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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of July 2, 1998, by and between CITYSCAPE CORP.,
having an office address at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(hereinafter referred to as the "Company") and ▇▇▇▇▇ ▇▇▇▇▇, residing at ▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as the
"Employee").
WITNESSETH:
WHEREAS, the Company desires to hire and retain the Employee as an
employee to perform certain services for the Company.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration the receipt of which is
hereby acknowledged, the Company and the Employee hereby agree as follows:
1. EMPLOYMENT OF EXECUTIVE.
(a) The Company hereby employs the Employee in the capacity
and for the position of President and Chief Operating Officer. Employee hereby
accepts such employment with the Company upon the terms and conditions
hereinafter set forth.
(b) The duties of the Employee shall include responsibility
for management, operation and strategic planning of the Company. These duties
and services shall at all times be subject to the direction, approval and
control of the Company and shall include such other duties as may be assigned by
the Board of Directors of the Company (the "Board") commensurate with the
responsibilities normally associated with Employee's position.
2. SERVICES TO BE RENDERED.
The Employee will devote Employee's full time and efforts to
the business and affairs of the Company and shall not during the term of this
Agreement be engaged in any other businesses; provided that the Employee may
engage in passive investments in businesses in which the Employee does not
participate. The Employee will always use Employee's best efforts to promote the
interests of the Company.
3. TERM.
The term of this Agreement (the "Term") shall commence on May
31, 1998, and shall continue until December 31, 1999, unless (i) extended by the
mutual agreement of the Company and the Employee or (ii) terminated as
hereinafter provided.
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4. COMPENSATION: BASE SALARY, BONUSES AND STOCK OPTIONS.
(a) Base Salary.
The Employee shall receive a base salary at a rate of
$300,000 per annum, payable monthly or more frequently in accordance with the
Company's practice as applied to other senior officers.
(b) Bonuses.
(i) As consideration for continued service with the
Company during the remainder of calendar year 1998, the Employee shall be
entitled to receive a Stay Bonus in the total amount of $250,000. Of that sum,
$120,367 shall be received by the Employee in the form of a signing bonus,
payable within forty-eight hours of the date that the Employee executes this
Agreement. So long as the Employee remains actively employed (but not if the
Employee fails to remain employed because of, inter alia, the Company's failure
to continue its operations) through the end of the month to which the payment
relates, the remainder of the Stay Bonus shall be paid in seven installments of
$18,519 with each payment made on the fifth day following the end of the month
to which it relates.
(ii) As additional compensation for services
rendered, the Employee shall be eligible to receive a Bonus for 1998 of up to
$450,000. The Employee's entitlement to $200,000 of this amount shall be
determined by the Board in its discretion. The Employee's entitlement to the
remaining $250,000 of this amount shall be based on the following factors as
evaluated by the Board and compared with goals to be established by the Company
within two months of the execution of this Agreement and disclosed to the
Employee in writing:
- 25% shall be based upon the attainment of sales
objectives;
- 25% shall be based upon the attainment of
operations/risk objectives;
- 25% shall be based upon the attainment of capital
market objectives; and
- 25% shall be based upon other factors, to be defined.
Any bonus for periods following 1998 shall be the subject of separate
discussions.
(c) Stock Options.
Stock options may be awarded to the Employee, subject
to the discretion of, and on terms and conditions determined by, the Board.
5. BENEFITS.
The Company shall continue to provide the Employee with the
fringe benefits which Employee was receiving pursuant to the Employment
Agreement immediately prior to the date
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hereof, including, without limitation, benefits with respect to a car, health
club membership, moving and relocation expenses, and long-term disability
insurance. The Company shall continue to pay Employee's housing expenses until
the resolution of his status with the Company. To the extent not inconsistent
with the foregoing, the Employee shall be entitled to participate in the regular
pension, profit sharing, health, disability, and other benefit programs of the
Company in effect from time to time on the same basis that other senior officers
of the Company participate therein. The Employee shall be entitled, for the term
hereof, to annual vacations to be taken in accordance with the policies of the
Company in effect from time to time for senior officers. The Employee shall be
entitled to all vacation which has accrued but remained unused pursuant to this
Agreement or any previous Employment Agreement between the Employee and the
Company. In lieu of taking his vacation, the Employee may elect to receive a
cash payment for any vacation which remains unused upon the termination of this
Agreement.
6. EXPENSES.
The Company shall reimburse the Employee against appropriate
vouchers or other receipts for business expenses reasonably incurred by Employee
in the performance of Employee's duties pursuant to the terms hereof. In
addition, upon the submission of appropriate vouchers or other receipts, the
Company shall reimburse Employee for gas, tolls, and car phone charges. Employee
shall submit vouchers or other receipts once per calendar month and shall be
reimbursed by the Company within thirty days of submission. Expenses shall
further include reimbursement for monthly car payments of up to $650.
