EXHIBIT 10.1
CONSULTING AGREEMENT
This Consulting Agreement (this "AGREEMENT") is made and entered as of
the "Effective Date" set forth below, by and between Tag-It Pacific, Inc., a
Delaware corporation (the "COMPANY"), and the "Consultant" set forth below.
Effective Date: January 1, 2007
Name: Xxxxxxxx Xxxxxxxx ("CONSULTANT")
Address: 0000 Xxxxxxxx Xx.
Xxxxxxxxx, XX 00000
Tel No. 000-000-0000
1. ENGAGEMENT AND SERVICES.
1.1 ENGAGEMENT. Commencing on the Effective Date, the
Company hereby engages Consultant, and Consultant hereby accepts such engagement
to render services to Company, upon the terms and subject to the conditions set
forth in this Agreement. Prior to the Effective Date, Consultant served as the
Executive Vice President of Operations of the Company pursuant to a letter
agreement dated March 16, 2006 the ("LETTER AGREEMENT"). The parties agree that
as of the Effective Date, the Letter Agreement shall be deemed terminated;
provided, however, that such termination will be considered neither a
"termination with cause" nor a "termination without cause" for purposes of the
Letter Agreement and, except as otherwise provided herein, Consultant shall not
be entitled to receive any Severance (as defined in the Letter Agreement) or
other benefits in consideration of the termination of the Letter Agreement.
1.2 TERM OF THE AGREEMENT. The initial term of this
Agreement (the "TERM") shall commence upon the Effective Date and shall
terminate twenty-four (24) months thereafter (the "TERMINATION DATE"), unless
sooner terminated as provided herein.
1.3 SERVICES TO BE PROVIDED BY CONSULTANT.
(a) SCOPE, RESPONSIBILITIES AND DUTIES.
Consultant agrees to provide the services listed in the attached EXHIBIT A
(hereinafter referred to as the "SERVICES"). Consultant may determine the
manner, method and means by which the Services will be provided and, except for
meetings to be held at the Company's premises as described on EXHIBIT A,
Consultant may perform the Services at a location other than the Company's
premises.
(b) NON-EXCLUSIVITY. Subject to the provisions
of SECTIONS 6 AND 7 below, Consultant by reason of the obligations ascribed to
it hereunder, shall not be required to devote full time or any specific amount
of time to the affairs of the Company, and Consultant may accept other
engagements and perform services for others, PROVIDED, HOWEVER, that during the
Term, Consultant shall devote the time necessary to fully and diligently perform
the Services and Consultant shall
not provide any consulting services to any other business or enterprise that
manufactures apparel trim products, including zippers and waist bands.
1.4 BOARD OF DIRECTORS. Consultant will remain on the
Company's Board of Directors; however, Consultant will not be compensated as an
outside director by the Company during the Term or for so long as he otherwise
remains a consultant to the Company. Consultant shall continue to be covered by
Company's Directors and Officers insurance under the same terms and conditions
as all other officers and directors.
2. COMPENSATION. As sole compensation for the Services to be
provided by Consultant to the Company, the Company shall pay Consultant in
accordance with the terms and conditions set forth on the attached EXHIBIT B.
Consultant's compensation shall include and Consultant shall be responsible for
the payment of all federal, state and local taxes of any kind which are
attributable to the compensation he receives.
3. EXPENSES. Upon receipt of itemized vouchers, expense account
reports and supporting documents submitted to the Company in accordance with the
Company's procedures then in effect, the Company shall reimburse Consultant for
all reasonable and necessary business expenses incurred ordinarily and
necessarily by Consultant in connection with the performance of Consultant's
duties hereunder.
4. TERMINATION OF ENGAGEMENT. Consultant's engagement pursuant to
this Agreement may be terminated by a party if the other party is in material
breach of this Agreement and such breach is not cured within fifteen (15) days
following written notice thereof. In addition, after six (6) months, Consultant
shall have the right to terminate this Agreement without cause upon 30 days'
written notice to Company. Should Consultant exercise this right, he shall be
paid through the end of the 30 day notice period. Similarly, Company shall have
the right to terminate this Agreement without cause upon 30 days' written notice
to Consultant. Should Company exercise this right, Consultant shall be paid the
full balance owing on this Agreement, with his benefits intact, and shall not
have any further obligation to provide consulting services.
5. CONFIDENTIALITY. Consultant shall maintain the confidentiality
of all Company's confidential business information and trade secrets as defined
by California's Uniform Trade Secrets Act. This provision shall survive the
expiration of this Agreement.
