EXHIBIT 10.40
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT is made as of the 9th day of November, 2006
by and between XXXXXXXXXX STRATEGIC PARTNERS, LLC (the "Consultant"), and
PERFORMANCE HEALTH TECHNOLOGIES, INC., a Delaware corporation (collectively with
its affiliates the "Company").
RECITALS:
WHEREAS, the Company wishes to engage the Consultant to render
consulting services to the Company regarding financial and regulatory matters
and potential strategic relationships and alliances in the healthcare and
rehabilitation industry and the Consultant wishes to render such services, all
as provided below.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained in this Agreement, and of other consideration (the receipt
and sufficiency of which are acknowledged by each party), the parties agree as
follows:
ARTICLE 1
CONSULTING SERVICES
1.1 CONSULTING SERVICES
(a) For the 24-month period commencing on the date of this Agreement
(the "Effective Date"), the Consultant shall provide the Company with such
regular and customary advice regarding financial and regulatory matters and
potential strategic relationships and alliances in the healthcare and
rehabilitation industry as is reasonably requested by the Company, provided that
the Consultant shall not be required to undertake duties not reasonably within
the scope of the advisory services contemplated by this Agreement. It is
understood and acknowledged by the Parties that the value of the Consultant's
advice is not readily quantifiable, and that the Consultant shall be obligated
to render advice upon the request of the Company, in good faith, but shall not
be obligated to spend any specific amount of time in so doing. The Consultant's
duties may include, but will not necessarily be limited to, providing
recommendations concerning the following matters:
1. Arranging, on behalf of the Company, at appropriate times,
meetings with individuals and representatives of companies in
the healthcare and rehabilitation industry;
2. Disseminating information about the Company to the healthcare
and rehabilitation industry at large; and
3. Rendering advice and assistance in connection with the
preparation of reports or other communications to the
healthcare and rehabilitation industry.
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(b) In addition to the foregoing, the Consultant agrees to furnish
advice to the Company as reasonably requested by the Company,
in connection with joint venture or other strategic
partnership or alliances with other media or financial
companies or institutions, or any other similar transaction.
(c) The Consultant shall render such other advisory services as
may from time to time be agreed upon by the Consultant and the
Company.
1.2 INFORMATION
In connection with Consultant's activities on the Company's behalf, the
Company will cooperate with Consultant and will furnish Consultant with all
information and data concerning the Company which Consultant reasonably believes
appropriate to the performance of services contemplated by this Agreement (all
such information so furnished being the "Information") and will provide
Consultant with reasonable access to the Company's officers, directors,
employees, independent accountants and legal counsel. The Company recognizes and
confirms that Consultant (i) will use and rely primarily on the Information and
on information available from generally recognized public sources in performing
the services contemplated by the Agreement, without having independently
verified same, (ii) does not assume responsibility for the accuracy or
completeness of the Information and such other information and (iii) will not
make an independent appraisal of any of the Company's assets. The Information to
be furnished by the Company, when delivered, will be, to the best of the
Company's knowledge, true and correct in all material respects and will not
contain any material misstatements of fact or omit to state any material fact
necessary to make the statements contained therein not misleading. The Company
will promptly notify Consultant if it learns of any material inaccuracy or
misstatement in, or material omission from any information thereto delivered to
Agent. Consultant agrees to keep the Information confidential and only to
release the Information with the consent of the Company. Upon termination of
this Agreement for whatever reason, Consultant will return the Information
(without keeping any copies thereof) forthwith on demand by the Company.
Consultant on its part represents, warrants, and agrees that it has complied,
and at all times while it is performing services under this Agreement it will
comply, with all laws, rules, and regulations applicable to it in connection
with the services it performs under this Agreement.
1.3 COMPENSATION
In consideration for the services to be rendered by the Consultant to
the Company pursuant to this Agreement, the Company shall issue to the
Consultant, upon approval by the Company's Board of Directors, a non-qualified
stock option (the "Options") to purchase up to 290,000 shares of the Company's
restricted common stock, of which the right to acquire 145,000 shares shall vest
on December 31, 2006 and the remaining 145,000 shares shall vest on December 31,
2007. The Options shall be exercisable for a period of ten years, shall have an
exercise price equal to $0.25 per share and shall contain such other standard
terms and conditions as other non-qualified stock options issued by the Company
pursuant to the Company's stock incentive plan currently in effect. In addition,
the Company shall reimburse the Consultant for all reasonable out-of-pocket
expenses in connection with the Consultant's rendering of services under this
Agreement.
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ARTICLE 2
REPRESENTATOINS
2.1 COMPANY REPRESENTATIONS
The Company has all requisite corporate power and authority to enter
into this Agreement and the transactions contemplated hereby. This Agreement has
been duly and validly authorized by all necessary corporate action on the part
of the Company and has been duly executed and delivered by the Company and
constitutes a legal, valid and binding agreement of the Company, enforceable in
accordance with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws).
