EXHIBIT 10.4
CONSULTING AGREEMENT WITH XXX X. XXXXXX
CONSULTING AGREEMENT
This CONSULTING AGREEMENT is made effective the 8th day of September, 2000 by
and between Xxx X. Xxxxxx and X.X.Xxxxxx, Corp., a California Corporation, with
offices at 0000 Xxx Xxxxxx Xxxxx Xxxxxx Xxx. XX 00000 ("Consultant") and Yes
Clothing Co., Inc. a Nevada Corporation (the "Company"), with its principal
offices at 0000 XxxXxxxxx Xxxxx, Xxxxxxx Xxxxx, XX. 00000.
WHEREAS, Consultant has over 30 years of experience in mergers, acquisitions,
and corporate finance and management; and,
WHEREAS, the Company desires to employ Consultant, to provide advice concerning
mergers and acquisitions, corporate finance, day-to-day management, guidance
with respect to general business decisions, and other duties commonly performed
by the Consultant of a Corporation.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and
Consultant agree as follows:
1. Engagement
The Company hereby engages Xxx X. Xxxxxx and X. X. Xxxxxx, Corp. as Consultant,
to provide the Company with advice and leadership as provided herein effective
the date hereof and continuing through the Engagement Period (as defined below).
2. Scope of Services
The services to be provided by Consultant under this Agreement shall be all
those necessary or proper to supervise the Company's management personnel and,
as needed, to evaluate and advise on transactions between the Company and third
parties.
3. Term of Engagement
This Agreement shall have an initial term of five (5) years. Thereafter, this
Agreement will automatically be extended on a year-to-year basis unless
Consultant or the Company shall serve written notice on the other party
terminating the Agreement (the "Engagement Period"); provided, however, that
Consultant and the Company shall agree in writing as to Consultant's continuing
compensation for the Management term following the fifth Anniversary hereof.
Notice to terminate shall be in writing and shall be delivered at least ten (10)
days prior to the end of the Engagement Period, as extended, as provided herein.
Consulting Agreement - Xxx X. Xxxxxx Page 2
May 4, 2001
4. Duties of Consultant
Consultant shall devote that amount of time as Consultant deems necessary, but
not more than 10 hours, on a monthly basis to fulfilling his obligations under
this Agreement with incentive compensation, vacation and other time allowances
as set forth herein. The particular amount of time may vary from day-to-day or
week-to-week at the election of Consultant. The Company understands that
Consultant serves as an officer and/or director for other companies which
require some of Consultant's professional time, but which do not conflict with
Consultant's obligations hereunder. Consultant agrees that he will at all times,
faithfully and to the best of their experiences, abilities, and talents, perform
all the duties required of them under this Agreement.
5. Compensation
Compensation to Consultant for services provided pursuant to this Agreement
shall consist of the following:
A) Fixed Annual Compensation. In consideration for the services
provided hereunder, the Company shall pay Consultant an annual
payment ("Fixed Annual Compensation") at the rate of Eight Thousand Dollars
($18,000) per annum, payable monthly on the First day of each month at One
Thousand Five Hundred ($1,500.00) per month , unless otherwise agreed
in writing between the Company and Consultant.
B) Business Expense Reimbursement. Consultant shall be entitled to
reimbursement of all reasonable and customary business travel and
entertainment expenses for which Consultant makes an adequate accounting
to the Company. The determination of the adequacy of the accounting
and reasonableness of the expenses submitted by Consultant shall be
within discretion of the Company's independent certified accountants
taking into consideration the substantiation requirements of the Internal
Revenue Code of 1986, as amended (the "Code"). If verification is
provided, the non-deductibility of such expenses for tax purposes
shall not affect Consultant's right to reimbursement.
C) Additional Incentive Compensation. In addition to the Fixed Annual
Compensation provided hereunder, the Company shall provide Consultant with
such additional incentive compensation ("Additional Incentive
Compensation"), and shall include but not be limited to the following:
(i) Option to Purchase Shares. Further, as additional incentive to
execute this Agreement, the Company hereby grants to Advisor an option
to purchase shares of the Company' common stock exercisable at a price
per share of one hundred ten percent(110%) of the moving average
closing bid price for such shares for the thirty (30) days prior to
the date hereof (the "Option"). The Option shall be evidenced and
governed by the Option Agreement in form and substance as that
attached hereto as Exhibit "A" and incorporated herein by reference.
