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EXHIBIT 10.4(a)
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and
entered into as of the 28th day of August, 1996, by and between Aames Financial
Corporation, a Delaware corporation (the "Parent"), and Xxxx X. Xxxxxxxxx, an
individual ("Executive"), with reference to the following:
RECITALS
A. The Parent is a party to an Agreement and Plan of
Reorganization, dated as of August 12, 1996, by and between the Parent, One
Stop Mortgage, Inc., a Wyoming corporation (the "Company") and Aames
Acquisition Corporation, a Delaware corporation ("Merger Sub") (the
"Reorganization Agreement") pursuant to which Merger Sub will be merged with
and into the Company, resulting in the Company becoming a wholly owned
subsidiary of Parent; and
B. It is material condition to the consummation of the
transactions contemplated by the Reorganization Agreement that the parties
enter into and deliver this Agreement to one another.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and
in consideration of the parties consummating the transactions contemplated by
the Reorganization Agreement and the mutual representations, warranties,
covenants and agreements contained herein, the parties hereto to agree as
follows:
1. EMPLOYMENT AND DUTIES. The Parent hereby employs
Executive to serve as Chief Executive Officer and President and Chairman of the
Board of the Company, and effective September 3, 1996, as Executive Vice
President of the Parent, with the powers and duties customarily accorded to
such positions, including those powers and duties set forth in the respective
Bylaws of the Parent and Company for such office and such other duties
consistent therewith as may be assigned to Executive from time to time by the
Chief Executive Officer of the Parent. Executive shall report to the Chief
Executive Officer of the Parent. Executive shall devote his entire business
time and attention to his duties hereunder and shall endeavor in good faith to
perform his duties in an efficient, faithful and business-like manner. During
the term of his employment, it is intended that Executive also serve as a
Director on the Board of Directors of the Company (the "Company Board") and a
Director on the Board of Directors of Parent (the "Parent Board"), and the
Parent will take action within its powers to include Executive among the slate
of directors proposed to be nominated by the Parent Board at any applicable
stockholders meeting.
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2. TERM. The initial term of this Agreement shall begin
on the date hereof and shall expire on the fifth anniversary of the date
hereof unless terminated earlier as set forth in Section 6 hereof or by mutual
agreement of the parties hereto (the "Initial Term"). At the expiration of the
Initial Term and each anniversary thereafter, the term of this Agreement shall
automatically be extended for an additional year (the "Extension Term") unless
either party shall have given written notice to the other party at least ninety
days prior to the end of the Initial Term or the Extension Term, as the case
may be, that it does not desire to extend the term of this Agreement. If
Executive's employment under this Agreement is extended for an Extension Term,
it shall thereafter or during any Extension Term be terminable (other than upon
expiration) only as provided in Section 6 or by mutual agreement of the parties
hereto.
3. COMPENSATION.
(a) Base Salary. During the term of this
Agreement, Executive shall be paid a base salary (the "Base Salary"), payable
in accordance with the Parent's normal payroll practices in the amount of
$750,000 per year. The amount of the Base Salary payable to Executive shall
be reviewed at least annually; provided, however, that Executive's Base Salary
shall not be reduced below $750,000 per annum during the term of this
Agreement.
(b) Performance Bonus.
i) In addition to Base Salary to be
paid to Executive hereunder, the Parent shall pay to Executive a bonus (the
"Performance Bonus") equal to 7.5 percent of the Company's Adjusted Pre-Tax
Income for each fiscal year or portion thereof during the term of Executive's
employment hereunder.
ii) The Performance Bonus for each
fiscal year shall be paid in four quarterly payments (the "Quarterly Payments")
as set forth in clauses iii) and iv) below.
iii) Within forty-five days following the
end of the first three fiscal quarters during any fiscal year which includes
any portion of the employment term hereunder, the Company shall deliver to
Executive a statement setting forth the amount of the Company's Adjusted
Pre-Tax Income for such quarter and for the period from the beginning of the
fiscal year (or, in the case of fiscal 1997, the date of the commencement of
Executive's employment hereunder) through the most recent fiscal quarter (the
"Measurement Period"), certified by the Chief Financial Officer of Parent,
accompanied by a cash payment in the amount by which (x) 7.5% of the Company's
Adjusted Pre-Tax Income for the Measurement Period, exceeds (y) the sum of the
Quarterly Payments previously paid to Executive with respect to such fiscal
year.