2.2 CONSULTANT REPRESENTATIONS
(a) Consultant has all requisite corporate power and authority to enter
into this Agreement and the transactions contemplated hereby. This Agreement has
been duly and validly authorized by all necessary corporate action on the part
of Consultant and has been duly executed and delivered by Consultant and
constitutes a legal, valid and binding agreement of Consultant, enforceable in
accordance with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws).
(b) The Consultant acknowledges and represents that it is experienced
in evaluating and investing in speculative, high risk and start-up companies and
companies similar to the Company. The Consultant acknowledges and represents
that it has such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of purchasing the Options and
the shares of common stock issuable thereunder (the "Option Shares"). The
Consultant acknowledges and represents that it is able to fend for itself and
can bear the economic risk of an investment in the Options and the Option
Shares.
(c) The Consultant further acknowledges and represents that it has (A)
reviewed the Company's Executive Summary dated December 2005 and (B) been
afforded, prior to the date hereof, the opportunity to ask questions of, and to
receive answers from, the Company and to obtain any additional information
necessary or desirable to enable the Consultant to make an informed investment
decision with respect to the purchase of the Options and the Option Shares, and
that it has received any such information that it has requested.
(d) The Consultant further acknowledges and represents that (A) the
Consultant is an "accredited investor" as that term is defined in Rule 401(a) of
Regulation D; (B) the Consultant is acquiring the Option and the Option Shares
for investment purposes only, and is not acquiring the Option or the Option
Shares for the purpose of sale or distribution; and (C) the Consultant
understands that the Option and the Option Shares are not registered under the
1933 Act and cannot be sold or otherwise disposed of except in compliance with
the 1933 Act or in reliance upon an exemption from the 1933 Act and that the
certificate(s) representing the Option Shares shall bear a legend in
substantially the following form:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE ACT OR
AN EXEMPTION FROM REGISTRATION, OR, IF IN THE OPINION OF COMPANY COUNSEL, AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS IS IN FACT APPLICABLE TO SAID
SHARES.
ARTICLE 3
INDEMNIFICATION
3.1 INDEMNIFICATION
The Company agrees to indemnify and hold harmless Consultant, to the
fullest extent permitted by law, from and against any and all losses, claims,
damages, liabilities, obligations, penalties, judgments, awards, costs, expenses
and disbursements (and any and all actions, suits, proceedings and
investigations in respect thereof and any and all legal and other costs,
expenses and disbursements in giving testimony or furnishing documents in
response to a subpoena or otherwise, including, without limitation, the costs,
expenses and disbursements, as and when incurred, of investigating, preparing or
defending any such action, suit, proceeding or investigation (whether or not in
connection with litigation in which Consultant is a party)), directly or
indirectly, caused by, relating to, based upon, arising out of or in connection
with Consultant's acting for the Company, including, without limitation, any act
or omission by Consultant in connection with its acceptance of or the
performance or nonperformance of its obligations under the Agreement, or
otherwise arising from this Agreement; PROVIDED, HOWEVER, that such indemnity
agreement shall not apply to any portion of any such loss, claim, damage,
liability, obligation, penalty, judgment, award, cost, expense or disbursement
to the extent it is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) to have resulted primarily from the
negligence, gross negligence or willful misconduct of Consultant, in which case
Consultant shall indemnify the Company to the same extent as set forth herein
with respect to the Company's indemnification obligations to the Consultant.
These Indemnification provisions shall be in addition to any liability
which a party may otherwise have to the other party or the persons indemnified
below in this sentence and shall extend to the following: the parties and their
respective affiliated entities, directors, officers, employees, legal counsel,
agents and controlling persons (within the meaning of the federal securities
law). All references to a party in these indemnification provisions shall be
understood to include any and all of the foregoing.
If any action, suit, proceeding or investigation is commenced, as to
which a party proposes to demand indemnification, it shall notify the other
party with reasonable promptness; PROVIDED, HOWEVER, that the indemnifying party
shall be relieved from its obligations hereunder to the extent a failure by the
indemnified party to notify the indemnifying party with reasonable promptness
results in a significant increase in the indemnifying party's obligations
hereunder. The indemnified party shall have the right to retain counsel of its
own choice to represent it, which counsel shall be reasonably acceptable to the
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indemnifying party, and the indemnifying party shall pay the reasonable fees,
expenses and disbursements of such counsel; and such counsel shall, to the
extent consistent with its professional responsibilities, cooperate with the
indemnifying party and any counsel designated by the indemnifying party. The
indemnifying party shall be liable for any settlement of any claim against the
indemnified party made with the indemnifying party's written consent, which
consent shall not be unreasonably withheld. The indemnifying party shall not,
without prior written consent of the indemnified party, settle or compromise any
claim, or permit a default or consent to the entry of any judgment in respect
thereof, unless such settlement, compromise or consent includes, as a condition
or term thereof, the giving by the claimant to the indemnified party of an
unconditional and irrevocable release from all liability in respect of such
claim.
