Exhibit 10.9
CONSULTING AGREEMENT
AGREEMENT, dated as of June 2, 1999, by and between TECH LABORATORIES,
INC., a New Jersey corporation with offices at 000 Xxxxxxx Xxxxxx, Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000 (the "Company") and COBY CAPITAL CORPORATION, a
Connecticut corporation with offices at 0000 Xxxxxxxxxx Xxxx., Xxxxxxxx, XX
00000 ("Consultant"). This Consulting Agreement between Consultant and the
Company shall be hereinafter referred to as the "Agreement."
W I T N E S S E T H:
WHEREAS, the Company is engaged in the business of developing, acquiring,
marketing and selling various products including, among other things, security
and anti-terrorist products and communication/networking products (the
"Products"); and
WHEREAS, the Company wishes to engage Consultant to provide certain
financial and business development services; and
WHEREAS, Consultant has experience in providing the services the Company
wishes to have performed; and
WHEREAS, the Company and Consultant mutually desire to enter into an
Consulting Agreement with respect to Consultant's engagement by the Company;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and for other good and valuable consideration the receipt of which is hereby
acknowledged, the Company and Consultant hereby agree as follows:
1. Engagement of Consultant.
(a) The Company hereby engages Consultant to provide certain services,
as described in Section 2. Consultant hereby accepts such engagement with
the Company upon the terms and conditions hereinafter set forth and agrees
to perform the services. The parties agree that the Consultant shall be
engaged by the Company as an independent contractor on a consulting basis,
and neither Consultant, nor any employee of Consultant shall be deemed an
employee of the Company.
(b) Consultant acknowledges that Company is entering into this
Agreement in reliance upon the continued employment by Consultant, on a
full-time basis, of Xxxxx Xxxx ("Coby"). Consultant agrees that the failure
of Coby to be employed by Consultant, including by reason of death or
disability, on a full-time basis at any time during the term of this
Agreement shall be deemed an attempted assignment of this Agreement by
Consultant and subject to the provisions of Section 14(e) hereof.
2. Services To Be Rendered.
(a) During the term of this Agreement, Consultant shall furnish to the
Company advice and recommendations with respect to the business and affairs
of the Company in general, and in connection with the development of the
Company's business plan, particularly with respect to the financial
requirements of the Company in the development of its business and in the
negotiation and securing the necessary capital, including debt and equity,
and the marketing of the Company's Products. The Company shall, from time
to time, request upon reasonable notice those services from Consultant that
shall be necessary in the sole discretion of the Company's management. The
services shall also include advising and assisting the Company in
connection with (i) the development and implementation of a marketing plan
for the Products and (ii) customer development.
(b) Consultant shall perform such services for the Company and other
entities now or hereafter affiliated with the Company. Consultant will
devote that amount of its time and effort to the affairs of the Company as
is reasonably necessary to perform the services.
(c) Consultant shall perform the services at the Consultant's or the
Company's offices and, if applicable, the business locations of customers
and potential customers or at such other location as is reasonably
necessary.
3. Term.
(a) The term of this Agreement shall commence as of May ___, 1999, and
shall continue to and including May ___, 2001 (the "Consulting Period"),
unless sooner terminated as hereinafter provided. The Consulting Period may
be extended by the mutual agreement of the Company and Consultant;
provided, however, notwithstanding anything to the contrary in this
Agreement, this Agreement shall be automatically extended for one (1) year
(the "Extension Period") so long as neither Consultant nor the Company has
provided written notice to the other party that this Agreement is not being
renewed. Such notice must be sent at least 90 days prior to the end of the
Consulting Period. Notwithstanding anything herein to the contrary, this
Agreement shall terminate in the event the Company has not raised $200,000
in equity financing to fund its operations by June 1, 1999.
(b) This Agreement may be terminated by Company, without notice, if at
any time:
i) Consultant commits a breach of any of the material
obligations under this Agreement and such breach has not
been cured within fifteen (15) days of written notice of
such breach;
ii) Consultant or its owner or any employee of Consultant
performing service for Company on behalf of Consultant has
been convicted of an indictable offence resulting in
incarceration or has improperly enriched itself at the
expense of Company or has committed an act evidencing
dishonesty, including, without limitation, an act of theft;
iii) Consultant becomes bankrupt or in the event that a receiving
order (or any analogous order under any applicable law) is
made against it or in the event that it makes any general
disposition or assignment for the benefit of its respective
creditors;
iv) The Consultant attempts to assign this Agreement without the
consent of the Company.
