SERVICES AGREEMENT
This Services Agreement is made effective as of April 19, 1996, by and between
DIGITAL RECORDERS, INC. ("Digital Recorders"), a North Carolina corporation with
offices at 0000 Xxxxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxx, Xxxxx Xxxxxxxx 00000, XXX,
and XXXXXXXX XXXXXX INTERNATIONAL, INC. ("RTI"), a Texas corporation with
offices at 000 Xxxx Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxx 00000, XXX.
W I T N E S S E T H:
WHEREAS, RTI has knowledge and experience in and relating to the
worldwide public transportation and transit market and industry and is willing
to provide certain services to Digital Recorders based on such knowledge and
experience, as hereinafter set forth; and
WHEREAS, Digital Recorders desires to receive such services from RTI on
the terms and conditions specified in this Services Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual agreements
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DESCRIPTION OF SERVICES: Beginning on March 15, 1996, RTI will provide
advisory, consulting and management services to the Company, including oversight
and direction in areas such as business development, business and manufacturing
operations, marketing, sales, acquisitions, mergers, strategic planning and
implementation, and technology, all as related to the public transportation and
transit related products and services of Digital Recorders (collectively the
"Services").
2. PERFORMANCE OF SERVICES: The manner in which the Services are to be
performed, and the specific hours to be worked by RTI, shall be determined by
RTI. Digital Recorders will rely on RTI to work as many hours as may be
reasonably necessary to fulfill RTI's obligations under this Services Agreement.
3. COMPENSATION: Digital Recorders will pay base compensation, and other
compensation, to RTI as described in Exhibit A attached hereto, for the
Services. This compensation shall be payable, and in termination of this
Services Agreement be treated, as stipulated in Exhibit A attached hereto.
4. ADDITIONAL PAYMENTS: In addition to the compensation payments under the
preceding paragraph, Digital Recorders will make or cause to be made certain
commission and other payments, as set forth in Exhibit B hereto, certain of
which will be based on a percentage of Net Sales. For purposes of this Services
Agreement, "Net Sales" means gross revenues derived by Digital Recorders and its
affiliates from direct or indirect sales, as contracted or invoiced, less
returns, allowances, and other adjustments determined in accordance with
generally accepted accounting principles, consistently applied, which is the
amount Digital Recorders or an affiliate enters in its records as the amount due
and payable by a customer.
a. PAYMENT SCHEDULE: The commission payments shall be payable, without
further action by RTI to prompt or collect same, within 15 days
following the end of the month in which receipt by Digital Recorders of
full or partial payment of amounts due and
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payable occurs; commission applied to amount actually received.
b. ACCOUNTING: Digital Recorders shall maintain records in sufficient
detail for purposes of determining the amount of the commissions
payable to RTI. Digital Recorders shall provide to RTI with each
commission payment a written accounting that sets forth, in such detail
as is reasonably satisfactory to RTI, the manner in which the
commission payment was calculated.
c. RIGHT TO INSPECT: RTI, or RTI's agent, shall have the right to inspect
Digital Recorder's records for the limited purpose of verifying
calculation of the commission payments, subject to such restrictions as
Digital Recorders may reasonably impose to protect the confidentiality
of those records. Such inspections shall be made during reasonable
business hours as may be set by Digital Recorders.
5. EXPENSE REIMBURSEMENT: Except as stipulated in Exhibit A or Exhibit B hereto
or herein limited, RTI shall be entitled to reimbursement from Digital Recorders
of all out-of-pocket expenses incurred in rendering the Services. However, RTI
will not be entitled to reimbursement of expenses incurred related specifically
to RTI actions which are independently taken not at the direction of Digital
Recorders, to produce sales for Digital Recorders products, where RTI would be
entitled to payment of a commission on such sales by Digital Recorders, under
commission arrangements stipulated in Section 4 and Exhibit B hereto.
6. NEW PROJECT APPROVAL: RTI and Digital Recorders recognize that the Services
may include the development and implementation by RTI of various new projects
for Digital Recorders. RTI shall obtain the approval of the chief executive
officer of Digital Recorders prior to the commencement of any new project.
