CONSULTING AGREEMENT
Exhibit
10.1
THIS
CONSULTING AGREEMENT (the “Agreement”) is entered into as of the 14 day of
April, 2006 by and between NuTech Digital, Inc., a California corporation,
with
an office at 0000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxxxxxxxxx 00000 (the “Company”) and
Digital Acquisitions Company, LLC, a Delaware limited liability company, with
an
office at 000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx xxx Xxx, Xxxxxxxxxx 00000
(the “Consultant”).
WHEREAS,
the Company wishes to obtain the services of Consultant as a consultant to
the
Company and Consultant desires to render such services to the Company on the
terms and conditions set forth below.
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants,
representations, and promises set forth below and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties agree as follows:
Consulting
Services.
Engagement.
The
Company hereby engages Consultant as a consultant to the Company and Consultant
accepts such engagement.
Services.
During
the Term (as defined below), Consultant shall render consulting services to
the
Company (the “Services”) as defined in one or more Statements of Services in the
form attached hereto as Schedule A (each, a “Statement of Services”). The
Services may include the preparation and delivery by Consultant of written
materials or other deliverables (the “Deliverables”) identified in, or
contemplated by, one or more Statements of Services. When signed by both parties
hereto, each Statement of Services shall be deemed incorporated in, and shall
form a part of, this Agreement.
Scope
and Assurances.
In
performing the Services, Consultant shall adhere to all of the Company's
reasonable policies and procedures which have been conveyed to Consultant in
writing and Consultant shall otherwise cooperate fully with the Company's Board
of Directors (the “Board”) or such other persons as may be identified in a
Statement of Services.
Compensation
and Related Matters.
Compensation.
As
compensation for Services rendered, and in consideration for Consultant
accepting the engagement set forth herein, the Company shall pay or provide
to
Consultant the compensation (the “Consulting Fee”) set forth in the Statement of
Services on the terms and in accordance with the terms set forth
therein.
Expenses.
Unless
otherwise provided in a Statement of Services, Consultant shall be entitled
to
reimbursement by the Company for all reasonable and necessary expenses incurred
by Consultant hereunder.
Other
Covenants.
Confidential
Information.
No
Disclosure.
Consultant acknowledges that Consultant may be exposed to or given access to
Confidential Information (as defined below) of the Company and of the Company's
clients, vendors, suppliers and business partners. Consultant shall hold such
Confidential Information in strict confidence and shall not at any time (either
during or after the Term) disclose, divulge, furnish or make the Confidential
Information available to any third party or otherwise use the Confidential
Information for any purpose other than for the purpose of performing
Consultant's obligations under this Agreement. Consultant shall use reasonable
efforts to advise the Company immediately in the event that Consultant learns
or
has reason to believe that a violation of this Section has occurred or is likely
to occur.
Definition.
For
purposes hereof, “Confidential Information” means any information disclosed to
Consultant during the course of the performance of this Agreement, which is
or
should reasonably be understood to be confidential or proprietary, including,
without limitation: the terms of this Agreement; information about the Company's
clients, vendors, suppliers and business partners; and information about the
Company's sales, costs and other financial information, business plans,
projections, marketing data, trade secrets, technology, product specifications,
inventions and ideas, research and development, price lists, the names and
backgrounds of personnel, personnel training and techniques and materials,
however documented, and any and all notes, analysis, compilations, studies,
summaries, and other material prepared by or for the Company or its clients,
vendors, suppliers and business partners containing or based, in whole or in
part, on any information included in the foregoing. Confidential Information
shall not include information that: (i) was in Consultant's possession prior
to
it being furnished to Consultant under the terms of this Agreement, provided
the
source of that information was not known by Consultant to be bound by a
confidentiality agreement with or other continual, legal or fiduciary obligation
of confidentiality to the Company; (ii) is now, or hereafter becomes, through
no
wrongdoing on the part of Consultant, generally known to the public; or (iii)
is
rightfully obtained by Consultant from a third party, without breach of any
obligation to the Company.
Representations
and Warranties.
Each
party hereby represents and warrants to the other that: (a) it is and, at all
times during the Term, shall be duly authorized to enter into and perform this
Agreement and each Statement of Services; and (b) the signing and performance
of
this Agreement by it shall not violate any agreement of such party with any
third party or otherwise violate the rights of any third party based upon the
relationship of such party with such third party.
Indemnification.
