CONSULTING AGREEMENT
This Agreement, (the "Agreement") is being made this 1st day of April,
2006 between Nuevo Financial Center, Inc. (the "Company"), having its principal
offices at 0000 Xxxxxxxxxx Xxxxxx, Xxxxx Xxxx, Xxx Xxxxxx 00000, and Xxxxxxxxx
Xxxxxxxx (the "Consultant"), having his principal offices at 000 Xxxxxxxxxx
Xxxx, Xxxxxxxx, Xxx Xxxx 00000.
WITNESSETH:
NOW, THEREFORE, in consideration of the mutual premises and agreements
contained herein and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Nature of Agreement.
The Company hereby engages the services of the Consultant, and
the Consultant agrees to provide consulting services to the Company,
upon the terms and conditions contained herein.
2. Term of Agreement.
(a) This Agreement is for a term of three-year term, commencing as
of April 1, 2006 (the "Commencement Date") and continuing until
March 31, 2008 (the "Expiration Date") (together, the "Term"),
unless sooner terminated as provided herein in Section 14, or unless
the Agreement is extended by mutual consent as provided herein in
Section 2(b).
(b) No later than six (6) months prior to the Expiration Date, the
Board of Directors (the "Board") of the Company shall notify the
Consultant, in writing, of the Company's intent to extend the
Agreement Term beyond the Expiration Date; however, if the Board and
the Consultant shall be unable to agree to the terms of such
extension, at least four months prior to the Expiration Date, this
Agreement shall terminate on the Expiration Date.
3. Scope of Services as Consultant.
During this Agreement, the Consultant shall provide consulting
services to the Company. In performance of his duties, Consultant
shall be subject to the direction of the Board. Consultant shall be
available to travel as the needs of the business require; provided,
however, that the Consultant shall not be required to relocate his
principal residence should the Company, or its successor or
assigned, elect to relocate its principal executive offices outside
of the Metropolitan area; such event which shall be construed as a
Change of Control Event (as defined herein in Section 7).
The Consultant is an independent contractor and is not an
employee, officer or director of the Company. The Consultant is not
retained to perform accounting, auditing, financial or tax services
and is not responsible for independently verifying the accuracy of
information generated by the Company. Nor does the Consultant have
any authority, expressed or implied, with regard to the Company's
actions related to the payment or non-payment of any past, present
or future obligations of the Company, including, but not limited to,
all federal, state, or local franchise, income, payroll, sales
taxes, or any other taxes, of any kind, required to be reported,
filed and paid by the Company.
4. Consulting Fee.
(a) As compensation for his services hereunder, the Company shall
pay Consultant, during the first year of Agreement (April 1, 2006
through March 31, 2007), a Consulting Fee at the annual rate of
$250,000 (the "2006 Base Consulting Fee"), payable as follows: (i)
$12,500 per month, or the annual rate of $150,000 (the "2006 Cash
Consulting Fee") until the completion of the Company's financing
(the "Financing Deal"), which is contemplated to close during the
third quarter of 2006 for a minimum of $5mm - PIPE or standard
secondary deal, at which time, the 2006 Cash Consulting Fee changes
to $16,667 per month, or the annual rate of $200,000 and there will
be a one-time cash catch-up payment, payable within five business
days after the closing of the Financing Deal, to compensate
Consultant for difference between $12,500 and $16,667 per month from
the Commencement Date through the closing date of the Financing
Deal. If the Financing Deal is not completed by October 31, 2006 the
Company and Consultant will negotiate by no later than December 31,
2006, a resolution for the payment of the difference between the
2006 Cash Consulting Fee ($150,000) and 2006 Base Consulting Fee
($200,000); and (ii) $50,000, which accrues and is deferred until
April 2007 (the "2006 Accrued Consulting Fee") until the revenue run
rate target of $10mm is achieved. At that time, the 2006 Accrued
Consulting Fee will become payable at the rate of $4,167 per month
for twelve consecutive months. However, when the average revenue
rate reaches $15mm, the balance of the 2006 Accrued Consulting Fee
is paid, in full, within 90 days. Note: For purposes of the
determining the payment of the 2006 Accrued Consulting Fee, revenues
will be determined by a minimum average monthly rate of $833,000 per
month for the 4Q 2006. If revenue target is not achieved in 2006,
the 2006 Accrued Consulting Fee balance carries over into 2007 until
target revenues are achieved.
