Exhibit 10.4
CONSULTING AGREEMENT
This Agreement is effective as of the 15th day of February, 1996, by and
between Advanced Financial, Inc., a Delaware corporation (the "Company"), and
Ocean Marketing Corporation, a Colorado corporation, or its assignees, (the
"Consultant").
WHEREAS, the Company is a publicly held company; and
WHEREAS, Consultant is in the business of assisting public companies in
financial relations; and
WHEREAS, the Company desires to retain Consultant to provide certified
specified services for the Company.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the receipt and sufficiency of which is hereby acknowledged,
the parties hereby agree as follows:
1. Duties and Involvement
a. The Company hereby engages Consultant to provide financial and
public relations service. Such services will generally include
advice to and consulting with the Company's management concerning
marketing surveys, investor profile information, methods of
expanding investor support and increasing investor awareness of the
Company and its products and/or services. Consultant will also
provide additional services to the Company, including broker
relations, assisting in the preparation and format of due diligence
meetings, and attendance at conventions and trade shows.
b. Consultant acknowledges that neither it not any of its employees or
affiliates is an officer, director, or agent of the Company, that in
rendering advice or recommendations to the Company it is not and
will not be responsible for any management decisions on behalf of
the Company and that it is not authorized or empowered to commit the
Company to any recommendation or course of action. The Company
represents that Consultant does not have, through stock ownership or
otherwise, the power to control the Company nor to exercise any
dominating influence over its management.
2. Terms
This agreement shall continue until six (6) months from date of execution
(see 20 b)
3. Compensation
As total and complete consideration for the services to be provided by
Consultant to the Company, the Company hereby grants to Consultant the
following:
Consultant or its designee shall receive an option to purchase two
hundred fifty thousand (250,000) shares of the Company's 144 common
stock at fifty cents (0.$50) per share. The options shall be
exercised, if at all, within ten (10) days following the filing of
the registration statement covering the common shares underlying
this option with the Securities Exchange Commission. Company shall
deliver to Consultant stock certificates representing the number of
shares exercised under this option within 30 days after exercised by
consultant. Such certificates shall contain the normal 144
restrictive legend.
In the event this agreement is terminated for any reason whatsoever,
the shares referred to herein shall remain in full force and effect
and with respect to any shares which is issued or are issuable
thereunder. Consultant shall have the right of retention of said
shares of common stock in consideration for services performed.
4. Services not Exclusive
Consultant shall devote such of its time and effort necessary to the
discharge of its duties hereunder. The Company acknowledges that
Consultant is engaged in other business activities and that it will
continue such activities during the term of this Agreement. Consultant
shall not be restricted from engaging in other business activities
during the term of this Agreement.
5. Confidentiality
Consultant acknowledges that it will have access to confidential
information regarding the Company and its business. Consultant agrees
that it will not, during or subsequent to the term of this Agreement,
divulge, furnish, or make accessible to any person (other than with the
written permission of the Company) any knowledge or information or plans
of the Company with respect to the Company or its business, including,
but not limited to, the products of the Company, whether in the concept
or development stage or being marketed by the company onthe effective
date of this Agreement or during the term hereof.
2
6. Covenant not to Compete
During the term of this Agreement, Consultant warrants, represents, and
agrees that it will not directly participate in the information
developed for and by the Company and will not compete directly with the
Company in the Company's primary industry or related fields.
7. Investment Representation
a. Access to Information
The Company represents and warrants that it has provided Consultant
access to all information available to the Company concerning its
condition, financial and otherwise, its management, its business and
its prospects. The Company represents that it has provided
Consultant with a copy of the Company's most recent Form 10-K and
any subsequent filing required or filed under the rules and
regulations promulgated under the Securities Act of 1933 as amended
(the "Act") or the Securities Exchange Act of 1934 as amended (the
"Exchange Act"), if any, (the "Disclosure Documents"). Consultant
acknowledges that it is aware that because of the Company's
financial position and other factors, the acquisition of the shares
to be paid to Consultant as compensation hereunder involves a high
degree of risk, including the risk that Consultant may lose its
entire investment in the shares of Common Stock. Consultant further
represents that it and its advisors have been afforded the
opportunity to discuss the Company with its management. The Company
represents that it has and will continue to provide Consultant with
any information or documentation necessary to verify the accuracy of
the information contained in the Disclosure Documents and will
promptly notify Consultant upon the filing of any registration
statement or other periodic reporting documents filed pursuant to
the rules and regulations of the Act or the Exchange Act. Any
additional sale or registration and filings with the NASD and SEC
will be made available to consultant at such time by notifying in
writing at least 30 days prior to any registration or sale.
