FINANCIAL PUBLIC RELATIONS AGREEMENT
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THIS FINANCIAL PUBLIC RELATIONS AGREEMENT ("Agreement") is made and entered
into this 1st day of January, 2004 (the "Effective Date") by and between
Rapidtron, Inc., a Nevada corporation ("Company") and Liolios Group, Inc., a
California Corporation ("Consultant").
RECITALS
Company desires to engage Consultant to perform certain financial public
relations services for it, and Consultant desires, subject to the terms and
conditions of this Agreement, to perform financial public relations services for
Company.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL PROMISES AND UNDERTAKING
HEREIN CONTAINED AND FOR OTHER GOOD AND VALUABLE CONSIDERATION THE RECEIPT AND
SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED THE PARTIES AGREE AS FOLLOWS:
1. ENGAGEMENT OF CONSULTANT
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Company hereby engages Consultant and Consultant hereby agrees to hold
itself available to render, and to render at the request of the Company,
independent advisory and consulting services for the Company, upon the
terms and conditions hereinafter set forth. Such consulting services shall
include the development, implementation and maintenance of an on-going
stock market support system that increases broker awareness of the
company's activities and stimulates investor interest in the Company. The
stock market support system shall include a Shareholder Communication
System, and Media Relation Systems, which will be defined and developed by
Consultant. It is understood that Consultant's ability to relate
information regarding the Company's activities is directly proportionate to
and contingent upon information availed by the Company to the Consultant.
Although Consultant will pass along information about the Company or its
assets to brokers, it undertakes no responsibility to independently
corroborate any information. The Company shall include in any documents or
materials prepared by or with the help of Consultant that no party may rely
on any representations purportedly made by Consultant, or on its
involvement with the Company, in making its decision to invest.
2. TERM
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The term of this Agreement ("Term") shall begin as of the Effective Date
and shall terminate six (6) months thereafter. Following the six (6) month
term, the engagement shall continue on a month-to-month basis, unless
terminated in accordance with the provisions of this Agreement.
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3. COMPENSATION
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As compensation for the services rendered by the Consultant under this
Agreement, Company agrees to pay to Consultant at a rate of $5,000 per
month in advance on the first day of each month. This is in addition to
reimbursement of reasonable expenses, which may include but not limited to:
electronic presentations, press releases, investor conference calls,
web-casts, fax broadcasts, road-shows and out-of-pocket travel expenses.
Further as compensation to the consultant for services rendered pursuit to
this agreement, the Company shall issue 50,000 shares of restricted Company
common stock subject to specific performance vesting metrics. The 50,000
shares will be issued pro rata over the six (6) months at 8333 shares per
month and subject to a 30-day termination clause.
4. INDEPENDENT CONTRACTOR.
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It is expressly agreed that the Consultant is acting as an independent
contractor in performing its services hereunder. Company shall carry no
workmen's compensation insurance or any health or accident insurance to
cover Consultant. Company shall not pay any contributions to social
security, unemployment insurance, Federal or state withholding taxes nor
provide any other contributions or benefits, which might be expected in an
employer-employee relationship.
5. ASSIGNMENT
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This Agreement is a personal one being entered into in reliance upon and in
consideration of the singular personal skills and qualifications of
Consultant. Consultant shall therefore not voluntarily or by operation of
law assign or otherwise transfer the obligations incurred on its part
pursuant to the terms of this Agreement without the prior written consent
of the Company. Any attempt at assignment to transfer by Consultant of its
obligation with out such consent shall be wholly void.
6. CONFIDENTIAL INFORMATION
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6.1 The term "Confidential Information" shall mean information designated
as Confidential Information by Company. "Confidential Information" may
include, but not be limited to, information regarding Company's
business, plans, customers, technology, and/or products that is
confidential and of substantial value to Company, which value would be
impaired if such information were disclosed to third parties.
Company's Confidential Information shall also include any and all
non-public information, which is related to Company's technology.
