1
EXHIBIT 10.9
NBC - LDDI ALLIANCE AGREEMENT
This agreement is made and entered into as of the 15 day of January,
1997, by and between National Benefits Consultants, L.L.C., a Delaware limited
liability company, and Long Distance Direct Holdings, Inc., a Nevada corporation
("LDDI").
RECITALS
A. NBC develops and maintains a customer base ("NBC Customers") for the
purposes of supplying a variety of disbursement recovery services,
health claims products and services, and a variety of employee benefit
services. NBC has entered into an Alliance Agreement with Deloitte &
Touche - ICRS (D&T) under which NBC will provide certain services
including accounts payable ("A/P") audit services.
B. LDDI's principal business is the provision of telephone services which
are, in general, co-extensive with the services offered by AT&T and MCI
to their own customers (the "LDDI Services").
C. NBC and LDDl wish to enter into a mutually beneficial relationship
involving, but not limited to, (a) the mutual referral of customers,
and (b) the performance of services for each other's customers, all on
the terms and subject to the conditions set forth herein.
PROVISIONS
Now, THEREFORE, in consideration of the RECITALS, premises and the
mutual covenants, conditions and obligations contained herein, NBC and LDDI
mutually agree as follows:
ARTICLE 1.
TERM
1.1. GENERAL. This Agreement shall be effective as of the date first written
above and shall continue in effect until December 31, 2001, unless terminated
earlier as provided hereafter in Article 6.
ARTICLE 2.
SCOPE OF THE ALLIANCE
2.1. LDDI SERVICES, LDDI agrees to perform LDDI Services for Registered NBC
Customers (as defined in Section 2.2 below) referred to LDDI by NBC.
2.2. REGISTRATION OF NBC CUSTOMERS. When NBC intends to refer a customer to
LDDI, NBC shall deliver a notice ("NBC Referral Notice") to LDDI identifying the
customer ("NBC Referral Customer"). If the NBC Referral Customer is already a
customer of LDDI, or if LDDI wishes to decline the performance of its services
for such NBC Referral Customer for specific reasons to be communicated, in
writing, to NBC, LDDI shall deliver a notice ("LDDI Customer Notice") to NBC
within ten (10) business days ("the "LDDI Notice Period") after receipt of the
NBC Referral Notice. If LDDI fails to deliver an LDDI Customer Notice within the
LDDI Notice Period with respect to an NBC Referral Customer, the NBC Referral
Customer shall become a "Registered NBC Customer" upon the expiration of the
LDDI Notice Period. If LDDI delivers an LDDI Customer Notice within the LDDI
Notice Period, with reference to an NBC Referral Customer, such notice shall
state the specific category of products or services provided by LDDI to the
customer under the existing LDDI contract or the reasons that LDDI
2
declines to perform the services for the Customer. Unless the LDDI Customer
notice states that LDDI is declining to perform services to the Customer, the
NBC Referral Customer shall become a Registered NBC Customer as to all other
categories of products and services not listed in the LDDI Customer Notice;
provided, however, if LDDI declines to perform services for an NBC Referral
Customer, NBC shall have the right to obtain those services from others. All
Deloitte & Touche audit clients are automatically NBC Registered Customers as of
the date of this Agreement, unless they are already a client of LDDI. If a
Registered NBC Customer does not become a customer of LDDI within 180 days of
first becoming a Registered NBC Customer, the registration shall lapse and such
customer shall no longer be an NBC Registered Customer for purposes of this
Agreement.
2.3. COMPENSATION TO NBC. NBC and LDDI agree that as compensation to NBC for its
referral of Registered NBC Customers to LDDI for LDDI Services, NBC shall
receive from LDDI fees ("NBC Referral Fees") in the amount of ten percent (10%)
of LDDI's receipts from xxxxxxxx, net of taxes ("Receipts"), to such Registered
NBC Customers, unless both NBC and LDDI otherwise agree, in writing. The payment
to NBC shall be made within 30 days after the end of the month in which the
Receipts are received by LDDI.
2.4. NBC BONUS COMPENSATION - STOCK. NBC shall have an option ("Option") to buy
shares of LDDI common stock ("Shares") constituting up to 20% of the Total
Shares (as defined in Section 2.4(a) hereof) upon the following terms and
conditions:
(a) "Total Shares" shall be calculated on a fully diluted basis
and shall mean the sum of (i) the total number of outstanding
Shares, (ii) the Shares then issuable upon the exercise of the
Option or the Second Option (as defined in Section 2.4(d)
hereof), and (iii) any Shares issuable upon conversion of
outstanding convertible debt instruments or convertible stock
or upon exercise of outstanding options or warrants, except
for shares issuable under such instruments where the
conversion or exercise price is above the market price of
LDDI's stock at the date of the exercise of the Option.
(b) "Referral Percentage" shall mean the percentage calculated for
the period ("Calculation Period") beginning with the first day
of the seventh full calendar month following the date of this
Agreement and ending with the Option Exercise Date (as defined
in Section 2.4(d) hereof) which percentage shall be determined
by dividing (i) the sum of (x) the amount of LDDI's Receipts
(as defined in Section 2.3 hereof) from NBC Registered
Customers during the Calculation Period, and (y) the amount of
any LDDI Referral Fees received by LDDI pursuant to Section
2.6 hereof during the Calculation Period by (ii) the amount of
LDDI's total receipts from all of LDDI's customers during the
Calculation Period. The Calculation Period shall be the
twenty-four (24) months ending immediately prior to the Option
Exercise Date and commencing not earlier than the first day of
the seventh full calendar month following the date of this
Agreement, except where an Acceleration Event occurs prior to
the elapse of twenty-four (24) months from the first day of
the seventh full calendar month following the date of this
Agreement.
(c) Upon the exercise of the option by NBC, it shall be entitled
to purchase a number of Total Shares equal to the "Referral
Percentage", not to exceed twenty percent (20%) of the Total
Shares.
2
3
(d) (1) NBC may exercise its Option by delivering to LDDI written
notice thereof (the "Option Notice") together with full
payment by NBC check of the Option exercise price which shall
be an amount equal to $3.00 per share of common stock
("Exercise Price"). The "Option Exercise Date" shall be the
date the Option Notice is deemed given under Section 7.11
hereof. Upon full payment of the Exercise Price, NBC shall
have all rights of a shareholder of LDDI effective as of the
Option Exercise Date. Subject to the rights to exercise the
Option in the case of an Acceleration Event as set forth in
Section 2.4(e)(2) below, the Option may be exercised at any
time following thirty (30) full months after the date of this
Agreement. If the Option is exercised prior to the termination
of this Agreement, NBC shall have a second option ("Second
Option") to purchase additional Shares ("Additional Shares")
as follows: (i)the Calculation Period for the Second Option
shall be the 24-month period prior to the Exercise Date of the
Second Option, (ii) the Second Option may be exercised at any
time after the Exercise Date of the first Option and prior to
the termination of this Agreement and (iii) the Additional
Shares, if any, issuable upon exercise of the Second Option
shall be the percentage of Total Shares equal to the amount by
which the Referral Percentage for the exercise of the Second
Option exceeds the Referral Percentage for the exercise of the
first Option. Under no circumstances shall NBC be entitled to
acquire, upon exercise of the Option and the Second Option, an
aggregate amount of Shares in excess of twenty percent (20%)
of the Total Shares. Any Additional Shares issuable hereunder
shall be issued and delivered to NBC within thirty (30) days
following the Exercise Date of the Second Option.
(e) (1) At least 30 days prior notice ("Acceleration Notice") of
any of the following transactions ("Acceleration Event") shall
be given by LDDI to NBC: (i) the dissolution or liquidation of
LDDI; (ii) a reorganization, merger or consolidation as a
result of which LDDI IS not the surviving corporation or as a
result of which the outstanding Shares are changed into or
exchanged for cash, property or securities not of LDDI's
issue, except for a merger or consolidation with a
wholly-owned subsidiary of LDDI or a transaction effected
primarily to change the state of LDDI's incorporation; or
(iii) the sale or other transfer of all or substantially all
of the assets of LDDI.
(2) If an Acceleration Event occurs, the Option shall
terminate upon the closing of the Acceleration Event;
provided, however, during the period from the Acceleration
Notice to the closing of the Acceleration Event, NBC, at its
election, may either (i) exercise the Option and purchase
Shares equal to the Referral Percentage as set forth above or
(ii) exercise the Option and purchase Shares equal to an
"Adjusted Referral Percentage" determined by computing the
Referral Percentage based upon an "Adjusted Calculation
Period" defined as the six full months immediately preceding
the Acceleration Event.
(3) An Acceleration Event shall also allow NBC, in its sole
discretion, to terminate this Agreement by giving notice
thereof to LDDI.
