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EXHIBIT 10.23
CONSULTING AGREEMENT
AGREEMENT is made as of this 1st day of October 1997, by and between
AUGMENT SYSTEMS INC., a Delaware corporation with its principal place of
business located at 0 Xxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxxx 00000 (the
"Company"), and VENTURE MANAGEMENT CONSULTANTS, LLC, a Massachusetts limited
liability company with its principal place of business located at 00 Xxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 ("Consultant").
RECITALS
WHEREAS, the Company has agreed to engage Consultant as a Consultant to
render advice and services from time to time regarding strategic planning and
financial matters; and general business advice requested from time to time by
the Company;
WHEREAS, Consultant and the Company agree that certain information
regarding the trade secrets, marketing plans and strategies, business and
operations of the Company that Consultant may obtain, prepare, review or develop
during the course of its relationship with the Company should be used
exclusively for the benefit of the Company and are deemed to be "works for hire"
for the Company.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and conditions herein contained, the parties hereto agree as follows:
1. Consultant's Services
(a) The Company hereby retains Consultant, and its members, to perform
the following consulting and advisory services (the "Services") upon the terms
and conditions set forth in this Agreement.
(b) Consultant's Services to be rendered to the Company shall include
the following: assistance in the evaluation by the Company of various financing
options, including the assessment of various forms of financing, whether through
bank lines of credit, private placements, public offering, merger or
acquisition; the review of strategic financial plans; the review and evaluation
of private placement memorandums; the review of offering literature and business
plans for private placements of the Company's debt or equity securities;
evaluation and critique of the Company's operations and such other general
business advice and assistance relating to the Company's capital structure,
operations, finance and working capital requirements as may be requested from
time to time by the Board of Directors and senior executive officers of the
Company.
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2. Independent Contractor. It is expressly understood that the
relationship of Consultant to the Company is that of an independent contractor
and consultant. Nothing contained herein shall be construed to create an
employer and employee or principal and agent relationship between the Company
and Consultant. Consultant shall have sole and exclusive responsibility for the
withholding and payment of all federal, state and local taxes and for all
employment and disability insurance, Social Security obligations and other
benefits for Consultant's officers, employees and agents. Consultant shall
assume and accept all responsibilities which are imposed upon an independent
contractor by any statute, regulation, rule of law or otherwise. Consultant is
not authorized to bind the Company, to incur any obligation or liability on
behalf of the Company, or to use the Company's name except as expressly
authorized in writing by the Company or as contemplated by this Agreement.
3. Compensation for Services. For the performance of the Services to be
rendered to the Company during the term of this Agreement, the Company shall pay
and provide Consultant, as full and complete compensation for the Services,
compensation as follows:
(a) Equity Issuance. The Company shall issue to Consultant, warrants
(singularly the "Warrant" and collectively the "Warrants") to purchase an
aggregate of 400,000 shares of the Company's common stock, $.01 par value per
share, ("Common Stock") at a purchase price of $3.00 per share (subject to
adjustment for stock splits or any other subdivision of the number of
outstanding shares of Common Stock). The Warrants shall be exercisable
immediately and each Warrant will expire and be of no further force or effect at
5 p.m. on the date five (5) years from the date hereof.
(b) Cash Compensation. For each month during the term of this
Agreement, Consultant shall be paid cash compensation in the amount of four
thousand dollars ($4,000). For any period during the term of this Agreement that
is less than a full month, the payment shall be prorated.
4. Expenses. The Company shall reimburse Consultant for all reasonable
and necessary out-of-pocket expenses incurred by Consultant in connection with
the Services rendered hereunder, provided that such expenses are deductible to
the Company and are properly documented in reasonable, itemized detail.
Consultant's expenses shall in no event exceed $1,000 per month unless such
expenses are authorized in advance by the Company.
5. Nondisclosure of Proprietary Information.
(a) Proprietary Information. For purposes of this Agreement, the term
"Proprietary Information" shall mean all knowledge and information which
Consultant has acquired or may acquire as a result of, or related to, or arising
from its relationship with the Company concerning the Company's business,
finances, operations, marketing plans and marketing strategies, research and
development activities, software designs and specifications, products, services,
trade secrets,
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and cost and pricing policies. Notwithstanding the foregoing sentence, such
Proprietary Information does not include (i) information which is or becomes
publicly available or is a matter for the public domain (except as may be
disclosed by Consultant in violation of this Agreement); (ii) information
acquired by Consultant from a source other than the Company or any of its
employees, which source legally acquired such information directly from the
Company without any obligation of nondisclosure; or (iii) information known to
Consultant prior to the date hereof.
