EXHIBIT 4.6
CONSULTING AGREEMENT
--------------------
THIS CONSULTING AGREEMENT (the "Agreement") is made this 25th day of
October 1999, by and between SmartServ Online, Inc., a Delaware corporation (the
"Company"), and Xxxxxx Xxxxxx (the "Consultant").
RECITALS
WHEREAS, the Company wishes to engage the Consultant to consult with
respect to certain aspects of its business;
WHEREAS, the Consultant is willing to make available to the Company the
consulting services provided for in this Agreement as set forth below;
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the respective
convenants and agreements of the parties herein contained, the parties hereto
agree as follows:
1. TERM.
The term of this Agreement shall commence on the date hereof and end
twelve months thereafter.
2. CONSULTING SERVICES.
(a) For the term of this Agreement, the Consultant agrees to provide the
following Consulting services to the Company:
(i) Consult with the Company's management concerning marketing surveys,
investor profile information, methods of expanding investor support and
increasing investor awareness of the Company and products and/or services.
(ii) Strategic planning (including market analysis, competition analysis,
and identification of strategic business opportunities);
(iii) Market research on proposed new business opportunities;
(iv) Assistance in the preparation of a revised business plan including
financial projections, operating strategy, and business development
strategy;
(v) Identification of and negotiation with merger and/or acquisition
candidates
1
(vi) identification and selection, when necessary, of an accounting firm,
appropriate legal counsel, and additional professional advisors;
(vii) Assistance, when necessary, in negotiations leading to strategic
business relationships;
(viii) Preparation of merger agreements, correspondence, and other
documentation necessary to negotiate mergers or acquisitions; and
(ix) Due diligence regarding merger or acquisition candidates including, if
necessary, domestic and international travel for meetings, negotiations and
research.
(b) COMPENSATION. The Company and the Consultant agree that the fair
value of the services to be rendered by Consultant on behalf of the Company is
five thousand dollar ($5,000) per month. In lieu of cash consideration for such
services, Consultant hereby agrees to accept upon execution of this agreement:
(i) A Noncancellable Common Stock Purchase Warrant for the purchase, in the
aggregate, of 100,000 shares of the Common Stock of the Company at an
exercise price of two dollars, sixty-two and one-half cents ($2.625) per
share, and
(ii) A Noncancellable Common Stock Purchase Warrant for the purchase, in
the aggregate, of 100,000 shares of Common Stock of the Company at an
exercise price of three dollars, sixty-two and one-half cents ($3.625).
The warrants shall not be exercisable or transferable for a period of
one hundred and eighty (180) days from date hereof and shall expire on the fifth
anniversary of the date of issuance.
Consultant shall pay all applicable taxes which are assessed against
him as a result of his receipt of compensation under this Agreement, and the
Company shall not withhold any such taxes from the compensation paid to
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.
c. REGISTRATION RIGHTS.
--------------------
(i) As soon as practicable following the date of this Agreement, the
Company shall cause to be prepared and filed with the SEC a Registration
Statement on Form X-0, Xxxx X-0 or other appropriate form (the "Registration
Statement") registering for sale the shares of Common Stock issuable upon
exercise of the Warrants (the "Shares").
(ii) In connection with the preparation and filing of the Registration
Statement, the Company agrees to (1) use its best efforts to cause such
Registration Statement to become and remain effective; (2) prepare and file with
SEC such amendments and supplements to such Registration Statement as may be
necessary to keep such Registration Statement effective for a
2
period of not less than one-hundred eighty (180) days; (3) furnish to 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 (4) 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 States of Connecticut and
Pennsylvania for the distribution of the securities covered by the Registration
Statement. Consultant agrees to cooperate in all reasonable respects with the
preparation and filing of the Registration Statement.
(iii) All fees and other expenses incurred in connection with the
registration, offering and distribution of the shares of Common Stock underlying
the Warrants 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 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.
(iv) To the extent permitted by law, Consultant will indemnify, defend
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, attorneys' 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 this Agreement or any 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.
(v) To the extent permitted by law, the Company will indemnify, defend
and hold the Consultant harmless against any losses, claims, damages,
liabilities, or expenses, including without limitation attorneys' 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 statement 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
3
indemnification 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.
