7
CONSULTING AGREEMENT
This Agreement (the "Agreement"), entered into effective the
11th of July, 2003, is by and between XXXX.xxx, Inc., a Delaware
corporation (the "Company"), and Xxxxx XxXxxxx (the
"Consultant").
RECITALS:
WHEREAS, the Consultant and the Company desire to establish
an agreement concerning Services (as defined herein) previously
and to be performed by the Consultant for the Company, and
Compensation (as defined herein) to be paid by the Company to the
Consultant;
WHEREAS, on or about December 15, 2002, the parties entered
into a consulting agreement which provided for furnishing
services through December 31, 2003, and which provided for
compensation of 2,000,000 shares of common stock (the "Prior
Agreement");
WHEREAS, pursuant to the terms of the Prior Agreement the
Company issued 1,500,000 shares of restricted common stock and
500,000 shares of registered common stock to the Consultant (the
"Prior Agreement Compensation");
WHEREAS, the parties desire to have this Agreement supercede
the Prior Agreement by extending the term of engagement and
increasing the Compensation;
WHEREAS, during third quarter ended September 30, 2003, the
Company issued 250,000 shares of registered common stock (the
"Third Quarter Compensation") for services performed by the
Consultant in connection with the settlement of outstanding
obligations of the Company;
WHEREAS, during fourth quarter ending December 31, 2003, the
Company issued an additional 250,000 shares of registered common
stock (the "Fourth Quarter Compensation") for services performed
by the Consultant in connection with the settlement of
outstanding obligations of the Company; and
WHEREAS, the Consultant and Company desire that this
Agreement shall modify the compensation paid under the Prior
Agreement and incorporate compensation granted for related
services, as well as establish the continuing stock-based
compensation under this Agreement.
NOW, THEREFORE, in consideration of the mutual terms and
conditions set forth herein, and other consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. Engagement of Consultant. The Company hereby engages
the Consultant to perform the following services (the "Consulting
Services") as an independent contractor for the Company and any
of its wholly owned subsidiaries for a period of five years from
the date of this agreement: advise the company's CEO on business
strategy; formulate marketing ideas and plans; and introduce the
Company to companies and individuals in various markets with
regard to the Company's business, products, and services.
2. Compensation. As consideration for performing the
Consulting Services, the Company shall provide to Consultant the
following Compensation:
2.1 Expenses. Reimburse Consultant for reasonable,
actual, and necessary travel expenses of Consultant where
authorized by Company and appropriate documentation of such
expenses are provided by the Consultant to the Company (the
"Reimbursement Compensation");
2.2 Return of Stock. Consultant shall return to the
Company the 1,500,000 shares of restricted common stock issued to
Consultant as part of the Prior Agreement Compensation. These
shares shall be returned to the authorized but unissued shares of
the Company.
2.3 Stock-Based Compensation. As Compensation under
this Agreement, the Company shall issue 5,500,000 shares to the
Consultant under the following terms and conditions:
(a) The 500,000 registered shares of common stock
issued to Consultant as part of the Prior Agreement Compensation
shall be retained by Consultant and credited toward the
Compensation to be paid to Consultant pursuant to this Section
2.3;
(b) The 250,000 registered shares issued as Third
Quarter Compensation shall be retained by Consultant but shall be
credited toward the Compensation to be paid to Consultant
pursuant to this Section 2.3;
(c) The 250,000 registered shares issued as
Fourth Quarter Compensation shall be retained by Consultant but
shall be credited toward the Compensation to be paid to
Consultant pursuant to this Section 2.3 and shall not vest until
December 31, 2003; and
(d) The Company shall issue 4,500,000 unvested
shares at an agreed upon price of $0.06 per share. These shares
will vest and be deemed earned on a quarterly basis over the term
of the agreement at a rate of 250,000 shares per quarter starting
with the operating quarter ending March 31, 2004. Except as
provided in this Agreement, any unvested shares shall expire
immediately upon termination of this Agreement.
3. Term. The term of this Agreement shall be begin on
7/11/2003, and shall terminate on 6/30/2008, unless extended in
writing by the parties.
