EXHIBIT 10
CONSULTING AGREEMENT
This Agreement is made and entered into by and between SmartServ Online,
Inc., a Delaware corporation having a principal place of business at Xxx Xxxxxxx
Xxxxx, Xxxxxxxx, Xxxxxxxxxxx (the "Company"), and Xxxxxx Xxxxxx (the
"Consultant") as of the 4th day of December, 2002 (the "Effective Date").
WHEREAS, the Company wishes to engage the Consultant to consult with
respect to certain aspects of its business;
WHEREAS, the Consultant is willing to make available to the Company the
consulting services provided for in this Agreement as set forth below;
For and in consideration of the foregoing premises and the mutual promises,
terms, provisions and conditions contained in this Agreement, the parties agree
as follows:
1. TERM. Subject to earlier termination, as hereinafter provided, the
term of this Agreement shall be for a period of two years, commencing on the
Effective Date, which term may only be extended or renewed by written agreement
duly authorized by the Board of Directors of the Company (the "Board"). The
initial term of this Agreement and any extension or renewal terms are
collectively referred to hereafter as "the term hereof" or "the term of this
Agreement."
2. RELATIONSHIP OF THE PARTIES.
a. It is expressly understood and agreed by the parties that the
Consultant is an independent contractor in the performance of each and every
part of this Agreement and that nothing contained in this Agreement is intended,
or shall be construed, to constitute the Consultant as the employee, agent,
partner or joint venturer of the Company or as constituting the exercise by the
Company of control or direction over the manner or method by which the
Consultant performs the services which are the subject of this Agreement.
b. The Consultant shall have no right, power or authority in any way
to bind the Company to the fulfillment of any condition, contract or obligation
or to create any liability binding on the Company. The Company is not
responsible for any expenses or liabilities incurred by the Consultant, other
than business expenses expressly authorized in writing by an executive officer
of the Company.
3. CONSULTANT'S SERVICES.
a. During the term of this Agreement, the Consultant shall provide the
following services:
(i) Consult with the Company's management concerning marketing
surveys, investor profile information, methods of expanding
investor support and increasing investor awareness of the Company
and its products and services;
(ii) Strategic planning (including market analysis, competition
analysis, and identification of strategic business
opportunities);
(iii) Market research on proposed new business opportunities;
(iv) Identification of merger and/or acquisition candidates; and
(v) Due diligence regarding merger or acquisition candidates.
b. In addition, the Consultant shall provide such other advice and
consulting services as the Company may from time to time request, upon
reasonable notice to the Consultant, oral or in writing. Services shall be
provided during normal business hours, unless otherwise mutually agreed. The
Consultant shall devote such business time as is necessary to fully perform
hereunder.
4. COMPENSATION.
a. During the term hereof, as full compensation for all services
performed by Consultant for the Company and subject to the Consultant's
performance hereunder, Consultant hereby agrees to accept upon execution of this
Agreement, (i) a Common Stock Purchase Warrant (the "Warrant") for the purchase,
in the aggregate, of up to 250,000 shares of the Common Stock of the Company at
an exercise price of one dollar, twenty eight cents ($1.28) per share. The
Warrant will become exercisable as to 75,000 shares on the Effective Date, and
as to the remaining175,000 shares on the one-year anniversary of the Effective
Date. The Warrant shall not be transferable except with the consent of the
Company and shall expire on the third anniversary of the date of issuance, and
(ii) if this Agreement remains in effect and has not been earlier terminated, a
cash fee of five thousand dollars ($5,000) per month. This cash fee shall be
earned and paid on a monthly basis, for twelve consecutive months (maximum total
cash fee of $60,000), beginning on the month during which the Company closes on
an equity financing of at least one million two hundred thousand dollars
($1,200,000).
b. Consultant shall pay all applicable taxes that are assessed against
him as a result of his receipt of compensation under this Agreement, and the
Company shall not withhold any such taxes from the compensation paid to
Consultant. Consultant agrees to indemnify and hold harmless the Company,
together with its officers and directors, with respect to any such taxes or
other assessments that may be due and payable as a result of the payment or
receipt of compensation hereunder.