3
4
(f) If the number of outstanding Shares is increased or decreased
by a stock dividend payable in shares of stock or a
subdivision, split, combination or reverse split of
outstanding shares of stock, or if the outstanding Shares are
changed into or exchanged for a different number or kind of
securities of LDDI through a reorganization or
reclassification, an appropriate and proportionate adjustment
shall be made to the number and kind of securities which may
be purchased upon exercise of the Option and the Option
exercise price.
(g) NBC shall have the registration rights as set forth in Exhibit
A.
2.5. COMPENSATION REPORTS TO NBC. LDDI will provide NBC with a statement of all
xxxxxxxx to and collections received from Registered NBC Customers and the
compensation due NBC based upon the LDDI Services rendered by LDDI hereunder on
a monthly basis no later than thirty (30) days following the end of each month.
In the event NBC disputes any such statement by giving LDDI written notice
thereof ("Dispute Notice"), after receiving the Dispute Notice and any other
communications from NBC relevant to the information contained in such report,
LDDI will cause its independent auditors within thirty (30) days after the
receipt of the Dispute Notice to supply NBC with a statement of reconciliation
which sets forth whether the amount of compensation paid to NBC was accurate. If
an inaccuracy is demonstrated, the payment made to NBC will be adjusted in
accordance with the report made by the independent auditors. If the report made
by the independent auditors discloses that the payment of compensation to NBC
was accurate, then NBC shall either reimburse LDDI for the cost of the report
made by the independent auditors or submit the matter for arbitration pursuant
to Section 7.9 hereof.
2.6. LDDI REFERRALS.
(a) Registration. When LDDI intends to refer an LDDI customer to
NBC, LDDI shall deliver a notice ("LDDI Referral Notice") to
NBC identifying the customer ("LDDI Referral Customer"). If
the LDDI Referral Customer is already a customer of NBC, NBC
shall deliver a notice ("NBC Customer Notice") to LDDI within
five (5) business days (the "NBC Notice Period") after receipt
of the LDDI Referral Notice. If NBC fails to deliver a NBC
Customer Notice within the NBC Notice Period with respect to
an LDDI Referral Customer, the LDDI Referral Customer shall
become a "Registered LDDI Customer" upon the expiration of the
NBC Notice Period. If NBC delivers a NBC Customer Notice
within the NBC Notice Period, such notice shall state the
specific category of products or services provided by NBC to
the customer under the existing NBC contract. As to all other
categories of products and services, the LDDI Referral
Customer shall become a Registered LDDI Customer. All Deloitte
& Touche audit clients are automatically NBC Registered
Customers under Section 2.2 hereof and none of them shall be
LDDI Registered Customers other than with respect to the
categories of products and services in which LDDI is
performing services for such customers at the date of this
Agreement. If a Registered LDDI Customer does not become a
customer of NBC within 180 days of first becoming a Registered
LDDI Customer, the registration shall lapse and such customer
shall no longer be a Registered LDDI Customer for purposes of
this Agreement.
(b) Compensation to LDDI. NBC agrees to pay fees ("LDDI Referral
Fees") to LDDI in accordance with the PCA Agreement attached
hereto as Exhibit B to be entered into between LDDI and NBC
concurrently herewith.
4
5
ARTICLE 3.
EXCLUSIVENESS
3.1. EXCLUSIVENESS OF THIS AGREEMENT. LDDI and NBC agree that during the term of
this Agreement NBC will not enter into a customer referral relationship
involving a potential equity position with any other entity that provides
services similar to LDDI's to a marketplace similar to LDDI's marketplace.
Specifically, NBC maintains the right to have a relationship with an entity
providing telecommunication services to large corporations. LDDI agrees not to
provide data to or contract with any firm that competes with NBC for the
services described in Recital A of the Recitals section of this Agreement.
ARTICLE 4.
COMPLIANCE
4.1. COMPLIANCE WITH RULES AND REGULATIONS. LDDI shall comply with the laws,
rules, and regulations of any governmental agency having jurisdiction with
respect to LDDI's performance of its obligations hereunder. LDDI will be solely
responsible for maintaining any and all licenses which may be required for the
provision of the LDDI Services and the performance of its obligations hereunder.
4.2. PAYMENT OF FINES AND PENALTIES. LDDI shall indemnify and hold NBC harmless
from any fines, penalties, and related expenses incurred by NBC as a result of
LDDI's failure to comply with the laws, rules, and regulations of any
governmental agency having jurisdiction over the performance of its obligations
hereunder.
ARTICLE 5.
INDEMNIFICATION
5.1. GENERAL PROVISION. LDDI agrees to indemnify and hold harmless NBC, its
members, directors, officers, employees, agents and representatives against any
and all claims, liabilities, losses or damages which arise from LDDI's
intentional or negligent acts during the performance of its duties under this
Agreement. NBC agrees to indemnify and hold harmless LDDI, its directors,
officers, employees, agents and representatives against all claims, liabilities,
losses or damages which arise from NBC's intentional or negligent acts during
the performance of its duties under this Agreement.
ARTICLE 6.
TERMINATION
6.1. EXPIRATION OF TERM. The Agreement will continue in effect until December
31, 2001, unless it is mutually extended by the parties or is earlier terminated
pursuant to this Section.
6.2. BANKRUPTCY OR INSOLVENCY. This Agreement shall automatically terminate if
either party shall be adjudicated insolvent or have an order for relief entered
against it or generally not pay its debts as they become due (within the meaning
of the United States Bankruptcy Code as at any time amended or any successor
statute thereto), or make an assignment for the benefit of creditors; or shall
apply for or consent to the appointment of a custodian, receiver, trustee or
similar officer for it for all or any substantial part of its property, or such
custodian, receiver, trustee or similar officer shall be appointed without its
application or consent and such appointment shall remain undismissed for a
period of sixty (60) days; or shall institute (by petition, application, answer,
consent or otherwise) or take any action indicating its consent to, approval of
or acquiescence in any bankruptcy, insolvency, reorganization,
5
6
moratorium, arrangement, readjustment of debt, dissolution, liquidation or
similar proceeding relating to it under the laws of any jurisdiction; or any
such proceeding shall be instituted (by petition, application or otherwise)
against either of them and shall remain undismissed for a period of sixty (60)
days; or any judgment, writ, warrant of attachment or execution or similar
process shall be issued or levied against a substantial part of any of their
property and such judgment, writ or similar process shall not be released,
vacated or fully bonded within sixty (60) days after its issue or levy.
6.3 TERMINATION FOR CAUSE. This Agreement may be terminated by either party for
cause; provided, however, neither party may terminate this Agreement for cause
prior to delivering a written notice to the other party specifying the cause and
the required remedies for a cure, and giving the other party a thirty (30) day
period in which to cure the specified cause.
(a) NBC shall have the right to terminate for cause in the event of:
(i) the failure by LDDI to perform its duties hereunder in any
material respect.
(ii) the failure by LDDI to comply in any material respect with
the provisions of any applicable statute, rule or regulation
of any governmental entity exercising jurisdiction over the
services provided, as determined by a court or government
agency having relevant jurisdiction and such failure has a
material adverse effect on NBC;
(iii) the commission by LDDI of any fraudulent act with respect to
its services provided hereunder;
(iv) an Acceleration Event pursuant to Section 2.5(e)(3) hereof.
(b) LDDI shall have the right to terminate for cause in the event of:
(i) the failure by NBC to perform its duties hereunder in any
material respect;
(ii) the failure by NBC to comply in any material respect with the
provisions of any applicable statute, rule or regulation of
any governmental entity exercising jurisdiction over the
services provided, as determined by a court or government
agency having relevant jurisdiction and such failure has a
material adverse effect on LDDI;
(iii) the commission by NBC of any fraudulent act with respect to
its services provided hereunder.
6.4 POST-TERMINATION OBLIGATIONS.
(a) Following the expiration of the term of the Agreement without
renewal, LDDI will continue, for a period of the greater of
six months or the life of the LDDI contract with each
Registered NBC Customer, to pay NBC Referral Fees to NBC, but
only for referrals made prior to such expiration. In
addition, the Option shall expire on the date of termination
of the Agreement and shall not be exercisable thereafter.
6
7
(b) Following a termination of this Agreement by LDDI or NBC
under Section 6.3 hereof, LDDI shall continue, for a period
of the greater of six months or the life of the LDDI contract
with each registered NBC Customer, to pay NBC Referral Fees
to NBC, but only for referrals made prior to such
termination. In addition, if the Agreement is terminated by
NBC pursuant to Section 6.3 hereof, the Option shall expire
on the date of such termination, but it will become
exercisable immediately prior to such termination in the same
manner as if there was an Acceleration Event on the date of
such termination. If the Agreement is terminated by either
NBC or LDDI pursuant to Section 6.3 hereof, the Option shall
be exercisable for a period of six months after the
termination of the Agreement.
(c) Following a termination of this Agreement by LDDI or NBC
under Section 6.3 hereof, NBC shall continue, for a period of
the greater of six months or the life of the NBC contract
with the Registered LDDI Customer, to pay LDDI Referral Fees
to LDDI but only for referrals made prior to such
termination.
