EXHIBIT 10.53
CONSULTING AGREEMENT
This Agreement is made and entered into by and between SmartServ Online,
Inc., a Delaware corporation having a principal place of business at 2250 Butler
Pike, Suite 150, Plymouth Meeting, PA 19462 (the "Company"), and M. Ezzat Jalled
(the "Consultant") as of the 1st day of June, 2004 (the "Effective Date").
WHEREAS, the Company wishes to engage the Consultant to consult with
respect to certain aspects of its business;
WHEREAS, the Consultant is willing to make available to the Company the
consulting services provided for in this Agreement as set forth below;
For and in consideration of the foregoing premises and the mutual promises,
terms, provisions and conditions contained in this Agreement, the parties agree
as follows:
1. TERM. Subject to earlier termination, as hereinafter provided, the term
of this Agreement shall be for a period of one year, commencing on the Effective
Date, which term may only be extended or renewed by written agreement duly
authorized by the Board of Directors of the Company (the "Board"). The initial
term of this Agreement and any extension or renewal terms are collectively
referred to hereafter as "the term hereof" or "the term of this Agreement."
2. RELATIONSHIP OF THE PARTIES.
a. It is expressly understood and agreed by the parties that the
Consultant is an independent contractor in the performance of each and every
part of this Agreement and that nothing contained in this Agreement is intended,
or shall be construed, to constitute the Consultant as the employee, agent,
partner or joint venturer of the Company or as constituting the exercise by the
Company
of control or direction over the manner or method by which the Consultant
performs the services which are the subject of this Agreement.
b. The Consultant shall have no right, power or authority in any way
to bind or speak for the Company or to create any liability binding on the
Company. The Company is not responsible for any expenses or liabilities incurred
by the Consultant, other than business expenses expressly authorized in writing
by an executive officer of the Company.
3. CONSULTANT'S SERVICES.
a. During the term of this Agreement, the Consultant shall provide the
following services:
(i) Consult with the Company's management concerning marketing
surveys, investor profile information, methods of expanding investor
support and increasing investor awareness of the Company and its
products and services;
(ii) Strategic planning (including market analysis, competition
analysis, and identification of strategic business opportunities);
(iii) Market research on proposed new business opportunities; and
(iv) Identification of merger and/or acquisition candidates.
b. In addition, the Consultant shall provide such other advice and
consulting services as the Company may from time to time request, upon
reasonable notice to the Consultant, oral or in writing. Services shall be
provided during normal business hours, unless otherwise mutually agreed. The
Consultant shall devote such business time as is necessary to fully perform
hereunder.
2
4. COMPENSATION.
a. During the term hereof, as full compensation for all services
performed by Consultant for the Company and subject to the Consultant's
performance hereunder, Consultant hereby agrees to accept upon execution of this
Agreement, a Common Stock Purchase Warrant (the "Warrant") for the purchase, in
the aggregate, of up to 100,000 shares of the Common Stock of the Company at an
exercise price of one dollar, fifty cents ($1.50) per share. The Warrant shall
not be transferable except with the consent of the Company and shall expire on
the second anniversary of the date of issuance. The shares of Common Stock
covered by this Warrant shall vest in equal amounts over a period of twelve (12)
months at the end of each calendar month commencing June 1, 2004.
b. Consultant shall pay all applicable taxes that are assessed against
him as a result of his receipt of compensation under this Agreement, and the
Company shall not withhold any such taxes from the compensation paid to
Consultant. Consultant agrees to indemnify and hold harmless the Company,
together with its officers and directors, with respect to any such taxes or
other assessments that may be due and payable as a result of the payment or
receipt of compensation hereunder.
5. NO ELIGIBILITY FOR EMPLOYEE BENEFITS. The Consultant understands that he
is an independent contractor and, as such, neither he nor any dependent or other
individual claiming through him will be eligible to participate in, or receive
benefits under, any of the employee benefit plans, programs and arrangements
maintained by the Company (collectively, the "Plans"). The Consultant hereby
waives irrevocably any and all rights to participate in, or receive benefits
under, any of the Plans. The Consultant agrees that he will never make a claim
under any of the Plans and agrees to indemnify and hold harmless the Company,
its officers, directors, shareholders, employees and agents, and all others
connected with it, and all administrators and fiduciaries of the Plans, and all
others connected with any of them, from any and all liabilities, losses, damage,
costs and expenses of whatever nature in any way arising out of or connected
with any such claim by him or by any dependent or other individual claiming
3
through him.
