taxmasters_10q-ex1005.htm


    
      

    

    EXHIBIT 10.5

     

    EMPLOYMENT
AGREEMENT

    


    THIS EMPLOYMENT AGREEMENT (this
“Agreement”), dated as of August 4, 2009, is made by and between:

    


    TaxMasters, Inc., a Nevada
corporation (formerly known as Crown Partners, Inc.) having its principal office
at 900 Town & Country Lane, Suite 400, Houston, Texas 77024 (hereinafter
referred to as "EMPLOYER")

    


    AND

    


    Michael L. Wallace, an adult
individual residing at 1627 S. Kirkwood Road, Houston, Texas 77077 (hereinafter
referred to as "EMPLOYEE")

    


    WITNESSETH
THAT:

    


    WHEREAS,
EMPLOYEE is a business executive with certain education, experience, background,
know-how and contacts which have been and will be useful and helpful to EMPLOYER
in its business and EMPLOYER is desirous of employing EMPLOYEE in order to
obtain the benefits of such education, experience, background, know-how and
contacts;

    


    WHEREAS,
EMPLOYEE has provided services to EMPLOYER’s subsidiary in connection with its
tax resolution business of assisting taxpayers with matters at the Internal
Revenue Service consistent with the duties to be performed hereunder, such
services having been provided under certain oral understandings;

    


    WHEREAS,
EMPLOYER will be merging its subsidiary with and into itself and desires to
retain the services of EMPLOYEE.

    


    WHEREAS,
EMPLOYEE is agreeable to being employed by EMPLOYER upon the terms and
conditions hereof and providing the benefits of his or her education,
experience, background and contacts to EMPLOYER;

    


    WHEREAS,
as the result of negotiations and discussions, EMPLOYER and EMPLOYEE have
finalized the terms of the employment of EMPLOYEE, and the parties having
concluded their negotiations now desire to have a document to formalize and
evidence their understandings and agreements, which document will supersede and
void all prior discussions and understandings;

    


    NOW,
THEREFORE, in consideration of the mutual promises, covenants and forbearances
contained herein, and intending to be legally bound, the parties have agreed as
follows:

    


    1.  EMPLOYMENT.  (a)  For
the term provided in Paragraph 2 below, EMPLOYER hereby employs EMPLOYEE, and
EMPLOYEE hereby accepts that employment, upon the terms and conditions
hereinafter set forth.

    


    (b)  This
Agreement shall supersede and replace all prior discussions, negotiations,
memoranda, correspondence, understandings, and agreements pertaining to the
employment of EMPLOYEE by EMPLOYER and/or its subsidiary.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.  TERM.  (a)  This
Agreement shall be effective as of the date executed by the last signing
party.  

    


    (b)  This
Agreement, subject to the provisions of Paragraphs 15 and 16 below, shall
continue and exist for an initial period from such effective date until December
31, 2012 (initial term).  The term “employment year” as used in this
Agreement shall mean January 1 to December 31, which is the EMPLOYER’s fiscal
year. 

    


    (c)  If,
on November 30, 2012, neither party is then in default under this Agreement,
EMPLOYER shall have the option to extend the term of this Agreement for an
additional one (1) year period.  Such option shall be exercised by
EMPLOYER mailing notice to EMPLOYEE, on or before December 1, 2012, of its
intention to so extend the Agreement.  If EMPLOYER shall not exercise
its extension option on or before December 1, 2012 this Agreement shall
terminate as provided herein.

    


    (d)  This
Agreement shall be subject to a further one (1) year extension under the
procedure provided in subparagraph (c), provided that on November 30 of the then
existing extension year neither party is then in default under this Agreement
and notice of exercise of the extension option is given by EMPLOYER to EMPLOYEE
on or before December 1 of such extension year.

    


    (e)  Notwithstanding
the foregoing, the term of this Agreement is otherwise subject to the various
termination provisions contained hereafter.

    


    3.  COMPENSATION-BASE AND
ANNUAL CASH BONUS.  (a) For all services rendered under this
Agreement, EMPLOYEE shall be paid, as base compensation, such annual salary as
shall be determined by the EMPLOYER's Board of Directors from time to time, but
in no event shall such compensation be at a rate of less than Ninety Thousand
Dollars ($90,000).  Such base compensation shall be in addition to
such incentive compensation, deferred compensation, fringe benefits and bonuses
as provided elsewhere herein.