(b) During the second year of Agreement (April 1, 2007 through
December 31, 2007), the Company shall pay Consultant a Consulting
Fee at the annual rate of $300,000 (the "2007 Base Consulting Fee"),
payable as follows: (i) $20,833 per month, or the annual rate of
$250,000; and (b) $50,000 accrues and deferred (the "2007 Accrued
Consulting Fee") until Jan 2008 until the (actual or run rate)
revenue target of $15mm is achieved. At that time, the 2007 Accrued
Consulting Fee will become payable at the rate of $4,167 per month
for twelve consecutive months. As revenue increases, any remaining
2006 Accrued Consulting Fee may also be triggered, if such revenue
target has not been previously achieved. However, when the revenue
run rate reaches $25mm, the balance of the 2007 Accrued Consulting
Fee is paid, in full, within 90 days. For the purposes of
determining the payment of the 2007 Accrued Consulting Fee, revenues
will be determined by a minimum average monthly rate of $1,250,000
per month for the 4Q 2007. If revenue target is not achieved in
2007, the 2007 Accrued Consulting Fee balance (and any unpaid 2006
Accrued Consulting Fee, if any) carries over into 2008 until target
revenues are achieved.
(c) During the third year of Agreement (January 1, 2008 through
December 31, 2008), the Company shall pay Consultant a Consulting
Fee at the rate of $350,000 (the "2008 Base Consulting Fee"),
payable as follows: (i) $25,000 per month, or the annual rate of
$300,000; and (b) $50,000 accrues and deferred (the "2008 Accrued
Consulting Fee") until Jan 2009 until the (actual or run rate)
revenue target of $25mm is achieved. At that time, the 2008 Accrued
Consulting Fee will become payable at the rate of $4,167 per month
for twelve consecutive months. As revenue increases, any remaining
2006 and 2007 Accrued Consulting Fee may also be triggered, if such
revenue target has not been previously achieved. Moreover, when the
revenue run rate reaches $35mm, the balance of the 2008 Accrued
Consulting Fee is paid, in full, within 90 days. For the purposes of
determining the payment of the 2008 Accrued Consulting Fee, revenues
will be determined by a minimum average monthly rate of $2,083,000
per month for the 4Q 2008. If this Agreement is not extended beyond
the Termination Date and revenue target is not achieved in 2008, the
2008 Accrued Consulting Fee balance (and any unpaid 2006 and/or 2007
Accrued Consulting Fee, if any) will be paid over twelve equal
monthly installments beginning as of the Expiration Date.
Alternatively, if this Agreement is extended beyond the Expiration
Date, then the 2008 Accrued Consulting Fee balance (and any unpaid
2006 and/or 2007 Accrued Consulting Fee, if any) carries over into
2009.
5. Incentive Fees.
During each year of this Agreement, Consultant shall be
eligible to earn annual Incentive Fees. Incentive Fee criteria and
amounts will be determined no later than 30 days prior to the
beginning of each calendar year and will be mutually agreed to
between the Consultant and the Board. In general, such Incentive Fee
criteria will consist of performance milestones related to revenues,
market capitalization and operational objectives. The following
Incentive Fees have been established for calendar year 2006:
(a) Revenue.
For the year ended December 31, 2006, Consultant shall receive
an Incentive Fee (the "Revenue Incentive") of $100,000 or $50,000,
provided (actual or run rate) revenues reach $10mm or $5mm,
respectively. For purposes of determining if either Revenue
Incentive has been earned, revenues for the fourth quarter of
calendar year 2006, should average $833,000 per month ($10mm per
annum rate), or average $416,000 per month ($5mm per annum rate),
respectively. Such Revenue Incentive, if earned, would be paid to
the Consultant in a lump sum, no later than March 31st 2007.
(b) Market Capitalization.
