CONSULTING AGREEMENT
EXHIBIT
10.3
CONSULTING
AGREEMENT
This
Agreement is made and entered into as of the 1st
day of
March, 2008 (the “Effective Date”), by and between A&C
Coatings, LLC,
a
Delaware limited liability company, whose address is 000 Xxx Xxxx Xxxxx,
Xxxxxxxxxxxxx, Xxxxxxxx 00000 (hereinafter referred to as "Company"), and Xxxxx
X. Xxxxxx, MD, PhD. Whose address is 000 Xxxxxxxxxx Xxxxx, Xxxxxxxxxxxxx,
Xxxxxxxx 00000 (hereinafter referred to as "Consultant").
WHEREAS,
Company is in the business of, among other things, applying powder plastic
spray
coatings that reduce and/or mitigate microbe levels on surfaces on which the
coatings are applied; and
WHEREAS,
Company desires to provide its powder plastic spray coatings to public
facilities (e.g., schools, supermarkets etc) and in particular healthcare
facilities (e.g., hospitals, clinics, doctor offices, etc): and
WHEREAS,
Consultant has represented to the Company that the Consultant can introduce
the
Company to public and healthcare facilities, as well as other health care
providers, and to provide the consulting services more particularly described
below; and
WHEREAS,
the Company desires to retain the services of Consultant to perform the services
designated on Exhibit “A” on the terms and conditions hereinafter
provided.
NOW,
THEREFORE, in consideration of the foregoing, and other good and valuable
considerations, the receipt and sufficiency of which are mutually acknowledged,
the parties agree as follows:
1.
Services.
Subject
to the terms and conditions herein, Company hereby retains Consultant to provide
the specific services described on Exhibit “A” attached hereto and hereby made a
part hereof.
2.
Compensation.
In
consideration of the services to be provided by Consultant, Company will
compensate Consultant in the manner described on Exhibit “B” attached hereto and
hereby made a part hereof. Compensation by Company to Consultant will continue
throughout the 3-year time period of this agreement and for a minimum of 2-years
thereafter (i.e., 2-years after scheduled or early termination of initial 3-year
consultant agreement).
3.
Covenants,
Representations and Warranties of Consultant.
Consultant hereby covenants, represents and warrants to Company as follows:
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a.
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Consultant
has the right, power and authority to enter into this Agreement and
to
perform all of its obligations
hereunder.
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b.
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The
execution of this Agreement by Consultant and the performance of
the
services to be provided by Consultant hereunder will not constitute
a
breach or default under any other agreement or commitment to which
Consultant may be a party or otherwise
bound.
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1
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c.
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Consultant
will provide all services in a professional and timely manner in
compliance with all applicable laws, rules and
regulations.
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d.
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Consultant
has had an opportunity to review the proposed independent contractor
relationship with counsel of Consultant’s choice, and that Consultant and
such counsel are of the opinion that the relationship created by
this
Agreement is a bona fide independent contractor relationship and
not
one between an employer and
employee.
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e.
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The
performance by Consultant of all of the terms of this Agreement and
as an
independent contractor for the Company does not, and will not, breach
any
agreement to keep in confidence proprietary information, knowledge
or data
acquired by Consultant in confidence or in trust prior to the date
hereof,
and Consultant will not disclose to the Company, or induce the Company
to
use, any confidential or proprietary information or material belonging
to
any previous employer or others. Consultant agrees not to enter into
any
agreement either written or oral in conflict
herewith.
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f.
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Consultant
acknowledges that the Company has a significant interest in maintaining
the confidentiality of certain information disclosed or to be disclosed
to
Consultant or to which Consultant will have access and that the provisions
of this Agreement are fair and
reasonable.
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g.
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Consultant
will communicate with Company in the manner preferred by Company
(i.e. via
e-mail, telephone, etc.) as specified by Company from time to
time.
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4.
Term
and Termination.
Unless
sooner terminated as provided herein, the term of this Agreement shall be for
a
period of three years from the Effective Date. Either party shall have the
right
to terminate this Agreement in the event of a material breach by the other
party
and failure of such breaching party to cure such breach within 10 days of
receipt of written notice of an alleged breach. Company shall have the right
to
terminate the services of Consultant at any time; however, unless Consultant
is
in breach of this Agreement, the Company will continue to pay Consultant the
commissions described on Exhibit “B” for the period and in the manner described
on Exhibit “B”. Furthermore, the Company shall have the right to terminate this
Agreement in the event Consultant does not introduce any Providers to Client
within 24 months of the Effective Date which result in an order for the
Company’s products or services within 36 months of the Effective Date.
