-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UBpAaLoZo1zOHMmo7R09wB1fbzAo6M4dfuJjRZrlEdCywBixFzbCKB1de9Mww8qs 1T9AfZbSe99BtuJToWmIzA== 0000856979-01-500002.txt : 20010509 0000856979-01-500002.hdr.sgml : 20010509 ACCESSION NUMBER: 0000856979-01-500002 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 11 REFERENCES 429: 000-18064 FILED AS OF DATE: 20010507 EFFECTIVENESS DATE: 20010507 FILER: COMPANY DATA: COMPANY CONFORMED NAME: YES CLOTHING CO CENTRAL INDEX KEY: 0000856979 STANDARD INDUSTRIAL CLASSIFICATION: WOMEN'S, MISSES', AND JUNIORS OUTERWEAR [2330] IRS NUMBER: 953768671 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-60324 FILM NUMBER: 1624021 BUSINESS ADDRESS: STREET 1: 4695 MACARTHUR CT STREET 2: STE 530 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 BUSINESS PHONE: 9498332094 MAIL ADDRESS: STREET 1: 4695 MACARTHUR CT STREET 2: STE 530 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 S-8 1 yesmayo1s8.txt AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 4, 2001 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Commission File Number 0-18064 Yes Clothing Company, Inc. (Exact name of Registrant as specified in its charter) Nevada 95-3768671 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 4695 MacArthur Court, Suite 1450, Newport Beach, CA 92660 (Address of Principal Executive Offices, including ZIP Code) The Yes Clothing Company, Inc. 2001 Stock Plan; Consulting Agreements with Jon L. Lawver and Leonard Roman; Professional Fee Agreement with Fred G. Luke; Fee Agreement for Professional Services with Richard O. Weed and Retainer Agreement with Michael Manson (Full title of the plan) Fred G. Luke, President Yes Clothing Company, Inc. 4695 MacArthur Court, Suite 1450 Newport Beach, California 92660 (Name and address of agent for service) (949) 834-2094 (Telephone number, including area code, of agent for service) CALCULATION OF REGISTRATION FEE
Amount of Proposed Proposed Title of Shares Maximum Maximum Amount of Securities to to be Offering Aggregate Registration be Registered Registered Price Per Share Offering Price(1) Fee - -------------- ------------ ---------------- ----------------- ------------ $.001 par value common stock 1,967,472 $ .04(1) $ 78,699 $ 20.00 $.001 par value common stock underlying stock options 191,530 $2.00(2) $160,000 $100.00 TOTALS 2,159,002 $238,699 $120.00
(1) This calculation is made solely for the purposes of determining the registration fee pursuant to the provisions of Rule 457(c) under the Securities Act of 1933, as amended, and is calculated on the basis of the average of the high and low prices per share of the common stock reported on the OTC Bulletin Board as of a date within five business days prior to the filing of this Registration Statement. (2) This calculation is made solely for the purposes of determining the registration fee pursuant to the provisions of Rule 457(g) under the Securities Act and is calculated upon the price at which the options may be exercised. 2 PROSPECTUS Yes Clothing Company, Inc. 2,159,002 Shares Of Common Stock This prospectus relates to the offer and sale by Yes Clothing Company, Inc., a Nevada corporation ("Yes"), of shares of its $.001 par value per share common stock to certain employees, officers, directors and consultants (the "consultants") pursuant to certain consulting agreements and the Yes Clothing Company, Inc. 2001 Stock Plan (the "Stock Plan"). Pursuant to the consulting agreements, in payment for services rendered, Yes is registering hereunder and then issuing, upon receipt of adequate consideration therefore, to the consultants, 1,967,472 shares of common stock and 191,530 shares of common stock underlying certain stock options. Pursuant to the Stock Plan, Yes is registering and then issuing 1,000,000 shares of common stock to the consultants in exchange for services rendered. The common stock is not subject to any restriction on transferability. Recipients of shares other than persons who are "affiliates" of Yes within the meaning of the Securities Act of 1933 (the "Act") may sell all or part of the shares in any way permitted by law, including sales in the over-the-counter market at prices prevailing at the time of such sale. Yes is registering 168,000 shares of common stock and 36,940 shares of common stock underlying stock options for affiliates of Yes, namely Fred G. Luke and Jon L. Lawver, officers and directors of Yes. An affiliate is summarily, any director, executive officer or controlling shareholder of Yes or anyone of its subsidiaries. An "affiliate" of Yes is subject to Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). If a consultant who is not now an "affiliate" becomes an "affiliate" of Yes in the future, he would then be subject to Section 16(b) of the Exchange Act. The common stock is traded on the OTC Bulletin Board under the symbol "YCCI". These Securities Have Not Been Approved Or Disapproved By The Securities And Exchange Commission Nor Has The Commission Passed Upon The Accuracy Or Adequacy Of This Prospectus. Any Representation To The Contrary Is A Criminal Offense. The date of this prospectus is May 4, 2001 3 This prospectus is part of a registration statement which was filed and became effective under the Securities Act of 1933, as amended (the "Securities Act"), and does not contain all of the information set forth in the registration statement, certain portions of which have been omitted pursuant to the rules and regulations promulgated by the U.S. Securities and Exchange Commission (the "Commission") under the Securities Act. The statements in this prospectus as to the contents of any contracts or other documents filed as an exhibit to either the registration statement or other filings by Yes with the Commission are qualified in their entirety by the reference thereto. A copy of any document or part thereof incorporated by reference in this prospectus but not delivered herewith will be furnished without charge upon written or oral request. Requests should be addressed to: Yes Clothing Company, Inc., 4695 MacArthur Court, Suite 1450, Newport Beach, CA 92660. Yes' telephone number is (949) 833-2094. Yes is subject to the reporting requirements of the Exchange Act and in accordance therewith files reports and other information with the Commission. These reports, as well as the proxy statements, information statements and other information filed by Yes under the Exchange Act may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W. Washington D.C. 20549. No person has been authorized to give any information or to make any representation, other than those contained in this prospectus, and, if given or made, such other information or representation must not be relied upon as having been authorized by Yes. This prospectus does not constitute an offer or a solicitation by anyone in any state in which such is not authorized or in which the person making such is not qualified or to any person to whom it is unlawful to make an offer or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create any implication that there has not been a change in the affairs of Yes since the date hereof. 4 TABLE OF CONTENTS Information Required in the Section 10(a) Prospectus..........................6 Item 1. Plan Information.....................................................6 General Information..................................................6 The Company..........................................................6 Purposes 6 Common Stock.........................................................6 The Consultants......................................................6 No Restrictions on Transfer..........................................6 Tax Treatment to the Consultants.....................................6 Tax Treatment to the Company.........................................7 Restrictions on Resales..............................................7 Documents Incorporated by Reference and Additional Information................8 Item 2. Registrant Information and Employee Plan Annual Information..........8 Legal Opinion and Experts............................................8 Indemnification of Officers and Directors............................8 Information Required in the Registration Statement............................9 Item 3. Incorporation of Documents by Reference..............................9 Item 4. Description of Securities............................................9 Item 5. Interests of Named Experts and Counsel...............................9 Item 6. Indemnification of Directors and Officers............................9 Item 7. Exemption from Registration Claimed.................................10 Item 8. Exhibits............................................................10 Item 9. Undertakings........................................................10 Signatures...................................................................12 Exhibit Index................................................................15 5 PART I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS Item 1. Plan Information GENERAL INFORMATION The Company Yes has its principal executive offices at 4695 MacArthur Court, Suite 1450, Newport Beach, California 92660, where its telephone number is (949) 833-2094. Purpose Yes will issue common stock to certain consultants pursuant to consulting agreements entered into between these consultants and Yes, and the Stock Plan, which have been approved by the Board of Directors of Yes. The agreements and the Stock Plan are intended to provide a method whereby Yes may be stimulated by the personal involvement of the consultants in Yes' future prosperity, thereby advancing the interests of Yes, and all of its shareholders. Copies of the agreements and the Stock Plan have been filed as exhibits to this registration statement. Common Stock The Board has authorized the issuance of up to 2,159,002 shares of the common stock to the consultants upon effectiveness of this registration statement. 