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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is effective as of June 1, 1997 by
and between XXXXXXX X. XXXXXXXX ("Employee") and XXXXXXX FINANCIAL SERVICES
CORPORATION, a Michigan corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Company desires to continue the employment of the Employee,
and the Employee desires to continue to be employed by the Company, on the
terms and subject to the conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises contained in this
Agreement, the parties agree as follows:
1. Employment.
(a) The Company agrees to employ the Employee and the Employee accepts
the employment, on the terms and subject to the conditions set forth below.
During the term of employment hereunder, the Employee shall serve as the Chief
Operating Officer ("COO") of the Company, and shall do and perform diligently
all such services, acts and things as are customarily done and performed by a
Chief Operating Officer of companies in similar business and in size to the
Company, together with such other duties as may be requested from time to time
by the Company. As the Company may in the future engage in other related
businesses, the Employee's duties may vary from time to time so long as such
duties are consistent with the duties of an executive officer of the Company.
(b) For service as an officer and employee of the Company, the Employee
shall be entitled to the full protection of the applicable indemnification
provisions of the Articles of Incorporation and Bylaws of the Company, as they
may be amended from time to time.
2. Term of Employment.
Subject to the provisions for termination provided below, the term of
the Employee's employment under this Agreement shall commence on the date hereof
and shall continue thereafter for a period of three (3) years.
3. Devotion to the Company's Business.
The Employee shall devote his best efforts, knowledge, skill, and his
entire productive time, ability and attention to the business of the Company
during the term of this Agreement.
4. Compensation.
(a) During the term of this Agreement, the Company shall pay or provide,
as the case may be, to the Employee the compensation and other benefits and
rights set forth in paragraphs 4, 5 and 6 of this Agreement.
(b) Base Compensation. As compensation for the services to be performed
hereafter, the Company shall pay to the Employee, during his employment
hereunder, a base salary (the "Base Salary") payable in accordance with the
Company's usual pay practices (and in any event no less frequently than
monthly) at the rate of SEVENTY THOUSAND DOLLARS ($70,000) per year through
October 31, 1997, and at the rate of EIGHTY THOUSAND DOLLARS ($80,000) per year
thereafter.
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(c) Bonus. The Company may prepare and adopt an employee bonus plan (the
"Bonus Plan") which shall be established for the payment of an incentive bonus
to the Employee based on the Company achieving certain performance criteria to
be established by the Company and the Employee. Upon adoption, a copy of the
Bonus Plan shall be attached to this Agreement and incorporated herein, and the
Employee shall be eligible to receive an award under the Bonus Plan on the
terms and conditions set forth in that document; provided, however, that such
bonus shall not exceed seventy five (75%) of the Employee's then current Base
Salary.
(d) Disability. During any period that the Employee fails to perform
his duties hereunder as a result of incapacity due to physical or mental
illness (the "Disability Period"), the Employee shall continue to receive his
full Base Salary, bonuses and other benefits at the rate in effect for such
period until his employment is terminated by the Company pursuant to paragraph
7(a)(iii) hereof; provided, however, that payments so made to the Employee
during the Disability Period shall be reduced by the sum of the amounts, if
any, which were paid to the Employee at or prior to the time of any such
payment under disability benefit plans of the Company.
5. Benefits.
(a) Insurance. The Company shall provide to the Employee life, medical
and hospitalization insurance for himself, his spouse and eligible family
members as may be determined by the Company to be consistent with the Company's
standard policies.
(b) Benefit Plans. The Employee, at his election, may participate,
during his employment hereunder, in all retirement plans, 401(K) plans and
other benefit plans of the Company generally available from time to time to
other employees of the Company and for which the Employee qualifies under the
terms of the plans (and nothing in this Agreement shall or shall be deemed to
in any way affect the Employee's right and benefits under any such plan except
as expressly provided herein). The Employee shall also be entitled to
participate in any equity, stock option or other employee benefit plan that is
generally available to other officers of the Company. The Employee's
participation in and benefits under any such plan shall be on the terms and
subject to the conditions specified in the governing document of the particular
plan.
