CONSULTING AGREEMENT
This
Consulting Agreement ("Agreement") is made by and between Xxxx Xxxxxxxx
("Consultant") and American Technology Corporation ("Company"). (Consultant
and
Company shall be referred to collectively as "the Parties."). In consideration
for the execution of this Agreement, and the performance of the terms and
conditions herein, the Parties agree:
R
E C
I T A L S
Consultant
has been the Vice President of Government and Force Protection Systems for
Company. Company, based on Consultant's representations, desires to retain
Consultant as an independent contractor to assist Company on the terms,
covenants, and conditions set forth in this Agreement. Consultant is willing
to
perform the services on such terms, covenants, and conditions as set forth
in
this Agreement.
A
G R
E E M E N T
NOW
THEREFORE, in consideration of the above Recitals and the terms, covenants,
and
conditions contained in this Agreement, Company and Consultant agree as
follows:
1. Term.
The
term of this Agreement (the "Term") shall be for the period of six (6)
months commencing May 10, 2005, unless terminated by one or both of the Parties
in the manner provided in Paragraph 12 of this Agreement and its
subparagraphs.
2. Consultant's
Services.
During
the Term of this Agreement, Consultant shall provide such consulting services
as
Company may request. Consultant is engaged to put forth his best efforts using
his skills, experience and knowledge to the best of his professional ability.
Consultant will put forth commercially reasonable efforts to complete projects
assigned by Company within the time designated. Consultant possesses the
necessary licenses, skills and abilities to perform these services. Consultant
shall comply with the requirements of all applicable present and future state
and federal laws in connection with the performance of consulting services
for
Company pursuant to this Agreement. Consultant shall perform services for
Company of: up to forty hours per month for the three months provided in
Paragraph 3(i) below; up to thirty hours per month for the two months provided
in Paragraph 3(ii) below; up to twenty hours per month for the one month
provided in Paragraph 3(iii) below.
3. Compensation.
During
the Term of this Agreement, so long as the Agreement is not terminated as
provided hereunder, Company shall monthly pay Consultant as follows:
(i) The
sum
of $20,000 per month for three months, payable on the first business day of
June, July, and August, 2005;
(ii) The
sum
of $15,000 per month for two months payable on the first business day of
September and October, 2005;
____________________ ____________________
Consultant's Initials Company's Initials
Consultant's Initials Company's Initials
-1-
(iii) The
sum
of $10,000 for one month, payable on the first business day of November,
2005.
Provided
that no payments shall be due should Consultant fail to execute or should
Consultant revoke the concurrent Separation and Release Agreement, and no
payments shall be due until the revocation period set forth in the concurrent
Separation and Release Agreement expires. Except as specifically set forth
herein, Consultant shall not be eligible to participate in any benefits or
programs sponsored or financed by Company for its employees, including, but
not
limited to, any insurance, workers' compensation, retirement, vacation, sick,
holiday or leave of absence programs or benefits.
4. Stock
Options.
The
performance of services hereunder shall constitute continuing Service (as that
term is defined in Company's 2002 Stock Option Plan) for purposes of all stock
options held by Consultant as of May 9, 2005, and accordingly, vesting of such
options shall continue for the Term of this Agreement. Consultant understands
that such options shall cease to be incentive stock options (as defined under
Section 422(b) of the Internal Revenue Code) to the extent not exercised on
or
before August 9, 2005.
5. Expenses.
Consultant shall be responsible for all expenses incurred by Consultant in
performing the services under this Agreement, except as otherwise approved
in
advance in writing by the President of Company.
6. Outside
Employment.
Consultant is free to contract with and/or be employed by other persons and/or
entities to provide them with services during the term of this Agreement,
provided however, that during the term hereof, Consultant shall not (i) create
a
conflict with the services provided by Consultant to Company under this
Agreement; (ii) cause a violation of Consultant's obligations under any other
agreement with Company or its Affiliates; (iii) perform services as an employee,
consultant, owner, shareholder, or otherwise for any company, person or
enterprise of any type which competes directly or indirectly with the business
of Company's Government and Force Protection Group as it is presently conducted,
including, without limitation, (a) providing acoustic solutions for
anti-terrorism, force protection, law enforcement, infrastructure protection,
or
border protection; (b) providing public address systems for indoor and outdoor
emergency response and notification; or (c) providing engineered acoustic
solutions for the markets identified in subparts (a) or (b) above. Without
limiting the generality of the foregoing, it is acknowledged by Company that
Consultant's services to any customer or teaming partner of Company shall not
be
considered a violation of clause (iii) above so long as such teaming partner
or
customer is providing solutions and/or systems purchased from Company and not
those of any supplier which competes directly or indirectly with the business
of
Company's Government and Force Protection Group as it is presently conducted.
