EXHIBIT 10.13
CONSULTING AGREEMENT
(XXXXXXX X. XXXXXX)
THIS CONSULTING AGREEMENT (the "Agreement") is made as of November 1,
1997 (the "Effective Date"), by and among APPLIED VOICE RECOGNITION, INC., a
Utah corporation (the "company"), and XXXXXXX X. XXXXXX, an individual residing
in Chicago, Illinois ("consultant").
W I T N E S S E T H:
WHEREAS, the Company and Consultant desire to enter into an agreement
regarding the providing of certain consulting services by Consultant to the
Company pursuant to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the parties covenant and agree as follows:
1. ENGAGEMENT. The Company hereby engages Consultant and Consultant
hereby accepts the engagement with the Company on the terms and conditions set
forth in this Agreement.
2. TERM OF ENGAGEMENT. The term of Consultant's engagement
hereunder (the "term") shall commence as of November 1, 1997 and shall continue
(subject to termination as hereinafter provided) for a one year term expiring on
October 31, 1998 (the "Expiration Date"). At the expiration of the Term, the
Company shall have no further obligation to Consultant other than payment of any
earned and unpaid fees under Section 3(a), the payment of reimbursable amounts
pursuant to Section 3(b), any amount payable pursuant to Section 6 and any right
under the Stock Option Agreement (as herein defined), and Consultant shall have
no further obligation to the Company except as set forth in Sections 7, 8, 9 and
10.
3. COMPENSATION AND OTHER BENEFITS.
a. As compensation for all services rendered by Consultant in
performance of Consultant's duties or obligations under this Agreement, the
Company shall pay Consultant a fee of twelve thousand five hundred dollars
($12,500) per month. The consulting fee provided for herein shall be payable in
equal semi-monthly installments on or about the first and fifteenth of each
month or at such other intervals as the Company and Consultant may hereafter
agree to from time to time; provided, however, any payment due as of the
execution of this Agreement shall be paid upon execution of this Agreement.
(b) The Company shall reimburse Consultant for all expenses
reasonably incurred by Consultant in connection with performing services
hereunder, including, without limitation, business class travel and other
business expenses and costs. Amounts reimbursable by the Company to Consultant
hereunder shall be paid by the Company to Consultant within thirty days after
receipt by the Company of Consultant's invoice therefor.
4. DUTIES.
a. During the term hereof, Consultant shall provide and perform
for the Company up to one hundred (100) days of services that generally conform
to the description of services described on EXHIBIT AA@ attached hereto and that
are designated by the Chairman or the President of the Company from time to
time. For purposes hereof, a day of service shall be approximately equal to
seven and one half working hours, but shall not include travel time. Consultant
agrees to provide to the Company a monthly accounting of time spent performing
services hereunder, including a brief description of the services performed.
Consultant shall retain full direction and control of the means and methods by
which Consultant performs the above services and of the places at which such
services are to be rendered.
b. During the Term, Consultant agrees not to solely or jointly
with others undertake or join any planning for or organization of any business
activity directly in the area of voice recognition software designs and
applications.
c. Consultant agrees that during the Term Consultant shall
refer to the Company all opportunities in the computer industry related to voice
recognition software designs and applications to which Consultant might become
exposed in carrying out Consultant's duties and responsibilities hereunder.
5. STOCK OPTION PLAN. As a further inducement to Consultant to
accept the consulting engagement upon the terms set forth herein and in
consideration of Consultant=s execution of this Agreement, Consultant shall be
granted, under the Applied Voice Recognition, Inc. 1997 Incentive Plan, options
to purchase 100,000 shares of the Company's common stock, par value $0.001 (the
"options"), pursuant to the Stock Option Agreement in the form attached hereto
as EXHIBIT AB@ (the "Stock Option Agreement"). The Stock Option Agreement shall
(i) be executed by the Company and Consultant immediately upon execution of this
Agreement, (ii) specify an exercise price per share (subject to adjustment as
set forth in the Stock Option Agreement) equal to the last reported trade of the
Company's common stock on the Nasdaq OTC Bulletin Board on the date prior to the
date this Agreement becomes fully executed by the parties hereto, and (iii)
include a provision providing for vesting of the stock options at the rate of
one thousand (1,000) shares per day for each day of services performed by
Consultant hereunder; provided, that any options not vested on the Expiration
Date shall, to the extent that the Term was not sooner terminated, become vested
on the Expiration Date. In the event Consultant's engagement is terminated for
any reason as described herein, Consultant shall be eligible to retain all
Options that have vested, but following such termination, any additional
unvested Options shall be cancelled.
