Registration of Securities of a Small-Business Issuer — Form 10-SB
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10SB12G Registration of Securities of a Small-Business 50 192K
Issuer
2: EX-2.1 Plan of Acquisition, Reorganization, Arrangement, 3 14K
Liquidation or Succession
3: EX-2.2 Plan of Acquisition, Reorganization, Arrangement, 10 47K
Liquidation or Succession
4: EX-3.1(A) Articles of Incorporation/Organization or By-Laws 64 337K
5: EX-6.1(A) Opinion re: Discount on Capital Shares 25 105K
EXHIBIT 6.1(a)
CONSULTING AGREEMENT
This CONSULTING AGREEMENT ("Agreement") is made and entered into
January 14, 1999, by and between SONUS COMMUNICATIONS, INC., a Virginia
corporation (the "Company"), and L. FLOMENHAFT & CO., INCORPORATED
("Consultant").
W I T N E S S E T H :
WHEREAS, the Company desires to engage Consultant, for the time period
herein set forth, to perform services relating to strategic financial and
business planning and business development; and
WHEREAS, the parties desire to set forth the terms of the engagement of
Consultant by the Company.
NOW, THEREFORE, for and in consideration of the covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties covenant
and agree as follows:
1. ENGAGEMENT OF CONSULTANT. Upon the terms and subject to the
conditions herein contained, the Company engages Consultant as an independent
contractor to provide strategic financial, business planning and business
development services (the "Consulting Services"). This Consulting Agreement will
become effective immediately on the date ("Effective Date") of the successful
completion of the closing of the minimum equity financing described in that
certain Private Placement Memorandum of the Company dated January 13, 1999 (the
"Memorandum"). If the closing of the minimum equity financing described in the
Memorandum has not occurred by March 1, 1999, then this Consulting Agreement
shall be void and of no force or effect.
2. CONSULTANT'S AGREEMENTS.
(a) TASKS DEFINED. Consultant shall determine the best and
most efficient methods and techniques of accomplishing the Consulting Services.
All Consulting Services shall be provided in accordance with good and reputable
business practices.
(b) CONSULTANT'S COVENANTS. When performing work for the
Company, Consultant shall not (i) use any trade secret or other proprietary
information belonging to any third party without the express consent of such
party, (ii) infringe or violate the rights of any third party with respect to
any patent, copyright, trademark, or other proprietary rights, (iii) violate the
terms of any non-disclosure, confidentiality, or non-compete agreement with any
third party, or (iv) violate any law, ordinance, rule, or regulation or any
order of any court or agency.
(c) CONSULTANT NOT TO INCUR LIABILITIES. Consultant shall not
incur any liability or obligation on the part of the Company without the prior
written consent of the Company or represent to any third party that Consultant
has the authority to incur any obligation on behalf of the Company. No
employment or agency relationship is created by this Agreement and Consultant
shall not act as or represent himself as an agent or Consultant of the Company.
(d) INDEPENDENT CONTRACTOR; WITHHOLDING. Consultant
acknowledges that he is an independent contractor and that he is fully
responsible for his own federal, state and local taxes, and estimated,
withholding and employment taxes with respect thereto. Consultant acknowledges
that compensation payments hereunder may be subject to withholding at the
Company's' discretion.
3. TERM. The term of this Agreement shall commence on the Effective
Date hereof and shall continue for a term of two (2) years and thereafter, by
mutual agreement of the parties.
4. COMPENSATION. As full and complete compensation for his services to
be rendered hereunder, the Company agrees to compensate Consultant as follows:
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(a) WARRANT COMPENSATION. On the Effective Date, the Company
will execute and deliver to the Consultant stock purchase warrants (the
"Consulting Warrants") giving the Consultant the right upon exercise thereof to
purchase 487,500 shares of the Company's Common Stock. The Consulting Warrants
shall be exercisable upon issuance and shall expire five years after issuance by
the Company and shall be in the form attached hereto as Exhibit A.
The exercise price of the Consulting Warrants shall be determined as follows:
(i) if, on or before March 1, 1999, the Company
consummates any of the following (a "Qualifying Corporate Transaction"):
(a) a merger with the Park Group, Ltd. (the
"Proposed Park Group Merger").
(b) another transaction ("Other
Transaction"), pursuant to which a class of equity securities of the Company or
its successor becomes registered under Section 12 of the Securities Act of 1934,
as amended (the "Exchange Act"), and the Company becomes obligated to file
periodic reports under Section 13 of the Exchange Act.
then the exercise price per share shall be $4.0 million divided by the number of
shares of the Company's common stock outstanding after completion of the
Qualifying Corporate Transaction.
(ii) prior to the completion of a Qualifying
Corporate Transaction and, if a Qualifying Corporate Transaction is not
consummated by March 1, 1999, then, after March 1, 1999, the exercise price
shall be $1.00 per share.
If the Company completes a Qualifying Corporate Transaction pursuant to
which a class of equity securities of the Company or its successor becomes
registered under Section 12 of the Exchange Act, and the Company becomes
obligated to file periodic reports under Section 13 of the Exchange Act, then
the Company will file a registration statement to register the resale of the
shares of common stock issuable upon exercise of the Consulting Warrants, in
accordance with the Consulting Warrant attached hereto as Exhibit A, on the
earlier of (x) three months following the date of completion of the Qualifying
Corporate Transaction, or (y) the first date on which the Company may file such
a registration statement in accordance with all applicable State and Federal
securities laws.
If within one year from the date of this Agreement, the Company has not
completed a Qualifying Corporate Transaction, then the Consultant and his
assigns shall be entitled to receive (i) a special semi-annual dividend for a
period of seven years or until the Company completes a Qualifying Corporate
Transaction, whichever is earlier, consisting of their pro rata share of the
Company's retained earnings as if the warrants received hereunder had been
exercised prior to the date of such dividend, provided that the Consultant and
his assigns shall apply all such dividends (up to the aggregate exercise price
of the Consulting Warrants) to exercise the Consulting Warrants received
hereunder in payment of the exercise price therefore, and (ii) semi-annual
financial statements prepared by management and audited by the Company's
independent accounting firm, consisting of an audited balance sheet, income
statement, statement of cash flows, statement of changes in equity and notes
thereto. Retained earnings, for the purpose of calculating the special dividend
hereunder, will be calculated assuming that the Founders' individual annual
compensation is capped at $125,000 per year.
(b) CASH COMPENSATION. If the Proposed Park Group Merger is
consummated, the Company agrees to pay the Consultant a cash fee equal to
$150,000. If in lieu of the Proposed Park Group Merger the Company completes
another Qualifying Transaction, the Company will pay the Consultant a cash sum
equal to 2% of the agreed upon post-combination valuation of the surviving
entity. Any cash compensation payable hereunder shall be paid in three equal
quarterly installments, with the first installment being due and payable on or
before the last day of the calendar quarter in which the Company completes a
Qualifying Corporate Transaction, and the second, third and fourth installments
being due and payable on the last day of the second, third and fourth succeeding
calendar quarters after the Company completes a Qualifying Corporate
Transaction. At the Consultant's election, all or part of such cash compensation
shall be paid to the Consultant in shares of the Company's Common Stock at a
valuation of $1.00 per share. Any shares of Common Stock paid to the Consultant
shall be registered for
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resale, along with the shares issuable upon exercise of the Consulting Warrants,
in accordance with the terms set forth in paragraph (a) of this Section 4. (c)
(c) REIMBURSEMENT OF EXPENSES. The Company will promptly pay
all of the Consultant's reasonable costs, fees and expenses in connection with
the Consultant's services to the Company.
6. NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and sent by certified or
registered mail, return receipt requested and shall be deemed to have been given
when delivered to the address specified below, or to such other address as may
be specified by any party by notice to the other parties.
7. MODIFICATION AND WAIVER. This Agreement supersedes all prior
discussions and agreements between Consultant and the Company with respect to
the matters herein contained. Any term or condition of this Agreement may be
waived at any time by the party hereto which is entitled to the benefit thereof.
A waiver on one occasion shall not be deemed to be a waiver of the same or of
any other breach on a future occasion. This Agreement may be modified or amended
only by writing signed by all of the parties hereto.
8. COUNTERPARTS AND HEADINGS. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original and all of which shall constitute one and the same instrument. The
headings set out are for convenience or reference and shall not be deemed a part
of this Agreement.
9. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, this
Agreement shall be binding upon, and shall inure to the benefit of, the parties,
their heirs, executors, legal representatives, successors and assigns.
10. SURVIVAL. The obligations of Consultant under Section 5 and 6 shall
survive the termination of this Agreement for any reason.
11. GOVERNING LAW. This Agreement shall be governed by, construed and
interpreted under the laws of the State of New York.
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IN WITNESS WHEREOF, Consultant has hereunto set its hand and seal and
SONUS COMMUNICATIONS has caused this Agreement to be executed by its duly
authorized officers as of the day and year specified above.
COMPANY:
SONUS COMMUNICATIONS, INC.
By: /s/ Charles W. Albo
------------------------------------------
Charles W. Albo, Chief Executive Officer
Address for notices for Company:
60005 Greeley Blvd.
Springfield, Virginia, GA 22152
Attn: Chief Executive Officer
CONSULTANT:
L. FLOMENHAFT & CO., INC.
By: /s/ Ted Flomenhaft
------------------------------------------
Ted Flomenhaft, Vice President
Address of Consultant:
225 West 34th Street
New York, N. Y. 10122
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EXHIBIT 6.1(b)
THE PLACEMENT AGENT AGREEMENT IS ATTACHED AS EXHIBIT 3.1(b) AND INCORPORATED
HEREIN BY REFERENCE
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EXHIBIT 6.1(c)
EMPLOYMENT AND NON-COMPETE AGREEMENT
THIS AGREEMENT entered into as of the 15th day of April, 1999, by and
between SONUS COMMUNICATIONS, INC., a Virginia corporation ("EMPLOYER") and
RICHARD D. ROSE ("EMPLOYEE").
WHEREAS, Employer desires the Employee's employment with Employer and
the Employee wishes to accept such employment, upon the terms and conditions set
forth in this Agreement; and
NOW, THEREFORE, in consideration of the above premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Article 1.
DEFINITIONS
"AGREEMENT" means this Employment Agreement, as amended from time to
time.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"COMPENSATION" means Salary and Employee Benefits and other
compensation paid or to be paid hereunder.
"BOARD OF DIRECTORS" means the board of directors of Employer.
"CONFIDENTIAL INFORMATION" means (i) any and all trade secrets and
other confidential or proprietary information (whether or not amounting to a
trade secret or confidential information) concerning the business and affairs of
Employer and its Affiliates and including, without limitation, product
specifications, data, know-how, formulae, compositions, processes, designs,
sketches, photographs, graphs, drawings, samples, inventions and ideas, past,
current, and planned research and development, current and planned manufacturing
or distribution methods and processes, customer lists, current and anticipated
customer requirements, price lists, market studies, business plans, computer
software and programs (including object code and source code), computer software
and database technologies, systems, structures, and architectures (and related
formulae, compositions, processes, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information, and any other
information, however documented), that is a trade secret within the meaning of
any applicable state trade secret law; (ii) information concerning the business
and affairs of Employer and its Affiliates (which includes historical financial
statements, financial projections and budgets, historical and projected sales,
capital spending budgets and plans, the names and backgrounds of key personnel,
personnel training and techniques and materials, however documented; and (iii)
notes, analysis, compilations, studies, summaries, and other material prepared
by or for Employer containing or based on, in whole or in part, any information
included in the foregoing.
"DISABILITY" has the meaning set forth in SECTION 6.2.
"EMPLOYEE BENEFITS" has the meaning set forth in SECTION 3.1(b).
"EMPLOYMENT PERIOD" means the term of Employee's employment under this
Agreement.
"FOR CAUSE" means (i) Employee's incompetence, negligence,
insubordination, misconduct in office, or breach of any representation,
warranty, covenant or other obligation or term of this Agreement including,
without limitation, the non-competition, confidentiality and non-solicitation
provisions contained herein; PROVIDED, HOWEVER, that, prior to termination under
this clause (i), Employer shall specify in reasonable detail the incompetence,
gross negligence, misconduct or breach in a written notice to Employee and, in
the event of a breach by Employee of a representation, warranty, covenant or
other obligation or term of this Agreement, shall, before terminating Employee,
provide Employee with 5 days to cure such breach to Employer's satisfaction;
(ii) Employee's conviction
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of a crime involving a felony, fraud, embezzlement or the like; habitual
insobriety; use of a controlled substance; or misappropriation of funds of
Employer or the taking by Employee of any improper personal benefit; (iii)
Employee's continued failure (on two or more occasions) to follow any reasonable
policy of Employer to which similarly situated Employees are subject, after
notice of such policy; (iv) upon Employer's reasonable determination that
Employee's continuation in his position may be expected to result in serious
harm or damage, or the material risk thereof, to the assets, business or worth
of Employer; or (v) the appropriation (or attempted appropriation) of a material
business opportunity of Employer.
"FOR GOOD REASON" has the meaning set forth in SECTION 6.3.
"PERSON" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, or governmental body.
"POST-EMPLOYMENT PERIOD" means (i) the period beginning on the date on
which the Employment Period ends and ending on the first anniversary of such
date; PROVIDED, HOWEVER, that if the Employment Period ends For Good Reason,
then there shall be no Post-Employment Period.
"PROPRIETARY ITEMS" has the meaning set forth in SECTION 7.1(d).
"SALARY" has the meaning set forth in SECTION 3.1(a).
"TERM" has the meaning set forth in SECTION 2.2 below.
Article 2.
EMPLOYMENT TERMS AND DUTIES
2.1 EMPLOYMENT. Employer hereby employs Employee, and Employee hereby
accepts employment by Employer, upon the terms and conditions set forth in this
Agreement.
2.2 TERM. Subject to the provisions of ARTICLE 6, the term of
Employee's employment under this Agreement will be one year, beginning on the
date hereof and ending on April 15, 2000, subject to one-year renewal terms upon
mutual agreement of the parties (the "Term").
2.3 DUTIES. Employee will have such duties as are assigned or delegated
to Employee by the Board of Directors which Employee acknowledges shall include,
without limitation, budgeting, forecasting, management of finances, supervision
and oversight of auditors and accountants, general bookkeeping, assisting in the
preparation of financials and periodic reports and other activities incident to
Employee's position as Chief Financial Officer and Treasurer of Employer.
Employee will serve as the Chief Financial Officer of the Employer and of Sonus
Communication Holdings, Inc., a Delaware corporation ("Holdings") during the
term. Employee will devote his entire business time, attention, skill, and
energy exclusively to the business of Employer, will use his best efforts to
promote the success of Employer's business, and will cooperate fully with the
Board of Directors in the advancement of the best interests of Employer. Nothing
in this SECTION 2.3, however, will prevent Employee from engaging in additional
activities in connection with personal investments, business and community
affairs that are not inconsistent with Employee's duties under this Agreement.
Article 3.
