Exhibit 99.1
Consulting Agreement with Xxxxxxx X. Xxxxx
LETTER OF ENGAGEMENT
SEPTEMBER 15TH, 2004
This letter constitutes a legal agreement (the "Agreement") between XXXXXXX X.
XXXXX and Xxxxx Biometry Incorporated ("Xxxxx" or "the Company"). Xxxxx wishes
to engage the Consultant as a senior financial advisor and financial controller
to the executive of Xxxxx, and the Consultant hereby agrees to become engaged in
that role, under the following terms and conditions.
1. SERVICES. Services provided by the Consultant 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 corporate advice on financial accounting, controls and audit
procedures; provide assistance preparing Company's financial statements,
forecasts and budgets.
b. Help to manage the Company's internal financial planning; help to drive
Company's monthly reporting metrics.
c. Assist Company with general business planning and strategic direction
d. Assist in negotiations of contracts with potential clients
2. Further details of the scope and nature of services that may be provided by
the Consultant in this regard is provided in ANNEX "A" attached to this
Agreement.
3. This Agreement shall be for the initial term of September 15th, 2004 through
September 14th, 2005 ("Termination Date").
4. Compensation. The Company shall pay Consultant a monthly retainer fee of
$3,000 IN US DOLLARS (USD) ("Retainer Fee") which Retainer Fee shall be deferred
until the Company receives U.S$400,000 in funding (the "Funding") and shall be
paid as set forth herein ("Deferred Compensation"). Upon the Company's receipt
of the Funding, the Consultant shall commence receiving the Retainer Fee and the
Company will commence payment of the Deferred Compensation to Consultant. The
Deferred Compensation shall be paid in equal installments over a period of six
(6) months from the date of receipt of the Funding. If the Company does not
receive the Funding by December 31, 2004, the Deferred Compensation shall be
forfeited by Consultant and the Company shall not be obligated to pay the
Deferred Compensation. From the date of receipt of the Funding, the Retainer Fee
plus all reasonable direct expenses shall be payable to the Consultant on the
last business day of each month or part-month in which services are rendered.
All expenses over $500 must be pre-approved by the Company in writing.
5. Xxxxx recognizes that the Consultant is a corporate executive with financial
management and business development experience. The parties agree that his
experience will be very beneficial to Xxxxx in achieving its objectives. In
consideration of the Consultant becoming engaged with Xxxxx and in further
consideration of the non-competition clauses of this Agreement that exclude the
Consultant from taking any assignments or entering into relationships that may
be of a competitive or conflicting nature to Xxxxx interests, Xxxxx agrees to
grant the Consultant 25,000 fully vested shares upon execution of this Agreement
and 100,000 incentive stock options issued pursuant to the Company's U.S. Stock
Option Plan, that has been approved by the Company's shareholders and board of
directors. Upon execution of this Agreement, the Company will grant the
incentive stock options at the strike price fixed by the board with vesting as
set forth below along with the standard form of Stock Option agreement (a copy
of which is attached hereto).
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These incentive options will vest as follows:
(I) 25,000 incentive options will immediately vest when the Consultant
has helped to implement a internal financial reporting strategy and
has assisted in drafting a new financial pro forma for the Company
during the time period of this Agreement. If the Board determines
that the Consultant has failed to meet these milestones on or before
the Termination Date, the options granted hereunder will not vest
and the options will expire worthless.
(II) 100,000 incentive options will immediately vest when Consultant has
played a major role in developing a comprehensive internal financial
control strategy, as determined by Xxxxx'x Board of Directors in its
sole discretion, during the time period of this Agreement. If the
Board determines that the Consultant has failed to develop strategic
and product positioning opportunities for Xxxxx on or before the
Termination Date, the options granted hereunder will not vest and
the options will expire worthless.
A. NON-COMPETITION AND NON-DISCLOSURE. The Consultant represents
and warrants that:
a. In executing this Agreement, he does not believe he is
presently involved in, nor will become involved in, any conflict of
interest situation that would prevent him from acting in the Xxxxx'x
best interests. In this regard the Consultant will identify all such
present contract activities he 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 Consultant 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 Consultant.
c. The provisions of these subparagraphs shall survive any
expiration or termination of this Letter of Engagement.
C. 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 January 31, 2005, then all options issued under para. 3a above
shall automatically vest. If it is determined by the Company that
termination is brought about due to the Consultant's non-performance
or material misrepresentation, as determined by Xxxxx'x Board of
Directors in its sole discretion, then all options which have not
vested shall automatically be cancelled and deemed cancelled on the
books of the Company without any notice to Consultant or any further
action required on behalf of the Company, its officers and
directors. Consultant herein waives any and all rights to said
options and waives his right to contest the Board's decision.
b. Should the Consultant terminate this Agreement prior to the
date of issuance of the 75,000 options as described in paragraph 3a
above, then all options which have not vested shall automatically be
cancelled and deemed cancelled on the books of the Company without
any notice to Consultant or any further action required on behalf of
the Company, its officers and directors. Consultant herein waives
any and all rights to said options and waives his right to contest
the Board's decision.
Signed: /s/ XXXXXXX X. XXXXX
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XXXXXXX X. XXXXX
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Print name
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Date
/s/ XXXXX BIOMETRY INC.
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XXXXX BIOMETRY INC.
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Print name
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Date
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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 Consultant with regard to this Agreement.
o Maintaining the financial records of the Company, including its general
ledger, accounts payable, accounts receivable, inventories and other
accruals, payroll journal, and general journal using generally accepted
accounting principles and practices;
o Preparing the Company's financial statements;
o Preparing and filing the Company's annual tax returns;
o Performing financial analysis and developing a financial pro forma
o Submitting records to the Company's Internal Auditor quarterly/annually
and in accordance with the deadlines set forth by the SEC;
o Submitting recommendations for improvements in management of the Company's
fiscal affairs to the Company's CFO and the Chair of the Company's Audit
Committee;
o Assisting the CFO in preparing an annual budget for presentation at the
annual director's meeting;
o Submitting monthly reports to the CFO on financial status, metrics;
o Drafting Internal Financial Controls for the Company compliant with
Xxxxxxxx-Xxxxx
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