(As used herein an "Affiliate" is any other person or entity which controls
or
is controlled by Company.)
7. Consultant
Warranties.
Consultant warrants that the execution and performance of this Agreement does
not and will not result in the breach of any other agreement or arrangement
to
which Consultant is a party.
____________________ ____________________
Consultant's Initials Company's Initials
Consultant's Initials Company's Initials
-2-
8. Independent
Contractor Relationship.
It is
the express intent of the Parties that Consultant shall provide consulting
services to Company as an independent contractor pursuant to this Agreement
and
not as an employee. Consultant shall not hold himself out to be an employee
of
Company and shall not have the authority to enter into or bind Company to any
contract, promise, or obligation under any circumstances. Consultant retains
the
right to control the manner, method and means by which Consultant's work is
performed. Company shall have no right or authority to direct or control
Consultant with respect to the performance of Consultant's services under this
Agreement, or with respect to any other matter, except as to the identification
of duties and results desired under this Agreement, and except as otherwise
provided by this Agreement. Company is not responsible for payment of workers'
compensation, disability or other benefits, unemployment or other insurance,
or
for withholding income or similar taxes or Social Security tax for Consultant,
but such responsibility shall be solely that of Consultant. Company will issue
an IRS 1099 Form to Consultant for services rendered to Company. Consultant
shall be fully liable and responsible to pay any and all taxes relating to
all
compensation paid hereunder, and to report all income and expenses, and shall
indemnify Company against any and all claims, demands, judgments, damages,
liabilities, costs and fees, including reasonable attorneys' fees, relating
to
or arising out of Consultant's failure to report or pay taxes relating to the
compensation paid hereunder. Company agrees to give Consultant prompt notice
of
any such claim, demand, or action and shall, to the extent Company is not
adversely affected, cooperate fully with Consultant in defense and settlement
of
such claim, demand, or action.
9. Confidentiality.
9.1 Consultant
shall not, at any time either during or after the Term of this Agreement, use,
divulge, disclose or communicate, either directly or indirectly, in any manner
whatsoever, any of Company's Confidential Information to any person or business
entity, without the prior written authorization of the President of Company.
As
used herein, "Confidential Information" means: all information and material
which is proprietary to Company, whether or not marked as "confidential" or
"proprietary" and which is disclosed to or obtained by Consultant, which relates
to Company's past, present or future research, development or business
activities. Confidential Information is all information or materials prepared
by
or for Consultant and includes, without limitation, all of the following:
designs, drawings, specifications, techniques, models, data, source code, object
code, documentation, diagrams, flow charts, research, development, processes,
procedures, "know-how," new product or new technology information, product
prototypes, product copies, manufacturing, development or marketing techniques
and materials, development or marketing timetables, strategies related to
customers, suppliers or personnel, pricing policies and financial information,
confidential customer information and other information of a similar nature,
whether or not reduced to writing or other tangible form, and any other trade
secrets or nonpublic business information. Confidential Information does not
include any information which (a) was in the lawful and unrestricted possession
of Consultant prior to its disclosure by Company, (b) is or becomes generally
available to the public by acts other than those of Consultant after receiving
it, or (c) has been received lawfully and in good faith by Consultant from
a
third party who did not derive it from Company.
____________________ ____________________
Consultant's Initials Company's Initials
Consultant's Initials Company's Initials
-3-
9.2 Consultant
shall take all reasonable measures necessary to protect the confidentiality
of
the Confidential Information and to avoid disclosure or use of the Confidential
Information, except as permitted herein, including the highest degree of care
that Consultant utilizes to protect his own confidential information. Consultant
shall promptly notify Company in writing of any misuse or misappropriation
of
Confidential Information which may come to Consultant's attention.
9.3 Consultant
will not copy, photograph, photocopy, alter, modify, disassemble, reverse
engineer, decompile, or in any manner reproduce any materials containing or
constituting Confidential Information without the express prior written consent
of the President of Company, and will return all such materials, together with
any copies thereof, promptly after the purposes for which they were furnished
have been accomplished, or upon the request of Company. Additionally, upon
request of Company, Consultant will return or destroy materials prepared by
Consultant that contain Confidential Information.
9.4 Disclosure
of Confidential Information is not precluded if such disclosure is in response
to a valid order of a court or other governmental body of the United States
or
any political subdivision thereof; provided that Consultant will first give
notice to Company and make a reasonable effort to obtain a protective order,
at
Company’s sole cost and expense including without limitation attorneys fees as
and when incurred, requiring that the Confidential Information be disclosed
only
for limited purposes for which the order was issued.
