DRAFT #2
KEY EMPLOYEE SEVERANCE AGREEMENT
(TIER 2 EXECUTIVE)
Southern Pacific Funding Corporation
August 1998
Note: This draft form of agreement
reflects the basic terms of the
severance policy with respect to
executive vice president level positions
adopted by the Board of Directors of
Southern Pacific Funding Corporation in
June 1998 and is subject to change upon
review by representatives of Southern
Pacific Funding Corporation and its
legal counsel.
CONTENTS
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Article 1. Definitions 1
Article 2. Severance Benefits 5
Article 3. Form and Timing of Severance Benefits 8
Article 4. Excise Tax 8
Article 5. The Company's Payment Obligation 9
Article 6. Recission 10
Article 7. Covenants 10
Article 8. Term of Agreement 11
Article 9. Legal Remedies 11
Article 10. Successors 13
Article 11. Miscellaneous 13
KEY EMPLOYEE SEVERANCE AGREEMENT (TIER 2 EXECUTIVE)
SOUTHERN PACIFIC FUNDING CORPORATION
THIS KEY EMPLOYEE SEVERANCE AGREEMENT is made, entered into, and is
effective as of August ---, 1998 (hereinafter referred to as the "Effective
Date"), by and between Southern Pacific Funding Corporation (the "Company"), a
California corporation, and -------------- (the "Executive").
WHEREAS, the Executive is currently employed by the Company in a key
management capacity; and
WHEREAS, the Executive possesses considerable experience and knowledge of
the business and affairs of the Company and its policies, methods, personnel,
and operations; and
WHEREAS, the Company is desirous of assuring insofar as possible, that it
will continue to have the benefit of the Executive's services; and the Executive
is desirous of having such assurances; and
WHEREAS, the Company recognizes that circumstances may arise in which a
change in control of the Company occurs, through acquisition or otherwise,
thereby causing uncertainty of employment without regard to the Executive's
competence or past contributions. Such uncertainty may result in the loss of the
valuable services of the Executive to the detriment of the Company and its
shareholders; and
WHEREAS, both the Company and the Executive are desirous that any proposal
for a change in control or acquisition will be considered by the Executive
objectively and with reference only to the business interests of the Company and
its shareholders; and
WHEREAS, the Executive will be in a better position to consider the
Company's best interests if the Executive is afforded a level of security, as
provided in this Agreement, against altered conditions of employment which could
result from any such change in control or acquisition.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1. DEFINITIONS
Wherever used in this Agreement, the following terms shall have the
meanings set forth below and, when the meaning is intended, the initial letter
of the word is capitalized:
(a) "Agreement" means this Key Employee Severance Agreement.
(b) "Base Salary" means the salary of record paid by the Company to the
Executive as annual salary, excluding amounts received under
incentive or other bonus plans, whether or not deferred.
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(c) "Board" means the Board of Directors of Southern Pacific Funding
Corporation.
(d) "Cause" shall be determined solely by the Committee in the exercise
of good faith and reasonable judgment, and shall mean the occurrence
of any one or more of the following:
(i) The willful and continued failure by the Executive to
substantially perform his duties of employment (other than
any such failure resulting from the Executive's Disability),
after a written demand for substantial performance is
delivered to the Executive that specifically identifies the
manner in which the Committee believes that the Executive
has not substantially performed his duties, and the
Executive has failed to remedy the situation within ten (10)
business days of receiving such notice; or
(ii) The Executive's conviction for committing an act of fraud,
embezzlement, theft, or other act constituting a felony
involving moral turpitude (with all rights of appeal having
been exhausted); or
(iii) The willful engaging by the Executive in misconduct
materially and demonstrably injurious to the Company,
monetarily or otherwise. However, no act or failure to act
on the Executive's part shall be considered "willful" unless
done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that his action or
omission was in the best interest of the Company.
