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EXHIBIT 10.19
PROFESSIONAL SERVICES AGREEMENT
THIS AGREEMENT, made as of this 6th day of June, 2000, between Xxxx
Xxxxxxx, a New York resident ("Provider"), and Pet Quarters, Inc., an Arkansas
corporation whose principal place of business is located at 000 Xxxx Xxxxx
Xxxxxx xx Xxxxxx, Xxxxxxxx 00000 ("Customer").
WITNESSETH:
WHEREAS, Customer desires to acquire consulting services from Provider
upon the terms, conditions and provisions as hereinafter set forth, and
Provider desires to provide such consulting services as Customer desires upon
the terms, conditions and provisions as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual
undertakings of the parties herein contained and for other good and valuable
consideration, the receipt of which the parties hereby acknowledge, intending
to be legally bound Provider and Customer hereby agree as follows:
1. Duties of Provider. Customer hereby contracts with Provider as an
e-commerce consultant whose responsibilities shall include, but not be limited
to, the design and development of interactive Web sites for Customer and its
subsidiaries for Internet, Intranet, and E-Commerce. In addition to such
described duties, Customer anticipates that it will request Provider to perform
additional consulting and managerial tasks for Customer and Provider shall
accept such additional assignments without additional compensation unless
otherwise agreed upon by Customer. Provider agrees to perform all such services
in a prompt, professional and workmanlike manner consistent with generally
accepted professional and business practices and standards. As payment for all
such services, including any additional tasks as contemplated above, Provider
shall receive the amounts described in paragraph 3 hereof.
Provider shall devote the time and attention necessary for Provider to
fulfill his commitment and obligations to Customer's business of developing the
premier Internet pet supply, information and resource site, designing and
developing Customer's Web sites, and assuring that Customer's computer systems
and operations are sufficient to meet Customer's internet and e-commerce needs.
Provider shall exert his best efforts to discharge the responsibilities
assigned to him by Customer. Provider shall discharge his responsibilities to
Customer in such a manner and he shall not at anytime do anything which may
cause or tend or be likely to cause any loss or damage to Customer in business,
reputation or otherwise. Provider shall consult exclusively with Customer
during the term of this Agreement; provided, however, that Provider may engage
in personal pursuits that do not substantially interfere with the performance
of his duties under this Agreement.
2. Term. This Agreement shall be effective as of the date hereof, and
the "TERM OF ENGAGEMENT" (as defined herein) shall commence as of June 1, 2000
(the "START DATE"). As used herein, the phrase "TERM OF ENGAGEMENT" shall mean
the period commencing on the Start Date and ending approximately two (2) years
from the Start Date on May 31, 2000; provided, however, that, unless either the
Customer or Provider provides two (2) months notice to the contrary prior to
the end of the Term of Engagement, the Term of Engagement shall
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automatically be extended for one (1) year periods. Notwithstanding the
foregoing, the Term of Engagement shall expire on the first to occur of the
following (the "TERMINATION DATE"):
(a) TERMINATION BY THE CUSTOMER WITHOUT CAUSE. Notwithstanding
anything to the contrary in this Agreement, whether express
or implied, the Customer may, at any time, terminate
Provider's engagement for any reason other than Cause (as
defined below), Disability (as defined below), or Death by
giving Provider at least thirty (30) days prior written
notice of the effective date of termination. In the event
Provider's engagement hereunder is terminated by the Customer
other than for Cause, Disability or Death, Provider shall be
entitled to receive from Customer all amounts specified below
as follows:
i. Base Compensation. Customer shall pay or cause to be
paid within 15 days of the Termination Date in a
lump sum, an amount equal to that portion of
Provider's Base Compensation (as defined below) as
he would have received during the period commencing
on the Termination Date and ending at the latter of
the Term of Employment or twelve (12) months after
the Termination Date (the "COMPENSATION CONTINUATION
PERIOD").
ii. Stocks/Stock Options. Any unvested stock options,
stock appreciation rights, warrants, bonus units, or
comparable rights (collectively, "options") granted
or to be granted to Provider, and any shares or
other units (collectively "shares") granted or to be
granted to Provider, pursuant to any plan involving
or based upon equity in the Customer, shall
automatically and fully vest in Provider (and any
and all conditions applicable thereto shall be
deemed satisfied). In addition, any options granted
or to be granted to Provider, vested or unvested,
and all shares of common stock of the Customer owned
by Provider shall automatically double. Such options
shall be fully vested in accordance with this
subsection except the exercise price for such
options granted pursuant to this subsection shall be
the closing bid price for shares of common stock of
the Company on the Termination Date, and such shares
of common stock shall be deemed to be validly
issued, fully paid, and nonassessable.
