EXHIBIT 10.3
CONSULTING AND ADVISORY SERVICES AGREEMENT
This CONSULTING AND ADVISORY SERVICES AGREEMENT for independent
contractor consulting and advisory services ("Agreement") is made and entered
into as of _________, 2005 (the "Effective Date"), by and between Ronco
Marketing Corporation, a Delaware corporation ("RMC"), and Xxxxxx X. Xxxxxx, an
individual ("Consultant").
WHEREAS, RMC, Ronco Inventions, LLC, Popeil Inventions, Inc., RP
Productions, Inc., RMP Family Trust and Consultant have entered into that
certain asset purchase agreement dated December 10, 2004 (the "Asset Purchase
Agreement"), pursuant to which RMC is purchasing substantially all of the assets
of Ronco Inventions, LLC, Popeil Inventions, Inc., and RP Productions, Inc.;
WHEREAS, it is a condition to the closing of the transaction under the
Asset Purchase Agreement that RMC and Consultant enter into this Agreement; and
WHEREAS, RMC desires to retain Consultant as an independent contractor
to perform certain consulting services for RMC and Consultant is willing to
perform such services, on terms set forth more fully below.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth herein, the parties, intending to be legally
bound, hereby agree as follows:
1. Services.
(a) General Consulting and Advisory Services. In accordance with the
terms and conditions set forth in this Agreement, during the Term (as defined
below) Consultant agrees to render general business advice to RMC regarding
operational and strategic matters for RMC related to the consumer home products
business (the "Consulting Services") at such reasonable times during normal
business hours as Consultant determines in his sole and absolute discretion and
further subject to any prior commitments described in Section 1(c) below.
(b) Personal Appearance Services. In accordance with the terms and
conditions set forth in this Agreement, during the Term Consultant agrees to
make certain personal appearances ("Personal Appearance Services"). Each
personal appearance will be performed after reasonable notice to Consultant (as
described below) at such reasonable times as Consultant determines in his sole
and absolute discretion and in each case, unless marked by an asterisk (*), at
Consultant's sole and absolute discretion.
(1) Chief Public Spokesperson. Upon at least 25 days prior
written request from RMC, Consultant may make a personal appearance at the time
and location and for the purpose specified in the written request to speak as
RMC's "chief public spokesperson" for non-financial matters (principally product
endorsements for the products acquired by RMC under the Asset Purchase Agreement
or the New Product Development Agreement by and between RMC and Consultant,
dated of even date herewith (the "New Product Development Agreement")). Such
appearance may be in any form of media not otherwise covered in Section 1(b) of
this Agreement. Such written request, must clearly identify the following
matters, and any other matters reasonably requested by Consultant: (a) the date,
time and location of such appearance, (b) the purpose of such appearance, (c)
the form, nature and broadcast scope of the media for such appearance (e.g.,
television, radio, internet, print media interviews or some other form of media
broadcast, a day-time talk show or variety show or some other nature, and
whether the media is internationally, nationally or locally broadcast or some
part thereof), (d) the reasonably anticipated time commitment for Consultant to
make such personal appearance (including in the calculation the number of days
to travel to and from such location), (e) a copy of any script or notice that a
script for such appearance is being prepared and (f) the amount of compensation
(including expense reimbursement) RMC is offering to pay Consultant for each
calendar day of such personal appearance and travel to and from the location of
such personal appearance. Consultant will have up to 15 days from receipt of
such request to accept, in writing, such request to make the personal appearance
or to negotiate with RMC and agree, in writing, on modified terms pursuant to
which Consultant will make such personal appearance. If Consultant does not
accept such written request in writing within such 15-day period, Consultant
will be deemed to have rejected such request and will not be obligated to make
such appearance. For purposes of clarity, Consultant will have the sole and
absolute discretion to make such requested appearance and will have no
obligation to make any such requested appearances.
(2) National Television Broadcasts. Upon at least 25 days
prior written request from RMC, Consultant may make a personal appearance to
promote the image of RMC (principally by promoting the products sold to RMC
under the Asset Purchase Agreement or the New Product Development Agreement) by
appearing on (a) national broadcast network (i.e., ABC, CBS, FBC, NBC, UPN and
WB) variety news or talk shows, such as "The Today Show" or "60 Minutes," or
(ii) nationally syndicated variety news or talk shows (e.g., "Oprah," "Xxxxx").
