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EXHIBIT 10.13
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") made as of the 1st day of
February, 1997, by and between First Sierra Financial, Inc., a Delaware
corporation (the "Employer" or "Company"), and Xxxx X. Xxxx (the "Employee").
Employer and Employee may be referred to herein collectively as the "Parties"
and individually as a "Party."
ARTICLE I
TERM
Employer hereby agrees to employ Employee and Employee hereby agrees to
accept employment with Employer for a period beginning on the day when the
Effective Time occurs (the "Effective Date") and ending on the third anniversary
of the Effective Date (the "Term"). Any capitalized term used but not defined
herein shall have the meaning ascribed to such term in that certain Agreement
and Plan of Merger dated February 1, 1997, among Employer, Employee and certain
other parties.
ARTICLE II
DUTIES OF EMPLOYEE
2.01 Duties. Employee is engaged to be an Executive Vice President of
Employer and the President of Employer's wholly owned subsidiary, Heritage
Credit Services, Inc. (the "Subsidiary"). Employee's duties and powers shall be
determined from time to time by the President of Employer. Employee shall
perform and discharge such duties in a businesslike manner and in accordance
with the credit/underwriting guidelines of Employer in effect from time to
time, and faithfully as an officer of Employer, and shall be subject to the
supervision and direction of the President of Employer and Employer's Board of
Directors. Employee will conduct his duties as an Executive Vice President of
the Company principally from the Company's Houston, Texas office; provided,
Employee may elect to conduct such duties outside of Houston, Texas during the
months of July, August and September.
2.02 Full Time Employment. Except as otherwise permitted by the
following sentence, Employee shall devote his business time, ability and
attention to the business of Employer during the Term. Employee shall not,
directly or indirectly, during the Term render any services of a business,
commercial or professional nature to any other person, corporation, form or
organization, whether for compensation or otherwise, without the prior written
consent of Employer; provided, Employee may maintain an ownership interest not
in excess of 50% in, and devote a not substantial amount of time and attention
to, Heritage Credit Services, Inc.-Oregon, so long as such time and attention
devoted to such entity shall not interfere with Employee carrying out his
duties pursuant to this Agreement, and Employee may fulfill his remaining
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commitment to, and thereafter participate in the usual activities of a member
of, the United Association of Equipment Leasing.
ARTICLE III
COMPENSATION AND BENEFITS
3.01 Base Compensation. As compensation for services rendered and
Employee's covenants and agreements under this Agreement, during the Term
Employee shall be entitled to receive from Employer a base salary of $195,000
per year, payable in equal semi-monthly installments, subject to withholding and
similar taxes. Employee's base salary will be reviewed on an annual basis by the
Compensation Committee of Employer's Board of Directors to determine (in the
discretion of such committee) whether any increase will be granted.
3.02 Senior Management Incentive Compensation Programs. Employee shall
be entitled to participate in all Senior Management Incentive Compensation
Programs of Employer from time to time in effect and as adopted by the
Compensation Committee of Employer's Board of Directors, as the terms of such
programs may be modified, amended or terminated from time to time by and at the
sole discretion of such Compensation Committee. To the extent any such programs
are in effect during 1997, for the year 1997 such compensation shall be based
upon the time from the date of this Agreement through December 31, 1997.
3.03 Benefit Plans. During the Term, and thereafter, to the extent
provided in the applicable plan, Employer agrees to include Employee in any
retirement, insurance or health benefit plans adopted by Employer for the
general benefit of the employees of Employer.
3.04 Expenses.
(a) Employer, in accordance with the rules and regulations that the
Board of Directors shall issue and revise from time to time, shall reimburse
Employee for business expenses directly and reasonably incurred in the
performance of his duties.
(b) In consideration for Employee conducting principally all of his
duties from the Company's Houston, Texas office, commencing as of the Effective
Date, Employee shall be given a $3,000 per month allowance during the Term
(including each July, August and September occurring during the Term) for
Houston housing, transportation, and other related additional non-business
expenses and for travel between Houston, Texas and Sacramento, California
(excluding travel to Sacramento, California principally for the purpose of
conducting business activities out of Employer's Sacramento division office
that are not customarily conducted or coordinated out of Employer's Houston,
Texas office). The aforesaid allowance shall be paid to Employee monthly in
advance on the first business day of each calendar month or the Effective Date,
as appropriate.
