EMPLOYMENT CONTRACT FOR REGIONAL DIRECTOR
LitFunding USA ("Employer"), a wholly-owned subsidiary of LitFunding
Corporation, a Nevada corporation ("LFC") whose stock is quoted on the
Over-the-Counter Bulletin Board, and Xxxxxxx X. Xxxx ("Employee"), in
consideration of the mutual promises made herein, agree as follows (the parties
specifically agree that for purposes of the restrictive covenants and conditions
of this Agreement, references to "Employer" also include any of Employer's
subsidiaries, affiliates and/or parent companies):
ARTICLE 1. TERM OF EMPLOYMENT
Specified Period
Section 1.01. Employer employs Employee and Employee accepts employment
with Employer for a period of one (1) year beginning on October __, 2004 and
terminating on October __, 2005. Employer, in its sole and absolute discretion,
may offer to extend this agreement for additional one (1) year periods.
"Employment Term" Defined
Section 1.02. "Employment term" refers to the entire period of
employment of Employee by Employer, whether for the periods provided above, or
whether terminated earlier as hereinafter provided or extended by mutual
agreement between Employer and Employee.
ARTICLE 2. DUTIES AND OBLIGATIONS OF EMPLOYEE
General Duties
Section 2.01. Employee shall serve as the Regional Director ("RD") of
Employer. In his capacity as RD of Employer, Employee shall do and perform all
services, acts, or things necessary or advisable, subject at all times to the
policies set by Employer's Board of Directors (for purposes of this Agreement,
references to "Employer's Board of Directors" or "Board", "Employer's officers"
and "Employer's committees" shall mean to include LFC's Board of Directors, its
officers and its committees), and to the consent of the Board when required by
the terms of this contract, to do perform the following tasks:
(1) Identify potential sources of business;
(2) Arrange meetings with potential sources of business;
(3) Assist with the closing of business transactions;
(4) Review and provide recommendations in other matters as requested by
Employer; and
(5) Find and introduce to Employer suitable merger targets and/or private
investors, subject to approval by the Employer in its sole and absolute
discretion.
Employee agrees that at all times the Board of Directors and its committees,
notably the Audit Committee, the SEC Committee and the Corporate Governance
Committee have oversight of Employee's activities and will have the right to
communicate with Employee independent of management. Employee will at all times
comply with provisions as stated in the Employer's employee handbook.
Specifically but without restriction, Employee agrees that he will be available
at the request of Employer and will arrange to be physically present at
Employer's facilities when requested by Employer. Employer will maintain a work
station or other work area for Employee at Employer's facilities. If Employer
provides Employee with client contacts, Employee will immediately follow up with
the contacts and perform other related tasks and services as dictated by
Employer.
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Matters Requiring Consent of Board of Directors
Section 2.02. Employee shall not, without specific approval of
Employer's Board of Directors, do or contract to do any of the following:
(1) Borrow on behalf of Employer.
(2) Terminate the services of any employee or hire any replacement of
any employee whose services have been terminated.
(3) Commit Employer to the expenditure of more than $1,000.00.
(4) Commit Employer to enter into any particular contract or investment
relationship.
Devotion to Employer's Business
Section 2.03. (a) Employee shall devote such portion of his productive
time, ability, and attention to the business of Employer as is reasonably
necessary to satisfy Employee's obligations pursuant to this agreement during
the term of this agreement.
(b) Provided Employee satisfies his obligations to Employer pursuant to
this agreement, Employee may engage in other business duties or pursuits, and
may directly or indirectly render services of a business, commercial, or
professional nature to other persons or organizations, whether for compensation
or otherwise, without the prior written consent of Employer's Board of
Directors; provided, however, that Employee must obtain the prior written
consent of Employer's Board of Directors before becoming an officer, director,
or principal shareholder of any business which competes directly with Employer,
and such consent may be withheld at the sole discretion of Employer's Board of
Directors. Moreover, the expenditure of reasonable amounts of time for
educational, charitable, or professional activities shall not be deemed a breach
of this agreement if those activities do not materially interfere with the
services required under this agreement and shall not require the prior written
consent of Employer's Board of Directors.
(c) This agreement shall not prohibit Employee from making passive
personal investments or conducting private business affairs if those activities
do not materially interfere with the services required under this agreement.
However, Employee shall not directly or indirectly acquire, hold, or retain any
interest in any business competing with or similar in nature to the business of
Employer without the prior written consent of Employer's Board of Directors.
Competitive Activities
Section 2.04. (a) During the term of this contract Employee shall not,
directly or indirectly, either as an employee, employer, owner, agent,
principal, partner, stockholder, corporate officer, director, or in any other
individual or representative capacity, engage or participate in any business
that is in competition in any manner whatsoever with the business of Employer.
