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Exhibit 99(2)
EMPLOYMENT AGREEMENT
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This Employment Agreement ("AGREEMENT") is entered into effective
January 1, 2000 by and between LA
GROUP, INC. ("EMPLOYER") and XXXXX XXXXXXXX ("EMPLOYEE"), and
PREMISES
1. Employee possesses expertise, experience and skill in the development
and marketing of products via electronic and other means.
2. Employee has demonstrated the ability to run, manage and build a
publicly traded development stage business.
3. Employer desires to employ Employee to serve as its President to run,
manage and build its business.
4. Employee desires to perform all of such services as Employer's employee
and both parties want to enter into a written agreement as to their
understanding of the employment relationship.
AGREEMENT
For and in Consideration of the mutual covenants contained herein and of
the mutual benefits to be derived hereunder, the parties agree as follows:
1. DEFINITIONS. Whenever used in this Agreement, the following terms shall
have the meanings set forth below:
a. "Accrued Benefits" shall mean the amount payable not later than ten
(10) days following an applicable Termination Date and which shall be equal to
the sum of the following amounts:
(i) All salary earned or accrued through the Termination Date;
(ii) Reimbursement for any and all monies advanced in connection with
Employee's employment for reasonable and necessary expenses
incurred by
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Employee and approved by the Employer through the
Termination Date; and
(iii) All other payments and benefits to which Employee may be
entitled under the terms of any benefit plan of the Employer.
b. "Board" shall mean the board of directors of the Employer.
c. "Cause" shall mean any of the following:
(i) The engagement by Employee in fraudulent conduct, which has a
significant adverse impact on the Employer in the conduct of the
Employer' s business;
(ii) Conviction of a felony involving a crime against the Employer, as
evidenced by a binding and final judgment, order or decree of a
court of competent jurisdiction;
(iii) Gross negligence or refusal by Employee to perform his duties or
responsibilities; or
d. "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
e. "Confidential Information" means information (i) disclosed to or
actually known by Employee as a consequence of or through his/her employment
with the Employer, (ii) not generally known outside the Employer, and (iii)
which relates to the Employer's business. Confidential Information includes, but
is not limited to, information of a technical nature, such as methods and
materials, trade secrets, inventions, processes, formulas, systems, computer
programs, and studies, and information of a business nature such as project
plans, market information, costs, customer lists, and so forth.
f. "Disability" shall mean a physical or mental condition whereby
Employee is unable to perform on a full-time basis his customary duties under
this Agreement.
g. "Developments" means all Inventions (defined hereafter), computer
programs, copyright works, mask works, trademarks, Confidential Information,
Works of Authorship (defined hereafter), and other Intellectual Property
(defined hereafter), made, conceived or authored by Employee, alone or jointly
with others, while employed by the Employer; whether or not during
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normal business hours or on the Employer's premises, that are within the present
scope of the Employer's business at the time such Developments are made,
conceived, or authored, or which result from or are suggested by any work
Employee or others may do for or on behalf of the Employer.
h. "Employer" means LA Group, Inc. and its subsidiaries, divisions and
affiliates as well as majority owned companies of such subsidiaries, divisions
and affiliates, or their successors or assigns.
i. "Invention" means discoveries, concepts, and ideas, whether or not
patentable or copyrightable, including but not limited to improvements,
know--how, data, processes, methods, formulae, and techniques, as well as
improvements thereof, or know--how related thereto, concerning any present or
prospective activities of the Employer which Employee makes, discovers or
conceives (whether or not during the hours of his engagement of with the use of
the Employer's facilities, materials or personnel), either solely or jointly
with others during his engagement by the Employer or any affiliate and, if based
on or related or Proprietary Information, at any time after termination of such
engagement.
j. "Intellectual Property" means Inventions, Confidential Information,
Works of Authorship, patent rights, trademark rights, service xxxx rights,
copyrights, know-how, Developments and rights of like nature arising or
subsisting anywhere in the world, in relation to all of the foregoing, whether
registered or unregistered.
