Exhibit No. 10.238
TERMINATION AGREEMENT
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THIS TERMINATION AGREEMENT (this "Agreement") is made and entered into this
17th day of January, 2002, between MEGO FINANCIAL CORP., a New York corporation
(the "Company"), and XXXXXX X. XXXXX ("Xxxxx"). This Agreement is intended to
replace that certain Amended and Restated Employment Agreement, dated as of
November 10, 2000, by and between Mego and Xxxxx (the "Employment Agreement").
Accordingly, effective as of the Commencement Date hereof as that term is
hereafter defined, the Employment Agreement shall be terminated and declared
null and void and no payment of Executive Incentive Income shall be due
respecting income of the Company for the period from September 1, 2001 to the
Commencement Date.
R E C I T A T I O N S
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A. The Company recognizes that Xxxxx has performed substantial services
for the Company which have contributed to its growth.
B. The Company and Xxxxx now each desire to terminate their existing
business relationship on the terms and conditions set forth in this Agreement.
O P E R A T I V E P R O V I S I O N S
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In consideration of the foregoing recitations, the mutual promises
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged hereby, the parties hereto, intending to
be legally bound, hereby covenant and agree as follows:
ARTICLE I
TERMINATION AGREEMENT
1.1 Termination Fee. In consideration for prior services provided by
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Xxxxx to Company and for the termination of Xxxxx'x Employment Agreement, the
Company shall pay a fee to Xxxxx equal to Seven Hundred Fifty Thousand Dollars
($750,000), payable in thirty six (36) equal consecutive monthly installments of
Twenty Thousand Eight Hundred and Thirty-Three Dollars and Thirty-Three cents
($20,833.33) per month, commencing February 1, 2002 (the "Commencement Date").
In the event of Xxxxx'x death prior to the entire distribution of the fee set
forth in this Section 1.1, the remaining amounts shall be paid to the
beneficiary designated by Xxxxx, in writing, to the Company, or if no such
beneficiary shall be designated, then to Xxxxx'x estate, at such times and in
such amounts as if Xxxxx had not died.
1.2 Other Benefits.
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(a) Medical Insurance Coverage. During the period commencing on the
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Commencement Date and ending three years from such date (the "Coverage Period")
Xxxxx and his Spouse shall continue to be covered under that certain Equitable
Life Assurance Society of the United States medical insurance policy, number PPB
N 86 803 722 (the "Policy"), and the Company shall pay the premiums thereon that
are allocable to the Coverage Period. In addition, the Company shall reimburse
Xxxxx for any medical expenses incurred by Xxxxx (but not for those medical
expenses incurred by his Spouse) during the Coverage Period that are not covered
under the Policy including, without limitation, any amounts that are not covered
by the reason of the deductible and/or copayment provisions of the Policy.
Reimbursements made by the Company to Xxxxx shall be made on a quarterly basis
and the amount of the quarterly reimbursement shall be based upon invoices
submitted by Xxxxx to the Company during such quarter. Notwithstanding anything
to the contrary herein, the Company shall not be required to pay any medical
expenses incurred by Xxxxx that are not covered by the Policy by reason of their
being in excess of the maximum amount of covered expenses under the Policy.
(b) Occupancy of Office. During the period beginning on the
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Commencement Date and ending on the last day of the third calendar month that
begins after the Commencement Date (as defined in Section 1.1 hereof ) (the
"Office Period"), the Company shall continue to lease, and pay the rent and
utility costs of, and Xxxxx shall have the right to continue utilizing, the
Company's office space in Miami, Florida (the "Miami Office") where Xxxxx
previously performed services for Mego. In addition, as of the Commencement
Date, Xxxxx shall be entitled to keep any office furniture, furnishings or
equipment located in the Miami Office. During the Office Period, Xxxxx shall
organize all records, files and transaction bibles of the Company, and arrange
to have those documents packaged and shipped, at the Company's expense, to the
Company's offices in Las Vegas, Nevada. Xxxxx shall be entitled to keep or
discard any such documents that the Company does not wish to have shipped as
aforesaid.
ARTICLE II
Restrictive Covenants.
