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Exhibit 10.3    
    


 
 

CORPORATE SERVICES AGREEMENT    
    


        THIS
CORPORATE SERVICES AGREEMENT (this "Agreement") is made as of October 1, 2004 (the "Effective Date") by and between SPY OPTIC, INC., a California corporation (the
"Company"), and NO FEAR, INC., a California corporation ("No Fear"). 


 
 

RECITALS    
    


        WHEREAS, the Company desires to engage No Fear to provide certain management services to the Company from time to time on the terms and subject to the conditions
provided for herein; and 


        WHEREAS,
No Fear is willing to provide to the Company such services on the terms and subject to the conditions provided for herein. 


        NOW,
THEREFORE, in consideration of the mutual promises and undertakings herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, intending to be legally bound hereby, the parties hereto agree as follows: 


 
 

ARTICLE 1
  SERVICES    
    


        At the request of the Company, from time to time, No Fear shall perform such services set forth in  Schedule I of this Agreement as
are requested in writing by the Company and accepted by No Fear (the
"Services"). No Fear agrees to use commercially reasonable efforts to provide the Services in a good, workmanlike and professional manner as if such
entity was performing similar services on its own behalf. Notwithstanding any provision herein to the contrary, the parties agree that there shall be no minimum purchase obligation with respect to any
of the Services under this Agreement. Notwithstanding any provision herein to the contrary, the parties may from time to time amend Schedule I to
add additional Services or modify the fees with respect to Services. Any such modification or amendment shall be in writing and shall be attached to this Agreement. 


        Notwithstanding
any other provision herein to the contrary, the parties agree that in no event shall No Fear be entitled to any payment with respect to the activities related to managing
the investment or holdings of No Fear in the Company (including, without limitation, any activities in connection with filing of any tax returns with respect to No Fear) and such activities shall not
constitute "Services" under this Agreement; provided, however, that this paragraph shall not preclude No
Fear and/or any representative of No Fear from receiving standard and customary director fees or reimbursement of director expenses in connection with a representative of No Fear serving on the Board
of Directors of the Company. 


 
 

ARTICLE 2
  PAYMENTS    
    



        2.1    Service Fees.    No Fear shall invoice the Company for the Services at the respective No Fear Costs with
respect to the Services performed (the "Service Fees"). For purposes of this Agreement, the "No Fear
Costs," with respect to any Service, means the product of 1.05 multiplied by the aggregate of all related costs which No Fear incurs, directly or indirectly, in the provision
of such Service. Each such invoice shall be accompanied by such supporting documentation as the Company reasonably may request. The Company agrees to pay all undisputed invoices with respect to
Services performed in accordance with the terms of this Agreement within thirty (30) days of receipt. 


        2.2    Expenses.    In addition to its obligations to pay Service Fees, the Company shall reimburse No Fear for all
reasonable expenses incurred by such party in connection with the provision of the Services; provided,  however, that all requests for reimbursement of such
expenses shall include supporting documentation reasonably satisfactory to the Company. 







 


 
 

ARTICLE 3
  REPRESENTATIONS AND WARRANTIES    
    


        3.1    Representations and Warranties by the Company.    The Company represents and warrants that: 



        (a)   The
Company is a corporation duly organized and validly existing under the laws of the state of California. The Company has all necessary corporate power and authority
to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement, and the performance of the Company's obligations hereunder, have been duly
authorized by all necessary action on the part of the Company and this Agreement constitutes the legal, valid and binding obligation of the Company, enforceable against it in accordance with its
terms. 


        (b)   Neither
the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will conflict with, or result in a breach or default
of any of the terms, conditions or provisions of the Certificate of Incorporation or Bylaws (or other similar governing documents) of the Company or any law or any regulation, order, writ, injunction,
license, franchise or decree of any court or governmental instrumentality or agency or of any agreement or instrument to which the Company is a party or by which it is bound. 




        3.2    Representations and Warranties by No Fear.    No Fear represents and warrants that: 



        (a)   No
Fear is a corporation duly organized and validly existing under the laws of the state of California. No Fear has all necessary corporate power and authority to
execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement, and the performance of the No Fear's obligations hereunder, have been duly authorized by all necessary
corporate action on the part of No Fear and this Agreement constitutes the legal, valid and binding obligation of No Fear, enforceable against it in accordance with its terms. 


