EXHIBIT 10.12
Document is copied.
EMPLOYMENT AGREEMENT
DATED OCTOBER 14, 1997
BETWEEN
PINNACLE BUSINESS MANAGEMENT, INC.
AND
XXXXXXX X. XXXXXX
Xxxxxxx Xxxxx Xxxx ("Executive") and Pinnacle Business Management Inc. a Nevada
corporation ("Company") hereby agrees to "The Employment Agreement" as follows:
1. Term
Pinnacle Business Management Inc. shall employ Xxxxxxx X. Xxxxxx and
Xxxxxxx X. Xxxxxx accepts such employment beginning on the date of October 14th
1997 and ending October 13, 2002, upon the terms and conditions set forth
herein, unless earlier terminated in accordance with provisions herein.
Notwithstanding the foregoing, if this Agreement shall not have been terminated
in accordance with the provisions herein on or before October 13th 2002, the
remaining term of the Agreement shall be extended such that at each and every
moment of time thereafter, the remaining term shall be one year unless (a) the
Agreement is terminated earlier in accordance with the provisions herein.
2. Duties
Executive shall devote substantially all of his time and best efforts to
the performance of the duties of that position so long as his employment in that
position shall be continued by PBM. Company agrees to nominate Executive for
election to the Board as a member of the management slate at each annual meeting
of stockholders during his employment hereunder at which Executive's director
class comes up for election. Executive shall report directly and solely to the
Company's Board of Directors ("Board"). Executive agrees to serve on the Board
if elected. Notwithstanding the above, Executive shall be permitted to serve as
a Director or Trustee of other organizations, provided such service does not
pose a conflict of interest or prevent Executive from effectively performing his
duties under this Agreement.
3. Salary
Executive shall be employed by the Company in a full time salaried
position, as its President. Executive shall receive an annual base salary of
$104,000 with additional increases at least annually as deemed necessary by the
Board, in its discretion. In the event the company cannot meet the executives
compensation the executive may either defer the compensation and accrue the
salary or take the difference in common stock at the rate of one share for each
dollar not received in the first year. In years two through five stock at a
rate equal to shares purchased by the dollar difference of the paid versus non
paid salary at an average price of the last thirty days in the trading year of
the stock.
4. Bonus
(a) Executive shall, as provided in, and subject to, paragraph (e) below,
receive an incentive bonus for Company's fiscal years ending December
31, 1997. And December 31, 1998, in an amount equal to 5% of that
portion of the pre tax income of Company for each such fiscal year as
reported by the Company for that fiscal year, or 50% of annual salary
compensation which ever is more.
(b) Executive shall, as provided in, and subject to, paragraph (e) below,
receive an incentive bonus for each fiscal year of Company which shall
end after December 31, 1997 and on or before the termination of this
Agreement and for such additional periods as are provided in paragraph
(e) below, in an amount equal to 5% of that portion of the pre tax
income of Company for each such fiscal year as reported by the Company
for that fiscal year.
(c) In the event that there shall be a combination of the Company with
another company or a capital restructuring of the Company, or any
other occurrence similar to any of the foregoing, and as a result
thereof the amount or value of the bonuses payable pursuant to either
of both of the bonus formulas set forth in paragraphs (a) and (b)
above would be, or could reasonably be expected to be, significantly
affected thereby, appropriate(s) will, at the request or either party,
be negotiated to establish a substitute formula or formulas, or if the
parties cannot agree as to whether or not an occurrence which would
give rise to the right of either party to request adjustment(s)
pursuant to the foregoing has occurred, the parties shall submit such
matter to arbitration by a qualified individual investment banker with
at least ten years' experience in corporate finance with a major
investment banking firm. Neither said firm or said individual shall
have had dealings with either party during the preceding five years.