6. BUSINESS OPPORTUNITIES. Consultant covenants and agrees that
for so long as he is engaged by the Company, Consultant will not, without the
prior written consent of the Company (which consent may be withheld by the
Company in the exercise of its absolute discretion), engage, directly or
indirectly, in any business, venture or activity that manufactures apparel trim
products, including zippers and waistbands. Consultant further covenants and
agrees that if Consultant ever engages in any such business, venture or activity
in contravention of this SECTION 6 any and all gross profits, compensation,
rents and other income or gain (computed without reduction for the value of the
services performed by the Company, if any) derived by Consultant in connection
therewith shall be held by Consultant for the benefit of the Company and the
affiliates thereof, and shall be remitted to the Company upon demand.
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7. NON-SOLICITATION COVENANT.
7.1 NONSOLICITATION AND NONINTERFERENCE. During the Term
and for a period of twelve months thereafter, Consultant shall not (a) induce or
attempt to induce any employee or consultant of the Company to leave the employ
of the Company or in any way interfere adversely with the relationship between
any such employee or consultant and the Company, (b) induce or attempt to induce
any employee or consultant of the Company to work for, render services or
provide advice to or supply confidential business information or trade secrets
of the Company to any third person, firm or corporation or (c) induce or attempt
to induce any customer, supplier, licensee, licensor or other business relation
of the Company to cease doing business with the Company or in any way interfere
with the relationship between any such customer, supplier, licensee, licensor or
other business relation and the Company.
7.2 INDIRECT SOLICITATION. Consultant agrees that, during
the Term and the period covered by SECTION 7.1 hereof, he will not, directly or
indirectly, assist or encourage any other person in carrying out, directly or
indirectly, any activity that would be prohibited by the provisions of SECTION
7.1 if such activity were carried out by Consultant, either directly or
indirectly; and, in particular, Consultant agrees that he will not, directly or
indirectly, induce any employee or consultant of the Company to carry out,
directly or indirectly, any such activity.
8. INJUNCTIVE RELIEF. Consultant hereby recognizes, acknowledges
and agrees that in the event of any breach by Consultant of any of his
covenants, agreements, duties or obligations contained in SECTIONS 5 THROUGH 7
of this Agreement, the Company would suffer great and irreparable harm, injury
and damage, the Company would encounter extreme difficulty in attempting to
prove the actual amount of damages suffered by the Company as a result of such
breach, and the Company would not be reasonably or adequately compensated in
damages in any action at law. Consultant therefore covenants and agrees that, in
addition to any other remedy the Company may have at law, in equity, by statute
or otherwise, in the event of any breach by Consultant of any of his covenants,
agreements, duties or obligations contained in SECTIONS 5 THROUGH 7 of this
Agreement, the Company shall be entitled to seek and receive temporary,
preliminary and permanent injunctive and other equitable relief from any court
of competent jurisdiction to enforce any of the rights of the Company, or any of
the covenants, agreements, duties or obligations of Consultant hereunder, and/or
otherwise to prevent the violation of any of the terms or provisions hereof, all
without the necessity of proving the amount of any actual damage to the Company
or any affiliate thereof resulting therefrom; provided, however, that nothing
contained in this SECTION 8 shall be deemed or construed in any manner
whatsoever as a waiver by the Company of any of the rights which the Company may
have against Consultant at law, in equity, by statute or otherwise arising out
of, in connection with or resulting from the breach by Consultant of any of his
covenants, agreements, duties or obligations hereunder.
9. RELEASE.
9.1 In exchange for receipt of the consideration provided
for in this Agreement, Consultant, on his own behalf, and for Consultant's
heirs, executors, administrators, successors, and assigns, does hereby fully and
forever release and discharge the Company and its related entities, and their
shareholders, employees and former employees, agents, directors, officers,
attorneys, predecessors, successors, assigns, heirs, executors, administrators,
and all
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other persons, firms, corporations, associations, partnerships, or entities
having any legal relationship to any of them, of and from any and all claims,
demands, causes of action, charges and grievances, of whatever kind or nature,
whether known or unknown, suspected or unsuspected (collectively, "CLAIMS"),
which Consultant now owns or holds or has at any time before the date of his
termination owned or held against any of them, including, but not limited to,
any and all claims, charges, demands and causes of action: (1) which are alleged
in, set forth in, arise out of, or are in any way connected with any
transactions, occurrences, acts or omissions or claims; (2) which arise out of
or are in any way connected with Consultant's prior employment with the Company
or the termination of Consultant's employment with the Company pursuant to the
Letter Agreement; (3) which are related to or concern (i) violations of any
local, state or federal law based on race, sex, age, disability, pregnancy or
any other category protected by law; (ii) wrongful termination, breach of
express and implied-in-fact contract, breach of the covenant of good faith and
fair dealing, intentional and negligent infliction of emotional distress,
defamation, invasion of privacy, breach of employment contract, fraud or
negligent misrepresentation, intentional interference with contractual relations
and prospective economic advantage, and other torts; (4) any claim for wages,
accrued vacation, benefits, salary, commissions or bonuses; or (5) which arise
out of or are in any way connected with any loss, damage or injury whatsoever
resulting from any act committed or omission made prior to the date hereof.
