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AGREEMENT This Agreement (the "Agreement") goes into effect as of the date, PhoneStars or American Operator Services Inc. ("Company") receives confirmation of your acceptance of the terms and conditions of this Contractor Agreement (the "Agreement"). For purposes of this Agreement, you shall be referred to throughout this Agreement as "Agent". I. AGE REPRESENTATION Agent or represents to Company that Contractor is at least 18 years of age, or at least the age of majority in Contractor's legal jurisdiction (whichever is older). As part of this Agreement, Contractor shall provide Company with reasonable proof of their majority age (e.g. state-issued photo identification). Contractor understands that should Contractor provide Company with false proof of age, Contractor will not hold Company liable as Contractor recognizes that such proof of age was accepted by Company in good faith, and that reasonable efforts were made to ensure that Contractor was at least 18 years of age at the time Contractor entered into this Agreement. II. PROJECT SERVICES Company operates a telephone information and entertainment network providing consumers with access to various adult services. This Agreement is entered into for the purpose of Contractor engaging with Company to perform services over Company's network or for any other business arrangement that may be mutually agreed upon between Contractor and Company. At all times, Contractor and Company shall operate as independent contractors to this arrangement and Contractor acknowledges he or she shall not be entitled to hold them self out as an employee of Company nor receive any employment benefits that may typically be offered in an employer-employee relationship. In particular, Contractor shall be contracted to perform the services that are set forth below under the heading Schedule A (the "Services") below. III. COMMISSIONS In consideration for all of the Services, work and equipment that shall be provided by Contractor under this Agreement, Company agrees to pay Contractor the fees that are set forth below under the heading Schedule B. IV. EXPENSES Contractor shall be responsible for all of his or her own expenses and costs of doing business incurred while performing the Services under this Agreement. These costs of doing business include, but are not limited to any fees, memberships and dues; phone or computer equipment, including video and audio hook-ups necessary to perform the Services hereunder; internet access; all equipment and supplies necessary to access Company's call routing system; all other equipment, supplies, and material required to supply the Services contemplated under this Agreement; and all insurance premiums that Contractor may be subject to in performance of their services. In the event that Contractor shall use or operate any tools, software, frameworks or other properties in connection with his or her performance of the Services, then Contractor represents and warrants to Company that he or she has and shall maintain all necessary and required permissions and licenses necessary to perform the Services in connection with this Agreement. Unless first approved in advance and in a writing signed by an authorized officer of Company, Contractor shall not (i) charge Company any fees or costs in connection with Contractor's use of permissions or licenses in connection with the Services; (ii) obligate Company for any purchase, contract, debt, or other liability or obligation in connection with the Services; or (iii) assign responsibility to Company for any and all other costs or expenses incurred by Contractor in connection with the Services. V. TERM/TERMINATION The term of this Agreement shall commence on Contractor's acceptance of the terms of this Agreement and shall continue until the Agreement is terminated as herein provided. This Agreement shall continue on a week-to-week basis until terminated by either party with seven (7) days prior written notice to the other party. Upon termination, Contractor shall communicate in detail to Company on all aspects of the Services and shall provide Company with all documentation, information, and other data within Contractor's possession or control in connection with the Services. Notwithstanding the foregoing, either Company or Contractor may terminate this Agreement with reasonable cause, effective immediately upon giving written notice to the other party. Reasonable cause for early termination shall include but not be limited to: (a) a breach or violation of any of the terms of this Agreement, including the Quality Performance Guidelines set forth in Schedule A; and (b) any act exposing the other party to liability. VI. QUALITY OF PERFORMANCE As part of the Agreement, Contractor will be subject to a reasonable minimum level of performance. If Contractor is unable to maintain the requisite performance levels, then at Company's election, Company shall be entitled to immediately terminate this Agreement with Contractor without penalty. Please reference the Quality Performance Guidelines set forth below under the heading Schedule A. VII. INDEPENDENT CONTRACTOR STATUS It is specifically understood and agreed that Contractor is an independent contractor and Contractor is not Company's employee. Contractor and Company agree to the following terms consistent with this independent contractor relationship: (a) Contractor has the right to perform services for others during the term of this Agreement; (b) Contractor has the sole right to control and direct the means, manner and method by which the Services to be performed under this Agreement will be performed; (c) At all times, Contractor has the right to perform the Services required by this Agreement within the state Contractor has contracted from; (d) Contractor will furnish all equipment and materials to be used to provide the