Document:

Exhibit
10.ll

 

Regis
Corporation

 

 

Short
Term Incentive Compensation Plan

 

 

 

TABLE OF
CONTENTS

 

	
   

  	
  ARTICLE I

  	
  ESTABLISHMENT AND
  PURPOSE

  	
   

  
	
   

  	
  1.1

  	
  Establishment

  	
   

  
	
   

  	
  1.2

  	
  Purposes

  	
   

  
	
   

  	
  ARTICLE
  II

  	
  DEFINITIONS

  	
   

  
	
   

  	
  2.1

  	
  Affiliate

  	
   

  
	
   

  	
  2.2

  	
  Appendix

  	
   

  
	
   

  	
  2.3

  	
  Award

  	
   

  
	
   

  	
  2.4

  	
  Beneficiary

  	
   

  
	
   

  	
  2.5

  	
  Board
  of Directors or Board

  	
   

  
	
   

  	
  2.6

  	
  Cause

  	
   

  
	
   

  	
  2.7

  	
  Change in
  Control

  	
   

  
	
   

  	
  2.8

  	
  Code

  	
   

  
	
   

  	
  2.9

  	
  Committee

  	
   

  
	
   

  	
  2.10

  	
  Company

  	
   

  
	
   

  	
  2.11

  	
  Covered
  Employee

  	
   

  
	
   

  	
  2.12

  	
  Disability

  	
   

  
	
   

  	
  2.13

  	
  Effective Date

  	
   

  
	
   

  	
  2.14

  	
  Participant

  	
   

  
	
   

  	
  2.15

  	
  Performance
  Goals

  	
   

  
	
   

  	
  2.16

  	
  Plan

  	
   

  
	
   

  	
  2.17

  	
  Representative

  	
   

  
	
   

  	
  2.18

  	
  Termination
  of Employment

  	
   

  
	
   

  	
  ARTICLE III

  	
  ADMINISTRATION

  	
   

  
	
   

  	
  3.1

  	
  Committee
  Structure and Actions

  	
   

  
	
   

  	
  3.2

  	
  Committee
  Authority

  	
   

  
	
   

  	
  ARTICLE
  IV

  	
  ELIGIBILITY

  	
   

  
	
   

  	
  4.1

  	
  Eligibility

  	
   

  
	
   

  	
  ARTICLE V

  	
  AWARDS

  	
   

  
	
   

  	
  5.1

  	
  General

  	
   

  
	
   

  	
  5.2

  	
  Award Amounts

  	
   

  
	
   

  	
  5.3

  	
  Performance
  Goals

  	
   

  
	
   

  	
  5.4

  	
  Payments

  	
   

  
	
   

  	
  5.5

  	
  Termination
  of Employment Due to Death, Disability or Other Reason

  	
   

  
	
   

  	
  5.6

  	
  Election to
  Defer

  	
   

  
	
   

  	
  ARTICLE VI

  	
  CHANGE IN CONTROL PROVISIONS

  	
   

  
	
   

  	
  6.1

  	
  Impact of Event

  	
   

  
	
   

  	
  ARTICLE
  VII

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
  7.1

  	
  Amendment
  and Termination

  	
   

  
	
   

  	
  7.2

  	
  Unfunded
  Status of Plan

  	
   

  
	
   

  	
  7.3

  	
  Provisions
  Relating to Internal Revenue Code Section 162(m)

  	
   

  
	
   

  	
  7.4

  	
  No
  Additional Obligation

  	
   

  
	
   

  	
  7.5

  	
  Withholding

  	
   

  
	
   

  	
  7.6

  	
  Controlling Law

  	
   

  
	
   

  	
  7.7

  	
  Offset

  	
   

  
	
   

  	
  7.8

  	
  Nontransferability;
  Beneficiaries

  	
   

  
	
   

  	
  7.9

  	
  No
  Rights with Respect to Continuance of Employment

  	
   

  
	
   

  	
  7.10

  	
  Headings

  	
   

  
	
   

  	
  7.11

  	
  Severability

  	
   

  
	
   

  	
  7.12

  	
  Successors
  and Assigns

  	
   

  
	
   

  	
  7.13

  	
  Entire
  Agreement

  	
   

  

 

i

 

REGIS
CORPORATION

SHORT TERM INCENTIVE COMPENSATION
PLAN

 

ARTICLE I

 

ESTABLISHMENT AND PURPOSE

 

1.1           Establishment.  The Regis Corporation Short Term Incentive
Compensation Plan (“Plan”), as originally established on June 30, 1998,
is hereby amended and restated by Regis Corporation (“Company”),
effective as of the Effective Date.  The
Plan shall remain in effect for a period of five years and shall terminate on
the fifth anniversary of the Effective Date unless earlier determined by the
Committee.