(b) TERMINATION FOR CAUSE. The Customer shall have the right to
terminate Provider's engagement at any time for Cause by
giving Provider written notice of the effective date of
termination (which effective date may, except as otherwise
provided below, be the date of such notice). If the Customer
terminates Provider's engagement for Cause, Provider shall be
paid his unpaid Base Compensation accrued through the
Termination Date, and the Customer shall have no further
obligation hereunder from and after the effective Termination
Date under this subsection and shall have all other rights
and remedies available under this or any other agreement and
at law or in equity.
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For purposes of this Agreement, "CAUSE" shall mean:
(i) theft, forgery, fraud, misappropriation,
embezzlement, moral turpitude or other act of
material misconduct against the Customer or any of
its affiliates;
(ii) willful and knowing violation of any rules or
regulations of any governmental or regulatory body,
which is or is reasonably expected to be materially
injurious to the financial condition of the
Customer; or
(iii) conviction of, or plea of guilty or nolo contendere
to, a felony or any crime of theft, forgery, fraud,
misappropriation, embezzlement, moral turpitude or
other act of material misconduct;
(iv) a material violation of any fiduciary duty owed to
the Customer;
provided, however, that for any such event, activity or
omission in clause (iv) of this subsection, Provider shall be
given (A) prior written notification of the Customer's
intended actions and a description of the alleged events,
activities or omissions giving rise thereto, and (B) with
respect to those events, activities or omissions for which a
cure is reasonably possible, a reasonable opportunity (of not
less than thirty (30) days) to cure such breach.
(c) TERMINATION ON ACCOUNT OF DEATH. In the event of Provider's
death while engaged by the Customer, his engagement hereunder
shall terminate on the date of his death and Provider shall
be paid his unpaid Base Compensation through the Termination
Date.
(d) TERMINATION ON ACCOUNT OF DISABILITY. To the extent not
prohibited by The Americans With Disabilities Act of 1990,
if, as a result of Provider's incapacity due to physical or
mental illness (as determined in good faith by a physician
acceptable to the Customer and Provider), Provider is unable
to substantially render to the Customer the services required
under this Agreement for more than ninety (90) days out of
any consecutive one hundred and eighty (180) day period or if
a physician acceptable to the Customer advises the Customer
that it is likely that Provider will be unable to return to
the performance of his duties for more than ninety (90) days
out of any consecutive one hundred and eighty (180) day
period his engagement may be terminated for "DISABILITY."
During any period that Provider fails to perform his duties
with the Customer as a result of incapacity due to physical
or mental illness, he shall continue to receive his Base
Compensation until Provider's engagement hereunder is
terminated pursuant to this subsection.
(e) TERMINATION BY PROVIDER FOR GOOD REASON. Provider shall have
the right to terminate Provider's engagement, without further
obligation or liability to Customer, except that any
termination of Provider's engagement under this Section 5(e)
shall have the same effect as a termination without cause by
Customer under Section 5(a) above, upon the occurrence of any
one or more of
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the following events, which events shall be deemed
termination by Provider for "Good Reason":
i. MATERIAL BREACH. If Customer willfully commits a
material breach of this Agreement with the actual
knowledge that its conduct constitutes a breach of
this Agreement;
ii. EFFECTIVENESS OF NOTICE. Upon the failure to cure
any of the events/breaches set out in Section
5(e)(i) within thirty (30) days after Customer's
receipt of written notice from Provider specifying
the applicable events/breaches and expressly
referring to this Section 5(e) (the "Initial
Notice"), Provider shall have the right to elect to
terminate his engagement for Good Reason by giving a
second written notice (the "Second Notice") to
Customer to such effect and referring to this
Section 5(e); provided, however, that with respect
to any such events/breaches that are capable of
prospective cure, if Customer commences to effect
such a cure within the foregoing thirty (30) day
period, Customer shall be permitted additional time
to cure and not be deemed in breach so long as it
diligently continues to seek to effect a cure.
Provider shall be deemed to have terminated his
engagement for Good Reason under this Section 5(e)
effective ten (10) days following Second Notice.
3. Compensation. For all the services to be rendered by Provider,
Customer agrees to pay Provider for the duration of the Term of Engagement
Compensation of no less than eight-five thousand dollars ($85,000) per calendar
year, payable no less than monthly, commencing June 30, 2000. Provider may also
participate, as deemed appropriate by the Board of Directors of Customer, in
any of the Customer's stock option plans.
