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Consulting Agreement (with fee and options)

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Consulting Agreement (with fee and options) Powered By Docstoc
					ACME INC., a California corporation CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this “Agreement”) is entered into and effective as of February 15, 2009 (the “Effective Date”), by and between Consulting Guy LLC f/s/o John Smith (collectively, “Consultant”), and Acme Inc., a California corporation (“Company”). Consultant and Company are sometimes individually referred to herein as a “party” and collectively as the “parties.” RECITALS This Agreement is made with reference to the following: A. description]; WHEREAS, Company is primarily engaged in the business of [Internet business

B. WHEREAS, Company desires to engage Consultant, and Consultant desires to accept such engagement, to perform certain advisory services set forth below, pursuant to the terms and conditions of this Agreement. NOW, THEREFORE, for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, covenant and agree as follows: ARTICLE 1 DEFINITIONS For purposes of this Agreement, the following capitalized terms shall have the meaning ascribed to them below: 1.1 “Confidential Information” shall mean: (i) any information that the Company indicates is confidential and Consultant acquires (as a result of disclosure by the Company, access to the Company’s facilities, analysis of the Company’s products or enhancements, or otherwise) in connection with the Services, including, without limitation, the Company’s content and information pertaining to usage of the Site; (ii) financial data, customer lists, technical information, know-how, and all other confidential information relating, in any manner, to the business of the Company; (iii) “trade secrets” within the meaning of the Uniform Trade Secrets Act (California Civil Code Sections 3426 through 3426.11); (iv) business plans, executive summaries, financial information of or pertaining to the Company; (v) ideas, concepts, designs, and plans related to the manufacture, production, distribution, financing, advertising, and marketing of or by the Company; (vi) all other proprietary information or trade secrets of the Company; and (vii) the terms and conditions of this Agreement and any and all discussions that led to the terms and conditions of this Agreement. 1.2 “Company Marks” shall mean the trademarks, trade names, service marks and logos owned, controlled, or licensed by or to the Company or any affiliate of the Company.

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1.3 “Services” shall mean the advisory services to be provided by Consultant as set forth herein, including without limitation those Services identified at Exhibit A attached hereto and incorporated herein by this reference. 1.4 “Site” shall mean the branded website being designed and developed by the Company with an URL address of www.acmeinc.com, or such other address as the Company may designate from time to time. below. 1.5 “Term” shall mean the term of this Agreement as set forth in Section 2.8 ARTICLE 2 SCOPE OF SERVICES; COMPENSATION 2.1 Services. During the Term of this Agreement and in consultation with the Consultant, Company will assign certain responsibilities and duties to Consultant, and the Consultant shall accept such responsibilities and use his best efforts to accomplish the Services in a timely manner and with the highest standards of professionalism and workmanship. Consultant shall devote a substantial portion of Consultant’s professional time, attention and energy to accomplishing the Services, which will allow Consultant to provide effective Services hereunder. If during the Term either party believes that the Services being provided are not commensurate with the compensation hereunder (or vice versa), the parties will in good faith discuss such matter(s) and attempt to reach a mutually acceptable resolution, which may include amendment or termination of this Agreement. 2.2 Consideration. As full and final compensation for Consultant’s provision of Services hereunder, Consultant shall receive: A monthly fee equal to Three Thousand Five Hundred Dollars ($4,000), payable on or about the 15th of each calendar month during the Term for the preceding month’s Services; and
(a)

an option to purchase up to One Hundred Twenty-Five Thousand (100,000) shares of Company’s common stock, which shall vest in accordance with that certain Nonqualified Stock Option Agreement at Exhibit B attached hereto and incorporated herein (the “Stock Option Agreement”). Consultant hereby acknowledges that he has read and understood the Stock Option Agreement.
(b)

2.3 Expenses. Consultant shall be reimbursed for all reasonable out of pocket expenses incurred in the performance of the Services; provided, however, that Consultant shall obtain Company’s prior written approval prior to incurring any such expenses. 2.4 Subcontractors. The Services being provided by Consultant herein are personal in nature, and Consultant may not delegate, assign, or subcontract the responsibility for accomplishing the Services, in whole or in part, without first obtaining Company’s prior written consent. Company may provide or withhold its consent of any delegation, assignment, or subcontract of the Services in its sole discretion, and any such consent shall not relieve Consultant of his responsibility for the performance of the Services.

