PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST TO THE SECURITIES AND EXCHANGE COMMISSION FOR CONFIDENTIAL TREATMENT. THE INFORMATION HAS BEEN SEPARATELY FILED WITH THE COMMISSION] EMPLOYMENT AGREEMENT
Exhibit 10.1
EXECUTION COPY
EXECUTION COPY
[PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST TO
THE SECURITIES AND EXCHANGE COMMISSION FOR CONFIDENTIAL TREATMENT.
THE INFORMATION HAS BEEN SEPARATELY FILED WITH THE COMMISSION]
THE SECURITIES AND EXCHANGE COMMISSION FOR CONFIDENTIAL TREATMENT.
THE INFORMATION HAS BEEN SEPARATELY FILED WITH THE COMMISSION]
THIS EMPLOYMENT AGREEMENT (“Agreement”) is dated December 21, 2007 (the “Effective Date”), and
is entered into by and between Xxxxxx X. Xxxxxxx (“Executive”), Fremont General Corporation (the
“Parent”) and Fremont Investment & Loan (the “Bank”), a wholly-owned subsidiary of Parent. (The
Parent and the Bank will be referred to collectively herein as the “Company”).
RECITALS
WHEREAS, the Executive serves as an officer of the Company pursuant to a Management Continuity
Agreement dated as of May 9, 2005 (the “Prior Agreement”);
WHEREAS, pursuant to a letter dated April 3, 2007, the Bank offered Executive a “retention
bonus” equal to one year of pay, payable in three installments as set forth therein, the last of
which is to be paid on December 14, 2007, which letter supersedes an earlier one that had been
issued dated March 20, 2007 (the “April 2007 Bank Retention Letter”);
WHEREAS, pursuant to a letter dated August 27, 2007, the Parent offered Executive a “retention
bonus” equal to one year of pay, payable in four installments as set forth therein, the last three
of which are to be paid on January 1, 2008, April 1, 2008 and July 1, 2008 (the “August 2007 Parent
Retention Letter” and, along with the April 2007 Bank Retention Letter, the “Retention Letters”);
WHEREAS, pursuant to Restricted Stock Agreements dated May 19, 2005, March 8, 2006 and
November 15, 2006, the Parent granted the Executive 21,000 shares (one-third of which vests on each
anniversary of the date of grant), 22,772 shares (one-third of which vests on each anniversary of
the date of grant), and 47,000 shares (one-third of which vests on January 1 of each of 2008, 2009
and 2010), respectively (collectively, the “Restricted Stock Agreements”), of common stock of
Parent, which shares are subject to the terms and conditions set forth in such Restricted Stock
Agreements;
WHEREAS, in connection with the issuance to the Company of Cease and Desist Orders issued by
the Federal Deposit Insurance Corporation (“FDIC”) and the California Department of Financial
Institutions (“DFI”), a new management team has been appointed at Parent and it is contemplated
that, upon receipt of approval of the FDIC and the DFI, the same new management team will be
appointed to similar positions at the Bank;
WHEREAS, the Executive has indicated a willingness to remain in the employ of the Company and
has agreed to relinquish any and all amounts that may be due and owing under the Prior Agreement
and under any other agreements, programs or plans of the Company that provide Executive with cash
or equity entitlements, except for the Retention Plans, which shall continue in full force and
effect subject to the requirements set forth in such Retention Plans, and the Restricted Stock
Agreements, which shall continue in full force and effect subject to the requirements set forth in
such Restricted Stock Agreements;
WHEREAS, the Company desires to be ensured of the Executive’s continued services; and
WHEREAS, Executive desires to enter into a new agreement covering employment by the Executive,
upon the terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, each intending to be legally bound hereby, agree as follows:
| 1. | Effective Date of Agreement; Termination of Prior Agreement and Other Arrangements |
This Agreement shall be executed and delivered by Executive to the Company and this Agreement
shall become effective as of the Effective Date. The Prior Agreement as well as any other
agreements, programs or plans that provide Executive with cash or equity entitlements, shall be
considered terminated and shall be of no force or effect, effective as of the Effective Date,
except (i) for the Retention Plans, which shall continue in full force and effect subject to the
requirements set forth in such Retention Plans and (ii) the Restricted Stock Agreements, which
shall continue in full force and effect subject to the requirements set forth in such Restricted
Stock Agreements. The Executive has represented and warranted to the Company that Executive is not
entitled to any cash or equity entitlements under any Company agreements, programs or plans, except
with respect to the Prior Agreement, the Retention Plans and the Restricted Stock Agreements.
| 2. | The Position |
The Executive agrees to be employed (a) as Executive Vice President and Head of Corporate
Development of Parent, commencing as of the Effective Date, and (b) as Executive Vice President and
Head of Corporate Development of the Bank. The Executive shall be based at either the Parent’s
headquarters in Santa Monica, California, the Bank’s headquarters in Brea, California or as
otherwise determined by the parties. Notwithstanding the foregoing, the Company understands and
agrees that Executive may from time to time physically render services from an alternative
location; provided, however, that the Executive will generally work out of the
Company’s offices.
| 3. | Duties |
During his employment with the Company, Executive will serve the Company and its affiliates
faithfully, diligently and to the best of his ability and will devote as much of his business
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time, energy, experience and talents as is necessary to perform his duties hereunder. During
his employment with the Company, Executive shall perform all duties and accept all responsibilities
incident to his position as Executive Vice President and Head of Corporate Development of Parent as
may be reasonably assigned to him from time to time by the Chief Executive Officer. Executive
shall also be subject to and shall abide by all policies and procedures of the Company, except to
the extent that such policies and procedures conflict with the other provisions of this Agreement,
in which case this Agreement shall control.