Consultant hereby acknowledges and knowingly, freely and voluntarily waives the
benefits of California Civil Code Section 1542, which provides:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR
AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR
HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR."
Consultant expressly acknowledges that such party's release herein is also
intended to include in its effect, without limitation, all Claims that such
party does not know or expect to exist in such party's favor at the time of
execution of this Agreement, and that such party's release herein contemplates
extinguishing all of these Claims.
9.2 EXCLUDED ITEMS. Consultant and Company acknowledge
and agree that: (1) their respective rights, duties, and obligations under this
Agreement are specifically excluded from the scope of the release contained
above in SECTION 9.1 hereof; and (2) their respective covenants, agreements,
acknowledgements and warranties contained in this Agreement will survive the
execution and delivery of this Agreement.
9.3 COVENANT NOT TO XXX. Consultant agrees and covenants
never to (directly or indirectly) participate in, or file or facilitate, any
lawsuit, arbitration proceeding or any other administrative proceeding against
Company for any Claims of whatever kind and character released and discharged
pursuant to or under this Agreement. Company agrees and covenants never to
(directly or indirectly) participate in, or file or facilitate, any lawsuit,
arbitration proceeding or any other administrative proceeding against Consultant
for any Claims of whatever kind and character released and discharged pursuant
to or under this Agreement.
10. INDEPENDENT CONTRACTOR; DAMAGES; THIRD PARTY AGREEMENTS;
TAXES. Consultant is and shall be deemed to be an independent contractor of
Company and nothing contained herein shall be
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deemed to constitute a partnership between or a joint venture by the parties
hereto, or constitute either party the employee or agent of the other. Company
shall not be responsible for any damage to or loss of any equipment belonging to
Consultant which may occur in the course of the performance of the Services.
Consultant acknowledges that nothing in this Agreement gives Consultant the
right to bind or commit Company to any agreements with any third parties. This
Agreement is not for the benefit of any third party and shall not be deemed to
give any right or remedy to any such party whether referred to herein or not.
Furthermore, Consultant warrants and represents that Consultant is solely liable
for and shall pay all applicable federal, state and/or local taxes on all
amounts earned pursuant to this Agreement. Consultant further agrees to
indemnify, defend (with counsel acceptable to Company) and hold harmless
Company, and its licensees, employees, agents, successors and assigns from and
against any and all liability (including attorneys' fees) which it or they may
incur regarding the payment of taxes for Consultant's services, excluding,
however, than any liability of the Company arising under section 409A of the
Internal Revenue Code with respect to amounts paid to Consultant hereunder.
Consultant will indemnify and hold Company, its licensees, employees, agents,
successors and assigns from and against any and all claims, actions, losses,
damages and expenses (including attorneys' fees) arising out of or caused by a
breach or threatened breach of any of Consultant's representations, warranties,
undertakings or agreements hereunder.
11. MISCELLANEOUS.
11.1 NOTICES. All notices, requests and other
communications (collectively, "NOTICES") given pursuant to this Agreement shall
be in writing, and shall be delivered by personal service or by United States
first class, registered or certified mail (return receipt requested), postage
prepaid, addressed to the party at the address set forth below:
If to Company:
Tag-It Pacific, Inc.
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx Xxxxx, XX 00000
If to Consultant, at the address set forth on the
first page of this Agreement.
Any Notice shall be deemed duly given when received by the
addressee thereof, provided that any Notice sent by registered or certified mail
shall be deemed to have been duly given five days from date of deposit in the
mails, unless sooner received. Either party may from time to time change its
address for further Notices hereunder by giving notice to the other party in the
manner prescribed in this section.
11.2 ENTIRE AGREEMENT. This Agreement contains the sole
and entire agreement and understanding of the parties with respect to the entire
subject matter hereof, and any and all prior agreements, discussions,
negotiations, commitments and understandings, whether oral or otherwise, related
to the subject matter hereof are hereby merged herein. No representations,
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oral or otherwise, express or implied, other than those contained in this
Agreement have been relied upon by any party to this Agreement.
