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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), dated as of the 13th day of
April, 1998, is entered into by and between Xxxx X. XxXxxxxx ("Executive") and
RealTrust Asset Corporation, a Maryland corporation ("Company"), and is
effective as of the date of execution hereof.
WHEREAS, the Company desires to establish its right to the continued
services of the Executive, in the capacity described below, on the terms and
conditions and subject to the rights of termination hereinafter set forth, and
the Executive is willing to accept such employment on such terms and conditions.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, the Executive and the Company have agreed and do hereby agree as
follows:
1. Employment by the Company. The Company does hereby employ, engage and hire
the Executive as Executive Vice President of Capital Markets and Asset Liability
Management of the Company, and the Executive does hereby accept and agree to
such hiring, engagement and employment. The Executive's duties shall be such
executive and managerial duties as the Board of Directors of the Company or its
subsidiaries shall from time to time prescribe and as provided in the bylaws of
the Company. The terms of this Agreement shall be subject to the personnel
policies of the Company as determined by the Board of Directors from time to
time, except to the extent that any such policy would have a material adverse
effect on the rights of the Executive under the terms of this Agreement. The
Executive shall devote such time, energy and skill to the performance of his
duties for the Company and for the benefit of the Company as may be necessary or
required for the effective conduct and operation of the Company's business. The
Executive agrees, during the Term of this Agreement and any extension of this
Agreement, to devote his entire business and professional time, attention, and
energies exclusively to the business of the Company as shall be necessary,
advisable or required to perform the duties of the Executive's position, and to
conform to the rules, regulations, instructions, personnel practices and
policies of the Company, as existing and amended from time to time by the
Company or its Board. Furthermore, the Executive shall exercise due diligence
and care in the performance of his duties to the Company under this Agreement.
2. Term of Agreement. The term ("Term") of this Agreement shall commence as of
the date of execution hereof (the "Effective Date") and shall continue through
April 13, 2001; provided, however, that on each April 13 commencing April 13,
2001 the Term of the Agreement shall automatically be extended for one
additional year unless, not later than three months prior to any such April 13,
either party shall have given written notice to the other that it does not wish
to extend the Term of the Agreement.
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3. Compensation.
a. Base Salary. The Company shall pay the Executive, and the Executive
agrees to accept from the Company, in payment for his services to the Company
beginning on the Effective Date, a base salary at the rate per annum to be
determined by the Compensation Committee of the Board of Directors and provided
to the Executive in writing ("Base Salary"), which is subject to increase upon
thirty (30) days' notice and shall initially be set at One Hundred Sixty
Thousand Dollars ($160,000.00) and is subject to Annual Review by the Board of
Directors. Base Salary is payable in equal biweekly installments or at such
other time or times as the Executive and Company agree.
b. Performance Bonus. Commencing with fiscal year ending December 31,
1999, the Executive shall be entitled to receive an incentive performance bonus
equal to 10% of the Bonus Incentive Compensation Plan established by the Company
("Bonus"), which, during the initial Term of this Agreement, shall substantially
reflect the provisions set forth in Exhibit A, provided, however, that such
Bonus shall not exceed the Executive's Base Salary unless the Board otherwise
determines. For the fiscal year ending December 31, 1998, Executive shall
receive a bonus of $40,000 upon completion of the Company's IPO (as defined
below).
c. Incentive Stock Options. At the Effective Date, the Company shall
grant Executive options to purchase 30,000 shares of the Company's Common Stock
at an exercise price equal to the price effective at the Company's planned
initial public offering of 5,750,000 Units each consisting of one share of
Common Stock and One Stock Purchase Warrant ("IPO"). Such options shall
immediately vest and become exercisable as provided in the Company's 1996 Stock
Option Plan.
d. Annual Review. The Compensation Committee of the Company's Board of
Directors shall, at least annually, review the Executive's entire compensation
package to determine whether it continues to meet the Company's compensation
objectives. Such annual review will include a determination of whether to
increase (i) the Base Salary set forth in Section 3(a) and (ii) the Bonus to be
awarded in accordance with Section 3(b).