 

1.2           Purposes. 
The purposes of the Plan are to enhance the value of the Company by
providing an annual incentive for the achievement of one or more of the
performance goals set out in Section 5.3(b) (“Performance Goals”) and
selected by the Committee for the applicable fiscal year;  to link a significant portion of a
Participant’s annual compensation to the achievement of one or more of the
Performance Goals; and to attract, motivate and retain employees on a
competitive basis by making awards based on annual achievement of Performance
Goals.

 

ARTICLE II

 

DEFINITIONS

 

For purposes
of the Plan, the following terms are defined as set forth below:

 

2.1           “Affiliate”  means any individual, corporation,
partnership, association, limited liability company, joint-stock company,
trust, unincorporated association or other entity (other than the Company) that
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the Company.

 

2.2           “Appendix”  means any schedule, chart or other
description of the specific awards prepared each year (or more frequently) by
the Committee with respect to the applicable fiscal year. Each Appendix shall
be a part of this Plan as if originally set forth herein.

 

2.3           “Award”  means an annual incentive award granted to a
Participant under the Plan.  Awards shall
be subject to the terms and conditions of the Plan, and such other terms and
conditions as the Committee shall deem desirable (as set out in an Appendix).

 

2.4           “Beneficiary”  means any person or other entity, which has
been designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the compensation, specified
under the Plan to the extent permitted. 
If there is no designated

 

1

 

beneficiary, then the term means any person or other
entity entitled by will or the laws of descent and distribution to receive such
compensation.

 

2.5           “Board of Directors” or “Board”  means the Board of Directors of the Company.

 

2.6           “Cause”  means, for purposes of determining whether
and when a Participant has incurred a Termination of Employment for Cause, any
act or omission which permits the Company to terminate the written agreement or
arrangement between the Participant and the Company or an Affiliate for “cause”
as defined in such agreement or arrangement, or in the event there is no such
agreement or arrangement or the agreement or arrangement does not define the
term “Cause,” then “Cause” means the Participant’s intentional participation in
illegal conduct which (i) is materially and directly detrimental to the
financial interests of the Company or an Affiliate and (ii) results in the
Participant’s conviction of a felony.

 

2.7           “Change
in Control”  means the first to occur
of any of the following events:

 

(1)           the acquisition by any “person,” as
that term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended, “beneficial ownership,” as defined in Rule 13d-3 under the
Exchange Act, directly or indirectly, of 20% or more of the shares of the
Company’s capital stock;

 

(2)           the first day on which less than
two-thirds of the total membership of the Board of Directors shall be
Continuing Directors (as that term is defined in Article VII of the Company’s
Articles of Incorporation);

 

(3)           the approval by the shareholders of
the Company of a merger, share exchange, or consolidation of the Company (a “Transaction”),
other than a Transaction which would result in the Voting Stock of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the Voting Stock of the Company or such
surviving entity immediately after such Transaction; or

 

(4)           the approval by the shareholders of
the Company of a complete liquidation of the Company or a sale or disposition
of all or substantially all the assets of the Company.

 

2.8           “Code”  means the Internal Revenue Code of 1986, as
amended from time to time, and any successor, along with related rules,
regulations and interpretations.

 

2.9           “Committee”  means the committee of the Board responsible
for granting Awards under the Plan, which initially shall be the Compensation
Committee of the Board, until such time as the Board may designate a different
committee.  The Committee shall consist
solely of two or more directors, each of whom is an “outside director” under
Section 162(m) of the Code.

 

2.10         “Company”  means Regis Corporation,
a Minnesota corporation, and includes any
successor or assignee corporation or corporations into which the Company

 

2

 

may be merged, changed or consolidated; any
corporation for whose securities the securities of the Company shall be
exchanged; and any assignee of or successor to substantially all of the assets
of the Company.

 

2.11         “Covered
Employee”  means a “covered employee”
within the meaning of Section 162(m) of the Code.

 

2.12         “Disability”  means a mental or physical illness that
entitles a Participant to receive benefits under the long-term disability plan
of the Company or an Affiliate, or if there is no such plan or the Participant
is not covered by such a plan or the Participant is not an employee of the
Company or an Affiliate, a mental or physical illness that renders a
Participant totally and permanently incapable of performing the Participant’s
duties for the Company or an Affiliate. 
Notwithstanding the foregoing, a Disability shall not qualify under this
Plan if it is the result of (i) a willfully self-inflicted injury or willfully
self-induced sickness; or (ii) an injury or disease contracted, suffered, or
incurred while participating in a criminal offense.  The determination of Disability for purposes
of this Plan shall be made by the Committee and shall not be construed to be an
admission of disability for any other purpose.

