THIS CONSULTING AGREEMENT (the "Agreement"), dated as of November 1,
2004, by and between Kevin S. Flannery, an individual residing at 255 Farmington
Drive, Charlottesville, VA 22901 (the "Consultant") and Scan-Optics, Inc., with
its principal place of business at 169 Progress Drive, Manchester, Connecticut
06040 (the "Company").
WHEREAS, the Consultant is an independent contractor who provides
consulting services; and
WHEREAS, the Company wishes to obtain such services for its benefit.
NOW THEREFORE, in consideration of the mutual covenants set forth
herein, the parties hereto, for good and valuable consideration, the sufficiency
and receipt of which are hereby acknowledged, agree as follows:
1. Services. The Company hereby engages the Consultant to provide to
the Company consulting, advisory and related services to and for the Company as
may be reasonably requested from time to time by the Chief Executive Officer or
Board of Directors (the "Services"). The Consultant shall devote such time to
the performance of such services as may be required to fulfill his obligations
under this Agreement, but, in no event shall the Consultant devote to the
performance of such services less than six (6) hours during any month, excluding
time spent, as a director, in connection with preparing for and attending Board
and committee meetings. Consultant shall provide the Services at times and
places mutually agreed upon by the Company and Consultant.
2. Fees and Expenses.
(a) Consulting Fees. The Company shall pay to the Consultant consulting
fees of $1,666.67 per month (the "Monthly Consulting Fee"), payable in arrears
on the last day of each month. Payment for any partial month shall be prorated.
(b) Reimbursement of Expenses. The Company shall reimburse the
Consultant for all reasonable and necessary expenses incurred or paid by the
Consultant in connection with, or related to, the performance of his services
under this Agreement. The Consultant shall submit to the Company itemized
monthly statements, in a form satisfactory to the Company, of such expenses
incurred in the previous month. The Company shall pay to the Consultant amounts
shown on each such statement within thirty (30) days after receipt thereof.
(c) All Fees and Expenses shall be paid to the Consultant net of
applicable withholding, sales or similar taxes.
(a) Subject to paragraph 3(b), the term of this Agreement shall
commence on November 1, 2004 and shall continue until terminated in accordance
with this Agreement.
(b) Either party may terminate this Agreement, for any reason or no
reason, upon thirty (30) business day's prior notice (the "Termination Date") to
the other party.
Upon the termination of this Agreement pursuant to this Section 3(b),
the Company shall reimburse the Consultant for all out-of-pocket expenses
incurred by the Consultant in the performances of Services which have not been
previously reimbursed by the Company. The Monthly Fee shall be deemed fully
earned when paid.
4. Nature of Relationship. The Consultant will act under this Agreement
as independent contractors with duties solely to the Company. Nothing in this
Agreement shall be deemed to create a fiduciary, agency, employment or joint
venture relationship between the Consultant, on one hand, and the Company, on
the other hand. Nothing in this Agreement shall be deemed to confer on any
person or entity other than the Consultant and the Company or their respective
successors and assigns any relationship, rights or remedies under or by reason
of this Agreement or of the Services to be rendered by the Consultant.
5. Use of Materials. The Company acknowledges that all advice (whether
written or oral) given by the Consultant to the Company in connection with the
Services or otherwise under this Agreement is intended solely for the benefit
and use of the Company (limited to its management and its Board). The Company
agrees that, except as required by law, no such advice shall be used for any
other purpose or reproduced, disseminated, quoted or referred to at any time in
any manner, nor shall any public references to the Consultant be made by the
Company, without the Consultant's prior written consent.
6. Confidentiality. For purposes of this Agreement, "Confidential
Information" shall mean any and all information disclosed by the Company to the
Consultant relating to its business or technology that Company designates as
being "non-public" or "confidential" or which, under the circumstances
surrounding disclosure, the Consultant reasonably should recognize should be
treated as confidential. Confidential Information includes, for example and
without limitation, Company's confidential business or technical information,
such as financial information or data, marketing techniques and material,
business plans and strategies, business operation and systems, pricing policies,
information concerning employees, customers, and/or vendors, trade secrets,
discoveries, inventions, improvements, research, development, know-how, designs,
products, compositions, prototypes, or physical materials and manufacturing
processes. The Consultant may use the Confidential Information only to provide
the Services, and shall hold any Confidential Information confidential in
accordance with its customary policies relating to any non-public or proprietary
information at least as broad in scope as the Consultant's obligations
hereunder. The Consultant may only disseminate Confidential Information to those
employees, members, attorneys, consultants or associates of the Consultant who
have: (i) a demonstrable need to know; (ii) been informed of the Consultant's
obligations hereunder; and (iii) are bound by an obligation of confidentiality
to the Consultant. A breach of such agreement shall be considered a material
breach hereunder. Except as expressly provided in the preceding two sentences,
the Consultant shall not: (i) publish, disseminate or otherwise disclose or make
available Confidential Information received hereunder to any person, Consultant
or corporation without prior written consent of the Company; or (ii) use