Exhibit 10.41
EMPLOYMENT AGREEMENT
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This Employment Agreement (this "Agreement"), dated as of October 1, 1997
is by and between United PanAm Mortgage Corp., a California corporation (the
"Company"), and Xxxx X. Xxxxxx ("Employee"), with reference to the following
facts:
A. Due to Employee's high degree of business acumen and experience in the
mortgage banking field, the Company desires to Employee as its Chairman,
President, and Chief Executive Officer on the terms set forth below.
B. Employee is willing to enter into this Employment Agreement on the
terms and conditions set forth below.
NOW, THEREFORE, the Company and Employee hereby agree as follows:
1. Position. During the term of his employment with the Company
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hereunder, Employee shall serve as Chairman, President, and Chief Executive
Officer of the Company. Employee shall, subject to the direction and policies of
the Board of Directors of the Company, perform those duties customarily
performed by officers with the same or similar titles of companies comparable to
the Company, and Employee shall not be required to perform any work not commonly
performed by officers with the same or similar titles of companies comparable to
the Company. While he is employed by the Company, Employee shall diligently
devote his entire business skill, time and effort to his employment hereunder.
Notwithstanding the foregoing, and provided that such activities do not
interfere with the fulfillment of Employee's obligations hereunder, Employee may
(a) serve as a director or trustee of any charitable or non-profit entity; (b)
acquire solely as an investment any securities of an entity so long as he
remains a passive investor in such entity and so long as such investment in any
entity directly or indirectly in competition with the Company does not exceed 2%
of such entity's outstanding voting securities; and (c) serve as a director of
any corporation so long as such entity is not, directly or indirectly, in
competition with the Company. Unless the Company and Employee agree to the
contrary, Employee's primary place of employment shall be at the Company's
offices in Orange, California. Employee shall travel to such other locations as
may be necessary in order to discharge his duties hereunder. In the event of the
termination of the employment of Employee before September 30, 1999 by the
Company without "Cause" or by Employee with "Good Reason" (as such terms are
defined in Section 6), Employee shall make himself available, during the
Consulting Term (as defined below) to perform consulting services to the Company
as the Company deems reasonable; provided, however, that Employee shall not be
required to be available outside of regular business hours without reasonable
advance notice.
2. Term of Employment. Employee's term of employment by the Company
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under this Agreement (the "Employment Term") shall begin on the date hereof and
shall continue until September 30, 1999, unless sooner terminated by either
party. The "Consulting Term" shall begin on the termination of this Agreement
before September 30, 1999 by the Company without "Cause" or by the Employee with
"Good Reason" (as such terms are defined in Section 6), and shall continue until
the later of the first anniversary of such termination or September 30, 1999.
By giving written notice to Employee at least 15 days before the expiration of
the Consulting Term, the Company may renew the Consulting Term for one
additional year. Employee hereby acknowledges that the Company shall not be in
breach of this Agreement by terminating this Agreement at any time without
"Cause," or by giving Employee "Good Reason" to terminate this Agreement,
provided that, after such termination, the Company pays the consulting fee set
forth in Section 3(c) in accordance with the terms of this Agreement.
3. Compensation. As compensation for the services contemplated hereby,
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Employee shall receive the following:
(a) A monthly base salary (the "Base Salary") of $16,667 during the
Employment Term.
(b) For each 12 month period during the Employment Term, Employee
shall receive a bonus in an amount determined in the discretion of the Board of
Directors of the Company; provided, however, that, assuming reasonable
performance by Employee of his obligations under this Agreement, such bonus
shall not be less than $100,000 payable on September 30, 1998 and September 30,
1999.
(c) Employee shall receive a consulting fee of $10,000 per month
during the Consulting Term. Payment of such consulting fee during the
Consulting Term, however, shall be conditioned upon Employee's observance of the
Covenant Not to Compete set forth in Section 8, consulting obligations set forth
in Section 1, and covenant of confidentiality set forth in Section 7.
