Exhibit 10.05
CONSULTING SERVICES AGREEMENT
CONSULTING SERVICES AGREEMENT entered into this 22nd day of March, 2000
(hereinafter "Effective Date") by and between ARS NETWORKS, INC., a New
Hampshire corporation with its principal office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇▇▇ (the "Company"), and YORKVILLE ADVISORS MANAGEMENT, LLC, a
Delaware limited liability company, with its principal office at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Consultant").
Company desires to retain the services of Consultant as an independent
contractor to provide certain consulting and advisory services designated below,
and Consultant desires to accept such engagement by Company, pursuant to the
terms and conditions of this Consulting Agreement.
In consideration of the representations, warranties, mutual covenants
and agreements set forth herein, the parties agree as follows:
1. SCOPE OF SERVICES.
a. DUTIES AND PERFORMANCE. From time to time during the term of this
Agreement, Consultant shall provide such advisory services relating to the
Company's financial status and capital structure (the "Services") to Company as
Consultant and Company shall agree. In connection with the Services, Consultant
may develop and communicate to Company certain business opportunities with
entities ("Persons") known to Consultant; the Services may include various types
of arrangements, including direct investment into Company.
b. INDEPENDENT CONTRACTOR STATUS. The parties agree that Consultant is
an independent ___ contractor performing Services hereunder and not an employee
of Company. Consultant may use contractors or other third parties of
Consultant's choice to assist Consultant in rendering such Services. Unless
otherwise agreed by Company in writing, Consultant shall be responsible for
payment of all compensation or expenses payable or reimbursable to such third
parties. Nothing herein or in the performance hereof shall imply either a joint
venture or principal and agent relationship between the parties, nor shall
either such relationship be deemed to have arisen under this Agreement.
2. COMPENSATION AND EXPENSES.
a. FINDERS FEE; NOT A BROKER.
i. In respect of any capital investment in, or debt financing to,
Company which is made recommended or advised upon by Consultant either during
the term of this Agreement or within one year from the termination or expiration
of this Agreement by an entity which was introduced directly or indirectly by
Consultant prior to a termination of the term of this Agreement, Company shall
pay to Consultant a fee in an amount equal to eight and 2/5 percent (8.4 %) of
the amount, or to any person designated by Consultant, invested or loaned to
Company. If the amount invested in or loaned to the Company is so invested or
loaned in installments or a Line of Credit financing, then the fee stated in the
preceding sentence shall be paid on each such installment. Company acknowledges
that Consultant is not a registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended, and, accordingly, Consultant will not (i)
engage in any effort to sell any securities of Company, (ii) engage in the
negotiation of any proposed transaction; (iii) provide advice as to the value of
the Company or of potential acquisition targets, or any of its or their
securities, or (iv) make any recommendations as to the acquisition of a
potential acquisition target or the purchase or sale of any particular
securities. Payment to Consultant in respect to any Section 2.c fee shall be
made at the closing of each such transaction, and shall be an express condition
to the closing of any such transaction. This Section 2.c shall survive any
termination of this Agreement.
ii. In the event of a Line of Credit Financing , the Company
shall issue to the Consultant upon the execution of the Line of Credit Agreement
four hundred and fifty thousand (450,000) shares of Common Stock of the Company
(the "Consultant's Common Stock") with demand and "piggy back" registration
rights. The Consultant's Common Stock shall be issued to the individuals and in
the amounts set forth on Schedule A attached hereto.
b. AUDIT OF BOOKS AND RECORDS. Company shall maintain all books and
records necessary to account for all transactions involving Commissions and
other fees which may be payable hereunder. Consultant and Consultant's
professional advisors may audit, review or examine such books and records at any
time during business hours upon twenty-four hours prior notice but not more than
once each calendar quarter. If any payments received by Company which Consultant
was not properly compensated for by receiving the appropriate payment, Company
shall be responsible for fully reimbursing Consultant for the cost of such
review, audit or examination and, furthermore, shall pay any amount found to be
payable to Consultant but then unpaid, within three (3) days plus interest at
the rate of ten percent (10%) per annum from the date on which payment should
have been made to Consultant.
c. EXPENSE REIMBURSEMENT. While this Agreement is in effect, Company
shall pay for or reimburse Consultant for all reasonable and itemized business
expenses incurred by Consultant directly related to the services to be performed
by Consultant under this Agreement. Consultant shall keep accurate and detailed
records of such expenses and submit expense reports along with relevant
documentation in accordance with the expense reimbursement policy of Company.