In order to provide for just and equitable contribution, if a claim for
indemnification pursuant to these indemnification provisions is made but it is
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) that such indemnification may not be enforced in such case, even
though the express provisions hereof provide for indemnification in such case,
then the Company, on the one had, and Consultant, on the other hand, shall
contribute to the losses, claims, damages, obligations, penalties, judgments,
award, liabilities, costs, expenses and disbursements to which the indemnified
persons may be subject in accordance with the relative benefits received by the
Company, on the one hand, and Consultant, on the other hand, in connection with
the statements, acts or omissions which resulted in such losses, claims,
damages, obligations, penalties, judgments, awards, liabilities, costs, expenses
or disbursements and the relevant equitable considerations shall also be
considered. No person found liable for a fraudulent misrepresentation shall be
entitled to contribution from any person who is not also found liable for such
fraudulent misrepresentation. Notwithstanding the foregoing, Consultant shall
not be obligated to contribute any amount hereunder that exceeds the amount of
fees previously received by Consultant pursuant to the Agreement nor shall the
Company be obligated to contribute any amount hereunder that exceeds the amount
of the net proceeds received by Company from transactions consummated with the
advise or other services of the Consultant as contemplated by this Agreement.
Neither termination nor completion of the engagement of Consultant
referred to the above shall affect these indemnification provisions which shall
continue to remain operative and in full force and effect.
ARTICLE 4
GENERAL
4.1 INTERPRETATION AND ENFORCEMENT
(a) The benefits of this Agreement shall inure to the parties hereto,
their respective successors and assigns and to the indemnified parties hereunder
and their respective successors and assigns and representatives, and the
obligations and liabilities assumed in this Agreement by the parties hereto
shall be binding upon their respective successors and assigns.
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(b) Each of the Company and Consultant (and, to the extent permitted by
law, on behalf of their respective equity holders and creditors) hereby
knowingly, voluntarily and irrevocably waives any right it may have to a trial
by jury in respect of any claim based upon, arising out of or in connection with
this Agreement and the transactions contemplated hereby. Each of the Company and
Consultant hereby certify that no representative or agent of the other party has
represented expressly or otherwise that such party would not seek to enforce the
provisions of this waiver. Further, each of the Company and Consultant
acknowledges that each party has been induced to enter this Agreement by, inter
alia, the provisions of this Section.
(c) If it is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) that any term or provision hereof
is invalid or unenforceable, (i) the remaining terms and provisions hereof shall
be unimpaired and shall remain in full force and effect and (ii) the invalid or
unenforceable provision or term shall be replaced by a term or provision that is
valid and enforceable and that comes closest to expressing the intention of such
invalid or unenforceable term or provision.
(d) This Agreement embodies the entire agreement and understanding of
the parties hereto and supersedes any and all prior agreements, arrangements and
understanding relating to the matters provided for herein. No alteration,
waiver, amendment, change or supplement hereto shall be binding or effective
unless the same is set forth in writing signed by a duly authorized
representative of each party.
(e) This Agreement does not create, and shall not be construed as
creating, rights enforceable by any person or entity not a party hereto, except
those entitled thereto by virtue of the indemnification provisions hereof. The
Company acknowledges and agrees that with respect to the services to be rendered
by Consultant, Consultant is not and shall not be construed as a fiduciary of
the Company and shall have no duties or liabilities to the equity holders or
creditors of the Company or any other person by virtue of this Agreement and the
retention of Consultant hereunder, all of which are hereby expressly waived. The
Company also agrees that Consultant shall not have any liability (including
without limitation, liability for losses, claims, damages, obligations,
penalties, judgments, awards, liabilities, costs, expenses or disbursements
resulting from any act or omission of Consultant, whether direct or indirect, in
contract, tort or otherwise) to the Company or to any person (including, without
limitation, equity holders and creditors of the Company) claiming through the
Company for or in connection with the engagement of Consultant, this Agreement
and the transactions contemplated hereby, except for liabilities which arise as
a result of the gross negligence or willful misconduct of Consultant. The
Company acknowledges that Consultant was induced to enter into this Agreement
by, INTER ALIA, the provisions of this Section.
4.2 APPLICABLE LAW
The validity and interpretation of this Agreement shall be governed by,
and construed and enforced in accordance with, the laws of the State of Delaware
applicable to agreements made and to be fully performed therein (excluding such
state's conflicts of laws rules).
4.3 COUNTERPARTS
This Agreement may be executed in any number of counterparts. Each
executed counterpart shall be deemed to be an original. All executed
counterparts taken together shall constitute one Agreement.
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IN WITNESS OF their agreement, the parties have duly executed this
Agreement as of the date first written above.
XXXXXXXXXX STRATEGIC PARTNERS, LLC
By:
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Xxxxx Xxxxxxx
Manager
PERFORMANCE HEALTH TECHNOLOGIES, INC.
By:
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Xxxxxx X. Xxxxxxxx
Chief Executive Officer and President
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