LEGAL SERVICES CONSULTANT AGREEMENT

 

 

 

 

 

 

 

 

1.            Term of Agreement. This Agreement shall be in full force and effect commencing January 1, 2010 and concluding at the close of business on December 31, 2015 (the "Term"), unless extended by mutual agreement of the parties.

 

2.           Consultation. The Consultant shall make appropriate personnel available to consult with the Board, the officers of the Corporation, and the department heads of the administrative staff of the Corporation, at reasonable times, concerning matters relating to any issue of importance regarding the business affairs of the Corporation, including, but not limited to, the specific Services detailed on Exhibit H attached hereto.

 

3.           Management Authority: Independent Contractor Status. The Consultant shall have no management authority of or for the Corporation. The Corporation's officers will operate the business affairs of the Corporation in their sole and absolute discretion. All the members of the Corporation's administrative staff shall be employees of the Corporation. The Consultant shall have no control or charge of the administrative staff and no control or authority to employ, discharge, direct, supervise or control any member of the administrative staff or other employees of the Corporation. It is the intention of the Corporation that the Consultant not undertake a ny activities which would make Consultant an affiliate of the Corporation, as that term is defined in the Securities Act of 1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934, as amended (the "Exchange Act") or the rules and regulations promulgated thereunder. The Corporation is interested only in the results obtained by the Consultant, who shall have the sole control of the manner and means of performing the Services under this Agreement. The Corporation shall not have the right to require the Consultant to collect accounts, investigate customer complaints, attend meetings, periodically report to the Corporation, follow prescribed itineraries, keep records of business transacted, make adjustments, conform to particular policies of the Corporation, or do anything else which would jeopardize the relationship of independent con tractor between the Corporation and the Consultant, nor shall the Corporation, nor the Consultant, do anything that would in any way cause the Consultant to be classified as an affiliate as defined in the Securities Act or the Exchange Act without the expressed written authorization to do so by both the Consultant and the Corporation.

4.           No Power of Consultant to Act as Agent. The Consultant shall have no right, power or authority to be, or act, as an agent of the Corporation for any purpose whatsoever. In that regard, the Consultant shall not attempt or purport to obligate the Corporation to any obligation or agreement.

 

5.           Limited Liability With regard to the Services, the Consultant shall not be liable to the Corporation, or to any person who may claim any right because of that person's relationship with the Corporation, for any acts or omissions in the performance of the Services on the part of the Consultant or on the part of the agents or employees of the Consultant, except when said acts or omissions of the Consultant are due to the Consultant's gross negligence or willful misconduct, which definition includes, but is not limited to, any violation by the Consultant of any local, state and or federal securities laws and or regulations, including those establi shed by the Securities and Exchange Commission ("SEC") and the Financial Industry Regulatory Authority ("FINRA"). In the event Consultant commits or causes to be committed any acts or omissions that are due to the Consultant's gross negligence or willful misconduct, this Agreement shall be deemed void, and all Shares issued in connection herewith shall be immediately cancelled by the Corporation and the Consultant shall physically return all Shares to the Corporation within three business days of the Consultant being notified of the acts and or omissions by the Corporation. In the event the Consultant has transferred or disposed of the Shares, or a portion thereof, prior to this Agreement becoming void as provided for herein, Consultant shall be solely responsible for replacing those Shares in order to comply with this Section 5.

 

6.           Cash Compensation.

 