191,530 of the shares are underlying stock options, exercisable at $2.00 per share on or before December 31, 2002. The Consultants The consultants have agreed to provide their expertise and advice to Yes for the purposes set forth in the consulting agreements. No Restrictions on Transfer The consultants will become the record and beneficial owners of the shares of common stock upon issuance and delivery and are entitled to all of the rights of ownership, including the right to vote any shares awarded and to receive ordinary cash dividends on the common stock. Tax Treatment to the Consultants The common stock is not qualified under Section 401(a) of the Internal Revenue Code. The consultants, therefore, will be required for federal income tax purposes to recognize compensation during the taxable year of issuance unless the shares are subject to a substantial risk of forfeiture. Accordingly, absent a specific contractual provision to the contrary, the consultants will receive compensation taxable at ordinary rates equal to the fair market value of 6 the shares on the date of receipt since there will be no substantial risk of forfeiture or other restrictions on transfer. If, however, the consultants receive shares of common stock pursuant to the exercise of an option or options at an exercise price below the fair market value of the shares on the date of exercise, the difference between the exercise price and the fair market value of the stock on the date of exercise will be deemed compensation for federal income tax purposes. The consultants are urged to consult each of their tax advisors on this matter. Further, if any recipient is an "affiliate," Section 16(b) of the Exchange Act is applicable and will affect the issue of taxation. Tax Treatment to the Company The amount of income recognized by any recipient hereunder in accordance with the foregoing discussion will be a tax deductible expense by Yes for federal income tax purposes in the taxable year of Yes during which the recipient recognizes income. Restrictions on Resales In the event that an affiliate of Yes acquires shares of common stock hereunder, the affiliate will be subject to Section 16(b) of the Exchange Act. Further, in the event that any affiliate acquiring shares hereunder has sold or sells any shares of common stock in the six months preceding or following the receipt of shares hereunder, any so called "profit," as computed under Section 16(b) of the Exchange Act, would be required to be disgorged from the recipient to Yes. Services rendered have been recognized as valid consideration for the "purchase" of shares in connection with the "profit" computation under Section 16(b) of the Exchange Act. Yes has agreed that for the purpose of any "profit" computation under 16(b), the price paid for the common stock issued to affiliates is equal to the value of services rendered. Shares of common stock acquired hereunder by persons other than affiliates are not subject to Section 16(b) of the Exchange Act. 7 DOCUMENTS INCORPORATED BY REFERENCE AND ADDITIONAL INFORMATION Yes hereby incorporates by reference (i) its annual report on Form 10-KSB for the year ended March 31, 2000, filed pursuant to Section 13 of the Exchange Act, (ii) any and all Forms 10-Q (or 10-QSB) filed under the Securities or Exchange Act subsequent to any filed Form 10-K (or 10-KSB), as well as all other reports filed under Section 13 of the Exchange Act, and (iii) its annual report, if any, to shareholders delivered pursuant to Rule 14a-3 of the Exchange Act. In addition, all further documents filed by Yes pursuant to Section 13, 14, or 15(d) of the Exchange Act prior to the termination of this offering are deemed to be incorporated by reference into this Prospectus and to be a part hereof from the date of filing. All documents which when together, constitute this prospectus, will be sent or given to participants by the registrant as specified by Rule 428(b)(1) of the Securities Act. Item 2. Registrant Information and Employee Plan Annual Information A copy of any document or part thereof incorporated by reference in this Registration Statement but not delivered with this prospectus or any document required to be delivered pursuant to Rule 428(b) under the Securities Act will be furnished without charge upon written or oral request. Requests should be addressed to: Yes Clothing Company, Inc., 4695 MacArthur Court, Suite 1450, Newport Beach, California 92660, where its telephone number is (949) 833-2094. Legal Opinion and Experts Richard O. Weed has rendered an opinion on the validity of the securities being registered. Mr. Weed is not an "affiliate" of Yes. The financial statements of Yes incorporated by reference in this prospectus as of and for the year ended March 31, 2000 and March 31, 1999 have been audited by McKennon, Wilson & Morgan LLP, independent certified public accountants, as set forth in their report incorporated herein by reference, and are incorporated herein in reliance upon the authority of said firm as experts in auditing and accounting. Indemnification of Officers and Directors Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, or persons controlling Yes, Yes has been informed that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities, other than the payment by registrant of expenses incurred or paid by a director, officer or controlling person of registrant in the successful defense of any action, suit or proceeding, is asserted by such director, officer or controlling person in connection with the securities being registered, registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 8 PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Documents by Reference Yes hereby states that (i) all documents set forth in (a) through (c), below, are incorporated by reference in this registration statement, and (ii) all documents subsequently filed by registrant pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which de-registers all securities then remaining unsold, shall be deemed to be incorporated by reference in this registration statement and to be a part hereof from the date of filing of such documents. (a) Yes' latest Annual Report, whether filed pursuant to Section 13(a) or 15(d) of the Exchange Act; (b) All other reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by annual report referred to in (a), above; and (c) The latest prospectus filed pursuant to Rule 424(b) under the Securities Act. Item 4. Description of Securities No description of the class of securities (i.e. the $.001 par value common stock) is required under this item because the common stock is registered under Section 12 of the Exchange Act. Item 5. Interests of Named Experts and Counsel Not applicable. Item 6. Indemnification of Directors and Officers Under Nevada law, a corporation may indemnify its officers, directors, employees and agents under certain circumstances, including indemnification of such person against liability under the Securities Act of 1933. A true and correct copy of Section 78.7502 of Nevada Revised Statutes that addresses indemnification of officers, directors, employees and agents is attached hereto as Exhibit 99. In addition, Section 78.037 of the Nevada Revised Statutes and Yes' Articles of Incorporation and Bylaws provide that a director of this corporation shall not be personally liable to the corporation or its stockholders for monetary damages due to breach of fiduciary duty as a director except for liability (a) for acts or omissions not in good faith which involve intentional misconduct, fraud or a knowing violation of law; or (b) for the payments of distribution in violation of Nevada Revised Statute 78.300. The effect of these provisions may be to eliminate the rights of Yes and its stockholders (through stockholders' derivative suit on behalf of Yes) to 9 recover monetary damages against a director for breach of fiduciary duty as a director (including breaches resulting from negligent or grossly negligent behavior) except in the situations described in clauses (a) - (b) of the preceding paragraph. Item 7. Exemption from Registration Claimed Not applicable. Item 8. Exhibits (a) The following exhibits are filed as part of this registration statement pursuant to Item 601 of Regulation S-K and are specifically incorporated herein by this reference: Exhibit No. Title 5. Opinion of Richard O. Weed regarding the legality of the securities registered. 10.1 Fee Agreement for Professional Services with Richard O. Weed 10.2 Consulting Agreement with Leonard Roman 10.3 Professional Fee Agreement with Fred G. Luke 10.4 Consulting Agreement with Jon L. Lawver 10.5 Retainer Agreement with Michael Manson 10.6 The Yes Clothing Company, Inc. 2001 Stock Plan 23.1 Consent of Richard O. Weed 23.2 Consent of McKennon, Wilson & Morgan LLP 99. 