Exhibit 99.2
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▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
c/o Treasure Mountain Holdings, Inc
1390 South ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
February 26, 2004
Re: Administrative Services Agreement (the "Agreement")
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Gentlemen:
This letter shall set forth our agreement with respect to services to be
provided by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ (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);
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 ▇▇▇▇▇▇ ▇▇▇▇▇▇'▇ office as the Company's
headquarters at 1390 South ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇ 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:
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"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."
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;
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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);
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
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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:
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Name:
Title:
APPROVED AND ACCEPTED THIS
DAY OF FEBRUARY 2004:
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APPROVED AND ACCEPTED THIS
DAY OF FEBRUARY 2004:
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SCIMITAR HOLDINGS, LLC
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc.,
its Member Manager
By:
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Name:
Title:
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