Exhibit 10.19
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Employment Agreement") is made and entered
into as of June 1, 2004, by and between JB OXFORD HOLDINGS, INC., a Utah
corporation (together with its wholly-owned subsidiaries JB Oxford & Company
("JBOC") and National Clearing Corp. hereinafter called the "Company"); and
XXXXXXX X. XXXXXX, an individual residing in the State of California
("Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Executive is a principal officer of the Company and an integral
part of its management;
WHEREAS, the Company is experiencing financial difficulties and is under
investigation by the Securities and Exchange Commission and other authorities;
and
WHEREAS, the Company desires to sell substantially all of the customer
accounts of JBOC to a third party (the "Transaction");
WHEREAS, the Company wishes to assure both itself of continuity of
management to maintain the Company's and JBOC's business and customer base in
order to facilitate the Transaction and provide a transition and necessary
business support following the closing of the Transaction; and
WHEREAS, Executive has agreed to continue providing services to the
Company and JBOC upon the terms and subject to the conditions set forth in this
Agreement;
AGREEMENT
1. Recitals. The statements contained in the recitals of fact set forth
above are true and correct and by this reference are incorporated in and made a
part of this Agreement.
2. Purpose and Intent. The Board of Directors of the Company (the "Board")
recognizes that the uncertainty and questions which necessarily arise among
management prior to a transaction of the type contemplated creates anxiety and
concern, and may result in the departure or distraction of key management
personnel to the detriment of the Company and its shareholders in this period
when their undivided attention and commitment to the best interests of the
Company and its shareholders are particularly important. Accordingly, the Board,
through the action of its Compensation Committee, has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of members of the Company's management, including
Executive, to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the Transaction.
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3. Term of Agreement. This Agreement shall be effective as of June 1,
2004, and shall remain in effect for a period of one (1) year thereafter (the
"Term"). After the end of the Term, this Agreement shall continue until such
time as either party gives written notice of termination to the other party.
4. Capacity and Duties. Executive is and shall be employed in the capacity
of Chief Financial Officer of the Company and shall have such other duties,
responsibilities and authorities, including as an officer of JBOC and NCC, as
are assigned to him by the Chief Executive Officer, President and boards of
directors of the respective companies so long as such additional duties,
responsibilities and authorities are consistent with Executive's position and
level of authority as Chief Financial Officer. Executive shall report directly
to the Chief Executive Officer of the Company. Subject to the control and
general directions of the Chief Executive Officer of the Company, and the
general policies and guidelines established by the respective boards of
directors, and except as otherwise herein provided, Executive shall devote
substantially all of his business time, best efforts and attention to promote
and advance the business of the Company and to perform diligently and faithfully
all the duties, responsibilities and obligations of Executive to be performed by
him under this Agreement.
5. Place of Employment. Executive's principal place of work shall be
located at the principal offices of the Company and JBOC in Southern California.
6. Compensation. During the employment period, subject to all the terms
and conditions of this Agreement and as compensation for all services to be
rendered by Executive under this Agreement, the Company shall pay to or provide
Executive with the following:
(a) Base Salary. The Company shall pay to Executive a base annual
salary at the rate of One Hundred Fifty Thousand Dollars ($150,000.00) per
year, payable at such intervals (at least monthly) as salaries are paid
generally to other executive officers of the Company. On January 1, 2005,
and annually thereafter, Executive's base annual salary shall be reviewed
by the Board and may be increased (but shall not be decreased) to an
amount determined in good faith by the Board, based upon a complete review
of Executive's performance under this Agreement during the prior year and
the growth and profitability of the Company, which review shall be
communicated in writing to Executive.
(b) Cash Bonus. The Executive may, but shall not be entitled to,
receive such additional compensation as the Board, in its sole discretion,
may determine.
(c) Benefits. The Company shall continue to provide Executive with
his current, or comparable, benefits and such other benefits as made
generally available to executive officers and other significant employees
of the Company.
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TERMINATION OF EMPLOYMENT
7. Compensation Following Termination.
(a) If the Company terminates Executive without Cause or Executive
terminates his employment For Good Reason during the Term, the Company shall
continue to make monthly payments to Executive at the current rate of
compensation through the end of the Term.
(b) If the Company terminates Executive without Cause or Executive
terminates his employment For Good Reason at any time after the end of the Term
and prior to June 1, 2006, the Company shall continue to make monthly payments
to Executive at the current rate of compensation for a period of one (1) year
following the date of termination of employment.
(c) Except as otherwise provided in Section 8 below, if Executive
terminates his employment at any time after June 1, 2006, the Company shall
continue to make monthly payments to Executive at the current rate of
compensation for a period of one (1) year following the date of termination of
employment.
