EXHIBIT 10.20
CONSULTING AGREEMENT
---------------------
This agreement is entered into, effective November 1, 2003, by and between,
Xxxxxxx Xxxxxxx (hereinafter referred to as "Consultant") and FoneFriend, Inc.,
a Delaware corporation (hereinafter referred to as the "Company") with reference
to the following:
A. Consultant is engaged in the business of furnishing consulting services,
and will apply his expertise, skill, and knowledge for the overall benefit of
the Company.
B. Company is engaged in the business of operating and marketing a dial-up,
Internet Telephony device.
C. Company desires to hire Consultant for his services, namely his
contribution to the future projects of the Company, network design, integration
services, regulatory research, the next round of the Company's equity
fundraising, and to serve as the Company's Chief Technology Officer, and the
Consultant desire to provide said services to Company.
THEREFORE, IT IS AGREED AS FOLLOWS:
1. Term. The term of this Agreement shall be for the period of twelve
---- ------
months from the effective date, subject to prior termination as provided herein.
------
This agreement supercedes all prior agreements with Consultant.
2. Fees. Attachment II and Attachment III sets forth compensation and fees
----
and they are hereby incorporated into and made a part of this Agreement. It is
anticipated and acknowledged by the parties that compensation programs are
subject to change in the normal course of business. Accordingly, all incentive
compensation described in Attachment II is subject to revision as may be
mutually agreed to by the parties so that Consultant's compensation is closely
aligned and consistent with Consultant's services that he provides to the
Company.
3. Costs and Expenses. Company will reimburse Consultant for all reasonable
------------------
and necessary expenses incurred in connection with the performance of
Consultant's duties hereunder upon receipt of documentation therefore in
accordance with Company's regular reimbursement procedures and practices in
effect from time to time. Monthly expenses exceeding $250.00 shall be approved
in advance by the Company.
4. Services provided by Consultant. Attachment I sets forth services to be
--------------------------------
provided by Consultant and is hereby incorporated into and made a part of this
Agreement. During the term of this Agreement, Consultant's best efforts shall be
devoted to the performance of Consultant's duties hereunder in a manner which
will faithfully and diligently further the business and interests of Company.
5. Compliance with Corporate Policy. Consultant shall, at all times,
-----------------------------------
observe, respect and comply with the rules, policies and procedures of the
Company in effect during the term of this Agreement. Consultant has signed a
Nondisclosure Agreement, which remains in force and becomes part of this
Agreement.
6. Delegation of Authority. Consultant shall not at any time enter into any
-----------------------
contracts which obligate the Company, whether with customers or suppliers, nor
obligate the Company in any manner without the prior written approval of the
Company signed by an officer of the Company.
7. Inventions. "Inventions" made or conceived entirely or partially by
----------
Consultant while engaged by the Company shall be the exclusive property of the
Company except as otherwise provided in Attachment III, for any inventions
jointly developed or owned by the Company and Consultant. For the purposes of
this Agreement, the term "Inventions" includes, without limitation, all
creations, whether or not patentable or copyrightable, and all ideas, reports,
or other creative works including without limitation, hardware or software,
processes, computer programs, manuals, and related materials which relate to the
existing or proposed business of the Company or any other business or research
or development effort conducted by the Company. Subject to the exceptions
listed in Attachment III. Consultant will promptly disclose each Invention to
the Company in writing and cooperate with the Company by executing all documents
tendered by the Company and taking such further actions as may be reasonably
requested by the Company for the purpose of obtaining patents or copyrights or
otherwise perfecting the Company's and or consultant sole and exclusive
ownership of all Inventions. This provision does not apply to an Invention for
which no equipment, supplies, facilities or trade secret information of the
Company was used and which was developed entirely on Consultant's own time
unless (I) the Invention relates directly to the anticipated research or
development, or (II) the Invention results from any work performed by Consultant
for the Company.
Consultant understands that, subsequent to the termination of his
consultancy-engagement by the Company, Consultant's assistance may be needed in
connection with securing, defending or enforcing any patent or other
intellectual property right related to an Invention. In that event Consultant
shall provide all such assistance, and the Company shall pay Consultant
reasonable compensation for Consultant's time at a rate to be agreed but not
higher than the last consulting fee paid to Consultant by the Company.