78.7502 & 78.751 of the Nevada Revised Statutes Item 9. Undertakings The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to: (i) include any prospectus required by Section 10 (a) (3) of the Securities Act of 1933; (ii) reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represents a fundamental change in the information set forth in the registration statement; (iii) include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; Provided, however, that paragraphs (1)(i) and (1)(ii) shall not apply if the information required to be included in a post-effective amendment by those paragraph is incorporated by reference from periodic reports filed by the registrant pursuant to section 13 or 10 section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each post-effective amendment to the registration statement shall be deemed to be a new registration statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) To deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information require to be presented by Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information. (5) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of registrant pursuant to the foregoing provisions, or otherwise, registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by registrant of expenses incurred or paid by a director, officer or controlling person of registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of registrant's annual report pursuant to Section 13(a) of the Securities Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 11 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned thereunto duly authorized in the City of Newport Beach, State of California on May 4, 2001. Yes Clothing Company, Inc. (Registrant) By: /s/ Fred G. Luke Fred G. Luke, President Pursuant to the requirements of the 1933 Act, this registration statement or amendment has been signed by the following persons in the capacities and on the dates indicated: Signatures Title Date -------------------- ---------- ------- /s/ Fred G. Luke President, May 4, 2001 Fred G. Luke Director /s/ Jon L. Lawver Secretary, Treasurer, May 4, 2001 Jon L. Lawver Director EX-5 2 may01s8ex5.txt EXHIBIT 5. OPINION OF COUNSEL WEED & CO. L.P. 4695 MACARTHUR COURT, SUITE 1450, NEWPORT BEACH, CALIFORNIA 92660-2164 TELEPHONE (949) 475-9086 FACSIMILE (949) 475-9087 WRITER'S DIRECT NUMBER (949) 475-9086 ext. 6 May 4, 2001 Board of Directors Yes Clothing Company, Inc. 4695 MacArthur Court, Suite 1450 Newport Beach, CA 92660 Re: Form S-8 Registration Statement; Opinion of Counsel Dear Members of the Board: I have acted as a special counsel for Yes Clothing Company, Inc., a Nevada corporation (the "Company"), in connection with the preparation and filing with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended, (the "Act") of a registration statement on Form S-8 (the "Registration Statement"), relating to the offer and sale of 2,047,472 shares of common stock, $.001 par value (the "Common Stock") to consultants of the Company, in consideration for services performed and to be performed on behalf of the Company under the terms and conditions of certain consulting agreements (the "Consulting Agreements"). As special counsel for the Company, I have examined the Company's articles of incorporation, bylaws, minute book, and certain other corporate records. For the purpose of the opinions expressed below, I have also examined the Registration Statement on Form S-8 to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, covering the Common Stock in this offering. In arriving at the opinions set forth below, I have examined and relied upon originals or copies, certified or otherwise identified to my satisfaction, of corporate records (including the Registration Statement with its exhibits) provided by the officers of the Company. I have made such investigations of law as I have considered necessary or appropriate as a basis for my opinions. My opinions are qualified in all respects by the scope of the document examination and I make no representation as to the sufficiency of my investigation for your purpose. I have not made any document examination or rendered any other advice other than as described herein and I at all times have assumed and relied upon the truth and completeness of the information, statements and representations which have been given by the Company to me. I do not express any opinion with respect to the completeness, adequacy, accuracy or any other aspect of the financial statements incorporated by reference in the Registration Statement. In rendering this opinion, I have assumed, without independently verifying such assumptions, and this opinion is based and conditioned upon the following: (i) the genuineness of the signatures on and the enforceability of all instruments, documents and agreements examined by me and the authenticity of all documents furnished for my examination as originals and the conformity to the original documents of all documents furnished to me as copies; (ii) where an executed document has been presented to me for my review, that such document has been duly executed on or as of the date stated and that execution and delivery was duly authorized on the part of the parties thereto; (iii) each of the foregoing certificates, instruments and documents Yes Clothing Company, Inc. Page 2 May 4, 2001 being duly authorized, executed and delivered by or on behalf of all the respective parties thereto, and such instruments and documents being legal, valid binding obligations of such parties; (iv) the truth and accuracy of representations and statements made in the documents received from the State of Nevada; and (vi) the Company will be operated in accordance with the terms of its charter documents and the laws of the State of Nevada and the terms of the instruments or documents referred to above. Based upon the foregoing, I am of the opinion that: 1. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Nevada, the jurisdiction of its incorporation. 2. The terms and provisions of the Common Stock conform to the description thereof contained in the Registration Statement, and the form of the stock certificates used to evidence the Common Stock are in good and proper form and no stockholder is entitled to preemptive rights to subscribe for or purchase any of the Common Stock. 3. Based upon the foregoing, I am of the opinion that the issuance and the sale of the shares of Common Stock in this offering has been duly and validly authorized, and subject to compliance with the provisions of the written agreements, the Common Stock issuable under the Consulting Agreement and the Plan will be duly authorized and validly issued as fully paid and non-assessable shares of Common Stock. I am admitted to practice in the State of California and the State of Texas. I am not admitted to practice in Nevada, the state of incorporation of the Company, or in any other jurisdictions other than California and Texas, in which the Company may own property or transact business. My opinions herein are with respect to federal law only and, to the extent my opinions are derived from the laws of other jurisdictions, are based upon an examination of all relevant authorities and the documents referenced herein and are believed to be correct. However, except for pending litigation or claims matters, I have not directly obtained legal opinions as to such matters from attorneys licensed in such other jurisdictions. No opinion is expressed upon any conflict of law issues. My opinions are qualified to the extent that enforcement of rights and remedies are subject to bankruptcy, insolvency, fraudulent conveyance, moratorium, and other laws of general application or equitable principles affecting the rights and remedies of creditors and security holders and to the extent that the availability of the remedy of specific performance or of injunctive relief is subject to the discretion of the court before which any proceeding may be brought. This opinion is limited to matters existing as of this date, and no responsibility is assumed to advise you of changes (factual or legal) which may hereafter occur, whether deemed material or not. I furnish this opinion to you as special counsel for the Company and it is solely for your benefit. This opinion is not to be used, circulated, quoted or otherwise referred to in whole or in part for any purpose, other than as set forth in my written consent. Very truly yours, /s/ Richard O. Weed Richard O. Weed EX-10 3 ex10-1.txt EXHIBIT 10.1 EXHIBIT 10.1 FEE AGREEMENT FOR PROFESSIONAL SERVICES This agreement is between Yes Clothing Company, Inc. ("Client" or the "Company") a Nevada corporation, whose address is 4695 MacArthur Court, Suite 1450, Newport Beach, CA, where its telephone number is (949) 834-2094 and Richard O. Weed, of the firm Weed & Co. L.P. ("Attorney") whose address is 4695 MacArthur Court, Suite 1450, Newport Beach, California 92660. Attorney has agreed to provide professional services to Client with respect to any and all legal matters or special projects referred to Attorney by Client from time to time through December 30, 2001 or as otherwise agreed. At December 31, 2000, Client owed Attorney $10,763.50 for legal services rendered. To protect both of the parties and to comply with professional obligations, we have already discussed with each other and resolved any potential conflicts of interest with present or former clients. The services that Attorney will provide shall be in accordance with the following terms and conditions: Professional Fees Fees will be based upon the reasonable value of Attorney's services as determined in accordance with the American Bar Association Model Code of Professional Responsibility and the California and Texas Rules of Professional Conduct. Fees will be based on the rates charged by Attorney. Attorney's rate is $200 per hour. It is anticipated