EMPLOYMENT AGREEMENT
EMPLOYMENT
AGREEMENT, dated April 2, 2007 (the “Agreement”), by and among Manchester Inc.,
a Nevada corporation (the “Company”), and Xxxxxxx X. Xxxxxx (the
“Executive”).
WHEREAS,
the Company desires to engage Xx. Xxxxxx as an officer to assist the Company
with the development of its Buy Here/Pay Here car business;
NOW
THEREFORE, in consideration of the premises and the mutual agreements made
herein, the Company and Xx. Xxxxxx agree as follows:
1. Employment;
Duties.
The
Company shall employ the Executive as Executive Vice President of Corporate
Development. The Executive shall serve the Company in such capacity in addition
to his current capacity as Corporate Secretary of the Company during the
“Engagement Period” as defined in Section 2. The Executive agrees that during
the term of his employment hereunder, he shall devote 50% of his professional
working time to the Company, and give his commercially reasonable efforts,
skills and abilities to promote the business and interests of the Company.
The
precise duties, responsibilities and authority of the Executive may be
reasonably expanded, limited or modified, from time to time, as directed by
the
Board of Directors of the Company or a committee of the Board to which the
Board
has delegated such authority (collectively, the “Board”). The Executive agrees
to faithfully and diligently perform such duties as may from time to time be
assigned to the Executive by the Board.
2. Employment
Period.
This
Agreement shall have an initial term of three (3) years to be effective as
of
the date hereof and ending on March 31, 2010 (the “Initial Period”), unless
sooner terminated in accordance with the provisions of Section 7 or Section
8.
On the expiration of such Initial Period, this Agreement shall automatically
renew and continue to remain in effect for successive one year periods, until
terminated in accordance with the provisions of Section 7 or Section 8, unless
either party provides the other party with written notice of non-renewal not
later than 10 days prior to the expiration of the Initial Period or the
anniversary of such date in any subsequent renewal period. Each effective period
of this Agreement is referred to herein as the “Employment Period.”
3. Compensation
and Benefits.
(a) Base
Compensation.
The
Executive shall be paid a base salary of $280,000 per annum, payable in monthly
increments less applicable statutory and regulatory deductions (the “Base
Salary”). The Base Salary shall be payable each month in accordance with the
Company’s regular payroll practices, as the same may be modified from time to
time. In addition, the Executive may, at the discretion of the Board, receive
such compensation as other members of the Board shall be entitled to, during
the
duration of his service thereon.
(b) Expense
Reimbursement.
The
Executive shall be entitled to reimbursement of reasonable out-of-pocket
expenses incurred in connection with travel related to the Company's business
and affairs upon receipt of itemized vouchers approved in accordance with
Company policy as in effect from time to time.
(c) Benefits.
The
Executive shall be immediately eligible for participation in any and all Company
benefits that may be available to employees as in effect from time to time.
In
addition, the Executive shall be entitled to receive reimbursement (i) for
the
monthly medical and dental insurance premiums of the Executive and his spouse,
as provided through such insurance carrier as the Executive may designate;
and
(ii) the Executive shall be entitled to be provided a Company car or provided
reimbursement for the monthly cost of a vehicle, including insurance, of the
make and model selected by Company and approved by the Board.
(d)
Bonus.
The
Executive shall receive an annual bonus to be determined at the sole discretion
of the Board of Directors.
(e) Equity
Compensation.
The
Executive shall be eligible to receive stock options as granted by the Board
of
Directors for the purchase of shares of Company common stock in accordance
with
the terms and conditions of the Company’s stock option plan.
(f) Vacation.
The
Executive shall be entitled to three (3) weeks paid vacation per calendar year,
pro-rated with respect to the portion of the year in which employment commenced
with the Company, in each case in accordance with Company general policies
regarding vacations. A maximum of one week of any accrued but untaken vacation
may be carried over and used up to nine months after the year in which accrued,
but not thereafter. No compensation shall be paid for accrued but untaken
vacation.