(b) Employee agrees that during the term of this contract and for a
period of one (1) year after termination of this agreement, Employee shall not
directly or indirectly solicit, hire, recruit, or encourage any other employee
of Employer to leave Employer.
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Uniqueness of Employee's Services
Section 2.05. Employee represents and agrees that the services to be
performed under the terms of this contract are of a special, unique, unusual,
extraordinary, and intellectual character that gives them a peculiar value, the
loss of which cannot be reasonably or adequately compensated in damages in an
action at law. Employee therefore expressly agrees that Employer, in addition to
any other rights or remedies that Employer may possess, shall be entitled to
injunctive and other equitable relief to prevent or remedy a breach of this
contract by Employee.
Indemnification for Negligence or Misconduct
Section 2.06. Employee shall indemnify and hold Employer harmless from
all liability for loss, damage, or injury to persons or property resulting from
the negligence or misconduct of Employee.
Non-Disclosure of Proprietary and Confidential Information By Employee
Section 2.07. During the term of this Agreement, Employee will have
access to Corporation Proprietary Information (as used in this Section 2.07 of
this Agreement, the term "Corporation Proprietary Information" shall mean and
include, without limitation, any and all marketing and sales data, plans and
strategies, financial projections, client lists, prospective client lists,
promotional ideas, data concerning the Employer's services, designs, methods,
inventions, improvements, discoveries, designs whether or not patentable,
"know-how", training and sales techniques, and any other information of a
similar nature disclosed to Employee or otherwise made known to Employee as a
consequence of or through this Agreement during the term hereof. The term
Corporation Proprietary Information shall not include any information that (i)
at the time of the disclosure or thereafter is or becomes generally available to
and known by the public, other than as a result of a disclosure by Employee or
any agent or representative of Employee in violation of this Agreement, or (ii)
was available to Employee on a non-confidential basis from a source other than
the Employer, or any of the Employer's officers, directors, employees, agents or
other representatives) or other information and data of a secret and proprietary
nature which the Employer desires to keep confidential. Employee (and any of his
affiliates, related entities, partners, agents and/or employees) agrees and
acknowledges that the Employer has exclusive proprietary rights to all
Corporation Proprietary Information, and Employee hereby assigns to the Employer
all rights that he might otherwise possess in any Corporation Proprietary
Information. Except as required in the performance of Employee's duties to the
Employer, Employee will not at any time during or after the term hereof,
directly or indirectly use, communicate, disclose, disseminate, lecture upon,
publish articles or otherwise put in the public domain, any Corporation
Proprietary Information. Employee agrees to deliver to the Employer any and all
copies of Corporation Proprietary Information in the possession or control of
Employee upon the expiration or termination of this Agreement, or at any other
time upon request by the Employer. The provisions of this section shall survive
the termination of this Agreement.
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Trade Secrets
Section 2.08. (a) The parties acknowledge and agree that during the
term of this agreement and in the course of the discharge of his duties
hereunder, Employee shall have access to and become acquainted with financial,
personnel, sales, scientific, technical and other information regarding
formulas, patterns, compilations, programs, devices, methods, techniques,
operations, plans and processes that are owned by Employer, actually or
potentially used in the operation of Employer's business, or obtained from third
parties under an agreement of confidentiality, and that such information
constitutes Employer's "trade secrets."
(b) Employee specifically agrees that he shall not misuse,
misappropriate, or disclose in writing, orally or by electronic means, any trade
secrets, directly or indirectly, to any other person or use them in any way,
either during the term of this agreement or at any other time thereafter, except
as is required in the course of his employment.
(c) Employee acknowledges and agrees that the sale or unauthorized use
or disclosure in writing, orally or by electronic means, of any of Employer's
trade secrets obtained by Employee during the course of his employment under
this agreement, including information concerning Employer's actual or potential
work, services, or products, the facts that any such work, services, or products
are planned, under consideration, or in production, as well as any descriptions
thereof, constitute unfair competition. Employee promises and agrees not to
engage in any unfair competition with Employer, either during the term of this
agreement or at any other time thereafter.
(d) Employee further agrees that all files, records, documents,
drawings, specifications, equipment, software, and similar items whether
maintained in hard copy or on line relating to Employer's business, whether
prepared by Employee or others, are and shall remain exclusively the property of
Employer and that they shall be removed from the premises or, if kept on-line,
from the computer systems of Employer, only with the express prior written
consent of Employer's Board of Directors.
