EXHIBIT 10.8
ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT (the "Agreement") is made this 30th day of April
1999, by and between Xxxxxx Consulting Group, Inc., a Nevada corporation
("Advisor") and PerfectData Corporation, a California corporation (the
"Company").
WHEREAS, Advisor and Advisor's Personnel (as defined below) have experience
in evaluating and effecting mergers and acquisitions, supervising corporate
management, and in performing general administrative duties for publicly-held
companies and development stage investment ventures; and
WHEREAS, the Company desires to retain Advisor to advise and assist the
Company in its development on the terms and conditions set forth below.
NOW THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and Advisor
agree as follows:
1. ENGAGEMENT
The Company hereby retains Advisor, effective as of the date hereof (the
"Effective Date") and continuing until termination, as provided herein, to
assist the Company in it's effecting the purchase of business and assets
relative to its business and growth strategy, resolution of outstanding debt and
obligations of the Company, introducing of the Company to broker/dealers and
assist with creating a market for the securities of the Company (the
"Services"). The Services are to be provided on a "best efforts" basis directly
and through Advisor's officers or others employed or retained and under the
direction of Advisor ("Advisor's Personnel"); provided, however, that the
Services shall expressly exclude all legal advice, accounting services or other
services which require licenses or certification which Advisor may not have.
2. TERM
This Agreement shall have an initial term of one (1) year (the "Primary
Term"), commencing with the Effective Date. At the conclusion of the Primary
Term this Agreement will automatically be extended on an annual basis (the
"Extension Period") unless Advisor of the Company shall serve written notice on
the other party terminating the Agreement. Any notice to terminate given
hereunder shall be in writing and shall be delivered at least thirty (30) days
prior to the end of the Primary Term or any subsequent Extension Period.
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3. TIME AND EFFORT OF ADVISOR
Advisor shall allocate time and Advisors Personnel as it deems necessary to
provide the Services. The particular amount of time may vary from day to day or
week to week. Except as otherwise agreed, Advisor's monthly statement
identifying, in general, tasks performed for the Company shall be conclusive
evidence that the Services have been performed. Additionally, in the absence of
willful misfeasance, bad faith, negligence or reckless disregard for the
obligations or duties hereunder by Advisor, neither Advisor nor Advisor's
Personnel shall be liable to the Company or any of its any shareholders for any
act or omission in the course of or connected with rendering the Services,
including but not limited to losses that may be sustained in any corporate act
in any subsequent Busineess Opportunity (as defined herein) undertaken by the
Company as a result of advice provided by Advisor or Advisors's Personnel.
4. COMPENSATION
The Company agrees to pay Advisor a fee for the Services ("Advisory Fee")
by way of the issuance by the Company of One Hundred Fifty Thousand (150,000)
shares of the Company's common stock to be delivered according to the following
schedule. Thirty Seven Thousand Five Hundred (37,500) shares of the Company's
common stock upon the execution hereof as a retainer fee, said shares may be
restricted pursuant to Rule 144. In ninety (90) days an additional Thirty Seven
Thousand Five Hundred (37,500) shares are to be transferred. Upon execution of a
final merger or acquisition an additional Seventy Five Thousand (75,000) shares
and any other shares provided for herein shall be immediately transferred to
Advisor.
5. OTHER SERVICES
If Advisor directly or indirectly finds, locates or introduces a Business
Opportunity, acceptable to the Company, and the Company enters into a merger or
exchanges securities with or purchases the assets or enters into a joint venture
with, or makes an investment in a company introduced by Advisor (a "Business
Opportunity"), the Company agrees to pay Advisor a fee, in addition to the
Advisory Fee, equal to, in cash or securities acceptable to Advisor at Advisors
option under the following formula: (1) 5% a Business Opportunity that has a
gross value of ($1,000,000) One Million Dollars or less; (2) plus, 4% of any
additional value over ($1,000,000) One Million Dollars up to ($2,000,000) Two
Million dollars in gross value; (3) plus, 3% of any additional value over
($2,000,000) Two Million dollars up to ($3,000,000) in gross value; (4) plus, 2%
of any additional value over ($3,000,000) Three Million dollars up to
($4,000,000) Four Million dollars in gross value; (5) plus, 1% of any additional
gross value which exceeds ($4,000,000) Four Million dollars (collectively
referred to herein, in each instance, as the "Transaction Fee"), which shall be
payable immediately following the closing of each such transaction, in cash or
in shares of the Company's common stock.
