EXHIBIT 10.31
EMPLOYMENT AND NON-COMPETITION AGREEMENT
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THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT is made as of this 18th
day of September, 1995, by and between CoastFed Business Credit Corporation, a
California corporation ("Employer" or "CBCC"), which is a wholly-owned
subsidiary of Imperial Credit Industries, Inc., a California corporation
("ICII"), and Xxxxx X. Xxxxxxx, an individual ("Employee"), with reference to
the following facts:
R E C I T A L S
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WHEREAS, ICII (or its assignee) is purchasing all of the outstanding
capital stock (the "Stock") of Employer pursuant to that Stock Purchase
Agreement among ICII, Coast Federal Bank, Federal Savings Bank and Employer
dated as of September 18, 1995 (the "Purchase Agreement");
WHEREAS, Employee is knowledgeable of and skillful in Employer's business,
and has well established business relationships and contacts in the current
business of Employer which includes, but is not limited to, financial services
and loans to business borrowers (the "Business");
WHEREAS, ICII expects to receive the benefit of the sole use of all trade
marks, service marks, tradenames or fictitious business names of Employer;
WHEREAS, Employee is knowledgeable and responsible in part for developing
Employer's trade secrets, including confidential information concerning product
and service marketing plans and strategy, customer needs and peculiarities, and
customer lists and detail information (the "Trade Secrets");
WHEREAS, Employee has significant business acumen and financial strength to
conduct an enterprise upon termination of his employment relationship with
Employer as described hereunder which would compete with the Business in the
markets currently served by Employer, and each of Employer and ICII desires that
Employee not participate in such a competing business;
WHEREAS, ICII would not enter into the Purchase Agreement unless it is
assured that it will be able to operate the Business of Employer without
competition from Employee;
WHEREAS, Employee has agreed not to compete with Employer or use any
confidential and/or proprietary business information regarding the business of
Employer to the detriment of Employer or ICII during the term of this Agreement,
in order to induce ICII to enter into the Purchase Agreement and to perform its
obligations thereunder;
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WHEREAS, Employer desires that Employee be employed as President and
Chief Operating Officer of Employer, such employment to become effective on the
Closing Date (as that term is defined in the Purchase Agreement); and
WHEREAS, Employee is willing to be employed by Employer as described
under the terms and conditions herein stated.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained, and for other good and valuable consideration,
it is hereby agreed by and between the parties hereto as follows:
1. Employment, Services, and Duties. Employer hereby employs Employee and
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Employee hereby accepts such employment full-time as President and Chief
Operations Officer of Employer, with the powers and duties consistent with such
position. Employee agrees to devote 100% of all working hours to rendering the
services as President and Chief Operations Officer of Employer. Employee shall
render his services to Employer by and subject to the instructions and
directions of Employer's Chief Executive Officer to whom Employee shall
directly report.
2. Term and Termination
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2.1 Unless sooner terminated pursuant to Paragraph 2.2 hereof,
Employee's employment shall commence on the Closing Date (as that term is
defined in the Purchase Agreement) and shall continue for a period of five (5)
years unless extended by the mutual agreement of Employer and Employee (the
"Term").
2.2 Employee's employment shall terminate prior to the expiration of
the Term upon the happening of any of the following events:
(a) Voluntary termination by Employee which is not subject to
Section 2.2(g) herein;
(b) Upon the death of Employee;
(c) Upon dissolution and termination of the Employer;
(d) For cause by the Employer, that is to say only:
(i) if Employee is convicted of (or pleads nolo contendere
to) or at any time prior to employment by Employer has been convicted of (or
pled nolo contendere to) a crime of dishonesty or breach of trust or crime
leading to incarceration of more than ninety (90) days (including, without
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limitation, embezzlement or theft from Employer) or the payment of a penalty or
fine of $10,000, or more;
(ii) upon a determination by Employer that Employee has
engaged in willful misconduct, gross negligence, or gross or habitual neglect in
the performance of his duties under this Agreement, or has committed an act of
fraud, theft or dishonesty against Employer;
(iii) if Employee has materially breached any of the terms
of this Agreement or any other material legal obligation to Employer including,
without limitation, a breach of trust or fiduciary duty involving Employer or a
material violation of policies or procedures of Employer and has not cured any
such breach within thirty (30) days after having been given written notice
thereof by Employer; or
(iv) Any determination of "cause" as used in this Section
2.2(d) shall be made only in good faith by an affirmative majority vote of the
Board of Directors (not counting Employee, if a director) of the Employer;
(e) By mutual agreement between Employer and Employee;
(f) Upon the good faith determination of the Board of Directors
of Employer that Employee has become so physically or mentally disabled as to be
incapable of satisfactorily performing his duties hereunder for a period of one
hundred and eighty (180) consecutive days, such determination based upon a
certificate as to such physical or mental disability issued by a licensed
physician and/or psychiatrist (as the case may be) employed by Employer; or
(g) Without cause by Employer.