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2.5 Trademark Usage Copyright Notice. Consultant shall not use any Company content or the Company Marks, logos or other identifiers in any manner without first obtaining Company’s prior written approval, which approval may be granted or withheld in Company’s sole discretion. Company reserves the right to review any approved use of the Company Marks and to require changes in such further use, and Consultant shall comply with any such requirements. 2.6 Ownership of Work Product. Any and all work product created by Consultant pursuant to this Agreement shall be the sole and exclusive property of the Company and shall be considered work “made for hire” by Consultant for Company under United States copyright law (17 U.S.C. 101 et seq. and otherwise). Company, and not Consultant or any third party, shall have the sole and exclusive right to obtain and hold in its own name, copyrights, registrations or such other protection under United States and international law as may be appropriate to the subject matter, and any extensions and renewals thereof. To the extent any work product created by Consultant is not considered a work “made for hire,” Consultant hereby irrevocably assigns to Company, its successors and assigns, all of Consultant’s right, title, and interest in and to such work product to Company. Additionally, Consultant agrees to cooperate with Company, including the execution of any written instruments required by Company, to permit Company to perfect its exclusive ownership rights to the work product as set forth in this Section. Upon termination of this Agreement, Consultant shall immediately return and make available to Company any and all work product created and/or in Consultant’s possession during Consultant’s involvement with the Company, and Consultant shall not make or retain any copies of such work product in any form following the effective date of termination. Consultant shall maintain as strictly confidential any and all intellectual property, business plans, diagrams, code and any other Company information to which Consultant may obtain access through his involvement with the Company. Any and all work product created by Consultant shall also be deemed “Confidential Information” hereunder. 2.7 Confidential Information.
(a)

No Confidential Information of Consultant. It is understood and agreed that Company does not wish to receive from Consultant any confidential information of Consultant or of any third party. Consultant represents and warrants that it has all right, title, and interest in and to any information being provided to Company during the Term, and Consultant shall disclose to Company in writing if any such information is not owned exclusively by Consultant. Confidential Information of Company. From time to time the Company may provide its own Confidential Information to Consultant in connection with the work to be performed by Consultant hereunder. Consultant shall not disclose any Confidential Information to any third party without the prior, express written consent of the Company, which such consent may be granted or withheld in the Company sole discretion. Consultant shall be responsible for the safekeeping of all materials and media containing Confidential Information and shall account for such materials and media at Company’s request. Upon completion or termination of all or any relevant Services, Consultant shall return all Confidential Information to the Company.
(b)

2.8

Term and Termination.

(a) Term of Agreement. This Agreement shall commence on the Effective Date and continue until terminated as described herein. [ALTNERNATIVE: INCLUDE TERM, OPTIONS TO EXTEND, ETC.]

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(b) Termination of Agreement without Cause. Either party may terminate this Agreement without cause upon not less than thirty (30) days’ prior written notice to the other party. [ALTERNATIVE – 45 DAYS, 60 DAYS, ETC.]

Termination for Breach. Either party may terminate this Agreement upon ten (10) days written notice if the other party materially breaches any of the terms of this Agreement; provided, however, that this Agreement will not terminate if the non-terminating party has cured the breach, if curable, within such ten (10) day period.
(c) (d) Termination for Bankruptcy and Similar Events. Either party may terminate this Agreement, effective immediately upon written notice, if: (i) all or a substantial portion of the assets of the other party are transferred to an assignee for the benefit of creditors, to a receiver or trustee in bankruptcy; (ii) a proceeding is commenced by or against the other party for relief under bankruptcy or similar laws and such proceeding is not dismissed within ten (10) days; or (iii) the other party is adjudged bankrupt or insolvent. (e) Effect of Termination; Obligations upon Termination or Expiration. In the event of a termination of this Agreement: (i) all rights of Consultant to all unvested shares of common stock issued pursuant to the Stock Option Agreement shall be forfeited (unless otherwise specified in said Stock Option Agreement); and (ii) Consultant shall immediately return to Company all copies of all Confidential Information, and all records of user information in the possession or control of Consultant.

ARTICLE 3 NON-COMPETE; NON-SOLICITATION 3.1 Non-Compete; Non-Solicitation. As a material term of this Agreement, as an inducement to Company to enter into this Agreement, in order to protect Company’s goodwill and Confidential Information, and to further enforce the agreements and covenants contained herein, Consultant hereby agrees to the following: During the Term hereof, Consultant shall not provide services substantially similar to those described herein to any person or entity that directly competes (or then intends to directly compete) with Company, without Company’s prior consent, which shall not be unreasonably withheld.
(a) (b) Consultant further agrees that during the Term hereof and for one (1) year thereafter, Consultant shall not directly or indirectly: (i) solicit or redirect Company’s customers to Consultant or any third person or entity, including but not limited to actions or solicitations which may reduce, diminish or otherwise negatively affect the Company’s business; or (ii) solicit any employee or independent contractor of the Company to accept employment or engagement with Consultant or any entity with which Consultant is affiliated or associated.

