CONSULTANT EMPLOYMENT/ENGAGEMENT AGREEMENT
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(Communication Options, LLC f/s/o Xxxxxxx Xxxxxxxx)
Consultant Employment/Engagement Agreement ("Agreement") dated as of March
1, 2000, between 0Xxxxxxxxx.xxx ("Company") and Communication Options, LLC
("COL"), a California corporation, Federal ID# 95- 4665470, f/s/o Xxxxxxx
Xxxxxxxx ("Xxxxxxxx") (collectively, "Consultant") in connection with
Consultant's provision of marketing support consulting services to Company
("Services") to develop Company's merchandising display division
("Division"). Reference is made to the Promissory Note and Security/Pledge
Agreement, each dated as of even date herewith, in connection with an
advance of monies to Consultant against its' future performance hereunder
("Advance").
1. ENGAGEMENT/INDEPENDENT CONTRACTORS. The Company engages Consultant and
Consultant accepts the engagement, subject to and in accordance with the terms
and conditions of this Agreement. It is expressly agreed that Company and
Consultant are acting hereunder as independent contractors and under no
circumstances shall any of the employees of one party be deemed the employees of
the other for any purpose. Any receivables prior to the date hereof, and any
liabilities of COL incurred at any time prior or subsequent to the date hereof,
remain the property and responsibility of COL. This Agreement shall not be
construed as authority for either party to act for the other party in any agency
or other capacity, or to make commitments of any kind for the account of or on
behalf of the other except to the extent and for the purposes provided for
herein.
2. TERM OF ENGAGEMENT/TERMINATION. Consultant's engagement as a marketing
support consultant to Company will begin on the date set forth above, and shall
continue for one (1) year, unless terminated for cause pursuant to Paragraph 6.
below. Thereafter, Consultant's engagement may be terminated by either party on
thirty (30) days written notice to the other. Any and all business generated on
or after March 1, 2000, by Consultant hereunder shall inure to the sole benefit
of Company.
3. COMPENSATION/TITLE. Upon receipt of appropriate invoices, Consultant shall be
paid the following compensation in connection with the Services. Consultant
shall utilize the following title hereunder:
(a) CONSULTING FEES. Consultant's annual consulting fee is $60,000,
payable at the rate of $5,000 per month, payable on the last day of
each month; and
(b) COMMISSION: 7.5% of the amount of Consultant's gross sales, less any
returns, uncollectible amounts, discounts and allowances
(collectively, "Returns"), collected by Company, payable on the tenth
business day following the month such monies are collected
(collectively, "Net Sales"); and
(c) STOCK OPTIONS/VESTING:
a. STOCK OPTIONS: Subject to approval by Company's Board of
Directors, Consultant will receive an option to purchase 20,000
shares of Company's common stock at the exercise price of $
12.875 (i.e., the closing price on February 29, 2000)
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("Options"), as provided in that certain Non-Qualified Stock
Option Agreement attached hereto as Exhibit "A".
b. VESTING: Such Options shall vest at the following rate: 1,000
shares per $100,000 of Net Sales during the Term of this
Agreement.
(d) TITLE: Xxxxxxxx shall utilize the following title in connection with
Consultant's performance hereunder: "Executive Director, Communication
Options, a division of 0Xxxxxxxxx.xxx".
(e) ADVANCE AGAINST FUTURE SALES/EARN-OUT/FUTURE ADVANCE/LIFE INSURANCE:
a. ADVANCE: Consultant has received an Advance of $50,000 pursuant
to the Promissory Note, repayment of which amount is secured by
Xxxxxxxx'x interest in COL pursuant to the Security/Pledge
Agreement.
b. ADVANCE FORGIVENESS: The Advance will be forgiven by Company at
the following rate: $5,000 for each $100,000 of Net Sales.
c. FUTURE ADVANCE: Upon Consultant's achievement of substantial
business hereunder (i.e., achievement of Net Sales of $300,000
and satisfactory performance hereunder), Company will provide
Consultant with an additional $50,000 Advance, subject to the
terms and conditions of the Promissory Note and Security/Pledge
Agreement.
d. LIFE INSURANCE: Consultant is required to maintain term life
insurance on Xxxxxxxx with Company as beneficiary in an amount to
secure sufficient payment of any portion of the Advance
outstanding together with any accrued interest thereon in the
event of Xxxxxxxx'x death. Consultant shall provide evidence of
such insurance to Company together with a copy of the insurance
contract on an ongoing basis.
4. DUTIES/SUPPORT SERVICES.
(a) DUTIES OF CONSULTANT: Consultant's primary duties will be to develop
the merchandising and display business for the internet. Consultant
will work with Company personnel and perform such other duties that
are consistent with the achievement of Division objectives.
(b) SUPPORT SERVICES PROVIDED BY COMPANY: Company shall provide only the
following support services to Consultant necessary to support Division
objectives: reimbursement for normal business operating expenses
(i.e., appropriate office space within Company and reasonable travel
expenses); Internet access (i.e., a Web site designed, built and owned
by Company together with any necessary renderings, prototypes and
product pages in connection therewith); and print services (i.e.,
1-sheet marketing fliers). The parties shall jointly develop a budget
for operating expenses for the Division.
