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Exhibit 10.9
Consulting Agreement with Xxxxx, Xxxxxxx & Co. dated July 1, 1999
CONSULTING AGREEMENT
This Agreement is entered into as of July 1, 1999 (the "Effective Date")
by and between XxxxxxXxxx.xxx International, Inc., a Delaware corporation, and
Xxxxx, Xxxxxxx & Co., a Nevada limited liability company ("Consultant"),
collectively referred to hereinafter as the "Parties" and individually as a
"Party."
RECITALS
WHEREAS, the Company is an Internet sports community seeking to provide
the most comprehensive offering of sports, outdoors and fitness related products
and services and information within a "club" environment (hereafter the
"Business"); and
WHEREAS, the Company desires to engage Consultant as an independent
contractor to the Company performing consulting services as more particularly
described herein (hereafter the "Services"), and Consultant is willing and able
to provide the Services to the Company on the terms set forth in this Agreement;
NOW, THEREFORE, in consideration of the representations and mutual
covenants contained herein, the parties hereto agree as follows:
1. Consulting Services
Consultant shall perform the Services for the Company with due diligence
and skill and in a prompt and professional manner. Consultant's duties shall
include consulting and advisory services with respect to management, strategic
partnerships, capital structure of the Company, capitalization and sources of
capital, and general corporate advice. Consultant shall perform such duties
subject to the general supervision and control of the Company's Board of
Directors. Consultant agrees that during the consultancy period, it shall not
carry on outside work of any nature (including, without limitation, charitable
work, civic activities, consulting work, or directorships) that is reasonably
determined by the Board of Directors to substantially interfere with
Consultant's duties and responsibilities hereunder. Consultant will devote to
the Company at least one (1) week per month on a full-time basis, and such
additional time as is necessary for Consultant to effectively perform its duties
hereunder.
2. Consultancy Period
Consultant's performance of the Services for the Company shall begin the
Effective Date of this Agreement and shall continue at the discretion of either
party, and until this Agreement is terminated pursuant to Section 6 below.
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3. Compensation for Services
a. In consideration of Consultant's performance of the Services,
the Company shall pay Consultant $10,000 per month unless otherwise agreed by
the parties hereto. The Company shall pay Consultant this amount on the last day
of each calendar month, in arrears, subject to Consultant's delivery to the
Company of an invoice for services rendered during the immediately preceding
month.
x. Xxxxx of Option. Effective as of August 24, 1999 (the "Grant
Date"), the Company hereby grants to Consultant an option ("Option") to acquire
986,250 shares of its common stock at an exercise price of $2.63 per share. The
Option shall vest as of the Grant Date with respect to 493,125 shares. With
respect to the remainder of the Option, the Option shall vest in two (2)
successive annual installments of 246,562 and 246,563 shares, respectively, with
the first installment vesting one (1) year from the Grant Date. Notwithstanding
the foregoing, if Consultant's consultancy is terminated by the Company for
Cause (as defined below), the Option shall immediately terminate with respect to
all unvested shares of Common Stock subject to the Option, all as more
particularly described in the Grant (as defined below). The Option or any
portion thereof shall expire if not exercised within five (5) years from the
date hereof. The Option shall be governed by and shall be subject to the
provisions of the Company's 1999 Stock Option Plan (the "Plan"). As Consultant
is not a full time employee of the Company, the Option will not be qualified
under the Internal Revenue Code. The Company shall prepare and deliver to
Consultant a separate grant of the Option (the "Grant") in accordance with the
Plan in the form attached hereto as Exhibit "A." For purposes hereof, "Cause"
shall mean (i) Consultant's material breach of any of the terms, covenants,
representations, or warranties contained in this Agreement; (ii) the Consultant
being guilty of willful misconduct on the Company's premises or elsewhere,
whether during the performance of his duties or not, which materially and
negatively affects the business or reputation of the Company; (iii) Consultant's
being found guilty or entering a plea of guilty or nolo contendre in a criminal
court of a felony; or (iv) Consultant's willful breach of duty or habitual
neglect of duty, or refusal to comply with any reasonable or proper direction
given by or on behalf of the Board of Directors.
