CANEUM, INC.
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is entered into effective as
of February 4, 2005 by and between Caneum, Inc. (the "Company") and
Xxxxxx X. Xxxxx ("Consultant"). The Company desires to retain
Consultant as an independent contractor to perform consulting services
for the Company, and Consultant is willing to perform such services,
on the terms described below. This Consulting Agreement replaces in
its entirety that certain Employment Agreement between Company and
Consultant dated October 23, 2003. In consideration of the mutual
promises contained herein, the parties agree as follows:
1. Term. The initial term of this Agreement shall be for a
period from the date of this Agreement to October 23, 2006, unless it
is terminated earlier as provided herein. Beginning on that date, and
on each anniversary thereafter, unless it is terminated earlier as
provided herein or The Company delivers written notice to the
Consultant of its intention not to extend the Agreement at least
ninety (90) days before such anniversary date, the term of this
Agreement shall automatically be extended for one additional year.
The restrictive covenants in Section 3 hereof shall survive the
termination of this Agreement.
2. Independent Contractor; Benefits.
2.1 Independent Contractor. It is the express intention of
the Company and Consultant that Consultant perform the Services (as
defined below) as an independent contractor to the Company. Nothing
in this Agreement shall in any way be construed to constitute
Consultant as an agent, employee or representative of the Company.
Without limiting the generality of the foregoing, Consultant is not
authorized to bind the Company to any liability or obligation or to
represent that Consultant has any such authority. Consultant agrees
to furnish all tools and materials necessary to accomplish this
Agreement and shall incur all expenses associated with performance,
except as expressly provided herein. Consultant acknowledges and
agrees that Consultant is obligated to report as income all
compensation received by Consultant pursuant to this Agreement.
Consultant agrees to and acknowledges the obligation to pay all
self-employment and other taxes on such income.
2.2 Benefits. The Company and Consultant agree that
Consultant will not receive any Company-sponsored benefits from the
Company. Notwithstanding the above, the Company will pay the COBRA
premiums for Consultant's health, medical and dental plan, or for
equivalent benefits from his prior employment by the Company, through
October 23, 2006.
3. Confidentiality.
3.1 Definition. "Confidential Information" means any
non-public information that relates to the actual or anticipated
business or research and development of the Company, technical data,
trade secrets or know-how, including, but not limited to, research,
product plans or other information regarding Company's products or
services and markets therefor, customer lists and customers with whom
Consultant became acquainted directly as a result of providing
Services during the term of this Agreement), software, developments,
inventions, processes, formulas, technology, designs, drawing,
engineering, hardware configuration information, marketing, finances
or other business information. Confidential Information does not
include information that (i) is known to Consultant at the time of
disclosure to Consultant by the Company as evidenced by written
records of Consultant, (ii) has become publicly known and made
generally available through no wrongful act of Consultant or (iii) has
been rightfully received by Consultant from a third party who is
authorized to make such disclosure.
3.2 Nonuse and Nondisclosure. Consultant will not, during
or subsequent to the term of this Agreement, (i) use the Confidential
Information for any purpose whatsoever other than the performance of
the Services on behalf of the Company or (ii) disclose the
Confidential Information to any third party. Consultant agrees that
all Confidential Information will remain the sole property of the
Company. Consultant also agrees to take reasonable precautions to
prevent unauthorized disclosure of such Confidential Information.
3.3 Former Client Confidential Information. Consultant
agrees that Consultant will not, during the term of this Agreement,
improperly use or disclose any proprietary information or trade
secrets of any former or current employer of Consultant or other
person or entity with which Consultant has an agreement or duty to
keep in confidence information acquired by Consultant, if any.
Consultant also agrees that Consultant will not bring onto the
Company's premises any unpublished document or proprietary information
belonging to any such employer, person or entity unless consented to
in writing by such employer, person or entity.
3.4 Third Party Confidential Information. Consultant
recognizes that the Company has received and in the future will
receive from third parties their confidential or proprietary
information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain
limited purposes. Consultant agrees that, during the term of this
Agreement and thereafter, Consultant owes the Company and such third
parties a duty to hold all such confidential or proprietary
information in the strictest confidence and not to disclose it to any
person, firm or corporation or to use it except as necessary in
carrying out the Services for the Company consistent with the
Company's agreement with such third party.
3.5 Return of Materials. Upon the termination of this
Agreement, or upon Company's earlier request, Consultant will deliver
to the Company all of the Company's property, including but not
limited to all electronically stored information and passwords to
access such property, or Confidential Information that Consultant may
have
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in Consultant's possession or control; provided, however, that
Consultant may retain a copy of such materials for archival purposes.
