Exhibit 10.19
CONSULTANT AGREEMENT
THIS CONSULTANT AGREEMENT (the "Agreement") is entered into as of the
1st day of March, 2002 (the "Effective Date") by and between Junum Incorporated,
a Delaware corporation (the "Company"), and Xxxxxx Xxxxxxx (the "Consultant").
WHEREAS, Consultant desires to provide the Company with his services
and the Company desires to receive Consultant's services on the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Term Of Agreement.
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The term of Consultant's services with the Company hereunder (the
`Term") shall commence on March 1, 2002 (the "Commencement Date") and shall
terminate upon thirty (30) days written notice by either party.
2. Position And Duties.
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During the Term, Consultant shall provide services as a consultant of
the Company. Consultant shall render such services on the terms set forth
herein. The services shall include advice relating to the Company's computer
software and hardware systems, general operational issues, marketing and product
design, implementation of product and marketing plans, organizational structure
and efficiency issues and specific projects to be assigned to Consultant by the
Company. Both the Company and the Consultant agree that Consultant will act as
an independent contractor in the performance of his services under this
Agreement. Consultant shall not render any services involving or relating to
capital raising activities or relating to the maintenance or promotion of a
market for any securities of the Company. It is understood and agreed that Junum
shall not permit Consultant to undertake any position or activity which would
cause Consultant to be ineligible to receive and immediately sell common stock
of the Company registered on Form S-8.
3. Other Activities of Consultant.
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The Company recognizes that Consultant may provide services to other
businesses and entities other than the Company. Consultant shall be free to
directly or indirectly own, manage, operate, join, purchase, organize or take
preparatory steps for the organization of, build, control, finance, acquire,
lease or invest or participate in the ownership, management, operation, control
or financing of, or be connected as an officer, director, employee, partner,
principal, manager, agent, representative, associate, consultant, investor,
advisor or otherwise with (collectively, be "Affiliated" with), any business or
enterprise, or permit his name or any part thereof to be used in connection with
any business or enterprise. Consultant may be Affiliated with any entity which
may provide services to the Company. The Company hereby waives any conflict of
interest that may arise from a relationship between Consultant and any entity
with which Consultant is Affiliated upon full disclosure of the relationship to
the Company.
4. Compensation.
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During the Term, as compensation for his services hereunder, the
Company shall compensate Consultant as follows:
4.1 FEES. Company shall pay to Consultant fees ("Fees")
for services provided under this Agreement. Fees
shall be paid by the Company monthly in advance. In
the event the Fees are paid by the Company in cash,
Company shall compensate Consultant at the rate (the
"Cash Rate") of Twenty Thousand Dollars ($20,000) per
month. In the event the Fees are paid by the Company
in the form of common stock registered on Form S-8
("Stock"), Company shall compensate Consultant at the
rate (the "Stock Rate") of Twenty Five Thousand
Dollars ($25,000) per month (each a "Stock Fee
Payment"). Each issuance shall be based on the
closing price of the Company's common stock on the
day prior to issuance (the "Issuance Day Price").
Accordingly, if the Issuance Day Price is $1.00, the
Company will issue 20,000 shares to Consultant for
that month. In the event the Consultant's Net
Proceeds (as defined below) from a Stock Fee Payment
is less than the Stock Rate, Company shall deliver to
Consultant, within five business days of written
request, additional Stock in an amount necessary to
increase Consultant's Net Proceeds to not less than
the Stock Rate (each a "True Up Issuance"). "Net
Proceeds" shall be calculated using the following
formula:
N = A + B - C
where A the value, based on the then-current trading
price of the Company's common stock, of any unsold
Stock; B = the gross proceeds from the sale of Stock;
and C = the reasonable costs incurred in the sale of
Stock, including but not limited to broker commission
fees. Consultant shall be entitled to True Up
Issuances until the Consultant's Net Cash Proceeds
(as defined below) from all Stock Fee Payments made
hereunder is not less than the product of i) the
number of Stock Fee Payments made hereunder; and ii)
the Stock Rate. "Net Cash Proceeds" shall be the
gross proceeds from the sale of Stock less the
reasonable costs incurred in the sale of Stock,
including but not limited to broker commission fees.
4.2 WARRANTS. On the date hereof, the Company shall issue
to Consultant warrants (the "Warrants") to purchase
One Million Eight Hundred Thousand (1,800,000) shares
of the Company's common stock at an exercise price
equal to $0.17 per share, which is the Fair Market
Value as of the date hereof. The Warrants shall have
a term of five (5) years following the date hereof
and shall vest and become exercisable in equal
monthly installments of 50,000 shares commencing on
March 1, 2002 through and including February 1, 2005.
