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Exhibit 10.1
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is being entered into as of February 3,
2001, by and between Douglas G. Furth ("Consultant") and Empyrean Bioscience,
Inc. ("Company"), whereby the Company has agreed to retain the services of the
Consultant under the terms and conditions as set forth within the Consulting
Agreement.
It is hereby acknowledged that the Company is desirous of retaining the services
of the Consultant for assistance in various matters pertaining to corporate
growth, strategic planning, public relations and the expansion of the existing
shareholder and equity base of the Company, and that the Consultant has agreed
to provide such services to the Company in exchange for the due consideration as
outlined within the subsequent portions of this Agreement.
SECTION 1 DESCRIPTION OF CONSULTING SERVICES
Under the terms and conditions of this Agreement, the Consultant has agreed to
act in an advisory capacity to the Company and to provide such services in
exchange for the due consideration as set forth within this Agreement. The scope
of such services shall be described as providing general assistance to the
company in the areas of corporate finance, investor relations, strategic
alliances, mergers, acquisitions and various other matters as pertaining to
growth and the enhancement of shareholder value.
Whereas the Consultant has agreed to act in an advisory capacity to the Company,
the Company and the Consultant understand and hereby acknowledge the fact that
this is a non-exclusive arrangement, and that the Company and the Consultant are
free to enter into any other such consulting and/or business agreement as each
party may deem necessary and desirable at any time. Such agreements may include
additional consulting agreements, outside business ventures and/or investments
as well as any other type of business and/or personal activity as the Company or
the Consultant may desire. The Company and the Consultant shall maintain the
right to enter into any such outside agreements and ventures, at each party's
sole discretion.
As a further provision of this Agreement both the Consultant and the Company
acknowledge and agree that there will not be any specific time requirement for
utilization by either party, and that the consideration that is due the
Consultant under the terms of this Agreement is unrelated to the amount of time
that is spent providing such consulting services, and is considered as a fixed
cost of this Agreement.
As a condition of this Agreement the Consultant hereby agrees to undertake
responsibility for the payment of all expenses incurred in the normal course of
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providing the consulting services that are stipulated under the terms of this
Agreement, with such expenses being inclusive of the following items:
1. All expenses relating to travel, lodging and entertainment
while providing consulting services to the Company, and
2. All normal office expenses including telephone, facsimile and
office supplies as incurred while providing consulting
services to the Company.
Any other expenses that may be incurred shall be reimbursed by the Company if
incurred with the prior written consent of the Company.
SECTION 2. DISCLAIMERS
In recognition and mutual acknowledgement of the fact that the Company is a
company in its development stage and is further engaged in a business with
little or no current revenues, income or liquid market for its stock at this
time the Consultant makes no representations, warranties or other affirmations
as to the success of any efforts that may be undertaken on the Company's behalf,
and the Company hereby acknowledges, accepts and understands such disclaimers as
made by the Consultant.
SECTION 3. DUE CONSIDERATION
As consideration for the consulting services as provided by the Consultant to
the Company under the terms under the terms and conditions as set forth within
this Agreement, the company hereby agrees to the timely payment of the following
to the Consultant:
1. A signing retainer in the amount of 284,746 shares of unrestricted common
stock in the Company and any of its successor entities, upon the execution
of this Agreement.
2. An earnout of 100,000 free-trading shares of unrestricted common stock in
the Company when the common stock of the Company, as quoted on the NASD or
any other exchange that is designated to quote a market price for the
stock, trades at an average price of $0.70 per share for a period of
fifteen (15) consecutive calendar days.
3. An earnout of 100,000 free-trading shares of unrestricted common stock in
the Company when the common stock of the Company, as quoted on the NASD or
any other exchange that is designated to quote a market price for the
stock, trades at an average price of $1.25 per share for a period of
fifteen (15) consecutive calendar days.
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4. An earnout of 100,000 free-trading shares of unrestricted common stock in
the Company when the common stock of the Company, as quoted on the NASD or
any other exchange that is designated to quote a market price for the
stock, trades at an average price of $2.00 per share for a period of
fifteen (15) consecutive calendar days.
5. An earnout of 100,000 free-trading shares of unrestricted common stock in
the Company when the common stock of the Company, as quoted on the NASD or
any other exchange that is designated to quote a market price for the
stock, trades at an average price of $3.00 per share for a period of
fifteen (15) consecutive calendar days.
