EXHIBIT 10.25
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (this "Agreement") is made and entered into as of
December 1, 1996, by and between PREFERRED CREDIT CORPORATION, a California
corporation (the "Company"), and Xxxxxxxx X. Xxxxx, an individual ("Executive").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Executive and the Company wish to provide for the terms and
conditions of Executive's employment as Chief Credit Officer of the Company.
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Executive agree as
set forth below.
1. Employment and Duties. The Company hereby employs Executive to serve
---------------------
as Chief Credit Officer of the Company, with the powers and duties customarily
accorded to such position, including those powers and duties set forth in the
Bylaws of the Company for such office and such other duties consistent therewith
as may be assigned to Executive from time to time by the Chief Executive
Officer, the President or the Board of Directors (the "Board") of the Company.
Initially, Executive's managerial and supervisorial duties shall be limited to
those departments and operations as determined by the Board and subsequently
expanded to include other departments and operations as directed by the Board.
Executive shall report directly to the Board. Executive shall endeavor in good
faith to perform his duties in an efficient, faithful and business-like manner.
In the event that the Company undergoes a reorganization pursuant to which
a holding company ("NewCo") for the common stock of the Company is formed, in
addition to serving as an employee of the Company, Employee shall be deemed an
employee of NewCo which additional employment also shall be governed pursuant to
the terms and conditions of this Agreement.
2. Term. The initial term of this Agreement shall begin on December 1,
----
1996 and expire on November 30, 2001 unless terminated earlier as set forth in
Section 6 hereof or by mutual agreement of the parties hereto (the "Initial
Term"). At the expiration of the Initial Term and each anniversary thereafter,
the term of this Agreement shall automatically be extended for an additional
year (the "Extension Term") unless either party shall have given written notice
to the other party at least six months prior to the end of the Initial Term or
the Extension Term, as the case may be, that it does not desire to extend the
term of this Agreement. If Executive's employment under this Agreement is
extended for an Extension Term, it shall thereafter or
during any Extension Term be terminable (other than upon expiration) only as
provided in Section 6 or by mutual agreement of the parties hereto.
3. Base Salary. During the term of this Agreement, Executive shall be
-----------
paid a base salary (the "Base Salary"), payable in accordance with the Company's
normal payroll practice. During the first year of the term of this Agreement,
Executive's Base Salary shall be $240,000. The annual Base Salary payable to
Executive shall be reviewed at least annually; provided, however, that
-------- -------
Executive's Base Salary shall not be reduced below $240,000 per annum during the
term of this Agreement.
4. Other Executive Benefits. During the term of this Agreement, the
------------------------
Company shall provide to Executive benefits commensurate with his position,
including each of the following benefits:
(a) Medical and Dental Coverage. The Company agrees to provide
---------------------------
coverage to Executive and dependent members of his family under the same medical
and dental plans as may be maintained from time to time in the discretion of the
Board for the other executive officers of the Company.
(b) Vacation. Executive shall be entitled to three (3) weeks of paid
--------
vacation during Executive's first year of employment with the Company and shall
be entitled to four (4) weeks during each year of employment with the Company
thereafter for the term of this Agreement. In each case, such entitlement shall
accrue pro rata over the contract year and shall be taken at such time or times
as not to interfere with the necessary performance of Executive's duties and
obligations under this Agreement. Upon termination, Executive shall not be paid
the cash value of any accrued but unused vacation time.
(c) Business Expenses. The Company will pay or reimburse Executive
-----------------
for any out-of-pocket expenses incurred by Executive in the course of providing
his services hereunder, which comply with the Company's travel and expense
policies adopted from time to time by the Board for the executive officers.
(d) Other Benefits. The Company agrees to provide to Executive the
--------------
same level of benefits offered generally to the other executive officers,
including, if any, life insurance, pension or profit sharing plans and cafeteria
plans; provided, however, Executive shall have no right to participate in any
-------- -------
performance bonus or commission-based plan provided generally to other executive
officers nor shall this section be interpreted as giving the Executive the right
to benefits specifically provided to certain executive officers pursuant to
employment agreements.