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iv) Within 90 days following the end of the
fourth quarter of any fiscal year which includes any portion of the employment
term hereunder, the Company shall deliver to Executive a reasonably detailed
calculation of the Company's Adjusted Pre-Tax Income for such fiscal year and
the Performance Bonus payable hereunder for such fiscal year, prepared by the
Parent's outside accounting firm. If the amount of the Performance Bonus for
such fiscal year, exceeds the sum of the Quarterly Payments made to Executive
with respect to such fiscal year, such calculation shall be accompanied by a
cash payment in the amount of the difference between the Performance Bonus
payable with respect to such fiscal year and the sum of the Quarterly Payments
previously paid to Executive with respect to such fiscal year. If the sum of
the Quarterly Payments previously paid to Executive with respect to such fiscal
year exceed the amount of the Performance Bonus, then Executive shall, within
15 days of receipt of such calculation, pay such difference to the Company.
v) If the employment term of Executive
hereunder commences or ends during any of the Company's fiscal quarters or
years, the applicable Performance Bonus and Quarterly Payment computed
hereunder with respect to such fiscal period shall be prorated based upon the
actual number of days during such fiscal period included in the employment term
of Executive hereunder; provided however, that the Performance Bonus for the
fiscal quarter commencing July 1, 1996 shall not be prorated and shall be paid
as if Executive had commenced employment pursuant to this Agreement on July 1,
1996.
vi) For purposes of this Agreement, the
Company shall adopt a fiscal year commencing on July 1 and ending on June 30.
(c) Adjusted Pre-Tax Income. For purposes of
this Agreement, Adjusted Pre-tax Income shall mean the income of the Company
computed on an accrual basis in accordance with generally accepted accounting
principles as previously consistently applied by Parent (GAAP), before federal,
state and local income taxes; provided that, in determining Adjusted Pre-Tax
Income, the following adjustments and exceptions shall apply to the application
of GAAP (even if required by "push down" or similar accounting rules under
GAAP) and whether or not recorded on the financial statements of the Company:
i) Revenues shall include only revenues
(i) of the Company derived from the origination, purchase, sale or servicing of
mortgage loans in the ordinary course of the Company's business, (ii) revenues
of the Parent (net of all expenses) derived from the servicing of mortgage
loans originated by the Company (for purposes of this subsection (c)i)(ii)
revenues shall include, without limitation, all loan interest income net of
related carying costs), (iii) revenues received by the Parent (net of
commissions paid by the Parent) with respect to the refinancing of any mortgage
loan originated by the Company, and (iv) revenues received by Parent (net of
commissions paid by the Parent) with respect to credit life, disability and
other ancillary products sold in connection with the Company's origination of
mortgage loans;
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ii) Any equity based benefits to the
employees, directors or agents of the Company, such as profit interests or
appreciation rights, shall be excluded from Adjusted Pre-Tax Income;
iii) The legal, accounting and other
professional fees and expenses (whether incurred before or after the
consummation of the merger) and all other costs associated with negotiating,
entering and closing the Xxxxxx Financing and Warrant Transactions,
Reorganization Agreement and the other agreements entered into in connection
therewith incurred by the Company, Parent or Merger Sub, or their respective
affiliates, shall be excluded from the computation of Adjusted Pre-Tax Income;
iv) All transactions between the
Company and the Parent or any of the affiliates of Parent shall be entered into
only on an arms-length basis, consistent with the past practices of Parent;
v) Charges from Parent (or its
affiliates) for outside legal and accounting services relating to the
operations of the Company, shall be based on the actual out-of-pocket costs
charged by such third party professionals;
vi) There shall be established an
intercompany account between Parent and the Company. All transfers of cash
between the two companies shall be accounted for in the intercompany account as
a loan from one company to the other and not as an equity contribution or
dividend payment to the extent the cash so transferred was raised by Parent
through the issuance of debt securities or under any credit or other financing
facilities now or hereafter made available to Parent. Adjusted Pre-Tax Income
shall reflect an interest expense on the amount owing to Parent in the
intercompany account computed using the weighted average interest rate payable
by Parent during the relevant period on Parent's outstanding debt.
