EXHIBIT 10.3
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (this "Agreement"), made and entered into as
of the 10th day of December, 1999, is by and between Xxxxxx Xxxx ("Consultant"),
and XxxXxxxxx.Xxx, Inc., a Delaware Corporation (the "Company").
WITNESSETH THAT:
WHEREAS, the Company desires to engage the Consultant in the capacity
hereinafter stated, and the Consultant desires to enter into an engagement with
the Company in such capacity for the period and on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below, it is hereby covenanted and agreed by the Company and the
Consultant as follows:
1. Consulting Period. The Company hereby agrees to employ the
Consultant as its Chief Executive Officer, and the Consultant, in
such capacity, agrees to provide services to the Company for the
period (the "Consulting Period") beginning on the date first above
written and ending, subject to Section 5, on March 31, 2000, which
is the date 110 days after the date hereof (the "Termination Date").
This Agreement will automatically renew for successive ninety-day
periods unless either party gives the other written notice of
termination as described in Section 5 hereof, with each such renewal
period being considered an extension of the Consulting Period.
2. Board of Directors. The Consultant hereby agrees to serve as a
member of the Board of Directors of the Company. The Company agrees
that, without limiting any rights of Consultant under the Company's
certificate of incorporation, (a) Consultant's liability as a
director shall be limited to the maximum extent permitted by law,
(b) Consultant shall be indemnified and held harmless by the Company
from and against any and all losses, liabilities, claims, expenses
and the like incurred by or asserted against Consultant as a
director, to the maximum extent permitted by law and (c) prior to
the Company's filing of a registration statement with respect to an
initial public offering, the Company shall have obtained Directors
and Officers liability insurance providing insurance for the
Consultant against liability as a director of the Company, and the
maintenance of that insurance shall be a condition to Consultant so
serving during the process of filing and having declared effective
such registration statement.
3. Performance of Duties. The Consultant agrees that, during the
Consulting Period, as requested by the Board of Directors of the
Company, the Consultant will provide his best efforts, professional
energy and talent to serving as Consultant and a board member in the
best interests of the Company. Consultant will perform, among other
duties consistent with the position of Chief Executive Officer,
those tasks and duties listed on Exhibit A attached hereto.
4. Compensation. Subject to the terms and conditions of this Agreement,
during the Consulting Period, the Consultant shall be compensated by
the Company for his services as follows:
(a) The Consultant shall receive a consulting fee of $20,000 for
each month he is engaged as a Consultant by the Company under
this Agreement (the "Consulting Fee"), payable on the first day
of each month during the Consulting Period.
(b) The Consultant shall receive, as a "signing bonus" in
consideration for (i) his agreement to enter into this Agreement
and (ii) his payment to the Company of $300 (which shall be
credited against his first month's payment of the Consulting
Fee), 30,000 shares of the Company's Common Stock, $.01 par
value (the "Common Stock"), which shares shall constitute 1% of
the number of shares of Common Stock initially to be issued to
XxxXxxxxxx.Xxx, Inc.
(c) Following both (i) the first renewal of this Consulting
Agreement for an additional Consulting Period and (ii) the
successful completion of a private placement of securities by
the Company the gross proceeds of which to the Company shall
equal at least $10,000,000 (the "Private Placement"), the
Company shall grant to the Consultant five-year options (the
"Options") to purchase that number of shares of the Company's
Common Stock as shall equal 4% of the outstanding shares of
Company Common Stock immediately following completion of the
Private Placement (the "Options"), which Options shall be
exercisable at the price at which shares of the Common Stock are
issued by the Company in the Private Placement. The Options
shall vest one year from the closing date of the Private
Placement (the "Vsting Date"); provided, that in the --------
event that the Company completes an initial public offering of
its securities prior to the Vesting Date. the Options shall vest
on the closing date of such initial public offering. Upon the
termination of the Consulting Agreement by either party hereto,
the Options which have not vested at such time shall
automatically become null and void
(d) The Consultant shall promptly be reimbursed for reasonable
expenses incurred in the performance of his duties hereunder;
provided, that he shall furnish an itemized account satisfactory
to the Board of Directors in substantiation of such
expenditures.
(e) In connection with the issuance of shares of Common Stock and
the granting of the Options to the Consultant, the Consultant
agrees that he shall execute sand deliver to the Company such
agreements and instruments as counsel to the Company shall deem
necessary in order for the Company to comply with applicable
federal and state securities laws.
5. Termination. This Agreement shall terminate upon the occurrence of
any of the following:
(a) Without Cause. Either party may terminate this Agreement upon
thirty (30) days' written notice.
(b) Discharge for Cause. The Board of Directors of the Company may
terminate this Agreement if:
(i) The Consultant is or becomes habitually addicted to drugs
or alcohol.
(ii) The Consultant discloses confidential information in
violation of Section 6.
(iii) The Consultant, voluntarily or involuntarily, steps down
from the Board of Directors of the Company.