(e) "Change in Control" shall be deemed to have occurred as of the first
day that any one or more of the following conditions shall have been
satisfied:
(i) Any Person (other than the Company; any trustee or other
fiduciary holding securities under an employee benefit plan
of the Company; or any company owned, directly or
indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of the
Stock of the Company) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company (not including
in the securities beneficially owned by such Person any
securities acquired directly from the Company or its
affiliates) representing thirty percent (30%) or more of the
combined voting power of the Company's then outstanding
securities; or
(ii) During any period of two consecutive years (not including
any period prior to the Effective Date), individuals who at
the beginning of such period constitute the Board, and any
new director (other than a director designated by a person
who has entered into an agreement with the Company to effect
a transaction described in clause (i), (iii), or (iv) of
this definition), whose election by the Board or nomination
for election by the Company's shareholders was approved by a
vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at the beginning
of the period or whose election or nomination for election
was previously so approved, cease for any reason to
constitute at least a majority thereof; or
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(iii) The shareholders of the Company approve a merger or
consolidation of the Company with any other corporation,
other than (A) a merger or consolidation which would result
in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity), in combination with the
ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, at
least seventy-five percent (75%) of the combined voting
power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger
or consolidation or (B) a merger or consolidation effected
to implement a recapitalization of the Company (or similar
transaction) in which no person acquires more than fifty
percent (50%) of the combined voting power of the Company's
then outstanding securities; or
(iv) The shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of
the Company's assets.
(f) "Claim Date" means the date on which the Executive or the Company
gives written notice to the other party that a controversy, dispute,
or claim exists that arises out of or relates to this Agreement.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means any committee to which the Board has delegated
authority to administer the provisions of this Agreement. If the
Board has not so delegated its authority, "Committee" shall mean the
Board.
(i) "Company" means Southern Pacific Funding Corporation, a California
corporation (including any and all subsidiaries), or any successor
thereto as provided in Article 10 herein.
(j) "Disability" means permanent and total disability as determined
under the Company's disability program or policy.
(k) "Effective Date" means the date set forth above in the preamble to
this Agreement.
(l) "Effective Date of Termination" means the date on which a Qualifying
Termination occurs, as provided in Paragraph 2.3 herein, which
triggers the payment of Severance Benefits hereunder.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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(n) "Good Reason" means, without the Executive's express written
consent, the occurrence after a Change in Control of the Company of
any one or more of the following:
(i) The assignment of the Executive to duties materially
inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, titles, and
reporting requirements) as an officer of the Company, or a
material reduction or alteration in the nature or status of
the Executive's authorities, duties, or responsibilities
from those in effect as of ninety (90) calendar days prior
to the Change in Control, other than an insubstantial and
inadvertent act that is remedied by the Company promptly
after receipt of notice thereof given by the Executive;
(ii) The Company's requiring that the Executive be based at a
location in excess of fifty (50) miles from the location of
the Executive's principal job location or office immediately
prior to the Change in Control; except for required travel
on the Company's business to an extent substantially
consistent with the Executive's present business travel
obligations;
(iii) A fifteen percent (15%) or more reduction by the Company of
the Executive's Base Salary or target bonus amount under the
Company's Executive Performance Excellence Incentive Plan
(or any successor plan) as each is in effect on the
Effective Date hereof or as the same shall be increased from
time to time; unless such reduction is the result of a
general reduction in the compensation paid to the Company's
executives for legitimate business reasons unrelated to the
Executive's employment;
(iv) The failure of the Company to continue in effect any of the
Company's short- or long-term incentive compensation plans,
or employee benefit or retirement plans, policies,
practices, or other compensation arrangements in which the
Executive participates unless such failure to continue the
plan, policy, practice, or arrangement pertains to all plan
participants generally and the Executive is provided with
replacement plans, policies, practices, or arrangements of
comparable value; or the failure by the Company to continue
the Executive's participation therein on substantially the
same basis, both in terms of the amount of benefits provided
and the level of the Executive's participation relative to
other participants, as existed immediately prior to the
Change in Control of the Company;
(v) The failure of the Company to obtain a satisfactory
agreement from any successor to the Company to assume and
agree to perform the Company's obligations under this
Agreement, as contemplated in Article 10 herein; and
(vi) Any purported termination by the Company of the Executive's
employment that is not affected pursuant to a Notice of
Termination satisfying the requirements of Section 2.8
herein, and for purposes of this Agreement, no such
purported termination shall be effective.
