I'm not really great with organization, heres a couple interesting things.
RELATED PARTY TRANSACTIONS
On July 19, 2005, we entered into a Consulting Agreement with The Watley Group, LLC (“Watley”), which was ratified by the Board of Directors on September 15, 2005, with regard to capital referral fees, merger and acquisitions, and other services. Under terms of the Agreement, Watley was entitled to receive a success fee for identifying, coordinating, and otherwise facilitating the completion of acquisitions. In addition, Watley received success fees for identifying and facilitating fund raising. Watley was granted 1,026,668 shares of our restricted common stock. Of those shares, 102,666 were allocated to Mr. Martin Brill and 924,002 remained with Watley for services each performed. Further, for the year ended September 30, 2006, Watley received fees from the Company of approximately $1,518,000. Anthony J. A. Bryan, a member of our board of directors, is the father of Mr. John Bryan, Chief Executive Officer of Watley.
On September 15, 2005, the Board ratified the issuance of warrants to purchase 1,500,000 shares of our common stock for $.01 per share to Watley and warrants to purchase 1,500,000 shares of our common stock for $.01 per share to our Chairman, Mr. Robert Y. Lee. Such warrants are to vest if and when our sales equal or exceed $100 million on an annualized basis for a consecutive 90-day period. None of the warrants have been exercised and the warrants will all expire on December 31, 2006.
On September 15, 2005, the Board also acknowledged an agreement between Mr. Lee, our then Chairman, and Watley, whereby Mr. Lee received success fees from Watley in connection with acquisitions for which Watley receives an acquisition success fee from us. During the period ended September 30, 2005, Mr. Lee received fees from Watley of approximately $111,000 in connection with certain of his fund-raising activities on our behalf. Effective December 12, 2006, Mr. Lee’s agreement with Watley terminated and is no longer effective.
Pursuant to his agreement with Watley, during the year ended September 30, 2006, one of our directors, Mr. Earl Greenburg, received approximately $150,000 in referral fees from Watley for his assistance to the company in obtaining debt or equity financing.
Pursuant to his agreement with Watley, during the year ended September 30, 2006, our Chief Financial Officer, Mr. Haddon Libby, received approximately $220,000 in referral fees from Watley for his assistance to the company in obtaining debt or equity financing.
Pursuant to his agreement with Watley, during the year ended September 30, 2006, Mr. Martin Brill, an attorney for us and, since July 27, 2006, one of our directors, received approximately $220,000 in referral fees and reimbursements from Watley for his assistance to us in obtaining debt or equity financing. Previously, in connection with Mr. Brill’s services in advising, and coordinating professionals relating to our acquisitions, financings, and growth, Watley had transferred to Mr. Brill 102,666 of the shares of our common stock that Watley had been issued.
On July 29, 2005, we entered into a two-year employment agreement with Mr. Drace. Under the terms of such agreement, Mr. Drace shall be compensated $175,000 during the first 12-month period and $183,600 during the second 12-month period. Mr. Drace also qualifies for certain other benefits and a discretionary bonus. Mr. Drace will be entitled to participate in our stock option plan, once the plan is approved by the Board, at a level commensurate with his position. This agreement may be extended for three additional years by mutual consent, and entitles Mr. Drace to severance pay equal to six months’ salary in the event his employment is terminated without cause.
On October 21, 2005, we entered into a term sheet with Haddon Libby. Under the terms of such agreement, Mr. Libby shall be compensated $150,000 annually. At the Board of Director’s discretion, Mr. Libby could receive periodic performance bonuses that, on an annual basis, can be as high as three times his base salary. Mr. Libby also received 300,000 shares of our restricted common stock as a start-up bonus with a value of $0.1208 per share. Furthermore, Mr. Libby is entitled to severance pay equal to six months’ salary in the event his employment is terminated without cause.
Effective December 12, 2006, we entered into a three-year employment agreement with Robert Y. Lee. Under the terms of such agreement, Mr. Lee shall be compensated a base salary at the rate of $20,000 per month until, for any 30-day period, our company achieves revenues from normal operations in excess of $4,166,667 and positive four-wall income for all stores considered in the aggregate for the same 30-day period, and $25,000 per month thereafter. Mr. Lee is also entitled to a bonus represented by a promissory note for his benefit in the principal amount of $200,000, of which $50,000 is payable at the earlier of the expiration of his employment term under the agreement and the closing by the company of a debt or equity financing of at least $1,500,000, and the balance of which is payable upon the earlier of the expiration of his employment term under the agreement and the closing by the company of a primary issuance of the company’s stock with gross proceeds of at least $3,000,000. In addition, Mr. Lee may be entitled to additional performance bonuses in the amount of $250,000 once the company reaches annual run-rate revenues in the amount of $50,000,000 and $500,000 once the company reaches annual run-rate revenues in the amount of $100,000,000. Furthermore, Mr. Lee is entitled to receive fully vested options under the company’s stock option plan, once the plan is approved by the Board, to purchase an aggregate of 800,000 shares of the company’s common stock, at exercise prices ranging from $3.50 to $10.00 per share. The company also agreed to pay an expense allowance for an automobile in an amount of $2,000 per month.
