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Exhibit
10.2
EXECUTIVE EMPLOYMENT
AGREEMENT
This Executive Employment
Agreement (“Agreement”) is made effective as of
January 1, 2007 (“Effective Date”), by and between
Arash Khazei (“Executive”) and United PanAm Financial
Corp and its subsidiary United Auto Credit Corporation, both of
which may be referred to interchangeably hereinafter as
“Company”.
The parties agree as
follows:
1. Employment . The
Company hereby employs Executive, and Executive hereby accepts such
employment, upon the terms and conditions set forth
herein.
2. Duties .
2.1 Position .
Executive is employed on a full-time basis as Chief Financial
Officer and Executive Vice President of the Company, shall report
directly to President and CEO,”), and as CFO also has a
direct reporting relationship to the Audit Committee of the Board,
and shall have the duties and responsibilities commensurate with
such position as shall be reasonably and in good faith determined
from time to time by the Board of Directors (the
“Board).
2.2 Obligations .
Executive shall: (i) abide by all federal, state and local
laws, regulations and ordinances and as applicable, all policies
and charter documents of the Company and its affiliates, and
(ii) except for vacation and illness periods, devote
substantially all of his business time, energy, skill and efforts
to the performance of his duties hereunder in a manner that will
faithfully and diligently further the business interests of the
Company.
3. Term . The term of
this Agreement shall commence on the Effective Date and shall
continue until December 31, 2009, unless earlier terminated as
herein provided (the “Initial Term”). As used herein,
“Term” shall include the Initial Term and any Extended
Term, but the Term of this Agreement shall end upon any termination
of Executive’s employment with the Company as herein
provided.
4. Compensation
.
4.1 Base Salary . As
compensation for Executive’s performance of Executive’s
duties and subject to Executive’s continued employment
pursuant to this Agreement up to and through such times, the
Company shall pay or cause to be paid to Executive the annual base
salary set forth in Exhibit A hereto during the Term of Employment
(“Base Salary”), payable in accordance with the normal
payroll practices of the Company or the paying entity, less all
legally required or authorized payroll deductions and tax
withholdings. During the Term of Employment, the Base Salary amount
set forth in Exhibit A may be increased from time to time at the
sole and absolute discretion of the Board.
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4.2 Bonuses
.
(a) Target Bonus .
Executive shall be eligible to receive an annual bonus payment
based on the payout formula and Target Bonus amount set forth in
Exhibit A. Such bonus payment shall be paid no later than the sixty
(60) day anniversary of the last day of the applicable
performance period, less all legally required or authorized payroll
deductions and tax withholdings. Each performance period during the
Term of this Agreement shall begin on the first day of the
Company’s fiscal year and end on the last day. Executive must
maintain continuous employment throughout the relevant performance
period to be eligible for a bonus payment under this
Section 4.2(a).
4.3 Equity
Compensation . Executive shall be eligible to receive grants of
stock options and/or restricted stock awards (“Equity
Compensation Awards”) pursuant to the Company’s
[Amended and Restated 1997 Employee Stock Incentive Plan] (the
“Plan”) as set forth in Exhibit B. Stock option awards
shall be made with an exercise price equal to the fair market value
of the underlying Shares on the date of grant. .
5. Health and Welfare
Benefits . Executive shall be eligible for all health and
welfare benefits generally available to full-time employees of the
Company of similar rank and status, subject to the terms and
conditions of the Company’s policies and benefit plan
documents.
6. Vacation .
Executive shall be entitled to earn vacation at the rate of four
(4) weeks per year.
7. Business and Personal
Expenses . Executive shall be reimbursed for all reasonable,
out-of-pocket business expenses incurred in the performance of
Executive’s duties on behalf of the Company, provided that
Executive furnish to the Company adequate records and other
documentation as may be required for the substantiation of such
expenditures as a business expense of the Company.
8. Automobile
Allowance . Executive shall receive an automobile allowance of
two-hundred dollars ($200) per month.
