As filed with the U.S. Securities and Exchange Commission on April 24, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
Registration Statement
Under the
Securities Act Of 1933
YES CLOTHING CO.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
95-3768671
(I.R.S. EMPLOYER IDENTIFICATION NO.)
4695 MacArthur COURT, SUITE 530, NEWPORT BEACH, CALIFORNIA 92660
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
Consulting Agreements with OTC Communications Inc., Structure America Inc.,
Jon L. Lawver, Nuven Advisors Inc., Richard O. Weed and Jonathan L. Small
(Full title of the plan)
Guy Anthome, 4695 MacArthur Court, Suite 530,
Newport Beach, California 92660
(Name and address of agent for service)
(714) 833-5381
(Telephone number, including area code, of agent for service
[YES\FORMS-8:042498.FS8]
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Title of Amount of Proposed Proposed
Securities Shares Maximum Maximum
to be to be Offering Aggregate Amount of
Registered Registered Price Per Offering Registration
Share(1) Price(1) Fee
- ---------------------- ---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
no par value
common stock 450,000 $0.14 $63,000 $5.99
no par value
common stock 450,000 $0.14 $63,000 $5.99
no par value
common stock 150,000 $0.14 $21,000 $2.00
no par value
common stock 500,000 $0.14 $70,000 $6.65
no par value
common stock 500,000 $0.14 $70,000 $6.65
no par value
common stock 150,000 $0.14 $21,000 $2.00
no par value
common stock
underlying
options 750,000 $0.14 $105,000 $9.98
no par value
common stock
underlying
options 750,000 $0.14 $105,000 9.98
TOTALS 3,700,000 N/A $518,000 $49.21
</TABLE>
Total Number of Pages: 27
Exhibit Index on Page No.: 13
(1) This calculation is made solely for the purposes of determining the
registration fee pursuant to the provisions of Rule 457(h) under the
Securities Act and is calculated on the basis of either (a) the average
of the high and low prices per share of the Common Stock as of a date
within five business days prior to the filing of this Registration
Statement.
[YES\FORMS-8:042498.FS8]
<PAGE>
PROSPECTUS
YES CLOTHING CO.
4695 MACARTHUR COURT, SUITE 530
NEWPORT BEACH, CALIFORNIA 92660
3,700,000 SHARES OF COMMON STOCK
This Prospectus relates to the offer and sale by Yes Clothing Co., a
California corporation (the "Company"), of shares of its no par value per share
common stock (the "Common Stock") to certain employees and consultants
(collectively the "Consultants") pursuant to agreements entered into between the
Company and the Consultants. The Company is registering hereunder and then
issuing, upon receipt of adequate consideration therefor, to the Consultants
3,700,000 shares of the Common Stock in consideration for services rendered and
to be performed under the agreements.
The Common Stock is not subject to any restriction on transferability.
Recipients of shares other than persons who are "affiliates" of the Company
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. Of the
shares registered hereunder, no shares of Common Stock are being sold to
"affiliates" of the Company. An affiliate is summarily, any director, executive
officer or controlling shareholder of the Company. The "affiliates" of the
Company may become subject to Section 16(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), which would limit their discretion in
transferring the shares acquired in the Company. If the Consultant who is not
now an "affiliate" becomes an "affiliate" of the Company in the future, he would
then be subject to Section 16(b) of the Exchange Act. (See "General Information
Restrictions on Resales").
The Common Stock is listed on the OTC bulletin board under the symbol "YSCO".
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 April 24, 1998
[YES\FORMS-8:042498.FS8]
<PAGE>
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 the Company 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 Co. 4695
MacArthur Court, Suite 530, Newport Beach, California 92660 Telephone (714)
833-5382.
The Company 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 the Company 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. Copies may be
obtained at the prescribed rates. In addition, the Common Stock is quoted on the
automated quotation system maintained by the National Association of Securities
Dealers, Inc. ("NASD"); thus, copies of these reports, proxy statements,
information statements and other information may also be examined at the offices
of the NASD at 1735 K. 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 the Company. 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 the Company since the date hereof.
