EXHIBIT C
CONSULTING AGREEMENT
between Kelly's and CFS
August 1st, 1997
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made effective this 1st day of
August 1997 by and between Kellys Coffee Group, Inc., a Colorado corporation
with principal offices at 000 Xxxxxxxxxxx Xxxxxx, X.X. Xxx 0000, Xxxxxxxx,
Xxxxxxxx 00000 ("Client"), and Canton Financial services corporation, a Nevada
corporation with principal offices at 000 Xxxx 000 Xxxxx, Xxxxx 000, Xxxx Xxxx
Xxxx, Xxxx 00000 ("Consultant").
PREMISES
WHEREAS, Client wishes to retain Consultant to provide Client with
general business consulting services including assistance in finding business
opportunities, assistance in the coordinating the preparation 6f Client's
periodic reports under the Exchange Act of 1934, and assistance in finding
partners willing to assist Client in the expansion of its operations;
WHEREAS, Consultant is in the business of providing general
consulting services and is willing to be retained by Client for a period of
one year in exchange for the consideration specified hereafter;
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants
and agreements contained herein, and for other good and valuable
consideration, the receipt and adequacy of which is expressly acknowledged,
Client and Consultant agree as follows:
Section 1- Engagement of Consultant and Term of Agreement.
A. Client retains Consultant to assist Client in general business
consulting, which shall consist of assistance in finding business
opportunities, assistance in the coordinating the preparation of Client's
periodic reports under the Exchange Act of 1934, and assistance in finding
partners willing to assist Client in the expansion of its operations.
B. Subject to earlier termination provided in Section 6 below,
the term of this Agreement shall, be one (1) year from the
execution of this Agreement.
Section 2 - Compensation
Client shall compensate Consultant in the following manner:
A. Upon execution of this Agreement, Client shall deliver to
Consultant 1,150,000 shares of Client's common stock, par value $ ("Common
Stock"). The 1,150,000 shares of Common Stock shall constitute a retainer fee
for Consultant's services. The shares of Common Stock to be issued as a
retainer shall be issued pursuant to the exemption from federal registration
afforded by ss.4(2) of the Securities Act of 1933, as amended (the "Act "),
and shall be restricted as to resale pursuant to Rule 144 promulgated under
the Act.
B. Client also agrees to pay Consultant a monthly consulting fee
which fee shall be calculated by multiplying the number of hours worked by
Consultant's professional staff with the hourly fee as set forth in Exhibit
"A," attached hereto and incorporated herein by this reference, and which may
be amended from time to time by Consultant. Consultant shall xxxx Client on a
monthly basis, and payment shall be due upon receipt of the xxxx, payable in
either cash or in Client's Common Stock, at Client's option. The Common Stock
shall be registered under any available registration statement. For purposes
of this Paragraph, Common Stock shall be valued at the lower of. (i) the
closing bid price for the Common Stock on the final day of the month in which
services were performed by Consultant;
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or (ii) the closing bid price for the Common Stock on date when the
Common Stock is actually issued, provided however, that any shares of Common
Stock issued to Consultant hereunder which are restricted as to resale shall
be valued at the lower of: (i) one-half the closing bid price for the Common
Stock on the final day of the month in which services were performed by
Consultant; or (ii) one-half the closing bid price for the Common Stock on
date when the Common Stock is actually issued.
C. Client shall reimburse Consultant for expenses incurred during and
in relation to Consultant's performance under this Agreement. Such expenses
include, but are not limited to, travel, lodging, filing fees, printing,
postage, delivery, shipping, copying, telephone calls, overnight packages,
facsimiles, and all other out-of-pocket expenses. Such expenses may be
repayable in either cash or Common Stock, at Client's option. For purposes of
this Paragraph, Common Stock shall be valued according to the formula set
forth in Section 2, Paragraph B.
D. All shares of stock issued to Consultant under this Agreement
shall, when issued, be validly issued, fully paid and non-assessable.
E. All fees and expenses are payable within 10 days of billing.
Amounts unsatisfied after this 10- day period are subject to an interest
charge of 12% per annum.
