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EXHIBIT 10.9
Fontenelle, LLC Consulting Agreement dated August 11, 1999
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is entered into as of August
11, 1999 by and between Virtual Technology Corporation ("VTC"), a Minnesota
corporation and Fontenelle, LLC ("Consultant"), a Nevada limited liability
company.
RECITALS
A. VTC is a public company whose Common Stock, no par value, is quoted on
the OTC Bulletin Board. VTC is in the business of selling computers and
computer-related equipment on the Internet.
B. Consultant is experienced in raising funds for growing businesses and
has significant contacts with possible financing sources.
C. VTC wishes to engage the Consultant on a nonexclusive basis as an
independent contractor to utilize Consultant's services to help VTC in raising
funds.
AGREEMENT
NOW, THEREFORE, it is mutually agreed by and between the Parties as
follows:
1. ENGAGEMENT. VTC hereby retains and engages Consultant to assist it in
developing a financing strategy and in identifying potential investors and as
described in more detail in paragraph 2 below (the "Consulting Services"), and
Consultant agrees to perform the Consulting Services subject to the terms and
conditions of this Agreement.
2. CONSULTING SERVICES. The Consulting Services contemplated by this
Agreement shall consist of:
a. Reviewing and evaluating VTC's current business plan and
remaining knowledgeable about the contents thereof;
b. Working with VTC's management to develop a financing strategy;
and
c. Introducing VTC potential investors and other sources of
financing.
3. CONSIDERATION. In consideration of the performance by Consultant of
the Consulting Services, VTC will issue to Consultant 1,200,000 shares of VTC's
Common Stock (the "Shares") valued at $1.37 per share (closing price Aug. 5,
1999), for a total consideration of $1,644,000, and an additional 300,000 shares
of VTC's Common Stock valued at $411,000, as more fully described in paragraph 4
below. In the event that Consultant does not completely perform the Consulting
Services (for any reason including the death or incapacity of Consultant), then
for each month that Consultant does not perform the Consulting Services, one
sixth (1/6) of the Shares (as
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adjusted for stock splits, reverse stock splits, stock dividends or
distributions or other reclassifications of VTC's common stock) shall be
returned to VTC and canceled. Consultant agrees to purchase shares in the open
market, if necessary, to fulfill such obligation to return shares to VTC.
The Shares will be issued as soon as practicable following execution of
this Agreement and will be "restricted securities" as defined in Rule 144(a)(3).
4. ADDITIONAL SHARES. In partial consideration of Consultant performing
the Consulting Services, VTC hereby grants the 0000 Xxxxxx Childrens Insurance
and Other Trust and the 1997 Xxxxxx Childrens Insurance and Other Trust each
150,000 shares of VTC's Common Stock valued at $1.37 per share.
5. EXPENSES. Consultant shall bear his out-of-pocket costs and expenses
incident to performing the Consulting Services, without a right of reimbursement
by VTC.
6. TERM. The term of this Agreement is one year, commencing August 11,
1999 and ending August 11, 2000 (the "Term"). This Agreement may be terminated
prior to the end of the Term upon the mutual written agreement of the Parties.
7. CONSULTANT'S LIABILITY. In the absence of gross negligence or willful
misconduct on the part of the Consultant or the Consultant's breach of any term
of this Agreement, the Consultant shall not be liable to the Company or to any
officer, director, employee, shareholder or creditor of the Company, for any act
or omission in the course of or in connection with the rendering or providing of
services hereunder. Except in those cases where gross negligence or willful
misconduct of the Consultant or the breach by the Consultant of any terms of
this Agreement is alleged and proven, the Company agrees to defend, indemnify,
and hold the Consultant harmless from and against any and all reasonable costs,
expenses and liability (including reasonable attorney's fees paid in the defense
of the Consultant) which may in any way result from services rendered by the
Consultant pursuant to or in connection with this Agreement. This
indemnification expressly excludes any and all damages as a result of any
actions or statements, on behalf of the Company, made by the Consultant without
the prior approval or authorization of the Company.
8. COMPANY'S LIABILITY. The Consultant agrees to defend, indemnify, and
hold the Company harmless from and against any and all reasonable costs,
expenses and liability (including reasonable attorney's fees paid in defense of
the Company) which may in any way result pursuant to its gross negligence or
willful misconduct or in any connection with any actions taken or statements
made, on behalf of the Company, without the prior approval or authorization of
the Company or which are otherwise in violation of applicable law.