2.3 Except as set forth in Sections 4, 5, 6 and 7 herein, in the
event that Employee's employment is terminated pursuant to Sections 2.2(a), (b),
(c), (d), (e) or (f) herein, neither Employer nor Employee shall have any
remaining duties or obligations hereunder, except that Employer shall pay to
Employee, or his representatives, on the date of termination of employment
("Termination Date"),
(i) such compensation as is due pursuant to Section 3.1(a)
herein, prorated through the Termination Date; and
(ii) expense reimbursements and car allowances due and
owing to Employee as of the Termination Date.
2.4 Except as set forth in Sections 4, 5, 6 and 7 herein, in the
event that Employee's employment is terminated pursuant to Section 2.2(g)
herein, neither Employer nor Employee
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shall have any remaining duties or obligations hereunder, except that Employer
shall pay to Employee, or his representatives, on the Termination Date,
(i) all such compensation as is due pursuant Section
3.1(a) through the Term;
(ii) whatever non-discretionary bonus or incentive
compensation is provided by any plan for the year of termination, prorated
through the Termination Date; and
(iii) expense reimbursements and car allowances due and
owing to Employee as of the Termination Date.
2.5 This Agreement shall terminate (and Employee's employment shall
not in any way have been deemed to have commenced hereunder) in the event of the
termination of the Purchase Agreement pursuant to Section 9.1 therein.
2.6 In the event that ICII, Employer or any assignee or affiliate
thereof causes the physical location of Employer to be moved to an area outside
of a ten mile radius from that address known as 00000 xxxxxxxx Xxxxxxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000-0000, Employee may deem this Agreement terminated by
giving written notice to Employer. In such event, Employee's sole remedy and
rights hereunder shall be limited to the right to receive from Employer all such
compensation as is referenced in section 2.4 (i), (ii) and (iii) herein.
2.7 This Agreement shall not be terminated by any:
(a) Merger, whether the Employer is or is not the surviving
corporation; or
(b) Transfer of all or substantially all of the assets or
capital stock of the Employer.
In the event of any such merger, transfer of assets or capital
stock, dissolution, liquidation, or consolidation, the surviving corporation or
transferee, as the case may be, shall be bound by and shall have the benefits
of this Agreement, and the Employer shall take all action to ensure that such
corporation or transferee is bound by the provisions of this Agreement.
3. Compensation
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3.1 As the total consideration for the services which Employee agrees
to render hereunder, Employee is entitled to the following:
(a) A salary of Two Hundred Thousand Dollars ($200,000) per year
("Salary"), payable in equal installments
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twice monthly on those days when Employer normally pays its employees;
(b) An annual incentive bonus in an amount equal to 1.50% of
CBCC's annual pre-tax profit as determined in accordance with generally accepted
accounting principles consistently applied ("GAAP") prior to payment of bonuses
to Employee and Xxxx Xxxxxx and amortization of goodwill. Payment of said bonus
shall be contingent upon the Company's annual net profit equalling or exceeding
an amount equal to the equivalent of 2.00% of Employer's average assets, not
including goodwill, or a pre-tax return on capital of 20.00%, each as determined
in accordance with GAAP. For purposes of this section 3.1(b), capital shall be
deemed to be equal to Twelve Million Dollars ($12,000,000) and Seller's cost of
funds in making calculations hereunder shall be deemed to be the rate that Bank
of America announces from time to time as its prime lending rate, as in effect
on the first date of each calendar month, less two percent.