that Client and Attorney will agree on a fixed fee for special projects from time to time. The fixed fee arrangements for special projects will be agreed to in writing from time to time. Client understands Attorney's billing rate may be reasonably adjusted from time to time, but not more frequently than annually. Notice of any such adjustments will be given within a reasonable time. Client further understands that during the course of Attorney's engagement, it may be necessary or advisable to delegate various portions of this matter to others. Costs and Expenses Client understands that in the course of representation, it may be necessary for Attorney to incur certain costs or expenses. Client will reimburse Attorney for certain costs or expenses actually incurred and reasonably necessary for completing the assigned matter, as long as the charges for costs and expenses are competitive with other sources of the same products or services. More particularly, Client will reimburse Attorney in accordance with the following guidelines: 1. Computer-Related Expenses - Client will reimburse Attorney for computerized research and research services. However, any charges over $500 per month will require approval. Client also encourages Attorney to utilize computer services that will enable Attorney to more efficiently manage the projects. Fee Agreement - Richard O. Weed Page 2 December 31, 2000 2. Travel - Client will reimburse Attorney for expenses in connection with out of town travel. However, Client will only reimburse for economy class travels (except for international travel which shall be business class) and, where necessary, for the reasonable cost of a rental car. All related travel expenses, i.e., lodging and meals, must be reasonable under the circumstances. 3. Filing Fees & Court Costs - Client will reimburse Attorney for expenses incurred in connection with filing fees and court costs, if any, but will not be responsible for sanctions or penalties imposed due to the conduct of Attorney. Billing All bills will include a summary statement of the kinds of services rendered during the relevant period. Client expects that Attorney will maintain back-up documentation for all expenses. Client expects to be billed monthly or at the conclusion of each project and expects to pay Attorney's invoices as described below. Payment As payment for services and costs, Client has proposed and Attorney has agreed, that Client place a block of 130,000 shares of free trading Company stock in Attorney's name with a national securities broker. At least once a month, Attorney will send Client a statement for fees and costs, with written notice to the brokerage firm of the dollar amount of such statement. Unless objection is made to the bill, sufficient Company stock, net of commission, shall then be liquidated forthwith at the prevailing market rate to satisfy such statement. Attorney has not been engaged to perform, nor will Attorney agree to perform any services in connection with a capital raising transaction in exchange for shares. The rules and regulations of the United States Securities and Exchange Commission do not allow the use of a Form S-8 registration statement under such circumstances. Any fees for services that are in connection with a capital raising transaction shall be paid in cash. In the course of Attorney's representation of the Company, if all the stock is liquidated, a new block of stock sufficient to cover projected fees and costs, in an amount contemporaneously agreed to by the parties, will again be placed with the brokerage firm, under the terms and conditions outlined above. At the conclusion of Attorney's representation of Client and the payment of all final fees and costs, any unused stock shall forthwith be returned to Client. Client has agreed to promptly register such blocks of stock pursuant to Form S-3 or Form S-8 at its own expense and deliver such stock to the Attorney or brokerage firm upon the filing and effectiveness of the Registration Statement. Fee Agreement - Richard O. Weed Page 3 December 31, 2000 Stock Option As an incentive for Attorney to represent the Client and to increase Attorney's proprietary interest in the success of the Company, thereby encouraging him to maintain his relationship with the Company, the Client hereby grants to Attorney options to purchase shares of the Client's common stock. As an initial option, the Client hereby grants Attorney the right to purchase 130,000 shares of the Client's common stock at a price of $2.00 per share. All stock options are non-transferable and will expire unless exercised on or before December 31, 2002. Client has agreed to promptly register the shares of common stock underlying the stock options at its own expense. Involvement of Client Client expects to be kept closely involved with the progress of Attorney's services in this matter. Attorney will keep Client apprised of all material developments in this matter, and, in the case of litigation or administrative proceedings, will provide sufficient notice to enable a representative to attend meetings, conferences, hearings and other proceedings. A copy of all correspondence in the course of Attorney's services will be forwarded to Client. There may be times when Attorney will need to obtain information from Client. All requests for access to documents, employees, or other information shall be granted without unreasonable delay. At the conclusion of this matter, all documents obtained shall be returned upon request. Termination Client shall have the right to terminate Attorney's engagement by written notice at any time. Attorney has the same right to terminate this engagement, subject to an obligation to give Client reasonable notice to permit it to obtain alternative representation or services and subject to applicable ethical provisions. Attorney will be expected to provide reasonable assistance in effecting a transfer of responsibilities to the new firm. Fee Agreement - Richard O. Weed Page 4 December 31, 2000 Disputes The laws of the State of California shall govern the interpretation of this agreement, entered into in Orange County, California, including all rules or codes of ethics which apply to the provision of services. Other than disputes involving fees, which are covered by the Mandatory Fee Arbitration Statutes, all disputes shall be properly venued in Orange County, California in either federal or state court in accordance with the rules and regulations for each particular forum. Dated: December 31, 2000 Client Yes Clothing Company, Inc. By: /s/ Fred G. Luke Name: Fred G. Luke Title: President Weed & Co. L.P. By: /s/ Richard O. Weed Name: Richard O. Weed Title: Managing Director/Special Projects EX-10 4 ex10-2.txt EXHIBIT 10.2 EXHIBIT 10.2 CONSULTING AGREEMENT WITH LEONARD J. ROMAN CONSULTING AGREEMENT This CONSULTING AGREEMENT is made effective the 1st day of October, 2000 by and between Leonard J. Roman, an individual, ("Consultant") and Yes Clothing Co., Inc. a Nevada Corporation (the "Company"), with its principal offices at 4695 MacArthur Court, Newport Beach, CA 92660. WHEREAS, Consultant has over 30 years of experience in mergers, acquisitions, and corporate finance and management; and, WHEREAS, the Company desires to employ Consultant, 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 the Consultant 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 Leonard J. Roman as 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 shall be all those necessary or proper to supervise the Company's management personnel and, as needed, to evaluate 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 Management 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. Consulting Agreement - Leonard J. Roman Page 2 May 4, 2001 4. Duties of Consultant Consultant shall devote that amount of time as Consultant deems necessary, at his sole discretion, on a monthly basis, but not less than Twenty (20) hours per month to fulfilling his obligations under this Agreement with incentive compensation, vacation and other time allowances as set forth herein. The particular amount of time may vary from day-to-day or week-to-week at the election of Consultant. The Company understands that Consultant serves as an officer and/or director for other companies which require some of Consultant's professional time, but which do not conflict with Consultant's obligations hereunder. Consultant agrees that he will at all times, faithfully and to the best of their experiences, abilities, and talents, perform all the duties required of them under this Agreement. 