CONSULTING AGREEMENT
THIS AGREEMENT, made, entered into this 30th day of April, 2006 (the "Effective
Date"), by and between Xxxxxxxxx Marketing Group, LLC, a limited liability
corporation with its principle place of business at 00000 Xxxxxxx Xxxx, Xxxxx
000, Xxxxxxx, XX 00000 (hereinafter referred to as "Consultant"), and STRONGHOLD
TECHNOLOGIES, INC., a Nevada corporation with its principal place of business at
X.X. Xxx 000, Xxxxxxx, XX 00000 (hereinafter referred to as "Corporation").
WITNESSETH:
WHEREAS, Consultant will provide valuable executive management services
and the use of its facilities (the "Services") to the Corporation and the
Corporation realizes that Consultant will provide Services to the Corporation it
would be desirable to retain Consultant's services under a consulting agreement;
WHEREAS, Consultant has provided the Corporation with various services
commencing on March 1, 2006;
WHEREAS, the Services shall include the appointment of Xxxxxx Xxxxxxxxx as
President and , upon the earlier of the effective date of the registration
statement or May 31, 2006, as Chief Executive Officer and he will be given the
powers and privileges to perform the duties of President and CEO or as others in
a similar position and a member of the Board of Directors, and Xxxx Xxxxxxx or,
in lieu of Xx. Xxxxxxx, an acceptable replacement, as Vice President of Sales,
and each such person shall commit at least 50% of his time to the Corporation;
WHEREAS, Consultant desires to provide such consulting services for the
Corporation as an independent contractor, with the understanding that she shall
not be required to devote its full time to the business of the Corporation and
shall be free to pursue other personal and business interests; and
NOW, THEREFORE, in consideration of the premises, the mutual covenants of
the parties herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by each of the parties
hereto, it is agreed as follows:
1. CONSULTING ARRANGEMENT. The Corporation hereby contracts for the
Services and Consultant agrees to perform such duties and responsibilities and
to render advice and consulting as may be requested by the Corporation from time
to time during the term of this consulting arrangement in connection with the
Corporation's business throughout the United States and world wide ("Consulting
Arrangement"). Said consulting services shall include, but not be limited to,
the Services.
2. RELATIONSHIP BETWEEN PARTIES. During the term of the Consulting
Arrangement, Consultant shall be deemed to be an independent contractor.
Consultant shall not be considered as having an employee status vis-a-vis the
Corporation, or by virtue of the Consulting Arrangement being entitled to
participate in any plans, arrangements or distributions by the Corporation
pertaining to or in connection with any pension, stock, bonus, profit sharing,
welfare benefits, or similar benefits for the regular employees of the
Corporation; provided, however, Xxxxxx Xxxxxxxxx as President and/or CEO will be
entitled to participate in all plans and benefits that other executive officers
are entitled to participate in. The Corporation shall not withhold any taxes in
connection with the compensation due Consultant hereunder, and Consultant will
be responsible for the payment of any such taxes and hereby agrees to indemnify
the Corporation against nonpayment thereof.
3. COMPENSATION FOR THE CONSULTING ARRANGEMENT. As part of the
consideration for the services to be rendered under the Consulting Arrangement
by Consultant and as compensation for the income Consultant could have otherwise
earned if Consultant had not agreed to keep Consultant available to the
Corporation hereunder, the Corporation shall pay the Consultant the following:
(a) the Corporation shall pay Consultant $15,000 per month on the 15th
day of each month, which such payment commenced on March 15, 2006,
unless the Corporation is generating sales in excess of $150,000 per
month, then such monthly payment shall be increased to $18,500 per
month for that specific month.
(b) 20% commission on net sales generated by the Corporation, which
shall be paid within 30 days of receipt of payment by the
Corporation from client.
(c) Reimbursement of all business related travel expenses, including air
travel (coach class), hotels, food and other expenses, and gas, oil
and tolls in connection with vehicular travel.
(d) Health benefits as made available to all executives of the
Corporation.
(e) An option exercisable at an aggregate price of $1.00 to purchase an
amount of shares of common stock of the Corporation, which vest on
the 12 month anniversary of the Effective Date (the "First
Anniversary Date"), equal to 10% of the total outstanding shares of
the Corporation as of the First Anniversary Date and an option to
purchase shares of common stock of the Corporation equal to 10% of
the total outstanding shares of the Corporationas of the date the
Corporation has generated positive net income for four consecutive
quarters (the "Net Income Date"), which shall vest as of the Net
Income Date; provided, however, such options may only be exercised
upon New Millennium Capital Partners II, LLC, AJW Qualified
Partners, LLC, AJW Offshore, Ltd. or AJW Partners, LLC
(collectively, the "Investors") having fully converted their
convertible debt outstanding as of the date hereof (the "Debt") to
shares of common stock of the Corporation. In the event that the
Investors have not converted the Debt 30 days prior to the
expiration of this Agreement, then Consultant may exercise its
option. Consultant is restricted from selling securities in the
Corporation; provided, however, after the expiration of three years
from the Effective Date and until such time that the Investors have
converted all the Debt, Consultant may then sell 20% of its shares
per year.