Non-Competition and Non-Circumvention by Employee
Section 2.09. In consideration and recognition of the fact that
Employee has access to Corporation Proprietary Information under the terms and
provisions of this Agreement and that the Employer will be introducing Employee
to various customers and potential customers, product manufacturers, retailers
and distributors, Employee represents, warrants and covenants to the Employer as
follows:
(a) Employee shall at no time disclose to any person,
without the Employer's prior written consent, any of
the terms, conditions or provisions specified in this
Agreement unless such disclosure is lawfully required
by any federal governmental agency or is otherwise
required to be disclosed by law or is necessary in
any legal proceeding regarding the subject matter of
this Agreement.
(b) During the term of this Agreement, Employee shall
not circumvent the Employer for the purpose of
transacting any business with any person or entity
which business shall interfere with any relationship
whatsoever between such person or entity and the
Employer, or use any Corporation Proprietary
Information to compete with the business of the
Employer. Employee shall not solicit any of the
Employer's employees, independent contractors or
agents for employment. Employee shall not hire or
engage in any way, any enterprise or person that
competes with, or is engaged in a business
substantially similar to, the business of the
Employer.
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(c) Employee shall not for a period of two (2) years
immediately following the termination of this
Agreement with Employer, either directly or
indirectly (i) make known to any person, firm or
corporation the names or addresses of any of the
Employer's clients or any other information
pertaining to them or the Employer's products or
services; (ii) call on, solicit, or take away, or
attempt to call on, solicit or take away any of the
Employer's clients either on Employee's behalf or
that of another person, firm or corporation.
(d) Employee shall not, during the term hereof or for a
period of two (2) years following such term, enter
into an agreement or contract directly with any
manufacturer, retailer or distributor introduced to
Employee by the Employer for any services provided by
the Employer herein or for any similar services.
(e) Employee acknowledges and agrees that the
representations, warranties and covenants made by
Employee and set forth in this section are material
and that the Employer would not enter into this
Agreement without Employee's making such
representations, warranties and covenants to the
Employer.
(f) Employee acknowledges and agrees that any breach by
Employee of the representations, warranties and
covenants contained herein will cause irreparable
harm and loss to the Employer, which harm and loss
cannot be reasonably or adequately compensated in
damages in an action at law. Therefore, Employee
expressly agrees that, in addition to any other
rights or remedies which the Employer may possess,
the Employer shall be entitled to injunctive and
other equitable relief to prevent or remedy a breach
of the representations, warranties and covenants made
by Employee herein.
(g) The terms and provisions of this section shall
survive the termination of this Agreement for a
period of two (2) years.
ARTICLE 3. OBLIGATIONS OF EMPLOYER
General Description
Section 3.01. Employer shall provide Employee with the compensation and
business expense reimbursement specified elsewhere in this agreement.
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ARTICLE 4. COMPENSATION OF EMPLOYEE
Annual Salary
Section 4.01. As compensation for the services to be performed
hereunder, for the one (1) term of employment Employee shall receive a salary at
the rate of Thirty-Six Thousand Dollars ($36,000.00), payable in installments on
the first and fifteenth calendar day of each month during the employment term.
In lieu of paying Employee's salary in cash, Employer has the right, in its sole
and absolute discretion, to pay Employee his salary in LFC stock. The amount of
LFC stock (and value placed thereon) shall be determined by taking the average
of the ask and bid price of LFC's stock over the preceding (i.e., the days
immediately before the payment of salary in stock) five (5) days as reported on
the Over-the-Counter Bulletin Board (or other quotation medium or exchange
should LFC's stock not be quoted on the Over-the-Counter Bulletin Board). If
LFC's stock is no longer quoted on a quotation medium or listed on an exchange,
the price will be determined by referring to the most recent private placement
stock price. Such stock, when issued, shall be restricted pursuant to Rule 144
and shall contain an appropriate restrictive legend.
Signing Bonus
Section 4.02. As an incentive for Employee to execute this Agreement
and in consideration for Employee's agreement to perform the services described
herein, no later than ten (10) business days of the execution of this Agreement
by Employer and Employee, LFC will file or cause to be filed a Registration
Statement on Form S-8 (the "S-8") wherein LFC will register one hundred thousand
(100,000) shares of LFC's common stock (the "Bonus Shares") in the name of
Employee. Within a reasonable time after the filing of the S-8 (assuming there
are no comments issued by the Securities and Exchange Commission), LFC will
cause the Bonus Shares to be issued to Employee. LFC's obligation to issue the
Bonus Shares will be, at all times, subject to the rules and restrictions
regarding the use of an S-8 Registration Statement and such shares will not be
issued in the event LFC determines that such issuance violates or will violate
the S-8 rules and restrictions.
