EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into on December 27, 1996, by and among
ISO BLOCK PRODUCTS USA, INC., a Colorado corporation (the "Parent"); FRANCHISE
CONNECTION, INC., a Colorado corporation (the "Company"); BRILLIANT MARKETING,
INC., a Colorado corporation ("BMI"); and XXXXXX X. XXXXXX, an individual
residing in the State of Colorado (the "Executive").
WHEREAS, BMI is wholly owned by the Company, and the Company in turn is
wholly owned by the Parent; the Executive and other shareholders of the Company
sold all of the issued and outstanding shares of the capital stock of the
Company to Parent in exchange for common and preferred shares of the Parent, all
pursuant to that certain Exchange Agreement and Plan of Reorganization of even
date herewith among Parent, the Company and the shareholders of the Company,
including the Executive (the "Exchange Agreement"), and this Agreement is
entered to as provided for in the Exchange Agreement; and
WHEREAS, the Company desires to establish and market franchises of certain
businesses with which it or BMI now have contractual relations or with which it
or BMI establishes relations in the future; and BMI engages principally in the
business of teaching business how to market their services and products;
WHEREAS, the Executive will occupy positions of high responsibility with
the Parent, the Company and BMI, and it is anticipated that he will continue to
be a significant contributor to the growth and success of all three companies;
and
WHEREAS, the Parent desires to arrange for employment of the Executive in
the capacity of Chief Executive Officer and President of the Company and BMI for
the conduct and operations of thereof, and the Executive desires to accept said
employment on the terms of this Agreement;
NOW, THEREFORE, in consideration of the foregoing recitals of their
respective covenants and commitments herein expressed, the parties hereto agree
as follows:
1. Definitions. When used in this Agreement, the following terms shall
have the respective meanings assigned them below:
"Act" means the Securities Act of 1933, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Parent Group" means the Parent, Company and BMI, not including any
other entities or businesses now or hereafter directly or indirectly,
wholly or partially owned by Parent, but does include any other entities or
businesses now or hereafter established or directly or indirectly, wholly
or partially owned by the Company or BMI.
Page 1
"SEC" means the U.S. Securities and Exchange Commission.
"Term" means the original term of this Agreement and all renewals,
extensions and replacements thereof.
1. Employment. On the terms and subject to the conditions of this
Agreement, the Company and BMI hereby employ and agree to compensate the
Executive, and the Executive hereby accepts employment by the Company and
BMI. The Parent Group and Executive hereby agree that this Agreement shall
hereinafter govern their relationship and their respective rights and
obligations under this Agreement.
2. Term of Employment. This Agreement will be effective as and from
the date first above written and will, unless otherwise terminated pursuant
to the terms of this Agreement, continue in force for a term of three (3)
years. Upon expiration of the original Term, this Agreement shall be
automatically renewed for three (3) further consecutive terms of ONE year
each on the same terms and conditions contained in this Agreement, unless
the Board of Directors of the Company shall have given to Executive at
least 30 days' written notice of termination prior to the expiration of the
Term or of any subsequent one-year period, unless this Agreement has
otherwise been terminated pursuant to Section 11 hereof.
3. Duties of Executive. Executive will be employed by both BMI and the
Company as Chief Executive Officer and President and shall serve as
Chairman of the board of directors of both companies. As such, the
Executive shall have authority to perform such functions and exercise such
powers and duties as are customary for such positions, subject always to
the control of the Company's Board of Directors. He shall also serve in
such other capacities with the Company, BMI or any related companies as
shall be designated, or to which Executive shall be elected, from time to
time, by the Board of Directors of the Company or the Parent. The Executive
shall not compete with the Company or BMI or any subsequent related
companyt thereof or engage in any franchiserelated business whatsoever, as
consultant, employee or otherwise. The Executive shall prepare all
franchise offering circulars for franchises handled by the Company and BMI
as part of his regular salary, until the crush of business shall, in
Executive's judgment, render such services by him impractical and not
cost-effective.
4. Extent of Services; Right to Name, etc. (a) The Executive shall
devote substantially his full time, attention, knowledge and skill to the
affairs and for the benefit of the Company and BMI and the advancement of
the best interests of the Parent Group, and he shall perform all duties
reasonably assigned to him by the Company's Board of Directors. Executive
may, however, devote such time to his personal investments as shall be
necessary and which do not interfere with the performance of his duties
hereunder.