        (b)   Neither
the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will conflict with, or result in a breach or default
of any of the terms, conditions or provisions of the Articles of Incorporation (or other similar governing documents) of No Fear or any law or any regulation, order, writ, injunction, license,
franchise or decree of any court or governmental instrumentality or agency or of any agreement or instrument to which No Fear is a party or by which it is bound. 



 
 

ARTICLE 4
  INDEMNIFICATION    
    


        4.1    Indemnification by the Company.    Subject to  Section 4.6 below, the Company shall indemnify and save and hold No Fear
and its respective officers and directors, employees, consultants and
agents (individually, a "No Fear Indemnified Party" and collectively the "No Fear Indemnified Parties")
harmless from and against any and all damages, liabilities, losses, costs and expenses (including, without limitation, reasonable attorney's fees, court costs and other
out-of-pocket expenses incurred in investigating, preparing or defending the foregoing) (collectively, "Losses") resulting from,
arising out of, or in connection with, this Agreement or the acceptance or performance of any duties or rendering of any Services performed by any No Fear Indemnified Party under this Agreement;  provided, however, that the Company shall have no liability hereunder in respect of any act or omission
of a No Fear Indemnified Party caused by such No Fear Indemnified Party's willful breach of this Agreement in any material respect, reckless disregard of its obligations and duties under this
Agreement, or willful misconduct, gross negligence or willful malfeasance in the performance of or in connection with providing the Services. 


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        4.2    Indemnification by No Fear.    No Fear shall indemnify and save and hold the Company and the officers and
directors, employees, consultants and agents of the Company (individually, a "Company Indemnified Party" and collectively the
"Company Indemnified Parties," and together with the No Fear Indemnified Parties, the "Indemnified
Parties") harmless from and against any and all Losses resulting from or arising out of No Fear's willful breach of this Agreement in any material respect, reckless disregard
of its obligations and duties under this Agreement, or willful misconduct, gross negligence or willful malfeasance in the performance of or in connection with providing the Services. 


        4.3    Indemnification Procedures for Third Party Claims.    In order for an Indemnified Party to be entitled to any
indemnification provided for under this Agreement in respect of, arising out of or involving any suit, action, proceeding, claim, demand or written notice made by any third party against an
Indemnified Party (a "Third Party Claim"), the Indemnified Party must notify the party of whom it is requesting such indemnification (the
"Indemnifying Party") in writing of the Third Party Claim within thirty
(30) calendar days after receipt by such Indemnified Party of written notice of the Third Party Claim;  provided, however, that the failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of any liability hereunder unless the Indemnifying Party has suffered material prejudice by such failure. If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party shall be entitled, if it so chooses, to elect to compromise or assume the defense thereof by delivering written notice to such effect to the Indemnified Party within  thirty
(30) calendar days or such shorter period as is reasonably required, following receipt by the
Indemnifying Party of the notice of the Third Party Claim. If the Indemnifying Party elects to compromise or assume the defense of any Third Party Claim, it may not agree to any settlement or
compromise of such claim, other than a settlement or compromise solely for monetary damages for which the Indemnifying Party shall be responsible, without the prior written consent of the Indemnified
Party. The Indemnified Party will cooperate in all reasonable respects with the Indemnifying Party in connection with such compromise or defense and shall have the right to participate in such
compromise or defense with counsel (but not more than one firm) selected (with the consent of the Indemnifying Party, not to be withheld unreasonably) and paid for by the Indemnifying Party. Except as
otherwise provided, regardless of which party assumes the defense of a Third Party Claim, (i) the Indemnified Party shall not settle or compromise any Third Party Claim without the consent of
the Indemnifying Party, (ii) the Indemnifying Party shall not withhold unreasonably consent to any settlement or compromise of such claim and (iii) the Indemnified Party and the
Indemnifying Party shall cooperate in any settlement or compromise of such claim, whether by the Indemnifying Party or the Indemnified Party, as the case may be. In the event the Indemnifying Party
does not compromise or assume the defense of any Third Party Claim, the Indemnifying Party shall promptly pay to the Indemnified Party all reasonable costs and expenses incurred or to be incurred by
an Indemnified Party in defending any claim in advance of the final disposition thereof; provided,  however, that if it ultimately is determined by a court
of competent jurisdiction (from whose decision no appeals may be taken or the time for appeal
has lapsed) that the Indemnified Party was not entitled to indemnity hereunder, then the Indemnified Party shall repay promptly all amounts so advanced. The Indemnified Party shall deliver to the
Indemnifying Party statements of the reasonable costs and expenses so incurred, or to be incurred, on a monthly basis, and the Indemnifying Party shall pay promptly to the Indemnified Party the
amounts shown on such statements. 


