CONSULTING AGREEMENT
EXHIBIT 10.1
This Consulting Agreement (this “Agreement”) is entered into as of September 25, 2008, by and
between EZPAWN Nevada, Inc. (“Client”), and Xxxxx XxXxxx (“XxXxxx”).
RECITALS
WHEREAS, Client is in the pawn, consumer lending, and retail sales of used merchandise
business, and Client, XxXxxx and certain business entities owned by XxXxxx have entered into an
agreement under which the Client will purchase eleven pawnshops owned by Pawn Plus 1, LLC, Pawn
Plus 2, LLC, Pawn Plus 3, LLC, Pawn Plus 4, LLC, Pawn Plus 5, LLC, Pawn Plus 6, LLC, Pawn Plus 7,
LLC, Pawn Plus 8, LLC, The Pawn Place, Inc., and ASAP Pawn, LLC which are engaged in same or
similar business as Client; and
WHEREAS, Client desires to engage XxXxxx for the purposes set forth in this Agreement; and
WHEREAS, XxXxxx desires to perform such services for Client under the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, and the mutual covenants,
representations, warranties, and agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, XxXxxx and Client,
intending to be legally bound, hereby agree as follows:
1. Services. Client hereby engages XxXxxx to provide advisory services related to
acquisitions, real estate, construction, and government affairs for Client’s businesses and
operations in the State of Nevada, as reasonably modified by Client from time to time. The
advisory services (the “Services”) specifically include but are not limited to: providing guidance
and counsel with respect to any pawnshops, pawn licenses, and other financial services businesses
which Client may wish to acquire; coordinating relocations of stores and development of potential
sites including identification, construction, licensing, and zoning; and coordinating government
and regulatory affairs activities at the local, county, and state levels. The parties agree that
XxXxxx shall not be required to devote his full time and resources to the performance of the
Services, but only such time as is commercially necessary to perform the Services, estimated by the
parties to average approximately sixteen (16) hours per month.
2. Compensation. XxXxxx hereby accepts the engagement described in paragraph 1 above.
As compensation for the Services, Client agrees to pay XxXxxx an annual retainer fee of
Two Hundred Thousand Dollars ($200,000.00), payable in quarterly installments of $50,000.00
each (the “Retainer”). In addition, the parties may mutually agree to certain success bonuses,
paid to XxXxxx in addition to the Retainer upon the achievement of certain goals specified by the
parties.
3. Term. This Agreement is expressly contingent upon and subject to the closing of
the transaction contemplated by the purchase agreement referenced above and effective as of the
date of such closing (“Effective Date”). The Initial Term of XxXxxx’x engagement shall extend for
a period of five years from the Effective Date of this Agreement. The parties, upon mutual
written agreement, may extend the term beyond the Initial Term.
4. Termination. This Agreement may be terminated prior to the last day of the Initial
Term, or during any extension, as follows:
(a) Termination by Mutual Consent. This Agreement may be terminated at any time by
the written mutual consent of the Client and XxXxxx.
(b) Termination by the Client for Cause. This Agreement may be terminated by the
Client at any time for Cause after delivery to XxXxxx of a written notice specifying the conduct
giving rise to the termination. XxXxxx shall have 30 days after receipt of such written notice to
cure. If XxXxxx fails or is unable to cure within the 30 days, this Agreement shall immediately
terminate. As used in this subparagraph 4(b) of the Agreement, the term “Cause” means any material
breach of this Agreement including, but not limited to failure to provide the Services, or breach
of any provision in paragraph 6, fraud, theft or gross malfeasance on the part of the XxXxxx,
including, without limitation, conduct of a felonious or criminal nature, conduct involving moral
turpitude, embezzlement or misappropriation of assets. In the event of termination by Client for
Cause, XxXxxx will be paid only the portion of the Retainer that has accrued through the effective
date of the termination.
