CONSULTING AGREEMENT AND COVENANT NOT TO COMPETE
THIS AGREEMENT is made effective as of this this first day of July,
1997 by and between VOXCOM HOLDINGS, INC., a Nevada corporation (the "Company"),
and XXX XXXXXXXX and XXXXX XXXXXX (together referred to herein as the
Consultants).
WHEREAS, Company desires to retain Consultants for a period of five
years to assist the Company in the development of a series of lecture companies
and to protect itself against the adverse consequences of competition by the
Consultants against the Company; and
WHEREAS, the Company and Consultants have enjoyed a mutually rewarding
business relationship since May 1996 in their joint ownership of The Home
Business Group, Inc. ("HBG") and wish to continue such relationship in a similar
manner as described in this Agreement;
NOW, THEREFORE, in consideration of the premises and the agreements
contained herein, the Company and Consultants hereby agree as follows:
1. Consulting Services.
1.1 For a period of 60-months beginning July 1, 1997, the
Company hereby retains Consultants and Consultants hereby agree to
perform consulting services for the Company pursuant to the terms of
this Agreement. Such services shall specifically include the following
activities:
a. Creation of a minimum of three companies to engage
in business as lecture companies (the "Lecture Companies")
that instruct participants in sponsored seminars about the
conduct of home based and other small businesses similar to
the operations now being conducted by HBG.
b. At the mutual election of Consultants and the
Company, consolidate the operations of HBG as a wholly owned
subsidiary of the Company in order to function as one of the
three (or more) Lecture Companies being created hereby.
c. Be jointly responsible for the day to day
management of the Lecture Companies in a manner consistent
with their duties at HBG, and carry out the directives of the
Boards of Directors of the Company and the Lecture Companies.
d. Cause the Lecture Companies to promote the goods
and services of AmeraPress, Inc., another wholly owned
subsidiary of the Company, in connection
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with the Lecture Companies' seminars and marketing materials.
This promotion will include a most-favorable presentation
placement and lead access by AmeraPress, Inc.
at lectures and seminars of the Lecture Companies.
1.2 Consultants shall at all times be free to devote time to
occupations, employment and activities other than those provided for in
this Agreement, provided they do not conflict with, detract from, or
compete with the duties of the Consultants under this Agreement.
1.3. Each Lecture Company shall include in its Bylaws and
Articles of Incorporation indemnification provisions in the form
attached hereto as Schedule B, which are identical to those contained
in comparable documents of the Company.
2. Consideration. Company will pay to Consultants for the agreement of
Consultants to perform consulting services in accordance with this Agreement,
as follows:
2.1 Company will grant to Consultants upon execution of this
Agreement a total of 200,000 shares of the Company's common stock, to
be divided between Consultants in such manner as they may agree.
2.2. Each Lecture Company will pay to the Consultants 4% of
the gross proceeds of sales by the Lecture Companies at seminars
sponsored by the Lecture Companies, and in telemarketing, direct
marketing and other sales resulting from the seminars and caused by the
efforts of the Consultants.
2.3. Each Lecture Company will pay to the Consultants, on a
quarterly basis, in cash, total commissions (to be divided between the
Consultants in such manner as they may agree) equal to 25% of the net
profit of the Lecture Companies on a combined basis. In computing net
profit, a deduction will be made to cover (i) their share of federal
income tax equal to 38% of the amount of net profit before such taxes,
and (ii) such companies' debt service obligations.
2.4. The Company will also grant to the Consultants (to be
divided between them in such manner as they may agree) shares of the
Company's common stock in accordance with the formula described on
attached Exhibit A.
2.5. The Company will review the performance of other key
employees of the Lecture Companies to determine the possibility of
grants in common stock to such persons.
2.6. Consultants hereby represent to the Company as follows
with regard to the acquisition of shares of the Company's common stock:
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(a) Consultants are acquiring the shares of Company
common stock being granted hereby (the "Company Shares") for
their own accounts, not as nominee or agent, for investment
and not with a view to, or for resale in connection with, any
distribution in violation of the Act, or any state securities
laws, and it has no present intention of, or agreement
relating to, selling, granting participations in or otherwise
distributing such Company Shares in violation of such laws.
(b) Consultants understand that (i) the Company
Shares have not been registered under the Act or any state
securities laws by reason of specific exemptions therefrom,
that the Company Shares may be sold, transferred or otherwise
disposed of only if such disposition is registered under the
Act and applicable state securities laws or is exempt from
such registration, and that they must therefore bear the
economic risk of such investment indefinitely, unless a
subsequent disposition thereof is registered under the Act and
applicable state securities laws or is exempt from such
registration; and (ii) each certificate representing the
Company Shares will be endorsed with a legend substantially in
the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
UNLESS AND UNTIL EITHER SUCH SHARES ARE REGISTERED
UNDER THE APPLICABLE FEDERAL AND STATE SECURITIES
LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY IS OBTAINED TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED."
