Exhibit 10.2
SERVICES AGREEMENT
This Services Agreement (the "Agreement") is entered into as of April
26, 2001 between Sinclair-Davis Trading Corp., a New York corporation
("Sinclair-Davis"), and Videolocity International, Inc., a Nevada corporation
("Client").
WHEREAS, Sinclair-Davis is in business of planning, developing and
implementing marketing and public relations services campaigns for corporations
and other business entities;
WHEREAS, Client desires to retain Sinclair-Davis to provide services to
Client, and Sinclair-Davis desires to provide such services to Client, pursuant
to the terms, conditions and provisions contained in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Term/Services. The term of this Agreement shall commence with the
date hereof and continue for a period of eighteen months. During the term of the
Agreement, Sinclair-Davis shall assemble and manage a team of one or more
professionals to provide Client with the following services and/or undertake the
following tasks, as the case may be (collectively referred to herein as the
"Services"):
A. Attract and maintain reputable market makers of and for
Client's common stock.
B. Posture and present Client in the investment community through
various actions, including but not limited to: (i)
implementation of a national investor relations program; (ii)
assistance with format, layout, presentation and timelines of
Client's financial results in each Annual Report to
Shareholders, press release, proxy statement and report on
Form 10-KSB and 10-QSB; (iii) attraction of media and trade
publication coverage of Client and/or its products; and (iv)
arranging and managing presentation of Client by its senior
management to strategic members of the investment community
such as brokers, stockholders, financial analysts, other
investment bankers, and institutions.
C. Assist Client in implementing its strategic plan, including
but not limited to: (i) design and development of merger and
acquisition (M&A) strategies; (ii) identification and
introduction of M&A candidates for such strategies; (iii)
analysis of M&A proposals and counter-proposals (iv)
development and implementation of a cash investment and
management program, (v) analysis of and advice in relation to
the Company's anticipated cash needs; and, (vi) identification
and introduction to potential joint venture and/or trading
partners.
All such Services shall be performed by Sinclair-Davis in a first-class and
professional manner, and Sinclair-Davis shall at all times conduct its
activities in accordance with all applicable federal, state and local laws and
regulations.
2. Representation and Warranties of Client. Client represents and
warrants to Sinclair-Davis that:
A. Organization. Client is a corporation duly organized, validly
existing and in good standing under the laws of the State of
its incorporation, and it is duly qualified to do business as
a foreign corporation in each jurisdiction in which it owns or
leases Property or engages in business and in which the
failure to so qualify would have a material adverse affect on
the business or financial condition of Client.
B. Formal Action. Client has the corporate power and authority to
execute and deliver this Agreement and to perform each of its
obligations hereunder, and this Agreement has been duly
approved by Client's Board of Directors.
C. Valid and Binding Agreement. This Agreement has been duly
executed and delivered by Client and is the valid and binding
obligation of Client enforceable against it in accordance with
its terms, subject to subject to bankruptcy, insolvency,
fraudulent transfer, moratorium, reorganization and similar
laws of general applicability relating to or affecting
creditors' rights and to general principles of equity).
D. No Violation. The execution, delivery and performance of this
Agreement does not and will not violate any provisions of the
charter or bylaws of Client or any agreement to which Client
is a party or any applicable law or regulation or order or
decree of any court, arbitrator, agency or government
applicable to Client and no action of or filing with, any
governmental or public body or authority is required in
connection with the execution, delivery or performance of this
Agreement.
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E. Litigation. Except as Client has disclosed in its public
filings with the Securities and Exchange Commission (the
"Commission"), there is no action, suit or proceeding which
could reasonably be expected to have a material adverse effect
on Client, which is pending or, to the knowledge of Client,
threatened against Client.
F. Accuracy of Information. Client has provided Sinclair-Davis
with copies of its annual report on Form 10-KSB for the fiscal
year ended October 31, 2000, its quarterly report on Form
10-QSB for the fiscal quarter ended January 31, 2001, and its
current report on Form 8-K dated January 5, 2001, as amended
March 6, 2001, all of which have been filed with the
Commission (collectively referred to as the "Information
Package"). Client represents and warrants that the reports
contained in the Information Package are accurate and complete
in all material respects as of their respective dates and do
not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
3. Covenants and Agreements of Client. Client agrees to comply with the
following covenants:
A. Client Certification. Client acknowledges that it is
responsible for the accuracy and completeness of the
Information Package and for all other information furnished to
Sinclair-Davis. Client agrees to promptly advise
Sinclair-Davis in writing of any condition, event,
circumstance or act that would constitute a material adverse
change in the business, properties, financial condition or
business prospects of Client or which would make any of the
information contained in the Information Package or in any
report or other document prepared by Sinclair-Davis for and on
behalf of Client misleading in any material respect. Client
agrees that Sinclair-Davis and its directors, officers, agents
and employees may rely on the Information Package and on all
other written information furnished by Client, and on each and
every certification provided by an authorized senior executive
officer of Client, until Sinclair-Davis is advised in writing
by an authorized senior executive officer of Client that the
information previously furnished to Sinclair-Davis is
inaccurate or incomplete in any material respect.
