EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Agreement is entered into as of the 18th day of January, 1996, by
and between SOURCE CAPITAL CORPORATION, a Washington corporation (the
"Company" or "Employer") and D. XXXXXXX XXXXX ("Employee" or "Xxxxx").
WHEREAS, the Employer desires to employ Xxxxx and Xxxxx desires to be
employed by and to serve the Employer in the capacities and for the
term and compensation and upon and subject to the terms and conditions
hereinafter set forth,
NOW, THEREFORE, in consideration of the promises and covenants herein,
Employer and Xxxxx mutually undertake and agree as follows:
1. EMPLOYMENT. Employer hereby employs Xxxxx, and Xxxxx hereby
accepts employment from Employer, on the terms and conditions
herein specified.
2. DUTIES OF XXXXX.
2.1 PRINCIPAL DUTIES. Employer hereby employs Xxxxx as President
and Chief Executive Officer of Employer, to perform such
duties for Employer as may reasonably be requested of Xxxxx
by the Board of Directors of Employer. Xxxxx shall report
directly to the Board of Directors of Employer.
2.1.1 The business of the Employer includes lending
activities, primarily making loans to individuals,
corporations, and other entities for commercial
business and mortgage lending.
2.1.2 The business of the Employer also includes identifying
other companies for acquisition by, or merger with,
Employer, as approved by Employer s Board of
Directors.
3. COMPENSATION.
3.1 SALARY. Employer shall pay Xxxxx a yearly salary of One
Hundred forty Thousand Dollars ($140,000.00). Xxxxx may
direct Employer as to the method and manner of payment of
compensation so as to minimize taxation to Xxxxx.
3.2 COST OF LIVING INCREASE ADJUSTMENT.
(a) The payment described in Section 3.1 of this Agreement
shall be adjusted to reflect cost-of-living increases
in order to ensure that the real value of the payments
provided under this Agreement are not impaired by
changing economic conditions.
(b) On January 1, 1997, and each January 1st thereafter,
Employer shall compute a cost-of-living increase
adjustment factor by which payments during the
following year are to be multiplied. The payments to
be multiplied are those determined under Section 3.1
without regard to any prior cost-of-living increase
adjustment. The factor shall consist of a fraction,
the numerator of which shall be the most recently
determined cost-of-living index when the calculation
is made, and the denominator of which shall be the
most recently determined cost-of-living index
determined prior to January 1, 1996.
(c) That all items, for the Standard Metropolitan
Statistical Area of Seattle, Washington cost-of-living
index required for this calculation shall be obtained
from the Consumer Price Index published by the Bureau
of Labor Statistics of the United States Department of
Labor. In any year in which this index is not
available Employer shall ascertain and utilize some
similar criterion and establish retroactively an
initial index figure for the denominator of the
fraction consistent with the intent of this Agreement.
(d) Nothing in this Agreement shall be construed to
diminish the fixed amount payable under this Agreement
as established above, or to diminish the amount of any
particular payment.
3.3 BONUS. By January 15 of each year, beginning January 15,
1997, Xxxxx shall receive a cash bonus based upon Employer s
net earnings for the prior year. Such bonus shall be
determined in the following manner: Xxxxx shall receive a
bonus of ten percent (10%) of Employer s net earnings. For
purposes of this paragraph, net earnings shall be defined as
before tax earnings computed by the Employer s Certified
Public Accountant using generally accepted accounting
principles consistently applied with the following
adjustments;
(i) No deductions shall be taken for stock options given
to or exercised by Xxxxx, the Directors, or Key
Employees or under any stock option plan.
(ii) No deductions shall be taken for bonuses given to
Xxxxx.
(iii) No federal, state, and local income taxes shall be
deductible.
Any Bonuses earned herein will be advanced as follows: July
15 based on a computation for the first quarter of Employer s
operations; October 15 based on a computation for the second
quarter of Employer s operations; and on December 31 based on
a computation for the remainder of the year of Employer s
operations. Notwithstanding the above, if net earnings for
the complete year at December 31 indicate Xxxxx has been
bonused in excess of ten (10% percent of net earnings, Xxxxx
agrees to reimburse Employer such excess amount by February
15 of the year following. Each complete year shall be
considered separately and not cumulatively for purposes of
this calculation.