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The Executive's termination of employment shall not be for "Good
Reason" if such termination occurs more than six (6) months after
the occurrence of an event that would otherwise constitute Good
Reason. The Executive's right to terminate employment for Good
Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. Except where the Executive remains
employed more than six (6) months after an event that would
otherwise constitute "Good Reason," the Executive's continued
employment shall not constitute consent to, or a waiver of rights
with respect to, any circumstance constituting Good Reason herein.
(o) "Gross-Up Payment" means the payment provided for in Section 4.1.
(p) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d).
(q) "Qualifying Termination" means any of the events described in
Section 2.3 herein, the occurrence of which triggers the payment of
Severance Benefits hereunder.
(r) "Severance Benefits" means the payment of severance compensation as
provided in Section 2.4 herein.
(s) "Stock" means the Common Stock, no par value per share, of the
Company.
ARTICLE 2. SEVERANCE BENEFITS
2.1 RIGHT TO SEVERANCE BENEFITS. Except to the extent prohibited pursuant
to Section 5.3 and Article 6, the Executive shall be entitled to receive from
the Company the Severance Benefits, described in Section 2.4 herein, if there
has been a Change in Control of the Company and if, within eighteen (18)
calendar months thereafter, the Executive's employment with the Company shall
end for any reason specified in Section 2.3 herein as being a Qualifying
Termination.
The Executive shall not be entitled to receive Severance Benefits if he is
terminated for Cause, or if his employment with the Company ends due to death,
Disability, normal retirement (as defined under the then established rules of
the Company's tax-qualified retirement plan), or due to a voluntary termination
of employment by the Executive without Good Reason.
2.2 SERVICES DURING CERTAIN EVENTS. In the event a Person begins a tender
or exchange offer, circulates a proxy to shareholders of the Company, or takes
any other step seeking to effect a Change in Control, the Executive agrees that
he will not voluntarily leave the employ of the Company and will render services
until such Person has abandoned or terminated his or its efforts to effect a
Change in Control, or until six (6) months after a Change in Control has
occurred; provided, however, that the Company may terminate the Executive's
employment for Cause at any time, and the Executive may terminate his employment
any time after the Change in Control for Good Reason.
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2.3 QUALIFYING TERMINATION. The occurrence of any one or more of the
following events within eighteen (18) months after a Change in Control of the
Company shall trigger the payment of Severance Benefits to the Executive under
this Agreement:
(a) The Company's involuntary termination of the Executive's
employment without Cause;
(b) The Executive's voluntary employment termination for Good
Reason within six (6) months of the occurrence of an event
that constitutes Good Reason;
(c) A successor company fails or refuses to assume the Company's
obligations under this Agreement in their entirety, as
required by Article 10 herein; or
(d) The Company, or any successor company, commits a material
breach of any of the provisions of this Agreement.
For purposes of this Agreement, a Qualifying Termination shall not include
a termination of employment by reason of death, Disability, or normal retirement
(as such term is defined under the then-established rules of the Company's
tax-qualified retirement plan), the Executive's voluntary termination without
Good Reason, or the Company's involuntary termination for Cause.
2.4 DESCRIPTION OF SEVERANCE BENEFITS. In the event that the Executive
becomes entitled to receive Severance Benefits, as provided in Sections 2.1 and
2.3 herein, the Company shall pay to the Executive and provide him with total
Severance Benefits equal to the following:
(a) A lump-sum amount equal to the Executive's unpaid Base
Salary, accrued vacation pay, unreimbursed business expenses,
and all other items earned by and owed to the Executive
through and including the Effective Date of Termination.
(b) A lump-sum amount equal to the Executive's annual target
bonus amount, established under the Executive Performance
Excellence Incentive Plan (or any successor plan) for the
bonus plan year in which the Executive's Effective Date of
Termination occurs, multiplied by a fraction the numerator of
which is the full number of calendar days in the year from
January 1 through the Effective Date of Termination, and the
denominator of which is three hundred sixty-five (365). This
payment will be in lieu of any other payment to be made to
the Executive under the Executive Performance Excellence
Incentive Plan (or any successor plan) for that plan year.