 

2.13         “Effective
Date”  means July 1, 2004.

 

2.14         “Participant”  means a person who satisfies the eligibility
conditions of Article IV and to whom an Award has been granted by the Committee
under the Plan for the applicable year. 
In the event that a Representative is appointed for a Participant, then
the term “Participant” shall mean such appointed Representative.  Notwithstanding the appointment of a
Representative, the term “Termination of Employment” shall mean the Termination
of Employment of the Participant.

 

2.15         “Performance
Goals”  mean one or more of the
performance goals set out in Section 5.3 (b) and chosen by the Committee for
the applicable fiscal year.

 

2.16         “Plan”  means the Regis Corporation Short Term
Incentive Compensation Plan, as herein set forth and as may be amended from
time to time.

 

2.17         “Representative”  means (a) the person or entity acting as the
executor or administrator of a Participant’s estate pursuant to the last will
and testament of a Participant or pursuant to the laws of the jurisdiction in
which the Participant had the Participant’s primary residence at the date of
the Participant’s death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
beneficiary of the Participant upon or following the Participant’s death; or
(d) the person to whom an Award has been permissibly transferred; provided that
only one of the foregoing shall be the Representative at any point in time as
determined under applicable law and recognized by the Committee.

 

2.18         “Termination of Employment”  means the occurrence of any act or event,
whether pursuant to an employment agreement or otherwise, that actually or
effectively causes or results in the person’s ceasing, for whatever reason, to
be an employee of the Company or of any Affiliate, including, without
limitation, death, Disability, dismissal, severance at the election of the
Participant, retirement, or severance as a result of the discontinuance, liquidation,
sale or transfer by

 

3

 

the Company or its Affiliates of a business owned or
operated by the Company or its Affiliates. 
A Termination of Employment shall occur with respect to an employee who
is employed by an Affiliate if the Affiliate shall cease to be an Affiliate and
the Participant shall not immediately thereafter become an employee of the
Company or an Affiliate.

 

In addition, certain other terms used herein have
definitions given to them in the first place in which they are used.

 

ARTICLE III

 

ADMINISTRATION

 

3.1           Committee Structure and Actions.  The Plan shall be administered by the
Committee in accordance with the rules and responsibilities of the Committee.

 

3.2           Committee
Authority.  Subject to the terms of
the Plan, the Committee shall have the authority:

 

(1)           to select those persons to whom
Awards may be granted from time to time;

 

(2)           to determine, whether through the use
of an Appendix or otherwise, such other terms and conditions regarding any
Award granted hereunder, any time or from time to time, of any Award, subject
to the limitations of Section 7.1;

 

(3)           to determine to what extent and under
what circumstances amounts payable with respect to an Award may be deferred;

 

(4)           to determine what legal requirements
are applicable to the Plan and Awards and to require of a Participant that
appropriate action be taken with respect to such requirements;

 

(5)           to cancel, with the consent of the
Participant or as otherwise provided in the Plan, outstanding Awards;

 

(6)           to determine whether and with what
effect an individual has incurred a Termination of Employment;

 

(7)           to determine whether an Award is to
be adjusted, modified or prorated under the Plan;

 

(8)           to adopt, amend and rescind such
rules and regulations as, in its opinion, may be advisable in the
administration of this Plan; and

 

(9)           to appoint and compensate agents,
counsel, auditors or other specialists to aid it in the discharge of its
duties.

 

4

 

The Committee
shall have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall, from time to time,
deem advisable, to interpret the terms and provisions of the Plan and any Award
issued under the Plan and to otherwise supervise the administration of the
Plan.  The Committee’s policies and
procedures may differ with respect to Awards granted at different times and may
differ with respect to a Participant from time to time, or with respect to
different Participants at the same or different times.

 

Any determination made by the Committee pursuant to
the provisions of the Plan shall be made in its sole discretion, and in the
case of any determination relating to an Award may be made at the time of the
grant of the Award or, unless in contravention of any express term of the Plan,
at any time thereafter.  All decisions
made by the Committee pursuant to the provisions of the Plan shall be final and
binding on all persons, including the Company and Participants.  Any determination shall not be subject to de novo review if challenged in court.