vii) All costs, fees and expenses
incurred by the Company with respect to any loss which the Executive or other
stockholders of the Company actually indemnify the Company, pursuant to the
Reorganization Agreement, or which are covered by insurance (but only to the
extent of the indemnification or insurance payments actually made to the
Company), shall be excluded from the calculation of Adjusted Pre-Tax Income;
viii) All costs, fees and expenses
incurred by the Parent with respect to any department or division that provides
administrative services or support to both the Parent and the Company shall be
allocated among the Parent and the Company pro rata based upon total loan
originations and, if not included in the calculation of total loan
originations, loan purchases of the Parent (and its subsidiaries) and the
Company during the relevant period; and
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ix) The proceeds or other amounts
received, if any, by the Company from life or other key man insurance on
Executive shall not be included in income or otherwise considered in any way in
computing Adjusted Pre-tax Income.
(d) Stock Bonus. Executive shall be eligible to
receive stock options under the Parent's stock option plans with annual awards
to be determined by the Compensation Committee of the Parent Board. All
options granted to Executive by the Parent in connection with the Executive's
employment are hereinafter referred to collectively as the "Options."
4. OTHER EXECUTIVE BENEFITS. During the term of this
Agreement, the Parent shall provide to Executive benefits commensurate with his
position, including each of the following benefits:
(a) Medical and Dental Coverage. The Parent
agrees to provide coverage to Executive and dependent members of his family
under the same medical and dental plans as may be maintained from time to time
in the discretion of the Parent Board for the benefit of the Chief Executive
Officer of Parent (the "CEO") and the dependent members of his family.
(a) Vacation. Executive shall be entitled to
four (4) weeks of paid vacation during Executive's first year of employment
with the Parent and shall be entitled to five (5) weeks during each year of
employment with the Parent thereafter for the term of this Agreement. In each
case, such entitlement shall accrue pro rata over the contract year and shall
be taken at such time or times as shall not unreasonably interfere with the
operations of the Company.
(a) Business Expenses. The Parent will pay or
reimburse Executive for any out-of-pocket expenses incurred by Executive in the
course of providing his services hereunder, which comply with Parent's travel
and expense policies adopted from time to time by the Parent Board for the CEO.
Such reimbursement shall be made by the Parent in the same manner and within
the same time period as applicable to the other executive officers of the
Parent.
(a) Automobile. The Parent shall provide
Executive with the use of a luxury automobile that is selected by Executive.
On the earlier of significant damage or destruction or attaining three years of
age, the Company shall replace such automobile with a new automobile selected
by Executive. The Company shall pay all costs of insurance, repair,
maintenance and operation of such automobile.
(a) Benefit Plans. Executive shall be entitled
to participate in any pension, profit-sharing, stock option, stock purchase or
other benefit plan of the Parent and the
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Company now existing or hereafter adopted for the benefit of employees
generally or the senior executives of the Parent and the Company.
(a) Life Insurance. Provided the following
policies may be obtained at a reasonable cost, the Parent shall provide
Executive with a $1,000,000 standard term life insurance policy and a
$1,000,000 standard term accidental death policy.
(a) Disability. Provided the following policy
may be obtained at a reasonable cost, the Parent shall provide Executive with a
long-term disability policy which provides for an annual disability payment in
an amount equal to 125% of Executive's Base Salary.
