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EXHIBIT 99.1
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is entered into as of
November 18, 1999 by and between Virtual Technology Corporation, a Minnesota
corporation ("VTC" or the "Company"), and Xxxx Xxxxxxxxx (the "Consultant").
R E C I T A L S:
A. VTC is a public company whose Common Stock, with a par value of
$.001 per share, is quoted on the OTC Bulletin Board. VTC is in the business of
selling computers and computer-related equipment on the Internet and through
wholesale distribution.
B. VTC requires expertise in mergers and acquisitions to support new
business opportunities, and wishes to engage the Consultant on a nonexclusive
basis as an independent contractor to utilize Consultant's advisory services.
C. The Parties wish to set forth the terms of their relationship
pursuant to the terms of this Agreement - specifically, to establish a Company
Consulting relationship for purposes of state and federal law;
NOW, THEREFORE, it is mutually agreed by and between the parties as
follows:
1. ENGAGEMENT. VTC hereby retains and engages the Consultant to consult with and
advise VTC with respect to the activities described in more detail in Section 2
below (the "Consulting Services"), and the Consultant agrees to perform the
Consulting Services subject to the terms and conditions of this Agreement.
Consultant agrees to work for VTC as a consultant and not as an employee, as
that term is understood for federal and state law purposes. Accordingly,
Consultant understands that he is not eligible for any vacation or other leave
or benefits provided to VTC employees and that he is responsible for payment of
all taxes arising out of his activities, including, but not limited to, federal
and state income tax, Social Security tax, unemployment insurance taxes and any
other business license fee as required. Consultant is also responsible for any
workers' compensation arrangements and payments required by applicable law.
2. CONSULTING SERVICES. The consulting services contemplated by this Agreement
(the "Consulting Services") shall consist of Consultant providing advice and
counsel regarding VTC's strategic business strategies, opportunities and
negotiations with potential alliances and partners, merger/acquisition
candidates, joint ventures, corporate partners and others excluding financial
and financially related transactions and any activities related to capital
formation.
3. BEST EFFORTS. Consultant shall devote such time and best efforts to the
affairs of VTC as is reasonable and adequate to render the consulting services
contemplated by this agreement.
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Consultant is not responsible for the performance of any services which may be
rendered hereunder without VTC providing the necessary information in writing
prior thereto, nor shall Consultant include any services that constitute the
rendering of any legal opinions or performance of work that is in the ordinary
purview of a Certified Public Accountant or attorney. It is understood that a
portion of the compensation to be paid hereunder is being paid by VTC to have
Consultant remain available to assist with transactions on an as-needed basis.
4. DUTIES EXPRESSLY EXCLUDED. This Agreement expressly excludes the Consultant
from providing any and all capital formation and/or public relations services to
the Company inclusive of, but not limited to: (i) direct or indirect promotion
of, or maintaining of a market in, the Company's securities; (ii) assistance in
obtaining debt and/or equity financing or any other capital-raising
transactions; or (iii) investor relations or shareholder communications
services.
5. CONSIDERATION. In consideration of the performance by the Consultant of the
Consulting Services, VTC will issue to Consultant 250,000 shares of VTC's Common
Stock (the "Shares"). The Shares will be issued as soon as practicable following
execution of this Agreement and the filing of a registration statement under the
Securities Act of 1933, as amended, on Form S-8 covering the original issuance
of such Shares.
6. EXPENSES. Consultant shall bear his out-of-pocket costs and expenses incident
to performing the Consulting Services, without a right of reimbursement by VTC.
7. TERM. The term of this Agreement is one year, commencing on the date hereof,
and shall continue for one year unless terminated sooner, by either party, upon
giving to the other party five (5) days written notice, after which time this
Agreement is terminated.
8. CONSULTANT'S LIABILITY. In the absence of gross negligence or willful
misconduct on the part of the Consultant or the Consultant's breach of any term
of this Agreement, the Consultant shall not be liable to the Company, or to any
officer, director, employee, shareholder or creditor of the Company, for any act
or omission in the course of or in connection with the rendering or providing of
services hereunder. Except in those cases where gross negligence or willful
misconduct of the Consultant or the breach by the Consultant of any terms of
this Agreement is alleged and proven, the Company agrees to defend, indemnify,
and hold the Consultant harmless from and against any and all reasonable costs,
expenses and liability (including reasonable attorneys' fees paid in the defense
of the Consultant) which may in any way result from services rendered by the
Consultant pursuant to or in connection with this Agreement. This
indemnification expressly excludes any and all damages as a result of any
actions taken or
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omissions or statements made by the Consultant without the prior approval or
authorization of the Company or which are otherwise in violation of applicable
law.
9. COMPANY'S LIABILITY. The Consultant agrees to defend, indemnify, and hold the
Company and its officers, directors, employees and shareholders harmless from
and against any and all reasonable costs, expenses and liability (including
reasonable attorneys' fees paid in defense of the Company and/or its officers,
directors, employees and/or shareholders) which may in any way result pursuant
to his gross negligence or willful misconduct or in any connection with any
actions taken or omissions or statements made without the prior approval or
authorization of the Company or which are otherwise in violation of applicable
law.
