CONSULTING AGREEMENT
Exhibit
10.16
THIS
CONSULTING AGREEMENT ("Agreement") is made and entered into in duplicate
and
shall be effective as of December 19, 2006 (“Effective Date”), by and between
Cobalis Corp., a Nevada corporation ("Corporation"), and Xxxxx Xxxxxxx
(“Consultant").
RECITALS
A.
It is
the desire of the Corporation to engage the services of the Consultant to
provide consulting services for the Corporation, including accounting and
recordkeeping services, preparation of financial statements and special
projects, as set forth herein.
B.
It is
the desire of the Consultant to so consult with the Board of Directors of
the
Corporation (“Board”) and the officers of the Corporation and fulfill his
consulting duties under the title as “Interim Chief Financial Officer” (“Interim
CFO”) of the Corporation.
NOW,
THEREFORE, IN CONSIDERATION OF THE MUTUAL PROMISES, COVENANTS AND UNDERTAKINGS
HEREIN SPECIFIED AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT
AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE OBLIGATED
LEGALLY AND EQUITABLY, THE PARTIES AGREE WITH EACH OTHER AS
FOLLOWS:
1.
Term of Agreement and Termination.
The
respective duties and obligations of the parties shall commence on the Effective
Date and shall continue until December 31, 2007. Either party may terminate
this
Agreement by giving the other party at least 30 days prior written notice
of
termination. This Agreement shall automatically terminate 30 days from the
date
appearing on the written notice.
2.
Duties.
The
Consultant shall consult with the Board and the officers of the Corporation
concerning any issue of importance regarding duties necessary in performing
duties as Interim CFO, including:
| a. |
Accounting
and Recordkeeping.
The Consultant will gain an understanding of the key accounting
principles, and procedures being followed, recordkeeping methods
and data
maintenance, file structures and file contents, and timeliness of
reporting and reporting mechanisms. If recommendations for changes
are
noted, as they pertain to safeguarding of assets, weaknesses in internal
controls, or efficiency and effectiveness of the accounting staff,
the
Consultant will discuss these matters with the Corporation’s management.
The Consultant will assist with implementation of proposed changes
as
directed by the Corporation’s management. This work will be done on an
ongoing basis.
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| b. |
Financial
Statements.
In connection with the quarterly financial statements prepared by
the
Corporation to be included in filing with the Securities and Exchange
Commission (“SEC”), the Consultant will prepare and review journal
entries, require and/or perform specific account analysis, review
the
assumptions used in expense accruals, revenue recognition, and tax
calculations, and perform other procedures as needed.
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| i. |
The
above work will be done on a timely basis to ensure that the Corporation
meets its timetable for filing its quarterly and annual reports with
the
Securities and Exchange Commission. These procedures do not constitute
an
audit, review or compilation of the financial statements in accordance
with the standards established by the American Institute of Certified
Public Accountants. The quarterly reviews and the annual audit will
be
performed by the accounting firm as selected, from time to time,
by the
Corporation.
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| ii. |
The
work shall be performed on a part-time basis, which limits the
Consultant’s involvement and knowledge of the Corporation’s daily
operations. Because of this, there is a risk that material errors,
irregularities, or illegal acts, including fraud or defalcation,
may exist
and may not be detected by the Consultant.
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| c. |
Other
Duties
During the Consultant’s engagement, the Consultant will assist with other
matters of the Corporation. These can include, but are not limited
to, SEC
filings, cash management, other tax issues, personnel procedures,
liaison
with vendors and customers or other professionals engaged by the
Corporation, and assistance with development of operating budgets
and
forecasts.
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3.
Management Power of Consultant.
The
business affairs of the Corporation and the operation of business of the
Corporation shall be conducted by the officers and administrative staff and
employees of the Corporation. It is the intention of the Corporation not
to
confer on the Consultant, and the Consultant shall not have, any power of
direction, management, supervision or control of the administrative staff
or
other employees of the Corporation or to otherwise be involved with the
management of the business of the Corporation.
4.
Authority to Contract.
The
Consultant shall have no power to, and the Consultant shall not, obligate
the
Corporation in any manner whatsoever to any contract, agreement, undertaking,
commitment or other obligation.
5. Consultant
Fees.
For the
services described herein, the Consultant will be paid the following:
| a. |
Cash
Fees.
Cash fees will be at the rate of $4,166.67 per month, which accrue
beginning December 19, 2006. Consultant will send statements for
services
on a monthly basis. All amounts payable are payable by the Corporation
within 14 days of receipt of Consultant’s
invoice.
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| b. |
Common
Stock.
In addition to the cash fees, the Corporation will issue shares of
its
common stock to Consultant as follows:
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January
1, 2007: 50,000
shares
April
1,
2007: 50,000
shares
July
1,
2007: 50,000
shares
October
1, 2007: 50,000
shares
The
Corporation acknowledges that prior to executing this Agreement, the Consultant
had not been issued the 50,000 shares that were payable on January 1, 2007.
