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EXHIBIT 10.2A
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into on
this 23 day of June, 1998 by and between MEGO MORTGAGE CORPORATION, a Delaware
corporation (the "Company"), and XXXXXX X. "CHAMP" MEYERCORD (hereinafter
called the "Executive").
R E C I T A L S
A. The Company wishes to employ Executive as the Chairman of the
Board of Directors and Chief Executive Officer of the Company.
B. The Executive is willing to make his services available to the
Company and on the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual
covenants set forth herein, the parties agree as follows:
1. Employment.
1.1 Employment and Term. The Company hereby agrees to
employ the Executive and the Executive hereby agrees to serve the Company on
the terms and conditions set forth herein.
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1.2 Duties of Executive. During the term of this
Agreement, the Executive shall serve as Chairman of the Board and Chief
Executive Officer of the Company, shall diligently perform all services as may
be assigned to him by the Board, and shall exercise such power and authority as
may from time to time be delegated to him by the Board. The Executive shall
devote his full time and attention to the business and affairs of the Company,
render such services to the best of his ability, and use his best efforts to
promote the interests of the Company. The Executive shall have the authority to
hire a Chief Financial Officer, Chief Operating Officer, and other managerial
personnel, that will report directly to him, subject to the prior consent and
approval of the Board.
2. Term.
2.1 Initial Term. The initial term of this Agreement, and
the employment of the Executive hereunder, shall commence at the "Financial
Closing", which shall be the date on which the Company successfully obtains at
least $32 million of additional financing from new and/or existing investors
(the "Commencement Date") and shall expire on December 31, 2001, unless sooner
terminated in accordance with the terms and conditions hereof (the "Initial
Term").
2.2 Expiration Date. The date on which the term of this
Agreement shall expire (including any extensions pursuant to Section 2.3
hereof), is referred to in this Agreement as the Expiration Date.
2.3 Extension of Term. The term of this Agreement shall
automatically extend on the last day of the Initial Term, and on the last day
of each twelve (12) month period for which the term is extended pursuant to
this Section 2.3, for another twelve (12) months unless written notice is
given, at least twelve (12) months but no more than eighteen (18) months prior
to the date on which the term of the Agreement otherwise would expire, by
either party communicating an intent not to extend the term of the Agreement.
3. Compensation.
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3.1 Base Salary. The Executive shall receive a base salary
at the annual rate of $300,000 (the "Base Salary") during the term of this
Agreement, with such Base Salary payable in installments consistent with the
Company's normal payroll schedule, subject to applicable withholding and other
taxes. The Base Salary shall be reviewed, at least annually, for merit
increases and may, by action and in the reasonable discretion of the Board, be
increased at any time or from time to time, based upon a competitive market
analysis of comparable companies, as well as published survey data, with
respect to compensation paid to individuals similarly situated to the
Executive.
3.2 Bonuses.
(a) For the period from the Commencement Date through
December 31, 1998, the Company shall pay the Executive a bonus that is not less
than $250,000 or such higher amount as shall be determined by the Company in
its discretion, payable in cash by no later than March 15, 1999.
(b) Commencing January 1, 1999, for each calendar year
during the term of this Agreement, the Executive shall be eligible to receive
bonuses pursuant to a management incentive compensation plan (the "Plan") to be
established by the Company with the approval of its Board of Directors by no
later than September 30, 1998. The annual bonuses, if any, under the Plan shall
be based upon the achievement of various financial and operational targets as
the Board, or the Compensation Committee of the Board, in its sole and absolute
discretion, shall set forth from time to time, and shall be payable to the
Executive in cash and/or to the extent agreed upon by the Executive with common
stock ("Common Stock") of the Company by no later than March 15 of the year
following the calendar year for which the bonus is payable, or such later date
as provided in Section 10 hereof. Notwithstanding the foregoing, if the bonus
awarded to the Executive under the Plan when added to his Base Salary, would
cause the Executive's total amount of cash compensation (i.e. salary and bonus)
received pursuant to Sections 3.1 and 3.2 hereof for the calendar year, to
exceed one million dollars ($1,000,000), then that portion of the bonus equal
to such excess amount (the "Excess") shall be payable by the Company to the
Executive in shares of Common Stock of the Company (the "Shares") equal in
value to the Excess. For this purpose, the fair market value of a Share shall
be determined on the last day of the calendar year for which the bonus is
payable. Any bonuses payable pursuant to this Section 3.2 are sometimes
hereinafter referred to as "Incentive Compensation." Each calendar year for
which Incentive Compensation shall be payable under the Plan shall be referred
to herein as a "Bonus Period."