1. CONFIDENTIAL INFORMATION.
(a) Non-Disclosure. Executive hereby agrees,
during the term of this Agreement, he will not disclose to any person or
otherwise use or exploit any proprietary or confidential information,
including, without limitation, trade secrets, processes, records of research,
proposals, reports, methods, processes, techniques, computer software or
programming, or budgets or other financial information, regarding the Company,
the Parent or any of their respective subsidiaries or any of their respective
businesses, properties, customers or affairs (collectively, "Confidential
Information") obtained by him at any time during the term, except to the extent
required by Executive's performance of his assigned duties. Notwithstanding
anything herein to the contrary, the term "Confidential Information" shall not
include information which (i) is or becomes generally available to the public
other than as a result of disclosure by Executive in violation of this
Agreement, (ii) is or becomes available to Executive on a non-confidential
basis from a source other than the Company, the Parent or any of their
respective subsidiaries, provided that such source is not known by Executive to
be furnishing such information in violation of a confidentiality agreement with
or other obligation of secrecy to the Company, the Parent or any of their
respective subsidiaries, (iii) has been made available, or is made available,
on an unrestricted basis to a third party by the Company, by an individual
authorized to do so or (iv) is known by Executive prior to its disclosure to
Executive. Executive may use and disclose Confidential Information to the
extent necessary to assert any right or defend against any claim arising under
this Agreement or pertaining to Confidential Information or its use, to the
extent necessary to comply with any applicable statute, constitution, treaty,
rule, regulation, ordinance or order, whether of the United States, any state
thereof, or any other jurisdiction applicable to Executive, or if Executive
receives a request to disclose all or any part of the information contained in
the Confidential Information under the terms of a subpoena, order, civil
investigative demand or similar process issued by a court of competent
jurisdiction or by a governmental body or agency, whether of the United States
or any state thereof, or any other jurisdiction applicable to Executive.
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(b) Injunctive Relief. Executive agrees that the
remedy at law for any breach by him of the covenants and agreements set forth
in this Section 5 may be inadequate and that in the event of any such breach,
the Company, the Parent or their respective subsidiaries may, in addition to
the other remedies that may be available to it at law, seek injunctive relief
prohibiting him (together with all those persons associated with him) from the
breach of such covenants and agreements.
2. TERMINATION.
(a) Termination by Parent for "Cause or
Voluntarily by Executive. The Parent may terminate this Agreement for "Cause"
effective immediately upon written notice thereof to Executive. For purposes
of this Agreement, "Cause" shall mean and be limited to the following events:
(i) an act of fraud, embezzlement or similar conduct by Executive involving the
Company, the Parent or any of their respective subsidiaries; (ii) any action by
Executive involving the arrest of Executive for violation of any criminal
statute constituting a felony if the Board reasonably determines that the
continuation of Executive's employment after such event would have an adverse
impact on the operations or reputation of the Company, the Parent or any of
their respective subsidiaries in the financial community; or (iii) a
continuing, repeated willful failure or refusal by Executive to perform his
duties; provided, however, that this Agreement may not be terminated under this
subclause (iii) unless Executive shall have first received written notice from
the Board advising Executive of the specific acts or omissions alleged to
constitute a failure or refusal to perform and such failure or refusal to
perform continues after Executive shall have had a reasonable opportunity to
correct the acts or omissions cited in such notice.
In the event of termination for "Cause" or voluntarily by
Executive other than as permitted in Sections 6(b)(i) and (ii) and 6(c), (x)
Executive shall be entitled to receive that portion of the Base Salary and all
benefits accrued through the date of termination and (y) all Options that have
become exercisable as of the date of termination shall remain so for a period
of 90 days.
(b) Termination by Parent Other Than for "Cause."
i) Death. Provided that notice of
termination has not previously been given under any Section hereof, if
Executive shall die during the term of this Agreement, this Agreement
and all of the Parent's obligations hereunder shall terminate, except
that Executive's estate or designated beneficiaries shall be entitled
to receive (A) all earned and unpaid Base Salary through the date of
termination; (B) the Base Salary and Performance Bonus and all
benefits with respect to the then current contract year which would
have been payable or provided to Executive had the term ended two
years following the last day of the month in which Executive's death
occurred; and (C) all other benefits that may be due to Executive or
Executive's estate or
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beneficiaries under the general provisions of any benefit plan, stock
incentive plan or other plan in which Executive is then a participant,
which benefits shall continue to be provided for a period of two years
following the date of death. In addition, all Options that have
become exercisable as of the date of death shall remain so for a
period of twelve (12) months.