COMPENSATION
3.1 BASIC COMPENSATION.
(a) BASE SALARY. Employee will be paid an annual salary of $84,000,
payable in accordance with Employer's usual compensation schedule and practices,
but not less frequently than monthly, during the Term. The Salary will be
reviewed by the Board of Directors from time to time, and may be adjusted upward
or downward in the sole discretion of the Board of Directors, but in no event
will the Salary be less than $84,000 per year. In addition to the base salary,
Employee shall be entitled, on December 31, 1999 provided Employee remains
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employed by Employer and is not in default or breach of this Agreement, to
additional cash compensation in an amount equal to $31,000. In addition to the
cash compensation provided hereunder, Employee shall be entitled to receive,
upon the execution and delivery of this Agreement, five-year warrants to
purchase 75,000 shares of common stock of Employer, par value $.0001 per share
("Common Stock"), at $1.00 per share. 15,000 of such warrants shall vest
immediately upon issuance, and the remainder shall vest in equal installments of
10,000 warrants each, on each six month anniversary of this Agreement during the
three year period beginning on the date of this Agreement and ending three years
from the date hereof; PROVIDED, HOWEVER, that in the event of a change of
control of Employer (as "control" is defined pursuant to Rule 12b-2 promulgated
under the Securities Exchange Act of 1934, as amended), all such warrants shall
vest immediately upon such change in control; PROVIDED, FURTHER, that a change
in control shall not be deemed to have occurred by virtue of the issuance of
additional shares of Common Stock in connection with one or more financings of
the Company, whether involving a public offering or otherwise.
(b) EMPLOYEE BENEFITS. During the Employment Period, Employee will be
permitted to participate in such pension, health, profit sharing, savings and
retirement and other employee benefit plans, practices, policies and programs
applicable generally to similarly situated senior management employees of
Employer, if any (collectively, the "EMPLOYEE BENEFITS").
Article 4.
FACILITIES AND EXPENSES
For the Employment Period, Employee shall be provided office and
conference room space, furniture, fixtures, miscellaneous office equipment
(including phones, faxes, computers, and copy machines). Employee shall be
entitled to reimbursement of reasonable expenses actually incurred by the
Employee in connection with Employee's pursuit of his duties under this
Agreement, provided, however, that Employee shall provide the Employer with all
documentation thereof reasonably requested by it.
Article 5.
VACATIONS AND HOLIDAYS
Employee will be entitled to three (3) weeks' paid vacation during the
first six full months of this Agreement, in accordance with the vacation
policies of Employer in effect for its senior executive officers from time to
time. Employee will also be entitled to the paid holidays and other paid leave
set forth in Employer's policies. Vacation requests shall be cleared by the
Board of Directors. Vacation days and holidays during any Fiscal Year that are
not used by Employee during such Fiscal Year may not be used in any subsequent
Fiscal Year.
Article 6.
TERMINATION
6.1 EVENTS OF TERMINATION. Except as otherwise provided in this ARTICLE
6, the Employment Period, Employee's Compensation, and any and all other rights
of Employee under this Agreement or otherwise as an employee of Employer will
terminate:
(a) immediately upon the death of Employee;
(b) upon the Disability of Employee immediately upon notice from either
party to the other;
(c) immediately upon a termination of the Employment Period by Employer
For Cause, or
(d) upon a termination of the Employment Period by Employee, upon not
less than thirty days' prior notice from Employee to Employer.
6.2 DEFINITION OF DISABILITY. For purposes of SECTION 6.1, Employee
will be deemed to have a "Disability" if, for physical or mental reasons,
Employee is unable to perform Employee's duties under this Agreement for one
hundred twenty (120) consecutive days, or one hundred eighty (180) days during
any twelve (12) month period, as determined in accordance with this SECTION 6.2.
The Disability of Employee will be determined by
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a medical doctor selected by written agreement of Employer and Employee upon the
request of either party by notice to the other. If Employer and Employee cannot
agree on the selection of a medical doctor, each of them will select a medical
doctor and the two medical doctors will select a third medical doctor who will
determine whether Employee has a Disability. The determination of the medical
doctor selected under this SECTION 6.2 will be binding on both parties. Employee
must submit to a reasonable number of examinations by the medical doctor making
the determination of Disability under this SECTION 6.2, and Employee hereby
authorizes the disclosure and release to Employer of such determination and all
supporting medical records. If Employee is not legally competent, Employee's
legal guardian or duly authorized attorney-in-fact will act in Employee's stead,
under this SECTION 6.2, for the purposes of submitting Employee to the
examinations, and providing the authorization of disclosure, required under this
SECTION 6.2.
6.3 DEFINITION OF FOR GOOD REASON. For purposes of this Agreement, the
phrase "For Good Reason" means Employer's material and continuing breach of this
Agreement.
6.4 BENEFITS. Except as otherwise provided in this Agreement,
Employee's accrual of, or participation in plans providing for, the Benefits
will cease at the effective date of the termination of the Employment Period,
and Employee will be entitled to accrued benefits pursuant to such plans only as
provided in such plans. Employee will receive, as his termination pay, any
payment or other compensation for any vacation, holiday, sick leave, or other
leave unused on the date the notice of termination is given under this
Agreement.
Article 7.
AGREEMENTS OF EMPLOYEE
In consideration of the compensation and benefits to be paid or
provided to Employee by Employer under this Agreement, Employee covenants as
follows:
7.1 CONFIDENTIALITY.
(a) Subject to SECTION 7.1(b), Employee agrees and acknowledges that
through the nature of his work, he will have access to and will acquire
information and knowledge concerning the business and operations of Employer and
its Affiliates including, without limitation, the Confidential Information.
Employee acknowledges that all such Confidential Information is the property of
Employer and its Affiliates solely and constitutes valuable, proprietary and
confidential information of Employer and its Affiliates; that the disclosure
thereof would cause substantial loss to the goodwill of Employer and its
Affiliates; that disclosure thereof to Employee is being made only because of
the position of trust and confidence which he will occupy and because of his
agreement to the restrictions herein contained. Employee shall not, at any time,
divulge, disseminate, disclose or communicate to any Person any Confidential
Information, which information Employee shall hold during such period in trust
in a fiduciary capacity for the sole benefit of Employer, its Affiliates, and
their successors and assigns.
(b) None of the foregoing obligations and restrictions applies to any
part of the Confidential Information that Employee demonstrates (i) was or
became generally available to the public other than as a result of a disclosure
by Employee; (ii) is information that has been explicitly approved for public
release by Employer or an Affiliate thereof; (iii) is disclosed pursuant to a
valid and enforceable subpoena of a court or governmental agency of competent
jurisdiction, provided that Employee shall first have given Employer reasonable
opportunity to seek a confidentiality order or other confidential treatment of
such Confidential Information; (iv) is disclosed to third parties by Employer
without restrictions as to confidentiality; or (v) is received from a third
party whose disclosure would not violate any confidentiality obligation, direct
or indirect, express or implied.
(c) Employee will not remove from Employer's premises (except to the
extent such removal is for purposes of the performance of Employee's duties at
home or while traveling, or except as otherwise specifically authorized by
Employer) any document, record, notebook, plan, model, component, device, or
computer software or code, whether embodied in a disk or in any other form
(collectively, the "PROPRIETARY ITEMS"). Employee recognizes that, as between
Employer and Employee, all of the Proprietary Items, whether or not developed by
Employee, are the exclusive property of Employer. Upon termination of this
Agreement by either party, or upon the request of Employer during the Employment
Period, Employee will return to Employer all of the Proprietary Items in
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Employee's possession or subject to Employee's control, and Employee shall not
retain any copies, abstracts, sketches, or other physical embodiment of any of
the Proprietary Items.