a.           Beginning May 1, 2010, the Corporation shall pay to the Consultant a base consulting fee at an annual rate of One Hundred Twenty Thousand Dollars ($120,000) (the "Base Fee"), increased by a minimum of five percent (5%) annually, or the annual adjustment in the Consumer Price Index ("CPI") as published by the US Department of Commerce, whichever is higher. The Consultant's Base Fee shall be reviewed annually by the CEO and the Board of Directors and may be increased (but not decreased) during the Term at the sole discretion of the CEO. The Base Fee shall be paid in equal installments (but not less frequently than bi-monthly). In the event the Corporation will be unable to generate the funds necessary to satisfy the cash compensation described in this Section 6 (a), Consultant shall receive the Corporation's 50.0001 par value Common Stock ("Shares") as payment for the services rendered from time to time as directed by Consultant until such time as the amount stated herein is paid in full. All Shares issued in accordance with this Section 6 (a) shall be issued in accordance with the terms and conditions of the Corporation's 2009 Common Stock Option/Issuance Plan ("Plan"), which was registered under the Securities Act with the SEC on a Form S-8 registration statement filed November 5, 2009 and any amendments and/or subsequent Form S-8 registration filings thereto. The price per Share shall be calculated upon the average closing bid price of the Shares for the 30 day period immediately preceding the issuance of the Shares or in accordance with the terms and conditions of the Plan, whichever is greater. Consultant acknowledges and confirms that none of the services provided in connection with the registered Shares as identified in this Section 6 are for promotion and/or for financing. In the event this Agreement is terminated due to the expiration of the Term or for any other reason other than those contained in Section 18, the terms and conditions of Section 6 of this Agreement shall remain in full force and effect until such time as Consultant has been paid in accordance herewith unless Consultant causes a Default as described Section 18 hereunder resulting in the voiding of this Agreement.

b.          Consultant shall be entitled to receive $20,000 in cash as payment in full for all of its outstanding cash and stock invoices with the Corporation as of April 30, 2010. In the event the Corporation will be unable to generate the funds necessary to satisfy the cash compensation described in this Section 6 (b), Consultant shall receive the Corporation's $0.0001 par value Common Stock ("Shares") as payment for the services rendered from time to time as directed by Consultant until such time as the amount stated herein is paid in full. All Shares issued in accordance with this Section 6 (a) shall be issued in accordance with the terms and conditions of the Corporation's 2009 Common Stock Option/Issuance Plan ("Plan"), which was registered under the Securities Act with the SEC on a Form S-8 registration statement filed November 5, 2009 and any amendments and/or subsequent Form S-8 registration filings thereto. The price per Share shall be calculated upon the average closing bid price of the Shares for the 30 day period immediately preceding the issuance of the Shares or in accordance with the terms and conditions of the Plan, whichever is greater. Consultant acknowledges and confirms that none of the services provided in connection with the registered Shares as identified in this Section 6 are for promotion and/or for financing. In the event this Agreement is terminated due to the expiration of the Term or for any other reason other than those contained in Section 18, the terms and conditions of Section 6 of this Agreement shall remain in full force and effect until such time as Consultant has been paid in accordance herewith unless Consultant causes a Default as described Section 18 hereunder resulting in the voiding of this Agreement.

9.          Options.

 

 

10.         Expenses,.

 

a.           During the Term, the Corporation shall reimburse the Consultant for all reasonable costs incurred by the Consultant relating to the leasing, maintenance, repair, insurance, operation, and use of an automobile by the Consultant, provided that the Consultant submits to the Corporation expense reports and substantiation of the expenses with respect to the use of such automobile. The monthly cost of a lease or loan payment to the Corporation, if applicable, shall not exceed five hundred dollars ($500), and will be paid in either cash or Shares.

 

b.           During the Term, the Corporation authorizes the Consultant to incur reasonable and necessary out-of-pocket business expenses, including without limitation, temporary housing, business related travel and administrative expenses, in the course of performing its duties and rendering services hereunder in accordance with the Corporation's policies with respect thereto, and the Corporation shall reimburse the Consultant for all such expenses, provided (i) such expenses and the purpose for which they were incurred are in accordance with the Corporation's policies, (ii) the Consultant submits to the Corporation expense reports and substantiation of the expenses in acco rdance with the Corporation's policies, and (iii) the Corporation approves estimated expenses in advance.

 

11.        Service/Effort During the Term the Consultant, shall devote as much time as necessary to the affairs of the Corporation as the Consultant and the Corporation mutually determine to be necessary or appropriate; and the Consultant may represent, perform services for, and be employed by, any additional persons as the Consultant, in the Consultant's sole discretion, determines to be necessary or appropriate. Notwithstanding the foregoing, Consultant hereby agrees to utilize its best efforts in performing the Services.

