EXHIBIT 10(a)
EMPLOYMENT AGREEMENT
AGREEMENT made effective as of the 1st day of January 2002, by and
between Legal Club of America Corporation with its principal offices in
Plantation, Florida, (the "Company") and Xxxxx Xxxxx Xxxxx, an individual
residing at 0000 X. X. 000 Xxxxx, Xxxxx, XX (the "Executive").
PRELIMINARY STATEMENT
The Company has agreed to employ the Executive and the Executive has
agreed to accept such employment, all on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable considerations, the receipt and adequacy of
which are hereby conclusively acknowledged, the parties, intending to be legally
bound, agree as follows:
1. Term. The Company hereby employs the Executive as Chief Financial Officer of
the Company (as used herein, reference to the Company includes its
subsidiaries), and the Executive agrees to serve the Company as such, upon the
terms and conditions hereof. The term of employment hereunder (the "Term") shall
commence on the date hereof and continue until January 1st, 2005, unless the
Term is otherwise terminated in accordance with the provisions hereof.
2. Duties. (a.) Executive shall serve as the Company's Chief Financial Officer,
and shall be responsible for the Company's financial operations, financial
reporting, treasury matters, and information systems. The Executive shall also
discharge such duties and authority as are generally incident to such position,
or in such other senior management position as the Company shall determine,
provided that such other position shall be comparable in authority and
responsibility to the position specified above. The Executive will report to the
Company's CEO and its Board of Directors. The Executive will hold such senior
offices and/or such directorships in the Company and/or any subsidiaries or
affiliates of the Company to which, from time to time, she may be elected or
appointed, as agreed to by the Company and the Executive. The Company shall not
require the Executive, directly or indirectly, to violate any applicable laws,
regulations or ethical standards governing the conduct of a Certified Public
Accountant. (b) The Executive agrees that she will devote substantially all of
her employment time and attention to the affairs of the Company and use her best
efforts to promote the business and interests of the Company and that she will
not engage, directly or indirectly, in any other occupation during the term of
employment. It is understood, however, that the foregoing will not prohibit the
Executive from engaging in personal investment activities for herself and her
family that do not interfere with the performance of her duties hereunder.
3. Compensation. The Company will pay the Executive for all services to be
rendered by the Executive hereunder (including, without limitation, all services
to be rendered by her as an officer and/or director of the Company and its
subsidiaries and affiliates):
(a) A salary ("Base Annual Pay") of $135,000, payable in installments in
accordance with customary payroll practices for senior executives of the
Company. Such installments, however, shall not exceed (4) four weeks between
payments.
(b) Bonus compensation for each fiscal year of the Company, based on
Executive's performance and the overall performance of the Company, either on an
"ad hoc" basis or pursuant to a bonus plan or arrangement as may be established
at the Company's discretion for senior executives of the Company.
Notwithstanding any conflicting or inconsistent provisions of this Agreement,
bonus compensation shall be payable in such amounts, if any, and at such times,
if any, as determined by the Company's Board of Directors or the Compensation
Committee thereof, in its sole and absolute discretion.
(c) Subject to the approval of the Company's Board of Directors, effective
with the execution of this document and the filing of the Form 10-KSB for the
year ending June 30, 2002, grants of stock options to buy shares of the
Company's common stock at the fair market value per share price with the
following vesting.
(1) 200,000 shares upon the filing of form 10KSB for the year
ending June 30th 2002.
(2) 300,000 shares one year from the effective date of this
contract
(3) 500,000 shares two years from the effective date of this
contract
The Executive will receive the stock option grants described in 2) and 3) above
only if she remains employed by the Company on the respective dates. The
Executive has determined to enter into this Agreement and accept the foregoing
share grants based on her own independent investigation, and not in reliance
upon any representation, warranty or statement of the Company or any of its
affiliates. The Executive will enter into underwriter's hold back agreements on
the same terms as applicable to the Company's CEO. The Company and the Employee
agree that if the Company shall consummate any stock splits, reverse splits or
stock dividends, then the number of stock options issued thereafter shall be
appropriately and proportionally adjusted. It is agreed that the Company's Board
of Directors' shall approve the foregoing stock option grants within one month
of the execution of this Agreement.
Nothing contained herein shall prohibit the Board of Directors of the Company,
in its sole discretion, from increasing the compensation payable to the
Executive pursuant to this Agreement. The Base Annual Pay shall be reviewed for
potential increase on an annual basis, on each anniversary of the date of this
Agreement, and the minimum annual increase in Base Annual Pay shall be 10% over
the Base Annual Pay then in effect, based solely on the Boards assessment of the
executives performance, and the company's overall growth.
