Exhibit 10.38
CONSULTING AGREEMENT
AGREEMENT (the "Agreement") made and entered into as of August 1, 2000,
between BREAKING WAVES, INC., a New York corporation with offices at 000 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("BWI" or the "Company"), and XXXXX XXXX
INC., a New York corporation with offices at 000X Xxxx 00xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 ("Consultant").
W I T N E S S E T H :
WHEREAS, BWI wishes to retain Consultant and Consultant wishes to
accept such offer, subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, in consideration of the premises
and mutual promises contained herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
agree as follows:
1. SERVICES.
During Consultant's relationship with BWI (the "Term"), Consultant
shall provide the services of at least one of its employees to provide
consulting services in connection with, and be in charge of sales of, the
Company's Gottex and Caral Cove lines, and shall perform such further services
as shall, from time to time, be reasonably delegated or assigned to it by the
Company's Board of Directors or President. In providing its services, Consultant
shall report to the President of the Company. The individual provided shall at
all times be satisfactory to the Company in its sole and subjective discretion.
2. MANNER OF PERFORMANCE.
During the Term, Consultant shall devote its best efforts, skill and
ability in the performance of its services hereunder. Consultant shall cause at
least one employee to be based at the Company's New York office. The employee so
based shall be satisfactory to BWI in its sole and subjective discretion.
Consultant and its employee shall provide services hereunder in a competent and
professional manner, shall work with other employees and/or consultants of BWI
and its affiliates and generally promote the best interests of BWI and its
clients. Consultant shall not, nor shall its employees, in any capacity, engage
in any activity which is, or may be, contrary to the welfare, interest or
benefit of the business now or hereafter conducted by BWI.
3. COMPENSATION.
3.1 FEES. In consideration of the services provided by Consultant
hereunder, the Company shall pay to Consultant in August of each year during the
Term, and Consultant agrees to accept from the Company for its services,
consulting fees (the "Fees") consisting of commissions calculated as follows:
3.1.1 Consultant shall be entitled to a commission equal to 5%
of the Net Sales (as hereafter defined) on all orders procured and written by
Consultant, without the involvement of any sales personnel of the Company, for
which the Markup (as hereafter defined) is greater than or equal to 40%.
Consultant shall be entitled to a commission equal to 2.5% of the Net Sales on
all orders procured and written by Consultant, without the involvement of any
sales personnel of the Company, for which the Markup is less than 40%.
3.1.2 Consultant shall be entitled to an override equal to 3%
of the Net Sales on all orders for the Caral Cove, Gottex Girls, and Breaking
Waves lines, procured and written by the sales personnel brought to the Company
by Consultant but employed by the Company, for which the Markup is greater than
or equal to 40%. Consultant shall be entitled to an override equal to 1.5% of
the Net Sales on all orders for the Caral Cove, Gottex Girls, and Breaking Waves
lines, procured by the sales personnel brought to the Company by Consultant and
employed by the Company, for which the Markup is less than 40%.
3.1.3 With respect to any order, "Net Sales" shall mean the
total dollar amount actually paid to the Company for such order, giving effect
to (i) any refunds, discounts, credits, chargebacks, and allowances actually
made or allowed to the customer, and (ii) customary trade discounts and
anticipations afforded to and actually taken by the customer, less any freight
charged to the customer. With respect to any order, the "Markup" shall mean the
percentage resulting from dividing (A) the difference between (i) the
consideration paid of payable by the Company for the manufacture and/or purchase
of the merchandise subject to the order, including without limitation any direct
and indirect costs and expenses such as shipping, freight, and insurance (the
"Net Cost"), and (ii) the Net Sales, by (B) the Net Cost.
3.2 WEEKLY DRAWS. During the Term, Consultant shall be entitled to a
weekly draw against the commissions payable under Section 3.1 above equal to
$1,500. The Company may, from time to time and in its sole and absolute
discretion, allow Consultant to draw more than $1,500 net per week.
