EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated effective the
17 day of January, 1997 (the "Effective Date"), is entered into by and among
LITIGATION RESOURCES OF AMERICA, INC., a Texas corporation ("Buyer"), LOONEY &
COMPANY, a Texas corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an
individual residing in the State of Texas (the "Employee"). The Company and
Buyer may sometimes hereinafter be referred to collectively as "Employers" or
singularly as "Employer." The Employers and Employee may sometimes hereinafter
be referred to singularly as a "Party" or collectively as the "Parties."
W I T N E S S E T H:
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WHEREAS, Employee has been the President and Chief Executive
Officer and sole shareholder of the Company and his knowledge of the affairs of
the Company, particularly the court reporting business in Texas and nationwide,
are of great value to the Employers;
WHEREAS, pursuant to the terms of that certain Stock Purchase
Agreement executed effective as of the Effective Date by and between Buyer and
the Employee (the "Purchase Agreement"), Buyer has purchased from the Employee,
and the Employee has sold to the Buyer all of the shares of issued and
outstanding capital stock of the Company;
WHEREAS, part of the consideration given to the Employee under the
Purchase Agreement included an agreement by the Employers to enter into this
Agreement; and
WHEREAS, the Employee would not have entered into the Purchase
Agreement without the Employers' execution of this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants,
promises and undertakings hereinafter contained, the Parties hereby undertake
and agree as follows:
1. Employment Term. The Employers hereby employ the Employee
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commencing on the date hereof (the "Effective Date") for a term of three (3)
years (the "Employment Term"), unless sooner terminated as hereinafter provided.
The term of this Agreement may be renewed or extended for one or more successive
additional one (1) year terms upon mutual agreement of the Parties prior to the
expiration of the initial term or any such renewal term. Unless otherwise
provided herein, sections 12 - 26 of this Agreement shall survive the expiration
or termination of this Agreement, for any reason whatsoever. The Employee
accepts such employment and agrees to perform the services specified herein, all
upon the terms and conditions hereinafter stated.
2. Duties. The Employee shall serve as the Chief Executive
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Officer ("CEO") and President of each of the Employers, and shall report to, and
be subject to the general direction and control of, the Board of Directors of
the Company and the Board of Directors of the Buyer (collectively, the
"Boards"). The Employee shall perform such management and administrative duties,
consistent with the Employee's positions, as are from time to time assigned to
the Employee by the Boards including developing national, regional and local
customers for the Employers and its Affiliates, and agreeing to serve as the
Chief Executive Officer and President of each of the Employers and such other
Affiliates of the Employers as the Boards may from time to time designate. The
Employee also agrees to perform, without additional compensation, such other
services for the Employers, and for any parent, subsidiary or affiliate
corporations of the Employers and any partnerships in which the Employers may
from time to time have an interest (herein collectively called "Affiliates"), as
the Boards shall from time to time specify, if such services are of the nature
commonly associated with the position of a CEO and a President of a company
engaged in activities similar to the activities engaged in by the Employers;
provided, however, that Employee shall under no circumstances be required by the
Company to relocate his primary residence, and further provided, that Employee
shall not be required to engage in any business that is not reasonably related
to the Business of the Employers, as hereinafter defined. Notwithstanding the
foregoing, the duties of Employee shall not include the duty to act in the
capacity of a court reporter.
3. Extent of Service. The Employee shall devote his full
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business time, attention and energy to the business of the Employers, and shall
not be engaged in any other business activity during the term of this Agreement.
The foregoing shall not be construed as preventing the Employee from making
passive investments in other businesses or enterprises, if (i) such investments
will not require services on the part of the Employee which would in any
material way impair the performance of his duties under this Agreement, (ii)
such other businesses or enterprises are not engaged in any business competitive
with the business of the Company, and (iii) the Employee has complied with
Sections 12 and 13 of this Agreement with respect to each such passive
investment.
4. Compensation. As payment for the services to be rendered by
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the Employee hereunder during the initial term, the Employee shall be entitled
to receive:
(a) a salary in the amount of Two Hundred Thousand and No/100
Dollars ($200,000.00) per year effective as of the date hereof which
shall be payable during the term of this Agreement in accordance with
the payroll policies of the Employers in effect from time to time (but
in no event less frequently than monthly); and
(b) a bonus as specified in Schedule A.
