Exhibit 10.6
EXECUTIVE EMPLOYMENT AGREEMENT
DATED AS OF SEPTEMBER 30, 1998
BY AND BETWEEN
MORTGAGE MARKET, INC.
AND
XXXXXX X. XXXXXXX
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omitted text has been marked with a bracketed asterisk ("[*]") and has been
filed separately with the Securities and Exchange Commission.
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is dated as of
September 30, 1998 by and between MORTGAGE MARKET, INC. ("MMI"), and XXXXXX X.
XXXXXXX ("Xxxxxxx").
R E C I T A L S:
WHEREAS, prior to the date of this Agreement, Xxxxxxx was a
shareholder of MMI;
WHEREAS, Prism Mortgage Company ("Prism"), as Prism has entered into
that certain Purchase and Sale Agreement dated as of even date herewith (the
"Purchase Agreement") between Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx and Xxxx
Xxxxxxxxxxxx, as Sellers, pursuant to which Prism has agreed to purchase all of
the shares of MMI;
WHEREAS, Xxxxxxx has been employed by MMI and is currently serving as
President of MMI;
WHEREAS, upon consummation of the transactions contemplated by the
Purchase Agreement, Prism will be the sole shareholder of MMI;
WHEREAS, MMI desires to retain the services of Xxxxxxx, as an employee
of MMI and, to that end, desires to enter into this contract of employment with
Xxxxxxx, upon the terms and conditions herein set forth; and
WHEREAS, Xxxxxxx desires to continue employment with MMI upon such
terms and conditions, and acknowledges that such terms and conditions, including
but not limited to the covenants contained in Section 7 hereof, constitute
material inducements for Prism to enter into and effect the transactions
contemplated in the Purchase Agreement and for MMI to employ Xxxxxxx pursuant to
this Agreement.
NOW, THEREFORE, in consideration of the above recitals, the promises
and covenants herein contained, Ten and No/l00 Dollars ($10.00), and
other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties agree as follows:
1. DEFINITIONS.
(a) "AFFILIATE" shall mean any legal entity or person which
directly or indirectly, through one or more intermediaries, owns and
controls, or is owned and controlled by, a company. The term "control"
means the power to direct or cause the direction of the management and
policies of an entity; "ownership" shall mean ownership of 25% or more
of the voting power or equity value of a company or 25% or more of a
capital and profits interest of an unincorporated entity.
(b) "BUSINESS" shall mean MMI's residential mortgage lending and
brokerage operations, as well as all secondary market transactions
conducted by, or on behalf of, MMI.
(c) "CLOSING" shall mean the date on which MMI is sold pursuant
to the Purchase Agreement.
(d) "MMI NET INCOME" shall equal MMI's Mortgage Banking Net
Income plus all other income generated by the MMI Operations
calculated in accordance with GAAP, including, without limitation,
revenues from loan origination minus (i) all operational,
administrative and out-of-pocket expenses including, without
limitation, all underwriting and closing costs, directly associated
with MMI Operations and (ii) all indirect or other expenses of Prism
and its Affiliates to the extent they are associated with services
provided to MMI and apply to MMI Operations (including, without
limitation, accounting, financial, legal and other services relating
to the provision of technology, human resources, accounting,
insurance, national marketing, national senior management and
otherwise provided by national senior management) allocated to or on
behalf of MMI based on the ratio of the number of loans closed by MMI
in any period compared to the number of loans closed by Prism and its
Affiliates including those closed by MMI in such period, provided that
no such indirect expenses of Prism incurred in the sixty (60) days
immediately follow-
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ing the Closing shall be allocated to MMI, provided further that any
costs or a portion of any costs related to [*] that MMI has incurred,
or incurred on behalf of MMI, which are necessitated solely by the [*]
of MMI Operations with Prism and incurred within [*] days immediately
following the Closing rather than the [*] of MMI Operations, such as
[*]. For purposes of this Agreement, MMI Net Income shall be computed
on a pretax basis so long as MMI and Prism are S Corporations, but
shall be computed on an after-tax basis for such periods as MMI and
Prism are C Corporations if and when MMI and Prism become C
Corporations.
