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EXHIBIT 4.1
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XXXXXXX X. XXXXX 1995 CONSULTATION AGREEMENT
THIS AGREEMENT is executed and made effective this 2nd day of August, 1995,
by and between APPLIED RESEARCH CORPORATION, a Colorado corporation (the
"Company") with principal offices at 0000 Xxxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxx
00000, and XXXXXXX X. XXXXX with offices at 00 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxx
Xxxx 00000 ("Consultant").
WITNESSETH
WHEREAS, the Company desires to retain the services of Consultant as more
fully described below:
NOW THEREFORE, in consideration of the mutual covenants, agreements and
provisions contained in this Agreement, the parties agree as follows:
1. CONSULTATION.
The Company hereby retains the services of Consultant, as an
independent contractor, which retention is accepted and agreed to be performed
by Consultant, subject to and upon the terms and conditions hereinbelow set
forth.
2. TERM.
2.1. The term of this Agreement shall begin on the day and year first
above written, and, unless earlier terminated by the Company in accordance with
the provisions of Section 2.2 hereof shall terminate on March 31, 1996 (the
"Initial Term"), unless extended or renewed at the sole option of the Company.
Upon the termination of this Agreement, the retention and agency, and
Consultant's independent contractor status, shall end, unless a new, separate
written agreement shall have been executed by all parties. In any event,
Sections 6, 10 through 12 and 14 through 21 shall survive any termination of
this Agreement.
2.2. The Company shall have the sole and exclusive option to terminate
this Agreement, effective the last day of any month, for any reason, or no
reason at all, upon written notice to the Consultant, delivered on or before the
close of business on the effective date of termination.
3. CONSULTANT'S STATUS.
It is understood and agreed that Consultant shall be at all times and
for all purposes hereunder an independent contractor to the Company and under no
circumstances shall be deemed an employee, partner or joint venturer of or with
the Company. Consultant agrees that he shall not directly or indirectly imply
or represent to others, or permit another to imply or represent to others that
Consultant has any authority to act for, represent or bind the Company in any
matter by virtue of this Agreement. Consultant expressly agrees to indemnify
and hold harmless the Company for any damages which may be sustained by the
Company as a result of or arising out of any breach of the covenants set forth
in this Section 3.
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4. SERVICES OF CONSULTANT.
4.1. Upon the request of the Company, Consultant shall render advice
and assistance to the Company on business-related matters and in connection
therewith shall:
4.1.1 Attend meetings of the Company's Board of Directors or
Executive Committee(s) when requested by the Company;
4.1.2 Attend meetings and at the request of the Company
review, analyze and report on proposed business opportunity;
4.1.3 Consult with the Company concerning on-going strategic
corporate planning and long-term investment policies, including any revision of
the Company's business plan;
4.1.4 Consult with and advise the Company with regard to
potential mergers and acquisitions whether the Company be the acquiring company
or the target of the acquisition.
4.2. In performing hereunder, Consultant may, but need not, use the
facilities or resources of the Company. Consultant shall be solely and
exclusively responsible for determining when, where, how and by whom the
services are to be performed hereunder, subject only to such matters as may be
specifically addressed in written communications from the Company.
4.3. In connection with the services to be rendered by Consultant,
Consultant shall report to and be responsible to the Board of Directors,
President and others of the Company and shall consult with those individuals on
behalf of the Company in connection with the development of a marketing plan for
product development, management, advertising and all other related areas.
Consultant agrees to make himself available to evaluate all proposals related to
any financing undertaken by the Company.
4.4. Consultant agrees to exercise his best efforts, skill and
diligence in the performance of his services hereunder and shall perform all
services in a good and workmanlike fashion.
4.5. Consultant shall keep accurate records showing the quantity and
date of time devoted to the services provided for herein and a description
thereof, and shall present such records to the Company on request.
4.6. Anything to the contrary herein notwithstanding, it is agreed
that Consultant's services will not include any service that constitute the
rendering of legal opinions, performance of work that is in the ordinary purview
of a certified public accountant or any work that is the ordinary purview of a
registered broker/dealer.
5. COMPENSATION.
5.1. The Consultant shall be promptly reimbursed for all reasonable and
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necessary business expenses incurred by the Consultant in connection with its
rendering of services hereunder to the Company; provided, however, that such
expenses require the prior approval of the President of the Company and provided
further that the Consultant shall only be reimbursed for such expenses as to
which it presents the Company with receipts or other reasonable substantiation
thereof.