3
b. Registration of Securities
Consultant understands and acknowledges that the shares of common
stock are being acquired by Consultant for its own account and not
on behalf of any other person and is being acquired for investment
purposes and not for distribution. Consultant represents that an
investment in the common stock is a suitable investment for
Consultant, taking into a consideration the restrictions on
transferability affecting the common stock.
The Company agrees to file a Registration Statement on an
appropriate form with piggyback rights to register these shares upon
the earlier of ninety (90) days from the date hereof or a soon as
practicable after the date of the mutual execution of the Agreement.
The Company will undertake to comply with the various states
securities laws with respect to the registration of the Shares
referred to herein. The Company undertakes to make available for
review and comment, on a timely basis and prior to submission with
any regulatory agency, copies of the Registration Statement.
The Company hereby acknowledges that time is of the essence in
respect to the registration of the Shares and agrees that in the
event the Shares are not registered and qualified for public sale
pursuant to an effective registration statement within one hundred
fifty (150) days from the date of this Agreement ("Penalty Date"),
the Company shall agree to issue an additional number of Shares
equal to 10% of the total number to the Consultant pursuant to the
terms of paragraph 3(a) herein for each additional thirty (30) day
delay in providing an effective registration statement pursuant to
which the Shares may be sold, provided however that the penalty
described herein shall not take effect if the Company has filed a
registration statement covering the shares with the Securities and
Exchange Commission, and said Registration Statement has not been
declared effective for reasons beyond the control of the Company. So
long as the Company has made a good faith and reasonable attempt to
have such registration statement declared effective. In the event of
a delay less than a full thirty (30) day period, the Consultant
shall be entitled to a pro rata allocation of additional Shares.
Penalty shares if not registered upon delivery would come with
demand registration and piggyback registration rights.
4
8. Assignment
This Agreement may not be assigned by either party hereto without the
written consent of the other but shall be binding upon the successors of
the parties.
9. Arbitration
Any dispute arising between the Company and the Consultant arising out
of or related to this Agreement or breach thereof, shall be settled by
arbitration, which shall be conducted in the State of Florida. Any award
made by such arbitrators shall be binding and conclusive for all purpose
thereof, may include injunctive relief, as well as orders for specific
performance and may be entered as a final judgment in any court of
competent jurisdiction. No arbitration arising out of or relating to
this Agreement shall include, by consolidation or joinder or in any
other manner, parties other than the Company or Consultant and other
persons substantially involved in common question of fact or law whose
presence is required if complete relief is to be afforded in
arbitration. The cost and expense of such arbitration shall be borne in
accordance with the determination of the arbitrators and may include
reasonable attorney's fees. Each party hereby further agrees that
service of process may be made upon it by registered or certified mail
or personal service at the address provided for herein.
10. Indemnification
a. The Company agrees to indemnify and hold harmless Consultant and its
agents and employees against any losses, claims, damages or
liabilities, joint or several, to which Consultant or any such other
person may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions, suits or
proceedings in respect thereof) arise out of or are based upon any
untrue statement of any material fact contained in the Registration
Statement, any preliminary prospectus, the prospectus, or any
amendment or supplement thereto, or arise out of or are based upon
the omission to state therein a material fact require the Consultant
or any such other person for any legal or other expenses reasonably
incurred by Consultant or any such other person in connection with
investigating or defending any such loss, claim, damage, liability,
or action, suit or proceeding; provided, however, that the Company
will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an
untrue statement, or omission or alleged omission from the
Registration Statement, any preliminary prospectus, the prospectus,
or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by the
Consultant specifically for use in the preparation thereof. This
indemnity agreement will be in addition to any liability which the
Company may otherwise have.
