EXHIBIT 10.1
INDEPENDENT CONSULTING AGREEMENT
This Independent Consulting Agreement ("Agreement"), effective as of
January 21, 2004 ("Effective Date") is entered into by and between RCG COMPANIES
INCORPORATED, a Delaware corporation (herein referred to as the "Company") and
THE DEL MAR CONSULTING GROUP, INC., a California corporation (herein referred to
as the "Consultant").
RECITALS
WHEREAS, the Company is a publicly-held corporation with its common
stock traded on the American Stock Exchange; and
WHEREAS, Company desires to engage the services of Consultant to
represent the company in investors' communications and public relations with
existing shareholders, brokers, dealers and other investment professionals as to
the Company's current and proposed activities, and to consult with management
concerning such Company activities.
NOW THEREFORE, in consideration of the promises and the mutual
covenants and agreements hereinafter set forth, the parties hereto covenant and
agree as follows:
1. Term of Consultancy. Company hereby agrees to retain the Consultant to act in
a consulting capacity to the Company, and the Consultant hereby agrees to
provide services to the Company commencing immediately and ending on January 30,
2005 unless otherwise mutually agreed to by the parties or terminated by Company
with 30 days notice for nonperformance by Consultant of its duties hereunder.
2. Duties of Consultant. The Consultant agrees that it will generally provide
the following specified consulting services through its officers and employees
during the term specified in Section 1, above.
(a) Consult with and assist the Company in developing and implementing
appropriate plans and means for presenting the Company and its business
plans, strategy and personnel to the financial community, establishing
an image for the Company in the financial community, and creating the
foundation for subsequent financial public relations efforts;
(b) Introduce the Company to the financial community, including, but
not limited to, retail brokers, buy side and sell side institutional
managers, portfolio managers, analysts, and financial public relations
professionals;
(c) With the cooperation of the Company, maintain an awareness during
the term of this Agreement of the Company's plans, strategy and
personnel, as they may evolve during such period, and consult and
assist the Company in communicating appropriate information regarding
such plans, strategy and personnel to the financial community;
Consulting Agreement - Page 1
(d) Assist and consult the Company with respect to its (i) relations
with stockholders, (ii) relations with brokers, dealers, analysts and
other investment professionals, and (iii) financial public relations
generally;
(e) Perform the functions generally assigned to stockholder relations
and public relations departments in major corporations, including
responding to telephone and written inquiries (which may be referred to
the Consultant by the Company); preparing press releases for the
Company with the Company's involvement and approval of press releases,
investor kits, reports and other communications with or to
shareholders, the investment community and the general public;
consulting with respect to the timing, form, distribution and other
matters related to such releases, reports and communications; and, at
the Company's request and subject to the Company's securing its own
rights to the use of its names, marks, and logos, consulting with
respect to corporate symbols, logos, names, the presentation of such
symbols, logos and names, and other matters relating to corporate
image;
(f) Upon and with the Company's direction and written approval,
disseminate information regarding the Company to shareholders, brokers,
dealers, other investment community professionals and the general
investing public;
(g) Upon and with the Company's direction, conduct meetings, in person
or by telephone, with brokers, dealers, analysts and other investment
professionals to communicate with them regarding the Company's plans,
goals and activities, and assist the Company in preparing for press
conferences and other forums involving the media, investment
professionals and the general investment public;
(h) At the Company's request, review business plans, strategies,
mission statements budgets, proposed transactions and other plans for
the purpose of advising the Company of the public relations
implications thereof; and
(i) Otherwise perform as the Company's consultant for public relations
and relations with financial professionals.
