Exhibit 10.1
EMPLOYMENT AGREEMENT
JIMMY YAN
This EMPLOYMENT AGREEMENT (“Agreement”), dated as of December 15, 2009, to be
effective as of January 11, 2010, by and between Franklin Credit Management
Corporation (“Employer” or “FCMC” and with its parent and affiliates, the
“Company”) and Jimmy Yan (“Employee”).
RECITALS
WHEREAS, Employer is a corporation organized under the laws of the State of
Delaware;
WHEREAS, Employer desires to employ Employee, and Employee desires to accept
such employment on the terms and conditions hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which the parties hereby acknowledge, the parties
agree as follows:
1. Definitions. For the purposes of this Agreement, the following capitalized
terms shall have the following meanings:
a. Board of Directors. shall mean the Board of Directors of FCMC or any
committee of the Board of Directors that is then charged with making
compensation decisions with respect to the Employee.
b. Competitor. shall mean any person or entity which: (1) is engaged or planning
to be engaged in the servicing and resolution of performing, reperforming and
nonperforming residential mortgage loans and related assets or in the due
diligence, analysis, pricing and acquisition of loan portfolios for third
parties; (2) is engaged in any other business that constitutes at least 10% of
the revenues of Employer, Franklin Credit Holding Corporation (“Parent”), or any
of its direct or indirect subsidiaries; or (3) is engaged in any other business
which the Employer, Parent or any of its direct or indirect subsidiaries have,
as of the termination of Employee’s employment or expiration of this Agreement,
reasonably certain plans to be substantially engaged within twelve months of
Employee’s termination (the businesses described in clauses (1), (2) and (3),
and any of them individually, being the “Business of the Company”).

 

 

--------------------------------------------------------------------------------

 

d. Change in Control shall mean the occurrence of one or more of the following
events:
(1) Parent, together with its affiliates and The Huntington National Bank and
its transferees, shall be the direct or indirect “beneficial owner” (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly
or indirectly, of securities of FCMC representing less than fifty percent (50%)
of the total voting power represented by FCMC’s then outstanding voting
securities;
(2) any “person”(as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becomes the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
FCMC representing twenty percent (20%) or more of the total voting power
represented by FCMC’s then outstanding voting securities who is not already such
as of the date of this Agreement, other than The Huntington National Bank and
its transferees;
(3) the consummation of a tender or exchange offer, one or more contested
elections related to the election of directors of FCMC, a reorganization, merger
or consolidation, or the acquisition of assets of another corporation, or any
combination of the foregoing transactions (each, a “Business Combination”) that
results in the replacement of a majority of members of the board of directors of
FCMC during any 12–month period by directors whose appointment or election is
not endorsed by a majority of the members of the board of directors of FCMC
before the date of the appointment or election; or
(4) a sale or other disposition of all or substantially all of the assets of
FCMC, except to an affiliate or creditor of either (I) Parent or (II) FCMC, or
in connection with an internal reorganization.
For purposes of clarity, the term “Change of Control” shall not be deemed to
have occurred if FCMC, Parent, or any of the Company’s affiliates or
subsidiaries file for bankruptcy protection, or if a petition for involuntary
relief is filed against FCMC, Parent, or any of the Company’s affiliates or
subsidiaries.
2. Employment/Term. Employee agrees to be employed by Employer upon the terms
and subject to the conditions set forth in this Agreement, such employment to
commence effective on January 11, 2010, and expire on the second anniversary of
such date, subject to earlier termination pursuant to Section 11 of this
Agreement.
3. Place of Employment. During the term of employment, Employee shall be based
at FCMC’s principal executive offices, which shall be in the Jersey City, New
Jersey metropolitan area (including the surrounding area of New York and New
Jersey), subject to reasonable travel required in the performance of Employee’s
duties.

