EMPLOYMENT AND STOCK OPTION AGREEMENT
THIS AGREEMENT ("Agreement") is effective August 9,1999, by and between
COLLEGE BOUND STUDENT ALLIANCE, INC., a Colorado corporation ("CBSA"), and
XXXXXX X. XXXXX ("Employee").
AGREEMENT
1. EMPLOYMENT AND DUTIES.
(a) EMPLOYMENT. CBSA hereby employs Employee, and Employee hereby
accepts employment as Chief Executive Officer ("CEO") of CBSA upon the terms
stated in this Agreement. Employee shall also serve as a director and the
parties anticipate that Employee will be appointed as Chairman of the Board of
Directors before December 31, 1999.
(b) DUTIES. Employee is engaged as the CEO of CBSA, subject to the
direction of the Board of Directors and in accordance with the Bylaws of CBSA to
perform such duties as he shall reasonably be directed by the Board of the
Directors of CBSA to perform.
(c) SERVICES. Employee shall: (i) devote up to the equivalent of
three (3) working days per week to the business and affairs CBSA; (ii) use his
best efforts, skills and abilities to promote CBSA's best interests; and (iii)
perform the duties described in Section 1(b) and such other duties as may be
assigned to him by CBSA in compliance with all applicable laws and regulations
and in accordance with the industry standards.
2. TERM OF EMPLOYMENT.
The term of Employee's employment under this Agreement (the "Term") shall
commence on August 9, 1999, and shall end on August 1, 2000, unless sooner
terminated pursuant to Section 9 of this Agreement. The Term shall be
automatically renewed for one-year periods ("Subsequent Terms") unless thirty
(30) days before August 1, 2000 and all subsequent one-year periods of this
Agreement either party gives notice in writing to the other of its intention not
to renew the Term. Unless otherwise stated, Term shall also refer to Subsequent
Terms.
3. BASE COMPENSATION.
CBSA agrees to pay Employee for his services hereunder compensation on
an annualized basis in the amount of $60,000.00 from August 9, 1999 through
August 1, 2000. Employee's compensation for the period from August 9, 1999
through December 31, 1999 shall be payable on January 3, 2000. Thereafter,
Employee's compensation shall be payable in accordance with CBSA's
then-existing general payroll procedures. Employee's base salary will be
re-negotiated by the parties no later than June 1, 2000, to be effective
August 1, 2000. Thereafter, the annual salary shall be reviewed by CBSA and
Employee, on or before June 1 of each year during the term of this Agreement
and may be adjusted by mutual agreement of Employee and CBSA. CBSA shall
withhold from the compensation to Employee federal and state withholding
taxes, federal FICA and FUTA payments and any other usual payroll deductions.
4. PERFORMANCE BONUSES. CBSA, from time to time, may pay to Employee
additional compensation or bonuses upon such terms and conditions as CBSA shall
deem to be in its business interest. The board of directors of CBSA, in its sole
and absolute discretion, shall determine the payment and the amount of any
additional compensation or bonuses, if any, and the board of directors
determination shall be final and conclusive.
5. STOCK OPTIONS.
(a) Employee is hereby granted the option, for a period of five
(5) years, to purchase 500,000 shares of CSBA common stock at eighty percent
(80%) of the stock's fair market value as of June 1, 1998 as follows: (i)
250,000 shares on execution of this Agreement, and (ii) 250,000 shares on the
one-year anniversary of the effective date of this Agreement. Employee must
exercise any stock options granted within five (5) years of the effective date
of this Agreement or as otherwise provided in this Agreement.
(b) The option price shall be paid in full in cash each time the
option is exercised by Employee for part or all of the 500,000 shares of stock,
as provided in this Section 5.
(c) Employee must be employed by CBSA at the time the option is
exercised in order to be eligible for any stock options pursuant to this Section
5, except as otherwise provided in this Section 5.
(e) In the event Employee is terminated "for cause" as provided in
this Agreement, Employee shall not be eligible for any stock option regardless
of the date of termination.
(f) In the event Employee is terminated "without cause" as
provided in this Agreement, Employee shall be eligible for the stock options
granted as provided in Section 5(a) on the date of termination.
