EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made this 31st day of January, 1997, by and between
Salt Lake Mortgage Corp., a Utah Corporation ("SLM"), Celtic Investment, Inc., a
Delaware Corporation ("Parent") and Reese Howell, Jr. ("Employee").
RECITALS
WHEREAS, SLM and Parent (hereafter jointly referred to as "Employer") and
Employee desire and agree to enter into an employment relationship by means of
this agreement ("Employment Agreement"); and
WHEREAS, SLM desires to employ Employee as its President and Employee is
willing to accept such employment by SLM on the terms and subject to the
conditions set forth in this Employment Agreement; and
WHEREAS, the Parent desires to employ Employee as its Senior Vice
President and Employee is willing to accept such employment by the Parent on the
terms and subject to the conditions set forth in this Employment Agreement.
NOW THEREFORE, in consideration of the promises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
AGREEMENT
1. Employment and Duties. Upon the effective date of the employment
defined herein ("Effective Date"), Employer shall, and hereby does, employ the
Employee and Employee shall, and hereby does, accept employment as President and
Chief Executive Officer of SLM and as Senior Vice President of the Parent.
Employee agrees to devote in good faith his full time and best effort to the
services that he is required to render to Employer hereunder. Employee shall
report to SLM's Board of Directors and to the Parent's President and at all
times during the term of this Agreement shall have powers and duties at least
commensurate with his position in SLM and Parent. Employee's duties with SLM
shall be consistent with those historically held by Employee as President of
SLM.
1.1. Disclosure and Acceptance of Other Activities. Employer
acknowledges that Employee is currently involved, for his own account, in land
development, real estate acquisitions and the ownership, purchase and sale of
real estate contracts, mortgage notes and trust deed notes. Employer also
acknowledges that Employee is also engaged in the purchase of passive
investments in various businesses. Employer also acknowledges that Employee is
an owner of Pratt & Howell Enterprises, a privately-held company engaged in a
land development project in Tooele County, Utah. Employee acknowledges that he
will not enter into any future investments in any SLM related business sectors
without first obtaining an approval from the Board of Directors of SLM.
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1.2. American Funds & Trust. The parties acknowledge that Employee
intends to attempt to acquire, either individually, or through an affiliated
company, American Funds &Trust or the right to purchase American Funds & Trust.
In the event such acquisition is effected, Employee, or such affiliate, shall
give Employer the right to purchase American Funds & Trust (or Employee's or
such affiliates right to purchase American Funds & Trust) on such terms and
conditions as the Employer and the Employee may agree to. In the event Employer
does not purchase American Funds & Trust, then Employee (and any affiliate of
Employee) shall sell all of his or its interest in American Funds & Trust as
soon as possible. In such a sale event transaction wherein employee receives
compensation, employee agrees to reimburse SLM for the actual time spent in
relation to the project. The amount of reimbursement will be based on employee's
hourly annual salary rate, not to exceed 250 hours. If Employer elects not to
purchase American Funds & Trust, and if thereafter Employee is, in the opinion
of Employer, devoting excessive time to American Funds & Trust, Employer may
require Employee to discontinue such excessive time involvement with American
Funds & Trust. Any demand by Employer to Employee that Employee discontinue such
excessive time involvement with American Funds & Trust shall be made in writing
to Employee and shall be hand delivered directly to Employee. In the event
Employee does not discontinue such excessive time involvement with American
Funds & Trust within twenty (20) days after receipt of such notice, Employer may
terminate this Employment Agreement immediately thereafter. Such termination
shall be deemed to be Termination for Cause as defined in paragraph 2.1.4 below.
Any determination by Employer that Employee is devoting excessive time to
American Funds & Trust shall be reasonable and made in good faith.
1.3. Consent by Employer. Employer consents to the continued
participation by Employee in the activities described in paragraphs 1.1 and 1.2
subject to his fulfillment of any and all fiduciary duties he will have as an
officer and director of SLM and an officer and director of Parent including
those fiduciary duties relating to corporate opportunities.
