CONSULTANT AGREEMENT
This Agreement ("Agreement") is made and entered into as of the 17th day of
May, 2004, by and between FoneFriend, Inc., a Delaware corporation (the
"Company") and Equity Market Information Systems, Inc., a California corporation
(the "Consultant").
WITNESSETH:
WHEREAS, the Consultant owns a proprietary database that tracks and
measures the performance of over 300 market support companies, enabling
Consultant to assist its clients in the identification and introduction to the
best investor relations promotional firm or firms for the Company's stock market
trading program needs.
WHEREAS, the Consultant is engaged in the business of providing corporate
communication services and administrating investor relations and stock market
trading programs on behalf of its clients; and
WHEREAS, the Company desires to retain Consultant for the purpose of having
Consultant provide its above referenced services to the Company and Consultant
hereby agrees to provide services to Company in accordance with the provisions
of this Agreement;
NOW THEREFORE, in consideration of the mutual promises made herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. TERM. This Agreement shall commence as of the date hereof and shall
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continue in effect for an initial period of three (3) months thereafter unless
earlier terminated in accordance with the provisions hereof. In the event that
Consultant materially fails to deliver the services described in Section 2
within 30 calendar days of the Date of this Agreement - and specifically the
distribution of corporate profiles and other pertinent information to it's
audience and email list as well as contract with outsourced Market Support
Partners - the Company reserves the right to immediately terminate this
Agreement by written notice to the Consultant and any remaining compensation due
under this Agreement shall be forfeit except where such failure to deliver is a
direct result of the Company's actions or failure to act under this Agreement or
that the Company receives an E-Listing, Cease Trade order or other catastrophic
market event such as a significant law suit.
2. SERVICES. The Company hereby engages Consultant for the term
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specified in Paragraph 1 hereof to render such services and advice to the
Company as the Company may request. Company acknowledges that the Consultant
will outsource some of its services provided to Company to third parties.
Consultant shall provide to the Company copies of such outsourced third party
Agreements upon request. Consultant covenants with Company that it shall
indemnify Company from any liability or obligation to such third parties.
Consultant's duties and services shall include, but will not necessarily be
limited to, providing assistance with, preparation of, and undertaking the
following activities:
(a) Development, dissemination and distribution of information
pertaining to the Company as follows:
MONTH 1
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Development of Corporate Profiles for the Company as a pdf file
Distribution of Corporate Profiles to Consultant's 700,000 email investors
Distribution of Corporate Profiles on Consultant's Corporate Profiles site
Distribution of Corporate Profiles to outsourced email investors
Distribution of Corporate Profiles Coverage on Market Support Partner sites
Distribution of Press Releases to all email investor lists
Timing: To be mutually agreed between the Company and Consultant
Consultant has written, in conjunction with ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, a 2 page
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editorial article on the U.S. Investor Awareness Industry for inclusion in Value
Rich Magazine which is distributed Quarterly to 30,000 public company CEO's,
venture capitalists, broker dealers, money managers and accredited investors.
The article includes a mention of the Consultant's forthcoming 2003 Report and
Survey of the US Investor Awareness Industry and the Company shall benefit from
visibility of said publications over the duration of the Campaign by visitors to
the Consultant's web sites. Consultant is not responsible for the actual timing
and publication date of the Value Rich article however Consultant shall be
announcing and distributing it's 2003 Report and Survey of the US Investor
Awareness Industry in June 2004.
MONTHS 2 AND 3
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Distribution of Press Releases to all email investor lists
Distribution of Press Releases on corporate profiling web sites
All services under this Agreement are provided on an 'As-Is' and 'Best
Efforts' basis by the Consultant and the third party Market Support Partners.
3. COMPENSATION. For all services rendered in connection with this
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Agreement, the Consultant shall be entitled to the following compensation:
(a) a cash fee in the amount of Thirty Five Thousand ($35,000.00)
Dollars, payable upon the execution of this Agreement; and
(b) a thirty-six month option, substantially in the form attached
hereto as Exhibit "A", to purchase shares of the Company's common stock in
accordance with the following:
Option Price Number of Options:
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$0.25 cents (twenty five cents) 50,000 (fifty thousand)
$0.50 cents (fifty cents) 50,000 (fifty thousand)
$1.00. (one dollar) 50,000 (fifty thousand)
(c) Shares as follows;
(i) two hundred fifty thousand (250,000) shares shall be
issued to Consultant thirty (30) days after the date hereof; and
(ii) two hundred fifty thousand (250,000) shares of the
Company's common shall be issued to Consultant sixty (60) days after the date
hereof.
