CONSULTING AGREEMENT
THIS
AGREEMENT, made, entered into, and effective this 16th day of July 2008 (the
"Effective Date"), by and between Xxxxx Xxxxxxxxx, an individual resident of
[Redacted]
(hereinafter
referred to as "Consultant"), and Spongetech Delivery Systems, Inc., a Delaware
corporation (hereinafter referred to as "Corporation").
W
I T N E S S E T H:
WHEREAS,
Consultant has been a valuable employee of the Corporation and the Corporation
realizes that Consultant has demonstrated a keen understanding of the
Corporation’s operations such that it would be desirable to retain Consultant's
services under a consulting agreement;
WHEREAS,
Consultant desires to provide such consulting services for the Corporation
as an
independent contractor, with the understanding that he shall not be required
to
devote his full time to the business of the Corporation and shall be free to
pursue other personal and business interests; and
NOW,
THEREFORE,
in
consideration of the premises, the mutual covenants of the parties herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by each of the parties hereto, it is agreed
as
follows:
1. CONSULTING
ARRANGEMENT.
The
Corporation hereby contracts for the services of Consultant and Consultant
agrees to perform such duties and responsibilities and to render advice and
consulting as may be requested by the Corporation from time to time during
the
term of this consulting arrangement in connection with the Corporation's
business throughout the United States and world wide ("Consulting Arrangement").
Said consulting services shall include, but not be limited to, corporate
development, providing guidance and advice with respect to financing
arrangements and investor relations. Consultant shall use his best efforts
to
keep the Corporation informed of all corporate business opportunities which
shall come to his attention and appear beneficial to the Corporation's business
so that the Corporation can obtain the maximum benefits from Consultant's
knowledge, experience, and personal contacts.
2. RELATIONSHIP
BETWEEN PARTIES.
During
the term of the Consulting Arrangement, Consultant shall be deemed to be an
independent contractor. He shall be free to devote his time, energy and skill
to
any such person, firm or company as he deems advisable except to the extent
he
is obligated to devote his time, energy and skill to the Corporation pursuant
to
the terms of this Agreement. Consultant shall not be considered as having an
employee status vis-a-vis the Corporation, or by virtue of the Consulting
Arrangement being entitled to participate in any plans, arrangements or
distributions by the Corporation pertaining to or in connection with any
pension, stock, bonus, profit sharing, welfare benefits, or similar benefits
for
the regular employees of the Corporation. The Corporation shall not withhold
any
taxes in connection with the compensation due Consultant hereunder, and
Consultant will be responsible for the payment of any such taxes and hereby
agrees to indemnify the Corporation against nonpayment thereof.
3. COMPENSATION
FOR THE CONSULTING ARRANGEMENT.
As part
of the consideration for the services to be rendered under the Consulting
Arrangement by Consultant and as compensation for the income he could have
otherwise earned if he had not agreed to keep himself available to the
Corporation hereunder, the Corporation shall pay Consultant compensation at
the
rate of Two Million (2,000,000) shares of Class B Stock of the Corporation
on
July 16, 2008. In
addition, Consultant shall be entitled to reimbursement for reasonable business
expenses up to $5,000 per annum and insurance coverage for major medical. All
compensation due to Consultant under this Section 3 shall accrue until such
time
as the Corporation has sufficient funds therefore.
4. TERM
OF CONSULTING ARRANGEMENT.
The
Consulting Arrangement shall begin effective as of the Effective Date of this
Agreement and shall continue for a period of twelve (12) months (the "Consulting
Period").
5. CONFIDENTIALITY
COVENANTS.
5.1 Acknowledgments
by the Consultant.
The
Consultant acknowledges that (a) during the Consulting Period and as a part
of his Consulting Arrangement, the Consultant will be afforded access to
Confidential Information (as defined below); (b) public disclosure of such
Confidential Information could have an adverse effect on the Corporation and
its
business; (c) because the Consultant possesses substantial technical
expertise and skill with respect to the Corporation's business, the Corporation
desires to obtain exclusive ownership of each Consultant Invention (as defined
below), and the Corporation will be at a substantial competitive disadvantage
if
it fails to acquire exclusive ownership of each Consultant Invention;
(d) the provisions of this Section 5 are reasonable and necessary to
prevent the improper use or disclosure of Confidential Information and to
provide the Corporation with exclusive ownership of all Consultant
Inventions.
