EXHIBIT 10.3
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT is made as of October __, 2003, by and
between XXXXXXXX TECHNOLOGIES, INC., a Florida corporation located at
___________________________________ (the "COMPANY"), and XXXXXX XXXX, an
individual residing at _____________, ______, Maryland _____ ("CONSULTANT").
BACKGROUND
The Company was created to, and is engaged in, the business of
delivering a portfolio of integrated proprietary world-class security solutions
to a U.S. government and the U.S. military customer base. Consultant previously
engaged in a segment of the Company's business through a corporation wholly
owned by him ("STR") that engages in chemical and biological agent detection
units (the "BUSINESS"). STR, on even date herewith, is merging with a subsidiary
of the Company pursuant to an Agreement and Plan of Merger, the consummation of
which will result in STR becoming a wholly owned subsidiary of the Company. The
execution of this Consulting Agreement is a condition to the consummation of the
aforementioned Agreement and Plan of Merger. The Company and Consultant desire
to enter into an arrangement subject to the terms and conditions stated in this
Agreement.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, and intending to be legally bound hereby, the parties agree as
follows:
1. APPOINTMENT AND ENGAGEMENT OF CONSULTANT. The Company appoints and
engages Consultant, and Consultant accepts such appointment and engagement,
subject to all of the terms and conditions of this Agreement, for the Term (as
defined in Section 6.1).
2. DUTIES. During the Term, Consultant shall, as and when requested by
the Company's Board of Directors and/or the Company's President or any Vice
President, and at such times and places as may be reasonably requested thereby,
render high-level advice to the Company and/or its directors, officers and/or
employees on matters pertaining to the business and affairs of the Company and
its subsidiaries, including, but not limited to, customer relations, customer
retention and business development. Consultant shall be required to devote no
more than fifteen (15) hours per week, employing reasonable energy, skill, and
efforts to perform such duties and to promote the Company's interests as is
required for the fulfillment of his obligations and the performance of his
duties under this Agreement.
3. NONCOMPETITION COVENANT.3.1 AGREEMENT NOT TO COMPETE. During the
Term, and for a period of three (3) years thereafter, Consultant shall not,
directly or indirectly, (i) engage in competition with the Company or its
affiliates in any manner or capacity (E.G., as an advisor, principal, agent,
partner, officer, director, stockholder, employee, member of any association or
otherwise) in any phase of the Business (the "RESTRICTED BUSINESS"); or (ii)
solicit or accept any Restricted Business from any customer to which the Company
provides products or services; or (iii) solicit, assist, entice, induce or
encourage (or attempt to do so) any person employed by the Company to leave the
employ of the Company, direct, counsel, or advise any person against becoming an
employee of the Company, or recruit or make an offer of employment to any person
that the Company is actively recruiting for employment.
3.2 GEOGRAPHIC EXTENT OF COVENANT. The obligations of
Consultant under Section 3.1 shall apply to any geographic area in which the
Company (i) has engaged in business during the Term through production,
promotional, sales or marketing activity, or otherwise, or (ii) has otherwise
established its goodwill, business reputation or any customer or supplier
relations.
3.3 LIMITATION OF COVENANT. Ownership by Consultant, as a
passive investment, of less than two percent of the outstanding shares of
capital stock of any corporation listed on a national securities exchange or
publicly traded on Nasdaq shall not constitute a breach of this Section 3.
3.4 INDIRECT COMPETITION. Consultant will not, directly or
indirectly, assist or encourage any other person in carrying out, directly or
indirectly, any activity that would be prohibited by the above provisions of
this Section 3 if such activity were carried out by Consultant, either directly
or indirectly. In particular Consultant agrees that he will not, directly or
indirectly, induce any employee of the Company or any of his family members to
carry out, directly or indirectly, any such activity.
3.5 ACKNOWLEDGMENT. Consultant agrees that the restrictions
and agreements contained in this Section 3 are reasonable and necessary to
protect the legitimate interests of the Company and that any violation of this
Section 3 will cause substantial and irreparable harm to the Company that would
not be quantifiable and for which no adequate remedy would exist at law and
accordingly injunctive relief shall be available for any violation of this
Section 3.
4. PATENT AND RELATED MATTERS.4.1 DISCLOSURE AND ASSIGNMENT. Consultant
will promptly disclose in writing to the Company complete information concerning
each and every invention, discovery, improvement, device, design, apparatus,
practice, process, method or product, whether patentable or not, made,
developed, perfected, devised, conceived or first reduced to practice by
Consultant, either solely or in collaboration with others, during the Term,
whether or not during regular working hours, relating either directly or
significantly and indirectly to the business, products, practices or techniques
of the Company ("Developments"). Consultant, to the extent that he has the legal
right to do so, hereby acknowledges that any and all of the Developments are the
property of the Company and hereby assigns and agrees to assign to the Company
any and all of Consultant's right, title and interest in and to any and all of
the Developments. At the request of the Company, Consultant will confer with the
Company and its representatives for the purpose of disclosing all Developments
to the Company as the Company shall reasonably request during the period ending
one year after termination of the Term, provided such conference is at Company's
expense and Employee is compensated at no less that a rate of $300 per hour for
his time for conference following termination or expiration of this Agreement.