(c) A lump-sum amount equal to two (2) multiplied by the sum of
(i) the greater of the Executive's Base Salary upon (a) the
Executive's Date of Termination or upon (b) the effective
date of a Change in Control; and (ii) the greater of (a) the
average of annual bonuses paid to the Executive during the
two (2) years immediately preceding the year in which a
Change in Control occurs, or (b) the Executive's annual
target bonus amount established under the Executive
Performance
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Excellence Incentive Plan (or any successor plan) for the
bonus plan year in which the Executive's Effective Date of
Termination occurs; provided, however, that under no
circumstances shall the amounts payable under this Section
2.4(c) exceed seven hundred thousand dollars ($700,000).
(d) The vesting and the lapse of restrictions on any and all
outstanding awards held by the Executive, as granted to the
Executive under the provisions of the Southern Pacific
Funding Corporation 1995 Stock Option, Deferred Stock, and
Restricted Stock Plan (as amended) (or any successor or
complementary plan), shall be governed by the provisions of
such plan or plans and any applicable award
agreements.
(e) A continuation for a twelve (12) month period of all
welfare-type benefits provided to the Executive at the time
of termination including, but not limited to, group term life
insurance, medical insurance, and accident and disability
insurance. These benefits shall be provided by the Company to
the Executive immediately upon the Effective Date of
Termination. Such benefits shall be provided to the Executive
at the Company's cost, and at the same coverage level, as in
effect as of the Executive's Effective Date of Termination.
Further, the eighteen (18) month COBRA period shall commence
for medical benefits as of the Executive's Effective Date of
Termination. Following the termination of the twelve (12)
month period of Company-provided benefits, the Executive
shall be allowed to purchase medical benefits at the then
applicable COBRA cost for the remaining six (6) month COBRA
coverage period.
However notwithstanding the above, these welfare-type
benefits shall be discontinued prior to the end of the stated
continuation period in the event the Executive receives
substantially similar benefits from a subsequent employer, as
determined solely by the Committee in good faith. For
purposes of enforcing this offset provision, the Executive
shall be deemed to have a duty to keep the Company informed
as to the terms and conditions of any subsequent employment
and the corresponding benefits earned from such employment
and shall provide, or cause to provide, to the Company in
writing correct, complete, and timely information concerning
the same.
(f) At Company expense, standard outplacement services from a
nationally recognized outplacement firm of the Company's
selection for a period of up to one (1) year from the
Effective Date of Termination. However, except as determined
by the Committee in its sole and absolute discretion, the
Executive shall not be entitled to receive a cash payment in
lieu of such outplacement services.
2.5 TERMINATION FOR TOTAL AND PERMANENT DISABILITY. Following a Change in
Control, if the Executive's employment is terminated with the Company due to
Disability, the Executive's benefits shall be determined in accordance with the
Company's disability, retirement, insurance, and other applicable plans and
programs then in effect.
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2.6 TERMINATION FOR RETIREMENT OR DEATH. Following a Change in Control, if
the Executive's employment with the Company is terminated by reason of his
normal retirement (as defined under the then established rules of the Company's
tax-qualified retirement plan), or death, the Executive's benefits shall be
determined in accordance with the Company's retirement, survivor's benefits,
insurance, and other applicable programs then in effect.
2.7 TERMINATION FOR CAUSE OR BY THE EXECUTIVE OTHER THAN FOR GOOD REASON.
Following a Change in Control, if the Executive's employment is terminated
either: (i) by the Company for Cause; or (ii) by the Executive other than for
Good Reason, the Company shall pay the Executive his full Base Salary at the
rate then in effect, accrued vacation, and other items earned by and owed to the
Executive through the Effective Date of Termination, plus all other amounts to
which the Executive is entitled under any compensation plans of the Company at
the time such payments are due, and the Company shall have no further
obligations to the Executive under this Agreement.
2.8 NOTICE OF TERMINATION. Any termination by the Company for Cause or a
Qualifying Termination by the Executive or the Company shall be communicated by
Notice of Termination to the other party. For purposes of this Agreement, a
"Notice of Termination" shall mean a written notice which shall indicate the
specific termination provision in this Agreement relied upon, and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated.
