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Exhibit (e)(13)
CHANGE IN CONTROL
SEVERANCE AGREEMENT
AGREEMENT between FIRST SIERRA FINANCIAL, INC., a Delaware corporation (the
"Company"), and Xxxxx Xxxxxxx ("Executive"),
W I T N E S S E T H :
WHEREAS, the Company desires to retain certain key employee personnel and,
accordingly, the Board of Directors of the Company (the "Board") has approved
the Company entering into a severance agreement with Executive in order to
encourage Executive's continued service to the Company; and
WHEREAS, Executive is prepared to perform such services in return for
specific arrangements with respect to severance compensation and other benefits;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Executive agree as follows:
1. DEFINITIONS.
(a) "BONUS AMOUNT" means the greater of (i) 10% of Executive's Compensation
or (ii) the annual bonus payment received by (or payable to) Executive with
respect to the Company's fiscal year that ended immediately prior to the fiscal
year during which a Change in Control occurs.
(b) "CHANGE IN CONTROL" means (i) any merger, consolidation, or
reorganization in which the Company is not the surviving entity (or survives
only as a subsidiary of an entity), (ii) any sale, lease, exchange, or other
transfer of all or substantially all of the assets of the Company to any other
person or entity other than a wholly-owned subsidiary of the Company (in one
transaction or a series of related transactions), (iii) dissolution or
liquidation of the Company, (iv) when any person or entity, including a "group"
as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, acquires or gains ownership or control (including, without limitation,
power to vote) of more than 50% of the outstanding shares of the Company's
voting stock (based upon voting power), or (v) during any two-year period, the
persons who were directors of the Company (together with any new directors whose
election by the Board or whose nomination for election by the Company's
shareholders was approved by a vote of at least three quarters of the directors
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) shall
cease for any reason to constitute a majority of the Board; provided, however,
that the term "Change in Control" shall not include any reorganization, merger,
consolidation, or similar transaction or series of transactions pursuant to
which the record holders of the voting stock of the Company immediately prior to
such transaction or series of transactions continue to hold immediately
following
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such transaction or series of transactions 50% or more of the voting securities
(based upon voting power) of (1) any entity which owns (directly or indirectly)
the stock of the Company, (2) any entity with which the Company has merged, or
(3) any entity that owns an entity with which the Company has merged.
(c) "CHANGE IN DUTIES" shall mean the occurrence, on the date upon which a
Change in Control occurs or within two years thereafter, of any one or more of
the following:
(i) A significant reduction in the nature or scope of Executive's
authorities or duties from those applicable to Executive immediately prior
to the date on which a Change in Control occurs;
(ii) A reduction in Executive's annual base salary or target
opportunity under any applicable bonus or incentive compensation plan or
arrangement from that provided to Executive immediately prior to the date
on which a Change in Control occurs;
(iii) A diminution in Executive's eligibility to participate in bonus,
stock option, incentive award and other compensation plans which provide
opportunities to receive compensation which are the greater of (A) the
opportunities provided by the Company (including its subsidiaries) for
executives with comparable duties or (B) the opportunities under any such
plans under which Executive was participating immediately prior to the date
on which a Change in Control occurs;
(iv) A diminution in employee benefits (including but not limited to
medical, dental, life insurance, and long-term disability plans) and
perquisites applicable to Executive from the greater of (A) the employee
benefits and perquisites provided by the Company (including its
subsidiaries) to executives with comparable duties or (B) the employee
benefits and perquisites to which Executive was entitled immediately prior
to the date on which a Change in Control occurs; or
(v) A change in the location of Executive's principal place of
employment by the Company by more than 50 miles from the location where
Executive was principally employed immediately prior to the date on which a
Change in Control occurs.
(d) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(e) "COMPENSATION" shall mean the greater of:
(i) Executive's annual base salary at the rate in effect immediately
prior to the date on which a Change in Control occurs;
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(ii) Executive's annual base salary at the rate in effect sixty days
prior to the date of Executive's Involuntary Termination; or
(iii) Executive's annual base salary at the rate in effect at the time
of Executive's Involuntary Termination.