| 4. | Compensation |
Executive shall be paid the following as compensation for all services to be rendered by
Executive pursuant to this Agreement:
(a) Base Salary. During the Term (as defined in Section 5 hereof), the Company shall
pay Executive a base salary (the “Base Salary”), payable in equal biweekly installments, according
to the Bank’s normal payroll practices, at an annual rate of Four Hundred Twenty Five Thousand
dollars ($425,000), less all applicable federal, state and/or local taxes and all other authorized
payroll deductions. Thereafter, Executive’s Base Salary will be subject to an approximately annual
review, and increases (but not reductions, except for reductions made to the Company’s executives
generally) may be made to Executive’s Base Salary at any time based upon the review by Parent’s
Board of Directors (“Board”) of Executive’s performance and the performance of the Company. For
the avoidance of any doubt, no payments made pursuant to the Retention Plans or the Restricted
Stock Agreements shall be considered to be part of “Base Salary” for any purpose under this
Agreement.
(b) Annual Bonus. During the Term, the Bank may pay Executive a bonus or bonuses in
such amount as and in such a manner as the Board, in its discretion determines is appropriate.
(c) New Restricted Shares. As of the Effective Date, the Parent will grant the
Executive an award of 200,000 restricted shares, pursuant to the Parent’s 2006 Performance
Incentive Plan. The restricted shares, whether or not vested, will be entitled to dividends if and
when such dividends are declared and paid to shareholders of Parent. Subject to acceleration of
vesting of such restricted shares as provided in Sections 9 and 10 hereof, one-third of the
restricted shares shall become vested on each of the first three anniversaries of the Effective
Date; provided, that as of each such vesting date, Executive is employed hereunder and has neither
given nor been given a notice of termination of Executive’s employment with Parent or the Bank.
| 5. | Term |
Subject to the terms of this Agreement (including, without limitation, Section 11 hereof), the
term of this Agreement (the “Term”) shall commence on the Effective Date and unless earlier
terminated pursuant to Sections 8 or 9 shall continue until the third (3rd) anniversary
of the Effective Date. Subject to the notice provisions of this paragraph, on the first annual
anniversary of the date first above written and each annual anniversary thereafter, the Term of
this Agreement may be renewed or extended for one (1) additional year after review and approval by
the Board or a duly authorized committee thereof. In the event the Company or the Executive gives
written notice to the other party or parties hereto of such party’s or parties’ election not to
extend the Term, with such
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notice to be given not less than ninety (90) days prior to any such anniversary date, then
this Agreement shall terminate at the conclusion of its remaining Term. References herein to the
Term of this Agreement shall refer to both the initial Term and successive Terms.
| 6. | Expenses |
During the Term, the Bank shall reimburse the Executive for his reasonable expenses incurred
in the course of Executive’s duties, in accordance with the procedures and to the extent allowed
under applicable policies of the Bank. These expenses shall include transportation between the
Executive’s home and the Company’s offices. The Bank shall also provide (or reimburse) the
Executive for temporary accommodations while he is working at the Company’s offices.
7. Benefits
(a) The Executive shall be eligible to participate in the employee benefit plans and executive
compensation programs maintained by the Bank or Parent of general applicability to other executives
of the Company, including retirement plans, savings or profit-sharing plans, deferred compensation
plans, supplemental retirement or excess-benefit plans, stock option, restricted stock programs,
incentive or other bonus plans, life, disability, health, accident and other insurance programs,
paid vacations, and similar plans or programs, if any, subject in each case to the generally
applicable terms and conditions of the plan or program in question and to the determination of the
Board or any committee administering such plan or program.
(b) Nothing in this Agreement shall preclude the Company from amending or terminating any
employee benefit plan or practice.
| 8. | Effect of Death or Disability |
(a) In the event of Executive’s termination of employment by reason of “disability” (as
defined from time to time in any applicable disability plan or program of the Company) during the
Term, this Agreement shall terminate, subject to any applicable disability plan or program of the
Company or federal or state disability or leave laws. Executive shall receive such compensation and
benefits (if any) in connection with such termination consistent with the terms of such plans,
programs or applicable laws.
(b) In the event of the Executive’s death, the Bank shall pay to the Executive’s estate an
amount, in cash, equal to (a) one hundred percent (100%) of his annual Base Salary at the rate in
effect at the time of Executive’s death, payable in a lump sum within thirty (30) days of the
Executive’s death, and (b) one hundred percent (100%) of the average Annual Bonus paid to the
Executive during the last three (3) fiscal years (or such shorter period if applicable) payable in
a lump sum within thirty (30) days of Executive’s death. The Bank will cause to be continued for
the Executive’s previously covered dependents’ life, medical and dental coverage that is
substantially equivalent to the coverage maintained by the Bank for Executive’s dependants prior to
the Executive’s death at no cost to the Executive’s covered dependants. Such coverage shall cease
upon the expiration of the remaining Term of this Agreement. If this coverage is not available,
the Bank will pay to the Executive’s covered dependants an amount equal to the remaining premiums
paid to
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the carrier for the coverage that was in force prior to the date of Executive’s death for the
remaining Term of this Agreement.
| 9. | Termination of Employment and Severance |
(a) General
(i) Termination by the Company for Cause or by Executive other than for Good
Reason. At any time during the Term, the Company may terminate Executive’s employment
under this Agreement for “Cause” (as hereinafter defined), or Executive may terminate his
employment with the Company other than for “Good Reason” (as hereinafter defined), after
which the Company shall pay to the Executive the amount of his accrued but unpaid Base
Salary and any unreimbursed reasonable expenses incurred in the performance of Executive’s
duties in accordance with the Company’s policies, in each case accrued through such
termination date (collectively, the “Accrued Obligations”). Except as set forth in the
preceding sentence, the Company shall have no further obligation hereunder to Executive.
