Draft of 2/7/97
EMPLOYMENT AGREEMENT
This Agreement is made as of the 1st day of January, 1997, between:
IMC MORTGAGE COMPANY, a Florida corporation, the address of which
is ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"COMPANY")
and
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, whose address is ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ (the "EMPLOYEE").
Background
The following facts constitute the background for this agreement:
A. The Company, which is in the mortgage banking business,
simultaneously herewith is purchasing substantially all the assets and business
of Equity Mortgage Co., Inc., a Maryland corporation ("EQUITY").
B. The Employee is a shareholder and key employee of Equity and the
Company intends to continue the business of Equity in the Company and/or one or
more of its affiliates (which continuation, regardless of the affiliate of
Company through which such business is continued is called the "EQUITY DIVISION"
of Company's business).
C. The Company believes that the services of Employee in continuing to
direct the Equity Division is very important to it continued success and
therefor, the Company desires to retain the services of the Employee, and the
Employee desires to be employed by the Company, in accordance with the terms and
conditions set forth in this Agreement. In addition to directing the Equity
Division, the Employee shall be a senior marketing vice president of the Company
with certain responsibilities for generating business from loss mitigation
activities and the sale of real estate owned by third parties (the "Loss
Mitigation Business").
NOW, THEREFORE, in consideration of the covenants and agreements set
forth herein, the parties hereto, intending to be legally bound, agree that the
background facts are true and correct and form a substantive and integral part
of this Agreement, and do further hereby agree as follows:
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1. Employment and Duties.
The Company hereby employs, either directly or through one of Company's
affiliates engaged in the mortgage banking business as the successor to Equity's
mortgage banking business in the Territory (as defined below) (the Company and
such affiliate sometimes hereinafter collectively called the "EMPLOYER, it being
agreed that the Company shall at all times continue to have primary liability
under this Agreement"), the Employee as the Senior Vice-President of the Equity
Division of Employer and as a senior marketing vice president for the Loss
Mitigation Business, and the Employee hereby accepts such employment upon the
terms and conditions contained in this Agreement. The Employee shall have such
rights, duties and responsibilities as are consistent with those of a Senior
Vice-President of a mortgage banking company and such other executive and
managerial responsibilities as may be from time to time reasonably designated by
the Board of Directors of the Company (the "BOARD") or the chief executive
officer of the Company or the president of the Company (the "EXECUTIVE
OFFICERS") that are consistent with Employee directing the day to day operations
of the Equity Division. The Employee will work from offices in Owings Mills,
Maryland and the Company agrees not to relocate Employee without Employee's
consent. The Employee shall perform his duties in a conscientious, reasonable
and competent manner, shall devote his reasonable best efforts, skill and
abilities to promote the Company and the business of the Equity Division and
shall devote Employee's full business time and attention to the performance of
his duties. The Employee shall at all times discharge his duties as an officer
and employee subject to the general control of the Board and the Executive
Officers of Employer, but the Company will not exercise unreasonable control
over the day-to-day operations of the Equity Division which shall be directed by
Employee.
2. Term.
This Agreement shall have an initial term beginning on January 1, 1997
and continuing until December 31, 2000 (the "CONTRACT TERM") unless earlier
terminated as provided herein. Employee is to serve at the pleasure of the Board
and such employment is subject to termination by either party, with or without
Cause, upon thirty (30) days written notice. At the expiration of the initial
term hereof (or any renewal term, if applicable), this Agreement shall
automatically renew for an additional two year term unless either party provides
notice to the other of intent not to renew at least 30 days prior to the
expiration of the initial term, or renewal term as applicable. If this Agreement
renews, then the Equity Division Bonus will not be applicable to the renewal
term. For purposes of this Section 2 (and Subsection 4(h)), "CAUSE" shall mean
(i) serious, willful misconduct by the Employee in respect to his obligation to
Company or Employer, including for example (but not limited to) the commission
by Employee of a felony or the perpetration by Employee of a common law fraud;
(ii) the violation by Employee of any material term of this Agreement, including
the failure of Employee to perform the amount and quality of service to Employer
reasonably expected of him, which violation or failure is not cured or rectified
after reasonable notice thereof and a reasonable opportunity to do so; or (iii)
willful refusal to follow the Employer's reasonable policies and directives
which violation is not cured or rectified after reasonable notice thereof and a
reasonable opportunity to do so.
