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EXHIBIT 10.4
CONSULTING AGREEMENT
(XXXXXX X. XXXXXX)
This Consulting Agreement (the "Agreement"), entered into as of the
10th day of August, 1999, is by and among XxxxxxxXxxx.xxx Incorporated, a
Delaware corporation (the "Company"), Xxxxxxxx.xxx Incorporated, a New York
corporation ("Cytation") and Xxxxxx X. Xxxxxx ("Xxxxxx").
W I T N E S S E T H :
WHEREAS, prior to the acquisition of the Company by Cytation, Xxxxxx
was the President of the Company; and
WHEREAS, having acquired the Company as of the date hereof, Cytation
desires to engage Xxxxxx to perform certain consulting services for the Company
and to be ensured that Xxxxxx will not compete with the Company or Cytation for
the period and within the geographical areas hereinafter specified; and
WHEREAS, Xxxxxx desires to perform such consulting services for the
Company under the terms and conditions described herein.
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties do hereby agree as follows:
1. CONSULTING SERVICES.
(a) Effective as of August 10, 1999, and through the period ending
December 31, 2000, Cytation and the Company hereby retain Xxxxxx to serve as a
consultant to the Company, and to perform such services for or on behalf of the
Company as may be reasonably requested from time to time.
(b) Xxxxxx hereby agrees to accept the engagement described above upon
the terms and conditions herein contained. Xxxxxx agrees to devote sufficient
business and productive time, skill, attention and efforts to the performance of
the services reasonably requested of him. Xxxxxx agrees to adhere at all times
to Company policies and to conduct his services in strict compliance with
applicable laws, rules and regulations and with a strong commitment to the
highest standards of business ethics. Xxxxxx shall not, during the term of his
engagement under this Agreement, perform services related to the same subject
matter as those performed under this Agreement for any other individual, firm,
association or organization.
2. CONSULTING FEES.
(a) CONSULTING FEE. For all services rendered during the term of this
Agreement, the Company shall pay to Xxxxxx a consulting fee at an annual rate of
$133,900, such fee to be paid in arrears ratably throughout the term of this
Agreement, but not less frequently than monthly.
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(b) HEALTH AND DENTAL INSURANCE. During the term of this Agreement,
Xxxxxx may continue to participate in the Company's health and dental plans
under the same terms and conditions as in effect immediately prior to the
effective date of this Agreement.
(c) STOCK OPTIONS. Effective as of August 10, 1999, the Company agrees
to award Xxxxxx an option to purchase 50,000 shares of the common stock of
Cytation, $.001 par value, at an exercise price equal to $4.875 per share. The
option shall be embodied in a written option agreement between the Company and
Xxxxxxx substantially in the form attached hereto as Exhibit A, the terms of
which shall be conclusive and binding.
(d) BUSINESS EXPENSES. During the term of this Agreement, the Company
will reimburse Xxxxxx in a manner consistent with Company practice for any
reasonable travel and out-of-pocket expenses actually incurred by Xxxxxx in
connection with performing the consulting services requested hereunder. The
Company's agreement under this subparagraph (b) is subject to Xxxxxx'x
substantiation of such expenses in accordance with Company policy.
3. NON-COMPETITION AGREEMENT.
(a) Xxxxxx will not, during the period of Xxxxxx'x engagement by the
Company, and for a period of one (1) year immediately following the termination
of such engagement, for any reason whatsoever, directly or indirectly, for
Xxxxxx or on behalf of or in conjunction with any other person, persons,
company, partnership, corporation or business of whatever nature:
(i) engage, as an officer, director, stockholder,
owner, partner, joint venturer, or in a managerial, consulting
or advisory capacity, whether as an employee, independent
contractor, consultant or advisor, or as a sales
representative, in any business which offers any services or
products in direct competition with Company within the United
States of America ("USA");
(ii) call upon any person who is, at that time,
within the USA, an employee of the Company in a managerial
capacity for the purpose or with the intent of enticing such
employee away from or out of the employ of Company;
(iii) call upon any person or entity which is, at
that time, or which has been, within one (1) year prior to
that time, a client of Company within the USA for the purpose
of soliciting or selling products or services in direct
competition with Company within the USA;
(iv) call upon any prospective acquisition candidate,
on Xxxxxx'x own behalf or on behalf of any competitor, which
candidate was, to Xxxxxx'x actual knowledge after due inquiry,
either called upon by Company or for which Company made an
acquisition analysis, for the purpose of acquiring such
entity;
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(v) induce or attempt to induce any person known by
Xxxxxx to be a customer, supplier, or business relation of the
Company to cease doing business with the Company or in any way
interfere with the relationship between the Company and any
person known by Xxxxxx to be a customer, supplier, licensee,
or business relation of the Company; or
(vi) perform services related to the same subject
matter as those performed under this Agreement for any
individual, firm, association, organization, or entity.
Notwithstanding the above, the foregoing covenants shall not be deemed
to prohibit Xxxxxx from acquiring as an investment not more than one percent
(1%) of the capital stock of a competing business, whose stock is traded on a
national securities exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to Company
as a result of a breach of the foregoing covenants, and because of the immediate
and irreparable damage that could be caused to Company for which Company would
have no other adequate remedy, Xxxxxx agrees that the foregoing covenants may be
enforced by Company in the event of breach by Xxxxxx, by injunctions and
restraining orders.
