CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement"), is made and entered into on
the 6th day of December, 2002, effective as of the Effective Date set forth
below, by and between Clarus Corporation, a Delaware corporation, ("Company")
and Xxxxxxx X. Xxxxxxx, a Georgia resident ("Consultant").
WHEREAS, Consultant has valuable experience, know-how and expertise
that will be beneficial to Company, and Company desires to retain
Consultant to render certain valuable Services (as defined herein) to
Company from time to time as a consultant and independent contractor;
and
WHEREAS, Consultant desires to perform such Services for Company on
those terms set forth below; and
WHEREAS, Company and Consultant desire to set forth in writing all of
the covenants, terms and conditions of their agreement and
understanding as to such performance of said Services;
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
herein contained and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
1. TERM. The term of this Agreement shall commence on the closing
(the "Closing") of the sale of Company's assets to Epicor
Software Corporation ("Epicor"), which is currently contemplated
to occur on December 6, 2002 (the "Effective Date") and shall
cease on the third anniversary of the Effective Date.
2. SERVICES. Company hereby retains Consultant as an independent
contractor and consultant for Company for the performance of
such services as shall be assigned to him by the Executive
Chairman of the Board or the Board of Directors of the Company
including matters relating to (i) assistance with the transition
of the Company's e-commerce business to EPICOR, (ii) the
Company's e-commerce business after the Closing, (iii)
identification, selection, negotiation with and due diligence
review of candidates for merger or acquisition (collectively,
the "Services"). The Consultant shall report to the Executive
Chairman of the Board.
Consultant agrees to devote his commercially reasonable best
efforts to the performance of such Services and to use as high a
degree of skill and care and devote such time as is necessary to
perform such Services, it being understood and agreed that the
Consultant shall not be required to devote his full time
throughout the term to perform such services. The Company
acknowledges that Consultant may be otherwise in the service of
other entities or persons (such services, "Other Services")
during the term of this Agreement subject to Sections 2 and 9
and the other terms of this Agreement.
3. COMPENSATION AND RELATED ISSUES.
(a) COMPENSATION. As compensation for the performance of the
Services under this Agreement, the Company shall pay
Consultant the aggregate sum of $250,000, payable in
twenty-four (24) equal monthly installments commencing
thirty (30) days after the Effective Date; provided,
however, that in the event the Consultant terminates this
Agreement, other than upon a Change of Control, he shall
refund and pay to the Company, within five (5) days of the
date of any such termination
Page 1 of 10
(the "Termination Date"), a dollar amount equal to such
portion of compensation received under this Agreement in
excess of the product of $228 multiplied by the number of
days elapsed from the Effective Date through the
Termination Date.
(b) EXPENSES. The Company shall also reimburse Consultant for
all actual and other reasonable out-of-pocket expenses
incurred by Consultant in the performance of the requested
Services referenced in paragraph 1(a) above.
4. CONSULTING/INDEPENDENT CONTRACTOR ARRANGEMENT. The parties agree
that this Agreement creates a consulting/independent contractor
relationship, and nothing in this Agreement shall be deemed to
create the relationship of partnership, joint venture or that of
an employer and employee. The Consultant acknowledges and agrees
that the Company will treat him as independent contractor for
taxation purposes and that the Consultant shall be solely
responsible for the payment of any and all taxes relating to his
services hereunder. Consultant, as an independent contractor,
waives any claim of rights or benefits normally afforded to
Company employees with respect to his Services hereunder.
5. CONSULTANT/INDEPENDENT CONTRACTOR'S AUTHORITY. In his capacity
as a consultant/independent contractor under this Agreement,
Consultant acknowledges that he shall not have any power or
authority to enter into any contract, undertaking or agreement
for or on behalf of Company or to assume or create any
obligation or responsibility, express or implied, on behalf of
or in the name of Company or to bind Company in any manner
whatsoever, without the express authorization of Company.