For the period ended March 31, 2007, Consultant shall receive
an Incentive Fee (the "Market Cap Incentive") of $250,000, $150,000
or $75,000, provided the Company's market capitalization for the
fourth quarter of 2006 averages $100mm, $75mm, or $50mm,
respectively. Such Market Cap Incentive, if earned, would be paid to
the Consultant in a lump sum no later than April 30, 2007.
(c) Company Objectives.
For the year ended December 31, 2006, Consultant shall receive
an Incentive Fee (the "Company Objective Incentive") of $50,000,
provided that all three of the following objectives are accomplished
in 2006: (i) Internal management information systems consisting of a
customer database and point-of-sale system that are in place, and
fully-functional at every store and at headquarter; (ii) hiring key
management personnel, which positions shall be identified and agreed
to by the Consultant and the Board consent no later than May 31,
2006 and should include at least a Chief Financial Officer, and
other key executive positions or functions to be determined by CEO
and Board; and (iii) the completion of a franchise offering circular
and commencement of a franchise program. Such Company Objective
Incentive, if earned, would be paid to the Consultant in a lump sum
no later than March 31, 2007.
(d) In connection with the Incentive Fee, if at the time any such
Incentive Fee payments are due, it is determined that the Company
does not have sufficient cash to pay any such lump sum Incentive Fee
or Fees, the Board reserves the right to offer the Consultant a
reasonable pay-out proposal, or the option to receive free and clear
tradable Common Stock of the Company in an amount equal to the
Incentive Fee or Fees amounts earned. In the event payment is made
with the Common Stock of the Company, the value of each share of
Common Stock will be determined by the average closing price for the
20 days prior to end of the first quarter of 2007.
6. Financing Deal Incentive.
In addition to the Incentive Fees outlined in Section 5 above,
the Consultant shall receive, an additional Incentive Fee in the
amount of $100,000 based upon the completion of a minimum $5,000,000
Financing Deal (the "Financing Deal Incentive"). The Financing Deal
Incentive will be paid in a lump-sum no later than fifteen (15)
business days after the closing of the Financing Deal.
7. Warrants.
(a) Upon execution of this Agreement, the Consultant shall be
granted warrants (the "Warrants") to purchase up to 4% of the fully
diluted shares of all classes of stock outstanding; estimated to be
approximately 1.1million shares, as calculated based upon the
completion of the Vision Capital Bridge Financing Deal ("Vision
Deal"); at an exercise price of $0.80 per share. If the Company
share price is below $0.80 at time of the Financing/PIPE deal then
both parties agree to renegotiate option exercise price within two
weeks after the subsequent release of the 10Q or 10K after the
financing/PIPE deal. One third of such Warrants shall be issued on
December 31st of each year of the Agreement, so long as the
Consultant is still engaged by the Company at such time. The form of
such Warrants shall be consistent with the warrants issued as part
of the Vision Deal.
(b) In the event of termination of this Agreement by the Company
without cause, all Warrants not yet issued as of the date of the
termination, shall vest in full on such date.
(c) In the event of a future disposition of the properties and
business of the Company, in case of a change of ownership greater
than 60% of the Company, whether by merger, consolidation, sale of
assets, sale of stock, or otherwise (each, a "Change of Control
Event"), then all Warrants not vested as of the date of the Change
of Control Event shall be issued in full on such date and, in
addition, if applicable, all Warrants will be included in any sale
of the Company's stock on a pro-rate basis with other shareholders.
(d) In the event of future disposition(s), by the Company's current
10 largest shareholders on record at the Commencement Date, of more
than 60% of the aggregate number of shares of Common Stock held by
such shareholders as of the date of the Financing Deal, the
cumulative effect of such sales of stock shall be considered a
Change of Control Event and, as such, then all Warrants not issued
as of the date of the Change of Control Event shall vest on a
pro-rata basis after the 60% limit is reached.
(e) The Warrants shall be subject to all of the terms of the Plan
and shall be evidenced by a stock Warrants grant certificate or
certificates that shall be issued by the Company. The Company
acknowledges that Warrants have not been delivered and agrees that
certificates evidencing the Warrants shall be delivered to
Consultant within 60 days after the date hereof. If the Financing
Deal is completed after the issuance of said certificates, the final
adjustment as discussed in Section 7(a) above will result in either
the immediate issuance or return of certificates.