(c) Each Consultant is a knowledgeable and
experienced investor and has had an opportunity to ask
questions and review information about the business and
financial condition of the Company. Each Seller acknowledges
receipt of an information package of the Company and such
other information as has been requested.
3. Additional Agreements.
3.1 The Company will agree to vote the common stock owned by
it in each Lecture Company to elect a three person board of directors
of each such company that is composed of any two of Xxxxx Xxxxxx,
Xxxxxxxx X. Xxxxx, Xx., or Xxxxxx X. XxXxxxxx and one person named by
the Consultants. The Consultant not a member of the board of directors
of each Lecture Company shall nevertheless be entitled to attend
meetings of the board on a nonvoting basis. In the event that no two of
Messrs. Xxxxxx, Xxxxx or XxXxxxxx are available for service on the
board, the Consultants shall have the right to terminate this
Agreement.
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3.2 The Company agrees to advance funds to the Lecture
Companies for their working capital needs to staff and conduct lectures
in advance of receiving profits therefrom. Such advances shall be
repaid, plus interest at the annual rate of 6%, from the profits of the
Lecture Companies.
4. Covenant Not to Compete.
4.1 Consultants agree that, during the five year term of the
Consulting Agreement and for two years thereafter, Consultants shall
not, without the prior written consent of the Company, directly, or
indirectly by being an officer, director, employee, or an owner of more
than five percent (5%) of the outstanding capital stock of any
corporation or an owner of any interest in, or employee of, any other
form of business association, sole proprietorship or partnership,
conduct a business in competition with the Company or the Lecture
Companies as it was conducted during the term of this Agreement, from
any business location with the States of Texas, Nevada or Utah. The
Company agrees that the publication by Xxxxxxxx of a book entitled
Starting a Successful Home Based Business shall not be deemed
competitive, nor shall the Company obtain any rights to or through such
book.
4.2 Consultants agree that during the five year term of the
Consulting Agreement and for two years thereafter, Consultants shall
not, directly, or indirectly by being an officer, director, employee,
or an owner of more than five percent (5%) of the outstanding capital
stock of any corporation, or an owner of any interest in, or employee
of, any other form of business association, sole proprietorship or
partnership, solicit or otherwise attempt to induce any employees,
agents or representatives of Company to terminate their position as
employee, agent or representative with Company.
4.3 Consultants agree that during the five year term of the
Consulting Agreement and for two years thereafter, Consultants shall
not, directly, or indirectly by being an officer, director, employee or
an owner of more than five percent (5%) of the outstanding capital
stock of any corporation or an owner of any interest in, or employee
of, any other form of business association, sole proprietorship or
partnership, solicit or otherwise attempt to induce any entities or
persons who have been customers of either Consultant or the Company at
any time during the five year term of this Section to become customers
of someone other than the Company that is in competition with the
Company or the Lecture Companies.
4.4 Consultants agree that all order forms, service contracts,
literature, manuals, catalogs, lists of customers, price lists,
brochures, books, records, correspondence, and other materials relating
to the Lecture Companies shall be the property of the Lecture Companies
and the Company.
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4.5 The Company agrees that, during the five year term of the
Consulting Agreement and for two years thereafter, the Company shall
not, without the prior written consent of the Consultants, directly, or
indirectly by being an officer, director, employee, or an owner of more
than five percent (5%) of the outstanding capital stock of any
corporation or an owner of any interest in, or employee of, any other
form of business association, sole proprietorship or partnership,
conduct a business in competition with the Lecture Companies as it was
conducted during the term of this Agreement, from any business location
with the States of Texas, Nevada or Utah, unless it shall have first
proposed the formation of such an enterprise to be included as a
Lecture Company subject to this Agreement, and Consultants shall have
declined to participate in such enterprise.
4.6 In the event that any court shall finally hold that any
provisions stated in this Section 4 constitutes an unreasonable
restriction upon Consultants, the parties hereby expressly agree that
the provisions of this Section 4 shall not be rendered void, but shall
apply as to time and territory or to such other extent as such court
may judicially indicate constitutes a reasonable restriction under the
circumstances involved. In the event such court shall hold as
aforesaid, but fail to indicate an alternative restriction of time or
territory, then the parties hereby expressly agree to submit this
matter to arbitration with the American Arbitration Association, for
the purposes of determining a reasonable restriction under the
circumstances involved.
4.7 Notwithstanding the foregoing, Section 4.1 of this
Agreement may be canceled at the option of the Consultants in the
events (i) any two of Xxxxx Xxxxxx, Xxxxxxxx X. Xxxxx, Xx. or Xxxxxx X.
XxXxxxxx cease to be substantially involved in the management of the
Company, or (ii) Consultants shall not have received aggregate value
from the items listed in Sections 2.1, 2.2, 2.3, and 2.4 during the
five year term of this Agreement in excess of $2 million each.
