WHERIFY WIRELESS, INC. CONSULTING AGREEMENT
THIS
CONSULTING AGREEMENT (this “Agreement”)
is made and entered into as of January 1, 2004, by and between Wherify Wireless,
Inc., a California corporation (the “Company”)
and W. Xxxxxxx Xxxxxx (the “Consultant”).
WHEREAS,
the Company desires consulting and similar services relating to the Company’s
business and products; and
WHEREAS,
the Consultant desires to contract with the Company to perform such
services;
NOW,
THEREFORE, in consideration of the mutual covenants hereinafter recited,
the
sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. Project.
The Consultant shall serve as a consultant to the Company for a period
commencing on the date of this Agreement and concluding upon the completion
of
the project described in Exhibit A
(the “Project”)
unless earlier terminated in accordance with Section 8 of this
Agreement.
2. Scope
of Work.
The Consultant shall perform the services set forth in Exhibit A
attached hereto (the “Services”).
Any additions to or modifications of the Project or the Services shall be
set
forth in writing and shall be signed by both parties. The performance of
services and the compensation for such services necessary to the completion
of
such additions or modifications shall be governed by this Agreement unless
otherwise described in the written agreement of the parties.
3. Consulting
Fees.
The Company agrees to pay the Consultant for the Services in accordance with
the
payment schedule set forth in Exhibit B
attached hereto.
4. Payments.
The Company shall pay each invoice submitted hereunder within 15 days of
receipt
thereof.
5. Noncompetition.
During the term of this Agreement, the Consultant shall not, directly or
indirectly, participate in or assist any business that is an actual or potential
competitor of the Company.
6. Confidentiality.
(a) Definition.
For purposes of this Agreement, “Confidential
Information”
means any information related to any aspect of the business of the Company
(including any person or entity directly or indirectly controlled by or
controlling the Company, or in which any of the aforesaid have at least a
50%
interest) which is either (a) information not known by the trade generally,
even though such information may be disclosed to one or more third parties
pursuant to agreements entered into by the Company, or (b) is proprietary
information of the Company, whether of a technical nature or otherwise.
Confidential Information includes Inventions, inventions, trade secrets,
original works, findings, reports, disclosures, processes, systems, methods,
formulae, procedures, concepts, compositions, techniques, drawings, models,
diagrams, flow charts, research, data, devices, machinery, copyrights, copyright
applications, patents, patent applications, trademarks, trademark applications,
intellectual property, instruments, materials, products, patterns, compilations,
programs, techniques, sequences, designs, research or development activities
and
plans, specifications, documentation, algorithms, software, computer programs,
source code, object code, mask works, costs of production, prices and other
financial data, volume of sales, promotional methods, marketing plans and
techniques, identities of and information regarding customers, clients and
personnel, lists of vendors or suppliers, pricing policies, business plans,
business opportunities, financial statements and other financial information.
Confidential Information also includes the confidential or proprietary
information of the Company’s consultants, vendors, suppliers, partners,
customers, clients and other parties with which it does business.
(b) Nondisclosure.
The Consultant acknowledges that Confidential Information is of great value
to
the Company. Accordingly, the Consultant agrees to hold all Confidential
Information in confidence and not disclose, use, copy, publish, summarize
or
remove from the premises of the Company any Confidential Information. Upon
the
expiration or termination of this Agreement, the Consultant agrees (i) to
promptly deliver to the Company all papers, records, data, notes, drawings,
files, documents, samples, devices, products, equipment and other materials,
including copies and in whatever form, relating to the Company that the
Consultant possesses or creates, whether or not confidential or proprietary,
(ii) to not disclose, use, copy, publish, summarize or remove from
the
premises of the Company any Confidential Information and (iii) to
promptly
execute and deliver to the Company the “Termination Certificate” attached hereto
as Exhibit C.
7. Inventions
and Original Works of Authorship.
(a) Definition.
For purposes of this Agreement, “Inventions”
means any and all ideas and discoveries, including, without limitation,
inventions, trade secrets, original works, findings, reports, disclosures,
processes, systems, methods, formulae, procedures, concepts, compositions,
techniques, drawings, models, diagrams, flow charts, research, data, devices,
machinery, intellectual property, instruments, materials, products, patterns,
compilations, programs, techniques, sequences, designs, specifications,
documentation, algorithms, software, computer programs, source code, object
code
and mask works, as well as improvements thereof or know-how related thereto,
whether copyrightable or patentable or not, relating to the business and/or
field of interest of the Company (including any person or entity directly
or
indirectly controlled by or controlling the Company, or in which any of the
aforesaid have at least a 50% interest).
(b) Ownership
and Assignment.