ii) Disability. Provided that notice of
termination has not previously been given under any Section hereof, if
Executive becomes ill or is injured or disabled during the term such
that Executive fails to perform all or substantially all of the duties
to be rendered hereunder and such failure continues for a period in
excess of 26 consecutive weeks (a "Disability"), the Parent shall
continue to employ Executive under this Agreement for two years from
the date of the Disability (which two year period shall commence at
the beginning of the 26 week period referred to herein) and shall
continue to pay Executive the Base Salary in effect on the date of the
Disability (determined at the beginning of the 26 week period referred
to herein), the Performance Bonus and all benefits then in effect;
provided, that (A) the Parent may relieve Executive of his duties and
responsibilities hereunder to the extent permitted by law and (B) any
long-term disability payments received by Executive under any
disability insurance plan made available to Executive by the Parent if
the premiums were paid by the Parent shall be deducted from the salary
and bonus payments otherwise required to be paid to Executive
hereunder. If during the term and subsequent to the Disability
commencement date (which shall be at any time following the end of the
26 week period referred to herein) Executive shall fully recover, the
Parent shall have the right (exercisable within 60 days after receipt
of notice from Executive of such recovery), but not the obligation, to
restore Executive to full-time service at full compensation. If the
Parent elects not to restore Executive to full-time service, Executive
shall be entitled to obtain other employment. If Executive is not
restored to full-time employment with the Parent, all Options that
have become exercisable as of the date of Disability (determined at
the end of the 26 week period referred to herein) shall remain so for
a period of 12 months.
iii) Without Cause. If the Parent elects
to terminate Executive for any reason whatsoever other than as
provided in Section 6(a) or if the Parent causes a Defacto Termination
of Executive (as defined below) (each, a "Severance Termination"),
Executive shall receive the "Separation Package." As used herein, the
"Separation Package" shall consist of (x) Base Salary for the
Severance Period (at the annual rate in effect at the date of the
Severance Termination), plus (y) an amount equal to the Performance
Bonus actually paid to Executive with respect to the period prior to
the date of the Severance Termination equal to the Severance Period
(or if Executive has been employed for a term less than the Severance
Period, the amount of Performance Bonus paid to Executive for the
entire period of employment multiplied by a fraction, the numerator of
which is the number of days in the Severance Period and the
denominator
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of which is the actual number of days for which Executive was employed
by the Parent), and (z) an amount, if any, necessary to reimburse
Executive on a net after tax basis for any applicable federal excise
tax. In addition, all Options which are scheduled to vest following
the date of the Severance Termination shall vest as of such date.
Further, all Options which have become exercisable as of the date of
the Severance Termination (including those which do so as a result of
the provisions of the preceding sentence) shall remain so for a period
of 12 months. In the event of a Severance Termination, Executive will
also be provided with reasonable office space and secretarial support
as well as the same mailing address and telephone number which
Executive had during the term for up to six months, and the Parent
shall pay the costs of out placement services with a provider of its
choice at a level appropriate to Executive's title and position as
requested by Executive. For purposes of this paragraph, the
"Severance Period" shall be the longer of (x) three years, and (y) the
remaining portion of the Initial Term of Executive's employment
hereunder. For purposes of this paragraph, a "Defacto Termination"
shall include any of the following events: (i) the Parent shall fail
to pay or shall reduce the Base Salary, Performance Bonus or other
benefits provided herein, except as permitted hereunder, or shall
otherwise breach any material provision hereof which breach is not
cured within 10 days after receipt of notice thereof from Executive;
(ii) the Parent shall fail to cause Executive to remain the Executive
Vice President of the Parent and Chief Executive Officer and President
and Chairman of the Board of the Company; (iii) Executive shall not be
continuously afforded the authority, powers, responsibilities and
privileges contemplated in Section 1 above (whether or not accompanied
by a change in title); (iv) the Parent shall require Executive's
primary services to be rendered in an area other than the Company's
principal offices in Orange County; or (v) after a Change in Control
(as defined below), the Parent increases the base salary for senior
executives of the Parent generally without similarly increasing the
Base Salary of Executive. For purposes of clause (iii), Executive
shall be deemed not to have been continuously afforded the authority,
powers, responsibilities and privileges contemplated in Section 1
above if there shall occur any reduction in the scope, level or nature
of Executive's employment hereunder, or any demotion, any phasing out
or assignment to others, of the duties contemplated herein.