5. Assignment of Developments and Non-Disclosure of Information.
------------------------------------------------------------
(a) Assignment. Executive hereby assigns and agrees to assign to the
----------
Company or its nominees, all of his rights to ideas, research, business plans
and strategies,
2
computer programs, inventions, discoveries, improvements, and developments
("Developments"), whether or not copyrightable, patentable, or subject to trade
secret protection, which, during the period of Executive's employment by the
Company, Executive has made, conceived, or conducted, or hereafter may make or
conceive or conduct, either solely or jointly with others: (i) with the use of
the Company's time, materials, or facilities; or (ii) resulting from or
suggested by Executive's work for the Company; or (iii) in any way pertaining to
any subject matter related to the Company's existing or contemplated business,
products, and services; provided, however, that if such Developments pertain to
-------- -------
any matters related to the Company's contemplated business, products or
services, Executive shall not have been deemed to assign such Developments to
the Company if the Company does not engage in or actively market such business,
products or services within one year after termination of Executive's employment
by the Company. Notwithstanding the foregoing and in accordance with California
Labor Code Sections 2870 and 2872, the provisions of this Section 5(a) shall not
apply to any Development that Executive developed entirely on his own time
without using the Company's equipment, supplies, facilities or Information (as
that term is defined below), except for those Developments that either:
i) relate at the time of conception or reduction to practice of
the Development to the Company's business, or actual or demonstrably anticipated
research or development of the Company; or
ii) result from any work performed by Executive for the Company.
(b) Report of Developments. Executive shall make and maintain
----------------------
adequate and current written records of all such Developments and other
information generated or possessed by Executive which may be the subject of
trade secret protection, which may be in the form of notes, sketches, data input
and output formats, design specifications, flowcharts, drawings, forms, computer
program listings, data, or reports relating thereto; which records shall be and
remain the property of and available to the Company at all times. Executive
shall promptly disclose to the Company all such Developments and other
information generated or possessed by Executive.
(c) Execution of Documents. At any time requested by the Company,
----------------------
either during employment or after termination thereof, and without charge to the
Company, but at its expense, Executive agrees to execute, acknowledge, and
deliver all such further papers, including applications for patents and
registrations of copyrights, and to perform such other lawful acts as, in the
opinion of the Company, are necessary to obtain, maintain, or register patents
or copyrights for such Development in any and all countries and to vest title
thereto in the Company or its nominees.
(d) Non-Disclosure. Executive realizes that in the course of his
--------------
employment the Company will necessarily reveal to him or he may develop
proprietary, secret or confidential information, and in addition to all other
obligations with respect to the observance of federal and state statutes and
U.S. Government security regulations, Executive hereby agrees as follows:
3
i) Executive agrees to keep in strictest confidence during and
subsequent to his employment all information identified as secret or
confidential or which, from the circumstances, in good faith and good
conscience ought to be treated as confidential, relating to the Company's
underwriting process or regarding the business plans and strategies,
computer programs and listings, inventions, discoveries, source code,
object or other executable code, manuals, hardcopy screen displays, data
input or output formats, improvements, developments, design specifications,
or trade secrets or secret processes, printouts, reports, client lists,
profit margins, or any other information of the business or affairs of the
Company (hereinafter collectively referred to as "Information") which
Executive may acquire or develop in connection with or as a result of his
employment.
ii) Executive covenants and agrees that, except as instructed by
Company during his employment, Executive will not use any Information and
without the prior written consent of Company, Executive will not directly
or indirectly publish, communicate, divulge, or describe to any
unauthorized person, nor patent or register a copyright for, any
Information during the period of his employment or at any time subsequent
thereto.
iii) This Section 5(d) shall not apply to Information already in
the public domain or Information which has been dedicated to or released to
the public by the Company.
(e) Return of Company Property. Upon termination of Executive's
--------------------------
employment, Executive agrees to return to the Company all property of the
Company of which Executive has had custody, including but not limited to all
Information, and all notebooks and other data relating to Developments made or
conceived by Executive, alone or in conjunction with others, and to make full
disclosure relating to such Developments.
(f) Prior Inventions. If, prior to employment with the Company,
----------------
Executive has made or conceived any Development, whether or not copyrightable or
patentable, which Executive desires to have excluded from this Agreement,
Executive has listed below a complete description thereof.
Asset-Backed Securitization Model Gain On Sale Model Excel ABS57.xls
-------------------------------------------------------------------------------
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(g) Perpetual Nonexclusive License. Executive hereby grants to the
------------------------------
Company a perpetual nonexclusive license to use any Development, whether or not
copyrightable or patentable, made, developed, perfected, devised, conceived or
first reduced to practice by Executive prior to the date of this Agreement and
while not working for the Company which is
4
utilized by the Company during the term of Executive's employment.
Notwithstanding anything contained herein to the contrary, this Section shall
survive the termination of this Agreement and the termination of Executive's
employment.
(h) Compliance Not Contingent Upon Additional Consideration.
