[LETTERHEAD]
April 28, 1999
Xxxxx Xxxxx
President and CEO
iChargeit, Inc.
0000 Xxxxxxxx Xxxxxx, #000
Xxxxxxxxxx Xxxxx, XX 00000
Re: Fee Arrangement
Dear Xxxxx:
Thank you for affording Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, a professional
corporation (the "Firm") the opportunity of representing iChargeit, Inc. (the
"Company"), as its corporate counsel. This letter agreement memorializes and
summarizes our discussions concerning the terms of the fee arrangement between
the Company and the Firm.
1. NATURE OF ENGAGEMENT. We will provide general corporate legal
services on behalf of the Company. I will be personally involved in providing
service to the Company with other attorneys and paraprofessionals of the Firm,
as appropriate. We understand that this relationship will include such matters
as the analysis, research, review and revisions of documents relating to the
reverse merger and the preparation, review and revision of standard and custom
form contracts and agreements, general human resource matters including employee
hiring and termination issues, preparation and review of employment agreements
and arrangements, documentation concerning employee benefits, compliance with
applicable employment and other regulations effecting employers, equity and
other benefit and welfare plans for employees, review of engagement letters and
fee arrangements with other professionals, preparation and review of corporate
records and general corporate law matters including duties and obligations of
the board of directors and officers and other matters arising under California
law and applicable common law. In addition, we understand that the Company may,
from time-to-time, engage the Firm to provide legal services for other matters
which may include litigation, acquisitions or dispositions of significant
amounts of assets or entities, material equity or debt financings and other
transactions.
2. RETAINER. The Company shall pay the Firm an initial retainer in the
amount of $50,000. This retainer will be held by us in our general accounts as
payment for future services and costs. We will provide the Company with monthly
invoices for services rendered and costs incurred which the Company agrees to
pay within thirty days of presentation in order to maintain, at all times,
Xxxxx Xxxxx
April 27, 1999
Page Two
a retainer of $50,000 on deposit with us. At the end of our engagement, and
after the payment of all of our invoices, any remaining retainer balance will
be refunded to you.
3. FEES. Generally, our invoices are for costs incurred and work
performed by attorneys and paraprofessionals on an hourly basis at the
then-current hourly rates. Currently, our rates run from $100 to $125 for
paraprofessionals, $145 to $245 for associates and $275 to $425 for shareholders
(partners) of the Firm. Our rates are traditionally reviewed at the beginning of
each year and are usually increased without prior notification to reflect
experience and other factors. Our rates are charged in 1/10th hour increments.
This means that you are charged in increments of six (6) minutes even though the
time spent may be less than that.
4. COSTS. The Company agrees to pay all out-of-pocket costs incurred
with respect to the matters for which we are engaged. Such costs will include
local telephone and telecommunications charges, computer charges, internal
copying charges, fees paid to third parties such as messenger fees, Federal
Express or other courier fees, travel expenses, parking, out of town travel
expenses, printing, filing or recording fees advanced on the Company's behalf
and other out-of-pocket costs incurred in connection with our engagement. All
significant third party fees or expenses will be subject to your prior approval.
5. BILLING PROCEDURES. We prepare invoices for services and costs on a
monthly basis. Our invoices to you will reflect the date and a description of
the services performed and a summary of the costs which we have incurred on your
behalf. Costs which are incurred but not posted may appear on the following
month's statement. Our invoices are payable within thirty (30) days of
presentation. Our Firm has adopted a policy of reserving the right to charge
interest at the rate of 1.5% per month on overdue balances. We reserve the right
to withdraw as your counsel of record in this or any related matter if you fail
to pay bills properly or if other valid reasons arise as determined in our sole
discretion. In the unlikely event an action or other proceeding is commenced
with respect to the collection of our invoices, the prevailing party shall be
entitled to reasonable attorney's fees.
6. OUTSIDE SERVICE PROVIDERS. Occasionally, with your prior consent, we
may contract with outside parties for services in connection with our
representation of the Company. If we do, we may forward the invoice directly to
the Company and ask that the Company pay the invoice directly.
7. ESTIMATE. You have requested us to estimate the fees and costs of
the work which we will perform for you in connection with (i) completing the
reorganization of the Company, including the disposition of HerbRx; (ii)
completing the Form 10 and/or the S-4, including preparation of a proxy
statement for reincorporating in Delaware; and (iii) drafting and finalizing the
incentive stock option, nonqualified stock option and restricted stock purchase
plan, non-disclosure agreements and other matters associated with the review and
"clean-up" of the reverse merger. We have made a preliminary review of the
documentation you have provided to us and based on our review, we estimate that
our fees, exclusive of costs, will be approximately $100,000 for the above work.