Services required by this Agreement; (e) Contractor shall not receive any training from Company for the skills necessary to perform the Services required by this Agreement; and (f) Company shall not require Contractor to devote full time to performing the Services required by this Agreement. Contractor acknowledges that Contractor has been classified as an independent contractor because such classification is a longstanding practice of a significant segment of Contractor's trade or industry. VIII. RIGHTS, DUTIES AND LIABILITIES OF CONTRACTOR (a) Contractor represents that he or she will comply with all applicable federal, state and local laws requiring business permits, certificates and licenses required to carry out the Services to be performed under this Agreement. (b) Contractor shall solely be responsible for the payment of all taxes incurred by Contractor while performing the Services under this Agreement, including all applicable income taxes and self-employment (Social Security) taxes. If Contractor is not a corporation, Company will, when applicable, issue and file with the Internal Revenue Service tax form 1099, and Company will provide Contractor with a copy of this form. Contractor understands and represents that Contractor will be responsible for reporting all applicable income on his/her personal or corporate income tax returns. Contractor acknowledges that Company will not: (1) withhold FICA (Social Security and Medicare taxes) from Contractor's payments or make FICA payments on Contractor's behalf; or (2) make state or federal unemployment compensation contributions on Contractor's behalf; or (3) withhold state or federal income tax from Contractor's payments. (c) Contractor understands that Contractor is not eligible to participate in any employee pension, health plan, vacation pay, sick pay or other fringe benefit plan of the Company. (d) Contractor shall obtain Contractor's own workers' compensation insurance coverage for themselves. Upon request by Company, Contractor shall provide Company with proof that this coverage has been obtained by Contractor. (e) Contractor understands and agrees that Company shall make no state or federal unemployment compensation payments on behalf of Contractor. Contractor understands that Contractor will not be entitled to these benefits in connection with the Services performed under this Agreement. (f) Contractor understands and agrees that Company will not, and shall not be under any obligation to provide any insurance coverage of any kind for Contractor or Contractor's employees or personnel. Contractor represents to Company that Contractor maintains adequate insurance to cover any negligent acts committed by Contractor while performing the Services under this Agreement. Contractor shall indemnify and hold Company harmless from any loss or liability arising from performing the Services under this Agreement. (g) Contractor will not disclose or use, either during or after the term of this Agreement, any proprietary or confidential information of Company without Company's prior written permission except to the extent necessary to perform the Services. Proprietary or confidential information includes but is not limited to: (1) written, printed, graphic or electronically recorded materials used by Contractor for the Services; (2) business plans, customer lists, customer information (including internet service provider information, email addresses, IP addresses, telephone numbers, addresses, credit card information, or other contact information), operating procedures, trade secrets, design formulas, know-how and processes, computer programs and inventories, discoveries and improvements of any kind; and (3) information belonging to Company, Company's customers, and suppliers of Company about whom Contractor gained knowledge as a result of the Services that shall be provided hereunder. Contractor shall not be restricted in using any material which is publicly available, already in Contractor's possession or is known to Contractor without restriction, or which is rightfully obtained by Contractor from sources other than Company. Upon termination of the Services to Company, or at Company's request, Contractor shall deliver to Company all materials in Contractor's possession relating to Company's business. (h) Contractor acknowledges and agrees that he or she shall have no right to record their conversations with any other person or party on Company's network. (i) During the term of this Agreement, and continuing for a period of five (5) years following termination of this Agreement, Contractor agrees not to call on, solicit or take away Company's customers or potential customers of which Contractor became aware as a result of the Services for Company. Contractor understands that Company has developed business plans, valuable relationships, confidential clients, mailing lists and data, customers, concepts, plans, designs, ideas and communications relating to its business, its services, as well as the Company's expansion and growth into new areas of business (all collectively to be known hereafter as the "Confidential Information"). Contractor agrees to maintain all the Confidential Information disclosed by Company in strict confidence and Contractor shall not reveal, use, publish or disclose to any third party the Confidential Information without the express prior written consent of Company. Contractor further agrees not to circumvent or disadvantage Company in any way in any dealings Company may have in connection with the Confidential Information, or in the execution of its business plans. Contractor agrees that throughout the term of this Agreement, and for a period of five (5) years following the termination of this Agreement, Contractor shall not offer employment to, hire, retain, contract with, subcontract with, or otherwise hire or engage, directly or indirectly, the services