THIS AGREEMENT (the "Agreement") is being made and is
effective as of the 1st day of June, 1996 between INNOPET BRANDS CORP., a
Delaware corporation (the "Company"), having its principal offices at One East
Broward Boulevard, Fort Lauderdale, Florida 33301 and MARC DUKE ("MD"), an
individual with an address at 633 Northeast Ninth Avenue, Ft. Lauderdale,
W I T N E S S E T H:
WHEREAS, the Company desires to continue to employ MD and MD
desires to continue to be employed by the Company as its Chief Executive Officer
upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual premises and
agreements contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Nature of Employment; Term of Employment. The Company
hereby employs MD and MD agrees to continue to serve the Company as its Chief
Executive Officer, upon the terms and conditions contained herein, for a term
commencing as of June 1, 1996 and continuing until May 31, 2000 (the "Employment
2. Duties and Powers.
(a) During the Employment Term, MD shall be employed
by the Company as Chief Executive Officer, which position is the senior
executive officer of the Company. MD
shall devote substantially his full working time to his duties as Chief
Executive Officer of the Company, except for the time he spends working for
InnoPet Inc. and its other subsidiaries. In performance of his duties, MD shall
be subject to the direction of the Board of Directors of the Company. As Chief
Executive Officer, MD shall be responsible for managing, directing, and
supervising all aspects of the business of the Company worldwide. The Chief
Executive Officer shall be responsible for developing the business plan and
objectives of the Company and managing the execution of such plan. Without
limiting the generality of the authority of the Chief Executive Officer, the
Chief Executive Officer has the right to hire and terminate any employee of the
(b) So long as MD is (i) an employee of the Company,
or (ii) owns more than 5% of the issued and outstanding common stock of the
Company (assuming and inclusive of the exercise by MD of any unexercised
warrants or options), MD shall be nominated as a director of the Company.
(a) Base Salary. As compensation for his services
hereunder, the Company shall pay MD, during the Employment Term, a salary (the
"Base Salary") payable in equal semi-monthly installments at the annual rate of
$200,000 through December 31, 1997, and thereafter, at the annual rate of
(b) Incentive Bonus. In addition to the salary
provided herein and subject to the discretion of the Compensation and Stock
Option Committee (the "Compensation Committee"), MD shall receive, an annual
bonus (the "Incentive Bonus"). The Incentive Bonus
shall be an amount up to 25% of the annual Base Salary. Such bonus shall be paid
to MD within thirty (30) days after completion of the Company's annual audit.
(c) (i) Options. MD may be granted stock options in
the Company, on an annual basis, pursuant to the Company Stock Option Plan, at
the discretion of the Company's Compensation Committee. In the event that MD is
terminated for any reason other than "for cause" as specified in Section 10(d)
below, all options granted pursuant to this Section 4(c) shall vest immediately.
(d) Performance Bonus. In addition to the Base Salary
and Incentive Bonus set forth herein, MD shall be entitled to a performance
bonus (the "Performance Bonus") to be determined each year by the Compensation
Committee of the Board of Directors based on the Company's net earnings in any
given fiscal year. Such bonus shall be paid to MD within thirty (30) days after
completion of the Company's annual audit. Notwithstanding the foregoing, the
Performance Bonus shall not exceed three times the Base Salary for a particular
year. No Performance Bonus shall be payable for a particular year if net
earnings of the Company for such year are less that $100,000.
4. Expenses; Vacation; Insurance; Other Benefits.
(a) Reimbursement. MD shall be entitled to
reimbursement for reasonable travel and other out-of-pocket expenses necessarily
incurred in the performance of his duties hereunder, upon submission and
approval of written statements and bills in accordance with the then regular
procedures of the Company.
(b) Vacation. MD shall be entitled to four (4) weeks
vacation time per annum in accordance with the regular procedures of the Company
governing senior executive officers. Unused vacation time shall be paid to MD in
accordance with the regular procedures of the Company.
(c) Life Insurance. So long as MD is employed by the
Company, the Company shall provide MD with term life insurance in the face
amount of at least Five Hundred Thousand Dollars ($500,000) but not more then
One Million Dollars ($1,000,000.00). MD shall cooperate in submitting to any
physical exams that may be required by any appropriate provider of insurance.
(d) Automobile Expenses. So long as MD is employed by
the Company, the Company shall provide MD with an automobile allowance of Eight
Hundred Dollars ($800) per month to cover the costs of leasing an automobile,
insurance, and the maintenance of such automobile.
