EXHIBIT 6.07
CONSULTING AGREEMENT
This Agreement (this "Agreement") is entered into as of September 1, 1999 by and
between Showstar On-Line, Inc., a Colorado corporation ("Company") and Xxxxxx
Xxxx, ("Xxxx"), trading as Xxxx Corporate Art Advisors, having her principal
place of business at 0000 Xxxxx Xxxx, Xxxxxx Xxxx, XX. 00000 ("Consultant").
The parties hereto agree as follows:
1. Engagement. Company hereby engages Consultant and Consultant hereby agrees
to hold herself available to render, and to render at the request of Company,
independent marketing, advisory and consulting services for Company and its art
web site which will be known as "ArtStar", to the best of its ability, upon the
terms and conditions hereinafter set forth.
2. Term. The term of this Agreement is one year and shall begin as of the date
of this Agreement. The Agreement shall be automatically renewed by the Company
for an additional two years unless either party gives sixty (60) days notice of
non-renewal prior to the first anniversary of signing.
3. Termination.
3.1. The provisions of paragraph 2 notwithstanding, this Agreement shall
terminate upon the occurrence of any one or more of the following:
a. Death of Xxxxxx Xxxx;
b. Inability of Xxxxxx Xxxx to perform her duties for a period of 60 consecutive
days due to sickness, disability or any other cause, unless Consultant is
granted a leave of absence by the Company; or
c. For cause as defined in sections 4.1 or 4.2 or 4.3.
3.2. Termination with Cause by the Company, Etc. Consultant shall be
entitled to compensation earned through the date of termination if
termination is with cause by the Company, without cause by Consultant or
because of Xxxx'x death or disability as provided in sections 3. 1 (a) or (b).
3.3. Termination without cause by the Company. Termination without cause by
the Company must be preceded by a minimum of a sixty (60) days' prior written
notice of such termination to Consultant. The period of non-competition shall
be reduced to one (1) in the event of termination of Consultant by the
Company without cause.
3.4. Resignation by Consultant. In the event Consultant elects to terminate
its relationship with the Company without cause by resigning, or otherwise,
Consultant shall be entitled to no further compensation or grant shares not
theretofore vested as of and from the date of such termination. Furthermore,
termination without cause by Consultant must be preceded by a minimum of a
sixty (60) days' or written notice of such termination to the Company.
3.5. Continuing Effect. Despite termination of this Agreement, and, unless
otherwise provided herein, irrespective of whether such termination has been
effected with or without cause by either Company or Consultant, such termination
shall not affect the continuing enforceability of those provisions hereof that
are by intended to apply after the termination hereof, including without
limitation those contained in section 10.
4. Cause and Breach.
4.1. Where reference is made in this Agreement to termination by the Company
with or without cause, "cause," shall mean cause resulting, from actions or
inactions of Consultant and is limited to the following:
a. Repeated failure or refusal to carry, out the reasonable directions of the
Company, provided such directions are consistent with the duties and obligations
herein set forth to be performed by Consultant;
b. Willful violation of a state or federal law involving the commission of
(1) a crime against the Company materially adversely affecting the Company or
(2) a felony of any kind; or
c. Any material breach by Consultant or this Agreement or the falsity of any
material representation or warranty of Consultant herein not corrected as
paragraph 4.3 hereof
4.2. Where reference is made in this Agreement to termination being by
Consultant with or without cause, "cause", shall mean any breach of this
Agreement by the Company not corrected as provided in paragraph 4.3 hereof
4.3. Whenever a breach of this Agreement by either party is relied upon as a
justification for any action taken by the other party pursuant to any
provision of this Agreement (including without limitation termination
hereof), before such action is taken, the party asserting the breach shall
give the other party written notice of the existence and nature of the breach
and such other party shall have the opportunity to correct such breach during
the thirty (30) day period following such notice. If such cure is effected,
then an ch breach shall not be a basis for the party intending to rely
thereon.