 

12.       Change of Control. In the event the Corporation experiences a "change in control" transaction, including, but not limited to, a merger, acquisition or sale of a controlling interest in the Corporation, the terms and conditions of this Agreement shall remain in effect and in full force, and such action by the Corporation shall not in any way diminish, affect or compromise the Consultant's rights, including but not limited to, all compensation as described in this Agreement.

13.          Hold Harmless. The Corporation agrees to indemnify and hold harmless Consultant, its affiliates, agents, attorneys, stockholders, directors, officers, employees and controlling persons, within the meaning of Section 15 of the Securities Act, or Section 20 of the Exchange Act, for any violations of state or federal securities laws by the Corporation or any of its officers, other employees, agents, affiliates, counsel, stockholders, directors, and controlling persons in connection with the terms and conditions of this Agreement and all acts by the Corporation as a result thereof. Likewise, the Consultant agrees to ind emnify and hold harmless the Corporation and its affiliates, agents, attorneys, stockholders, directors, officers, employees and controlling persons, within the meaning of Section 15 of the Securities Act, or Section 20 of the Exchange Act, for any violations of state or federal securities laws by the Consultant or any of its officers, other employees, agents, affiliates, attorney, stockholders, directors, and controlling persons in connection with the terms and conditions of this Agreement and all acts by the Consultant as a result thereof.

 

14.          Corporate Documents. The Corporation will provide and deliver to Consultant, at the Corporation's expense, all documents, appraisals, projections, financial data, and other information (collectively referred to herein as the "Information"), requested by Consultant for the purpose of rendering the Services under this Agreement. All Information shall be accurate and complete, in all material respects, and the Corporation recognizes and confirms that (a) Consultant will use and rely on the Information without having independently verified the same, and (b) Consultant does not assume responsibility for the accuracy or c ompleteness of the Information.

 

15.          Corporate Disclosure. The Corporation shall use its best efforts to disclose to Consultant all material events and developments that have occurred prior to the date of this Agreement relating to the Corporation's financial condition, operations or prospects. During the Term, the Corporation will promptly notify Consultant of any material event or development relating to the financial condition, business operations or business prospects of the Corporation and promptly deliver to Consultant copies of all material filings made by the Corporation with any regulatory agency and copies of all press releases issued by the Corporation and make available same for inspection by Consultant, during regular business hours and upon 24 hours notice by Consultant.

 

16.          Confidentiality. The Consultant has and will have access to and participate in the development of or be acquainted with confidential or proprietary information and trade secrets related to the business of the Corporation, its parent, subsidiaries and affiliates (the "Corporations"), including but not limited to (i) business plans, operating plans, marketing plans, bid strategies, bid proposals, financial reports, operating data, budgets, wage and salary rates, pricing strategies and information, terms of agreements with suppliers or customers and others, customer lists, formulae, patents, devices, software programs, reports, correspondence, tapes, discs, tangible property and specifications owned by or used in the Corporation' businesses, operating strengths and weaknesses of the Corporation' officers, directors, employees, agents, suppliers and customers, and/or (ii) information pertaining to future developments such as, but not limited to, research and development, future marketing, distribution, delivery or merchandising plans or ideas, and potential new distribution or business locations, and (iii) other tangible and intangible property, which is used in the business and operations of the Corporation, but not made publicly available (the "Confidential Information").Consultant agrees to keep confidential all Confidential Information, including, but not limited to, all material, non-public Confidential Information provided to it by the Corporation, except as required by law or as contemplated by the terms of this Agreement. It is further agreed that from time to time that the Corporation may designate certain disclos ed information as confidential for purposes of this Agreement. Notwithstanding anything to the contrary herein, Consultant may disclose non-public Information to its agents and advisors whenever Consultant determines that such disclosure is necessary or advisable to provide the Services. The Consultant hereby acknowledges and affirms that it has been notified by the Corporation that this Agreement and all other agreements between the parties may be included in various filings that the Corporation is required make, or elects to make, with the SEC and various state agencies. The Consultant shall not, directly or indirectly, disclose, use or make known for its or another's benefit any Confidential Information of the Corporation or use such Confidential Information in any way except in the best interests of the Corporation in the performance of the Law Corporation's duties under this Agreement. The obligations of the Consultant under this Section 16 shall survive the termination of the Consultant's engagement and the expiration or termination of this Agreement.

