Document:

<PAGE>   1
                                                                  EXHIBIT 10.16

                            AGREEMENT OF EMPLOYMENT

         AGREEMENT, made as of this 6th day of August, 1999, between Humboldt
Industries, Inc., a Pennsylvania corporation (the "Employer") and Melanie
Rosenzweig (the "Employee").

                                  WITNESSETH:

         WHEREAS, the Employer and the Employee desire to enter into an
Agreement relating to the employment of the Employee by the Employer.

         NOW, THEREFORE, the parties hereby agree as follows:

         1. EMPLOYMENT. The Employer hereby employs Employee and Employee
hereby accepts employment by the Employer, upon the terms and conditions
hereinafter set forth.

         2. EFFECTIVE DATE. The effective date of this Agreement shall be the
closing date of the PetQuarters.com acquisition of Humboldt Industries. This
Agreement shall continue in full force and effect until July 31, 2001 or until
terminated or amended by the parties hereto.

         3. DUTIES. The Employee shall devote her full time and attention to
the Employer's business of catalog sales and direct and Internet marketing of
pet supplies and products, as an employee of the Employer, and the Employee
shall not, without the written consent of the Chief Executive Officer of
Employer, either directly or indirectly, engage in any other profession or
business activity, whether or not such professional or business activity is
pursued for gain, profit or other pecuniary advantage; provided, however, that
the Employee may engage in personal non-financial pursuits that do not
substantially interfere with the performance of her duties under this Agreement
and nothing contained herein shall be construed as preventing the Employee from
investing her assets in such form or manner as will not require her services in
the operation of the

<PAGE>   2

affairs of the company or companies in which such investment or investments are
made.

         The Employee shall abide by all of the rules, regulations and policies
established or promulgated by the Employer. The Employee shall devote such time
to the administration and operation of the business of the Employer as the
Employer shall determine.

         4. DIRECTION OF SERVICES. The Employer shall direct, control and
supervise the duties and work of the Employee; provided, however, that the
Employer shall not impose employment duties or constraints of any kind which
would require the Employee to infringe the ethics of her profession or violate
any ordinance or law.

         5. RELATIONSHIP OF PARTIES. The relationship between the Employee and
the Employer is that of employee and employer. The Employee, by virtue of this
relationship, shall not have any interest in the Employer's tangible or
intangible assets.

         6. COMPENSATION.

                  A. Salary: Employee shall have and receive, subject to
         withholding and other applicable employment taxes a yearly salary of
         Eighty Thousand Dollars ($80,000), payable on a bi-weekly basis. Such
         yearly salary is based upon One Thousand, Five Hundred (1,500) hours
         per average minimum work year, and may be raised by written agreement
         of the Chief Executive Officer, and subject to the approval of the
         Board of Directors of the Employer, but it shall not be reduced under
         the amount set forth herein, unless by written agreement of the
         Employee.

                  B. Vehicle: Employer shall provide Employee with a monthly
         vehicle allowance of $1,200 for the term of this Agreement. Employee
         shall be

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         responsible for all expenses ordinarily and customarily associated
         with the use of a vehicle, including, but not limited to gas, oil,
         tires, maintenance and cleaning.

                  C. Other Expenses: Employer shall upon presentation of
         acceptable receipts, reimburse Employee for all travel and other out
         of pocket expenses paid by Employee and related to her carrying out of
         her duties under this Agreement. This shall include, but is not
         limited to lodging, transportation, meals, entertaining of suppliers
         and potential suppliers, gratuities, and all other customary expenses.

                  D. Withholding: Employer shall be responsible for making all
         withholding of taxes and other such expenses, including federal,
         states and local taxes.

                  E. Health Plan: Employer shall, at its expense, if Employee
         elects, include Employee as a participant in the Group Health Coverage
         Plan. The Employee's rights and entitlements with respect to any such
         benefits will be subject to the provisions of the relevant contracts,
         policies or plans providing such benefits. Nothing contained herein
         shall be deemed to impose any obligation on the Employer to initiate
         or maintain any such plan.

                  F. Other Plans: In addition to the items listed here,
         Employee shall be entitled to participate in all other employee
         benefit plans in which any other full time employee of Employer is
         entitled to participate.