k. "Notice of Termination" shall mean the notice described in Section 13
hereof.
l. "Person" shall mean any individual, partnership, joint venture,
association, trust, corporation or other entity, other than an employee benefit
plan of the Employer of an entity organized, appointed of established pursuant
to the terms of any such benefit plan.
m. "Proprietary Information" shall mean any and all methods, inventions,
improvements or discoveries, whether or not patentable or copyrightable, and any
other information of a similar nature related to the business of the Employer
disclosed to the Employee or otherwise made known to him as a consequence of or
through his engagement by the Employer (including information originated by
Employee) in any technological area previously developed by the Employer or
developed, engaged in, or researched, by the Employer during the term of
Employee's engagement, including, but not limited to, trade secrets, processes,
products, formulae, apparatus, techniques, know-how, marketing plans, data,
improvements, strategies, forecasts,
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customer lists, and technical requirements of customers, unless such information
is in the public domain to such an extent as to be readily available to
competitors.
n. "Termination Date" shall mean, except as otherwise provided in
Section 12 hereof.
(i) Employee's date of death;
(ii) Thirty (30) days after the delivery of the Notice of Termination
if Employee's employment on account of Disability pursuant to
Section 16 hereof, unless Employee returns on a full-time basis
to the performance of his duties prior to the expiration of such
period;
(iii) Thirty (30) days after the delivery of the Notice of Termination
if Employee's employment is terminated by Employee voluntarily;
and
(iv) Thirty (30) days after the delivery of the Notice of Termination
if Employee's employment is terminated by the Employer for any
reason other than death or Disability.
o. "Termination Payment" shall mean the payment described in Section 14
hereof.
p. "Works of Authorship" means an expression fixed in a tangible medium
of expression regardless of the need for a machine to make the expression
manifest, and includes, but is not limited to, writings, reports, drawings,
sculptures, illustrations, video recordings, audio recordings, computer
programs, and charts.
2. EMPLOYMENT. Employer hereby employs Employee to perform those duties
generally described in this Agreement, and Employee hereby accepts and agrees to
such employment on the terms and conditions hereinafter set forth. e
3. TERM. Subject to the terms and conditions of this Agreement, the term of
this Agreement shall commence retroactively from January 1, 2000,
and end on December 31, 2001.
4. DUTIES. During the term of this Agreement, Employee shall be
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employed by Employer as its Chief Operating Officer. In addition to the office
of Chief Operating Officer, Employee agrees to serve in such other office or
position with Employer or any subsidiary of Employer and as such shall, from
time to time, be determined by Employer's Board. Employee agrees to serve as a
member of the Employer's Board. Employee shall devote substantially all of his
working time and efforts to the business of Employer and its subsidiaries and
shall not during the term of this Agreement be engaged in any other substantial
business activities which will significantly interfere or conflict with the
reasonable performance of his duties hereunder.
5. COMPENSATION.
a. Salary. For all services rendered by Employee, Employer shall pay to
Employee a base salary of $100,000 for the term of this Agreement. If Employer's
financial constraints so dictate, Employee agrees to defer a portion of the
salary contained in this Section. This deferred base salary shall be paid to
Employee at such time or times as financial constraints so allow, but in no
event will payments be made after January 1, 2002. All salary payments shall be
subject to withholding and other applicable taxes. The rate of salary may be
increased at any time, as the Board may determine, based on earnings, increased
activities of the Employer, or such other factors as the Board may deem
appropriate. Employee shall receive bonus or incentive compensation as approved
by the Board.
b. Insurance Benefits. Employer shall provide health and medical
insurance for Employee in a form and program to be chosen by Employer for
certain of its full-time employees. Alternatively, at Employee's discretion,
Employer may reimburse Employee for Employee's health and medical insurance
coverage for Employee and his family. Employer shall provide Employee with
directors and officers liability insurance in the minimal amount of $2,000,000
and life and disability insurance in amounts approved by the Board.