8. Nondisclosure of Confidential Information and Covenants.
------------------------------------------------------------
8.1 Confidential Information. Consultant acknowledges it is a policy of the
------------------------
Company to maintain as secret and confidential all information heretofore or
hereafter acquired, developed, used or useful to the Company relating to the
business, operations, technology or customers of the Company or of any
affiliates of the Company, including without limitation, customer lists and
business or trade secrets developed by or on behalf of the Company. (All of the
above is collectively referred to as "Confidential Information").
Confidential Information does not include information which is already public
knowledge or which can be obtained by reference to public sources. Consultant
recognizes that all such Confidential Information is the property of the Company
and agrees that except as required by the duties of Consultant's
consultancy-engagement with the Company shall never directly or indirectly use,
publish, disseminate or otherwise disclose any Confidential Information obtained
during Consultant's engagement with the Company without the prior written
consent of the Company, it being understood that the terms of this Section shall
survive the term of this Agreement.
8.2 Solicitation. During the term of his consultancy-engagement and for the
------------
period of twelve (12) months thereafter, Consultant shall not (a) seek to
persuade, directly or indirectly, any employees of the Company to discontinue
that individual's engagement with the Company, or seek to persuade any such
employee to become employed in any activity similar to or competitive with the
activities of the Company, or (b) directly or indirectly solicit from any person
or entity who was a customer of the Company and with whom Consultant had
business dealings on behalf of the Company during the one-year period prior to
the termination of Consultant's consultancy-engagement any business which is
competitive with the business activities of the Company in which Consultant was
engaged on behalf of the Company, or cause or authorize such solicitation, for
or on behalf of Consultant or any third party.
8.3 Unfair Competition. Consultant agrees that provisions of Sections 7 and
------------------
8 of this Agreement are reasonably necessary to protect the rights of the
Company and to prevent unfair competition. The provisions of Sections 7 and 8
shall apply if Consultant's consultancy-engagement is terminated at the end of
the term of this Agreement or otherwise. The period of the covenants contained
in Sections 7 and 8 shall be extended by any period of time during which the
court or arbitrator shall find enforceable.
8.4 Records. Upon termination of this Agreement, all documents, records,
-------
files, notebooks, and similar repositories containing the information described
in Sections 7 and 8 of this Agreement, including all copies, then in
Consultant's possession, whether prepared by Consultant or others, shall be
immediately returned to the Company by Consultant.
9. Injunctive Relief. Consultant acknowledges that the breach or threatened
-----------------
breach of any of the nondisclosure or noncompetition provisions or other
agreements contained in this Agreement would give rise to irreparable injury to
the Company, which injury would be inadequately compensable in money damages.
The Company, which may, therefore, seek and obtain a restraining order or
injunction prohibiting the breach or threatened breach of any provision,
requirement or covenant of this Agreement. In addition to and not in limitation
of any other legal remedies which may be available.
10. Use of the Company Name. The use of the name or trademarks of the
---------------------------
Company on any written document, stationary, business cards, advertisements,
building directory, telephone directory, office door or in any other manner by
Consultant shall require prior written consent of the Company.
Consultant acknowledges that he has no and shall not acquire any right to any of
Company's names, logos and/or trademarks and shall cease to use any use allowed
by reason of this Agreement upon termination of this Agreement.
11. Termination. This Agreement shall terminate upon the occurrence of any
-----------
of the following events:
(a) The Company may terminate the Consulting Agreement at any time without
cause upon ten (10) days prior written notice.
(b) The Company reserves the right to terminate the Consulting Agreement at
any time for cause.
(c) Upon termination for any reason, the unearned portion of the
Consultant's stock compensation, as described in Attachment II, shall
immediately expire and be forfeited.
12. Independent Contractor Status. Consultant shall perform duties under
-------------------------------
this Agreement as an independent contractor and not as an employee of Company
for any purpose whatsoever. Consultant shall not, in any manner whatsoever, or
for any purpose or reason, be deemed to be or be treated as an employee of the
Company. Consultant shall not be eligible to participate, by reason of this
Agreement, in any qualified pension plans of Company, or any other employee
fringe benefits provided by the Company. Company shall not withhold any local,
state or federal taxes from Consultant's fee, nor shall Company be obligated to
make any contributions to unemployment insurance or worker's compensation funds
on behalf of Consultant.