(c) The covenants in this Paragraph 3 are severable and separate, and
the unenforceability of any specific covenant shall not affect the provisions of
any other covenant. Moreover, in the event any court of competent jurisdiction
shall determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and this
Agreement shall thereby be reformed.
(d) Xxxxxx acknowledges that the covenants in this Paragraph 3 (i) are
agreed to by Xxxxxx as an inducement for and in consideration of the Company's
entering into this Agreement, and (ii) contain limitations as to time,
geographic area and scope of activity to be restrained that are reasonable and
do not impose a greater restraint than is necessary to protect the goodwill or
other business interests of Company.
(e) Xxxxxx agrees that all of the covenants in this Paragraph 3 shall
be construed as an agreement independent of any other provision in this
Agreement, that Company shall be the beneficiary of and have the right to
enforce such covenants, and that the existence of any claim or cause of action
of Xxxxxx against Company, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by Company of such covenants.
It is specifically agreed that the period of one (1) year following termination
of Xxxxxx'x engagement, during which the agreements and covenants of Xxxxxx made
in this Paragraph 3 shall be effective, shall be computed by excluding from such
computation any time during which Xxxxxx is in violation of any provision of
this Paragraph 3.
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4. TERM AND TERMINATION.
(a) TERM. This Agreement shall begin on August 10, 1999, and shall
terminate on December 31, 2000. This Agreement may only be extended by a further
written agreement by the parties. Notwithstanding the foregoing, either party
may terminate this Agreement as provided below.
(b) XXXXXX TERMINATION. Xxxxxx may terminate this Agreement at any time
by providing notice to Cytation and the Company at least thirty (30) days in
advance. Upon termination of this Agreement by Paxton, Paxton shall be entitled
to receive payment of consulting fees accrued through the date of termination.
Any portion of the option described in Paragraph 2(a) hereof which is not
exercisable on the date this Agreement is terminated shall immediately
terminate, and any remaining portion, if any, shall expire upon the earlier of
(i) [three months} from the date this Agreement is terminated, or (ii) the
expiration of the option term.
(c) COMPANY TERMINATION WITHOUT CAUSE. Cytation may terminate this
Agreement without Cause (as defined below) at any time by providing notice to
Xxxxxx at least thirty (30) days in advance. Upon termination of this Agreement
by Cytation without Cause, Xxxxxx will continue to receive the consulting fees
described in Paragraph 2(a) hereof until December 31, 2000. The option described
in Paragraph 2(c) hereof shall immediately become exercisable in full, and shall
expire upon the earlier of (i) one year from the date of termination of this
Agreement, or (ii) the expiration of the option term. .
(d) TERMINATION FOR CAUSE. Cytation may terminate this Agreement
without notice for Cause (as defined below). In the event the Company terminates
this Agreement for Cause, Xxxxxx shall be entitled to consulting fees accrued
through the date of termination, but shall be entitled to no further rights or
benefits hereunder. The option described in Paragraph 2(c) hereof shall
immediately terminate and become null and void. For purposes of this Agreement,
"Cause" means, as determined in good faith by two-thirds of the Board of
Directors of Cytation, (1) Xxxxxx'x material and irreparable breach of this
Agreement, (2) Xxxxxx'x xxxxx negligence in the performance of his engagement
hereunder; (3) Xxxxxx'x willful dishonesty or fraud with respect to the business
or affairs of the Company; (4) Xxxxxx'x conviction of a felony crime; or (5)
chronic alcohol abuse or illegal drug abuse by Xxxxxx.
(e) DISABILITY OR DEATH. Upon the Disability (as defined below) or
death of Xxxxxx during the term of this Agreement, the Company shall pay to
Xxxxxx or Xxxxxx'x designated beneficiary(ies) consulting fees described in
Paragraph 2(a) hereof until December 31, 2000. The option described in Paragraph
2(c) hereof shall immediately become exercisable in full, and shall upon expire
upon the earlier of (i) one year from the date of Disability or death, or (ii)
the expiration of the option term. For purposes of this Agreement, "Disability"
means the inability of Xxxxxx to discharge his duties hereunder for one or more
periods totaling three (3) months during any consecutive twelve (12) month
period due to illness, accident or other disability (mental or physical).
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5. RETURN OF COMPANY PROPERTY. All records, files, business plans,
financial statements, manuals, memoranda, lists, designs, patents, and other
property delivered to or compiled by Xxxxxx by or on behalf of Company or any of
its representatives, vendors or clients which pertain to the business of Company
shall be and remain the property of Company and be subject at all times to its
discretion and control. Likewise, all correspondence, reports, records, charts,
advertising materials and other similar data pertaining to the business,
activities or future plans of Company which is collected by Xxxxxx shall be
delivered promptly to the Company without request by it upon termination of
Xxxxxx'x employment.
