Consulting Agreement - SunnComm Inc. and Kenneth W. Fagan
CONSULTING AGREEMENT THIS AGREEMENT, made this 18TH day of August, 2000 by and between: SunnComm Inc., 668 North 44th Street Suite 220 Phoenix, AZ 85008 (hereinafter referred to as the "Client") and Kenneth W. Fagan, 408 West Galer Street, Seattle, WA 98119 (herein after referred to as "Consultant") WITNESSETH THAT: WHEREAS, CLIENT requires broad corporate consulting services and desires to engage CONSULTANT to provide such services, as an independent contractor, and CONSULTANT is agreeable to contract to provide such services and the parties hereto desire a written document formalizing and defining their relationship and evidencing the terms and conditions of their agreement, NOW THEREFORE, intending to be legally bound under the laws of the State of Arizona, and in consideration of the mutual promises and covenants contained herein after, the parties have agreed as follows: 1.0 APPOINTMENT CLIENT hereby appoints CONSULTANT as a business corporate consultant and hereby retains CONSULTANT, on the terms and conditions of this Agreement. CONSULTANT accepts such appointment and agrees to render said services upon the terms and conditions as set forth herein. CLIENT further appoints CONSULTANT as a Special Advisor to the Board Of Directors (SAB) for the express purpose of review and advice of technical matters pursuant to CLIENT requirements, and understands the Board may, at its discretion, invite him to be added as a member of the Board. 2.0 TERM The term of this Agreement shall be for One (1) year beginning upon the date first written herein above and ending twelve (12) months thereafter. 3.0 SERVICES Consultant agrees with Client that there are two major initiatives to be achieved if the proposed Company efforts are to succeed: (a) Consultant will provide direct assistance in strategy development and partner negotiations to bring the SunX products to market in the audio, video, publishing, and most significantly, the software industry. (b) Sign and assist in implementing the roll-out of at least three (3) major software vendors to a licensing deal. A "major" software vendor shall be classified as having revenues in excess of $25 million per year. 3.1 CONSULTANT shall act as advisor to Client to provide the following: (a) Advise management on product development strategies, business relationships and hiring practices in order to get a product to market quickly with as much quality and marketability as possible. (b) Meet with prospective partners and customers to represent the company as a senior advisor to management. (c) Advise management and staff on staffing issues related to technology and marketing positions. (d) Regular conference calls (suggesting a minimum of a weekly one hour conference call) to discuss the above matters with the appropriate Client staff and management. (e) Attend quarterly board meetings as special advisor to the board (SAB). 3.2 CONSULTANT, in providing the foregoing services shall be responsible for all cost of providing said services with the exception of; a) out of pocket expenses as approved in advance by client; and b) travel between CONSULTANTS office and CLIENTS office and any travel costs for business requested by Client are the responsibility of the CLIENT. CONSULTANTS compensation set forth under paragraph 7.0 of this Agreement shall be deemed to include all other cost. 4.0 LIMITATIONS OF SERVICES The parties hereto recognize that certain responsibilities and obligations are imposed by governing bodies or jurisdictions in which securities may be traded, and by the rules of the stock exchanges(s) governing the sale of CLIENTS securities, CLIENTS in-house "due diligence" or "compliance" procedures and by the "due diligence" or "compliance" departments of financial institutions which may deal in CLIENTS securities, accordingly CONSULTANT agrees: 4.1 CONSULTANT will NOT release any financial or other information about the CLIENT in advance of a proposed meeting or the format or agenda of such a meeting without CLIENT approval and CLIENT may elect to have a representative of CLIENT attend such Meeting(s). 4.2 CONSULTANT will NOT conduct any meeting without informing CLIENT in advance of any such proposed meeting or the format or agenda of such a meeting and CLIENT may elect to have a representative of CLIENT attend such Meeting(s). 4.3 CONSULTANT will NOT release any information about CLIENT to any selected or limited person(s), entity, or group if CONSULTANT is aware that such information has not been generally released or promulgated. 5.0 DUTIES OF CLIENT 5.1 CLIENT shall supply CONSULTANT, on a regular and timely basis, with all information approved by the CLIENT, for release to the public, about CLIENTS, management, its products, its operations and its financial reports or development status of any product. CLIENT shall also be responsible for alerting CONSULTANT of any facts which would materially affect the accuracy of information previously provided to CONSULTANT so that CONSULTANT may take immediate corrective action. 5.2 CLIENT shall contemporaneously notify CONSULTANT if any information being supplied to CONSULTANT has not be generally released or promulgated. 6.0 REPRESENTATION AND INDEMNIFICATION 6.1 CLIENT shall deemed to make a continuing representation of the accuracy of any and all material facts, information and data which it supplies to CONSULTANT and CLIENT acknowledges its awareness that CONSULTANT will rely upon such continuing representation in disseminating such information. 