9.5 Consultant
agrees that Company's Confidential Information has been developed or obtained
by
the investment of significant time, effort and expense and provides Company
with
a significant competitive advantage in its business. If Consultant fails to
comply with any obligations hereunder, Consultant agrees that Company will
suffer immediate, irreparable harm for which monetary damages will provide
inadequate compensation. Accordingly, Consultant agrees that Company will be
entitled, in addition to any other remedies available to it, at law or in
equity, to immediate injunctive relief to specifically enforce the terms of
this
Agreement.
9.6 The
obligations set forth in this Paragraph 9 and its subparagraphs shall survive
expiration or termination of this Agreement.
10. Intellectual
Property.
10.1 Ownership.
Consultant agrees that Company shall be entitled to own and control all
proprietary technology and all financial, operating, training ideas, data,
processes, procedures and materials, including works of expression, all
copyrights, all patent rights, and all trade secret rights in joint products
that are developed, written, or conceived by Consultant during the term of
this
Agreement while performing services hereunder. Accordingly, Consultant agrees
to
promptly disclose, deliver and assign to Company all such patentable inventions,
discoveries, and improvements, trade secrets, and all works subject to copyright
relating to such joint products, and Consultant agrees, without the necessity
of
further consideration, but without expense to Consultant, to execute all
documents, patent applications and arrangements necessary to further document
such ownership and/or assignment and to take whatever steps may be needed to
give Company the full benefit of them.
____________________ ____________________
Consultant's Initials Company's Initials
Consultant's Initials Company's Initials
-4-
10.2 Materials
Furnished.
All
right, title, and interest in and to any Confidential Information, drawings,
sketches, documentation, programs, systems, data, and materials furnished to
Consultant by Company are and shall remain the property of Company.
11. Consultant
Interference and Non-Disparagement.
Consultant agrees not to make any statement or take any action, including but
not limited to the disclosure of Confidential Information, which in any way
would aid a third party in violating Company's rights in and to its products,
or
which would damage the reputation or promotion of Company or its products.
12. Termination.
This
Agreement may be terminated prior to the end of the Term by Company or
Consultant as set forth below. Any termination of this Agreement shall not
relieve Consultant of the obligations under Paragraphs 8, 9, 10, 11, 13, 14
and
16 of this Agreement and their subparagraphs.
12.1 Breach
of Agreement.
Either
Party may terminate this Agreement if the other Party breaches this Agreement;
provided however that if the breach is capable of cure, a Party may not so
terminate this Agreement unless the other Party has failed to cure such breach
within thirty (30) days after written notice. The Parties agree that violations
of Consultant's obligations in Paragraphs 6, 7, 9, 10 and 11, and their
subparagraphs, are not capable of cure. If this Agreement is terminated by
Company due to Consultant's breach, Company shall not be liable to Consultant
for any unpaid consulting fees due for the balance of the Term. Conversely,
if
this Agreement is terminated by Consultant due to Company's breach, Company
shall be liable to Consultant for any unpaid consulting fees due for the balance
of the Term.
12.2 Convenience
by Consultant.
Consultant may terminate this Agreement for any or no reason upon 30 days
written notice.
12.3 Separation
and Release Agreement.
Company
may terminate this Agreement as provided in Paragraph 15 hereof.
12.4 Death
or Disability.
This
Agreement shall terminate automatically upon the death or disability of
Consultant. "Disability" shall mean a disability as defined under the Americans
with Disabilities Act that prevents Consultant from performing the essential
functions of the Agreement. Company shall not be liable to Consultant for any
unpaid consulting fees due for the balance of the Term under such
circumstances.
13. Return
of Company Property.
Upon
termination of this Agreement for any reason, Consultant shall promptly return
to Company all copies of any Company data, records, or materials of whatever
nature or kind, including all materials incorporating the Confidential
Information of Company. Consultant shall also furnish to Company all work in
progress or portions thereof, including all incomplete work.
____________________ ____________________
Consultant's Initials Company's Initials
Consultant's Initials Company's Initials
-5-
14. Arbitration
and Attorneys' Fees.