The right of Advisor to exercise the Option will vest to Advisor upon
execution hereof.
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May 4, 2001
(ii) Officers Liability Insurance - The Company shall obtain insurance
generally maintained for by Limited Liability companies for the
benefit of their Consultants against all costs, charges
and expenses whatsoever incurred or sustained in connection with any
action, suit or proceeding to which such Consultants may
be made a party by reason of being or having been the Consultant of
the Company. Such insurance coverage shall be provided by the
Company and it shall use its best efforts to cause such insurance to
be maintained in effect for not less than six (6) years from the date
of termination of this Agreement and containing terms and
conditions acceptable to Consultant.
(iii) Vacation and Other Paid Leave of Absence. Consultant shall
be allowed to take not less than twenty one (21) days of paid vacation
leave per year. Consultant shall be allowed to arrange his work
schedule under to this Agreement.
6. Registration of Company Shares
The Company will register the Option Shares and any other securities of the
Company issued to Advisor in connection with the Services with the Securities
and Exchange Commission (the "Commission") on a registration statement on Form
S-1 or other applicable registration statement within one (1) year from the date
hereof. Any Option Shares issued prior to registration will be done so only in
reliance on exemptions from registration provided by Section 4(2) of the
Securities Act of 1933 (the "Act"), Regulation D of the Act, and applicable
state securities laws. Such issuance shall be in reliance on representations and
warranties of Advisor set forth herein, and updated upon written request by the
Company.
7. Place of Services
The services provided by Consultant hereunder will be performed from the
Company's offices in Newport Beach, California, except as otherwise mutually
agreed in writing between Consultant and the Company. It is understood and
expected that Consultant may make contacts with persons and entities and perform
services in other locations as deemed appropriate by Consultant in his sole
discretion, provided that such services and any related business travel shall
not interfere with Consultant=s personal time commitments.
8. Status
The Company will not be responsible for payment of all federal, state, and local
taxes on compensation paid under this Agreement, including income and social
security taxes, unemployment insurance, and any other taxes as may be required.
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May 4, 2001
9. Termination
(A) Termination for Disability. If, during the Engagement Period,
Consultant shall be unable to provide services to the Company for three
(3) consecutive months because of illness, accident, or other
incapacity, the Company shall have the right to terminate this Agreement
upon written notice to Consultant. Termination under this paragraph
shall be effective ten (10) days after the end of the three (3) month
period, upon receipt by Consultant of such notice.
(B) Death. In the event of Consultant's death, except for the Life
Insurance, this Agreement and all rights and obligations hereunder shall
immediately be terminated.
(C) Termination for Cause. The Company may, at its option,
terminate this Agreement by giving written notice of termination to
Consultant without prejudice to any other remedy to which the Company may
be entitled either at law, in equity, if Consultant:
(i) Willfully breaches or neglects the duties that he
is required to perform under the terms of this
Agreement; or
(ii) Fails to promptly comply with and carry out all directives of the
Company's Limited Partners not otherwise in conflict or banned by
the terms hereof, in which case, the terms hereof shall prevail; or
(iii) Is convicted of committing any dishonest or
unlawful act.
(D) Termination Other Than For Cause. This Agreement
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shall terminate immediately on the occurrence of any
one of the following events:
(i) The occurrence of circumstances, in the judgment of the Company's
Limited Partners, that make it impracticable for the Company to
continue its present line(s) of business; or
(ii) The decision of and upon notice by Consultant to
voluntarily terminate this Agreement; or
(iii) The loss by Consultant of legal capacity; or
(iv) If the Company makes a general assignment for the benefit of
creditors, or institutes, or has instituted against it any bankruptcy
proceeding for reorganization for rearrangement of its financial
affairs, or has a receiver of its assets or property
appointed because of insolvency, or otherwise becomes insolvent or
unable to timely satisfy all obligations in the ordinary course of
business.