4.2 LIMITATION ON SECTION 4.1. The provisions of Section 4.1
shall not apply to any Development meeting the following conditions:
4.2.1 such Development was developed entirely on
Consultant's own time without the use of any Company equipment, supplies,
facility or trade secret information; and
4.2.2 such Development does not relate directly to
the business of the Company to the Company's actual or demonstrably anticipated
research or development; or result from any work performed by Consultant for the
Company.
4.3 COPYRIGHTABLE MATERIAL. All right, title and interest in
all copyrightable material that Consultant shall conceive or originate, either
individually or jointly with others, and which arise out of the performance of
this Agreement, will be the property of the Company and are by this Agreement
assigned to the Company along with ownership of any and all copyrights in the
copyrightable material. Upon request and without further compensation therefor,
but at no expense to Consultant, Consultant shall execute all papers and perform
all other acts necessary to assist the Company to obtain and register copyrights
on such materials in any and all countries, except that Employee shall be
compensated at no less that a rate of $300 per hour for his time for compliance
with this provision following termination or expiration of this Agreement. Where
applicable, works of authorship created by Consultant for the Company in
performing his responsibilities under this Agreement shall be considered "WORKS
MADE FOR HIRE," as defined in the U.S. Copyright Act.
4.4 KNOW-HOW AND TRADE SECRETS. All know-how and trade secret
information conceived or originated by Consultant that arises out of the
performance of his obligations or responsibilities under this Agreement or any
related material or information shall be the property of the Company, and all
rights therein are by this Agreement assigned to the Company.
5. COMPENSATION.
5.1 CONSULTING FEES. In consideration for the consulting
services to be rendered by Consultant during the Term and the other covenants
made by Consultant under this Agreement, the Company shall pay to Consultant the
negotiated sum of Two Hundred Eighty-Five Thousand Dollars ($285,000.00) Term
(the "FEE"). The Fee shall be payable as follows: Sixty-One Thousand Two Hundred
Fifty Dollars ($61,250) shall be payable on March 15, 2004, a second payment in
the amount of Eighty-One Thousand Five Hundred Dollars ($81,500), shall be due
May 15, 2004, a third payment in the amount of Fifty-One Thousand One Hundred
and Twenty Five Dollars ($51,125.00) shall be on July 15, 2004, the fourth and
final payment in the amount of Ninety-One Thousand One Hundred and Twenty Five
($91,125.00) Dollars, shall be on October 15, 2004. The Company shall not
withhold any federal, state or local taxes or other withholdings from any
payment due to Consultant. Any and all responsibility for payment of such taxes
and other withholdings shall be the sole and exclusive responsibility of
Consultant.
5.2 INDEPENDENT CONTRACTOR. Consultant, under this Agreement,
shall at all times be an independent contractor of the Company and not an
employee, agent or partner of the Company. Consultant shall not be entitled to
receive or participate in any employee benefit plans or fringe benefits of the
Company. Consultant shall be solely responsible for all expenses incurred by
Consultant in performing his services.
6. TERM AND TERMINATION.
6.1 TERM. The term of the consulting services to be provided
hereunder shall be a period of one (1) years commencing on the date hereof and
ending on October 15, 2004 (the "TERM").
6.2 TERMINATION. This Agreement may not be terminated by the
Company. Should Yang die during the Term, his heirs shall remain subject to the
confidentiality and non-compete covenants set forth in this Agreement and shall
be paid the remainder of the Fee as set forth in Section 5 of this Agreement.
7. CONFIDENTIALITY.
7.1 Consultant shall not, at any time after the date hereof,
except with the express prior written consent of the Company, directly or
indirectly, disclose, communicate or divulge to any Person, or use for the
benefit of any Person, any secret, confidential or proprietary knowledge or
information with respect to the conduct or details of the Business including,
but not limited to, technical know-how, software, processes, customers,
prospects, costs, designs, marketing methods and strategies, finances and
suppliers.
7.2 The parties agree that any breach of the covenants and
agreements contained in this Section 7 shall result in irreparable injury to the
Company for which money damages could not adequately compensate the Company.
Therefore, in the event of any such breach, the Company shall be entitled (in
addition to any other rights and remedies which it may have at law or in equity)
to have an injunction issued by any competent court of equity enjoining and
restraining Consultant and/or any other Person involved therein from continuing
such breach. In any action to enforce the provisions of this Section 7,
Consultant and/or any other person involved therein shall expressly waive the
defense that the Company's remedy at law is adequate. The existence of any claim
or cause of action which Consultant may have against the Company or any other
Person (whether under this Agreement or otherwise) shall not constitute a
defense to or bar the enforcement of any of the covenants or agreements
contained in this Section 7. If the Company is obliged to resort to the courts
for the enforcement of any of the covenants or agreements contained herein, or
if such covenants or agreements are otherwise the subject of litigation between
the parties, then the term of such covenants and agreements shall be extended
for a period of time equal to the period of such breach.
