EXHIBIT 10.35
CONTRACTOR ADVISOR AGREEMENT
BRILLIANT DIGITAL ENTERTAINMENT, INC. AND BUSINESS DEVELOPMENT EXPERTS, INC.
This Agreement (the "Agreement") is made as of this 15th day of April, 2002 (the
"Effective Date") by and between Business Development Experts, Inc., a Nevada
corporation, Xxxxx X. Xxxxx - Principal (referred to herein as "Contractor" or
"BDX"), and Brilliant Digital Entertainment, Inc, a Delaware corporation (the
"Company"), to establish a binding retainer relationship between the two
parties.
RECITALS
(A) The Company is engaged in the business of, among other things,
developing, producing, marketing and distributing: (1) 3D authoring tools
(software); (2) digital animated entertainment; (3) interactive, 3D animated
with audio, rich media banner advertisements for the internet ("Brilliant
Banners"); (4) ad serving software necessary for Brilliant Banners to be
displayed on web pages; and (5) enterprise solutions for distributed network
services, processing and storage through its majority ownership in Altnet, Inc.,
which is a private, peer-to-peer network ("Altnet").
(B) BDX is engaged by the Company to perform the duties described in
Attachment A and, in connection with his engagement, has been and/or will be
exposed to Confidential Information (as defined below) and may participate in
the development and/or sales and marketing activities of the Company referred to
in Recital "A" above, in addition to many other confidential aspects of the
Company's business. It is understood that for the period of BDX's engagement
hereunder, BDX's services may be non-exclusive to Company. However, BDX agrees
that, for the term hereof, BDX shall not perform any services for any person or
firm that is in a business that is directly and materially competitive with the
Company or with any subsidiary of the Company.
(C) BDX will, in the course of Contractor's engagement with the Company,
receive training with respect to and acquire personal knowledge of the Company's
products, plans and business relationships with customers and potential
customers.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing facts and the covenants
hereinafter set forth, and in consideration of the Contractor's engagement, the
Company and Contractor agree as follows:
I. DEFINITIONS.
For the purposes of this Agreement, the following terms have the following
definitions:
(a) "Confidential Information" means all information of any kind, type or
nature (written, stored on magnetic or other media or oral) which at any time
during the engagement of Contractor by the Company is or has been compiled,
prepared, devised, developed, designed, discovered or otherwise learned of by
Contractor to the extent that such information relates to the Company or any of
its affiliated entities including, without limitation, all of the Company's
price lists, pricing information, customer lists, customer information,
financial information, trade secrets, formulas, patterns, compilations, devices,
methods, techniques, processes, confidential trade knowledge and computer
programs and information; provided, however, that any such information which is
generally known to the public or which may be obtained by a reasonably diligent
businessman without material cost or
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effort from trade publications or other readily available and public sources of
information shall not be deemed to be Confidential Information, unless such
information was first published in breach or violation of this Agreement or any
similar confidentiality agreement by Contractor. Contractor shall only have a
duty to protect Confidential Information under the terms of this Agreement (a)
if it is marked or accompanied by documents clearly and conspicuously
designating them as "confidential" or the equivalent; or (b) if it is identified
by the Company as confidential before, during or promptly after the presentation
or communication or (c) if the circumstances under which it is provided would
lead a reasonable person to conclude such information to be confidential.
(b) "Person" means any individual, corporation, partnership, limited
liability company, trust, government or regulatory authority, or other entity.
(c) "Brilliant Banner Campaign" means the serving of advertisements on the
web, utilizing Brilliant Banner ads.
(d) "ASO"s means advertising sales organizations, and includes third party
web site advertising sales forces.
II. SERVICES.
BDX is engaged to provide the services to the Company as set forth in Attachment
A (the "Services"). Xxxxx Xxxxx, representing BDX, and the Company's authorized
representative (as defined in Attachment A) will work together to define the
scope, priority and timing of such Services within the terms of the engagement
pursuant to this Agreement. It is understood that these Services may or may not
be performed on the Company's premises. At the end of each month BDX and the
Company will review progress to assure whether expectations are being met or
exceeded.
