EXHIBIT 10.51
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT is made and entered into as of September 15,
2004, by and between SMARTSERV ONLINE, INC. ("Corporation") and XXXXXXX XXXXXXX
("Consultant").
BACKGROUND
Corporation is primarily engaged in the marketing and delivery of products
and services to the mobile phone marketplace and provides ringtones, games and
graphics through its nReach division. Consultant has been the president and
founder of the nReach division and was previously a principal shareholder of
nReach prior to its acquisition by the Corporation. Corporation desires to avail
itself of the benefit of Consultant's experience and business advice and
Consultant is willing to be available as an advisor and consultant to
Corporation on the terms and under the conditions of this Agreement.
In consideration of the premises and the mutual promises and conditions
contained herein, and intending to be legally bound hereby, the parties agree as
follows:
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, and intending to be legally bound hereby, the
parties agree as follows:
1. Term and Duties.
(a) The Corporation engages Consultant and Consultant accepts such
engagement as a general advisor and consultant to the Corporation on matters
pertaining to the nReach division of the Corporation for the period commencing
on the date hereof and terminating on March 15, 2005 (the "Term"). This
Agreement may not be terminated by the Corporation for any reason during the
Term.
(b) During the Term, Consultant shall be available via telephone and
electronic means during normal business hours (Monday through Friday) to advise
and consult with the Corporation at its request and shall devote his best
efforts, including such reasonable time as shall be necessary, to advancing the
interests of Corporation and the nReach division thereof. Consultant shall not
be expected to report to work at the offices of the Corporation or nReach, or
perform assignments outside of Golden, Colorado. As part of his duties
hereunder, Consultant will be the point person on subleasing of the office space
of the nReach division in Golden, Colorado, and shall, as required, show the
office space to and respond to phone calls from potential tenants. Consultant
acknowledges and agrees that he has no authority to sign contracts or enter into
any verbal contracts on behalf of Corporation or the nReach division thereof.
Consultant shall report and be responsible to the President and Chief Operating
Officer of Corporation.
2. Compensation and Expenses.
(a) As compensation for consulting services rendered hereunder, the
Corporation shall pay Consultant the total amount of $84,000 payable in 12 equal
bi-monthly installments during the Term, beginning on September 30, 2004 and
ending on March 15, 2005.
(b) During the Term, upon prior approval of the Corporation, Consultant
may incur reasonable expenses in furtherance of or in connection with the
performance of his duties hereunder. Corporation shall timely reimburse
Consultant for such approved expenses on his presentation of an itemized account
with appropriate receipts or vouchers therefor in accordance with Corporation's
normal practice.
3. Repurchase of Stock.
(a) Consultant grants the Corporation the option to purchase (the
"Option") 253,817 shares of the Corporation's common stock which Consultant owns
(the "Shares") for $84,000. Consultant shall promptly place the stock
certificate for the Shares (duly endorsed for transfer to the Corporation and
signed by Consultant on the reverse side thereof) with an escrow agent mutually
agreeable to Consultant and Corporation (the "Escrow Agent") pursuant to the
terms of a mutually agreeable Escrow Agreement. To exercise the Option, the
Corporation must deliver its check for $84,000 payable to Consultant to the
Escrow Agent on or before March 15, 2005 (the "Deadline"), and, in turn, the
Escrow Agent shall deliver the Stock Certificate to the Corporation, and the
check for $84,000 to the Consultant. All costs and expenses incurred by
Consultant or the Corporation to the Escrow Agent or with respect to the Escrow
Agreement shall be paid by the Corporation and Consultant shall have no
liability therefore.
(b) Consultant represents and warrants that he has full power to
transfer the Shares to the Corporation and such Shares, being transferred to the
Corporation, are, and will be at the time of exercise of the Option, free and
clear of all liens and encumbrances.
(c) In the event the Corporation does not exercise the Option on or
before the Deadline, the Term of this Agreement shall automatically be renewed
for an additional six months for the period of March 16, 2005 through September
15, 2005 for additional compensation of $84,000 paid in accordance with Section
2(a) hereof, with the first bi-monthly payment due to Consultant on March 31,
2005 and the final bi-monthly payment due September 15, 2005. In addition, the
Escrow Agent shall return to the Consultant the stock certificate for the
Shares.
(d) Consultant shall, upon request of Corporation, execute and deliver
to the Corporation such instruments and documents to the Corporation as
Corporation may reasonably request to confirm and perfect the transfer of the
Shares and Corporation's title therein.
(e) Consultant agrees that the Shares are unique and special property
and that the Corporation shall be entitled to specific performance with respect
to the Option and enforcing its rights hereunder, in addition to other
applicable remedies at law or in equity.
