EXHIBIT 10.11
CONSULTING ENGAGEMENT AGREEMENT
The Agreement is made and entered into this 9th day of September 2002, by and
between Cognigen Networks, Inc. ("Client"), a Colorado corporation, having its
principal place of business at 0000 Xxxxxxx Xxxxxx, X.X., Xxxxx 000, Xxxxxxx,
Xxxxxxxxxx 00000; and Combined Telecommunications Consultancy, Ltd. ("CTC"), a
Delaware corporation, having its primary business address at 0000 Xxxxxx Xxxxxx,
#000, Xxxxxxx, Xxxxxxxxxx 00000.
Whereas, Client is an Internet enable telecommunications marketing business and
licensed facilities based carrier, and
Whereas, CTC is in the business of introducing its clients to potential funding
sources, and potential acquisition/merger targets, and is active in assisting
its clients in the negotiations of debt and/or equity funding as well a
providing consulting services as may be required by its clients, and
Whereas, CTC is intimately acquainted with the Client's business plan financing
needs since its inception as a public company, and the Client is very familiar
with CTC's reputation and capabilities in all of the above mentioned areas if
endeavor, and
Whereas, CTC is compensated for its services, other than strictly consulting
services, based upon the schedule of fees set forth herein, and only upon
successful completion of debt and/or equity financing, fulfillment of mergers,
fusions and/or acquisitions, combinations, joint ventures, distribution
agreements or strategic alliances as provided herein. Consulting services, as
described herein, are payable according to the schedule of fees set forth
herein.
NOW THEREFORE, in consideration of the premises, mutual promises, obligations,
representations, and warranties, the parties agree as follows:
Term of Consulting Engagement:
This Agreement will become effective on September 9, 2002, and will continue in
effect for one year, unless earlier terminated pursuant to the terms of this
Agreement. The Client may terminate this Agreement at any time, with or without
cause, effective 15 days after receipt of written notification by certified or
registered mail. The Client's obligations hereunder shall survive termination
under this Agreement.
Services Provided by CTC:
CTC shall introduce the Client to prospective and funding sources, and shall
assist client in assembling and presenting materials for dissemination to
investment and funding sources. At the request of the Client, CTC shall provide
consulting services such as drafting, editing and publishing business plans,
executive summaries, corporate profiles, proposals and memoranda communicating
Client's plans, intentions and proposals to interested third parties. CTC may
also, from time to time, provide other services such as introductions to
companies interested in potential mergers, acquisitions, fusions, combinations,
joint ventures, distribution agreements and strategic alliances. At the request
of the Client CTC shall assist in drafting, editing and disseminating news
releases to print and electronic media.
Relationship of the Parties:
It is the express intention that CTC be an independent contractor and not an
employee, agent, joint venture, or partner of the Client. CTC shall have the
right to commit the Client to any binding agreement, and terms of any
investment, funding, or merger, fusion, acquisition or combination shall be
subject to the prior approval of the Client.
Right to Accept:
The right to accept any capital investment by way of unsecured debt or other
secured credit facilities, equity investment by way of registered or
non-registered securities, mergers, fusions, acquisitions, combinations, joint
ventures, strategic alliances or distribution agreements, or any other
transaction CTC may introduce to the Client is vested solely in the Client.
Fees, Success Fees and Equity Compensation:
Fees, success fees and equity compensation payable to CTC for services rendered
to the client shall be as follows:
1. Equity Financing - On the basis of the gross amount received by the Client
of equity investment obtained from an individual source introduced by CTC,
Client shall pay CTC, a cash fee of 10% of the first two million dollars,
or any part thereof, 9% of the next three million dollars, 8% of the next
five million dollars, 7% of the next ten million dollars, and 6% of the
gross balance received. Payment to CTC shall be made by the Client
concurrently with its receipt of funds from the equity investor.
2. Debt Financing - Client shall pay CTC a fee of 5% of the gross amount of
any successful debt financing up to the total amount of the commitment for
the credit facility specifically arranged by CTC. Payment shall be made at
the time Client has received the proceeds from the funding source. These
fees shall apply and be payable to CTC for any amounts received from the
debt financing source for a period of one year from the date of the initial
funding of the credit facility.
3. Convertible Debentures - Special debt financing achieved through issuance
of convertible debentures shall entitle CTC to receive a cash payment of 5%
of the total dollar amount of the debentures issued at the time of initial
funding, and additional 3%, of the total amount of shares issued upon
conversion of the debentures, payable in common stock of the Client at the
time the debenture are converted by the bond holder, or operation of the
debenture bond agreement. Such second payment of 3% shall be upon the same
price and conditions as granted to the bondholder.