6. COMPLIANCE WITH LAWS AND COMPANY POLICY; TRADING RESTRICTIONS. The
Consultant will comply with this Agreement and all applicable laws, rules and
regulations. Some of the information to be disclosed by the Company to the
Consultant under this Agreement is material inside information. Material inside
information will only be disclosed to Consultant on a need to know basis and for
a specific purpose, and Consultant shall use such information only for such
specific purpose. The Consultant agrees to comply with all applicable securities
laws, rules and regulations (collectively, "Securities Laws") and agrees not to
use material inside information or trade in the Company's securities except as
permitted by the Securities Laws. The Consultant further agrees that it will not
take any action in connection with the performance of its services herein that
is illegal or in violation of applicable laws, rules and regulations The
Consultant agrees to indemnify and save the Company harmless from any and all
liability, cost and expense suffered by the Company as a consequence of the
Consultant's failure to comply with these obligations.
7. CONFIDENTIAL INFORMATION, NON-COMPETITION AND CONFLICTS OF INTEREST. The
Consultant agrees that some restrictions on his activities during and after the
term of this Agreement are necessary to protect the Confidential Information,
good will and other legitimate interests of the Company, as follows:
a. During the term hereof, the Consultant shall not, directly or
indirectly, compete with the Company, whether as a contractor, consultant,
agent, partner, principal, investor, employee or otherwise. Specifically, but
without limiting the generality of the foregoing, the Consultant agrees that he
shall not, directly or indirectly solicit or encourage any customer of the
Company to terminate or diminish its relationship with the Company or to conduct
with himself or with any other person, organization or other entity any business
or activity which such customer conducts or could conduct with the Company.
Consultant further agrees that, during the term hereof, he shall not, directly
or indirectly, hire or attempt
4
to hire any employee of the Company, assist in such hiring by any other person
or entity, or encourage any such employee to terminate his or her relationship
with the Company.
b. The Consultant acknowledges that, during the course of his
performance under this Agreement, the Consultant may develop Confidential
Information for the Company and may learn of Confidential Information developed
or owned by the Company or entrusted to it by others. The Consultant agrees that
he will not, during the term of this Agreement or at any time thereafter, use or
disclose any Confidential Information. For purposes of this Agreement,
"Confidential Information" means any and all information of the Company that is
not generally available to the public. Confidential Information includes but is
not limited to (i) the Company's financial information, development, research
and marketing activities, (ii) the Company's products and services, (iii) the
Company's costs, sources of supply and strategic plans, (iv) the identity and
special needs of the Company's customers and (v) the people and organizations
with whom the Company has business relationships and those relationships.
Confidential Information also includes such information the Company may receive
or has received belonging to customers or others who do business with it.
c. During the term hereof, Consultant shall not undertake or continue
any outside activity, whether or not competitive with the business of the
Company, that could foreseeably give rise to a conflict of interest, or
otherwise interfere with his duties and obligations to the Company.
8. NO CONFLICTING AGREEMENTS. The Consultant hereby represents and warrants
that the execution of this Agreement and the performance of his obligations
hereunder will not breach or be in conflict with any other agreement to which
the Consultant is a party or is bound and that the Consultant is not now subject
to any covenants against competition or similar covenants that would affect the
performance of his obligations hereunder. The Consultant will not disclose to or
use on behalf of the Company any proprietary information of any third party
without such party's consent.
5
9. INDEMNIFICATION.
a. The Company shall indemnify the Consultant from and against any and
all expenses (including attorneys' fees), judgments, fines, claims, causes of
action, liabilities and other amounts paid (whether in settlement or otherwise
actually and reasonably incurred) by the Consultant arising out of the
consulting services rendered pursuant to this Agreement as a result of any act
or omission of the Company constituting bad faith, gross negligence or willful
misconduct.
b. The Consultant shall indemnify and hold the Company, its
subsidiaries and other affiliates, and all of their respective directors,
officers, employees, agents, successors and assigns, harmless from any and all
injuries, losses, claims and damages to any person or property, and all costs
and expenses, including without limitation attorneys' fees, and any other
liabilities incurred by any of the foregoing as a result of any action or
omission of the Consultant constituting bad faith, gross negligence or willful
misconduct or act or omission of the Consultant in violation of any provision of
this Agreement.