4. Independent Contractor. In its performance of services pursuant to
this Agreement, Provider shall at all times act in his own capacity and right
as an independent contractor, and nothing herein may be construed to make
Provider an agent, partner, or joint venturer of Customer. Provider shall not
have any claim to Customer's revenues. Provider shall be solely responsible for
all taxes due upon or as a result of Provider's receipt of the compensation
contemplated herein, and Customer shall not be responsible in any manner,
except as required by the income tax laws of the United States, for withholding
or payment of taxes related to any amounts paid by Customer to Provider.
5. Confidentiality And Nondisclosure Agreement. Provider acknowledges
that, as a consultant to Customer, Provider has been and will be in a position
to receive or have access to confidential information (as hereafter defined)
regarding the business carried on by Customer. Confidential Information
includes, but is not limited to, all information regarding Customer's: (a)
customers and customer lists, including all names, addresses, phone numbers and
any other pertinent information; (b) sources of supply, price lists and costs;
(c) marketing strategies and procedures, advertising strategies and sales
methods; (d) corporate strategies, plans and goals; (e) information contained
in training manuals; (f) technical information; (g) prospective and executed
contracts, financial information and other business arrangements; (h) all other
proprietary knowledge or data acquired or obtained through Provider's
relationship with Customer. Provider
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hereby agrees that, except with the prior written consent of Customer, Provider
will not, during the course of his association with Customer or at any time
thereafter, directly or indirectly use, disclose or disseminate (in any manner)
to any other person (including any individual or entity) any Confidential
Information. In the event Provider's contract with Customer terminates or is
terminated for any reason, Provider agrees to return to Customer all
documentation pertaining or relating to any Confidential Information.
Provider also recognizes and agrees that in the event of Provider's
breach or violation of any provisions of this paragraph, Customer may suffer
irreparable injury that cannot adequately be compensated for monetary damages
and agrees that Customer shall have the immediate right to obtain a preliminary
or final injunction against Provider issued by a court of competent
jurisdiction enjoining any breach or violation of this paragraph.
6. Fair Competition Agreement. To induce Customer to retain Provider,
Provider agrees, commencing on the date of Provider's termination of services
to Customer for any reason except if this Agreement is terminated by Customer,
without good cause, and continuing for a period of one (1) year, Provider shall
not solicit, accept business, or in any way compete with Customer, whether on
his own account or as a shareholder, partner, joint venturer, employee,
consultant, advisor and/or agent of any person, firm, corporation or other
entity engaged in the business of providing pet products, supplies, services or
advice to third-parties on the internet or by mail order catalogues anywhere in
the world. Provider acknowledges, represents and warrants to Customer that the
covenant of Provider hereunder is reasonably necessary for the protection of
Customer's interest and is not unduly restrictive upon Provider.
Provider also recognizes and agrees that in the event of Provider's
breach or violation of any provisions of this paragraph, Customer may suffer
irreparable injury that cannot adequately be compensated for monetary damages
and agrees that Customer shall have the immediate right to obtain a preliminary
or final injunction against Provider issued by a court of competent
jurisdiction enjoining any breach or violation of this paragraph.
7. Consolidation. Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, following the date hereof, directly or
indirectly, (x) the Customer shall consolidate with, or merge
with and into, any other entity (other than a subsidiary of
the Customer), and the Customer shall not be the continuing
or surviving corporation of such consolidation or merger, (y)
any person (other than a subsidiary of the Customer) shall
consolidate with, or merge with or into, the Customer, and
the Customer shall be the continuing or surviving corporation
of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding
shares of common stock of the Customer shall be changed into
or exchanged for stock or other securities of any other
entity or cash or any other property, or (z) the Customer
shall sell or otherwise transfer (or one or more of its
subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets,
operating income, cash flow or earning power of the Customer
and its subsidiaries (taken as a whole) to any person(s) or
entity(ies)
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(other than the Customer or any subsidiary of the Customer),
then, and in each such case and except as contemplated by
subsection (d), Provider shall have been deemed terminated
without cause for purposes of Section 5(a)(ii), regardless of
whether Provider remains employed by Customer or its survivor
pursuant to this Agreement, and any termination of Provider
within twelve (12) months of such consolidation or merger
shall be deemed to be without cause and the remaining
provisions of Section 5(a) shall be applicable.