3.2 Remedies. Consultant hereby acknowledges and agrees that: (i) the provisions of this Article are reasonable and necessary to protect the legitimate interests of the Company; (ii) that any violation of this Article shall result in irreparable injury to Company; (iii) if Consultant breaches any of the terms set forth herein, the damages to Company will be substantial, although difficult to ascertain, and money damages will not afford Company an adequate remedy;

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and (iv) if Consultant is in breach of any one or more of the provisions of this Article, or threatens a breach thereof, Company shall be entitled, in addition to all other rights and remedies as may be provided hereunder or by law, to specific performance, injunctive and other equitable relief to prevent or restrain such a breach. The parties hereto agree that the provisions of this Article shall survive the termination or expiration of this Agreement for any reason, regardless of the reason therefor or the correctness thereof. ARTICLE 4 GENERAL PROVISIONS 4.1 Expenses. Except as otherwise expressly provided in this Agreement, each party to this Agreement will bear its respective expenses incurred in connection with the preparation, execution and performance of this Agreement, including all fees and expenses of agents, representatives, counsel, and accountants. 4.2 Notices. All notices, consents, waivers and other communications under this Agreement must be in writing and will be deemed to have been duly given when: (i) delivered by hand (with written confirmation of receipt); (ii) sent by facsimile (with written confirmation of receipt), provided that a copy is mailed by registered mail, return receipt requested; or (iii) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addresses and facsimile numbers set forth below (or to such other addresses and facsimile numbers as a party may designate by notice to the other parties): If to Consultant: John Smith c/o Consulting Guy, LLC Telephone: Facsimile: e-mail: johnsmith@consultingguyllc.com If to the Company: Acme Inc. 10100 Wilshire Blvd., Suite 3000 Los Angeles, CA 90264 Attn: _________________ e-mail: ________________

4.3 Dates of Notices and Actions. All notices required to be given hereunder shall be effective as of the date of delivery. If the date of any notice required to be given hereunder or action required to be taken hereunder falls on a weekend or holiday, such notice or action may be delivered or taken at any time through the next occurring business day. 4.4 Jurisdiction; Service of Process. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement must be brought against any of the parties in the United States District Court for the Central District of California in Los Angeles, California, and each of the parties consents to the jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein. Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world.

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4.5 Further Assurances. The parties agree to furnish upon request to each other, without further consideration, such further information, execute and deliver to each other such other documents and to do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to herein. 4.6 Waiver. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. To the maximum extent permitted by applicable law, (i) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party, (ii) no waiver that may be given by a party will be applicable except in the specific instance for which it is given, and (iii) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement. 4.7 Entire Agreement. All prior agreements, representations and understandings between the parties are incorporated in this Agreement, and the exhibits and schedules attached hereto, which together constitute the entire contract between the parties. The terms of this Agreement are intended by the parties as a final expression of their agreement with respect to such terms as are included herein and may not be contradicted by evidence of any prior or contemporaneous written or oral representations, agreements or understandings, whether express or implied. The parties further intend that this Agreement constitutes the complete and exclusive statement of its terms and that no extrinsic evidence whatsoever may be introduced in any judicial proceeding, if any, involving this Agreement. No amendment or variation of the terms of this Agreement shall be valid unless made in writing and signed by each of the parties. 4.8 Assignment, Successors and No Third-Party Rights. Consultant may not assign any of its rights or obligations under this Agreement without the prior written consent of the Company, which such consent may be granted or withheld in the Company’s sole discretion. The Company shall have the right to assign or delegate any of its rights or obligations under this Agreement to any other person or entity without any obligation to provide notice to or obtain the consent of Consultant. Subject to the foregoing, this Agreement will apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted assigns of the parties. Nothing expressed or referred to in this Agreement will be construed to give any person other than the parties to this Agreement any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement. 4.9 Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable. 4.10 Section Headings; Construction. The headings of sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. All

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references to “Section” or “Sections” refer to the corresponding section or sections of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. Unless otherwise expressly provided, the word “including” does not limit the preceding words or terms. 4.11 Attorney’s Fees. The prevailing party in any litigation, arbitration, mediation, bankruptcy, insolvency or other proceeding relating to the enforcement or interpretation of this Agreement may recover from the unsuccessful party all costs, expenses and reasonable attorney’s fees (including expert witness and other Consultants fees and costs) relating to or arising out of (i) the proceeding (whether or not the proceeding proceeds to judgment), and (ii) any post-judgment or post-award proceeding. All such judgments and awards shall contain a specific provision for the recovery of all such subsequently incurred costs, expenses and actual attorney’s fees. 4.12 Governing Law. This Agreement will be governed by the laws of the State of California without regard to conflicts of laws principles. 4.13 Survival. Upon expiration or termination of this Agreement, the provisions of Sections 2.5, 2.6, and 2.7, shall survive. Agreement. 4.14 Time of the Essence. The parties recognize that time is of the essence in this

4.15 Independent Contractor, No Joint Venture. The parties agree and acknowledge that the relationship of the parties is in the nature of an independent contractor. This Agreement shall not be deemed to create a partnership, joint venture or any other relationship other than that of independent parties, and neither party shall act as the other’s agent, partner, employee, or representative. Neither party hereto shall have the right to obligate or bind the other party in any manner whatsoever, and nothing herein contained shall give or is intended to give any rights of any kind to any third persons. Consultant shall be solely responsible for any and all tax or other payments due in connection with the compensation payable to Consultant hereunder, and Consultant agrees to defend, indemnify and hold harmless the Company with respect to any liability arising from Consultant’s failure to pay such amounts. 4.16 Counterparts; Facsimile. This Agreement may be executed in one or more counterparts, all of which when fully-executed and delivered by all parties hereto and taken together shall constitute a single agreement, binding against each of the parties. To the maximum extent permitted by law or by any applicable governmental authority, any document may be signed and transmitted by facsimile with the same validity as if it were an ink-signed document. Each signatory below represents and warrants by his signature that he is duly authorized (on behalf of the respective party for which such signatory has acted) to execute and deliver this instrument and any other document related to this transaction, thereby fully binding each such respective party. (signature page follows)