[YES\FORMS-8:042498.FS8]
<PAGE>
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 Consultant...................................6
Tax Treatment to the Company......................................7
Restrictions on Resales...........................................7
DOCUMENTS INCORPORATED BY REFERENCE AND ADDITIONAL INFORMATION.............7
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL
INFORMATION..............................................7
Legal Opinion and Experts...............................................8
Indemnification of Officers and Directors...............................8
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT.........................8
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE8.................8
ITEM 4. DESCRIPTION OF SECURITIES................................8
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.............................................12
SIGNATURES...............................................14
EXHIBIT INDEX............................................15
[YES\FORMS-8:042498.FS8]
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information
GENERAL INFORMATION
The Company
The Company has its principal executive offices at: 4695 MacArthur
Court, Suite 530, Newport Beach, California 92660 Telephone (714) 833-5382.
Purposes
The Common Stock will be issued by the Company pursuant to agreements
entered into between the Consultants and the Company and approved by the Board
of Directors of the Company (the "Board of Directors"). The agreements are
intended to provide a method whereby the Company may be stimulated by the
personal involvement of the Consultants in the Company's future prosperity,
thereby advancing the interests of the Company, and all of its shareholders.
Copies of the agreements have been filed as exhibits to this Registration
Statement.
Common Stock
The Board has authorized the issuance of up to 3,700,000 shares of the
Common Stock to the Consultants upon effectiveness of this Registration
Statement.
The Consultants
The Consultants have agreed to provide their expertise and advice to
the Company on a non-exclusive basis for the purpose of promoting the interests
of the Company.
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 Consultant
The Common Stock is not qualified under Section 401(a) of the Internal
Revenue Code. The Consultant, therefore, will be deemed for federal income tax
purposes to recognize ordinary income during the taxable year in which the first
of the following events occurs: (a) the shares become freely transferable, or
(b) the shares cease to be subject to a substantial risk of forfeiture.
Accordingly, the Consultant will receive compensation taxable at ordinary rates
equal to the fair market value of the shares on the date of receipt since there
will be no substantial risk of forfeiture or other restrictions on transfer. If,
however, the Consultant receives 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
ordinary income for federal income tax purposes. The Consultant is urged to
consult his tax advisor 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.
[YES\FORMS-8:042498.FS8]
<PAGE>
Tax Treatment to the Company
The amount of income recognized by any recipient hereunder in
accordance with the foregoing discussion will be an expense deductible by the
Company for federal income tax purposes in the taxable year of the Company
during which the recipient recognizes income.
Restrictions on Resales
In the event that an affiliate of the Company 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 the Company. 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. The Company 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.
DOCUMENTS INCORPORATED BY REFERENCE AND ADDITIONAL INFORMATION
The Company hereby incorporates by reference (i) its annual report on
Form 10-K for the year ended March 31, 1997, 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 10K (or 10-KSB), as well as all
other reports filed under Section 13 of the Exchange Act, and the Company's Form
8-A filing, 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 the Company 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 Co. 4695 MacArthur Court, Suite 530,
Newport Beach, California 92660 Telephone (714) 833-5382.
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 the Company, but
does own 800,000 shares of the Company and will receive 500,000 shares of common
stock pursuant to this registration statement.
[YES\FORMS-8:042498.FS8]
<PAGE>
The financial statements of Yes Clothing Co.incorporated by reference
in the Company's Annual Report (Form 10-K) for the year ended March 31, 1998
have been audited by Grobstein, Horwath & Company LLP, independent auditors, as
set forth in their report incorporated herein by reference and are incorporated
herein in reliance upon such report given upon the authority of the 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 the Company,
the Company 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.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Registrant 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 deregisters 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) Registrant's 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 no 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
Richard O. Weed has rendered an opinion on the validity of the
securities being registered. Mr. Weed is not an "affiliate" of the Company, but
does own 800,000 shares of the Company and will receive 500,000 shares of common
stock pursuant to this registration statement.
