Exhibit 10.2
Xxxx Xxxxxxxx
000 Xxxx 000 Xxxxx
Xxxx Xxxx Xxxx, XX 00000
Xxxxxx X. Xxxxxx III
c/o Treasure Mountain Holdings, Inc
1390 South 0000 Xxxx Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
February 26, 2004
Re: Administrative Services Agreement (the "Agreement")
Gentlemen:
This letter shall set forth our agreement with respect to services to
be provided by Xxxxxx Xxxxxx and Xxxx Xxxxxxxx (the "Executives", individually,
each an "Executive") to Treasure Mountain Holdings, Inc., a Nevada corporation
(the "Company"). Defined terms not otherwise defined herein shall have the
meanings ascribed to such terms in the Common Stock Purchase Agreement, dated as
of the 26th day of February 2004, as amended to date (the "Purchase Agreement"),
by and among the Company, the sellers listed on Schedule 1.1 annexed thereto and
the purchasers listed on Schedule 1.1 annexed thereto (collectively referred to
herein as the "Purchasers"). We hereby agree as follows:
1. Services. The Executives shall remain officers and directors of the
Company in their current positions for the primary purpose of
performing administrative duties and tasks consistent with the way
such tasks and duties were carried out in 2002 and 2003. These
duties and tasks shall include, but are not limited to, the
following:
a. Overseeing that all filings with the Securities and Exchange
Commission (the "Commission") are accurately and timely filed
with the Commission;
b. Assisting the Company's counsel in the preparation and filing
of the Company filings required by the Securities Exchange
Act of 1934, as amended;
c. Maintaining accurate books and records of the Company,
including financial statements in GAAP format consistent with
prior practice;
d. Preparing the general journal and trial balance required for
the Company's auditors to complete the Company's audit for
the fiscal year ended December 31, 2003 and financial
statements for the fiscal quarters ending March 31, 2004 and
June 30, 2004 (and any subsequent periodic reports);
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e. Assisting the Company's auditors in the execution and filing
of the Company's audit confirmation letters and
representation letters;
f. Preparing board resolutions and board minutes for all board
actions, subject to review by the Company's counsel, which
shall be a firm designated by the Purchasers;
g. Attending to any and all issues that arise with respect to
shareholders, the Company's transfer agent, and any other
matter requiring the Executives' attention;
h. The availability of the Executives to discuss and confer with
any key shareholders with respect to that key shareholder's
questions;
i. Use without charge of Xxxxxx Xxxxxx'x office as the Company's
headquarters at 1390 South 0000 Xxxx Xxxxx 000 Xxxx Xxxx
Xxxx, Xxxx 00000, for receipt of mail delivery and the
continuation of local telephone service listing in all local
phone directories;
j. Such other matters as shall be consistent with their titles,
their previous responsibilities and incident to the foregoing.
2. Compensation. As compensation for the duties and tasks described above,
the Company agrees to provide the Executives with the following
compensation during the term hereof: (i) the Company will pay the
Executives $1,000 per month, in the aggregate, commencing on May
15, 2004, and on the 15th day of each month (the "Issuance Date")
during the term hereof, in the form of common stock of the Company
("Common Stock") of which the Executives will each receive an
equal amount, to be valued at the greater of (x) $.10 per share or
(y) the average of the closing prices of the Common Stock during
the five trading days immediately prior to the Issuance Date and
(ii) cash compensation of $1,000 per month, payable to Xxxxxx
Xxxxxx on the 15th of each month, commencing on March 15, 2004. If
the 15th day of any month falls on a Saturday, Sunday or a legal
holiday, then the foregoing compensation payments shall be paid on
the next succeeding day not a Saturday, Sunday or legal holiday.
Such shares of Common Stock issued pursuant to (i) above shall be
"restricted securities" and may only be disposed of pursuant to an
effective registration statement under the Securities Act of 1933,
as amended (the "Securities Act") or pursuant to an available
exemption from the registration requirements of the Securities
Act, and in compliance with any applicable state securities laws.
The Executives acknowledge that any certificates evidencing shares
of Common Stock issued hereunder shall contain the following or
similar legend:
"These securities have not been registered with the securities and
exchange commission or the securities commission of any state in reliance upon
an exemption from registration under the Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, may not be offered or sold except pursuant
to an effective registration statement under the Securities Act or pursuant to
an available exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act, as evidenced by a legal
opinion, the substance of which shall be reasonably acceptable to the Company."
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3. Term of Employment; Termination. The term of this agreement shall
commence on the date hereof and shall terminate on July 31, 2004
(the "Initial Term"). The term shall be automatically deemed
renewed on a month to month basis thereafter (each a "Renewal
Term") on the same terms as shall have been effective at the end
of the immediately preceding term, whether the Initial Term or a
Renewal Term, if the Company or the Executive have not delivered
written notice of non-renewal of this agreement at least 30 days
prior to the expiration of the Initial Term or Renewal Term, as
the case may be. Notwithstanding anything to the contrary herein,
upon the request of the Purchasers, each of the Executive hereby
agree to resign as officers of the Company. Such resignation shall
be effective upon the delivery of such notice to the Executives.