Company shall pay or reimburse Consultant for all reasonable out-of-pocket
expenses actually incurred or paid by Consultant in the course of performing
services as required hereunder; provided, that any individual expense in excess
of five hundred dollars ($500.00) shall have been approved in advance by
Company.
d. NON-CIRCUMVENTION. Company represents and warrants that Company
shall take no action which shall result in Company and any third-party
introduced to Company, directly or indirectly, by Consultant consummating a
relationship or transaction with Company without the participation and
compensation of Consultant.
3. INDEMNIFICATION. Exhibit A attached hereto and made a part hereof sets forth
the understanding of the parties with respect to the indemnification and
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exculpation of Consultant. The provisions of Exhibit A shall survive, and remain
in full force and effect after, the termination of this Agreement until fully
performed.
4. TERM AND TERMINATION. The initial term of this Agreement shall be for a
period commencing on the Effective Date hereof and ending on the one anniversary
of the date of this Agreement; thereafter, unless previously terminated, and
neither party has given notice of termination, this Agreement shall be
automatically renewed for successive year periods of one year each. Either party
may terminate this Agreement without cause or without the necessity of
specifying cause by giving written notice of termination to the other party.
This Agreement shall terminate upon its expiration or upon receipt of this
notice of termination by the non-terminating party. Upon termination or
expiration of this Agreement, Company shall pay to Consultant all amounts due
through the date of termination within 30 days of said date. Notwithstanding the
termination of this Agreement, in addition to those subsection of Section 2
which survive the termination of this Agreement, Sections 3 and 5 shall continue
in force and effect and shall survive such termination.
5. MISCELLANEOUS.
a. NOTICE. All notices and other communications hereunder shall be in
writing and delivered by Federal Express or any other generally recognized
overnight delivery service, or by hand, to the appropriate party at the address
stated in the initial paragraph of this Agreement for such party or to such
other address as a party indicates in a notice to the other party delivered in
accordance with this Section.
b. SEVERABILITY. Should one or more provisions of this Agreement be
held unenforceable, for whatever cause, the validity of the remainder of this
Agreement shall remain unaffected. The parties shall, in such event, attempt in
good faith to agree on new provisions which best correspond to the object of
this Agreement.
c. ENTIRE AGREEMENT. The parties have entered into the present
Agreement after negotiations and discussions, an examination of its text, and an
opportunity to consult counsel. This Agreement constitutes the entire
understanding between the parties regarding to specific subject matter covered
herein. This Agreement supersedes any and all prior written or oral contracts or
understandings between the parties hereto and neither party shall be bound by
any statements or representations made by either party not embodied in this
Agreement. No provisions herein contained shall be waived, modified or altered,
except by an instrument in writing, duly executed by the parties hereto.
d. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to any
choice of law of conflict of law provision or rule whether such provision or
rule is that of New York or any other jurisdiction. Each party irrevocably
consents to the exclusive personal jurisdiction of New York State courts
situated in the county in which Consultant is located in New York, or the United
States District Court, or the Southern District of New York, in connection with
any action, suit or proceeding relating to or arising out of this Agreement or
any of the transactions or relationships contemplated hereby. Each party, to the
maximum extent permitted by law, hereby waives any objection that such party may
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now have or hereafter have to the jurisdiction of such courts on the basis of
inconvenient forum or otherwise. Each party waives trial by jury in any
proceeding that may arise with respect to this Agreement.
e. NO IMPLIED WAIVERS. No delay or omission by either party to exercise
its rights and remedies in connection with the breach or default of the other
shall operate as or be construed as a waiver of such rights or remedies as to
any subsequent breach.
f. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, but all counterparts hereof shall together constitute but one
agreement. In proving this Agreement, it shall not be necessary to produce or
account for more than one counterpart signed by both of the parties.
g. BINDING NATURE. This Agreement shall be binding upon and shall inure
to the benefit of the successors and assigns of the respective parties to this
Agreement.
h. ASSIGNMENT. Except as set forth in this Agreement, neither party
will have the right to assign, pledge or transfer all or any part of this
Agreement without the prior written consent of the other, and any such purported
assignment, pledge or transfer by a party without such prior written consent
shall be void.
i. CAPACITY. Company represents to Consultant that each person signing
this Agreement on its behalf has the full right and authority to do so, and to
perform its obligations under this Agreement.
j. CAPTIONS. The captions appearing in this Agreement are inserted only
as a matter of convenience and for reference and in no way define, limit or
describe the scope and intent of this Agreement or any of the provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the Effective Date.
