Exhibit 10(k)
UNION ATLANTIC LC
Consulting Agreement
This Agreement is made and entered into as of March 15, 1999 between Pro Tech
Communications, Inc. with its principal place of business at 0000 Xxxxxxxxxx
00xx, Xx. Xxxxxx, XX 00000 herein referred to as "Corporation", and Union
Atlantic LC with its principal place of business at 000 Xxxxxxxx Xxxxxx, Xxxxx
0000, Xxxxx, Xxxxxxx 00000 herein referred to as "Consultant".
Recitals
1. Corporation is a developer, manufacturer and distributor of telephone
headsets and other telephony related products, and in the pursuit of such
business, Corporation desires consulting services.
2. Consultant agrees to perform services for Corporation under the terms and
conditions set forth in this Agreement.
In consideration of the mutual promises set forth herein, it is agreed by
and between Corporation and Consultant as follows:
Section One
Statement of Work
Consultant, will on behalf of the Corporation, and on an exclusive basis perform
the following services:
2. Education. Consultant will work with management to become educated in the
company's markets, services and strategies. As part of this process
Consultant will assist management in formalizing a business plan that
defines how much capital is required to execute the plan and when the
capital is required (special emphasis will be placed on targeting
milestones that once they are achieved will have a significant impact on
valuation).
3. Offering Memorandum. Consultant will work with management to prepare an
offering memorandum that reflects both the current and future business of
the Company. This document will detail the Corporation's current financial
and strategic position and define the requirements and terms for funding.
The Memorandum shall describe both current and potential distribution
channels, market potential, marketing strategies, a description of key
technologies, organizational structure, historical financial information
and a three-year projection. In performing its services hereunder,
Consultant shall be entitled to rely without investigation upon all
information that is provided by the Corporation, which information the
Corporation hereby warrants shall be complete and accurate in all material
respects, and not misleading.
4. Research. Consultant will research those markets where the company's
technology and services are applicable and put together a target list of
institutional investors, strategic corporate investors and venture capital
firms that have a track record in participating in like financings.
5. Execution. Consultant will contact all potential investors on the target
list. Each prospect will be qualified and meetings set to present the
Corporation. The Consultant will, in consultation with management, take the
lead to negotiate and close a transaction. The Consultant will seek to
obtain financing on behalf of the Corporation but can in no way guarantee
that the Corporation will successfully raise capital. 6. Communication.
Each week, Consultant will provide Corporation a written report identifying
key activities accomplished during the prior week and objectives for the
upcoming week. Bi-weekly meetings will be scheduled to review progress
and/or to make changes to our strategy.
Section Two
Place of Work
It is understood that Consultant's services will be rendered both on and
off-site of Corporation. Corporation agrees to provide an office, secretarial
support, and time of key employees while Consultant is on-site.
Section Three
Time Devoted to Work
In the performance of the services, the services and the hours Consultant is to
work on any given day will be entirely within the Consultant's control and
Corporation will rely upon Consultant to put in such number of hours as is
reasonably necessary to fulfill the spirit and the purpose of this Agreement.
Section Four
Duration
The duration of this Agreement (the "Term") shall be from March 15, 1999 to
October 15, 1999. After September 15, 1999, either party shall have the right to
terminate this Agreement subject to providing thirty (30) days prior written
notice. If neither party terminates this Agreement, this Agreement shall
automatically renew for an additional six (6) month period.
Section Five
Payment
Corporation will pay Consultant a consulting fee of Five Thousand Dollars
($5,000) per calendar month in consideration of services performed. Payment
shall be made on the first day of each month during the Term with the first
payment due on March 15, 1999.
Corporation will pay Consultant a fee of Seven Thousand and Five Hundred Dollars
($7,500) upon delivery of Offering Memorandum to Corporation. Said fee shall not
be subject to the termination provision included in the "Duration" Paragraph
above.
A Capital Transaction shall include any form of financing, public or private
sale of equity, convertible debt, purchase of assets, assumption of liabilities,
joint venture agreements, distribution agreements, employment agreements,
license and/or sale agreements, merger or acquisition of or by the Corporation
or any successor thereof.
Consultant shall receive, in cash, at the closing of any Capital Transaction
during the term of this Agreement (or at the closing of a Capital Transaction
within twenty-four (24) months after the termination of this Agreement with a
party contacted by Consultant during the term of this Agreement) a six percent
(6%) fee. Excluded from the definition of Capital Transaction shall be any
transactions with NCT Group, Inc. or First National Bank, Vero Beach, Florida.
The amount of the consideration received or the value of securities received for
any Capital Transaction shall be multiplied by the above referenced percentage.
These fees shall be payable in cash out of the proceeds of the financing and
Corporation or any successor corporate entity will cause such payment to be made
immediately upon the closing(s) of such transaction.