3.3 COMMISSION STATEMENTS. No later than the 20th day of each month,
the Company shall provide to Consultant a statement setting forth the orders
during the preceding calendar month for which Consultant shall be entitled to a
commission hereunder, the Net Cost and Net Sales with respect to such orders,
the amount of the commission payable to Consultant hereunder pursuant to this
Section 3, and any draws made against such commission. The statement delivered
by the Company to Consultant in August of each year (the "August Statement")
shall contain a summary of all statements delivered in the preceding twelve (12)
months to Consultant pursuant to this Section 3.3. If the Fees payable to
Consultant for the twelve (12) month period preceding the August Statement
exceeds the gross aggregate amount of draws made by Consultant during such
period pursuant to Section 3.2 above, the Company shall pay to Consultant the
difference between the gross aggregate amount of draws by Consultant and the
Fees payable to Consultant hereunder during such period.
3.4 ACCESS TO COST SHEETS. Consultant shall have the right, by
providing the Company with not less than five (5) business days' prior written
notice thereof, to review the cost sheets of the Company with respect to the
merchandise sold by, or which sale was procured by, Consultant.
4. REIMBURSEMENT OF EXPENSES; INSURANCE.
4.1 BWI shall pay directly, or reimburse Consultant for, all reasonable
and necessary expenses and disbursements incurred by it or its employees for and
on behalf of BWI in the performance of its services under this Agreement,
provided that such expenses and disbursements are approved in writing by the
Company prior to their incurrence.
4.2 In order to induce Consultant to provide the services of Xxxxx Xxxx
to the Company, the Company agrees to reimburse Consultant for any sums paid by
it to Xx. Xxxx or for Xx. Xxxx'x benefit to obtain medical insurance coverage
for Xx. Xxxx but in no event shall such sum exceed $283.79 per month.
5. REPRESENTATIONS BY CONSULTANT:
5.1. Consultant, in order to induce the Company to enter into this
Agreement, does hereby warrant and represent as follows:
5.1.1. That it is a corporation duly organized and validly
existing under the laws of the State of New York.
5.1.2. That it is and will continue to be engaged in the
business as a sales consultant and maintains its own offices at 000X Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, maintains adequate insurance coverage for its
employees as required from time to time including, but not limited to, Workmen's
Compensation.
5.1.3. That is complies with and will comply in the future
with all relevant tax reporting and filing requirements of any taxing authority
having jurisdiction over the Consultant.
5.1.4. That Xxxxx Xxxx is a senior employee of Consultant and
that Consultant will make his services available to the Company at all relevant
times during the term of this Agreement.
5.2. Consultant acknowledges that breach of any one of the aforesaid
warranties shall be deemed cause for the Company to terminate this Agreement.
6. NON-DISCLOSURE.
6.1 Nondisclosure.
6.1.1 Definitions. Consultant recognizes and acknowledges that
it and its employees shall have access to certain information of BWI or any of
its affiliates which is either proprietary, non-public or proprietary in nature,
such as operational policies, pricing and cost policies that are valuable,
special and unique assets of BWI and its affiliates, and/or their respective
businesses (the "Confidential Information"). Confidential Information shall not
include any information:
6.1.1.1 which becomes known to the public
generally through no fault of Consultant,
6.1.1.2 as to which disclosure is required by law
or the order of any governmental authority under color of law; provided, that
prior to disclosing any information pursuant to this clause, Consultant shall
give prior written notice thereof to BWI and provide BWI with the opportunity to
contest such disclosure, or
6.1.1.3 as to which the disclosing party
reasonably believes that such disclosure is required in connection with the
defense of a lawsuit against the disclosing party.
6.1.2 Covenant to Maintain Confidentiality. Consultant
agrees and shall cause its employees to agree that it shall not disclose
Confidential Information to any person, firm, corporation, association or other
entity for any purpose or reason whatsoever, except
6.1.2.1 to authorized representatives of BWI,
6.1.2.2 during the Term, such information may be
disclosed by Consultant as is required in the course of providing services to
BWI hereunder, and
6.1.2.3 to counsel and other advisers, provided that
such advisers (other than counsel) agree to the confidentiality provisions of
this Section 6.
6.2 Injunctive Relief; Damages. Because of the difficulty of measuring
economic losses to BWI as a result of a breach of the foregoing covenants in
this Section 6, and because of the immediate and irreparable damage that could
be caused to BWI for which it would have no other adequate remedy, the Company
shall be entitled, in addition to any other right and remedy available to it, to
an injunction restraining such breach or a threatened breach, and in either case
no bond or other security shall be required in connection therewith, and
Consultant hereby consents to the issuance of such injunction. Consultant agrees
that the provisions of this Section 6 are necessary and reasonable to protect
the Company in the conduct of its business. Nothing herein shall be construed as
prohibiting BWI from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.