8. Expenses.
(a) During the Agreement Term, the Company will pay Consultant for
certain monthly expenses as outlined in this Section 8(a). Such
covered expenses are outlined as follows: (i) a $400 car allowance;
(ii) the actual cost of business travel expenses (gas, tolls, and
parking) incurred when on business for the Company;and (iii) 50% of
the Consultant's then current health insurance premium, whether or
not such health insurance is provided by the Company, which is
capped at $500 per month.
(b) The Company shall provide the Consultant with a cellular phone
to be used in the conduct of Consultants duties at no cost to the
Consultant.
(c) The Company shall provide the Consultant with a laptop computer,
at a cost not to exceed $1,000 or reimburse Consultant the up to
$1,000 for the cost of a laptop to be utilized in the scope of his
duties.
9. Other.
(a) Consultant is entitled to be away from the engagement for four
(4) weeks per year; however, the Company is still required to pay
the Consulting Fee.
(b) Such time away shall be cumulative and a maximum of one week per
year may be carried over to ensuing years. If any time away is
carried over, Consultant shall make his best efforts to schedule
such time away as to minimize conflict with the Company's reasonable
business needs.
10. Representations and Warranties of Company.
(a) Notwithstanding the fact that the Company needs to complete the
Financing Deal to fund its revised business strategy, the Company
represents and warrants that upon execution of this Agreement, it
has the financial resources to fulfill its obligations under this
Agreement, at least as it pertains to the payment of Cash Consulting
Fee and Expenses during the first year of the Agreement.
(b) Further, the Company is current on all of its tax payments and
reporting, including, but not limited to such liabilities related to
payroll, sales and income tax obligations.
(c) The Company is not a party to any lawsuit or aware of any
complaint or notice of intent to file a lawsuit suit against the
Company, or any of its officers and/or directors.
11. Representations and Warranties of Consultant.
Consultant represents and warrants that (a) Consultant is
under no restriction which would prevent the Consultant from
performing his duties hereunder and (b) Consultant has no physical
or mental disability that would hinder his performance of duties
under this Agreement.
12. Non-Competition.
Consultant agrees that he will not (a) during the period he is
employed under this Agreement, engage in, or otherwise directly or
indirectly be employed by, or act as consultant or lender to, or be
a director, officer, Consultant, owner, member, or partner of, any
other business or organization that is or shall then be competing
with the Company (as a retail provider of financial and
telecommunication products focused on targeting Hispanic and other
ethnic communities) within a 5-mile radius), and (b) for a period of
one year after he ceases to be employed by the Company upon
expiration of this Agreement or three years if the Consultant is
terminated by the Company :for "cause" or if the Consultant
voluntarily terminates this Agreement prior to the Expiration Date,
except that in each case the provisions of this Section 13 will not
be deemed breached merely because the Consultant owns more than five
percent (5.0%) of the outstanding common stock of a corporation, if,
at the time of its acquisition by Consultant, such stock is listed
on a national securities exchange, is reported on NASDAQ, or is
regularly traded in the over-the-counter market by a member of a
national securities exchange.
13. Termination of Agreement.
(a) Notwithstanding anything contained herein, on or after the date
hereof, and prior to the Expiration Date, the Company and the
Consultant shall each have the right to terminate this Agreement,
without cause, upon 5 days written notice to the other party to this
Agreement.
(b) In the event that this Agreement is terminated by the Company
"without cause" pursuant to Section 14(a), then Consultant shall be
entitled to receive through the date on which such termination shall
take effect, only: (i) his unpaid Base Consulting Fee, on a pro-rata
per diem basis, at the rate provided in Section 4 and earned
Incentive Fees under Sections 5 and 6; (ii) accrued but unpaid
Consulting Fee and deferred Consulting Fee on a per-diem basis,
bonuses, vacation, and expenses as provided in Sections 4, 5, 6, 8
and 9; and (iii) break-up fee (the "Break-Up Fee "), in an amount
equal to the Cash Consulting Fee applicable to the year such
termination occurs. However, in the event that the Consultant has
earned the right to receive the Base Consulting Fee at the time of
the termination, then the Base Consulting Fee becomes the amount of
the Break-Up Fee Payment. All payments, other than the Break-Up Fee
Payment are due within 10 business days of the Termination Date. See
Section 14(c) for Break-Up Fee guidelines. In addition, all Warrants
which have not yet vested as of such date shall immediately vest.