17.          Work Product. The Consultant hereby irrevocably assigns to Corporation, and Corporation shall have, exclusive ownership rights, including, without limitation, all patent, copyright, trademark and trade secret rights, with respect to any work produced by Consultant in the course of rendering Services to Corporation including, but not limited to, the development, modification or enhancement of systems, programs, instructions, concepts and documentation developed for or relating to Corporation and all documents, data and other information of any kind including information incorporating, based upon or derived from the foregoing, including reports and no tes prepared by the Consultant. Such work product will be the property of Corporation and may not be used by the Consultant for any other purpose than the benefit of Corporation. Any and all such property and material containing such property shall be delivered promptly to Corporation on request of the Corporation and in any event at the termination of the Consultant's work for Corporation and no copies thereof shall be retained by the Consultant unless the prior written consent of the Corporation. To that extent, immediately upon termination of the Consultant's engagement with the Corporation, the Consultant shall deliver to the Company all copies of data, information and knowledge of Corporation, including, without limitation, all Confidential Information, documents, correspondence, notebooks, reports, computer programs, names of full-time and part-time employees and consultants, and all other materials and copies thereof (including computer discs and other electronic media) relating in any way to the busi ness of the Company in any way obtained by the Consultant during the period of its engagement with the Corporation. Notwithstanding the provisions of this Section, any agreements with respect to which the Consultant is a party (including without limitation this Agreement) and any documents the Consultant is required to retain in accordance with applicable law may be retained by the Consultant, provided, however, that the Consultant shall provide the Corporation with copies of any documents the Consultant is required to retain in accordance with applicable law. Immediately upon termination of the Consultant's engagement with the Corporation, the Consultant shall deliver to the Corporation all tangible property belonging, leased or licensed to Corporation in the possession of the Consultant including, without limitation, telephones, facsimile machines, computers, leased automobiles and credit cards. A certificate evidencing compliance with this provision shall, if requested by Corporation, accompany such mater ials. Further, the Consultant will execute and deliver all documents required by Corporation to document or perfect Corporation's proprietary rights in said work. Such work shall be a work made for hire and the Consultant shall have no proprietary interest herein. All deliverables shall bear Corporation's copyright and trade secret notices. The obligations of the Consultant under this Section 6 shall survive the termination of the Consultant's engagement and the expiration or termination of this Agreement.

 

18.          Advertisements; No Faxes: No email& In the event that the Consultant finds itself in a position to make a newsworthy announcement, including, but not limited to, a new product, sales results, existing product information or expansion, Consultant will have the right to place advertisements in various media outlets, including, but not limited to, print publications, the internet, direct mail, radio, television, satellite, or cable, describing its Services to the Corporation hereunder; provided, however, that Consultant will submit copies of such advertisements to the Corporation so that the Corporation may consent to the form and content of such advertisements, approval of which shall not reasonably be withheld. Notwithstanding the foregoing, Consultant shall not either directly or indirectly authorize, direct, place or allow any announcements or other material of any type whatsoever to be faxed and or emailed, including, but not limited to, promotional material of any nature, type or form, relating to the Corporation, nor shall the Consultant contract with any third party which as a result of said contract would result in some type of fax or email program being contemplated or implemented, without the expressed written consent of the Corporation. In the event Consultant fails to honor, and is therefore in default of this Section 18 ("Default"), this Agreement shall be deemed void, and all Shares shall be immediately cancelled by the Corporation and the Consultant shall physically return all c ertificates representing Shares to the Corporation within three business days of the Consultant being notified of the Default by the Corporation. The Default, should it occur, would be by definition "gross negligence and willful misconduct" by the Consultant. In the event the Consultant has transferred or disposed of the Shares or a portion thereof prior to a Default occurring, Consultant shall be solely responsible for replacing the Shares in order to comply with this Section 18.