(ii) Intentionally Left Bank.
Termination by the Company other than for Death, Disability or Cause or by the Executive
following a Qualifying Sale. If prior to the first anniversary of the date hereof, the Bank
[*] (a “Qualifying Sale”), then the restricted share award granted to Executive pursuant to Section
4(c) of this Agreement shall vest in full upon the consummation of the Qualifying Sale transaction.
If following the consummation of a Qualifying Sale and prior to the first anniversary of the
Effective Date, the Executive’s employment is terminated by the Company other than on account of
the Executive’s death, disability or for Cause, or the Executive provides written notice of his
intent to terminate his employment, for any reason, upon ninety (90) days prior written notice,
then in lieu of any other severance payment provided in this Agreement, or other Company plan,
policy or arrangement, then the Bank shall make the following payments and benefits available to
the Executive following his termination of employment (less all applicable federal, state and/or
local taxes and all other authorized payroll deductions): (A) the Accrued Obligations, and (B)
subject to the Executive’s continued compliance with the restrictive covenants contained in
Sections 11 through 15 of this Agreement, provided, however, that the non-solicitation provisions
of Section 11(a) shall remain in force for twelve (12) months following Executive’s termination of
employment, and further provided that the Executive signs and returns to the Company the Release
and such Release has become irrevocable by Executive, severance compensation equal to (I) the
remaining portion of the Base Salary Executive would have received had he worked through the first
anniversary of the Effective Date, or through the first fifteen (15) months of this Agreement, if
the Qualifying Sale occurs in the 10th, 11th or 12th month of this
Agreement, payable in a lump sum within thirty (30) days following such termination date, provided,
however, that if the Qualifying Sale does not constitute a change in control event for purposes of
Code Section 409A, then the payment will be made in equal biweekly installments over a twelve (12)
calendar-month period, in accordance with the Company’s normal payroll practices; and (II)
continued health benefits for three (3) years following the Executive’s termination of employment;
provided, however, that to the extent the applicable health plan does not permit Executive to
continue to participate in the plan during all or a part of such period, the Company shall pay the
premiums relating to such continued
| * | Confidential information has been omitted pursuant to a request to the Securities and Exchange Commission for confidential treatment. The information has been separately filed with the Commission. |
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coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). Except as set
forth in this paragraph, the Company shall have no further obligation hereunder to Executive.
(iii) Termination by Executive for Good Reason or by the Company other
than for Death, Disability or Cause. At any time during the Term, if Executive’s
employment is terminated by Executive for Good Reason, or by the Company for any reason
other than Executive’s death, disability or for Cause, the Bank (and Parent with respect to
(B)(I) below) shall make the following payments and benefits available to the Executive
(less all applicable federal, state and/or local taxes and all other authorized payroll
deductions): (A) the Accrued Obligations, and (B) subject to Executive’s continued
compliance with the restrictive covenants contained in Sections 11 through 15 of this
Agreement and further provided that Executive signs and returns to the Company the Release
and such Release has become irrevocable by Executive, severance compensation equal to (I)
three hundred percent (300%) of Executive’s annual Base Salary at the rate in effect at the
time of termination, payable in equal biweekly installments over a twelve (12)
calendar-month period, in accordance with the Company’s normal payroll practices; (II) three
hundred percent (300%) of the average Annual Bonus paid to the Executive during the last
three (3) fiscal years (or such shorter period if applicable), payable in equal biweekly
installments over a twelve (12) calendar-month period, in accordance with the Company’s
normal payroll practices; (III) full vesting of the restricted share award granted pursuant
to Section 4(c) of this Agreement; (IV) an amount equal to three hundred percent (300%) of
the Average Annual Equity Value (defined below) payable in equal biweekly installments over
a twelve (12) calendar-month period, in accordance with the Company’s normal payroll
practices; (V) in addition to the benefits to which the Executive is entitled under each
defined contribution retirement plan of the Company (a “DC Retirement Plan”), the Company
shall pay the Executive a lump sum amount, in cash, equal to the sum of (i) the amount that
would have been contributed thereto by the Company on the Executive’s behalf during the
three (3) years immediately following the date of termination, determined (x) as if the
Executive made the maximum permissible contributions thereto during such period, (y) as if
the Executive earned compensation during such period at a rate equal to the Executive’s
compensation (as defined in the DC Retirement Plan) during the twelve (12) months
immediately preceding the Date of Termination or, if
higher, during the twelve months immediately prior to the first occurrence of an event
or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC
Retirement Plan made subsequent to a Change in Control Event and on or prior to the date of
termination, which amendment adversely affects in any manner the computation of
benefits
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thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under the DC
Retirement Plan as of the date of termination over (y) the portion of such account balance
that is nonforfeitable under the terms of the DC Retirement Plan; plus (VI) continued health
benefits for three (3) years following the Executive’s termination of employment; provided,
however, that to the extent the applicable health plan does not permit Executive to continue
to participate in the plan during all or a part of such period, the Company shall pay the
premiums relating to such continued coverage under COBRA. For purposes of this Agreement,
“Average Annual Equity Value” shall mean the sum of (1) and (2), where (1) equals the
average aggregate fair market value (based upon the closing price of the stock on the date
of such award), determined as of the date of grant, of all stock, phantom stock or similar
awards granted during the three years prior to Executive’s termination, and (2) equals the
average fair value (determined as of the date of grant) utilizing the same assumptions as
the Parent uses for financial accounting purposes under FAS 123R, of all stock option or
similar awards granted to Executive during the three years prior to the termination date,
provided, however, that Average Annual Equity Value shall not include the
restricted stock grant provided in Section 4(c) of this Agreement and to restricted stock
grants made pursuant to the Restricted Stock Agreements. Except as set forth in this
paragraph, the Company shall have no further obligation hereunder to Executive.
