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EXHIBIT 10.7
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into as
of June 1, 1997 by and between AAMES FINANCIAL CORPORATION, a Delaware
corporation (the "Company"), and XXXX XXXXXXXX, an individual ("Executive").
W I T N E S S E T H:
WHEREAS, Executive and the Company wish to provide for the terms and
conditions of Executive's employment as Executive Vice President -- Loan
Production of the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Executive agree as
set forth below.
1. EMPLOYMENT AND DUTIES. The Company hereby employs Executive to serve
as the Executive Vice President -- Loan Production of the Company, with the
powers and duties customarily accorded to such position, and such other duties
consistent therewith as may be assigned to Executive from time to time by the
Chief Executive Officer (the "CEO") of the Company.
2. TERM. The initial term of this Agreement shall begin as of June 1,
1997. The initial term shall expire on June 1, 1999, unless terminated earlier
as set forth in Section 6 hereof or by mutual agreement of the parties hereto
(the "Initial Term"). At the expiration of the Initial Term and each anniversary
thereafter, the term of this Agreement shall automatically be extended for an
additional year (the "Extension Term") unless either party shall have given
written notice to the other party at least ninety days prior to the end of the
Initial Term or the Extension Term, as the case may be, that it does not desire
to extend the term of this Agreement.
3. COMPENSATION
(a) Base Salary. During the term of this Agreement, Executive
shall be paid a base salary (the "Base Salary"), payable in accordance with the
Company's normal payroll practices. During the first year of the term of this
Agreement, Executive's Base Salary shall be $200,000. The annual Base Salary
payable to Executive shall be reviewed on an annual basis, provided, however,
that Executive's Base Salary shall not be reduced below $200,000 per annum
during the term of this Agreement.
(b) Performance Bonus. Executive shall be entitled to receive a
quarterly bonus of up to $50,000, as shall be determined in the sole discretion
of the compensation committee of the Board of Directors, for the quarters ended
June 30, September 30 and
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December 31, 1996 and for each quarter thereafter until the compensation
committee of the Board of Directors adopts a performance bonus plan for
Executive, at which time Executive shall be entitled to participate in such
plan. It is currently contemplated that such plan will be based on the Company's
retail and wholesale loan production. Amounts so paid shall be referred to as
the "Performance Bonus." Upon the adoption of the performance bonus plan, the
computation and payment of the Performance Bonus shall be as provided in the
plan.
4. Other Executive Benefits. During the term of this Agreement, the
Company shall provide to the Executive benefits commensurate with his position,
including each of the following benefits:
(a) Group Medical and Life Insurance Benefits. The Company shall
provide for Executive, at the Company's expense, participation in medical,
dental, accident, health, life and disability insurance benefits equivalent to
the normal customary benefits currently or from time to time provided by the
Company. Said coverage shall be in existence as of the commencement of the
Initial Term.
(b) Vacation. Executive shall be entitled to 15 days of paid
vacation during the first year of this Agreement and 20 days of paid vacation
during each subsequent year of the term of this Agreement. In each case, such
entitlement shall accrue pro rata over the contract year and shall be taken at
such time or times as shall not unreasonably interfere with the operations of
the Company.
(c) Business Expenses. The Company will pay or reimburse
Executive for any out-of-pocket expenses incurred by Executive in the course of
providing services hereunder, which comply with the Company's travel and expense
policies in effect generally from time to time for other officers of the
Company. Such reimbursement shall be made by the Company in the same manner and
within the same time period as applicable to the other executive officers of the
Company.
(d) Benefit Plans. Executive shall be entitled to participate in
any pension, profit-sharing, stock option, stock purchase or other benefit plan
of the Company now existing or hereafter adopted for the benefit of employees
generally.
5. CONFIDENTIAL INFORMATION.
(a) Non-Disclosure. Executive hereby agrees, during the term of
this Agreement, he will not disclose to any person or otherwise use or exploit
any proprietary or confidential information, including, without limitation,
trade secrets, processes, records of research, proposals, reports, methods,
processes, techniques, computer software or programming, or budgets or other
financial information, regarding the Company, its business, properties,
customers or affairs (collectively, "Confidential Information") obtained by him
at any time during the term, except to the extent required by Executive's
performance of assigned duties for the Company. Notwithstanding anything herein
to the contrary, the term
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"Confidential Information" shall not include information which is or becomes
generally available to the public other than as a result of disclosure by
Executive in violation of this Agreement, is or becomes available to Executive
on a non-confidential basis from a source other than the Company, provided that
such source is not known by Executive to be furnishing such information in
violation of a confidentiality agreement with or other obligation of secrecy to
the Company, has been made available, or is made available, on an unrestricted
basis to a third party by the Company, by an individual authorized to do so or
is known by Executive prior to its disclosure to Executive. Executive may use
and disclose Confidential Information to the extent necessary to assert any
right or defend against any claim arising under this Agreement or pertaining to
Confidential Information or its use, to the extent necessary to comply with any
applicable statute, constitution, treaty, rule, regulation, ordinance or order,
whether of the United States, any state thereof, or any other jurisdiction
applicable to Executive, or if Executive receives a request to disclose all or
any part of the information contained in the Confidential Information under the
terms of a subpoena, order, civil investigative demand or similar process issued
by a court of competent jurisdiction or by a governmental body or agency,
whether of the United States or any state thereof, or any other jurisdiction
applicable to Executive.