6. An earnout of 100,000 free-trading shares of unrestricted common stock in
the Company when the common stock of the Company, as quoted on the NASD or
any other exchange that is designated to quote a market price for the
stock, trades at an average price of $4.00 per share for a period of
fifteen (15) consecutive calendar days.
7. A fee of seven percent (7%) of all monies raised if the consultant is
successful in raising equity for the Company, payable at closing.
8. A fee of two and one-half percent (2.5%) of all monies raised if the
consultant is successful in raising debt for the Company, payable at
closing.
9. In the event the Consultant is successful in securing any merger,
acquisition, consolidation or other similar transaction for the Company, a
fee based upon the economic value of the transaction, with a minimum fee
payable of $200,000, will be due to the Consultant at closing as follows:
- 5% for the first $1 million;
- 4% for the second $1 million;
- 3% for the third $1 million;
- 2% for the fourth $1 million; and
- 1% for any amount thereafter.
Both the Consultant and the company hereby acknowledge and agree that the
earnouts as listed above are arbitrary benchmarks of the Company's success and
that such benchmarks do not represent any warranty that the Consultant will be
able to exert any influence whatsoever on the price of the stock.
In the event of a stock-split or reverse stock-split, the bonus share price
trading activation levels shall be adjusted in direct proportion to the split
(i.e. a 2-for-1 split alters the share activation level to one-half of the
previously set forth levels).
As a condition of this Agreement, subheadings 2-6 as listed above in the Due
Consideration portion of this Agreement shall be considered as having survived
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the term of this Agreement, and shall remain in full force and effect until one
of the following has occurred:
a. the earnout provisions have been fulfilled, or
b. one year has passed subsequent to the termination date of this
Agreement, or
c. this Agreement has been terminated by the Company for cause
under Section 7.
SECTION 4. TIMELY PAYMENT
As a condition of this Agreement it is hereby understood that all obligations as
incurred by the Company shall be paid to the Consultant in a timely manner. It
is acknowledged that all such obligations shall become due and payable within
the following timeframes:
a. The signing retainer shall become due and payable upon the
execution of this Agreement;
b. The earnout shares shall become due and payable as of the
thirtieth calendar day following the day that the Consultant
qualifies for the earnout as set forth in subheadings 2-6 in
Section 3, as above; and
c. Any other pre-approved expenses and distributions shall be
considered as becoming due and payable upon notification to
the Company by the Consultant.
SECTION 5. TERM OF THE AGREEMENT
The term of this Consulting Agreement shall run for a period of one (1) year
from the date of its execution by all parties, with additional options for
extension thereafter by mutual and written consent. Notwithstanding the
foregoing sentence, either party shall have the right to terminate the Agreement
at any time through the forwarding of a written notification to the other party
with a thirty (30) day notice period. The Company shall have the right to
terminate this Agreement immediately and have no further obligations hereunder
for "cause" in accordance with Section 7.
SECTION 6. TRANSFER OF ASSETS, MERGER
Notwithstanding anything to the contrary herein, if:
a. All or substantially all of the assets of the Company, should
be transferred (either by sale, exchange, foreclosure,
liquidation, dissolution, repurchase or other disposition) to
a corporation or other entity, or
b. A majority of the following persons, Lawrence D. Bain, Richard
C. Adamany, Bennett S. Rubin, Robert G.J. Burg II, Michael
Cicak and
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Dr. Andrew J. Fishleder, each of whom is expected to be
elected to the Company's Board of Director's at the next
annual meeting of the stockholders, is no longer a member of
the Company's Board of Directors,
this Agreement shall terminate.
SECTION 7. TERMINATION FOR CAUSE
The Company shall have the right to terminate this Agreement immediately and
have no further obligations hereunder for "cause." For purposes of this
Agreement, cause shall be defined as one of the following acts committed by the
Consultant, his designates, a subcontractor or other entity that he has engaged
to assist him in fulfillment of his duties under this Agreement: (a) commission
of a felony or any violation of Federal or state securities laws or rules of the
NASD or SIPC, (b) voluntary or involuntary bankruptcy or insolvency, (c)
material breach of any written directive from the Company's Board of Directors
or Chief Executive Officer, or (d) material misstatement regarding the Company,
its financial condition, business or prospects.