3.4 DISABILITY PAY. In the event Xxxxx becomes unable to perform
his duties hereunder by reason of illness or accident, he
shall receive full salary during the first six (6) months of
such incapacity in any elapsed period of twelve (12) months.
The number of days during which Xxxxx is entitled to
disability pay hereunder shall be proportionately reduced if
such incapacity occurs before the initial twelve months of
the term of employment have elapsed. Pay under this
provision shall be noncumulative. Employer may, in its sole
discretion, maintain a disability insurance policy for the
purpose of funding benefits for Xxxxx while so incapacitated.
This provision, however, shall not in any way limit the
rights of Employer under Paragraph 4.
3.5 EXPENSES. Xxxxx shall be entitled to receive reimbursement
for all reasonable expenses incurred by him in connection
with the performance of his duties, provided he submits an
itemized statement for such expenses to Employer and, if
required by Employer, actual receipts of the expenses so
incurred.
3.6 REIMBURSEMENT OF DISALLOWED EXPENSES. If any salary,
payment, reimbursement, employee fringe benefit, expense
allowance payment, or other expense incurred by the Employer
for the benefit of Xxxxx is disallowed in whole or in part as
a deductible expense of Employer for federal income tax
purposes, shall reimburse the Employer, upon notice and
demand, to the full extent of the disallowance. This legally
enforceable obligation is in accordance with the provisions
of Revenue Ruling 69-115 and it is for the purpose of
entitling Xxxxx to a business expense deduction for the
taxable year in which the repayment is made to the Employer.
In this manner the Employer will be protected from having to
bear the entire burden of a disallowed items.
3.7 FRINGE BENEFITS. While he is in the employ of the Employer,
Xxxxx shall be entitled to the following benefits:
(a) AUTOMOBILE USE. Xxxxx shall receive Five Hundred
dollars ($500.00) per month automobile reimbursement
expense. Employee shall arrange for an "umbrella"
policy in the name of Employer or naming Employer as
an additional insured in the minimum amount of Three
Million Dollars ($3,000,000).
(b) HEALTH BENEFITS. Employer shall purchase and maintain
for the benefit of employee and his family medical
insurance providing such coverage as may from time to
time be determined by the Board of Directors.
(c) VACATION. Beginning January 18, 1996, Xxxxx shall be
entitled each year to a vacation of four (4) weeks
during which time his compensation shall be paid in
full; provided however, Xxxxx shall not take more than
two (2) consecutive weeks of vacation.
(d) LIFE INSURANCE. Employer and Xxxxx agree to enter
into a Buy-Sale Agreement which will provide: Employer
shall purchase and maintain term life insurance on
Xxxxx in an amount equal to the fair market value of
Employer s stock held by Xxxxx. Such insurance shall
be in force for the duration of Xxxxx employment and
proceeds of which shall be used to buy from Xxxxx
estate Employer s stock. In the event of death of
Xxxxx, Employer agrees to redeem and repurchase Xxxxx
stock as soon as practicable upon receive of proceeds
of said insurance. Xxxxx agrees his estate shall sell
his stock pursuant to a Buy-Sell Agreement.
(e) OTHER BENEFITS. Xxxxx shall be entitled to
participate in any pension plans, or any other health
insurance plans, or other fringe benefit plan which
the Employer may adopt from time to time for the
benefit of its officers or executive employees.
(f) STOCK OPTIONS AND STOCK APPRECIATION RIGHTS. In
addition to the compensation provided for herein,
Xxxxx shall be granted, at the Exercise Price per
share, the right during the term of this Agreement to
purchase from Employer Class A Common Stock ("Option
Shares") at the following price (the "Exercise Price")
and in the following amounts: (i) 50,000 shares at
$1.00 per share; (ii) 50,000 shares at $1.33 per
share; and (iii) 50,000 shares at $1.67 per share.
(1) Payment of the option exercise price may be made
in cash, cashier s, or personal check, or to the
extent permitted by the Company, in its sole
discretion: (i) transfer to the Company of shares
of Class A Common Stock having a Fair Market
Value equal to the option exercise price at the
time of such exercise; (ii) delivery of
instructions to the Employer to withhold from the
option, shares that would otherwise be issued on
the exercise that number of option shares having
a Fair Market Value equal to the option exercise
price at the time of such exercise. If the Fair
Market Value of the whole number of shares
transferred or the number of whole option shares
surrendered is less than the total exercise price
of the option, the shortfall must be made up in
cash. As used in this subparagraph the "Fair
Market Value" shall mean the average of the
lowest bid and asked price for the thirty (30)
day period prior to the date of exercise of the
option by Xxxxx.
