Exhibit 10.3
MARKETING AND CONSULTING
AGREEMENT
This Marketing and Consulting
Agreement (this “Agreement”) dated
, 2006 is entered into by and between Future Marketing, LLC, a
Delaware limited liability company (“Future”), and
American Telecom Services, Inc., a Delaware corporation (the
“Company”), and effective as of the date of the
consummation of the initial public offering of the Company’s
stock (the “Effective Time”).
RECITALS
A. The Company is engaged in the
business of sourcing, marketing, and distributing telephony
equipment bundled with broadband or prepaid communication
services.
B. Future provides the Company with
certain marketing, sales and consulting services including the
development and execution of the Company’s marketing plans,
management of Company accounts, assistance in connection with the
Company’s product development and back office services
(collectively, the “Services”).
C. The Company wishes to continue to
contract for the Services with Future, subject to the terms and
conditions set forth below.
NOW, THEREFORE, in consideration of
their mutual promises and agreements and subject to the terms and
conditions set forth below, the parties agree as
follows:
1. Retention; Term . The
Company agrees to retain Future to provide the Services, on the
terms and subject to the conditions contained herein. Future shall
devote such resources and time as shall be necessary to perform all
Services reasonably requested by the Company from time to time. All
Services shall be provided in a timely and professional manner.
Future shall not, directly or indirectly, render any services of a
business, commercial, or professional nature to any other entity or
person in any way competitive with the Company, whether for
compensation or otherwise. Future represents that the execution of
this Agreement and the performance of Future’s obligations
under this Agreement do not conflict with or result in a breach or
a default under any agreement, contract or instrument to which
Future is a party or by which Future is bound. The Term of this
Agreement shall commence as of the Effective Time and shall
continue through December 31, 2007 unless terminated as
provided herein (the “Term”).
2. Base Fees . In
consideration for the performance of the Services, the Company
shall pay Future base fees (the “Base Fees”) on a
monthly basis. For the period ending June 30, 2006,
Future’s annualized Base Fees shall be $164,000 per year. For
the period beginning July 1, 2006, and ending
December 31, 2007, Future’s annualized Base Fees shall
be $184,800 per year.
Future shall be responsible for all
required taxes, whether Federal, state or local in nature,
including, but not limited to, income taxes, that are required to
be paid by it pursuant to any applicable law.
3. Bonus Payments . Future
shall be eligible for Net Sales Bonus payments and Net Profits
Bonus payments as follows:
(a) Net Sales Bonus . Future
shall be eligible for bonus payments based on the
“Company’s Net Sales”, defined as the
Company’s revenues collected during the relevant bonus
period, less allowances granted to retailers, markdowns, discounts,
commissions, reserves for service outages, customer holdbacks, and
expenses, (the “Net Sales Bonus”), as described
below.
(i) Calculation and Timing of
Payments . The Net Sales Bonus shall be calculated and payable
as follows:
(A) Subject to the limitation in
Section 3(c) below, one percent of the amount by which the
Company’s Net Sales during the fiscal year ending
June 30, 2006, exceed $5,000,000, payable within ten
(10) days after the first public availability of the
Company’s audited financial statements for the fiscal year
ending June 30, 2006;
(B) Subject to the limitation in
Section 3(c) below, one percent of the amount by which the
Company’s Net Sales for the fiscal year ending June 30,
2007, exceed the Company’s Net Sales during the fiscal year
ending June 30, 2006 payable within ten (10) days after
the first public availability of the Company’s audited
financial statements for the fiscal year ending June 30, 2007;
and
(C) Subject to the limitation in
Section 3(c) below, one percent of the amount by which the
Company’s Net Sales for the six-month period ending
December 31, 2007, exceed the Company’s Net Sales during
the six-month period ending June 30, 2007 payable within ten
(10) days after the first public availability of
Company’s audited financial statements for the six month
period ending December 31, 2007.
(D) The Net Sales Bonus shall in no
event exceed seventy five percent (75%) of
(x) Future’s then current annual Base Fees or,
(y) in the case of the six-month period ending
December 31, 2007, the Base Fees during such
period.
(ii) Termination for Cause .
If this Agreement is terminated for cause by the Company pursuant
to Section 7(a) of this Agreement, Future shall be ineligible
for any Net Sales Bonus following the date of termination of this
Agreement; provided, however, if this Agreement is still in effect
on the last day of the fiscal year or other financial reporting
period on which a Net Sales Bonus payment is based, Future shall
remain eligible for a Net Sales Bonus payment for such period in
accordance with this Section 3.
(iii) Termination Without Cause
Or For Good Reason . If this Agreement is terminated without
cause by the Company, or for Good Reason by Future, Future shall be
eligible for a pro rated Net Sales Bonus based on the data from the
Company’s audited financial statements for the period ending
on the last completed quarter of the financial reporting period on
which a Net Sales Bonus is based; it being understood for purposes
of Sections 3(a)(i)a and 3(a)(i)b that the sales figures shall be
annualized and the resulting Net Sales Bonus shall be equal to the
product of (x) the Net Sales Bonus determined on such
annualized sales figures and (y) a fraction, the numerator of
which shall be the number of quarters completed in the financial
reporting period prior to the termination and the denominator of
which shall be four; it being
- 2 -
further understood that for purposes of
Section 3(a)(i)c, if the termination occurs after
September 30, 2007 but prior to December 31, 2007, the
sales figures through the quarter ending September 30, 2007
shall be multiplied by two and the resulting Net Sales Bonus shall
be equal to the quotient of (x) the Net Sales Bonus determined
on the basis of such sales figures and (y) two. The pro rated
bonus hereunder shall be payable within ten days of the termination
date of this Agreement.
