Exhibit 10.1
INDEPENDENT CONSULTING AGREEMENT
This Independent Consulting Agreement ("Agreement"), effective as of
December 16, 2004 ("Effective Date") is entered into by and between VELOCITY
ASSET MANAGEMENT, INC., a Delaware corporation (herein referred to as the
"Company") and THE DEL MAR CONSULTING GROUP, INC., a California corporation
(herein referred to as the "Consultant").
RECITALS
WHEREAS, the Company is a publicly-held corporation with its common stock
traded on the OTC Bulletin Board; and
WHEREAS, Company desires to engage the services of Consultant to represent
the Company in investor communications and public relations with existing
shareholders, brokers, dealers and other investment professionals as to the
Company's current and proposed activities, and to consult with management
concerning such Company activities;
NOW THEREFORE, in consideration of the promises and the mutual covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. Term of Consultancy. Company hereby agrees to retain the Consultant to
act in a consulting capacity to the Company, and the Consultant hereby agrees to
provide services to the Company commencing immediately and ending on December
16, 2005 unless otherwise mutually agreed to by the parties.
2. Duties of Consultant. The Consultant agrees that it will generally
provide the following specified consulting services through its officers and
employees during the term specified in Section 1, above:
(a) Consult with and assist the Company in developing and
implementing appropriate plans and means for presenting the Company and its
business plans, strategy and personnel to the financial community,
establishing an image for the Company in the financial community, and
creating the foundation for subsequent financial public relations efforts;
(b) Introduce the Company to the financial community, including, but
not limited to, retail brokers, buy side and sell side institutional
managers, portfolio managers, analysts, and financial public relations
professionals;
(c) With the cooperation of the Company, maintain an awareness during
the term of this Agreement of the Company's plans, strategy and personnel,
as they may evolve during such period, and consult and assist the Company
in communicating appropriate information regarding such plans, strategy and
personnel to the financial community;
(d) Assist and consult with the Company with respect to its (i)
relations with stockholders, (ii) relations with brokers, dealers, analysts
and other investment professionals, and (iii) financial public relations
generally;
(e) Perform the functions generally assigned to stockholder relations
and public relations departments in major corporations, including
responding to telephone and written inquiries (which may be referred to the
Consultant by the Company); preparing press releases for the Company with
the Company's involvement and approval of press releases, reports and other
communications with or to shareholders, the investment community and the
general public; consulting with respect to the timing, form, distribution
and other matters related to such releases, reports and communications;
and, at the Company's request and subject to the Company's securing its own
rights to the use of its names, marks, and logos, consulting with respect
to corporate symbols, logos, names, the presentation of such symbols, logos
and names, and other matters relating to corporate image;
(f) Upon and with the Company's direction and written approval,
disseminate information regarding the Company to shareholders, brokers,
dealers, other investment community professionals and the general investing
public;
(g) Upon and with the Company's direction, conduct meetings, in
person or by telephone, with brokers, dealers, analysts and other
investment professionals to communicate with them regarding the Company's
plans, goals and activities, and assist the Company in preparing for press
conferences and other forums involving the media, investment professionals
and the general investment public;
(h) At the Company's request, review business plans, strategies,
mission statements budgets, proposed transactions and other plans for the
purpose of advising the Company of the public relations implications
thereof; and
(i) Otherwise perform as the Company's consultant for public
relations and relations with financial professionals.
3. Allocation of Time and Energies. The Consultant hereby promises to
perform and discharge faithfully the responsibilities which may be assigned to
the Consultant from time to time by the officers and duly authorized
representatives of the Company in connection with the conduct of its financial
and public relations and communications activities, so long as such activities
are in compliance with applicable securities laws and regulations. Consultant
and staff shall diligently and thoroughly provide the consulting services
required hereunder. Although no specific hours-per-day requirement will be
required, Consultant and the Company agree that Consultant will perform the
duties set forth herein above in a diligent and professional manner. The parties
acknowledge and agree that a disproportionately large amount of the effort to be
expended and the costs to be incurred by the Consultant and the benefits to be
received by the Company are expected to occur within or shortly after the first
two months of the effectiveness of this Agreement. It is explicitly understood
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that neither the price of the Company's common stock nor the trading volume of
the Company's common stock hereunder measure Consultant's performance of its
duties. It is also understood that the Company is entering into this Agreement
with Consultant, a corporation and not any individual member or employee
thereof, and, as such, Consultant will not be deemed to have breached this
Agreement if any member, officer or director of the Consultant leaves the firm
or dies or becomes physically unable to perform any meaningful activities during
the term of the Agreement, provided the Consultant otherwise performs its
obligations under this Agreement.