5.
Independent
Contractor Relationship.
This
Agreement does not constitute a hiring by any party. The parties hereto are
and
shall remain independent contractors bound by the provisions hereof. Company
shall not withhold from Consultant any amounts for taxes or other items. Company
shall not make any premium payments or contributions for any workmen's
compensation or unemployment compensation for Consultant. Consultant will not
be
entitled to any of the fringe or supplemental benefits of the Company. Except
as
otherwise specifically provided herein, Consultant shall have no right or
authority to bind or obligate Company in any manner whatsoever.
2
6.
Indemnification.
Consultant hereby agrees to indemnify and hold harmless Company, its affiliates,
and their respective owners, officers, directors, employees and agents (the
“Indemnified Parties”) from and against any and all claims, losses, damages,
costs, liabilities (including but not limited to fines, taxes and tax
assessments) and expenses (including but not limited to court costs and
attorneys fees incurred in defending any such claim) arising out of (i) the
performance of Contractor’s services hereunder; or (ii) breach by Contractor of
the covenants, representations and warranties hereunder.
Company
hereby agrees to indemnify and hold harmless Consultant, from and against any
and all claims, losses, damages, costs, liabilities (including but not limited
to fines, taxes and tax assessments) and expenses (including but not limited
to
court costs and attorneys fees incurred in defending any such claim) arising
out
of (i) the performance of Companies products and services hereunder; (ii)
unanticipated harmful effects of Companies products and services to individuals,
groups of individuals and facilities exposed to such harmful effects;
Or
(iii)
breach by Company of the covenants, representations and warranties hereunder.
7.
Restrictive
Covenants.
Consultant covenants and agrees with Company as follows:
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a.
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Consultant
shall not, either during the term of this Agreement or for a period
of
five (5) years after the termination or expiration of this Agreement,
use
for its own benefit, or for the benefit of any other person or legal
entity, or to the detriment of Company, its successors or assigns,
or
disclose to any person, firm or corporation, any secret, private
or
confidential information, proprietary knowledge or trade secret of
and
concerning the business and affairs of Company which Consultant may
have
acquired in the course of, or as incident to its relationship with
Company
(whether relating to marketing plans, financial information, designs,
methods, past, present or prospective customers, associates and employees
or otherwise).
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b.
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During
the term of this Agreement and for a period of two (2) years after
the
termination or expiration of this Agreement, Consultant will not,
directly
or indirectly, as an individual or on behalf of a firm, corporation,
partnership or other legal entity, engage, solicit, entice, urge
or
otherwise encourage any employee of Company, or any subcontractors
or
other independent contractors of Company to terminate their contractual
or
employment relationship with
Company.
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3
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c.
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Upon
termination of this Agreement or upon the earlier request of Company,
Consultant agrees to promptly surrender and deliver to the Company
all
records, documents and data of any nature pertaining to any trade
secret
or confidential information of the Company and Consultant will not
take
with it any description containing or pertaining to any confidential
information, knowledge or data of the Company which Consultant may
produce
or obtain during the term of this
Agreement.
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d.
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Consultant
agrees that it will not, from and after the date hereof, encourage
or
entice any customer/client or supplier of the Company to cease doing
business with the Company.
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e.
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During
the term of this Agreement and for a period of three (3) years from
the
expiration or earlier termination of this Agreement, Consultant will
not,
directly or indirectly, provide any services to any of Company’s
customers/clients, which services compete directly or indirectly
with the
services then being offered by Company or its
affiliates.
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8.
Governing
Law/Venue.
This
Agreement shall be interpreted and enforced in accordance with the laws of
the
Commonwealth of Kentucky. Any litigation arising out of this Agreement shall
be
brought only in Jessamine County, Kentucky. The parties hereby consent to the
personal jurisdiction of the state and federal courts situated in Jessamine
County or Fayette County, Kentucky.
9.
Assignment.
This
Agreement may not be assigned by Consultant without the prior written consent
of
Company.
10.
Entire
Agreement.
This
Agreement constitutes the entire agreement and understanding between the parties
hereto with regard to the subject matter hereof, and supersedes all previous
and
contemporaneous oral or written agreements. This Agreement may not be modified
or amended other than by a written instrument executed by both
parties.
11.
Binding
Effect.
This
Agreement shall be binding upon and inure to the benefit of the respective
successors, permitted assigns, heirs and legal representatives of the parties
hereto.
