exh10-3_consulting.htm


     

    
      

      

    

     

     

     

     

     

     

     

     

     

    EXHIBIT 10.3

     

    CONSULTING AGREEMENT DATED JUNE 6, 2008

    
 

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


     

    June 6,
2008

     

     

    


    Gordon
Beckstead

    Chairman

    V2K
International, Inc

    13949
West Colfax Avenue

    Suite
250

    Lakewood,
Colorado  80401

    


    


    Re:           V2K
Business Assessment and Marketing Strategy

    


    


    


    Dear
Gordon,

    


    This
letter will serve as the definitive agreement for the Business Assessment and
Marketing Strategy to be developed by Growth Management Partners LLC d/b/a
Amerivon Retail Consulting (“ARC”) in conjunction with the Reliable Retail
Results Proposal dated March 17, 2008 and executed by V2K and
Amerivon.

    


    We at ARC
are very impressed with the V2K concept and look forward to working with your
team to develop and execute a go-to-market strategy to grow V2K’s business and
shareholder value. This letter provides a detailed description of our work plan
and the deliverables for the engagement.  We look forward to
discussing it with you and beginning our work together.

    


    


    Overview

    


    ARC will
focus its efforts on two fronts:  an initial Business Assessment
followed by a thorough development of a Marketing Plan.  The Marketing
Plan will cover all aspects of the company’s sales and marketing strategy with a
particular focus on two major go-to-market issues:

    


    
      	
              1.  

            	
              Using
      kiosks inside of major retailers to generate sales leads.  It is
      our understanding that V2K has a successful sales model with a very high
      closing rate for new sales prospects.  Our goal will be to
      evaluate how an in-store kiosk could successfully be deployed to generate
      more leads.  We will be working with the company to evaluate and
      adjust the pilot kiosk program being launched in two Sam’s Club locations
      in April 2008.

            


    

    


    
      	
              2.  

            	
              Using
      a dealer network to complement the existing franchise
      model.  V2K currently uses a franchise model as it primary sales
      force.  We understand that this choice was partially driven by
      limited access to capital during the company’s start-up
      phase.  ARC will explore whether or not a dealer model with
      company owned stores and direct employees may provide better control and
      margins.

            


    

    


    The above
will represent Phase l of our work with V2K.  ARC would also like to
evaluate the company’s sourcing and supply chain strategies, especially the
products that are sourced from China and Mexico.  We would also like
to evaluate several technology issues (on-line selling, call centers, and
technology licensing) as well as product line extensions and alliances (paints,
floor coverings, accessories, etc).  We will collect data on these
issues in the course of our work in Phase 1, but a full evaluation of these
issues will be undertaken in a Phase II engagement at the direction of
V2K.

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

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Page 2                                                                                                                                                         
June 6, 2008

       

    

    Approach

    


    As
outlined in our March 17th Reliable Retail Results letter, ARC will provide an
assessment of V2K’s current business and will develop a complete marketing
strategy in Phase l.  The key deliverables for this Phase I plan will
include:

    


    
      	
              1.  

            	
              Current
      business and market assessment,
including:

            


    

    


    
      	
              a.  

            	
              Review
      the size of the window treatment market and industry trends. We will focus
      on the US market, but will include international data where
      available.

            


    

    


    
      	
              b.  

            	
              Develop
      a SWOT analysis for V2K’s current
business.

            


    

    
      	
              i.  

            	
              Strengths:

            


    

    
      	
              1.  

            	
              Technology

            


    

    
      	
              2.  

            	
              Sales
      process

            


    

    
      	
              3.  

            	
              Backend
      process management

            


    

    
      	
              4.  

            	
              Sam’s
      club kiosk test

            


    

    
      	
              ii.  

            	
              Weaknesses:

            


    

    
      	
              1.  

            	
              Lead
      generation

            


    

    
      	
              2.  

            	
              Brand
      awareness

            


    

    
      	
              3.  

            	
              Branding
      strategies

            


    

    
      	
              iii.  

            	
              Opportunities:

            


    

    
      	
              1.  

