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CONSULTING AGREEMENT
THIS AGREEMENT (the "Agreement") made this 20 day of April, 1999 by and
between and Project Finance Associates, Inc., a corporation organized under the
laws of the State of Nevada, hereinafter, individually or collectively referred
to as ("PFA") or ("Consultant"), located at 00000 X. 00xx Xxx., Xxxxxxxx,
Xxxxxxx 00000 and XxxXxxxxx00.xxx, a corporation organized under the laws of the
State of Arizona, hereinafter individually or collectively known as the
("Client) or the ("Company") located at 0000 Xxxxxxxx Xxx., Xxxxx 0, Xxxxxxx,
Xxx Xxxx 00000.
WITNESSETH:
WHEREAS, Consultant provides a number of services, including but not
limited to providing Client with certain financial advisory services for the
transaction or transactions set forth below. In addition, Consultant provides
development services, organizational and structure services, management
services, business plan and business plan marketing, accounting and financing
assistance, product marketing services, and other products, services and
elements, needed to have a well organized and managed company including the
potential to become a publicly traded company, collectively referred to
hereinafter as ("Services"); and
WHEREAS, Client desires to become a public company and have Client's
shares traded on a recognized exchange and also anticipates the need for
additional capital and wishes to enter into agreements with the Consultant and
other professionals introduced to the Client by the Consultant for the purposes
of assisting Client to become a public company; and
WHEREAS, Consultant has certain specialized knowledge that will
assist Company in the negotiation and performance of the above-referenced
services; and
WHEREAS, the Company desires Consultant to perform certain Services
for the Company upon the terms and conditions contained herein;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein the parties agree as follows.
I. Engagement of Consultant.
The Company hereby engages the Consultant and the Consultant hereby agrees to
provide the Services listed in Description of Services as provided below, in
accordance with the terms of this Agreement.
II. Description of Services
PFA agrees to provide Client, on a best effort's basis, consulting services as
outlined below.
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Scope of Work
PFA will assist, facilitate and coordinate the creation of a
comprehensive strategic public company model and business plan to be utilized in
the production of the Client's strategy to reverse into a public company.
Consultant will assist in the design and creation of the financial terms and
conditions of the structure as well as assist in the drafting and reviewing of
the work product along with the Client's securities legal counsel. Consultant
will represent Company and assist the officers and directors of the Company to
identify a public company opportunity and execute a strategy to assist the
Company in its goal to have its shares publicly traded.
PFA will utilize its investment banking and Broker/Dealer contacts that
include registered investment advisors, analysts, private investors, and
investment companies and market makers. In addition, Consultant will contact
venture capital firms, institutional investors, and commercial investment
banking firms and other investment professionals. Consultant is being retained
for the express purpose of locating a public company, negotiate the acquisition
of such a company and effect an acquisition of the Client by the public company
through a reverse merger.
PFA will advise the Client on strategic alternatives, including but
not limited to possible appropriate mergers and acquisitions, business
combinations, joint ventures, and equity investments in the Company and
strategic alliances to include:
a) Assisting Client in determining the appropriate value of any financial
transaction.
b) Assisting Client in identifying, approaching and negotiating satisfactory
and acceptable financial transactions specifically including mergers and
acquisitions.
c) Assisting Client in analyzing potential transactions including merger and
acquisition due diligence, market research and financial modeling where
appropriate.
d) Recommend and assist Client to evaluate potential new executives and skilled
professional advisors such as attorneys, accountants, valuation experts and
others when required.
e) Assisting client with the assembly and production of all SEC. and each
individual State required due diligence, disclosure material and regulatory and
compliance matters.
Program Services:
PFA is willing to perform the following services where necessary to include:
(a) Assistance in the development of time-lines for development of the Program
(b) Assistance in the initial and ongoing development of a business plan
package for the officers and directors as well as private, institutional and
public investors.
(c) Assistance in the development of budgets and financial planning.
(d) Assistance in selection of management personnel and a well balanced Board
of Directors.
(e) Assistance in developing an appropriate corporate and management structure
to meet die needs of the Company.
(f) Assistance in working with capital resources and underwriters, to review
the pricing and/or operation of the Program.
(g) Assistance in the development and ongoing maintenance of appropriate
relationships with capital sources.
(h) Assistance in the Selection of broker dealers for the sale of securities.