4. Trade
Secrets.
The
Executive recognizes that it is in the Company's legitimate business interest
to
restrict his disclosure or use of trade secrets and confidential information
relating to the Company or its affiliates for any purpose other than in
connection with his performance of his duties to the Company.
5. Return
of Documents and Property.
Upon
the expiration or termination of the Executive's employment with the Company,
or
at any time upon the request of the Company, the Executive (or his heirs or
personal representatives) shall deliver to the Company (a) all documents and
materials (including, without limitation, computer files) containing Trade
Secrets and Confidential Information relating to the Company's business and
affairs, and (b) all documents, materials, equipment and other property
(including, without limitation, computer files, computer programs, computer
operating systems, computers, printers, scanners, pagers, telephones, credit
cards and ID cards) belonging to the Company, which in either case are in the
possession or under the control of the Executive (or his heirs or personal
representatives).
6. Discoveries
and Works.
All
Discoveries and Works made or conceived by the Executive during his employment
by the Company, solely, jointly or with others, that relate to the Company's
present or anticipated activities, or are used or useable by the Company shall
be owned by the Company. The term “Discoveries and Works” includes, by way of
example but without limitation, Trade Secrets and other Confidential
Information, patents and patent applications, service marks, and service xxxx
registrations and applications, trade names, copyrights and copyright
registrations and applications. The Executive shall (a) promptly notify, make
full disclosure to, and execute and deliver any documents requested by the
Company, as the case may be, to evidence or better assure title to Discoveries
and Works in the Company, as so requested, (b) renounce any and all claims,
including but not limited to claims of ownership and royalty, with respect
to
all Discoveries and Works and all other property owned or licensed by the
Company, (c) assist the Company in obtaining or maintaining for itself at its
own expense United States and foreign patents, copyrights, trade secret
protection or other protection of any and all Discoveries and Works, and (d)
promptly execute, whether during his employment with the Company or thereafter,
all applications or other endorsements necessary or appropriate to maintain
patents and other rights for the Company and to protect the title of the Company
thereto, including but not limited to assignments of such patents and other
rights. Any Discoveries and Works which, within one year after the expiration
or
termination of the Executive's employment with the Company, are made, disclosed,
reduced to tangible or written form or description, or are reduced to practice
by the Executive and which pertain to the business carried on or products or
services being sold or delivered by the Company at the time of such termination
shall, as between the Executive and, the Company, be presumed to have been
made
during the Executive's employment by the Company. The Executive acknowledges
that all Discoveries and Works shall be deemed “works made for hire” under the
Copyright Act of 1976, as amended 17 U.S.C. Sect. 101.
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7. Termination.
(a) Manner
of Termination.
The
Company and the Executive may terminate this Agreement, with or without cause,
only in accordance with the provisions of this Section 7.
(b) Termination
Without Cause.
During
the Employment Period, if the Company terminates this Agreement other than
for
cause, the Executive shall continue to receive his salary for 12 additional
months payable in accordance with the Company’s normal payroll practice, plus
reimbursement of any and all expenses incurred by Executive as of the date
of
notice of such date and through the twelve (12) month anniversary thereof to
the
extent otherwise permitted hereunder, plus payment of any and all bonus payments
payable as of such date, and, subject to the terms and conditions of applicable
option agreements, all of such equity instruments that would by their own terms
vest and become exercisable as of the twelve (12) month anniversary date of
such
notice of termination other than for cause, which options shall remain so vested
and exercisable and non-forfeitable by the Executive (but in no event beyond
the
expiration of the stated term of such instrument), and all of such payments
and
vesting of such equity instruments shall completely and fully discharge any
and
all obligations and liabilities of the Company to the Executive with respect
to
this Agreement.
(c) Termination
for Cause.