(e) "MMI OPERATIONS" shall mean (i) all current operations of
MMI existing as of the Closing plus (ii) any new operations (including
acquisitions) which are expressly approved as a MMI Operation by Prism
in writing, in its reasonable discretion.
(f) "MMI'S MORTGAGE BANKING NET INCOME" shall include all
service release premiums, incentive income, gain on sale income,
interest income, income generated as a result of bulk sales,
assignment of trade or co-issuer transactions and all similar income
and fees generated from the sale of loans in the secondary market and
shall be computed on a product-by-product basis by calculating the
total gross revenues generated by each product for MMI and Prism and
its Affiliates. Such gross revenue shall be allocated as MMI Mortgage
Banking Net Income based on (i) the ratio of the [*] MMI, Prism or its
Affiliates (including MMI) relative to the [*] Prism and its
Affiliates (including the MMI loans) multiplied by (ii) [*] from which
total (i.e., the aggregate sum of the foregoing calculations [*]) is
subtracted the following: (A) all mortgage banking expenses incurred
in connection with such revenues allocated to MMI based on the ratio
of [*] MMI and funded by Prism or its Affiliates (including MMI)
relative to [*] Prism or its Affiliates [*]; (B) all hedging costs
(e.g., all costs, including transaction costs, of purchasing and
selling marketable securities obtained to hedge pipeline loans against
interest rate risk together with the pair-off losses and gains
associated with such xxxxxx) allocated to MMI [*] MMI and funded by
Prism or its Affiliates (including MMI) [*] Prism or its Affiliates
[*] taking into account [*] compared to [*], (C) any costs and
expenses associated with any repurchase obligations of MMI to the
extent they are not solely
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caused by Prism and its Affiliates other than MMI, and (D) any special
fees paid to, or reduced premiums received from, purchasers of loan
product of MMI, Prism or its Affiliates due to [*] such loan products
closed by MMI (e.g., surcharges by purchasers of loans based on [*]
the loans) and (E) adjusted further by adding or subtracting any [*]
reflected on the rate sheet of MMI distributed to its loan officers
vis-a-vis the rate sheets of Prism and its Affiliates (other than MMI)
distributed to their loan officers.
By way of example, assume MMI [*] of $500 Million [*] of $200 Million
[*] of $300 Million, that mortgage banking operations [*] $250 Million [*] $300
Million [*] and $500 Million [*] Assume further Prism and its Affiliates [*] of
$10 Million [*] $5 Million in [*] and $15 Million [*] $1 Million in hedging
costs [*] $10 Million in mortgage banking operating expenses [*] 3,000 loans
[*].
MMI Mortgage Banking Net Income would equal [*].
[*] ($500 Million/$750 Million x $10 Million) + ($200 Million/$500 Million
x $5 Million)
[*] ($300 Million/$800 Million x $15 Million)]
[*] [3,000/10,000 x $10 Million] - [$1 billion/$2.05 billion x $1 Million]
[*] [$6,666,666.66 + 2,000,000 + $5,625,000] - [$3,000,000 - $487,804]
[*] $10,803,862
2. EMPLOYMENT TERM.
(a) INITIAL TERM. The Term of this Agreement ("Term") shall
commence on the date hereof, and shall end on the first anniversary
date of this Agreement, unless otherwise terminated as set forth
herein. Upon the written request of Xxxxxxx at least ninety (90) days
prior to the end of the Term of this Agreement, the parties hereto
shall in good faith enter into negotiations regarding the renewal of
this Agreement.
(b) RENEWAL TERM(s). This Agreement may be renewed for
subsequent one-year terms, at the compensation and upon the other
terms and conditions set forth herein or as otherwise agreed by the
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parties hereto ("Renewal Term(s)") upon the mutual agreement of the
parties hereto at least forty-five (45) days prior to the expiration
of the Term or the then current Renewal Term.
