EXHIBIT 10.28
Consulting Agreement
This Consulting agreement ("Agreement") is entered into as of this 3rd day of
March 1999 by and between Financial Intranet Inc. (hereinafter referred to as
the "Corporation"), with principal offices at 000 Xxx Xxxx Xxxxx Xxxx, Xxxxxxx
Xxx Xxxx 00000 and Xxx X. Xxxxx (hereinafter referred to as "Xxxxx") with
principal residence at 000 Xxxxxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxx 00000
WHEREAS, the Corporation, desires to have Consultant devote his efforts
to the development of Corporation's business as Director of Brokerage Sales.
WHEREAS, Consultant, understanding and accepting the conditions of
engagement set forth herein, desires to be so engaged.
WHEREAS, certain terms used herein are defined in Exhibit A.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants set forth herein, and for other good and valuable consideration, the
receipt whereof is hereby duly acknowledged, the parties hereto covenant and
agree as follows:
1. Engagement
(A) Corporation agrees to engage Consultant and Consultant agrees to be
so engaged, in the capacity of Director of Brokerage Sales and for such other
duties and services for the Corporation as may be determined and assigned to him
from time to time by the Board of Directors or the President of the Corporation.
Consultant's duties shall include generating, soliciting and marketing sales of
the Corporation's Network Services within the brokerage and financial services
industries or any other market as may be determined by the Corporation's
President. Consultant shall devote his full time, entire knowledge and best
skills to the furtherance of the business purposes of the Corporation.
Consultant shall at all times discharge his duties in consultation with and
under the supervision of the Corporation's President. Consultant shall be
available for telephonic communications from the Corporation on request of the
President and, on reasonable notice, be available for meetings at the
Corporation's offices.
(B) Consultant shall have the responsibility to select and interview
sales people to work under Consultant's direction as independent contractors.
The engagement of any salespeople and the terms of their engagement are subject
to the Corporation's prior written approval.
(C) Consultant shall provide the Corporation with written sales reports
on a weekly basis indicating the persons and Customers contacted on behalf of
the
Corporation, the dates contacted and the status of the proposed sale.
(D) Any use of telemarketing, direct mail or any other marketing
techniques shall be in strict accord with company policy and approved
methodologies. Consultant shall at all times conduct his efforts in a
commercially reasonable manner.
(E) Consultant shall solicit and obtain from prospective Customers
service orders on forms supplied and/or by procedures approved by the
Corporation and within no more than ten (10) days shall transmit all necessary
Customer information to the Corporation's order entry center for the
Corporation's acceptance or rejection in its sole discretion. Acceptance of an
order requires that the Customer Agreement (authorization form) be entered or a
database entry be programmed by the Corporation.
(F) Consultant shall not use any promotional, marketing, or other form
of solicitation or advertising material, in any fashion whatsoever, concerning
the Network Services offered by the Corporation or use the Corporation's
trademarks, trade names or copyrights in materials which have not been provided
by or approved by the Corporation.
2. Term
Engagement shall be for a term effective as of November 13, 1998
through December 31, 2002.
3. Compensation
(A) Cash Compensation.
(I) Consultant's compensation for services rendered to or on
behalf of the Corporation and for Qualified Revenues produced by the Consultant
and collected by the Corporation shall be based on the commission schedule
attached as Exhibit B.
The Board of Directors may, at its sole discretion, elect
to provide additional compensation from time to time based on the operating
performance of the Consultant.
(II) The Corporation shall pay Commissions during the time
period there is Customer usage of the Network Services by the Customer obtained
by the Consultant during his engagement by the Corporation up to a maximum of
twelve (12) months from the date of the original or any renewed, new or expanded
Customer Agreement obtained by the Consultant.