7.2 DISPUTES OR CONTROVERSIES. Employee recognizes that should a
dispute or controversy arising from or relating to this Agreement be submitted
for adjudication to any court, arbitration panel, or other third party, the
preservation of the secrecy of Confidential Information may be jeopardized.
Employee and Employer will use their best efforts to cause all pleadings,
documents, testimony, and records relating to any such adjudication to be
maintained in secrecy and to make the same available for inspection by Employer,
Employee, and their respective attorneys and experts, who will agree, in advance
and in writing, to receive and maintain all such information in secrecy, except
as may be limited by them in writing.
Article 8.
RESTRICTIVE COVENANTS
8.1 ACKNOWLEDGMENTS BY EMPLOYEE. Employee acknowledges that: (a) the
services to be performed by him under this Agreement are of a special, unique,
unusual, extraordinary, and intellectual character; (b) Employer's business is
national in scope and its products are marketed throughout the United States;
(c) Employer competes with other businesses that are or could be located in any
part of the United States; (d) Employer has required that Employee make the
covenants set forth in this ARTICLE 8 as a condition to Employer's employment of
employee; and (e) the geographic boundaries, scope of prohibited activities, and
time duration of the provisions of this ARTICLE 8 are reasonable, are no broader
than are necessary to protect the business interests of Employer and its
Affiliates and are not oppressive and do not and will not impose any
unreasonable burden on Employee.
8.2 COVENANTS OF EMPLOYEE. In consideration of the acknowledgments by
Employee, and in consideration of the compensation and benefits to be paid or
provided to Employee by Employer, Employee covenants that he will not, directly
or indirectly:
(a) during the Employment Period, except in the course of his
employment hereunder, and during the Post-Employment Period, engage or invest
in, own, manage, operate, finance, control, or participate in the ownership,
management, operation, financing, or control of, be employed by, associated
with, or in any manner connected with, lend Employee's name or any similar name
to, lend Employee's credit to or render services or advice to, any business
whose products or activities compete in whole or in part with the products or
activities of Employer:
(i) anywhere within the United States;
(ii) anywhere in Virginia, Washington, D.C. or Maryland;
(iii) anywhere within 50 miles of any location where Employer
does business including, without limitation, Georgia, China or Pakistan;
(iv) anywhere within 100 miles of any physical location owned,
leased or operated by Employer;
(v) anywhere within 50 miles of any physical location owned,
leased or operated by Employer;
PROVIDED, HOWEVER, that (a) Employee may purchase or otherwise acquire up to
(but not more than) 4.99 percent of any class of securities of any enterprise
(but without otherwise participating in the activities of such enterprise) if
such securities are listed on any national or regional securities exchange or
have been registered under Section 12(g) of the Securities Exchange Act of 1934,
and (B) this provision shall not require Employee to sell, transfer, assign or
otherwise divest any interest owned by him prior to the date of this Agreement;
(b) whether for Employee's own account or for the account of any other
Person, at any time during the Employment Period and the Post-Employment Period,
solicit business of the same or similar type being carried on
5
by Employer, from any Person known by Employee to be a customer of Employer,
whether or not Employee had personal contact with such person during and by
reason of Employee's employment with Employer;
(c) whether for Employee's own account or the account of any other
Person (i) at any time during the Employment Period and the Post-Employment
Period, solicit, employ, or otherwise engage as an employee, independent
contractor, or otherwise, any Person who is an employee of Employer or in any
manner induce or attempt to induce any employee of Employer to terminate his
employment with Employer; or (ii) at any time during the Employment Period and
during the Post-Employment Period, interfere with Employer's relationship with
any Person, including any Person who at any time during the Employment Period
was an employee, contractor, supplier, or customer of Employer; or
(d) at any time during the Employment Period and during the
Post-Employment Period, disparage Employer or any of its shareholders,
directors, officers, employees, or agents.
8.3 RETURN OF MATERIALS. When Employee ceases to be an employee of
Employer, Employee promptly shall deliver to Employer all documents, memoranda,
records, notes, and other materials in his possession, whether prepared by him
or others, and all copies thereof, that contain any Confidential Information,
and Employee shall have no further rights therein.
Article 9.
MISCELLANEOUS
9.1 INJUNCTIVE RELIEF AND ADDITIONAL REMEDY. Employee acknowledges that
the injury that would be suffered by Employer as a result of a breach of the
provisions of this Agreement (including any provision of ARTICLE 7 or ARTICLE 8)
would be irreparable and that an award of monetary damages to Employer for such
a breach would be an inadequate remedy. Consequently, Employer will have the
right, in addition to any other rights it may have, to obtain injunctive relief
to restrain any breach or threatened breach or otherwise to specifically enforce
any provision of this Agreement, and Employer will not be obligated to post bond
or other security in seeking such relief. Without limiting Employer's rights
under this ARTICLE 9 or any other remedies of Employer, if Employee breaches any
of the provisions of ARTICLE 7 or ARTICLE 8, Employer will have the right to
cease making any payments otherwise due to Employee under this Agreement.
9.2 COVENANTS OF ARTICLE 7 AND ARTICLE 8 ARE ESSENTIAL AND INDEPENDENT
COVENANTS. The covenants by Employee in ARTICLE 7 and ARTICLE 8 are essential
elements of this Agreement, Employer would not have entered into this Agreement
or employed or continued the employment of Employee. The Company and Employee
have independently consulted their respective counsel and have been advised in
all respects concerning the reasonableness and propriety of such covenants, with
specific regard to the nature of the business conducted by Employer. Employee's
covenants in ARTICLE 7 and ARTICLE 8 are independent covenants and the existence
of any claim by Employee against Employer under this Agreement or otherwise, or
against the Buyer, will not excuse Employee's breach of any covenant in ARTICLE
7 or ARTICLE 8. Except as otherwise stated herein, if Employee's employment
hereunder expires or is terminated, this Agreement will continue in full force
and effect as is necessary or appropriate to enforce the covenants and
agreements of Employee in ARTICLE 7 and ARTICLE 8.
9.3 REPRESENTATIONS AND WARRANTIES BY EMPLOYEE. Employee represents and
warrants to Employer that the execution and delivery by Employee of this
Agreement does not, and the performance by Employee of Employee's obligations
hereunder will not, with or without the giving of notice or the passage of time,
or both: (a) violate any judgment, writ, injunction, or order of any court,
arbitrator, or governmental agency applicable to Employee; or (b) conflict with,
result in the breach of any provisions of or the termination of, or constitute a
default under, any agreement to which Employee is a party or by which Employee
is or may be bound.
9.4 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by either
party in exercising any right, power, or privilege under 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,
(a) no claim or right arising out of this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the
6
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) 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.
9.5 BINDING EFFECT; DELEGATION OF DUTIES PROHIBITED. This Agreement
shall inure to the benefit of, and shall be binding upon, the parties hereto and
their respective successors, assigns, heirs, and legal representatives,
provided, however, that this Agreement may be assigned by Employer only with the
prior written consent of Employee, which consent shall not be unreasonably
withheld. The duties and covenants of Employee under this Agreement, being
personal, may not be delegated.