    


    (b)  At
the end of each fiscal year, the EMPLOYER's Board of Directors shall review the
performance of EMPLOYEE for such year and, based upon such evaluation, establish
any increase in the base compensation payable to EMPLOYEE for the succeeding
fiscal year.  EMPLOYER shall not be obligated to provide any increase;
however, any increase shall supersede the “floor” in subparagraph
(a).

    


    (c)  During
each fiscal year during the term of this Agreement, EMPLOYEE shall be entitled
an annual cash bonus equal to a maximum of Ten Percent (10%) of EMPLOYEE’s base
annual salary.  Such bonus shall be paid quarterly within sixty (60)
days after the end of each fiscal quarter.  Each such quarterly bonus
payment shall not be greater than Two and One-half Percent (2.5%) of EMPLOYEE’s
base annual salary in effect for such fiscal year.  The amount of each
quarterly cash bonus payment shall be determined by EMPLOYER’s Board of
Directors subject to the limitations set forth in this subparagraph
(c).

    


    
      
         

      

      
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    4.  SIGNING
BONUS.  As a "signing bonus", EMPLOYER shall promptly issue to
EMPLOYEE Five Hundred Thousand (500,000) shares of its Common Stock, ownership
to which shall vest immediately.  EMPLOYEE represents and warrants
that he or she is acquiring such shares for personal investment purposes and not
with a view to resale or distribution; the certificate(s) for such shares shall
bear a legend on the face thereof indicating that such shares have not been
registered under the Securities Act of 1933 and are restricted as to further
transfer.

     

    5.  ANNUAL STOCK BONUS AND
OPTION GRANTS.  (a) At the end of each fiscal year, EMPLOYEE shall be
eligible for a bonus consisting of shares of EMPLOYER’s Common
Stock.  The number of such shares of Common Stock and the vesting of
such shares shall be as determined by the EMPLOYER’s Board of Directors,
provided however, that such bonus shares shall be issued to EMPLOYEE within
sixty (60) days after the end of such prior fiscal
year.  

    


    (b)  The
certificates for such bonus shares shall bear a legend on the face thereof
indicating that such shares (i) have not vested and cannot be sold, transferred,
assigned or otherwise disposed of until and unless they have vested and (ii)
have not been registered under the Securities Act of 1933 and are restricted as
to further transfer.

    


    (c)
During the initial term, EMPLOYEE shall be eligible for a grant of stock options
under EMPLOYER’s 2009 Stock Option Plan as follows:  (i) Two Million
Five Hundred Thousand (2,500,000) options at the end of fiscal 2009, (ii) One
Million (1,000,000) options at the end of fiscal 2010 and (iii) One Million
(1,000,000) options at the end of fiscal 2011.  In the event that
Earnout Shares are issued with respect to 2009, 2010 and/or 2011 to EMPLOYER’s
Chief Executive Officer, Patrick R. Cox, under that certain Share Exchange
Agreement, dated as of August 4, 2009, by and among EMPLOYER, Mr. Cox,
TaxMasters, Inc. and certain former shareholders of EMPLOYER named therein, then
the option grants to EMPLOYEE for 2009, 2010 and 2011 shall be increased in the
same proportion as the number of Earnout Shares for the respective fiscal year
issued to Mr. Cox bears to the total number of Earnout Shares issuable under
Section 5.1 of the Share Exchange Agreement.  All options granted to
EMPLOYEE pursuant to this paragraph 5(c) shall have a three (3) year term and
shall vest immediately upon grant.  EMPLOYEE shall be eligible for
such other option grants under EMPLOYER’s 2009 Stock Option Plan as determined
in the discretion of EMPLOYER’s Board of Directors.