4. Remuneration.
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4.1 For undertaking this engagement, for previous services rendered,
and for other good and valuable consideration, the Company agrees to issue to
the Consultant a "Commencement Bonus" of One Hundred Thousand (100,000) shares
of the Company's Common Stock ("Common Stock" and such shares, collectively, the
"Shares"), as well as an Option to purchase Two Hundred Fifty Thousand 250,000
shares of the Company's Common Stock at $2.50 per share, exercisable for a term
of five years from the date of this Agreement and has a "cashless net exercise"
provision (the "Option"). A copy of the Option is attached hereto and referenced
as "Exhibit "A". This Commencement Bonus shall be fully paid and non-assessable
and stock certificates and the Option representing the Commencement Bonus shall
be issued and delivered to Consultant within 30 days of execution of this
Agreement.
(a) Consultant agrees that the Company may, in its sole discretion,
cause one or more shareholders of the Company to deliver any of or all of
the Shares.
(b) Notwithstanding anything else in this Agreement to the contrary,
in the event Xxxxxx Xxxx ceases to be actively involved in performing
services for Consultant under this Agreement, dies or becomes physically
unable to perform any meaningful activities under this Agreement, (1)
Company may terminate this Agreement 15 days following delivery to
Consultant of a written notice of intent to terminate under this Section
4.1(c) and (2) Consultant will return to Company, as liquidated damages:
(A) 75% of the Commencement Bonus if such termination is effective within
the initial 3 months of this Agreement's term, (B) 50% of the Commencement
Bonus if such termination is effective following the initial 3 months of
this Agreement's term but before the expiration of the initial 6 months of
this Agreement's term and (C) 25% of the Commencement Bonus if such
termination is effective following the initial 6 months of this Agreement's
term but before the expiration of the initial 9 months of this Agreement's
term.
4.2 The Company understands and agrees that Consultant has foregone
significant opportunities to accept this engagement and that the Company derives
substantial benefit from the execution of this Agreement and the ability to
announce its relationship with Consultant. The Commencement Bonus, therefore,
constitutes payment for Consultant's agreement to consult to the Company and is
a nonrefundable, non-apportionable, and non-ratable retainer and is not a
prepayment for future services, except as provided in paragraph 4.1(b).
Excluding the provisions contained in paragraph 4.1(b), if the Company decides
to terminate this Agreement prior to December 16, 2005, for any reason
whatsoever, it is agreed and understood that Consultant will not be requested or
demanded by the Company to return any of the shares of Common Stock or the
Option paid to it as Commencement Bonus hereunder. Further, if and in the event
the Company is acquired during the term of this Agreement, it is agreed and
understood Consultant will not be requested or demanded by the Company to return
any of the shares of Common Stock or the Option paid to it hereunder. Consultant
agrees and understands that if during the term of this Agreement, Consultant
performs substantial services for any direct competitor of the Company, then the
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Shares and the Option issued by the Company to Consultant hereunder will be
forfeited.
4.3 Notwithstanding anything else in this Agreement to the contrary,
Company and Consultant acknowledge and agree that for purposes of the Company's
internal accounting practices, the Company may desire to allocate all or a
portion of the Commencement Bonus to any number of the services provided by the
Consultant to the Company under this Agreement consistent with the United States
generally accepted accounting practices. Accordingly, Consultant agrees to
cooperate with the Company, and will provide to the Company reasonable support
and documentation in connection with any such allocation process.
4.4 The Company or its assigns agrees that it will include the Shares
in the next registration statement filed by the Company with the SEC on Forms
XX-0, X-0 or other appropriate form relating to the resale of restricted shares.
The Company agrees to file such a registration statement no later than April 30,
2005.
4.5 Company warrants that the Shares and the Option issued to
Consultant under this Agreement by the Company shall be or have been validly
issued, fully paid and non-assessable and that the Company's board of directors
has or shall have duly authorized the issuance and any transfer of them to
Consultant.