5. Termination.
5.1 Subject to the provisions of Section 5.2, this Agreement
shall terminate as to either Consultant:
a. Upon the death of a Consultant.
b. Upon the mutual agreement of Company and
Consultant.
c. At the Company's option for good cause. For
purposes of this Section, "good cause" for termination shall
consist of: (a) the failure of a Consultant to diligently or
effectively perform his duties under this Agreement, (b) the
commission by Consultant of any act involving moral turpitude
or the commission by Consultant of any act or the suffering by
Consultant of any
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occurrence or state of facts, which renders Consultant
incapable of performing his duties under this Agreement, or
adversely affects or could reasonably be expected to adversely
affect the Company's business reputation, (c) any breach by a
Consultant of any of the terms of, or the failure to perform
any covenant contained in, this Agreement, (d) the violation
by a Consultant of instructions or policies established by the
Company with respect to the operation of its business and
affairs or a Consultant's failure to carry out the reasonable
instructions of the Chairman or President of the Company, or
(e) the commission by a Consultant of any action or the
existence of any state of facts which would legally justify
the Company in terminating a contract of employment.
d. At the option of the Consultants if the price per
share of the Company's common stock does not equal or exceed
$10.00 per share at any time during the year ending June 30,
1998.
5.2 Upon termination for any reason, all consideration
payments under Section 2 shall be prorated and paid to the date of
termination, and all other forms of benefits shall cease effective with
such date, subject to any vesting of benefits that extend beyond
termination by their terms. No termination under this Section 5 shall
affect the rights and obligations of the parties under Section 4.
6. General.
6.1 This Agreement supersedes all prior agreements and
understandings between the Consultants and the Company with regard to
the subject matter of this Agreement.
6.2 No modification, termination, or waiver under this
Agreement shall be valid unless in writing and signed by the
Consultants and the Company.
6.3 This Agreement shall inure to the benefit of and be
binding upon any successor or assign of the Company and shall inure to
the benefit of and be binding upon the Consultants' heirs, successors
and assigns.
6.4 The waiver by the Company of a breach of any provision of
this Agreement by any Consultants shall not operate or be construed as
a waiver of any subsequent breach of such Consultants and the waiver by
a Consultants of a breach of any provision of this Agreement by the
Company shall not operate or be construed as a waiver of any subsequent
breach by the Company.
6.5 This Agreement shall be interpreted and construed under
the laws of the State of Texas.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
VOXCOM HOLDINGS, INC.
By: /s/ Xxxxxxxx X. Xxxxx, Xx.
-------------------------------------
Xxxxxxxx X. Xxxxx, Xx., President
/s/ Xxx Xxxxxxxx
-------------------------------------
XXX XXXXXXXX
/s/ Xxxxx Xxxxxx
-------------------------------------
XXXXX XXXXXX
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SCHEDULE A TO CONSULTING AGREEMENT
AND COVENANT NOT TO COMPETE
YEAR 1 - JULY 1, 1997 - JUNE 30, 1998
The Company will issue a total number of shares equal to the net profit of the
Lecture Companies on a combined basis, less: (i) a provision for federal income
tax equal to 38% of such profit, (ii) debt service obligations of the Lecture
Companies, and (iii) the cash commissions paid to the Consultants pursuant to
Section 2.2, multiplied by the average price to earnings ratio of the Company's
common stock in the over-the-counter market over the 90 days prior to June 30,
1998, multiplied by 25%, divided by the average over the 20 trading days
preceding June 30, 1998 of the mean bid and ask price of the Company's common
stock in the over-the-counter market.
YEARS 2 THROUGH 5, ENDING JUNE 30, 1999, 2000, 2001, AND 2002
In each succeeding year, shares of common stock will be granted based on the
same formula in effect during the year ended June 30, 1998, except that instead
of using net profit (as adjusted) as the starting number, substitute the growth
in net profit over the previous year and apply the same adjustments.
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SCHEDULE B
INDEMNIFICATION PROVISIONS
Bylaws Provision
Indemnification
Section _____. Unless otherwise provided in the Articles of
Incorporation, the Corporation shall indemnity its officers, agents and
Directors to the full extent permitted by the General Corporation Law of Nevada.
The protection and indemnification provided hereunder shall not be deemed
exclusive of any other rights to which such Director, agent or officer or former
Director or officer or such person may be entitled under any agreement,
insurance policy, vote of stockholders or otherwise.
Articles of Incorporation Provision
ARTICLE _____
Section 1. Limitation of Personal Liability. The personal liability of the
directors of the corporation is hereby eliminated to the fullest extent
permitted by the General Corporation Law of the State of Nevada, as the same may
be amended and supplemented.
Section 2. Indemnification. The corporation shall, to the fullest extent
permitted by the General Corporation Law of the State of Nevada, as the same may
be amended and supplemented, indemnify the directors and officers of the
corporation from and against any and all of the expenses, liabilities, or other
matters referred to in or covered by said Law, and the indemnification provided
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for herein shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any Bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
while holding such office, and shall continue as to a person who has ceased to
be a director or officer and shall inure to the benefit of the heirs, executors,
and administrators of such person.
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