(b) Executive hereby grants to the Parent Group and all related
companies the non-exclusive right to use his name, picture or other
likeness and biographical material concerning him, in connection with
advertising, promotion and publicizing the Parent Group and such
related companies and its or their activities, so long as this
Agreement is in effect. Such use of Executive's name shall be fair and
not misleading or unflattering.
Page 2
5. Compensation and Expenses. As compensation for his services to be
performed hereunder and expenses paid, the Company shall pay and reimburse
the Executive as follows for his services to the Company and BMI and other
services hereunder:
(a) Base Salary. A base annual salary of $72,000.00 for each
year, as hereinafter defined, of his employment. Such base annual
salary, less federal and state withholding taxes and other payroll
taxes and deductions, shall be paid in twenty-four equal bi-monthly
installments on the first and fifteenth days of each and every month
during the Executive's employment. Executive's base annual salary
shall be increased on on each anniversary of the effective date of
this Agreement (December 27) by a percentage equal to the percentage
increased for such year past in the Consumer Price Index, plus one
percent (1%); and if such increase is unknown, then the assumed
increase shall be one percent (1%). The Executive shall serve as a
member of Parent's board of directors from the Closing and, upon the
request of Parent, shall serve as an officer or executive officer of
Parent. The Executive shall not receive any additional compensation
for so acting unless such directorship and officership should involve
significant increase in the duties of or time spent by the Executive.
(b) Pension and Other Plans. In addition to the compensation set
forth in paragraph (a) preceding, the Executive shall be entitled to
participate in any pension and/or profit sharing plan established by
any of the Parent Group and made available generally to senior
executives.
(c) Expenses. Pay or reimburse the Executive for his reasonable
business, travel and entertainment expenses incurred in connection
with his employment in the business of the company.
6. Stock Option.
(a) The Parent hereby grants Executive the option in the form of
Exhibit A hereto (the "Option") to purchase up to One Hundred Thousand
(100,000) common shares of the Company, subject to adjustment as
provided in the Option (the "Option Shares") for a period commencing
on December 27, 1996 and ending on December 26, 1999. Such shares
shall vest quarterly. The Option shall be issued upon the execution
hereof.
(b) The Executive and Parent acknowledge that a major part of the
inducement and consideration for the Parent to enter into the Exchange
Agreement and acquire ownership of the Company is the agreement of the
Executive herein to remain in the employ of the Company and BMI for a
period of three (3) years and to manage the Company and BMI in such a
manner that their revenues and profitability continue to grow.
Therefore, in the event that Executive voluntarily elects to terminate
his employment with the Company on the terms set forth in this
Agreement during the original four-year Term of this Agreement, all
options held by Executive, of every kind and description and
irrespective how or when granted to Executive to purchase common
shares of Parent shall be subject to immediate cancellation by Parent,
at Parent's sole election.
7. Confidentiality. Without the prior written consent of the Parent, the
Executive shall not at any time (whether during or after his employment
hereunder), use for his own benefit or purposes, or for the benefit or purpose
of any other person, firm, partnership, association, corporation or business
organization, entity or enterprise, any trade secrets, information, data,
know-how or knowledge (including, but not limited to, trade secrets,
information, data, know-how or knowledge relating to customers, sales, market
development programs, costs, products, apparatus, equipment, processes, formula,
financing or marketing methods, compositions, designs, plans or employees)
belonging to, or relating to the affairs of, the Parent, the Company or BMI or
any related corporation. However, in the event that this Agreement is cancelled
and that the Exchange Agreement also is unwound and rescinded, then this
confidentiality covenant imposed upon the Executive shall apply only to
information concerning the Parent. This covenant shall survive the termination
of this Agreement and the Exchange Agreement for any reason.
Page 3
8. Vacation. During each year within the term hereof, original or extended,
the Executive shall be entitled to vacation with pay as follows: The first year
of this Agreement - two (2) weeks vacation; in year two, increasing to three (3)
weeks; in year three (3) and years thereafter, increasing to four (4) weeks.
Such weeks shall be designated by the Executive. The Executive shall not take
more than three weeks of vacation in any six-month period.
9. Other Insurance. The Parent or Company shall have the right to purchase,
own and be the beneficiary of key-man life insurance, disability insurance or
key executive loss insurance covering the loss or life and/or services of the
Executive. The Executive agrees to cooperate with the Company, and to assist the
Company to the best of his ability in every lawful way, in applying for and
obtaining any such insurance (including providing medical information and taking
medical and physical examinations, for example), upon request.