6. TERMINATION OF ENGAGEMENT. Either of the Company or the
Consultant shall have the right to terminate Consultant's engagement hereunder
without prior notice and without cause; provided, however, (a) if Consultant's
engagement was terminated by the Company, Consultant shall continue to receive
the compensation described in Section 3 above for a period of one (1) month
following the date of such termination; and (b) in the event the aggregate
compensation paid by the Company to Consultant pursuant to Section 3(a),
including the one (1) month severance described above (if applicable),
aggregates less than $1,500 per day for each day of service Consultant has
rendered to the Company pursuant hereto, the Company shall pay to Consultant
such difference. Notwithstanding the foregoing, the aggregate compensation to
be paid to Consultant pursuant to this Agreement shall not exceed $150,000.
7. INVENTIONS AND CREATIONS BELONG TO THE COMPANY.
a. Any and all inventions, discoveries, improvements or
creations which Consultant has conceived or made or may conceive or make during
the Term and that in any way, directly or indirectly, are connected with the
Company's business (collectively, "creations") shall be the sole and exclusive
property of the Company. Consultant agrees that all Creations that are
copyrightable works created by Consultant are "works made for hire" and shall be
the sole and complete property of the Company and that any and all copyrights to
such works shall belong to the Company. To the extent any of the works
described in the preceding sentence are not deemed to be "works made for hire,"
Consultant hereby assigns all proprietary rights, including copyright, in these
works to the Company without further compensation.
b. Consultant further agrees to (i) disclose promptly to the
Company all such Creations, (ii) assign all such Creations to the Company, and
(iii) execute and sign any and all applications, assignments or other
instruments which the Company may deem necessary in order to enable the Company,
at the Company's expense, to apply for, prosecute and obtain copyrights, patents
or other proprietary rights in the United States and foreign countries or in
order to transfer to the Company all right, title and interest in said
Creations.
8. CONFIDENTIALITY; OWNERSHIP OF INFORMATION. The Company promises
that the Company will, during the Term, provide Consultant with access to such
Confidential Information (as defined in Section 8(a)) owned by the Company and
that is used in the operation of the Company's business as reasonably necessary
to allow Consultant to perform Consultant's obligations hereunder. Consultant
acknowledges that the Company has agreed to provide Consultant with access to
such Confidential Information of the Company during the Term.
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a. DEFINITION. For purposes of this Agreement, "Confidential
Information" means any and all information relating directly or indirectly to
the Company that is not or does not become generally ascertainable from public
or published information or trade sources and that represents proprietary
information to the Company, excluding, however, (i) Consultants' business
contacts, (ii) information already known to Consultant prior to Consultant's
engagement with the Company, (iii) information disclosed to Consultant without
confidential or proprietary restriction by a third party who rightfully
possesses the information (without confidential or proprietary restriction) and
did not learn of it, directly or indirectly, from the Company, or (iv)
information required to be divulged in any legal or administrative proceeding in
which Consultant is involved. Confidential Information shall consist of, for
example, and not intending to be inclusive, (A) software (source and object
codes), algorithms, computer processing systems, techniques, methodologies,
formulae, processes, compilations of information, drawings, proposals, job
notes, reports, records and specifications, and (B) information concerning any
matters relating to the business of the Company, any of its customers,
prospective customers, customer contacts, licenses, the prices it obtains or has
obtained for the licensing of its software products and services, or any other
information concerning the business of the Company and the Company's good will.
b. NO DISCLOSURE. During the Term and at all times thereafter,
Consultant shall not disclose or use in any manner, directly or indirectly, and
shall use Consultant's best efforts and shall take all reasonable precautions to
prevent the disclosure of, any such Confidential Information, except to the
extent required in the performance of Consultant's duties or obligations to the
Company hereunder or by express prior written consent of a duly authorized
officer or director of the Company.
c. OWNERSHIP OF INFORMATION. Such Confidential Information is
and shall remain the sole and exclusive property and proprietary information of
the Company or the Company's customers, as the case may be, and is disclosed in
confidence by the Company or permitted to be acquired from such customers in
reliance on Consultant's agreement to maintain such Confidential Information in
confidence and not to use or disclose such Confidential Information to any other
person except in furtherance of the Company's business.
d. RETURN OF MATERIAL. Upon the expiration of the Term or
earlier termination of the engagement for any reason, Consultant shall
immediately turn over to the Company all documents, disks or other magnetic
media, or other material in Consultant's possession or under Consultant's
control that may contain or be derived from Creations or Confidential
Information. Consultant shall not retain any Confidential Information in any
form (e.g., computer hard drive, microfilm, etc.) upon the expiration of the
Term or earlier termination of the engagement.
