EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 29th day of June 1997, by and between
STARLOG FRANCHISE CORPORATION, a New Jersey corporation having its office in
Union, New Jersey, hereinafter referred to as "Employer" and XXXXX X. XXXXXX
KELEN, hereinafter referred to as "Employee," entered into in the city of Tampa,
County of Hillsborough, State of Florida.
The parties recite that:
A. Employer is engaged in the business of retail sales of personal
property bearing licensed logos throughout the United States and internationally
and maintains business premises at Union, New Jersey.
B. Employee is willing to be employed by Employer, and Employer is willing
to employ Employee on the terms and conditions hereinafter set forth.
For the reasons set forth above, and in consideration of the mutual covenants
and promises of the parties, the sufficiency of which the parties hereby
acknowledge, Employer and Employee covenant and agree as follows:
1. Agreement to Employ.
Employer hereby employs Employee for the position of President,
Distribution Division, and Employee hereby accepts and agrees to such
employment.
2. Description of Employee's Duties.
Subject to the supervision and pursuant to the orders, advice, and
direction of Employer, Employee shall perform the following duties:
a. Supervise and direct all administrative aspects and be responsible for
the operation of Employer's Distribution Division including Employer's sales and
marketing programs for such division; and
b. Perform such other duties as are customarily performed by one holding
such position in other business or enterprises of the same or similar nature as
that engaged in by Employer and such other executive management services as are
designated by Employer from time to time.
3. Manner of Performance of Employee's Duties.
Employee shall at all times faithfully, industriously, and to the best of
his ability, experience and talent perform all duties that may be required of
and from him pursuant to the express and implicit terms hereof, to the
reasonable satisfaction of Employer. Such duties shall be
rendered at the above mentioned premises and at such other place or places as
Employer shall in good faith require or as the interest, needs, business and
opportunities of Employer shall require or make advisable.
4. Compensation.
Employee acknowledges and agrees that the only compensation and/or
benefits that Employee is to receive from Employer are as follows:
a. Employee shall receive a base annual salary to be paid in accordance
with Employer's customary payroll practice. The initial amount of Employee's
base annual salary shall be $100,000.00 for each of the first and second years
of this Agreement. This amount shall be increased to the annual salary amounts
as follows for the third, fourth and fifth years of the term of this Agreement:
Year Base Salary
---- -----------
3 $115,000
4 $120,000
5 $125,000
b. Employee shall be eligible to receive a performance incentive in the
form of stock options each year during the term of this Agreement. In the event
that the Employer meets or exceeds the "Gross Sales Projection" as set forth
below at the end of each year (a "Measurement Year"), then Employer shall,
within 30 days after the end of such year, grant and deliver to Employee an
option (dated and effective as of the first day of the year after the
Measurement Year) to purchase from the Employer 200,000 shares of the common
stock of the Employee at the designated "Option Exercise Price," as follows:
Year Gross Sales Projection Option Exercise Price
---- ---------------------- ---------------------
1 $5,000,000 $0.50
2 $6,000,000 $0.60
3 $7,000,000 $0.70
4 $8,000,000 $0.80
5 $9,000,000 $0.90
For the purposes of this subsection (b):
(i) Year one (1) shall be deemed to be the period ending twelve (12)
months after the execution of this Agreement. Each subsequent year shall
end on the anniversary date of this Agreement.
(ii) The Annual Gross Sales Projection shall have been met if the
gross sales of the "Distribution Division" as determined for financial
accounting and SEC reporting
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purposes equal or exceed such amount. The "Distribution Division" shall
consist of the business operations formerly known as Goal Post
Distribution, Inc. combined with the distribution business operations of
Sumon, L.L.C, a wholly owned subsidiary of the Employer.
(iii) The aggregate number of shares of stock subject to this Option
and the Option Price will be appropriately adjusted for any increase or
decrease in the number of issued shares of Employer's common stock
resulting from a recapitalization, the subdivision or consolidation of
shares, stock splits or forward stock splits (but not reverse stock
splits, or consolidation of shares in which case the Option Price shall
not be adjusted but the number of shares shall be adjusted), or the
payment of a stock dividend after the date the option is granted.