12.
Injunctive
Relief.
Consultant acknowledges and agrees that Company's remedy at law for any breach
by Consultant under this Agreement would be inadequate and therefore agrees
and
consents that temporary and permanent injunctive relief may be granted in any
proceeding which may be brought to enforce any provision of this Agreement,
without the necessity of proof of inadequate remedy at law or actual damage,
and
without being required to post a bond. If the scope of any restriction contained
in this Agreement is too broad to permit enforcement of such restriction to
its
full extent, then such restriction shall be enforced to the maximum extent
permitted by law, and Consultant agrees that such scope may be judicially
modified accordingly in any proceeding brought to enforce such
restriction.
4
13.
Attorneys
Fees.
In the
event of any litigation between the parties hereto arising out of this
Agreement, the prevailing party in any such litigation shall be entitled to
an
award of their court costs, expenses and attorneys fees incurred in connection
with such litigation, at all trial and appellate levels, in addition to any
other or further relief to which such prevailing party may be
entitled.
14.
Cooperation.
The
parties agree to take such further action and to execute such further
documentation as the other party may reasonably request to effectuate the
purposes and intent of this Agreement.
15.
Notices.
All
notices, requests, demands, consents and other communications required or
permitted under this Agreement shall be in writing (including telex and
telegraphic communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to the appropriate party at its
address set forth above or to such other address as that party may designate
by
notice complying with the terms of this Section. Each such notice is deemed
delivered: (a) on the date delivered if by personal delivery; (b) on the date
of
transmission, with confirmed answer back if by telefax or other telegraphic
method; or (c) on the date upon which the return receipt is signed or delivery
is refused or the notice is designated by the postal authorities or courier
service as not deliverable, as the case may be, if mailed or
couriered.
16.
Severability.
All
provisions of this Agreement are severable from the others and this Agreement
shall be interpreted and enforced as if all completely invalid or unenforceable
provisions were not contained herein; all partially valid and enforceable
provisions shall be enforced to the extent they are intelligible, valid and
enforceable.
17.
Headings.
The
section headings contained herein are for reference purposes only and shall
not
in any way affect the meaning or interpretation of this Agreement.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date the
first indicated above.
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WITNESSES:
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A&C
Coatings, LLC
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By:
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Date:
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| Consultant: | |||
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By:
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Xxxxx
X. Xxxxxx, MD, PhD.
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Date:
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5
EXHIBIT
“A”
DESCRIPTION
OF CONSULTING SERVICES
Consultant
hereby agrees to provide the following services to Company during the term
of
this Agreement:
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1.
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Consultant
shall introduce Company to prospective public clients including
appropriate facilities (e.g., schools, supermarkets, athletic facilities)
and in particular healthcare facilities (e.g., hospitals, operating
rooms,
intensive care units, clinics, physician offices, etc) and other
health
care providers (collectively
“Providers”).
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2.
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Consultant
will make presentations to Providers introducing the Company’s products
and services to such Providers.
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3.
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Consultant
will advise and consult with Company on public and healthcare and
toxicology issues as they relate to the business of the
Company.
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4.
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Consultant
will establish and recruit members for a Scientific Advisory Board
for the
Company.
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5.
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Consultant
will consult with and advise the Company on regulatory issues as
they
relate to the business of Company and the performance of its services
toward public and healthcare facility
applications.
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6.
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Consultant
shall supply Company with written reports not less than monthly describing
the status of Consultant’s services hereunder.
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6
EXHIBIT
“B”
COMPENSATION
The
Company will pay to Consultant, as its sole compensation hereunder, the
following:
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1.
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For
the 12-month period commencing on the Effective Date, the Company
shall
pay to Consultant a commission equal to 2% of the Gross Revenues
actually
received by the Company for products and services provided by the
Company
to Providers, whether or not the Providers were introduced to Company
by
Consultant.
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2.
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For
the second 12-month period from the Effective Date, the Company shall
pay
to Consultant: (a) a commission equal to 2% of the Gross Revenues
actually
received by the Company for products and services provided by the
Company
to Providers, whether or not the Providers were introduced to Company
by
Consultant; and (b) a commission equal to 1% of the Gross Revenues
actually received by the Company for products and services provided
by the
Company to Providers who were introduced to the Company by
Consultant.
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3.