In the event this Agreement is terminated for any reason, Employee shall not be
obligated to mitigate any damages Employee might otherwise suffer. The
Company's obligation to make payments to Employee pursuant to this Agreement
shall not be affected by any other employers or sources or any setoff,
counterclaim, recoupment, defense or other right which the Company or its
subsidiaries may have against Employee.
4. Employee Benefits. Employee shall be entitled to participate while
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employed by the Company in all employee benefit plans and programs and
perquisites of the Company which are made generally available from time to time
by the Company to its executive management employees. Employee shall
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be entitled annually to a minimum of two weeks of vacation per year and sick
leave in accordance with the Company's normal policies for its executive
employees. The Company shall offer to employ an assistant designated by Employee
on reasonable terms. Upon the execution of this Agreement, the Company shall
assume Employee's obligations under that certain lease of the premises commonly
known as Xxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, which
Employee represents to be rent of $1,500 per month for a term expiring on
October 31, 1998. Upon such assumption, the Company shall have the right to
occupy or sublet such premises, and, if it elects to sublet such premises, to
retain the proceeds. On the execution hereof, Employee shall receive options to
purchase 30 shares of the common stock of Pan American Group, Inc., the parent
corporation of the Company, which such options shall (a) have an exercise price
per share equal to the price per share at which such shares are offered to the
public in an initial public offering of the stock of Pan American Group, Inc.,
(b) vest and become exercisable 25% on the date of this Agreement, and 25% on
each anniversary of the date of this Agreement; provided, however, that such
options shall become fully vested and exercisable on September 30, 1999 if
Employee is an employee of the Company on that date and the Company and Employee
neither renew this Agreement nor enter into a new employment agreement, and (c)
be in addition to any other options to purchase shares of the common stock of
Pan American Group, Inc. which Employee has received before the date of this
Agreement.
5. Expenses. The Company shall pay or reimburse Employee for any
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expenses reasonably incurred by him in furtherance of his duties hereunder,
including expenses for entertainment, traveling, meals and hotel accommodations,
upon submission by him of vouchers or itemized lists thereof prepared in
compliance with such reasonable rules and policies relating thereto as the
Company may from time to time adopt and as may be required in order to
facilitate the treatment of such payments as proper deductions to the Company
under the Internal Revenue Code and the rules and regulations adopted pursuant
thereto now or hereafter in effect.
6. Death, Disability, and Termination for Cause.
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(a) The payment of compensation under this Agreement shall terminate
upon the termination of the employment of Employee by reason of death or
"Disability," by the Company for "Cause," or voluntary termination by Employee
without "Good Reason," as such terms are defined in this Section 6. In the event
of termination in one of the circumstances described in this Section 6, Employee
shall be entitled to receive all Base Salary earned to the date of termination,
but shall forfeit all rights to subsequent Minimum Bonuses and other bonuses
that would have accrued during or would have been payable with respect to the
year in which such termination occurs to the extent that such
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termination occurs before the date on which they are payable.
(b) As used herein, "Cause" shall mean (i) any action of Employee or
any failure to act on the part of Employee which constitutes fraud, embezzlement
or any felony in connection with Employee's duties as a principal officer or
other employee of the Company or any subsidiary of the Company, or willful
misconduct which causes substantial economic or reputational injury to the
Company, (ii) willful breach of a material provision of this Agreement by
Employee, and the failure of Employee to begin to cure such breach within ten
(10) days after receiving written notice from the Company specifying such
breach, provided that such ten (10) day period shall be extended during any
period of Employee's disability or other physical or mental illness, or (iii) a
material neglect or refusal (other than by reason of a mental or physical
illness or disability) by Employee to follow the reasonable instructions of the
Board of Directors of the Company and Employee's failure to begin to follow such
instructions within ten (10) days after receiving written notice from the
Company to do so, provided that such ten (10) day period shall be extended
during any period of Employee's disability or other physical or mental illness.
