EXHIBIT 10.10
CONSULTING AGREEMENT
Effective Date of the Agreement: March 1, 2005
THIS CONSULTING AGREEMENT ("Agreement") is entered into as of March 1,
2005, by and between Technology Management Advisors LLC, a Colorado limited
liability company ("Consultant"), and Composite Technology Corporation, a Nevada
corporation ("Company").
Recitals
A. The Company is in the business of (a) developing technology for
composite materials for electrical conductor and structural applications, (b)
manufacturing, marketing and selling composite reinforced materials for
electrical conductor and structural applications, and (c) manufacturing,
marketing and selling electrical conductor and structural products incorporating
composite materials (the "Business"). The Company's success is in significant
part dependent upon its ability to protect its intellectual property and to
continue to develop or identify additional technology that will provide a
competitive advantage in the Business.
B. Consultant is in the business of advising clients with respect to the
creation, management and protection of intellectual property rights. Consultant
also provides business advice and structuring for new business opportunities.
C. The Company desires to retain Consultant, and Consultant is willing to
be retained by the Company, to render consulting services on the terms and
conditions set forth herein.
Agreement
Accordingly, in consideration of the mutual covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Term.
On the terms and subject to the conditions set forth herein, the Company
agrees to retain Consultant, and Consultant agrees to serve as a consultant to
the Company, for a term commencing on the date hereof and ending on February
29,2008. This term may be extended upon mutual agreement of the parties.
2. Technoloy Management.
Consultant shall provide the following services to the Company in connection
with its ongoing technology management program:
(a) Advise management of the Company with respect to all aspects of
the Company's technology protection and management program,
including consulting with respect to strategies to create and
protect intellectual property rights associated with its existing
technology and any new technology developed or acquired;
(b) Consider and advise management concerning patent protection for
the Company's technology, including the processes, hardware
configurations and software, and advise management in connection
with management's determinations as to the filing of patent
applications;
(c) Select and manage legal groups to prepare, file and prosecute
the desired patent applications authorized by management; review the
patent applications prepared by counsel on behalf of the Company;
and keep management advised as to the prosecution of each
application and the timing of the issuance of each of the
applications;
(d) Consider and advise management concerning international filing
strategies, including the selection of countries for each of the
corresponding U.S. applications; select and manage attorneys and
agents in each country selected by management for filing, coordinate
with such attorneys and agents the filing and prosecution of all
foreign patent applications and the maintenance of issued patents;
(e) Work closely with management with regard to the ongoing research
and development efforts to coordinate the initial patent filings
with anticipated filings and to develop a database sufficient
to strengthen and broaden the overall patent protection consistent
with available resources;
(f) Consider and advise management concerning options for
third-party arrangements for further technology development,
manufacturing, marketing, licensing and joint venture arrangements
in the U.S. and abroad and overall company strategies regarding such
transactions;
(g) Advise management with respect to technology based agreements,
including consulting agreements, agreements dealing with the
disclosure and protection of proprietary information and agreements
establishing and managing technology based joint developments, joint
ventures, limited liability companies and other forms of business
alliances;
(h) Working with patent counsel, advise management with respect to
"freedom to operate" issues relating to third party patents,
including problems associated with the production and sales of
particular products in view of third-party patents; and
2
(i) Provide such other services relating to technology management
and protection as are agreed upon by the Company and Consultant.
3. New Technology Within Scope of Business.
Consultant shall assist management in evaluating new technology that is
within the scope of the Business. Consultant shall promptly advise Company when
it becomes aware of new technology that is within the scope of the Business and
Company shall advise Consultant of its interest in any technologies that it
desires the services of Consultant. Regarding such technologies, each shall
provide to the other all relevant information in its possession with respect to
the technology. If the Company desires to pursue the new technology, Consultant
shall use commercially reasonable efforts to investigate and analyze the
technology and determine its availability to the Company, including, without
limitation, conducting due diligence in the area of intellectual property
protection and freedom to operate. Consultant shall report to management the
results of any investigations and the Company shall instruct Consultant whether
it wishes to pursue the acquisition of rights with respect to the technology. If
the Company desires to acquire rights in the technology, Consultant shall
attempt to negotiate agreements for the Company's acquisition of the rights
desired. Consultant shall not have authority to enter into any such agreement on
the Company's behalf and all agreements must be approved and executed by an
authorized officer of the Company. Consultant will advise and consult with
management concerning all agreements and transactions pursuant to which rights
in such technology are acquired or new technology is developed or
commercialized, including, without limitation, the structuring and documentation
of relationships with other individuals or entities who will participate in the
acquisition, development or commercialization of the technology. If the Company
is successful in acquiring rights in a technology, Consultant will provide the
services discussed in Section 2 with respect to that technology.