(c) Annual Vacation. The Employee shall be entitled to two (2 ) weeks
vacation time each year without loss of compensation which shall be scheduled
with the advance approval of the Company.
6. Reimbursement of Business Expenses.
The Company shall reimburse the Employee or provide him with an expense
allowance during the term of this Agreement for travel, car telephone, and
other expenses reasonably and necessarily incurred by the Employee in
connection with the Company's business. The Employee shall furnish such
documentation with respect to reimbursement to be paid hereunder as the Company
shall reasonably request.
7. Termination of Employment.
(a) The Employee's employment under this Agreement may be terminated:
(i) by either the Employee or the Company at any time for any
reason whatsoever or for no reason upon not less than thirty (30)
days written notice;
(ii) by the Company at any time for "cause" as defined below,
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without prior notice;
(iii) by the Company upon the Employee's "permanent disability" as
defined below, without prior notice; and
(iv) upon the Employee's death.
(b) For purposes hereof, for "cause" shall mean (i) the breach of any
material provision of this Agreement by Employee, and any action of Employee
(or the Employee's failure to act), which, in the reasonable determination of
the Company, involves malfeasance, fraud or moral turpitude, or which, if
generally known, would or might have a material adverse effect on the Company,
its businesses and/or reputations, (ii) the conviction of the Employee for any
felony, fraud or theft, (iii) any misconduct or gross negligence of the
Employee in performing his duties hereunder, including a knowing failure to
disclose or stop the dishonesty of others, (iv) dishonesty of the Employee, (v)
any act on the part of the Employee of fraud, deceit or misappropriation, (vi)
any failure or refusal on the part of Employee to perform his duties, or (vi)
any unauthorized self-dealing by the Employee. In the event of termination of
the Employee's employment under this Agreement for "cause" or if Employee
voluntarily terminates his employment hereunder, the Employee shall be entitled
to no further compensation or other benefits under this Agreement, except only
as to any unpaid salary, bonus and benefits accrued and earned by him hereunder
up to and including the effective date of such termination.
(c) For purposes hereof, the Employee's "permanent disability" shall be
deemed to have occurred after ninety (90) consecutive days during which the
Employee, by reason of his physical or mental disability or illness, shall have
been unable to discharge his duties under this Agreement. The date of
permanent disability shall be such ninetieth (90th) day. In the event either
the Company or the Employee, after receipt of notice of the Employee's
permanent disability from the other, disputes that the Employee's permanent
disability shall have occurred, the Employee shall promptly submit to a
physical examination by the chief of medicine of any major accredited hospital
in Michigan and, unless such physician shall issue his written statement to the
effect that in his opinion, based on his diagnosis, the Employee is capable of
resuming his employment and devoting his full time and energy to discharging
his duties within thirty (30) days after the date of such statement, such
permanent disability shall be deemed to have occurred.
8. Compensation Upon Termination or Disability.
(a) In the event that the Company terminates the Employee's employment
under this Agreement without "cause" pursuant to paragraph 7(a)(i) hereof, the
Employee shall be entitled to a portion of any unpaid salary, bonus and
benefits accrued and earned by him hereunder up to and including the effective
date of such termination and the Company shall pay the Employee monthly an
amount equal to one-twelfth (1/12) of the Base Salary in effect on the date of
such termination for a period of up to twelve (12) months if the Employee is
terminated within two years of the date of this Agreement, or an amount equal
to one-twelfth (1/12) of the Base Salary in effect on the date of such
termination for a period of up to eighteen (18) months if the Employee is
terminated at any time after two years of the date of this Agreement, provided
that the Employee fully complies with paragraph 11 of this Agreement (the
"Severance Payment"). Notwithstanding the foregoing, the Company, in its sole
discretion, may elect to make the Severance Payment to the Employee in one lump
sum due within thirty (30) days of the Employee's termination of employment.
