EXHIBIT 10.17
CONSULTING AGREEMENT
This Agreement is made and entered into as of the 1st day of January,
2003 between BENJAM CONSULTING, LLC ("Benjam"), XXXX X. XXXXX ("Xxxxx") (Benjam
and Xxxxx are hereinafter referred to collectively as the "Consultant") and
MOVIE STAR, INC. (the "Company").
In consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Company hereby engages the Consultant to render consulting services and
advice to the Company upon the terms and conditions set forth herein. The term
of this Agreement shall commence on January 1, 2003 and end on June 30, 2007.
2. During the term of this Agreement, Benjam shall provide the services of Xxxxx
to provide the Company with such consulting advice as is reasonably requested by
the Company. It is understood and acknowledged by the parties that the value of
Consultant's advice is not readily quantifiable, and that although Consultant
shall be obligated to render the services contemplated by this Agreement upon
the reasonable request of the Company, Consultant shall not be obligated to
spend any specific amount of time in so doing. Consultant's duties may include,
but will not necessarily be limited to:
A. Rendering advice and assistance in connection with the Company's
operations, including without limitation, sourcing, manufacturing,
merchandising, marketing and sales;
B. Disseminating information about the Company to the investment
community at large;
C. Rendering advice and assistance in connection with the preparation
of annual and interim reports and press releases;
D. Assisting in the Company's financial public relations;
E. Arranging and attending, on behalf of the Company, at appropriate
times, meetings with investment bankers and financial advisors retained by
the Company;
F. Rendering advice with regard to internal operations, including: the
formation of corporate goals and their implementation; the Company's
financial structure and its divisions or subsidiaries; when and if
necessary and possible, additional financing through banks and/or insurance
companies; and corporate organization and personnel;
G. Rendering advice with regard to any of the following corporate
finance matters: changes in the capitalization of the Company; changes in
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the Company's corporate structure; redistribution of shareholdings of the
Company's stock; offerings of securities in public and private
transactions; alternative uses of corporate assets; and structure and use
of debt;
In addition to the foregoing, Consultant agrees to furnish advice to the Company
in connection with (A) the acquisition of and/or merger with other companies,
the sale of the Company itself, or any of its assets, subsidiaries or
affiliates, or similar type of transaction, and (B) financings from financial
institutions, including but not limited to lines of credit, performance bonds,
letters of credit, loans or other financings .
Consultant shall also render such other consulting services as may from time to
time be agreed upon by Consultant and the Company.
3. The Company shall pay to Benjam an annual fee of $225,000.00 in monthly
installments of $18,750.00, the first payment due upon the execution of this
Agreement; and thereafter on the first day of each calendar month during the
term of this Agreement.
4. In addition to the annual fee payable hereunder, Consultant shall be entitled
to reimbursement from the Company for all travel and out-of-pocket expenses
("Expenses") incurred in connection with the services performed by Consultant
pursuant to this Agreement in an amount not to exceed $50,000.00 per annum. It
is expressly understood and agreed that if the Company requests that Consultant
travel outside the United States or if Consultant's services under this
Agreement require that Consultant spend more than one week in each calendar
month in New York City, Expenses shall not include the costs of such travel or
additional time in New York City, but any such costs shall be separately paid or
reimbursed to Consultant by the Company.
5. (a) Consultant acknowledges that:
(i) As a result of the services to be rendered pursuant to this
Agreement, and David's prior relationship as an employee and director of
the Company, Consultant has obtained and will obtain secret and
confidential information concerning the business of the Company and its
subsidiaries and affiliates (referred to collectively in this paragraph 5
as the "Company"), including, without limitation, financial information,
designs and other proprietary rights, trade secrets and "know-how,"
customers and sources ("Confidential Information").
(ii) The Company will suffer substantial damage which will be
difficult to compute if, during the period of this Agreement or thereafter,
Consultant should enter a business competitive with the Company or divulge
Confidential Information.
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(iii) The provisions of this Agreement are reasonable and necessary
for the protection of the business of the Company.