9. NONCOMPETE; WORKING FOR COMPETITOR. In consideration of
Consultant's engagement by the Company, Consultant will not, at any time during
the Term or at any time for one (1) year subsequent to any expiration or, if
earlier, termination of the Term, directly or indirectly, within the United
States, Canada, Mexico, South America or Europe, for Consultant's own account or
on behalf of any direct competitors of the Company, engage in any business or
transaction directly involving the design, installation, integration, service or
consulting with respect to voice recognition software designs and applications
(whether as an employee, employer, independent contractor, consultant, agent,
principal, partner, stockholder, corporate officer, director or in any other
individual or representative capacity), without the prior written consent of the
Company, which consent may be withheld by the Company in the Company's sole and
absolute discretion; provided, that nothing herein shall prohibit Consultant
from acquiring or holding securities of any publicly traded company.
10. NON-SOLICITATION OF EMPLOYEES. During the Term and for a period
of one (1) year after the date of expiration or, if earlier, termination of the
Term, Consultant will not in any way (i) induce or attempt to induce any
employee of the Company to quit employment with the Company; (ii) otherwise
intentionally interfere with or intentionally disrupt the Company's relationship
with its employees; (iii) solicit or entice any employee of the Company to leave
the employ of the Company other than by general advertisement or other
solicitation not directed specifically to such employee; or (iv) hire or engage
(whether for his own account or the account of others) any person Consultant
knew to be an employee of the Company or hire or engage any person Consultant
knew to be a former employee of the Company whose employment with the Company
ceased less than one year before the date of such hiring or engagement. With
regard to the foregoing, Consultant agrees that he will use reasonable means to
determine whether any person hired by Consultant during the applicable period
meets the provisions of clause (iv) above. Consultant acknowledges that the
Company claims that any
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attempt on the part of Consultant to induce others to leave the Company's
employ, or any effort by Consultant to interfere with the Company's relationship
with its employees would be harmful and damaging to the Company.
11. CONSULTANT'S ACKNOWLEDGEMENT. It is the express intention of
Consultant and the Company to comply with sections 15.50 et seq. of the Texas
Business and Commerce Code in effect as of the date of execution hereof.
Consultant stipulates that the provisions of this Agreement are not oppressive
or overly burdensome to Consultant and will not prevent Consultant from earning
an income following termination of this Agreement. Consultant warrants and
represents that:
a. Consultant is familiar with non-compete and non-solicitation
covenants;
b. Consultant has discussed or acknowledges the opportunity to
discuss the provisions of the non-compete and non-solicitation covenants
contained herein with Consultant's attorney and has concluded that such
provisions (including, without limitation, the right to equitable relief and the
length of time provided for herein) are fair, reasonable and just under the
circumstances;
c. Consultant is fully aware of the obligations, limitations
and liabilities included in the non-compete and non-solicitation covenants
contained in this Agreement;
d. The scope of activities covered hereby are substantially
similar to those activities to be performed by Consultant under this Agreement;
e. The one (1) year non-compete and non-solicitation period is
a reasonable restriction, giving consideration to the following factors: (1)
Consultant and the Company reasonably anticipate that this Agreement, although
terminable under certain provisions, will continue in effect for sufficient
duration to allow Consultant to attain superior bargaining strength and an
ability for unfair competition with respect to the customers covered hereby; (2)
the duration of the one (1) year non-compete and non-solicitation period is a
reasonably necessary period to allow the Company to restore its position of
equivalent bargaining strength and fair competition with respect to those
customers covered hereby; and (3) historically, consultants and employees of all
types have remained with the Company for a duration of longer than the duration
of the one (1) year non-compete and non-solicitation period; and
f. The limitations contained in this Agreement with respect to
geographic area, duration and scope of activity are reasonable; however, if any
court shall determine that the geographic area, duration or scope of activity of
any restriction contained in this Agreement is unenforceable, it is the
intention of the parties that such restrictive covenants set forth herein shall
not thereby be terminated, but shall be deemed amended to the extent required to
render such covenants valid and enforceable.