[YES\FORMS-8:042498.FS8]
<PAGE>
Item 6. Indemnification of Directors and Officers
The Company' Certificate of Incorporation and By-Laws contain
provisions that no director of the Company shall be liable to the Company for
monetary damages for breach of fiduciary duty as a director involving any act or
omission of such director other than (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders; (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law; (iii) in respect of certain unlawful dividend payments or stock
redemptions or repurchases, or (iv) for any transaction from which the director
derived an improper personal benefit.
The effect of these provisions will be to eliminate the rights of the
Company and its stockholders (through shareholders' derivative suits on behalf
of the Company) to 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 (i) -
(iv) of the proceeding sentence.
These provisions will not affect the validity of injunctive relief
against directors of the Company (although such relief may not always be
available as a practical matter) nor will it limit directors liability for
violations of federal securities laws.
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. A. Engagement Letter and Fee Agreement with OTC
Communications Inc.
B. Engagement Letter and Fee Agreement with Structure
America Inc.
C. Consulting Agreement with Jon L. Lawver(1)
D. Consulting Agreement with NuVen Advisors Inc.(1)
E. Consulting Agreement with Richard O. Weed(1)
F. Consulting Agreement with Jonathan L. Small
24.1 Consent of Richard O. Weed, special counsel to registrant, to
the use of his opinion with respect to the legality of the
securities being registered hereby and to the references to
him in the Prospectus filed as a part hereof.
24.2 Consent of Grubstein, Horwath & Company LLP.
(1) Incorporated by reference from the Form S-8 registration
statement filed March 16, 1998
[YES\FORMS-8:042498.FS8]
<PAGE>
Item 9. Undertakings
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.
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;
(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; and
(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, paragraphs (i) and (ii) shall not apply if
the information required to be included in a post-effective
amendment by those paragraph is incorporated by reference from
period reports filed by the registrant small business issuer
under the Exchange Act.
(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.
[YES\FORMS-8:042498.FS8]
<PAGE>
(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 14e-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.
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.
[YES\FORMS-8:042498.FS8]
<PAGE>
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 Irvine, State of California on the 24th day of April,
1998.
YES CLOTHING CO.
(Registrant)
By: /s/ Guy Anthome
----------------------------------
Guy Anthome,
Chief Executive Officer
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/ Guy Anthome Chief Executive Officer April 20, 1998
and Director
[YES\FORMS-8:042498.FS8]
<PAGE>
FORM S-8 REGISTRATION STATEMENT
EXHIBIT INDEX
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:
<TABLE>
<CAPTION>
Exhibit
Number in
Registration Numbered
Statement Description Page
- ----------------- ------------------------------------------------------------------------- --------
<S> <C> <C>
5. Opinion of Counsel 14
10. A. Engagement Letter and Fee Agreement with OTC Communications
Inc. 16
B. Engagement Letter and Fee Agreement with Structure America Inc. 20
C. Consulting Agreement with Jon L. Lawver(1)
D. Consulting Agreement with NuVen Advisors Inc.(1)
E. Consulting Agreement with Richard O. Weed(1)
F. Consulting Agreement with Jonathan L. Small 24
24.1 Consent of Richard O. Weed to Use of Opinion 26
24.2 Consent of Grobstein, Horwath & Company LLP.
</TABLE>
27
[YES\FORMS-8:042498.FS8]
<PAGE>
EXHIBIT 5.
OPINION OF COUNSEL
ARCHER & WEED
Special Project Counsel
4695 MACARTHUR COURT, SUITE 530, NEWPORT BEACH, CALIFORNIA 92660
TELEPHONE (714) 475-9086 FACSIMILE (714) 475-9087
EMAIL: [email protected]
WRITER'S DIRECT NUMBER
(714) 475-9088
April 24, 1998
Board of Directors
Yes Clothing Co.