(g) In the event Employee elects to terminate his employment for
any reason, Employee shall not thereafter be eligible to exercise any stock
option regardless of the date of termination.
(h) In the event of a Change in Control in CBSA, as defined below,
Employee shall be eligible for all stock options as provided in Section 5(a)
regardless of the date of termination. For purposes of this Agreement, Change in
Control shall mean: (aa) sale of substantially all of the assets of CBSA, or
(bb) the acquisition by any corporation or group of associated persons acting in
concert, of an aggregate of one hundred percent (100%) of the outstanding shares
of voting stock coupled with or followed by the election as directors of CBSA of
persons who were not directors at the time of such acquisition if such persons
shall become a majority of the Board of Directors of CBSA, or (cc) the
effectiveness of a registration statement filed by CBSA under the Securities Act
of 1933, as amended with respect to any shares of stock of CBSA.
(i) The aggregate number of shares of stock available pursuant to
this Section 5, the stock subject to option, and the price per share of stock
all shall be proportionately adjusted for any increase or decrease in authorized
or issued shares of CBSA resulting from: (aa) a subdivision or consolidation of
shares or any other capital adjustment, or (bb) any other increase or decrease
in such stock effected without receipt of full and fair consideration by CBSA.
Upon dissolution or liquidation of CBSA, or upon a merger or consolidation in
which CBSA is not the surviving corporation, all options shall terminate, except
as provided in Section 5(i).
(j) Employee acknowledges that the potential options granted and
securities to be issued pursuant to this Agreement, including stock to be issued
upon exercise of any option granted hereunder, have not been and will not be
registered under the Securities Act of 1933, as amended or applicable State
Securities Acts, and in addition to all other transfer restrictions provided in
this Agreement shall not be sold, pledged, hypothecated, donated or otherwise
transferred (whether or not for consideration) by the holder except by Employee
upon the issuance to CBSA of a favorable opinion of Employee's counsel which
shall be subject to the review and acceptance by CBSA, and the submission to
CBSA of such other evidences may be satisfactory to counsel for CBSA, in each
such case to the effect that any transfer shall not be in violation of such
acts. Employee further acknowledges that all shares of stock issued pursuant to
this Agreement will contain a conspicuous restrictive legend containing the
information above and any other information now or hereafter included on CBSA's
standard restrictive stock legends.
6. TRANSFER RESTRICTIONS ON STOCK.
(a) RESTRICTIONS ON TRANSFER. Employee shall not, during the term
of this Agreement, transfer any of the stock, or any interest therein, unless
Employee shall have procured an effective current registration statement
relating to the stock under the Securities Act of 1933 (the "Act") or an opinion
of counsel, in form and substance satisfactory to the CBSA, to the effect that
registration is not required because Employee has satisfied all of the
requirements set forth under Rule 144 promulgated under the Act by the
Securities and Exchange Commission ("Rule 144"). Any attempted disposition of
the stock or any interest therein while it is restricted shall be null and void
and of no effect.
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(b) OBLIGATIONS OF TRANSFEREES. Each transferee or any subsequent
transferee of stock or any interest in such stock shall hold such stock or
interest in the stock subject to all of the provisions of this Agreement and
shall make no further transfers except as provided in this Agreement.
7. OTHER BENEFITS.
Employee shall be allowed to participate in CBSA's medical, dental and
disability insurance, and other benefits, if any, in accordance with CBSA's
policy as in effect from time to time. Employee's vacation, holidays and sick
leave shall be determined by mutual agreement of the parties.
8. FACILITIES: EXPENSES.
CBSA shall provide Employee with such facilities, equipment, services and
supplies as CBSA reasonably determines are suitable to Employee's position and
adequate for the performance of Employee's duties under this Agreement. However,
Employee shall have, maintain and use, when appropriate, an automobile, home
telephone and other facilities and equipment reasonably needed in connection
with employment under this Agreement. The Company shall reimburse Employee for
any and all reasonable ordinary course travel, entertainment or other
business-related out of pocket expenses incurred by Employee. Any extraordinary
travel, entertainment or other business-related expenses outside the ordinary
course shall require the prior written consent of CBSA.