(b) Nondisclosure Obligation. Consultant agrees that it will not at any
time, either during or after the term or any termination of this Agreement,
without the prior written consent of the Company, divulge or disclose to anyone
outside the Company, or appropriate for its own use or the use of any third
party, any such Proprietary Information, and will not during its engagement by
the Company hereunder, or at any time thereafter, disclose or use, or attempt to
use, any such Proprietary Information for its own benefit, or the benefit of any
third party, or in any manner which may injure or cause loss, or may be
calculated to injure or cause loss, to the Company. Consultant shall obtain from
all employees, Consultants, agents, or other representatives employed or engaged
by it to do any work for the benefit of the Company a written agreement
obligating them to the same restrictions on the disclosure of Proprietary
Information as set forth in this Section.
(c) Works for Hire. Consultant and the Company agree that any and all
reports, business plans, memoranda, notes, drawings, private placement memoranda
or other written materials conceived, devised, developed or otherwise obtained
by Consultant for the benefit of the Company during the course of rendering
Services to the Company hereunder are "works for hire" and are hereby assigned
to the Company. Such materials shall be the sole and exclusive property of the
Company as consideration for any and all compensation paid to Consultant under
this Agreement.
6. Term. The term of this Agreement shall be for one year commencing on
the date hereof unless terminated earlier upon (i) the dissolution, liquidation
or cessation of business in the ordinary course of Consultant or the Company, or
(ii) as provided in Section 7 below. The term of the Agreement may be extended
and renewed by mutual, written agreement of the parties.
7. Termination. Either party may terminate this Agreement upon five (5)
days prior written notice in the event of a material breach of the terms of this
Agreement. The Company may terminate this Agreement for "just cause" upon five
(5) days prior written notice to Consultant. "Just cause" shall mean any one or
more of the following: (a) the substantial and continuing failure of Consultant
to render Services to the Company in accordance with its obligations under this
Agreement for a continuous period of thirty (30) days; (b) willful misconduct,
malfeasance, misfeasance or gross negligence of Consultant (or any of
Consultant's employees, consultants or agents) in connection with the
performance of such Services; (c) the conviction of Consultant (or any of
Consultant's employees, Consultants or agents) of a felony,
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either in connection with the performance of its obligations to the Company or
which shall adversely affect Consultant's ability to perform such obligations;
(d) disloyalty, dishonesty or breach of fiduciary duty to the Company; or (e)
the commission of an act of embezzlement, fraud or deliberate disregard of the
rules or policies of the Company which results in loss, damage or injury to the
Company. If the Company terminates this Agreement for "just cause", Consultant
shall forfeit one-half of the Warrants and one-half of the shares of Common
Stock issued upon exercise of the Warrants. Except as provided for herein, after
any termination becomes effective, both the Company and Consultant shall
thereafter be relieved of any further obligations pursuant to this Agreement.
8. Indemnification and Contribution. Each party (the "Indemnifying
Party") agrees to indemnify and hold harmless the other party (the "Indemnified
Party") and each of the Indemnified Party's directors, officers, agents,
employees and controlling persons (as such persons are defined in the Securities
Act) against any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) related to or arising out of any actions or
omissions committed by the Indemnifying Party hereunder (including any violation
of applicable federal and state securities laws), and will reimburse the
Indemnified Party and each other person indemnified hereunder for all legal and
other expenses incurred in connection with investigating or defending any such
loss, claim, damage, liability, action or proceeding in connection with pending
or threatened litigation or other actions or investigations in which the
Indemnified Party or any of its directors, officers, agents, employees and
controlling persons is a party; provided however, that the Indemnifying Party
will not be liable in any such case for losses, claims, damages, liabilities or
expense that a court of competent jurisdiction shall have found to have arisen
primarily from the recklessness, negligence or willful misconduct, malfeasance,
misfeasance of the Indemnified Party or any party claiming a right to
indemnification.