4. Fringe Benefits. The Executive shall be entitled to participate in any
benefit programs adopted from time to time by the Company for the benefit of its
executive employees at an appropriate level for the duties of the officer, and
the Executive shall be entitled to receive such other fringe benefits as may be
granted from time to time by the Company's Board of Directors or its
Compensation Committee.
a. Benefit Plans. The Executive shall be entitled to participate in any
benefit plans relating to stock options, stock purchases, pension, thrift,
profit sharing, life insurance, medical coverage, education or other retirement
or employee benefits available to other executive employees of the Company at an
appropriate level for the duties of the office, subject to any restrictions
(including waiting periods) specified in such plans. The Company shall make
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commercially reasonable efforts to obtain medical and disability insurance, and
such other forms of insurance as the Board of Directors shall determine, for its
employees.
b. Vacation. The Executive shall be entitled to four (4) weeks of paid
vacation per calendar year and to compensation for earned but unused vacation
days, with such vacation to be scheduled and taken in accordance with the
Company's standard vacation policies. Executive shall also be entitled to all
paid holidays given by the Company to its employees and key management
Executives.
5. Expenses.
a. Business Expenses. The Company shall reimburse the Executive for any
and all necessary, customary and usual expenses, properly receipted in
accordance with Company policies, incurred by the Executive on behalf of the
Company.
b. Relocation Expenses. The Company shall bear, or reimburse the
Executive for, the following expenses incurred by Executive in moving from
Seattle, Washington, his current principal place of business, to the vicinity of
Salt Lake City, Utah. Such relocation expenses shall be:
i. Reasonable closing costs incurred on acquisition of a
principal residence in the Salt Lake City area;
ii. Reasonable monthly rent and utilities for temporary housing
in a corporate apartment with kitchen facilities (Pinehurst Union Creek) for up
to four (4) months;
iii. Three trips (via coach class air) for the purpose of
locating a principal residence for Executive's immediate family to the Salt Lake
City area from Seattle, Washington; and travel costs (via coach class air) for
three trips by Executive from Seattle, Washington per month until relocation of
Employee for up to four (4) months;
iv. The reasonable costs of moving Executive's personal property
from Seattle, Washington to Salt Lake City, Utah.
v. The reasonable sales expenses incurred on the sale of
Executive's principal residence in Bellevue, Washington.
6. Termination of Executive's Employment
a. Death. If the Executive dies while employed by the Company, his
employment shall immediately terminate. The Executive's compensation and
benefits shall be determined in accordance with Section 8 below.
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b. Disability.
(i) If, as a result of the Executive's incapacity due to physical
or mental illness ("Disability"), Executive shall have been absent from the
full-time performance of his duties with the Company for six (6) consecutive
months, and, within thirty (30) days after written notice is provided to him by
the Company, he shall not have returned to the full-time performance of his
duties, the Executive's employment under this Agreement may be terminated by the
Company for Disability. During any period prior to such termination during which
the Executive is absent from the full-time performance of his duties with the
Company due to Disability, the Company shall continue to pay the Executive his
Base Salary and Bonus at the rate in effect at the commencement of such period
of Disability. Subsequent to such termination, the Executive's compensation and
benefits upon termination by Disability shall be determined in accordance with
Section 8 below.
(ii) If, however, as a result of the Executive's partial
incapacity due to physical or mental illness in which Executive shall not have
been absent from his duties for six consecutive months and shall have returned
to work on a full-time basis but is not able to perform at the same level as
when hired and/or is not able to perform the same functions for which originally
hired ("Partial Disability"), the Company shall make reasonable efforts to
accommodate the Executive's Partial Disability by modifying his job description
appropriately, together with a commensurate adjustment in compensation;
provided, however, the Company shall be required to so continue the employment
of the Executive in the event of a Partial Disability of the Executive only if
the Company determines, in its sole discretion, that it can create a position
for which the Executive would be suited and that would be economically
advantageous to the Company.