III. TERM OF ENGAGEMENT.
(a) The Company agrees to pay BDX a monthly retainer as set forth in
Section IV below for an initial term of 12 months ("Initial Term") commencing on
the Effective Date to provide the Services. The Company hereby acknowledges and
agrees that the monthly retainer shall be due and owing in full with regard to
the Initial Term and any extension thereof, during the Term.
(b) The Company agrees that billing for BDX's time shall be on a
month-to-month basis. The parties agree that unused time from one month may not
be applied to the commitment of any succeeding month.
(c) The term of this Agreement may be extended with the written
concurrence of both parties under the same terms on a month-to-month basis for
up to three additional months, and thereafter on terms mutually agreeable to
both parties. Either party may terminate this Agreement any time after the
Initial Term with 30-calendar days written notice, in which case, any prepaid
retainer shall be pro-rated based on the greater of the number of hours worked
by BDX or the number of days elapses in the month of termination.
(d) BDX will use reasonable efforts to keep the Company apprised of, and
consult with the Company concerning, the status of the Company's projects and
its account with BDX. The Company and BDX will discuss all projects and the
timing expectations relative thereto.
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IV. PAYMENT.
(a) MONTHLY RETAINER. Commencing with the Effective Date of this Agreement
and continuing for the duration of the Initial Term, Company agrees to pay
Contractor a monthly retainer in the amount of Five Thousand Dollars ($5,000)
(the "Monthly Retainer") for performance of the Services.. The Monthly Retainer
shall payable in advance on the Effective Date and on each monthly anniversary
thereof during the term hereof (including the Initial Term and any extension
thereof).
(b) SUCCESS OPTIONS. On the Effective Date of this Agreement, Company
agrees to grant, as an incentive for Contractor to contribute to the success of
the Company, subject to shareholder approval of an increase in the current size
of the Company's option pool such that sufficient options are available for the
Company to make this grant, options to purchase up to Two Hundred Fifty Thousand
(250,000) shares of the Company's common stock (the "Success Options"). The
Success Options shall be priced at Twenty-five Cents ($0.25) per share and shall
vest on a percentage basis; the numerator of which shall be the cumulative net
revenue amount recognized by Altnet and/or the Company according to generally
accepted accounting principals for revenue which accrues to either Altnet or the
Company based on the direct efforts of Contractor in performing his duties as
described in Attachment A attached hereto ("Contractor Generated Revenue"), and
the denominator which shall be One Million Dollars ($1,000,000). In the event
that during the Initial Term, the Company is acquired, merged into or
consolidated with another company such that the Company does not survive, or as
a result of which there is more than a fifty percent (50%) change in the
ownership of the Company (collectively referred to as a "Change of Control"),
then all unvested Success Options will fully accelerate in vesting so that all
unvested shares will become vested shares. The Success Options shall also be
subject to and governed by the same provisions as are currently in place for the
qualified options plan of the Company, and Contractor represents and warrants
that the Success Options are being acquired for investment purposes and not with
a view to further distribution and the Success Options will also contain
customary legends and will not be transferred other than in compliance with the
Securities Act in transactions not required to be registered with the Securities
and Exchange Commission (the "SEC").
(c) ISSUANCE OF BDE WARRANTS. The Company recognizes the value of
Contractor's past business experiences and the potential value of his services
to be performed for the Company. Therefore, as incentive for Contractor to enter
into this Agreement, and as partial consideration for Contractor performing the
duties pursuant to Attachment A attached hereto, upon the execution of this
Agreement by authorized signatories, the Company shall issue a warrant to
purchase up to Two Hundred Fifty Thousand (250,000) shares of the Company's
common stock (the "BDE Warrants"). All BDE Warrants will be issued in the form
of Attachment "C" attached hereto and incorporated herein by reference (the
"Form of Warrant"). The BDE Warrants will be priced at Twenty-five Cents ($0.25)
per share and may be fully exercised at any time, providing all warrants are
exercised no later than forty-eight (48) months from the Effective Date.