The Corporation will pay Consultant rent plus other expenses including one half
of an administrative assistant and proportional office services and supplies
(i.e. phones, etc.) used to further the business of the Corporation for the
proportional use of its facilities located at 00000 Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxxx, XX 00000 and 0000 Xxxxx Xxxxxx Xxxx., Xxxxx 000, Xxxxxxxxx, XX 00000.
4. TERM OF CONSULTING ARRANGEMENT. The Consulting Arrangement shall begin
effective as of the Effective Date and shall continue for a period of three (3)
years from the Effective Date (the "Consulting Period"). The Consulting
Arrangement shall automatically renew at the expiration of the Consulting Period
unless either party provides notice to the other party six (6) months prior to
the expiration of the Consulting Period that the Consulting Arrangement has been
terminated.
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5. CONFIDENTIALITY COVENANTS.
5.1 ACKNOWLEDGMENTS BY THE CONSULTANT. The Consultant acknowledges that
(a) during the Consulting Period and as a part of his Consulting Arrangement,
the Consultant will be afforded access to Confidential Information (as defined
below); (b) public disclosure of such Confidential Information could have an
adverse effect on the Corporation and its business; (c) because the Consultant
possesses substantial technical expertise and skill with respect to the
Corporation's business, the Corporation desires to obtain exclusive ownership of
each Consultant Invention (as defined below), and the Corporation will be at a
substantial competitive disadvantage if it fails to acquire exclusive ownership
of each Consultant Invention; (d) the provisions of this Section 5 are
reasonable and necessary to prevent the improper use or disclosure of
Confidential Information and to provide the Corporation with exclusive ownership
of all Consultant Inventions.
5.2 AGREEMENTS OF THE CONSULTANT. In consideration of the compensation and
benefits to be paid or provided to the Consultant by the Corporation under this
Agreement, the Consultant covenants as follows:
(a) Confidentiality.
(i) During and following the Consulting Period, the Consultant
will hold in confidence the Confidential Information and will not disclose it to
any person except with the specific prior written consent of the Corporation or
except as otherwise expressly permitted by the terms of this Agreement.
(ii) Any trade secrets of the Corporation will be entitled to
all of the protections and benefits under California law and any other
applicable law. If any information that the Corporation deems to be a trade
secret is found by a court of competent jurisdiction not to be a trade secret
for purposes of this Agreement, such information will, nevertheless, be
considered Confidential Information for purposes of this Agreement. The
Consultant hereby waives any requirement that the Corporation submit proof of
the economic value of any trade secret or post a bond or other security.
(iii) None of the foregoing obligations and restrictions
applies to any part of the Confidential Information that the Consultant
demonstrates was or became generally available to the public other than as a
result of a disclosure by the Consultant.
(iv) The Consultant will not remove from the Corporation's
premises (except to the extent such removal is for purposes of the performance
of the Consultant's duties at home or while traveling, or except as otherwise
specifically authorized by the Corporation) any document, record, notebook,
plan, model, component, device, or computer software or code, whether embodied
in a disk or in any other form (collectively, the "Proprietary Items"). The
Consultant recognizes that, as between the Corporation and the Consultant, all
of the Proprietary Items, whether or not developed by the Consultant, are the
exclusive property of the Corporation. Upon termination of this Agreement by
either party, or upon the request of the Corporation during the Consulting
Period, the Consultant will return to the Corporation all of the Proprietary
Items in the Consultant's possession or subject to the Consultant's control, and
the Consultant shall not retain any copies, abstracts, sketches, or other
physical embodiment of any of the Proprietary Items.
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(b) Consultant Inventions. Each Consultant Invention will belong
exclusively to the Corporation. The Consultant acknowledges that all of the
Consultant's writing, works of authorship, and other Consultant Inventions are
works made for hire and the property of the Corporation, including any
copyrights, patents, or other intellectual property rights pertaining thereto.