c. Other Benefits. Employee shall be entitled to participate in any
retirement, pension, profit-sharing, or other plan as may be put in effect from
time to time by the Board, including the following:
(i) Qualified Stock Option Plan. Pursuant to a Qualified Stock Option
Plan authorized by the Board and approved by the Shareholders of
Employer, Employee shall have the option to purchase up to
400,000 shares of the Employer's common shares on the following
terms: up to 100,000 shares of Employer's
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stock in six months at $1.00 per share, up to 100,000 shares of
Employer's stock in 12 months at $2.00 per share, up to 100,000
shares of Employer's stock in eighteen months at $3.00 per share
and up to 100,000 shares of Employer's stock in twenty-four
months at $4.00 per share. These options are cumulative and
fully vested upon execution of this Agreement; and
(ii) Revenue Performance Bonuses. Employee shall be issued 100,000
shares of Employer's stock for each $10,000,000 in Gross Income
received by Employer on an annual basis with a maximum of
3,000,000 shares to be issued during the term of this Agreement
Gross Income shall mean total revenue less sales taxes collected,
returns and allowances; and
(iii) Stock Performance Options. Employee shall have the option to
purchase additional shares of the Employer's common stock upon
the happening of the following: if the public trading price
closes at a minimum of $2.00 per share for five (5) consecutive
days, Employee shall have the option to purchase 150,000 shares
at $1.00 per share; if the public trading price closes at a
minimum of $4.00 per share for five (5) consecutive days,
Employee shall have the option to purchase an additional 150,000
shares at $2.00 per share; if the public trading price closes at
a minimum of $6.00 per share for five (5) consecutive days,
Employee shall have the option to purchase an additional 200,000
shares at $3.00 per share. These options are cumulative and fully
vested upon execution of this Agreement. These options must be
executed prior to the expiration of this Agreement by written
notice to the President of the Employer.
e. Automobile / Transportation. Employer shall pay for Employees
insurance. monthly automobile payment, not to exceed $1,000 per month, including
applicable taxes, fuel, oil, repairs and maintenance.
6. EXPENSES. Employer will reimburse Employee for expenses incurred in
connection with Employer's business, including expenses for travel, lodging,
meals, beverages, entertainment, and other items of Employee's periodic
presentation of an account of such expenses. Employer shall
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reimburse Employee for the following expenses whether incurred or to be incurred
on behalf of Employer.
7. WORKING FACILITIES. Employer shall provide to Employee offices and
facilities appropriate to Employee's position and suitable for the performance
of Employee's duties as set forth in this Agreement.
8. NONDISCLOSURE OF PROPRIETARY AND CONFIDENTIAL INFORMATION Recognizing
that the Employer is presently engaged, and may hereafter continue to be engaged
in the research and development of processes, the manufacturing of products or
performance of services, which involve experimental and inventive work and that
the success of the Employer's business depends upon the protection of the
processes, products and services by patent, copyright or by secrecy and that
Employee has had, or during the course of his engagement may have, access to
Proprietary and Confidential Information, as herein defined, of the Employer or
other information and data of a secret or proprietary nature of the Employer
which the Employer wishes to keep confidential and Employee has furnished, or
during the course of his engagement may furnish such information to the
Employer, Employee agrees and acknowledges that:
a. The Employer has exclusive property rights to all Proprietary and
Confidential Information and Employee hereby assigns all rights he might
otherwise possess in any Proprietary and Confidential Information to the
Employer. Except as required in the performance of his duties to the Employer,
Employee will not at any time during or after the term of his engagement, which
term shall include any time in which Employee may be retained by the Employer as
a consultant, directly or indirectly use, communicate, disclose or disseminate
any Proprietary or Confidential Information of a secret, proprietary,
confidential or generally undisclosed nature relating to the Employer, its
products, customers, processes and services, including information relating to
testing, research development, manufacturing, marketing and selling.