(c) Upon the termination of Consultant's engagement, the Company shall
pay Consultant any unpaid amounts due under this Agreement for services
rendered through the date of such termination.
(d) It is expressly agreed that notwithstanding termination of the
Agreement by either party, for any reason in an any circumstance
whatsoever, such termination shall be without prejudice to
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the rights of the Company, in relation to, up to and including the date of
termination; and the provisions of Section 7 respecting confidentiality
shall remain and continue in full force and effect unless and until the
Company, in its absolute discretion, resolves otherwise and so notifies
Consultant in writing.
4. Compensation
(a) So long as Consultant performs the services set forth in Section 2
for the Company and the Company has raised proceeds of at least Two Hundred
Thousand Dollars ($200,000) on or before June , 1999 (the "Interim
Financing"), through the sale of its shares of common stock at a price of
not less than $2.22 per share, the Company shall issue to Consultant (i) an
option exercisable for four (4) years to purchase 50,000 shares of its
common stock at $1.85 per share, which option (in the form attached hereto
as Exhibit A) shall vest upon the completion of the Interim Financing, and
(ii) an option (in the form attached hereto as Exhibit B) to purchase up to
200,000 shares of the Company's common stock exercisable for four (4) years
at $3.50 per share, such option to vest in increments of not less than
25,000 shares, which vesting shall occur upon the Company's receipt of the
proceeds from the sale of its Products of $250,000 or more up to a maximum
of sales of $2,000,000 at any time and from time to time during the two
year term of this Agreement (such 25,000 shares to increase pro rata with
sales in excess of $250,000) as a result of Consultant's efforts. Options
shall continue to vest with respect to any proceeds received after the
expiration of the two (2) year term of this Agreement, which proceeds were
derived from contracts or firm orders received by the Company prior to the
expiration of the two (2) year term of this Agreement or from parties
introduced by the Consultant for the Company prior to the expiration of the
two (2) year term as more fully described in Exhibit B.
(b) The Company shall, as soon as practicable after the close of each
calendar month, prepare and deliver to Consultant a statement of the
amounts of revenues from the sale of all Products sold due to Consultant's
efforts and of the number of shares vested for the reported period.
(c) If Consultant's engagement is terminated pursuant to Sections 3(a)
or (b), or if Consultant terminates its engagement voluntarily, then
Consultant shall not be entitled to any compensation from and after such
date of termination, except any sales proceeds or the fulfillment of any
firm orders generated by Consultant prior to the date of termination shall
cause the corresponding portion of the option described above to vest.
5. Expenses.
The Consultant shall be solely responsible for paying any expenses,
including, without limitation, salaries and commissions of Consultant's
employees, if any, and expenses for equipment, supplies and licenses, incurred
by Consultant or its employees in connection with the performance of this
Agreement. The Company shall reimburse Consultant against appropriate vouchers
or other receipts for business expenses reasonably incurred by it in the
performance of its duties pursuant to the terms hereof, provided that the
Company has previously approved such expenses.
6. Non-Competition.
(a) During the period of Consultant's engagement by the Company and
for a period of one (1) year following termination of Consultant's
engagement, other than by reason of the Company's breach of any provision
of this Agreement (the "Non-Competition Period"), Consultant agrees that it
will not, anywhere in the United States, directly or indirectly enter into
or participate in (whether as owner, partner, shareholder, officer,
director, salesman, consultant, employee or otherwise) any business which
is in competition with any material business in which the Company or any of
its subsidiaries may engage
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after the date hereof, without having first obtained the Company's prior
written consent; provided, however, that (a) the Company specifically
acknowledges and agrees that Consultant may own up to 5% of the outstanding
equity securities of any entity that is subject to the public reporting
requirements of the Securities Exchange Act of 1934.
(b) Consultant shall not at any time within a period of one (1) year
following the termination of its engagement, without the prior written
consent of the Company, directly or indirectly, (i) solicit, request, cause
or induce any person who is at the time, or within 12 months prior thereto
had been, an employee or a consultant to the Company, to leave the employ
of or terminate his relationship with the Company or (ii) solicit the
employment, engagement or association with, or endeavor to entice away from
the Company to any business that is competitive with any of the businesses
engaged in by the Company during the time that Consultant, any such person.