5. Compensation Compensation to Consultant for services provided pursuant to this Agreement shall consist of the following: (A) Fixed Annual Compensation. In consideration for the services provided hereunder, the Company shall pay Consultant an annual payment ("Fixed Annual Compensation") at the rate of Eight Thousand Dollars ($18,000) per annum, payable monthly on the First day of each month at One Thousand Five Hundred ($1,500.00) per month , unless otherwise agreed in writing between the Company and Consultant. (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 adequate accounting to the Company. The determination of the adequacy of the accounting and reasonableness of the expenses submitted by Consultant shall be within discretion of the Company's independent certified accountants taking into consideration the substantiation requirements of the Internal Revenue Code of 1986, as amended (the "Code"). If verification is provided, the non-deductibility of such expenses for tax purposes shall not affect Consultant's right to reimbursement. (C) Additional Incentive Compensation. In addition to the Fixed Annual Compensation provided hereunder, the Company shall provide Consultant with such additional incentive compensation ("Additional Incentive Compensation"), and shall include but not be limited to the following: (i) Option to Purchase Shares. Further, as additional incentive to execute this Agreement, the Company hereby grants to Advisor an option to purchase shares of the Company's common stock exercisable at a price per share of one hundred ten percent (110%) of the moving average closing bid price for such shares for the thirty (30) days prior to the date hereof (the "Option"). The Option shall be evidenced and governed by the Option Consulting Agreement - Leonard J. Roman Page 3 May 4, 2001 Agreement in form and substance as that attached hereto as Exhibit "A" and incorporated herein by reference. The right of Advisor to exercise the Option will vest to Advisor upon execution hereof. (ii) Officers Liability Insurance - The Company shall obtain insurance generally maintained for by Limited Liability companies for the benefit of their Consultants against all costs, charges and expenses whatsoever incurred or sustained in connection with any action, suit or proceeding to which such Consultants may be made a party by reason of being or having been the Consultant of the Company. Such insurance coverage shall be provided by the Company and it 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 and containing terms and conditions acceptable to Consultant. (iii) Vacation and Other Paid Leave of Absence. Consultant shall be allowed to take not less than twenty one (21) days of paid vacation leave per year. Consultant shall be allowed to arrange his work schedule under to this Agreement. 6. Registration of Company Shares The Company will register the Option Shares and any other securities of the Company issued to Advisor in connection with the Services with the Securities and Exchange Commission (the "Commission") on a registration statement on Form S-1 or other applicable registration statement within one (1) year from the date hereof. Any Option 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 Advisor 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 the Company'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 services in other locations as deemed appropriate by Consultant in his sole discretion, provided that such services and any related business travel shall not interfere with Consultant's personal time commitments. 8. Status The Company will not be responsible for payment of all federal, state, and local taxes on compensation paid under this Agreement, including income and social security taxes, unemployment insurance, and any other taxes as may be required. Consulting Agreement - Leonard J. Roman Page 4 May 4, 2001 9. Termination (A) Termination for Disability. If, during the Engagement Period, Consultant shall be unable to provide services to the Company for three (3) consecutive months because of illness, accident, or other incapacity, the Company shall have the right to terminate this Agreement upon written notice to Consultant. Termination under this paragraph shall be effective ten (10) days after the end of the three (3) month period upon receipt by Consultant of such notice. (B) Death. In the event of Consultant's death, except for the Life Insurance, this Agreement and all rights and obligations hereunder shall immediately be terminated. (C) Termination for Cause. The Company may, at its option, terminate this Agreement by giving written notice of termination to Consultant without prejudice to any other remedy to which the Company may be entitled either at law, in equity, if Consultant: (i) Willfully breaches or neglects the duties that he is required to perform under the terms of this Agreement; or (ii) Fails to promptly comply with and carry out all directives of the Company's Limited Partners not otherwise in conflict or banned by the terms hereof, in which case, the terms hereof shall prevail; or (iii) Is convicted of committing any dishonest or unlawful act. (D) Termination Other Than For Cause. This Agreement shall terminate immediately on the occurrence of any one of the following events: (i) The occurrence of circumstances, in the judgment of the Company's Limited Partners, that make it impracticable for the Company to continue its present line(s) of business; or (ii) The decision of and upon notice by Consultant to voluntarily terminate this Agreement; or (iii) The loss by Consultant of legal capacity; or (iv) If the Company makes a general assignment for the benefit of creditors, or institutes, or has instituted against it any bankruptcy proceeding for reorganization for rearrangement of its financial affairs, or has a receiver of its assets or property appointed because of insolvency, or otherwise becomes insolvent or unable to timely satisfy all obligations in the ordinary course of business. Consulting Agreement - Leonard J. Roman Page 5 May 4, 2001 (E) Effect of Termination on Compensation. In the event of Termination Other Than For Cause prior to the completion of the Engagement Period, Consultant shall be entitled to a lump sum payment equal to the balance of all compensation due to Consultant under this Agreement, including but not limited to salary and benefits, and to the rights to exercise any remaining, previously unexercised Stock Options, if any. Notwithstanding anything contained herein to the contrary, Consultant's right to exercise any exercised Stock Options, if any, shall continue for two (2) years following the date of termination. 10. Representations and Warranties of the Company The Company represents and warrants to Consultant that: (A) Limited Liability 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 The Company and Consultant each agree to indemnify, defend and hold each other 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 either party by reason of or resulting from a breach of any representation, warranty, covenant, condition, or agreement of the other party to this Agreement. Consulting Agreement - Leonard J. Roman Page 6 May 4, 2001 The Company further 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 Consultant arising from Consultant's fulfillment of his duties as the Consultant to the maximum extent permitted by the Nevada Revised Statutes. In addition to the foregoing indemnity, the Company agrees to indemnify and hold harmless Consultant, and each other person controlling Consultant or any of its affiliates (collectively, the "Indemnified Parties" and each an "Indemnified Party"), within the meaning of either Section 15 of the Act, or Section 20 of the Securities Exchange Act of 1934, (the "Exchange Act") from and against any losses, claims, damages and liabilities (or actions in respect thereof), joint or several, which are related to or arise out of or are based upon any untrue or alleged untrue statement of material fact or any omission or alleged omission of material fact required to be stated or necessary to make other statements, in light of the circumstances in which they are made, not misleading contained in any document, report or material provided to and relied upon by Consultant to prepare any registration statement, prospectus, prospectus, application of any kind or other materials or reports filed by the Company with any regulatory agency. 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 a 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. Consulting Agreement - Leonard J. Roman Page 7 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 Co., Inc. 4695 MacArthur Court, #1450 Newport Beach, CA. 92660 Telephone: (949) 833-2094 Telefax: (949) 833-7854 (2) In the case of Consultant: Leonard J. Roman 4695 MacArthur Court, Suite 1450 Newport Beach, CA 92660 Telephone: (949) 833-2094 Telefax: (949) 833-7854 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. (I) Governing Law. This Agreement was negotiated and is being contracted for in the State of California, and shall be governed by the laws of the State of California, notwithstanding any conflict-of-law provision to the contrary. (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. Consulting Agreement - Leonard J. Roman Page 8 May 4, 2001 (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. Consulting Agreement - Leonard J. Roman Page 9 May 4, 2001 IN WITNESS WHEREOF, the parties have executed this Agreement effective the date first written above. "Consultant" Leonard J. Roman /s/Leonard J. Roman By: Leonard J. Roman "Company" YES CLOTHING CO., INC. a Nevada Corporation By: /s/ J.L.Lawver Name: J.L. Lawver Title: Director EX-10 5 ex10-3.txt EXHIBIT 10.3 EXHIBIT 10.3 PROFESSIONAL FEE AGREEMENT WITH FRED G. LUKE PROFESSIONAL FEE AGREEMENT This PROFESSIONAL FEE AGREEMENT is made effective the 8th day of September, 2000 by and between Fred G. Luke, 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 - Fred G. Luke Page 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 - Fred G. Luke Page 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 - Fred G. Luke Page 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 - Fred G. Luke Page 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 - Fred G. Luke Page 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. Professional Fee Agreement - Fred G. Luke Page 7 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. 