SURGE GLOBAL ENERGY, INC. CONSULTING AGREEMENT
Exhibit
10.39
THIS
CONSULTING AGREEMENT ("Agreement")
is
entered this October 6, 2006, to be effective as
of
September 26, 2006, by and between SURGE
GLOBAL ENERGY, INC, a
Delaware corporation (the "Company")
and
Xxxxxxx Xxxxxxx,
an
individual ("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. In consideration of the mutual promises
contained herein (including Section I I hereof), the parties agree as
follows:
1. Services
and Compensation. Consultant
agrees to perform for the Company the services described in Exhibit
A (the
"Services"),
and
the
Company agrees to pay Consultant the compensation described in Exhibit
A for Consultant's
performance of the Services. In connection with Consultant's receipt of the
options described on Exhibit
A, Consultant
hereby makes the representations set forth on Exhibit
B to this
Agreement.
2.
Confidentiality.
A. 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, strategic plans or other
information regarding Company's products or services and markets therefor,
vendors list and vendors, customer lists and customers, developments, processes,
technology, designs, engineering, marketing, finances or other business
information. Confidential Information does not include information that (i)
has
become, publicly known and made generally available through no wrongful act
of
Consultant or (ii) has been rightfully received by Consultant from a third
party
who is authorized to make such disclosure.
B. 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 all reasonable precautions to prevent any unauthorized disclosure of
such Confidential Information.
C. 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.
D. 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.
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E.
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 in Consultant's
possession or control.
3. Conflicting
Obligations. Consultant
certifies that Consultant has no outstanding agreement or obligation that is
in
conflict with any of the provisions of this Agreement or that would preclude
Consultant from complying with the provisions of this Agreement. Consultant
will
not enter into any such conflicting agreement during the term of this
Agreement.
4. 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.
5. Term
and Termination,
A. Term.
The
term
of this Agreement will begin on the date of this Agreement and will continue
until the earlier of (i) final completion of the Services or (ii) termination
as
provided in Section 5.B.
B. Termination.
The
Consultant may terminate this Agreement if, following 10 calendar days' prior
written notice, the Company has not provided to Consultant the compensation
earned, due and payable as set forth on Exhibit
A hereto.
The Company may terminate this Agreement upon giving the Consultant 30 calendar
days' prior written notice of such termination pursuant to Section 10.E of
this
Agreement, Additionally, the Company may terminate this Agreement immediately
and without prior notice if Consultant refuses to or is unable to perform the
Services or is in breach of any material provision of this
Agreement.
C. Survival.
Upon
such
termination, all rights and duties of the Company and Consultant toward each
other shall cease except:
(1) The
Company
will pay, within 30 calendar days after the effective date of termination,
all
amounts owing to Consultant for Services completed and accepted by the Company
prior to the termination date and related expenses, if any, submitted in
accordance with the Company's policies and in accordance with
the
provisions of Section 1 of this Agreement; and
(2) Section
2
(Confidentiality), Section 3 (Conflicting Obligations), Section 6 (Independent
Contractor; Benefits), Section 7 (Indemnification) Section 8 (Nonsolicitation)
and Section 9 (Arbitration and Equitable Relief) will survive termination of
this Agreement.
6. Independent
Contractor; Benefits.
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A.
Independent Contractor. It
is the
express intention of the Company and Consultant that Consultant perform the
Services 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 (or reimburse the Company for) all tools and materials necessary
to accomplish this Agreement and shall incur all expenses associated
with
performance, except as expressly provided in Exhibit
A. 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. Consultant hereby agrees to indemnify Company fully for
any such taxes for which Company is held liable by reason of any
re-characterization of Consultant as an employee of Company by any taxing
authority, including but not limited to, employer's share of FICA. It is
Consultant's responsibility to provide Consultant's own worker's compensation,
comprehensive liability and auto insurance coverage to the extent required
by
law. This responsibility shall extend not only to Consultant, but to any and
all
assistants, independent contractors, employees or agents Consultant may hire
or
utilize to assist him in the performance of this Agreement.
B.
