EXHIBIT 10.42
[LETTERHEAD]
AGREEMENT FOR
FINANCIAL PUBLIC RELATIONS SERVICES
THIS AGREEMENT is entered into on this 22nd day of August 1996 by and between
CORPORATE RELATIONS GROUP (hereinafter "CRG") , with its principal place of
business at 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000 and XXXXXX
CORPORATION hereinafter ("Client"), a Washington corporation, with its
principal place of business at 00000 00xx Xxxxxx Xxxx, Xxxxxxxx, XX 00000 --
206 -775-1202 .
HEREAFTER, the Client and CRG are referred to collectively as "Parties", and
singularly as "Party".
WHEREAS, the Parties desire to set forth the terms and conditions under which
the said services shall be performed.
NOW, THEREFORE, in consideration of these promises of the mutual covenants
herein, the Parties hereto agree as follows:
ARTICLE I - SCOPE OF SERVICES
CRG agrees to perform for the Client the financial services described as
follows:
(a) CRG will develop, implement, and maintain an ongoing stock market
support system with the general objective of expanding stockbroker awareness
of the Client's activities, and hence to commensurate interest in the
Client's stock. This market support system will have a four part approach:
(i) A SHAREHOLDER COMMUNICATION SYSTEM to keep existing stockholders
informed about the Client's activities and potential.
(ii) A STOCKBROKER SUPPORT SYSTEM to build a national network of
stockbrokers who are informed about and interested in the Client.
(iii) AN INVESTOR GENERATION SYSTEM to develop leads for selected brokers and
to assist them in their marketing activity of the Client's stock.
(iv) A MEDIA RELATIONS SYSTEM to increase corporate visibility through
informational press releases, placement of articles and copy consulting on
annual and quarterly reports.
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(b) Optional Services. Additional projects, such as design and production
of annual and quarterly reports, video or slide presentations, speech
writing, and consulting related to financing activities, will be performed
and billed as mutually agreed upon by both Parties.
(c) CRG agrees to provide the Client with a written investor relations
update each quarter which outlines activities undertaken by CRG on the
Client's behalf and to be available to meet with the Client to evaluate the
program's progress and direction.
ARTICLE II - PERIOD OF PERFORMANCE
The period of performance under this agreement shall be for a primary
term of six (6) months from the date hereof. This Agreement may be terminated
at the end of the six (6) month period by either Party upon at least 30 days
written notice. Notice of termination may only be given on or before the last
day of the initial six month term. If no notice of termination is received
at that time the Agreement automatically renews for one successive six (6)
month period under the same terms and conditions. Adjustments in
compensation structure and the issuance of additional options (a new Option
Agreement) will be considered after each year of service under the Agreement
(two six month periods).
ARTICLE III - CONTRACTUAL RELATIONSHIP
In performing the services under this Agreement, CRG shall operate as,
and have the status of an independent contractor. The Client and CRG will be
mutually responsible for determining the means and the methods for performing
the services described in ARTICLE I.
ARTICLE IV - COMPENSATION
As full consideration for the performance of the basic (four-part)
services described above, the Client shall pay CRG compensation as follows:
(a) CASH: $3,000 per month, which includes expenses for telephone/facsimile
charges and postage for press release mailings.
(i) Initial payment for the first month and an equal amount as a deposit
against expenses and/or retainer amounts shall be due at the time this
Agreement is signed ($6,000). Following the initial payment, ensuing
payments are payable monthly in advance to CRG's principal place of business
and are due on the first day of each month.
(b) EXPENSES: Additional expenses include, but are not limited to, the
following: travel and lodging; fare of public carrier; photocopy and
printing; wire service (PR Newswire) charges; and postage for specially
targeted mailings other than press releases. CRG agrees to obtain prior
client approval for any single expense over $50.00. CRG shall submit a
monthly invoice to the Client, which covers the monthly fee and reimbursable
expenses. The Client agrees to indemnify and pay CRG for all authorized
expenses committed to on behalf of the Client prior to termination of this
Agreement for any reason.
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(c) OPTIONS: Three Options (or Warrants) to purchase the Client's common
stock shall be granted to CRG.
(i) OPTION A - Immediately exercisable option to purchase 60,000 shares of
Client's Common Stock at an exercise price equal to the closing bid price on
the date of this Agreement (subject to adjustment as provided herein). This
Option A may be exercised from the date of this Agreement until 11:59 p.m.
(Los Angeles time) on the date that is 12 months after the date of this
Agreement. Any portion of this Option A not exercised on or before its
expiration date shall expire.