13. Representations and Warranties. Company and Consultant do hereby
--------------------------------
represent and warrant to each other that each is an entity duly organized,
validly existing, and in good standing under the laws of the State of
California, and that each has the full right, authority and legal capacity to
enter into and perform its obligations under this Agreement, and that the
adoption and execution of this Agreement has been duly authorized by their
respective representatives and that no further corporate action is necessary to
make this Agreement valid and binding.
14. Indemnification. Consultant shall indemnify, defend and hold Company
---------------
harmless from and against any and all losses, liabilities, damages, claims,
demands, and expenses (including, without limitation, reasonable attorneys'
fees), arising out of any negligence, gross negligence, willful misconduct or
violations of laws and regulations related to the consulting activities of the
Consultant or its employees, or representatives; provided Consultant is notified
promptly in writing of the claim after Company has notice of it, Company has
sole control over its defense or settlement, and Company provides reasonable
assistance in the defense of the same.
The Company indemnifies the Consultant against any and all claims provided that
such claim did not arise from the willful negligence of the Consultant.
15. Arbitration. In the event of any breach arising from the performance of
-----------
this Agreement, either party may request arbitration. In such event, the
parties will submit to arbitration by a qualified arbitrator with the definition
and laws of the state of California. Such arbitration shall be final and
binding on both parties.
16. Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given as if
personally delivered and properly addressed to the parties or their assigns at
the following addresses (or at such addresses as shall be give in the manner
herein provided):
Company:
-------
FoneFriend, Inc.
Attn: President
0000 Xxxxx Xxx. X., Xxxxx X
Xxxxxxxx, XX 00000
Consultant:
----------
Xxxxxxx Xxxxxxx
0000 Xxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
17. Attorneys' Fee and Damages. In the event that either party shall bring
---------------------------
an action in connection with the performance, breach or interpretation of this
Agreement, or any action related to the transaction contemplated hereby, the
prevailing party in such action, as may be determined by binding arbitration,
shall be entitled to recover from the losing party in such action, also as
determined by binding arbitration according to the rules of the American
Arbitration Associate applicable to such action, all reasonable costs and
expenses of such litigation, including attorneys' fees, court costs, costs of
investigation, accounting, and other costs reasonably related to such
litigation, in such amount as may be determined. Further, Company shall be
entitled to damage award(s) as determined by the court having jurisdiction due
to loss or market advantage in the event Consultant is proved to have violated
any of the provisions of the Non Disclosure Agreement.
18. Applicable Laws; Severability. The parties hereto agree that this
-------------------------------
Agreement shall be governed by the laws of the State of California. In the
event that any of the provisions of this Agreement are held to be unenforceable
or invalid, the validity and enforceability of the remaining provisions hereof
shall not be affected thereby.
19. Consultant Confirmation.
------------------------
(a) Consultant confirms that he has read and understands this Consulting
Agreement.
(b) Consultant represents and warrants that he is not subject to any
non-competition obligation and that he is able to commence his position with the
Company at the agreed upon date.
20. Tax Consequences. The parties hereto understand that no tax advice has
----------------
been rendered regarding the consequences of this Agreement. Each party shall
consult an independent tax consultant if necessary.
Agreed effective as of the date last written below.
CONSULTANT COMPANY
/S/ Xxxxxxx Xxxxxxx /S/ Xxxxxxxx Xxxxxx
--------------------- ---------------------
Name: Xxxxxxx Xxxxxxx Name: Xxxxxxxx Xxxxxx
Title: President
November1, 2003 November1, 2003
---------------- ----------------
Date Date
ATTACHMENT I
Services Provided by Consultant
-------------------------------
1. Consultant's Responsibilities: Consultant shall be responsible for
coordinating an alliance which shall be composed of LEC's, IXC's, Winsonic
Holdings, and Company (the "Alliance"). The terms and conditions of said
Alliance shall be set forth in the Strategic Alliance Agreement (the "Strategic
Alliance Agreement") to be executed by the parties no later than thirty (30)
days from the date of this Agreement. The Consultant, together with the
Alliance, will collaborate to complete the tasks described below within the
specified amount of time. Although the Consultant shall not be solely
responsible for completing said tasks, Consultant acknowledges that he plays a
critical role in initiating, facilitating, and bringing to completion the tasks
described below.
(A) PROJECTS.
