EXHIBIT 10.9
EMPLOYMENT AGREEMENT
AGREEMENT made as of December 1 , 1996, by and between MORTGAGE PORTFOLIO
SERVICES, INC., a Delaware corporation (the "COMPANY"), and XXXXX X. XXXXXX
whose address is 0000 Xxxxxx Xxxx Xxxxx, Xxxxxx XX 00000, Texas (the
"EMPLOYEE").
W I T N E S S E T H
WHEREAS, the Employee is currently serving as President and Chief Executive
Officer of the Company; and
WHEREAS, the Company desires to continue to enjoy the benefits of the
Employee's managerial services upon the terms and conditions set forth in this
Agreement, and the Employee is willing to continue to provide such services on
such terms and conditions.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement the parties agree as follows:
THE PROVISIONS OF SECTIONS 1 THROUGH 6 OF THIS AGREEMENT ARE SUBJECT TO THE
PROVISIONS OF SECTION 7 HEREOF.
SECTION 1. TERM OF EMPLOYMENT.
------------------------------
Subject to the terms and provisions of Section 6, the Company shall employ
the Employee, and the Employee accepts employment by the Company, on the terms
and conditions contained in this Agreement for a period commencing on the date
hereof and ending on March 18, 1999 (the "Employment Period").
SECTION 2. DUTIES; ETC.
-----------------------
The Employee shall serve as the Company's President and Chief Executive
Officer and shall perform such services and duties for the Company consistent
with such position as the Board of Directors of the Company or its designee may
reasonably assign or delegate to him from time to time, and, subject to Section
6, he shall serve as such during the Employment Period unless and until the
Board of Directors of the Company removes him from such position prior thereto.
The Employee shall also serve, if elected, as a director of the Company without
additional compensation. The Employee also agrees to serve, if elected or
appointed, as a managerial employee, officer and/or director of (i) any
corporation which is the surviving corporation of any merger or consolidation
involving the Company or otherwise becomes a successor to the Company (a
"Successor"), (ii) any corporation which becomes a subsidiary of the Company (a
"Subsidiary"), (iii) any corporation which owns 80% or more of the common stock
of the Company (a "PARENT") and/or (iv) any division of a Successor or a
Subsidiary or a Parent, all without additional compensation. The Employee
shall devote his entire time, energy and skill during regular business hours to
the affairs of the Company (and/or any Successor, Parent or Subsidiary) and to
the promotion of their interests.
SECTION 3. COMPENSATION; BENEFITS.
----------------------------------
(a) SALARY. As full compensation for his services and covenants under this
------
Agreement and subject to the provisions of Section 6, the Company shall pay the
employee a salary at the rate of One Hundred Seventy Five Thousand Dollars
($175,000) per year during the Employment Period, which salary shall be reviewed
on March 18 of each year during the Employment Period and adjusted at the
discretion of the Board of Directors. Such salary shall be payable in accordance
with the Company's regular payroll practices for its full-time managerial
employees, prorated for any partial month, but no less frequently than monthly.
(b) BENEFITS. (i) Subject to Section 6, the Company shall provide the
--------
following benefits to the Employee during the Employment Period:
(A) The Company shall include the Employee in any group medical,
health and dental insurance coverages which may hereafter be adopted and
maintained from time to time by the Company for its full-time managerial
employees, such participation to be upon the same terms and conditions as
apply generally to such employees.
(B) The Employee shall be entitled to participate and be included in
any pension, profit-sharing, "401K" or other retirement plan which may
hereafter be adopted and maintained from time to time by the Company for the
benefit of its full-time managerial employees, such participation to be upon
the same terms and conditions as apply generally to such employees. As of
the date of this Agreement, the Company has no such plans in effect.
(C) The Employee shall be entitled to participate in and be included
in any long-term disability plan which may hereafter be adopted and
maintained from time to time by the Company for the benefit of its full-time
managerial employees, such participation to be upon the same terms and
conditions as apply generally to such employees. As of the date of this
Agreement, the Company has no such plan in effect.
(D) The Employee shall be entitled to vacation, with pay, of 15
working days per year (up to five of which may be carried forward to the
next year) and to such holidays and similar rights and privileges as are
enjoyed generally in accordance with policies and practices established from
time to time by the Company.
(E) The Company shall pay the Employee the sum of $550 per month as
car allowance. The Company shall not be responsible for any costs or
expenses associated
2
with the Employee's car, it being understood that the same are the
Employee's responsibility.