3.05 Vacations. Employee shall have the right to take vacations at such
times as are consistent with Employee's past practice as President of Heritage
Credit Services, Inc.; provided, Employee shall make himself available during
such vacations on (if needed) each business day.
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for the purpose of handling any material matters that arise and are within the
scope of Employee's duties.
ARTICLE IV
TERMINATION
This Agreement shall terminate prior to the expiration of its Term upon
the occurrence of any one of the following events:
4.01 Disability. If Employee is unable fully to perform his duties and
responsibilities hereunder to the full extent required by the Board of
Directors of Employer by reason of illness, injury or incapacity for 60
consecutive days (during such 60 day period Employee shall continue to be
compensated as provided in Section 3.01), this Agreement may be terminated by
Employer, and Employer and Employee shall have no further liability or
obligations hereunder other than Employer's obligation to pay Employee amounts
that may have accrued (if any) under Section 3.02 (to the extent under a plan
where benefits accrue and have in fact accrued) and Section 3.04 through the
date of such termination and not been previously paid to Employee and any rights
of Employee with respect to the plans described in Section 3.03 that, in
accordance with the terms of the applicable plan, provide for benefits to
Employee beyond such termination date. In the event of any dispute under this
Section 4.01, Employee shall submit to a physical examination by a licensed
physician selected by Employer.
4.02. Death. If Employee dies during the Term Employer shall pay to
Employee's executors, legal representatives or administrators the base
compensation specified in Section 3.01 hereof in respect of the period through
the date of such death together with any amount that may have accrued (if any)
under Section 3.02 (to the extent under a plan where benefits accrue and have
in fact accrued) and Section 3.04 through the date of such death and not been
previously paid to Employee.
4.03. Cause. Nothing in this Agreement shall be construed to prevent the
termination of this Agreement by Employer at any time for "cause." For purposes
of this Agreement, "cause" shall mean Employee (i) shall commit an act of theft
or embezzlement from or fraud on Employer, (ii) shall consistently neglect his
duties while employed by Employer, (iii) shall fail materially to comply with
Employer's policies, (iv) shall be in material breach or default of this
Agreement, or (v) shall commit an act of moral turpitude or illegality that
brings the reputation of the Company into public disrepute or causes Employer to
be viewed unfavorably by customers or suppliers. Upon termination for cause,
Employer shall pay to Employee all sums due to Employee through the date of such
termination under Section 3.01 and under Section 3.02 (to the extent under a
plan where benefits accrue and have in fact accrued) and Section 3.04 through
the date of such termination and not previously paid to Employee. Following such
termination and payment as described in the preceding sentence, Employer shall
have no further duties or obligations to Employee. Employee will also have all
rights with respect to the plans described in Section 3.03 that in accordance
with the terms of the applicable plan provide for benefits to Employee beyond
such termination date.
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4.04 Termination Without Cause by Employer. Employer, in its discretion
and for any reason, may terminate this Agreement at any time by delivering 30
days' prior written notice to Employee prior to such intended termination
("Termination Date"). This Agreement shall terminate on the Termination Date
and, except as provided under this Section 4.04, the Parties shall have no
further duties or obligations to each other. Employer shall pay to Employee all
amounts that may have accrued under Section 3.01 and 3.02 through the date of
such termination but not been previously paid to Employee, and Employer shall
also pay an amount equal to 12 months of the base compensation at the rate
effective as of the Termination Date provided under Section 3.01 and the
benefits under Section 3.03 during the same period, and, if Employer so elects,
an amount equal to an additional 12 months of such base compensation and the
benefits under Section 3.03 during the same period and thereafter to the extent
provided in the applicable plan. In the event of termination without cause
hereunder, Employee's covenants under Section 5.01 hereunder shall continue for
the period through which Employer pays Employee under this Section 4.04.