4.6 Consultant acknowledges that the Shares to be issued pursuant to
this Agreement have not been registered under the Securities Act of 1933, as
amended (the "Securities Act") and accordingly are "restricted securities"
within the meaning of Rule 144 of the Act. As such, the Shares may not be resold
or transferred unless the Company has received an opinion of counsel and in form
reasonably satisfactory to the Company that such resale or transfer is exempt
from the registration requirements of that Securities Act. Consultant agrees
that during the term of this Agreement, that it will not sell or transfer any of
the Shares issued to it by the Company hereunder, except to the Company; nor
will it pledge or assign such Shares as collateral or as security for the
performance of any obligation, or for any other purpose.
4.7 In connection with the acquisition of the Shares, Consultant
represents and warrants to Company, to the best of its/his knowledge, as
follows:
(a) Consultant has been afforded the opportunity to ask questions of
and receive answers from duly authorized officers or other representatives
of the Company concerning an investment in the Shares, and any additional
information that the Consultant has requested.
(b) Consultant's investment in restricted securities is reasonable in
relation to the Consultant's net worth, which is in excess of ten (10)
times the Consultant's cost basis in the Shares. Consultant has had
experience in investments in restricted and publicly traded securities, and
Consultant has had experience in investments in speculative securities and
other investments that involve the risk of loss of investment. Consultant
acknowledges that an investment in the Shares is speculative and involves
the risk of loss. Consultant has the requisite knowledge to assess the
relative merits and risks of this investment without the necessity of
relying upon other advisors, and Consultant can afford the risk of loss of
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his entire investment in the Shares. Consultant is an accredited investor,
as that term is defined in Regulation D promulgated under the Securities
Act.
(c) Consultant is acquiring the Shares for the Consultant's own
account for long-term investment and not with a view toward resale or
distribution thereof except in accordance with applicable securities laws.
5. Finder's Fee.
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5.1 It is understood that in the event Consultant directly introduces
Company to a lender or equity purchaser, not already having a preexisting
relationship with the Company, with whom Company, or its nominees, ultimately
finances or causes the completion of such financing, Company agrees to
compensate Consultant for such services with a "finder's fee" in the amount of
7% of total gross funding provided by such lender or equity purchaser, such fee
to be payable in cash.
5.2 It is understood that in the event Consultant introduces Company
to an intermediary or broker dealer, not already having a preexisting
relationship with Company, with whom Company, or its nominees, ultimately
finances or causes the completion of such financing, Company agrees to
compensate Consultant for such services with a "finder's fee" in the amount of
2.5% of total gross funding provided by such intermediary or broker dealer, such
fee to be payable in cash. This will be in addition to any fees payable by
Company to said intermediary or broker dealer, if any, which shall be per
separate agreements negotiated between Company and such other intermediary or
broker dealer.
5.3 It is also understood that in the event Consultant directly
introduces Company, or its nominees, to a merger and/or acquisition candidate,
not already having a preexisting relationship with Company, with whom Company,
or its nominees, ultimately is acquired, or with whom Company, or its nominees
acquires or causes the completion of such acquisition, Company agrees to
compensate Consultant for such services with a "finder's fee" in the amount of
5% of total gross consideration provided by such merger and/or acquisition, such
fee to be payable in the same form of consideration received by the
seller/merged company.
5.4 It is also understood that in the event Consultant introduces
Company, or its nominees, to a merger and/or acquisition candidate, indirectly
through another intermediary, not already having a preexisting relationship with
Company, with whom Company, or its nominees, ultimately is acquired, or with
whom Company, or its nominees acquires or causes the completion of such
acquisition, Company agrees to compensate Consultant for such services with a
"finder's fee" in the amount of 2.5% of total gross consideration provided by
such merger and/or acquisition, such fee to be payable in the same form of
consideration received by the seller/merged company. This will be in addition to
any fees payable by Company to any other intermediary, if any, which shall be
per separate agreements negotiated between Company and such other intermediary.
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5.5 It is also understood that in the event Consultant introduces
Company to a strategic or business partner, not already having a preexisting
relationship with Company, with whom Company, or its nominees, ultimately enters
into a business alliance, Company agrees to compensate Consultant, for such
services with a "finder's fee" in the amount and form that mutually agreeably to
both Company and Consultant.