All Inventions and all original works of authorship (including without
limitation, software, computer programs, source code, object code and the
documentation and notes related thereto) made or conceived by the Consultant
during the term of this Agreement shall be works made for hire and shall
become
and remain the sole and exclusive property of the Company. The Consultant
shall
promptly notify the Company in writing of all Inventions and original works
of
authorship so conceived or made by the Consultant. To the extent that ownership
of such Inventions and original works of authorship do not automatically
vest in
the Company, the Consultant hereby transfers and assigns to the Company all
right, title and interest in and to the same, whether or not patent or copyright
applications are filed thereon.
2
(c) Power
of Attorney.
If the Company is unable because of the Consultant’s mental or physical
incapacity or for any other reason to secure the Consultant’s signature to apply
for or to pursue any application for any United States or foreign letters
patent
or copyright registrations covering Inventions or original works of authorship
assigned to the Company pursuant to Section 7(b), then the Consultant
hereby irrevocably designates and appoints the Company and its duly authorized
officers and agents as the Consultant’s agent and attorney in fact, to act for
and on the Consultant’s behalf and stead to execute and file any such
applications and to do all other lawfully permitted acts to further the
prosecution and issuance of letters patent or copyright registrations
thereon.
(d) Further
Assurances.
The Consultant shall execute such documents as the Company shall reasonably
require to evidence and confirm the transfer of rights to the Company made
under
this Agreement.
8. Termination.
Either party shall have the right to terminate this Agreement at any time
upon
30 days written notice. In the event of any termination of this Agreement,
the
Company shall make payments to the Consultant for all work performed in
accordance with the terms and conditions of this Agreement up to the date
of
termination, and the Consultant shall immediately return to the Company,
without
limitation, all documents, drawings and any other items of whatever nature
supplied to the Consultant by the Company or owned by the Company pursuant
to
this Agreement. Sections 6 through 22 of this Agreement shall survive any
termination of this Agreement.
9. Independent
Contractor/Taxes.
The Consultant is not an agent or employee of the Company and is not authorized
to act on behalf of the Company. Except as required by a final determination
by
the Internal Revenue Service or state taxing authority and upon due notice
to
the other party, the Consultant and the Company each agrees that it will
treat
the Consultant as an independent contractor for tax purposes and file all
tax
and information returns and pay all applicable taxes on that basis.
10. Indemnification.
The Company agrees to indemnify the Consultant pursuant to the terms attached
hereto as Exhibit
D.
11. Prior
Contracts.
The Consultant represents that except as disclosed in writing to the Company,
(a) there are no other contracts to assign Inventions that are now in existence
between any other party and the Consultant, and (b) the Consultant has no
employments, consultancies or undertakings which would restrict or impair
the
Consultant’s performance of this Agreement.
3
12. Assignment.
The rights and liabilities of the parties hereto shall bind and inure to
the
benefit of their respective successors, heirs, executors and administrators,
as
the case may be; provided, however, that as the Company has specifically
contracted for the services to be provided by the Consultant hereunder, the
Consultant may not assign or delegate the Consultant’s obligations under this
Agreement either in whole or in part without the prior written consent of
the
Company.
13. Governing
Law; Consent to Jurisdiction.
This Agreement shall be governed by and construed in accordance with the
laws of
the State of California applicable to contracts made between California
residents and wholly to be performed in California. The Consultant hereby
submits to the sole jurisdiction and venue of the courts of the State of
California for purposes of any action or proceeding relating to this
Agreement.
14. Injunctive
Relief.
The Consultant acknowledges and agrees that damages will not be an adequate
remedy in the event of a breach of any of the Consultant’s obligations under
this Agreement. The Consultant therefore agrees that the Company shall be
entitled (without limitation of any other rights or remedies otherwise available
to the Company and without the necessity of posting a bond) to obtain an
injunction from any court of competent jurisdiction prohibiting the continuance
or recurrence of any breach of this Agreement.
15. Arbitration.
Any controversy or claim arising out of, or relating to, this Agreement or
the
breach of this Agreement will be settled by arbitration by, and in accordance
with the applicable Commercial Arbitration Rules of the American Arbitration
Association and judgment upon the award rendered by the arbitrator(s) may
be
entered in any court having jurisdiction. The arbitrator(s) will have the
right
to assess, against a party or among the parties, as the arbitrator(s) deem
reasonable, (a) administrative fees of the American Arbitration Association,
(b)
compensation, if any, to the arbitrator(s) and (c) attorneys’ fees incurred by a
party. Arbitration hearings will be held in San Mateo County, California.
The
provisions of California Code of Civil Procedure Section 1283.05 will
apply
to any arbitration.
16. Headings.
The headings in this Agreement are intended principally for convenience and
shall not, by themselves, determine the rights and obligations of the parties
to
this Agreement.
17. Attorneys’
Fees.
If any party seeks to enforce its rights under this Agreement by legal
proceedings or otherwise, the non-prevailing party shall pay all costs and
expenses of the prevailing party.
