Appendix H
EMPLOYMENT AGREEMENT
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THIS AGREEMENT is made as of June 1, 1997, by and between APPROVED
FINANCIAL CORPORATION ("Employer") and its successors and assigns, and Xxxx X.
Xxxxxx ("Employee"), who, in consideration of the mutual promises of the parties
and other good and valuable consideration, the receipt and adequacy of which are
acknowledged, the parties have agreed as follows:
1. Definitions. Whenever the following words or phrases are used in the
Agreement, they shall have the meanings given in this Section, unless
otherwise indicated.
(a) "Affiliate" means any Person owned by (greater than 10%), owning
(greater than 10%), under common ownership with, controlling,
controlled by, or under common control with, another Person, which
includes subsidiary and parent organizations.
(b) "Compete" shall mean in any way being in, contest with or rivalry
with Employer, including directly or indirectly working with, being
employed by, or having any interest or involvement in any other
Person which is involved in selling, marketing or otherwise
providing any of the services or products which are provided or
performed as part of the Primary Business Operation of Employer
during Employee's employment with Employer.
(c) "Customer" shall mean individual borrowers, mortgage brokers or
other sources of referrals of business to Employer.
(d) "Non-Conforming Loans" means all residential real property loans,
regardless of lien position, that do not conform to all applicable
Federal National Mortgage Association guidelines.
(e) "Primary Business Operation" shall mean wholesale and retail
origination and sale of Non-Conforming Loans.
(f) "Person" shall include both natural persons and entities.
(g) "Territory" shall mean the area encompassed in a 35 mile radius
around any office of Employer or its Affiliates which are in the
same Primary Business Operation
2. Employment. Employer employs Employee for the position of Chief Financial
Officer. Employee agrees to perform the duties assigned to Employee, and
to comply with the general supervision and policies of Employer and the
orders, advice and direction of the Chief Executive Officer of Employer.
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3. DUTIES. Employee shall perform the duties customarily performed by one
holding Employee's position in similar businesses, and such duties as may
be assigned by this Agreement as specified in Schedule A attached to and
incorporated herein, and such other duties as may be assigned from time to
time by Employer. Employee shall make available to Employer all
information of which Employee shall have any knowledge, and shall make all
suggestions and recommendations that will be of benefit to Employer.
4. BEST EFFORTS OF EMPLOYEE. Employee will at all times faithfully,
industriously, and to the best of Employee's ability, perform all of
Employee's duties, to the satisfaction of Employer.
5. TERM AND RENEWAL. This Agreement is for an initial term of one (1) year,
renewable thereafter on a year to year basis. Either party must give
ninety (90) days written notice if the contract is not going to be
renewed. Upon failure to give such notice, this Agreement will
automatically renew for a period of twelve (12) months on the same terms.
This notice requirement shall continue for all subsequent renewal periods.
6. COMPENSATION:
(a) Employer shall pay Employee in full payment for Employee's services,
compensation in accordance with the Compensation Schedule attached
to this Agreement as Schedule B and incorporated as part of this
Agreement, which shall remain in effect until supplemented or
replaced by a new Agreement between Employer and Employee.
(b) It is mutually agreed that the Employer shall pay to Employee one
year's annual base compensation as provided in Schedule B of this
Agreement in the event that following a change of control (more than
50% of the voting stock) of Employer the present President and Chief
Executive Officer of the Employer, Xxxxx X. Xxxxx, is no longer
employed by the Employer, and Employer chooses to terminate Employee
without cause.
7. OTHER ACTIVITIES. Employee shall devote all business time, attention,
knowledge and skills solely to the business and interest of Employer, and
Employer shall be entitled to all of the benefits, profits or other issues
arising from or incident to all work, services and advice of Employee.
Employee shall not, during the term of this Agreement be employed by or
contract to provide services to any other person or engage in any other
business or trade, nor shall employee use or take for Employee's person
benefit any position which conflicts with or is contrary to any position
which would be beneficial to Employer. Nothing in this Agreement, however,
shall limit Employee's right to invest in publicly traded securities, to
engage in any business with the written consent of Employer, or to engage
in civic and charitable activities.
8. BENEFITS. Employee shall be entitled to benefits according to Employer's
stated policy, as amended from time to time.
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9. TERMINATION. Employer may terminate this Agreement at any time without
advance notice for cause. For the purpose of this Agreement "cause" is
defined as:
(i) a breach of this Agreement or any policy, rule, instruction,
or order of Employer; any act or omission by Employee, which
involves moral turpitude, gross negligence, dishonesty, bad
faith, conflict of interest, intentionally lying to Employer,
taking action prohibited by Employer, or breach of fiduciary
duty:
(ii) violation of any law or regulation applicable to the business
of the Employer;
(iii) repeated neglect of duties; or
(iv) failure to follow any lawful directive from the Chief
Executive Officer or Board of Directors.