(c) Change in Control.
i) Following a Change in Control, this
Agreement shall continue to be binding upon the Company and Executive shall be
entitled to the payments provided for in this Section 6 in the event of
termination resulting from death, disability, cause, or a Separation
Termination, all as provided for in Section 6(a) and 6(b).
ii) Executive may (but shall not be
obligated to) terminate this Agreement effective 30 days after the giving of
such notice given at any time within two years
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following a Change in Control. In the event that Executive elects to terminate
this Agreement pursuant to this Section 6(c)(ii), Executive shall be entitled
to the following payments:
(A) If the Change in Control is
effected to an Adverse Person (as defined below), then Executive shall be
entitled to and receive the Severance Package. In addition, all Options then
held by Executive which are not yet vested shall vest as of the date of such
termination. Further, all Options that have become exercisable as of the date
of such termination (including those which do so as a result of the provisions
of the preceding sentence) shall remain so for the entire remaining term of the
Options.
(B) If the Change in Control is
effected to a person other than an Adverse Person, Executive shall be entitled
to receive the Severance Package. In addition, all Options which are scheduled
to vest during the 12 months following the termination date shall vest as of
the date of such termination. Further, all Options that have become
exercisable as of the date of such termination (including those which do so as
a result of the provisions of the preceding sentence) shall remain so for a
period of 12 months.
(d) Payment of Termination Amounts. Executive
may elect to have all amounts to be paid to Executive pursuant to this Section
6 payable (i) over the remaining term of this Agreement or for such shorter
period as expressly provided for herein, as applicable, or (ii) in a lump sum
within 30 days following termination; provided, however, in the case of death
or disability, the Performance Bonus shall be payable at such time as
performance-based bonuses are paid to similarly situated employees of the
Parent. In the event Executive elects to be paid pursuant to clause (i),
Executive agrees promptly to notify the Parent in writing of Executive's
acceptance of full-time employment; within 15 days after receipt of such
notice, the Parent shall pay Executive in a lump sum any amounts which remain
otherwise due to Executive hereunder.
(e) Stock and Similar Rights. Except with regard
to the vesting and exercise dates of Options as set forth in this Section 6,
Executive's rights under any other agreement or plan under which stock options,
restricted stock or similar awards are granted shall be determined in
accordance with the terms and provisions of such plans or agreements.
(f) No Mitigation. Payment of any sum under this
Section 6 shall not be subject to any claim of mitigation.
(g) Other Insurance Policies. Upon any
termination of Executive's employment, and upon reimbursement of the Company of
all amounts paid by the Company in connection with such policies, Executive
shall have the right to purchase or otherwise direct the disposition or
assignment of any disability insurance policy on him held by the Company
(excluding only group disability insurance policies) upon the payment of One
Dollar ($1.00) as the total consideration for each such policy.
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(h) Officer and Director Positions. Executive
agrees that if this Agreement is terminated for any reason, he shall
immediately resign from all officer and director positions he then holds with
the Company, the Parent, or any of their respective subsidiaries.