5.6 It is further understood that Company, and not Consultant, is
responsible to perform any and all due diligence on such intermediary broker
dealer, lender, equity purchaser or acquisition/merger candidate introduced to
it by Consultant under this Agreement, prior to Company receiving funds or
closing on any acquisition/merger. However, Consultant will not introduce any
parties to Company about which Consultant has any prior knowledge of
questionable, unethical or illicit activities.
5.7 Company agrees that said compensation to Consultant shall be paid
in full at the time said financing or acquisition/merger is closed, such
compensation to be transferred by Company to Consultant within five (5) business
days of the closing of a financing, merger or acquisition transaction.
5.8 As further consideration to Consultant, Company, or its nominees
and assigns, agrees to pay with respect to any financing or acquisition/merger
candidate provided directly or indirectly to the Company by any broker/dealer
intermediary, lender or equity purchaser covered by this Section 5 during the
period commencing at the effective date of this Agreement and ending one year
from the termination of this Agreement, a fee to Consultant equal to that
outlined in Section 5 herein.
5.9 Consultant will notify Company, in writing, of introductions it
makes for potential sources of financing or acquisitions/mergers or strategic
partners in a timely manner (within approximately 3 days of introduction) via
confirmed delivery of a facsimile memo or email. If Company has a preexisting
relationship with such nominee and believes such party should be excluded from
this Agreement, then Company will notify Consultant immediately within two (2)
business days of Consultant's facsimile to Company of such circumstance via
facsimile memo or email.
5.10 It is specifically understood that Consultant is not and does not
hold itself out be a Broker/Dealer, but is rather merely a "Finder" in reference
to the Company procuring financing sources and acquisition/merger candidates,
and Consultant does not normally provide such services. The Consultant will only
be introducing the Company to such potential entities and will not be
responsible for the structuring of any transaction. Any obligation to pay a
"Finder's Fee" hereunder shall survive the merging, acquisition, or other change
in the form of entity of the Company and to the extent it remains unfulfilled
shall be assigned and transferred to any successor to the Company. The Company
agrees that no reference to the Consultant will be made in any press release or
advertisement of any transaction without the express approval, in writing, of
such release by Consultant.
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6. Non-Assignability of Services. Consultant's services under this
contract are offered to Company only and may not be assigned by Company to any
entity with which Company merges or which acquires the Company or substantially
all of its assets wherein the Company becomes a minority constituent of the
combined Company. In the event of such merger or acquisition, all compensation
to Consultant herein under the schedules set forth herein shall remain due and
payable, and any compensation received by the Consultant may be retained in the
entirety by Consultant, all without any reduction or pro-rating and shall be
considered and remain fully paid and non-assessable. Notwithstanding the
non-assignability of Consultant's services, Company shall assure that in the
event of any merger, acquisition, or similar change of form of entity, that its
successor entity shall agree to complete all obligations to Consultant,
including the provision and transfer of all compensation herein, and the
preservation of the value thereof consistent with the rights granted to
Consultant by Company herein. Consultant shall not assign its rights or delegate
its duties hereunder without the prior written consent of Company.
7. Expenses. Consultant agrees to pay for all its expenses (phone,
mailing, labor, etc.), other than extraordinary items (travel required by/or
specifically requested by the Company, luncheons or dinners to large groups of
investment professionals, mass faxing to a sizable percentage of the Company's
constituents, investor conference calls, print advertisements in publications,
etc.) approved by the Company in writing prior to its incurring an obligation
for reimbursement. The Company agrees and understands that Consultant will not
be responsible for preparing or mailing due diligence and/or investor packages
on the Company, and that the Company will have some means to prepare and mail
out investor packages at the Company's expense.
8. Indemnification. The Company warrants and represents that all oral
communications, written documents or materials furnished to Consultant or the
public by the Company with respect to financial affairs, operations,
profitability and strategic planning of the Company are accurate in all material
respects and Consultant may rely upon the accuracy thereof without independent
investigation. The Company will protect, indemnify and hold harmless Consultant
against any claims or litigation including any damages, liability, cost and
reasonable attorney's fees as incurred with respect thereto resulting from
Consultant's communication or dissemination of any said information, documents
or materials excluding any such claims or litigation resulting from Consultant's
communication or dissemination of information not provided or authorized by the
Company.