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5. FULL-TIME EFFORT. Consultant will devote its full-time best efforts to
providing the Services to Company.
6. TERMINATION FOR CAUSE. Company may terminate this Agreement after written
notice to Consultant of any one or more of the following events if Consultant
fails to remedy such events within a reasonable period: (1) Consultant's
material failure to perform under this Agreement; (2) Consultant's material
failure to perform its duties to the Company; (3) Consultant's material failure
to abide by the policies and procedures of the Company; or (4) any act, failure
to act or condition of Consultant which jeopardizes the business of the Company.
7. NON-COMPETITION/NON-DISCLOSURE: Consultant will sign that certain Consultant
New-Hire Agreement attached hereto as Exhibit "B". If Consultant voluntarily
terminates this Agreement and becomes employed, engaged or affiliated with any
of Company's Competitors (as defined in Exhibit "B") (collectively, "Competes"),
at Company's sole discretion, Company may require that the any financial gains
to Consultant associated with exercising the Options must be disgorged to
Company if Consultant exercises any Options during the six (6) -month period
preceding Consultant's termination date.
8. DISPUTE RESOLUTION.
8.1. INTERNAL DISPUTE RESOLUTION. If any dispute should arise
concerning performance under or interpretation of this Agreement, then,
prior to, and as a condition to a party's right to initiate any action
pursuant to Paragraph 8.2 below, the parties will take the following steps
in an attempt to informally resolve any such dispute:
8.1.1. DISPUTE NOTICE. At the written request of either party,
each party will meet in person and will present to each other a
written summary, reflecting in reasonable detail, the nature and
extent of the dispute in question (the "Dispute Notice"). Such an
in-person meeting will take place within five (5) days of receipt of
the request.
8.1.2. INITIATION OF ARBITRATION. If any dispute remains
unresolved after ten (10) days following the initial request for
informal dispute resolution, then either party may, as contemplated by
Paragraph 8.2, initiate an arbitration proceeding.
8.1.3. INFORMAL RESOLUTION. Notwithstanding the foregoing, if the
parties are able to resolve disputes without litigation in a court of
law and without resorting to the procedures described in this
Paragraph 8., they will not be obligated to follow such procedures.
8.2. ARBITRATION. The parties stipulate and agree that if they are
unable to resolve any controversy arising under this Agreement as
contemplated by Paragraph 8.1 of this Agreement, then such controversy and
any ancillary claims not so resolved and not so subject will be submitted
to mandatory and non-binding arbitration at the election of either party
(the "Disputing Party") pursuant to the following terms and conditions:
8.2.1. SELECTION OF ARBITRATOR. The Disputing Party will notify
the American Arbitration Association (the "AAA") in writing and will
request that the AAA furnish to the parties a list of five possible
arbitrators who, if possible, will have experience in data processing
matters. Each party will have fifteen (15) days to reject two of the
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proposed arbitrators. If one individual has not been so rejected, he
or she will serve as arbitrator; if two or more individuals have not
been so rejected, the AAA will select the arbitrator from those
individuals.
8.2.2. CONDUCT OF ARBITRATION. Arbitration will be conducted by
the arbitrator selected pursuant to Paragraph 8.2.1. over the dispute
described in the Dispute Notice and any other disputes related to this
Agreement between the parties to this Agreement (1) pending at the
inception of such arbitration and not otherwise being arbitrated under
this Paragraph 8.2.; or (2) arising during the pendency of such
arbitration, in accordance with the rules of the AAA, except as
specifically provided otherwise in this Paragraph 8.2. In particular
and without limitation, the parties hereto hereby affirm and agree to
comply with those rules of the AAA that limit pre-hearing discovery.
The arbitrator will have no power or authority, under the rules of the
AAA or otherwise, to amend or disregard any provision of this
Paragraph 8.2.
8.2.3. REPLACEMENT OF ARBITRATOR. Should the arbitrator refuse or
be unable to proceed with arbitration proceedings as called for by
this Paragraph 8.2., such arbitrator will be replaced by an arbitrator
selected from the other four arbitrators originally proposed by the
AAA and not rejected by the parties, if any, or if there are no
remaining proposed arbitrators who have not been rejected, by
repeating the process of selection. If an arbitrator is replaced
pursuant to this Paragraph 8.2.3., then a rehearing will take place in
accordance with the rules of the AAA.
8.2.4. FINDINGS AND CONCLUSIONS. The arbitrator rendering
judgment upon disputes between parties to this Agreement as provided
in this Paragraph 8.2. will, after reaching judgment and award, if
any, prepare and distribute to the parties to such disputes a writing
describing the findings of fact and conclusions of law relevant to
such judgment and award and containing an opinion setting forth the
reasons for the giving or denial of any award.
8.2.5. TIME IS OF THE ESSENCE. The arbitrator is hereby
instructed that time is of the essence in the arbitration proceeding,
and that the arbitrator will have the right and authority to issue
monetary sanctions against either of the parties if, upon a showing of
good cause therefor, said party is unreasonably delaying the
proceeding.
