INDEPENDENT CONTRACTOR AGREEMENT
This Agreement, dated as of January 1, 2002, is between Brightcube ("the
Company") and Xxxxxxx Xxxxx and Digitech Strategy (together the "Contractor"),
(collectively, "the Parties").
The Parties agree as follows:
1. SERVICES COVERED. The Company hereby engages Contractor to perform
business development, marketing and product development consultation (the
"Services").
2. TERM. The term of this Agreement shall be the twelve (12) month period
commencing on January 1, 2002, unless terminated earlier pursuant to Paragraph
15 below.
3. TAXPAYER IDENTIFICATION NUMBER. Prior to commencing the Services,
Contractor shall provide the Company with a duly executed IRS Form W-9 and
obtain an Employer Identification Number (EIN) from the IRS.
4. NO TRAINING OR INSTRUCTIONS. The Company enters into this Agreement
based on Contractor's demonstrated ability to perform the Services.
Consequently, the Company does not contemplate providing Contractor with any
training or instructions with respect to the Services.
5. INTENT OF INDEPENDENT CONTRACTOR RELATIONSHIP.
(a) The Parties intend that the relationship created by this Agreement
shall be that of service recipient and independent contractor. In this regard,
Contractor shall retain the exclusive right to control and direct all details of
the Services. Contractor shall have no authority to bind the Company. The
Company is not obligated to use Contractor exclusively.
(b) For all purposes, including but not limited to the Federal
Insurance Contributions Act ("FICA"), the Social Security Act, the Federal
Unemployment Tax Act ("FUTA"), income tax withholding requirements, California
Personal Income Tax Withholding ("PIT"), California Unemployment taxes ("UI"),
California Disability Insurance ("SDI"), and all other federal, state and local
laws, rules and regulations, Contractor (and his respective employees, if any)
shall be treated as an independent contractor and not as an employee with
respect to the Company.
6. CONDUCT BY CONTRACTOR. Contractor agrees to conduct Contractor's
business in a reputable manner and agrees to comply with all federal, state and
municipal laws, rules, regulations, and codes of ethics that are binding upon or
applicable to Contractor or to Contractor's business, equipment or personnel
engaged in operations covered by this Agreement, or accruing out of the
performance of such operations.
7. NO BENEFITS. None of the benefits, if any, that the Company provides to
its employees shall be available to Contractor. Contractor's exclusion from
benefit programs maintained by the Company is a material component of the terms
of compensation negotiated by the Parties, and is not premised on Contractor's
status as a nonemployee with respect to the Company. Contractor also agrees
that, consistent with his independent contractor status, he will not apply for
any government-sponsored benefits that are intended to apply to employees,
including, but not limited to, unemployment benefits.
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8. TAX REPORTING AND FILING. Contractor acknowledges and agrees that he
shall be responsible (as a self-employed individual) for filing all tax returns,
tax declarations, and tax schedules, and for the payment of all taxes required,
when due, with respect to any and all compensation earned by Contractor under
this Agreement. The Company will not withhold any employment taxes from
compensation it pays Contractor. Rather, the Company will report the amount it
pays Contractor on IRS Forms 1099, to the extent required to do so under
applicable Internal Revenue Code provisions and state or local law.
9. COMPENSATION. In consideration for the Services to be performed by
Contractor, the Company agrees to pay Contractor $2,500 per month of service as
a draw (the "Draw"). Additionally, the Contractor will be paid $2,500 per month
as base consulting fees. The Contractor shall receive commission (the
"Commission") on direct paper sales to the Company on products directly
introduced to specific customers where Contractor is actively involved in
securing and maintaining the customer relationship ("Direct Sales"). The
Commission will be based as a sliding percentage determined by the level of
Direct Sales per 12-month term of this contract based on the following:
Direct Sales Commission Rate
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up to $5,000,000 3%
$5,000,001 - $10,000,000 2%
$10,000,001+ 1%
For example, if total Direct Sales for a 12-month period were $10,000,000 the
first $5,000,000 would earn commission at 3% while the next $5,000,000 would
earn commission at 2%. All Direct Sales shall have a minimum net gross margin
of 20% per invoice. Any invoices that have a gross margin of less than 20% will
have a reduced Commission Rate. The Application Commission Rate will be
prorated evenly down to a 0% rate for an invoice with a 0% net gross margin.
For example, an invoice with a 15% gross margin would incur only 75% of the
applicable Commission Rate.
Any Commissions paid shall first be offset against monies paid to the Contractor
under the Draw. Commissions will be paid as long as this Agreement remains in
effect, or any subsequent agreement but based on the amended terms of any such
agreement, and for a period of six months thereafter.
Contractor shall inform the Company's Chief Financial Officer in writing of
every new customer introduced. Net gross margin for the purposes of this
agreement shall mean revenue less cost of goods as normally calculated by the
Company. Contractor shall be solely responsible for all costs incurred in
connection with the performance of the Services. The Company shall reimburse
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Contractor for any reasonable pre-approved out-of-pocket expenses directly
related to service provided under this contract.