9. TERMINATION.
(a) UPON DEATH. This Agreement shall terminate upon the death of
Employee. Upon termination by reason of Employee's death, CBSA shall pay to the
personal representative of the estate of Employee the base compensation owed to
Employee under the terms of Section 3 of this Agreement to the date of death.
(b) UPON ILLNESS OR DISABILITY. This Agreement shall terminate
immediately following three (3) months in any twelve (12) month period during
which Employee is unable to perform his duties as a result of illness, injury or
other incapacity.
(c) TERMINATION BY CBSA "FOR CAUSE". In the event of the
occurrence of any of the following and upon written notice to Employee, CBSA, at
any time, may immediately terminate the term of Employee's employment hereunder
"for cause": (i) gross negligence or willful misconduct by Employee in
performing his duties here under, (ii) dishonesty or theft by Employee; (ii)
conviction of Employee of any felony, or of any lesser crime or offense
involving the property of CBSA; (iv) repeated refusal of Employee to follow the
reasonable directions of the Board of Directors of CBSA; or (v) any other
material breach of this Agreement by the Employee which is not cured after ten
(10) days written notice. Upon termination of Employee's employment for cause,
CBSA shall pay to Employee his base compensation for services performed by him
to the date of termination as provided in Section 3 of this Agreement.
(d) TERMINATION BY EMPLOYEE. Notwithstanding any other provision
of this Agreement to the contrary, Employee may terminate his employment with
CBSA upon thirty (30) days prior written notice.
(e) TERMINATION DUE TO LACK OF FUNDING. Either party may terminate
this Agreement if CBSA fails to achieve its bridge financing or other funding of
at least $750,000 on or before December 31, 1999. Until such funding is
obtained, Employee's salary shall accrue but remain unpaid.
10. COVENANT AGAINST COMPETITION. Without the express written consent of
CBSA, during the term of Employee's employment with CBSA and for a period of
three (3) years from the termination of Employee's employment with CBSA,
Employee will not, directly or indirectly, own, manage, operate, control, be
employed by, perform services for, consult with, solicit business for,
participate in, or be connected with the ownership, management, operation, or
control of: (i) any business which is materially similar to or competitive with
CBSA's business in the United States, or (ii) with any of CBSA's then-existing
vendors, affiliates or customers in the United States.
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11. COVENANT AGAINST DISCLOSURE OF CONFIDENTIAL INFORMATION. During the
term of Employee's employment with CBSA and for a period of three (3) years
after termination of Employee's employment with CBSA, Employee shall not use for
any purpose or disclose to any person or entity any confidential information
acquired during the course of employment with CBSA. Employee shall not, directly
or indirectly, copy, take, or remove from CBSA's premises, any of CBSA's books,
records, customer lists, or any other documents, materials or confidential
information.
12. MISCELLANEOUS.
(a) AMENDMENT. No modification, waiver, amendment, discharge or
change to this Agreement shall be valid unless the same is in writing and signed
by the party against which the enforcement of said modification, waiver,
amendment, discharge or change is sought.
(b) NOTICE. All notices, demands or other communications given
hereunder shall be in writing and shall be deemed to have been duly given upon
personal delivery or on the first business day after mailing by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
To CBSA: College Bound Student Alliance, Inc.
Attn: Xxxxxx X. Xxxxx
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
To the Employee: Xxxxxx X. Xxxxx
0000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
or to such other address or to such other person as any party shall designate to
the other for such purpose in the manner hereinafter set forth.
(c) ENTIRE AGREEMENT. This Agreement contains the entire agreement
and understanding by and between CBSA and Employee with respect to the covenants
contained herein, and no representations, promises, agreements, or
understandings, written or oral, not herein contained shall be of any force or
effect. No valid waiver of any provision of this Agreement at any time shall be
deemed a waiver of any other provision of this Agreement at such time or will be
deemed a valid waiver of such provision at any other time.
(d) SURVIVAL. Upon any termination of this Agreement, neither
party shall have any further rights, duties or obligations to the other under
this Agreement except for: (i) Employee's covenants, obligations and duties to
be performed after any such termination, inclusive of Section 10 hereof, and
(ii) the parties' liability to each other for their obligations, duties and
responsibilities under this Agreement prior to such termination.
