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EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered effective as of September 1, 2000 by
and between VESTIN GROUP, INC., a Delaware corporation (the "Corporation"), and
Xxx X. Xxxxxx (the "Executive") with reference to the following facts:
WITNESSETH:
WHEREAS, the Corporation desires to retain Executive in the position of
Executive Vice President of Legal and Corporate Affairs and Executive desires
to accept such position; and
WHEREAS, in order to retain the services of the Executive and to maximize
the period of his continued availability, the Corporation desires to enter into
this Agreement with Executive as is more fully set forth herein.
NOW, THEREFORE, on the basis of the foregoing facts and in consideration
of the mutual covenants and agreements contained herein, the parties hereto
agree as follows:
1. Employment. The Corporation hereby agrees to, and does hereby, employ
the Executive and Executive hereby accepts employment with the Corporation on
the terms and conditions set forth in this Agreement (the "Agreement").
2. Term. The term of this Agreement shall commence on September 1, 2000,
and shall continue until December 31, 2003 (the "Term"). After the original
Term, this Agreement shall continue for successive three (3) year periods
unless either party hereto shall notify the other in writing at least one
hundred eighty (180) days prior to the end of the Term of their intention of
not renewing the same. Subject to the terms and conditions of this Agreement,
the Corporation agrees not to terminate the Executive during the Term except
for Cause. Executive shall be considered terminated, at the Executive's
election, if (i) there is a Change of Control, as defined herein, of the
Corporation, or (ii) a resignation by Executive for Good Reason, as defined
herein.
3. Duties and Services.
a. The Corporation and the Executive hereby agree that, subject to
the provisions of this Agreement, the Corporation will employ the
Executive and the Executive will serve the Corporation as
Executive Vice President of Legal and Corporate Affairs. The
Corporation understands, acknowledges and agrees that during the
first four months of this Agreement the Executive may not be
available full time to the Corporation as he transitions his
private law practice.
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b. Executive agrees during the term of this Agreement not to usurp
a corporate opportunity for his own financial gain. A corporate
opportunity shall be defined as a business opportunity which the
Corporation is financially able to undertake, is, from its
nature, in the line of the Corporation's business and is one in
which the Corporation has an interest or a reasonable
expectancy. Executive agrees that he shall offer a corporate
opportunity to the Corporation. The Corporation shall have ten
(10) days to either take the opportunity for itself or to reject
the opportunity in which case Executive shall have the right to
pursue such opportunity for himself. Failure to notify Executive
within such ten (10) day period shall be deemed a rejection of
the opportunity by the Corporation.
4. Definitions. The following terms shall have the following meanings
when used herein:
a. Change of Control. For the purpose of this Agreement, a "Change
of Control" of the Corporation shall be deemed to occur if any
person or entity directly or indirectly acquires ownership,
control, power to vote, or proxies representing more than
twenty-five percent (25%) of the Voting Stock of Vestin, or of
any entity controlling Vestin, or any successor thereto, or
obtains control of the election of a majority of the members of
the Board of Directors of Vestin, or any successor thereto (the
"Board") or of any entity controlling Vestin.
b. Cause. Cause shall exist when and only when Executive (i) after
receipt of written notification by the Board of Directors or the
CEO has wilfully failed and continues to fall after such written
notice for a period of thirty (30) days to substantially perform
his duties (other than failure resulting from incapacity due to
physical or mental illness), (ii) is convicted of a crime
constituting a felony, or (iii) has been proven by a court of
law to be dishonest, has embezzled or has committed common law
fraud ("for Cause").
c. Good Reason. Executive may terminate Executive's employment Term
under this Agreement for "Good Reason." Good Reason shall mean
the occurrence without the consent of Executive of any of the
circumstances set forth below, unless such circumstances are
fully corrected within ten (10) days after delivery of written
notice of termination based on such occurrence to the
Corporation:
(1) a reduction by the Corporation of the Base Salary as then
in effect or the duties of the Executive as then in effect;
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(2) the failure by the Corporation to provide, when required, any
compensation or benefits;
(3) a breach of this Agreement by the Corporation which is not cured
within ten (10) days following notice of such breach by
Executive to the Corporation;