(b) Injunctive Relief. Executive agrees that the remedy at law
for any breach by him of the covenants and agreements set forth in this Section
may be inadequate and that in the event of any such breach, the Company may, in
addition to the other remedies that may be available to it at law, seek
injunctive relief prohibiting him (together with all those persons associated
with him) from the breach of such covenants and agreements.
6. Termination.
(a) Termination by Company for "Cause" or Voluntarily by
Executive. The Company may terminate this Agreement for "Cause" effective
immediately upon written notice thereof to Executive. For purposes of this
Agreement, "Cause" shall mean and be limited to the following events: an act of
fraud, embezzlement, gross dishonesty or similar conduct by Executive involving
the Company; any action by Executive involving the arrest of Executive, for
violation of any criminal statute consisting of a felony if the Board reasonably
determines that the continuation of Executive's employment after such event
would have an adverse impact on the operations or reputation of the Company in
the financial community; or continued insubordination or a refusal by Executive
to perform his duties hereunder in a manner deemed to be reasonably satisfactory
to the CEO; provided, however, that this Agreement may not be terminated under
this subclause unless Executive shall have first received written notice from
the CEO advising Executive of the specific acts or omissions alleged to
constitute a refusal to perform and such refusal to perform continues after
Executive shall have had a reasonable opportunity to correct the acts or
omissions cited in such notice.
In the event of termination for "Cause," voluntarily or by
Executive other than as permitted in Sections 6(b)(i), 6(b)(ii) and 6(c), (x)
Executive shall be entitled to receive that portion of the Base Salary and all
benefits accrued through the date of termination and (y) all
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Options that have become exercisable as of the date of termination shall become
and shall remain so for a period of 30 days.
(b) Termination by Company Other Than For "Cause".
(i) Death. Provided that notice of termination has not
been previously given under any Section hereof, if Executive shall die during
the term of this Agreement, this Agreement and all of the Company's obligations
hereunder shall terminate, except that Executive's estate or designated
beneficiaries shall be entitled to receive (A) all earned and unpaid Base Salary
through the date of termination; (B) a pro-rated portion of the Performance
Bonus, if any, earned and paid for the year preceding the death of Executive;
and (C) all other benefits, if any, that may be due to Executive or Executive's
estate or general provisions of any benefit plan, stock incentive plan or other
plan in which Executive is then a participant.
(ii) Disability. If the Executive shall become disabled or
incapacitated to the extent that in the reasonable judgment of the Board he is
unable to perform the duties of Executive Vice President -- Loan Production, he
shall be entitled to receive disability benefits of the type generally provided
for other executive employees of the Company. In such event, the rights of the
Executive to receive the salary provided in Section 3 of this Agreement shall be
suspended until the Executive is able to fully perform his duties.
(iii) Without Cause. Subject to the provisions of Section
6(c) hereof, this Agreement may be terminated at will at any time upon sixty
(60) days' written notice of termination by Company or Executive. In the event
Company elects to terminate this Agreement during the term of this Agreement,
Executive shall be entitled to the Base Salary earned by Executive prior to the
date of termination computed pro rata up to and including that date plus
additional compensation equal to the then current Base Salary for six (6) months
or, if less, the months remaining in the term, less required withholding and
payroll taxes.
(c) Change in Control.
(i) Following a Change in Control, this Agreement shall
continue to be binding upon the Company and Executive shall be entitled to the
payments provided for in this Section 6 in the event of termination resulting
from death, disability, cause, or without cause, all as provided for in Sections
6(a) and 6(b).
(ii)If a Change in Control of the Company shall have
occurred while the Executive is still an employee of the Company, then the
Executive shall be entitled to receive the Separation Package upon the
termination of the Executive's employment by the Company or the Executive
("Severance Termination"), unless such termination is as a result of: (i) the
Executive's death; (ii) the Executive's disability (as defined in Section
6(b)(ii)) (iii) the Executive's termination by the Company for Cause (as defined
in Section 6(a)); or (iv) the Executive's decision to terminate employment other
than for Good Reason (as defined in Section
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6(d) below). As used herein, the "Separation Package" shall consist of two
years' Base Salary (at the annual rate in effect at the date of the Severance
Termination) plus an amount equal to the Performance Bonus actually paid to
Executive with respect to the eight fiscal quarters preceding the date of the
Severance Termination (or if Executive has been employed for less than two
years, the amount of Performance Bonus paid to Executive for the entire period
of employment multiplied by a fraction, the numerator of which is the number
eight and the denominator of which is the actual number of fiscal quarters for
which Executive was employed by the Company).