3. CHANGE IN CONTROL. For purposes of this Agreement, a
"Change in Control" shall mean the occurrence of any of the following events
which occur after the date of the Original Agreement:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934) (a "Person") of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act ("Rule 13d-3")) of more than
50% of the combined voting power of the then outstanding voting securities of
the Company or of 20% or more of the combined voting power of the then
outstanding securities of the Parent entitled to vote generally in the election
of directors (the "Outstanding Voting Securities of Parent"); provided,
however, that neither of the following acquisitions shall constitute a Change
in Control; (i) any acquisition by the Company, the Parent or their respective
subsidiaries or (ii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company, the Parent or their respective
subsidiaries or any corporation controlled by the Company, Parent or any of
their respective subsidiaries; or
(b) Individuals who, as of the date hereof
constitute the Parent Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date of the Original Agreement
whose election, or nomination for election by the stockholders of the Company,
shall be approved by a vote of a least a majority of the directors then
compromising the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board; or
(c) Approval by the stockholders of the Parent of
a reorganization, merger or consolidation, in each case, unless, following such
reorganization, merger or consolidation: (i) more than 60% of the combined
voting power of the then outstanding voting securities of the corporation
resulting from such reorganization, merger, or consolidation, which may be the
Parent or any of its subsidiaries (the "Resulting Corporation") entitled to
vote generally in the election of directors (the "Resulting Corporation Voting
Securities") shall then be owned beneficially, directly or indirectly, by all
or substantially all of the Persons who were the beneficial owners of
Outstanding Voting Securities immediately prior to such reorganization, merger
or consolidation, in substantially the same proportions as their respective
ownerships of Outstanding Voting Securities immediately prior to such
reorganization, merger, or consolidation; (ii) no Person (excluding the
Company, the Parent or any of their respective subsidiaries or any employee
benefit plan (or related trust) sponsored by any of them, the
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Resulting Corporation, and any Person beneficially owning, immediately prior to
such reorganization, merger or consolidation, directly or indirectly, 20% or
more of the combined voting power of Outstanding Voting Securities) shall own
beneficially, directly or indirectly 20% or more of the combined voting power
of the Resulting Corporation Voting Securities; and (iii) at least a majority
of the members of the Board shall have been members of the Incumbent Board at
the time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(d) Approval by the stockholders of the Parent of
(i) a complete liquidation or dissolution of the Parent or (ii) the sale or
other disposition of all or substantially all of the assets of the Company or
Parent, other than to a corporation (the "Buyer") with respect to which (x)
following such sale or other disposition, more than 60% of the combined voting
power of securities of Buyer entitled to vote generally in the election of
directors ("Buyer Voting Securities"), shall be owned beneficially, directly or
indirectly, by Parent, any of its subsidiaries, any employee benefit plan
sponsored by the Company, the Parent or any their respective subsidiaries or by
all or substantially all of the Persons who were the beneficial owners of the
Outstanding Voting Securities immediately prior to such sale or other
disposition, in substantially the same proportion as their respective ownership
of Outstanding Voting Securities, immediately prior to such sale or other
disposition; (y) no Person (excluding the Company and any employee benefit plan
(or related trust) of the Company or Buyer and any Person that shall
immediately prior to such sale or other disposition own beneficially, directly
or indirectly, 20% or more of the combined voting power of Outstanding Voting
Securities), shall own beneficially, directly or indirectly, 20% or more of the
combined voting power or, Buyer Voting Securities; and (z) at least a majority
of the members of the board of directors of Buyer shall have been members of
the Incumbent Board at the time of the execution of the initial agreement or
action of the Board providing for such sale or other disposition or assets of
the Company.
For purposes of this Agreement, an Adverse Person shall mean
any person which acquires control of the Parent in a transaction involving a
Change in Control other than a transaction which, before the time of the
transaction, has been approved by the Board of Directors of the Parent.
4. INSURANCE. During the term, the Parent shall maintain, at no
cost to Executive, officers and directors liability insurance that would cover
Executive in an amount of no less than $45,000,000.
5. GENERAL PROVISIONS.
(a) Notices. All notices, requirements,
requests, demands, claims or other communications hereunder shall be in
writing. Any notice, requirement, request, demand, claim or other
communication hereunder shall be deemed duly given (i) if personally delivered,
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when so delivered, (ii) if mailed, two (2) business days after having been set
by registered or certified mail, return-receipt requested, postage prepaid and
addressed to the intended recipient as set forth below, (iii) if given by
telecopier, once such notice or other communication is transmitted to the
telecopier number specified below, and the appropriate telephonic confirmation
is received, provided that such notice or other communication is promptly
thereafter mailed in accordance with the provisions of clause (ii) above or
(iv) if sent through an overnight delivery service under circumstances by which
such service guarantees next day delivery, the date following the date so sent:
If to the Company, to:
Aames Financial Corporation
0000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Senior Vice President
and General Counsel
If to Executive, to:
Xxxx X. Xxxxxxxxx
00000 Xxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Any party may change the address to which notices, requests, demands, claims
and other communications hereunder are to be delivered by giving the other
party notice in the manner herein set forth.