18. Notices.
All notices, requests, demands, and other communications required by, or
made in
connection with, this Agreement or the transactions contemplated by this
Agreement, shall be in writing and shall be deemed to have been duly given
on
the date of delivery, if delivered in person, or three days after mailing
if
mailed by certified or registered mail, postage prepaid, return receipt
requested, addressed as follows:
4
| If to the Company: |
Wherify Wireless, Inc.
0000
Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx
Xxxxxx, XX 00000
Attention:
President
|
| If to the Consultant: | The address listed on the signature page hereto. |
Such
addresses may be changed, from time to time, by means of a notice given in
the
manner provided in this Section 17.
19. Severability.
If any provision of this Agreement is held to be unenforceable for any reason,
such provision shall be adjusted rather than voided, if possible, in order
to
achieve the intent of the parties to the maximum extent possible. In any
event,
all other provisions of this Agreement shall be deemed valid and enforceable
to
the full extent possible.
20. Waiver.
The waiver of any term or condition contained in this Agreement by any party
to
this Agreement shall not be construed as a waiver of a subsequent breach
or
failure of the same term or condition or a waiver of any other term or condition
contained in this Agreement.
21. 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.
22. Entire
Agreement; Modifications.
Except as otherwise provided herein or in the exhibits hereto, this Agreement
represents the entire understanding among the parties with respect to the
subject matter of this Agreement, and this Agreement supersedes any and all
prior and contemporaneous understandings, agreements, plans, and negotiations,
whether written or oral, with respect to the subject matter hereof, including,
without limitation, any understandings, agreements, or obligations respecting
any past or future compensation, bonuses, reimbursements, or other payments
to
the Consultant from the Company. All modifications to the Agreement must
be in
writing and signed by each of the parties hereto.
[Remainder
of Page Intentionally Left Blank.]
5
IN
WITNESS WHEREOF, the parties hereto have executed this Consulting Agreement
as
of the date first written above.
| Company: |
WHERIFY
WIRELESS, INC.
|
|
| |
|
|
| By: | ||
|
Xxxxxxx X. Xxxxx, President |
||
| Consultant: |
|
|
| Address: |
134 Shore Drive West
New
Seabury, MA 00000
000.000.0000
(phone)
000.000.0000
(fax)
|
|
6
EXHIBIT A
PROJECT
AND SCOPE OF SERVICES
The
Company hereby retains the Consultant as a financial advisor to the Company.
The
Consultant’s Services to the Company shall include, without limitation,
advising, and as appropriate, assisting the Company in evaluating and executing
the Company’s strategic alternatives including negotiations related to such
alternatives.
The
Consultant shall report to the Company’s Chief Executive Officer and Board of
Directors. The Consultant shall provide services at the Company’s offices or at
such other place and time as the Company and the Consultant may mutually
determine.
EXHIBIT B
CONSULTING
FEES
The
Company shall pay the Consultant a retainer of $10,000 per full month of
Services.
The
Company shall issue to the Consultant promptly following the date of this
Agreement an option to purchase 100,000 shares of the Company’s Common Stock at
the then fair market value of such shares pursuant to the Company’s standard
form of Nonqualified Stock Option Agreement under the Company’s 1999 Stock
Option Plan, as amended. The option shall vest ratably on a monthly basis
over
the 36 month period commencing on the date of this Agreement, and shall cease
to
vest upon termination of this Agreement for any reason. Notwithstanding the
above, the option shall vest immediately with respect to all of the shares
covered by the option upon a “Change
of Control,”
which shall mean the occurrence of any one of the following: (i) any “person”,
as such term is used in Section 13(d) and 14(d) of the Securities Exchange
Act
of 1934, as amended (the “Exchange
Act”)
(other than the Company, a subsidiary, an affiliate, or a Company employee
benefit plan, including any trustee of such plan acting as trustee) is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of Company representing 50% or
more
of the combined voting power of Company’s then outstanding securities; or (ii) a
sale of assets involving 75% or more of the fair market value of the assets
of
Company as determined in good faith by the Board of Directors of Company;
or
(iii) any merger, reorganization or other transaction of Company whether
or not
another entity is the survivor, pursuant to which holders of all the shares
of
capital stock of Company outstanding prior to the transaction hold, as a
group,
less than 50% of the shares of capital stock of Company outstanding after
the
transaction; provided, however, that a transaction the sole purpose of which
is
to change the Company’s state of incorporation or to raise capital for the
Company shall not constitute a Change in Control.