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To
avoid any confusion as to whether or not a particular Provider was
introduced to the Company by Consultant, Consultant must notify the
Company in writing (or via e-mail) of the name of a particular Provider
that Consultant would like to introduce to the Company (the “Introduction
Notice”). If the Company notifies Consultant in writing (or via e-mail)
within 3 business days of the date it receives the Introduction Notice
that the Company is already negotiating or doing business with such
Provider, or in the event, for any reason, the Company chooses not
to do
business with such Provider, then in such event the Company shall
not be
obligated to pay Consultant the commission referred to in Section
2(b)
above in the event the Company ultimately does business with such
Provider. In the event the Company either requests, within 3 business
days
of its receipt of the Introduction Notice, that Consultant introduce
the
Company to the Provider, or in the event the Company fails to respond
to
the Introduction Notice within the 3 business day period described
above,
the Provider will be deemed a “Qualified Provider”, and the Company will
be obligated to pay Consultant the commission described in Section
2(b)
above.
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4.
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The
commission payments due to Consultant hereunder shall be paid monthly
by
the 15th
day of each month based upon Gross Revenues actually received by
the
Company from Providers during the prior
month.
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7
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5.
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For
purposes of this Agreement, the term “Gross Revenues” means the entire
amount of revenues actually received by the Company from Providers
during
the Term, less only applicable sales and related taxes, if any, refunds,
rebates, and other credits issued to the Providers. In the event
the
Company refunds any money to a Provider after the Company has paid
a
commission to Consultant, the Company will have the right to offset
the
commission applicable to the refund against future commissions due
Consultant hereunder.
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6.
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In
addition to the foregoing, during the first 12 months of the term
of this
Agreement, the Company shall pay Consultant a monthly Professional
Fee
related to ongoing company directed consultation services. This
Professional Fee will be paid at the rate of $250/hour with a minimum
per
month of 4-consultant hours (e.g., $1,000/month minimum professional
fee)
regardless of company direction of Consultant services. The Professional
Fee due to Consultant hereunder shall be paid monthly by the
15th
day of each month. Any Professional Fee hours in excess of 4 hours
per
month requires the prior written consent of the Company. Amounts
paid to
Consultant for Professional Fees shall be deducted from commissions
otherwise due Consultant hereunder.
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7.
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In
addition to the foregoing, the Company shall reimburse Consultant
for all
pre-approved travel and other business
expenses.
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8.
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In
addition to the foregoing, provided
the Company meets the annual sale revenue goals set forth in the
pro forma
attached hereto as Exhibit C,
the Company shall pay to Consultant a commission equal to one percent
(1%)
of the Gross Revenues actually received by the Company for products
and
services provided by the Company to Providers, whether or not the
Providers were introduced to Company by Consultant. The underlined
needs
to be removed since it is not reasonable for consultant compensation
to
depend upon the Company meeting simulated fiscal projections. The
consultant compensation should be paid regardless of any company
milestones.
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8
Exhibit
C
3
Year Pro Forma
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2008
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2009
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2010
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Franchise
units
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Franchise
units
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Franchise
Units
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||||||||||||||
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Sold
15x 55,000 =
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825,000
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Sold
35x 55,000 =
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1,925,000
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Sold
70 x 55,000 =
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3,850,000
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Royalty
Fees
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Royalty
Fees
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Royalty
Fees
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Powder
Sold =
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396,000
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Powder
Sold =
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924,000
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Powder
Sold=
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1,848,000
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Anti.-Microbial Units
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Anti-Microbial
Units
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Anti-Microbial
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||||||||||||||
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20
Units Sold =
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44,000,000
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50
Units Sold =
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110,000,000
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100
Sold =
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220,000,000
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Powder
Sold =
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280,000
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Powder
Sold =
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700,000
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Powder
Sold=
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1,400,000
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|||||||||||
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Franchise
Fee
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Franchise
Fee
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Franchise
Fee
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||||||||||||||
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and
Equipment =
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1,100,000
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and
Equipment =
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2,750,000
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and
Equipment=
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5,500,000
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Royalty
Fee
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Royalty
Fees
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Royalty
Fees
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for
Year =
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42,000
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for
Year =
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105,000
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for
Year=
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210,000
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Total
Profit
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46,643,000
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Total
Profit
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116,404,000
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Total
Profit
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232,808,000
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Operating
Cost and
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Operating
Cost and
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Operating
Cost
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||||||||||||||
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Taxes
@60% =
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27,985,800
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Taxes
@60% =
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69,842,400
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Taxes
60% =
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139,684,800
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|||||||||||
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Net
Profit =
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18,657,200
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Net
Profit =
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46,561,600
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Net
Profit
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93,123,200
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9
