EXHIBIT 10.13
CONSULTING AGREEMENT
CONSULTING AGREEMENT, dated as of April 3, 2002 (this
"Agreement"), by and between STARBASE CORPORATION, a Delaware corporation (the
"Company"), and Xx. Xxxxxxx X. Xxxx III (the "Consultant").
WHEREAS, the Consultant has been employed by the Company as the
Chief Executive Officer of the Company and Chairman of the Board of Directors of
the Company; and
WHEREAS, concurrently with entering into this Agreement, the
Consultant is resigning as the Chief Executive Officer of the Company and
Chairman of the Board of Directors of the Company; and
WHEREAS, the Company desires to retain the consulting services of
the Consultant as a consultant to the Company, and the Consultant is willing to
provide such consulting services, all upon the terms, provisions and conditions
set forth in this Agreement.
NOW THEREFORE, in consideration of the premises hereinafter set
forth and for other good and valuable consideration, the receipt and legal
sufficiency of which is hereby acknowledged, the Consultant and the Company
agree as follows:
1. Resignation as Chief Executive Officer and Chairman of the
Board. As of the date of this Agreement (the "Effective Date"), the Consultant
hereby acknowledges and agrees that he has resigned as Chief Executive Officer
of the Company and Chairman of the Board of Directors of the Company, and the
Company has accepted the Consultant's resignation as Chief Executive Officer of
the Company and Chairman of the Board of Directors of the Company. Nothing
herein is intended to effect or modify the Consultant's right to remain a member
of the Company's Board of Directors in accordance with the Company's by-laws and
applicable law.
2. Term. The term of this Agreement shall commence on the date of
this Agreement and shall expire on the first anniversary of the date of this
Agreement, subject to earlier termination pursuant to the provisions of Section
5 of this Agreement (the "Term").
3. Duties. During the Term, the Consultant shall report to the
interim Chairman of the Board of Directors of the Company, currently Xx. Xxxx
Xxxxxxxx, or his successor as Chairman of the Board of Directors (the
"Chairman"), or such other individual as the Board of Directors shall reasonably
designate, in its sole discretion (the "Board Designee"). The Consultant shall
perform only those duties as may be reasonably assigned to him from time to time
by the Chairman or the Board Designee, as the case may be. The Consultant shall
not have authority to legally bind the Company or enter into any contract or
agreement on behalf of the Company, and the Consultant and shall not represent
to any third-party that he is authorized to legally bind the Company. The
Consultant shall use his best efforts, skills and abilities to diligently
perform his duties under this Agreement and shall keep the Chairman or the Board
Designee, as the case may be, reasonably informed of his conduct in performing
services required under this Agreement. The Consultant's services shall be
limited to advising the
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Company on product development and strategic alliances, including, without
limitation, potential mergers and acquisitions, the actual scope of such
services to be reasonably set and delineated by the Chairman or the Board
Designee, as the case may be.
4. Consulting Fee, Benefits and Related Items.
(a) During the Term, the Company shall pay to the Consultant, and
the Consultant shall accept from the Company, as full compensation for the
performance of services under this Agreement, an annual consulting fee of
$250,000, (the "Consulting Fee"). The Consulting Fee shall be payable at the
time of, and in accordance with the Company's regular payroll practices. The
Consultant shall be responsible for the payment of all taxes on the Consulting
Fee and the Company shall have no obligation in respect thereof.
(b) During the Term, the Company shall continue to provide the
Consultant with medical insurance benefits at the Company's cost and expense
(including coverage for him and his wife) and such other health and insurance
benefits as the Company generally provides to its senior executive officers,
pursuant to plans or policies the Company has in effect for its employees
generally, which plans or policies may be amended from time to time at the
Company's sole discretion. Following the Term, the Company will arrange to
provide the Consultant, at his cost and expense, with medical coverage to the
extent required by COBRA.
(c) The Company must approve in writing all business expenses to
be incurred by the Consultant in the performance of his duties hereunder prior
to the incurrence of such expense. The Company shall reimburse the Consultant
for all approved business expenses in accordance with its customary practices
and upon submission of proper documentation by the Consultant to the Company
evidencing such expense.
(d) The Consultant acknowledges and agrees that the Consultant is
obligated to the Company to reimburse the aggregate amount of $10,946.89 for
moving expenses incurred by the Consultant which were not payable by the
Company. Accordingly, the Company shall be entitled to withhold an amount equal
to $912.25 per month from the payments of the Consulting Fee payable to the
Consultant pursuant to Section 4(a) hereof, which amount shall be applied
against the amount owed. If the consulting arrangement established hereby is
terminated prior to the full repayment of the $10,946.89, the Company shall be
entitled to immediate payment by the Consultant of the balance owed.