4. Bonus.
The parties have agreed that Consultant will receive a bonus of five
percent (5%) (the "Bonus"), upon a successful closing (i) of the net proceeds
from an underwritten public offering of the Company's securities (with net
proceeds to the Company of at least $10 Million), or (ii) of the total
transaction value of a sale, merger, or other acquisition of the Company and/or
all or substantially all of its stock or assets by an entity traded on a
national securities exchange as defined pursuant to Section 6 of the Securities
Exchange Act of 1934 (a "Transaction"). The Bonus will be paid to Consultant at
a reasonable time following the closing of a Transaction. The obligation of the
Company to pay the Bonus will terminate in the event that a Transaction has not
closed on or before the date which is two years from the date first set forth
above, or earlier, in the event that this Agreement is terminated pursuant to
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Section 6, below.
5. Reimbursement for Expenses
The Company shall promptly reimburse Consultant for all reasonable
out-of-pocket business expenses incurred in fulfilling Consultant's duties
hereunder, in accordance with the general policy of the Company in effect from
time to time, provided that Consultant furnishes to the Company adequate records
and other documentary evidence required by all federal and state statutes and
regulations issued by the appropriate taxing authorities for the substantiation
of each such business expense as a deduction on the federal or state income tax
returns of the Company.
6. Termination
a. Terminable at Will. Either the Company or Consultant may
terminate this Agreement at anytime for any reason (or for no reason) by giving
written notice to the other of such termination at least thirty (30) days in
advance of the date of such termination.
b. Effect of Termination. Upon termination of this Agreement, all
obligations of the Company and all obligations of Consultant shall cease, except
that Consultant shall continue to be obligated to the Company pursuant to
Sections 12 through 14 below and the miscellaneous provisions of the Agreement
contained in Sections 16 through 23 below shall continue in effect, as
appropriate. All liability of either party for any breach of this Agreement
shall also survive termination hereof. Upon any such termination, Consultant
shall promptly return to the Company all Confidential Information (as defined in
Section 13 below). Upon such termination, Consultant shall be entitled to
compensation earned by him prior to the date of termination computed pro rata up
to and including the date of termination, but shall not be entitled to any
further compensation or reimbursement following such date.
7. Relationship of Parties
Consultant is an independent contractor and shall perform the Services
in the manner and by the means determined in Consultant's sole discretion,
subject at all times, however, to the general direction of the Company.
Consultant is not an agent or employee of the Company and shall have no
authority to bind the Company by contract or otherwise.
8. Pre-existing Obligations
Consultant represents and warrants to the Company that Consultant does
not have any pre-existing obligations, contractual or otherwise, that are
inconsistent with the provisions of this Agreement or that might prevent or
impair Consultant's ability to perform the Services hereunder.
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9. Licenses
Consultant now possesses and shall maintain at all times during the term
of this Agreement all such licenses, permits, or other governmental approvals as
may be necessary for Consultant to perform the Services hereunder.
10. Insurance
During the term of this Agreement, Consultant shall maintain adequate
insurance to protect himself from all claims under worker's compensation and
state disability laws.
11. Employment Taxes and Benefits
Consultant shall report all compensation received by Consultant pursuant
to this Agreement as self-employment income in his tax returns, and Consultant
shall indemnify the Company and hold it harmless to the extent of any obligation
imposed by law on the Company to pay any withholding taxes, social security,
unemployment or disability insurance, or similar items in connection with any
payments made to Consultant by the Company pursuant to this Agreement.
Consultant shall not be entitled to participate in any plans, arrangements or
distributions by the Company pertaining to any bonus, stock option, profit
sharing, insurance, or similar benefits for employees of the Company, except as
expressly provided for herein.
12. Indemnification
Each party shall indemnify the other party and hold him or it harmless
from and against all claims, damages, losses, liabilities, costs and expenses,
including without limitation reasonable attorneys' fees, caused by any act or
omission or willful conduct of either party under this Agreement.