(iv) Executive may terminate his employment with the Company, whether for Good Reason
or not, only by giving the Company thirty (30) days’ advance notice in writing, in
accordance with the notice provisions of this Agreement.
(b) Definitions. For purposes of this Agreement, the following definitions shall
apply:
(i) “Cause” shall mean any of the following: (A) Executive’s engaging in and/or
failure to take all appropriate action in response to any acts of fraud, dishonesty, theft,
embezzlement, or any other acts or omissions that are harmful or injurious to the Company
and/or any of its affiliates; (B) Executive’s willful refusal to perform any of the duties
or responsibilities: (I) reasonably assigned to Executive by the Board, (II) otherwise
reasonably assigned to Executive through Board adopted policies or procedures of the
Company; (C) Executive is removed, permanently prohibited, suspended and/or temporarily
prohibited from participating in the conduct of the Parent’s or Bank’s affairs by a notice
or order served under §8(e)(3), (e)(4) or (g)(1) of the Federal Deposit Insurance Act (12
U.S.C. 1818(e)(3), (e)(4) and (g)(1)); (D) Executive’s commission of, indictment, or
conviction for, any felony, including any plea of guilty or nolo contendere or placement in
a pretrial diversion program; (E) Executive’s material violation of any policies or
procedures of the Company and/or any of its affiliates that adversely affects the Company;
and/or (F) Executive’s breach of any of the material terms of this Agreement or any other
agreement that Executive now has or later has with the Company and/or any of its affiliates
and failure to cure such breach of this subpart (F) within thirty (30) days following
Executive’s receipt of written notice of such breach from the Board.
(ii) “Good Reason” shall mean Executive’s termination of his employment following the
Executive’s giving notice of his voluntary resignation within thirty (30) days after the
occurrence of any of the following, without Executive’s written consent: (A) a
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material reduction in Executive’s base salary or aggregate benefits, (B) a material
demotion in position accompanied by a material reduction in job duties and responsibilities,
(C) a material breach by the Company of any of its obligations under this Agreement, or (D)
a relocation of Executive’s principal place of employment by more than 30 driving miles from
its location at the Effective Date unless such relocation results in Executive principal
place of employment being closer to Executive’s primary residence, and in each of subparts
(A), (B), (C) or (D) of Section 9(b)(ii) above, a failure by the Company to cure such breach
within thirty (30) days following receipt of written notice from Executive of such breach.
| 10. | Change in Control Event. |
Upon the occurrence of a Change in Control Event (as defined below), all outstanding, unvested
equity awards shall vest in full. For purposes of this Agreement, a “Change in Control Event”
means the occurrence of any of the following after the Effective Date:
For purposes of this Agreement, a “Change in Control Event” of the Bank or Parent shall mean
an event of a nature that: (i) would be required to be reported in response to Item 5.01(a) of the
current report on Form 8-K, as in effect on the date hereof, pursuant to Sections 13 or 15(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”); or (ii) results in a Change
in Control Event of the Bank or Parent within the meaning of the Federal Deposit Insurance Act and
the rules and regulations promulgated by the applicable banking regulators, as in effect on the
date hereof (provided, that in applying the definition of change in control as set forth under the
rules and regulations of the applicable banking regulators, the Board of Directors shall substitute
its judgment for that of the applicable banking regulators); or (iii) without limitation such a
Change in Control Event shall be deemed to have occurred at such time as (A) any “person” (as the
term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of voting securities of
the Bank or Parent representing 20% or more of the Bank’s or Parent’s outstanding voting securities
or right to acquire such securities except for any voting securities of the Bank purchased by
Parent and any voting securities purchased by any employee benefit plan of the Bank or Parent, (B)
individuals who constitute the Board of Directors as of the close of business on November 8, 2007
(the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided
that any person becoming a director subsequent to the date hereof whose election was approved by a
vote of at least three-quarters of the directors comprising the Incumbent Board, or whose
nomination for election by Parent’s stockholders was approved by a Nominating Committee solely
comprised of members who are Incumbent Board members, shall be, for purposes of this clause (B),
considered as though he were a member of the Incumbent Board; provided, however, that the
resignations of members of the Board of Directors, contemplated in Section 9(a)(ii) hereof, shall
not constitute a Change in Control Event, or (C) a plan of reorganization, merger, consolidation,
sale of all or substantially all the assets of the Bank or the Parent or similar transaction occurs
or is effectuated in which the Bank or Parent is not the resulting entity.
