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Exhibit 10.1

 
[pazoo_verticallogo.jpg]

 
 
 
February 3, 2012
 

PERSONAL AND CONFIDENTIAL VIA E-MAIL

 
 
 
Mr. David M. Cunic
Chief Executive Officer
Pazoo, Inc.
15A Saddle Road
Cedar Knolls, New Jersey 07927
 
 
RE: BUSINESS ADVISORY AGREEMENT
 
 
Dear Mr. Cunic:
 
This letter agreement (“Agreement”) is made and entered into as of this 3rd day
of February, 2012 (the “Effective Date”) between Pazoo, Inc., a Nevada
corporation with offices at 15A Saddle Road, Cedar Knolls, New Jersey 07927 (the
“Company” or “Pazoo”) and The Vertical Group, a New York limited liability
company and FINRA member firm with principal offices at 417 Fifth Avenue, Sixth
Floor, New York, New York 10016 (the “Advisor”).
 
 
WHEREAS, the Company is seeking certain services and advice regarding the
Company’s business and financing activities; and
 
WHEREAS, the Advisor is willing to furnish certain business and financial
related advice and services to the Company on the terms and conditions set forth
hereinafter.
 
NOW, THEREFORE, in consideration of the mutual terms and covenants contained
herein, and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
 

 
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1.  
Purpose.  The Company hereby engages the Advisor on a non-exclusive basis for
the term specified in this agreement to render financial and business advisory
consulting advice to the Company as a financial advisor relating t o financial
and similar matters upon the terms and conditions set forth herein.

 
2.  
Representations of the Advisor.  The Advisor represents and warrants to the
Company that (a) it is a member in good standing of the Financial Industry
Regulatory Authority (“FINRA”) and that it is engaged in the securities
business; (b) in addition to its securities business, the Advisor provides
consulting advisory services; and (c) it is free to enter into this Agreement
and the services to be provided pursuant to this Agreement are not in conflict
with any other contractual or other obligation to which the Advisor is bound.
The Company acknowledges that the Advisor is in the securities business and may
provide financial and business consulting services and advice of the type
contemplated by this Agreement to others, and that nothing contained herein
shall be construed to limit or restrict the Advisor in providing such services
or advice to others.

 
3.  
Duties of the Advisor.  During the term of this Agreement, the Advisor shall
provide the Company with consulting advice as specified below at the request of
the Company, provided that the Advisor shall not be required to undertake duties
not reasonably within the scope of the consulting advisory service in which the
Advisor is engaged generally. In the performance of these duties, the Advisor
shall provide the Company with the benefits of its best judgment and efforts,
and the Advisor cannot and does not guarantee or promise that its efforts will
have any impact on the business of the Company or that any subsequent
improvement will result from the efforts of the Advisor. It is understood and
acknowledged by the parties that the value of the Advisor’s advice is not
measurable in any quantitative manner, and that the amount of time spent
rendering such consulting advice shall be determined according to the Advisor’s
discretion. The Advisor’s duties may include, but will not necessarily be
limited to, rendering the following services to the Company:

 
a)  
Study and review the business, operations, historical financial performance of
the Company (based upon information provided to the Advisor by management) so as
to enable the Advisor to provide advice to the Company;

 
b)  
Assist the Company in attempting to formulate the optimum strategy to meet the
Company’s working capital and capital resource needs during the term of this
Agreement;

 
c)  
Assist in the formulation of the terms and structure of any reasonable proposed
equity or debt financing or business transaction involving the Company;

 
d)  
Assist in the introduction of the Company to institutional or other capital
financing sources;

 
e)  
Assist in the formulation of terms and structure of any reasonable proposed
equity or debt financing or business transaction involving the Company;

 
f)  
Vertical, upon request, will assist the Company in finding proper corporate
counsel, auditor, and other professionals to represent the Company.

 
g)  
Vertical, upon request, will assist in any presentation to the Board of
Directors of the Company in connection with a proposed transaction or financing;

 
h)  
Vertical, upon request, will review the Company’s executive compensation and
employee benefit plans and make recommendations to the Company as to how such
plans may be improved or enhanced and

 
 
 
 
