EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated April 20, 2006 (the "Agreement"), by and
among Manchester Inc., a Nevada corporation (the "Company"), and ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ (the "Executive").
WHEREAS, the Company desires to initially engage ▇▇. ▇▇▇▇▇▇ as a
consultant to assist the Company with the development of its Buy Here / Pay Here
car business;
WHEREAS, upon the effectiveness of the Company obtaining adequate
directors and officers' insurance (the "D&O Effective Date"), ▇▇. ▇▇▇▇▇▇ has
agreed to commence service as Chief Financial Officer of the Company;
NOW THEREFORE, in consideration of the premises and the mutual
agreements made herein, the Company and ▇▇. ▇▇▇▇▇▇ agree as follows:
1. Employment; Duties. The Company shall engage the Executive to
serve as a consultant to the Company and as of the D&O Effective Date, the
Company shall employ ▇▇. ▇▇▇▇▇▇ as Chief Financial Officer of the Company. The
Executive shall serve the Company in such respective capacity for the
"Engagement Period" as defined in Section 2. The Executive agrees that during
the term of his employment hereunder, he shall devote 100% of his professional
working time, attention, knowledge and experience and give his best effort,
skill and abilities to promote the business and interests of the Company. The
precise duties, responsibilities and authority of the Executive may be expanded,
limited or modified, from time to time, as directed by the Chief Executive
Officer (CEO) and subject to the policy mandates of the Board of Directors of
the Company or a committee of the Board to which the Board has delegated such
authority (collectively, the "Board"). In connection with this responsibility,
the Executive will submit written reports to the CEO and the Board as reasonably
requested. The Executive agrees to faithfully and diligently perform such duties
as may from time to time be assigned to the Executive by the Board.
2. Employment Period. This Agreement shall have an initial term of
two (2) years to be effective as of the date hereof and ending on April 30, 2008
(the "Initial Period"), unless sooner terminated in accordance with the
provisions of Section 7 or Section 8. On the expiration of such Initial Period,
this Agreement shall automatically renew and continue to remain in effect for
successive one year periods, until terminated in accordance with the provisions
of Section 7 or Section 8, unless either party provides the other party with
written notice of non-renewal not later than 10 days prior to the expiration of
the Initial Period or the anniversary of such date in any subsequent renewal
period. Each effective period of this Agreement is referred to herein as the
"Employment Period."
3. Compensation and Benefits.
(a) Base Compensation. The Executive shall be paid a monthly base
salary of $190,000 per annum, payable in monthly increments less applicable
statutory and regulatory deductions (the "Base Salary"). The Base Salary shall
be payable each month in accordance with the Company's regular payroll
practices, as the same may be modified from time to time.
(b) Expense Reimbursement. The Executive shall be entitled to
reimbursement of reasonable out-of-pocket expenses incurred in connection with
travel related to the Company's business and affairs upon receipt of itemized
vouchers approved in accordance with Company policy as in effect from time to
time.
(c) Benefits. The Executive shall be immediately eligible for
participation in Company benefits that may be available to employees as in
effect, including monthly reimbursement for the Executive's monthly medical and
dental insurance premiums, up to $350 per month.
(d) Bonus. The Executive shall receive an annual bonus to be
determined at the sole discretion of the Board of Directors upon the
recommendation of the Chief Executive Officer.
(e) Equity Compensation. The Executive shall receive warrants and or
stock options for the purchase of shares of Company common stock in accordance
with the terms and conditions of the Company's warrants and stock option plan
for the Executive as defined in Exhibit A.
(f) Vacation. The Executive shall be entitled to three (3) weeks
paid vacation per calendar year, pro-rated with respect to the portion of the
year in which employment commenced with the Company, in each case in accordance
with Company general policies regarding vacations. A maximum of one week of any
accrued but untaken vacation may be carried over and used up to nine months
after the year in which accrued, but not thereafter. No compensation shall be
paid for accrued but untaken vacation.