Upon the occurrence of a Change in Control of the
Company prior to the termination of this Agreement,
the vesting schedule of the Warrants shall
automatically be accelerated with respect to a
maximum of 300,000 warrants, such that up to 300,000
of such Warrant shares shall immediately vest as of
the date of such Change in Control. For purposes of
this Agreement "Change in Control" shall have the
meaning set forth in the attached Appendix A.
4.3 EXPENSES. During the Term, the Company shall
reimburse Consultant for any expenses reasonably
incurred by him in furtherance of his duties
hereunder on an accountable basis, including without
limitation travel (including (i) expense
reimbursement for Consultant's automobile travel to
and from the Company's location and other locations
as may be required; and (ii) coach class travel),
meals, entertainment, accommodations, and other
customary expenses for Company purposes, upon
submission of vouchers or receipts and in compliance
with such rules and policies generally applicable to
executives of the Company.
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5. Termination.
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5.1 TERMINATION FOR CAUSE. The Company may terminate the
Agreement hereunder for Cause at any time. "Cause"
shall mean that during the Term, the Consultant
engaged in gross and willful misconduct that is
materially and significantly injurious to the
Company, and, after written notice of such conduct,
Consultant has failed to cease such conduct within
not less than 20 days. Any termination pursuant to
this section shall be communicated by written Notice
of Intended Termination. For purposes of this
Agreement, a "Notice of Intended Termination" shall
mean a notice which shall clearly state the specific
termination provision in this Agreement relied upon
and shall set forth in reasonable and specific detail
the facts and circumstances claimed to provide a
basis for termination. For 20 days after receipt by
Consultant of the Notice of Intended Termination,
Consultant shall have the opportunity to meet and
confer with the appropriate and authorized
representative of the Company with respect to any
complaint or alleged breach, violation or default
hereunder, and shall have the opportunity to cure any
such breach, violation, default or any other event
which would be considered "Cause" hereunder for a
period of 15 days following such meeting.
5.2 COMPENSATION UPON TERMINATION FOR CAUSE. In the event
of termination of this Agreement by the Company for
Cause, the Company shall pay to Consultant (i) all
amounts of accrued but unpaid Fees through the
effective date of such termination, and (ii)
reimbursement for reasonable and verifiable expenses
incurred by Consultant through the date of notice of
such termination ((i) and (ii), the "Accrued
Benefits"). Any portion of the Warrants that has
vested and become exercisable prior to the date of
termination shall remain exercisable for a period of
two (2) months following the date of termination of
this Agreement for Cause. Any portion of Consultant's
Warrants that have not vested as of the date of
termination shall terminate as of such date.
5.3 COMPENSATION UPON TERMINATION WITHOUT CAUSE. In the
event the Company terminates this Agreement without
Cause as defined herein, or does not fully comply
with the termination and hearing procedures specified
in Section 5.1 herein, then the Company shall pay to
Consultant as actual and liquidated total damages the
Accrued Benefits. In addition, all warrants held by
Consultant which have vested as of the termination
date shall remain exercisable for a period of two (2)
years from the date of termination of this Agreement.
Any portion of Consultant's Warrants that have not
vested as of the date of termination shall terminate
as of such date.
5.4 COMPENSATION UPON TERMINATION BY REASON OF
CONSULTANT'S DEATH OR TOTAL DISABILITY. In the event
that this Agreement is terminated by reason of
Consultant's death or Total Disability (as defined
below), Consultant or Consultant's estate, as the
case may be, shall be entitled to receive (i) the
Accrued Benefits, and (ii) any portion of the
Warrants that have vested and become exercisable
prior to the date of termination. "Total Disability"
shall mean any physical or mental disability that,
even after reasonable accommodation by the Company,
prevents Consultant from performing one or more of
the essential functions of his position and which is
expected to be of at least 30 days duration. A
termination of this Agreement due to Total Disability
shall be deemed a termination without cause.
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6. Protection of Confidential Information.
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During the course of providing services to the Company, Consultant may
be exposed to documents and other information regarding the confidential affairs
of the Company, including without limitation information about its past, present
and future financial condition, the markets for its products, past, present or
future actual or threatened litigation, trade secrets, current and prospective
customer lists, operational methods, acquisition plans, prospects, plans for
future development and other business affairs and information about the Company
not readily available to the public (the "Confidential Information"). Consultant
shall not divulge, disclose, or otherwise use any Confidential Information for a
period of two (2) years from the Effective Date, unless and until such
information is readily available in the public domain or unless such disclosure
is required by law or occurs in the normal course of performing Consultant's
services to the Company.