(2) Delivery of a certificate representing the shares
purchased will be made within thirty (30) days of
receipt by Employer of such notice, and payment
will be due on delivery.
(3) Employee shall only sell any shares acquired by
him as permitted by SEC Rule 144(e); provided,
further, if requested by the Company s Board of
Directors, Xxxxx shall execute a Shareholder Buy-
Sell Agreement further restricting the sale,
transfer or other disposition of the option
shares.
(4) STOCK APPRECIATION RIGHTS. Provided, however, at
Employer s sole option and in its sole
discretion, of the total 150,000 shares of
Employer s Class A Common Stock granted to
Employee in Section 3.7(f) herein, 70,000 may be
in the form of Stock Appreciation Rights (SAR).
The granting of each SAR shall reduce the
remaining number of Option Shares ratably.
(i) Payment for each SAR shall be in an amount
equal to _______ percent (____%) of the
difference between the average bid price,
for employer s Class A Common Stock, for
the five (5) business days prior to Xxxxx
exercise of his option to purchase the
shares, and the Exercise Price.
(ii) Payment for each SAR shall be made within
thirty (30) days of Xxxxx notice to
Employer of his intent to exercise his
option to purchase the shares.
(iii) If Xxxxx exercises his option to purchase
the shares, as provided herein, Employer
shall notify him within five (5) days of
its intent to allow the exercise of the
options or to issue the SAR.
3.8 REGISTRATION UNDER THE SECURITIES ACT OF 1933.
(a) PIGGYBACK REGISTRATION. In the event that the
Employer files a registration statement under the
Securities Act of 1933, as amended ("Act") at any time
which relates to a current offering of securities of
the Employer (except in connection with an exchange
offer, an offer to acquire assets or a registration on
Form S-4) such registration statement and the
prospectus included therein shall also, at the written
request to the Employer by Xxxxx, include the Shares
issued upon exercise of the Option granted herein or
options at any time previously granted and exercised
(collectively, the "Share"). The Employer shall give
written notice to Xxxxx of its intention to file a
registration statement under the Act relating to a
current offering at least thirty (30) days prior to
the filing of such registration statement. Xxxxx
shall thereafter have twenty (20) days in which to
request that the Shares owned by Xxxxx be included as
part of the registration (the "Registration Notice").
Notwithstanding the foregoing or the actual filing of
the registration statement, the Employer may determine
at any time not to offer the securities to which such
registration statement relates, without liability to
Xxxxx, except that the Employer under Paragraph 3.8(e)
below. Provided, Xxxxx may only exercise the rights
granted under this Paragraph 3.8(a) only once a year,
but no more than three (3) times during the term of
this Agreement.
(b) EXERCISE OF REGISTRATION RIGHT. In the event that the
Registration Notice shall have been so mailed or
delivered, Xxxxx, may mail or deliver to the Company a
written notice (the "Supplemental Notice") (i)
specifying the number of Option Shares (the
"Supplemental Registration Shares") proposed to be
sold or otherwise transferred by such holder, (ii)
describing the proposed manner of sale or other
transfer thereof and (iii) requesting the registration
thereof under the Securities Act; provided, however,
that the Supplemental Notice shall be so mailed or
delivered by Xxxxx not more than 15 days after the
date of delivery to Xxxxx of Registration Notice.
Xxxxx shall have no further right to cause the
Employer to register the Option Shares; provided,
however, to the extent that any Supplemental
Registration Shares specified in the Supplemental
Notice shall not have been registered (as contemplated
herein other than clause (ii) thereof), the provisions
of this paragraph 3.8 shall apply in the case of the
next registration (and, if necessary, succeeding
registrations until all the Supplemental Registration
Shares specified in the Supplemental Notice shall have
been registered.