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i)  
Vertical, upon request, will advise the Company as to the expected reaction of
the financial community to any transaction and assist in determining the optimum
means of communicating the pertinent aspects of such transaction

 
j)  
Vertical, upon request, will review all aspects of the Company’s business and
advise as to the overall perception from the financial community;

 
4.  
Term.  Subject to the termination provisions set forth in paragraph 16 hereof,
the term of this Agreement shall be for four (4) months commencing from the date
of this Agreement (the “Term”); provided, however, that this Agreement may be
renewed or extended upon such terms and conditions as may be mutually agreed
upon by the parties hereto. This Agreement shall terminate, only in the event
that the Advisor is no longer a member in good standing of the FINRA.

 
5.  
Advisory Fee.  In consideration of the services to be rendered and performed by
Vertical during the Consulting Period (as defined below), Pazoo will pay to
Vertical a financial advisory fee of $35,000 (“Advisory Fee”) upon execution of
this Agreement. The Advisory Fee shall be a non-refundable advance payment to
Vertical whether or not any of the respective services covered under this
Agreement have been requested by Pazoo and/or rendered by Vertical.

 
6.  
Financing Fee.  In the event the Advisor effects or introduces a financing by
offering or selling any of the securities of the Company, in a private debt
and/or equity transaction, pursuant to which the Company obtains financing or
other consideration, the Advisor shall receive a “financing fee” in addition to
the Advisory Fee and any other fee to be received pursuant to this Agreement,
which shall be mutually determined between the Company and the Advisor at the
time of any such financing.

 
7.  
Transaction Finder’s Fee.

 
a)  
In connection with any transaction (“Transaction”) consummated by the Company
during the period ending two (2) years from the termination of this Agreement in
which the Advisor during the term of this Agreement introduced the other party
(except for any party identified by the Company on a schedule to be provided
contemporaneously with the execution of this Agreement) to the Company, the
Company will pay to the Advisor a Transaction Fee (“Transaction Fee”) based on
the aggregate consideration received or to be paid by the Company in connection
with such Transaction, and computed as follows: (i) 7% of the first million
dollars or part thereof; 6% of the next million dollars or part thereof; 5% of
the next million dollars or part thereof; 4% of the next million dollars of part
thereof and 3% of the balance of the value of the transaction, or (ii) as
otherwise mutually agreed to in writing by the parties (the formula can be
increased). The Transaction Fee will be payable in the same forms and
proportions as the aggregate consideration disbursed or received by the Company,
unless otherwise mutually agreed to in writing by the parties.

 
b)  
As used herein, the term “aggregate consideration” shall be deemed to be the
total amount disbursed or received by the Company (which shall be deemed to
include amounts paid into escrow) in connection with a Transaction.

 
c)  
A Transaction Fee is payable in the event of and upon the closing of a
Transaction; provided, however, that if the aggregate consideration consists of
or may be increased by future payments or contingent payments related to future
earnings or operations, the Company, in its discretion, shall have the choice to
either (i) pay that portion of the Transaction Fee at closing from escrow based
on the present value of any future and/or

 
 
 
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contingent payments calculated at closing or (ii) pay that portion of the
Transaction Fee calculated and paid when and as such future and/or contingent
payments are made to the Company; provided further, however, that even if the
Company exercises its discretion under clause (ii) above, the entire Transaction
Fee due to the Advisor will be paid within twenty-four (24) months of the date
this Agreement is terminated, regardless of whether the Company has then
received all payments that are to be made to the Company in connection with the
Transaction.

 
8.  
Use of Name and Advice.  The Company agrees that any reference to Advisor in any
release, communication or other material is subject to Advisor’s prior written
approval, which may be given or withheld in its sole discretion and which will
expire immediately upon Advisor’s resignation or the termination of this
Agreement. No statements made or advice rendered by Advisor in connection with
the services performed by Advisor pursuant to this Agreement will be quoted by,
nor will any such statements or advice be referred to, in any communication,
whether written or oral, prepared, issued or transmitted, directly or
indirectly, by the Company without the prior written authorization of Advisor,
which may be given or withheld in its sole discretion, except to the extent
required by law (in which case the appropriate party shall so advise Advisor in
writing prior to such use and shall consult with Advisor with respect to the
form and timing of disclosure).