2. Term of Employment.
2.1 Definitions. For the purposes of this Employment Agreement, the
following terms shall have the following meanings:
2.1.1.Adjusted Pretax Profits. For purposes of this Agreement, the
term "Adjusted Pretax Profits" shall have the same meaning as "API" has in
the Escrow Agreement (hereafter defined) and shall be calculated in the
same manner it is calculated in the Escrow Agreement.
2.1.2. Agreement and Plan of Merger. "Agreement and Plan of Merger" shall
mean the Agreement and Plan of Merger dated the date hereof, entered into by
Parent, Celtic Investment Merger Sub, Inc., SLM, Reese Howell, Jr. and Roger
Davis, which provides for the acquisition SLM by Parent by way of reverse
triangular merger of Celtic Merger Sub, Inc. into SLM.
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2.1.3.Bonus Period. "Bonus Period" shall mean (i) the six separate
periods which are provided for in Section 4.1.2 of this Employment
Agreement for the purpose of calculating the amount of cash bonuses due
hereunder to Employee; and (ii) the four separate periods which are
provided for in the Stock Option Agreement (as hereafter defined) for the
purpose of calculating the number of Performance Based Option Shares (as
hereafter defined) Employee shall be entitled to purchase under the Stock
Option Agreement.
2.1.4 Escrow Agreement. "Escrow Agreement" shall mean the Escrow
Agreement dated the date hereof , entered into by Celtic Investment, Inc.,
Reese Howell, Jr., Roger Davis and Security Title Insurance Agency of
Utah, Inc. as Escrow Agent, which provides for the deposit into escrow of
500,000 shares of Celtic $.001 par value common stock ("Celtic Common
Stock") owned by Reese Howell, Jr. and Roger Davis and for the release of
such shares based upon the terms and conditions of such Escrow Agreement.
2.1.5.Stock Option Agreement. "Stock Option Agreement" shall mean
the Stock Option Agreement dated the date hereof, entered into by Celtic
Investment, Inc. and Employee whereby Employee is granted (i) options to
purchase 150,000 shares of Celtic Common Stock, which options vest over a
period of time as provided for in the Stock Option Agreement and (ii)
options to purchase 350,000 shares of Celtic Common Stock, which options
vest on the basis of the achievement of certain operating results as
agreed to in the Stock Option Agreement.
2.1.6. Termination for Cause. "Termination For Cause" shall mean
termination by Employer of Employee's employment by the Employer by reason
of Employee's willful dishonesty towards, fraud upon, or deliberate injury
or attempted injury to Employer, or by reason of Employee's willful
material breach of this Employment Agreement which has resulted in
material injury to the Employer and any termination of employment by
Employer pursuant to notice under paragraph 1.2 above.
2.1.7 Termination Without Cause. "Termination Without Cause" shall mean any
termination of employee's employment by Employer other than for cause by Reason
of Disability or by Reason of Death.
2.1.8.Voluntary Termination. "Voluntary Termination" shall mean termination
by Employee of Employee's employment by Employer other than (i) as described in
paragraph 2.1.8 or (ii) termination by reason of Employee's death or disability
as described in paragraphs 2. 5. and 2.6.