6. CONFIDENTIAL INFORMATION AND TRADE SECRETS. During the term of
this Agreement, Consultant will or may be making use of,
acquiring, creating, or adding to certain valuable, unique,
proprietary, and secret information of Company (whether tangible
or intangible and whether or not electronically kept or stored),
including business plans, processes, procedures, inventions,
pricing policies, customer and prospect lists and contacts,
contracts, sources and identity of vendors and contractors,
financial information of customers and Company, and other
proprietary documents, materials, or information relating to
Company, its businesses and activities, proposed businesses and
activities, or the manner in which Company does business, all of
which is valuable to Company in conducting its business because
the information is kept confidential and is not generally known
to Company's competitors or to the general public ("Confidential
Information"). Confidential Information does not include
information generally known or easily obtained from public
sources or public records.
Consultant acknowledges and agrees that to the extent that the
Confidential Information constitutes a trade secret under
applicable law, then Consultant shall forever protect and
maintain the confidentiality of such trade secrets, and will
refrain from disclosing, copying, or using any such trade
secrets without Company's prior written consent, except as
necessary in Consultant's performance of Services under this
Agreement.
To the extent that the Confidential Information does not
constitute a trade secret under applicable law, Consultant will,
during the term of this Agreement and for a period of three (3)
years following the date of the termination of this Agreement
and, thereafter, to the extent required by fiduciary obligation
or otherwise pursuant to applicable law, protect and maintain
the confidentiality of the Confidential Information, and for the
same
Page 2 of 10
period, Consultant will refrain from disclosing, copying, or
using any Confidential Information without Company's prior
written consent, except, as necessary in Consultant's
performance of Services under this Agreement. For purposes of
this Section 6 the term Company shall include subsidiaries of
the Company and its direct and indirect parent entities, if the
Company is part of a multitiered parent subsidiary ownership
structure.
7. TERMINATION. This Agreement may be terminated prior to the
expiration of the term as follows:
(a) DEATH OR DISABILITY. This Agreement shall terminate
automatically upon Consultant's death. In such event, the
Company shall pay Consultant's estate any earned and
unpaid compensation prorated through the date of death. If
Consultant is prevented from performing his material
duties hereunder as a result of physical or mental
illness, injury or incapacity for either (i) a period of
45 consecutive days or (ii) more than 60 days in the
aggregate in any twelve (12) month period, then the
Company may terminate this Agreement upon written notice
to Consultant.
(b) FOR CAUSE. Company may terminate this Agreement for Cause
at any time upon notice to Consultant setting forth in
reasonable detail the nature of such Cause. In the event
that the Company terminates this Agreement for Cause, the
Company shall not be obligated to pay any compensation to
Consultant after the effective date of termination, other
than compensation which has accrued and is unpaid through
the date of termination.
(c) WITHOUT CAUSE. In the event Company terminates this
Agreement without Cause, then Consultant shall be entitled
to receipt of the remaining amount of compensation payable
to Consultant hereunder in one lump sum, payable within
thirty days following the date of such termination and all
unvested stock options previously awarded to Consultant
shall become fully vested.
(d) CHANGE OF CONTROL. Consultant may terminate this Agreement
at any time during the three (3) month period beginning
ninety days after a Change of Control has occurred by
written notice given to the Company. In the event of such
termination:
(i) Company shall pay to Consultant the remaining amount
of compensation payable to Consultant hereunder in
one lump sum, payable within thirty days following
the date of such termination, and
(ii) All unvested stock options previously awarded to
Consultant shall become fully vested.
8. RETURN OF PROPERTY OF COMPANY. Upon termination or expiration of
this Agreement, Consultant agrees to immediately return to
Company all property of Company (including but not limited to
all documents, electronic files, records, computer disks or
other tangible or intangible things that may or may not relate
to or otherwise comprise Confidential Information or trade
secrets (as defined by applicable law)) that Consultant created,
used, possessed or maintained while working for Company from
whatever source and whenever created, including all
reproductions or excerpts thereof.
