CONSULTING AND CONFIDENTIALITY AGREEMENT
This CONSULTING AND CONFIDENTIALITY AGREEMENT is entered into as of
the 18th day of January, 2002 between 1-800-ATTORNEY, Inc., a Florida
corporation ("Company") and Peter S. Balise, an individual ("Consultant").
BACKGROUND
The Company wishes to engage the Consultant as an independent advisor
to the Company and the Consultant is willing to accept such engagement on the
terms and conditions of this Agreement.
TERMS
1. ENGAGEMENT.
The Company hereby engages the Consultant in an advisory capacity and the
Consultant hereby accepts such engagement, upon the terms and conditions
set forth in this Agreement.
2. TERM.
The term of this Agreement shall commence on January 18, 2002 and shall
terminate on December 31, 2004 (the "Term").
3. DUTIES.
a. Upon reasonable request, the Consultant shall provide general advice and
assistance to the Company on a variety of projects and activities as
determined from time to time by the Company's Chief Executive Officer, to
whom the Consultant shall report and receive his direction and project
priorities. In the event the Company decides to implement strategies or
make business decisions based on any opinions, advice or assistance of
Consultant, the Company does so at its own risk and without any recourse
against the Consultant for any opinions, advice or assistance given.
b. During the Term, the Consultant shall reach reasonable agreement from
time-to-time with the Company's CEO as to the amount of time that shall be
allocated by Consultant for the Company's benefit, it being the intention
of the parties that this consulting arrangement not interfere with
Consultant's ability to undertake other full time employment or pursue
other full time business opportunities not involving the Company, nor to
restrict Consultant's ability to travel or relocate his personal residence.
4. INDEPENDENT CONTRACTOR.
a. The relationship of the Consultant to the Company shall be that of an
independent contractor, and neither this Agreement nor any conduct
hereunder shall be deemed to create a relationship of employer-employee,
partnership, joint venture or any other common enterprise. Consultant shall
be responsible for payment of all taxes including Federal, State and Local
taxes arising out of Consultant's activities in accordance with this
Agreement.
b. The Consultant shall have no authority to bind the Company to, or
assume, enter into, or act on behalf of the Company for, any obligation,
agreement or act.
5. FEES AND EXPENSES.
a. During the Term of this Agreement, as compensation for all services
rendered by the Consultant, the Company shall pay to Consultant a fee equal
to $225,000, payable as follows: $50,000 in a lump sum due upon execution
of this Agreement, and $6,250 per month payable on the 15th day of each
month beginning September 15, 2002, and continuing each month thereafter
through December 15, 2004, to be paid by Company check timely mailed to
Consultant's address set forth in Section 11 hereof or such other address
as Consultant shall provide to the Company in a written change of address
communication.
b. During the term of this Agreement, the Company shall reimburse
Consultant for all business expenses reasonably incurred by the Consultant
in the performance of services hereunder provided that such business
expenses were approved in writing by the Company. Consultant will submit to
the Company a written accounting or other adequate documentary evidence of
such expenses no more frequently than monthly. The Company agrees to
reimburse Consultant for such expenses within fifteen (15) business days of
receipt of each such expense accounting.
c. The Company shall pay the health insurance and all other health
benefits, including AFLAC, under COBRA for the Consultant for an 18-month
period beginning in February 2002. These health benefits shall cease if and
when the Consultant becomes covered under other insurance. The Consultant
shall promptly notify the Company of any new insurance coverage.
d. The Company shall reimburse Consultant's cell phone charges during the
12 month period beginning February 1, 2002, at the rate of $150 per month,
and will reimburse amounts in excess of $150 per month for expenses on
Company business. The Consultant shall be required to submit to the Company
for reimbursement as a business expense, any cell phone charges in excess
of $150 per month which pertain to consulting services provided hereunder.