4695 MacArthur Court, Suite 530
Newport Beach, CA 92660
RE: Form S-8 Registration Statement
Dear Members of the Board:
As special project counsel to Yes Clothing Co., a California corporation (the
"Company"), in connection with that certain Form S-8 registration statement
dated April 24, 1998, I have been asked to provide an opinion of counsel as to
the legality of the securities being registered, indicating whether they will,
when sold, be legally issued, fully paid and non-assessable.
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 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 California; and (vi) the Company will
be operated in accordance with the terms of its charter documents and the laws
of the State of California and the terms of the instruments or documents
referred to above.
Based upon the foregoing, I am of the opinion that:
The Company has been duly incorporated and is validly existing as a corporation
in good standing under the laws of the State of California, the jurisdiction of
its incorporation.
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.
<PAGE>
Yes Clothing Co.
April 24 1998
Page 15
The issuance and the sale of the shares of common stock has been duly and
validly authorized and the securities will, when sold, be duly authorized,
legally issued, fully paid and non-assessable shares of common stock of the
Company.
I am admitted to practice in the State of California and the State of Texas. I
am not admitted to practice in any 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. 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 other purpose, except as set
forth in my consent.
Very truly yours,
/s/ Richard O. Weed
Richard O. Weed
<PAGE>
EXHIBIT 10 A
ENGAGEMENT LETTER AND FEE AGREEMENT WITH OTC COMMUNICATIONS INC.
OTC COMMUNICATIONS INC.
1041 Great Plain Avenue
Needham, Massachusetts 02192
Telephone: (617) 444-6100
March 23, 1998
Mr. Jon L. Lawver
YES CLOTHING CO.
4695 MacArthur Court, Suite 530
Newport Beach, California 92660
RE: Engagement Letter and Fee Agreement for shareholder relations
Dear Jon:
This letter sets forth the agreement (the "Agreement") between Yes Clothing Co.
(the "Company") and OTC Communications ("OTC"), concerning shareholder
communication and related advisory services (hereafter being referred to as the
"Services") rendered to the Company from January 1, 1998 and continuing through
December 31, 1998.
When countersigned in the space provided below, this letter shall serve as our
agreement, as follows:
1. The Services
OTC shall provide shareholder and financial community communication
services to the Company, and to serve, when requested, as the Company
liaison and spokesman. Such services shall include but not be limited
to the timely response, by fax, telephone or mail, to all inquiries
related to the Company from shareholders, or other interested parties.
Such response shall consist of written materials such as copies of
public announcements, shareholder Due Diligence Packages, current
corporate profile of the Company, and teleconferencing as necessary.
Additionally, OTC agrees to make reasonable best efforts to increase
investor participation in the Company's securities by organizing and
supervising the production of a corporate video, corporate advertising,
and quarterly and annual financial reports to its shareholders
(collectively, the "Services").
With respect to providing the Services, OTC agrees to make itself
available for reasonable amounts of time and upon reasonable notice,
devote reasonable and good faith attention to the Company's other
communications and public relations needs. Specific assignments,
however, will be mutually agreed upon and may incur additional fees to
the Company. It is understood that OTC does not perform investment
advisory services or advise any person or entity to buy or sell the
Company's stock, or seek or solicit offers for financing for the
Company. OTC only disseminates information as an intermediary on behalf
of the Company and as a liaison between the Company and its
shareholders.
[OTC\AGR:YESFEE.AGR]-2
<PAGE>
Yes Clothing Co.
March 23, 1998
Page 17
2. Compensation for the Services
In compensation for the Services, the Company agrees to pay OTC a base
fee ("Advisory Fee") equal to Three Thousand Dollars ($3,000) per
month, payable either (a) in cash, or (b) 150,000 shares of the
Company's common stock payable quarterly in advance. Such Advisory Fee
excludes the out of pocket costs and related expenses, which shall be
covered by advanced by the Company and included in each quarterly
statement with credits for any advances. Interest on any overdue
balance owed to OTC by the Company shall accrue at 1.5% per month.
Prior to the date of each quarterly payment of the Fee, OTC shall
notify the Company of its election to accept Company Shares or cash in
payment of such quarterly installment of the Fee.