6.3 Severability; Reformation. The covenants in this Section 6 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
6.4 Independent Covenant. All of the covenants in this Section 6 shall
be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action by Consultant
against BWI (including the subsidiaries and affiliates thereof), whether
predicated on this Agreement or otherwise, and shall not constitute a defense to
the enforcement by BWI of such covenants. The covenants contained in this
Section 6 shall not be affected by any breach of any other provision hereof by
any party hereto.
6.5 Survival. The obligations of the parties under this Section
6 shall survive the termination of this Agreement.
6.6. Agreement of Consultant's Employees. Consultant agrees that
it will cause any of its employees at any time rendering services or who are
proposed to render services on its behalf to the Company to agree to the terms
and conditions of this Section 6 and agree to be bound thereby.
7. ASSIGNMENT.
This Agreement may not be sold, transferred, assigned, pledged or
hypothecated by Consultant, without the express prior written consent of the
Company, or except as otherwise set forth herein. This Agreement shall inure to
the benefit of and be binding upon BWI and Consultant, and each of their
permitted heirs, successors and assigns, including without limitation, any
corporation or other entity into which BWI is merged or which acquires all or
substantially all of the assets of BWI.
8. NOTICES.
Any notice required or permitted to be given pursuant to this Agreement
shall be deemed given (i) upon receipt by personal delivery, (ii) one (1)
business day after delivered by a nationally recognized overnight courier, or
(iii) three (3) business days after such notice is mailed by certified mail,
return receipt requested, addressed to the parties at each of their addresses
set forth at the beginning of this Agreement, or at such other address as such
party shall designate by written notice to the other party. Copies of all
notices shall also be provided to Todtman, Nachamie, Spizz & Xxxxx, P.C., 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxxxx Xxxxxxxx, Esq.
9. GOVERNING LAW.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the state of New York, without regard to its
conflict-of-laws rules. Any controversy arising out of or relating to this
Agreement or any modification or extension thereof, including any claim for
rescission, shall be settled by arbitration before a single arbitrator in New
York City, in accordance with the rules then obtaining of the American
Arbitration Association. Such decision shall be final and binding upon the
parties hereto, and shall be enforceable by any court of competent jurisdiction.
10. WAIVER.
Waiver by either party of a breach of any provision of this Agreement
by the other shall not operate or be construed as a waiver of any subsequent
breach by such other party. The failure of either party hereto to take any
action by reason of such breach shall not deprive such party of the right to
take action at any time while such breach continues.
11. INVALIDITY AND SEVERABILITY.
If any provisions of this Agreement are held invalid or unenforceable
by a court of competent jurisdiction, such invalidity or unenforceability shall
not affect the other provisions of this Agreement, and, to that extent, the
provisions of this Agreement are intended to be and shall be deemed severable.
12. NO JOINT VENTURE; ENTIRE AGREEMENT; AMENDMENT.
Nothing in this Agreement shall be construed as creating or
establishing a joint venture, partnership or franchise. This Agreement
constitutes the entire agreement between the parties with respect to the subject
matter hereof and there are no representations, warranties or commitments except
as set forth herein. This Agreement supersedes any other prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether written or oral, of the parties hereto relating to the transactions
contemplated by this Agreement. This Agreement may be amended only in a writing
executed by the parties hereto affected by such amendment.
13. TERM. This Agreement shall continue to August 5, 2001 and shall continue
from year to year thereafter unless cancelled by either party on thirty (30)
days prior written notice. Anything herein contained to the contrary
notwithstanding either party with or without cause may at any time terminate
this Agreement upon thirty (30) days prior written notice.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
BREAKING WAVES, INC. XXXXX XXXX INC.
By: /s/ Xxxxxxx Xxxxxxxxx By: /s/ Xxxxx Xxxx
Xxxxxxx Xxxxxxxxx, Secretary Xxxxx Xxxx
President
The undersigned employees of Consultant having been designated by
Consultant to render services to the Company hereby agree to be bound to all of
the terms, covenants and conditions of Section 6 hereof.
Date: August 1, 2000 /s/ Xxxxx Xxxx
Xxxxx Xxxx