| 11. | Non-Solicitation, Non-Competition and Non-Disclosure of Confidential Information |
(a) Executive agrees that, during the Term and for a period of eighteen (18) months
immediately following the termination of Executive’s employment with the Company for any reason,
Executive shall not disrupt, damage, impair or interfere with the business of the Company
8
and/or any of its affiliates, whether by way of interfering with or raiding their employees,
disrupting their relationships with any prospective (to Executive’s knowledge) or current
customers, clients, depositors, borrowers, brokers, lenders, suppliers, service providers,
employees, agents, representatives, and/or shareholders of the Company or any of its affiliates
(hereinafter collectively referred to as “Business Contacts”), or otherwise. Nor shall Executive
during the same period either directly or indirectly solicit, induce, recruit, or encourage to
leave the employment of the Company and/or any of its affiliates for any reason and/or to perform
work for a competitor of the Company and/or any of its affiliates (as an employee, independent
contractor, or otherwise) (such conduct is collectively referred to as “solicitation”) any person
who is then employed by the Company and/or any of its affiliates or who left the employ of the
Company and/or any of its affiliates less than one (1) year prior to the solicitation.
(b) During the Term, Executive shall not, either directly or indirectly, without written
consent of the Company, in any state in the United States in which the Company is doing “Business”
(as defined below) at the time Executive’s employment with the Company terminates: (i) engage in
the business of deposit gathering sourced through retail branch banks and real estate mortgage
origination and servicing or providing any other services or products that the Company offers as of
the time Executive’s employment terminates (the “Business”); (ii) enter the employ of, or render
any consulting or any other services to, any entity that is principally engaged in the Business; or
(iii) become interested in any such entity in any capacity, including, without limitation, as an
individual, partner, shareholder, officer, director, principal, agent, trustee or consultant;
provided, however, Executive may own, directly or indirectly, solely as a passive investment,
securities of any entity traded on any national securities exchange if Executive is not a
controlling person of, or a member of a group which controls, such entity and does not, directly or
indirectly, own two percent (2%) or more of any class of securities of such entity.
(c) Executive acknowledges that, in his employment hereunder, he will occupy a position of
trust and confidence with the Company and/or its affiliates. Executive agrees that Executive shall
not, except as may be required to perform his duties hereunder, with the written consent of the
Company or as required by applicable law, without limitation in time or until such information
shall have become public other than by Executive’s unauthorized disclosure, use, disclose or
disseminate any trade secrets, confidential information or any other information of a secret,
proprietary, confidential or generally undisclosed nature (hereinafter collectively referred to as
“Confidential Information”) relating to the Company and/or any of its affiliates, or their
respective businesses, contracts, projects, proposed projects, revenues, costs, operations, methods
or procedures. Executive acknowledges that said information is specialized, unique in nature and
of great value to the Company and/or its affiliates, and that such information gives the Company
and/or its affiliates a competitive advantage in their businesses.
(d) For purposes of this Section 11, Confidential Information shall not include information
that: (i) is or becomes generally available to the public other than as a result of an unauthorized
disclosure by Executive; (ii) becomes available to Executive in a manner that is not in
contravention of applicable law from a source (other than the Company) that is not known by
Executive, after reasonable investigation, to be bound by a confidential relationship with the
Company; or (iii) is required to be disclosed by law, court order or other legal process.
9
(e) Executive acknowledges and agrees that (a) the Confidential Information referred to in
this Agreement and (b) the relationships with the Business Contacts referenced in this Agreement
each are of substantial value to the Company and/or its affiliates and that a breach of any of the
terms and conditions of this Agreement relating to those subjects would cause irreparable harm to
the Company and/or its affiliates, for which the Company and/or its affiliates would have no
adequate remedy at law. Therefore, in addition to any other remedies that may be available to the
Company and/or any of its affiliates under this Agreement or otherwise, the Company and/or its
affiliates shall be entitled to appropriate equitable relief to specifically enforce Executive’s
duties and obligations under this Agreement, or to enjoin any breach of this Agreement, without the
need to post a bond or other security and without the need to demonstrate special damages.
(f) Executive and the Company intend that: (i) this Section 11 shall be construed as a series
of separate covenants; (ii) if any portion of the restrictions set forth in this Section 11 should,
for any reason whatsoever, be declared invalid by an arbitrator or a court of competent
jurisdiction, the validity or enforceability of the remainder of such restrictions shall not
thereby be adversely affected; and (iii) Executive declares that the territorial and time
limitations set forth in this Section 11 are reasonable and properly required for the adequate
protection of the business of the Company and/or its affiliates. In the event that any such
territorial or time limitation is deemed to be unreasonable by an arbitrator or a court of
competent jurisdiction, Executive agrees to the reduction of the subject territorial or time
limitation to the area or period which such arbitrator or court shall have deemed reasonable.
(g) All of the provisions of this Section 11 are in addition to any other written agreements
on the subjects covered herein that Executive may have with the Company and/or any of its
affiliates, and are not meant to and do not excuse any additional obligations that Executive may
have under such agreements.
| 12. | Return of Company Property |
Executive agrees, upon the termination of his employment with the Company for any reason, to
return all physical, computerized, electronic or other types of records, documents, proposals,
notes, lists, files and any and all other materials including, without limitation, computerized
and/or electronic information that refers, relates or otherwise pertains to the Company and/or its
affiliates, and any and all business dealings of said persons and entities. In addition, Executive
shall return to the Company all property or equipment that Executive has been issued during the
course of Executive’s employment or which Executive otherwise currently possesses, including, but
not limited to, any computers, cellular phones, BlackBerries, PDAs, and/or pagers. Executive shall
immediately deliver to the Company any such physical, computerized, electronic or other types of
records, documents, proposals, notes, lists, files, materials, property and equipment that are in
Executive’s possession. Executive further agrees that Executive will immediately forward to the
Company any business information regarding the Company and/or any of its affiliates that has been
or is inadvertently directed to Executive following Executive’s last day of employment with the
Company. The provisions of this Section 12 are in addition to any other written agreements on this
subject that Executive may have with the Company and/or any of its affiliates, and are not meant to
and do not excuse any additional obligations that Executive may have under such agreements.