(f) "INVOLUNTARY TERMINATION" shall mean any termination of Executive's
employment with the Company which:
(i) does not result from a resignation by Executive (other than a
resignation pursuant to clause (ii) of this subparagraph (f)); or
(ii) results from a resignation by Executive on or before the date
which is sixty days after the date upon which Executive receives notice of
a Change in Duties; provided, however, the term "Involuntary Termination"
shall not include a Termination for Cause or any termination as a result of
death, disability under circumstances entitling Executive to benefits under
the Company's long-term disability plan, or Retirement.
(g) "RETIREMENT" shall mean Executive's resignation on or after the date
Executive reaches age sixty-five.
(h) "SEVERANCE AMOUNT" shall mean an amount equal to (i) 2.0 multiplied by
(1) the sum of 120% of Executive's Compensation and (2) the Bonus Amount.
(i) "TERMINATION FOR CAUSE" shall mean that Executive's employment with the
Company has been terminated by the Company for "cause" (as such term is defined
in an employment agreement between Executive and the Company); provided,
however, that if such an employment agreement does not exist, is no longer
effective, or does not define the term "cause," then "Termination for Cause"
shall mean that Executive's employment with the Company has been terminated by
the Company because Executive (i) has engaged in gross negligence or willful
misconduct in the performance of Executive's duties, (ii) has willfully refused
without proper legal reason to perform Executive's duties and responsibilities,
(iii) has materially breached any material provision of any agreement between
the Company and Executive, (iv) has materially breached any material corporate
policy maintained are established by the Company that is of general
applicability to the Company's executive employees, (v) has willfully engaged in
conduct that Executive knows or should know is materially injurious to the
Company or any of its affiliates, or (vi) has engaged in illegal conduct or any
act of serious dishonesty which adversely affects, or reasonably could in the
future adversely affect, the value, reliability, or performance of Executive in
a material manner; provided, further, that in no event shall a termination of
Executive's employment constitute a "Termination for Cause" unless such
termination is approved by at least two-thirds of the members of the Board after
Executive has been given written notice by the Company of the specific reason
for such termination and an opportunity for Executive, together with Executive's
counsel, to be heard before the Board. Members of the Board may participate in
any hearing that is required pursuant to this subparagraph (i) by means of
conference telephone or similar communications equipment by means of which all
persons participating in the hearing can hear and speak to each other; provided,
however, that at least one-half of the members of the Board shall attend the
hearing in person.
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2. SERVICES. Executive agrees that Executive shall (a) render services to the
Company (as well as any subsidiary thereof or successor thereto) during the
period of Executive's employment to the best of Executive's ability and in a
prudent and businesslike manner and (b) devote substantially the same time,
efforts, and dedication to Executive's duties as heretofore devoted.
3. SEVERANCE BENEFIT. If Executive's employment by the Company or any
successor thereto shall be subject to an Involuntary Termination that occurs on
the date upon which a Change in Control occurs or within two years thereafter,
then Executive shall be entitled to receive, as additional compensation for
services rendered to the Company (including its subsidiaries), a lump sum cash
payment in an amount equal to the Severance Amount, which shall be paid to
Executive on or before the fifth day after the last day of Executive's
employment with the Company.
Notwithstanding the foregoing, the lump sum cash payment to Executive pursuant
to this Paragraph 3 shall be reduced by the present value (determined using a
discount rate equal to the prime or base rate of interest of Chase Bank as of
the date of Executive's Involuntary Termination) of all cash severance payments,
if any, payable to Executive from or on behalf of the Company on account of
Executive's Involuntary Termination pursuant to (a) any other agreement between
the Company and Executive or (b) any severance benefit plan maintained by the
Company.
4. INTEREST ON LATE BENEFIT PAYMENT. If the payment provided for in
Paragraph 3 hereof is not made when due, then the Company shall pay to Executive
interest on the amount payable from the date that such payment should have been
made under such paragraph until such payment is made, which interest shall be
calculated at the rate of 1% per month (with a partial month counting as a full
month).