6.2 Notwithstanding the foregoing, Confidential Information shall not
include information which (i) is or becomes a part of the public
domain through no act or omission of the receiving party; or (ii) was
in the receiving
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party's lawful possession prior to the disclosure and had not been
obtained by the receiving party either directly or indirectly from the
disclosing party; or (iii) is lawfully disclosed to the receiving
party by a third party without restriction on disclosure; or (iv) is
independently developed by the receiving party; or (v) is required to
be disclosed by law provided that the disclosing party has had seven
(7) days to respond to the request.
6.3 Consultant agrees, both during the term of this Agreement and for a
period of two years thereafter, to hold Company's Confidential
Information in confidence, and agrees not to make such Confidential
Information available in any form to any third party, or use such
Confidential Information for any other purpose than the implementation
of this Agreement. Consultant agrees to take all reasonable steps to
ensure that Company's Confidential Information is not disclosed or
distributed by its employees or agents in violation of the provisions
of this Agreement. Termination of the Agreement shall not relieve
Consultant of its obligations under this Section 6.
7. TERMINATION
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This Agreement may be terminated by either party for any reason upon
thirty-days (30) notice in writing following the three (3) month
anniversary. In the event the Agreement is terminated, Consultant shall
cease rendering its services to Company as of the effective date of
termination, and Company shall pay Consultant for the services performed
and approved expenses through the later of the effective date of
termination. Any materials created for the Company shall be delivered to
Company within ten (10) days of the date of termination.
8. PUBLIC ANNOUNCEMENTS
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Upon any completed Transaction, Consultant shall have the right to place
announcements and advertisements in financial and other newspapers,
journals and mailings, at its own expense, describing its services in
connection with the Transaction.
9. INDEMNIFICATION; EXCULPATION
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Recognizing that Consultant, in providing the services contemplated hereby,
will be acting as representative of and relying on information provided by
the Company, the Company agrees to the provision of Schedule I hereto. The
Company shall use its best efforts to cause any binding agreements with
acquirers or providers of capital or financing to include exculpation and
indemnification provisions in favor of Consultant which are equivalent to
the foregoing and are binding on such persons. It is specifically
understood and agreed that the indemnification provisions of Schedule I
shall be binding on the successors and assigns of the parties hereto and of
the Indemnified parties, specifically including the continuing entity after
any Transaction and any successor thereto whether by
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subsequent merger, consolidation or transfer of all or a substantial part
of the assets or business of the Company or such continuing entity.
10. GENERAL PROVISIONS
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10.1 Governing Law and Jurisdiction
This Agreement shall be governed by and interpreted in accordance with
the laws of the State of California. Each of the Parties hereto
consents to such jurisdiction for the enforcement of this Agreement
and matters pertaining to the transaction and activities contemplated
hereby.
10.2 Non-Circumvention and Non-Disclosure
Neither the Company nor its directors, officers, agents attorneys,
employees, affiliates, representatives, successors, or assigns
(collectively referred to as the "Company") will attempt to consummate
a transaction (each, a "Transaction") with any financing sources, or
potential acquisition, introduced by the Consultant without first
notifying Consultant, and satisfying Consultant's right to a fee of a
descending scale-3% up to 1 million, 2% from 1-2 million, 1% 2-3
million, .05% anything above 3 million. This provision will inure
during the term of this Agreement and continue for a period of three
(3) years form the expiration or termination of this Agreement but
does not include any party or parties that exist prior to this
agreement.
10.3 Attorney's Fees
In the event a dispute arises with respect to this Agreement, the
party prevailing in such dispute shall be entitled to recover all
expenses, including, without limitation, reasonable attorney's fees
and expenses incurred in ascertaining such party's rights, in
preparing to enforce or in enforcing such party's rights under this
Agreement, whether or not it was necessary for such party to institute
suit. Further, in the event the Company, its officers, and or its
directors cause a dispute in which Consultant is involved, the Company
agrees to hold Consultant harmless, and provide reasonable attorney
fees. Company further agrees to notify Consultant immediately of such
event.