 
9.  
Representations and Warranties of the Company.  Set forth on Exhibit C are the
representations and warranties of the Company.

 
10.  
Covenants of the Company.  The Company covenants and agrees with Advisor that
during the Term of this Agreement, the Company will deliver to the Advisor:

 
a)  
as soon as they are available, copies of all reports (financial or other) mailed
to shareholders;

b)  
as soon as they are available, copies of all reports and financial statements
furnished to or filed with the Commission, the FINRA or any securities exchange;

c)  
every press release and every material news item or article of interest to the
financial community in respect of the Company or its affairs which was prepared
and released by or on behalf of the Company; and

d)  
any additional information of a public nature concerning the Company (aid any
future subsidiaries) or its businesses which the Advisor may reasonably request.

 
11.  
Costs and Expenses.  In addition to the fees payable hereunder, the Company
shall reimburse the Advisor, within five (5) business days of its request, for
any and all reasonable out-of-pocket expenses incurred in connection with the
services performed by the Advisor under this Agreement; provided, however, that
any single expense item in excess of $200 or monthly expense in excess of $500
shall be preapproved by the Company.

 
12.  
Company Information. The Company recognizes and confirms that, in advising the
Company and in fulfilling its engagement hereunder, the Advisor will use and
rely on data, material and other information furnished to the Advisor by the
Company (the “Company Information”). The Company acknowledges and agrees that in
performing its services under this engagement, the Advisor may rely upon the
Company Information without independently verifying the accuracy, completeness
or veracity of same. The parties further acknowledge that the Advisor shall have
no responsibility for the accuracy of any statements to be made by Company
management contained in press releases or other communications, including, but
not limited to, filings with the SEC and FINRA. In addition, in the performance
of its services, the Advisor may look to such others for factual information,
economic advice and/or research upon which to base its advice to the Company
hereunder as the Advisor shall in good faith deem appropriate.

 

 
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13.  
Indemnification.

 
a)  
The Company agrees to indemnify and hold harmless the Advisor, each person who
controls the Advisor within the meaning of Section 15 of the Act or Section 20
of the Securities Exchange Act of 1934, as amended, and the Advisor’s officers,
directors, employees, accountants, attorneys and agents (the “Advisor’s
Indemnitees”) against any and all losses, claims, expenses, damages or
liabilities, joint or several, to which they or any of them may become subject
(including the costs of any investigation and all reasonable attorneys’ fees and
costs which shall be prepaid) or incurred by them, to the fullest extent lawful,
in connection with any pending or threatened litigation, legal claim or
proceeding, whether or not resulting in any liability, arising out of or in
connection with the services rendered by the Advisor or any transactions in
connection with this Agreement; provided, however, that the indemnity agreement
contained in this paragraph 13(a) shall not apply to any such losses, claims,
related expenses, damages or liabilities arising out of gross negligence,
willful misconduct or fraud of the Advisor, or a material breach of the
Advisor’s representations and warranties hereunder.

 
b)  
The Advisor agrees to indemnify and hold harmless the Company and its officers,
directors, employees, accountants, attorneys and agents (the “Company’s
Indemnitees”) against any and all losses, claims, expenses, damages or
liabilities, joint or several, to which they or any of them may become subject
(including the costs of any investigation and all reasonable attorneys’ fees and
costs) or incurred by them, to the fullest extent lawful, in connection with any
pending or threatened litigation, legal claim or proceeding, whether or not
resulting in any liability, arising out of gross negligence, willful misconduct
or fraud of the Advisor; provided, however, that the indemnity agreement
contained in this paragraph 13(b) shall not apply to any such losses, claims,
related expenses, damages or liabilities arising out of the gross negligence,
willful misconduct or fraud of the Company, or a material breach of the
Company’s representations and warranties hereunder. In addition, Advisor and
Advisor’s Indemnitees shall not have any liability to the Company or Company
Indemnitees in connection with the services rendered pursuant to the Agreement
except for any liability for claims, liabilities, losses or damages finally
judicially determined to have resulted solely as a result of the gross
negligence or willful misconduct of Advisor or Advisor’s Indemnitees. In no
event shall Advisor or Advisor’s Indemnitees be responsible for any special,
indirect, punitive or consequential damages.