                  G. Stock grants: Employee shall receive 40,000 shares of
         common stock of PetQuarters, Inc., pursuant to the terms and
         conditions of the Restricted Stock Agreement attached hereto as
         Exhibit A, upon the effective date of this Agreement and conditioned
         upon her continued employment for one year and one day from the date
         hereof. In the event of a change of voting control of PetQuarters,
         Inc., Employee shall be immediately vested in all shares previously

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         granted to her pursuant to this Exhibit A. In the event Employee
         either is terminated for cause or terminates her employment on or
         prior to one year and one day from the date hereof, all shares granted
         to but not vested in Employee shall be forfeited by Employee to
         PetQuarters and these grants shall be deemed null and void.

         7. VACATION. The Employee shall be entitled to Ten (10) working days
of vacation with pay per year of this Agreement. Such vacation to be taken by
the Employee at such time or times as shall be approved by the Chief Executive
Officer of Employer. In addition, the Employee shall be entitled to such
holidays as the Board of Directors of Employer may approve for all employees.
Unused days of vacation may not be carried over from one fiscal year to
another.

         8. TERMINATION OF EMPLOYMENT. This Agreement, and the Employee's
employment hereunder, may be terminated by Employee upon Thirty (30) days
written notice by Employee to Employer and shall be terminated immediately upon
the happening of any of the following events:

                  A. The death or disability of the Employee.

                  B. The Employee's being convicted for the commission of a
         felony under any federal or state law.

                  C. For purposes of this Agreement, "disability" shall mean a
         physical or mental disability of Employee which results in her absence
         from work for One Hundred Twenty (120) days during any Six (6) month
         period. Such disability shall be determined by a physician selected by
         a licensed Arbitrator appointed by the Philadelphia Regional Office of
         the American Arbitration Association, in accordance with the terms of
         the Uniform Arbitration Act, and such physician's determination shall
         be binding upon Employer and Employee.

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                  D. By the Employer with "good cause" upon the giving of 3
         days written notice. For the purpose of this Agreement, "good cause"
         shall include, alcohol or drug abuse, proven dishonesty, theft, fraud,
         embezzlement, conviction of a felony, or other actions by the Employee
         which cause material harm to, or publicly defame the name of, the
         Employer.

         Upon any such termination of this Agreement, the Employee's employment
shall terminate and the Employee shall be entitled to receive her monthly
salary prorated through the date of such termination. The Employee shall not be
entitled to receive any severance pay or other additional compensation, unless
the Employer, in the sole discretion of the Board of Directors, shall so elect.

         In the event of such termination, the Employee shall immediately pay
any indebtedness owed to the Employer, and shall reimburse the Employer for any
unearned prepaid expenditures incurred on behalf of or for the benefit of the
Employee. The Employer may, in its sole discretion, deduct or offset any such
amounts owed to it by the Employee from any amounts that may otherwise be due
to the Employee from the Employer. All amounts due to the Employee under the
provisions of this Paragraph 8 shall be determined by the accountant or the
accounting firm then employed by the Employer and the determination of such
accountant or accounting firm shall be conclusive and binding on the parties
hereto. Following termination, Employee shall fully cooperate with Employer and
all matters relating to the winding up of her pending work on behalf of
Employer and the orderly transfer of any such pending work to other employees
of Employer.

         9. CONFIDENTIALITY AND NONDISCLOSURE AGREEMENT. Employee acknowledges
that, as an employee of Employer, Employee has been and will be in a position
to receive or have access to confidential information (as hereafter defined)

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regarding the business carried on by Employer through its employees.
Confidential Information includes, but is not limited to, all information
regarding Employer's: (a) customers and customer lists, including all names,
addresses, phone numbers and any other pertinent information; (b) sources of
supply, price lists and costs; (c) marketing strategies and procedures,
advertising strategies and sales methods; (d) corporate strategies, plans and
goals; (e) information contained in training manuals; (f) technical
information; (g) prospective and executed contracts, financial information and
other business arrangements; (h) all other proprietary knowledge or data
acquired or obtained through Employee's relationship with Employer. Employee
hereby agrees that, except with the prior written consent of Employer, and in
the normal course of her duties, Employee will not, during the course of
employment with Employer or at any time thereafter, directly or indirectly use,
disclose or disseminate (in any manner) to any other person (including any
individual or entity) any Confidential Information. In the event Employee's
employment with Employer terminates or is terminated for any reason, Employee
agrees to return to Employer all documentation pertaining or relating to any
Confidential Information.

         Employee also recognizes and agrees that in the event of Employee's
breach or violation of any provisions of this paragraph, Employer may suffer
irreparable injury that cannot adequately be compensated for monetary damages
and agrees that Employer shall have the immediate right to obtain a preliminary
or final injunction against Employee issued by a court of competent
jurisdiction enjoining any breach or violation of this paragraph.