(d) Following a termination of this Agreement by LDDI or NBC,
both LDDI and NBC agree that they will not solicit the
other's customers, including those referred to each other
pursuant to and during the existence of this Agreement, for
the purpose of providing the telecommunications services
referred to in this Agreement.
ARTICLE 7.
MISCELLANEOUS PROVISIONS
7.1. INDEPENDENT ENTITIES; NO GRANT OF AUTHORITY. NBC and LDDI are independent
entities and are not the agent, employee or partner of each other. This
Agreement does not grant authority to NBC or LDDI to bind each other or any of
their principals or members. NBC and LDDI shall each act in accordance with
their own expertise, experience, manner and methods and through their own duly
authorized employees, agents and subcontractors.
7.2 EXPENSES. Each party shall be responsible for its own expenses incurred as
the result of performing its duties pursuant to this Agreement unless otherwise
set forth in this Agreement or mutually agreed to in writing.
7.3 MODIFICATION OR AMENDMENT. This Agreement and any Exhibit or Schedule hereto
may not be modified or amended unless such modification or amendment is
contained in a writing signed by the parties.
7.4 GOVERNING LAWS. Except to the extent provided in Section 7.9 herein, this
Agreement and any Exhibit or Schedule hereto shall be subject to and construed
pursuant to the laws of the State of California without giving effect to the
choice of law principles thereof.
7.5 WAIVER AND ESTOPPEL. No waiver by either party or any act or omission to act
in violation of this Agreement on the part of either party shall stop or bar the
other from reasserting a similar act or omission to act as a breach or other
violation of the Agreement at a subsequent date.
7.6 HEADINGS. The paragraph headings in this Agreement and any Exhibit or
Schedule hereto are included solely as a matter of convenience for reference and
are not intended to be a part of this Agreement.
7
8
7.7 SEVERABILITY. If any term or condition of the Agreement or Exhibit or
Schedule hereto is held by any government agency, court of competent
jurisdiction or arbitrator appointed pursuant to Section 7.9 herein to be
invalid or unenforceable, the balance of this Agreement shall remain in effect.
This Agreement shall be deemed to consist of a series of separate covenants.
Should any government agency, court of competent jurisdiction or arbitrator
determine that any covenant is not enforceable in light of the circumstances as
they then exist, then it is the intention of the parties that this Agreement be
construed by the government agency, court or arbitrator in such a manner as to
impose only those restrictions on the conduct of a party which are enforceable
in light of the circumstance as they then exist and as necessary to assure the
other party the intended benefit of this Agreement. If in an agency, judicial or
arbitration proceeding such agency, court or arbitrator shall refuse to enforce
a series of separate covenants because, cumulatively, they are more extensive
than necessary to assure a party the intended benefit of the Agreement, it is
expressly agreed by the parties that those covenants which, if eliminated, would
permit the remaining separate covenants to be enforced in such proceeding, shall
for the purpose of such proceeding, be deemed eliminated from this Agreement.
7.8 COUNTERPARTS. This Agreement and any Exhibit or Schedule hereto may be
executed in one or more counterparts and when executed by all parties hereto,
such counterpart shall be deemed to be the original.
7.9 ARBITRATION. The parties hereby stipulate and agree that any and all
disputes between them arising out of or otherwise relating to this Agreement
shall be governed exclusively by the Federal Arbitration Act, as amended, and
shall be submitted for resolution to mandatory, exclusive and binding
arbitration in Orange County, California before a single arbitrator in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The party initiating arbitration shall first provide the responding
party written notice (the "Notice") of the initiating party's intention to
arbitrate, a brief statement of the nature of the dispute and a list of proposed
arbitrators. The Notice shall be sent and deemed given in accordance with
Section 7.11. The parties shall then mutually select an arbitrator. If the
parties fail to agree to an arbitrator within thirty (30) days following the
delivery of the Notice in accordance with Section 7.11, an arbitrator shall be
selected in the manner provided by the American Arbitration Association. The
parties agree to be bound by any final decision rendered by the arbitrator,
which final decision may be enforced in any court of competent jurisdiction. The
parties hereby consent to the exercise of personal jurisdiction over them by
such courts and the propriety of venue of such courts for the purpose of
carrying out this provision and they waive any objection that they would
otherwise have to the same. The parties agree that the arbitrator shall have no
power or authority to make awards of punitive or exemplary damages. The parties
further agree that the arbitrator shall have the power to dispense equitable
relief.
Either party may, without inconsistency with this Agreement, seek from a court
any interim or provisional relief that is necessary to protect the right or
property of that party, until the arbitration award is rendered or the
controversy is otherwise resolved. The arbitrator shall render a single written
decision setting forth an award, to the extent applicable, and state with
reasonable specificity the reasons for the decision reached. The parties hereby
further stipulate that each party (as determined by the arbitrator) shall pay
the fees and expenses of the Arbitrator. The Arbitrator shall award fees to the
prevailing party, or, in the event no party is clearly prevailing, in a manner
deemed equitable by the Arbitrator. This Section shall survive the termination
of this Agreement. Unless prohibited by applicable law, any arbitration under
this Agreement must be commenced within one (1) year of the conduct or event
giving rise to the dispute. An arbitration shall be deemed commenced upon
effective delivery of the Notice. The parties acknowledge, understand and agree
that in the event of a dispute under this Agreement
8
9
between the parties, both parties have waived any right to a jury trial and a
judicial resolution of the dispute.
7.10. ENTIRE AGREEMENT. This Agreement and the Exhibits and Schedules hereto are
entire in content and constitute the sole and complete understanding of the
parties.
7.11. NOTICES. All notices required by this Agreement shall be in writing and
shall be given (i) by either party personally delivering notice to the other
party or any officer thereof, or (ii) by certified or registered U.S. Mail,
return receipt requested postage and charges prepaid; or (iii) by facsimile; or
(iv) by reputable overnight courier service (e.g., Federal Express) which
provide written proof of delivery. Notices shall be sent to the address shown
below or to any other address a party may furnish the other pursuant to this
Section. Notice shall be sent to:
NBC LDDI
Xxxx X. Xxxxx Xxxxxx Xxxxxxx
National Benefits Consultants, LLC President
000 Xxxx Xxxxxx Xxxxx Long Distance Direct, Inc.
Xxxxx 000 0 Xxxx Xxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000 Xxxxx Xxxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Telefax: (000)000-0000 Telefax: (000) 000-0000
Notice shall be deemed given and received (i) at the time actually received, if
personally delivered; or (ii) per the date of receipts or refusal indicated on
the return receipt, if sent by registered or certified mail, return receipt
requested, postage and charges prepaid and properly addressed; or (iii) upon
confirmation of receipt if sent by facsimile; or (iv) upon the date of delivery
as set forth in the courier's delivery receipt if sent by overnight courier
service.
7.12. SIGNATURES. Where required, signature from the parties are deemed
acceptable from the facsimile transmission.
7.13. THIRD PARTY BENEFICIARY. None of the obligations hereunder of either party
shall run to or be enforceable by any party other than a party to this Agreement
or by one deriving rights hereunder as a result of an assignment permitted
pursuant to the terms hereof. The parties acknowledge and agree that either
party is not a party beneficiary of any agreement between the other party and
any third party.
7.14. DEFINED TERMS. Unless the context otherwise requires, defined terms may be
used in the singular or plural, depending on the reference.
7.15. SURVIVAL OF PROVISIONS. Any of the provisions in this Agreement relating
to compensation, general indemnification, confidentiality, nondisclosure and
nonsolicitation shall survive the termination of this Agreement.
7.16. ASSIGNMENTS. This agreement will inure to the benefit of and be binding
upon the parties and their respective successors and permitted assigns. No party
may assign its obligations or rights under this Agreement, except for its rights
to receive cash payments, without the written consent of the other party, and
except that NBC shall have the right to assign all or any portion of the Option
or Shares issuable upon exercise of the Option in a transaction registered under
or exempt from the registration requirements of the Securities Act of 1933 as
amended.
9
10
IN WITNESS WHEREOF, the parties have signed this Agreement and declared
it effective on the date first written above.
NATIONAL BENEFITS CONSULTANTS, LLC LONG DISTANCE DIRECT HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxxx Xxxxxxx
-------------------------------- ---------------------------------
Xxxx X. Xxxxx Xxxxxx Xxxxxxx
Title: Managing Member Title: President
10
11
LONG DISTANCE DIRECT HOLDINGS, INC.
REGISTRATION RIGHTS CERTIFICATE
1. DEFINITIONS.
(a) The term "Company" shall mean Long Distance Direct
Holdings, Inc., a Nevada corporation.
(b) The term "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, or any similar federal statute then in effect, and a
reference to a particular section thereof or rule thereunder shall be deemed to
include a reference to the comparable section or rule, if any, of any such
similar federal statute.
(c) The term "Holder" shall mean National Benefits
Consultants, LLC, a Delaware limited liability company.