In addition, upon closing of a Capital Transaction(s), which generates a fee for
Consultant pursuant to this Agreement, in an amount equal to or greater than
Five Hundred Thousand Dollars ($500,000) with respect to which Consultant is
entitled to a fee as described herein above, Corporation or any successor entity
will grant to Consultant a warrant to purchase up to three and one half percent
(3.5%) of the outstanding common stock of the Corporation, as calculated
immediately following the Capital Transaction, at a per-share exercise price
equal to the per-share price paid by the investors in the Capital
Transaction(s).
Warrants shall be issued at the closing of a Capital Transaction, and can be
exercised, at Consultant's option, by tendering cash or as a "cash-less
exercise" by tendering the common stock of the Corporation underlying such
Warrants valued at the closing price of such common stock on the trading day
immediately preceding such exercise. Such Warrants may be exercised at any time
by Consultant in whole or part over 5 years. Corporation or its successor entity
agrees to reserve sufficient amount of common shares to cover the exercise of
warrants. Corporation shall grant Consultant piggyback registration rights for
the common stock underlying the warrants issued pursuant to this paragraph in
accordance with Addendum "A" to this Agreement.
These warrants shall be subject to a proportionate downward adjustment in the
per share exercise price in the event of any (a) stock splits, stock dividends,
recapitalizations or similar events, or (b) issuances of common stock at a per
share price less than the warrant price.
Corporation will reimburse Consultant for all pre-approved business expenses
("Expenses") incurred by the Consultant in the performance of the work defined
herein.
Section Six
Status of Consultant; Indemnification
This Agreement calls for the performance of the services as an independent
contractor and Consultant will not be considered an employee of the Corporation
for any purpose.
In the event that Consultant becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter referred to in this
Agreement, the Corporation will reimburse Consultant for its reasonable and
necessary legal and other expenses incurred in connection therewith. The
Corporation will also indemnify Consultant against losses, claims, damages or
liabilities to which Consultant may become subject in connection with any matter
referred to in this Agreement, except to the extent that any such loss, claim,
damage or liability results from the recklessness or bad faith of Consultant
performing the services that are the subject of this Agreement. The foregoing
provisions shall survive any termination of this Agreement.
Section Seven
Services for Others
Consultant may, during the term of this Agreement, perform services for any
other person or firm without Corporation's prior approval.
Section Eight
Ownership
Consultant acknowledges that all work developed under this Agreement, will be
the sole property of the Corporation and only Corporation will be free to use
such works without any obligation to remit any payment, other than that which is
agreed to in this Agreement, to Consultant for future and continued usage.
Section Nine
Governing Law
The laws of the State of Florida shall govern this agreement. Any controversy or
claim arising out of, or relating to, this Agreement, to the making,
performance, or interpretation of it, shall be settled by arbitration in Miami,
Florida unless otherwise mutually agreed upon by the parties, under the
commercial arbitration rules of the American Arbitration Association then
existing, and any judgment on the arbitration award may be entered in any court
having jurisdiction over the subject matter of the controversy. If any legal
action or any arbitration or other proceeding is brought for the enforcement of
this Agreement, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties shall be entitled to recover
reasonable attorney's fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
In the event that Consultant becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter referred to in this
letter, the Corporation will reimburse Consultant for its legal and other
expenses incurred in connection therewith. The Corporation will also indemnify
Consultant against losses, claims, damages or liabilities to which Consultant
may become subject in connection with any matter referred to in this letter,
except to the extent that any such loss, claim, damage or liability results from
the recklessness or bad faith of Consultant performing the services that are the
subject of this letter.
The Governing Law provisions shall survive any termination of this Agreement.
Section Ten
Integration
This Agreement contains the entire Agreement among the parties and supersedes
all prior and contemporaneous oral and written Agreements, understandings, and
representations among the parties. No amendments to this Agreement shall be
binding unless executed in writing by all the parties.
Section Eleven
Non Binding Expectations
The Corporations non-binding expectations for entering into this Agreement are
for Consultant to use best efforts to conduct the affairs of the Corporation in
a prudent, profitable manner.
IN WITNESS WHEREOF, The parties to this Agreement have duly executed it on the
day and year first above written.
CORPORATION
Pro Tech Communications, Inc.