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(i) Assistance in the Selection and introduction of an appropriate
number of market makers for the trading of the company's stock.
(j) Assistance in the selection and ongoing oversight of management
services vendors, consultants, and/or in-house personnel for the
ongoing operation of appropriate systems to deal effectively with:
1. Accounting systems producing meaningful financial reports for
the management team, board of directors, SEC, and investor
community.
2. Private placement to accredited investors
3. Legal issues for securities transactions and SEC reporting
4. Director relations
5. Investor relations
6. Shareholder relations
7. Human Resource requirements
III. Term of Contract
This Agreement will become effective on the date of execution by Client. This
engagement shall be for an initial term of 3 years and may be extended by mutual
agreement between the parties. Upon termination, Client shall have no further
obligation except as provided by this Consulting Agreement with respect to
amounts already owing to Consultant and the rights of Consultant during its
protection period. Consultant shall have no further obligation to Client.
Termination of this Agreement shall not prejudice or in any way invalidate
Consultant's rights as provided herein. This agreement further binds any
successors, assigns, affiliates and subsidiaries of Client. Client or Consultant
may terminate this Agreement upon 60 days prior written notice to the other,
provided that Consultant shall be entitled to the compensation described
elsewhere herein as set forth in the Compensation Section of this Agreement and
incorporated herein by reference through the date of termination. Consultant
shall also be entitled to any success fees and warrants due Consultant through
the date of termination as set forth in the Compensation Section and any success
fees and warrants earned by Consultant during the protection period as set forth
elsewhere herein.
IV. Compensation
a) Costs
Client shall pay to PFA an Advance on expenses of U.S. $15,000 (Fifteen Thousand
U.S. Dollars) within five (5) business days of the date of the execution of this
Agreement as a non-refundable retainer against Project Costs to be incurred by
Consultant on behalf of the Client. Consultant shall provide the Client with a
monthly invoice itemizing expenses which shall include, but not be limited to,
communications, travel and per diem, printing and binding costs and the like. At
such time as the Advance has been expended, Client shall automatically pay to
Consultant a further Advance in the same amount, and Consultant shall continue
to provide services on the terms agreed herein.
b) Third Party Charges In addition, Client shall pre-pay, or be responsible to
pay, all costs, including but not limited to, the costs of a public shell and
for all professional Third Party charges (legal, financial, technical etc.) in
connection with the preparation of documents (Business Plans, Investment
Memoranda, Joint Venture Agreements, Licenses, Memorandum of Agreements and the
like), as may be required from time to time. Client shall also pre-pay, on the
basis of a written proposal of costs, for all charges in connection with Third
Party reviews (Auditors, Technical Evaluation of Product and
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Patents or Patent Applications, Engineering Reports, Product
Testimonials and the like) as may be required from time to time. It is
specifically understood by the Company that employees who will be paid
by Company and other consultants used by the Company to develop any of
the systems listed in item (j) 1 above may not be employees of the
Consultant and will xxxx the Company separately for their services as
mutually agreed with the Company and that the Consultant shall
not be responsible in any way, for the performance of other
consultants or of the Company employees.
c) Success Fee (Development Capital Funding, Acquisitions etc.)
If a transaction is consummated with a prospect, Client shall pay PFA
a Fee based on the total face value of the consideration
("Consideration") paid by the Prospect directly or indirectly in
connection with the Transaction. Consideration may include, but is not
limited to, payments in cash, stock, real and personal property;
warrants and options; fees; notes; debentures; earn outs the total
amount of non-compete, employment, consulting and lease agreements or
amendments thereto; corporate debt or refinancing of any kind; and all
other things of value exchanged or to be exchanged with the
Transaction.
The amount of the Fee shall be five percent (5%) of the Consideration.
