EXHIBIT 99.1
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SERVICE AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into this 3rd day of
November, 2005, by and between ELITE FINANCIAL COMMUNICATIONS GROUP, LLC,
located at 000 Xxxxxxxx Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxx, Xxxxxxx 00000,
(hereinafter referred to as "ELITE") and SEMOTUS SOLUTIONS, INC., located at 000
Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000, (hereinafter referred
to as the "Company").
WITNESSETH:
For and consideration of the mutual promises and covenants contained herein, the
parties hereto agree as follows:
1) EMPLOYMENT
Company hereby hires and employs ELITE as an independent contractor, and ELITE
does hereby accept its position as an independent contractor to the Company upon
the terms and conditions hereinafter set forth.
2) TERM
The term of this Agreement shall be for three (3) months. Upon termination of
the Agreement for whatever reason, Independent Contractor shall immediately
deliver all materials and information created by Independent Contractor during
the term of this Agreement to the Company.
3) DUTIES AND OBLIGATIONS OF ELITE
a) ELITE will review and analyze various aspects of the Company's goals
and make recommendations on feasibility and achievement of desired
goals.
b) Through its Market Relations Group, ELITE will provide exposure to its
network of firms and brokers that may be interested in participating
with the Company, schedule and conduct the necessary due diligence,
and obtain the required approvals necessary for those firms to
participate. ELITE will also interview and make determinations on any
brokerage or institutional firms referred by the Company with regard
to their participation.
c) At the Company's request, ELITE will be available to field any calls
from firms, individual investors/shareholders and brokers inquiring
about the Company. In addition, ELITE will assist the Company in
preparing its quarterly communications relative to its financial
results and coordinate corresponding news announcements, conference
calls and simulcasts on the Internet in accordance with Regulation FD.
d) ELITE will feature the Company on the Internet via ELITE's home web
site (xxx.xxxx.xxx) within the ELITE FINANCIAL FORUM which will
feature comprehensive information relative to the Company's
fundamental and technical strengths, as well as industry and corporate
overviews; management biographies; stock trading history; market
making activity; conference call/webcast archives; and other
information meaningful to the investment community. The FORUM will be
updated routinely and provide for site visitors to request ongoing
information about the Company as it is released.
e) ELITE shall write, produce and/or assist the Company in preparing and
releasing all news announcements. The Company shall be solely
responsible for paying all fees associated with the actual release(s)
through BusinessWire, PR Newswire, or any other comparable news
dissemination source. ELITE will create, build and continually enhance
a database of all brokers, investors, analysts and media contacts who
have expressed an interest in receiving ongoing information on the
Company and manage the ongoing distribution of news announcements
and/or other Company approved communications.
f) ELITE shall serve as the Company's publicist and will strive to obtain
coverage in both national and industry publications, in financial
newsletters, on financial radio and television programming and via
traditional press mediums. Specifically, ELITE will facilitate an
ongoing outreach program to an intelligently targeted universe of
media professionals. Further, ELITE will track published articles and
provide monthly clippings of those articles/mentions featuring the
Company.
g) At the Company's request, strive to obtain the Company analyst
coverage and/or investment banking sponsorship.
h) ELITE shall arrange for a series of due diligence meetings with select
broker/dealers, institutional investors and analysts at predetermined
dates throughout the campaign term, while remaining compliant with the
rules and regulations associated with Regulation FD.
i) ELITE shall develop customized, high-quality, high-impact and fully
integrated financial communications programs and platforms, and
leverage our strategic resources to enhance general product/service
marketing programs initiated by the Company.
j) ALL OF THE FOREGOING ELITE-PREPARED DOCUMENTATION CONCERNING THE
COMPANY, INCLUDING, BUT NOT LIMITED TO, INFORMATIONAL WRITE-UPS, NEWS
ANNOUNCEMENTS, SHAREHOLDER LETTERS, ET AL, SHALL BE PREPARED BY ELITE
USING MATERIALS SUPPLIED TO IT BY THE COMPANY AND SHALL BE APPROVED BY
THE COMPANY PRIOR TO DISSEMINATION BY ELITE.