If it is determined that any such works are not works made for hire, the
Consultant hereby assigns to the Corporation all of the Consultant's right,
title, and interest, including all rights of copyright, patent, and other
intellectual property rights, to or in such Consultant Inventions. The
Consultant covenants that he will promptly:
(i) disclose to the Corporation in writing any Consultant
Invention;
(ii) assign to the Corporation or to a party designated by the
Corporation, at the Corporation's request and without additional compensation,
all of the Consultant's right to the Consultant Invention for the United States
and all foreign jurisdictions;
(iii) execute and deliver to the Corporation such
applications, assignments, and other documents as the Corporation may request in
order to apply for and obtain patents or other registrations with respect to any
Consultant Invention in the United States and any foreign jurisdictions;
(iv) sign all other papers necessary to carry out the above
obligations; and
(v) give testimony and render any other assistance in support
of the Corporation's rights to any Consultant Invention.
5.3 DISPUTES OR CONTROVERSIES. The Consultant recognizes that should a
dispute or controversy arising from or relating to this Agreement be submitted
for adjudication to any court, arbitration panel, or other third party, the
preservation of the secrecy of Confidential Information may be jeopardized. All
pleadings, documents, testimony, and records relating to any such adjudication
will be maintained in secrecy and will be available for inspection by the
Corporation, the Consultant, and their respective attorneys and experts, who
will agree, in advance and in writing, to receive and maintain all such
information in secrecy, except as may be limited by them in writing.
5.4 DEFINITIONS.
(a) For the purposes of this Section 5, "Confidential Information"
shall mean any and all:
(i) trade secrets concerning the business and affairs of the
Corporation, product specifications, data, know-how, formulae, compositions,
processes, designs, sketches, photographs, graphs, drawings, samples, inventions
and ideas, past, current, and planned research and development, current and
planned manufacturing or distribution methods and processes, customer lists,
current and anticipated customer requirements, price lists, market studies,
business plans, computer software and programs (including object code and source
code), computer software and database technologies, systems, structures, and
architectures (and related formulae, compositions, processes, improvements,
devices, know-how, inventions, discoveries, concepts, ideas, designs, methods
and information, and any other information, however documented, that is a trade
secret within the meaning of Chapter 688, Florida Statutes;
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(ii) information concerning the business and affairs of the
Corporation (which includes historical financial statements, financial
projections and budgets, historical and projected sales, capital spending
budgets and plans, the names and backgrounds of key personnel, personnel
training and techniques and materials, however documented; and
(iii) notes, analysis, compilations, studies, summaries, and
other material prepared by or for the Corporation containing or based, in whole
or in part, on any information included in the foregoing.
(b) For the purposes of this Section 5, "Consultant Invention" shall
mean any idea, invention, technique, modification, process, or improvement
(whether patentable or not), any industrial design (whether registerable or
not), any mask work, however fixed or encoded, that is suitable to be fixed,
embedded or programmed in a semiconductor product (whether recordable or not),
and any work of authorship (whether or not copyright protection may be obtained
for it) created, conceived, or developed by the Consultant, either solely or in
conjunction with others, during the Consulting Period, or a period that includes
a portion of the Consulting Period, that relates in any way to, or is useful in
any manner in, the business then being conducted or proposed to be conducted by
the Corporation, and any such item created by the Consultant, either solely or
in conjunction with others, following termination of the Consultant's Consulting
Arrangement with the Corporation, that is based upon or uses Confidential
Information.
6. NON-COMPETITION AND NON-INTERFERENCE
6.1 ACKNOWLEDGMENTS BY THE CONSULTANT. The Consultant acknowledges that:
(a) the services to be performed by him under this Agreement are of a special,
unique, unusual, extraordinary, and intellectual character; (b) the
Corporation's business is national in scope and its products are marketed
throughout the United States and world wide; (c) the Corporation competes with
other businesses that are or could be located in any part of the United States
and world wide; (d) the provisions of this Section 6 are reasonable and
necessary to protect the Corporation's business.
6.2 COVENANTS OF THE CONSULTANT. In consideration of the acknowledgments
by the Consultant, and in consideration of the compensation and benefits to be
paid or provided to the Consultant by the Corporation, the Consultant covenants
that he may not, directly or indirectly:
(a) during the Consulting Period, except in the course of his
Consulting Arrangement hereunder, and during the Post-Consulting Period (as
defined below), engage or invest in, own, manage, operate, finance, control, or
participate in the ownership, management, operation, financing, or control of,
be employed by, associated with, or in any manner connected with, lend the
Consultant's name or any similar name to, lend Consultant's credit to or render
services or advice to, any business whose products or activities compete in
whole or in part with the products or activities of the Corporation anywhere
within the United States; provided, however, that the Consultant may purchase or
otherwise acquire up to (but not more than) one percent of any class of
securities of any enterprise (but without otherwise participating in the
activities of such enterprise) if such securities are listed on any national or
regional securities exchange or have been registered under Section 12(g) of the
Securities Exchange Act of 1934;
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(b) whether for the Consultant's own account or for the account of
any other person, at any time during the Consulting Period and the
Post-Consulting Period, solicit business of the same or similar type being
carried on by the Corporation, from any person known by the Consultant to be a
customer of the Corporation, whether or not the Consultant had personal contact
with such person during and by reason of the Consultant's Consulting Arrangement
with the Corporation;
(c) whether for the Consultant's own account or the account of any
other person (i) at any time during the Consulting Period and the
Post-Consulting Period, solicit, employ, or otherwise engage as an employee,
independent contractor, or otherwise, any person who is or was an employee of
the Corporation at any time during the Consulting Period or in any manner induce
or attempt to induce any employee of the Corporation to terminate his Consulting
Arrangement with the Corporation; or (ii) at any time during the Consulting
Period and for three years thereafter, interfere with the Corporation's
relationship with any person, including any person who at any time during the
Consulting Period was an employee, contractor, supplier, or customer of the
Corporation; or
(d) at any time during or after the Consulting Period, disparage the
Corporation or any of its shareholders, directors, officers, employees, or
agents.