Such written request, must clearly identify the following matters, and any other
matters reasonably requested by Consultant: (a) the date, time and location of
such appearance, (b) the purpose of such appearance, (c) the type of broadcast
for such appearance, (d) the reasonably anticipated time commitment for
Consultant to make such personal appearance (including in the calculation the
number of days to travel to and from such location), and (e) a copy of any
script (including the interviewers proposed and final interview questions) or
notice that a script for such appearance is being prepared. Consultant will have
up to 15 days from receipt of such request to accept, in writing, such request
to make the personal appearance or to negotiate with RMC and agree, in writing,
on modified terms pursuant to which Consultant will make such personal
appearance. If Consultant does not accept such written request, as may be
modified above, in writing within such 15-day period, Consultant will be deemed
to have rejected such request and will not be obligated to make such appearance.
For purposes of clarity, Consultant will have the sole and absolute discretion
to make such appearance and will have no obligation to make any such
appearances. Notwithstanding the foregoing or anything to the contrary contained
herein, in no event shall Consultant be asked to make more than six (6) such
appearances in the aggregate per year nor shall Consultant be required to make
any appearance hereunder on any show which is telecast on any so-called "direct
response marketing" network (e.g., QVC, HSN, etc.).
(3) National Retailers. Upon at least 25 days prior written
request from RMC, Consultant may make a personal appearance to promote the
products sold to RMC under the Asset Purchase Agreement or the New Product
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Development Agreement at a Lead National Retailer. Such written request, must
clearly identify the following matters, and any other matters reasonably
requested by Consultant: (a) the date, time and location of such appearance, (b)
the purpose of such appearance, (c) the name of the Lead National Retailer at
which such appearance will take place, (d) the reasonably anticipated time
commitment for Consultant to make such personal appearance (including in the
calculation the number of days to travel to and from such location), and (e) a
copy of any script or notice that a script for such appearance is being
prepared. Consultant will have up to 15 days from receipt of such request to
accept, in writing, such request to make the personal appearance or to negotiate
with RMC and agree, in writing, on modified terms pursuant to which Consultant
will make such personal appearance. If Consultant does not accept such written
request, as may be modified above, in writing within such 15-day period,
Consultant will be deemed to have rejected such request and will not be
obligated to make such appearance. For purposes of this Section 1(b)(3), a Lead
National Retailer will be a major national retail chain of stores (e.g.,
WalMart, Xxxx'x Home Improvement Warehouses, The Home Depot). For purposes of
clarity, Consultant will have the sole and absolute discretion to make such
appearance and will have no obligation to make any such appearances.
(4) Infomercials.* Consultant will make on-screen appearances
in up to three (3) Infomercials per year for consumer products sold under the
Asset Purchase Agreement or the New Product Development Agreement. However, RMC
must provide Consultant with a written request at least 25 days prior to the
scheduled start of principal photography of such Infomercial, requesting
Consultant to appear in such Infomercial. Such written request, must clearly
identify the following matters, and any other matters reasonably requested by
Consultant: (a) the date, time and location for such appearance(s), (b) the
product being marketed and promoted in such Infomercial, (c) the reasonably
anticipated time commitment/duration of Consultant to appear in such Infomercial
(including in the calculation the number of days to travel to and from such
location), and (d) a copy of any script or notice that a script for such
Infomercial is being prepared. Consultant will have up to 15 days from receipt
of such request to accept, in writing, such request to appear in such
Infomercial or to negotiate with RMC and agree, in writing, on modified terms
pursuant to which Consultant will appear in such Infomercial. If Consultant does
not accept such written request in writing within such 15-day period, Consultant
will be deemed to have rejected such request and will not be obligated to appear
or otherwise participate in such Infomercial. For purposes of clarity,
Consultant will have the sole and absolute discretion to participate in such
requested Infomercial; provided, however, Consultant must appear in at least
three (3) reasonably requested Infomercials per year. With respect to each
Infomercial in which Consultant agrees to appear, Consultant shall have a right
of prior, meaningful active consultation and reasonable approval over all
material creative elements relating to such Infomercial, including without
limitation the development of such Infomercial, the script for such Infomercial,
the set design for such Infomercial, the host(s) or other spokespersons for such
Infomercial, and all marketing and advertising materials relating to such
Infomercial. For purposes of this Agreement, "Infomercial" means a long,
information-rich, television advertisement not to exceed 30 minutes in length
devoted exclusively to promoting goods. For purposes of clarity, Consultant will
have satisfied his obligations under this Section 1(a)(4) if he appears for the
principal photography (to the extent required) and participates in any looping
or dubbing in connection therewith that is necessary for the completion of three
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(3) Infomercials in any consecutive 12 calendar months beginning on the
Effective Date and continuing until the expiration of the Term, regardless of
whether any such Infomercial is ultimately broadcast or otherwise exploited in
any manner.