4. Conflicting Obligations. Consultant certifies that
Consultant has no outstanding agreement or obligation that would
preclude Consultant from complying with the provisions of this
Agreement. Consultant will not enter into any such prohibitive
agreement during the term of this Agreement. Consultant's violation
of this Section 4 will be considered a material breach under this
Agreement.
5. Reports. Consultant also agrees that Consultant will, from
time to time during the term of this Agreement or any extension
thereof, keep the Company advised as to Consultant's progress in
performing the Services under this Agreement. Consultant further
agrees that Consultant will, as requested by the Company, prepare
written reports with respect to such progress. The Company and
Consultant agree that the time required to prepare such written
reports will be considered time devoted to the performance of the
Services.
6. Location. Consultant shall provide Services at Consultant's
offices, at the Company's offices, or at such other places as may be
mutually agreed upon by Company and Consultant.
7. Services. During the term of this Agreement, Consultant
shall, at the request of the President, the Chief Executive Officer,
or the Board, render consulting and advisory services to the Company
relating to strategic planning, corporate and product development, and
general business and financial matters, and, at least initially, will
serve as the Vice Chairman of the Board of Directors of the Company
(the "Services"), provided, however, that the Company's obligations
under this Agreement do not require that Consultant be retained as
Vice Chairman of the Board of Directors. Consultant shall not be
required to devote his entire time, ability and attention to the
business of the Company, and the Company agrees and acknowledges that
Consultant, during the term of this Agreement and thereafter, may be
engaged in other business endeavors both in the same and other
industries, both competitive and non-competitive with the Company,
that will require the time, ability and attention of Consultant;
however, Consultant agrees to devote his best efforts to performing
well all duties that the Company may reasonably assign to him from
time to time during the term of this Agreement; provided, however,
that in no case shall Consultant be required to devote in excess of
25% of his business time and effort to providing Services hereunder;
and, provide further, that Consultant shall not be required to provide
Services in connection with the offer or sale of securities of the
Company in a capital-raising transaction, or to provide services to
directly or indirectly promote or maintain a market for the securities
of the Company. Other than non-waiveable fiduciary duties and duties
of loyalty to the Company that Consultant may owe to the Company in
Consultant's capacity as a member of the Company's Board of Directors,
Consultant shall have no affirmative duty to bring business
opportunities to the attention of the Company or to report potential
competitive issues between the Company's activities and the
Consultant's business activities provided other than for the Company.
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8. Compensation and Benefits.
8.1 Base Fee. The Consultant's monthly fee shall be $60,000
per year (the "Base Fee") payable $5,000 per month, which fee shall
secure Consultant's obligation to provide Services hereunder. The Base
Fee shall be payable in the Company's restricted unregistered common
stock at a price per share equal to the average bid price Company's
stock on a listed exchange or the OTC/BB, for the prior 20 business
days prior to the Closing, and each subsequent anniversary of the
Closing.
8.2 Performance Bonus. Individual will be eligible to
receive an annual bonus between 0% and 100% of the then applicable
Base Salary, less applicable withholding taxes, upon achievement of
annual performance objectives to be determined by the Board and
Individual, which such objectives for the first year of this Agreement
will be established within thirty (30) days of the Effective Date.
These bonuses may be paid in either cash or restricted and
unregistered stock subject to the determination of the Company's
Compensation Committee based on the cash position of the Company at
the time of the effective date of the Performance Bonus. Objectives
for subsequent years will be determined as set forth herein within
thirty (30) days of the beginning of each fiscal year of the Company.
8.3 Option Grant. The option granted to Individual at the
August 14, 2003 meeting of the Board (the "Option") shall continue in
effect as nonstatutory options, and the Grant of Stock Option (and the
exhibits thereto) attached hereto as Exhibit B (the "Option
Agreement") shall have been, or shall be as soon as administratively
practicable following the Effective Date executed and delivered by
Individual to the Company. The Option will be subject to the terms,
definitions and provisions of the Company's 2002 Stock Option/Stock
Issuances Plan (the "Option Plan") and the Option Agreement, both of
which documents are incorporated herein by reference.
8.4 Reimbursement Of Business Expenses. The Company shall
promptly reimburse the Consultant for all reasonable travel,
entertainment and other expenses incurred or paid by the Consultant in
performing Services under this Agreement, upon presentation by the
Consultant of such supporting information and documentation as the
Company may reasonably request in accordance with applicable Company
policy and the requirements of the Internal Revenue Code.
9. Termination.
9.1 Survival. Section 3 (Confidentiality), Section 10
(Mitigation and Offset), Section 12 (Legal Expenses), and Section 13
(Indemnification) will survive termination of this Agreement.
