ADVISORY SERVICES AGREEMENT
THIS ADVISORY SERVICES AGREEMENT (this "Agreement") is entered into as of
March 13, 2001, by and between ON STAGE ENTERTAINMENT, INC., a Nevada
corporation (the "Company"), and MDC MANAGEMENT COMPANY IV, L.P., a California
limited partnership ("MDC").
A. Contemporaneously with this Agreement, certain affiliates of MDC, will
acquire certain shares of the capital stock of the Company; and
B. The investment in the Company by certain affiliates of MDC is subject to
the execution and delivery of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises of the parties
hereinafter set forth, MDC and the Company hereby agree as follows:
1. Retention as Advisor. Subject to each of the terms, conditions and
provisions of this Agreement, the Company hereby retains MDC to perform, and MDC
hereby agrees to perform, those financial, advisory and managerial functions set
forth in Section 4 of this Agreement.
2. Term.
2.1 Subject to the provisions for termination set forth herein, this
Agreement shall be effective as of the date hereof and expire on the fifth
anniversary of the date hereof; provided, however, that this Agreement shall be
renewable automatically annually for additional one-year terms unless MDC
receives a notice of termination from the Company prior to the renewal date.
2.2 The Company, by written notice to MDC, authorized by a majority of the
directors other than those who are representatives of MDC, may terminate this
Agreement for justifiable cause, which shall mean any of the following events:
(i) material breach by MDC of any of its obligations hereunder; (ii)
misappropriation by MDC of funds or property of the Company or other willful
breach in the course of the consultantcy; or (iii) gross neglect by MDC in the
fulfillment of its obligations hereunder.
2.3 MDC, by thirty (30) days prior written notice to the Company, may
terminate this Agreement at any time.
3. Compensation.
3.1 As compensation to MDC for its management and advisory services to the
Company under this Agreement, the Company agrees to (i) pay MDC a fee of two
hundred fifty thousand dollars ($250,000) for services rendered hereunder
through March 30, 2002, such fee to be paid in advance in four (4) equal
installments on or before the fifth day of April, 2001, July, 2001, October,
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2001 and January, 2002 and (ii) thereafter, pay MDC a fee for each fiscal
quarter of service hereunder equal to the greater of (x) sixty-two thousand five
hundred dollars ($62,500) or (y) one-fourth of one percent (0.25%) of the
Company's gross revenues reported for the four (4) most recent fiscal quarters
then ended, such sum to be paid on or before the fifth day of January, April,
July and October of each year, as applicable. In no event shall the fee to be
paid to MDC pursuant to this Section 3.1 exceed ninety-five thousand dollars for
any one fiscal quarter.
3.2 From time to time, the Company may request MDC to provide significant
additional services, such as in connection with a major acquisition or debt
restructuring. MDC will be entitled to receive additional compensation for such
services, which will be governed by a separate written agreement, negotiated and
signed by both parties. The Company and MDC agree to negotiate in good faith
concerning the scope and compensation for such additional services, based upon
compensation customarily received by independent investment banking firms for
providing similar assistance. Any agreement regarding additional compensation
shall be in writing and signed by MDC and the Company.
3.3 The Company agrees to pay actual and direct out-of-pocket expenses
(including, but not limited to, reasonable fees and disbursements of attorneys,
accountants and other professionals and consultants retained by MDC in
connection with the services provided hereunder) incurred by MDC and its
personnel in performing services hereunder to the Company and its subsidiaries
which shall be reimbursed to it by the Company upon MDC's rendering of an
invoice statement therefor together with such supporting data as the Company
reasonably shall require.
4. Duties as Advisor.
MDC's duties as a financial and management advisor to the Company under the
provisions of this Agreement shall include providing services in obtaining
equity, debt, lease and acquisition financing, as well as providing other
financial, advisory and consulting services for the operation and growth of the
Company at any time during the term of this Agreement (the "Services"). Such
Services shall be rendered upon the reasonable request of the Company. MDC shall
devote as much time as reasonably necessary to the affairs of the Company.
5. Decisions.
The Company reserves the right to make all decisions with regard to any
matter upon which MDC has rendered its advice and consultation, and there shall
be no liability to MDC for any such advice accepted by the Company pursuant to
the provisions of this Agreement.
6. Authority of Advisor.
MDC shall have authority only to act as a consultant and advisor to the
Company. MDC shall have no authority to enter into any agreement or to make any
representation, commitment or warranty binding upon the Company or to obtain or
incur any right, obligation or liability on behalf of the Company. Nothing
contained herein shall be interpreted as restricting, modifying or waiving the
rights, privileges or obligations of MDC or any of its affiliates as a
shareholder, director or officer of the Company.
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7. Independent Contractor.
Except as may be expressly provided elsewhere in this Agreement, MDC shall
act as an independent contractor and shall have complete charge of its personnel
engaged in the performance of the Services.
8. Books and Records.
MDC's books and records with respect to the Services ("Books and Records")
shall be kept at MDC's office located at 0000 Xxxx Xxxx Xxxx, Xxxxxxxx 0, Xxxxx
000, Xxxxx Xxxx, Xxxxxxxxxx 00000. The Books and Records shall be kept in
accordance with recognized accounting principles and practices, consistently
applied, and shall be made available for the Company or the Company's
representatives' inspection and copying at all times during regular office
hours. MDC shall not be required to maintain the Books and Records for more than
three (3) years after termination of this Agreement.
