EXHIBIT 10.4
CONSULTING SERVICES AGREEMENT
This Consulting Services Agreement ("Agreement"), dated July 31, 2003
(the "Effective Date"), is made by and between Xxxx Xxxxxxx, an individual
("Consultant"), whose address is 0000-0 Xxxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx
00000, and Dtomi, Inc., a Nevada corporation ("Dtomi"), having its principal
place of business at 000 Xxxxx Xxx., Xxxxx 000, Xxxxxx Xxxxxx, Xxxxxxx 00000.
WHEREAS, Consultant is the author and owner of the air spring powered
lowerable suspension assembly patent, Patent No. 6,530,580 (the "Patent");
WHEREAS, Consultant desires to be engaged by Dtomi to provide
consulting services regarding the commercialization of the Patent in his area of
knowledge and expertise on the terms and subject to the conditions set forth
herein (the "Services");
WHEREAS, Dtomi is a publicly held corporation with its common stock
shares trading on the Over the Counter Bulletin Board under the ticker symbol
"DTOI," and desires to further develop its business and customers; and
WHEREAS, Dtomi desires to engage Consultant to provide the Services in
his area of knowledge and expertise on the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration for those services Consultant provides
to Dtomi, the parties agree as follows:
1. SERVICES OF CONSULTANT.
(a) Consultant shall provide to Dtomi, on an as needed basis by Dtomi,
forty (40) hours per month of the Services, which shall include advising,
consulting, and strategizing on matters relating to the commercialization of the
Patent.
(b) Consultant will make adjustments, in an equitable fashion, to any
problems in the Services identified by Dtomi.
2. CONSIDERATION.
2.1 STOCK GRANT.
(a) Immediately upon the Effective Date, Dtomi will grant Consultant a
sufficient quantity of common shares of Dtomi such that Consultant shall own
thirty percent (30%) of all issued and outstanding shares of Dtomi. The parties
acknowledge that, as of the Effective Date,
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thirty percent (30%) of all issued and outstanding shares of Dtomi is estimated
to be approximately 1,500,000 common shares.
(b) Consultant's common share ownership is subject to the following
non-dilution covenants, which shall be in effect only for the Term, as defined
herein, of this Agreement:
(i) Subsequent to such time as at least Six Hundred Thousand
Dollars ($600,000) of either investment capital or in-kind consideration has
been received by Dtomi, Dtomi will grant Consultant, if necessary, a sufficient
quantity of common shares such that Consultant shall own no less than
twenty-five percent (25%) of all issued and outstanding shares of Dtomi.
(ii) Subsequent to such time as at least One Million Dollars
($1,000,000) of either investment capital or in-kind consideration has been
received by Dtomi, Dtomi will grant Consultant, if necessary, a sufficient
quantity of common shares such that Consultant shall own no less than twenty-two
percent (22%) of all issued and outstanding shares of Dtomi.
(iii) The non-dilution covenants described herein shall only
apply to such dilution of Consultant's ownership of his shares of Dtomi common
stock that is caused by a financing. Consultant shall NOT have any of the
anti-dilution protections as set forth above in the event additional shares of
Dtomi stock, common or preferred, are issued by Dtomi in connection with any
acquisitions or other transactions that do not involve or otherwise relate to
the commercialization of the Patent.
(c) Common shares issued to Consultant shall have piggyback
registration rights in accordance with the terms of the attached EXHIBIT A.
2.2 OTHER CONSIDERATION.
(a) Consultant shall have an option to serve on the Board of Directors
of Dtomi (the "Board"), or to appoint a Board member for as long as that certain
Exclusive Patent License Agreement, attached hereto as EXHIBIT B, between
Consultant and Dtomi, remains in effect. Upon termination or expiration of that
certain License Agreement, Consultant shall resign from the Board, or if he has
appointed a Board member, such appointment shall be revoked.
(b) Dtomi shall assume and be fully responsible for Consultant's
estimated $300,000 debt and hold Consultant harmless from said debt as well as
any consequential damages to Consultant caused by any delay in payment by Dtomi
of such debt.
2.3 OUT OF POCKET EXPENSES.
Dtomi will pay Consultant for any pre-approved out-of-pocket expenses incurred
by Consultant.
3. CONFIDENTIALITY.
Each party agrees that during the course of this Agreement, information
that is confidential or of a proprietary nature may be disclosed to the other
party, including, but not
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limited to, product and business plans, software, technical processes and
formulas, source codes, product designs, sales, costs and other unpublished
financial information, advertising revenues, usage rates, advertising
relationships, projections, and marketing data ("Confidential Information").