(vi) 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 exercise of the Warrants,
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.
d. EXERCISE OF WARRANTS. The Warrants shall be exercisable by
Consultant by presentation and surrender thereof to the Company with the
purchase form annexed thereto duly executed and accompanied by payment of the
aggregate exercise price, all of which must be delivered prior to the expiration
date.
e. EXPENSES. During the term of the Consultant's engagement hereunder,
the Consultant shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Consultant in performing services hereunder,
including all travel and living expenses while away from home on business at the
request of and in the service of the Company, provided that such expenses are
incurred and accounted for in accordance with the policies and procedures
established by the Company, and that any expenses in excess of $5,000 have been
pre-approved in writing by the Company. Notwithstanding the foregoing, the
Consultant shall bear all expenses in connection with the initial mailing of
material describing the Company to brokers and dealers.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Consultant that as of
the date hereof and as of the Closing Date (after giving effect to the
transactions contemplated hereby):
(a) EXISTENCE AND AUTHORITY. The Company is a corporation duly
organized and validly existing in good standing under the laws of its
jurisdiction of incorporation and has full power and authority to own its
respective property, carry on its respective business as now being conducted,
and enter into and perform its obligations under this Agreement and to issue and
deliver the Shares to be issued by it hereunder. The Company is duly qualified
as a foreign corporation and is in good standing in all jurisdictions in which
it is necessary to be so qualified to transact business as currently conducted.
This Agreement has been duly authorized by all necessary corporate action,
executed, and delivered by the Company, and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights of
creditors generally and to general principles of equity.
4
(b) AUTHORIZATION AND VALIDITY OF WARRANTS AND SHARES. The Warrants and
the Shares have been duly authorized and are validly issued and outstanding, and
free of any preemptive rights, with no personal liability for the obligations of
the Company attaching to the ownership thereof by reason of such issuance. None
of the Shares is subject to any lien, pledge, security interest or other
encumbrance.
(c) AUTHORIZATION OF AGREEMENT. The Company has taken all actions and
obtained all consents or approvals necessary to authorize it to enter into and
perform its obligations under this Agreement, to issue the Warrants and Shares
to be issued by it and to consummate the transactions contemplated hereby.
(d) NO VIOLATION. Neither the execution or delivery of this Agreement,
the issuance or delivery of the Shares, the performance by the Company of its
obligations under this Agreement, nor the consummation of the transactions
contemplated hereby will conflict with, violate, constitute a breach of or a
default (with the passage of time or otherwise) under, require the consent or
approval of or filing with any person (other than consents and approvals which
have been obtained) and filings which have been made under, or result in the
imposition of a lien on or security interest in any properties or assets of the
Company, pursuant to the charter or bylaws of the Company, any award of any
arbitrator or any agreement (including any agreement with stockholders),
instrument, order, judgment, decree, statute, law, rule or regulation to which
the Company is party or to which any such person or any of their respective
properties or assets is subject.
4. FILINGS.
The Company shall furnish to the Consultant, promptly after the sending
or filing thereof, copies of all reports which the Company sends to its equity
security holders generally, and copies of all reports and registration
statements which the Company files with the Securities and Exchange Commission
(the "Commission"), and any securities exchange or the National Association of
Securities Dealers, Inc. ("NASD").
5. SUPPLYING INFORMATION.
The Company shall cooperate with the Consultant in supplying such
publicly available information as may be reasonably necessary for the Consultant
to complete and file any information reporting forms.
6. INDEMNIFICATION.
The Company shall indemnify the Consultant from and against any and all
expenses (including attorneys' fees), judgments, fines, claims, causes of
action, liabilities and other amounts paid (whether in settlement or otherwise
actually and reasonably incurred) by the Consultant arising out of the
consulting services contemplated by this agreement in connection with such
action, suit or proceeding if (i) the Consultant was made a party to any action,
suit or proceeding by reason of the fact that the Consultant rendered advice or
services pursuant to this
6
Agreement, and (ii) the Consultant acted in good faith and in a manner
reasonably believed by the Consultant to be in or not opposed to the interests
of the Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the Consultant did not act in good faith and in a manner
reasonably believed by the Consultant to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Notwithstanding the foregoing, the Company shall not indemnify the Consultant
with respect to any claim, issue or matter as to which the Consultant shall have
been adjudged to be liable for gross negligence or willful misconduct in the
performance of his duties pursuant to this Agreement unless and only to the
extent that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability, but in view of all
the circumstances of the case, the Consultant is fairly and reasonably entitled
to indemnity for such expenses and which such court shall deem proper.