5. Expenses. During the term of this Agreement, the Employers
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shall promptly pay or reimburse the Employee for all reasonable out-of-pocket
expenses for travel, meals, hotel accommodations and similar items incurred by
him in connection with the Business of the Employers as hereinafter defined, and
approved by the Boards or incurred in accordance with the travel and
reimbursement policies of the Employers as the same shall be in effect from time
to time,
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upon submission by him of an appropriate statement documenting such expenses.
The Employers shall also pay the Employee an automobile allowance in the amount
of $750.00 per month.
6. Employee Benefits. During the term of this Agreement, the
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Employee shall be entitled to participate in all employee benefit plans from
time to time made generally available to the executive employees of the
Employers, including any stock option plan, retirement plan, profit-sharing
plan, group life plan, health or accident insurance or other employee benefit
plans as the same shall be maintained in effect, as determined by the Boards.
Until the Buyer is able to procure its own insurance coverage, the Employers
agree to continue the prior insurance previously provided to the Employee by the
Company. The Employers will use commercially reasonably efforts to assist
Employee in procuring insurance coverage for any preexisting conditions.
7. Vacation. During the term of this Agreement, the Employee
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shall be entitled to annual vacation time determined in accordance with the
vacation policies of the Employers in effect from time to time but not less than
four (4) weeks per year, during which time his compensation shall be paid in
full. Unused vacation time shall not accrue from year to year.
8. Covenants of Employee. For and in consideration of the
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employment herein contemplated and the consideration paid or promised to be paid
by the Employers, the Employee does hereby covenant, agree and promise that
during the term hereof and thereafter to the extent specifically provided in
this Agreement:
(a) Except as otherwise specifically permitted by this
Agreement, during the term of this Agreement, Employee will not
actively engage, directly or indirectly, in any other business
other than that of Employers, except at the direction or approval
of the Employers.
(b) The Employee will use his best reasonable efforts to
truthfully and accurately make, maintain and preserve all records
and reports that the Employers may from time to time request or
require.
(c) The Employee will fully account for all money, records,
goods, wares and merchandise or other property belonging to the
Employers of which the Employee has custody, and will pay over and
deliver same promptly whenever and however he may be reasonably
directed to do so by the Employers.
(d) The Employee will obey all rules, regulations and special
instructions of the Employers applicable to him, and will be loyal
and faithful to the Employers at all times.
(e) The Employee will make available to the Employers any and
all of the information of which he has knowledge relating to the
business of the Employers,
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and will make all suggestions and recommendations which he feels
will be of mutual benefit to the Parties.
(f) The Employee agrees that upon termination of his
employment hereunder he will immediately surrender and turn over
to the Employers all books, records, forms, specifications,
formulae, data, processes, papers and writings related to the
business of the Employers and all other property belonging to the
Employers, together with all copies of the foregoing, it being
understood and agreed that the same are the sole property of the
Employers.
(g) The Employee agrees that all ideas, concepts, processes,
discoveries, devices, machines, tools, materials, designs,
improvements, inventions and other things of value relating to the
Business of the Employers (hereinafter collectively referred to as
"intangible rights"), whether patentable or not, which are
conceived, made, invented or suggested by him alone or in
collaboration with others during the term of his employment, and
whether or not during regular working hours, shall be promptly
disclosed in writing to the Employers and shall be the sole and
exclusive property of the Employers. The Employee hereby assigns
all of his right, title and interest in and to all such intangible
rights to the Employers, and its successors or assigns. In the
event that any of said intangible rights shall be deemed by the
Employers to be patentable or otherwise registerable under any
federal, state or foreign law, the Employee further agrees that,
at the expense of the Employers, he will execute all documents and
do all things reasonably necessary, advisable or proper to obtain
patents therefor or registration thereof, and to vest in the
Employers full title thereto.