(III) The obligation to pay any Commissions to the Consultant
under this Agreement is expressly conditioned upon the Corporation's collection
of the Customer charges for usage of the Network Services; provided, however,
that payment of said Commissions may in the sole discretion of the Corporation
be suspended
temporarily or permanently discontinued in the event the Consultant fails to use
his best efforts to maximize the revenues derived from Customer usage of the
Network Services and/or the Consultant takes any action in derogation of
preserving and maintaining the Corporation's base of Customers.
(IV) Notwithstanding any other provision of this Agreement,
should Consultant sell or attempt to sell for any other entity services similar
to the Network Services, or to transfer or attempt to transfer any Customers to
any other entity, such sale, attempt to sell, transfer or attempt to transfer
shall result in immediate dismissal, and forfeiture of Commissions and all other
company benefits.
(V) Should Consultant become aware of new services offered by
other telecommunications providers, Consultant shall disclose the new services
to the Corporation and shall cooperate and use his best efforts to assist the
Corporation in acquiring any available knowledge and information on the new
services to offer to the Corporation's existing and potential Customers. In the
event the new services are acquired by the Corporation as a result of the
material and substantive efforts of Consultant, Consultant's Commission shall be
adjusted based on the Qualified Revenues derived from such new services;
provided that a commission structure for the new services commensurate with the
commission structure in place for the Network Services shall be acceptable
unless otherwise expressly so provided, subject in any event to the terms and
conditions of this Agreement.
(VI) The Corporation shall pay Consultant Commissions on all
Qualified Revenues. True-up or other adjustments to the total of Qualified
Revenues attributable to Consultant's sales efforts will be made, if at all,
within sixty (60) days and thereafter will not be adjusted.
(VII) Commission Statements shall be provided monthly and
shall be based on the usage information received by the Corporation from its
underlying network facilities providers. Commission Statements shall include a
summary in reasonable detail of the calculations and usage data relied on to
prepare the Commission Statement.
(B) Stock Options.
(I) The Corporation and the Consultant acknowledge that as of
the date of this agreement, the Consultant had unexercised options to purchase
2,500,000 shares of Common Stock at an exercise price of $.19 per share.
Consultant has agreed to exercise these options with respect to 879,685 shares
of Common Stock as of the date of this agreement, leaving a balance of
1,620,315, pursuant to Section 5.
(II) All options granted under this Agreement expire on
December 31, 2002, subject to termination on such other date as provided as
follows (the "Option Period"). If the Consultant dies, the Consultant's estate
shall have the right to
exercise any unexercised options for one year after the date of Consultant's
death. In the event the Consultant voluntarily ceases to act as a consultant
under this agreement, any option then held by the Consultant shall remain in
effect until the end of the Option Period. In the event that the Consultant's
engagement is terminated for any reason by the Company other than for "Cuase"
(as defined in section 6), any option then held by the Consultant shall
terminate at the end of th4e Option Period. Any options shall terminate
immediately upon termination for "Cause."
(III) Any option granted to the Consultant is personal to the
Consultant and is not assignable by the Consultant. All options shall be
exercised by written notice as called for in this Engagement Agreement. Delivery
of the certificates representing the shares called for under the within option
shall be made promptly after receipt of such notice of exercise, against the
payment of the purchase price by certified check or cashier's check.
(IV) Shares issued pursuant to the grant of the options in
accordance with the terms of this agreement may not be sold, exchanged,
transferred, pledged, hypothecated, or otherwise disposed of except as provided
for under Rule 144 of the Securities and Exchange Act of 1933 (the "Act"). The
following shall apply:
(A) Said Common Stock must be held indefinitely unless
(1) distribution of said Common Stock has been made registered under the Act,
(2) as sale of said Common Stock is made in conformity with the provisions of
Rule 144 of the Act, or (3) in the opinion of counsel acceptable to the Company,
some other exemption from registration is available.
(B) The Consultant will not make any sale, transfer or
other disposition of said Common Stock except in compliance with the Act and
Rules and Regulations thereunder.
(C) The Consultant is familiar with all of the provisions
of Rule 144 including (without limitation) the holding period thereunder.