11.3 ATTORNEYS' FEES. If any action, suit or other
proceeding is instituted to remedy, prevent or obtain relief from a default in
the performance by any party of its obligations under this Agreement, the
prevailing party shall recover all of such party's costs and reasonable
attorneys' fees incurred in each and every such action, suit or other
proceeding, including any and all appeals or petitions therefrom.
11.4 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, UNITED
STATES OF AMERICA, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.
11.5 CAPTIONS. The various captions of this Agreement are
for reference only and shall not be considered or referred to in resolving
questions of interpretation of this Agreement.
11.6 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
11.7 BUSINESS DAY. If the last day permissible for
delivery of any Notice under any provision of this Agreement, or for the
performance of any obligation under this Agreement, shall be other than a
business day, such last day for such Notice or performance shall be extended to
the next following business day (provided, however, under no circumstances shall
this provision be construed to extend the date of termination of this
Agreement).
11.8 SURVIVAL. SECTIONS 4, 5, 6, 7, 8, 9, 10 AND 11, and
any other provision hereof specifying an obligation or a right of a party after
the termination of Consultant's services or this Agreement, for any reason
whatsoever, shall survive such termination and shall remain in full force and
effect.
11.9 VACATION DAYS. Consultant represents and warrants to,
and agrees with the Company that, as of the Effective Date, Consultant has taken
all paid vacation to which he was entitled as an employee of the Company and
that Consultant has no accrued vacation days as of the Effective Date.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
Company: Consultant:
TAG-IT PACIFIC, INC.
By: /S/ XXXXXXX XXXXX /S/ XXXXXXXX XXXXXXXX
--------------------------- ---------------------------------
Xxxxxxx Xxxxx Xxxxxxxx Xxxxxxxx
Title: Chief Executive Officer
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EXHIBIT A
SERVICES
Consultant shall assist the Company in managing its stretch waistband products
business, including managing the Company's relationships with related licensors,
suppliers and customers and assisting the Company in its litigation with Pro Fit
Holdings Limited, all as directed from time to time by the Company's Chief
Executive Officer and Board of Directors. Consultant will report to the
Company's Chief Executive Officer. Such Services will include the following to
the extent related to the stretch waistband products business:
o Financial modeling;
o Telephone and in-person meetings with existing and potential
customers and suppliers;
o Sourcing of machine parts related equipment used in the
business;
o Assisting with product R&D efforts;
o Sales and business development; and
o Managing and training sales agents.
Consultant agrees to travel up to five days per month in performing Services, to
the extent requested by the Company.
Consultant agrees to attend in person meetings with Company management at the
Company's premises in Woodland Hills, California, or such other premises in Los
Angeles County, California, up to two days per week, to the extent requested by
the Company.
Consultant shall prepare a weekly report summarizing activities of the business
for which Consultant has been involved. Consultant will not be required to
provide a weekly report when travel or other unanticipated events makes such a
report impractical to prepare. The subsequent report shall cover all activities
Consultant engaged in since the previous report.
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EXHIBIT B
COMPENSATION
BASE PAY
As of the Effective Date, Consultant's compensation will be based on an annual
amount of $225,000 payable in accordance with the Company's standard payroll
schedule.
ADDITIONAL PAY
Consultant shall receive payments in the amount of $3,333.33 per month, payable
in cash or by check or direct deposit to Consultant's designated account on the
last business day of each calendar month for an eighteen (18) month period
beginning January 31, 2007.
OPTIONS
The Company acknowledges and agrees that, notwithstanding termination of
Consultant's employment with the Company, Consultant's employment with the
Company shall be deemed continuous for purposes of Consultant's outstanding
stock options, by virtue of this Agreement and Consultant's continued service on
the Board of Directors, and all such outstanding stock options shall continue to
vest and remain exercisable in accordance with the terms of the applicable stock
option agreements, which shall remain in full force and effect..
BENEFITS
For an eighteen (18) month period beginning on the Effective Date, the Company
shall continue to provide Consultant and his family with medical benefits in
accordance with the Company's existing benefits plan, or, in the event the
Company is not able to provide medical benefits to Consultant and his family in
accordance with such existing benefits plan, the Company shall pay for coverage
under COBRA during the Term.
BONUS
Consultant shall not be entitled to receive any bonus or participate in any
bonus plans or bonus pools which the Company may offer, including but not
limited to the Company's executive bonus pool which is based on a calculation of
EBIT.
CAR
For an eighteen (18) month period beginning on the Effective Date, the Company
shall pay Consultant a car allowance of $950.00 per month.
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