2.1.9.Good Reason Resignation. "Good Reason Resignation" shall mean
termination by Employee of Employee's employment by Employer following the
occurrence of any of the events set out below unless such event is fully
corrected by the Employer within 30 days following written notification by
Employee to Employer
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that Employee intends to terminate his employment for one or more of the
reasons set out below:
(a) removal of Employee from, or a failure to appoint or reappoint Employee
to, any of his offices or the assignment of Employee to any duties inconsistent
with Employee's status as Chairman, President and Chief Executive Officer of SLM
and as Senior Vice President of Parent or a material alteration in the nature or
status of Employee's responsibilities or conditions of employment from those in
effect prior to the date of this Employment Agreement except as contemplated by
this Employment Agreement;
(b) any failure to elect or reelect Employee or his designee to
the Board of Directors of SLM or Parent pursuant to provisisions of
Sections 3.4 and 3.7 of the Agreement and Plan of Merger;
(c) the relocation, without Employee's consent, of SLM's
principal executive offices to a location outside of Salt Lake
County or the imposition of a requirement, without Employee's
consent, that Employee be based anywhere other than Salt Lake
County, except for required travel on Employer's business;
(d) failure by Employer without Employee's consent to pay to
Employee any portion of Employee's current compensation, including
bonuses, the vesting of stock options and the issuance of shares
upon exercise of stock options;
(e) the failure to obtain the specific assumption of this
Employment Agreement by any successor or assign of the Employer or
any person acquiring a substantial portion of the assets of either
SLM or Parent or, following any such assumption, assignment or
acquisition by an entity other than an affiliate of SLM or Parent;
(f) any material breach by Employer of any provision of this Employment
Agreement; or
(g) the failure of the Capital Infusion (as defined in Section
3 of the Escrow Agreement) to be made into SLM within the time
agreed to in the Escrow Agreement.
2.2. Initial Term. The term of employment of Employee by Employer under
this Employment Agreement shall be for a period of five (5) years beginning with
Effective Date ("Initial Term"), unless terminated earlier pursuant to this
Section. At any time prior to the expiration of the Initial Term, Employer and
Employee may, by mutual written agreement, extend Employee's employment under
the terms of this Employment Agreement for such additional periods as they may
agree.
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2.3. Termination For Cause. Termination for Cause may be effected
immediately by Employer during the term of this Agreement by written
notification to Employee. Upon Termination For Cause, the following shall
promptly occur:
(a) Employer shall pay Employee all accrued salary earned at the date of
Termination for Cause;
(b) Employer shall pay Employee all vacation pay which is accrued at the
date of Termination for Cause;
(c) Employer shall pay all business expenses incurred by Employee in
connection with his duties hereunder which are unpaid at the date of
Termination for Cause;
(d) Employer shall pay to Employee all compensation or benefits due
to Employee at the date of Termination for Cause under any agreement or
plans, excluding stock options or cash bonuses which are specifically
provided for in paragraphs 2.3 (e)(f)and (g) below;
(e) The compensation payable to Employee under paragraph 4.1.2.
hereunder is calculated on the basis of June 30 fiscal year end results
and any bonus payable thereunder will be payable in six Bonus Periods
which are described in paragraph 4.1.2. If Employee is Terminated for
Cause, the amount of bonus due to Employee under paragraph 4.1.2 shall be
prorated on the basis of the percentage of the Bonus Period which has been
completed as of the date of Termination for Cause. The bonus compensation
due to Employee under this paragraph 2.3(e) will not be determinable until
the completion of the Employer's consolidated audited financial statements
for the Bonus Period in which Employee is Terminated for Cause. The bonus
compensation will be paid to Employee within twenty (20) days from the
date such audited financial statements are available. An example of this
provision is as follows:
If, under paragraph 4.1.2 of this Agreement, the Employee would
have been entitled to bonus compensation of $50,000 if Employee had
worked for the entire Bonus Period, and if Employee's employment was
Terminated for Cause after sixty percent (60%) of the Bonus Period
had been completed, then Employee shall be entitled to a bonus of
$30,000 (60% of the total bonus compensation due for such Bonus
Period).
(f) Employee has been granted incentive stock options to purchase
150,000 shares of Celtic Common Stock pursuant to the Stock Option
Agreement which options vest solely on the basis of time of employment
("Time Based Options" and "Time Based Option Shares"). In the event the
Employee is Terminated for Cause, the Time Based Options shall be
accelerated and shall vest immediately, on a prorated basis, through the
date of Termination for Cause but shall be prorated. The number of Time
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Based Option Shares which Employee shall be entitled to purchase shall be
prorated on the basis of the percentage of the Vesting Period which has
been completed as of the date of Termination for Cause. An example of this
provision, is as follows:
In the event Employee has a Time Based Option to purchase
75,000 Time Based Option Shares which option vests on the first
anniversary date of this Employment Agreement, and if Employee is
Terminated for Cause eight months after the date of this Employment
Agreement, then Employee shall have the right to purchase 50,000
Time Based Option Shares immediately after the date of Termination
for Cause pursuant to the applicable terms and conditions of the
Stock Option Agreement. The right to purchase the remaining 25,000
Time Based Option Shares shall be terminated immediately as of the
date of Termination for Cause. Employee shall have no right to
purchase Time Based Option Shares for any vesting period which is
subsequent to the vesting period in which Termination for Cause
occurred.