4. Expenses. The Executive shall be entitled to reimbursement by the Company,
in accordance with the Company's policies then applicable to senior executives
at the Executive's level, against appropriate vouchers or other receipts for
authorized travel, entertainment and other business expenses reasonably incurred
by her in the performance of her duties hereunder. Without limiting the
generality of the foregoing, the Company will pay or reimburse the Executive for
the use of a pager and for her business use of a cellular telephone.
5. Executive Benefits. The Executive shall be entitled to participate in, and
receive benefits under, any pension, profit sharing, insurance, hospitalization,
medical, disability, stock purchase, stock option (as set forth in paragraph 3
(c), stock ownership, vacation or other employee benefit plan, program or policy
of the Company which may be in effect at any time during the course of her
employment by the Company and which shall be generally available to senior
executives of the Company occupying positions of comparable status or
responsibility, subject to the terms of such plans, programs or policies.
Notwithstanding the foregoing, the Company may, in its discretion, at any time
and from time to time, change or revoke any of its employee benefits plans,
programs or policies and Executive shall not be deemed, by virtue of this
Agreement, to have any vested interest in any such plans, programs or policies.
The Executive shall also be entitled to three (3) weeks' paid vacation during
the first year this agreement is in effect and beginning January 1st 2003 the
executive will be entitled to four (4) weeks vacation per year. Without limiting
the generality of the foregoing, (a) upon the inception of this agreement the
Executive shall be entitled to receive Group Health and Dental Insurance
coverages for herself and her family at no charge to Executive, and at the
Executive's option, the Company will pay the amount of the Company's premium for
these coverages to the Executive, in lieu of providing such coverage, (b) the
Executive will be entitled to long term disability insurance coverage at the
same time as such coverage is made available to the Company's Chief Executive
Officer, and (c) the Company will pay the costs and expenses required to keep
the Executive in good standing as a certified public accountant (including dues,
licensure, and continuing professional education costs).
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6. Withholding. All payments required to be made by the Company hereunder to
the Executive shall be subject to the withholding of such amounts relating to
taxes and other governmental assessments as the Company may reasonably determine
it should withhold pursuant to any applicable law, rule or regulation.
7. Death; Permanent Disability. Upon the death of the Executive during the term
of this Agreement, this Agreement shall terminate. If during the term of this
Agreement the Executive fails because of illness or other incapacity to perform
the services required to be performed by her hereunder for any consecutive
period of more than 60 days, or for shorter periods aggregating more than 60
days in any consecutive twelve-month period (any such illness or incapacity
being hereinafter referred to as "permanent disability"), then the Company, in
its discretion, may at any time thereafter terminate this Agreement upon not
less than 30 days written notice thereof to the Executive, and this Agreement
shall terminate and come to an end upon the date set forth in said notice as if
said date were the termination date of this Agreement; provided, however, that
no such termination shall be effective if prior to the date when such notice is
given, the Executive's illness or incapacity shall have terminated and she shall
be physically and mentally able to perform the services required hereunder and
shall have taken up and be performing such duties.
If the Executive's employment shall be terminated by reason of her
death or permanent disability, the Executive or her estate, as the case may be,
shall be entitled to receive (i) any earned and unpaid salary accrued through
the date of termination, (ii) a pro rata portion of any annual bonus which the
Executive would otherwise have been entitled to receive pursuant to any bonus
plan or arrangement for senior executives of the Company (such pro rata portion
to be payable at the time such annual bonus would otherwise have been payable to
the Executive) and (iii) subject to the terms thereof, any benefits which may be
due to the Executive on the date of termination under the provisions of any
employee benefit plan, program or policy.
8. Venue. The Executive and the Company agree that the Executive's duties are
to be discharged principally from the Sunrise/Plantation Florida locations or
some location in Dade, Broward, or Palm Beach Counties. It is further agreed to
that the Executive will not be required to travel more than 25% of her time
worked.