6.2 CONSULTANT, in the absence of notice in writing from CLIENT, will rely on the on the continuing accuracy of material, information supplied by CLIENT. 6.3 CLIENT hereby agrees to indemnify CONSULTANT against, and to hold CONSULTANT harmless from any claims, demands, suits, loss, damages, etc arising out of CONSULTANT'S reliance upon the accuracy and continuing accuracy of such facts, material, information unless CONSULTANT has been negligent in fulfilling the duties and obligations hereunder. 6.4 CONSULTANT agrees to indemnify and hold CLIENT and its director, officers and employees harmless from any legal action, claims, or investigations arising out of the conduct of CONSULTANT in performing its services hereunder unless such activity or activities are required by or done at the request of CLIENT. 7.0 COMPENSATION 7.1 For acting as a special advisor to the Board, CLIENT shall pay CONSULTANT on the first of each calendar month, beginning September 1, 2000, the sum of two thousand dollars ($2,000 USD) during the term of this agreement of any extension thereof. 7.2 For all special services not within the scope of this Agreement, CLIENT shall pay CONSULTANT such fee as, and when, the parties shall determine in advance of the performance of said special services to be provided to CLIENT, that such services are approved by CLIENT. 7.3 An initial payment of $2,500 was paid upon execution of a Memorandum of Understanding dated 8/18/00 between the parties of this agreement. 7.4 250,000 shares of common stock shall be made available to CONSULTANT upon terms and conditions of delivery mutually acceptable to both parties after CONSULTANT shall seek advice and direction from his Accountant and/or Attorney. The shares shall be delivered immediately upon formalizing this Agreement 7.5 750,000 options at a strike price equal to the share close price on August 21, 2000 (.22) common stock shall be made available to CONSULTANT upon terms and conditions of delivery mutually acceptable to both parties after CONSULTANT shall seek advice and direction from his Accountant and/or Attorney. The shares shall be delivered in the form decided upon by the parties as follows: a) 34% to be issued upon the signing of the third (3rd) company licensing relationship pursuant to paragraph 3.0(b) above; b) 66% to be issued upon the signing of the Company's first major licensing agreement with a large Independent Software Vendor (ISV) (such as Oracle, Microsoft, etc.). 8.0 BILLING AND PAYMENT The monthly basic fee provided for in Paragraph 7.1 shall be due and payable on the first (1st) day of each contract month. Payment for out-of-pocket expenses (Paragraph 7) shall be due and payable upon submission of invoice to CLIENT by CONSULTANT. 9.0 RELATIONSHIP OF PARTIES CONSULTANT is an independent contractor, responsible for compensation of its employees, agent and representatives, as well as all applicable withholding therefrom and taxes thereon (including unemployment compensation) and all workmens compensation insurance. This Agreement does not establish any partnership, joint venture, or other business entity or association between the parties and neither party is intended to have any interest in the business or the property of the other. 10.0 TERMINATION This Agreement may be terminated by either party after twelve (12) months have lapsed, only in writing at least fifteen (15) business days prior to the expiration of current contract term. In the absence of notice this Agreement shall continue month to month until canceled by either party giving the other thirty (30) days written notice of cancellation. 11.0 ATTORNEY FEES Should either party default in the terms or conditions of this Agreement and suit be filed for such default, the prevailing party shall be entitled to recover all cost incurred as a result of such default including all cost and reasonable attorney fees, expenses and court cost through trial and appeal. 12.0 WAIVER OF BREACH The waiver by either party hereto of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach by the other party. 13.0 ASSIGNMENT This Agreement is NOT assignable by Consultant. It shall not be assigned and if assigned will not inure to the benefit of such successors or assignee's. This agreement shall be binding upon CLIENT and any successors or assignee's. 14.0 NOTICES Any notice required or permitted to be given under this Agreement shall be sufficient if in writing, and is sent by certified mail receipt requested, to the principal office of the party being notified. 15.0 ENTIRE AGREEMENT This instrument contains the entire agreement of the parties and may be modified only by agreement in writing, signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. This Agreement shall be governed for all purposes by the laws of the State of Arizona, United States of America. If any provision of this Agreement is declared void, such provision shall be deemed severed from this Agreement, which shall otherwise remain in full force and effect. IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have executed this Agreement. FOR SUNNCOMM, INC. FOR: KENNETH W. FAGAN By: /s/ Peter H. Jacobs By: /s/ Kenneth W. Fagan -------------------------- ------------------------------ Peter H. Jacobs, President Kenneth W. Fagan, Individually