(c) DUTIES OF EMPLOYER. In each instance, after receipt
of Supplemental Notice as provided in Section 3.8(a),
the Employer shall take action to permit a public
offering of the Shares. The Employer agrees to the
following:
(1) Employer shall supply to Xxxxx two (2) executed
copies of the registration statement, final and
other prospectus which conform with the
requirements of the Act and Rules and Regulations
promulgated thereunder and such documents which
Xxxxx may reasonably request.
(2) The Employer shall cooperate in taking such
action as may be reasonably necessary to register
or qualify the Shares under such other securities
acts or blue sky laws of such jurisdictions as
Xxxxx shall reasonably request and to do any and
all other acts and things which may be necessary
or advisable to enable Xxxxx to consummate such
proposed sales in any such jurisdiction;
provided, however, the Employer shall not be
required to qualify or register in any state or
jurisdiction which would obligate any shareholder
of the Employer to escrow their shares, (provided
that the Employer shall not be required in
connection therewith to qualify as a foreign
corporation or to execute general consent to
service of process in any state); provided,
however, that if (i) in the case of an
underwritten public offering of securities
proposed to be made by the Employer, the managing
underwriter shall advise the Employer in writing
that inclusion of some or all of such
supplemental Registration Shares would, in such
managing underwriter s opinion, interfere with
the proposed distribution of the securities to be
issued by the Employer in respect of which
registration was originally to be effected, then
the Employer may, upon written notice to Xxxxx
and to all other holders of securities which
otherwise were to be included in such
registration (other than the Employer which shall
have first priority or, in the case of a
registration for the purpose of sale or other
transfer by a holder of common shares, other than
such holder which shall have first priority),
allocate (if and to the extent such allocation is
certified by such managing underwriter as
necessary to eliminate such interference) the
Supplemental Registration Shares and such other
securities pro rata among the Supplemental
Registration Shares and such other securities,
(ii) any firm of counsel representing the
Employer in connection with such registration
shall advise the Employer in writing that in
their opinion one or more of the steps
contemplated hereby is not necessary to permit
the sale of the Supplemental Registration Shares
in a transaction constituting a public offering
within the meaning of the Securities Act, then
the Employer shall not be required to take any
action with respect to such step or steps, and
(iii) in the case of an underwritten public
offering, if the managing underwriter requires
that the Employer and all other selling security
holders agree not to sell or otherwise dispose of
securities of the Employer following the closing
of such public offering, Xxxxx shall so agree,
provided that the period of such agreement shall
not exceed 120 days.
(3) The Employer shall keep any such registration
statement effective for a period of nine (9)
months after the initial effectiveness and
cooperate in taking such reasonable action as may
be necessary to keep effective such other
registrations and qualifications, and do any and
all other acts and things for such period as may
be necessary to permit the public sale of the
Shares by Xxxxx.
(4) If an underwriter is involved in the offering,
the Employer and Xxxxx shall execute such
documents are as necessary.
(e) EXPENSES. Employer shall pay all expenses necessary
to effect under the Securities Act any registration
statements, amendments or supplements filed pursuant
to this paragraph 3.8 (other than underwriters
discounts and commissions and brokerage commissions,
expenses and fees, if any, payable with respect to
Option Shares sold by Xxxxx, transfer taxes, and other
than legal fees incurred by Xxxxx), including, without
limitation, printing expenses, fees of the Securities
and Exchange commission and the National Association
of Securities Dealers, Inc., expenses of compliance
with Blue Sky and other state, securities laws, and
accounting and legal fees and expenses, except to the
extent that such expenses are required to be paid by
Xxxxx under applicable law or regulations.
(f) CONDITIONS. The Employer s obligation hereunder shall
be conditioned, as to each public offering, upon a
timely receipt by the Employer in writing of:
(1) Information as to the terms of such public
offering furnished by Xxxxx.
(2) Such other information as the Employer and any
underwriter may reasonably require from Xxxxx.
(g) TRANSFER. The Agreement and the options evidenced
hereby may not be sold, transferred, pledged,
hypothecated or otherwise disposed of except by will,
the Laws of Descent and Distribution, or other
testamentary transfer. Each taker and holder of this
Agreement, the Options evidenced hereby and any shares
of capital stock of the Employer issued upon exercise
of any such options, by taking or holding the same,
consents to and agrees to be bound by the provisions
of this Agreement; provided, further, if requested by
the Company s Board of Directors, Xxxxx shall execute
a Shareholder Buy-Sell Agreement further restricting
the sale, transfer or other disposition of the option
shares.