All Commission shall be paid at the end of each of the Company's fiscal quarters
upon cash collections from the applicable customers on invoices subject to
Commission. The Company shall reserve the right to refuse business to any
potential customer without liability to the Contractor.
10. STOCK OPTIONS. Upon execution of this agreement and approval by the
Company's Board of Director's the Contractor be granted non-qualified options to
purchase 350,000 shares of common stock in the Company. 50% of these shares
shall vest immediately upon execution of this agreement and the remaining amount
shall vest, if at all, evenly over eight quarters following the effective date
of this agreement. The vesting shall occur on the first day of each calendar
month following the end of a calendar quarter and continue until fully vested
for as long as this agreement or Contractor's service as a member of the
Company's Board of Directors continues. Said grant and vesting is subject to
compliance with applicable securities laws and board approval of such Stock
Options. The exercise price for each Stock Option will be the fair market
value, as determined by the Company's Board of Directors, of the Common Stock on
the date that the option grant is approved by the Board.
In addition, Contractor shall be granted non-qualified options to purchase
common stock in the Company upon approval by the Company's Board of Director's
and upon the following occurrences and in the following amounts:
a. Major paper sales accounts - options covering 50,000 common shares each
for the first three major paper sales accounts introduced to the Company. For
these purposes, major paper sales accounts shall be defined as any account that
is anticipated to generate at least $3 million in sales during the first
eighteen months following the first production purchase order from said
customer.
b. Investment - options covering 200,000 common shares for introducing the
Company to any printer manufacturer or other investor that results in an equity
investment of at least $2,000,000.
These grants shall be fully vested when issued. Said grant and vesting is
subject to compliance with applicable securities laws and board approval of such
Stock Options. The exercise price for each Stock Option will be the fair market
value, as determined by the Company's Board of Directors, of the Common Stock on
the date that the option grant is approved by the Board.
11. LIABILITY AND INSURANCE. The Services shall be performed entirely at
Contractor's risk. The Company shall not be held liable for any act performed
by Contractor. In performance of this Agreement, Contractor assumes all
responsibility for the condition of the tools and equipment and for the safety
of the work, and shall maintain all protection necessary to fulfill these
responsibilities. Contractor shall be solely responsible for injuries, damages,
and losses to products, materials, or other goods that are in his possession in
order to perform the Services and
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for injuries, damages, and losses to any product caused by Contractor or those
within its control. The Company shall neither be responsible or held liable for
any injury or damage to person or property resulting from the use, or misuse, or
failure of any equipment, product, material, or other goods used by Contractor
or any of Contractor's agents, employees, or servants even if such are
furnished, rented, or loaned to Contractor by the Company. Any equipment or
tools supplied by the Contractor shall be fully insured by the Contractor.
12. EQUIPMENT AND TOOLS. Contractor shall provide and be responsible for
maintaining any facilities, equipment and tools that Contractor uses, or
determines is necessary, to provide the Services.
13. MANNER, TIME, AND LOCATION. Contractor shall have the right to perform
the Services in such manner, at such times, and at such locations as Contractor
deems appropriate. The Company shall have no right to interfere with
Contractor's judgment with respect to the manner, time, and place of performance
of the Services, so long as any performance deadlines that may be established by
the Company are satisfied.
14. PERFORMING SERVICES FOR OTHERS. The Company agrees that Contractor may
perform services for others, so long as the performance of those services does
not interfere with the performance of the Services.
15. TERMINATION. Either Party may terminate this Agreement by providing the
other Party with thirty (30) days advance written notice. In the case of a
material breach of this Agreement by one Party, the other Party shall have the
right to terminate this Agreement with no advance notice if, after providing the
breaching Party with notice of the breach, the breaching Party fails to cure the
breach within fifteen (15) days after receipt of the notice of breach. Upon
termination the Contractor will not be required to pay back any amounts still
due the Company for the Draw.
16. TRADE SECRETS. During the term of this Agreement, Contractor may have
access to the Company's internal records, systems and methods of operating its
business, trade secrets, customer lists, price lists, contract information and
other confidential or proprietary information. Contractor agrees that all such
information is the exclusive property of the Company, irrespective of whether
such information was created or prepared by Contractor or others. Contractor
further agrees that Contractor will not, at any time, in any manner, directly or
indirectly, disclose such information to any person or entity, or use such
information other than in furtherance of the purposes of the Company. Upon
termination of this Agreement, Contractor will deliver to the Company all
property of the Company, including any written memorial of, or documents
relating to, the information described above. The Parties agree that this
Paragraph shall survive the termination of this Agreement.