Upon failure to agree upon the selection of the arbitrator, each party
shall submit a panel of five qualified arbitrators, of the other party
may strike three from other's list, and the arbitrator shall be
selected by a lot from the remaining four names. The arbitrator shall
have the authority only to determine (I) whether the matter is
arbitrable under the conditions of this subparagraph (c) and (ii) the
substitute formula or formulas that will yield and equitable and
comparable result in accordance with the foregoing.
(d) Each incentive bonus shall be payable (i) 30 days following the date
Company's audited consolidated statement of income for the applicable
fiscal year becomes available or (ii) on the January 2 following the
end of that fiscal year, whichever is later (the "Bonus Payment
Date").
(e) Executive shall be entitled to receive the bonus provided for in
paragraph (a) or paragraph (b) above, as the case may be, for each
fiscal year during which he is employed hereunder and, in addition,
for the next twenty-four months after termination of his employment,
except that said post-termination bonus coverage (I) shall only extend
for twelve months after termination if Executive takes employment with
another major Title Loan, Real Estate or competitive company within
twelve months of termination and (ii) shall not apply
if Executive has been discharged for good cause. The bonus formula set
forth in paragraph (a) above shall be applicable to any part or all of
any period prior to December 31, 1998 in respect of which a
post-termination bonus is payable, and the formula set forth in
paragraph (b) above shall be applicable to any part or all of any
period after December 31, 1998 in respect of which a post-termination
bonus is payable.
5. Bonus Payments
(a) Bonuses for the fiscal years ending December 31, 1997 and December 31,
1998 shall be payable in cash.
(b) Bonuses for fiscal years ending after December 31, 1998 shall be
payable in cash or a combination of cash and Restricted Stock (as
hereinafter defined) as follows: that portion of the bonus for each
such fiscal year which does not exceed the Liquid Cash Available.
Wherewith if the amount of the bonus calculated in accordance with
Section 4(b) hereof shall exceed the Liquid Cash Available, the
remaining unpaid portion of such bonus shall (except at otherwise
provided in Section 12(a) (ii) hereof be payable in Restricted Stock.
For purposes of the foregoing, the term "Liquid Cash Available" shall
mean, the unallocated money available in the Operating Checking
Account.
(c) For purposes of this Agreement the term "Restricted Stock" shall mean
shares of Company common stock which are issued to Executive pursuant
to Company's 1997 Stock Incentive Plan (the "Plan") in accordance
with, and subject to, the following terms, restrictions, and
conditions:
(i) All shares of Restricted Stock shall be subject to forfeiture
(i.e., all right, title, and interest of Executive in such shares
shall cease and such shares shall be returned to Company with no
compensation of any nature being paid therefore to Executive), if
Executive's employment with Company is terminated for good cause
as defined in Section 10(a)(iii). Any shares of Restricted Stock
issued to Executive after December 31, 2002 shall be deemed to
have been issued subject to restrictions which shall have
expired, and accordingly, will be free of all restrictions
hereunder.
(ii) During the Restricted Period, Executive will have voting right
and will receive dividends (if available) and other distributions
with respect to shares of Restricted Stock issued to him but
will not be permitted to sell, pledge, assign, convey, transfer,
or otherwise alienate or hypothecate such shares.
(iii)All restrictions on the shares of Restricted Stock issued to
Executive hereunder will immediately lapse in the event of the
death of Executive or disability of Executive resulting in a
termination of employment by company pursuant to Section
10(a)(ii) hereof.
(iv) All restrictions on the stock will lapse immediately in the event
company enters into an agreement pursuant to which either the
Company or all or substantially all of its assets are to be sold
or combined with another entity (regardless of whether or not
such sale or combination is subject to the satisfaction of
conditions precedent or subsequent) and as a consequence thereof,
the market for public trading of Company common stock would be,
or could reasonably be expected to be, eliminated or materially
impaired.
(v) Executive shall enter into an escrow agreement providing that the
certificate(s) representing Restricted Stock issued to him will
remain in the physical custody of company (or and escrow holder
selected by Company) until all restrictions are removed or
expire.