5. PARACHUTE PAYMENT. Notwithstanding anything to the contrary in this
Agreement, if Executive is a "disqualified individual" (as defined in Section
280G(c) of the Code), and the severance benefit provided for in Paragraph 3,
together with any other payments which Executive has the right to receive from
the Company and its affiliates, would constitute a "parachute payment" (as
defined in Section 280G(b)(2) of the Code), the severance benefit provided
hereunder shall be either (a) reduced (but not below zero) so that the present
value of such total amounts received by Executive will be one dollar ($1.00)
less than three times Executive's "base amount" (as defined in Section 280G of
the Code) and so that no portion of such amounts received by Executive shall be
subject to the excise tax imposed by Section 4999 of the Code or (b) paid in
full, whichever produces the better net after-tax position to Executive (taking
into account any applicable excise tax under Section 4999 of the Code and any
applicable income tax). The determination as to whether any such reduction in
the amount of the severance benefit is necessary shall be made initially by the
Company in good faith. If a reduced payment is made and through error or
otherwise that payment, when aggregated with other payments from the Company (or
its affiliates) used in determining if a "parachute payment" exists, exceeds one
dollar ($1.00) less than three times Executive's base amount, then Executive
shall immediately repay such excess to the Company upon notification that an
overpayment has been made.
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6. GENERAL.
(a) TERM. The effective date of this Agreement is September 1, 1999. Within
sixty days from and after the expiration of two years after said effective date
and within sixty days after each successive two-year period of time thereafter
that this Agreement is in effect, the Company shall have the right to review
this Agreement, and in its sole discretion either continue and extend this
Agreement, terminate this Agreement, and/or offer Executive a different
agreement. The Compensation Committee of the Board (excluding any member of such
committee who is covered by this Agreement or by a similar agreement with the
Company) will vote on whether to so extend, terminate, and/or offer Executive a
different agreement and will notify Executive of such action within said
sixty-day time period mentioned above. This Agreement shall remain in effect
until so terminated and/or modified by the Company. Failure of the Compensation
Committee of the Board to take any action within said sixty days shall be
considered as an extension of this Agreement for an additional two-year period
of time. Notwithstanding anything to the contrary contained in this "sunset
provision," it is agreed that if a Change in Control occurs while this Agreement
is in effect, then this Agreement shall not be subject to termination or
modification under this "sunset provision," and shall remain in force for a
period of two years after such Change in Control, and if within said two years
the contingency factors occur which would entitle Executive to the benefits as
provided herein, this Agreement shall remain in effect in accordance with its
terms. If, within such two years after a Change in Control, the contingency
factors that would entitle Executive to said benefits do not occur, thereupon
this two-year "sunset provision" shall again be applicable with the sixty-day
time period for action by the Compensation Committee of the Board to thereafter
commence at the expiration of said two years after such Change in Control and on
each two-year anniversary date thereafter.
(b) INDEMNIFICATION. If Executive shall obtain any money judgment or
otherwise prevail with respect to any litigation brought by Executive or the
Company to enforce or interpret any provision contained herein, the Company, to
the fullest extent permitted by applicable law, hereby indemnifies Executive for
Executive's reasonable attorneys' fees and disbursements incurred in such
litigation and hereby agrees (i) to pay in full all such fees and disbursements
and (ii) to pay prejudgment interest on any money judgment obtained by Executive
from the earliest date that payment to Executive should have been made under
this Agreement until such judgment shall have been paid in full, which interest
shall be calculated at the rate of 1% per month (with a partial month counting
as a full month).
(c) PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation to pay (or cause
one of its subsidiaries to pay) Executive the amounts and to make the
arrangements provided herein shall be absolute and unconditional and shall not
be affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company (including
its subsidiaries) may have against Executive or anyone else. All amounts payable
by the Company (including its subsidiaries hereunder) shall be paid without
notice or demand. 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
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employment shall in no event effect any reduction of the Company's obligations
to make (or cause to be made) the payments and arrange rents required to be made
under this Agreement.
(d) SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the Company and any successor of the Company, by merger or otherwise.
This Agreement shall also be binding upon and inure to the benefit of Executive
and Executive's estate. If Executive shall die prior to full payment of amounts
due pursuant to this Agreement, such amounts shall be payable pursuant to the
terns of this Agreement to Executive's estate.