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3. Compensation.
(a) Base Salary. The Company shall or shall cause Employer to pay the
Employee a base salary ("Base Salary"), throughout the term of employment under
this Agreement payable monthly, pro rated for any partial month such amount as
is established by the Board from time to time, but not less than the following:
(1) First Year. For the first 12 months of employment, a base
salary per year of One Hundred Seventy-Five Thousand Dollars
($175,000);
(2) Cost of Living Adjustments. Beginning on the first
anniversary of Employee's employment, and upon each anniversary
thereafter, the base salary per year shall equal the sum of (i) the
salary paid to Employee for the last year prior to such anniversary
date (the "LAST YEAR'S SALARY"), plus (ii) an amount equal to Last
Year's Salary times the CPI Adjustment (as hereinafter defined).
As used in this agreement, the term "CPI ADJUSTMENT" shall mean the
percentage increase for the twelve (12) months ending on the applicable
anniversary date of Employee's employment, in the Consumer Price Index-All Urban
Consumers, U.S. City average All Items (1967=100) Not Seasonally Adjusted, as
published by the Bureau of Labor Statistics, U.S. Department of Labor ("CPI")
over the prior twelve (12) months. The percentage increase in the cost of living
shall be zero percent (0%) if the CPI is decreased during the past year. If the
CPI is discontinued or unavailable, such other comparable governmental index
shall be used to obtain substantially the same result as if the CPI had been
continued or available.
(b) Equity Division Bonus. Employer shall pay to Employee within sixty
(60) days following the end of each of the Company's calendar years beginning
with calendar year 1997, and ending with calendar year 2000, a bonus (the
"EQUITY DIVISION BONUS") in an amount equal to 1 1/2% of the mortgage
originations ("Originations") of the Equity Division of Company which will be
directed and operated primarily by Employee provided, however, in no event will
the Equity Division Bonus be greater than the after tax profits of such Equity
Division computed before taking into effect the Equity Division Bonus. Upon
termination of Employee's employment, Employee shall be entitled to the bonus
earned through the date of termination (plus bonus that accrues with respect to
business in the pipeline as of such termination date that closes following such
termination date)with such amount to be paid within sixty days following
termination. The Employee shall be entitled to access reports and books and
records to verify the computation of the Equity Division Bonus.
(c) Loss Mitigation Business Bonus. Employer shall pay Employee within
sixty (60) days following the end of each of the Company's calendar years
beginning with calendar year 1997, a bonus (the "Loss Mitigation Business
Bonus") in an amount equal to the greater of (i) 25 basis points (.0025) on all
sub-prime mortgage loans originated by Company's Loss Mitigation Business, or
(ii) ten percent (10%) of the front-end points received by Company on all loans
originated by the Loss Mitigation Business. Employee will pay from the Loss
Mitigation Business
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Bonus any amounts due to ▇▇▇▇ ▇▇▇▇▇▇▇▇ in connection with such Loss Mitigation
Business. The Equity Division Bonus and the Loss Mitigation Business Bonus are
collectively called the "Bonus." Upon termination of Employee's employment,
Employee shall be entitled to the bonus earned through the date of termination
(plus bonus that accrues with respect to business in the pipeline as of such
termination date that closes following such termination date) with such amount
to be paid within sixty days following termination. The Employee shall be
entitled to access reports and books of records to verify the computation of the
Loss Mitigation Business Bonus.
(d) Employee Benefits. Employee shall be eligible for, and shall
receive, all benefits on the same basis as otherwise generally available to
other executives of the Company, including, but not limited to: health and
dental insurance, life insurance, profit sharing plans, investment and
retirement plans and vacations and holidays. A general listing of the benefits
currently available to executives of the Company is attached hereto as EXHIBIT
A.
