Exhibit 10.5
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 Achim
Lippoth (“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 his 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
. The term of this
Agreement is twelve (12) months form the Closing Date (the
“Term”). This Agreement will terminate of its own
accord at the conclusion of the Term without any further action
required by any Party, unless terminated earlier as set forth
herein, or unless the Parties renew or extend this Agreement by
separate written addendum.
(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) Consultant’s felony conviction;
(ii) Consultant’s theft and/or misappropriation and/or
misdirection of Company funds, property, and/or business
opportunities; (iii) Consultant’s
material violation of this Agreement; and/or
(iv) Consultant’s or his affiliate’s violation of
the terms of the Termination Agreement by and between the Company
and Consultant, dated as of March 31, 2008. 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 his knowledge and contacts in order to render
consulting services to the Company and to assist the Company and
its affiliates in Germany and the European Union (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 his 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 his reasonable best efforts
and diligence to promote the sale and use of, and to stimulate
interest in, Heelys-branded footwear and other products
(collectively with all of the Company’s other products that
become subject to this Agreement, the “Products”) in
the Territory . Consultant represents and warrants to
the Company that he has, and during the Term will continue to
maintain, the capacity, facilities and personnel necessary to carry
out his obligations under this Agreement. Consultant
acknowledges that he 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 shall pay Consultant ** per month during the Term.
Payment
2
shall be made on or before the last day of each
month. The Company shall also reimburse Consultant for his
reasonable and pre-approved business and travel expenses during the
Term.
3.
Relationship of the Parties;
Independent Contractors; 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
neither 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 Social Security law, the Fair Labor Standards Act,
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 him while engaged as
Consultant by the Company are the property of the Company and that
during the Term, Consultant 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 Consultant or otherwise coming into
his possession, shall 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 prior written consent of the Company, and in any event shall be
promptly delivered to the Company upon termination of the Term or
at any time the Company may request. It is understood and
agreed to by the Parties that all customer, dealer and supplier
lists (among other items) are deemed to be Trade Secrets and shall
remain the exclusive property of the Company and its
Affiliates. Consultant agrees that each of the nondisclosure
agreements set forth herein are reasonable, supported by good and
valuable consideration and that it sha
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