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EXHIBIT 10.3
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (the "Agreement") is entered into as of the
_____ day of October 2000 between ARIES EQUITY CORP., a New York corporation
(the "Consultant") and PET QUARTERS, INC., an Arkansas corporation (the
"Company").
WITNESSETH:
WHEREAS, the Company desires to engage the Consultant and the
Consultant desires to be engaged by the Company pursuant to the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained, the parties agree as follows:
1. Engagement. The Company hereby engages the Consultant to
advise the Company on a range of corporate financial and
associated matters which may be undertaken by the Company
(collectively, the "Services.") The Services shall be rendered
only upon the request of the Company and shall consist SOLELY
of the following:
a. Analyze and assess for the Company alternatives for
raising capital, including the use of private and
public offerings of the securities of the Company;
b. Establishing relationships with securities
broker-dealers and institutional investors for the
purposes of obtaining capital through transactions
not involving a public offering;
c. Providing the Company with recommendations, review of
documents and other advice relating to selection and
potential engagement of underwriters, market makers,
legal counsel and accountants;
d. Advise the Company with respect to shareholder
relations;
e. Identify opportunities for the Company involving a
business combination with an appropriate merger or
acquisition candidate;
f. General consulting advice for marketing,
reorganization and restructuring.
2. Performance.
a. The Consultant will use its best efforts to furnish
the Services to the Company on a timely basis.
b. It is understood and agreed that the Services do not
include the provision by Consultant of public
relations services, advertising services, accounting
or auditing services, legal services or services in
connection with acting as an underwriter, broker,
dealer investment banker, market maker as to the
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securities of the Company. In this connection, it is
further understood and agreed that the Services do
not require or contemplate that the Consultant will
raise any capital for or on behalf of the Company.
c. The Consultant shall render the services from any
location chosen by the Consultant.
d. The Consultant shall be required to devote only such
time as the Consultant deems reasonably necessary, in
the Consultant's sole discretion, to render the
Services. Notwithstanding the foregoing, the
Consultant shall not be required to devote more than
35 hours in any consecutive thirty-day period in
rendering the Services.
3. Information.
a. In order for the Consultant to furnish the Services,
the Company will, as requested by the Consultant,
furnish the Consultant with all information
concerning the Company which Consultant reasonably
deems appropriate in such form as the Consultant may
require, will provide Consultant with access to the
officers, directors, accountants, counsel and other
advisors of the Company and will cause the
accountants for the Company to timely prepare and
furnish to the Consultant such financial statements
of the Company as may be reasonably requested by the
Consultant (collectively the "Due Diligence
Information").
b. The Company hereby represents and warrants to the
Consultant that all Due Diligence Information will be
true and accurate in all material respects and will
not contain any untrue statement or material fact and
will not omit to state a material fact necessary in
order to make all or any part of the Due Diligence
Information not misleading in light of the
circumstances under which such Due Diligence
Information is provided.
c. The Company acknowledges and agrees that the
Consultant will be using and relying upon the Due
Diligence Information supplied by the Company and its
officers, directors, agents or other designated
parties as well as any information concerning the
Company which is publicly available without any
independent investigation or verification thereof and
without any independent appraisal thereof by the
Consultant.
d. The Consultant recognizes and accepts that some Due
Diligence Information may not have been publicly
disseminated and the wrongful use or distribution of
such information may be a violation of the antifraud
provisions of the federal securities laws.
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4. Service Term. Except as otherwise provided herein, the
Consultant shall be obligated to render the Services for a
period of one year from the date hereof (the "Service Term").
5. Suspension of Services and Termination. The Consultant shall
not be required to render any of the Services during the
Service Term during any time that the Company has breached any
of its obligations under this Agreement. Any such breach shall
not relieve the Company of any of its obligations under this
Agreement, including, but not limited to, its obligation to
pay the Compensation to the Consultant.