(iv) Consultant agrees that he will not at any time, either during the
term of this Agreement or thereafter, divulge to any person or entity any
Confidential Information obtained or learned by Consultant as a result of
rendering services under this Agreement, or David's prior employment by,
the Company, except (A) in the course of performing duties hereunder, (B)
with the Company's express written consent; (C) to the extent that any such
information is in the public domain other than as a result of Consultant's
breach of any of his obligations hereunder; or (D) where required to be
disclosed by court order, subpoena or other government process. If
Consultant shall be required to make disclosure pursuant to the provisions
of clause (D) of the preceding sentence, Consultant promptly, but in no
event more than 72 hours after learning of such subpoena, court order, or
other government process, shall notify, by personal delivery or by
electronic means, confirmed by mail, the Company and, at the Company's
expense, Consultant shall: (1) take all reasonably necessary and lawful
steps required by the Company to defend against the enforcement of such
subpoena, court order or other government process, and (2) permit the
Company to intervene and participate with counsel of its choice in any
proceeding relating to the enforcement thereof.
(v) Upon termination of this Agreement, Consultant will promptly
deliver to the Company all memoranda, notes, records, reports, manuals,
drawings, and other documents (and all copies thereof) relating to the
business of the Company and all property associated therewith, which he may
then possess or have under his control; provided, however, that Consultant
shall be entitled to retain copies of such documents reasonably necessary
to document his financial relationship (both past and future) with the
Company.
(vi) During the period commencing on the date hereof and ending on the
date Consultant's services hereunder are terminated (and, if Consultant is
terminated with "Cause", as hereinafter defined, or Consultant terminates
this Agreement without "Good Reason," as hereinafter defined, for a period
of one year following any such termination), Consultant, without the prior
written permission of the Company, shall not, anywhere in the world, (A) be
employed by, or render any services to, any person, firm or corporation
engaged in any business which is directly or indirectly in competition with
the Company ("Competitive Business"); (B) engage in any Competitive
Business for his or its own account; (C) be associated with or interested
in any Competitive Business as an individual, partner, shareholder,
creditor, director, officer, principal, agent, employee, trustee,
consultant, advisor or in any other relationship or capacity; (D) employ or
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retain, or have or cause any other person or entity to employ or retain,
any person who was employed or retained by the Company while Consultant was
rendering consulting services to the Company; or (E) solicit, interfere
with, or endeavor to entice away from the Company, for the benefit of a
Competitive Business, any of its customers or other persons with whom the
Company has a contractual relationship. Notwithstanding the foregoing,
nothing in this Agreement shall preclude Consultant from investing assets
in the securities of any corporation or other business entity which is
engaged in a Competitive Business if such securities are traded on a
national stock exchange or in the over-the-counter market and if such
investment does not result in his beneficially owning, at any time, more
than 4.9% of the publicly-traded equity securities of such Competitive
Business.
(b) If Consultant commits a breach, or threatens to commit a breach, of any
of the provisions of Sections 5(a)(iv) or 5(a)(vi), the Company shall have the
right and remedy:
(i) to have the provisions of this Agreement specifically enforced by
any court having equity jurisdiction, it being acknowledged and agreed by
Consultant that the services being rendered hereunder to the Company are of
a special, unique and extraordinary character and that any such breach or
threatened breach will cause irreparable injury to the Company and that
money damages will not provide an adequate remedy to the Company; and
(ii) to require Consultant to account for and pay over to the Company
all monetary damages suffered by the Company as the result of any
transactions constituting a breach of any of the provisions of Sections
5(a)(iv) or 5(a)(vi), and Consultant hereby agrees to account for and pay
over such damages to the Company.
Each of the rights and remedies enumerated in this Section 5(b) shall be
independent of the other, and shall be severally enforceable, and such rights
and remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or equity.
(c) In connection with any legal action or proceeding arising out of or
relating to this Agreement, the prevailing party in such action or proceeding
shall be entitled to be reimbursed by the other party for the reasonable
attorneys' fees and costs incurred by the prevailing party.
(d) If Consultant shall violate any covenant contained in Section 5(a), the
duration of such covenant so violated shall be automatically extended for a
period of time equal to the period of such violation.
