EXHIBIT 10.5
BUSINESS ADVISORY AGREEMENT
This Business Advisory Agreement ("Agreement") dated this 10th day of
December, 2001, is entered into by and between Xxxxxxxx Xxxx
("Advisor"), an individual residing in the state of California, and
Patriot Motorcycle Company. ("Company" or "PMCY"), a Nevada
corporation. Advisor and Company may each be referred to as a "Party"
and together Advisor and Company may be referred to as the "Parties".
WHEREAS, Company desires to obtain strategic planning services to
evaluate its business status and possible new directions for Company
and its future development;
WHEREAS, Company wishes to engage Advisor to complete a thorough
evaluation of Company's business practices and business development
programs and provide recommendations about various courses of action;
WHEREAS, Company wishes to engage Advisor to perform a complete review
of its current business procedures and make recommendations; and
WHEREAS, after reviewing Company's business goals with management,
Advisor is sufficiently confident that management's objectives can be
achieved;
NOW THEREFORE, in consideration of the promises and covenants
contained herein, the Parties hereto agree as follows:
1. Responsibilities of Advisor. Advisor agrees to become a
management consultant to Company with respect to the evaluation of the
current business development programs and growth strategies (the
"Program"), and make recommendations as to possible ways to focus the
assets and management resources to achieve long-term growth. Advisor
will complete an analysis of Company's current operation and
management structures. Advisor will work with management to evaluate
all strategic plans and evaluate the current capabilities of Company
in view of its organization and resources. In addition, Advisor will
continue to provide business development services for Company. It is
understood that this program of business development may involve the
Company in possible business combination or joint venture
transactions. None of the services to be provided by Advisor under
this Agreement will involve the offer or sale of securities by PMCY.
Advisor shall provide Company with his opinion and recommendations
with respect to the most appropriate means of meeting corporate goals;
however, the implementation of such recommendations shall be at the
sole and exclusive option of Company.
2. Analysis and Review. Advisor agrees to provide the following
services, and such other advisory services as may be reasonably
requested to assist the Company to meet its corporate goals:
A. Conduct summary due diligence and analysis of Company's
operations and structures to ascertain the feasibility of the Program.
Such analysis shall include a critical evaluation of the information
and documents delivered to Advisor by Company prior to implementation
of the Program; and
B. Provide Company with a formal recommendation for implementation
of the Program.
3. Program Implementation. Upon receipt of formal approval and
written authorization from Company to proceed with the Program,
Advisor shall:
A. Advise Company with respect to the form and structure of the
Program;
B. Provide an analysis of strategic business alternatives;
C. Assist in the development of new opportunities;
D. Assist Company wherever possible with the implementation of each of
the above-enumerated steps.
4. Responsibilities of Company. In connection with the above
activities, which will be undertaken by Advisor on Company's behalf,
Company shall fully cooperate with the Advisor in the fulfillment of
its duties hereunder, and Company and Advisor agree to the following:
A. Relationship. Advisor is an independent contractor of Company
and will act as an advisor to Company in accordance with this
Agreement. Advisor acknowledges and agrees that it is his
responsibility to provide all employment taxes, insurance premiums and
local, state and federal taxes related to this Agreement. Neither
FICA (Social Security), FUTA (Federal Unemployment), nor local, state
or federal income taxes will be withheld from payments to Advisor.
B. Access to Information. Furnish all non-privileged information and
data concerning Company, any transactions or prior transactions which
Advisor may request.
C. Access to Company Officers and Professionals. Company will
provide Advisor reasonable access to Company's officers, directors,
employees, accountants, counsel and other key persons in furtherance
of this Agreement.
5. Term. The term of this Agreement shall be for a period of five
months, commencing on the date first set forth above.
6. Truthful Representations. Company represents and warrants that
all information (a) made available to the Advisor, or (b) contained in
any materials prepared by Company will, at all times during this
engagement be true, accurate and complete in all material respects and
will not contain any untrue statement of a material fact or omit to
state therein any fact necessary to make the statements therein not
misleading in light of the circumstances under which they are made.
Company further represents that any projections provided to Advisor or
contained in any materials prepared by or on behalf of Company with
respect to the subject matter thereof will have been prepared in good
faith and will be based on assumptions which in light of the
circumstances under which they are made are in Company's
determination, reasonable.
7. Responsibility for Representations. Company acknowledges and
agrees that in rendering its services as agreed hereunder, Advisor
will be using and relying on the information (and information
available from public sources and other sources deemed to be reliable)
without independent verification thereof and without independent
appraisal of any of Company's assets. Advisor does not assume
responsibility for the accuracy or completeness of the information.
Any advice rendered by Advisor pursuant to this Agreement may not be
disclosed publicly without Company's prior written consent.