Benefits. The
Company and Consultant agree that Consultant will receive no Company-sponsored
benefits from the Company. If Consultant is reclassified by a state or federal
agency or court as Company's employee, Consultant will become a reclassified
employee and will receive no benefits from the Company, except those mandated
by
state or federal law, even if by the terms of the Company's benefit plans or
programs of the Company in effect at the time of such reclassification,
Consultant would otherwise be eligible for such benefits.
7. Indemnification.
A. Consultant
Indemnification. Consultant
agrees to indemnify and hold harmless the Company and its directors, officers
and employees from and against all taxes, losses, damages, liabilities, costs
and expenses, including attorneys' fees and other legal expenses, arising
directly or indirectly from or in connection with a determination by a court
or
agency that the Consultant is not an independent contractor or any breach of
the
provisions of this Agreement by Consultant.
B. Company
Indemnification. Company
agrees to indemnify Consultant against all Claims (as defined below) and all
costs, expenses and reasonable attorneys' fees incurred in the defense of any
such Claims or any actions or proceeding brought on any such Claims
(collectively, "Expenses"),
unless
such Claims and/or Expenses shall have been the result of gross negligence,
fraud or intentional misconduct
by Consultant, in which case such indemnification shall not cover such Claims
or
Expenses to
the
extent resulting from such gross negligence, fraud or intentional misconduct.
For purposes of this Section 7B, "Claims"
shall
mean all liabilities, damages, costs, expenses, reasonable attorneys' fees
and
claims, arising from (i) any activity, work or thing done, permitted or suffered
by Company or by any agent, employee, officer, or independent contractor of
or,
retained by Company in connection with this Agreement, or (ii) any breach or
default in the performance of any obligation to be performed by Company under
this Agreement. If any action or proceeding is brought against Consultant by
reason of any Claims of which Consultant is entitled to indemnification under
this Section 7B, then upon written notice from Consultant ("Notice"),
Company
shall defend such action or proceeding at Company's sole cost by counsel
reasonably satisfactory to Consultant; provided, however, such Notice shall
include a written undertaking by Consultant to repay all amounts paid by the
Company to defend such action or proceeding, including attorneys' fees and
costs, if it shall ultimately be determined that Consultant Person is not
entitled to be indemnified under this Section
7B.
8.
Nonsolicitation. From
the
date of this Agreement until 12 months after the termination of this Agreement
(the "Restricted
Period"), Consultant
will not, without the Company's prior written consent, directly or indirectly,
solicit or encourage any employee or contractor of the Company or its affiliates
to terminate employment with, or cease providing services to, the Company or
its
affiliates. During the Restricted Period, Consultant will not, whether for
Consultant's own account or for the account of any other person, firm,
corporation or other business organization, intentionally interfere with any
person who is or during the period of Consultant's engagement by the Company
was
a partner, supplier, customer or client of the Company or its
affiliates.
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9. Arbitration
and Equitable Relief
A. Arbitration.
Consultant
agrees that any and all controversies, claims or disputes with anyone (including
the Company and any employee, officer, director, shareholder or benefit plan
of
the Company, in its capacity as such or otherwise) arising out of, relating
to
or resulting from Consultant's performance of the Services under this Agreement
or the termination of this Agreement, including any breach of this Agreement,
shall be subject to binding arbitration under the Arbitration Rules set forth
in
California Code of Civil Procedure Section 1280 through 1294.2, including
Section 1283.05 (the "Rules")
and
pursuant to California law. CONSULTANT AGREES TO ARBITRATE, AND THEREBY AGREES
TO WAIVE ANY RIGHT TO A TRIAL BY JURY WITH RESPECT TO, ALL DISPUTES ARISING
FROM
OR RELATED TO THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO: ANY STATUTORY CLAIMS
UNDER STATE OR FEDERAL LAW, CLAIMS UNDER TITLE VII OF THE CIVIL RIGHTS ACT
OF
1964, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE AGE DISCRIMINATION IN
EMPLOYMENT ACT OF 1967,
THE
NEVADA LABOR CODE, CLAIMS OF HARASSMENT, DISCRIMINATION OR WRONGFUL TERMINATION
AND ANY STATUTORY CLAIMS. Consultant understands that this Agreement to
arbitrate also applies to any disputes that the Company may have with
Consultant.
