EMPLOYMENT AGREEMENT WILLIAM F. SULLIVAN
XXXXXXX
X. XXXXXXXX
This
AGREEMENT is made as of this 1st day of February, 2006, between Franklin Credit
Management Corporation and Xxxxxxx X. Xxxxxxxx (“Employee”).
RECITALS
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a.
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FCMC
is a Corporation organized under the laws of the State of
Delaware.
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b.
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FCMC
desires to employ Employee, and Employee desires to accept employment
from
FCMC.
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c.
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The
parties desire to record the arrangements made for such employment.
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AGREEMENT
IT
IS,
THEREFORE, AGREED:
1. Definitions:
For the
purposes of this Agreement, the following capitalized terms shall have the
following meanings:
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a.
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FCMC
or
Company
shall mean Franklin Credit Management
Corporation.
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b.
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Employee
shall mean Xxxxxxx X. Xxxxxxxx.
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c.
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Competitor
shall mean any person, company, firm or corporation which: (1) actually
competes with the Company, its subsidiaries or affiliates; (2) is
engaged
in a business in which the Company, its subsidiaries or affiliates
are
also engaged; or (3) is engaged in a business which the Company,
its
subsidiaries or affiliates have at the date of Employee’s termination of
employment reasonably certain plans to enter within twelve months
of the
Employee’s termination.
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2. Employment/Term.
Effective February 1, 2006, FCMC hereby employs Employee as the General Counsel
of FCMC. The term of employment shall be for the period commencing February
1,
2006 and ending on the date the term of employment is terminated pursuant to
Section 11 of this Agreement.
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a.
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Place
of Employment.
During the term of employment, Employee shall be based at the Company’s
principal executive offices, which shall be in the New York City
metropolitan area (including the surrounding area of New Jersey),
subject
to reasonable travel required in the performance of Employee’s duties.
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3. Duties
and Authority.
The
responsibilities of the Employee shall include the following:
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a.
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Employee
shall have the duties and responsibilities as the General Counsel
of the
Company, including but not limited to the
following:
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i.
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Managing
the Company’s compliance with all State and Federal regulations and
licensing requirements:
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ii.
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Management
of the Company’s litigation and other legal matters; and,
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iii.
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Management
of the legal department of the
Company.
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b.
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Employee
shall report directly to the Chief Executive Officer of the Company.
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4. Compensation.
FCMC
shall pay to Employee the following compensation:
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a.
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Salary.
Employee shall receive an annual salary of $250,000, payable on a
semimonthly basis. Not less than annually, the Company shall review
Employee’s base compensation.
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b.
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Bonuses.
In addition to the salary set forth above, Employee shall receive
the
following bonuses:
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i.
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Employee
shall receive a signing bonus of Ten Thousand ($10,000) dollars on
execution of this Agreement.
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ii.
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Employee
shall be entitled to receive an annual bonus based on his performance
and
the performance of the Company. The amount of such annual bonuses
shall be
subject to the reasonable discretion of the Board of Directors of
the
Company.
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c.
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Stock.
As additional compensation for services provided under this agreement,
Employee will
receive a grant of 5,000 shares of common stock of the Company as
of the
date of issuance of such stock. On execution of this Agreement, the
Company shall immediately direct that 5,000 shares of common stock
be
issued to Employee.
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i.
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Employee
acknowledges that the stock to be issued by the Company shall be
restricted stock and limitations shall apply to Employee’s ability to
trade such stock.
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d.
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Car
Allowance.
Throughout the term of employment, Employee shall receive a car allowance
of $400 per month and a paid parking space in the vicinity of the
Company’s offices.
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5. Vacation
and other benefits.
During
each twelve-month period that Employee is employed by FCMC, Employee shall
be
entitled to three weeks (i.e., fifteen days) of paid vacation plus regular
personal days and holidays in accordance with the policies of FCMC. Vacation
days can not be accrued or aggregated from one twelve-month period to the next.