(V) The Company is under no obligation to register the sale,
transfer or other disposition of said Common Stock by the Consultant or on his
behalf or to take any other action necessary in order to make compliance with an
exemption from registration available.
(VI) There will be a restrictive legend placed on the
certificates for said Common Stock stating in substance:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and may not be sold, pledged, or
otherwise transferred except pursuant to an effective registration
statement under said Act, SEC Rule 144 or an opinion of counsel
acceptable to the company that some other
exemption from registration is available."
(VII) The number of Shares subject to this Option during the
Option Period shall be cumulative as to all prior dates of calculation and shall
be adjusted for any stock dividend, subdivision, split-up or combination of
common stock.
(VIII) The exercise price shall be subject to adjustment from
time to time as follows:
(A) If, at any time during the Option Period, the
number of shares of common stock outstanding is increased by a stock dividend
payable in shares of common stock, then, immediately following the record date
fixed for the determination of holders of shares of common stock entitled to
receive such stock dividend, subdivision or split-up, the exercise price shall
be appropriately decreased so that the number of Shares included in the Shares
issuable upon the exercise hereof shall be increased in proportion to such
increase in outstanding shares.
(B) If, at any time during the Option Period, the
number of shares of common stock outstanding is decreased by a combination of
outstanding shares of common stock, then, immediately following the record date
for such combination, the exercise price shall be appropriately increased so
that the number of Shares issuable upon the exercise hereof shall be decreased
in outstanding shares.
(IX) The Corporation and the Consultant hereby acknowledge
that prior to this date the Consultant had been awarded options to purchase a
number of shares of the Company's Common Stock equal to (A)25% percent of the
shares issued by the Company through December 31, 1998 minus (B) 1,500,000
shares of Common Stock previously issued to the Consultant and further reduced
in accordance with the parties agreement dated September 12, 1997. Consultant
had also been entitled to options to purchase an additional two percent of the
Corporation's issued and outstanding shares as of December 31, 1998, but that
Consultant had previously assigned his rights to options to purchase one percent
of the Corporation's issued and outstanding shares of common stock to each of
Xxxxxxx Xxxxxxxx and Xxxxx Xxxx. The parties acknowledge that, as of December
31, 1998, the number of options set forth in paragraph (I) represent all of the
options and warrants that Consultant is entitled to exercise and that Consultant
has no other outstanding options or warrants pursuant to this Agreement or
otherwise.
4. Expenses
The Corporation agrees to pay Consultant an allotment towards rent,
office supplies, telephone, automobile and health insurance as set forth on
Exhibit C. In addition to the expenses set forth above, Corporation shall
advance or repay to Consultant, as the case may be, for any out-of-pocket
expenses incurred or advanced by Consultant in performing his duties under the
Agreement for the benefit of Corporation. Any single expense in excess of two
hundred and fifty dollars ($250) shall
require the approval of the President of the Corporation prior to Consultant
expending or incurring funds equal to or greater than any single expense of
$250. Notwithstanding the Corporation's commitment to provide reimbursement for
any expenses, in order to receive allotments or reimbursement for any expenses,
Consultant shall provide the Corporation with such invoices and receipts and
such additional information in the format as is requested by the Corporation.
5. Exercise of Option
Consultant has agreed to exercise options with respect to 879,685
sahres of Common Stock as of the date of this agreement. The Corporation and the
Consutlatnt agree to apply the aggregate of $167,140 owed to Xx. Xxxxx by the
Copoation as of the date hereof to the purchase of 879,685 shares of Common
Stock. Such $167,140 represent all accrued and unpaid compensation due to date
in the amount of $109,500 and satisfaction of all amounts due to Consultant
under certain promissory notes, including all accrued and unpaid interest
thereon, in the amount of $57,640.