 

ARTICLE IV

 

ELIGIBILITY

 

4.1           Eligibility.  The Participants for each fiscal year (“Award
Year”) shall consist of (a) the Covered Employees for the immediately
preceding fiscal year, except as excluded in writing by the Committee prior to
the commencement of the Award Year plus (b) any other person that the Committee
expects to be a Covered Employee for the Award Year and designates as a
Participant before the commencement of the Award Year.

 

ARTICLE V

 

AWARDS

 

5.1           General.  The Committee shall have authority to grant
Awards under the Plan at any time or from time to time. Awards consist of the
right to receive cash upon achievement of certain Performance Goals.  The Committee shall have complete discretion to determine the Awards granted to each
Participant. The time period during which an Award shall be earned shall be the
“Performance Period,” and shall be one fiscal year in length.

 

5.2           Award
Amounts.

 

(a)           Target Pay-out.  The target amount that may be paid with
respect to an Award (the “Target Pay-out”) shall be determined by the
Committee and shall be based on a percentage of a Participant’s actual annual
base salary at the time of grant (“Participation Factor”), within the
range established by this Section and any Appendix to the Plan.  Any such amount shall be subject to
adjustment as provided below in this Section 5.2. The Participation Factors are
intended to reflect a Participant’s level of responsibility and other factors
deemed

 

5

 

appropriate by the Committee.  Accordingly, the Participation Factors will
vary among the Chief Executive Officer, the Executive Vice Presidents, the
Senior Vice Presidents, the Vice Presidents and other Participants. The
Committee may establish curves, matrices or other measurements for prorating
the amount of pay-outs for achievement of Performance Goals at less than the
Target Pay-out.

 

(b)           Maximum Pay-out.  The Committee may also establish a maximum
potential pay-out amount (the “Maximum Pay-out”) with respect to an
Award of [up to 100%] of the Target Pay-out in
the event that Performance Goal targets are exceeded by an amount established
by the Committee at the time Performance Goals are established. The Committee
may establish curves, matrices or other measurements for prorating the amount
of pay-outs for achievement of Performance Goals at greater than the Target
Pay-out but less than the Maximum Pay-out.

 

(c)           Threshold Pay-out.  The Committee may also establish a minimum
potential pay-out amount (the “Threshold Pay-out”) with respect to an
Award of a fraction of the Target Pay-out in the event that at least a minimum
percentage (established by the Committee at the time Performance Goals are
established) of the Performance Goal targets are achieved. The Committee may
establish curves, matrices or other measurements for prorating the amount of
pay-outs for achievement of Performance Goals at greater than the Threshold
Pay-out but less than the Target Pay-out.

 

(d)           Code Section 162(m) Maximum.  With respect to any Participant who is or may
become a Covered Employee, the maximum dollar amount that may be paid under an
Award shall be set at the time the Committee grants the Award and establishes
Performance Goals for the Award.  The
Committee shall have the discretion to decrease an Award payment, but may not
under any circumstances increase such amount. Notwithstanding any other
provision of this Plan, the maximum dollar amount a Plan Participant may be
paid under an Award, with respect to any fiscal year is $2,000,000. The
Committee may, in its discretion, decrease this maximum, but may not, under any
circumstances, increase this maximum. 
Additional restrictions designed to satisfy Code Section 162(m) appear
in Section 12.3 below.

 

5.3           Performance
Goals.

 

(a)           Establishment.  Payment under an Award shall be made to a
Participant only if the Company achieves Performance Goals established by the
Committee.  The Performance Goals must be
set forth in writing not later than ninety (90) days after the commencement of
the fiscal year to which the Performance Goals relate, provided that the
outcome is substantially uncertain at the time the Committee establishes the
Performance Goals; and provided further that in no event will a Performance
Goal be considered to be pre-established if it is established after 25% of the
period of service (as scheduled in good faith at the time the Performance Goal
is established) has elapsed.

 

(b)           Criteria for Performance Goals.
 Performance Goals may based on any of
the following performance criteria, either alone or in any combination, as the
Committee may determine:  earnings per
share (“EPS”); sales; cash flow; cash flow from operations; operating

 

