SALON CITY, INC. West Hollywood, CA 90069
Exhibit
10.1
SALON
CITY, INC.
000
X.
Xxxx Xxxxxx, Xxx 000
Xxxx
Xxxxxxxxx, XX 00000
June
26,
2006
PERSONAL
AND CONFIDENTIAL
Xx.
Xxxxx
Xxxxxxxxx
President
Capital
Solutions, Inc.
0000
Xxxxxxxx Xxxx
Xxx
Xxxxxx, Xxxxxxxxxx 00000
Dear
Xx.
Xxxxxxxxx:
This
letter agreement ("Agreement") confirms the terms and conditions of the
engagement of Capital Solutions, Inc. (“Capital”) and Xxxxx Xxxxxxxxx by Salon
City, Inc. (the “Company”) to render certain professional services to the
Company in connection with the Company's strategic and financial plans, as
follows:
1. Services. Capital
agrees to perform the following services:
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(a)
|
Make
Xxxxx Xxxxxxxxx available to actively participate in helping the
Company
with its financial planning, financings and other related financial
activities;
|
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(b)
|
Make
Xxxxx Xxxxxxxxx available to assist the CEO reach his financial and
revenue milestones through active on-going
communication;
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(c)
|
Make
Xxxxx Xxxxxxxxx available to interface with the investment team of
the
Company;
|
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(d)
|
Make
Xxxxx Xxxxxxxxx available to assist the Company to meet and accelerate
its
revenue goals from 2007, 2008, and 2009, which will be the basis
for
incentive bonuses; and
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(e)
|
Xxxxx
Xxxxxxxxx will provide the above services independently of the Company,
from a separate office, without taking on any direct Company
responsibility.
|
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2. Fees. The
Company agrees to pay Capital for its services with a professional fee
("Professional Fee") of a total of:
(a) One
million shares of restricted common stock of the Company (as such term
“restricted” is defined in Rule 144 under the Exchange Act) to be issued as
promptly as practicable after the execution of this Agreement for services
performed from January 1, 2005 to date.
(b) One
million shares of restricted common stock of the Company (as such term
“restricted” is defined in Rule 144 under the Exchange Act) to be issued within
30 days after end of the 2008 fiscal year, if and when the Company reaches
$5.0
million in sales, or a pro-rated portion of said one million shares based on
annual volume for fiscal 2008. Two examples of such pro rating are
the following: (1) If the Company’s sales reach $4.0 million for fiscal 2008,
the Company will be obligated to issue 800,000 restricted shares under this
subsection; (2) if the Company’s sales reach $6.0 million for fiscal 2008, the
Company will be obligated to issue 1,200,000 restricted shares under this
subsection.
(c) One
million shares of restricted common stock of the Company (as such term
“restricted” is defined in Rule 144 under the Exchange Act) to be issued within
30 days after the end of the 2009 fiscal year, if and when the Company reaches
$10.0 million in sales, or a pro-rated portion of said one million shares based
on annual volume for fiscal 2009. Two examples of such pro
rating are the following: (1) If the Company’s sales reach $8.0
million for fiscal 2009, the Company will be obligated to issue 800,000
restricted shares under this subsection; (2) if the Company’s sales reach $12.0
million for fiscal 2009, the Company will be obligated to issue 1,200,000
restricted shares under this subsection.
(d) Antidilution
Protection - The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the percentage ownership position or potential percentage
ownership position of Capital in the Company, but will at all times in good
faith assist in the maintaining such ownership position or potential ownership
position of Capital and in the taking of all such action as may reasonably
be
requested by the Capital in order to protect such ownership percentage or
potential ownership percentage against dilution or other impairment, consistent
with the tenor and purpose of this Agreement.
(e) All
certificates for common stock of the Company to be issued pursuant to the terms
of this Agreement shall be issued in the name of “Xxxxx Xxxxxxxxx,” the person
who will be providing the services under this Agreement, and Xxxxx Xxxxxxxxx
does hereby agree to perform such services.
3. Term. The
term of this Agreement shall commence on January 1, 2005, and end on the
completion of fiscal 2009 (the "Term"). This Agreement may be renewed
upon mutual written agreement of the parties hereto with the additional services
and fees to be mutually agreed upon. This agreement may be terminated by the
Company with 45 days prior written notice to Capital.