13. Confidential Information
Consultant acknowledges that during Consultant's consultancy with the
Company, Consultant will develop, discover, have access to, and become
acquainted with technical, financial, marketing, personnel, and other
information relating to the present or contemplated products, services
(including prices, costs, sales, or content), or the conduct of business of the
Company or an affiliate thereof, computer programs, computer systems,
operations, processes, knowledge of the organization or the industry, research
and development operations, future business plans, customers (including
identities of customers and prospective customers, identities of individual
contracts at business entities which are customers or potential customers),
business relationships, or other information, which is of a confidential and
proprietary nature ("Confidential Information"). Consultant agrees that all
files, data, records, reports, documents, and the like relating to such
Confidential Information, whether prepared by him or otherwise coming into
Consultant's possession, shall remain the exclusive property of the Company (or
its affiliates as the case may be), and Consultant hereby agrees to promptly
disclose such Confidential Information to the Company upon request and hereby
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assigns to the Company any rights which Consultant may acquire in any
Confidential Information. Consultant further agrees not to disclose or use any
Confidential Information and to use Consultant's best efforts to prevent the
disclosure or use of any Confidential Information either during the term hereof
or at any time thereafter, except as may be necessary in the ordinary course of
performing Consultant's duties under this Agreement. Upon termination of
Consultant's consultancy with the Company for any reason, Consultant shall
promptly deliver to the Company all materials, documents, data, equipment, and
other physical property of any nature containing or pertaining to any
Confidential Information, and Consultant shall not take from the Company's
premises any such material or equipment or any reproduction thereof.
14. Invention Assignment
a. Disclosure of Inventions. Consultant hereby agrees that if he
conceives, learns, makes, or first reduces to practice, either alone or jointly
with others, any inventions, improvements, original works of authorship,
formulas, processes, computer programs, sales or marketing techniques, know-how,
or data (hereinafter referred to as "Inventions") relating to the business
and/or technology of the Company while he is engaged by the Company, he will
promptly disclose such Inventions to the Company or to any person designated by
the Company.
b. Ownership, Assignment, Assistance, and Power of Attorney. All
Inventions relating to the Company's business, operations, or research and
development which result from work performed by Consultant for the Company shall
be the sole and exclusive property of the Company, and the Company shall have
the right to use and to apply for patents, copyrights, or other statutory or
common law protections for such Inventions in any country. Consultant hereby
assigns to the Company any rights which Consultant has acquired or which
Consultant may acquire in such Inventions. Furthermore, Consultant agrees to
assist the Company in every proper way at the Company's expense to obtain
patents, copyrights, and other statutory or common law protections for such
Inventions in any country and to enforce such rights from time to time.
Specifically, Consultant agrees to execute all documents as the Company may use
in applying for and in obtaining or enforcing such patents, copyrights, and
other statutory or common law protections, together with any assignments thereof
to the Company or to any person designated by the Company. Consultant's
obligations under this paragraph shall continue beyond the termination of his
consultancy with the Company, but the Company shall compensate Consultant at a
reasonable rate after such termination for the time which Consultant actually
spends at the Company's request in rendering such assistance. In the event the
Company is unable for any reason whatsoever to secure Consultant's signature to
any lawful document required to apply for or to enforce any patent, copyright,
or other statutory or common law protections for such Inventions, Consultant
hereby irrevocably and severally designates and appoints the Company and its
duly authorized officers and agents as Consultant's agents and attorneys-in-fact
to act in Consultant's stead to execute such documents and to do such other
lawful and necessary acts to further the issuance or prosecution of such
patents, copyrights, and other statutory or common law protections, and
Consultant hereby declares that such documents or such acts shall have the same
legal force
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and effect as if such documents were executed by Consultant or such acts were
done by Consultant.
c. Exclusion of Prior Inventions. Consultant has identified on
Exhibit B attached hereto a complete list of all Inventions which Consultant has
conceived, learned, made or first reduced to practice, either alone or jointly
with others, prior to Consultant's consultancy with the Company and which
Consultant desires to exclude from the operation of this Agreement. If no
Inventions are listed on this Exhibit B, Consultant represents that he has made
no such Inventions at the time of signing this Agreement.
