EXHIBIT 10.9
CONSULTING AGREEMENT
This Consulting Agreement ("AGREEMENT") is executed to be effective as
of November 30, 2004 (the "EFFECTIVE DATE") by and among Sealife Corporation, a
Delaware corporation ("PARENT"), SeaLife Marine Products, Inc., a California
corporation and indirect wholly-owned subsidiary of Parent ("COMPANY"), and
Michael Sahl, an individual (the "CONSULTANT"), with reference to the following:
RECITALS
Parent and Company wish to retain the Consultant on a non-exclusive
basis, and the Consultant wishes to be retained by Parent and Company, to
provide to Parent and Company the "SERVICES" set forth below, all upon the terms
and subject to the conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Parent, Company and the Consultant
agree as follows:
1. TERM. Parent and Company hereby retain the Consultant and the
Consultant accepts this appointment by Parent and Company, for a period
commencing as of the Effective Date and terminating October 31, 2005 (the
"TERMINATION DATE"), unless extended by mutual agreement of the parties
(collectively, the "TERM").
2. DUTIES OF CONSULTANT. The Consultant will perform
non-exclusive consulting services for Company as the parties may mutually agree,
including without limitation, those services described on EXHIBIT A hereto (the
"SERVICES"). The Consultant will determine, in his sole discretion, the method,
details and means of performing the Services. The Consultant shall not be
required to devote his full time and business attention to the performance of
the Services.
3. COMPENSATION.
3.1 STOCK CONSIDERATION. As compensation for the Services
to be provided to Company during the Term, Parent will issue to the Consultant,
sixteen thousand six hundred sixty seven (16,667) shares of the common stock of
Parent on the last day of each calendar month of the term, beginning November
30, 2004 (the "STOCK CONSIDERATION"). Company shall cause its transfer agent to
issue to and register in the name of the Consultant certificates evidencing the
Stock Consideration to be received under this Section 3.1.
3.2 Unless written notice is otherwise delivered by
Company to Consultant, on the Termination Date, the Services shall be deemed
completed and satisfied in full and Consultant shall be deemed to have delivered
full consideration for the Stock Consideration as of such date.
4. NONDISCLOSURE.
4.1 ACCESS TO CONFIDENTIAL INFORMATION. The Consultant
agrees that during the Term, the Consultant may have access to and become
acquainted with confidential proprietary information ("CONFIDENTIAL
INFORMATION") which is owned by Company and is regularly used in
the operation of Company's business. The Consultant agrees that the term
"Confidential Information" as used in this Agreement is to be broadly
interpreted and includes (i) information that has, or could have, commercial
value for the business in which Company is engaged, or in which Company may
engage at a later time, and (ii) information that, if disclosed without
authorization, could be detrimental to the economic interests of Company. The
Consultant agrees that the term "Confidential Information" includes, without
limitation, any patent, patent application, copyright, trademark, trade name,
service mark, service name, "know-how," negative "know-how," trade secrets,
customer and supplier identities, characteristics and terms of agreement,
details of customer or consultant contracts, pricing policies, operational
methods, marketing plans or strategies, product development techniques or plans,
business acquisitions plans, science or technical information, ideas,
discoveries, designs, computer programs (including source codes), financial
forecasts, unpublished financial information, budgets, processes, procedures,
formulae, improvements or other proprietary or intellectual property of Company,
whether or not in written or tangible form, and whether or not registered, and
including all memoranda, notes, summaries, plans, reports, records, documents
and other evidence thereof. The Consultant acknowledges that all Confidential
Information, whether prepared by the Consultant or otherwise acquired by the
Consultant in any other way, will remain the exclusive property of Company.
4.2 NO UNFAIR USE BY CONSULTANT. The Consultant promises
and agrees that the Consultant will not misuse, misappropriate, or disclose in
any way to any person or entity any of the Company's Confidential Information,
either directly or indirectly, nor will the Consultant use the Confidential
Information in any way or at any time except as required in the course of the
Consultant's business relationship with Company.
5. TERMINATION.
5.1 TERMINATION FOR CONVENIENCE. Parent and Company shall
be permitted to terminate this agreement with or without cause and for any
reason upon delivery to the Consultant of sixty (60) days prior written notice
of its termination.
5.2 TERMINATION ON DEFAULT. Should any party default in
the performance of this Agreement or materially breach any of its provisions,
the non-breaching party may terminate this Agreement by giving written
notification to the breaching party. Termination shall be effective immediately
on receipt of said notice. For purposes of this Section 5, material breaches of
this Agreement shall include, but not be limited to, (i) the failure by Parent
or Company to pay the compensation set forth in Section 3 above; (ii) the
Consultant's failure to provide the Services hereunder in a manner reasonably
acceptable to Parent and Company; (iii) the Consultant's commission of acts of
material fraud or material misrepresentation; and (iv) the failure by the
Consultant to conform in all material respects to all laws and regulations
governing the Consultant's duties under this Agreement.