10.4 Complete Agreement
This Agreement supersedes any and all of the other agreements, either
oral or in writing, between the Parties with respect to such subject
matter in any manner whatsoever. Each Party to this Agreement
acknowledges that no representations, inducements, promises or
agreements, oral or otherwise, have been made by any Party, or anyone
herein, and that no other Agreement, statement or promise not
contained in the Agreement may be changed or amended only by an
amendment in writing signed by all of the Parties or their respective
successors-in-interest.
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10.5 Unenforceable Terms
Any provision hereof prohibited by law or unenforceable under the law
of any jurisdiction in which such provision is applicable shall adhere
to such jurisdiction only be ineffective without affecting any other
provision if this Agreement. To the full extent, however, that such
applicable law may by waived to the end that this Agreement be deemed
to be a valid and binding agreement enforceable in accordance with its
terms, the Parties hereto hereby waive such applicable law knowingly
and understanding the effect of such waiver.
10.6 Execution in Counterparts
This Agreement may be executed in several counterparts and when so
executed shall constitute one agreement binding on all the Parties,
notwithstanding that all the Parties are not signatory to the original
and same counterpart.
10.7 Further Assurances
From time to time each Party will execute and deliver such further
instruments and will take such other action as any other Party may
reasonably request in order to discharge and perform their obligations
and agreements hereunder and to give effect to the intentions
expressed in this Agreement.
10.8 Incorporation By Reference
All exhibits referred to in this Agreement are incorporated herein in
their entirety by such reference.
10.9 Miscellaneous Provisions
The various headings and numbers herein and the grouping of provisions
of this Agreement into separate articles and paragraphs are for the
purpose of convenience only and shall not be considered a part hereof.
The language in all parts of this Agreement shall in all cases be
construed in accordance with its fair meanings as if prepared by a all
Parties to the Agreement and not strictly for or against any of the
Parties.
11. NOTICES
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Any notice or other communication required or permitted hereunder shall be
in writing and shall be delivered personally, telegraphed, telexed, sent by
facsimile transmission (provided acknowledgement of receipt thereof is
delivered to the sender) or sent by certified, registered or express mail,
postage prepaid. Any such notice shall be deemed given when so delivered
personally, telegraphed, telexed, sent by facsimile transmission or, if
mailed, three days after the date of deposit in the United States mails as
follows:
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If to Consultant, to:
LIOLIOS GROUP, INC.
2431 West Coast Hwy, #202
Newport Beach, CA. 92663
If to Company, to:
RAPIDTRON, INC.
3151 Airway Ave., Building # Q
Costa Mesa, CA 92626
or such address as any of the above shall have specified by notice hereunder.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the day and year first hereinabove written.
RAPIDTRON, INC.
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Name: John Creel
Title: President, CEO
LIOLIOS GROUP, INC.
By:
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Name: J. Scott Liolios
Title: President
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APPENDIX
DEFINITION OF KEY TERMS
"TRANSACTION" shall mean any transaction or series or combination of
transactions (except for transactions in the ordinary course of business)
whereby, directly or indirectly, debt or equity securities of the Company are
issued, all or a substantial part of the business, assets (tangible or
intangible) or capital stock of the Company, are transferred or assigned for
consideration, including without limitation, a sale or exchange of capital stock
or assets, grant of a license, merger or consolidation, tender or exchange
offer, leveraged buy-out, capital contribution or other infusion of capital,
formation of a partnership, trust, joint venture or joint marketing arrangement,
or any similar transaction.