--------
Definition Stage. Consultant shall collaborate with the Company and the Alliance
----------------
to define and complete all projects within approximately ninety (90) days from
the date of this Agreement. The Parties shall determine, as soon as reasonably
possible the following:
(1) Project name;
(2) Project goals;
(3) Various tasks and specifications pursuant to the goals;
(4) Potential customers;
(5) Anticipated revenue;
(6) Task allocation and the staff involved;
(7) Development and testing facilities; and
(8) Marketing strategies.
Development Stage. Consultant shall collaborate with the Alliance to achieve
------------------
the following tasks for the Company:
(1) integration, engineering services required to make fully operational the
FoneFriend system.
(2) Enable the Company's customers to initiate and complete both
"FoneFriend-to-FoneFriend" calls and "FoneFriend-to-Gateway" calls.
(3) Joint development of co-location facilities, internet connectivity and
call completion services with Level 3 or other similar, suitable providers.
(4) Review and outline for the functional, scaleable operations of the
FoneFriend VoIP telephony system with integration of peripheral services,
customer billing and customer service software
(5) Expansion of lab system; and
(6) Pursuit of further capital.
(7) Acquisition on credit terms of all telecom equipment, including, but not
limited to billing & customer management system, gateway, radius, registration
and connectivity servers, least call routing equipment, etc.
(B) DEBT OR EQUITY FINANCING. Consultant shall collaborate with the Alliance
------------------------
and the Company's brokers to raise a minimum of Three Million Dollars
($3,000,000) in the next round of the Company's equity and/or debt financing.
Compensation for services under this paragraph 1(b) shall be set forth in
Attachment III.
(C) SALE OF COMPANY'S PRODUCTS. Consultant shall collaborate with the
-----------------------------
Alliance and Company sales groups to sell Company's existing products.
(d) Consultant shall use his best efforts to provide such engineering,
management, marketing, and other consulting services as may be assigned to him
from time to time by, and at the sole and exclusive discretion of, the President
(or its designee), and other officers of the Company. Consultant shall render
his advice and service for the best interest of the Company, applying his
knowledge and expertise.
(e) Consultant shall remain an independent contractor free to use at his own
discretion the work time and methods of conduction his business and is not and
shall not be construed to be an employee, partner, joint venturer, agent,
representative or participant of or with the Company pursuant to this Agreement.
(f) Consultant's best efforts shall be devoted to the performance of
Consultant's duties hereunder in a manner which will faithfully and diligently
further the business and interests of Company.
2. Company's Review of Consultant's Performance:
(a) Every month the Company shall evaluate the performance of Consultant.
Such evaluation shall be based in part on the monthly report from the
Consultant.
ATTACHMENT II
Fees and Incentive Compensation
-------------------------------
1. COMPENSATION.
------------
(a) Retainer Fee. As consideration for entering into this Consulting
-------------
Agreement, Consultant shall be paid a one-time fee of $5,000.00 in cash, which
Consultant hereby acknowledges receipt of said Retainer Fee.
(b) Stock Service Fee. As consideration for Consultant's continuing
-------------------
services to be provided to the Company during the term of this Agreement,
Consultant shall be entitled to receive:
(i) A monthly service fee payable in stock at the rate of twenty thousand
(20,000) shares of the Company's common stock for each month that services are
rendered by Consultant. Said stock shall be due and owing to Consultant on a
quarterly basis (every 3 months) and shall be issued to Consultant on or before
the end of the month following each calendar quarter in which services were
performed by Consultant; and
(ii) A one-time Project Completion fee payable in stock in the amount of one
hundred ten thousand (110,000) shares of the Company's common stock, which shall
be due and owing to Consultant upon completion.
2. SUBSCRIPTION AGREEMENT. All fees payable in the form of stock to which
-----------------------
Consultant may become entitled to under this Agreement shall be issued subject
to the Company's receipt of a properly executed subscription agreement, in the
standard form as prepared by and acceptable to the Company. In the event this
Agreement is terminated prior to its initial term, Consultant's right to earn
additional fees payable in stock shall cease as of the date of any such
termination.
3. RESPONSIBILITY FOR TAXES AND SOCIAL SECURITY CONTRIBUTIONS;
-----------------------------------------------------------------
INDEMNIFICATION. Consultant will be responsible for paying his own income and/or
---------------
withholding taxes and any and all health care and social security contribution,
and shall indemnify and hold the Company harmless form and against any and all
claims, demands, causes of action, losses, liabilities, judgements, damages,
obligations, costs or expenses, (including attorneys' fees), arising out of or
in connection with any acts or omissions of Consultant under this Agreement.