5.2. For all services to be rendered by Consultant during the Initial
Term, the Company agrees to issue to Consultant 400,000 shares of the $.005 par
value Common Stock ("Common Stock") of the Company to be held in escrow, subject
to vesting and consulting in accordance with the provisions of Section 5.2.1.
5.2.1 The Company Stock shall vest in Consultant in
accordance with the following schedule provided the Company does not, in
accordance with the provisions of Section 2.2 above, terminate this Agreement.
In the event the Company terminates this Agreement, those shares of Common Stock
which on the effective date of termination have NOT vested in Consultant shall
be returned to the Company.
Date Shares No. of Shares
Vest in Consultant Vesting in Consultant
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August 1, 1995 50,000
September 1, 1995 50,000
October 1, 1995 50,000
November 1, 1995 50,000
December 1, 1995 50,000
January 1, 1996 50,000
February 1, 1996 50,000
March 1, 1996 50,000
5.3. The Consultant shall pay all applicable taxes which are assessed
against it as a result of its receipt of compensation under this Agreement, and
the Company shall not withhold any such taxes from the compensation paid to the
Consultant. Consultant agrees to indemnify and hold harmless the Company,
together with its officers and directors, with respect to any such taxes or
other assessments which may be due and payable as a result of the payment or
receipt of compensation hereunder.
6. COVENANTS OF CONSULTANT.
6.1. In connection with its performance hereunder, Consultant shall
not make any untrue statement of a material fact regarding the Company or omit
to state a material fact necessary in order to make any statement regarding the
Company made by the Consultant not misleading.
6.2. The Consultant agrees to indemnify, defend and hold harmless the
Company, and it officers, directors, shareholders, agents, employees (hereafter
"Affiliates"), attorneys, successors and assigns, from and against, and pay or
reimburse each of them for, any and all claims, losses, damages, judgments,
amounts paid in settlement, costs and legal, accounting or other expenses
(collectively "Losses") that any of them may sustain or incur as a
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result of any misrepresentation, and inaccuracy in, or any breach of, any
warranty or representation or any nonperformance of any covenant or other
obligation on the part of the Consultant contained in this Agreement.
7. REGISTRATION RIGHTS.
7.1. Within thirty (30) days of the date of this Agreement, the
Company shall cause to be prepared and filed with the SEC a Registration
Statement on Form S-8 registering for sale the shares of Common Stock issuable
in accordance with the provisions of Section 5.2 (the "Registration Statement").
7.2. In connection with the preparation and filing of the Registration
Statement, the Company agrees to (i) use its best efforts to cause such
Registration Statement to become and remain effective; (ii) prepare and file
with the SEC such amendments and supplements to such Registration Statement as
may be necessary to keep such Registration Statement effective for a period of
not less than one hundred eighty (180) days; (iii) furnish to the Consultant
such number of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act of 1933, as amended (the
"Act"), and such other documents as Consultant may reasonably request in order
to facilitate the disposition of the shares of Common Stock; and (iv) use its
best efforts to register and qualify the shares of Common Stock covered by such
Registration Statement under the Blue Sky laws of the State of New York for the
distribution of the securities covered by the Registration Statement. The
Consultant agrees to cooperate in all reasonable respects with the preparation
and filing of the Registration Statement.
7.3. All fees and other expenses incurred in connection with the
registration, offering and distribution of the shares of Common Stock shall be
borne by the Company, including, without limitation, fees of the Company's legal
counsel, Securities and Exchange Commission filing fees. Blue Sky filing fees,
printing costs, accounting fees costs, transfer agent fees, and any other
miscellaneous costs and disbursements. Consultant shall be liable for any and
all underwriting discounts, brokerage commissions or other fees or expenses
incurred in connection with the sale or other disposition by Consultant of the
shares of Common Stock covered by the Registration Statement.
7.4. To the extent permitted by law, Consultant will indemnify and
hold harmless the Company, and its directors, officers, employees, agents and
representatives, as well as its controlling persons (within the meaning of the
Act) against any losses, claims, damages, liabilities, or expenses, including
without limitation, attorney's fees and disbursements, which arise out of or are
based upon any violation by Consultant of the Act or under the Securities
Exchange Act of 1934, or any rule or regulation promulgated thereunder
applicable to Consultant, or arise out of or are based upon any untrue statement
or omission of Consultant in the Subscription Agreement between the Company and
Consultant, or arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or alleged untrue statement or omission, or alleged omission was made
in such Registration Statement in reliance upon and in conformity with
information furnished by Consultant in writing, expressly for use in connection
with such Registration Statement.