b. All documents, records, notebooks, notes, memoranda and similar
repositories of, or containing, Proprietary and Confidential Information or any
other information of a secret, proprietary, confidential or generally
undisclosed nature relating to the Employer or its operations and activities
made or compiled by Employee at any time or made available to him prior to or
during the term of his engagement by the Employer, including any and all copies
thereof, shall be the property of the Employer, shall be held by him in trust
solely for the benefit of the Employer, and shall be delivered to the Employer
by him on the termination of his engagement or at any other time on
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the request of the Employer.
c. Employee will not assert any rights under any inventions, trademarks,
copyrights, discoveries, concepts or ideas, or improvements thereof, or
know--how related thereto, as having been made or acquired by him during the
term of his engagement if based on or otherwise related to Proprietary or
Confidential Information.
9. ASSIGNMENT OF INVENTIONS.
a. All Inventions shall be the sole property of the Employer, and
Employee agrees to perform the provisions of this Section 9 with respect thereto
without the payment by the Employer of any royalty or any consideration therefor
other than the regular compensation paid to Employee in the capacity of any
employee or consultant, with the exception that Employee shall continue to
receive royalties from sales of any and all products currently distributed by
Coordinated Strategic Alliances of Xxxxxxx, New York.
b. Employee shall apply, at the Employer's request and expense, for
United States and foreign letters patent or copyrights either in Employee' s
name or otherwise an the Employer shall desire.
c. Employee hereby assigns to the Employer all of his rights to such
Inventions, and to applications for United States and/or foreign letters patent
or copyrights and to United States and/or foreign letter patent or copyrights
granted upon such Inventions.
d. Employee shall acknowledge and deliver promptly to the Employer,
without charge to the Employer, but at its expense, such written instruments
(including applications and assignments) and do such other acts, such as giving
testimony in support of Employee' s inventorship, as may be necessary in the
opinion of the Employer to obtain, maintain, extend, reissue and enforce United
States and/or foreign letters patent and copyrights relation to the Inventions
and to vest the entire right and title thereto in the Employer of its nominee.
Employee acknowledges and agrees that any copyright developed or conceived of,
by Employee during the term of his employment that is related to the Business of
the Employer shall be a " work for hire" under the copyright law of the United
States and other applicable jurisdictions.
e. Employee represents that his performance of all the terms of this
Agreement and as an employee of or consultant to the Employer does not and will
not breach any trust prior to his employment by the Employer. Employee agrees
not to enter into any agreement either written or oral in conflict
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herewith and represents and agrees that he has not brought and will not bring
with to the Employer or use in the performance of his responsibilities at the
Employer any materials or documents of a former employer which are not generally
available to the public, unless he has obtained written authorization from the
former employer for their possession and use, a copy of which has been provided
to the Employer.
f. No provisions of the Paragraph shall be deemed to limit the
restrictions applicable to Employee under Section 8 and 9.
10. SHOP RIGHTS. The Employer shall also have the royalty-free right to use
in its business, and to make, use and sell products, processes and/or services
derived from any inventions, discoveries, concepts and ideas, whether or not
patentable, including but not limited to processes, methods, formulas and
techniques, as well as improvements thereof or know-how related thereto, which
are not within the scope of Inventions as defined herein but which are conceived
of or made by Employee during the period he is engaged by the Employer or with
the use or assistance of the Employer's facilities, materials or personnel.
