Exhibit 10.6
CONSULTING AGREEMENT
THIS AGREEMENT (the "Agreement"), effective as February 23, 2004 (the
"Effective Date"), is made by and between TOTAL IDENTITY CORP., a Florida
corporation (the "Company") and ROBERT DAVID (the "Consultant").
RECITALS:
This Agreement is made in respect to the following, which Company and
Consultant acknowledge are true and correct:
a. Company has acquired from Consultant, a controlling interest
in Total Identity Systems Corp., a New York corporation
("TISC").
b. Consultant has substantial experience, knowledge and expertise
in the operation of the business of TISC.
c. Company deems Consultant's availability to provide advice and
guidance to Company in connection with the business of TISC to
be critical to the Company's success.
d. Company desires to secure the availability of Consultant, and
to engage Consultant to assist and consult with Company in the
management of the business conducted by TISC, all on the terms
and conditions herein set forth.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, and for other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Engagement. Subject to Section 3 below, the Company hereby engages
Consultant to render consulting services and advice to Company, and Consultant
hereby accepts such engagement, upon the terms and conditions set forth herein.
Consultant's engagement shall be for a term of thirty-two (32) months commencing
on the Effective Date (the "Term"). Consultant shall perform such duties and
responsibilities with respect to the management and operation of the business of
TISC as may be reasonably requested of him by the Chief Executive Officer of the
Company. In particular, Consultant shall assist in the transition to new
management, in the maintenance and promotion of harmonious relations with the
customers of the TISC, and in the location and solicitation of new customers. In
rendering services hereunder, Consultant shall not be required to maintain a
full time presence in Rochester, New York and shall not be required to devote
his full time and attention to the business of the Company. However, Consultant
shall generally be available to the Chief Executive Officer of the Company in
person or by telephone or other communication device between 9:00 a.m. and 2:00
p.m. weekdays.
2. Compensation. During the Term, the Company shall pay Consultant the
compensation and other amounts set forth below.
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2.1. Consulting Fee. For the services rendered and to be rendered by
Consultant hereunder, Company shall pay Consultant a consulting fee at the rate
of $8,333.33 per month, for each month during the Term of this Agreement (the
"Consulting Fee"). Said Consulting Fee shall be paid in installments not less
frequently than monthly. Except as otherwise expressly permitted hereunder, all
payments to Consultant shall be made without prior demand and without offset,
defense or deduction of any kind. The Consulting Fee may be increased in the
discretion of the Board of Directors of the Company.
2.2. Benefits. In addition to payment of the Consulting Fee, Company
shall receive the following benefits to be paid for by the Company: (a) group
health insurance under the existing Blue Cross-Blue Shield health insurance plan
maintained by the Company, covering Consultant and his spouse, and under any
health insurance plan subsequently adopted by the Company; and (b) reimbursement
for reasonable and necessary out-of-pocket expenses incurred by Consultant in
the performance of his duties hereunder (such expenses shall be reimbursed by
the Company, from time to time, upon presentation of appropriate receipts
therefore, provided such expenses are approved in advance in writing by the
Chief Financial Officer or the Board of Directors).
3. Termination.
3.1. The Consultant's engagement and the Company's obligation to
compensate Consultant pursuant to this Agreement shall be terminated upon the
first to occur of the following events:
(a) The death of Consultant.
(b) The Complete Disability of Consultant. "Complete Disability"
as used herein shall mean the inability of Consultant, due to illness, accident,
or any other physical or mental incapacity, to perform the services contemplated
by this Agreement for an aggregate of 90 days within any period of 12
consecutive months during the term hereof.