6

 

profit or income; net income; operating margin; net
income margin; return on net assets; economic value added; return on total
assets; return on common equity; return on total capital; total shareholder
return; revenue; revenue growth; earnings before interest, taxes, depreciation
and amortization (“EBITDA”); EBITDA growth; funds from operations per
share and per share growth; cash available for distribution; cash available for
distribution per share and per share growth; share price performance on an
absolute basis and relative to an index of earnings per share or improvements
in the Company’s attainment of expense levels; and implementing or completion
of critical projects.  The foregoing
criteria shall have any reasonable definitions that the Committee may specify,
which may include or exclude any or all of the following items as the Committee
may specify:  extraordinary, unusual or
non-recurring items; effects of accounting changes; effects of financing activities
(e.g., effect on EPS of issuance of convertible debt securities); expenses for
restructuring or productivity initiatives; other non-operating items; spending
for acquisitions; effects of divestitures; and effects of litigation activities
and settlements.  Any such performance
criterion or combination of such criteria may apply to a Participant’s Award
opportunity in its entirety or to any designated portion or portions of the
Award opportunity, as the Committee may specify.  Unless the Committee determines otherwise for
any Performance Period, extraordinary items, such as capital gains and losses,
which affect any performance criterion applicable to the Award (including but
not limited to the criterion of net income) shall be excluded or included in
determining the extent to which the corresponding performance goal has been
achieved, whichever will produce the higher Award.  In the event applicable tax or other laws
change to permit the Committee discretion to alter the governing performance
measures without obtaining shareholder approval of such changes, the Committee
shall have sole discretion to make such changes without obtaining shareholder
approval.

 

5.4           Payments.
 After the close of the applicable
Performance Period, the Committee shall determine the extent to which the
established Performance Goals have been achieved.  Before any payment is made under the Plan,
the Committee must certify in writing, as reflected in its minutes, that the
Performance Goals established with respect to an Award have been achieved.  Payment with respect to Awards for Covered
Employees shall be a direct function of the extent to which the Company’s
Performance Goals have been achieved. 
The Committee may, in its discretion, reduce or eliminate the amount of
payment with respect to an Award to a Covered Employee, notwithstanding the
achievement of a specified performance condition.  In the event of a Participant’s Termination
of Employment prior to the end of the Performance Period for any reason, the
amount payable with respect to such Award will be governed by the provisions of
Section 5.5.

 

5.5           Termination of Employment Due to
Death, Disability or Other Reason. 
In the event of a Termination of Employment due to death or Disability
during a Performance Period, the Participant shall receive a pro rata share of
the Award relating to such Performance Period. 
Unless otherwise determined by the Committee, in the event that a
Participant’s employment terminates for any other reason (whether or not the
Termination of Employment is for Cause), all Awards not yet paid to the
Participant shall be forfeited by the Participant to the Company.  Distribution of amounts with respect to
earned Awards may be made at the same time payments are made to Participants
who did not incur a Termination of Employment during the applicable Performance
Period.

 

7

 

5.6           Election
to Defer.  A Participant may elect to
defer receipt of the payment of his or her Award for a specified period or
until a specified event, subject to the Committee’s approval and to such terms
as are determined by the Committee. 
Subject to any exceptions adopted by the Committee, such election must
be made at least one year prior to completion of the Performance Period.

 

ARTICLE
VI

 

CHANGE IN
CONTROL PROVISIONS

 

6.1           Impact
of Event.  Notwithstanding any other
provision of the Plan to the contrary, in the event of a Change in Control
prior to a Participant’s Termination of Employment any Performance Goal or
other condition with respect to any Award shall be deemed to have been
satisfied in full, and such Award shall be fully distributable.

 

ARTICLE
VII

 

MISCELLANEOUS

 

7.1           Amendment and Termination.  The Committee may, in its sole discretion,
amend, suspend or terminate the Plan at any time, with or without advance
notice to Participants.  Notwithstanding
the preceding sentence of this Section, no amendment to the Plan shall be
effective that (a) would increase the maximum amount payable under Article V to
a Participant who is a Covered Employee, (b) would change the Performance Goal
criteria applicable to a Participant who is a Covered Employee for payment of
Awards stated under Article V, or (c) would modify the requirements as to
eligibility for participation under Article IV, unless the shareholders of the
Company shall have approved such change in accordance with the requirements of
Code Section 162(m). No amendment, modification or termination of the Plan may
adversely affect in a material manner any right of any Participant with respect
to any Award theretofore granted without such Participant’s written consent,
except an amendment (a) made to cause the Plan to comply with applicable law or
(b) made to permit the Company or an Affiliate a tax deduction under applicable
law.

 

7.2           Unfunded
Status of Plan.  It is intended that
the Plan be an “unfunded” plan for incentive compensation.  The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
make payments; provided, however, that, unless the Committee otherwise determines,
the existence of such trusts or other arrangements is consistent with the “unfunded”
status of the Plan.

