EXECUTIVE COMPENSATION AGREEMENT
This
EXECUTIVE COMPENSATION AGREEMENT (the “Agreement”),
dated
as of July 17, 2008 (the “Effective
Date”),
is
entered into by and between PET
EXPRESS SUPPLY, INC.,
a
Nevada corporation with offices located at 00 Xxxx 00xx
Xxxxxx,
0xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (“Company”),
on
the one hand, and XXXXXXXX
XXXXXX,
the
Chief Executive of Company (“Executive”).
WHEREAS,
Company has employed Executive as its Chief Executive Officer, pursuant to
the
Employment Agreement dated as of June 15, 2007, between the X X Vision
Enterprises, Inc. (“X X Vision”) and the Executive, as amended by the First
Amendment of Employment Agreement dated January 2, 2008 between X X Vision
and
Executive (collectively, the “Employment Agreement”), which Employment Agreement
was assigned by X X Vision to Company and has been assumed by Company pursuant
to the Assignment and Assumption Agreement dated July 17, 2008 between X X
Vision and Company.
WHEREAS,
Company desires to provide additional incentive compensation to Executive in
connection with his services which are over and above the duties and
responsibilities set forth in his Employment Agreement, with such additional
services likely having the outcome of increasing Company’s valuation;
and
WHEREAS,
Executive desires to provide such services to Company pursuant to the terms
of
this Agreement;
NOW,
THEREFORE, in consideration of the mutual agreements hereinafter set forth,
the
parties hereto agree as follows:
1. Term.
The
term of this Agreement (the “Term”)
shall
commence as of the Effective Date and shall be co-terminous with the term of
the
Employment Agreement.
2. Compensation.
(a) (i) In
consideration for the services to be rendered by Executive hereunder , including
cooperation with one or more potential Transaction Parties, which constitute
further duties and responsibilities in addition to his operational and other
duties set forth in the Employment Agreement, Company shall pay to Executive
additional compensation in the form of a Fee (as defined below in Section
2(a)(ii) below), solely in connection with a “Qualifying Transaction” (as
defined in Section 2(b)(i) below).
(ii) As
used
herein, the “Fee”
shall
mean a payment (in cash or in kind, as provided in Section 2(b)(v) below) with
respect to each Qualifying Transaction equal to the following percent of the
“Transaction Proceeds” (as defined in Section 2(b)(iii) below) from such
Qualifying Transaction:
| · |
Five
percent (5%) of the first Ten Million Dollars
($10,000,000)
|
| · |
Four
percent (4%) of the second Ten Million Dollars
($10,000,000)
|
| · |
Two
and one-half percent (2½%) of the next Eighty Million Dollars
($80,000,000)
|
less
the
amount of any other fee or commission arrangement approved by Executive with
respect to such Qualifying Transaction. For the avoidance of doubt, no Fee
shall
be paid to Executive with respect to Transaction Proceeds in excess of One
Hundred Million Dollars $100,000,000. If more than one Qualifying Transaction
should occur during the Term, the Transaction Proceeds with respect to all
of
the Qualifying Transactions shall be aggregated for purposes of computing the
Fee payable to Executive.
(b) (i) As
used
herein, a “Qualifying
Transaction”
shall
mean: (A) a “Transaction” (as defined in Section 2(b)(ii) below) between Company
Party (as hereinafter defined) and a third party purchaser (the “Transaction
Party”) that is consummated at any time during the Term hereof or within twelve
months after the expiration or termination of the Term hereof, provided Company
Party signs a purchase agreement, letter of intent, agreement in principle,
expression of interest or similar document with the Transaction Party during
the
Term hereof; or (B) a Transaction between Company Party and a Transaction Party
that is consummated during the Term (whether or not Company Party has previously
signed a purchase agreement, letter of intent, agreement in principle,
expression of interest or similar document with the Transaction Party); provided
that none of the transactions consummated pursuant to the Exchange Agreement
dated July 17, 2008 by and among Company, X X Vision and the other parties
thereto, or the Loan and Security Agreement dated July 17, 2008 by and among
Company, X X Vision,
and the
other parties thereto.