(e) Additional Office Expenses. MD shall be entitled
for reimbursement for all costs reasonably incurred in connection with providing
office equipment and related services at his home office, including, without
limitation, the costs of appropriate computer equipment, fax equipment, and
related telephone services.
5. Representations and Warranties.
(a) MD represents and warrants to the Company that
(i) MD is under no contractual or other obligation which is inconsistent with
the execution of this Agreement, the
performance of his duties hereunder, or the other rights of the Company
hereunder and (ii) MD is under no physical or mental disability that would
hinder his performance of duties under this Agreement.
(b) The Company acknowledges that MD is and will
continue to be the Chief Executive Officer and Chairman of the Board of
Directors of InnoPet Inc., and be an officer and director of The Original Pet
Drink Co., Inc. and AniVet, Inc. (collectively, "InnoPet") during the term of
this Agreement and that such positions do not conflict in any way with his
obligations and duties to the Company. MD agrees to work a minimum of forty (40)
hours a week on behalf of the Company.
6. Non-Competition. MD agrees that he will not (a) during the
period he is employed by the Company engage in, or otherwise directly or
indirectly be employed by, or act as a consultant or lender to, or be a
director, officer, employee, owner, or partner of, any other business or
organization that is or shall then be competing with the Company, and (b) for a
period of one (1) year after he ceases to be employed by the Company, directly
or indirectly compete with or be engaged in the same business as the Company, or
be employed by, or act as consultant or lender to, or be a director, officer,
employee, owner, or partner of, any business or organization which, at the time
of such cessation, competes with or is engaged in the same business as the
Company, except that in each case the provisions of this Section 6 will not be
deemed breached merely because MD owns not more than five percent (5%) of the
outstanding common stock of a corporation, if, at the time of its acquisition by
MD, such stock is listed on a national securities exchange, is reported on
NASDAQ, or is regularly traded in the
over-the-counter market by a member of a national securities exchange. Subject
to Section 5(b) hereof, these restrictions do not, and will not, apply in any
way to MD's positions and work for InnoPet Inc.
7. Patents; Copyrights. Any interest in patents, patent
applications, inventions, copyrights, developments, and processes ("Such
Inventions") which MD now or hereafter during the period he is employed by the
Company may own or develop relating to the fields in which the Company may then
be engaged shall belong to the Company; and forthwith upon request of the
Company, MD shall execute all such assignments and other documents and take all
such other action as the Company may reasonably request in order to vest in the
Company all his right, title, and interest in and to Such Inventions, free and
clear of all liens, charges and encumbrances.
8. Confidential Information. All confidential information
which MD may now possess or may obtain during the Employment Term relating to
the business of the Company shall not be published, disclosed, or made
accessible by him to any other person, firm, or corporation during the
Employment Term or any time thereafter without the prior written consent of the
Company. MD shall return all tangible evidence of such confidential information
to the Company prior to or at the termination of his employment.
9. Purchase of Shares. MD agrees to purchase 417,566 shares
(the "Shares") of common stock of the Company for $1,336,213 pursuant to the
terms of a note ("the Note") in the form attached hereto as Exhibit A. MD agrees
to execute the Note, a Stock Subscription
and Security Agreement and a stock power in the forms attached hereto as
Exhibits B and C, respectively.
(a) If MD is terminated other than pursuant to
Sections 10(b), (c), and (d) below, the Company shall be obligated to pay to MD
an amount equal to three times MD's average annual salary payments over the
course of the previous five years (or such period he is employed by the Company
if such term is less than five years). Such payment shall be made in two
installments; half on the date of termination and the balance six months
(b) Disability. In the event that MD shall be
physically or mentally incapacitated or disabled or otherwise unable fully to
discharge his duties hereunder for a period of six (6) months, then this
Agreement shall terminate upon thirty (30) days' written notice to MD, and MD
shall be entitled to receive an additional six months of Base Salary, as well as
any accrued but unpaid Incentive and Performance Bonus payments to the date of
termination, and any other payments provided under any disability insurance
policy carried by the Company.
(c) Death. In the event that MD shall die, then this
Agreement shall terminate on the date of MD's death, and no further compensation
shall be payable to MD, except for any accrued but unpaid Base Salary and/or
Incentive and Performance Bonus payments to the date of termination, and any
payments provided under the insurance policy referred to in Section 5(c) hereof.