(d) For purposes of this Section 7, the following additional provisions
regarding payment of compensation to Executive shall apply:
(i) Compensation "at the current rate" means (x) Base Salary as
provided in Section 3 above at the then current rate, (y) any unpaid
Company matching contribution to Executive's accounts in the Company's
401(k) plan, and (z) any unpaid Company target or discretionary bonus with
respect to the Company's fiscal year ended prior to the termination date
to the extent the bonus has not been paid to Executive or contributed to
Executive's accounts in the Company's 401(k) plan.
(ii) Unless not permitted under the applicable stock option plan,
all previously granted but unvested and/or unexercised options to acquire
shares of the Company's common stock which are outstanding on the date of
the termination shall become immediately vested and may be exercised
through the end of the post-termination compensation payment period. All
of the stock option agreements between Executive and the Company hereby
shall be deemed to be amended to modify any provisions inconsistent with
the vesting and extended exercise period terms herein stated.
(iii) Unless not permitted under the applicable benefit plan, all
shares of restricted stock previously issued to the Executive under any
Company employee benefit plan shall immediately vest on the date of
termination, and all forfeiture provisions relating to, and restrictions
upon transfer of, such shares shall lapse. All of the Company's restricted
share agreements between Executive and the Company hereby shall be deemed
to be amended to modify any provisions inconsistent with the vesting and
extended exercise period terms herein stated.
(iv) All medical, dental, life, disability and hospitalization
benefits for Executive and his family then in effect shall be continued,
at the Company's expense, through the end of the post-termination
compensation payment period.
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(e) 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 or benefit provided for in this Agreement be
reduced by any amounts earned or accrued through the date of termination or by
any amounts to which Executive shall be entitled by law (nor shall payment
hereunder be deemed in lieu of such amounts), by any compensation earned by
Executive as a result of employment by another employer, or by retirement
benefits after the date of termination or voluntary termination, or otherwise.
(f) Anything to the contrary notwithstanding, all payments required to be
made by the Company hereunder to Executive or his estate or beneficiaries shall
be subject to the withholding of such amounts, if any, relating to tax and other
payroll deductions as the Company may reasonably determine it should withhold
pursuant to any applicable law or regulation. In lieu of withholding such
amounts, the Company may accept other provisions to the end that it has
sufficient funds to pay all taxes required by law to be withheld in respect of
any or all of such payments.
8. Compensation Following For Cause Termination, Death or Disability. If
Executive's employment with the Company shall be terminated by the Company (i)
For Cause, (ii) on account of an accident or illness which renders Executive
unable, for a period of at least six (6) consecutive months, to perform the
essential functions of his job notwithstanding the provision of reasonable
accommodation by the Company ("Disability"), or (iii) by reason of Executive's
death, the Company shall pay to Executive a lump sum payment, within fifteen
(15) days following the date of such termination, in an amount equal to all
amounts earned or accrued through the date of such termination but not paid as
of the date of such termination, including (A) base salary, (B) reimbursement
for reasonable and necessary expenses incurred by Executive on behalf of the
Company during the period ending on date of such termination, (C) the sum of (i)
the unpaid Company matching contribution to Executive's accounts in the
Company's 401(k) plan, and (ii) the unpaid Company target or discretionary bonus
with respect to the Company's fiscal year ended prior to the termination date to
the extent the bonus has not been paid to Executive or contributed to
Executive's accounts in the Company's 401(k) plan; provided, however, that
Executive shall not entitled to any bonus in the case of a termination by the
Company For Cause.
9. Definition of "With Good Reason". The termination of Executive's
employment by the Executive shall be deemed "With Good Reason" if:
(d) the Company violates the compensation provisions of Section 6 above,
or changes his title without his prior express written approval;
(e) without Executive's express written consent, the Company requires
Executive to be based anywhere other than the Southern California, except for
required travel on the Company's business;
(f) the Company fails to obtain the assumption of the performance of this
Agreement by any successor of the Company; or
(d) any purported termination of Executive's employment For Cause by the
Company that does not comply with the terms of Section 10 below.
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10. Definition of "For Cause". The termination of Executive's employment
by the Company shall be deemed "For Cause" if:
(c) it results from the willful and continued failure by Executive
substantially to perform his reasonably assigned employment duties or regular
failure to follow the specific directives of the Board (in either case other
than a failure resulting from Executive's incapacity due to Disability), after
written demand for substantial performance, that specifically identifies the
manner in which the Company believes Executive has not substantially performed
his duties, is delivered by the Company to Executive; or
(d) Executive willfully engages in misconduct which is materially
injurious to the Company, monetarily or otherwise.