5. Compensation. As compensation for all services rendered by Consultant under
this Agreement, Company shall pay Consultant the following sums:
(a) During the term of this Agreement Company shall pay Consultant a refundable
advancement of $5000.00 during the term hereof, which constitutes a draw against
commissions due Consultant. Consultant is guaranteed a minimum of $5000.00 each
month, provided, however, that in those months in which Consultant earns a
commission greater than $5000.00, Company shall deduct from such commission, an
amount, if any, equal to that owed the Company in prior months in which $5000.00
in commissions were not actually earned by Consultant.
(b) During the term of this Agreement Company shall pay Consultant a commission
of twenty percent (20%) of gross profits made on all purchases of goods, defined
as all artwork, frames and related items, and a commission of fifty percent
(50%) of gross profits made on all purchases of consulting services by any
ArtStar client. Gross profits are defined as revenues less cost.
(c) Payment will be made monthly, the sum based upon receipts of purchases of
goods and of consulting services by ArtStar Consulting (defined below)
clients purchaser makes full payment of purchase price.
(d) Upon execution of this agreement, Consultant shall receive three hundred
thousand (3 00,000) shares of Company, which shall vest at one hundred thousand
(100,000) shares per year commencing upon execution and upon each anniversary
date; provided, however, that Consultant is not terminated with cause or that
Consultant elects to terminate without cause by resignation, or otherwise.
(e) During the time of this agreement Consultant shall receive stock options of
one hundred fifty thousand (150,000) shares at $1.00 per share per year for
three (3) years, which shall vest at 50,000 shares, each year beginning on the
first anniversary of execution of the Agreement; provided, however, that
Consultant is not terminated with cause or that consultant elects to terminate
without cause by resignation, or otherwise.
(f) In the event that Consultant is terminated without cause, then the effective
date of all the foregoing shares and options shall be advanced to the date of
any such occurrence, and such options shall remain in effect until termination.
All such compensation shall be payable without deduction, including no deduction
for federal income, social security, or state income taxes.
6. Duties. Consultant shall hold itself to render, and shall render at the
request of Company from time to time consulting and marketing services for the
Company, including, without limitation, advice and assistance on the following:
(a) designing and developing the entire on-line ArtStar art selection service to
be known as "ArtStar Consulting", including conferring with programmers to
create all necessary programs;
(b) providing personalized art selection service to every ArtStar Consulting
client and directing all art sales through ArtStar, including in-person
consulting services;
(c) creating customized art programs;
(d) developing an exclusive ArtStar listing of special art sources using
Consultant's professional connections with hundreds of professional artists and
photographers;
(e) negotiating with individual artists and photographers to sell their artwork
directly through ArtStar for the benefit of ArtStar Consulting clients,
provided, however that the commission paid to ArtStar shall be greater than
thirty percent (30%);
(f) negotiating with art galleries, and dealers to grant special discounts of
more than twenty percent (20%) to ArtStar Consulting clients at a companion site
to be known as "Artist Preferred," provided, however that the commission paid to
ArtStar is no less than thirty percent (30%).
(g) negotiating directly with framers to grant special discounts to ArtStar,
provided, however that the commission paid to ArtStar shall be at least fifty
percent (50%);
(h) using her best efforts to direct current and future corporate and private
clients of Consultant to use ArtStar as their exclusive agent for all art
resales through the ArtStar retail and auction site;
(i) negotiating with current Consultant's corporate clients to create an
online ArtStar protocol for the procurement of artwork in specific instances,
including large-scale purchases of artwork designated for personal offices
within large corporations such as American Express, Merck & Co., and Deloitte
& Touche, when Consultant deems appropriate;
(j) initiating talks with Consultant's close contacts in Sienna, Italy in the
effort to bring artwork and items to ArtStar's auction site and to create a
cultural and travel program focused on Tuscany;
(k) initiating talks with MasterCard International, to explore a potential
online art and culture relationship with ArtStar;
(l) exploring the possibility of providing online art purchasing services to
employees of Consultant's corporate clients through in-house company intranet
systems;
(m) developing "tours" of clients' corporate art collections and providing art
purchasing programs for the employees, when the Consultant deems appropriate;
(n) encouraging and creating relationships with other consultants to provide
consulting services to ArtStar clients in other potential areas, including but
not limited to home furnishings and antique collecting; and
(o) making significant contributions and assist in all aspects of the ArtStar
web site to ensure its overall success.