3. Other Transactions
OTC may, on its own accord and outside of the scope of the Services to
be provided under this Agreement, choose to investigate possible
acquisitions or merger candidates for the Company, or identify sources
of financing for certain of the Company's lines of business
(collectively, a "Business Opportunity"). OTC shall also be entitled to
receive from the Company a "Transaction Fee", as a result of any
transaction effected by the Company with a Business Opportunity
introduced by OTC. A Business Opportunity shall include the merger,
sale of assets, consolidation or other similar transaction or series or
combination of transactions whereby the Company or its subsidiaries
transfer to the other, or both transfer to a third entity or person,
assets or any interest in its business in exchange for stock, assets,
securities, cash or other valuable property or rights, or wherein they
make a contribution of capital or services to a joint venture, commonly
owned enterprise or venture with the other for purposes of future
business operations and opportunities. To be a Business Opportunity
covered by this section, the transaction must occur during the term of
this Agreement, or during the period of one year after the expiration
of this Agreement. In the event this paragraph shall apply, any
Transaction Fee due shall be based upon the net value of the
consideration, securities, property, business, assets or other value
given, paid, transferred or contributed by, or to the Company, and
shall be equal to five percent (5%) of the first One Million Dollars
($1,000,000) of such net value, four percent (4%) of the second One
Million Dollars ($1,000,000), two percent (2%) of the next One Million
Dollars ($1,000,000) and one percent (1%) of all value above Five
Million Dollars ($5,000,000). Unless otherwise mutually agreed in
writing prior to the closing of any Business Opportunity, the
Transaction Fee shall be paid in cash at the closing of the
transaction.
4. Term
This Agreement shall be effective for a term of one (1) year beginning
the date the Services were first performed which was on or about
January 1, 1998 (the "Initial Term"). However, either party may
terminate upon thirty (30) days prior written notice to the other. If
thirty (30) days prior to the expiration of the Initial Term neither
party has terminated this Agreement, it shall automatically renew. In
the event of termination, all fees and charges owed by the Company to
OTC up until the effective date of termination (including any
unreimbursed expenses) will be paid to OTC within ten (10) days of the
later of the effective termination date or the notice date. Interest on
any overdue balance owed to OTC by the Company shall accrue at 1.5% per
month.
5. Reports
At the Company's request, OTC agrees to supply a report up to once a
month, usually included in the billing invoice, on general activities
and actions taken on behalf of the Company.
[OTC\AGR:YESFEE.AGR]-2
<PAGE>
Yes Clothing Co.
March 23, 1998
Page 18
6. Materials
The Company agrees to furnish any supplies and materials which OTC may
need regarding the Company, its management, products, financial and
business status and plans.
7. Independent Contractor Status
OTC is acting as an independent contractor, and not as an employee or
partner of the Company. As such, neither party has the authority to
bind the other, nor make any unauthorized representations on the behalf
of the other.
8. Indemnification
The Company shall indemnify OTC and hold harmless for any acts,
statements or decisions made by OTC in reliance upon information
supplied to OTC by the Company, or in accordance with instructions from
or acts, statements or decisions approved by the Company. This
indemnity and hold harmless obligation shall include expenses and fees
including attorneys fees incurred by OTC in connection with the defense
of any act, suit or proceeding arising out of the foregoing.
9. Confidential Information
OTC will use its best efforts to maintain the confidential nature of
the proprietary or confidential information the Company entrusts to it
through strict control of its distribution and use. Further, OTC will
use its best efforts to guard against any loss to the Company through
the failure of OTC or their agents to maintain the confidential nature
of such information. "Proprietary" and "confidential information", for
the purpose of this Agreement shall mean any and all information
supplied to OTC which is not otherwise available to the public,
including information which may be considered "inside information"
within the meaning of the U.S. securities laws, rules and regulations.
OTC acknowledges that his use of "inside information" to purchase or
sell securities of Company, or its affiliates, or to transmit such
information to any other party with a view to buy, sell or otherwise
deal in the securities of Company or its affiliates is prohibited by
law and would constitute a breach of this Agreement and,
notwithstanding the provisions of this Agreement, will result in the
immediate termination of the Agreement without penalty to the Company.