4.05 Termination by Employee.
(a) Employee may terminate this Agreement at any time by delivering
written notice to Employer of Employee's intent to terminate at least 30 days
prior to such intended termination ("Departure Date"). This Agreement shall
terminate on the Departure Date and the parties shall have no further duties or
obligations to each other, provided, Employee shall remain subject to all of
the provisions of Article V and Employer shall pay to Employee all sums due to
Employee under Sections 3.01 through the Departure Date and all amounts that
have accrued (if any) through the Departure Date under Section 3.02 (to the
extent under a plan where benefits accrue and have in fact accrued) and Section
3.04 through the date of such termination and not been previously paid to
Employee and any rights of Employee with respect to the plans described in
Section 3.03 that, in accordance with the terms of the applicable plan, provide
for benefits to Employee beyond such termination date.
(b) Employee may further terminate this Agreement for "Good Reason"
by delivering written notice to Employer of Employee's intent to terminate and
stating the Good Reason therefore at least 30 days prior to such intended
termination (also referred to herein as the "Departure Date"). In the event of a
termination for Good Reason this Agreement shall terminate on the Departure Date
and Employee shall have the rights and Employer shall have the duties specified
in Section 4.04 to apply where Employer terminates this Agreement without cause.
"Good Reason" means a material breach by Employer of the provisions of this
Agreement, an adverse change in Employee's job title not resulting from a
failure by Employee to satisfy his obligations in his current position with
Employer, a material adverse change in Employee's job responsibilities not
resulting from a failure by Employee to satisfy his obligations in his current
position with Employer, the change of Employer's principal place of business to
a location more than 50 miles from the airport of a major metropolitan area
located west of the Mississippi River which has direct flight service with
Sacramento, California Metro Airport, or the bankruptcy or insolvency of
Employer.
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ARTICLE V
PROPERTY RIGHTS
5.01 Scope of Protection. During the period that Employee is employed
hereunder, Employee shall use his best efforts to promote the interests of
Employer consistent with his normal duties. During Employee's employment with
Employer and (to the extent applicable to periods of time following Employee no
longer being employed by Employer) during the period commencing as of the date
hereof and ending upon the earliest to occur of (a) the effective date of
termination of Employee's employment under Section 4.01, (b) the expiration of
one year or two year period, as applicable, that Employer agrees to pay Employee
following a termination pursuant to Section 4.04 or 4.05(b), and (c) the
expiration of four years from the Effective Date. Employee hereby agrees that he
shall not, directly or indirectly, either through any form of ownership, or as a
director, officer, principal, agent, employee, employer, advisor, consultant,
partner or in any individual or representative capacity whatsoever, either for
his own benefit or for the benefit of any other person or entity, without the
prior written consent of the Board of Directors of Employer, within any
geographic area that Employer does business during the Term, engage in any of
the following acts, which acts shall be considered violations of this Agreement:
(i) engage in any equipment or software lease or financing business in which the
Company or any of its subsidiaries engages during the Term except as
contemplated by Section 2.02; (ii) canvas, solicit, accept or perform any type
of work performed by Employer for any of its customers; (iii) request or advise
any customer of Employer to withdraw, curtail or cancel any of its business with
Employer; (iv) induce or attempt to influence any employee of Employer to
terminate his or her employment with Employer; (v) disclose or communicate to
any other person or entity the names of any customers of Employer or other
knowledge of the operations and business of Employer (excluding any of the same
that is public knowledge other than as a result of a breach of this Agreement by
Employee or other than, to Employee's knowledge, the breach of a nondisclosure
or confidentiality agreement by another party, that is required to be disclosed
by Employee pursuant to legal process, or that is known to Employee prior to the
Effective Date and is not covered by a disclosure or confidentiality obligation
owed by Employee or Heritage Credit Services, Inc. to Employer pursuant to a
written agreement entered into by either such party prior to the Effective
Date); (vi) employ or cause to be employed any individual employed by Employer
at any time during such period who does not first request employment by
Employee; (vii) request, advise or attempt to influence any person or entity
which is a source of materials, supplies, personnel, services, funds or
information for Employer to withdraw, cancel or curtail the sale or furnishing
of such items to Employer; or (viii) use for his own benefit or otherwise, or
communicate to, divulge to, or use for the benefit of, any other person or
entity confidential information and/or trade secrets disclosed to, discovered by
or otherwise known by Employee through his employment and/or association with
Employer (excluding any of the same that is public knowledge other than as a
result of a breach of this Agreement by Employee or other than, to Employee's
knowledge, the breach of a nondisclosure or confidentiality agreement by another
party, that is required to be disclosed by Employee pursuant to legal process,
or that is known to Employee prior to the Effective Date and is not covered by a
disclosure or confidentiality obligation owed by Employee or Heritage Credit
Services, Inc. to Employer pursuant to a written agreement entered into by
either such party prior to the Effective Date), it being the intent of the
parties that Employee will honor such
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confidential information and will not, directly or indirectly, use the
confidential information in such a way as to adversely effect Employer or
Employer's business relations.