Upon such resignation, this Agreement shall be terminated. Each
Executive may terminate this Agreement with respect to himself at
any time upon 30 days' prior written notice to the Company and the
Purchasers. Notwithstanding anything herein to the contrary, in
their capacities as the only members of the board of directors of
the Company, the Executives hereby agree to increase the size of
the board of directors of the Company, and to appoint designees of
the Purchasers to fill such vacancies when and as requested by the
Purchasers, except to the extent their fiduciary duties require
otherwise. Further, immediately following such appointments, the
Executives hereby agree to immediately resign from all positions
as officers and directors of the Company if requested by the
Purchasers.
4. Indemnification. The Executives shall jointly and severally indemnify
the Company and its agents and hold them harmless from and against
any and all losses, claims, damages, actions, expenses (including
without limitation reasonable attorneys' fees and disbursements)
and liabilities arising in any manner out of or in connection with
the rendering by the Executives of services hereunder.
5. Shareholder Approval. During the term of this agreement, the Executives
must receive the written consent of all of the Purchasers to carry
out the following actions:
a. Any merger or consolidation involving the Company or any
affiliate or subsidiary thereof;
b. Any amendment or repeal of the Articles of Incorporation or
by-laws of the Company;
c. Issuance of shares of any class or other rights relating to
the issuance of shares of the Company except for shares to be
issued as compensation to the Executives pursuant to the
terms hereof;
d. Transfer of all, or substantially all of, the assets of the
Company;
e. Amendment to this agreement;
f. Voluntary dissolution of the Company;
g. The expenditure of any monies for any purpose in excess of
$250 individually or $500 in the aggregate;
h. Any change in the number of members constituting the board of
directors from that provided for in the by-laws of the
Company (and any action which would derogate from the right
of the shareholders to nominate members of the board of
directors);
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i. The acquisition by the Company of any shares or securities of
any other corporation or of any investment in any other
business entity;
j. The taking of any proceedings with a view to the dissolution,
winding up, or termination of the corporate existence of the
Company, or the merger or consolidation of the Company with
or into another entity;
k. The sale, lease or other disposition by the Company of any of
its assets in any one transaction or a series of related
transaction whether or not in the ordinary course of
business, or the granting of an option or other right in
respect of such sale, lease or disposition;
l. The establishment or change of any dividend policy or other
policy with respect to the distribution of any class of
equity or the payment of any dividend or distribution;
m. Any change in the nature of the business of the Company;
n. The acquisition of all or substantially all of the assets of
any other business entity or the entering into of any
amalgamation, merger, partnership, joint venture or other
combination with any other business entity;
o. The payment or declaration of any bonuses, profit sharing,
retirement allowances or other such distributions to
directors, officers or employees of the Company or any
increase in the compensation paid to any directors, officers
or employees of the Company;
p. Any guaranty of any liability of any other person or entity;
and
q. The taking of any action which may lead to any of the
foregoing.
6. Miscellaneous. This Agreement constitutes the entire agreement among
the Executives, the Company and the Purchasers relative to the
subject matter hereof and supersedes in its entirety any and all
prior agreements (written or oral), understandings and discussions
with respect thereto, and the parties have made no agreements,
representations or warranties relating to the subject matter of
this agreement that are not set forth herein or therein. This
Agreement may not be modified, amended or waived in any manner
except by an instrument in writing signed by each of the parties
hereto. It is hereby acknowledged that the Executives shall not be
responsible for providing equity or debt financing to satisfy the
Company's working capital needs during the term hereof. The waiver
by either party of compliance with any provision of this Agreement
by the other party shall not operate or be construed as a waiver
of any other provision of this agreement, or of any other breach
by such party of a provision of this Agreement. The Company and
the Executives may not assign their respective rights or
obligations hereunder. This agreement shall be governed by and
construed in accordance with the laws of the State of New York,
without regard to the conflicts of laws principles thereof.
Neither party shall take any action with the intention or result
that such action directly or indirectly circumvents the intentions
or provisions hereof.
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If the foregoing represents our agreement, please sign both copies of
this agreement where indicated below and return them to me.
Sincerely,
TREASURE MOUNTAIN HOLDINGS, INC.
By: /s/ Xxxx Xxxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxxx
Title: Secretary/Treasurer
APPROVED AND ACCEPTED THIS
26th DAY OF FEBRUARY 2004:
/s/ Xxxxxx Xxxxxx III
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Xxxxxx Xxxxxx III
/s/ Xxxx Xxxxxxxx
------------------------------------------
APPROVED AND ACCEPTED THIS
26th DAY OF FEBRUARY 2004:
SCIMITAR HOLDINGS, LLC
By: Xxxxxxx Xxxxx & Co., Inc.,
its Member Manager
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President
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