7.3 If any portion of the covenants or agreements contained in
this Section 7, or the application thereof, is construed to be invalid or
unenforceable, then the other portions of such covenant(s) or agreement(s) or
the application thereof shall not be affected and shall be given full force and
effect without regard to the invalid or unenforceable portions. If any covenant
or agreement herein is held to be unenforceable because of the area covered, the
duration thereof, or the scope thereof, then the court making such determination
shall have, for purposes of enforcement in equity, the power to reduce the area
and/or duration and/or limit the scope thereof, and the covenant or agreement
shall then be enforceable in its reduced form.
8. PRIOR AGREEMENTS. Consultant represents to the Company (a) that
there are no restrictions, agreements or undertakings whatsoever to which
Consultant is a party which would prevent or make unlawful his execution of this
Agreement or his engagement hereunder, (b) that his execution of this Agreement
or his engagement hereunder do not constitute a breach of any contract,
agreement or understanding, oral or written, to which he is a party or which he
is bound and (c) that he is free and able to execute this Agreement and to enter
into the engagement hereunder.
9. NOTICES. All notices, consents or other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given (a) when delivered personally, (b) three business
days after being mailed by first class certified mail, return receipt requested,
postage prepaid, or (c) one business day after being sent by a reputable
overnight delivery service, postage or delivery charges prepaid, to the parties
at their respective addresses stated on the first page of this Agreement.
Notices may also be given by prepaid telegram or telecopy and shall be effective
on the date transmitted if confirmed within 24 hours thereafter by a signed
original sent in the manner provided in the preceding sentence. Notice to the
Company, addressed to the attention of the President, shall suffice as notice to
the Company, provided that a copy thereof is simultaneously sent to
__________________________________________. A copy of any notice to Consultant
shall be simultaneously sent to Xxxxx X. Xxxxxx, Esq., Hodes, Ulman, Xxxxxx &
Xxxx, P.A., Xxxxx 000 Xxxxxx, Xxxxxxxx 00000. Any party may change its address
for notice and the address to which copies must be sent by giving notice of the
new addresses to the other parties in accordance with this Section 7, except
that any such change of address notice shall not be effective unless and until
received.
10. ENTIRE AGREEMENT. This Agreement is the entire agreement between
the parties with respect to the subject matter hereof (and is exclusive from the
Employment Agreement bya and between STR and Yang) and supersedes all prior
agreements and understandings between the parties with respect to such subject
matter. This Agreement may not be terminated, modified or amended except in a
writing executed by each party hereto affected by such termination, modification
or amendment.
11. ASSIGNMENT. This Agreement, being for the personal services of
Consultant, shall not be assignable by him. The Company may not assign its
rights, or delegate its obligation, under this Agreement to any person without
the consent of Consultant which shall not be unreasonably withheld. The Company
may, however, at any time and from time to time without Consultant's consent
assign its rights, or delegate its obligations, under this Agreement to any
Affiliate of the Company.
12. NO WAIVERS. No waiver with respect to this Agreement shall be
enforceable unless in writing and signed by the party against whom enforcement
is sought. Except as otherwise expressly provided herein, no failure to
exercise, delay in exercising, or single or partial exercise of any right, power
or remedy by any party, and no course of dealing between or among any of the
parties, shall constitute a waiver of, or shall preclude any other or further
exercise of the same or any other right, power or remedy.
13. SEVERABILITY. If any provision of this Agreement is construed to be
invalid, illegal or unenforceable, then the remaining provisions hereof shall
not be affected thereby and shall be enforceable without regard thereto.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall constitute an
original hereof, and it shall not be necessary in making proof of this Agreement
to produce or account for more than one original counterpart hereof.
15. CONTROLLING LAW. This Agreement is made under, and shall be
construed in accordance with, the laws of the State of Maryland applicable to
agreements made and to be performed solely therein, without giving effect to
principles of conflicts of law.
16. DEFINITIONS. For purposes of this Agreement, (a) "PERSON" means any
individual, sole proprietorship, corporation, limited liability company, limited
liability partnership, trust, estate, partnership (general or limited), joint
venture, association, governmental entity or other entity, and (b) "AFFILIATE"
means, with respect to a given Person, any other Person that controls, is
controlled by or is under common control with, directly or indirectly, such
Person.
*****
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXXXXXXX TECHNOLOGIES, INC.
BY: /s/ Xxx Xxxxx
------------------------------------
Xxx Xxxxx
CFO/President
CONSULTANT:
/s/ Xxxxxx Xxxx
----------------------------------------
Xxxxxx Xxxx