4695 MacArthur Court, #1450 Newport Beach, CA. 92660 Telephone: (949) 833-2094 Telefax: (949) 833-7854 (2) In the case of Consultant: Fred G. Luke 4695 MacArthur Court, Suite 1450 Newport Beach, CA 92660 Telephone: (949) 833-2094 Telefax: (949) 833-7854 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. Professional Fee Agreement - Fred G. Luke Page 8 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 - Fred G. Luke Page 9 May 4, 2001 IN WITNESS WHEREOF, the parties have executed this Agreement effective the date first written above. "Consultant" Fred G. Luke /s/ F.G. Luke - ------------------ By: Fred G. Luke "Company" YES CLOTHING COMPANY, INC. a Nevada Corporation By:/s/ J.L.Lawver Name: J.L.Lawver Title:Director EX-10 6 ex10-4.txt EXHIBIT 10.4 EXHIBIT 10.4 CONSULTING AGREEMENT WITH JON L. LAWVER CONSULTING AGREEMENT This CONSULTING AGREEMENT is made effective the 8th day of September, 2000 by and between Jon L. Lawver and J.L.Lawver, Corp., a California Corporation, with offices at 1004 Via Romero Palos Verdes Est. CA 90274 ("Consultant") and Yes Clothing Co., Inc. a Nevada Corporation (the "Company"), with its principal offices at 4695 MacArthur Court, Newport Beach, CA. 92660. WHEREAS, Consultant has over 30 years of experience in mergers, acquisitions, and corporate finance and management; and, WHEREAS, the Company desires to employ Consultant, 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 the Consultant 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 Jon L. Lawver and J. L. Lawver, Corp. as 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 shall be all those necessary or proper to supervise the Company's management personnel and, as needed, to evaluate 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 Management 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. Consulting Agreement - Jon L. Lawver Page 2 May 4, 2001 4. Duties of Consultant Consultant shall devote that amount of time as Consultant deems necessary, but not more than 10 hours, on a monthly basis to fulfilling his obligations under this Agreement with incentive compensation, vacation and other time allowances as set forth herein. The particular amount of time may vary from day-to-day or week-to-week at the election of Consultant. The Company understands that Consultant serves as an officer and/or director for other companies which require some of Consultant's professional time, but which do not conflict with Consultant's obligations hereunder. Consultant agrees that he will at all times, faithfully and to the best of their experiences, abilities, and talents, perform all the duties required of them under this Agreement. 5. Compensation Compensation to Consultant for services provided pursuant to this Agreement shall consist of the following: A) Fixed Annual Compensation. In consideration for the services provided hereunder, the Company shall pay Consultant an annual payment ("Fixed Annual Compensation") at the rate of Eight Thousand Dollars ($18,000) per annum, payable monthly on the First day of each month at One Thousand Five Hundred ($1,500.00) per month , unless otherwise agreed in writing between the Company and Consultant. 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 adequate accounting to the Company. The determination of the adequacy of the accounting and reasonableness of the expenses submitted by Consultant shall be within discretion of the Company's independent certified accountants taking into consideration the substantiation requirements of the Internal Revenue Code of 1986, as amended (the "Code"). If verification is provided, the non-deductibility of such expenses for tax purposes shall not affect Consultant's right to reimbursement. C) Additional Incentive Compensation. In addition to the Fixed Annual Compensation provided hereunder, the Company shall provide Consultant with such additional incentive compensation ("Additional Incentive Compensation"), and shall include but not be limited to the following: (i) Option to Purchase Shares. Further, as additional incentive to execute this Agreement, the Company hereby grants to Advisor an option to purchase shares of the Company' common stock exercisable at a price per share of one hundred ten percent(110%) of the moving average closing bid price for such shares for the thirty (30) days prior to the date hereof (the "Option"). 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 Advisor to exercise the Option will vest to Advisor upon execution hereof. Consulting Agreement - Jon L. Lawver Page 3 May 4, 2001 (ii) Officers Liability Insurance - The Company shall obtain insurance generally maintained for by Limited Liability companies for the benefit of their Consultants against all costs, charges and expenses whatsoever incurred or sustained in connection with any action, suit or proceeding to which such Consultants may be made a party by reason of being or having been the Consultant of the Company. Such insurance coverage shall be provided by the Company and it 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 and containing terms and conditions acceptable to Consultant. (iii) Vacation and Other Paid Leave of Absence. Consultant shall be allowed to take not less than twenty one (21) days of paid vacation leave per year. Consultant shall be allowed to arrange his work schedule under to this Agreement. 6. Registration of Company Shares The Company will register the Option Shares and any other securities of the Company issued to Advisor in connection with the Services with the Securities and Exchange Commission (the "Commission") on a registration statement on Form S-1 or other applicable registration statement within one (1) year from the date hereof. Any Option 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 Advisor 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 the Company'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 services in other locations as deemed appropriate by Consultant in his sole discretion, provided that such services and any related business travel shall not interfere with Consultant=s personal time commitments. 8. Status The Company will not be responsible for payment of all federal, state, and local taxes on compensation paid under this Agreement, including income and social security taxes, unemployment insurance, and any other taxes as may be required. Consulting Agreement - Jon L. Lawver Page 4 May 4, 2001 9. Termination (A) Termination for Disability. If, during the Engagement Period, Consultant shall be unable to provide services to the Company for three (3) consecutive months because of illness, accident, or other incapacity, the Company shall have the right to terminate this Agreement upon written notice to Consultant. Termination under this paragraph shall be effective ten (10) days after the end of the three (3) month period, upon receipt by Consultant of such notice. (B) Death. In the event of Consultant's death, except for the Life Insurance, this Agreement and all rights and obligations hereunder shall immediately be terminated. (C) Termination for Cause. The Company may, at its option, terminate this Agreement by giving written notice of termination to Consultant without prejudice to any other remedy to which the Company may be entitled either at law, in equity, if Consultant: (i) Willfully breaches or neglects the duties that he is required to perform under the terms of this Agreement; or (ii) Fails to promptly comply with and carry out all directives of the Company's Limited Partners not otherwise in conflict or banned by the terms hereof, in which case, the terms hereof shall prevail; or (iii) Is convicted of committing any dishonest or unlawful act. (D) Termination Other Than For Cause. This Agreement ------------------------------------- shall terminate immediately on the occurrence of any one of the following events: (i) The occurrence of circumstances, in the judgment of the Company's Limited Partners, that make it impracticable for the Company to continue its present line(s) of business; or (ii) The decision of and upon notice by Consultant to voluntarily terminate this Agreement; or (iii) The loss by Consultant of legal capacity; or (iv) If the Company makes a general assignment for the benefit of creditors, or institutes, or has instituted against it any bankruptcy proceeding for reorganization for rearrangement of its financial affairs, or has a receiver of its assets or property appointed because of insolvency, or otherwise becomes insolvent or unable to timely satisfy all obligations in the ordinary course of business. Consulting Agreement - Jon L. Lawver Page 5 May 4, 2001 (E) Effect of Termination on Compensation. In the event of Termination Other Than For Cause prior to the completion of the Engagement Period, Consultant shall be entitled to a lump sum payment equal to the balance of all compensation due to Consultant under this Agreement, including but not limited to salary and benefits, and to the rights to exercise any remaining, previously unexercised Stock Options, if any. Notwithstanding anything contained herein to the contrary, Consultant's right to exercise any exercised Stock Options, if any, shall continue for two (2) years following the date of termination. 