(g) Director & Officers (D&O) Insurance Coverage. The Executive
shall be entitled to be a named insured under the Company's D&O Insurance
coverage. The Executive's D&O Insurance coverage will be non-rescindable and
will require that the insurance carrier reimburse the Executive for any defense
costs incurred by the Executive within 30 days following notification by the
Executive to the insurance carrier of such incurred defense costs. The D&O
Insurance policy will not contain a co-insurance provision. The D&O Insurance
policy will not contain any exclusions denying coverage to the Executive unless
there was "in fact" wrongful conduct on the part of the Executive. The D&O
Insurance policy will contain severability language stating that conduct of any
officer or director of the Company will not be imputed to any other officer or
director. The D&O insurance policy will not contain any language that would bar
coverage for any claim "brought by an Insured Organization". The Company will
retain outside legal counsel to review that the D&O insurance policy is in
compliance with the above provisions. The Company will obtain for the Executive
the above D&O Insurance coverage within 30 days following the signing of this
Agreement and the Company will completely indemnify the Executive for any and
all defense costs until the D&O coverage for the Executive is in place.
2
4. Trade Secrets. The Executive recognizes that it is in the
Company's legitimate business interest to restrict his disclosure or use of
trade secrets and confidential information relating to the Company or its
affiliates for any purpose other than in connection with his performance of his
duties to the Company.
5. Return of Documents and Property. Upon the expiration or
termination of the Executive's employment with the Company, or at any time upon
the request of the Company, the Executive (or his heirs or personal
representatives) shall deliver to the Company (a) all documents and materials
(including, without limitation, computer files) containing Trade Secrets and
Confidential Information relating to the Company's business and affairs, and (b)
all documents, materials, equipment and other property (including, without
limitation, computer files, computer programs, computer operating systems,
computers, printers, scanners, pagers, telephones, credit cards and ID cards)
belonging to the Company, which in either case are in the possession or under
the control of the Executive (or his heirs or personal representatives).
6. Discoveries and Works. All Discoveries and Works made or
conceived by the Executive during his employment by the Company, solely, jointly
or with others, that relate to the Company's present or anticipated activities,
or are used or useable by the Company shall be owned by the Company. The term
"Discoveries and Works" includes, by way of example but without limitation,
Trade Secrets and other Confidential Information, patents and patent
applications, service marks, and service ▇▇▇▇ registrations and applications,
trade names, copyrights and copyright registrations and applications. The
Executive shall (a) promptly notify, make full disclosure to, and execute and
deliver any documents requested by the Company, as the case may be, to evidence
or better assure title to Discoveries and Works in the Company, as so requested,
(b) renounce any and all claims, including but not limited to claims of
ownership and royalty, with respect to all Discoveries and Works and all other
property owned or licensed by the Company, (c) assist the Company in obtaining
or maintaining for itself at its own expense United States and foreign patents,
copyrights, trade secret protection or other protection of any and all
Discoveries and Works, and (d) promptly execute, whether during his employment
with the Company or thereafter, all applications or other endorsements necessary
or appropriate to maintain patents and other rights for the Company and to
protect the title of the Company thereto, including but not limited to
assignments of such patents and other rights. Any Discoveries and Works which,
within one year after the expiration or termination of the Executive's
employment with the Company, are made, disclosed, reduced to tangible or written
form or description, or are reduced to practice by the Executive and which
pertain to the business carried on or products or services being sold or
delivered by the Company at the time of such termination shall, as between the
Executive and, the Company, be presumed to have been made during the Executive's
employment by the Company. The Executive acknowledges that all Discoveries and
Works shall be deemed "works made for hire" under the Copyright Act of 1976, as
amended 17 U.S.C. Sect. 101.
3
7. Termination.
(a) Manner of Termination. The Company and the Executive may
terminate this Agreement, with or without cause, only in accordance with the
provisions of this Section 7.