The
Company may terminate this Agreement for cause at any time during the Employment
Period effective immediately upon giving written notice of termination to the
Executive. For purposes of this Agreement, “cause” shall mean, with respect to
the Executive, (i) any act of fraud or dishonesty, willful misconduct or
negligence in connection with the Executive's duties, (ii) a breach by the
Executive of any provision hereof or of any contractual or legal fiduciary
duty
to the Company (including, but not limited to, the unauthorized disclosure
of
Trade Secrets or other Confidential Information, or non-compliance with the
policies, guidelines and procedures of the Company), (iii) the arrest of the
Executive for the commission of a felony, whether or not such alleged felony
was
committed in connection with the Company's business or (iv) the commencement
of
any bankruptcy proceedings (whether voluntary or involuntary), the appointment
of a trustee or receiver for the Executive or the general assignment of the
Executive's assets to his creditors.
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(d) Termination
by Executive .
The
Executive may terminate this Agreement with or without good reason at any time
during the Employment Period effective immediately upon giving written notice
of
termination to the Company. For purposes of this Agreement, with respect to
the
Company, “good reason” shall mean (i) the failure to pay any amounts due
Executive hereunder (and not disputed in good faith by the Company) within
one
month after their due date; (ii) breach of performance by the Company of any
other term herein due to the Executive; (iii) requirement that Executive
relocate away from his principal residence as of the date of this Agreement;
(iv) travel on Company related matters without notice of not less than five
business days; or (v) travel on Company related matters more than five business
days in any 30 day period days.
(e) Effect
of Termination.
Except
as otherwise provided herein, in the event this Agreement is terminated for
cause, the Executive's rights and the Company's obligations hereunder shall
cease as of the effective date of the termination, including, without
limitation, the right to receive Base Salary, bonus and all other compensation,
expense allowance or benefits provided for in this Agreement, and the Executive
shall not be entitled to any further compensation, expense allowance, benefits,
or severance compensation of any kind, and shall have no further right or claim
to any compensation, benefits or severance compensation under this Agreement
or
otherwise against the Company or its subsidiaries and affiliates, from and
after
the date of such termination. For purposes of clarity, in the event of a
termination of this Agreement the Executive shall not be entitled to any bonus
other than any bonus payable through the date of notice of such
termination.
(f) Change
in Control Termination.
Notwithstanding any other provision in this Agreement, in the event the
Executive's employment with the Company is terminated by the Company following
a
Change
in
Control
(as
defined below), the Executive shall receive within ten (10) calendar days of
notice of such termination, in lieu of the payment specified in Section 7(b)
above, a lump sum payment equivalent to twelve (12) months salary, plus
reimbursement of any and all expenses incurred by Executive as of such date,
plus payment in full of any and all prospective annual bonus payments with
respect to the next succeeding twelve (12) month Employment Period, and, subject
to the terms and conditions of the option agreement attached hereto as Exhibit
A, all of such equity instruments granted therein shall fully and irrevocably
vest and become exercisable and/or non-forfeitable by the Executive until the
first anniversary of the termination of the Executive's employment (but in
no
event beyond the expiration of the stated term of such instrument), and all
of
such payments and vesting of equity instruments shall completely and fully
discharge any and all obligations and liabilities of the Company to the
Executive with respect to this Agreement.
(g) Survival.
Any
termination under this Section 7 is subject to the provisions of Sections 18
and
20 hereof.
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(h) Relinquishment
of Authority.
Notwithstanding anything to the contrary set forth herein, upon written notice
to the Executive, the Company may immediately relieve the Executive of all
his
duties and responsibilities hereunder and may relieve the Executive of authority
to act on behalf of, or legally bind, the Company.
(i) Change
in Control.