In addition, Employee shall be entitled to participate in all present and future
benefit plans provided by FCMC to its other executive officers.
6. Moving
Expenses.
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a.
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Employee
shall relocate to the New York City metropolitan area on or before
April
1, 2006.
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b.
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The
Company shall reimburse Employee for the reasonable and actual expenses
associated with Employee and his immediate family’s relocation to the New
York City metropolitan area including but not limited to moving,
storage
and packing expenses, travel expenses and other similar
expenses.
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c.
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The
Company shall provide Employee with lodging in the New York City
metropolitan area through the earlier of: (1) Employee’s relocation to the
New York City metropolitan area, or (2) April 1,
2006.
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d.
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The
Company shall reimburse Employee for weekly trips to Boston during
the
period prior to Employee’s relocation to the New York City metropolitan
area, utilizing cost-effective airfare and ground
transportation.
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7. Acknowledgments.
FCMC is
in the business of purchasing, servicing and disposing of residential mortgages
and other secured financial assets, and related services in the both New York
City metropolitan area and on a national basis. Employee acknowledges that:
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a.
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FCMC’s
services are highly specialized;
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b.
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FCMC
has a proprietary interest in its methods and processes;
and,
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c.
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Documents
and other information regarding FCMC’s methods, pricing and costs are
highly confidential and constitute trade
secrets.
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8. Trade
secrets and confidential information.
During
the term of this Agreement, Employee may have access to, and become familiar
with, various trade secrets and confidential information belonging to FCMC,
its
subsidiaries or affiliates. Employee acknowledges that such confidential
information and trade secrets are owned and shall continue to be owned solely
by
FCMC, its subsidiaries or affiliates. During the term of his employment and
for
thirty-six (36) months after such employment terminates for any reason,
regardless of whether termination is initiated by FCMC or Employee, Employee
agrees not to use, communicate, reveal or otherwise make available such
information for any purpose whatsoever, or to divulge such information to any
person, partnership, corporation or entity other than Employer or persons
expressly designated by Employer, unless Employee is compelled to disclose
it by
judicial process.
9. Restrictive
covenants.
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a.
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Full-time
Employment.
During the period of his employment, Employee shall not, directly
or
indirectly, alone or as a member of any partnership, or as an officer,
director, shareholder, or employee of any corporation, engage in
or be
concerned with any other paid employment, except as otherwise authorized
in writing by the Company.
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b.
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Non-competition.
Employee agrees that:
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i.
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During
both the period of Employee’s employment by the Company and the period in
which Employee is entitled to receive periodic severance payments
pursuant
to Paragraph 12(b)(ii) of this Agreement, regardless of whether the
termination was initiated by FCMC or Employee, Employee will not
accept
employment with, or act as a consultant, contractor, advisor, or
in any
other capacity for, a Competitor, or enter into competition with
FCMC, its
subsidiaries or affiliates, either by himself or through any entity
owned
or managed in whole or in part by the Employee, and Employee shall
not
make any preparations to compete with the
Company.
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ii.
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During
the term of this Agreement and for a period of nine (9) months after
termination Employee’s employment by the Company for any reason,
regardless of whether the termination is initiated by FCMC or Employee,
Employee shall not solicit or make, or cause to make, any offer of
employment to any employee of the Company, it subsidiaries or affiliates,
for the purpose of inducing such employee to terminate his or her
employment with the Company, or its subsidiaries or
affiliates.
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iii.
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For
a period of twelve (12) months after termination of Employee’s employment
for any reason, regardless of whether the termination is initiated
by the
Company or Employee, or for a period of time equal to the length
of
Employee's employment with FCMC if such tenure is less than twelve
(12)
months, Employee will not, directly or indirectly, solicit for the
purchase or sale of financial assets any person, company, firm, or
corporation from whom the Company purchased financial assets or to
whom
the Company sold assets originated by the Company during the term
of
Employee's employment. Employee agrees not to so solicit such customers
on
behalf of himself or any other person, firm, company, or corporation,
if
such solicitation is for the purchase or sale of the same or similar
types
of financial assets purchased or sold by the
Company.