9. Termination of
Employment. Subject to the terms and conditions of this
Section 9, either the Company or Executive may terminate
Executive’s employment at any time, with or without Cause (as
defined in Section 9.7), during the Term of Employment. Any
termination of Executive’s employment during the Term of
Employment shall be communicated by written notice of termination
from the terminating party to the other party (“Notice of
Termination”). The Notice of Termination shall indicate the
specific provision(s) of this Agreement relied upon in effecting
the termination, if any. Termination shall be effective on the date
designated by the terminating party in the Notice of Termination.
In the event Executive’s employment is terminated by either
party, for any reason, during the Term of Employment, the Company
shall pay the prorated Base Salary earned as of the date of
Executive’s termination of employment and the accrued but
unused vacation as of the date of Executive’s termination of
employment to Executive upon Executive’s termination of
employment. Except as otherwise provided in this Section 9,
the Company shall have no further obligation to make or provide to
Executive, and Executive shall have no further right to receive or
obtain from the Company, any payments or benefits in respect of the
termination of Executive’s employment with the Company during
the Term of Employment.
9.1 Severance Upon
Involuntary Termination without Cause and Termination by Executive
with Good Reason . In the event that the Company causes to
occur an involuntary termination without Cause (as defined in
Section 9.7(a)) or in the event that Executive resigns from
employment with the Company for Good Reason (as defined in
Section 9.7(c)) during the Term of
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Employment, Executive shall be entitled
to a “Severance Payment” as set forth in Exhibit C;
provided , however, that Executive executes a Separation
Agreement that includes a general release in favor of the Company,
any successor company, and all subsidiary and related entities, and
their officers, directors, shareholders, employees and agents to
the fullest extent permitted by law, drafted by and in a form
reasonably satisfactory to the Company, and does not revoke the
general release within any legally required revocation period, if
applicable. All legally required and authorized deductions and tax
withholdings shall be made from the Severance Payment, including
for wage garnishments, if applicable, to the extent required or
permitted by law. Effective immediately upon termination of
employment, Executive shall no longer be eligible to contribute to
or to be an active participant in any retirement or benefit plan
covering employees of the Company. All other Company obligations to
Executive shall be automatically terminated and completely
extinguished.
9.2 Effect of
Disability. In the event Executive’s employment is
terminated on account of Disability (as defined in
Section 9.7), Executive shall be entitled to payment of the
difference between (a) any monthly disability payments
provided through insurance plans offered by the Company, if any,
provided Executive has enrolled in such plans, has paid the costs
thereof and is otherwise eligible, and (b) the monthly Base
Salary effective immediately prior to the date of termination, for
a period of six (6) months following the date of termination,
plus a prorated Target Bonus for such year through the date of
termination, calculated on the basis of 100% achievement of target.
Both (a) and (b) in the preceding sentence shall be paid
in equal monthly installments during the six month period following
the date of termination. All legally required and authorized
deductions and tax withholdings shall be made from the payments
described in the previous sentence, including for wage
garnishments, if applicable, to the extent required or permitted by
law.
9.3 Effect of Death.
In the event Executive’s employment is terminated by reason
of death, this Agreement shall terminate without further
obligations of Employer to Executive (or your heirs or legal
representatives) under this Agreement, other than for payment of:
(i) any unpaid base salary (as set forth in Section 4.1
hereof) through the date of termination; (ii) the amount of
any Target Bonus prorated through the date of termination,
calculated on the basis of 100% achievement of target;
(iii) all compensation previously deferred by you;
(iv) any accrued vacation and/or sick leave pay; and
(v) any amounts due pursuant to the terms of any applicable
welfare benefit plan. All of the foregoing amounts (other than any
prorated bonus compensation) shall be paid to Executive’s
estate or beneficiary, as applicable, in a lump sum cash payment
within thirty (30) days after the date of termination or
earlier as required by applicable law.
9.4 Employment
Reference. In the event Executive’s employment is
terminated without Cause, or Executive resigns for Good Reason,
Executive and the Company will negotiate in good faith to reach an
agreement on a statement reflecting a benign reason for termination
or resignation. This statement will include, at minimum, positions
held, date of hire, employment period and confirmation of salary
history (if requested by Executive).
