Exhibit 10.12
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement"), effective as of February 25, 2005,
is entered into by and between The Children's Internet, Inc., a Nevada
corporation (herein referred to as "Company") and Crosslink Financial
Communications, Inc., a California corporation (herein referred to as
"Consultant").
RECITALS
WHEREAS, Company is a publicly-held corporation with its common stock traded on
the OTC Bulletin Board; and
WHEREAS, Company desires to engage the services of Consultant to represent the
company in investors' communications and public relations with existing
shareholders, brokers, dealers and other investment professionals as to the
Company's current and proposed activities, and to consult with management
concerning such Company activities;
NOW THEREFORE, in consideration of the promises and the mutual covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. Term of Consultancy. Company hereby agrees to retain the Consultant to act in
a consulting capacity to the Company, and the Consultant hereby agrees to
provide services to the Company commencing February 25, 2005 and ending twelve
months thereafter.
2. Duties of Consultant. The Consultant agrees that it will generally provide
the following specified consulting services:
(a) Consult and assist the Company in developing and
implementing appropriate plans and means for presenting the Company and
its business plans, strategy and personnel to the financial community,
establishing an image for the Company in the financial community, and
creating the foundation for subsequent financial public relations
efforts;
(b) Introduce the Company to the financial community;
(c) With the cooperation of the Company, maintain an awareness
during the term of this Agreement of the Company's plans, strategy and
personnel, as they may evolve during such period, and consult and assist
the Company in communicating appropriate information regarding such
plans, strategy and personnel to the financial community;
(d) Assist and consult the Company with respect to its (i)
relations with stockholders, (ii) relations with brokers, dealers,
analysts and other investment professionals, and (iii) financial public
relations generally;
(e) Perform the functions generally assigned to stockholder
relations and public relations departments in major corporations,
including responding to telephone and written inquiries (which may be
referred to the Consultant by the Company); preparing press releases for
the Company with the Company's involvement and approval of press
releases, reports and other communications with or to shareholders, the
investment community and the general public; consulting with respect to
the timing, form, distribution and other matters related to such
releases, reports and communications; and, at the Company's request and
subject to the Company's securing its own rights to the use of its names,
marks, and logos, consulting with respect to corporate symbols, logos,
names, the presentation of such symbols, logos and names, and other
matters relating to corporate image;
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(f) Upon the Company's direction and approval, disseminate
information regarding the Company to shareholders, brokers, dealers,
other investment community professionals and the general investing
public;
(g) Upon the Company's approval, conduct meetings, in person or by
telephone, with brokers, dealers, analysts and other investment
professionals to communicate with them regarding the Company's plans,
goals and activities, and assist the Company in preparing for press
conferences and other forums involving the media, investment
professionals and the general investment public;
(h) At the Company's request, review business plans, strategies,
mission statements budgets, proposed transactions and other plans for the
purpose of advising the Company of the public relations implications
thereof; and,
(i) Otherwise perform as the Company's Consultant for public
relations and relations with financial professionals.
3. Allocation of Time and Energies. The Consultant hereby promises to perform
the responsibilities which may be assigned to the Consultant from time to time
by the officers and duly authorized representatives of the Company in connection
with the conduct of its financial and public relations and communications
activities, so long as such activities are in compliance with applicable
securities laws and regulations. Consultant and staff shall diligently provide
the consulting services required hereunder. Although no specific hours-per-day
requirement will be required, Consultant and the Company agree that Consultant
will perform the duties set forth herein above in a diligent and professional
manner. It is explicitly understood that Consultant's performance of its duties
hereunder will in no way be measured by the price of the Company's common stock,
nor the trading volume of the Company's common stock.
4. Remuneration. As full and complete compensation for services described in
this Agreement, the Company shall compensate Consultant as follows:
4.1 For undertaking this engagement and for other good and valuable
consideration, the Company agrees to issue and deliver to the Consultant a
"Commencement Bonus" payable in the form of 200,000 shares (collectively,
the "Shares") of the Company's Common Stock ("Common Stock"). This
Commencement Bonus shall be issued to the Consultant immediately following
execution of this Agreement and shall, when issued and delivered to
Consultant, be fully paid and non-assessable. The Company understands and
agrees that Consultant has foregone significant opportunities to accept
this engagement and that the Company derives substantial benefit from the
execution of this Agreement and the ability to announce its relationship
with Consultant. The 200,000 Shares of Common Stock issued as a
Commencement Bonus, therefore, constitute payment for Consultant's
agreement to consult to the Company and are a nonrefundable,
non-apportionable, and non-ratable retainer; such Shares of common stock
are not a prepayment for future services. If the Company decides to
terminate this Agreement prior to February 25, 2006, for any reason
whatsoever, it is agreed and understood that Consultant will not be
requested or demanded by the Company to return any of the Shares of Common
Stock paid to it as Commencement Bonus hereunder. Further, if and in the
event the Company is acquired in whole or in part, during the term of this
agreement, it is agreed and understood Consultant will not be requested or
demanded by the Company to return any of the 200,000 Shares of Common
stock paid to it hereunder. It is further agreed that if at any time
during the term of this agreement, the Company or substantially all of the
Company's assets are merged with or acquired by another entity, or some
other change occurs in the legal entity that constitutes the Company, the
Consultant shall retain and will not be requested by the Company to return
any of the 200,000 Shares.