4. TERM AND TERMINATION OF AGREEMENT. The term and termination of
this Agreement shall be as follows:
4.1 TERM. The term of this Agreement shall be the period
beginning on January 20, 1996 (the "Commencement Date") and
terminate on January 19, 2001 (the "Termination Date"),
(a) unless Xxxxx shall sooner die, whereupon this
Agreement shall terminate, or
(b) unless this Agreement shall be sooner terminated by
Xxxxx as herein provided for, or
(c) unless the Employer shall terminate this Agreement as
provided for in the next succeeding paragraph hereof,
4.2 EFFECT OF TERMINATION:
(a) RESIGNATION. In the event Employee resigns as an
employee, Employee shall have the right to
compensation as set forth in Paragraph 4.4.
(b) Termination "for cause". In the event Employee is
terminated for "for cause", Employee shall have the
right to compensation as set forth in Paragraph 3 to
the end of the month of such termination, however,
Employee waives any rights to any compensation from
and following the end of the month of termination
including but not limited to compensation, benefits or
securities payable to Employee under sections 3.1,
3.2, 3.3, 3.4, 3.5, 3.7 (a,b,c,d,e,). Employee s
salary under paragraph 3.1 shall be prorated up to the
month of such termination and Employee shall have no
right to direct Employer as to the method and manner
of payment of compensation. In the event Employee is
terminated "for cause" as defined in paragraph 4.3,
Employee shall forfeit any rights in and to any
Options.
(c) If Xxxxx shall become ill or be injured or otherwise
become so incapacitated that he cannot, in the
judgment of the Board of Directors of Employer, fully
carry out and perform his duties hereunder, and such
incapacity shall continue for a period of six (6)
months, he shall be considered disabled. In the event
of such disability, Employer may, give to Xxxxx
written Notice of such termination, and this agreement
shall be terminated fifteen (15) days thereafter, and
Employee shall have the right to compensation as
provided in paragraph 4.2(b).
(d) If at any time after the Commencement Date the
Employer commits a material breach of the terms an
provisions of this Agreement and fails to cure such
breach prior to the expiration of thirty (30) days
after the delivery by Xxxxx to the Employer by written
notice setting forth the nature and extent of such
breach, Xxxxx may terminate this Agreement thereafter
by prompt written notice of such termination delivered
to the Employer, subject to Xxxxx rights for payment
of all compensation outlined within Paragraph 3 and
Paragraph 4.3 through the term of this Agreement. The
failure by Xxxxx to exercise his right to matters
referred to in this Paragraph 4.1 shall not be taken
or held to be a waiver by Xxxxx of his right to
terminate this Agreement in respect of that breach and
his right to enumerated payments. The foregoing
sentence shall not limit Xxxxx rights or remedy,
other than in regard to termination, for damages
occasioned by breach of this Agreement by Employer.
4.3 For purposes of this Agreement termination "for cause" shall
mean:
(a) disloyalty, including conflicts of interest and other
circumstances amounting to a breach of fiduciary duty,
or dishonesty toward or involving Employer;
(b) repeated failure or refusal to carry out the
directions of the board of Directors of the Employer,
which directions are consistent with the duties herein
required of the Employee;
(c) violation of the state or federal criminal laws
involving the conviction of a felony;
(d) medical certification that the Employee is unable to
carry out his duties by reason of insanity or physical
disability;
(e) any material breach of the terms of this Agreement;
and
(f) breach of fiduciary duty by Employee.
Notice by Employer under Paragraph 4.2(b) above shall state
generally the reason or reasons for termination; and such
notice under Paragraph 4.2(c) shall identify the period of
incapacity; provided, however, that the reasons stated in the
notice pursuant to Paragraph 4.2(b) shall in no event be
considered a waiver by the Employer of the reasons for such
termination.