4. Termination.
4.1 Termination Due To Death. Consultant's engagement
with the Company and this Agreement shall terminate immediately
upon Consultant's death. If Consultant's employment is
terminated due to his death, his estate or his beneficiaries, as
the case may be, shall be entitled to reimbursement pursuant to
Section 2.1 for any outstanding reasonable expenses Consultant
incurred or paid in performing hereunder and full and immediate
vesting of all outstanding unvested shares issued to Consultant
pursuant to Section 2.3.
4.2 Termination Due To Disability. The Company may
terminate Consultant's engagement at any time if Consultant
becomes disabled, upon written notice by the Company to
Consultant. For all purposes under this Agreement, "Disability"
shall mean that Consultant, at the time the notice is given, has
been unable to perform his duties under this Agreement for a
period of not less than thirty (30) days during any ninety-day
period as a result of Consultant's incapacity due to physical or
mental illness. If Consultant's employment is terminated due to
his Disability, he shall be entitled to reimbursement pursuant to
Section 2.1 for any outstanding reasonable expenses Consultant
incurred or paid in performing hereunder and full and immediate
vesting of all outstanding unvested shares issued to Consultant
pursuant to Section 2.3.
4.3 Termination for Cause. The Company may terminate
Consultant's engagement at any time for Cause, provided that the
Company gives written notice of termination to Consultant as set
forth below. If Consultant's employment is terminated for Cause,
as defined below, he shall be entitled to reimbursement pursuant
to Section 2.1 for any outstanding reasonable expenses Consultant
incurred or paid in performing hereunder
For purposes of this Agreement, a termination for
"Cause" shall mean: (i) the final conviction of Consultant of,
or Consultant's plea of guilty or nolo contendere to, any felony
involving moral turpitude, (ii) fraud, misappropriation or
embezzlement by Consultant in connection with Consultant's duties
to the Company, or (iii) Consultant's willful failure or
misconduct in the performance of his duties to the Company.
If the Company exercises its right to terminate
the Consultant for Cause, the Company shall: (1) give the
Consultant written notice of termination at least ten (10) days
before the date of such termination specifying in detail the
conduct constituting such Cause, and (2) deliver to the
Consultant a copy of a resolution duly adopted by a majority of
the entire membership of the Board, excluding interested
directors, after reasonable notice to Consultant and an
opportunity for Consultant to be heard in person by members of
the Board, finding that the Consultant has engaged in such
conduct.
4.4 Termination By the Company Without Cause or
Constructive Termination Without Cause. The Company may
terminate the Consultant's engagment at any time without Cause,
provided that it gives written notice of termination at least
thirty (30) days before the date of such termination. If the
Consultant's service is terminated by the Company without Cause,
or if there is a Constructive Termination Without Cause, as
defined below, the Consultant shall be entitled to receive from
the Company the following reimbursement pursuant to Section 2.1
for any outstanding reasonable expenses Consultant incurred or
paid in performing hereunder and full and immediate vesting of
all outstanding shares issued to Consultant pursuant to Section
2.3.
For purposes of this Agreement, "Constructive
Termination Without Cause" shall mean a termination of Consultant
at his own initiative following the occurrence, without the
Consultant's prior written consent, of any material breach of
this Agreement by the Company not on account of Cause.
In the event the Consultant is terminated by the
Company without Cause or there is a Constructive Termination
Without Cause, each party shall provide the other with written
notice not less than thirty (30) days before the effective date
of the termination of employment.
4.5 Voluntary Termination. If the Consultant
voluntarily terminates his service on his own initiative for
reasons other than his death, Disability, or Constructive
Termination Without Cause, he shall be entitled to reimbursement
pursuant to Section 2.3 for any outstanding reasonable expenses
Consultant incurred or paid in performing hereunder. If the
Consultant so terminates his services during the first year of
this Agreement, he shall pay to the Company a termination fee
$20,000; if during the second year a termination fee of $15,000;
if during the third year a termination fee of $10,000; if during
the fourth year a termination fee of $5,000; and if during the
fifth year a termination fee of $2,500. Consultant may
voluntarily resign his engagement and terminate the Agreement at
any time by providing fifteen (15) days notice to the Company.