YORKVILLE ADVISORS MANAGEMENT, LLC ARS NETWORKS, INC.
By: By:
-------------------------------- -------------------------------
Name: Name:
Title: Title:
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EXHIBIT A
The Company will indemnify and hold harmless the Consultant and its
affiliates and their respective directors, members, officers, agents and
employees and each other person controlling the Consultant or any of its
affiliates (collectively, "losses") (i) related to or arising out of (A) oral or
written information provided by the Company, the Company's employees or other
agents, which information either the Consultant or the Company provides to any
actual or potential buyers, sellers, investors or offerees, or (B) any other
action or failure to act by the Consultant, its members, officers, agents or
employees or by the Consultant or any other indemnified party at the Company's
request or with the Company's consent, or otherwise related to or arising out of
the consulting services provided or to be provided by the Consultant under this
Agreement (the "Engagement") or any transaction or conduct in connection
therewith, except that this clause (ii) shall not apply with respect to any
losses that are finally judicially determined to have resulted primarily from
the gross negligence or willful misconduct of such indemnified party.
If the foregoing indemnity is unavailable to any indemnified party for
any reason, the Company will contribute to any losses related to or arising out
of the engagement or any transaction or conduct in connection therewith as
follows. With respect to such losses referred to in clause (i) of the preceding
paragraph, each of the Company and the Consultant shall contribute in such
proportion as is appropriate to reflect the relative benefits received (or
anticipated to be received) by the Consultant on the one hand, and by the
Company and its securityholders, on the other hand, from the actual or proposed
transaction arising in connection with the Engagement. With respect to any other
losses, and for losses referred to in clause (i) of the preceding paragraph if
the allocation provided by the immediately preceding sentence is unavailable for
any reason, each of the Company and the Consultant shall contribute in such
proportion as is appropriate to reflect not only the relative benefits as set
forth above, but also the relative fault of each the Company and the Consultant
in connection with the actions, omissions or other conduct that resulted in such
losses, as well as any other relevant equitable considerations. Benefits
received (or anticipated to be received) by the Company and its securityholders
shall be deemed to be equal to the aggregate cash consideration and value of
securities or any other property payable, issuable, exchangeable or transferable
in such transaction or proposed transaction, and benefits received by the
Consultant shall be deemed to be equal to the compensation paid by the Company
to the Consultant in connection with the Engagement (exclusive of amounts paid
for reimbursement of expenses or paid under this Agreement). Relative fault
shall be determined by reference to, among other things, whether any alleged
untrue statement of omission or any other alleged conduct relates to information
provided by the Company or other conduct by the Company (or the Company's
employees or other agents), on the one hand, or by the Consultant, on the other
hand. The parties agree that it would not be just and equitable if contribution
were determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to above.
Notwithstanding anything to the contrary above, in no event shall the Consultant
be responsible for any amounts in excess of the amount of the compensation
actually paid by the Company to the Consultant in connection with the Engagement
(exclusive of amounts paid for reimbursement of expenses or paid under this
Agreement).
The Company agrees that it will not, without prior written consent of
the Consultant, settle any pending or threatened claim or proceeding related to
or arising out of the Engagement or any actual or proposed transactions or other
conduct in connection therewith (whether or not the Consultant or any
indemnified party is a party to such claim or proceeding) unless such settlement
includes a provision unconditionally releasing the Consultant and each other
indemnified party from, and holding all such persons harmless against, all
liability in respect of claims by any releasing party related to or arising out
of the engagement or any transactions or conduct in connection therewith. The
Company will also promptly reimburse each indemnified party for all expenses
(including counsel fees and expenses) as they are incurred by such indemnified
party in connection with investigating, preparing for, defending, or providing
evidence in, any pending or threatened claim or proceeding related to or arising
out of the engagement or any actual or proposed transaction or other conduct in
connection therewith or otherwise in respect of which indemnification or
contribution may be sought hereunder (whether or not the Consultant or any other
indemnified party is a party to such claim or proceeding) or in enforcing this
agreement.
The Company further agrees that no indemnified party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company or any of the Company's affiliates, creditors or security holders for or
in connection with the engagement or any actual or proposed transactions or
other conduct in connection therewith except for losses incurred by the Company
that are finally judicially determined to have resulted primarily from the gross
negligence or willful misconduct of such indemnified party.
The provisions set forth above shall remain in full force and effect
and shall survive the completion or termination of the Engagement.
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SCHEDULE A
COMMON STOCK HOLDERS
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