ATTACHMENT III
Compensation for Debt or Equity Financing
-----------------------------------------
Xx. Xxxxxxx Xxxxxxx
RE: Engagementof Consultant
------------------------
The purpose of this letter agreement ("Agreement") is to confirm the engagement
of Xx. Xxxxxxx Xxxxxxx (hereinafter, the "Consultant") by FoneFriend, Inc.
(hereinafter, the "Company"), on a non-exclusive basis, to assist the Company in
its efforts to raise capital funding of up to $3,000,000, either from certain
accredited investors ("Investment"), or the equivalent amount in the provision
of services from various third parties ("Service Providers"), or a combination
thereof (hereinafter, such Investment and services from Service Providers are
collectively referred to as the "Financing Facility"), upon terms and conditions
which are solely agreeable to Company. The individual financial and service
requirements that comprise the Financing Facility are described in schedule "A",
attached hereto and made a part of this Agreement, and may be amended from time
to time with such other amounts or items as may be determined and agreed to
between Consultant and the Company. The Company will issue up to six million
six hundred thousand (6,600,000) shares of its common stock (hereinafter,
"Reserve Shares") for Investment and to various Service Providers, in such
amounts as are calculated and set forth in accordance with Schedule "A", as
consideration for receipt of the Financing Facility.
1. ----- DELETED -----
2. Services to be rendered. Upon engagement, the Consultant's primary
------------------------
task shall be to arrange for the procurement of all or part of the Financing
Facility. Consultant may employ the services of individuals or firms, at its
own discretion and expense, to perform the following services as the Company may
reasonably request:
(a) Analysis. Consultant shall perform a financial review and
--------
analysis of any proposed portion of the Financing Facility arranged by
Consultant and make a full and accurate disclosure thereof to the Company for
its review and, at its sole discretion, acceptance.
(b) Familiarization with the Company's Business. Consultant shall
-------------------------------------------
familiarize itself with the needs of the Company and its financial, marketing
and business strategy. In the course of such familiarization, Consultant shall
rely on (i) information supplied by the Company, (ii) information supplied by
third parties employed by the Company (including, but not limited to other
consultants of the Company, accountants, legal counsel, other investment banking
institutions and others), (iii) information obtained as a result of Consultant's
independent investigation, and (iv) information otherwise publicly available.
The Company shall provide Consultant with all information and access to
responsible officers as Consultant shall, from time to time, reasonably request.
(c) Debt and Equity Finance. Consultant shall assist in
--------------------------
determining the lender and/or equity investor, the appropriate amount and
methodology to obtain any portions of the Financing Facility for the purpose of
providing equity venture capital to fund acquisition of necessary infrastructure
for Company to commence operations of its global telecommunications over the
internet market, voice product and service telecommunications business.
(d) Negotiations. Consultant will work with and assist the
------------
Company and other designated consultants in developing a general negotiating
strategy and tactics for accomplishing the Financing Facility, including
negotiations with potential lenders, investors and/or companies and institutions
(all of which shall be "accredited" investors, as that term is defined under
Rule 501 of Regulation D of the Securities Act of 1933 (the "Act"), regarding
the Financing Facility. Company shall have the sole and exclusive right to
accept or reject all prospects, Investment and Service Providers presented to
the Company by Consultant. The Company shall be solely responsible for the
completeness and accuracy of information supplied by Company to Consultant for
this purpose.
(e) Placement. On a best efforts basis, Consultant shall locate
---------
potential venture capital investment, equipment manufacturers and vendors,
banking firms and lending institutions on behalf of the Company, and assist the
Company in negotiating the terms of placement of a Financing Facility or other
appropriate financial and/or services structure for the benefit of the Company.
Consultant understands that any securities issued in connection with the
Financing Facility shall be issued as restricted securities in reliance upon
exemptions from registration as set forth under Regulation D, or Sections 4(2)
or 4(6) of the Act, or other federal of state securities regulations which
provide a similar "safe harbor" exemption.
