CONSULTING AGREEMENT
This Agreement is made on November ___, 2004 between TechAlt, Inc., a Nevada
corporation (the "Company") and Services By Designwise, Ltd., an Illinois
corporation (the "Consultant"), (collectively, "the Parties") and is effective
on December 1, 2004 ("Effective Date"). The Consultant has experience regarding
the Services (defined in Section 1 below), and the Company seeks to benefit from
the Consultant's expertise by retaining the Consultant. The Consultant wishes to
provide the Services to the Company. In addition, this Agreement is given in
part consideration for the parties entering into that certain Settlement
Agreement of even date herewith ("Settlement Agreement") and the Related
Agreements as defined thereunder ("Related Agreements").
Accordingly, the Company and the Consultant agree as follows:
1. Services.
a. During the term of this Agreement, the Consultant shall provide
1080 hours consulting services ("Services") to the Company as requested by
Company as described on SCHEDULE A as follows. (i) during the first four
(4) months of this Agreement, the Consultant shall devote no more than
ninety (90) hours per month to the Primary Consulting Services ("Initial
Maximum Monthly Services") as directed by the Company, and (ii) during the
remaining thirty two (32) months of this Agreement, the Consultant shall
devote no more than twenty two and a half (22.5) hours per month to the
Primary Consulting Services and the Consulting Services ("Subsequent
Maximum Monthly Services") as directed by the Company; provided, however,
that time spent maintaining or repairing the SBD System (as that term is
defined in the Settlement Agreement) under normal TechAlt warranty
provisions at the SBD location which are installed as of Closing with
remaining warranty shall not be applied against that amount of time
required to be devoted to the Primary Consulting Services and the
Consulting Services set forth in this Section 1.a. The Services may be
provided at the Company's location or at any other location as reasonably
determined by the Consultant including the customers' site. The Company
shall not receive any credit or offset for its payment obligations or the
Consultant's Services obligation hereunder in the event the Company fails
to utilize Consultant for the number of hours set forth herein.
2. Compensation.
a. As consideration for the Services provided by the Consultant, the
Company shall pay to the Consultant as follows: (i) $25,000.00 per month
for the first four (4) months and (ii) $6,250.00 per month for the next
thirty-two (32) months. Said payments shall be paid on the fifth (5th)
business day of each month following the month Services are provided and
shall be due and payable regardless of whether the Company requests less
than the maximum number of hours for which Consultant is available. The
Company shall not be entitled to any credit for which the Consultant's
available hours were not utilized by the Company. The Company shall pay
Consultant $150 per hour for any hours of Services performed by Consultant
beyond the Initial Maximum Monthly Services and/or the Subsequent Maximum
Monthly Services.
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b. In addition to the foregoing, during the term of this Agreement,
the Company shall provide the following benefits for the Consultant at no
cost to the Consultant:
i. The Company shall provide the Consultant with the use of an
automobile of Consultant's choice, with optional equipment of
Consultant's selection. The automobile provided hereunder
shall at no time be older than three (3) years. The Company
shall pay all operating expenses of the automobile, including
fuel and shall procure and maintain automobile liability
insurance on the automobile.
ii. The Company shall reimburse the Consultant for all
reasonable business expense(s) actually incurred after the
Effective Date of this Agreement by the Consultant on behalf
of the Company in the performance of the Services within
thirty (30) days of presentation by the Consultant of
voucher(s), receipt(s) or other written evidence(s) in
accordance with the policies of the Company and the rules of
the Internal Revenue Service. This includes reimbursement for
reasonable business expenses incurred by the Consultant or its
employees or agents while working from a home office, such as
telephone, fax and Internet services, and general office
supplies. In the event Consultant pays for any of the benefits
set forth in subparagraphs 6.i, iii, iv and/or v, the Company
shall reimburse Consultant within thirty (30) days.
iii. During the term of this Agreement, the Company shall, at
its expense, provide Consultant with the use of (i) a cellular
phone with a cellular phone calling plan with unlimited
minutes, and (ii) any other electronic communication devices
the Company deems reasonably necessary in connection with the
services to be rendered to the Company hereunder by
Consultant.
iv. During the term of this Agreement, the Company shall, at
its expense, provide Consultant with the use of full country
club and health club memberships to one (1) country club and
one (1) health club acceptable to both Consultant and the
Company.
v. The Company understands that the Consultant will retain
professional assistance, including but not limited to legal
and tax counsel, in assessing and protecting his rights under
this Agreement and related documents. The Company agrees to
pay all reasonable professional charges incurred for these
purposes, consistent with the expenses paid by the Company for
James Solomon.