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above. Company: ACME INC., a California corporation By:

Joe Smith, Chief Executive Officer

Consultant:

CONSULTING GUY, LLC, a _________________ limited liability company ______________________________ John Smith, Manager and Sole Member

(Signature page to Consulting Agreement)

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Exhibit A Description of Services Consultant will be reasonably available to consult with Company regarding Company’s overall operations, technology build process, strategy and tactics, and will reasonably participate in telephone calls, meetings and tactical sessions. Consultant shall assist the Company in the successful build of its initial Site, partnerships, fundraising and other important business activities. [MODIFY AS APPROPRIATE, DEPENDING ON WHAT THE CONSULTANT IS DOING]

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Exhibit B ACME INC. NONQUALIFIED STOCK OPTION AGREEMENT THIS NONQUALIFIED STOCK OPTION AGREEMENT (this “Agreement”), effective as of February 15, 2009 (the “Effective Date”), is made and entered into by and between Acme Inc., a California corporation (the “Company”) and John Smith (“Holder”). WHEREAS, the Company has adopted the Company’s 2008 Equity Participation Plan (the “Plan”); and WHEREAS, the Board of Directors of the Company has determined that Holder is eligible to receive options to purchase shares of common stock of the Company (“Common Stock”). WITNESSETH NOW, THEREFORE, in consideration of the promises and the mutual covenants undertaken herein by the parties, the parties agree as follows: 1. Award of Option. Holder is hereby granted a nonqualified option to purchase One Hundred Thousand (100,000) shares of Common Stock (the “Shares”) at the exercise price of Forty Cents ($0.40) per Share, subject to the terms and conditions specified in this Agreement and the Plan, including any adjustments in number and kind of shares and prices pursuant to the Plan and Section 12 herein (the “Option”). The Option is not intended to be an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). No Option shall be granted or deemed valid under this Agreement unless and until all applicable federal, state and foreign securities laws and securities exchange listing requirements have been met. All terms and conditions of the Plan are hereby incorporated into this Agreement by reference and shall be deemed to be part of this Agreement, without regard to whether such terms and conditions are otherwise set forth in this Agreement. To the extent any capitalized term used in this Agreement is not defined, such term shall have the definition set forth in the Plan. 2. Term of Option. The Option shall terminate on the tenth (10th) anniversary of the Effective Date (the “Option Termination Date”), unless such Option shall be terminated before such date in accordance with the provisions of this Agreement or the Plan. 3. Vesting and Exercise of the Option.

3.1. Vesting. Except as otherwise provided herein, during Holder’s Employment the Option shall become exercisable (“vest”) as set forth herein. Except in the event that Holder’s Employment shall have terminated, or except as set forth below, the Option shall vest in equal monthly installments over a thirty-six (36) month period commencing March 15, 2009, subject to a six (6) month “cliff.” [NOTE: USUALLY OPTIONS WILL VEST OVER A 3-4 YEAR PERIOD, MONTHLY OR QUARTERLY, AND ARE SOMETIMES SUBJECT TO A “CLIFF”.] “Holder’s Employment” shall mean Holder’s employment with, engagement by or service to the

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Company which is uninterrupted except for vacations, illness (except for permanent disability, as defined in Section 22(e)(3) of the Code) or leaves of absence which are approved in writing by the Company. Notwithstanding anything to the contrary herein, if a Proposed Sale (as defined below) occurs and the Option hereunder will not be assumed on an equivalent basis by the acquiring entity for any reason, or otherwise not continued in full force and effect pursuant to the terms of the Proposed Sale, then the vesting of any unvested portion of the Option hereunder shall be deemed to have automatically accelerated, such that any unvested portion of the Option shall be deemed vested hereunder immediately prior to the effective date of any such Proposed Sale. 3.2. Termination of Employment.