 

- 2 -

--------------------------------------------------------------------------------

 

4. Duties and Authority.
a.  Employee shall serve as Executive Vice-President and Managing Director of
the servicing and recovery departments of the Employer. Employee’s duties shall
include responsibility for the general and active management of the collection
and recovery strategies of Employer, including without limitation
(i) supervision, direction, and control of the day to day activities of the
servicing and recovery department and its staff; (ii) establishing and
developing strategies and processes to improve asset collection and recovery
performance; (iii) advising the Chief Executive Officer, President, and other
senior management of the Employer on major business decisions and (iii) such
other duties and responsibilities, consistent with Employee’s position, as may
be assigned by the Chief Executive Officer or President from time to time.
b.  Employee shall report directly to the President or Chief Executive Officer
of Employer. Employee shall be subject to and abide by all policies of the
Company or its subsidiaries as they relate to its employees.
5. Compensation. Employer shall pay to Employee the following compensation:
a. Salary. Employee shall receive an initial annual salary of $250,000, payable
on a semimonthly basis or otherwise in accordance with Employer’s standard
payroll practices, which annual salary may be adjusted by the Board of
Directors.
b. Bonuses. Employee shall be entitled to participate in performance or
incentive bonuses that the Employer may award from time to time pursuant to a
bonus plan for senior management employees, which shall be subject to change and
modification, without prior notice, at the discretion of the President or Chief
Executive Officer of FCMC and the Board of Directors. The precise calculation of
such amount shall be determined by the President or Chief Executive Officer of
FCMC and the Board of Directors. Any annual bonus shall be paid no later than
two and one-half (21/2) months from the last day of the tax year in which the
annual bonus was earned. Notwithstanding the foregoing, Employee agrees to repay
to the Employer any performance or incentive bonus paid to Employee based on
performance objectives achieved through the dishonesty, fraud or other
misconduct of Employee; materially inaccurate financial statements; or any other
materially inaccurate performance metric criteria.  This repayment shall not be
limited to a specific recovery period.  

 

- 3 -

--------------------------------------------------------------------------------

 

c. Stock. As additional compensation for services provided under this Agreement,
Employee shall be granted 17,000 shares of restricted common stock of the Parent
(the “Restricted Award”) on or about January 11, 2010 (the “Grant Date”) in
accordance with the provisions of this Section 5(c).
(1) The Restricted Award shall vest and become nonforfeitable on the following
schedule:
8,500 shares on January 11, 2010; and
8,500 shares on January 11, 2011;
provided, however, that the entire Restricted Award shall vest and become
nonforfeitable upon a Change in Control.
(2) Employee acknowledges that the shares subject to the Restricted Award shall
be restricted stock and subject to restrictions imposed by Federal and/or State
securities laws.
(3) Any unvested portion of the Restricted Award will be forfeited upon the
termination of Employee’s employment for any reason.
(4) Any certificates representing the shares subject to such restricted award
will bear legends reflecting the substance of this Section 5c.
6. Certain Benefits.
a. Vacation and other benefits. During each twelve-month period that Employee is
employed by Employer, Employee shall be entitled to four weeks (i.e., twenty
days) of paid vacation plus two personal days, five sick days and regular
holidays in accordance with the policies of Employer. In addition, Employee
shall be entitled to participate in all present and future benefit plans and/or
fringe benefits provided by Employer to its other executive officers generally.
b.       Expense Reimbursements. Employee is authorized to incur reasonable,
ordinary and necessary expenses in carrying out his duties and responsibilities
under this Agreement, including, without limitation, expenses for travel,
business entertainment and similar items related to such duties and
responsibilities, in each case in accordance with Employer’s policy. Employer
will reimburse Employee for all such expenses upon presentation by Employee from
time to time of appropriately itemized and documented accounts of such
expenditures, consistent with Employer’s policy.
7. Acknowledgments. The Company conducts its business on a national basis.
Employee acknowledges that:
a. The Company’s business is highly competitive;
b. The Company’s services are highly specialized;
c. The Company has a proprietary interest in its methods and processes;
d. Documents and other information regarding the Company’s methods, pricing and
costs are highly confidential and constitute trade secrets; and
e. Access to such documents and information renders the Employee special and
unique within the Company’s industry.