Furthermore, this Agreement shall terminate immediately upon
Employee's death or disability, but such termination shall not
affect any previously vested right of Employee to receive disability
payments in accordance with any applicable plan for a disability
which arises while this Agreement is in effect. Either party may
upon ninety (90) days prior written notice terminate this Agreement
without cause. If Employer terminates without cause, the decision
shall be made either by Xxxxx X. Xxxxx, personally, or Employer's
Board of Directors.
10. CONFIDENTIAL AND PROPRIETARY INFORMATION. In the course of this
employment, Employee will be exposed to certain confidential and
proprietary information of Employer and its Customers. Employee shall not
reproduce or remove from any premises any such information without the
express written consent of Employer. Any such information acquired by
Employee shall be promptly delivered to Employer if in tangible form,
unless specific written consent is received from Employer. Employee shall
not at any time or in any manner, disclose to any Person, nor in any way
use to his benefit or that of any other person, any information concerning
any matters affecting or relating to the business of Employer, including
any of its Customers, the prices it obtains or at which it offers its
products or services, or the sources of and/or prices it pays for any
supplies, material, services or technical assistance, or any other
information concerning the finances or business of Employer or any of its
Customers, without regard to whether any of foregoing matters would
otherwise be considered confidential or trade secrets, the parties
agreeing that these matters are important, material and confidential and
gravely affect the successful conduct of Employee's business and goodwill,
and that any breach of the terms of this Section shall be a material
breach of this Agreement and result in irreparable harm to Employer.
Employee further agrees that upon termination or expiration of this
Agreement for any reason, Employer shall immediately deliver to Employer
any and all information, documents, agreements, data, work product,
customer lists, notes and the like of Employer or relating to Employer's
business. The duties and restrictions on Employee in this Section shall
survive the expiration or termination of this Agreement and remain in full
force and effect for so long as Employer continues in business.
11. COVENANT NOT TO COMPETE. In consideration of the employment of Employee or
in the event Employee is entering into this Agreement after having been an
employee, either with a prior contract or no contract, then in
consideration of continued employment, the benefits of this Agreement and
other good and valuable consideration, the Employee independently
convenants and agrees with Employer, each of which said convenants shall
be independent of any severable from each other and each of which shall
continue in force for the specified
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duration irrespective of the completion and performance of all other
obligations between the parties hereto, that:
(a) Employee will NOT during the term of Employee's employment, not one
(1) year immediately following the termination of employment,
compete with Employer within the geographical limits of the
Territory.
(b) Employee will NOT, during the term of Employee's employment nor (1)
year immediately following the termination thereof, directly or
indirectly, for Employee, or in conjunction with any other Person,
(by disparagement of Employer's business or otherwise), do business
with, divert, take away or cause to leave any of the Customers of
Employer.
(c) Employee will NOT, during the term of Employee's employment nor one
(1) year immediately following the termination thereof, directly or
indirectly, for Employee, or in conjunction with any other Person
(by disparagement of Employer's business or otherwise), employ,
solicit, divert or take away any of the Employees of Employer.
(d) If any of the preceding limitations on the Employee imposed by the
preceding subsection "(a)" through "(c)" exceed the maximum
limitation permissible under the statutes, laws or precedents of any
state wherein it is sought to be enforced against the Employee, then
the parties hereto agree that such limitation may and shall be
deemed to be amended to conform to the maximum limitation
permissible under such statutes, laws or precedents, or in the
absence thereof, to such limitations deemed appropriate by any Court
of record in the state wherein it is sought to be enforced.
(e) The Employee acknowledges that a violation on Employee's part of any
convenants of this Section and its Subsections or Section 10 or 12,
will cause such damage to the Employer as will be irreparable and
the exact amount, of which will be impossible to ascertain, and for
that reason, the Employee further acknowledges that the Employer
shall be entitled, as a matter of course, to an injunction out of
any Court of competent jurisdiction, restraining any further
violations of the covenant by the Employee, and, pending the hearing
and decision on the application for such injunction, the Employer
shall be entitled to a Temporary Restraining Order, and waives any
request for a bond, or the equivalent thereof, without prejudice to
any other remedies available to it. The Employee particularly agrees
to the immediate issuance of such Temporary Restraining Order and
hereby waives any requirements of notice or objection whatsoever to
the issuance of such an Order.