3. Allocation of Time and Energies. The Consultant hereby promises to perform
and discharge faithfully the responsibilities which may be assigned to the
Consultant from time to time by the officers and duly authorized representatives
of the Company in connection with the conduct of its financial and public
relations and communications activities, so long as such activities are in
compliance with applicable securities laws and regulations. Consultant and staff
shall diligently and thoroughly provide the consulting services required
hereunder. Although no specific hours-per-day requirement will be required,
Consultant and the Company agree that Consultant will perform the duties set
forth herein above in a diligent and professional manner. The parties
acknowledge and agree that a disproportionately large amount of the effort to be
expended and the costs to be incurred by the Consultant and the benefits to be
received by the Company are expected to occur within or shortly after the first
two months of the effectiveness of this Agreement. It is explicitly understood
that neither the price of the Company's common stock, nor the trading volume of
the Company's common stock hereunder measure Consultant's performance of its
Consulting Agreement - Page 2
duties. It is also understood that the Company is entering into this Agreement
with Consultant, a corporation and not any individual member or employee
thereof, and, as such, Consultant will not be deemed to have breached this
Agreement if any member, officer or director of the Consultant leaves the firm
or dies or becomes physically unable to perform any meaningful activities during
the term of the Agreement, provided the Consultant otherwise performs its
obligations under this Agreement.
4. Remuneration.
4.1 (a) For undertaking this engagement, for services previously rendered,
and for other good and valuable consideration, the Company agrees to
issue to the Consultant a "Commencement Bonus" of Four Hundred Thousand
(400,000) restricted shares of the Company's Common Stock ("Common
Stock" and such shares, collectively, the "Shares"). Company may issue
uncertified shares in accordance with Company's Bylaws. This
Commencement Bonus shall be fully paid and non-assessable and stock
certificates representing the Commencement Bonus shall be issued and
delivered as follows:
(1) 280,000 shares of Common Stock shall be deemed issued as
of the date hereof and delivered to Consultant within 5 days
of approval of the American Stock Exchange which approval
shall be sought by Company upon the next acquisition or
financing but no later than the earlier of (i) January 1, 2005
and (ii) 15 days of termination of this Agreement by Company.
(2) 60,000 shares shall be deemed issued to Consultant upon
Consultant introducing at least 75 investment professionals
(such as retail stock brokers, buy side and sell side
analysts, portfolio managers, investment newsletter writers,
investment bankers, etc.) to the Company during the first
forty-five (45) days of this Agreement. Consultant shall email
or fax to Company, on a daily basis, each individual
investment professional that it has introduced to the Company.
The Company shall deliver to the Consultant a certificate
representing 60,000 shares upon the later of (a) introduction
of the 75th such investment professional to the Company and
(b) 5 days of approval of the American Stock Exchange which
approval shall be sought by Company upon the next acquisition
or financing but no later than the earlier of (i) January 1,
2005 and (ii) 15 days of termination of this Agreement by
Company.
(3) 60,000 shares shall be deemed issued to Consultant upon
Consultant introducing at least 150 individual investment
professionals to the Company during the first seventy-five
(75) days of this Agreement. The Company shall deliver to
Consultant the 60,000 shares upon the later of (a)
introduction of the 150th such investment professional to the
Company (calculated in accordance with Section 4.1(a)(2)
above) and (b) 5 days of approval of the American Stock
Exchange which approval shall be sought by Company upon the
next acquisition or financing but no later than the earlier of
(i) January 1, 2005 and (ii) 15 days of termination of this
Agreement by Company.
Consulting Agreement - Page 3
(b) Notwithstanding anything else in this Agreement to the contrary, in
the event Xxxxxx Xxxx ceases to be actively involved in performing
services for Consultant under this Agreement, dies or becomes
physically unable to perform any meaningful activities under this
Agreement, (1) Company may terminate this Agreement 15 days following
delivery to Consultant of a written notice of intent to terminate under
this Section 4.1(b) and (2) Consultant will return to Company, as
liquidated damages: (A) 75% of the Commencement Bonus if such
termination is effective within the initial 3 months of this
Agreement's term, (B) 50% of the Commencement Bonus if such termination
is effective following the initial 3 months of this Agreement's term
but before the expiration of the initial 6 months of this Agreement's
term and (C) 25% of the Commencement Bonus if such termination is
effective following the initial 6 months of this Agreement's term but
before the expiration of the initial 9 months of this Agreement's term.