7. Indemnification
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The Company agrees to indemnify and hold harmless Consultant to the
fullest extent possible from and against any and all losses, claims, damages,
and liabilities, joint or several (and all actions, claims, proceedings and
investigations in respect thereof), caused by, related to or arising out of,
directly or indirectly, the services provided under this Agreement, whether
under any statute, under common law, or otherwise. The Company will also
reimburse Consultant for all expenses (including attorneys' fees), as such
expenses are incurred, in connection with investigating, preparing to defend or
defending any such action, claim, proceeding or investigation, whether or not in
connection with pending or threatened litigation in which Consultant is a party
or target. If for any reason the foregoing indemnification is unavailable to
Consultant or insufficient to hold it harmless, then the Company will contribute
to the amount paid or payable by Consultant as a result of such loss, claim or
damage or liability in such proportion as is appropriate to reflect the benefits
received by the Company and the fault of the Company, as well as any relevant
equitable considerations. Consultant will have the right to retain counsel of
his own choice to represent Consultant, and the fees and expenses of such
counsel will be paid by the Company. Such counsel will, to the fullest extent
consistent with its professional responsibilities, cooperate with the Company
and any counsel designated by the Company. The indemnification, contribution and
expense reimbursement provisions in this Section 7 are in addition to, and not
in lieu of, any other obligation or liability the Company might otherwise have
to Consultant. Neither termination nor completion of this Agreement will affect
the provisions of this section, which will remain operative and in full force
and effect.
8. Arbitration and Governing Law.
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Any controversy, claim, or counterclaim arising from this Agreement
between the Company and the Consultant shall be submitted to and decided by
final and binding arbitration by a single arbitrator administered in Los
Angeles, California by JAMS under its commercial rules, and shall apply
California law without regard to conflict of laws provisions. The arbitrator may
not, in any event, either make any ruling, finding or award that does not
conform to the terms and conditions of this Agreement, or alter, amend, modify
or change any of the terms of this Agreement. The arbitrator's decision shall be
rendered within 30 days after the conclusion of the arbitration hearing, and the
arbitrator shall make findings of fact and shall set forth the reasons and legal
bases for the decision. Such arbitrator's decision shall be final and binding on
the parties and a judgment upon the decision rendered may be entered in any
court having jurisdiction thereof. The prevailing party in such dispute shall be
entitled to recover from the other party all reasonable costs and fees of
enforcing any right of the prevailing party including, without limitation, any
JAMS administration fee, the arbitrators fee, costs for the use of facilities
during the hearings, expert fees, accountant's fees and expenses, and attorneys'
fees and expenses. The prevailing party shall be that party which recovers a
judgment or award in the action.
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9. Notices.
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Any notice required, permitted or desired to be given pursuant to any
of the provisions of this Agreement shall be deemed to have been sufficiently
given or served for all purposes if delivered in person or sent by certified
mail, return receipt requested, postage and fees prepaid, or by national
overnight delivery prepaid service to the parties at their addresses set forth
below. Any party hereto may at any time and from time to time hereafter change
the address to which notice shall be sent hereunder by notice to the other party
given under this paragraph. The date of the giving of any notice sent by mail
shall be the day two (2) days after the posting of the mail, except that notice
of an address change shall be deemed given when received. The addresses of the
parties are as follows:
If to the Company: Junum Incorporated
Xxxxx Xxxxxxx, President
0000 Xxxxxxxxx Xx.
Xxxxx Xxxx, XX 00000
Telephone:(000) 000-0000
Fax: (000)000-0000
If to Consultant: Xxxxxx Xxxxxxx
0000 Xxxxxx Xxx. #0
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Any party may change such party's address for notices by notice duly
given pursuant hereto.
10. General.
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10.1 GOVERNING LAW. This Agreement shall be governed by
and construed and enforced in accordance with the
laws of the State of California without giving effect
to conflicts of laws principles thereof which might
refer such interpretations to the laws of a different
state or jurisdiction.
10.2 ENTIRE AGREEMENT. This Agreement sets forth the
entire understanding of the parties relating to
Consultant's services to the Company during the Term
and cancels and supersedes all agreements,
arrangements and understandings relating thereto made
prior to the date hereof, written or oral, between
the Consultant and the Company. This Agreement shall
not be altered or modified except in writing, duly
executed by the parties hereto.
10.3 AMENDMENTS; WAIVERS. This Agreement may be amended,
modified, superseded, canceled, renewed or extended,
and the terms or covenants hereof may be waived, only
by a written instrument executed by the parties, or
in the case of a waiver, by the party waiving
compliance. The failure of any party at any time or
times to require performance of any provision hereof
shall in no manner affect the right of such party at
a later time to enforce the same. No waiver by any
party of the breach of any term or covenant contained
in this Agreement, whether by conduct or otherwise,
in any one or more instances, shall be deemed to be,
or construed as, a further or continuing waiver of
any such breach, or a waiver of the breach of any
other term or covenant contained in this Agreement.