(e) With respect to the stock options (the "Options") to purchase
shares of common stock of the Company, par value $.01 per share (the "Common
Stock") which have been granted to the Consultant prior to the date hereof and
are set forth on Schedule I attached hereto, such Options shall continue to be
subject to the agreements and stock option plans under which they were issued
and are presently subject; provided that notwithstanding anything to the
contrary contained in such agreements or plans all vested Options shall continue
to be exercisable for a period equal to (i) one (1) year from the end of the
Term of this Agreement or (ii) such longer period as may be provided in such
agreement or plan. Any unvested Options shall continue to vest during the Term
of this Agreement in accordance with the existing vesting schedules for such
Options.
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(f) Nothing in this Agreement shall effect the Consultant's
rights, if any, to shares of Common Stock (the "Escrowed Shares") held in escrow
by Montreal Trust Company in accordance with the terms and conditions of that
certain performance escrow agreement.
(g) The sums and benefits being paid to or provided to the
Consultant pursuant to this Section 4 are in lieu of any other payment,
obligation, distribution, salary, bonus, incentive plan payment, severance pay,
unused accrued vacation pay or any other form of compensation, benefit of any
kind otherwise due, owing or payable by the Company to the Consultant and the
Consultant hereby waives, to the fullest extent permitted by applicable law, any
entitlement that he may have to any such payment, obligation, distribution,
salary, bonus, incentive plan payment, severance payment, unused vacation pay or
any other form of compensation due from the Company prior to the date hereof.
(h) The Consultant shall not be required to perform his duties
hereunder from any particular location. Within forty-eight (48) hours from the
execution and delivery of this Agreement, the Consultant shall vacate the office
that he presently maintains at the Company's principal executive offices. The
Consultant shall be entitled to remove the computers that he has in his current
office and to use those computers in a home or other office maintained by the
Consultant during the Term of this Agreement. During the Term, the Consultant
shall have access to the Company's e-mail system and subject to such security
measures as the Company may require, the Company's network.
5. Termination.
The consulting arrangement established by this Agreement may be
terminated prior to the expiration of the Term set forth in Section 1 upon the
occurrence of any of the events set forth in, and subject to the terms of, this
Section 5.
(a) Death. The consulting arrangement established by this
Agreement will terminate immediately and automatically upon the death of the
Consultant. If the consulting arrangement established by this Agreement is
terminated as a result of the death of the Consultant, then the Consultant's
estate shall be entitled to receive accrued and unpaid Consulting Fees through
the date of such termination.
(b) Disability. The consulting arrangement established by this
Agreement may be terminated by the Company as of the date the Company provides
notice to the Consultant that it has been terminated due to a "permanent
disability", as defined herein. For purposes of this Agreement, the term
"permanent disability" shall mean the Consultant's inability to perform his
duties under this Agreement due to illness, accident or any other physical
incapacity: (i) for a period of 90 consecutive days, or (ii) for an aggregate of
120 days, whether or not consecutive. If this Agreement is terminated on account
of the permanent disability of the Consultant then the Consultant shall be
entitled to receive accrued and unpaid Consulting Fees through the date of such
termination.
(c) Cause. For purposes of this Agreement, the term "Cause" shall
mean: (i) any material breach of this Agreement by the Consultant, including
without limitation, the
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performance by the Consultant of any actions purportedly on behalf of the
Company which are not authorized in accordance with Section 3 of this Agreement,
(ii) failure of the Consultant to perform his services in a reasonably diligent
manner and in good faith, which in the reasonable judgment of the Company is
likely to have a material adverse effect on the Company, its financial condition
or reputation (iii) failure of the Consultant to exercise reasonable diligence
in following the reasonable and lawful directions of the Chairman or the Board
Designee, as the case may be, regarding the performance of his services; or (iv)
the appropriation of a material business opportunity or series of opportunities
which in the aggregate are material to the Company, including securing any
personal profit in connection with any transaction entered into on behalf of the
Company; provided that nothing in this clause shall restrict or apply to any
profit that the Consultant would receive in transaction as a result of his
ownership of any common stock or Options. In the event that the Company should
elect to terminate the Consultant for Cause, the Company shall deliver to the
Consultant written notice specifying the nature of such Cause in reasonable
detail and the Consultant shall have a period of ten (10) days after his receipt
of such written notice to cure any non-compliance set forth therein, and in such
event, Cause shall exist if, in the determination of the Board of Directors, in
its sole discretion, the Consultant shall fail to cure such noncompliance within
the period prescribed above.