Contractor acknowledges that the BDE Warrants shall not be registered, but upon
exercise shall be entitled to "piggy back" registration rights pursuant to
Exhibit "C" in the Form of Warrant. Contractor represents and warrants that he
is an "accredited investor" as defined in Regulation D under the Securities Act
of 1933, as amended (the "Securities Act"), and that the exercise of the BDE
Warrants would be done so for investment purposes and not with a view to further
distribution. Contractor agrees that the BDE Warrants will contain customary
legends and will not be transferred other than in compliance with the Securities
Act in transactions not required to be registered with the SEC.
(d) PERFORMANCE FEE. To the extent that, through the direct efforts of
Contractor (including, but not limited to, introductions to individuals, venture
capitalists and/or companies), a capital investment is made in either the
Company or any of its subsidiaries by a Person initially introduced to the
Company by Contractor, the Company agrees to pay BDX a fee based on the total
gross amount of any equity or debt financing raised by the Company. The
performance fee shall be payable in cash and/or equity, at
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BDX's discretion, and shall be due concurrently with the closing of such
financing. Contractor shall receive, upon the funding of such investment, the
following compensation calculated as a percentage of the amounts invested:
(i) up to the 1st $1.0 million: 6%;
(ii) between $1.001 million and $2.0 million: 5%;
(iii) between $2.001 million and $3.0 million: 4%; and
(iv) all amounts above $3.0 million: 3%.
By way of example only, if the direct efforts of Contractor leads to a $2.5
million investment, the compensation would be: $130,000 ($60,000 on the 1st
million (6%); $50,000 on the 2nd million (5%); and $20,000 (4%) on the remaining
$500,000).
(e) REIMBURSABLE EXPENSES. BDX will be reimbursed for all reasonable
pre-approved out-of-pocket business expenses incurred by it pursuant to this
Agreement, including, but not limited to: airfare, hotels, meals, taxis, rental
cars, special business supplies or presentation materials, duplicating expenses,
equipment rentals and parking. Expenses shall be itemized and submitted with
receipts for payment by the Company. Within fifteen (15) days of receipt of the
above, Company shall reimburse Contractor for his documented, pre-approved
expenses.
(f) TAXES. Both parties acknowledge that Contractor is not an employee for
state or federal tax purposes. Therefore, Contractor is solely responsible for
any and all federal, state and local taxes, and insurance applicable to the
business of Contractor and shall indemnify the Company and hold the Company
harmless for any such failure to pay any and all applicable taxes or obtain and
maintain requisite insurance, including, but not limited to, comprehensive and
business liability and worker's compensation coverage for Contractor and any
assistants and employees of Contractor.
V. INDEPENDENT CONTRACTOR.
(a) Contractor and Company agree and recognize that Contractor is not, and
shall not be deemed an employee, agent, or joint venture partner of Company, but
is an Independent Contractor. Nothing in this agreement shall be interpreted or
construed as creating or establishing the relationship of employer and employee
between the Company and Contractor. Contractor shall not be entitled to
participate in any employee benefit plans provided by the Company, including
without limitation, vacation and sick pay.
(b) Without limiting the generality of any other provision of this
Agreement, Contractor specifically acknowledges and agrees that all work product
resulting from Contractor's engagement pursuant to this Agreement are for the
benefit of and are the sole and exclusive property of the Company, it successors
and assigns and constitute "work for hire" under Section 201 of Title 17 of the
United States Code. If such work product(s) are not legally capable of being
considered as "work for hire", then, in such event, Contractor hereby
irrevocably grants, transfers and assigns to the Company in perpetuity all
right, title and interest, including without limitation, copyright, and all
extensions and renewals thereof, Contractor may have in or to such work product.
