EXHIBIT 10.2
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into as
of the 10th day of July, 2000, by and among Avatar Systems, Inc., a Texas
corporation (the "Company"), Merchant Capital Holdings, Limited, a British
Virgin Islands company ("MCH") and its affiliate, First Merchants Capital
Limited, a company incorporated in England and Wales ("Consultant").
R E C I T A L S:
The Company was introduced by Xxxxxxxx Xxxx, a director of the
Consultant to Cybertec Holdings Plc ("Cybertec"), who is purchasing 1.6 million
shares of the Company's common stock for $1.6 million pursuant to that certain
Stock Purchase Agreement (the "Stock Agreement") dated of even date herewith
between the Company and Cybertec.
The Company desires to compensate Consultant for its assistance to the
Company in finding a purchaser of the 1.6 million shares of common stock of the
Company and to retain Consultant to provide the services described herein, and
Consultant desires to be retained pursuant to the terms of this Agreement.
Consultant shall, as a consultant to the Company, have access to
confidential information in which the Company and its affiliates or its
customers or suppliers have a proprietary interest.
In consideration of the mutual covenants and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Services. Consultant is hereby retained to serve as a
consultant to the Company to provide the Services set forth in Exhibit
I hereto (the "Services"). Consultant shall provide the Services to the
Company as and when requested by the Company.
2. Term. The term of this Agreement shall commence on the date
hereof and shall continue, unless earlier terminated pursuant to
Section 7 below, for a period of one (1) year (the "Term"). The term
may be renewed for one additional one-year term with the approval of
the Board of Directors of the Company and Consultant under the same
provisions as herein stated, except that there will be no additional
payments pursuant to Section 3(a) herein upon renewal.
3. Compensation. As compensation for rendering the Service
during the Term, Consultant shall be entitled to receive from the
Company the following compensation:
(a) A one-time payment of $15,000 upon execution by
the parties of this Agreement.
(b) An annual fee of $60,000 payable to Consultant in
twelve (12) monthly payments of $5,000 ("Base Compensation").
The first such payment being due August 1, 2000 and continuing
on the 1st of each succeeding month for the Term of this
Agreement until the Base Compensation is paid to Consultant.
Consulting Agreement-Page 1
(c) Upon execution of this Agreement by the parties,
the Company shall issue and deliver to MCH a five-year warrant
to purchase two million shares of the Company's common stock
at an exercise price of $1.00 per share (the "MCH Warrant") in
substantially the same form as attached as Exhibit "D" to the
Stock Agreement.
The compensation set forth in this Section 3 will be
the sole compensation payable to Consultant and MCH and the
sole issuance of a warrant for performing the Services and no
additional compensation, fee or issuance will be payable by
the Company to Consultant or MCH by reason of any benefit
gained by the Company directly or indirectly through
Consultant's performing the Services, nor shall the Company be
liable in any way for any additional compensation, fee or
issuance for performing the Services unless the Company shall
have expressly agreed thereto in writing. Notwithstanding
anything in this Agreement to the contrary, the Company shall
be entitled to withhold from such compensation such amounts as
are necessary to comply with U.S. tax laws as reasonably
determined by counsel for the Company. The Company shall have
no obligation to reimburse Consultant, MCH, or both, for any
expenses incurred pursuant to this Agreement.
4. Independent Contractor Status. In all matters relating to this
Agreement, Consultant shall be acting as an independent contractor. MCH may
assist the Consultant with providing the Services hereunder and shall be
compensated by Consultant, if applicable. Neither Consultant nor any employee,
agent or affiliate of Consultant is an employee of the Company under the meaning
or application of any federal or state unemployment or insurance laws or
worker's compensation laws, or otherwise. Consultant shall assume all
liabilities or obligations imposed by any of such laws with respect to employees
or affiliates of Consultant in the performance of this Agreement as shall be
identified and agreed upon, in writing, between the Company and Consultant.
Consultant shall pay timely all local, state, and federal taxes arising from
payments made to Consultant for the Services provided hereunder and shall
prepare and file all required U.S. tax returns, including, without limitation,
income, self-employment, and other taxes attributable to payments hereunder. The
Company shall not provide Consultant with insurance of any kind in connection
with the Services to be provided hereunder. Consultant shall not have any
authority to assume or create any obligation, express or implied, on behalf of
the Company, except as may be requested or required by the Company for the
performance of Consultant's duties and Services. Consultant shall have no
authority to represent itself or any of its employees, officers and directors,
shareholders or affiliates as an agent, employee, or in any other capacity of
the Company, except as may be requested or required by the Company, for the
performance of Consultant's duties and Services.
