CONSULTING AGREEMENT
This CONSULTING AGREEMENT (the "Agreement") is dated as of December 12,
2003, by and between Xxxxx Xxxxx, an individual (the "Consultant") whose address
is 0000 Xx 00xx Xxxxxx, Xxxx Xxxxx, Xxxxxxx 00000 and Powerchannel Inc., whose
address is 00 Xxxxx Xxxx Xxxxxx, Xxxxx 000 Xxx Xxxx, Xxx Xxxx 00000 a Delaware
corporation (the "Company").
WHEREAS, the Company is engaged in the sale of set-top boxes which
provide consumers with Internet access through their television sets (the
"Products");
WHEREAS, the Company desires to continue to retain the Consultant and
to ensure the continued availability to the Company of the Consultant's
services, and the Consultant is willing to accept such appointment and render
such services, all upon and subject to the terms and conditions contained in
this Agreement; and
THIS AGREEMENT SUPERCEDES ALL PRIOR AGREEMENTS AND/OR UNDERSTANDINGS
BETWEEN THE PARTIES, EXCEPT FOR THE COMPENSATION OWED FOR THE BALANCE OF THE
AGREEMENT DATED AUGUST 18 2003
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth in this Agreement, and intending to be legally bound, the
Company and the Consultant agree as follows:
1. Term. The Company hereby retains the Consultant, and the Consultant
hereby accepts such appointment with the Company commencing on the date of this
Agreement and shall thereafter continue for a period of 12 months (the "Term"),
it being understood that either party may terminate this Agreement upon no less
than 30 days written notice unless terminated earlier in accordance with its
terms. Notwithstanding any termination of the consulting relationship, at the
end of the term or otherwise, the provisions of Sections 6 and 7 shall remain in
full force and effect and the provisions of Section 7 shall be binding upon the
legal representatives, successors and assigns of the Consultant.
2. Duties.
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(a) General Duties. The Consultant shall provide general business advice to
the Company concerning its current and proposed business. The Consultant shall
report directly to Xxxxxx Xxxxxxx, the Company's Chairman and Chief Executive
Officer or any other individual designated by Xx. Xxxxxxx. The Consultant shall
use his best efforts to perform his duties and discharge his responsibilities
pursuant to this Agreement competently, carefully and faithfully.
(b) Specific Duties. Consultant has been retained by Company to provide
marketing services to the Company, specifically:
(i) Develop marketing strategies to help introduce and launch the
Company into the Hispanic and various other markets throughout
the United States;
(ii) Establish sales agencies to service such markets;
(iii) Expand the distribution of the Company's set-top boxes into
those markets;
(iv) Locate advertisers in these markets;
(v) Research marketing alliances/cross-partnerships among
appropriate partners;
(vi) Provide the Company with Consultant's sales contacts and
resources to help secure these relationships;
(vii) Represent the Company to appropriate partners and sponsors;
(viii) Provide ongoing coordination, partnership sales and
management support for the projects after launch;
(ix) Submit and execute media/marketing plans and budgets; and (x)
Perform services, as required, to support the above efforts.
(c) Devotion of Time. The Consultant shall contribute up to 40 hours per
month during such hours and days as he deems appropriate to the affairs of the
Company. The Consultant shall not enter the employ of or serve as a consultant
to, or in any way perform any services with or without compensation to, any
other persons, business or organization that competes directly or indirectly,
with the Company, or participate in or assist any business which is a current or
potential supplier, customer, or competitor of the Company to develop Products
that are the same as those being developed or under consideration for
development by the Company, with the Company without the prior written approval
of the Board of Directors of the Company.
(d) Location of Office. The Consultant shall perform the services at his
own offices, the Company's offices or any other such location the Consultant in
his sole discretion deems necessary to the performance of the services.
(e) Adherence to Inside Information Policies. The Consultant acknowledges
that the Company is publicly-held whether directly or through an affiliate,
successor, subsidiary, an acquisition or
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a merger, and as a result, shall implement inside information policies designed
to preclude its employees and those of its subsidiaries from violating the
federal securities laws by trading on material, non-public information or
passing such information on to others in breach of any duty owed to the Company,
or any third party. The Consultant shall promptly execute any agreements
generally distributed by the Company or any successor thereto, to its employees
requiring such employees to abide by its inside information policies.