B. Procedure.
Consultant
agrees that any
arbitration
will be administered by the American Arbitration Association ("AAA"), and that
a
neutral arbitrator will be selected in a manner consistent with its National
Rules for the Resolution of Employment Disputes. Consultant agrees that the
arbitrator will have the power to decide any motions brought by any party to
the
arbitration, including discovery motions, motions for summary judgment andlor
adjudication and motions to dismiss and demurrers, prior to any arbitration
hearing. Consultant agrees that the arbitrator will issue a written decision
on
the merits. Consultant also agrees that the arbitrator will have the power
to
award any remedies, including attorneys' fees and costs, available under
applicable law. Consultant understands that the Company will pay for any
administrative or hearing fees charged by the arbitrator or AAA, except that
Consultant shall pay the first $200.00 of any filing fees associated with any
arbitration Consultant initiates. Consultant agrees that the arbitrator will
administer and conduct any arbitration in a manner consistent with the Rules
and
that, to the extent that the AAA's National Rules for the Resolution of
Employment Disputes conflict with the Rules, the Rules will take
precedence.
C. Remedy.
Except
as
provided by the Rules, arbitration will be the sole, exclusive and final remedy
for any dispute between the Company and Consultant. Accordingly, except as
provided for by the Rules, neither the Company nor Consultant will be permitted
to pursue court action regarding claims that are subject to arbitration.
Notwithstanding the foregoing, the arbitrator will not have the authority to
disregard or refuse to enforce any lawful Company policy, and the arbitrator
shall not order or require the Company to adopt a policy not otherwise required
by law which the Company has not adopted.
D. Availability
of Injunctive Relief In
addition to the right under the Rules to petition the court for provisional
relief, Consultant agrees that any party may also petition the court for
injunctive relief where either party alleges or claims a violation of Sections
2
(Confidentiality), or 3 (Conflicting Obligations) of this Agreement or any
other
agreement regarding trade secrets, confidential information or nonsolicitation.
In the event either the Company or Consultant seeks injunctive relief, the
prevailing party will be entitled to recover reasonable costs and attorneys'
fees.
E. Administrative
Relief Consultant
understands that this Agreement does not prohibit Consultant from pursuing
an
administrative claim with a local, state or federal administrative body such
as
the Department of Fair Employment and Housing, the Equal Employment Opportunity
Commission or the workers' compensation board. This Agreement does, however,
preclude Consultant from pursuing court action regarding any such
claim.
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F. Voluntary
Nature of Agreement. Consultant
acknowledges and agrees that Consultant is executing this Agreement voluntarily
and without any duress or undue influence by the Company or anyone else,
Consultant further acknowledges and agrees that Consultant has carefully read
this Agreement and has asked any questions needed to understand the terms,
consequences and binding effect of this Agreement and fully understand it,
including that Consultant is waiving its right to a jury trial. Finally,
Consultant agrees that Consultant has been provided an opportunity to seek
the
advice of an attorney of its choice before signing this Agreement.
10. Miscellaneous.
A. Governing
Law. This
Agreement shall be governed by the laws of California without regard to
California's conflicts of law rules.
B.
Assignability.
Consultant
may not sell, assign or delegate any rights or obligations under this Agreement,
including without limitation, any of the options or shares provided to
Consultant pursuant to this Agreement; provided, however, Consultant may sell
shares of the Company acquired pursuant to this Agreement in compliance with
applicable state and federal securities law.
C. Entire
Agreement. This Agreement
constitutes the entire agreement between the parties with respect to the subject
matter of this Agreement and supersedes all prior written and oral agreements
between the parties regarding the subject matter of this Agreement. The parties
hereto agree that any rule of construction to the effect that ambiguities are
to
be resolved against the drafting party shall not be applied in the construction
or interpretation of this Agreement.
D. Headings.
Headings
are used in this Agreement for reference only and shall not be considered when
interpreting this Agreement.