(5) Investor "Road Shows". Upon at least 25 days prior written
request from RMC, Consultant may make a personal appearance at an RMC investor
"road show" to speak as to non-financial matters (principally product
endorsements for the products acquired by RMC under the Asset Purchase Agreement
or the New Product Development Agreement). Such written request, must clearly
identify the following matters, and any other matters reasonably requested by
Consultant: (a) the date, time and location of such appearance, (b) the purpose
of such appearance, (c) the parties to whom Consultant is requested to speak to,
and (d) the reasonably anticipated time commitment for Consultant to make such
personal appearance (including in the calculation the number of days to travel
to and from such location). Consultant will have up to 15 days from receipt of
such request to accept, in writing, such request to make the personal appearance
or to negotiate with RMC and agree, in writing, on modified terms pursuant to
which Consultant will make such personal appearance. If Consultant does not
accept such written request in writing within such 15-day period, Consultant
will be deemed to have rejected such request and will not be obligated to make
such appearance. For purposes of clarity, Consultant will have the sole and
absolute discretion to make such requested appearance and will have no
obligation to make any such requested appearances.
(6) Gourmet Show and Housewares Show.* Consultant will and attend and
reasonably participate in the annual Gourmet Show* and the annual Housewares
Show.* With respect to both the Gourmet Show and the Housewares Show, RMC must
first, however, present Consultant with a written notice at least 25 days prior
to the date of either show detailing the following information: (a) the date,
time and location of Consultant's required appearance, (b) the reasonably
anticipated time commitment/duration of Consultant's required appearance, (c)
the product being marketed and promoted at such show and (d) the scope of
Consultant's participation. Consultant will comply with all reasonable requests
by RMC to participate in either show, one time per year for each show. For
purposes of this Agreement, "Gourmet Show" means a gourmet food and cooking
convention sponsored by __________ and "Housewares Show" means a housewares
convention sponsored by _________ .
(c) Preexisting Obligations. Notwithstanding anything in Section 1 of
this Agreement to the contrary, Consultant's obligations hereunder are subject
and subordinate to his preexisting obligations under that certain Agreement
dated February 27, 2004, by and between IGT and Consultant (including, but not
limited to, his personal appearance obligation at the Global Gaming Expo taking
place in Las Vegas, Nevada in the fall of 2005), and under that certain Option
Purchase Agreement dated February 2, 2001, by and among Lucky Brand Foundation
and Home Box Office.
(d) Services Distinct and Separate. The parties hereby acknowledge and
agree that Consultant's obligations under each of subsections 1(a) and 1(b)
above are separate, distinct and not conditioned upon Consultant's performance
or fulfillment of any obligations under the other such subsection, and
Consultant's failure or inability to render services under either of subsection
1(a) or 1(b) shall not be deemed a breach of Consultant's obligations under the
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other such subsection, nor shall any breach of either such subsection entitle
RMC to any right of offset, crediting or attachment to any consideration owing
to Consultant under the other such subsection.
2. Payment.
(a) Cash Component.