ARTICLE 3. FORM AND TIMING OF SEVERANCE BENEFITS
3.1 FORM AND TIMING OF SEVERANCE BENEFITS. Except as otherwise provided in
Section 5.3, the Severance Benefits described in Sections 2.4(a), 2.4(b), and
2.4(c) herein shall be paid in cash to the Executive in a single lump-sum as
soon as practicable following the Executive's Effective Date of Termination, but
in no event beyond thirty (30) days from such date.
3.2 WITHHOLDING OF TAXES. The Company shall withhold from any amounts
payable under this Agreement all federal, state, city, or other taxes as legally
shall be required.
ARTICLE 4. EXCISE TAX
4.1 EXCISE TAX PAYMENT. If any portion of the Severance Benefits or any
other payment under this Agreement or under any other agreement with, or plan of
the Company, including but not limited to stock options, and other long-term
incentives, would constitute an "excess parachute payment," such that a golden
parachute excise tax is due, the Company shall provide to the Executive an
additional payment, in cash, in an amount sufficient to cover the full cost to
the Executive of any excise tax and the state and federal income and employment
taxes on this additional payment, and all iterative excise, income, and
employment taxes thereon (cumulatively, the "Gross-Up Payment"). For this
purpose, the Executive shall be deemed to be in the highest marginal rate of
federal and state taxes. The Gross-Up Payment shall be made as soon as possible
following the date of the Executive's Qualifying Termination, but in no event
later than thirty (30) calendar days of such date.
For purposes of this Agreement, the term "excess parachute payment" shall
have the meaning assigned to such term in Section 280G of the Code, and the term
"excise tax" shall mean the tax imposed on such excess parachute payment
pursuant to Sections 280G and 4999 of the Code.
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4.2 SUBSEQUENT RECALCULATION. In the event the Internal Revenue Service
subsequently adjusts the excise tax computation herein described, the Company
shall reimburse the Executive for the full amount necessary to make the
Executive whole on an after-tax basis (less any amounts received by the
Executive that the Executive would not have received had the computations
initially been computed as subsequently adjusted), including the value of any
underpaid excise tax, and any related interest and/or penalties due to the
Internal Revenue Service.
ARTICLE 5. THE COMPANY'S PAYMENT OBLIGATION
5.1 PAYMENT OBLIGATIONS ABSOLUTE. Except as may otherwise be provided in
Section 5.3 and Article 6, the Company's obligation to make the payments
provided for herein shall be absolute and unconditional, and shall not be
affected by any circumstances, including, without limitation, any offset,
counterclaim, recoupment, defense, or other right which the Company may have
against the Executive or anyone else. All amounts payable by the Company
hereunder shall be paid without notice or demand. Except as may otherwise be
provided in Section 5.4, each and every payment made hereunder by the Company
shall be final, and the Company shall not seek to recover all or any part of
such payment from the Executive or from whomsoever may be entitled thereto, for
any reasons whatsoever.
The Executive shall not be obligated to seek other employment in mitigation
of the amounts payable or arrangements made under any provision of this
Agreement, and the obtaining of any such other employment shall in no event
effect any reduction of the Company's obligations to make the payments and
arrangements required to be made under this Agreement, except to the extent
provided in Section 2.4(e) herein.
5.2 CONTRACTUAL RIGHTS TO BENEFITS. This Agreement establishes and vests in
the Executive a contractual right to the benefits to which he is entitled
hereunder. However, nothing herein contained shall require or be deemed to
require, or prohibit or be deemed to prohibit, the Company to segregate,
earmark, or otherwise set aside any funds or other assets, in trust or
otherwise, to provide for any payments to be made or required hereunder.
5.3 EXECUTION OF RELEASE. The Executive agrees that the payment of any sums
due the Executive pursuant to this Agreement is contingent on the Executive
executing a release of all legal claims or actions against the Company, its
affiliates, shareholders, directors, officers, employees, representatives, or
agents, whether arising out of, or relating to, the Executive's employment with
the Company, in substantially the same form as the release attached to this
Agreement. The Executive agrees that his failure to execute such a release shall
cancel the Company's obligations to pay any sums otherwise due the Executive
under this Agreement (other than any sums due pursuant to Section 2.4(a)).