(d) All Shares issued to Consultant, including shares issued
pursuant to any stock option, shall be issued as "freely tradable" securities,
without restrictive endorsement, having been registered under the Company's
registration statement filed on Form SB-2. Company shall provide an Opinion
Letter from it's counsel to the Consultant to the effect that the 500,000 shares
issued to the Consultant under this Agreement have been duly registered for free
trading status and are not subject to S8 or Affiliate rules.
4. REPRESENTATIONS AND WARRANTIES. Consultant hereby represents,
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warrants and covenants and agrees with the Company to the following:
(a) Sophistication of Consultant. Consultant has evaluated the
merits and risks of acquiring the Share Options, has such knowledge and
experience in financial and business matters that the undersigned is capable of
evaluating the merits and risks of such acquisition, is aware of and has
considered the financial risks and financial hazards of acquiring the Share
Options and is able to bear the economic risk of acquiring the Share Options,
including the possibility of a complete loss with respect thereto;
(b) Access to Information. Consultant will have access to such
information regarding the business and finances of the Company, the receipt and
careful reading of which is hereby acknowledged by Consultant, and has been
provided the opportunity to discuss with the Company's management the business,
affairs and financial condition of the Company and such other matters with
respect to the Company as would concern a reasonable person considering the
transactions contemplated by this Agreement and/or concerned with the operations
of the Company including, without limitation, pursuant to a meeting and/or
discussions with management of the Company;
(c) No Guarantees. It never has been represented, guaranteed or
warranted to the Consultant by the Company, or any of its officers, directors,
agents, representatives or employees, or any other person, expressly or by
implication, that:
(i) any gain will be realized by the Consultant's investment
in the Shares Options;
(ii) there will be any approximate or exact length of time
that Consultant will be required to remain as a holder of Shares; or
(iii) the past performance or experience on the part of the
Company, its predecessors or of any other person, will in any way indicate any
future results of the Company;
(f) No Other Representations, Warranties, Covenants or Agreements
of the Company. Except as set forth in this Agreement, the Company has not made
any representation, warranty, covenant or agreement with respect to the matters
contained herein, and Consultant has not and will not rely on any
representation, warranty, covenant or agreement except as set forth in this
Agreement;
(g) High Degree of Investment Risk. The investment in the Share
Options involves a high degree of risk and may result in a loss of the entire
amount invested; there is no assurance that the Company's operations will be
profitable in the future; and there is no assurance that a public market for
shares of Common Stock will continue to exist;
(h) No General Solicitation. Consultant has not received any
general solicitation of general advertising regarding the purchase of any of the
Share Options.
(i) The Consultant. Agrees and warrants there will be no short
selling in, or against, the Company's securities by Consultant.
(j} Confidentiality; Non-Circumvention. The Consultant
acknowledges that any and all non-public and/or Confidential knowledge or
information concerning the Company, its affairs and business activity obtained
by Consultant, its principals, employees and/or contractors in the course of its
engagement hereunder is strictly confidential, and the Consultant covenants not
to reveal same to any other persons and/or entities, including, but not limited
to, competitors of the Company and that it will not impart any such knowledge to
anyone whosoever during the term hereof or anytime thereafter. Further, the
Consultant agrees not to partake, either itself or in conjunction with other
third parties, in any activities or dealings that would circumvent, bypass or
obviate the business or economic opportunities or best interests of the Company.
All information, including but not limited to business operations, software and
other intellectual property rights, pertaining to the Company which is forwarded
to, or otherwise obtained by the Consultant hereunder, is to be received in
strict confidence and used only for the purposes of this Agreement and not in
circumvention of any business or economic opportunity or business relationship
of the Company. The provisions of this Paragraph shall survive the termination
of this Agreement.
5. OTHER CONSULTING CLIENTS. The Company acknowledges that Consultant
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is in the business of providing services and consulting advice to other parties.
Nothing herein contained shall be construed to limit or restrict Consultant in
conducting such business with others, or in rendering such advice to others,
provide that Consultant shall not take any action, to the best of its knowledge
and belief that would be contrary to the interests of the Company.