    


    6.  COMPENSATION-FRINGE
BENEFITS.  EMPLOYEE shall receive at least the following additional
benefits, which may be extended or increased, but not reduced, by
EMPLOYER:

    


    (a)  Base
Personal Leave - During each year of this Agreement, EMPLOYEE shall receive
twenty (20) days paid personal leave, which shall not be accumulated from year
to year if unused. EMPLOYEE shall not be compensated for any unused personal
leave.  "Personal leave" shall include vacation, sick leave,
bereavement leave, so-called “personal days” and all other personal time off,
other than legal holidays in the State of Texas.

     

    
      
         

      

      
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    (b)  Medical
Insurance - EMPLOYEE shall receive such medical, surgical, dental and/or
hospitalization insurance as EMPLOYER shall provide to its other
officers/employees/consultants.

    


    (c)  Other
- EMPLOYEE shall receive such other fringe benefits as are available to any
other officers/employees/consultants. Nothing contained in this Agreement shall
be in lieu of any rights, benefits and privileges to which EMPLOYEE may be
entitled under any stock option, 401(k), retirement, pension, profit-sharing,
insurance, ESOT/ESOP, hospitalization, medical, surgical, dental, legal or other
plans which may now be in effect or which may hereafter be adopted, either by
EMPLOYER or any subsidiary or affiliate of EMPLOYER.  EMPLOYEE shall
have the same rights and privileges to participate in such plans and benefits as
any other employee during his or her period of employment and EMPLOYEE shall be
entitled to participate on parity with executives of equal rank.

    


    (d)EMPLOYER shall reimburse EMPLOYEE up to
$60 per month for cell phone expenses upon presentation by EMPLOYEE, on a
monthly basis, of EMPLOYEE’s monthly bill for cell phone service.

    


    (e)EMPLOYER shall reimburse EMPLOYEE for
deductible, co-pay and/or co-insurance payments made by EMPLOYEE under any
medical, dental and/or vision insurance provided by EMPLOYER.

    


    7.  DUTIES.  (a)
EMPLOYEE is initially engaged as the (i) Acting General Counsel and Secretary of
EMPLOYER during the period ending December 31, 2010 and (ii) Deputy General
Counsel during the remainder of the term of this Agreement.  EMPLOYEE
shall perform all usual and customary services as such executive, as outlined on
Schedule A
annexed hereto and made a part hereof.

    


    (b)  EMPLOYEE'S
performance shall be subject to the supervision of EMPLOYER'S Board of
Directors.  The precise job description and the specific services to
be rendered by EMPLOYEE may be defined, interpreted, curtailed, or extended,
from time to time, by determination of the EMPLOYER' Board of Directors,
provided, however, that any definition, interpretation, curtailment, or
extension is consistent with the status of, and/or educational experience
required for, the responsibilities for which EMPLOYEE has been engaged
hereunder. It is the intent of this provision to provide EMPLOYER with
flexibility in assigning responsibilities to EMPLOYEE and/or promoting EMPLOYEE,
and this provision shall not be used to discipline, embarrass, humiliate or
harass EMPLOYEE.

    


    8.  EXTENT OF
SERVICES.  EMPLOYEE agrees that this employment constitutes his or her
primary employment and understands that his or her primary loyalty and
responsibility is to EMPLOYER. Accordingly, EMPLOYEE shall devote such adequate,
reasonable, and proper time, attention, and energies to the business of EMPLOYER
as shall be necessary or consistent with such understanding and EMPLOYEE shall
not, during the term of this Agreement be engaged in any other business activity
(whether or not such business activity is pursued for gain, profit, or other
pecuniary advantage), which conflicts with EMPLOYEE's employment
responsibilities hereunder, without prior, written authorization of EMPLOYER's
Board of Directors.  Nothing contained herein shall be construed as
preventing EMPLOYEE from investing his or her assets in such form or manner as
EMPLOYEE may select, whether or not such investment will require any services on
EMPLOYEE'S part in the operation of the affairs of the companies in which such
investments are made.

     

    
      
         

      

      
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    9.WORKING FACILITIES.  EMPLOYEE shall
be furnished, at EMPLOYER's expense, with all necessary working facilities,
including but not limited to an equipped office, clerical help, and
telephone/facsimile/copying services, suitable to his or her position and
adequate for the performance of his or her duties.