6. Compensation.
a. In consideration of the Services that the Consultant
is obligated to provide to the Company pursuant
hereto, the Company shall pay the following
non-refundable compensation (collectively, the
"Compensation") to the Consultant:
(1) Warrants to purchase up to 50,000 shares of
the Company's common stock at a price of
$.65 per share, subject to adjustment as set
forth in the Warrants, upon the execution of
this Consulting Agreement;
(2) Warrants to purchase up to 20,000 shares of
the Company's common stock at a price of
$.65 per share, subject to adjustment as set
forth in the Warrants, at such time, as any,
as the lowest offer for a share of the
Company's common stock in any public market
therefor is at least $1.00 for three
consecutive trading days within one year
from the date of this Consulting Agreement;
(3) Warrants to purchase up to 20,000 shares of
the Company's common stock at a price of
$.65 per share, subject to adjustment as set
forth in the Warrants, at such time, as any,
as the lowest offer for a share of the
Company's common stock in any public market
therefor is at least $1.25 for three
consecutive trading days within one year
from the date of this Consulting Agreement;
(4) Warrants to purchase up to 20,000 shares of
the Company's common stock at a price of
$.65 per share, subject to adjustment as set
forth in the Warrants, at such time, as any,
as the lowest offer for a share of the
Company's common stock in any public market
therefor is at least $1.50 for three
consecutive trading days within one year
from the date of this Consulting Agreement;
(5) Warrants to purchase up to 7,500 shares of
the Company's common stock at a price of
$.65 per share, subject to adjustment as set
forth in the Warrants, as such time, as any,
as each $100,000 of capital is
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obtained by the Company in one or more
transactions which are intended to not
involve a public offering as a result,
directly or indirectly, of an introduction
by the Consultant within two years from the
date of this Consulting Agreement; and
(6) cash payments of 5% of each $100,000 of
capital obtained by the Company as described
in subparagraph 6.a.(5) above within two
business days after such capital is received
by the Company.
b. For purposes of this Paragraph 6, capital shall
include, but not be limited to, proceeds received or
receivable by the Company or any subsidiary thereof
in connection with the issuance of any debt or equity
security or other instrument.
c. All Warrants to be issued pursuant to this Paragraph
6 (the "Warrants") shall be exercisable during the
period of five years subsequent to the date of its
issuance and shall be in the form set forth in
Exhibit A hereto.
d. For purposes of this Paragraph 6, the lowest offer
for a share of the Company's common stock in any
public market shall be adjusted in the same manner as
is the exercise price of the Warrants as set forth in
Exhibit A.
6. Expenses. The Company shall promptly reimburse the Consultant
for all expenses pre-approved in writing and incurred by the
Consultant in connection with the Services upon presentation
of corresponding receipts or other documentation to support
such expenses, provided, however, that the Company will allow
Consultant to submit and shall reimburse a maximum monthly
aggregate sum of $250 for incidental expenses incurred without
prior written consent of the Company as long as such expenses
are reasonable and incurred by the Consultant in connection
with the Services provided to the Company and no other entity
or client of Consultant.
7. Public Disclosure. Any reference to the Consultant or any
advice, information or other matter pertaining to the Services
shall not be publicly disclosed or made available to any third
parties without the prior written consent of the Consultant,
unless such disclosure is required by law.
8. Indemnification.
a. The Company hereby agrees to indemnify, defend and
hold harmless the Consultant, its affiliates,
directors, officers, partners, agents and employees
and each other person, if any, controlling the
Consultant or any of its affiliates (collectively,
the "Consultant Indemnified Parties"), to the full
extent lawful, from and against any and all demands,
claims, actions or causes of action, assessments,
losses, damages, liabilities, costs and expenses,
including, without limitation, interest, penalties
and attorneys' fees and expenses asserted against,
imposed upon or incurred by the Consultant
Indemnified Parties
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resulting from or by reason of a breach of any
representation, warranty or covenant contained herein
or as a result of any action improperly taken or
omitted to be taken as required hereby by the
Company, its agents or employees.
b. The Consultant hereby agrees to indemnify, defend and
hold harmless the Company, its affiliates, directors,
officers, partners, agents and employees and each
other person, if any, controlling the Company or any
of its affiliates (collectively, the "Company
Indemnified Parties"), to the full extent lawful,
from and against any and all demands, claims, actions
or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including, without
limitation, interest, penalties and attorneys' fees
and expenses asserted against, imposed upon or
incurred by the Company Indemnified Parties resulting
from or by reason of a breach of any representation,
warranty or covenant contained herein or as a result
of any action improperly taken or omitted to be taken
as required hereby by the Consultant, its agents,
assigns or employees. The aggregate liability of the
Consultant with respect to such indemnification shall
be limited to the total Compensation of the
Consultant under this Agreement which has then been
paid to the Consultant, its agents, assigns or
employees whether in the form of cash, Warrant, or
the profits derived by the Consultant through the
sale of such Warrants and whether such Compensation
is actually received by warrant or assigned to a
third party by Consultant in accordance with
paragraph 16 hereof.