For purposes of this Section 6.2, the term "Post-Consulting Period"
means the one year period beginning on the date of termination of the
Consultant's Consulting Arrangement with the Corporation.
If any covenant in this Section 6.2 is held to be unreasonable,
arbitrary, or against public policy, such covenant will be considered to be
divisible with respect to scope, time, and geographic area, and such lesser
scope, time, or geographic area, or all of them, as a court of competent
jurisdiction may determine to be reasonable, not arbitrary, and not against
public policy, will be effective, binding, and enforceable against the
Consultant.
The period of time applicable to any covenant in this Section 6.2 will be
extended by the duration of any violation by the Consultant of such covenant.
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7. NOTICES. All notices, consents, waivers, and other communications under
this Agreement must be in writing and will be deemed to have been duly given
when (a) delivered by hand (with written confirmation of receipt), (b) sent by
facsimile (with written confirmation of receipt), provided that a copy is mailed
by registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):
(a) if to the Corporation, to it at: with a copy to:
Stronghold Technologies, Inc. Xxxxxxx Xxxxxxxxx, Esq.
X.X. Xxx 000 Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
Xxxxxxx, XX 00000 1065 Avenue of the Americas
Fax: ( ) - Xxx Xxxx, XX 00000
Fax: (000) 000-0000
(b) if to Consultant, to it at: with a copy to:
Xxxxxxxxx Marketing Group, LLC
00000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
8. BINDING EFFECT. This Agreement shall extend to, shall inure to the
benefit of and shall be binding upon all the parties hereto and upon all of
their respective heirs, successors and representatives.
9. ENTIRE AGREEMENT. This Agreement, including the agreements incorporated
by reference, contains the entire Agreement among the parties hereto with
respect to the matters contemplated hereby and supersedes all prior agreements
and undertakings between the parties with respect to such matters. This
Agreement may not be amended, modified or terminated in whole or in part, except
in writing, executed by each of the parties hereto.
10. INDEMNIFICATION. Consultant hereby agrees to hold harmless and
indemnify Corporation from and against any and all loss, damage, expense, and
cost (including reasonable attorneys' fees incurred in connection with the same)
incurred by Corporation as a result of Consultant's breach of any covenant or
agreement made herein.
11. SEVERABILITY. Should any part of any provision of this Agreement be
declared invalid by a court of competent jurisdiction, such decision or
determination shall not affect the validity of any remaining portion of such
provision or any other provision and the remainder of the Agreement shall remain
in full force and effect and shall be construed in all respects as if such
invalid or unenforceable provision or portion thereof were not contained herein.
In the event of a declaration of invalidity, the provision or portion thereof
declared invalid shall not necessarily be invalidated in its entirety, but shall
be observed and performed by the parties to the Agreement to the extent such
provision is valid and enforceable.
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12. SECTION HEADINGS. The section headings contained herein are for
convenience of reference only and shall not be considered any part of the terms
of this Agreement.
13. CHOICE OF LAW. This Agreement shall be interpreted and performed in
accordance with the laws of the State of New Jersey, and the parties agree,
notwithstanding the principles of conflicts of law, that the internal laws of
the State of New Jersey shall govern and control the validity, interpretation,
performance, and enforcement of this Agreement.
IN WITNESS WHEREOF, Consultant has hereunto put her hand, and the
Corporation has caused this instrument to be executed in its corporate name by
its duly authorized officer, all as of the day and year first above written.
CONSULTANT:
Xxxxxxxxx Marketing Group, LLC
/s/Xxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxxx, President and CEO
CORPORATION:
Stronghold Technologies, Inc.
/s/Xxxxxxxxxxx Xxxxx
Xxxxxxxxxxx Xxxxx, CEO
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