6. INDEMNIFICATION.
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(a) The Company agrees to indemnify and hold harmless Consultant,
its employees, directors, officers, agents, representatives and controlling
persons from and against any and all losses, claims, damages, liabilities,
suits, actions, proceedings, costs and expenses (collectively, "Damages"),
including, without limitation, reasonable attorney fees and expenses, as and
when incurred, if such Damages were directly caused by, relating to, based upon
or arising out of the rendering by Consultant of services pursuant to this
Agreement, so long as Consultant shall not have engaged in illegal, intentional
or willful misconduct, or shall not have been grossly negligent, in connection
with the services provided which form the basis of the claim for
indemnification. This paragraph shall survive the termination of this Agreement.
(b) The Consultant agrees to indemnify and hold harmless the
Company, its employees, directors, officers, agents, representatives and
controlling persons from and against any and all Damages, including, without
limitation, reasonable attorney fees and expenses, as and when incurred, if such
Damages were directly caused by, relating to, based upon or arising out of the
rendering by Consultant of services pursuant to this Agreement, if Consultant
shall have engaged in illegal, intentional or willful misconduct, or shall have
been grossly negligent, in connection with the services provided which form the
basis of the claim for indemnification. This paragraph shall survive the
termination of this Agreement.
7. INDEPENDENT CONTRACTOR. Consultant shall perform its services here
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under as an Independent Contractor and not as an employee or agent of the
Company or any affiliate thereof. Consultant shall have no authority to act for,
represent or bind the Company or any affiliate thereof in any matter, except as
may be expressly agreed to by the Company in writing from time to time.
8. ARBITRATION. In the event of any dispute under this Agreement, then
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and in such event, each party agrees that the same shall be submitted to the
American Arbitration Association ("AAA") in Los Angeles, California, for its
decision and determination in accordance with it rules and regulations then in
effect. Each of the parties agrees that the decision and/or award made by the
AAA may be entered as judgment and enforced by any court of competent
jurisdiction.
9. NOTICES. Any notice to be given by either party to the other here
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under shall be sufficient if in writing and sent by (a) nationally recognized
overnight courier, (b) facsimile transmission electronically confirmed, (c) hand
delivery against receipt, (d) registered or certified mail, return receipt
requested, in each case addressed to such party at the address specified below:
If to Company: FoneFriend, Inc.
Attn: President
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Consultant: Equity Market Information Systems, Inc.
Attn: ▇▇▇▇▇ ▇▇▇▇▇
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Or, such other address as either party may have given notice of to the
other party, from time to time, in writing.
10. MISCELLANEOUS. This Agreement constitutes the entire agreement
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between the parties with respect to the subject matter hereof. No provision of
this Agreement may be amended, modified or waived, except in writing signed by
both parties. This Agreement shall be biding upon and inure to the benefit of
each of the parties and their respective successors, legal representatives and
assigns. Either party without the written consent of the other party shall not
assign this Agreement. This Agreement may be executed in counterparts. The
validity, construction, interpretation and effect of this Agreement shall
exclusively be governed by and determined in accordance with the law of the
State of Delaware, irrespective of the fact that one or more of the parties
hereto resides in, or is domiciled in another state, and except to the extent
preempted by federal law, which shall to the extent govern.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duty executed on the day of the year first above written.
"CONSULTANT"
Equity Market Information Systems, Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇
Title: President
"COMPANY"
FoneFriend, Inc.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
EXHIBIT "A"
FORM OF STOCK OPTION AGREEMENT
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GRANT OF OPTION
DATE OF GRANT: MAY 19, 2004.
This Grant of Option agreement ("Agreement"), dated as of the Date of Grant
first stated above (the "Date of Grant"), is delivered by FoneFriend, Inc., a
Delaware corporation (the "Company"), to Equity Market Information Systems,
Inc., a California corporation (the "Consultant"), which is expected to provide
services to the Company as a consultant in accordance with that certain
Consulting Agreement to which this Grant of Option is attached as an exhibit.
WHEREAS, the Company has filed a registration statement to register shares
of its common stock pursuant to Form SB-2 (the "SB-2");
WHEREAS, the Company will file a post effective amendment to its SB-2 to
provide for the issuance of registered shares of the Company's common stock to
Consultant upon the exercise of the option granted hereunder; and
WHEREAS, the Company has determined that it would be in its best interest
to grant the incentive stock options documented herein;
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. Grant of Option.