Each
party shall defend, indemnify, and hold the other party, and its employees,
officers, directors, shareholders, members, owners, subcontractors, agents,
successors and permitted assigns, harmless from and against any and all
liabilities, obligations, damages, deficiencies, costs and expense, including
reasonable attorneys' fees and expenses and the costs to enforce these
indemnification provisions, arising out of or relating to any third party claims
or demands based on any breach by such party of any of such party's
representations, warranties, covenants or obligations contained herein, or
the
in accuracy of any of such representations or warranties. In addition, and
without limiting the generality of the foregoing, the Company shall defend,
indemnify, and hold Consultant, and its employees, officers, directors,
shareholders, members, owners, subcontractors, agents, successors and permitted
assigns, harmless from and against any and all liabilities, obligations,
damages, deficiencies, costs and expense, including reasonable attorneys’ fees
and expenses and the costs to enforce these indemnification provisions, arising
out of or relating to any claims or demands from the creditors of the Company
and any claims or demands from parties acting on behalf of such creditors or
the
Company, including, but not limited to, any receiver, bankruptcy trustee or
creditors committee. Within five (5) business days from the date hereof, the
Company shall add Consultant and Consultant's representatives as additional
insured parties under the Company's D&O insurance policy. Such policy shall
have liability protection for Consultant and its representatives of at least
$5
million.
Termination.
Termination.
The
Company may terminate Consultant's engagement hereunder only in the event that
Consultant commits a material breach of this Agreement which is not cured by
Consultant within thirty (30) days of its receipt of a notice thereof from
the
Company. Consultant may terminate Consultant's engagement hereunder at any
time
for any reason or no reason upon ten (10) days advance written notice to the
Company.
Compensation
Upon Termination.
In the
event Consultant's engagement is terminated pursuant to Section 6.1 above,
Consultant shall receive, or otherwise shall be entitled to continue to enjoy
and benefit from, all compensation granted to Consultant hereunder, including,
but not limited to, all stock and stock options purchased or granted to
Consultant (and related registration rights), and any reimbursable expenses,
to
which Consultant was entitled as of the date of termination and the Company
shall have no further obligations to Consultant under this Agreement, except
for
its obligation to indemnify Consultant and provide insurance coverage to
Consultant under Section 5 above.
Return
of Company Property.
Upon
termination of Consultant's engagement hereunder for any reason, Consultant
shall return to the Company all of the Company's property and any and all other
Company materials that are in Consultant's possession as of the date of
termination (collectively, the “Company Property”). The Company Property shall
be delivered to the Company at its office (at the address stated above) within
five (5) days after the date of the Company's request therefor or the date
of
termination, as the case may be.
Miscellaneous.
Independent
Contractor.
Consultant is acting as independent contractor hereunder. Consultant is without
authority to and shall not bind or obligate the Company in any manner
whatsoever, or incur any debt or obligation for the account of the Company
without the written consent of the Company. Consultant shall be responsible
for
paying any income taxes, and making any employment related deductions,
attributable to the fees and expenses received by Consultant
hereunder.
Notices.
All
notices and communications that are required or permitted to be given hereunder
shall be in writing and shall be deemed to have been duly given (i) if by hand
delivery, upon receipt by the receiving party, or (ii) if mailed, three (3)
business days after deposit in the U.S. Mail, postage prepaid. Notices to the
Company shall be delivered to it at the address stated for the Company on page
1
hereof and notices to Consultant shall be delivered to it at the address stated
for Consultant on page 1 hereof or to such other address as may be specified
in
a written notice delivered by one party to the other party
hereunder.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
and
year first above written.
| NUTECH DIGITAL, INC. | DIGITAL ACQUISITIONS COMPANY, LLC | |
| |
|
|
| By: | By: | |
|
Name:
Title:
|
Name:
Title:
|
|
SCHEDULE
A
STATEMENT
OF SERVICES
This
Statement of Services is issued pursuant to the Consulting Agreement dated
as of
April 14 2006 between NUTECH DIGITAL, INC. a California corporation (the
“Company”) and DIGITAL ACQUISITIONS COMPANY, LLC, a Delaware limited liability
company (the “Consultant”). Capitalized terms not otherwise defined herein shall
have the respective meanings ascribed to them in the Consulting
Agreement.
1. Description
of the Services:
Consultants shall provide advice and recommendations to Company with respect
to:
long term and short term financing of Company's operations; selection and
management of key employees; assessment of new business opportunities;
management of relationships with existing customers and suppliers; and such
other services as may be agreed upon by the parties.
2. Consulting
Fees:
As
compensation for Consultant's services hereunder, and in consideration of
Consultant agreeing to be engaged by Company under the terms hereof, Company
and
Consultant hereby agree that Consultant shall be entitled to receive the
following:
(a) Pursuant
to that certain Distribution Agreement, between the parties dated as of March
27, 2006 (the “Distribution Agreement”), Consultant paid to the Company the sum
of $126,000.00 as an advance against future royalties payable to Company under
the Distribution Agreement (the “Advance”). The Company hereby agrees that at
any time after the date hereof, Consultant shall have the right, but not the
obligation, from time to time, to convert all or any portion of the Advance
that
has not at the time of conversion been recouped by Consultant from Net Proceeds
under the Distribution Agreement, into shares of common stock, no par value
per
share (the “Common Stock”), of the Company. The price per share shall be equal
to the lesser of $0.05 (subject to equitable adjustment in the event of a stock
split, stock dividend or other recapitalization event) or the Fair Market Value
of the Common Stock on the date that notice is given to the Company of
Consultant’s election to so convert all or a portion of the Advance. For
purposes of this Agreement, the term “Fair Market Value” shall have the meaning
ascribed to such term in the Company’s Amended and Restated 2003 Consultant
Stock Plan (the “Consultant Stock Plan”).