c. Termination by the Company for Cause. The Company may terminate the
Executive's employment under this Agreement for "Cause," at any time prior to
expiration of the Term of the Agreement, only in the event of (i) acts or
omissions constituting gross negligence, recklessness or willful misconduct on
the part of the Executive in respect of his fiduciary obligations or otherwise
relating to the business of the Company, (ii) the Executive's material breach of
this Agreement, or (iii) the Executive's conviction or entry of a plea of nolo
contendere for fraud, misappropriation or embezzlement. In such a case, the
Executive's employment under this Agreement may be terminated immediately
without any advance written notice, and the Company's obligation to pay the
Executive's Base Salary will cease and the Company shall have no obligation to
pay any Bonus or Fringe Benefits which may have accrued or vested as of the
termination date.
d. Termination by the Executive. The Executive may at any time during
the Term of this Agreement terminate his employment hereunder for any reason or
no reason by giving the Company notice in writing in advance of such
termination. Except as may be provided in Sections 9 and 10, the Executive shall
have no further obligations to the Company after the effective date of
termination, as set forth in the notice. In the event of a termination by the
Executive under this paragraph, the Company will pay only the portion of Base
Salary or previously awarded Bonus unpaid as of the termination date. Fringe
benefits which have accrued and/or vested on the
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termination date will continue in effect according to their terms, but no
additional accrual or vesting will take place.
7. Compensation upon Termination by the Company upon Death, Disability or
Without Cause. If the Executive's employment shall be terminated (i) by
Executive's death, (ii) upon Executive's Disability or (iii) without cause, the
Executive shall be entitled to the following benefits:
a. Payment of Base Salary. The Company shall immediately pay the
Executive any portion of the Executive's Base Salary or previously awarded Bonus
not paid prior to the termination date.
x. Xxxxxxxxx Payment. The Company shall pay the Executive an amount (the
"Severance Amount") equal to one half of the Executive's combined current year
Base Salary and any actual Bonus compensation for the preceding fiscal year;
provided, however, that the Severance Amount shall not be less than Eighty
Thousand Dollars ($80,000.00) nor more (once the minimum is reached) than one
percent (1.0%) of the book value of the Company (i.e., the amount reported on
the Company's balance sheet prepared in accordance with generally accepted
accounting principles as stockholders' equity). The Severance Amount shall be
payable immediately upon the termination date.
c. Stock Options. Stock options owned by the Executive as of the
termination date shall be exercisable in accordance with the Company's stock
option plan and the applicable stock option agreements.
d. Continuation of Fringe Benefits. From and after termination of the
Executive's employment, other than Executive's Death, the Company shall continue
to provide the Executive with all life insurance and medical coverage fringe
benefits set forth in Section 4 as if the Executive's employment under the
Agreement had not been terminated until the earlier to occur of (i) such time as
the Executive finds full-time employment or (ii) the expiration of one (1) year.
Notwithstanding the immediately preceding sentence, if, as the result of
termination of the Executive's employment, the Executive and/or his otherwise
eligible dependents or beneficiaries shall become ineligible for benefits under
any one of the Company's benefit plans or the cost of providing such benefits
exceeds two hundred percent (200%) of the cost of providing such benefits to
other members of senior management, the Company, at the Company's option, shall
(i) continue to provide the Executive and his eligible dependents or
beneficiaries with benefits at a level at least equivalent to the level of
benefits for which the Executive and his dependents and beneficiaries were
eligible under such plans immediately prior to the termination date or (ii) for
any fringe benefit not so provided, the Company shall pay the Executive 200% of
the cost of providing such fringe benefit to other members of senior management.
8. No Mitigation Required; No other Entitlement to Benefits under Agreement. The
Executive shall not be required in any way to mitigate the amount of any payment
provided for
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in Section 7, including, but not limited to, by seeking other employment, nor
shall the amount of any payment provided for in Section 7 be reduced by any
compensation earned by the Executive as a result of employment with another
employer after the termination date of employment, or otherwise. Except as set
forth in Section 7, following a termination governed by Section 7, the Executive
shall not be entitled to any other compensation or benefits set forth in this
Agreement, except as may be separately negotiated by the parties and approved by
the Board of Directors of the Company in writing in conjunction with the
termination of Executive's employment under Section 7.