(d) The term "person" shall mean an individual, partnership,
corporation, trust, unincorporated organization or other entity.
(e) The term "Registrable Securities" shall mean shares of
Common Stock of the Company issued upon exercise of the option granted by the
Company to the Holder pursuant to the terms of the NBC-LDDI Alliance Agreement
dated as of January 15, 1997 between the Company and the Holder (the "NBC-LDDI
Agreement"). As to any particular Registrable Securities, once issued, such
shares shall cease to be Registrable Securities when (i) such shares shall have
been registered under the Securities Act, the registration statement with
respect to the sale of such shares shall have become effective under the
Securities Act and such shares shall have been disposed of pursuant to such
effective registration statement, (ii) such shares shall have been distributed
pursuant to Rule 144 (or any similar provision relating to the disposition of
securities then in force) under the Securities Act, (iii) such shares shall have
been otherwise transferred, new certificates or other evidences of ownership for
them not bearing a legend restricting further transfer and not subject to any
stop-transfer order or other restrictions on transfer shall have been delivered
by the Company and subsequent disposition of such shares shall nor require
registration or qualification of such shares under the Securities Act or any
state securities laws then in force or (iv) such shares shall cease to be
outstanding.
(f) The term "Registration Expenses" shall mean all expenses
incident to the Company's performance of or compliance with this Certificate,
including, without limitation, all SEC and stock exchange or National
Association of Securities Dealers, Inc. registration and filing fees and
expenses, fees and expenses of compliance with securities or blue sky laws
(including, without limitation, reasonable fees and disbursements of counsel for
the underwriters in connection with blue sky qualification of the Registrable
Securities), rating agency fees, printing expenses,
Exhibit A
12
messenger and delivery expenses, the fees and expenses incurred in connection
with the listing of the shares to be registered on each securities exchange on
which similar securities issued by the Company are then listed, fees and
disbursements of counsel for the Company and all independent certified public
accountants (including the expenses of any annual audit, special audit or "cold
comfort" letters required by or incident to such performance and compliance),
securities acts liability insurance (if the Company so desires or if the
underwriters so desire), the fees and disbursements of underwriters customarily
paid by issuers or sellers of securities, the reasonable fees and expenses of
any special experts retained by the Company in connection with such
registration, and fees and expenses of other persons retained by the Company
(but not including any underwriting discounts or commissions attributable to the
sale of Registrable Securities by the Holder).
(g) The term "SEC" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act or the Exchange Act.
(h) The term "Securities Act" shall mean the Securities Act of
1933, as amended, or any similar federal statute then in effect, and a reference
to a particular section thereof or rule thereunder shall be deemed to include a
reference to the comparable section or rule, if any, of any such similar federal
statute.
(i) The term "Shares" shall mean shares of Common Stock of the
Company issued upon exercise of the option granted by the Company to the Holder
pursuant to the terms of the NBC-LDDI Agreement.
2. SALE OR TRANSFER OF SHARES; LEGEND.
(a) The Shares and the Registrable Securities shall not be
sold or transferred unless either (i) they first shall have been registered
under the Securities Act, or (ii) the Company first shall have been furnished
with an opinion of legal counsel, reasonably satisfactory to the Company, to the
effect that such sale or transfer is exempt from the registration requirements
of the Securities Act.
(b) Notwithstanding the foregoing, no registration or opinion
shall be required for a transfer made in accordance with Rule 144 under the
Securities Act.
(c) Each certificate representing the Shares and the
Registrable Securities shall bear a legend substantially in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED UNLESS AND UNTIL SUCH SHARES ARE
REGISTERED UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY
2
13
IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS
NOT REQUIRED.
3. DEMAND REGISTRATION.
(a) At any time after the Company becomes eligible to file
a registration statement on Form S-3 (or any successor form relating to
secondary offerings), the Holder or Holders holding in the aggregate at least
50% of the Registrable Securities may request the Company, in writing, to effect
the registration on Form S-3 (or such successor form) of the Registrable
Securities owned by such Holder or Holders. Upon receipt of any such request,
the Company shall promptly give written notice of such proposed registration to
all Holders. Such Holders shall have the right, by giving written notice to the
Company within twenty (20) days after the Company provides its notice, to elect
to have included in such registration such of their Registrable Securities as
such Holders request in such notice of election. Thereupon, the Company shall,
as expeditiously as possible, use its best efforts to effect the registration on
Form S-3, or such successor form, of all Registrable Securities which the
Company has been requested to register. The Company will pay all Registration
Expenses in connection with each registration of Registrable Securities
requested pursuant to Section 3 of this Certificate.
(b) The Company shall not be required to effect more than
two registrations pursuant to paragraph (a) of this Section 3.
(c) If at the time of any request to register Registrable
Shares pursuant to this Section 3, the Company is engaged in any activity which,
in the good faith determination of the Company's Board of Directors, would be
adversely affected by the requested registration to the material detriment of
the Company, then the Company may at its option direct that such request be
delayed for a period not in excess of six months from the effective date of
commencement of such material activity, such right to delay a request to be
exercised by the Company not more than once in any two year period.
4. INCIDENTAL REGISTRATION.
(a) If the Company proposes to register any of its
securities under the Securities Act (other than a registration on Form S-4 or
Form S-8, or any successor or similar forms), whether or not for sale for its
own account, in a manner which would permit registration of the Registrable
Securities for sale to the public under the Securities Act, the Company will
give prompt written notice to the Holder of its intention to do so and of such
Holder's rights under this Certificate at least twenty (20) days prior to the
anticipated filing date of the registration statement relating to such
registration. Such notice shall offer the Holder the opportunity to include in
such registration statement such number of Registrable Securities as Holder may
request. Upon the written request of Holder made within ten (10) days after the
receipt of the Company's notice (which request shall specify the number of
Registrable Securities intended to be disposed of by Holder and the intended
method of disposition thereof), the Company will use its best efforts to effect
the registration under
3
14
the Securities Act of all Registrable Securities which the Company has been so
requested to register by Holder, to the extent requisite to permit the
disposition (in accordance with such intended methods thereof) of the
Registrable Securities so to be registered; provided, that if such registration
involves an underwritten offering, Holder must sell the Registrable Securities
to the underwriters selected by the Company on the same terms and conditions as
apply to the Company. If a registration requested pursuant to this Certificate
involves an underwritten public offering, Holder may elect, in writing prior to
the effective date of the registration statement filed in connection with such
registration, not to register such securities in connection with such
registration. The Company will pay all Registration Expenses in connection with
each registration of Registrable Securities requested pursuant to Section 4 of
this Certificate.
(b) If a registration pursuant to this Certificate involves
an underwritten offering and the managing underwriter advises the Company in
writing that, in its opinion, the number of securities which the Company, the
Holder and any other persons intend to include in such registration exceeds the
number which would have an adverse effect on such offering, including the price
at which such securities can be sold, the Company will include in such
registration (i) first, all the securities the Company proposes to sell for its
own account and (ii) second, a number of such securities equal to the number, in
the opinion of such underwriters, which can be sold without having the adverse
effect referred to above, such amount to be allocated pro rata among Holder and
other persons on the basis of the relative number of securities Holder and each
other person has requested to be included in such registration.
(c) Notwithstanding the provisions of this Section 4, the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 4 (irrespective of whether a written request for
inclusion of any Registrable Securities shall have been made) to elect not to
file any such proposed registration statement, or to withdraw the same after the
filing but prior to the effective date thereof. The Company shall not be
obligated to maintain effectiveness of any registration statement in which
Registrable Securities are included pursuant to this Section 4 for any period of
time.
5. REGISTRATION PROCEDURES. In the case of each registration
pursuant to this Certificate, the Company shall:
(a) Furnish to Holder a copy of the prospectus included in
such registration statement in conformity with the requirements of the
Securities Act and such other documents as Holder may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by
Holder.
(b) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as shall be reasonably requested by Holder,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify as a foreign corporation or as a dealer in
securities or
4
15
to file a general consent to service of process in any such states or
jurisdictions in which it has not already done so and except as may be required
by the Securities Act.
(c) Notify Holder at any time when a prospectus is required
to be delivered under the Securities Act of the happening of any event as a
result of which the prospectus, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing.
6. INFORMATION BY HOLDER. Holder shall furnish in writing to
the Company such information regarding Holder and the distribution of the
Registrable Securities proposed by Holder as the Company may request in writing
and as shall be required in connection with any registration referred to in this
Certificate. The Company's obligations under this Certificate are conditioned
upon compliance by Holder with the provisions of this Certificate.