Confidential Information shall not include information that the receiving party
can demonstrate (a) is, as of the time of its disclosure, or thereafter becomes
part of the public domain through a source other than the receiving party, (b)
was known to the receiving party as of the time of its disclosure, (c) is
independently developed by the receiving party, or (d) is subsequently learned
from a third party not under a confidentiality obligation to the providing
party.
4. INDEMNIFICATION.
4.1 DTOMI. Dtomi agrees to indemnify, defend, and shall hold harmless
Consultant and/or his agents, and to defend any action brought against said
parties with respect to any claim, demand, cause of action, debt or liability,
including reasonable attorneys' fees to the extent that such action is based
upon a claim that: (a) is true, (b) would constitute a breach of any of Dtomi's
representations, warranties, or agreements hereunder, or (c) arises out of the
negligence or willful misconduct of Dtomi, or any Dtomi Content to be provided
by Dtomi and does not violate any rights of third parties, including, without
limitation, rights of publicity, privacy, patents, copyrights, trademarks, trade
secrets, and/or licenses.
4.2 CONSULTANT. Consultant agrees to indemnify, defend, and shall hold
harmless Dtomi, its directors, employees and agents, and defend any action
brought against same with respect to any claim, demand, cause of action, debt or
liability, including reasonable attorneys' fees, to the extent that such an
action arises out of the gross negligence or willful misconduct of Consultant.
4.3 NOTICE. In claiming any indemnification hereunder, the indemnified
party shall promptly provide the indemnifying party with written notice of any
claim, which the indemnified party believes falls within the scope of the
foregoing paragraphs. The indemnified party may, at its expense, assist in the
defense if it so chooses, provided that the indemnifying party shall control
such defense, and all negotiations relative to the settlement of any such claim.
Any settlement intended to bind the indemnified party shall not be final without
the indemnified party's written consent, which shall not be unreasonably
withheld.
5. RELATIONSHIP OF THE PARTIES.
Consultant and Dtomi are acting solely as independent contractors under
this Agreement. It is expressly understood and agreed by the parties hereto that
nothing in this Agreement, its provisions or transactions and relationships
contemplated hereby shall constitute either party as the agent, employee,
partner or legal representative of the other for any purpose whatsoever, nor
shall either party hold itself out as such. Neither party to this Agreement
shall have the authority to bind or commit the other party hereto in any manner
or for any purpose whatsoever, except as may be expressly provided for herein,
but rather each party shall at all times act and conduct itself in all respects
and events as an independent contractor. This Agreement creates no relationships
of joint venturers, partners, associates or principal and agent between the
parties hereto.
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6. TERM.
This Agreement shall become effective on the Effective Date as defined
herein and terminate five (5) years thereafter. Unless otherwise agreed upon in
writing by Consultant and Dtomi, this Agreement shall not automatically be
renewed beyond its Term.
7. TERMINATION.
(a) Either party may terminate this Agreement on ninety (90) calendar
days written notice, or if prior to such action, the other party materially
breaches any of its representations, warranties or obligations under this
Agreement. Except as may be otherwise provided in this Agreement, such breach by
either party will result in the other party being responsible to reimburse the
non-defaulting party for all costs incurred directly as a result of the breach
of this Agreement, and shall be subject to such damages as may be allowed by law
including all attorneys' fees and costs of enforcing this Agreement.
(b) Upon any termination or expiration of this Agreement, Dtomi shall
pay all unpaid and outstanding fees through the effective date of termination or
expiration of this Agreement. Upon any termination or expiration of this
Agreement, Consultant shall provide and deliver to Dtomi any and all outstanding
services due through the effective date of this Agreement.
8. MISCELLANEOUS.
8.1 RIGHTS CUMULATIVE; WAIVERS.
The rights of each of the parties under this Agreement are cumulative.
The rights of each of the parties hereunder shall not be capable of being waived
or varied other than by an express waiver or variation in writing. Any failure
to exercise or any delay in exercising any of such rights shall not operate as a
waiver or variation of that or any other such right. Any defective or partial
exercise of any of such rights shall not preclude any other or further exercise
of that or any other such right. No act or course of conduct or negotiation on
the part of any party shall in any way preclude such party from exercising any
such right or constitute a suspension or any variation of any such right.
8.2 BENEFIT; SUCCESSORS BOUND.
This Agreement and the terms, covenants, conditions, provisions,
obligations, undertakings, rights, and benefits hereof, shall be binding upon,
and shall inure to the benefit of, the undersigned parties and their heirs,
executors, administrators, representatives, successors, and permitted assigns.
8.3 ENTIRE AGREEMENT.
This Agreement contains the entire agreement between the parties with
respect to the subject matter hereof. There are no promises, agreements,
conditions, undertakings, understandings, warranties, covenants or
representations, oral or written, express or implied,
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between them with respect to this Agreement or the matters described in this
Agreement, except as set forth in this Agreement. Any such negotiations,
promises, or understandings shall not be used to interpret or constitute this
Agreement.