4.2 The Company understands and agrees that Consultant has foregone significant
opportunities to accept this engagement and that the Company derives substantial
benefit from the execution of this Agreement and the ability to announce its
relationship with Consultant. The Commencement Bonus, therefore, constitutes
payment for Consultant's agreement to consult to the Company and, except as set
forth in Section 4.1(b), is a nonrefundable, non-apportionable, and non-ratable
retainer and is not a prepayment for future services. If the Company decides to
terminate this Agreement prior to January 30, 2005, for any reason whatsoever,
it is agreed and understood that, except as set forth in Section 4.1(b),
Consultant will not be requested or demanded by the Company to return any of the
shares of Common Stock paid to it as Commencement Bonus hereunder. Further, if
and in the event the Company is acquired during the term of this Agreement, it
is agreed and understood Consultant will not be requested or demanded by the
Company to return any of the shares of Common Stock paid to it hereunder.
Consultant agrees and understands that if the during the term of this Agreement,
Consultant performs substantial services for any direct competitor of the
Company, then the Shares issued by the Company to Consultant hereunder will be
forfeited.
4.3 Notwithstanding anything else in this Agreement to the contrary, Company and
Consultant acknowledge and agree that for purposes of the Company's internal
accounting practices, the Company may desire to allocate all or a portion of the
Commencement Bonus to any number of the services provided by the Consultant to
the Company under this Agreement consistent with the United States generally
accepted accounting practices. Accordingly, Consultant agrees to cooperate with
the Company, and will provide to the Company reasonable support and
documentation in connection with any such allocation process.
4.4 For performance under this agreement on a month-to-month basis, Company will
pay Consultant a cash fee in the amount of $6,000 per month. This Consultancy
Fee shall be issued to the Consultant on a monthly basis, the first monthly
payment due and payable upon the execution of this Agreement and each following
monthly payment payable in full on the first day of the respective month. The
monthly Consultancy Fee shall continue to be paid monthly for the duration of
this Consulting Agreement. The Company shall not be obligated to Consultant for
any monthly cash fee for any month or part thereof remaining from the date of
any cancellation to January 30, 2005.
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4.5 The Company or its assigns agrees that it will include the Shares in the
next registration statement filed by the Company with the SEC on Forms XX-0, X-0
or other appropriate form, other than a registration on Form S-4 or S-8, a
registration relating solely to a Rule 145 transaction, or a registration on any
registration form that does not permit secondary sales relating to the resale of
restricted shares.
4.6 Company warrants that the Shares issued to Consultant under this Agreement
by the Company shall be or have been validly issued, fully paid and
non-assessable and that the Company's board of directors has or shall have duly
authorized the issuance and any transfer of them to Consultant.
4.7 Consultant acknowledges that the Shares to be issued pursuant to this
Agreement have not been registered under the Securities Act of 1933, as amended
(the "Securities Act") and accordingly are "restricted securities" within the
meaning of Rule 144 of the Act. As such, the Shares may not be resold or
transferred unless the Company has received an opinion of counsel and in form
reasonably satisfactory to the Company that such resale or transfer is exempt
from the registration requirements of that Securities Act. Consultant agrees
that during the term of this Agreement, that it will not sell or transfer any of
the Shares issued to it by the Company hereunder, except to the Company; nor
will it pledge or assign such Shares as collateral or as security for the
performance of any obligation, or for any other purpose.
4.8 In connection with the acquisition of the Shares, Consultant represents and
warrants to Company as follows:
(a) Consultant has been afforded the opportunity to ask questions of
and receive answers from duly authorized officers or other
representatives of the Company concerning an investment in the Shares,
and any additional information that the Consultant has requested.
Consultant acknowledges and agrees that it has been provided with
copies of or has access to Company's SEC filings and has reviewed such
filings.