(i) Consulting Services. Provided Consultant makes himself
available (pursuant to the terms of subsection 1(a) above) to render the
Consulting Services during the Term, RMC shall pay Consultant compensation in
the amount of Five Hundred Thousand Dollars ($500,000.00) per year (the
"Compensation") in equal monthly installments, payable on the first (1st) day of
each month over the Term; provided that the first (1st) of such payments will be
paid concurrently with the execution hereof. RMC will also reimburse Consultant
for reasonable and customary business expenses incurred in connection with such
Consulting Services so long as Consultant: (i) provides to RMC reasonable
documentation relating to such expenses, and (ii) obtains prior authorization
from RMC for any expenses which are reasonably expected to exceed $5,000. Each
payment of the Compensation to Consultant will be made by wire transfer of
immediately available funds to an account specified in writing by Consultant and
all such payments shall be non-refundable. For the avoidance of doubt,
Consultant's entitlement to the Compensation shall not be conditioned on
Consultant's rendering of the Personal Appearance Services pursuant to
subsection 1(b) above.
(ii) Personal Appearance Services. RMC shall pay Consultant
the appearance fees, the amount and terms and conditions of which are set forth
in Schedule I for each of the personal appearances described in Section 1(b)
above. For the avoidance of doubt, Consultant's entitlement to the appearance
fees set forth on Schedule I shall not be conditioned on Consultant's rendering
of the Consulting Services pursuant to subsection 1(a) above.
(b) Equity Component. Consultant will be eligible to receive stock
options of RMC based on his contribution to RMC's growth, as determined by RMC's
board at its sole discretion.
3. Term and Termination.
(a) The Term of this Agreement shall be three (3) years, commencing on
the Effective Date set forth above (the "Term"), subject to early termination as
set forth below. The Term may be extended by mutual agreement of the parties.
Any extension will, however, be subject to the approval of the RMC board of
directors.
(b) Either party may terminate this Agreement (reserving cumulatively
all other remedies and rights under this Agreement at in law and in equity) in
the event that the other party materially breaches this Agreement by giving such
other party thirty (30) days' written notice thereof explaining in reasonable
detail the nature of the alleged breach; provided, however, that any such
termination shall not be effective if the breach has been cured prior to the
expiration of said thirty (30) days.
(c) Upon termination of this Agreement for any reason, RMC shall pay to
Consultant (or the Consultant's estate) all accrued but unpaid fees and expenses
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due as of the date of termination and shall have no further obligations
hereunder. The parties' respective rights and obligations under Sections
6,7,8,10,11,13,16, and 17 hereof shall survive the termination of this
Agreement, regardless of the reason for such termination.
4. Conflict of Interest Prohibited. Except with respect to Consultant's
pre-existing obligations described in Section 1(c) above or as may be permitted
under the New Product Development Agreement, during the term of this Agreement,
Consultant will not enter into any consulting services, advisory services or
employment agreement nor directly provide consulting or advisory services to any
entity or person that is in direct competition with the business acquired in the
Asset Purchase Agreement or pursuant to the New Product Development Agreement.
Except to the extent a conflict arises with respect to Consultant's pre-existing
obligations described in Section 1(c) above, the Asset Purchase Agreement or the
New Product Development Agreement, Consultant hereby represents and warrants
that the Consulting Services to be provided hereby will not result in any
conflict of interest (which includes, without limitation, the use of another's
confidential and proprietary information) with any of the Consultant's other
contracts for services or other employment, if any, and Consultant covenants to
take all actions necessary so that no such conflict arises during the Term of
this Agreement.
5. Independent Contractor Relationship. In accordance with the mutual
intentions of RMC and Consultant, this Agreement establishes between them an
independent contractor relationship, and all of the terms and conditions of this
Agreement shall be interpreted in light of that relationship. There is no
intention to create by this Agreement an employer-employee relationship.