 

- 4 -

--------------------------------------------------------------------------------

 

8. Trade secrets and confidential information. Prior to and during the term of
this Agreement, Employee has and shall have access to, and become familiar with,
various trade secrets and confidential information belonging to the Company, its
subsidiaries or third parties with which it or they may have a business
relationship. Trade secrets and confidential information include, without
limitation, any nonpublic information that, if disclosed, might be useful or
helpful to the Company’s (or its subsidiaries’) competitors or harmful to the
Company (or its subsidiaries) and/or its customers, such as potential
acquisitions/dispositions or business engagements, marketing plans, new product
ideas, financial data, supplier lists, customer lists, client lists, broker
lists, capital investment plans, projected sales or earnings, and salary or
other compensation information. Employee acknowledges that such confidential
information and trade secrets are owned and shall continue to be owned solely by
the Company, its subsidiaries or such third parties, as the case may be.
Employee agrees not to use (except in the service of the Company or its
subsidiaries), or to communicate, reveal or otherwise make available to any
third party such trade secrets or confidential information for any purpose
whatsoever, except to the extent Employee is compelled to disclose it by
judicial process, provided that Employee provides Employer with prompt written
notice of such proposed disclosure and every available opportunity to seek to
limit the disclosure or obtain a protective order.
9.Restrictive covenants.
a. Full-time Employment. During the period of his employment, Employee shall
not, directly or indirectly, (a) engage in any business or commercial activity
other than on behalf of the Company or its subsidiaries without the prior
written consent of Employer; (b) engage in any non-commercial activity which
conflicts or interferes with or derogates from the performance of Employee’s
duties hereunder, whether or not such activity is pursued for gain or profit,
except as approved in advance in writing by Employer (provided, however, that
Employee shall be entitled to manage his personal passive investments and
otherwise attend to personal affairs, including charitable social and political
activities, in a manner that does not unreasonably interfere with his
responsibilities hereunder); or (c) seek, accept or engage in any other
employment, whether as an employee or consultant or in any other capacity, and
whether or not compensated therefor.
b. Non-competition. Employee agrees that:
(1) During the period of Employee’s employment by Employer and for three
(3) months after the termination or expiration thereof for any reason, Employee
will not compete with the Company or its subsidiaries in the Business of the
Company in the New York City metropolitan area, New Jersey or locations in
Connecticut not further north than New Haven, which means that Employee will not
within such area, directly or indirectly, be engaged by, own any interest in, or
act as an employee, consultant, contractor, or advisor to, or in any other
capacity for, any Competitor.

 

- 5 -

--------------------------------------------------------------------------------

 