(e) Employment Taxes. The Company shall deduct from any payments to the
Employee taxes required to be withheld and paid to any federal, state or local
government as a result of the Employee's employment.
(f) Expense Reimbursement. The Employer shall reimburse Employee for all
customary and reasonable business expenses (including automobile expenses)
incurred by Employee in connection with Employer's business, subject to a
reasonable budget approved by the Company and subject to reasonable
documentation. The Company shall arrange to have a credit card issued to
Employee for business use.
4. Non-Competition and Proprietary Information.
(a) Restricted Business Activity and Geographic Scope. The Employee will
not compete with the Company, Employer or any of their respective affiliates in
the mortgage banking business (including, without limitation, either the
conforming or nonconforming loan business), either directly or indirectly, alone
or in conjunction with others, anywhere inside of the Territory (as defined
below), during the term of Employee's employment with the Employer (except to
wind-down the assets of Equity). In addition, for a period beginning on this
date and ending two (2) years following Employee's termination of employment
(the "NON-COMPETITION TERM") for whatever cause or reason, including expiration
of the Contract Term, but subject to subsection (h) of this Section 4, the
Employee will not compete with the Company, the Employer or any of their
affiliates in the mortgage banking business (including, without limitation,
either the conforming or nonconforming loan business), either directly or
indirectly, alone or in conjunction with others, within the Territory, and
during said period, the Employee will not act as a competitor to the Company or
its affiliates directly, or indirectly, as a proprietor, owner, shareholder
(other than as a shareholder of a publicly traded Company so long as Employee
does not own or control more than 5% of the shares of such Company), partner,
joint venturer, trustee, director, representative, employee, agent or consultant
to any person or entity (called an "ASSOCIATED PERSON") where Associated Person
competes with Company or any of its affiliates, as described above.
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(b) Territory. "TERRITORY" means such areas where the Equity
Division actually engaged in the mortgage banking business during the term of
this Agreement and prior to termination of employment.
(c) Customers/Relationships. The Employee shall not directly or
indirectly through an Associated Person, do anything to interfere with any
relationship between the Company, or it's affiliates and any of their customers,
clients, lenders, or persons or concerns dealing with the Company or it's
affiliates during his employment and the Non-Competition Term; provided,
however, that if subsection 4(h) becomes operative, general competition by
Employee (or by an Associates Person) shall not be deemed interference for
purposes of this subsection 4(c).
(d) Employees. The Employee shall not directly or indirectly
through an Associated Person, without the prior consent of the Company and its
affiliates solicit, hire away or employ any person who is an employee of the
Company or the Company's affiliates during the Non-Competition Term if such
employee earns more than $50,000 per year ("SENIOR PERSONNEL").
(e) Reasonable and Necessary Restrictions. The Employee
acknowledges that the restrictions, prohibitions and other provisions of this
Section 4 are reasonable, fair and equitable in scope, term and duration, are
necessary to protect the legitimate business interests of the Company, and are a
material inducement to the Company to enter into the transactions herein
contemplated. The Employee covenants that he will not raise any defenses as to
the reasonableness of the Non- Competition Term or geographic scope of the
restrictions found in this Section 4.
(f) Enforceability. In the event that any restriction contained
in this Section 4 shall be held to be too broad to allow enforcement of such
restriction to its full extent, then such restriction shall be enforced to the
maximum extent permitted by law, and the Employee hereby consents and agrees
that such scope may be judicially modified accordingly in any proceeding brought
to enforce such restriction.
(g) Inadequacy of Remedy at Law. The Employee acknowledges and
agrees that the Company's remedy at law for any breach of his obligations under
this section may be inadequate, and agrees and consents that temporary and/or
permanent or injunctive relief may be sought against him from breaching this
Agreement and further agrees that any proceeding may be brought to enforce any
provision of this section without the requirement that the Company prove actual
damages as a result of the premature breach of this Agreement.