(F) The Employee shall be entitled to participate in other employee
benefits which hereafter may be provided by the Company for its full-time
managerial employees, such participation to be on the same terms and
conditions as apply generally to such employees, except that the Employee
shall not be entitled to participate in any stock option, bonus or incentive
compensation plan or arrangement, except as otherwise provided in this
Agreement or in any other agreement in writing between the Company and the
Employee.
(ii) If any benefits provided by the Company to the Employee are determined
to constitute, in whole or in part, taxable income to him, then, in such case,
the Company shall be entitled to withhold from the Employee's salary such
additional amounts in respect thereof as are required to be withheld therefrom
by applicable law.
(c) EXPENSE REIMBURSEMENT. The Company will reimburse the Employee for all
---------------------
documented expenses that he properly and reasonably incurs during the Employment
Period in the performance of his duties under this Agreement to the extent that
such expenditures meet the requirements of the Internal Revenue Code for
deductibility by the Company for federal income tax purposes and are
substantiated by the Employee as required by the Internal Revenue Service.
SECTION 4. BONUS.
----------------
The Company may, in its discretion, award and pay to the Employee a bonus
(the "Bonus") in respect of any fiscal year if the same is approved by the Board
of Directors on the recommendation of the Chairman of the Board.
SECTION 5. LOYALTY, NON-COMPETITION AND CONFIDENTIALITY.
--------------------------------------------------------
(a) NON-COMPETITION. The Employee agrees and covenants that, except for the
---------------
benefit of the Company (and/or any Successor, Parent or Subsidiary) during the
Non-Competition Period (as defined in Section 5(b)) he will not engage, directly
or indirectly (whether as officer, director, consultant, employee,
representative, agent, partner, owner, stockholder or otherwise), in the
business of originating and servicing sub-prime residential mortgage loans in
the Non-Competition Area (as defined on Section 5(c)). It is the parties express
intention that if a court of competent jurisdiction finds or holds the
provisions of this Section 5(a) to be excessively broad as to time, duration,
geographical scope, activity or subject, this Section 5(a) shall then be
construed by limiting or reducing it so as to comport with then applicable law.
3
(b) NON-COMPETITION PERIOD. As used herein, the term "Non-Competition
----------------------
Period" means the period beginning on the date hereof and ending on a date which
is two years after the later to occur of (i) the date on which the Employment
Period ends or (ii) the date on which the Employee's employment with the Company
terminates (whether before or after the end of the Employment Period); provided,
---------
however, that if the Employee's employment is terminated by the Company without
-------
"cause" pursuant to Section 6(a)(ii), the Non-Competition Period shall end on
the date of such termination.
(c) NON-COMPETITION AREA. As used herein, the term "Non-Competition Area"
--------------------
means anywhere in the United States of America.
(d) OTHER EMPLOYEES. The Employee agrees that during the Non-Competition
---------------
Period he shall not, directly or indirectly, for his own account or as agent,
servant or employee of any business entity, engage, hire or offer to hire or
entice away in any other manner persuade or attempt to persuade any officer,
employee, or agent of the Company or any Subsidiary to discontinue his or her
relationship with the Company or any Subsidiary.
(e) CONFIDENTIALITY. The Employee acknowledges that he has learned and will
---------------
learn Confidential Information, as defined in Section 5(f), relating to the
business of the Company. The Employee agrees that he will not, except in the
normal and proper course of his duties , disclose or use or enable anyone else
to disclose or use, either during the Non-Competition Period or subsequently
thereto, any such Confidential Information without prior written approval of the
Board of Directors of the Company.
(f) CONFIDENTIAL INFORMATION. "Confidential Information" shall include, but
------------------------
not be limited to, the following types of information and regarding the Company:
corporate information, including contractual arrangements, plans, strategies,
tactics, policies , resolutions, copyrights and patent applications, and any
litigation or negotiations; marketing information, including sales or product
plans, strategies, tactics, methods, customers, prospects, or market research
data; financial information, including cost and performance data, debt
arrangement, equity structure, investors, and holdings; operational information,
including trade secrets, secret formulae, control and inspection practices,
credit evaluation criteria, servicing and collection methods and techniques and
personal information, including personnel lists, resumes, personal data,
organizational structure and performance evaluations. Confidential Information
is limited to that information which is not generally known in the industries in
which the Company or any Subsidiary operates, and does not include skills,
knowledge, and experience acquired by the Employee during his employment with
the Company or any prior employer.