Consultant shall render such services conscientiously and shall devote its
best efforts and abilities thereto, at such times during the term hereof and
in such manner, as Company and Consultant shall mutually agree, it being
acknowledged that Consultant's services shall be non-exclusive and performed
at such places and at such times as are reasonably convenient to Consultant.
Consultant shall observe all policies and directives promulgated from time to
time by Company's Board of Directors or Officers. Consultant shall not engage
in any activities in conflict with the business and purposes of ArtStar or
the Company's other business as from time to time conducted.
7. Expenses.
(a) Consultant shall be promptly (within thirty (30) days) reimbursed by Company
for all reasonable business expenses which are deductible by Company for U.S.
Federal income tax purposes and which were incurred by Consultant during the
performance of its services hereunder; provided, any such reimbursement in
excess of $1000.00 in any month, shall require Company's prior written approval.
Company's obligation to reimburse Consultant pursuant to this subparagraph shall
be subject to the presentation to Company by Consultant of an itemized account
of such expenditures, together with supporting vouchers, in accordance with
Company's policies as in effect from time to time.
(b) Company shall promptly reimburse Consultant for all expenditures related
to in-person consulting services, including travel, lodging and other
reasonable expenses incurred in connection with the rendering such services
by Consultant. Company shall xxxx ArtStar clients for all expenses associated
with in-person consulting services, including travel, lodging and other
reasonable expenses incurred in connection with in-house consulting services.
(c) Company shall increase the monthly stipend payable to Consultant by an
amount reasonably determined by both parties in the event that additional
manpower is required to provide Consultant's services.
(d) Company shall increase the monthly stipend payable to Consultant by an
amount reasonably determined by both parties in the event that Consultant
requires the expertise of other art consultants or consultants in other
relevant fields.
8. Independent Contractor. It is expressly agreed that Consultant is acting as
an independent contractor in performing her services hereunder. Company shall
carry no Workmen's Compensation insurance or any health or accident insurance to
cover Consultant. Company shall not pay any contributions to Social Security,
unemployment insurance, federal, or state withholding taxes, nor provide any
other contributions or benefits, which might be expected in an employer-employee
relationship.
9. Disclosure of Information. Consultant shall not disclose or appropriate to
her own use, or to the use of any third party, at any time during or subsequent
to the term of this Agreement, any secret or confidential information of Company
or ArtStar of which Consultant has been or hereafter becomes informed, whether
or not developed by Consultant, including, but not limited to, information
pertaining to ArtStar Consulting, ArtStar Preferred, customer lists, art
sources, art software programs, services, methods, processes, prices, profits,
contract terms or operating procedures, except as required in connection with
Consultant's performance of this Agreement, or as required by governmental
authority. Company shall have the right to obtain injunctive relief, without
bond, for violation of thee terms of this paragraph and the terms of this
paragraph shall survive the term of this Agreement. Nothing herein shall prevent
Consultant from continuing to conduct its historical art services business,
except in connection with doing so online or on the Internet.
10. Conduct of Business
(a) Consultant shall have artistic control over ArtStar Consulting and ArtStar
Preferred, including the right to select or disapprove of any gallery providing
artwork to ArtStar Consulting clients.
(b) All existing clients of Consultant and any clients hereafter obtained by
Consultant not through ArtStar, will be and will remain Consultant's clients
and ArtStar shall not be entitled to any compensation on sales to such
clients.
(c) Consultant shall pay Company five percent (5%) of all profits received by
Consultant for use of ArtStar services by all existing clients of Consultant
and any clients hereafter obtained by Consultant not through ArtStar.