(c) Consultant may perform services, including services similar to the
services it performs for the Company, for other individuals and businesses;
provided, however, that Consultant shall not provide services to entities
that compete directly with the business of the Company.
7. Non-Disclosure of Confidential Information.
(a) Subject in all respects to the provisions of, and as contemplated
by, clause (a) of Section 6 hereof, Consultant shall at all times, both
during and after the Consulting Period, hold in a fiduciary capacity for
the benefit of the Company and each of its subsidiaries, and shall not use
or disclose or permit the use of the disclosure to any third party, any and
all trade secrets, information, knowledge and data not generally known to,
or easily obtainable by, the public that it may have learned, discovered,
developed, conceived, originated or prepared during or as a result of its
relationship with the Company or any of its subsidiaries (as a stockholder
or otherwise) or any predecessor-in-interest to any of the Company's or any
of its subsidiaries' business or assets with respect to the operations,
business, New Technology as hereinafter defined, affairs, products,
technology or services of the Company or any of its subsidiaries.
(b) Consultant acknowledges that any breach of the provisions of
Sections 6 and 7 hereof can cause irreparable harm to the Company and its
subsidiaries for which the Company and its subsidiaries would have no
adequate remedy at law. In the event of a breach or threatened breach by
Consultant of any of such provisions, in addition to any and all other
rights and remedies it may have under this Agreement or otherwise, the
Company or any of its subsidiaries may immediately seek any judicial action
it deems necessary, including, without limitation, temporary, preliminary,
and/or permanent injunctive relief.
8. Rights to Technology.
(a) The property rights in and to all items of New Technology as
defined below herein, shall be deemed to have been created for the Company
as work for hire and are and shall be the sole and exclusive property of
the Company, and Consultant does hereby agree that he will make full and
prompt disclosure to the Company of any and all such New Technology. For
the purposes of this Agreement, the term "New Technology" shall mean each
and every invention, discovery and development, device, design, apparatus,
practice, method, product, item of know-how, improvement, process, item of
technical knowledge, formula, trade secret, trade name and modification,
whether or not patentable, trademarkable or copyrightable, which were made,
developed or first reduced to practice by Consultant (whether acting alone
or with others) during the term of its engagement hereunder (the
"Technology Term"), and which relate primarily to the Company's business.
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(b) During the Technology Term, and at any time and from time to time
thereafter, Consultant shall (i) execute all documents requested by the
Company to assign to the Company all of his right, title and interest in
and to any New Technology and to confirm the complete ownership by the
Company of such New Technology, (ii) execute any and all documents
requested by the Company for filing and prosecuting applications for
patents, design patents, trademarks or copyrights for or with respect to
the New Technology, and (iii) render to the Company all assistance that it
may request, including the giving of testimony in any suit, action or
proceeding before any court of appropriate jurisdiction, including, but not
limited to, any governmental or quasi-governmental agency or other
regulatory body, in order to obtain, maintain and protect the Company's
rights and ownership interests with respect to the New Technology.
9. Severability. In the event of the invalidity or unenforceability of any
one or more provisions of this Agreement, such illegality or unenforceability
shall not affect the validity or enforceability of the other provisions hereof
and such other provisions shall be deemed to remain in full force and effect.
10. Independent Status. Consultant shall be treated as an independent
contractor for all purposes, including employment tax purposes. The Company will
report any payments made to Consultant in accordance with this Agreement on IRS
Form 1099-MISC. Consultant shall report such payment and pay all applicable
taxes, including, without limitation, income, unincorporated business, FICA and
self-employment taxes, with respect thereto. The Company and Consultant agree
that Consultant shall not be considered or deemed to be an agent, employee,
joint venturer, or partner of the Company. Consultant shall have no authority to
contract for or bind the Company in any manner and shall not represent himself
as an agent of the Company except as authorized in writing by the Company.
Neither Consultant nor any owner, officer or employee of Consultant shall have
any status as an employee or any right to the benefits that the Company grants
its employees.
11. Insurance. On an annual basis, Consultant shall provide the Company
evidence that Consultant has obtained and maintains insurance prior to the
performance of any work under this Agreement. Such insurance shall include, but
is not limited to, workers' compensation insurance applicable to all employees
of Consultant.
12. Maintenance of Records. Consultant shall maintain records as required
and specified by the Company. It will submit a monthly invoice for services
rendered on behalf of the Company by it in the performance of this Agreement.