(vi) Each certificate representing Restricted Stock issued to
Executive will bear a legend making appropriate reference to the
terms, conditions, and restrictions imposed. Any attempt to
dispose of Restricted Stock in contravention of such terms,
conditions and restrictions, irrespective of whether the
certificate contains such a legend, shall be ineffective and any
disposition purported to be effected thereby shall be void.
(vii)Any shares or other securities received by Executive as a stock
dividend on, or as a result of stock splits, combinations,
exchanges of shares, reorganizations, mergers, consolidations or
otherwise with respect to shares of Restricted Stock shall have
the same terms, conditions, and restrictions and bear the same
legend as Restricted Stock.
(d) In determining the number of shares of Restricted Stock to be issued
in respect of any bonus, the Restricted Stock will be valued on the
basis of the average closing price of Company common stock during the
period starting on the third business day and ending on the twelfth
business day following the release for publication by Company of its
annual summary statement of sales and earnings for the applicable
fiscal year (as such release is defined by Rule 16-b-3 (e)(1)(ii)
promulgated by the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934, as amended).
(e) Company shall in due course after the execution of this Agreement (and
in no event later than the date Restricted Stock is first required to
be issued to Executive hereunder) adopt rules pursuant to the Plan
regarding restricted stock which shall reflect the foregoing
provisions and such other provisions as are in the reasonable opinion
of Company's counsel customary with respect to restricted stock. In
the event that the Plan should for any reason become unavailable for
the issuance of Restricted Stock, Company shall cause the shares of
Restricted Stock required to be issued to Executive hereunder to be
issued pursuant to another plan of Company on substantially the same
terms and conditions as such Restricted Stock would have been issued
under the plan.
6. Stock Options
(a) Executive shall be granted options pursuant to the Plan to purchase
(I) beginning with a compensation base of 500,000 shares of Company
common stock having an exercise price equal to $.50 per-share (the "A
Options") in 1998 and (ii) 500,000 shares of Company common stock
having an exercise price equal to $1.00 per share in 1999 through the
year 2002 (the "B Option"). Seventy five percent of both the A Options
and the B Options will vest in increments as nearly equal as possible
on October 14th 2002. The remaining twenty-five percent of both the A
Options and the B Options will vest in increments as nearly equal as
possible on October 8th each year starting October 14th 1999, and
continuing through October 8th 2002. Such options shall be subject to,
and governed by, the terms and provisions of the Plan except to the
extent of modifications of such options which are permitted by the
Plan and which are expressly provided for herein. (i) Executive's
options may be increased (in the A&B Options) by a percentage amount,
to reflect the percentage of fiscal year growth that the company may
achieve.
(b) Executive agrees to enter into a stock option agreement with Company
containing the terms and provisions of such options together with such
other terms and conditions as counsel for the Company may reasonable
require to assure compliance with applicable state or federal law and
stock exchange requirements in connection with the issuance of Company
stock upon exercise of options to be granted as provided herein, or as
may be required to comply with the Plan.
(c) If Company has not already done so, company shall register Executive's
shares pursuant to the appropriate form of registration statement
under the Securities Act o 1933 and shall maintain such registration
statement's effectiveness as all required times.
(d) Company shall, to the extent permitted by law, may make loans to
Executive in reasonable amounts on reasonable terms and conditions
during his employment by Company to facilitate the exercise of the
options granted to him as described above.
7. Benefits
(a) Executive shall be entitled to receive all benefits generally made
available to other executives of company.
(b) Company shall maintain during the term hereof a minimum of a
$1,000,000 split dollar life insurance policy on his life unless a
physical examination (which he agrees to take) shows that he is
uninsurable.
(c) Company shall maintain a full medical coverage for Executives, spouse
and children.
(d) Personal liability insurance.
(e) Company Car Lease
(f) Regional Professional Sports Season tickets for gifts
(g) Free Financial Counseling, Legal and Accounting advice
(h) Health, or Country Club Membership
(i) Paid sick leave
(j) Vacations of up to six weeks per year or longer as the Board may
authorize during which time Executive's compensation shall be paid in
full and he shall continue to participate in all other rights and
benefits.