     

    10.EXPENSES.  EMPLOYEE is not
authorized to incur expenses on behalf of, or chargeable to, EMPLOYER, with
respect to his or her business travel, including transportation, lodging, food,
entertainment, etc. except within such guidelines as may be established from
time to time by the EMPLOYER's management.  EMPLOYER shall reimburse
EMPLOYEE for authorized expenses within such guidelines upon presentation by
EMPLOYEE, from time to time, of an itemized account of such expenditures in such
form as EMPLOYER may require, together with receipts or other proofs of the
expenditures as may be required.

     

    11.NON-DISCLOSURE OF
INFORMATION.  (a) EMPLOYEE recognizes and acknowledges that, during
the course of his or her employment, he or she will have access to valuable
"Proprietary Information" as limited in subparagraph (b) below, including, but
not limited to:  management plans for expansion, licensing,
franchising, marketing, sales, and advertising, etc.; financial data such as
revenues, costs, expenses, cash flow, working capital, etc.; customer data,
including names, contact persons and numbers, terms and conditions of
relationships, etc.; employee data including names, addresses telephone numbers,
personal data, compensation arrangements and employment terms, etc.; sales and
marketing arrangements, contracts, and relationships; shareholder and investor
names, addresses, amounts and types of investments and contact data; computer
systems, including hardware and software, etc.; and
EMPLOYER’s  costing and pricing methods and procedures and that such
information constitutes unique assets of the business of EMPLOYER and of which
EMPLOYER is the sole and exclusive owner.  EMPLOYEE will treat such
Proprietary Information on a confidential basis and will not, during or after
his or her employment, personally use or disclose all, or any part of, such
Proprietary Information to any person, firm, corporation, association, agency,
or other entity except as properly required in the conduct of the business of
EMPLOYER, or except as authorized in writing by EMPLOYER, publish, disclose or
authorize anyone else to publish or disclose, any Proprietary Information of
EMPLOYER with which EMPLOYEE's service may in any way acquaint
EMPLOYEE.  EMPLOYEE shall surrender possession of all Proprietary
Information, including especially all Trade Secrets (as defined in Paragraph
14(a)(iii) hereof), to EMPLOYER upon any suspension or termination of EMPLOYEE's
employment with the EMPLOYER.  In the event of a breach, or threatened
breach, by EMPLOYEE, of the provisions of this Paragraph 11, EMPLOYER shall be
entitled to a preliminary, temporary and permanent injunction restraining
EMPLOYEE from disclosing in whole or in part, any such Proprietary Information
and/or from rendering any services to any person, firm, corporation,
association, agency, or other entity to whom such information, in whole or in
part, has been disclosed or is threatened to be
disclosed.  Furthermore, nothing herein shall be construed as
prohibiting EMPLOYER from pursuing any other equitable or legal remedies
available to it for such breach or threatened breach, including the recovery of
damages from EMPLOYEE.

    


    (b)  For
purposes hereof, "Proprietary Information" shall not include information which
(i) is publicly available from a source other than EMPLOYEE or can be lawfully
obtained from a third party or parties in lawful possession thereof, or (ii) is
publicly released in writing by EMPLOYER, or (iii) is required to be disclosed
pursuant to the authority of any court or public agency.

     

    
      
         

      

      
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    12.RESTRICTIVE COVENANT.  (a) During the
term of this Agreement and for a period of twelve (12) months after the
termination of this Agreement and any extension thereof, EMPLOYEE shall not,
within the United States or any other area of the world in which EMPLOYER is
then operating, directly or indirectly, compete with, own, manage, operate,
control, be employed by, consult for, participate in, perform services for, or
be connected in any manner with the ownership, management, operation or control
of any business similar to the type of business conducted by EMPLOYER (or any
parent, subsidiary or affiliate) at the time of the termination of this
Agreement.  EMPLOYEE shall not, directly or indirectly, compete with
any products or services marketed or offered by EMPLOYER at the time of
termination, or engage in any activities which could be deemed a conflict of
interest.

    


    (b)  EMPLOYEE
agrees that the "time", "geographic area", and "Scope of Business" provisions of
this restrictive covenant are reasonable and proper and have been negotiated in
connection with his or her employment hereunder.