(e) ENFORCEMENT: SEVERABILITY. It is the intention of the parties
that the provisions of this Agreement shall be enforceable to the fullest extent
permissible under applicable law, but that the unenforceability (or modification
to conform to such law) of any provision or provisions hereof shall not render
unenforceable, or impair, the remainder thereof. If any provision or provisions
of this Agreement shall be deemed invalid or unenforceable, either in whole or
in part, this Agreement shall be deemed amended to delete or modify, as
necessary, the offending provision or provisions and to alter the bounds thereof
in order to render it valid and enforceable to the fullest extent permissible.
The noncompetition, nondisclosure, and nonsolicitation obligations of Employee
contained in this Agreement are intended to be extended by the length of time
during which Employee shall have been in breach of any of those provisions.
(f) GOVERNING LAW AND VENUE. This Agreement shall be construed in
accordance with the laws of the State of Colorado and any proceeding arising
between the parties in any matter pertaining or related to this Agreement only
shall be held in a court of competent jurisdiction for Boulder, Colorado.
(g) LITIGATION. In any action between the parties to enforce any
of the terms of this Agreement or any other matter arising from this Agreement,
the prevailing party shall be entitled to recover
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its costs and expenses, including reasonable attorney's fees, incurred up to and
including all negotiations, trials and appeals, whether or not litigation is
initiated.
(h) BENEFIT OF AGREEMENT. This Agreement may be assigned only by
CBSA, the Employee's duties being of a personal nature. Subject to the
restrictions on transferability and assignment contained herein, the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties, their successors, permitted assigns, personal representatives,
estates, heirs and legatees.
(i) CAPTIONS. The captions in this Agreement are for convenience
and reference only and in no way define, describe, extend or limit the scope of
this Agreement or the intent of any provisions hereof.
(j) NUMBER AND GENDER. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular or plural,
as the identity of the party or parties, or their personal representatives,
successors and assigns may require.
(k) FURTHER ASSURANCES. The parties agree to do, execute,
acknowledge and deliver or cause to be done, executed, acknowledged or delivered
and to perform all such acts and deliver all such deeds, assignments, transfers,
conveyances, powers of attorney, assurances, stock certificates and other
documents, as may, from time to time, be required herein to effect the intent
and purpose of this Agreement.
(l) STATUS. Nothing in this Agreement shall be construed or shall
constitute a partnership, joint venture, agency, or lessor-lessee relationship;
but rather, the relationship established hereby is that of employer-employee.
(m) COUNTERPARTS. This Agreement may be executed in any number of
counterparts. All executed counterparts shall constitute one Agreement
notwithstanding that all signatories are not signatories to the original or the
same counterpart.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
effective as of the date first above written.
CBSA:
COLLEGE BOUND STUDENT ALLIANCE, INC.
a Colorado corporation
By: /s/ Xxxx Xxxxxx
--------------------------------------
WITNESSES: Name: Xxxx Xxxxxx
------------------------------------
/s/ Xxxxxxxxx Xxxx Title: CHAIR OF BOARD
-------------------------------- -----------------------------------
--------------------------------
(as to CBSA)
EMPLOYEE:
/s/ Xxxxxx X. Xxxxx
-----------------------------------------
Xxxxxx X. Xxxxx
WITNESSES:
/s/ Xxxxxx Xxxxx
--------------------------------
--------------------------------
(as to Employee)
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NON-TRANSFERABLE STOCK OPTION
COLLEGE BOUND STUDENT ALLIANCE, INC. (FORMERLY SPORTSSTAR MARKETING,
INC.), a Colorado corporation, 0000 XXX Xxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx
00000 ("Company"), for and in consideration of $10.00 and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, irrevocable grants unto XXXXXX XXXXX ("Optionee"), the option
("Option") to purchase up to 250,000 shares ("Shares") of the Company's no par
value common stock ("Common Stock") subject to the following terms and
conditions:
1. PURCHASE PRICE. The purchase price for Shares pursuant to this
Option is 250,000 shares at eighty percent (80%) of the stocks fair
market value as of June 1, 1999 per share which payment shall be
made at the time of exercise by:
(a) Delivery to the Company of cash or a certified check payable
to the order of the Company in the amount equal to the
purchase price of the Shares; or
(b) Delivery to the Company of Common Stock of the Company then
owned by the Optionee having a fair market value equal in
amount to the purchase price of such Shares; or
(c) Any combination of any such method of payment.