(g) Employee has been granted incentive stock options to purchase
350,000 shares of Celtic Common Stock pursuant to the Stock Option
Agreement which options vest solely on the basis of the achievement of
certain operating results ("Performance Based Options" and "Performance
Based Option Shares"). In the event that Employee's employment is
Terminated for Cause, the vesting of Performance Based Options relating to
the Bonus Period in which Termination for Cause occurs, shall be
accelerated. The number of Performance Based Option Shares which Employee
shall be entitled to purchase shall be prorated on the basis of the
percentage of the Bonus Period which has been completed as of the date of
Termination for Cause. The Performance Based Option Shares which may be
purchased under this paragraph 2.3(g) will not be determinable until the
completion of the Employer's consolidated audited financial statements for
the Bonus Period in which Employee is Terminated for Cause. An example of
this provision is as follows:
If, under the Stock Option Agreement, Employee would have been
entitled to purchase 116,666 Performance Based Option Shares had he
worked for the entire Bonus Period, and if Employee's employment was
Terminated for Cause immediately after sixty percent (60%) of the
Bonus Period had been completed, then Employee shall be entitled to
purchase, under the Stock Option Agreement, 70,000 of the
Performance Based Option Shares attributed to such Bonus Period).
Employee shall not be entitled to purchase any Performance Based
Option Shares which underlie Performance Based Options for Bonus
Periods which are subsequent to the Bonus Period in which
Termination for Cause occurred.
2.4. Termination Without Cause. Employer may terminate Employee's
employment for any reason and without cause at any time upon thirty (30) days
written notice to Employee.
Upon Termination without Cause, the following shall promptly occur:
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(a) Employer shall pay Employee all salary compensation for a period
of one year from the date of Termination Without Cause.
(b) Employer shall pay Employee all vacation pay which is accrued at the
date of Termination without Cause;
(c) Employer shall pay all business expenses incurred by Employee in
the connection with his duties hereunder which are unpaid at the date of
Termination without Cause;
(d) Employer shall pay or deliver to Employee all compensation or
benefits due to Employee at the date of Termination without Cause under
any agreement or plans excluding stock options or cash bonuses which are
specifically provided for in paragraphs 2.4 (e)(f)and (g) below;
(e) The compensation payable to Employee under paragraph 4.1.2.
hereunder is calculated on the basis of June 30 fiscal year end results
and any bonus payable thereunder will be payable in six Bonus Periods
which are described in paragraph 4.1.2. If Employee is Terminated without
Cause, the amount of bonus due to Employee under paragraph 4.1.2 shall be
the amount of bonus compensation which would be due to Employee if
Employee had been employed for the entire Bonus Period in which
Termination without Cause occurred. The bonus compensation due to Employee
under this paragraph 2.4(e) will not be determinable until the completion
of the Employer's consolidated audited financial statements for the Bonus
Period in which Employee is Terminated without Cause. The bonus
compensation will be paid to Employee within twenty (20) days from the
date such audited financial statements are available. An example of this
provision is as follows:
If, under paragraph 4.1.2 of this Agreement, the Employee would
have been entitled to bonus compensation of $50,000 if Employee had
worked for the entire Bonus Period, and if Employee's employment was
Terminated without Cause immediately after sixty percent (60%) of
the Bonus Period had been completed, then Employee shall be entitled
to the entire bonus of $50,000.
