EMPLOYMENT AGREEMENT
This Agreement is effective as of the ___ day of _______, 2005
("Agreement") and is by and between EAUTOCLAIMS, INC., a Nevada corporation
("Company"), and XXXX XXXXXX, a resident of the State of Florida ("Executive").
WHEREAS, the Company and the Executive entered into an Employment
Agreement effective February 1, 2003;
WHEREAS, the Company desires to continue to employ the Executive and
the Executive desires to continue to be employed by the Company pursuant to
revised terms and conditions; and
WHEREAS, the Company and the Executive wish to enter into a new
employment agreement, covering the continued employment of the Executive by the
Company.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants set forth in this Agreement, and intending to be legally bound, the
Company and the Executive agree as follows:
1. Term of Employment
(a) Offer/Acceptance/Effective Date. The Company hereby offers
employment to the Executive, and the Executive hereby accepts employment with
the Company, subject to the terms and conditions set forth in this Agreement.
(b) Termination of Prior Agreement. This Agreement supersedes and
replaces the previous Employment Agreement, which expired on February 1, 2005.
(c) Term. The term of this Agreement shall commence on the date
first indicated above and shall remain in effect for two (2) years thereafter
(Term").
2. Duties.
(a) General Duties. The Executive shall serve as the President and
Chief Executive Officer of the Company with duties and responsibilities that are
customary for such executives including, without limitation, the overall
management, leadership and future vision of the Company subject to the approval
and ratification of such other duties from time to time by the Board of
Directors of the Company.
(b) Best Efforts. The Executive covenants to use his best efforts to
perform his duties and discharge his responsibilities pursuant to this Agreement
in a competent, diligent and faithful manner.
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(c) Devotion of Time. The Executive shall devote substantially all
of his time, attention and energies during normal business hours to the
Company's affairs (exclusive of periods of sickness and disability and of such
normal holiday and vacation periods as have been established by the Company).
Notwithstanding the foregoing, Executive shall have the right and is encouraged
to devote time, attention and energies during normal business hours to Civic and
business organizations. Executive's devotion of time, attention and energies
during normal business hours to such endeavors shall not be a breach of this
employment agreement. It is also understood the Executive has personal business
investments that from time to time may require his attention during business
hours, such activities shall not be of competing interests to the company and
shall not be a breach of his employment agreement.
3. Compensation and Expenses.
(a) Base Salary. For the services of the Executive to be rendered by
him under this Agreement, the Company shall pay the Executive an annual base
salary ("Base Salary") of One Hundred Seventy Thousand Dollars ($170,000). If
the Company is able to generate positive cumulative EBITDA (which excludes
non-cash compensatory and equity charges under GAAP) of greater than $50,000 in
any three (3) consecutive months, the Company will increase the Base Salary to
Two Hundred Thousand Dollars ($200,000).
The Base Salary shall be prorated for any period of less than a full
calendar year. The Company shall pay the Executive his Base Salary in equal
installments no less frequently than semi-monthly.
(b) Base Salary Adjustment. The Base Salary may not be decreased
hereunder during the Term of this Agreement, but may be increased upon review
by, and at the sole discretion of, the Company's Board of Directors.
(c) Bonus. Executive shall be entitled to receive quarterly bonus
compensation in an amount as approved by the Company's Board of Directors based
upon the performance criteria as may be established by the Compensation
committee from time to time. Such bonuses may be paid in cash or issued in
shares of the Company's common stock as elected by Executive and will be
advanced monthly. At no time may the bonus be less than 3% of the Company's
EBITDA as computed under GAAP.
(d) Option Bonus: The Executive shall be entitled to receive an
option to purchase not less than 25,000 shares of the Company's common stock,
exercisable at the fair market price, for each month the Company has net income
before income taxes and extraordinary items, as computed in accordance with GAAP
(the "Bonus Options"). The Bonus Options shall vest during the remaining term of
the Executives employment Agreement, and will expire not less than five (5)
years from the date of grant.
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(e) Expenses. In addition to any compensation received pursuant to
this Section 3, the Company will pay on behalf of the Executive or will
reimburse the Executive for all reasonable expenses incurred in connection with
the performance of his duties under this Agreement, including but not limited to
expenses for travel, education, seminars, trade shows, entertainment, and
professional dues, provided that the Executive properly accounts for such
expenses to the Company in accordance with the Company's practices. Such advance
payments and/or reimbursements shall include travel, lodging and food costs for
the Executive's immediate family to the extent they accompany the Executive on
business related travel.