By: /s/XXXXXXX XXXXXXXXX 3/5/99
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Authorized Representative Date
CONSULTANT
Union Atlantic LC
By: /s/ XXXXXXX X. XXXXXXX 3/5/99
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Xxxxxxx X. Xxxxxxx, Partner Date
ADDENDUM "A"
Registration Rights
(a) Piggy-Back Registration Rights. If at any time ending five (5) years from,
the date of this Agreement (the "Registration Period"), the Corporation
proposes to register any of securities under the 1933 Act (other than
registration form relating to a registration of a stock option, stock
purchase or compensation or incentive plan or of stock issued or issuable
pursuant to any such plan, or dividend investment plan, a registration of
stock proposed to be issued in exchange for securities or assets of, or in
connection with the merger or consolidation with, another corporation, or a
registration of stock proposed to be issued in exchange for other
securities of the Corporation), the Corporation shall give prompt written
notice thereof to the Consultant and, upon the written request made within
ten (10) days after the Consultant and, upon receipt of such notice, the
Corporation shall use its best efforts to effect as part of such
registration the registration under the 1933 Act of that number of the
Shares which the Consultant requests the Corporation to register, provided
that the managing underwriter of the Corporation's public offering, if any,
shall be of the opinion that the inclusion in such registration of such
number of Shares will not interfere with the successful marketing of all of
the Corporation's securities being registered. If the managing underwriter
requests the Consultant to reduce in whole or in part the number of shares
sought or be registered by the Consultant, the Consultant shall comply with
the request of the managing underwriter. In any underwritten offering, the
Consultant shall sell the Shares registered as part of such underwritten
offering to the underwriters of such offering on the same terms and
conditions as apply to the Corporation. In connection with any registration
pursuant to this Section (a), the Consultant shall provide the Corporation
with such information regarding the Consultant and the distribution of the
Shares as the Corporation and the managing underwriter shall reasonably
request. The Corporation shall pay all costs and expenses of the
Consultant. The Corporation shall not be obliged to effect registration
under the 1933 Act pursuant to this Section (a) on more than one occasion.
(b) General Conditions. In connection with each registration effected pursuant
to Section (a), the Corporation and the Consultant agree as follows:
(i) Indemnification of Consultant. The Corporation shall indemnify and
hold harmless the Consultant against any and all losses, claims,
damages, or liabilities to which he or she may become subject under
the 1933 Act, or any other statute or common law, including any amount
paid in settlement of any litigation, commenced or threatened, if such
settlement is effected with the written consent of the Corporation,
and to reimburse them for any legal or other expenses incurred by them
in connection with investigating any claims and defending any action
insofar as any such losses, claim, damages, liabilities or actions
arise out of or are based upon 1) any untrue statement or alleged
untrue statement of a material fact, contained in the registration
statement relating to the sale of the Shares, or any post-effective
amendment thereof, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, 2) any untrue statement or
alleged untrue statement of a material fact, contained in a
preliminary prospectus, if used prior to the effective date of such
registration statement, or contained in the prospectus (as amended or
supplemented, if the Corporation shall have filed with the SEC any
amendment thereof or supplement thereto), if used within the period
during which the Corporation is required to keep the registration
statement to which the prospectus relates current pursuant to the
terms hereof, or the omission or alleged omission to state therein (if
so used) the material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The indemnification Agreement contained in this Agreement,
however, shall not: 1) apply to such losses, claims, damages,
liabilities, or actions arising out of, or based upon, any such untrue
statement or alleged omission, if such statement or omission was in
reliance upon and in conformity with the information furnished in
writing to the Corporation by the Consultant in connection with the
preparation of the registration statement or any preliminary
prospectus or prospectus contained in the registration statement or
any amendment thereof or supplement thereto, or 2) inure to the
benefit of any underwriter from whom the person asserting any such
losses, claims, damages, expenses or liabilities purchased the
securities which are the subject thereof (or to the benefit of any
person controlling such underwriter), if such underwriter failed to
send or give a copy of the prospectus to such person at or prior to
the written confirmation of the sale of such securities to such
person.
(ii) Indemnification of the Corporation. The Consultant and each
underwriter of the Shares to be registered (such party and such
underwriters being referred to severally in this subparagraph as the
"Indemnifying Party") shall agree, in the same manner and to the same
extent as set forth in the preceding paragraph, to indemnify and hold
harmless the Corporation and each person, if any, who controls the
Corporation within the meaning of Section 15 of the 1933 Act, its
directors and those officers of the Corporation who shall have signed
such registration statement, with respect to any statement in or
omission from such registration statement or any post-effective
amendment thereof or any preliminary prospectus (as amended or
supplemented, if amended or supplemented as aforesaid) contained in
such registration statement, if such statement or omission was made in
reliance upon and in conformity with information furnished in writing
to the Corporation by such Indemnifying Party for use in connection
with the preparation of such registration statement or any preliminary
prospectus or prospectus contained in such registration statement or
any amendment thereof or supplement thereto.
(iii)Notice of Indemnifiable Action. Each indemnified party will, promptly
after the receipt of notice or the commencement of any action against
such indemnified party in respect of which indemnity may be sought
from a party hereto on account of an indemnity Agreement contained in
this Section, notify the indemnifying party in writing of the
commencement thereof. The omission of any indemnified party so to
notify an indemnifying party of any such action shall relieve the
indemnifying party from any liability in respect of such action which
it may have to such indemnified party on account of the indemnity
Agreement contained in this Section, but shall not relieve the
indemnifying party from any other liability which it may have to such
indemnified party.