(b) Consultant's investment in restricted securities is reasonable in
relation to the Consultant's net worth, which is in excess of ten (10)
times the Consultant's cost basis in the Shares. Consultant has had
experience in investments in restricted and publicly traded securities,
and Consultant has had experience in investments in speculative
securities and other investments that involve the risk of loss of
investment. Consultant acknowledges that an investment in the Shares is
speculative and involves a high degree of risk of loss, including, but
not limited to, those risks specifically set forth in Company's SEC
filings. Consultant has the requisite knowledge to assess the relative
merits and risks of this investment without the necessity of relying
upon other advisors, and Consultant can afford the risk of loss of his
entire investment in the Shares. Consultant is an accredited investor,
as that term is defined in Regulation D promulgated under the
Securities Act.
(c) Consultant is acquiring the Shares for the Consultant's own account
for long-term investment and not with a view toward resale or
distribution thereof except in accordance with applicable securities
laws.
Consulting Agreement - Page 5
5. Finder's Fee.
5.1 It is understood that in the event Consultant directly introduces Company to
a lender or equity purchaser, not already having a preexisting relationship with
the Company, with whom Company, or its nominees, ultimately finances or causes
the completion of such financing, Company agrees to compensate Consultant for
such services with a "finder's fee" in the amount of 7% of total gross funding
provided by such lender or equity purchaser, such fee to be payable in cash.
5.2 It is understood that in the event Consultant introduces Company to an
intermediary or broker dealer, not already having a preexisting relationship
with Company, with whom Company, or its nominees, ultimately finances or causes
the completion of such financing, Company agrees to compensate Consultant for
such services with a "finder's fee" in the amount of 2.5% of total gross funding
provided by such intermediary or broker dealer, such fee to be payable in cash.
This will be in addition to any fees payable by Company to said intermediary or
broker dealer, if any, which shall be per separate agreements negotiated between
Company and such other intermediary or broker dealer.
5.3 It is also understood that in the event Consultant directly introduces
Company, or its nominees, to a merger and/or acquisition candidate, not already
having a preexisting relationship with Company, with whom Company, or its
nominees, ultimately is acquired, or with whom Company, or its nominees acquires
or causes the completion of such acquisition, Company agrees to compensate
Consultant for such services with a "finder's fee" in the amount of 5% of total
gross consideration provided by such merger and/or acquisition, such fee to be
payable in the same form of consideration received by the seller/merged company.
5.4 It is also understood that in the event Consultant introduces Company, or
its nominees, to a merger and/or acquisition candidate, indirectly through
another intermediary, not already having a preexisting relationship with
Company, with whom Company, or its nominees, ultimately is acquired, or with
whom Company, or its nominees acquires or causes the completion of such
acquisition, Company agrees to compensate Consultant for such services with a
"finder's fee" in the amount of 2.5% of total gross consideration provided by
such merger and/or acquisition, such fee to be payable in the same form of
consideration received by the seller/merged company. This will be in addition to
any fees payable by Company to any other intermediary, if any, which shall be
per separate agreements negotiated between Company and such other intermediary.
5.5 It is also understood that in the event Consultant introduces Company to a
strategic or business partner, not already having a preexisting relationship
with Company, with whom Company, or its nominees, ultimately enters into a
business alliance, Company agrees to compensate Consultant, for such services
with a "finder's fee" in the amount of 5% of total gross revenue provided by
such business alliance, for the life of the business alliance, such fee to be
payable in cash within 10 days of Company' receipt of said revenue.
5.6 It is further understood that Company, and not Consultant, is responsible to
perform any and all due diligence on such intermediary broker dealer, lender,
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equity purchaser or acquisition/merger candidate introduced to it by Consultant
under this Agreement, prior to Company receiving funds or closing on any
acquisition/merger. However, Consultant will not introduce any parties to
Company about which Consultant has any prior knowledge of questionable,
unethical or illicit activities.
5.7 Company agrees that said compensation to Consultant shall be paid in full at
the time said financing or acquisition/merger is closed, such compensation to be
transferred by Company to Consultant within five (5) business days of the
closing of a financing, merger or acquisition transaction.