Consultant acknowledges that, as an independent contractor to the
Company, neither it nor any of its employees, officers, directors, shareholders
or affiliates are entitled to participation in, coverage under, or benefits from
the Company or any of its employee benefit plan funds, programs or arrangements
sponsored or maintained by the Company for its employees. In the event
Consultant's and its employees, directors, officers, shareholders or affiliates'
relationship with the Company is determined to be as an "employee" of the
Company rather than as an independent contractor to the Company, Consultant
expressly waives and declines, from the date hereof, participation in, coverage
under, or benefits from the Company or any of its employee benefit plans, funds,
programs or arrangements sponsored or maintained by the Company for its
employees.
Consulting Agreement-Page 2
5. Ownership of Work Product.
(a) The Company shall own all right, title and interest
(including patent rights, copyrights, trade secret rights, mask work
rights, trademark rights and all other intellectual and industrial
property rights of any sort throughout the world) relating to any and
all inventions (whether or not patentable), works of authorship, mask
works, designations, designs, know-how, ideas and information made or
conceived or reduced to practice, in whole or in part, by Consultant or
any employee, agent, or affiliate of Consultant, including MCH, during
the term of this Agreement that relate to the subject matter of, or
arise out of, the Services performed by Consultant or any employee,
agent, or affiliate of Consultant, including MCH, for the Company
(collectively, "Inventions") and Consultant and any employee, agent, or
affiliate of Consultant, including MCH, will promptly disclose and
provide all Inventions to the Company. All Inventions are "works made
for hire" to the extent allowed by law and, in addition, Consultant and
any employee, agent, or affiliate of Consultant, including MCH, hereby
make all assignments necessary to accomplish the foregoing ownership.
(b) To the extent such Inventions are not deemed to be "works
made for hire," Consultant and any employee, agent, or affiliate of
Consultant, including MCH, hereby assign to the Company all
intellectual and industrial property rights of any sort throughout the
world in and to the Inventions without further compensation. If
Consultant or any employee, agent, or affiliate of Consultant has any
rights to the Inventions that cannot be assigned to the Company,
Consultant and any employee, agent, or affiliate of Consultant,
including MCH, unconditionally and irrevocably waives the enforcement
of such rights, and if such rights cannot be waived, Consultant and any
employee, agent, or affiliate of Consultant, including MCH, hereby
grant to the Company an exclusive, irrevocable, perpetual, worldwide,
fully paid and royalty-free license, with rights of sublicense through
one or more levels of subcustomers, to use, reproduce, create
derivative works of, distribute, publicly distribute, publicly perform
and publicly display such rights by all means now known or later
developed. The Company hereby acknowledges and agrees, however, that
the Inventions shall not include any Consultant owned proprietary
program, or any part thereof, or to the ideas, concepts, know-how or
techniques employed by Consultant in performing the work and delivering
the Inventions to the Company, or to any modifications of or
enhancements to such Consultant owned proprietary programs; provided,
however, if and to the extent any proprietary information or material
of Consultant or any employee, agent, or affiliate of Consultant, is
embodied in any Invention, Consultant and any employee, agent, or
affiliate of Consultant, including MCH, hereby grant the Company a
irrevocable, perpetual, worldwide, fully paid and royalty-free license,
with rights of sublicense through one or more levels of subcustomers,
to use, reproduce, create derivative works of, distribute, publicly
distribute, publicly perform and publicly display such proprietary
information or material by all means now known or later developed in
conjunction with the Invention.
Consulting Agreement-Page 3
(c) To the extent allowed by law, Section 5(a) includes all
rights of paternity, integrity, disclosure and withdrawal and any other
rights that may be known as or referred to as "moral rights," "artist's
rights," "droit moral," or the like. To the extent Consultant or any
employee, agent, or affiliate of Consultant, including MCH, retains any
such moral rights under applicable law, Consultant and any employee,
agent, or affiliate of Consultant, including MCH, hereby ratify and
consent to, and provide all necessary ratifications and consents to,
any action that may be taken with respect to such moral rights by or
authorized by the Company. Consultant and any employee, agent, or
affiliate of Consultant, including MCH, agree not to assert any moral
rights with respect to the Inventions. Consultant and any employee,
agent, or affiliate of Consultant, including MCH, will confirm any such
ratifications, consents and agreements from time to time as requested
by the Company.