9. Proprietary Information.
a. Executive acknowledges that certain technological and other
information may from time to time be disclosed to Executive by Company during
the continuance hereof. Executive hereby acknowledges that all such information
and technology, whether currently existing or hereafter developed by Company
through or involving the services and efforts of Executive hereunder, shall at
all times consist of and be preserved by Executive as valuable trade secrets and
confidential information which is proprietary to and owned exclusively by
Company, and that Executive does not have, and shall not have or hereafter
acquire, any rights in or to any of such information and technology, including
without limitation any patents, inventions, discoveries, know-how, trademarks or
trade names used or adopted by Company in connection with the design,
development, manufacture, or marketing of any financial or mortgage products
which at any time during the continuation hereof may be offered or sold by
Company. Executive further warrants and agrees that he shall not at any time,
whether during the continuance of this Agreement or after its expiration or
earlier termination, whether by Executive or by Company, in any manner or form,
directly or indirectly, use, disclose, duplicate, license, sell, reveal,
divulge, publish or communicate any portion of any such information or
technology, nor use, disclose, duplicate, license, sell, reveal, divulge,
publish or communicate any other confidential information concerning Company, or
any customers or products of Company, to any person, firm or entity.
b. Executive acknowledges that the Company possesses information
obtained from its customers and clients ("Customer Confidences"). Executive
agrees never to make use of Customer Confidences for any use not expressly
authorized by the Customer whose Customer Confidences are in question.
c. The Executive agrees that all styles, designs, lists, materials,
books, files, reports, correspondence, records and other documents ("Company
Materials") used, prepared or made available to the Executive, shall be and
shall remain the property of the Company. Upon the termination of employment or
the expiration of this Agreement, all Company Materials shall be returned
immediately to the Company, and the Executive shall not make or retain any
copies thereof.
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d. Executive agrees that the terms of this Section 9 will survive the
term of this Agreement and will continue in full force and effect throughout his
tenure with the Company in any capacity, whether as an employee, officer,
director or outside consultant.
10. Competition. During the Term hereof, Executive shall not, without the
Company's prior written consent, directly or indirectly engage in any business
activity, or have any interest in any person, firm or other entity engaged in
any business activity, in which Company at the time is engaged or is planning to
engage. During the Term hereof and for a period of two (2) years thereafter,
Executive shall not directly or indirectly: (a) divert or take away or solicit
or attempt to divert or take away any of Company's customers, including without
limitation those customers with whom Executive became acquainted while retained
by Company; (b) employ, or knowingly permit any business entity controlled by
Executive to employ, any person who during the period of twelve (12) months
immediately preceding such time has been employed by Company; (c) solicit or
otherwise seek to induce any employee of Company to leave his or her employment
with the Company; or (d) undertake planning for or organization of any business
activity that will injure Company's business, or conspire with employees of
Company for the purpose of organizing any such injurious business activity.
Executive agrees that the terms of this Section 10 will survive the term of this
Agreement and will continue in full force and effect throughout his tenure with
the Company in any capacity, whether as an employee, officer, director or
outside consultant. However, this Section 10 shall not continue after
termination of employment in the event that the Company terminates Executive
without Cause.
11. Notices. All notices and other communications under this Agreement shall be
in writing and shall be given by fax or first class mail, certified or
registered with return receipt requested, and shall be deemed to have been duly
given three (3) days after mailing or twenty-four (24) hours after transmission
of a fax to the respective persons named below:
If to Company: RealTrust Asset Corporation
Attn: Board of Directors
0000 X. Xxxxxxxxxx Xxxxxxx
Xxxx Xxxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
If to Executive: Xxxx X. XxXxxxxx
___________________________
___________________________
Either party may change such party's address for notices by notice duly given
pursuant hereto.
12. Attorneys Fees. In the event judicial determination is necessary of any
dispute arising as to the parties' rights and obligations hereunder, each party
shall have the right, in addition to any other relief granted by the court, to
attorneys' fees based on a determination by the court of the
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extent to which each party has prevailed as to the material issues raised in
determination of the dispute.
13. Termination of Prior Agreements. This Agreement terminates and supersedes
any and all prior agreements and understandings between the parties with respect
to employment or with respect to the compensation of the Executive by the
Company.