(a) If Holder’s Employment is terminated: (1) for cause by the Company; (2) voluntarily by Holder without cause; or (3) voluntarily by Holder after an event which would be grounds for termination of Holder’s Employment by the Company for cause, then the right to exercise the Option shall expire as of the date of Holder’s termination of Employment. 4. Method of Exercise of Option. The Option may be exercised by written notice in the form attached hereto as Exhibit A delivered to the Company, which notice shall state the number of Shares with respect to which the Option is being exercised (an “Exercise Notice”). The Exercise Notice must be accompanied by payment in cash or by check payable to the order of the Company for the amount of the purchase price of such Shares or by such other means determined by the Company. No less than One Hundred (100) Shares may be purchased at any one time, unless the number purchased is the total number of vested Shares remaining under the Option. 5. Shares Issued upon Exercise. Upon receipt of an Exercise Notice accompanied by full payment for the number of Shares referenced therein, the Company shall, at its own expense, take and diligently pursue all actions necessary under applicable law to effect the issuance of such Shares to Holder; provided, however, nothing herein shall require the Company to file a registration statement or otherwise qualify the Shares under state or federal securities laws. 6. Restrictions on Transfer. Except as otherwise set forth herein, neither the Shares nor the Option may be sold, exchanged, transferred, pledged, encumbered, hypothecated or otherwise disposed of, directly or indirectly. 7. Rights of Refusal.

7.1. Notice. In the event Holder desires, at any time, to sell, transfer, assign or otherwise dispose of any Shares (the “Offered Shares”) and receives a bona fide offer (the “Purchase Offer”) from a third party to acquire any of the Offered Shares, Holder shall deliver a notice (the “Notice”) to the Company, which Notice shall describe in reasonable detail the proposed sale or transfer including, without limitation, the number of Shares to be sold or transferred, the nature of the sale or transfer, the amount of consideration to be paid and the name and the address of each prospective transferee. The consideration for any Offered Shares to be sold shall be paid solely in cash. Any purported transfer of Shares in contravention of this Agreement shall be null and void and shall pass no title to the proposed transferee. 7.2. Company Right of First Refusal. For thirty (30) days following the receipt of a Notice by the Company, the Company (or its designated assignee(s)) may elect to purchase all or

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any portion of the Offered Shares to which the Notice refers, at the price per share and the other terms and provisions of sale contained in the Purchase Offer. The right shall be exercised by delivering to Holder a written election to purchase the Offered Shares. The closing shall then be held thirty (30) days following the Company’s exercise of its purchase rights hereunder. Full payment for the Offered Shares which the Company elects to purchase shall be made by cash or check to Holder upon transfer of such shares. 7.3. Effect of Failure to Exercise Right of First Refusal. If the Company does not elect to purchase all of the Offered Shares as provided in Section 7.2 above, Holder may sell such unpurchased Offered Shares to the maker of the Purchase Offer at the price and on the terms set forth in the Notice; provided, however, that such sale or transfer is consummated within sixty (60) days after the expiration of the Company’s option to acquire such shares pursuant to Section 7.2; provided, further, that (i) any such sale is in accordance with all the terms and conditions hereof; and (ii) such transferee (and such transferee’s spouse, as applicable) executes and becomes a party to this Agreement and thereby agrees to receive and hold all of the Offered Shares subject to all of the provisions and restrictions contained herein (including the imposition of a restrictive legend on the certificates representing such shares). If such sale is not consummated within sixty (60) days after the expiration of the Company’s option to acquire the Offered Shares, then Sections 7.1 and 7.2 must again be complied with by Holder before Holder may sell any Offered Shares pursuant to this Section. 7.4. Judicial Transfers. All proposed judicial transfers and sales of the Shares by order of any court or referee in bankruptcy (“Order”) shall be subject to the terms and provisions of this Section 7. In the event a sale or transfer is proposed pursuant to an Order, all of the terms of this Section 7 shall apply, with the following modification: instead of a notice of intent to transfer being delivered to the Company, a copy of the Order shall be delivered to the Company by the proposed transferee, which shall state the name and address of the proposed transferee and shall specify the number of the Shares to be sold and the consideration per Share. For other purposes of this Section 7, the receipt of the Order shall be treated as the receipt of the notice of intended disposition as set forth in Section 7.1 above. All proposed transfers pursuant to an Order which do not set forth a purchase price capable of valuation which would allow the Company to exercise its right of first refusal are expressly prohibited. Any purported transfer in contravention of this Section 7.4 shall be null and void and shall pass no title to the proposed transferee. 8. Exempt Transfers. Notwithstanding the foregoing, the provisions of Sections 6 and 7 shall not apply to any transfer or gift of Shares to Holder's ancestors, descendants or spouse or to trusts for the benefit of such persons, provided that: (i) Holder shall inform the Company of such transfer or gift prior to effecting it; and (ii) the transferee (and such transferee’s spouse, as applicable) furnishes the Company with a written agreement to be bound by and comply with all provisions of this Agreement and the Plan. Such transferred Shares shall remain “Shares” hereunder, and such transferee or donee shall be treated as “Holder” for purposes of this Agreement. 9. Drag Along Rights. 9.1 Sale of Shares. In the event that the holders of a majority of all outstanding capital stock (the “Capital Stock”) of the Company at such time (the “Majority Holders”), voting together as a single class, approve a sale, transfer, exchange or other disposition of the majority of