ARTICLE 5. BUSINESS EXPENSES
Reimbursement of Other Business Expenses
Section 5.01. (a) Employer shall promptly reimburse Employee for all
other reasonable business expenses incurred by Employee in connection with the
business of Employer; provided, however, that all reasonable business expenses
in excess of fifty dollars ($50.00) must be pre-approved, in writing, by the
Employer's Board of Directors or President.
(b) Each such expenditure shall be reimbursable only if it is of a
nature qualifying it as a proper deduction on the federal and state income tax
return of Employer.
(c) Each such expenditure shall be reimbursable only if Employee
furnishes to Employer adequate records and other documentary evidence required
by federal and state statutes and regulations issued by the appropriate taxing
authorities for the substantiation of each such expenditure as an income tax
deduction, including, but not limited to, receipts for such expenditures.
Repayment of Disallowed Expenses
Section 5.02. In the event that any expenses paid for Employee or any
reimbursement of expenses paid to Employee shall, on audit or other examination
of Employer's income tax returns, be determined not to be allowable deductions
from Employer's gross income, and in the further event that this determination
shall be acceded to by the Employer or made final by the appropriate federal or
state taxing authority or a final judgment of a court of competent jurisdiction,
and no appeal is taken from the judgment or the applicable period for filing
notice of appeal has expired, Employee shall repay to Employer the full amount
of the disallowed expenses.
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ARTICLE 6. TERMINATION OF EMPLOYMENT
Termination for Cause
Section 6.01. (a) Employer reserves the right to terminate this
agreement if Employee willfully breaches or habitually neglects the duties which
he is required to perform under the terms of this agreement; or commits such
acts of dishonesty, fraud, misrepresentation or other acts of moral turpitude as
would prevent the effective performance of his duties.
(b) Employer may at its option terminate this agreement for the reasons
stated in this Section by giving written notice of termination to Employee
without prejudice to any other remedy to which Employer may be entitled either
at law, in equity, or under this agreement.
(c) The notice of termination required by this section shall specify
the ground for the termination and shall be supported by a statement of relevant
facts.
(d) Termination under this section shall be considered "for cause" for
the purposes of this agreement.
Termination Without Cause
Section 6.02. (a) This agreement shall be terminated upon the death of
Employee.
(b) Employer reserves the right to terminate this agreement within one
month after Employee suffers any physical or mental disability that would
prevent the performance of his essential job duties under this agreement, unless
reasonable accommodation can be made to allow Employee to continue working. Such
a termination shall be effected by giving 10 days' written notice of termination
to Employee.
(c) Termination under this section shall not be considered "for cause"
for the purposes of this agreement.
Effect of Merger, Transfer of Assets, or Dissolution
Section 6.03. (a) This agreement shall not be terminated by any
voluntary or involuntary dissolution of Employer resulting from either a merger
or consolidation in which Employer is not the consolidated or surviving
corporation, or a transfer of all or substantially all of the assets of
Employer.
(b) In the event of any such merger or consolidation or transfer of
assets, Employer's rights, benefits, and obligations hereunder may only be
assigned to the surviving or resulting corporation or the transferee of
Employer's assets if Employee, in his sole discretion, agrees to such an
assignment in writing.
Payment on Termination
Section 6.04. Notwithstanding any other provision of this agreement, if
Employer terminates this agreement without cause, or Employee does not consent
to the assignment specified in Section 6.03(b) above, Employer shall pay
Employee an amount equal to one (1) month salary at the then current rate of
compensation. If this agreement is terminated "for cause", all of Employer's
obligations to Employee cease, including, but not limited to, Employer's
obligation to make any payments hereunder.
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ARTICLE 7. GENERAL PROVISIONS
Notices
Section 7.01. Any notices to be given hereunder by either party to the
other shall be in writing and may be transmitted by personal delivery or by
mail, registered or certified, postage prepaid with return receipt requested.
Mailed notices shall be addressed to the parties at the addresses appearing in
the introductory paragraph of this agreement, but each party may change that
address by written notice in accordance with this section. Notices delivered
personally shall be deemed communicated as of the date of actual receipt; mailed
notices shall be deemed communicated as of the date of mailing.
