CONSULTING AGREEMENT
THIS AGREEMENT is made and entered into as of October 1, 2001 (the
"Agreement"), by and between Western Media Group Corporation, a Minnesota
corporation, ("WMGC"), and Xxxxxx X. Xxxxxxx ("Xxxxxxx").
WHEREAS, WMGC is currently a development stage company, with one
subsidiary, K-Rad Konsulting, LLC ("K-Rad"), which has been seeking merger or
acquisition opportunities;
WHEREAS, WMGC is currently in discussions with several companies
concerning merger or acquisition opportunities; and
WHEREAS, WMGC currently has only a single director, no employees, and
limited funds; and
WHEREAS, WMGC seeks assistance, in view of foregoing merger
transactions, from a consultant to provide services in assisting WMGC with legal
and regulatory issues in exchange for WMGC $.01 par value per share common stock
("Common Stock"); and
WHEREAS, Rametra, a securities and corporate attorney wishes to provide
such services to WMGC in exchange for Common Stock as set forth herein;
NOW, THEREFORE the parties agree as follows:
1 TERM OF AGREEMENT. This Agreement shall commence as of October 1,
2001and shall continue for twelve (12) months thereafter. This
Agreement shall be renewable for an additional twelve (12) months at
the option of WMGC. WMGC may terminate this Agreement upon thirty (30)
days written notice to Rametra.
2 SERVICES TO BE PROVIDED.
2.1 Rametra shall perform the functions of a corporate general
counsel to WMGC and shall perform the following principal duties
and responsibilities:
2.1.1 providing assistance to WMGC in complying with applicable
legal and regulatory requirements imposed by the federal
securities laws, the Securities and Exchange Commission and
Minnesota, New York and Delaware law, including, but not
limited to, providing advice with respect to restricted
stock issues and issues arising under Section 16 of the
Securities Exchange Act of 1934, as amended;
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2.1.2 assistance with structuring and administration of employee
benefit arrangements;
2.1.3 assistance in the preparation of, and review of all SEC
filings, including, but not limited to, filings on forms
8-K, 10-K and 10-Q;
2.1.4 providing advice to WMGC with respect to corporate
governance issues under Federal, Minnesota and New York law;
2.1.5 assistance in preparation and analysis of all contracts
entered into in the ordinary course of WMGC's business; and
2.1.6 providing assistance to WMGC's outside counsel with respect
to litigation or corporate matters as may be reasonably
requested.
2.2 Rametra understands that he is not an employee of WMGC, that WMGC
is not required to provide him with workers' compensation or
health insurance, and that Rametra is responsible for payment of
all taxes relating to payments made to him hereunder by WMGC.
2.3 EXCLUSIVITY. This Agreement shall not be exclusive; provided,
however, that Rametra shall devote most of his business time to
WMGC. In the event that Rametra wishes to devote more than five
hours per week to performing services to another entity or
person, whether or not such services are similar to those to be
performed hereunder, Rametra shall first seek WMGC's wriiten
consent, which consent shall not be withheld unless: (i) the
services will interefere with the services to be performed
hereunder or (ii) the provision of services will, or create the
substantial likelihood of a violation of this Agreement.
2.4 WORK SCHEDULE. Rametra shall provide services to WMGC Monday
through Friday, exclusive of legal holidays.
2.5 PLACE OF PERFORMANCE OF SERVICES. Services shall be performed by
Rametra (i) at WMGC's offices when necessary or requested by
WMGC, (ii) wherever a current or potential client or strategic
partner of a WMGC subsidiary is located when necessary or
requested by WMGC and (iii) when not required or requested to
perform services elsewhere, at such place as Rametra may choose
with access by both telephone and facsimile service.