Termination for Cause shall be by written notice from the Company to Employee,
and such notice shall identify with reasonable (under the circumstances)
specificity the damage caused.
(c) As used herein, "Good Reason" shall mean (i) the assignment to
Employee of any duties inconsistent with Employee's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 1 of this Agreement, or any other
action by the Company which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated and
insubstantial action not taken in bad faith and not intended to be inconsistent
with this Agreement and which is remedied by the Company promptly after receipt
of notice thereof given by Employee, (ii) any failure by the Company to comply
with its obligations under this Agreement, other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by Employee, (iii) any
purported termination of Employee's employment by the Company otherwise than as
expressly permitted in this Agreement, or (iv) any failure by any successor to
the Company to assume the obligations of the Company under this Agreement.
(d) As used herein, "Disability" means the failure of Employee to
render the services contemplated by this Agreement for three consecutive months,
or for shorter periods aggregating 75 or more business days in any 12 month
period, because of illness, incapacity or injury which is determined, within the
applicable definitions under Employer's group disability insurance, to be total
and permanent by a physician
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selected by Employer or its insurers and acceptable to Employee or Employee's
legal representative (with such agreement as to acceptability not to be
unreasonably withheld).
(e) In the event of Employee's death, his compensation shall be
payable to any beneficiary which he has designated in writing to the Company,
or, if he has not designated any such beneficiary, to his estate. In the event
this Agreement is terminated for any reason, Employee shall not be obligated to
mitigate any damages Employee might otherwise suffer.
7. Nondisclosure of Confidential Material.
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In the performance of Employee's duties, Employee has previously had,
and will have, access to confidential records and information, including, but
not limited to, development, marketing, purchasing, organizational, strategic,
financial, managerial, administrative, distribution and sales information, data,
and specifications presently owned or at any time hereafter developed by the
Company or its agents or consultants or used presently or at any time hereafter
in the course of its business, that are not otherwise part of the public domain
(collectively, the "Confidential Material"). All such Confidential Material is
considered secret and has been and/or will be disclosed to Employee in
confidence. Employee acknowledges that the Confidential Material constitutes
proprietary information of the Company which draws independent economic value,
actual or potential, from not being generally known to the public or to other
persons who could obtain economic value from its disclosure or use, and that the
Company has taken efforts reasonable under the circumstances, of which this
Section 7 is an example, to maintain its secrecy. Except in the performance of
Employee's duties to the Company, Employee shall not, directly or indirectly for
any reason whatsoever, disclose or use any such Confidential Material, except
that the foregoing disclosure prohibition shall not apply as to Confidential
Material that (a) has been publicly disclosed or was within Employee's
possession prior to its being furnished to Employee by Company or becomes
available to Employee on a nonconfidential basis from a third party (in any of
such cases, not due to a breach by Employee of Employee's obligations to the
Company or by breach of any other person of a confidential or fiduciary
obligation), (b) is required to be disclosed by Employee pursuant to applicable
law, and Employee provides notice to Company of such requirement as promptly as
possible, or (c) was independently acquired or developed by Employee without
violating any of the obligations under this Agreement and without relying on
Confidential Material of the Company. All records, files, drawings, documents,
equipment and other tangible items, wherever located, relating in any way to the
Confidential Material or otherwise to the Company's business, which Employee has
prepared, used or encountered or shall in the future prepare, use or encounter,
shall be and remain the Company's sole and exclusive property and shall be
included in the Confidential Material. Upon Employee's termination of
employment with the Company, or whenever requested by the Company, Employee
shall promptly deliver to the Company any and all of the Confidential Material
and copies thereof, not previously delivered to the Company, that may be, or at
any previous time has been, in Employee's possession or under Employee's
control.
