EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered on October 24, 2006
(the "Execution Date") and is effective as of September 29, 2006 ("Effective
Date") between National Investment Managers Inc. ("Company") and Xxxxxx X. Xxxx
("Executive").
RECITALS
Company wishes to employ Executive as its President and Chief Executive
Officer and Executive wishes to accept such employment under the terms and
conditions set forth in this Agreement.
IT IS AGREED as follows:
1. Employment. Company hereby employs Executive as its President and Chief
Executive Officer. Executive accepts such employment.
2. Term. The term of employment under this Agreement shall commence on the
Effective Date and shall continue, unless otherwise terminated earlier under
Section 10, until March 31, 2008. The Term shall be automatically extended for
an additional one (1) year period unless at least thirty (30) days prior to such
anniversary date, either Company or Executive furnishes the other with written
notice that the Term not be so extended.
3. Duties. Executive shall devote his full-time efforts to the proper and
faithful performance of all duties customarily discharged by a President and
Chief Executive Officer, consistent with Company policies and budgets and
directives of Company's Board of Directors, together with any additional duties
assigned to him from time to time by the Board of Directors. Executive agrees to
use his best efforts and comply with all fiduciary and professional standards in
the performance of his duties. Executive shall provide services to any
subsidiary or affiliate of Company without additional compensation and benefits
beyond those set forth in this Agreement. Executive shall serve on the Board(s)
of Directors of Company and any affiliate or subsidiary.
4. Base Salary. Executive shall be paid a base salary of Three Hundred
Fifty Thousand Dollars ($350,000.00) per annum for the Term payable, less
applicable withholding, in equal monthly payments or more frequently in
accordance with Company's regular practice. Upon Company reaching a quarterly
Earnings before Interest Taxes Depreciation Amortization and Stock based
Compensation ("EBITDA SBC") of $2,250,000, the base salary shall increase to
Four Hundred Thousand Dollars ($400,000.00) per annum, effective the first pay
period of the quarter immediately following the attainment of the aforementioned
target. Upon extension of the Term, Executive's base salary will be set by the
Compensation Committee of Company; provided, however, that Executive's base
salary shall not be reduced from the base salary in effect prior to the
extension of the Term. In addition to his base salary, Executive shall receive
compensation for service on the Board of Directors in an amount consistent with
other non-employee Board members, including annual stock option grants issued to
Board members.
5. Bonus. Executive shall be eligible to receive an incentive bonus during
each fiscal year of the Term. A 2006 bonus of One Hundred Thousand Dollars
($100,000.00) shall be paid with the signing of the Employment Contract. The
2007 bonus shall be targeted at fifty percent (50%) of Executive's base salary
based upon the achievement of 2007 EBITDA SBC of Ten Million Dollars
($10,000,000.00).
6. Restricted Stock. Executive shall receive a grant of 800,000 shares of
restricted stock in the Company, of which 100,000 shares are to be issued
immediately, 100,000 shares on March 28, 2007, or immediately upon contract
termination, 100,000 shares upon reaching a cumulative $4,000,000 EBITDA SBC for
Q2 - Q4 2006, and 500,000 shares upon attainment of $10,000,000 EBITDA SBC in
2007. Executive is granted piggyback registration rights on all shares issued
pursuant to this contract.
7. Stock Options. Executive retains all previously granted stock options.
8. Benefits.
(a) Executive shall be entitled to participate in all Company sponsored
retirement plans, 401(k) plans, life insurance plans, medical
insurance plans, short-term and long-term disability insurance
plans, and such other benefit plans generally available from time to
time to executive management of the Company for which he qualifies
under the terms of the plans. Executive's participation in and
benefits under any benefit plan shall be on the terms and subject to
the conditions specified in such plan. The Company shall supplement
the insurance coverage and benefits in a separate executive benefits
plan, including supplementary health insurance coverage, a minimum
of $1 million life insurance coverage and appropriate long-term
disability coverage, to be fully paid by Company.