For purposes of this Section, no act, or failure to act, on Executive's
part shall be considered "willful" unless done, or omitted to be done, by him
intentionally, and without a reasonable belief that his action or omission was
in the best interest of the Company. Notwithstanding the foregoing, Executive
shall not be deemed to have been terminated For Cause under subsection (a) or
(b) without (i) reasonable advance written notice to Executive setting forth the
reasons for the Company's intention to terminate For Cause, (ii) a reasonable
opportunity for Executive to cure any such breach during the 30-day period after
Executive's receipt of such notice, (iii) and an opportunity at any reasonable
time during the 30-day period after Executive's receipt of such notice, for
Executive, together with his counsel, to be heard before the Board.
PROPRIETARY INFORMATION; NO SOLICITATION
11. Proprietary Information and Inventions. Executive understands and
acknowledges that the Company possesses and will continue to possess information
that has been created, discovered, or developed by, or otherwise become known
to, the Company (including, without limitation, information created, discovered,
developed or made known to by Executive during the period of or arising out of
my employment by the Company) or in which property rights have been or may be
assigned or otherwise conveyed to the Company, which information has commercial
value in the business in which the Company is engaged and is treated by the
Company as confidential. Except as otherwise herein provided, all such
information is hereinafter called "Proprietary Information", which term, as used
herein, shall also include, but shall not be limited to, data, functional
specifications, computer programs, know-how, research, technology, improvements,
developments, designs, marketing plans, strategies, forecasts, new products,
unpublished financial statements, budgets, projections, licenses, franchises,
prices, costs, and customer, supplier and potential acquisition candidates
lists.
Notwithstanding anything contained in this Agreement to the contrary, the
term "Proprietary Information" shall not include (i) information which is in the
public domain, (ii) information which is published or otherwise becomes part of
the public domain through no fault of Executive, (iii) information which
Executive can demonstrate was in Executive's possession at the time of
disclosure and was not acquired by Executive directly or indirectly from any of
the Company on a confidential basis, (iv) information which becomes available to
Executive on a non-confidential basis from a source other than any of the
Company and which source, to the best of Executive's knowledge, did not acquire
the information on a confidential basis or (v) information required to be
disclosed by any federal or state law, rule or regulation or by any applicable
judgment, order or decree or any court or governmental body or agency having
jurisdiction in the premises.
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All Proprietary Information shall be the sole property of the Company and
their respective assigns. Executive assigns to the Company any rights Executive
may have or acquire in such Proprietary Information. At all times, both during
Executive's employment by the Company and after its termination, Executive shall
keep in strictest confidence and trust all Proprietary Information, and
Executive shall not use or disclose any Proprietary Information without the
written consent of the Company, except as may be necessary in the ordinary
course of performing Executive's duties as an Executive of the Company.
12. Surrender of Documents. Executive shall, at the request of the
Company, promptly surrender to the Company or its nominee any Proprietary
Information or document, memorandum, record, letter or other paper in his
possession or under his control relating to the operation, business or affairs
of the Company.
13. Restrictive Covenant. The Company currently, through its subsidiaries
JBOC and NCC, is a registered broker-dealer offering discount and electronic
brokerage services to the investing public and clearing services to other
broker-dealers. The Company may continue these activities or pursue other
business activities in the future. The activities of the Company and its
subsidiaries, as conducted at or within one year prior to the termination of
Executive's employment under this Agreement, and any future activities
reasonably related thereto which are contemplated by the Company and/or its
subsidiaries at Executive's termination of employment identified in writing by
the Company to Executive at the date of such termination, are hereinafter
referred to as the "Business Activities"). Executive acknowledges and recognizes
Executive's possession of Proprietary Information and the highly competitive
nature of the business of the Company and, accordingly, agrees that in
consideration of the premises contained herein Executive will not, during the
period of Executive's employment by the Company and for a period of one (1) year
following his termination of employment, engage in any Business Activities in
the United States in competition with the Business Activities of the Company or
induce employees of the Company to terminate their employment with the Company
for purposes of providing services for others engaged in the same or similar
Business Activities.