Consulting Agreement - Xxx X. Xxxxxx Page 5
May 4, 2001
(E) Effect of Termination on Compensation. In the event of Termination
Other Than For Cause prior to the completion of the Engagement Period,
Consultant shall be entitled to a lump sum payment equal to the balance of
all compensation due to Consultant under this Agreement, including but not
limited to salary and benefits, and to the rights to exercise any
remaining, previously unexercised Stock Options, if any.
Notwithstanding anything contained herein to the contrary, Consultant's
right to exercise any exercised Stock Options, if any, shall continue
for two (2) years following the date of termination.
10. Representations and Warranties of the Company
The Company represents and warrants to Consultant that:
(A) Limited Liability Corporate Existence. The Company is a corporation
duly organized, validly existing, and in good standing under the laws of
the State of Nevada, with power to own property and carry on its business
as it is now being conducted.
(B) No Conflict. This Agreement has been duly executed by the Company and
the execution and performance of this Agreement will not violate, or result
in a breach of, or constitute a default in any agreement,
instrument, judgment, decree or order to which the Company is a party or to
which the Company is subject, nor will such execution and performance
constitute a violation or conflict of any fiduciary duty to which the
Company is subject.
(C) Full Disclosure. The information concerning the Company
provided to Consultant pursuant to this Agreement is, to the best of the
Company's knowledge and belief, complete and accurate in all material
respects and does not contain any untrue statement of a material fact or
omit to state a material fact required to make the statements made, in
light of the circumstances under which they were made, not misleading.
(D) Date of Representations and Warranties. Each of the representations and
warranties of the Company set forth in this Agreement is true and correct
at and as of the date of execution of this Agreement.
11. Indemnification
The Company and Consultant each agree to indemnify, defend and hold each other
harmless from and against all demands, claims, actions, losses, damages,
liabilities, costs and expenses, including without limitation, interest,
penalties and attorneys' fees and expenses asserted against or imposed or
incurred by either party by reason of or resulting from a breach of any
representation, warranty, covenant, condition, or agreement of the other party
to this Agreement.
The Company further agrees to indemnify defend and hold Consultant harmless from
and against all demands, claims, actions, losses, damages, liabilities, costs
and expenses, including without limitation, interest, penalties and attorneys'
fees and expenses asserted against or imposed or incurred by Consultant arising
from Consultant's fulfillment of his duties as the Consultant to the maximum
extent permitted by the Nevada Revised Statutes.
Consulting Agreement - Xxx X. Xxxxxx Page 6
May 4, 2001
In addition to the foregoing indemnity, the Company agrees to indemnify and hold
harmless Consultant, and each other person controlling Consultant or any of its
affiliates (collectively, the "Indemnified Parties" and each an "Indemnified
Party"), within the meaning of either Section 15 of the Act, or Section 20 of
the Securities Exchange Act of 0000, (xxx "Xxxxxxxx Xxx") from and against any
losses, claims, damages and liabilities (or actions in respect thereof), joint
or several, which are related to or arise out of or are based upon any untrue or
alleged untrue statement of material fact or any omission or alleged omission of
material fact required to be stated or necessary to make other statements, in
light of the circumstances in which they are made, not misleading contained in
any document, report or material provided to and relied upon by Consultant to
prepare any registration statement, prospectus, prospectus, application of any
kind or other materials or reports filed by the Company with any regulatory
agency.
12. Miscellaneous
(A) Subsequent Events. Consultant and the Company each agree to notify the
other party if, subsequent to the date of this Agreement, either party
incurs obligations which could compromise their efforts and obligations
under this Agreement.
(B) Amendment. This Agreement may be amended or modified at any time and in
any manner only by an instrument in writing executed by the parties hereto.
(C) Further Actions and Assurances. At any time and from time to time, each
party agrees, at its or their expense, to take actions and to execute and
deliver documents a may be reasonably necessary to effectuate the purposes
of this Agreement.
(D) Waiver. Any failure of any party to this Agreement to comply with any
of its obligations, agreements, or conditions hereunder may be waived in
writing by the party to whom such compliance is owed. The failure of any
party to this Agreement to enforce at any time any of the provisions of
this Agreement shall in no way be construed to be a waiver of any such
provision or a waiver of the right of such party thereafter to enforce each
and every such provision. No waiver of any breach of or non-compliance with
this Agreement shall be held to be a waiver of any other or subsequent
breach or non-compliance.
