Exhibit 10.1
NATIONAL FINANCIAL COMMUNICATIONS CORP.
CONSULTING AGREEMENT
AGREEMENT made as of the 1st day of February, 2001 by and
between ARS Networks, maintaining its principal offices at 000
Xxxxxx Xx, Xxxxxxxxx, XX 00000 (hereinafter referred to as "Client")
and National Financial Communications Corp. DBA/ OTC Financial
Network, a Commonwealth of Massachusetts corporation maintaining its
principal offices at 000 Xxxxxxxx Xx, Xxxxx 000, Xxxxxxx, XX 00000
(hereinafter referred to as the "Company").
W I T N E S S E T H :
WHEREAS, Company is engaged in the business of providing and
rendering public relations and communications services and has
knowledge, expertise and personnel to render the requisite services
to Client; and
WHEREAS, Client is desirous of retaining Company for the
purpose of obtaining public relations and corporate communications
services so as to better, more fully and more effectively deal and
communicate with its shareholders and the investment banking
community.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, it is agreed as
follows:
I. Engagement of Company. Client herewith engages Company and
Company agrees to render to Client public relations, communications,
advisory and consulting services.
A. The consulting services to be provided by the Company shall
include, but are not limited to, the development, implementation and
maintenance of an ongoing program to increase the investment
community's awareness of Client's activities and to stimulate the
investment community's interest in Client. Client acknowledges that
Company's ability to relate information regarding Client's
activities is directly related to the information provided by Client
to the Company.
B. Client acknowledges that Company will devote such time as
is reasonably necessary to perform the services for Client, having
due regard for Company's commitments and obligations to other
businesses for which it performs consulting services.
II. Compensation and Expense Reimbursement.
A. Client will pay the Company, as compensation for the
services provided for in this Agreement and as reimbursement for
expenses incurred by Company on Client's behalf, in the manner set
forth in Schedule A annexed to this Agreement which Schedule is
incorporated herein by reference.
B. In addition to the compensation and expense reimbursement
referred to in Section 2(A) above, Company shall be entitled to
receive from Client a "Transaction Fee", as a result of any
Transaction (as described below) between Client and any other
company, entity, person, group or persons or other party which is
introduced to, or put in contact with, Client by Company, or by
which Client has been introduced to, or has been put in contact
with, by Company. A "Transaction" shall mean merger, sale of stock,
sale of assets, consolidation or other similar transaction or series
or combination of transactions whereby Client or such other party
transfer to the other, or both transfer to a third entity or person,
stock, assets, or any interest in its business in exchange for
stock, assets, securities, cash or other valuable property or
rights, or wherein they make a contribution of capital or services
to a joint venture, commonly owned enterprise or business
opportunity with the other for purposes of future business
operations and opportunities. To be a Transaction covered by this
section, the transaction must occur during the term of this
Agreement or the one year period following the expiration of this
Agreement.
The calculation of a Transaction Fee shall be based upon the total
value of the consideration, securities, property, business, assets
or other value given, paid, transferred or contributed by, or to,
the Client and shall equal 5% of the dollar value of the
Transaction. Such fee shall be paid by certified funds at the
closing of the Transaction.
Term and Termination. This Agreement shall be for a period of
one year commencing February 1, 2001 and terminating January 31,
2002. If the Client does not cancel the contract during the term,
the contract will be automatically extended for an additional three
months. Either party hereto shall have the right to terminate this
Agreement upon 10 days prior written notice to the other party after
the first 90 days.
Treatment of Confidential Information. Company shall not
disclose, without the consent of Client, any financial and business
information concerning the business, affairs, plans and programs of
Client which are delivered by Client to Company in connection with
Company's services hereunder, provided such information is plainly
and prominently marked in writing by Client as being confidential
(the "Confidential Information"). The Company will not be bound by
the foregoing limitation in the event (i) the Confidential
Information is otherwise disseminated and becomes public information
or (ii) the Company is required to disclose the Confidential
Informational pursuant to a subpoena or other judicial order.
Representation by Company of other clients. Client
acknowledges and consents to Company rendering public relations,
consulting and/or communications services to other clients of the
Company engaged in the same or similar business as that of Client.
Indemnification by Client as to Information Provided to
Company. Client acknowledges that Company, in the performance of its
duties, will be required to rely upon the accuracy and completeness
of information supplied to it by Client's officers, directors,
agents and/or employees. Client agrees to indemnify, hold harmless
and defend Company, its officers, agents and/or employees from any
proceeding or suit which arises out of or is due to the inaccuracy
or incompleteness of any material or information supplied by Client
to Company.