12. REMEDIES; INJUNCTION. In the event of a breach or threatened
breach by Consultant of any of the provisions of this Agreement, Consultant
agrees that the Company, in addition to and not in limitation of any other
rights, remedies or damages available to the Company at law or in equity, shall
be entitled to a permanent injunction without the necessity of proving actual
monetary loss in order to prevent or restrain any such breach by Consultant or
by Consultant's partners, agents, representatives, servants, employees and/or
any and all persons directly or indirectly acting for or with Consultant. It is
expressly understood between the parties that this injunctive or other equitable
relief shall not be the Company's exclusive remedy for any breach of this
Agreement, and the Company shall be entitled to seek any other relief or remedy
which it may have by contract, statute, law or otherwise for any breach hereof.
13. ARBITRATION. The parties agree that all disputes or questions
arising in connection with this Agreement and/or the termination of Consultant's
engagement hereunder shall be settled by a single arbitrator pursuant to the
rules of the American Arbitration Association in the City of Houston, Texas, and
the award of the arbitrators shall be final, non-appealable, conclusive and
enforceable in a court of competent jurisdiction; provided, however,
notwithstanding the foregoing, in no event shall any dispute, claim or
disagreement arising under Sections 7, 8, 9 and 10 of this Agreement that
requires injunctive or other equitable relief be required to be submitted to
arbitration pursuant to this provision or otherwise.
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14. NOTICES. Any notice, demand or request which may be permitted,
required or desired to be given in connection therewith shall be given in
writing and directed to the Company and Consultant as follows:
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If to the Company, at: Applied Voice Recognition, Inc.
0000 Xxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
Facsimile No.: (000) 000-0000
with a copy to: Xxxxx, Xxxxx & Xxxxxx
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: J. Xxxxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
or, if to Consultant, at: Xx. Xxxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Notices shall be deemed properly delivered and received when and if either: (i)
personally delivered; (ii) delivered by nationally-recognized overnight courier;
(iii) when deposited in the U.S. Mail, by registered or certified mail, return
receipt requested, postage prepaid; or (iv) sent via facsimile transmission with
confirmation mailed by regular U.S. mail. Any party may change its notice
address for purposes hereof to any address within the continental United States
by giving written notice of such change to the other parties hereto at least
fifteen days prior to the intended effective date of such change.
15. SEVERABILITY. If any provision of this Agreement is rendered or
declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation or by decree of a court of last resort, the Company and
Consultant shall promptly meet and negotiate substitute provisions for those
rendered or declared illegal or unenforceable, but all the remaining provisions
of this Agreement shall remain in full force and effect.
16. ASSIGNMENT. This Agreement may not be assigned by any party
without the prior written consent of the other parties.
17. BINDING AGREEMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, and their respective legal
representatives, heirs, successors and permitted assigns.
18. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.
19. ATTORNEYS FEES. In the event of any dispute between the parties
regarding this Agreement, the prevailing party shall be entitled to be
reimbursed for such prevailing party's attorneys fees and costs of court (or
cost of arbitration, as applicable) by the non-prevailing party.
20. AGREEMENT READ, UNDERSTOOD AND FAIR. Consultant has carefully
read and considered all provisions of this Agreement and agrees that all of the
restrictions set forth are fair and reasonable and are reasonably required for
the protection of the interests of the Company.
21. INDEPENDENT CONTRACTOR. Consultant shall operate at all times as
an independent contractor of the Company, and is in no way considered an
employee of he Company. This Agreement does not authorize the Consultant to act
for the Company as its agent or to make commitments on behalf of the Company.
22. AMENDMENTS. This Agreement may not be modified or amended except
by an instrument in writing, signed by the Consultant and by a duly authorized
representative of the Company.
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23. ENTIRE AGREEMENT. The terms of this Agreement are intended by
the parties to be the final expression of their agreement with respect to the
retention of Consultant by the Company and may not be contradicted by evidence
of any prior or contemporaneous agreement. The parties further intend that this
Agreement shall constitute the complete and exclusive statement of its terms and
that no extrinsic evidence whatsoever may be introduced in any judicial,
administrative, or other legal proceeding involving this Agreement.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
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IN WITNESS WHEREOF, the parties have executed this Agreement on this
1st day of November, 1997, effective as of the Effective Date.
THE COMPANY:
APPLIED VOICE RECOGNITION, INC., a Utah
corporation
By: /S/ XXXXXXX X. XXXXXXXX
----------------------------------------
Xxxxxxx X. Xxxxxxxx, Chairman and Chief
Executive Officer
CONSULTANT:
/S/ XXXXXXX X. XXXXXX
----------------------------------------
XXXXXXX X. XXXXXX
Signature Page to
Consulting Agreement
(Xxxxxxx X. Xxxxxx)
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