(b) In the event of termination of the Employee's employment under this
Agreement for "cause" or if the Employee voluntarily terminates his employment
hereunder, the Employee shall be entitled to no further compensation or other
benefits under this Agreement, except only as to any unpaid salary, bonus and
benefits accrued and earned by him hereunder up to
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and including the effective date of such termination.
(c) In the event of termination of the Employee's employment under this
Agreement due to the Employee's permanent disability or death, the Employee (or
his successors and assigns in the event of his death) shall be entitled to a
portion of any unpaid salary, bonus and benefits accrued and earned by him
hereunder up to and including the effective date of such termination and the
Company shall pay the Employee monthly an amount equal to one-twelfth (1/12) of
the Base Salary in effect on the date of such termination for a period of up to
twelve (12) months if the Employee is terminated within two years of the date
of this Agreement, or an amount equal to one-twelfth (1/12) of the Base Salary
in effect on the date of such termination for a period of up to eighteen (18)
months if the Employee is terminated at any time after two years of the date of
this Agreement, provided that the Employee fully complies with paragraph 11 of
this Agreement (the "Disability Payment"); and provided, however, that payments
so made to the Employee shall be reduced by the sum of the amounts, if any,
which were paid to the Employee at or prior to the time of any such payment
under disability benefit plans of the Company. Notwithstanding the foregoing,
the Company, in its sole discretion, may elect to make the Disability Payment
to the Employee in one lump sum due within thirty (30) days of the Employee's
termination of employment.
(d) Regardless of the reason for termination of the Employee's
employment hereunder, bonuses and benefits shall be prorated and paid for any
period of employment not covering an entire year of employment.
(e) Notwithstanding anything to the contrary in this paragraph 8, the
Company's obligation to pay, and the Employee's right to receive, any
compensation under this paragraph 8, including, without limitation, the
Severance Payment and the Disability Payment, shall terminate upon the
Employee's breach of any provision of paragraph 11 hereof. In addition, the
Employee shall promptly forfeit any compensation received from the Company
under this paragraph 8, including, without limitation, the Severance Payment
and the Disability Payment, upon the Employee's breach of any provision of
paragraph 11 hereof.
9. Effect of the Company's Merger, Transfer of Assets, or Dissolution. In
the event of any voluntary or involuntary dissolution of the Company resulting
from either a merger or consolidation in which the Company is not the
consolidated or surviving corporation, or a transfer of all or substantially
all of the assets of the Company, pursuant to which the Employee's employment
under this Agreement is terminated, the Company shall pay to the Employee,
immediately prior to such merger, consolidation, or transfer of assets, an
amount equal to the sum of (a) the portion of any unpaid salary, bonus and
benefits accrued and earned by the Employee hereunder up to and including the
effective date of such change in control; and (b) an amount equal to twelve
(12) months' Base Salary at the rate in effect on the date of such termination,
if such termination is within two years of the date of this Agreement, or an
amount equal to eighteen (18) months' Base Salary at the rate in effect on the
date of such termination, if such termination is at any time after two years of
the date of this Agreement.
10. Stock Options. In the event of termination of the Employee's
employment under this Agreement for "cause", all stock options or other stock
based compensation awarded to the Employee shall lapse and be of no further
force or effect whatsoever in accordance with the Company's 1997 Stock Option
Plan. In the event that the Company terminates the Employee's employment under
this Agreement without "cause" or upon the death or permanent disability of the
Employee, all stock options and other stock based compensation awarded to the
Employee shall become fully vested and immediately exercisable; provided,
however, that such options and other stock based compensation must be exercised
within ninety (90) days and such stock options or other stock based
compensation shall be automatically forfeited upon the Employee's breach of any
of the provisions of paragraph 11 hereof. Any Stock Option Agreements between
the Company and the Employee shall be amended to conform to the provisions of
this paragraph 10.
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11. Restrictive Covenants. For purposes of this paragraph 11,
"Restrictive Period" shall mean a period commencing from date of execution of
this Agreement and ending upon the expiration of twelve (12) months from the
date of termination of this Agreement, if terminated within two years of the
date of this Agreement, or ending upon the expiration of eighteen (18) months
from the date of termination, if terminated at any time after two years after
the date of this Agreement, in both instances for any reason whatsoever.