6. Indemnification. Consultant will, to the extent permitted by law,
indemnify and hold harmless RMC from all claims, losses, and damages which may
arise from the breach of any of the representations, warranties, or obligations
under this Agreement. RMC will indemnify and hold harmless Consultant in
connection with any third party proceeding arising by reason of or in connection
with (e.g., as a result of Consultant's participation in investor "road shows")
Consultant's services hereunder if Consultant is not in material uncured breach
of this Agreement and has no obligation to indemnify RMC pursuant to the
preceding sentence. In addition, for so long as Consultant is providing
Consulting Services or Personal Appearance Services hereunder RMC shall include
Consultant as a named insured under RMC's product, general liability and errors
and omissions insurance policies (with combined limits of not less than Ten
Million Dollars (US$10,000,000)), all of which policies shall be issued by
reputable insurers with top A.M. Best (or substantially equivalent) ratings, and
shall provide Consultant with certificates of insurance evidencing this coverage
prior to any provision of Consulting Services or Personal Appearance Services
hereunder.
7. Consultant Responsible for Taxes. Without limiting any of the
foregoing, Consultant agrees to: (i) accept exclusive liability for the payment
of taxes or contributions for unemployment insurance or old age pensions or
annuities or social security payments which are measured by the wages, salaries
or other remuneration paid to Consultant or any of Consultant's Agents; and (ii)
reimburse and indemnify RMC for such taxes or contributions or penalties which
RMC may be compelled to pay. Consultant agrees to comply with all valid
administrative regulations respecting the assumption of liability for such taxes
and contributions.
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8. Ownership of Work Product. All of the results and proceeds of
Consultant's services hereunder during the Term (including without limitation
all products therefrom, if any) will belong exclusively to Consultant and will
not be considered a work made for hire for RMC within the meaning of Title 17 of
the United States Code. RMC and Consultant further acknowledge and agree that
during the Term Consultant will be developing new products and potentially
advising on improvements to products acquired under the Asset Purchase
Agreement, the New Product Development Agreement or otherwise acquired by RMC
and that all such products and/or improvements designed, developed or created by
Consultant (with or without the assistance of third parties), if any, will
belong to Consultant and may be sold by Consultant in his discretion to RMC, if
at all, pursuant to the terms of the New Product Development Agreement.
9. No Assignments by Consultant. Consultant may not assign or transfer
any rights, or delegate any duties, under this Agreement without RMC's prior
written consent, and any attempt of assignment, transfer or delegation without
such consent shall be void. RMC may not assign or transfer any rights, or
delegate any duties, under this Agreement without Consultant's prior written
consent, and any attempt of assignment, transfer or delegation without such
consent shall be void. Notwithstanding the foregoing, RMC may assign all its
rights and delegate all its obligations as part of a merger, reorganization or
sale of all or substantially all its assets.
10. Governing Law. This Agreement shall be governed by the laws of the
State of California without regard to principles of conflict of laws.
11. Severability. If any provision of this Agreement or the application
thereof is determined to be invalid, illegal or unenforceable, the remaining
provisions of this Agreement shall remain in full force and effect without
regard to the invalidity of such provision, and this Agreement shall be
construed as if such provision had never been contained herein.
12. Waiver; Amendment. No waiver of any breach of any provision of this
Agreement shall be construed to be, or shall be, a waiver of any other breach of
this Agreement. No waiver shall be binding unless in writing and signed by the
party waiving the breach. This Agreement may be modified only with a written
instrument duly executed by each of the parties
13. Notice. All notices, requests, demands and other communications
under this Agreement shall be deemed to have been sufficiently given either when
delivered by hand, first-class mail (postage pre-paid, return receipt
requested), private courier service or facsimile addressed to either party.
Notices shall be effective only when addressed as follows (or as otherwise
designated by proper notice under this Agreement):
RMC: Ronco Marketing Corporation
Attention: Xxxxxxx Xxxxx
00000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
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With a copy to:
Xxxxxxx Azafrani, Esq.
00000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Consultant: Xxxxxx X. Xxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxx, Xxxxxx & Xxxxxx L.L.P.
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxx
14. Compliance with Law. Consultant shall comply with any and all
applicable laws and regulations relating to this services hereunder including
but not limited to health, safety and security rules and regulations which are
now in effect or which may become applicable.
15. Mutual Drafters. Each party has cooperated in the drafting and
preparation of this Agreement, and this Agreement shall not be construed against
any party on the basis that such party was the drafter.
16. Advice of Counsel. In entering this Agreement, each party hereto has
relied upon the advice of counsel, or has been advised, and has had reasonable
time and opportunity, to consult counsel of its own choosing. Each party, and
its counsel, has completely read, fully understands, and voluntarily accepts the
terms of this Agreement.