Section 3 - Registration Rights.
Client agrees to subsequently register all restricted shares issued,
exchanged or otherwise transferred to Consultant pursuant to Section 2 of this
Agreement ("Payment Shares") as follows:
A. If, at any time commencing after the termination of this Agreement
and for a period of two (2) years thereafter, Client (or any of its successors)
proposes to file a registration statement for the public sale of shares of the
Payment Shares, written notice of such proposal will be given to Consultant at
least 60 days prior to the filing of such registration statement. The term
"Registration Statement" as used in this Section shall be deemed to include any
form which may be used to register a distribution of securities to the public, a
post-effective amendment to a registration statement, or a Notification and
Offering Circular pursuant to a Regulation A Offering- when necessary to perfect
an exemption thereunder. Client agrees that on written notice received from
Consultant, within 20 days after Consultant's receipt of the notice to file a
registration statement, Client shall allow Consultant to have the Payment Shares
included in such Registration Statement. Notwithstanding the provision of this
section, Client shall have the right, at any time after it shall give written
notice pursuant to this subsection to elect to offer only a portion of the
Payment Shares in such Registration Statement, to cease filing any proposed
Registration Statement, or to withdraw the same after the filing but prior to
the effective date thereof. Notwithstanding any provision to the contrary
contained herein, Client shall not be required to include any of the Payment
Shares transferred hereunder in any Registration Statement with respect to
shares offered in any underwriting:
(i) unless Consultant agrees to offer such shares, on
the same terms and conditions as Client's shares are
being offered, and to sign an underwriting agreement
in the form to be signed by the other offerors; or
(ii) if, in the good faith and reasonable opinion of
the managing, underwriter of the offering, the sale
of the Payment Shares to be included would be
materially detrimental to the remainder of the
offerors.
In such an event the amount of Payment Shares and the amount of shares to be
registered, if any, by the remainder of the offerors (other than Client) shall
be proportionally reduced to a level acceptable to the managing underwriter of
the offering, who may reasonably refuse to have any shares registered.
B. Pursuant to the registration rights granted herein, Consultant shall
provide Client with all reasonable information relating to such sale and on
which Client shall be entitled to rely and to include such information in any
such
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Registration Statement. All sales pursuant to any such Registration Statement
shall be made in accordance with the provision of the Securities Act of 1933, as
amended (the "Securities Act") and the Securities Exchange Act of 1934, as
amended, (the "Exchange Act") and Client shall not be required to include any
such Payment Shares in any registration until it has received written assurances
reasonably satisfactory in form and substance to Client from the shareholders
offering such Payment Shares that such sales shall be so conducted. All expenses
incurred by Client in complying with the registration requirements hereof
(except fees and disbursements of counsel for any shareholder and underwriting
discounts, commissions, or similar expenses to be incurred in connection with
the sale of Payment Shares) shall be borne by Client. On notice to any
shareholder offering Payment Shares covered by a Registration Statement that
such Registration Statement or prospectus relating thereto requires revision,
such holder will immediately cease to make offers or sales pursuant to such
Registration Statement and return all such Registration Statements and
prospectuses to Client. All registration rights granted herein may apply only to
shares of Common Stock issued by Client. Client is under no obligation to
maintain the effectiveness of any Registration Statement for an aggregate of 90
days.
C. In connection with the filing of any Registration Statement or
offering statement under this section, Client covenants and agrees that it will
take all necessary action which may be required in qualifying or registering the
Payment Shares included in a Registration Statement or offering statement for
the offer and sale under the securities or blue sky laws of such states as may
be reasonably requested by the holders of the Payment Shares; provided, that
Client shall not be obligated to execute or file any general consent to service
of process or to qualify as a foreign corporation to do business under the laws
of any such jurisdiction.
D. In the event that the Payment Shares are the subject of or are
included in any Registration Statement or offering statement which is filed and
becomes effective, Client agrees to utilize its best efforts to keep the same,
including blue sky filings, for an effective period of not less than 90 days.