4.4 SEVERANCE PAY. In the event the Board of Directors of
Employer terminates the employment of Xxxxx for any reason
other than the provisions of Paragraph 4.2(b), Xxxxx shall be
entitled to his salary under 3.1 for a period of three (3)
months, and his bonus prorated for such year of termination
computed as described herein. Said sums shall be paid to
Xxxxx in a manner that minimizes tax liability for Xxxxx, all
at the request of Xxxxx. Xxxxx retains the right to all
compensation (other than salary as specified above) earned to
the date of termination [specifically all compensation,
benefits or securities earned under sections 3.2, 3.4, 3.5,
3.7 (a,b,c,d,e,f); provided, however, in the event Xxxxx
still has options upon the date of termination, such Options
must be exercised within three (3) months of termination. If
such termination occurs other than on December 31, the bonus
provided for under paragraph 3.3 in the year of termination
shall be prorated to each of the following dates, as
appropriate, and computed based upon the Company s
performance as follows: July 15 based on a computation for
the first quarter of Employer s operations; October 15 based
on a computation for the second quarter of Employer s
operations; and on December 31 based on a computation for the
remainder of the year of Employer s operations; provided,
however, nothing herein shall be construed to entitle Xxxxx
to a Bonus attributable to a period of time after
termination.
4.5 NO WAIVER. The failure by Employer to exercise its right to
terminate Xxxxx employment under this Agreement with respect
to any one or more of the matters referred to in Paragraph
4.2 above, or with respect to any incapacity of Xxxxx which
would give rise to the Employer having a right to terminate
this Agreement, as provided for above, shall not be taken or
held to be a waiver by the Employer of its right of
termination of this Agreement in respect of that breach or
incapacity (provided it shall be continuing) or of any
subsequent breach or incapacity, Paragraph 4.2 shall not
limit the Employer s rights or remedies, other than in regard
to termination, for a breach of this Agreement by Xxxxx.
4.6 RIGHTS PRESERVED. In the event that at any time during the
term of this Agreement, the Employer shall be liquidated or
dissolved or merged into or consolidated with another
corporation, all rights of Xxxxx under this Agreement shall
be preserved unimpaired, and all liabilities and obligations
of Employer hereunder shall thenceforth flow to the entity
receiving the properties and assets of Employer in such
liquidation and dissolution, or the surviving corporation in
such merger or consolidation, and may be enforced against
corporation in such merger or consolidation, and may be
enforced against it to the same extent as if this Agreement
had been entered into by it; provided, however, that in the
event Employer is merged into another corporation and is not
the surviving entity, Xxxxx shall exercise his Options prior
to the effective date of such merger and, if such Options are
not so exercised, then they shall automatically expire and
terminate.
5. DISCLOSURE OF INFORMATION. Xxxxx will not, during or any time
after termination of employment hereunder, without written
authorization of Employer, disclose to, or make use of, for
himself or for any person or corporation or other entity, any
files or trade secrets or other confidential or proprietary
information concerning the business, clients, methods, operations,
financing, or services of Employer. Trade secrets and
confidential information shall mean the information disclosed to
Xxxxx or known by him as a consequence of his employment by
Employer, whether or not pursuant to this Agreement and not
generally known in the industry.
6. SURRENDER OF BOOKS AND RECORDS. Xxxxx acknowledges that all
files, lists, books, records, products, and other materials owned
by Employer or used by it in connection with the conduct of its
business shall at all times remain the property of Employer and
that upon termination of employment hereunder, irrespective of the
time, manner, or cause of such termination, Xxxxx will surrender
to the Employer all such files, lists, books, records, products,
and other materials.
7. SEVERABILITY. If any provisions of this Agreement shall be held
invalid or unenforceable, the remainder of this Agreement shall,
nevertheless, remain in full force and effect. If any provisions
are held invalid or unenforceable with respect to particular
circumstances, it shall nevertheless, remain in full force and
effect in all other circumstances.
8. NOTICE. All notices required to be given under the terms of this
Agreement shall be in writing, shall be effective, upon receipt,
and shall be delivered to the addressee in person or mailed by
certified mail, return receipt requested:
If to Employer: Source Capital Corporation
c/o Chairman of the Board
0000 X. Xxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
If to Xxxxx: D. Xxxxxxx Xxxxx
0000 X. 00xx, XXX 212
Xxxxxxx, XX 00000
9. BENEFIT. This Agreement shall inure to and shall be binding upon
the parties hereto, the successors and assigns of Employer and the
heirs and personal representatives of Xxxxx. This Agreement
cannot be assigned by Xxxxx because of the personal services
required of Xxxxx.