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4. Expense Reimbursement and Other Benefits.
4.1 Reimbursement of Expenses. During the term of this
Agreement, upon the submission of proper substantiation (including all relevant
receipts, invoices and other evidence reasonably requested by the Company) by
the Executive, and subject to such rules and guidelines as the Company may from
time to time adopt, the Company shall reimburse the Executive for all of the
following:
(a) reasonable expenses actually paid or incurred by
the Executive in the course of and pursuant to the business of the Company;
(b) the non-exclusive use of a two-bedroom apartment in
Atlanta, Georgia, owned or leased by the Company for use by the Executive and
his family while the Executive is providing services pursuant to this
Agreement; and
(c) reasonable costs to relocate to a destination at
the reasonable request of the Company.
4.2 Compensation/Benefit Programs. During the term of this
Agreement, the Executive shall participate in all basic health, major medical,
dental, hospitalization, accidental death and dismemberment, disability, travel
and life insurance plans, and any and all other plans as are presently and
hereinafter offered by the Company to its executives, including savings,
pension, profit-sharing and deferred compensation plans, subject to the general
eligibility and participation provisions set forth in such plans. With respect
to the life insurance plans, the Company shall provide the Executive with term
life insurance, subject to insurability, in an amount equal to five (5) times
his Base Salary, as defined in Section 3.1 hereof. With respect to disability
insurance, the Company shall use reasonable efforts to provide Executive with
coverage equal to sixty percent (60%) of the Executive's Base Salary, or such
lower amount that is within standard underwriting limitations for such
coverage. In the event that the Executive is not insurable at the standard
rates, then the amount of life insurance or disability insurance coverage
provided to the Executive shall be reduced to the amount of coverage, if any,
that can be purchased for the Executive for a premium equal to the premium that
would be payable for such coverage if it could be purchased at standard rates
from the insurer issuing the policy. In addition, the Executive shall receive
those perquisites
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and supplemental benefits that would typically accrue to executives in the
Executive's position within the peer group.
4.3 Working Facilities. During the term of this Agreement,
the Company shall furnish the Executive with an office, secretarial help and
such other facilities and services suitable to his position and adequate for
the performance of his duties hereunder.
4.4 Automobile. During the term of this Agreement, the
Company shall provide the Executive with an automobile appropriate to the
Executive's position within the peer group.
4.5 Stock Options.
(a) The Executive shall be granted options ("Stock
Options") to purchase five percent (5%) of the total outstanding shares of
Common Stock of the Company after the Financial Closing on a fully diluted
basis, including in this computation any rights offered by the Company
subsequent to the Financial Closing. During the term of this Agreement, the
Executive shall be eligible to be granted additional Stock Options to purchase
Common Stock of the Company under (and therefore subject to all terms and
conditions of) the Company's Omnibus Stock Plan and any successor plan thereto
(the "Stock Option Plan") and all rules of regulation of the Securities and
Exchange Commission applicable to stock option plans then in effect. The Stock
Option Plan will provide for the granting to management personnel of the
Company, including the Executive, of options to purchase an aggregate of twelve
percent (12%) of the issued and outstanding shares of Common Stock of the
Company, determined as of the Financial Closing.
(b) The Stock Options granted to the Executive shall be
granted as of the Commencement Date and have the following vesting schedule:
(i) one third (1/3) will be exercisable on the first anniversary of the date of
grant; (ii) one third (1/3) will be exercisable on the second anniversary of
the date of grant; and (iii) one third (1/3) will be exercisable on the third
anniversary of the date of grant. Notwithstanding the foregoing, any and all
Stock Options granted to the Executive shall become immediately vested and
fully exercisable in the event of a Change in Control of the Company (as
defined in Section 5.6 herein). The Stock Options granted as of the
Commencement Date shall be granted with an option price equal to the price at
which the Common Stock is sold by the Company at the Financial Closing. The
Stock Options shall be granted as Incentive Stock Options within the meaning of
Section 422(b) of the Code, if and to the extent they do not exceed the limits
under Section 422(d) of the Code and provided that the option price as
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determined in the preceding sentence is not less than the fair market value of
the Common Stock on the Commencement Date.