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the voting power of the Capital Stock (as may be adjusted pursuant to the Plan and Section 12 herein), or all or substantially all of the assets of the Company in any transaction or series of transactions (either, a “Proposed Sale”), then Holder hereby agrees with respect to all equity securities of the Company beneficially owned or held by Holder: (a) To vote (in person, by proxy or by action by written consent, as applicable) all shares of the Capital Stock as to which Holder has beneficial ownership in favor of such Proposed Sale and in opposition of any and all other proposals that could reasonably be expected to delay or impair the ability of the Company to consummate such Proposed Sale; (b) To refrain from exercising any dissenters’ rights or rights of appraisal under applicable law at any time with respect to such Proposed Sale; (c) To sell Holder’s equity securities on the terms and conditions approved by the Majority Holders; (d) To execute and deliver all related documentation and take such other action in support of such Proposed Sale as shall reasonably be requested by the Company; and (e) Except as set forth herein, Holder shall not deposit any shares of Capital Stock beneficially owned by Holder in a voting trust or subject any such shares of Capital Stock to any arrangement or agreement with respect to the voting of such shares of Capital Stock. 9.2. Notice. If the Majority Holders desire to exercise their right to require Holder to participate in a Proposed Sale pursuant to Section 9.1 above, then the Company shall give written notice to Holder of the exercise of such right. The notice shall specify: (i) the name of the proposed purchaser; (ii) the aggregate consideration and the consideration per share to be paid by the purchaser; and (iii) the other terms and conditions of the Proposed Sale, as available. The Company shall provide to Holder, as available, all other information reasonably requested by Holder in writing in connection with the Proposed Sale. 9.3. Stock Power. Within ten (10) business days of receipt of such notice pursuant to Section 9.2 above, Holder shall deliver to the Company stock certificates representing all of the shares of Capital Stock owned by Holder, the instruments representing all then outstanding options to purchase Capital Stock and any securities convertible or exercisable into Capital Stock, and appropriate stock powers, duly executed in blank, proxies, and assignment instruments to permit the transfer and voting, pursuant to this Section 9, of all Capital Stock, all options to purchase Capital Stock and all securities convertible or exercisable into Capital Stock. Holder hereby irrevocably authorizes the Company to vote, sell, deliver and transfer such Capital Stock, such options to purchase Capital Stock and such securities convertible or exercisable into Capital Stock owned by Holder in accordance with the provisions of this Section 9, it being intended that this authorization shall constitute a power coupled with an interest. Holder shall also execute and deliver any other documents or instruments that may reasonably be required for the purpose of voting or transferring the Capital Stock, the options to purchase Capital Stock and the securities convertible or exercisable into Capital Stock in accordance with this Section 9. 9.4. Proceeds. The Company shall cause to be delivered to Holder the appropriate amount of the proceeds from the sale of the Capital Stock, the options to purchase

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Capital Stock and the securities convertible or exercisable into Capital Stock immediately following the closing of the Proposed Sale. Subject to the terms and conditions of the charter of the Company, the proceeds shall be distributed pro rata to Holder based upon the number of Shares held by Holder (determined on an as-converted and as-exercised basis of all then outstanding options to purchase Capital Stock and the securities convertible or exercisable into Capital Stock). Holder agrees that Holder shall accept the proceeds from the purchaser under this Section 9 in full and final consideration of all of Holder’s Capital Stock, options to purchase Capital Stock and securities convertible or exercisable into Capital Stock; provided, however, that Holder shall not be required to exercise any options by making a cash payment, and provided further that all such options shall either vest or be assumed in connection with the Proposed Sale. 10. Legend.

(a) Each certificate representing the Shares or issued to any person in connection with a transfer pursuant to the terms hereof shall be endorsed with the following language in addition to customary state and federal securities law legends and any legends required pursuant to the Plan: “THE SALE, PLEDGE, HYPOTHECATION, ENCUMBRANCE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A NONQUALIFIED STOCK OPTION AGREEMENT BY AND BETWEEN THE HOLDER AND THE CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION.” (b) Holder agrees that the Company may instruct its transfer agent to impose transfer restrictions on the shares represented by certificates bearing the legend referred to in Section 10(a) above to enforce the provisions of this Agreement and the Company agrees to promptly do so. The legend shall be removed upon termination of this Agreement upon request by Holder. 11. No Guarantee of Employment. Nothing contained in this Agreement shall confer upon Holder any right to be employed by or otherwise serve the Company, nor shall this Agreement affect in any way the right of the Company to terminate Holder’s Employment at any time and for any reason. 12. Option and Share Adjustments. If the outstanding shares of the Company are increased, decreased, changed into or exchanged for a different number or kind of shares or other security of the Company (or its successor entity) through reorganization, recapitalization, reclassification, share dividend, share split or reverse share split, a proportionate adjustment shall be made in the number or kind of Shares, and the per-Share exercise price thereof; provided, however, that no such adjustment shall effect a change in the aggregate exercise price applicable to the unexercised portion of the Option. 13. Non-Assignability of Options. During Holder’s lifetime, the Option and any other rights conferred on Holder by this Agreement may be exercised only by Holder or Holder’s duly appointed guardian or legal representative. The Option and such other rights shall not be sold,