Page 3 of 10
9. PROTECTIVE COVENANTS.
(a) NON-PIRACY OF EMPLOYEES. During the term of this Agreement
and for a period of two (2) years following the date of
the termination of this Agreement, Consultant covenants
and agrees that Consultant shall not, directly or cause
any person or entity to indirectly, solicit, recruit, or
hire (or attempt to solicit, recruit, or hire) or
otherwise assist anyone in soliciting, recruiting, or
hiring, any employee of the Company who performed work for
Company within the twelve month period prior to the date
of termination of this Agreement or who was otherwise
engaged or employed with Company at the time of
termination of this Agreement and that, for said two year
period, Consultant shall not otherwise encourage, solicit,
or support any such employee(s) to leave their employment
with Company.
(b) NON-SOLICITATION OF CUSTOMERS. During the term of this
Agreement and for a period of two (2) years following the
date of the termination of this Agreement, Consultant
agrees not to, directly or indirectly, solicit, divert,
appropriate, or call upon with the intent of doing
business with the customers or clients of Company,
including prospects of Company, if the purpose of such
activity is either to solicit these customers or clients
or prospective customers or clients for a Competitive
Business as herein defined (including but not limited to
any Competitive Business started by Consultant) or to
otherwise encourage any such customer or client to
discontinue, reduce, or adversely alter the amount of its
business with Company. Consultant acknowledges that due to
Consultant's relationship with Company, Consultant has and
will develop special contacts and relationships with
Company's clients and prospects, and that it would be
unfair and harmful to Company if Consultant took advantage
of these relationships in a Competitive Business. A
"Competitive Business" is an enterprise that is in the
business of offering services and products that are
similar or identical to those offered by the Company
during Consultant's relationship with the Company.
(c) EXCEPTIONS TO PROTECTIVE COVENANTS. It is understood and
agreed by Consultant that the terms and provisions of
subsections 6 and 9 (the "Restrictive Covenants") are not
intended to restrict Consultant in the exercise of
Consultant's skills or the use of knowledge or information
that does not constitute Confidential Information.
Consultant acknowledges the reasonableness of these
Restrictive Covenants and their respective limitations,
given Consultant's position with Company, the Company's
business, and the aforementioned consideration, and
Consultant agrees to strictly abide by the terms hereof.
(d) COVENANT NOT TO COMPETE. By virtue of his prior
relationship with the Company and the performance of the
Services to the Company hereunder, Consultant shall be
given an opportunity to, and shall have an obligation to,
participate in strategic planning with respect to the
Company and shall be made privy to the Company's strategy,
development, pricing, and other matters specifically
designed to address market opportunities and competition.
Therefore, Consultant hereby affirms the covenants
concerning noncompetition in his existing Employment
Agreement with the Company, which shall survive
termination of his employment, and further agrees that at
such time as the Company has completed the acquisition of
an operating business or assets,
Page 4 of 10
whether through merger, reorganization, acquisition of
stock or assets or otherwise (a "Transaction"),
Consultant, if he has served as a director of the Company
at any time within six (6) months prior to the approval of
any such transaction, shall enter into a Noncompetition
Agreement with the Company in which Consultant will agree
that during the term of this Agreement and for a period of
two (2) years following termination thereof, Consultant
will not compete with the business as conducted by the
Company within a geographic territory in which the Company
and such acquired entity does business; provided, however,
that the Consultant shall be permitted to continue to
perform any Other Services to the extent he is engaged to
perform such services at the time the Company consummates
a Transaction so long as the Consultant has been and
continues to be in material compliance with the terms of
this Agreement.