5.3 AUTOMATIC TERMINATION. This Agreement terminates
automatically on the occurrence of any of the following events: (i) the
bankruptcy or insolvency of Company; (ii) the death or permanent disability of
the Consultant; or (iii) the voluntary resignation of the Consultant.
5.4 RETURN OF PROPERTY. Upon the termination or
expiration of this Agreement, the Consultant will immediately transfer to
Company all files (including, but not limited to, electronic files), records,
documents, drawings, specifications, equipment and similar items in its
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possession relating to the business of Parent or Company or their respective
Confidential Information (including the work product of the Consultant created
pursuant to this Agreement).
6. REPRESENTATIONS AND WARRANTIES.
(a) Parent and Company hereby represent and warrant to the
Consultant as follows:
(i) the execution and delivery by Parent and Company of
this Agreement, and the consummation by Company of the transactions set forth
herein, have been duly authorized by all necessary corporate action on the part
of Parent and Company, respectively; and
(ii) this Agreement has been duly executed and delivered
by Parent and Company and constitutes a valid and binding obligation of Parent
and Company enforceable against Company in accordance with its terms.
(b) The Consultant hereby represents and warrants to Parent and
Company as follows:
(i) this Agreement has been duly executed and delivered
by Consultant and constitutes a valid and binding obligation of Consultant
enforceable against Consultant in accordance with its terms;
(ii) the Consultant has the qualifications and ability to
perform the Services in a professional manner, without the advice, control, or
supervision of Parent and Company;
(iii) the Consultant is an "accredited investor" within the
meaning of Rule 501 of Regulation D, promulgated under the Securities Act of
1933, as amended (the "SECURITIES ACT").
(iv) the Consultant is a sophisticated investor and has
such knowledge and experience in business and financial matters as to be capable
of evaluating the merits and risks of an investment in Parent and has the
capacity to protect its own interest in connection with the acquisition of the
Stock Consideration;
(v) the Consultant acknowledges that except as expressly
stated in Section 6(a) of this Agreement, neither Parent nor any officer,
director, employee, agent or representative thereof have made any
representations or warranties of any kind to the Consultant including
representations regarding future revenues, earnings or profits of Parent, the
future value of the Stock Consideration, the future capitalization of Parent,
the occurrence or timing of any registered offering Company, the amount of
future business that may be transacted by Company or otherwise. The Consultant
further understands that Company's success in achieving their respective goals
and objectives in the future and implementing their respective business plans
cannot be predicted and are subject to numerous factors not within the control
of Company. The Consultant is not acquiring the Stock Consideration based upon
representations, oral or written, by any person with respect to the future value
of, or income from, the Stock Consideration, or the length of time that the
Consultant will be required to remain as the owner of the Stock Consideration
but rather upon an independent examination and judgment as to the prospects of
Company;
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(vi) the Consultant understands that the Stock
Consideration has not been registered under the Securities Act, or any other
applicable state or federal securities statutes (together with the Securities
Act, the "ACTS"). The Consultant is acquiring the Stock Consideration for
investment, for the Consultant's own account, and with no present intention of
reselling, directly or indirectly participating in any distribution of or
otherwise disposing of the Stock Consideration. The Consultant understands that
the Stock Consideration is subject to restrictions on transfer and that that
Consultant may bear the economic risk of acquiring the Stock Consideration for
an indefinite period of time;
(vii) the Consultant was not presented with or solicited by
any leaflet, public promotional meeting, circular, newspaper or magazine
article, radio or television advertisement or any other form of general
advertising or solicitation for the acquisition of the Stock Consideration;
(viii) the Consultant has had reasonable opportunity to seek
the advice of independent counsel respecting its investment and the risks and
the implications thereof and has relied solely upon the advice of it's own tax
and legal advisors with respect to the tax and other legal aspects of the
acquisition;
(ix) the Consultant acknowledges that a legend
substantially as follows will be placed on the certificates representing the
Stock Consideration:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER EITHER THE
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD, OFFERED FOR SALE, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH
RESPECT TO THE SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
SATISFACTORY TO ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED;
and
7. TRANSFER RESTRICTIONS. The Stock Consideration may not be
offered for sale, sold or transferred except pursuant to (i) an effective
registration under the Securities Act or in a transaction which is otherwise in
compliance with the Securities Act, (ii) an effective registration under any
applicable state securities statute or in a transaction otherwise in compliance
with any applicable state securities statute, and (iii) evidence of compliance
with the applicable securities laws of other jurisdictions. The Consultant shall
furnish to Company shall be entitled to rely upon, an opinion of competent
securities counsel acceptable to Company with respect to compliance with the
above laws.
