CONSULTING AGREEMENT
This Agreement is made and entered into this 28th day of September,
1999, between PalmWorks, Inc. (Nevada) (the "Company") and Northwest Capital
Partners, L.L,C. (the "Consultant"), and sets forth the terms and conditions
upon which the Consultant will act as financial advisor to the Company in
connection with the completion of the financing described m Exhibit "A" attached
hereto (the "Financing").
In consideration for the mutual promises and covenants contained
herein, and for other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. PURPOSE. The Company hereby engages the Consultant during the term hereof to
arrange financing, as a finder, for the Company upon terms and conditions as set
forth herein and in accordance with the requirements set forth in Exhibit "A"
(the "Financing"). Consultant shall also have a right of first refusal to
consult with the Company regarding appropriate financings subsequent to the
Financings set forth in Exhibit "A" for a period of three years following the
term of this Agreement.
2. TERM. The term of this Agreement shall be for a period of 36 months, provided
that the Interim Financing shall be completed no later than December 31, 1999.
An offering pursuant to Rule 504 or other applicable Rule adopted pursuant to
the Securities Act of 1933, as amended (the "Act"), shall be completed within 30
days of' the Company's approval and, following the quotation of the Company's
common stock on the NASD OTC Bulletin Board.
3. DUTIES OF THE CONSULTANT. During the term hereof, Consultant shall provide
the Company with the benefit of its best judgment and efforts to complete the
Financing on a reasonable business basis in accordance with the requirements set
forth in Exhibit "A." It shall be Consultant's duty to suggest and evaluate from
the standpoint of financial soundness the Company's business plans and programs,
corporate financial structures, and corporate organization, and any other
financial matters involving the Company. In connection with the financing
contemplated by this Agreement, Consultant agrees that it will advise and work
with the Company to complete the Financing successfully in accordance with Rule
504 or other applicable Rule under the Act and the related and applicable Blue
Sky laws of the states in which the financing is completed. Consultant shall
advise the Company of each proposed broker or other financing or referral source
identified by Consultant prior to authorizing any participation in the
Financing. Consultant shall use its best efforts, after receiving information
from Company sufficient to comply with the informational requirements of Rule
15c2-11 under the Securities Exchange Act of 1934 (the "1934 Act"), to arrange
for the shares of common stock of the Company to be quoted on the NASD OTC
Bulletin Board either by direct application and approval through the NASD or by
reverse merger. The Company and the Consultant shall review the filing of a Form
10 (1934 Act form) with the U.S. Securities and Exchange Commission upon the
execution of this agreement. Company agrees that it will accept Financing
amounts at each closing contemplated by Exhibit "A" which are in excess of the
amounts in Exhibit "A" if Consultant is able to raise such additional amounts in
accordance with the appropriate disclosure and the securities registration
exemption provisions of the Act and the relevant Blue Sky laws. Consultant's
duties shall also include, but not be limited to:
3.1 Assist the Company's management in the development and execution of a
strategic short-term, intermediate term and long-term financial plan;
3.2 Assist the Company in the negotiation of the terms of the Financings;
3.3 Assist the management of the Company in connection with inquiries made by or
on behalf of any proposed brokers and investors;
3.4 Assist the management of the Company in the preparation of presentation
materials for the purpose of pursuing the Financing;
3.5 Using its best efforts, on terms acceptable to the Company, to arrange the
Financings as described in Exhibit "A" attached hereto.
3.6 If the Company and the Consultant determine that a direct application to the
NASD is not in the best interest of the Company and determine that the Company
go public by way of a reverse merger with an existing publicly traded company
the Consultant will be responsible for the location and acquisition of such
public company including all costs associated with its acquisition.
4. CONSULTANT'S COMPENSATION.
4.1 The Company shall pay Consultant a fee of $5,000 for each month or partial
month this Agreement has been in effect, providing that such payment shall be
paid, as accrued, at the closing of the Interim Financing and then continuing
through the closing of the Second and Third Stage Financings, as described in
Exhibit "A," by the Consultant. Upon the closing of the Third Stage of
Financing, the fee of $5,000 per month will be extended for an additional 36
months, for duties to be mutually agreed upon by the parties.