4) ELITE'S COMPENSATION
a) 128,000 restricted shares of the Company's common stock, to be issued
as follows: 42,666 shares shall be issued as soon as practicable after
the full execution of this Agreement. The remaining shares shall be
issued as follows and upon the Company's acceptance of Elite's
deliverables, as set forth in Section 3, such acceptance not to be
unreasonably withheld: 42,667 shares shall be issued one month after
the Effective Date, and 42,667 shares shall be issued two months after
the Effective Date.
b) ELITE would also be entitled to receive a warrant to purchase up to
10,000 common shares of the Company's common stock, exercisable at
$0.35 per share, which shall fully vest immediately upon execution of
this Agreement. The underlying shares common shares shall be held by
the Company until the earlier of a) such time as ELITE elects to
exercise its option or warrant to purchase the common shares, or b) 24
months from the date of issuance of the warrant. The term of the
warrant shall expire 24 months from the date of issuance of the
warrant.
c) The Company shall agree to grant ELITE piggyback registration rights
for the restricted shares that have already been issued to Elite at
the time the Registration Statement is filed and the common shares
underlying the warrant listed above ("underlying shares") (together
the "Shares"), whereby the Company will include these Shares on the
first applicable Registration Statement filed by the Company with the
U.S. Securities & Exchange Commission. In the event the Company elects
early termination of this Agreement, as defined in Section 2 herein,
all restricted shares and underlying shares that have not reached
their issue or vesting dates will be deemed null and void.
d) Piggyback Registration Rights: If (but without any obligation to do
so) Company proposes to register any of the Shares on a registration
statement (other than a registration relating solely to the sale of
securities to participants in a Company stock plan, a registration
relating to a corporate reorganization or other transaction under Rule
145 of the Act, a registration on any form that does not include
substantially the same information as would be required to be included
in a registration statement covering the sale of the Shares, a
registration in which the only Shares being registered are Shares
issuable upon conversion of debt securities that are also being
registered, or if there is a managing underwriter of the offering of
shares referred to in the registration statement and such managing
underwriter advises the Company in writing that the Shares proposed to
be included in the offering will have an adverse effect on its ability
to successfully conclude the offering), Company shall, at such time,
promptly give the Holder written notice of such registration. Upon the
written request of the Holder given within ten (10) days after mailing
of such notice by Company, Company shall, subject to the final
approval of the other holder(s) of securities (including the
underwriter, if applicable) intended to be included on such
registration statement, use all reasonable efforts to cause to be
registered under the Act all of the Shares that the Holder has
requested to be registered. If and when the registration statement
does become effective, Elite may sell an amount of shares not to
exceed the daily average trading volume of the Company's common stock
in the prior month, per week.
5) ELITE'S EXPENSES AND COSTS
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Company shall pay all reasonable costs and expenses incurred by ELITE, its
directors, officers, employees and agents, in carrying out its duties and
obligations pursuant to the provisions of this Agreement, excluding ELITE's
general and administrative expenses and costs, but including and not limited to
the following costs and expenses; provided all costs and expense items IN EXCESS
OF $1.00 (ONE DOLLAR) must be approved by the Company in writing prior to
ELITE's incurrence of the same:
a) Seminars, expositions, money and investment conferences.
b) Radio and television time and print media advertising costs, when/if
applicable.
c) Subcontract fees and costs incurred in preparation of independent
third party research reports, when/if applicable.
d) Cost of on-site due diligence meetings, if applicable.
e) Printing and publication costs of brochures and marketing materials,
which are not supplied by the Company.
f) Corporate web site development costs.
g) Printing and publication costs of Company annual reports, quarterly
reports, and/or other shareholder communication collateral material,
which is not supplied by the Company.