5.02 Reasonableness of Restrictions. Insofar as the covenants set forth
in this Agreement are concerned, Employee specifically acknowledges and agrees
as follows: (i) the covenants are reasonable and necessary to protect the
goodwill and the operations and business of Employer: (ii) the time duration of
the covenants are reasonable and necessary to protect the goodwill and the
operations and business of Employer; (iii) the geographical area limitations of
the covenants are reasonable and necessary to protect the goodwill and the
operations and business of Employer; and (iv) the covenants are not oppressive
to Employee and do not impose a greater restraint on Employee than is necessary
to protect the goodwill and the operations and business of Employer.
5.03 Enforcement. If Employee violates any of the covenants set forth in
this Agreement, Employer may suffer irreparable damage and shall be entitled
where appropriate to full injunctive relief or such other relief against
Employee as may be provided by law or in equity together with such damages as
may be provided at law or in equity. Employer shall be entitled where provided
under applicable law to specific performance of the requirements of this
Agreement or to temporary or permanent injunctive relief against any breach of
any provision of this Agreement by Employee. If either party files a lawsuit
seeking specific performance of injunctive against, or damages for, any breach
of this Agreement, the party substantially prevailing in such lawsuit shall be
entitled to recover from the other party all court costs and reasonable
attorney's fees incurred by the prevailing party in connection with such
lawsuit.
5.04 Reformation It is the express intention of the Employer and Employee
to comply with all laws which may be applicable to the covenants contained in
this Agreement. Therefore, Employer and Employee have attempted to limit
Employee's right to compete only to the extent necessary to protect (i) Employer
from unfair competition, and (ii) Employer's goodwill and its operations and
business. Employer and Employee recognize, however, that reasonable people may
differ in making such a determination. Consequently, Employer and Employee
hereby specifically agree that, in the event that any covenant contained in this
Agreement shall be determined by any court or other constituted legal authority
to be effective in any particular area or jurisdiction only if such covenant is
modified to limit its duration or scope, such covenant may be reformed or
modified by the judgment or order of such court or authority to reflect a lawful
and enforceable duration or scope. Such covenant shall automatically be deemed
to be amended and modified with respect to that particular area or jurisdiction
so as to comply with the judgment or order of such court or authority and, as to
all other areas and jurisdictions covered by this Agreement, the terms and
provisions hereof shall remain in full force and effect as originally written.
If any covenants contained in this Agreement shall be held by any court or other
constituted legal authority to be void or otherwise unenforceable in any
particular area or jurisdiction notwithstanding the operation of this Section
5.04, such covenant automatically shall be deemed to be amended so as to
eliminate therefrom that particular area or jurisdiction as to which such
covenant is so held void or otherwise enforceable and, as to all other areas and
jurisdictions covered by this Agreement, the terms and provisions hereof shall
remain in full force and effect as originally written.
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ARTICLE VI
GENERAL PROVISIONS
6.01 Notices. Any notices to be given hereunder by either Party to the
other may be effected either by personal delivery in writing or by mail,
registered or certified, postage prepaid with return receipt requested:
If to Employer:
First Sierra Financial, Inc.