(c) The discharge of Consultant by the Company for Cause. "Cause"
as used herein shall mean:
(i) Consultant's conviction of a crime involving illegal drug
use or alcohol abuse by Consultant;
(ii) improper or personal use of the Company's property
assets;
(iii) acts of fraud, dishonesty, malfeasance, criminal
activity, wrongful conduct, breach of fiduciary duty by Consultant against the
Company or its affiliates, or in connection with the performance of his duties
hereunder; and/or
(iv) Consultant's willful failure or refusal to comply with
the provisions of this Agreement, or failure (including as a result of
Consultant's illegal drug use or alcohol abuse that does not involve a criminal
conviction) to perform Consultant's duties and obligations under this Agreement
in any material respect following written notice of such failure or refusal and
Consultant's failure to cure same within 30 days following Consultant's receipt
of such notice.
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4. Related Party Transactions. So long as Consultant is engaged by the
Company, he shall not, without the prior written consent of the Company, cause
or permit the Company, or any subsidiary to enter into or effect any agreement
or transaction, or provide or receive any service, between the Company or any
subsidiary on the one hand, and Consultant or a Related Party (defined below),
on the other hand, except for the consultant relationship contemplated hereby.
In any event, any such agreements, transactions or services shall be at prices
and terms which are equal to the prices and terms available for similar
agreements, transactions or services with unrelated third parties. As used
herein, "Related Party" means (a) any person related by blood, adoption, or
marriage to Consultant, (b) any director or officer of the Company or any of its
subsidiaries, (c) any corporation or other entity in which Consultant has,
directly or indirectly, at least 5% beneficial interest in the capital stock or
other type of equity interest in such corporation or other entity, or (d) any
partnership in which Consultant is a general partner or a limited partner having
a 5% or more interest therein.
5. Treatment and Ownership of Confidential Information.
5.1 Confidentiality. The parties hereto acknowledge that Consultant
shall or may be provided access to, make use of, acquire and/or add to
Confidential Information (as that term is defined in Section 5.2 below).
Consultant covenants and agrees that during the Term and at all times thereafter
he shall not, except with the prior written consent of the Company, or except if
he is acting during the Term solely for the benefit of the Company or any of the
affiliates, at any time, directly or indirectly, disclose, divulge, report,
transfer or use, for any purposes whatsoever, any such Confidential Information,
including Confidential Information obtained, used, acquired or added by, or
disclosed to, Consultant prior to the date of this Agreement. Consultant further
acknowledges that the Confidential Information constitutes valuable, special and
unique assets of the Company.
5.2 Confidential Information Defined. For purposes of this Agreement,
the term "Confidential Information" shall mean all of the following materials
and information which Consultant receives, conceives or develops or has
received, conceived or developed, in whole or in part, in connection with
Consultant's affiliation with the Company:
(a) The contents of any manuals or other written
materials of the Company or any of its affiliates;
(b) The names of actual or prospective clients,
customers, suppliers, or persons, firms, lenders, or persons,
firms, corporations, or other entities with whom Consultant
may have or has had contact on behalf of the Company or any of
its affiliates or to whom any other Consultant of the Company
or any of its affiliates has provided goods or services at any
time;
(c) The terms of agreements between the Company or
any of its affiliates, and any third parties;
(d) The contents of actual or prospective customer or
client records, which customer and client lists and records
shall not only mean one or more of the names and addresses of
the customers of the Company or any of its affiliates, but
shall also encompass any and all information whatsoever
regarding them;
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(e) Any data or database, or other information
compiled by the Company or any of its affiliates, including,
but without limitation, information concerning the Company or
any of its affiliates, or any business in which the Company or
any of its affiliates is engaged or contemplates becoming
engaged, any company which the Company or any of its
affiliates engages in business, any customer, prospective
customer, or other person, firm or corporation to whom or
which the Company or any of its affiliates has provided goods
or services or to whom or which any Consultant of the Company
or any of its affiliates has provided goods or services on
behalf of the Company or any of its affiliates, or any
compilation, analysis, evaluation or report concerning or
deriving from any data or database, or any other information;
(f) All policies, procedures, strategies and
techniques regarding training, marketing and sales, either
oral or written, and assorted lists containing information
pertaining to lenders, customers and/or prospective customers;
and
(g) Any other information, data, training methods,
formulae, technology, business methods, know-how, show-how,
source code, subject code, copyright, trademarks, patents or
knowledge of a confidential or proprietary nature observed,
received, conceived or developed by Consultant in connection
with Consultant's affiliation with the Company.