(b) Upon
execution and delivery of this Agreement, Consultant shall pay to the Company
the sum of $24,000.00 for 600,000 shares of the Common Stock of the Company.
The
number of such shares of Common Stock to be delivered to Consultant shall be
determined by taking the sum of $24,000.00 and dividing it by a price per share
equal to the lesser of $0.05 (subject to equitable adjustment in the event
of a
stock split, stock dividend or other recapitalization event) or the Fair Market
Value of the Common Stock on the date of purchase. Notwithstanding the
foregoing, in the event Consultant elects not to pay the sum of $150,000.00
to
the Company in accordance with paragraph (d) below, then Consultant shall have
the right to recoup the aforementioned sum of $24,000.00 from future royalties
payable to Company under the Distribution Agreement.
(c) Upon
execution and delivery of this Agreement, the Company shall grant to Consultant
options to purchase an aggregate of 23,000,000 shares of Common Stock under
the
Consultant Stock Plan. Such options shall have an exercise price that is equal
to the Fair Market Value on the date of this Agreement. All such options shall
be fully vested as of the date of grant. The options shall be exercisable for
a
period of ten years from the date of grant and shall continue to be exercisable
after Termination (as defined in the Consultant Stock Plan) for any reason
whatsoever or for no reason.
(d) Consultant
hereby agrees that if the conditions set forth in Schedule
A-1
attached
hereto are satisfied on or prior to sixty (60) days from the date hereof (the
“Investment
Date”),
Consultant shall pay to the Company $150,000.00 and Consultant shall elect
what
portion of such amount shall be deemed to be an exercise of options granted
pursuant to paragraph (c) above and/or what portion of such amount shall be
deemed to be the purchase price for newly issued shares of Common Stock. The
purchase price of any newly issued shares of Common Stock shall be deemed to
be
the lesser of $0.05 per share or the Fair Market Value at the date that
Consultant gives notice to the Company of its election to purchase such newly
issued shares of Common Stock. Upon the issuance of any newly issued shares
of
Common Stock pursuant to this paragraph (d) or shares issued to Consultant
under
paragraphs (a) (b) and (c) above, the Company and Consultant shall enter into
a
registration rights agreement in substantially the form attached hereto as
Schedule
A-2
that
grants both demand and piggyback registration rights under the Securities Act
of
1933, as amended, with respect to all such shares of Common Stock.
3. Reimbursable
Expenses:
Company
shall reimburse Consultants for all expenses reasonably incurred in connection
with the rendition of Consultant's services hereunder.
Dated
as
of: April
14,
2006
| NUTECH DIGITAL, INC. |
DIGITAL
ACQUISITIONS COMPANY, LLC
|
|
| |
|
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| By: /s/ Xxx Xxxxxx | By: | /s/ Xxxxx Xxxxxxxx |
|
Name:
Xxx Xxxxxx
Title:
President
|
Name:
Xxxxx Xxxxxxxx
Title:
CEO
|
|
|
|
||
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SCHEDULE
A-1
CONDITIONS
THAT MUST BE MET UNDER SECTION 2 (d) OF SCHEDULE A-1
1. The
Company shall terminate its distribution/sales arrangement with Xxxxx in Canada.
The deals Xxxxx put in place prior to such termination, specifically Canada
and
Australia, shall remain in full force and effect and be honored.
2. Xxx
Xxxxxx shall resign as CEO of the Company and any other office he holds with
the
Company.
3. The
Company shall not enter into any agreement or commitment with any vendor,
supplier or other third party without first consulting with
Consultant.
4.
Consultant shall have completed its due diligence review of the Company and,
as
a result thereof, is satisfied that the Company can and will carry out the
recommendations made by Consultant hereunder.
-8-
SCHEDULE
A-2
The
parties intend to attached hereto a registration rights between the parties
that
grants both demand and piggyback registration rights to Consultant under the
Securities Act of 1933, as amended, with respect to all shares of Common Stock
granted to Consultant hereunder. If, for any reason, such registration rights
agreement is not entered into by the parties and attached hereto upon the
execution and delivery of this Agreement, then Consultant shall have such demand
and piggyback registration rights as designated by Consultant in accordance
with
applicable law.
-9-