5. NO ELIGIBILITY FOR EMPLOYEE BENEFITS. The Consultant understands
that he is an independent contractor and, as such, neither he nor any dependent
or other individual claiming through him will be eligible to participate in, or
receive benefits under, any of the employee benefit plans, programs and
arrangements maintained by the
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Company (collectively, the "Plans"). The Consultant hereby waives irrevocably
any and all rights to participate in, or receive benefits under, any of the
Plans. The Consultant agrees that he will never make a claim under any of the
Plans and agrees to indemnify and hold harmless the Company, its officers,
directors, shareholders, employees and agents, and all others connected with it,
and all administrators and fiduciaries of the Plans, and all others connected
with any of them, from any and all liabilities, losses, damage, costs and
expenses of whatever nature in any way arising out of or connected with any such
claim by him or by any dependent or other individual claiming through him.
6. COMPLIANCE WITH LAWS AND COMPANY POLICY; TRADING RESTRICTIONS. The
Consultant will comply with this Agreement and all applicable laws, rules and
regulations. Some of the information to be disclosed by the Company to the
Consultant under this Agreement is material inside information. Material inside
information will only be disclosed to Consultant on a need to know basis and for
a specific purpose, and Consultant shall use such information only for such
specific purpose. The Consultant agrees to comply with all applicable securities
laws and agrees not to use material inside information or trade in the Company's
securities except as permitted by the securities laws. The Consultant further
agrees that it will not take any action in connection with the performance of
its services herein that is illegal or in violation of applicable laws, rules
and regulations The Consultant agrees to indemnify and save the Company harmless
from any and all liability suffered by the Company as a consequence of the
Consultant's failure to comply with these obligations.
7. CONFIDENTIAL INFORMATION, NON-COMPETITION AND CONFLICTS OF INTEREST. The
Consultant agrees that some restrictions on his activities during and after the
term of this Agreement are necessary to protect the Confidential Information,
good will and other legitimate interests of the Company, as follows:
a. During the term hereof, the Consultant shall not, directly or
indirectly, compete with the Company, whether as a contractor, consultant,
agent, partner, principal, investor, employee or otherwise. Specifically, but
without limiting the generality of the foregoing, the Consultant agrees that he
shall not, directly or indirectly solicit or encourage any customer of the
Company to terminate or diminish its relationship with the Company or to conduct
with himself or with any other person, organization or other entity any business
or activity which such customer conducts or could conduct with the Company.
Consultant further agrees that, during the term hereof, he shall not, directly
or indirectly, hire or attempt to hire any employee of the Company, assist in
such hiring by any other person or entity, or encourage any such employee to
terminate his or her relationship with the Company.
b. The Consultant acknowledges that, during the course of his
performance under this Agreement, the Consultant may develop Confidential
Information for the Company and may learn of Confidential Information developed
or owned by the Company or entrusted to it by others. The Consultant agrees that
he will not, during the term of this Agreement or at any time thereafter, use or
disclose any Confidential Information. For purposes of this Agreement,
"Confidential Information" means any and
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all information of the Company that is not generally available to the public.
Confidential Information includes but is not limited to (i) the Company's
development, research and marketing activities, (ii) the Company's products and
services, (iii) the Company's costs, sources of supply and strategic plans, (iv)
the identity and special needs of the Company's customers and (v) the people and
organizations with whom the Company has business relationships and those
relationships. Confidential Information also includes such information the
Company may receive or has received belonging to customers or others who do
business with it.
c. During the term hereof, Consultant shall not undertake or continue
any outside activity, whether or not competitive with the business of the
Company, that could foreseeably give rise to a conflict of interest, or
otherwise interfere with his duties and obligations to the Company.
8. NO CONFLICTING AGREEMENTS. The Consultant hereby represents and warrants
that the execution of this Agreement and the performance of his obligations
hereunder will not breach or be in conflict with any other agreement to which
the Consultant is a party or is bound and that the Consultant is not now subject
to any covenants against competition or similar covenants that would affect the
performance of his obligations hereunder. The Consultant will not disclose to or
use on behalf of the Company any proprietary information of any third party
without such party's consent.
9. INDEMNIFICATION.
a. The Company shall indemnify the Consultant from and against any and
all expenses (including attorneys' fees), judgments, fines, claims, causes of
action, liabilities and other amounts paid (whether in settlement or otherwise
actually and reasonably incurred) by the Consultant arising out of the
consulting services contemplated by this agreement in connection with such
action, suit or proceeding if (i) the Consultant was made a party to any action,
suit or proceeding by reason of the fact that the Consultant rendered advice or
services pursuant to this Agreement, and (ii) the Consultant acted in good faith
and in a manner reasonably believed by the Consultant to be in or not opposed to
the interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a please of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the Consultant did not act in good faith and
in a manner reasonably believed by the Consultant to be in or not opposed to the
best interests of the Company, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Notwithstanding the foregoing, the Company shall not indemnify the Consultant
with respect to any claim, issue or matter as to which the Consultant shall have
been adjudged to be liable for gross negligence or willful misconduct in the
performance of his duties pursuant to this Agreement unless and only to the
extent that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability, but in view of all
the circumstances of the case, the Consultant is fairly and reasonably entitled
to indemnity for such expenses and which such court shall deem proper.