(f) Subsidiary and Affiliate Payments. In recognition of the fact
that in the course of the performance of his duties hereunder, the Executive may
provide substantial benefits to the Company's subsidiaries or affiliated
companies, the Executive and the Company may at any time and from time to time
agree that all or any portion of the compensation due the Executive hereunder
may be paid directly to the Executive by one or more of the Company's
subsidiaries or affiliated companies.
(g) Additional Equity Based Incentive Compensation. The Executive
shall be entitled to additional annual equity-based incentive compensation as
set forth in the Company's Management Incentive Compensation Plan as established
by the Compensation Committee of the Board of Directors.
(h) Personal Expense Allowance. In addition to the reimbursement of
expenses under subsection (d) above, the Company shall pay the Executive a
personal expense allowance of not less than $1,000 per month during the term of
this Agreement.
(i) Stock. The Company agrees to issue Executive one million
(1,000,000) shares of its common stock, par value $.0001 (the "Shares") upon
execution of this Agreement. The Shares shall contain a restrictive legend under
Rule 144. The Company agrees to include the Shares in a Form S-8 Registration
Statement when filed by the Company.
(j) Executive Option to Elect Payment in Stock. At the election of
the Executive, any compensation payable hereunder including the severance or
termination payments described in this Agreement, may be made one-half (1/2) in
cash and one-half (1/2) in the Company's Shares valued at 75% of the average
closing price of the Company's Shares over the 30 trading days preceding the
termination date. Any Shares issued to the Executive shall be registrable under
a Form S-8 and shall have "piggyback" registration rights.
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4. Benefits.
(a) Vacation and Holidays. For each calendar year during the Term
during which the Executive is employed, the Executive shall be entitled to
vacation (which shall accrue and vest, except as may be hereinafter provided to
the contrary, on each January lst thereof) without loss of compensation or other
benefits to which he is entitled under this Agreement, as follows:
(i) For the remainder of calendar year 2005, 20 work days;
(ii) For calendar year 2006, 20 work days.
The Executive shall carry-over any vacation time earned in his
previous employment agreement. The Executive will also be entitled to the paid
holidays set forth in the Company's policies.
If the Executive is unable to take all of his vacation days
during a year for which he becomes vested therein, then the Executive at his
sole option, may elect to (x) carry over any unused vacation to the next
calendar year to be used solely in that next year or (y) receive an appropriate
pro rata portion of his Base Salary corresponding to the year in which vacation
days vested.
The Executive shall take his vacation at such times as the
Executive may select and the affairs of the Company or any of its subsidiaries
or affiliates may permit.
(b) Employee Benefit Programs. In addition to the compensation to
which the Executive is entitled pursuant to the provisions of Section 3 hereof,
during the Term, the Executive will be entitled to participate in any stock
option plan, stock purchase plan, pension or retirement plan, and insurance or
other employee benefit plan that is maintained at that time by the Company for
its employees, including any programs of life, disability, basic medical and
dental, and supplemental medical and dental insurance.
(c) Automobile Allowance. During the Term of this Agreement, the
Company shall pay the Executive an additional $750 per month as an automobile
allowance to be applied to any automobile expense incurred by the Executive,
which amount may be increased but not decreased by the Board of Directors.
(d) Annual Physical. The Executive agrees to have an annual physical
examination performed by a physician of his choice during each year of this
Agreement. The Company shall reimburse Executive for the costs of his annual
physical examination.
(e) Educational Benefits. The Company shall pay or reimburse the
Executive for all educational endeavors of the Executive, provided the
educational establishment is considered of good reputation and the studies are
relevant to the Company's business or the Executive's management duties.
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5. Termination.
(a) Termination by Company for Cause. The Company may only terminate
the Executive's employment pursuant to this Agreement before expiration of the
Term, for cause only upon fulfillment of the events described in subparagraph
5(a)(i) below. Upon any such termination for cause, the Executive shall have no
right to other compensation, bonus or reimbursement under Section 3 or to
participate in any employee benefit programs or other benefits to which he may
be entitled under Section 4 for any period subsequent to the effective date of
termination; provided, however, that any vested but unexercised options shall
remain in effect following any such termination but all unvested options shall
expire.