Notwithstanding the foregoing, in the event that the validity or enforceability
of this Agreement shall become the subject matter of a legal action following
the termination or expiration of the Employee's employment with the Company,
the Restrictive Period shall begin to run upon the issuance of an order or
judgment by a court of competent jurisdiction enforcing the terms of this
Agreement or upon dismissal of such legal action.
(a) For the Restrictive Period, Employee will not, directly or
indirectly, engage in, or have an interest in or be associated with
(whether as an officer, director, stockholder, partner, associate,
employee, consultant, owner or otherwise) any corporation, limited
liability company, partnership, firm, enterprise or any other entity or
organization which is engaged in, (i) the business of financing purchases
of new or used manufactured homes or any refinancing of loans secured by
manufactured homes, or (ii) any business which is competitive with the
business then or at any time during the term of this Agreement conducted
or proposed to be conducted by the Company, or any company owned or
controlled by the Company, or under common control with the Company
("Affiliate"), anywhere in the United States of America (the "Restrictive
Areas").
(b) For the Restrictive Period, Employee shall not directly or
indirectly divert, or by aid to others, do anything which would tend to
divert, any business from the Company.
(c) For the Restrictive Period, Employee shall not, either directly
or indirectly, induce or attempt to induce any person to leave the
employment of the Company or any Affiliate of the Company.
(d) Confidentiality.
(1) Except as otherwise provided in this Agreement, or as the
Company may otherwise consent to in writing, the Employee shall
keep confidential and not disclose, or make any use of, except for
the Company's benefit, at any time, either during or subsequent to
the Employee's employment, any trade secrets, formulae, methods,
techniques, computations, knowledge, data or other information of
the Company relating to products, processes, know-how, marketing,
merchandising, selling ideas, selling concepts, customer lists,
customer names or addresses, borrower lists, borrower names or
addresses, forecasts, marketing plans, strategies, pricing
strategies, computer programs and copyrightable materials,
finances, or other confidential information or subject matter
pertaining to the Company's business, or any of its clients,
customers, patients, consultants, suppliers or affiliates, which
the Employee may produce, use, view or otherwise acquire during his
employment with the Company ("Proprietary Information").
(2) Employee acknowledges and agrees that Proprietary
Information has been and will be given to the Employee in
confidence, solely to permit the Employee to fulfill his
obligations to the Company under this Agreement, and that such
information derives actual or potential economic value by virtue of
its confidentiality and nondisclosure to the public or other
persons who could obtain economic value from their disclosure or
use. The Employee shall not, under any circumstances, deliver,
reproduce or allow any Proprietary Information, or any
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documentation relating thereto, to be delivered to, or used by, any
person or entity whatsoever without specific written consent of a
duly authorized representative of the Company. The Employee will
not reveal the names of the Company's personnel to any competitor,
or representative of a competitor.
(e) Employee acknowledges and agrees that the covenants set forth
above are reasonable and valid in geographical and temporal scope and in
all other respects. If any court determines that any of the covenants,
or any part of any covenant, is invalid or unenforceable, the remainder
of the covenants shall not be affected and shall be given full effect,
without regard to the invalid portion. If any court determines that any
of the covenants, or any part of any covenant, is unenforceable because
of its duration or geographic scope, such court shall have the power to
reduce the duration or scope, as the case may be, and, enforce such
provision in such reduced form. The Employee and the Company intend to
and confer jurisdiction to enforce the covenants upon the courts of any
jurisdiction within the geographical scope of such covenants. If the
courts of any one or more of such jurisdictions hold the covenants, or
any part of the covenants, unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the Employee and the Company
that such determination not bar or in any way affect the right of the
Company to the relief provided above in the courts of any other
jurisdiction within the geographical scope of such covenants as to
breaches of such covenants in such other respective jurisdictions. For
this purpose, such covenants as they relate to each jurisdiction shall be
severable into diverse and independent covenants.