B. Books and Records. Client shall maintain true and complete
books, records and accounts in which true and correct entries
shall be made of its transactions in accordance with generally
accepted accounting principles consistently applied ("GAAP").
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C. Financial and Other Information. Client agrees to furnish to
Sinclair-Davis the following information:
(1) Annual Financial Statements. As soon as practicable
and in any event within 90 days after the end of
Client's fiscal year, annual financial statements
including a balance sheet, an income statement, a
statement of cash flows, and a statement of
stockholder's equity, and all notes thereto prepared
in accordance with GAAP and audited by an independent
certified public accountant. This requirement may be
satisfied by the delivery of a copy of Client's
annual report on Form 10-KSB as filed with the
Commission.
(2) Quarterly Financial Statements. As soon as
practicable, and in any event within 45 days after
the end of each of Client's fiscal quarters,
quarterly financial statements including a balance
sheet, a quarterly and year-to-date income statement,
a statement of cash flows, and a statement of
stockholder's equity, prepared by Client in
accordance with GAAP and certified by the chief
financial officer and chief executive officer of
Client as fairly presenting, subject to normal
year-end audit adjustments, Client' s financial
position as of and for the periods indicated. This
requirement may be satisfied by the delivery of
copies of Client's quarterly reports on Form 10-QSB
as filed with the Commission.
D. Sinclair-Davis' Reliance on Client's Full Disclosure. Client
will provide, or cause to be provided, to Sinclair-Davis all
financial and other information requested by Sinclair-Davis
for the purpose of rendering its services pursuant to this
Agreement. Client recognizes and confirms that Sinclair-Davis
will use such information in performing the services
contemplated by this Agreement without independently verifying
such information and that Sinclair-Davis does not assume any
responsibility for the accuracy or completeness of such
information. Client certifies that there is no fact, known to
it which materially adversely affects or may (so far as the
Client's senior management can now reasonably foresee)
materially adversely affect the business, properties,
condition (financial or other) or operations (present or
prospective) of Client which has not been set forth in written
form delivered by Client to Sinclair-Davis. Client agree to
keep Sinclair-Davis promptly informed of any facts hereafter
known to Client which materially adversely affect or may (so
far as the Client's senior management can now reasonably
foresee) materially adversely affect the business, properties,
condition (financial or other) or operations (present or
prospective) of Client.
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E. Relationship Of the Parties. This Agreement pertains to the
provision of Services by Sinclair-Davis to Client and the
provisions of this Agreement pertaining to compliance with
financial covenants, delivery of financial statements, and
similar provisions are intended solely to provide
Sinclair-Davis with information on which it may rely in
providing the Services hereunder. Nothing contained in this
Agreement shall be construed as permitting or obligating
Sinclair-Davis to act as a financial or business advisor or
consultant to Client, as permitting Sinclair-Davis to
participate in the management of Client's business, or as
creating or imposing any fiduciary obligations on
Sinclair-Davis with respect to Client or its business.
Sinclair-Davis shall have no duty or obligation to provide
services to Client other than the Services. Sinclair-Davis
shall have no authority to incur expenses on behalf of Client
unless first approved in writing or obligate Client to enter
into any agreement or arrangement or commit Client to any
course of action. Client acknowledges that it has had the
opportunity to obtain the advice of experienced counsel of its
own choosing in connection with the negotiation and execution
of this Agreement, the provision of Services hereunder and
with respect to all matters contained herein.
4. Compensation. Client agrees to compensate Sinclair-Davis as follows
for the provision of the Services hereunder:
A. Client shall issue Sinclair-Davis 200,000 restricted shares of
Client's Common Stock on the date of execution of this
Agreement.
B. Client shall issue Sinclair-Davis 200,000 restricted shares of
Client's Common Stock on that date which is three months from
the date of execution of this Agreement.