9. Termination
(a) For Cause. The Company may at any time during the term of this
Agreement, by written notice, terminate the employment of the Executive for
cause, the cause to be specified in the notice. For purposes of this Agreement,
"cause" shall mean (i) any gross negligence, self dealing or material willful
misconduct of the Executive in connection with the performance of any of her
duties hereunder, including without limitation misappropriation of funds or
property of the Company, securing or attempting to secure personally any profit
in connection with any transaction entered into on behalf of the Company or any
material willful and intentional act having the effect of injuring the
reputation, business or business relationships of the Company (ii) material
breach of any covenants contained in this Agreement; (iii) engaging in any
criminal enterprise involving moral turpitude, or (iv) indictment or being held
for trial in connection with misdemeanor involving moral turpitude or any
felony, provided, however, that (1) if the Executive is defending against the
charge in good faith and by appropriate proceedings, then the Company shall
suspend the Executive from office without compensation of any type, pending the
resolution of the matter; and (2) unless the Executive is exonerated from the
charges, she shall be terminated for cause effective upon the date she was
indicted or held for trial. Termination for cause shall be effective upon the
giving of such notice and the Executive shall be entitled to receive (i) any
earned and unpaid salary accrued through the date of termination and (ii)
subject to the terms thereof, any benefits which may be due to the Executive on
such date under the provisions of any employee benefit plan, program or policy.
The Executive hereby disclaims any right to receive a pro rata portion of any
annual bonus with respect to the fiscal year in which such termination occurs.
(b) Without Cause. A. The Company may terminate the Term at any time, upon
at least 60 days' notice to Executive, without Cause, provided that in such
event that the Company shall pay the Executive Base Annual Pay (as then in
effect) for the greater of 6 months salary, or the amount due under the
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remainder of the current year of the contract, as severance (payout period), in
addition to (i) any additional earned and unpaid compensation accrued hereunder
through the date of termination, (ii) subject to the terms thereof, any benefits
which may be due to the Executive on such date under the provisions of any
employee benefit plan, program or policy; (iii) continuation of health, dental
and disability coverage for the greater of 12 months, (iv) a pro rata portion of
any annual bonus with respect to the fiscal year in which such termination
occurs and, (v) immediate vesting of all past present and future stock grants
contemplated under this agreement.
(c) Parachute payment. If the Executive's employment is terminated due to
the occurrence of a Change of Control of the Company; then (A) the Company shall
pay to the Executive in a lump sum payment (a "Parachute Payment") on the
effective date of the termination of the Executive's Employment (the
"Termination Date") an amount equal to the sum of one times the Executive's
annualized includible compensation for the base period, as such may be defined
in ss.280G of the Internal Revenue code of 1986, as amended (or the regulations
promulgated thereunder) (the "Code") minus one dollar (it being the intent of
this provision that the Executive receive the maximum compensation payable under
the Code in such circumstances that is deductible to the Company and which doe
not trigger the excise tax contemplated by the Code for excess parachute
payments); and (B) the Company shall maintain in full force and effect, at the
Company's sole expense (pursuant to waiver of COBRA premiums or otherwise) and
for the Executive's continued benefit until one year after the Termination Date
all life insurance, medical, health and accident, and disability plans and
similar arrangements in which the Executive was entitled to participate
immediately prior to the Event of Termination. In the event that the Executive's
participation in any such plan or program is barred by the plans or programs,
the Company shall arrange to provide the Executive with benefits, at the
Company's sole expense, substantially similar to those to which the executive is
entitled under such plans and programs. The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise, nor shall the amount of any payment provided for
in this Section be reduced by any compensation earned by the Executive as a
result of employment by another employer after the Termination Date or
otherwise; however, the Executive shall have the right (but not the obligation)
to voluntarily reduce the consideration payable to him upon a Change in Control,
in any manner the Executive may elect by written notice to the Company.
10. Insurance. The Executive agrees that the Company may procure insurance on
the life of the Executive, in such amounts as the Company may in its discretion
determine, and with the Company named as the beneficiary under the policy or
policies. The Executive agrees that upon request from the Company she will
submit to a physical examination and will execute such applications and other
documents as may be required for the procurement of such insurance. The Company
agrees that such information will be held in the strictest confidence and will
not be disseminated without the Executive's written approval.
11. Second Highest Level. Notwithstanding any other provisions herein, any
benefits made available to Executive shall be at the highest level made
available to the Company's other executives, second only to the Company's CEO.
12. Non-Competition; Solicitation.
(a) The Executive acknowledges and recognizes that the highly competitive
nature of the Company's business and that the goodwill and patronage of the
Company's customers and network of attorneys constitute a substantial asset of
the Company, having been acquired through considerable time, effort and money.