5.3 Exclusions. Excluded from the Confidential Information and
therefore not subject to the provisions of this Agreement shall be any
information which (a) is or becomes generally available to the public through no
breach or fault of Consultant; provided that this exception shall apply only
from and after the date the information became generally available to the
public, and (b) Consultant can establish by Consultant's written records was in
Consultant's possession at the time of disclosure and was not previously
acquired directly or indirectly from the Company, provided that this exception
shall apply only from and after the date that the information is disclosed to
Consultant by a third party or was in Consultant's possession. Specific
Confidential Information shall not be deemed to be within the foregoing
exceptions merely because it is embraced by, or contained or referenced in, more
general information in the public domain. Additionally, any combination of
features shall not be deemed to be within the foregoing exceptions merely
because individual features are in the public domain. If Consultant intends to
avail himself of any of the foregoing exceptions, Consultant shall notify the
Company in writing of his intention to do so and the basis for claiming the
exception.
5.4 Ownership. Consultant covenants and agrees that all right, title
and interest in any Confidential Information shall be and shall remain the
exclusive property of the Company and its affiliates, as the case may be.
Consultant agrees to promptly disclose to the Company all Confidential
Information hereafter developed in whole or in part by Consultant within the
scope of this Agreement and to assign to the Company or any of the affiliates,
as the Company determines in its sole discretion, any right, title or interest
Consultant may have in such Confidential Information.
6. Inventions.
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6.1 Consultant agrees to promptly inform and to disclose to the
Company, in writing, all inventions, concepts, developments, procedures, ideas,
innovations, systems, programs, techniques, processes, information, discoveries,
improvements and modifications and related documentations, other works of
authorship and the like (collectively the "Inventions"), which, during the
course of Consultant's employment with the Company, Consultant has created,
made, conceived, written either alone or with others, while in the Company's
employ, or while performing services for the Company or its affiliates, whether
or not during working hours, and at all times thereafter, whether or not such
Inventions are patentable, subject to copyright protection or susceptible to any
other form of protection which (a) related to the actual business or research of
development of the Company or its affiliates; or (b) was suggested by or
resulted from any task assigned or to be assigned to Consultant or performed by
Consultant for or on behalf of the Company or any of its affiliates. In the case
of any "other works of authorship", such assignment shall be limited to those
works of authorship meeting both conditions (a) and (b) above. Consultant
further acknowledges and agrees that all copyright and any other intellectual
property right in Inventions and related documentation, and other works of
authorship, created within the scope of Consultant's employment, are "works for
hire" and are the property of the Company or its affiliates, as the case may be.
6.2 In connection with any of the Inventions assigned by Section 6.1,
Consultant shall, on the Company's request, promptly execute a specific
assignment of title to the Company or its designee, and do anything else
reasonably necessary to enable the Company or such designee to secure a patent,
copyright or other form of protection therefor in the United States and in other
countries.
6.3 Consultant further acknowledges and agrees that the Company and its
affiliates, licensees, successors or assigns (direct or indirect) are not
required to designate Consultant as an author of any Invention which is subject
to Section 6.1, when it is distributed, publicly or otherwise, or to secure my
permission to change or otherwise alter its integrity. Consultant hereby waives
and releases, to the extent permitted by law, all rights in and to such
designation and any rights that Consultant may have concerning modifications of
such Inventions.
6.4 Consultant understands that any rights, waivers, releases and
assignments herein granted and made by Consultant are freely assignable by the
Company and are for the benefit of the Company and its affiliates, licensees,
successors and assigns.