10
| 13. | All Developments the Property of the Company |
All confidential, proprietary or other trade secret information, all work performed, and all
other ideas, discoveries, inventions, designs, processes, methods and improvements, conceived,
developed, or otherwise made by Executive, during his employment with the Company, alone or with
others, and in any way relating to the Company’s and/or any of its affiliates’ present or planned
businesses or products, whether or not patentable or subject to copyright protection and whether or
not reduced to tangible form or reduced to practice during the period of Executive’s employment
with the Company (“Developments”) shall be the sole property of the Company, provided,
however, that such Developments do not include any invention or development that qualifies
fully under the provisions of California Labor Code Section 2870 (the text of which is attached
hereto as Exhibit A). Executive further agrees to disclose all Developments promptly, fully and in
writing to the Company promptly after development of the same, and at any time upon request.
Executive agrees to, and hereby does assign to the Company all of Executive’s right, title and
interest throughout the world in and to all Developments. Executive agrees that each of the
Developments shall constitute a “work made for hire,” as defined in 17 U.S.C. § 101, and hereby
irrevocably assigns to the Company all copyrights, patents and any other proprietary rights
Executive may have in any Developments without any obligation on the part of the Company to pay
royalties or any other consideration to Executive in respect of such Developments. Executive
hereby grants to the Company an irrevocable power of attorney to perform any and all acts and
execute any and all documents and instruments on behalf of Executive as the Company may deem
appropriate in order to perfect or enforce the rights defined in this Section 13. Executive agrees
to assist the Company (without charge, but at no cost to Executive) to obtain and maintain for
itself such rights, and agrees that such obligation to assist the Company shall continue after the
termination of this Agreement. The provisions of this Section 13 are in addition to any other
written agreements on this subject that Executive may have with the Company and/or any of its
affiliates, and are not meant to and do not excuse any additional obligations that Executive may
have under such agreements.
| 14. | Non-Disparagement of the Company |
During Executive’s employment with the Company and at all times thereafter, Executive and the
Company agree, to the fullest extent permissible by law, not to make, directly or indirectly, any
public or private statements, gestures, signs, signals or other verbal or nonverbal, direct or
indirect communications that are or could be harmful to or reflect negatively on the Executive or
on the Company and/or any of its affiliates and/or their businesses, or that are otherwise
disparaging of the Executive or the Company and/or any of its affiliates and/or their businesses,
or any of their past, present or future officers, directors, employees, advisors, agents, policies,
procedures, practices, decision-making, conduct, professionalism or compliance with standards. The
provisions of this Section 14 are in addition to any other written agreements on this subject that
Executive may have with the Company and/or any of its affiliates, and are not meant to and do not
excuse any additional obligations that Executive or the Company may have under such agreements.
| 15. | Cooperation in Third-Party Disputes |
At all times during and after Executive’s employment with the Company, Executive shall
cooperate with the Company and/or its affiliates and each of their respective attorneys or other
legal representatives (collectively referred to as “Attorneys”) in connection with any claim,
litigation, or
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judicial or arbitral proceeding which is now pending or may hereinafter be brought against the
Parent, the Bank and/or any of its affiliates by any third party. Executive’s duty of cooperation
shall include, but shall not be limited to, (a) meeting with the Company’s and/or its affiliates’
Attorneys by telephone or in person at mutually convenient times and places in order to state
truthfully Executive’s knowledge of the matters at issue and recollection of events; (b) appearing
at the Company’s and/or its affiliates’ and/or their Attorneys’ request (and, to the extent
possible, at a time convenient to Executive that does not conflict with the needs or requirements
of Executive’s then-current employer) as a witness at depositions, trials or other proceedings,
without the necessity of a subpoena, in order to state truthfully Executive’s knowledge of the
matters at issue; and (c) signing at the Company’s and/or its affiliates’ and/or their Attorneys’
request declarations or affidavits that truthfully state the matters of which Executive has
knowledge. The Company shall promptly reimburse Executive for Executive’s actual and reasonable
travel or other out-of-pocket expenses that Executive may incur in cooperating with the Company
and/or its affiliates and/or their Attorneys pursuant to this Section 15. The provisions of this
Section 15 are in addition to any other written agreements on this subject that Executive may have
with the Company and/or its affiliates, and are not meant to and do not excuse any additional
obligations that Executive may have under such agreements.
| 16. | No Conflicts |
Executive represents and warrants to the Company that his acceptance of employment and
performance of duties for the Company will not conflict with or result in a violation or breach of,
or constitute a default under any contract, agreement or understanding to which the Executive is or
was a party or of which the Executive is aware and that there are no restrictions, covenants,
agreements or limitations on the Executive’s right or ability to enter into and perform the terms
of this Agreement.
| 17. | Indemnification |
With respect to any claim, loss, damage or expense (including reasonable attorneys’ fees)
arising out of the performance by Executive of his duties as an officer or director of the Company
(but excluding any breach or alleged breach of the terms of this Agreement), Executive shall be
entitled to indemnification by the Company to the fullest extent permitted by applicable law,
including 12 C.F.R. 359, as set forth in the Company’s Bylaws, and to reimbursement under any
directors’ and officers’ liability insurance policy of the Company that may be in effect from time
to time.
| 18. | Survival of Provisions |
The rights and obligations contained in Sections 8 through 28, inclusive, of this Agreement
shall survive the termination or expiration of this Agreement or of Executive’s employment with the
Company, and shall be fully enforceable thereafter. Further, all other rights and obligations of
the parties hereto, other than those applicable by their express terms only during the Term, shall
survive any termination or expiration of this Agreement or of Executive’s employment with the
Company, and shall be fully enforceable thereafter.