5.8 As further consideration to Consultant, Company, or its nominees and
assigns, agrees to pay with respect to any financing or acquisition/merger
candidate provided directly or indirectly to the Company by any broker/dealer
intermediary, lender or equity purchaser covered by this Section 5 during the
period commencing at the effective date of this Agreement and ending one year
from the termination of this Agreement, a fee to Consultant equal to that
outlined in Section 5 herein.
5.9 Consultant will notify Company, in writing, of introductions it makes for
potential sources of financing or acquisitions/mergers or strategic partners in
a timely manner (within approximately 3 days of introduction) via confirmed
delivery of a facsimile memo or email. If Company has a preexisting relationship
with such nominee and believes such party should be excluded from this
Agreement, then Company will notify Consultant immediately within two (2)
business days of Consultant's facsimile or email to Company of such circumstance
via facsimile memo or email.
5.10 It is specifically understood that Consultant is not and does not hold
itself out be a Broker/Dealer, but is rather merely a "Finder" in reference to
the Company procuring financing sources and acquisition/merger candidates, and
Consultant does not normally provide such services. The Consultant will only be
introducing the Company to such potential entities and will not be responsible
for the structuring of any transaction. Any obligation to pay a "Finder's Fee"
hereunder shall survive the merging, acquisition, or other change in the form of
entity of the Company and to the extent it remains unfulfilled shall be assigned
and transferred to any successor to the Company. The Company agrees that no
reference to the Consultant will be made in any press release or advertisement
of any transaction without the express approval, in writing, of such release by
Consultant.
6. Non-Assignability of Services. Consultant's services under this contract are
offered to Company only and may not be assigned by Company to any entity with
which Company merges or which acquires the Company or substantially all of its
assets wherein the Company becomes a minority constituent of the combined
Company. In the event of such merger or acquisition, all compensation to
Consultant herein under the schedules set forth herein shall remain due and
payable, and any compensation received by the Consultant may be retained in the
entirety by Consultant, all without any reduction or pro-rating and shall be
considered and remain fully paid and non-assessable. Notwithstanding the
non-assignability of Consultant's services, Company shall assure that in the
event of any merger, acquisition, or similar change of form of entity, that its
successor entity shall agree to complete all obligations to Consultant,
including the provision and transfer of all compensation herein, and the
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preservation of the value thereof consistent with the rights granted to
Consultant by Company herein. Consultant shall not assign its rights or delegate
its duties hereunder without the prior written consent of Company.
7. Expenses. Consultant agrees to pay for all its expenses (phone, mailing,
labor, etc.), other than extraordinary items (travel required by/or specifically
requested by the Company, luncheons or dinners to large groups of investment
professionals, mass faxing to a sizable percentage of the Company's
constituents, investor conference calls, print advertisements in publications,
etc.) approved by the Company in writing prior to its incurring an obligation
for reimbursement. The Company agrees and understands that Consultant will not
be responsible for preparing or mailing due diligence and/or investor packages
on the Company, and that the Company will have some means to prepare and mail
out investor packages at the Company's expense.
8. Indemnification. The Company warrants and represents that all oral
communications, written documents or materials furnished to Consultant or the
public by the Company with respect to financial affairs, operations,
profitability and strategic planning of the Company are accurate in all material
respects and Consultant may rely upon the accuracy thereof without independent
investigation. The Company will protect, indemnify and hold harmless Consultant
against any claims or litigation including any damages, liability, cost and
reasonable attorney's fees as incurred with respect thereto resulting from
Consultant's communication or dissemination of any said information, documents
or materials excluding any such claims or litigation resulting from Consultant's
communication or dissemination of information not provided or authorized by the
Company. 9. Representations/Covenants. Consultant represents that it is not
required to maintain any licenses and registrations under federal or any state
regulations necessary to perform the services set forth herein. Consultant
acknowledges that, to the best of its knowledge, the performance of the services
set forth under this Agreement will not violate any rule or provision of any
regulatory agency having jurisdiction over Consultant. Consultant acknowledges
that, to the best of its knowledge, neither Consultant nor any of its officers
and directors is the subject of any investigation, claim, decree or judgment
involving any violation of the SEC or securities laws. Consultant further
acknowledges that it is not a securities Broker Dealer or a registered
investment advisor. Consultant agrees to comply with all securities laws,
regulations, industry guidelines and applicable laws and to maintain
confidential all of Company's confidential information. Consultant acknowledges
that it has relied solely upon Consultant's own tax advisors with respect to all
tax matters related to this Agreement. Company acknowledges that, to the best of
its knowledge, that it has not violated any rule or provision of any regulatory
agency having jurisdiction over the Company. Company acknowledges that, to the
best of its knowledge, Company is not the subject of any investigation, claim,
decree or judgment involving any violation of the SEC or securities laws.