7. INDEMNIFICATION.
(a) To the extent permitted by law, the Company will
indemnify each Holder, each of its officers, directors and constituent partners,
legal counsel for the Holders, and each person controlling such Holder, with
respect to which registration of Registrable Securities has been effected
pursuant to this Certificate, and each underwriter, if any, and each person who
controls any underwriter, against all claims, losses, damages or liabilities (or
actions in respect thereof) to the extent such claims, losses, damages or
liabilities arise out of or are based upon any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus or other
document (including any related registration statement) incident to any such
registration, or are based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by the Company of any rule
or regulation promulgated under the Securities Act applicable to the Company and
relating to action or inaction required of the Company in connection with any
such registration; and the Company will reimburse each such Holder, each such
underwriter and each person who controls any such Holder or underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action;
provided, however, that the indemnity contained in this Section 7 shall not
apply to amounts paid in settlement of any such claim, loss, damage, liability
or action if settlement is effected without the consent of the Company (which
consent shall not unreasonably be withheld); and provided, further, that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based upon any untrue
statement or omission based upon written information furnished to the Company by
such Holder, underwriter, or controlling person and stated to be for use in such
prospectus or other documents.
(b) To the extent permitted by law, each Holder will, if
Registrable Securities held by such Holder are included in the securities as to
which registration is being effected pursuant to this Certificate, indemnify the
Company, each of its directors and officers, each legal
5
16
counsel and independent accountant of the Company, each underwriter, if any, of
the Company's securities covered by such registration statement, each person who
controls the Company or such underwriter within the meaning of the Securities
Act, and each other such Holder, each of its officers, directors and constituent
partners and each person controlling such other Holder, against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based upon any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus or other document,
or any omission (or alleged Omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or any violation by such Holder of any rule or regulation promulgated under the
Securities Act applicable to such Holder and relating to action or inaction
required of such Holder in connection with any such registration; and will
reimburse the Company, such Holders, such directors, officers, partners,
persons; law and accounting firms, underwriters or control persons for any legal
and any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, or other document in reliance upon and in conformity with
written information furnished to the Company by such Holder and stated to be
specifically for use in such registration statement, prospectus or other
document; and provided that in no event shall any indemnity under this Section
7(b) exceed the gross proceeds from the offering received by the Holder.
(c) Each party entitled to indemnification under this
Section 7 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein within a reasonable amount
of time, if such failure is prejudicial to the Indemnifying Party of its
obligations under this Certificate, shall relieve the Indemnifying Party of any
liability to the Indemnified Party under this Section 7, but not of any
obligation rising apart from this Certificate. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation. If any such Indemnified Party shall have
reasonably concluded that there may be one or more legal defenses available to
such Indemnified Party which are different from or additional to those available
to the Indemnifying Party, or that such claim or litigation involves or could
have an effect upon matters beyond the scope of the indemnity agreement provided
in this Certificate, the Indemnifying Party shall not have the right to assume
the defense of such action on behalf of such Indemnified Party and such
Indemnifying Party shall reimburse such Indemnified Party and any person
controlling such
6
17
Indemnified Party for that portion of the fees and expenses of any counsel
retained by the Indemnified Party which are reasonably related to the matters
covered by the indemnity agreement provided in this Section 7.
8. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Company to register securities granted by the Company under this Certificate to
the Holders may be assigned by any Holder to a transferee or assignee of any
Registrable Securities; provided, however, that the Company must be given
written notice prior to the time of said transfer, stating the name and address
of said transferee or assignee and identifying the securities with respect to
which such registration rights are being assigned.
9. ADJUSTMENTS AFFECTING SECURITIES. The Company will not take
any action or permit any change to occur, with respect to the Shares or the
Registrable Securities that would affect adversely the ability of the Holders to
include the Registrable Securities in a registration undertaken pursuant to this
Certificate or the marketability of the Shares or the Registrable Securities in
any registration. If, and as often as, there is any change in the Common Stock
of the Company by way of a stock split, stock dividend, combination or
reclassification; or through a merger, consolidation or reorganization, or by
any other means, appropriate adjustment shall be made in the provisions hereof
so that the rights and privileges granted hereby shall continue with respect to
the Shares and the Registrable Securities.
10. MISCELLANEOUS.
(a) This Certificate shall be governed in all respects by
the laws of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California.
(b) Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
(c) All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by United States
first-class mail, postage prepaid, sent by facsimile or delivered personally by
hand or nationally recognized courier addressed (a) if to the Holder at 000 Xxxx
Xxxxxx Xxxxx, Xxxxx 000, Xxxxx Xxxx, Xxxxxxxxxx 00000, or at such other address
as such Holder or permitted assignee shall have furnished to the Company in
writing, or (b) if to the Company, at such address or facsimile number as the
Company shall have furnished to the Holder in writing. All such notices and
other written communications shall be effective on the date of mailing,
facsimile transfer or delivery.
(d) The titles of the sections and subsections of this
Certificate are for convenience of reference only and are not to be considered
in construing or interpreting this Certificate.
7
18
The Company has caused this Registration Rights Certificate to
be duly executed as of January 15, 1997.
COMPANY:
LONG DISTANCE DIRECT HOLDINGS, INC.
By: /s/ Xxxxxx Xxxxxxx
------------------------------
Its: President
-------------------------
8
19
PARTICIPATING CONSULTANT AGREEMENT
THIS PARTICIPATING CONSULTANT AGREEMENT (the "Agreement") is entered into on
this fifteenth day of January, 1997 by and between MARKETER, (the "Consultant"),
whose business is located at ADDRESS; and NATIONAL BENEFITS CONSULTANTS, LLC, a
Nevada limited liability company ("NBC"), whose business office is located at
Suite 450, 000 Xxxx Xxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx.
RECITALS
A. NBC has entered into arrangements with certain providers of services (the
"Service Providers") to provide the services which are more particularly
described hereafter. NBC may grant arrangements to others to locate,
identify, and introduce potential customers for the described services.
B. NBC has developed specific marketing techniques for the promotion, packaging
and sale of the services, and such techniques are proprietary to NBC.
C. Because of the proprietary nature of the arrangements with the Service
Providers and the development of the marketing, packaging, and selling
techniques, the resultant products are known as "NBC Products".
D. Consultant desires to enter into an arrangement with NBC to locate and
identify potential customers for the NBC Products, introduce said customers
to NBC, and to assist NBC with the introduction of NBC Products to any
pre-approved potential customer as requested by NBC. Consultant desires to
receive compensation for such services in conformance with the provisions
set forth hereafter.
E. NBC desires to grant a consulting arrangement to Consultant for the
identification of potential customers so long as Consultant's efforts are
directed only to certain specific prospects who have been identified and
introduced to NBC by Consultant, and who are then pre-approved by NBC
through its screening process so that NBC may make a determination that any
particular prospect fits the proprietary profile necessary for a successful
closing. Any particular prospect who has been screened, quantified, and
approved by NBC, in its sole and unfettered discretion, shall be then
accredited to Consultant as an "Approved Prospect". No promotion of any NBC
Product shall occur unless and until a particular potential customer has
been pre-approved by NBC pursuant to the provisions set forth hereafter.
PROVISIONS
NOW, THEREFORE, in consideration of the RECITALS (incorporated as
provisions as though fully re-written herein), these premises and the mutual
covenants, conditions and obligations contained herein, Consultant and NBC
mutually agree as follows:
ARTICLE 1
TERM
1.1 GENERAL.
This Agreement shall be effective as of the date first written above
and shall continue in effect until terminated as provided hereafter in Article
6.
Exhibit B
20
ARTICLE 2
SCOPE OF THE CONSULTING ARRANGEMENT
2.1 GENERAL PROVISIONS OF ENGAGEMENT.
Consultant agrees that the scope of its engagement hereunder shall be
to use Consultant's best efforts to identify and introduce potential customers
to NBC in conformance with the restrictions and limitations set forth hereafter.
Consultant will receive performance-based compensation for its services strictly
from revenues received by NBC through the closing of sales of NBC Products to
any such Approved Prospects. This engagement is nonexclusive with respect to
geographic territory and the NBC Products.
2.2 SPECIFIC PROVISIONS REGULATING EFFORTS.
NBC has developed specific marketing techniques which have proven
successful in the sale of NBC Products throughout the United States. The
techniques involve a preliminary screening procedure which is conducted solely
by NBC prior to any communications with a prospective customer. If the
prospective customer does not meet the requirements of the profile established
by NBC, then NBC will not make its products available for marketing or sale to
that particular prospective customer. Therefore, Consultant agrees that it is in
its best interests to adhere specifically to the procedure developed by NBC.
Consultant will abide by the following procedure:
(a) Before Consultant has any discussion whatsoever with a
prospective customer regarding NBC, its programs, or its
products, Consultant will identify the prospective customer to
NBC. Such identification will be made to NBC on a "Prospect
Registration Form" which will be supplied by NBC. At such time as
Consultant delivers a Prospect Registration Form to NBC, NBC will
conduct its preliminary screening procedure. If the prospective
customer thus identified has originated from Consultant, and if
such prospective customer further meets the profile established
by NBC, Consultant will be informed of such determination by NBC.
(b) If the prospective customer thus identified has not originated
from Consultant, or such prospective customer does not meet the
profile established by NBC, no further action will be taken by
Consultant with respect to an introduction of the NBC Products.