11. NON-COMPETE. Employee hereby agrees that during the term of this
Agreement and for a period of one year thereafter, Employee will not:
a. Within any jurisdiction or marketing area in the United States or
Canada in which the Employer or any subsidiary thereof is doing business, own,
manage, operate, or control any business of the type and character engaged in
and competitive with the Employer or any subsidiary thereof. For purposes of
this paragraph, ownership of securities of not in excess of five percent (5%) of
any class of securities of a public employer listed on a national securities
exchange or on the National Association of Securities Dealers Automated
Quotation System (NASDAQ) shall not be considered to be competition with the
Employer or any subsidiary thereof;
b. Within any jurisdiction or marketing area in the United States in
which the Employer or any subsidiary thereof is doing business, act as, or
become employed as an officer, director, employee, consultant or agent of any
business of the type and character engaged in and competitive with the Employer
or any of its subsidiaries;
c. Solicit any similar business to that of the Employer's for, or sell
any products that are in competition with the Employer's products to which is,
as of the date hereof, a customer or client of the Employer or any of its
subsidiaries, or was such a customer or client thereof within two years prior to
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the date of this Agreement; or
d. For up to six months following the termination of this Agreement
solicit the employment of, or hire, any full time employee employed by the
Employer or its subsidiaries as of the date of termination of this Agreement.
12. TERMINATION. Employer may not terminate this Agreement during its term
without Cause as defined herein. If this Agreement is terminated without Cause,
Employee shall be entitled to the Termination Payments set forth in Section 14
hereof. Any termination by Employer of Employee of Employee's employment during
the term hereof shall be communicated by written Notice of Termination to
Employee, if such Notice of Termination is delivered by the Employer, and to the
Employee, if such Notice of Termination is delivered by Employee, all in
accordance with the following procedures:
a. The Notice of termination shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances alleged to provide a basis for termination;
b. Any Notice of Termination by the Employer shall be approved by a
resolution duly adopted by a majority of the members of the Employer;
c. If Employee shall provide the president or chief executive officer
with a Notice of Termination at least 30 days prior to leaving the employment of
the Employer. Upon the end of the thirty days, all compensation provisions of
this Agreement shall cease.
13. TERMINATION UPON TRANSFER OF BUSINESS. Notwithstanding any provision
this Agreement to the contrary, Employee may terminate this Agreement upon the
happening of any of the following events: (a) the sale by Employer of
substantially all of its assets to a single purchaser or to a group of
associated purchasers; (b) the sale, exchange, or other disposition to a single
entity or group of entities under common control in one transaction or series of
related transactions of greater than 50% of the outstanding shares of Employer's
common stock; (c) the decision by Employer to terminate its business and
liquidate its assets; or (d) the merger or consolidation of Employer in a
transaction in which the shareholders of the Employer immediately prior to such
merger or consolidation receive less than 50% of the outstanding voting shares
of the new or continuing corporation. In the event Employee does not elect to
terminate this Agreement upon the happening of
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any of the events noted above, and as a result of such event, Employer is not
the surviving entity, then the provisions of this Agreement shall inure to the
benefit of and be binding upon the surviving or resulting entity. If as a result
of the merger, consolidation, transfer of assets, or other event listed above,
the duties of Employee are increased, then the compensation of Employee provided
for in paragraph 5 of this Agreement shall be reasonably adjusted upward for the
additional duties and responsibilities assumed. In the event of the occurrence
of (a) (b) or (d) above and Employee elects to terminate this Agreement,
Employee shall be entitled to a bonus equal to three (3) times the base salary
provided for in Paragraph 5(a). Said payment to be paid at time of closing.
14. TERMINATION PAYMENTS. In the event the Employee's employment is
terminated by the Employer during the term hereof for reasons other than Cause,
as defined herein, Employee shall be paid any sums owed under this Agreement,
including but not limited to any salary, any deferred compensation, accrued
benefits, bonuses and options, and for any potential actions for breach of this
Agreement by Employer. Other than any payments set forth in this Section 14,
Employee shall be entitled to no further compensation nor any other payments
after termination. Employee shall receive no further payments if terminated for
Cause other than Accrued Benefits.
15. DEATH DURING EMPLOYMENT. If Employee dies during the term of this
Agreement, Employer shall have no further obligations to pay Employee other than
any Accrued Benefits.