4. Independent Status.
In his capacity as a Consultant, Consultant shall be an independent
contractor and shall not be deemed to be an employee of Corporation. As such,
Consultant shall be solely responsible for all necessary withholding of
appropriate federal income tax, state income tax, and social security taxes.
Consultant shall indemnify and hold Corporation harmless from all taxes,
interest, penalties or other amounts associated with or that arise as a result
of Consultant's failure to pay all appropriate taxes and fees associated with
payments by Corporation to Consultant under this Agreement. In the event that
the Internal Revenue Service or any other governmental agency should question or
challenge the independent contractor status of Consultant, Consultant agrees
that Corporation shall have the right to participate in any discussions or
negotiations occurring with such agency or agencies.
5. Confidentiality.
(a) Consultant covenants and agrees that he will at all times keep
confidential and will not at any time, except with the prior written consent of
Corporation, directly or indirectly, communicate or disclose or use for any
reason other than the performance of his duties hereunder, any trade or
confidential or proprietary information of Corporation or its affiliates,
including but not limited to, technical know-how, processes, designs, software,
customer or vendor lists, fees, data, reports, records, plans, policies,
applications, financial information, contracts or other documents and will also
use his best efforts to prevent unauthorized disclosure by others.
(b) The parties agree that any breach by Consultant of the covenants
and agreements in this Section 5 will result in irreparable injury to
Corporation for which money damages could not adequately compensate Corporation
and, therefore, in the event of any such breach, Corporation shall be entitled
(in addition to any other rights and remedies which it may have at law or in
equity) to have an injunction issued by any competent court of equity enjoining
and restraining Consultant and/or any other Person involved therein from
continuing such breach. The existence of any claim or cause of action which
Consultant may have against Corporation or any other Person shall not constitute
a defense or bar to the enforcement of such covenants. The covenants contained
in this Section 5 are independent of all other covenants between Consultant and
Corporation.
(c) All information, client lists, data, reports, software, records,
plans, policies, applications, financial information, contracts and other
papers, articles, and materials of any kind relating to Corporation's business
and obtained by Consultant in the course of his association with Corporation,
whether developed by him or not, shall be and remain Corporation's property and
will be returned to Corporation along with any and all copies thereof, at such
time as Consultant ceases to be a consultant of Corporation.
6. Termination of Employment.
(a) Consultant and Corporation mutually agree that Consultant's
employment by the Corporation shall terminate on the close of business on
September 14, 2004, notwithstanding any provision of that certain Employment
Agreement dated February 28, 2004 between Consultant and Corporation (the
"Employment Agreement"). The Corporation agrees to pay Consultant's unused
accrued vacation time in the amount of $____________ , which payment will be
made on or before September 30, 2004.
(b) In consideration of the Corporation's agreement to terminate
Consultant's employment under the Employment Agreement, and the Corporation
entering into this Agreement with Consultant, Consultant agrees that the
Restriction Period under Section 7(b) of the Employment Agreement shall continue
in full force and effect during the Term hereof , notwithstanding anything to
the contrary in the Employment Agreement. Sections 7 through 21 of the
Employment Agreement shall continue in full force and effect as to Consultant
and Corporation. Notwithstanding the foregoing, or anything contained in the
Employment Agreement, the Corporation acknowledges and agrees that Consultant
may be engaged in new business ventures and opportunities in addition to
performing the consulting services set forth herein. Consultant shall be
entitled to engage in such new business ventures and activities provided that he
is not otherwise in breach of his confidentiality and non-disparagement
obligations set forth herein and those new business ventures do not conflict
with or breach the provisions of Section 7 of the Employment Agreement.
(c) Consultant will cooperate with the Corporation and its affiliates
in the defense or prosecution of all disputes with third parties. In furtherance
thereof, if requested by the Corporation, upon reasonable notice, Consultant
will provide written and oral evidence and testimony in any proceedings and will
meet with the Corporation's attorneys or other representatives at reasonable
times and places in connection therewith. The Corporation shall not be required
to pay further consideration to Consultant for such cooperation and testimony,
except that Consultant will be reimbursed by the Corporation for reasonable
out-of-pocket expenses (including any travel expenses incurred by Consultant in
preparation of such testimony) incurred in connection with such cooperation or
testimony.
(d) Each of Consultant and the Corporation agree that he or it will not
disparage in any way the professional or personal reputation of the other party,
including any affiliated corporations or entities, or any officers, directors,
employees, agents or representatives of the Corporation or its affiliated
corporations or entities.