(c) The Stock Options granted to the Executive shall
terminate on the earliest of: (i) three (3) months after the date on which the
Executive's employment with the Company is terminated for any reason other than
for Cause (as defined in Section 5.1 herein), death or disability; (ii)
immediately in the event that the Executive's employment with the Company is
terminated for Cause; (iii) twelve (12) months after the date on which the
Executive's employment with the Company is terminated due to death, retirement
or disability; and (iv) ten (10) years from the date of grant.
4.6 Other Benefits. The Executive shall be entitled to
vacation each calendar year during the term of this Agreement, consistent with
industry norms for comparable positions to be taken at such times as the
Executive and the Company shall mutually determine and provided that no
vacation time shall interfere with the duties required to be rendered by the
Executive hereunder. Any vacation time not taken by Executive during any
calendar year may not be carried forward into any succeeding calendar year
without the express approval of the Board of the Company. The Executive shall
receive such additional benefits, if any, as the Board of the Company shall
from time to time determine. The Company shall cover the Executive under its
Directors and Officers liability insurance policy during the period he is
employed by the Company.
5. Termination.
5.1 Termination for Cause. The Company shall at all times
have the right, upon written notice to the Executive, to terminate the
Executive's employment hereunder, for Cause. For purposes of this Agreement,
the term "Cause" shall mean (i) an action or omission of the Executive which
constitutes a willful and material breach of this Agreement which is not cured
within thirty (30) days after receipt by the Executive of written notice of
same, (ii) fraud, embezzlement, misappropriation of funds or breach of trust in
connection with his services hereunder, (iii) conviction of any crime which
involves dishonesty or a breach of trust, (iv) gross negligence in connection
with the performance of the Executive's duties hereunder, or (v) the material
and willful refusal (other than as a result of a disability) by the Executive
to perform his duties hereunder. Any termination for cause shall be made in
writing to the Executive, which notice shall set forth in detail all acts or
omissions upon which the Company is relying for such termination. The Executive
shall have the right to address the Board regarding the acts set forth in the
notice of termination. Upon any termination pursuant to this Section 5.1, the
Company shall (i) pay to the Executive his Base
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Salary to the date of termination and (ii) pay to the Executive his determined
but unpaid Incentive Compensation, if any, for any Bonus Period ending on or
before the date of the termination of Executive's employment with the Company.
The Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the provisions of Section 4.1).
5.2 Disability. The Company shall at all times have the
right, upon written notice to the Executive, to terminate the Executive's
employment hereunder, if the Executive shall become entitled to benefits under
the disability insurance policy the Company maintains on behalf of such
executive pursuant to Subsection 4.6(c) hereof as then in effect, or, if the
Executive shall as the result of mental or physical incapacity, illness or
disability, become unable to perform his obligations hereunder for a period of
180 days in any 12-month period. The Company shall have sole discretion based
upon competent medical advice to determine whether the Executive continues to
be disabled. Upon any termination pursuant to this Section 5.2, the Company
shall (i) pay to the Executive any unpaid Base Salary through the effective
date of termination specified in such notice, (ii) pay to the Executive his
accrued but unpaid Incentive Compensation, if any, for any Bonus Period ending
on or before the date of termination of the Executive's employment with the
Company, (iii) continue to pay the Executive for a period of twelve (12) months
following the termination of the Executive's employment with the Company, an
amount equal to the excess, if any, of (A) the Base Salary he was receiving at
the time of his Disability, over (B) any benefits the Executive is entitled to
receive during such period under any disability insurance policies provided to
the Executive by the Company, such amount to be paid in the manner and at such
times as the Base Salary otherwise would have been payable to the Executive,
and (iv) continue to pay the Executive Incentive Compensation and continue to
provide the Executive with the benefits he was receiving under Section 4.2
hereof (the "Benefits") for a period of twelve (12) months following the
termination of the Executive's employment with the Company, in the manner and
at such times as the compensation or Benefits otherwise would have been payable
or provided to the Executive, provided that the amounts payable to the
Executive pursuant to the foregoing clauses (i) through (iv) shall be reduced
by the amount payable to the Executive pursuant to the disability insurance
referred to in Section 4.2 hereof. The Incentive Compensation payable under
clause (iv) of this Section 5.2 shall be equal to the amount of Incentive
Compensation payable to the Executive for the calendar year immediately
preceding the termination of Executive's employment hereunder, but in no event
less than $500,000 per annum and the Benefits shall be the Benefits provided to
the Executive for the calendar year in which the Executive's employment
hereunder terminates. Vesting of any unvested Stock Options granted to the
Executive as of the Commencement Date pursuant to Section 4.5(a) of this
Agreement shall be accelerated and become immediately vested, subject to
exercise prior to the termination of the Stock Options pursuant to Section
4.5(c) of this Agreement. The Company shall have no further liability hereunder
(other than for reimbursement for reasonable business expenses incurred prior
to the date of termination, subject, however to the provisions of Section 4.1).
