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Consulting Agreement

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CONSULTING AGREEMENT


THIS CONSULTING AGREEMENT ("Agreement") is made and entered into this 15th day of May 1998, by and between ALFIN, INC., a New York corporation, (hereinafter referred to as "Alfin'"), Alfin's wholly-owned subsidiary, ADRIEN ARPEL, INC., a New York corporation, and STAR SHOPPE DIRECT, INC., a Florida corporation, (hereinafter referred to as "Consultant").


WHEREAS, Alfin, by itself and through Arpel, develops, distributes and sells cosmetics and beauty services and products: and


WHEREAS, Alfin desires to engage Consultant, and Consultant desires to be engaged, to advise and consult with Alfin on direct and electronic retail marketing of Alfin's products and services.


NOW, THEREFORE, Alfin and Consultant do hereby covenant and agree as follows:


1. Engagement. During the of this Agreement, Consultant will render advice to, and otherwise consult with, Alfin and its subsidiaries regarding direct marketing through means such as catalogue sales and television direct marketing. During the term of this Agreement, Consultant will devote as much time as is determined reasonably necessary by Consultant to enable Consultant to render such services, including whatever time is necessary to attend meetings reasonably requested by Alfin (including meetings with representatives of Alfin), but Consultant will not be required to expend more than 15 hours in any week nor more than 50 hours in any month rendering services under this Agreement. Subject to the foregoing, Consultant shall use its best efforts to perform its services herein. Benedict V. White ("White"), Consultant's President shall provide substantially all of the non-administrative, services of Consultant hereunder.


2. Term.


(a) Initial Term. The term of this Agreement is effective as of March 1, 1998 ("Effective Date") and, unless earlier terminated under Section 6 herein, will end on and include February 28, 1998.


(b) Extensions. Thereafter, this Agreement shall renew for successive one year periods, each year being a Consulting Year (as defined herein), unless either party gives written notice of termination at least ninety (90) days before the end of the Consulting Year.


3. Compensation.


(a) Definitions. As used in this Agreement (a) the term "Consulting Year(s)" shall mean each twelve month period commencing on the Effective Date and each additional consecutive twelve month period as renewed under Section 2(b); (b) the term "Consulting Net Sales" shall mean the consolidated gross revenues less returns of Alfin and all of its direct and indirect subsidiaries, including, but not limited to, Arpel, now existing or hereafter acquired or created, arising out of or in connection with the efforts of Consulting (whether before the Effective Date or at any time during a Consulting Year) including, but not limited to, revenues derived from (i) Spiegel's Reverse Syndication Marketing Program and any other agreements other relationships with Spiegel, (ii) media placement (ads), (iii) direct marketing and catalog, (iv) electronic marketing; and (v) licensing agreements to mass marketers.


(a) Amount of Compensation.


(i) For each Consulting Year, Consultant shall be entitled to ten percent (10%) of Alfin's Consolidated Net Sales to the extend that Alfin's Consolidated Net Sales are less than or equal to five million dollars ($5,000,000). 2
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(ii) For each Consulting year, Consultant shall be entitled to fifteen percent (15%) of Alfin's Consolidated Net Sales to the extent that Alfin's Consolidated Net Sales are less than or equal to five million dollars ($5,000,000).


(iii) If (A) Consultant terminates this Agreement under Section 2(b) or other wise than for Cause under Section 6(b) or (B) Alfin properly terminates Consultant for Cause under Section 6(a), then Consultant's fees under this Section 3(b) shall cease as of the date of such termination.


(iv) If (A) Alfin terminates this Agreement other than pursuant to Section 2(b) or for Cause under Section 2(b) for Cause under Section 6(a) or (B) Consultant terminates this Agreement for Cause under Section 6(b), then Consultant shall be entitled to its compensation under Section 3(b) (A) through the end of the Consulting Year of such termination, plus (B) compensation for the next succeeding twelve month period following the Consulting Year of termination arising out of services performed by Consultant during the Consulting Year of termination, and, if any contract is renewed during that twelve month period, the compensation applicable to such renewal period, plus (C) compensation during the term of any legally binding agreement which Alfin or any of its subsidiaries has entered as a result of Consultant's services performed herein.


(v) If Alfin terminates this Agreement under Section 2(b), then Consultant shall be entitled to its compensation under Section 3(b)(A) through the end of the Consulting Year of such termination, plus (B) compensation during the term of any legally binding agreement which Alfin or any of its subsidiaries has entered as a result of Consultant's services performed herein.


(vi) Notwithstanding the foregoing, Consultant shall be entitled to compensation earned but yet unpaid under Section 3(c), unreimbursed expenses under Section 3(d), and stock options and back fees under Sections 18 and 19, respectively.


(c) Method of Compensation. Payments for compensation earned under Section 3(b) shall be made to Consultant no less frequently than monthly within the later of fifteen (15) calendar days of the end of such month or when Alfin or its subsidiaries receives payment for which Consultant's compensation relates. Alfin agrees that Consultant may enter into agreements with third parties to assist Consultant in its duties hereunder solely at Consultant's expense and not otherwise inconsistent with this Agreement. Alfin agrees to cooperate as reasonably request by Consultant to assist Consultant in performing its duties hereunder. Consultant may, upon reasonable notice to Alfin and during normal business hours, have the right to inspect Alfin's books and records to the extent reasonably necessary ensure compliance with this Agreement; provided, however, if the right is tot exercised within sixty (60) days after the end of each calendar quarter, the amount received by Consultant during such calendar quarter shall be deemed to be accepted as accepted by Consultant.


(d) Expenses. Alfin will reimburse Consultant for the reasonable expense, with receipts, incurred by Consultant in performing its duties under this Agreement, including (i) traveling expenses incurred in attending meetings outside the New York City Metropolitan area at the request of Alfin, and (ii) if Consultant informs Alfin in advance that travel is required from outside the New York City Metropolitan area in order to attend a meeting in the New York City Metropolitan area at the request of Alfin and Alfin continues to request that Consultant attend that meeting, the costs of traveling to the New York City Metropolitan area in order to attend that meeting, provided, however, expenses incurred during calendar month which exceeds $1,500 must be preapproved in writing by Alfin.


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4. Confidentiality.


(a) By Consultant. Consultant will keep confidential and will not directly or indirectly divulge to anyone nor use or otherwise appropriate for Consultant's own benefit, or on behalf of Consultant's directors, officers, employees, or agents, or any entity which controls, is controlled by, or under common control with, Consultant, any and all trade secrets or other confidential information of any kind, nature or description concerning any matters affecting or relating to the business of Alfin or any subsidiary which derives economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from Its disclosure or use and which is subject to effort by Alfin that are reasonable under the circumstances to maintain its secrecy, but excluding information which (i) is or becomes generally available to the public or the trade other than as a result of a disclosure by Consultant or any of its agents or representatives, or (ii) was with Consultant's possession prior to its being furnished to Alfin; provided that the source of such information in the case of either clause (i) or (ii) was not bound by a confidentiality agreement or other obligation of confidentiality with respect to such information. Hamilton


(b) By Alfin. Alfin, on behalf of itself and its subsidiaries and affiliates, will keep confidential and will not directly or indirectly divulge to anyone nor use or otherwise appropriate for Alfin's own benefit, or on behalf of Alfin's directors, officers, employees, or agents, or any entity which controls, is controlled by, or under common control with, Consultant, any and all trade secrets or other confidential information of any kind, nature or description concerning any m
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