(d) For Cause. Notwithstanding anything herein
contained, if on or after the date hereof and prior to the end of the Employment
Term, MD is terminated "For Cause" (as defined below) then the Company shall
have the right to give notice of termination of MD's services hereunder as of a
date to be specified in such notice, and this Agreement shall terminate on the
date so specified. Termination "For Cause" shall mean MD shall (i) be convicted
of a felony crime, (ii) commit an act of fraud against the Company, or (iii)
materially breach any term of this Agreement and fail to correct such breach
within twenty days after notice of commission thereof.
11. Merger, Etc.
(a) In the event of a future disposition of the
properties and business of the Company, substantially as an entirety, by merger,
consolidation, sale of assets, sale of stock, or otherwise (each, a "Change of
Control Event"), then the Company shall assign this Agreement and all of its
rights and obligations hereunder to the acquiring or surviving corporation.
(b) In the event there is a Change of Control Event
and MD's employment is terminated within two (2) years from the date of the
Change of Control Event other than pursuant to Sections 10(b), (c) or (d), then
the Company shall, in addition to any payments due under Section 10(a), be
obligated to pay to MD an amount equal to three times MD's average annual salary
and bonus payments over the course of the previous five years (or such period he
is employed by the Company if such term of employment is less than five years).
shall be paid in two installments; half on the date of termination and the
balance six months thereafter.
12. Survival. The covenants, agreements, representations, and
warranties contained in or made pursuant to this Agreement shall survive MD's
termination of employment, irrespective of any investigation made by or on
behalf of any party.
13. Modification. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof,
supersedes all existing agreements between them concerning such subject matter,
and may be modified only by a written instrument duly executed by each party.
14. Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested, or delivered against receipt to the
party to whom it is to be given at the address of such party set forth in the
preamble to this Agreement (or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 14).
Notice to the estate of MD shall be sufficient if addressed to MD as provided in
this Section 14. Any notice or other communication given by certified mail shall
be deemed given at the time of certification thereof, except for a notice
changing a party's address which shall be deemed given at the time of receipt
15. Waiver. Any waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any other breach of such
provision of this Agreement. The failure of a party to insist upon strict
adherence to any term of this Agreement on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement. Any waiver
must be in writing.
16. Binding Effect. MD's rights and obligations under this
Agreement shall not be transferable by assignment or otherwise, such rights
shall not be subject to encumbrance or the claims of MD's creditors, and any
attempt to do any of the foregoing shall be void. The provisions of this
Agreement shall be binding upon and inure to the benefit of MD and his heirs and
personal representatives, and shall be binding upon and inure to the benefit of
the Company and its successors and those who are its assigns under Section 11.
17. Headings. The headings in this Agreement are solely for
the convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
18. Counterparts; Governing Law. This Agreement may be
executed in any number of counterparts (and by facsimile), each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument. It shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without giving
effect to the rules governing the conflicts of laws.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first written above.
INNOPET BRANDS CORP.
Amount: $__________ Ft. Lauderdale, Florida
Interest Rate: 5.75% June 1, 1996
FOR VALUE RECEIVED, the undersigned, _____________________________
("Maker"), promises to pay to the order of InnoPet Brands Corp. (formerly known
as InnoPet Products Corp.), a Delaware corporation ("Payee"), at One East
Broward Boulevard, Ft. Lauderdale, Florida 33301, or at such other place as
Payee may from time to time designate by written notice to Maker, in lawful
money of the United States of America, the sum of
Dollars ($____________) plus interest from the date of this Note on the unpaid
balance. All payments of principal and interest are to be made as set forth
below without setoff or counterclaim. Maker further agrees as follows:
Section 1. Interest Rate.
(a) Interest shall accrue at a rate equal to five and
three-quarters percent (5.75%) per annum.
(b) Interest shall be computed on the basis of a year of 365
days for the actual number of days elapsed. After maturity (whether by
acceleration or otherwise, and before as well as after judgments), all unpaid
principal and interest shall bear interest until it is paid at a rate equal to
the highest rate allowed by law.
Section 2. Payments.
(a) Together with each payment of principal of this Note there
shall also be due and payable and paid the amount of accrued unpaid interest on
said payment. All references herein to the unpaid portion of this Note shall be
deemed and treated as referring to and
including both the then unpaid principal of this Note and the then accrued
unpaid interest thereon. The unpaid portion of the Note may be paid in dollars
or in property, including, without limitation, all or any part of the Shares, as
defined below. If the Note is paid by Shares then their value shall be equal to
their Fair Market Value, as defined herein. Fair Market Value shall mean the
average closing bid price as reported by the Nasdaq SmallCap Market (or such
other exchange or quotation system that is the then primary forum for trading
the Shares) for the five (5) trading days immediately preceding the day payment
of the Note is made by presentment of the Shares provided, however, that in no
event shall the Shares be deemed to have a Fair Market Value of less than $1.55
(b) Upon the sale of any shares of common stock (the "Shares")
of Payee issued originally by Payee to Maker against delivery to Payee of this
Note, and upon receipt by Payee of the proceeds from such sale, the Maker shall
promptly pay to Payee an amount equal to $3.20 per share sold and the then
unpaid portion of this Note shall be correspondingly reduced.