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5.3 Death. In the event of the death of the Executive
during the term of his employment hereunder, the Company shall (i) pay to the
estate of the deceased Executive any unpaid Base Salary through the Executive's
date of death, (ii) pay to the estate of the deceased Executive his accrued but
unpaid Incentive Compensation, if any, for any Bonus Period ending on or before
the Executive's date of death, (iii) continue to pay to the estate of the
deceased Executive the Base Salary the Executive was receiving prior to his
death under Section 3.1 hereof for a period of twelve (12) months following the
Executive's death, in the manner and at such times as the Base Salary otherwise
would have been payable to the Executive, and (iv) continue to pay to the
estate of the deceased Executive Incentive Compensation, in the manner and at
such times as the compensation would have been payable or provided to the
Executive, provided that the amounts payable pursuant to the foregoing clauses
(iii) and (iv) shall be reduced by the amount payable pursuant to the life
insurance plans referred to in Section 4.2. The Incentive Compensation payable
under clause (iv) of this Section 5.3 shall be equal to the amount of Incentive
Compensation payable to the Executive for the calendar year immediately
preceding the Executive's death. Vesting of any unvested Stock Options granted
to the Executive as of the Commencement Date pursuant to Section 4.5(a) of this
Agreement shall be accelerated and become immediately vested, subject to
exercise prior to the termination of the Stock Options pursuant to Section
4.5(c) of this Agreement. The Company shall have no further liability hereunder
(other than for reimbursement for reasonable business expenses incurred prior
to the date of termination, subject, however to the provisions of Section 4.1).
5.4 Termination Without Cause. At any time the Company
shall have the right to terminate the Executive's employment hereunder by
written notice to the Executive. Upon any termination pursuant to this Section
5.4 (that is not a termination under any of Sections 5.1, 5.2, 5.3, or 5.5),
the Company shall (i) pay to the Executive any unpaid Base Salary through the
effective date of termination specified in such notice, (ii) pay to the
Executive the accrued but unpaid Incentive Compensation, if any, for any Bonus
Period ending on or before the date of the termination of the Executive's
employment with the Company, (iii) continue to pay the Executive's Base Salary
and Incentive Compensation through the Expiration Date, in the manner and at
such time as the Base Salary and Incentive Compensation otherwise would have
been payable to the Executive, and (iv) continue to provide the Executive with
the benefits he was receiving under Section 4.2 hereof (the "Benefits") through
the Expiration Date, in the manner and at such times as the Benefits otherwise
would have been payable or provided to the Executive. The Incentive
Compensation payable under clause (iii) of this Section 5.4 shall be equal to
the amount of Incentive Compensation payable to the Executive for the calendar
year immediately preceding the termination of Executive's employment hereunder,
and the Benefits shall be the Benefits provided to the Executive for the
calendar year in which the Executive's employment hereunder terminates. In the
event that the Company is unable to provide the Executive with any Benefits
required hereunder by reason of the termination of the Executive's employment
pursuant to this Section 5.4, then the Company shall pay the Executive cash
equal to the value of the Benefit (based upon the cost to the Executive to
obtain comparable benefits at standard rates) that otherwise would have accrued
for the Executive's benefit under the plan, for the period during which such
Benefits could not be provided under the plans, said cash payments
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to be made within 45 days after the end of the year for which such
contributions would have been made or would have accrued. The Company's good
faith determination of the amount that would have been contributed or the value
of any Benefits that would have accrued under any plan shall be binding and
conclusive on the Executive. Vesting of any unvested Stock Options granted to
the Executive as of the Commencement Date pursuant to Section 4.5(a) of this
Agreement shall be accelerated and become immediately vested, subject to
exercise prior to the termination of the Stock Options pursuant to Section
4.5(c) of this Agreement. The Company shall have no further liability hereunder
(other than for reimbursement for reasonable business expenses incurred prior
to the date of termination, subject, however, to the provisions of Section
4.1).