Texas Commerce Tower, Suite 7050
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: President
If to Employee:
Xxxx X. Xxxx
0000 Xxxxxxx Xxxxx
Xxxxxx Xxxxxxx, Xxxxxxxxxx 00000
Mailed notices shall be addressed to the Parties at the addresses set forth
above, but each Party may change his/her address by written notice in
accordance with this Section 6.01. Notices delivered personally shall be deemed
communicated as of actual receipt, and mailed notices shall be deemed
communicated as of the earlier of the date of receipt or five days after
deposit in the U.S. mail.
6.02 Entire Agreement. This Agreement supersedes any and all other
agreements, letters of intent, statements, understandings, representations and
warranties (if any), whether oral or in writing, between the Parties solely
with respect to the employment of Employee by Employer and contains all of the
covenants and agreements between the parties with respect to such employment.
6.03 Certain Acknowledgments. Employee by his execution and delivery of
this Agreement represents to Employer as follows:
(i) Employee has been advised by Employer to have this Agreement
reviewed by an attorney representing Employee, and Employee has
had this Agreement reviewed by such attorney.
(ii) Employee either on his own or with the assistance and advice of
his attorney has in particular reviewed Article V and
understands and accepts (a) the restrictions imposed by Article
V and (b) the restrictions imposed upon Employee pursuant to
these sections are reasonable and necessary for the protection
of the rights of the Employer and its affiliates.
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6.04 Headings. The headings or titles to Sections or Articles in this
Agreement are intended solely for convenience of the Parties and no provision
of this Agreement is to be construed by reference to the heading or title of
any section.
6.05 Amendment or Modification: Waiver. No provision of this Agreement
may be amended, modified or waived unless such amendment, modification or
waiver is agreed to in writing, signed by Employee and by an officer of
Employer thereunto duly authorized. Except as otherwise specifically provided
in this Agreement, no waiver by any Party hereto of any breach by any other
party hereto of any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of a similar or dissimilar provision
or condition at the same or at any prior or subsequent time; nor shall the
receipt or acceptance of Employee's employment be deemed a waiver of any
condition or provision hereof.
6.06 Assignability. Employee shall not assign, pledge or encumber any
interest in this Agreement or any part thereof without the express written
consent of Employer, this Agreement being personal to Employee. This Agreement,
shall, however, inure to the benefit of Employee's estate, dependents,
beneficiaries and legal representatives. This Agreement shall not be assignable
by Employer without the written consent of Employee, but if Employer shall
merge or consolidate with or into, or transfer substantially all of its assets
to, another corporation or other form of business organization, then this
Agreement shall bind the successor of Employer resulting from such merger,
consolidation or transfer. No such merger, consolidation or transfer, however,
shall relieve Employer of Employee from liability and responsibility for the
performance of their respective duties and obligations hereunder.
6.07 Governing Law. THIS AGREEMENT HAS BEEN NEGOTIATED, EXECUTED AND
DELIVERED IN THE STATE OF TEXAS, AND SHALL IN ALL RESPECTS BE INTERPRETED,
CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF TEXAS.
Nothing in this Agreement shall limit the right of Employer or Employee to
bring proceedings against the other in the courts of any jurisdiction.
6.08 Severability. Each provision of this Agreement constitutes a
separate and distinct undertaking, covenant and/or provision hereof. In the
event that any provision of this Agreement shall finally be determined to be
unlawful, such provision shall be deemed severed from this Agreement, but every
other provision of this Agreement shall remain in full force and effect, and
in substitution for any such provision held unlawful, there shall be
substituted a provision of similar import reflecting the original intent of the
Parties hereto to the maximum extent permissible under law.
6.09 No Duress. Employee acknowledges that no force, fear or threats or
duress of any kind have used to obtain the agreements and covenants contained
in this Agreement.
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EXECUTED as of the day and year first above written.
EMPLOYER:
First Sierra Financial, Inc.
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx, President
EMPLOYEE:
/s/ Xxxx X. Xxxx
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XXXX X. XXXX
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