(e) SEVERABILITY. Any provision in this Agreement which is prohibited or
unenforceable in any jurisdiction by reason of applicable law shall, as to such
jurisdiction, be ineffective only to the extent of such prohibition or
unenforceability without invalidating or affecting the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
(f) NON-ALIENATION. Executive shall not have any right to pledge,
hypothecate, anticipate or assign this Agreement or the rights hereunder, except
by will or the laws of descent and distribution.
(g) NOTICES. Any notices of other communications provided for in this
Agreement shall be sufficient if in writing. In the case of Executive, such
notices or communications shall be effectively delivered if hand delivered to
Executive at Executive's principal place of employment or if sent by registered
or certified mail to Executive at the last address Executive has filed with the
Company. In the case of the Company such notices or communications shall be
effectively delivered if sent by registered or certified mail to the Company at
its principal executive offices.
(h) CONTROLLING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas, excluding any conflict-of-law
rule or principle that might refer the governance of the construction of this
Agreement to the law of another jurisdiction.
(i) FULL SETTLEMENT; WITHHOLDING. If Executive is entitled to and receives
the benefits provided hereunder, performance of the obligations of the Company
hereunder will constitute full settlement of all claims that Executive might
otherwise assert against the Company on account of Executive's termination of
employment. Any severance benefits paid pursuant to this Agreement shall be
deemed to be a severance payment and not "Compensation" for purposes of
determining benefits under the Company's qualified plans (unless and to the
extent that any such qualified plan expressly provides otherwise), and shall be
subject to any required tax withholding.
(j) UNFUNDED OBLIGATION. The obligation to pay amounts under this Agreement
is an unfunded obligation of the Company (including its subsidiaries), and no
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such obligation shall create a trust or be deemed to be secured by any pledge or
encumbrance on any property of the Company (including its subsidiaries).
(k) NOT A CONTRACT OF EMPLOYMENT. This Agreement shall not be deemed to
constitute a contract of employment, nor shall any provision hereof affect (i)
the right of the Company (or its subsidiaries) to discharge Executive at will or
(ii) the terms and conditions of any other agreements between the Company and
Executive except as provided herein.
(l) NUMBER AND GENDER. Wherever appropriate herein, words used in the
singular shall include the plural and the plural shall include the singular. The
masculine gender where appearing herein shall be deemed to include the feminine
gender.
(m) AMENDMENT. No provision of this Agreement may be amended, modified or
waived unless such amendment, modification or waiver is agreed to in writing and
signed by the Company and Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
21st day of January, 1999.
"EXECUTIVE"
/s/ Xxxxx Xxxxxxx
-----------------------------------
"COMPANY"
FIRST SIERRA FINANCIAL, INC.
BY: /s/ Xxxxxx X. Xxxxxxx
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XXXXXX X. XXXXXXX
CHIEF EXECUTIVE OFFICER
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FIRST AMENDMENT TO EMPLOYMENT AGREEMENT AND CHANGE IN
CONTROL SEVERANCE AGREEMENT
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT AND CHANGE IN CONTROL
SEVERANCE AGREEMENT by and between XxxxxxXxxxxx.xxx Inc., f/k/a First Sierra
Financial Inc, a Delaware corporation, (the Employer") and Xxxxx Xxxxxxx (the
"Employee") is made as of the 4th day of September, 2000.
WHEREAS, the Employee has entered into an Employment Agreement with
Employer, dated as of the 13th day of October, 1998 (the "Employment
Agreement"); and
WHEREAS, the Employee has entered into a Change In Control Severance
Agreement with Employer, dated as of the 21st day of January, 1999 (the Change
In Control Severance Agreement); and
WHEREAS, the Employment Agreement and Change In Control Severance Agreement
provide that each may be amended by the written agreement of the parties; and
WHEREAS, the Employer and the Employee now wish to amend the Employment
Agreement and Change In Control Severance Agreement to provide for the payment
of a certain performance bonus and the modification of the severance payments
due to the in Employee pursuant to the Change In Control Severance Agreement and
Employment Agreement in certain circumstances.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter contained, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties do hereby
amend the Employment Agreement and Change In Control Severance Agreement as
follows:
1. Article III of the Employment Agreement is hereby amended by adding at
the end of such Article the following new section:
3.05 ACQUISITION BONUS. Should the Employer be acquired by a third
party acquirer and the Employee is offered and signs a commercially
reasonable employment agreement pursuant to which the Employee agrees to
remain employed by the surviving company, the Employee will be paid a one
time cash bonus payment of Six Hundred Thousand Dollars ($600,000) less
applicable withholding (the "Acquisition Bonus"). This Acquisition Bonus
will be payable and conditioned upon the closing of such acquisition.