5.5 Termination by Executive.
(a) The Executive shall at all times have the right,
upon six (6) months written notice to the Company, to terminate his employment
hereunder.
(b) Upon any termination pursuant to this Section 5.5
by the Executive, the Company shall (i) pay to the Executive any unpaid Base
Salary through the effective date of termination specified in such notice and
(ii) pay to the Executive his accrued but unpaid Incentive Compensation, if
any, for any Bonus Period ending on or before the termination of Executive's
employment with the Company. The Company shall have no further liability
hereunder (other than for reimbursement for reasonable business expenses
incurred prior to the date of termination, subject, however, to the provisions
of Section 4.1.)
5.6 Change in Control of the Company.
(a) In the event that a Change in Control (as defined
in paragraph (b) of this Section 5.6) in the Company shall occur prior to the
Expiration Date, and within two years after the date of the Change in Control,
either (i) the Executive's employment with the Company is terminated by the
Company without Cause, as defined in Section 5.1 (and other than pursuant to
Section 5.2 by reason of the Executive's disability or Section 5.3 by reason of
the Executive's death) or (ii) the Executive terminates his employment with the
Company for Good Reason, as defined in Subsection 5.6(c) hereof, the Company
shall pay to the Executive those amounts Executive would be entitled to under
Section 5.4 hereof if his employment was terminated by the Company without
Cause. Vesting of any unvested Stock Options granted to the Executive as of the
Commencement
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Date pursuant to Section 4.5(a) of this Agreement shall be accelerated and
become immediately vested upon termination of the Executive's employment
pursuant to this Section 5.6, subject to exercise prior to the termination of
the Stock Options pursuant to Section 4.5(c) of this Agreement.
(b) For purposes of this Agreement, the term "Change in
Control" shall mean:
(i) Approval by the shareholders of the Company of
(x) a reorganization, merger, consolidation or other form of corporate
transaction or series of transactions, in each case, with respect to which
persons who were the shareholders of the Company immediately prior to such
reorganization, merger or consolidation or other transaction do not,
immediately thereafter, own more than 50% of the combined voting power entitled
to vote generally in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities, or (y) a liquidation
or dissolution of the Company or (z) the sale of all or substantially all of
the assets of the Company (unless such reorganization, merger, consolidation or
other corporate transaction, liquidation, dissolution or sale is subsequently
abandoned); or
(ii) Individuals who, immediately following the
Financial Closing, constitute the Board (as of the date hereof the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Securities Exchange Act) shall be, for purposes of this Agreement, considered
as though such person were a member of the Incumbent Board.
(c) For purposes of this Agreement, "Good Reason" shall
mean (i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 1.2 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, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive; (ii) any
failure by the
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Company to comply with any of the provisions of Article 3 of 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 the Executive; (iii) the Company's requiring the Executive to
be based at any office or location more than fifty (50) miles outside of any
major metropolitan area without the Executive's prior agreement, except for
travel reasonably required in the performance of the Executive's
responsibilities; (iv) any purported termination by the Company of the
Executive's employment otherwise than for Cause pursuant to Section 5.1, or by
reason of the Executive's disability pursuant to Section 5.2 of this Agreement
prior to the Expiration Date.
5.7 Resignation. Upon any termination of employment
pursuant to this Article 5, the Executive shall be deemed to have resigned as
an officer, and if he or she was then serving as a director of the Company, as
a director, and if required by the Board, the Executive hereby agrees to
immediately execute a resignation letter to the Board.
5.8 Survival. The provisions of this Article 5 shall
survive the termination of this Agreement, as applicable.
6. Restrictive Covenants.
6.1 Non-competition. At all times while the Executive is
employed by the Company and for the lesser of (a) the two (2) year period after
the termination of the Executive's employment with the Company for any reason,
and or (b) the period of time during which the Executive is entitled to receive
any Base Salary continuation pursuant to Sections 5.2, 5.4 and 5.6 hereof, the
Executive shall not, directly or indirectly, engage in or have any interest in
any sole proprietorship, partnership, corporation or business or any other
person or entity (whether as an employee, officer, director, partner, agent,
security holder, creditor, consultant or otherwise) that directly or indirectly
(or through any affiliated entity) engages in competition with the Company;
provided that such provision shall not apply to the Executive's ownership of
Common Stock of the Company or the acquisition by the Executive, solely as an
investment, of securities of any issuer that is registered under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended, and that are
listed or admitted for trading on any United States national securities
exchange or that are quoted on the National Association of Securities Dealers
Automated Quotations System, or any similar system or automated dissemination
of quotations of securities prices in common use, so long as the Executive does
not control, acquire a controlling interest in or become a member of a group
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which exercises direct or indirect control or, more than five percent of any
class of capital stock of such corporation.