6.5 Consultant affirms that Consultant has not disclosed and will not
disclose to anyone outside of the Company and its affiliates, or has used, or
will use, any Confidential Information or material received in confidence from
third parties, such as customers, by the Company or any of its affiliates, other
than as permitted by a written agreement between the Company and the third
party.
6.6 Consultant irrevocably appoints any Company-selected designee to act
as his agent and attorney-in-fact to perform all acts necessary to obtain
patents and/or copyrights as required by this Agreement if Consultant (a)
refuses to perform those acts or (b) is unavailable, within the meaning of the
United States Patent and Copyright Laws. It is expressly intended by Consultant
that the foregoing power of attorney is coupled with an interest.
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6.7 Consultant shall keep complete, accurate and authentic information
and records on all Inventions in the manner and form reasonably requested by the
Company. Such information and records, and all copies thereof, shall be the
property of the Company as to any Inventions within the meaning of this
Agreement. In addition, Consultant agrees to promptly surrender all such
original and copies of such information and records at the request of the
Company.
7. Restrictive Covenants.
7.1 Acknowledgments. Consultant agrees and acknowledges that in order
to protect the value of the Company and its business, it is necessary and
appropriate that Consultant undertake not to utilize the special knowledge about
the business of the Company that Consultant has acquired or may acquire and the
relationships with the Company's customers, suppliers and Consultants to compete
with the Company. Consultant further acknowledges that:
(a) Consultant is one of a limited number of persons who will
assist in developing the business of the Company;
(b) Consultant will occupy a position of trust and confidence with
the Company during the course of Consultant's engagement under
this Agreement and Consultant has and will continue to become
familiar with the proprietary and Confidential Information of
the Company and its affiliates;
(c) The agreements and covenants contained in this Section 7 are
essential to protect the Company and the goodwill of its
business and are an express condition precedent to the
willingness of the Company to sign this Agreement;
(d) The Company would be irreparably damaged if Consultant were to
provide services to any person or entity in violation of the
provisions of this Agreement;
(e) The scope and duration of the provisions of this Section 7,
and the provisions of Sections 5 and 6, are reasonably
designed to protect a valuable interest of the Company and are
not excessive in light of the circumstances; and
(f) Consultant has a means to support Consultant and Consultant's
dependents, if any, other than engaging in the activities
prohibited by this Section 7.
7.2 Non-Compete. Consultant hereby agrees that during the term of
Consultant's engagement by the Company and for the Post-Term Period (as
hereinafter defined) identified below (the "Non-Compete Period"), except on
behalf of the Company in accordance with this Agreement, Consultant shall not,
directly or indirectly, as consultant, agent, employee, stockholder, director,
partner or in any other individual or representative capacity, own, operate,
manage, control, engage in, invest in or participate in any manner in, act as a
consultant or advisor to, render services for (alone or in association with any
person, firm, corporation or entity), or otherwise assist any person or entity
that engages in or owns, invests in, operates, manages or controls any venture
or enterprise that directly or indirectly engages or proposes to engage in the
business now or hereafter conducted by the Company anywhere within the Rochester
and Buffalo, New York Metropolitan areas (collectively the "Territory");
provided however, that nothing contained herein shall be construed to prevent
the Consultant from (a) investing in stock or other securities of any public or
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private enterprise provided that such investment does not require active
participation by the Consultant and such enterprise does not engage in any
activity competitive with the business now or hereafter conducted by the Company
("Permitted Investments"), or (b) attending to such charitable and/or civic
activities as are deemed appropriate by Consultant; provided that such
activities shall not detract from Consultant's duties and obligations under this
Agreement. For purposes of this Section 7.2, the Post-Term Period shall be five
years.