(f) Employee has been granted incentive stock options to purchase
150,000 Time Based Option Shares which vest solely on the basis of time of
employment. In the event the Employee is Terminated without Cause, all
Time Based Options for the vesting period in which Termination without
Cause occurred, shall be accelerated and shall vest immediately. An
example of this provision, is as follows:
In the event Employee has a Time Based Option to purchase
75,000 shares of Employers common stock which vests on the first
anniversary date of this Agreement, and if Employee is Terminated
without Cause nine months after the date of this Employment
Agreement, then Employee shall have the
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right to purchase all 75,000 shares of Employer's common stock
immediately after the date of Termination without Cause pursuant to
the applicable terms and conditions of the stock option agreement.
Employee shall have no right to purchase Time Based Option Shares
for any vesting period which is subsequent to the vesting period in
which Termination without Cause occurred.
(g) Employee has been granted incentive stock options to purchase
350,000 shares of Celtic Common Stock pursuant to the Stock Option
Agreement which vest solely on the basis of the achievement of certain
operating results. In the event that Employee's employment is Terminated
without Cause, the vesting of such Performance Based Options shall be
accelerated and the number of Performance Based Option shares which
Employee is entitled to purchase shall be that number of Performance Based
Option Shares which Employee would have been entitled to purchase if he
had been employed during the entire Bonus Period. The Performance Based
Option Shares which may be purchased under this paragraph 2.4(g) will not
be determinable until the completion of the Employer's consolidated
audited financial statements for the Bonus Period in which Employee is
Terminated without Cause. An example of this provision is as follows:
If, under the Stock Option Agreement, Employee would have been
entitled to purchase 150,000 Performance Based Option Shares had he
worked for the entire Bonus Period, and if Employee's employment was
Terminated without Cause immediately after sixty percent (60%) of
the Bonus Period had been completed, then Employee shall be entitled
to purchase, under the Stock Option Agreement, all 150,000
Performance Based Option Shares attributed to such Bonus Period.
Employee shall not be entitled to purchase any Performance Based
Option Shares which underlie Performance Based Options for Bonus
Periods which are subsequent to the Bonus Period in which
Termination without Cause occurred.
2.5. Termination by Reason of Disability. If, during the term of this
Agreement, Employee, in the reasonable judgment of the Board of Directors of
either SLM or Parent, has failed to perform his duties under this Agreement on
account of illness or physical or mental incapacity, and such illness or
incapacity continues for a period of more than three (3) consecutive months,
Employer shall have the right to terminate Employee's employment hereunder by
twenty (20) days written notification to Employee. In the event of termination
by reason of disability, Employee shall pay Employee all cash and other
compensation which would be due and owing to Employee under paragraph 2.3 of
this Employment Agreement if Employee's employment had been Terminated for Cause
by Employer rather than as a result of the Disability of Employee.
Upon receipt of notice of termination under this paragraph 2.5, Employee
may request an opportunity to discuss the termination of his employment at a
meeting of the Boards of Directors of both SLM and Parent. Such request must be
made, if at all, in writing and shall be delivered to SLM and to Parent withing
five (5) days from the date Employee receives
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notification of termination of employment under this paragraph 2.5. Upon receipt
of such request, each of SLM and Parent shall, within a reasonable time, call
and hold a Board of Directors meeting to allow Employee to discuss termination
for reason of disability.
2.6 . Death. In the event of Employee's death during the term of this
Agreement, Employee's employment shall be deemed to have terminated as of the
last day of the month during which his death occurs and the Employer shall pay
to his estate or such beneficiaries as Employee may from time to time designate,
to the date of Employee's death all cash and other compensation which would be
due and owing to Employee under paragraph 2.3 of this Employment Agreement if
Employee's employment had been Terminated for Cause by Employer rather than by
as a result of the Death of Employee.
2.7. Voluntary Termination. In the event of a Voluntary Termination,
Employer shall pay to Employee all cash and other compensation which would be
due and owing to Employee under paragraph 2.3 of this Employment Agreement if
Employee's employment had been Terminated for Cause by Employer rather than by
the Voluntary Termination by Employee.