            	
              Increase
      market penetration and geographic
coverage

            


    

    
      	
              2.  

            	
              Improve
      control and margins

            


    

    
      	
              3.  

            	
              Partner
      with selected retailers

            


    

    
      	
              4.  

            	
              Improve
      efficiency of sourcing and
manufacturing

            


    

    
      	
              5.  

            	
              Add
      related product lines such as paint and floor coverings through alliances,
      expand license technology, develop an on-line
  platform

            


    

    
      	
              iv.  

            	
              Threats:

            


    

    
      	
              1.  

            	
              Low
      brand awareness

            


    

    
      	
              2.  

            	
              Capital
      requirements to increase market penetration and geographic
      coverage

            


    

    
      	
              3.  

            	
              Margin
      pressure from changes in foreign currency exchange rates which in turn
      increases sourcing costs

            


    

    
      	
              4.  

            	
              Competition

            


    

    


    
      	
              c.  

            	
              Analysis
      of the competitive landscape.

            


    

    
      	
              i.  

            	
              Evaluate
      competitors such as Hunter Douglas, who have catalogue and on-line
      businesses, as well as alliances with selected retailers such as
      Costco.

            


    

    
      	
              ii.  

            	
              Evaluate
      regional competitors such as Eddie Z’s who have their own stores or sales
      models.

            


    

    
      	
              iii.  

            	
              Evaluate
      existing retailer initiatives such as the Hunter Douglas in-store kiosk
      program with Costco.

            


    

    
      	
              iv.  

            	
              Evaluate
      the V2K/Sam’s club pilot.

            


    

    


    
      	
              2.  

            	
              Marketing
      Strategy

            


    

    


    
      	
              a.  

            	
              Evaluate
      the current franchise model.

            


    

    
      	
              i.  

            	
              Review
      strengths (franchising income, low capital requirements, high quality
      sales personnel) and weaknesses (less control, lower
    margins).

            


    

    
      	
              ii.  

            	
              Identify
      opportunities to improve control, efficiencies,
    profitability

            


    

    


    
      	
              b.  

            	
              Evaluate
      a potential dealer model with company owned stores and direct
      employees.

            


    

    
      	
              i.  

            	
              Identify
      requirements to establish dealer network: store logistics, technology,
      staff and compensation.

            


    

    
      	
              ii.  

            	
              Develop
      store geography and location strategy, including number of stores and
      expansion planning.

            


    

    
      	
              iii.  

            	
              Evaluate
      costs, benefits, and ROI of a direct dealer
  model.

            


    

    
      	
              iv.  

            	
              Evaluate
      a mixed model of franchise and direct
dealers.

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      
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Page 3                                                                                                                                                         
June 6, 2008

         

      

    

    
      	
              c.  

            	
              Evaluate
      the current in-store kiosk strategy

            


    

    
      	
              i.  

            	
              Review
      the objectives of kiosk: awareness, lead generation, product information
      and demonstration, and sales leads.

            


    

    
      	
              ii.  

            	
              Evaluate
      kiosk execution issues: design, user experience and time, cost,
      maintenance.

            


    

    
      	
              iii.  

            	
              Look
      at current and future channel partners.  Which retailers are the
      best strategic fit (Costco, Loews, JC Penny,
  etc)

            


    

    
      	
              iv.  

            	
              Review
      the retailer value proposition and benefits: providing new services and
      revenues such as the ability to sell custom window
    treatments.

            


    

    
      	
              v.  

            	
              Review
      the kiosk fulfillment plan: lead capture and distribution, payment
      processing, accounting, customer service, and issue
    resolution

            


    

    


    


    Work
Plan

    


    In order
to provide the foregoing deliverables, we propose the following work
plan:

    


    
      	
              1.  

            	
              Current
      business and market assessment.

            


    

    


    
      	
              a.  

            	
              Project
      start-up meeting with V2K
management.

            


    

    
      	
              i.  

            	
              Review
      and finalize project objectives

            


    

    
      	
              ii.  

            	
              Appoint
      V2K project team members: team leader/sponsor; finance; franchisee
      contact; customer contact; Sam’s Club
contact.