For purposes of this Agreement, the term "cause" shall mean only:
(i) the Executive's conviction of a crime involving fraud, theft
or misappropriation involving the Company or any of its subsidiaries or
affiliates and all appeals with respect thereto have been extinguished or
abandoned by the Executive;
The Board of Directors shall have the right to terminate this
agreement for reasons other than for cause. In such event the Company shall be
obligated to make severance payments to Executive pursuant to the other
provisions of this agreement.
(b) Death or Disability. This Agreement and the Company's
obligations hereunder will terminate upon the death or disability of the
Executive. For purposes of this Section 5(b), "disability" shall mean that for a
period of six (6) months in any twelve-month period, the Executive is incapable
of substantially fulfilling the essential functions of the Executive's duties
set forth in this Agreement because of physical, mental or emotional incapacity
resulting from injury, sickness or disease as determined by an independent
physician mutually acceptable to the Company and the Executive. Upon any
termination of this Agreement due to death or disability, the Company will
promptly pay the Executive or his designated beneficiaries, as the case may be,
any accrued but unpaid then current Base Salary (which may include any accrued
but unused vacation time) through the date of such termination of employment
plus any other compensation that may be due and unpaid plus a lump-sum payment
equal to 2.99 times the then current Base Salary. Any unexercised options will
remain in effect in accordance with such options terms.
(c) Voluntary Termination. Prior to any other termination of this
Agreement, the Executive may, on thirty-days (30) prior written notice to the
Company given at any time during the Term, terminate his employment with the
Company. Upon any such termination with proper notice, the Company shall
promptly pay the Executive any accrued but unpaid Base Salary through the date
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of such termination of employment (not including any accrued but unused vacation
time) and the Executive shall have no further right to other compensation, bonus
or reimbursement under Section 3 or to participate in any employee benefit
programs or other benefits to which he may be entitled under Section 4 for any
period subsequent to the effective date of such termination; provided, however,
that any vested but unexercised options shall remain in effect following any
such termination (subject to the provisions of the applicable option agreement)
and all unvested options shall immediately vest upon such termination.
(d) Termination for any reason other than for "Cause", Death or
Disability or Voluntary Termination. In the event the Executive's employment is
terminated for any reason other than (i) for "Cause" (paragraph 5(a), (ii) Death
or Disability (paragraph 5(b), (iii) Voluntary Termination by Executive
(paragraph 5(c)), then the Company shall be obligated to immediately pay the
Executive a cash lump sum equal to 2 times the then current Base Salary and any
vested but unexercised options shall remain in effect and all unvested options
shall immediately vest upon the effective date of termination pursuant to this
paragraph.
(e) Termination of Agreement through stated Term. If the Company
does not employee the Executive beyond the expiration of the Term, the Company
shall pay the Executive the base salary in effect upon expiration of the Term in
equal monthly amounts during the 12 months after termination. In addition, all
unvested options shall immediately vest upon the effective date of termination
of this Agreement pursuant to this paragraph.
6. Restrictive Covenants.
(a) Competition with the Company. The Executive covenants and agrees
that during the Term, and for a period of six (6) months after termination of
this Agreement, the Executive shall not, without the prior written consent of
the Company, directly or indirectly (whether as a sole proprietor, partner,
member, stockholder, director, officer, employee or in any other capacity as
principal or agent) compete with the Company. Notwithstanding the foregoing, if
the Executive is terminated pursuant to Section 5(d) or termination occurs for
any reason other than for "Cause" (including voluntary termination by Executive)
after a Change of Control as described in Section 7, the 6-month non-compete
provision set forth in this Section 6(a) shall be released and be of no further
force or effect, unless the Executive elects to have the non-competition
covenant take effect, in which case the Company shall pay the Executive his Base
Salary in 12 equal month payments. Notwithstanding this restriction, Executive
shall be entitled to invest in stock of other competing public companies so long
as his ownership is less than 5% of such company's outstanding shares.
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(b) Disclosure of Confidential Information.