Termination of Consulting Agreement dated December 15,
2002. The parties agree that this Agreement supercedes the prior
agreement between the Consultant and Company dated December 15,
2002, and that all shares issued pursuant to that agreement will
be applied to the total Compensation of the Consultant.
5. Covenants of the Consultant.
5.1 Confidential Information. The Consultant
recognizes and acknowledges that certain information, including,
but not limited to, information pertaining to the financial
condition of the Company, its systems, methods of doing business,
agreements with customers or suppliers, or other aspects of the
business of the Company or which are sufficiently secret to
derive economic value from not being disclosed (hereinafter
"Confidential Information") may be made available or otherwise
come into the possession of the Consultant by reason of his
services performed for the Company. Accordingly, the Consultant
agrees that he will not (either during or after the term of this
Agreement) disclose any Confidential Information to any person,
firm, corporation, association, or other entity for any reason or
purpose whatsoever or make use to his personal advantage or to
the advantage of any third party, of any Confidential
Information, without the prior written consent of the Company.
The Consultant shall, upon termination of this Agreement, return
to the Company all documents which reflect Confidential
Information (including copies thereof). Notwithstanding anything
heretofore stated in this subsection 5(a), Consultant's
obligations under this subsection shall not, after termination of
this Agreement, apply to information which has become generally
available to the public without any action or omission of the
Consultant (except that any Confidential Information which is
disclosed to any third party by an employee or representative of
the Company who is authorized to make such disclosure shall be
deemed to remain confidential and protectable under this
subsection).
5.2 Records. All files, records, memoranda, and other
documents regarding former, existing, or prospective customers of
the Company or relating in any manner whatsoever to Confidential
Information or the business of the Company (collectively the
"Records"), whether prepared by the Consultant or otherwise
coming into his possession, shall be the exclusive property of
the Company. All Records shall be immediately placed in the
physical possession of the Company upon the termination this
Agreement, or at any other time specified by the Company. The
retention and use by the Consultant of duplicates in any form of
Records after termination of this Agreement is prohibited.
6. Nature of Relationship. The parties intend that
Consultant be an independent contractor and not an agent or
employee of the Company. The Company shall not provide office
space or office materials to Consultant to provide the services
set forth in this Agreement. Except for the compensation to be
provided herein, Consultant shall not be entitled to any of the
benefits provided by the Company to its employees. Consultant
shall be responsible for and shall pay any and all state,
federal, or local taxes on compensation paid to the Consultant
hereunder.
7. Entire Agreement; Modification; Waiver. This Agreement
constitutes the entire agreement between or among the parties
pertaining to the subject matter contained in it and supercedes
all prior and contemporaneous agreements, representations, and
understandings of the parties, including, but not limited to, any
previous agreements, oral or written. No supplement,
modification, or amendment of this Agreement will be binding
unless executed in writing by all the parties or the applicable
parties to be bound by such amendment. No waiver of any of the
provisions of this Agreement will constitute a waiver of any
other provision, whether or not similar, nor will any waiver
constitute a continuing waiver. No waiver will be binding unless
executed in writing by the party making the waiver.
8. Notices. All notices, requests, demands, and other
communications required to or permitted to be given under this
Agreement shall be in writing addressed tot he other party at the
address set forth below and shall be conclusively deemed to have
been duly given when:
Hand-delivered to the other party; or
Received when sent by telex or facsimile at the address
and number set forth below; the next business day after same have
been deposited with a national overnight delivery service,
shipping prepaid, addressed to the parties as set forth below
with next-business day delivery guaranteed, provided that the
sending party receives a confirmation of delivery from the
delivery service provider; or three business days after mailing
if mailed from within the continental United States by registered
or certified mail, return receipt requested, addressed to the
parties as set forth below.
Consultant: Xxxxx XxXxxxx
00000 Xxxxxxx XX
Xxxxxxxxxxx, XX 00000
Company: XXXX.xxx, Inc.