 
c)  
Each Advisor’s Indemnitee or Company’s Indemnitee, as the case may be (an
“Indemnified Person”), shall give prompt written notice to the Company or the
Advisor, as appropriate (the “Indemnifying Party”), after the receipt by such
Indemnified Person of any written notice of the commencement of any action, suit
or proceeding for which such Indemnified Person will claim indemnification or
contribution pursuant to this Agreement. The Indemnifying Party shall have the
right, exercisable by giving written notice to an Indemnified Person within
twenty (20) business days after the receipt of written notice from such
Indemnified Person of such commencement, to assume, at its expense, the defense
of any such action, suit or proceeding; provided, however, that an Indemnified
Person shall have the right to employ counsel in any such action, suit or
proceeding, and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Person unless: (i)
the Indemnifying Party fails to assume the defense of such action, suit or
proceeding or fails to employ separate counsel reasonably satisfactory to such
Indemnified Person in any such action, suit or proceeding; or (ii) the
Indemnifying Party and such Indemnified Person shall have been advised by
counsel that there may be one or more defenses available to such Indemnified
Person which are in conflict with, different from or additional to those
available to the Indemnifying Party, or another Indemnified Person, as the case
may be (in which case, if such Indemnified Person notifies the Indemnifying
Party in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense of such action, suit or proceeding on behalf of such Indemnified
Person); it being understood, however, that the Indemnifying Party shall not, in
connection with any one such action or proceeding of separate but substantially
similar or related actions or proceedings arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time acting for each Indemnified Person in any one jurisdiction. The
Indemnifying Party shall not settle or compromise or consent to the entry of any
judgment in or otherwise seek to terminate any pending or threatened action,
claim, suit or proceeding in which any Indemnified Person is a party and as to
which indemnification or contribution has been sought by such Indemnified Person
hereunder, unless such Indemnified Person has given its prior written consent or
the settlement, compromise, consent or termination includes an express
unconditional release of such Indemnified Person, satisfactory in form and
substance to such Indemnified Person, from all losses, claims, damages or
liabilities arising out of such action, claim, suit or proceeding.

 
 
 
 
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d)  
If for any reason the indemnity provided for in this paragraph 12 is unavailable
to an Indemnified Person or insufficient to hold an Indemnified Person harmless,
then the Indemnifying Party, to the fullest extent permitted by law, shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such claims, liabilities, losses, damages or expenses in such proportion as
its appropriate to reflect (i) the relative benefits received by the Company on
one hand and by the Advisor on the other, from the transaction or proposed
transaction under this Agreement and (ii) the relative fault of the Company and
the Advisor, as well as any relevant equitable considerations. The relative
fault of the Company on the one hand and the Advisor on the other shall be
determined by reference to, among other things, whether any untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the
Advisor. The indemnity, contribution and expense reimbursement obligations set
forth herein (i) shall be in addition to any liability an Indemnifying Party may
have to any Indemnified Person at common law of otherwise, (ii) shall survive
the termination of this Agreement, (iii) shall apply to any modification of this
Agreement and shall remain in full force and effect following the completion or
termination of the Agreement, (iv) shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Advisor or
any other Indemnified Person, and (v) shall be binding on any successor or
assign of the Company or the Advisor and the respective successors or assigns to
all or substantially all of the Company’s or the Advisor’s business and assets.

 
e)  
In the performance of its services, the Advisor shall be obligated to act only
in good faith, and shall not be liable to the Company for errors in judgment
that are not the result of gross negligence or willful misconduct.

 
14.  
Use of Advice by the Company.  The Company acknowledges that all opinions and
advice (written or oral) given by the Advisor to the Company in connection with
the engagement of the Advisor are intended solely for the benefit and use of the
Company in considering the matters to which they relate, and the Company agrees
that no person or entity other than the Company and its Board of Directors shall
be entitled to make, use or rely upon the advice of the Advisor to be given
hereunder, and no such opinion or advice shall be used for any other purpose, or
reproduced, disseminated, quoted or referred to at any time, in any manner or
for any purpose, nor may the Company make any public references to the Advisor,
or use the Advisor’s name in any reports or releases of the Company without the
Advisor’s prior written consent.