5.2 Agreements
of the Consultant. In
consideration of the compensation and benefits to be paid or provided to the
Consultant by the Corporation under this Agreement, the Consultant covenants
as
follows:
(a) Confidentiality.
(i) During
and following the Consulting Period, the Consultant will hold in confidence
the
Confidential Information and will not disclose it to any person except with
the
specific prior written consent of the Corporation or except as otherwise
expressly permitted by the terms of this Agreement.
(ii) Any
trade
secrets of the Corporation will be entitled to all of the protections and
benefits under New York State law and any other applicable law. If any
information that the Corporation deems to be a trade secret is found by a court
of competent jurisdiction not to be a trade secret for purposes of this
Agreement, such information will, nevertheless, be considered Confidential
Information for purposes of this Agreement. The Consultant hereby waives any
requirement that the Corporation submit proof of the economic value of any
trade
secret or post a bond or other security.
(iii) None
of
the foregoing obligations and restrictions applies to any part of the
Confidential Information that the Consultant demonstrates was or became
generally available to the public other than as a result of a disclosure by
the
Consultant.
(iv) The
Consultant will not remove from the Corporation's premises (except to the extent
such removal is for purposes of the performance of the Consultant's duties
at
home or while traveling, or except as otherwise specifically authorized by
the
Corporation) any document, record, notebook, plan, model, component, device,
or
computer software or code, whether embodied in a disk or in any other form
(collectively, the "Proprietary Items"). The Consultant recognizes that, as
between the Corporation and the Consultant, all of the Proprietary Items,
whether or not developed by the Consultant, are the exclusive property of the
Corporation. Upon termination of this Agreement by either party, or upon the
request of the Corporation during the Consulting Period, the Consultant will
return to the Corporation all of the Proprietary Items in the Consultant's
possession or subject to the Consultant's control, and the Consultant shall
not
retain any copies, abstracts, sketches, or other physical embodiment of any
of
the Proprietary Items.
(b) Consultant
Inventions.
Each
Consultant Invention will belong exclusively to the Corporation. The Consultant
acknowledges that all of the Consultant's writing, works of authorship, and
other Consultant Inventions are works made for hire and the property of the
Corporation, including any copyrights, patents, or other intellectual property
rights pertaining thereto. If it is determined that any such works are not
works
made for hire, the Consultant hereby assigns to the Corporation all of the
Consultant's right, title, and interest, including all rights of copyright,
patent, and other intellectual property rights, to or in such Consultant
Inventions. The Consultant covenants that he will promptly:
(i)
disclose
to the Corporation in writing any Consultant Invention;
(ii) assign
to
the Corporation or to a party designated by the Corporation, at the
Corporation's request and without additional compensation, all of the
Consultant's right to the Consultant Invention for the United States and all
foreign jurisdictions;
(iii) execute
and deliver to the Corporation such applications, assignments, and other
documents as the Corporation may request in order to apply for and obtain
patents or other registrations with respect to any Consultant Invention in
the
United States and any foreign jurisdictions;
(iv) sign
all
other papers necessary to carry out the above obligations; and
(v) give
testimony and render any other assistance in support of the Corporation's rights
to any Consultant Invention.
5.3 Disputes
or Controversies. The
Consultant recognizes that should a dispute or controversy arising from or
relating to this Agreement be submitted for adjudication to any court,
arbitration panel, or other third party, the preservation of the secrecy of
Confidential Information may be jeopardized. All pleadings, documents,
testimony, and records relating to any such adjudication will be maintained
in
secrecy and will be available for inspection by the Corporation, the Consultant,
and their respective attorneys and experts, who will agree, in advance and
in
writing, to receive and maintain all such information in secrecy, except as
may
be limited by them in writing.