(c) If the prospective customer thus identified has originated from
Consultant and meets the profile established by NBC, then
Consultant agrees to use its best efforts to arrange an
introductory meeting between a Managing Member of NBC, or its
designee, and a representative of the prospective customer who
must be identified as an executive officer within the
organization of the prospective customer having decision making
authority such as a chief financial officer, chief operating
officer or chief executive officer. If the prospective customer
is a state, city, or other type of local government, the
introductory meeting must be arranged with a person or persons
approved by an NBC Managing Member prior to the making of any
arrangements for such introductory meeting. It is agreed that
during the process of making the arrangements for an introductory
meeting, Consultant may discuss the NBC Products with the
prospective customer. NBC agrees to provide support with respect
to such discussions.
(d) Following the introductory meeting, if the prospective customer
continues to meet the criteria established for a successful
marketing effort as determined by NBC, in its sole and absolute
discretion, then the prospective customer shall be designated an
Approved Prospect. Consultant will be informed of such
designation in writing by NBC. Until a prospective customer is
designated as an Approved Prospect, Consultant agrees that no
effort will be
2
21
made to promote a sale of any particular NBC Product to that
prospective customer. A sale of any particular NBC Product will
be deemed closed when the Approved Prospect signs a contract for
the purchase of the NBC Product in such form as will be supplied
by NBC.
2.3 WINDOW OF OPPORTUNITY.
Once a prospective customer becomes an Approved Prospect pursuant to
the procedure outlined in Section 2.2 above, Consultant shall have the exclusive
right to sell any one or more of the NBC products to the Approved Prospect for a
period of 6 months following the date of the designation of the prospective
customer as an Approved Prospect. If a sale of one or more of the NBC Products
is not closed within the 6-month period described, then the prospective customer
will no longer be an Approved Prospect and the exclusive right granted to
Consultant with regard to that particular customer will terminate, and NBC, in
its sole and absolute unfettered discretion, shall:
(a) renew the exclusive window of opportunity granted to Consultant
for an additional specified period if NBC determines, in its sole
and absolute unfettered discretion, that Consultant is using its
best efforts and is actively promoting NBC to the prospective
customer at the conclusion of the first described 6-month period
(such extension shall be granted to Consultant, in NBC's sole and
absolute unfettered discretion, and only in a writing delivered
to Consultant) or;
(b) grant an exclusive arrangement with any other NBC consultant
which will identify that particular prospective customer as an
Approved Prospect for the other NBC consultant, and Consultant
agrees to then refrain from any further promotion of NBC Products
to such prospective customer and to refrain from interfering with
any other NBC consultant; or
(c) have the right to continue soliciting the prospective customer
for the sale of one or more NBC Products and Consultant agrees to
refrain from making any further promotion of NBC Products to
such prospective customer and agrees to refrain from interfering
with such solicitation by NBC.
In the event that a sale of one or more NBC Products is made to a prospective
customer who had been identified as an Approved Prospect for Consultant, and
such sale is made following NBC's election to proceed under the provisions of
(b) or (c) above, then Consultant will be entitled to receive a fixed fee in
lieu of any other form of compensation. Such fixed fee shall be paid as the
result of the sale in conformance with the provisions set forth hereafter in
Section 3.2.
2.4 DESCRIPTION OF NBC PRODUCTS.
Currently, NBC has developed several products in conjunction with
several Service Providers. NBC has made arrangements with the Services Providers
to render services to NBC customers as subcontractors or in such other capacity
as agreed by NBC. This Agreement pertains to the following described NBC
Products:
a) HEALTH CARE RECOVERY SERVICES
b) HEALTH CARE COST REDUCTION SERVICES
c) DISBURSEMENT RECOVERY SERVICES
3
22
d) CORPORATE OWNED LIFE INSURANCE AND ANNUITY PRODUCTS
e) TRAINING SERVICES
NBC will identify the Service Provider who will provide the services with
respect to any described NBC Product from time to time. NBC reserves the right
to delete or add any particular NBC Product.
ARTICLE 3
COMPENSATION FOR PERFORMANCE
3.1 ENTITLEMENT TO COMPENSATION.
Notwithstanding any other provision contained herein, Consultant shall
be entitled to receive compensation and shall be paid compensation only after
NBC has received revenues from the sale of an NBC Product to a customer who has
been designated as an Approved Prospect in conformance with the provisions set
forth in Article 2 above.
3.2 PAYMENT OF COMPENSATION.
If the sale of a particular NBC Product is made to a
Consultant-designated Approved Prospect within the initial 6-month window of
opportunity, or within an extended window of opportunity as described in Section
2.3(a), then NBC will, within 30 days following the receipt of any increments of
its compensation, pay Consultant compensation as described in Schedule "A"
attached hereto from its general account.
For all purposes within this Agreement, "NBC Compensation" shall mean the gross
amount collected by NBC from a sale of a particular NBC Product to a particular
Approved Prospect, less all charges and expenses paid to the Service Providers,
sub-contractors and any other suppliers of goods or services engaged to perform
the work necessary to provide that particular NBC Product to that particular
Approved Prospect.
3.3 PAYMENT OF COMPENSATION FOLLOWING TERMINATION OF THE AGREEMENT.
This Agreement may be terminated as set forth in Article 6 hereafter.
As set forth in Article 6, this Agreement may be terminated by NBC for cause as
defined in Article 6. If this Agreement is terminated by NBC for cause, then
Consultant will be paid its stated compensation for the sale of NBC Products to
Consultant-designated Approved Prospects which have agreed to purchase NBC
Products pursuant to a written agreement signed by such Approved Prospects prior
to the date of termination of this Agreement. Consultant will not be paid any
compensation for sale of NBC Products to Consultant-designated Approved
Prospects which have purchased said products through a written agreement signed
by said Approved Prospects after the date of termination of this Agreement for
cause. On the other hand, if NBC terminates this Agreement for any reason other
than cause as defined hereafter in Article 6, then Consultant shall be paid its
stated compensation for all NBC Products sold to Consultant-designated Approved
Prospects who enter into a written agreement for the purchase of the NBC
Products within the 6-month window of opportunity following the designation of
the prospective customer as an Approved Prospect, or within any extension of the
6-month window of opportunity as described in Section 2.3(a), even though the
sale is made following the date of Termination of this Agreement.
4
23
3.4 COMPENSATION REPORTS.
NBC will provide Consultant with a report of NBC Compensation received
by NBC from a sale of NBC Products to a Consultant-designated Approved Prospect
for which Consultant is entitled to receive compensation. Reports will be made
to Consultant for each Consultant-designated Approved Prospect at such time as a
payment is made to Consultant pursuant to the provisions of this Article 3.
Under no circumstances shall Consultant have access to or right to inspect the
books, ledgers, files, reports, operating records or any accounting, financial
or other business information of NBC. In the event Consultant should dispute any
compensation report after communications with NBC relevant to the information
contained in such report, NBC will cause its independent auditors to supply
Consultant with a statement of reconciliation which demonstrates the amount of
payment made to Consultant was accurate. If an inaccuracy is found, the payment
made to Consultant will be adjusted in accordance with the report made by the
independent auditors. If the report made by the independent auditors discloses
that the payment of compensation made to Consultant was accurate, then
Consultant agrees to reimburse NBC for the cost of the report made by the
independent auditors.
ARTICLE 4
COMPLIANCE
4.1 COMPLIANCE WITH RULES AND REGULATIONS.
Consultant shall comply with the laws, rules, and regulations of any
governmental agency having jurisdiction with respect to Consultant's performance
of its obligations pursuant to this Agreement. Consultant will be solely
responsible for maintaining any and all licenses which may be required for
performing services required for the receipt of compensation to be paid
hereunder.
4.2 PAYMENT OF FINES AND PENALTIES.
Consultant shall indemnify and hold NBC harmless from any fines,
penalties, and related expenses incurred by Consultant as the result of
Consultant's failure to comply with the laws, rules, and regulations of any
governmental agency having jurisdiction over its performance of obligations
pursuant to this Agreement.
ARTICLE 5
INDEMNIFICATION
5.1 GENERAL PROVISION.
Consultant agrees to indemnify and hold harmless NBC, its members,
directors, officers, employees, agents, and representatives against any and all
claims, liabilities, losses or damages which arise from Consultant's intentional
or negligent acts during the performance of its duties under this Agreement. NBC
agrees to indemnify and hold harmless Consultant, its directors, officers,
employees, agents, and representatives against all claims, liabilities, losses
or damages which arise from NBC's intentional or negligent acts during the
performance of NBC's duties under this Agreement.
ARTICLE 6
TERMINATION
6.1 VOLUNTARY TERMINATION.
Either party may terminate this Agreement by giving 90 days written
notice to the other party. This Agreement shall automatically terminate without
further action upon the expiration of the ninety-day period following receipt of
the written notice.