For
purposes of this Agreement “Change in Control” means (i) the acquisition (by
means of purchase, merger or otherwise) by any person or any two or more persons
acting as a partnership, syndicate or other group for the purpose of acquiring,
holding or disposing of such securities of beneficial ownership of fifty-one
percent (51%) or more of the sum of the amount of the shares of Company common
stock (the “Shares”) then outstanding, plus any Shares which may be issued
pursuant to the conversion or exercise of all outstanding options, rights or
warrants; or (ii) the sale of all or substantially all of the assets of the
Company. Notwithstanding anything to the contrary, for purposes of this Section,
a person shall not be deemed to have made an acquisition of beneficial ownership
of Shares if such person: (a) acquires beneficial ownership of such Shares
directly from the Company; (b) assumes beneficial ownership of more than the
permitted percentage of Shares solely as a result of the acquisition of
beneficial ownership of Shares by the Company which, by reducing the
proportional beneficial ownership of Shares by other security holders, increases
the proportional beneficial ownership of Shares by such person; or (c) is (1)
the Company or any corporation or other person of which a majority of its voting
power or its equity securities or equity interest is owned directly or
indirectly by the Company (a “Controlled Entity”) or is owned directly or
indirectly by the stockholders of the Company in the same proportion as their
beneficial ownership of Shares or (2) a trustee or other fiduciary holding
securities under one or more employee benefit plans or arrangements (or any
trust forming a part thereof) maintained by the Company or any Controlled
Entity.
(j) For
purposes of clarity and notwithstanding the foregoing provisions of this
Section 7, the termination of the Employment Term of this Agreement in
accordance with ordinary termination of this Agreement without renewal shall
not
be deemed to be a termination which requires any supplemental payments,
compensation, consideration or remuneration of any nature to be paid to the
Executive as a function of such termination.
8. Disability:
Death.
(a) If,
prior
to the expiration of the Employment Period, the Executive shall be unable to
perform his duties hereunder by reason of physical or mental disability for
at
least thirty (30) consecutive calendar days, the Company shall have the right
to
terminate this Agreement and the remainder of the Employment Period by giving
written notice to the Executive to that effect. Immediately upon the giving
of
such notice, the Employment Period shall terminate and such termination shall
be
deemed to be a termination without cause.
(b) Upon
termination of this Agreement pursuant to Section 8(a), the Executive shall
be
paid his Base Salary and bonus (if any) through the effective date of such
termination and all other compensation and benefits shall be subject to
Section 7(b).
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(c) In
the
event of a dispute as to whether the Executive is disabled within the meaning
of
Section 8(a), either party may from time to time request a medical examination
of the Executive by a doctor appointed by the chief of staff of a hospital
selected by mutual agreement of the parties, or as the parties may otherwise
agree, and the written medical opinion of such doctor shall be conclusive and
binding upon the parties as to whether the Executive has become disabled and
the
date when such disability arose. The cost of any such medical examination shall
be borne by the requesting party.
(d) If,
prior
to the expiration of the Employment Period or the termination of this Agreement,
the Executive shall die, the Executive's estate shall be paid in accordance
with
Section 7(b). Any bonus payable shall be payable on the first bonus payment
date
following such termination. Except as otherwise provided in this Section 8(d),
upon the death of the Executive, the Employment Period shall terminate without
further notice and the Company shall have no further obligations hereunder,
including, without limitation, obligations with respect to compensation, expense
allowance and benefits provided for in Section 3 of this Agreement, other
than as set forth in in Section 7(b).
(e) Any
termination under this Section 8 is subject to the provisions of Section 18
hereof.
9. No
Conflicts.
The
Executive has represented and hereby represents to the Company and its
affiliates that the execution, delivery and performance by the Executive of
this
Agreement do not conflict with or result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default under
any
contract, agreement or understanding, whether oral or written, to which the
Executive is a party or of which the Executive is or should be aware and that
there are no restrictions, covenants, agreements or limitations on his right
or
ability to enter into and perform the terms of this Agreement, and agrees to
indemnify and save the Company and its affiliates harmless from any liability,
cost or expense, including attorney’s fees, based upon or arising out of any
such restrictions, covenants, agreements, or limitations that may be found
to
exist.