4.2 The Company agrees that, at the closing of the first Interim Financing, as
described in Exhibit "A," by the Consultant or at the time the Company goes
public, the Company will issue to the Consultant 1,500,000 shares of common
stock of the Company at value of $0.01 per share. The Consultant's shares shall
be held in escrow by the Company's lawyer pursuant to an escrow agreement that
releases the Consultant's shares to the Consultant based upon the following
terms and conditions:
Upon the completion of the First Interim Financing, as described in
Exhibit "A", the Consultant shall have earned 750,000 shares of the Company and
such shares will be delivered to the Consultant. Upon the completion of the
Second Interim Financing, as described in Exhibit "A", the Consultant shall have
earned an additional 750,000 shares of the Company and such shares will be
delivered to the Consultant. Upon the Company's receipt of the aggregate amount
of $1,000,000 through any combination of the Interim, Second or Third Stage
financings as described in Exhibit "A", the Consultant shall have earned all
1,500,000 shares of the Company and such shares will be delivered to the
Consultant. In the event that the Company terminates this agreement the Company
retains the right to purchase all of the Consultant's shares that remain in
escrow for $0.01 per share.
4.3 The Company agrees to issue the Consultant an option to purchase an
additional 1,000,000 shares at $0.01 per share. This option can be exercised at
any time upon the Company's market capitalization achieving the value of
$100,000,000.00 or more. The shares under this option will be issued by the
company as restricted shares at a value of $0.01 per share and will be granted
"piggy-back" rights so that the shares will be registered upon the Company's
first registration after the share's issuance.
4.4 The Company agrees that it shall reimburse Consultant for reasonable,
out-of-pocket expenses incurred by Consultant in performing the services
provided pursuant to this Agreement, provided that such out-of-pocket expense
reimbursement shall not exceed $3,000 in any calendar month or partial month,
and provided that any expenses in excess of $500 in any calendar month shall
require advance approval by the Company. Such reimbursement shall be paid upon
the within 30 days of the Company's receipt of the Consultant's invoice. Such
reimbursement may be claimed for any month commencing with the signing of this
Agreement and monthly thereafter to the date of each closing, payable within 30
days of receipt.
4.5 If the Consultant is unsuccessful in introducing investors to the Company
(either directly or through a broker) who would be willing to fund the
Financings contemplated in Exhibit "A" within the time periods set forth, this
Agreement may be terminated at the Company's discretion, unless otherwise
extended by mutual consent. Such consent will be implied should the Company be
in or continue negotiation with investors which should reasonably result in
successful Financing or should the Company accept fund from one of the sources
introduced to the Company by the Consultant during this period. Following
termination, however, Consultant will be entitled to the consideration above as
to those stages of the Financing completed and in the event that after
termination a financing of any kind or amount is consummated with any party
introduced to the Company by the Consultant during a period of twelve months
after termination of this Agreement.
5. INDEMNIFICATION.
5.1 The Company agrees to indemnify the Consultant, its agents and employees
against any and all claims, lawsuits, and litigation arising from
representations of the Company made to Consultant or prospective investors
concerning its business plan and financial condition. Such indemnification shall
include reasonable attorney's fees to defend any such actions or claims.
5.2 The Consultant agrees to indemnify the Company, its agents and employees
against any and all claims, lawsuits, and litigation arising from
representations of the Consultant made to prospective investors concerning the
Company except for those representations constituting information provided by
the Company. Such indemnification shall include reasonable attorney's fees to
defend any such actions or claims.