5
24
6.2 TERMINATION FOR CAUSE.
This Agreement may be terminated by either party for cause following a
written notice to the other party specifying the cause, and giving the other
party a thirty-day period in which to cure the specified cause. For these
purposes cause shall mean:
a) As to both parties, if either NBC or Consultant shall be
adjudicated insolvent or have an order for relief entered against
it or generally not pay its debts as they become due (within the
meaning of the United States Bankruptcy Code as at any time
amended or any successor statute thereto), or make an assignment
for the benefit of creditors; or shall apply for or consent to
the appointment of a custodian, receiver, trustee or similar
officer for it for all or any substantial part of its property,
or such custodian, receiver, trustee or similar officer shall be
appointed without its application or consent and such appointment
shall continue undischarged for a period of sixty days; or shall
institute (by petition, application, answer, consent or
otherwise) or take any action indicating its consent to, approval
of or acquiescence in any bankruptcy, insolvency, reorganization,
moratorium, arrangement, readjustment of debt, dissolution,
liquidation or similar proceeding relating to it under the laws
of any jurisdiction; or any such proceeding shall be instituted
(by petition, application or otherwise) against either of them
and shall remain undismissed for a period of sixty days; or any
judgment, writ, warrant of attachment or execution or similar
process shall be issued or levied against a substantial part of
any of their property, and such judgment, writ or similar process
shall not be released, vacated or fully bonded within sixty days
after its issue or levy.
(b) As to NBC, its failure to pay the performance-based compensation
or the introduction fee in a timely manner.
(c) As to Consultant:
i. its failure to perform its duties in a workmanlike
manner;
ii. its failure to comply with the provisions of any
applicable statute, rule or regulation of any
governmental entity exercising jurisdiction over NBC
Products, as determined by a court or government
agency having relevant jurisdiction;
iii. its commission of any act or course of action which may
jeopardize the relationship of NBC or any of its
Service Providers with any Approved Prospect or any
other prospective customer;
iv. its commission of any act or course of action which may
jeopardize the relationship of NBC with any of its
Service Providers;
v. its commission of any fraudulent act or any negligent
act with respect to any NBC Product or any NBC Service
Provider.
6
25
ARTICLE 7
CONFIDENTIALITY AND NONDISCLOSURE
7.1 GENERAL.
Consultant hereby acknowledges that NBC's business and services are
highly specialized, that the NBC Products are highly specialized and technically
sophisticated, that the identity and particular needs of NBC's customers,
prospects, and Service Providers are not generally known, that documents,
materials and information regarding NBC's methods of marketing, outsourcing,
operations, services, pricing, costs and, without limitation, other NBC
customer, prospect, and product-related information, are highly confidential and
constitute trade secrets ("NBC Trade Secrets"). Consultant acknowledges that
under the terms of this Agreement it will receive or have access to certain NBC
Trade Secrets, which secrets are proprietary to NBC and not generally known or
available. The following information shall not be considered as confidential
information:
(a) information in the public domain at the time of disclosure to
Consultant by NBC;
(b) information which, after disclosure to Consultant, becomes a part
of public domain by dissemination by a third party and other than
by an act or omission of the Consultant;
(c) information which the Consultant can demonstrate by documentary
evidence to be in his possession at the time of disclosure to
Consultant, and not acquired directly or indirectly from NBC; and
(d) information which is subsequently disclosed or made available to
Consultant without an obligation of confidence by a third party
having a bona-fide right to disclose or make available such
information.
7.2 PROHIBITION.
Consultant agrees that it shall not use NBC Trade Secrets or
confidential information for any purpose other than as expressly allowed in this
Agreement. Consultant shall take all reasonable steps necessary to maintain the
confidentiality of NBC Trade Secrets and confidential information. Consultant
shall restrict distribution of NBC Trade Secrets and confidential information to
only those persons directly involved in performing the prescribed obligations
under this Agreement and as necessary to comply with the terms and conditions of
this Agreement. Consultant further agrees not to reproduce in any manner or
allow reproduction of NBC Trade Secrets and confidential information except as
reasonably necessary for the performance of its duties pursuant to this
Agreement.
7.3 RETURN OF INFORMATION.
Upon Termination of this Agreement, Consultant shall immediately return
to NBC any NBC Trade Secrets and confidential information, including all
reproductions thereof made by Consultant, if any. Consultant shall in no event
retain NBC Trade Secrets and confidential information in any form, except that
which is reasonably necessary for tax, audit and NBC customer servicing and
legal requirements.
Consultant shall indemnify and hold NBC harmless from any and all
damages, claims, losses, liabilities or costs (including reasonable attorneys'
fees) related to any breach of the provisions of this Article by Consultant.
7
26
7.4 PROTECTIVE NOTICE.
In the event Consultant is required in a judicial, arbitral,
administrative or governmental proceeding to disclose any information,
materials, records and flies or NBC customer or prospect lists which are
obtained or furnished as a result of this Agreement, Consultant will use its
good faith efforts to provide NBC with prompt notice of such request(s) so that
NBC may seek an appropriate protective order or waive compliance with the
provisions of this Article.
7.5 RESTRAINT.
Consultant agrees that in view of Consultant's access to and receipt of
NBC Trade Secrets and confidential information, Consultant, any Consultant
affiliate, and any person or entity acting for Consultant shall not engage in
any services or other dealings with respect to NBC Products during the term of
this Agreement except to the extent provided in this Agreement or as NBC shall
otherwise expressly agree in writing.
7.6 REMEDIES.
Consultant agrees that NBC will suffer irreparable harm in the event
that Consultant fails to comply with its obligations under this Article and the
monetary damages alone will be inadequate to compensate NBC for such breach.
Accordingly, Consultant agrees that, in addition to all other remedies which may
be available to NBC in law or in equity, NBC shall be entitled to injunction
relief, and such costs associated with seeking such relief shall be borne by
Consultant.
7.7 SERVICE PROVIDER PROVISIONS.
Unless NBC otherwise consents in writing, Consultant shall not, nor
shall any Consultant affiliate, (a) contact or solicit a Service Provider or a
Service Provider's employee(s), or (b) use any Service Provider's name in
written materials in connection with activities related to this Agreement or
NBC.
ARTICLE 8
NONSOLICITATION
8.1 COMPETITION PROHIBITED.
Consultant agrees that, in view of Consultant's access to and receipt
of NBC Trade Secrets and confidential information, during the term of this
Agreement and for a period of twelve (12) months thereafter, Consultant shall
not, nor shall any Consultant affiliate, solicit any NBC customer or Approved
Prospect on behalf of any competing services ("Competing Services") without the
prior written consent of NBC, except for such products as the Consultant has
offered for sale and has submitted on a written list for NBC's review prior to
the execution of this Agreement. "Competing Services" shall mean any person or
entity (other than NBC) that deals in or provides any service or product similar
to the NBC Products, which service or product is marketed, offered or sold in
the United States during the term of this Agreement or during the period of 12
months following the termination of this Agreement.
8.2 INTERFERENCE PROHIBITED.
Consultant agrees that, in view of Consultant's access to and receipt
of NBC Trade Secrets and confidential information, during the term of this
Agreement and for a period of twelve (12) months thereafter, Consultant shall
not, nor shall any Consultant affiliate, induce or attempt to induce any NBC
customer or Approved Prospect to cease doing business with NBC with regard to
NBC Products. However, the Consultant may solicit NBC customers or Approved
Prospects introduced to NBC by the Consultant for services that are not NBC
Products nor similar to those products so long as such products
8
27
or services are not in conflict with this Article. NBC Trade Secrets and
confidential information shall not be used by Consultant to invent, create,
modify, adopt or manufacture any products or services which would or could
compete with or be used in lieu of NBC Products or services.
8.3 EQUITABLE RELIEF.
Consultant agrees and acknowledges that a violation of the covenants of
this Article will result in substantial damage to NBC. Consultant agrees that
NBC shall be entitled to an injunction issued by any court of competent
jurisdiction (or, to the extent available, any arbitrator) restraining any
further violation of such covenant or covenants by Consultant or any of its
employees, agents, affiliates, or any entity acting for it, as means of
enforcing the prohibition of this Article, in addition to such other remedies as
may be available under applicable law.
ARTICLE 9
MISCELLANEOUS PROVISIONS
9.1 INDEPENDENT CONTRACTOR STATUS; NO GRANT OF AUTHORITY.
Consultant is an independent contractor and is not the agent, employee
or partner of NBC. This Agreement does not grant authority to Consultant to bind
NBC or any of its principals or members or any of its Service Providers as the
result of actions taken pursuant to this Agreement. Consultant shall act in
accordance with its own expertise, experience, manner and methods, and through
its own duly authorized employees. Consultant shall comply with all applicable
governmental laws, rules and regulations with reference to taxation and
otherwise. It is understood that any compensation received by Consultant under
this Agreement shall not be considered salary, and Consultant and its employees
will not be entitled to any fringe and supplemental benefits of NBC nor will NBC
withhold any Social Security (FICA) or similar contributions from the
compensation payable to Consultant. NBC shall have no liability whatsoever
except for the payment of compensation to Consultant as provided herein.