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c. The Company shall pay Consultant a commission of ten percent
(10%) of gross sales on all First Responder Systems (as defined
hereinbelow) ("Commission") purchased by customers specifically identified
or introduced by Consultant as a potential customer ("Referred
Customer(s)"). Consultant will present the identity of the Referred
Customer to Company in writing and within seven (7) business days, the
Company shall compare the identity of the Referred Customer to existing
forecasts from internal Company sales and support representatives and
partners/resellers of the Company and in the event the Company rejects
such referral as originating from Consultant, Company shall provide
Consultant its rejection in writing stating all reason(s) therefore within
the same seven (7) business days ("Rejection Notice"). The Company shall
have been deemed to have accepted the Referred Customer for purposes of
this paragraph if Company fails to provide the Rejection Notice in a
timely manner. Consultant shall earn the Commission upon any order or
contract between the Company and the Referred Customer, and the Company
shall pay Consultant the Commission within seven (7) days of receipt of
payment from the Referred Customer.
2. Competition.
a. Both parties retain the right to do business with third parties
in matters that may be competitive with the interests of the other party
to this Agreement, except that during the term of this Agreement, the
Consultant shall not engage in a competitive manner, either directly or
indirectly, in the manufacture or sales of First Responder Systems. For
purposes of this Agreement, "First Responder Systems" shall mean the
following:
o In-car video recording systems used for emergency first responders
(i.e. Police, Fire, EMS).
o In-car wireless communications systems used for emergency first
responders.
o Community-wide wireless infrastructure.
o Forms and database applications both at the client (vehicle) and at
the server (headquarters).
b. Notwithstanding the foregoing, in the event the Company ceases to
operate its business during the term of this Agreement, Consultant may
freely compete against the Company in all markets, including the First
Responder Systems market; provided, however, that in the event of an
acquisition of the Company pursuant to which this Agreement remains in
effect, the Consultant's obligations pursuant to this Section 3 shall
continue in full force and effect.
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c. The parties agree and acknowledge that Consultant may
manufacture, distribute and sell the services, products and/or systems set
forth on EXHIBIT 3.B during the term of this Agreement. The purpose of
Exhibit 3b is to merely provide examples of lines of business that are not
competitive with First Responder Systems and shall not in any way limit
Consultant's rights to compete in markets other than First Responder
Systems.
3. Confidentiality.
a. The parties may, from time to time, in connection with work
contemplated under this Agreement, disclose confidential information to
each other ("Confidential Information"). Each party will use reasonable
efforts to prevent the disclosure of any of the other party's Confidential
Information to third parties for a period of two years following
termination of this Agreement. Confidential Information shall include only
that information that is both (i) disclosed or made known by the
disclosure to the recipient and (ii) identified in writing as
"proprietary" by the disclosure. The recipient agrees not to disclose any
Confidential Information to third parties or to use any Confidential
Information for any purpose other than performance of the Services
contemplated by this Agreement, without prior written consent of the
disclosing party.
b. Confidential Information subject to paragraph 4(a) does not
include information that (i) is or later becomes available to the public
through no breach of this Agreement by the recipient; (ii) is obtained by
the recipient from a third party who had the legal right to disclose the
information to the recipient; (iii) is already in the possession of the
recipient on the date this Agreement becomes effective; (iv) is
independently developed by recipient; or (v) is required to be disclosed
by law, government regulation, or court order.