In the event that the Consultant satisfies the requirements of Rule
144, Parent will, upon request, remove the legend set forth above from
Consultant's certificate; provided, however, that if Company reasonably believes
that an opinion of counsel for the Consultant is necessary, due to unusual
circumstances, in order to determine that the requirements of Rule 144 have been
satisfied, Company shall request, and the Consultant shall provide, such opinion
prior to the removal of the legend.
8. NOTICES. Unless otherwise specifically provided in this
Agreement, all notices or other communications (collectively and severally
called "NOTICES") required or permitted to be given under this Agreement, shall
be in writing, and shall be given by: (A) personal delivery
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(which form of Notice shall be deemed to have been given upon delivery), (B) by
telegraph or by private airborne/overnight delivery service (which forms of
Notice shall be deemed to have been given upon confirmed delivery by the
delivery agency), or (C) by electronic or facsimile or telephonic transmission,
provided the receiving party has a compatible device or confirms receipt thereof
(which forms of Notice shall be deemed delivered upon confirmed transmission or
confirmation of receipt). Notices shall be addressed to the address set forth in
below, or to such other address as the receiving party shall have specified most
recently by like Notice, with a copy to the other party:
If to Company: SeaLife Corporation
Attn: Barre Rorabaugh
5601 W. Slauson Avenue
Culver City, California 90230
If to the Consultant: Michael Sahl
P.O. Box 435
Point Arena, CA 95468
9. REGISTRATION RIGHTS.
9.1 SB-2 REGISTRATION. On or prior to the date which is
thirty (30) calendar days from the Effective Date, Parent shall prepare and file
with the SEC a Securities Act registration statement on Form SB-2, or such other
form (other than Form S-4 or S-8, or any successor form) (the "REGISTRATION
STATEMENT") sufficient to register the resale of the shares held by the
Consultant (the "SHARES") for an offering to be made on a continuous basis
pursuant to Rule 415 promulgated under the Securities Act. Parent shall use its
commercially reasonable efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as possible after the
filing thereof, and shall use its commercially reasonable efforts to keep the
Registration Statement continuously effective, and updated as required, under
the Securities Act until the date which is two (2) years after the Effective
Date or such earlier date when all Shares covered by the Registration Statement
have been sold or may be sold without volume restrictions pursuant to Rule
144(k) promulgated under the Securities Act as determined by counsel to Parent
pursuant to a written opinion letter to such effect, addressed and acceptable to
the Parent's transfer agent. Notwithstanding the foregoing, the Company's
obligations hereunder to file the Registration Statement and to keep the
Registration Statement continuously effective, and updated as required, under
the Securities Act shall be suspended if the fulfillment of such obligations (i)
would require the Company to make a disclosure that would, in the reasonable
judgment of the Parent's Board of Directors, have a material adverse effect on
the Parent or a material adverse effect on the future prospects of the Parent or
its stockholders, or (ii) would adversely affect, or would, in the reasonable
judgment of the Parent's Board of Directors, be adversely affected by, the SEC's
ongoing investigation of Parent and certain of its directors and officers as
previously disclosed to Consultant and as more fully set forth in Parent's
Periodic Reports.
9.2 PIGGYBACK REGISTRATION RIGHTS.
9.2.1 RIGHT TO PIGGYBACK. Whenever Parent proposes
to register any of its securities under the Securities Act (other than on a
registration on Form S-4 or S-8 or any
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successor form or a registration of non-convertible debt securities) on a
registration form which may be used for the registration of any Shares (a
"PIGGYBACK REGISTRATION"), Parent will give written notice to Holder of its
intention to effect such a registration and will use its commercially reasonable
efforts to include in such registration all Shares (in accordance with the
priorities set forth in Sections 9.2.2 and 9.2.3 below) with respect to which
Parent has received written requests for inclusion by Consultant within fifteen
(15) days after the delivery of Parent's notice.
9.2.2 PRIORITY ON PRIMARY REGISTRATIONS. If a
Piggyback Registration is an underwritten primary registration on behalf of
Parent and any Shares are included in the underwritten offering and the managing
underwriters advise Parent in writing that in their opinion the number of
securities requested to be included in such underwritten offering exceeds the
number which can reasonably be sold in such offering, Parent will include in
such underwritten offering first, the securities that Parent proposes to sell;
second, the securities that any holder of registration rights issued prior to
the Effective Date proposes to sell; and third, the Shares requested to be
included therein by the Holder.