3. MANAGEMENT RESPONSIBILITIES AND OTHER DUTIES. During the Term,
Xxxxxxx shall serve as President of MMI and shall have the responsibilities set
forth in Exhibit A (the "Principal Responsibilities"). Xxxxxxx, together with
the other senior officers of MMI, and subject to MMI's Board of Directors'
("Board") control and direction, shall be responsible for the management of the
day-to-day operations of the Business. Xxxxxxx shall devote substantially all of
his time during business hours (reasonable sick leave and vacations excepted),
and shall use his best efforts, to fulfill faithfully, responsibly and to the
best of his ability, his Principal Responsibilities and other duties to MMI.
Other than those decisions requiring board or shareholder consent or approval
under MMI's articles of incorporation, bylaws or applicable state law, and,
subject to Prism and the Board's control and direction, Xxxxxxx shall have
decision-making authority similar to such authority afforded Xxxxxxx by MMI
during the twelve (12) month period immediately preceding the date of this
Agreement. In addition to his Principal Responsibilities, Xxxxxxx shall have
those duties, responsibilities and authority as shall be reasonably required or
authorized by the Board, from time to time, provided that none of the duties set
forth in Exhibit A may be reduced or limited without the prior consent of
Xxxxxxx, except for a change or reduction of such responsibilities based on
Xxxxxxx' failure to perform certain responsibilities described in Exhibit A,
which failure is not corrected by Xxxxxxx within 30 days after such failure is
communicated to Xxxxxxx in writing during his annual performance review or
otherwise communicated in writing AND which change or reduction is authorized by
the Board of MMI in its sole discretion.
4. NATIONAL ADVISORY BOARD. Prism shall appoint Xxxxxxx as a member
of a "National Advisory Board," to be established by Prism, during the Term of
this Agreement. In the event Xxxxxxx is no longer employed by MMI on the date
which is five (5) years from the Closing Date, Xxxxxxx shall resign from such
National Advisory Board but may appoint a replacement member, who shall be an
employee of MMI, to serve for the remainder of such five (5) year period.
5. COMPENSATION.
(a) SALARY. During the Term of this Agreement, in addition to
any other amounts due Xxxxxxx pursuant to Section 5 hereof, to the
extent Xxxxxxx remains employed by MMI, MMI shall pay Xxxxxxx a
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gross annual salary, prior to required withholdings, equal to One
Hundred Fifty Thousand and No/100 ($150,000.00), payable in
twenty-four (24) equal installments on the fifteenth (15th) and the
last day of each month.
(b) BONUS. Beginning in 1999 and throughout the Term of this
Agreement, and subject to the provisions of Section 11 hereof, MMI
shall pay Xxxxxxx bonus compensation of $50,000 if the MMI Net Income
exceeds $1,000,000 in the twelve (12) month period following the
Closing Date ("Bonus"), which shall be paid to Xxxxxxx within sixty
(60) days of the close of such period.
(c) BENEFITS. Xxxxxxx shall be entitled, while employed by MMI,
to such employee benefits set forth in Exhibit B, attached hereto and
made a part hereof, and, in addition and without reducing or limiting
the benefits set forth in Exhibit B, shall have the benefits,
including, without limitation, health insurance, which are in effect
from time to time, and offered by MMI to its other management
employees generally and in accordance with the policies promulgated by
the Board. Xxxxxxx shall also be entitled to (i) occupy an office of
similar size with similar furnishings as that occupied by Xxxxxxx
prior to the Closing, and (ii) secretarial and administrative support
services at least equivalent, as determined by MMI, to such services
available to Xxxxxxx prior to the Closing. In addition, Xxxxxxx shall
also be entitled to receive two (2) Portland Trailblazers season
tickets, provided that such tickets shall be used in part for MMI
business and business entertainment purposes.
(d) VACATION; HOLIDAYS; SICK DAYS. Xxxxxxx shall be entitled to
six (6) weeks of vacation per calendar year (two (2) weeks for the
balance of 1998), and paid holidays and sick leave in accordance with
the policies for management and employees promulgated by the Board,
then in effect.