(d) The Consultant shall have the right to terminate the
consulting arrangement established by this Agreement upon not less than ten (10)
business days prior written notice to the Company.
(e) A termination of the consulting arrangement established by
this Agreement shall not effect the rights of the Consultant to (i) his vested
Options, except to the extent provided in the agreements or plans governing such
Options or (ii) the Escrowed Shares, except to the extent provided for in the
agreement governing the Escrowed Shares.
6. Non-Solicitation; Non-Competition; Non-Disclosure.
(a) From the date hereof and during the Term, the Consultant
agrees that he will not, directly or indirectly, as an equity owner, director,
employee, consultant, lender, agent or in any other capacity, (i) engage in any
activity intended to terminate, disrupt or interfere with the Company's or any
of its subsidiary's or affiliate's relationship with a customer, supplier,
vendor, lessor or other person, or which is inconsistent with the Consultant's
duties under this Agreement or in conflict with the interests of the Company,
(ii) engage or participate in, or have any interest in any corporation, entity
or other person that engages or participates in any business or activity engaged
or participated in by the Company on the Effective Date, or (iii) engage or
participate in, or have an interest in any corporation, entity or other person
that participates in a merger, acquisition or consolidation with the Company.
From the date hereof and for a period of one year following the Term, the
Consultant agrees that he will not, directly or indirectly, as an equity owner,
director, employee, consultant, lender, agent or in any other capacity, solicit,
induce or entice for employment, retention or affiliation, or recommend to any
corporation, entity or other person the solicitation, inducement or enticement
for employment, retention or affiliation of, any employee, consultant,
independent contractor or other person employed or retained by, or affiliated
with, the Company, or any of its subsidiaries or affiliates. For purposes of
this Section 6(a), the Consultant will be deemed directly or indirectly to be
engaged or
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participating in the operation of such a business or activity, or to have an
interest in a corporation, entity or other person, if he is a proprietor,
partner, joint venturer, shareholder, director, officer, lender, manager,
employee, consultant, advisor or agent or if he, directly or indirectly
(including as a member of a group), controls all or any part thereof; provided,
that nothing in this Section 6(a) shall prohibit the Consultant from holding
less than two percent (2%) of a class of a corporation's outstanding securities
that are listed on a national securities exchange or traded in the
over-the-counter market.
(b) The Consultant hereby acknowledges and agrees that during the
period of his employment with the Company he was in a confidential relationship
with the Company and has had access to confidential information and trade
secrets of the Company, its subsidiaries and affiliates (collectively, the
"Confidential Information"). Confidential Information includes, but is not
limited to, all confidential or any proprietary information regarding the
Company, its subsidiaries and affiliates or any aspect of their business or
operations, including, but not limited to, customer and client lists, financial
information, price lists, pricing strategies, marketing and sales strategies and
procedures, computer programs, databases and software, supplier, vendor and
service information, personnel information, operating procedures and techniques,
business plans and strategies, terms of products strategic alliances (both those
in existence and those contemplated operational techniques, intellectual
property strategies, the status of the Company's intellectual property, quality
control procedures and systems, internal control procedures, accounting and
reporting systems, special projects, employee compensation, personnel, and all
other records, files, and information in respect of the Company. The Consultant
shall maintain the strictest confidentiality of all Confidential Information and
shall not use or permit the use of, or disclose, discuss, communicate or
transmit or permit the disclosure, discussion, communication or transmission of,
any Confidential Information. This Section 6(b) shall not apply to (i)
information that, by means other than the Consultant's deliberate or inadvertent
disclosure, becomes generally known to the public, or (ii) information the
disclosure of which is compelled by law (including judicial or administrative
proceedings and legal process). In that connection, in the event that the
Consultant is requested or required (by oral question, interrogatories, requests
for information or documents, subpoenas, civil investigative demand or other
legal process) to disclose any Confidential Information, the Consultant agrees
to provide the Company with prompt written notice of such request or requirement
so that the Company may seek an appropriate protective order or relief therefrom
or may waive the requirements of this Section 6(b). If, failing the entry of a
protective order or the receipt of a waiver hereunder, the Consultant is, in the
opinion of counsel, compelled to disclose Confidential Information under pain of
liability for contempt or other censure or penalty, the Consultant may disclose
such Confidential Information to the extent so required. In the event of a
breach or threatened breach by the Consultant of any of the provisions of this
Section 6(b), the Company shall be entitled to an injunction to be issued by any
court or tribunal of competent jurisdiction to restrain the Consultant from
committing or continuing any such violation. In any proceeding for an
injunction, the Consultant agrees that his ability to answer in damages, or his
or the Company's ability to take any other lawful remedial action, shall not be
a bar or be interposed as a defense to the granting of a temporary or permanent
injunction against him. The Consultant acknowledges that the Company will not
have an adequate remedy at law in the event of any breach by him as aforesaid
and that the Company may suffer irreparable damage and injury in the event of
such a breach by him. Nothing contained herein shall be construed as prohibiting
the Company from
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pursuing any other remedy or remedies available to the Company in respect of
such breach or threatened breach.