7. TERM & TERMINATION: Except as provided in Exhibit A or Exhibit B hereto, this
Services Agreement may be terminated as follows:
a. By either party for any reason upon 90 days' written notice to the
other party;
b. By either party upon 30 days' written notice to the other party if the
other party commits any material default or breach of any of its
agreements, obligations, representations or warranties contained in
this Services Agreement; or
c. By either party upon 30 days' written notice to the other party if the
other party is declared bankrupt or becomes insolvent or voluntarily
institutes a bankruptcy proceeding under the Bankruptcy Code, or a
receiver is appointed for the assets of such other party, or such other
party makes a general assignment for the benefit of creditors or admits
in writing its inability to pay its debts as they become due;
PROVIDED, HOWEVER, that this Services Agreement will not be terminated as
provided in paragraph (b) or (c) if, within such 30-day period, such other party
cures such breach, default, act or circumstance giving rise to the right of
termination to the reasonable satisfaction of the party delivering the notice.
The term of this Services Agreement shall be a period of three years
commencing on the date of its execution by RTI and Digital Recorders. This
Services Agreement shall automatically be renewed for an additional three-year
term at the end of the initial and each successive term, unless either party
shall have given notice to the other party that it elects not to renew this
Services Agreement prior to end of the second year of the initial or any
subsequent three-year
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term.
8. RELATIONSHIP OF PARTIES: It is understood by the parties that RTI is an
independent contractor with respect to Digital Recorders, and not an employee,
partner or joint venturer of Digital Recorders. Unless otherwise specifically
agreed with respect to any specific individual, Digital Recorders will not
provide a salary, fringe benefits, including health insurance benefits, paid
vacation, or any other employee benefit, for the benefit of RTI or RTI's
employees.
9. DISCLOSURE: RTI is required to disclose any outside activities or interests
that, in the sole opinion of RTI, conflict or may conflict with the best
interests of Digital Recorders. Notwithstanding RTI's opinion on such, prompt
disclosure is specifically required under this section if the activity is
directly or indirectly competitive with the public transportation and transit
business of Digital Recorders. As of the date hereof, the only such item is the
beneficial holding, by Xxxxx X. Xxxxxx, a principal of RTI, of less than 5,000
shares of Trans Industries common stock.
10. EMPLOYEES: RTI's and Digital Recorders' employees, if any, who perform
services under this Services Agreement, shall also be bound by the provisions of
this Services Agreement.
11. INJURIES: RTI acknowledges RTI's obligation to obtain appropriate insurance
coverage for the benefit of RTI (and RTI's employees, if any). RTI waives any
rights to recovery from Digital Recorders for any injuries that RTI (and/or
RTI's employees) may sustain while performing Services under this Services
Agreement or that are a result of the negligence of RTI or RTI's employees,
unless such injuries result from the intentional or reckless behavior or gross
negligence of Digital Recorders or its employees.
12. ASSIGNMENT AND RELIANCE ON CERTAIN PARTIES: Neither party's rights or
obligations under this Services Agreement may be assigned or transferred to any
other person, firm or corporation without the prior written consent of the other
party. RTI acknowledges that Digital Recorders is primarily, but not
exclusively, relying on the availability of Xxxxx X. Xxxxxx to perform Services
under this Services Agreement. RTI understands that the lack of such
availability, at the sole discretion of Digital Recorders, may be reason for
termination of this Services Agreement by Digital Recorders upon 90 days'
written notice as provided in Section 7.
13. INTELLECTUAL PROPERTY: The following provisions shall apply with respect to
copyrightable works, trademarks, trade secrets, ideas, discoveries, inventions,
applications for patents, and patents of Digital Recorders and RTI
(collectively, "Intellectual Property"):
a. RTI's Intellectual Property: As of the effective date of this Services
Agreement, RTI does not hold any interest in any Intellectual Property
which relates to the products and technology of Digital Recorders to
which this Services Agreement applies other than RTI's exclusive
license and distribution rights granted to it by Lite Vision
Corporation relating to a device used in passenger information display
systems in public transit and transportation-related applications, in
accordance with that certain Exclusive Distribution and License
Agreement among RTI, Lite Vision Corporation and UTM, Inc. dated as of
April 19, 1996. RTI has granted to Digital Recorders a sublicense with
respect to its rights under such agreement, pursuant to an Exclusive
Distribution and Sublicense Agreement dated as of April 19, 1996, by
and between RTI and Digital Recorders (the "Sublicense").
