Exhibit 10.4 Agreement with Xxxxx Xxxxx and Xxxxx Xxxxx
LETTER OF ENGAGEMENT
March 26, 2004
This letter constitutes a legal agreement (the "Agreement") between the joint
and equal partnership association of Xxxxx Xxxxx and Xxxxx Xxxxx (the
"Partners"), and Xxxxx Biometry Incorporated ("Xxxxx" or "the Company"). Xxxxx
wishes to engage the Partners as senior advisors and marketing consultants to
the executive of Xxxxx, and the Partners hereby agree to become engaged in that
role, under the following terms and conditions.
1. Services. Services provided by the Partners will be of an active nature as
well as on an as-and-when basis, and will be broad and diverse,
incorporating but not limited to the following types of advisory services:
a. Provide assistance with the definition and strategic positioning of
Xxxxx and its products. Provide product advisory services regarding
potential new or related products and services for Xxxxx based on
their core technologies.
b. Help to develop a marketing strategy that will allow Xxxxx to
penetrate key market areas around the world.
c. Provide introductions to major government, international organizations
and companies that are involved in security and biometrics.
d. Assist in negotiations of contract with such organizations.
2. Further details of the scope and nature of services that may be provided by
the Partners in this regard is provided in Annex "A" attached to this
Agreement.
3. This Agreement shall be for the initial term of April 1, 2004 through March
31, 2005, and shall automatically renew under the same terms and conditions
as of April 1 2005 unless either party posts written notice with the other
party, in advance (30 days), that they wish to re-negotiate the terms of
the Agreement upon renewal, or cancel the Agreement without renewal.
4. Compensation. Compensation for services by the Partners shall not consist
of hourly fees for work done, but rather be in the form of a monthly
retainer fee, plus bonuses for specific achievements of value to Xxxxx.
This compensation shall be as follows:
a. A monthly retainer fee of $ 2,000 in US dollars (USD), plus all
reasonable direct expenses incurred on behalf of Xxxxx, payable to the
Partners on the last business day of each month or part-month in which
services are engaged. All expenses over $100 must be pre-approved by
the Company in writing.
b. These retainer fees will be accrued but not paid by Xxxxx, and be
carried as an interest-free payable to the Partners, until such time
as Xxxxx achieves investment capital, amounting to a minimum of
$1,000,000 USD of equity in Xxxxx. At this time all arrears fees due
to the Partners shall be paid in full and all later fees shall be paid
on the due date.
c. For revenue-based achievements (contracts) involving work by the
Partners, a bonus of 4% of the contract value shall be payable to the
Partners upon closure. (Any contingent value in the contract, such as
renewal value of sales, shall have an equivalent bonus payable when
such contingency is resolved and the additional fees accrue to Xxxxx.)
d. For non-revenue achievements (e.g. recognition of the Xxxxx biometric
technology by ICAO nations for passport use), a fair and reasonable
bonus shall be payable to the Partners as determined by the Company's
board of directors.
e. Payment of bonuses in accordance with (c) or (d) above may be done in
the form of shares with the mutual agreement of Xxxxx and the
Partners, in such quantities and under terms that are agreed between
the parties in each case.
5. Any payments of fees or bonuses made to the Partners shall be distributed
in each case according to the wishes of the Partners, in a single payment
with all relevant taxes, such as GST, as may be lawfully required but with
no withholdings or deductions of any sort for any purpose.
6. Both parties agree that this Agreement is not an agreement of employment,
and the Partners hereby waive any rights of employment that might exist
under any laws or practices of the USA or Canada in this regard.
7. Other Considerations. Xxxxx recognizes that the Partners are key
individuals with long experience in application and biometric service
industries, as well as executives with long experience in financing and
management of high technology companies. Their experience will be very
beneficial to Xxxxx in achieving its objectives.
a. In consideration therefore of the Partners becoming engaged with Xxxxx
in this regard, and in further consideration of the non-compete
clauses of this Agreement that exclude the Partners from taking any
other assignments that may be of a competitive or conflicting nature
to Xxxxx interests, Xxxxx agrees that the Partners will be granted
entitlement to 500,000 restricted shares of common stock of Xxxxx upon
signing of this Agreement.