(c) The then unpaid portion of this Note shall be due and
payable on June 1, 1999.
(d) Maker shall have the right to prepay the unpaid portion of
this Note in full or in part at any time, without premium or penalty. All
prepayments shall be applied first to the then accrued unpaid interest and then
to the unpaid principal.
Section 2. Security.
This Note is secured by the Shares owned by the Maker.
Section 3. Recourse.
Until June 1, 1998, the obligations of the Maker under this
Note shall be recourse against the Maker. Thereafter, the obligations of the
Maker under this Note shall be non-recourse and the Payee's sole recourse for
payment of this Note shall be the Shares (or any other property then pledged as
security for repayment of the Note).
Section 4. Default.
It shall be an event of default ("Event of Default"), and the
then unpaid portion of this Note shall become immediately due and payable, at
the election of Payee, upon the occurrence of any of the following events:
(a) any failure on the part of Maker to make any payment
hereunder when due, whether by acceleration or otherwise, and the continuation
of such failure for a period of ten (10) days after written notice thereof from
(b) any failure on the part of Maker to keep or perform any of
the terms or provisions (other than payment) of this Note or the Stock
Subscription and Security Agreement executed herewith, or any amendments
thereof, and the continuation of such failure for more than ten (10) days after
written notice thereof from Payee.
(c) any failure on the part of Maker to pay any debt within
sixty (60) days of its due date (except where contested in good faith);
(d) Maker shall commence (or take any action for the purpose
of commencing) any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, moratorium or similar law or statute;
(e) a proceeding shall be commenced against Maker under any
bankruptcy, reorganization, arrangement, readjustment of debt, moratorium or
similar law or statute and relief is ordered against him, or the proceeding is
controverted but is not dismissed within sixty (60) days after the commencement
(f) Maker consents to or suffers the appointment of a
receiver, trustee or custodian of any substantial part of his assets that is not
vacated within thirty (30) days;
(g) any information furnished to Payee by or on behalf of
Maker shall be false or misleading in any material respect.
Section 5. Jurisdiction and Service of Process.
Maker irrevocably consents to the jurisdiction of the courts
of the State of Florida and of any federal court located in such State in
connection with any action or proceeding arising out of or relating to this Note
or a breach of this Note. Maker waives, to the full extent permitted by law, any
objection which it may now or hereafter have to the laying of venue of any
action or proceeding arising out of or relating to this Note brought in the
State of Florida, and further irrevocably waives, to the full extent permitted
by law, any claim that any such action or proceeding brought in such State has
been brought in an inconvenient forum. In any such action or proceeding, Maker
waives, to the full extent permitted by law, personal service
of any summons, complaint, or other process and agrees that service thereof may
be made on Maker by certified or registered U.S. mail or by personal delivery.
Within thirty (30) days after such service, or such other time as may be
mutually agreed upon in writing by the attorneys for the parties to such action
or proceeding Maker shall appear or answer such summons, complaint, or other
process. Should Maker so served fail to appear or answer within such thirty
(30)-day period or such extended period, as the case may be, Maker shall be
deemed in default and judgment may be entered by Payee against Maker for the
amount as demanded in any summons, complaint, or other process so served.
Section 6. Waivers.
(a) Maker waives demand, presentment, protest, notice of
protest, notice of dishonor, and all other notices or demands of any kind or
nature with respect to this Note.
(b) Maker agrees that a waiver of rights under this Note shall
not be deemed to be made by Payee unless such waiver shall be in writing, duly
signed by Payee, and each such waiver, if any, shall apply only with respect to
the specific instance involved and shall in no way impair the rights of Payee or
the obligations of Maker in any other respect at any other time.
(c) Maker agrees that in the event Payee demands or accepts
partial payment of this Note, such demand or acceptance shall not be deemed to
constitute a waiver of any right to demand the entire unpaid portion of this
Note at any time in accordance with the terms of this Note.
(d) In any action or proceeding arising out of or relating to
this Note, Maker waives (to the full extent permitted by law) all right to a
trial by jury or to plead as a defense any statute of limitations or any other
similar law or equitable doctrine.