"TRANSACTION VALUE" shall mean the value of all cash, securities or other
property received, directly or indirectly, by the Company, the selling
shareholders or any affiliate of the Company, in connection with a Transaction,
including the value of any residual interest in the Company which is retained by
the shareholders in connection with a financial recapitalization. The value of
any such securities (other than a purchase money note) or other property shall
be determined as follows: (i) the value of securities that are freely tradable
in an established public market will be determined on the basis of the average
of the last market closing prices for the ten trading days ending on the third
business day prior to receipt thereof; and (ii) the value of securities that are
not freely tradable or have no established public market, or property other than
securities, shall be the fair market value thereof as mutually agreed upon by
the parties to this Agreement or, if such parties cannot agree, by a third party
mutually agreed upon by such parties. Notwithstanding the foregoing, if
securities with a similar economic interest are purchased by an independent
third party or the acquiror in connection with the Transaction, the valuation of
the securities received by the selling shareholders or the Company shall be
deemed to be the price paid by the independent third party or acquiror. The
value of any purchase money notes received by the Company (or selling
shareholders or affiliate) shall be deemed to be the face amount of any such
note. To the extent any such consideration is contingent upon the future
performance of the Company or any of its businesses or assets, the Company and
Consultant will negotiate in good faith to agree upon that portion of the
Transaction Fee to be paid to Consultant in consideration of such contingent
consideration. If Consultant and the Company cannot agree on such a fee, the
Transaction Fee(s) payable to Consultant on that portion of the Transaction
Value shall be paid on amounts actually received by the Company, its affiliates
or the selling shareholders, and shall be payable as such amounts are received.
In addition, if the Transaction takes the form of a sale of assets, Transaction
Value shall also include (w) the value of any current assets not purchased,
minus (x) the value of any current liabilities not assumed. In the case of a
Transaction involving a sale of assets and assumption of liabilities, the
Transaction Value shall also include the fair market value of any debt (other
than trade payables) assumed or to which the assets sold are subject. In the
case of a Transaction involving the sale of stock of the Company, the
Transaction Value shall include the fair market value of any indebtedness (other
than trade payables) and preferred stock of the Company at the time of, or
immediately prior to, such sale.
APPENDIX
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Transaction Value shall also include (y) the value of any contracts or other
property received by the selling shareholders in connection with the
Transaction, including without limitation, any (a) non-competition agreements or
(b) consulting agreements or employment agreements which are in excess of
reasonable amounts for future services or (z) compensation to other employees,
agents or independent contractors for past services or amounts in excess of
reasonable compensation for future services. In the event that any real property
owned by the Company or affiliates and/or shareholders of the Company is leased
or licensed in connection with a Transaction, Transaction Value shall include
the present value of any payments under the lease or license where such present
value is calculated using a discount rate equal to the U.S. Treasury bond rate
for the maturity identical to the term of the lease or license. In the event an
escrow fund is required expressly for the purpose of providing future payments
to non-shareholder employees from the proceeds of a Transaction to compensate
such non-shareholder employees for amended profit sharing compensation
arrangements, then Consultant agrees to deduct the actual amount placed into the
escrow up to a maximum of $3 million from the Transaction Value for purposes of
calculating its Contingent Fee.
APPENDIX
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SCHEDULE I
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This Schedule I is a part of and is incorporated into that certain
Financial Public Relations Agreement (together, the "Agreement") dated January
1, 2004, by and between the Company and Consultant. The Company agrees to
indemnify and hold harmless Consultant and its affiliates, the respective
directors, officers, attorneys, finders and other agents, stockholders and
employees of Consultant and its affiliates and each other person, if any,
controlling Consultant or any of its affiliates (Consultant and each such person
and entity being referred to as an "Indemnified Person"), to the full extent
lawful, from and against any losses, claims, damages, expenses or liabilities or
actions (including without limitation shareholder actions and actions arising
from the use of information contained in any Information Materials or omissions
from such materials) related to or arising out of this engagement or
Consultant's role in connection herewith, and will pay (or, if paid by an
Indemnified Person, reimburse such Indemnified Person) for all fees and expenses
(including without limitation counsel fees and charges for the time of
Consultant professional employees at their then current hourly rates) incurred
by such Indemnified Person in connection with investigating, preparing or
defending any such action or claim, whether or not in connection with pending or
threatened litigation in which any Indemnified Person is a party.
The Company will not, however, be responsible for any claims, liabilities,
losses, damages or expenses which result from any compromise or settlement not
approved by the Company or which are determined by a final judgment of a court
of competent jurisdiction to have resulted solely from the fraud, willful
misconduct or gross negligence of any Indemnified Person. The Company also
agrees that no Indemnified Person shall have any liability to the Company for or
in connection with this engagement, except for any such liability for losses,
claims, damages, liabilities or expenses incurred by the Company, which are
determined by a final judgment of a court of competent jurisdiction to have
resulted solely from the fraud, willful misconduct or gross negligence of the
Indemnified Person. The foregoing agreement shall be in addition to any rights
that any Indemnified Person may have at common law or otherwise, including
without limitation any right to contribution.