2.8. Good Reason Resignation. In the event of a Good Reason Resignation
Employee resigns, Employer shall continue to pay to Employee his salary for a
period of one (1) year from the date of Resignation for Good Reason and Employer
shall pay to Employee all cash and other compensation which would be due and
owing to Employee under paragraph 2.4 of this Employment Agreement if Employee's
employment had been Terminated without Cause by Employer rather than the Good
Reason Resignation by Employee.
3. Effective Date of Employment. The Effective Date of this Agreement and
Employee's employment by the Employer hereunder shall be January 31, 1997.
4. Compensation. As his entire compensation for all services rendered to
the Employer during the term of this Agreement, in whatever capacity rendered,
the Employee shall be paid, subject to withholding and other applicable
employment taxes, as follows;
4.1.1.Base Salary. Employee shall be paid a base salary of $90,000
per year commencing on the Effective Date. Such base salary shall be
payable in monthly installments, provided however, if the first month of
employment is less than a full calendar month, the first payment shall be
prorated for the number of days worked in the first calendar month of
employment.
Employee's base salary shall be reviewed annually by the Board of
Directors, and the base salary for each employment year (or portion
thereof) beginning July 1, 1998, shall be determined by the Board of
Directors which shall authorize an increase in Employee's base salary for
such year in an amount which, at a minimum, shall be equal to the
cumulative cost-of-living increment on the Base Salary as reported in the
"Consumer Price Index, Salt Lake City, UT, All Items," published by the
U.S.
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Department of Labor (using January 1, 1995 as the base date for
computation). Provided however, that the base salary shall not increase by
more than ten percent (10%) per year due to increases in the Consumer
Price Index.
4.1.2. Bonus. Employee shall be paid a bonus based upon Adjusted Pretax
Profits of SLM. Under this Employment Agreement, there shall be six Bonus
Periods during which the bonus shall be determined and such Bonus Periods are as
follows:
Bonus Period 1 - commencing January 31, 1997, ending June 30, 1997
Bonus Period 2 - commencing July 1, 1997, ending June 30, 1998 Bonus
Period 3 - commencing July 1, 1998, ending June 30, 1999 Bonus
Period 4 - commencing July 1, 1999, ending June 30, 2000 Bonus
Period 5 - commencing July 1, 2000 ending June 30, 2001 Bonus Period
6 - commencing July 1, 2001 ending January 31, 2002
For Bonus Period 1 Employee shall be paid a bonus equal to seven
percent (7%) of the Adjusted Pretax Profits up to a bonus payment of
$30,000.00 After a total bonus of $30,000.00 is earned for Bonus Period 1,
the bonus shall be reduced from seven percent (7%) of Adjusted Pretax
Profits to one and one half percent (1 1/2%) of Adjusted Pretax Profits.
For each of the Bonus Periods 2,3, 4 and 5 ("Full Bonus Periods"),
Employee shall be paid a bonus equal to seven percent (7%) of the Adjusted
Pretax Profits up to a bonus payment of $60,000. After a total bonus of
$60,000 is earned for each of such Bonus Periods, the bonus shall be
reduced from seven percent (7%) to one and one half percent (1 1/2%) of
Adjusted Pretax profits.
For Bonus Period 6, Employee shall be paid a bonus equal to seven
percent (7%) of the Adjusted Pretax Profits up to a bonus payment of
$30,000.00. After a total bonus of $30,000.00 is earned for Bonus Period
6, the bonus shall be reduced from seven percent (7%) to one and one half
percent (1 1/2%) of Adjusted Pretax Profits.
Any bonus due hereunder shall be paid to Employee within twenty (20)
days after the date on which the audited financial statements of Employer
are available for each June 30th fiscal year end.
4.1.3.Vacation. Employee shall be entitled to four (4) weeks of
vacation during each year during the term of this Agreement and any
extensions thereof, prorated for partial years.