Accordingly, the Executive agrees that during her employment with the Company
and for a period to run concurrent with the Payout Period (as previously
referred to) after Executive leaves the Company's employ for any reason, she
shall not, without the written consent of the Company, directly or indirectly,
either individually or as an employee, agent, partner, shareholder, consultant,
option holder, lender of money, guarantor or in any other capacity other than
passive investor, participate in, engage in or have an active financial interest
or management position in any business, firm, company or other entity if it
competes with any material business operation conducted by the Company or its
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subsidiaries or affiliates or any successor or assign thereof, nor will she
solicit any other person to engage in any of the foregoing activities, in each
case within the United States of America, its possessions and territories. The
Executive acknowledges that the Company's business includes a nationwide network
of attorneys and a national customer base, and therefore agrees that such the
scope of this restriction is appropriate and necessary to protect the Company's
legitimate business interests. Participation in the management of any business
operation other than in connection with the management of a business operation
which is in direct competition with the Company or its subsidiaries or
affiliates or any successor or assign thereof shall not be deemed to be a breach
of this Section 10(a). The foregoing provisions of this Section 10(a) shall not
prohibit the ownership by the Executive (as the result of open market purchase)
of 1% or less of any class of capital stock of a Company which is regularly
traded on a national securities exchange or over-the-counter on the NASDAQ
System.
(b) The Executive will not at any time during her employment with the
Company and for a period to run concurrent with the Payout Period, solicit or
assist or encourage the solicitation of) any employee of the Company or any of
its subsidiaries or affiliates to work for Executive or for any business, firm,
Company or other entity in which the Executive, directly or indirectly, in any
capacity described in Section 10(a) hereof, participates or engages (or expects
to participate or engage) or has (or expects to have) a financial interest or
management position.
(c) The Executive shall not at any time during her employment and for a
period to run concurrent with the Payout Period, directly or indirectly compete
with the Company by soliciting, inducing or influencing any of the customers or
attorneys of the Company or its attorney network to discontinue or reduce the
extent of such relationship with the Company, or commence or expand any such
relationship with any competitor of the Company.
(d) If any of the covenants contained in this Section 10 or any part
thereof, is held by a court of competent jurisdiction to be unenforceable
because of the duration of such provision, the activity limited by or the
subject of such provision and/or the area covered thereby, then the court making
such determination shall construe such restriction so as to thereafter be
limited or reduced to be enforceable to the greatest extent permissible by
applicable law.
13. Inventions, Etc. The Executive agrees that any and all systems,
work-in-progress, inventions, discoveries, improvements, processes, compounds,
formulae, patents, copyrights and trademarks, made, discovered or developed by
her, solely or jointly with others, or otherwise, during the term of her
employment by the Company, and which may be useful in or relate to any business
of the Company and/or any subsidiary or affiliate of the Company shall be fully
disclosed by the Executive to the Chief Executive Officer of the Company, and
shall be the sole and absolute property of the Company, and the Company will be
the sole and absolute owner thereof. The Executive agrees that at all times,
both during her employment and after the termination of her employment, she will
keep all of the same secret from everyone except the Company and its duly
authorized employees and will disclose the same to no one except as required in
good faith in the course of her employment with the Company, or by law, or
unless otherwise authorized in writing by the Chief Executive Officer of the
Company.
14. Patents. The Executive agrees, at the request of the Company, to make
application in due form for United States Letters Patent and foreign Letters
Patent on any of such systems, inventions, discoveries, improvements, processes,
compounds and formulae referred to in Section 12 hereof, and to assign to the
Company all of her right, title and interest in and to said inventions,
discoveries, improvements, processes, compounds, formulae and patent
applications therefore or patents thereon, and to execute at any and all times
any and all instruments, and to do any and all acts necessary, or which the
Company may deem desirable, in connection with such applications for Letters
Patent, in order to establish and perfect in the Company the entire right, title
and interest in and to said systems, inventions, discoveries, improvements,
processes, compounds, formulae and patent applications therefore, or in the
conduct of any proceedings or litigation in regard thereto. It is understood and
agreed that all costs and expenses, including but not limited to reasonable
attorneys' fees, incurred at the request of the Company in connection with any
action taken by an Executive pursuant to this Section 12, shall be borne by the
Company.
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15. Confidential Information, Etc. The Executive agrees that she shall not,
during or after the termination of this Agreement for a period to run concurrent
with the Payout Period, divulge, furnish or make accessible to any person, firm,
Company or other business entity, any information, trade secrets, technical data
or know-how relating to the business, business practices, methods, products,
processes, equipment, clients' prices, lists of customers or marketing agents of
the Company, terms of marketing arrangements or the attorney network list, or
other confidential or secret aspect of the business of the Company and/or any
subsidiary or affiliate, except as may be required in good faith in the course
of her employment with the Company or by law, without the prior written consent
of the Company, unless such information shall become public knowledge or becomes
available from independent sources, in each case other than by reason of
Executive's breach of the provisions hereof.
16. Acceptance by Parties. Each of the Executive and the Company accepts all of
the terms and provisions of this Agreement and agrees to perform all of the
covenants on her or its part to be performed hereunder.