c. No party shall be liable to indemnify any other party
to the extent that demands, claims, actions or causes
of action, assessments, losses, damages, liabilities,
costs or expenses against the liable party resulted
from bad faith, misrepresentation, omission,
negligence or disregard of duty, or breach of any
applicable foreign, federal or state laws concerning
the sales, marketing, trading, promotion or
registration of securities by such party, its agents,
assigns or employees.
d. The rights of indemnification as set forth in this
Paragraph 8 shall be in addition to any rights that
the Consultant Indemnified Parties or Company
Indemnified Parties or any other person entitled to
indemnification may have in law or otherwise,
including but not limited to, any right to
contribution, provided, however, in no event shall
the Consultant be liable or responsible for any
amount in excess of the Compensation actually paid to
the Consultant, its agents, assigns or employees
whether in the form of cash, Warrant, or the profits
derived by the Consultant through the sale of such
Warrants and whether such Compensation is actually
received by warrant or assigned to a third party by
Consultant in accordance with paragraph 16 hereof.
e. Any party seeking indemnification ("Indemnitee")
shall notify the other party ("Indemnitor") of any
claim against Indemnitee within 15 days after it has
notice of such claim, but failure to notify
Indemnitor shall in no case prejudice
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the rights of Indemnitee under this Agreement unless
Indemnitor shall be prejudiced by such failure and
then only to the extent of such prejudice. Should
Indemnitor fail to discharge or undertake to defend
Indemnitee against such liability (with counsel
reasonably approved by Indemnitee), within 10 days
after Indemnitee gives Indemnitor written notice of
the same, then Indemnitee may settle such claim, and
Indemnitor's liability to Indemnitee shall be
conclusively established by such settlement, the
amount of such liability to include both the
settlement consideration and the reasonable costs and
expenses, including attorney's fees, incurred by
Indemnitee in effecting such settlement. Indemnitee
shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel
shall be at the expense of Indemnitee unless: (a) the
employment of such counsel and the fees payable
thereto shall have been authorized in writing by
Indemnitor in connection with the defense of such
action, (b) Indemnitor shall not have employed
counsel to direct the defense of such action, or (c)
Indemnitee shall have reasonably concluded that there
may be defenses available to it which are different
from or additional to those available to Indemnitor
which results in a conflict of interest (in which
case Indemnitor shall not have the right to direct
the defense of such action or of Indemnitee), in any
of which events such fees and expenses shall be borne
by Indemnitor.
10. Status of Consultant. The Consultant shall be deemed to be an
independent contractor. The Consultant shall have no authority
to, and shall not, bind the Company to any agreement or
obligation with a third party. Nothing in this Agreement shall
be construed to constitute the parties hereto as partners or
joint venturers with each other.
11. Other Activities of Consultant Indemnified Parties. The
Company recognizes and accepts the fact that the Consultant
Indemnified Parties now render, and in all probability will
continue to render, services which are substantially similar
to the Services to other parties, some of which may conduct
business and have activities similar to those of the Company.
The Company specifically authorizes the Consultant Indemnified
Parties to continue with such activities.
12. Other Agreements and Understandings. If the Company, following
the issuance of any Warrants to Consultant pursuant to this
Agreement, at any time registers its shares of common stock
for sale or resale under the Securities Act of 1933 or the
Arkansas Securities Act (collectively or individually the
"Securities Act(s)") in connection with an underwritten public
offering, the Company shall cause the Company's shares
underlying the issued Warrants to be registered under the
applicable Securities Act as part of such registration of the
underwritten public offering. The cost of all such
registrations shall be borne by the Company except for fees
and disbursements of special counsel or consultants retained
by the Consultant and underwriters or brokers discounts
applicable to the securities. If the managing underwriter
shall advise the Company and the Consultant in writing that
the inclusion in any registration pursuant hereto of some or
all of the shares sought to be registered
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creates a substantial risk that the proceeds or price per
unit, which the sellers of securities covered by such
registration will derive from the sale of such securities
pursuant to such registration, will be reduced or that the
number of securities to be registered (including those sought
to be registered by the Company and those sought to be
registered by the Consultant is too large a number to be
reasonably sold, then the number of shares sought to be
registered by the Consultant shall be reduced to the extent
necessary to reduce the number of securities to be registered
to the number recommended by the managing underwriter. In no
instance shall the Company be required to reduce the number of
shares of common stock it seeks to register to enable shares
underlying the Warrants.