(f) Nature of Services. Consultant represents and agrees that the
------------------
Company has entered into this Agreement based upon the services to be performed
by Consultant, under the terms of this Agreement, and that Consultant's services
are of a special, unique, extraordinary and intellectual character so as to give
them a peculiar value to the Company, the loss of which cannot be reasonably or
adequately compensated in damages in an action at law. Therefore, Consultant
expressly agrees that the Company, in addition to any other rights or remedies
that it may possess, shall be entitled to injunctive and other equitable relief
to prevent or remedy a breach of this Agreement by Consultant.
(g) Other Services. Consultant shall render such other services
---------------
as shall be necessary and appropriate in connection with the building of the
infrastructure and functionality of Company as requested by Company from time to
time. In addition, if requested by the Company, Consultant shall assist the
Company in development of strategy in the appropriate areas necessary to carry
out the Company's mandate to expand the business to meet the demand for
expansion of the Company's international and second tier voice over the internet
telecommunications strategy. This obligation shall include assisting the
Company in negotiating terms with other companies, persons or groups to fulfill
its marketing strategy.
(h) Limitation of Services. Consultant will not itself directly
------------------------
make or solicit any offer to sell or purchase, or effectuate any actual sale or
purchase of any securities of the Company, and under no circumstances will
Consultant act as a "broker" or "agent" of the Company for purposes of the
Federal securities laws or the securities laws of any state.
3. Term. The term of this Agreement shall be one hundred eighty (180)
----
days from the date hereof; subject, however, to the parties right to terminate
this Agreement as provided for under Section 7 hereof. Thereafter, this
Agreement shall continue on a month-to-month basis until otherwise terminated.
4. Fees. A fee shall be due and owing to Consultant hereunder only in
----
the event that the Company issues any Reserve Shares for an Investment or to a
Service Provider, provided that any such Investment or Service Provider was
procured through the efforts of Consultant. Consultant acknowledges and
understands that the Company has engaged other consultants that will be
procuring Investment and/or Service Providers relating to the Financing
Facility. Consultant shall be due a fee as described in Sections 4(a) through
4(d) in the event that a Financing Facility is provided by a party who can be
verified, to the satisfaction of the Company, to have become familiar with the
Company and its business, through the efforts of the Consultant. No fee or
compensation will be due Consultant for any portion of the Financing Facility
which is obtained for the Company through the efforts of another source or third
party consultant. For all services provided to the Company by Consultant under
this Agreement, the Company will pay Consultant the following fees:
(a) Stock Fee. For a Financing Facility of Three Million
----------
($3,000,000) Dollars (lesser amounts will earn a Fee on a pro-rata basis),
Consultant shall be paid a fee in the form of shares of restricted common stock
of the Company ("Stock Fee") in an amount equal to seven and one half percent
(7.5%) of any Reserve Shares issued by Company in accordance with Schedule "A"
as consideration for (i) a debt or equity Investment, or (ii) the provisioning
of services from a Service Provider accepted and approved by the Company. The
Consultants Stock Fee shall be issued on a pro-rata basis and in like manner
with the Reserve Shares issued for the Financing Facility. The maximum amount of
shares issued hereunder to Consultant as the Stock Fee is 495,000 (i.e.,
6,600,000 Reserve Shares multiplied times 7.5%), assuming all Reserve Shares
were issued solely through the efforts of the Consultant.
(b) All shares of stock issued to Consultant shall be restricted
shares (with the customary and usual restrictive legend heretofore used by the
Company), and shall be subject to the Company's receipt of appropriate
subscription documents as required by the Company. Consultant may request the
Company to remove the restrictive legend following two (2) years from issue
date, provided Consultant shall comply with SEC Rule 144, or thereafter, if the
restrictive legend is not removed within thirty (30) days, the Company will use
its best efforts to effect their registration without delay.
(c) Cash Fee. In addition, the Company shall pay Consultant a
---------
cash fee in an amount equal to five percent (5%) of any cash investment which is
obtained for the Company solely through the efforts of Consultant.
5. Expenses. Consultant shall be responsible for and pay its own
--------
expenses unless otherwise approved, in advance in writing, by the Company. The
Company shall be responsible for the expenses of preparation of the related
documents necessary to complete the Financing Facility. Further, as a condition
to reimbursement of any approved expenses, Consultant shall provide actual
receipts and adequate records and documentation of such expenses as is required
by appropriate law for the substantiation of each such expense as an income tax
deduction for the Company.