SECTION 8. LIABILITY AND INDEMNIFICATION
Each party to this Agreement agrees to indemnify the other party and its
respective shareholders, directors, officers, employees and agents against, and
agrees to hold them harmless from, any and all costs, expenses, losses, damages
and liabilities incurred or suffered, directly or indirectly, by any of them
(including, without limitation, reasonable attorneys' fees) (collectively
"Losses") arising out of or relating to: (i) any failure to perform any covenant
made by, or obligation of such party pursuant to this Agreement; (ii) any claim
or demand by any third party arising out of allegations that, if true, would
constitute a failure to perform any such covenant or obligation by such party;
and (iii) any act or omission of such party if such act or omission constitutes
the gross negligence of such party.
SECTION 9. AUTHORITY
The Company and any affiliates hereby warrant and represent that they have the
full power and authority to execute and deliver this Agreement to the Consultant
and to perform the obligations as contained herein, and that this Agreement has
been duly authorized, executed and delivered by the Company and any affiliates
and further constitutes and valid, binding and legally enforceable obligation of
the Company and any affiliates.
SECTION 10. NOTICES, ETC.
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All notices and other communications hereunder shall be in writing and shall be
deemed to have been given either; when hand delivered to the addressee's office,
or three (3) days after being mailed by first class, registered or certified
mail, postage prepaid, addressed as follows:
a. If to the Consultant to: Douglas G. Furth, 714 Arbor Way,
Aurora, Ohio 44202, or to any other such person(s) and/or
addresses as may be furnished, in writing, to the Company by
the Consultant;
b. If to the company to: Richard C. Adamany, President and Chief
Executive Officer, 23800 Commerce Park Road, Suite A,
Cleveland, OH 44122 with a copy to Joseph G. Tegreene,
Benesch, Friedlander, Coplan & Aronoff LLP, 2300 BP America
Building, 200 Public Square, Cleveland, OH 44114 or to any
other such person(s) and/or addresses as may be furnished, in
writing to the Consultant by the Company
SECTION 11. ENTIRE AGREEMENT
The parties hereto agree that this Agreement constitutes the entire agreement
between the parties with respect to the subject mater hereof, that that this
Agreement supersedes any and all prior agreements and understandings between the
parties with regard to such subject matter, and that there are no restrictions,
agreements, arrangements, either oral or written, between the parties relating
to the subject matter hereof which are not fully and accurately expressed or
referred to herein.
SECTION 12. WAIVERS
Any waiver of the terms and/or conditions as set forth within this Agreement
shall not operate as a waiver of any other breach or claim of such terms or
conditions or any other term or condition, nor shall any failure to enforce any
provisions hereof operate as a waiver of such provision or of any other
provision hereof. No waiver, unless it by its own terms explicitly so provides,
shall be construed to effect a continuing waiver in any other instance or for
any other purpose, or impair the right of the party against whom such waiver is
claimed, in all other instances or for all other purposes, to require full
compliance with such provision.
SECTION 13. FURTHER AMENDMENTS
Each of the parties hereto agrees to execute all such further instruments and
documents and to take all such further action as the other party may reasonably
require in order to effectuate the terms, conditions and purposes of this
Agreement.
SECTION 14. AMENDMENTS
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This Agreement may not be amended, nor shall any waiver, change, modification,
consent or discharge be effected, except by an instrument in writing fully
executed by the party against whom enforcement of any amendment, waiver, change,
modification, consent or discharge is sought.
SECTION 15. ASSIGNMENT; SUCCESSORS AND ASSIGNS
This Agreement shall, except as hereinafter provided, not be assignable by
either party without the receipt of the prior written consent of the other. This
Agreement may also be assigned pursuant to a sale of substantially all of the
assets of the Consultant's practice with or to a party acceptable to the
Company, which party shall have assumed the Consultant's obligations hereunder
pursuant to an agreement in form and substance reasonably satisfactory to the
Company. This Agreement shall be binding upon and shall inure to the benefit of
the parties and their respective successors in interest (whether by merger,
consolidation or similar transaction), and permitted assigns, except as provided
in Section 6.