9.2.3 PRIORITY ON SECONDARY REGISTRATIONS. If a
Piggyback Registration is an underwritten secondary registration on behalf of
holders of Parent's securities and any Shares are included in the underwritten
offering and the managing underwriters advise Parent in writing that in their
opinion the number of securities requested to be included in such underwritten
offering exceeds the number which can reasonably be sold in such offering,
Parent will include in such underwritten offering first, the securities that any
holder of registration rights issued prior to the Effective Date proposes to
sell; and second, the Shares requested to be included therein by the Holder.
9.2.4 SELECTION OF UNDERWRITERS. In connection
with any Piggyback Registration in which Consultant has elected to include
Shares, Parent shall have the right to select the managing underwriters to
administer any offering of Parent's securities in which Parent participates.
9.3 INDEMNIFICATION.
9.3.1 INDEMNIFICATION BY HOLDERS. Consultant
(sometimes referred to in this Section 9.3 as a "HOLDER") shall, if Shares held
by Holder are included in a Securities Act registration effected pursuant to
this Section 9 severally and not jointly, indemnify and hold harmless Parent,
its directors, officers, agents and employees, each person who controls Parent
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, agents or employees of such
controlling persons (collectively, the "Parent Indemnitees"), to the fullest
extent permitted by applicable law, from and against all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable
attorneys' fees) and expenses (collectively, "LOSSES"), as incurred, to the
extent arising out of or based upon: (x) Holder's failure to comply with the
prospectus delivery requirements of the Securities Act, or (y) any untrue or
alleged untrue statement of a material fact contained in the Registration
Statement, any prospectus, or any form of prospectus, or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading (i) to
the extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by Holder to Parent
specifically for inclusion in the Registration Statement or such prospectus, or
(ii) to the extent that (1) such
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untrue statements or omissions are based solely upon information regarding
Holder furnished in writing to Parent by Holder expressly for use therein, or to
the extent that such information relates to Holder or Holder's proposed method
of distribution of Shares and was reviewed and expressly approved in writing by
Holder expressly for use in the Registration Statement, such prospectus or such
form of prospectus or in any amendment or supplement thereto, or (2) the use by
Holder of an outdated or defective prospectus after Purchaser has notified
Holder in writing that such prospectus is outdated or defective. In no event
shall the liability of any selling Holder hereunder be greater in amount than
the dollar amount of the net proceeds received by Holder upon the sale of the
Shares giving rise to such indemnification obligation. In no event shall any
Holder be liable for indemnity with respect to amounts paid in settlement by
Parent Indemnitees if such settlement is effected without the consent of Holder
(which consent shall not be unreasonably withheld).
9.3.2 INDEMNIFICATION BY PARENT. If Shares held by
any Holder are included in a Securities Act registration effected pursuant to
this Section 9, Parent will indemnify Holder, each of its directors, officers,
agents or employees, each person who controls Holder (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling person
(collectively, "Holder Indemnitees"), to the fullest extent permitted by
applicable law, from and against all Losses, as incurred, to the extent arising
out of or based upon: (x) any knowing violation by Parent of the Securities Act
or any rule or regulation thereunder applicable to Parent and relating to action
or inaction required of Parent in connection with any such registration, or (y)
any untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any prospectus, or any form of prospectus, or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein not misleading,
except that Parent will not be liable under this clause (y) in any such case to
the extent that any such Losses arise out of or are based upon any untrue
statement or omission based solely upon information furnished in writing to
Parent by Holder specifically for use therein. In no event shall Parent be
liable for indemnity of amounts paid in settlement by Parent if such settlement
is effected without the consent of Parent (which consent shall not be
unreasonably withheld).
10. LOCK-UP. Notwithstanding anything else herein to the contrary,
including, without limitation, the provisions of Section 7 hereto, and
notwithstanding the provisions of Rule 144 promulgated under the Securities Act,
or of any registration statement that may register the resale of the Stock
Consideration, the Consultant agrees that, for a period of two (2) years
following the Effective Date, the Consultant shall not sell, transfer, assign,
make any short sale of, loan, grant any option for the purchase of, or otherwise
dispose of or trade (collectively, a "SALE") any of the Stock Consideration or
other securities of Company otherwise acquired by the Consultant after the
Effective Date, except to the extent that such Sale, together with all Sales of
restricted and other securities of the same class for the account of the
Consultant within the preceding three months, does not exceed one percent (1%)
of the Stock Consideration or other securities of Company then held by the
Consultant.