Consultant and Company agree that should either Party allege a violation of
the
terms of this Agreement, or should any other disagreements or disputes arise
in
connection herewith, any such dispute shall be settled exclusively by
arbitration in San Diego, California by an arbitrator selected by the Parties
from the American Arbitration Association ("AAA") or JAMS. The arbitrator shall
not have the power to modify any of the provisions of this Agreement. The
arbitration decision shall be final and binding upon the Parties and judgment
upon the award rendered by the arbitrator may be entered in any court having
jurisdiction. The Parties shall evenly split the cost of the Arbitration. In
the
event of any arbitration between the Parties relating to this Agreement, the
prevailing Party and/or Parties shall be entitled to its attorneys' fees and
costs. Should any Party to this Agreement hereafter pursue any dispute by any
method other than as set forth in this Agreement, the responding Parties shall
be entitled to recover from the initiating Party all damages, costs, expenses
and attorneys' fees incurred as a result of appearing in, dismissing, staying
or
litigating such action.
15. Effective
Date.
This
Agreement shall become effective when signed by both Parries hereto
retroactively to cover the period from May 10, 2005, forward. However, should
Consultant fail to execute or should Consultant revoke the concurrent Separation
and Release Agreement, this Agreement shall be terminable at Company's
discretion, with no amounts owed hereunder whatsoever.
16. Miscellaneous
16.1 Assignment.
Consultant shall have no right to assign Consultant's duties or responsibilities
under this Agreement. Subject to the above, this Agreement shall inure to the
benefit of and be binding upon the Parties and their respective executors,
administrators, successors and assigns.
16.2 Waiver.
The
waiver by either of the Parties, express or implied, of any right under this
Agreement or any failure to perform under this Agreement by the other Party,
shall not constitute or be deemed a waiver of any other right under this
Agreement or of any other failure to perform under this Agreement by the other
Party, whether of a similar or dissimilar nature.
16.3 Notice.
All
notices, requests, demands, waivers, consents, approvals, payments or other
communications which are required or permitted hereunder shall be in writing
and
be deemed delivered (a) upon receipt, if by hand delivery, (b) upon
transmission, if sent by facsimile during normal business hours in the time
zone
in which the transmission is received, with confirmation of receipt, (c) the
next day, if sent by a reputable overnight mail courier service such as FedEx,
or (d) on the fifth (5th) day following deposit in the United States mail,
certified, postage prepaid, return receipt requested, addressed as
follows:
____________________ ____________________
Consultant's Initials Company's Initials
Consultant's Initials Company's Initials
-6-
If to Company: | American Technology Corporation | |
00000 Xxxxxxx Xxxxx Xxxxx Xxxxx | ||
Xxx Xxxxx, XX 00000 | ||
Facsimile: (000) 000-0000 | ||
Attn: President | ||
If to Consultant: | Xxxx Xxxxxxxx | |
______________________ | ||
______________________ | ||
Facsimile:______________ |
Any
Party may change its address for receiving notice by giving notice of such
new
address in the manner provided herein.
16.4 Entire
Agreement; Modifications.
This
Agreement contains the entire agreement between the Parties hereto with respect
to the transactions contemplated hereby, and contains all of the terms and
conditions thereof and supersedes all prior agreements and understandings
relating to the subject matter hereof. No changes or modifications of or
additions to this Agreement shall be valid unless the same shall be in writing
and signed by each Party hereto.
16.5 Severability.
The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any one or more of the provisions hereof shall not affect
the validity and enforceability of the other provisions hereof.
16.6 Governing
Law.
This
Agreement is made and shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of California, without regard
to
the conflict of laws principles thereof, as the same apply to agreements
executed solely by residents of California and wholly to be performed within
California.
16.7 No
Third-Party Benefits.
None of
the provisions of this Agreement shall be for the benefit of, or enforceable
by,
any third-party beneficiary.
16.8 Counterparts.
This
Agreement may be executed in several counterparts all of which together shall
constitute one and the same instrument with the same force and effect as though
each of the Parties had executed the same document.
16.9 Headings.
The
Section and Subsection headings used herein are for convenience or reference
only, are not a part of this Agreement and are not to affect the construction
of, or be taken into consideration in interpreting, any provision of this
Agreement.
16.10 Authority.
Each
of
the persons executing this Agreement represents and warrants that he is
authorized to execute this Agreement and the entity or person on whose behalf
they are signing is bound by the terms hereof.
____________________ ____________________
Consultant's Initials Company's Initials
Consultant's Initials Company's Initials
-7-
IN
WITNESS WHEREOF, the Parties hereto acknowledge that they have read this
Agreement, fully understand it, and freely and voluntarily agree to each of
its
provisions.
Date: ___________________, 2005 | AMERICAN TECHNOLOGY CORPORATION | |
By: _________________________________ | ||
Its: _________________________________ | ||
Date: ___________________, 2005 | ____________________________________ | |
Xxxx Xxxxxxxx |
____________________ ____________________
Consultant's Initials Company's Initials
Consultant's Initials Company's Initials
-8-