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| 19. | Payments; Withholding Obligations; Internal Revenue Code Section 409A; Taxes |
(a) Each obligation to make a payment under this Agreement that is subject to the limits of 12
C.F.R. 359 shall be subject to the prior approval of the FDIC, together with each payment under any
such obligation.
(b) The Company shall make such deductions and withhold such amounts from each payment made to
Executive hereunder as may be required from time to time by law, governmental regulation and/or
order.
(c) Notwithstanding any other provision of this Agreement to the contrary, to the extent
required by Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), any
payment or benefits otherwise due to Executive upon his termination of employment with the Company
shall not be made until and unless such termination from employment constitutes a “Separation From
Service,” as such term is defined under Code Section 409A. This provision shall have no effect on
payments or benefits otherwise due or payable to Executive or on his behalf, which are not on
account of his termination from employment with the Company, including as a result of his death.
(d) Notwithstanding anything to the contrary in this Agreement, to the extent necessary to
comply with Section 409A, any of the benefits described in this Agreement that are due to be paid
or provided during the first six (6) months after the date of Executive’s Separation From Service
shall, to the extent required to avoid negative tax consequences of Section 409A, be suspended and
paid on the day immediately following the six (6) month anniversary of Executive’s Separation From
Service.
(e) It is the intention of the Company and Executive that this Agreement not result in
unfavorable tax consequences to Executive under Section 409A; however, the Company and Executive
agree to work together in good faith in an effort to comply with Section 409A, including, if
necessary and as permitted under Section 409A, amending this Agreement to avoid the imposition of
any additional tax pursuant to Section 409A, provided that the Company shall not be required to
assume any increased economic burden.
(f) In the event that, as a result of payments in the nature of compensation to or for the
benefit of Executive under this Agreement, and in connection with a Change in Control Event, any
state, local or federal taxing authority imposes any taxes on the Executive that would not be
imposed but for the occurrence of a Change in Control Event, including any excise tax under Section
4999 of the Code and any successor or comparable provision (other than ordinary income and
employment taxes imposed on such payments), then, in addition to the benefits provided for under
Sections 9 and 10 of the Agreement, the Company (including any successor to the Company) shall pay
to the Executive at least fifteen days prior to the date that such taxes are due, an amount equal
to the amount of any such tax imposed or to be imposed on the Executive (the amount of any such
payment, the “Excise Tax Reimbursement”). In addition, the Company (including any successor to the
Company) shall “gross up” such Excise Tax Reimbursement by paying to the Executive at the same time
an additional amount equal to the aggregate amount of any additional taxes (whether federal, state
or local income taxes, excise taxes, special taxes, additional taxes, employment taxes or
otherwise) that are or will be payable by the Executive as a result of the Excise Tax
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Reimbursement being paid or payable pursuant to this sentence, such that after payment of such
additional taxes, the Executive shall have been paid on an after-tax basis an amount equal to the
Excise Tax Reimbursement. The Company shall, at its own expense, engage an outside accounting firm
to calculate for the benefit of Executive the amount of the Excise Tax Reimbursement and the “gross
up” for additional taxes described above and provide such calculations to Executive at least sixty
(60) days prior to the due date for Executive’s federal return for the calendar year in which such
payment is attributable. Executive or his representative shall notify the Company within
twenty-one (21) days of receipt of such calculations any discrepancies or proposed adjustments.
| 20. | Successor in Interest |
This Agreement and the rights and obligations hereunder shall be binding upon and inure to the
benefit of the parties hereto and their respective legal representatives, and shall also bind and
inure to the benefit of any successor of the Company by merger or consolidation or any purchaser or
assignee of all or substantially all of its assets. Neither this Agreement nor any of the rights
or benefits hereunder may be assigned by either party hereto, except to any such aforementioned
successor, purchaser, or assignee of the Company. Executive may not assign any of his obligations
or duties under this Agreement.
| 21. | Invalid Provision |
The parties understand and agree that if any provision of this Agreement shall, for any
reason, be adjudged by any court or arbitrator of competent jurisdiction to be invalid or
unenforceable, such judgment shall not affect, impair, or invalidate the remainder of this
Agreement, but shall be confined in its operation to the provision of this Agreement directly
involved in the controversy in which such judgment shall have been rendered.
| 22. | Arbitration of Disputes |
Except as is necessary for either party to preserve its rights under this Agreement by seeking
equitable relief (including the Company’s rights under Section 11 of this Agreement) from a court
of competent jurisdiction, the Company and Executive agree that any and all disputes based upon,
relating to or arising out of this Agreement, Executive’s employment relationship with the Company
and/or the termination of that relationship, and/or any other dispute by and between the Company
and Executive, including any and all claims Executive may at any time attempt to assert against the
Company, shall be submitted to binding arbitration in Orange County, California, pursuant to the
American Arbitration Association’s (“AAA”) Employment Arbitration Rules and Mediation Procedures
(the “Rules”), provided that the Rules shall be modified by the arbitrator to the extent necessary
to be consistent with applicable law. Executive acknowledges and agrees that by agreeing to
arbitrate claims pursuant to this Section 22, he is irrevocably waiving his right to a jury trial
of any and all claims relating to or arising out of this Agreement, Executive’s employment
relationship with the Company and/or the termination of that relationship, and/or any other dispute
by and between the Company and Executive.