3. Compensation.
(a) Fees. As consideration for the performance of the services of the
Consultant to be rendered under this Agreement, the Company hereby grants to
Consultant 450,000 unrestricted shares of its common stock immediately that will
be filed under its Employee Benefits Program and 5year options to purchase
1,500,000 shares of the Company's common stock, at an exercise price of $0.4%
per share (the "Options"). The Options shall vest in increments of 250,000
Options on the first day of each month beginning January 1, 2004. These shares
shall be deemed earned upon the execution of the Agreement The Company will use
its best efforts to cause to be filed with the Securities and Exchange
Commission a registration statement on Form S-8, covering both the shares of
common stock of the Company granted to Consultant and the shares of common stock
of the Company issuable upon the exercise of the Options.
(b) Expenses. In addition to any compensation received pursuant to Section
3(a) the Company agrees to reimburse Consultant within 15 days of invoice for
any pre-approved expenses, such as travel, hotel, entertainment, phone, faxes,
and supplies that are required to fulfill the above obligations; or advance
funds to the Consultant for all reasonable travel, entertainment and
miscellaneous expenses incurred in connection with the performance of his duties
under this Agreement, provided that such expenses are approved in advanced in
writing by the Company's Chief Executive Officer and that the Consultant
properly provides a written accounting of such expenses to the Company in
accordance with the Company's practices. Any expense under $250 will not require
pre-approval. Any pre-approved expense not paid within 15 days is subject to a
10% penalty. Such reimbursement or advances shall be made in accordance with
policies and procedures of the Company in effect from time to time relating to
reimbursement of or advances to employees.
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(c) Additional Materials and/or Services. Any additional materials and/or
other services, which are not specifically delineated herein that are authorized
by the Company shall be billed to the Company for payment in advance.
4. Exercise of Options; Cashless Exercise. The Options may be exercised, in
whole or in part, at any time and from time to time. Such exercise shall be
accomplished by tender to the Company of the purchase price set forth above as
the Options price (the "Options Price"), either (a) in cash, by wire transfer or
by certified check or bank cashier's check, payable to the order of the Company,
or (b) by surrendering all or a portion of the Options using the amount by which
the Fair Market Value, as defined, exceeds the Options Price to purchase a
number of shares of Common Stock without the payment of any cash as illustrated
in the formula in this Section 4 (a "Cashless Exercise"), together with
presentation and surrender to the Company of this Options with an executed
subscription in substantially the form attached hereto as Exhibit A (the
"Subscription"). Upon receipt of the foregoing, the Company will deliver to the
Consultant or his assigns (the "Holder"), as promptly as possible but in no
event more than three business days, a certificate or certificates representing
the shares of Common Stock so purchased, registered in the name of the Holder or
its transferee. With respect to any exercise of this Options, the Holder will
for all purposes be deemed to have become the holder of record of the number of
shares of Common Stock purchased hereunder on the date this Options, a properly
executed Subscription and payment of the Options Price is received by the
Company (the "Exercise Date"), irrespective of the date of delivery of the
certificate evidencing such shares, except that, if the date of such receipt is
a date on which the stock transfer books of the Company are closed, such person
will be deemed to have become the holder of such shares at the close of business
on the next succeeding date on which the stock transfer books are open.
Fractional shares of Common Stock will not be issued upon the exercise of this
Options. In lieu of any fractional shares that would have been issued but for
the immediately preceding sentence, the Holder will be entitled to receive cash
equal to the current Fair Market Value of such fraction of a share of Common
Stock on the trading day immediately preceding the Exercise Date. In the event
this Options is exercised in part, the Company shall issue a new Options to the
Holder covering the aggregate number of shares of Common Stock as to which this
Options remains exercisable for.
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If the Holder elects to conduct a Cashless Exercise, the Company shall
cause to be delivered to the Holder a certificate or certificates representing
the number of shares of Common Stock computed using the following formula:
X = Y (A-B)
-----
A
Where:
X = the number of shares of Common Stock to be
issued to Holder;
Y = the portion of the Options (in number of
shares of -~ Common
Common
Stock) being exercised by Holder(at the
date of such calculation)
A = the Fair Market Value of one share of
Common Stock on Exercise Date (as calculat
the ed below); and
B = Options Price.