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2.1 Non-Competition. For the three (3) year period ending on the third
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anniversary of the Commencement Date (the "Restricted Period") and provided that
the Company is not in breach of any of its obligations under Sections 1.1, 1.2
or 3.4 of this Agreement, Xxxxx shall not, directly or indirectly, engage in or
have any interest in any sole proprietorship, corporation, company, partnership,
association, venture or business or any other person or entity (whether as an
employee, officer, director, partner, agent, security holder, creditor,
consultant or otherwise) that directly or indirectly (or through any affiliated
entity) competes with the Company's business (for this purpose, the Company's
business shall mean any business that engages in time share sales in North
America); provided that such provision shall not apply to Xxxxx'x ownership of
Common Stock of the Company or the acquisition by Xxxxx, solely as an
investment, of securities of any issuer that is registered under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended, and that are listed
or admitted for trading on any United States national securities exchange or
that are quoted on the National Association of Securities Dealers Automated
Quotations System, or any similar system or automated dissemination of
quotations
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of securities prices in common use, so long as Xxxxx does not control, acquire a
controlling interest in or become a member of a group which exercises direct or
indirect control of, more than five percent of any class of capital stock of
such corporation.
2.2 Nonsolicitation of Employees. During the Restricted Period, and
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provided that the Company is not in breach of any of its obligations under
Sections 1.1, 1.2 or 3.4 of this Agreement, Xxxxx shall not, directly or
indirectly, for himself or for any other person, firm, corporation, partnership,
association or other entity employ or attempt to employ or enter into any
contractual arrangement with any employee or former employee of the Company,
unless such employee or former employee has not been employed by the Company for
a period in excess of six months.
2.3 Acknowledgment by Xxxxx. Xxxxx acknowledges and confirms that (i) the
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restrictive covenants contained in this Article II are reasonably necessary
to protect the legitimate business interests of the Company, and (ii) the
restrictions contained in this Article II (including without limitation the
length of the term of the provisions of this Article II) are not overbroad,
overlong, or unfair and are not the result of overreaching, duress or coercion
of any kind. Xxxxx further acknowledges and confirms that his full, uninhibited
and faithful observance of each of the covenants contained in this Article II
will not cause him any undue hardship, financial or otherwise, and that
enforcement of each of the covenants contained herein will not impair his
ability to obtain employment commensurate with his abilities and on terms fully
acceptable to him or otherwise to obtain income required for the comfortable
support of him and his family and the satisfaction of the needs of his
creditors. Xxxxx acknowledges and confirms that his special knowledge of the
business of the Company is such as would cause the Company serious injury or
loss if he were to use such ability and knowledge to the benefit of a competitor
or were to compete with the Company in violation of the terms of this Article
II. Xxxxx further acknowledges that the restrictions contained in this Article
II are intended to be, and shall be, for the benefit of and shall be enforceable
by, the Company's successors and assigns.
2.4 Reformation by Court. In the event that a court of competent
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jurisdiction shall determine that any provision of this Article II is invalid or
more restrictive than permitted under the governing law of such jurisdiction,
then only as to enforcement of this Article II within the jurisdiction of such
court, such provision shall be interpreted and enforced as if it provided for
the maximum restriction permitted under such governing law.
2.5 Survival. The provisions of this Article II shall survive the
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payment by the Company to Xxxxx of the Lump Sum Payment pursuant to Article II
hereof.
2.6 Injunction. It is recognized and hereby acknowledged by the parties
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hereto that a breach by Xxxxx of any of the covenants contained in Article II of
this Agreement will cause irreparable harm and damage to the Company, the
monetary amount of which may be virtually impossible to ascertain. As a result,
Xxxxx recognizes and hereby acknowledges that the Company shall be entitled to
an injunction from any court of competent jurisdiction enjoining
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and restraining any violation of any or all of the covenants contained in
Article II of this Agreement by Xxxxx or any of his affiliates, associates,
partners or agents, either directly or indirectly, and that such right to
injunction shall be cumulative and in addition to whatever other remedies the
Company may possess.
ARTICLE III
Miscellaneous
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3.1 Entire Agreement; Amendment. This Agreement constitutes the entire
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agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements, understandings, negotiations and
discussions, both written and oral, among the parties hereto. This Agreement
may not be amended or modified in any way except by a written instrument
executed by the Company and Xxxxx.
3.2 Notice. All notices under this Agreement shall be in writing and
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shall be given by personal delivery, or by registered or certified United States
mail, postage prepaid, return receipt requested, to the address set forth below:
If to Xxxxx: Xxxxxx X. Xxxxx
00000 Xxxxxxxx Xxxx. #000
Xxxxx, Xxxxxxx, 00000
If to Company: MEGO FINANCIAL CORP.
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, President
or to such other person or persons or to such other address or addresses as
Xxxxx and the Company or their respective successors or assigns may hereafter
furnish to the other by notice similarly given. Notices, if personally
delivered, shall be deemed to have been received on the date of delivery, and if
given by registered or certified mail, shall be deemed to have been received on
the fifth business day after mailing.