The arbitrator shall be mutually agreed upon by the parties. If, however, the parties are
unable to agree upon an arbitrator, then an arbitrator shall be selected by AAA in accordance with
the Rules. The Company and Executive further agree that each party shall pay its own costs and
14
attorneys’ fees, if any; provided, however, that if either party prevails on a claim which
affords the prevailing party an award of attorneys’ fees, then the arbitrator may award reasonable
attorneys’ fees to the prevailing party, consistent with applicable law. The Company and Executive
further agree that any hearing must be transcribed by a certified shorthand reporter, and that the
arbitrator shall issue a written decision and award supported by essential findings of fact and
conclusions of law in order to facilitate judicial review. Said award and decision shall be issued
within thirty (30) days of the completion of the arbitration. Judgment in a court of competent
jurisdiction may be had on said decision and award of the arbitrator. For these purposes, the
parties agree to submit to the jurisdiction of the state and federal courts located in Orange
County, California.
| 23. | Governing Laws |
This Agreement shall be governed by and construed and enforced in accordance with the laws of
the State of California, without regard to its conflict of laws rules.
| 24. | Headings |
Titles or captions of Sections contained in this Agreement are inserted only as a matter of
convenience and for reference, and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provisions hereof.
| 25. | Interpretation |
Executive and the Company agree that this Agreement shall be deemed to have been drafted
jointly by the parties. Any uncertainty or ambiguity shall not be construed for or against any
party based on attribution of drafting to any party.
| 26. | Notice |
Any and all notice given hereunder shall be in writing and shall be deemed to have been duly
given when received, if personally delivered; when transmitted, if transmitted by telecopy, or
electronic or digital transmission method, upon receipt of telephonic or electronic confirmation;
the day after the notice is sent, if sent for next day delivery to a domestic address using a
generally recognized overnight delivery service (e.g., FedEx); and upon receipt, if sent by
certified or registered mail, return receipt requested. In each case notice will be sent as
follows:
If to the Parent:
|
Freemont General Corporation 0000 Xxxxxxx Xxxxxxxxx, 0xx Xxxxx Xxxxx Xxxxxx, XX 00000 Attention: Fax Number: |
|
If to the Bank:
|
Fremont Investment & Loan 0000 Xxxx Xxxxxxxx Xxxxxxx Xxxx, XX 00000 Attention: |
15
| Fax Number: | ||
With copies to:
|
Xxxxxx Xxxxx LLP 0000 X Xxxxxx, X.X. Xxxxxxxxxx, XX 00000 Attn: Xxxxxx X. Xxxxx, Esq. Xxxxxxx X. Xxxx, Esq. Fax: (000) 000-0000 |
|
If to Executive:
|
Xxxxxx X. Xxxxxxx To the address shown in the Company’s personnel records. |
Any party may change its address and/or facsimile number for notice purposes by duly giving notice
to the other party pursuant to this Section.
| 27. | Entire Agreement; Amendment |
This Agreement represents the entire agreement and understanding between the parties and,
except as expressly stated in this Agreement, supersedes any prior agreement, understanding or
negotiations respecting such subject between Executive and the Company, including but not limited
to the Prior Agreement. No change to or modification of this Agreement shall be valid or binding
unless it is in writing and signed by Executive and a duly authorized director of the Company.
| 28. | Waiver |
Failure to insist upon strict compliance with any of the terms, covenants, or conditions
hereof shall not be deemed a waiver of such term, covenant, or condition, nor shall any waiver or
relinquishment of, or failure to insist upon strict compliance with, any right or power hereunder
at any one or more times be deemed a waiver or relinquishment of such right or power at any other
time or times. No waiver of any breach of any term or provision of this Agreement shall be
construed to be, nor shall be, a waiver of any other breach of this Agreement. No waiver shall be
binding unless in writing and signed by the party waiving the breach.
| 29. | Counterparts |
This Agreement may be executed in counterparts, which together shall constitute one and the
same Agreement. The parties may execute more than one copy of this Agreement, each of which copies
shall constitute an original. A facsimile signature shall be deemed to be the same as an original
signature.
(Signature Page Follows)
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have hereunto executed
this Agreement on the day and year first written above.
| EXECUTIVE |
||||
| /s/ Xxxxxx X. Xxxxxxx, Xx. | ||||
| Xxxxxx X. Xxxxxxx, Xx. | ||||
| FREMONT GENERAL CORPORATION |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Its: | Chairman and Chief Executive Officer | |||
| FREMONT INVESTMENT & LOAN |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Its: | Chairman and Chief Executive Officer | |||
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EXHIBIT A
Section 2870 of the California Labor Code provides as follows:
(a) Any provision in an employment agreement which provides that an employee shall assign, or
offer to assign, any of his or her rights in an invention to his or her employer shall not apply to
an invention that the employee developed entirely on his or her own time without using the
employer’s equipment, supplies, facilities, or trade secret information except for those inventions
that either:
(1) Relate at the time of conception or reduction to practice of the invention to the
employer’s business, or actual or demonstrably anticipated research or development of
the employer; or
(2) Result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to require an employee to
assign an invention otherwise excluded from being required to be assigned under subdivision (a),
the provision is against the public policy of this state and is unenforceable.
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