6. TERMINATION; RIGHT OF SETOFF. This Agreement may be terminated
by the Board of MMI only"with cause." For purposes of this provision, "with
cause" shall mean an involuntary discharge by MMI for any of the following:
(a) conviction of fraud, embezzlement, or theft;
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(b) disclosing of confidential or proprietary information of
MMI, Prism or their Affiliates; aiding a competitor of MMI, Prism or
their Affiliates; or misappropriation of a corporate opportunity of
MMI, Prism or their Affiliates, which disclosure, aid or
misappropriation breaches Xxxxxxx' fiduciary duty to MMI as an officer
or employee of MMI;
(c) conviction of a felony or entry of any guilty plea or plea
of nolo contendere to a felony;
(d) conviction of, or entry of any guilty plea or plea of nolo
contendere to, any criminal charge (1) resulting in MMI, Prism or
their Affiliates being in violation of any mortgage brokerage
licensing act in any state in which MMI, Prism or their Affiliates are
then licensed or relating to the business of MMI, Prism or their
Affiliates; (2) involving moral turpitude resulting in harm or
embarrassment to MMI, Prism or their Affiliates;
(e) any material misrepresentation to MMI or Prism by Xxxxxxx in
connection with Xxxxxxx' employment hereunder;
(f) gross negligence in performance of any Principal
Responsibilities;
(g) any charge brought in a court of competent jurisdiction or
with an appropriate regulatory agency of unlawful tortious conduct
involving moral turpitude or unlawful discrimination is made against
Xxxxxxx which MMI or Prism reasonably and in good faith believes to be
credible, which charge results in (i) substantial and material damage
or harm to the business of MMI, Prism, or their Affiliates; or (ii)
negative publicity which embarrasses and materially damages the image
or reputation of MMI, Prism, or their Affiliates;
(h) failure or breach in performing or complying with any
obligations under this Agreement or in performing any Principal
Responsibilities (which shall include, without limitation, repeated
negligent acts or omissions, or repeated incompetent performance of
Principal Responsibilities) after Xxxxxxx has been given written
notice specifying the nature of the failure or breach and has failed
to correct
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or discontinue such failure or breach within thirty (30) days after
such notice.
RIGHT OF SETOFF. In addition to the rights to terminate referred to
above, MMI and Prism shall have the right to setoff against any amounts due
Xxxxxxx, or his heirs or devisees, hereunder, any expense or damages incurred or
suffered by MMI or Prism, including, but not limited to, attorneys' fees and
costs, due to, or relating to, any breach or default by Xxxxxxx under the terms
of, or in connection with, the Purchase Agreement, to the extent Prism is
entitled to indemnification under, and in accordance with, the provisions of
Section 10.3 of the Purchase Agreement, provided that such amounts are due and
owing to MMI or Prism and are allowed under applicable law.
7. COVENANTS OF XXXXXXX. The following covenants are made by and
between Xxxxxxx and MMI in consideration of the undertakings in this Agreement
and the transaction contemplated by the Purchase Agreement, and it is expressly
acknowledged and agreed by Xxxxxxx that such covenants are material inducements
for MMI to enter into this Agreement, and for Prism to consummate the
transaction contemplated by the Purchase Agreement. The following covenants are
also made in consideration of the Term of this Agreement, and any subsequent
Renewal Terms, as provided in Section 2 hereof, and the compensation to be paid
Xxxxxxx as provided in Section 7 hereof. In addition, Xxxxxxx acknowledges that
MMI and its Affiliates, including, without limitation, Prism, expend
considerable time, money and resources in recruiting, training and developing
the skills and abilities of their employees; developing business relationships
with referral sources and customers so as to improve the good will of MMI;
establishing branches of MMI, including, but not limited to, entering into a
long-term lease for office space; establishing and maintaining close business
relationships between MMI's employees and MMI's customers; and obtaining,
compiling and developing confidential customer lists, various internal computer
reports and other proprietary business information not readily available to the
public or through other sources. Subject to the provisions of Section 7, Xxxxxxx
acknowledges and agrees that MMI is entitled to protect its investment in the
foregoing and to keep the results of its efforts for its exclusive use.
