Exhibit 10.3
TRANSITION AND CONSULTING AGREEMENT
This Transition and Consulting Agreement (the "Agreement") is made as of
November 2, 2005 by and between MediaMax Technology Corporation, a Nevada
corporation with a principal place of business at 000 Xxxxx 00xx Xxxxxx, Xxxxx
000, Xxxxxxx, Xxxxxxx 00000 (the "Company"), and Xxxxx X. Xxxxxx (the
"Consultant").
WHEREAS, the Consultant is the President and Chief Executive Officer of
SunnComm International, Inc., a Nevada corporation with a principal place of
business at 000 Xxxxx 00xx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000
("SunnComm");
WHEREAS, the Company and SunnComm are parties to an Agreement and Plan of
Merger, dated as of June 11, 2005 (the "Merger Agreement"), pursuant to which a
wholly-owned subsidiary of the Company is anticipated to merger with and into
SunnComm with the effect that SunnComm would become a wholly-owned subsidiary of
the Company (the "Merger");
WHEREAS, the Consultant was the founder of SunnComm and the Merger
Agreement contemplated that Consultant would become the Chief Executive Officer
of the Company following the Merger;
WHEREAS, the Company is currently undertaking a financing (the "Financing")
to fund the operations of both the Company and SunnComm through the completion
of the Merger and, as a condition of the Financing, the investors participating
in the Financing have required the Company to hire an industry specialist as its
Chief Executive Officer, thereby requiring Consultant to agree to resign
executive positions with SunnComm and the Company at the effective time of the
Merger (the "Effective Time");
WHEREAS, the Company desires to compensate Consultant for his agreement to
relinquish executive positions with the Company following the Merger so that the
Financing can be completed, to engage Consultant to provide assistance to the
Company and its Chief Executive Officer on a non-executive basis following the
Effective Time and to serve as the non-executive Chairman of the Board of
Directors of the Company following the Effective Time; and
WHEREAS, Consultant is willing to agree not to serve as the Chief Executive
Officer of the Company following the Effective Time so that the Financing can be
completed, to assist the Company following the Merger pursuant to the terms
hereof and to service as the non-executive Chairman of the Board of Directors of
the Company following the Effective Time;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Company and Consultant agree as follows:
SECTION 1. Engagement. The Company agrees to engage Consultant to assist
the Company's Board of Directors and Chief Executive Officer in integrating the
operations of the Company and SunnComm, developing and implementing a strategic
plan for the Company and otherwise assisting the Chief Executive Officer of the
Company from and after the Effective Time, and Consultant hereby accepts such
engagement (the "Engagement"). Consultant agrees to commit such necessary time
as shall be reasonably necessary to perform such services to the Company from
and after the Effective Time. During the Term (as defined below) and for one
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SECTION 1. Engagement - continued
year thereafter, Consultant shall not engage in any activity that has a conflict
of interest with the Company, including any competitive employment, business, or
other activity, and he shall not assist any other person or organization that
competes, or intends to compete, with the Company.
SECTION 2. Term. The term of the Engagement of Consultant by the Company as
provided in Section 1 shall begin at the Effective Time and shall continue until
June 30, 2007 (the "Term"), unless earlier terminated as hereinafter provided.
SECTION 3. Non-Executive Chairman Position. At the Effective Time,
Consultant shall be elected to serve as the non-executive Chairman of the Board
of Directors of the Company and shall serve in such capacity until the 2007
Annual Meeting of Stockholders of the Company and thereafter until his successor
is duly elected and qualified.
SECTION 4. Compensation and Expenses.
(a) Compensation. During the Term, the Company shall pay Consultant a
consulting fee at a monthly rate equal to one-half the current monthly salary
consultant receives from SunnComm at the time of execution of this Agreement.
The consulting fee shall be payable at the end of each calendar month during the
Term.
(b) Expenses. The Company shall reimburse Consultant for all reasonable
out-of-pocket expenses incurred by Consultant in connection with the business of
the Company and in performance of Consultant's duties under this Agreement.