5.4 Definitions.
(a) For
the
purposes of this Section 5, "Confidential Information" shall mean any and
all:
(i) trade
secrets concerning the business and affairs of the Corporation, product
specifications, data, know-how, formulae, compositions, processes, designs,
sketches, photographs, graphs, drawings, samples, inventions and ideas, past,
current, and planned research and development, current and planned manufacturing
or distribution methods and processes, customer lists, current and anticipated
customer requirements, price lists, market studies, business plans, computer
software and programs (including object code and source code), computer software
and database technologies, systems, structures, and architectures (and related
formulae, compositions, processes, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information, and any other
information, however documented, that is a trade secret within the meaning
of
Chapter 688, Florida Statutes;
(ii) information
concerning the business and affairs of the Corporation (which includes
historical financial statements, financial projections and budgets, historical
and projected sales, capital spending budgets and plans, the names and
backgrounds of key personnel, personnel training and techniques and materials,
however documented; and
(iii) notes,
analysis, compilations, studies, summaries, and other material prepared by
or
for the Corporation containing or based, in whole or in part, on any information
included in the foregoing.
(b) For
the
purposes of this Section 5, "Consultant Invention" shall mean any idea,
invention, technique, modification, process, or improvement (whether patentable
or not), any industrial design (whether registerable or not), any mask work,
however fixed or encoded, that is suitable to be fixed, embedded or programmed
in a semiconductor product (whether recordable or not), and any work of
authorship (whether or not copyright protection may be obtained for it) created,
conceived, or developed by the Consultant, either solely or in conjunction
with
others, during the Consulting Period, or a period that includes a portion of
the
Consulting Period, that relates in any way to, or is useful in any manner in,
the business then being conducted or proposed to be conducted by the
Corporation, and any such item created by the Consultant, either solely or
in
conjunction with others, following termination of the Consultant's Consulting
Arrangement with the Corporation, that is based upon or uses Confidential
Information.
6. NON-COMPETITION
AND NON-INTERFERENCE
6.1 Acknowledgments
by the Consultant. The
Consultant acknowledges that: (a) the services to be performed by him under
this Agreement are of a special, unique, unusual, extraordinary, and
intellectual character; (b) the Corporation's business is international in
scope and its products are marketed throughout the United States and world
wide;
(c) the Corporation competes with other businesses that are or could be
located in any part of the United States and world wide; (d) the provisions
of this Section 6 are reasonable and necessary to protect the Corporation's
business.
6.2 Covenants
of the Consultant. In
consideration of the acknowledgments by the Consultant, and in consideration
of
the compensation and benefits to be paid or provided to the Consultant by the
Corporation, the Consultant covenants that he may,
directly or indirectly:
(a) during
the Consulting Period, except in the course of his Consulting Arrangement
hereunder, and during the Post-Consulting Period (as defined below), engage
or
invest in, own, manage, operate, finance, control, or participate in the
ownership, management, operation, financing, or control of, be employed by,
associated with, or in any manner connected with, lend the Consultant's name
or
any similar name to, lend Consultant's credit to or render services or advice
to, any business whose products or activities compete in whole or in part with
the products or activities of the Corporation anywhere within the United States;
provided, however, that the Consultant may purchase or otherwise acquire up
to
(but not more than) one percent of any class of securities of any enterprise
(but without otherwise participating in the activities of such enterprise)
if
such securities are listed on any national or regional securities exchange
or
have been registered under Section 12(g) of the Securities Exchange Act of
1934;
(b) whether
for the Consultant's own account or for the account of any other person, at
any
time during the Consulting Period and the Post-Consulting Period, solicit
business of the same or similar type being carried on by the Corporation, from
any person known by the Consultant to be a customer of the Corporation, whether
or not the Consultant had personal contact with such person during and by reason
of the Consultant's Consulting Arrangement with the Corporation;
(c) whether
for the Consultant's own account or the account of any other person (i) at
any time during the Consulting Period and the Post-Consulting Period, solicit,
employ, or otherwise engage as an employee, independent contractor, or
otherwise, any person who is or was an employee of the Corporation at any time
during the Consulting Period or in any manner induce or attempt to induce any
employee of the Corporation to terminate his Consulting Arrangement with the
Corporation; or (ii) at any time during the Consulting Period and for three
years thereafter, interfere with the Corporation's relationship with any person,
including any person who at any time during the Consulting Period was an
employee, contractor, supplier, or customer of the Corporation; or
(d) at
any
time during or after the Consulting Period, disparage the Corporation or any
of
its shareholders, directors, officers, employees, or agents.