Section 7. Collection Costs.
Maker will upon demand pay to Payee the amount of any and all
reasonable costs and expenses, including, without limitation, the reasonable
fees and disbursements of its counsel (whether or not suit is instituted) and of
any experts and agents, which Payee may incur in connection with the following:
(i) the enforcement of this Note; and (ii) the enforcement of payment of all
obligations of Maker by any action or participation in, or in connection with, a
case or proceeding under Chapters 7, 11, or 13 of the Bankruptcy Code, or any
successor statute thereto.
Section 8. Assignment of Note.
Maker may not assign or transfer this Note or any of its
obligations under this Note in any manner whatsoever without the prior written
consent of Payee which shall not be unreasonably withheld. The Note may be
assigned at any time by Payee . Maker agrees not to assert against any assignee
of this Note any claim or defense which Maker may have against any assignor of
Section 9. Miscellaneous.
(a) This Note may be altered only by prior written agreement
signed by the party against whom enforcement of any waiver, change,
modification, or discharge is sought. This Note may not be modified by an oral
agreement, even if supported by new consideration.
(b) This Note shall be governed by, and construed in
accordance with, the laws of the State of Florida, without giving effect to such
state's principles of conflict of laws.
(c) Subject to Section 8, the covenants, terms, and conditions
contained in this Note apply to and bind the heirs, successors, executors,
administrators and assigns of the parties.
(d) If any provision or any word, term, clause, or other part
of any provision of this Note shall be invalid for any reason, the same shall be
ineffective, but the remainder of this Note shall not be affected and shall
remain in full force and effect.
(e) All notices, consents, or other communications provided
for in this Note or otherwise required by law shall be in writing and may be
given to or made upon the respective parties at the following mailing addresses:
Payee: InnoPet Brands Corp.
One East Broward Boulevard
Ft. Lauderdale, Florida 33301
Such addresses may be changed by notice given as provided in this subsection.
Notices shall be effective upon the date of receipt; provided, however, that a
notice (other than a notice of a changed address) sent by certified or
registered U.S. mail, with postage prepaid, shall be presumed received not later
than three (3) business days following the date of sending.
(f) Time is of the essence under this Note.
IN WITNESS WHEREOF, Maker has executed this Note effective as
of the date first set forth above.
STOCK SUBSCRIPTION AND SECURITY AGREEMENT
June 1, 1996
To: InnoPet Brands Corp.
_______________ (the "Subscriber") hereby subscribes for
___________ shares (the "Shares") of common stock, par value $.01 per share, of
InnoPet Brands Corp (the "Company").
Subscriber hereby agrees, represents, and warrants that:
(1) Subscriber is acquiring such shares for
Subscriber's own account for investment purposes only and not with a view to the
distribution or resale thereof;
(2) By virtue of its position, Subscriber has access
to the same kind of information which would be available in a registration
statement filed under the Securities Act of 1933;
(3) Subscriber is a sophisticated investor;
(4) Subscriber understands that it may not sell or
otherwise dispose of such shares in the absence of either a registration
statement under the Securities Act of 1933 or an exemption from the registration
provisions under the Securities Act of 1933; and
(5) The certificates representing such shares may
contain a legend to the effect of (4) above.
(6) Subscriber grants the Company a security interest
in the Shares to secure the repayment of a certain note (the "Note") used to
purchase the Shares. The Subscriber agrees that the Company shall hold the
Shares until the Note is paid in full, except that upon written demand of the
Subscriber, his estate or heirs to release all or any part of the Shares to
effect a sale of such Shares by the Subscriber, his estate or heirs, the Company
shall immediately deliver the number of Shares requested to be released to the
transfer agent in escrow so that such sale may occur. The Company shall have a
security interest in the proceeds of the such sale to the extent set forth in
the Note until such proceeds are applied in accordance with the terms of the
Note. If the sale does not occur the Shares shall be immediately returned to the
security for the repayment of the Note. The Subscriber agrees to execute a stock
power in blank with respect to the Shares and that the Company shall also hold
such stock power.
Agreed to and Accepted:
INNOPET BRANDS CORP.
Name: Marc Duke
FOR VALUE RECEIVED,_________________ hereby sells, assigns and transfers unto
INNOPET BRANDS CORP. shares of Common Stock of the INNOPET BRANDS CORP.
standing in its name on the books of said Corporation represented by
Certificate(s) No.(s). herewith, and do hereby irrevocably constitute and
attorney to transfer the said stock on the books of said Corporation with full
power of substitution in the premises.
Dated: June 1, 1996