EXHIBIT 10.2 FEE AGREEMENT WITH XXXXXXX X. XXXX
WEED & CO. L.P.
0000 XXXXXXXXX XXXXX, XXXXX 0000, XXXXXXX XXXXX, XXXXXXXXXX 00000-0000
TELEPHONE (000) 000-0000 FACSIMILE (000) 000-0000
July 30, 2001
Xx. Xxx Xxxxxx
President and CEO
Force 10 Trading, Inc.
Telephone 000.000.0000
Cellular 000.000.0000
RE: Special Projects
Dear Xx. Xxxxxx:
The purpose of this letter is to set forth the terms and conditions that will
govern our professional relationship.
This agreement for professional services is between Force 10 Trading, Inc., a
Delaware corporation, and all its subsidiaries, ("Client") and Weed & Co. L.P.
("Weed") whose address is 0000 XxxXxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000.
Weed agrees to provide professional services to Client with respect to certain
capital formation, business strategy and legal affairs referred to Weed by
Client from time to time. This agreement is made to document the conditions and
guidelines that will govern the relationship between the parties. The initial
special project involves the following matter:
ADVISE AND ASSIST THE CLIENT REGARDING A MERGER WITH A PUBLICLY TRADING SHELL
COMPANY, THE PREPARATION AND FILING OF A REGISTRATION STATEMENT ON THE PROPER
FORM, AND EFFORTS TO INSURE A LISTING OF THE COMBINED BUSINESS ON THE OTC
BULLETIN BOARD.
To protect both of the parties and to comply with professional obligations, we
have already discussed with each other and resolved any potential conflicts of
interest with present or former clients. The services that Weed will provide
shall be in accordance with the following terms and conditions.
PROFESSIONAL FEES
Fees will be based upon the reasonable value of Weed's services as determined in
accordance with the American Bar Association Model Code of Professional
Responsibility and the California & Texas Rules of Professional Conduct. Fees
will be based on the rates charged by Weed.
Weed's rate is $300 per hour. It is anticipated that Client and Weed will agree
on a fixed fee for special projects from time to time. The fixed fee
arrangements for special projects will be agreed to in writing.
Client further understands that during the course of Weed's engagement, it may
be necessary or advisable to delegate various portions of this matter to others.
COSTS AND EXPENSES
Client understands that in the course of representation, it may be necessary for
Weed to incur certain costs or expenses. Client will reimburse Weed for certain
costs or expenses actually incurred and reasonably necessary for completing the
assigned matter, as long as the charges for costs and expenses are competitive
with other sources of the same products or services and approved by Client in
advance. More particularly, Client will reimburse Weed in accordance with the
following guidelines:
1. COMPUTER-RELATED EXPENSES - Client will reimburse Weed for computerized
research and research services. However, any charges over $500 per month will
require approval. Client also encourages Weed to utilize computer services that
will enable Weed to more efficiently manage the projects.
2. TRAVEL - Client will reimburse Weed for expenses in connection with out of
town travel. However, Client will only reimburse for economy class travel and,
where necessary, for the reasonable cost of a rental car. All related travel
expenses, i.e., lodging and meals, must be reasonable under the circumstances.
3. FILING FEES & COURT COSTS - Client will reimburse Weed for expenses incurred
in connection with filing fees and court costs, if any, but will not be
responsible for sanctions or penalties imposed due to the conduct of Weed.
BILLING
All bills will include a summary statement of the kinds of services rendered
during the relevant period. Client expects that Weed will maintain back-up
documentation for all expenses. Client expects to be billed monthly or at the
conclusion of each project and expects to pay Weed's invoices as described
below.
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PAYMENT
To initiate the relationship Client agrees to deliver a cash retainer fee of
$4,000. Client shall pay Weed's out of pocket costs promptly. As payment for
professional services, Client agrees to pay in cash or as follows.