For
purposes of this Section 6.2, the term "Post-Consulting Period" means the
three-year period beginning on the date of termination of the Consultant's
Consulting Arrangement with the Corporation.
If
any
covenant in this Section 6.2 is held to be unreasonable, arbitrary, or against
public policy, such covenant will be considered to be divisible with respect
to
scope, time, and geographic area, and such lesser scope, time, or geographic
area, or all of them, as a court of competent jurisdiction may determine to
be
reasonable, not arbitrary, and not against public policy, will be effective,
binding, and enforceable against the Consultant.
The
period of time applicable to any covenant in this Section 6.2 will be extended
by the duration of any violation by the Consultant of such
covenant.
7. NOTICES.
All
notices, consents, waivers, and other communications under this Agreement must
be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by facsimile (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if
sent by a nation-ally recognized overnight delivery service (receipt requested),
in each case to the appropriate addresses and facsimile numbers set forth below
(or to such other addresses and facsimile numbers as a party may designate
by
notice to the other parties):
8. BINDING
EFFECT.
This
Agreement shall extend to, shall inure to the benefit of and shall be binding
upon all the parties hereto and upon all of their respective heirs, successors
and representatives.
9. ENTIRE
AGREEMENT. This
Agreement, including the agreements incorporated by reference, contains the
entire Agreement among the parties hereto with respect to the matters
contemplated hereby and supersedes all prior agreements and undertakings between
the parties with respect to such matters. This Agreement may not be amended,
modified or terminated in whole or in part, except in writing, executed by
each
of the parties hereto.
10. INDEMNIFICATION.
Consultant
hereby agrees to hold harmless and indemnify Corporation from and against any
and all loss, damage, expense, and cost (including reasonable attorneys' fees
incurred in connection with the same) incurred by Corporation as a result of
Consultant's breach of any covenant or agreement made herein.
11. SPECIFIC
PERFORMANCE.
The
Consultant acknowledges that his obligations hereunder are unique, and that
it
would be extremely impracticable to measure the resulting damages if he should
default in his obligations under this Agreement. Accordingly, in the event
of
the failure by Consultant to perform his obligations hereunder, which failure
constitutes a breach hereof by him, the Corporation may, in addition to any
other available rights or remedies, xxx in equity for specific performance
and,
in connection with any such suit, the Consultant expressly waives the defense
therein that the Corporation has an adequate remedy at law.
12. SEVERABILITY.
Should
any part of any provision of this Agreement be declared invalid by a court
of
competent jurisdiction, such decision or determination shall not affect the
validity of any remaining portion of such provision or any other provision
and
the remainder of the Agreement shall remain in full force and effect and shall
be construed in all respects as if such invalid or unenforceable provision
or
portion thereof were not contained herein. In the event of a declaration of
invalidity, the provision or portion thereof declared invalid shall not
necessarily be invalidated in its entirety, but shall be observed and performed
by the parties to the Agreement to the extent such provision is valid and
enforceable.
13. SECTION
HEADINGS.
The
section headings contained herein are for convenience of reference only and
shall not be considered any part of the terms of this Agreement.
14. CHOICE
OF LAW.
This
Agreement shall be interpreted and performed in accordance with the laws of
the
State of New York, and the parties agree, notwithstanding the principles of
conflicts of law, that the internal laws of the State of New York shall govern
and control the validity, interpretation, performance, and enforcement of this
Agreement.
IN
WITNESS WHEREOF,
Consultant has hereunto put his hand, and the Corporation has caused this
instrument to be executed in its corporate name by its duly authorized officer,
all as of the day and year first above written.
| CONSULTANT: | ||
| /s/ Xxxxx Xxxxxxxxx | ||
| Xxxxx Xxxxxxxxx | ||
| CORPORATION: | ||
| Spongetech Delivery Systems, Inc. | ||
| /s/ Xxxxxx X. Xxxxxxxxx | ||
| Name: Xxxxxx X. Xxxxxxxxx | ||
|
Title:
Chief Operating Officer
|