4.1.4.Automobile Allowance. SLM currently provides Employee with an
automobile. During the term of this Agreement, Employer shall continue to
provide such automobile (or an equivalent replacement thereof) for
Employee's use and Employer shall pay the first $2,500 of the operating
costs of such automobile. For purposes of this paragraph 4.1.4, operating
costs, shall include, but are not limited to,
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fuel, oil, normal service, repairs, tires and insurance. At any time upon
the request of Employee, or in connection with a termination of his
employment for any reason, this automobile shall be transferred to
Employee for no consideration. In such event, Employee shall be
responsible for any and all taxes, (income, property, or sales taxes)
thereafter and for all such taxes arising as a result of such transfer.
4.1.5.Reimbursement for Expenses. During the term of this Agreement,
The Employer shall reimburse Employee for reasonable and properly
documented out-of-pocket business and/or entertainment expenses incurred
by Employee in connection with his duties under this Agreement.
4.1.6.Additional Benefits. The Employer shall provide the Employee
with health and disability insurance during the term of this Agreement.
The Employee shall be entitled to participate in such benefit and
compensation plans as are now generally available or later made generally
available to the employees or executive officers of the Employer,
including, but not limited to, 401(k) plans, stock option plans, profit
sharing plans and other such plans and benefits. The health plan offered
to Employee hereunder will be at least as advantageous to Employee as
those offered by SLM prior to the date of the execution of this Agreement.
5. Stock Options. As additional consideration for Employee's services
hereunder, the Employee shall be granted an option to purchase 500,000 shares of
Celtic Investment common stock at a price of $3.00 per share. The terms and
condition of such options are set forth in the Stock Option Agreement.
6. Covenant not to Compete. Employee agrees that he will not, during the
term of his employment, and for the ("Restriction Period") which is defined in
paragraph 6.1.2 of this Employment Agreement directly or indirectly, in any
state, county, city or metropolitan area in which SLM, Parent or any subsidiary
of Parent has transacted business in the three (3) years preceding said
termination, own, manage, operate or control, or participate in the ownership,
management, operation or control of, or be connected with or have any interest
in, as a stockholder, director, officer, employee, agent, consultant, partner or
otherwise, any business which is engaged in the same business as SLM, Parent or
any Subsidiary of Parent. Specifically, but without limitation, this covenant
shall extend to all existing clients or customers of SLM, Parent and all
subsidiaries of Parent and all of the funding sources of SLM, Parent and all
subsidiaries of Parent.
6.1.1.If any of the provisions of this paragraph are 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 shall then be applicable in
such modified form. The Employer and the Employee acknowledge the reasonableness
of this covenant not to compete and the reasonableness of the geographic area
and duration of time which are part of this covenant.
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6.1.2. The Restricted Period shall be that period of time during
which the Covenant not to Compete set forth in this paragraph 6 is binding upon
Employee. The Restricted Period shall initially be a period of twenty four (24)
months commencing on the Effective Date but shall be reduced thereafter by one
month for each full month of employment of Employee by Employer. Subject to
paragraph 6.1.3 below, in no event shall the Restricted Period be less than six
(6) months from the date of termination of employment regardless of the number
of months of employment prior to termination.
6.1.3.In the event Employee's employment is terminated by Employer
without cause or in the event Employee Resigns for Good Reason, the restrictions
set forth in this paragraph 6 shall be limited to the time in which Employee
continues to receive a salary from Employer under this Agreement.
6.1.4.Notwithstanding anything else contained herein to the
contrary, following the termination of employment under this Employment
Agreement, Employee shall be entitled to engage in land development, real estate
acquisitions and in the ownership, purchase and sale of real estate contracts,
mortgage notes and trust deed notes for his own account to the extent that such
activities have been pre-approved by the SLM Board of Directors.
7. Confidential Information. Employee covenants and agrees not to
disclose, directly or indirectly, at any time either during employment or within
twenty four (24) months subsequent to the termination of employment to anyone
not an employee or consultant of the Employer, and not to use at any time either
during employment or within two (2) years subsequent to the termination of
employment, except in the course of employment with the Employer, any
Confidential Information, as defined below, of the Employer or any parties
dealing with the Employer unless he shall first secure the consent of the
Employer in writing or unless he shall involuntarily be required to do so by a
court having competent jurisdiction, by any governmental agency having
supervisory authority over the business of Employer or Parent, or by any
administrative body or legislative body (including a committee thereof) with
purported or apparent jurisdiction to order Employee to divulge, disclose or
make accessible such information after notice to the Employer. Employer and
Employee hereby acknowledge that: (a) the duration and geographical limitations
imposed with respect to said secret and confidential information are reasonable;
and (b) the restrictions stated hereinabove are reasonably necessary for the
protection of Employer's legitimate proprietary interests.