(b) Assignment. This Agreement and the benefits
hereunder are personal to the Parent and the Company and are not assignable or
transferable, nor may be the services to be performed hereunder be assigned by
the Parent and the Company to any person, firm or corporation; provided
however, that this Agreement and the benefits hereunder may be assigned by the
Parent and the Company to any corporation into which the Parent and the Company
may be merged or consolidated, and this Agreement and the benefits hereunder
will automatically be deemed assigned to any such corporation, subject,
however, to Executive's right to terminate this Agreement to the extent
provided in Section 6. In the event of any assignment of this Agreement to any
corporation acquiring all or substantially all of the assets of the Parent or
the Company or to any other corporation into which the Parent or the Company
may be merged or consolidated, the responsibilities and duties assigned to
Executive by such successor
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corporation shall be the responsibilities and duties of, and compatible with
the status of, a senior executive officer of such successor corporation. The
Parent or the Company may delegate any of its obligations hereunder to any
subsidiary of the Company, provided that such delegation shall not relieve the
Parent or the Company of any of its obligations hereunder. Executive may not
assign its rights hereunder or delegate his duties hereunder to any Person.
(c) Complete Agreement. This Agreement contains
the entire agreement among the parties hereto with respect to the subject
matter hereof and supersedes and cancels any and all previous written or oral
negotiations, commitments, understandings, agreements and any other writings or
communications in respect of such subject matter.
(d) Amendments. This Agreement may be modified,
amended, superseded or terminated only by a writing duly signed by both
parties.
(e) Severability. Any provision of this
Agreement which is invalid, illegal or unenforceable in any jurisdiction shall,
as to that jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability, without affecting in any way the remaining
provisions hereof in such jurisdiction or rendering that or any other provision
of this Agreement invalid, illegal or unenforceable in any other jurisdiction.
(f) No Waiver. Any waiver by either party of a
breach of any provisions of this Agreement shall not operate as or be construed
to be a waiver of any other breach of such provision or of any breach of any
other provision of this Agreement. The failure of either party to insist upon
strict adherence to any term of this Agreement on one or more occasions shall
be considered a waiver or to deprive such party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement.
(g) Binding Effect. This Agreement shall be
binding on, and shall inure to the benefit of, the parties hereto and their
permitted assigns, successors and legal representatives.
(h) Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which when taken together shall
constitute one and the same document.
(i) Governing Law. This Agreement has been
negotiated and entered into in the State of California and shall be construed
in accordance with the laws of the State of California.
(j) Arbitration. The parties hereby expressly
agree that any controversy or claim relating to this Agreement, including the
construction, enforcement or
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application of the terms hereof, shall be submitted to arbitration in Los
Angeles, California by the American Arbitration Association in accordance with
the Commercial Arbitration Rules of such association. The arbitrator shall be
a retired judge of the Los Angeles Superior Court or other party acceptable to
the parties and the rules of evidence shall apply. The costs of the arbitrator
shall be borne equally. Each party shall be responsible for its own attorneys'
fees and costs. However, the arbitrator shall have the right to award costs
and expenses (including actual attorneys' fees) to the prevailing party as well
as equitable relief. The award of the arbitrator shall be final and binding
and shall be enforceable in any court of competent jurisdiction. Nothing in
this paragraph shall preclude the parties from seeking an injunction or other
equitable relief from a court of competent jurisdiction under appropriate
circumstances.
(k) Headings. The headings included in this
Agreement are for the convenience of the parties only and shall not affect the
construction or interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
AAMES FINANCIAL CORPORATION,
a Delaware corporation
/s/ Xxxx X. Xxxxxxxx
----------------------------------------
By: Xxxx X. Xxxxxxxx
Its: Chief Operating Officer
EXECUTIVE
/s/ Xxxx X. Xxxxxxxxx
----------------------------------------
Xxxx X. Xxxxxxxxx
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