-------------------------------------------------------
Executive has not been promised and Executive shall not require any additional
or special payment for compliance with the covenants and agreements herein
contained in this Section 5.
(i) Injunctive Relief. Executive agrees that the Company may suffer
-----------------
irreparable harm in the event that Executive fails or threatens not to comply
with any terms of this Agreement, and that monetary damages may be inadequate to
compensate the Company in such event. Accordingly, subject to the proviso in
Section 5(j), below, Executive agrees that the Company, in addition to any other
remedies available to it at law or in equity, including the right to monetary
damages, will be entitled to injunctive relief, without the posting of bond or
other security, to enforce this Agreement.
(j) Indemnification. Executive agrees to indemnify and hold Company
---------------
harmless from any loss or damage resulting from Executive's breach of this
Section 5; provided, however, that the Company's sole remedy for a breach of
-------- -------
Section 5(a), above, shall be injunctive relief and the Company shall not be
entitled to monetary damages.
6. Termination.
-----------
(a) Termination by Company for "Cause." The Company may terminate
-----------------------------------
this Agreement for "Cause" effective immediately upon written notice thereof to
Executive. For purposes of this Agreement, "Cause" shall include, but not be
limited to, the following events: (i) an act of fraud, embezzlement or similar
conduct by Executive involving the Company; (ii) any action by Executive
involving the arrest of Executive for violation of any criminal statute; or
(iii) a failure or refusal by Executive to perform his duties under this
Agreement.
In the event of termination for "Cause," Executive shall be entitled to
receive that portion of the Base Salary and all benefits accrued through the
date of termination.
(b) Termination by Company Other Than for "Cause."
----------------------------------------------
i) Death. Provided that notice of termination has not
-----
previously been given under any Section hereof, if Executive shall die during
the term of this Agreement, this Agreement and all of the Company's obligations
hereunder shall terminate, except that Executive's estate or designated
beneficiaries shall be entitled to receive (i) all earned and unpaid Base Salary
through the date of termination; and (ii) all other benefits that may be due to
Executive or Executive's estate or beneficiaries under the general provisions of
any benefit plan, stock incentive plan or other plan in which Executive is then
a participant.
5
ii) Disability. Provided that notice of termination has not
----------
previously been given under any Section hereof, if Executive becomes ill or is
injured or disabled during the term of this Agreement, such that Executive fails
to perform all or substantially all of the duties to be rendered hereunder and
such failure continues for a period in excess of 26 consecutive weeks, this
Agreement and all of the Company's obligations hereunder may be terminated by
the Company effective immediately upon written notice thereof to Executive,
except that Executive shall be entitled to receive (i) all earned and unpaid
Base Salary through the date of termination; and (ii) all other benefits that
may be due to Executive under the general provisions of any benefit plan, stock
incentive plan or other plan in which Executive is then a participant.
iii) Without Cause. The Company may terminate this Agreement
-------------
without "Cause" effective immediately upon written notice thereof to Executive.
In the event of termination without "Cause," Executive shall be entitled to
receive that portion of the Base Salary and all benefits accrued through the
date of termination.
(c) Termination by Executive. Executive may terminate this Agreement
------------------------
for "Good Cause" effective 30 days after giving the Company written notice of
the event(s) constituting Good Cause; provided, the Company does not cure the
--------
situation giving rise to Good Cause within 15 days after receipt of such notice
from Executive. Unless initiated or concurred in by Executive, each of the
following events shall constitute an event for "Good Cause:" (i) a decrease in
Executive's Base Salary; (ii) action on the part of the Board that makes it
impossible or impractical for Executive to perform his duties under this
Agreement; (iii) a change in the location at which Executive customarily
performs his duties of more than 50 miles from the present location in Irvine,
California; (iv) the acquisition of all or substantially all of the business of
the Company (whether by sale of stock, sale of assets, merger, or consolidation
or otherwise) in connection with which the purchaser(s) thereof do not either
confirm, in writing, the continued effectiveness of this Agreement or assume
this Agreement; or (v) a breach by the Company of any of its material
obligations to Executive under this Agreement.
(d) Stock and Similar Rights. Executive's rights under any other
------------------------
agreement or plan under which stock options, restricted stock or similar awards
are granted shall be determined in accordance with the terms and provisions of
such plans or agreements.
(e) No Mitigation or Offset. Payment of any sum under this Section 6
-----------------------
shall not be subject to any claim of mitigation nor shall the Company be
entitled to any right of offset with respect thereto.