9.6 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.7 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be given by registered or
certified mail, return receipt requested, postage prepaid, by telecopier or by
national overnight delivery service, and addressed to the intended recipient as
set forth below:
If to Employee:
Richard D. Rose
-------------------
-------------------
-------------------
With a Copy to:
If to Employer
Cecil E. Martin, III, Esquire
Sonus Communications, Inc. McGuire, Woods, Battle & Boothe LLP
c/o Chairman of the Board Seven Saint Paul Street
1600 Wilson Blvd. Baltimore, Maryland 21202-1626
Suite 1008
Arlington, Virginia 22201
Any notice given in the manner aforesaid shall be deemed to have been served,
and shall be effective for all purposes hereof (a) if sent by registered or
certified mail, on the earlier of the second day following the day on which it
is posted or the date of its receipt by the party to be notified, (b) if sent by
telecopier, the day actually received as evidenced by a written receipt of
transmission and (c) if sent by overnight delivery service, the day after such
notice has been delivered by the party to said service. Any Party may change the
address to which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Party notice in the manner
herein set forth.
9.8 ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral or written, between the
parties hereto with respect to the subject matter hereof. This Agreement may not
be amended orally, but only by an agreement in writing signed by the parties
hereto.
9.9 CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or
7
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
9.10 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.
9.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
9.12 GOVERNING LAW; VENUE. This Agreement shall be governed by and
construed in accordance with the domestic laws of the Commonwealth of Virginia
without giving effect to any choice or conflict of law provision or rule
(whether of the Commonwealth of Virginia or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the
Commonwealth of Virginia. To the extent not resolved by binding arbitration
pursuant to Section 9.13 below, each of the parties submits to the jurisdiction
of any state or federal court sitting in Fairfax, Virginia, in any action or
proceeding arising out of or relating to this Agreement and agrees that all
claims in respect of the action or proceeding shall be heard and determined in
any such court. Each party also agrees not to bring any action or proceeding
arising out of or relating to this Agreement in any other court. Each of the
parties waives any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety, or other security
that might be required of any other party with respect thereto.
9.13 BINDING ARBITRATION. Any controversy, dispute or claim of whatever
nature arising out of, in connection with, or in relation to the interpretation,
performance or breach of this Agreement, including any claim based on contract,
tort, or statute, and regardless of the amount of any claim or counterclaim,
shall be settled, at the request of any party to this Agreement, by final and
binding arbitration conducted at a location in Fairfax, Virginia (the
"Arbitration") determined by an arbitrator (the "Arbitrator") selected and
designated by the American Arbitration Association ("AAA"), administered by and
in accordance with the then existing Expedited Procedures (the "Expedited
Procedures") under the Commercial Arbitration Rules of the AAA, and judgment
upon any award rendered by the Arbitrator may be entered by any state or federal
court having jurisdiction thereof. By executing this Agreement, the parties
hereto expressly agree that the Expedited Procedures under the Commercial
Arbitration Rules of the AAA shall govern any arbitration proceeding, and the
parties expressly waive any and all challenges to the administration of
Arbitration pursuant to the Expedited Procedures.
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**********
8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed and delivered as of the day and date first above written.
EMPLOYER:
SONUS COMMUNICATIONS, INC.
By: /s/ W. Todd Coffin
----------------------------
Name: W. Todd Coffin
Title: President
EMPLOYEE:
Richard D. Rose
-------------------------------
Richard D. Rose
9
Exhibit 6.1(f)
CONSULTING AND NON-COMPETE AGREEMENT
THIS AGREEMENT entered into as of the 15th day of April, 1999, by and
between SONUS COMMUNICATIONS, INC., a Virginia corporation ("SONUS"), COFFIN &
SONS, INC. ("CONSULTANT") and W. TODD COFFIN ("CONSULTANT REPRESENTATIVE").
WHEREAS, Sonus desires the Consultant's engagement with Sonus and the
Consultant wishes to accept such engagement, upon the terms and conditions set
forth in this Agreement; and
NOW, THEREFORE, in consideration of the above premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS
"AGREEMENT" means this Consulting and Non-Compete Agreement, as amended
from time to time.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"BOARD OF DIRECTORS" means the board of directors of Sonus.
"CONFIDENTIAL INFORMATION" means (i) any and all trade secrets and
other confidential or proprietary information (whether or not amounting to a
trade secret or confidential information) concerning the business and affairs of
Sonus and its Affiliates and including, without limitation, product
specifications, data, know-how, formulae, compositions, processes, designs,
sketches, photographs, graphs, drawings, samples, inventions and ideas, past,
current, and planned research and development, current and planned manufacturing
or distribution methods and processes, customer lists, current and anticipated
customer requirements, price lists, market studies, business plans, computer
software and programs (including object code and source code), computer software
and database technologies, systems, structures, and architectures (and related
formulae, compositions, processes, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information, and any other
information, however documented), that is a trade secret within the meaning of
any applicable state trade secret law; (ii) information concerning the business
and affairs of Sonus and its Affiliates (which includes historical financial
statements, financial projections and budgets, historical and projected sales,
capital spending budgets and plans, the names and backgrounds of key personnel,
personnel training and techniques and materials, however documented; and (iii)
notes, analysis, compilations, studies, summaries, and other material prepared
by or for Sonus containing or based on, in whole or in part, any information
included in the foregoing.
"CASH CONSULTING FEE" has the meaning set forth in SECTION 3.1(A).
"CONSULTING FEE" means the Cash Consulting Fee and the right hereunder
to receive shares of common stock of Sonus Communication Holdings, Inc., a
Delaware corporation ("Holdings").
"CONSULTING PERIOD" means the term of Consultant's engagement under
this Agreement.
"DISABILITY" has the meaning set forth in SECTION 6.2.
"FOR CAUSE" means (i) Consultant's or Consultant Representative's
incompetence, negligence, insubordination, misconduct in office, or breach of
any representation, warranty, covenant or other obligation or term of this
Agreement including, without limitation, the non-competition, confidentiality
and non-solicitation provisions contained herein; PROVIDED, HOWEVER, that, prior
to termination under this clause (i), Sonus shall specify in reasonable detail
the incompetence, gross negligence, misconduct or breach in a written notice to
Consultant and, in the event of a breach by Consultant of a representation,
warranty, covenant or other obligation or term of this Agreement, shall, before
terminating Consultant, provide Consultant with 5 days to cure such breach to
Sonus's satisfaction; (ii) Consultant's or Consultant Representative's
conviction of a crime involving a felony, fraud, embezzlement or the like;
habitual insobriety; use of a controlled substance;
1
or misappropriation of funds of Sonus or the taking by Consultant or Consultant
Representative of any improper personal benefit; (iii) Consultant's or
Consultant Representative's continued failure (on two or more occasions) to
follow any reasonable policy of Sonus to which it is subject, after notice of
such policy; (iv) upon Sonus's reasonable determination that Consultant's or
Consultant Representative's continuation in his position may be expected to
result in serious harm or damage, or the material risk thereof, to the assets,
business or worth of Sonus; (v) the appropriation (or attempted appropriation)
of a material business opportunity of Sonus, or (vi) the failure by Consultant
to make the Consultant Representative available for performance hereunder in
accordance with the terms hereof.
"FOR GOOD REASON" has the meaning set forth in SECTION 6.3.
"PERSON" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, or governmental body.
"POST-CONSULTING PERIOD" means (i) the period beginning on the date on
which the Consulting Period ends and ending on the first anniversary of such
date; PROVIDED, HOWEVER, that if the Consulting Period ends For Good Reason,
then there shall be no Post-Consulting Period.
"PROPRIETARY ITEMS" has the meaning set forth in SECTION 7.1(D).
"TERM" has the meaning set forth in SECTION 2.2 below.
ARTICLE 2.
CONSULTING TERM AND DUTIES
2.1 ENGAGEMENT. Sonus hereby engages Consultant, and Consultant hereby
accepts the engagement by Sonus, upon the terms and conditions set forth in this
Agreement.