(ii) OPTION B - Immediately exercisable option to purchase 60,000 shares of
Client's Common Stock at an exercise price equal to 150% of the closing bid
price on the date of this Agreement (subject to adjustment as provided
herein). This Option B may be exercised from the date of this Agreement
until 11:59 p.m. (Los Angeles time) on the date that is 18 months after the
date of this Agreement. Any portion of this Option B not exercised on or
before its expiration date shall expire.
(iii) OPTION C - Immediately exercisable option to purchase 60,000 shares
of Client's Common Stock at an exercise price equal to 200% of the closing
bid price on the date of this Agreement (subject to adjustment as provided
herein). This Option C may be exercised from the date of this Agreement
until 11:59 p.m. (Los Angeles time) on the date that is 24 months after the
date of this Agreement. Any portion of this Option C not exercised on or
before its expiration date shall expire.
(iv) MISCELLANEOUS: The Options pursuant to this Agreement may not be
transferred, assigned, pledged or hypothecated in any manor (whether by
operation of law or otherwise) without the prior written consent of Client.
The Options may be exercised in whole or in part by means of a written notice
of exercise delivered to Client accompanied by payment of the full exercise
price in cash or by certified or cashier's check. CRG agrees that it will
also pay to Client, the amount necessary , if any, for Client to satisfy its
withholding obligations imposed by the Internal Revenue Code. CRG
acknowledges that the issuance of shares of Common Stock upon exercise of the
forgoing Options, and any resale of the shares of Common Stock, may only be
affected in accordance with applicable state and federal laws and
regulations. CRG shall furnish evidence satisfactory to Client (including a
written and signed representation letter and a consent to be bound by all
transferred restrictions imposed by applicable law) to that effect upon
exercise of any of the Options and that it is not entitled to any rights as a
shareholder with respect to any shares of Common Stock issuable pursuant to
the Options until the Options have been exercised.
(v) PIGGYBACK REGISTRATION RIGHTS: If at any time prior to August 31, 1999,
Client proposes to register any of its Common Stock under the Securities Act
Of 1933 in connection with a firmly underwritten public offering of Common
Stock for cash for its own account on a registration form that may be used
for the registration of the sale of Common Stock issued upon exercise of the
Options ( "Registerable Shares" ), at least 20 days before filing such
registration statement Client will notify CRG of such determination, and upon
the request of CRG given in writing, within twenty (20) days after receipt of
the Client's notice, Client shall use its reasonable best efforts to cause
any of the Registerable Shares specified by CRG to be included in such
registration statement.
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(ARTICLE IV (C) (V) - CONTINUED)
However, if any managing underwriter for such public offering determines in
its reasonable good faith judgment that the inclusion of all Registerable
Shares requested by CRG and the Common Stock proposed to be offered by Client
and by other shareholders, whether originally covered by requests for
registration or otherwise included, might interfere with the successful
marketing of such securities within a price range reasonably acceptable to
Client, then Client shall be required to include in the registration only
that number of securities, including Registerable Shares, which the managing
underwriter believes will not jeopardize the success of the offering and the
number of shares otherwise to be included in the registration statement shall
be reduced as follows: (1) there shall first be excluded Common Stock
proposed to be included by other shareholders not possessing legal rights to
include the same pursuant to this Agreement or any similar agreement; and (2)
any further reduction shall be pro rata among all other shareholders (having
such legal rights) requesting inclusion of there Common Shares in such
registration (with the exception of holders of rights pursuant to the
Registration Rights Agreement dated June 12, 1996 among Client and Xxxxxxx
Capital Management, Inc. and its affiliates (the "Senior Registration Rights
Agreement")), in the proportion of the number of shares of Common Stock then
owned by each with respect to which it has registration rights; and (3) any
further reduction shall be determined in accordance with the terms of the
Senior Registration Rights Agreement. CRG agrees not to seek an injunction
restraining or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Agreement. Client shall not be required to include
any Registerable Shares in a registration pursuant to this Agreement unless
CRG accepts the terms of the underwriting as agreed upon between Client and
the underwriters selected by Client. CRG shall cooperate with Client in
connection with the preparation of a registration statement, and shall
provide to Client, in writing, for use in the registration statement, all
such information regarding CRG and his or its plan of distribution with
respect to the Registerable Shares covered thereby as Client from time to
time may reasonably request to prepare the Registration Statement and
prospectus covering the Registerable Shares, to maintain the currency and
effectiveness thereof and otherwise to comply with all applicable
requirements of law in connection therewith.
(vi) S-8 REGISTRATION: If Client has not registered shares as described
above, then upon the written request of CRG thereafter, the Client shall use
its reasonable best efforts to cause all shares underlying the Options
granted to CRG to be registered via an S-8 Registration.