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5.4 REHIRE. In the event that the Executive is rehired by the Company
following a termination after a Change in Control, unless otherwise determined
by the Committee in its sole and absolute discretion, the Executive shall be
required to reimburse to the Company an amount equal to the applicable repayment
percentage specified on the schedule below multiplied by the sum of any amounts
paid to the Executive pursuant to Sections 2.4(b) and 2.4(c):
CALENDAR DAYS FROM (BUT NOT INCLUDING) REPAYMENT PERCENTAGE
THE EFFECTIVE DATE OF TERMINATION
THROUGH THE DATE OF REHIRE
0 through 90 75%
91 through 180 50%
180 through 270 25%
More than 270 0%
Notwithstanding the foregoing, the repayment amount shall be reduced,
dollar for dollar, to the extent, if any, that the sum of the Executive's Base
Salary and annual target bonus amount under the Company's Executive Performance
Excellence Plan (or any successor plan) upon rehire is less than the greater of
such sum as of either (a) the date immediately prior to the effective date of
the Change in Control, or (b) the Executive's Effective Date of Termination.
ARTICLE 6. RECISSION
If the Committee determines, in its sole and absolute discretion, based
upon the opinion of the Company's independent certified public accounting firm,
that (i) the consummation of a pending merger involving the Company may be
contingent upon the parties' ability to use pooling of interests accounting, and
(ii) a provision of this Agreement (including, but not limited to the Gross-Up
Payment of Section 4.1) would preclude the use of pooling of interests
accounting in such merger, the Committee may, in its sole and absolute
discretion, eliminate or modify any such provisions only to the extent required
to allow pooling of interests accounting to be used in such merger.
The Executive agrees that the execution of this Agreement by the Company
constitutes sufficient consideration for the Executive granting the Company the
right to recission provided for in this Article 6 and that no additional
consideration shall be required from the Company, or any other party, in the
event that the Committee exercises such right of recission.
ARTICLE 7. COVENANTS
7.1 CONFIDENTIALITY. The Executive agrees that at all times during and
following the term of this Agreement, he will not, without the prior written
consent of the Company use, attempt to use, disclose, or otherwise make known to
any person, firm, corporation, or other entity (other than the Board of
Directors of the Company) any confidential or proprietary knowledge or
information of the Company or its subsidiaries which is now known to him or
which hereafter (whether before or after his termination) may become known to
him as a result of his employment or association with the Company.
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7.2 NONSOLICITATION. Following the termination of employment, the Executive
agrees that he will not retain, solicit, or induce or attempt to retain,
solicit, or induce, any employee of the Company or any of its subsidiaries, to
terminate his employment.
7.3 COOPERATION. The Executive agrees that, at all times following his
employment termination, he will furnish such information and render such
assistance and cooperation as may reasonably be requested in connection with any
litigation or legal proceedings concerning the Company or any of its
subsidiaries (other than any legal proceedings concerning the Executive's
employment). In connection with such cooperation, the Company will pay or
reimburse the Executive for all reasonable expenses incurred in cooperating with
such requests.
7.4 REMEDIES FOR BREACH. It is recognized that damages in the event of
breach of this Article 7 by the Executive would be difficult, if not impossible,
to ascertain, and it is therefore agreed that the Company, in addition to and
without limiting any other remedy or right it may have, shall have the right to
an injunction or other equitable relief in any court of competent jurisdiction,
enjoining any such breach, and the Executive hereby waives any and all defenses
he may have on the ground of lack of jurisdiction or competence of the court to
grant such an injunction or other equitable relief. The existence of this right
shall not preclude the Company from pursuing any other rights and remedies at
law or in equity that the Company may have.