(iv) Each such option shall be immediately exercisable and shall
expire at the end of the ten years after its grant; provided, however, if
a person or entity providing financing to Employer is of the opinion that
such financing cannot be accomplished without shortening the exercise
period of such options, Employee agrees to shorten such exercise period,
but to not less than five years after grant.
(v) Shares of stock purchased upon exercise of any option shall at
the time of purchase be paid for in full in cash or as otherwise permitted
by Employer. Options may be exercised in whole or in part from time to
time by written notice to Employer stating the full number of shares of
stock with respect to which the option is being exercised and the time of
delivery thereof, which shall be at least 15 days after the giving of such
notice unless an earlier date shall have been mutually agreed upon,
accompanied by full payment for the shares of stock.
(vi) Within nine months after the date hereof, Employer shall cause
to be prepared in accordance with applicable rules and regulations and
filed with the U.S. Securities and Exchange Commission ("SEC") a
registration statement of Form S-8 (or such other form as is appropriate
for the registration of employee options) covering 1,000,000 shares of
Employer common stock underlying the options which may be granted to
Employee hereunder and shall cause use its best efforts to cause such
registration statement to be declared effective by the SEC and to be
current at all times during the period of time that options granted to
Employee hereunder may remain outstanding.
(vii) Commencing on the date hereof, Employer shall advise Employee,
by written notice at least 30 days prior to the filing of any registration
statement under the Securities Act of 1933, as amended (the "Act")
covering any securities of Employer for its own account or for the account
of others, and will for the period beginning on the date hereof and ending
five (5) years thereafter, and upon the request of Employee and (i)
subject to the consent of any underwriter, if applicable, and (ii) the
availability under the form of registration statement selected by the
Employer in its sole discretion include in any such registration statement
such information as may be required to permit a public distribution
(within the meaning of the Act) of any of the Common Stock or options (and
the Common Stock underlying such options) thereon acquired by Employee
hereunder (the "Registrable Securities"). Employer shall supply a
reasonable number of prospectuses in order to facilitate the public sale
or other disposition of the Registrable Securities, use its best efforts
to register and qualify any of the Registrable Securities for sale in such
states as Employee shall reasonably designate, the cost to qualify of
which is to be
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born by Employer (the number of states shall be limited to those states in
which Employer's original registration statement was qualified). Employee
shall furnish information reasonably requested by Employer in connection
with such registration statement including his intentions with respect
thereto, shall promptly pay the pro rata portion of the SEC registration
fee incurred by Employer as the percentage of the Registration Securities
relates to all securities included in the registration statement and
Employer and Employee shall furnish to each other indemnification in a
form acceptable to Employer and Employee and customary and reasonable for
such transactions. Employer shall continue to advise Employee of its
intention to file a registration statement pursuant to this subparagraph
until the earlier of five years after the date hereof, or such time as all
of the Registrable Securities have been registered under the Act.
c. Employer shall provide health insurance coverage for Employee and
Employee's spouse in accordance with Employer's customary health insurance
coverage for its employees.
5. Duration and Termination of Employment.
The term of this Agreement is for a period of five (5) years, commencing
upon July 1, 1997. The employment relationship may be terminated at any time by
either party with or without cause. In the even Employee's employment is
terminated without Cause, the performance incentive set forth in paragraph 4.b.
above shall remain in effect for the remaining term of this Agreement and
Employee (or Employee's personal representative or heirs in the case of death)
shall continue to receive grants of options under paragraph 4.b. the same as if
Employee had continued in the employ of Employer throughout the period of time
set forth in paragraph 4.b. hereof. In addition to the foregoing, in the event
Employee terminates this Agreement, he shall give Employer at least two weeks
prior notice and in the event that Employer terminates this Agreement without
cause, Employer shall pay Employee six months severance pay, which shall be paid
in six (6) equal monthly installments commencing on the first day of the month
following such termination.