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b. The Consultant shall indemnify and hold the Company, its
subsidiaries and other affiliates, and all of their respective directors,
officers, employees, agents, successors and assigns, harmless from any and all
injuries, losses, claims and damages to any person or property, and all costs
and expenses, including without limitation attorneys' fees, and any other
liabilities incurred by any of the foregoing as a result of any action or
omission of the Consultant or any employee or agent of the Consultant that did
not met the standard of conduct in paragraph a of this Section 9.
10. TERMINATION. Notwithstanding the provisions of Section 1 hereof, this
Agreement shall terminate under the following circumstances:
a. Death or Permanent Disability. In the event of the Consultant's
death or permanent disability during the term hereof, this Agreement shall
immediately and automatically terminate.
b. Termination by the Company for Cause. The Company may terminate
this Agreement without notice in the event that the Consultant fails to provide
services under this Agreement or breaches any material provision of this
Agreement or the Consultant otherwise acts in a manner that is materially
harmful to the business interests or reputation of the Company.
c. Termination by the Company Other than for Cause. The Company may
terminate this Agreement other than for cause at any time upon written notice to
the Consultant.
d. Termination by Consultant. The Consultant may terminate this
Agreement upon thirty (30) days' prior written notice to the Company.
e. Effect of Termination. Upon termination of this Agreement in
accordance with paragraphs a, b or d of this Section 10, the Company shall
cancel any portion of the Warrant that is not then exercisable and shall have no
further obligations to the Consultant, other than any indemnification
obligations under Section 9 for acts of omissions occurring prior to the date of
termination.
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11. ENFORCEABILITY. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
12. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of either party to
require the performance of any term or obligation of this Agreement, or the
waiver by either party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
13. NOTICES. All notices provided by this Agreement shall be in writing and
shall be given by facsimile transmission, overnight courier, by registered mail
or by personal delivery, by one party to the other, addressed to such other
party at the applicable address set forth below, or to such other addresses as
may be given for such purpose by such other party by notice duly given
hereunder. Notice shall be deemed properly given on the date of delivery.
To Consultant:
Xxxxxx Xxxxxx
0000 Xxxxxxxx Xxxx, Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
To the Company:
SmartServ Online, Inc.
Metro Center, Xxx Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
ATTENTION: Xxxxxxxxx Xxxxxxxx, CEO
14. ENTIRE AGREEMENT. This Agreement contains the entire understanding
between the parties hereto with respect to the transactions contemplated hereby,
and may not be amended, modified, or altered except by an instrument in writing
signed by the party against whom such amendment, modification, or alteration is
sought to be enforced.
15. GOVERNING LAW. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Pennsylvania.
16. Binding Effect; Assignment. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective permitted heirs, executors,
administrators, successors and assigns. Neither the Company nor the Consultant
may make any assignment of this Agreement or any interest herein, without the
prior consent of the other party, provided, however, that the Company may assign
its rights and obligations under this Agreement without the consent of the
Consultant in the event that the Company shall hereafter effect a
reorganization, consolidate with, or merge into any
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other person, corporation or other entity or transfer all or substantially all
of its properties or assets to any other person or entity.
17. CONSTRUCTION. The captions and headings contained herein are inserted
for convenient reference only, are not a part hereof and the same shall not
limit or construe the provisions to which they apply. References in this
Agreement to "paragraphs" are to the paragraphs in this Agreement, unless
otherwise noted.
18. EXPENSES. Each party shall pay and be responsible for the costs and
expenses, including, without limitation, attorneys' fees, incurred by such party
in connection with the negotiation, preparation and execution of this Agreement
and the transactions contemplated hereby.
19. NO RIGHTS TO OTHERS. Nothing herein contained or implied is intended or
shall be construed to confer upon or give to any person, firm or corporation,
other than the parties hereto.
20. COUNTERPART. This agreement may be executed simultaneously in two
counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same agreement, binding upon both parties
hereto, notwithstanding that both parties are not signatories to the original or
the same counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
SMARTSERV ONLINE, INC.
By:
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Xxxxxxxxx Xxxxxxxx, Chairman and CEO
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Xxxxxx Xxxxxx
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