3.3 Governing Law. This Agreement shall be governed by, and construed and
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interpreted in accordance with, the laws of the State of Florida, without giving
effect to the conflict of laws principles of each State. With respect to any
disputes concerning federal law, such disputes shall be determined in accordance
with the law as it would be interpreted and applied by the United States Court
of Appeals for the Eleventh Circuit.
3.4 Assignment: Successors and Assigns. Neither Xxxxx nor the Company may
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make an assignment of this Agreement or any interest herein, by operation of
laws or otherwise, without the prior written consent of the other party. This
Agreement shall inure to the benefit
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of, and be binding upon, the Company and Xxxxx, his heirs, personal
representatives, executors, legal representatives, successors and their
permitted assigns, if any. In the event that the Company shall effect a
reorganization, consolidate with or merge into any other corporation,
partnership, organization or other entity, or transfer all or substantially all
of its properties or assets to any other corporation, partnership, organization
or other entity, or if more than fifty percent (50%) of its stock shall be sold,
transferred or issued to another party or parties, the Company shall immediately
pay Xxxxx the balance of the $750,000 fee set forth in Section 1.1 hereof not
previously paid by the monthly payments provided for in the said Section 1.1
hereof (such payment being referred to as the "Lump Sum Payment"). Upon payment
by the Company of the Lump Sum Payment in accordance with the foregoing sentence
of this Section 3.4, then the Coverage Period for the continued payment of
health insurance premiums and reimbursement of medical expenses under Section
1.2(a) hereof shall cease for expenses incurred after the date on which the
Company has made the Lump Sum Payment to Xxxxx.
3.5 Waiver. The waiver by any party hereto of the other party's prompt
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and complete performance or breach or violation of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
or violation, and the waiver by any party hereto to exercise any right or remedy
which he or it may possess shall not operate nor be construed as the waiver of
such right or remedy by such party or as a bar to the exercise of such right or
remedy by such party upon the occurrence of any subsequent breach or violation.
3.6 Severability. The invalidity of any one or more of the words,
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phrases, sentences, clauses, sections or subsections contained in this Agreement
shall not affect the enforceability of the remaining portions of this Agreement
or any part thereof, all of which are inserted conditionally on their being
valid in law, and, in the event that any one or more of the words, phrases,
sentences, clauses, sections or subsections contained in this Agreement shall be
declared invalid by a court of competent jurisdiction, then this Agreement shall
be construed as if such invalid word or words, phrase or phrases, sentence or
sentences, clause or clauses, section or sections, or subsection or subsections
had not been inserted.
3.7 Damages. Nothing contained herein shall be construed to prevent the
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Company or Xxxxx from seeking and recovering from the other damages sustained by
either or both of them as a result of its or his breach of any term or provision
of this Agreement. In the event that either party hereto brings suit for the
collection of any damages resulting from, or the injunction of any action
constituting, a breach of any of the terms or provisions of this Agreement, then
the party found to be at fault shall pay all reasonable court costs and
attorneys' fees of the other.
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3.8 Consent to Jurisdiction. In the event any controversy or claim arises
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out of or relates to this Agreement or the breach thereof, the parties hereby
consent to the jurisdiction of the Supreme Court of Florida, the Florida
District Court of Appeal, and the United States District Court for the District
of Florida. Accordingly, with respect to any such court action, Xxxxx and the
Company each (i) submit to the personal jurisdiction of such courts; (ii)
consent to service of process; and (iii) waive any other requirement (whether
imposed by statute, rule of court, or otherwise) with respect to personal
jurisdiction or service of process.
3.9 Gender and Number. Wherever the context shall so require, all words
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herein in the male gender shall be deemed to include the female or neuter
gender, all singular words shall include the plural and all plural words shall
include the singular.
3.10 Section Headings. The section or other headings contained in this
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Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of any or all of the provisions of this Agreement.
3.11 No Third Party Beneficiary other than Company. Nothing expressed or
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implied in this Agreement is intended, or shall be construed, to confer upon or
give any person, firm, corporation, partnership, association or other entity,
other than the parties hereto and each of their respective heirs, personal
representatives, legal representatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
THE COMPANY:
MEGO FINANCIAL CORP., a New York
corporation
/s/ Xxxxx X. Xxxxxxx
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XXXXX X. XXXXXXX, President
XXXXX:
/s/ Xxxxxx Xxxxx
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XXXXXX X. XXXXX
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