2.2 TERM. Subject to the provisions of ARTICLE 6, the term of
Consultant's engagement under this Agreement will be six months and 15 days,
beginning on the date hereof and ending on October 31, 1999, subject to one-year
renewal terms upon mutual agreement of the parties (the "Term").
2.3 DUTIES. Consultant shall provide the services of Consultant
Representative to perform its duties and obligations hereunder. Consulting
Representative shall perform such duties as are assigned or delegated to
Consultant by the Board of Directors, which Consultant and Consultant
Representative acknowledge shall include, without limitation, representing Sonus
with investors and within the investment community, coordinating budgeting and
financial planning activities, overseeing new business development activities,
and being responsible for the profitability and cash flow management of Sonus.
Consultant Representative has agreed to serve as the Chief Executive Officer of
the Sonus and of Holdings during the term of this Consulting Agreement. During
the term, Consultant will ensure that Consultant Representative will devote his
entire business time, attention, skill, and energy exclusively to the business
of Sonus, will use his best efforts to promote the success of Sonus's business,
and will cooperate fully with the Board of Directors in the advancement of the
best interests of Sonus. Nothing in this SECTION 2.3, however, will prevent
Consultant from engaging in additional activities in connection with personal
investments, business and community affairs that are not inconsistent with
Consultant's duties under this Agreement.
2.4 BOARD REPRESENTATION. Consultant will serve as a director of Sonus
and Holdings during the Consulting Period. Consultant will fulfill his duties as
such director without additional compensation except as may be provided to other
similarly situated directors of Sonus and Holdings.
2
ARTICLE 3.
COMPENSATION
Consultant will be paid a monthly consulting fee of $10,000, payable on
the 1st and 15th day of each month during the Term (the "Cash Consulting Fee").
Payment shall commence on the later of May 1, 1999 or the date on which Sonus
receives the proceeds from that certain bridge loan to be entered into between
the Sonus and certain investors; provided, however, that one-fifth of
Consultant's Cash Consulting Fee ($2,000) shall be deferred until the successful
completion of the next equity financing (private placement of shares of common
stock) conducted by the Sonus after May 15, 1999. In addition to the cash
compensation set forth above, Consultant shall be entitled to receive (i) 50,000
shares of Holdings upon signing of this employment agreement; (i) 50,000 shares
upon the successful completion of the next private placement of equity in an
amount in excess of $1,000,000 at a price per share of at least $1.50; (iii)
50,000 shares following the closing of such private placement if the shares
issued in such private placement are successfully registered and the stock
trades at or above $3.00 per share for 20 consecutive trading days; and (iv) in
the event Sonus and Consultant choose not to renew the Term of this Agreement,
50,000 shares following the installation of a CEO identified and recruited by
Consultant and acceptable to the Company.
ARTICLE 4.
FACILITIES AND EXPENSES
For the Consulting Period, the Consultant Representative shall be
provided office and conference room space, furniture, fixtures, miscellaneous
office equipment (including phones, faxes, computers, and copy machines).
Consultant shall be entitled to reimbursement of reasonable expenses actually
incurred by the Consultant in connection with Consultant's pursuit of its duties
under this Agreement, provided, however, that Consultant shall provide the Sonus
with all documentation thereof reasonably requested by it.
ARTICLE 5.
TERMINATION
5.1 EVENTS OF TERMINATION. Except as otherwise provided in this ARTICLE
5, the Consulting Period, Consultant's Consulting Fee, and any and all other
rights of Consultant under this Agreement or otherwise as an Consultant of Sonus
will terminate:
(a) immediately upon the death of Consultant Representative;
(b) upon the Disability of Consultant Representative immediately upon
notice from either party to the other;
(c) immediately upon a termination of the Consulting Period by Sonus
For Cause, or
(d) upon a termination of the Consulting Period by Consultant, upon not
less than thirty days' prior notice from Consultant to Sonus.
5.2 DEFINITION OF DISABILITY. For purposes of SECTION 5.1, Consultant
Representative will be deemed to have a "Disability" if, for physical or mental
reasons, Consultant Representative is unable to perform Consultant's duties
under this Agreement for one hundred twenty (60) consecutive days, or one
hundred eighty 90) days during any twelve (12) month period, as determined in
accordance with this SECTION 5.2. The Disability of Consultant Representative
will be determined by a medical doctor selected by written agreement of Sonus
and Consultant upon the request of either party by notice to the other. If Sonus
and Consultant cannot agree on the selection of a medical doctor, each of them
will select a medical doctor and the two medical doctors will select a third
medical doctor who will determine whether Consultant has a Disability. The
determination of the medical doctor selected under this SECTION 5.2 will be
binding on both parties. Consultant must submit to a reasonable number of
examinations by the medical doctor making the determination of Disability under
this SECTION 5.2, and Consultant hereby authorizes the disclosure and release to
Sonus of such determination and all supporting medical records.
6.3 DEFINITION OF FOR GOOD REASON. For purposes of this Agreement, the
phrase "For Good Reason" means Sonus's material and continuing breach of this
Consulting Agreement.
3
ARTICLE 6.
AGREEMENTS OF CONSULTANT
In consideration of the consulting fee to be paid or provided to
Consultant by Sonus under this Agreement, Consultant and Consultant
Representative covenant as follows:
6.1 CONFIDENTIALITY.
(a) Subject to SECTION 6.1(B), Consultant (which, for the purposes of
Article 6 and 7 of this Consulting Agreement, shall include Consultant and
Consulting Representative, and their respective employees, agents, principals,
officers, directors, representatives and affiliates) agrees and acknowledges
that through the nature of its work, it will have access to and will acquire
information and knowledge concerning the business and operations of Sonus and
its Affiliates including, without limitation, the Confidential Information.
Consultant acknowledges that all such Confidential Information is the property
of Sonus and its Affiliates solely and constitutes valuable, proprietary and
confidential information of Sonus and its Affiliates; that the disclosure
thereof would cause substantial loss to the goodwill of Sonus and its
Affiliates; that disclosure thereof to Consultant is being made only because of
the position of trust and confidence which he will occupy and because of his
agreement to the restrictions herein contained. Consultant shall not, at any
time, divulge, disseminate, disclose or communicate to any Person any
Confidential Information, which information Consultant shall hold during such
period in trust in a fiduciary capacity for the sole benefit of Sonus, its
Affiliates, and their successors and assigns.
(b) None of the foregoing obligations and restrictions applies to any
part of the Confidential Information that Consultant demonstrates (i) was or
became generally available to the public other than as a result of a disclosure
by Consultant; (ii) is information that has been explicitly approved for public
release by Sonus or an Affiliate thereof; (iii) is disclosed pursuant to a valid
and enforceable subpoena of a court or governmental agency of competent
jurisdiction, provided that Consultant shall first have given Sonus reasonable
opportunity to seek a confidentiality order or other confidential treatment of
such Confidential Information; (iv) is disclosed to third parties by Sonus
without restrictions as to confidentiality; or (v) is received from a third
party whose disclosure would not violate any confidentiality obligation, direct
or indirect, express or implied.
(c) Consultant will not remove from Sonus's premises (except to the
extent such removal is for purposes of the performance of Consultant's duties at
home or while traveling, or except as otherwise specifically authorized by
Sonus) any document, record, notebook, plan, model, component, device, or
computer software or code, whether embodied in a disk or in any other form
(collectively, the "PROPRIETARY ITEMS"). Consultant recognizes that, as between
Sonus and Consultant, all of the Proprietary Items, whether or not developed by
Consultant, are the exclusive property of Sonus. Upon termination of this
Agreement by either party, or upon the request of Sonus during the Consulting
Period, Consultant will return to Sonus all of the Proprietary Items in
Consultant's possession or subject to Consultant's control, and Consultant shall
not retain any copies, abstracts, sketches, or other physical embodiment of any
of the Proprietary Items.