5.3 Promptly after receipt by an indemnified party of notice of any claim or
commencement of any action in respect of which indemnity may be sought, the
indemnified party will notify the indemnifying party in writing of the receipt
or commencement thereof and the indemnifying party shall have the right to
assume the defense of any such claim or action (including the employment of
counsel reasonably satisfactory to the indemnified party and the payment of fees
and expenses of such counsel), after which the indemnifying party shall not be
liable to the indemnified party for any legal fees incurred by the indemnified
party in connection with the defense of such claim or action. Notwithstanding
the prior sentence, the indemnified party shall have the right to control its
defense if, in the opinion of its counsel, the indemnified party's defense is
unique or separate to it, as the case may be, as opposed to a defense pertaining
to the indemnifying party. In such event, the indemnified party shall have the
right to retain counsel reasonably satisfactory to the indemnifying party at the
indemnifying party's expense to represent it in any claim or action in respect
of which indemnity may be sought and agrees to cooperate with the indemnifying
party and the indemnifying party's counsel on the defense of any such claim of
action, it being understood, however, that the indemnifying party shall not, in
connection with any such claim or action or separate but substantially similar
or related claim or action in the same jurisdiction arising out of the same
general circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys, unless the defense of one indemnified party
subject to the same claim or action. No party shall be liable for any settlement
of any claim or action effected without its written consent.
6. REPRESENTATION AND WARRANTIES. Company represents and warrants a follows:
6.1 The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the state of Nevada and is
qualified as a foreign corporation where required.
6.2 The shares of common stock of the Company which will be delivered to the
investors Consultant will be duly authorized and validly issued and fully paid
and nonassessable.
7. CONDITIONS PRECEDENT. Consultant's duties to use its best efforts to complete
the Financings contemplated herein shall be subject to:
7.1 The Company will not change or modify the Company's capital structure
without the prior written consent of Consultant, which consent shall not be
unreasonably withheld.
7.2 The Company will submit quarterly budgets to Consultant during the period of
the Financing and for one year after successful completion of the Financing.
7.3 The Company will provide all pertinent information in connection with the
Company's assets, including, but not limited to, all tangible and intangible
assets, and all copyright and trademark information.
7.4 The Company shall have received executed employment agreements from each of
its officers and Directors and other key individuals in a form reasonably
appropriate in accordance with industry standards.
7.5 The Company will provide Consultant with all information and verifications
thereof which Consultant or its legal counsel may reasonably request from the
Company in a manner and form satisfactory to Consultant and its legal counsel.
7.6 Receipt by Consultant of suitable financial statements of the Company that
are in form and substance satisfactory to Consultant, in its sole discretion.
The Company shall provide financial statements consisting of a balance sheet and
a related statement of income for the period then ended, which fairly present
the financial condition of each as of their respective dates and for the periods
involved, and such statements shall be prepared in accordance with generally
accepted accounting principles consistently applied or upon such other basis as
the parties shall mutually agree and for the periods mutually agreed upon among
the parties.
7.7 All existing shares of the Company have or will be issued in accordance to
Rule 4(2) of the 1933 Act and consequently, such securities will be "Restricted
Securities" as such term is defined in Rule 144 as promulgated under the 1933
Act and thus will be subject to certain resale limitations as contained in Rule
144 and the certificates shall bear the following restrictive legend limiting
their resale under Rule 144 of the Act.
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED PURSUANT TO A TRANSACTION EFFECTED IN RELIANCE UPON
SECTION 4(2) OF THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND HAVE NOT BEEN THE SUBJECT OF A REGISTRATION
STATEMENT UNDER THE ACT OR ANY STATE SECURITIES ACT. THESE
SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR APPLICABLE EXEMPTION THEREFROM
UNDER THE ACT OR ANY APPLICABLE STATE SECURITIES ACT."
8. CONDITIONS AND SUBSEQUENT.
8.1 For a period of three years from the date of closing of a Financing arranged
by Consultant pursuant to this Agreement, the Company will provide Consultant,
at its expense, following a reasonable request by Consultant for the purpose of
reviewing and/or protecting the Company's shareholder's interests, with copies
of stock transfer sheets from the Company's Transfer Agent, as well as weekly
DTC Reports from the Depository Trust Company to the extent such reports can be
made available to a party that is not an affiliate of the Company, and will
provide Consultant with all publicly available financial reports and publicly
available reports of material developments regarding the Company and its
compliance with laws and regulations applicable thereto.