6. INVENTIONS AND WORKS. Xxxxxx shall disclose promptly to the Company
and Cytation any and all significant conceptions and ideas for inventions,
improvements and valuable discoveries, whether patentable or not, and any and
all works of authorship (including computer software), whether copyrightable or
not, which are conceived or made by Xxxxxx, solely or jointly with another,
during the term of this Agreement or within one (1) year thereafter, and which
are directly related to the business or activities of the Company and which
Xxxxxx conceives as a result of Xxxxxx'x engagement by the Company. Xxxxxx
hereby assigns and agrees to assign all Xxxxxx'x interests therein to the
Company or its nominee. Whenever requested to do so by the Company, Xxxxxx shall
execute any and all applications, assignments or other instruments that the
Company shall deem necessary to apply for and obtain copyright registration or
Letters Patent of the United States or any foreign country or to otherwise
protect the Company's interest therein. It is understood and agreed that Xxxxxx
has heretofore disclosed all inventions and works as described above to the
Company, and has assigned to it all inventions and works now known to him over
which he has any control.
7. TRADE SECRET, PROPRIETARY AND CONFIDENTIAL INFORMATION. Xxxxxx
acknowledges and agrees that Xxxxxx has or may during the term of this Agreement
learn about, develop or be entrusted with, Trade Secret, Proprietary and
Confidential Information. The Company has in the past and will in the future use
reasonable efforts to keep secret the Trade Secret, Proprietary and Confidential
Information. Xxxxxx expressly acknowledges and agrees that unless the Trade
Secret, Proprietary and Confidential Information becomes publicly known through
legitimate means not involving an act or omission by Xxxxxx: (i) the Trade
Secret, Proprietary and Confidential Information is, and at all times shall
remain, the sole and exclusive property of the Company, (ii) Xxxxxx shall use
the utmost diligence to guard and protect the Trade Secret, Proprietary and
Confidential Information from disclosure to any other person or entity except as
reasonably necessary in the scope of performing services for the Company; (iii)
Xxxxxx shall not use for his own benefit, or for the benefit of any other person
or entity other than the Company, and shall not disclose, directly or
indirectly, to any other person or entity, any of the Trade Secret, Proprietary
and Confidential Information except as reasonably necessary in the scope of
performing services for the Company; and (iv) except as reasonably necessary in
the scope of performing services for the Company, Xxxxxx shall not seek or
accept any of the Trade Secret, Proprietary and Confidential Information from
any former, present, or future employee of the Company.
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For purposes of this Agreement, "Trade Secret, Proprietary or
Confidential Information" means any and all confidential, trade secret and/or
proprietary information of the Company or its clients, including without
limitation financial information, projected budgets, marketing strategies, past
performances, client lists, pricing policies, operational methods, marketing
plans or strategies, product development techniques or plans, flowcharts,
software programs, data, systems, techniques, business acquisition plans,
inventions and research projects and other business affairs or any other
documents or materials, whether or not reduced to tangible form, pertaining to
the business of Company.
8. COMPLETE AGREEMENT. This Agreement is not a promise of future
engagement or employment. This written Agreement is the final, complete and
exclusive statement and expression of the agreement between the Company and
Xxxxxx and of all the terms of this Agreement, and it cannot be varied,
contradicted or supplemented by evidence of any prior or contemporaneous oral or
written agreements. This written Agreement may not be later modified or extended
except by a further writing signed by a duly authorized officer of the Company
and Xxxxxx, and no term of this Agreement may be waived except by writing signed
by the party waiving the benefit of such term.
9. INDEPENDENT CONTRACTOR STATUS. In performing the services required
under this Agreement, Xxxxxx shall be deemed to be, and shall be, an independent
contractor, and not a joint venturer, partner, employee or agent with or of the
Company. Xxxxxx acknowledges that by entering into this Agreement, he shall not
participate in any employee benefit plans or be entitled to any fringe benefits
offered to employees or executives of the Company, except as specifically
provided for herein. Without limiting the generality of the foregoing, neither
the Company nor Xxxxxx shall have the power to bind the other, contractually or
otherwise, except with prior written approval.
10. NOTICE. Whenever notice is required hereunder, it shall be given in
writing and addressed to Cytation and the Company at the main business office of
Cytation, and to Xxxxxx at the address reflected in the payroll records of the
Company.
11. GOVERNING LAW. This Agreement shall in all respects be construed
according to the laws of the State of Delaware.
12. ARBITRATION. Any dispute, controversy or claim arising out of or
relating to this Agreement or the breach or performance hereof will be settled
by arbitration in accordance with the laws of the State of Delaware by an
arbitrator mutually agreed upon by the Company and Xxxxxx. If an arbitrator
cannot be agreed upon, the Company and Xxxxxx shall each choose an arbitrator,
and these two together shall select a third arbitrator. If the first two
arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator will be appointed by the American Arbitration Association in
Providence, Rhode Island. Such arbitration will be conducted in the City of
Providence in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, except with respect to the selection of arbitrators
which shall be as provided in this Paragraph 12. Judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
XXXXXXXX.XXX INCORPORATED
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx, Chief Financial Officer
XXXXXXXXXXX.XXX INCORPORATED
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx, Treasurer
XXXXXX X. XXXXXX
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
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