14. Remedies. Executive acknowledges and agrees that the Company's remedy
at law for a breach or a threatened breach of the provisions of Sections 11, 12
and 13 herein would be inadequate, and in recognition of this fact, in the event
of a breach or threatened breach by Executive of any of such provisions of this
Agreement, it is agreed that the Company shall be entitled to, equitable relief
in the form of specific performance, a temporary restraining order, a temporary
or permanent injunction or any other equitable remedy which may then be
available, without posting bond or other security. Executive acknowledges that
the granting of a temporary injunction, a temporary restraining order or other
permanent injunction merely prohibiting Executive from engaging in any Business
Activities would not be an adequate remedy upon breach or threatened breach of
this Agreement, and consequently agrees upon any such breach or threatened
breach to the granting of injunctive relief prohibiting Executive from engaging
in any activities prohibited by this Agreement. No remedy herein conferred is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to any other remedy given hereunder
now or hereinafter existing at law or in equity or by statute or otherwise.
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INDEMNIFICATION
15. Actions Other than by the Company. In the event Executive was or is a
party, or is threatened to be made a party, to any proceeding (other than an
action by or in the right of the Company) by reason of the fact that he is or
was an agent of the Company, the Company shall indemnify him against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with such proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interest of the
Company and, in the case of a criminal proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that Executive did not act
in good faith and in a manner which he reasonably believed to be in the best
interest of the Company or that Executive had reasonable cause to believe that
his conduct was lawful. No indemnification shall be made under this Section 15
in connection with any other proceeding charging that Executive derived an
improper personal benefit, whether or not involving action in his official
capacity, in which proceeding he is adjudged liable on the basis that he derived
an improper personal benefit.
16. Actions by the Company. In the event Executive is a party, or is
threatened to be made a party, to any threatened, pending or completed action by
or in the right of the Company to procure a judgment in its favor by reason of
the fact that he is or was an agent of the Company, the Company shall indemnify
him against expenses actually and reasonably incurred by him in connection with
the defense or settlement of that action if Executive acted in good faith, in a
manner that he believed to be in, or not opposed to, the best interest of the
Company and, in the case of a criminal proceeding, that he had no reasonable
cause to believe that his conduct was unlawful. No indemnification shall be made
under this Section 16 in respect of any claim, issue or matter as to which
Executive shall have been adjudged to be liable to the Company unless and only
to the extent that the court in which that action was brought shall determine
upon application that, in view of all the circumstances of the case, Executive
is fairly and reasonably entitled to indemnification for the expenses which the
court shall determine.
17. Successful Defense by Executive. To the extent that Executive has been
successful on the merits in defense of any proceeding referred to in Sections 15
or 16 herein, or in defense of any claim, issue or matter therein, Executive
shall be indemnified against expenses actually and reasonably incurred by him in
connection therewith.
18. Required Approval. Except as provided in Section 17 herein, any
indemnification under this Agreement shall be made by the Company only if
authorized in the specific case on a determination that indemnification of
Executive is proper in the circumstances because he has met the applicable
standard of conduct set forth in Section 15 or Section 16 herein, by: (a) a
majority vote of a quorum consisting of Directors who are not parties to the
proceeding; (b) a majority vote of the stockholders of the votes entitled to be
cast by holders of qualified shares present in person or by proxy at a meeting;
(c) special legal counsel; or (d) the court in which the proceeding is or was
pending, on application made by the Company or Executive or the attorney or
other person rendering services in connection with the defense, whether or not
such application by Executive, attorney or other person is opposed by the
Company.
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19. Advancement of Expenses. Expenses incurred in defending any proceeding
may be advanced by the Company before the final disposition of the proceeding on
receipt of (i) a written affirmation of Executive's good faith belief that he
has met the applicable standard of conduct described in Section 15 or Section 16
herein, and (ii) an undertaking by him or on his behalf to repay the amount of
the advance unless it shall be determined ultimately that he is entitled to be
indemnified as authorized herein. A determination must also be made that the
facts then known to those making the determination would not preclude
indemnification.
20. Other Indemnification Rights. Nothing contained in this Agreement
shall affect any right to indemnification to which Executive may be entitled by
the General Company Law of Utah, the Company's amended articles of
incorporation, its amended bylaws, contract or otherwise.
21. Limitations. No indemnification or advance shall be made under this
Agreement, except as provided in Section 15 or Section 16, in any circumstance
where it appears: (a) that it would be inconsistent with a provision of the
Articles of Incorporation, a resolution of the stockholders, or an agreement in
effect at the time of the accrual of the alleged cause of action asserted in the
proceeding in which the expenses were incurred or other amounts were paid, which
prohibits or otherwise limits indemnification; or (b) that it would be
inconsistent with any condition expressly imposed by a court in approving a
settlement.
22. Insurance. Upon and in the event of a determination by the Board to
purchase liability insurance for its Directors or officers, the Company shall
purchase and maintain insurance on behalf of Executive against any liability
asserted against or incurred by him as a Director or officer of the Company or
arising out of his status as such whether or not the Company would have the
power to indemnify him against that liability under the provisions of this
Agreement.