5. Compensation.
a. As salary during the Term, the Corporation shall pay the Executive,
in accordance with its normal payroll, a minimum annual salary which
shall initially be $262,500 (the "Base Salary"), such salary to be
paid no less than semi-monthly during the Term. The Executive shall
receive such additional salary as the Board of Directors of the
Corporation may from time to time determine during the Term but at
no time shall the Base Salary be less than the initial Base Salary
identified in the immediately preceding sentence increased by the
increase in the relevant CPI increase for the immediately preceding
12-month period. This CPI adjustment shall be made effective
September 1 of each year commencing September 1, 2001. Unless
expressly agreed in writing by the parties hereto, no such additional
compensation or benefits shall be deemed to modify or otherwise
effect the terms or conditions of this Agreement. Notwithstanding the
foregoing if Executive resigns for Good Reason or Executive is
terminated other than (i) for Cause, as defined herein, or (ii) as a
result of a Change of Control, as defined herein, Executive shall be
entitled to the greater of twelve (12) months Base Salary of the Base
Salary due to Executive for the remaining term of this Agreement as
severance, plus the continuation of all of Executive's benefits for
the greater of twelve (12) months and the remaining term of this
Agreement, and all options shall immediately vest. In the event of a
Change of Control, Executive shall be entitled to the greater of two
(2) years Base Salary or the Base Salary due for the remaining term
of this Agreement, as severance, plus the continuation of all of
Executive's benefits for the greater of two (2) years and the
remaining term of this Agreement, and all options shall immediately
vest provided Executive exercises his right pursuant to this
Agreement to treat such change of control as a termination of this
Agreement. In the event Executive does not exercise his right to be
terminated upon a Change of Control this Agreement shall renew for a
period of three (3) years commencing on the day preceding the Change
of Control. In the event Executive resigns for Good Reason, is
terminated other than for cause or there is a Change in Control, all
obligations to pay Executive shall be due and owed in cash in a lump
sum payment without discount or offset on the earlier of the date of
termination, the date of the Change of Control and/or the date
Executive elects termination pursuant to the provisions of Paragraph
2 hereof.
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b. Expense Reimbursement. Upon presentation by Executive to the
Corporation of adequate supporting documentation, the
Corporation shall reimburse Executive for all reasonable and
necessary business, travel and entertainment expenses,
disbursements, and other reasonable and necessary incidental
expenses incurred for or on behalf of the Corporation.
6. Other Benefits. During the Term the Executive shall receive all
rights and benefits for which he is then eligible under any employee benefit
plan or bonus plan which the Corporation generally provides for its senior
executives. Such benefits in any event include, but shall not be limited to, a
bonus plan, which shall be explicitly set forth by the Corporation's Board of
Directors within one hundred eighty (180) days of the execution of this
Agreement, but Executive's bonus shall be no less than the highest bonus paid to
other similarly situated Executives based upon a percentage of salary, and full
medical, dental, disability, life and health insurance for Executive and his
dependents. Further, Executive shall receive disability insurance guarantying
payments equal to a minimum of sixty percent (60%) of his salary or at
Executive's option Executive may purchase disability insurance and be
reimbursed for such disability insurance by the Corporation. In addition, the
Corporation shall pay for Executive's bar association dues with the State Bar
of Nevada and California, the Xxxxx County Bar Association, the American Bar
Association and all other related associations and for all continuing legal
education costs and fees including seminar fees and travel and lodging fees,
which travel and lodging shall be approved in advance by the Corporation.
7. Options. Executive shall receive options to purchase 150,000
shares of the Corporation's common stock to purchase 75,000 shares vesting
immediately and the remaining options to purchase 75,000 shares vesting on the
one (1) year anniversary of this Agreement unless Executive resigns for Good
Reason, is terminated, dies, is disabled or there is a Change in Control in
which case the options shall vest immediately.
8. Death or Disability. In the event of the death of the Executive or
the disability of the Executive, this Agreement shall immediately terminate and
the Corporation shall pay to the Executive or his estate one (1) year's salary
in cash in a single lump sum payment without discount or offset which payment
shall be due and payable upon the sooner of (i) thirty (30) days of Executive's
death or (ii) thirty (30) days after Executive is declared by his physician
incapable of performing his duties as specified in this Agreement. The
Corporation shall have the right to fund Executive's death and/or disability
benefit through life insurance beyond that provided for in Section 6 if it so
elects.
9. Place of Performance. In connection with his employment by the
Corporation during the Term, the Executive shall at all times be entitled to an
office at the principal executive offices of the Corporation, located in Las
Vegas, Nevada, or at such other office of the Corporation, in Las Vegas,
Nevada, as the Chief Executive Officer of the Corporation shall, in his
reasonable discretion deem to be in the best interest of the Corporation. In
the event the Corporation moves its principal place of business outside of Las
Vegas, Nevada, Executive at his option shall have the right to terminate this
Agreement and receive the greater of such salary due him for the remaining Term
of
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this Agreement but in no event less than twelve (12) months' salary or to cause
the Corporation to maintain an office in Las Vegas, Nevada for the Executive
during the Term. In addition, Executive shall be entitled to appropriate legal
secretarial assistance.
