1
EXHIBIT 10.23
SERVICES AND CONSULTING AGREEMENT
THIS AGREEMENT ("Agreement") dated as of September 1, 1996, is entered
into by and between MEGO MORTGAGE CORPORATION ("MMC"), a Delaware corporation,
and PREFERRED EQUITIES CORPORATION ("PEC"), a Nevada Corporation.
BACKGROUND OF AGREEMENT
a. MMC and PEC are affiliated companies by virtue of having a common
parent, Mego Financial Corp., which owns, as of the date of this Agreement, all
of the issued and outstanding stock of MMC and PEC.
b. MMC has utilized the services of PEC and certain of PEC's
officers, executives and staff to aid MMC in its business operations including,
without limitation, management, legal and planning services, for which the
estimated cost thereof to PEC has been charged and allocated to MMC on the
accounting books of the parties.
c. MMC and PEC have decided to enter into this Agreement for the
purpose of (i) documenting and detailing PEC's support services to MMC and (ii)
providing a schedule (the "Schedule"), attached hereto and made a part hereof,
of the services to be provided by PEC to MMC and the corresponding cost of same,
as shown on the Schedule.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter contained, the parties hereto do hereby
agree as follows:
ARTICLE 1. APPOINTMENT; TERM
1.1 On the terms and subject to the conditions set forth in this
Agreement, MMC hereby appoints PEC as a Management Consultant and Service
Provider to MMC to provide the services shown, and for the remuneration shown,
on the Schedule attached hereto and made a part hereof; and PEC accepts such
appointment. Nothing contained herein shall be deemed a delegation by MMC, or
an acceptance by PEC, of any responsibility for or authority from MMC for the
management of its business and affairs, which responsibility and authority shall
at all times be and remain vested in the Board of Directors, shareholders and
management of MMC.
1.2 The term of this agreement shall commence as of the date of this
Agreement and shall continue for an initial one-year period. Thereafter, it
shall continue unless and until canceled by either party on a whole or partial
basis (as defined in Article 6.2 hereof) by notice given no later than ninety
(90) days prior to the prospective whole or partial termination.
ARTICLE 2. PROPRIETARY INFORMATION AND SECRECY
2.1 Each party shall (i) keep secret and confidential all know-how, plans,
data and other industrial property ("Proprietary Information") owned and
specified as secret and confidential by the other party and (ii) use its best
effort to prevent its employees, agents,
1
2
representatives and shareholders from divulging to others any such Proprietary
Information and utilizing any such Proprietary Information except in connection
with the business or operations of the other party. The provisions of this
Article 2 shall survive for a period of one (1) year following the entire
termination of this Agreement for whatever reason. Excluded from such
requirement to keep Proprietary Information secret and confidential are the
following:
a. Information which, at the time of disclosure, is in the public
domain;
b. Information which, after disclosure to the other party, enters the
public domain, except where such entry is the result of a breach of this
Agreement;
c. Information which, prior to disclosure hereunder, was already in
the other party's possession;
d. Information which, subsequent to disclosure hereunder, is obtained
by a party from a third person who is lawfully in possession of such Proprietary
Information and not subject to a contractual or fiduciary relationship with
respect to such Proprietary Information and who does not require such party to
refrain from disclosing such information; and
e. Information which is required to be disclosed by either party or
any of their affiliates in a filing with the Securities and Exchange Commission
or any other governmental agency or in any other disclosure document required by
such authorities or information required to be disclosed in a legal proceeding.
ARTICLE 3. SCOPE OF DUTIES OF PEC
3.1 PEC shall, at the reasonable request of MMC from time to time
during the term hereof, advise and consult with MMC and its management and
provide various services with respect to MMC's operations, financial activities
and business affairs, as shown on the attached Schedule, subject to PEC's
reasonable convenience and other business activities. Without limitation, the
initial services to be provided by PEC shall include management consulting,
treasury, accounting, legal, management information, administrative,
communications and advertising.
3.2 Such services shall be performed only during regular business
hours on weekdays except at the option of PEC, and shall be performed by such
employees or agents of PEC as PEC, in its sole discretion, deems appropriate.
ARTICLE 4. NO RESTRICTIONS
It is understood that this Agreement shall not restrict PEC or any
affiliate of PEC from engaging in any business activities, including those
which may be deemed to be competitive with MMC, and that this Agreement shall
not obligate PEC to bring to MMC any business opportunities that may come to
PEC in its business activities.
2
3
ARTICLE 5. COMPENSATION; EXPENSES
As full compensation for PEC's services hereunder, MMC hereby agrees to
pay to PEC $967,000.00 per annum, payable at $80,583.33 a month, due and
payable on the first business day of each month. PEC's performance of any and
all services is subject to MMC's timely monthly payments.
ARTICLE 6. SCHEDULE REVISION; WHOLE OR PARTIAL TERMINATION
6.1 Not later than sixty (60) days prior to the September 1, 1997, and
annually thereafter for the term of this Agreement, PEC shall provide MMC with a
revised Schedule detailing the services and cost thereof, PEC is to provide MMC
during the next year. Within ten (10) days of the receipt of any such Schedule,
MMC may advise PEC of any service listed on the Schedule it does not wish PEC to
perform and/or request PEC to perform additional services. Any additional
services PEC agrees to perform shall be added to the Schedule to be performed
for a fee mutually agreeable to PEC and MMC.