VI. CONFIDENTIALITY.
(a) Contractor shall not, at any time from and after the date hereof and
throughout perpetuity, directly or indirectly, disclose, reveal or permit access
to all or any portion of the Confidential Information, or any tangible
expressions or embodiments thereof (including any facilities, apparatus or
equipment which embody or employ all or any portion of the Confidential
Information), to any Person without the written consent of the Company, except
to Persons designated or employed by the Company.
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(b) Without the prior written consent of the Company, Contractor shall
not, directly or indirectly, use or exploit the Confidential Information at any
time from and after the date hereof and throughout perpetuity for any purpose
other than in connection with his engagement duties and obligations to the
Company, and any gain or profit of any kind or nature obtained or derived by
Contractor or to which Contractor may become entitled, directly or indirectly,
at any time as a result of the disclosure of use of all or any part of the
Confidential Information in violation of the provisions of this Agreement, shall
be held in trust by Contractor for the express benefit of the Company and shall
be remitted thereby to the Company on demand.
(c) Contractor acknowledges and agrees that the uses of Confidential
Information specifically prohibited hereunder include, without limitation, the
following:
(i) Using any Confidential Information to induce or attempt to induce
any Person, who is either a customer of the Company or who was being actively
solicited by the Company at any time during which Contractor is or was engaged
by the Company, to cease doing business or not to commence doing business in
whole or in part with the Company; or
(ii) Using any Confidential Information to solicit or assist in the
solicitation of the business of any customer for any products or services
competing with those products and services offered and sold by the Company at
any time during which Contractor is engaged by the Company.
VII. PROPRIETARY RIGHTS.
(a) Contractor shall disclose in writing to the Company full and complete
details respecting any Confidential Information devised, developed, designed or
discovered by Contractor while engaged by the Company. Such disclosure shall be
made promptly upon such development, design or discovery, and shall be disclosed
in writing pursuant to the form attached as Attachment "B" to this Agreement, or
such other form as the Company may from time to time provide.
(b) All ownership, copyright, patent, trade secrecy, works, inventions,
improvements, discoveries, processes or other properties made or conceived by
BDX specifically for the Company in connection with the Services during the term
of this Agreement shall be the rights and property solely of the Company,
whether developed independently by BDX or jointly with others, and whether or
not the Company uses, registers, or markets the same. BDX hereby transfers and
assigns to the Company all of the foregoing, whether now existing or hereafter
coming into existence.
(c) At the request and expense of the Company, Contractor shall assist the
Company in applying for and obtaining both domestic and foreign patents, or
copyrights, as the case may be, on all Confidential Information that the Company
deems to be patentable or copyrightable devised, developed, designed or
discovered by Contractor or in which he may otherwise obtain, or has otherwise
obtained, any rights, while engaged by the Company, and Contractor shall execute
at any time or times any and all documents and perform all acts reasonably
requested by the Company which the Company deems to be necessary or desirable in
order to obtain such patents or copyrights or otherwise to vest in the Company
full and exclusive title and interest in and to all such Confidential
Information, to protect the same against infringement by others and otherwise to
aid the Company in connection with any continuations, renewals or reissues of
any patents or copyrights, or in the conduct of any proceedings or litigation in
regard thereto. All expenses of procuring any patent or copyright shall be born
by the Company.
(d) CERTAIN INVENTIONS OF CONTRACTOR. Notwithstanding anything to the
contrary herein, pursuant to Section 2870 of the California Labor Code, this
Agreement does not apply to any invention for which no equipment, supplies,
facilities or trade secret information of the Company was used and which was
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developed entirely on Contractor's own time or as a result of Contractor's
responsibilities and fiduciary duties to Contractor's employer, Vidius, Inc.,
and (i) which does not relate at the time of conception or reduction to practice
of the invention either to the business of the Company or to the Company's
actual or demonstrably anticipated research or development, or (ii) which does
not result from any work performed by Contractor for the Company.