9. Mutual Covenants of the Employers and the Employee. For and
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in consideration of the employment herein contemplated and the compensation,
covenants, conditions and promises herein recited, the Employers and the
Employee do hereby mutually agree that during the term hereof:
(a) The Employee shall not, by reason of this Agreement, have
any vested interest in, or right, title or claim to, any land,
buildings, equipment, machinery, processes, systems, products,
contracts, goods, wares, merchandise, business assets or other
things of value belonging to or which may hereafter be acquired or
owned by the Employers.
(b) In carrying out his duties as CEO and President of each
of the Employers, the Employee shall primarily be responsible for
making day to day decisions in the ordinary course of business of
the Employers, subject to possible review by the Boards. The
Employers' plans, properties, contracts, methods, and policies,
shall be vested in the Boards and the Employers may, in their sole
and absolute discretion, give, sell, assign, transfer or otherwise
dispose of any or all of
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their assets or businesses in whole or in part, to any person,
firm or corporation, whether or not such person, firm or
corporation is in any manner owned by or associated with or
affiliated with the Employers.
(c) The Employee acknowledges that because of the nature of
the position for which he has been employed, the Employee may be
called upon to perform such duties and render such services as are
required of him hereunder, irregularly, and agrees to perform to
the best of his abilities such duties as the business may
reasonably demand, and acknowledges that the number of hours per
day or per week may vary. Notwithstanding the foregoing, the
Employee shall work in a manner that is consistent with his prior
customary practice on behalf of the Employers.
10. Termination of Employment for Cause. The Employers may
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terminate the employment of the Employee if the Employers suffer or may
reasonably be expected to suffer any material adverse effect as a result of the
Employee (any such termination being a termination for "Cause"):
(a) Breaching any material provision of this Agreement and
failing to cure such breach within ten (10) days after written
note thereof;
(b) Misappropriating funds or property of either of the
Employers;
(c) Securing any personal profit not thoroughly disclosed to
and approved by the Employers in connection with any transaction
entered into on behalf of the Employers;
(d) Engaging in conduct, even if not in connection with the
performance of his duties hereunder, which would reasonably be
expected to result in a material adverse effect to the interest of
the Employers if he was retained as an employee, such as his
commission of a felony or a crime of moral turpitude;
(e) Becoming and remaining "Disabled", as hereinafter defined
(either physically, mentally or otherwise) for a period of one
hundred thirty-five (135) days during any consecutive twelve month
time period;
(f) Failing to carry out and perform the duties assigned to
the Employee in accordance with the terms hereof and failing to
cure such breach within ten (10) days after written notice
thereof; or
(g) Failing to comply with corporate policies of either of
the Employers that are promulgated from time to time and made
known to Employee and failing to cure such breach within ten (10)
days after written notice thereof.
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In the event of the death of the Employee, such occurrence shall
immediately constitute a termination for Cause. Except as provided in item (e)
above, no termination for Cause shall be effective if the Employee is Disabled.
In the event the Employee is terminated for Cause because he is
Disabled, the Employee may be permitted to participate in any disability
insurance policy the Employers then have in effect.
In the event of termination of his employment for Cause, the
Employee shall be entitled to receive his compensation, as determined in Section
4 of this Agreement, due or accrued on a pro rata basis to the date of
termination. Any salary or remuneration owed as of the date of termination shall
be paid less the amount of damages, if any, caused to the Employers by such
breach, but no such damages offset shall extend beyond any compensation due and
owing under this Agreement.
Notwithstanding the cure provisions provided in Sections 10(a), 10
(f) and 10(g), the Employee shall not have the opportunity to cure any violation
of these subsections if such violation cannot reasonably be expected to be
cured. In such event, the Employers shall be required to furnish the Employee
notice of the violation, but the Employee shall not be furnished an opportunity
to cure.
"Disabled" shall mean the continuous inability, whether mental or
physical, of Employee to perform his normal job functions as determined by at
least two of three medical physicians selected as follows: the Employee or his
legal designee shall be entitled to appoint one physician, the Employers shall
be entitled to appoint one physician, and such two appointed physicians shall
mutually appoint a third physician. Notwithstanding the foregoing, the Employee,
or his designee, and the Employers may mutually agree that he is "Disabled"
within the meaning of this Agreement.
