EXHIBIT 10.2
CONSULTING AGREEMENT WITH XXXXXXX X. XXXXX
CONSULTING AGREEMENT
This CONSULTING AGREEMENT is made effective the 1st day of October,
2000 by and between Xxxxxxx X. Xxxxx, an individual, ("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 Xxxxxxx X. Xxxxx 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.
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May 4, 2001
4. Duties of Consultant
Consultant shall devote that amount of time as Consultant deems necessary, at
his sole discretion, on a monthly basis, but not less than Twenty (20) hours per
month 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's 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
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May 4, 2001
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.
(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 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.
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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.
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May 4, 2001
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.
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.
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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:
Xxxxxxx X. Xxxxx
0000 XxxXxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, 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.
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May 4, 2001
(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.
(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 - Xxxxxxx X. Xxxxx Page 9
May 4, 2001
IN WITNESS WHEREOF, the parties have executed this Agreement effective the date
first written above.
"Consultant"
Xxxxxxx X. Xxxxx
/s/Xxxxxxx X. Xxxxx
By: Xxxxxxx X. Xxxxx
"Company"
YES CLOTHING CO., INC.
a Nevada Corporation
By: /s/ X.X.Xxxxxx
Name: X.X. Xxxxxx
Title: Director