8.2.6. FINDINGS. The arbitrator will render his or her judgment
or award within twenty (20) days following the conclusion of the
arbitration proceeding.
8.2.7. DISCOVERY. Recognizing the express desire of the parties
for an expeditious means of dispute resolution, the arbitrator will
limit or allow the parties to expand the scope of discovery as may be
reasonable under the circumstances.
8.3. LITIGATION.
8.3.1. IMMEDIATE INJUNCTIVE RELIEF. The parties to this Agreement
hereby agree that the only circumstance in which disputes between them
will not be subject to the provisions of this Paragraph 8. is where a
party makes a good faith determination that a breach of the terms of
this Agreement by another party is such that the damages to such party
resulting therefrom will be so immediate, so large or severe and so
incapable of adequate redress after the fact that a temporary
restraining order and/or other immediate injunctive relief is the only
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adequate remedy for such breach. If a party making such a
determination files a pleading with a court seeking such immediate
injunctive relief and this pleading is challenged by another party to
this Agreement and the challenging party succeeds in such challenge,
the party filing such pleading seeking immediate injunctive relief
will pay all of the costs and attorneys' fees of the party
successfully challenging such pleading.
8.3.2. JURISDICTION. The parties hereto hereby consent to the
jurisdiction of the federal district court residing in California for
all litigation that may be brought with respect to the terms of and
the transactions and relationships contemplated by this Agreement. The
parties hereto further consent to the jurisdiction of any state court
the district of which encompasses assets of a party against which a
judgment has been rendered, either through arbitration or through
litigation, for the enforcement of such judgment against such assets
of such party.
8.3.3. COSTS AND ATTORNEYS' FEES. Notwithstanding any rule of the
AAA to the contrary, the arbitrator rendering judgment upon disputes
between parties to this Agreement as provided in Paragraph 8.2. will
have the power to award all costs and attorneys' fees between the
parties subject to such disputes. In any litigation between parties to
this Agreement with respect to matters under or contemplated by this
Agreement, if and to the extent such litigation does not concern the
prayer for or challenge to immediate injunctive relief, the losing
party will pay all costs and attorneys' fees of such litigation
accruing to the other party.
9. WAIVER. No waiver of any breach of this Agreement will be deemed to
constitute a waiver of any subsequent breach of the same or any other provision.
10. SEVERABILITY. If any provision of this Agreement is declared or found to be
illegal, unenforceable or void, then all parties will be relieved of all
obligations arising under such provision, but only to the extent that such
provision is illegal, unenforceable or void, it being the intent and agreement
of the parties that this Agreement will be deemed amended by modifying the
provision to the minimum extent necessary to make it legal and enforceable while
preserving its intent or, if that is not possible, by substituting therefor
another provision that is legal and enforceable and achieves the same objective.
If the remainder of this Agreement will not be affected by the declaration or
finding and is capable of substantial performance, then each provision not so
affected will be enforced to the extent permitted by law.
11. ASSIGNMENT. The Company's rights and obligations under this Agreement will
inure to the benefit of and be binding upon the Company's successors and
assignees. This Agreement is not assignable by Consultant.
12. SURVIVAL. Paragraphs 7. and 8. will survive the termination or expiration of
this Agreement.
13. NOTICES AND PAYMENTS. Any notices and payments hereunder shall be directed
as follows:
To 3D: To COL:
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0Xxxxxxxxx.xxx Communication Options, LLC
000 Xxxxxxxxxx Xxxxxxxxx 000 Xxxxxxxx Xxxxxx
Xxxxxx xxx Xxx, XX 00000 Xxxxx Xxxxxx, XX 00000
Attn: Legal Department (Notices) Attn: Xxxxxxx Xxxxxxxx
Finance Department (Payments)
Fax: (000) 000-0000 Fax:( )
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14. ENTIRE AGREEMENT. This Agreement, together with the Consultant New Hire
Agreement, Promissory Note and Security/Pledge Agreement, and any exhibits and
appendices attached to it, if any, constitutes the entire agreement of the
parties, superseding in all respects any and all prior proposals, negotiations,
understandings and other agreements, oral or written, between the parties.
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ACCEPTED AND AGREED:
COMMUNICATION OPTIONS, LLC
f/s/o XXXX XXXXXXXX 0XXXXXXXXX.XXX
By By
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Title Date Title Date
By signing below, Xxxxxxxx acknowledges that he has read this Agreement and
confirms all grants, representations, warranties and agreements made by COL and
agrees to perform the services provided for herein in accordance with the terms
and provisions hereof and, if Xxxxxxxx fails to do so, Xxxxxxxx acknowledges
that Company shall have the same rights and remedies against Xxxxxxxx as Company
has against COL. Xxxxxxxx shall look solely to COL for any compensation
hereunder and, if Xxxxxxxx'x employment agreement with COL becomes ineffective
or if COL ceases to exist, then Xxxxxxxx, at Company's election, may be deemed
substituted as a direct party in lieu of COL.
XXXX XXXXXXXX
By
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