11. Termination By the Employers Without Cause or By the Employee
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With Good Reason. The Employers may terminate the employment of Employee for
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any reason other than those for Cause, in which event such termination shall be
deemed a "Termination Without Cause". In addition, the Employee shall have the
right to terminate this Agreement for any breach of this Agreement by the
Employers which shall include but not be limited to materially changing the
duties assigned to Employee beyond those contemplated in paragraph 2 of this
Agreement or causing Employee to relocate his primary residence in violation of
paragraph 2 of this Agreement; provided that the Employers shall be furnished
ten (10) days notice of such breach and an opportunity to cure (any such
termination constituting a "Termination By Employee With Good Reason").
Notwithstanding the cure provisions provided in the preceding sentence, the
Employers shall not have the opportunity to cure any violation of this Agreement
if such violation cannot reasonably be expected to be cured but the Employee
shall still furnish notice to the Employers. In the event of a Termination
Without Cause or a Termination with Good Reason by the Employee the Employers
shall continue making payments to Employee in an amount equal to the
compensation of the Employee, as determined in Section 4 of this Agreement, as
if he was still employed for a
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period of the lesser of: (i) one (1) year , or (ii) the remaining term of this
Agreement which, in the event of a Termination Without Cause or a Termination By
Employee With Good Reason , shall constitute the full and total amount of
liquidated damages that the Employee shall be entitled to receive from the
Employers and its Affiliates for any contractual or tort claims arising out of
his employment relationship with the Employers.
12. Covenant Not to Compete. The Employee recognizes that the
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Employers have business goodwill and other legitimate business interests which
must be protected in connection with and in addition to the Information (as
defined hereinafter), and therefore, in exchange for access to the Information,
the specialized training and instruction which the Employers will provide, the
Employers' agreement to employ the Employee on the terms and conditions set
forth herein, the Employers' agreement to execute and consummate the Purchase
Agreement, and the promotion and advertisement by the Employers of Employee's
skill, ability and value in the Employers' business, subject to the provisions
of the next full paragraph of this Section 12, the Employee agrees that in the
event (i) Employee is terminated for Cause, or (ii) Employee leaves the employ
of the Employers other than a Termination By Employee With Good Reason prior to
expiration of the term of the Agreement, or (iii) upon the expiration of the
term of this Agreement, then for a period of the latest date of: (i) five (5)
years after the date of this Agreement, or (ii) three (3) years after the date
employment is so terminated:
(a) Employee will not in any capacity or relationship enter
into, engage in, or be connected with any business or business
operation or activity within a fifty (50) mile radius of any
office location then operated by the Employers at the time of such
termination, which consists in whole or in part of the Business of
the Employers (as defined hereinafter). For purposes of this
Agreement, the "Business of the Employers" shall be defined as the
current business of the Employers and their Affiliates, including,
but not limited to, the providing of court reporting and
litigation support services; and
(b) Employee will not call upon any customer whose account
is serviced in whole or in part by the Employers or their
Affiliates at the time of the termination of Employee's
employment, with the purpose of selling or attempting to sell to
any such customer any services included within that offered by the
Employers or their Affiliates; and
(c) Employee will not intentionally divert, solicit or take
away any customer, supplier or employee of the Employers or their
Affiliates, or the patronage of any customer or supplier of the
Employers or their Affiliates, or otherwise interfere with or
disturb the relationship existing between the Employers or their
Affiliates and any of their respective customers, suppliers or
employees, directly or indirectly.
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In addition, the foregoing restrictive covenants shall also apply
to the Employee in the event of his Termination Without Cause or in the event of
Termination By Employee With Good Reason by the Employee, but only for so long
as the Employers are making payments to the Employee as required by Section 11
herein.
In the event the Employers cease operation of the Business of the
Employers other than in a merger, consolidation, or similar transaction, or upon
the filing of a bankruptcy or receivership proceeding against the Employers, or
upon the appointment of a liquidator for the Employers, the provisions of this
Section 12 shall not be applicable to the conduct of Employee subsequent
thereto.
It is mutually understood and agreed that if any of the provisions
relating to the scope, time or territory in this Section 12 are more extensive
than is enforceable under applicable laws or are broader than necessary to
protect the good will and legitimate business interests of Employers, then the
Parties agree that they will reduce the degree and extent of such provisions by
whatever minimal amount is necessary to bring such provisions within the ambit
of enforceability under applicable law.