(k) Travel Expenses inclusive of Airline VIP Clubs
(l) Relocation Expenses.
(i) Employer shall reimburse the Executive for reasonable expenses
incurred in relocation, but not confined to: all costs of the
physical move; en route travel expenses, including hotel and
meals; temporary living expenses for Executive and family,
including meals, for up to fifteen (15) weeks; three (3) house
hunting trips for the Executive and family; weekly commuting
expenses until Executive has moved; closing costs and commission
involved in selling Executive's former residence and purchasing
a residence in the area of company's desired location. An
additional amount to cover federal, state, and local taxes
incurred as a result of the relocation. Company may provide
temporary financing while the Executive is trying to obtain
permanent financing.
(ii) Creative Time: The company recognizes the value of creativity of
the Executive if he is allowed "creative time" in an environment
that suits and stimulates the executive. The company will pay all
costs of this time off including meals and lodging for one
weekend each quarter in an area of the executives choice to boost
and recharge his creative abilities. These activities are
including but not limited to recreational activities, religious
retreats, health spas or any other activity deemed necessary by
the executive.
8. Reimbursement for Expenses
Executive shall be expected to incur various business expenses customarily
incurred by person holding like positions, including but not limited to
traveling, entertainment and similar expenses, all of which are to be incurred
by Executive for the benefit of Company. Subject to company's policy regarding
the reimbursement and non-reimbursement of all such expenses), Company shall
reimburse Executive for such expenses from time to time, at Executive's request,
and Executive shall account to Company for such expenses.
9. Protection of Company's Interests
(a) During the term of this Agreement Executive shall not directly or
indirectly engage in competition with, or not own any interest in any
business which competes with, any business of Company or any of its
subsidiaries; provided, however, that the provisions of this Section 9
shall not prohibit his ownership of not more than 5% of voting stock
of any publicly held corporation unless approved by the board.
(b) Except for actions taken in the course of his employment hereunder, at
no time shall Executive divulge, furnish or make accessible to any
person any information of a confidential or proprietary nature
obtained by him while in the employ of Company. Upon termination of
his employment by Company, Executive shall return to the Company all
such information which exists in writing or other physical form and
all copies thereof in his possession or under his control.
(c) Company, its successors and assigns, shall, in additions to
Executive's services, be entitled to receive and own all of the
results and proceeds of said services (including, without limitation,
literary material and other intellectual property) produced or created
during the term of Executive's employment hereunder. Executive will,
at the request of Company, execute such assignments, certificates of
other instruments as Company may from time to time deem necessary or
desirable to evidence, establish, maintain, protect, enforce or
defend its right or title to any such material.
(d) Executive recognizes that the services to be rendered by him hereunder
are of a character giving them peculiar value, the loss of which
cannot be adequately compensated for in damages, and in the event of a
breach of this Agreement by Executive, Company shall be entitled to
equitable relief by way of injunction or by any other legal or
equitable remedies.
10. Termination by Company
(a) Company shall have the right to terminate this Agreement after January
1, 2000 under the following circumstances. The company cannot
terminate the executive prior to this date. (the company recognizes
the value of the Executives role in the critical first two years
following the merger with a public shell).
(i) Upon the death of Executive
(ii) Upon notice from Company to Executive in the event of an illness
or other disability which has incapacitated him from performing
his duties for twelve consecutive months as determined in good
faith by the board.
(iii)For good cause upon notice from Company, Termination by Company
of Executive's employment for "good cause" as used in this
Agreement shall be limited to gross negligence or malfeasance by
Executive in the performance of his duties under this agreement
or the voluntary resignation by Executive as an employee of the
company without the prior written consent of the Company.
(iv) For creating private deals at the expense of Company, not for the
benefit of the Company and realizing all of the profits without
the knowledge or approval of the Board.
(b) If this Agreement is terminated pursuant to Section 10(a) above,
Executive's rights and Company's obligations hereunder shall forthwith
terminate except as expressly provided in this Agreement.