6. NON-COMPETITION AGREEMENT.
a. NON-COMPETITION WITH THE COMPANY. Until December 31, 2004, the
Consultant, directly or indirectly, in association with or as a
stockholder, director, officer, consultant, employee, partner, joint
venturer, member or otherwise of or through any person, firm, corporation,
partnership, association or other entity, shall not compete with the
Company or any of its Affiliates in any line of business which is directly
competitive with the business of the Company or any of its Affiliates in
existence or planned as of the date of this Agreement, within any
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metropolitan area in the United States. The Company's current business (the
"Prohibited Business") is defined as the Company's bar, legal or medical
print directory programs, current attorney referral service business
(1-800-ATTORNEY) or the sale of specialty listings for attorneys and/or
service providers to the legal profession where such listings are contained
in print directories referred to above or on the Internet; provided,
however, the foregoing shall not prohibit the Consultant from owning up to
5% of the securities of any publicly-traded enterprise provided the
Consultant is not an executive, director, officer, consultant to such
enterprise or otherwise reimbursed for services rendered to such
enterprise. Affiliate shall have the meaning contained in Rule 405 under
the Securities Act of 1933.
b. SOLICITATION OF CUSTOMERS. During the periods in which the provisions of
Section 6(a) shall be in effect, the Consultant, directly or indirectly,
shall not refer Prohibited Business from any Customer to any enterprise or
business other than the Company to any enterprise or business that is in
direct competition with the Company's bar, legal or medical print directory
programs, or attorney listings on the Internet or in print, or attorney
referral service business or receive commissions based on sales or
otherwise relating to the Prohibited Business from any Customer that is in
direct competition with the Company's bar, legal or medical print directory
programs or attorney referral service business, or any enterprise or
business other than the Company. For purposes of this Agreement, the term
"Customer" means any person, firm, corporation, partnership, association or
other entity to which the Company or any of its Affiliates sold or provided
goods or services during the twelve-month period prior to the time at which
any determination is required to be made as to whether any such person,
firm, corporation, partnership, association or other entity is a Customer,
or who or which was approached by or who or which has approached an
employee of the Company for the purpose of soliciting business from the
Company or the third party, as the case may be.
c. SOLICITATION OF EMPLOYEES. During the periods in which the provisions of
Section 6(a) shall be in effect, the Consultant, directly or indirectly
including through any Affiliate shall not solicit, hire, negotiate with, or
contact any employee of the Company for the purpose of hiring them or
causing them to terminate their employment relationship with the Company.
However, if the Company terminates an employee, or if an employee leaves
the Company for a period of six months not in relation to any solicitation
by the Consultant, the Consultant may hire such employee.
d. NO PAYMENT. The Consultant acknowledges and agrees that no separate or
additional payment will be required to be made to him in consideration of
his undertakings in this Section 6.
7. CONFIDENTIAL INFORMATION. During the term of this Agreement, the Confidential
Information shall be held by the Consultant in the strictest confidence and
shall not, without the prior written consent of the Company, be disclosed to any
person other than in connection with Consultant's assigned projects and
activities hereunder.
a. CONFIDENTIAL INFORMATION. Confidential Information includes, but is not
limited to, trade secrets as defined by the common law and statute in
Florida or any future Florida statute, processes, policies, procedures,
techniques, designs, drawings, know-how, show-how, technical information,
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specifications, computer software and source code, information and data
relating to the development, research, testing, costs, marketing and uses
of the Services (as defined herein), the Company's budgets and strategic
plans, and the identity and special needs of Customers, databases, data,
all technology relating to the Company's businesses, systems, methods of
operation, client or Customer lists, Customer information, solicitation
leads, marketing and advertising materials, methods and manuals and forms,
all of which pertain to the activities or operations of the Company, names,
home addresses and all telephone numbers and e-mail addresses of the
Company's executives, former executives, clients and former clients. In
addition, Confidential Information also includes Customers and the identity
of and telephone numbers, e-mail addresses and other addresses of
executives or agents of Customers (each a "Contact Person") who are the
persons with whom the Company's executives and agents communicate in the
ordinary course of business. Confidential Information also includes,
without limitation, Confidential Information received from the Company's
subsidiaries and Affiliates. For purposes of this Agreement, the following
shall not constitute Confidential Information (i) information which is or
subsequently becomes generally available to the public through no act of
the Consultant, (ii) information set forth in the written records of the
Consultant prior to disclosure to the Consultant by or on behalf of the
Company which information is given to the Company in writing as of or prior
to the date of this Agreement, and (iii) information which is lawfully
obtained by the Consultant in writing from a third party (excluding any
Affiliates of the Consultant) who did not acquire such confidential
information or trade secret, directly or indirectly, from Consultant or the
Company. As used herein, the term "Services" shall include the Company's
bar, legal and medical directory business and its attorney referral service
business during the term of this Agreement.