6.2 Nondisclosure. The Executive shall not at any time
divulge, communicate, use to the detriment of the Company or for the benefit of
any other person or persons, or misuse in any way, any Confidential Information
(as hereinafter defined) pertaining to the business of the Company. Any
Confidential Information or data now or hereafter acquired by the Executive
with respect to the business of the Company (which shall include, but not be
limited to, information concerning the Company's financial condition,
prospects, technology, customers, suppliers, sources of leads and methods of
doing business) shall be deemed a valuable, special and unique asset of the
Company that is received by the Executive in confidence and as a fiduciary, and
Executive shall remain a fiduciary to the Company with respect to all of such
information. For purposes of this Agreement, "Confidential Information" means
information disclosed to the Executive or known by the Executive as a
consequence of or through his employment by the Company (including information
conceived, originated, discovered or developed by the Executive) prior to or
after the date hereof, and not generally known, about the Company or its
business. Notwithstanding the foregoing, nothing herein shall be deemed to
restrict the Executive from disclosing Confidential Information to the extent
required by law.
6.3 Nonsolicitation of Employees and Clients. At all
times while the Executive is employed by the Company and for the lesser of (a)
the two (2) year period after the termination of the Executive's employment
with the Company for any reason, or (b) the period of time during which the
Executive is entitled to receive salary continuation pursuant to Sections 5.2,
5.4 and 5.6 hereof, the Executive shall not, directly or indirectly, for
himself or for any other person, firm, corporation, partnership, association or
other entity (a) employ or attempt to employ or enter into any contractual
arrangement with any employee or former employee of the Company, unless such
employee or former employee has not been employed by the Company for a period
in excess of six months, and/or (b) call on or solicit any of the [actual or
targeted] prospective clients of the Company on behalf of any person or entity
in connection with any business competitive with the business of the Company,
nor shall the Executive make known the names and addresses of such clients or
any information relating in any manner to the Company's trade or business
relationships with such customers, other than in connection with the
performance of Executive's duties under this Agreement.
6.4 Books and Records. All books, records, and accounts
relating in any manner to the customers or clients of the Company, whether
prepared by the Executive or otherwise coming into the Executive's possession,
shall be the exclusive property of the Company and shall be returned
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immediately to the Company on termination of the Executive's employment
hereunder or on the Company's request at any time.
6.5 Definition of Company. Solely for purposes of this
Article 6, the term "Company" also shall include any existing or future
subsidiaries of the Company that are operating during the time periods
described herein and any other entities that directly or indirectly, through
one or more intermediaries, control, are controlled by or are under common
control with the Company during the periods described herein.
6.6 Acknowledgment by Executive. The Executive
acknowledges and confirms that (a) the restrictive covenants contained in this
Article 6 are reasonably necessary to protect the legitimate business interests
of the Company, and (b) the restrictions contained in this Article 6 (including
without limitation the length of the term of the provisions of this Article 6)
are not overbroad, overlong, or unfair and are not the result of overreaching,
duress or coercion of any kind. The Executive further acknowledges and confirms
that his full, uninhibited and faithful observance of each of the covenants
contained in this Article 6 will not cause him any undue hardship, financial or
otherwise, and that enforcement of each of the covenants contained herein will
not impair his ability to obtain employment commensurate with his abilities and
on terms fully acceptable to him or otherwise to obtain income required for the
comfortable support of him and his family and the satisfaction of the needs of
his creditors. The Executive acknowledges and confirms that his special
knowledge of the business of the Company is such as would cause the Company
serious injury or loss if he were to use such ability and knowledge to the
benefit of a competitor or were to compete with the Company in violation of the
terms of this Article 6. The Executive further acknowledges that the
restrictions contained in this Article 6 are intended to be, and shall be, for
the benefit of and shall be enforceable by, the Company's successors and
assigns.
6.7 Survival. The provisions of this Article 6 shall
survive the termination of this Agreement, as applicable.
7. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration in the county in which the principal office of the Company is
located, in accordance with the Rules of the American Arbitration Association
then in effect (except to the extent that the procedures outlined below differ
from such rules). Within thirty (30) days after written notice by either party
has been given that a dispute exists and that arbitration is required, each
party must select an arbitrator and those two arbitrators shall promptly, but
in no event later than thirty (30) days after their selection, select a third
arbitrator. The
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parties agree to act as expeditiously as possible to select arbitrators and
conclude the dispute. The selected arbitrators must render their decision in
writing. In the event that either party hereto brings suit for the collection
of any judgement resulting from any binding arbitration, then the prevailing
party shall be reimbursed for all attorney's fees and related costs incurred by
the prevailing party in connection with such action. If advances are required,
each party will advance one-half of the estimated fees and expenses of the
arbitrators. Judgment may be entered on the arbitrators' award in any court
having jurisdiction.
8. Section 162(m) Limits. Notwithstanding any other provision of
this Agreement to the contrary, if and to the extent that any remuneration
payable by the Company to the Executive for any year would exceed the maximum
amount of remuneration that the Company may deduct for that year under Section
162(m) ("Section 162(m)") of the Internal Revenue Code of 1986, as amended (the
"Code"), payment of the portion of the remuneration for that year that would
not be so deductible under Section 162(m) shall, in the sole discretion of the
Board, be deferred and become payable at such time or times as the Board
determines that it first would be deductible by the Company under Section
162(m), with interest at the "short-term applicable rate" as such term is
defined in Section 1274(d) of the Code. The limitation set forth under this
Section 8 shall not apply with respect to any amounts payable to the Executive
pursuant to Article 5 hereof.
9. Assignment. Neither party shall have the right to assign or
delegate his rights or obligations hereunder, or any portion thereof, to any
other person. The Executive shall, however, be permitted to transfer by gift
his rights under any Stock Options granted by the Company as of the
Commencement Date to the Executive under Section 4.5 of this Agreement to any
family member of the Executive or to any trust, partnership or other entity of
which the Executive and/or his family are the sole beneficial owners, for
estate planning purposes.
10. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey.
11. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and, upon its effectiveness, shall supersede all prior agreements,
understandings and arrangements, both oral and written, between the Executive
and the Company (or any of its affiliates) with respect to such subject matter.
This Agreement may not be modified in any way unless by a written instrument
signed by both the Company and the Executive.
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12. Notices: All notices required or permitted to be given hereunder
shall be in writing and shall be personally delivered by courier, sent by
registered or certified mail, return receipt requested or sent by confirmed
facsimile transmission addressed as set forth herein. Notices personally
delivered, sent by facsimile or sent by overnight courier shall be deemed given
on the date of delivery and notices mailed in accordance with the foregoing
shall be deemed given upon the earlier of receipt by the addressee, as
evidenced by the return receipt thereof, or three (3) days after deposit in the
U.S. mail. Notice shall be sent (i) if to the Company, addressed to 0000
Xxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxx, Xxxxxxx 00000, Attention: Corporate
Secretary, and (ii) if to the Executive, to his address as reflected on the
payroll records of the Company, or to such other address as either party hereto
may from time to time give notice of to the other.
13. Benefits; Binding Effect. This Agreement shall be for the
benefit of and binding upon the parties hereto and their respective heirs,
personal representatives, legal representatives, successors and, where
applicable, assigns, including, without limitation, any successor to the
Company, whether by merger, consolidation, sale of stock, sale of assets or
otherwise.
14. Severability. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part thereof, all of which are inserted conditionally on their being valid in
law, and, in the event that any one or more of the words, phrases, sentences,
clauses or sections contained in this Agreement shall be declared invalid, this
Agreement shall be construed as if such invalid word or words, phrase or
phrases, sentence or sentences, clause or clauses, or section or sections had
not been inserted. If such invalidity is caused by length of time or size of
area, or both, the otherwise invalid provision will be considered to be reduced
to a period or area which would cure such invalidity.
15. Waivers. The waiver by either party hereto of a breach or
violation of any term or provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or violation.
16. Section Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
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17. No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or
remedies under or by reason of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first above written.
COMPANY:
MEGO MORTGAGE CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President and Chief Executive
Officer
EXECUTIVE:
/s/ Xxxxxx X. "Champ" Meyercord
-------------------------------------------
XXXXXX X. "CHAMP" MEYERCORD
00 Xx Xxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
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