E. Notices.
Any notice
or
other communication required or permitted by this Agreement to be given to
a
party shall be in writing and shall be deemed given if delivered personally
or
by commercial messenger or courier service, or mailed by U.S. registered or
certified mail (return receipt requested), or sent via facsimile (with receipt
of confirmation of complete transmission) to the party at the party's address
or
facsimile number written below or at such other address or facsimile number
as
the party may have previously specified by like notice. If by mail, delivery
shall be deemed effective 3 business days after mailing in accordance with
this
Section 9(E).
| (1) | If to the Company, to: 00000
Xx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attention:
Xxxxx Xxxxx, President
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
|
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(2)
If to
Consultant, to the address for notice on the signature page to this Agreement
or, if no such address is provided, to the last address of Consultant provided
by Consultant to the Company.
F. Attorneys'
Fees. In any
court
action at law or equity that is brought by one of the parties to this Agreement
to enforce or interpret the provisions of this Agreement, the prevailing party
will be entitled to reasonable attorneys' fees, in addition to any other relief
to which that party may be entitled.
G. Severability.
If
any
provision of this Agreement is found to be illegal or unenforceable, the other
provisions shall remain effective and enforceable to the greatest extent
permitted by law.
11.
Legal
Counsel. EACH
OF
THE PARTIES HERETO ACKNOWLEDGES AND UNDERSTANDS THAT SUCH PARTY HAS THE RIGHT
TO
CONSULT WITH AN ATTORNEY OF HISIHERIITS CHOICE CONCERNING THE TERMS, EXECUTION
AND EFFECT OF THIS AGREEMENT. EACH OF THE PARTIES REPRESENTS THAT SUCH PARTY
HAS
HAD AN OPPORTUNITY TO REVIEW THE AGREEMENT, THAT SUCH PARTY HAS READ AND
UNDERSTAND THE AGREEMENT, THAT SUCH PARTY IS FULLY AWARE OF THE CONTENTS OF
THIS
AGREEMENT AND OF ITS LEGAL EFFECT, AND WARRANTS AND REPRESENTS THAT THIS
AGREEMENT IS EXECUTED VOLUNTARILY AND WITHOUT DURESS OR UNDUE INFLUENCE ON
THE
PART OF OR ON BEHALF OF ANY PERSON OR ENTITY. EACH OF THE PARTIES FURTHER
ACKNOWLEDGES AND REPRESENTS THAT XXXXXXXXX TRAURIG, LLP (AND XXXXXX X. XXXXXXXX,
ESQ., SPECIFICALLY) ("COUNSEL")
HAS
BEEN
INSTRUCTED AND RETAINED BY THE COMPANY TO PREPARE AND NEGOTIATE THIS AGREEMENT
AND COUNSEL DOES NOT REPRESENT, AND HAS NEVER REPRESENTED, CONSULTANT IN
CONNECTION WITH THIS AGREEMENT OR IN ANY OTHER CAPACITY WHATSOEVER ON OR PRIOR
TO THE EFFECTIVE DATE. COUNSEL SHALL BE ENTITLED TO RELY UPON AND TO ENFORCE,
AT
THE PARTIES' EXPENSE, THE PROVISIONS OF THIS SECTION 11, AS AN EXPRESS AND
INTENDED THIRD PARTY BENEFICIARY OF THIS SECTION 11.
IN
WITNESS
WHEREOF, the
parties hereto have executed this Consulting Agreement on this day
of
October 6th, 2006, to be effective as of September 26, 2006.
|
CONSULTANT |
SURGE GLOBAL ENERGY, INC. | |
| /s/ Xxxxxxx Xxxxxxx | By: | /s/Xxxxx Xxxxx |
| Xxxxx Xxxxx, President | ||
|
Address
for Notice:
|
||
|
|
||
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EXHIBIT
A
SERVICES
AND COMPENSATION
1. Contact.
Consultant's
principal Company contact:
Name:
Xxxxx Xxxxx
Title:
President
2. Services.
Consultant
shall perform the following services during the term of this
Agreement:
A. Consultant
shall make himself reasonably available to the Company's President up to a
maximum of twelve (12) hours per month for consultation and other activities
related to formulating and implementing business strategies and relationships.