        4.4    Indemnification Procedures for Non-Third Party Claims.    In the event an Indemnified Party shall
claim a right to payment pursuant to this Agreement for other than a Third Party Claim, such Indemnified Party shall send written notice of such claim to the Indemnifying Party and such notice shall
specify the basis for such claim in reasonable detail; provided, however, that the failure to give such
notice or to specify such claim shall not relieve the Indemnifying Party of any liability hereunder (unless the Indemnifying Party has suffered material prejudice by such failure). Any dispute between 


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the
parties with respect to a claim for indemnity under this Agreement shall be resolved in accordance with the provisions of Article 7 below. 


        4.5    Exclusive Remedy.    Absent fraud, the indemnification provided in this  Article 4 shall be the sole and exclusive
remedy available to the parties for breach of any of the terms, conditions, representations or
warranties contained herein or any right, claim or action arising from the transactions contemplated hereby; provided,  however, this exclusive remedy does
not preclude a party from (i) bringing an action for specific performance or other equitable remedy to
require a party to perform its obligations under this Agreement or (ii) otherwise exercising any rights of such party under the terms of this Agreement. 


        4.6    Limitation of Liability.    Notwithstanding any other provision of this Agreement, (i) no party shall be
liable to the other party for indemnification under this Article 4 for any indirect, special, incidental, punitive, exemplary or consequential
damages arising out of this Agreement, including, but not limited to, loss of profits, and each party hereby releases the other party from any claims that it may have against the other party for any
such damages and loss of profits, unless such damages or loss of profits are covered by insurance, in which event the insured party shall be obligated to seek recovery and submit any recovery to the
Indemnified Party; provided, however, that the foregoing shall not be construed to preclude recovery by
the Indemnified Party in respect to Losses directly incurred from Third Party Claims. Both parties shall take commercially reasonable actions to mitigate their damages. 


 
 

ARTICLE 5
  RELATIONSHIP OF PARTIES    
    


        5.1    Independent Contractor.    Notwithstanding any other provision herein to the contrary, No Fear acknowledges and
agrees that (i) the relationship between No Fear, on the one hand, and the Company, on the other hand, is that of independent contractor only and in no event shall any representative of No Fear
be deemed to be an employee of the Company and (ii) No Fear shall have no authority to enter into any agreement or to make any representation, commitment or warranty binding upon the Company or
to obtain or incur any right, obligation or liability on behalf of the Company. This Agreement is not intended to create any other relationship of any kind, including, but not limited to, an
employer-employee relationship, joint venture, franchise, partnership or other relationship of any similar kind between or among the Company and No Fear or representatives of the Company or No Fear,
and the parties expressly deny the existence of any such relationship. As an independent contractor, No Fear solely is responsible for payment of all taxes relating to the obligations of No Fear under
this Agreement, and any employee of No Fear, including, but not limited to, all federal, state and local income taxes, employment-related taxes, worker's compensation insurance, social security taxes
and withholding taxes. 


        5.2    Confidentiality.    



        (a)   No
party (a "Disclosing Party") shall, without the prior written consent of the other party (the
"Non-Disclosing Party"), disclose any Confidential Information (defined below) of the Non-Disclosing Party, except to a
Disclosing Party's employees or representatives who need to know such information for any reason contemplated by this Agreement (and then only to the extent that any such persons are under an
obligation to maintain the confidentiality of, and to abide by the non-use provisions set forth herein with respect to, the Confidential Information), or use any Confidential Information
of the Non-Disclosing Party for any reason other than as contemplated by this Agreement. Without limiting the provisions of  Section 5.2(c) below, in the event that the Disclosing Party is requested
or required by documents subpoena, civil investigative demand or other
similar process or applicable law to disclose any Confidential Information, the Disclosing Party shall provide the Non-Disclosing Party with prompt written notice of such demand or other
similar process so that the Non-Disclosing Party may seek an appropriate protective order 



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or,
to the extent such subpoena, demand, process or law is mandatory and no protective order is possible, waive the Disclosing Party's compliance with the provisions of this  Section 5.2(a), as
appropriate. In addition to the foregoing, each party agrees that it will disclose Confidential Information only to such
employees or representatives who need to know such information for any reason contemplated by this Agreement or to assist such party in fulfilling its obligations or enforcing its rights under this
Agreement (and then only to the extent that any such person is under an obligation to maintain the confidentiality of such Confidential Information). 


