Term Sheet - B. Xxxx Xxxxx
The following agreement ("Agreement") sets forth the terms and conditions
of the employment of B. Xxxx Xxxxx ("CEO" or "Employee") by AMRESCO
Independence Funding, Inc. ("AIF" or "Employer"). This Agreement replaces
any prior agreements (written or oral) between Employer and the Employee.
Position Chief Executive Officer (CEO) for AIF reporting to either
Xxxxx Xxxxx, President of AMRESCO, INC.'s Commercial Finance
Division, or another person in a similar position. The CEO
is responsible for the oversight of AIF with emphasis on
increasing the economic value of AIF. The CEO's
full time duties may change from time to time as necessary;
however, the duties shall remain consistent with the title
of a CEO.
Effective Date The effective date for this Agreement is April 1, 2000.
Compensation Base salary shall be $230,000 per annum payable in accordance
with the normal payroll policy of AIF. An annual performance
bonus ("Performance Bonus") will be paid based on the
performance of the CEO and AIF. For the calendar year 2000,
this bonus will be targeted at 70% of the above annual base
salary if AIF meets its year 2000 agreed upon operating
income budget of $8.4 million. The targeted percentage for
this bonus may fluctuate higher or lower, dependent upon the
actual year 2000 operating income performance of AIF.
The above compensation (base salary and Performance Bonus)
may be modified by the Employer as necessary from time to
time, including the 2000 method of calculation used to derive
the Performance Bonus. However, the new compensation method
utilized will be similar to past compensation amounts,
subject to the Employee's level of performance
and AIF's performance in general. The CEO must be employed by
AIF and must not be receiving severance payments from AIF in
order for the Employee to be entitled to receive the
Performance Bonus contemplated above.
Stay Incentive If AIF is, or substantially all of its assets are, sold to an
individual or entity (the "Purchaser") on or before June 30,
2002, and the Employee is a full time employee of AIF on the
date of the closing of such sale unless
terminated without cause within 90 days of the close of such
sale, and this sale is not a result of a sale of AMRESCO, INC.
or its assets to the Purchaser, then this will be referred
to as a Separate Sale, and the Employee will earn an incentive
to stay payment (the "Stay Incentive") based on the following
formula:
The Stay Incentive will be equal to $150,000 plus the
greater of 1)
$300,000, or 2) 3% of the difference, if positive,
between a) the goodwill value received, and b)
$5,000,000; however, any differential above a $30 million
goodwill value will be multiplied by 1.5%. The goodwill
value will be equal to the sales price less the book
value of the tangible assets and liabilities transferred
to the Purchaser at the closing of the transaction. The
sales price is equal to the cash value of any proceeds
received at closing along with an estimated fair market
value of any proceeds to be received in the future. The
tangible book values will be based in accordance with
AIF's normal historical GAAP practice.
The Stay Incentive will be paid to the Employee under the
following conditions:
The Employee will be paid the Stay Incentive only if 1)
the Employee is employed by the Purchaser at the time
(described below) of the payment of the Stay Incentive or
2) the Employee has been terminated by the Purchaser
without cause during the period from 90 days before the
closing such sale to the final payment of the Stay
Incentive. The term "cause", as used in this Agreement,
shall mean actual fraud, willful misconduct, any material
violation of this Agreement, conviction of a felony, or
negligence that results in material damage to AIR
25% of the Stay Incentive will be paid upon closing the
sale and the remaining 75% of the Stay Incentive will be
paid the sooner of 1) 12 months after the closing of the
sale or 2) termination of the Employee without cause.
If there is a Separate Sale, then on the date of the sale
of AIF, 75% of the Stay Incentive will be placed in an
interest bearing escrow account with an independent third
party escrow agent mutually agreeable to the Employer and
Employee. The Stay Incentive will be held in escrow
pursuant to a mutually agreed upon escrow agreement. The
escrow agreement will comply with the conditions of this
Agreement for the release of the Stay Incentive. Any
interest earned in the escrow account is to be paid to the
Employee at the time the Stay Incentive is paid to the
Employee. All payments related to the Stay Incentive that
are to be paid to the Employee will be in immediately
available funds and will be subjected to applicable
withholdings.