(c) If this Agreement is terminated pursuant to Section 10(a)(I) or (ii)
hereof, Executive or his estate shall be entitled to receive 100% of
his base salary for the balance of the term of this Agreement,
together with the bonus provided for in Section 4(e) hereof. Company
may purchase insurance to cover all or any part of its obligations set
forth in the preceding sentence, and Executive agrees to take a
physical examination to facilitate the obtaining of such insurance. If
the physical examination shows that Executive is uninsurable, such
death and disability benefits shall not be provided (except for
bonus), and Executive shall receive only normal Company levels of
death and disability benefits.
(d) Whenever compensation is payable to Executive hereunder during a time
when he is partially or totally disabled and such disability (except
for the provisions hereof) would entitle him to disability income or
to salary continuation payments from Company according to the terms of
any plan now or hereafter provided by Company or according to any
Company policy in effect at the time of such disability, the
compensation payable to him hereunder shall be inclusive of any such
disability income or salary continuation and shall not be in addition
thereto. If disability income is payable directly to Executive under
an insurance policy paid for by Company, the amounts paid to him by
said insurance company shall be considered to be part of the payments
to be made by Company to him pursuant to this Section 10, and shall
not be in addition thereto.
(e) Under this agreement pursuant to sections 10(a)(b)(c)(d) the
termination of an Executive's contract for "Good Cause" shall be
determined and enforced by an unanimous decision by the Board of
Directors.
(f) If the Executive had relocated his home for the benefit of the
Company, upon his termination for "Good Cause" the Company will
purchase his home at fair market value (if within 5 year period of
moving) and relocated him at Company to his original home location.
11. Termination by Executive
Executive shall have the right to terminate his employment under this
agreement upon 30 days' notice to company given within 60 days following the
occurrence of any o the following events:
(i) Executive is not elected or retained as President and Director of
company.
(ii) Company acts to materially reduce Executive's duties and
responsibilities hereunder. Executive's duties and responsibilities
shall not be deemed materially reduced for purposes hereof solely by
virtue of he fact that Company is (or substantially all of its assets
are) sold to, or is combined with, another entity provided that (a)
Executive shall continue to have the same duties and responsibilities
with respect to Company's Loan and Real Estate business and (b)
Executive shall report directly to the chief executive officer and
board of directors of the entity (or individual) that requires Company
or its assets.
(iii)Company acts to change the geographic location of the performance of
Executive's duties from the Tampa Bay metropolitan area.
12. Consequences of Breach of Company
(a) If this Agreement is terminated pursuant to Section 11 hereof, or if
Company shall terminate Executive's employment under this Agreement in
any other way that is a breach of this Agreement by Company, the
following shall apply:
(i) Executive shall receive a cash payment equal to the present value
(based on a discount rate of 9%) of Executive's base salary
hereunder for the remainder of the term, payable within 39 days
of the date of such termination.
(ii) Executive shall be entitled to bonus payments as provided in
Sections 4 and 5 above (it being understood, however that all
such bonus payments, if made pursuant to this clause, shall be
paid in cash regardless of whether or not such payments exceed
the Cash Limit).
(iii)All stock options and Restricted Stock granted by Company to
executive under the Plan or granted by Company to Executive prior
to the date hereof shall accelerate and become immediately
exercisable.
(b) The parties believe that because of the limitations of Section 11(ii)
the above payments do not constitute "Excess Parachute Payments" under
Section 280G of the Internal Revenue Code of 1954, as amended (the
"Code"). Notwithstanding such belief, if any benefit under the
preceding paragraph is determined to be an "Excess Parachute Payment"
the Company shall pay Executive an additional amount ("Tax Payment")
such that (x) the excess of all Excess Parachute Payments (including
payments under this sentence) over the sum of excise tax thereon under
section 4999 of the Code and income tax thereon under Subtitle A of
the Code and under applicable state law is equal to (y) the excess of
all Excess Parachute Payments (excluding payments under this sentence)
over income tax thereon under Subtitle A of the Code and under
applicable state law, provided that the company shall not be obligated
to make a Tax Payment in excess o the value of 6.6667 compensation
years. For the purposes hereof, the value of a "Compensation Year",
including stock options and bonus entitlements, is defined as equal to
two times the base salary set for in Section 3.