        (b)   The
term "Confidential Information" as used in this Section 5.2
means the following (and whether disclosed prior to or after the date of this Agreement): (i) as to the Company, all confidential information relating to the business and operations of the
Company and (ii) as to No Fear, all confidential information relating to the business and operations of No Fear; provided,  however, that the term
"Confidential Information" does not include information which (1) is
generally available to the public currently, (2) becomes generally available to the public other than as a result of disclosure by the Disclosing Party or (3) becomes available to the
Disclosing Party on a non-confidential basis from a source other than the Non-Disclosing Party (so long as such source is not bound by a duty of confidentiality (whether by
agreement or otherwise) to the Non-Disclosing Party). 



 
 

ARTICLE 6
  TERMINATION    
    



        6.1    Termination.    Each party to this Agreement shall have the right to terminate this Agreement, with or without
cause, upon thirty (30) days' notice. 


        6.2    Effect of Termination.    If this Agreement is terminated in accordance with  Section 6.1 above, from and after the date
of such termination, this Agreement shall have no further force or effect, without any liability on
the part of any party or its directors, officers, members or stockholders, except for the obligations of the parties hereto which continue after termination as provided in  Section 8.7 below and
that No Fear shall be entitled to receive all undisputed invoice amounts which have not been paid prior to the date of such
termination. Nothing in this Section 6.2 shall be deemed to release either party from any liability for any willful and material breach of any
obligation hereunder. 


 
 

ARTICLE 7
  DISPUTE RESOLUTION    
    



        7.1    Dispute Resolution.    In the event that a party to this Agreement has reasonable grounds to believe that the
other party hereto has breached or failed to satisfactorily perform any of its obligations hereunder, such party will notify promptly the other party in writing of the substance of its belief. The
party receiving such notice must respond in writing within ten (10) calendar days of receipt of such
notice and either provide evidence that it has cured (or is diligently in the process of curing) the condition specified, or provide an explanation why it believes that its performance is in
accordance with the terms and conditions of this Agreement, and also specify three (3) dates (excluding holidays and weekends), all of which must
be within thirty (30) calendar days from the date of the notice of termination, for a meeting to resolve
the dispute. The claiming party will then select one of the three (3) dates, and a dispute resolution
meeting will be held. If the parties cannot resolve their dispute by good faith negotiations, then the parties shall be free to seek relief in the courts as specified in  Section 7.2. 



        7.2    Submission to Jurisdiction.    The Company and No Fear irrevocably submit to the jurisdiction of the courts of
the State of California for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby (and each agrees that no such action, suit or
proceeding relating to this Agreement or any transaction contemplated hereby shall be brought 


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by
it or any of its affiliates except in such courts). The Company and No Fear agree that service of any process, summons, notice or document by registered mail to such person's respective address set
forth below shall be effective service of process for any action, suit or proceeding in California with respect to any matters to which it has submitted to jurisdiction as set forth above in the
immediately preceding sentence. 


        7.3    Waiver of Jury Trial.    Each party hereby waives and agrees to cause each of its affiliates to waive, to the
fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any litigation directly and indirectly arising, out of, under or in connection with this Agreement. 


 
 

ARTICLE 8
  MISCELLANEOUS    
    


        8.1    Successors and Assigns.    This Agreement may not be assigned by the Company or No Fear without the prior
written consent of the other party, except that the Company may assign its rights and delegate its obligations hereunder without No Fear's consent in connection with a sale of all or substantially all
of the assets of the Company or in connection with a merger, acquisition or other corporate reorganization of the Company. Any attempt to assign any rights or obligations arising under this Agreement,
except as set forth in this Section 8.1, without such prior consent shall be null and void. Subject to the foregoing, this Agreement will be
binding upon and inure to the benefit of the parties and their successors and permitted assigns. Nothing contained in this Agreement, express or implied, is intended to confer upon any person other
than the parties to it and their respective successors and permitted assigns any rights or remedies under or by reason of this Agreement. 



        8.2    Governing Law.    The construction, validity and enforceability of this Agreement shall be governed by the laws
of the State of California, without regard to its conflicts of laws principles. 


        8.3    Notices.    All notices, requests and other communications hereunder must be in writing and will be deemed to
have been duly given only if delivered personally or by facsimile transmission or mailed (first class postage prepaid) or sent by overnight courier to the parties at the following addresses: 



	(a)
	To
the Company: 




Spy
Optic, Inc.