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(e) If any provision of Sections 5(a)(iv) or 5(a)(vi) is held to be
unenforceable because of the scope, duration or area of its applicability, the
tribunal making such determination shall have the power to modify such scope,
duration, or area, or all of them, and such provision or provisions shall then
be applicable in such modified form.
(f) The provisions of this paragraph 5 shall survive the termination of
this Agreement for any reason.
6. The Company acknowledges that Consultant or its affiliates are in the
business of providing consulting services and advice to others. Except as
expressly provided in Section 5(a)(vi) of this Agreement, nothing herein
contained shall be construed to limit or restrict Consultant in conducting such
business with others, or in rendering such advice to others.
7. The Company recognizes and confirms that, in advising the Company hereunder,
Consultant will use and rely on data, material and other information furnished
to Consultant by the Company, without independently verifying the accuracy,
completeness or veracity of same.
8. (a) If Xxxxx dies during the term of this Agreement, this Agreement shall
thereupon terminate, except that the Company shall pay to the person or persons
designated by Consultant in writing, from time to time, (i) an amount equal to
one half of the aggregate fees which would otherwise have been payable from the
date of Xxxxx=s death through the date fixed for the expiration of this
Agreement, and (ii) all valid expense reimbursements through the date of the
termination of this Agreement. Consultant hereby designates Xxxxx Xxxxx as the
person to receive the payment referred to in this Section 8(a).
(b) The Company, by notice to Consultant, may terminate this Agreement if
Xxxxx shall fail because of illness or incapacity to render, for six consecutive
months, services of the character contemplated by this Agreement.
Notwithstanding such termination, the Company shall pay to Consultant (i) an
amount equal to one half of the aggregate fees which would otherwise have been
payable from the date of such termination through the date fixed for the
expiration of this Agreement, and (ii) all valid expense reimbursements through
the date of the termination of this Agreement.
9. The Company agrees to indemnify Consultant and hold Consultant harmless
against all costs, expenses (including, without limitation, reasonable
attorneys' fees) and liabilities (other than settlements to which the Company
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does not consent, which consent shall not be unreasonably withheld)
(collectively, "Losses") reasonably incurred by Consultant in connection with
any claim, action, proceeding or investigation brought against or involving
Consultant with respect to, arising out of or in any way relating to
Consultant's services under this Agreement; provided, however, that the Company
shall not be required to indemnify Consultant for Losses incurred as a result of
Consultant's intentional misconduct or gross negligence (other than matters
where Consultant acted in good faith and in a manner he reasonably believed to
be in and not opposed to the Company's best interests). Consultant shall
promptly notify the Company of any claim, action, proceeding or investigation
under this paragraph and the Company shall be entitled to participate in the
defense of any such claim, action, proceeding or investigation and, if it so
chooses, to assume the defense with counsel selected by the Company; provided
that Consultant shall have the right to employ counsel to represent him (at the
Company's expense) if Company counsel would have a "conflict of interest" in
representing both the Company and Consultant. The Company shall not settle or
compromise any claim, action, proceeding or investigation without Consultant's
consent, which consent shall not be unreasonably withheld; provided, however,
that such consent shall not be required if the settlement entails only the
payment of money and the Company fully indemnifies Consultant in connection
therewith. The Company further agrees to advance any and all expenses
(including, without limitation, the fees and expenses of counsel) reasonably
incurred by the Consultant in connection with any such claim, action, proceeding
or investigation, provided Consultant first enters into an appropriate agreement
for repayment of such advances if indemnification is found not to have been
available.
10. (a) The Company, by notice to Consultant, may terminate this Agreement for
cause. As used herein, "Cause" shall mean: (i) the refusal or failure by
Consultant to carry out specific directions of the Board which are of a material
nature and consistent with his duties as a consultant hereunder, or the refusal
or failure by Consultant to perform a material part of Consultant's duties
hereunder; (ii) the commission by Consultant of a material breach of any of the
provisions of this Agreement; (iii) fraud or dishonest action by Consultant in
his relations with the Company or any of its subsidiaries or affiliates, or with
any customer or business contact of the Company or any of its subsidiaries or
affiliates ("dishonest" for these purposes shall mean Consultant's knowingly or
recklessly making of a material misstatement or omission for his personal
benefit); or (iv) the conviction of Consultant of any crime involving an act of
moral turpitude. Notwithstanding the foregoing, no "Cause" for termination shall
be deemed to exist with respect to Consultant's acts described in clauses (i) or
(ii) above, unless the Company shall have given written notice to Consultant
specifying the "Cause" with reasonable particularity and, within thirty calendar
days after such notice, Consultant shall not have cured or eliminated the
problem or thing giving rise to such "Cause;" provided, however, that a repeated
breach after notice and cure of any provision of clauses (i) or (ii) above
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involving the same or substantially similar actions or conduct, shall be grounds
for termination for "Cause" without any additional notice from the Company. In
the event the Company terminates this Agreement for ACause@ pursuant to the
provisions of this Section 10(a), the Company shall have no further obligation
to Consultant under this Agreement.