(ii) As
used
herein, a “Transaction”
shall
mean any transaction whereby, directly or indirectly, a Transaction Party
purchases all or a major portion of Company, whether through a purchase of
all
or substantially all or a major portion of Company’s assets, capital stock or
other equity securities, or effects a merger, reorganization, consolidation
or
other business combination with Company or any subsidiary or division of
Company.
(iii) As
used
herein, “Transaction
Proceeds”
means
all consideration paid by any purchaser to Company Party, including
collectively, and without duplication: (A) the aggregate amount of the cash
proceeds delivered to Company Party by the Transaction Party in connection
with
the Transaction, plus
(B) the
value of any non-cash consideration delivered to Company Party by the
Transaction Party in connection with the Transaction. Transaction Proceeds
shall
include, without limitation, any deferred Transaction Proceeds to be paid,
delivered, assumed, acquired, remaining, outstanding, or retired after the
closing of a Transaction, but having a value that is readily determinable at
the
time of closing of the Transaction (i.e., pursuant to an installment payment,
promissory note or similar arrangement, in which event the value thereof shall
be the face amount of such payment obligation plus
the
amount of any interest payable with respect thereto); and Transaction Proceeds
shall also include any payments made to equity holders of the Company Party
other than Executive. Notwithstanding
the foregoing,
Transaction Proceeds shall not include any deferred proceeds based on a
contingency, including without limitation, royalties, residuals, earn-outs
and
similar types of contingent proceeds whose value is not readily determinable
at
the time of closing of the Transaction.
(iv)
As
used
herein, “Company Party” shall mean Company and its shareholder(s), parent(s),
affiliate(s), division(s) and/or any other party authorized to sell the stock,
business or assets of the Company).
(v)
The
Fee
shall be disbursed by or as directed by Company to Executive at the time of
the
consummation of the Qualifying Transaction (the “Closing”) of each Transaction
at the same time any Transaction Proceeds are paid to Company Party, including
with respect to any deferred Transaction Proceeds having a value that is readily
determinable at the time of closing of the Transaction (i.e., pursuant to an
installment payment, promissory note or similar arrangement, in which event
the
value thereof shall be the face amount of such payment obligation plus
the
amount of any interest payable with respect thereto). The Fee shall be in cash,
except that, if non-cash consideration is paid to Company Party, the Fee shall
be paid to Executive in the same non-cash consideration. Company shall furnish
Executive with copies of closing statements, the Closing Memorandum and other
pertinent information regarding any Qualifying Transaction within 5 or 10 days
of the Closing.
3. Amendments.
No
amendment, supplement or waiver of any provision of this Agreement shall be
effective unless the same shall be in writing and signed by Executive and
Company (in the case of an amendment or supplement) or by the waiving party
(in
the case of a waiver).
4.
Successors
and Assigns.
This
agreement shall be binding on and inure to the benefit of Company, executive,
and its/their/his successors, assigns and/or heirs
5.
Time
of the Essence.
Time is
of the essence in this agreement.
6. Applicable
Law.
This
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the State of New York, without giving effect to principles of
conflicts of law or choice of law that would compel the application of the
substantive laws of any other jurisdiction.
7. Entire
Agreement.
This
Agreement and the Employment Agreement set forth the entire agreement of the
parties hereto with regard to the subject matter hereof, and this Agreement
supersedes and replaces the Executive Compensation Agreement dated as of January
22, 2008 between the Executive and X X Vision, and all other prior agreements,
understandings and representations, oral or written, other than the Employment
Agreement, with regard to such matters.
8. Counterparts.
This
Agreement may be executed in counterparts, each of which shall be an original,
and both of which together shall constitute one and the same
document.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
PET
EXPRESS SUPPLY, INC.
By:
Xxxxxxx
Xxxxxx
Chairman
EXECUTIVE:
XXXXXXXX
XXXXXX