VIII. COVENANT NOT TO SOLICIT.
Contractor covenants and agrees that for so long as he is engaged by the Company
and for one year thereafter, Contractor shall not hire, solicit or cause to be
solicited for engagement by Contractor or by any third party, any person who is
as of the date of such solicitation or who was within the 12-month period prior
to the date of such solicitation an employee of the Company or any subsidiary or
affiliate of the Company.
IX. BUSINESS OPPORTUNITIES EXCLUSIONS.
Contractor has advised Company and Company is aware that Xxxxx Xxxxx is
currently an employee of Vidius, Inc., the operations of which shall not be
deemed to be competitive with the Company or any of its affiliates.
X. NOTICES.
Any notice to the Company required or permitted hereunder shall be given in
writing to the Company, either by personal service, or by registered or
certified mail, postage prepaid, duly addressed to the President of the Company
at its then principal place of business. Any such notice to the Contractor shall
be given in a like manner, at the following address:
BDX
Attention: Xx. Xxxxx Xxxxx
00000 Xxxxxxx Xxxxxxxxx Xxxxx 000
Xxxxxx Xxxx, XX 00000
For the purpose of determining compliance with any time limit herein, a notice,
if sent by mail, shall be deemed given on the date it is so deposited in the
United States mail.
XI. MISCELLANEOUS PROVISIONS.
(a) INDEMNIFICATION. The parties indemnify each other as follows:
(i) Company agrees to indemnify, defend, and hold Contractor harmless
from any claims, losses, liabilities, causes of action and costs (including
reasonable attorney's fees) arising from, or on account of any representation
made by the Company to Contractor regarding the Company's products, services, or
business practices, upon which Contractor relies and, in the performance of his
duties hereunder, represents to others; provided, however, that the Contractor
shall promptly notify Company of any such claim and shall provide Company the
opportunity to control the defense and negotiations for the settlement and/or
compromise of such claim at Company's exclusive cost. The indemnity set forth
above shall be in addition to any other rights of indemnity which Contractor may
have in any other capacity with respect to Company, including as a member of the
Board of Directors.
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(ii) Contractor agrees to indemnify, defend, and hold Company and any
of its subsidiaries or affiliates, and their respective officers, directors,
stockholders, agents, employees, representative, heirs, independent contractors,
successors and assigns harmless from any and all claims, losses, liabilities,
causes of action and costs (including reasonable attorney's fees) arising from,
or on account of any breach by Contractor of his duties hereunder; or as a
result of any misrepresentation made by Contractor about Company.
(b) REPRESENTATIONS AND WARRANTIES. Contractor warrants and represents
that Contractor is free and available to enter this Agreement and perform the
services herein and that permission of no other party is required to perform
such services.
(c) SUCCESSORS AND ASSIGNS. This Agreement shall be binding on the parties
hereto and their respective successors and assigns. The parties' respective
duties, obligations, rights and privileges hereunder may not be delegated or
assigned in any manner, except as provided below. The benefits hereunder with
respect to the rights of the Company may be assigned by the Company to any other
corporation or other business entity which succeeds to all or substantially all
of the business of the Company through merger, consolidation, corporate
reorganization or by acquisition of all or substantially all of the assets of
the Company.
(d) SEVERABILITY. If any provision of this Agreement is or becomes or is
deemed invalid, illegal or unenforceable in any jurisdiction such provision
shall be deemed amended to conform to the applicable laws of such jurisdiction
so as to be valid and enforceable or, if it cannot be so amended without
materially altering the intention of the parties, it will be stricken, but the
validity, legality and enforceability of such provision shall not in any way be
affected or impaired thereby in any other jurisdiction and the remainder of this
Agreement shall remain in full force and effect.
(e) CONTROLLING LAW. All of the provisions of this Agreement shall be
construed in accordance with the laws of the State of California as applied to
residents of that State entering into contracts to be performed solely within
such state. Contractor consents to the exclusive jurisdiction of any state or
federal court empowered to enforce this Agreement located in Los Angeles County,
California, and waives any objection thereto on the basis of personal
jurisdiction or venue.