Notwithstanding the foregoing, the Consultant shall not incur total expenses in
excess of $1,000 per month without the prior written approval of the Company.
SECTION 5. Equity Compensation.
(a) The Put Right Shares. On or promptly after January 1, 2006, the Company
shall issue to Consultant 10,000,000 shares of the Common Stock, $.001 par value
per share ("Common Stock"), of the Company (such shares, as the same may be
adjusted by stock split, stock dividend or combination of shares and including
any dividends or distributions of securities or property paid thereon being
hereinafter referred to collectively as the "Put Right Shares") for a purchase
price of $.001 per share (or $10,000.00 in the aggregate). Consultant
acknowledges that the fair market value of the Put Right Shares may exceed the
purchase price therefore and has consulted his tax advisors with respect to the
Federal and state income tax consequences of such stock issuance.
(b) Put Right. Consultant shall have the right but not the obligation (the
"Put Right") for a period of 30 days following the second anniversary of the
Effective Time (the "Thirty-Day Window") to require the Company to repurchase
the Put Right Shares, free and clear of all liens, proxies, voting restrictions
and other encumbrances for $.10 per share or $1,000,000 in the aggregate. The
Consultant may exercise the Put Right by giving written notice to the Company
pursuant to Section 16 of this Agreement at any time during the Thirty-Day
Window. Upon Consultant's exercise of his Put Rights, the Company shall
repurchase the Put Right Shares by lump-sum payment payable to Consultant within
30 days of the Company's receipt of such notice of exercise.
(c) Stock Options. On or prior to November 21, 2005, the Company shall
grant Consultant non-statutory stock options to purchase 10,000,000 shares of
Common Stock of the Company at $.05 per share and non-statutory stock options to
purchase 5,000,000 shares of Common Stock of the Company at $.075 per share. The
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SECTION 5. Equity Compensation - continued
foregoing options (collectively, the "Options") shall vest in full as of the
Effective Time.
(d) Restrictions on Transfer. The Consultant agrees that he will not
Transfer (as defined below) any of the Put Right Shares and any shares held by
Consultant as a result of any exercise of the Options (collectively, the
"Shares"), except in accordance with the terms of this Agreement. The
immediately preceding sentence of this Section shall not apply to or otherwise
prevent (1) the inter vivos transfer or assignment by Consultant, voluntarily or
by operation of law, of all of his Shares to his legal representative in the
case of his incompetency, (2) a lifetime or testamentary transfer of all or part
of the Shares of Consultant to his spouse, children, grandchildren or a trust or
other entity for the benefit of Consultant and/or any such other Persons, (3) a
transfer of the Shares to the Consultant's heirs at law upon Consultant's death,
or (4) a transfer of the Shares to Sunrise Communications, LLC, provided,
however, that in any of the foregoing permitted cases, each transferee agrees in
writing to be bound by all of the provisions of this Agreement, and the term
"Consultant" hereunder shall include such transferees. Any attempt to Transfer
or any purported Transfer of any Shares not in accordance with the terms of this
Agreement shall be null and void and neither the Company, as the issuer of such,
nor any transfer agent of such Shares shall give any effect to such attempted
Transfer in its stock records. For the purposes of this Agreement, the term
"Transfer" shall mean any direct or indirect sale, transfer, assignment, grant
of participation in, gift, hypothecation, alienation, pledge or other
disposition of any securities or any interests therein excluding, for the
avoidance of doubt, any exercise of purchase or conversion rights under options,
warrants or convertible securities.
(e) Legends. Each certificate representing the Shares held by Consultant
shall be endorsed with the following legends and such other legends as may be
required by applicable state securities laws:
THE SALE, TRANSFER, ASSIGNMENT OR ANY OTHER ALIENATION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE AND THE RIGHTS OF THE HOLDERS OF SUCH
SECURITIES ARE SUBJECT TO THE TERMS AND CONDITIONS OF A TRANSITION AND
CONSULTING AGREEMENT, DATED AS OF NOVEMBER 2, 2005, AS SUCH AGREEMENT MAY
BE AMENDED, MODIFIED OR RESTATED FROM TIME TO TIME (A COPY OF WHICH IS ON
FILE WITH THE SECRETARY OF THE ISSUER HEREOF).
