Aegis Equity LLC
1012 Prospect St. , Suite 300
La Jolla, CA 92037
November 11, 2005
Re: Consulting Agreement
Dear Messrs. Horne and Ault,
This letter presents the terms of the consulting agreement (the "Agreement")
between Digicorp (OTCBB: DGCO.OB) (the "Client"), having a place of business at
100 Wilshire Blvd., Suite 1750, Santa Monica, CA and Aegis Equity LLC (the
"Company"), having a place of business at 1012 Prospect St., Suite 300, La
Jolla, CA, as follows:
1. Term. Work under this Agreement commenced on or about Sept. 1, 2005 and will
continue indefinitely until this Agreement is terminated in accordance with the
provisions of the Termination section (Section 5) of this Agreement.
2. Services. The Company and its affiliates (collectively, "Affiliates") hereby
agree to provide certain advisory and consulting services ("Services") to the
Client, including but not limited to the following: M&A advisory services
related to a proposed acquisition by the Client of Rebel Crew Films, Inc. and
certain loans receivable of Rebel Crew Holdings LLC, including performance and
coordination of due diligence, advice on integration, legal affairs, and four
months of communications advisory services from the date of execution of this
Agreement. The Company, its Affiliates and its Representatives shall at all
times inform the Client of its activities in connection with performance of the
Services and all such activities shall be expressly approved by the Client
before the Company, its Affiliates or its Representatives may begin to conduct
such activities. In connection with the foregoing Services, the Company will:
(a) Consult with and assist the Client in developing and implementing
appropriate plans and means for presenting the Client and its business plans,
strategy and personnel to the financial community, establishing an image for the
Client in the financial community, and creating the foundation for subsequent
financial public relations efforts;
(b) Introduce the Client to the financial community, including, but not
limited to, retail brokers, buy side and sell side institutional managers,
portfolio managers, analysts, and financial public relations professionals;
(c) With the cooperation of the Client, maintain an awareness during the
term of this Agreement of the Client's plans, strategy and personnel, as they
may evolve during such period, and consult and assist the Client in
communicating appropriate information regarding such plans, strategy and
personnel to the financial community;
(d) Assist and consult with the Client with respect to its (i) relations
with stockholders, (ii) relations with brokers, dealers, analysts and other
investment professionals, and (iii) financial public relations generally;
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(e) Perform the functions generally assigned to stockholder relations and
public relations departments in major corporations, including: (i) responding to
telephone and written inquiries (which may be referred to the Company by the
Client); (ii) preparing press releases for the Client with the Client's
involvement and approval of such press releases, reports and other
communications with or to shareholders, the investment community and the general
public; (iii) consulting with respect to the timing, form, distribution and
other matters related to such releases, reports and communications; and (iv), at
the Client's request and subject to the Client's securing its own rights to the
use of its names, marks, and logos, consulting with respect to corporate
symbols, logos, names, the presentation of such symbols, logos and names, and
other matters relating to corporate image;
(f) Upon and with the Client's direction and written approval, disseminate
information regarding the Client to shareholders, brokers, dealers, other
investment community professionals and the general investing public;
(g) Upon and with the Client's direction, conduct meetings, in person or
by telephone, with brokers, dealers, analysts and other investment professionals
to communicate with them regarding the Client's plans, goals and activities, and
assist the Client in preparing for press conferences and other forums involving
the media, investment professionals and the general investment public;
(h) At the Client's request, review business plans, strategies, mission
statements budgets, proposed transactions and other plans for the purpose of
advising the Client of the public relations implications thereof; and
(i) Otherwise perform as the Client's consultant for public relations and
relations with financial professionals.
3. Fees.
(a) Client will pay Company an advisory fee (the "Fee") for the Services
in the amount of 530,000 restricted shares of the Client's common stock, $.001
par value per share ("Common Stock"), cash from the sale of 100,000 free trading
(unrestricted) shares of Client's Common Stock as distributed pro-rata from the
sale of the entire stock position of Client held by Patient Safety Technologies,
Inc. (4,016,027 shares), and warrants entitling the Company or its designee(s)
to purchase 300,000 shares of the Client's Common Stock with an exercise price
of $0.65 per share. The above restricted shares of Common Stock shall have piggy
back registration rights and shall be delivered in certificate form within 15
business days of the execution of this agreement. As per section (d) below,
should the Company receive notification from the Client that the proposed
acquisition will not take place, the Company agrees to return all stock
compensation within 15 business days of such notification.
(b) In connection with the Fee, the Company hereby represents that it and
each person who is issued securities as payment of the Fee is an "accredited
investor" as such term is defined in Rule 501(a) promulgated under the
Securities Act of 1933, as amended (the "Securities Act"). The Company for
itself, and on behalf of each person who is issued securities as payment of the
Fee, further hereby represents that it is acquiring such securities for its own
account, for investment purposes only and not for distribution or resale to
others in contravention of the registration requirements of the Securities Act.