In case any proceeding shall be instituted involving any person in
respect of whom indemnity may be sought, the Indemnified Party shall promptly
notify the Indemnifying Party, and the Indemnifying Party, upon the request of
the Indemnified Party, shall retain counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party and any others the
Indemnified Party may designate in such proceeding and shall pay as incurred the
fees and expenses of such counsel related to such proceeding. In any such
proceeding, the Indemnified Party shall have the right to retain its own counsel
at its own expense. In no event shall the Indemnifying Party be liable for the
fees and expenses of more than one counsel for all Indemnified Parties in
connection with any one action or separate but similar or related actions in the
same or other jurisdictions arising out of the same general allegations or
circumstances. The Indemnifying Party shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the Indemnifying
Party agrees to indemnify the Indemnified Party to the extent set forth in this
Section.
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In the event a claim for indemnification under this Section is
determined to be unenforceable by a final judgment of a court of competent
jurisdiction, then the Indemnifying Party shall contribute to the aggregate
losses, claims, damages or liabilities to which the Indemnified Party or its
officers, directors, agents, employees or controlling persons may be subject in
such amount as is appropriate to reflect the relative benefits received by each
of the Indemnifying Party and the party seeking contribution on the one hand and
the relative faults of the Indemnified Party and the party seeking contribution
on the other, as well as any other relevant equitable contributions; provided,
however, that no person adjudged guilty of fraudulent judicial determination
shall be entitled to contribution from the Indemnifying Party. The provisions of
this Section shall survive any termination of this Agreement and shall be
binding upon any successors or assigns of the Company and Consultant.
9. Absence of Conflicting Agreements. Consultant represents and
warrants that it is not a party to any agreement or arrangement, whether oral or
written, which conflicts with this Agreement or would prevent it from satisfying
completely its obligations to the Company under this Agreement.
10. General. This Agreement constitutes the entire Agreement between
the parties relative to the subject matter hereof, and supersedes all proposals,
letters of intent or agreements, written or oral, and all other communications
between the parties relating to the subject matter of this Agreement.
No provision of this Agreement shall be waived, amended, modified,
superseded, canceled, renewed or extended except in a written instrument signed
by the party against whom any of the foregoing actions is asserted. Any waiver
shall be limited to the particular instance and for the particular purpose when
and for which it is given.
The invalidity, illegality or unenforceability of any provision of this
Agreement shall in no way effect the validity, legality or enforceability or any
other provision of this Agreement. This Agreement is entered into subject to
compliance by Consultant with all applicable federal and state securities laws,
including the Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940, and the Investment Advisors of 1940. The
Services rendered by Consultant shall be limited to the services described
herein and shall not extend to the placement of securities or otherwise offering
or soliciting the purchase of any of the Company's securities. Consultant shall
not act as a "broker", "dealer" or "finder" and the compensation payable to
Consultant thereunder shall be paid regardless of the consummation of any
financing of the Company.
This Agreement, Consultant's Services to be performed thereunder, and
all rights thereunder are personal to Consultant and may not be transferred or
assigned by Consultant at any time without the prior written consent of the
Company.
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This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the internal laws of The
Commonwealth of Massachusetts.
All notices provided for in this Agreement shall be given in writing
and shall be effective when either served by personal delivery, electronic
facsimile transmission, express overnight courier service or by registered or
certified mail, return receipt requested, addressed to the parties at their
respective addresses herein set forth, or to such other address or addresses as
either party may later specify by written notice to the other.
This Agreement may be executed in duplicate counterparts, which, when
taken together, shall constitute one instrument and each of which shall be
deemed to be an original instrument.
The provisions of Sections 5 and 8 shall survive the termination or
expiration of this Agreement as a continuing covenant and obligation of the
Company and Consultant.
Any dispute, controversy or claim arising out of, in connection with,
or in relation to this Agreement or the breach of any of the provisions hereof
shall be settled by binding arbitration by a panel of three arbitrators in
Boston, Massachusetts, pursuant to the rules then obtaining of the American
Arbitration Association. Any award shall be final, binding and conclusive upon
the parties and a judgment rendered thereon may be entered in any court having
competent jurisdiction thereof. The prevailing party shall be entitled to
recover all reasonable fees and expenses of the costs of such arbitration
(including reasonable attorneys' fees), and if no party shall be determined by
the arbitrator(s) to have successfully prevailed, or to be less at fault than
the other party, then each party shall bear its own costs and expenses
(including attorneys' fees). The parties agree to use their best efforts to
settle any and all disputes without resort to arbitration and litigation.
IN WITNESS WHEREOF, Parties have executed this Agreement as of the day
and year first above written.
AUGMENT SYSTEMS, INC.
By:_________________________________
VENTURE MANAGEMENT CONSULTANTS, LLC
By:_________________________________
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