7. INDEPENDENT CONTRACTOR STATUS.
It is expressly understood and agreed that this is a consulting
agreement only and does not constitute an employer-employee relationship.
Accordingly, the Consultant agrees that the Consultant shall be solely
responsible for payment of his own taxes or sums due to the federal, state or
local governments, overhead, workmen's compensation, fringe benefits, pension
contributions and other expenses. It is further understood and agreed that the
Consultant is an independent contractor and that the Company shall have no right
to control the activities of the Consultant other than during the express period
of time in which the Consultant is performing services hereunder, and that such
control by the Company is solely predicated upon the consulting services
provided hereunder and not because of any presumed employer-employee
relationship. The Consultant shall have no authority to bind the Company.
The parties further acknowledge that the Consultant's services
hereunder are not exclusive, but that the Consultant shall be performing
services, and undertaking other responsibilities, for and with other entities or
persons, which may directly or indirectly compete with the Company. Accordingly,
the services of the Consultant hereunder are on a part-time basis only, and the
Company shall have no direction, control of, or interest in, the Consultant's
services which are not covered by the terms of this Agreement. The Company
hereby waives any conflict of interest which now exists or may hereafter arise
with respect to the Consultant's current or future relationship.
8. NOTICE.
All notices provided by this Agreement shall be in writing and shall be
given by facsimile transmission, overnight courier, by registered mail or by
personal delivery, by one party to the other, addressed to such other party at
the applicable address set forth below, or to such other address as may be given
for such purpose by such other party by notice duly given hereunder. Notice
shall be deemed properly given on the date of delivery.
6
To Consultant:
Xxxxxx Xxxxxx
The GSB Building
Xxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
Facsimile: (000) 000-0000
To the Company:
SmartServ Online, Inc.
Metro Center
Xxx Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
ATTENTION: Xxxxxxxxx Xxxxxxxx
9. MISCELLANEOUS.
(a) WAIVER. Any term or provision of this Agreement may be waived at
any time by the party entitled to the benefit thereof by a written instrument
duly executed by such party.
(b) ENTIRE AGREEMENT. This Agreement contains the entire understanding
between the parties hereto with respect to the transactions contemplated hereby,
and may not be amended, modified, or altered except by an instrument in writing
signed by the party against whom such amendment, modification, or alteration is
sought to be enforced.
(c) GOVERNING LAW. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Pennsylvania.
(d) BINDING EFFECT. This Agreement shall bind and inure to the benefit
of the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
(e) CONSTRUCTION. The captions and headings contained herein are
inserted for convenient reference only, are not a part hereof and the same shall
not limit or construe the provisions to which they apply. References in this
Agreement to "paragraphs" are to the paragraphs in this Agreement, unless
otherwise noted.
(f) EXPENSES. Each party shall pay and be responsible for the costs and
expenses, including, without limitation, attorneys' fees, incurred by such party
in connection with the negotiation, preparation and execution of this Agreement
and the transactions contemplated hereby.
(g) ASSIGNMENT. No party hereto may assign any of its rights or
delegate any of its obligations under this Agreement without the express written
consent of the other party hereto.
7
(h) NO RIGHTS TO OTHERS. Nothing herein contained or implied is
intended or shall be construed to confer upon or give rights to any person, firm
or corporation, other than the parties hereto.
(i) COUNTERPART. This Agreement may be executed simultaneously in two
counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same agreement, binding upon both parties
hereto, notwithstanding that both parties are not signatories to the original or
the same counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date and
year first above written.
SMARTSERV ONLINE, INC.
By:
--------------------------------
Xxxxxxxxx X. Xxxxxxxx, Chairman/CEO
-----------------------------------
Xxxxxx Xxxxxx