10. Outside Activities and Non-Competition.
a. Covenant Not to Compete. Executive recognizes that the
Corporation's decision to enter into this Agreement is
induced primarily because of the covenants and assurances
made by Executive, that Executive's covenant not to compete
is necessary to ensure the continuation of the business of
the Corporation and the reputation of the Corporation, and
that irreparable harm and damage will be done to the
Corporation if Executive competes with the Corporation.
Therefore, Executive agrees that during the term of this
Agreement and for a period of one (1) year following
termination of this Agreement, Executive shall not, directly
or indirectly, as an employee, employer, contractor,
consultant, agent, principal, shareholder, corporate officer,
director, or in any other individual or representative
capacity, engage or participate in any business or practice
within the Practice Territory that is in competition in an
manner whatsoever with the business of the Corporation as of
the date this Agreement is executed without the written
permission of the Corporation. Notwithstanding the foregoing,
Executive may engage in the private practice of law during
(provided such practice does not affect his duties pursuant
to this Agreement) and after the Term of this Agreement. The
Corporation understands, acknowledges and agrees that
Executive may continue to service clients in addition to his
obligations hereunder. The term "in competition in any manner
whatsoever with the business of the Corporation" shall
include the practice of accounting in the Practice Territory
and engaging in the mortgage or accounting business in the
Practice Territory. Practice Territory shall be defined as
any area in which the Corporation has an office or conducts
business. Executive agrees:
(i) If Executive should set up an office within the
Practice Territory in competition with the business of
the Corporation, it would cause economic harm and loss
of goodwill to the Corporation resulting in immediate
and irreparable loss, injuries, and damage to the
Corporation.
(ii) Notwithstanding anything to the contrary in this
Section 10, Executive is no prohibited from owning less
than five percent (5%) of the equity of any publicly
traded entity.
b. Enforcement. The Corporation and Executive further agree that
if any restriction in this Article is held by any court to be
unenforceable or
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unreasonable, a lesser restriction will be enforced in its place and
the remaining restrictions in this Agreement will be enforced
independently of each other. In any action to enforce any provision
of this Article 10, the court may award reasonable attorneys' fees,
costs, and expenses to the prevailing party. Notwithstanding the
prior provisions of this Article, Executive shall be immediately
released from the restrictive covenant in this Article and may
practice in competition with the Corporation within the Practice
Territory after the termination of this Agreement by purchasing the
covenants described in this Article 10.a. The parties believe that
reasonable compensation to the Corporation for the release of
Executive from the restrictive covenants of this Article 10 would be
Fifty Thousand Dollars ($50,000.00), which is the Corporation's
anticipated costs of recruiting and training a replacement for
Executive. Executive promises to pay, and the Corporation agrees to
accept, that amount as consideration if Executive should desire to be
released from the restrictive covenants of this Article 10.
c. Survival. The provisions of this Article 10 shall survive the
termination of this Agreement for one (1) year.
11. Confidentiality of Information.
a. Confidential Information. Executive agrees to keep confidential and
not to use or to disclose to others during the term of this Agreement
and for a period of five (5) years thereafter, except as expressly
consented to in writing by the Corporation or required by law, any
secrets or confidential technology, proprietary information, patient
lists, or trade secrets of the Corporation, or any matter or thing
ascertained by Executive through Executive's affiliation with the
Corporation, the use or disclosure of which matter or thing might
reasonably be construed to be contrary to the best interest of the
Corporation, the use or disclosure of which matter or thing might
reasonably be construed to be contrary to the best interests of the
Corporation. This restriction shall not apply to any information that
(i) is or becomes generally available to and known by the public
(other than as a result of an unpermitted disclosure directly or
indirectly by Executive or Executive's affiliates, advisors, or
representatives); (ii) is or becomes available to Executive on a
nonconfidential basis from a source other than the Corporation or its
affiliates, advisors, or representatives, provided that, at the time
of disclosure to Executive, Executive is not aware that such source
was bound by a confidentiality agreement with or other obligation of
secrecy to the Corporation; or (iii) has already been or is hereafter
independently acquired or developed by the Corporation; without
violating any confidentiality agreement with or other obligation of
secrecy to the Corporation.
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b. Departure. Except as provided herein, should Executive leave
the employment of the Corporation, Executive will neither take
no retain, without prior written authorization from the
Corporation, any papers, client lists, fee books, client
records, files, or other documents or copies thereof or other
confidential information or any kind belonging to the
Corporation pertaining to the Corporation's clients, business,
sales, financial condition, or products. Without limiting other
possible remedies to the Corporation for the breach of this
covenant, Executive agrees that injunctive or other equitable
relief shall be available to enforce this covenant, such relief
to be without the necessity of posting a bond, cash or
otherwise. Executive further agrees that if any restriction
contained in this paragraph is held by any court to be
unenforceable or unreasonable, a lesser restriction shall be
enforced in its place and remaining restrictions contained
herein shall be enforced independently of each other.
c. Exceptions.