The holders of the Payment Shares shall cooperate with Client and shall furnish
such information as Client may reasonably request in connection with any such
registration or offering statement hereunder, on which Client shall be entitled
to rely.
E. Client further agrees that in the event that counsel to Consultant
is of the reasonable opinion that the Payment Shares may be transferred and/or
sold in full compliance with the provisions of the Act, without the need for
filing a Registration Statement Client will fully cooperate in connection with
such transfer and/or sale at Client's sole expense.
F. Client further agrees and represents that while any of the Payment
Shares are outstanding and held by Consultant or Consultant's affiliates, Client
will file timely all reports and documents required under the Exchange Act and
the Securities Act as well as such additional information as is necessary in
order to allow the holder of the Payment Shares to rely upon the provisions of
Rule 144 promulgated under the Securities Act with respect to the current public
information requirements contained in Rule 144(c).
In the event of any registration of any Client common stock under the Securities
Act, Client shall indemnify and hold harmless Consultant or any subsequent
transferee of the Payment Shares against any losses, claims, damages or
liabilities, joint or several, to which such holder may become subject under the
Securities Act or any other statute or at common law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any alleged untrue statement of any material fact contained, on
the effective date thereof, in any Registration Statement under which such
securities were registered under the Securities Act, any preliminary prospectus
or final prospectus contained therein, or any amendment required to be stated
therein or necessary to make the statements therein not misleading and shall
reimburse such holder for any legal or any other expenses reasonably incurred by
such holder in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that Client shall not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any alleged untrue statement or alleged omission
made in such Registration Statement, preliminary prospectus, prospectus or
amendment or supplement in reliance upon and in conformity with written
information furnished to Client by such holder specifically for use therein.
Such indemnity shall remain in full force and effect
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regardless of any investigation made by or on behalf of such holder and shall
survive the transfer of such securities by such holder and consummation of the
transactions contemplated by this Agreement.
Section 4 - Client's Representations
Client represents, warrants and covenants to Consultant that each of
the following are true and complete as of the date of this Agreement:
A. Client is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Colorado, with full corporate
power and authority and all necessary governmental authorizations to own,
lease and operate property and carry on its business as it is now being
conducted. Client is duly qualified to do business in and is in good standing
in every jurisdiction in which the nature of its business or the property
owned or leased by it makes such qualifications necessary.
B. The execution and delivery of this Agreement and the consummation
of the transactions contemplated herein have been duly authorized by the
Client. This Agreement has been duly executed and delivered by Client and
constitutes the valid and legally binding obligation of Client enforceable in
accordance with its terms, except to the extent that enforceability may be
subject to or limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated herein will not conflict with or result in any violation of any
provision of the Articles of Incorporation or Bylaws of Client. To the best of
Client's knowledge, after due inquiry, the execution and delivery of this
agreement and the consummation of the transaction contemplated herein will not
conflict with any mortgage, indenture, lease, contract, commitment, agreement,
or other instrument, permit, concession, grant, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Client or any of its properties or assets.
C. To the best of Client's knowledge, after due inquiry, Client is
not in violation of or default under any statute, law, ordinance, rule,
regulation, judgment, order, decree, permit, concession, grant, franchise,
license or other governmental authorization or approval applicable to it or
any of its proper-ties or business. There are no proceedings pending or
threatened which may result in the revocation, cancellation, suspension, or
any adverse modification of any permit, concession, grant, franchise, license
or other governmental authorization or approval necessary for the conduct of
Client's business or which question the validity of this Agreement or of any
action taken or to be taken in connection herewith or the consummation of the
transactions contemplated hereby. Client has all franchise, licenses, permits
and other governmental approvals necessary to enable it to carry on its
business as presently conducted, except where the failure to have such
franchises, licenses or permits or other governmental approvals would not
have, individually or in the aggregate, a material and adverse affect on
Client's business.