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10.4 SUCCESSORS AND ASSIGNS; BINDING AGREEMENTS. This
Agreement shall inure to the benefit of and shall be
binding upon the Company (and its successors and
assigns) and Consultant and his heirs, executors and
personal representatives. Prior to the effectiveness
of any succession (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of
the Company, the Company will require the successor
to expressly assume and agree to perform this
Agreement in the same manner and to the same extent
that the Company would be required to perform it if
no such succession had occurred. As used in this
Agreement, "Company" shall mean the Company as
defined above and any successor to its business
and/or assets which executes and delivers the
Agreement provided for in this Section 10.4 or which
otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law or
otherwise.
10.5 SEVERABILITY. The invalidity or unenforceability of
any provision of this Agreement shall not affect the
validity or enforceability of any other provision of
this Agreement. If any provision of this Agreement
shall be held invalid or unenforceable in part, the
remaining portion of such provision, together with
all other provisions of this Agreement, shall remain
valid and enforceable and continue in full force and
effect to the fullest extent consistent with law. In
lieu of any such invalid, illegal or unenforceable
provision, the parties hereto intend that there shall
be added as part of this Agreement a term, covenant
or provision as similar in terms to such invalid,
illegal or unenforceable term, covenant of provision,
or part thereof, as may be possible and be valid,
legal and enforceable.
10.6 WARRANTY. The Company and Consultant each hereby
warrant and agree that each is free to enter into
this Agreement, that the parties signing below are
duly authorized and directed to execute this
agreement, and that this Agreement is a valid,
binding and enforceable against the parties hereto.
10.7 CAPTIONS. The section headings contained herein are
for reference purposes only and shall not in any way
affect the meaning or interpretation of this
Agreement.
10.8 SURVIVAL OF TERMS. Notwithstanding the termination of
this Agreement for whatever reason, the provisions
hereof shall survive such termination, unless the
context requires otherwise.
10.9 COUNTERPARTS; FACSIMILE. This Agreement may be
executed by the parties hereto in separate
counterparts, each of which when so executed and
delivered shall be an original but all such
counterparts together shall constitute one and the
same instrument. Such execution may be by facsimile.
Any signature by facsimile shall be valid and binding
as if an original signature were delivered.
IN WITNESS WHEREOF, Consultant and the Company have executed this
Agreement as of the date first written above.
JUNUM INCORPORATED
/S/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx, President
CONSULTANT
/S/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
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APPENDIX A
"Change in Control" means the occurrence of any of the following: (A)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company to any "person" (as such term is
used in Section 1 3(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") which is (i) a third party, (ii) not affiliated with the
Company as of the date hereof, (iii) not affiliated with any holder (as of the
date hereof) of more than 4% of any class of outstanding capital stock of the
Company, and (iv) not the holder (as of the date hereof) of any convertible
security which is convertible into more than 4% of the outstanding capital stock
of the Company at any time (a "Non-affiliated Purchaser"), (B) the adoption of a
plan relating to the liquidation or dissolution of the Company, and (C) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any Non-affiliated Purchaser becomes
the "beneficial owner" (as such terms are used in Rule 13d-3 and Rule 1 3d-5
under the Exchange Act), directly or indirectly, of capital stock of the Company
representing a greater proportion of the voting power of the Company's
outstanding voting securities than the shares of Company stock "beneficially
owned" by the Principal Shareholders and their Related Parties in the aggregate.
For purposes of this definition, any transfer of an equity interest of an entity
that was formed for the purpose of acquiring voting stock of the Company will be
deemed to be a transfer of such voting stock as corresponds to the portion of
the equity that has been so transferred.
"Principal Shareholders" those shareholders which hold beneficial
ownership of an aggregate 51 % or more of the outstanding shares of the Company
on the Effective Date.
"Related Party" with respect to any Principal Shareholder means any (A)
spouse or family member of such Principal Shareholder, (B) corporation,
partnership or any other entity, the stockholders, partners, owners or persons
beneficially holding an 80% or more controlling interest of which consist of
such Principal Shareholder and/or such other persons referred to in the
immediately preceding clause (A), or (C) trust, the beneficiaries holding more
than a 50% beneficial interest of which consist of any Principal Shareholder
and/or other such persons referred to in clause (A), so long as the Principal
Shareholder or any of the other persons referred to in clause (A) above or any
other Principal Shareholder serves as trustee therefor and, in such capacity,
possesses and retains the right to vote, at such trustee's absolute discretion,
all shares of capital stock held in such trust.