Consultant shall not be required to devote his entire time, attention and
energies to the business of the Company and shall not be required to maintain
any set hours at the Company's offices. Consultant's obligations under this
Section 2A shall terminate on the earlier of (i) September 26, 2007,
and
(ii)
on Consultant's giving the Company 30 calendar days' prior
written
notice of such termination pursuant to Section 10.E of this
Agreement.
B. Consultant
shall use his commercially reasonable efforts to locate and introduce qualified
appointees ("Appointees")
to
the
Company's Board of Directors until such time as three (3) such Appointees have
either accepted positions on the Board or such positions have been filled
(Consultant may be a proposed Appointee); and
C. If
any
one or more of the Appointees does not serve on the Board for at least 12
months, Consultant shall use his commercially reasonable efforts to Iocate
and
introduce a replacement Appointee for each such board position to the extent
such board position remains open,
3. Compensation.
A. The
Company will pay Consultant a non-refundable retainer of $6,000 per month
for
the
service to be provided by Consultant under Section 2A above, The first payment
shall be due on the later of October 5, 2006, or the signing of this
Agreement.
B. Additionally,
the Company shall pay the Consultant $25,000 per Appointee (defined below)
upon
the Initial Vesting Date (defined below), and $2,083.33 per Appointee (payable
by the fifth (5`h)
day of
each applicable month) for each of the 12 months following the Initial Vesting
Date (defined below) that such Appointee serves on the Company's Board of
Directors,
C. The
Company hereby grants Consultant a nonqualified stock option to purchase 300,000
shares of the Company's Common Stock at a price per share equal to $0.001,
subject to the following vesting schedule: 50,000 of the shares subject to
the
option shall vest upon the Company's appointment of, and the acceptance of
such
appointment by each Appointee (up to a maximum of three Appointees (i.e., total
of 150,00 shares)) (the date of such acceptance, the "Initial Vesting Date"),
and the remaining shares shall vest at a rate of 4,166 shares per month for
each
Appointee that remains on the Company's Board of Directors following the Initial
Vesting Date. By way of illustration only, if one Appointee remains on the
Company's Board of Directors for three months following the Initial Vesting
Date, the second Appointee remains on the Company's Board of Directors for
1
month following the Initial Vesting date and the third person is not appointed,
then the total number of share vested shall be 16,664 shares (4,166 + [3 x
4,166] = 16,664 shares) plus the 50,000 vested shares for each of the two
Appointees as of the Initial Vesting Date, for a total of 116,664
shares.
Accepted
and agreed this October 6, 2006, to be effective as of September 26,
2006.
|
CONSULTANT |
SURGE GLOBAL ENERGY, INC. | |
| /s/ Xxxxxxx Xxxxxxx | By: | /s/Xxxxx Xxxxx |
| Xxxxx Xxxxx, President | ||
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EXHIBIT
B
CONSULTANT'S
REPRESENTATIONS AND WARRANTIES
Consultant
hereby represents, warrants and covenants to the Company as follows, which
representations, warranties and covenants shall be deemed made on the date
of
execution of this Agreement and upon each exercise of an option issued in
accordance with Section
3C
of
Exhibit
A :
1. Purchase
for Own Account.
Consultant represents that it is acquiring the options and equity
securities issuable upon exercise of the options in accordance with Section
3C
of ExhibitA
to
this
Agreement (collectively, the "Securities")
solely
for investment for Consultant's own account not
as
a
nominee or agent, and not with a view to the resale or distribution of any
part
thereof, and that Consultant has no present intention of selling, granting
any
participation in, or otherwise distributing the same. The acquisition by
Consultant of any of the Securities shall constitute confirmation of the
representation by Consultant that Consultant does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or
grant
participations to such person or to any third person, with respect to any of
the
Securities.
2. Disclosure
of Information.
Consultant has received all the information he considers necessary or
appropriate for deciding whether to acquire the Securities. Consultant further
represents that he has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Securities and the business, properties, prospects and financial condition
of
the Company.
3. Investment
Experience.