14. Assignment; Successors. This Agreement is personal in its nature and neither
of the parties hereto shall, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder; provided that,
in the event of the merger, consolidation, transfer, or sale of all or
substantially all of the assets of the Company with or to any other individual
or entity, this Agreement shall, subject to the provisions hereof, be binding
upon and inure to the benefit of such successor and such successor shall
discharge and perform all the promises, covenants, duties, and obligations of
the Company hereunder.
15. Governing Law. This Agreement and the legal relations thus created between
the parties hereto shall be governed by and construed under and in accordance
with the laws of the State of Utah.
16. Entire Agreement; Headings. This Agreement embodies the entire agreement of
the parties respecting the matters within its scope and may be modified only in
writing. Section headings in this Agreement are included herein for convenience
of reference only and shall not constitute a part of this Agreement for any
other purpose.
17. Waiver; Modification. 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. This Agreement shall not be modified in any
respect except by a writing executed by each party hereto.
18. Severability. In the event that a court of competent jurisdiction determines
that any portion of this Agreement is in violation of any statute or public
policy, only the portions of this Agreement that violate such statute or public
policy shall be stricken. All portions of this Agreement that do not violate any
statute or public policy shall continue in full force and effect. Further, any
court order striking any portion of this Agreement shall modify the stricken
terms as narrowly as possible to give as much effect as possible to the
intentions of the parties under this Agreement.
19. Indemnification. The Company shall indemnify and hold Executive harmless to
the maximum extent permitted by Maryland Law and the Bylaws of the Company.
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20. Counterparts. This Agreement may be executed in counterparts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
"Company" "Executive"
RealTrust Asset Corporation, Xxxx X. XxXxxxxx
a Maryland corporation
By: ________________________________ _________________________________
Xxxx X. Xxx Xxxx X. XxXxxxxx
President and Chief Executive
Officer
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EXHIBIT A
BONUS INCENTIVE COMPENSATION PLAN
The Bonus Incentive Compensation Plan shall be effective commencing upon
closing of the Company's initial public offering ("IPO"). The annual bonus
pursuant to the Bonus Incentive Compensation Plan will be paid one-half in cash
and one-half in shares of Common Stock of the Company, annually, following
receipt of the audit for the related fiscal year. This program will award
bonuses annually to those officers out of a total pool determined by shareholder
return on equity ("XXX") as follows:
XXX/(1)/ in Excess of Base Rate/(2) Bonus as % of Average Net
Worth/(3)/ Outstanding
Zero or less 0%
Greater than 0% but less than 6% 10% * (actual XXX - Base Rate)
Greater than 6% (10% * 6%) + 15% * (Actual
XXX - (Base Rate + 6%))
Of the amount so determined, one-half will be deemed contributed to the
total pool in cash and the other half deemed contributed to the total pool in
the form of shares of Common Stock, with the number of shares to be calculated
based on the average price per share during the preceding year.
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/(1) /"XXX" is determined for the fiscal year by averaging the monthly ratios
calculated each month by dividing the Company's monthly Net Income
(adjusted to an annual rate) by its Average Net Worth for such month. For
such calculations, the "Net Income" of the Company means the net income or
net loss of the Company determined according to GAAP, but after deducting
any dividends paid or payable on preferred stock issued after the IPO and
before giving effect to the bonus incentive compensation or any valuation
allowance adjustment to stockholders' equity. The definition "XXX" is used
only for purposes of calculating the bonus incentive compensation payable
pursuant to the Bonus Incentive Compensation Plan, and is not related to
the actual distributions received by stockholders. The bonus payments will
be made before any income distributions are made to stockholders.
/(2) /"Base Rate" is the average for each month of the Ten-Year U.S. Treasury
Rate, plus 4%.
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/(3) /"Average Net Worth" for any month means the arithmetic average of the sum
of (i) the net proceeds from all offerings of equity securities by the
Company since formation (but excluding any offerings of preferred stock
subsequent to the IPO), after deducting any underwriting discounts and
commissions and other expenses and costs relating to the offerings, plus
(ii) the Company's retained earnings (without taking into account any
losses incurred in prior fiscal years, after deducting any amounts
reflecting taxable income to be distributed as dividends and without giving
effect to any valuation allowance adjustment to stockholders' equity)
computed by taking the daily average of such values during such period.
