[LETTERHEAD]
February 20, 2004
Xx. Xxxxxxx X. Xxxxxxxxxx, President HAND DELIVERED
Versatech USA
000 Xxxxxxxx Xxx XX, 0xx Xxxxx
Xxxxxxxx, XX 00000
Dear Mr. Xxxxxxxxxx:
This letter has been prepared to document our terms of engagement and
if signed by Versatech, Inc., dba Versatech USA (hereinafter "Versatech USA")
shall constitute the contract between Versatech USA and EPWC Management, Inc.
(hereinafter "EPWC").
1. SERVICES. EPWC shall provide management consultation services as to the
direction and feasibility in the course of Versatech USA's quest in the
acquisition(s) of companies(s) as may be necessary to build and
establish Versatech USA's going concern value as a public entity.
Xxxxxx X. Xxxx shall be assigned by EPWC as the primary consultant to
consult with Versatech USA's Board of Directors, Officers, and Company
Advisors and any existing or future Company Managers or Advisors
concerning the organization and fiscal policy of Versatech USA and the
evolutions that may come about as its direction so warrants. EPWC shall
have complete authority and power to organize any information that may
be necessary to the complete success of Versatech USA and will be
responsible to inform the above parties of Versatech USA, including the
direction and supervision of administrative issues. EPWC at its
discretion may arrange to assist Versatech USA's Management in duties
and may delegate to its Management and other Retained Consultants and
Advisors such duties, as EPWC deems prudent.
The foregoing services description contemplates EPWC could materially
participate in a due diligence review of companies beneficially owned
by Xxxxx X. Xxxxxxx. Xxxxxx X. Xxxx, as a practicing Certified Public
Accountant, has represented Xx. Xxxxxxx and certain of his investee
organizations and related benefit program entities. Xxxxxx X. Xxxx and
EPWC represents that neither he nor it has any ongoing professional or
business responsibilities to Xx. Xxxxxxx, his investee organizations,
or related benefit program entities. Further, Xx. Xxxxxxx has been made
aware that EPWC is under contract to Versatech USA whereby services of
Xxxxxx X. Xxxx are committed to Versatech USA. Accordingly, neither
EPWC nor Xxxxxx X. Xxxx is aware of any conflicts of interest between
Versatech USA and Xxxxx X. Xxxxxxx and his investee organizations.
Xx. Xxxxxxx X. Xxxxxxxxxx, President
Versatech USA
February 20, 2004
Page 2
Notwithstanding the foregoing, as a matter of prudence, EPWC has
advised Versatech USA that it employ Xxxxx X. Xxxxx Consulting, or
other suitable advisors or persons to provide an independent review of
the materials and resulting conclusions EPWC may develop in its
possible participation in the due diligence review of the companies
beneficially owned by Xx. Xxxxxxx. Such independent review should also
include the expression of opinion by such advisors or persons as to the
conclusions and recommendations formed by EPWC, as supported by its
findings in its possible participation in the due diligence review
activities concerning the companies beneficially owned by Xxxxx X.
Xxxxxxx.
2. TERM. The term of this agreement will be for an initial period of two
(2) years, commencing on January 1, 2004, and may be extended for an
additional period by mutual consent in writing between the parties.
Except as otherwise provided by 4. Below, after August 1, 2004, this
agreement may be suspended or terminated at any time by either
Versatech USA or EPWC by giving to each other thirty (30) days written
notice of termination.
3. HOURS TO BE DEVOTED FOR SERVICE. EPWC shall devote whatever time it
deems necessary to be fiducially responsible to its duties under this
agreement. EPWC will do its best to insure its service offerings for
other clients do not unduly interfere with its responsibilities for
services, as contemplated herein. It being stipulated, however, by
both Versatech USA and EPWC, the hours required by Versatech USA,
calculated on a monthly basis during the term of this service
agreement, cannot be readily determined by the parties at this date
to accomplish the service obligation performance standard, as
contemplated in 1. Above. Specifically, it is recognized by both
Versatech USA and EPWC the hours required on a monthly basis to
accomplish the needs of Versatech USA could and will vary greatly
during the service term of this agreement.
Unless specifically agreed to, as a written addendum(s) to this
agreement, EPWC shall not be required to provide more than 40 man/hours
of lead man consulting time (including the services of Xxxxxx X. Xxxx)
to Versatech USA in any monthly period during the service period of
this agreement. Such engagement addendum(s) will specify the specific
services EPWC shall perform, deadline dates for services completion,
and required fee payment modification provisions. Versatech USA and
EPWC pledge to each other to act reasonably in drafting such
modification of terms so to enable EPWC to meet the needs and
expectations of Versatech USA within a prudent financial basis, while
considering the financial operating requirements of EPWC.