ARTICLE 8. TERM OF AGREEMENT
This Agreement will commence on the Effective Date first written above, and
shall continue in effect for three (3) full calendar years. However, at the end
of such three-year period and, if extended, at the end of each additional year
thereafter, the term of this Agreement shall be extended automatically for one
(1) additional year, unless the Company delivers written notice to the Executive
three (3) months prior to the end of such term, or extended term, that the
Agreement will not be extended. In such case, the Agreement will terminate at
the end of the term, or extended term, then in progress.
However, in the event a Change in Control occurs during the original or any
extended term, and notwithstanding any other provision of this Article 8, this
Agreement will remain in effect for the longest of (i) the remaining term of the
original three (3) year term, if still in effect; (ii) eighteen (18) months from
the effective date of such Change in Control; or (iii) until all obligations of
the Company hereunder have been fulfilled, and until all benefits required
hereunder have been paid to the Executive.
ARTICLE 9. LEGAL REMEDIES
9.1 DISPUTE RESOLUTION. Each controversy, dispute, or claim between the
Executive and the Company arising out of or relating to this Agreement, which
controversy, dispute, or claim is not settled in writing within thirty (30)
calendar days after the Claim Date, will be settled by binding arbitration in
Portland, Oregon in accordance with the provisions of the American Arbitration
Association. Further:
(a) Such arbitration shall constitute the exclusive remedy for
the settlement of any controversy, dispute, or claim, and the
Executive and the Company each waive their rights to initiate
any legal proceedings against each other in any court or
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jurisdiction. Any decision rendered by the arbitrator and
such arbitration will be final, binding, and conclusive and
judgment shall be entered in any court in the state of Oregon
having jurisdiction.
(b) Except as expressly set forth in this Agreement, the
arbitrator shall determine the manner in which the proceeding
is conducted, including the time and place of all hearings,
the order of presentation of evidence, and all other
questions that arise with respect to the course of the
proceeding. All proceedings and hearings conducted before the
arbitrator, except for trial, shall be conducted without a
court reporter, except that when any party so requests, a
court reporter will be used at any hearing conducted before
the arbitrator. The party making such a request shall have
the obligation to arrange for any pay for the court reporter.
Except as may otherwise be provided in Section 9.2, the costs
of the court reporter shall be borne equally by the parties.
(c) The arbitrator shall be required to determine all issues in
accordance with existing case and statutory law of the state
of Oregon. The rules of evidence applicable to proceedings at
law in the state of Oregon will be applicable to the
proceeding. The arbitrator shall be empowered to enter
equitable as well as legal relief, to provide all temporary
and/or provisional remedies, and to enter equitable orders
that will be binding upon the Executive and the Company. The
arbitrator shall issue a single judgment at the close of the
proceeding which shall dispose of all of the claims of the
Executive and the Company that are the subject of the
proceeding. The Executive and the Company hereto each
expressly reserve the right to contest or appeal from the
final judgment or any appealable order or appealable judgment
entered by the arbitrator. The Executive and the Company
hereto each expressly reserve the right to findings of fact,
conclusions of law, a written statement of decision, and the
right to move for a new trial or a different judgment, which
new trial, if granted, is also to be a proceeding governed
under this Section 9.1.
9.2 PAYMENT OF LEGAL FEES. In the event that it shall be necessary or
desirable for the Executive to retain legal counsel and/or to incur other costs
and expenses in connection with the enforcement of any or all of his rights
under this Agreement, including, but not limited to, maintaining an action
pursuant to Section 9.1 herein, the Company shall pay (or the Executive shall be
entitled to recover from the Company) fifty percent (50%) of the Executive's
reasonable attorneys' fees and costs and expenses in connection with the
enforcement of his rights including the enforcement of any arbitration award.
This shall include without limitation, court costs and attorneys' fees incurred
by the Executive as a result of any claim, action, or proceeding, including any
such action against the Company arising out of, or challenging the validity or
enforceability of this Agreement or any provision hereof. However, under no
circumstances shall the amounts payable by the Company to or on behalf of the
Executive pursuant to this Section 9.2 exceed fifty thousand dollars ($50,000).
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ARTICLE 10. SUCCESSORS
The rights of the Executive and the Company hereunder shall run in favor of
the Company and their respective successors, assigns, nominees, or other legal
representatives. Termination of the Executive's employment shall not operate to
relieve the Executive of any remaining obligations hereunder, and all such
obligations are binding upon his heirs, executors, administrators, or other
legal representatives.