 

7.3           Provisions Relating to Internal
Revenue Code Section 162(m).  It is
the intent of the Company that Awards granted to persons who are Covered
Employees shall constitute “qualified performance-based compensation”
satisfying the requirements of Code Section 162(m).  Accordingly, the Plan shall be administered
and the provisions of the Plan shall be interpreted in a manner consistent with
Code Section 162(m).  If any provision of
the Plan does not comply or is inconsistent with the requirements of Code
Section 162(m), such provision shall be construed or deemed amended to the
extent necessary to conform to such requirements.

 

8

 

7.4           No
Additional Obligation.  Nothing
contained in the Plan shall prevent the Company or an Affiliate from adopting
other or additional compensation or benefit arrangements for its employees.

 

7.5           Withholding.  Awards are subject to withholding for certain
federal, state, or local taxes required by law to be withheld with respect to
such income. The Company and its Affiliates shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment otherwise due to
the Participant. 

 

7.6           Controlling
Law.  The Plan and all Awards made
and actions taken thereunder shall be governed by and construed in accordance
with the laws of Minnesota (other than its law respecting choice of law).  The Plan shall be construed to comply with
all applicable law and to avoid liability to the Company, an Affiliate or a
Participant.

 

7.7           Offset.  Any amounts owed to the Company or an
Affiliate by the Participant of whatever nature may be offset by the Company
from the payment of any Award to the Participant.  No cash shall be transferred unless and until
all disputes between the Company and the Participant have been fully and
finally resolved and the Participant has waived all claims to such against the
Company or an Affiliate.

 

7.8           Nontransferability; Beneficiaries.
 No Award shall be assignable or
transferable by the Participant, otherwise than by will or the laws of descent
and distribution or pursuant to a beneficiary designation. Each Participant may
designate a Beneficiary to receive the proceeds of any Award held by the
Participant at the time of the Participant’s death.  If a deceased Participant has named no
Beneficiary, the proceeds of any Award held by the Participant at the time of
death shall be transferred as provided in his or her will or by the laws of
descent and distribution.

 

7.9           No Rights with Respect to
Continuance of Employment.  Nothing
contained herein shall be deemed to alter the relationship between the Company
or an Affiliate and a Participant, or the contractual relationship between a
Participant and the Company or an Affiliate if there is a written contract
regarding such relationship.  Nothing
contained herein shall be construed to constitute a contract of employment
between the Company or an Affiliate and a Participant.  The Company or an Affiliate and each of the
Participants continue to have the right to terminate the employment or service
relationship at any time for any reason, except as provided in a written
contract.  The Company or an Affiliate
shall have no obligation to retain the Participant in its employ or service as
a result of this Plan.  There shall be no
inference as to the length of employment or service hereby, and the Company or
an Affiliate reserves the same rights to terminate the Participant’s employment
or service as existed prior to the individual becoming a Participant in this
Plan.

 

7.10         Headings.  The headings contained in this Plan are for
reference purposes only and shall not affect the meaning or interpretation of
this Plan.

 

9

 

7.11         Severability.  If any provision of this Plan shall for any
reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not effect any other provision hereby, and this Plan
shall be construed as if such invalid or unenforceable provision were omitted.

 

7.12         Successors
and Assigns.  This Plan shall inure
to the benefit of and be binding upon each successor and assign of the
Company.  All obligations imposed upon a
Participant, and all rights granted to the Company hereunder, shall be binding
upon the Participant’s heirs, legal representatives and successors.

 

7.13         Entire
Agreement.  This Plan (including any
Appendix thereto) constitutes the entire agreement with respect to the subject
matter hereof and thereof.

 

10EXHIBIT 10.1

                              CONSULTING AGREEMENT

          THIS AGREEMENT is entered into by and between Raven Moon
Entertainment, Inc., a Florida corporation with principal offices at 120
International Parkway, Suite 220, Heathrow, FL 32746, ("Raven Moon"), and Big
Apple Consulting U .S.A., Inc., a Delaware corporation with principal offices at
280 Wekiva Springs Road, Suite 201, Longwood, FL 32779, ("Big Apple")
(collectively "Parties").

          WHEREAS, Big Apple represents various financial websites that
individuals can access to learn more about companies they may not otherwise be
exposed to;

          WHEREAS, In addition, Big Apple maintains an extensive database of
brokers representing investors interested in owning stock in companies such as
Raven Moon and employs a stock profiler team which regularly communicates with
such brokers; and

          WHEREAS, Raven Moon wishes to promote itself through Big Apple's
efforts in the brokerage community in order to gain as much exposure as possible
for Raven Moon.