10. Termination
This Agreement may be canceled by either part for any reason on thirty
(30) days' written notice. Upon termination of this Agreement the
Company is to pay for all authorized work in process, at cost. OTC
shall transfer, assign and make available to the Company, or its
representative, all property and materials in OTC's possession or
control which belong to and were paid for by the Company.
11. Option to Purchase Shares
In consideration for OTC entering into this Agreement, the Company
hereby grants OTC immediately exercisable options to purchase up to
Seven Hundred Fifty Thousand (750,000) shares of its common stock,
exercisable at 110% of the trading average bid price for the Company's
common stock ten (10) days prior to the date hereof.
[OTC\AGR:YESFEE.AGR]-2
<PAGE>
Yes Clothing Co.
March 23, 1998
Page 19
12. Registration of Shares
As soon as practicable following the execution of this Agreement, the
Company will include the Option Shares the Company Shares, if any, in a
Form S-8 Registration Statement, or other applicable registration
statement to be filed with the Securities and Exchange Commission as
soon as practicable following the execution hereof. In the event the
compensation hereunder contains Company Shares, OTC, at its sole
discretion, may request that such shares may be issued prior to
registration 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.
13. Expenses
Unless otherwise agreed and approved in writing between OTC and the
Company, all third party and out-of-pocket expenses incurred by OTC in
performing the Services under this Agreement and not covered by the
Advisory Fee shall be approved in writing by the Company in advance.
If the foregoing is agreeable, please indicate your approval by dating and
signing below and returning an original copy to me.
Very truly yours,
/s/ Geoffrey Eiten
- ----------------------------------
Name: Geoffrey Eiten
Title: President
APPROVAL AND ACCEPTANCE
READ AND ACCEPTED this 30th day of March, 1998, with an effective date
retroactive to the date services were first performed for the Company.
YES CLOTHING CO.
By: /s/ Guy Anthome
-----------------------------
Guy Anthome
Chief Executive Officer
[OTC\AGR:YESFEE.AGR]-2
<PAGE>
EXHIBIT 10 B
ENGAGEMENT LETTER AND FEE AGREEMENT WITH STRUCTURE AMERICA INC.
March 23, 1998
YES CLOTHING CO.
4695 MacArthur Court, Suite 530
Newport Beach, California 92660
RE: Engagement Letter and Fee Agreement for Merger and Acquisition
Services
Gentlemen:
This letter sets forth the agreement between Yes Clothing Co. (the "Company")
and Structure America, Inc. ("SAI"), concerning merger and
acquisition services to be rendered to the Company by SAI.
Regarding our services, SAI agrees to use its best efforts to identify, make
initial contact with, and negotiate on the Company's behalf if requested,
potential acquisitions of apparel, retail and licensing companies, and perform
other advisory services as requested by the Company.
In return for these services rendered, upon execution hereof, the Company agrees
to pay to SAI the following consideration:
1. One Hundred Fifty Thousand (150,000) shares (the "Initial Shares") of
the Company's Common Stock; and
2. Five Thousand Dollars ($5,000) per month on a quarterly basis (the
"Fee"), paid in advance in cash or in shares of the Company's common
stock ("Fee Shares"), at SAI's election, issued based upon the 10-day
moving average bid price; and
3. Options to purchase Seven Hundred Fifty Thousand (750,000) shares (the
"Option Shares") of the Company's stock pursuant to the Option
Agreement attached hereto as Exhibit "A" and incorporated herein by
reference.
Within thirty (30) days of execution hereof, the Company will register the
Initial Shares, together with the Fee Shares and the Option Shares (if any),
with the Securities and Exchange Commission under a Form S-8 Registration
Statement or other applicable registration statement. At the sole discretion of
SAI, any of the Company's shares issuable to SAI may be issued or reserved for
issuance prior to registration 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.