6. Employee's Loyalty to Employer's Interest.
Employee shall devote his best efforts and all of his full business time,
attention, knowledge and skill solely and exclusively to the business and
interest of Employer, and Employee shall be entitled to all benefits,
emoluments, profits or other issues arising from or incident to any and all
work, services and advice of Employee. Employee expressly agrees that during the
term hereof he will not be interested, directly or indirectly, in any form,
fashion or manner as partner, officer, director, stockholder, advisor, Employee,
or in any other form or capacity in any other business similar to Employer's
business.
7. Nondisclosure of Information Concerning Business.
Employee will not at any time, in any fashion, form or manner directly or
indirectly divulge, disclose or communicate to any person, firm or corporation
in any manner whatsoever any of the confidential business information of
Employer. For purposes of this Agreement the term "confidential business
information" shall include any information (a) of value or significance
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to Employer and (b) nor intended by Employer for general dissemination,
including without limitation the names of any of its customers, the price at
which it places its advertising or any other confidential information concerning
the business of Employer, its manner of operation or its plans, processes or
other confidential data of any kind, nature or description. It shall be a
defense to any action by Employer hereunder that such information is generally
known to competitors of Employer.
The parties hereby stipulate that, as between them, the foregoing matters
are important, material and confidential and gravely affect the effective and
successful conduct of the business of Employer and its goodwill, and that any
breach of the terms of this section is a material breach of this Agreement.
8. Trade Secrets.
Employee shall keep and hold as confidential all confidential business
information or trade secrets relating to the business which accrued to him
during his course of employment with Employer. Employee agrees not to divulge
any trade secrets or any other confidential information pertaining to the
business of Employer, including but not limited to, names and addresses of
Employer's past or present clients. Employee will not, during or after the term
of his employment, furnish to any individual, firm or corporation other than
with Employer's written permission any list of clients, suppliers, employees or
any other confidential business information related to Employer's business. For
purposes of this paragraph 8, the term "confidential business information" shall
have the same meaning as in paragraph 7.
It is understood that "trade secret" as used in this Agreement is deemed
to include lists of clients, customers, contracts, lists of suppliers, employees
software compilations, operating procedures, licenses, or any other proprietary
information of whatever nature which gives Employer an opportunity to obtain an
advantage over its competitors who do not have access or know or use it.
Employee agrees that, upon separation from Employer, he will return all company
property including all copies of any company trade secrets that have been in his
possession during the term of his employment. Employee will not make copies of
these documents for personal use at any time. After termination of Employee's
employment all mail addressed to Employee will be opened by Employer's
secretary. Personal mail not relating to Employer's business will be promptly
forwarded to Employee. Similarly, all mail received by Employee relating to the
company business will be immediately forwarded to Employer.
9. Covenant Not to Compete.
Employee agrees that in the event his employment with Employer is
terminated in accordance with the provisions of this Agreement, that he will not
for a period of two years after the date of such termination, directly or
indirectly, engage in any business which is competitive with the business
engaged in by Employer, either for Employee's own benefit or for the benefit of
any other person, partnership, firm or corporation whatsoever within the United
States or Canada. In the event of dismissal or discharge the employment of
Employee shall cease, but this Agreement shall remain in full force and effect
and neither direct nor indirect dismissal, diminution in salary or compensation,
nor condition and status of Employee's employment with Employer
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shall be any defense to any causes of action brought under this Agreement to
enforce this covenant not to compete. Employee hereby consents and agrees that
for any violation of any of the provisions of the Agreement, a temporary and/or
permanent restraining order or injunction may be issued against him. This right
shall be in addition to any other rights which Employer may have, including but
not limited to seeking damages from Employee.
10. Proprietary Rights.
All ideas, marketing systems, computer programs, configurations, systems
or procedures, programs or methods, formulae, inventions, discoveries,
improvements, secrets or processes whether or not patentable or copyrightable,
made or developed by the Employee during the term of this Agreement relating to
the business of the Employer shall be the exclusive property of the Employer,
whether or not any claim of the Employee to compensation has been or will be
satisfied, and the Employee agrees to provide the Employer at its request and
expenses such instruments and evidence as it may reasonably request to perfect,
enforce and maintain the Employer's rights to such property.