(h) Termination of Certain Non-Competition Restrictions. In the
event (i) the Employee quits as a result of a breach of this Agreement by the
Company, (ii) the Employee becomes disabled and subsequently is ready to return
to work and the Company does not hire him back on substantially similar terms
(iii) prior to the end of the initial term, or any renewal term, the Company and
the Employee (both acting reasonably) have not agreed upon a bonus arrangement
for the renewal period and the Company or the Employee gives a notice of
nonrenewal or (iv) the Employee is terminated without Cause during the initial
term or any renewal term, or (v) the Employee's
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employment is not continued by the Company without Cause at the expiration of
the initial term or any renewal term, then the Employee will be released from
the non-competition restrictions in subsection (a), but the obligations not to
interfere and not to hire Senior Personnel stated in subsections (c) and (d)
shall continue until the later of the expiration of the Non-Competition Term or
twelve months following such termination without Cause.
5. Proprietary Information. During the term of this Agreement, the
Employee shall only make disclosures of information that the Employee believes
in good faith to be in the best interests of the Company and its affiliates. At
all times thereafter, the Employee shall not, directly or indirectly, in any
fashion, form or manner, divulge, disclose, furnish, communicate or make
accessible to any person who is not authorized by the Company or its affiliates
to receive such information any client or prospect list, financial data, sales
data, advertising or marketing plans, technological information or any other
confidential information of the Company or its affiliates. All files, records,
documents, forms, plans, policy and procedures manuals, client or prospective
client lists, written memoranda and similar materials relating to the business
of the Company or its affiliates, whether prepared by the Employee or otherwise
coming into the Employee's possession or knowledge during the term of this
Agreement, shall remain the exclusive property of the Company.
Notwithstanding the foregoing, and in light of the Employee's
significant first hand knowledge of the mortgage banking business and his direct
and substantial participation in designing, developing, implementing and
monitoring certain information which otherwise might be deemed confidential or
proprietary information, it is agreed that for purposes of this Agreement, the
term "confidential information" as used in this Paragraph 5, shall not include
any oral or written information which (i) is in the public domain or becomes
generally available to the public other than as a result of a disclosure by the
Employee, (ii) is or becomes available to the Employee on a non-confidential
basis from a source other than the Employer, (iii) the Employee is required by
applicable law to disclose, (iv) the Employee had knowledge of before being
employed by the Employer, or (v) the Employee designed or developed while
employed by the Employer.
6. Termination.
(a) General. This Agreement is for employment at will and either party
may terminate the Employee's employment hereunder, with or without Cause, upon
thirty (30) days written notice.
(b) Termination in the Event of Death. This Agreement shall terminate
automatically upon the death of the Employee. In such event, the Company shall
pay to the Employee's legal representative only the salary and bonus due to the
Employee up to the date of termination (plus bonus that accrues with respect to
business in the pipeline as of such termination date that closes following such
termination date) as well as the benefits and reimbursed expenses due to the
Employee at the time of death.
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(c) Effect of Termination. In the event of the termination of Employee's
employment hereunder then:
(i) By Employee Without Good Reason, or by Employer With Cause. If the
termination is either (aa) by the Employee without a material breach by
Employer of the terms of this agreement, or (bb) by Employer with Cause,
then Employee will receive his Base Salary (plus bonus pipeline) through
the effective date of termination (the "ACCRUED SALARY") and the Bonus
earned until the termination date (plus bonus that accrues with respect to
business in the pipeline as of such termination date that closes following
such termination date).
(ii) By Employee With Good Reason or by Employer Without Cause. If the
termination is either (aa) by the Employee due to a material breach by
Employer of the terms of this agreement, or (bb) by the Employer without
Cause, then Employee will receive his Base Salary through the end of the
initial term (or the renewal term, as applicable) of this Agreement (the
"FULL CONTRACT SALARY") and the Bonus for the remaining initial term (or
the renewal term, as applicable) of this Agreement will continue to be paid
as though the Employee's employment had continued except that the Bonus
shall be calculated at one hundred and twenty percent (120%) of the Bonus
for the calendar year preceding the year of such termination of employment;
provided, however, that (a) there shall be no after tax profit ceiling
(i.e. no ceiling based upon the profits of the current or future periods)
in computing the Bonus to be payable under this subsection (ii), and (b) if
such termination occurs during the first year of employment, the Bonus
shall be predicated on the mortgage originations of Equity for the 1996
calendar year.