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7.5. To the extent permitted by law, the Company will indemnify and
hold harmless Consultant, including his employees, agents, and representatives,
against any losses, claims, damages, liabilities, or expenses, including without
limitation attorney's fees and disbursements, to which Consultant may become
subject under the Act to the extent that such losses, claims, damages or
liabilities arise out of or are based upon any violation by the Company of the
Act or under the Securities Exchange Act of 1934, or any rule or regulation
promulgated thereunder applicable to the Company, or arise out of or are based
upon any untrue or alleged untrue statement of any material fact contained in
the Registration Statement, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or arise out of any
violation by the Company of any rule or regulation promulgated under the Act
applicable to the Company and relating to action or inaction required of the
Company in connection with such Registration Statement; provided, however, that
the indemnity agreement contained in this paragraph shall not apply to any loss,
damage or liability to the extent that same arises out of or is based upon an
untrue statement or omission made in connection with such Registration Statement
in reliance upon and in conformity with information furnished in writing
expressly for use in connection with such Registration Statement by Consultant.
7.6. Consultant undertakes to comply with all applicable laws
governing the distribution of securities in connection with Consultant's sale of
common stock of the Company acquired pursuant to the terms of this Agreement,
including, without limitation, Rule 10(b)-6 under the Securities Exchange Act of
1934, and to notify the Company of any changes in Consultant's plan of
distribution, including the determination of the public offering price and any
dealer concession or discount so that the Company can sticker or amend the
Registration Statement as the Company deems appropriate in its sole discretion.
8. PERFORMANCE AND OTHER ENGAGEMENTS.
Throughout the term of this Agreement, it is understood that
Consultant will only provide services to the Company on a part-time basis and,
subject to the provisions concerning competition hereinbelow set forth, may
perform the same or similar services for other persons or entities not
inconsistent with his undertakings hereunder.
9. REPRESENTATIONS AND WARRANTIES OF THE CONSULTANT.
9.1. The Consultant hereby represents and warrants to the Company that
there are no agreements or binding obligations enforceable against the
Consultant which would be violated by his entering into this Agreement or
providing the services to be provided hereunder.
9.2. NO OTHER INFORMATION RELIED UPON
Consultant represents, warrants and agrees that he has been
afforded the opportunity to make, and has made, all such investigation of the
Company and its financial condition, business affairs and prospects as it deems
appropriate. Consultant acknowledges receipt of such information as he deems
necessary or appropriate as a prudent and knowledgeable investor in evaluating
the Company and the shares of Company Common Stock issuable hereunder.
Consultant acknowledges that the Company has made available to him the
opportunity to obtain additional information to evaluate the merits and risks of
this Agreement. Consultant
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acknowledges that he has had the opportunity to ask questions of the Company
and, to the extent he availed himself of such opportunity. Consultant received
satisfactory answers from the Company, its affiliates, associates, officers and
directors.
9.3. NATURE OF THE RISK.
Consultant represents, warrants and agrees that he understands
that the Company's business is, by its nature, speculative; that Consultant is
aware that the financial resources of the Company are extremely limited and that
it is very likely that the Company will require additional capital, and there is
no assurance that such capital will be available if necessary; that Consultant
is familiar with the high degree of risk that is involved in the Company's
business, and that Consultant is financially able and willing to accept the
substantial risk involved in such investment, including the risk of loss of the
entire amount of his compensation.
9.4. UNREGISTERED STOCK.
Consultant represents that he understands that the Company's
stock issuable hereunder has not been registered for sale under federal or state
securities laws and that such securities are being issued to Consultant pursuant
to a claimed exemption from the registration requirements of such laws which is
based upon the fact that said securities are not being offered to the public.
Consultant understands that in order to satisfy such requirement he must be
acquiring the stock with no view to making a public distribution of said
securities, and the representations and warranties contained in this Section 9
are given with the intention that the Company may rely thereon for purposes of
claiming such exemption; and that he understands that he must bear the economic
risk of his investment in the stock issuable hereunder, for a substantial period
of time, because neither has been registered under the federal or state
securities laws, and cannot be sold unless subsequently registered under such
laws, or unless an exemption from such registration is available.