For purposes of this Agreement,
“Good Reason” shall mean (i) the Company’s
material breach of this Agreement and its failure to cure such
breach within thirty (30) days after written notice thereof
from Future to the Company.
(iv) Termination by Future .
If this Agreement is terminated by Future for any reason (other
than for Good Reason), Future shall be ineligible for any Net Sales
Bonus following the date of termination, provided, however, if this
Agreement is still in effect on the last day of the fiscal year or
other financial reporting period on which a Net Sales Bonus is
based, Future shall remain eligible for a Net Sales Bonus payment
for such period in accordance with this Section 3.
(b) Net Profits Bonus .
During the Term, Future shall receive a bonus based on the
“Company’s Net Profits,” defined as the
Company’s net income, after taxes, as determined in
accordance with Generally Accepted Accounting Principles (GAAP),
(the “Net Profits Bonus”), as described
below.
(i) Calculation and Timing of
Payments . The Net Profits Bonus shall be calculated and
payable as follows:
(A) Subject to the limitation in
Section 3(c) below, one percent of the Company’s Net
Profits for the fiscal year ending June 30, 2006 payable
within ten (10) days after the first public availability of
the Company’s audited financial statements for the fiscal
year ending June 30, 2006;
(B) Subject to the limitation in
Section 3(c) below, one percent of the Company’s Net
Profits for the fiscal year ending June 30, 2007 payable
within ten (10) days after the first public availability of
the Company’s audited financial statements for the fiscal
year ending June 30, 2007; and
(C) Subject to the limitation in
Section 3(c) below, one percent of the Company’s Net
Profits for the six-month period ending December 31, 2007
payable within ten (10) days after the first public
availability of Company’s audited financial statements for
the six month period ending December 31, 2007.
(ii) Termination for Cause .
If this Agreement is terminated for cause by the Company pursuant
to Section 7(a) of this Agreement, Future shall be ineligible
for any Net Profits Bonus payment following the date of
termination, provided, however, if this Agreement is still in
effect on the last day of the fiscal year or other financial
reporting period on which a Net Profits Bonus is based, Future
shall remain eligible for a Net Profits Bonus payment for such
period in accordance with this Section 3.
- 3 -
(iii) Termination Without Cause
Or For Good Reason . If this Agreement is terminated without
cause by the Company, or for Good Reason by Future, Future shall be
eligible for a pro rated Net Profits Bonus based on the data from
the Company’s audited financial statements for the period
ending on the last completed quarter of the financial reporting
period on which a Net Profits Bonus is based; it being understood
for purposes of Sections 3(b)(i)a and 3(b)(i)b the net profits
shall be annualized and the resulting Net Profits Bonus payment
shall be equal to the product of (x) the Net Profits Bonus
determined on such annualized net profits and (y) a fraction,
the numerator of which shall be the number of quarters completed in
the financial reporting period prior to the termination and the
denominator of which shall be four; it being further understood
that for purposes of Section 3(b)(i)(c), if the termination
occurs after September 30, 2007 but prior to December 31,
2007, the net profits through the quarter ending September 30,
2007 shall be multiplied by two and the resulting Net Profits Bonus
shall be equal to the quotient of (x) the Net Profits Bonus
determined on the basis of such net profits and (y) two. The
pro rated bonus hereunder shall be payable within ten days of the
termination date of this Agreement.
(iv) Termination by Future .
If this Agreement is terminated by Future for any reason (other
than for Good Reason), Future shall be ineligible for any Net
Profits Bonus payment following the date of termination, provided,
however, if this Agreement is still in effect on the last day of
the fiscal year or other financial reporting period on which a Net
Profits Bonus is based, Future shall remain eligible for a Net
Profits Bonus payment for such period in accordance with this
Section 3.
(c) Maximum Amount Of Bonus
Payments . The aggregate of Future’s Net Sales Bonus and
Net Profits Bonus will in no event exceed 112% of Future’s
Base Fees during any bonus period for which the Net Sales Bonus and
Net Profits Bonus are paid.
4. Stock Options . Subject to
the terms and conditions of the Company’s 2005 Stock Option
Plan (the “Plan”) and a Stock Option Agreement to be
executed by the Company and Future (the “Option
Agreement”), Future shall receive a grant of 25,000 stock
options under the Plan (the “Options”) as of the
Effective Time. The Options shall be subject to vesting as set
forth in the Option Agreement which shall include, without
limitation, accelerated vesting in the event of a termination of
this Agreement without cause by the Company, for Good Cause by
Future and in the event of a Change in Control.
As used hereby, “Change in
Control” shall mean (w) any person shall after the date
hereof become the beneficial owner, directly or indirectly, of
securities of the Company representing 50% or more of the voting or
economic interest of all then outstanding securities of the
Company, (x) the consummation of any corporate transaction,
including a consolidation or merger, of the Company in which the
Company is not the continuing or surviving entit