b. Development of Intellectual Property: Any improvements to any existing
Intellectual Property of Digital Recorders, any other and further
inventions or improvements, and
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any new items of Intellectual Property relating to the products and
technology of Digital Recorders to which this Services Agreement
applies (collectively, "Improvements") shall be (a) the sole and
exclusive property of Digital Recorders if created, developed or
produced by RTI (or RTI's employees, if any) in the course of providing
the Services to Digital Recorders during the term of this Services
Agreement, or (b) the sole and exclusive property of RTI if created,
developed or produced by RTI (or RTI's employees, if any) other than in
the course of providing the Services to Digital Recorders during the
term of this Services Agreement, and in either case any and all such
Improvements shall be subject to an irrevocable, perpetual right and
license from the property holder to the other party to make, use, sell
or otherwise exploit products and services derived from such
Improvements without payment of royalties. Such rights and licenses
will be exclusive for the term of this Services Agreement, including
any extensions or renewals of such term. After termination of this
Services Agreement, such rights and licenses shall be nonexclusive, but
shall remain royalty-free. Each party shall execute such documents as
may be necessary to perfect and preserve the rights and interests of
either party with respect to any such Improvements and the licenses
therein as contemplated by this paragraph (b).
14. CONFIDENTIALITY: RTI and Digital Recorders each acknowledge that the other
has and will have trade secrets and other proprietary information (such as, but
not limited to, future plans, business affairs, process information, technical
information, customer lists, inventions, price lists and other pricing
information, and information relating to costs, apparatus, products and
machinery) (collectively, "Information") which are valuable, special and unique
assets of Digital Recorders or RTI, respectively. RTI and Digital Recorders each
agrees to not at any time or in any manner, either directly or indirectly,
divulge, disclose, or communicate in any manner any Information of the other
party to any third party without the prior written consent of the other. Each
party will protect the Information of the other and treat it as strictly
confidential. Notwithstanding the foregoing, neither party shall be obligated to
maintain any Information of the other party as confidential and refrain from
using or disclosing it, if (a) the Information was in the receiving party's
possession or was known to it prior to its receipt from the other party, (b) the
Information is independently developed or learned by the receiving party without
the utilization of any Information provided by the other party, (c) the
Information is or becomes public knowledge without fault of the receiving party
or (d) the receiving party is required by applicable law or court order to
disclose the Information.
15. UNAUTHORIZED DISCLOSURE OF INFORMATION: Each party acknowledges that a
violation by it of Section 14 would be a material violation of this Services
Agreement and would cause irreparable harm to the other party for which money
damages would be an inadequate remedy. Accordingly, except as provided otherwise
in Section 14, if it appears that RTI or Digital Recorders has disclosed (or has
threatened to disclose) Information in violation of this Services Agreement, the
other party shall be entitled to an injunction to restrain the disclosing party
from disclosing, in whole or in part, such Information, or from providing any
services to any party to whom such Information has been disclosed or may be
disclosed.
16. CONFIDENTIALITY AFTER TERMINATION: The confidentiality provisions of this
Services Agreement shall remain in full force and effect for a period of six
months after the termination of this Services Agreement.
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17. SERVICES TO OTHER PARTIES: Digital Recorders and RTI each acknowledge and
agree that RTI may provide consulting or other services to other parties during
the term of this Services Agreement. However, RTI is bound by the
confidentiality and disclosure provisions of this Services Agreement, and RTI
may not use the Information of Digital Recorders, directly or indirectly, for
the benefit of third parties in violation of this Services Agreement nor take
any action inconsistent with or in violation of the Sublicense.
18. NON-COMPETE AGREEMENT: RTI agrees and covenants that for a period of six
months following the termination of this Services Agreement, in the event of
RTI's voluntary termination of this Services Agreement, RTI will not directly or
indirectly engage in any business competitive with Digital Recorders' public
transportation and transit products and services business, as conducted on the
effective date of this Services Agreement. This covenant shall apply to the
geographical areas that include the USA, Europe, and Asia. Directly or
indirectly engaging in any competitive business means (i) engaging in a business
as owner, partner, or agent; or (ii) becoming an employee of any third party
that is engaged in such business; or (iii) soliciting any customer of Digital
Recorders for the benefit of a third party that is engaged in such business. In
the event of termination of this Services Agreement by Digital Recorders, RTI
shall not be subject to this section.
19. RETURN OF RECORDS: Upon termination of this Services Agreement, RTI shall,
upon request, deliver all records, notes, data, memorandum, models, and
equipment of any nature that are in RTI's possession or under RTI's control and
that are Digital Recorder's property or relate to Digital Recorder's business.
