Exhibit 10.4
Application for
confidential treatment for a portion of this document has been
submitted to the Securities and Exchange Commission pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934.
This document omits the information subject to the confidentiality
request. Omissions are designated by the symbol
“**”. A complete version of this document has
been filed separately with the Securities and Exchange
Commission.
CONSULTING AGREEMENT
THIS CONSULTING
AGREEMENT (the “Agreement”) is entered into
as of March 31, 2008 (the “Closing Date”), between
Heeling Sports EMEA, a Belgian company (SPRL) with a registered
office of Avenue Van Volxemlaan 79, B1190 Brussels, Belgium,
represented by its Vice President, John O’Neil, a citizen of
the United States of America (the “Company”) and The
Sansean Group Limited, a company incorporated and duly existing
under the laws of Hong Kong with a registered address at 5705, The
Center, 99 Queen’s Road Central, Hong Kong, represented by
its Director Mr. Sven Heller, a citizen of Switzerland
(“Consultant”). The Company and Consultant are
sometimes collectively referred to herein as the
“Parties” and individually as a
“Party.”
WHEREAS, the
Company wishes to enter into this Agreement with Consultant for the
provision of consulting services in Germany and the European
Union;
WHEREAS, the
Company and its affiliates, in their business, use confidential
customer, dealer and supplier lists and other trade secrets and
confidential and proprietary information that will be communicated
to Consultant during its provision of services to the Company and
its affiliates, and the Company and its affiliates have expended
and will expend substantial time, effort, and money to develop said
customer, dealer and supplier lists, other trade secrets and
confidential and proprietary information, data, processes,
business, patronage and goodwill to promote and increase its
business; and
WHEREAS, Consultant
desires to perform services for the Company, and the Company is
desirous of having Consultant perform services to the Company and
its affiliates, provided that in so doing, the Company can protect
its customer, dealer and supplier lists, other trade secrets and
confidential and proprietary information, data, processes,
business, patronage and goodwill.
NOW, THEREFORE, in
consideration of the mutual covenants and agreements set forth
herein, the Parties agree as follows:
1.
Consulting Term and
Services. The Company hereby engages Consultant as
an independent contractor, and not as an employee, to render
consulting services to the Company.
(a)
Term . Consultant hereby accepts such engagement for a
period commencing on the Closing Date and terminating automatically
upon (i) the date on which the Company pays Consultant for the
500,000th Net Pair Sold (as defined in Section 2) of
Heelys-branded footwear sold by the Company or its affiliates in
Germany or Austria (the “Products,” and each pair is a
“Product”); or (ii) Consultant’s dissolution
or closing.
(b)
Termination . The Company may terminate this Agreement
at any time without notice, for Cause. For the purpose of
this paragraph, “Cause” shall mean (i) theft
and/or misappropriation and/or misdirection of Company funds,
property, and/or business opportunities by Consultant, its
employees, affiliates or affiliate’s employees; or
(ii) Consultant’s material violation of this
Agreement. Termination of this Agreement for Cause shall
include the prospective termination of the consideration recited in
Section 2 of this Agreement.
(c)
Services . During the Term, Consultant shall use its
knowledge and contacts in order to render consulting services to
the Company and to assist the Company and its affiliates in Germany
and Austria (the “Territory”). The services
rendered by Consultant hereunder shall be provided by Consultant as
a consultant, and not as an employee, partner or joint venturer of
the Company.
(i)
Throughout the Term,
Consultant shall: (A) make available to the Company all
current and prospective customer lists and any other intangible
assets that would be useful to the Company in developing the brand
and the distribution business in the Territory; (B) act to
preserve the goodwill of all employees, customers, dealers,
suppliers, and other persons having business relations with the
Company and its affiliates; (C) perform its services in a
business-like manner and in a manner that will not harm the
business reputation of the Company; (D) refer all inquiries received
for Products to the Company; (E) comply with good business practices and all
applicable laws and regulations ; and (F) use its reasonable best efforts
and diligence to promote the sale and use of, and to stimulate
interest in, the Products in the Territory . Consultant represents and warrants to
the Company that it has, and during the Term will continue to maintain, the capacity,
facilities and personnel necessary to carry out its obligations
under this Agreement. Consultant acknowledges that it has no
authority to negotiate the sale or purchase of Products on behalf
of the Company or any of its affiliates or to negotiate or conclude
such transactions on behalf of or in the name of the Company or any
of its affiliates.