All such records and invoices shall remain the property of the Company.
13. Indemnification.
(a) Consultant hereby indemnifies and holds harmless the Company with
respect to any liability arising from the negligence or willful misconduct
of Consultant or its employees or representatives. Consultant, at its
expense, shall defend any claim or legal proceeding which is brought
against the Company and is within the foregoing indemnification, and pay
any judgment formally awarded in any such legal proceeding; provided that
the Company gives Consultant notice of such claim or legal proceeding,
furnishes a copy of all documents and instruments served upon the Company
in connection therewith and reasonably cooperates with Consultant in such
defense.
(b) Company hereby indemnifies and holds harmless the Consultant with
respect to any liability arising from the negligence or willful misconduct
of Company or its employees or representatives. Company, at its expense,
shall defend any claim or legal proceeding which is brought
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against the Consultant and is within the foregoing indemnification, and pay
any judgment formally awarded in any such legal proceeding; provided that
the Consultant gives Company notice of such claim or legal proceeding,
furnishes a copy of all documents and instruments served upon the
Consultant in connection therewith and reasonably cooperates with the
Company in such defense.
14. Miscellaneous.
(a) Nothing in this Agreement shall be deemed to preclude the Company
from obtaining the services of other persons or entities undertaking the
same or similar services as those undertaken by Consultant or from
independently developing or acquiring materials or programs that are
similar to, or competitive with, the services provided under this
Agreement.
(b) This Agreement supersedes any prior agreements or understandings,
oral or written, between the parties hereto and represents their entire
understanding and agreement with respect to the subject matter hereof. This
Agreement can be amended, supplemented or changed, and any provision hereof
can be waived, only by written instrument making specific reference to this
Agreement which is signed by the party against whom enforcement of any such
amendment, supplement, modification or waiver is sought. Any waiver of any
breach of this Agreement shall not be construed to be a continuing waiver
or consent to any subsequent breach by any party hereto.
(c) No delay or omission in exercising any right or remedy hereunder
shall operate as a waiver thereof or of any other right or remedy, and no
single or partial exercise thereof shall preclude any other or further
exercise thereof or the exercise of any other right or remedy. Any waiver
of any breach of this Agreement shall not be construed to be a continuing
waiver or consent to any subsequent breach by any party hereto.
(d) Any notice, consent, direction or other instruction required or
permitted to be given under the provisions of this Agreement shall be in
writing and delivered or sent by personal delivery, overnight delivery
service, registered mail, or by facsimile transmission addressed to the
recipient at the address first above written or such address as may be
designated by notice by either party to the other. Any communication made
or given by personal delivery, overnight delivery service, or facsimile
transmission shall be conclusively deemed to have been given on the day of
actual delivery thereof, provided that if delivery is effected after 5:00
p.m. (New York time) delivery shall be deemed to have been made on the next
following day which is not a Saturday, Sunday or statutory holiday in New
York City. Any communication made or given by registered mail shall be
conclusively deemed to have been given on the fifth day, other than
Saturday, Sunday or statutory holiday in New York City following the
deposit thereof in the mail.
(e) Consultant's rights and duties under this Agreement may not be
assigned or delegated without the prior written consent of the Company in
its sole discretion, and any attempted assignment or delegation without
such consent shall be void. The rights of the Company may be assigned to a
successor carrying on substantially the same business as the Company. This
Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their legal representatives, successors and assigns; but
nothing in this Agreement, express or implied, is intended to or shall
confer upon any other person any rights or remedies under or by reason of
this Agreement.
(f) Consultant acknowledges that it has read this Agreement and has
been given the opportunity to obtain independent legal advice and that such
advice has either been obtained or waived.
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(g) This Agreement shall be construed and governed by the laws of the
State of New York.
(h) This Agreement shall be binding upon and shall inure to the
benefit of the Company and Consultant and their respective heirs, legal
representatives, successors and assigns.
(i) The Section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement.
(j) This Agreement shall be construed and governed in accordance with
the laws of the State of New York.
(k) This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first written above.
TECH LABORATORIES, INC.
By: /s/
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Xxxxxxx X. Xxxxxxxx, President
COBY CAPITAL CORPORATION
By: /s/
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Xxxxx Xxxx, President
The undersigned agrees to be personally
bound by Sections 6, 7, and 8 of this
Agreement.
/s/
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Xxxxx Xxxx
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