            


    

    


    
      	
              b.  

            	
              Determine
      the market size and review trends.

            


    

    
      	
              i.  

            	
              Review
      data from V2K and ARC sources to determine size of window treatment
      market, trends, competitors, and issues. Focus on the US, but collect
      international data where available.

            


    

    
      	
              ii.  

            	
              Interview
      V2K executives and franchises to capture their views on these
      issues

            


    

    


    
      	
              c.  

            	
              Identify
      competitors and evaluate their
models

            


    

    
      	
              i.  

            	
              Identify
      key competitors such as Hunter Douglas and regional companies such as
      Eddie Z’s, etc.

            


    

    
      	
              ii.  

            	
              Evaluate
      the competitor models: product and service offerings, pricing, sales
      channels (company stores, franchisees, catalogue, on-line, in-store
      kiosk), retail partners, sourcing, profitability, strengths and
      weaknesses. In particular, evaluate the Hunter Douglas kiosks in Costco
      (objectives, functions, customer experience, benefits, operations issues,
      cost, and ROI).

            


    

    


    
      	
              d.  

            	
              Evaluate
      the current franchise model

            


    

    
      	
              i.  

            	
              Interview
      V2K franchisees and V2K management.

            


    

    
      	
              ii.  

            	
              Identify
      strengths and weaknesses of V2K franchise model: franchise cost and fees,
      technology, products, training and sales support, leads, in-home selling
      experience, average sale size, backend operations and
      fulfillment.

            


    

    
      	
              iii.  

            	
              Identify
      opportunities for improvement ( i.e. leads, control, new products such as
      paints)

            


    

    
      	
              iv.  

            	
              Evaluate
      financials: franchise fees and income; revenue growth;
      margins.

            


    

    


    
      	
              e.  

            	
              Evaluate
      consumer experience

            


    

    
      	
              i.  

            	
              Interview
      V2K consumers

            


    

    
      	
              ii.  

            	
              Determine
      how consumers became aware of V2K and contacted
  company.

            


    

    
      	
              iii.  

            	
              Determine
      awareness and perception of V2K versus
  competitors.

            


    

    
      	
              iv.  

            	
              Evaluate
      consumer response to brand name.

            


    

    
      	
              v.  

            	
              Evaluate
      in-home shopping, buying and fulfillment
  experience.

            


    

    
      	
              vi.  

            	
              Identify
      trends (in-store shopping, on-line shopping), opportunities for
      improvement, and growth (new products,
etc)

            


    

    


    
      	
              f.  

            	
              Evaluate
      Sam’s Club pilot.

            


    

    
      	
              i.  

            	
              Interview
      V2K and Sam’s Club management.

            


    

    
      	
              ii.  

            	
              Review
      the objectives of the kiosk, operations issues, benefits, cost,
      ROI

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
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Page 4                                                                                                                                                         
June 6, 2008

    

     

    
      	
              iii.  

            	
              Interview
      consumers (buyers and aware non-buyers).  Focus on awareness,
      kiosk usage experience, leads generated, if purchased why, if not
      purchased why not, strengths and opportunities for
      improvement.

            


    

     

    ARC will
summarize the findings of Market and Business Assessment and will conduct
management workshops to and present the findings.  The workshops will
cover:

    
      	
              ·  

            	
              SWOT
      analysis of current business

            


    

    
      	
              ·  

            	
              Competitive
      landscape

            


    

    
      	
              ·  

            	
              Evaluation
      of existing retailer initiatives: Hunter Douglas Costco kiosk program; V2K
      Sam’s Program

            


    

    
      	
              ·  

            	
              Key
      issues to be resolved in developing the Marketing
  Strategy

            


    

    


    We
estimate that the Market and Current Business Assessment phase will take 4 to 6
weeks to complete, depending on the availability of data and people to be
interviewed.

    


    


    
      	
              2.  

            	
              Marketing
      Strategy

            


    

    


    
      	
              a.  

            	
              Evaluate
      dealer model

            


    

    
      	
              i.  