(b) Termination Without Cause. During the Employment Period, if the
Company terminates this Agreement other than for cause, the Executive shall
receive a lump sum payment equivalent to one-half of his twelve (12) months
salary, plus reimbursement of any and all expenses incurred by Executive as of
the date of notice of such date, plus payment of any and all bonus payments
payable as of such date, and, subject to the terms and conditions of the option
agreement summarized in Exhibit A, all of such equity instruments that would by
their own terms vest and become exercisable as of the date of notice of
termination other than for cause, shall remain so vested and exercisable and
non-forfeitable by the Executive (but in no event beyond the expiration of the
stated term of such instrument), and all of such payments and vesting of such
equity instruments shall completely and fully discharge any and all obligations
and liabilities of the Company to the Executive with respect to this Agreement.
(c) Termination for Cause. The Company may terminate this Agreement
for cause at any time during the Employment Period effective immediately upon
giving written notice of termination to the Executive. For purposes of this
Agreement, "cause" shall mean, with respect to the Executive, (i) any act of
fraud or dishonesty, willful misconduct or negligence in connection with the
Executive's duties, (ii) a breach by the Executive of any provision hereof or of
any contractual or legal fiduciary duty to the Company (including, but not
limited to, the unauthorized disclosure of Trade Secrets or other Confidential
Information, non-compliance with the policies, guidelines and procedures of the
Company or engaging during his employment in any other employment or business
without the express written approval of the Company's Board of Directors), (iii)
the arrest of the Executive for the commission of a felony, whether or not such
alleged felony was committed in connection with the Company's business or (iv)
the commencement of any bankruptcy proceedings (whether voluntary or
involuntary), the appointment of a trustee or receiver for the Executive or the
general assignment of the Executive's assets to his creditors.
(d) Termination by Executive. The Executive may terminate this
Agreement with or without cause at any time during the Employment Period
effective immediately upon giving written notice of termination to the Company.
For purposes of this Agreement, with respect to the Company, "cause" shall mean
the failure to pay any amounts due Executive hereunder (and not disputed in good
faith by the Company) within two months after their due date.
(e) Effect of Termination. Except as otherwise provided herein, in
the event this Agreement is terminated, the Executive's rights and the Company's
obligations hereunder shall cease as of the effective date of the termination,
including, without limitation, the right to receive Base Salary, bonus and all
other compensation, expense allowance or benefits provided for in this
Agreement, and the Executive shall not be entitled to any further compensation,
expense allowance, benefits, or severance compensation of any kind, and shall
have no further right or claim to any compensation, benefits or severance
compensation under this Agreement or otherwise against the Company or its
subsidiaries and affiliates, from and after the date of such termination. For
purposes of clarity, in the event of a termination of this Agreement the
Executive shall not be entitled to any bonus other than any bonus payable
through the date of notice of such termination.
4
(f) Change in Control Termination. Notwithstanding any other
provision in this Agreement, in the event the Executive's employment with the
Company is terminated by the Company following a Change in Control, the
Executive shall receive within ten (10) calendar days of notice of such
termination, in lieu of the payment specified in Section 7(b) above, a lump sum
payment equivalent to twelve (12) months salary, plus reimbursement of any and
all expenses incurred by Executive as of such date, plus payment in full of any
and all prospective annual bonus payments with respect to the next succeeding
twelve (12) month Employment Period, and, subject to the terms and conditions of
the option agreement attached hereto as Exhibit A, all of such equity
instruments granted therein shall fully and irrevocably vest and become
exercisable and/or non-forfeitable by the Executive until the first anniversary
of the termination of the Executive's employment (but in no event beyond the
expiration of the stated term of such instrument), and all of such payments and
vesting of equity instruments shall completely and fully discharge any and all
obligations and liabilities of the Company to the Executive with respect to this
Agreement.
(g) Survival. Any termination under this Section 7 is subject to the
provisions of Sections 18 and 20 hereof.