(i) The Executive acknowledges that during his employment he
will gain and have access to confidential information regarding the Company and
its subsidiaries and affiliates. The Executive acknowledges that such
confidential information as acquired and used by the Company or any of its
subsidiaries or affiliates constitutes a special, valuable and unique asset in
which the Company or its subsidiaries or affiliates, as the case may be, holds a
legitimate business interest. All records, files, materials and confidential
information (the "Confidential Information") obtained by the Executive in the
course of his employment with the Company shall be deemed confidential and
proprietary and shall remain the exclusive property of the Company or its
subsidiaries or affiliates, as the case may be. The Executive shall not, except
in connection with and as required by his performance of his duties under this
Agreement, (i) use any Confidential Information for his own benefit or the
benefit of any person or entity with which he may be associated other than the
Company; or (ii) disclose any Confidential Information to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever
without the prior written consent of the Board of Directors of the Company,
unless such information previously shall have become public knowledge through no
action by or omission of the Executive.
(ii) If the Executive is requested or becomes legally compelled
(by oral questions, interrogatories, requests for information or documents,
subpoena, civil or criminal investigative demand, or similar process) or is
required by a regulatory body to make any disclosure that is prohibited or
otherwise constrained by this Agreement, the Executive will proved the Company
with prompt notice of such request so that the Company may seek an appropriate
protective order or other appropriate remedy. Subject to the foregoing, the
Executive may furnish that portion of the Confidential Information that, in the
written opinion of its counsel reasonably acceptable to the Company, the
Executive is legally compelled or is otherwise required to disclose or else
stand liable for contempt or suffer other material censure or material penalty.
(c) Subversion, Disruption or Interference. At no time during the
Term of this Agreement shall the Executive, directly or indirectly, interfere,
induce, influence, combine or conspire with, or attempt to induce, influence,
combine or conspire with, any of the employees of, or consultants to, the
Company to terminate their relationship with the Company or compete with or ally
against the Company or any of its subsidiaries or affiliates in the business in
which the Company or any of its subsidiaries or affiliates is then engaged in.
The Executive shall be permitted to enter into outside business interests with
employees and or consultants, provided it shall not have an adverse effect or be
of a competitive nature to the company.
(d) Enforcement of Restrictions. The parties hereby agree that any
violation by Executive of the covenants contained in this Section 6 will likely
cause irreparable damage to the Company or its subsidiaries and affiliates and
may be restrained by process issued out of a court of competent jurisdiction, in
addition to any other remedies provided by law.
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7. Change of Control.
(a) For purposes of this Agreement, "Change of Control" means:
(i) the closing of any merger, combination, consolidation or
similar business transaction involving the Company in which the holders of a
majority of the shares of the common stock of the Company immediately prior to
such closing are not the holders of a majority of the ordinary voting securities
of the surviving entity in such transaction; or
(ii)the closing of any sale by the Company of all or
substantially all of its assets to an acquiring entity in which the holders of a
majority of the shares of common stock of the Company immediately prior to such
closing are not the holders of a majority of the ordinary voting securities of
the acquiring entity; or
(iii) the closing of any sale by the holders of common stock of
the Company of an amount of common stock that equals or exceeds a majority of
the shares of common stock of the Company immediately prior to such closing to
an entity in which the holders of a majority of the shares of the common stock
of the Company immediately prior to such closing are not the holders of a
majority of the ordinary voting securities; or
(iv) a change in the composition of the Board of Directors of
the Company such that the current members of the Board of Directors are no
longer the majority in number of the Board of Directors.
(v) An Event of Default is declared under the Securities
Purchase Agreement, Registration Rights Agreement, Certificate of Designation of
Series A Preferred Stock or other related agreements with the holders of the
Company's Series A Preferred Stock.
(vi) Any holder of the Series A Preferred Stock elects to
convert the Series A Preferred Stock into shares of the Company's common stock,
which results in the holders of the Series A Preferred Stock (or their
affiliates) owning greater than fifteen percent (15%) of the outstanding number
of shares of the Company's common stock.
(b) If, during the Term, the Executive's employment is terminated by
the Company after a Change of Control, the Executive shall be entitled to
promptly receive, subject to the provisions of subsection (c) below, a lump-sum
payment equal to 2.99 times the Executive's current Base Salary in addition to
any other compensation that may be due to and owing to the Executive under
Section 3 hereof and all stock options issued to Executive shall immediately
vest and be exercisable in full at any time over the remaining term of the stock
options. In addition, in the event of a Change of Control, the Executive shall
be released from the non-competition provisions of Section 6(a) and such
restrictive covenants against competition shall be of no further force or
effect.