b. Upon termination of Consultant's engagement hereunder, for whatever
reason and whether voluntary or involuntary pursuant to specific
termination provisions hereof, or at any time at the request of Company's
CEO, Consultant shall promptly return or destroy all Confidential
Information in the possession or under the control of Consultant to Company
and shall not retain any copies or other reproductions or extracts thereof,
except that Consultant may keep some copies of directories published by the
Company over the years and advertising sales/media kits for "show and tell"
type items to be used as examples of his work product in the course of
seeking employment. Consultant shall at any time at the request of Company
destroy or have destroyed all memoranda, notes, reports, and documents,
whether in "hard copy" form or as stored on magnetic or other media, and
all copies and other reproductions and extracts thereof, prepared by
Consultant.
8. BINDING EFFECT, ASSIGNMENT. This Agreement shall inure to the benefit of and
be binding upon the Company, its successors and assigns, including, without
limitation, any person, partnership, company or corporation which may acquire
substantially all of the Company's assets or business or with or into which the
Company may be liquidated, consolidated, merged or otherwise combined, and shall
inure to the benefit of and be binding upon the Consultant, his heirs,
distributees and personal representatives. The Consultant may not assign this
Agreement or any right or obligation under this Agreement.
9. WAIVER. The failure of either party to insist in any one or more instances
upon performance of any terms or conditions of this Agreement shall not be
construed a waiver of future performance of any
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such term, covenant or condition, and the obligations of either party with
respect to such term, covenant or condition shall remain in full force and
effect.
10. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument. The execution of this Agreement may be
by actual or facsimile signature.
11. NOTICES AND ADDRESSES. All notices and any other acts required or permitted
under this Agreement shall be in writing, and shall be sufficiently given if
delivered to the addressees in person, by Federal Express or similar receipted
delivery, or if mailed, postage prepaid, by certified mail, return receipt
requested, as follows:
To the Company: 1-800-ATTORNEY, Inc.
186 Attorneys.com Court
Lake Helen, Florida 32744
Facsimile No.: (386) 228-0276
With a Copy to: Louis T. M. Conti, Esq.
Holland & Knight LLP
200 South Orange Avenue, Suite 2600
Orlando, Florida 32801
Facsimile No.: (407) 244-5288
To the Consultant: Mr. Peter S. Balise
6939 Sylvan Woods Drive
Sanford, Florida 32771
With a Copy to: Thomas A. Simser, Jr., Esq.
Winderweedle, Haines, Ward & Woodman, P.A.
P.O. Box 880
Winter Park, Florida 32790
Facsimile No.: (407) 645-3728
12. ENTIRE AGREEMENT, MODIFICATION. This Agreement supersedes all previous
agreements, negotiations or communications between Consultant and Company and
contains the entire understanding and agreement between the parties with respect
to its subject matter. This Agreement cannot be amended, modified or
supplemented in any respect except by a subsequent written agreement entered
into by both parties.
13. HEADINGS. Headings in this Agreement are for convenience only and should not
be used to interpret or construe its provisions.
14. GOVERNING LAW. This Agreement shall be construed and enforced in accordance
with the laws of the State of Florida.
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15. SEVERABILITY. If any provision of this Agreement is held to be invalid,
illegal or unenforceable, in whole or in part, such invalidity shall not affect
any otherwise valid provision, and all other valid provisions shall remain in
full force and effect.