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c.
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The
parties have attempted to limit Employee's right to compete only
to the
extent necessary to protect FCMC from unfair competition. The parties
recognize, however, that reasonable people may differ in making such
a
determination. Consequently, the parties hereby agree that, if the
scope
or enforceability of the restrictive covenant is in any way disputed
at
any time, a court or other trier of fact may modify and enforce the
covenant to the extent that it believes the covenant is reasonable
under
the circumstances existing at that time.
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d.
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Employee
further acknowledges that: (1) in the event his employment with FCMC
terminates for any reason, regardless of whether the termination
is
initiated by FCMC or Employee, he will be able to earn a livelihood
without violating the foregoing restrictions; and (2) his ability
to earn
a livelihood without violating such restrictions is a material condition
of his employment with FCMC.
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10. Remedies.
Employee acknowledges that: (1) compliance with Paragraphs 8 and 9 herein is
necessary to protect FCMC’s business and good will; (2) a breach of those
Paragraphs will irreparably and continually damage FCMC’; and (3) an award of
money damages will not be adequate to remedy such harm. Consequently, Employee
agrees that, in the event he breaches or threatens to breach any of these
covenants, FCMC shall be entitled to both: (1) a preliminary or permanent
injunction in order to prevent the continuation of such harm; and (2) money
damages, insofar as they can be determined, including, without limitation,
all
reasonable costs and attorneys' fees incurred by the FCMC in enforcing the
provisions of this Agreement if FCMC is successful in establishing Employee’s
breach of these covenants Nothing in this Agreement, however, shall prohibit
FCMC from also pursuing any other remedy.
11. Termination.
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a.
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Termination
by Either Party.
Either party may terminate Employee’s employment “without cause” by giving
thirty (30) days' written notice to the other.
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b.
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Termination
by Company.
Employee’s employment may be terminated by the Company “for cause” if he:
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(1)
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fails
or refuses to perform each and all of his material assigned duties
to;
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(2)
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to
comply with one or more policies of the Company;
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(3)
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breaches
any of the material terms of this Agreement; or,
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(4)
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commits
any criminal, fraudulent or dishonest act related to his employment;
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provided
that cause shall not be deemed to exist under subsections (1) or (2) of this
subparagraph unless the Employee has been given written notice describing in
reasonable detail the alleged breaches and stating that such breaches are
grounds for termination for good reason under this section, and the Employee
fails to cure such breaches within 10 days.
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c.
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Termination
by Employee.
Employee shall have the right to terminate his employment for “good
reason.” For the purposes of this Agreement, good reason shall be limited
to the following:
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i.
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The
Company transfers the place of Employee’s employment in violation of
Paragraph 2 (a) of this Agreement;
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ii.
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The
Company’s breaches any of the material terms of Paragraphs 3, 4, 5 or 6 of
this Agreement.
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d.
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Termination
Due to Incapacity.
In
the event Employee is unable to perform his material duties because
of
illness or disability for a continuous period of 120 days, the Company
may
terminate this Agreement without further notice.
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12. Severance.
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a.
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Conditions
under which Severance is Paid.
In the event the Company terminates Employee’s employment without cause or
for Employee’s failure to perform assigned duties, the Employee shall
receive the severance pay provided in subparagraph (b) of this Paragraph.
Employee shall also be entitled to the severance provided for in
subparagraph (b) of this Paragraph if the Employee terminates his
employment for good reason.
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b.
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Amount
of Severance.
To
the extent severance is payable to Employee pursuant to subparagraph
(a)
of this Agreement, Employee shall
be entitled to receive the severance payments provided for in subparts
(i)
and (ii) of this subparagraph:
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i.
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Lump
Sum Payment.