            	
              Evaluate
      competitors models: Hunter Douglas, Eddie Z’s and
  others

            


    

    
      	
              ii.  

            	
              Develop
      elements of dealer model

            


    

    
      	
              iii.  

            	
              Store
      costs: rent, technology (kiosks, other),fixtures and display,
      product/sample inventory

            


    

    
      	
              iv.  

            	
              Staffing:
      skills sets (sales people, designer, other); compensation(hourly base,
      commissions)

            


    

    
      	
              v.  

            	
              Headquarters
      team: management, operations, technology, sourcing,
  finance

            


    

    
      	
              vi.  

            	
              Number
      and location of stores with a roll out
plan

            


    

    
      	
              vii.  

            	
              Costs
      and ROI

            


    

    


    
      	
              b.  

            	
              Compare
      franchise and dealer models

            


    

    
      	
              i.  

            	
              Strengths,
      weaknesses and benefits of each
model

            


    

    
      	
              ii.  

            	
              Cost
      and ROI of each model

            


    

    
      	
              iii.  

            	
              Evaluate
      a mix of franchise and dealer
stores

            


    

    


    
      	
              c.  

            	
              Evaluate
      and further refine the in-store kiosk
strategy

            


    

    
      	
              i.  

            	
              Summarize
      findings of Hunter Douglas Costco kiosk program and V2K Sam’s
      test.

            


    

    
      	
              ii.  

            	
              Determine
      the objectives of the kiosk: to increase awareness, generate leads,
      provide information and demonstrate the
product.

            


    

    
      	
              iii.  

            	
              Further
      develop design and user interface/experience. Determine operating and
      maintenance issues.

            


    

    
      	
              iv.  

            	
              Determine
      fulfillment issues: lead and order management; payment and accounting;
      customer service

            


    

    
      	
              v.  

            	
              Develop
      retailer proposition: benefits ( new revenue due to ability to offer
      custom window treatments, etc); terms; cost and ROI to
      retailer

            


    

    
      	
              vi.  

            	
              Determine
      which retailers would be best strategic partners and priority (
      Sam’s/Wal-Mart; Costco; JC Penny, Loews, Bed Bath and Beyond,
      etc)

            


    

    
      	
              vii.  

            	
              Determine
      cost and ROI to V2K

            


    

    


    We will
summarize the findings of the Marketing Strategy plan and will hold meetings
with V2K management to present the results.  We will make
recommendations regarding:

    
      	
              ·  

            	
              Franchise
      model versus dealer strategy, or mix of
both

            


    

    
      	
              ·  

            	
              In-store
      kiosk strategy, including retail partners, proposition, and execution
      issues

            


    

    
      	
              ·  

            	
              Opportunities
      to improve current business model

            


    

    
      	
              ·  

            	
              Priorities,
      timing, capital requirements, and
ROI

            


    

    


    We will
identify several issues for a Phase ll engagement such as: sourcing and supply
chain issues; technology issues (on-line platform, licensing), and international
expansion.

    


    We
estimate that the Marketing Strategy plan will require 4 to 6 weeks to develop.
We believe we can begin some elements of the Marketing Strategy plan toward the
end of the Market and Business Assessment phase. 

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
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    Consequently,
the total time for the completion of Phase l is estimated at 8 to 10
weeks.  This estimate is dependent upon the availability of data and
people to be interviewed.   As requested by V2K, ARC will use its
best efforts to complete Phase I as quickly as possible, while delivering a
quality report.

    


    


    ARC
Team

    


    The ARC
team will be led by Elizabeth Harrington, President of Amerivon Retail
Consulting. Elizabeth is a former Partner of PricewaterhouseCoopers retail
practice. Her clients have included Wal-Mart/Sam’s, JC Penny, Home Depot, Sears,
and other companies relevant to V2K. She is also experienced in kiosk selling
systems and dealer versus franchise network development from her work with
Kodak, their digital film kiosks, and Kodak Express Stores. Elizabeth will be
supported by Scott DeRuyter, a manager in our consulting practice with extensive
experience in retail kiosk technology and business strategy.