For
purposes of this Agreement, “affiliate” shall include any person or entity
directly or indirectly controlled by or controlling the Company.
10. Non-competition.
Except
as authorized by the Board of Directors, during the Engagement Period Executive
will not (except as an officer, director, stockholder, employee, agent or
consultant of the Company or any subsidiary or affiliate thereof) directly,
own,
manage, operate, join, or have a financial interest in, control or participate
in the ownership, management, operation or control of, or be employed as an
employee, agent or consultant, or in any other individual or representative
capacity for any business which is directly and geographically competitive
within a 25 mile radius of any business carried on or planned to be carried
on
by the Company or any of its subsidiaries or affiliates.
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11. Non-Solicitation.
During
the Restricted Period, the Executive, directly or indirectly, whether for his
account or for the account of any other individual or entity, shall not solicit
or canvas the trade, business or patronage of, or sell to, any individuals
or
entities that were either customers of the Company during the time the Executive
was employed by the Company, or prospective customers with respect to whom
a
sales effort, presentation or proposal was made by the Company or its
affiliates, during the one year period prior to the termination or expiration
of
this Agreement, as the case may be. The Executive further agrees that during
the
Restricted Period, he shall not, directly or indirectly, (i) solicit, induce,
enter into any agreement with, or attempt to influence any individual who was
an
employee or consultant of the Company at any time during the time the Executive
was employed by the Company, to terminate his or her employment relationship
with the Company or to become employed by the Executive or any individual or
entity by which the Executive is employed or (ii) interfere in any other way
with the employment, or other relationship, of any employee or consultant of
the
Company or its affiliates.
12. Enforcement.
The
Executive agrees that any breach of the provisions of Sections 4, 5, 6, 10
and
11 hereof would cause substantial and irreparable harm, not readily
ascertainable or compensable in terms of money, to the Company for which
remedies at law would be inadequate and that, in addition to any other remedy
to
which the Company may be entitled at law or in equity, the Company shall be
entitled to temporary, preliminary and other injunctive relief in the event
the
Executive violates or threatens to violate the provisions of Sections 4, 5,
6,
10 or 11 hereof, as well as damages, including, without limitation consequential
damages, and an equitable accounting of all earnings, profits and benefits
arising from such violation, in each case without the need to post any security
or bond. Nothing herein contained shall be construed as prohibiting the Company
from pursuing, in addition, any other remedies available to the Company for
such
breach or threatened breach. A waiver by the Company of any breach of any
provision hereof shall not operate or be construed as a waiver of a breach
of
any other provision of this Agreement or of any subsequent breach by the
Executive.
13. Determinations
by the Company.
All
determinations and calculations with respect to this Agreement shall be made
by
the Board or any committee thereof to which the Board has delegated such
authority in accordance with applicable law, the certificate of incorporation
and by-laws of the Company, in its sole discretion, and shall be final,
conclusive and binding on all persons, including the Executive and the personal
representative of his estate.
14. Successors
and Assigns.
This
Agreement shall inure to the benefit of and shall be binding upon (i) the
Company, its successors and assigns, and any company with which the Company
may
merge or consolidate or to which the Company may sell substantially all of
its
assets, and (ii) Executive and his executors, administrators, heirs and legal
representatives. Since the Executive’s services are personal and unique in
nature, the Executive may not transfer, sell or otherwise assign his rights,
obligations or benefits under this Agreement.
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15. Notices.
Any
notice required or permitted under this Agreement shall be deemed to have been
effectively made or given if in writing and personally delivered, mailed
properly addressed in a sealed envelope, postage prepaid by certified or
registered mail, delivered by a reputable overnight delivery service or sent
by
facsimile. Unless otherwise changed by notice, notice shall be properly
addressed to the Executive if addressed to the address of record then on file
with the Company; and properly addressed to the Company if addressed
to:
000
Xxxxxxxx Xxxxx, 0xx
Xxxxx
Xxxxxx,
Xxxxx 00000
Attention:
Board of Directors
with
a
copy to:
Wuersch
& Xxxxxx LLP
000
Xxxx
Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Telephone:
000-000-0000
Telecopier:
212-509-9559
Attention:
Xxxxxx X. Xxxxxx, Esq.