16. ARBITRATION. Except for a claim for equitable relief, any controversy,
dispute or claim arising out of or relating to Sections 6 and 7 of this
Agreement, or its interpretation, application, implementation, breach or
enforcement which the parties are unable to resolve by mutual agreement, shall
be settled by submission by either party of the controversy, claim or dispute to
binding arbitration in Orange County, Florida (unless the parties agree in
writing to a different location), before three arbitrators in accordance with
the rules of the American Arbitration Association then in effect. In any such
arbitration proceeding the parties agree to provide all discovery deemed
necessary by the arbitrators. The decision and award made by the arbitrators
shall be final, binding and conclusive on all parties hereto for all purposes,
and judgment may be entered thereon in any court having jurisdiction thereof.
The prevailing party shall be entitled to reimbursement by the other party for
all reasonable costs of arbitration incurred by such prevailing party.
17. ATTORNEY'S FEES. In the event that there is any controversy or claim arising
out of or relating to this Agreement, or to the interpretation, breach or
enforcement thereof, and any action or proceeding is commenced to enforce the
provisions of this Agreement, the prevailing party shall be entitled to a
reasonable attorney's fee, costs and expenses.
18. SECTION AND PARAGRAPH HEADINGS. The section and paragraph headings in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
19. MERGER OR SALE OF THE COMPANY. In the event the Company merges into or is
acquired by another company, the total outstanding balance of monies due the
Consultant may, at the Company's option, be accelerated and immediately become
payable to the Consultant, subject to compliance with the other terms of this
Agreement, provided that, if the outstanding balance of monies due hereunder is
not accelerated, the Company shall be required to negotiate, as a condition of
such merger or sale, the assumption of all liabilities and obligations of the
Company hereunder and shall provide written evidence of such assumption to
Consultant promptly following such merger or sale.
20. EQUITABLE RELIEF.
a. In the event the Consultant is in breach of the terms and conditions of
Sections 6 or 7 hereof, the Company shall be entitled to institute and
prosecute proceedings in any court of competent jurisdiction to seek to
enjoin the Consultant from breaching Sections 6 or 7 of this Agreement,
provided, however, that the Company shall have no such right to institute
and prosecute proceedings due to a violation by the Consultant of Sections
6 or 7 at any time the Company is in default in the payment of any amounts
owed the Consultant hereunder. In the event the Company is permitted to
bring such legal action, the Company shall not be required to plead or
prove irreparable harm or lack of an adequate remedy at law or post a bond
or other security. Nothing contained in this Section 20 shall be construed
to prevent the Company from seeking such other remedy in arbitration in
case of any breach of this Agreement by the Consultant, as the Company may
elect. Notwithstanding anything in this Agreement to the contrary, the
Company shall not be
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permitted to terminate this Agreement nor institute and prosecute
proceedings on the grounds that Consultant did not perform his consulting
duties hereunder or did not do so in a manner acceptable to the Company,
and in the event of any such termination or commencement of such
proceedings, all amounts due Consultant hereunder during the Term shall be
accelerated and shall be immediately due and payable.
b. Any proceeding or action brought pursuant to Section 20.a above must be
commenced in Orange County, Florida (unless the parties agree in writing to
a different location). The Consultant and the Company irrevocably and
unconditionally submit to the exclusive jurisdiction of such courts and
agree to take any and all future action necessary to submit to the
jurisdiction of such courts. The Consultant and the Company irrevocably
waive any objection that they now have or hereafter may have to the laying
of venue of any suit, action or proceeding brought in any such court and
further irrevocably waive any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient
forum. Final judgment against the Consultant or the Company in any such
suit shall be conclusive and may be enforced in other jurisdictions by suit
on the judgment, a certified or true copy of which shall be conclusive
evidence of the fact and the amount of any liability of the Consultant or
the Company therein described, or by appropriate proceedings under any
applicable treaty or otherwise.