9. Representations. Consultant represents that it is not required to
maintain any licenses and registrations under federal or any state regulations
necessary to perform the services set forth herein. Consultant acknowledges
that, to the best of its knowledge, the performance of the services set forth
under this Agreement will not violate any rule or provision of any regulatory
agency having jurisdiction over Consultant. Consultant acknowledges that, to the
best of its knowledge, Consultant and its officers and directors are not the
subject of any investigation, claim, decree or judgment involving any violation
of the SEC or securities laws. Consultant further acknowledges that it is not a
securities Broker Dealer or a registered investment advisor. Company
acknowledges that, to the best of its knowledge, that it has not violated any
rule or provision of any regulatory agency having jurisdiction over the Company.
Company acknowledges that, to the best of its knowledge, Company is not the
subject of any investigation, claim, decree or judgment involving any violation
of the SEC or securities laws.
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10. Legal Representation. Each of Company and Consultant represents that
they have consulted with independent legal counsel and/or tax, financial and
business advisors, to the extent that they deemed necessary.
11. Status as Independent Contractor. Consultant's engagement pursuant to
this Agreement shall be as independent contractor, and not as an employee,
officer or other agent of the Company. Neither party to this Agreement shall
represent or hold itself out to be the employer or employee of the other.
Consultant further acknowledges the consideration provided hereinabove is a
gross amount of consideration and that the Company will not withhold from such
consideration any amounts as to income taxes, social security payments or any
other payroll taxes. All such income taxes and other such payment shall be made
or provided for by Consultant and the Company shall have no responsibility or
duties regarding such matters. Neither the Company nor the Consultant possesses
the authority to bind each other in any agreements without the express written
consent of the entity to be bound.
12. Attorney's Fee. If any legal action or any arbitration or other
proceeding is brought for the enforcement or interpretation of this Agreement,
or because of an alleged dispute, breach, default or misrepresentation in
connection with or related to this Agreement, the successful or prevailing party
shall be entitled to recover reasonable attorneys' fees and other costs in
connection with that action or proceeding, in addition to any other relief to
which it or they may be entitled.
13. Waiver. The waiver by either party of a breach of any provision of
this Agreement by the other party shall not operate or be construed as a waiver
of any subsequent breach by such other party.
14. Notices. All notices, requests, and other communications hereunder
shall be deemed to be duly given if sent by U.S. mail, postage prepaid,
addressed to the other party at the address as set forth herein below:
To the Company:
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Velocity Asset Management, Inc.
Xxxx Xxxxxxxx, CEO
00 X. Xxxxxxxx Xxxxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
xxx@xxxx.xxx
To the Consultant:
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The Del Mar Consulting Group, Inc.
Xxxxxx X. Xxxx, President
0000 Xx Xxxxx Xxxx
Xxx Xxx, XX 00000
Phone: (000) 000-0000
Fax - (000) 000-0000
xxxxx@xxxxxxxxxxxxxxxx.xxx
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It is understood that either party may change the address to which notices for
it shall be addressed by providing notice of such change to the other party in
the manner set forth in this paragraph.
15. Choice of Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of California.
16. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the alleged breach thereof, or relating to Consultant's
activities or remuneration under this Agreement, shall be settled by binding
arbitration in San Diego, CA, in accordance with the applicable rules of the
American Arbitration Association, Commercial Dispute Resolution Procedures, and
judgment on the award rendered by the arbitrator(s) shall be binding on the
parties and may be entered in any court having jurisdiction.
17. Complete Agreement. This Agreement contains the entire agreement of
the parties relating to the subject matter hereof. This Agreement and its terms
may not be changed orally but only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
SIGNATURES ON THE FOLLOWING PAGE
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
AGREED TO:
Company:
VELOCITY ASSET MANAGEMENT, INC.
By: /s/ XXXX XXXXXXXX
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Name: Xxxx Xxxxxxxx
Title: CEO
Consultant:
THE DEL MAR CONSULTING GROUP, INC.
By: /s/ XXXXXX X. XXXX
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Name: Xxxxxx X. Xxxx
Title: President and its
Duly Authorized Agent
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