9.5 Ineligibility For
Severance. Executive shall not be entitled to any Severance
Package under this Agreement, if at any time during the Term of
Employment, either (a) Executive voluntarily resigns or
otherwise terminates employment with the Company other than for
Good Reason, or (b) the Company involuntarily terminates
Executive’s employment with Cause. Effective immediately upon
termination of employment, Executive shall no longer be eligible to
contribute to or to be an active participant in any retirement or
benefit plan covering employees of the Company. All other Company
obligations to Executive shall be automatically terminated and
completely extinguished.
9.6 Taxes and
Withholdings. The Company may withhold from any amounts payable
under this Agreement, including any benefits or Severance Payment,
such federal, state or local taxes as may be required to be
withheld pursuant to applicable law or regulations, which amounts
shall be deemed to have been paid to Executive.
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9.7 Definitions
.
(a) “Cause” shall
mean the occurrence during the Term of Employment of any of the
following: (i) indictment for, formal admission to (including
a plea of guilty or nolo contendere to), or conviction of a
felony, (ii) a crime of moral turpitude, dishonesty, breach of
trust or unethical business conduct, or any crime involving the
Company, (iii) willful or knowing unauthorized dissemination
by Executive of Proprietary Company Information; (iv) failure
by Executive to perform Executive’s duties which are
reasonably and in good faith requested in writing by the Board;
(v) failure of Executive to perform any lawful directive of
the Board communicated to Executive in the form of a written
request from the Board, and (vi) Executive’s breach of
the Company’s Code of Conduct which would normally result in
termination of any Company employee.
(b) “Disability”
shall mean, to the extent consistent with applicable federal and
state law (including, without limitation Section 409A),
Executive’s inability by reason of physical or mental illness
to fulfill his obligations hereunder for ninety
(90) consecutive days or for a total of one hundred and twenty
(120) days in any twelve (12) month period which, in the
reasonable opinion of an independent physician selected by the
Company or its insurers and reasonably acceptable to Executive or
Executive’s legal representative, renders Executive unable to
perform the essential functions of his job, even after reasonable
accommodations are made by the Company. The Company is not,
however, required to make unreasonable accommodations for Executive
or accommodations that would create an undue hardship on the
Company.
(c) “Good Reason”
shall mean the occurrence during the Term of Employment of any of
the following: (i) a material breach of this Agreement by the
Company which is not cured by the Company within thirty
(30) days following the Company’s receipt of written
notice by Executive to the Company describing such alleged breach;
(ii) the Executive’s Base Salary is reduced by the
Company or the Target Bonus formula is changed to the detriment of
the Executive; (iii) a reduction in Executive’s title, a
material reduction in Executive’s duties and/or
responsibilities, or the assignment to Executive of any duties
materially inconsistent with Executive’s position; or
(iv) relocation of the Executive’s place of work to a
location greater than 35 miles away from the current
location.
9.8 Nonduplication of
Benefits . Notwithstanding any provision in this Agreement or
in any other Company benefit plan or compensatory arrangement to
the contrary, but at all times subject to Section 9.5,
(a) any payments due under either Section 9.2 or
Section 9.3 shall be made not more than once, if at all,
(b) payments may be due under either Section 9.2 or
Section 9.3, but under no circumstances shall payments be made
under both Section 9.2 and Section 9.3, (c) no
payments made under this Agreement shall be considered compensation
for purposes of any benefit plan or compensatory arrangement of the
Company, and (d) Executive shall not be entitled to severance
benefits from the Company other than as contemplated under this
Agreement, unless such other severance benefits offset and reduce
the benefits due under this Agreement on a dollar-for-dollar basis,
but not below zero.
10. No Competition and No
Conflict of Interest . Executive must not engage in any work,
paid or unpaid, that could create a conflict of interest with the
interests of the Company during the Term of this Agreement, and for
a period of 12 months after Executive’s employment with the
Company. Such work shall include, but is not limited to, directly
or indirectly competing with the Company Business in any way, or
acting as an officer, director, employee, consultant, stockholder,
volunteer, lender, or agent of any business enterprise of the same
nature as, or which is in direct
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competition with, the Company Business
or any business in which the Company becomes engaged during the
Term of Employment For purposes of this Agr
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