5
b. Consultant will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the Registration
Statement and each person, if any, who controls the Company within
the meaning of the Act against any losses, claim, damages or
liabilities to which the Company or any such other person may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions, suite, or proceedings in
respect thereof) arise out of or are based upon any untrue
statement, of any material fact, contained in the Registration
Statement, any preliminary prospectus, the prospectus, or any
amendment or supplement thereto, or arise out of or are based on the
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading
in each case to the extent, but only to the extent, that such untrue
statement, in reliance upon and in conformity with written
information furnished to the Company by Consultant specifically for
use in the preparation thereof, and will reimburse any legal or
other expenses reasonably incurred by the Company or any such other
person in connection with investigating or defending any such loss,
claim, damage, liability or action, suit or proceeding. This
indemnity agreement will be in addition to any liability which the
Consultant may have.
c. Promptly after receipt by an indemnified party under this Section or
notice of the commencement of any action, suit or proceeding, such
indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party under the Section, notify the
indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than
under this Section. In case any such action, suit or proceeding is
brought against any indemnified party, and it notified an
indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein, and, to the extent it
may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory
to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with
the defense thereof other than reasonable costs of investigation.
6
11. Notices
All notices required or permitted to be given under with Agreement shall
be in writing and shall be deemed to have been duly given (i) two (2)
hours after delivered personally to the party to be notified; or (ii)
six (6) business days after deposited in the U.S. mail, postage paid via
registered or certified mail, return receipt requested. Notices to the
Company shall be addressed to its president at its principal executive
office and to the Consultant at the address set forth beneath the
signature line, or to such other addresses as either party may designate
upon at least ten days' notice to the other party.
12. Governing Law
This Agreement shall be constructed by and enforced in accordance with
the laws of the State of Florida.
13. Representations
Consultant and it employees represent that they are not acting as either
a broker or brokerage firm nor are they affiliated or registered with
any securities agency and are acting merely as a consultant or investor.
a. Company states and represents there are and will be no S-8 or
registrations without prior approval from Consultant during the term
of agreement. Such approval shall not be unreasonably withheld.
7
b. Company states and represents they will not do any reg-S placement
without prior written approval from consultant during the term of
agreement. Such approval shall not be unreasonably withheld.
c. Company states and agrees that there will be no additional issuance
of securities, options or warrants of any kind without prior written
approval. Such approval shall not be unreasonably withheld.
Any violation of the above representations of 13a, 13b, 13c, a penalty
of 10% of the total amount of shares owed in this agreement shall be
paid in additional shares to Consultant per month until the expiration
of agreement. Shares would be issued with piggyback registration rights.
14. Entire Agreement
This Agreement contains the entire understanding and agreement between
the parties. There are no other agreements, conditions or
representations, or written, express or implied, with regard thereto.
This Agreement may be amended only in writing signed by both parties.
15. Non-waiver
A delay or failure by either party to exercise a right under this
Agreement, or a partial or single exercise of that right, shall not
constitute a waiver of that or any other right.
16. Headings
Headings in this Agreement are for convenience only and shall not be
used to interpret or construe its provisions.
17. Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which together shall constitute one and
the same agreement.
18. Binding Effect
The provisions of the Agreement shall be binding upon the parties, their
successors and assigns.
8
19. Severability
If any provisions of this Agreement, except paragraph 1 and 3, or
application thereof to any person or circumstance shall be deemed or
held to be invalid, illegal, or unenforceable to any extent, the
remainder of this Agreement shall not be affected and the application of
such affected provision shall be enforced to the greatest extent
possible under law.
20. Restrictions
a. Company will complete a Pooling Agreement with
management/directors/officers. Such pooling agreements will require
management/directors/ officers to notify consultant in writing prior
to any sale of the Company's securities held by them.
b. At the option of the Company, the Company can extend agreement for
an additional six (6) months, in which case Consultant will provide
the same type, quantity, and quality of service as provided during
the first six (6) months. These services will be provided under the
same terms as otherwise contained in this agreement. Company agrees
to compensate Consultant with two hundred fifty thousand dollars
($250,000) in restricted stock with piggyback registration rights at
fifty percent (50%) of the average of the bid for the last five (5)
trading days of the agreement at the end of the first six (6)
months.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement to be effective as of the day and year first above written.
ADVANCED FINANCIAL, INC. OCEAN MARKETING CORPORATION
By: /s/ Norman L. Peterson By: /s/ Richard J. Fixaris
--------------------------- ---------------------------
Norman Peterson, President Richard J. Fixaris, President
5425 Martindale 2901 Hill Street
Shawnee, KS 66218 New Smyrna Beach, FL 32169
9