CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement"), dated December 18, 1996 and
effective as of January 12, 1997 is entered into by and between ED NET, INC., a
Colorado corporation (herein referred to as the "Company") and LIVIAKIS
FINANCIAL COMMUNICATIONS, INC., a California corporation (herein referred to as
the "Consultant").
RECITALS
WHEREAS, Company is a publicly held corporation with its common stock
traded on the NASDAQ Electronic Bulletin Board; and
WHEREAS, Consultant has experience in the area of corporate finance,
investor communications and financial and investor public relations; and
WHEREAS, Company desires to engage the services of Consultant to assist
and consult with the Company in matters concerning corporate finance and 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;
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 January 12, 1997 and ending on
January 2, 1998.
2. Duties of Consultant. The Consultant agrees that it may provide some or
all of the following specified consulting services through it's officers and
employees during the term specified in Section 1.:
(a) Advise and assist the Company in developing and implementing
appropriate plans and materials 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 advise and assist the Company in
communicating appropriate information regarding such plans, strategy and
personnel to the financial community;
(d) Assist and advise the Company with respect to its (i) corporate
finance activities, (ii) stockholder and investor relations, (iii) relations
with brokers, dealers, analysts and other investment professionals, and (iv)
financial public relations generally;
(e) Perform the functions generally assigned to investor/stockholder
relations and public relations departments in major corporations, including
responding to telephone and written
1.
inquiries (which may be referred to the Consultant by the Company); preparing or
reviewing press releases, reports and other communications with or to
shareholders, the investment community and the general public; advising with
respect to the timing, form, distribution and other matters related to such
releases, reports and communications; and consulting with respect to corporate
symbols, logos, names, the presentation of such symbols, logos and names, and
other matters relating to corporate image;
(f) Disseminate information regarding the Company to shareholders,
brokers, dealers, other investment community professionals and the general
investing public;
(g) Conduct meetings, in person or by telephone, with brokers, dealers,
analysts and other investment professionals to advise them of the Company's
plans, goals and activities, and assist the Company in preparing for press
conferences and other forums involving the media, investment community
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 investment community implications
thereof; and,
(i) Otherwise perform as the Company's financial relations and public
relations consultant.
(j) Make public communications and disclosures regarding the Company
within the scope of the authorizations conferred and information provided by the
Company.
3. Allocation of Time and Energies. The Consultant hereby promises to perform
and discharge well and faithfully 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 investor public relations and communications activities, so long as such
activities are in compliance with applicable securities laws and regulations.
Consultant shall diligently and thoroughly 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 hereinabove in a diligent and professional manner. Though the
parties acknowledge and agree that a disproportionately large amount of the
effort to be expended and the costs to be incurred by the Consultant and the
benefits to be received by the Company are expected to occur upon and shortly
after, and in any event, within one month of the effectiveness of this
Agreement, the parties further agree that diligent effort will be expended by
the Consultant throughout the term of the Agreement. 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, both of which cannot be guaranteed by the Consultant. It
is also understood that the Company is entering into this Agreement with
Liviakis Financial Communications, Inc. ("LFC"), a corporation and not any
individual member of LFC, and with such, Consultant will not be deemed to have
breached this Agreement if any member, officer or director of LFC leaves the
firm or dies or becomes physically unable to perform any meaningful activities
during the term of the Agreement.
4. Remuneration. As full and complete compensation for services described
in this Agreement, the Company shall compensate Consultant as follows:
2.
4.1 For undertaking this engagement and for other good and valuable
consideration , the Company agrees to issue a "Commencement Bonus"
payable in the form of 490,000 unregistered, restricted shares of the
Company's common stock (the "Common Stock") as that term is defined in
the Securities Act of 1933, as amended. This Commencement Bonus shall
be issued to the Consultant promptly 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 490,000 shares of Common Stock issued
as a Commencement Bonus, therefore, constitute payment for Consultant's
agreement to represent 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 January 2, 1998 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. All shares of Common Stock issued pursuant to this
Agreement shall be evidenced by a stock certificate(s) in the name of
Liviakis Financial Communications, Inc. Consultant shall have demand
registration rights at the end of this Agreement to require the Company
to register the 490,000 shares issued to it under this Agreement with
the same timing as that committed to participants in the Reg D/506
private placement initiated by the Company in December, 1996. All
registration costs shall be borne solely by the Company.