The
shares yet to be issued shall be issued pursuant to instructions provided
by
Consultant. If the Agreement is terminated before the end of the term specified,
shares not yet issued shall be forfeited.
In
the
event of a Change of Control of the Corporation prior to October 1, 2007,
all
unissued shares shall be issued immediately.
For
purposes of this Agreement, a "Change in Control" shall mean any of the
following events:
| 1. |
the
acquisition (other than from the Corporation) by any person (as such
term
is defined in Section 13(c) or 14(d) of the Securities Exchange Act
of
1934, as amended (the "1934 Act")) of beneficial ownership (within
the
meaning of Rule 13d-3 promulgated under the 0000 Xxx) of fifty-one
percent
(51%) or more of the combined voting power of the Corporation's then
outstanding voting securities, excluding any acquisition by Cornell
Capital, LP of shares contemplated by the terms of the Securities
Purchase
Agreement and any associated agreements, executed by the Corporation
on
December 20, 2006;
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| 2. |
the
individuals who, as of the date hereof, are members of the Board
(the
"Incumbent Board"), cease for any reason to constitute at least two
thirds
(2/3) of the Board, unless the election, or nomination for election
by the
Corporation's stockholders, of any new director was approved by a
vote of
at least two thirds (2/3) of the Incumbent Board, and such new director
shall, for purposes of this Agreement, be considered as a member
of the
Incumbent Board;
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| 3. |
approval
by stockholders or the Board of:
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(i) a
merger
or consolidation involving the Corporation and an independent third party
if the
stockholders of the Corporation, immediately before such merger or
consolidation, do not, as a result of such merger or consolidation, own,
directly or indirectly, more than seventy percent (70%) of the combined voting
power of the then outstanding voting securities of the corporation resulting
from such merger or consolidation in substantially the same proportion as
their
ownership of the combined voting power of the voting securities of the
Corporation outstanding immediately before such merger or consolidation;
or
(ii) an
agreement for the sale or other disposition of all or substantially all of
the
assets of the Corporation to an independent third party; and
| 4. |
the
liquidation or dissolution of the
Corporation.
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Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur pursuant
to this
Section, solely because thirty percent (30%) or more of the combined voting
power of the Corporation's then outstanding securities is acquired by any
corporation which, immediately prior to such acquisition, is owned directly
or
indirectly by the stockholders of the Corporation in the same proportion
as
their ownership of stock in the Corporation immediately prior to such
acquisition.
| c. |
Expenses.
Fees do not include out-of-pocket expenses advanced on behalf of
the
Corporation, such as computer charges, telephone calls, postage,
photocopying, out of town travel, etc.; these will be billed separately
and will be payable on the same terms as the cash fees provided for
in
Section 5(a) hereof. Notwithstanding the foregoing, Consultant shall
not
be entitled to reimbursement of expenses over $250 unless such expenses
are pre-approved, in writing, by the Corporation prior to Consultant
incurring such expense.
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| d. |
Fee
Disputes.
If any dispute arises among the parties to this Agreement, the parties
agree to first try in good faith to settle the dispute by mediation
administered by the American Arbitration Association under its Rules
for
Professional Accounting and Related Services Disputes before resorting
to
litigation. The costs of any mediation proceeding shall be shared
equally
by all parties. The Corporation and the Consultant both agree that
any
dispute over fees charged by the Consultant to the Corporation will
be
submitted for resolution by arbitration in accordance with the Rules
for
Professional Accountant and Related Services Disputes of the American
Arbitration Association. Such arbitration shall be binding and final.
IN
AGREEING TO ARBITRATION, CONSULTANT AND THE CORPORATION BOTH ACKNOWLEDGE
THAT IN THE EVENT OF A DISPUTE OVER FEES CHARGED BY THE CONSULTANT,
EACH
IS GIVING UP THE RIGHT TO HAVE THE DISPUTE DECIDED IN A COURT OF
LAW
BEFORE A JUDGE OR JRY AND INSTEAD, THE CONSULTANT AND THE CORPORATION
ACCEPT THE USE OF ARBITRATION FOR RESOLUTION.
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6.
Services of Consultant Not Exclusive.
The
Consultant may represent, perform services for, and be employed by, any
additional persons as the Consultant, in the Consultant's sole discretion,
determines to be necessary or appropriate.
7.
Relationship Created.
The
Consultant is not an employee of the Corporation for any purpose whatsoever,
but
is an independent contractor. The Consultant shall have the sole and exclusive
control of the manner and means of performing pursuant to this Agreement.
The
Corporation shall not have the right to require the Consultant to do anything
which would jeopardize the relationship of independent contractor between
the
Corporation and the Consultant.
8.
Indemnification.