Independent Contractor. It is expressly agreed that Company is
acting as an independent contractor in performing its services
hereunder. Client shall carry no workers compensation insurance or
any health or accident insurance on Company or consultant's
employees. Client shall not pay any contributions to social
security, unemployment insurance, Federal or state withholding taxes
nor provide any other contributions or benefits which might be
customary in an employer-employee relationship.
Non-Assignment. This Agreement shall not be assigned by either
party without the written consent of the other party.
Notices. Any notice to be given by either party to the other
hereunder shall be sufficient if in writing and sent by registered
or certified mail, return receipt requested, addressed to such party
at the address specified on the first page of this Agreement or such
other address as either party may have given to the other in
writing.
Entire Agreement. The within agreement contains the entire
agreement and understanding between the parties and supersedes all
prior negotiations, agreements and discussions concerning the
subject matter hereof.
Modification and Waiver. This Agreement may not be altered or
modified except by writing signed by each of the respective parties
hereof. No breach or violation of this Agreement shall be waived
except in writing executed by the party granting such waiver.
Law to Govern; Forum for Disputes. The Company and the Client
agree that any legal disputes that may occur between the Company and
the Client, and that arise out of, or are related in any way to, the
Company contract with the Client and/or its performance of services
under the Contract or the termination of this contract, and which
disputes cannot be resolved informally, shall be resolved
exclusively through final and binding private arbitration before an
arbitrator mutually selected by the Company and the Client with each
party to bear its own costs and attorney fees. If the Company and
the Client are unable to agree upon an arbitrator within twenty-one
(21) days after either party made a demand for arbitration, the
matter will be submitted for arbitration to the Boston office of the
American Arbitration Association pursuant to the rules governing
contract dispute resolution in effect as of December 1, 1998.
Notwithstanding the foregoing, in no event shall a demand for
arbitration be made after the date when institution of legal or
equitable proceedings based on such claim, dispute, or other matter
in question would be barred by the applicable statutes of
limitation.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first written above.
National Financial Communications Corp.
By:
-------------------------------------
Xxxxxxxx Xxxxx, President
ARS Networks
By:
-------------------------------------
Xxxxxx Xxxxxxx, Authorized Agent
SCHEDULE A-1 PAYMENT FOR SERVICES AND REIMBURSEMENT OF EXPENSES.
SCHEDULE A-2 GRANT OF OPTIONS TO NATIONAL FINANCIAL COMMUNICATIONS
IN ADVANCE OF SERVICES RENDERED
SCHEDULE A-1
PAYMENT FOR SERVICES
AND REIMBURSEMENT OF EXPENSES
A. For the services to be rendered and performed by Company
during the term of the Agreement, Client shall pay to Company the
sum of $7,000 per month payable in shares plus 20% for paying in
shares rather than cash. The amount of shares will be determined by
the share price at the date of this contract. The Company will keep
an accounting of the sales of stock and deduct those sales from the
$7,000 per month owed. If those sales exceed the monthly fee, the
excess amount will be credited to the next month's monthly fee. If
there are not enough dollars in shares to cover the $7,000 monthly
fee, the Client will either pay additional shares or cover the
deficit or the Company will pay the deficit in cash for that
particular month.
For the period of February 1 to July 31, 2001 we will base the
closing bid price as of the date of this contract,, $7,000 per month
plus 20% premium (based on the closing price February 1, 2001 of
$1.2188, ARS will issue 41,350 shares for this period.).
Quarterly thereafter, in advance for the $7,000 per month plus
a 20% stock premium based on the lower of the closing bid price at
July 31 and October 31, 2001 respectively and $2.50 per share. The
maximum number of shares that will be issued related to any quarter
will be 42,000.
B. Client shall also reimburse Company for all reasonable and
necessary out-of-pocket expenses incurred in the performance of its
duties for Client upon presentation of statements setting forth in
reasonable detail the amount of such expenses. Company shall not
incur any expense for any single item in excess of $250 either
verbally or written except upon the prior approval of the Client.
Company agrees that any travel, entertainment or other expense which
it may incur and which may be referable to more than one of its
clients (including Client) will be prorated among the clients for
whom such expense has been incurred. Shares will be accepted for
payment of expenses in the same manner as the base fee per month in
Paragraph A above.
National Financial Communications Corp.