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4.2 Monthly Stock Compensation The Company agrees to issue and
deliver, every month on the contract anniversary of this Agreement, an
additional 8,000 Shares of Common Stock.
4.3 With each transfer of Shares of Common Stock to be issued
pursuant to this Agreement, Company shall cause to be issued a certificate
representing the Common Stock and a written opinion of counsel for the
Company stating that said Shares are validly issued, fully paid and
non-assessable and that the issuance and eventual transfer of them to
Consultant has been duly authorized by the Company. Company warrants that
all Shares issued to Consultant pursuant to this Agreement shall have been
validly issued, fully paid and non-assessable and that the issuance and
any transfer of them to Consultant shall have been duly authorized by the
Company's Board of Directors.
The Company further agrees that all Shares issued to Consultant
hereunder shall carry "piggyback registration rights" whereby such Shares
will be included in the next registration statement filed by the company.
The Company further agrees that it will file a registration statement in
which the Consultant is permitted to participate no later than February
25, 2006. Consultant agrees that it will not sell or transfer, during the
terms of this Agreement, any of the Shares of Company stock issued to
Consultant.
4.4 Consultant acknowledges that the Shares of Common Stock to be
issued pursuant to this Agreement have not been registered under the
Securities Act of 1933, and accordingly are "restricted securities" within
the meaning of Rule 144 of the Act. As such, the Shares may not be resold
or transferred unless the Company has received an opinion of counsel
reasonably satisfactory to the Company that such resale or transfer is
exempt from the registration requirements of that Act.
5. Monthly Cash Compensation. The Company agrees to pay Consultant a cash fee of
$5,000 per month for the term of the Agreement. The first payment is due on the
date the assignment is actually initiated), and subsequent payments are due on
the same day of each calendar month for the subsequent eleven months, and any
extensions thereafter. Out of this fee, Consultant will pay for complementary
services (e.g., other mailing services, email services, data base extensions) up
to an average of $2,500 per month, never less than $1,500 per month. Invoices
and documents indicating the payment for those services will be supplied to
Company.
6. Financing "Finder's Fee". It is understood that in the event Consultant
introduces Company, or its nominees, to a lender or equity purchaser, not
already having a preexisting relationship with the Company, with whom Company,
or its nominees, ultimately finances or causes the completion of such financing,
Company agrees to compensate Consultant for such services with a "finder's fee"
in the amount of 4.0% of total gross funding provided by such lender or equity
purchaser, such fee to be payable in cash. This 4.0% will be in addition to any
fees payable by Company to any other intermediary, if any, which shall be the
subject of separate agreements, negotiated between Company and such other
intermediary. It is also understood that in the event Consultant introduces
Company, or its nominees, to an acquisition candidate, either directly or
indirectly through another intermediary, not already having a preexisting
relationship with the Company, which Company, or its nominees, ultimately
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acquires or causes the completion of such acquisition, Company agrees to
compensate Consultant for such services with a "finder's fee" in the amount of
4% of total gross consideration provided by such acquisition, such fee to be
payable in cash. This 4% will be in addition to any fees payable by Company to
any other intermediary. It is specifically understood that Consultant is not and
does not hold itself out be a Broker/Dealer, but is rather merely a "Finder" in
reference to the Company procuring financing sources and acquisition candidates.
Any obligation to pay a "Finder's Fee" hereunder shall survive the merging,
acquisition, or other change in the form of entity of the Company and to the
extent it remains unfulfilled shall be assigned and transferred to any successor
to the Company.
Company agrees that said compensation to Consultant shall be paid in full at the
time said financing or acquisition is closed, such compensation to be
transferred by Company to Consultant within seven (7) business days of the
execution of the financing of acquisition closing document. Payment of said
compensation shall be a condition precedent to the closing of such financing or
acquisition, and Company shall execute any and all documents necessary to effect
said compensation. As further consideration to Consultant, Company, or its
nominees, agrees to pay with respect to any financing or acquisition candidate
provided directly or indirectly to the Company by any lender or equity purchaser
covered by this Section 5 during the period of one year from the close of the
term of this Agreement, a fee to Consultant equal to that outlined in Section 5
herein.
Consultant will notify Company of introductions it makes for potential sources
of financing or acquisitions in a timely manner (within approximately 3 days of
introduction) via facsimile memo. If Company has a preexisting relationship with
such nominee and believes such party should be excluded from this Agreement,
then Company will notify Consultant immediately within twenty-four (24) hours of
Consultant's facsimile to Company of such circumstance via facsimile memo.