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3 COMPENSATION. As compensation for the services to be provided
hereunder, WMGC agrees to pay Rametra a total of one million four
hundred forty thousand (1,440,000) shares of its Common Stock
which shall be issuable as follows: (1) seventy five percent
(75%) upon approval of this Agreement by the WMGC Board of
Directors and filing of a registration statement on Form S-8 as
set forth below and (2) twenty five percent (25%) eight months
after the date of commencement of the Term of this Agreement,
unless this Agreement shall be terminated pursuant to its terms
prior to that date. Rametra shall also receive an option to
purchase one million two hundred thousand (1,200,000) shares of
Common Stock at $.02 per share which shall vest eight (8) months
after the commencement of the term of this Agreement (the
"Option"), unless this Agreement shall be terminated pursuant to
its terms prior to that date. In the event that WMGC is unable to
register the Common Stock on Form S-8 within three (3) months of
the date of this Agreement, it shall be issued with the following
restrictive legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT") OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (I) AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE 1933 ACT
AND AN EFFECTIVE REGISTRATION OR QUALIFICATION OF SUCH SECURITIES
FOR SALE UNDER ANY APPLICABLE STATE SECURITIES LAW; OR (II) AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION AND QUALIFICATION IS NOT REQUIRED.
In the event that WMGC exercises its option to extend the Term of
this Agreement for an additional twelve (12) months, WMGC shall pay Rametra (1)
$10,000 per month either (i) in cash or (ii) in Common Stock at a 20% discount
to the prevailing market value on the last business day of each month and (2) an
option to purchase 1.2 million shares of Common Stock at fair market value on
October 1, 2002.
4 REGISTRATION OF THE COMMON STOCK.
4.1 OBLIGATION TO REGISTER. WMGC shall use its best efforts to
register the Common Stock to be issued hereunder, and the Common
Stock issuable upon exercise of the Option, on Form S-8 to permit
the resale of the Common Stock by Rametra (the "Registration
Statement"). In addition, WMGC shall:
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4.1.1 furnish to Rametra, without charge, as many copies of the
Registration Statement, the Prospectus and any amendment or
supplement thereto as they may reasonably request;
4.1.2 use its best efforts to comply with all applicable Federal and
state regulations, and take such other action as may be
reasonably necessary or advisable to enable Rametra to consummate
the sale or disposition in such jurisdictions or jurisdictions in
which Rametra shall have requested that the Common Stock be sold;
PROVIDED that WMGC shall not be required (i) to qualify generally
to do business as a foreign corporation in any jurisdiction
wherein it would not otherwise be obligated to be so qualified,
(ii) to subject itself to taxation in any such jurisdiction
solely by reason of such registration or qualification or (iii)
to consent to general service of process in any jurisdiction.
4.1.3 Except as otherwise provided in this Agreement, WMGC shall have
sole control in connection with the preparation, filing,
withdrawal, amendment or supplementing of the Registration
Statement, and may include within the coverage thereof additional
shares of Common Stock or other securities for the account of one
or more of its other security holders.
4.1.4 Rametra shall furnish to WMGC such information regarding the
distribution of the Common Stock and such other information as
may otherwise be required by the Securities Act to be included in
the Registration Statement.
4.2 INDEMNIFICATION.
4.2.1 INDEMNIFICATION BY WMGC. In connection with the Registration
Statement relating to disposition of the Common Stock, WMGC shall
indemnify and hold harmless Rametra against any and all losses,
claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of any action,
suit or proceeding or any claim asserted), to which he may become
subject under the Securities Act of 1933, as amended (the
"Securities Act"), the Securities Exchange Act of 1934 (the
"Exchange Act"), as amended or other Federal or state law or
regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus or such
amendment or supplement thereto, or arise out of or are based
upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading; PROVIDED, HOWEVER, that such
indemnity shall not inure to the benefit of Rametra on account of
any losses, claims, damages or liabilities arising from the sale
of the Common Stock if such untrue statement or omission or
alleged untrue statement or omission was made in such
Registration Statement, Prospectus or such amendment or
supplement, in reliance upon and in conformity with information
furnished in writing to WMGC by Rametra specifically for use
therein. This indemnity agreement shall be in addition to any
liability that the WMGC may otherwise have.