         10. COVENANT NOT COMPETE. To induce Employer to employ Employee,
Employee agrees, commencing on the date of Employee's termination of employment
for any reason except if Employee is terminated by Employer, without good
cause, and

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continuing a period of one year, she shall not solicit, accept business, or in
any way compete with Employer, whether on her own account or as a shareholder,
partner, joint venturer, employee, consultant, advisor and/or agent of any
person, firm, corporation or other entity. Employee acknowledges, represents
and warrants to Employer that the covenant of Employee hereunder is reasonably
necessary for the protection of Employer's interest and is not unduly
restrictive upon Employee.

         Employee also recognizes and agrees that in the event of Employee's
breach or violation of any provisions of this paragraph, Employer may suffer
irreparable injury that cannot adequately be compensated for monetary damages
and agrees that Employer shall have the immediate right to obtain a preliminary
or final injunction against Employee issued by a court of competent
jurisdiction enjoining any breach or violation of this paragraph.

         11. BENEFIT. This Agreement shall bind all parties, the respective
heirs, executors, administrators and assigns, but nothing contained herein
shall be construed as an authorization or right of any party to assign his
rights or obligations hereunder.

         12. WAIVER OF BREACH OR VIOLATION NOT DEEMED CONTINUING. The waiver by
either party of a breach or violation of any provision of this Agreement shall
not operate as or be construed to be a waiver of any subsequent breach hereof.

         13. NOTICES. Any and all notices required or permitted to be given
under this Agreement will be sufficient if, in the case of the Employee,
furnished in writing and sent by registered mail to the Employee's last known
residence or, in the case of the Employer, to its principal office in Lonoke,
Arkansas.

         14. AUTHORITY. The provisions of this Agreement required to be
approved by the Board of Directors have been so approved and authorized.

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         15. GOVERNING LAW. This Agreement shall be interpreted, construed and
governed according to the laws of the State of Pennsylvania.

         16. FORCE MAJEURE. Employee and Employer shall be excused for the
period of any delay in the performance of any obligations under this Agreement
when prevented from performing such obligations by cause or causes beyond their
reasonable control, including, without limitation, civil commotion, war,
invasion, rebellion, hostilities, military or usurped power, sabotage,
pestilence, riots, fire or other casualty or acts of God.

         17. SURVIVAL. The covenants contained in or liabilities accrued under
this Agreement which, by their terms, require their performance after the
expiration or termination of this Agreement shall be enforceable
notwithstanding the expiration or other termination of this Agreement.

         18. PARAGRAPH HEADINGS. The paragraph headings contained in this
Agreement are for convenience only and shall in no manner be construed as part
of this Agreement.

         19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

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         20. ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties and may not be changed except by a writing signed by the party
against whom the enforcement of any waiver, change, modification or discharge
is sought.

         IN WITNESS WHEREOF, the Employer has hereunto caused this Agreement to
be executed by its duly authorized officers and the Employee has hereunto set
her hand, all being done in duplicate originals with One (1) original being
delivered to each party on the day and year first above written.

                                   EMPLOYER:

                                   HUMBOLDT INDUSTRIES, INC., a wholly-owned
                                   subsidiary  of PetQuarters, Inc.

Attest:
                                   By:
                                      -----------------------------------------
                                      President

--------------------------------
Secretary

                                   EMPLOYEE:

                                   --------------------------------------------
                                   Melanie Rosenzweig

                                       9<PAGE>   1
                                                                  EXHIBIT 10.17

                            AGREEMENT OF EMPLOYMENT

         AGREEMENT, made this ___ day of August, 1999, between Humboldt
Industries, Inc., a Pennsylvania business corporation ("Humboldt") and Mike
Kelly ("Kelly").

                                  WITNESSETH:

         WHEREAS, Humboldt and Kelly desire to enter into an Agreement relating
to the employment of Kelly by Humboldt.

         NOW, THEREFORE, the parties hereby agree as follows:

         1. EMPLOYMENT. Humboldt hereby agrees to hire Kelly and Kelly hereby
agrees to accepts employment by Humboldt, upon the terms and conditions set
forth herein.

