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Exhibit 10.5
[GRAPHIC OMITTED]
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:
1. 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).
2. 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.
3. 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.
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4. 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.
5. 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.
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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.
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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:
---------------------------------------------------------------
Authorized Representative Date
CONSULTANT
UNION ATLANTIC LC
BY:
Xxxxxxx X. Xxxxxxx /s/ 3/5/99
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Xxxxxxx X. Xxxxxxx, Partner Date
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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
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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.
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AMENDMENT NO. 1 TO
CONSULTING AGREEMENT
This Agreement is made and entered into as of June 1, 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.
3. Consultant and Corporation desired to amend the Consulting Agreement by and
between Corporation and Consultant dated March 15, 1999 ("Consulting
Agreement").
In consideration of the mutual promises set forth herein, it is agreed by and
between Corporation and Consultant as follows that the Consulting Agreement
shall be amended as follows:
1. The fourth paragraph of Section 5 shall be deleted in its entirety and
replaced with the following paragraph:
"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. IN THE EVENT THE CAPITAL TRANSACTION IS A MERGER OR SALE OF CONTROL OF
CORPORATION OR SUBSTANTIALLY ALL OF ITS ASSETS, SUCH FEE SHALL BE REDUCED BY ANY
CONSULTING FEES PAID TO CONSULTANT BY CORPORATION PURSUANT TO THIS AGREEMENT
PRIOR TO SUCH CAPITAL TRANSACTION. EXCLUDED FROM THE DEFINITION OF CAPITAL
TRANSACTION SHALL BE ANY TRANSACTION WITH FIRST NATIONAL BANK, VERO BEACH,
FLORIDA. "
2. All other terms and conditions of the Consulting Agreement shall remain in
full force and effect.
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:
-------------------------------------------------------------
Authorized Representative Date
CONSULTANT
UNION ATLANTIC LC
BY:
Xxxxxxx X. Xxxxxxx /s/ 6/1/99
-------------------------------------------------------------
Xxxxxxx X. Xxxxxxx, Partner Date