Subject to the terms and conditions hereinafter set forth, the Company
hereby grants to the Consultant, as of the Date of Grant, an option to purchase
up to 150,000 shares of Stock, which shall be exercisable in such amounts and
purchased at such prices as set forth below:
50,000 shares at a purchase price of $0.25 per share; and
50,000 shares at a purchase price of $0.50 per share; and
50,000 shares at a purchase price of $1.00 per share; and
2. Term of Option.
Subject to the other provisions of this Agreement, the Option and all
rights hereunder with respect thereto, to the extent such rights shall not have
been exercised, shall terminate and become null and void thirty-six months from
the Date of Grant, or upon the termination of this Agreement.
Further, this Option and all rights hereunder with respect thereto, to the
extent such rights shall not have been exercised, shall terminate and become
null and void in the event of the bankruptcy or dissolution the Consultant.
3. Exercise of Option.
(a) The Consultant may exercise the Option with respect to all or any
part of the number of Option Shares then exercisable hereunder by giving the
Company written notice of intent to exercise the Option. The notice of exercise
shall specify the number of Option Shares as to which the Option is to be
exercised and the date of exercise thereof.
(b) Payment of the purchase price of any Option Shares, in respect of
which the Option shall be exercised, shall be made by the Consultant on or
before the exercise date specified in the notice of exercise by certified or
bank cashier's check, or by bank wire transfer, in the amount of such purchase
price payable to the order of the Company. The Consultant also agrees to assume
responsibility to pay any required income tax, or withholding taxes, which may
be imposed on the purchase of any Option Shares.
(c) On the exercise date specified in the Consultant's notice or as
soon thereafter as is practicable, the Company shall cause to be delivered to
the Consultant, a certificate or certificates for the Option Shares then being
purchased (out of theretofore unissued stock or reacquired Stock, as the Company
may elect) upon full payment for such Option Shares. However, if (i) the
Consultant is subject to Section 16 of the Securities Exchange Act of 1934 and
(ii) the Consultant exercises the Option before six months have passed from the
Date of Grant, the Company shall be permitted if required to comply with the
exemptive provisions of Section 16 of the Securities Exchange Act of 1934 to
hold in its custody any stock certificate arising from such exercise until six
months has passed from the Date of Grant. The obligation of the Company to
deliver Stock shall, however, be subject to the condition that if at any time
the Board shall determine in their discretion that the listing, registration or
qualification of the Option or the Option Shares upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the Option or the issuance or purchase of Stock thereunder, the Option may
not be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board.
(d) If the Consultant fails to pay for any of the Option Shares
specified in such notice of exercise, or fails to accept delivery thereof, the
Consultant's right to purchase such Option Shares shall be terminated
immediately by the Company without notice. The date specified in the
Consultant's notice as the date of exercise shall be deemed the date of exercise
of the Option, provided that payment in full for the Option Shares to be
purchased upon such exercise shall have been received by such date.
4. Adjustment of and Changes in Stock of the Company.
In the event of a reorganization, recapitalization, change of shares, stock
split, stock dividend, reclassification, subdivision or combination of shares,
merger, consolidation, rights offering, or any other change in the corporate
structure or shares of capital stock of the Company, the Company shall make such
adjustment as may be required under the applicable reorganization agreement in
the number and kind of shares of common stock subject to the Option or in the
option price; provided, however, that no such adjustment shall give the
Consultant any additional benefits under the Option. If there is no provision
for the treatment of the Option under an applicable reorganization agreement,
the Option may terminate on a date determined by the Company following at least
thirty (30) days written notice to the Consultant.
5. No Rights of Stockholders.
Neither the Consultant nor any personal representative shall be, or shall
have any of the rights and privileges of a stockholder of the Company with
respect to any Option Shares purchasable or issuable upon the exercise of the
Option, in whole or in part, prior to the date of exercise of the Option.
6. Non-Transferability of Option.
During the term hereof, the Option hereunder shall be exercisable only by
the Consultant or its duly appointed legal representative, and the Option shall
not be transferable, nor shall the Option be subject to attachment, execution or
other similar process. In the event of (a) any attempt by the Consultant to
alienate, assign, pledge, hypothecate or otherwise dispose of the option, except
as provided for herein, or (b) the levy of any attachment, execution or similar
process upon the rights or interest hereby conferred, the Company may terminate
the Option by notice to the Consultant and it shall thereupon become null and
void.