NOW THEREFORE, in consideration of the mutual promises and covenants contained
herein and other good and valuable considerations, the receipt, sufficiency and
adequacy of which is hereby acknowledged, the Parties agree as follows:

     1.   Services to be Performed by Big Apple.

          A.   Big Apple shall access its database of brokers and shall utilize
               a profiler team (comparable in size and capability to that
               currently employed by Big Apple) in order to contact brokers
               interested in recommending Company to their investor clients.

          B.   Big Apple shall diligently market and promote Raven Moon to
               brokers and other investors, advisors, counselors, trustees,
               agents and other individuals and entities whom Big Apple is
               legally permitted to contact (including with the proper
               disclosures and disclaimers) and shall introduce Raven Moon and
               its principals to Big Apples' current and future network of
               brokerage firms and market makers.

          C.   Big Apple shall provide investor lead management services normal
               and customary in the industry.

          D.   Big Apple shall organize, initiate, manage and facilitate
               broker/investor conference telephone calls and other
               presentations mutually agreeable to Raven Moon and Big Apple.
               Expenses for broker/investor conference calls and other
               presentations are to be paid by Big Apple, and must be
               pre-approved by the Company.

<PAGE>

          E.   Big Apple shall have the right to obtain and review Raven Moon's
               DTC reports provided it obtains such reports at its own expense.

     2.   Term, Contingency and Effective Date.

          A.   The Term of this Agreement is One (1) year and is subject to the
               termination provisions of this Agreement.

          B.   The Effective Date of this Agreement shall be the 1st day of the
               first full month following SEC approval of the Company's SB-2
               plan and the mutual termination of any other Consulting
               Agreements between the Parties.

     3.   Compensation.

          The Company agrees to register One Hundred Sixty Six Thousand, Six
          Hundred Sixty Six (166,666) shares of restricted stock of Raven Moon
          Entertainment, Inc., ("RVNM"), in the name of Big Apple Consulting
          USA, Inc. in an SB2 Registration within Thirty (30) days of the
          acceptance of the SB2 by the SEC. The Company shall hold the
          restricted shares in an escrow account until such time as they are due
          the Big Apple under the terms of this Agreement.

     4.   Non-Compete, Non-Conflict of Interest. During the Term of this
          Agreement and any extensions thereof and for two (2) years following
          any termination of this Agreement or any extensions thereof, Big
          Apple, its officers and directors shall not directly or indirectly
          engage in the entertainment business or in any business similar to,
          without regard to genre, or in any way competitive with Raven Moon's
          businesses in the entertainment industry. This includes, but is not
          limited to television production; animation; live theatrical events;
          television syndication; music production; music recording; music
          distribution; talent promotion or representation; publishing;
          distribution; fan clubs; toy manufacturing, development and licensing;
          and merchandising of characters, music, videos and DVD's from
          television programs. Further, Big Apple shall not directly solicit or
          accept any investor relations business from individuals or businesses
          in the entertainment industry during the Term of this Agreement, any
          extension thereof and for two (2) years following any termination of
          this Agreement. Raven Moon hereby recognizes that Big Apple conducts
          business or is associated with business in the following areas;
          investor relations, travel company, website design, real estate, comic
          books and cards and the wall covering business. Raven Moon agrees that
          these businesses as conducted as of the date of this Agreement, do not
          conflict or compete with Raven Moon's business as enumerated herein.
          In the event a conflict of interest does arise, the Parties hereto
          agree that they will endeavor to use their best efforts to resolve the
          conflict as expeditiously and to the mutual satisfaction of each
          Party.

<PAGE>

     5.   Termination. Raven Moon shall have the right to terminate this
          Agreement at any time with five (5) days written notice to Big Apple
          for a breach of any term of this Agreement. If Raven Moon exercises
          its termination right, Big Apple shall not be entitled to any further
          compensation. Big Apple shall have the right to terminate this
          Agreement on the grounds of Raven Moon's failure to remit to Big Apple
          the required monthly payments or in the event of any breach of the
          Agreement by Raven Moon.

     6.   Representations. Raven Moon represents and warrants that it is in
          compliance with all required filings and regulations of NASD, the SEC
          and/or any other governmental agencies, and that Raven Moon's stock is
          not suspended from trading for any reason whatsoever. Raven Moon
          further represents and warrants that during the term of this
          agreement, it will continue to file all required reports with the SEC,
          NASD and/or any other governmental agencies and will continue to
          adhere to SEC, NASD, and/or any other governmental agency's
          requirements, and that it will take whatever steps are deemed
          necessary to keep its shares listed and "fully reporting." Raven
          Moon's failure to comply with the provisions of this paragraph shall
          constitute a material breach of the Parties' Agreement. Further, in
          the event of a breach of this paragraph by Raven Moon, Raven Moon
          agrees to continue to make any payments due for services rendered by
          Big Apple which are due at the time of the Breach.