The Company and SAI acknowledge and agree that the Services to be provided by
SAI hereunder do not include or require SAI to seek or arrange financing for the
Company directly or indirectly, Further, unless otherwise agreed and approved in
writing between SAI and the Company, all third party and out-of-pocket expenses
incurred by SAI performing services under this letter agreement shall be the
sole responsibility of the Company.
[SAI\AGR:YESFEE.AGR]-3
<PAGE>
Yes Clothing Co.
March 23, 1998
Page 21
This Agreement is cancelable by either party upon ninety (90) days written
notice.
The Company agrees that it will indemnify, defend and hold harmless SAI from and
against any loss or losses asserted against, resulting to, imposed upon or
incurred or suffered by SAI, directly or indirectly, resulting from any dispute,
claim, or cause of action arising from the transactions contemplated under the
Agreements or in any way connected to the providing of services to the Company
under this letter agreement.
If the foregoing is agreeable, please indicate your approval by dating and
signing below and returning an original copy to me.
Very truly yours,
/s/ STRUCTURE AMERICA, INC.
-----------------------------
Structure America Inc.
APPROVAL AND ACCEPTANCE
READ AND ACCEPTED this 23rd day of March, 1998, with an effective date
retroactive to March 1, 1998, the date services were first performed for the
Company.
YES CLOTHING CO.
By: /s/ Guy Anthome
-----------------------------
Guy Anthome
[SAI\AGR:YESFEE.AGR]-3
<PAGE>
EXHIBIT "A"
to the
Engagement Letter and Fee Agreement for Merger and Acquisition Services
Dated March 1, 1998
OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Option Agreement") is made this 1st day of
March 1998, by and between Yes Clothing Co., a corporation organized under the
laws of California (the "Company") and Structure America Inc., a Delaware
corporation ("SAI").
WHEREAS, on March 23, 1998, the Company entered into an Engagement
Letter Agreement with SAI (the "Agreement") wherein, among other covenants and
agreements, the Company granted SAI an option to purchase shares of the
Company's common stock.
NOW, THEREFORE, IN CONSIDERATION of the mutual promises contained
herein, the benefits to be derived by each party hereunder and other good and
valuable consideration, the receipt and sufficiency of which are hereby
expressly acknowledged, the Company and SAI agree as follows:
1. Grant Options
The Company hereby grants to SAI, subject to the terms and conditions
set forth or incorporated herein, options ("Options") to purchase Seven
Hundred Fifty Thousand (750,000) shares of common stock of the Company
("Option Shares") at an exercise price of $0.14 per share representing
110% of the 10-day moving average bid price for the Company's common
stock.
2. Exercise
The Options shall be exercisable by the delivery to and receipt by the
Company of (i) written notice of election to exercise, specifying the
number of shares to be purchased; (ii) accompanied by payment of the
full purchase price thereof in cash or certified check payable to the
order of the Company, and (iii) the return of a counterpart of this
Agreement for endorsement of exercise by the Company.
3. Term
The Option evidenced hereby shall be exercisable in whole or in part
during the twelve (12) months immediately following the date of the
Agreement (the "Option Period").
4. Transferability
The Options are assignable.
5. Registration of Shares
The Company will register the Option Shares with the Securities and
Exchange Commission on a Form S-8 or other applicable registration
statement within thirty (30) days from the date hereof. 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 SAI set forth in the Agreement, to be updated upon
exercise.
[SAI\AGR:YESFEE.AGR]-3
22
<PAGE>
6. Effect of Termination of Agreement
In the event of the termination of the Agreement prior to the
expiration of the Option Period and the complete exercise of the
Options, SAI's right to exercise any unexercised Options shall continue
for three (3) months following the effective date of termination.
7. Amendment
This Option Agreement may be amended or modified at any time and in any
manner only by an instrument in writing executed by the parties hereto.
8. 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 Option
Agreement.
9. 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
Delaware, notwithstanding any conflict-of-law provision to the
contrary.