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4.2.2 INDEMNIFICATION BY RAMETRA. In connection with the Registration
Statement, Rametra shall indemnify, to the same extent as the
indemnification provided by WMGC in Section 4.2.1. Rametra will
indemnify WMGC, its directors and each officer who signs the
Registration Statement and each person who controls WMGC (within
the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), only insofar as such losses, claims, damages
and liabilities arise out of or are based upon any untrue
statement or omission or alleged untrue statement or omission
made in the Registration Statement, the Prospectus or any
amendment thereof or supplement thereto, in reliance upon and in
conformity with information furnished by Rametra in writing to
WMGC, specifically for use therein. Rametra's liability shall not
be greater than the dollar amount of the net proceeds Rametra
receives upon the sale of the Common Stock giving rise to such
indemnification obligation.
4.2.3 CONDUCT OF INDEMNIFICATION PROCEDURE. Any party that proposes to
assert the right to be indemnified hereunder will, promptly after
receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim is to
be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement
of such action, suit or proceeding, enclosing a copy of all
papers served. No indemnification provided for in Section 4.2.1
or 4.2.2 shall be available to any party who shall fail to give
notice as provided in this Section 4.2.3 if the party to whom
notice was not given was unaware of the proceeding to which such
notice would have related and was prejudiced by the failure to
give such notice, but the omission so to notify such indemnifying
party of any such action, suit or proceeding shall not relieve it
from liability that it may have to any indemnified party for
contribution or otherwise than under this Section. In case any
such action, suit or proceeding shall be brought against any
indemnified party and it shall notify the indemnifying party of
the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it shall
wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so
to assume the defense thereof and the approval by the indemnified
party of such counsel, the indemnifying party shall not be liable
to such indemnified party for any legal or other expenses, except
as provided below and except for the reasonable costs of
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investigation previously incurred by such indemnified party in
connection with the defense thereof. The indemnified party shall
have the right to employ its counsel in any such action, but the
fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of counsel by such
indemnified party has been authorized in writing by the
indemnifying parties, (ii) the indemnified party shall have
reasonably concluded, based on advice of counsel, that there may
be a conflict of interest between the indemnifying parties and
the indemnified party in the conduct of the defense of such
action (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the
indemnified party) or (iii) the indemnifying parties shall not
have employed counsel to assume the defense of such action within
a reasonable time after notice of the commencement thereof, in
each of which cases the fees and expenses of counsel shall be at
the expense of the indemnifying parties. An indemnifying party
shall not be liable for any settlement of any action, suit,
proceeding or claim effected without its written consent.
4.2.4 CONTRIBUTION. In connection with the Registration Statement
relating to the disposition of the Common Stock, if the
indemnification provided for in subsection 4.2.1 hereof is
unavailable to an indemnified party thereunder in respect of any
losses, claims, damages or liabilities referred to therein, then
WMGC shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities.
The amount to be contributed by WMGC hereunder shall be no
greater than the proceeds of the same of the Common Stock by
Rametra.
4.2.5 SPECIFIC PERFORMANCE. WMGC and Rametra acknowledge that remedies
at law for the enforcement of Sections 4.2.1 through 4.2.4 may be
inadequate and intend that those Sections shall be specifically
enforceable.
5 INDEPENDENT CONTRACTOR STATUS. Both WMGC and Rametra agree that Rametra
shall be acting as an independent contractor and not as an employee,
servant or agent of WMGC. Accordingly, it is agreed that Rametra shall
not have any authority to act for or on behalf of WMGC or to bind WMGC
without its express consent. Rametra shall not be considered as having
employee status for the purpose of any employee benefit plan applicable
to WMGC's employees generally. Rametra is responsible for the payment
of any taxes relating to payments made to him hereunder by WMGC.
6 RAMETRA'S REPRESENTATIONS AND WARRANTIES.Rametra hereby represents and
warrants to WMGC as follows:
6.1 AUTHORITY. Rametra has full power and authority to execute and
deliver, to perform his obligations under, and to consummate the
transactions contemplated by this Agreement. This Agreement is a
valid and legally binding obligation of Rametra, enforceable
against him in accordance with its terms. Rametra is not
restricted or prohibited, contractually, by court order,
agreement or otherwise, from entering into and performing this
Agreement, and the services to be performed hereunder, and
Rametra's's execution and performance of this Agreement is not a
violation or breach of any agreement between Rametra and any
other person or entity.