6.2 WITHHOLDING AND TAXES. Consultant and Consultant Representative
agree to pay all withholding, self-employment and other taxes arising out of the
payment by Sonus to Consultant of the Consulting Fee when and as required by
applicable law, and agree to indemnify Sonus and its Affiliates for and hold
them harmless against any and all losses, penalties, costs, expenses, fees
(including reasonable attorneys' fees) and damages arising out of or in
connection with any failure to so do.
6.3 DISPUTES OR CONTROVERSIES. Consultant recognizes that should a
dispute or controversy arising from or relating to this Agreement be submitted
for adjudication to any court, arbitration panel, or other third party, the
preservation of the secrecy of Confidential Information may be jeopardized.
Consultant and Sonus will use their best efforts to cause all pleadings,
documents, testimony, and records relating to any such adjudication to be
maintained in secrecy and to make the same available for inspection by Sonus,
Consultant, and their respective attorneys and experts, who will agree, in
advance and in writing, to receive and maintain all such information in secrecy,
except as may be limited by them in writing.
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ARTICLE 7.
RESTRICTIVE COVENANTS
7.1 ACKNOWLEDGMENTS BY CONSULTANT. Consultant acknowledges that: (a)
the services to be performed by it under this Agreement are of a special,
unique, unusual, extraordinary, and intellectual character; (b) Sonus's business
is national in scope and its products are marketed throughout the United States;
(c) Sonus competes with other businesses that are or could be located in any
part of the United States; (d) Sonus has required that Consultant make the
covenants set forth in this ARTICLE 7 as a condition to Sonus's engagement of
Consultant; and (e) the geographic boundaries, scope of prohibited activities,
and time duration of the provisions of this ARTICLE 7 are reasonable, are no
broader than are necessary to protect the business interests of Sonus and its
Affiliates and are not oppressive and do not and will not impose any
unreasonable burden on Consultant.
7.2 COVENANTS OF CONSULTANT. In consideration of the acknowledgments by
Consultant, and in consideration of the consulting fee to be paid or provided to
Consultant by Sonus, Consultant covenants that he will not, directly or
indirectly:
(a) during the Consulting Period, except in the course of his
employment hereunder, and during the Post-Consulting Period, engage or invest
in, own, manage, operate, finance, control, or participate in the ownership,
management, operation, financing, or control of, be employed by, associated
with, or in any manner connected with, lend Consultant's name or any similar
name to, lend Consultant's credit to or render services or advice to, any
business whose products or activities compete in whole or in part with the
products or activities of Sonus:
(i) anywhere within the United States;
(ii) anywhere in the world where Sonus does business
including, without limitation, the Republic of Georgia, China or Pakistan;
(iii) anywhere within 100 miles of any physical location
owned, leased or operated by Sonus;
(iv) anywhere within 50 miles of any physical location owned,
leased or operated by Sonus;
(v) anywhere within 100 miles of Sellers' place of business;
and
(vi) anywhere within 50 miles of Sellers' place of business.
PROVIDED, HOWEVER, that (A) Consultant may purchase or otherwise
acquire up to (but not more than) 4.99 percent of any class of securities of any
enterprise (but without otherwise participating in the activities of such
enterprise) if such securities are listed on any national or regional securities
exchange or have been registered under Section 12(g) of the Securities Exchange
Act of 1934, and (B) this provision shall not require Consultant to sell,
transfer, assign or otherwise divest any interest owned by him prior to the date
of this Agreement;
(b) whether for Consultant's own account or for the account of any
other Person, at any time during the Consulting Period and the Post-Consulting
Period, solicit business of the same or similar type being carried on by Sonus,
from any Person known by Consultant to be a customer of Sonus, whether or not
Consultant had personal contact with such person during and by reason of
Consultant's employment with Sonus;
(c) whether for Consultant's own account or the account of any other
Person (i) at any time during the Consulting Period and the Post-Consulting
Period, solicit, employ, or otherwise engage as an employee, independent
contractor, or otherwise, any Person who is an employee of Sonus or in any
manner induce or attempt to induce any employee of Sonus to terminate his or her
employment with Sonus; or (ii) at any time during the Consulting Period and
during the Post-Consulting Period, interfere with Sonus's relationship with any
Person, including any Person who at any time during the Consulting Period was an
employee, contractor, supplier, or customer of Sonus; or
(d) at any time during the Consulting Period and during the
Post-Consulting Period, disparage Sonus or any of its shareholders, directors,
officers, employees or agents.
5
7.3 RETURN OF MATERIALS. When Consultant ceases to be a consultant of
Sonus, Consultant promptly shall deliver to Sonus all documents, memoranda,
records, notes, and other materials in his possession, whether prepared by him
or others, and all copies thereof, that contain any Confidential Information,
and Consultant shall have no further rights therein.
ARTICLE 8.
MISCELLANEOUS
8.1 INJUNCTIVE RELIEF AND ADDITIONAL REMEDY. Consultant and Consultant
Representative acknowledge that the injury that would be suffered by Sonus as a
result of a breach of the provisions of this Agreement (including any provision
of ARTICLE 6 or ARTICLE 7) would be irreparable and that an award of monetary
damages to Sonus for such a breach would be an inadequate remedy. Consequently,
Sonus will have the right, in addition to any other rights it may have, to
obtain injunctive relief to restrain any breach or threatened breach or
otherwise to specifically enforce any provision of this Agreement, and Sonus
will not be obligated to post bond or other security in seeking such relief.
Without limiting Sonus's rights under this ARTICLE 8 or any other remedies of
Sonus, if Consultant or Consultant Representative breaches any of the provisions
of ARTICLE 6 or ARTICLE 7, Sonus will have the right to cease making all
consulting and other payments otherwise due to Consultant under this Agreement.
8.2 COVENANTS OF ARTICLE 6 AND ARTICLE 7 ARE ESSENTIAL AND INDEPENDENT
COVENANTS. The covenants by Consultant and Consultant Representative in ARTICLE
6 and ARTICLE 7 are essential elements of this Agreement, Sonus would not have
entered into this Agreement or engaged or continued the engagement of
Consultant. The Company and Consultant have independently consulted their
respective counsel and have been advised in all respects concerning the
reasonableness and propriety of such covenants, with specific regard to the
nature of the business conducted by Sonus. Consultant's and Consultant
Representative's covenants in ARTICLE 6 and ARTICLE 7 are independent covenants
and the existence of any claim by Consultant or Consultant Representative
against Sonus under this Agreement or otherwise, or against the Buyer, will not
excuse Consultant's or Consultant Representative's breach of any covenant in
ARTICLE 6 or ARTICLE 7. Except as otherwise stated herein, if Consultant's
engagement hereunder expires or is terminated, this Agreement will continue in
full force and effect as is necessary or appropriate to enforce the covenants
and agreements of Consultant and Consultant Representative in ARTICLE 6 and
ARTICLE 7.
8.3 REPRESENTATIONS AND WARRANTIES BY CONSULTANT AND CONSULTANT
REPRESENTATIVE. Consultant and Consultant Representative represents and warrants
to Sonus that the execution and delivery by Consultant and Consultant
Representative of this Agreement does not, and the performance by Consultant and
Consultant Representative of Consultant's and Consultant Representative's
obligations hereunder will not, with or without the giving of notice or the
passage of time, or both: (a) violate any judgment, writ, injunction, or order
of any court, arbitrator, or governmental agency applicable to Consultant or
Consultant Representative; or (b) conflict with, result in the breach of any
provisions of or the termination of, or constitute a default under, any
agreement to which Consultant or Consultant Representative is a party or by
which Consultant or Consultant Representative is or may be bound.
