MANAGEMENT SERVICES AGREEMENT
Exhibit
6.3
This Management Agreement (the
“Agreement”) is made as of the 27th day of April, 2015,
by and between xxxxx xxxxxxx Worldwide LLC (“Manager”),
and Level Beauty Group, Inc., a North Carolina corporation
(“Managee”).
RECITALS
WHEREAS, Manager has agreed to provide
certain management, creative and marketing services to Managee;
and
WHEREAS, the parties desire to set forth
in writing the terms and conditions on which Manager shall provide
such services to Managee.
AGREEMENT
NOW THEREFORE in consideration of the
foregoing and the mutual agreements set forth herein, the parties
agree as follows:
1. Management
Services. The Company
hereby retains Manager to provide the “Services” (as
defined below) to Managee for a period of two years initially
(“Initial Term”), then on a at will basis upon the
terms and conditions of this Agreement, commencing on the date
hereof. The parties understand and agree that Xxxxx Xxxxxxx shall
be named as Chief Creative Advisor to the Managee; provided, that
public disclosure of Xxxxx Xxxxxxx’x association or
affiliation with the Company, as well as her title, shall require
her prior written consent.
2. Compensation.
(a) For services
rendered by Manager to Managee, Managee shall pay (the
“Management Fee”) a monthly fee equal to $10,000. To
the extent the Board of Directors of the Managee reasonably
determines that the Managee and/or any of its portfolio companies
do not have sufficient available cash to pay such Management Fee in
a particular month, the parties agree that the portion of the
Management Fee not paid shall accrue and the accrued amount shall
be paid to Manager upon the earliest to occur of the following: (a
“Liquidation Event”): (i) when the Board of Directors
reasonably believes that the Managee or such Managee portfolio
company has such cash available for payment, (ii) upon the closing
of a future capital raise (after the $2,000,000 capital raise
currently in process is completed) in excess of $5,000,000 (on an
aggregate basis, through a single or series of subsequent capital
raises), (iii) the sale of all or substantially all of the assets
or a majority of the common stock of the Managee, or (iv) an
initial public offering of the Managee’s securities listed
through NASDAQ or other national securities exchange.
(b) To the extent that
Manager is offering its services with respect to a particular
Managee portfolio company, an annual fee in an amount equal to ten
percent (10%) of the gross margin (gross consolidated revenue less
cost of goods sold, as determined by the Managee’s
accountants under Generally Accepted Accounting Principles) of such
Managee portfolio company shall be paid to Manager annually;
provided, that, it is understood and agreed that the Management Fee
owed under this Section 2(b) shall not be paid on the gross margin
attributable to the first Ten Million Dollars ($10,000,000) in
annual revenue of such Managee portfolio company (the
“Royalty Fee”). By way of illustration, in any given
calendar year, if Managee has $30,000,000 in revenue and COGS is
$15,000,000 (a 50% gross margin), then the fee under this Section
2(b) shall equal $1,000,000 ($30,000,000 less the $10,000,000
threshold, the result of which is multiplied by the 50% gross
margin, times the 10% royalty).
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(c) In addition,
Managee shall pay to Manager a $750,000 fee as follows: (i) a cash
payment of $100,000 will be paid to Manager on the date of
execution hereof, and (ii) the remaining $650,000 (“Remaining
Amount”) will be an obligation of the Company. The Remaining
Amount will be paid through the Royalty Fee set forth in Section
2(b) (and will not be in addition to the Royalty Fee set forth in
Section 2(b)); subject to the following: (y) promptly upon a
Liquidation Event, the portion of the Remaining Amount not
theretofore recouped through payment of the Royalty Fee will be
paid in full (such portion of the Remaining Amount so paid is
referred to as the “Liquidation Event Royalty
Advance”); and (z) the Liquidation Event Royalty Advance will
be a non recoupable advance, will not be recoverable or recoupable
from Managee or its affiliates, and shall solely be credited
against and used to offset any Royalty Fee due after closing of a
Liquidation Event on a dollar for dollar basis.