of any Company personnel or any other contractor hired or retained by Company who has knowledge of or access to the Confidential Information without Contractor first obtaining the advance written approval of an authorized officer of the Company. (j) Contractor agrees to indemnify and hold Company harmless against all losses Company incurs if by Contractor's actions, Contractor is deemed to be Company's employee. Contractor further acknowledges that damages for improper disclosure of Confidential Information may be irreparable; therefore, Company shall be entitled to seek equitable relief, including injunction and preliminary injunction, in addition to all other remedies. Contractor shall punctually pay any debts that are separately incurred by Contractor in connection with the Services and shall indemnify Company against the same and all expenses thereof. The fees and charges set forth in Schedule B below are the full and complete consideration to be paid to Contractor by Company in connection with the Services. IX. NON-EXCLUSIVITY Nothing contained in this Agreement shall be construed by the parties hereto, or by any third parties, to create the relationship of principal and agent, joint venture or partnership, employer-employee, or any other fiduciary relationship or association between the parties. The relationship between Company and Contractor shall not be exclusive to either party. Both Company and Contractor shall be entitled to enter into similar agreements with third parties on the condition that such agreements do not interfere with or directly conflict with the terms of this Agreement. X. NO PARTNERSHIP/NO FIDUCIARY This Agreement does not create a partnership relationship or any fiduciary relationship between Contractor and Company. Further, Contractor does not have authority to enter into contracts on Company's behalf. XI. RIGHT TO WITHHOLD/OFFSET MONIES In the event of any dispute including, but not limited to possible fraud, excessive chargebacks, etc. Company, in good faith, shall have the right to withhold or offset any monies due Contractor under any agreement between Contractor and Company. Said monies may be used to cover any amounts that may be owed by Contractor to Company. Upon resolution of the dispute, remaining monies, if any, shall be released to Contractor. Company has the right to withhold or offset from any commission otherwise payable to Contractor under this Agreement the applicable amount of damages incurred by Company. XII. RESOLVING DISPUTES If a dispute arises under this Agreement, the parties agree to first try to resolve the dispute through good faith negotiations. If it proves impossible to arrive at a mutually satisfactory solution through such negotiations, the parties agree to submit their dispute to a court of competent jurisdiction located within Los Angeles County, State of California. XIII. APPLICABLE LAW This Agreement will be governed by the laws of the state of California. XIV. NOTICES All notices and other communications in connection with this Agreement shall be in writing and shall be considered given as follows: (a) when delivered personally to the recipient's address; (b) three days after being deposited in the United States mail, with postage prepaid to the recipient's address; or (c) when sent by email or fax to the last email address or fax number of the recipient known to the person giving notice. Notice is effective upon receipt provided that a duplicate copy of the notice is promptly given by first class mail, or the recipient delivers a written confirmation of receipt. To Company: American Operator Services, Inc. 6433 Topanga Canyon Boulevard, Suite 808 Canoga Park, California 91303 Fax: (800) 350-4520 To Contractor: To the address or contact information provided by Contractor to Company electronically as part of this engagement of services. Contractor acknowledges, agrees and consents that the phone number and email address provided to Company by Contractor may be used for all business communications between Contractor and Company. XV. ENTIRE AGREEMENT This document and the sections entitled Schedule A, Schedule B and Schedule C below constitute the entire Agreement by and between Contractor and Company. Schedule A Description of the Services Contractor shall be providing explicit adult conversation over Company's network (the "Services"). The schedule for such Services shall be mutually agreed upon by both Contractor and Company. Contractor will be held responsible for maintaining three (3) important areas as part of the performance of their Services: 1. Adhering to Quality Performance Guidelines. 2. Maximizing the length of time in conversations. 3. Providing a high quality adult conversation. Quality Performance Guidelines 1. Company evaluates Contractor's performance level based on the calls routed to the Log-In Code assigned to Contractor. Contractor's Log-In Code identifies Contractor to Company's system and allows Company to record Contractor's calls properly. It is extremely important that Contractor logs on and off Company's communications system correctly. Company records Contractor's start time based on Contractor's log in time. Failure to log in properly could mean a change in the start of Contractor's start time. Failure to log out properly could result in the continuation of calls routed to Contractor's Log-In Code. 2. The designated telephone line used by Contractor to log-in must be a working telephone line without call waiting. If Contractor changes their telephone number, Contractor must notify Company promptly. 3. Contractor is recommended to provide Company with a secondary point of contact. This access point can be a cell phone, pager, or secondary phone line. If Contractor is logged into Company's system and speaking with a caller, Company may need to reach Contractor using a different resource. Contractor should make sure this secondary point of contact is available at all times Contractor is performing their Services. 