7 WMGC'S REPRESENTATION AND WARRANTIES. WMGC hereby represents and
warrants to Rametra as follows:
7.1 ORGANIZATION. WMGC is a corporation duly organized, validly
existing and in good standing under the laws of Minnesota, and
has full corporate power and authority to conduct its business as
and to the extent now conducted and to own, use and lease its
assets and properties. WMGC has full corporate power and
authority to execute and deliver this Agreement and the Common
Stock and to perform its obligations hereunder and to consummate
the transactions contemplated hereby.
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7.2 AUTHORITY; DUE AUTHORIZATION. The execution and delivery by WMGC
of this Agreement and the Common Stock, and the performance by
WMGC of its obligations hereunder, have been duly and validly
authorized by the WMGC Board of Directors, no other corporate
action on the part of WMGC or its respective shareholders being
necessary. This Agreement has been duly and validly executed and
delivered by WMGC and constitutes legal, valid and binding
obligations of WMGC enforceable against WMGC in accordance with
its terms.
7.3 NO CONFLICTS. The execution and delivery by WMGC of this
Agreement does not, and the consummation of the transactions
contemplated hereby will not:
7.3.1 conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the certificate of
incorporation or by-laws (or other comparable corporate charter
document) of WMGC;
7.3.2 conflict with or result in a violation or breach of any term or
provision of any law or order applicable to WMGC or any of its
assets and properties; or
7.3.3 (a) conflict with or result in a violation or breach of, (b)
constitute (with or without notice or lapse of time or both) a
default under, (c) require WMGC or any other person or entity to
obtain any consent, approval or action of, make any filing with
or give any notice to any person or entity as a result or under
the terms of, or (d) result in the creation or imposition of any
lien upon WMGC or any of its assets or properties under, any
contract or license to which WMGC is a party or by which any of
its assets and properties is bound.
8 TERMINATION. Either party may terminate this Agreement upon thirty
(30) days notice to the other. However, in the event of a termination
by Rametra, he shall be obligated to return the pro rata portion of
the Common Stock represented by the number of months remaining to be
performed under this Agreement, divided by twelve (12). In the event
of termination of this Agreement by Rametra, all provisions of
Section 9 shall remain in effect.
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9 NON-DISCLOSURE AND NON-SOLICITATION.
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9.1 CONFIDENTIAL INFORMATION. Rametra shall not, during the term of
this Agreement, directly or indirectly, divulge, disclose or
communicate to any person, firm, or corporation, any Confidential
Information (as defined herein), except as may be required by law
or valid legal process. If Rametra is served with formal legal
process requesting any Confidential Information, Rametra shall
notify WMGC within three (3) business days of receipt of the
request and provide WMGC with a copy of the request.
"Confidential Information" shall mean any matters affecting or
relating to the business of WMGC which derives economic value,
actual or potential, from not being generally known to the public
or trade, including, but not limited to, all customer lists,
names and addresses of customers, contact persons at customers,
agreements or arrangements with customers, items usually
purchased by customers, supplier lists, names and addresses of
suppliers, contact persons at suppliers, agreements or
arrangements with suppliers, sales techniques, pricing and
prices, and marketing information or strategies. "Confidential
Information" shall not include matters generally known to the
public or trade. Rametra has been advised by WMGC that said
Confidential Information is proprietary to WMGC, and constitutes
a trade secret owned exclusively by WMGC, the disclosure of which
would be harmful and damaging to WMGC's business.
9.2 EXCEPTIONS CONCERNING CONFIDENTIAL INFORMATION. Notwithstanding
the foregoing provisions, use of Confidential Information shall
not violate Section 9.1 if used by Rametra in connection with the
provision of services hereunder.
9.3 WMGC MATERIALS. All reports and analysis, contracts, contractual
arrangements, proposed and actual pricing arrangements,
specifications, computer software, computer records and data
stored in WMGC's computers, computer printouts, computer disks,
documents, memoranda, notebooks, correspondence, files, lists and
other records, and the like, and all photocopies or other
reproductions thereof, affecting or relating to the business of
WMGC which Rametra shall prepare, use, construct, observe,
possess or control ("WMGC Materials"), shall be and remain the
sole property of WMGC. Upon termination of this Agreement,
Rametra shall deliver promptly to WMGC all such WMGC Materials
and any copies or excerpts thereof.