9.2 Termination Due To Death. The Consultant's service and
this Agreement shall terminate immediately upon Consultant's death.
If the Consultant's service is terminated due to his death, his estate
or his beneficiaries, as the case may be, shall be entitled to:
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(a) payment of any due but unpaid portion of the Base
Fee through the date of such termination;
(b) reimbursement pursuant to Section 8.5 for any
outstanding reasonable travel, entertainment and other expenses
Consultant incurred or paid in performing Services hereunder;
(c) full and immediate vesting of all stock options
(and stock subject to vesting) issued to Consultant; and
(d) payment of any accrued but unpaid benefits, and any
other rights, as required by the terms of any benefit plan or
program of the Company, this Agreement, or any other agreement
between the Company and the Consultant.
9.3 Termination Due To Disability. The Company may
terminate the Consultant's service at any time if the Consultant
becomes disabled, upon written notice by the Company to the
Consultant. For all purposes under this Agreement, "Disability" shall
mean that the Consultant, at the time the notice is given, has been
unable to perform his duties under this Agreement for a period of not
less than ninety (90) days during any 180-day period as a result of
the Consultant's incapacity due to physical or mental illness. If the
Consultant's service is terminated due to his disability, he shall be
entitled to:
(a) payment of any due but unpaid portion of the Base
Fee through the date of such termination;
(b) reimbursement pursuant to Section 8.5 for any
outstanding reasonable travel, entertainment and other expenses
Consultant incurred or paid in performing Services hereunder;
(c) full and immediate vesting of all stock options
(and stock subject to vesting) issued to Consultant;
(d) payment of any accrued but unpaid benefits, and any
other rights, as required by the terms of any benefit plan or
program of the Company, this Agreement, or any other agreement
between the Company and the Consultant.
9.4 Termination For Cause.
The Company may terminate the Consultant's Services at any
time for Cause, provided that the Company gives written notice of
termination to the Consultant as set forth below. If the Consultant's
service is terminated for Cause, as defined below, he shall be
entitled to:
(a) payment of any due but unpaid portion of the Base
Fee through the date of such termination;
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(b) reimbursement pursuant to Section 8.5 for any
outstanding reasonable travel, entertainment and other expenses
Consultant incurred or paid in performing Services hereunder;
(c) payment of any accrued but unpaid benefits, and any
other rights, as required by the terms of any benefit plan or
program of the Company, this Agreement, or any other agreement
between the Company and the Consultant.
For purposes of this Agreement, a termination for "Cause"
shall mean: (1) the final conviction of the Consultant of, or the
entry of a plea of guilty or nolo contendere by the Consultant to, any
felony involving moral turpitude; (2) fraud, misappropriation or
embezzlement by the Consultant; (3) the Consultant's willful failure
or gross misconduct in the performance of Services; or (4) the breach
by the Consultant of any material term of this Agreement.
If the Company exercises its right to terminate the
Consultant for Cause, the Company shall: (1) give the Consultant
written notice of termination at least twenty (20) days before the
date of such termination specifying in detail the conduct constituting
such Cause, and (2) deliver to the Consultant a copy of a resolution
duly adopted by a majority of the entire membership of the Board,
excluding interested directors, after reasonable notice to the
Consultant and an opportunity for the Consultant to be heard in person
by members of the Board, finding that the Consultant has engaged in
such conduct.
9.5 Termination By the Company Without Cause or Constructive
Termination Without Cause. The Company may terminate the Consultant's
service at any time without Cause, provided that it gives written
notice of termination at least sixty (60) days before the date of such
termination. If the Consultant's service is terminated by the
Company without Cause, or if there is a Constructive Termination
Without Cause, as defined below, the Consultant shall be entitled to
receive from the Company the following:
(a) payment of any due but unpaid portion of the Base
Fee through the date of such termination;
(b) reimbursement pursuant to Section 8.5 for any
outstanding reasonable travel, entertainment and other expenses
Consultant incurred or paid in performing Services hereunder;
(c) full and immediate vesting of all stock options
(and stock subject to vesting) issued to Consultant; and
(d) payment of any accrued but unpaid benefits, and any
other rights, as required by the terms of any benefit plan or
program of the Company, this Agreement, or any other agreement
between the Company and the Consultant.