6. Termination for Cause
For purposes of this Agreement, "Cause" means conviction of (and such
conviction is sustained on appeal) or the entry of a plea of guilty by the
Executive to a felony involving fraud, conversion, embezzlement, theft, or a
type of similar felony involving the Company's property.
7. Taxes
Consistent with the policies of the Corporation in connection with
Consultant's previous prevision of services to the Corporation, the Corporation
will deliver to Consultant a Form 1099 regarding the Consultant's compensation.
Consultant shall be responsible for payment of all taxes which may be imposed in
connection with Consultant's provision of services to the Corporation, whether
under this agreement, the consulting agreement dated as of February 27, 1997 or
the agreement dated as of September 12, 1997.
6. Independent Contractor
Consultant shall be an independent contractor and shall not have the
authority to bind or obligate the Corporation to any contract or agreement and
Consultant shall not represent to third parties that he has the authority to
bind or obligate the Corporation. The terms of any sales of the Corporation's
products or services shall be subject to the prior written consent of the
Corporation.
7. Termination
This agreement may be terminated for cause by the Corporation prior to
the end
of the term upon written notice by the Corporation. Termination for cause shall
include, but not necessarily be limited to, the following:
(A) Consultant's failure, or refusal to perform services required of
him by the Corporation to the best of his ability.
(B) Consultant's commitment of an offense of moral turpitude or offense
under federal, state or local laws.
(C) Commission by Consultant of an act of disloyalty against the
Corporation or the violation by Consultant of any provision of this Agreement.
8. Notices
All notices required or permitted to be given under this Agreement
shall be given by telecopy, overnight courier or certified mail, return receipt
requested, to the parties at the addresses first set forth above or to such
other addresses as either may designate in writing to the other party. Notices
sent by certified mail shall be deemed given three days after mailing.
9. Confidential Matters
Consultant acknowledges his understanding that in the performance of
his duties and obligations hereunder he may obtain knowledge of "Confidential
Information" as hereinafter defined, relating to the business of the
Corporation. Consultant agrees to treat as Confidential Information and to hold
in strictest confidence any and all Confidential Information except to the
extent necessary for performance of his services and obligations under this
Agreement and in all such instances Consultant will take reasonable steps to
safeguard the confidentiality of all such information. Consultant's use of any
Confidential Information is subject to the written instructions of the
Corporation.
Except as set forth in this Section 9, Consultant shall keep in
strictest confidence, not use for his own benefit, and prevent the disclosure to
any person, firm or corporation, or any unauthorized person or persons the
Confidential Information after the date of this Agreement. Consultant shall not
directly or indirectly publish, communicate, divulge or describe to any
unauthorized person nor utilize in any way any Confidential Information received
from or on behalf of Corporation except as set forth above.
After termination of this Agreement, Consultant shall return to the
Corporation any confidential information previously delivered to Consultant,
including any copies thereof.
"Confidential Information" shall mean all information of any kind or
nature pertaining to the Corporation and/or its affiliates which is not
available to the public,
including, but not limited to, information relating to the Corporation's and/or
its affiliates' agreements, the Corporation's proprietary rights, research,
developments, inventions, know-how, trade secrets, patents, patent applications,
documents of any kind and manuals, technical advances, research results,
commercial arrangements, manufacture, engineering, products, processes,
accounting, sales, strategies, tax returns, financial statements, marketing,
customers or customer lists, and any information of a like nature furnished to
or obtained by the Consultant from the Corporation and/or its affiliates
relating to activities of third parties which said third party or parties have
transmitted to the Corporation and/or its affiliates under any agreement or
arrangement to hold the same secret or confidential.
10. Inventions
Consultant shall promptly disclose to the Corporation any and all
inventions. improvements, machines, appliances, processes, products, or the like
(all of which are referred to herein as "inventions") which Consultant may
invent, conceive, produce, or reduce to practice, either solely or jointly with
others, at any time, in furtherance or in the performance of his duties as set
forth in this Agreement. Any and all such inventions which in any way relate to
the products or services manufactured, sold, or used by the Corporation, or to
any methods, processes, or apparatus used in connection with the delivery or
production of such services or goods, or in either case which are or may be or
may become capable of use in the business of the Corporation, shall at all times
and for all purposes be regarded as acquired and held by Consultant in a
fiduciary capacity and solely for the benefit of the Corporation.
