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EXHIBIT 99.1
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is entered into as of May
10, 1999 by and between Virtual Technology Corporation, a Minnesota corporation
("VTC" or the "Company"), and Xxxxx Xxxxxx (the "Consultant").
R E C I T A L S:
A. VTC is a public company whose Common Stock, no par value, 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 wishes to engage the Consultant on a nonexclusive basis as an
independent contractor to utilize Consultant's services to further develop and
refine its strategic marketing plans.
NOW, THEREFORE, it is mutually agreed by and between the parties as
follows:
1. ENGAGEMENT. VTC hereby retains and engages the Consultant to evaluate and
assist in the development of strategic marketing plans as 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.
2. CONSULTING SERVICES. The consulting services contemplated by this Agreement
(the "Consulting Services") shall consist of:
(a) reviewing and evaluating VTC's current business plan and remaining
knowledgeable about the contents thereof;
(b) working with VTC's management to develop and prepare a detailed strategic
co-branding and/or partnership marketing plan with one or more Internet
marketing organizations and/or major credit card issuers;
(c) working with VTC's management to periodically revise the VTC strategic
marketing plan as required during the term of this Agreement; and
(d) providing introductions to computer/computer resale industry contacts.
3. 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.
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4. CONSIDERATION. In consideration of the performance by the Consultant of the
Consulting Services, VTC will issue to the Consultant 400,000 shares of VTC's
Common Stock (the "Shares") for a total consideration of $2,000,000. In
addition, if during the Term hereof, the Consultant secures an affiliate
marketing relationship acceptable to VTC with VISA International, Inc. ("VISA"),
then as a bonus for services rendered, VTC shall, within 30 days after entering
into any such agreement with VISA, issue to the Consultant an additional 100,000
Shares (the "Bonus Shares"). In the event that the Consultant does not
completely perform the Consulting Services (for any reason including the death
or incapacity of the Consultant), then for each month that the Consultant does
not perform the Consulting Services, one-twelfth (1/12th) of the Shares
(including any Bonus Shares outstanding at such time and in any case as adjusted
for stock splits, reverse stock splits, stock dividends or distributions or
other reclassifications of VTC's Common Stock) shall be returned to VTC and
canceled. The Consultant agrees to purchase Shares in the open market, if
necessary, to fulfill such obligation to return Shares to VTC.
The initial 400,000 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. In the event that the Consultant earns the Bonus Shares during
the Term hereof, VTC agrees to use its best efforts to file a registration
statement on Form S-8 covering the original issuance of such Shares.
5. EXPENSES. Consultant shall bear her out-of-pocket costs and expenses
incident to performing the Consulting Services, without a right of reimbursement
by VTC.
6. TERM. The term of this Agreement is one year, commencing on the date hereof
(the "Term"). This Agreement may be terminated prior to the end of the Term upon
the mutual written agreement of the parties or in the event the Consultant is in
default (as defined below) in the performance of the Consulting Services, which
default is not cured within a reasonable time following written notice thereof
from VTC. A "default" occurs when, in VTC's sole and exclusive judgment, the
Consultant is not satisfactorily performing the Consulting Services.
7. 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 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.
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8. 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 her 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.
9. 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 her 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 not currently the subject of an investigation or inquiry
by the Securities and Exchange Commission, the NASD or any state securities
commission;
(d) 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;
(e) The Consultant is either properly registered as, or exempt from
registration, a broker-dealer or an investment advisor;
(f) The Consultant understands that, as a result of her services, she may come
to possess material non-public information about the Company, and she has
implemented internal control procedures designed to reasonably to insure that
neither she nor any of her 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 and
marketing plans; the identity of the Company's customers, suppliers and
prospective customers and suppliers; the identity of the Company's marketing
partners; the identity of the Company's creditors and other sources of
financing; the Company's estimating and costing procedure and the 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 others except in the proper
exercise of her duties for the Company, or use her knowledge thereof in any way
that would be detrimental to the interest of the Company unless compelled to
disclose such information
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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.
10. 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.
11. 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.
12. ASSIGNMENT AND BINDING EFFECT. This Agreement may not be assigned without
the prior written consent of the other party.
13. 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.
14. 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
Xxxxxxxxxxx, Xxxxxxxxx 00000
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If to Consultant, to:
Xxxxx Xxxxxx
00000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxx 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.
15. 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.
16. NO BENEFIT TO OTHERS. The representations, warranties, covenants and
agreements contained in this Agreement are for the sole benefit of the parties
hereto.
17. 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.
18. 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.
19. 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.
20. ACKNOWLEDGMENT CONCERNING COUNSEL. Each party acknowledges that it had the
opportunity to employ separate and independent counsel of its own choosing in
connection with this Agreement.
21. 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.
22. 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/ XXXXX XXXXXX
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Xxxxxxx Israel, Chairman Xxxxx Xxxxxx
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