7. DEATH AND DISABILITY.
The Employee's employment hereunder shall terminate upon his
death. In the event of the total disability of the Employee, the Employee's
employment hereunder may terminate at the option of the Board. For purposes of
this Agreement, "total disability" shall mean the Employee's inability to
perform Employee's regular and customary duties on behalf of the Company for a
period of no less than 120 consecutive days, or any 180 days during any twelve
month period, with such total disability being established by a written
certification submitted by a medical doctor agreed to by the Employee and the
Company. In the absence of agreement, the Company and the Employee shall each
nominate a qualified medical doctor and these two doctors shall select a third
qualified medical doctor, which third doctor shall make the determination as to
total disability. During the aforementioned 120 and 180 day periods, Employee
shall receive his regular salary less any Company provided disability insurance
proceeds Employee may receive. After the termination of these time periods, no
salary will be payable.
8. CAUSE AND GOOD REASON.
By notice to the Employee, the President of the Company or the
Board may terminate this Agreement for Cause. As used herein, "Cause" shall be
defined as: (a) the refusal or failure by the Employee to carry out specific
directions of the Board of Directors which are of a material nature and
consistent with Employee's position described in Section 1(b), or the refusal or
failure by the Employee to perform a material part of the Employee's duties
hereunder; (b) the commission by the Employee of a breach of any of the
provisions of this Agreement; (c) the commission by the
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Employee of a fraudulent or dishonest act in Employee's relations with the
Company or any of its affiliates, or with any customer or business contact of
the Company or any of its affiliates ("dishonest" for these purposes shall mean
that Employee knowingly or recklessly made a material misstatement or omission
or took a material action for Employee's personal benefit); (d) the conviction
of the Employee for a felony or any crime involving an act of moral turpitude;
(e) any act of insubordination or the willful failure to carry out a written
directive of the Board of Directors which does not violate the terms of this
Agreement; (f) any breach under Sections 9 and 11 of this Agreement; or (g) the
Employee's gross incompetence. Notwithstanding the foregoing, no "Cause" for
termination shall be deemed to exist with respect to the Employee's acts
described in clauses (a) or (b) above, unless the Company shall have given
written notice to the Employee specifying the "Cause" with reasonable
particularity and, within ten business days after such notice, Employee shall
not have cured or eliminated the problem or thing giving rise to such "Cause";
provided, however, that (i) any periodic breach or continual breaching after
notice and cure of any provision of clauses (a) or (b) above, or (ii) a repeated
breach after notice and cure, of any provision of clauses (a) or (b) above,
involving the same or substantially similar actions or conduct, shall be grounds
for termination for cause without any additional notice from the Company. The
parties hereto agree that three separate instances of a breach by the Employee
of the provisions of this Agreement during the Term shall be considered
periodic, continual or repeated and shall constitute "Cause" within the meaning
of this Section 8.
The Employee may terminate his employment hereunder for Good
Reason. For purposes of this Agreement, Good Reason is defined as any adverse
change in the Employee's job responsibilities, duties, functions, reporting
relationships, status, offices, title, perquisites, or support staff; provided,
however, that the Employee shall give the Company written notice of any actions
alleged to constitute Good Reason, and the Company shall have ten days to cure
any such alleged Good Reason.
9. NON-COMPETITION.
(a) During the Term except if the Employee terminates
Employee's employment hereunder as a result of a Continued Company Breach (as
such term is defined in ((c)) below) the Employee agrees that Employee will not,
directly or indirectly, enter into or participate (whether as owner, partner,
shareholder, officer, director, salesman, consultant, employee, principal, or in
any other relationship or capacity) in any business operating or providing
services in any State in which the Company or its affiliates are operating or
providing services as of the date of termination which directly or indirectly,
through subsidiaries or otherwise, manages or performs the following business
activities and services: residential and commercial and real estate lending;
servicing loan portfolios and/or mortgage or real estate brokerage services (a
"Competing Entity"); provided that the Employee may own up to one percent of the
outstanding equity securities of any Competing Entity that is subject to the
public reporting requirements of the Securities Exchange Act of 1934.
(b) During the Term and for one year after the termination of
the Employee's employment hereunder for any reason, and unless the Company
terminates the Employee's employment without Cause or the Employee terminates
his employment for Good Reason or due to a Continued Company Breach, and except
for a "Permitted Contact" as defined below, the Employee
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shall not, without the prior written consent of the Company, directly or
indirectly, (i) solicit, request, cause or induce any person who is at the time,
or twelve months prior thereto had been, an employee of or a consultant to the
Company to leave the employ of or terminate Employee's relationship with the
Company or (ii) employ, hire, engage or be associated with, or endeavor to
entice away from the Company any such person, or any customer of the Company or
its affiliates or (iii) attempt to limit or interfere with any business
agreement or relationship existing between the Company and/or its affiliates
with a third party.