    


    (c)  EMPLOYER
and EMPLOYEE agree, that if any court of competent jurisdiction shall, for any
reason, conclude that any portion of this covenant shall be too restrictive, the
court shall determine and apply lesser restrictions, it being the intent of the
parties that some such restrictions shall be applicable for the protection of
EMPLOYER and its shareholders.

    


    13.  NONSOLICITATION
COVENANT.  (a)  For a period of thirty-six (36) months after
the termination of this Agreement (including any extension thereof) (the "Post
Termination Period") EMPLOYEE shall not, solicit, directly or indirectly, by any
means, any of the clients, customers, accounts, employees or "leads" of EMPLOYER
during the Post Termination Period.

    


    (b)  EMPLOYER
and EMPLOYEE agree, that if any court of competent jurisdiction shall, for any
reason conclude that any portion of this covenant shall be too restrictive, the
court shall determine and apply lesser restrictions, it being the intent of the
parties that some such restrictions shall be applicable for the protection of
EMPLOYER and its shareholders.

    


    (c)  This
covenant has been given to induce EMPLOYER to enter into this Agreement and
provide EMPLOYEE'S job responsibilities and compensation.

    


    14.  OWNERSHIP OF INVENTIONS
AND DEVELOPMENTS.  (a)  For purposes of this Agreement, the
following definitions shall apply:

    


    (i) "Inventions" shall
mean:

    


    (A)  All
inventions, improvements, modifications, and enhancements, whether or not
patentable, made by EMPLOYEE during EMPLOYEE's employment by EMPLOYER;
and

     

    
      
         

      

      
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    (B)  All
inventions, improvements, modifications and enhancements made by EMPLOYEE,
during a period of one (1) year after any suspension or termination of
EMPLOYEE's employment by EMPLOYER, which relate, directly or indirectly, to the
past, present or planned future business of the EMPLOYER, determined as of the
date of termination.   

    


    (ii)
"Work Product" shall mean all documentation, software, creative works, programs,
systems, source codes, know-how and information created, in whole or in part, by
EMPLOYEE during EMPLOYEE's employment by EMPLOYER, whether or not copyrightable
or otherwise protectable, excluding Inventions.

     

    (iii)
"Trade Secrets" shall mean all documentation, software, know-how and information
relating to the past, present and future business of the EMPLOYER or any plans
therefor, or relating to the past, present or future business of a third party
or plans therefor that are disclosed to the EMPLOYER, which the EMPLOYER may not
or does not disclose to third parties without restrictions on use or further
disclosure.  In the case of EMPLOYEE, the term “Trade Secrets” shall
include all knowledge, information and know-how regarding the Internal Revenue
Service and its rules, procedures, practices, personnel and policies (whether or
not published).

    


    (b)  EMPLOYEE
shall promptly disclose to EMPLOYER all Inventions and keep accurate records
relating to the conception and reduction to practice of all
Inventions.  Such records shall be the sole and exclusive property of
EMPLOYER, and the EMPLOYEE shall surrender possession of such records to the
EMPLOYER upon any suspension or termination of EMPLOYEE's employment with the
EMPLOYER.

    


    (c)  EMPLOYEE
hereby assigns to the EMPLOYER, without further consideration to the EMPLOYEE,
the entire right, title and interest in and to the Inventions and Work Product
and in and to all proprietary rights therein or based
thereon.  EMPLOYEE agrees that the Work Product shall be deemed to be
a "work made for hire".  EMPLOYEE shall execute all such assignments,
oaths, declarations and other documents as may be prepared by EMPLOYER to effect
the foregoing.

    


    (d)  EMPLOYEE
shall provide EMPLOYER with all information, documentation, and assistance
EMPLOYER may request to perfect, enforce, or defend the proprietary rights in or
based on the Inventions, Work Product or Trade Secrets.  EMPLOYER, in
its sole discretion, shall determine the exact extent of the proprietary rights,
if any, to be protected in or based on the Inventions and Work
Product.  All such information, documentation and assistance shall be
provided at no additional expense or cost to the EMPLOYER, except for
out-of-pocket expenses which the EMPLOYEE incurs at the EMPLOYER's
request.