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS THE REGISTRATION PROVISIONS OF SAID ACT HAVE BEEN COMPLIED WITH OR
UNLESS THE CORPORATION HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO
THE CORPORATION, IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION,
THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
OR "BLUE SKY" LAWS OF ANY JURISDICTION. THEY MAY NOT BE OFFERED OR SOLD
WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION, IN FORM AND
SUBSTANCE SATISFACTORY TO THE CORPORATION, THAT THE PROPOSED TRANSACTION
WILL BE EXEMPT FROM REGISTRATION, QUALIFICATION AND FILINGS IN ALL SUCH
JURISDICTIONS.
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SECTION 5. Equity Compensation - continued
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legends (except a new certificate issued upon the
completion of a Transfer pursuant to a registered public offering under the
Securities Act or pursuant to Rule 144 thereunder and made in accordance with
the Securities Act) shall also bear such legends, unless in the opinion of
counsel for the Company, the Shares represented thereby are no longer subject to
the provisions of this Agreement or, in the opinion of the Company (with advice
from counsel to the Company, as the Company may deem appropriate), the Shares
represented thereby are no longer subject to the restrictions on transfer
imposed under the Securities Act or state securities laws, in which case the
applicable legend (or legends) will be removed.
SECTION 6. Representations of Consultant.
(a) The Consultant understands that the Shares are not registered under the
Securities Act of 1933, as amended (the "Act"), and represents to the Company,
and agrees that the Company is entitled to rely on such representations, as
follows: that the Consultant is acquiring the Shares with no intention of
reselling any of them in any distribution within the meaning of the Act; that he
is acquiring the Shares for his own account and that no one else has any
beneficial ownership in the Shares; and that he does not intend to and will not
resell the Shares except in compliance with the Act and subject to the terms and
conditions set forth in section 5 hereof. In addition, the Consultant
understands and agrees that (i) the Shares are "restricted securities" within
the meaning of Rule 144 under the Act; (ii) the Shares must be held unless they
are registered under the Act or an exemption from registration is available, and
the Company has received an opinion of counsel to such effect, in form and
substance satisfactory to it; (iii) in any event, the exemption from
registration under Rule 144 will not be available for at least one year and even
then will not be available unless a public market then exists for the Common
Stock of the Company, adequate information concerning the Company is then
available to the public, and other terms and conditions of Rule 144 are complied
with.
(b) The Consultant is relying solely on his tax advisors with respect to
the tax consequences of this investment and the transactions contemplated
hereunder and not on any statements or representations of the Company or any of
its agents or representatives. The Consultant understands that the equity
compensation he receives under this Agreement may be considered taxable income
for Federal or state income tax purposes and that the Company may treat such
equity compensation as a compensation charge against its earnings. The
Consultant understands that the Consultant, and not the Company, shall be
responsible for the Consultant's own tax liability that may arise as a result of
this investment or the transactions contemplated hereunder.
SECTION 7. Termination. Except as provided in the next succeeding sentence,
this Agreement may only be terminated by written agreement of the Company and
Consultant. Notwithstanding the foregoing, the Company may terminate this
Agreement, effective immediately upon receipt of written notice, if the
Consultant breached or threatens to breach any provision of Section 8 or Section
9 of this Agreement. No termination of this Agreement shall affect any of
Consultant's rights to receive equity compensation pursuant to Section 5 above
or to exercise Consultant's Put Right pursuant to Section 5(b), unless and until
(a) Consultant has agreed in writing to such termination, or (b) it is finally
judicially determined that Consultant has breached any provision of Section 8 or
Section 9 of this Agreement.
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SECTION 8. Covenants of Consultant.
