FORM OF
TOUCH TONE AMERICA, INC.
XXXXXXX CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") is made and entered into as of
January __, 1997 by and between TOUCH TONE AMERICA, INC. (the "Corporation"),
and XXXXXX XXXXXXX ("Consultant").
Consultant has been employed as a consultant to the Corporation pursuant to
a Consulting Agreement dated April 22, 1996 (the "Original Consulting
Agreement").
The Corporation is party to a transaction pursuant to which it will be the
survivor of a merger with SVV Sales, Inc. d/b/a Arcada Communications, Inc. (the
"Merger").
In connection with the Merger, Consultant and the Corporation desire to
terminate the Original Consulting Agreement, and enter into this agreement
pursuant to which the Corporation will retain Consultant as, and Consultant will
serve as a consultant to, the Corporation pursuant to the terms and conditions
hereof.
The parties hereto agree:
1. TERM. The Corporation hereby retains Consultant, and Consultant
hereby agrees to be retained by the Corporation, for the consideration and upon
the terms and conditions herein set forth, to consult, counsel and advise with
the Corporation as set forth herein for a term commencing upon the consummation
of the Merger (the "Commencement Date") and continuing for one (1) year (the
"Term"). The Term may be extended for one (1) additional year by mutual
agreement of the parties.
2. DUTIES. Consultant agrees to render counsel and advice to the
President of the Corporation from time to time, as reasonably requested by and
at the sole discretion of the President of the Corporation, for the profit,
benefit and advantage of the Corporation in connection with locating unrelated
entities that the Corporation may acquire or be interested in acquiring and
developing and implementing finance plans for acquisitions and/or business
expansion purposes, in all cases subject to the approval and oversight of the
Board of Directors and the President of the Corporation. The services of
Consultant hereunder shall be rendered at such times and places as shall be
mutually convenient to the Corporation and the Consultant. Nothing in this
Agreement shall prevent Consultant from performing services for persons or
entities other than the Corporation, provided that performance of such services
shall not be contrary to any of the provisions of Sections 10 through 12 and
shall not interfere with the Consultant's performance of his duties hereunder
unless Consultant has obtained the prior written consent of the Corporation.
It is expressly understood and agreed that Consultant's discharge of his
duties as expressly set forth herein requires an extensive time commitment and
that Consultant is not
required and agrees that he shall not engage in and shall have no authority with
respect to any matters not expressly set forth herein including, without
limitation, investor or public relations, management, personnel or
administrative matters, security dealer or broker relations or day to day
operations of the Corporation without the prior approval of the President of the
Corporation.
3. TITLE. Consultant shall have the title of "Special Advisor-Mergers
and Acquisitions".
4. COMPENSATION. Consultant shall be paid a consulting fee of One
Hundred and Twenty Thousand Dollars ($120,000) per year. Consultant shall be
paid this consulting fee on a monthly basis.
5. USE OF FACILITIES AND SERVICES. The Corporation shall provide
Consultant with access to the Corporation's staff, equipment and services as are
reasonably necessary to perform Consultant's duties under this Agreement.
6. AUTHORITY. Consultant shall not, and covenants and agrees that he
will not, enter into any agreement or commitment purporting to bind the
Corporation nor hold himself out as authorized to do so without the prior
express written approval of the President of the Corporation. Consultant
covenants and agrees to indemnify and hold harmless the Corporation from and
against any and all damages incurred by the Corporation resulting from
Consultant's breach of this or any other covenant or agreement contained herein
and the Corporation covenants and agrees to indemnify and hold harmless
Consultant from and against any and all damages incurred by Consultant resulting
from the Corporation's breach of any covenant or agreement contained herein.
7. FINDERS FEE.
(a) The Corporation agrees to pay Consultant a commission (a "Finders
Fee") in accordance with the provisions of this Section 7 for every merger or
acquisition candidate (a "Candidate") which Consultant finds, makes contact
with, introduces to the Corporation and with which the Corporation, or any of
its subsidiaries or affiliates, subsequently consummate a transaction involving
a merger with or acquisition of all or a portion of such candidate (an
"Acquisition").
(b) The Corporation shall not be obligated to pay any such Finders
Fee to Consultant unless (i) The Corporation shall not have previously
identified, contacted or otherwise obtained an introduction to such Candidate
without the assistance of Consultant, and (ii) Consultant notifies the President
of The Corporation in writing of the identity of such Candidate and the
Corporation, within ten days of receipt of such notice, does not dispute
Consultant's claim to such Candidate. Any dispute between the Corporation and
Consultant shall be resolved by mutual agreement between Consultant and the
Corporation.