The Parties acknowledge that the remedies at law for breach of
Employee's covenants contained in this Section 12 are inadequate, and they agree
that the Employers shall be entitled, at their election, to injunctive relief
(without the necessity of posting bond against such breach or attempted breach),
and to specific performance of said covenants in addition to any other remedies
at law or equity that may be available to the Employers.
Notwithstanding any provision in this Agreement, the obligations
of the Employee pursuant to this Section 12 shall terminate immediately upon the
occurrence of (i) an event of default in making payments, if any, under the
terms of the Buyer Preferred Shares, as such term is defined in the Purchase
Agreement, which does not constitute exercise of the offset rights by the Buyer
as permitted by the Purchase Agreement and which is not cured within any
applicable time periods , or (ii) a default of any of the obligations of the
Employers under this Agreement, but only after fifteen (15) days after the
delivery by Employee to the Employers of a notice detailing such default, during
which the Employers shall have an opportunity to cure.
13. Business Opportunities. Except for investments by the
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Employee in publicly traded corporations, or investments in private ventures
which do not compete with the Employers and which come to the attention of the
Employee outside of the scope of his employment, for as long as the Employee
shall be employed by the Employers and thereafter with respect to any business
opportunities learned about during the time of Employee's employment by the
Employers, the Employee agrees that with respect to any future business
opportunity or other new and future business proposal which is offered to, or
comes to the attention of, the Employee and which is in any way related to, or
connected with, the Business of the Employers, the Employers shall have the
right to take advantage of such business opportunity or other business proposal
for its own benefit. The Employee agrees to promptly deliver notice to the
Boards in writing of the existence of such
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opportunity or proposal and the Employee may take advantage of such opportunity
only if the Employers do not elect to exercise its right to take advantage of
such opportunity.
14. Confidential Information. The Employee acknowledges that
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in the course of his employment with the Employers, he will receive certain
trade secrets, know-how, lists of customers, employee records and other
confidential information and knowledge concerning the Business of the Employers
(hereinafter collectively referred to as "Information") which the Employers
desire to protect. The Employee understands that such Information is
confidential and he agrees that he will not reveal such Information to anyone
outside the Employers except for (i) information already known to the public,
now or in the future, or (ii) in connection with any legal proceeding regarding
this Agreement, the Purchase Agreement or the transactions contemplated thereby
or as otherwise required by law or judicial order. The Employee further agrees
that during the term of this Agreement and thereafter he will not use such
Information in competing with the Employers. Upon termination of his employment
hereunder, the Employee shall surrender to the Employers all papers, documents,
writings and other property produced by him or coming into his possession by or
through his employment hereunder and relating to the information referred to in
this Section 14, which are not general knowledge in the industry, and the
Employee agrees that all such materials will at all times remain the property of
the Employers.
15. Notices. All notices, consents, demands or other
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communications required or permitted to be given pursuant to this Agreement
shall be deemed sufficiently given when delivered personally with a written
receipt acknowledging delivery or telefaxed, or three (3) business days after
the posting thereof by United States first class, registered or certified mail,
return receipt requested, with postage fee prepaid and addressed:
If to the Company: Looney & Company
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telefax:(▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chairman of the Board
Copy to: Litigation Resources of America, Inc.
3850 Nationsbank Center
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: G. ▇▇▇▇ ▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
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If to the Buyer: Litigation Resources of America, Inc.
3850 Nationsbank Center
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: G. ▇▇▇▇ ▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: Looney & Company
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telefax:(▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chairman of the Board
If to the Employee: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telefax:(▇▇▇) ▇▇▇-▇▇▇▇
Any Party may change its address for notice hereunder by providing written
notice of such change to the other Party hereto.
16. Specific Performance. The Employee acknowledges that a
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remedy at law for any breach or attempted breach of Sections 12, 13 or 14 of
this Agreement will be inadequate, the Employee agrees that the Employers shall
be entitled to specific performance and injunctive and other equitable relief in
case of any such breach or attempted breach, and further agrees to waive any
requirement for the securing or posting of any bond in excess of $50,000 in
connection with the obtaining of any such injunctive or any other equitable
relief.