b. These shares will be issued and delivered to the Partners in two
tranches:
(i) 100,000 shares upon signing of this agreement
(ii) 400,000 shares will also be issued upon signing of this Agreement
but be held back by Xxxxx until the Partners have played a major
role in delivering tangible benefits to Xxxxx, as determined by
the board, during the time period of this Agreement.
x. Xxxxx and the Partners note that restricted common shares have no
intrinsic or par value at this time, and that Xxxxx cannot guarantee
that this situation will change in the foreseeable future. The
Partners acknowledge that they therefore have no claim on Xxxxx for
any valuation of shares received in this regard.
d. Further, the Partners understand and agree that these common shares of
Xxxxx are restricted from trading under Rule 144 of the Securities and
Exchange Act.
8. Non-competition and non-disclosure. The Partners represent and warrant
that:
a. In executing this Agreement, they do not believe they are presently
involved in, nor will become involved in, any conflict of interest
situation that would prevent them from acting in the Xxxxx'x best
interests. In this regard the Partners will identify all such present
contract activities they may have underway in the same general
industry as Xxxxx, for review and acceptance by Xxxxx, and will not
become involved in any future work of a potential conflicting nature
without the express written consent of Xxxxx in each case.
b. The Partners will not directly or indirectly disclose or use, at any
time, either during or subsequent to the termination or expiry of this
Agreement, any secret or any confidential information or data of Xxxxx
unless it has first secured the Xxxxx'x written consent to such
disclosure or use. This condition becomes null and void if such
information has become publicly or generally available in any way
other than through the actions of the Partners.
c. The provisions of these subparagraphs shall survive any expiration or
termination of this Letter of Engagement.
9. Termination. This agreement for services can be terminated unequivocally by
either party with 30 days written notice, under the following terms and
conditions.
a. Should Xxxxx terminate this Agreement without cause prior to March 31,
2005, then the said 400,000 shares held back by Xxxxx in accordance
with paragraph 7b (ii) herein shall immediately be given over to the
Partners by Xxxxx. If it is determined by the Company that termination
is necessary for non-performance or for material misrepresentation, as
determined solely by the board, then the Company reserves the right to
hold the said 400,000 shares for cancellation and the Partners will
agree not to contest the board's decision.
b. Should the Partners terminate this Agreement prior to the date of
issuance of the additional 400,000 shares per paragraph 7b, then the
entitlement to said shares by the Partners shall be considered
abandoned by the Partners and Xxxxx will not be under further
obligation for such delivery.
Signed: /s/X. Xxxxx /s/Xxx Ko Chau
Xxxxx Xxxxx Xxxxx Biometry Inc.
/s/D Xxxxx Xxx Ko Chau
Xxxxx Xxxxx Print name
Dates: Mar 26, 2004 March 27, 2004
Letter of Engagement - Annex "A"
Potential Advisory Services
The following represent the type of advisory services, among others, that may be
requested or provided by the Partners with regard to this Agreement.
o Strategic planning for Xxxxx technologies and products
o Focus on best and broadest coverage
o Identity of niche and least-competitive product opportunities
o Base technology - delivery mechanisms - e.g. integration with/by
commercial scanners and scanner vendors
o Vertical scanner products - OEM product integration
o Brainstorming, identification, and investigation of related
technological opportunities - e.g. cryptography, steganography,
biometric fusion (e.g. face/finger) applications, others.
o Identification and definition of related utilities and vertical
application software tools;
o Technology integration with applications - border, police
o Strategic partnerships with systems and product/service firms
o Development of logical technology and product growth plans.
o Strategic application positioning and marketing of Xxxxx technologies
o International OTD (Official Travel Documents) biometrics applications
o Border security and functionality - US VISIT, APIS
o Military applications - Canada, USA
o Police systems - FBI, RCMP, other
o Specialty international applications - Saudi Arabia
o Commercial application functionality - ATM/credit cards, commercial ID
and loyalty programs, building pass/badging, other
o Negotiation and closing of complex deals - partnerships, joint bids, OEM
arrangements, M&A, other.
o Representation and executive services
o Conceptualization, planning and development assistance with White
Papers, position papers, brochures, and web marketing tools
o Privacy issues
o Biometric intrusiveness issues
o Fingerprinting implications for consumers
o Application integration opportunities
o Investor opportunities
o Introductions and representation with international contacts
o Membership in the executive roster as advisors for PR purposes