7. Restriction on Exercise.
The Option may not be exercised if the issuance of the Option Shares upon
such exercise would constitute a violation of any applicable federal or state
securities or other law or valid regulation. As a condition to the exercise of
the Option, the Company may require the Consultant exercising the Option to make
any representation or warranty to the Company as may be required by any
applicable law or regulation and, specifically, may require the Consultant to
provide evidence satisfactory to the Company that the Option Shares are being
acquired without any present intention to sell or distribute the shares in
violation of any federal or state securities or other law or valid regulation.
8. Representations of Consultant.
(a) Consultant acknowledges, recognizes and understands that the
purchase of the Option Shares is considered speculative and considered to
involve a high degree of risk. The Consultant has made its own independent
investigation of the Company and others to the extent it deems necessary to
determine the propriety of the purchase of the Option Shares, and will rely
solely on such independent investigation and upon the review and advice by
Consultant's own independent legal counsel, with respect to such matters.
(b) Consultant, and/or its representatives, have had the opportunity to
discuss with the Company's representatives the business activities of the
Company and to review and to discuss the following documents and information
concerning the Company:
(1) All public filings made by the Company pursuant to the
reporting requirements of the Securities Exchange Act of 1934, including but not
limited to the Company's financial and business information filed in its latest
10-K, 10-Q, 8-K and its registration statement under Form SB-2; and
(2) Such other documents and information as the Consultant may
reasonably request to conduct its independent investigation of the Company.
9. Consultant Status Not Affected.
The granting of the Option or its exercise shall not be construed as
granting to the Consultant any right with respect to continuance of its
Consulting Agreement with the Company, to which this Option is attached as an
exhibit. Except as may otherwise be limited by a written agreement between the
Company and the Consultant, the right of the Company to terminate the
Consultant's Consulting Agreement, in accordance with the provisions contained
therein, is specifically reserved by the Company, and hereby acknowledged by the
Consultant.
10. Amendment of Option.
The terms of the Option may be amended by the Company at any time prior to
exercise: (i) if the Board determines, in its sole and absolute discretion, that
amendment is necessary or advisable in the light of any addition to or change in
the Internal Revenue Code of 1986, or in the regulations issued thereunder, or
any federal or state securities law or other law or regulation, which change
occurs after the Date of Grant and by its terms applies to the Option; or (ii)
other than in the circumstances described in clause (i), with the consent of the
Consultant.
11. Notice.
All notices, requests, demands, and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered personally,
or by certified mail with return receipt requested, or by overnight delivery
service with receipt confirmation, or by facsimile transmission with receipt
confirmation, as follows:
To Company: FoneFriend, Inc.
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Attn: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To Consultant: Equity Market Information Systems, Inc.
Attn: ▇▇▇▇▇ ▇▇▇▇▇
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
12. Incorporation of SB-2 by Reference.
The Option is granted pursuant to registration under the SB-2, the terms of
which, and the information contained therein, are incorporated herein by
reference, and the registration of the shares of common stock underlying this
Option shall in all respects be interpreted in accordance with, and shall be
subject to, the SB-2.
13. Governing Law.
The validity, construction, interpretation and effect of this Agreement
shall exclusively be governed by and determined in accordance with the law of
the State of Delaware, irrespective of the fact that one or more of the parties
hereto resides in, or is domiciled in another state, and except to the extent
preempted by federal law, which shall to the extent govern.
IN WITNESS WHEREOF, the parties hereto have caused their respective duly
authorized representatives to execute this Agreement, effective as of the Date
of Grant.
"COMPANY"
FONEFRIEND, INC.
a Delaware corporation
By: ______________________________________
Name:
Title:
ACCEPTED AND AGREED TO AS OF THE DATE OF GRANT:
"CONSULTANT"
EQUITY MARKET INFORMATION SYSTEMS, INC.
An Arizona corporation
By: ______________________________________
Name:
Title:
NOTICE OF EXERCISE OF OPTION
The undersigned record holder of the within Option hereby irrevocably
elects to exercise the right to purchase __________ Option Shares evidenced by
the within Option, according to the terms and conditions thereof, and herewith
makes payment of the purchase price in full. Further, the Consultant hereby
represents that it is not subject to any requirements under Section 16 of the
Securities Exchange Act of 1934. The undersigned requests that certificates for
such Option Shares shall be issued by the Company forthwith.
Dated: ____________________, __________.
__________________________________________
Signature
__________________________________________
Print Name of Signatory
__________________________________________
(Street Address)
__________________________________________
(City, State Postal Code)
__________________________________________
(Tax Payer I.D. Number)