10. Representations and Warranties of the Company The Company represents and warrants to Consultant that: (A) Limited Liability 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 The Company and Consultant each agree to indemnify, defend and hold each other 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 either party by reason of or resulting from a breach of any representation, warranty, covenant, condition, or agreement of the other party to this Agreement. The Company further 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 Consultant arising from Consultant's fulfillment of his duties as the Consultant to the maximum extent permitted by the Nevada Revised Statutes. Consulting Agreement - Jon L. Lawver Page 6 May 4, 2001 In addition to the foregoing indemnity, the Company agrees to indemnify and hold harmless Consultant, and each other person controlling Consultant or any of its affiliates (collectively, the "Indemnified Parties" and each an "Indemnified Party"), within the meaning of either Section 15 of the Act, or Section 20 of the Securities Exchange Act of 1934, (the "Exchange Act") from and against any losses, claims, damages and liabilities (or actions in respect thereof), joint or several, which are related to or arise out of or are based upon any untrue or alleged untrue statement of material fact or any omission or alleged omission of material fact required to be stated or necessary to make other statements, in light of the circumstances in which they are made, not misleading contained in any document, report or material provided to and relied upon by Consultant to prepare any registration statement, prospectus, prospectus, application of any kind or other materials or reports filed by the Company with any regulatory agency. 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 a 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. Consulting Agreement - Jon L. Lawver Page 7 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 Co., Inc. 4695 MacArthur Court, #1450 Newport Beach, CA 92660 Telephone: (949) 833-2094 Telefax: (949) 833-7854 (2) In the case of Consultant: J. L. Lawver, Corp. P.O. Box #113 Palos Verdes Est. CA. 90274 Telephone: (310) 541-6600 Telefax: (310) 541-6970 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. (I) Governing Law. This Agreement was negotiated and is being contracted for in the State of California, and shall be governed by the laws of the State of California, notwithstanding any conflict-of-law provision to the contrary. (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. Consulting Agreement - Jon L. Lawver Page 8 May 4, 2001 (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. Consulting Agreement - Jon L. Lawver Page 9 May 4, 2001 IN WITNESS WHEREOF, the parties have executed this Agreement effective the date first written above. "Consultant" J. L. LAWVER, CORP. /s/ J.L. Lawver By: J.L.Lawver, President "Consultant" Jon L. LAWVER /s/ Jon L. Lawver By: Jon L. Lawver "Company" YES CLOTHING CO., INC. a Nevada Corporation /s/ F.G. Luke By: F.G. Luke, Title: President EX-10 7 ex10-5.txt EXHIBIT 10.5 EXHIBIT 10.5 RETAINER AGREEMENT WITH MICHAEL MANSON MICHAEL MANSON An Accountancy Corporation CERTIFIED PUBLIC ACCOUNTANT 4695 MacArthur Court, Suite 1470 Newport Beach, California 92660 (949) 260-0560 fax (949) 260-0564 February 1, 2001 We have adopted a policy of advising our clients in writing of our understanding as to the scope of our services and asking them to confirm that their understanding is the same as ours. This letter confirms the arrangements for our services. We look forward to the opportunity to assist you in developing a business plan for Yes Clothing. This letter outlines our understanding of the terms and objectives of the engagement. The review is to evaluate the allocation of duties and responsibilities among key corporate personnel, the authority levels of these people and the organizational structure of the Company. In addition, we will give a cursory evaluation of staffing levels. We will not perform work measurement or related activities to definitively identify staffing needs. The review is to evaluate the overall processing systems and reporting mechanisms in place at the Company as they relate to activities. We will review reports that are currently being prepared. We will provide an analysis of additional personnel involved and we will look for unnecessary reporting. We will perform a detailed review of the accounting area for the purpose of evaluating key accounting policies, principles and procedures being followed; record-keeping methods and data maintained; file structures and file contents; timeliness of reporting and reporting mechanisms. Our firm will perform a study of financing needs and the reasons for these needs. Based on our study, we will advise you on the types and sources of financing your company needs. We will assist you in evaluating and choosing a financing alternative. We will assist you in preparing a financing proposal to the financing source and in the negotiation of financing terms and conditions. If the financing is secured, we will assist you in reviewing the closing documents for consistency with the terms and conditions agreed to in the negotiations. Our role is one of assisting, evaluating, and advising, and we offer no assurance that financing will be received. If financing is not received after a presentation to a potential source and you request our assistance at future presentations, such a request will be considered a new engagement. Retainer Agreement - Michael Manson Page 2 May 4, 2001 We expect that the financing proposal we submit to you will include projected financial statements of the company, compiled based on management's assumptions. These assumptions reflect conditions management expects would exist and courses of action management expects would be taken, assuming the financing is secured and used as the financial proposal describes. We will not express any form of assurance on the advisability of the projection or reasonableness of the underlying assumptions. Changes in these assumptions or similar unforeseeable events could modify the information presented in the financing proposal. We do not assume responsibility for updating the information or our report for such events after the date of our report. We understand that the projection and our report will be used only for inclusion in the financing proposal to be submitted to a potential provider of financing with whom management will conduct negotiations. We will evaluate your existing operations to determine strengths and weaknesses by, as appropriate, interviewing company personnel, reviewing available documents, and holding discussions with external parties. We will assist you in developing a mission statement for the Company and identifying goals and objectives for the period covered by the plan. Finally, we will help you develop implementation and monitoring actions for the plan. We will be relying on the accuracy and reliability of the historical financial statements, forecasts or projections of future operations, and other financial data of your company. We will not perform an audit or review the financial information, and will not express an opinion or any form of assurance on it. At the conclusion of the engagement, we will request that you sign a representation letter on the accuracy and reliability of the financial information used in the engagement. To our understanding there are major differences between your initial operating budgets and actual historical comparisons; the variance between the budget and historical information is now difficult to analyze. Our fees for this work will be at our regular hourly rates for the individuals involved, plus direct out-of-pocket expenses. Payment for services is due when rendered, and interim billings may be submitted as work progresses and expenses are incurred. Our discount rates for this engagement are: Partner $150 per hour Staff $75 per hour Statements for our services will be sent on a weekly basis. We appreciate the opportunity to be of service to you and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us. This letter will continue in effect until canceled by either party. Retainer Agreement - Michael Manson Page 3 May 4, 2001 It is understood that our assignment is limited to an accounting service and does not include an audit of your financial statements in accordance with generally accepted auditing standards, and we ask that you do not in any manner refer to this as an audit. Accordingly, the financial statements that we prepare will not satisfy any regulatory, contractual, or other requirements for an audit in accordance with such standards. Sincerely, /s/ Michael Manson Michael Manson /s/ Jon L. Lawver Officer, Yes Clothing EX-10 8 stkplan10-6.txt 2001 STOCK PLAN EXHIBIT 10.6 THE YES CLOTHING COMPANY, INC. 2001 STOCK PLAN 1. Purpose of the Plan The purpose of the Yes Clothing Company, Inc. 2001 Stock Plan ("Plan") is to provide means by which Yes Clothing Company, Inc., a Nevada corporation ("Company"), may compensate key employees, advisors, and consultants by issuing to them shares of its capital stock in exchange for services, and to thereby conserve the Company's cash resources. In addition, equity ownership will provide increased incentive for such individuals to render services to the Company in the future and to exert maximum effort for the success of the Company's business. 