6. Indemnity.
---------
(a) Consultant agrees to indemnify and hold the Company and all of
its officers, directors, employees, affiliates, agents, accountants, and
attorneys harmless from and against all losses, claims, damages, liabilities and
expenses incurred by the Company (including fees and disbursements of counsel)
which are related to or arise out of actions taken or omitted to be taken by
Consultant, or any of its affiliates or agents, in connection with Consultant's
activities under this Agreement, including claims or actions under the
Securities Act and any state securities laws, and any claims of any third
parties with respect to the compensation payable hereunder.
(b) Company agrees to indemnify and hold Consultant and all of its
officers, directors, employees, affiliates, agents, accountants, and attorneys
harmless from and against all losses, claims, damages, liabilities and expenses
incurred by the Consultant (including fees and disbursements of counsel) which
are related to or arise out of actions taken or omitted to be taken by Company,
or any of its affiliates or agents, in connection with Company's activities
under this Agreement, including claims or actions under the Securities Act and
any state securities laws, and any claims of any third parties with respect to
the compensation payable hereunder.
7. Termination of Agreement. Company or Consultant may terminate this
-------------------------
Agreement and Consultant's engagement hereunder at any time without cause, and
without any further obligation or liability for such termination, upon ten (10)
days advance written notice to that effect to the other party. Notwithstanding
the foregoing, should Consultant have introduced the Company to a financing
source, the Company agrees that should the Company enter into a Financing
Facility or transaction with such financing source within two (2) years from the
date of this Agreement, then and in such event, the Company agrees to pay to
Consultant the fees as provided for in Section 4 above.
8. General Provisions.
-------------------
(a) Company's Right to Reject Financing Facility or
-----------------------------------------------------
Transaction(s). The Company shall have the sole right, at its discretion, to
--------------
accept or reject any offer by a potential investor for an Investment, or to
retain the services of any Service Provider in furtherance of the Financing
Facility, whether or not such Investment or Service Provider was identified or
procured by Consultant, and, in the event of any rejection, the Company shall
not be liable to Consultant, or any of its agents, for any fees, costs or
damages of any kind whatsoever, regardless of the reasons for such rejection.
Company reserves the right to accept Investment and/or Service Providers from
other consultants and/or agents working on procuring the Financing Facility
without any obligation or liability to Consultant.
(b) Survival of Provisions. The provisions of Sections 4, 6, 7,
------------------------
8(b) and 9 shall Survive termination of this Agreement.
(c) Relationship of the Parties. It is the intent of each party
-----------------------------
hereto that the services of Consultant will be provided as that of an
independent contractor and, as such, they shall be responsible for and shall
indemnify and hold the Company harmless from any compensation of their agents,
employees and representatives, as well as all applicable withholding taxes
thereon, including unemployment compensation and all workmen's compensation
insurance. This Agreement does not establish any employer-employee relationship,
nor any partnership, joint venture, or other business entity or association
between the parties, and neither party is intended to have any interest in the
business or property of the other.
(e) Notices. Any notices, requests, demands or other communication
-------
required or permitted hereunder shall be deemed properly given when personally
served in writing, sent by facsimile transmission, provided that such facsimile
transmission is acknowledged by a return facsimile transmission, or when
deposited in the United States mail, postage prepaid, addressed to the other
party at the following address.
If to the Company: FoneFriend, Inc.
0000 Xxxxx Xxxxxx Xxxx, Xxxxx X
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
If to Consultant: Xx. Xxxxxxx Xxxxxxx
0000 Xxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Fax: (___) ____ - ______
9. Obligations of the Company. Conditioned upon Consultant's execution
--------------------------
of a separate confidentiality and non-circumvention agreement, the Company
acknowledges and agrees that it has performed or will perform the following
undertakings, agreements and covenants in connection with this engagement:
(a) Make Documents Available. Make available or cause to make
--------------------------
available to Consultant (at Company's expense) a breakdown of Company's
financing needs.
