CONSULTING AGREEMENT
This Consulting Agreement between Collectibles USA, Inc., a Delaware
corporation ("Company"), and Wasatch Capital Corporation ("Consultant"), is
hereby entered into this 31st day of May, 1998 to be effective as of the
consummation of the initial public offering of the Company's common stock.
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby agreed
as follows:
1. Duties.
(a) The Company hereby engages Consultant (A) as a merger and acquisition
consultant to assist the Company in implementing its strategy to acquire
additional retailers of collectibles and marketers of animation art, including
to the extent requested by the Company, (i) assisting the Company in designing
the Company's acquisition program and identifying and evaluating potential
acquisition candidates, their operations, historical performance and future
prospects, (ii) advising the Company in discussions and negotiations with
acquisition candidates and (iii) advising the Company with respect to obtaining
debt and/or equity financing and (B) as a consultant to advise the Company with
respect to its management matters.
(b) Consultant hereby accepts this engagement upon the terms and conditions
herein contained and agrees to devote a reasonable amount of time, attention and
efforts to promote and further the business and services of the Company.
(c) Consultant agrees to keep the Company informed of its activities
hereunder. Specifically, after identifying a potential acquisition candidate and
gathering appropriate information with respect thereto, Consultant will provide
all such information to the Chief Executive Officer of the Company, or its
designee, and discuss the desirability of proceeding with such potential
candidate with the Chief Executive Officer of the Company and any such
discussion with the potential acquisition candidate shall take place with the
Chief Executive Officer or his designee. No discussion with respect to a
possible purchase price of such potential acquisition candidate shall take place
without the prior approval of the Chief Executive Officer of the Company and
shall take place in the presence of, or with the prior approval of, the Chief
Executive Officer or his designee. Any such acquisition shall, of course, be
subject to prior approval of the Board of Directors.
2. Compensation.
(a) For all services rendered by Consultant to the Company, the Company
shall compensate the Consultant based upon each acquisition candidate with which
an acquisition is consummated in accordance with Exhibit A attached hereto. No
such compensation shall be paid until such time as an acquisition is
consummated.
(b) The Company shall reimburse Consultant for all ordinary and necessary
business expenses lawfully and reasonably incurred by Consultant in the
performance of its services. All reimbursable expenses shall be appropriately
documented in reasonable detail by Consultant upon submission of any request for
reimbursement.
3. Term; Termination; Rights of Termination. The term of this Agreement
shall begin on the date of this Agreement and continue for a period of three (3)
years subject to automatic one-year extensions unless either party notifies the
other at least 90 days before the end of the initial three-year term or one-year
extension term of the desire to not renew the agreement.
4. Taxes. It is mutually understood and agreed that in the performance of
its services under this Agreement, Consultant is at all times performing its
services as an independent contractor, and acknowledges that it is responsible
for payment of its federal income tax, employment taxes and social security
taxes. Further, Consultant will comply with all taxing authorities, regulations
and laws, whether federal or state.
5. Nondisclosure and Nonuse of Confidential Information. Except as required
by the nature of Consultant's duties or with the prior written approval of an
authorized officer of the Company, Consultant will never, during the term of
this Agreement or thereafter, use or disclose any confidential information of
the Company, any of its customers or any potential acquisition candidate,
including without limitation customer lists, market research, strategic plans or
other information or discoveries, inventions, improvements, know-how, methods or
other trade secrets, whether developed by Consultant or others. Consultant will
comply with the Company's policies and procedures for the protection of
confidential information.
6. Use and Return of Documents. Consultant will not disclose any documents,
record, tapes and other media that contain confidential information and will not
copy any such material or remove it from the Company's offices except as
approved by an authorized officer of the Company. Upon termination of this
Agreement, Consultant will return to the Company all copies of documents,
records, tapes, and other media that contain confidential information.
7. Remedies. Consultant acknowledges that in the event of a violation by
him of this Agreement the harm to the Company could be irreparable. Consultant
agrees that, in addition
to any other remedies provided by law, the Company will be entitled to obtain
injunctive relief against any such violation without having to post a bond.
8. Complete Agreement. There are no oral representations, understandings,
or agreements with the Company or any of its officers, directors or
representatives covering the same subject matter as this Agreement. This written
Agreement is the final, complete and exclusive statement and expression of the
agreement between the Company and Consultant and of all the terms of this
Agreement, and it cannot be varied, contradicted or supplemented by evidence of
any prior or contemporaneous oral or written agreements. This written Agreement
may not be later modified except by a further writing signed by the Company and
Consultant, and no term of this Agreement may be waived except by writing signed
by the party waiving the benefit of such terms.
9. No Waiver. No waiver by the parties hereto of any default or breach of
any term, condition or covenant of this Agreement shall be deemed to be a waiver
of any subsequent default or breach of the same or any other term, condition or
covenant contained herein.
10. Assignment; Binding Effect. Consultant understands that it may not
assign its rights or obligations hereunder without the prior written consent of
the Company. Subject to the preceding sentence, this Agreement shall be binding
upon and inure to the benefit of the parties thereto and their respective heirs,
successors and assigns. It is further understood and agreed that the Company may
be merged or consolidated with another entity and that any such entity shall
automatically succeed to the rights, powers and duties of the Company hereunder.
11. Notices. Whenever any notice is required hereunder, it shall be given
in writing addressed as follows:
To the Company: Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Chief Executive Officer
To Consultant: 0000 Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Notice shall be deemed given and effective seven (7) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party may
change the address for notice by notifying the other party of such change in
accordance with this paragraph 11.
12. Severability; Headings. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are not intended
in the way to describe, interpret, define or limit the extent or intent of this
Agreement or of any part hereof.
13. Governing Law; Place of Performance. This Agreement shall in all
respects be construed according to the laws of the State of New York.
[Signature Page to Follow]
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
COLLECTIBLES USA, INC.
By: /s/ Xxxxxx Xxxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxxx
Title: Chairman
WASATCH CAPITAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman of the Board
EXHIBIT A
Consultant shall be entitled to receive 3.2% of Pre-Tax Net Income for the
acquisition candidate. Pre-Tax Net Income will be calculated based upon the
acquisition candidate's most recently completed fiscal year, and shall be
computed in accordance with (i) generally accepted accounting principals in the
United States and (ii) the rules of Regulation SX, Title 17 of the Code of
Federal Regulations (Part 210), as such may be amended.
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