 
15.  
The Advisor as an Independent Contractor.  The Advisor shall perform its
services hereunder as an independent contractor and not as an employee of the
Company or an affiliate thereof. It is expressly understood and agreed to by the
parties hereto that the Advisor shall have no authority to act for, represent or
bind the Company or any affiliate thereof, in any manner, except as may be
agreed to expressly by the Company in writing from time to time.

 
16.  
Termination.  This engagement will commence on the Effective Date and continue
for a period of four (4) months (the “Consulting Period”). The term may be
extended or shortened by mutual written consent to be provided thirty (30) days
in advance. In the event the Company terminates the Agreement, all accrued and
unpaid fees shall be due and payable immediately. Unless otherwise specifically
provided, termination of this Agreement shall not affect the Advisor’s rights to
fees as set forth in paragraphs 5, 6 and 7 above.

 
17.  
Representations, Warranties and Agreements to Survive.  The respective
indemnities, agreements, representations, warranties and other statements of the
Company and the Advisor set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of the Advisor, the Company, or any of their respective officers or
directors.

 
18.  
Notices.  All communications hereunder will be in writing and, except as
otherwise expressly provided herein, sent by overnight mail,

 
 
 
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if to the Company at:
 
Pazoo, Inc.
15A Saddle Road
Cedar Knolls, New Jersey 07927
Attn: David M. Cunic, Chief Executive Officer
 
if to the Advisor at:
 
The Vertical Group
417 Fifth Avenue, Sixth Floor
New York, New York 10016
Attn: Michael L. Shwarts, Managing Director
 
19.  
Parties in Interest.  This Agreement is made solely for the benefit of the
Advisor and the Company, and their respective controlling persons, directors and
officers, and their respective successors, assigns, executors and
administrators. No other person shall acquire or have any right under or by
virtue of this Agreement.

 
20.  
Headings.  The section headings in this Agreement have been inserted as a matter
of convenience of reference and are not part of this Agreement.

 
21.  
Applicable Law; Venue and Jurisdiction.  Construction and interpretation of this
Agreement shall be governed by the laws of the State of New York, excluding any
conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of this Agreement to the substantive Applicable
Law of another jurisdiction. The parties hereby irrevocably and unconditionally
consent to the exclusive jurisdiction of the courts of the State of New York and
the United States District Court for the Southern District of New York for any
action (other than appeals therefrom) arising out of or relating to this
Agreement or the Related Documents or otherwise in connection with the
transactions contemplated hereby and thereby, and agree not to commence any
action, (other than appeals therefrom) related thereto except in such courts. 
The parties further hereby irrevocably and unconditionally waive any objection
to the laying of venue of any action (other than appeals therefrom) arising out
of or relating to this Agreement or otherwise in connection with the
transactions contemplated hereby and thereby in the courts of the State of New
York or the United States District Court for the Southern District of New York,
and hereby further irrevocably and unconditionally waive and agree not to plead
or claim in any such court that any such action brought in any such court has
been brought in an inconvenient forum.  Each party hereto further agrees that
service of any process, summons, notice or document by U.S. registered mail to
its address set forth above in paragraph 18.

 
22.  
Integration.  This Agreement constitutes the entire agreement and understanding
of the parties hereto, and supersedes any and all previous agreements and
understandings, whether oral or written, between the parties with respect to the
matters set forth herein. No provision of this Agreement may be amended,
modified or waived, except in a writing signed by all of the parties hereto.

 
23.  
Counterparts.  This Agreement may be executed in any number of counterparts,
each of which together shall constitute one and the same instrument.

 
24.  
Authority.  This Agreement has been duly authorized, executed and delivered by
and on behalf of the Company and the Advisor.

 
 
 
 
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first written above.
 

  PAZOO, INC.                   By:    
 
  Mr. David M. Cunic       Chief Executive Officer                     THE
VERTICAL GROUP                   By:         Mr. Michael L. Shwarts      
Managing Director  

 
 
 
 
 
 
 

 
 
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