20. NOTICES: All notices required or permitted under this Services Agreement
shall be in writing and shall be deemed delivered when delivered in person or
deposited in the United States mail, postage prepaid, addressed as follows:
If to Digital Recorders:
Digital Recorders, Inc.
X. Xxxxxxxx X. Xxxxxxxx, Chairman and CEO
0000 Xxxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
If to RTI:
Xxxxxxxx Xxxxxx International, Inc.
Xxxxx X. Xxxxxx, Principal
000 Xxxx Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Such address may be changed from time to time by either party by providing
written notice to the other in the manner set forth above.
21. ENTIRE AGREEMENT: This Services Agreement contains the entire agreement of
the parties related to the Services. This Services Agreement supersedes any
prior written or oral agreements between the parties.
22. AMENDMENT: This Services Agreement may be modified or amended only by means
of a written instrument signed by both parties.
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23. SEVERABILITY: If any provision of this Services Agreement shall be held to
be invalid or unenforceable for any reason, the remaining provisions shall
continue to be valid and enforceable. If a court finds that any provision of
this Services Agreement is invalid or unenforceable, but that by limiting such
provision it would become valid and enforceable, then such provision shall be
deemed to be written, construed, and enforced as so limited.
24. WAIVER OF CONTRACTUAL RIGHT: The failure of either party to enforce any
provision of this Services Agreement shall not be construed as a waiver or
limitation of that party's right to subsequently enforce and compel strict
compliance with such provision or any other provision of this Services
Agreement.
25. APPLICABLE LAW: This Services Agreement shall be governed by the laws of the
State of Texas.
26. DISPUTE RESOLUTION: Except for the provision for injunctive relief contained
in Section 15, the parties agree to engage in binding arbitration for resolution
of all disputes arising out of or relating to this Services Agreement or the
performance or failure of performance hereunder. Such arbitration shall be
conducted on or near the business premises of the aggrieved party pursuant to
the expedited procedures of and in accordance with the rules of the American
Arbitration Association. The arbitrator shall be mutually selected by the
parties or, if they cannot agree on such selection, Digital Recorders and RTI
each shall designate one arbitrator to represent it in the selection process and
the two arbitrators shall appoint a third arbitrator who shall arbitrate such
dispute. Such selection process shall be completed within 30 days from the date
on which arbitration is requested by either party. The arbitrator selected
shall, if reasonably possible, be one who is familiar with the commercial and
manufacturing practices of the public transportation and transit passenger
information display industry. The arbitrator's award shall be final and binding
on the parties hereto and enforceable by either party in any court of competent
jurisdiction. The parties agree that each party will bear its own costs of such
arbitration (including attorneys' fees and expenses), regardless of the decision
rendered by the arbitrator.
IN WITNESS WHEREOF, the parties hereto have executed this Services
Agreement as of the date first written above.
DIGITAL RECORDERS, INC.
By:
X. Xxxxxxxx X. Xxxxxxxx, Chairman and CEO
XXXXXXXX XXXXXX INTERNATIONAL, INC.
By:
Xxxxx X. Xxxxxx, Principal
Exhibits made a part of this Services Agreement and attached hereto:
EXHIBIT A - COMPENSATION
EXHIBIT B - ADDITIONAL PAYMENTS
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EXHIBIT A - COMPENSATION
(CONSISTING OF PAGES 7 & 8)
I.) BASE COMPENSATION: RTI shall be paid $6,000 per month by Digital Recorder as
base compensation under this Services Agreement. This compensation will be paid
monthly by the 15th day of the month without further action by RTI to invoice or
collect. Upon termination of this Services Agreement, payments under this
paragraph shall cease; provided, however, that RTI shall be entitled to payments
for periods or partial periods that occurred prior to termination for which RTI
has not yet been paid. This base compensation is for the normal course of
business conduct in providing the Services. RTI will be entitled, subject to
written prior agreement with Digital Recorders, to collect additional base
compensation in the event that the parties agree to RTI performing more
time-consuming tasks such as, but not limited to, turn-around, restructuring, or
temporary direct management duties, of any Digital Recorders division or
business unit.