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(c) Provided Consultant has satisfied and complied with the
provisions of Section 7(b) above, The Corporation shall pay to Consultant, at
the closing of an Acquisition a Finder's Fee based on the following:
5% of first one million,
4% of second one million,
3% of third one million,
2% of fourth one million, and
1% of all over four million of the total value of the
Acquisition.
For purposes hereof "total value" of the Acquisition shall be deemed
to mean the total dollar price, whether in cash, stock or combination thereof
paid, or in the case of a reverse merger or other similar transaction received
by the Corporation in connection with the acquisition or merger of the
Corporation of or with a Candidate.
The Finders Fee is due and payable at the closing of each Acquisition
and shall be paid in stock, cash, warrants or notes as mutually agreed by the
Corporation and Consultant prior to the closing of each such Acquisition.
8. COMMISSION IN CONNECTION WITH MERGER. Notwithstanding anything to the
contrary contained herein, The Corporation agrees to pay to Consultant, and
Consultant agrees to accept from The Corporation the following Commission in
connection with the Merger (the "Merger Commission"):
(a) The sum of $150,000 in cash; and
(b) the greater of (i) 250,000 shares of the Corporation's common
stock or (ii) a number of shares of the Corporation's common stock equal to the
result obtained by dividing:
(1) 5% of the first one million,
4% of the second one million,
3% of the third one million,
2% of the fourth one million, and
1% of all over four million of the total value of the shares
issued by the Corporation in the Merger, by
(2) the Average Price Per Share (as defined below).
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Solely for purposes of the Section 8 "total value" shall be deemed to
mean 12,500,000 multiplied by the Average Price Per Share. Solely for purposes
of this Section 8, Average Price Per Share shall be deemed to mean the average
of the closing bid and asked price for the Corporation's common stock, as
reported on the Nasdaq SmallCap Market for the five business days preceding the
day before the effective date of the Merger.
The Merger Commission shall be paid by the Corporation on the
Effective Date; provided, however, that the Corporation shall not be obligated
to pay the Merger Commission and the Consultant shall not be entitled to receive
the Merger Commission unless and until Consultant shall have delivered to the
Corporation a release executed by Xxxxx Xxxxxxx releasing the Corporation from
any and all obligations to pay commissions or other fees to Xx. Xxxxxxx in
connection with the Merger or otherwise.
Consultant and the Corporation agree that the Merger Commission is the
only consideration to be paid to Consultant in connection with the Merger and
Consultant hereby waives any claim to any other fee, commission or other
consideration in connection with the Merger including, without limitation, under
the Original Consulting Agreement.
In the event that, at any time or from time to time after the effective
date of the Merger, the Corporation proposes to register any securities (the
"Registration Stock"), including shares of stock, under the Securities Act of
1933 and the rules and regulations promulgated thereunder (the "1933 Act") other
than pursuant to a registration statement on Forms S-4 or S-8, or any successor
to such Forms, for the purpose of the sale or other transfer of the Registration
Stock by the Corporation or by any present or future holder of securities of the
Corporation, Consultant shall have the right to request that the Corporation
effect the registration under the 1933 Act, of any or all of the shares (the
"Requested Registration Shares") of the Corporation's common stock issued to
Consultant pursuant to this Section 8 (the "TTA Shares") which are then
beneficially owned by Consultant. In such event, the Corporation shall use its
best efforts to cause the Requested Registration Shares to be registered under
the 1933 Act; provided, however, that the Corporation shall not be obligated to
file and cause to become effective more than one registration statement for the
Consultant in which Requested Registration Shares are sold pursuant to this
Section 8. Consultant covenants and agrees to cooperate and to furnish the
Corporation with such information as it deems necessary to assist in the
preparation of such registration.
In the event that the Corporation shall not have caused the TTA shares to
be registered on or prior to the sixth month of the Effective Date of the
Merger, the Corporation shall, at the written request of Consultant, undertake
to cause the TTA Shares to be registered under the 1933 Act so as to permit a
public offering and sale by Consultant of the TTA Shares.
9. EXPENSES. Consultant shall obtain prior approval for any business
expense, including travel expenses, in excess of $250. which consent shall not
be unreasonably withheld. Provided Consultant has obtained prior approval or
such expenses are below $250, the Corporation shall reimburse Consultant for
such expenses reasonably incurred by Consultant and directly relating to the
provision by Consultant of his services pursuant to this Agreement.
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Consultant shall maintain such records as will be necessary to enable The
Corporation to properly deduct such items as business expenses when computing
The Corporation's federal income tax.
10. TERMINATION OF EMPLOYMENT. With reasonable cause, either party may
terminate this Agreement effective immediately after giving written notice of
termination for cause or, without cause, either party may terminate this
Agreement after giving thirty (30) days prior written notice to the other of
intent to terminate without cause. The parties shall deal with each other in
good faith during the thirty (30) day period after notice of intent to terminate
without cause has been given.