(d) Good Reason. The Executive may terminate his employment by
the Company for Good Reason at any time following a Change in Control during the
term of this Agreement. For purposes of this Agreement, "Good Reason" shall mean
any of the following:
(i) the assignment to the Executive of any duties
materially inconsistent with, or any substantial diminution of, the Executive's
positions, duties, responsibilities and status with the Company immediately
prior to a Change in Control, or a significant adverse alteration in the nature
of the Executive's reporting responsibilities, titles, or offices as in effect
immediately prior to a Change in Control, or any removal of the Executive from,
or any failure to reelect the Executive to, any such positions, except in
connection with a termination of the employment of the Executive for Cause,
disability, or as a result of the Executive's death or by the Executive other
than for Good Reason;
` (ii) a reduction by the Company in the Executive's Base
Salary in effect immediately prior to a Change in Control;
(iii) failure by the Company to continue in effect
(without substitution of a substantially equivalent plan) any compensation plan,
bonus or incentive plan, stock purchase plan, stock option plan, life insurance
plan, health plan, disability plan or other benefit plan or arrangement in which
the Executive is participating at the time of a Change in Control, or the taking
of any action by the Company which would adversely affect Executive's
participation in or materially reduce Executive's benefits under any of such
plans;
(iv) any material breach by the Company of any provision
of this Agreement;
(v) following a Change in Control, the Executive is
excluded (without substitution of a substantially equivalent plan) from
participation in any incentive, compensation, stock option, health, dental,
insurance, pension or other benefit plan generally made available to persons at
Executive's level of responsibility in the Company; or
(vi) without the Executive's express written consent, the
requirement by the Company that the Executive's principal place of employment be
relocated more than twenty-five (25) miles from his place of employment prior to
the Change in Control, or travel on the Company's business to an extent
materially greater than the Executive's customary business travel obligations.
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(e) Payment of Termination Amounts. Unless otherwise specifically
provided herein, Executive may elect to have all amounts to be paid to Executive
pursuant to this Section 6 payable (i) over the remaining term of this Agreement
or for such shorter period as expressly provided for herein, as applicable, or
(ii) in a lump sum within 30 days following termination. In the event Executive
elects to be paid pursuant to clause (i), Executive agrees promptly to notify
the Company in writing of Executive's acceptance of full-time employment; within
15 days after receipt of such notice, the Company shall pay Executive in a lump
sum any amounts which remain otherwise due to Executive hereunder.
(f) Stock and Similar Rights. Executive's rights under any other
agreement or plan under which stock options, restricted stock or similar awards
are granted shall be determined in accordance with the terms and provisions of
such plans or agreements.
7. CHANGE IN CONTROL. For purposes of this Agreement, a "Change in
Control" shall mean the occurrence of any of the following events which occur
after the date hereof.
(a) The acquisition of any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act ("Rule 13d-3")) of 50% or more of the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Voting Securities"); provided,
however, that neither of the following acquisitions shall constitute a Change of
Control; any acquisition by the Company or any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; or
(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election or nomination for election by the
stockholders of the Company, shall be approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board; or
(c) Approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, unless in such
reorganization, merger or consolidation more than 50% of the combined voting
power of the then outstanding voting securities of the corporation resulting
from such reorganization, merger or consolidation, which may be the Company (the
"Resulting Corporation") entitled to vote generally in the election of directors
(the "Resulting Corporation Voting Securities") shall then be owned
beneficially, directly or indirectly, by all or substantially all of the Persons
who were the beneficial owners of Outstanding Voting Securities immediately
prior to such reorganization, merger or consolidation, in substantially the same
proportions as their respective ownership of Outstanding Voting Securities
immediately prior to such reorganization, merger or consolidation;
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no Person (excluding the Company, any employee benefit plan (or related trust)
of the Company, the Resulting Corporation and any Person beneficially owning,
immediately prior to such reorganization, merger or consolidation, directly or
indirectly, 20% or more of the combined voting power of Outstanding Voting
Securities) shall own beneficially, directly or indirectly 20% or more of the
combined voting power of the Resulting Corporation Voting Securities; and at
least a majority of the members of the Board shall have been members of the
Incumbent Board at the time of the execution of the initial agreement providing
for such reorganization, merger or consolidation; or
(d) Approval by the stockholders of the Company of (x) a complete
liquidation or dissolution of the Company or (y) sale or other disposition of
all or substantially all of the assets of the Company, other than to a
corporation (the "Buyer") with respect to which following such sale or other
disposition, more than 50% of the combined voting power of securities of Buyer
entitled to vote generally in the election of directors ("Buyer Voting
Securities"), shall be owned beneficially, directly or indirectly, by all or
substantially all of the persons who were beneficial owners of the Outstanding
Voting Securities immediately prior to such sale or other disposition, in
substantially the same proportion as their respective ownership of Outstanding
Voting Securities, immediately prior to such sale or other disposition; no
Person (excluding the Company and any employee benefit plan (or related trust)
of the Company or Buyer and any Person that shall immediately prior to such sale
or other disposition own beneficially, directly or indirectly, 20% or more of
the combined voting power of Outstanding Voting Securities), shall own
beneficially, directly or indirectly, 20% or more of the combined voting power
or, Buyer Voting Securities; and (z) at least a majority of the members of the
board of directors of Buyer shall have been members of the Incumbent Board at
the time of the execution of the initial agreement or action of the board
providing for such sale or other disposition or assets of the Company.