(c) Termination by XxXxxx. This Agreement may be terminated by XxXxxx at any time for
Cause after delivery to Client of a written notice specifying the conduct giving rise to the
termination. Client shall have 30 days after receipt of such written notice to cure. If Client
fails or is unable to cure the breach within the 30 days, this Agreement shall immediately
terminate. As used in this subparagraph 4(c) of the Agreement, the term “Cause” means any material
breach of this Agreement by Client including, but not limited to the failure to pay the Retainer.
In the event of termination by XxXxxx for Cause, XxXxxx will be paid the remaining portion of the
Retainer as specified in paragraph 2 of this Agreement for the remainder of the Initial Term or any
extension thereof.
(d) Termination upon Death or Disability of XxXxxx. This Agreement will be terminated
immediately upon the death or permanent disability of XxXxxx, as determined in good faith by the
Client at such time as XxXxxx becomes physically or mentally incapable of properly performing his
duties under this Agreement and such incapacity will exist or can reasonably be expected to exist
for a period of ninety days or more.
5. Expenses. Client shall reimburse XxXxxx for all reasonable out-of-pocket expenses
incurred by XxXxxx in connection with the performance of services under this Agreement including,
but not limited to, expenses such as travel, meals, printing, copying, delivery and mailing. XxXxxx
shall provide Client a statement of expenses on a monthly basis, and Client shall reimburse XxXxxx
for such expenses within 15 days of Client’s receipt of the statement of expenses.
6. Confidentiality, Non-Disclosure, and Other Covenants.
(a) Detrimental Statements. XxXxxx will not, directly or indirectly, in any
individual or representative capacity whatsoever, make any statement, oral or written, or perform
any act or omission which is or could be detrimental in any material respect to the goodwill of the
Client.
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(b) Covenant of Confidentiality. XxXxxx recognizes and acknowledges that he will be
provided access to confidential information and trade secrets of Client, and other entities doing
business with Client relating to technical information, information of a business nature, including
but not limited to past, present or future business policies, budgets, projections, business plans,
business and governmental relations strategies, costs, profits, market shares, sales, customer and
employee lists, organizational structure, operating performance, and other proprietary research,
development, marketing, financial, and business-related information or activities of Client or may
discover, conceive, perfect, or develop, solely or jointly with others, other confidential
marketing, customer, financial, and business information or strategies of Client (hereinafter
“Confidential Information”). Such Confidential Information constitutes valuable, special, and
unique property of Client, and/or other entities doing business with Client. In consideration of
such access to Confidential Information, XxXxxx will not, during or after the term of this
Agreement, make any use of, or disclose any of such Confidential Information to any person or firm,
corporation, association, or other entity for any reason or purpose whatsoever, except as is
generally available to the public or as specifically allowed in writing by an authorized
representative of Client. Further, XxXxxx may disclose Confidential Information if such disclosure
is required by applicable law, rule or regulation or if in response to an order or request from a
court, or other governmental agency or regulatory commission to disclose such Confidential
Information; provided, however, that before making such disclosure, XxXxxx shall first give Client
prompt and reasonable notice of such request to afford Client the opportunity to object to the
order or request, and/or to obtain, at Client’s sole expense, a protective order covering the
Confidential Information to be disclosed. This subsection (b) will indefinitely survive the
expiration or termination of this Agreement.
(c) Return of Confidential Information. Upon the expiration of the term or
termination of this Agreement, XxXxxx will surrender to Client all tangible Confidential
Information in the possession of, or under the control of, XxXxxx, including, but without
limitation, the originals and all copies of all software, drawings, manuals, letters, notes,
notebooks, reports, and all other media, material, and records of any kind, and all copies thereof
pertaining to Confidential Information acquired or developed by XxXxxx during the term of this
Agreement (including the period preceding the Effective Date). XxXxxx further agrees that upon
termination of this Agreement, for any reason, and at the request of Client, XxXxxx shall make
himself available and shall meet with representatives of Client. At such meeting, XxXxxx shall
fully disclose and deliver any of the above described materials in XxXxxx’x possession and, at
Client’s request, shall execute any and all documents reasonably necessary to ensure and verify
compliance with this Section 6.