Accordingly, Xxxxxxx agrees to the covenants and conditions set forth in
Sections 7(a) through 7(d) hereof, and acknowledges and agrees that they are
necessary to preserve and protect the legitimate business interests of MMI, and
shall be binding upon Xxxxxxx during and after Xxxxxxx' employment with MMI in
accordance with their terms:
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(a) CONFIDENTIALITY. During the course of Xxxxxxx' employment,
Xxxxxxx will have access to certain trade secrets and other
proprietary and confidential business information regarding MMI, the
Business and the business of MMI's Affiliates. Xxxxxxx acknowledges,
covenants and agrees that such information is, and shall remain, the
property of MMI and/or its Affiliates. Except on behalf of MMI as
Xxxxxxx' duties may require, Xxxxxxx shall keep confidential and shall
not divulge to any other person or entity, and shall not use for
Xxxxxxx' own benefit, or the benefit of others, during Xxxxxxx'
employment or after Xxxxxxx' employment is terminated by either party
hereto for any reason, any information relating to MMI or the
Business, or otherwise pertaining to Xxxxxxx' employment, or of the
business secrets or other confidential information regarding MMI and
its Affiliates which have not otherwise become public knowledge;
provided, however, that nothing in this Agreement shall preclude
Xxxxxxx from disclosing necessary or appropriate information (i) to
parties retained to perform services for MMI or its Affiliates; (ii)
under any other circumstances to the extent such disclosure is
appropriate or necessary to further the best interests of MMI or its
Affiliates; or (iii) as may be required by law or to be disclosed in
any governmental, administrative, judicial or quasi-judicial
proceeding (providing that Xxxxxxx permits MMI or its Affiliates the
opportunity to quash or oppose any subpoena or any other attempt to
force Xxxxxxx to provide information in such forums and cooperates in
such effort). For the purposes of this Agreement, confidential
business information shall have its ordinary and customary meaning and
shall include, without limitation: all business and marketing plans,
customer and prospect lists concerning referral sources, lists of
employees of MMI and its Affiliates, lists of the existence and
locations of existing or planned branches of the Business, computer
programs, internal business reports, agreements, manuals, loan
documents (including form documents such as MMI's loan pricing
disclosure agreements and the like), training materials, marketing
materials (including, without limitation, newsletters and
correspondence), financial information, information concerning
financial arrangements with outside lending institutions, terms of
vendor agreements, internal pricing, and fee and cost information,
which are confidential or treated as confidential business information
by MMI. Notwithstanding the foregoing, confidential information
covered by this Agreement shall not include (i) agreements,
informa-
9
tion, loan documents and other materials which are in the public
domain and which Xxxxxxx receives or obtains after his employment
hereunder; and (ii) Xxxxxxx' skills, knowledge of the trade, judgment,
training and experience (other than knowledge unique to or gained
exclusively from MMI).
(b) RECORDS. All documents, records, programs, computer media,
files and lists (including all originals and all copies) containing
trade secrets or confidential business information, and all papers,
books, documents, forms, handbooks, reports, computer disks and tapes,
training manuals, lending manuals and records of every kind and
description relating to the business and affairs of MMI or its
Affiliates, whether or not prepared by Xxxxxxx, and all tangible items
obtained by Xxxxxxx in the scope of or during the course of
employment, and related to the Business, and the business of MMI's
Affiliates, including, without limitation, phones, keys, computers,
credit cards, lists, manuals, office equipment, furniture, and the
like, shall be the sole and exclusive property of MMI, and Xxxxxxx
shall surrender them to MMI upon termination of this Agreement, or at
any time upon the request of MMI. Notwithstanding the foregoing, the
restrictions in this Subsection 7(b) shall not include materials
regarding the mortgage business in general to the extent that such
materials have been gathered by Xxxxxxx at his own cost and expense
and tangible materials such as office equipment, furniture and the
like to the extent purchased by Xxxxxxx at his own cost and expense or
received by Xxxxxxx as a gift.
(c) ENFORCEMENT. Xxxxxxx recognizes that the provisions of this
Section 7 are vitally important to the continuing welfare of MMI and
its Affiliates and that money damages constitute an inadequate remedy
for any violation thereof. Accordingly, in the event of any such
violation by Xxxxxxx, MMI and the Affiliates, in addition to any other
remedies they may have, shall have the right to institute and maintain
a proceeding to compel specific performance thereof or to issue an
injunction restraining any action by Xxxxxxx in violation of this
Section 7, without the necessity of posting a bond.