C. During the term of this Agreement, Sinclair-Davis shall have
the right to demand, on one occasion only, the registration
under the Securities Act of 1933, as amended, of those shares
of Client's Common Stock issued to Sinclair-Davis on or prior
to the date of such demand. Sinclair-Davis shall also be
entitled to "piggyback" registration rights (subject to the
customary exclusion from any registration statement based on
the reasonable objection of the managing underwriter), which
shall remain in effect until such time as the shares of
Client's Common Stock issued to Sinclair-Davis hereunder may
be sold without registration under Rule 144. Sinclair-Davis
shall cooperate with Client in connection with any
registration statement filed by Client with respect to shares
held by Sinclair-Davis and shall provide Client with such
information, affidavits and indemnifications as may be
reasonably requested by Client.
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D. Following a demand for registration by Sinclair-Davis, Client
will use its best efforts to file a registration statement on
Form S-3 on an expeditious basis and have it declared
effective at the earliest practicable date. In the event such
registration statement is not declared effective by the
Commission within 120 days of the exercise of the demand
registration right by Sinclair-Davis, Client will issue 20,000
additional shares of its restricted Common Stock to
Sinclair-Davis and will issue an additional 20,000 shares of
its restricted Common Stock to Sinclair-Davis for each 30 days
thereafter that the registration statement has not been
declared effective. Sinclair-Davis shall be entitled to
"piggyback" registration rights (subject to the customary
exclusion from any registration statement based on the
reasonable objection of the managing underwriter) with respect
to any additional shares issued under this subparagraph, which
rights shall remain in effect until such time as such
additional shares may be sold without registration under Rule
144.
E. The registration rights granted to Sinclair-Davis shall be
transferable to any third party or parties, who may acquire
the shares of Client's Common Stock from Sinclair Davis in a
lawful transaction with the same rights and subject to the
same restrictions as those applicable to Sinclair-Davis.
F. While not included in the Services and not currently
contemplated by Client, in the event Sinclair-Davis should
introduce Client to an acquisition, a buyout, financing and/or
a merger candidate, and a transaction is consummated, then
Client shall pay Sinclair-Davis a finder's fee in an amount to
be negotiated by the parties before Sinclair-Davis provides
any such introduction.
5. Date Shares Earned. The Shares issuable to Sinclair-Davis pursuant
to Sections 4(A) and 4(B) above shall be deemed to have been earned on the date
such shares are delivered pursuant to the terms of such sections.
6. Termination. This Agreement may be terminated: (i) upon written
notice by one party to the other party if the representations and warranties
made by the other party are proved to have been inaccurate in any material
respect; or (ii) upon written notice by one party to the other party if the
other party should be in default in the performance of the material terms or
provisions of this Agreement, and such defaulting party has failed to cure such
default within thirty (30) days following written notice of such default from
the non-defaulting party. In the event of termination by Sinclair-Davis, it may
immediately cease the performance of services for Client under this Agreement.
In the event of termination by Client, prior to the expiration of three months
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from the date of this Agreement, Client shall have no obligation to issue to
Sinclair-Davis the shares of Client's Common Stock described in Section 4(B) of
this Agreement.
7. Indemnification. Client agrees to indemnify Sinclair-Davis and hold
it harmless from all claims, damages, losses and expenses (including reasonable
attorney's fees) for claims caused by any material inaccuracy in the Information
Package or other written information provided by Client to Sinclair-Davis.
Sinclair-Davis agrees to indemnify Client and hold it harmless from all and all
claims, damages, losses and expenses (including reasonable attorney's fees) for
claims caused by violation by Sinclair-Davis of the terms and conditions of this
Agreement or of any state, federal or other governmental laws or regulations.
8. Confidentiality Information. Confidential Information means all
proprietary data, concepts, projections, strategies, client lists, marketing
plans, designs, processes, methods of operation, innovations, and other
information pertaining to the business operations and other activities of Client
and its affiliated companies. Sinclair-Davis shall use any Confidential
Information disclosed or provided to it by Client, whether orally, written, by
demonstration, in models or otherwise, only as permitted under this Agreement
and shall maintain all such Confidential Information in confidence and shall not
disclose or divulge such Confidential Information to any third party or to any
of its own personnel not having a need to know such information, provided that
Sinclair-Davis shall has informed its personnel of its obligations under this
Section 8, and provided further any person to whom such disclosure is made shall
have entered into a non-disclosure agreement, the terms of which require such
person to maintain the confidentiality of the Confidential Information.