7.3 Non-Solicitation. Without limiting the generality of the provisions
of Section 7.2 above, Consultant hereby agrees that for a period commencing on
the date of this Agreement and ending upon expiration of the Non-Compete Period,
except on behalf of the Company in accordance with this Agreement, Consultant
will not, directly or indirectly, as Consultant, agent, consultant, principal or
otherwise, (a) solicit any business from or in any way transact or seek to
transact any business with or otherwise seek to influence or alter the
relationship between the Company or any of its affiliates with any person or
entity to whom the Company or any of its affiliates provided business-related
services (i) at any time during the one year period preceding the Termination
Date or (ii) if there has been no Termination Date, at any time during the Term
hereof or (b) solicit for employment or other services or otherwise seek to
influence or alter the relationship between the Company or any of its affiliates
of any person who is or was an Consultant of the Company or any of its
affiliates (x) at any time during the one (1) year period preceding the
Termination Date or (xi) if there has been no Termination Date, at any time
during the Term hereof.
7.4 Blue-Pencil. If any court of competent jurisdiction shall at any
time deem the term of this Agreement or any particular Non-Compete Period too
lengthy or the Territory too extensive, the other provisions of this Section 7
shall nevertheless stand, the Non-Compete Period shall be reduced to be the
longest period permissible by law under the circumstances and the Territory
shall be comprised of the largest territory permissible by law under the
circumstances. The court in each case shall reduce the Non-Compete Period and/or
Territory to one of permissible duration or size.
8. Remedies. Consultant acknowledges and agrees that the covenants set
forth in Section 5, 6 and 7 of this Agreement are reasonable and necessary for
the protection of the business interests of the Company and its affiliates, that
irreparable injury will result to the Company if Consultant breaches any of the
terms of Sections 5, 6 or 7, and that in the event of Consultant's actual or
threatened breach of any provisions of Section 5, 6 or 7, the Company and its
affiliates will have no adequate remedy at law. Consultant accordingly agrees
that in the event of any actual or threatened breach by Consultant of any of the
provisions of Section 5, 6 or 7, the Company and its affiliates shall be
entitled to seek injunctive relief, specific performance and other equitable
relief from any court of competent jurisdiction or in connection with an
arbitration pursuant to Section 11.2, without bond and without the necessity of
showing actual monetary damages, subject to hearing as soon thereafter as
possible. Nothing contained herein shall be construed as prohibiting the Company
and its affiliates from pursuing any other remedies available to them for such
breach or threatened breach, including but not limited to the recovery of
damages.
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9. Representations and Warranties of Consultant.
9.1 Consultant represents and warrants to the Company that:
(a) He is not and has not been subject to any litigation or any
regulatory or administrative proceeding that could reasonably
have an adverse impact on the ability of Consultant to render
services under this Agreement;
(b) He is free of known physical and mental disabilities that
would, with or without reasonable accommodations create an
undue hardship for the Company or any of its affiliates,
impair his performance hereunder and he is fully empowered to
enter and perform his obligations under this Agreement;
(c) He is under no restrictive covenants to any person or entity
that will be violated by his entering into and performing this
Agreement; and
(d) He is not the subject of any event described in Item 401(d)(1)
through (4) of Regulation S-B [or Item 401(f) of Regulation
S-K, if then applicable to the Company], promulgated by the
Securities and Exchange Commission.
9.2 Consultant shall indemnify the Company on demand for and against
any and all judgments, losses, claims, damages, expenses and costs (including
without limitation all legal fees and costs, even if incident to appeals)
incurred or suffered by the Company as a result of any breach by Consultant of
any of these representations and warranties.
10. Successors. This Agreement is personal to Consultant and may not be
assigned by Consultant. This Agreement is not assignable by the Company except
in connection with the sale of all or substantially all of the Company's assets
or stock or upon a merger or any similar transaction. Subject to the foregoing,
this Agreement shall inure to the benefit of and be binding upon the Company and
its successors and assigns.