6) FUNDING ADVISORY SERVICES
Upon request by the Company's management team, Elite will make strategic
introductions to funding groups, investment banking firms, and/or other sources
interested in furthering the business of the Company. In the event that a
private/public financing transaction is arranged and successfully implemented
using a source first introduced to the Company by Elite, then Elite shall be
entitled to receive a cash finder's fee at closing equal to 3% of the gross
proceeds received by the Company.
7) COMPANY'S DUTIES AND OBLIGATIONS
Company shall have the following duties and obligations under this Agreement:
a) Cooperate fully and timely with ELITE so as to enable ELITE to perform
its obligations under this Agreement.
b) Within ten (10) days of the date of execution of this Agreement to
deliver to ELITE a complete due diligence package on the Company,
including all the Company's filings with the U.S. Securities and
Exchange Commission within the last twelve months; the last six (6)
months of press announcements on the Company; and all other relevant
materials with respect to such filings, including but not limited to,
corporate reports, brochures, and the like, and a list of analysts and
or fund managers, who have been following the Company.
c) The Company will act diligently and promptly in reviewing materials
submitted to it from time to time by ELITE and inform ELITE of any
inaccuracies contained therein prior to the dissemination of such
materials.
d) Promptly give written notice to ELITE of any change in the Company's
financial condition or in the nature of its business or operations
which had or might have an adverse material effect on its operations,
assets, properties or prospects of its business.
e) Promptly pay all Company pre-approved costs and expenses incurred by
ELITE under the provisions of this Agreement when presented with
invoices for the same by ELITE, provided that Elite provides to the
Company all appropriate and reasonable back-up documentation related
to such expenses.
f) Give full disclosure of all material facts concerning the Company to
ELITE and update such information on a timely basis.
g) Promptly pay the compensation due ELITE under the provisions of this
Agreement, and as defined in Section 4 and Sections 5 and 6 (if and
when applicable) herein.
8) NONDISCLOSURE
Except as may be required by law, the Company, its officers, directors,
employees, agents and affiliates shall not disclose the contents and provisions
of this Agreement to any individual or entity without ELITE's expressed
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written consent subject to disclosing same further to Company counsel,
accountants and other persons performing investment banking, financial, or
related functions for the Company.
9) COMPANY'S DEFAULT
In the event of any default in the payment of ELITE's compensation to be paid to
it pursuant to this Agreement, or any other charges or expenses on the Company's
part to be paid or met, or any part or installment thereof, at the time and in
the manner herein prescribed for the payment thereof and as when the same
becomes due and payable, and such default shall continue for five (5) days after
ELITE's written notice thereof is received by Company; in the event of any
default in the performance of any of the other covenants, conditions,
restrictions, agreements, or other provisions herein contained on the part of
the Company to be performed, kept, complied with or abided by, and such default
shall continue for five (5) days after ELITE has given Company written notice
thereof, or if a petition in bankruptcy is filed by the Company, or if the
Company is adjudicated bankrupt, or if the Company shall compromise all its
debts or assign over all its assets for the payment thereof, of if a receiver
shall be appointed for the Company's property, then upon the happening of any of
such events, ELITE shall have the right, at its option, forthwith or thereafter
to accelerate all compensation, costs and expenses due or coming due hereunder
and to recover the same from the Company by suit or otherwise and further, to
terminate this Agreement. The Company covenants and agrees to pay all reasonable
attorney fees, paralegal fees, costs and expenses due of ELITE, including court
costs, (including such attorney fees, paralegal fees, costs and expenses
incurred on appeal) if ELITE employs an attorney to collect the aforesaid
amounts or to enforce other rights of ELITE provided for in this Agreement in
the event of any default as set forth above and ELITE prevails in such
litigation.