Optionee shall have no rights with respect to dividends or have any
other rights as a shareholder with respect to Shares subject to this
Option until he has given written notice of the exercise of this
Option and has paid in full for such Shares.
2. TIME OF EXERCISE. This Option may be exercised any time on or before
August 9, 2004. This Option shall expire five (5) years from the
date the Option becomes exercisable. The period of time during which
the Option may be exercised is referred to herein as the "Option
Period."
3. CHANGE OF CAPITALIZATION. If prior to the exercise of this Option,
the Company effects one or more stock split-ups, stock dividends, or
there are increases or reductions of the number of shares of its
Common Stock outstanding without receiving compensation therefore in
money, services or property, other than pursuant to any executive or
employee option plan which shall have been or is thereafter approved
by the shareholders of the Company within one year of the issuance
pursuant thereto, the number of shares of Common Stock subject to
the Option hereby granted shall (a) if a net increase shall have
been affected in the number of outstanding shares of the Company's
Common Stock, be proportionately increase, and the cash
consideration payable per share shall be proportionately reduced;
and (b) if a net reduction shall have been affected in the number or
outstanding shares of the Company's Common Stock, be proportionately
reduced and the cash consideration payable per share be
proportionately increased. In the event that the Company is
dissolved, liquidated, merged, consolidated with another
corporation, sells all or substantially all of the Company's assets
or enters into some other type of corporate reorganization in which
the Company is not the surviving corporation or in which the Company
is the surviving corporation but holders of the Company's Common
Stock receive securities of another corporation, this Option shall
terminate as of the effective date of such event provided that
immediately prior to such event, Optionee shall have the right to
exercise this Option in whole or in part; however, such exercise
shall be subject to the restrictions contained in this Option.
4. NOTICE OF EXERCISE. This Option may be exercise in whole or in part
at any time and from time to time by the delivery of written notice
to the Company together with payment for the number of Shares
purchased. This notice shall state the election to exercise the
Option, the number of Shares in respect of which the Option is being
exercised, and shall be signed by the person exercising the Option.
5. NON-TRANSFERABLE. This Option may not be transferred by Optionee
other than by will or laws of descent and distribution. During
Optionee's lifetime this Option shall be exercisable only by
Optionee.
6. RESTRICTED SECURITIES. Optionee, by the acceptance of this Option,
represents and acknowledges that because of Optionee's relationship
with the Company, Optionee has available full information concerning
the Company's affairs. Further, Optionee agrees that before Optionee
purchases any stock pursuant to this Option, Optionee will represent
to the Company in writing such stock is being purchased for
investment and not for purposes of distribution, the stock will
constitute restricted securities as defined in Rule 144 promulgated
pursuant to the Securities Act of 1933, as amended, and Optionee
agrees that (I) the Company may place a stop order against the
transfer of the Shares with its transfer agent and (ii) the stock
certificate evidencing such stock may be stamped with a legend
substantially as follows:
"The securities represented by this Certificate may not be
offered for sale, sold or otherwise transferred except
pursuant to an effective registration statement under the
Securities Act of 1933 (the "Act"), or pursuant to an
exemption from registration under the Act, the availability of
which is to be established to the satisfaction of the
Company."
7. SHARES RESERVED. The Company shall at all times during the duration
of this Option reserve and keep available such number of shares of
its stock as will be sufficient to satisfy the requirements of this
Option.
8. COLORADO LAW. This Option shall be construed according to Colorado
law.
Dated: SEPTEMBER 13, 1999
COLLEGE BOUND STUDENT ALLIANCE, INC.
a Colorado corporation
By:
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Title:
------------------------------------
Attest: SEAL
------------------------------------
, Secretary
------------------------
Accepted by Optionee:
----------------------------
Xxxxxx Xxxxx