By:
-------------------------------------
Xxxxxxxx Xxxxx, President
ARS Networks
By:
-------------------------------------
Xxxxxx Xxxxxxx, Authorized Agent
SCHEDULE A-2
GRANT OF OPTIONS TO NATIONAL FINANCIAL COMMUNICATIONS CORP. IN
ADVANCE OF SERVICES RENDERED*
X. Xxxxx of Options and Option Exercise Price. As compensation
for the services to be rendered by Company hereunder, Client
herewith issues and grants to Company stock options (the "Options")
to purchase an aggregate of 500,000 shares of Client's Common Stock
at an exercise price of $1.00 per share. The Options are exercisable
upon and subject to the terms and conditions contained herein. The
Options are exercisable during the period commencing on the date
hereof and ending three years subsequent to the termination date of
this Agreement.
B. Manner of Exercise. Exercise of any of the Options by
Company shall be by written notice to Client accompanied by
Company's certified or bank check for the purchase price of the
shares being purchased. Upon receipt of such notice and payment,
Client shall promptly cause to be issued, without transfer or issue
tax to the option holder or other person entitled to exercise the
option, the number of shares for which the Option has been
exercised, registered in the name of Company. Such shares, when
issued, shall be fully paid and non-assessable.
C. Option Shares. Company acknowledges that any shares which
it may acquire from Client pursuant to the exercise of the Options
provided for herein will not have been registered pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), and
therefore may not be sold or transferred by Company except in the
event that such shares are the subject of a registration statement
or any future sale or transfer is, in the opinion of counsel for
Client, exempt from such registration provisions. Company
acknowledges that any shares which it may acquire pursuant to the
exercise of the Options will be for its own account and for
investment purposes only and not with a view to the resale or
redistribution of same. Company further consents that the following
legend be placed upon all certificates for shares of Common Stock
which may be issued to Company upon the exercise of the Options:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT
BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED."
Company further consents that no stop transfer instructions being
placed against all certificates may not be issued to it upon the
exercise of the Options.
(i) If the Client executes a Registration during the term of
the contract, then the Company's shares will be added to this
Registration at no cost to the Company. The Client shall bear all
costs and expenses attributable to such registration, excluding fees
and expenses of Company's counsel and any underwriting or selling
commission. Client shall maintain the effectiveness of such
registration throughout the term of this Agreement and for a 120 day
period thereafter.
(ii) Notwithstanding the foregoing, if the Shares issuable
upon exercise of the Options are not otherwise registered under the
Securities Act and the Client shall at any time after the date
hereof propose to file a registration statement under the Securities
Act, which registration statement shall include shares of Common
Stock of Client or any selling shareholder, Client shall give
written notice to Company of such proposed registration and will
permit Company to include in such registration all Shares which it
has acquired as of the date of such notice. The Client shall bear
all costs and expenses attributable to such registration, excluding
fees and expenses of Company's counsel and any underwriting or
selling commission.
D. Adjustments in Option Shares.
(i) In the event that Client shall at any time sub-divide its
outstanding shares of Common Stock into a greater number of shares,
the Option purchase price in effect prior to such sub-division shall
be proportionately reduced and the number of shares of Common Stock
purchasable shall be proportionately increased. In case the
outstanding shares of Common Stock of Client shall be combined into
a smaller number of shares, the Option purchase price in effect
immediately prior to such combination shall be proportionately
increased and the number of shares of Common Stock purchasable shall
be proportionately reduced.
(ii) In case of any reclassification or change of outstanding
shares of Common Stock issuable upon exercise of this Option (other
than change in par value, or from par value to no par value, or from
no par value to par value, or as a result or a subdivision or
combination), or in case of any consolidation or merger of the
Client with or into another corporation (other than a merger in
which the Client is the continuing corporation and which does not
result in any reclassification or change of outstanding shares of
Common Stock, other than a change in number of the shares issuable
upon exercise of the Option) or in case of any sale or conveyance to
another corporation of the property of the Client as an entirety or
substantially as an entirety, the Holder of this Option shall have
the right thereafter to exercise this Option into the kind and
amount of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation,
merger, sale or conveyance by a holder of the number of shares of
Common Stock of the Client for which the Option might have been
exercised immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. The above provisions
shall similarly apply to successive reclassifications and changes of
shares of Common Stock and to successive consolidations, mergers,
sales or conveyances.
(iii) The Company reserves the right to assign these options
to a third party at its own discretion.
National Financial Communications Corp.
By:
------------------------------------
Xxxxxxxx Xxxxx, President
ARS Networks
By:
------------------------------------
Xxxxxx Xxxxxxx, Authorized Agent
*National Financial Communications (NFC) will receive the
options in Schedule A-2. Fifty percent (50%) of any profits
received through the exercising of options will be credited to
the client's account while this contract is in force. If the
contract is cancelled by the client, any credit with the
client will become an asset of NFC and any unexercised options
remaining will remain an asset of NFC three years subsequent
to the termination of this agreement.