6. REGISTRATION OF SHARES
Company agrees that any shares issued to satisfy the Advisory Fee (if paid
in shares), and the issuance of shares as a Transaction Fee, that all such
issued shares shall be registered by the
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Company with the Securities and Exchange Commission under any subsequent
applicable registration statement filed by the Company. Such issuance or
reservation of shares shall be in reliance on representations and warranties of
Advisor set forth herein.
7. COSTS AND EXPENSES
All third party and out-of-pocket expenses incurred by Advisor in the
performance of the Services shall be paid by the Company, or Advisor shall be
reimbursed if paid by Advisor on behalf of the Company, within ten (10) days of
receipt of written notice by Consultant, provided that the Company must approve
in advance all such expenses in excess of $500 per month.
8. PLACE OF SERVICES
The Services provided by Advisor or Advisor's Personnel hereunder will be
performed at Advisor's offices except as otherwise mutually agreed by Advisor
and the Company.
9. INDEPENDENT CONTRACTOR
Advisor and Advisor's Personnel will act as an independent contractor in
the performance of its duties under this Agreement. Accordingly, Advisor will be
responsible for payment of all federal, state, and local taxes on compensation
paid under this Agreement, including income and social security taxes,
unemployment insurance, and any other taxes due relative to Advisor's Personnel,
and any and all business license fees as may be required. This Agreement neither
expressly NOR impliedly creates a relationship of principal and agent, or
employee and employer, between Advisor's Personnel and the Company. Neither
Advisor nor Advisor's Personnel are authorized to enter into any agreements on
behalf of the Company. The Company expressly retains the right to approve, in
its sole discretion, each Asset Opportunity or Business Opportunity introduced
by Advisor, and to make all final decisions with respect to effecting a
transaction on any Business Opportunity.
10. REJECTED ASSET OPPORTUNITY OR BUSINESS OPPORTUNITY
If, during the Primary Term of this Agreement or any Extension Period, the
Company elects not to proceed to acquire, participate or invest in any Business
Opportunity identified and/or selected by Advisor, notwithstanding the time and
expense the Company may have incurred reviewing such transaction, such Business
Opportunity shall revert back to and become proprietary to Advisor, and Advisor
shall be entitled to acquire or broker the sale or investment in such rejected
Business Opportunity for its own account, or submit such assets or Business
Opportunity elsewhere. In such event, Advisor shall be entitled to any and all
profits or fees resulting from Advisor's purchase, referral or placement of any
such rejected Business Opportunity, or the Company's subsequent purchase or
financing with such Business Opportunity in circumvention of Advisor.
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11. NO AGENCY EXPRESS OR IMPLIED
This Agreement neither expressly nor impliedly creates a relationship of
principal and agent between the Company and Advisor, or employee and employer as
between Advisor's Personnel and the Company.
12. TERMINATION
The Company and Advisor may terminate this Agreement prior to the
expiration of the Primary Term upon thirty (30) days written notice with mutual
written consent. Failing to have mutual consent, without prejudice to any other
remedy to which the terminating party may be entitled, if any, either party may
terminate this Agreement with thirty (30) days written notice under the
following conditions:
(A) BY THE COMPANY.
(i) If during the Primary Term of this Agreement or any Extension
Period, Advisor is unable to provide the Services as set forth
herein for thirty (30) consecutive business days because of
illness, accident, or other incapacity of Advisor's Personnel;
or,
(ii) If Advisor willfully breaches or neglects the duties required to
be performed hereunder; of,
(B) BY ADVISOR.