Xx. Xxxxxxx X. Xxxxxxxxxx, President
Versatech USA
February 20, 2004
Page 3
4. RIGHTS OF SUSPENSION AND OR TERMINATION OF SERVICES BY EPWC.
EPWC, at it sole discretion and election, may suspend or terminate
services under this agreement should Versatech USA: (1) fail to make
payment of deposit sums or make monthly service and expense
reimbursement payments or issue securities as specified herein and as
provided by any future written service addendum(s) hereto; (2) perform
any illegal acts or the commission of acts that may be deemed
violations of rules and regulations of governmental regulatory agencies
it has reporting responsibilities to, including but not limited to the
NASD, the Securities & Exchange Commission, any other federal, state or
foreign regulatory commission or body that it has or becomes
responsible to report to or that it must comply with its rules and
regulations, and federal and state taxing agencies and authorities;
(3) fail to perform any material act it has declared and promised to
perform in the organization and development of Versatech USA as
a going concern public entity.
5. COMPENSATION FOR SERVICES RENDERED. Versatech USA shall compensate EPWC
as fees for services rendered in cash and with its securities as
follows:
Cash Compensation:
-----------------
For services rendered during the period January 1, 2004 through July
31, 2004, Versatech USA shall pay EPWC a flat rate of $5,000.00 per
month or such amount specified in any future written service
addendum(s) made hereto. Such payment is due upon presentation of
statement, billed monthly. Said services payment will be considered
timely paid (except for January 2004 services that are due on or before
March 5, 2004 as provided by 8. Below), if paid by Versatech USA within
60 days of the month-end for the monthly service period so billed.
For monthly periods commencing after July 31, 2004, the monthly service
fee shall be calculated on the basis of the minimum of $5,000.00 per
month or the fee so calculated based upon hours incurred by EPWC
calculated billed at $175.00 per hour for the lead consultant
(including the time spent by Xxxxxx X. Xxxx) and $90.00 per hour for
assistants.
Compensation by Issuance of Versatech USA Securities:
----------------------------------------------------
As soon as possible after the execution of this agreement by Versatech
USA, EPWC Management, Inc. shall be issued a total of 600,000 shares of
Versatech USA's "restricted" common stock in two certificates of
300,000 shares each. EPWC Management, Inc. shall enable Versatech to
re-purchase 300,000 shares, evidenced by one certificate (with such
share amount as reduced by reverse split or other reduction plan device
implemented by Versatech USA) at a sum of the lesser of $100,000.00 or
35% of the market price of Versatech USA's common stock. This option to
re-purchase shall expire on December 31, 2004. EPWC shall be deemed to
have earned these securities when issued.
Xx. Xxxxxxx X. Xxxxxxxxxx, President
Versatech USA
February 20, 2004
Page 4
As soon as possible after the execution of this agreement by Versatech
USA, EPWC shall be issued a stock purchase warrant entitling it to
purchase 1,000,000 shares of common stock at $1.00 per share. The
warrant shall also provide that EPWC may exchange the warrant for
600,000 shares of common stock without payment of any kind (with such
share amounts restated as reduced by implementation of a reverse split
or other reduction plan device implemented by Versatech USA). This
stock purchase warrant shall be exercisable at the earliest of the
event of: (a) the approval of Versatech USA, in its sole discretion;
(b) upon the reverse spilt or other share reduction of Versatech USA's
common stock; or, (c) on March 31, 2005. This stock purchase warrant
shall expire on December 31, 2006, unless extended by Versatech USA, in
its sole discretion. EPWC shall be deemed to have earned this security
when issued.
Versatech USA represents and warrants to EPWC that to the best of its
knowledge and belief, there exists no ready market for its restricted
common shares and stock purchase warrant that is to be issued to EPWC,
as part of its fee compensation for services. Accordingly, the parties
mutually agree that the 600,000 shares of "restricted" common stock to
be issued to EPWC will be at a declared value of $9,000.00 and the
stock purchase warrant shall be at the declared value of nil value.
These values shall be employed and used in any recordings and filings
of Versatech USA and on its books and records.