5. Return of Materials. The Consultant agrees to promptly return or destroy
and certify that it has been destroyed, following the termination of this
Agreement or upon earlier request by the Company, all Confidential
Information in the Consultant's possession, (i) supplied by the Company in
conjunction with the Services provided pursuant to this Agreement or (ii)
generated by the Consultant in the performance of Services under this
Agreement.
6. Intellectual Property.
a. The Company shall be responsible for verifying any property
rights of other parties prior to use of any work product provided under
this Agreement.
b. The Company acknowledges that the use of any design, advice,
drawing or other service provided by the Consultant, its employees and
agents does not relieve the Company's responsibility as a manufacturer and
seller to execute sufficient testing and judgment to ensure that any
resulting product and/or system is suitable for usage in the Company's
products and systems.
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7. Defense and Indemnification. The Company agrees, at its sole expense, to
defend the Consultant against, and to indemnify and hold the Consultant harmless
from, any claims or suits by a third party, including reasonable attorneys fees,
against the Consultant or any liabilities or judgments based thereon, either
arising from the Consultant's performance of Services for the Company under this
Agreement and/or arising from any Company products and/or systems which result
from the Consultant's performance of Services under this Agreement except in the
case of the Consultant's willful or wanton misconduct under or breach of this
Agreement.
8. Term and Termination.
a. This Agreement shall be for a term of three (3) years from the
date of this Agreement. b. Termination of the Agreement at the end of the
then-current term shall not affect (a) the Company's obligation to pay for
Services previously performed by the Consultant, the compensation due
under the Agreement, including the Commission or expenses reasonably
incurred by the Consultant for which the Consultant is entitled to
reimbursement under paragraph 2.b.ii, above,
(b) the Company's obligation to defend and indemnify the Consultant
under paragraph 7 above, or (c) the parties' continuing obligations to one
another under paragraphs 4(a) above.
c. The Services may be terminated by the Company based on (i)
Consultant's conviction or plea of "guilty" or "no contest" to any crime
constituting a felony in the jurisdiction in which the crime constituting
a felony is committed, any crime involving moral turpitude (whether or not
a felony), or any other violation of criminal law involving dishonesty or
willful misconduct that materially injures the Company (whether or not a
felony); (ii) Consultant's failure or refusal to perform the Services at
all or in an acceptable manner, or to follow the lawful and proper
directives of the Company or Consultant's supervisor(s) that are within
the scope of Consultant's Services; (iii) Consultant's breach of this
Agreement; (iv) Consultant's breach of the Confidentiality Information
provisions contained herein; (v) misconduct by Consultant that has or
could discredit or damage the Company; or (vi) Consultant's indictment for
a felony violation of the federal securities laws, provided any of the
aforementioned violations or breaches have not been cured by Consultant
within thirty (30) days after written notice of said violation or breach.
Moreover, notwithstanding the termination of the Services, the Company
shall remain obligated to pay Consultant all of the compensation set forth
in Section 2 of this Agreement even though Consultant is not providing any
Services to Company.
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d. Notwithstanding the foregoing, the Company may terminate this
Agreement if the Consultant has breached this Agreement by failing to
perform the Services for the number of hours for which the Consultant is
obligated hereunder, and the Consultant has failed to cure said breach
within thirty (30) days after receipt of written notice from the Company
of such non-performance more than three (3) times within any calendar year
("Consultant's Refusal to Work"). In the event the Company terminates this
Agreement pursuant to Consultant's Refusal to Work, the Company shall
remain obligated to pay the Consultant the amount resulting from
multiplying (y) the difference between 1,080 and the number of hours the
Consultant has actually worked; and (z) $139.00. Said amount shall be paid
within thirty (30) days following termination of this Agreement, ("Minimum
Consulting Payment"). The Company's sole remedy for Consultant's Refusal
to Work shall be that all of its obligations under this Agreement shall
terminate after payment to Consultant of the Minimum Consulting Payment.