10. Facsimile Counterparts
A facsimile, telecopy, or other reproduction of this Option 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
The "Company"
Yes Clothing Co.,
a California corporation
By: /s/ Guy Anthome
----------------------------------
Guy Anthome
Chief Executive Officer
"SAI"
Structure America Inc.,
a Delaware corporation
By: /s/ Structure America Inc.
Structure America Inc.
[SAI\AGR:YESFEE.AGR]-3
23
<PAGE>
EXHIBIT 10 F
CONSULTING AGREEMENT WITH JONATHAN L. SMALL
JONATHAN L. SMALL
3642 Boulder Hwy., #387
Las Vegas, Nevada 89121
March 31, 1998
YES Clothing Co.
1380 W. Washington Blvd.
Los Angeles, CA 90007
RE: Engagement Letter and Fee Agreement for Services
Gentlemen:
This letter sets forth the agreement (the "Agreement") between YES Clothing Co.
(The "Company") and Jonathan L. Small ("Small"), pursuant to which Small agrees
to serve the Company in the capacity as head of mergers and acquisitions (the
"Services").
In return for the Services rendered, upon execution of this Agreement, the
Company hereby agrees to Small's monthly fee of Three Thousand Dollars
($3,000.00), payable in shares of the Company's common stock, quarterly in
advance (the "Fee Shares").
The Company agrees to include the Fee Shares in a Form S-8 Registration
Statement to be filed by the Company with the Securities and Exchange Commission
(the "S-8 Registration") within thirty (30) days of the date of execution of
this Agreement. At Small's sole discretion, the Fee Shares may be issued prior
to the effective date of the S-8 Registration in reliance upon 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.
All third party and out-of-pocket expenses incurred by Small while performing
the services shall and will continue to be the sole responsibility of the
Company, provided such costs are approved by the Company in writing.
This Agreement cancels all other prior agreements and understandings between the
Company and Small, written or oral, prior to the date hereof.
The Company agrees that it will indemnify, defend and hold harmless Small from
and against any loss or losses asserted against, resulting to, imposed upon or
incurred or suffered by Small, directly or indirectly, resulting from any
dispute, claim, or cause of action which arise from or which are a result of the
Services to be provided.
[SMALL:YESCONS.AGR]
24
<PAGE>
YES Clothing Co.
March 31, 1998
Page 2
If the foregoing is agreeable, please indicate your approval by dating and
signing below and returning an original copy to me.
Very truly yours,
By: /s/ Jonathan L. Small
-----------------------------
Jonathan L. Small
APPROVAL AND ACCEPTANCE
READ AND ACCEPTED this 31st day of March, 1998, with an effective date
retroactive to the date services were first performed for the Company.
YES CLOTHING CO.
By: /s/ Guy Anthome
-----------------------------
Guy Anthome
Chief Executive Officer
[SMALL:YESCONS.AGR]
25
<PAGE>
EXHIBIT 24.1
CONSENT OF RICHARD O. WEED TO USE OF OPINION
Archer & Weed
Special Project Counsel
4695 MacArthur Court, Suite 530
Newport Beach, California 92660
Telephone (714) 475-9086 Facsimile (714) 475-9087
Mr. Guy Anthome
Yes Clothing Co.
4695 MacArthur Court, Suite 530
Newport Beach, California 92660
RE: Consent to Use of Opinion
Dear Mr. Anthome:
I hereby consent to the use of my legal opinion as an exhibit to the Form S-8
registration statement being filed by Yes Clothing Co.
Sincerely yours,
/s/ Richard O. Weed
---------------------------------------
Richard O. Weed
26
<PAGE>
EXHIBIT 24.2
CONSENT OF GROBSTEIN, HORWATH & COMPANY LLP
The reports of the auditors with respect to the past two years contained no
adverse opinion or disclaimer of opinion nor was either qualified or modified as
to uncertainty, audit scope, or accounting principles except that the opinion
with respect to the 1997 fiscal year was qualified as to the ability of the
Company to continue as a going concern due to its recurring net losses and
negative cash flows from operating activities.
[NM\FS8\80594.FS8]
27