Each
party shall save the other party harmless from and against and shall indemnify
the other party for any liability, loss, costs, expenses, or damages however
caused by reason of any injury (whether to body, property, or personal or
business character or reputation) sustained by any person or to any person
or to
property by reason of any act, neglect, default, or omission of such party
or
any of such party’s agents, employees, or other representatives, and, such party
shall pay any and all amounts to be paid or discharged in case of an action
or
any such liability less costs, expenses, or damages. If either party is sued
in
any court for damages by reason of any of the acts of the other party referred
to in this Paragraph 8, such other party shall defend said action (or cause
same
to be defended) at such other party’s own expense and shall pay and discharge
any judgment that may be rendered in any such action; if such other party
fails
or neglects to so defend in said action, the party sued may defend the same
and
any expenses, including reasonable attorneys’ fees, which such party may pay or
incur in defending said action and the amount of any judgment which such
party
may be required to pay as a result of said action shall be promptly reimbursed
upon demand.
9.
Governmental Rules and Regulations.
The
provisions of this Agreement are subject to any and all present and future
orders, rules and regulations of any duly constituted authority having
jurisdiction of the relationship and transactions contemplated by the provisions
of this Agreement.
10.
Notices.
All
notices, requests, demands or other communications pursuant to this Agreement
shall be in writing or by telex or facsimile transmission and shall be deemed
to
have been duly given (i) on the date of service, if delivered in person or
by
telex or facsimile transmission (with the telex or facsimile confirmation
of
transmission receipt serving as confirmation of service when sent and provided
telexed or telecopied notices are also mailed by first class, certified or
registered mail, postage prepaid); or (ii) 48 hours after mailing by first
class, registered or certified mail, postage prepaid, and properly addressed
as
follows:
5
If
to the
Corporation: Cobalis
Corp.
0000
XxXxxx Xxx, Xxxxx 000
Xxxxxx,
XX 00000
If
to the
Consultant:
Xxxxx
Xxxxxxx
Xxxxxxx
& Green CPAs
00000
Xxxxxxxxxxxxx Xxxx
Xxxxxxxx,
XX 00000
11.
Entire Agreement.
This
Agreement is the final written expression and the complete and exclusive
statement of all the agreements, conditions, promises, representations,
warranties and covenants between the parties with respect to the subject
matter
of this Agreement, and this Agreement supersedes all prior or contemporaneous
agreements, negotiations, representations, warranties, covenants, understandings
and discussions by and between and among the parties, their respective
representatives, and any other person, with respect to the subject matter
specified in this Agreement. This Agreement may be amended only by an instrument
in writing which expressly refers to this Agreement and specifically states
that
such instrument is intended to amend this Agreement and is signed by each
of the
parties.
12.
Number and Gender.
Whenever
the singular number is used in this Agreement, and when required by the context,
the same shall include the plural, and vice versa; the masculine gender shall
include the feminine and neuter genders, and vice versa; and the word "person"
shall include corporation, firm, trust, estate, joint venture, governmental
agency, sole proprietorship, political subdivision, company, congregation,
organization, fraternal order, club, league, society, municipality, association,
joint stock company, partnership or other form of entity.
13.
Execution in Counterparts.
This
Agreement may be prepared in multiple copies and forwarded to each of the
parties for execution. All of the signatures of the parties may be affixed
to
one copy or to separate copies of this Agreement and when all such copies
are
received and signed by all the parties, those copies shall constitute one
agreement which is not otherwise separable or divisible.
14.
Choice of Law and Consent to Jurisdiction.
Notwithstanding the provisions of Paragraph 5(d) above regarding fee disputes,
all questions concerning the validity, interpretation or performance of any
of
the terms, conditions and provisions of this Agreement or of any of the rights
or obligations of the parties, shall be governed by, and resolved in accordance
with, the laws of the State of California. Any and all actions or proceedings,
at law or in equity, to enforce or interpret the provisions of this Agreement
shall be litigated in courts having situs within the County of Orange, State
of
California, and each party hereby consents to the exclusive jurisdiction
of any
local, state or federal court located within the County of Orange, State
of
California and consents that any service of process in such action or proceeding
may be made by personal service upon such party wherever such party may be
then
located, or by certified or registered mail directed to such party at such
party's last known address.
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15.
Assignability.
Neither
party shall sell, assign, transfer, convey or encumber this Agreement or
any
right or interest in this Agreement or pursuant to this Agreement, or suffer
or
permit any such sale, assignment, transfer or encumbrance to occur by operation
of law without the prior written consent of the other party.
16.
Consent to Agreement.
By
executing this Agreement, each party represents such party has read or caused
to
be read this Agreement in all particulars, and consents to the rights,
conditions, duties and responsibilities imposed upon such party as specified
in
this Agreement.
IN
WITNESS WHEREOF the parties have executed this Consulting Agreement in duplicate
and in multiple counterparts, each of which shall have the force and effect
of
an original, on the date specified in the preamble of this
Agreement.
| CORPORATION: | CONSULTANT: | ||
|
a
Nevada corporation
|
Xxxxx
Xxxxxxx
Xxxxxxx
& Green, CPAs
|
||
| Dated: March 20, 2007 | Dated: March 20, 2007 | ||
| By: /s/ Xxxxxxx Xxxxxxxx | By: /s/ Xxxxx Xxxxxxx | ||
|
Xxxxxxx Xxxxxxxx Its:
President
|
Xxxxx Xxxxxxx |
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