8.2 For a period of three years after the date that the Company's shares of
common stock commence trading on the NASD OTC Bulletin Board, the Company's
executive offices and directors who own at least five percent (5%) of the
Company's common stock ("Principal Stockholders") and the Company shall provide
the Company's officers with the right of first refusal with respect to any
offering (public or private) of the Company's securities by either the Company
or the Principal Stockholders involving more than 1000 shares of stock.
For a period of three years after the date that the Company's shares of
common stock commence trading on the NASD OTC Bulletin Board, the Company's
executive officers and directors who own at least five percent (5%) of the
Company's common stock ("Principal Stockholders") and the Company shall provide
the Company with the second right of first refusal with respect to any offering
(public or private) of the Company's securities by either the Company or the
Principal Stockholders involving more than 1000 shares of stock.
For a period of three years after the date that the Company's shares of
common stock commence trading on the NASD OTC Bulletin Board, the Company's
executive officers and directors who own at least five percent (5%) of the
Company's common stock ("Principal Stockholders") and the Company shall provide
the Consultant with the third right of first refusal with respect to any
offering (public or private) of the Company's securities by either the Company
or the Principal Stockholders involving more than 1000 shares of stock.
For a period of three years after the date that the Company's shares of
common stock commence trading on the NASD OTC Bulletin Board, the Company's
executive officers and directors who own at least five percent (5%) of the
Company's common stock ("Principal Stockholders") and the Company shall provide
the other Principal Stockholders of the Company with the fourth right of first
refusal with respect to any offering (public or private) of the Company's
securities by either the Company or the Principal Stockholders involving more
than 1000 shares of stock.
8.3 The Company's officers and directors will use their best efforts to cause
each Principal Shareholder and each other holder of 5% or more of the Company's
common stock to enter into an agreement with Consultant pursuant to the terms of
which each such person shall agree not to sell any shares owned by such person
on the NASD OTC Bulletin Board, for a period of twelve months after the date
that the Company's shares of common stock commence trading on the NASD OTC
Bulletin Board, without Consultant's prior written consent, which consent will
not be unreasonably withheld. Provided that each such person may sell up to
1,000 shares every three months after the first 180 days has passed the date
that the Company's shares common stock commence trading on the NASD OTC Bulletin
Board.
8.4 Consultant shall be entitled for a period of five years to nominate a
director for the Company's board of directors which the Company's existing
directors will support. Such director shall be paid the same salary as other
directors (for director's duties performed) and shall participate in all bonus
programs granted to the Company's board of directors.
9. TERMINATION OF RELATIONSHIP. This Agreement shall terminate upon the
happening of any one of the following events:
9.1 Either party may terminate this Agreement upon ten days written notice to
the other that a material breach by the other of the terms or covenants of this
agreement shall have occurred and such breach shall not have been cured within
ten days after such notice.
9.2 Either party shall have the right (but not the obligation) to terminate this
Agreement upon written notice to the other party if such terminating party
reasonably determines that the other party or any of its directors, officers or
controlling shareholders has engaged in any unlawful, wrongful, or fraudulent
act against the Company or its shareholders.
9.3 Either party shall have the right (but not the obligation) to terminate this
Agreement upon written notice to the other party if such terminating party shall
determine that any material fact concerning the other party represented to them
during the course of performing their undertakings under this Agreement are
misstated or untrue or that the other party has intentionally failed to provide
the terminating party with material facts concerning the other party.
9.4 Either party may terminate this Agreement at any time: (i) in the event of
war; (ii) in the event of any material adverse change in the business, property
or financial condition of the Company (of which terminating party shall be the
sole judge); (iii) in the event of any action, suit or proceeding at law or at
equity against the Company or Consultant, or by any Federal, State or other
commission or agency where any unfavorable decision would materially adversely
affect the business, property, financial condition or income of a party; (iv) in
the event of adverse market conditions of which event the terminating party is
to be the sole judge. Further, Consultant's commitment will be subject to
receipt by Consultant of all information and verifications thereof which
Consultant or their counsel may reasonably request from the Company in a manner
and form satisfactory to Consultant.
In the event of Termination by Consultant, upon grounds stated herein above,
Consultant shall be entitled to accrued fees and expense reimbursements and
shares otherwise payable shall be paid as though this Agreement was not
terminated.