Retention Incentive If there is no Separate Sale of AIF by June 30, 2001,
then the Employee will be paid a Retention
Incentive of $300,000 on June 30, 2001. The Employee
will be paid the Retention Incentive only if 1)
the Employee is employed by AIF on June 30, 2001 or
2) the Employee has been terminated by AIF without cause.
If the Employee is terminated without
cause before June 30, 2001 and there has been no
Separate Sale of AIF, then the Employee will be paid
the Retention Incentive on the date of
termination. Payment of the Retention Incentive will be
paid in immediately available funds and will be subject
to applicable withholdings.
Benefits The CEO will have four (4) weeks vacation per year.
Additionally, the CEO will be provided with medical
and dental coverage along with participation in a
401 K plan and other company benefits similar to the
other employees of AIF, including paid holidays and
sick leave.
Term Subject to the terms and conditions of this Agreement,
the CEO will be employed by the Employer commencing
on the date hereof and expiring on March 31, 2003,
unless sooner terminated in accordance with this
Agreement. The Employer may terminate this Agreement
for cause immediately or give the CEO 30 days prior
notice of termination without cause. The CEO may
terminate this Agreement with 30 days prior notice.
AIF may pay the CEO during the 30 day notice period
without requiring service. Without altering each
party's rights to terminate this Agreement
as provided for above, after March 31, 2002 the
expiration date of this Agreement will be defined to
be March 31, 2003 plus the number of days
the Employee has worked past March 31, 2002, until the
Employer or the CEO gives the other notice of its or
his intent not to continue this Agreement, and in such
event, prior notice shall be given in accordance
with the time frames set forth in this paragraph.
Severance If the CEO is terminated without cause by the Employer
or the CEO is constructively terminated as defined
below, the CEO will be entitled to the total of his
base salary until the expiration of this Agreement as
if there had been no termination multiplied by 1.7 (less
customary withholdings). If the ratio of base salary
to expected Performance Bonus is materially
changed, then the 1.7 ratio for severance shall be
changed accordingly. If the CEO is terminated for
cause or leaves on his own accord, the CEO will
not be entitled to any severance and the CEO will only
receive the base salary until the date of termination.
No bonuses will be paid at termination of employment.
The Employee shall be considered to be constructively
terminated if the Employer does one of the following:
1) materially reduces the Employee's overall compensation
notwithstanding reasonable performance by the
Employee and reasonable profits for AIF;
2) assigns the Employee any duties inconsistent with
his position, duties, responsibilities and status
immediately prior to such change, or a material
adverse change in his reporting responsibilities,
titles or offices;
3) requires the Employee to be based more than
thirty-five (35) miles from Dallas, Texas, except
for required travel on the Employer's business to
an extent substantially consistent with his current
business travel obligations;
4) reduces the Employee's base salary;
5) failure to provide the Employee benefit or
compensation plans (including, but not limited to
any pension plan, life insurance plan, health and
accident plan or disability plan) which do not
materially reduce the benefits from those he
currently enjoys, or the failure to provide the
Employee with the number of paid vacation days to
which he is currently entitled; or
6) any failure of AIF to obtain the assumption of, or
the agreement to perform, this Agreement in its
entirety by any successor in interest.
To terminate under the above circumstances, the
Employee must give the Employer written notice and
provide the Employer with 30 days to cure such event
or condition after the Employer receives the notice.
All references in this Agreement to termination
without cause include the constructive termination
terms.
Disputes Without limitation of Employer's right to seek injunctive
relief as is permitted in this Agreement, any disputes
related to this Agreement that cannot be resolved between
the Employee and the Employer will first go
to mediation. If the mediation does not resolve the
dispute, then the Employee and the Employer will utilize
binding arbitration to resolve the dispute. Such arbitration
will take place in the State of Texas under the
rules of the American Arbitration Association under its
commercial arbitration rules by a single arbitrator. Such
arbitration shall commence no more than 30 days after either
party's request for such arbitration. Both
Employee and Employer intend that all disputes be
settled by either mediation or arbitration, including any
dispute involving any claim of discrimination or Employee
whistle blower claims under any applicable
federal, state, local, or common laws. Both the Employer
and the Employee will use best efforts to quickly resolve
disputes arising out of this Agreement. The loser of the
arbitration shall bare the cost of
arbitration and the cost of each party's legal fees.