(b) Executive will receive at least four (4) weeks of paid vacation per
year.
(c) Executive shall receive a housing and office allowance of Five
Thousand Dollars ($5,000.00) per month. Such allowance shall be paid
to Belcourt Associates.
9. Reimbursement of Expenses. The Company will reimburse Executive for the
ordinary and necessary expenses incurred by him in the performance of his duties
under this Agreement in accordance with the Company's policies in effect from
time to time.
10. Termination of Employment.
(a) Executive's employment under this Agreement may be terminated at any
time by the Board of Directors of Company for Cause.
(b) Executive's employment under this Agreement shall terminate upon
expiration of the Term without extension as described in Section 2.
(c) Executive's employment under this Agreement shall terminate upon his
retirement, resignation or death.
(d) Executive's employment under this Agreement shall terminate upon
written notice by Company to Executive of a termination due to
Disability.
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(e) If Executive's employment terminates for Cause or for any reason
other than as set forth in Sections 10(f) or (g), Company shall be
obligated only to continue to pay Executive's base salary and, to
the extent earned, accrued and unpaid, annual incentive bonus and
furnish the then existing benefits under Section 8 up to the date of
termination; provided, that if Executive's employment is terminated
as a result of Executive's Disability, Executive shall remain
eligible for benefits under any long-term disability program of
Company, as amended from time to time, as long as his Disability
continues.
(f) If Executive's employment is terminated by Company for Cause, other
than as set forth in Section 11(a)(i) and Section 11(a)(ii), or upon
expiration of the Term without extension, in addition to the amounts
payable under Section 10(e), Executive shall be entitled to receive
a lump sum severance payment equivalent to one week of his current
base salary for every month of service, with a minimum of three
months equivalent, and medical and other insurance benefits under
Section 8(a) for a period of twelve (12) months. Further, any
restricted stock earned at the time of termination, including the
100,000 shares due March 28, 2007, will be issued to Executive. As a
condition to the salary and benefit continuation under this Section
10(f), Executive must first execute and deliver to Company, in a
form prepared by Company, a release of all claims against Company
and other appropriate parties, excluding Company's performance under
this Section 10(f) and of Executive's vested rights under any
Company sponsored retirement plans, 401(k) plans and stock ownership
plans.
11. Definitions. The meaning of certain terms in this Agreement are as
follows:
(a) "Cause" shall consist of any of the following:
(i) the Executive is convicted of, or has pleaded guilty or
entered a plea of nolo contendere to, a felony (under the laws
of the United States or any state thereof);
(ii) fraudulent conduct by the Executive in connection with the
business or other affairs of the Company or any related
company or the theft, embezzlement, or other criminal
misappropriation of funds by the Executive from the Company or
any related company;
(iii) the Executive's failure to perform the duties of the President
and Chief Executive Officer, after reasonable notice has been
provided of such non-performance and, if such failure is
curable, Executive has not cured such failure within a
reasonable period following such notice; or
(iv) the Executive's failure to comply with reasonable directives
of the Board which are communicated to him in writing, after
reasonable notice has been provided of such non-performance
and, if such failure is curable, Executive has not cured such
failure within a reasonable period following such notice.
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(b) "Disability" means the inability of Executive, due to injury,
illness, disease or bodily or mental infirmity, to engage in the
performance of his material duties of employment with Company as
determined in good faith by Company, for (i) any period of one
hundred twenty (120) consecutive days or (ii) a period of one
hundred eighty days (180) in any continuous twenty-four (24) month
period, provided that interim returns to work of less than ten (10)
consecutive business days in duration shall not be deemed to
interfere with a determination of consecutive absent days if the
reason for absence before and after the interim return are the same.
Benefits to which Executive is entitled under any disability policy
or plan provided by Company shall reduce the base salary paid to
Executive during any period of Disability on a dollar-for-dollar
basis.