23. Certain Definitions. In addition to the words and terms elsewhere
defined in this Agreement, certain capitalized words and terms used in Sections
15 through 22 of this Agreement shall have the meanings given to them by the
definitions and descriptions in this Section 23 unless the context or use
indicates another or different meaning or intent, and such definitions shall be
equally applicable to both the singular and plural forms of any of the
capitalized words and terms herein defined. The following words and terms are
defined terms under this Agreement:
(a) "Company" means JB Oxford Holdings, Inc. ("JBOH"), its wholly-owned
subsidiaries JB Oxford & Company ("JBOC") and National Clearing Corp. ("NCC"),
and any other domestic or foreign corporation, partnership, joint venture, trust
or other enterprise for which Executive is or was a director, officer, employee,
or agent at the request of JBOH, JBOC, NCC or any of their predecessor
companies.
(b) "proceeding" means any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative, or investigative and
whether formal or informal.
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(c) "expenses" include, without limitation, attorneys' fees and any
expenses of establishing a right to indemnification under Section 15 or Section
16 of this Agreement.
MISCELLANEOUS
24. Intent. This Agreement is made by the Company in order to induce
Executive to remain in the Company's employ, with the Company's acknowledgment
and intent that it will be relied upon by Executive, and in consideration of the
services to be performed by Executive from time to time hereafter.
25. Governing Law. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of California. Any action
brought by a party to this Agreement shall be brought and maintained in a court
of competent jurisdiction in Los Angeles County in the State of California.
26. Successors and Assigns.
(a) The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree in
writing to perform this Agreement. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall require the Company to pay to Executive
compensation from the Company in the same amount and on the same terms as
Executive would be entitled hereunder in the event of a Termination, except that
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed to be the date on which Executive
shall receive such compensation from the Company. As used in this Agreement,
"Company" shall mean the Company as herein above defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law or otherwise.
(b) This Agreement shall inure to the benefit of, and be enforceable by,
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should die
while any amount would still be payable to Executive hereunder if Executive had
continued to live, all such amounts, shall be paid in accordance with the terms
of this Agreement to Executive's devisee, legatee or other designee or, if there
is no such designee, to Executive's estate.
27. Notices. Except as otherwise expressly provided herein, any notice,
demand or payment required or permitted to be given or paid shall be deemed duly
given or paid only if personally delivered or sent by United States mail and
shall be deemed to have been given when personally delivered or three (3) days
after having been deposited in the United States mail, certified mail, return
receipt requested, properly addressed with postage prepaid. All notices or
demands shall be effective only if given in writing. For the purpose hereof, the
addresses of the parties hereto (until notice of a change thereof is given as
provided in this Section 10(d)), shall be as follows:
The Company JB Oxford Holdings, Inc.
and JBOC: JB Oxford & Company
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx
Attention: Chief Executive Officer
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With a copy to: Xxxxxxxx, Loop & Xxxxxxxx, LLP
000 X. Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: X. Xxxxxxxx Thorn, III
Executive: Xxxxxxx X. Xxxxxx
0000 Xxxxx xx Xxx
Xxxxxxxx Xxxx, XX 00000
28. Severability. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) is held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable in any respect, and
the validity and enforceability of any such provision in every other respect and
of the remaining provisions hereof shall not be in any way impaired and shall
remain enforceable to the fullest extent permitted by law.
29. Entirety. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and supersedes any prior or
contemporaneous agreement or understandings relating to the subject matter
hereof.
30. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or
limit Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company (except for any
severance or termination policies, plans, programs or practices) and for which
Executive may qualify, nor shall anything in this Agreement limit or reduce such
rights as Executive may qualify, nor shall anything in this Agreement limit or
reduce such rights as Executive may have under any other agreements with the
Company (except for any severance or termination agreement). Amounts that are
vested benefits or that Executive is otherwise entitled to receive under any
plan or program of the Company shall be payable in accordance with such plan or
program, except as explicitly modified by this Agreement.
31. Amendment. This Agreement may be amended only by a written instrument
signed by the Company and Executive, which makes specific reference to this
Agreement.
IN WITNESS WHEREOF, the undersigned have executed or caused to be executed
this Agreement as of the date first above written.
JB OXFORD HOLDINGS, INC. "EXECUTIVE"
By: /s/ Xxxxxxxxxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxxxx
------------------------------- ------------------------------
Chief Executive Officer XXXXXXX X. XXXXXX
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