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For purposes of this Agreement, "Constructive Termination
Without Cause" shall mean a termination of the Consultant at his own
initiative following the occurrence, without the Consultant's prior
written consent, of one or more of the following events not on account
of Cause:
(1) a reduction in the Consultant's then current Base
Fee, or a significant reduction by the Company in Consultant's
opportunities for earnings under any incentive compensation plans, or
the termination or significant reduction of any benefit or perquisite
enjoyed by Consultant;
(2) the failure of the Company to obtain an assumption
in writing of its obligation to perform this Agreement by any
successor to all or substantially all of the assets of the Company
within forty-five (45) days after a merger, consolidation, sale or
similar transaction.
In the event the Consultant is terminated by the Company
without Cause or there is a Constructive Termination Without Cause,
each party shall provide the other with written notice not less than
thirty (30) days before the effective date of the termination of
employment.
9.6 Voluntary Termination. If the Consultant voluntarily
terminates his service on his own initiative for reasons other than
his death, disability, or Constructive Termination Without Cause, he
shall be entitled to:
(a) payment of any due but unpaid portion of the Base
Fee through the date of such termination;
(b) reimbursement pursuant to Section 8.5 for any
outstanding reasonable travel, entertainment and other expenses
Consultant incurred or paid in performing Services hereunder;
(c) payment of any accrued but unpaid benefits, and any
other rights, as required by the terms of any benefit plan or
program of the Company, this Agreement, or any other agreement
between the Company and the Consultant.
Consultant may voluntarily resign his service and terminate
the Agreement at any time by providing fifteen (15) days notice to the
Company.
10. Mitigation And Offset. If the Consultant's service is
terminated during the term of this Agreement pursuant to the
provisions of Section 9.5, above, the Consultant shall be under no
duty or obligation to seek or accept other employment, and no payment
or benefits of any kind due him under this Agreement shall be reduced,
suspended or in any way offset by any subsequent employment. The
obligation of the Company to make the payments provided for in this
Agreement shall not be affected by any circumstance including, by way
of example rather than limitation, any set-off, counterclaim,
recoupment, defense, or other right that the Company may assert, or
due to any other employment or source of income obtained by the
Consultant.
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11. Entitlement To Other Benefits. Except as expressly provided
herein, this Agreement shall not be construed as limiting in any way
any rights or benefits the Consultant, Consultant's spouse or domestic
partner, dependents or beneficiaries may have pursuant to any other
benefits plans or programs.
12. Legal Expenses. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default, or misrepresentation in connection
with any of the provisions of this Agreement, the successful or
prevailing party or parties will be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding,
in addition to any other relief to which it or they may be entitled.
13. Indemnification. The Company agrees that if the Consultant
is made a party, or is threatened to be made a party, to any action,
suit or proceeding, whether civil, criminal, administrative, or
investigative (a "Proceeding"), by reason of the fact that he is or
was a director, officer, consultant or employee or the Company, or is
or was serving at the request of the Company as a director, officer,
member, consultant, employee or agent of another corporation,
partnership, limited liability company, joint venture, trust or other
enterprise, including service with respect to benefit plans, whether
or not the basis of such Proceeding is the Consultant's alleged action
in an official capacity while serving as a director, officer, member,
consultant, employee or agent, the Consultant shall be Indemnified and
held harmless by the Company to the fullest extent permitted or
authorized by the Company's articles of incorporation and bylaws. To
the extent consistent with the foregoing, this obligation to indemnify
the Consultant and hold him harmless shall continue even if he has
ceased to be a director, officer, member, consultant, employee or
agent of the Company or other such entity described above, and shall
inure to the benefit of the Consultant's heirs, executors and
administrators. The Company shall advance to the Consultant all
reasonable costs and expenses incurred by him in connection with a
Proceeding within twenty (20) days after receipt by the Company of a
written request for such advance. Such request shall include an
undertaking by the Consultant to repay the amount of such advance if
it shall ultimately be determined that the Consultant is not entitled
to be indemnified against such costs and expenses.
Neither the failure of the Company (including its Board,
independent legal counsel or stockholders) to have made a
determination before such Proceeding concerning payment of amounts
claimed by the Consultant under the paragraph above that
indemnification of the Consultant is proper because he has met the
applicable standards of conduct, nor a determination by the Company
(including its Board, independent legal counsel or stockholders) that
the Consultant has not met such applicable standards of conduct, shall
create a presumption that the Consultant has not met the applicable
standards of conduct.
Consultant understands and acknowledges that the Company may be
required in the future to undertake with the Securities and Exchange
Commission to submit in certain circumstances the question of
indemnification to a court for a determination of the Company's right
under public policy to indemnify Consultant.