(d) Covenant Not to Compete. As an ancillary covenant to the terms and conditions set
forth elsewhere in this Agreement, and in particular the covenants set forth in subsections (b) and
(c) above, and in consideration of the mutual promises set forth in this Agreement and other good
and valuable consideration received and to be received, XxXxxx will not, directly or indirectly,
own or become employed by, lease real property (except any such property formerly leased by and
voluntarily vacated by Client) to, provide financing for, invest, or otherwise provide consulting
services to, any person, business, or entity engaged or planning to become engaged in the pawn
business, retail sale of used or secondhand merchandise or jewelry, auto title loans, deferred
deposit loans, or any business competitive with Client prior to the date of termination of this
Agreement in the state of Nevada. XxXxxx understands that the Client and its affiliates have plans
to expand the scope of their activities and the geographic area of operations of Client and its
affiliates in the near future with the direct involvement of XxXxxx; therefore, XxXxxx agrees that
the limitations as to time, geographical area, and scope of activity contained in this covenant do
not impose a greater restraint than is necessary to protect the goodwill and other business
interests of
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Client, and are therefore reasonable. If any provision of this covenant is found to be
invalid in part or in whole, Client may elect, but shall not be required, to have such provision
reformed, whether as to time, area covered, or otherwise, as and to the extent required for its
validity under applicable law and, as so reformed, such provision shall be enforceable.
Notwithstanding anything herein to the contrary, this subparagraph 6(d) specifically excludes: (i)
XxXxxx’x existing business engaged in the sale and financing of used motor vehicles in Nevada; (ii)
pawnshops operated in Arizona and Oregon, and the involvement of Pawn Shop Management LLC, a Nevada
limited liability company, therewith; and (iii) XxXxxx’x position as a member of the Board of
Directors and minority investor in a bank chartered in the State of Nevada.
(e) Non-Solicitation. XxXxxx will not induce, or attempt to induce, any employee or
independent contractor of Client or Client’s affiliates to cease such employment or contractual
relationship with Client. XxXxxx furthermore agrees that in the event an employee or independent
contractor terminates their employment or contractual relationship with Client or Client’s
Affiliates, or such employee or independent contractor is terminated by Client or Client’s
Affiliates, XxXxxx, without the prior written consent of Client or Client’s Affiliate, which
consent shall not be unreasonably withheld, will not, directly or indirectly, offer employment to,
employ or otherwise enter into any agreement or contract (whether written or oral) for the services
of such employee or independent contractor.
(f) Right to Injunctive Relief. XxXxxx acknowledges that a violation or attempted
violation on his part of any agreement in this Section 6 will cause irreparable damage to the
Client and its affiliates, and accordingly XxXxxx agrees that the Client shall be entitled as a
manner of right to an injunction restraining any violation or further violation of such agreements
by XxXxxx; such right to an injunction, however, shall be cumulative and in addition to whatever
other remedies the Client may have. The existence of any claim of XxXxxx, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement by the Client of the
agreements contained in this Section 6.
(g) Duration. The provisions of subparagraph (a), (d), and (e) of this paragraph 6
shall remain in full force and effect and survive for the latter of either (1) one year beyond the
termination of the Agreement, regardless of the reason for termination; or (2) if the Initial Term
is extended as provided in paragraph 3, for one year following the expiration or termination of
this Agreement for any reason.
7. Relationship of the Parties. Nothing contained in this Agreement, nor any action
taken by either party pursuant to this Agreement, is intended or shall be construed to create or
establish any agency, partnership, joint venture, or employer/employee relationship between the
parties, and neither party hereto has any authority, nor shall either party imply it has any
authority, to act for, in any manner bind, acquire any rights as an employee of, or to incur any
obligations on behalf of or in the name of the other party. XxXxxx is an independent contractor in
all respects and for all purposes under this Agreement, and no employee or subcontractor of XxXxxx
shall be deemed to be the servant, employee, or agent of Client for any purpose whatsoever
hereunder. The parties hereto acknowledge and agree that nothing contained herein creates any
fiduciary duties between the parties, and XxXxxx may, without limitation, perform similar Services
to any and all parties other than Client, provided that the performance of any such Services do not
otherwise violate XxXxxx’x covenants and obligations under Section 6 of this Agreement.