10. TERMINATION. Notwithstanding the provisions of Section 1 hereof, this
Agreement shall terminate under the following circumstances:
a. Death or Permanent Disability. In the event of the Consultant's
death or permanent disability during the term hereof, this Agreement shall
immediately and automatically terminate.
b. Termination by the Company for Cause. The Company may terminate
this Agreement without notice in the event that the Consultant fails to provide
services under this Agreement or breaches any material provision of this
Agreement or the Consultant otherwise acts in a manner that is materially
harmful to the business interests or reputation of the Company.
6
c. Termination by the Company Other than for Cause. The Company may
terminate this Agreement other than for cause at any time upon written notice to
the Consultant.
d. Termination by Consultant. The Consultant may terminate this
Agreement upon thirty (30) days' prior written notice to the Company.
e. Effect of Termination. Upon termination of this Agreement in
accordance with paragraphs a, b, or d of this Section 10, any portion of the
Warrant that is not then vested shall be automatically terminated and the
Company shall have no further obligations to the Consultant, other than any
indemnification obligations under Section 9 for acts or omissions occurring
prior to the date of termination. Upon any termination of this Agreement under
Section 10, the provisions of Sections 4b, 5, 6, 7, 9,11, 12, 13, 14, 15, 16,
17, 18, and 19 shall continue in full force and effect as to the Consultant.
11. ENFORCEABILITY. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
12. WAIVER. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of either party to
require the performance of any term or obligation of this Agreement, or the
waiver by either party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
13. NOTICES. All notices provided by this Agreement shall be in writing and
shall be given by facsimile transmission, overnight courier, by registered mail
or by personal delivery, by one party to the other, addressed to such other
party at the applicable address set forth below, or to such other
7
addresses as may be given for such purpose by such other party by notice duly
given hereunder. Notice shall be deemed properly given on the date of delivery.
To Consultant:
M. Ezzat Jalled
To the Company:
SmartServ Online, Inc.
2250 Butler Pike, Suite 150
Plymouth Meeting, PA 19462
ATTENTION: Robert M. Pons
With a copy to:
Dean M. Schwartz, Esquire
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103
14. ENTIRE AGREEMENT. This Agreement contains the entire understanding
between the parties hereto with respect to the transactions contemplated hereby,
and may not be amended, modified, or altered except by an instrument in writing
signed by the party against whom such amendment, modification, or alteration is
sought to be enforced.
15. GOVERNING LAW, JURISDICTION, VENUE. This Agreement shall be construed
and
8
interpreted in accordance with the laws of the State of Pennsylvania without
regard to the conflict of law principles thereof. Consultant and Company each
consent to the forum, jurisdiction and venue of the state and federal courts of
the Commonwealth of Pennsylvania in actions, disputes or controversies
hereunder. The rights of the Company and the obligations of Consultant shall
survive completion of performance in accordance with the provisions of this
Agreement.
16. BINDING EFFECT; ASSIGNMENT. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective permitted heirs, executors,
administrators, successors and assigns. Neither the Company nor the Consultant
may make any assignment of this Agreement or any interest herein, without the
prior consent of the other party, provided, however, that the Company may assign
its rights and obligations under this Agreement without the consent of the
Consultant in the event that the Company shall hereafter effect a
reorganization, consolidate with, or merge into any other person, corporation or
other entity or transfer all or substantially all of its properties or assets to
any other person or entity.
17. CONSTRUCTION. The captions and headings contained herein are inserted
for convenient reference only, are not a part hereof and the same shall not
limit or construe the provisions to which they apply. References in this
Agreement to "paragraphs" are to the paragraphs in this Agreement, unless
otherwise noted.
18. EXPENSES. Each party shall pay and be responsible for the costs and
expenses, including, without limitation, attorneys' fees, incurred by such party
in connection with the negotiation, preparation and execution of this Agreement
and the transactions contemplated hereby.
19. NO RIGHTS TO OTHERS. Nothing herein contained or implied is intended or
shall be construed to confer upon or give to any person, firm or corporation,
other than the parties hereto.
20. COUNTERPART. This agreement may be executed simultaneously in two
counterparts,
9
each of which shall be deemed an original, but both of which together shall
constitute one and the same agreement, binding upon both parties hereto,
notwithstanding that both parties are not signatories to the original or the
same counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
SMARTSERV ONLINE, INC.
By: /s/ Robert M. Pons
-------------------------------------
Robert M. Pons,
Chief Executive Officer
/s/ M. Ezzat Jalled
----------------------------------------
M. Ezzat Jalled
10