The Company's agreement to indemnify Consultant and other Indemnified
Persons pursuant to this letter shall not be disclosed publicly or made
available to third parties by either party hereto without the other party's
prior written consent. If any action or proceeding is brought against any
Indemnified Person in respect of which indemnity may be sought against the
Company pursuant hereto, or if any Indemnified Person receives notice from any
potential litigant of a claim which such person reasonably believes will result
in the commencement of any such action, proceeding, or claim, such Indemnified
Person shall promptly notify the Company in writing of the commencement of such
action or proceeding, or of the existence of any such claim, but the failure so
to notify the Company of any such action or proceeding shall not relieve the
Company from any other obligation or liability which it may have to any
Indemnified Person otherwise than under this Agreement or with respect to any
other action or proceeding. In case any such action or proceeding shall be
brought against any Indemnified Person with respect to which such Indemnified
Person gives notice of its intention to seek indemnification
Schedule I
Page 1
hereunder, the Company shall be entitled to participate in such action or
proceeding and, to the extent that the Company may determine, to assume the
defense thereof, with counsel of the Company's choice (in which case the Company
shall not thereafter be responsible for the fees and expenses of any separate
counsel retained by such Indemnified Person), or compromise or settle such
action or proceeding, at its expense; provided, however, that such counsel shall
be satisfactory to the Indemnified Person in the exercise of its reasonable
judgment. Notwithstanding the Company's election to assume the defense of such
action or proceeding, such Indemnified Person shall have the right to employ
separate counsel and to participate in the defense of such action or proceeding,
and the Company shall bear the reasonable fees, costs and expenses of such
separate counsel (and shall pay such fees, costs and expenses at least
quarterly), if (a) the use of counsel chosen by the Company to represent such
Indemnified Person would, in the judgment of the Indemnified Person, present
such counsel with a conflict of interest; (b) the defendants in, or targets of,
any such action or proceeding include both an Indemnified Person and the
Company, and such Indemnified Person shall have reasonably concluded that there
may be legal defenses available to it or to other Indemnified Persons which are
different from or additional to those available to the Company (in which case
the Company shall not have the right to direct the defense of such action or
proceeding on behalf of the Indemnified Person); (c) the Company shall not have
employed counsel satisfactory to such Indemnified Person in the exercise of the
Indemnified Person's reasonable judgment to represent such Indemnified Person
within a reasonable time after notice of the institution of such action or
proceeding; or (d) the Company shall authorize such Indemnified Person to employ
separate counsel at the Company's expense.
In order to provide for the just and equitable contribution, if a claim for
indemnification hereunder is found unenforceable in a final judgment by a court
of competent jurisdiction (not subject to further appeal), even though the
express provisions hereof provide for indemnification in such case, then the
Company and Consultant shall contribute to the losses, claims, damages,
judgments, liability, expenses or costs to which the Indemnified Person may be
subject in accordance with the relative benefits received by, and the relative
fault of, each in connection with the statements, acts or omissions which
resulted in such losses, claims, damages, judgments, liabilities, or costs. The
Company agrees that a pro rata allocation would be unfair. No person found
liable for a fraudulent misrepresentation or omission shall be entitled to
contribution from any person who is not also found liable for such fraudulent
misrepresentation or omission. Notwithstanding the foregoing, Consultant shall
not be obligated to contribute any amount hereunder that exceeds the amount of
fees previously received by Consultant for its services to the Company.
These indemnification provisions shall (i) remain operative and in full
force and effect regardless of any termination or completion of the engagement
of Consultant; (ii) inure to the benefit of any successors, assigns, heirs or
personal representative of any Indemnified Person; and (iii) be in addition to
any other rights that any Indemnified Person may have.
Schedule I
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