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8. Miscellaneous.
(a) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEVADA. THE VENUE OF ANY LAWSUIT OR OTHER ACTION BASED
UPON THIS AGREEMENT SHALL BE IN XXXXX COUNTY, NEVADA.
(b) Entirety and Amendments. This Agreement embodies the entire agreement between the
parties and supersedes all prior agreements and understandings relating to the subject matter
hereof; provided, however, that this Agreement does not supersede or terminate the obligations and
assignments of XxXxxx arising under any separate assignment and nondisclosure agreement (however
styled) that may have been, or may be, entered into between the Client and XxXxxx. This Agreement
may be amended or modified only in writing.
(c) Notices. Any notice or other communication hereunder must be in writing to be
effective and shall be deemed to have been given either (1) when personally delivered to XxXxxx or
the Client; (2) if mailed, on the third day after it is enclosed in an envelope and sent certified
mail/return receipt requested in the United States mail; or (3) if by telephonic facsimile
communication, with proof of successful transmission. Any notice delivered by telephonic facsimile
communication shall be deemed effective the same day it is transmitted if by 5:00 p.m. Austin,
Texas time and the following day if after 5:00 p.m. Austin, Texas time. Either party may from time
to time change its address for notification purposes by giving the other party written notice of
the new address and the date upon which it will become effective. The address for each party for
notices hereunder is as follows:
Xxxxx XxXxxx
0000 X. Xxxxxx Xxxx Xxxxxxxxx
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
0000 X. Xxxxxx Xxxx Xxxxxxxxx
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
With a copy to:
Marquis & Aurbach
Attn: Xxxxxxx X. Xxxxxxx, Esq.
00000 Xxxx Xxx Xxxxx
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
00000 Xxxx Xxx Xxxxx
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
EZPAWN Nevada, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, General Counsel
Fax: (000) 000-0000
0000 Xxxxxxx Xxxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, General Counsel
Fax: (000) 000-0000
(d) Attorney’s Fees. In the event that either party is required to obtain the
services of an attorney in order to enforce any right or obligation hereunder, the prevailing party
shall be entitled to recover reasonable attorney’s fees and court costs from the other party.
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(e) Assignability; Binding Nature. This Agreement is binding upon the Client and
XxXxxx and their respective successors, heirs, and assigns. The rights and obligations of the
Client hereunder may not be assigned without the written consent of XxXxxx, which consent shall not
be unreasonably withheld.
(f) Headings. The headings of paragraphs contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or construction of any
provision of this Agreement.
(g) Severability. If, but only to the extent that, any provision of this Agreement is
declared or found to be illegal, unenforceable, or void, so that both the Client and XxXxxx would
be relieved of all obligations arising under such provision, it is the agreement of the Client and
XxXxxx that this Agreement shall be deemed amended by modifying such provision to the extent
necessary to make it legal and enforceable while preserving its intent. If such amendment is not
possible, another provision that is legal and enforceable and achieves the same objective shall be
substituted therefor. If the remainder of this Agreement is not affected by such declaration or
finding and is capable of substantial performance by both the Client and XxXxxx, then the remainder
shall be enforced to the extent permitted by law.
(h) XxXxxx’x Representations. XxXxxx represents and warrants that he is free to enter
into this Agreement and to perform the terms and covenants contained herein. XxXxxx represents and
warrants that he is not restricted or prohibited, contractually or otherwise, from entering into
and performing this Agreement, and that his execution and performance of this Agreement is not a
violation or breach of any other agreement between XxXxxx and any other person or entity.
(i) Counterparts. This Agreement may be executed in one or more counterparts, each of
which will be deemed to be part of the same instrument.
(j) No Third Party Beneficiary. This Agreement is for the benefit of the parties
hereto and confers no rights, benefits or causes of action in favor of any other third parties or
entities.
Executed as of the date first set forth above by:
| EZPAWN Nevada, Inc. | Xxxxx XxXxxx | |||
| By: | ||||
| Name: | ||||
| Title: | ||||
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