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EXHIBIT 6.3
NAPRO, INC.
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1300 EAST ST., FAIRPORT HARBOR, OHIO 44077, USA PHONE: (216) 354-6500
FAX: (216) 354-9129
February 14, 1998
To: Anthony O'Rourke
From: Dean and Steve Tsengas, OurPet's Company
During the last year plus, we have sincerely enjoyed working with you and
appreciate the contributions you have made.
To more effectively utilize your talents and to fairly compensate you for your
contributions, we would like to put forth the following suggestions:
1. Reg: PetsMart:
a. Per our previous agreement, you receive 4% commission on net sales to
PetsMart through August 31, 2001. It is our mutual desire to as quickly as
possible, build Petsmart to an annual sales level exceeding $2 million and/or
20-25% of our total sales.
b. We perceive your role as related to PetsMart as follows:
1. Help Ourpet's develop and maintain high level, mutually
beneficial relationships with PetsMart key people though personal visits, phone
calls, etc.
2. Help OurPet's increase level of profitable sales with PetsMart
through:
i. Identifying new product/service ideas for OurPet's to
sell PetsMart.
ii. Identifying specific means by which as many of
OurPet's products are included in PetsMart stores and also specified programs by
which such sales can be increased.
iii. Identifying and helping implement long range strategic
programs as related to PetsMart; eg. sales promotional programs, development of
unique products for PetsMart, etc.
2. Re: Board Participation:
Normal compensation package, as other Board Members, for meeting attendance
and advice - to be determined.
3. Re: General Consulting (1998) - ASSIST OURPET'S TO ACHIEVE A SALES GROWTH
RATE OF OVER 200% through:
a. As requested, develop specific marketing plans as related to:
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i. Independent Sales Representatives - review existing OurPet's
list, identify strengths and weaknesses, and make recommendations to correct
weaknesses, as appropriate assist in recruiting, provide recommendations for
improving the overall effectiveness of sales representatives, etc.
ii. Pet Distributors - including identifying key players, wherever
possible assist in bringing them aboard and develop specific programs for
enhancing high level of profitable sales.
iii. Pet - Major and Regional Chains - including identifying key
players, wherever possible assist in bringing them aboard and develop specific
programs for enhancing high level of profitable sales.
iv. Mass Retailers, TV Direct, Catalogs, Hardware Chains, Grocery
Chains, Drug Store Chains, etc. - including identifying key players, wherever
possible assist in bringing them aboard and develop specific programs for
enhancing high level of profitable sales.
b. As requested, review and comment on specific submittals as prepared by
OurPet's - eg. new product ideas, marketing programs, packaging or product
design, advertising and promotional program layout and content, etc.
For 1998, we feel that an average of 12-18 hours per month should be sufficient
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to accomplish the above objectives. It is critical that we make use of your
talents more effectively and efficiently. Since OurPet's does not have the cash
to pay for such services and since we desire to have you participate in the
anticipated significant Company growth and ownership appreciation, we propose to
compensate you with OurPet's restricted stock as follows:
One (1) share of stock per month of consulting service - total of twelve
(12) shares for 1998. It is anticipated that these shares will soon be
split 5000-5500 : 1 and offered to the public at $.75/share. Your ownership
by the end of 1998 would amount to 60-66,000 new shares ($45,000 to
$49,500).
Assuming OurPet's net revenues of $6.78 million and net income of $1.22 million
in 1998 and 10 million new shares outstanding, earnings per share would amount
to $.12/share. Brokers have advised us that at these E.P.S. levels and at a 30
times E.P.S. multiplier, the stock would be worth $3.60 per share. The value of
your stock would be worth $216,000 - $237,600. Of course, there is no guarantee
of such performance - many internal and external factors can affect such
performance both positively and negatively.
The compensation package related to the consulting will have to be submitted to
the Board for approval.
Sincerely,
Dean and Steve Tsengas
f:AnOr0214