For purposes hereof, reasonable cause shall include:
(i) A material violation of this Agreement.
(ii) Any act exposing the other party to liability to others for
personal injury or property damage.
(iii) The commission by the Consultant of a willful or negligent act,
or any act or omission taken in bad faith, which, in the good faith opinion of
the Corporation, causes material harm to the Corporation, its affiliated
entities, its customers or its employees.
(iv) The Contractor's intentional and persistent failure to obey
instructions from the Board of Directors or President of the Corporation.
(v) The commission or perpetration by the Consultant of any
criminal act, any act of moral turpitude, fraudulent or intentional
misrepresentation or any fraud.
In the event of Corporation's termination of this Agreement for reasonable
cause or Consultant's termination of this Agreement without cause, the
Corporation shall pay to the Consultant (i) promptly after such termination, the
consulting fee provided for in Section 4 accrued to the date of such termination
and not theretofore paid to the Consultant and (ii) when and if payable pursuant
to Section 7(c) of this Agreement, any Finders Fee payable to Consultant for any
Candidate which Consultant identified in writing and introduced to the
Corporation prior to the termination of this Agreement.
In the event of Consultant's termination of this Agreement for reasonable
cause or the Corporation's termination of this Agreement without cause, the
Corporation shall (i) continue to pay to the Consultant, in the same periodic
installments as the Consultant's consulting fee was paid, the consulting fee
provided for in Section 4, until the then scheduled expiration of the term
hereof and (ii) when and if payable pursuant to Section 7(c) of this Agreement,
pay to Consultant any Finders Fee payable to Consultant for any Candidate which
Consultant furnished to the Corporation prior to the termination of this
Agreement. After termination hereof, whether for reasonable cause or otherwise,
neither the Corporation not Consultant shall have any further
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rights or obligations under this Agreement, except as provided in this Section
10(b) and in Sections 6, 11, 12, 13, 14 and 16 hereof.
11. NONCOMPETITION. During the term of this Agreement and for a period of
at least thirty (30) days thereafter, Consultant shall not at any time, directly
or indirectly, in any capacity whatsoever, own, manage, operate, join in,
control, participate in, invest in, work for, or otherwise be connected with, in
any manner, whether as an officer, director, consultant, partner, investor,
consultant, agent or otherwise, any business entity or person which is engaged,
or proposes to engage, in activities that are directly competitive with the then
current or proposed activities of the Corporation. The parties hereto
acknowledge that this noncompetition covenant is made to induce the Corporation
to retain Consultant and is required for the purpose of preserving for the
Corporation the goodwill of its current and future business. The parties hereto
further acknowledge and agree that, without limiting the foregoing, for a period
of one (1) year after the termination of this Agreement , Consultant will not
contact or solicit (on behalf of Consultant or any third party) any Candidate
which Consultant furnished to the Corporation prior to the termination of this
Agreement.
12. COVENANT NOT TO DISCLOSE. Consultant shall not at any time, without
the express prior written consent of the Corporation, disclose or otherwise make
known or available to any person, firm, corporation or other entity other than
the Corporation, or use for his own account, any Confidential Information of the
Corporation, whether made available to Consultant in the course of the provision
of his services to the Corporation, or in negotiations leading up to the
provision of such services, or otherwise, that relates to the Corporation, the
existing business of the Corporation, or the reasonably foreseeable business of
the Corporation. Without limiting the foregoing, consultant covenants and
agrees that he will not purchase or sell the Corporation's securities while in
possession of any material Confidential Information.
13. CONFIDENTIAL INFORMATION. As used in this Agreement, "Confidential
Information" means any non-public information obtained by Consultant from The
Corporation, whether during or prior to the Term, including but not limited to
financial projections and performance information, billing information, customer
lists, business plans, marketing plans, and other proprietary business
information of the Corporation; any and all subject matter claimed in or
disclosed by any patent application prepared or filed by or on behalf of by the
Corporation, in any jurisdiction, and any amendments or supplements thereto; and
any and all "know how," methods, information, procedures or processes related to
any invention, invention report, trade secret, or proprietary information of the
Corporation.
Confidential Information includes any of the foregoing information whether
or not such information was developed, devised or otherwise created in whole or
in part by the efforts of Consultant. Confidential Information may be written,
oral, electronically stored, contained in magnetic media, simulated, or
manifested physically, or in or by other forms, but shall be protected as
Confidential Information regardless of form. Confidential Information shall not
include matters of public knowledge, unless such matters become public knowledge
as a result of any disclosure by Consultant or by any other party who is bound
by obligations of confidence to the Corporation, or unless the combination of
such matters would amount to Confidential
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Information. In any dispute over whether information or matter is Confidential
Information for purposes of enforcement of this Agreement, it shall be the
burden of Consultant to show both that such contested information or matter is
not Confidential Information within the meaning of this Section 8, and that it
does not constitute a trade secret under the laws of the State of Washington.