10. Legal Representation. Each of Company and Consultant represents that they
have consulted with independent legal counsel and/or tax, financial and business
advisors, to the extent that they deemed necessary.
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11. Status as Independent Contractor. Consultant's engagement pursuant to this
Agreement shall be as independent contractor, and not as an employee, officer or
other agent of the Company. Neither party to this Agreement shall represent or
hold itself out to be the employer or employee of the other. Consultant further
acknowledges the consideration provided hereinabove is a gross amount of
consideration and that the Company will not withhold from such consideration any
amounts as to income taxes, social security payments or any other payroll taxes.
All such income taxes and other such payment shall be made or provided for by
Consultant and the Company shall have no responsibility or duties regarding such
matters. Neither the Company nor the Consultant possesses the authority to bind
each other in any agreements without the express written consent of the entity
to be bound.
12. Attorney's Fee. If any legal action or any arbitration or other proceeding
is brought for the enforcement or interpretation of this Agreement, or because
of an alleged dispute, breach, default or misrepresentation in connection with
or related to this Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs in connection
with that action or proceeding, in addition to any other relief to which it or
they may be entitled.
13. Waiver. The waiver by either party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any subsequent breach by such other party.
14. Notices. All notices, requests, and other communications hereunder shall be
deemed to be duly given if sent by confirmed facsimile transmission or receipted
overnight courier (such as Federal Express) addressed to the other party at the
address as set forth herein below:
To the Company:
--------------
RCG Companies Incorporated
Xxxxxxx X. Xxxxxx, CEO
0000 Xxxxxxxx Xxxx.; Xxxxx 000
Xxxxxxxxx, XX 00000
Fax - (000) 000-0000
xxx@xxxxxxxxxxxxxx.xxx
To the Consultant:
-----------------
The Del Mar Consulting Group, Inc.
Xxxxxx X. Xxxx, President
0000 Xx Xxxxx Xxxx
Xxx Xxx, XX 00000
Fax - (000) 000-0000
xxxxx@xxxxxxxxxxxxxxxx.xxx
It is understood that either party may change the address to which notices for
it shall be addressed by providing notice of such change to the other party in
the manner set forth in this paragraph.
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15. Choice of Law. This Agreement shall be governed by, construed and enforced
in accordance with the laws of the State of California.
16. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the alleged breach thereof, or relating to Consultant's activities
or remuneration under this Agreement, shall be settled by binding arbitration in
San Diego, CA, in accordance with the applicable rules of the American
Arbitration Association, Commercial Dispute Resolution Procedures, and judgment
on the award rendered by the arbitrator(s) shall be binding on the parties and
may be entered in any court having jurisdiction.
17. Complete Agreement. This Agreement contains the entire agreement of the
parties relating to the subject matter hereof. This Agreement and its terms may
not be changed orally but only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
COMPANY: CONSULTANT:
RCG COMPANIES INCORPORATED THE DEL MAR CONSULTING GROUP, INC.
By: By:
-------------------------------------- -------------------------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxx
Title: CEO and its Duly Authorized Agent Title: President and its Duly Authorized Agent
Consulting Agreement - Page 10