9. Event of Default.
For purpose of this Paragraph, the term "Event of Default" shall mean:
a. either Party shall make an assignment for the benefit of
creditors or admit in writing its inability to pay its debts generally as
they become due or fail to generally pay its debts as they become due; an
order, judgment or decree shall be entered for relief in respect of or
adjudicating such Party or any of its subsidiaries bankrupt or insolvent;
either Party or any of its subsidiaries shall petition or apply to any
tribunal for the appointment of, or taking of possession by, a trustee,
receiver, custodian, or liquidator or other similar official of such Party
or any subsidiary or of any substantial part of any of their respective
assets; either Party or any of its subsidiaries shall commence any
proceeding relating to such Party or any subsidiary under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution
or liquidation law of any jurisdiction, or any such petition or
application is filed or any such proceeding is commenced against such
Party or any of its subsidiaries and such petition, application or
proceeding is not dismissed within sixty (60) days;
b. either Party shall be in breach of any representation, warranty,
obligation, undertaking or covenant made or entered into under this
Agreement which has not been cured within thirty (30) days after written
notice of such breach provided, however, any breach of paragraph 2 of this
Agreement by the Company shall be cured within seven (7) days after
written notice of said breach.
c. the occurrence of a default under the Settlement Agreement of
even date herewith or any of the "Related Agreements" as defined therein
which remains uncured after the applicable cure period.
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10. Remedies.
a. In the event of a breach of this Agreement by either party,
except as specifically limited as set forth herein, the non-breaching
party may exercise any and all rights and remedies available at law or in
equity; provided, however, TechAlt's Liabilities as defined in the
Settlement Agreement shall be absolute and unconditional, and the Company
shall pay and/or fulfill TechAlt's Liabilities as it relates to the
Related Agreements without abatement, diminution or deduction regardless
of any costs or circumstances whatsoever including, without limitation,
any defense, setoff, recruitment, claim or counterclaim which the Company
may have or assert against the Consultant under this Agreement.
b. In the event of an Event of Default attributable to the Company
under this Agreement, the Consultant shall have the option, in lieu of its
other remedies available hereunder, to terminate this Agreement upon
written notice to the Company. In the event of such termination, the
parties agree the Consultant's damages shall be equal to the accrued but
unpaid compensation, and the remaining compensation, (including the value
of the non-cash benefits), for the balance of the then-current term under
this Agreement, such sum discounted at the rate of five percent (5%) per
year. The Company shall pay the Consultant's damages under this section
within thirty days following the Consultant's termination.
c. The non-prevailing party shall be liable for, and agrees to pay,
all reasonable costs and expenses that may be incurred by the prevailing
party in enforcing this Agreement, including all reasonable attorneys
fees, together with the attorneys fees and costs incurred in the
collection of any judgments in favor of the prevailing party arising out
of this Agreement.
11. Miscellaneous.
a. This Agreement shall inure to the benefit of and be binding upon
the respective heirs, executors, successors, representatives, and assigns
of the parties, as the case may be.
b. This Agreement replaces all previous agreements and the
discussions relating to the subject matters hereof and constitutes the
entire agreement between the Company and the Consultant with respect to
the subject matter of this Agreement. This Agreement may not be modified
in any respect by any verbal statement, representation, or agreement made
by any employee, officer, or representative of the Company, or by any
written documents unless it is signed by an officer of the Company and by
the Consultant.
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c. The waiver by any Party of any provision of this Agreement shall
not constitute a waiver by that Party of the same or other provision of
this Agreement on any subsequent occasion.
d. This Agreement shall be construed in accordance with, governed by
and enforced under the laws of the State of Illinois; the Parties
acknowledging that this Agreement has been executed and performed in Cook
County, Illinois. Any paragraph, subparagraph, sentence or phrase of this
Agreement which is contrary to the laws of the State of Illinois and/or
unenforceable shall not affect the validity or enforceability of any other
paragraph, subparagraph, sentence, or phrase of this Agreement and shall
be modified or deleted to conform with the applicable laws of the State of
Illinois.
e. The Parties agree that the Circuit Court of Cook County,
Illinois, or the U.S. District Court for the Northern District of
Illinois, Chicago, Illinois, shall have exclusive jurisdiction and venue
over any dispute relating to or arising from this matter, and proper venue
shall lie in said Court.
f. Any notice, consent, waiver, or other communication that is
required or permitted hereunder shall be sufficient if it is in writing,
signed by or on behalf of the Party giving such notice, consent, waiver,
or other communication, and delivered personally, by mail or by Federal
Express or similar overnight courier, postage prepaid, and if by mail,
certified or registered, to the addresses set forth below, or to such
other addressee or address as shall be set forth in a notice given in the
same manner:
If to Consultant: SERVICES BY DESIGNWISE, LTD.