Employee shall be entitle to receive payment in a lump sum in respect
of
all accrued and unused vacation within ten days after termination
of
employment in an amount based on Employee’s current base salary. If such
termination occurs after the end of any calendar year and before
the
payment date of the bonus in respect of that year as provided in
Section
4(b), an amount equal to the bonus for such calendar year calculated
as
provided in Section 4(b) shall be paid to Employee on April 15 of
the year
of termination.
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ii.
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Monthly
Payments.
Employee shall be entitled to receive
monthly payments equal to one twelfth of his then current base salary
for
the periods set forth below after such termination. In addition,
if
Employee is enrolled in and covered by a medical insurance plan offered
by
the Company on the date of termination of employment, Employee shall
be
entitled, at his election, to receive either (x)
continued health benefits for the periods set forth below, or
(y)
an amount equal to the medical insurance premiums paid by the Company
on
behalf of the Employee for the periods set forth
below.
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(1)
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In
the event the termination occurs prior to February 1, 2007 - three
months.
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(2)
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In
the event the termination occurs on or after February 1, 2007 - four
months.
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Such
payments shall be made semimonthly for the periods specified above.
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c.
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Effect
of Severance Payments.
The severance payments set forth in this Paragraph are payments made
as
liquidated damages and not as a penalty. In the event Employee’s
employment is terminated and Employee is not entitled to severance
in
accordance with subparagraph (a) of this Paragraph, Employee shall
be
entitled to no further compensation or payments from the Company.
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13. Effect
of Termination.
Notwithstanding any other provision of this Agreement, in the event Employee’s
employment is terminated pursuant to Paragraph 11 of this Agreement or
otherwise: (1) all stock options held by Employee not exercised by the effective
date of such termination shall expire in accordance with the terms of the
Employee Stock Option Plan maintained by the Company pursuant to which such
options were issued and (2) except as provided in Paragraph 12, Employee’s right
to any bonuses and the Company’s obligation to pay such bonuses which are not
paid as of the effective date of the termination of Employee’s employment shall
terminate.
14. Return
of the Company property.
On
termination of employment, the Employee shall return to the Company all keys,
correspondence, contracts, reports, price lists, manuals, forms, mailing lists,
customer lists, advertising materials, ledgers, supplies, equipment, checks,
xxxxx cash and all documents of any form relating to the Company’s or its
subsidiaries or affiliates business in his possession or control.
15. Notice.
Any
notice required to be given hereunder shall be in writing sent by registered
mail, return receipt requested, to FCMC at Number 6 Xxxxxxxx Street, Sixth
Floor, Attention Xxxxxx X. Xxxx, and to Employee at 00 Xxxxxxxx Xxxxxx,
Xxxxxxxx, Xx. 00000 or to such changed address as the parties may designate
by
like notice. The effective date of such notice shall be its mailing date.
16. Entire
agreement.
This
Agreement supersedes all agreements previously made by the parties relating
to
its subject matter. There are no other understandings or agreements between
the
parties.
17. No
violation or default.
The
Employee hereby represents and warrants that the execution of this Agreement
by
him will not violate the provisions of or constitute a default under any other
Agreement or arrangement to which the Employee is party or otherwise bound.
18. Indemnification.
The
Company shall indemnify Employee under the terms and conditions of the existing
agreement between the Company and its other Officers and Directors.
19. Non-Waiver.
No
delay or failure by either party to exercise any right under this Agreement,
and
no partial or single exercise under it, shall constitute a waiver of that or
any
other right.
20. Headings.
Headings in this Agreement are for convenience only and shall not be used to
interpret or construe its provisions.
21. Governing
law.
This
Agreement shall be construed in accordance with and governed by the laws of
the
State of New Jersey.
22. Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original but all of which together shall constitute one and the same
instrument.
23. Binding
effect.
The
provisions of this Agreement shall be binding upon and inure to the benefits
of
each of the parties and their respective successors and assigns.
In
witness whereof, the parties hereto have signed this Agreement.
Dated
February 15, 2006.
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Employee
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Franklin
Credit Management Corporation
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By:
Xxxxxx Xxxx
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President
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