(f) The Employee understands that the Company would not have an
adequate remedy at law for the breach or threatened breach by the
Employee of any one or more of the covenants set forth above, and agrees
that if there is any such breach or threatened breach, the Company may,
in addition to the other legal or equitable remedies which may be
available to it, obtain an injunction or restraining order to enjoin or
restrain the Employee from the breach or threatened breach of such
covenants.
12. Return of Proprietary Property and Proprietary Information. Upon
the termination of this Agreement for any reason, the Employee (or his heirs,
executors or personal representatives, as the case may be) shall promptly
surrender and deliver to the Company, as the case may be, all property of the
Company in the Employee's possession (the "Proprietary Property"), including,
but not limited to, all records, materials, equipment, drawings, documents and
data pertaining to his employment with, or to any Proprietary Information of,
the Company, including all copies thereof, and the Employee shall not take with
him any description of any Proprietary Information or Proprietary Property of
the Company.
13. Arbitration. Any dispute or controversy arising out of or relating
to this Agreement shall be settled finally and exclusively by arbitration in
the State of Michigan in accordance with the rules of the American Arbitration
Association then in effect. Such arbitration shall be conducted by an
arbitrator(s) appointed by the American Arbitration Association in accordance
with its rules and any finding by such arbitrator(s) shall be final and binding
upon the parties. Judgment upon any award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof, and the parties consent to
the jurisdiction of the courts of the State of Michigan for this purpose.
Nothing contained in this paragraph 13 shall be construed to preclude the
Company from obtaining injunctive or other equitable relief to secure specific
performance or to otherwise prevent a breach or contemplated breach of this
Agreement by the Employee as provided in paragraph 11 hereof.
14. Notice. All notices, requests, consents and other communications,
required or permitted to be given hereunder to be given under this Agreement
shall be personally delivered in writing or shall have been deemed duly given
when received after it is posted in the United States mail, postage prepaid,
registered or certified, return receipt requested addressed as follows:
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If to the Company:
Xxxxxxx Financial Services Corporation
00000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
If to the Employee:
Xxxxxxx X. Xxxxxxxx
0000 Xxxxxxxx
Xxxx Xxxxxxxxxx , Xxxxxxxx 00000
In all events, with a copy to:
Jaffe, Raitt, Heuer & Xxxxx,
Professional Corporation
Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
15. Miscellaneous.
(a) The provisions of this Agreement are severable and if any one
or more provisions may be determined to be illegal or otherwise unenforceable,
in whole or in part, the remaining provisions and any partially unenforceable
provision to the extent enforceable in any jurisdiction nevertheless shall be
binding and enforceable.
(b) The rights and obligations of the Company under this Agreement
shall inure to the benefit of, and shall be binding on, the Company and its
successors and assigns, and the rights and obligations (other than obligations
to perform services) of the Employee under this Agreement shall inure to the
benefit of, and shall be binding upon, the Employee and his heirs, personal
representatives and assigns. This Agreement is personal to Employee and he may
not assign his obligations under this Agreement in any manner whatsoever.
(c) The failure of either party to enforce any provision or
protections of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions as to any future violations thereof, nor
prevent that party thereafter from enforcing each and every other provision of
this Agreement. The rights granted the parties herein are cumulative and the
waiver of any single remedy shall not constitute a waiver of such party's right
to assert all other legal remedies available to it under the circumstances.
(d) This Agreement supersedes all agreements and understandings
between the parties and may not be modified or terminated orally. No
modification, termination or attempted waiver shall be valid unless in writing
and signed by the party against whom the same is sought to be enforced.
(e) This Agreement shall be governed by and construed according
to the laws of the State of Michigan.
(f) Captions and paragraph headings used herein are for
convenience and are not a part of this Agreement and shall not be used in
construing it.
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(g) This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement on
the date first written above.
COMPANY:
XXXXXXX FINANCIAL SERVICES
CORPORATION, a Michigan corporation
By: ____________________________________
Xxxxxxx X. Xxxxxxxx, President
EMPLOYEE:
________________________________________
XXXXXXX X. XXXXXXXX
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