II.) SET-UP COMPENSATION: RTI shall be paid a $25,000 one-time set-up
compensation by Digital Recorders, due upon signing of this Services Agreement,
and upon submission of an invoice by RTI, with the plan noted below attached
thereto. This set-up compensation shall be for the purpose of RTI conducting a
thorough evaluation and study of Digital Recorders and Digital Recorders'
transit market-related business and products, and consultation with third
parties, all for the purpose of RTI becoming detail familiar with the business,
technology, and products of Digital Recorders. Digital Recorders will cooperate
with and assist RTI in this effort. RTI will submit to Digital Recorders a
written plan for conduct of this activity; Digital Recorders shall have the
right to delete from that plan any activity which it reasonably believes to not
be in the best interest of Digital Recorders. RTI will not be entitled to
reimbursement, under Section 5 of this Services Agreement, for expenses incurred
in connection with this specific one-time activity.
III.) ACQUISITION, MERGER, DIVESTITURE, FINANCING, OR INVESTMENT COMPENSATION:
RTI will be entitled to collect from Digital Recorders additional compensation
for any acquisition, merger, divestiture, financing transaction or investment
opportunity engaged in or pursued by Digital Recorders or its affiliates, where
such action was recommended or facilitated by RTI, and documented in advance and
in writing by RTI letter to Digital Recorders, stipulating that such
recommendation is to be subject to this compensation. Such compensation, and
actions to which applicable, will be negotiated and agreed in each instance and
documented in writing before becoming a binding obligation of Digital Recorders
and before substantive direct action by RTI in behalf of Digital Recorders on
same. This type compensation, in the event of expiration or termination of this
Services Agreement prior to the completion of related actions of RTI, will
remain due and payable by Digital Recorders, in any event, according to the
stipulations in the related agreement on same. While the parties recognize that
such compensation will be negotiated and agreed in each instance, it is
acknowledged that such compensation may be based on a percentage of the gross
value of the transaction in question and that such percentage may typically be
in the 2% to 5% range. As of the date of this Services Agreement, there is only
a certain compensation under a separate agreement dated January 22, 1996 between
RTI and TRANSIT-MEDIA GmbH ("Transit-Media"), which is to be paid by
Transit-Media, to which Digital Recorders would become a party should Digital
Recorders enter into an agreement to acquire Transit-Media (or to have a new
subsidiary of Digital Recorders acquire the assets of Transit-Media). In the
event of such acquisition agreement, Digital Recorders agrees to be bound by the
terms of the agreement between Transit-Media and RTI and to cause Transit-Media
or such new subsidiary of Digital Recorders to make the payment to RTI specified
therein.
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IV.) LONG TERM GAIN IN MARKET VALUE: Recognizing that the actions of RTI under
this Services Agreement will be intended to produce long-term gain in the market
value of the Common Stock of Digital Recorders, Digital Recorders will grant to
RTI, simultaneously with the execution of this Services Agreement, the option to
purchase, at an exercise price of $6.50 per share, not less than 30,000 shares
of the marketable Common Stock of Digital Recorders. RTI will be entitled to
purchase this stock, commencing after the end of the first year of this Services
Agreement, at any time, and in any purchase increments up to the currently
vested amount, over whatever time period desired, as RTI, in its sole
discretion, deems appropriate. The 30,000 shares will vest to RTI's interest and
availability for purchase at the rate of 50% on the date that is 13 months from
the date of execution of this Services Agreement, a further 30% on the date that
is 25 months from the date of such execution, and the final 20% on the date that
is 35 months from the date of such execution. However, this right to purchase
such shares will be contingent upon the market price of the Common Stock
exceeding, for a period of 90 consecutive calendar days, the following prices,
for each block of shares:
First 10,000 Share Block $6.50
Next 6,000 Share Block $9.50
Next 6,000 Share Block $11.00
Final 8,000 Share Block $14.00
For this purpose, "market price" means the closing sale price of the Common
Stock on the Nasdaq Stock Market over the counter trading system (Symbol TBUS),
or on such stock exchange or other stock market on which the Common Stock may
hereafter be listed or admitted for trading.
To the extent vested in accordance with the foregoing, such
option may be exercised, in RTI's discretion, in whole or in part, at any time
and from time to time, during the 10-year period commencing on the effective
date of this Services Agreement.
If this Services Agreement is terminated by Digital Recorders
pursuant to Section 7(a), or by RTI pursuant to Section 7(b) or (c) of this
Services Agreement, at any time during the period beginning three months after
the effective date of this Services Agreement and ending 36 months after such
effective date, the vesting of all remaining unvested portions of such option
shall be accelerated, and such option shall be and become exercisable in full
from and after the date of such termination, at any time and from time to time,
during the remainder of the 10-year term thereof. If this Services Agreement is
terminated at any time by RTI pursuant to Section 7(a), or by Digital Recorders
pursuant to Section 7(b) or (c) of this Services Agreement, the option shall be
exercisable by RTI, to the extent vested on the date of such termination, at any
time and from time to time, during the remainder of the 10-year term thereof,
and all unvested portions of the option on such date of termination shall
terminate.