11. Termination.
a. Options previously granted by Employer to Employee shall not be
affected by any termination (with or without Cause) of the employment of
Employee. If Employee's employment is terminated during the course of a year and
Employee would have been entitled to receive the grant of an option at the end
of such year under the provisions of paragraph 4 hereof, Employee shall
nevertheless be entitled to receive such grant for such year the same as if
Employee had been employed by Employer throughout the entire year, but shall not
be entitled to receive any additional options from Employer. Except for the
foregoing, if Employee is terminated for Cause, he shall not be entitled to any
further compensation after the date of termination.
b. For purposes of this Agreement, Employer shall have "Cause" to
terminate Employee's employment hereunder upon (i) the failure by Employee to
substantially perform his duties hereunder (other than any such failure
resulting from Employee's incapacity due to physical or mental illness), after
demand for substantial performance is delivered by Employer that specifically
identifies the manner in which Employer believes Employee has not substantially
performed his duties, or (ii) the willful engaging by Employee in misconduct
which is materially injurious to the Employer, monetarily or otherwise, or (iii)
the material breach by Employee of any of the material provisions of this
Agreement. Notwithstanding the foregoing, Employee shall not be terminated
without (i) reasonable notice to Employee setting forth the specific reasons for
Employer's intention to terminate for Cause and the specific paragraphs of this
Agreement that are alleged to be breached by Employee, (ii) a reasonable
opportunity has been given to Employee to cure such breach, and (iii) delivery
to Employee of a Notice of Termination as defined in subparagraph (c) hereof.
c. Any termination of Employee's employment by Employer for Cause shall
be communicated by written Notice of Termination to Employee. For purposes of
this Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific
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termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Employee's employment under the provision so indicated.
12. Non-Transferability of Agreement or Option Rights.
This Agreement and the options granted hereunder shall not be assignable
or transferable otherwise than by will or by the laws of descent and
distribution. During the lifetime of Employee, the options granted hereunder
shall be exercisable only by Employee or, in the case of Employee's death, by
Employee's Personal Representative.
13. Interpretation, Venue and Waiver
This Agreement shall be interpreted and governed under the laws of the
State of Florida. Employee consents to the jurisdiction of any court, state or
federal, within Hillsborough County, Florida and agree that all litigation
regarding this Agreement shall be brought only in Hillsborough County, Florida
and further by execution of this Agreement the undersigned waives his privilege
of venue in suits brought by Employer or against Employer in connection with
this Agreement, and the undersigned further waives any and all right he may have
in the selection of venue and to trial by jury of this matter.
14. Descriptive Expressions.
All pronouns used in any gender shall include all genders and all words
used in singular number shall include the plural and vice versa wherever the
context so permits.
15. Severability.
The provisions of this Agreement are severable. If any judgment or court
order shall declare any provision of the provisions of this Agreement too broad
or unenforceable because of its breadth, the Court shall determine a smaller
area or time period which is enforceable and such enforceable limitation or
provision shall be enforced and the other provisions shall not be affected
thereby and shall remain in full force and effect.
16. Entirety.
Employee and Employer agree that this is the entire understanding by both
parties and that this Agreement supersedes all prior negotiations and/or written
agreements between the parties and that such Agreement may not be amended or
modified except in writing signed by Employee or Employer.
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17. Counterparts; Facsimile Signatures.
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original and which together shall constitute one and
the same instrument. Facsimile signatures shall be of the same 1egal effect as
if signed originally.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written in Tampa, Hillsborough County, Florida.
EMPLOYER:
ATTEST STARLOG FRANCHISE CORPORATION
/s/ Xxxx X. Xxxxx, By: /s/ Xxxx X. Xxxxxxxxxx
------------------------ --------------------------
Xxxx X. Xxxxx, Secretary Xxxx X. Xxxxxxxxxx, President
WITNESS: EMPLOYEE:
/s/ Xxxxxx X. Xxxxxx Xxxxxx /s/ Xxxxx X. Xxxxxx Kelen
--------------------------- -------------------------
/s/ [ILLEGIBLE] Xxxxx X. Xxxxxx Kelen
---------------------------
This Agreement shall be executed in duplicate; one copy to be retained by
Employee and one copy to be retained by Employer.
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