10. Incapacity of the Executive. If the Executive shall, at any time, be
incapacitated or prevented by physical or mental disability, whether resulting
from accident, illness or otherwise, or any other circumstances beyond his
control from performing his duties under this Agreement satisfactorily for a
consecutive period of at least sixty (60) days, the Company may, by written
notice to the Executive given at any time after such 60-day period and so long
as the incapacity shall continue, discontinue payment in whole or in part of the
compensation provided for herein from such date as may be specified in the
notice until the incapacity of the Executive shall cease. Alternatively, the
Company may terminate the Executive's employment as provided in Section 11
(Termination) hereof.
Otherwise, the said payment shall, notwithstanding the incapacity of the
Executive, continue to be paid to the Executive in accordance with the foregoing
provisions; provided, that if the Executive shall receive any amount during the
time of such incapacity by reason of any disability insurance or any other
insurance plan, senior executive loss or income policy, disability policy or any
other plan or scheme of a like nature funded by the Company or the Parent Group,
the payment above provided may be reduced by a like amount.
11. Termination. (a) This Agreement and the Executive's employment with the
Company and BMI and his compensation therefor shall terminate and cease to
accrue prior to the end of the Term at the sole option of the Parent upon:
(i) the failure by the Executive to observe or perform his
agreements herein contained or the Executive's neglect of the faithful
performance of his duties, provided, however, that if the Executive
shall fail to observe or perform his agreements herein contained, or
neglect the faithful performance of his duties, his employment and
aforesaid compensation shall not terminate or cease unless the Company
gives written notice to the Executive of such failure or neglect and
the Executive does not remedy within thirty (30) days of the date of
said written notice, such failure or neglect as designated by the
Company in said written notice.
Page 4
(ii) the Executive's conviction of or plea of guilty or nolo
contendre to a felony crime;
(iii) absence of the Executive from the performance of his duties
hereunder for any reason other than contemplated in Section 10
(Incapacity) hereof for a period in excess of 40 working days total in
any six-month period;
(iv) the total or partial disability of the Executive for an
aggregate period of ninety (90) days or more during any year of the
Term. Total disability shall mean that the Executive is unable to
perform his duties as a result of physical or mental disability,
whether resulting from accident or disease. Partial disability shall
mean that Executive's activity in the performance of his duties is
materially limited as a result of physical or mental disability,
whether resulting from accident or disease. Executive's total or
partial disability, as defined in this subparagraph, may only be
established by the mutual agreement of the Parent and the Executive,
or by the certificate of a physician jointly designated by the Parent
and Executive.
(iv) death of the Executive.
(v) the termination or recission of the Exchange Agreement.
Any such termination pursuant to clauses (i), (ii) and (iii) shall be effective
only if written and dated notice, setting forth the cause and effective date of
termination, is given to the Executive not later than ten (10) days following
the event, transaction or occurrence giving rise to such right of termination,
or, if later, 10 days after the Company first discovers that such event,
transaction or occurrence has taken place.
(b) the Executive may terminate this Agreement prior to the end of the
Term upon sixty (60) days' written and dated notice to the Company and the
Parent setting forth the effective date of such termination.
(c) Upon termination of this Agreement, the Executive shall
immediately resign all offices held with the Parent, the Company, BMI and
all related companies thereof, and the Executive shall not be entitled to
receive any termination or severance payment or compensation for loss of
office or otherwise. If the Executive fails to immediately resign as herein
provided, then in such event the Executive irrevocably appoints the
Secretary of the Company in his name and on his behalf to sign any
resignation confirmation or do anything necessary or requisite to give
effect to such resignation(s).
Page 5
(d) On the effective date of termination of this Agreement, the
Executive will deliver to the Company, in a reasonable state of repair, all
property of the Company, BMI and every related company, both real and
personal owned, leased or bailed to the Executive and used by or in the
possession of the Executive.
(e) A continuation of the Executive's employment with the Company
beyond the Term, without an agreement in writing covering such
continuation, shall be deemed an extension of the Term hereof on a
month-to-month basis for the duration of such continuation, provided,
however, that either party hereto may terminate the Executive's employment
by giving the other party thirty (30) days prior written notice thereof
during such continuation.