8.4 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by either
party in exercising any right, power, or privilege under 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,
(a) no claim or right arising out of 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; (b) no waiver that may be given by
a party will be applicable except in the specific instance for which it is
given; and (c) 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.
8.5 BINDING EFFECT; DELEGATION OF DUTIES PROHIBITED. This Agreement
shall inure to the benefit of, and shall be binding upon, the parties hereto and
their respective successors, assigns, heirs, and legal representatives,
provided, however, that this Agreement may be assigned by Sonus only with the
prior written consent of Consultant, which consent
Schedule A-1
shall not be unreasonably withheld. The duties and covenants of Consultant and
Consultant Representative under this Agreement may not be delegated or assigned.
8.6 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.7 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be given by registered or
certified mail, return receipt requested, postage prepaid, by telecopier or by
national overnight delivery service, and addressed to the intended recipient as
set forth below:
IF TO CONSULTANT:
William Todd Coffin
1600 Wilson Blvd.
Suite 1008
Alexandria, VA 22201
IF TO SONUS WITH A COPY TO:
Sonus Communications, Inc. Cecil E. Martin, III, Esquire
c/o Chairman of the Board Seven Saint Paul Street
6005 Greeley Blvd. Baltimore, Maryland 21202-1626
Springfield, Virginia 22152
Any notice given in the manner aforesaid shall be deemed to have been served,
and shall be effective for all purposes hereof (a) if sent by registered or
certified mail, on the earlier of the second day following the day on which it
is posted or the date of its receipt by the party to be notified, (b) if sent by
telecopier, the day actually received as evidenced by a written receipt of
transmission and (c) if sent by overnight delivery service, the day after such
notice has been delivered by the party to said service. Any Party may change the
address to which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Party notice in the manner
herein set forth.
8.8 ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, between the
parties hereto with respect to the subject matter hereof. This Agreement may not
be amended orally, but only by an agreement in writing signed by the parties
hereto.
8.9 CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
8.10 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.
8.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
Schedule A-2
8.12 GOVERNING LAW; VENUE. This Agreement shall be governed by and
construed in accordance with the domestic laws of the Commonwealth of Virginia
without giving effect to any choice or conflict of law provision or rule
(whether of the Commonwealth of Virginia or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the
Commonwealth of Virginia. To the extent not resolved by binding arbitration
pursuant to Section 8.13 below, each of the parties submits to the jurisdiction
of any state or federal court sitting in Alexandria or Arlington, Virginia, in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding shall be heard and
determined in any such court. Each party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other party with respect thereto.
8.13 BINDING ARBITRATION. Any controversy, dispute or claim of whatever
nature arising out of, in connection with, or in relation to the interpretation,
performance or breach of this Agreement, including any claim based on contract,
tort, or statute, and regardless of the amount of any claim or counterclaim,
shall be settled, at the request of any party to this Agreement, by final and
binding arbitration conducted at a location in Arlington, Virginia (the
"Arbitration") determined by an arbitrator (the "Arbitrator") selected and
designated by the American Arbitration Association ("AAA"), administered by and
in accordance with the then existing Expedited Procedures (the "Expedited
Procedures") under the Commercial Arbitration Rules of the AAA, and judgment
upon any award rendered by the Arbitrator may be entered by any state or federal
court having jurisdiction thereof. By executing this Agreement, the parties
hereto expressly agree that the Expedited Procedures under the Commercial
Arbitration Rules of the AAA shall govern any arbitration proceeding, and the
parties expressly waive any and all challenges to the administration of
Arbitration pursuant to the Expedited Procedures.
[The remainder of this page is intentionally left blank]
**********
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed and delivered as of the day and date first above written.
SONUS:
SONUS COMMUNICATIONS, INC.
By: /s/ CHARLES W. ALBO
----------------------------------------
Name: Charles W. Albo
Title: Executive Vice President
CONSULTANT:
COFFIN & SONS, INC.
/s/ WILLIAM TODD COFFIN
-------------------------------------------
William Todd Coffin, President
/s/ WILLIAM TODD COFFIN
-------------------------------------------
William Todd Coffin
Schedule A-3
Exhibit 6.1(d)
AGREEMENT
SENSE OF WORK: Hudson Capital Advisors will undertake the following on behalf
of Sonus.
ASSIGNMENT (R.H. COFFIN)
Mr. Raleigh Coffin, Managing Partner of HCA will provide part-time services
to Sonus as a consultant for a minimum of a three-month period beginning
April 15, 1999. During that time, working with Sonus Management, he will:
1) Develop the definitive strategy for Sonus going forward.
2) Complete a comprehensive Business Plan with the full cooperation of Sonus
personnel, including:
- 3 year P&L projections
- Year 1 fiscal budget
- Marketing Plan
- Product advantages vs. competition
- Technical section
- Manpower plan
3) Once the Business Plan is accepted by Sonus Board/Management, develop
this into a Private Placement Memorandum, for the next round of financing.
4) Prepare a compelling "roadshow" in PowerPoint to present to the financial
community.
5) Assist in other matters such as Management and Board Selection,
institutional contacts, strategic client/partner introductions and the
development and inculcation of Management Controls in the areas of
finance, technology, equipment deployment and capital planning. These
elements should come together into a Cash Plan, a key management tool
going forward.
6) Special Assignment such as providing:
- Board Membership
- Executive search
- Fund Raising
- Strategic Partnering
- Buyout candidates
Are outside the preview of this agreement and are separately negotiable.
1
COMPENSATION (R.H. COFFIN)
--------------------------
Effective April 15, 1999, Mr. Raleigh Coffin will be paid $10,000 per month
in advance, half of which will be deferred until the next round of finance is
completed. In addition pre-authorized out-of-pocket expenses will be
reimbursed.
Mr. (R.H.) Coffin will receive a two year common stock option grant effective
April 15, 1999 as a strike price not to exceed $1.00 per share for a total of
100,000 shares vesting as follows:
1. 25,000 shares vesting immediately upon the signing of this agreement.
2. 25,000 shares upon the successful completion of the PPM including the
Business Plan.
3. 25,000 shares upon the successful completion of the offering.
4. 25,000 shares when the stock publicly trades at $3.00 per share for at
least 20 consecutive days.
It is assumed that at least two rounds of financing will be required to reach
#4 above indicating considerable dilution will be experienced.
Agreed to by:
/s/ W. Todd Coffin /s/ Ralston H. Coffin
----------------------------------- -----------------------------------
W. Todd Coffin Date Ralston H. Coffin Date
CEO & Director Managing Partner
Somus Communications, Inc. Hudson Capital Advisors
2
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EXHIBIT 6.1 (e)
THE 10% CONVERTIBLE DEBENTURES ATTACHED AS EXHIBIT 3.1(d) ARE INCORPORATED
HEREIN BY REFERENCE
1
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘10SB12G’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 4/15/00 | | 7 |
| | 12/31/99 | | 7 | | | | | 10KSB |
| | 10/31/99 | | 16 |
| | 5/17/99 |
| | 5/15/99 | | 17 |
| Filed on: | | 5/14/99 |
| | 5/1/99 | | 17 |
| | 4/15/99 | | 23 | | 24 |
| | 3/1/99 | | 1 | | 2 |
| | 1/14/99 | | 1 |
| | 1/13/99 | | 1 |
| List all Filings |
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