(e) SHARE RESTRICTION AGREEMENT. Consultant hereby agrees that
he will not, without the prior written consent of the
Company (which consent may be withheld in its sole
discretion), directly or indirectly, sell, offer, contract
or grant any option to sell (including without limitation
any short sale), pledge, transfer, establish an open "put
equivalent position" within the meaning of Rule 16a-1(h)
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or otherwise encumber or dispose of any
shares of Common Stock of the Company owned by the
Consultant on the date hereof (the "Owned Shares") or
hereafter acquired or capable of being acquired upon the
exercise of a stock option granted to Consultant by the
Company (the "Option Shares"), whether such Common Stock
is currently or hereafter owned either of record or
beneficially (as defined in Rule 13d-3 under the Exchange
Act) by Consultant, or publicly announce his intention to
do any of the foregoing, for a period commencing on the
date hereof and continuing thereafter as follows: (i) with
respect to the Owned Shares, for a period commencing on
the Effective Date and ending on December 31, 2003, (ii)
with respect to the Option Shares, for a period commencing
on the Effective Date and ending on December 31, 2004.
Notwithstanding the release of the Owned Shares and Option
Shares from the provisions of this paragraph 9(e),
Consultant agrees that until December 6, 2005, at least an
aggregate of 200,000 Owned Shares and Option Shares (as
adjusted for any stock splits, combinations or dividends)
owned by Consultant (whether Owned Shares or Option
Shares) will remain subject to the restrictions of this
paragraph 9(e). In the event that this Agreement is
terminated by Company without Cause or by Consultant upon
a Change of Control as provided in Section 7(d), the
provisions of this Section 9(e) shall automatically
terminate. The Consultant also agrees and consents to the
entry of stop transfer instructions with the Company's
transfer agent and registrar against the transfer of
shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the
Consultant except in compliance with the foregoing
restrictions.
10. WORK PRODUCT; INVENTIONS.
(a) OWNERSHIP BY COMPANY. Company shall own all right, title
and interest in and to all work product developed by
Consultant in Consultant's provision of Services to
Company, including without limitation, all works of
authorship, all derivative works and patentable and
unpatentable inventions and improvements, all copies of
such works in whatever medium such copies are fixed or
embodied,
Page 5 of 10
and all worldwide copyrights, trademarks, patents or other
intellectual property rights in and to such works
(collectively, the "Work Product"). All copyrightable
materials of the Work Product shall be deemed a "work made
for hire" for the purposes of U.S. Copyright Act, 17
X.X.X.xx. 101 et seq., as amended (the "Copyright Act").
(b) ASSIGNMENT AND TRANSFER. In the event any right, title or
interest in and to any of the Work Product (including
without limitation all worldwide copyrights, trademarks,
patents or other intellectual property rights therein)
does and shall not vest automatically in and with Company,
Consultant agrees to and hereby does irrevocably assign,
convey, and otherwise transfer to Company, and Company's
respective successors and assigns, all such right, title
and interest in and to the Work Product with no
requirement of further consideration from or action by
Consultant or Company.
(c) REGISTRATION RIGHTS. Company shall have the exclusive
worldwide right to register, in all cases as "claimant"
and when applicable as "author", all copyrights in and to
any copyrightable element of the Work Product, and file
any and all applicable renewals and extensions of such
copyright registrations. Company shall also have the
exclusive worldwide right to file applications for and
obtain (i) patents on and for any of the Work Product in
Consultant's name and (ii) assignments for the transfer of
the ownership of any such patents to Company.
(d) ADDITIONAL DOCUMENTS. Consultant agrees to execute and
deliver all documents requested by Company regarding or
related to the ownership and/or other intellectual
property rights and registrations specified herein.
Consultant hereby further irrevocably designates and
appoints Company as Consultant's agent and
attorney-in-fact to act for and in Consultant's behalf and
stead to execute, register and file any such assignments,
applications, registrations, renewals and extensions and
to do all other lawfully permitted acts to further the
registration, prosecution and issuance of patents,
copyright or similar protections with the same legal force
and effect as if executed by Consultant.
11. INJUNCTIVE RELIEF. Consultant acknowledges that it may be
difficult to calculate Company's damages from its breach of
Sections 6, 9, or 10 and that money damages may therefore be an
inadequate remedy. Accordingly, upon such breach, Consultant
acknowledges that Company may seek and shall be entitled to
injunctive relief against Consultant and/or other appropriate
orders to restrain such breach. Nothing in this provision shall
limit Company from seeking any other damages or relief provided
by applicable law for breach of this Agreement or any section or
provision hereof.