(h) Relinquishment of Authority. Notwithstanding anything to the
contrary set forth herein, upon written notice to the Executive, the Company may
immediately relieve the Executive of all his duties and responsibilities
hereunder and may relieve the Executive of authority to act on behalf of, or
legally bind, the Company.
(i) Change in Control. For purposes of this Agreement "Change in
Control" means (i) the acquisition (by means of purchase, merger or otherwise)
by any person or any two or more persons acting as a partnership, syndicate or
other group for the purpose of acquiring, holding or disposing of such
securities of beneficial ownership of fifty-one percent (51%) or more of the sum
of the amount of the shares of Company common stock (the "Shares") then
outstanding, plus any Shares which may be issued pursuant to the conversion or
exercise of all outstanding options, rights or warrants; or (ii) the sale of all
or substantially all of the assets of the Company. Notwithstanding anything to
the contrary, for purposes of this Section, a person shall not be deemed to have
made an acquisition of beneficial ownership of Shares if such person: (a)
acquires beneficial ownership of such Shares directly from the Company; (b)
assumes beneficial ownership of more than the permitted percentage of Shares
solely as a result of the acquisition of beneficial ownership of Shares by the
Company which, by reducing the proportional beneficial ownership of Shares by
other security holders, increases the proportional beneficial ownership of
Shares by such person; or (c) is (1) the Company or any corporation or other
person of which a majority of its voting power or its equity securities or
equity interest is owned directly or indirectly by the Company (a "Controlled
Entity") or is owned directly or indirectly by the stockholders of the Company
in the same proportion as their beneficial ownership of Shares or (2) a trustee
or other fiduciary holding securities under one or more employee benefit plans
or arrangements (or any trust forming a part thereof) maintained by the Company
or any Controlled Entity.
5
(j) For purposes of clarity and notwithstanding the foregoing
provisions of this Section 7, the termination of the Employment Term of this
Agreement in accordance with ordinary termination of this Agreement without
renewal shall not be deemed to be a termination which requires any supplemental
payments, compensation, consideration or remuneration of any nature to be paid
to the Executive as a function of such termination.
8. Disability; Death.
(a) If, prior to the expiration of the Employment Period, the
Executive shall be unable to perform his duties hereunder by reason of physical
or mental disability for at least thirty (30) consecutive calendar days, the
Company shall have the right to terminate this Agreement and the remainder of
the Employment Period by giving written notice to the Executive to that effect.
Immediately upon the giving of such notice, the Employment Period shall
terminate.
(b) Upon termination of this Agreement pursuant to Section 8(a), the
Executive shall (i) be paid his Base Salary and bonus (if any) through the
effective date of such termination. All other compensation and benefits provided
for in Section 3 of this Agreement shall cease upon termination pursuant to
Section 8(a).
(c) In the event of a dispute as to whether the Executive is
disabled within the meaning of Section 8(a), either party may from time to time
request a medical examination of the Executive by a doctor appointed by the
Chief of Staff of a hospital selected by mutual agreement of the parties, or as
the parties may otherwise agree, and the written medical opinion of such doctor
shall be conclusive and binding upon the parties as to whether the Executive has
become disabled and the date when such disability arose. The cost of any such
medical examination shall be borne by the requesting party.
(d) If, prior to the expiration of the Employment Period or the
termination of this Agreement, the Executive shall die, the Executive's estate
shall be paid his Base Salary and a pro rated portion of his bonus (if any) and
other compensation or expense allowance then due. Any bonus payable pursuant to
this Section 8(c) shall be payable on the first bonus payment date following
such termination. Except as otherwise provided in this Section 8(d), upon the
death of the Executive, the Employment Period shall terminate without further
notice and the Company shall have no further obligations hereunder, including,
without limitation, obligations with respect to compensation, expense allowance
and benefits provided for in Section 3 of this Agreement, other than as set
forth in the immediately preceding sentence.
(e) Any termination under this Section 8 is subject to the
provisions of Section 18 hereof.