For purposes of this Agreement, the term Confidential Information shall
mean any and all:
(a) trade secrets concerning the business and affairs of Employer,
data, know-how, customer lists, current and anticipated customer
requirements, market studies, business plans, and any other information,
however documented, that is a trade secret within the meaning of the Utah
Trade Secrets Act ss. ss. 13-24-1 to 13-24-9; and
(b) information concerning the business and affairs of the Employer
(which includes historical financial statements, financial projections and
budgets, historical
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and projected sales, capital spending budgets and plans, the names and
backgrounds of key personnel, personnel training and techniques and
materials however documented; and
(c) notes, analysis, compilations, studies, summaries, and other
material prepared by or for Employer containing or based, in whole or in
part, on any information included in the foregoing.
Nothing contained in this paragraph 7 shall be deemed to apply to (i) any
information which is or becomes known to the public other than as a result of a
breach of this Section 7 by Employee or (ii ) any information which is lawfully
acquired from a third party who is not obligated to Employer to maintain such
information in confidence.
8. Solicitation of Other Employees and/or Consultants. Employee agrees
that he will not, during the course of his employment or for a period of twenty
four (24) months commencing upon the expiration of his employment, either
voluntary or involuntary, for any reason whatsoever, directly or indirectly,
individually or on behalf of persons not now parties to this agreement, aid or
endeavor to solicit or induce any other employee, employees, consultant and/or
consultants of the Employer to leave their employment with the Employer in order
to accept employment of any kind with any other person, firm, partnership or the
Employer.
9. Breach of Covenants by Employee. In the event that the Employee shall
breach paragraphs 6,7 or 8 of this agreement, then the Employer shall be
entitled to seek injunctive relief against the Employee. In any proceeding
commenced by Employer to enforce paragraphs 6,7 or 8 of this Employment
Agreement, the prevailing party shall be liable and shall pay for all damages,
court costs, and reasonable attorneys' fees incurred as the direct result of
commencing or defending such proceeding. The provisions of paragraphs 6, 7 and 8
hereof shall survive the termination of this Employment Agreement.
10. Separate Counsel. The parties acknowledge that the Employer and the
Employee have been represented by separate legal counsel in this transaction and
that Employee has not been represented by the Employer's counsel.
11. Miscellaneous.
11.1 This Employment Agreement and the written agreements referred to
herein, constitutes the entire agreement between the parties or the matters
discussed herein. It also supersedes any and all other agreements or contracts,
either oral or written, between the parties with respect to the subject matter
hereof.
11.2. The terms and conditions of this Employment Agreement may be amended
at any time by mutual agreement of the parties, provided that before any
amendment shall be valid or effective it shall have been approved by the Board
of Directors of the Employer, reduced to writing and signed by the Employer and
the Employee.
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11.3. The invalidity or unenforceability of any particular provision of
this Employment Agreement shall not affect its other provisions, and this
Employment Agreement shall be construed in all respects as if such invalid or
unenforceable provision had been omitted.
11.4. Except as otherwise expressly provided herein, this Employment
Agreement shall be binding upon and inure to the benefit of the Employer, its
successors and assigns, and upon the Employee, his administrators, executors,
legatees, heirs and assigns.
11.5. This Employment Agreement shall be construed and enforced under and
in accordance with the laws of the State of Utah.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
the day and year first above-written.
Salt Lake Mortgage Corp. Employee:
By /s/ By /s/
Roger Davis, Vice President, Reese Howell, Jr.
Celtic Investment, Inc.
By___/s/________________________
Douglas P. Morris, President
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