(g) CORPORATE DOCUMENTS. The Employee agrees that all documents of any
-------------------
nature pertaining to activities of the Company or to any of the foregoing
matters in his possession now or at any time during the Non-Competition Period,
including, without limitation,
4
memoranda, notebooks, notes, data sheets, records and blueprints, are and shall
be the property of the Company and that they and all copies of them shall be
surrendered to the Company whenever requested by the Company from time to time
during the Non-Competition Period or thereafter and with or without request upon
termination of the Employee's employment with the Company.
(h) EQUITABLE REMEDIES. In the event of a breach by the Employee of any of
------------------
the provisions of this Section 5, the Company, in addition to any other remedies
it may have, shall be entitled to an injunction restraining the Employee from
doing or continuing to do any such act in violation of this Section 5.
SECTION 6. TERMINATION OF EMPLOYMENT
------------------------------------
(a) The Employee's employment as provided in Section 1 may be terminated by
the Company at any time:
(i) for "cause" in accordance with Section 6(b);
(ii) without "cause" , or
(iii) upon the failure by the Employee to fully perform his duties under
this Agreement for an aggregate of 9O days (exclusive of vacation days and
up to 14 "sick days" per year) or more during any consecutive 12-month
period by reason of illness or physical or mental disability.
(b) The Company shall be entitled to terminate the employment of the
Employee for "cause" if (i) the Employee grossly neglects or willfully fails or
refuses to perform fully his duties and obligations under this Agreement,
(ii) he violates or breaches any of his covenants in Section 5 hereof, (iii) he
is convicted of a felony or crime involving moral turpitude, (iv) he commits any
fraudulent or dishonest act that results in material injury to the Company or
any Subsidiary or Parent, (v) he suffers from drug addiction or alcohol abuse to
such extent that, in the reasonable and good faith judgment of the Board of
Directors, his ability to perform his duties hereunder is materially impaired,
(vi) he makes defamatory or derogatory remarks, orally or in writing, about the
Company, (excluding remarks made in good faith to senior officers or directors
of the Company for proper business purposes such as, for example, improving
operations, increasing sales, etc.) or (vii) he wilfully fails to follow the
instructions of the Board of Directors of the Company or the instructions of
persons reasonably designated by the Board to issue instructions to him relating
to the performance of his duties to the Company.
(c) In the event that the Employee resigns his employment with the Company
or if his employment is terminated for "cause" pursuant to Sections 6(a)(i) and
6(b), (i) the
5
Company's obligation to pay him salary and provide him benefits hereunder shall
cease as of the date of termination except for unpaid salary earned prior
thereto and except, in the case of health insurance, to the extent otherwise
required by applicable law, (ii) the Company shall not be obligated to pay the
Bonus, if any, or any portion thereof in respect of the fiscal year of
termination or any subsequent fiscal year and (iii) the Company shall be
entitled to such relief and remedies as may be available to it at law and/or in
equity.
(d) In the event that the employee's employment with the Company is
terminated by reason of the death of the Employee, then, in such case, the
Company shall (i) subject to Section 6(g), continue the health insurance
coverage (if any is in effect on the date of death) provided by the Company for
the Employee's dependents (if the Company is providing such coverage for such
dependents on the date of death) for the period required by applicable law
(provided, however, that if the Company terminates such health insurance
---------- -------
coverage, if any, for its employees or their dependents generally, the Company
may discontinue such coverage for such dependents on the date of such general
termination), (ii) within 9O days after the end of the fiscal year in which his
death occurs, pay to the Employee's spouse (or his estate if there be no
surviving spouse) that portion of the Bonus, if any, for such fiscal year which
is determined by multiplying the full amount of such bonus (calculated as if the
Employee were an employee hereunder for the entire fiscal year) by a fraction
the denominator of which is 365 and the numerator of which is the number of days
in the period from the beginning of such fiscal year to the date of death, and
(iii) the Company shall not be obligated to provide or continue to provide any
other benefits or compensation.