(c) As used herein, (i) "Continued Company Breach" shall mean
three separate instances of a material breach during the Term by the Company of
the obligations it owes the Employee pursuant to Section 1, Section 4(a) and
Section 5 hereof after the Company has received written notice from the Employee
regarding each such breach and the Company fails to cure each such breach within
ten days of the receipt of such notice; and (ii) "Permitted Contact" shall mean
an unpersonalized mass mailing to at least 1000 persons or an advertisement in a
periodical of general circulation.
10. SEVERANCE.
If the Company terminates the Employee's employment without
Cause or Employee terminates his employment due to a Continued Company Breach or
for Good Reason, and Employee executes a general release in the Company's
customary form, the Company shall pay to the Employee for the duration of the
Term hereof (1) all remaining salary, as described in Section 4(a), (2) all
remaining payments of the Stay Bonus as described in Section 4(b)(i), and (3)
Employee's Bonus, to the extent earned, as described in Section 4(b)(ii). In
addition, if the conditions described in this Section are satisfied, the Company
shall make payments to cause Employee's health insurance to remain in effect for
the duration of the Term of this Agreement. Upon making such payments and any
other accrued salary or expenses, Company shall have no further obligation to
Employee hereunder. In the event of a termination under this Agreement by the
Company for Cause as defined in Section 8 or by Employee for any reason except
Continued Company Breach as defined in Section 9(c), all salary and benefits
shall cease as of the date of termination, provided that all accrued salary,
bonus and expenses shall be paid to Employee or Employee's estate or legal
representative as the case may be.
11. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) The Employee acknowledges that as a result of Employee's
employment by the Company, the Employee, both during and after the Term, will
obtain secret and confidential information concerning the business of the
Company and its affiliates, including, without limitation, financial
information, trade secrets, information concerning the operations, sales,
personnel, suppliers, customers, costs, profits and pricing policies, "know how"
and certain business methodologies (the "Confidential Information").
(b) During the Term and thereafter, the Employee shall
exercise all due and diligent precautions to protect the integrity of the
customer lists, mailing lists and sources thereof, statistical data and
compilations, agreements, contracts, manuals, memoranda, notes, records, reports
or other documents and any and all other materials embodying any Confidential
Information (the
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"Confidential Materials") and, upon the Company's request in writing, Employee
shall immediately return to the Company all such Confidential Materials (and
copies thereof) then in Employee's possession or control.
(c) The Employee agrees that Employee will not at any time,
either during the Term of this Agreement or thereafter, divulge to any person or
entity any Confidential Information or deliver or permit any person or entity to
obtain any Confidential Materials except (i) when required in the course of
performing Employee's duties hereunder, (ii) with the Company's express written
consent; (iii) where required to be disclosed by court order, subpoena or other
government process, or (iv) any information which is in the public domain. If
the Employee shall be required to make disclosure pursuant to the provisions of
clause (iii) of the preceding sentence, the Employee promptly, but in no event
more than forty-eight hours after learning of such subpoena, court order, or
other governmental process, shall notify, by personal delivery or by electronic
means, confirmed by mail, the Company and, at the Company's expense, Employee
shall: (x) take all reasonably necessary steps required by the Company to defend
against the enforcement of such subpoena, court order or other government
process, and (y) permit the Company to intervene and participate with counsel of
its choice in any proceeding relating to the enforcement thereof.
(d) Upon termination of Employee's employment with the
Company, the Employee will promptly deliver to the Company all Confidential
Materials relating to the Company and its affiliates, which Employee may then
possess or have under Employee's control; provided, however, that Employee shall
be entitled to retain copies of such documents reasonably necessary to document
Employee's financial relationship (both past and future) with the Company.
(e) The Employee acknowledges that (i) any breach of the
provisions of these Sections 9 and 11 may cause substantial and irreparable harm
to the Company for which the Company would have no adequate remedy at law, and
(ii) the provisions of this Agreement are reasonable and necessary for the
protection of the business of the Company and its affiliates.