10) COMPANY'S REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to ELITE for the purpose of inducing ELITE
to enter into and consummate this Agreement as follows:
a) The Company has the power and authority to execute, deliver and
perform under this Agreement.
b) The execution and delivery by the Company of this Agreement have been
duly and validly authorized by all requisite action by the Company. No
license, consent or approval of any form is required for the Company's
execution and delivery of this Agreement.
c) No representation or warranty by the Company in this Agreement and no
information in any statement, certificate, exhibit, schedule or other
document furnished, or to be furnished by the Company to ELITE
pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make
the statements contained herein or therein not misleading. There is no
fact which the Company has not disclosed to ELITE, in writing, or in
SEC filings or news announcements, which materially adversely affects,
nor, so far as the Company can now reasonably foresee, may adversely
affect the business, operations, prospects, properties, assets,
profits or condition (financial or otherwise) of the Company. IN NO
EVENT WILL THE COMPANY BE LIABLE FOR ANY INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES NOR FOR ANY CLAIM AGAINST ELITE BY ANY PERSON OR
ENTITY ARISING FROM OR IN ANY WAY RELATED TO THIS AGREEMENT,
11) ELITE'S REPRESENTATIONS AND WARRANTIES
a) Protection of Confidential Information of the Company. Elite
understands that its work as an Independent Contractor of the Company
creates a relationship of trust and confidence between the Company and
myself. During and after the period of my engagement with the Company,
Elite will not use or disclose or allow anyone else to use or disclose
any "Confidential Information" (as defined below) relating to the
Company, its products, services, suppliers or customers except as may
be necessary in the performance of my work for the Company or as may
be authorized in advance by appropriate officers of the Company.
"Confidential Information" shall include, but not be limited to,
methodologies, processes, tools, innovations, business strategies,
financial information, forecasts, personnel information, customer
lists, trade secrets and any other non-public technical or business
information, whether in writing or given to me orally, which Elite
knows or has reason to know the Company would like to treat as
confidential for any purpose, such as maintaining a competitive
advantage or avoiding undesirable publicity. Elite will keep
Confidential Information secret and will not allow any unauthorized
use of the same, whether or not
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any document containing it is marked as confidential. These
restrictions, however, will not apply to Confidential Information that
has become known to the public generally through no fault or breach of
mine or that the Company regularly gives to third parties without
restriction on use or disclosure. Upon termination of my work with the
Company, Elite will promptly deliver to the Company all documents and
materials of any nature pertaining to its work with the Company and
Elite will not take any documents or materials or copies thereof
containing any Confidential Information.
b) Prohibition Against Xxxxxxx Xxxxxxx. Elite hereby acknowledges that it
is aware that United States securities laws prohibit any person who
has material, non-public information about a company from purchasing
or selling securities of such a company or from communicating such
information to any other person under circumstances in which it is
reasonably foreseeable that such person is likely to purchase or sell
such securities.
c) Regulatory Compliance. Elite agrees to comply with all applicable
securities legislation and regulatory policies in relation to
providing the Services, including but not limited to United States
securities laws (in particular, Regulation FD) and the policies of the
United States Securities and Exchange Commission.
d) Authority. Elite shall have no right or authority, express or implied,
to commit or otherwise obligate the Company in any manner whatsoever
except to the extent specifically provided herein or specifically
authorized in writing by the Company
e) No Assignment. Elite may not assign any rights or delegate any
responsibilities hereunder without prior written approval of the
Company.
12) ELITE'S DEFAULT
In the event of any default in the performance by ELITE pursuant to this
Agreement, at the sole discreation of the company, and such default shall
continue for five (5) days after the company's written notice thereof is
received by ELITE; in the event of any default in the performance of any of the
other covenants, conditions, restrictions, agreements, or other provisions
herein contained on the part of ELITE to be performed, kept, complied with or
abided by, and such default shall continue for five (5) days after Company has
given ELITE written notice thereof, or if a petition in bankruptcy is filed by
the ELITE, or if ELITE is adjudicated bankrupt, or if ELITE shall compromise all
its debts or assign over all its assets for the payment thereof, of if a
receiver shall be appointed for ELITE's property, then upon the happening of any
of such events, the Company shall have the right, at its option, forthwith or
thereafter to get back all of its money from ELITE by suit or otherwise and
further, to terminate this Agreement. ELITE covenants and agrees to pay all
reasonable attorney fees, paralegal fees, costs and expenses due of the Company,
including court costs, (including such attorney fees, paralegal fees, costs and
expenses incurred on appeal) if the Company employs an attorney to collect the
aforesaid amounts or to enforce other rights of the Company provided for in this
Agreement in the event of any default as set forth above and the Company
prevails in such litigation.