9.5. STOCK ACQUIRED FOR INVESTMENT: LIMITATIONS ON DISPOSITION.
Consultant represents that he is acquiring the Common Stock for
his own account and for investment and not with a view to, or for sale in
connection with, any distribution thereof in violation of the Securities Act of
1933, as amended. Consultant agrees that the Common Stock will not be offered
for sale, sold or otherwise transferred for value, and that no transfer thereof
will be made by the Consultant unless (i) a registration statement with respect
thereto has become effective under the Securities Act of 1933, as amended, or
(ii) there is presented to the Company an opinion of counsel for Consultant
reasonably satisfactory to the Company that such registration is not required,
or (iii) there is presented to the Company a letter from the Securities and
Exchange Commission (said Commission having been informed of all relevant
circumstances) to the effect that in the event either the Common Stock is
transferred by Consultant without such registration, the Commission or its staff
will not recommend any action. Consultant further agrees that the Common Stock
will not be offered for sale, sold or otherwise transferred unless, in the
opinion of legal counsel for the Company, such sale or disposition does not and
will not violate any provisions of any federal or state securities law or
regulation. Consultant consents that any transfer agent of the Company may be
instructed not to transfer any of the Common Stock unless it receives
satisfactory evidence of compliance with the foregoing
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provisions and that there may be endorsed upon any certificate (or instruments
issued in substitution thereof) the Company's regular legend regarding the sale
of restricted securities.
9.6. The Consultant shall pay all applicable taxes which are assessed
against him as a result of the receipt of compensation under this Agreement, and
the Company shall not withhold any taxes from the compensation paid thereunder
to the Consultant.
10. CONFIDENTIALITY.
Consultant for himself and his employees covenants with the Company
that all information concerning its methods, processes, plans of acquisition,
research, markets, plans, strategies, distributors, dealers, customers, clients
and vendors collectively are and constitute the trade secrets and confidential
proprietary information of the Company. Consultant covenants and agrees for
himself and his employees that he will not (except as required in the course of
his services for the Company), during the term of this Agreement or thereafter,
communicate or divulge to, or use for the benefit of himself or any other
person, firm, association, or corporation, without the consent of the Company,
any trade secrets or confidential and proprietary information of the Company or
other confidential matters possessed, owned, or used by the Company that may be
communicated to, acquired by, or learned of by him or his employees in the
course of or as a result of his services for the Company. All records, disks,
tapes, stored information on any medium, files, memoranda, reports, price lists,
customer lists, drawings, plans, sketches, documents, equipment, and the like,
relating to the business of the Company, which Consultant or his employees shall
use or prepare or come into contact with, shall remain the sole property of the
Company, and upon termination of this Agreement, shall, together with all copies
in the possession of Consultant, be delivered to the Company.
Notwithstanding the foregoing, the restrictions on disclosure and use of
information and materials as set forth in this Section 10 shall not apply to the
following, and the following is not confidential or proprietary information: (1)
any information or materials which were generally available to the public at the
time made available to Consultant by the Company, (2) any information or
materials which become, without breach of this Section 10 and through no fault
of Consultant, generally available to the public, (3) any informatin or
materials which Consultant has received from other sources prior to the date of
this Agreement, subject to no restrictions on disclosure applicable to
Consultant; and (4) any information or materials which Consultant at any time
lawfully obtains from a third party and who is not under any obligation of
secrecy or confidentiality to the Company, under circumstances permitting
disclosure by Consultant to others without restriction.
11. NON-INTERFERENCE WITH EMPLOYEES.
11.1. Consultant convenants with the Company that employees of or
consultants to the Company and employees of and consultants to firms,
corporations or entities affiliated with the Company have, of necessity, been
exposed to and have acquired certain knowledge, understandings, and know-how
concerning the Company's business operations which is confidential information
and proprietary to the Company.
11.2. In order to protect the Company's confidential information
and to promote and insure the continuity of the Company's contractual relations
with its employees and
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consultants, Consultant covenants and agrees that for the term of this
Agreement, and for a period of sixty (60) days from the date this Agreement
terminates, he will not directly or indirectly, or permit or encourage others to
directly or indirectly (i) interfere in any manner whatsoever with the Company's
contractual or other relations with any or all of its employees or consultants,
or (ii) induce or attempt to induce any employee or consultant to the Company to
cease performing services for or on behalf of the Company.
11.3. In the event any court of competent jurisdiction determines
or holds that all or any portion of the covenants contained in this Section 11
are unlawful, invalid, or unenforceable for any reasons, then the parties hereto
agree to modify the provisions of this Section 11 if and only to the extent
necessary to render the covenants herein contained enforceable and otherwise in
conformance with all legal requirements.
12. CLIENTS AND CUSTOMERS.
12.1. Consultant covenants with the Company that the clients and
customers of the Company, both actual and contemplated, constitute actual and
prospective business relationships which are proprietary to the Company and
comprise, in part, the Company's confidential information and trade secrets.