4. Indemnification. In
addition to the payment of fees and reimbursement of fees and expenses provided
for above, the Company agrees to indemnify Capital and its affiliates with
regard to the matters contemplated herein, as set forth in Exhibit A, attached
hereto, which is incorporated by reference as if fully set forth
herein.
5. Matters
Relating to Engagement. The Company acknowledges that
Capital has been retained solely to provide the services set forth in this
Agreement. In rendering such services, Capital shall act as an
independent contractor, and any duties of Capital arising out of its engagement
hereunder shall be owed solely to the Company. The Company further
acknowledges that Capital may perform certain of the services described herein
through one or more of its affiliates.
The
Company acknowledges that Capital is a consulting firm that is engaged in
providing professional services. The Company acknowledges and agrees that in
connection with the performance of Capital's services hereunder (or any other
services) that neither Capital nor any of its employees will be providing the
Company with legal, tax or accounting advice or guidance (and no advice or
guidance provided by Capital or its employees to the Company should be construed
as such) and that neither Capital nor its employees hold itself or themselves
out to be advisors as to legal, tax, accounting or regulatory matters in any
jurisdiction. The Company shall consult with its own legal, tax, accounting
and
other advisors concerning all matters and advice rendered by Capital to the
Company and the Company shall be responsible for making its own independent
investigation and appraisal of the risks, benefits and suitability of the advice
and guidance given by Capital to the Company and the transactions contemplated
by this Agreement. Neither Capital nor its employees shall have any
responsibility or liability whatsoever to the Company or its affiliates with
respect thereto.
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The
Company recognizes and confirms that in performing its duties pursuant to this
Agreement, Capital will be using and relying on data, material, and other
information (the "Information") furnished by the Company or their respective
employees and representatives. The Company will cooperate with Capital and
will
furnish Capital with all Information concerning the Company which Capital deems
appropriate and will provide Capital with access to the Company's officers,
directors, employees, independent accountants and legal counsel for the purpose
of performing Capital's obligations pursuant to this Agreement. The
Company hereby agrees and represents that all Information furnished to Capital
pursuant to this Agreement shall be accurate and complete in all material
respects at the time provided, and that, if the Information becomes materially
inaccurate, incomplete or misleading during the term of Capital's engagement
hereunder, the Company shall promptly advise Capital in
writing. Accordingly, Capital assumes no responsibility for the
accuracy and completeness of the Information. In rendering its
services, Capital will be using and relying upon the Information without
independent verification evaluation thereof. Capital hereby promises
and agrees to hold all of such Information confidential and not to use such
information for its benefit without the express written permission of the
Company.
6. Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to the
conflict of laws provisions thereof.
7. No
Brokers. The Company represents and warrants to Capital that
there are no brokers, representatives or other persons which have an interest
in
compensation due to Capital from any services contemplated herein.
8. Authorization. The
Company and Capital represent and warrant that each has all requisite power
and
authority, and all necessary authorizations, to enter into and carry out the
terms and provisions of this Agreement and the execution, delivery and
performance of this Agreement does not breach or conflict with any agreement,
document or instrument to which it is a party or bound.
9. Miscellaneous. This
Agreement constitutes the entire understanding and agreement between the Company
and Capital with respect to the subject matter hereof and supersedes all prior
understanding or agreements between the parties with respect thereto, whether
oral or written, express or implied. Any amendments or modifications
must be executed in writing by both parties. This Agreement and all
rights, liabilities and obligations hereunder shall be binding upon and insure
to the benefit of each party’s successors but may not be assigned without the
prior written approval of the other party. If any provision of this
Agreement shall be held or made invalid by a statute, rule, regulation, decision
of a tribunal or otherwise, the remainder of this Agreement shall not be
affected thereby and, to this extent, the provisions of this Agreement shall
be
deemed to be severable. This Agreement may be executed in any number
of counterparts, each of which, shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument. The
descriptive headings of the Paragraphs of this Agreement are inserted for
convenience only, do not constitute a part of this Agreement and shall not
affect in anyway the meaning or interpretation of this Agreement.
Please
confirm that the foregoing correctly sets forth our agreement by signing below
in the space provided and returning this Agreement to Capital for execution,
which shall constitute a binding agreement as of the date first above
written.
Thank
you. We look forward to a mutually rewarding
relationship.
SALON
CITY, INC.