10. MISCELLANEOUS.
10.1 Authorization. This Agreement has been duly authorized, executed and
delivered by and on behalf of the Company and the Consultant.
10.2 Notices. Any notice or other communication required or permitted by any
provision of this Agreement shall be in writing and shall be deemed to have been
given or served for all purposes if delivered personally or sent by registered
or certified mail, return receipt requested, postage prepaid, addressed to the
parties as follows:
To Consultant: Northwest Capital Partners, L.L.C.
Mr. Brent Nelson
10900 NE 8th Street, Suite 900
Bellevue, Washington 98004
Tel: 425-455-1969
Fax: 425-990-5979
To the Shareholders
and to the Company: PalmWorks, Inc. (Nevada)
Mr. James T. Voss
2525 South Shore Blvd., Suite 309
League City, TX 77573-2989
Tel: 281-334-5940
Fax: 281-334-0889
10.3 Validity; Complete Agreement. The validity and enforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision hereof. This Agreement sets forth the entire understanding and
embodies the entire agreement of the parties with respect to the subject matter
covered hereby and supersedes all prior or contemporaneous oral or written
agreements, understandings, arrangements, negotiations or communications among
the parties hereto.
10.4 Amendment. This Agreement shall not be modified or amended except by
written agreement of the parties hereto.
10.5 Governing Law. This Agreement shall be governed by the laws of the state of
Washington giving effect to that state's conflict of laws principle.
In witness whereof, the parties hereto have executed this Agreement as
of the date first above written.
NORTHWEST CAPITAL PARTNERS, L.L.C.
By /s/ Brent Nelson
-----------------------------
Brent Nelson, President
PALMWORKS, INC. (NEVADA)
By /s/ James T. Voss
------------------------
James T. Voss, Chairman & CEO
EXHIBIT "A"
PalmWorks, Inc. (Nevada)
Financing Requirements
Attached hereto and made a part hereof the
Agreement between PalmWorks, Inc. (Nevada)
and Northwest Capital Partners, L.L.C.
Dated September 28, 1999
MINIUMUM AMOUNT APPROXIMATE DATE
- --------------- ----------------
$350,000 Interim Financing October 31, 1999
$650,000 Interim Financing (1) December 31, 1999
$500,000 Interim Financing March 31,2000
Second and Third Stage financing as required (2)
(1) The price per share of common stock shall be determined by the Company
following consultation with Consultant.
(1) The term "Interim Financing" as used in the Agreement shall include
segment 1, 2, and 3 above.
(2) Within 6 months after the date the Company's common stock is quoted on
the NASD OTC Bulletin Board, provided that the Company has subsequently
filed with the U.S. Securities and Exchange Commission a Form 10
pursuant to Section 12(g) of the 1934 Act.
PALMWORKS, INC. (NEVADA)
APPROVAL OF CAPITAL RESTRUCTURE
The undersigned hereby agree to revise the Capital Structure of
PalmWorks, Inc. (Nevada) a indicated below. Furthermore, the undersigned agree
to allow the PalmWorks, Inc. (Nevada) Compensation Committee to grant stock
options from those shares of stock reserved in the Employee Pool to new or
existing hires, in accordance with the option package structure guidelines to be
determined by the PalmWorks, Inc. (Nevada) Compensation Committee, and at the
Committee's discretion.
Signed this 28th day of September, 1999 by:
/s/ Brent Nelson
- ---------------------
Brent Nelson
President, Northwest Capital Partners, L.L.C.
/s/ James T. Voss
- ----------------------
James T. Voss
Chairman & CEO, PalmWorks, Inc. (Nevada)
Number of Shares of Common Stock
Shareholder After Restructuring
James T. Voss 2,000,000
Ellen S. Eckler 1,400,000
Mike Barnwell 250,000
Stock Options 1,600,000
Northwest Capital 1,500,000
---------
TOTAL 6,750,000
Financing Required Dollars Received
- ------------------ ----------------
October 31, 1999 $ 350,000
December 31, 1999 $ 650,000
March 31, 2000 $ 500,000
---------
TOTAL $1,500,000