9. Confidential Information.
The parties acknowledge that during the course of provision of the
Services, the Company may disclose information to MDC or its affiliated
companies. MDC shall treat such information as the Company's confidential
property and safeguard and keep secret all such information about the Company,
including reports and records, customer lists, trade lists, trade practices, and
prices pertaining to the Company's business coming to the attention or knowledge
of MDC because of any activities conducted by MDC under or pursuant to this
Agreement; provided, however, that nothing contained herein shall be construed
as prohibiting MDC from disclosing information regarding the Company to its
investors and other affiliates as MDC may deem necessary, advisable or
convenient, provided MDC informs its investors and other affiliates about the
confidentiality restrictions and ensures that such investors and affiliates also
agree to be bound by the terms of this paragraph.
10. Notices and Communications.
10.1 All communications relating to the day-to-day activities necessary to
render the Services shall be exchanged between the respective representatives of
the Company and MDC, who will be designated by the parties promptly upon
commencement of the Services.
10.2 All other notices, demands, and communications required or permitted
hereunder shall be in writing and shall be delivered personally to the
respective representatives of the Company and MDC set forth below or shall be
mailed by registered mail, postage prepaid, return receipt requested. Notices,
demands and communications hereunder shall be effective: (i) if delivered
personally, on delivery; or (ii) if mailed, forty-eight (48) hours after deposit
thereof in the United States mail addressed to the party to whom such notice,
demand, or communication is given. Until changed by written notice, all such
notices, demands and communications shall be addressed as follows:
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If to the Company:
On Stage Entertainment, Inc.
0000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxx Xxxxxxx, Esq.
If to MDC:
XxXxxx De Leeuw & Co., Inc.
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxx
With copies to:
Xxxxxx Godward LLP
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxx
Nida & Xxxxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxxxx Xxxxxxx
11. Assignments.
MDC shall not assign this Agreement in whole or in part without the prior
written consent of the Company; provided, however, that such consent shall not
be unreasonably withheld with respect to assignments to MDC's affiliates or
wholly-owned subsidiaries.
Subject to the foregoing, all the terms and conditions contained herein
shall inure to the benefit of and shall be binding upon the parties hereto and
their respective heirs, personal representatives, successors and assigns.
12. Limitation of Liability; Indemnity.
MDC shall have no liability to the Company on account of any advice that it
rendered to the Company provided MDC believed in good faith that such advice was
useful or beneficial to the Company at the time it was rendered. The Company
will indemnify and hold harmless MDC and its affiliates, and each of their
respective directors, officers, partners, principals, employees, agents and
representatives, from and against any actual or threatened claims, lawsuits,
actions or liabilities (including the fees and expenses of counsel and other
litigation costs) of any kind or nature, arising as a result of or in connection
with this Agreement and their services, activities and decisions hereunder,
except that the Company will not be obligated to so indemnify any indemnified
party if, and to the extent that, such claims, lawsuits, actions or liabilities
against such indemnified party directly result from the gross negligence or
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willful misconduct of such indemnified party as admitted in any settlement by
such indemnified party or held in any final, non-appealable judicial or
administrative decision. In connection with such indemnification, the Company
will promptly remit or pay to MDC any amounts that MDC certifies to the Company
in writing are payable to MDC or other indemnified parties hereunder.
13. Applicable Law and Severability.
This Agreement shall, in all respects, be governed by the laws of the State
of California applicable to agreements executed and to be wholly performed
within the State of California. Nothing contained herein shall be construed so
as to require the commission of any act contrary to law, and wherever there is
any conflict between any provisions contained herein and any contrary present or
future statute, law, ordinance or regulation, the latter shall prevail, but the
provisions of this Agreement which are affected shall be curtailed and limited
only to the extent necessary to bring them within the requirements of the law.
14. Further Assurances.
Each of the parties hereto shall execute and deliver any and all additional
papers, documents and other assurances, and shall do any and all acts and things
reasonably necessary in connection with the performance of their obligations
hereunder and to carry out the intent of the parties hereto.
15. Attorneys' Fees and Costs.
The prevailing party in any proceeding brought to enforce or interpret any
provision of this Agreement shall be entitled to recover its reasonable
attorneys' fees, costs and disbursements incurred in connection with such
proceeding, including but not limited to the reasonable costs of experts,
accountants and consultants and all other reasonable costs and services related
to the proceeding, including those incurred in any appeal, jointly and
severally, from the nonprevailing party or parties.
16. Time of the Essence.
Time is of the essence of this Agreement and all the terms, provisions,
covenants and conditions hereof.
17. Captions.
The captions appearing at the commencement of the Sections hereof are
descriptive only and for convenience and reference. Should there be any
conflicts between any such caption and the Section at the head of which it
appears, the Section and not such caption shall control and govern in the
construction of this Agreement.
18. Modifications or Amendments.
No amendment, change or modification of this Agreement shall be valid
unless it is in writing and signed by all the parties hereto and expressly
states that an amendment, change or modification of this Agreement is intended.
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19. Separate Counterparts.
This Agreement may be executed in one or more separate counterparts, each
of which, when so executed, shall be deemed to be an original. Such counterparts
shall, together, constitute and be one and the same Agreement.
20. Entire Agreement.
This Agreement shall constitute the entire understanding and agreement
between the parties hereto and shall supersede any and all letters of intent,
whether written or oral, pertaining to the subject matter of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers on the date first appearing above.
ON STAGE ENTERTAINMENT, INC.
By:________________________________
Name:
Title:
MDC MANAGEMENT COMPANY IV, L.P.,
a California limited partnership
By:________________________________
Name:
Title:
