Exhibit (10)(iii)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into by
and between LIFE INVESTMENT FUNDING ENTERPRISES, INC., a Nevada corporation
having its principal place of business at Sarasota, Florida (the "Company"), and
J. XXXXXXX XXXXX, a resident of Sarasota, Florida (the "Executive"), as of the
_____ day of ______________, 2002.
R E C I T A L S
The Company has been organized under Nevada law for the purpose of
raising initial capital and to conduct a business involving the purchase of life
insurance policies of various types from the owners and insureds thereof with a
view to realizing profit and economic gain, such business activities sometimes
being referred to as "viatical settlements" or "senior settlements". The
Company, upon acquisition of such life insurance policies, will continue to pay
the premiums due thereon in order to maintain the in-force status of such life
insurance policies. In connection with such business activity, the Company
intends to engage in numerous asset purchase transactions with approximately 60
limited liability companies, also formed under Nevada law. The purpose of such
asset acquisition transactions will be to acquire the life insurance policy
portfolios of such limited liability companies. The purchase consideration to be
given in such asset acquisition transactions is expected to be the Class B
Convertible Preferred Stock of the Company in anticipated aggregate amount of
2.8 million shares.
The Company desires to employ the Executive in the position of
Chairman, President and Chief Executive Officer of the Company and Executive
desires to accept such employment in such capacity. The Executive will, if
elected, serve as a member of the Board of Directors of the Company, and in the
fulfillment and carrying out of his executive responsibilities will have those
general executive powers normally vested in the Chief Executive Officer of a
corporation for profit.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, the Company and the Executive hereby agree as follows:
I. EMPLOYMENT
1.1 TERM. The Company hereby agrees to employ the Executive and the
Executive hereby accepts employment with the Company for an initial term which
shall conclude on December 31, 2006 (the "Initial Term"). The Initial Term of
this Agreement between the Company and the Executive shall commence as of the
time agreed upon by the parties hereto and that the Executive first commences to
render executive services to the Company. Upon the mutual agreement of the
Company and the Executive, this Agreement may be extended for additional,
subsequent terms upon the expiration of the Initial Term. Any renewal term,
however, shall be for a period of not less than two years.
1.2 DUTIES. The Executive hereby accepts employment by the Company as
its Chairman, President and Chief Executive Officer and as such shall supervise,
direct and manage the business of the Company as described earlier in this
Agreement, and in so doing shall have the general executive powers customarily
held by chief executive officers and such additional powers, or limitations on
such powers, as may be established by the Board of Directors of the Company from
time to time. The Executive shall devote substantially all of his business time,
ability, and attention to the business of the Company during the Initial Term of
this Agreement and any renewal term.
1.3 CHANGE OF DUTIES. Except as otherwise provided in this Agreement,
the duties of the Executive may be changed from time to time only by the mutual
consent of the Board of Directors of the Company and the Executive set forth in
writing. Any such change notwithstanding, the employment of the Executive shall
be construed as continuing under this Agreement as modified. If, at any time
during the term of this Agreement, the Executive should be unable to perform his
duties hereunder by reason of personal injury or illness, the Board of Directors
of the Company may assign the Executive to other duties and the compensation to
be paid to the Executive thereafter shall be determined by the Board of
Directors of the Company in its sole discretion. If, in such event, the
Executive is unwilling to accept the modification of his duties and compensation
effected by the Company, or if the Executive's inability to perform his duties
is of such magnitude as to make a modification of his duties hereunder not
feasible on a reasonable basis, this Agreement shall terminate in accordance
with Section 5.2 hereof.
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1.4 FIDUCIARY DUTIES. While employed by the Company, Executive must
exercise the fiduciary duties of care and loyalty to the Company of that of an
ordinary prudent person in a like position.
II. COMPENSATION
2.1 BASIC COMPENSATION. For his full time service to the Company as
Chairman, President and Chief Executive Officer, the Executive shall receive
compensation at the annual rate of One Hundred Eighty Thousand Dollars
($180,000.00) payable in such monthly or more frequent installments as may be
mutually agreed by the Executive and the Company. Immediately following the
conclusion of each twelve month period of the Initial Term, the Company agrees
to undertake in a good faith, responsible manner a review of the Executive's
performance with respect to his service as Chairman, President and Chief
Executive Officer of the Company and to promptly determine and pay an
appropriate bonus to the Executive for such services, the amount of such bonus
to be determined by the Board of Directors of the Company, exclusive of the
Executive. During each year of the Initial Term and any renewal term of this
Agreement, the Board of Directors of the Company shall review such annual
compensation being paid to the Executive in order to determine and award any
appropriate increase in such annual compensation, as well as any bonus
compensation to which the Executive may be entitled.
2.2 COMPENSATION AS A DIRECTOR. The Executive, if so elected, agrees to
serve as a member of the Board of Directors of the Company. Any compensation or
reimbursement received by the Executive from the Company for his service as a
director shall be separate and apart from, and in addition to, the compensation
to be paid to the Executive pursuant to this Agreement.
2.3 CERTAIN BENEFITS. In addition to the compensation and bonus
provided for in this Article II, the Executive shall be entitled to receive the
benefits set forth and described in Article III of this Agreement.
2.4 REIMBURSEMENT OF EXPENSES. The Company, in accordance with the
rules and regulations which it may establish from time to time, shall reimburse
the Executive for reasonable business expenses incurred in the performance of
his duties on behalf of the Company including, without limitation, travel,
automobile and entertainment expenses. The Executive shall also have the use of
any automobile acquired or leased by the Company for utilization by the
Executive without cost to the Executive.
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2.5 MODIFICATION OF COMPENSATION. Upon the mutual written agreement of
the Company and the Executive, which may occur one or more times during the
Initial Term of this Agreement or any renewal term, the Executive and the
Company may agree that all or a portion of the compensation payable by the
Company to the Executive pursuant to the provisions of this Article II or other
provisions of this Agreement shall be suspended until such time as the financial
circumstances of the Company more appropriately permit the payment of such
compensation. With respect to any compensation, the payment of which is
suspended, such compensation payment suspended shall accrue for the benefit of
the Executive and shall be promptly paid in one or more installments upon the
Company's attainment of the financial capability to effect such payment. If
requested by the Executive, the Company shall cause to be prepared and delivered
to the Executive one or more promissory notes evidencing such accrued but unpaid
compensation hereunder and the principal of such note or notes shall bear
interest at an annual rate equal to the corporate prime rate as charged from
time to time by Northern Trust Bank of Florida, N.A., Sarasota, Florida.
III. BENEFITS
3.1 GENERALLY. The Executive shall be entitled to participate in any
qualified pension plan, qualified profit-sharing plan, medical and/or dental
insurance or reimbursement plan, group term life insurance plan and any other
employee benefit plan which may be established by the Company, subject to and in
accordance with the terms and conditions of any such plan as established by the
Company and/or any entity rendering services in connection therewith.
3.2 VACATION. The Executive, if he is in the active employ of the
Company, shall be entitled to such periods of vacation with pay during each year
of the Initial Term or any renewal term of this Agreement as shall be determined
by the Board of Directors of the Company. The Board of Directors of the Company
will endeavor to permit the Executive to utilize such vacation periods at times
selected by the Executive but reserves the ultimate right to determine and
approve the utilization of such vacation time in order to insure the efficient
and orderly operation of its business. Neither the Executive nor any other
employee of the Company shall be entitled to receive vacation pay in lieu of
vacation, and any vacation time not utilized during the year to which it applies
shall be deemed waived.
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3.3 SICK LEAVE AND HOLIDAYS. The Executive shall be entitled to the
benefit of all sick leave and holidays, with full pay, as established by the
Board of Directors to apply to the Company and all its employees.
IV. NON-COMPETITION
4.1 NON-COMPETITION; RESTRICTIVE COVENANT. During the term of this
Agreement, the Executive shall not, directly or indirectly, as an employee,
employer, consultant, agent, principal, partner, shareholder, officer, director,
or in any other individual or representative capacity, engage or participate in
any business which is in competition in any manner with the business of the
Company. On termination of employment by the act of the Executive, the Executive
shall not directly or indirectly engage in competition with the Company with
respect to business activities and business then being conducted by the Company,
its subsidiaries or affiliates and successors. The Executive shall be precluded
from such competitive activity throughout the United States. In the event of a
breach or threatened breach by the Executive of his obligations pursuant to this
restrictive covenant, the Executive acknowledges that the Company will not have
an adequate remedy at law and shall be entitled to such injunctive and other
equitable relief as may be available to restrain the Executive from the
violation of the provisions hereof. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedies available at law or in
equity for such breach or threatened breach. The provisions of this Section 4.1
shall be of no force and effect if the employment of the Executive is terminated
by action of the Company during the Initial Term hereof or any renewal term,
whether such action be for cause or otherwise. For purposes of this Section 4.1,
"Company" shall mean LIFE INVESTMENT FUNDING ENTERPRISES, INC. and any successor
entity thereto resulting from any merger, business combination or consolidation
of the Company with and/or into another entity. The provisions of this Section
4.1 shall also not be applicable in the event that there occurs a change of
control with respect to the Company during the Initial Term or any renewal term
hereof.
4,2 ACKNOWLEDGMENTS. Executive hereby acknowledges that the:
(a) Company's services are highly specialized;
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(b) identity and particular needs of the Company's customers and
investors are not generally known;
(c) Company has a proprietary interest in its customers, investors
list and marketing methods and procedures; and
(d) documents and other information pertaining to the Company's
sales, marketing and pricing methods and/or techniques, as well
as information pertaining to the Company's customers and
investors, including, without limitation, identity, location, and
service requirements are highly confidential proprietary
information and constitute trade secretes in which the Company
has a sole ownership interest.
4.3 TRADE SECRETS. During the term of this Agreement, Executive may
have access to, and become familiar with, various trade secrets and/or
proprietary information belonging to the Company, including, without limitation,
the documents and information referred to in Section 4.2 above. Executive
acknowledges that such trade secrets and proprietary information are owned by
and shall continue to be owned solely by the Company. During this Agreement and
for thirty-six (36) months after the termination of this Agreement, regardless
of the reasons for termination of this Agreement, Executive agrees not to use,
communicate, reveal or otherwise divulge said information to any person,
partnership, corporation or other legal entity unless such Executive is
compelled to do so by a court of competent jurisdiction.
4.4 SEPARABILITY. The Company and the Executive agree that the
covenants and conditions set forth in Paragraph 4.1 hereof are severable and
separate, and that the unenforceability of any specific covenant or condition
shall not affect the validity of any other covenant or condition set forth
herein. Such covenants and conditions of employment shall be construed as an
agreement independent of any other provisions of this Agreement, and the
existence of any claim or cause of action of the Executive against the Company,
whether predicated upon this Agreement and its covenants and conditions, or
otherwise, shall not constitute a defense to the enforcement by the Company of
the covenants and conditions set forth in Paragraph 4.1 hereof.
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V. TERMINATION
5.1 BY THE COMPANY FOR CAUSE. In the event that the Executive willfully
breaches or habitually neglects the duties which he is required to perform
pursuant to the terms of this Agreement, breaches the covenants of Paragraph 4.1
hereof, or engages in a course of conduct which, in the sole reasonable judgment
of the Board of Directors of the Company, is damaging to the business reputation
of the Company or causes or will tend to cause the Company to be held in
disrepute, the Board of Directors of the Company may, at its option, terminate
this Agreement immediately by giving written notice of such termination to the
Executive, without prejudice to any other remedy or right to which the Company
may be entitled at law, in equity or pursuant to this Agreement ("Termination
for Cause"). In addition to Termination for Cause as heretofore provided, the
Executive's employment hereunder may be terminated by the Company upon ninety
(90) days written notice given by the Company to the Executive; provided,
however, that in no event shall the employment of the Executive hereunder be
terminated within the Initial Term hereof. In the event that the Executive's
employment hereunder is terminated other than for cause or for disability or
death as contemplated by Section 5.2 hereof during any renewal term hereof, the
Company shall be obligated to pay to the Executive for the remainder of the then
renewal term of this Agreement the amount of compensation payable to the
Executive under Section 2.1 hereof as in effect as of the time of such notice,
as well as any bonus compensation which has accrued hereunder. Additionally, in
the event of such termination other than for cause and upon such 90 day notice,
the Executive shall be entitled during the remaining renewal term of this
Agreement to receive such other benefits as have been provided by the Company to
the Executive under Article III of this Agreement to the extent that such
benefits are applicable.
5.2 DISABILITY. In the event that the Executive becomes permanently
disabled by reason of illness, injury or physical or mental incapacitation, or
for any other reason, such that it reasonably appears that he will be unable to
complete his duties under this Agreement or any feasible modification hereof,
the Company shall have the option to terminate this Agreement immediately by
giving written notice of such termination to the Executive. This Agreement shall
automatically terminate in the event of the death of the Executive.
5.3 EFFECT ON COMPENSATION. In the event of the termination of this
Agreement pursuant to Paragraph 5.1 or Paragraph 5.2 hereof (except Termination
for Cause), the Executive shall be entitled to receive that compensation which
would be payable to him with respect to the Initial Term or any renewal term
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during which such termination occurs (the "Entitled Compensation"). Such
Entitled Compensation shall be paid by the Company to the Executive in lump sum
or in such installments as the Executive and the Company may agree in writing.
At the request of the Executive, the Company shall cause to be prepared and
delivered to the Executive its promissory note evidencing such Entitled
Compensation and the principal amount of such note shall bear interest at the
then corporate prime rate as charged by Northern Trust Bank of Florida, N.A.,
Sarasota, Florida. In the event that the Executive dies prior to the expiration
of the Initial Term or any renewal term of this Agreement, any compensation
which may be due to him from the Company pursuant to this Agreement, as of the
date of such death, shall be paid by the Company to the personal representative
of the Executive's estate or to any person or persons as may be designated by
applicable law.
VI. MISCELLANEOUS PROVISIONS
6.1 ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
between the parties with respect to the subject matter hereof. All prior
understandings and agreements between the parties are hereby superseded by and
merged with this Agreement.
6.2 WAIVER OF RIGHTS. The failure of either party to insist, in one or more
instances, upon the performance of any of the terms, covenants, agreements or
conditions of this Agreement, or to exercise any rights hereunder shall not be
construed as a waiver or relinquishment of such party's right to insist upon the
future performance of such term, covenant, agreement or condition, or the future
exercise of any such right and the obligations of the other party with respect
to such future performance shall continue in full force and effect.
6.3 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Florida.
6.4 SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby and shall remain in full force and
effect as if the invalidated provision had not been included herein.
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6.5 INCORPORATION OF RECITALS. The recitals set forth in the
preliminary portion of this Agreement are hereby incorporated in and made an
integral part of this Agreement.
6.6 NOTICES. Any notice required or desired to be given pursuant to
this Agreement shall be in writing and shall be deemed given when deposited,
postage paid, in United States certified mail, return receipt requested, at the
addresses set forth below or at such subsequent address provided by the parties:
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If to the Company - Life Investment Funding Enterprises, Inc.
Attention: ___________________________
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxxx 00000
If to the Executive - J. Xxxxxxx Xxxxx
_______________________________________
_______________________________________
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
LIFE INVESTMENT FUNDING ENTERPRISES, INC.
By__________________________________
Its________________________________
------------------------------------
J. XXXXXXX XXXXX, Executive
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ADDENDUM TO EMPLOYMENT AGREEMENT
THIS FIRST ADDENDUM is made to that certain Employment Agreement (the
"Addendum" and the "Agreement", respectively), which Agreement is being entered
into by and between LIFE INVESTMENT FUNDING ENTERPRISES, INC., a Nevada
corporation having its principal place of business in Sarasota, Florida (the
"Company") and J. XXXXXXX XXXXX, presently resides in Michigan who will upon the
effectiveness of the Agreement become a resident of Sarasota, Florida (the
"Executive"). This Addendum is made as of an even date with the Agreement.
The Company and the Executive wish to provide for certain additional
maters and for clarification of certain of the provisions set forth in the
Agreement and such purposes are being accomplished by means of this Addendum.
Accordingly, in consideration of the mutual covenants and promises
contained in the Agreement and the other good and valuable consideration recited
therein, as well as the additional promises, covenants and considerations
recited in this Addendum, the Company and the Executive further agree as
follows:
1. EXECUTIVE MOVING EXPENSE. The Company agrees to pay an executive
moving expense to the Executive in the amount of Ten Thousand Dollars
($10,000.00). Such executive moving expense amount may be paid in one or more
installments as determined by the Executive and shall be payable at the time
that the Company timely attains the minimum requirement with respect to its
anticipated private offer and sale of its Class A Convertible Preferred Stock,
$.001 par value, which is expected to commence on or before April 1, 2002. Such
minimum requirement requires the Company to receive and accept subscriptions
representing $1 million or more in gross proceeds resulting from the private
offer and sale of such Class A Convertible Preferred Stock, $.001 par value.
Such Class A Convertible Preferred Stock, $.001 par value, is being privately
offered at $10 per share.
2. COMMENCEMENT OF TERM. The term of the Agreement shall commence on
the day that the minimum proceeds requirement is timely attained by the Company
as described in Section 1 above.
3. VEHICLE REIMBURSEMENT. On and after the effective date of the
Agreement, the Executive shall be entitled to receive a leased vehicle
reimbursement amount of Seven Hundred Dollars ($700.00) per month.
4. COMPENSATION. The Agreement provides for a base annual salary to be
paid by the Company to the Executive of One Hundred Eighty Thousand Dollars
($180,000.00). The Company and the Executive acknowledge that the Company has
prepared certain financial projections relating to its net income and other
financial performance matters for the first, second, third and fourth fiscal
years of the Company. It is acknowledged by the Company and the Executive that
the first fiscal year of the Company will be that 12 month period ending
December 31, 2003. In the event that the Company achieves the net income
projections for the first, second, third and fourth fiscal years as set forth
subsequently in Section 5 of this Addendum, the Executive will be entitled to an
increase in his base annual salary in an amount equal to twenty percent (20%) of
the Executive's base annual salary earned by the Executive for fiscal year with
respect to which the net income projections were attained. Such increase in the
annual salary of the Executive shall be effective January 1 of the next
subsequent fiscal year of the Company even though the net income of the Company
may not be determined on such date. The Company shall make all necessary
payments to the Executive in order to remit such salary increase amount to the
Executive for any period of time on and subsequent to January 1 of such next
subsequent fiscal year of the Company.
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5. BONUS COMPENSATION. In addition to the compensation provided for in
the Agreement and this Addendum, the Executive shall also be entitled to bonus
compensation. Such bonus compensation shall be applicable to each fiscal year of
the Company commencing with the fiscal year ending December 31, 2003, except as
hereinafter provided. The Company and the Executive acknowledge that the
financial projections which have been prepared by the Company indicate that the
Company anticipates earning for such fiscal year ending December 31, 2003 net
income after provision for income taxes of $5,976,631. In the event that such
net income projections are achieved in their entirety for the fiscal years
ending December 31, 2003, 2204, 2005 and 2006, the Executive shall be entitled
to a bonus payable in the manner hereinafter provided equal to ten percent (10%)
of such net income earned by the Company. To the extent that such net income
projections are not achieved and realized by the Company for the indicated
fiscal years, but the Company does experience net income, the Executive shall be
entitled to a bonus which shall be proportionately reduced from such 10% amount;
provided, however, that the Company must realize and report for the fiscal years
indicated at least forty percent (40%) of such projected income amounts in order
for the Executive to be entitled to any bonus compensation. For purposes of such
bonus calculation, it is acknowledged by the Company and the Executive that the
projected net income amounts after provision for income taxes for the fiscal
years ending December 31, 2003, 2004, 2005 and 2006 are as follows:
FISCAL YEAR ENDING DECEMBER 31,*
2003 $ 5,976,631
2004 15,485,882
2005 20,446,505
2006 27,570,522
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* Such projected net income amounts do not reflect increases in Executive's base
and bonus compensation. By way of example only, if the Company achieves and
reports for the fiscal year ending December 31, 2003 net income of $5,378,968
(which is 90% of the projected amount), the Executive would be entitled to a
bonus equal to nine percent (9%) of such net income amount. The bonus
compensation will be calculated by the internal accountants for the Company as
soon as practicable after the close of each fiscal year commencing with the
fiscal year ending December 31, 2003, utilizing the actual net income after
provision for income taxes determined by the independent certified public
accountants of the Company. Such calculation is expected to be available by
March 31 of each subsequent fiscal years following the fiscal year ending
December 31, 2003. 2004, 2005 and 2006. The bonus shall be paid by the Company
to the Executive in the form of cash and the Common Stock, $.001 par value, of
the Company. In that regard, fifty percent (50%) of the earned bonus amount
shall be paid to the Executive in cash paid by the Company to the Executive over
the eight consecutive months following the month of calculation and
determination of net income and bonus. The remaining 50% of such earned bonus
amount shall be paid, as indicated, to the Executive in Common Stock of the
Company. For purposes of determining the number of shares of Common Stock to be
issued to the Executive in such bonus payment, such shares shall be valued at
the mean between the bid and the asked price thereof less a discount of 15%.
Such shares of Common Stock issued to the Executive as bonus compensation shall
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constitute Restricted Securities and control stock under the Securities Act of
1933 as amended, and the Securities Exchange Act of 1934, as amended. The
Executive, however, will be entitled to require the Company from time to time to
file a Registration Statement utilizing United States Securities and Exchange
Commission Form S-8 (or any successor form) in order to register not more than
50% of shares of the Common Stock received by the Executive as a result of such
bonus compensation. The remaining 50% of shares of Common Stock of the Company
owned by the Executive shall continue to be restricted and control stock.
The Company has not projected net income for the partial fiscal year
ending December 31, 2002. However, it is agreed by the Company and the Executive
that if the Company reports net income after provision for taxes for the partial
fiscal year ending December 31, 2002 and such reported net income, on an
annualized basis, equals or exceeds the projected net income after provision for
taxes for the fiscal year ended December 31, 2003, then and in such event the
Executive shall be entitled to a bonus calculated in the same manner as will be
the case for the fiscal years ending December 31, 2003, 2004, 2005 and 2006 and
shall be paid a bonus for the fiscal year ended December 31, 2002 adjusted
proportionately for such partial fiscal year.
Except as modified and expanded by this Addendum, the Company and the
Executive confirm and readopt all of the terms and the provisions of the
Agreement.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Addendum as of even date with the Agreement.
LIFE INVESTMENT FUNDING ENTERPRISES, INC.
By__________________________________
Its _______________________________
EXECUTIVE
------------------------------------
J. XXXXXXX XXXXX
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