(c) Reimbursement for reasonable and necessary business and
entertainment expenses incurred by him in connection with the performance of his
duties hereunder. Employer shall reimburse the Employee for all such expenses
upon presentation by the Employee, from time to time, of an itemized account of
such expenditures. In the event that any Federal, state or local government
agency or authority determines to disallow any such expenses which are
reimbursed to Employee, Employee agrees, to the extent that such determination
involves the Employee, to reimburse Employer for all such disallowed expenses
and for all penalties incurred by Employer;
(d) Employee shall be entitled to four (4) weeks vacation time
each year without loss of compensation. Employee may be absent from his
employment only at such times as Employer shall determine from time to time.
Employee's vacation shall be under Employer's usual policies applicable to all
employees;
(e) Employee shall be entitled to a monthly car allowance of
Five Hundred Dollars ($500) payable by the fifth day of each month;
(f) On the Closing Date (as that term is defined in the Purchase
Agreement), ICII shall grant Employee incentive stock options to purchase ten
thousand (10,000) shares of ICII's Common Stock under ICII's Stock Option Plan
(the "Plan"), such options to be governed by the terms of the Plan;
(g) Employer agrees to provide Employee with insurance coverages
and other benefits available to all employees of Employer under its group plans;
and
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(h) Such other benefits as the Board of Directors of Employer,
in its sole discretion, may from time to time provide.
3.2 Employer shall have the right to deduct from the compensation due
to Employee hereunder any and all sums required for social security and
withholding taxes and for any other federal, state, or local tax or charge which
may be in effect or hereafter enacted or required as a charge on the
compensation of Employee.
4. Non-Competition
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(a) During Employee's employment hereunder, and for a period of one
(1) year following a termination of this Agreement by Employee hereunder,
Employee shall not, directly or indirectly, engage or participate in, prepare or
set up, assist or have any interest in any person, partnership, corporation,
firm, association, or other business organization, entity or enterprise (whether
as an employee, officer, director, agent, security holder, creditor, consultant
or otherwise) that engages in any activity, which is the same as, similar to, or
competitive with any activity now engaged in by Employer or in any way relating
to the Business currently conducted by Employer in those geographic areas where
Employer conducts the Business.
(b) Nothing contained in this Agreement shall be deemed to preclude
Employee from purchasing or owning, directly or beneficially, as a passive
investment, one percent (1%) or less of any class of a publicly traded
securities or any entity if he does not actively participate in or control,
directly or indirectly, any investment or other decisions with respect to such
entity.
5. Confidentiality.
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Employee shall keep all Trade Secrets confidential; use Trade Secrets
only in the course of his duties hereunder; maintain in trust, as Employer's
property, all documents concerning Employer's Business, including his own work
papers of any kind including telephone directories and notes, and any and all
copies thereof in his possession or under his control; and transfer to Employer
all documents that belong to Employer and any and all copies that are in his
possession or under his control when his Employment terminates, or at any other
time upon request by Employer.
6. Injunctive Relief
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Employee hereby acknowledges and agrees that it would be difficult to
fully compensate Employer for damages resulting from the breach or threatened
breach of Sections 4 and 5, herein and, accordingly, that Employer shall be
entitled to temporary
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and injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, to enforce such Sections without the
necessity of proving actual damages therewith. This provision with respect to
injunctive relief shall not, however, diminish Employer's right to claim and
recover damages or enforce any other of its legal and/or equitable rights or
defenses.
7. Severable Provisions
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The provisions of this Agreement are severable and if any one or more
provisions may be determined to be illegal or otherwise unenforceable, in whole
or in part, the remaining provisions, and any partially unenforceable provisions
to the extent enforceable, shall nevertheless be binding and enforceable.