Consideration is payable in certified funds at closing. If a portion
of the Consideration is incalculable at closing, such as a royalty or
earnout, the portion of Consultant's fee relating to the Consideration
shall be paid to Consultant when that portion of the Consideration is
payable.
d) Equity Fee for Arranging a Public Company
Further, PFA shall be entitled to receive, as a Fee, not less than
five percent (5%) of the common stock of the public company based on
the total number of shares of common stock of the public company
following the completion of a reverse merger into a public company or
the acquisition of the Client by a public company. This transfer shall
be non-dilutable through the initial trading and through the first
Five Hundred thousand dollars ($500,000) of capital raise.
e) Warrants
In addition to the equity described in III (d) above, the Company
shall provide PFA with warrants to purchase common stock of the public
company as follows:
1. 50.000 warrants at an exercise price of Twenty-five cents
($0.25) per share
2. 50,000 warrants at an exercise price of Fifty cents ($0.50)
per share
3. 50,000 warrants at an exercise price of Seventy-five cents
($0.75) per share
4. 50.000 warrants at an exercise price of One Dollar ($1.00)
per share
The warrants shall be good for two years from the date of issue.
f.) Charter Webmaster Positions
In addition, Client shall register and "gift" two lifetime Charter
Webmaster positions, including all benefits, for Consultants own use
or for Consultant to provide to third parties whose assistance may be
necessary to complete the Services outlined elsewhere herein.
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V. OBLIGATIONS OF CLIENT
a) Provision of Information. Client shall provide Consultant any and
all financial and other business information reasonably required by
Consultant to perform the services set forth herein and shall keep
Consultant informed of all business activities on a timely basis.
b) Accuracy of Information. Client expressly acknowledges and agrees
that it shall use its best efforts to provide full, complete and
accurate business and financial information to Consultant and that
Client is and shall remain solely and exclusively responsible for
the accuracy of any and all such information supplied. Client
expressly agrees to defend, indemnify, and hold Consultant harmless
for any errors, omissions or inaccuracies as set forth below. Client
shall keep and maintain full and adequate books of account and such
other records reflecting the results of operations Such books and
records shall be kept in all material respects in accordance with
GAAP (generally accepted accounting principals) and in accordance
with existing U.S. Tax Code practice.
c) Indemnification. Client agrees to defend, indemnify and hold PFA,
its officers, directors, employees. controlling persons, agents and
assigns harmless from any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries, and
deficiencies, including interest, penalties and reasonable attorneys
fees and costs, that Consultant may incur as a result of a breach by
Client of this agreement and/or the performance of services
thereunder, except to the extent any such claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies are attributable to the negligence or bad faith of
Consultant or its agents.
d) Proprietary Information. Client agrees that any written, printed,
graphic, or electronically or magnetically recorded information
furnished by PFA for Client's use, which is not based upon
information provided by Client, is the sole property of Consultant
and Client. Client, including its officers, directors, controlling
persons, employees and agents, will keep this information in the
strictest confidence during the term of this Agreement.
e) Prospects. All Prospects shall remain the exclusive and
proprietary interest of PFA. Client agrees: to receive and hold in
confidence and with the terms and conditions herein stated all
information which they shall receive from Consultant, its agents or
advisors, that they will not discuss the information they receive
with any other third party except for those individuals within their
employ or retained professional advisors with whom they must consult
in order to evaluate the information they receive, without the prior
written consent of Consultant (which consent where given may include
a condition that a representative of Consultant be present at any
such discussions), that they will not use the information and
introductions they receive to circumvent any interest of PFA in any
manner whatsoever and shall not enter into, or attempt to enter
into, or cause any other party to enter into or attempt to enter
into any Transactions to the detriment of Consultant under the terms
of this Agreement.
f) Exclusivity and Protection. Client agrees that Consultant shall
be the exclusive agent for the provision of the services referenced
in this Agreement. During the term of this agreement if Client
enters into an agreement for a financing commitment with a buyer, a
lender or other financing source of which Client became aware of as
a result of efforts made by Consultant, Client shall pay Consultant
the fee as set forth in the Compensation section of this Agreement.
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(f) Tax and Legal Advice. Client acknowledges that PFA will not provide
tax or legal advice regarding any proposed transaction. Client agrees
to retain tax and legal advisors to advise Client on the tax and legal
consequences of any proposed transaction and agrees that he will not
rely upon Consultant for such advice or counsel.
VI. Obligations of Project Finance Associates, Inc.
a) Provision of Services. PFA agrees to use its best effort to perform
the services set forth in the Description of Services and to comply
with all reasonable requests of Client. Consultant is not, and does not
purport to be qualified to render legal opinions in any form
whatsoever. It will be necessary for Client to submit any work product
developed by Consultant to qualified counsel for review and correction
as to form and substance where necessary and for final conformance with
any and all regulatory agencies that may be affected.
b) Proprietary Information. PFA agrees that any written, printed,
graphic, or electronically or magnetically recorded information
furnished by Client for Consultant's use is the sole property of
Client. Consultant will keep this information in the strictest
confidence, and will not disclose it by any means to any person except
with Client's approval, and only to the extent necessary to perform the
services under this Agreement. This prohibition applies to Consultant's
officers, directors, controlling persons, employees, and agents.