(f) WAIVER. Waiver by either of the parties of any breach of any provision
of this Agreement shall not operate or be construed as a waiver of any prior or
subsequent breach of the same or any other provision hereof.
(g) SURVIVAL OF CONTRACTOR'S OBLIGATIONS. The obligations of Contractor
hereunder shall survive the termination of Contractor's engagement with the
Company and the termination of this Agreement regardless of the reason or cause
for such termination.
(h) ENTIRE AGREEMENT. This instrument contains the entire agreement of the
parties with respect to the subject matter hereto and into which all prior
agreements and negotiations, whether written or oral, are merged.
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IN WITNESS WHEREOF, the parties hereto have entered into and executed this
Agreement as of the date first above written.
"COMPANY"
Brilliant Digital Entertainment, Inc.
By: /S/ XXXXX XXXXXXXXXX
-------------------------
Xxxxx Xxxxxxxxxx
Its: CEO
-------------------------
"CONTRACTOR"
/S/ XXXXX XXXXX
-------------------------------
Xxxxx Xxxxx
Business Development Experts, Inc.
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ATTACHMENT A
CONTRACTOR'S DUTIES
In executing Contractor's responsibilities hereunder, Contractor will
consult with and report to the Company's Designated Representative ("CDR")
identified pro tem as Xxxxx Xxxxxxxxxx. Contractor shall submit periodic
reports, containing a summary of Contractor's activities, analyses, and
recommendations (including, in the case of recommendations, cost estimates for
implementing such recommendations).
THE SCOPE OF CONTRACTOR'S DUTIES: Contractor shall be engaged as an advisor
to the Company. In his capacity as an advisor, Consultant shall advise the sales
force and business development team, provide strategic financial, marketing and
managerial advise, introduce corporate alliance partners, and interface with
multiple external sales forces with the main intent of promoting, marketing, and
exploiting the Company's private peer-to-peer network currently known as
"Altnet". Secondarily, Contractor shall provide services necessary to exploit
the Company's (1) Brilliant Banner ad strategy, and (2) b3d software authoring
tools known as b3d Studio and Studio Pro. Specifically, Contractor shall assist
Company with the following, providing such assistance does not conflict with
business related to the Contractor's responsibilities and fiduciary duties as an
employee of Vidius, Inc.:
i. developing business relationships and achieving strategic sales
relationships for Altnet services primarily focused on leveraging
Altnet's technologies to generate money saving enterprise and
entertainment based retail solutions for distributed network,
processing and storage services;
ii. work directly with senior management of the Company. Such work
shall include assisting the Company with the development of the
necessary business plans, strategic directions, documentation,
promotional and support materials for presentations and follow-up
communications related to the commercial applications of Altnet's
technologies;
iii. developing relationships with ASOs to promote the acceptance of
Brilliant Banner ad serving technology and achieve sales of
Brilliant Banner Campaigns. By way of example only, and not of
limitation, some of the ASOs currently identified by the Company
include: DoubleClick; Xxxxxxxxxxx.xxx; 24/7 Real Media; Interep
Interactive; 411 Web; and Premium Networks; and
iv. identifying third party developers which are potential licensees
of b3d Studio and b3d Studio Pro and actively market and close
licensing transactions of these software tools to such potential
licensees.
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ATTACHMENT B
NOTICE OF DISCOVERY
Pursuant to Section VII (a) of that certain Contractor Advisory Agreement
(the "Agreement") between Brilliant Digital Entertainment, Inc. (the "Company")
and myself, I hereby disclose full and complete details of the following
Confidential Information (as defined in Section I (a) of the Agreement) (I have
attached additional sheets if the space provided herein is insufficient):
I agree to provide such further information regarding such Confidential
Information as may be requested by the Company.
Name: Xxxxx Xxxxx
Date: _____________________________
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ATTACHMENT C
ISSUANCE OF WARRANTS (FORM)
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