3. Services.
Manager shall, from time to time and when, as and if determined in
her sole discretion, provide management, creative and marketing
services reasonably requested by the Managee from time to time (the
“Services”) at no additional expense to Manager except
as set forth herein. The Managee understands, acknowledges and
agrees that Manager has a variety of different obligations, duties
and commitments to third parties, some or all of which may
conflict, limit or prohibit the performance of the Services. As a
result, the manner, type and scope of the Services shall be
determined by Manager in her sole discretion, and her failure or
refusal to provide Services at any time and/or for any reason shall
in no way be deemed to be a breach of this Agreement or result in
any liability to Manager or her affiliates.
4. Limitation
of Liability. Manager
shall not be liable to Managee, its members, managers, officers,
employees, creditors, representatives or agents for any loss,
damage, liability, cost or expense suffered by it on account of any
action or omission by Manager or its agents unless arising from
Manager’s bad faith or willful misconduct.
5. Indemnification.
Managee shall indemnify, defend and hold harmless Manager and each
of its directors, officers, employees, partners, agents,
Affiliates, successors and assigns thereof from and against any and
all losses, judgments, fines, penalties, costs and expenses
(including, without limitation, reasonable attorney’s fees),
damages, and any other liabilities asserted against, imposed upon
or incurred or suffered by such person or entity which arises out
of, results from or relates to any act or failure to act on the
part of Managee or her affiliates that in any way relates to the
negotiation, execution, performance and/or existence of this
Agreement.
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6. Nonexclusivity.
Manager's Services hereunder are not exclusive. Manager shall at
all times be free to perform the same or similar services for
others, including providing services for a competitor of Managee,
as well as to engage in any and all other business
activities.
7. Termination.
This Agreement may be terminated by either party by giving thirty
(30) days written notice to the other, and shall terminate
automatically, without further obligation of either party other
than the payment of fees previously earned but unpaid, in the event
that either party ceases operations.
8. No
Waiver. No delay on
Managee’s part in exercising any right, power or privilege
under this Agreement shall operate as a waiver of any such
privilege, power or right.
9. Notices.
All notices and other communications hereunder shall be in writing
and shall be deemed validly given if delivered personally or sent
by certified mail, postage prepaid, return receipt requested, to
either party at its principal place of business, and shall be
deemed to have been given as of the date so personally delivered or
received.
10. Integration/Severability.
This Agreement expresses the entire agreement of the parties
relative to the subject matter. In the event that any provision of
this Agreement should be held to be void, voidable or
unenforceable, the remaining portions hereof shall remain in full
force and effect and shall be enforced to the fullest extent
permitted by law.
11. Assignment/Binding
Agreement. This
Agreement may not be assigned by either Manager or Managee without
the prior written consent of the other party. This Agreement shall
be binding upon and inure to the benefit of the parties, their
respective successors and permitted assigns.
12. Confidentiality.
Managee, and its respective affiliates, employees, attorneys,
accountants and agents shall hold in confidence and shall not use
or disclose, except as permitted by Manager in writing (which may
be withheld or granted in Manager’s sole and absolute
discretion), (i) the terms of this Agreement, including without
limitation the financial arrangement between the Managee and
Manager, and (ii) Manager’s name, likeness, marks and/or
brand; provided, that Managee may disclose the terms of this
Agreement if required by law so long as prior written notice of
such disclosure has been sent to Manger and Managee has taken all
actions reasonably within its control in order to avoid disclosure
(and any such disclosure shall be limited to the minimum
information required by law).
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13. Governing
Law. This Agreement
and the rights and obligations of the parties hereunder shall in
all respects be governed by, and construed and enforced in
accordance with, the laws of the State of North Carolina (exclusive
of its choice of laws rules) applicable to agreements performed
entirely within such State.
IN WITNESS WHEREOF, the parties have
executed this Agreement to be effective as of the date first above
written.
Level
Beauty Group, Inc.
By:/s/
Xxxxxxx Xxxx
Xxxxxxx
Xxxx, President
xxxxx
xxxxxxx Worldwide LLC
By:/s/
Xxxxx Xxxxxxx
Xxxxx
Xxxxxxx, CEO
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