7. Successors and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Employee and his heirs and personal representatives
and the Company and its successors, assigns and legal representatives. This
Agreement is for the personal services of the Employee. The benefits and
obligations hereunder are personal to the Employee and are not assignable or
transferrable by the Employee. This Agreement shall not be assigned by the
Company to any entity or person without the prior written consent of the
Employee, provided that it may be assigned by the Company (with the Company
continuing to have primary liability hereunder) without the prior written
consent of the Employee to any entity or person which (a) acquires all or
substantially all of the assets of the Company by purchase, merger or
consolidation or (b) is formed as a wholly owned subsidiary by the Company to
conduct the business formerly conducted by the Company at a substantially
comparable level. In the event of any permitted assignment, any and all
reference to the Company in this Agreement shall be deemed to mean such
assignee.
8. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given (i) when delivered to such person by hand
delivery or recognized national overnight
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delivery service, or (ii) on the seventh day after being deposited in the United
States mail, certified mail, return receipt requested, postage prepaid, to the
person at the address first listed above or to such other person and/or address
as may be designated from time to time in writing.
9. Entire Agreement. This Agreement constitutes the entire understanding
between the Company and the Employee with respect to the subject matter hereof.
10. Modification and Waiver. No provision of this Agreement may be
amended, modified or waived unless such amendment, modification or waiver shall
be agreed to in writing and signed by the Employee and by a person duly
authorized by the Board of the Company. Any waiver by either party of any breach
of any of the terms of this Agreement shall not be considered a waiver of any
subsequent breach.
11. No Assignment of Compensation. No right to or interest in any
compensation or reimbursement payable hereunder shall be assignable or divisible
by the Employee; provided, however, that this provision shall not preclude the
Employee from designating one or more beneficiaries (otherwise to his estate) to
receive any amount that may be payable after his death and shall not preclude
his executor or administrator from assigning any right hereunder to the person
or persons entitled thereto.
12. No Attachments. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge or hypothecation, or
to execution, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.
13. Headings. The heading of Sections and Subsections hereof are
included solely for convenience of reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
14. Governing Law. This Agreement shall be construed in accordance with
and governed for all purposes by the substantive laws of the State of Florida.
15. Severability. In the event that any provision of this Agreement
shall be held invalid and unenforceable for any reason whatsoever, such
provision shall be deleted and the remainder of the Agreement shall not be
affected and shall be valid and enforceable to the fullest extent permitted by
law without the deleted provision or provisions.
16. Attorneys' Fees and Costs. In connection with any legal action to
enforce the terms of this Agreement, the prevailing party in such action shall
be entitled to receive from the other party all costs incurred in connection
therewith, including reasonable attorneys', legal assistant, investigator and
other paralegal and clerical fees and costs, including such costs and fees on
appeal, if any.
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17. Counterparts. This Agreement shall become effective only upon
execution hereof by the Company and Employee. It may be executed in several
counterparts, any one of which shall constitute the agreement between the
parties.
18. Termination of Prior Agreements. This Agreement shall supersede any
and all prior oral or written agreements existing between the Company, Equity
and the Employee with respect to employment or compensation and, as between
Company and Employee, specifically supersedes the Employment Agreement between
Equity Mortgage Co., Inc. and the Employee dated April 10, 1987 (collectively
all such prior agreements being the "Prior Agreements"). Accordingly, the
Employee hereby releases and discharges the Employer and it's affiliates from
any further obligation, liability or responsibility under any such Prior
Agreements, and the Company, for and on behalf of itself and on behalf of its
affiliates, hereby releases and discharges the Employee from any further
obligation, liability or responsibility under any such Prior Agreements.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed all as of the day and year first above written.
IMC MORTGAGE COMPANY, a Florida
corporation
By:
-------------------------------------
Its
-----------------------------
("Company")
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
("Employee")
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EXHIBIT A
Benefits for Senior Executives
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