(c) Each of the Company and the Consultant, hereby agrees that
from and after the date of the execution and delivery of this Agreement, neither
will directly or indirectly, provide to any person or entity any information
that concerns or relates to the negotiation of or circumstances leading to the
execution of this Agreement or to the terms and conditions hereof, except to (i)
the extent that such disclosure is specifically required by applicable law or
legal process; (ii) such party's tax advisors as may be necessary for the
preparation of tax returns or other similar reports required by law, (iii) such
party's attorneys as may be necessary to secure advice concerning the
interpretation of this Agreement or in connection with the enforcement of this
Agreement; (iv) members of the Consultant's immediate family; or (v) to members
of the Board of Directors of the Company. Each of the Company and the Consultant
agrees that prior to disclosing such information under clauses (ii), (iii) or
(iv) of this Section 6, such party will inform the recipients that they are
bound by the limitations of this Section 6 and such disclosure will only be
permitted if the recipient agrees to be bound by such limitations. Each of the
Company and the Consultant further agrees that any disclosure of such
information by any such recipients not in accordance with this Section 6 shall
be deemed to be a disclosure by the disclosing party in breach of this
Agreement.
(d) It is expressly acknowledged and agreed by the Consultant
that his obligations set forth in this Section 6 were an inducement to the
Company to enter into this Agreement and that the scope of the provisions set
forth in this Section 6 are in each case reasonable and necessary in light of
the circumstances. If, for any reason, any aspect of any of the provisions set
forth in this Section 6 as they apply to the Consultant is determined by a court
of competent jurisdiction to be unreasonable, illegal, invalid or unenforceable,
the provisions shall, to the fullest extent possible, be modified by the court
to the minimum extent required by applicable law in order to make the provisions
legal, valid and enforceable to the fullest extent permitted by applicable law
and the determination by the Court shall not affect the legality, validity and
enforceability of this Agreement in any other jurisdiction. The Consultant
hereby acknowledges and agrees that his services were and continue to be of a
unique character and he expressly grants the Company the right to enforce the
provisions of this Section 6 through the use of all remedies available at law or
in equity, including, but not limited to, obtaining a court order, injunction or
other equitable relief prohibiting the Consultant from threatening to breach,
breaching or continuing to breach any provision of this Section 6, without the
Company being required to post a bond or other security or prove any amount of
actual damages. If the Consultant is adjudicated by a court of competent
jurisdiction to have violated any of the provisions of this Section 6, the
Company shall be excused and discharged from any obligation to make payments to
the Consultant pursuant to this Agreement for the period commencing from the
date of the violations.
(e) Unless a provision in this Section 6 by its terms have a
limited period of duration, the provisions contained in this Section 6 shall
survive the expiration of the Term or the termination of this Agreement for any
reason whatsoever.
7. Other Agreements. (a) The Consultant agrees not to publicly
disparage, denigrate, libel, slander, or make any public negative statements,
directly or indirectly, about the
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Company or its affiliates or subsidiaries or any of their respective directors,
officers or advisors at any time, whether orally or in writing, except for
disparaging or negative remarks made under oath, or pursuant to subpoena. The
Company agrees not to publicly disparage, denigrate, libel, slander, or make any
public negative statements, directly or indirectly, about the Consultant at any
time, whether orally or in writing, except for disparaging or negative remarks
made under oath, or pursuant to subpoena. The Company and the Consultant agree
that the only statement made to third parties or contained in any press release
relating to the Consultant's resignation as Chairman and Chief Executive Officer
of the Company shall be consistent with the statement set forth on Schedule 2
attached hereto. Prior to issuing any press release related to the aforesaid
resignation, the Company shall furnish a copy thereof to the Consultant for his
review. The Consultant hereby waives any and all claims, causes of action,
damages or other rights he may have against the Company as of the date hereof.
The Consultant agrees not to, and waives any right to, commence any litigation,
suit or other action or proceeding against the Company based upon or relating to
the circumstances giving rise to the resignation of the Consultant as the
Chairman and Chief Executive Officer of the Company.
(b) Nothing in Section 7(a) shall prohibit the Consultant from
bringing any action, suit or other proceeding which is based upon acts of which
would be considered to be disparagement, libel or slander.