(2) During the term of Employee’s employment by Employer and for a period of
twelve (12) months after termination or expiration thereof for any reason,
Employee shall not directly or indirectly take any action with respect to any
employee of the Company or its subsidiaries that has the purpose or effect of
encouraging or inducing such employee to terminate his or her employment with
the Company or its subsidiaries, including but not limited to soliciting or
offering employment to any such person or suggesting that any other person or
entity consider hiring or engaging such person.
(3) During the term of Employee’s employment by Employer and for a period of
twelve (12) months after the termination or expiration thereof for any reason,
Employee will not, directly or indirectly, on behalf of himself or any third
party, (I) solicit or arrange for refinancing or refinance any borrower under a
mortgage held or serviced by the Company or its subsidiaries (unless such
mortgage was first held or serviced by the Company subsequent to such
termination or expiration), or (II) solicit for the servicing or collection of
the same or similar types of financial assets serviced by the Company or its
subsidiaries, or provide such services to, any person, company, firm or
corporation for whom the Company or its subsidiaries serviced or collected
financial assets during the last twelve (12) months of Employee’s employment.
c. Employee understands that the provisions of this Section 9 may limit his
ability to earn a livelihood in a business similar to the Business of the
Company but nevertheless agrees and hereby acknowledges that the consideration
provided under this Agreement, including, without limitation, his employment by
Employer and any amounts or benefits provided under this Agreement and other
obligations undertaken by Employer hereunder, is sufficient to justify the
restrictions contained in such provisions. In consideration thereof and in light
of Employee’s education, skills and abilities, Employee agrees that he will not
assert in any forum that such provisions prevent him from earning a living or
otherwise are void or unenforceable or should be held void or unenforceable. The
parties have attempted to limit Employee’s right to compete only to the extent
necessary to protect the Company and its subsidiaries from unfair competition.
10. Remedies. Employee acknowledges that: (1) compliance with Sections 8 and 9
herein is necessary to protect the Employer’s business and good will; (2) a
violation of the undertakings in those Sections will cause Employer immediate,
substantial, irreparable and continual harm; and (3) an award of money damages
will not be adequate to remedy such harm. Consequently, Employee agrees that, in
the event the Employee violates or threatens to violate any of these covenants,
Employer shall be entitled to: (1) preliminary and permanent injunctions in
order to enjoin such violation or threatened violation; (2) money damages; and
(3) all reasonable costs and attorneys’ fees incurred by Employer in enforcing
the provisions of this Agreement if Employer is successful in establishing
Employee’s violation or threatened violation of these covenants. Employee waives
posting by Employer of any bond otherwise necessary to secure such injunction or
other equitable relief. Rights and remedies provided for in this Section 10 are
cumulative and shall be in addition to rights and remedies otherwise available
to the parties hereunder or under any other agreement or applicable law.

 

- 6 -

--------------------------------------------------------------------------------

 

11. Termination.
a. Termination by Either Party. The Employer may terminate Employee’s employment
without Cause, and the Employee may terminated his employment without Good
Reason, in each case by giving thirty (30) days prior written notice to the
other party.
b. Termination by Employer for Cause. Employee’s employment may be terminated by
the Employer for Cause if he:
(1) fails or refuses to perform one or more of his material assigned duties to
the Company or its subsidiaries;
(2) fails or refuses to comply with one or more policies of the Company or its
subsidiaries;
(3) breaches any of the material terms of this Agreement; or
(4) commits any criminal, fraudulent or dishonest act related to his employment
or the Company (or its subsidiaries) or any of its assets or opportunities
(other than an arm’s length dispute relating to the erroneous reporting of an
immaterial amount as an expense) or is convicted of (or enters a plea of guilty
or nolo contendre to) any felony or a misdemeanor involving, in the good faith
judgment of Employer, fraud, dishonesty or moral turpitude.
Notwithstanding the foregoing, Employer shall not be entitled to terminate
Employee for Cause under subsections (1), (2) or (3) of this subsection unless:
(i) Employee has been given written notice describing in reasonable detail the
alleged breaches and stating that such breaches are grounds for termination for
cause under this Section, and (ii) if such breaches are amenable to cure,
Employee fails to cure such breaches within ten (10) days after receipt of such
notice.
In the event that Employer terminates Employee for Cause pursuant to the
provisions of this subsection and it is later determined by a court of competent
jurisdiction that such Cause did not exist, Employee’s termination shall be
deemed to be a termination by the Employer without Cause.