8. GENERAL PROVISIONS.
(a) Notices. All notices, requirements, requests, demands, claims
or other communications hereunder shall be in writing. Any notice, requirement,
request, demand, claim or other communication hereunder shall be deemed duly
given if personally delivered, when so delivered, if mailed, two (2) business
days after having been sent registered or certified mail, return-receipt
requested, postage-prepaid, and addressed to the intended recipient as set forth
below, if given by telecopier, once such notice or other communication is
transmitted to the telecopier number specified below, and the appropriate
telephonic confirmation is received, provided that such notice or other
communication is promptly thereafter mailed in accordance with the provision of
clause (ii) above or if sent through an overnight delivery service under
circumstances by which service guarantees next day delivery, the date following
the date so sent:
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If to the Company to:
AAMES FINANCIAL CORPORATION
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Executive Vice President -- Human Resources
If to Executive:
Mr. Xxxx Xxxxxxxx
0000 Xxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Any changes to the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other party notice in
the manner herein set forth.
(b) Assignment. This Agreement and the benefits hereunder are
personal to the Company and are not assignable or transferable, nor may the
services to be performed hereunder be assigned by the Company or to any person,
firm or corporation; provided, however, that this Agreement and the benefits
hereunder may be assigned by the Company to any corporation into which the
Company may be merged or consolidated, and this Agreement and the benefits
hereunder will automatically be deemed assigned to any such corporation. The
Company may delegate any of its obligations hereunder to any subsidiary of the
Company, provided that such delegation shall not relieve the Company of any of
its obligations hereunder. Executive may not assign its rights hereunder or
delegate his duties to any Person.
(c) Complete Agreement. This Agreement contains the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersedes and cancels any and all previous written or oral negotiations,
commitments, understandings, agreements and any other writings or communications
in respect of such subject matter.
(d) Amendments. This Agreement may be modified, amended,
superseded or terminated only by a writing duly signed by both parties.
(e) Severability. Any provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction, or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
(f) No Waiver. Any waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any breach of such
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provision or of any breach of any other provision of this Agreement. The failure
of either party to insist upon strict adherence to any term of this Agreement on
one or more occasions shall not be considered a waiver or deprive such party of
the right thereafter to insist upon strict adherence to that term or any other
term of this Agreement.
(g) Binding Effect. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their permitted assigns,
successors and legal representatives.
(h) Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same document.
(i) Governing Law. This Agreement has been negotiated and
entered into in the State of California and shall be construed in accordance
with the laws of the State of California.
(j) Arbitration. The parties hereby expressly agree that any
controversy or claim relating to this Agreement, including the construction,
enforcement or application of the terms hereof, shall be submitted to
arbitration in Los Angeles, California by the American Arbitration Association
in accordance with Commercial Arbitration Rules of such association. The
arbitrator shall be a retired judge of the Los Angeles Superior Court or other
party acceptable to the parties and the rules of evidence shall apply. The costs
of the arbitrator shall be borne equally. Each party shall be responsible for
its own attorneys' fees and costs. However, the arbitrator shall have the right
to award costs and expenses (including actual attorneys' fees) to the prevailing
party as well as equitable relief. The award of the arbitrator shall be final
and binding and shall be enforceable in any court of competent jurisdiction.
Nothing in this paragraph shall preclude the parties from seeking an injunction
or other equitable relief from a court of competent jurisdiction under
appropriate circumstances.
(k) Headings. The headings included in this Agreement are for the
convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officer and Executive has executed
the same as of the day and year first above-written.
AAMES FINANCIAL CORPORATION
By:/s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
Chief Executive Officer
EXECUTIVE
/s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx
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