(e) In the event that the Company terminates the employment of the Employee
without "cause" pursuant to Section 6(a) (ii), then subject to Sections 6(g) and
6(h), the Company shall (i) continue the health insurance coverage (if any is in
effect on the date of termination) provided by the Company for the Employee and
for the Employee's dependents (if the Company is providing such coverage for
such dependents on the date of termination) for the period required by
applicable law (provided, however, that if the Company terminates such health
--------- -------
insurance coverage, if any, for its employees or their dependents generally, the
Company may discontinue such coverage for the Employee and his dependents on the
date of such general termination), (ii) continue to pay the Employee the salary
provided for in Section 3(a) for a period ending on the later to occur of (A)
March 18, 1999 and (B) a date which is the first anniversary of the date of such
termination and (iii) within 9O days after the end of the fiscal year in which
such termination occurs, pay to the Employee that portion of the Bonus, if any,
for such fiscal year which is determined by multiplying the full amount of such
bonus (calculated as if the Employee were an employee hereunder for the entire
fiscal year) by a fraction the denominator of which is 365 and the numerator of
which is the number of days in the period from the beginning of the fiscal year
to the date of termination. After any termination pursuant to this Section 6(e),
the Company shall not be obligated to provide any benefits to the Employee or
his dependents other than health insurance in accordance with the foregoing
provisions of this Section 7(e).
6
(f) In the event that the Company terminates the employment of the Employee
pursuant to Section 6(a)(iii) by reason of the disability of the Employee,
subject to Sections 6(g) and 6(h), the Company shall (i) continue the health
insurance coverage (if any is in effect on the date of termination) provided by
the Company for the Employee and his dependents (if the Company is providing
such coverage to such dependents on the date of termination) for the period
required by applicable law (provided, however, that if the Company terminates
--------- -------
such health insurance coverage, if any, for its employees or their dependents
generally, the Company may discontinue such coverage for the Employee and his
dependents on the date of such general termination), (ii) continue to pay to the
Employee the salary provided for in Section 3(a) for a period ending on the
later to occur of (A) March 18, 1999 and (B) a date which is the first
anniversary of the date of termination and (iii) within 9O days after the end of
the fiscal year in which such termination occurs, pay to the Employee that
portion of the Bonus, if any, for such fiscal year which is determined by
multiplying the full amount of the Bonus (calculated as if the Employee were an
employee hereunder for the entire fiscal year) by a fraction the denominator of
which is 365 and the numerator is which is the number of days in the period from
the beginning of such fiscal year to the date of termination. The Company's
obligation to make salary continuation payments under this Section 6(f) shall be
reduced dollar-for-dollar by any benefits which the Employee receives under any
policy of disability insurance for which the Company has paid the premiums
(directly or indirectly).
(g) Notwithstanding any of the foregoing provisions of this Section 6
requiring that the Company provide health insurance coverage to the Employee
and/or his dependents after the date of termination of employment, the Company
shall not be obligated to provide such coverage (and shall not be in breach
hereof for failing to provide the same) if the Employee or his dependents are
not eligible for such continued coverage under the terms of the applicable
insurance policies or the rules of the insurer.
(h) If, pursuant to this Section 6, the Company becomes obligated to make
salary continuation payments to the Employee after the termination of his
employment, the Company shall be entitled to make such payments in installments
in accordance with the Company's regular payroll practices for its full-time
managerial employees, prorated for any partial month. Any continuation of salary
provided for in this Section 6 shall be offset dollar-for-dollar by any salary
and/or other compensation received or earned by the Employee during the period
of salary continuation for services rendered by him as an employee, consultant
or otherwise to any person, corporation or other entity.
SECTION 7. LEASING ARRANGEMENT.
--------------------------------
(a) As of the date hereof, the Employee is an employee of Staff Leasing,
Inc. ("SLI") and is providing the services described in Section 1 to the Company
(on a full-time
7
basis) pursuant to a lease agreement between SLI and the Company (the "Lease
Agreement"). The Employee receives his compensation and benefits directly from
SLI. He receives no compensation or benefits directly from the Company. In
effect, the Company is leasing the Employee's services from SLI and is making
lease payments to SLI for the same.
The Company entered into the Lease Agreement upon the recommendation and at
the request of the Employee. The terms of the Lease Agreement were negotiated by
the Employee. The salary, benefits and other compensation provided by SLI to the
Employee are comparable to the salary, benefits and other compensation provided
for in Section 3, and it is the intention of the parties that such comparability
shall continue for so long as the Lease Agreement is in effect.