9. No Conflicts. The Executive has represented and hereby represents
to the Company and its affiliates that the execution, delivery and performance
by the Executive of this Agreement do not conflict with or result in a violation
or breach of, or constitute (with or without notice or lapse of time or both) a
default under any contract, agreement or understanding, whether oral or written,
to which the Executive is a party or of which the Executive is or should be
aware and that there are no restrictions, covenants, agreements or limitations
on his right or ability to enter into and perform the terms of this Agreement,
and agrees to indemnify and save the Company and its affiliates harmless from
any liability, cost or expense, including attorney's fees, based upon or arising
out of any such restrictions, covenants, agreements, or limitations that may be
found to exist.
6
For purposes of this Agreement, "affiliate" shall include any person
or entity directly or indirectly controlled by or controlling the Company.
10. Non-competition. Except as authorized by the Board of Directors,
during the Engagement Period Executive will not (except as an officer, director,
stockholder, employee, agent or consultant of the Company or any subsidiary or
affiliate thereof) directly, own, manage, operate, join, or have a financial
interest in, control or participate in the ownership, management, operation or
control of, or be employed as an employee, agent or consultant, or in any other
individual or representative capacity for any business which is directly and
geographically competitive within a 25 mile radius of any business carried on or
planned to be carried on by the Company or any of its subsidiaries or
affiliates.
11. Non-Solicitation. During the Restricted Period, the Executive,
directly or indirectly, whether for his account or for the account of any other
individual or entity, shall not solicit or canvas the trade, business or
patronage of, or sell to, any individuals or entities that were either customers
of the Company during the time the Executive was employed by the Company, or
prospective customers with respect to whom a sales effort, presentation or
proposal was made by the Company or its affiliates, during the one year period
prior to the termination or expiration of this Agreement, as the case may be.
The Executive further agrees that during the Restricted Period, he shall not,
directly or indirectly, (i) solicit, induce, enter into any agreement with, or
attempt to influence any individual who was an employee or consultant of the
Company at any time during the time the Executive was employed by the Company,
to terminate his or her employment relationship with the Company or to become
employed by the Executive or any individual or entity by which the Executive is
employed or (ii) interfere in any other way with the employment, or other
relationship, of any employee or consultant of the Company or its affiliates.
12. Enforcement. The Executive agrees that any breach of the
provisions of Sections 4, 5, 6, 10 and 11 hereof would cause substantial and
irreparable harm, not readily ascertainable or compensable in terms of money, to
the Company for which remedies at law would be inadequate and that, in addition
to any other remedy to which the Company may be entitled at law or in equity,
the Company shall be entitled to temporary, preliminary and other injunctive
relief in the event the Executive violates or threatens to violate the
provisions of Sections 4, 5, 6, 10 or 11 hereof, as well as damages, including,
without limitation consequential damages, and an equitable accounting of all
earnings, profits and benefits arising from such violation, in each case without
the need to post any security or bond. Nothing herein contained shall be
construed as prohibiting the Company from pursuing, in addition, any other
remedies available to the Company for such breach or threatened breach. A waiver
by the Company of any breach of any provision hereof shall not operate or be
construed as a waiver of a breach of any other provision of this Agreement or of
any subsequent breach by the Executive.
7
13. Determinations by the Company. All determinations and
calculations with respect to this Agreement shall be made by the Board or any
committee thereof to which the Board has delegated such authority in accordance
with applicable law, the certificate of incorporation and by-laws of the
Company, in its sole discretion, and shall be final, conclusive and binding on
all persons, including the Executive and the personal representative of his
estate.
14. Successors and Assigns. This Agreement shall inure to the
benefit of and shall be binding upon (i) the Company, its successors and
assigns, and any company with which the Company may merge or consolidate or to
which the Company may sell substantially all of its assets, and (ii) Executive
and his executors, administrators, heirs and legal representatives. Since the
Executive's services are personal and unique in nature, the Executive may not
transfer, sell or otherwise assign his rights, obligations or benefits under
this Agreement.