The Company shall require any successor (whether direct or indirect, by
purchase, merger, reorganization, consolidation, acquisition of property or
stock, liquidation, or otherwise) to all or a significant portion of the assets
of the Company by agreement, in form and substance satisfactory to the
Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession had taken place. Regardless of whether such agreement is
executed, this Agreement shall be binding upon any successor in accordance with
the operation of law and such successor shall be deemed the "Company" for
purposes of this Agreement.
ARTICLE 11. MISCELLANEOUS
11.1 EMPLOYMENT STATUS. Nothing herein contained shall be deemed to create
an employment agreement between the Company (or a subsidiary) and the Executive,
providing for the employment of the Executive by the Company (or a subsidiary)
for any fixed period of time. The Executive's employment with the Company (or
any subsidiary) is terminable at will by the Company (or the subsidiary, as the
case may be), or the Executive and each shall have the right to terminate the
Executive's employment with the Company (or any subsidiary) at any time, with or
without Cause, subject to the Company's obligation to provide any Severance
Benefits as may be required hereunder.
Upon a termination of the Executive's employment prior to the effective
date of a Change in Control, there shall be no further rights under this
Agreement; provided, however, that if such an employment termination shall arise
in connection with, or in anticipation of, a Change in Control, then the
Executive's rights shall be the same as if the termination had occurred within
eighteen (18) months following a Change in Control.
11.2 ENTIRE AGREEMENT. This Agreement contains the entire understanding of
the Company and the Executive with respect to the subject matter hereof. In
addition, the payments provided for under this Agreement in the event of the
Executive's termination of employment shall be in lieu of any severance benefits
payable under any severance plan, program, or policy of the Company to which he
might otherwise be entitled.
11.3 NOTICES. All notices, requests, demands, and other communications
hereunder shall be sufficient if in writing and shall be deemed to have been
duly given if delivered by hand or if sent by registered or certified mail to
the Executive at the last address he has filed in writing with the Company or,
in the case of the Company, at its principal offices.
11.4 EXECUTION IN COUNTERPARTS. This Agreement may be executed by the
parties hereto in counterparts, each of which shall be deemed to be original,
but all such counterparts shall constitute one and the same instrument, and all
signatures need not appear on any one counterpart.
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11.5 CONFLICTING AGREEMENTS. The Executive hereby represents and warrants
to the Company that his entering into this Agreement, and the obligations and
duties undertaken by him hereunder, will not conflict with, constitute a breach
of, or otherwise violate the terms of, any other employment or other agreement
to which he is a party, except to the extent any such conflict, breach, or
violation under any such agreement has been disclosed to the Company's Board in
writing in advance of the signing of this Agreement.
11.6 SEVERABILITY. In the event any provision of this Agreement shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions of the Agreement, and the Agreement shall be
construed and enforced as if the illegal or invalid provision had not been
included. Further, the captions of this Agreement are not part of the provisions
hereof and shall have no force and effect.
Notwithstanding any other provisions of this Agreement to the contrary, the
Company shall have no obligation to make any payment to the Executive hereunder
to the extent, but only to the extent, that such payment is prohibited by the
terms of any final order of a Federal or state court or regulatory agency of
competent jurisdiction; provided, however, that such an order shall not affect,
impair, or invalidate any provision of this Agreement not expressly subject to
such order.
11.7 MODIFICATION. No provision of this Agreement may be modified, waived,
or discharged unless such modification, waiver, or discharge is agreed to in
writing and signed by the Executive and by a member of the Company's Board, as
applicable, or by the respective parties' legal representatives or successors.
11.8 APPLICABLE LAW. To the extent not preempted by the laws of the United
States, the laws of the state of California shall be the controlling law in all
matters relating to this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on this -----
day of ---------------, 1998.
ATTEST SOUTHERN PACIFIC FUNDING CORPORATION
By: -------------------------- By: -------------------------------
Corporate Secretary
Title: ----------------------------
-----------------------------------
Executive
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