4. Mergers, Fusions, Acquisitions, Combinations, Joint Ventures and Strategic
Alliances - During the term of this Agreement and extending for a period of
one year from the date CTC introduces, identifies orally or in writing to
the Client parties with whom the Client subsequently enters into a
preliminary or definitive agreement for merger, fusion, acquisition,
combination, joint venture or strategic alliance, the Client agrees to pay
CTC a success fee of 4% of the value of the transaction. Said second
payment of 3% shall le upon the same price and conditions as granted to the
bondholder.
5. Other Consulting Services - Upon request and engagement by the Client, CTC
shall perform other consulting services as may be required by the Client,
CTC shall perform other consulting services as may be required by the
Client. CTC shall be paid an hourly fee of $150 per hour, billable in 15
minutes increments, with a minimum engagement of two hours. CTC shall
require a text confirmation issued in print, or electronically transmitted
from Client's CEO and a written acknowledgment by Client's CFO prior to
undertaking any engagement services. Whenever practicable, CTC shall
provide Client with a written estimate of the time such an engagement will
require prior to undertaking the assignment. Billing for such work will be
submitted in arrears on a biweekly basis and shall be payable upon
presentation.
6. Expenses - If client requires CTC to travel or otherwise incur expenses for
supplies, third party contractors, and miscellaneous expenses, CTC shall
first provide an estimate of such cots, and upon receiving prior approval
in writing from Client's CEO and CFO, shall either obtain an expense
advance or shall pay such costs, and receive reimbursement from the Client
within ten days of submittal of an expense accounting.
Confidentiality - CTC will exercise reasonable care to keep confidential
any material, non-public information regarding the Client obtained in
connection with this engagement that was either (i) heretofore obtained by
CTC from the Client in connection with discussions concerning any
transaction, or (ii) hereafter provided by the Client and, with respect to
clauses (i) and (ii), identified solely for the purpose contemplated by
this engagement (including, providing the information to prospective
investors, lenders, sellers, buyers and joint venture-strategic alliance
parties unless specifically prohibited by the Client), unless expressly
agreed to by the Client, or required by law.
Disclosure, Protection And Exclusivity Of Contact And Sources
CTC may from time to time disclose in writing or oral communication to the
Client the names and identities of potential investment, lending and other
funding sources, merger, acquisition, fusion, joint venture, strategic
alliance and distribution agreement candidates. If the per sons, companies
and institutions thus identified are not actively discussing with,
negotiating with or otherwise engaging in the process of pursing
fulfillment of any of the above cited processes with the Client, or are not
personally known to the client's appropriate executive personnel, or are
known only be reputation on a general information basis, then such
disclosure when made by CTC to the client will be considered and
introduction of first impression, and will entire entitle CTC to all fees
and expenses cited under this agreement. In the case of companies and
funding presently known to the Client and CTC such as, but not limited to,
OPEX, UniTel, Planet Earth, Sonus, EOT, Quandrant, One Star, Capsule
Communications, Amerivision, Covista, Sartec, erbia, MCG, International
Monetary Resources, iCapital, West Park Financial, Xxxxxxxxx Securities and
ING, with whom past negotiations have expired or are inactive, renewal of
all contacts and opportunities through the efforts of CTC will entitle CTC
to full fees listed hereunder. Specifically excluded is any funding
originating with Roccus Capital Partners and Stanford Financial Group or
any of its subsidiaries, unless the client requests such services by CTC as
would merit success fees. Client may, however retain CTC to perform other
or additional duties from which CTC will be entitled to hourly fees as may
be appropriate. However, should Roccus Capital or Stanford Financial Group
or its subsidiaries participate in a P.I.P.E. in which other funding
entities comprise a majority of funding, the CTC will have the right to
earn success fees on the entire P.I.P.E. including the portion subscribed
to by Roccus Capital or Stanford Financial Group or any of its
subsidiaries.
Representations and Warranties - the Client represents and warrants that
this Agreement has been duly authorized, and, upon due execution and
delivery, will constitute a legal, valid, binding and enforceable
obligation of the Client. CTC represents and warrants that this Agreement
has been duly authorized, and, upon due execution and delivery, will
constitute a legal, valid, binding and enforceable obligation of CTC.
Assignment - No party to this Agreement may assign this Agreement or its
rights or obligations hereunder without the prior written consent of the
other party.
Arbitration - This Agreement is governed under the laws of the State of
Washington. During and after the term or any extension of the term of this
Agreement, any dispute, controversy or claim arising out of or relating to
this Agreement, or the breach thereof between CTC and the Client ("Arbitral
Claims") shall be settle by binding arbitration in Seattle, WA, according
to the Federal Arbitration Act, 9 X.X.X.xx. 1, et seq., inasmuch as this
Agreement concerns transactions involving interstate commerce and the
corporation laws of the State of Washington. Arbitral Claims shall include,
but are not limited to, contract (express or implied) and tort claims of
all kinds, as well as all claim based on any federal, state, or local law,
statute or regulation. If appropriate, each of the parties hereby submits
to the jurisdiction of the state and federal courts in Seattle, Washington
to fulfill these purposes.