    


    (e)  In
the event of termination of this Agreement, EMPLOYER shall be entitled to advise
any new employer of EMPLOYEE of his or her rights and obligations
hereunder.

     

    
      
         

      

      
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    15.DISABILITY.  (a)  If
EMPLOYEE is unable to perform his or her services by reason of illness or
incapacity for a period of more than twenty (20) consecutive work days, or more
than forty (40) work days in any three-month period whether or not consecutive,
the compensation otherwise payable to EMPLOYEE thereafter during the continued
period of such illness or incapacity may, at the option of EMPLOYER, be reduced
by fifty percent (50%).  If such illness or incapacity shall continue
for a period of thirty (30) consecutive work days or more than fifty percent of
any calendar quarter, payment of such compensation may, at the option of
EMPLOYER, be stopped altogether.  The full compensation shall be
reinstated upon EMPLOYEE's return to service and the discharge of his or her
full duties hereunder.  Notwithstanding anything herein to the
contrary, EMPLOYER may, at its option, terminate this Agreement at any time
after the EMPLOYEE shall be absent from his or her employment, for whatever
cause, for a continuous period of more than six (6) months, and all obligations
of EMPLOYER hereunder shall cease upon any such termination.

    


    (b)  EMPLOYER
may elect to continue the payment of full compensation notwithstanding the
foregoing.  Such payments shall be in the sole discretion of EMPLOYER,
may be discontinued at any time, and if initiated shall not thereby become a
duty or requirement.

    


    16.  TERMINATION OF
EMPLOYMENT.  (a)  EMPLOYER can terminate EMPLOYEE's
employment at any time for good cause.  Without intending to limit the
definition of good cause hereby, good cause will include:

    


    (1)the EMPLOYEE'S death;

    


    (2)the occurrence of one of the following
events:

    


    (i)  EMPLOYEE
commits and/or is officially charged with a felony or any crime involving moral
turpitude or unethical conduct which in the good faith opinion of the EMPLOYER
could impair his or her ability to perform his or her duties or which impacts
the market price of the EMPLOYER’s Common Stock;

    


    (ii)  EMPLOYEE
commits an act, or fails to take action in bad faith and to the detriment of the
EMPLOYER, or

    


    (iii)  in
the good faith opinion of the EMPLOYER's Board of Directors, the EMPLOYEE fails,
to a material extent, to fully and faithfully perform his or her obligations
under this  Agreement.

    


    (b)The termination of EMPLOYEE'S services
shall not constitute a termination of the restrictive obligations and duties
under Paragraphs 11, 12, 13 and 14.

    


    (c)In the event of the bankruptcy (Chapter
7), reorganization (Chapter 11) or other termination of the business of the
EMPLOYER, the provisions of Paragraph 12 shall continue in full force and effect
only so long as full base compensation by EMPLOYER shall continue.

     

    
      
         

      

      
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    (d)If EMPLOYER terminates EMPLOYEE’s
employment hereunder without cause or EMPLOYEE terminates his or her employment
hereunder for any reason or no reason, then EMPLOYER shall (i) pay EMPLOYEE his
or her annual salary earned but not yet paid through the date that notice of
such termination was given, (ii) deliver to EMPLOYEE any annual stock bonus
earned under Paragraph 5 hereof but not yet paid, (iii) reimburse EMPLOYEE for
any expenses pursuant to Paragraph 10 hereof subject to EMPLOYEE’s compliance
with the provisions thereof and (iv) provide any other rights, compensation
and/or benefits as may be due to EMPLOYEE in accordance with the terms and
provisions of any agreements, plans or programs of EMPLOYER (excluding severance
plans or policies, if any).

    


    (e)  IF
EMPLOYER terminates EMPLOYEE’s employment for good cause, then EMPLOYER shall
(i) pay EMPLOYEE his or her annual salary earned but not yet paid through the
date that notice of such termination was given, (ii) reimburse EMPLOYEE for any
expenses pursuant to Paragraph 10 hereof subject to EMPLOYEE’s compliance with
the provisions thereof and (iii) provide any other rights, compensation and/or
benefits as may be due to EMPLOYEE in accordance with the terms and provisions
of any agreements, plans or programs of EMPLOYER (excluding severance plans or
policies, if any).