11. Miscellaneous.
11.1 Modification and Waiver. Any term or condition of this
Agreement may be waived at any time by the party hereto that is entitled to the
benefit thereof; provided, however, that any such waiver shall be in writing and
signed by the waiving party, and no such waiver of any breach or default
hereunder is to be implied from the omission of the other party to take any
action on account thereof. A waiver on one occasion shall not be deemed to be a
waiver of the same or of any other breach on a future occasion. This Agreement
may be modified or amended only by a writing signed by both parties hereto.
11.2 Governing Law; Arbitration. This agreement shall be governed
by and interpreted in accordance with the laws of the state of Florida without
regard to the principles of conflict of laws. Each of the parties irrevocably
and unconditionally agrees that any suit, action or legal proceeding arising out
of or relating to this Agreement shall be settled by binding arbitration
conducted in accordance with the Commercial Rules of Arbitration of the American
Arbitration Association ("AAA"). The arbitration shall take place at such
location as the AAA determines, and shall be heard by three arbitrators selected
in accordance with AAA Rules of Commercial Arbitration. The Arbitrators shall
render a reasoned award and such award shall be signed and dated. Any witness
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residing outside of the state in which the arbitration is heard may testify by
affidavit, and such affidavit shall be admissible at any arbitration hearing.
The decision of the arbitrators shall be final and binding upon the parties, and
the arbitration award may be entered in any court of competent jurisdiction.
Initially, each of the parties shall pay one-half of the fees of the AAA (other
than filing fees), including without limitation hearing and arbitrators' fees,
and the parties' obligation to pay such fees shall be enforceable in any court
of competent jurisdiction. The parties to any arbitration hereunder agree to
submit for determination by the arbitrators, the amount of fees and expenses,
including reasonable attorney's fees, to be borne by each party.
11.3 Tax Withholding. The Company may withhold from any amounts payable
under this Agreement such taxes as shall be required to be withheld pursuant to
any applicable law or regulation.
11.4 Section Captions. Section and other captions contained in this
Agreement are for reference purposes only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
11.5 Severability. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity of the
remainder of this Agreement.
11.6 Integrated Agreement. This Agreement constitutes the entire
understanding and agreement among the parties hereto with respect to the subject
matter hereof, and supersedes any other employment agreements executed before
the date hereof. There are no agreements, understandings, restrictions,
representations, or warranties among the parties other than those set forth
herein or herein provided for.
11.7 Interpretation. No provision of this Agreement is to be
interpreted for or against any party because that party or that party's legal
representative drafted such provision. For purposes of this Agreement, "herein,"
"hereby," "hereunder," "herewith," "hereafter," and "hereinafter" refer to this
Agreement in its entirety, and not to any particular section or subsection. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, and all of which shall constitute one and the same
instrument.
11.8 Notices. All notices, requests, demands, or other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given upon receipt if delivered in person or by Federal Express (or
similar overnight courier service) to the parties at the following addresses:
If to Consultant: Robert David
3006 East Avenue
Rochester, New York 14610
If to the Company: 2340 Brighton-Henrietta Town Line Road
Rochester, New York 14623
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Any party may change the address to which notices, requests, demands or other
communications to such party shall be delivered or mailed by giving notice
thereof to the other parties hereto in the manner provided herein. Any notice
may be given on behalf of a party by its counsel.
11.9 No Jury Trial. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY PROCEEDING BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES' ACCEPTANCE OF THIS AGREEMENT.
11.10 Effective Date/Superceding Effect. This Agreement is made
concurrently with a certain Amendment No. 1 to Stock Purchase Agreement between
Company and Consultant. Upon the Effective Date, this Agreement shall supercede
an Employment Agreement between Company and Consultant made effective as of
October 13, 2003, and neither the Company nor Consultant shall have any further
rights or obligations under said Employment Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
COMPANY:
TOTAL IDENTITY CORP.
By: /s/ Philip C. Mistretta
--------------------------
Philip C. Mistretta
Chairman of the Board
CONSULTANT:
/s/ Robert David
-----------------------------
Robert David
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