Attn: Paul Masanek
5250 Cleveland Street
Skokie, IL 60077
Fax: (847) 673-3539
With a copy to: Piccione, Keeley & Associates, Ltd.
Attn: Mr. Patrick C. Keeley
122C South County Farm Road
Wheaton, IL 60187
Fax: (630) 653-8029
If to the Company: TECHALT, INC.
Attn: James E. Solomon
3311 N. Kennicott Ave., Suite A
Arlington Heights, IL 60004
Fax: (847) 398-1692
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With a copy to: The Otto Law Group, PLLC
Attn: David Otto
900 Fourth Avenue, Suite 3140
Seattle, WA 98164
Fax: (206) 262-9513
Notice shall be deemed given upon delivery if delivered personally, on the
next day if delivered by an overnight carrier, or three (3) days after the
date of postmark if deposited in the U.S. Mail for delivery by certified
or registered mail, return receipt requested, postage prepaid, addressed,
or upon transmission if it has been given by facsimile between 9:00 a.m.
and 5:00 p.m. central time, Monday through Friday.
g. Each Party is an independent contractor under this Agreement and
nothing herein shall be construed to create a partnership, joint venture,
or agency relationship between the Parties hereto. None of the Parties
shall have authority to enter into agreements of any kind on behalf of the
other Party, other than in strict accordance with the terms of this
Agreement and neither Party shall have power or authority to bind or
obligate the other Party in any matter to any third Party.
h. This Agreement may be executed in two or more counterparts, all
of which together shall constitute one and the same instrument.
i. Facsimile signatures shall be sufficient for the purpose of
executing this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement effective the date
first stated above.
THE COMPANY:
TECHALT, INC.
By:
-------------------------------
Its President
THE CONSULTANT:
SERVICES BY DESIGNWISE, LTD.
By:
-------------------------------
Its President
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EXHIBIT 3.B
Products, systems and services for which Consultant can currently compete
include but are not limited to the following:
In building security systems including camera systems to the extent the
Consultant does not provide the link with First Responder Systems.
In building water control systems.
In building fire alarm systems.
In building wireless systems.
Non-security and building control products.
Bus and train video surveillance systems to the extent the Consultant does not
provide the link with First Responder Systems.
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SCHEDULE A
SERVICES
For purposes of the Consulting Agreement, Services shall include the following:
1. Primary Consulting Services:
Trouble-shoot enhanced VHS systems at customer site for Trouble-shooting at
customer facilities in Snow Hill, MD
Trouble-shoot enhanced VHS systems at customer site for Trouble-shooting at
customer facilities in Portsmouth RI
Trouble-shoot South Suburban Managers & Majors portable camera system
(intermittent disconnection and short range)
Survey North Chicago DPW for quotation on 3 cameras
Improve Cook Sheriff's portable camera system ("stealth" alternative)
Design and Develop a Fixed Coms Module
Research / Develop a "stealth camera system": fixed and in-vehicle
Research / Develop a "Stable" Portable Camera Stand Product and Carrying Case
Review VHS Recording System for cost reduction and/or functionality improvement
Source Code / Documentation of Assembly Language Programming for Systems and
Components including:
- Power Board of Coms Module
- Enhanced VHS System
- Over Head Console
- Interface Between VHS Recording System
- Camera Control
2. Consulting Services:
Customer support (i.e. installation issues, systematic problems, training)
Testing of deployed systems
Review of documentation created for training, system installation, system
operation, etc.
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