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EXHIBIT B - ADDITIONAL PAYMENTS
(CONSISTING OF PAGES 9, 10 & 11)
I.) COMMISSION ON SALES OF EXISTING TRANSIT OR TRANSPORTATION PRODUCTS OF
DIGITAL RECORDERS TO CUSTOMERS OR ENTITIES LOCATED IN THE USA, MEXICO, AND
CANADA: The following Digital Recorders specific transit or transportation
market products, or derivatives thereof, are in existence as of the date of this
Services Agreement, and are subject to this type commission payment to RTI,
generally as stipulated in Section 4 of this Services Agreement:
- The "TALKING BUS" family of voice announce products including products bearing
the following reference numbers or nomenclature:
_______________________________ ___________________________________
_______________________________ ___________________________________
_______________________________ ___________________________________
On these products, considering that RTI's Services under this Services Agreement
will include actions, plans, and strategies to increase the sales volume of
Digital Recorders of these products, RTI shall be entitled to a commission on
Net Sales in the United States, Mexico and Canada exceeding the actual Net Sales
in such territory for the preceding calendar year (the "Threshold"), calculated
on a quarterly annualized basis, and adjusted at the end of each year to actual
Net Sales. The rate of this commission shall be as provided in the rate schedule
in the following Part II (referred to below as the "Rate"). This commission
shall be due and payable by the 15th day of the month next following the end of
each calendar quarter to the extent that such amount due exceeds 50% of the base
compensation paid in accordance with Part I of Exhibit A to this Services
Agreement. Payment of this commission will continue for a period of six months
following termination of this Services Agreement and will be payable with
respect to all products ordered or shipped during such six-month period,
regardless of when payment therefor is received. The formula for calculation of
this commission is set forth below:
For Quarter #1:
(Net Sales in quarter x 4) - Threshold = Sales Subject to Commission (Sales
Subject to Commission x Rate) / 4 = Amount to credit RTI Amount to credit
RTI - 50% of Base Compensation paid in quarter = Commission Due RTI
(but not less than zero).
For Quarter #2:
(Net Sales in first two quarters x 2) - Threshold = Sales Subject to
Commission (Sales Subject to Commission x Rate) / 2 = Amount to credit RTI
Amount to credit RTI - 50% of Base Compensation paid in first two quarters -
commissions paid first quarter = Commission Due RTI (but not less than
zero).
For Quarter #3:
(Net Sales in first three quarters x 1.33) - Threshold = Sales Subject to
Commission (Sales Subject to Commission x Rate) / 1.33 = Amount to credit
RTI Amount to credit RTI - 50% of Base Compensation paid in first three
quarters - commissions paid first two quarters = Commission Due RTI (but not
less than zero).
For Quarter #4:
(Net Sales in four quarters - Threshold) x Rate = Amount to credit RTI.
Amount to credit RTI - 50% of Base Compensation paid in four quarters -
Commissions paid in first three quarters = Commission Due RTI (but not less
than zero).
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Notwithstanding the foregoing, it is agreed that the Threshold amount, for 1996
only, shall be construed to be an amount such that no payment above the base
compensation is required by this Part I for any quarter in 1996.
II.) COMMISSION ON SALES OF NEW TRANSIT OR TRANSPORTATION PRODUCTS TO CUSTOMERS
OR ENTITIES LOCATED IN THE USA, MEXICO, AND CANADA: Considering that RTI's
Services under this Services Agreement, related to new products of Digital
Recorders, will include actions, plans, and strategies to launch these products
for maximum sales volume, RTI will be entitled to a commission on all Net Sales
derived from sales of new products in the United States, Mexico and Canada, as
provided in Section 4 of this Services Agreement, according to the following
schedule of commission Rates, based on Net Sales volume achieved in each
calendar year:
First $2,000,000 Net Sales---------------- rate of 3%
Next $3,000,000 Net Sales---------------- rate of 2%
Net Sales exceeding $5,000,000-------- rate of 1%
Payment of this commission will be due by the 15th day of each month, with
respect to Net Sales received by Digital Recorders or any affiliate in the
preceding month, and will continue, following termination of this Services
Agreement, until commission has been paid on all contracts and purchase orders,
and contracts and purchase orders resulting from proposals, dated prior to the
date of termination of this Services Agreement.