(b) Cooperation. Cooperate fully with Consultant in connection
-----------
with its review and analysis and provide Consultant with such information which
Company and Consultant deems to be reasonably necessary in connection with the
Financing Transaction and in order to verify the accuracy of the information
provided by the Company (to the extent that the Company possesses such
information or can acquire it without unreasonable effort or expense). Although
the Company will endeavor to provide Consultant with information that it
believes is accurate and complete at the time it was published, no
representation or warranty, expressed or implied, is made as to the accuracy or
completeness of any information supplied to Consultant (or any Indemnified
Parties) by the Company and/or its agents. Further, nothing contained in such
information furnished by the Company shall be relied upon by Consultant (or any
Indemnified Parties) as a promise or representation, whether as to the past or
the future.
10. Arbitration. Any and all claims, disputes, controversies or
-----------
differences arising between the parties hereto in relation to or in connection
with this Agreement, except in respect of Section 6, shall be determined by
Arbitration. This arbitration shall be held in San Diego County, California and
conducted in accordance with the rules of the American Arbitration Association
before a panel of three arbitrators, of which one arbitrator shall be selected
by each party hereto, and a third arbitrator shall be selected by other two
arbitrators. The decision of a majority of such arbitrators shall be final and
binding upon the parties hereto and may be enforced by any court having
jurisdiction over the subject matter contained therein. The prevailing party
shall be entitled to payment of all costs and expenses related to the
arbitration.
11. The undersigned represents to Consultant that the undersigned has
the authority to execute this Agreement on behalf of the Company and that this
Agreement will be fully binding on the Company. Consultant and the Company
agree that this Agreement shall be construed and enforced in accordance with the
laws of the State of California. This Agreement is not assignable by either
party.
12. This Agreement may be executed in two or more counterparts, and by
facsimile signatures, each of which shall be deemed an original but all of which
together shall be one and the same instrument.
Intending to be legally bound, the parties have executed this Agreement as
of the day and year first written above.
"COMPANY"
FoneFriend, Inc.
By: /S/ Xxxxxxxx Xxxxxx
---------------------
Xxxxxxxx Xxxxxx
President
ACCEPTED AND AGREED TO:
"Consultant"
Xx. Xxxxxxx Xxxxxxx
By: /S/ Xxxxxxx Xxxxxxx
---------------------
Xxxxxxx Xxxxxxx
SCHEDULE "A"
------------
COMPONENTS OF THE FINANCING FACILITY
------------------------------------
DOLLAR PCNT. OFRESERVE
1ST MO. 2ND MO. 3RD MO. VALUE $3.0 MIL SHARES
-------- -------- -------- -------- -------- ---------
1 Cash Loan 50,000 - - 50,000 1.67% 110,000
2 Product Inventory 300,000 - 305,000 605,000 20.17% 1,331,000
3 Roll Out - 100 units 10,000 5,000 5,000 20,000 0.67% 44,000
4 Marketing & Public Relations 10,000 20,000 20,000 50,000 1.67% 110,000
5 Customer Services - 50,000 2,000 52,000 1.73% 114,400
6 Fulfillment Services 2,500 5,000 8,000 15,500 0.52% 34,100
7 Network Services 20,000 45,000 25,000 90,000 3.00% 198,000
8 Deposits - Telcos 20,000 10,000 - 30,000 1.00% 66,000
9 Customer Management System 10,000 25,000 25,000 60,000 2.00% 132,000
10 Technical Support Services 5,000 15,000 20,000 40,000 1.33% 88,000
11 Product Improvements 25,000 50,000 55,000 130,000 4.33% 286,000
12 Accounting 10,000 5,000 5,000 20,000 0.67% 44,000
13 Legal 10,000 5,000 5,000 20,000 0.67% 44,000
14 SEC Compliance 10,000 10,000 10,000 30,000 1.00% 66,000
15 Facilities 6,000 6,000 6,000 18,000 0.60% 39,600
16 General Adminstration 25,000 35,000 40,000 100,000 3.33% 220,000
17 Consultants 10,000 10,000 10,000 30,000 1.00% 66,000
18 Working Capital Reserve 50,000 100,000 120,000 270,000 9.00% 594,000
19 Hardware 40,000 60,000 60,000 160,000 5.33% 352,000
SUB-TOTAL 1,790,500 59.68% 3,939,100
2nd order production reserve 350,000 350,000 11.67% 770,000
Exclusive License Agreement 250,000 250,000 8.33% 550,000
Cost of Funds 300,000 10.00% 660,000
Reserve Fund 309,500 10.32% 680,900
TOTAL 3,000,000 100.00% 6,600,000