(f) It is mutually agreed that regardless of whether the Employee leaves
the employ of the Employer by Employee's own request or the request
of the Employer, or regardless of how or by what manner the
employment relationship is terminated (including whether with or
without cause), or this contract is terminated or expires, the
independent covenants herein contained in this Section and in
Sections 10 and 12 shall survive and remain in full force and effect
as INDEPENDENT CONVENANTS. Should any provision or covenant in this
Agreement be breached by Employer, or be declared void or
enforceable by a Court of competent jurisdiction, the remaining
covenants remain in full force and effect, each being independent
and severable.
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(g) During the term of the non-competition covenant, Employee shall give
all of Employee's actual and prospective employers written notice of
the requirements of the noncompetition covenant. If Employer
believes that Employee has failed to provide any actual or
prospective employer such notice, Employer may provide such notice,
including providing a copy of any or all of this Agreement.
(h) Employee acknowledges that:
(i.) there was no duress involved in signing this Agreement;
(ii.) other employment options were available to Employee at the
time of signing this Agreement;
(iii.)Employee's covenant not to compete was a material and
necessary inducement to Employer to employ or continue the
employment of Employee;
(iv.) agrees that the restrictions imposed upon Employee by this
Agreement are reasonable in scope and duration and are
necessary to serve a legitimate business interest of Employer;
(v.) Employee acknowledges that the non-conforming loan business is
only a part of the overall mortgage loan industry and
therefore a restrictive covenant limited to the primary
business operation as defined herein would not prevent
Employee from earning a livelihood in the overall mortgage
loan industry; and
(vi.) Employee has had an opportunity to have this Agreement
reviewed by legal counsel of Employee's choice.
(i) Employee represents and warrants that his employment by Employer
does not and will not breach any agreement or duty which Employee
has to any other Person to keep in confidence any confidential
information belonging to others or not to compete with others.
12. INTELLECTUAL PROPERTY RIGHTS. Employee acknowledges that the proprietary
rights to any original works, concepts, software, manuals, programs,
routines, inventions, trademarks, service marks, and trade names made,
developed, or conceived by Employee, whether singularly or in conjunction
with another Person, during the term of this Agreement (collectively
"inventions") shall be the property of Employer. Accordingly, Employee
agrees as follows:
(a) Employee hereby assigns, and shall assign in the future, any and all
of Employee's rights in order to all inventions.
(b) Employee shall promptly disclose in writing to Employer any
invention. If requested by Employer, Employee will execute, file and
prosecute any and all applications and assignments necessary or
proper to vest in Employer the complete rights in and to any
inventions.
(c) If Employer chooses to pursue any patent or other application for
any invention, Employer shall bear all costs and fees in connection
with the application.
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(d) If Employer declines in writing to pursue any patent or other
application for an invention, Employee may with the written consent
of Employer pursue the application in Employee's own name and at
Employee's own expense, provided that Employer shall have A
perpetual, world-wide, royalty-free license and right to use, or to
adapt and develop in any way, any and all inventions, whether or not
protectable under any applicable law.
(e) Upon the termination of this Agreement for any reason, Employee
shall deliver to Employer any and all notes, records, documents and
other material relating to any completed or incomplete inventions
which Employee worked on prior to such termination.
(f) Except as set forth on Schedule C attached to and incorporated in
this Agreement, Employee shall not assert any rights to any
inventions as having been made or acquired by Employee prior to
being employed by Employer, or since then and not covered by this
Agreement.
(g) Employee need not assign to Employer any rights to any invention,
etc. Wholly conceived and developed by Employee after the
termination of this Agreement, unless the conception or development
of such invention, etc. involves the use of confidential or
proprietary information obtained by Employee while employed by
Employer.
13. GOVERNING LAW AND FORUM. All questions regarding this Agreement shall be
governed by the laws of Virginia, except that in the case of an issue
regarding the reasonableness of any restrictive covenants in Sections 10,
11 or 12 of this Agreement, the parties agree to apply the law of the
state wherein Employer files legal action to enforce any restrictive
covenant. Any suit relating to this Agreement must be brought in the
Circuit or General District Courts of the City of Virginia Beach,
Virginia, provided, however, Employer may file legal action in connection
with the enforcement of any of the restrictive convenants contained in
this Agreement in any state or federal court where Employer in its
discretion deems it appropriate for its protection.
14. SUCCESSORS AND ASSIGNS. This agreement shall be finding upon and inure to
the benefit of the parties and their heirs, personal representatives,
successors and assigns.
15. ASSIGNABILITY. The rights and obligations of the Employee under this
Agreement may not be assigned or delegated. The rights and obligations of
the Employer may be assigned or delegated without the consent of Employee.
16. OFFSETS AGAINST COMPENSATION. Upon termination of this Agreement, Employee
authorizes Employer to offset against any compensation or other amounts
owning to Employee any sums that Employee owes to Employer, evidenced in
writing.