17. INTELLECTUAL PROPERTY. As a material condition to which Contractor
agrees in exchange for the opportunity to provide the Services, Contractor
expressly acknowledges and agrees that all discoveries, inventions, processes,
designs, plans, and trade secrets, whether of a technical nature or not, made or
developed by Contractor alone or in conjunction with any other person or entity
while performing the Services, which relate to or affect the business of the
Company.
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("Intellectual Property"), shall be the sole and exclusive property of the
Company. Contractor expressly agrees to disclose and reveal to the Company all
Intellectual Property, and all information regarding Intellectual Property,
concurrent with the discovery or development of the Intellectual Property.
Contractor hereby assigns to the Company all rights, title, and interest in any
Intellectual Property. Contractor agrees that he will not use or disclose any
Intellectual Property owned by the Company to benefit a competitor, customer,
individual, or other entity without the express written permission of the
Company.
18. INDEMNIFICATION. Contractor indemnifies and holds harmless the Company
from and against any and all liabilities, losses, damages, claims or causes of
action, and any connected expenses (including reasonable attorneys' fees) that
are caused, directly or indirectly, by or as a result of the performance by
Contractor or its employees or agents of the Services, provided that nothing
herein shall be construed to require Contractor to indemnify the Company from or
against the negligent acts of the Company or its employees.
19. NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified, (b) when sent by confirmed facsimile if sent during
normal business hours of the recipient; if not, then on the next business day,
(c) three (3) days after having been sent by first class mail, return receipt
requested, postage prepaid, (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written or oral
verification of receipt, or (e) upon confirmed delivery by electronic mail.
20. ARBITRATION. All disputes between Contractor (and his attorneys,
successors, and assigns) and the Company (and its affiliates, employees, agents,
successors, attorneys, and assigns) relating in any manner whatsoever to the
engagement or service relationship between the Parties, including, without
limitation, all disputes arising under this Agreement, claims of fraud in the
inducement of this Agreement or claims relating to the general validity or
enforceability of this Agreement ("Arbitrable Claims") shall be resolved by
arbitration. Arbitrable Claims shall include, but are not limited to, contract
(express or implied) and tort claims of all kinds, as well as all claims based
on any federal, state, or local law, statute, or regulation. Arbitration shall
be final and binding upon the Parties and shall be the exclusive remedy for all
Arbitrable Claims. In accordance with the foregoing sentence, THE PARTIES
HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO ARBITRABLE
CLAIMS. Arbitration of Arbitrable Claims shall be in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, as amended
and shall occur in Los Angeles County. The Federal Arbitration Act shall govern
the interpretation and enforcement of this Paragraph. The fees of the
arbitrator shall be split between both Parties equally. The prevailing Party
shall be entitled to recover reasonable attorneys' fees and costs. Judgment on
the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The Parties agree that this Paragraph shall survive the
termination of this Agreement.
21. INTEGRATION. This Agreement is intended to be the final, complete, and
exclusive statement of the terms of Contractor's engagement by the Company.
This Agreement supersedes all other prior and contemporaneous agreements and
statements, whether written or oral,
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express or implied, pertaining in any manner to the engagement of Contractor,
and it may not be contradicted by evidence of any prior or contemporaneous
statements or agreements. To the extent that the practices, policies, or
procedures of the Company, now or in the future, apply to Contractor and are
inconsistent with the terms of this Agreement, the provisions of this Agreement
shall control.
22. AMENDMENTS; WAIVERS. This Agreement may not be amended except by an
instrument in writing, signed by each of the Parties. Failure to exercise any
right under this Agreement shall not constitute a waiver of such right.
23. ASSIGNMENT; SUCCESSORS AND ASSIGNS. Neither the Company nor Contractor
shall assign any rights or obligations under this Agreement.
24. SEVERABILITY. If this Agreement is found to be invalid, unenforceable,
or void, the remainder of this Agreement shall remain in full force and effect.
25. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the law of the State of California.
26. INTERPRETATION. This Agreement shall be construed as a whole, according
to its fair meaning, and not in favor of or against any Party. By way of
example and not in limitation, this Agreement shall not be construed in favor of
the Party receiving a benefit nor against the Party responsible for any
particular language in this Agreement. Captions are used for reference purposes
only and should be ignored in the interpretation of the Agreement.
27. CONTRACTOR ACKNOWLEDGMENT. Contractor acknowledges that he has had the
opportunity to consult legal counsel in regard to this Agreement, that he has
read and understands this Agreement, that he is fully aware of its legal effect,
and that he has entered into it freely and voluntarily and based on his own
judgment and not on any representations or promises other than those contained
in this Agreement.
The Parties have duly executed this Agreement as of the date first written
above.
Contractor: BRIGHTCUBE
By: /s/ Xxxx X. Xxxxxx
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/s/ Xxxxxxx Xxxxx Title: Chief Financial Officer
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Xxxxxxx Xxxxx
Dated: December 29, 2001 Dated: December 28, 2001
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