(c) Any Break-Up Fee due under this Agreement pursuant to Section
14(b), concerning termination Without Cause, shall be payable in
twelve equal monthly installments beginning as of the date of
Termination, provided that in the year of such termination the
following applies: (i) the Company's Market Capitalization is
greater than $75mm at Dec. 31, 2006 or greater than $100mm from Dec.
31, 2007 and thereafter; (ii) for the previous three months prior to
any termination, revenues are greater than $10mm, if termination
occurs in year 1, revenues are greater than $15mm, if termination
occurs in year 2 and revenues are greater than $20mm, if termination
occurs in year 3; and (iii) as of the date of termination, the
Company has not been required to pay the proceeds of any litigation
it has lost, where such award exceeds 5% of the Company's total
assets.
(d) In the event this Agreement is terminated by the Consultant
pursuant to Section 14 (a), the Consultant agrees to remain with the
Company for a reasonable transition period, not to exceed 30 days,
if desired by the Company, as to enable the Company to find a
suitable successor for Consultant' and the Consultant shall be
entitled to receive, through the transition period discussed above,
only, (i) his unpaid Base Consulting Fee, on a per-diem basis, at
the rate provided in Section 4 and earned Bonuses under Sections 5
and 6; and (ii) accrued but unpaid Consulting Fee and deferred
Consulting Fee on a per-diem basis, Incentive Fees, time away pay,
and expenses as provided in Sections 4, 5, 6, 8 and 9. Consultant
agrees to act on a consultancy basis if requested by Company. All
such payments are due within 10 business days of the Date of
Termination. In addition, Consultant forfeits any Warrants not yet
vested.
(e) Notwithstanding anything contained herein, prior to the end of
this Agreement, Consultant may be terminated "For Cause" (as defined
below). In such event, the Company shall have the right to give
notice of termination of Consultant's services hereunder as a date
to be specified in such notice, and this Agreement shall terminate
on the date so specified. Termination "For Cause" shall mean the
Consultant shall have: (i) been convicted of a felony; (ii)
committed any act or omit to take any action in bad faith and to the
detriment of the Company; (iii) repeatedly failed to follow
commercially reasonable directions of the Board, provided Consultant
had been previously notified, in writing, of such failures, (iv)
committed an act of fraud against the Company; or (v) materially
breached any term of this Agreement and failed to correct such
breach within ten days after written notice of commission thereof.
In the event that this Agreement is terminated "For Cause" pursuant
to Section 14(d), then Consultant shall be entitled to receive,
through the date on which termination shall take effect, only, his
unpaid Base Consulting Fee at the rate provided in Section 4 and
earned Bonuses under Sections 5 and 6; and (ii) accrued but unpaid
Consulting Fee, deferred Consulting Fee, Incentive Fees, time away
pay, and expenses as provided in Sections 4, 5, 6, 8, and 9. All
such payments are due within 10 business days of the Date of
Termination.
(f) In the event the Consultant shall be physically or mentally
incapacitated or disabled or otherwise unable fully to discharge his
duties hereunder for a period of three consecutive months, then this
Agreement shall terminate upon 90 days' written notice to
Consultant, and no further compensation shall be payable after such
90 day period, except (i) as may be otherwise be provided under any
disability policy; and (ii) any accrued but unpaid Consulting Fee,
accrued Consulting Fee, Incentive Fees, time away pay, and expenses
as provided in Sections 4, 5, 6, 8 and 9. All such payments are due
within 10 business days of the Date of Termination. In addition, all
Warrants which have not yet vested as of such date shall vest on
schedule.
(g) In the event that Consultant shall die, the this Agreement shall
terminate in the date of the Consultant's death, and no further
compensation shall be payable to the Consultant, except (i) as may
otherwise be provided under any insurance policy or similar
instrument; and (ii) any accrued but unpaid Consulting Fee,
Incentive Fees, time away pay, and expenses as provided in Sections
4, 5, 6, 8 and 9. All such payments are due within 10 business days
of the Date of Termination. In addition, all Warrants which have not
yet vested as of such date shall vest on schedule.