Notwithstanding the foregoing, Sinclair-Davis shall not be liable for disclosure
of any such Confidential Information which: (a) can be demonstrated by
reasonable documentary evidence to have been in its possession prior to receipt
from Client, provided that the source of such information was not known to
Sinclair-Davis to be bound by a confidentiality agreement with or other
contractual or fiduciary obligation of confidentiality to Client or any other
person with respect to such information; (b) is or becomes part of the public
domain other than through an act or omission attributable to employees or agents
of Sinclair-Davis; or (c) is or is made available to Sinclair-Davis by a third
party unaffiliated with Client and which has no obligation to Client with
respect thereto. Upon the termination of this Agreement, Sinclair-Davis shall
promptly return to Client all Confidential Information provided by Client to
Sinclair-Davis, and all copies thereof, in its possession. This Section 8 shall
survive the termination of this Agreement.
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9. Miscellaneous.
A. Governing Law. This Agreement shall be governed by the laws of
the State of New York.
B. Entire Agreement. This Agreement embodies the entire agreement
of the parties with respect to its subject matter. There are
no restrictions, promises, representations, warranties,
covenants, or undertakings other than those expressly set
forth or referred to herein.
C. Amendments to be in Writing. This Agreement may be amended
only in a writing signed by all of the parties.
D. No Waivers by Course of Dealing; Limited Effect of Waivers. No
waiver shall be effective against any party unless it is in a
writing signed by that party. No course of dealing and no
delay on the part of Sinclair-Davis in exercising its rights
shall operate as a waiver of that right or otherwise prejudice
Sinclair-Davis. Sinclair-Davis' failure to insist upon the
strict performance of any provision of this Agreement, or to
exercise any right or remedy available to Sinclair-Davis shall
not constitute a waiver by Sinclair-Davis of such provision.
No specific waiver by Sinclair-Davis of any specific breach of
any provision of this Agreement shall operate as a general
waiver of the provision or of any other breach of the
provision. Client shall have no right to cure any breach
except as specifically provided herein.
E. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
F. Circulation of Rights and Remedies. No right or remedy of
Sinclair-Davis under this Agreement is intended to preclude
any other right or remedy and every right and remedy shall
coexist with every other right and remedy now or hereafter
existing whether by contract, at law, or in equity.
G. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties and their
successors and assigns. Neither party shall have any right to
assign any of its rights or delegate any of its obligations or
responsibilities under this Agreement without the prior
written consent of the other party.
H. Payment of Fees and Expenses of Enforcing Agreement. In the
event of any dispute between the parties arising out of or
related to this Agreement or the interpretation thereof, at
the trial level or appellate level, the prevailing party shall
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be entitled to recover from the non-prevailing party all costs
and expenses, including reasonable fees and disbursements of
counsel which may be reasonably incurred by it in connection
with such proceeding, including without limitation, any costs
and expenses of experts, witnesses, depositions and other
similar costs.
I. Notices. Any notices or other communications required or
permitted to be given hereunder shall be in writing, and shall
be delivered to the parties at the addresses set forth below
(or to such other addresses as the parties may specify by
notice to the other in the manner provided in this section).
Notices or other communications shall be effective when
received at the recipient's address (or when delivered to that
location if receipt is refused). Notices or other
communications given by facsimile transmission shall be
presumed received at the time indicated in the recipient's
automatic acknowledgment. Notices or other communications
given by Federal Express or other recognized overnight courier
service shall be presumed to have been received on the
following business day. Notices or other communications given
by certified mail, return receipt requested, postage prepaid,
shall be presumed received 5 business days after the date of
mailing.
Client: Videolocity International, Inc.
358 South 700 East, #B-604
Salt Lake City, Utah 84102
Attention: D. T. Norman,
Secretary
Sinclair-Davis: Sinclair-Davis Trading Corp.
108 Harbor Road
Head of the Harbor, NY 11780
J. No Partnership. No agency, partnership, joint venture, or
employment is created as a result of this Agreement and
neither party nor its agents shall have any authority of any
kind to bind the other party in any respect whatsoever.
K. Headings. The headings in this Agreement are intended solely
for convenience of reference. They shall be given no effect in
the construction or interpretation of this Agreement.
L. Severability. The invalidity or unenforceability of any
provision of this Agreement shall not impair the validity or
enforceability of any other provision.
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In Witness Whereof, the parties have executed this Agreement as of the
date first above written.
Client: VIDEOLOCITY INTERNATIONAL, INC.
By /s/ Jerry E. Romney, Jr.
-------------------------------
Jerry E. Romney, Jr., President
Sinclair-Davis: SINCLAIR-DAVIS TRADING CORP.
By /s/ Brooke Bray
-------------------------------
Brooke Bray, President
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