D. Client acknowledges that Consultant is not a law firm, neither is
it an accounting firm. Client represents that it has retained counsel which
shall be responsible for reviewing all documents provided by Consultant to
Client and all opportunities Consultant introduces to Client. Client hereby
warrants that it will not rely upon Consultant to determine that legal
sufficiency of any representation made by Consultant and that Client has and
will continue to seek the independent advice of legal and financial counsel
regarding all material aspects of the transactions contemplated by this
Agreement. Client acknowledges that the attorneys, accountants and other
advisors employed by Consultant represent the interests of Consultant solely,
and that no representation or warranty has been and will be given to Client by
Consultant as to any legal, tax, accounting, financial or other aspect of the
transactions contemplated by this Agreement.
Section 5 - Non-Circumvention
Client agrees that Client will not enter into any merger with or
acquisition of a target company, raise any funds for which Consultant provided
services, or enter into any transaction involving a business opportunity or
asset
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introduced to Client by Consultant, without compensating Consultant pursuant to
this Agreement. Neither will Client terminate this Agreement solely as a means
to avoid paying Consultant compensation earned or to be earned, or in any other
way attempt to circumvent Consultant.
Section 6 - Termination of Agreement by Consultant and by Client
A. Consultant may terminate this Agreement if the following occurs:
i. Payments due under this Agreement are not timely made.
ii. In the judgment of the Board of Directors of
Consultant, Client's actions or conduct make it
unreasonable for Consultant to perform under this
Agreement. Such acts include, and are or may be
perceived as being in the nature of, dishonesty,
illegal activities, activities harmful to the
reputation of the Consultant, and activities which
may create civil or criminal liability for the
Consultant.
iii. Consultant makes a bona fide decision to terminate
its business and liquidate its assets.
iv. Client misrepresents its corporate standing, power to
enter and bind itself to this Agreement, misrepre-
sentation of its Section 3 guarantees, or any other
concealed or misrepresented material fact which
would decrease the binding effect of this
Agreement on Client.
vi. An unanticipated material change in either the
market, Client or Consultant makes continued
performance under this Agreement unreasonable.
vii. There ceases to be a public trading market for
Client's Common Stock.
viii. Breach of any provision of this Agreement.
ix. Notwithstanding the termination of this
Agreement, Consultant shall be entitled to receipt of
all compensation owed pursuant to Section 2 up to the
time of termination of this Agreement, including the
full amount paid as a retainer fee. Consultant shall
also be entitled to reimbursement of any expenses
incurred, up to the time of termination of this
Agreement along with any expenses incurred as a
result of the termination.
B. Client may terminate this Agreement under the following conditions:
i. Consultantfails to follow Client's reasonable
instructions. Client must advise consultant that its
actions or inactions are unacceptable and give
Consultant thirty (30)days during which to comply. If
Consultant fails to comply within thirty (30) days,
Consultant may be terminated hereunder by Client's
service of notice of termination to Consultant.
ii If, in the judgment of the Board of Directors of
Client, Consultant's actions or conduct would make it
unreasonable to require Client to retain Consultant.
Such acts include, and are in the nature of,
dishonesty, illegal activities, activities harmful to
the reputation of the Client, and activities which
create civil or criminal liability for the Client.
Section 7 - Utilization of Attorneys
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Consultant utilizes attorneys to assist it in preparing the
documentation required to effectuate the transactions contemplated by this
Agreement. The attorneys utilized by Consultant represent only Consultant, and
Consultant's interest in providing consulting services and do not in anyway
represent the interests of any party to this Agreement other than Consultant's.
Client is advised, and has represented, that it will seek independent legal
counsel to review all documentation provided to Client by Consultant.
Section 8 - Nondisclosure of Confidential Information
A. In consideration for the Client entering into this
Agreement, Consultant agrees that the following items used in
the Client's business are secret, confidential, unique, and
valuable, were developed by Client at great cost and over a
long period of time, and disclosure of any of the items to
anyone other than Client's officers, agents, or authorized
employees will cause Client irreparable injury.
i. Non-public financial information, accounting
information, plans of operations and possible mergers
or acquisitions prior to the public announcement.
ii. Customer lists, call lists and other confidential
customer data;
iii. Memoranda, notes and records concerning the
technical and creative processes conducted by Client;
iv. Sketches, plans, drawings and other confidential
research and development data or;
v. Manufacturing processes, chemical formulae and the
composition of Client's products.