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14. Assignability And Binding Nature. This Agreement shall be
binding upon and inure to the benefit of the parties and their
respective successors, heirs (in the case of the Consultant) and
assigns. No rights or obligations may be assigned or transferred by
the Company except that such rights or obligations may be assigned or
transferred pursuant to a merger or consolidation in which the Company
is not the continuing entity, or the sale or liquidation of all or
substantially all of the assets of the Company, provided that the
assignee or transferee is the successor to all or substantially all of
the assets of the Company and such assignee or transferee assumes the
liabilities, obligations, and duties of the Company, as contained in
this Agreement, either contractually or as a matter of law. The
Company further agrees, that in the event of a sale of assets or
liquidation as described in the foregoing sentence, it shall take
whatever action it is legally entitled to take in order to Cause the
assignee or transferee to expressly assume the liabilities,
obligations, and duties of the Company under this Agreement.
Notwithstanding any such assignment, the Company shall not be relieved
from liability under this Agreement. No rights or obligations of the
Consultant under this Agreement may be assigned or transferred by the
Consultant other than his right to receive compensation and benefits,
provided such assignment or transfer is otherwise permitted by law.
15. Notices. All notices required or permitted hereunder shall
be in writing and shall be deemed effective: (1) upon personal
delivery; (2) upon deposit with the United States Postal Service, by
registered or certified mail, postage prepaid; or (3) in the case of
delivery by nationally recognized overnight delivery service, when
delivered, addressed as follows:
If to the Company, to:
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
With a copy (which shall not constitute notice) to:
Xxxxxx X. Xxxxx
Attorney at Law
00 Xxxx 000 Xxxxx
Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
If to the Consultant, to:
Ro xxxx X. Xxxxx
00 Xxxx xxxx Xxxxxx, Xxxxx 00
Xxx Xxxxx, XX 00000
or to such other address or addresses as either party shall designate
to the other in writing from time to time by like notice.
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16. Amendment. This agreement may be amended or modified only
by a written instrument executed by both the Company and the
Consultant.
17. Pronouns. Whenever the context might require, any pronouns
used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular forms of nouns and pronouns shall
include the plural, and vice versa.
18. Captions. The captions appearing herein are for convenience
of reference only and in no way define, limit or affect the scope or
substance of any section hereof.
19. Time. All reference herein to periods of days are to
calendar days, unless expressly provided otherwise. Where the time
period specified herein would end on a weekend or holiday, the time
period shall be deemed to end on the next business day.
20. Entire Agreement. This Agreement constitutes the entire
agreement between the Company and the Consultant and supersedes all
prior agreements and understandings, whether written or oral relating
to the subject matter hereof.
21. Severability. In case any provision hereof shall be held by
a court or arbitrator with jurisdiction over the Company or the
Consultant to be invalid, illegal, or otherwise unenforceable, such
provision shall be restated to reflect as nearly as possible the
original intentions of the Company and the Consultant in accordance
with applicable law, and the validity, legality, and enforceability of
the remaining provisions shall in not way be affected or impaired
thereby.
22. Waiver. No delays or omission by the Company or the
Consultant in exercising any right hereunder shall operate as a waiver
of that or any other right. A waiver or consent given by the Company
or the Consultant or any one occasion shall be effective only in that
instance and shall not be construed as a bar or waiver of any right on
any other occasion.
23. Governing Law. This Agreement shall be construed,
interpreted, and enforced in accordance with the laws of the State of
California, without regard to its conflicts of laws principles.
24. Successors And Assigns. This Agreement shall be binding
upon and inure to the benefit of both the Company and the Consultant
and their respective successors and assigns, including any entity with
which or into which the Company might be merged or that might succeed
to its assets or business or any entity to which the Company might
assign its rights and obligations hereunder; provided, however, that
the obligations of the Consultant are personal and shall not be
assigned or delegated by him.
25. Withholding. The Company may make any appropriate
arrangements to deduct from all benefits provided hereunder any taxes
reasonably determined to be required to be withheld by any government
or government agency. The Consultant shall bear all taxes on benefits
provided hereunder to the extent that no taxes are withheld,
irrespective of whether withholding is required.
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26 Counterparts. This Agreement may be executed 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.
27. Full Knowledge. By their signatures, the parties
acknowledge that they have carefully read and fully understand the
terms and conditions of this Agreement, that each party has had the
benefit of separate counsel, or has been advised to obtain separate
counsel, and that each party has freely agreed to be bound by the
terms and conditions of this Agreement.
IN WITNESS WHEREOF, Company and the Consultant have executed this
Agreement effective as of the day and year first written above.
COMPANY: CANEUM, INC.
Date: February 18, 2005 By: /s/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: Executive Vice President
CONSULTANT:
Date: February 18, 2005 /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
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