8. Notices. Any notice or demand which is required or provided to
be given under this Agreement shall be in writing and (except for payments which
may be sent by first class United States mail) shall be deemed to have been
sufficiently given and received for all purposes when delivered by hand, or
facsimile or one (1) business day after delivered to a nationally recognized
overnight courier for delivery (with all costs paid), or five (5) days after
being sent by certified or registered mail, postage and charges prepaid, return
receipt requested, to the following addresses:
(a) if to the Company:
Starbase Corporation
0 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxx, XX 00000
Facsimile: (000) 000-0000
Attention: Chairman
with a copy to:
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxx Xxxxxxxx, Esq.
Facsimile: 000-000-0000
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(b) if to the Consultant:
Xxxxxxx X. Xxxx III
10 Alessandria
Xxxxxxx Xxxxx, XX 00000
with a copy to:
Xxxxxxxxx Xxxxxxx Fields Claman & Machtinger LLP
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: 310-553-0687
or to such other address as a party shall have designated by notice given to the
other party pursuant hereto.
9. Miscellaneous.
(a) Entire Agreement. Except with respect to the agreements and
plan governing the Options and Escrowed Shares, as applicable, this Agreement
sets forth the entire understanding and agreement of the parties and, except as
specifically set forth herein, merges and supersedes any prior and/or
contemporaneous understandings and agreements (whether written or oral) between
the parties pertaining to the subject matter hereof, including, without
limitation, any rights the Consultant may have under any employment agreement or
separation agreement entered into between the Company and the Consultant prior
to the date hereof.
(b) Modification; Amendment. This Agreement may not be modified
or terminated orally, and no modification, termination or attempted waiver of
any of the provisions hereof shall be binding unless in writing and signed by
the party against whom the same is sought to be enforced. This Agreement may not
be amended, except by an instrument in writing which is executed by the
Consultant and the Company. Neither party shall have any obligation to mitigate
any damages it may incur.
(c) Waiver. Failure of a party to enforce one or more of the
provisions of this Agreement or to require at any time performance of any of the
obligations hereof shall not be construed to be a waiver of such provisions by
such party nor to in any way affect the validity of this Agreement or such
party's right thereafter to enforce any provision of this Agreement, nor to
preclude such party from taking any other action at any time which it would
legally be entitled to take. Any waiver of a provision hereof shall be limited
to the purpose and instance for which it was given.
(d) Severability. If any provision of this Agreement is held to
be illegal, invalid or unenforceable by a court of competent jurisdiction, such
invalidity or unenforceability shall not affect the legality, validity and
enforceability of the other provisions of this Agreement and the provisions held
to be illegal, invalid or unenforceable shall be enforced as nearly as possible
according to its original terms and intent to eliminate such illegality,
invalidity or unenforceability.
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(e) Jurisdiction; Venue, etc. This Agreement shall be subject to
the exclusive jurisdiction of the courts of Orange County, California. Any
breach of any provision of this Agreement shall be deemed to be a breach
occurring in the State of California by virtue of a failure to perform an act
required to be performed in the State of California, and the parties irrevocably
and expressly agree to submit to the jurisdiction of the courts of Orange
County, California for the purpose of resolving any disputes among them relating
to this Agreement or the transactions contemplated by this Agreement and waive
any objections on the grounds of forum non conveniens or otherwise. The parties
hereto agree to service of process by certified or registered United States
mail, postage prepaid, addressed to the party in question. The party that
prevails in any action, suit or other proceeding to enforce this Agreement shall
be entitled to be reimbursed for the costs and expenses (including, without
limitation, court costs and attorneys' fees and expenses) incurred by such party
in connection with such action, suit or other proceeding.
(f) Governing Law. This Agreement is made and executed and shall
be governed by and construed in accordance with the laws of the State of
California, without regard to the conflicts of law principles thereof or any
other laws which would defer to the substantive law of another jurisdiction.
This Agreement shall not be interpreted or construed with any presumption
against the party which causes this Agreement to be drafted.
(g) Counterparts. This Agreement may be executed in two (2) or
more counterparts, each of which shall be an original, and all of which, when
taken together, shall constitute one and the same instrument.
(h) Headings. Section headings have been inserted in this
Agreement for convenience of reference only, and such headings, shall not have
any effect on the construction or interpretation of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has duly executed
this Employment Agreement as of the date set forth above.
STARBASE CORPORATION
By: /s/ XXXX X. XXXXXXXX
--------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chairman
/s/ XXXXXXX X. XXXX
------------------------------------
Xxxxxxx X. Xxxx III
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