(b) Consultant, by notice to the Company, may terminate this Agreement if a
"Good Reason" exists. For purposes of this Agreement, "Good Reason" shall mean
the occurrence of any of the following circumstances without the Consultant's
prior express written consent: (i) a substantial and material adverse change in
the nature of Consultant's duties or responsibilities that are inconsistent with
the duties or responsibilities set forth in this Agreement; (ii) a substantial
and material breach of this Agreement by the Company; and (iii) a failure by the
Company to make any payment to Consultant when due, unless the payment is not
material and is being contested by the Company, in good faith. Notwithstanding
the foregoing, no Good Reason shall be deemed to exist with respect to the
Company's acts described in clauses (i), (ii) or (iii) above, unless the
Consultant shall have given written notice to the Company specifying the Good
Reason with reasonable particularity and, within thirty calendar days after such
notice, the Company shall not have cured or eliminated the problem or thing
giving rise to such Good Reason; provided, however, that a repeated breach after
notice and cure of any provision of clauses (i), (ii) or (iii) above involving
the same or substantially similar actions or conduct, shall be grounds for
termination for Good Reason without any additional notice from the Consultant.
In the event that Consultant terminates this Agreement for Good Reason, pursuant
to the provisions of this Section 10(b), or the Company terminates this
Agreement without "Cause," as defined in Section 10(a), the Company shall
continue to pay to Consultant (or in the case of his death, the legal
representative of Consultant's estate or such other person or persons as
Consultant shall have designated by written notice to the Company), all
payments, compensation and benefits required under this Agreement through the
end of the term of this Agreement.
11. Consultant shall perform the services hereunder as an independent contractor
and not as an employee or agent of the Company or any affiliate thereof.
Consultant shall have no authority to act for, represent or bind the Company or
any affiliate thereof in any manner, except as may be expressly agreed to by the
Company in writing from time to time.
12. This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof. No provision of this Agreement may be
amended, modified or waived, except in a writing signed by both parties. This
Agreement shall be binding upon and inure to the benefit of each of the parties
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and their respective successors, legal representatives and assigns. This
Agreement may be executed in counterparts. Except with respect to the provisions
of Sections 5 and 9 of this Agreement, in the event of any dispute under this
Agreement, then and in such event, each party agrees that the same shall be
submitted to the American Arbitration Association ("AAA") in the City of New
York, for its decision and determination in accordance with its rules and
regulations then in effect. Each of the parties agrees that the decision and/or
award made by the AAA may be entered as judgment of the Courts or the State of
New York, and shall be enforceable as such. The arbitration provisions set forth
in this Section 12 shall not apply to the enforcement of any of the provisions
of Sections 5 or 9 of this Agreement. This Agreement shall be construed and
enforced in accordance with the laws of the State of New York, without giving
effect to conflict of laws.
This Agreement supersedes all prior understandings and agreements by and among
the parties hereto with respect to the consulting services to be performed by
Consultant and the fees and expenses to be paid by the Company therefor.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on the day and year first above written.
MOVIE STAR, INC.
By: /s/ Xxxxxx Xxxxxx
--------------------------
Xxxxxx Xxxxxx
President
BENJAM CONSULTING, LLC
By: /s/ Xxxx X. Xxxxx
--------------------------
Xxxx X. Xxxxx
Managing Member
/s/ Xxxx X. Xxxxx
----------------------------
Xxxx X. Xxxxx, Individually
