EXHIBIT 10.3
PROFESSIONAL FEE AGREEMENT WITH XXXX X. XXXX
PROFESSIONAL FEE AGREEMENT
This PROFESSIONAL FEE AGREEMENT is made effective the 8th day of
September, 2000 by and between Xxxx X. Xxxx, an individual
("Consultant") and Yes Clothing Company, Inc. a Nevada
corporation (the "Company").
WHEREAS, Consultant has over 30 years of experience in mergers, acquisitions,
corporate finance and business management; and,
WHEREAS, the Company desires to employ Consultant as its Chairman of the Board
and 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 a director 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 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 (the "Services")
shall be all those necessary or proper to conduct meetings of the Company's
Board of Directors, and to evaluate business opportunities 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 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.
Professional Fee Agreement - Xxxx X. Xxxx Xxxx 2
May 4, 2001
4. Duties of Consultant
Consultant shall devote not less than four (4) hours per month as Consultant
deems necessary from day-to-day or week-to-week, at his sole discretion, to
fulfilling his obligations under this Agreement. Consultant shall receive
compensation, vacation and other time allowances as set forth herein. The
Company understands that Consultant serves as an officer and/or director for
other companies which require Consultant's professional time, but which will not
conflict with Consultant's obligations hereunder.
5. Compensation
Compensation to Consultant for the Services provided pursuant to this Agreement
shall consist of the following:
(A) Annual Compensation. The Company shall pay Consultant an annual fee
("Director's Fee") of Eighteen Thousand Dollars ($18,000), payable monthly
in advance on the first day of each month at the rate of One Thousand Five
Hundred ($1,500.00) per month.
(B) Business Expense Reimbursement. Consultant shall be entitled to
reimbursement of all reasonable and customary business travel and
entertainment expenses for which Consultant makes an accounting to the
Company. Reimbursement of Consultants expenses shall be paid by the Company
within twenty (20) days following receipt of Consultant's written statement
of reimbursable expenses.
(C) Additional Incentive Compensation. In addition to the Director's Fee, the
Company shall provide Consultant with additional incentive compensation
("Incentive Compensation"), which shall include the following:
(i) Option to Purchase Shares. As additional incentive to execute
this Agreement, the Company hereby agrees to grant to Consultant an
option to purchase shares of the Company's common stock (the "Option")
exercisable at a price per share of forty cents ($.40), representing
one hundred ten percent (110%) of the moving average closing bid price
for such shares for the 30 days immediately preceding the date hereof.
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 Consultant to exercise
the Option will vest upon execution hereof.
(ii) Director's Liability Insurance - Consultant shall not be liable
to the Company or any of its shareholders for any act or omission in
the course of or connected with rendering the Services, including but
not limited to losses that may be sustained in any corporate act
undertaken by the Company approved or submitted by Consultant and
undertaken by the Company. In connection with Consultant serving as
the Chairman of the Board, the Company shall maintain insurance on
behalf of Consultant.
Professional Fee Agreement - Xxxx X. Xxxx Xxxx 3
May 4, 2000
containing terms and conditions acceptable to Consultant against
all costs, charges and expenses whatsoever incurred or sustained
in connection with any action, suit or proceeding to which
Consultant may be made a party by reason of being or having been
a Director or Agent for the Company. The Company 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.
6. Registration of Company Shares
The Company will register with the Securities and Exchange Commission (the
"Commission") the shares underlying the Option and reserved for future issuance
by the Company in lieu of cash for payment of the Director's Fee. Such
securities shall be included in a registration statement on Form S-1 or other
applicable registration statement filed by the Company within ten (10) business
days from the date hereof. Any 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 Consultant 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
Consultant'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
the Services in other locations as deemed appropriate by Consultant, in his sole
discretion, provided that any and all meetings, conference calls or business
travel related to the services provided hereunder shall not interfere with
Consultant's personal time commitments to care for his children or attend their
activities.
8. Consultant an Independent Contractor
Consultant is providing the Services as an independent contractor and not as an
employee of the Company, or of any entity affiliated with the Company. Except
for participation in the Company stock option or stock compensation plan
Consultant has no power or authority to act for the Company or represent any
entity affiliated with the Company in any manner. Consultant is not entitled to
any medical coverage, life insurance,
participation in the Company's savings plan, or other benefits afforded to the
Company's regular employees, or those of the Company's affiliated companies. If
the Company or any of its affiliated entities are required to pay or withhold
any taxes or make any other payment with respect to fees payable to Consultant,
Consultant will reimburse the Company or the affiliated entity in full for taxes
paid, and permit the Company to make deductions for taxes required to be
withheld from any sum due Consultant.