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(c) If, during the Term, a Change of Control event occurs and the
Executive voluntarily terminates pursuant to Section 5(c), the Executive shall
be immediately and automatically released from the non-competition provisions of
Section 6(a) and this non-compete restrictive covenant shall be of no further
force or effect.
(d) The amounts payable to the Executive under any other
compensation arrangement maintained by the Company which become payable after
payment of the lump-sum provided for in subsection (b) above upon or as a result
of the exercise by Executive of rights which are contingent on a Change of
Control (and would be considered a "parachute payment" under Internal Revenue
Code 280G and regulations thereunder), shall be reduced to the extent necessary
so that such amounts, when added to such lumps-sum, do not exceed 2.99 times the
Executive's Base Salary (as computed in accordance with provisions of the
Internal Revenue Code of 1986, as amended and any regulations promulgated
thereunder) for determining whether the Executive has received an excess
parachute payment. Any such excess amount shall be deferred and paid in the next
tax year.
(e) In the event of a proposed Change of Control, the Company will
allow the Executive to participate in all meetings and negotiations related
thereto.
9. Indemnification and Insurance. To the maximum extent permitted by
law and the Company's by-laws, the Company shall indemnify the Executive with
respect to the performance of his duties under this Agreement. The Company will
maintain directors and officers liability insurance, and agrees to advance to
the Executive the costs of defense of any lawsuit against him with respect to
his service to the Company under this Agreement.
10. Assignability. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company, provided that such successor or assign shall acquire all
or substantially all of the assets and business of the Company. The Executive's
rights and obligations hereunder may not be assigned or alienated and any
attempt to do so by the Executive will be void.
11. Severability. If any provision of this Agreement is deemed to be
invalid or unenforceable or is prohibited by the laws of the state or
jurisdiction where it is to be performed, this Agreement shall be considered
divisible as to such provision and such provision shall be inoperative in such
state or jurisdiction and shall not be part of the consideration moving from
either of the parties to the other; provided, however, that the provisions of
Section 6 may be modified and enforced by a court in any legal or equitable
action as necessary to comply with applicable law as determined by the court.
The remaining provisions of this Agreement shall be valid and binding.
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12. Notice. Notices given pursuant to the provisions of this Agreement
shall be sent by certified mail, postage prepaid, or by overnight courier, or
telecopier, to the following address:
To the Company: eAutoclaims, Inc.
000 Xxxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
To the Executive: Xxxx Xxxxxx
000 Xxxxx Xxxxx Xxxxx
Xxxxxxx, XX 00000
Either party may, from time to time, designate any other address to
which any such notice to it or him shall be sent. Any such notice, shall be
deemed to have been delivered upon the earlier of actual receipt or four days
after deposit in the mail, if by certified mail.
13. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal, substantive laws of the State of
Florida without giving effect to the conflict of laws rules thereof.
(b) Waiver/Amendment. The waiver by any party to this Agreement of a
breach of any provision hereof by any other party shall not be construed as a
waiver of any subsequent breach by any party. No provision of this Agreement may
be terminated, amended, supplemented, waived or modified other than by an
instrument in writing signed by the party against whom the enforcement of the
termination, amendment, supplement, waiver or modification is sought.
(c) Attorney's Fees. In the event any legal or equitable action is
commenced to enforce the terms and conditions hereof, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and expenses.
(d) Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
replaces and supersedes any prior agreements or understandings.
(e) Counterparts. This Agreement may be executed in counterparts,
all of which shall constitute one and the same instrument.
(f) Attorney Review. The parties acknowledge that each has had an
opportunity to retain an attorney to review the terms and conditions of this
Agreement. No provision hereof shall be interpreted against the interests of one
party solely because such provision was drafted by such party or by the attorney
for such party.
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(g) Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or the breach of this Agreement, shall be settled by
arbitration in accordance with the rules of the American Arbitration Association
conducted in a location selected by the Company. A judgment of a court having
jurisdiction may be entered upon the arbitrator's award.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the day and year first above written.
COMPANY:
EAUTOCLAIMS, INC.
By:
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Name:
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Its:
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EXECUTIVE:
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XXXX XXXXXX
MTC/ej/343885/v5
5/23/05
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