13) LIMITATION OF ELITE LIABILITY
If ELITE fails to perform its services hereunder, its entire liability to the
Company shall not exceed the actual damage to the Company as a result of such
non-performance. IN NO EVENT WILL ELITE BE LIABLE FOR ANY INDIRECT, SPECIAL OR
CONSEQUENTIAL DAMAGES NOR FOR ANY CLAIM AGAINST THE COMPANY BY ANY PERSON OR
ENTITY ARISING FROM OR IN ANY WAY RELATED TO THIS AGREEMENT, UNLESS SUCH DAMAGES
RESULT FROM THE USE, BY ELITE, OF INFORMATION NOT AUTHORIZED BY THE COMPANY.
14) MISCELLANEOUS
a) Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be deemed to have been
duly given when delivered personally or sent by registered or
certified mail, return receipt requested, postage prepaid to the
parties hereto at their addresses first above written. Either party
may change his or its address for the purpose of this paragraph by
written notice similarly given.
b) Entire Agreement. This Agreement represents the entire agreement
between the Parties in relation to its subject matter and supercedes
and voids all prior agreements between such Parties relating to such
subject matter.
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c) Amendment of Agreement. This Agreement may be altered or amended, in
whole or in part, only in writing signed by both Parties.
d) Waiver. No waiver of any breach or condition of this Agreement shall
be deemed to be a waiver of any other subsequent breach or condition,
whether of a like or different nature, unless such shall be signed by
the person making such waiver and/or which so provides by its terms.
e) Captions. The captions appearing in this Agreement are inserted as a
matter of convenience and for reference and in no way affect this
Agreement, define, limit or describe its scope or any of its
provisions.
f) Situs. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York. Venue shall be located in
Seminole County, Florida.
g) Benefits. This Agreement shall inure to the benefit of and be binding
upon the Parties hereto, their heirs, personal representatives,
successors and assigns.
h) Severability. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall
attach only to such provision and shall not in any way render invalid
or unenforceable any other provisions of this Agreement, and this
Agreement shall be carried out as if such invalid or unenforceable
provision were not contained herein.
i) Arbitration. Any controversy, dispute or claim arising out of or
relating to this Agreement or the breach thereof shall be settled by
arbitration. Arbitration proceedings shall be conducted in accordance
with the rules then prevailing of the American Arbitration Association
or any successor. The award of the Arbitration shall be binding on the
Parties. Judgment may be entered upon an arbitration award or in a
court of competent jurisdiction and confirmed by such court. Venue for
arbitration proceedings shall be located in Seminole County, Florida.
The costs of arbitration, reasonable attorney's fees of the Parties,
together with all other expenses, shall be paid as provided in the
Arbitration award.
j) Currency. In all instances, references to monies used in this
Agreement shall be deemed to be United States dollars.
k) Multiple Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of
such counterparts shall constitute one (1) instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year
as follows:
CONFIRMED AND AGREED ON THIS 4th DAY OF November, 2005.
ELITE FINANCIAL COMMUNICATIONS GROUP, LLC
BY: /S/ XXXX X. XXXXX /S/ XXXX X. XXXXXX
ELITE OFFICER WITNESS
XXXX X. XXXXX XXXX X. XXXXXX
PRINT NAME PRINT NAME
CONFIRMED AND AGREED ON THIS 4th DAY OF November, 2005
SEMOTUS SOLUTIONS,, INC.
BY: /S/ XXXXXXX X. XXXXXX /S/ XXXX XXXXXX
DULY AUTHORIZED WITNESS
XXXXXXX X. XXXXXX XXXX XXXXXX
PRINT NAME PRINT NAME
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