9.2 EXPENSES.
Each party shall be responsible for its own expenses incurred as the
result of performing its duties pursuant to this Agreement unless otherwise
set forth in this Agreement or mutually agreed to in writings.
9.3 MODIFICATION OR AMENDMENT.
This Agreement and any schedule hereto may not be modified or amended
unless such modification or amendment is contained in writing signed by the
parties.
9.4 GOVERNING LAWS.
Except to the extent provided in Section 9.10 herein, this Agreement
shall be subject to and construed pursuant to the laws of the State of Nevada
without giving effect to the choice of law principles thereof.
9.5 ASSIGNMENT OR SALE.
Neither party's rights under this Agreement are assignable or delegable
unless otherwise agreed to in writing by the other party, and any attempt at any
such assignment shall be deemed null and void ab initio. In the event 50% or
more of the ownership of NBC is assigned or otherwise transferred, the
Consultant shall be notified of such change in ownership, and Section 6.1 hereof
shall be amended by replacing "90 days" with "180 days" in the first sentence
thereof.
9
28
9.6 WAIVER AND ESTOPPEL.
No waiver by either party or any act or omission to act in violation of
this Agreement on the part of either party shall stop or bar the other from
reasserting a similar act or omission to act as a breach or other violation of
the Agreement at a subsequent date.
9.7 HEADINGS.
The paragraph headings in this Agreement and any schedule hereto are
included solely as a matter of convenience for reference and are not intended to
be a part of this Agreement.
9.8 SEVERABILITY.
If any term or condition of this Agreement is held by any government
agency, court of competent jurisdiction or arbitrator appointed pursuant to
Section 9.10 herein, to be invalid or unenforceable, the balance of this
Agreement shall remain in effect. This Agreement shall be deemed to consist of a
series of separate covenants. Should any government agency, court of competent
jurisdiction or arbitrator determine that any covenant is not enforceable in
light of the circumstances as they then exist, then it is the intention of the
parties that this Agreement be construed by the government agency, court or
arbitrator in such a manner as to impose only those restrictions on the conduct
of a party which are enforceable in light of the circumstances as they then
exist and as necessary to assure the other party the intended benefit of this
Agreement. If in an agency, judicial or arbitration proceeding, such agency,
court or arbitrator shall refuse to enforce a series of separate covenants
because, cumulatively, they are more extensive than necessary to assure a party
the intended benefit of the Agreement, it is expressly agreed by the parties
that those covenants which, if eliminated, would permit the remaining separate
covenants to be enforced in such proceeding shall, for the purpose of such
proceeding, be deemed eliminated from this Agreement.
9.9 COUNTERPARTS.
This Agreement may be executed in one or more counterparts and when
executed by all parties hereto, such counterpart shall be deemed to be the
original.
9.10 ARBITRATION.
The parties hereby stipulate and agree that any and all disputes
between them arising out of or otherwise relating to this Agreement shall be
governed exclusively by the Federal Arbitration Act, as amended, and shall be
submitted for resolution to mandatory, exclusive and binding arbitration in the
State of Nevada before a single arbitrator in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. The party initiating
shall first provide the responding party written notice (the "Notice") of the
initiating party's intention to arbitrate, a brief statement of the nature of
the dispute, and a list of proposed arbitrators. The Notice shall be sent and
deemed given in accordance with Section 9.12. The parties shall then mutually
select an arbitrator. If the parties fail to agree to an arbitrator within 30
days following delivery of the Notice in accordance with Section 9.12, an
arbitrator shall be selected in the manner provided by the American Arbitration
Association. The parties agree to be bound by any final decision rendered by the
arbitrator, which final decision may be enforced in any court of competent
jurisdiction. The parties hereby consent to the exercise of personal
jurisdiction over them by such courts and the propriety of venue of such courts
for the purpose of carrying out this provision, and they waive any objection
that they would otherwise have to the same. The parties agree that the
arbitrator shall have no power or authority to make awards of punitive or
exemplary damages. The parties further agree that the arbitrator shall have the
power to dispense equitable relief in the manner provided in Articles 7 and 8 of
this Agreement. Either party may, without inconsistency with this Agreement,
seek from a court any interim or provisional relief that is necessary to protect
the rights
10
29
or property of that party, until the arbitration award is rendered or the
controversy is otherwise resolved. The arbitrator shall render a single written
decision setting forth an award to the extent applicable, and state with
reasonable specificity the reasons for the decision reached. The parties hereby
further stipulate that each party to any such arbitration shall pay its own
costs in connection therewith, and that the losing party (as determined by the
arbitrator) shall pay the fees and expenses of the arbitrator. This Section
shall survive the termination of this Agreement. Unless prohibited by applicable
law, any arbitration under this Agreement must be commenced within one (1) year
of the conduct or event giving rise to the dispute. An arbitration shall be
deemed commenced upon effective delivery of the Notice. Consultant acknowledges,
understands and agrees that, in the event of a dispute under this Agreement with
NBC, Consultant has waived any right to a jury trial and a judicial resolution
of the dispute.
9.11 ENTIRE AGREEMENT.
This Agreement is entire in content and constitutes the sole and
complete understanding of the parties. It also serves as a complete revocation
of any previous written agreements between the parties.
9.12 NOTICES.
All Notices required by this Agreement shall be in writing, and shall
be given (i) by either party personally delivering Notice to the other party or
any officer thereof; or (ii) by certified or registered U.S. Mail, return
receipt requested, postage and charges prepaid; or (iii) by facsimile; or (iv)
by reputable overnight courier service (e.g., Federal Express) which provides
written proof of delivery. Notices shall be sent to the address shown below or
at any other address a party may furnish the other pursuant to this Section.
Notice shall be sent to:
NBC CONSULTANT
--- ----------
Xxxx Xxxxx NAME
National Benefits Consultants, LLC MARKETER
000 Xxxx Xxxxxx Xxxxx XXXXXXX
Xxxxx Xxxx, Xxxxxxxxxx 00000 CITY STATE ZIP
Notice shall be deemed given and received (i) at the time actually received, if
personally delivered; or (ii) upon the date of receipt or refusal indicated on
the return receipt, if sent by registered or certified mail, return receipt
requested, postage and charges prepaid and properly addressed; or (iii) upon
confirmation of receipt if sent by facsimile; or (iv) upon the date of delivery
as set forth in the courier's delivery receipt if sent by overnight courier
service.
9.13 SIGNATURES.
Where required, signatures from the parties are deemed acceptable from
the facsimile transmission.
9.14 THIRD PARTY BENEFICIARY.
None of the obligations hereunder of either party shall run to or be
enforceable by any party other than a party to this Agreement or by one deriving
rights hereunder as a result of an assignment permitted pursuant to the terms
hereof. Consultant acknowledges and agrees that it is not a party beneficiary of
any agreement between NBC and any Service Provider.
11
30
9.15 DEFINED TERMS.
Unless the context otherwise requires, defined terms may be used in the
singular or plural, depending on the reference.
9.16 CONSULTANT AFFILIATES.
For all purposes within this Agreement, Consultant affiliates means the
family members of each and every owner of an interest in Consultant, the agents,
employees, and representatives of the Consultant and its owners, partnerships in
which Consultant or its owners own any direct or indirect interest, corporations
in which Consultant or its owners own any direct or indirect interest, any other
form of business enterprise in which Consultant or the owners own any direct or
indirect interest, and financing arrangements with such entities which are
tantamount to ownership interests.
9.17 SURVIVAL OF PROVISIONS.
The provisions relating to compensation, general indemnification,
confidentiality, nondisclosure, and nonsolicitation shall survive the
termination of the Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement and
declared it effective on the date first written above.
NBC MARKETER (CONSULTANT)
--- ---------------------
By: /s/ Xxxx Xxxxx By: /s/ ILLEGIBLE
---------------------------- ----------------------------
XXXX XXXXX
Title: MANAGING MEMBER Title: PRESIDENT
----------
12
31
SCHEDULE A
COMPENSATION SCHEDULE
SERVICE COMPENSATION
------- ------------
Health Care Recovery Services (HCRS):
Retrospective Recovery Engagements with:
35% Fee 2.5% of recoveries
45% Fee 5% of recoveries
Prospective Cost Reduction Products and 20% of NBC gross revenue
Services
Disbursement Recovery Services (DRS)
Retrospective Recovery Engagements with:
45% Fee 1.5% of recoveries
50% Fee 2.5% of recoveries
Prospective Cost Reduction Products and 20% of NBC gross revenue
Services
Employee Benefit Insurance Services 50% of First Financial Resources
principal level revenue
Training Services Engagement 10% of gross fees
NOTE: Compensation is subject to modification. Modifications will be
communicated to MARKETER in writing.
13