12. ASSIGNMENT. Due to the personal service nature of Consultant's
obligations, Consultant may not assign this Agreement or his
obligations hereunder. Subject to the restrictions in this
subsection, this Agreement shall be binding upon and benefit the
parties hereto and their respective heirs, successors, legal
representatives, executors or assigns. The Company may not
assign this Agreement or its obligations hereunder except to its
successor or affiliate including resulting from a Change of
Control or as Consultant may otherwise agree in writing
Page 6 of 10
13. SEVERABILITY. In the event a court of competent jurisdiction
finds any provision herein (or subpart thereof) to be illegal or
unenforceable, such court shall modify said provision(s) (or
subpart(s) thereof) to make this Agreement valid and enforceable
to the fullest extent possible to carry out the intent expressed
by the provisions hereof. Any illegal or unenforceable provision
(or subpart thereof) or any modification by any court, shall not
affect the remainder of this Agreement, which shall continue at
all times to be valid and enforceable.
14. ENTIRE AGREEMENT; MODIFICATION. This Agreement constitutes the
entire understanding between the parties regarding the subject
matters addressed herein and supersedes any prior oral or
written agreements, promises, representations, warranties or
inducements between or by the parties. The benefits accorded to
Consultant hereunder are (i) in lieu of, the benefits to which
he is entitled under that certain Employment Agreement dated
January 1, 2000, as amended except for (A) continued payments of
Base Salary (as defined in such Employment Agreement) until the
first anniversary of the Change of Control (as defined in such
Employment Agreement) and (B) medical insurance coverage
contemplated by the second sentence of Section 4(c) of such
Employment Agreement, and (ii) in addition to any stock option
agreement between the parties.
15. GOVERNING LAW; FORUM SELECTION. This Agreement is executed
within the State of New York and shall be governed by the laws
of the State of New York without regard to the conflicts of laws
provisions of said State. In the event of any litigation arising
out of or relating to this Agreement or the parties' contractual
relationship, the parties designate the state or federal court
in New York County, State of New York, as the exclusive forum
for the litigation. Consultant hereby expressly agrees to
jurisdiction and venue in this Court and waives any defenses to
this forum and venue selection.
16. NEGOTIATED AGREEMENT. Consultant and Company agree that this
Agreement shall be construed as drafted by both of them, as
parties of equivalent bargaining power and not for or against
either of them as drafter.
17. REVIEW AND RECEIPT OF THIS AGREEMENT. Consultant acknowledges
that Consultant has had an opportunity to read, review and
consider the provisions of this Agreement, that Consultant has
in fact read and does understand such provisions and that
Consultant has voluntarily entered into this Agreement.
18. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
(a) "CAUSE."
(i) Consultant's repeated failure to perform (other than
by reason of disability), or gross negligence in the performance
of, his material duties and responsibilities hereunder and the
continuance of such failure or negligence for a period of thirty
(30) days after notice to the Consultant;
(ii) Material breach by Consultant of any provision of
this Agreement or any other written agreement between Consultant
and Company or any of its affiliates; and
(iii) Other conduct by the Consultant that involves a
material violation of law
Page 7 of 10
or breach of fiduciary obligation on the part of Consultant or
is otherwise materially harmful to the business, interests,
reputation or prospects of Company or any of its affiliates.