9. CONSULTANT'S REPRESENTATIONS. The Consultant makes the following
representations:
(a) Consultant has no prior or existing legally binding obligations
that are in conflict with its entering into this Agreement;
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(b) Consultant shall not offer or make payment of any consideration
to brokers, dealers, or others for purposes of inducing the purchase,
making of a market or recommendation for the purchase of the Company's
securities;
(c) Consultant is not currently the subject of an investigation or
inquiry by the Securities and Exchange Commission, the NASD, or any state
securities commission;
(d) Consultants activities and operations fully comply with now and
will comply with in the future all applicable state and federal securities
laws and regulations;
(e) Consultant is either properly registered as, or exempt from
registration, a broker-dealer or an investment advisor;
(f) Consultant understands that, as a result of its services, it may
come to possess material non-public information about the Company, and that
it has implemented internal control procedures designed to reasonably to
insure that none of its employees, agents, consultants or affiliates, trade
in the securities of client companies while in possession of material
non-public information;
(g) During the Term of this Agreement and for a period of two years
thereafter, the Consultant shall treat as the Company's confidential trade
secrets all data, information, ideas, knowledge and papers pertaining to
the affairs of the Company. Without limiting the generality of the
foregoing such trade secrets shall include: the identity of the Company's
customers, suppliers and prospective customers and suppliers; the identity
of the Company's creditors and other sources of financing, the Company's
estimating and costing procedure and the cost and gross prices charged by
the Company for its products; the prices or other consideration charged to
or required of the Company by any of the suppliers or potential suppliers;
the Company's sales and promotional policies; and all information relating
to entertainment programs or properties being produced or otherwise
developed by the Company. The Consultant shall not reveal said trade
secrets to others except in the proper exercise of its duties for the
Company, or use their knowledge thereof in any way that would be
detrimental to the interest of the Company unless compelled to disclose
such information by judicial or administrative process; provided, however,
that the divulging of information shall not be a breach of this Agreement
to the extent that such information was (i) previously known by the party
to which it is divulged, (ii) already in the public domain, all through no
fault of the Consultant, or (iii) required to be disclosed by Consultant
pursuant to judicial or governmental order. The Consultant shall also treat
all information pertaining tot he affairs of the Company's suppliers and
customers and prospective customers and suppliers as confidential trade
secrets of such customers and suppliers and prospective customers and
suppliers;
(h) Consultant agrees to notify the Company immediately if, at any
time, any of the representations and warranties made by the Consultant
herein are no longer true and correct or if a breach of any of the
representations and warranties made by the Consultant herein occurs; and
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(i) Consultant is an "accredited investor", as that term is defined in
Rule 501(a) of regulation D promulgated under the Securities Act of 1933
(the Securities Act") and has the capacity to protect its own interests
with respect to an investment in the securities issued and issueable
hereunder (the "Securities"). Consultant and, as assignees of the
Consultant, the trusts identified in paragraph 4 above, are acquiring, or
will acquire, the Securities for investment for their own account, not as a
nominee or agent, and not with the view to, or for resale in connection
with, any distribution thereof. Consultant understands that the Securities
have not been registered under the Securities Act and that there is no
current plan to so register the Securities. Consultant acknowledges that
the Securities must be held indefinitely unless subsequently registered
under the Securities Act or unless an exemption from such registration is
available. Consultant further acknowledges that the certificate(s)
evidencing the Securities will be imprinted with a standard restrictive
legend prohibiting the transfer of the Securities in the absence of an
opinion of counsel or an exemption from the registration and prospectus
delivery requirements of the Securities Act and that a stop transfer
notation will be made on VTC's stock transfer records.
10. COMPANY REPRESENTATION'S. The Company makes the following
representations:
(a) The Company is not currently the subject of an investigation or
inquiry by the Securities and Exchange Commission, the NASD, or any state
securities commission.
(b) The Company is in good standing in the state of incorporation,
Minnesota.
(c) The Company and its senior management are not aware of any
materially adverse events not previously disclosed in the Company's annual
and quarterly reports with the Securities and Exchange Commission.
11. ENTIRETY OF AGREEMENT. This Agreement sets forth the entire
understanding of the Parties with respect to the matters contemplated hereby.
Any and all previous agreements and understandings between or among the Parties
regarding the subject matter hereof, whether written or oral, are superseded by
this Agreement. This Agreement shall not be amended or modified except by
written instrument duly executed by each of the Parties.
12. ASSIGNMENT AND BINDING EFFECT. This Agreement may not be assigned
without the prior written consent of the other Party.
13. WAIVER. Any term or provision of this Agreement may be waived at any
time by the Party entitled to the benefit thereof by a written instrument duly
executed by such Party.
14. NOTICES. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by facsimile, or
by registered or certified mail, postage prepaid, as follows:
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If to VTC to:
Virtual Technology Corporation
0000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
If to Consultant, to:
Fontenelle, LLC
Attn: Xx. Xxxxxx Xxxxxx
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communications will be deemed to have been given as
of the date so delivered, telephoned or mailed.
15. GOVERNING LAW. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of Minnesota.
16. NO BENEFIT TO OTHERS. The representations, warranties, covenants and
agreements contained in this Agreement are for the sole benefit of the Parties
hereto.
17. SEVERABILITY. Any provision of this Agreement that is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability in such jurisdiction without invalidating or
rendering unenforceable the remaining provisions hereof, and any such invalidity
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
18. HEADINGS. The headings of this Agreement are inserted solely for the
convenience of reference and are not part of, and are not intended to govern,
limit or aid in the construction of any term or provision hereof.
19. FURTHER ACTS. Each party agrees to perform any further acts and
execute and deliver any further documents that may be reasonably necessary to
carry out the provisions and intent of this Agreement.
20. ACKNOWLEDGMENT CONCERNING COUNSEL. Each party acknowledges that it had
the opportunity to employ separate and independent counsel of its own choosing
in connection with this Agreement.
21. INDEPENDENT CONTRACTOR STATUS. There is no relationship, partnership,
agency, employment, franchise or joint venture between the parties. The parties
have no authority to bind the other or incur any obligations on their behalf.
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22. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the date first above written.
VIRTUAL TECHNOLOGY CORPORATION
a Minnesota corporation
By: /s/ Xxxxxxx Israel
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Name: Xxxxxxx Israel, Chairman
FONTENELLE, LLC
a Nevada Limited Liability Company
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx - Authorized Officer