 

- 7 -

--------------------------------------------------------------------------------

 

c. Termination by Employee for Good Reason. Following a Change in Control,
Employee shall have the right to terminate his employment for “Good Reason.” For
the purposes of this Agreement, Good Reason shall be limited to the following:
(1) the Board of Directors requests in writing that Employee resign;
(2) A material diminution by Employer of Employee’s duties or responsibilities,
except in connection with the termination of Employee’s employment under
subsections (a), (b), (d) or (e) of this Section 11; and
(3) Employee is removed as Executive Vice-President and Managing Director of the
servicing and recovery departments of the Employer, and such removal results in
a material diminution of Employee’s authority, duties or responsibilities.
Notwithstanding the foregoing, the occurrence of any of the events described in
(1) through (3) above shall not constitute “Good Reason” unless (i) Employee
gives Employer written notice, within ninety (90) days after Employee has
knowledge of the occurrence of any of the events described in (1) through
(3) above, that such circumstances constitute Good Reason, (ii) Employer
thereafter fails to cure such circumstances within thirty (30) days after
receipt of such notice and (iii) the Employee terminates employment no later
than two (2) years following the occurrence of such circumstance.
In the event that Employee terminates for Good Reason pursuant to the provisions
of this subsection and it is later determined by a court of competent
jurisdiction that such Good Reason did not exist, Employee’s termination shall
be deemed to be a termination by Employee without Good Reason.
d. Termination Due to Incapacity. In the event Employee is unable, with or
without reasonable accommodation, to perform his material duties for a
continuous period of 120 days because of illness or disability, Employer may
terminate this Agreement upon written notice. For the purposes of Section 12 of
this Agreement, any such termination shall be deemed a termination by Employer
without Cause.
e. Termination Due to Death. This Agreement shall terminate upon the death of
Employee, subject to the rights and obligations of each party contained herein.
For the purposes of Section 12 of this Agreement, such a termination due to the
death of Employee shall be deemed a termination by Employer without Cause, and
all amounts otherwise due to Employee pursuant to this Agreement shall be paid
to Employee’s estate.

 

- 8 -

--------------------------------------------------------------------------------

 

12. Payments.
a. Termination Generally. Following termination of Employee’s employment
pursuant to this Agreement for any reason, Employee shall be entitled to
receive:
(1) Accrued Salary. Accrued but unpaid salary, in accordance with Employer’s
ordinary payroll practices;
(2) Accrued Vacation. A lump sum in respect of all accrued and unused vacation,
payable in accordance with the Employer’s standard payroll practices; and
(3) Expenses. Reimbursement for expenses incurred in accordance with Section
6(b) of this Agreement.
b. Severance. If the Employment Agreement has not expired, following any
termination of Employee’s employment by Employer pursuant to Section 11(a),
11(d) or 11(e) of this Agreement, or by Employee pursuant to Section 11(c) of
this Agreement, and provided that Employee executes a general release of claims
in a form reasonably acceptable to Employer no later than ten (10) days prior to
the date payment would otherwise be required to be made, Employee shall be
entitled to receive (i) a payment, in a lump sum payable not more than two and a
half months after termination, in an amount equal to twelve (12) months of
Employee’s base salary at the rate in effect immediately prior to such
termination and (ii) if Employee is enrolled in and covered by a medical
insurance plan offered by the Employer on the date of termination subject to the
Consolidated Omnibus Reconciliation Act (“COBRA”) and the Employee or Qualified
Beneficiary (as defined under COBRA) timely elects continuation of his group
health insurance coverage due to the occurrence of a Qualifying Event (as
defined under COBRA), Employer shall pay the employer and employee portions
during the period of entitlement to continuation coverage under COBRA for a
period not to exceed twelve (12) months. If the release is not timely executed
and delivered to Employer, Employee shall have no right to receive any payments
under this Section 12(b). Payments under this Paragraph 12(b) shall only be made
after Employee has incurred a “separation from service” as defined under
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).
Notwithstanding the foregoing, any payment under this Paragraph 12(b) shall be
postponed to the date that is six months and one day following the Employee’s
separation from service to the extent that such postponement is necessary to
prevent the imposition of the additional tax under Section 409A(a)(B) of the
Internal Revenue Code.
c. Effect of Payments. Following the termination of Employee’s employment for
any reason, Employee’s sole entitlement shall be to the payments by Employer
expressly provided for in this Section 12, and to no other or further
compensation or payments.
d. Cooperation. On termination of employment with Employer, Employee shall
provide Employer a written resignation from all positions with the Company and
its subsidiaries, and any other documents that Employer may need to effectuate
severance of the relationship.