13. Miscellaneous.
a. Benefit. This Agreement shall inure to the benefit of
the parties thereto and their respective successors
and assigns.
b. Entire Agreement. This Agreement contains the entire
understanding of the parties hereto in respect of the
subject matter contained herein. There are no
representations, warranties, promises, covenants or
undertakings other than those expressly set forth
herein. This Agreement supersedes all prior
agreements, whether written or oral, between the
parties with respect to the subject matter hereof.
This Agreement may be amended only by a written
agreement duly executed by the parties hereto. Any
condition to a particular party's obligations
hereunder may be waived in writing by such party.
c. Headings. The headings contained in this Agreement
have been inserted for convenience and reference
purposes only and shall not affect the meaning or
interpretation hereof in any manner whatsoever.
d. Separability. If any of the terms, provisions or
conditions contained in this Agreement shall be
declared to be invalid or void in any judicial
proceeding, this Agreement shall be honored and
enforced to the extent of its validity, and those
provisions not declared invalid shall remain in full
force and effect.
e. Notices. All notices, requests, demands and other
communications required or permitted to be given
hereunder shall be deemed given when received by the
parties at the addresses below or to such other
address, or the attention of such other party, as the
parties shall advise the other by notice given in
conformity herewith.
If to the Company: Pet Quarters, Inc.
000 X. Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxxx
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If to the Consultant: Aries Equity Corp.
0000 Xxxx Xxxx
Xxxxxxxxx, XX 00000
Attn.: D. Xxxxxx Xxxx, CEO
or to such other address, or the attention of such
other party, as the parties shall advise the other by
notice given in conformity herewith.
14. Governing Law. This Agreement shall be governed by, construed
and enforced in accordance with the laws of the State of New
York without giving effect to conflicts of law.
15. Counterparts. This Agreement may be executed in counterparts
each of which shall be deemed an original and all of which
together shall constitute one and the same agreement.
16. Assignments. This Agreement may not be assigned by either
party except that the Consultant may assign its right to
Compensation under this Agreement, but not its
responsibilities, obligations, duties and liabilities, to D.
Xxxxxx Xxxx or any other entity then controlled by D. Xxxxxx
Xxxx, and upon such assignment, the assignee shall assume the
same responsibilities, obligations, duties and liabilities as
Consultant has under this Agreement.
17. Facsimile Signatures. Facsimile signatures on counterparts of
this Agreement are hereby authorized and shall be acknowledged
as if such facsimile signatures were an original execution,
and this agreement shall be deemed as executed when an
executed facsimile hereof is transmitted by a party to any
other party.
18. Arbitration. Any dispute controversy, difference or claim
arising between the parties out of, relating to or in
connection with this Agreement, shall be settled by
arbitration in accordance with the applicable rules of the
American Arbitration Association then in effect. Any
arbitration hearing shall be held in Nassau County, New York.
This agreement to arbitrate shall be specifically enforceable.
The award of the arbitrator(s) shall be final and binding, on
the parties and judgment upon any such award shall be
enforceable by the prevailing party before the courts of
competent jurisdiction of the non-prevailing party's domicile.
This provision shall survive the termination of this
Agreement. In the event one of the parties gives the other
parties notice of arbitration, the parties shall agree upon
the arbitrator within thirty days from the date of such
notice, and if they fail to do so, the arbitrator shall be
selected by the American Arbitration Association. The
reasonable compensation and expenses of the arbitration shall
be shared equally by the parties. In each instance, the
decision of the arbitrator shall be final and binding.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
ARIES EQUITY CORP. PET QUARTERS, INC.
By: By:
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D. Xxxxxx Xxxx, President Xxxxx Xxxxxxx, CEO
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