(e) In consideration of the payments set forth in Section 2 hereof,
Consultant, on behalf of himself and his agents, heirs, successors and assigns,
finally and unconditionally releases and discharges the Corporation, and its
subsidiaries, affiliates and other related companies, and all of their
respective officers, directors, insurers, reinsurers, agents, employees,
partners, shareholders, predecessors, successors and assigns (collectively
herein, "Released Parties") from any and all claims, demands, liabilities,
damages, obligations, actions or causes of action (collectively, "claims") of
any kind, known or unknown, past or present, asserted or unasserted, suspected
or unsuspected, matured or unmatured, which Consultant now has, may have or
could claim to have against the Released Parties up to and including the date
hereof, including, but not limited to, any and all claims arising out of,
relating to, or in connection with, Consultant's employment or termination from
such employment. The claims released by Consultant include, but are not limited
to, claims for wrongful termination, constructive discharge, sexual harassment,
breach of contract, breach of the covenant of good faith and fair dealing,
breach of fiduciary duty, bad faith discharge, fraud, defamation, libel,
workers' compensation, retaliation, invasions of privacy and intentional or
negligent infliction of emotional distress. The claims released by Consultant
further include, but are not limited to, claims under all federal, state and
local laws including, but not limited to, claims under any laws prohibiting
employment discrimination, including, but not limited to, the Age Discrimination
in Employment Act, Title VII of the Civil Rights Act of 1964, the Fair Labor
Standards Act, the Americans with Disabilities Act, the Employee Retirement
Income Security Act, and the Family and Medical Leave Act. Consultant will
forever refrain from instituting, initiating, prosecuting, maintaining or
participating in any lawsuit, claim or other proceeding in any jurisdiction or
forum relating in any way to his employment or to his termination from such
employment or to any claims released hereby in which Consultant seeks, or any
person seeks on Consultant's behalf, personal monetary or equitable relief, and
will not cause or permit anyone to do so in his name or on his behalf. If
Consultant breaches this covenant, he will pay all losses (including, but not
limited to, costs and attorney fees) incurred by the Released Parties arising
from such breach. The release contained herein is intended to be complete and
final and to cover not only claims which are known, but also claims which are
unknown or which Consultant does not suspect to exist in his favor which, if
known at the time of executing this Agreement, might have affected his actions.
7. Notices.
All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered by hand,
by reputable overnight courier or by certified or registered mail, return
receipt requested, with postage prepaid, at the following addresses or to such
other address as either party may designate by like notice:
(a) If to Consultant, to:
Xxxxxxx Xxxxxxx
00000 Xxxxx Xxxxx Xxxxx
Xxxxxx, XX 00000
(b) If to Corporation, to:
SmartServ Online, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, COO
8. Additional Provisions.
(a) Consultant represents, warrants, and covenants that neither the
execution and delivery of this Agreement nor the performance of the consulting
services contemplated hereby will result (either immediately or after the
passage of time and/or the giving of notice) in any breach or default by
Consultant under any agreement or contract to which Consultant is a party, or by
which Consultant may be bound, or which would have a material adverse effect on
Consultant's ability to perform fully his obligations under this Agreement.
(b) This Agreement shall inure to the benefit of and be binding upon
Corporation, and its successors and assigns and Consultant, his heirs,
executors, administrators and legal representatives.
(c) This is a personal service contract and may not be assigned by
Consultant.
(d) This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof, and cannot be changed or terminated
orally. This Agreement supersedes all prior and contemporaneous written or oral
agreements between the parties relating to the subject matter hereof. No
modification or waiver of any of the provisions hereof shall be effective unless
in writing and signed by the party against whom it is sought to be enforced.
(e) If any provision of this Agreement shall be or shall become illegal
or unenforceable in whole or in part, for any reason whatsoever, the remaining
provisions shall nevertheless be deemed valid, binding and subsisting.
(f) No failure on the part of any party hereto to exercise and no delay
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.
(g) The headings of the several sections of this Agreement have been
inserted for convenience of reference only and shall in no way restrict or
modify any of the terms or provisions hereof.
(h) "Person" as used herein means a natural person, joint venture,
corporation, limited liability company, sole proprietorship, trust, estate,
partnership, cooperative, association, non-profit organization or other entity.
(i) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania, without regard to
conflicts of laws rules, and each party hereto consents to the exclusive
jurisdiction and venue of the courts of the Commonwealth of Pennsylvania and the
federal courts sitting in the Eastern District of Pennsylvania. The parties
irrevocably consent to service of process by certified mail, return receipt
requested, to the addresses set forth herein, or to such other address as to
which notice thereof has been given.
(j) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall be deemed one
and the same document.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
SMARTSERV ONLINE, INC. CONSULTANT:
By: /s/ Xxxxxxx X. Xxxxxxx /s/ Xxxxxxx Xxxxxxx
----------------------------- -------------------------------------
Xxxxxxx X. Xxxxxxx Xxxxxxx Xxxxxxx
Chief Operating Officer