B. Consultant shall have no liability to the Client with respect to the
use or disclosure to others not party to this Agreement, of such information as
Consultant can establish to:
i. Have been publicly known;
ii. Have become known, without fault on the part of
Consultant, subsequent to disclosure by Client of
such information to Consultant;
iii. Have been otherwise known by Consultant prior to
communication by the Client to Consultant of such
information, or
iv. Have been received by Consultant at any time from a
source other than Client lawfully having possession of
such information.
Section 9 - Best Efforts
Consultant agrees that it will at all times faithfully and to the best
of its experience, ability and talents, perform all the duties that may be
required of and from Consultant pursuant to the terms of this Agreement.
Consultant does not guarantee that its efforts will have any impact on Client's
business or that any subsequent financial improvement will result from
Consultant's efforts.
Section 10 - Place of Services.
The Consulting Services contemplated to be performed by Consultant will
be performed through Consultant's offices; however, it is understood and
expected that Consultant may make contacts with persons and entities in any
other place deemed appropriate by Consultant.
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Section 11 - Nonexclusive Services.
Client acknowledges that Consultant is currently providing services of
the same or similar nature to other parties and Client agrees that Consultant is
not prevented or barred from rendering services of the same nature or a similar
nature to any other individual or entity.
Section 12 - All Prior Agreements Terminated
This Agreement comprises the entire agreement and understanding between
the parties hereto at the date of this Agreement as to the subject matter hereof
and supersedes and replaces all proposals, prior negotiations and agreements,
whether oral or written, between the parties hereto in connection with the
subject matter hereof. None of the parties hereto shall be bound by any
conditions, definitions, warranties or representations with respect to the
subject matter of this Agreement other than as expressly provided in this
Agreement unless the parties hereto subsequently agree to vary this Agreement in
writing, duly signed by authorized representative of the parties hereto.
Section 13 - Consultant is not an Agent or Employee of Client
Consultant's obligations under this agreement consist solely of the
Consulting Services described herein. In no event shall Consultant be considered
to act as the employee or agent of Client or otherwise represent or bind Client.
For the purposes of this Agreement, Consultant is an independent contractor. All
final decisions with respect to acts of Client or its affiliates, whether or not
made pursuant to or in reliance on information or advice furnished by Consultant
hereunder, shall be those of Client or such affiliates and Consultant, its
employees or agents shall under no circumstances be liable for any expense
incurred or loss suffered by Client as a consequence of such action or
decisions.
Section 14 - Disclosure of Documents
Upon the execution of this Agreement, and prior to the consummation of
the transactions contemplated herein, Client will provide Consultant, at
Client's sole expense, audited financial statements in accordance with generally
accepted accounting principles and financial documentation with respect to
Client since the later of either the date of incorporation of Client or three
(3) years prior to the execution of this Agreement, other financial and
corporate information, pro-forma, due diligence, articles of incorporation,
bylaws, business plans, proof of ownership of assets, accounts receivable, bank
statements and copies of deeds, liens, mortgages, a certificate of good standing
issued by Client's state of incorporation, and any other documents that may be
reasonably required by Consultant to provide services to Client for the
transactions contemplated herein. After review of the documents and information
provided in this paragraph, or after review of the due diligence information
requested by Client, Consultant or Client may make a determination that the
transactions contemplated are not in their best interests and may terminate this
Agreement with no further obligation.
Section 15 - Continue Operations in Substantially Same Manner
Client will not transfer, sell or hypothecate, assign or distribute any
of the assets currently in its possession except upon the written agreement of
the parties to this Agreement, and will continue operations in substantially the
same manner as it is presently functioning, until the closing of the
transactions mutually acceptable to the parties are entered into and this
agreement has been consummated.