17. NOTICES. Any notice or other communication required or permitted by this
Agreement shall be in writing and shall be considered given when hand
delivered or deposited in the United States mail, postage prepaid, via
first class or certified mail, and addressed to Employer at its
administrative headquarters and to Employee at his residence, as indicated
by the records of the Employer.
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19. NUMBER AND GENDER. Whenever used in this Agreement, the singular shall
include the plural, and the plural shall include the singular.
20. SEVERABILITY. If any provision of this Agreement is determined to be
unenforceable, the remainder of this Agreement shall be construed and
enforced as if the unenforceable provision had not been contained in this
Agreement, and each provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
21. ENTIRE AGREEMENT. This Agreement is intended to be a complete, exclusive
and final expression of the parties' agreement concerning Employee's
employment, merging and replacing all prior negotiations, offers,
representations, warranties and agreements. To the extent that Employee
was employed by Employer prior to the date of this Agreement this
Agreement is in confirmation of the agreements previously reached and
under which the parties have been working. No course of prior dealing
between the parties, no usage of trade, and no parole or extrinsic
evidence of any nature shall be used to supplement or modify any of the
term of this Agreement.
22. MODIFICATION AND WAIVER. The provisions of this Agreement may not be
modified for waived, including the waiver of the provisions of this
Section, except by a written instrument, signed by the party against whom
such modification or waiver is sought to be enforced.
23. SURVIVAL. Any provision of this Agreement which imposes any obligation
upon Employee which may extend beyond the term of this Agreement shall
survive the termination of this Agreement.
24. THIRD PARTY BENEFICIARIES. The provisions of this Agreement are intended
to benefit only the parties to this Agreement. No person not a party to
this Agreement shall be deemed to be a third party beneficiary of this
Agreement, nor shall any such person be empowered to enforce the
provisions of this Agreement, except to the extent such a person becomes a
permitted assignee of one of the parties.
25. COST OF ENFORCEMENT. In the event of a dispute or litigation relating to
this Agreement, each party shall pay their own costs and expenses,
including legal fees.
26. CHANGE OF POSITION. The parties hereto acknowledge that during the course
of employment of Employee, the Employee's job, location, classification,
or pay may from time to time change by mutual agreement. It is understood
and agreed, that such change shall not cause this Agreement to be
terminated unless such termination is agreed to in writing by Employer;
and it is further agreed that the independent covenants contained in
Sections 10, 11 and 12 shall survive any such changes and remain in fall
force and effect unless and until Employer, in writing by Employer, in
writing, expressly consents or agrees to terminate them.
26. NON-WAIVER. The failure of the Employer at any time to require, the
performance by the Employee of any of the provisions, covenants and
conditions hereof shall in no way affect its right thereafter to
enforce the same, nor shall the waiver by the Employer of any breach of
this Agreement, term, provision, covenant or condition hereof be taken
or held to be a waiver of any succeeding breach of any agreement, term,
provision, covenant or condition. The
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failure by Employer to performance by any other employee of any provision,
covenant or condition in that employee's employment shall in no way affect
Employer's right to enforce this Agreement or any covenant herein.
WITNESS the following signatures and seals:
EMPLOYER:
APPROVED FINANCIAL CORPORATION
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
Title: President and Chief Executive Officer
EMPLOYEE:
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
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SCHEDULES
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SCHEDULE A
SPECIFIC DUTIES ASSIGNED
UPON EXECUTION OF EMPLOYMENT AGREEMENT
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The parties acknowledge that Employer may assign new duties and revise
existing duties from time to time without the need to amend this Schedule or the
Employment Agreement. If additional specific duties are assigned upon execution
of this Agreement, execution of this they are set forth below. If no additional
specific duties are assigned upon execution of this Agreement, then nothing
shall be specified below.
(1) It is mutually agreed that Employee shall serve as a Director and/or
Officer of the Employer or its Affiliates as elected to such position(s) by that
entity's Shareholders, Members and/or Directors.
SCHEDULE B
COMPENSATION SCHEDULE
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1. BASE COMPENSATION: Eighty-five thousand dollars ($85,000.00) annually,
payable in arrears in twenty-four (24) equal semi-monthly payments.
2. GROUP BENEFITS: Employee shall be entitled to group benefits as contained
in the stated written policy of the Corporation, which may from time to
time be revised.
3. STOCK OPTIONS: To the extent the Corporation adopts any management
incentive plan involving the Corporation's stock or options, a committee
of the Board of Directors or the Board itself will determine the
participants pursuant to its authority and the requirements of any plan.
4. OTHER:
(a) QUARTERLY BONUS: Employee shall be entitled to a quarterly bonus
based on .50 (1/2%) of net profit after taxes to be paid at the end
of the month following the quarter. The Bonus is not to exceed
$35,000.00.