2070 Las Palmas Drive

Carlsbad, California 92009

Attention: Barry Buchholtz

Facsimile: (760) 804-8442 




	

	With
a copy to: 






Pillsbury
Winthrop LLP

11682 El Camino Real, Suite 200

San Diego, California 92130

Attention: Christopher M. Forrester

Facsimile: (858) 509-4010 




	(b)
	To
No Fear: 






No
Fear, Inc.

2251 Faraday Avenue

Carlsbad, California 92008

Attention: Mark Simo

Facsimile: (760) 931-9741 





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All
such notices, requests and other communications will (i) if delivered personally to the address provided in this Section 8.3, be
deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this Section 8.3, be deemed
given upon receipt, provided confirmation of such receipt is obtained, and (iii) if delivered by mail or courier service in the manner described above to the address as provided in this  Section 8.3, be deemed given upon receipt, provided confirmation of such receipt is obtained (in each case regardless, of whether such notice,
request or other communication is received by any other person to whom a copy of such notice is to be delivered pursuant to this Section 8.3).
Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other parties hereto
as herein provided. Notwithstanding any other provision herein to the contrary, in the event that any obligation hereunder falls on a weekend or holiday, such obligation shall be deemed to be due on
the next business day following such weekend or holiday. 


        8.4    No Waiver.    The failure of either party at any time to require performance by the other party of any
provision of this Agreement shall in no way affect the right of such party to require performance of that provision. Any waiver by either party of any breach of any provision of this Agreement shall
not be construed as a waiver of any continuing or succeeding breach of such provision, a waiver of the provision itself or a waiver of any tight under this Agreement. 


        8.5    Severability.    All provisions of this Agreement are severable and any provision which may be prohibited by
law shall be ineffective to the extent of such prohibition without invalidating the remaining provisions of this Agreement and the parties hereto agree to cooperate to provide a legal substitute for
any provision which is prohibited by law. 


        8.6    Entire Agreement; Modifications and Amendments.    This Agreement (including, but not limited to,  Schedule I attached
hereto) and any other agreements executed and delivered by the parties contemporaneously herewith constitute the entire
agreement between the parties concerning the subject matter hereof and supersedes all prior agreements and understandings both oral or written, between the parties with respect to the subject matter
hereof. Except to the limited extent provided herein, no provision of this Agreement may be amended or waived unless such amendment or waiver is agreed to in writing and signed by the parties to this
Agreement. 


        8.7    Survival.    In the event this Agreement is terminated pursuant to  Article 6, from and after the date of termination,
this Agreement shall have no further force or effect, except for the provisions of  Articles 2, 4, 5, 7 and this Article 8, which shall survive such
termination. 


        8.8    Headings: Interpretation.    The headings contained in this Agreement are for reference purposes only and shall
not in any way control the meaning or interpretation of this Agreement. For purposes of this Agreement, the term "affiliate" shall mean a person or entity controlling, controlled by or under common
control with the person or entity to which reference to an affiliate is made. 


        8.9    Counterparts.    This Agreement may be executed in separate counterparts, each of which so executed and
delivered shall constitute an original, but all such counterparts shall together constitute one and the same instrument and any one of which may be used to evidence this Agreement. 


[REMAINDER
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        IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date. 



	 	 	SPY OPTIC, INC.
	

 	
 	

By:	

/s/  MICHAEL BROWER      

	 	 	Its:	Chief Financial Officer
	 	 	Name:	Michael Brower
	

 	
 	
NO FEAR, INC.
	

 	
 	

By:	

/s/  MARK SIMO      

	 	 	Its:	Chief Executive Officer
	 	 	Name:	Mark Simo




[SIGNATURE PAGE TO CORPORATE SERVICES AGREEMENT]








  



 
 

SCHEDULE I    
    
    MANAGEMENT SERVICES    
    


Description of Service  


Accounting
Services 


Administrative
Services 


Legal
Services 


Other
Services may be added to this Schedule from time to time in accordance with Article 1 of this Agreement. 


SA-1











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Exhibit 10.3


CORPORATE SERVICES AGREEMENT

RECITALS

ARTICLE 1 SERVICES

ARTICLE 2 PAYMENTS

ARTICLE 3 REPRESENTATIONS AND WARRANTIES

ARTICLE 4 INDEMNIFICATION

ARTICLE 5 RELATIONSHIP OF PARTIES

ARTICLE 6 TERMINATION

ARTICLE 7 DISPUTE RESOLUTION

ARTICLE 8 MISCELLANEOUS


SCHEDULE I MANAGEMENT SERVICES