    


    


    Compensation

    


    Our
professional fees for the development of the Business Assessment and
Go-to-Market Strategy will be $200,000 USD. Our out-of-pocket expenses for
travel have been budgeted at $25,000 USD.  All expenses will be
supported with receipts. The fees and expenses have been withheld out of the
$1.6 Million USD Bridge Loan to be provided by Amerivon Investments LLC. 50% of
our fee will be earned upon commencement of our work and the balance will be
deemed earned on a progress basis as we work through the
engagement.  Additional expenses may be required for consumer
research. If so, we will discuss these with you and recommend a third party
supplier, and provide an estimate for your approval in advance.

    


    


    Business
Continuation Services

    


    
      	
              1.  

            	
              Our
      business continuation services will include the
  following:

            


    

    
      	
               
      

            	
              a.

            	
              Review,
      advise, and revise your business plan to maximize your funding
      opportunities for high net worth and institutional investors such as
      venture capital firms, PIPE funds, and private equity
    funds.

            


    

    
      	
               
      

            	
              b.

            	
              Advise
      and represent you in approaching prospective asset based and cash flow
      lenders.

            


    

    


    
      	
              2.  

            	
              Our
      fees for these services will be:

            


    

    
      	
               
      

            	
              a.

            	
              An
      upfront payment of $80,000, which is included in the $305,000 Consulting
      Agreement fee provided in Section 2.3(a) of the Bridge Loan Agreement,
      dated as of June 6, 2008, by and between you and Amerivon Investments
      LLC;

            


    

    
      	
               
      

            	
              b.

            	
              7%
      of the committed equity or convertible debt securities funding amount from
      capital sources introduced to you by us or any of our affiliates during
      the term of our business continuation services
  arrangement;

            


    

    
      	
               
      

            	
              c.

            	
              3%
      of the committed credit extended to you by any lender introduced to you by
      us or any of our affiliates during the term of our business continuation
      services arrangement;

            


    

    
      	
               
      

            	
              d.

            	
              10%
      warrant coverage of equity or convertible debt securities for which we
      receive the cash fee in paragraph 2(b) above, with an exercise price at
      the valuation of V2K determined by such securities with an exercise period
      of five years.  These warrants may be exercised using the
      cashless exercise method;

            


    

    
      	
               
      

            	
              e.

            	
              3%
      warrant coverage of warrants or equity issued to a lender for which we
      receive the cash fee in paragraph 2(c) above, with an exercise price at
      the valuation of V2K determined by such securities with an exercise period
      of five years.  These warrants may be exercised using the
      cashless exercise method;

            


    

    
      	
               
      

            	
              f.

            	
              You
      will reimburse us for all of our reasonable out-of-pocket expenses
      associated with these services; and

            


    

    
      	
               
      

            	
              g.

            	
              We
      will not receive any fees for funds provided by Vision Capital or any of
      its controlled affiliates.  However, we will be entitled to the
      cash fees and warrant coverage with respect to the issuance and sale of
      the Series B preferred stock, except for shares purchased by Vision
      Capital or any of its controlled
affiliates.

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      
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6                                                                                                                                                         
June 6, 2008

         

      

       

    

    
      	
              3.  

            	
              The
      term of our business continuation services will be for 180 days, with
      automatic three-month renewals unless either of us give written notice to
      the other of the election not to renew at least thirty days prior to the
      expiration of the initial or any renewal term.  You will pay our
      fees for any funding received by V2K during the six months following the
      termination of our business continuation
  services.

            


    

    


    


    We look
forward to finalizing this agreement and beginning our work with
V2K.

    


    Best
Regards,

    


    AMERIVON
HOLDINGS LLC

    


    


    


    By:    /s/ Tod M.
Turley                          


    Tod M. Turley, Chairman
and

    Chief Executive Officer

    


    


    


    


    


    Agreed
and acknowledged this 6th day of June, 2008.

    


    


    V2K
International, Inc.

    


    


    By:           /s/ Victor J.
Yosha                    


    


    Name:     Victor J.
Yosha                        


    


    Title:     Chief Executive
Officer