2. Section 3 of the Change In Control Severance Agreement is hereby amended
by adding the following new section:
3.01 SEVERANCE BENEFIT. Payment of the Acquisition Bonus to the
Executive [Employee] under the provisions of the Employment Agreement,
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by and between Executive and Employer dated October 13, 1998, shall be made
in lieu of and shall not be in addition to payment of the Severance
Benefit. If the Employee is paid the Acquisition Bonus he shall not be
entitled to receive the Severance Benefit under this Change In Control
Severance Agreement.
The Employer and Employee hereby agree that if this Amendment shall
expire, and shall have no further force and effect, ninety (90) days after
the date first above written, unless a definitive agreement, providing for
a Change In Control as such term is defined in the Change In Control
Severance Agreement, has been executed by the Employer and an acquiring
party.
Except as amended and modified hereby, the terms of the Employment
Agreement and Change In Control Severance Agreements shall remain in full
force and effect.
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IN WITNESS WHEREOF, the parties hereto have entered into this First
Amendment to the Employment Agreement and Change In Control Severance Agreement
as of the day and year first written above.
EMPLOYER:
XxxxxxXxxxxx.xxx Inc.
By: /s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx,
Chief Operating Officer
EMPLOYEE:
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
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SECOND AMENDMENT TO EMPLOYMENT AGREEMENT AND CHANGE IN
CONTROL SEVERANCE AGREEMENT
THIS SECOND AMENDMENT TO THE EMPLOYMENT AGREEMENT AND CHANGE
IN CONTROL SEVERANCE AGREEMENT ("Second Amendment") by and between
XxxxxxXxxxxx.xxx Inc., formerly known as First Sierra Financial Inc, a Delaware
corporation (the "Employer"), and Xxxxx Xxxxxxx (the "Employee") is made as of
the 3rd day of December, 2000.
WHEREAS, the Employee has entered into an Employment Agreement
with Employer, dated as of the 13th day of October, 1998 (the "Employment
Agreement"); and
WHEREAS, the Employee has entered into a Change In Control
Severance Agreement with Employer, dated as of the 21st day of January, 1999
(the Change In Control Severance Agreement); and
WHEREAS, the Employee and the Employer have entered into that
certain First Amendment to Employment Agreement and Change in Control Severance
Agreement, dated as of the 4th day of September, 2000 (the "First Amendment", or
collectively with the Employment Agreement and the Change in Control Severance
Agreement, the "Agreements"); and
WHEREAS, the Employee and the Employer now wish to further
amend the Agreements on the terms and conditions herein stated.
NOW THEREFORE, in consideration of the mutual promises and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Employee and the
Employer hereby agree as follows:
1. The term of the First Amendment is hereby extended for one hundred eighty
(180) days, expiring on June 1, 2001 (the "Expiration Date"). As of the
Expiration date, the terms of the First Amendment and this Second Amendment
shall terminate and have no further force and effect, unless otherwise extended
or further amended by a written agreement executed between the Employer and the
Employee.
2. Except as set forth herein, all of the provisions of each of the Agreements
shall remain in full force and effect, except that in the event of any conflict
between the terms of such Agreements and the First Amendment, the terms of the
First Amendment shall govern and control.
3. In the event of any conflict between the provisions of any of the Agreements
and this Second Amendment, the terms of this Second Amendment shall govern and
control.
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IN WITNESS WHERE OF, the parties hereto have executed this
Second Amendment as of the date first written above.
EMPLOYER: EMPLOYEE:
XxxxxxXxxxxx.xxx Inc.
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxx Xxxxxxx
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Xxxxxx X. Xxxxxxx, President and Xxxxx Xxxxxxx
Chief Executive Officer