1. Definitions The following definitions apply the provisions of this Plan: A. "Board" means the Company's Board of Directors B. "Common Stock" means the Company's $.001 par value common stock C. "Committee" means the Committee appointed by the Board in accordance with paragraph A of Section 3 of this Plan. If no Committee is appointed, "Committee" refers to the Board. D. "Employee" means any person, including officers, directors, employees, advisors, and consultants employed by the Company or any Subsidiary on either a full-time or part-time basis. E. "Plan" means this 2001 Stock Plan. F. "Share" means a share of Common Stock. The Yes Clothing Company Page 2 2001 Stock Plan (continued) 2. Administration of the Plan A. Procedure. The board shall administer the Plan. The Board may appoint a Committee of not less than two (2) Board members to administer the Plan, subject to such terms and conditions as the Board may prescribe. Once appointed, the Committee shall continue to serve until the Board otherwise directs. From time to time, the Board may increase the Committee size and appoint additional members, fill vacancies, however caused, and remove all members and thereafter directly administer the Plan. Members of the Committee who are either eligible for Shares under this Plan or have been granted Shares under this Plan may vote on any matters affecting the Plan administration or granting any Shares under the Plan; provided that no such member shall act upon the granting of Shares to himself or herself, but any such member may be counted in determining the existence of a quorum at any meeting during which such action is taken. B. Powers of the Committee. The Committee shall have the authority to (i) based on relevant information, to determine the fair market value of the Common Stock; (ii) to determine the value of the services rendered or to be rendered to the Corporation, (iii) the Employees or Consultants to whom and the time or times when Common Stock shall be granted and the number of Shares to be issued; (iv) to interpret the Plan; (v) to prescribe, amend and rescind rules and regulations relating to the Plan; (vi) to authorize any person to execute on the Company's behalf any instrument required to effectuate a grant of Common Stock; and (vii) to make all other determinations deemed necessary or advisable for administering the Plan. C. Effect of Committee's Decision. All decisions, determinations, and interpretations of the Committee shall be final and binding on any and all holders of Common Stock granted under the Plan. 3. Shares Reserved. A total of One Million (1,000,000) shares of Common Stock shall be subject to the Plan and shall be and are hereby reserved for issuance under the Plan. Such Shares shall be unissued or previously issued shares reacquired and held by the Company. Any such shares which remain unsold when the Plan terminates shall cease to be reserved for the Plan but, until termination, the Company shall at all times reserve a sufficient number of shares to meet the Plan's requirements. 4. Eligibility Common Stock may be issued under this Plan only to Employees for services rendered to the Company or on the Company's behalf as determined by the Board or the Committee. Common stock may not be issued under this Plan for services rendered in connection with a capital raising transaction for the Company. An Employee who has been issued Common Stock under the Plan, if he or she is otherwise eligible, may be granted additional Common Stock. The Yes Clothing Company Page 3 2001 Stock Plan (continued) 5. Continuation of Employment Neither the Plan or the issuance of any Common Stock under the Plan shall confer upon any Employee any right with respect to continuing employment with the Company, nor shall it interfere in any way with his or her right or the Company's right to terminate his or her employment or other position at anytime. 6. Fair Market Value Limitation The Company's Board of Directors or Committee shall grant the right to receive Common Stock to Employees for services rendered to, or to be rendered to, or on behalf of, the Company such that the fair market value of the Shares approximates the fair market value of the services. Determination of fair market value shall be within the business discretion of the Board of Directors and/or Committee. 7. Investment Representation Each Employee granted Shares under this Plan shall represent in writing that she/he is acquiring the shares for investment and not for resale or to distribute the Shares to the public. Upon demand, delivery of such a representation prior to the delivery of any shares issued shall be a condition precedent to the right of the Employee to receive Shares under the Plan. 8. Amendments or Termination The Board of Directors may amend, alter or discontinue the Plan. 9. Compliance with Other Laws and Regulations The Plan, the grant, and issuance of Shares under the Plan shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by the governmental or regulatory agency as may be required. The Company shall not be required to issue or deliver any certificates for shares of Common Stock prior to the completion of any registration or qualification of such shares under any federal or state law, or any ruling or regulation of any governmental body which the Company shall, in its sole discretion, determine to be necessary or advisable. Further, it is the intention of the Company that the Plan comply in all respects with the provisions of Rule 16b-3 of the Securities and Exchange Act of 1934, as amended. If any Plan provision is found not to be in compliance with Rule 16b-3, the provision shall be deemed null and void. 10. Effectiveness and Expiration of the Plan The Plan shall be effective on February 28, 2001, and continue to February 28, 2004, three years after the effective date of the Plan, and thereafter no Shares shall be granted under the Plan. The Yes Clothing Company Page 4 2001 Stock Plan (continued) APPROVED THIS EFFECTIVE DAY THE 28TH DAY OF FEBRUARY BY THE BOARD OF DIRECTORS /s/ Fred Luke Fred Luke, Director /s/ Jon l. Lawver Jon L. Lawver, Director EX-23 9 ex23-1.txt EXHIBIT-23.1 CONSENT EXHIBIT 23.1 CONSENT OF WEED & CO. L.P. -------------------------- WEED & CO. L.P. 4695 MACARTHUR COURT, SUITE 1450 NEWPORT BEACH, CALIFORNIA 92660-2164 TELEPHONE (949) 760-7424 FACSIMILE (949) 475-9087 WRITER'S DIRECT NUMBER (949) 475-9086 Ext. 6. May 4, 2001 Board of Directors Yes Clothing Company, Inc. 4695 MacArthur Court, Suite 1450 Newport Beach, CA 92660 Re: Form S-8 Dear Members of the Board: I consent to the use of this opinion as an exhibit to the Form S-8 Registration Statement and to the reference to me in any prospectus which is incorporated by reference into and made a part of the Registration Statement. Very truly yours, /s/Richard O. Weed Richard O. Weed EX-23 10 ex23-2.txt EXHIBIT 23.2 CONSENT EXHIBIT 23.2 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in this Registration Statement of Hart Industries, Inc. on Form S-8 of our report dated June 23, 2000, appearing in the Annual Report on Form 10-KSB of Yes Clothing Company, Inc. for the year ended March 31, 2000. /s/ McKennon, Wilson & Morgan LLP McKennon, Wilson & Morgan LLP Irvine, California May 4, 2001 EX-99 11 ex99.txt EXHIBIT 99 NEVADA STATUTES EXHIBIT 99. Section 78.7502. Discretionary and mandatory indemnification of officers, directors, employees and agents: General provisions 1. A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and that, with respect to any criminal action or proceeding, he had reasonable cause to believe that his conduct was unlawful. 2. A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys' fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation. Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper. 3. To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections 1 and 2, or in defense of any claim, issue or matter therein, the corporation shall indemnify him against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the defense. Exhibit 99. Page 2 Section 78.751. Authorization required for discretionary indemnification; advancement of expenses; limitation on indemnification and advancement of expenses 1. Any discretionary indemnification under NRS 78.7502, unless ordered by a court or advanced pursuant to subsection 2, may be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. The determination must be made: (a) By the stockholders; (b) By the board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding; (c) If a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion; or (d) If a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion. 2. The articles of incorporation, the bylaws or an agreement made by the corporation may provide that the expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the corporation. The provisions of this subsection do not affect any rights to advancement of expenses to which corporate personnel other than directors or officers may be entitled under any contract or otherwise by law. 3. The indemnification and advancement of expenses authorized in or ordered by a court pursuant to this section: (a) Does not exclude any other rights to which a person seeking indemnification or advancement of expenses may be entitled under the articles of incorporation or any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, for either an action in his official capacity or an action in another capacity while holding his office, except that indemnification, unless ordered by a court pursuant to NRS 78.7502 or for the advancement of expenses made pursuant to subsection 2, may not be made to or on behalf of any director or officer if a final adjudication establishes that his acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and was material to the cause of action. (b) Continues for a person who has ceased to be a director, officer, employee or agent and inures to the benefit of the heirs, executors and administrators of such a person. -----END PRIVACY-ENHANCED MESSAGE-----