     7.   Warranties. Big Apple warrants to Raven Moon that the services it
          provides to Raven Moon are legal and ethical and that as of the
          Effective Date Big Apple does not have any judgments against them from
          the SEC, any attorney general offices, including but not limited to
          the State of Florida.

     8.   Entire Agreement. This Agreement contains the entire agreement between
          the Parties and may not be waived, amended, modified or supplemented
          except by agreement in writing signed by the Party against whom
          enforcement of any waiver, amendment, modification or supplement
          sought. Waiver of or failure to exercise any rights provided by this
          Agreement in any respect shall not be deemed a waiver of any further
          or future rights.

     9.   Governing Law/Jurisdiction. This Agreement shall be construed under
          the laws of the State of Florida or the federal district court having
          venue in Seminole County, Florida, and the Parties agree that
          exclusive jurisdiction for any litigation arising from this Agreement
          shall be in Seminole County, Florida.

     10.  Integration. This Agreement, after full execution, acknowledgment and
          delivery, memorializes and constitutes the entire agreement and
          understanding between the parties and supersedes and replaces all

<PAGE>

          prior negotiations and agreements of the parties, whether written or
          unwritten. Each of the parties to this Agreement acknowledges that no
          other party, nor any agent or attorney of any other party has made any
          promises, representations, or warranty whatsoever, express or implied,
          which is not expressly contained in this Agreement; and each party
          further acknowledges that he or it has not executed this Agreement in
          reliance upon any belief as to any fact not expressly recited herein
          above.

     11.  Attorneys Fees. In the event of a dispute between the parties
          concerning the enforcement or interpretation of this Agreement, the
          prevailing party in such dispute, whether by legal proceedings or
          otherwise, shall be reimbursed in a reasonable time for the reasonably
          incurred attorneys' fees and other costs and expenses by the other
          parties to the dispute.

     12.  Context. Wherever the context so requires, the singular number shall
          include the plural and the plural shall include the singular.

     13.  Captions. The captions by which the sections and subsections of this
          Agreement are identified are for convenience only, and shall have no
          effect whatsoever upon its interpretation.

     14.  Severance. If any provision of this Agreement is held to be illegal or
          invalid by a court of competent jurisdiction, such provision shall be
          deemed to be severed and deleted and neither such provision, nor its
          severance and deletion, shall affect the validity of the remaining
          provisions.

     15.  Successors and Assigns. This Agreement shall be binding upon the
          Parties, their successors and assigns, provided, however, that Big
          Apple shall not permit any other person or entity to assume these
          obligations hereunder without the prior written approval of Raven
          Moon.

     16.  Counterparts. This Agreement may be executed in two or more
          counterparts, each of which shall be deemed an original, but which
          taken together shall constitute on agreement.

     17.  Notices. All notices must be in writing and sent to the appropriate
          address listed above, or to such other address as either party may
          designate in writing, by first class mail and either certified mail
          return receipt requested or overnight courier service. In the case of
          certified mail notice shall be deemed given as of the date of deposit
          with the United States Postal Service, and in case of overnight
          courier service notice shall be deemed given as of the date of deposit
          with such overnight courier service.

     18.  Confidentiality. Raven Moon and Big Apple agree that it will not at
          any time, or in any fashion or manner divulge, disclose or otherwise
          communicate to any person or corporation, in any manner whatsoever,
          any information of any kind, nature, or description concerning any

<PAGE>

          matters affecting or relating to the business of each others company.
          This includes its method of operation, or its plans, its processes, or
          other data of any kind or nature that they know, or should have known,
          is confidential and not already information that resides in the public
          domain. Both Raven Moon and Big Apple expressly agree that
          confidentiality of these matters is extremely important and gravely
          affect the successful conduct of business of each company, and its
          goodwill, and that any breach of the terms of this section is a
          material breach of this Agreement. The provisions of this section
          shall survive termination of the Agreement.

IN WITNESS WHEREOF, the Parties have executed or caused this Agreement to be
executed as of August 1, 2005.

For Raven Moon Entertainment, Inc.         For Big Apple Consulting U.S.A., Inc.

/s/  Joey DiFrancesco                      /s/  Marc Jablon
-----------------------------              -----------------------------
     Joey DiFrancesco, CEO                      Marc Jablon, President

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