12. Confidential Information. During Executive's employment with the
Company and at all times after the termination of such employment, regardless of
the reason for such termination, Executive shall hold all Confidential
Information relating to the Company in strict confidence and shall not use,
disclose or otherwise communicate the Confidential Information to anyone other
than the Company without the prior written consent of the Company. "Confidential
Information" includes, without limitation, financial information, trade secrets,
business plans, business methods or practices, market studies, customer lists,
referral lists and other proprietary business information of the Company.
"Confidential Information" shall not include information which is or becomes in
the public domain through no action by Executive or information which is
generally disclosed by the Company to third parties without restrictions on such
third parties. Executive shall return all Confidential Information to the
Company upon termination of employment.
13. Solicitation of Customers. During his employment with the Company and
for a period after the termination of Executive's employment, regardless of the
reason for the termination, equal to the greater of (a) one (1) year or (b) the
period for which Executive receives payment of his base salary under Section
10(f) or (g) (the "Non-Competition Period"), Executive shall not influence or
attempt to influence, directly or indirectly, any customer of the Company to
divert its business away from the Company.
14. Soliciting Employees. Executive agrees that during his employment with
the Company and during the Non-Competition Period, he will not directly or
indirectly solicit any person who is then, or at any time within six months
prior thereto was, an employee of the Company to work for any person or entity
then in competition with the Company.
15. Non-Competition. During his employment with the Company and for a
one-year period after termination of Executive's employment, Executive shall
not, directly or indirectly, in any capacity:
(a) Engage, own or have any interest in;
(b) Manage, operate, join, participate in, accept employment with,
render advice to, or become interested in or be connected with;
(c) Furnish consultation or advice to; or
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(d) Permit his name to be used in connection with;
any person or entity that competes with the business of the Company.
Notwithstanding the foregoing, holding five percent (5%) or less of an interest
in the equity, stock options or debt of any publicly traded company shall not be
considered a violation of this Section 15.
16. Remedies. In the event of a material breach or threatened material
breach of Section 12, Section 13, Section 14 or Section 15, Company, in addition
to its other remedies at law or in equity, shall be entitled to injunctive or
other equitable relief in order to enforce or prevent any violations of the
aforementioned Sections. In the event of any such material breach, if applicable
Company may immediately cease payment of Executive's base salary and the
providing to Executive of benefits under Section 10(f) or (g).
17. Severability and Savings. Each provision in this Agreement is
separate. If necessary to effectuate the purpose of a particular provision, the
Agreement shall survive the termination of Executive's employment with the
Company. If any provision of this Agreement, in whole or in part, is held to be
invalid or unenforceable, the parties agree that any such provision shall be
deemed modified to make such provision enforceable to the maximum extent
permitted by applicable law. As to any provision held to be invalid or
unenforceable, the remaining provisions of this Agreement shall remain in
effect.
18. Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of Company and its successors and assigns. This Agreement shall
be binding upon and inure to the benefit of Executive, his heirs and personal
representatives. This Agreement is not assignable by Executive.
19. Miscellaneous.
(a) No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in
writing and signed by the Company and Executive. The waiver or
nonenforcement by the Company of a breach by Executive of any
provision of this Agreement shall not be construed as a waiver of
any subsequent breach by Executive.
(b) Any notice under this Agreement must be in writing and delivered
personally or by overnight courier, sent by facsimile transmission
or mailed by registered or certified mail to the parties at their
respective addresses.
(c) This Agreement shall be governed by the laws of the State of
California.
(d) This Agreement may be executed in counterparts, which together shall
constitute one Agreement.
(e) By their signatures below, the parties acknowledge that they have
had sufficient opportunity to read and consider, and that they have
carefully read and considered, each provision of this Agreement and
that they are voluntarily signing this Agreement.
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The parties have executed this Agreement as of the Execution Date.
/s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
National Investment Managers Inc.
By /s/ Xxxxxxx Xxxxxx
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Its
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