(d) SURVIVAL OF COVENANTS. The provisions of this Section 7
shall survive termination of Xxxxxxx' employment for any reason.
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8. EXCLUSIVITY. Xxxxxxx hereby represents, covenants and warrants
that as of the date of this Agreement, Xxxxxxx is bound by no other employment
agreement, consulting agreement, non-competition agreement or other similar such
agreement with a party other than MMI, Prism and the Affiliates, except for this
Agreement. Furthermore, during the term of his employment hereunder, Xxxxxxx
shall not enter into, or otherwise become bound by, any other employment
agreement, consulting agreement, or non-competition agreement or other similar
such agreement other than with MMI, Prism and its Affiliates.
9. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed within the continental United States by first class
certified mail, return receipt requested, postage prepaid, addressed as follows:
(a) If to MMI, to: c/o Prism Mortgage Company
000 Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) If to Xxxxxxx, to: Xxxxxx X. Xxxxxxx
c/o Mortgage Market, Inc.
0 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxx Xxxxxx, Xxxxxx 00000
Such addresses may be changed by written notice sent to the other party at the
last recorded address of that party.
10. TAX WITHHOLDING. MMI shall provide for the withholding of any
taxes required to be withheld by federal, state and local law with respect to
any payment in cash and/or other property made by or on behalf of MMI to or for
the benefit of Xxxxxxx under this Agreement, or otherwise made in connection
with Xxxxxxx' employment with MMI.
11. NO ASSIGNMENT. Except as otherwise expressly provided herein,
this Agreement is not assignable by either party hereto and no payment to be
made hereunder shall be subject to alienation, sale, transfer, assignment,
pledge,
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encumbrance or other charge provided that an assignment of this Agreement by
MMI to an Affiliate or by operation of or in connection with the merger, sale
of stock or a sale of all or substantially all the business or assets of MMI
or Prism shall not be deemed an assignment covered by such prohibition.
Except as expressly set forth herein, this Agreement is not intended to
confer upon any other person or entity any rights or remedies hereunder and
shall be binding upon and inure to the benefit solely of each party hereto.
12. RELATIONSHIP BETWEEN MMI AND XXXXXXX. The relationship between
MMI and Xxxxxxx is that of employer and employee only. Xxxxxxx shall have no
authority to enter into any contracts binding upon MMI or to create any
obligations on the part of MMI, except such authority as has been or from time
to time shall be authorized by the Board.
13. EXECUTION IN COUNTERPARTS. This Agreement may be executed by the
parties hereto in two or more counterparts, each of which shall be deemed to be
an original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.
14. SEVERABILITY. If any provision of this Agreement shall be
adjudged by any court of competent jurisdiction to be invalid or unenforceable
for any reason, such judgment shall not affect, impair or invalidate the
remainder of this Agreement. Furthermore, if the scope of any restriction or
requirement contained in this Agreement is too broad to permit enforcement of
such restriction or requirement to its full extent, then such restriction or
requirement shall be enforced to the maximum extent permitted by law, and
Xxxxxxx consents and agrees that any court of competent jurisdiction may so
modify such scope in any proceeding brought to enforce such restriction or
requirement.
15. PRIOR UNDERSTANDINGS. This Agreement together with the
employment manuals and policies of MMI and subsequent addenda and amendments
hereto and thereafter to the extent not inconsistent with this Agreement embody
the entire understanding of the parties hereto regarding the employment
relationship of MMI with Xxxxxxx, provided that nothing in the Purchase
Agreement shall be deemed to be affected or impaired by this provision, and
supersede all other oral or written agreements or understandings between them,
regarding such employment relationship, it being understood that all previous
agreements relating to Xxxxxxx' employment existing between MMI and Xxxxxxx are
hereby deemed to be null and void and replaced hereby. No change, alteration or
modification hereof may be made except in
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a writing, signed by each of the parties hereto. The headings in this
Agreement are for convenience and reference only and shall not be construed
as part of this Agreement or to limit or otherwise affect the meaning hereof.