As payment for services, Client has proposed and Xxxxxxx X. Xxxx ("Attorney")
has agreed, that immediately following the merger with the public company,
Client place a block of shares of free trading stock in Attorney's name with a
market value of $30,000. (Attorney and Client agree that it may be several
months before Client can perform by issuing shares of free trading stock in
Client to Attorney.) At least once a month, Attorney will send Client a
statement for fees and costs, with written notice to the brokerage firm of the
dollar amount of such statement. Unless objection is made to the bill,
sufficient Company stock, net of commission, shall then be liquidated forthwith
at the prevailing market rate to satisfy such statement. Attorney has not been
engaged to perform, nor will Attorney agree to perform any services in
connection with a capital raising transaction in exchange for shares registered
on Form S-8. The rules and regulations of the United States Securities and
Exchange Commission do not allow the use of a Form S-8 registration statement
under such circumstances. Any fees for services that are in connection with a
capital raising transaction shall be paid in cash or registered on another form
of registration statement.
In the course of Attorney's representation of the Company, if all the stock is
liquidated, a new block of stock sufficient to cover projected fees and costs,
in an amount contemporaneously agreed to by the parties, will again be placed
with the brokerage firm, under the terms and conditions outlined above. At the
conclusion of Attorney's representation of Client and the payment of all final
fees and costs, any unused stock shall forthwith be returned to Client.
Client has agreed to promptly register such blocks of stock pursuant to Form S-8
or other applicable registration statement at its own expense and deliver such
stock to the Attorney or brokerage firm upon the filing and effectiveness of the
registration statement.
STOCK OPTION
As an incentive for Weed to represent the Client and to increase Weed's
proprietary interest in the success of the Client, thereby encouraging it to
maintain its relationship with the Client, the Client hereby grants to Weed
options to purchase shares of the Client's common stock. As an initial option,
the Client hereby grants Weed the right to purchase either (1) 250,000 shares or
(2) 2% of Client's outstanding common stock calculated immediately following the
merger with the public shell company, whichever is greater, at a price equal to
125% of the lowest bid price for the public company's common stock during the 10
trading days prior to the initial closing date of the merger agreement as shown
by reports from IDD Information Services, Bloomberg, L.P. or other reliable data
source. Further, every six months following the date hereof that this agreement
remains in effect, the Company shall grant to Weed an option to purchase an
additional 50,000 shares of Client's common stock at a price equal to 125% of
the average closing bid price for the 10 days immediately prior to the date of
the grant. All stock options will expire unless exercised on or before December
31, 2005 or 3 years from the date of the grant, whichever is later. The options
granted will not be subject to dilution (i.e. no adjustment to the number of
shares or the exercise price) based upon any reverse split of the Client's
common stock. Client has agreed to promptly register the shares of common stock
underlying the stock options at its own expense.
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Client shall cause any subsidiary or parent corporation to adopt and be bound by
this Agreement and all its provisions.
INVOLVEMENT OF CLIENT
Client expects to be kept closely involved with the progress of Xxxx's services
in this matter. Weed will keep Client apprised of all material developments in
this matter, and will provide sufficient notice to enable a representative to
attend meetings, conferences, and other proceedings.
There may be times when Weed will need to obtain information from Client. All
requests for access to documents, employees, or other information shall be
granted without unreasonable delay.
TERMINATION
Client shall have the right to terminate Weed's engagement by written notice at
any time. Weed has the same right to terminate this engagement, subject to an
obligation to give Client reasonable notice to permit it to obtain alternative
representation or services and subject to applicable ethical provisions. Weed
will be expected to provide reasonable assistance in effecting a transfer of
responsibilities to the new service provider.
DISPUTES
The laws of the State of California shall govern the interpretation of this
agreement, including all rules or codes of ethics that apply to the provision of
services. All disputes between us arising out of this engagement which cannot be
settled, shall be resolved through binding arbitration in Orange County,
California in accordance with the rules for resolution of commercial disputes,
then in effect, of the American Arbitration Association, and judgment upon the
award may be entered in any Court having jurisdiction thereof. It is further
agreed that the arbitrators may, in their sole discretion, award attorneys' fees
to the prevailing party.
If the foregoing accurately reflects your agreement with Xxxxxxx X. Xxxx
regarding professional services, please sign and return a duplicate copy of this
letter. Thank you in advance for your prompt attention to this matter. We will
also need a copy of the articles of incorporation with any amendments, bylaws,
and corporate minutes during the last 12 months.
Very truly yours,
/s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
Managing Director/Special Projects
Approved and Agreed:
Force 10 Trading, Inc.
By: /s/ Xxx X. Xxxxxx
---------------------
Name: Xxx X. Xxxxxx
Title: CEO
Date: 7/30/01
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