(ii)
Throughout the Term,
Consultant shall not, without prior written approval of the
Company: (A) encourage the sale of the Products outside
the Territory; (B) maintain or seek to establish any branch or
channel distribution inside the Territory; (C) engage in
deceptive, misleading or unethical practices detrimental to the
Company or the Products, including, but not limited to,
disparagement of the Company or the Products; (D) make
representations, warranties or guarantees to customers or to the
trade with respect to the specifications, features or capabilities
of the Products that are inconsistent with the literature
distributed by the Company; (E) market, promote, sell, lease,
solicit or procure orders for or otherwise represent any product in
competition with any of the Products in the Territory; or
(F) engage in conduct or business activities in violation of
the terms set forth herein.
2.
Compensation
. In consideration of
Consultant’s consulting services set forth in Section 1
above, the Company will compensate Consultant as
follows:
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(a)
The Company shall pay Consultant **, as follows: ** payable on the
Closing Date and ** shall be made ten days after the Closing
Date.
(b)
Further payment will be based on Net Pairs Sold by the Company as
of December 31, the end of the financial year.
“Net Pairs Sold” shall equal gross sales in pairs in
the Territory less all pair returns. Payments shall be made
to Consultant within sixty (60) days after the financial
year-end. Consultant shall have the right to see the relevant
documents and/or financial statements necessary to verify the
calculation of Net Pairs Sold (but such information shall be held
confidential pursuant to the provisions of Section 4).
(c)
In addition, for each Product sold by the Company (but not any
Product sold by The Distributor GmbH), the Company shall pay
Consultant (i) ** for each Product sold (for the first 200,000
(Two Hundred Thousand) Net Pairs Sold); and (ii) ** (for
200,001 (Two Hundred Thousand One) to 500,000 (Five Hundred
Thousand) Net Pairs Sold). After payment associated with the
500,000th Net Pair Sold is made, this Agreement and the Term shall
terminate.
3.
Relationship of the Parties;
Independent Contractor; No Employee Benefits
. Notwithstanding any provision
hereof, Consultant is an independent contractor and not an
employee, agent, partner or joint venturer of the Company and shall
not bind nor attempt to bind the Company to any contract.
Consultant shall accept any directions issued by the Company
pertaining to the goals to be attained and the results to be
achieved but shall be solely responsible for the manner and hours
in which Services are performed under this Agreement.
Consultant shall not be eligible to participate in any of the
Company’s employee benefit plans, fringe benefit programs,
group insurance arrangements or similar programs. The Company
shall not provide workers’ compensation, disability
insurance, social security or unemployment compensation coverage or
any other statutory benefit to Consultant. Consultant shall
comply at Consultant’s expense with all applicable provisions
of workers’ compensation laws, unemployment compensation
laws, federal, state and local income tax laws, and all other
applicable federal, state and local laws, regulations and codes
relating to terms and conditions of employment required to be
fulfilled by employers or independent contractors.
4.
Nondisclosure
Agreement . Consultant acknowledges that the
information, observations and data obtained by it while engaged as
a consultant by the Company are the property of the Company and
that during the Term, it will have access to and become familiar
with various trade secrets, consisting of information, records,
specifications, sales procedures, customer requirements, customer,
dealer and supplier lists, methods of doing business, and other
confidential information (all of which are hereinafter referred to
as “Trade Secrets”), which are owned by the Company and
its Affiliates and which are regularly used in the operation of the
business of the Company and its Affiliates.
“Affiliates” shall mean entities and natural persons
controlling, controlled by, or under common control with the
Company. Consultant shall not disclose any of the Trade
Secrets, directly or indirectly, or use them in any way, either
during the Term or at any time thereafter, except as required in
the course of Services under this Agreement. All files,
records, documents, drawings, specifications, information, data,
customer lists, customer information, dealer and supplier lists,
dealer and supplier information, compilations of information, and
similar items relating to the business of the Company and its
Affiliates, whether prepared by the Consultant or otherwise coming
into its possession, shall
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remain the exclusive property of the Company
and shall not be disseminated, communicated or otherwise removed
from the premises of the Company under any circumstances, without
the pri
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