17. Equitable Remedies. The Executive acknowledges that she has been employed
for her unique talents and that her leaving the employ of the Company would
seriously hamper the business of the Company and that the Company will suffer
irreparable damage if any provisions of Sections 10, 11, 12 or 13 hereof are not
performed strictly in accordance with their terms or are otherwise breached. The
Executive hereby expressly agrees that the Company shall be entitled as a matter
of right to injunctive or other equitable relief, in addition to all other
remedies permitted by law, to prevent a breach or violation by the Executive and
to secure enforcement of the provisions of Sections 10, 11, 12 or 13 hereof.
Resort to such equitable relief, however, shall not constitute a waiver or any
other rights or remedies, which the Company may have.
18. Indemnification Company further agrees to maintain Directors and Officers
liability insurance in amounts commensurate with the business risk, and will
reimburse all legal and related expenses not so covered. Such indemnification
shall continue after the Executive leaves the Company for actions and duties
discharged while in the employ of the Company.
19. Entire Agreement. This Agreement memorializes, encompasses and supersedes
the party's understandings and agreement relative to the Executive's acceptance
of employment hereunder, and constitutes the entire agreement between the
parties hereto and there are no other terms other than those contained herein.
No variation or modification hereof shall be deemed valid unless in writing and
signed by the parties hereto and no discharge of the terms hereof shall be
deemed valid unless by full performance of the parties hereto or by a writing
signed by the parties hereto. No waiver by the Company or any breach by the
Executive of any provision or condition of this Agreement by her to be performed
shall be deemed a waiver of a breach of a similar or dissimilar provision or
condition at the same time or any prior or subsequent time.
20. Severability. In case any provision in this Agreement shall be declared
invalid, illegal or unenforceable by any court of competent jurisdiction, the
validity and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
21. Notices. All notices, requests, demands and other communications provided
for by this Agreement shall be in writing and shall be deemed to have been given
at the time when mailed in the United States enclosed in a registered or
certified post-paid envelope, return receipt requested, and addressed to the
addresses of the respective parties stated below or to such changed addresses as
such parties may fix by notice:
To the Company: Legal Club of America Corporation
0000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxxxxx, XX 00000
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To the Executive: Xxxxx Xxxxx Xxxxx
0000 X.X. 000 Xxxxx
Xxxxx, XX 00000
provided, however, that any notice of change of address shall be effective only
upon receipt.
22. Successors and Assigns. This Agreement is personal in its nature and neither
of the parties hereto shall, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder (except for an
assignment or transfer by the Company to a successor as contemplated by the
following proviso); provided, however, that the provisions hereof (including but
not limited to the non-compete and confidentiality provisions hereof) shall
inure to the benefit of, and be binding upon, any successor of the Company,
whether by merger, consolidation, transfer of all or substantially all of the
assets of the Company, or otherwise, and upon the Executive, her heirs,
executors, administrators and legal representatives.
23. Governing Law. This Agreement and its validity, construction and performance
shall be governed in all respects by the internal laws of the State of Florida,
without giving effect to any principles of conflict of laws.
24. Headings. The headings in this Agreement are for convenience of reference
only and shall not control or affect the meaning or construction of this
Agreement.
25. Arbitration. Except as otherwise provided in this Agreement, any dispute
arising out of or in connection with this Agreement or the employment of the
Executive by the Company shall be resolved by binding arbitration in Miami,
Florida, in accordance with the American Arbitration Association's rules and
procedures then in effect and applicable to employment disputes. In any such
arbitration proceedings, the arbitrators shall have the right to order such
document production, exchange of exhibits, interviews of witnesses and other
discovery matters as they determine to be appropriate. The fees and expenses of
the arbitration, including but not limited to legal fees and arbitrator's fees,
shall be borne as the arbitrators may determine to be appropriate. A judgment on
the arbitration award may be entered in any court of competent subject matter
jurisdiction in Miami-Dade County. In the event that a party hereto seeks an
injunctive or equitable remedy, then a proceeding therefore may be commenced and
maintained in such a Court in Miami-Dade County. The parties consent and waive
all objection to such jurisdiction.
IN WITNESS WHEREOF, the parties hereto have hereunder set their hands and seals
the day and year first above written.
LEGAL CLUB OF AMERICA CORPORATION
By: /s/ XXXXX XXXX
-------------------------------------------------
Xxxxx Xxxx
Chief Executive Officer and Chairman of the Board
Executive: /s/ XXXXX XXXXX XXXXX
------------------------------------------
Xxxxx Xxxxx Xxxxx
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