(a) Consultant recognizes that the knowledge of, information concerning and
relationship with customers, suppliers and agents, and the knowledge of the
Company's business methods, systems, plans, software, technologies and policies
which Consultant will establish, receive or obtain as a consultant to the
Company (collectively, "Confidential Information"), are valuable and unique
assets of the business of the Company. Consultant will not, during or within
five (5) years after the Term, disclose any such Confidential Information
pertaining to the Company, its customers, suppliers, agents, policies or other
aspects of its business, for any reason or purpose, whatsoever except pursuant
to Consultant's duties hereunder or as otherwise authorized by the Company in
writing. The term Confidential Information shall not include knowledge or
information which (i) is in or enters the public domain without violation of
this Agreement or other obligations of confidentiality by Consultant or his
agents or representatives, (ii) Consultant can demonstrate was in his possession
on a nonconfidential basis prior to the commencement of his engagement with the
Company, or (iii) Consultant can demonstrate was received or obtained by him on
a non-confidential basis from a third party who did not acquire it wrongfully or
under an obligation of confidentiality, subsequent to the termination of his
engagement hereunder.
(b) All memoranda, notes, records or other documents made or compiled by
Consultant or made available to Consultant while engaged concerning customers,
suppliers, agents or personnel of the Company, or the Company's business
methods, systems, plans and policies, shall be the Company's property and shall
be delivered to the Company within five (5) business days of the termination of
Consultant's engagement or at any other time on request.
(c) During the Term and for two (2) years thereafter, Consultant shall not
directly or indirectly solicit or initiate contact with any employee of the
Company with a view to inducing or encouraging such employee to leave the employ
of the Company for the purpose of being hired by Consultant, an employer
affiliated with him or any competitor of the Company.
(d) Consultant acknowledges that the provisions of this section are
reasonable and necessary for the protection of the Company and that the Company
will be irrevocably damaged if such covenants are not specifically enforced.
Accordingly, Consultant agrees that, in addition to any other relief to which
the Company may be entitled in the form of actual or punitive damages, the
Company shall be entitled to seek and obtain injunctive relief from a court of
competent jurisdiction for the purposes of restraining Consultant from any
actual or threatened breach of such covenants.
(e) In the event that, following the termination of this Agreement,
consultant is entitled to receive any further payments other than for
compensation or other amounts accrued prior to termination or expiration of this
Agreement, such payments shall nonetheless cease and the Company shall no longer
be obligated to make such payments if there is a material breach of any of the
covenants in this section and Consultant shall forthwith upon demand of the
Company repay any such amounts paid to Consultant subsequent to the date such
breach occurred.
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SECTION 9. Assignment of Inventions.
(a) Consultant agrees that all Confidential Information and all other
inventions, discoveries, concepts, designs, research methods and results,
processes, formulae, creations, products, works of authorship, databases, trade
secrets and know-how, or parts thereof, conceived, developed, or otherwise made
by Consultant, alone or jointly with others and in any way relating to the
Company's present or proposed programs or services or to tasks assigned to me
during the course of Consultant's engagement by the Company, whether or not
patentable or subject to copyright protection and whether or not reduced to
tangible form or reduced to practice, during the period of Consultant's
engagement by the Company, whether or not made during Consultant's regular
working hours, and whether or not made on the premises of the Company, and
whether or not disclosed by Consultant to the Company (hereinafter collectively
referred to as "Developments"), together with all goods or services which embody
or emulate such Developments, shall be the sole property of the Company.
Consultant agrees to, and hereby does, assign to the Company all his or her
right, title and interest throughout the world in and to all Developments and to
anything tangible which evidences, incorporates, constitutes, represents or
records any such Developments. Consultant agrees that all such Developments
shall constitute works made for hire under the copyright laws of the United
States and hereby assign and, to the extent any such assignment cannot be made
at present, hereby agrees to assign to the Company all copyrights, patents and
other proprietary rights Consultant may have in any such Development, together
with the right to file for and/or own wholly without restriction United States
and foreign patents, trademarks, and copyrights with respect thereto.
(b) Consultant shall make and maintain adequate and current written records
of all Developments, and shall disclose all Developments promptly, fully and in
writing to an authorized officer of the Company immediately upon development of
the same and at any time upon request.