8. Indemnification of Advisor. If in connection with the services or
matters that are the subject of this Agreement Advisor becomes
involved in any capacity in any action or legal proceeding, due to the
actions, information, position, assertions, and/or affirmations put
forth by Company or by Advisor at the direction of Company, or in
reliance upon material or information furnished by Company, Company
agrees to indemnify and hold harmless Advisor as the case may be for
the reasonable legal fees of counsel, court costs and other expenses
(including the costs of investigation and preparation) incurred.
Company also agrees to hold harmless Advisor against any losses,
claims, damages or liabilities, joint services or matters which are
the subject of this Agreement; provided however that Company shall not
be liable to Advisor with respect to any loss, claim, damages or
liability to the extent and only to the extent that such loss, claim,
damage or liability resulted from the gross negligence or willful
misconduct of Advisor. The provisions of this paragraph shall survive
the expiration of the period of this Agreement including any
extensions thereof set forth herein.
9. Implementation of Program. In the event that Company provides
Program Authorization to Advisor, Company intends, subject to its
resources, to:
A. Allocate the services of its Chief Executive Officer, Chief
Financial Officer and engage such other outside professionals as
required to successfully implement and complete each task associated
with the Program, pursuant to Advisor's recommendation, unless
modified in writing by the mutual consent of the parties, and
B. Issue such compensation as may be suggested by Advisor so as to
cause timely implementation of the Program pursuant to Advisor's
recommendation, unless modified in writing by the mutual consent of
the parties.
10. Compensation. In consideration for the services which are to be
provided by Advisor under this Agreement, Company agrees to compensate
Advisor as follows:
A. Analysis and Review Services. Company will pay to Advisor a non-
refundable engagement fee of $10,000.00, payable upon the execution of
this Agreement.
B. Stock in Lieu of Cash Compensation. Advisor will be paid in
restricted Common Stock of PMCY. The ratio that will govern the
amount of stock considered equal to an amount of cash fee will be
1.25:1 ($1.25 in stock will be considered equal to $1.00 in cash). To
determine the exact number of shares to be awarded in lieu of cash,
the "Stock Equivalent" shall be divided by the agreed to price of
$1.00 per share which was selected by negotiation of the parties.
Utilizing the calculation described above, 10,000 shares of restricted
PMCY common stock, par value $0.001 per share, will be issued to
satisfy the compensation due under this Agreement. All shares will be
issued according to all state and federal rules and regulations.
Company shall use all reasonable and best efforts to prepare and file
a Form S-8 Registration Statement covering the registration of the
above-referenced shares within 10 days in of the date of the execution
of this Agreement. Company will bear the full expense of the Form S-8
Registration filing.
11. Expenses. Upon demand, but no more than monthly, Company shall
reimburse Advisor for all of his reasonable out of pocket expenses
incurred in connection with the performance of his services pursuant
to this Agreement. Such expenses shall include, but not be limited to
travel, lodging, research, entertainment, printing, postage and
similar charges. Advisor agrees that he shall obtain authorization
from Company prior to incurring any expense in excess of Five Hundred
Dollars ($500.00).
12. Confidentiality. Except to the extent necessary to perform its
obligations hereunder or to comply with any applicable law, regulation
or rule, neither Party shall disclose or divulge to any third party
other than the other Party's directors, officers, auditor or legal
advisors, either before or after the termination of this Agreement,
any document or information exchanged between the Parties during the
term of this Agreement without prior written consent of the other
Party, which consent shall not unreasonably withheld.
13. Use of Advice and Recommendations. Neither the Recommendations or
any advice, whether oral or in writing, and no other material prepared
for Company in connection with Advisor's services hereunder is to be
used for any purpose other than the purpose for which such report,
advice or material was prepared, or is to be used or referred to by
Company in any public documents or otherwise publicly referred to
without Advisor's written consent. Notwithstanding the foregoing, in
the event that Company receives a request to disclose all or any part
of the information contained in any such report, advice or material
under the terms of a valid and effective subpoena or order issued by a
court of competent jurisdiction, Company may disclose such information
provided that Company notifies Advisor of the existence, terms and
circumstances surrounding such request.
14. Non-Circumvention. Company hereby irrevocably agrees not to
circumvent, avoid or bypass Advisor, either directly or indirectly.
Company will not directly use or approach Advisor's associates,
contacts or introductions in order to avoid payments of fees to
Advisor, or otherwise benefit, either financially or otherwise, from
information supplied to it or individuals and or business entities
introduced to it by Advisor with regard to any business opportunity,
business combination or joint venture under discussion. The spirit of
mutual trust and confidence shall be the underlying principle of this
undertaking, and the Parties agree to adhere thereto.