7. Directors and Officers Insurance. The Company agrees to provide, at
--------------------------------
its sole cost, at all times after its initial public offering to the extent
appropriate and necessary, directors and officers insurance naming Executive as
an insured, which directors and officers insurance shall provide for coverage
for covered actions occurring while Executive is employed by the Company,
notwithstanding that at the time of any action against Executive, he may not be
employed by the Company. Such directors and officers insurance shall be at
least as favorable
6
as the coverage generally recommended for companies engage in the business in
which the Company is engaged.
8. General Provisions.
------------------
(a) Notices. All notices, requirements, requests, demands, claims or
-------
other communications hereunder shall be in writing. Any notice, requirement,
request, demand, claim or other communication hereunder shall be deemed duly
given (i) if personally delivered, when so delivered, (ii) if mailed, two (2)
business days after having been set by registered or certified mail, return-
receipt requested, postage prepaid and addressed to the intended recipient as
set forth below, (iii) if given by telecopier, once such notice or other
communication is transmitted to the telecopier number specified below, and the
appropriate telephonic confirmation is received, provided that such notice or
other communication is promptly thereafter mailed in accordance with the
provisions of clause (ii) above or (iv) if sent through an overnight delivery
service under circumstances by which such service guarantees next day delivery,
the date following the date so sent:
If to the Company, to:
---------------------
Preferred Credit Corporation
0000 Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attn: President
Telecopy: (000) 000-0000
If to Executive to:
------------------
to the address set forth in
the records of the Company
Any party may change the address to which notices, requests, demands, claims and
other communications hereunder are to be delivered by giving the other party
notice in the manner herein set forth.
(b) Assignment. This Agreement and the benefits hereunder are
----------
personal to the Company and are not assignable or transferable, nor may be the
services to be performed hereunder be assigned by the Company to any person,
firm or corporation; provided however, that this Agreement and the benefits
-------- -------
hereunder may be assigned by the Company to any corporation into which the
Company may be merged or consolidated, and this Agreement and the benefits
hereunder will automatically be deemed assigned to any such corporation,
subject, however, to Executive's right to terminate this Agreement to the extent
provided in Section 6. In the event of any assignment of this Agreement to any
corporation acquiring all or substantially all of the assets of the Company or
to any other corporation into which the Company may be merged or consolidated,
the responsibilities and duties assigned to Executive by such successor
7
corporation shall be the responsibilities and duties of, and compatible with the
status of, a senior executive officer of such successor corporation. The
Company may delegate any of its obligations hereunder to any subsidiary of the
Company, provided that such delegation shall not relieve the Company of any of
its obligations hereunder. Executive may not assign its rights hereunder or
delegate his duties hereunder to any Person.
(c) Complete Agreement. This Agreement contains the entire agreement
------------------
among the parties hereto with respect to the subject matter hereof and
supersedes and cancels any and all previous written or oral negotiations,
commitments, understandings, agreements and any other writings or communications
in respect of such subject matter.
(d) Amendments. This Agreement may be modified, amended, superseded
----------
or terminated only by a writing duly signed by both parties.
(e) Severability. Any provision of this Agreement which is invalid,
------------
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement invalid,
illegal or unenforceable in any other jurisdiction.
(f) No Waiver. Any waiver by either party of a breach of any
---------
provisions of this Agreement shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Agreement. The failure of either party to insist upon strict adherence to
any term of this Agreement on one or more occasions shall not be considered a
waiver or to deprive such party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.
(g) Binding Effect. This Agreement shall be binding on, and shall
--------------
inure to the benefit of, the parties hereto and their permitted assigns,
successors and legal representatives.
(h) Counterparts. This Agreement may be executed by the parties
------------
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same document.
(i) Governing Law. This Agreement has been negotiated and entered
-------------
into in the State of California and shall be construed in accordance with the
laws of the State of California.
(j) Headings. The headings included in this Agreement are for the
--------
convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.
8
(k) Attorneys' Fees. In the event of any controversy, claim or
---------------
dispute between the parties hereto arising out of or relating to this Agreement,
the prevailing party shall be entitled to receive his or its reasonable
attorneys' fees, expenses and costs.
9
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its duly authorized officer and Executive has executed the same as
of the day and year first above written.
PREFERRED CREDIT CORPORATION
/s/ Xxxx Xxxxxxxxx
------------------------------------------------------
By: Xxxx Xxxxxxxxx
-------------------------------------------------
Its: Chief Executive Officer
-------------------------------------------------
XXXXXXXX X. XXXXX
/s/ Xxxxxxxx X. Xxxxx
-----------------------------------------------------
10