 

- 9 -

--------------------------------------------------------------------------------

 

13. Return of Company Property. On termination of employment, Employee shall
return to Employer, and not retain or copy, all keys, correspondence, contracts,
reports, price lists, software, hardware, programs, works, products, manuals,
forms, mailing lists, customer lists, client lists, broker lists, advertising
materials, ledgers, supplies, equipment, checks, petty cash and all documents
and files in any form (including those in electronic format) relating to the
business of the Company or its subsidiaries, including, without limitation, any
such materials reflecting trade secrets or confidential information of the
Company or its subsidiaries, in the possession or control of Employee.
14. Notice. Any notice required to be given hereunder shall be in writing sent
by registered mail, return receipt requested, to Employer at 101 Hudson Street,
Jersey City, New Jersey 07302, Attention Chief Legal Officer, and to Employee at
the address contained in the personal records of Employer or to such changed
address as a party may designate by like notice to the other party pursuant to
the terms of this Section 14. The effective date of such notice shall be its
mailing date.
15. Entire Agreement; Amendment. This Agreement contains the entire agreement
and understanding between the parties hereto in respect of Employee’s employment
and supersedes, cancels and annuls any prior or contemporaneous written or oral
agreements, understandings, commitments and practices between them respecting
Employee’s employment, including, without limitation, all prior employment
agreements, if any, between Employer and Employee, which agreement(s) hereby are
terminated and shall be of no further force or effect. This Agreement may be
amended only by a writing which makes express reference to this Agreement as the
subject of such amendment and which is signed by Employee and a duly authorized
officer of Employer. Without limiting the foregoing, the Employee agrees that
this Agreement satisfies any rights the Employee may have had under any prior
agreement or understanding with the Company with respect to the Employee’s
employment by the Company.
16. No Violation or Default; Reputation. Employee represents and warrants that
that neither Employee’s employment with Employer nor Employee’s performance of
Employee’s obligations hereunder will conflict with or violate or otherwise be
inconsistent with any other obligations, legal or otherwise, which Employee may
have. During his employment hereunder and thereafter, Employee agrees that he
will not take action which is intended, or would reasonably be expected, to harm
the Company (and its subsidiaries) or its reputation or which would reasonably
be expected to lead to unwanted or unfavorable publicity with regard to the
Company or its subsidiaries.

 

- 10 -

--------------------------------------------------------------------------------

 