8. Covenant Not to Compete.
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Employee acknowledges that the Company's business is highly innovative
and competitive, and that the Confidential
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Material involves valuable and proprietary information. Employee further
acknowledges that this Confidential Material would necessarily be compromised
were Employee to use this information for himself after his employment, or were
Employee to become an employee or consultant or otherwise become associated with
any competitor of the Company during the life-cycle of the development of the
Company's products and services and the strategy associated with the marketing
of such products and services. Although the lengths of such cycles vary
depending upon the product or service, the Company and Employee agree that, in
light of Employee's knowledge and position with the Company, a period ending on
the later of September 30, 1999 or one year after the termination of Employee's
employment with the Company (the "Applicable Period") is a reasonable and
necessary period in order to protect the Company's Confidential Material.
Employee hereby acknowledges that the Company's business is national in scope.
Accordingly, Employee and the Company agree that, for the Applicable Period,
Employee will not himself use any of the Confidential Material, and will not
directly or indirectly become an employee of, consult with, render services for,
own, manage, control, participate in, or in any manner engage in any business
which competes with the business of the Company in any state in which the
Company does business. Employee further agrees that for the Applicable Period,
Employee will not induce or attempt to induce any employee of the Company to
leave the employ of the Company or hire, directly or through another person or
entity, any person who is an employee of the Company at any time during the last
year of Employee's employment at the Company. Employee further agrees that he
will not induce or attempt to induce any customer, supplier, licensee or other
person or entity with a business relationship with the Company to cease doing
business with the Company, or in any way interfere with the relationships
between such customer, supplier, licensee or business relation and the Company.
Nothing in this Section 8 shall prohibit Employee from being a passive owner of
not more than two percent (2%) of the outstanding shares of any class of stock
of a corporation which is publicly traded, so long as Employee does not serve
such company in any capacity whether as a board member or otherwise, and
Employee has no active participation in the business of such corporation or any
of its subsidiaries or affiliates. If, at the time of enforcement of this
Section 8, an arbitrator (or court) should hold that the duration or scope of
the restrictions stated herein are unreasonable under the circumstances then
existing, the parties agree that the maximum duration or scope which is
reasonable under such circumstances shall be substituted for the stated duration
or scope. Similarly, if, at the time of enforcement, an arbitrator (or court)
should hold that the area of the restriction stated herein is unreasonable under
the circumstances then existing, the parties agree that the maximum area which
is reasonable under such circumstances shall be substituted for the stated area.
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9. Equitable Relief.
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Employee acknowledges that violation of Sections 7 and 8 would cause
the Company irreparable damage for which the Company cannot be reasonably
compensated in damages in an action at law, and that therefore in the event of
any breach by Employee of Sections 7 or 8, the Company shall be entitled to
apply to a court of competent jurisdiction for equitable relief by way of
injunction or otherwise, without being required to post a bond. This provision
shall not, however, be construed as a waiver of any of the rights which the
Company may have for damages under this Agreement or otherwise, and, except as
limited in Section 12, all of the Company's rights and remedies shall be
unrestricted.
10. Notices.
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For purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been duly
given when personally delivered, telecopied, or sent by certified or overnight
mail, return receipt requested, postage prepaid, addressed to the respective
addressees, or sent to the respective telecopier numbers, last given by each
party to the other. All notices and communications shall be deemed to have been
received on the date of delivery thereof if personally delivered, upon return
confirmation if telecopied, on the third business day after the mailing thereof,
or on the date after sending by overnight mail, except that notice of change of
address shall be effective only upon actual receipt. No objection to the method
of delivery may be made if the written notice or other communication is actually
received.
11. General.
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(a) Governing Law. This Agreement shall be governed by and construed
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and enforced in accordance with the laws of the State of California, without
giving effect to conflicts of laws principles thereof which might refer such
interpretations to the laws of a different state or jurisdiction; provided,
however, that the construction and enforcement of the Covenant Not To Compete
set forth in Section 8 in each state in which the Company does business shall be
governed by the laws of such state, without giving effect to conflicts of laws
principles thereof which might refer such interpretations to the laws of a
different state or jurisdiction.