6. REIBURSEMENT OF EPWC ADVANCED EXPENSES. In addition to the compensation
for fees described in 5. Above, Versatech USA shall advance or
reimburse EPWC for the expenses it incurs in the performance of
services. Provided, EPWC shall not incur expenses in excess of $500.00
per month without the prior approval of Versatech USA.
Expenses advanced, including but not limited to, travel, communication
(longdistance and cell phone charges), report or document reproduction
charges, shall be billed monthly evidenced by a listing of the date and
nature of expenses advanced. Included will be an accounting of the
usage of any advance payments or pre-payments Versatech USA makes to
EPWC. Such xxxxxxxx for expenses are due immediately upon statement
presentation and will be immediately reimbursed by Xxxxxxxxx USA,
unless otherwise agreed to in writing by EPWC. Further, Xxxxxxxxx USA
agrees to advance or direct pay necessary travel expenses EPWC
needs to incur in the performance of services on its behalf.
7. TIME RECORDS. EPWC shall maintain detailed time records
contemporaneously with the performance of services it performs for
Versatech USA. Such records shall include the date, consultant or
assistants involved and service activity it has performed on Versatech
USA's behalf.
Xx. Xxxxxxx X. Xxxxxxxxxx, President
Versatech USA
February 20, 2004
Page 5
Such records shall be suitable to enable to allow Versatech USA to
properly account for such fees it shall pay to EPWC, in accordance with
Generally Accepted Accounting Principles. Further, EPWC shall make
available to Versatech USA such time records at any time or times it
may reasonably request during the course of the service period of this
engagement.
8. REQUIRED PAYMENT AND CASH DEPOSIT. On or before March 5, 2004,
Versatech USA shall pay EPWC $5,000.00 representing payment for
services EPWC has provided in January 2004 and for expenses it has
advanced during the month then ended.
On or before March 5, 2004, Versatech USA shall pay EPWC $30,000.00
that represents a cash deposit toward services to be rendered by EPWC
during the term of this agreement.
In the event Versatech USA terminates this agreement prior to its
expiration date, or EPWC suspends or terminates the agreement because
of an event specified in 4. Above, such deposit shall be deemed to have
been earned in full by EPWC.
9. ASSIGNMENT. This agreement may not be transferred or assigned by EPWC
without the prior written consent of Versatech USA. Provided, Versatech
USA, will permit EPWC to assign in full or part this agreement to
Xxxxxx X. Xxxx, an individual, or any entity he maintains beneficial
interest or control.
10. RIGHT OF ARBITRATION. The auspices of the State of Washington
Arbitration Panel shall resolve any disputes under this agreement. The
findings of this arbitration panel shall be binding and final.
This letter agreement has been prepared in duplicate originals. If the
foregoing meets with your understanding, please so indicate by your signature
at the space provided below on page 6. hereto.
Xxxxx, we look forward to a long and mutually beneficial relationship
between our two companies.
Sincerely,
EPWC MANAGEMENT, INC.
/S/
Xxxxxx X. Xxxx, President
EPW/clb
Versatechengltr022004.doc
Xx. Xxxxxxx X. Xxxxxxxxxx, President
Versatech USA
February 20, 2004
Page 6
APPROVAL AND ACCEPTANCE BY VERSATECH USA:
The proceeding pages 1-5 of the letter agreement dated February 20, 2004
consists of our entire agreement and understanding of the engagement terms of
EPWC Management, Inc. by Versatech USA and represents the contract between us.
By my signature below, I, Xxxxxxx X. Xxxxxxxxxx, further represent that I
possess the full power and authority to enter into this contract on behalf of
Versatech USA and to bind Versatech USA to the terms and conditions as
specified herein.
/S/ 2/20/04
-------------------------------------- -------
Xxxxxxx X. Xxxxxxxxxx, President & CEO Date
Versatech, Inc. dba VERSATECH USA
RE-ACKNOWLEDGEMENT AND ACCEPTANCE BY EPWC MANAGEMENT, INC.:
The proceeding pages 1-5 of the letter agreement dated February 20, 2004
consists of our entire agreement and understanding of the engagement terms
with Versatech USA and represents the contract between us.
By my signature below, I, Xxxxxx X. Xxxx, further represent that I possess
the full power and authority to enter into this contract on behalf of EPWC
Management, Inc. and to bind EPWC Management, Inc. to the terms and
conditions as specified herein.
/S/ 2/20/04
--------------------------------------- -------
Xxxxxx X. Xxxx, President Date
EPWC Management, Inc.