4. During periods that Contractor has made himself or herself available to provide the Services over Company's network, Contractor shall refrain from and be prohibited from the following: (i) Sleeping (ii) Eating (iii) Excessive background noise (iv) Children are not to be present or in the background (v) Engaging in adult content conversation with minors (i.e., anyone believed to be under the age of 18) (vi) Stating to callers that Contractor is currently under 18 years old (vii) Giving out any personal information, including telephone numbers, addresses, e-mail addresses or other personal contact information to any party connected to Company's network (viii) Speaking with any party connected to Company's network about credit card use or the cost of the service (Please note that callers must contact Company's Customer Service if they have questions) (ix) Soliciting any parties connected to Company's network to reach Contractor in any way other than through Company's network (x) Giving out any information regarding Company, Company's personnel, or Company's Contractors (xi) Being rude or disrespectful to any party connected to Company's network (xii) Any discussion engaging or promoting any type of illegal activity (drugs, rape, incest, minors, bestiality, molestation) (xiii) Allowing any unauthorized party to speak with any parties connected to Company's network (xiv) Giving Company's system access number or Contractor's assigned code to any unauthorized party (xv) Allowing any type of interruption in working or secondary phone line service during Contractor's performance of the Services (i.e. accepting faxes or using computer) 5. All Contractors will need to use equipment that will work on Company's network. Company does not provide headsets for Contractors. Quality headsets can be purchased online or at a number of large retail chains such as Wal-Mart, Target, Frys, Amazon or Best Buy. It is Contractor's responsibility to maintain the quality of their connection to Company's network. 6. Company randomly records and monitors its network 24 hours a day to ensure quality assurance and compliance with FCC guidelines. Contractor acknowledges Company's right to record and monitor all communications over its network. 7. Company will play a "whisper tag" in Contractor's ear prior to the connection of a party connected to Company's network to give Contractor a hint at what the calling party is interested in. Schedule B Fees, Charges and Expenses Contractor's commission will be based on total weekly talk minutes, average weekly hold times, and effective rates. An effective rate is defined as the percentage of total weekly calls that are billed as 60 seconds or longer in length. Weekly Average Hold Time Efficiency Payout Rate (cents per call minute) 6:59 and below 0% - 100% 18 7:00 and above 0% - 69% 23 7:00 - 7:59 70% - 100% 25 8:00 - 8:59 70% - 100% 32 9:00 - 9:59 70% - 100% 35 10:00- 10:59 70% - 100% 40 11:00- 11:59 70% - 100% 45 12:00- 12:59 70% - 100% 50 13:00 and above 70% - 79% 50 13:00 and above 80% - 100% 55 The payout cycle for commissions generated on Company's network begin each week on Monday at 12:00am through Sunday at 11:59pm (Pacific time). Contractor will be mailed bi-weekly commission checks issued within ten (10) business days following the end of the payout cycle. Weekly commissions totaling less than $50.00 (US) per payout cycle will carry forward to the following payout cycle. All commission revenue will be disbursed in U.S. dollars. Schedule C Voice Release, Permission, and Certification Company operates program(s) that are intended for entertainment or informational use on their internet sites, via telephone and throughout their adult communications network. These programs are or will be made available to the general public. Contractor agrees to participate in these programs and to allow Contractor's voice and overall participation to be recorded, monitored and/or used in connection with any of the eventual programs that will be created by Company. Any recording for these programs may be exhibited or broadcast or made available to the public and exploited by Company in connection with its internet sites and the adult entertainment programs that are available via the telephone, the internet and for other similar purposes and media. Any recordings using Contractor's voice or participation may further be exhibited, advertised, or promoted via any other media, including radio, television and the internet or other similar media. Contractor grants to Company, and its assigns, in perpetuity, the absolute right and permission to copyright, use and exploit any audio recordings created, which contain the recorded voice or participation of Contractor, in any manner, including the advertising and promotion of Company's internet sites and its adult communications network, on all media, now known or hereafter devised. The frequency of the use of the audio recordings using my voice or participation shall be determined solely by Company, or their assigns. This grant of rights from Contractor includes any audiotape or videotape or any other means and format used in connection with the recording and editing by Company, for exploitation in all media, now known or hereafter devised. Contractor waives any claims that Contractor may have to the eventual use to which the recordings may be applied. No additional fees or residuals of any kind shall be due to Contractor for the exploitation of Contractor's voice or other participation by Company. Contractor represents that he/she is over the age of 18 and has read the above authorization and release prior to Contractor's certification of this release, permission and certification. The foregoing terms and conditions are agreed to and accepted.
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