5. Changes in Capital Structure. In the event of a change in the
corporate structure or capitalization, or if Xxxxxx Xxxxxxx is no longer Chief
Executive Officer or possesses all of the authority that he currently possesses
of the Company, the Board of Directors (subject to any required action by the
shareholders of the Company) shall make such equitable adjustments as are
necessary and appropriate to protect against dilution in the number, kind and in
the exercise price of the shares underlying the Option; provided, however, that
the Board of Directors shall not be required to make any such adjustments in the
event of a change which does not result in a dilution of at least one percent
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(1%) in the number or exercise price of the shares underlying the Option. For
the purposes of this Section 5(a), a change in the corporate structure or
capitalization of the Company shall include, but is not limited to, changes
resulting from a recapitalization, stock split, consolidation, rights offering,
stock dividend, reorganisation or liquidation.
(a) Upon the effective date of the dissolution or liquidation
of the Company, or upon a reorganization, merger or consolidation in which the
Company is not the surviving corporation, or upon a transfer of all or
substantially all of the property of the Company and its subsidiaries (taken as
a whole), the Option and all of the Optionee's rights hereunder shall terminate,
unless provision is made by the Company in connection with such transaction for
the assumption or purchase of the Option granted hereunder, or for the
substitution for the Option of a new option of the successor corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to the number,
kind of shares and the purchase price per share, in which event the Option or a
new option substituted for the Option shall continue in the manner and under the
terms as provided.
(b) If the Company does not make provision for the assumption or
purchase of the Option or the substitution of a new option in connection with
the transactions listed in this Section 5(b), then: (i) the Option shall become
fully vested (notwithstanding the vesting schedule of Section 3); (ii) the
Company shall provide the Optionee with at least 10 days prior written notice of
such transaction; and (iii) during such 10-day period, the Optionee shall be
entitled to exercise the Option.
(c) This Agreement shall not in any way limit or affect the right of
the Company to make changes in its capital structure or to merge or consolidate
or to dissolve, liquidate or sell all or any part of its business or assets.
6. Notices and Addresses. All notices, offers, acceptance and any other
acts under this Agreement (except payment) shall be in writing, and shall be
sufficiently given if delivered to the addressees in person, by Federal Express
or similar receipted delivery, by facsimile delivery or, if mailed, postage
prepaid, by certified mail, return receipt requested, as follows:
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To the Company: PowerChannel, Inc.
------------------
------------------
Facsimile: ( )
Attention: Xxxxxx Xxxxxxx
To the Consultant: Xxxxx Xxxxx
0000 XX 00xx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Telephone:(000) 000-0000
Facsimile:(000) 000-0000
With a Copy to: Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxx Xxxxxx,P.A.
0000 Xxxx Xxxxx Xxxxx Xxxx. Xxxxx 000
Xxxx Xxxx Xxxxx, XX 00000
Facsimile: (000)000-0000
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be evidence of successful facsimile delivery. Time shall
be counted to, or from, as the case may be, the delivery in person or by
mailing.
7. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement maybe by actual or facsimile signature.
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8. Attorney's Fees. In the event that there is any controversy or claim
arising out of or relating to this Agreement, or to the interpretation, breach
or enforcement thereof, and any action or proceeding is commenced to enforce the
provisions of this Agreement, the prevailing party shall be entitled to a
reasonable attorney's fee, costs and expenses.
9. Governing Law. This Agreement and any dispute, disagreement, or
issue of construction or interpretation arising hereunder whether relating to
its execution, its validity, the obligations provided therein or performance
shall be governed or interpreted according to the internal laws of the State of
Florida without regard to choice of law considerations.
10. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties and supersedes all prior oral and written agreements between
the parties hereto with respect to the subject matter hereof. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, except by a statement in writing signed by the party or
parties against which enforcement or the change, waiver discharge or termination
is sought.
11. Additional Documents. The parties hereto shall execute such
additional instruments as may be reasonably required by their counsel in order
to carry out the purpose and intent of this Agreement andd to fulfill the
obligations of the parties hereunder.
12. Section and Paragraph Headings. The section and paragraph headings
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Company and the Consultant have executed this
Agreement as of the date and year first above written.
POWERCHANNEL, INC.
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By:____________________________________________________
Xxxxxx Xxxxxxx, Chief Executive Officer
CONSULTANT:
____________________________________________________
Xxxxx Xxxxx
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