         2. EFFECTIVE DATE. The effective date of this Agreement shall be
August 30, 1999. This Agreement shall continue in full force and effect for 12
months or until terminated or amended by the parties hereto. Notwithstanding
anything contained herein to the contrary, Kelly may commence his employment
with Humboldt prior to the effective date of this Agreement and be compensated
in accordance with this Agreement if he is available to commence his duties and
obligations under this Agreement prior to the effective date, but such early
employment shall not affect the effective date or the termination date of this
Agreement.

         3. DUTIES. Kelly shall be appointed as the Executive Vice President of
the Catalog Division of Humboldt and as such he shall devote his full time and
attention to Humboldt's business of catalog sales and direct marketing of pet
supplies, as an officer and employee of Humboldt, and Kelly shall not, without
the written consent of the Board

<PAGE>   2

of Directors of Humboldt, either directly or indirectly, engage in any other
profession or business activity, whether or not such professional or business
activity is pursued for gain, profit or other pecuniary advantage; provided,
however, that Kelly may engage in personal non-financial pursuits that do not
substantially interfere with the performance of his duties under this Agreement
and nothing contained herein shall be construed as preventing Kelly from
investing his assets in such form or manner as will not require him services in
the operation of the affairs of the company or companies in which such
investment or investments are made.

         Kelly shall abide by all of the rules, regulations and policies
established or promulgated by Humboldt. Kelly shall devote such time to the
administration and operation of the business of Humboldt as Humboldt shall
determine.

         4. DIRECTION OF SERVICES. Humboldt shall direct, control and supervise
the duties and work of Kelly; provided, however, that Humboldt shall not impose
employment duties or constraints of any kind which would require Kelly to
infringe the ethics of his profession or violate any ordinance or law.

         5. RELATIONSHIP OF PARTIES. The relationship between Kelly and
Humboldt shall be that of officer/employee and company/employer. Kelly, by
virtue of this relationship, shall not have any interest in Humboldt's tangible
or intangible assets.

         6. COMPENSATION.

                  A. Salary: Kelly shall have and receive, subject to
         withholding and other applicable employment taxes a yearly salary of
         One Hundred and Thirty-Five Thousand Dollars ($135,000), payable in
         bi-weekly installments of Five Thousand, One Hundred and Ninety-Two
         Dollars and Thirty-One Cents

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         ($5,192.31). Such yearly salary is based upon Two Thousand (2,000)
         hours per average minimum work year, and may be raised by written
         agreement of the Board of Directors of Humboldt, but it shall not be
         reduced under the amount set forth herein, unless by written agreement
         of Kelly.

                  B. Moving Allowance: Humboldt shall, upon presentation of
         acceptable receipts or documentation, reimburse Kelly's actual Moving
         Expenses (as hereinafter defined) to relocate his family and household
         from Rochester, New York to Hazleton, Pennsylvania. "Moving Expenses"
         shall include (i) all out-of-pocket expenses Kelly incurs to move his
         household goods and personal effects from his former residence to his
         new residence and the costs of traveling (including lodging and
         temporary housing) from the former residence to the new residence; and
         (ii) all closing costs incurred in purchasing the new residence.
         "Moving Expenses" shall not include any expenses for meals. From the
         time Kelly moves into his new residence until he sells his former
         residence, Humboldt shall pay the lowest of Kelly's two monthly
         payments for the mortgage on his former residence or the mortgage on
         his new residence. In addition, Humboldt shall reimburse Kelly for any
         loss he incurs upon the sale of his former residence, upon the
         condition that before Kelly sells his former residence at a loss for
         which he expects to Humboldt to reimburse him, Kelly offers to sell
         the former residence to Humboldt upon the same terms and conditions.
         For the purposes of the preceding sentence, loss is defined as the
         difference between the current sale price of the former residence and
         Kelly's purchase price for the former residence when he acquired it.

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                  C. Other Expenses: Humboldt shall upon presentation of
         acceptable receipts, reimburse Kelly for all travel and other expenses
         related to his carrying out his duties under this Agreement. This
         shall include, but is not limited to lodging, transportation, meals,
         entertaining of suppliers and potential suppliers, gratuities, and all
         other customary expenses.

                  D. Withholding: Humboldt shall be responsible for all
         withholding of taxes and other such expenses, including federal,
         states and local taxes.

                  E. Health Plan: Humboldt shall, at its expense, if Kelly
         elects, include Kelly and his family, as participants in the group
         health plan currently provided to Humboldt employees. Kelly's rights
         and entitlements with respect to any such benefits will be subject to
         the provisions of the relevant contracts, policies or plans providing
         such benefits. Nothing contained herein shall be deemed to impose any
         obligation on Humboldt to maintain any such plan.