(d) To the extent any of the foregoing is ineffective under
applicable law, Consultant and MCH, if applicable, hereby provide any
and all ratifications and consents necessary to accomplish the purposes
of the foregoing to the extent possible. Consultant and MCH, if
applicable, shall further assist the Company to further evidence,
record and perfect such assignments, and to perfect, obtain, maintain,
enforce, and defend any rights assigned. Consultant and MCH hereby
irrevocably designate and appoint the Company as its agents and
attorneys-in-fact to act for and in Consultant's or MCH's behalf to
execute and file any document and to do all other lawfully permitted
acts to further the foregoing with the same legal force and effect as
if executed by Consultant.
6. Non-Disclosure of Confidential Information.
(a) Consultant and MCH hereby agree that Consultant and MCH
currently have and may acquire in the future valuable confidential
information concerning the business of the Company or its successors
and assigns, including, but not limited to, inventions, patents,
technologies, developments, products, processes, customers, suppliers,
vendors, discoveries, trade secrets, customer lists, property owner
lists, sales techniques, financial information, sales literature,
canvassing or solicitation techniques, instruction manuals, business
plans, presentation information, information systems, suppliers,
developed or utilized promotional materials, operating policies, rules
of conduct, note books, reports, data, records and other information,
whether considered confidential or not. Consultant and MCH agree not
to, directly or indirectly, use, disclose, permit disclosure of, or
reveal to any person, firm, or corporation, or take from the premises
of the Company, at any time any Confidential and Proprietary
Information (including, but not limited to, computer programs) except
as may be necessary for performance of Consultant's duties and Services
hereunder and with the written consent of the Company. Consultant and
MCH acknowledge that all such documents and information are, at all
times, the property of the Company and constitute trade secrets and
proprietary information and property belonging to the Company.
The parties expressly understand, acknowledge, agree, and
stipulate that any and all of the information described in the
immediately preceding paragraph shall constitute "Confidential and
Proprietary Information" for all purposes of this Agreement.
Consulting Agreement-Page 4
(b) Notwithstanding the right to cure defaults under this
Agreement, Consultant and MCH understand and recognize that breach of
this Agreement by them may cause immediate and irreparable harm to the
legitimate business interests of the Company, not necessarily or
readily compensable by ascertainable money damages. Consultant and MCH
agree that in the event it is determined by a court of competent
jurisdiction that they have individually or jointly violated or
breached any of the covenants, conditions, or terms of this Agreement,
the Company shall have the right in accordance with the Texas rules of
civil procedure to obtain injunctive relief against Consultant or MCH
or both restraining and enjoining one or both from breaching or
violating or further breaching or violating this Agreement. Such
injunctive relief shall be in addition to the right of the Company to
seek damages for any such breach or violation of this Agreement, to
recover all costs thus expended, including reasonable attorneys' fees,
and to obtain all other relief, whether legal, equitable, or both, to
which the Company may be entitled.
7. Termination. This Agreement and the consulting relationship created
hereby shall terminate upon the earlier to occur of any of the following events:
(a) The expiration of the Term of this Agreement as set forth
in Section 2 above;
(b) Agreement by written instrument executed by each of the
parties hereto;
(c) A material breach by Consultant or by MCH of Section 6 of
this Agreement that remains uncured thirty (30) days after written
notice of such breach by the Company to Consultant or to MCH or to
both; or
(d) A material breach by Consultant or by MCH or by both of
this Agreement (including but not limited to the refusal or inability
of Consultant to provide the Services) that remains uncured thirty (30)
days after written notice of such breach by the Company to Consultant
or to MCH or to both.
If this Agreement is terminated for any reason, all Base
Compensation due and payable to such termination date shall be paid to
Consultant within thirty (30) days of such termination. The Company,
Consultant and MCH further acknowledge and agree that the termination
of this Agreement pursuant to Section 7(c) and (d), shall have no
affect on the enforceability of the Non-Disclosure of Confidential and
Proprietary Information provisions of this Agreement. In all other
events, termination of this Agreement and/or default by the Company of
any of the terms of this Agreements voids Consultant's and MCH's
obligations pursuant to the Non-Disclosure of Confidential and
Proprietary Information.
8. Notices. Any notices, consents, demands, requests, approvals and
other communications to be given under this Agreement by either party to the
other shall be deemed to have been duly given if given in writing and personally
delivered or sent by facsimile transmission, courier service, overnight delivery
service or by mail, registered or certified, postage prepaid with return receipt
requested, as follows:
Consulting Agreement-Page 5
If to the Company: Avatar System, Inc.