Upon
the closing of a Change of Control during the term of this Agreement, or
within
six months thereafter, in which the acquiring person or entity is introduced
to
the Company by the Consultant (a “Qualified
Sale Transaction”),
the Company shall pay to the Consultant in cash at the closing a transaction
fee
(the “Acquisition
Fee”)
equal to 2% of the aggregate consideration paid to the Company’s shareholders in
the Qualified Sale Transaction. If the consideration paid to the Company’s
shareholders in such Qualified Sale Transaction is in whole or part in the
form
of securities, the value of such securities, for purpose of calculating the
Acquisition Fee, shall be the fair market value of such securities as determined
in good faith by the Company’s Board of Directors; provided, however, that if
any of such securities are then trading on an existing public trading market,
the value of such securities shall be determined by the average of the closing
sales price for the five trading days prior to closing of the Change of Control.
If the consideration paid to the Company’s shareholders in such Qualified Sale
Transaction is paid in installments or pursuant to certain contingencies
such as
an escrow, the Acquisition Fee shall be paid in one or more installments
at such
time and in proportion as the consideration is actually paid to the Company’s
shareholders. Upon introducing any potential acquiring person or entity to
the
Company, the Consultant and the Company must acknowledge in writing that
a
Qualified Sale Transaction involving such person or entity would give rise
to
the accrual of an Acquisition Fee.
EXHIBIT C
TERMINATION
CERTIFICATE
This
is to certify that I do not have in my possession, nor have I failed to return,
any papers, records, data, notes, drawings, files, documents, samples, devices,
products, equipment, designs, computer programs or other materials, including
copies and reproductions of any of the aforementioned items, in whatever
form,
relating to Wherify Wireless, Inc. (the “Company”),
whether or not confidential or proprietary.
I
further certify that I have complied with all the terms of the Consulting
Agreement by and between the Company me dated January 1, 2004 (the “Consulting
Agreement”).
Moreover,
I acknowledge and agree that, in compliance with the Consulting Agreement,
I
will hold in confidence and will not disclose, use, copy, publish, summarize
or
remove from the premises of the Company any “Confidential Information” (as
defined in the Consulting Agreement).
Date:
____________________
|
W. Xxxxxxx
Xxxxxx
|
EXHIBIT D
INDEMNIFICATION
Recognition
that transactions of the type contemplated in this engagement sometimes result
in litigation and that the Consultant’s role is advisory in nature, the Company
agrees to indemnify and hold harmless the Consultant from and against any
losses, claims damages and liabilities related to or arising in any manner
out
of any transaction, proposal or any other matter (collectively, a “Matter”)
contemplated by this Agreement, and will promptly reimburse the Consultant
for
all reasonable and documented expenses (including reasonable and documented
fees
and expense of legal counsel) incurred in connection with the investigation
of
or defense of any pending or threatened claim related to or arising in any
manner out of any Matter contemplated by this Agreement, or any action or
proceeding arising therefrom (collectively, “Proceedings”).
Notwithstanding the foregoing, the Company shall not be liable in respect
of any
losses, claims, damages, liabilities or expenses that a court of competent
jurisdiction shall have determined by final judgment resulted primarily from
the
gross negligence, bad faith or willful misconduct of the Consultant. The
Company
further agrees that it will not, without the prior written consent of Consultant
(which consent will not be unreasonably withheld or delayed) settle, compromise
or consent to the entry of any judgment in any pending or threatened Proceeding
in respect of which indemnification may be sought hereunder, unless such
settlement, compromise or consent includes an unconditional release of
Consultant from all liability arising out of such Proceeding. Consultant
agrees
that he will not settle, compromise or consent to the entry of any judgment
in
any pending or threatened Proceeding in respect of which indemnification
may be
sought hereunder without the prior written consent of the Company (which
consent
shall not be unreasonably withheld).
Promptly
after receipt by the Consultant of notice of any complaint or the commencement
of any Proceeding with respect to which indemnification is being sought
hereunder, Consultant will notify the Company of such complaint or of the
commencement of such Proceeding. The failure to notify the Company will not
relieve the Company from any liability which the Company may have hereunder,
except to the extent that such failure results in the forfeiture by the Company
of substantial rights and defense in respect of such Proceeding. If the Company
so elects, the Company will assume the defense of such Proceeding, including
the
employment of counsel reasonably satisfactory to Consultant and the payment
of
fees and expense of such counsel. In any Proceeding the defense of which
the
Company assumes, the Consultant will have the right to participate in such
litigation and to retain his own counsel at the Consultant’s expense unless (i)
the Company shall have agreed to pay the fees and expenses of counsel to
Consultant, (ii) the Company shall have failed to employ counsel reasonably
satisfactory to Consultant or to assume the defense of the Proceeding in
a
timely manner or (iii) Consultant reasonably determines in his reasonable
judgment that having common counsel would present actual or potential conflicts
of interest, including situation in which there are one or more legal defenses
available to Consultant that are different from or addition to those available
to the Company, in which case Consultant may employ separate counsel to
represent or defend him in such proceeding and the Company will pay the
reasonable fees and expenses of not more than one separate counsel.