21. DISCLOSURE OF LIABILITIES. Except as disclosed on Schedule 21 and for
liabilities arising in the ordinary course of business, to the knowledge of the
Consultant, the Company has no contingent liabilities in existence as of the
date hereof in an amount of $5,000 or more, except for: (i) liabilities
reflected on the Company's balance sheet at September 30, 2001, or the Company's
balance sheet at December 31, 2001 or otherwise known or disclosed to the
Company as of the date hereof; and (ii) any contingent liabilities known, as of
the date hereof, to other members of the Company's Board of Directors, the
Company's Chief Operating Officer, or the Company's Chief Financial Officer
(individually referred to as an "Unknown Contingent Liability"). Moreover, the
Consultant specifically represents and warrants to the Company that the Company
has no liability to Legal Research Center, Inc. of Minneapolis, MN in excess of
$7,500. In the event that a claimant makes a demand or asserts a right to be
paid for an Unknown Contingent Liability, and such claimant provides reasonable
evidence to the Company that Consultant knew of such Unknown Contingent
Liability prior to the date of the Agreement yet failed to disclose it to the
Company, the Company, after notice to the Consultant, may, pursuant to the
procedure set forth in Section 22 hereof, offset the amounts of the Unknown
Contingent Liability against any sums due the Consultant pursuant to this
Agreement.
22. RIGHT OF SET-OFF. In the event the Consultant breaches Sections 6 or 7 of
this Agreement, or in the event the Company has a right of offset pursuant to
Section 21 hereof as a result of the existence of an Unknown Contingent
Liability, the Company may, after written notice to Consultant, offset any
damages to the Company with the amounts otherwise payable to Consultant under
this Agreement. If the Company elects its right of offset by delivery of written
notice thereof, and Consultant elects to challenge such offset by commencing an
arbitration proceeding challenging such offset, among other things, the
provisions of Section 23 below shall be stayed until such time as the
arbitration proceeding is concluded, the time to seek relief therefrom in the
courts has been finally determined, and an additional five days from receipt of
notice to the Company has elapsed. In the event Consultant prevails in an
arbitration action challenging such offset, the late payment penalty that would
have been due pursuant to Section 23 hereof shall be reinstated and owed by the
Company as of the date of any non-payment.
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23. BREACH OF PAYMENT BY THE COMPANY. In the event the Company fails to pay the
Consultant any and all monies within 10 days of when due, and such failure to
pay is not based on a good faith belief by the Company that Consultant has
breached Sections 6 or 7 of this Agreement, this Agreement shall be deemed to be
in default, with no further notice required by the Consultant to the Company,
and the Consultant shall be entitled to a 12% late fee on all payments past due,
and the Company shall pay all reasonable collection costs incurred by
Consultant, including but not limited to legal fees and costs. In the event the
default is not cured within 45 days from the original due date of the payment,
Sections 6 and 7 of this Agreement and Sections 7, 8 and 9 of that certain
Severance Agreement of even date herewith between the Company and Consultant
shall immediately become null and void and the total monies due under this
Agreement shall accelerate and become due and payable to the Consultant.
24. DEATH OR DISABILITY OF CONSULTANT. The parties acknowledge that Consultant
would not have entered into this Agreement but for the expectation that
Consultant or his estate would be paid all amounts required to be paid
hereunder. In lieu of the Company purchasing life insurance on the life of
Consultant payable to Consultant's estate, and in lieu of the Company purchasing
disability insurance covering Consultant, the Company agrees to pay all amounts
due hereunder: (i) in the event of disability, to Consultant, when and as such
amounts become due; or (ii) in the event Consultant becomes deceased during the
Term, to Consultant's estate when and as such amounts become due.
25. PROPER AUTHORITY; DUE EXECUTION. The Company represents and warrants to the
Consultant that this Agreement has been approved by the Company's Board of
Directors and that the officer of the Company signing on behalf of the Company
has been fully authorized to do so on the Company's behalf.
26. EXECUTION OF AGREEMENT. In addition to executing this Agreement below, the
parties hereto shall both initial each page of this Agreement and, in the event
either party makes any marked up changes hereto, both parties shall initial each
such change.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written. COMPANY:
1-800-ATTORNEY, Inc.
By: /s/ James M. Koller
-------------------------------------
James M. Koller, CFO & Treasurer
CONSULTANT:
By: /s/ Peter S. Balise
-------------------------------------
Peter S. Balise
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Schedule 21
1. American Express bills, including:
o Auto repair / service
o Gas
o Restaurants
o Lodging
o Auto rental
2. Photobooks - Internet / web work
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Consulting and Confidentiality Agreement - 1-800-ATTORNEY Inc. and Peter S. Balise
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