8.4 ASSIGNMENT.
Neither this Agreement nor any other benefit to accrue hereunder shall
be assigned or transferred by either party, either in whole or in part, without
the written consent of the other party, and any purported assignment in
violation hereof shall be void.
8.5 AMENDMENT.
This Agreement may be amended only by an instrument in writing executed
by all the parties hereto.
8.6 SEVERABILITY.
Each part of this Agreement is intended to be severable. In the event
that any provision of this Agreement is found by any court or other authority of
competent jurisdiction to be illegal or unenforceable, such provision shall be
severed or modified to the extent necessary to render it enforceable and as so
severed or modified, this Agreement shall continue in full force and effect.
8.7 SECTION HEADINGS.
The Section headings in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
8.8 CONSTRUCTION.
Unless the context otherwise requires, when used herein, the singular
shall be deemed to include the plural, the plural shall be deemed to include
each of the singular, and pronouns of one or no gender shall be deemed to
include the equivalent pronoun of the other or no gender.
8.9 FURTHER ASSURANCES.
In addition to the instruments and documents to be made, executed and
delivered pursuant to this Agreement, the parties hereto agree to make, execute
and deliver or cause to be made, executed and delivered, to the requesting party
such other instruments and to take such other actions as the requesting party
may reasonably require to carry out the terms of this Agreement and the
transactions contemplated hereby.
8.10 NOTICES.
Any notice which is required or desired under this Agreement shall be
given in writing and may be sent by personal delivery or by mail (either a.
United States mail, postage prepaid, or
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b. Federal Express or similar generally recognized overnight carrier), addressed
as follows (subject to the right to designate a different address by notice
similarly given):
If to Dtomi: Dtomi, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxxxx, Xxxxxxx 00000
With a copy to: Xxxxx X. Xxxx
The Xxxx Law Group, PLLC
000 0xx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
If to Consultant: Xxxx Xxxxxxx
0000-0 Xxxxxxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxx 00000
8.11 GOVERNING LAW.
This Agreement and the performance of the parties hereunder shall be
construed and governed in accordance with the laws of the State of Washington.
8.12 ARBITRATION.
(a) Any controversy, dispute, or claim arising out of or relating to
this Agreement, including specifically the breach thereof, shall be settled by
binding arbitration in Seattle, Washington.
(b) Any party to this Agreement can initiate arbitration pursuant to
this Agreement by serving notice on the other party of intent to arbitrate. The
notice shall specify with particularity the claims or issues that are to be
arbitrated. Within ten days of receipt of the notice by all parties, the parties
shall obtain a list of available arbitrators from the local office of the
Judicial Arbitration and Mediation Service ("JAMS") and select a mutually
acceptable arbitrator. If the parties are unable to agree on an arbitrator
within ten days, any party may petition the Presiding Judge of the Superior
Court for King County to select a single arbitrator from the JAMS list. The
Parties shall have the discovery rights available under Washington's Civil
Rules, subject to the limitation that each side shall be limited to no more than
five interrogatories and five depositions unless, upon a showing of good cause,
the Party can convince the arbitrator that more interrogatories or depositions
should be permitted. All discovery must be concluded within 60 days of the
selection of an arbitrator. The arbitration hearing must be concluded within 30
days of the close of discovery and it will be conducted in accordance with
Washington Rules of Evidence. The arbitrator's final decision shall be rendered
within ten days of the final hearing day. Judgment upon the arbitrator's final
award may be entered in any court having jurisdiction thereof.
(c) The parties shall bear in equal shares the arbitrator's fees and
costs. The prevailing party in the arbitration shall be awarded its reasonable
attorneys' fees and all costs, other than the
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arbitrator's fees and costs. For the purposes of determining who is the
prevailing party, each side will submit to the other a single written offer of
settlement ten days prior to the start of the arbitration hearing and the Party
whose offer most closely approximates the arbitrator's award shall be deemed the
prevailing Party for the purpose of awarding attorneys' fees.
8.13 CONSENTS.
The person signing this Agreement on behalf of each party hereby
represents and warrants that he has the necessary power, consent and authority
to execute and deliver this Agreement on behalf of such party.
8.14 REPRESENTATION BY COUNSEL.
This Agreement is the result of negotiation between the parties, who
acknowledge that they have been represented by counsel during such negotiation;
accordingly, this Agreement shall not be construed for or against either party
regardless of which party drafted this Agreement or any portion thereof.
8.15 EXECUTION IN COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and have agreed to and accepted the terms herein on the date written
above.
DTOMI, INC.
By : _________________________
Xxxx "JT" Thatch
Title: _______________________
XXXX XXXXXXX
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Xxxx Xxxxxxx
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