12. REMEDIES
(a) If Employee commits a material breach, or threatens to
commit a material breach, of any of the provisions of Sections 9 and 11, the
Company shall have the right and remedy:
(i) to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction; and
(ii) to require Employee to account for and to pay
over to the Company all damages suffered by the Company (including consequential
and incidental damages) as the result of any transactions constituting a breach
of any of the provisions of Sections 9 and 11, and Employee hereby agrees to
account for and pay over such damages to the Company;
(b) The Employee acknowledges and agrees that the services
being rendered hereunder to the Company are of a special, unique and
extraordinary character and that any such breach or threatened breach may cause
substantial and irreparable injury to the Company and that money damages will
not provide an adequate remedy to the Company. Employee further agrees that
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the Company in any such equitable proceeding shall not have to prove irreparable
harm. (However, in a suit for damages, Company shall be required to prove the
amount of damages actually sustained.)
(c) Each of the rights and remedies enumerated in Section
12(a) shall be independent of the other, and shall be severally enforceable, and
such rights and remedies shall be in addition to, and not in lieu of any other
rights and remedies available to the Company under law or equity.
(d) If any provision of Section 9 or 11 is held to be
unenforceable because of the scope, duration or area of its applicability, the
court making such determination shall have the power to modify such scope,
duration, or area, or all of them, and such provision or provisions shall then
be applicable in such modified form.
13. INDEMNIFICATION.
(a) The Company hereby agrees to indemnify and hold harmless
the Employee, both during and after the expiration of the Term, from and against
any and all loss or liability including reasonable legal fees and legal
disbursements which the Employee may have to third parties as a result of the
proper performance of Employee's duties hereunder during the Term or pursuant to
any previous Employment Agreement between the Company and Employee, to the
extent permitted by the laws of the State of New York. The Employee hereby
agrees to indemnify and hold harmless the Company from any and all loss or
liability which the Company suffers as a result of Employee's material breach of
Employee's obligations hereunder to the extent permitted by the laws of the
State of New York. When the Company assumes its obligation to indemnify and hold
harmless the Employee in connection with a claim or litigation, its obligation
with respect to such claim or litigation shall be limited to holding the
Employee harmless from and against any judgment or settlement approved by the
Company in connection with the claim or litigation. The Company reserves the
right to select counsel of its choosing to defend the Employee.
(b) Whenever a claim shall arise for which any party may be or
become entitled to indemnification hereunder, the indemnified party shall notify
the indemnifying party promptly, and in the case of a third party claim, in
writing within ten days of the indemnified party's first receipt of written
notice of such third party claim, and in any event within such shorter period as
may be legally required for the indemnifying party or parties to take
appropriate action to resist such claim. The failure to give a timely notice, as
provided in the preceding sentence, shall not operate as a waiver of an
indemnified party's right to indemnification, provided that the failure to give
such notice did not materially prejudice the legal rights of the indemnifying
party. Such notice shall specify all facts known to the indemnified party giving
rise to such indemnity rights and shall estimate (to the extent determinable)
the amount of the liability arising therefrom.
14. NOTICE.
Any notice required hereunder shall be delivered by hand, or
sent by registered or certified mail, addressed to the other party hereto at its
address set forth above or at such other address as notice thereof shall have
been given in accordance with the provisions of this Section 14. Any such notice
shall become effective (a) if mailed, on the date indicated on the receipt or if
not
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accepted, the date indicated that delivery was attempted, and (b) in the case of
delivery by hand, upon delivery or attempted delivery as shown on the records of
the deliveries.
15. AGREEMENT; AMENDMENT.
This Agreement supersedes any prior agreements or
understandings, oral or written, between the parties hereto and represents their
entire understanding and agreement with respect to the subject matter hereof.
This Agreement can be amended, supplemented or changed, and any provision hereof
can be waived, only by written instrument making specific reference to this
Agreement which instrument is signed by the party against whom enforcement of
any such amendment, supplement, modification or waiver is sought. Any waiver of
any breach of this Agreement shall not be construed to be a continuing waiver or
consent to any subsequent breach by any party hereto.
16. SEVERABILITY.
In the event of the invalidity or unenforceability of any one
or more provisions of this Agreement, such illegality or unenforceability shall
not affect the validity or enforceability of the other provisions hereof and
such other provisions shall be deemed to remain in full force and effect.
17. ASSIGNMENT; BINDING EFFECT.
This Agreement is not assignable by Employee without the prior
written consent of the Company. This Agreement shall be binding upon and shall
inure to the benefit of the Company and its successors and assigns.
18. SECTION HEADINGS.
The Section Headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
19. GOVERNING LAW; VENUE.
THIS AGREEMENT SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO AGREE THAT ANY
ACTIONS OR PROCEEDINGS INSTITUTED TO ENFORCE RIGHTS HEREUNDER SHALL BE INITIATED
IN THE FEDERAL OR STATE COURTS LOCATED IN WESTCHESTER COUNTY, NEW YORK.
20. EXECUTION IN COUNTERPARTS.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed
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on the day and year first above written.
CITYSCAPE CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title Sr VP
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇
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