SECTION 16. NO AGENCY CREATED
Nothing as contained within this Agreement is intended to create, nor shall any
provision hereof be construed so as to create, a partnership, joint venture,
coadventure or joint undertaking by and among the Consultant and the Company, or
to further constitute the consultant as an agent of the Company, it being the
express intention of the parties hereto that the relationship created hereby
shall be that of separate and independent contractors acting at all times in
their sole and individual capacities. The consultant shall have no authority to
act on behalf of the Company in any matter except as expressly outlined within
this Agreement, or as may be agreed upon otherwise, in writing.
SECTION 17. ACCESS; ASSISTANCE; INFORMATION: COMPLIANCE WITH LAW
a. In connection with the Consultant's engagement as contemplated by and
through this Agreement the Company and any affiliates hereby agree to
furnish the Consultant and any of his designates with all information
concerning the Company and any affiliates which the Consultant reasonably
deems as being appropriate, and will provide the Consultant with access to,
assistance from, availability for communications and meetings with, the
Company's and any affiliates files, officers, directors, accountants,
counsel, investment bankers, broker-dealers, marketmakers and other outside
advisors. The Company represents and warrants to the Consultant that all
such information is and will be truthful and accurate in all material
respects and that it does not nor will not contain any untrue statement of
a material fact, or omit to state a material fact necessary in order to
make the statements therein not misleading in light of the circumstances
under which such statements are made. The Company acknowledges that the
consultant will be utilizing and relying upon the accuracy and completeness
of the
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information supplied by or on behalf of the Company and its officers in
connection with its engagement without independent verification, and that
the Consultant does not assume responsibility for the accuracy and
completeness of any such information. The Company will promptly notify the
Consultant in writing in the event that it learns of any material
inaccuracy in or material omissions from, any information as previously
delivered to the Consultant, including, particularly, the financial
projections of the Company and any affiliates.
b. The burden of compliance with law for all matters concerning the Company
and any affiliates and/or entities which either have or may be
contemplating the issuance of Securities, rests with the Company and any
such affiliate or entity. Although the Consultant may offer its practical
advice or offer comments or observations regarding such matters, he shall
not be deemed to provide legal or accounting advice or services, nor to be
the maker, author, publisher or be responsible for any statement,
representation or misstatement, misrepresentation, omission or alleged
misstatement, alleged misrepresentation or alleged omission.
SECTION 18. SEVERABILITY
In the event that any provision of this Agreement shall be held or deemed to be,
or shall in fact be invalid, inoperative or unenforceable as applied to any
particular case in any jurisdiction or jurisdictions, or in all jurisdictions or
cease, because of conflict of any provision with any constitution or statute or
rule of public policy or for any other reason, such circumstance shall not have
the effect of rendering the provision or provisions herein contained invalid,
inoperative or unenforceable, to the extent that such other provisions are not
themselves actually in conflict with such constitution, statute or rule of
public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative or unenforceable provision
had never been contained here and such provision reformed so that it would be
valid, operative and enforceable to the maximum extent permitted in such
jurisdiction or in such case, except when such construction could operate as an
undue hardship on either party, or constitute a substantial deviation from the
general intent and purpose of such party is reflected within this Agreement. For
purposes of interpretation, no party shall be deemed the drafter of this
Agreement.
SECTION 19. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument, and in pleading or proving any provision of this Agreement, it shall
not be necessary to produce more than one of such counterparts signed by the
party against whom enforcement is sought. Fax signatures shall be valid as
originals or copies.
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SECTION 20. SECTION HEADINGS
The headings as utilized throughout this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement
SECTION 21. GENDER
Whenever used herein the singular noun shall include the plural, the plural
shall include the singular, and the use of any gender shall include all genders.
SECTION 22. GOVERNING LAW
This Agreement shall be governed by and construed and enforced in accordance
with the internal law of the State of Ohio, without regard to the principles of
conflicts of laws.
IN WITNESS WHEREOF, the parties have executed or caused to be executed the
Agreement as of the date first above written.
DOUGLAS G. FURTH
/s/ Douglas G. Furth
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DATE: February 3, 2001
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EMPYREAN BIOSCIENCE, INC.
BY: /s/ Richard C. Adamary
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TITLE: President
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DATE: February 3, 2001
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