6.2 Notwithstanding the provisions of Section 1.2 hereof, at any time
during the term of the Agreement, either party may terminate this Agreement in
whole or in part by giving the other party written notice of such termination
not later than ninety (90) days prior to the proposed termination date. Any
partial termination(s) must specifically detail the line item description of the
services on the Schedule that are subject to termination. All payments due
prior to any said whole or partial termination shall be prorated to the date of
cancellation on a per diem basis, and thereafter neither party shall have a duty
to perform or accept such services subject only to MMC's duty to pay for all
services rendered to the date of whole or partial termination.
ARTICLE 7. LIMITATIONS ON LIABILITY OF PEC; INDEMNIFICATION OF PEC
7.1 Notwithstanding anything to the contrary contained in this
Agreement, PEC shall not be liable to MMC for any loss or damage of any nature
suffered by MMC occasioned by or arising from any act or omission, or alleged
act or omission, of PEC or any officer, employee or agent of PEC in the
performance or the nonperformance of this Agreement or any part hereof, or the
consequences of any action or course of action taken by MMC pursuant to this
Agreement, unless directly caused by PEC's gross negligence or willful
misconduct or an act of bad faith in breach of this Agreement. In no event
shall PEC be responsible for MMC's loss of profits and/or other consequential
loss or damage howsoever caused and whether or not occasioned or caused by the
act, default or negligence of PEC.
7.2 MMC shall indemnify, defend and hold harmless PEC and each of its
officers and employees performing services hereunder from and against any and
all demands, claims, actions or causes of actions, judgments, assessments,
losses, liabilities, damages or penalties and reasonable attorney's fees and
related disbursements (collectively "Losses") arising out of or due to the
performance by PEC or any such officers and employees of any of PEC's duties or
obligations hereunder unless such Losses are directly caused by PEC's gross
negligence or willful misconduct or an act of bad faith in breach of this
Agreement.
3
4
ARTICLE 8. INDEMNIFICATION OF MMC
PEC agrees to indemnify, defend and hold harmless MMC for any loss, damage,
reasonable expense, claims, and/or causes of action that may be asserted against
MMC as a result of any gross negligence or willful misconduct on the part of
PEC, its agents or employees in the performance of the services required by this
Agreement.
ARTICLE 9. MISCELLANEOUS
9.1 Notwithstanding anything to the contrary contained in this
Agreement, PEC shall be deemed to be an independent contractor for all purposes
hereof and shall not be deemed to be, and shall not, for the purposes of this
Agreement, hold itself out as, an agent or partner of, or joint venturer with
MMC; and, except as specifically provided herein, PEC shall take no action,
without the prior consent of MMC, by which any third party might infer that PEC
is such an agent, partner or joint venturer.
9.2 All notices, requests and demands to or upon the respective
parties shall be deemed to have been given or made when personally delivered or
when deposited in the mail, first class mail, registered or certified, return
receipt requested and postage prepaid as follows:
9.2.1 If to PEC, to:
Preferred Equities Corporation
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxx,
Executive Vice President and
Chief Operating Officer
9.2.2 If to MMC, to:
Mego Mortgage Corporation
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Executive Vice President,
Treasurer
and Chief Financial Officer
or to such other address as either such party shall notify the other.
9.3 No failure to exercise and no delay in exercising, on the part of
either party hereto, any right, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof of the
exercise of any other right, power or privilege. No modification or waiver of
any provision of this Agreement, nor consent to any departure from the
provisions hereof, shall be effective unless the same shall be in writing from
the party so modifying, waiving or consenting and then such waiver or consent
shall be given only in the specific instance and for the purpose for which it is
given. No notice to either party shall entitle such party to any other of
further notice in other or similar circumstances unless expressly provided for
herein. No course of
4
5
dealing between any of the parties shall operate as a waiver of any of their
respective rights under this Agreement.
9.4 The captions of the various sections of this Agreement have been
inserted only for the purpose of convenience, and shall not be deemed in any
matter to modify, define, enlarge or restrict any of the provisions of this
Agreement.
9.5 This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and assigns. Notwithstanding the
foregoing, neither party shall assign or transfer any rights or obligations
hereunder, except that PEC may assign or transfer this Agreement and its rights
and obligations hereunder to a successor corporation in the event of a merger,
consolidation or transfer or sale of all or substantially all of the assets of
PEC. Any purported assignment, other than as provided above, shall be null and
void.
9.6 This Agreement contains the entire agreement between the parties
hereto with respect to the subject matter hereof, supersedes all prior written
agreements and negotiations and oral understanding, if any, and may not be
amended, supplemented or discharged except by performance or by an instrument in
writing signed by both of the parties hereto.
9.7 This Agreement shall be construed in accordance with and governed
by the laws of the State of Georgia.
9.8 Nothing contained in this Agreement, express or implied, shall
confer upon any other person not a party to this Agreement any rights or
remedies under or by virtue of this Agreement.
9.9 This Agreement shall be executed on one or more copies, but such
counterparts shall together constitute but one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective duly authorized officer or officers
thereunto duly authorized as of the day and year first set forth above.
PREFERRED EQUITIES CORPORATION, MEGO MORTGAGE CORPORATION,
a Nevada corporation a Delaware corporation
By: /s/ Xxxxxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------ ------------------------------
Xxxxxxxxx X. Xxxxx, Xxxxx X. Xxxxxx,
Executive Vice President Executive Vice President
5