17. Severability. Whenever possible, each provision of this
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Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provisions shall be ineffective to the extent
of such provision or invalidity only, without invalidating the remainder of such
provision or the remainder of such provision or the remaining provisions of this
Agreement.
18. Assignment. This Agreement may not be assigned by the
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Employee. Neither the Employee, his spouse nor their estates shall have any
right to encumber or dispose of any right to receive payments hereunder, it
being understood that such payments and the right thereto are nonassignable and
nontransferable; provided, however in the event of the death of Employee, any
payments that Employee is entitled to receive may be assigned to the
beneficiaries of the Employee's estate.
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19. Binding Effect. Subject to the provisions of Section 18 of
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this Agreement, this Agreement shall be binding upon and inure to the benefit of
the Parties hereto, the Employee's heirs and personal representatives, and the
successors and assigns of the Employers.
20. Governing Law. This Agreement shall be construed and
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enforced in accordance with and governed by the laws of the State of Texas.
21. Prior Employment Agreements. Employee represents and
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warrants to the Employers that he has fulfilled all of the terms and conditions
of all prior employment agreements to which he may be or have been a party, and
at the time of execution of this Agreement is not a party to any other
employment agreement.
22. Parole Evidence. This Agreement constitutes the sole and
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complete agreement between the Parties hereto with respect to the subject matter
hereof, and no verbal or other statements, inducements or representations have
been made to or relied upon by either Party, and no modification hereof shall be
effective unless in writing signed and executed in the same manner as this
Agreement, provided, however, the amount of compensation to be paid Employee for
services to be performed for Employers may be changed from time to time by the
Parties hereto by written agreement without in any other way modifying, changing
or affecting this Agreement and the performance by the Employee of any of the
duties of his employment with the Employers. Written notification of any
modification of compensation paid or payable to the Employee for his services
shall be conclusively deemed to be a ratification and confirmation of this
Agreement amended by such change in compensation unless the Employee shall
object in writing with ten (10) days after such written notification from the
Employers.
23. Waiver. Any waiver to be enforceable must be in writing and
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executed by the Party against whom the waiver is sought to be enforced.
24. Arbitration. If a dispute arises out of or relates to this
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Agreement, or the breach thereof, and if said dispute cannot be settled through
negotiation, the Parties agree first to try in good faith to settle the dispute
by mediation under the Commercial Mediation Rules of the American Arbitration
Association, before resorting to arbitration, litigation, or some other dispute
resolution procedure as required by this Section 24. Failing an adequate
resolution by mediation, any controversy or claim arising out of or relating to
this Agreement or the transactions contemplated hereby, including any
controversy or claim arising out of or relating to the Parties' decision to
enter into this Agreement, shall be settled by binding arbitration. There shall
be one arbitrator to be mutually agreed upon by the Parties involved in the
controversy and to be selected from the National Panel of Commercial Arbitrators
(or successor panel, if any). If within 45 days after service of the demand for
arbitration the Parties are unable to agree upon such an arbitrator who is
willing to serve, then an arbitrator shall be appointed by the American
Arbitration Association in accordance with its rules. Except as specifically
provided in this Section 24, the arbitration shall be conducted in accordance
with the Commercial Arbitration Rules of the American Arbitration Association.
The arbitrator shall not render an award of punitive damages. Any arbitration
hereunder shall be held
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in ▇▇▇▇▇▇ County, Texas. Expenses related to the arbitration, including counsel
fees, shall be borne by the Party incurring such expenses except to the extent
otherwise provided in Section 25 herein. The fees of the arbitrator and of the
American Arbitration Association, if any, shall be divided equally among the
Parties involved in the controversy. Judgment upon the award rendered by the
arbitrator (which may, if deemed appropriate by the arbitrator, include
equitable or mandatory relief with respect to performance of obligations
hereunder) may be entered in any court of competent jurisdiction. The arbitrator
shall award the prevailing Party in any arbitration proceeding recovery of its
attorneys' fees, the arbitrators' fees and other costs in connection with the
arbitration from the non-prevailing Party.