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pledged, or subject to execution, attachment or similar process; or assigned or transferred in any manner (whether by operation of law or otherwise) except by will or by the laws of descent and distribution or as permitted by Rule 701 of the Securities Act of 1933, as amended, with respect to transfers by Holder to Holder’s family members, provided, however, that the Participant may not receive any consideration for the transfer. In the event that the Holder’s spouse has or shall have acquired a community property interest in the Option or such other rights, Holder (or such permitted successors in interest upon Holder’s death) may exercise the Option on behalf of Holder’s spouse, or such spouse’s successor in interest. Until its receipt of written notice of a permitted passage of rights hereunder, the Company shall be entitled, for all purposes, to treat Holder as the holder of the Option. 14. Limitation on Holder’s Rights. Holder shall have no rights as a stockholder with respect to the Shares covered by the Option until the Shares have been issued to Holder. 15. Withholding. The Company shall be entitled to deduct or cause to be deducted from other compensation payable to Holder any sums required by federal, state or local tax laws to be withheld with respect to the exercise of the Option, but, in the alternative, the Company may require Holder or other person duly authorized pursuant to this Agreement to exercise the Option (an “Other Person”) to pay, or Holder or such Other Person may elect to pay, such sums directly to the Company. If Holder or Other Person elects to pay such sums in cash, written notice of that election shall be delivered to the Company prior to such exercise and, whether pursuant to such election or pursuant to a requirement imposed by the Company, payment in cash or by check of such sums shall be delivered to the Company within ten (10) days after the date of exercise. The Company shall not be obligated to issue Shares to Holder or Other Person upon exercise of the Option until such payment has been received, unless withholding as of or prior to the date of such exercise is sufficient to cover all such sums due with respect to such exercise. 16. Investment Covenant. Holder represents and agrees that if Holder exercises the Option in whole or in part at a time when there is not in effect a registration statement relating to the Shares under the Securities Act of 1933, as amended (the “Act”), and a prospectus meeting the requirements of the Act is not available for delivery: (i) Holder will acquire the Shares for investment purposes only and not with a view to the sale or distribution of the Shares; (ii) upon each such exercise of the Option, if requested by the Company, Holder will furnish to the Company an investment letter in form attached hereto as Exhibit B; (iii) prior to selling or offering for sale any such Shares, if requested by the Company, Holder will furnish the Company with an opinion of counsel satisfactory to the Company to the effect that such sale may lawfully be made, and Holder will furnish the Company with such certificates as to factual matters as the Company may reasonably request; and (iv) certificates representing such Shares may be marked with an appropriate legend describing such conditions precedent to sale or transfer. Any person or persons entitled to exercise the Option under the provisions of Section 13 hereof shall furnish to the Company letters, opinions and certificates to the same effect as would otherwise be required of Holder. 17. Further Assurances. At any time on or after the date hereof, Holder shall perform such act, execute and deliver such instruments, assignments, endorsements and other documents and do all such other things consistent with the terms of this Agreement and the Plan as may be reasonably necessary to accomplish the transaction contemplated in this Agreement or otherwise carry out the purpose of this Agreement, including, without limitation, causing the spousal consent in the form of Exhibit C to be executed and delivered to the Company.

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18. Market Standoff Agreement. Holder agrees in connection with any registration of the Company’s securities that Holder shall not, without the prior written consent of the Company or the underwriters managing any such registration: (i) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any Shares or any securities convertible into or exercisable or exchangeable for the Shares (whether such shares or any such securities are then owned by Holder or are thereafter acquired); or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Shares, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of the Shares or other securities, in cash or otherwise, for a period of time (not to exceed one hundred eighty (180) days) from the effective date of such registration as the Company or the underwriters may specify. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Shares of Holder (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period. 19. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of California, without regard to any conflict of laws. 20. Modification of Agreement; Third Party Beneficiaries. This Agreement may not be modified, amended, suspended or terminated, nor may any terms, covenants, representations or conditions herein be waived, other than by a written instrument executed by the parties hereto. The Majority Holders shall be deemed to be third party beneficiaries hereof. 21. Severability. Should any provision of this Agreement be held by a court to be unenforceable or invalid for any reason, the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force and effect in accordance with their terms. 22. Termination. Upon election by the Company (in its sole discretion), this Agreement, and the Option granted herein, shall terminate at such time as a registration statement for the Company’s equity securities is filed with, and declared effective by, the Securities and Exchange Commission under the Act. 23. Counterparts. This Agreement may be executed in one or more counterparts and, when such counterparts have been executed by each of the parties hereto, such counterparts shall constitute a single and valid agreement although each of the signatory parties have executed separate counterparts hereof. 24. Headings. Headings are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. (Signature page follows)

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IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the day and year first above written.

COMPANY: ACME INC., a California corporation By:

Joe Smith Its: Chief Executive Officer HOLDER:

John Smith

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EXHIBIT A NOTICE OF EXERCISE OF NONQUALIFIED OPTION To: Acme Inc.