(b) "CHANGE OF CONTROL" For the purposes herein, a "Change of
Control" shall be deemed to have occurred on the earliest of the
following dates:
(i) The date any entity or person other than Xxxxxx
Xxxxxxx or his affiliates shall have become the beneficial owner
of, or shall have obtained voting control over, fifty percent
(50%) or more of the outstanding Common Stock of the Company;
(ii) The date there shall have been a change in a majority
of the Board of Directors of the Company within a 12-month
period (not including any period prior to the execution of this
Agreement) unless the nomination for election by the Company's
stockholders of each new director was approved by the vote of a
majority of the directors then still in office who were in
office at the beginning of the 12-month period;
(iii) The date the Company consummates (A) a merger or
consolidation of the Company with or into another corporation,
in which the Company is not the continuing or surviving
corporation or pursuant to which any shares of Common Stock of
the Company would be converted into cash, securities or other
property of another corporation, other than (x) a merger or
consolidation of the Company in which holders of Common Stock
immediately prior to such merger or consolidation have the same
proportionate ownership of Common Stock of the surviving
corporation immediately after such merger or consolidation as
immediately before such merger or consolidation and (Y) a merger
or consolidation of the Company in which holders of Common Stock
immediately prior to such merger or consolidation continue to
own at least a majority of the combined voting securities of the
Company (or the surviving entity) outstanding immediately after
such merger or consolidation, or (B) the sale or other
disposition of all or substantially all of the assets of the
Company.
19. OPTION AGREEMENTS. The option agreements described on Schedule A
attached hereto, are hereby deemed amended (a) so that all
references in each option agreement that relate to employment
shall be deemed to refer, instead, to Consultant's consultancy
hereunder, it being the intent that the options remain
exercisable by Consultant during the term of this Agreement, (to
the extent otherwise exercisable) and (b) to provide that each
option agreement will remain exercisable (to the extent the term
of such options has not otherwise expired by its terms) until
December 6, 2005 in the event this Agreement is terminated by
the Company without Cause. Otherwise, each option agreement
shall continue in full force and effect in accordance with their
terms.
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IN WITNESS WHEREOF, the parties hereto have hereunto affixed their
hands and seals as of the date first above written.
COMPANY:
Clarus Corporation
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxx
-------------------------------------
Title: Executive Chairman
-------------------------------------
CONSULTANT:
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------------------
Xxxxxxx X. Xxxxxxx
Page 9 of 10
SCHEDULE A
----------------------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF OPTIONS
DATE OF OPTIONS EXERCISE EXERCISABLE (AS OF
PLAN GRANT NO. TYPE GRANT OUTSTANDING PRICE 8/31/02)
----------------------------------------------------------------------------------------------------------------------
SQL 1992 D0001114 ISO 12/5/96 11,250 $1.00 11,250
Stock Plan
----------------------------------------------------------------------------------------------------------------------
SQL 1992 H0001114 ISO 12/5/96 39,999 $1.00 39,999
Stock Plan
----------------------------------------------------------------------------------------------------------------------
SQL 1992 Stock I0001115 NQSO 12/5/96 13,752 $1.00 13,752
Stock Plan
----------------------------------------------------------------------------------------------------------------------
SQL 1992 E0001114 ISO 11/10/97 22,479 $3.67 22,479
Stock Plan
----------------------------------------------------------------------------------------------------------------------
SQL 1992 E0001114A NQSO 11/10/97 42 $3.67 42
Stock Plan
----------------------------------------------------------------------------------------------------------------------
SQL 1992 G0001114 NQSO 2/5/98 107,845 $4.83 107,845
Stock Plan
----------------------------------------------------------------------------------------------------------------------
SQL 1992 F0001114A NQSO 2/5/98 22 $4.83 22
Stock Plan
----------------------------------------------------------------------------------------------------------------------
1998 Stock J0001114 ISO 5/27/99 32,809 $5.41 14,325
Incentive Plan
----------------------------------------------------------------------------------------------------------------------
1998 Stock K0001114 NQSO 5/27/99 77,191 $5.41 62,675
Incentive Plan
----------------------------------------------------------------------------------------------------------------------
1998 Stock 497 ISO 7/30/01 15,657 $7.00 0
Incentive Plan
----------------------------------------------------------------------------------------------------------------------
1998 Stock 497A NQSO 7/30/01 134,343 $7.00 50,000
Incentive Plan
----------------------------------------------------------------------------------------------------------------------