ARTICLE V - ADJUSTMENTS TO OPTIONS
The Exercise Price and the number of shares of Common Stock and classes of
capital stock of the Company purchasable upon the exercise of each Option are
subject to adjustment from time to time as follows:
(a) If the Company: (i) pays a dividend or makes a distribution on its
Common Stock, in each case, in shares of its Common Stock; (ii) subdivides
its outstanding shares of Common Stock into a greater number of shares; (iii)
combines its outstanding shares of Common Stock into a smaller number of
shares; (iv) makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock or (v) issues by reclassification of
its shares of Common Stock any shares of its capital stock; then the number
and classes of shares purchasable upon exercise of each Option in effect
immediately prior to such action shall be adjusted so that the holder of any
Option thereafter exercised may receive the number and classes of shares of
capital stock of the Company which such holder would have owned immediately
following such action if such holder had exercised the Option immediately
prior to such action.
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(b) If the Client is a party to a consolidation, merger or transfer of
assets which reclassifies or changes its outstanding Common Stock, the
successor corporation (or corporation controlling the successor corporation
or the Company, as the case may be) shall by operation of law assume the
Client's obligations under this Agreement.
(c) Upon consummation of such transaction the Options shall automatically
become exercisable for the kind and amount of securities, cash or other
assets which the holder of an Option would have owned immediately after the
consolidation, merger or transfer if the holder had exercised the Option
immediately before the effective date of such transaction. As a condition to
the consummation of such transaction, the Client shall arrange for the person
or entity obligated to issue securities or deliver cash or other assets upon
exercise of the Option to, concurrently with the consummation of such
transaction, assume the Client's obligations hereunder by executing an
instrument so providing and further providing for adjustments which shall be
as nearly equivalent as may be practical to the adjustments provided herein.
ARTICLE VI - CLIENT INFORMATION
Since CRG must at all times rely upon the accuracy and completeness of
information supplied to it by the Client's officers, directors, agents, and
employees, the Client agrees to indemnify, hold harmless, and defend, CRG,
its officers, agents, employees at the Client's expense, in any proceeding or
suit which may arise out of and/or due to any inaccuracy or incompleteness of
such material supplied by the Client to CRG.
ARTICLE VII - GRANT OF LICENSE
(a) CRG hereby grants a license to the Client, through the duration of this
Agreement, to use CRG's exclusive system, lists, manuals and trademarked and
copyrighted materials. Due to the unique and proprietary nature of these
systems and materials, CRG will revoke this license upon termination of this
Agreement for any reason and all such materials and lists must be returned to
CRG immediately thereafter and their use by the Client discontinued.
(b) CRG agrees that all information disclosed to it about the Client's
products, processes and services are the sole property of the Client and it
will not assert any rights to any confidential or proprietary information or
material, nor will it directly or indirectly, except as required in the
conduct of its duties under the Agreement, disseminate or disclose any such
confidential information; and
(c) Upon termination of this Agreement, CRG will return to the Client all
documents, records, notebooks and similar items of or containing confidential
information then in its possession, including copies thereof, whether
prepared by CRG or others.
ARTICLE VIII - REPRESENTATIVE AND NOTICES
Notices provided for hereunder shall be in writing and may be served
personally to the Client's Representative and CRG's representative at their
respective place of business or by registered mail to the address of each
Party as first set forth herein above or may be transmitted by FAX.
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ARTICLE IX - ARBITRATION/JURISDICTION OF COURT
Any controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled by arbitration in the County of Orange,
California, in accordance with the rules of the American Arbitration
Association there in effect, except that the parties thereto shall have any
right to discovery as would be permitted by the Federal Rules of Civil
Procedure and the prevailing Party shall be entitled to actual costs and
actual attorney's fees from arbitration or any other civil action. Judgment
upon the award rendered therein may be entered in any Court having
jurisdiction thereof. Jurisdiction for any legal action is stipulated
between the Parties to lie in the County of Orange, California.
ARTICLE X - MISCELLANEOUS
This Agreement constitutes the entire agreement between the Client and CRG
relating to providing financial relations services. It supersedes all prior
or contemporaneous communications, representations or agreements, whether
oral or written, with respect to the subject matter hereof and has been
induced by no representations, statements or agreements other than those
herein expressed. No agreement hereafter made between the Parties shall be
binding on either Party unless reduced to writing and signed by an authorized
officer of the Party bound thereby.
This Agreement shall in all respects be interpreted and construed, and the
rights of the Parties hereto shall be governed by the laws of the State of
California.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized officers.
XXXXXX CORPORATION CORPORATE RELATIONS GROUP
By: /s/X.X.XXXXX By: /s/XXXXXXX X. XXXXXXX
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Xxxxxxx X. Xxxxxxx
Date: 9-9-96 Date: 8/22/96
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