9.4 SOLICITATION OF CUSTOMERS. Rametra shall not, at any time during
the term of this Agreement, directly or indirectly, either for
himself or for any other person, firm, or corporation, compete
for, solicit, divert, or take away, or attempt to divert or take
away, any of the customers of WMGC who are customers during the
term of this Agreement or who were customers at the time of
termination of this Agreement.
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9.5 SOLICITATION OF EMPLOYEES, ETC. Rametra shall not, at any time
during the term of this Agreement, directly or indirectly, either
for himself or for any other person, firm, or corporation,
solicit (or seek to solicit) any person who is engaged (as an
employee, agent, independent contractor or someone similarly
situated) by WMGC to terminate his or her employment or
engagement.
10 MERGER, ETC., OF WMGC. In the event of a future disposition of the
properties and business of WMGC, substantially or in its entirety, by
merger, consolidation, sale of assets, or otherwise, then WMGC may
assign this Agreement and all of the rights and obligations of WMGC
under this Agreement to the acquiring or surviving corporation;
provided, that such acquiring or surviving corporation shall assume
in writing all of the obligations under this Agreement. However, if
the acquiring or surviving corporation declines to accept assignment
of this Agreement it shall be terminated and all payments to be made
hereunder.
11 GENERAL PROVISIONS.
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11.1 SEVERABLE PROVISIONS. The provisions of this Agreement are
severable, and if any one or more provisions may be determined to
be judicially unenforceable, in whole or in part, the remaining
provisions shall nevertheless be binding and enforceable.
11.2 ASSIGNMENT. This Agreement may not be assigned by WMGC or
Rametra, except as set forth in Section 10.
11.3 WAIVER. Either party's failure to enforce any provision or
provisions of this Agreement shall not be construed as a waiver
of any such provision or provisions, or prevent that party
thereafter from enforcing each and every other provision of this
Agreement.
11.4 ENTIRE AGREEMENT; AMENDMENTS. This Agreement between WMGC and
Rametra supersedes any and all other agreements, either oral or
in writing, between the parties hereto with respect to the
consulting arrangement between Rametra and WMGC and contains all
of the covenants and agreements between the parties with respect
to the consulting arrangement between Rametra and WMGC. Each
party to this Agreement acknowledges that no representations,
inducements, promises or agreements, orally or otherwise, have
been made by any party, or anyone acting on behalf of any party,
which are not embodied herein, and that no other agreement,
statement or promise not contained in this Agreement will be
effective unless it is in writing signed by the party to be
charged.
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11.5 TITLES AND HEADINGS.Titles and headings to sections of this
Agreement are for the purpose of reference only and shall in no
way limit, define or otherwise affect the interpretation or
construction of such provisions.
11.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original,
and all of which together shall constitute a single agreement.
11.7 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
11.8 NOTICES. Any notice to be given to WMGC under the terms of this
Agreement shall be addressed to WMGC at the address of WMGC's
principal place of business, with a copy to Guzov, Xxxxxxxx &
Ofsink, LLC, 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, and any notice to be given to Rametra shall be addressed
to Rametra at 00 Xxxx Xxxxx, Xxxxxxx, Xxx Xxxx 00000, or at such
other address as either party may hereafter designate in writing
to the other. Any notice required or permitted under this
Agreement shall be in writing, shall be sent by certified mail,
return receipt requested, or by hand, and shall be deemed
effective: (i) upon receipt in the event of delivery by hand,
including delivery made by private delivery or overnight mail
service where either the recipient or delivery agent executes a
written receipt or confirmation of delivery; or (ii) 48 hours
after deposited in the United States mail, registered or
certified mail, return receipt requested, postage prepaid.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
Xxxxxx X. Xxxxxxx
WESTERN MEDIA GROUP CORPORATION
a Minnesota corporation
By:_________________________
Title:
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