11. MISCELLANEOUS.
11.1 INDEPENDENT CONTRACTOR. It is the intention of
Company and the Consultant that Company, on the one hand, and the Consultant, on
the other hand are, and shall be deemed to be, independent contractors with
respect to the subject matter of this Agreement,
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and nothing contained herein shall be deemed or construed in any manner
whatsoever as creating any partnership, joint venture, employment or other
similar relationship between Company and the Consultant.
11.2 CHOICE OF LAW AND VENUE. This Agreement shall be
governed according to the laws of the State of California, notwithstanding the
conflict of laws principles thereof. Subject to the Arbitration provisions
herein, venue for any legal or equitable action between Company, on the one
hand, and the Consultant, on the other hand, which relates to this Agreement
shall be in the state or federal courts located in Los Angeles, California.
11.3 INJUNCTIVE RELIEF. The Consultant agrees that in the
event of any breach by the Consultant of any of the covenants and agreements set
forth in this Agreement, including, without limitation, the covenants and
agreements set forth in Paragraphs 2, 4, 5.4, 7 and 9 hereof, Company would
encounter extreme difficulty in attempting to prove the actual amount of damages
suffered by each as a result of such breach and would not have adequate remedy
at law in such event. The Consultant therefore agrees that, in addition to any
other remedy available at law or in equity, in the event of such breach, Company
shall be entitled to seek and receive specific performance and temporary,
preliminary and permanent injunctive relief from violation of any of said
covenants and agreements from any court of competent jurisdiction without
necessity of proving the amount of any actual damage to Company resulting from
such breach.
11.4 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding on the parties hereto and their respective successors and assigns. The
Consultant's duties, obligations, rights and privileges hereunder may not be
delegated or assigned by it in any manner. The benefits hereunder with respect
to the rights of Company may be assigned by Company to any other corporation or
other business entity which succeeds to all or substantially all of the business
of Company through merger, consolidation, corporate reorganization or by
acquisition of all or substantially all of the assets of Company.
11.5 COUNTERPARTS. This Agreement may be executed manually
or by facsimile signature in two or more counterparts, each of which shall be
deemed an original, and all of which together shall constitute but one and the
same instrument.
11.6 WAIVER. Waiver by either of the parties of any breach
of any provision of this Agreement shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereof.
11.7 SURVIVAL. Sections 4, 5.4, 7, 8, 9 and 10 shall
survive the termination of this Agreement.
11.8 ATTORNEYS' FEES. The prevailing party in any
litigation instituted under this Agreement shall, in addition to other remedies,
be entitled to be reimbursed by the other party for all expenses of such
litigation, including reasonable attorneys' fees.
11.9 ARBITRATION. The parties hereby agree that all
controversies, claims and matters of difference shall be resolved by binding
arbitration before JAMS/Endispute ("JAMS") located in Los Angeles, California
according to the rules and practices of JAMS from time-to-time in force;
PROVIDED HOWEVER that the parties hereto reserve their rights to seek and obtain
injunctive or
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other equitable relief from a court of competent jurisdiction, without waiving
the right to compel such arbitration pursuant to this section.
11.10 SEVERABILITY. If any term or provision of this
Agreement or the application thereof to any person or circumstance shall, to any
extent, be determined to be invalid, illegal or unenforceable under present or
future laws effective during the term of this Agreement, then and, in that
event: (A) the performance of the offending term or provision (but only to the
extent its application is invalid, illegal or unenforceable) shall be excused as
if it had never been incorporated into this Agreement, and, in lieu of such
excused provision, there shall be added a provision as similar in terms and
amount to such excused provision as may be possible and be legal, valid and
enforceable, and (B) the remaining part of this Agreement (including the
application of the offending term or provision to persons or circumstances other
than those as to which it is held invalid, illegal or unenforceable) shall not
be affected thereby and shall continue in full force and effect to the fullest
extent provided by law.
11.11 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement and understanding of Company and the Consultant in respect of
the subject matter identified herein, and supersedes all prior understandings,
agreements, or representations by or among Company, on the one hand, and the
Consultant, on the other hand, written or oral, to the extent they relate in any
way to the subject matter identified herein.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the Effective Date.
"CONSULTANT"
MICHAEL SAHL
/S/ MICHAEL SAHL
-----------------------------
"PARENT"
SEALIFE CORPORATION
By: /S/ ROBERT MCCASLIN
--------------------------
Name: Robert McCaslin
Title:CEO
"COMPANY"
SEALIFE MARINE PRODUCTS, INC.
By: /S/ BARRE RORABAUGH
--------------------------
Name: Barre Rorabaugh
Title: President
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