Either
(i) Consultant has a preexisting personal or business relationship with the
Company or its officers,
directors
or controlling persons, or (ii) Consultant, by reason of his own business and
financial experience, has the capacity to protect his own interests in
connection with the investment contemplated hereby. Consultant represents that
he is an investor in securities of companies comparable to the Company and
acknowledges that he is able to fend for himself, can bear the economic risk
of
his investment, and has such knowledge and experience in financial or business
matters that he is capable of evaluating the merits and risks of the investment
in the Securities. Consultant acknowledges that any investment in the Securities
involves a high degree of risk, and represents that he is able, without
materially impairing his financial condition, to hold the Securities for an
indefinite period of time and to suffer a complete loss of his
investment,
4. Accredited
Investor.
Consultant represents that (i) he is a natural person whose individual net
worth
(or joint net worth with his spouse) exceeds $1,000,000, (ii) he is a natural
person who had an individual income in excess of $200,000 in each of the two
most recent years and who reasonably expects to have an individual income in
excess of $200,000 in the current year or who had joint income in excess of
$300,000 in each of the two most recent years and who reasonably expects to
have
joint income in excess of $300,000 in the current year, and (iii) for the
purpose of Section 25102(f) of the California Corporations Code, he is excluded
from the count of "purchasers" pursuant to Rule 260.102.13
thereunder.
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5.
Restrictions
on Transfer.
Consultant understands that the Securities are characterized as "restricted
securities" under the federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering
and
that under such laws and applicable regulations such securities may be resold
without registration under the Securities Act of 1933, as amended (the
"Act"), only in certain limited circumstances. In this connection, Consultant
represents that he is familiar with Securities Exchange Commission Rule 144,
as
presently in effect, and understands the resale limitations imposed thereby
and
by the Act. CONSULTANT UNDERSTANDS AND ACKNOWLEDGES HEREIN THAT AN INVESTMENT
IN
THE COMPANY'S SECURITIES INVOLVES AN EXTREMELY HIGH DEGREE OF RISK AND MAY
RESULT IN A COMPLETE LOSS OF HIS INVESTMENT. Consultant understands that the
Securities have not been and will not be registered under the Act and have
not
been and will not be registered or qualified in any state in which they are
offered, and thus Consultant will not be able to resell or otherwise transfer
his Securities unless they are registered under the Act and registered or
qualified under applicable state securities laws, or an exemption from such
registration or qualification is available. Consultant has no immediate need
for
liquidity in connection with this investment and does not anticipate that he
will need to sell his
Securities in the foreseeable future.
6.
Certain
Definitions.
For
purposes of Section IA above: (i) "net worth" means the excess of total assets
at fair market value, including any owned personal residence and personal
property, over total liabilities, including any mortgage debt; (ii) "individual
income" means adjusted gross income as reported for Federal income tax purposes,
less any income attributable to a spouse or to property owned by a spouse,
increased by the following amounts (but not including any amounts attributable
to a spouse or to property owned by a spouse): (A) the amount of any interest
income received which is tax-exempt under Section 103 of the Internal Revenue
Code of 1986, as amended (the "Code"), (B) the amount of losses claimed as
a
limited partner in a Iimited partnership (as reported on Schedule E of Form
1040), (C) any deduction claimed for depletion under Section 611 et seq. of
the
Code, and (iv) any amount by which income from long-term capital gains has
been
reduced in arriving at adjusted gross income pursuant to the provisions of
Section 1202 of the Code prior to its repeal by the Tax Reform Act of 1986;
and
(iii) 'joint income" means adjusted gross income as reported for Federal income
tax purposes, including
any
income attributable to a spouse or to property owned by a spouse, increased
by
the following amounts (including any amounts attributable to a spouse or to
property owned by a spouse): (A) the amount of any interest income received
which is tax-exempt under Section 103 of the Code, (B) the amount of losses
claimed as a limited partner in a limited partnership (as reported on Schedule
E
of Form 1040), (C) any deduction claimed for depletion under Section 611 et
seq.
of the Code, and (iv) any amount by which income from long-term capital gains
has been reduced in arriving at adjusted gross income pursuant to the provisions
of Section 1202 of the Code prior to its repeal by the Tax Reform Act of
1986.
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