                  F. Other Plans: In addition to the items listed here, Kelly
         shall receive all benefits to which other full time employees of
         Humboldt are entitled.

                  G. Stock Grants: Kelly shall receive 50,000 shares of common
         stock of PetQuarters, Inc. ("PetQuarters"), pursuant to the terms and
         conditions of the Restricted Stock Agreement attached hereto as
         Exhibit A, upon the effective date of this Agreement and conditioned
         upon his extension of this Agreement for at least a one-year period
         after the termination of this Agreement. Kelly shall receive an
         additional grant of 25,000 shares of common stock of PetQuarters at
         the end of his second year of employment by Humboldt if he shall
         extend this Agreement for a third year. In the event of a change of
         ownership of

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         PetQuarters, Kelly shall be immediately fully vested in all shares
         previously granted to him pursuant to this Agreement . In the event
         Kelly is terminated for cause, all shares granted to but not vested in
         Kelly shall revert to PetQuarters and these grants shall be deemed
         null and void.

         7. VACATION. Kelly shall be entitled to fifteen (15) working days of
vacation with pay during the term of this Agreement. Such vacation to be taken
by Kelly at such time or times as shall be approved by the Board of Directors
of Humboldt. In addition, Kelly shall be entitled to such holidays as the Board
of Directors of Humboldt may approve. Unused days of vacation may not be
carried over from one fiscal year to another.

         8. TERMINATION OF EMPLOYMENT. This Agreement, and Kelly's employment
hereunder, shall not be terminated prior to August 27, 1999. In addition, this
Agreement shall not be terminated in the event of a change in ownership of
Humboldt or PetQuarters. Nevertheless, notwithstanding anything contained
herein to the contrary, this Agreement and Kelly's employment hereunder shall
be terminated immediately upon the happening of any of the following events:

                  A. The death or disability of Kelly. For purposes of this
         Agreement, "disability" shall mean a physical or mental disability of
         Kelly that results in his absence from work for One Hundred Twenty
         (120) days during any Six (6) month period.

                  B. Kelly's being convicted for the commission of a felony
         under any federal or state law.

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                  C. Immediate termination by Humboldt with "good cause" upon
         the giving of written notice. For the purpose of this Agreement, "good
         cause" shall include, alcohol or drug abuse, proven dishonesty, theft,
         fraud, embezzlement, conviction of a felony, or other actions by Kelly
         which cause material harm to, or publicly defame the name of, Humboldt
         or PetQuarters.

         Upon any such termination of this Agreement, Kelly's employment shall
terminate and Kelly shall be entitled to receive his monthly salary prorated
through the date of such termination. Kelly shall not be entitled to receive
any severance pay or other additional compensation, unless Humboldt, in the
sole discretion of the Board of Directors, shall so elect.

         Kelly shall own no interest in the accounts receivable of Humboldt and
shall not be entitled to receive any payment from or on account of any such
accounts receivable. In the event of such termination, Kelly shall immediately
pay any indebtedness owed to Humboldt, and shall reimburse Humboldt for any
unearned prepaid expenditures incurred on behalf of or for the benefit of
Kelly. Humboldt may, in its sole discretion, deduct or offset any such amounts
owed to it by Kelly from any amounts that may otherwise be due to Kelly from
Humboldt. All amounts due to Kelly under the provisions of this Paragraph 8
shall be determined by the accountant or the accounting firm then employed by
Humboldt and the determination of such accountant or accounting firm shall be
conclusive and binding on the parties hereto. Following termination, Kelly
shall fully cooperate with Humboldt and all matters relating to the winding up
of his pending work on behalf of Humboldt and the orderly transfer of any such
pending work to other employees of Humboldt.

                                       6
<PAGE>   7

         9. CONFIDENTIALITY AND NONDISCLOSURE AGREEMENT. Kelly acknowledges
that, as an employee of Humboldt, Kelly will be in a position to receive or
have access to confidential information (as hereafter defined) regarding the
business carried on by Humboldt through its employees. Kelly hereby agrees
that, except with the prior written consent of Humboldt, Kelly will not, during
the course of employment with Humboldt or at any time thereafter, directly or
indirectly use, disclose or disseminate (in any manner) to any other person
(including any individual or entity) any Confidential Information, which is
hereby defined for this purpose to mean all financial information regarding or
relating (directly or indirectly) to the business of Humboldt. In the event
Kelly's employment with Humboldt terminates or is terminated for any reason,
Kelly agrees to return to Humboldt all documentation pertaining or relating to
any Confidential Information.