    


    17.  ARBITRATION.  Any
controversy or claim arising out of, or relating to this Agreement, or the
breach thereof, shall be settled by arbitration in Houston, Texas accordance
with the rules then pertaining of the American Arbitration Association, but with
all rights of discovery provided by the Texas Rules of Civil Procedure, and
judgment upon the award rendered may be entered in any court having jurisdiction
thereof, which award and judgment may include reasonable attorney’s fees and
costs.

     

    18.WAIVER OF BREACH.  The waiver
by either party of a breach of any provision of this Agreement by the other
party shall not operate or be construed as a waiver of any subsequent breach by
such other party.  The failure of a party to exercise any rights or
privileges under this Agreement shall not be deemed to be a waiver or
extinguishment of such rights or privileges, all of which shall continue to be
exercisable.

     

    19.BENEFIT.  The rights and
obligations of EMPLOYER under this Agreement shall inure to the benefit of, and
shall be binding upon, its successors and assigns.  The protections of
Paragraphs 11, 12, 13 and 14 shall inure to the benefit of EMPLOYER and any
successors and assigns. The rights and obligations of EMPLOYEE under this
Agreement shall inure to the benefit of, and shall be binding upon, his or her
heirs, administrators, executors, successors and assigns.

     

    20.NOTICES.  Any notice required
or permitted to be given under this Agreement shall be sufficient if in writing,
and if either personally delivered or sent by certified mail, to his or her
residence in the case of EMPLOYEE, or to its principal office in the case of
EMPLOYER.

     

    21.LIFE INSURANCE.  EMPLOYER
and/or one or more of its subsidiaries may, in its/their discretion at any time
after the execution of this Agreement, apply for and procure, as owner and for
its/their own benefit, insurance on the life of EMPLOYEE, in such amounts and in
such forms as EMPLOYER may choose.  EMPLOYER shall not be required to
give EMPLOYEE any interest whatsoever in any such policy or policies, (although
nothing contained herein shall be deemed to prohibit any such arrangement) but
EMPLOYEE shall, at the request of EMPLOYER, subject himself to such medical
examination, supply such information, and execute such information releases and
documents as may be required by the insurance company or companies to whom
EMPLOYER has applied for such insurance.

     

    
      
         

      

      
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    22.ENTIRE AGREEMENT.  This instrument
contains the entire agreement of the parties and may be modified only by
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification, extension or discharge is sought.

    


    23.  APPLICABLE
LAW.  This Agreement shall be governed for all purposes by the laws of
the State of Texas, without reference to any “conflict of law”
provisions.  If any provision of this Agreement is declared void, such
provision shall be deemed severed from this Agreement, which shall otherwise
remain in full force and effect.

     

    24.  COUNTERPARTS. This
Agreement may be executed in two or more counterparts, including facsimile
counterparts, any one of which shall be deemed to be an original.

    


    


    


     

     

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    IN WITNESS WHEREOF, the parties hereto,
intending to be legally bound, have hereunto set their hands and seals as of the
day and year herein above written.

    


     

    
      	 	TAXMASTERS,
      INC. 
	 	 
	 	By:     /s/ Patrick R.
      Cox                                  
      
	 	Name:  Patrick
      R. Cox
      
              Title:
      Chief Executive Officer

            
	 	 
	 	 
	 	EMPLOYEE: 
	 	 
	 	 
	 	        
      /s/ Michael
      Wallace                   
                  
      
	 	Name:  Michael
      Wallace 


    

     

     

    


     

     

    
      
         

      

      
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    SCHEDULE A – EMPLOYEE
DUTIES

    


    As Acting
General Counsel - Plan and direct all aspects of EMPLOYER’s legal affairs and
ensures maximum protection of EMPLOYER’s legal rights by leading the defense of
EMPLOYER in lawsuits and the prosecution of lawsuits on behalf of EMPLOYER
against others.   

    


    Provide
legal expertise to other departments as requested.  

    


    Lead and
direct the work of the legal department.

    


    As Deputy
General Counsel – The same duties as Acting General Counsel subject to the
direction of the General Counsel.

     

     

     

     

     

    
      
         

      

      
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