13. Remedies
Company recognizes that because of Executive's special talents, stature and
opportunities in the corporate management environment, and because of the
creative nature of and compensation practices of said industry and the material
impact that individual projects can have on and the company's results of
operations, in the event of termination by Company hereunder (except under
Section 10(a)), or in the event of termination by Executive under Section 11,
before the end of the agree term, Company acknowledges and agrees that the
provisions for the consequences of such termination, do not constitute a
penalty, and such payments and benefits shall not be limited or reduced by
amounts Executive might earn or be able to earn from any other employment or
ventures during the remainder of the agreed term of this Agreement.
14. CONFLICT RESOLUTION
In case of any dispute between the Executive and the Company as to the
amount of additional compensation payable to the Executive in respect of any
fiscal year, determination of the amount so payable will be determined by an
independent accountant so hired by the Company, made at the request of any party
shall be binding and conclusive on all parties hereto. In the event that any
action, suit or other proceeding in law or in equity is brought to enforce the
provisions of this agreement, and such action results in the awarding of a
judgment in favor of the Company, all expenses of the Company in conjunction
with said action shall be payable by the Executive.
15. BINDING AGREEMENT
This instrument shall be binding upon and inure to the benefit of
Executive, his heirs, distributees and assigns and company, its successor and
assigns. Executive may not, without the express written permission of the
Company, assign or pledge any rights or obligations hereunder to any person,
firm or corporation.
16. AMENDMENT; WAIVER
This instrument contains the entire agreement of the parties with respect
to the employment of Executive by Company. No amendment or modification of
this agreement shall be valid unless evidenced by a written instrument executed
by the parties hereto. No waiver by either party of any breach by the other
party of any provision or condition of this Agreement shall be deemed a waiver
of any similar or dissimilar provision or condition at the same or any prior or
subsequent time.
17. GOVERNING LAW
(a) This agreement shall be governed by and construed in accordance with
the laws of the State of Nevada.
(b) The parties are aware that Executive's obligation to provide services
to Company hereunder for the full term of this agreement (with a
minimum of two years and approximately five years) The parties agree
that this Agreement (together with certain additional documents and
agreements specifically referred to herein) shall constitute the sole
and conclusive basis for establishing Executive's compensation for all
services are provided by him hereunder, regardless of from the date
hereof, notwithstanding the further provision of tract employment may
be referred to as affording a "presumptive measure of compensation"
for services under such contract. Executive hereby confirms his intent
to provide services to the Company under this Agreement for the full
term thereof.
18. NOTICES
All notices which a party is required or may desire to give to the other
party under or; in connection with this Agreement shall be given in writing by
addressing the same to the other party as follows:
If to Executive to:
Xxxxxxx X. Xxxxxx
0000 00xx Xxx. X.
Xx. Xxxxxxxxxx, Xxxxxxx 00000
If to Company to:
Pinnacle Business Management Inc.
0000 Xxxx Xx Xxx Xxxx. Xxxxx 000
Xxxxxxxxxx Xxxxxxx 00000
or at such other places may be designated in writing by like notice. Any notice
shall be deemed to have been given within 46 hours after being addressed as
required herein and deposited, first class postage prepaid, in the United States
mail.
IN WITNESS THEREOF, the parties have executed this agreement this 1st day of
December, 1997, effective as of the day and year first above written.
/s/
------ -----------------------------------
Xxxxxxx X. Xxxxxx
President Pinnacle Business Management, Inc.
/s/
------ -----------------------------------
Xxxxxxx X. Xxxxxx
C.E.O. Pinnacle Business Management, Inc.