No termination of engagement of the Consultant by the Corporation or of
this Agreement shall release the Consultant or his heirs or legal
representatives from complying with the foregoing obligations as to such
inventions. To that extent, the terms of this Article 10 shall survive this
Agreement.
11. Equitable Relief
The parties further acknowledge that in the event of a breach by the
Consultant of any of his obligations under Sections 9 or 10, the Corporation may
be unable to ascertain the exact amount of damages resulting from such breach,
will suffer irreparable harm and will not have an adequate remedy at law.
Accordingly, in the event of any such breach or threatened breach by the
Consultant, the Corporation shall be entitled to such equitable and injunctive
relief as may be available to restrain the Consultant and any corporation,
partnership or other entity participating in such breach or threatened breach
from the violation of the provisions hereof. Nothing herein shall be construed
as prohibiting the Corporation from pursuing any other remedies available at law
or in equity as may be available to it by reason of such breach or threatened
breach.
12. Governing Law
This Agreement shall be construed and enforced in accordance with the
laws of the State of New York with respect to contracts executed in the State of
New York. The parties acknowledge that all disputes arising under this Agreement
shall be brought in the courts of the State of New York and the parties consent
to the jurisdiction of the courts of the State of New York.
13. Entire Contract
This Agreement constitutes the entire understanding and agreement
between the Corporation and the Consultant with regard to all matters referred
to herein. There are no other agreements, conditions or representations, oral or
written, express or implied, with regard thereto. The parties acknowledge that
this agreement supersedes the consulting agreement dated February 27, 1997 and
the Employment Agreement dated September 12, 1997. The Corporation has no
further obligations to Consultant under such agreements, except with respect to
any accrued or deferred cash compensation which remains due the Consultant under
such agreements. This Agreement may be amended only in writing signed by both
parties. Each party has had the opportunity to have this agreement reviewed by
counsel.
14. Non- Waiver
A delay or failure by either party to exercise a right under this
Agreement, or a partial or single exercise of that right, shall not constitute a
waiver of that or any other right.
15. Assignment
This Agreement shall not be assigned by Consultant except that any
benefits which inure at any time to his estate or personal representative shall
be transferable as a matter of right to such entity or entities. The Corporation
shall have the right to transfer and assign this Agreement and its rights
hereunder in its entirety in its sole discretion.
16. Enforceability.
The invalidity or unenforceability of any provision, term, or condition
hereof shall in no way effect the validity or enforceability of any other
provision or of this Agreement or of the Agreement in its entirety.
17. Restrictive Covenant
In the event that the engagement of the Consultant is terminated by any
party for any reason, the Consultant for a period of one year from the date of
the termination shall be and hereby agrees to be prohibited from directly or
indirectly, either as a
principal, agent, manager, Consultant, owner, partner, stockholder, director, or
officer of a corporation or otherwise from engaging or becoming interested in ,
financially or otherwise, in any business, trade, or occupation similar to or in
competition with the business of the Corporation. Consultant shall not solicit,
directly or indirectly, including the mailing of informative notices, and of the
Corporation's customers during the year following termination of this agreement.
18. Counterparts
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original of which together shall constitute one and the
same agreement.
19. Binding Effect
The provisions of this Agreement shall be binding upon and inure to the
benefit of both parties and their respective successors and assigns.
IN WITNESS WHEREOF, the Corporation and the Consultant have
executed this Agreement as of the date first above written.
FINANCIAL INTRANET, INC.