         Kelly also recognizes and agrees that in the event of Kelly's breach
or violation of any provisions of this paragraph, Humboldt may suffer
irreparable injury that cannot adequately be compensated for monetary damages
and agrees that Humboldt shall have the immediate right to obtain a preliminary
or final injunction against Kelly issued by a court of competent jurisdiction
enjoining any breach or violation of this paragraph.

         10. COVENANT NOT TO COMPETE. To induce Humboldt to employ Kelly, Kelly
agrees, commencing on the date of Kelly's termination of employment for any
reason except if Kelly is terminated by Humboldt without cause, and continuing
a period of one year, he shall not solicit, accept business, or in any way
compete with Humboldt, whether on his own account or as a shareholder, partner,
joint venturer, employee, consultant, advisor and/or agent of any person, firm,
corporation or other entity.

                                       7
<PAGE>   8

Humboldt and Kelly recognize, accept and agree that, for the purposes of this
covenant not to compete, Humboldt is in the business of selling, via catalogs
and the internet, and distributing pet supplies. Kelly acknowledges, represents
and warrants to Humboldt that the covenant of Kelly hereunder is reasonably
necessary for the protection of Humboldt's interest and is not unduly
restrictive upon Kelly.

         Kelly also recognizes and agrees that in the event of Kelly's breach
or violation of any provisions of this paragraph, Humboldt may suffer
irreparable injury that cannot adequately be compensated for monetary damages
and agrees that Humboldt shall have the immediate right to obtain a preliminary
or final injunction against Kelly issued by a court of competent jurisdiction
enjoining any breach or violation of this paragraph.

         11. ANNOUNCEMENT. Neither party hereto shall make any public
announcement concerning this Agreement or Humboldt's employment of Kelly for a
period of at least seven (7) days following both parties signing of this
Agreement.

         12. BENEFIT. This Agreement shall bind all parties, the respective
heirs, executors, administrators and assigns, but nothing contained herein
shall be construed as an authorization or right of any party to assign his
rights or obligations hereunder.

         13. WAIVER OF BREACH OR VIOLATION NOT DEEMED CONTINUING. The waiver by
either party of a breach or violation of any provision of this Agreement shall
not operate as or be construed to be a waiver of any subsequent breach hereof.

         14. NOTICES. Any and all notices required or permitted to be given
under this Agreement will be sufficient if, in the case of the Kelly, furnished
in writing and sent by registered mail to the Kelly's last known residence or,
in the case of the Humboldt PetQuarters or PQ, to PetQuarters' principal office
in Lonoke, Arkansas.

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<PAGE>   9

         15. AUTHORITY. The provisions of this Agreement required to be
approved by the Board of Directors have been so approved and authorized.

         16. GOVERNING LAW. This Agreement shall be interpreted, construed and
governed according to the laws of the State of Arkansas.

         17. FORCE MAJEURE. Kelly, Humboldt and PetQuarters shall be excused
for the period of any delay in the performance of any obligations under this
Agreement when prevented from performing such obligations by cause or causes
beyond their reasonable control, including, without limitation, civil
commotion, war, invasion, rebellion, hostilities, military or usurped power,
sabotage, pestilence, riots, fire or other casualty or acts of God.

         18. SURVIVAL. The covenants contained in or liabilities accrued under
this Agreement which, by their terms, require their performance after the
expiration or termination of this Agreement shall be enforceable
notwithstanding the expiration or other termination of this Agreement.

         19. PARAGRAPH HEADINGS. The paragraph headings contained in this
Agreement are for convenience only and shall in no manner be construed as part
of this Agreement.

         20. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         21. ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties and may not be changed except by a writing signed by the party
against whom the enforcement of any waiver, change, modification or discharge
is sought.

                                       9
<PAGE>   10

         IN WITNESS WHEREOF, Humboldt has hereunto caused this Agreement to be
executed by its duly authorized officers and the Kelly has hereunto set his
hand, all being done in duplicate originals with One (1) original being
delivered to each party on the day and year first above written.

                                                HUMBOLDT INDUSTRIES, INC.

Attest:
                                                By:
                                                   -----------------------------
                                                Steve Dempsey, President

--------------------------------
Dino Moshova, Secretary

                                                MIKE KELLY:

                                                --------------------------------
                                                Mike Kelly

                                      10

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