17. Dispute Resolution. Any dispute arising out of or relating to this
Agreement shall be resolved in accordance with the procedures set forth in
Section 11.10 of the Asset Purchase Agreement, which section shall be
incorporated herein by reference. In the event of any arbitration or other
action for the breach of this Agreement or misrepresentation by any party, the
prevailing party in such arbitration or other action shall be entitled, in
addition to all other relief, to reasonable attorneys' and experts' fees
relating to such arbitration or other action, including attorneys' and experts'
fees incurred in any proceeding to compel arbitration. The non-prevailing party
shall be responsible for all costs of the arbitration or litigation, including
but not limited to, the arbitration fees, court reporter fees, etc.
18. Entire Agreement. This instrument constitutes and contains the entire
agreement and final understanding between the parties, and supersedes all prior
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negotiations and agreements, proposed or otherwise, whether written or oral,
covering the subject matter hereof.
19. Section Headings. Section headings are used for ease of reference only
and are not controlling.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
RONCO MARKETING CORPORATION
-------------------
By:
Its:
CONSULTANT
--------------------
Xxxxxx X. Xxxxxx
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Schedule I
Payment
Payment Terms:
Personal Appearance Fees
Chief Public Spokesperson
Consultant and RMC will negotiate the fee for chief public spokesperson on a
fair and reasonable basis as and when appearance requests arise. Each payment
hereunder to Consultant will be made by wire transfer of immediately available
funds to an account specified in writing by Consultant and all such payments
shall be non-refundable.
Nationally Broadcast Television Programs
RMC will pay Consultant, in advance (based on the estimated time commitment in
the accepted written request notice), $10,000 per calendar day for appearances
on Nationally Broadcast Television Programs. Such calculation will also include
$10,000 per calendar day for travel to and from such Nationally Broadcast
Television Programs. For any calendar days Consultant was required to
participate to complete such obligation in excess of the amount prepaid (so long
as such additional days are not the result of an unreasonable delay by
Consultant), RMC will promptly pay Consultant upon completion of such personal
appearance such additional fees, calculated in the same manner as above, as were
not prepaid. Each payment hereunder to Consultant will be made by wire transfer
of immediately available funds to an account specified in writing by Consultant
and all such payments shall be non-refundable.
Lead National Retailers
RMC will pay Consultant, in advance (based on the estimated time commitment in
the accepted written request notice), $10,000 per calendar day for appearances
at Lead National Retailers. Such calculation will also include $10,000 per
calendar day for travel to and from such Lead National Retailers. For any
calendar days Consultant was required to participate to complete such obligation
in excess of the amount prepaid (so long as such additional days are not the
result of an unreasonable delay by Consultant), RMC will promptly pay Consultant
upon completion of such personal appearance such additional fees, calculated in
the same manner as above, as were not prepaid. Each payment hereunder to
Consultant will be made by wire transfer of immediately available funds to an
account specified in writing by Consultant and all such payments shall be
non-refundable.
Production of Infomercials
RMC will pay Consultant, in advance, the sum of $50,000 for each infomercial
Consultant participates in the production of (without residuals). Each payment
hereunder to Consultant will be made by wire transfer of immediately available
funds to an account specified in writing by Consultant and all such payments
shall be non-refundable.
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Xxxxxxxx Xxxx Shows, Gourmet Show and Housewares Show
RMC will pay Consultant, in advance (based on the estimated time commitment in
the accepted written request notice), $50,000 per calendar day for appearances
at "investor road shows," the Gourmet Show and the Housewares Show. Such
calculation will also include $50,000 per calendar day for travel to and from
such appearances. For any calendar days Consultant was required to participate
to complete such obligation in excess of the amount prepaid (so long as such
additional calendar days are not the result of an unreasonable delay by
Consultant), RMC will promptly pay Consultant upon completion of such personal
appearance such additional fees, calculated in the same manner as above, as were
not prepaid. Each payment hereunder to Consultant will be made by wire transfer
of immediately available funds to an account specified in writing by Consultant
and all such payments shall be non-refundable.
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