(i) If the Company breaches this Agreement or fails to make any
payments or provide information required hereunder; or,
(ii) If the Company ceases business or, other than in an Initial
Merger, sells a controlling interest to a third party, or agrees
to a consolidation or merger of itself with or into another
corporation, or enters into such a transaction outside of the
scope of this Agreement, or sells substantially all of its assets
to another corporation, entity or individual outside of the scope
of this Agreement; or,
(iii) If the Company subsequent to the execution hereof has a receiver
appointed for its business or assets, or otherwise becomes
insolvent or unable to timely satisfy its obligations in the
ordinary course of, including but not limited to the obligation
to pay the Initial Fee, the Transaction fee, or the Advisory Fee;
or,
(iv) If the Company subsequent to the execution hereof institutes,
makes a general assignment for the benefit of creditors, has
instituted against it any bankruptcy proceeding for
reorganization for rearrangement of its
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financial affairs, files a petition in a court of bankruptcy,
or is adjudicated a bankrupt; or,
(v) If any of the disclosures made herein or subsequent hereto by the
Company to Consultant are determined to be materially false or
misleading.
In the event Advisor elects to terminate without cause or this Agreement is
terminated prior to the expiration of the Primary Term or any Extension Period
by mutual written agreement, or by the Company for the reasons set forth in A(i)
and (ii) above, the Company shall only be responsible to pay Advisor for
unreimbursed expenses, Advisory Fee and Transaction Fee accrued up to and
including the effective date of termination. If this Agreement is terminated by
the Company for any other reason, or by Advisor for reasons set forth in B(i)
through (v) above, Advisor shall be entitled to any outstanding unpaid portion
of reimbursable expenses, Transaction Fee, if any, and the balance of the
Advisory Fee for the remainder of the unexpired portion of the applicable term
(Primary Term or Extension Period) of the Agreement.
13. INDEMNIFICATION
Subject to the provisions herein, the Company and Advisor agree to
indemnify, defend and hold each other harmless from and against all demands,
claims, actions, losses, damages, liabilities, costs and expenses, including
without limitation, interest, penalties and attorneys' fees and expenses
asserted against or imposed or incurred by either party by reason of or
resulting from any action or a breach of any representation, warranty, covenant,
condition, or agreement of the other party to this Agreement.
14. REMEDIES
Advisor and the Company acknowledge that in the event of a breach of this
Agreement by either party, money damages would be inadequate and the
non-breaching party would have no adequate remedy at law. Accordingly, in the
event of any controversy concerning the rights or obligations under this
Agreement, such rights or obligations shall be enforceable in a court of equity
by a decree of specific performance. Such remedy, however, shall be cumulative
and non-exclusive and shall be in addition to any other remedy to which the
parties may be entitled.
15. MISCELLANEOUS
(A) SUBSEQUENT EVENTS. Advisor and the Company each agree to notify the
other party if, subsequent to the date of this Agreement, either party
incurs obligations which could compromise its efforts and obligations
under this Agreement.
(B) AMENDMENT. This Agreement may be amended or modified at any time and
in any manner only by an instrument in writing executed by the parties
hereto.
(C) FURTHER ACTIONS AND ASSURANCE. At any time and from time to time, each
party agrees, at its or their expense, to take actions and to execute
and deliver
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documents as may be reasonably necessary to effectuate the purposes of
this Agreement.
(D) WAIVER. Any failure of any party to this Agreement to comply with any
of its obligations, agreements, or conditions hereunder may be waived
in writing by the party to whom such compliance is owed. The failure
of any party to this Agreement to enforce at any time any of the
provisions of this Agreement shall in no way be construed to be a
waiver of any such provision or a waiver of the right of such party
thereafter to enforce each and every such provision. No waiver of any
breach of or non-compliance with this Agreement shall be held to be a
waiver of any other or subsequent breach or non-compliance.