For purposes of this Exhibit B, "new products of Digital Recorders"
means all products developed, sold or distributed by Digital Recorders and its
affiliates, directly or indirectly, for use in or relating to the transit or
transportation market initiated by RTI. Without limiting the foregoing, the
commission provided for in this Part II shall be payable with respect to
products containing the components and technology that are the subject of the
Sublicense, for so long as the Sublicense remains in effect, as contemplated by
Section 6.1 of the Sublicense.
III.) COMMISSIONS AND OTHER PAYMENTS ON ALL SALES OF ALL DIGITAL RECORDERS
TRANSIT OR TRANSPORTATION PRODUCTS (EXISTING AND NEW) TO ENTITIES LOCATED IN
EUROPE, ASIA, INDONESIA, SOUTH AMERICA AND AUSTRALIA: Digital Recorders agrees
to enter into a separate agreement or agreements with RTI for RTI to become the
sole and exclusive agent of Digital Recorders and its affiliates for purposes of
sales of existing or new Digital Recorders products initiated by RTI in Europe,
Asia, Indonesia, South America and Australia. RTI and Digital Recorders agree
that such separate agreement(s) will be negotiated and signed within 60 days of
the signing of this Services Agreement. The terms of such agreement(s), as
related to commission rates and payment, will be the same as provided in Part II
above, unless specifically agreed otherwise.
The parties acknowledge and agree that the agreement(s) implementing this Part
III may provide for compensation to RTI in the form of commissions, management
fees or other forms of compensation, as the parties may agree based on such
factors as they deem appropriate, including the nature and scope of the services
to be provided. Without limiting the foregoing, the parties will initially enter
into the following agreements:
(a) An agreement among Digital Recorders, Transit-Media and RTI (the
"Transit-Media Agreement") pursuant to which RTI will provide advisory,
consulting and management services to Transit-Media and receive a
management fee for such services determined using the Rates specified
in Part II of this Exhibit B. Such management fee will be calculated on
the basis of Transit-Media's Net Sales, derived from sales of existing
or new products, in Europe, Singapore and Hong Kong (the "Transit-Media
Territory"). The fee will be payable by Transit-Media and guaranteed by
Digital Recorders. RTI shall not be
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entitled to receive any additional fee or commission under the
following paragraph (b) with respect to Transit-Media's Net Sales in
the Transit-Media Territory for so long as the Transit-Media Agreement
is in effect; and
(b) An agreement between Digital Recorders and RTI providing for the
payment by Digital Recorders to RTI of a commission determined using
the Rates specified in Part II of this Exhibit B and calculated on the
basis of Net Sales derived from sales of existing or new products
anywhere in Europe, Asia, Indonesia, South America and Australia, but
excluding sales by Transit-Media in the Transit-Media Territory with
respect to which RTI receives compensation under the Transit-Media
Agreement.
As used in paragraphs (a) and (b) above, "Transit-Media" refers to Transit-Media
or a new subsidiary of Digital Recorders that acquires the assets of
Transit-Media, as the case may be, as contemplated by Part III of Exhibit A of
this Agreement.
Digital Recorders represents that, prior to the execution of this Services
Agreement, it had in process certain proposals or understandings with selected
specific customers which Digital Recorders believes may materialize into orders.
Therefore, notwithstanding the foregoing, no commission shall be due RTI under
this Part III on the following proposals, orders, or customers until after
expiration of the time period noted:
Customer, Proposal, or Order Time Period Ending
-------------------------------------- ---------------
NONE
-------------------------------------- ---------------
-------------------------------------- ---------------
-------------------------------------- ---------------
-------------------------------------- ---------------
IV.) USE OF COMMISSIONED SALES AGENTS: Digital Recorders acknowledges that RTI
may utilize commissioned sales agents ("Agents") in carrying out this Services
Agreement. Such Agents being utilized, and arrangements related thereto, will be
subject to the approval of Digital Recorders. Once approved, such Agents, unless
otherwise agreed, will be directed by RTI and will be paid by the business group
of Digital Recorders without offset against any compensation due RTI.
"Transportation Products" pertain to bus, rail and vehicles throughout.
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