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(c) To the extent that costs are incurred by the Company in performing the
Services, and whereas the Company intends to submit these costs to the Client
for reimbursement, they shall be preapproved by an officer of the Client.
(d) Notwithstanding anything in this Agreement to the contrary, the
Company shall not be entitled to any part of the Fee if the Client does not
complete the proposed acquisition of Rebel Crew Films, Inc. and certain loans
receivable of Rebel Crew Holdings LLC.
4. Additional Consultancy Fees.
(a) The parties agree that if, during the Term of this Agreement and
during the 12 months following the expiration of the Term of this Agreement, any
of the following transactions are consummated following introductions made by
the Company: debt or equity financing, merger and/or acquisition, or strategic
or business partnership, then Client agrees to pay a mutually agreed upon
consultancy fee to the Company, which shall be negotiated in good faith by the
parties and paid to the Company no later than 30 days following the consummation
of any such transaction. Such introductions shall include introductions made by
the Company to Client of all broker dealers and intermediaries not having a
preexisting relationship with Client as of the date of this Agreement, and all
affiliates of such broker dealers and intermediaries.
(b) The parties expressly acknowledge that the Company is not a registered
broker/dealer and the Company is not being retained to offer, sell or place any
securities of Client. While the Company and its principals have relationships
and contacts with various financing sources, the Company's participation in the
actual offer, placement or sale of the Company's securities shall be limited to
that of an advisor to the Company and as a "finder" of suitable candidates for
financing, acquisitions or mergers, and the Company does not normally provide
such services. The Company will only be introducing the Client to such potential
financing sources or merger and acquisition candidates and will not be
responsible for the structuring of any transaction. Client acknowledges and
agrees that the solicitation and consummation of any offer, placement or sale of
Client's securities shall be handled by Client or by one or more NASD member
firms engaged by Client for such purpose. The Company is not vested with
authority, and shall not be required, to participate in any negotiations
relating to the placement or sale of securities. No fees or other remuneration
paid pursuant hereto shall relate to commissions for the placement or sale of
securities, and the fees due hereunder are not contingent on the placement or
sale of securities. Client acknowledges and agrees that all compensation to be
paid to the Company hereunder shall be in consideration for bona fide consulting
services. Any obligation to pay a consultancy fee hereunder shall survive the
merging, acquisition, or other change in the form of entity of the Client and to
the extent it remains unfulfilled Client expressly agrees to assign and transfer
such obligation to any successor to the Client.
5. Termination. This Agreement shall terminate immediately upon the occurrence
of the earliest of:
(a) The passage of a period of 120 days from the date of execution of this
Agreement;
(b) The parties enter into a mutual written agreement to such termination;
or
(c) Any breach by either party of any provision of this Agreement,
including without limitation any failure by either party to observe and to fully
and faithfully perform each and all of its duties, responsibilities, and
obligations pursuant to this Agreement, provided that the terminating party
provides the party to be terminated with written notice of such breach and that
such breach is not cured within 10 business days following such notice.
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6. Confidentiality. The Company acknowledges and agrees that the Client will be
providing the Company, its directors, executive officers, employees and
Affiliates (collectively, "Representatives") certain data, documents, salary
structure, plans, personnel needs, business, practices, and other information of
Client and its corporate affiliates, which are either confidential, proprietary
or otherwise not available to the public ("Information"). The Company and its
Representatives hereby agree to: (a) keep the Information confidential, (b) not
disseminate the Information to any third party, and (c) not use the Information
other than as expressly contemplated by this Agreement. All physical
manifestations of the Information will be returned promptly and all derivations
and copies of the Information will be physically and/or electronically destroyed
immediately upon termination of this Agreement pursuant to paragraphs 4(a), (b)
or (c).
7. Warranties. The Company and its Representatives agree to complete all work in
a professional manner in conformance with industry standards. In the event that
the Client is dissatisfied with any Services the Company and its Representatives
have provided, the Company and its Representatives agree to use commercially
reasonable means to reperform the Services in question, if requested in writing
by the Client. In the event that reperformance of the Services in question is
impossible and/or impractical in the judgment of the board of directors of the
Client, the parties shall agree to work together in good faith to devise an
equitable solution. If such an equitable solution is not reached within 30 days
after written notice is provided by Client of its dissatisfaction with the
Services in question, then the parties may seek to enforce their rights or
remedies through any legally available means and to the extent permitted by
applicable law.
8. Indemnification. The Client agrees to indemnify, defend and hold the Company
and its Representatives harmless from any causes of legal action or resulting
damages that may occur in connection with a breach by the Client of the terms of
this Agreement. The Company agrees to indemnify, defend and hold the Client and
its directors, executive officers, employees and affiliates harmless from any
causes of legal action or resulting damages that may occur in connection with a
breach by the Company of the terms of this Agreement.