10. WAIVER. The waiver by either party of any breach or violation of
any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent breach or violation hereof.
11. GOVERNING LAW. This Agreement has been negotiated and executed in
the State of Washington, and the law of that state shall govern
its construction and validity.
12. ARBITRATION. Any controversy arising out of, connected to, or
relating to any matters herein of the transactions between
Employee and Employer (including for purposes of arbitration,
officers, directors, employees, controlling persons, affiliates,
professional advisors, accountants, attorneys, agents, or
promoters of the Employer), on behalf of the undersigned, or this
Agreement, or the breach thereof, including, but not limited to
any claims of violations of Federal and/or State Securities Acts,
Banking Statutes, Consumer Protection Statutes, Federal and/or
State anti-Racketeering (e.g. RICO) claims as well as any common
law claims and any State Law claims of breach of contract, fraud,
negligence, negligent misrepresentations, unlawful discharge,
and/or conversion shall be settled by arbitration; and in
accordance with this paragraph and judgment on the arbitrator s
award may be entered in any court having jurisdiction thereof in
accordance with the provisions of RCW 7.04. In the event of such
a dispute, each party to the conflict shall select an arbitrator,
both of whom shall select a third artbitrator, which shall
constitute the three person arbitration board. The decision of a
majority of the board of arbitrators, who shall render their
decision within thirty (30) days of appointment of the final
arbitrator, shall be binding upon the parties. Venue for
arbitration and any action herein shall lie in Spokane County,
State of Washington. The laws of the State of Washington shall
apply herein.
13. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties hereto with respect to the employment of Xxxxx
by Employer. No change, addition, or amendment shall be made
except by written agreement signed by the parties hereto.
14. REPRESENTATIONS AND WARRANTIES OF XXXXX. Xxxxx hereby represents
and warrants to the Employer:
(a) Xxxxx understands that this Agreement and the Common Stock to
be issued herein, HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION, THE STATE
OF WASHINGTON, OR ANY OTHER STATE SECURITIES AGENCIES.
(b) Xxxxx is not an underwriter and would be acquiring this
Agreement and the Common Stock to be issued, solely for
investment for his own account and not with a view to, or
for, resale in connection with any distribution of stock
within the meaning of the Federal Securities Acts, the
Washington State Securities Act, or any other applicable
State Securities Acts.
(c) Xxxxx understands the speculative nature and risks of
investments associated with the Employer, and confirms that
this Agreement and the Common Stock to be issued would be
suitable and consistent with his investment program and that
his financial position enables it bear the risks of this
investment; and that there may not be any public market for
this Agreement and the Common Stock to be issued herein.
(d) This Agreement and the Common Stock to be issued herein may
not be transferred, encumbered, sold, hypothecated, or
otherwise disposed of to any person, without the express
prior written consent of the Employer, and the prior opinion
of counsel for the Employer, that such disposition will not
violate Federal and/or State Securities Acts. Disposition
shall include, but is not limited to acts of selling,
assigning, transferring, pledging, encumbering,
hypothecating, giving, and any form of conveying, whether
voluntary or not.
(e) To the extent that any Federal and/or State Securities law
shall require, Xxxxx hereby agrees that: (1) any shares
acquired pursuant to this Agreement shall be without
preference as to dividends, assets, or voting rights and
shall have no greater or lesser rights per share than the
securities issued for cash or its equivalent; (2) any shares
acquired pursuant to this Agreement shall be subordinated in
favor of the securities to be sold to the public with respect
to dividend rights or preferences and liquidation or other
distribution rights or preferences in the event of a
dissolution, liquidation, bankruptcy, receivership, or sale
of all or substantially all of such issuer s assets until
such time as the purchasers of the public stock offering
shall have received back their initial investment at which
time all Xxxxx shall share pro rata in any further
distribution.
(f) Xxxxx has fully reviewed or had the opportunity to review the
economic consequences of this Agreement and the Common Stock
to be issued, with his attorney and/or other financial
advisor, has been afforded access to the books and records of
the Corporation (including tax returns) and is or has had the
opportunity to become fully familiar with the financial
affairs of the Corporation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date set forth above.
EMPLOYER:
SOURCE CAPITAL CORPORATION
By
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Title
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EMPLOYEE:
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D. XXXXXXX XXXXX