(b) The Customer shall not consummate any such consolidation,
merger, sale or transfer unless the surviving entity shall
have a sufficient number of authorized shares of its common
stock that have not been issued or reserved for issuance to
permit the exercise in full of the rights of Provider in
accordance with Section 5(a)(ii) and unless prior thereto the
Customer and such surviving entity shall have executed and
delivered to the Provider an agreement acknowledging the
Customer's or the surviving entity's obligation to, as soon
as practicable after the date of any Section 7 event, prepare
and file a registration statement under the Securities Act of
1933 (the "Act"), with respect to all shares of common stock
owned by Provider or to be acquired by Provider pursuant to
any option, and will use its best efforts to cause such
registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with
a prospectus at all times meeting the requirements of the
Act) until Provider has sold all of his shares of common
stock in the Customer or the surviving entity or Provider can
sell of his shares of common stock in the Customer or the
surviving entity without such current registration statement.
(c) The provisions of this Section 7 shall similarly apply to
successive mergers or consolidations or sales or other
transfers.
8. Benefit. This Agreement shall bind all parties, the respective
heirs, executors, administrators and assigns, but nothing contained herein
shall be construed as an authorization or right of any party to assign his
rights or obligations hereunder.
9. Resolution of Disputes. If any dispute shall arise under or related
to this Agreement or the transactions contemplated hereby, other than pursuant
to and under Section 6, such dispute shall be settled by arbitration in
accordance with the rules of the American Arbitration Association (the "AAA").
Such dispute shall be settled by arbitration in the City of Little Rock,
Arkansas by three (3) arbitrators, one of whom shall be appointed by Provider,
one by the Customer, and the third by the first two arbitrators. If either
party fails to appoint an arbitrator within ten (10) days of a request in
writing by the other party to do so or if the first two arbitrators cannot
agree on the appointment of a third arbitrator within ten (10) days, then such
arbitrator shall be appointed in accordance with the rules of the AAA. Except
as to the selection of arbitrators which shall be as set forth above, the
arbitration shall be conducted promptly and expeditiously in accordance with
the rules of the AAA so as to enable the arbitrators to render an award within
sixty (60) days of the commencement of the arbitration proceedings. The
decision of the arbitrators shall be binding upon the parties, and judgment
upon the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The decision of the
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arbitrators shall include within the arbitration award a recovery by the
prevailing party or parties of its or their expenses of arbitration, including
the fees and expenses of the arbitrators, other costs associated with the
arbitration proceeding and the reasonable attorneys' fees and expenses of the
prevailing party or parties incurred in connection with the arbitration.
10. Assignment. Neither Customer nor Provider may assign this
Agreement without the prior written consent of the other party.
11. Waiver Of Breach Or Violation Not Deemed Continuing. The waiver by
either party of a breach or violation of any provision of this Agreement shall
not operate as or be construed to be a waiver of any subsequent breach hereof.
12. Notices. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered or one day
after delivery to an overnight air courier guaranteeing next day delivery,
addressed as follows:
If to Provider: Xxxx Xxxxxxx
00 Xxxxxx Xxxxx
Xxxxxx Xxxx, Xxx Xxxx 00000
If to the Customer: Pet Quarters, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxxx, CEO
With copies to: Xxxxxx, Xxxxxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: C. Xxx Xxxxxxxx
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
13. Governing Law. This Agreement shall be construed, interpreted and
the rights of the parties determined in accordance with the internal laws of
the State of Arkansas without reference to the choice of law provisions of such
State's law, except with respect to matters of law concerning the internal
corporate affairs of any corporate entity which is a party to or the subject of
this Agreement, and as to those matters of the law the jurisdiction under which
the respective entity derives its powers shall govern, and to the extent
governed by federal law.
14. Survival. The covenants contained in or liabilities accrued under
this Agreement which, by their terms, require their performance after the
expiration or termination of this Agreement shall be enforceable
notwithstanding the expiration or other termination of this Agreement.
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15. Paragraph Headings. The paragraph headings contained in this
Agreement are for convenience only and shall in no manner be construed as part
of this Agreement.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17. Entire Agreement. This instrument contains the entire agreement of
the parties and may not be changed except by a writing signed by the party
against whom the enforcement of any waiver, change, modification or discharge
is sought.
18. Provider's Acknowledgment. Provider acknowledges (i) that he has
consulted with or has had the opportunity to consult with independent counsel
of his own choice concerning this Agreement and has been advised to do so by
the Customer, and (ii) that he has read and understands the Agreement, is fully
aware of its legal effect, and has entered into it freely based on his own
judgment.
IN WITNESS WHEREOF, Customer has hereunto caused this Agreement to be
executed by its duly authorized officers and Provider has hereunto set his
hand, all being done in duplicate originals with One (1) original being
delivered to each party on the day and year first above written.
CUSTOMER:
PET QUARTERS, INC.
000 Xxxx Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
XXX
By:
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Xxxxx Xxxxxxx, President
PROVIDER:
XXXX XXXXXXX
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Xxxx Xxxxxxx
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