10. CONSULTANT'S REPRESENTATIONS. The Consultant makes the following
representations:
(a) The Consultant has no prior or existing legally binding obligations that are
in conflict with his entering into this Agreement;
(b) The Consultant shall not offer or make payment of any consideration to
brokers, dealers, or others for purposes of inducing the purchase, making of a
market or recommendation for the purchase of the Company's securities;
(c) The Consultant is currently a shareholder of VTC;
(d) The Consultant is not currently the subject of an investigation or inquiry
by the Securities and Exchange Commission, the NASD or any state securities
commission;
(e) The Consultant's activities and operations fully comply with now and will
comply with in the future all applicable state and federal securities laws and
regulations;
(f) The Consultant understands that, as a result of his services, he may come to
possess material non-public information about the Company, and he has
implemented internal control procedures designed to reasonably to insure that
neither he nor any of his employees, agents, consultants or affiliates trade in
the securities of the Company while in possession of material non-public
information;
(g) During the term of this Agreement and for a period of five years thereafter,
the Consultant shall treat as the Company's confidential trade secrets all data,
information, ideas, knowledge and papers pertaining to the affairs of the
Company. Without limiting the generality of the foregoing, such trade secrets
shall include, without limitation: the Company's business, marketing and
acquisition plans; the identity of the Company's customers, suppliers,
prospective customers and suppliers and acquisition candidates; the identity of
the Company's marketing partners; the identity of the Company's creditors and
other sources of financing; the Company's cost and gross prices charged by the
Company for its products; the prices or other consideration charged to or
required of the Company by any of the suppliers or potential suppliers; and the
Company's sales and promotional policies. The Consultant shall not reveal such
trade secrets to
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others except in the proper exercise of his duties for the Company, or use his
knowledge thereof in any way that would be detrimental to the interest of the
Company unless compelled to disclose such information by judicial or
administrative process. Despite the above, the divulging of information shall
not be a breach of this Agreement to the extent that such information was (i)
previously known by the party to which it is divulged, (ii) already in the
public domain, all through no fault of the Consultant or (iii) required to be
disclosed by the Consultant pursuant to judicial or governmental order (as to
which case, the Consultant shall promptly notify VTC of any request for
information so that VTC can determine whether to seek a protective order as to
such information). The Consultant shall also treat all information pertaining to
the affairs of the Company's suppliers and customers and prospective customers
and suppliers as confidential trade secrets of such customers and suppliers and
prospective customers and suppliers; and
(h) The Consultant agrees to notify the Company immediately if, at any time, any
of the representations and warranties made by the Consultant herein are no
longer true and correct or if a breach of any of the representations and
warranties made by the Consultant herein occurs.
11. COMPANY REPRESENTATIONS. The Company makes the following representations:
(a) The Company is in good standing in under the laws of the State of Minnesota.
(b) The issuance of the Shares has been authorized by VTC's Board of Directors
and, when issued, will be fully paid and nonassessable.
12. ENTIRETY OF AGREEMENT. This Agreement sets forth the entire understanding of
the parties with respect to the matters contemplated hereby. Any and all
previous agreements and understandings between or among the parties of any kind,
whether written or oral, are superseded by this Agreement. This Agreement shall
not be amended or modified except by written instrument duly executed by each of
the parties.
13. ASSIGNMENT AND BINDING EFFECT. This Agreement may not be assigned without
the prior written consent of the other party.
14. 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.
15. NOTICES. Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted hereunder shall be in writing and
shall be deemed given only if delivered personally or sent by facsimile, or by
registered or certified mail, postage prepaid, as follows:
If to VTC to:
Virtual Technology Corporation
0000 Xxxx Xxxx Xxxxxx, Xxxxx 000
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Xxxxxxxxxxx, Xxxxxxxxx 00000
If to Consultant, to:
Xxxx Xxxxxxxxx
0000 Xxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communications will be deemed to have been given as
of the date so delivered, telephoned or mailed.
16. GOVERNING LAW. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of Minnesota, exclusive of its
conflict of laws rules.
17. NO BENEFIT TO OTHERS. The representations, warranties, covenants and
agreements contained in this Agreement are for the sole benefit of the parties
hereto.
18. SEVERABILITY. Any provision of this Agreement that is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability in such jurisdiction without invalidating or
rendering unenforceable the remaining provisions hereof, and any such invalidity
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
19. HEADINGS. The headings of this Agreement are inserted solely for the
convenience of reference and are not part of, and are not intended to govern,
limit or aid in the construction of any term or provision hereof.
20. FURTHER ACTS. Each party agrees to perform any further acts and execute and
deliver any further documents that may be reasonably necessary to carry out the
provisions and intent of this Agreement.
21. ACKNOWLEDGMENT CONCERNING COUNSEL. Each party acknowledges that it/he had
the opportunity to employ separate and independent counsel of its/his own
choosing in connection with this Agreement.
22. INDEPENDENT CONTRACTOR STATUS. There is no relationship, partnership,
agency, employment, franchise or joint venture between the parties. The parties
have no authority to bind the other or incur any obligations on their behalf.
23. COUNTERPARTS. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have hereunto affixed their
signatures.
VIRTUAL TECHNOLOGY CORPORATION CONSULTANT
By /s/ Xxxxxxx Israel /s/ Xxxx Xxxxxxxxx
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Xxxx Xxxxxxxxx
Its Chairman
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