12. Relationship of the Parties. The Executive will perform his duties as
an employee of the Company and BMI and is not, nor will he be deemed to be, a
joint venturer or partner with the Company or BMI, or the Parent, or any related
company thereof, and nothing in this Agreement will be construed so as to make
him a joint venturer or partner with the Parent, the Company, BMI or any related
company.
13. Assignment, Etc. The Executive may not assign, pledge or encumber in
any way all or any part of his rights, obligations or interest hereunder without
the prior written consent of the Company and the Parent. Neither Parent, the
Company nor BMI shall assign, pledge or encumber in any way its respective
rights, obligations or interest hereunder; however, it shall not constitute an
assignment if Parent, the Company or BMI reorganize or divide, or merge or
consolidate with any other company(ies), or otherwise become a different
company.
14. Miscellaneous Provisions.
(a) Amendments. This Agreement may be amended, modified, or
supplemented only by instrument in writing executed by all parties.
(a) Notices. All notices required to be given under the terms
of this Agreement shall be in writing, shall be effective upon receipt, and
shall be delivered to the addressee in person or mailed by certified mail,
return receipt requested. Such notice shall be deemed received on the date on
which it is delivered to the addressee. For purposes of notice, the addresses of
the parties shall be as follows:
If to ISO BLOCK: If to the Company:
--------------- ------------------
0000 Xxxxx Xxxxxx Xxxxxx 0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000 Xxxxxx, Xxxxxxxx 00000
Attn: Egin Bresnig, CEO Attn: Xxxxxx X. Xxxxxx, CEO
If to BMI: If to Xxxxxx X. Xxxxxx:
--------- -----------------------
0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000 0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000 Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, CEO Attn: Xxxxxx X. Xxxxxx, CEO
Page 6
or such other address as either party shall have designated for notices to be
given to him or it in accordance with this paragraph.
(c) No Waiver Intended. The failure of any member of the Parent Group
at any time or from time to time to require performance of any of the
Executive's obligations shall in no manner affect the Parent's, the
Company's or BMI's right to enforce any provisions of this Agreement at a
subsequent time, and shall not constitute the waiver by the Parent, the
Company or BMI of any right arising out of any breach.
(d) Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties concerning the subject matter hereof and
supersedes all prior agreements, arrangements, and understanding between
the parties hereto. No representation, promise, inducement or statement of
intention has been made by or on behalf of either party which is not set
forth in this Agreement, and the term hereof may not be amended or modified
except by written instrument executed by the parties hereto.
(e) Parties in Interest; No Third Party Beneficiaries. Except as
otherwise provided herein, the terms and conditions of this Agreement shall
be binding on and inure to the benefit of the Executive, his heirs and
administrators, and shall be binding on and inure to the benefit of the
Parent Group and their respective successors and assigns. This Agreement
shall not be deemed to confer upon any person not a party hereto any rights
or remedies hereunder.
(f) Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Further, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of this
Agreement a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid and
enforceable.
(g) Captions. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
(h) Interpretation. This Agreement shall be governed by and construed
under the laws of the State of Colorado. If any action is brought to
enforce or interpret any term of this Agreement, venue shall be in the
District Court of Arapahoe County, State of Colorado. This Agreement shall
be interpreted as if all parties participated equally in its drafting and
preparation.
(i) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument. Execution and
delivery of this Agreement by exchange of facsimile copies bearing
facsimile signature of a party shall constitute a valid and binding
execution and delivery of this Agreement by such party. Such facsimile
copies shall constitute enforceable original documents.
Page 7
(j) Prevailing Party Clause. In the event of any litigation or
proceeding arising as a result of the breach of this Agreement or the
failure to perform hereunder, or failure or untruthfulness of any
representation or warranty herein, the party or parties prevailing in such
litigation or proceeding shall be entitled to collect the costs and
expenses of bringing or defending such litigation or proceeding, including
reasonable attorneys' fees, from the party or parties not prevailing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first above written and have initialled every preceding
page of this Agreement.
ISO BLOCK PRODUCTS USA, INC. FRANCHISE CONNECTION, INC.
By: /s/ Egin Bresnig By: /s/ Xxxxxx X. Xxxxxx
-------------------- ------------------------
Egin Bresnig, CEO Xxxxxx X. Xxxxxx, CEO
BRILLIANT MARKETING, INC. XXXXXX X. XXXXXX, Individually
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------ ------------------------
Xxxxxx X. Xxxxxx, CEO Signature
Page 8