4. Scope.
The Company acknowledges that the time required for Consultant to perform
the services described in Sections 2 and 3 will depend upon the level of
technology-related activity by the Company and also upon the nature and
availability of technology within the scope of the Business. Consultant shall
devote such time and effort to the performance of those services as is
reasonably necessary to fulfill its obligations hereunder. Any work or task of
Consultant provided for herein which requires the Company to provide information
or assistance to Consultant shall be excused (without effect upon any obligation
of the Company) until such time as the Company has fully provided all
information and assistance necessary for Consultant to complete the work or
task. The services of Consultant shall not include any work that is in the
ordinary purview of a lawyer, certified public accountant or other licensed
professional and the Company shall be responsible for separately retaining and
compensating any such professional whose services are necessary to allow
Consultant to fulfill its obligations hereunder. Consultant cannot guarantee
results on behalf of the n Company, but shall use commercially reasonable
efforts in providing the services described above.
3
5. Consultant Personnel.
Consultant acknowledges that the Company is entering into this Agreement
to obtain the services of Xx. XxXxxxxx. Consultant agrees that all services
hereunder (other than clerical or administrative services) shall be performed
either directly by or under the direct supervision of Xx. XxXxxxxx.
6. Consultant Compensation.
Consultant shall be compensated in an amount of $250,000 per year, payable
quarterly at the beginning of each calendar quarter. Payment may be made in cash
or if the price of the shares is above $2.00, in freely trading shares of the
Company's common stock at the election of the Company. If payment is made in
stock, the amount to be credited to Company shall be that amount that Consultant
actually receives upon the sale of such shares, provided, however, that the
amount credited to the Company shall be no less than $1.83 per share. Consultant
shall promptly report to Company the sale of any such shares, and the amount
received by Consultant upon such sale, and this amount shall be credited to the
account of Company. Consultant shall produce satisfactory receipts or bills of
sale supporting such sales. Such shares shall be registered under the Securities
Act of 1933, as amended (the "Securities Act"), for issuance to Consultant
hereunder. Such certificates shall be issued in the name of Xxxxxxx X. XxXxxxxx
as the owner of Consultant. The shares of Common Stock issued each year shall be
duly authorized, validly issued, fully paid and nonassessable and shall not be
subject to any restrictive legend or other restriction on transfer. If the
Company terminates this Agreement pursuant to Section 12(b) or (c), Consultant's
annual compensation under this Section 6(a) for the year of termination shall be
prorated to the date of termination and Consultant shall return any unsold
shares and/or refund to the Company the portion of such compensation
attributable to the portion of the quarter after the date of termination. In the
event that the Company shall not be in receipt of proper reporting of the
receipts from the sale of any shares issued in compensation in accordance with
the terms hereof for longer than 12 months from the date of the issue of the
share certificates, the value attributed to such shares shall be fixed by the
Company calculated as the average of the publicly announced closing prices of
the shares during such 12 month period.
7. Expenses.
The Company shall reimburse Consultant for all direct out-of-pocket costs
reasonably incurred by Consultant in the performance of services hereunder;
provided, however, that any expense in excess of $1,000 for any item must be
approved in advance by the Company. The Company shall reimburse expenses
promptly upon receipt of a statement therefore from Consultants accompanied by a
reasonable supporting documentation.
4
8. Cooperation by Company.
The Company shall make available to Consultant all information and
personnel reasonably requested by Consultant in connection with the performance
of its obligations hereunder. In addition, the Company shall keep Consultant
informed on a reasonably current basis of developments in the Company's
technology and business so that the Consultant shall have a reasonable basis
upon which to advise the Company as contemplated hereby.
9. Confidentiality.
Consultant and Company aclcnowledge and reaffirm the Confidentiality
Agreement entered into on January 4,2002.
10. Standard of Care.
Consultant shall perform all services hereunder in a commercially
reasonable manner and to the best of its ability. However, Consultant shall have
no liability to the Company for any loss, liability, cost or expense suffered or
incurred by the Company as a result of any act or omission by Consultant or its
personnel except such as arise from the gross negligence or willful misconduct
of Consultant or its personnel. In the event that Consultant selects legal
counsel or others to provide services to the Company, Consultant shall not be
responsible for any act or omission of such legal counsel or others as long as
they were selected with reasonable care.
11. Indemnification.
The Company shall indemnify Consultant and its members, managers,
officers, directors, employees and agents against any loss, liability, cost or
expense incurred by any of them as a result of or relating to the performance of
services for the Company hereunder, except such as are caused directly by the
gross negligence or willful misconduct of Consultant or its personnel. Such
indemnification shall include all expenses (including reasonable attorneys fees)
incurred by the indemnified person in connection with investigating and
defending any claim against which such person is entitled to indemnification.
12. Termination.
(a) Either party shall have the right to terminate this Agreement as
of any anniversary of the date hereof by providing at least ninety (90)
days' prior written notice to the other party.
(b) Breach. If either party fails to perform its obligations
hereunder in any material respect, and if such failure is not cured within
30 days after written notice of breach from the other party, the other
party may terminate this Agreement by written notice of termination to the
breaching party.
5
(c) Unavailability of XxXxxxxx. In the event that the services of
Xx. XxXxxxxx become unavailable to Consultant, whether as a result of
death, disability, retirement or otherwise, the Company may terminate this
Agreement by written notice to Consultant.