Section 16 - Miscellaneous
A. This Agreement may be amended or modified at any time and in any
manner only by an instrument in writing executed by the parties hereto.
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B. No term of this Agreement shall be considered waived and no breach
excused by either party unless made in writing. No consent, waiver or excuse by
either party, express or implied, shall constitute a subsequent consent, waiver
or excuse.
C. Assignment:
i. The rights and obligations of the Consultant
under this Agreement shall inure to the
benefit of and shall be binding upon its
successors and assigns. There shall be no
rights of transfer or assignment of this
Agreement by Client except with the prior
written consent of the Consultant.
Nothing in this Agreement, expressed
or implied, is intended to confer
upon any person, other than the
parties and their successors, any
rights or remedies under this
Agreement.
D. Any notice or other communication required or permitted by this
Agreement must be in writing and shall be deemed to be properly given when
delivered in person to an officer of the other party, when deposited in the
Unites States mails for transmittal by certified or registered mail, postage
prepaid, or when deposited with a public telegraph company for transmittal or
when sent by facsimile transmission, charges prepaid provided that the
communication is addressed:
i. In the case of Consultant to the following or to
such other person or address designated by Client in
writing to receive notice:
Canton Financial Services Corporation
ATTN: Xxxxxxx Xxxxxx, President
000 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
ii. In the Case of Client to the following or to such
other person or address designated by Client in
writing to receive notice:
Kellys Coffee Group, Inc.
ATTN: Xxxxxxxx X. Xxxxxx
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
E. The headings of paragraphs are included solely for convenience. If a
conflict exists between any heading and the text of this Agreement, the text
shall control.
F. In the event that any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, but this Agreement
shall be constructed as if it never contained any such invalid, illegal or
unenforceable provisions.
G. The validity, interpretation, and performance of this Agreement
shall be governed by the laws of the State of Utah, without regard to its law on
the conflict of laws. Any dispute arising out of this Agreement shall be brought
in a court of competent jurisdiction in Salt Lake County, Utah. The parties
exclude any and all statutes, laws and treaties which would allow or require any
dispute to be decided in another forum or by other rules of decision than
provided in this Agreement.
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H. If any action at law or in equity, including an action for
declaratory relief, is brought to enforce or interpret the provisions of this
Agreement, the prevailing party shall be entitled to recover actual attorney's
fees, court costs, and other costs incurred in proceeding with the action from
the other party. The attorney's fees, court costs or other costs, may be ordered
by the court in its decision of any action described in this paragraph or may be
enforced in a separate action brought for determining attorney's fees, court
costs, or other costs. Should either party be represented by in-house counsel,
all parties agree that that party may recover attorney's fees incurred by that
inhouse counsel in an amount equal to that attorney's normal fees for similar
matters, or, should that attorney not normally charge a fee, by the prevailing
rate charged by attorneys with similar background in that legal community.
I. Time is of the essence of this Agreement and of each and every
provision hereof.
J. The parties hereto shall cooperate with each other to achieve
the purpose of this Agreement, and shall execute such other and further
documents and take such other and further actions as may be necessary or
convenient to effect the transactions described herein.
K. Client and Consultant agree to indemnify, hold harmless and, at the
party seeking indemnification's sole option, defend the other from and against
all demands, claims, actions, losses, damages, liabilities, costs and expenses,
including without limitations interest, penalties, court fees, and attorneys'
fees and expenses asserted against or imposed or incurred by either party by
reason of or resulting from a breach of any representation, warranty, covenant
condition or agreement of the other party to this Agreement. Neither party shall
be responsible to the other party for any consequential or punitive damages.
L. If a party signs this Agreement and transmits an electronic
facsimile of the signature page to the other party, the party who receives the
transmission may rely upon the electronic facsimile as a signed original of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date herein above written.
Kellys Coffee Group, Inc. Canton Financial Services Corporation
By: /s/ Xxxxxxxx X. Xxxxxx By: /s/ Xxxxxxx Xxxxxx
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Xxxxxxxx X. Xxxxxx Xxxxxxx Xxxxxx
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