Covenants Upon termination of his employment with AIF without cause by
the Employer, the CEO agrees that for a period from the time of
the termination until the expiration of this Agreement as if
there had been no termination, the CEO shall not directly or
indirectly, either for himself or any other person, (A)
induce or attempt to induce any employee of AIF or
of any of AIF's affiliates to leave the employ of AIF or any
of its affiliates, (B) in any way interfere with the
relationship between AIF or any of its
affiliates and any employee thereof or (C) employ, or
otherwise engage as an employee, independent contractor, or
otherwise, any employee of AIF or of any of its affiliates.
Should the CEO voluntarily resign from AIF or
should the CEO be terminated for cause, the CEO agrees that
the above period of time will be increased by six (6) months
for the above covenants.
In addition to the above time frames regarding the above
covenants, if the CEO receives the Stay Incentive described
above, the CEO agrees for a period of twelve (12) months after
receiving the remaining 75% of the Stay Incentive to not
directly or indirectly, engage or invest in, own,
manage, operate, finance, control, or participate in the
ownership, management, operation, financing, or control of,
be employed by, associated with, or in any manner connected
with, lend his name, lend his credit to, or render services
or advice to, any business whose products or
activities compete in whole or in part with AIF's Business
(defined herein as the business conducted by AIF as of the
date of this Agreement and such further business activities
of AIF with respect to which Employee materially participates
during his employment with AIF), anywhere within
the United States; provided, however, Employee may purchase
or otherwise acquire up to (but not more than) five (5) percent
of any class of securities of any enterprise (but without
otherwise participating in the activities of such enterprise)
if such securities are listed on any national or
regional securities exchange or have been registered under
Section 12(g) of the Securities Act of 1934.
Employee agrees that during the term of this Agreement and at
all times thereafter, the Employee will not disclose to any
individual, company, corporation or other enterprise or use
for Employee's direct or indirect benefit any confidential
or proprietary information of Employer, including
without limitation, compensation methods, pricing, customer
list, and referral sources, provided that the Employee's
obligations under this paragraph shall not apply to
information that a) is generally known in the
Employer's industry, b) the Employee had prior to his
employment with AIF, or c) is required to disclosed by
operation of law. Employee acknowledges and agrees that the
restrictions on the activities in which he may engage that
are set forth in this Agreement are reasonable
and necessary to protect Employer's legitimate business
interests.
Employee understands and agrees that if he breaches any of
the provisions of the covenants of this Agreement, Employer
would suffer irreparable harm and monetary damages would be
an inadequate remedy. Accordingly, Employee agrees that in
the event of his breach, Employer shall have the right to
injunctive and other equitable relief in addition to any
other remedies that may be available.
Assignment The Employer reserves the right to assign this Agreement
without the Employee's consent to a third party or an
affiliated entity. Because this is a personal services
contract, the Employee shall not have the right to assign
this Agreement.
Further Assurances Each party to this Agreement will execute and deliver
such additional instruments and other documents and will
take such further actions as may be necessary or appropriate
to effectuate, carry out, and to comply with all the terms
of this Agreement and the transactions contemplated hereby.
This Agreement represents the entire agreement of Employee and Employer
with respect to the subject herein. No change or modification of this
Agreement shall be effective unless in writing signed by the parties
hereto. Any notices required by this Agreement between the Employee and the
Employer shall be written notices. This Agreement shall be governed and
enforced by the laws of the state of Texas. If any provision of this
Agreement is held to be unenforceable, the parties agree that the decision
maker making such determination shall exercise its powers to reduce or
alter such provisions, and as reduced or altered such provisions shall be
enforceable and shall be enforced. Any reduction or alteration of any
provision of this Agreement, or any part hereof, shall not affect any other
provision of this Agreement.
Employer:
Dated: as of April 1, 2000 AMRESCO Independence Funding, Inc.
By: _________________________
Xxxxx Xxxxxxxxx
Assistant Secretary and General
Counsel
By: __________________________
Xxxxxxx X. Xxxxx
President, Commercial Finance
for AMRESCO, INC.
Employee:
By: _________________________
B. Xxxx Xxxxx