Professional Fee Agreement - Xxxx X. Xxxx Xxxx 4
May 4, 2001
9. Termination
The Company and Consultant may terminate this Agreement prior to expiration upon
mutual written consent. Failing to have mutual consent, without prejudice to any
other remedy to which the non-terminating party may be entitled, if any, either
party may terminate this Agreement with thirty (30) days written notice under
the following conditions:
(A) By the Company
(1) If Consultant is unable to provide the Services as set forth
herein for sixty (60) consecutive business days because of illness,
accident, or other incapacity;
(2) If Consultant willfully breaches or neglects the
duties required or reasonably requested to be
performed hereunder; or
(3) In the event of any other breach of a material
term of this Agreement by Director; or
(4) If Consultant institutes, makes a general assignment for the
benefit of creditors, has instituted against him any bankruptcy
proceeding for reorganization or for rearrangement of his financial
affairs, files a petition in a court of bankruptcy, or is adjudicated
a bankrupt; or, if any of the disclosures made herein or subsequent
hereto by the Consultant to the Company are determined to be
materially false or misleading, or if Consultant is convicted of or
enters a plea of guilty or nolo contendere to a felony involving
fraud, embezzlement, theft or dishonesty or other criminal conduct.
(B) By Consultant
(1) If the Company breaches any part of this Agreement, or fails to
make any payments or provide information required hereunder; or,
(2) If the Company ceases business, or sells a controlling interest to
a third party, or agrees to a consolidation or merger of itself with
or into another corporation, or sells substantially all of its assets
to another corporation, entity or individual; or,
(3) If the Company has a receiver appointed for its business or
assets, or otherwise becomes insolvent or unable to timely satisfy its
obligations in the ordinary course of business, including but not
limited to the obligation to pay the Director Fee; institutes, has
instituted against it any bankruptcy proceeding for reorganization for
rearrangement of its financial affairs, files a petition in a court of
bankruptcy, or is adjudicated a bankrupt or makes a general assignment
for the benefit of creditors; or,
Professional Fee Agreement - Xxxx X. Xxxx Xxxx 5
May 4, 2001
(4) If any of the disclosures made herein or subsequent hereto
by the Company to Director are determined by Consultant to be
materially false or misleading.
(5) In the event (a) Consultant elects to terminate without
cause, (b) this Agreement is terminated prior to the expiration of the
Engagement Term by mutual written agreement, or (c) the Company
terminates for the reasons set forth in A(i) and (ii) above, the
Company shall only be responsible to pay Consultant for unreimbursed
expenses, and the Director Fee accrued up to and including the
effective date of termination. If this Agreement is terminated by the
Company for any other reason, or by Director for reasons set forth in
B (i) through (v) above, Consultant shall be entitled to any
outstanding unpaid portion of reimbursable expenses, if any, accrued
Director Fees and the balance of the Director Fee for the remainder of
the term of this Agreement.
10. Representations and Warranties of the Company
The Company represents and warrants to Consultant that:
(A) 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
In addition to the Company's covenant to provide Insurance coverage for
Consultant, the Company 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 him by
reason of or resulting from litigation to which Consultant is named a party
defendant relating in any way to this Agreement.
Professional Fee Agreement - Xxxx X. Xxxx Xxxx 6
May 4, 2001
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 as 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 Company, Inc.
0000 XxxXxxxxx Xxxxx, #0000
Xxxxxxx Xxxxx, XX. 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
(2) In the case of Consultant:
Xxxx X. Xxxx
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.
(G) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of California
applicable to the performance and enforcement of contracts made within
such state, without giving effect to the law of conflicts of laws
applied thereby. In the event that any dispute shall occur between the
parties arising out of or resulting from the construction,
interpretation, enforcement or any other aspect of this Agreement, the
parties hereby agree to accept the exclusive jurisdiction of the
Courts of the State of California sitting in and for the county of
Orange. In the event either party shall be forced to bring any legal
action to protect or defend its rights hereunder, then the prevailing
party in such proceeding shall be entitled to reimbursement from the
non-prevailing party of all fees, costs and other expenses (including,
without limitation, the actual expenses of its attorneys) in bringing
or defending against such action.
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May 4, 2001
(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.
(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.
Professional Fee Agreement - Xxxx X. Xxxx Xxxx 9
May 4, 2001
IN WITNESS WHEREOF, the parties have executed this Agreement effective the date
first written above.
"Consultant"
Xxxx X. Xxxx
/s/ X.X. Xxxx
------------------
By: Xxxx X. Xxxx
"Company"
YES CLOTHING COMPANY, INC.
a Nevada Corporation
By:/s/ X.X.Xxxxxx
Name: X.X.Xxxxxx
Title:Director