14. Confidential Information.
All confidential information which Consultant may now possess,
may obtain during the term of the Agreement, or may create prior to
the period of the term of the Agreement he is employed by the
Company under this Agreement, relating to the business of the
Company or any customer or supplier of the Company shall not be
published, disclosed, or made accessible by him to any other person,
firm, corporation or entity during the term of the Agreement or any
time thereafter without the prior written consent of the Company.
Consultant shall return all tangible evidence of such confidential
information to the Company prior to or at the termination of his
Agreement.
15. Survival.
The covenants, agreements, representations, and warranties
contained in or made pursuant to this Agreement shall survive
Consultant's termination of Agreement, irrespective of any
investigation made by or on behalf of any party.
16. Modification.
This Agreement sets forth the entire understanding of the
parties with respect to the subject matter hereof, supersedes all
existing agreements between them concerning such subject matter, and
may be modified only by a written instrument duly executed by each
party.
17. Notices.
Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be by certified mail,
return receipt requested, or delivered against receipt to the party
to whom it is given at the address of such party set forth in the
preamble to this Agreement. Notice to the estate of the Consultant
shall be sufficient if addressed to Consultant as provided in this
Section 14. Any notice or other communication given by certified
mail shall be deemed given at the time of certification thereof,
except for a notice of changing a party's address which shall be
deemed given at the time of receipt thereof.
18. Waiver.
Any waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other
provision of this Agreement. The failure of a party to insist upon
strict adherence to any term of this Agreement on one or more
occasions shall not be considered a waiver or deprive that party of
the right thereafter to insist upon strict adherence to that term or
any other term of this Agreement. Any waiver must be in writing.
19. Binding Effect. Assignment.
Consultant's rights and obligations under this Agreement shall
not be transferable by assignment or otherwise, such rights shall
not be subject to encumbrances or the claims of Consultant's
creditors, and any attempt to do any of the foregoing shall be void.
The provisions of this Agreement shall be binding upon and inure to
the benefit of Consultant, and shall be binding upon and inure to
the benefit of the Company and its successors and assigns. In the
case of a Change of Control Event, the Company may elect to assign
this Agreement and all of its rights and obligations hereunder to
the acquiring or surviving entity. In the case of a Change of
Control Event, if (i) the Company does not elect to assign this
Agreement, or (ii) Consultant elects not to accept such assignment
(which Consultant may do in his sole discretion), then Consultant
shall be entitled to receive (i) his unpaid Base Consulting Fee at
the rate provided in Section 4 and earned Bonuses under Sections 5
and 6; (ii) accrued but unpaid Consulting Fee, deferred Consulting
Fee, bonuses, time away, and expenses as provided in Sections 4, 5,
6, 8 and 9; and (iii) Break-Up Fee (the "Break-Up Fee Payment"), in
an amount equal to the Cash Consulting Fee applicable to the year
such termination occurs. However, in the event that the Consultant
has earned the right to receive the Base Consulting Fee at the time
of the termination, then the Base Consulting Fee becomes the amount
of the Break-Up Fee Payment. All payments, other than the Break-Up
Fee Payment are due within 10 business days of the Termination Date.
20. Governing Law.
This contract shall be governed by and construed in accordance
with the laws of the State of New Jersey. Any disputes which arise
under this contract, even after the termination of this contract,
will be heard only in the state or federal courts located in the
State of New Jersey. The parties hereto expressly agree to submit
themselves to the jurisdiction of the foregoing courts in the State
of New Jersey. The parties hereto expressly waive any rights they
may have to contest the jurisdiction, venue or authority of any
court sitting in the State of New Jersey. Parties waive the right to
a jury trial.
21. Headings.
The headings in this Agreement are solely for the convenience
of reference and shall be given no effect in the construction or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date written above.
Nuevo Financial Center, Inc.
By:
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Name: Xxxx Xxxxxx
Title: Chairman
By:
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Name: Xxxxxxxxx Xxxxxxxx