(b) Captions. The section headings contained herein are for
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reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
(c) Entire Agreement. This Agreement sets forth the entire agreement
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and understanding of the parties relating to the subject matter hereof, and
supersedes all prior
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agreements, arrangements and understandings, written or oral, between the
parties.
(d) No Other Representations. No representation, promise or
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inducement has been made by any party hereto that is not embodied in this
Agreement, and no party shall be bound by or liable for any alleged
representation, promise or inducement not so set forth.
(e) Successors and Assigns. This Agreement shall inure to the
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benefit of and shall be binding upon the Company and Employee and their
respective heirs, executors, personal representatives, successors and assigns,
including any resulting or surviving corporation or other entity with or into
which the Company may merge or consolidate.
(f) Amendments; Waivers. This Agreement may be amended, modified,
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superseded, cancelled, renewed or extended, and the terms or covenants hereof
may be waived, only by a written instrument executed by all of the parties
hereto, or in the case of a waiver, by the party waiving compliance. The
failure of any party at any time or times to require performance of any
provision hereof shall in no manner affect the right at a later time to enforce
the same. No waiver by any party of the breach of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such breach, or a waiver of the breach of any other term or
covenant contained in this Agreement.
(g) Representation By Counsel; Interpretation. Employee acknowledges
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that (i) this Agreement has been drafted by counsel for the Company, (ii) the
Company has advised him to obtain the advice of his own counsel in reviewing
this Agreement and deciding whether to sign it, and (iii) he has either signed
this Agreement after consulting with his own counsel, or intentionally deciding
not to seek the advice of his own counsel. Accordingly, any rule of law,
including but not limited to Section 1654 of the California Civil Code, or any
legal decision that would require interpretation of any alleged ambiguities in
this Agreement against the party that drafted it has no application and is
expressly waived.
12. Arbitration of Disputes.
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Except for equitable relief as provided in Section 9, arbitration
shall be the exclusive remedy for resolving any dispute or controversy between
Employee and the Company, including, but not limited to, any dispute regarding
Employee's employment or the termination of Employee's employment or any dispute
regarding the application, interpretation or validity of this Agreement. Such
arbitration shall be conducted in accordance with the then most applicable rules
of the American Arbitration Association.
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The arbitrator shall be empowered to grant only such relief as would be
available in a court of law. In the event of any conflict between this Agreement
and the rules of the American Arbitration Association, the provisions of this
Agreement shall be determinative. If the parties are unable to agree upon an
arbitrator, they shall select a single arbitrator from a list designated by the
office of the American Arbitration Association having responsibility for the
city in which Employee last resided while employed by the Company of seven
arbitrators, all of whom shall be retired judges who are actively involved in
hearing private cases or members of the National Academy of Arbitrators. If the
parties are unable to agree upon an arbitrator from such list, they shall each
strike names alternatively from the list, with the first to strike being
determined by lot. After each party has used three strikes, the remaining name
on the list shall be the arbitrator. The fees and expenses of the arbitrator
shall initially be borne equally by the parties; provided, however, that each
party shall initially be responsible for the fees and expenses of its own
representatives and witnesses. If the parties cannot agree upon a location for
the arbitration, the arbitrator shall determine the location. Judgment may be
entered on the award of the arbitrator in any court having jurisdiction. The
prevailing party in the arbitration proceeding, as determined by the arbitrator,
in any enforcement or other court proceedings, or in any proceedings to obtain
equitable relief under Section 9, shall be entitled to the extent provided by
law to reimbursement from the other party for all of the prevailing party's
costs (including but not limited to the arbitrator's compensation), expenses and
reasonable attorney's fees.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the date first above written.
"Employee"
/s/ XXXX X. XXXXXX
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Xxxx X. Xxxxxx
the "Company"
UNITED PANAM MORTGAGE CORP.
By: /s/ XXXXXXX XXXX
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Title:
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