9. Client Representations and Warranties. Client represents and warrants to the
Company that (a) to the best of Client officers' knowledge and belief, any
information furnished or to be furnished to the Company for use in the provision
of the Company's advisory services, will contain no untrue statement of any
material fact nor omit to state any material fact necessary to make the
information furnished not misleading, except to the extent subsequently
corrected prior to the date of use of such information with third parties and
(b) that if the circumstances or facts relating to information or documents
furnished to the Company change at any time subsequent to the furnishing of such
document or information to the Company and prior to the date of the consummation
of any transaction, Client will inform the Company promptly of such changes and
forthwith deliver to the Company documents or information necessary to ensure
the continued accuracy and completeness of all information and documents
previously furnished.
10. Company Representations and Warranties. The Company represents to Client
that during the term of this Agreement that (a) neither it nor its employees or
agents, if any, will make any untrue statement of material fact, and (b) all
actions taken by it and its employees and agents on behalf of Client, in
connection with any advisory services, will be conducted in compliance with all
applicable state and federal laws.
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11. Other provisions.
(a) Non-Assignment. Neither the Client nor the Company may assign or
transfer this Agreement or any rights or obligations hereunder without the prior
written consent of the other party, which consent shall not be unreasonably
withheld.
(b) Use of Logo. Neither party to this Agreement shall use the other
party's marks, codes, drawings or specifications without the prior written
permission of the other party.
(c) Public Announcements. All press releases pertaining to and in
connection with the underlying transactions contemplated by this Agreement will
name the Company as an advisor to the Client in connection with such
transactions and will be subject to the Client and Company's joint approval.
(d) Independent Contractors. The parties agree that the Company is an
independent contractor of Client, and nothing in this Agreement will be deemed
to place the parties in any other relationship. As such, neither Company nor its
Representatives shall have authority to enter into or execute any agreement, to
incur any liability on behalf of Client, or to otherwise act on behalf of the
Client.
(e) Non-Waiver/Severability. Failure of either party to enforce any of its
rights hereunder will not be deemed to constitute a waiver of its future
enforcement of such rights or any other rights. If any provisions of this
Agreement are held to be invalid, illegal, or unenforceable under present or
future laws, such provisions will be struck from the Agreement or amended, but
only to the extent of their invalidity, illegality or unenforceability. The
parties will remain legally bound by the remaining terms of this Agreement, and
will strive to reform the Agreement in a manner as consistent as reasonably
possible with the original intent of the parties as expressed herein.
(f) Force Majeure. Either party will be excused from any delay or failure
in performance hereunder, caused by or due to any cause beyond its reasonable
control, including, but not limited to acts of God, earthquake, flood, third
party labor disputes, utility curtailments, power failures, explosions, civil
disturbances, vandalism, riots, war, governmental actions, and acts or omissions
of third parties. The obligations and rights of the party so excused will be
extended on a day-to-day basis for the period of time equal to that of the
underlying cause of the delay.
(g) Governing Law; Jurisdiction. This Agreement will be governed by and
construed in accordance with the substantive laws of the State of California,
without regard to conflict of law principles. Both parties submit to personal
jurisdiction in California and further agree that any cause of action relating
to this Agreement shall be brought exclusively in a court in Los Angeles County,
California.
(h) Integration. This Agreement expresses the complete and final
understanding of the parties with respect to the subject matter hereof, and
supersedes all prior communications between the parties, whether written or oral
with respect to the subject matter hereof. No modification of this Agreement
will be binding upon the parties hereto, unless in writing and executed by all
of the parties hereto.
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(i) Notices. Except where other means of communication are expressly
provided for in this Agreement, all notices provided for under this Agreement
will be in writing, signed by the party giving the same, and will be deemed
properly given and received: (i) on the next business day after deposit for
overnight delivery by an overnight courier service; or (ii) three business days
after mailing, by registered or certified mail, return receipt requested. All
such notices or other instruments or communications will be furnished with
delivery or postage charges prepaid addressed to the Client at the address in
paragraph 1 of this Agreement, or to the Company at the address listed on the
letterhead of this Agreement. Either party may change its address for notices
hereunder by written notice to the other party.
(j) Survival. The respective obligations of the parties hereto, which by
their nature would continue beyond the termination or expiration of this
Agreement, including without limitation, the obligations under paragraphs 4, 5,
6, 7 and 8 shall survive termination of this Agreement for the period provided
by the applicable statute of limitations.
AEGIS EQUITY LLC
By: /s/Patrick Gaynes
----------------------
Patrick Gaynes
Managing Director
ACCEPTED AND AGREED on this 11th day of November, 2005:
DIGICORP
By: /s/ William B. Horne
------------------------
William B. Horne
Chief Executive Officer
Patient Safety Technologies, Inc.
By: /s/ Milton "Todd" Ault III
------------------------------
Milton "Todd" Ault III
Chief Executive Officer
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