The undersigned hereby elects to purchase ________ shares of the common stock of Acme Inc. (the “Company”) pursuant to the nonqualified option granted to the undersigned in that certain Nonqualified Stock Option Agreement between the Company and the undersigned bearing an effective date of February 15, 2009 (the “Agreement”). The aggregate purchase price for such shares is $__________, which amount is being tendered herewith. The effective date of this election shall be ___________________, or the date of receipt of this notice by the Company, if later. Executed this _____ day of _______________, 200__, at ________________________ _______________________________________.

________________________________________ John Smith ________________________________________ Social Security Number

Exhibit A

EXHIBIT B INVESTMENT REPRESENTATION LETTER To: Acme Inc. This letter is furnished to you, Acme Inc., a California corporation (“Company”), in connection with the purchase on ____________ by John Smith, an individual (“Holder”) of ______________ (____) shares of Company’s common stock (the “Shares”). Holder acknowledges that Holder is aware that the Shares to be issued to Holder by the Company have not been registered under the Securities Act of 1933, as amended (the “Act”). In this connection, Holder warrants and represents to the Company as follows: 1. Holder is acquiring the Shares solely for Holder’s own account for investment purposes and not with a view to or for sale or distribution of the Shares or any portion thereof and not with any present intention of selling, offering to sell or otherwise disposing of or distributing the Shares or any portion thereof. Holder also represents that the entire legal and beneficial interest of the Shares will be held for the account of Holder only and neither in whole nor in part for any other person. 2. Holder has heretofore discussed the Company and its plans, operations and financial condition with its officers and Holder has heretofore received all such information as Holder deems necessary and appropriate to enable Holder to evaluate the financial risk inherent in making an investment in the Shares of the Company and Holder further represents and warrants that Holder has received satisfactory and complete information concerning the business and financial condition of the Company in response to all inquiries in respect thereof. 3. Holder realizes that the purchase of the Shares is a highly speculative investment and represents that Holder is able, without impairing Holder’s financial condition, to hold the Shares for an indefinite period of time and to suffer a complete loss on the investment. 4. Company hereby discloses to Holder and Holder hereby acknowledges that:

(a) the Shares have not been registered under the Act, and such Shares must be held indefinitely unless a transfer of them is subsequently registered under the Act or an exemption from such registration is available; (b) the share certificate representing the Shares will be stamped with the legends restricting transfer as specified in that certain Nonqualified Stock Option Agreement between Company and Holder relating to the Shares (the “Agreement”); and (c) Company will make a notation in its records of the aforementioned restrictions on transfer and legends. 5. Holder understands that the Shares are restricted securities within the meaning of Rule 144 promulgated under the Act; that the exemption from registration under Rule 144 will not be available in any event for at least one (1) year from the date of sale of the Shares to Holder, and even then will not be available unless: (i) a public trading market then exists for the Shares of the

Exhibit B

Company; (ii) adequate current public information concerning Company is then available to the public; (iii) Holder has been the beneficial owner and Holder has paid the full purchase price for the Shares at least one (1) year prior to the sale; (iv) other terms and conditions of Rule 144 are complied with; and (v) that any sale of the Shares may be made by Holder only in limited amounts in accordance with such terms and conditions, as amended from time to time. 6. Without in any way limiting any of the other provisions of the Agreement or its representations set forth above, Holder further agrees that Holder shall not make any disposition of all or any portion of the Shares without first complying with the provisions of the Agreement relating to Company’s right of first refusal unless and until there is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with said registration statement. 7. Holder: (a) is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated by the Securities and Exchange Commission under the Act; or (b) has either a preexisting personal or business relationship with Company or any of its officers or directors, or by reason of Holder’s business or financial experience or the business or financial experience of Holder’s professional advisors who are unaffiliated with and who are not compensated by Company, directly or indirectly, could be reasonably assumed to have the capacity to protect Holder’s own interests in connection with the investment in the Shares. ________________________________________ John Smith ________________________________________ Social Security Number

Exhibit B

EXHIBIT C CONSENT AND RATIFICATION OF SPOUSE The undersigned, the spouse of John Smith, a party to the attached Nonqualified Stock Option Agreement (the “Agreement”), dated as of February 15, 2009, hereby consents to the execution of said Agreement by such party; and ratifies, approves, confirms and adopts said Agreement, and agrees to be bound by each and every term and condition thereof as if the undersigned had been a signatory to said Agreement, with respect to the Shares (as defined in the Agreement) made the subject of said Agreement in which the undersigned has an interest, including any community property interest therein. I also acknowledge that I have been advised to obtain independent counsel to represent my interests with respect to this Agreement but that I have declined to do so and I hereby expressly waive my right to such independent counsel. Date: Print Name:

(Signature)


				
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posted:3/27/2009
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Description: This is a nice Consulting Agreement (which also can be used for an advisor) that I've used for many start-ups and established companies. It includes compensation in the form of a monthly fee plus options vesting over time, plus the requisite Stock Option Agreement and ancillary documents all attached.