BY: /S/Xxxxxxx Xxxxxxxx
/s/Xxx X. Xxxxx
XXX X. XXXXX
EXHIBIT A
"Commission Payment Date" is the fifty-fifth (55th) day following the last day
of any calendar month.
"Commissions" are the amounts payable for the sales of the Corporation
telecommunications services closed by the Consultant.
"Customer" is any natural person or legal entity that issues a proper letter of
agency or other duly authorized order for the network services of the
Corporation as defined hereinafter and upon the Corporation's acceptance of such
order becomes liable for the payment of charges for said network services.
"Customer Agreement" is the letter of agency, order and/or authorization form,
tape transcribed order of service via toll free access or dial-up lines to the
Corporation, contract, agreement or any other written or oral communication
and/or commitment appropriately verified as timely, accurate and authentic by
the Corporation and/or any third party the Corporation employs to verify
customer service orders.
"Network Services" are telecommunications services provided by the Corporation's
global telecommunications network for the origination and termination of a
Customer's voice, data, fracsimile, and/or video communications traffic.
"Qualified Revenue" are those revenues collected by the Corporation from
Customers for usage of the Corporation's Network Services on or before the
twenty-fifth (25th) day of the month following the last day of the calendar
month in which the Customer's usage of the Corporation's Network Services
occurred (the "Collection Period"), exclusive of all taxes, fees, operator
and/or directory assistance and/or all other non-usage charges.
"Affiliate" shall mean any person, whether a natural person or legal entity,
which controls, is controlled by or is under common control with, a named party
of this Agreement.
EXHIBIT B
April 13, 1999
Xx. Xxx X. Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Dear Xxxxx,
The purpose of this letter is to outline Financial Intranet's expense
reimbursement policy pertaining to your expenses, and to issue certain monthly
allotments that have been approved by the Company.
FORMAT OF EXPENSE REPORTING
1. The attached expense report form should be filled out on a weekly
basis, and submitted at the end of each month. (This form can also be
found in the Lotus 123, release 5 version of master forms, if you have
that).
2. It is imperative that the "detailed entertainment record" and/or
"purpose of trip" sections be completed and detailed, i.e. names,
dates, locations, etc.
3. Receipts are required for all expenses over $5,.00, with the business
nature written on the back of the receipt, unless shown in the
"detailed entertainment record" or "purpose of trip" sections. This
includes gas, tolls, parking, transportation, meals and lodging, and
any other expenses listed on the face of the expense report.
4. Any expense reports not signed or properly documented will be sent
back.
5. Expenses submitted that are (older than three months will not be
approved.
6. Only business-related expenses, i.e. no personal expenses, will be
approved and reimbursed.
ALLOTMENTS
The following monthly allotments will apply to all expense reports not yet paid,
as well as all future ones. The Company has authorized these allotments, and
detailed support must still be included, where applicable, i.e. copies of
telephone bills, insurance premium notices, etc:
a. Cellular Phone: $170 maximum (based on the current payment plan,
which
allows 1400 minutes per month).
b. Office telephone and fax lines: $250 maximum
c. Car allowance: $600
d. Car insurance premium: $112 (based on 6-month premium of $672.00)
e. Medical insurance premium: $285 (based on single employee-only
policy)
f. Office rent: $335 (all-inclusive, based on annual rent of $10/sq.
ft. for 400-foot office space.
If there are any questions, please call me at 000-000-0000 or email at
xxxxx@xxxx.xxx.
Thanks for your anticipated cooperation.
Sincerely,
Xxxx X. Xxxx
Vice President, Finance
Attachment: Expense report form
cc: Xxxxxxx Xxxxxxxx
Xxxxxx Xxxxxxxx - XxXxxxxxxx & Xxxxx
EXHIBIT C
XXXXX XXXXX COMMISSION SCHEDULE
Gross Profit Commission Rate
------------ ---------------
Greater than or equal to 40% 8%
30 - 39% 6%
20 - 29% 4%
10 - 19% 2%
Less than 10% 0