25. Attorney's Fees. If any litigation is instituted to enforce
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or interpret the provisions of this Agreement or the transactions described
herein, the prevailing Party in such action shall be entitled to recover its
reasonable attorneys' fees and other costs from the other Party hereto.
26. Drafting. All Parties hereto acknowledge that each was
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actively involved in the negotiation and drafting of this Agreement and that no
law or rule of construction shall be raised or used in which the provisions of
this Agreement shall be construed in favor or against any Party hereto because
one is deemed to be the author thereof.
27. Multiple Counterparts. This Agreement may be executed in
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multiple counterparts, each of which shall have the force and effect of an
original, and all of which shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date and year first above written.
THE COMPANY:
LOONEY & COMPANY,
a Texas corporation
By: [ILLEGIBLE SIGNATURE APPEARS HERE]
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President
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THE BUYER:
LITIGATION RESOURCES OF AMERICA, INC.,
a Texas corporation
By: /s/ G. ▇▇▇▇ ▇▇▇▇▇
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G. ▇▇▇▇ ▇▇▇▇▇
President
THE EMPLOYEE:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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SCHEDULE A
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CALCULATION OF ANNUAL BONUS
During each fiscal year, the accountants regularly employed by the
Buyer shall determine the amount of net pre-tax profits (excluding the
amortization of any debt discount), if any, of the Buyer during each consecutive
twelve (12) month time period of October 1 through September 30 ("Annual Pre-Tax
Profits"), with the first year commencing on the Effective Date through
September 30, 1997 and the last year commencing on October 1, 1999 and ending on
January 17, 2000. All partial years shall be determined on a pro rata basis.
The Board of Directors shall in good faith determine an annual budget for the
pre-tax income of the Buyer (excluding the amortization of any debt discount)
(the "Budgeted Pre-Tax Profits"). At the end of six (6) months into a fiscal
year (except for the years of 1997 and 2000), the Pre-Tax Profits for such six
(6) month period (the "Semi-Annual Pre-Tax Profits") shall be determined and if
the Semi-Annual Pre-Tax Profits earned through such date are seventy-five
percent (75%) or more one-half (1/2) of the Budgeted Pre-Tax Profits, then a
bonus pool of nine and one/tenth (9.1%) of the amount of such Semi-Annual Pre-
Tax Profits earned through such date, if any, shall be set aside (the "Semi-
Annual Bonus Pool"). Employee shall be paid an amount equal to or greater than
seventy-five percent (75%) of Semi-Annual Bonus Pool. In the event the Annual
Pre-Tax Profits for a particular fiscal year are seventy-five percent (75%) or
more of the Budgeted Pre-Tax Profits for that complete year, then a bonus pool
of nine and one/tenth (9.1%) of the amount of such Annual Pre-Tax Profits, if
any, shall be set aside (the "Annual Bonus Pool"). Employee shall then be paid
an amount equal to or greater than seventy-five percent (75%) of such Annual
Bonus Pool less the amount, if any, paid Employee out of the Semi-Annual Bonus
Pool. For the first time period of the Effective Date through September 30,
1997, there shall be one calculation and one payment, as well as the last time
period of October 1, 1999 through January 17, 2000, with all determinations
being made on a pro rata basis. All bonus payments shall be made within thirty
(30) days after the end of each semi-annual time period or other applicable time
period for which they are calculated. Notwithstanding anything to the contrary
contained herein, if the Buyer has more than two salaried executive officers
that are participants in the Semi-Annual Bonus Pool or the Annual Bonus Pool,
then he shall be paid a bonus of at least fifty percent (50%) instead of at
least seventy-five percent (75%) of the Semi-Annual Bonus Pool or the Annual
Bonus Pool, if any. Notwithstanding anything to the contrary contained herein,
under no circumstances shall Employee be paid an amount under the Semi-Annual
Bonus Pool and/or the Annual Bonus Pool that when combined with his base salary
under paragraph 4 exceeds an aggregate amount of $300,000 on an annualized
basis, or a pro-rata lesser amount of $300,000 if less than a full year of Semi-
Annual Bonus Pool payments and/or Annual Bonus Pool Payments are made.
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