(d) Company shall have all proprietary rights, including intellectual
property rights, to all property created by Consultant pursuant to this
Agreement, including, but not limited to, ArtStar Consulting, ArtStar
Preferred, customer lists, art sources, art software programs, services,
methods, and processes.
11. Non-Competition. During the term of Consultant's retention by Company and
for a period of two (2) years thereafter, Consultant shall not, directly or
indirectly, be employed by, own, manage, operate, join, control or participate
in the ownership, management, operation or control of or be connected in any
manner with the field of Internet online business intended for or actually
operated in by Company or ArtStar. Consultant shall be deemed to be connected
with a business if such business is carried on by a partnership in which it/she
is a general or limited partner, consultant or employee, or a corporation or
association of which it/she is a shareholder, officer, director, employee,
member, consultant or agent; provided, however, that nothing herein shall
prevent the purchase or ownership by Consultant of shares of less than 2% of the
outstanding shares of a publicly or privately held company. Nothing herein shall
prevent Consultant from continuing to conduct her historical art services
business, except in connection with doing so on the Internet.
12. Indemnification. Consultant shall defend, indemnify and hold harmless
Company and ArtStar from any and all losses, damages, liabilities and claims
associated with Consultant's on-line art selection service, based upon the
authenticity, history and online art selection service, or based upon any act of
omission, misrepresentation, fraud or inaccuracy on the part of the Consultant
pursuant to this Agreement. Notwithstanding the foregoing, Consultant shall not
be responsible for any consequential damages.
13. Assignment. This Agreement is a personal one, being entered into in reliance
upon and in consideration of the singular personal skill and qualifications of
Consultant. Consultant shall therefore shall not voluntarily or by operation of
law assign or otherwise transfer the obligations incurred on its part pursuant
to the terms of this Agreement without the prior written consent of Company. Any
attempted assigm-nent or transfer by Consultant of its obligation without such
consent shall be wholly void. Notwithstanding the foregoing, Consultant may
assign her interest here in to a corporation, limited liability company or
partnership controlled by Consultant and thereupon, Consultant shall be released
hereunder, except from her obligations under sections 9 and 11.
14. Notice. Instructions and other documents hand-delivered under this Agreement
shall be valid if (I) hand-delivered, (II) sent by registered or certified mail,
return receipt requested, (III) sent by Federal Express or other reliable
overnight courier service, or (IV) transmitted by telecopy.
If to Company:
ArtStar. Com
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
XxxXxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
If to Consultant:
Xxxx Corporate Art Advisors
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attn: Xxxxxx Xxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Each communication which shall be given or made in the manner described above
shall be deemed sufficiently given or made at such time as it is delivered to
the addressee in the case of person delivery or registered or certified mail,
one (1) business day following the courier if sent by Federal Express or other
reliable overnight courier or upon receipt of the telecopy; if sent by telecopy,
followed by a written confirmation within two (2) business days.
15. Waiver of Breach. The waiver by either party of any breach of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
16. Titles. The titles of the Sections herein are for convenience of reference
only and are not to be considered in construing this Agreement.
17. Governing Law. This Agreement has been executed and delivered in the State
of New York, and its interpretation, validity and performance shall be construed
and enforced in accordance with the laws of such State.
18. Arbitration. In the event of a disagreement of any kind related to this
Agreement, the parties agree to submit the dispute to binding arbitration before
the American Arbitration Association in New York City.
19. Entire Agreement. This Agreement contains the entire contract of the parties
with respect to the subject matter hereof and supercedes all agreements and
understanding between the parties concerning the subject matter hereof
Executed as of the date first above written.
Showstar On-line, Inc.
/s/ X.X. XXXXXX FOR
Name: XXXX XXXXX
Title: PRES & CEO
Xxxx Corporate Art Advisors
/s/
Name: XXXXXX X. XXXX
Title: Owner