16. ILLNESS OR INCAPACITY. If Employee is unable to perform Employee's
services by reason of illness or incapacity for a period of more than two (2)
consecutive months the compensation thereafter payable to Employee during the
next two (2) consecutive months shall be 50% of the compensation provided for
herein. During such period of illness or incapacity, Employee shall be entitled
to receive incentive compensation if any Notwithstanding the foregoing, if such
illness or incapacity does not cease to exist within a four (4) consecutive
month period, Employee shall not be entitled to receive any further compensation
nor any payments for such illness or incapacity, and Employer may terminate this
Agreement without further liability to Employee. Any existing options to
purchase Employer's common stock held by Employee at the time termination shall
be governed by the terms of the option and not affected by this provision. At
the termination of such illness or incapacity, Employee shall be entitled to
receive Employee's full compensation payable pursuant to the terms of this
Agreement.
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17. NON-TRANSFERABILITY. Neither Employee, Employee's spouse, Employee's
designated contingent beneficiary, nor their estates shall have any right to
anticipate, encumber, or dispose of any payment due under this Agreement. Such
payments and other rights are expressly declared non-assignable and
nontransferable except as specifically provided herein.
18. INDEMNIFICATION. Employer shall indemnify, defend and hold Employee
harmless from liability for acts or decisions made by Employee while performing
services for Employer to the greatest extent permitted by applicable law.
Employer shall use its best efforts to obtain coverage for Employee under any
insurance policy now in force or hereafter obtained during the term of this
Agreement insuring officers and directors of Employer against such liability.
19. ASSIGNMENT. This Agreement may not be assigned by either party without
the prior written consent of the other party.
20. ENTIRE AGREEMENT. This Agreement is and shall be considered to be the
only agreement or understanding between the parties hereto with respect to the
employment of employee by employer. All negotiations, commitments, and
understandings acceptable to both parties have been incorporated herein. No
letter, telegram, or communication passing between the parties hereto covering
any matter during this contract period, or any plans or periods thereafter,
shall be deemed a part of this Agreement; nor shall it have the effect of
modifying or adding to this Agreement unless it is distinctly stated in such
letter, telegram, or communication that is to constitute a part of this
Agreement and is attached as an amendment to this Agreement and is signed by the
parties to this Agreement.
21. ENFORCEMENT. Each of the parties to this Agreement shall be entitled to
any remedies available in equity or by statute with respect to the breach of the
terms of this Agreement by the other party. Employee hereby specifically
acknowledges and agrees that a breach of the agreements, covenants and
conditions of this Agreement will cause irreparable harm and damage to the
Employer, that the remedy at law, for the breach or threatened breach of this
Agreement will be adequate, and that, in addition to all other remedies
available to the Employer for such breach or threatened breach (including,
without limitation the right to recover damages), the Company shall be entitled
to injunctive relief for any breach or threatened breach of this Agreement.
22. GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York.
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23. SEVERABILITY. If and to the extent that any court of competent
jurisdiction holds any provision or any part thereof of this Agreement to be
invalid or unenforceable, such holding shall in no way affect the validity of
the remainder of this Agreement.
24. WAIVER. No failure by any party to insist upon the strict performance
of any covenant, duty, agreement, or condition of this Agreement or to exercise
any right or remedy consequent upon a breach hereof shall constitute a waiver of
any such breach or of any covenant, agreement, term, or condition.
25. LITIGATION EXPENSES. In the event that it shall be necessary or
desirable for the Employee or Employer to retain legal counsel and/or incur
other costs and expenses in connection with the enforcement of any or all of the
provisions of this Agreement, the prevailing party shall be entitled to recover
from the other party reasonable attorneys' fees, costs, and expenses incurred by
the prevailing party in connection with the enforcement of this Agreement.
Payment shall be made upon the conclusion of such action.
26. SURVIVABILITY. The provisions of Section 8, 9, 10, 11 and 12 shall
survive termination of this Agreement.
AGREED AND ENTERED INTO as of the date first above written.
EMPLOYER: EMPLOYEE:
LA GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx, CEO /s/ Xxxxx Xxxxxxxx
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Duly Authorized Officer Xxxxx Xxxxxxxx
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