15. Notices. Any notice required or permitted under this Agreement
shall be deemed to have been effectively made or given if in writing and
personally delivered, mailed properly addressed in a sealed envelope, postage
prepaid by certified or registered mail, delivered by a reputable overnight
delivery service or sent by facsimile. Unless otherwise changed by notice,
notice shall be properly addressed to the Executive if addressed to the address
of record then on file with the Company; and properly addressed to the Company
if addressed to:
MANCHESTER INC.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Board of Directors
with a copy to:
Wuersch & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: 212-509-9559
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
16. Severability. It is expressly understood and agreed that
although the Company and the Executive consider the restrictions contained in
this Agreement to be reasonable and necessary for the purpose of preserving the
goodwill, proprietary rights and going concern value of the Company, if a final
judicial determination is made by a court having jurisdiction that any
restriction contained in this Agreement is invalid, the provisions of this
Agreement shall not be rendered void but shall be deemed amended to apply as to
such maximum time and territory and to such other extent as such court may
judicially determine or indicate to be reasonable. Alternatively, if the court
referred to above finds that any restriction contained in this Agreement or any
remedy provided herein is unenforceable, and such restriction or remedy cannot
be amended so as to make it enforceable, such finding shall not affect the
enforceability of any of the other restrictions contained therein or the
availability of any other remedy. The provisions of this Agreement shall in no
respect limit or otherwise affect the Executive's obligations under other
agreements with the Company.
8
17. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
18. Effects of Termination. Notwithstanding anything to the contrary
contained herein, if this Agreement is terminated pursuant to Section 7 or
Section 8 or expires by its terms, the provisions of Sections 4, 5, 6, 10, 11,
12, 13, 14, 15, 16, 19, 20 and this Section 18 shall continue in full force and
effect.
19. Miscellaneous. This Agreement constitutes the entire agreement,
and supersedes all prior agreements, of the parties hereto relating to the
subject matter hereof, and there are no written or oral terms or representations
made by either party other than those contained herein. This Agreement cannot be
modified, altered or amended except by a writing signed by all the parties. No
waiver by either party of any provision or condition of this Agreement at any
time shall be deemed a waiver of such provision or condition at any prior or
subsequent time or of any other provision or condition at the same or any prior
or subsequent time.
20. Governing Law; Arbitration.
(a) This Agreement shall be governed by and construed in accordance
with the domestic laws of the State of Nevada without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of
Nevada or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Nevada.
(b) The parties hereto agree to submit to arbitration any and all
matters in dispute or in controversy among them concerning the terms and
provisions of this Agreement. All such disputes and controversies shall be
determined and adjudged by the decision of an arbitrator (hereinafter sometimes
called the "Arbitrator") selected by mutual agreement of the parties hereto or
if the parties hereto fail to reach agreement on the Arbitrator within ten days
after a party has notified the other of its interest to submit a matter to
arbitration, the Arbitrator shall be selected by the American Arbitration
Association upon application made to it for such purpose by the parties.
Arbitration shall take place in Dallas, Texas or such other place as the parties
hereto may agree in writing. The Arbitrator shall reach and render a decision in
writing with respect to the amount, if any, of payment respecting the disputed
matter. The arbitration proceedings shall be held in accordance with the
applicable rules of the American Arbitration Association. Any award rendered
shall be final and conclusive upon the parties and adjudgment thereon may be
entered in the highest court of the forum, state or federal, having
jurisdiction. The fees and expenses of the Arbitrator and the respective fees
and expenses of the parties hereto in connection with any such arbitration
(including, without limitation, reasonable fees and expenses of legal counsel
and consultants) shall be paid by the party against whom a decision by the
Arbitrator is rendered.
9
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the day and year first above written.
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
MANCHESTER INC.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Corporate Secretary and Director
10
Exhibit A
[Option Agreement Attached]
11