16. ARBITRATION.
(a) NEGOTIATION. EXCEPT FOR CONTROVERSIES, DISPUTES OR CLAIMS
RELATED TO OR BASED ON XXXXXXX' ALLEGED BREACH OF THE COVENANTS IN
SECTION 7, FOR WHICH MMI MAY SEEK INJUNCTIVE OR SUCH OTHER RELIEF AS
SUCH PARTY MAY DEEM APPROPRIATE, OR CLAIMS BROUGHT BY CONSUMERS OR
GOVERNMENTAL AUTHORITIES, NEITHER PARTY SHALL INSTITUTE ANY PROCEEDING
IN ANY COURT OR ADMINISTRATIVE AGENCY OR ANY ARBITRATION TO RESOLVE A
DISPUTE ARISING HEREUNDER BETWEEN THE PARTIES BEFORE THAT PARTY HAS
SOUGHT TO RESOLVE THE DISPUTE THROUGH DIRECT NEGOTIATION WITH THE
OTHER PARTY. IF THE DISPUTE IS NOT RESOLVED WITHIN THREE WEEKS AFTER A
DEMAND FOR DIRECT NEGOTIATION, THE PARTIES SHALL THEN ATTEMPT TO
RESOLVE THE DISPUTE THROUGH ARBITRATION AS PROVIDED IN THIS SECTION.
(b) SCOPE OF ARBITRATION. EXCEPT FOR CONTROVERSIES,
DISPUTES OR CLAIMS RELATED TO OR BASED ON AN ALLEGED BREACH OF
XXXXXXX' COVENANTS IN SECTION 7, FOR WHICH MMI MAY SEEK
INJUNCTIVE OR SUCH OTHER RELIEF AS SUCH PARTY MAY DEEM
APPROPRIATE, OR CLAIMS BROUGHT BY CONSUMERS OR GOVERNMENTAL
AUTHORITIES, ALL CONTROVERSIES, DISPUTES OR CLAIMS BETWEEN MMI
AND XXXXXXX ARISING OUT OF OR RELATED TO THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION THE VALIDITY OF THIS AGREEMENT, WILL
BE SUBMITTED FOR BINDING ARBITRATION TO THE PORTLAND, OREGON
OFFICE OF AMERICAN ARBITRATION ASSOCIATION ON DEMAND OF XXXXXXX
OR MMI. SUCH ARBITRATION PROCEEDING WILL BE CONDUCTED IN
PORT-
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LAND, OREGON AND, EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT,
WILL BE HEARD BY ONE ARBITRATOR IN ACCORDANCE WITH THE THEN
CURRENT RULES OF THE AMERICAN ARBITRATION ASSOCIATION. ALL
MATTERS RELATING TO ARBITRATION WILL BE GOVERNED BY THE FEDERAL
ARBITRATION ACT (9 U.S.C. Sections 1 ET SEQ.) AND NOT BY ANY
STATE ARBITRATION LAW.
THE DECISION AND AWARD OF THE ARBITRATOR SHALL BE BINDING
AND CONCLUSIVE UPON BOTH XXXXXXX AND MMI, AND ENFORCEABLE IN ANY
COURT OF COMPETENT JURISDICTION. THE ARBITRATOR WILL HAVE THE
RIGHT TO AWARD OR INCLUDE IN THE AWARD ANY LAWFULLY APPROPRIATE
RELIEF AND TO ASSESS COSTS OR EXPENSES TO ONE OR BOTH PARTIES.
XXXXXXX AND MMI AGREE TO BE BOUND BY THE PROVISIONS OF ANY
LIMITATION ON THE PERIOD OF TIME IN WHICH CLAIMS MUST BE BROUGHT
UNDER APPLICABLE LAW OR THIS AGREEMENT, WHICHEVER EXPIRES
EARLIER. XXXXXXX AND MMI FURTHER AGREE THAT, IN CONNECTION WITH
ANY SUCH ARBITRATION PROCEEDING, EACH MUST SUBMIT OR FILE ANY
CLAIM WHICH WOULD CONSTITUTE A COMPULSORY COUNTERCLAIM (AS
DEFINED BY RULE 13 OF THE FEDERAL RULES OF CIVIL PROCEDURE)
(EXCEPT ONE THAT COULD BE FILED UNDER ANOTHER AGREEMENT HAVING
ITS OWN ARBITRATION AGREEMENT) WITHIN THE SAME PROCEEDING AS THE
CLAIM TO WHICH IT RELATES. ANY SUCH CLAIM WHICH IS NOT SUBMITTED
OR FILED AS DESCRIBED ABOVE WILL BE FOREVER BARRED.