(b) For so long as the Lease Agreement is in effect, the Company shall
have no obligation to pay any salary, benefits or other compensation directly to
the Employee pursuant to Section 3 (and shall have no payroll related
obligations in respect thereof), and the Employee shall look solely to SLI for
the payment or provision thereof. The Company's only obligation in respect
thereof shall be to make the lease payments to SLI under the Lease Agreement in
amounts sufficient to support the contemplated salary, benefits and other
compensation to be paid or provided to the Employee. Further, the Company shall
have no liability or obligation to the Employee in the event that it is
determined at any time that the salary or benefits paid or provided to the
Employee are less than, or less favorable to the Employee, than those
contemplated by Section 3, it being understood and agreed that the Employee has
negotiated the terms of the Lease Agreement and the terms of his compensation
from SLI. The Employee shall be responsible for ensuring that the terms of the
leasing arrangement with SLI provide him with salary benefits and other
compensation comparable to those provided for in Section 3.
(c) The Company shall have the right at any time to terminate the Lease
Agreement and thereafter to (i) employ the Employee directly in accordance with
the terms of this Agreement (other than the terms of this Section 8) or
(ii) employ the Employee indirectly through another leasing company provided
that the salary, benefits and other compensation provided by such other leasing
company are at all times comparable to those provided for in Section 3.
(d) Except to the extent otherwise provided in this Section 8, all of the
terms and provisions of this Agreement shall apply and be effective regardless
of whether the Employee is employed indirectly through SLI (or any replacement
leasing company) or directly, except that in the event of a termination of the
Employee's direct or indirect employment with the Company at a time when the
Employee is indirectly employed (through SLI or any replacement leasing
company), the Company shall have the option of satisfying its obligations under
Section 6 directly or through SLI or any replacement leasing company
8
and except that the Company shall have the option of satisfying any other
payment obligations under this Agreement directly or through SLI (for so long as
the Lease Agreement is in effect) or any replacement leasing company. Without
limiting the generality of the preceding sentence, for purposes of this
Agreement only and for purposes of determining the rights and obligations of the
parties hereunder, the Employee shall be deemed to be an employee of the Company
at all times during which he renders the services provided for in Section 1
whether he renders such services as a direct employee of the Company of as an
employee of SLI pursuant to the Lease Agreement or as an employee of any
replacement leasing company.
SECTION 8. SUCCESSORS, ASSIGNS, ETC.
------------------------------------
This Agreement shall be binding upon and shall inure to the benefit of the
Company and its successors and assigns (including without limitation any
successor by merger). This Agreement shall be binding upon the Employee and
shall inure to his benefit and to the benefit of his heirs, executors,
administrators and legal representatives, but his duties hereunder shall not be
assignable or delegable by the Employee.
SECTION 9. ENTIRE AGREEMENT; AMENDMENT.
---------------------------------------
The Agreement constitutes the entire agreement between the Company and the
Employee relating to his employment and the additional matters herein provided
for. This Agreement may be amended or altered only by the written agreement of
the Company and the Employee. This Agreement supersedes all prior agreements, if
any, whether written or oral, between the Employee and the Company relating to
the employment of the Employee, and all such prior agreements, if any, are
hereby terminated and of no further force and effect.
SECTION 10. NOTICES.
--------------------
All notices, requests, consents and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if hand delivered or mailed by first class registered or certified mail,
return receipt requested, postage and registry fees prepaid, addressed as
follows: if to the Company, at c/o NAB Asset Corporation, 00000 Xxx Xxxxxx
Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000, Attention: Chairman of the Board,
or if to the Employee, at the address first set forth above, or to such other
address as may have been furnished to the Company by the Employee as herein
provided in writing. Such addresses may be changed by notice in writing to the
other party as aforesaid.
9
Section 11. Applicable Law: Severability.
---------- -----------------------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without regard to principles of conflicts of
laws. Each provision of this Agreement is severable from the others, and if any
provision hereof shall be to any extent unenforceable it and the other
provisions hereof shall continue to be enforceable to the full extent allowable.
IN WITNESS WHEREOF, the Employee has executed this Agreement and the Company
has caused this Agreement to be executed on its behalf by its duly authorized
officer, as of the day and year first above written.
THE COMPANY: THE EMPLOYEE:
MORTGAGE PORTFOLIO SERVICES, INC.
By: /s/ XXXXXXX X. XXXXX /s/ XXXXX X. XXXXXX
------------------------------------ ----------------------------------
Xxxxxxx X. Xxxxx Xxxxx X. Xxxxxx
Chairman of the Board
10
