[THE XXXXXX GROUP, LLC LETTERHEAD]
CONFIDENTIAL
April 28, 1999
Xxxxx Xxxxxxxxxx
Internet Golf Association, Inc.
00000 Xxx Xxxxx Xxxxxx Xxxxx, Xxx. B200
Dana Point, CA 92629
Re: Services Proposal/Agreement
Dear Xxxxx:
I'm glad we had the chance to got acquainted over the phone earlier today. I
enjoyed learning about the IGA my meeting with Xxxx last week. At your
request, I have prepared this proposal/agreement of the terms by which the
Xxxxxx Group ("Xxxxxx") would prepare the Internet Golf Association, Inc.
(the "Company") business plan.
1) Comprehensive Business Plan. Preparation of the business plan entails the
investment of time necessary to present all pertinent aspects the Company in
a thoroughly professional manner. The projections cover three (3) years and
include balance sheet, cash flow and income statements, with supporting
schedules and cross-referenced table of assumptions. The fees for the
Business Plan depend on several factors such as breadth and number of
product lines, number of markets served, technical nature of products and
industry, scope of operations, etc.
We will compile information that will comprise the business plan through
discussions with management, the answering of questionnaires, industry/market
and company information to which you have access, and some outside research. We
base our estimate of fees on the assumption that the Company shall provide
Xxxxxx with any and all company, industry, marketplace, competitor, and
other information available to it upon request by Xxxxxx.
a) Fees. The total fee for preparing the Business Plan, as described above,
will be $20,000 (100 hrs of our Staff Consultants' time at $100/hr; 60 hrs
of our Senior Consultants' time at $150/hr. and 40 hrs of clerical time -for
transcriptions - at $25/hr). As you have indicated that you would be
interested in compensating us for a portion of the fees in common stock
of the Company, we have included our formula for such compensation in
this proposal/agreement. Our proposed stock compensation formula reduces
the cash portion of the fees by 25% to $15,000 (please see Terms).
In the event that the Company first engages Xxxxxx to prepare an Executive
Summary document, as described in paragraph 2 below, then any fees related
to the preparation thereof shall be credited against the fees for the
Business Plan.
b) Terms.
i) All Cash Terms:
1. 1/3 of estimated fees ($6,667) at start of project (signing of this
agreement);
2. 1/3 ($6,667) when initial retainer is exhausted;
3. 1/6 ($3,333) upon submission of complete draft plan;
4. Final balance ($3,333) upon submission of final draft.
initial acceptance of (1.b.i) here: _____
ii) Cash & Stock Terms: We have indicated to you that we would be willing to
accept payment for 23% of the billed hours in the form of common stock of
the Company. Under this type of arrangement, the terms are as follows:
1. 1/4 of estimated fees ($5,000) at start of project (signing of this
agreement);
2. 1/4 ($5,000) when initial retainer is exhausted;
3. 1/4 ($5,000) upon submission of complete draft plan;
4. Final balance upon submission of final draft, to be paid in Common Stock
of the Company as follows: 25% of Consultants' hours (40 hours) to be valued
at $300 per hour (for a total of $12,000) to be paid in Common Stock of the
Company at 50% of the current market rate (if public), or the last price paid
by an outside investor for Common Stock (if private) of the Company (the
"Stock Compensation"). The Company agrees to issue such shares to The Xxxxxx
Group pursuant to and in accordance with "Rule 701" which is designed to
provide ft payment of services rendered to independent contractors in the
form of common stock.
Initial acceptance of (1.b.ii) here: ____
2) Executive Summary Document. This document summarizes the pertinent
aspects of the business in brief detail. You understand that it does not
include the level of detail that is presented by the business plan or a
summary business plan. It is understood that the summary plan shall not
include the detailed pro forma financial statement that would be
prepared in connection with a Comprehensive Business Plan. We will
include summary projected financial information if such information
is made available to us by the Company.
a) Fees. The total fee for preparing the Business Plan, as described
above, will be $5,000 (25 hrs of oue Staff Consultants' time at $100/hr;
15 hrs of our Senior Consultants' time at $150/hr; and 10 hrs of clerical
time - for transcriptions - at $25/hr)
b) Terms.
1. 1/2 of estimated fees ($2,500) at start of project (signing of this
agreement);
2. 1/4 (1,250) upon submission of complete draft executive summary;
3. Final balance ($1,250) upon submission of final draft.
Initial acceptance OF 2 here: _______
3) Additional Services. Any time for services requested and agreed to by
you other than above directly related to the business plans, such as
strategic planning, etc., will be recorded separately and billed at
month-end. Such services shall be billed at the rate of $150/hr
and paid by the Company immediately upon receipt of invoice(s).