(d) Change of Control. In the event that (i) the Company sells more
than 50% of its assets, whether in a single transaction or a series of
transactions, (ii) any five or fewer persons (other than Xxxxxxx Xxxxxxxxx
and Xxxxxx Xxxxxxxx) have or acquire beneficial ownership (as determined
for purposes of Section 13 of the Securities Exchange Act of 1934, as
amended) of 40% or more of the Company's outstanding Common Stock, or
(iii) Xxxxxx Xxxxxxxx'x employment with the Company terminates, whether as
a result of death, disability, retirement or otherwise, then, in any such
event, Consultant may terminate this Agreement by written notice to the
Company.
13. Nature of Agreement.
The services to be provided by Consultant hereunder shall not include the
practice of law. Any legal services required by the Company with respect to the
matters dealt with in this Agreement shall be provided by lawyers selected by
Consultant and reasonably satisfactory to the Company who shall be retained and
separately compensated by the Company. The Consultant shall act solely as an
independent contractor under this Agreement and nothing contained herein is
intended to create any partnership, agency, joint venture or other relationship
between the Company and the Consultant. Consultant shall have no authority to
bind the Company contractually in any manner. The Consultant understands that it
is illegal for the Company to issue securities registered under its 2002 Non
Qualified Stock Compensation Plan in compensation for financial consulting
services; accordingly the Consultant represents and warrants that it shall
indicate clearly the provision of any such services so that they may be
compensated in cash and that the Consultant shall not accept in remuneration of
such services any shares in accordance with the provisions contained herein.
14. Notices.
All notices given under this Agreement shall be in writing. Any notice may
be transmitted by any means selected by the sender. A notice that is mailed to a
party at its address given below, registered or certified mail, return receipt
requested, with all postage prepaid, will be deemed to have been given and
received on the earlier of the date reflected on the return receipt or the third
business day after it is posted. Any notice sent by facsimile transmission to a
party at its facsimile number given below shall be deemed to have been given and
received upon confirmation of transmission by the sender's facsimile machine.
Any notice transmitted by recognized overnight courier service to a party at its
address given below shall be deemed given and received on the first business day
after it is delivered to the courier. Any notice given by any other means shall
be deemed given and received only upon actual receipt. The addresses and
facsimile numbers of the parties for notice purposes are as follows:
6
If to the Consultant:
Xxxxxxx X. XxXxxxxx, Manager
Technology Management Advisors LLC
0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx X-0
Xxxxxxxxx, XX 00000
Facsimile No: (000) 000-0000
If to the Company:
Xxxxxx X. Xxxxxxxx, CEO
Composite Technology Corporation
0000 XxXxx Xxxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Any party may change its address or facsimile number for notice purposes,
or add additional persons to whom copies of any notice should be sent, by
written notice to the other Party.
15. Miscellaneous.
This Agreement shall be governed in all respects by the laws of the State
of California. This Agreement contains the entire understanding of the parties
with respect to the subject matter hereof and neither party has relied upon any
representation, warranty or promise not contained herein. As of the Effective
Date of this Agreement, this Agreement shall supercede the Consulting Agreement
between the parties under date of March 27,2002, and that portion of the term of
the March 27,2002 Consulting Agreement from February 28, 2005 to its stated
expiration shall no longer be in effect. The Consultant acknowledges the full
settlement of any amounts outstanding under the March 27, 2002 Consulting
Agreement with the issue by the Company of 150,000 shares by the Company subject
to the terms of the Minutes of the Board of Directors of the Company dated March
1,2005. The Consultant further acknowledges that it has received, through the
issue of such shares to Xx XxXxxxxx, additional shares (or is holding cash from
the proceeds of the sale of such shares) that have not yet been applied to the
payment of any amounts owing by the Company to the Consultant. The Consultant
undertakes to apply the proceeds from the sale of such shares to payments made
under the present Agreement and in accordance with its terms. No failure by
either party to insist upon the strict performance of any term or provision of
this Agreement shall constitute a waiver thereof on that or any subsequent
occasion. This Agreement may be amended, and any term or provision hereof may be
waived, only in a writing signed by the party charged with such amendment or
waiver. In the event of any litigation between the parties with respect to this
Agreement or the performance of either party hereunder, the prevailing party
shall be entitled to recover, in addition to any other relief awarded by the
court, its reasonable attorneys' fees and other costs of preparing for and
participating in the litigation.
[Signatures follow on the next page, page 8]
7
IN WITNESS WHEREOF, the Company and the Consultant have executed this
Agreement as of the day and year first above written.
Composite Technology Corporation
By: /s/ Xxxxxx X Xxxxxxxx, CEO
--------------------------------
Xxxxxx X Xxxxxxxx, CEO
Technology Management Advisors LLC
By: /s/ Xxxxxxx X XxXxxxxx
--------------------------------
Xxxxxxx X XxXxxxxx, Manager
8