12.2. In order to protect the Company's proprietary rights and to
promote and ensure the continuity of the Company's contractual relations with
its customers and clients, Consultant covenants and agrees that for the term of
this Agreement, and for a period of sixty (60) days from the date this Agreement
terminates, he will not directly, or indirectly, or permit or encourage other to
directly or indirectly (i) interfere in any manner whatsoever with the Company's
contractual or prospective relations with any clients or customers, or (ii)
induce or attempt to induce any client or customer of the Company to cease doing
business with the Company, or (iii) solicit, offer to retain, or retain, or in
any other manner engage or enter into any business or other arrangement with any
of the Company's customers or clients to provide any services or products to any
of such customers or clients as they may from time to time exist or be
constituted, except and unless such arrangements for the provision of products
or services is not in any way competitive with the products or services actually
provided by the Company to its clients or customers or proposed to be provided
by the Company to its clients or customers.
12.3. In the event any court of competent jurisdiction determines
or holds that all or any portions of the covenants contained in this Section 12
are unlawful, invalid or unenforceable for any reason, then the parties hereto
agree to modify the provisions of this Section 12 if and only to the extent
necessary to render the covenants herein contained enforceable and otherwise in
conformance with all legal requirements.
13. AFFILIATES OF CONSULTANT.
Consultant agrees that the Covenants set forth in Sections 9, 10, 11
and 12 of this Agreement are applicable to and binding upon any and all of
Consultant's agents and employees (hereafter "Affiliates"). Consultant agrees
that he will not permit any Affiliate to perform services hereunder nor permit
the disclosure of any Company trade secret, proprietary or confidential
information to any Affiliate until and unless such Affiliate agrees in writing
to be bound by the terms and conditions of Sections 9, 10, 11 and 12 of this
Agreement.
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14. ATTORNEY'S FEES.
In the event there is any litigation or arbitration between the
parties concerning this Agreement, the successful party shall be awarded
reasonable attorney's fees and litigation or arbitration costs, including the
attorney's fees and costs incurred in the collection of any judgment.
15. NOTICES.
All notices required or permitted hereunder shall be sufficient if
delivered personally or mailed to the parties at the address set forth below or
at such other address as either party may designate in writing from time to
time. Any notice by mailing shall be effective 48 hours after it has been
deposited in the United States certified mail, return receipt requested, duly
addressed and with postage prepaid.
16. PARTIAL INVALIDITY.
If any provisions of this Agreement are in violation of any statute or
rule of law of any state or district in which it may be sought to be enforced,
then such provisions shall be deemed null and void only to the extent that they
may be in violation thereof, but without invalidating the remaining provisions.
17. BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of the
respective parties hererto, their heirs, personal representatives, successors
and assigns.
18. WAIVER.
No waiver of any breach of any one of the agreements, terms,
conditions or covenants of this Agreement by the Company shall be deemed to
imply or constitute a waiver of any other agreement, term, condition or
covenants of this Agreement. The failure of either party to insist on strict
performance of any agreement, term, condition or covenant, herein set forth,
shall not constitute or become construed as a waiver of the rights of either or
the other thereafter to enforce any other default of such agreement, term,
condition or covenant; neither shall such failure to insist upon strict
performance be deemed sufficient grounds, to enable either party hererto to
forego or subvert or otherwise disregard any other agreement, term, condition or
covenants of this Agreement.
19. GOVERNING LAW.
This Agreement and the rights and duties of the parties shall be
construed enforced in accordance with the laws of the State of New York.
20. FAX/COUNTERPARTS.
This Agreement may be executed by telex, telecopy or other facsimile
transmission, and such facsimile transmission shall be valid and binding to the
same extent as if
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it were an original. Further, this Agreement may be signed in one or more
counterparts, all of which when taken together shall constitute the same
document.
21. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement of the parties hereto
with respect to the subject matter hereof. There are no representations,
warranties, conditions or obligations except as herein specifically provided.
Any amendment or modification hereof must be in writing.
IN WITNESS WHEREROF, the parties to this Agreement have duly executed
effective on the day and year first above written.
APPLIED RESEARCH CORPORATION
Attest:
/s/ Xxxxxx X. X'Xxxxx By: /s/ Dr. S.P.S. Anand
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Secretary Dr. S.P.S. Anand, President
CONSULTANT:
/s/ Xxxxxxx X. Xxxxx
-----------------------------
Xxxxxxx X. Xxxxx
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