19.         Consultant Representation. Consultant represents and warrants to Corporation that: (a) Consultant is not a broker dealer, (b) Consultant and its principals, employees, advisors and/or consultants are not and will not violate any federal and/or state securities laws and/or regulations in performing the Services contemplated by this Agreement; (c) Consultant and its principals, employees, advisors and/or consultants are not receiving compensation based upon the performance, including, but not limited to, price and volume, of any security connected with this Agreement, including, but not limited to, the Shares; (d) In addition to cash payments, Consultant is receiving as consideration hereunder a specific number of Shares for the Services performed; and (e) Consultant agrees to indemnify and hold harmless Corporation from any claim brought against Corporation as a result of the Services to be performed, including, but not limited to, any claims and/or actions resulting from a breach by Consultant and his principals, employees, advisors and/or consultants of the representations made hereunder.

 

20.         Failure to act by One Person. Any direction, consultation given, or service performed by any persons acting on behalf of the Consultant pursuant to the provisions of this Agreement shall constitute the performance of the Service by the Consultant.

 

21.         Indemnification. In addition to the limitation of liability found in Sections 5 and 13, respectively, each party (the "Indemnifying Party") agrees to indemnify, defend, and hold harmless the other party (the "Indemnified Patty") from and against any and all claims, damages, and liabilities, including any and all expense and costs, legal or otherwise, caused by the negligent act or omission of the Indemnifying Party, its subcontractors, agents, or employees, incurred by the Indemnified Party in the investigation and defense of any claim, demand, or action arising out of the work performed under this Agreement; including breach of the Indemnifying Party of this Agreement. The Indemnifying Party shall not be liable for any claims, damages, or liabilities caused by the sole negligence of the Indemnified Party, its subcontractors, agents, or employees.

 

 

 

22.         Remedies. As a result of the uniqueness of the Services to be performed by the Consultant for the Corporation, and because the Consultant's reputation in the community may be affected by the financial success or failure of the Corporation, in addition to the other rights and remedies that the Consultant may have for a breach of this Agreement, the Consultant shall have the right to enforce this Agreement, in all of its provisions, by specific performance or other relief in a court or equity. Notwithstanding the foregoing, if the Consultant commits a breach, or threatens to commit a breach, of any of the provisions of Section 16, 17 or 22 of this Agreement (subject to the provisions of Section 7.4 hereof), th e Corporation shall have the following rights and remedies:

 

 

 

23.           Consultant's Representatives. In its performance of the Services, the Consultant shall have the right to appoint or otherwise designate suitable and desirable employees, agents and representatives (the "Consultant's Representatives"). The Consultant shall be solely responsible for the Consultant's Representatives, including but not limited to, their acts, omissions, and liabilities. Consultant agrees that the Consultant's Representatives shall not have any claim against the Corporation for salaries, commissions, items of cost, or other form of compensation or reimbursement. The Consultant represents, warran ts, and covenants that the Consultant's Representatives shall be subordinate to the Consultant and subject to each and all of the terms, provisions and conditions applying to the Consultant specified in this Agreement.

 

24.           Attorneys' Fees. In the event any party to this Agreement shall commence legal proceedings against another party to enforce the terms hereof, or to declare rights hereunder, as the result oaf breach of any covenant or condition of this Agreement, the prevailing party in any such proceeding shall be entitled to recover from the losing party its costs of suit, including reasonable attorneys' fees, as may be fixed by the court.

 

25.           Governmental Rules and Regulations. The provisions of this Agreement are subject to any and all present and future orders, rules and regulations of any duly constituted authority having jurisdiction of the relationship contemplated by the provisions of this Agreement.

 

26.           Notices. Any notice, request, instruction, or other document required by the terms of this Agreement, or deemed by any of the parties hereto to be desirable, to be given to any other party hereto shall be in writing and shall be given by personal delivery, overnight delivery, mailed by registered or certified mail, postage prepaid, with return receipt requested, or sent by facsimile transmission to the addresses of the Parties as follows:

a.         Termination Events. The Consultant's engagement by the Corporation pursuant to this Agreement shall terminate on the earliest of any of the following (each, a "Termination Event"):