7. Non-Assignability of Services. Consultant's services under this contract are
offered to Company only and may not be assigned by Company to an entity with
which Company merges or which acquires the Company or substantially all of its
assets. In the event of such merger or acquisition, all compensation to
Consultant herein under the schedules set forth herein shall remain due and
payable, and any compensation received by the Consultant may be retained in the
entirety by Consultant, all without any reduction or pro-rating and shall be
considered and remain fully paid and non-assessable. Notwithstanding the
non-assignability of Consultant's services, Company shall assure that in the
event of any merger, acquisition, or similar change of form of entity, that its
successor entity shall agree to complete all obligations to Consultant,
including the provision and transfer of all compensation herein, and the
preservation of the value thereof consistent with the rights granted to
Consultant by the Company herein, and to Shareholders.
8. Expenses. Consultant agrees to pay for all its ordinary expenses (phone,
faxing, labor, etc.). Out of pocket expenses for extraordinary items (travel
required by/or specifically requested by the Company, luncheons or dinners to
large groups of investment professionals, mass faxing to a sizable percentage of
the Company's constituents, investor conference calls, print advertisements in
publications, etc.) shall be paid by the Company within ten business days of
receipt of invoice.
9. Indemnification. The Company warrants and represents that all oral
communications, written documents or materials furnished to Consultant by the
Company with respect to financial affairs, operations, profitability and
strategic planning of the Company are accurate and Consultant may rely upon the
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accuracy thereof without independent investigation. The Company will protect,
indemnify and hold harmless Consultant against any claims or litigation
including any damages, liability, cost and reasonable attorney's fees as
incurred with respect thereto resulting from Consultant's communication or
dissemination of any said information, documents or materials excluding any such
claims or litigation resulting from Consultant's communication or dissemination
of information not provided or authorized by the Company.
10. Representations. Consultant represents that it is not required to maintain
any licenses and registrations under federal or any state regulations necessary
to perform the services set forth herein. Consultant acknowledges that, to the
best of its knowledge, the performance of the services set forth under this
Agreement will not violate any rule or provision of any regulatory agency having
jurisdiction over Consultant. Consultant acknowledges that, to the best of its
knowledge, Consultant and its officers and directors are not the subject of any
investigation, claim, decree or judgment involving any violation of the SEC or
securities laws. Consultant further acknowledges that it is not a securities
Broker Dealer or a registered investment advisor. Company acknowledges that, to
the best of its knowledge, that it has not violated any rule or provision of any
regulatory agency having jurisdiction over the Company. Company acknowledges
that, to the best of its knowledge, Company is not the subject of any
investigation, claim, decree or judgment involving any violation of the SEC or
securities laws.
11. Legal Representation. The Company acknowledges that it has been represented
by independent legal counsel in the preparation of this Agreement. Consultant
represents that it has consulted with independent legal counsel and/or tax,
financial and business advisors, to the extent the Consultant deemed necessary.
12. Status as Independent Contractor. Consultant's engagement pursuant to this
Agreement shall be as independent contractor, and not as an employee, officer or
other agent of the Company. Neither party to this Agreement shall represent or
hold itself out to be the employer or employee of the other. Consultant further
acknowledges the consideration provided hereinabove is a gross amount of
consideration and that the Company will not withhold from such consideration any
amounts as to income taxes, social security payments or any other payroll taxes.
All such income taxes and other such payment shall be made or provided for by
Consultant and the Company shall have no responsibility or duties regarding such
matters. Neither the Company nor the Consultant possesses the authority to bind
each other in any agreements without the express written consent of the entity
to be bound.
13. Attorney's Fee. If any legal action or any arbitration or other proceeding
is brought for the enforcement or interpretation of this Agreement, or because
of an alleged dispute, breach, default or misrepresentation in connection with
or related to this Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs in connection
with that action or proceeding, in addition to any other relief to which it or
they may be entitled.
14. Waiver. The waiver by either party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any subsequent breach by such other party.
15. Choice of Law, Jurisdiction and Venue. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of California.
The parties agree that San Francisco County, CA. will be the venue of any
dispute and will have jurisdiction over all parties.
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16. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the alleged breach thereof, or relating to Consultant's activities
or remuneration under this Agreement, shall be settled by binding arbitration in
California, in accordance with the applicable rules of the American Arbitration
Association, and judgment on the award rendered by the arbitrator(s) shall be
binding on the parties and may be entered in any court having jurisdiction as
provided by Paragraph 14 herein. The provisions of Title 9 of Part 3 of the
California Code of Civil Procedure, including section 1283.05, and successor
statutes, permitting expanded discovery proceedings shall be applicable to all
disputes that are arbitrated under this paragraph.
17. Complete Agreement. This Agreement contains the entire agreement of the
parties relating to the subject matter hereof. This Agreement and its terms may
not be changed orally but only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
AGREED TO:
"Company" The Children's Internet, Inc.
Date: February 25, 2005 By: /s/ Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx, Chief Executive Officer
"Consultant" CROSSLINK FINANCIAL COMMUNICATIONS, INC.
Date: February 25, 2005 By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, President
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