Severability
Section 7.02. To the extent any provision of this Agreement shall be
determined to be unlawful or otherwise unenforceable, in whole or in part, such
determination shall not affect the validity of the remainder of this Agreement,
and this Agreement shall be reformed to the extent necessary to carry out its
provisions to the greatest extent possible. In the absence of such reformation,
such part of such provision shall be considered deleted from this Agreement and
the remainder of such provision and of this Agreement shall be unaffected and
shall continue in full force and effect. In furtherance and not in limitation of
the foregoing, should the duration or geographical extent of, or business
activities covered by any provision of this Agreement be in excess of that which
is valid and enforceable under applicable law, then such provision shall be
construed to cover only that duration, extent or activities which may validly
and enforceably be covered. To the extent any provision of this Agreement shall
be declared invalid or unenforceable for any reason by any Governmental or
Regulatory Authority in any jurisdiction, this Agreement (or provision thereof)
shall remain valid and enforceable in each other jurisdiction where it applies.
Both parties acknowledges the uncertainty of the law in this respect and
expressly stipulate that this Agreement shall be given the construction that
renders its provisions valid and enforceable to the maximum extent (not
exceeding its express terms) possible under applicable law.
Arbitration
Section 7.03. In case of any dispute or difference between the parties
hereto arising out of or pertaining to this agreement (including, without
limitation, any dispute involving: interpretation, construction, performance,
duties or obligations of any party hereunder or any declaration thereof, or any
matters ancillary thereto) or any resulting transaction, each such dispute shall
be decided by neutral, binding arbitration, each such dispute shall be decided
by neutral, binding arbitration and not by court action, except as provided by
Nevada law for judicial review of arbitration proceedings. The arbitration shall
be conducted by a single arbitrator in accordance with the laws of the State of
Nevada and pursuant to the rules of the American Arbitration Association (AAA).
The parties to any such arbitration may agree in writing to use different rules
and/or arbitrator(s). Judgment upon the award rendered by the arbitrator(s) may
be entered in any court having jurisdiction thereof. The parties shall have the
right to discovery in accordance with the Nevada Code of Civil Procedure. By
entering into this agreement, the parties understand that they are waiving their
constitutional right to have such dispute decided in a court of law before a
jury, and intend and accept the use of neutral, binding arbitration to resolve
any such disputes. The prevailing party shall be entitled to attorney's fees and
costs within the arbitrator's discretion.
NOTICE: BY SIGNING THIS CONTRACT YOU ARE AGREEING TO HAVE ANY ISSUE ARISING OUT
OF OR IN ANY WAY PERTAINING TO THIS CONTRACT DECIDED BY NEUTRAL ARBITRATION AND
YOU ARE GIVING UP YOUR RIGHT TO A JURY OR COURT TRIAL.
Attorneys' Fees and Costs
Section 7.04. If any legal action is necessary to enforce or interpret
the terms of this agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs, and necessary disbursements in addition to
any other relief to which that party may be entitled. This provision shall be
construed as applicable to the entire contract.
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Entire Agreement
Section 7.05. This agreement supersedes any and all other agreements,
either oral or in writing, between the parties hereto with respect to the
employment of Employee by Employer and contains all of the covenants and
agreements between the parties with respect to that employment in any manner
whatsoever. Each party to this agreement acknowledges that no representation,
inducements, promises, or agreements, orally or otherwise, have been made by any
party, or anyone acting on behalf of any party, which are not embodied herein,
and that no other agreement, statement, or promise not contained in this
agreement shall be valid or binding on either party.
Modifications
Section 7.06. Any modification of this agreement will be effective only
if it is in writing and signed by the party to be charged.
Effect of Waiver
Section 7.07. The failure of either party to insist on strict
compliance with any of the terms, covenants, or conditions of this agreement by
the other party shall not be deemed a waiver of that term, covenant, or
condition, nor shall any waiver or relinquishment of any right or power at any
one time or times be deemed a waiver or relinquishment of that right or power
for all or any other times.
Partial Invalidity
Section 7.08. If any provision in this agreement is held by a court of
competent jurisdiction to be invalid, void, or unenforceable, the remaining
provisions shall nevertheless continue in full force without being impaired or
invalidated in any way.
Law Governing Agreement and Venue
Section 7.09. This agreement shall be governed by and construed in
accordance with the laws of the State of Nevada. Any disputes over the terms and
conditions of this agreement shall be brought in the State of Nevada and each
party hereto specifically consents to jurisdiction in Nevada.
Sums Due Deceased Employee
Section 7.10. If Employee dies prior to the expiration of the term of
his employment, any sums that may be due him from Employer under this agreement
as of the date of death shall be paid to Employee's executors, administrators,
heirs, personal representatives, successors, and assigns.
Executed on October __, 2004.
EMPLOYER
LITFUNDING USA
By _________________
Its: President
EMPLOYEE-REGIONAL DIRECTOR
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Xxxxxxx X. Xxxx