16. Severability.
It is
expressly understood and agreed that although the Company and the Executive
consider the restrictions contained in this Agreement to be reasonable and
necessary for the purpose of preserving the goodwill, proprietary rights and
going concern value of the Company, if a final judicial determination is made
by
a court having jurisdiction that any restriction contained in this Agreement
is
invalid, the provisions of this Agreement shall not be rendered void but shall
be deemed amended to apply as to such maximum time and territory and to such
other extent as such court may judicially determine or indicate to be
reasonable. Alternatively, if the court referred to above finds that any
restriction contained in this Agreement or any remedy provided herein is
unenforceable, and such restriction or remedy cannot be amended so as to make
it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained therein or the availability of any other remedy.
The provisions of this Agreement shall in no respect limit or otherwise affect
the Executive's obligations under other agreements with the Company.
17. Counterparts.
This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same
instrument.
18. Effects
of Termination.
Notwithstanding anything to the contrary contained herein, if this Agreement
is
terminated pursuant to Section 7 or Section 8 or expires by its terms, the
provisions of Sections 4, 5, 6, 10, 11, 12, 13, 14, 15, 16, 19, 20 and this
Section 18 shall continue in full force and effect.
19. Miscellaneous.
This
Agreement constitutes the entire agreement, and supersedes all prior agreements,
of the parties hereto relating to the subject matter hereof, and there are
no
written or oral terms or representations made by either party other than those
contained herein. This Agreement cannot be modified, altered or amended except
by a writing signed by all the parties. No waiver by either party of any
provision or condition of this Agreement at any time shall be deemed a waiver
of
such provision or condition at any prior or subsequent time or of any other
provision or condition at the same or any prior or subsequent
time.
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20. Governing
Law; Arbitration.
(a)
This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of New York without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any
other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
(b)
The
parties hereto agree to submit to arbitration any and all matters in dispute
or
in controversy among them concerning the terms and provisions of this Agreement.
All such disputes and controversies shall be determined and adjudged by the
decision of an arbitrator (hereinafter sometimes called the “Arbitrator”)
selected by mutual agreement of the parties hereto or if the parties hereto
fail
to reach agreement on the Arbitrator within ten days after a party has notified
the other of its interest to submit a matter to arbitration, the Arbitrator
shall be selected by the American Arbitration Association upon application
made
to it for such purpose by the parties. Arbitration shall take place in the
City
of New York in the Borough of Manhattan, or such other place as the parties
hereto may agree in writing. The Arbitrator shall reach and render a decision
in
writing with respect to the amount, if any, of payment respecting the disputed
matter. The arbitration proceedings shall be held in accordance with the
applicable rules of the American Arbitration Association. Any award rendered
shall be final and conclusive upon the parties and adjudgment thereon may be
entered in the highest court of the forum, state or federal, having
jurisdiction. The fees and expenses of the Arbitrator and the respective fees
and expenses of the parties hereto in connection with any such arbitration
(including, without limitation, reasonable fees and expenses of legal counsel
and consultants) shall be paid by the party against whom a decision by the
Arbitrator is rendered.
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IN
WITNESS WHEREOF, the parties have executed this Employment Agreement as of
the
day and year first above written.
| |
/s/ | Xxxxxxx X. Xxxxxx |
|
XXXXXXX X. XXXXXX |
||
| MANCHESTER INC. | ||
| |
|
|
| By: | /s/ Xxxxxxxx X. Xxxxxx | |
|
Name: Xxxxxxxx X. Xxxxxx |
||
| Title: Executive Vice President and Chief Financial Officer | ||
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