15. Authorization
The Company represents and warrants to Consultant that this Agreement
has been duly authorized by its board of directors and that this Agreement
constitutes a valid and binding obligation of the Company.
16. Equitable Remedies
Each of the parties acknowledges and agrees that the breach by the other
party of certain provisions of this Agreement would cause irreparable harm to
the non-breaching party for which money damages would be an inadequate remedy.
Accordingly, as a material inducement to the other party to enter into this
Agreement, each party hereby agrees that, upon a breach or threatened breach of
such provisions, the non-breaching party shall be entitled to seek injunctive or
other equitable relief in addition to any other remedy to which it may be
entitled, including the recovery of money damages.
17. Successors and Assigns
The rights and liabilities of the parties hereto shall bind and inure to
the benefit of their respective successors, heirs, executors, administrators,
and assigns, as the case may be; provided, however, that this Agreement is for
the personal services of Consultant and is not assignable or delegable in whole
or in part by Consultant without the prior written consent of the Company.
18. Waiver or Modification
Any waiver, modification, or amendment of any provision of this
Agreement shall be effective only if in writing in a document that specifically
refers to this Agreement and is signed by the party against whom enforcement
thereof is sought.
19. Entire Agreement
This Agreement constitutes the full and complete understanding and
agreement of the parties hereto with respect to the subject matter covered
herein and supersedes all prior oral or written understandings and agreements
with respect thereto.
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20. Severability
The provisions of this Agreement are intended to be severable, and a
finding that any provision hereof is invalid shall not affect the validity of
the remaining provisions hereof.
21. Notices
Any notice required hereunder to be given by either party shall be in
writing and shall be delivered personally, by overnight courier, by telefax, or
sent by certified or registered mail, postage prepaid, return receipt requested,
to the other party as set forth below. Notices delivered by telefax shall be
deemed delivered on dispatch, notices sent by courier or delivered personally
shall be deemed delivered upon receipt, and notices sent by certified or
registered mail shall be deemed delivered on the date indicated on the return
receipt. Notices shall be sent to the following addresses, until changed by
notice as aforesaid:
If to the Company: Xxxxxxx Xxxxx
Executive Vice President
XxxxxxXxxx.xxx International, Inc.
The Towers at South Towne II
10421 South 000 Xxxx
Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Telefax: 000-000-0000
With a copy to: Xxxxxx Xxxxxxx, Esq.
Jones, Waldo, Xxxxxxxx & XxXxxxxxx
000 Xxxxx Xxxx Xx.
Xxxxx 0000
Xxxx Xxxx Xxxx, XX 00000
Telefax: 000-000-0000
If to the Consultant: Xxxxxxx Xxxxx
00000 Xxxxxxx Xxxxx Xxxxxxx,
XXX 000
Xxxxxx, XX 00000
Telefax: (000) 000-0000
22. Dispute Resolution. Except as set forth in Section 19, above, all
disputes hereunder shall be resolved first, though mediation, and if
unsuccessful, then though binding arbitration before a single arbitrator in
accordance with the applicable rules of the American Arbitration Association
then in effect. The venue for mediation and arbitration shall be Salt Lake City,
UT. Judgment of the arbitrator may be entered in any court having jurisdiction
over the non-prevailing party.
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23. Governing Law
This Agreement shall be governed and construed in accordance with the
laws of the State of Utah, without giving effect to the conflict of laws
provisions thereof.
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IN WITNESS WHEREOF, Consultant has personally signed below and the
Company has caused this Agreement to be executed by its duly authorized
representative.
XxxxxxXxxx.xxx International, Inc. Consultant
By /s/ Xxxxxxx Xxxxx /s/ Xxxxxxx Xxxxx
----------------------------- ------------------------------
Xxxxxxx Xxxxx, Executive Xxxxxxx Xxxxx
Vice President
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EXHIBIT A
OPTION GRANT
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EXHIBIT B
PRE-EXISTING INVENTIONS