Our estimate is just that, an estimate. We cannot guarantee that the actual fees
and costs will not be higher than estimated amounts, because complicated
business transactions often involve unexpected
Xxxxx Xxxxx
April 27, 1999
Page Three
difficulties which take time and effort to resolve. As we begin to perform
services, we will have a clearer understanding of the amount and the scope of
the work that needs to be performed and if, at any time, we believe that the
charges for the above work will exceed $100,000, we will so advise you.
8. TERMINATION OF SERVICES. Subject to the limitations imposed by law,
our engagement may be terminated at any time by either you or us. Upon
termination of our engagement, a final statement will be prepared for fees and
costs incurred through the date of termination. Upon your written request, a
copy of the file (other than any portions covered by the attorney work product
doctrine) made at your expense will be delivered to you or your authorized
representative at your expense.
9. CLIENT OBLIGATIONS. It is your responsibility to be truthful with
us, to provide us with information in your possession helpful to completion of
legal services, and to cooperate in completion of the matters for which we have
been engaged.
10. ESTIMATED FEES. Whenever our representation involves litigation or
another extraordinary matter, we prefer to avoid fee estimates. The outcome of
any litigation matter can never be assured. Likewise, the amount of fees and
costs involved in a litigation or other extraordinary matter can often be
difficult to gauge, as the legal tactics employed by the opposition can
dramatically affect the time and effort involved in the matter. We cannot
estimate with any accuracy the number, length or complexity of the motions,
depositions, interrogatories or other discovery made by the opposition in a
litigation matter. In addition, the conduct of witnesses, opposing counsel and
opposition can escalate the amount of legal fees. We may, however, at your
request, provide you with estimates of fees and costs to be incurred in
connection with an extraordinary matter which, unless we otherwise specifically
agree, shall be estimates only and should not be considered as guarantees that
the actual costs and expenses will not exceed such estimates.
11. ADDITIONAL CLIENT MATTERS. This Firm maintains errors and omissions
insurance coverage applicable to the services to be rendered to you pursuant to
the terms of this letter. Such coverage does not include fraud or intentional
wrongdoing.
If we become aware of any conflict of interest, we will notify you
immediately and will only proceed as permitted by the rules of the California
State Bar.
If at any time you believe our fees and expenses, or the nature of our
services do not meet your expectations, we would expect you to contact us so
that we may discuss the matter with the objective of reaching a satisfactory
arrangement.
12. ARBITRATION. ANY DISPUTE BASED UPON OR ARISING OUT OF OUR
ENGAGEMENT, THIS LETTER AGREEMENT AND/OR THE PERFORMANCE OR FAILURE TO PERFORM
SERVICES (INCLUDING, WITHOUT LIMIT, CLAIMS OF PROFESSIONAL
Xxxxx Xxxxx
April 27, 1999
Page Four
NEGLIGENCE) SHALL BE SUBJECT TO BINDING ARBITRATION TO BE HELD IN ORANGE
COUNTY, CALIFORNIA BEFORE THE JUDICIAL ARBITRATION AND MEDIATION SERVICE
("JAMS"). JUDGMENT ON THE ARBITRATOR'S AWARD SHALL BE BINDING. THE PREVAILING
PARTY IN ANY ARBITRATION OR LITIGATION ARISING OUT OF OR RELATING TO OUR
ENGAGEMENT OR THIS LETTER AGREEMENT AND/OR THE PERFORMANCE OR FAILURE TO
PERFORM SERVICES SHALL BE ENTITLED TO RECOVER REASONABLE ATTORNEY'S FEES
(INCLUDING THE VALUE OF THE TIME OF THE ATTORNEYS IN THE FIRM AT THEIR NORMAL
BILLING RATES) AND OTHER EXPERT FEES, EXPENSES AND COSTS INCURRED IN
CONNECTION WITH EITHER OBTAINING OR COLLECTING ANY RELIEF TO WHICH THAT PARTY
MAY BE ENTITLED.
If you have any questions or would like to discuss the nature of this
proposal pertaining to our engagement, please do not hesitate to call. As I
indicated to you, we are flexible concerning this arrangement and would be happy
to discuss any item. If the terms of the proposed engagement of Xxxxxxxxx Xxxxx
Xxxxxxx & Xxxxx, a professional corporation, are acceptable, please sign the
enclosed copy of this letter, and return it to me.
If at any time you have any questions pertaining to any of your monthly
invoices, or otherwise, we would be happy to discuss them with you.
We look forward to working with you in the future.
Very truly yours,
XXXXXXXXX XXXXX XXXXXXX & XXXXX
/s/ X.X. Xxxxxxx
X.X. Xxxxxxx
AGREED AND ACCEPTED:
"COMPANY"
By: /s/ Xxxxx Xxxxx
-------------------------------------
Name: Xxxxx Xxxxx
-------------------------------------
Title: CEO/President
-------------------------------------
RCS:jlm