SECTION 10. Exceptions. Consultant hereby certifies that Consultant has
informed the Company in writing of all continuing obligations to any previous
employer, including those which require Consultant not to disclose to the
Company any information, and that Consultant has also informed the Company, in
writing, of all Confidential Information or Developments which Consultant claims
as his or her own or otherwise intends to exclude from this Agreement because it
was developed by Consultant prior to the date of this Agreement. Consultant
understands that after execution of this Agreement, Consultant shall have no
right to exclude Confidential Information or Developments from this Agreement.
SECTION 11. Obligation to Cooperate. Consultant will, at any time during
his engagement, or after it terminates, at the request of the Company, execute
all documents and perform all lawful acts which the Company considers necessary
or advisable to secure its rights hereunder and to carry out the intent of this
Agreement. It is understood that reasonable out-of-pocket expenses of
Consultant's assistance incurred at the request of the Company will be
reimbursed by the Company.
SECTION 12. Release. Consultant hereby releases and waives all claims,
causes of action or the like that Consultant had, now has or may in the future
have against the Company or SunnComm and any and all of the respective officers,
employees, directors and stockholders (collectively, the "Released Parties"),
whether now known or unknown, in respect to all matters relating to Consultant's
employment with SunnComm or engagement by the Company, possible separation from
employment with SunnComm, which Consultant acknowledges may occur for
nondiscriminatory reasons, or treatment of Consultant by the Company while in
the Company's employ or engagement, including all claims related to severance,
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SECTION 12. Release - continued
notice of termination, the payment of salary and/or incentive performance bonus,
and all claims arising under the Age Discrimination in Employment Act of 1967
("ADEA") as amended by the Older Workers Benefit Protection Act, Title VII of
the Civil Rights Act of 1964 as amended by the Civil Rights Act of 1991, the
Equal Pay Act of 1962, the Americans with Disabilities Act of 1990, the Workers
Adjustment and Retraining Notification Act, or any other federal, state or local
statute or ordinance, and Consultant further releases and waives any other claim
or cause of action recognized in law or equity which Consultant had or now has
against any of the Released Parties arising out of conduct, acts or omissions of
the Company or SunnComm occurring prior to the execution date of this Agreement.
Consultant understands and acknowledges that this Agreement will bar recovery in
any forum for any claims that are the subject matter of the release set forth
herein, and that Consultant will neither seek nor accept any moneys for any
claim or cause of actions which is the subject matter of this release
SECTION 13. Non-Disparagement. Company and Consultant agree that they will
not make any comments or statements to the press, employees of the Company, any
individual or entity with whom either party has a business relationship or any
other person if such comment or statement could be likely to adversely affect
the conduct of the business of the Company or Consultant, or any of their plans
or prospects or the business reputation of the Company or Consultant or that of
any of Company's employees or stockholders, except as may be required by law or
subpoena.
SECTION 14. Independent Contractor Status. The Consultant shall perform all
services under this Agreement as an "independent contractor" and not as an
employee or agent of the Company.
SECTION 15. Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the subject matter thereof,
supersedes and replaces in its entirety any and all prior agreements of the
parties with respect to the subject matter thereof, and cannot be changed or
extended except by a writing signed by both parties hereto. This Agreement shall
be binding upon and inure to the benefit of the parties and their respective
legal representatives, executors, heirs, administrators, successors and assigns.
SECTION 16. Governing Law. This Agreement and all matters and issues
collateral thereto shall be governed by the laws of the State of Arizona,
without regard to its conflict of law principles.
SECTION 17. Severabilitv. If any provision of this Agreement, as applied to
either party or to any circumstance, shall be adjudged by a court to be void and
unenforceable, the same shall in no way affect any other provision of this
Agreement or the validity or enforceability thereof.
SECTION 18. Notices. All notices or other communications hereunder shall be
given in writing and shall be deemed given if served personally or mailed by
registered or certified mail, return receipt requested, to the parties at their
respective addresses on record at the Company, or at such other address or
addresses as they may hereafter designate in writing.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
first date written above.
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MEDIAMAX TECHNOLOGY CORP.
By:__________________________________
Name:________________________________
Title:_______________________________
CONSULTANT
____________________________________
Xxxxx Xxxxxx
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