EACH PARTY AGREES THAT ARBITRATION WILL BE CONDUCTED ON AN
INDIVIDUAL, NOT A CLASS-WIDE, BASIS, AND THAT AN ARBITRATION
PROCEEDING BETWEEN XXXXXXX AND MMI MAY NOT BE
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CONSOLIDATED WITH ANY OTHER ARBITRATION PROCEEDING BETWEEN
XXXXXXX OR MMI, AS APPLICABLE, AND ANY OTHER PERSON, CORPORATION,
LIMITED LIABILITY COMPANY OR PARTNERSHIP, OR, EXCEPT UPON THE
EXPRESS WRITTEN CONSENT OF THE PARTIES HERETO, WITH ANY
ARBITRATION PROCEEDING COMMENCED BY MMI OR XXXXXXX UNDER ANY
OTHER AGREEMENT.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
SECTION, XXXXXXX AND MMI SHALL EACH HAVE THE RIGHT IN A PROPER
CASE TO OBTAIN TEMPORARY RESTRAINING ORDERS AND TEMPORARY OR
PRELIMINARY INJUNCTIVE RELIEF FROM A COURT OF COMPETENT
JURISDICTION; PROVIDED, HOWEVER, THAT XXXXXXX OR MMI MUST
CONTEMPORANEOUSLY SUBMIT THE DISPUTE FOR ARBITRATION ON THE
MERITS AS PROVIDED HEREIN.
THE PROVISIONS OF THIS SECTION WILL CONTINUE IN FULL FORCE
AND EFFECT SUBSEQUENT TO AND NOTWITHSTANDING THE EXPIRATION OR
TERMINATION OF THIS AGREEMENT.
(c) GOVERNING LAW. ALL MATTERS RELATING TO ARBITRATION WILL BE
GOVERNED BY THE FEDERAL ARBITRATION ACT (9 U.S.C. Sections 1 ET SEQ.).
EXCEPT TO THE EXTENT GOVERNED BY OTHER FEDERAL LAW, THIS AGREEMENT AND
ALL CLAIMS ARISING FROM THE EMPLOYMENT RELATIONSHIP BETWEEN MMI AND
XXXXXXX WILL BE GOVERNED BY THE LAWS OF THE STATE OF OREGON AND THE
UNITED STATES OF AMERICA WITHOUT REGARD TO ITS CONFLICT OF LAWS
PRINCIPLES.
(d) WAIVER OF JURY TRIAL. MMI AND XXXXXXX IRREVOCABLY WAIVE
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER AT
LAW
15
OR IN EQUITY, BROUGHT BY EITHER OF THEM AGAINST THE OTHER.
(e) CONSENT TO JURISDICTION. EACH PARTY AGREES THAT THE OTHER
PARTY MAY INSTITUTE ANY ACTION AGAINST IT (WHICH IS NOT REQUIRED TO BE
ARBITRATED HEREUNDER OR UNDER ANOTHER ARBITRATION AGREEMENT IN ANY
OTHER AGREEMENT) IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION LOCATED IN THE CITY OF PORTLAND, STATE OF OREGON, AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND WAIVES ANY
OBJECTION IT MAY HAVE TO EITHER THE JURISDICTION OF OR VENUE IN SUCH
COURTS.
16
IN WITNESS WHEREOF, this Agreement is effective as of the day and year
first above written.
MORTGAGE MARKET, INC.
By: /s/ Xxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxx
-------------------------------------- -------------------------
Title: President Xxxxxx X. Xxxxxxx
------------------------------
ACKNOWLEDGED BY:
PRISM MORTGAGE COMPANY
By: /s/ Xxxxx Xxxxxx
--------------------------------------
Title: Vice President
------------------------------