(i) Executive shall not be prohibited from releasing any
confidential or proprietary information to Executive's
legal counsel or financial advisors, provided that
Executive places such advisors under legal obligation not
to disclose the confidential information.
(ii) It shall not be a breach of Executive's covenants under
this Article 11 if a disclosure is made pursuant to a court
order, a valid administrative agency subpoena, or a lawful
request for information by an administrative agency.
Executive shall give Corporation prompt notice of any such
court order, subpoena, or request for information.
12 Notice. All Notices and other communications hereunder shall be in
writing and shall be deemed to have been validly served, given or delivered
five (5) days after deposit in the United States mail, by certified mail with
return receipt requested and postage prepaid, when delivered personally, one
(1) day after delivery to any overnight courier, or when transmitted by
facsimile transmission facilities, and addressed to the party to be notified as
follows:
If to Corporation at: 0000 Xx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
If to Executive at: 0000 Xxxxxxx Xx.
Xxxxxxxxx, Xxxxxx 00000
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13. Miscellaneous.
a. This Agreement shall inure to the benefit of and be binding upon
the Corporation, its successors and assigns. This Agreement may
not be assigned by the Corporation without the prior written
consent of the Executive. The obligations and duties of the
Executive hereunder shall be personal and not assignable.
b. Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be valid and effective under
applicable law, but if any provision of this Agreement is found
to be prohibited or invalid under applicable law, such provision
will be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision
of the remaining provisions of this Agreement.
c. For purposes of this Agreement an "affiliate" of a person shall
include any person, firm, corporation, association,
organization, or unincorporated trade or business that, now or
hereinafter directly or indirectly, controls, or is controlled
by, or practices is under common control with such person.
d. Any waiver, alteration or modification of any term of this
Agreement will be valid only if made in writing and signed by
the parties hereto. Each party hereto from time to time may
waive any of his or its rights hereunder without effecting a
waiver with respect to any subsequent occurrences or
transactions hereunder.
e. Captions and paragraph heading used herein are for convenience
only are not a part and shall not be used in construing this
Agreement.
f. This Agreement constitutes the entire understanding and
agreement of the parties and, except as otherwise provided
hereunder, there are no other agreements or understandings,
written or oral, in effect between the parties relating to the
employment of the Executive by the Corporation during the Term.
All prior negotiations or agreements, if any, between the
parties relating solely to the employment of the Executive by
the Corporation during the Term are hereby superseded.
g. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Nevada.
h. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but both of which taken together
shall constitute one and the same instrument.
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i THE CORPORATION UNDERSTANDS, ACKNOWLEDGES, AND AGREES THAT THE
EXECUTIVE IS AN ATTORNEY WHO HAS PERFORMED LEGAL SERVICES FOR THE
CORPORATION. THE CORPORATION AGREES THAT EXECUTIVE IS REPRESENTING
HIMSELF IN THIS AGREEMENT AND NOT THE CORPORATION AND THE CORPORATION
IS URGED TO SEEK LEGAL COUNSEL PRIOR TO THE EXECUTION OF THIS
AGREEMENT.
14. Arbitration. Any controversy between the parties hereto, including
the construction or application of any of the terms, covenants or conditions of
this Agreement, shall on written request of one party served on the other be
settled exclusively by arbitration in accordance with the rules of the American
Arbitration Association then in effect. The arbitrator selected must be a
member of the National Academy of Arbitrators and must have significant
experience in arbitrating labor disputes. Further, the Arbitrator must be an
attorney practicing labor law in the Southern California area. The cost of such
arbitration shall be borne by the losing party or in such proportions as the
Arbitrator(s) shall decide. Judgment may be entered on the arbitrator's award in
any court of competent jurisdiction.
15. The Executive's Employment. Nothing contained in this Agreement (i)
obligates the Corporation or any subsidiary of the Corporation to employ the
Executive in any capacity whatsoever, or (ii) prohibits or restricts the
Corporation (or any such subsidiary) or the Executive from terminating the
employment, if any, of the Executive at any time or for any reason whatsoever,
with or without cause, subject to the terms and conditions of this Agreement.
IN WITNESS WHEREOF, this Agreement is effective as of the day and year
first above written.
"EXECUTIVE"
/s/ XXX X. XXXXXX
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Xxx X. Xxxxxx
VESTIN GROUP, INC.,
A DELAWARE CORPORATION
By: /s/ XXXXXXX XXXXXXX
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Name: Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
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