(E) Assignment. Neither the Company nor Consultant shall assign their
rights or obligations under the Agreement without the prior written consent
of the other.
Consulting Agreement - Xxx X. Xxxxxx Page 7
May 4, 2001
(F) Notices. Any notice or other communication required or permitted by
this Agreement must be in writing and shall be deemed to be properly given
when delivered in person to an officer of the other party, when deposited
in the United States mails for transmittal by certified or registered mail,
postage prepaid, or when deposited with a public telegraph company for
transmittal, or when sent by facsimile transmission charges prepared,
provided that the communication is addressed:
(1) In the case of the Company:
Yes Clothing Co., Inc.
0000 XxxXxxxxx Xxxxx, #0000
Xxxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
(2) In the case of Consultant:
X. X. Xxxxxx, Corp.
X.X. Xxx #000
Xxxxx Xxxxxx Xxx. XX. 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
or to such other person or address designated by the Company or
Consultant to receive notice.
(G) Headings. The section and subsection headings in this agreement are
inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.
(H) Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(I) Governing Law. This Agreement was negotiated and is being contracted
for in the State of California, and shall be governed by the laws of the
State of California, notwithstanding any conflict-of-law provision
to the contrary.
(J) Binding Effect. This Agreement shall be binding upon the parties hereto
and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors, and assigns.
(K) Entire Agreement. This Agreement contains the entire agreement between
the parties hereto and supersedes any and all prior agreements,
arrangements, or understandings between the parties relating to the subject
matter of this Agreement. No oral understandings, statements, promises, or
inducements contrary to the terms of this Agreement exist. No
representations, warranties, covenants, or conditions, express or implied,
other than as set forth herein, have been made by any party.
Consulting Agreement - Xxx X. Xxxxxx Page 8
May 4, 2001
(L) Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force and
effect.
(M) Facsimile Counterparts. A facsimile, telecopy, or other reproduction of
this Agreement may be executed by one or more parties hereto and such
executed copy may be delivered by facsimile of similar instantaneous
electronic transmission device pursuant to which the signature of or on
behalf of such party can be seen, and such execution and delivery shall be
considered valid, binding and effective for all purposes. At the request of
any party hereto, all parties agree to execute an original of this
Agreement as well as any facsimile, telecopy or other reproduction hereof.
(N) Termination of Any Prior Agreements. Effective the date hereof, all
prior rights of Consultant relating to the accrual or payment of any form
of compensation or other benefits from the Company based upon any
agreements other than this Agreement, whether written or oral, entered into
prior to the date hereof, are hereby terminated.
(O) Consolidation or Merger. Subject to the provisions hereof, in the event
of a sale of the stock, or substantially all of the stock, of the Company,
or consolidation or merger of the Company with or into another corporation
or entity, or the sale of substantially all of the operating assets of the
Company to another corporation, entity or individual, the Company may
assign its rights and obligations under this Agreement to its
successor-in-interest and such successor-in-interest shall be deemed to
have acquired all rights and assumed all obligations of the Company
hereunder; provided, however, that in no event shall the duties and
services of Consultant provided for herein, or the responsibilities,
authority or powers commensurate therewith, change in any material respect
as a result of such sale of stock, consolidation, merger or sale of assets.
(P) Time is of the Essence. Time is of the essence of this Agreement and of
each and every provision hereof.
Consulting Agreement - Xxx X. Xxxxxx Page 9
May 4, 2001
IN WITNESS WHEREOF, the parties have executed this Agreement effective the date
first written above.
"Consultant"
X. X. XXXXXX, CORP.
/s/ X.X. Xxxxxx
By: X.X.Xxxxxx,
President
"Consultant"
Xxx X. XXXXXX
/s/ Xxx X. Xxxxxx
By: Xxx X. Xxxxxx
"Company"
YES CLOTHING CO., INC.
a Nevada Corporation
/s/ X.X. Xxxx
By: X.X. Xxxx,
Title: President