0000 Xxxxxx Xxxxxx Xxxx XX
Xxxxxxxxxxx, XX 00000
Attn: President
9. Dispute Resolution. The purpose and intent of the
parties is to resolve their disputes expeditiously, and in a
financially reasonable manner; and further that the parties will
meet personally, and directly and in good faith to discuss how to
proceed with dispute resolution and with that purpose and intent
in mind. Any dispute between the parties to this Agreement or
any other controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be submitted to and
resolved by binding arbitration in Albuquerque, New Mexico. Such
arbitration shall be conducted upon the request of any party,
before a single arbitrator, selected by the parties or, failing
agreement on a choice of an arbitrator within thirty (30) days of
service of written demand for arbitration, by an arbitrator
designated pursuant to the Uniform Arbitration Act, NMSA 44-7-1
et seq. Once the arbitrator is selected, but as a condition
precedent to proceeding with arbitration, the parties shall
engage on a good-faith best efforts basis (i) in direct fact-to-
face negotiations, and failing resolution by negotiation, then
(ii) mediation and, failing mediation, then (iii) arbitration.
Such arbitration shall be in accordance with the laws of the
State of New Mexico and pursuant to the Uniform Arbitration Act,
and subject to the Federal Rules of Civil Procedure as the
arbitrator may determine. The arbitration shall be conducted
within sixty (60) days of the selection of the arbitrator and the
arbitrator shall render his or her decision within twenty (20)
days after conclusion of the arbitration. The prevailing party
in the arbitration shall be entitled as a part of the arbitration
award to the costs and expenses (including reasonable attorney
fees) of investigating, preparing, and pursuing or defending the
arbitration claim as such costs and expenses are awarded by the
arbitrator. The duty to pursue the foregoing dispute resolution
provisions shall survive the termination or cancellation of this
Agreement. Arbitration pursuant to the foregoing shall be
specifically enforceable under prevailing arbitration law of the
State of New Mexico. The decision of the arbitrator shall be
final and binding upon the parties and enforceable in a court of
competent jurisdiction.
10. Assignment. Neither party to this Agreement may assign
its or his rights or obligations hereunder without the prior
written consent of the other party to this Agreement, except that
the Company may assign this Agreement to any successor to the
entire business of the Company pertaining to this Agreement
without requiring approval of the Consultant.
11. Counterparts; Facsimile Execution. This Agreement may
be executed in any number of counterparts and all such
counterparts taken together shall be deemed to constitute one
instrument. Delivery of an executed counterpart of this
Agreement by facsimile shall be equally as effective as delivery
of a manually executed counterpart of this Agreement. Any party
delivering an executed counterpart of this Agreement by facsimile
also shall deliver a manually executed counterpart of this
Agreement, but the failure to deliver a manually executed
counterpart shall not affect the validity, enforceability, or
binding effect of this Agreement.
12. Effect of Headings. The subject headings of the
sections and subsections of this Agreement are included for
convenience only and will not affect the construction of any of
its provisions.
13. Drafting. This Agreement was drafted with the joint
participation of the parties and/or their legal counsel. Any
ambiguity contained in this Agreement shall not be construed
against any party as the draftsman, but this Agreement shall be
construed in accordance with its fair meaning.
14. Binding on Successors. This Agreement will be binding
on, and will inure to the benefit of, the parties to it and their
respective heirs, legal representatives, successors, and assigns.
15. Survival of Covenants, Etc. All covenants,
representations and warranties made herein shall survive the
making of this Agreement and shall continue in full force and
effect until the obligations of this Agreement have been fully
satisfied.
16. Governing Law. This Agreement will be construed in
accordance with, and governed by, the laws of the State of New
Mexico as applied in contracts that are executed and performed
entirely in the State of New Mexico.
17. Severability. If any provision of this Agreement is
held invalid or unenforceable by any court of final jurisdiction,
it is the intent of the parties that all other provisions of this
Agreement be construed to remain fully valid, enforceable, and
binding on the parties, and that the invalid or unenforceable
provision be severed herefrom only to the extent necessary to
correct such invalidity or unenforceability.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year set forth below to be effective the
day and year first above written.
XXXX.xxx, Inc.
By /s/ Xxxxxxx Xxxxxxxx /s/ Xxxxx XxXxxxx
-------------------------- -------------------
Xxxxxxx Xxxxxxxx, President Xxxxx XxXxxxx
Date: November 4, 2003 Date: November 4, 2003