(iv) The Company is directed by regulatory or governmental
authorities to terminate the engagement of the Consultant
or the Consultant engages in activities that result in
actions to be taken by regulatory or governmental
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authorities that have a material adverse effect on the
Company.
(v) The Consultant is convicted of or pleads nolo contendere
to any felony involving moral turpitude or to any crime in
connection with his duties hereunder which causes
substantial detriment to the Company, but specifically
shall not include traffic offenses.
(vi) The Consultant breaches his duties under this Agreement in
any material respect, and that breach is not cured within
ten (10) days of notice thereof from the Company to the
Consultant. Such notice will only be required for the
first said breach.
(vii) The Consultant engages in any misconduct that has a
material adverse effect on the Company.
(viii) The Consultant commits an act of fraud against the
Company or any client of the Company.
6. Confidential Information. Except as may be required by the law or to
enforce the provisions of this Agreement, the Consultant agrees (a)
to keep secret and confidential indefinitely all non-public
information concerning the Company and its affiliates which was
acquired by or disclosed to the Consultant during the course of his
engagement by the Company, including information relating to
customers (including, without limitation, credit history, repayment
history, financial information and financial statements), costs,
operations, financial data and plans (whether past, current or
planned) and (b) not to disclose the same, either directly or
indirectly, to any other person, firm or business entity, or use it
in any way other than to perform its obligations hereunder;
provided, however, that the provisions of this Section 6 shall not
apply to information (a) which is in the public domain, (b) which
was disclosed to the Consultant by independent third parties who, to
Consultant's knowledge, were not bound by an obligation of
confidentiality or (c) which the Consultant is required to disclose
in order to respond to a summons or subpoena or in connection with
any litigation; and provided further, that the Company recognizes
that the Consultant shall, during the course of his engagement with
the Company, acquire certain general information regarding the
financial condition, borrowing trends and business operations of the
Company's customers and agrees that the provisions of this Section 6
shall not apply to the use of such general information; provided
that the use of such information does not violate applicable Federal
or state laws. The Consultant further agrees that he will not make
any statement or disclosure of information gained by him in
connection with the performance of duties under this Agreement which
would be prohibited by applicable Federal or state laws.
7. Successors. This agreement shall be binding on, and inure to the
benefit of, the Company and its successors and assigns and any
person acquiring all or substantially all of the Company's assets
and business, whether by merger, consolidation, purchase of assets
or otherwise.
8. Nonalienation. The interests of the Consultant under this Agreement
are not subject to the claims of his creditors, and may not
otherwise be voluntarily or involuntarily assigned, alienated or
encumbered.
9. Remedies. The Consultant acknowledges that the Company may be
irreparably injured by a violation of Section 6, and agrees that the
Company shall be entitled to an injunction restraining the
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Consultant from any actual or threatened breach of Section 6, or to
any other appropriate equitable remedy without bond or other
security being required.
10. Waiver of Breach. The waiver by either the Company or the
Consultant of a breach of any provision of this Agreement shall not
operate as or be deemed a waiver of any subsequent breach by either
the Company or the Consultant.
11. Notice. Any notice to be given hereunder by a party hereto shall be
in writing and shall be deemed to have been given when delivered by
hand or by facsimile with confirmation back, one day after delivery
to an overnight courier of national reputation (for next day
delivery) or three days after being deposited in the U.S. mail,
certified or registered mail, postage prepaid:
(a) to the Consultant addressed as follows:
Xxxxxx Xxxx
0 Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
(b) to the Company addressed as follows:
XxxXxxxxx.Xxx, Inc.
C/o XxxXxxxxxx.Xxx, Inc.
0 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
12. Amendment. This Agreement may be amended or cancelled by mutual
agreement of the parties in writing without the consent of any
other person and no person, other than the parties hereto, shall
have any rights under or interest in this Agreement or the
subject matter hereof.
13. Applicable Law. The provisions of this Agreement shall be construed
in accordance with the internal laws of the State of New York,
without regard to its principles of conflict of laws.
14. Termination. All of the provisions of this Agreement shall
terminate upon the expiration of the Consulting Period, as it may
be extended, except that the obligations of Section 6 shall not
terminate and shall remain in effect indefinitely.
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IN WITNESS WHEROF, the Consultant and the Company have executed this
Consulting Agreement on the ______ day of December, 1999.
XXXXXX XXXX XXXXXXXXX.XXX, INC.
By:___________________________ By:_____________________________
Xxxxxx Xxxx
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EXHIBIT A
Xxxxxx Xxxx'x duties, as a Consultant to XxxXxxxxx.Xxx, Inc, shall include the
following:
He shall devise and write a comprehensive business plan.
He shall help arrange and supervise beta testing.
He shall solicit and enter into vendor relationships.
He shall supervise the marketing of the BugSolver Web site and develop a
strategy to promote the BugSolver Web site.
He shall actively participate in BugSolver's efforts to raise capital through a
private placement.
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