VII. Termination of this Agreement
If either party defaults in the performance of this Agreement or
materially breaches any of its provisions. the non-breaching party may
terminate this agreement by giving written notification to the
breaching party. Termination will take effect immediately on receipt of
notice by the breaching party or five days after mailing of notice,
whichever occurs first.
VIII. Rights of Observation
During the Term of this Agreement, PFA or its designee shall receive
notice of all meetings of the Board of Directors of the Company any and
shall have the right to attend and observe all such Board meetings and
shall be compensated for all normal business expenses.
IX. General Provisions
a) Waiver. No Waiver by any party of any provision of this Agreement
shall constitute a waiver of such party's right to demand exact
compliance with the terms of this Agreement. Waiver by any party of any
default shall not affect or impair such party's rights in respect of
any subsequent default of the same or different provision or
provisions.
b) Non-Assignment. Neither this Agreement nor any duties or
obligations under this Agreement maybe assigned by other party without
the prior written consent of the non-assigning party, provided however,
that this Agreement shall survive any merger or similar transaction and
be binding on any public company that may acquire Client.
c) Modification. This Agreement may only be modified or amended, in
writing, executed by both parties.
d) Arbitration. In the event of a breach or default of this agreement
which does not require injunctive or other non-monetary relief in
addition to a claim for damages, such solely monetary
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breach or default shall be adjudicated under the rules of Judicial
Arbitration and Mediation Services, Inc. ("JAMS") before one
arbitrator.
c) Choice of Law and Venue. This Agreement is entered into in
Maricopa County, Arizona United States of America. The parties
expressly agree that this Agreement shall be interpreted and governed
by the laws of the State of Arizona and that Maricopa County shall be
the only, and proper venue for the resolution of any and all disputes
which may arise regarding the terms and provisions of this Agreement
f) Attorney's Fees. In the event legal action is required to enforce
or interpret the terms or provisions of this Agreement the prevailing
party shall be entitled to recover reasonable attorney's fees and
costs.
g) Notices. Any notices to be given under the terms of this
Agreement shall be deemed to have been given when delivered in
person or mailed postage pre-paid by first-class certified mail,
receipt then certified, to the parties at their current addresses. The
parties' addresses for purpose of Notice may be changed at any time
and Notice provided to the other party accordingly.
h) Successors and Assigns. This Agreement is binding upon and enures
to the benefit of the parties, their executors, administrator, heirs
and any other lawful successors in interest.
i) Titles and Captions. Titles of captions and sections contained
within this Agreement are inserted for reference only and in no way
define, limit, extend or describe the scope of this Agreement and or
the intent of any provision.
j) Integration. This Agreement constitutes the entire agreement by
and between the parties on the subject matter contained heron. No other
agreements, whether oral or written, prior or contemporaneous,
pertaining to the subject matter, exist between the parties.
k) Severability. In the event any provisions of this Agreement are
determined to be invalid or unenforceable, those provisions shall be
deemed severable from the remainder of this Agreement and shall not
cause the invalidity or unenforceability of the remainder of this
Agreement.
THIS SPACE INTENTIONALLY LEFT BLANK
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1) Capacity and Authorization: The parties each agree, represent and
warrant that the undersigned signatories have the legal capacity and
binding authority to execute this Agreement.
APPROVED AND ACCEPTED:
Project Finance Associates, Inc. XxxXxxxxx00.xxx
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxx X. XxXxx,
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Xxxxxxx X. Xxxxxx, President Xxxx X. XxXxx, President
By: /s/ Xxxx Xxxxxx VP
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Xxxx Xxxxxx, Vice President
Dated: April 13, 1999 Dated: 4/20/99
All notices shall be sent to:
Project Finance Associates, Inc. XxxXxxxxx00.xxx
XX Xxx 00000 0000 Xxxxxxxx Xxx., Xxxxx 0
Xxxxxxxx, Xxxxxxx 00000 Xxxxxxx, Xxx Xxxx 00000
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