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EXHIBIT 10.4
FIRST AMENDMENT TO SERVICES AGREEMENT
BETWEEN B-III CAPITAL, LLC AND PET QUARTERS, INC.
AND STOCK OPTION AGREEMENT
BETWEEN ROBERT M. BROWN, III AND PET QUARTERS, INC.
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THIS FIRST AMENDMENT ("Amendment") to the Services Agreement between B-III
Capital, LLC ("B-III") and Pet Quarters, Inc. ("Pet Quarters") dated as of
October 25, 1999 ("Services Agreement") and Stock Option Agreement between
Robert M. Brown, III ("Brown") and Pet Quarters dated as of November 8, 1999
("Stock Option Agreement"), is entered into to be effective as of the last date
written below.
RECITALS
WHEREAS, B-III and Pet Quarters entered into the Agreement and anticipated
paying B-III "success fees" equal to three percent (3%) of cash paid for any
shares of common stock of Pet Quarters acquired by an investor procured for Pet
Quarters by B-III; and
WHEREAS, B-III and Pet Quarters anticipate closing several private and public
placements with or through Ladenburg Thalmann & Co., Inc. ("Ladenburg") or Keane
Securities, Inc. ("Keane"), investors procured for Pet Quarters by B-III; and
WHEREAS, B-III and Pet Quarters agree that B-III's success fee for private or
public placements with or through Ladenburg or Keane should be one percent (1%)
instead of three percent (3%); and
WHEREAS, Brown and Pet Quarters agree that in certain events the vesting
schedule for a portion of Brown's options to purchase common stock of Pet
Quarters under the Stock Option Agreement should be accelerated; and
NOW, THEREFORE, in consideration of the respective promises contained in the
Agreement, B-III, Brown and Pet Quarters agree as follows:
1. Paragraph 2 - "Success Fees" of the Services Agreement is amended to
read,
In connection with the private placement of any Pet Quarters shares
negotiated by B-III to an investor procured for Pet Quarters by B-III,
other than Ladenburg Thalmann & Co, Inc. ("Ladenburg") or Keane
Securities, Inc. ("Keane"), Pet Quarters agrees to pay B-III a success
fee in cash in an amount of three percent (3%) of the net cash
consideration received by Pet Quarters for such shares, less any
retainer fees paid to B-III and not previously so credited, payable on
B-III's instructions at closing of the private placement. In connection
with the private placements of any Pet Quarters shares negotiated by
B-III to Ladenburg or Keane, Pet Quarters agrees to pay B-III a success
fee in cash in the amount of one percent
2
(1%) of the net cash consideration actually received by Pet Quarters,
less any retainer fees to B-III paid and not previously so credited,
payable within twenty (20) days after the closing of any transaction
with or through Ladenburg or Keane. The success fees referenced above,
whether referring to a 3% or a 1% fee, also applies to the net proceeds
received by Pet Quarters from any debt placed by B-III on Pet Quarters'
behalf, less any retainer fees paid to B-III and not previously
credited.
2. Paragraph 3 of the Stock Option Agreement is amended to read,
Acceleration of Vesting. Upon the occurrence of a "change in control"
of the Company, or (ii) a successful public offering of registered
shares of the Company, or (iii) the termination of the Services
Agreement by the Company without cause, the Option granted hereby shall
thereupon be fully vested and may thereafter be exercised for 100% of
the shares covered thereby, notwithstanding the vesting and exercise
schedule set forth in Section 2 above. A "change in control" of the
Company shall mean the transfer, whether in a single transaction or a
series of transactions, occurring within a two (2) month period, of
more than 50% of the voting equity securities or voting control of the
Company to any person or group of persons acting in concert, if such
person (or all persons in such group) were not, as of the date of this
Agreement, owners of at least one share of the Company's common stock;
provided, however, that a transfer of the Company's common stock by
gift, bequest or inheritance shall not be deemed a transfer for
purposes of determining if a change in control has occurred, and
provided further that any person who has received shares of the
Company's common stock by gift, bequest or inheritance, directly or
indirectly from a person who owned at least one share of the Company's
common stock as of the date of this Agreement, shall be deemed a person
who owned at least one share of the Company's common stock as of the
date of this Agreement. Upon the closing of a private placement of
shares of Pet Quarters negotiated by B-III to an investor procured for
Pet Quarters by B-III, as outlined in and contemplated by paragraph 2 -
Success Fees of that certain Services Agreement dated as of October 25,
1999, by and between B-III and Pet Quarters, as amended, one-half (1/2)
of the unvested shares under this Agreement shall vest and become
immediately exercisable by Brown. The shares designated for accelerated
vesting under this provision shall be selected in inverse order of
scheduled vesting as set forth in paragraph 2 hereof, commencing with
those shares scheduled to vest on November 8, 2001.
3. The remaining terms of the Services Agreement and the Stock Option
Agreement shall remain unchanged unless such terms would be in conflict with the
amendments set forth herein, and then the Services Agreement and Stock Option
Agreement should be read to incorporated the changes contemplated hereby and in
accordance herewith.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date noted by their signatures.
B-III CAPITAL, LLC:
Date: March , 2000 By:
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Robert M. Brown, III, President
ROBERT M. BROWN, III:
Date: March , 2000 By:
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Robert M. Brown, III
PET QUARTERS, INC.
Date: March , 2000 By:
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Steven B. Dempsey, President