4)Direct Costs. The hard costs Of producing the physical business plan,
such as artwork, laser printing, photography, xeroxing, printing,
binding, covers, foil sampling, die, etc., will be costs that are above
and beyond the fees outlined above. We can provide you with a definitive
estimate of these costs at a later date, however, hard-bound plans
generally run between $20.00 - $22.00 each (not including
photos/color xeroxes), plus about $150 in one time set-up costs. You can
coordinate these services and pay these costs directly, or we can
coordinate and pay them (for a service mark-up), at your
choice. Prior to placing an order for the production/printing of
business plans, we will require an advance against the estimated costs
thereof.
5) Independent Relationship. It is understood that Xxxxxx, including
its principal(s), employees, and/or agents is acting as an independent
contractor to the Company and is not authorized to act on behalf of
or otherwise obligate the Company in any way without the prior consent
of the Company. It is further understood that the scope of the services
described above does not provide for the conducting of a thorough due
diligence review process by Xxxxxx; and therefor, Xxxxxx is
relying completely on the statements and representations of the Company as
the basic for all information contained in the Business Plan, including,
but not limited to financial projections and assumptions thereto. It
is agreed that the Company shall submit the draft business plan
to Company legal counsel for their review and comments prior to the
publication and/or dissemination of a final draft; and that any
comments from counsel arising from such review shall be provided to Xxxxxx.
6) Indemnity. The Company shall indemnify and hold harmless The Xxxxxx Group,
LLC, including its principals, employees, affiliates and agents, from and
against any and all losses, claims, damages, other reasonable expenses
incurred by Xxxxxx in connection with investigating or defending against
or providing evidence in any litigation, whether commenced or threatened, in
connection with any claim, action, or proceedings, whether or not resulting
in any liability to which Xxxxxx may become subject under any statute, at
common low or otherwise, caused by, or arising out of, any service under this
Agreement; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability (a) is
found in a final judgment by a court to have resulted from Xxxxxx' xxxxx
negligence.
7) Miscellaneous. The Xxxxxx Group, LLC shall own the copyright to all
materials developed by Xxxxxx for the Company. In consideration of payment in
full to its services rendered under this agreement, the Company shall be
entitle the right, without further payment, to use and/or reproduce such
materials for any legal purposes, which right shall extend for an
indefinite period of time.
Our estimates presume adequate and timely supply of information by the
client, the absence of significant "running changes," or other unforeseen
factors that may add to the actual hours, fees and turnaround times. In the
event that the Company instigates changes in the project that are outside
the original scope of the project and add materially to Xxxxxx' investment
of time, Xxxxxx shall inform the Company of any additional resulting fees
prior to undertaking such changes, and the parties shall agree to such
additional changes and fees before proceeding. In the event that the
Company chooses to terminate the project prior to its completion, the Company
shall immediately instruct Xxxxxx to cease work. The Company shall pay
Xxxxxx any and all fees due for instrumental work performed on the
project up to and including the date of receipt of notice of project
termination.
This Agreement constitutes the entire Agreement between the parties, and it
may not be modified except in writing signed by all the parties. This
Agreement shall be governed and construed in accordance with the laws of
the State of California. The parties mutually agree that any
controversy, dispute, or claim of whatever nature arising out in,
in connection with, or in relation to the interpretation,
performance or breach of this agreement and any schedule or
exhibit attached hereto or this relationship against you or you against
the Company shall be resolved through a two-step dispute resolution
process administered by Judicial Arbitration & Mediation Services,
Inc. (JAMS) involving first mediation before a retired judge or justice
from the JAMS panel, followed if necessary, by final and binding arbitration
conducted at a location determined by the arbitration in Los Angeles
County, California, administered in accordance with the then existing
rule of practice and procedure of JAMS and judgment upon any award
rendered by the arbitrator may be entered by any state or federal court
having jurisdiction thereof. The arbitrator shall determine which is the
prevailing party and shall include in the award that party's reasonable
attorney fees ad other costs of the mediation and arbitration.
If you have any questions regarding this proposal, please give me a call.
Otherwise, please indicate your choice of projects and terms by indicating
next to paragraph 1.b.i or 1.b.ii and/or 2 (above), and acknowledge
your acceptance where indicated below. We are pleased to be able
to assist you and your colleagues in achieving your continued growth
objectives for Internet Golf Association, Inc.
Very trult yours,
/s/Xxxxx X. XxxXxxxxxx, Xx., Managing Partner
The Xxxxxx Group, LLC.
AGREED AND ACCEPTED: Date: 8-29-99
Internet Golf Association, Inc.
/s/Xxxxx Xxxxxxxxxx, Principal