By:______________________________
Name: Xxxxx
Xxxxxxxx
Title: President
AGREED
TO
AND ACCEPTED
AS
OF
JUNE __, 2006
CAPITAL
SOLUTIONS,
INC. XXXXX
XXXXXXXXX
By:______________________________ ______________________________
Name: Xxxxx
Xxxxxxxxx
(In His Individual Capacity)
Title: President
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EXHIBIT
A: INDEMNIFICATION
The
Company agrees to indemnify Capital, its employees, directors, officers, agents,
affiliates, and each person, if any, who controls it within the meaning of
either Section 20 of the Securities Exchange Act of 1934 or Section 15 of the
Securities Act of 1933 (each such person, including Capital is referred to
as
"Indemnified Party") from and against any losses, claims, damages and
liabilities, joint or several (including all legal or other expenses reasonably
incurred by an Indemnified Party in connection with the preparation for or
defense of any threatened or pending claim, action or proceeding, whether or
not
resulting in any liability) ("Damages"), to which such Indemnified Party, in
connection with providing its services or arising out of its engagement
hereunder, may become subject under any applicable Federal or state law or
otherwise, including but not limited to liability or loss (i) caused by or
arising out of an untrue statement or an alleged untrue statement of a material
fact or omission or alleged omission to state a material fact necessary in
order
to make a statement not misleading in light of the circumstances under which
it
was made, (ii) caused by or arising out of any act or failure to act, or (iii)
arising out of Capital's engagement or the rendering by any Indemnified Party
of
its services under this Agreement; provided, however, that the Company will
not
be liable to the Indemnified Party hereunder to the extent that any Damages
are
found in a final non-appealable judgment by a court of competent jurisdiction
to
have resulted from the gross negligence or willful misconduct of the Indemnified
Party seeking indemnification hereunder.
These
indemnification provisions shall be in addition to any liability which the
Company may otherwise have to any Indemnified Party.
If
for
any reason, other than a final non-appealable judgment finding an Indemnified
Party liable for Damages for its gross negligence or willful misconduct the
foregoing indemnity is unavailable to an Indemnified Party or insufficient
to
hold an Indemnified Party harmless, then the Company shall contribute to the
amount paid or payable by an Indemnified Party as a result of such Damages
in
such proportion as is appropriate to reflect not only the relative benefits
received by the Company and its shareholders on the one hand and the Indemnified
Party on the other, but also the relative fault of the Company and the
Indemnified Party as well as any relevant equitable considerations.
Promptly
after receipt by the Indemnified Party of notice of any claim or of the
commencement of any action in respect of which indemnity may be sought, the
Indemnified Party will notify the Company in writing of the receipt or
commencement thereof and the Company shall have the right to assume the defense
of such claim or action (including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of fees and expenses
of
such counsel), provided that the Indemnified Party shall have the right to
control its defense if, in the opinion of its counsel, the Indemnified Party's
defense is unique or separate to it as the case may be, as opposed to a defense
pertaining to the Company. In any event, the Indemnified Party shall
have the right to retain counsel reasonably satisfactory to the Company, at
the
Company's sole expense, to represent it in any claim or action in respect of
which indemnity may be sought and agrees to cooperate with the Company and
the
Company's counsel in the defense of such claim or action. In the
event that the Company does not promptly assume the defense of a claim or
action, the Indemnified Party shall have the right to employ counsel to defend
such claim or action. Any obligation pursuant to this Annex shall survive the
termination or expiration of the Agreement.
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ADDENDUM
TO LETTER AGREEMENT
This
clause below shall be incorporated into the contract dated June 26, 2006 between
Salon City, Inc. ("Company"), Capital Solutions, Inc. and Xxxxx Xxxxxxxxx
(collectively referred to as "Consultant") concerning the engagement of
Consultant by Company to render certain professional services to Company
("Agreement").
PERFORMANCE
BONUS
Company
and Consultant agree that Consultant shall receive a performance bonus of THREE
MILLION (3,000,000) restricted shares of Company common stock for Consultant's
services to Company in 2006. The additional shares shall be
distributed to Consultant within a reasonable time after the signing of this
Addendum.
IN
WITNESS WHEREOF, The parties
hereto, intending to be bound, hereby sign this Addendum to Letter Agreement
below as of February 20, 2007.
SALON
CITY, INC.
/s/
Xxxxx Xxxxxxxx
Title: President
CAPITAL
SOLUTIONS, INC.
By:_______________________
Name: Xxxxx Xxxxxxxxx Title: President
XXXXX
XXXXXXXXX
(In
his
Individual Capacity)
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