(E) ASSIGNMENT. Neither this Agreement nor any right created by it shall
be assignable by either party without the prior written consent of the
other.
(F) NOTICES. Any notice or other communication required or permitted by
this Agreement must be in writing and shall be deemed to be properly
given when delivered in person to an officer of the other party, when
deposited in the United States mails for transmittal by certified or
registered mail, postage prepaid, or when deposited with a public
telegraph company for transmittal, or when sent by facsimile
transmission charges prepared, provided that the communication is
addressed;
(i) In the case of the Company:
PerfectData Corporation
000 Xxxx Xxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
Attention: Xxxxxx Xxxxx, Chairman, President & CEO
(ii) In the case of Advisor:
Xxxxxx Consulting Group
000 Xxxx 000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, President
or to such other person or address designated in writing by the
Company or Advisor to receive notice.
(G) HEADINGS. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
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(H) GOVERNING LAWS. This Agreement was Negotiated and is being contracted
for in Utah and California, and shall be governed by the laws of the
State of California and United States of America, notwithstanding any
conflict-of-law to the contrary.
(I) BINDING EFFECT. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties, their respective
heirs, administrators, executors, successors, and assigns.
(J) ENTIRE AGREEMENT. This Agreement contains the entire agreement between
the parties hereto and supersedes any and all prior agreements,
arrangements, or understandings between the parties relating to the
subject matter of this Agreement. No oral understandings, statements,
promises, or inducements contrary to the terms of this Agreement
exist. No representations, warranties, covenants, or conditions,
express or implied, other than as set forth herein, have been made by
any party.
(K) SEVERABILITY. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force
and effect.
(L) COUNTERPARTS. A facsimile, telecopy, or other reproduction of this
Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument, by one or more parties
hereto and such executed copy may be delivered by facsimile or similar
instantaneous electronic transmission device pursuant to which the
signature of or on behalf of such party can be seen. In this event,
such execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party hereto, all
parties agree to execute an original of this Agreement as well as any
facsimile, telecopy or other reproduction hereof.
(M) TIME IS OF THE ESSENCE. Time is of the essence of this Agreement and
of each and every provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
above written.
The "Company" "Advisor"
PerfectData Corporation Xxxxxx Consulting Group
A California Corporation a Nevada Corporation
By: /s/ XXXXXX XXXXX By: /s/ XXXXXXX XXXXXX
------------------------- ----------------------
Name: Xxxxxx Xxxxx Name: Xxxxxxx Xxxxxx
Title: President and CEO Title: President
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ADDENDUM TO ADVISORY AGREEMENT
Xxxxxx Consulting Group Inc. and PerfectData Corporation agree and
stipulate that the following businesses are known to PerfectData and in the
event that a transaction is concluded with any of the named businesses Xxxxxx is
not entitled to fees for that transaction under the Advisory Agreement of April
1999.
Excluded Businesses:
Pego Systems Inc.
Hartcourt Companies
Flamemaster Corp.
Statuni Corp.
El Guapo Foods
Omni Computer
Cohesant Technologies
Novaquest Info Systems
Esselte
Tech Spray
Startus
Rite Off Inc.
EMB Corporation
Bay Resources
Recoton.
Acknowledge and agreed this 30th Day of April, 1999
Xxxxxx Consulting Group, Inc. PerfectData Corporation
By: /s/ XXXXXXX XXXXXX By: /s/ XXXXXX XXXXX
----------------------------- ---------------------------
Xxxxxxx Xxxxxx, President Xxxxxx Xxxxx, President
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LETTERHEAD
CERTIFIED RETURN RECEIPT
October 27, 1999
Xxxxxxx X. Xxxxxx, President
Xxxxxx Consulting Group, Inc.
000 Xxxx 000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Dear Xxxxxxx:
This letter is PerfectData Corporation's 30-day written notice that the Company
is terminating our Agreement with Xxxxxx Consulting Group, Inc. on November 27,
1999.
Sincerely,
/s/ XXXXXX XXXX
---------------
President
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