15. Termination by Advisor. It is hereby agreed and understood that
Advisor shall have the right to interview Company and accomplish a due
diligence review with respect to Company's representations and that at
Advisor's sole discretion if such interviews and due diligence
demonstrate substantive and/or material discrepancies from that which
was put forth by the Company then Advisor shall have the right to
terminate this Agreement and be held harmless from any claims of
Company for such termination as well as from any claims of third
parties which may result from any such discrepancy. In the event that
Advisor is unable to perform its responsibilities under this Agreement
due to the failure of Company to perform its responsibilities
hereunder, Advisor shall be released from its responsibilities under
this Agreement and shall receive any compensation due and owing
pursuant to Paragraph 10 above.
16. Termination by Company. Notwithstanding Paragraph 5, Company may
terminate this Agreement at any time, without cause, upon thirty (30)
days' written notice to Advisor. In the event that Company terminates
Advisor without cause prior to the expiration of the term set forth in
Paragraph 5, Advisor shall be entitled to all compensation set forth
in Paragraph 10. In the event that at time of such termination
Company shall be in discussions with respect to any persons or
entities introduced by Advisor, Advisor will maintain the exclusive
right to conclude any transactions between Company and such persons or
entities. In case of termination, regardless of when or by whom such
termination may have been brought about, Advisor will receive full
reimbursement for the entire amount of expenses incurred by Advisor in
connection with his services pursuant to Paragraph 11 of this
Agreement. Neither termination nor completion shall affect the
provisions of Paragraphs 6, 7, 8, 11, 12, 13 or 14, which shall remain
operative and in full force and effect for a period of two years
subsequent to termination.
17. Securities Laws. The Parties to this Agreement mutually agree to
comply with any and all applicable securities laws with respect to
their performance under this Agreement.
18. Miscellaneous Provisions.
A. Notices. All notices, requests, demands and other communications
to be given hereunder shall be in writing and shall be deemed to have
been duly given on the date of personal service or transmission by fax
if such transmission is received during the normal business hours of
the addressee, or on the first business day after sending the same by
overnight courier service or by telegram, or on the third business day
after mailing the same by first class mail, or on the day of receipt
if sent by certified or registered mail, addressed as set forth below,
or at such other address as any party may hereafter indicate by notice
delivered as set forth in this Section 18(A):
If to the Company: Patriot Motorcycle Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xx. Xxxxxx Xxxxxx
President
If to the Advisor: Xx. Xxxxxxxx Xxxx
2020 Avenue of the Stars, Xxxxx 000
Xxx Xxxxxxx, XX 00000-0000
B. Binding Agreement; Assignment. This Agreement shall constitute
the binding agreement of the Parties hereto, enforceable against each
of them in accordance with its terms. This Agreement shall inure to
the benefit of each of the Parties hereto, and their respective
successors and permitted assigns.
C. Entire Agreement. This Agreement constitutes the entire and final
agreement and understanding between the Parties with respect to the
subject matter hereof and the transactions contemplated hereby.
D. Waiver. No waiver of any provision of this Agreement shall be
deemed to be or shall constitute a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing
waiver. No waiver shall be binding unless executed in writing by the
Party making the waiver.
E. Headings. The headings provided herein are for convenience only
and shall have no force or effect upon the construction or
interpretation of any provision hereof.
F. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
G. Further Documents and Acts. Each party agrees to execute such
other and further documents and to perform such other and further acts
as may be reasonably necessary to carry out the purposes and
provisions of this Agreement.
H. Governing Law & Venue. This Agreement shall be governed by and
construed in accordance with the laws of the State of California,
without giving effect to the principles of conflicts of laws applied
thereby. The parties hereby agree that any disputes arising hereunder
shall be brought before any court of competent jurisdiction sitting in
the County of Los Angeles, State of California, and hereby consent to
jurisdiction and venue in the County of Los Angeles, State of
California.
I. Advice, Drafting. Each party further agrees and acknowledges that
this Agreement represents the respective understandings of such
parties as negotiated between them, and no ambiguity or other aspect
of this Agreement shall be construed against any party solely by
virtue of the drafting or presentment of this Agreement. Each party
has been advised to speak with a legal and an accounting professional
to understand the legal and tax implications and impact of the
transactions contemplated hereby, and neither party has relied upon
the other, the Company or their respective counsel in connection
therewith.
J. Severability. The provisions of this Agreement are severable, and
if any one or more provisions is determined to be illegal, invalid or
otherwise unenforceable, in whole or in part, by any court of
competent jurisdiction, then the remaining provisions of this
Agreement and any partially unenforceable provisions to the extent
enforceable in the pertinent jurisdiction, shall continue in full
force and effect and shall be binding and enforceable on the Parties.
K. Survival. The representations, warranties, general covenants and
indemnities contained in this Agreement shall survive the termination
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
COMPANY:
PATRIOT MOTORCYCLE CORPORATION
/s/__________________
By: Xxxxxx Xxxxxx, President & CEO
ADVISOR:
XXXXXXXX XXXX
/s/__________________
By: Xxxxxxxx Xxxx