8. Reference Provision
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(a) Each controversy, dispute or claim between the parties arising
out of or relating to this Agreement, which controversy, dispute or claim is not
settled in writing within thirty (30) days after the "Claim Date" (defined as
the date on which a party subject to the Agreement gives written notice to the
other that a controversy, dispute or claim exists), will be settled by binding
arbitration in Los Angeles, California in accordance with the provisions of the
American Arbitration Association, which shall constitute the exclusive remedy
for the settlement of any controversy, dispute or claim, and the parties waive
their rights to initiate any legal proceedings against each other in any court
or jurisdiction other than the Superior Court of Los Angeles (the "Court"). Any
decision rendered by the arbitrator and such arbitration will be final, binding
and conclusive and judgment shall be entered pursuant to CCP Section 644 in any
court in the State of California 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. 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 law and the statutory laws of the State of
California. The rules of evidence applicable to proceedings at law in the State
of California will
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be applicable to the reference 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
parties. The arbitrator shall issue a single judgement at the close of the
proceeding which shall dispose of all of the claims of the parties that are the
subject of the proceeding. The parties hereto expressly reserve the right to
contest or appeal from the final judgment or any appealable order or appealable
judgement entered by the arbitrator. The parties hereto 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 provision.
9. Binding Agreement
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This Agreement shall inure to the benefit of and shall be binding upon
Employer, its successors and assigns. In the event that ICII assigns its rights
to purchase the Stock under Section 1.6 of the Purchase Agreement, all
references to Employer set forth herein shall mean such assignee.
10. Captions
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The Section captions are inserted only as a matter of convenience and
reference and in no way define, limit or describe the scope of this Agreement or
the intent of any provisions hereof.
11. Entire Agreement
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This Agreement contains the entire agreement of the parties relating
to the subject matter hereof, and the parties hereto have made no agreements,
representations or warranties relating to the subject matter of this Agreement
that are not set forth otherwise herein. This Agreement supersedes any and all
prior agreements, written or oral, between Employee and Employer and its
affiliates. Any such prior agreements are hereby terminated and of no further
effect and Employee by the execution hereof agrees that any compensation
provided for under any such prior agreement(s) is specifically superseded and
replaced by the provision of this Agreement. No modification of this Agreement
shall be valid unless made in writing and signed by the parties hereto and
unless such writing is made by an executive officer of Employer. The parties
hereto agree that in no event shall an oral modification of this Agreement be
enforceable or valid.
12. Governing Law
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This Agreement shall be governed and construed in accordance with the
laws of the State of California.
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13. Notices. All notices and other communications under this Agreement
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shall be in writing (including, without limitation, telegraphic, telex,
telecopy or cable communication) and mailed, telegraphed, telexed, telecopied,
cabled or delivered by hand or by a nationally recognized courier service
guaranteeing overnight delivery to a party at the following address (or to such
other address as such party may have specified by notice given to the other
party pursuant to this provision):
If to the Employee, to:
Xxxxx X. Xxxxxxx
CoastFed Business Credit Corporation
00000 xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
___________________________________
___________________________________
___________________________________
Telephone: ________________________
Facsimile: ________________________
Attention: ________________________
If to the Employer or ICII, to:
Imperial Credit Industries, Inc.
0000 Xxxxxxx Xxxxx, Xxxxxxxx #0, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: H. Xxxxx Xxxxxxx,
Chairman of the Board
with a copy to:
Freshman, Marantz, Orlanski, Xxxxxx & Xxxxx
Eighth Floor, East Tower
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
All such notices and communications shall, when mailed, telegraphed, telexed,
telecopied, cabled or delivered, be effective three days after deposit in the
mails, delivered to the telegraph company, confirmed by telex answerback,
telecopied with confirmation of receipt, delivered to the cable company,
delivered by hand to the addressee or one day after delivery to the courier
service.
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14. Attorney's Fees. In the event that any party shall bring an action or
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proceeding in connection with the performance, breach or interpretation hereof,
then the prevailing party in such action as determined by the court or other
body having jurisdiction shall be entitled to recover from the losing party in
such action, as determined by the court or other body having jurisdiction, all
reasonable costs and expense of litigation or arbitration, including reasonable
attorney's fees, court costs, costs of investigation and other costs reasonably
related to such proceeding.
IN WITNESS WHEREOF, this Employment Agreement is executed as of the
day and year first above written.
"EMPLOYER"
CoastFed Business Credit
Corporation
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: CEO
"EMPLOYEE"
/s/ Xxxxx X. Xxxxxxx
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XXXXX X. XXXXXXX
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