14. RETURN OF CONFIDENTIAL INFORMATION. Immediately upon termination of
this Agreement, howsoever arising, or at any time upon the written request of
the Corporation or upon the oral request of any of Consultant's supervisors,
Consultant shall immediately return to the Corporation all Confidential
Information in any written or other manifestation or form, and shall further
surrender and deliver to the Corporation all records, materials, equipment,
drawings, documents and data of any nature pertaining to the Corporation, the
retention of Consultant's services, or the performance of any of Consultant's
duties as a consultant of the Corporation.
15. ADDITIONAL INSURED. During the term hereof, to the extent no
additional premiums are required, the Corporation covenants and agrees to use
its best efforts to have Consultant named as an "additional insured" on any
errors and omissions insurance policy obtained by the Corporation for its
officers and directors.
16. SPECIFIC PERFORMANCE. Consultant acknowledges and agrees that: (a)
but for the agreement of Consultant to comply with the covenants of this
Agreement, the Corporation would not contemplate retaining or continuing to
retain Consultant; (b) the Corporation will not have no adequate remedy at law
if Consultant violates the terms of this Agreement or fails to perform any other
obligation hereunder; and (c) the Corporation shall have the right, in addition
to any other rights it may have, to obtain in any court of competent
jurisdiction, temporary, preliminary and permanent injunctive relief to restrain
any breach, threatened breach, or otherwise to specifically enforce any, of such
covenants or any other obligations of Consultant, if Consultant fails to perform
any of his obligations under this Agreement.
17. SEVERABILITY. The invalidity of all or any part of any section of
this Agreement shall not render invalid the remainder of this Agreement or the
remainder of such section. Consultant acknowledges and stipulates that the
covenants set forth in Sections 6 through 9 above are fair and reasonably
necessary for the protection of the Corporation's protectable interests. In the
event a court of competent jurisdiction should decline to enforce any provision
of Sections 6 through 9, such section(s) shall be reformed to the extent
necessary in the judgment of such court to make such section(s) enforceable to
the maximum extent which the court shall find enforceable.
18. NOTICES. Any notices given under this Agreement shall be in writing,
personally delivered, or sent by certified mail, postage prepaid, or sent via
telefacsimile, receipt confirmed, to the following addresses and telephone
numbers, which a party may change from time to time by prior written notice to
the other party:
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Corporation: Touch Tone America, Inc.
0000 X. Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: President
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With a copy to: Cairncross & Hempelmann, P.S.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxx
Consultant: Xxxxxx Xxxxxxx
______________________________
______________________________
19. INDEPENDENT CONTRACTOR. Consultant shall during the Term be deemed to
be an independent contractor.
20. MISCELLANEOUS. This Agreement shall be binding upon and inure to the
benefit of the parties' respective successors and assigns. The waiver of any
breach of any provision of this Agreement or failure to enforce any provision
hereof shall not operate or be construed as a waiver of any subsequent breach.
In the event of any dispute between the parties that arises out of this
Agreement, the substantially prevailing party shall be entitled to reimbursement
for its attorneys' and experts' costs, fees and expenses. The provisions of
this Agreement shall not be construed as limiting any rights or remedies that
either party may otherwise have under applicable law, and shall be in addition
to all other rights and remedies of such party, including any which may arise
out of any other written agreement involving the parties.
21. GOVERNING LAW; VENUE. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Washington
without regard to conflicts of laws principles. The obligations set forth in
this Agreement are intended to supplement and not to supersede the protections
afforded the Corporation under the Uniform Trade Secrets Act, or similar law or
laws as may be in effect from time to time within the State of Washington. The
exclusive jurisdiction and venue of any lawsuit between the parties arising
under this Agreement or out of the transactions contemplated hereby shall be the
Superior Court of Washington for King County, or the United States District
Court for the Western District of Washington at Seattle, and each of the parties
hereby submits itself to the exclusive jurisdiction and venue of such court for
the purposes of such lawsuit.
22. PRIOR AGREEMENTS. This Agreement amends, restates and supersedes all
prior oral and written agreements between the parties. Without limiting the
foregoing, the parties hereto agree that, commencing on the Commencement Date,
this agreement restates and supersedes the Original Consulting Agreement and
that the Original Consulting Agreement shall be terminated and of no further
force and effect commencing on such date.
* * *
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DATED as of the day and year first written above.
TOUCH TONE AMERICA, INC.
By _____________________
Its_____________________
________________________
XXXXXX XXXXXXX
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