Pending the final disposition of a dispute arising out of the termination
of this Agreement by CTC, the parties shall, at all times, proceed
diligently with the performance of this Agreement.
The arbitrator(s) shall be selected as follows: The parties shall jointly
select one impartial arbitrator in the event the dispute is less than
$50,000. In the event the parties cannot agree on one arbitrator within the
following twenty (20) days, and those two selected arbitrators shall select
the third arbitrator who will comprise a three-person panel for
arbitration. All arbitration matters shall be held and decided in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("AAA"), but without the administration, cost or
supervision of AAA. In any arbitration, the burden of proof shall be
allocated as provided in applicable law, and the arbitrator(s) shall have
the authority to award or grant legal, equitable, and declaratory relief
only to the same extent as if the case were brought in a civil court.
The arbitrator(s), in addition to declaratory relief, preliminary and
permanent injunctive relief and compensatory damages, shall award
reasonable attorney's fees and costs to the prevailing party.
Confirmation and enforcement of the decision and xxxx rendered by the
arbitrator or panel of arbitrators shall be binding and may be entered in
any court having jurisdiction thereof for confirmation and enforcement of
the arbitration decision and award.
Severability - If any portion of this Agreement shall be held invalid, such
invalidity shall not affect the other provisions hereof, and to this
extent, the provisions of this Agreement are intended to be and shall be
deemed severable.
Miscellaneous - This Agreement is the entire understanding of the parties
hereto with respect to the subject matter contained herein, and may be
amended only by written instrument executed by the parties hereto,
notwithstanding a purported amendment is supported by additional
consideration. This Agreement
Nothing contained in the Agreement shall be deemed to create any fiduciary
relationship between the parties.
Any notice or other communication required or permitted under this
Agreement shall be sufficiently given if sent by certified or registered
mail, postage prepaid and return receipt requested, to the address of the
parties set forth in the first paragraph of this Agreement, or such address
as may have been provided in like manner to both parties to this Agreement.
Any notice that is sent by mail under this Agreement shall be considered
received on the date on which it is actually delivered to the premises of
the party, to whom it is properly addressed, such dare to be conclusively
evidenced by the date of the return receipt.
IN WITNESS WHEREOF, the parties caused this Agreement to be executed by
their duly authorized representatives as September 9, 2002.
Cognigen Networks, Inc.
By: /s/ Xxxxxxx X. Xxxxxx Date: September 10, 2002
---------------------------------
Xxxxxxx X. Xxxxxx
Chief Executive Officer
Combined Telecommunications Consultancy, Ltd.
By: /s/ Xxxxx Xxxxxx Date: September 10, 2002
---------------------------
Xxxxx Xxxxxx
Managing Director
COGNIGEN
COGNIGEN NETWORKS, INC., 0000 XXXXXXX XXXXXX XX, XXXXX 000, XXXXXXX, XX 00000 **
Phone 000-000-0000 ** Fax 000-000-0000
Xxxxx X. Xxxxxxx
Senior Vice-President/Secretary
XX Xxx 0000
Xxxxxxxxx, XX 00000
phone 000-000-0000
cell phone 000-000-0000
fax 000-000-0000
e-mail: xxxxxxx-x@xx.xxx
----------------
September 9, 2003
Xx. Xxxxx Xxxxxx
Combined Telecommunications Consultacy, Ltd.
0000 Xxxxxx Xxxxxx, #000
Xxxxxxx, Xxxxxxxxxx 00000
Re: Extension of Consultancy Agreement
Xxxxx,
This letter is to confirm the discussions and agreement by and between Cognigen
and you on behalf of CTC for extension of the CONSULTING ENGAGEMENT AGREEMENT
entered into September 9, 2002, by and between Cognigen and CTC. The only
modification of the Agreement involves the following provision, which shall be
as follows:
Term of Consulting Engagement:
This Agreement will become effective on September 9, 2003, and will
continue in effect for one year, unless earlier terminated pursuant to the
terms of this Agreement. The Client may terminate this Agreement at any
time, with or without cause, effective 15 days after receipt of written
notification by certified or registered mail. The Client's obligations
hereunder shall survive termination of this Agreement.
Cognigen's management and I personally express sincere appreciation for the
efforts you have expended on behalf of Cognigen. You have dedicated far more
time an effort than that which you have requested compensation.
Respectfully submitted,
Cognigen Networks, Inc.
/s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Corporate Secretary and Senior Vice President Corporate and Legal Affairs
AGREEMENT MODIFICATION ACKNOWLEDGED AND ACCEPTED:
By:
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Xxxxx Xxxxxx