4.2 Consultant acknowledges that the Common Stock issuable pursuant to this
Agreement (the "Shares") 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.
4.3 In connection with the acquisition of Shares hereunder, the Consultant
represents and warrants to the Company as follows:
(a) Consultant acknowledges that the Consultant has been afforded the
opportunity to ask questions of and receive answers from duly
authorized officers or other representatives of the Company concerning
an investment in the Shares, and any additional information which the
Consultant has requested.
(b) Consultant's investment in restricted securities is reasonable in
relation to the Consultant's net worth, which is in excess of ten (10)
times the Consultant's cost basis in the Shares. Consultant has had
experience in investments in restricted and publicly traded securities,
and Consultant has had experience in investments in speculative
securities and other investments which involve the risk of loss of
investment. Consultant acknowledges that an investment in the Shares is
speculative and involves the risk of loss. Consultant has the requisite
knowledge to assess the relative merits and risks of
3.
this investment without the necessity of relying upon other advisors,
and Consultant can afford the risk of loss of his entire investment in
the Shares. Consultant is (i) accredited investors, as that term is
defined in Regulation D promulgated under the Securities Act of 1933,
and (ii) a purchaser described in Section 25102(f)(2) of the California
Corporate Securities Law of 1968, as amended.
(c) Consultant is acquiring the Shares for the Consultant's own account
for long-term investment and not with a view toward resale or
distribution thereof except in accordance with applicable securities
laws.
5. Expenses. Consultant agrees to pay for all its expenses (phone,
mailing, labor, etc.), other than 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.) approved by the Company prior to its incurring an obligation for
reimbursement.
6. Indemnification. The Company warrants and represents that all oral
communications, written documents or materials, other than those designated by
the Company to the Consultant as "confidential" or "Company private", 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 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 with respect thereto resulting from Consultant's communication or
dissemination of any said information, documents or materials not designated by
the Company to the Consultant as "confidential" or "Company private", excluding
any such claims or litigation resulting from Consultant's communication or
dissemination of information not provided or authorized by the Company. To the
extent feasible, the Company agrees to make Consultant an additional insured on
any and all commercial liability and directors and officers liability insurance
policies and to provide Consultant with current Certificates of Insurance
reflecting the same.
7. Representations. Consultant represents that he 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 his 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 his
knowledge, Consultant is not the subject of any investigation, claim, decree or
judgment involving any violation of the SEC or securities laws. Consultant
further acknowledges that he 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.
4.
8. Legal Representation. The Company acknowledges that it has been
represented by independent legal counsel in the preparation of this Agreement.
Consultant represents that they have consulted with independent legal counsel
and/or tax, financial and business advisors, to the extent the Consultant deemed
necessary.
9. 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 or the Consultant possess the authority to bind
each other in any agreements without the express written consent of the entity
to be bound.
10. 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.
11. 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.
12. Notices. All notices, requests, and other communications hereunder
shall be deemed to be duly given if sent by U.S. mail, postage prepaid,
addressed to the other party at the address as set forth herein below:
To the Company: Xx. Xxx Xxxxxxxxx
CEO
ED NET, Inc.
Xxx Xxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
To the Consultant: Liviakis Financial Communications, Inc.
Xxxx X. Xxxxxxxx, President
0000 "X" Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
It is understood that either party may change the address to which
notices for it shall be addressed by providing notice of such change to the
other party in the manner set forth in this paragraph.
5.
13. 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 Sacramento County, CA will be the venue of
any dispute and will have jurisdiction over all parties.
14. 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
thereof. 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.
15. Complete Agreement. This Agreement instrument 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" ED NET, INC.
Date: 1/3/97 By: /s/ Xxx Xxxxxxxxx
-------------------- ------------------------------
Xxx Xxxxxxxxx
CEO
"Consultant" LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
Date: 12/18/96 By: /s/ Xxxx X. Xxxxxxxx
-------------------- ------------------------------
Xxxx X. Xxxxxxxx
President
6.