17. Severability. If any provision of this Agreement or the application of any
such provision to any party or circumstances shall be determined by any court of
competent jurisdiction to be invalid or unenforceable to any extent, the
remainder of this Agreement, or the application of such provision to such person
or circumstances other than those to which it is so determined to be invalid or
unenforceable, shall not be affected thereby, and each provision hereof shall be
enforced to the fullest extent permitted by law. If any provision of this
Agreement, or any part thereof, is held to be invalid or unenforceable because
of the scope or duration of or the area covered by such provision, the parties
hereto agree that the court making such determination shall reduce the scope,
duration and/or area of such provision (and shall substitute appropriate
provisions for any such invalid or unenforceable provisions) in order to make
such provision enforceable to the fullest extent permitted by law and/or shall
delete specific words and phrases, and such modified provision shall then be
enforceable and shall be enforced. The parties hereto recognize that if, in any
judicial proceeding, a court shall refuse to enforce any of the separate
covenants contained in this Agreement, then that invalid or unenforceable
covenant contained in this Agreement shall be deemed eliminated from these
provisions to the extent necessary to permit the remaining separate covenants to
be enforced. In the event that any court determines that the time period or the
area, or both, are unreasonable and that any of the covenants is to that extent
invalid or unenforceable, the parties hereto agree that such covenants will
remain in full force and effect, first, for the greatest time period, and
second, in the greatest geographical area that would not render them
unenforceable.
18. Indemnification. Employer shall indemnify Employee in Employee’s capacity as
an officer, if and as applicable, under the terms and conditions of any
liability insurance in place for FCMC and its other executive officers or under
FCMC’s Certificate of Incorporation, either of which may be revised from time to
time.
19. Non-Waiver. No delay or failure by either party to exercise any right under
this Agreement, and no partial or single exercise under it, shall constitute a
waiver of that or any other right. To be effective, any waiver must be reflected
in a writing signed by the party against whom it is being enforced.
20. Headings. Headings in this Agreement are for convenience only and shall not
be used to interpret or construe its provisions.
21. Governing Law; Forum. This Agreement shall be governed by and construed
(both as to validity and performance) and enforced in accordance with the
internal laws of the State of New Jersey applicable to agreements made and to be
performed wholly within such jurisdiction, without regard to the principles of
conflicts of law or where the parties are located at the time a dispute arises.
The parties consent to the jurisdiction of the state and federal courts sitting
in Hudson and Essex Counties in the State of New Jersey in connection with any
dispute arising out of or related to this Agreement or the Employee’s employment
by Employer, and such courts shall be the exclusive forum for any such disputes.
22. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
23. Binding Effect. The provisions of this Agreement shall be binding upon and
inure to the benefits of each of the parties and their respective successors and
assigns.

 

- 11 -

--------------------------------------------------------------------------------

 

24. Survival. Following the expiration or termination of this Agreement, neither
party shall have any further obligations to the other party, except as may be
required by law, and except that the provisions of Sections 1, 7 through 10 and
12 through 24, shall survive such expiration or termination for the periods (if
any) specified in such Sections and, otherwise, until the covenants and
agreement set forth therein have been fully performed.
25. Section 409A of the Code. It is the intention of the parties that this
Agreement comply with the requirements of Section 409A of the Internal Revenue
Code of 1986, as amended, and applicable guidance issued thereunder
(“Section 409A”), and this Agreement will be interpreted in a manner intended to
comply with Section 409A. All payments under this Agreement are intended to be
excluded from the requirements of Section 409A or be payable on a fixed date or
schedule in accordance with Section 409A(a)(2)(iv). Employee shall be solely
responsible and liable for the satisfaction of all taxes and penalties that may
be imposed on Employee in connection with this Agreement (including any taxes
and penalties under Section 409A). Notwithstanding anything in this Agreement to
the contrary, in the event that Executive is deemed to be a “specified employee”
within the meaning of Section 409A(a)(2)(B)(i) and is not “disabled” within the
meaning of Section 409A(a)(2)(C), no payments hereunder that are “deferred
compensation” subject to Section 409A shall be made to Executive prior to the
date that is six (6) months after the date of Executive’s “separation from
service” (as defined in Section 409A and any Treasury Regulations promulgated
thereunder) or, if earlier, Executive’s date of death. Following any applicable
six (6) month delay, all such delayed payments will be paid in a single lump sum
on the earliest permissible payment date. For purposes of this Agreement, with
respect to payments of any amounts that are considered to be “deferred
compensation” subject to Section 409A, references to “termination of employment”
(and substantially similar phrases) shall be interpreted and applied in a manner
that is consistent with the requirements of Section 409A.
[Remainder of Page Intentionally Left Blank]

 

- 12 -

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date
first above written.

            EMPLOYEE:
    Date: 12-15-09  /s/ Jimmy Yan       Jimmy Yan        FRANKLIN CREDIT
MANAGEMENT CORPORATION
    Date: 12-28-09  By:   /s/ Thomas J. Axon         Name:   Thomas J. Axon     
  Title:   President   

 

- 13 -