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xx., President
Fax: 000-000-0000
with a copy to: Xxxx Xxxxxxxx, Esq.
Xxxxxx and Xxxxx LLP
0000 X. Xxxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxx 00000
Fax: 000-000-0000
If to Consultant: First Merchant Capital Limited
000 Xxxxx Xxxxxx
Xxxxxx XXXXXXX
XX0X0XX
Fax: 000-00-000-0000
If to MCH: Merchant Capital Holdings Limited
Trident Xxxxxxxx
Xxxxxxx Xxx.
X.X. Xxx 000
Xxxxxxxx, Xxxxxxx BVI
Fax: 000-00-000-0000
with a copy to: Xxxxxxx X. Xxxxxxx
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax: 000-000-0000
Notices delivered personally or by facsimile transmission, courier
service or overnight delivery shall be deemed communicated as of actual receipt;
mailed notices shall be deemed communicated as of three days after the date of
mailing.
9. Entire Agreement. This Agreement, the Investors' Rights Agreement
and Shareholders' Agreement included as part of the Stock Agreement, and the MCH
Warrant contain the entire agreement of the parties hereto and supersede all
prior agreements and understandings, oral or written between the parties hereto.
No modification or amendment of any of the terms, conditions or provisions
herein may be made otherwise than by written agreement signed by the parties
hereto.
10. Governing Law. THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE INTERPRETED, CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS, WITHOUT REGARD TO ITS CHOICE OF LAW PRINCIPLES, AND VENUE SHALL
BE IN THE COURTS OF DALLAS COUNTY, TEXAS.
Consulting Agreement-Page 6
11. Parties Bound. This Agreement and the rights and obligations
hereunder shall be binding upon and inure to the benefit of the Company,
Consultant and MCH, and their respective heirs, personal representatives,
successors and assigns. The Company, Consultant and MCH shall have the right to
assign this Agreement to any affiliate or to their respective successors or
assigns. The terms "successors" and "assigns" shall include any person,
corporation, partnership or other entity that buys all or substantially all of
the Company's, Consultant's or MCH's assets or all of their stock, or with which
the Company, Consultant or MCH merges or consolidates.
12. Enforceability. If, for any reason, any provision contained in this
Agreement should be held invalid in part by a court of competent jurisdiction,
then it is the intent of each of the parties hereto that the balance of this
Agreement be enforced to the fullest extent permitted by applicable law.
Accordingly, should a court of competent jurisdiction determine that the scope
of any covenant is too broad to be enforced as written, it is the intent of each
of the parties that the court should reform such covenant to such narrower scope
as it determines enforceable.
13. Waiver of Breach. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party.
14. Captions. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
15. Costs. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which it may be entitled.
16. Other Obligations. Consultant and MCH represent and warrant that
each is not subject to any agreement which would be violated or breached as a
direct or indirect result of Consultant or MCH executing this Agreement.
17. Affiliate. An "affiliate" of any party hereto shall mean any person
controlling, controlled by or under common control with such party.
18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument, but only one of which need be produced.
Consulting Agreement-Page 7
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
AVATAR SYSTEMS, INC.
By: /s/ Xxxxxx Xxxxxxx Xxxxxx, Xx.
-------------------------------------------------
Xxxxxx Xxxxxxx Xxxxxx, Xx., President
MERCHANTS CAPITAL HOLDINGS LIMITED.
By:/s/ Xxxxxxxx Xxxx
-------------------------------------------------
Xxxxxxxx Xxxx, Director
FIRST MERCHANT CAPITAL LIMITED
By:/s/ Xxxxxxxx Xxxx
-------------------------------------------------
Xxxxxxxx Xxxx, Director
Consulting Agreement-Page 8
EXHIBIT I
Services:
Financial and business consulting services as requested by the Company.
Development of new business relationships as requested by the Company.
Assist the Company and Cybertec with locating a U.S. non-operating public
company (the "Public Company") which will acquire the Company or into which the
Company will merge upon terms agreed to by the Company and its Board of
Directors and shareholders, if required. Such duties may include conducting a
due diligence investigation of the Public Company as may be required by the
Company. Additionally, Consultant shall assist the Company with securing an
underwriter or investment banker for a public offering of securities of the
Company.
Consulting Agreement-Page 9
