Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) is by and between SIMIA CAPITAL,
LLC, a Delaware limited liability company (the “Company”) and Mr. Patrick Preece
(“Executive”), and entered into effective as of November 11, 2016.

 

 

INTRODUCTION

 

The Company will be engaging in the business of providing litigation funding and
related services to the litigation industry and monitoring the liquidation of an
existing funding portfolio involving an affiliate of the Company (collectively,
the “Business”). The Board of Directors (“Asta Board”) of Asta Funding Inc.
(“Asta”), the parent of the Company, has determined that it is in the best
interests of Asta and the Company to ensure that the Company will have the
continued dedication and service of Executive, in the role of the Company’s
Chief Executive Officer, and to obtain the benefit of certain covenants set
forth herein. Executive desires to serve the Company in such role and provide
the Company with such covenants. Accordingly, the parties wish to enter into
this Agreement setting forth their respective rights and obligations. Executive
is being appointed as a director of Asta promptly upon execution of this
Agreement and will serve as a director without additional compensation.

 

 

AGREEMENT

 

Now, Therefore, in consideration of the foregoing and the mutual covenants set
forth herein, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:

 

1.     Certain Definitions.

 

1.1     “Code” means the Internal Revenue Code of 1986, as amended, including
and succeeding provisions of law and any regulations promulgated by the United
States Treasury Department thereunder.

 

1.2     “Employment Period” means the period beginning on November 11, 2016 and
ending on the fifth anniversary of that date unless terminated sooner pursuant
to this Agreement or if renewed by both parties.

 

1.3     “Cause” means any one or more of the following: (a) the commission by
Executive of an act constituting a misdemeanor involving moral turpitude or a
felony (or state law equivalent of either) under the laws of the United States
or any state or political subdivision thereof or any other jurisdiction
(including a plea of nolo contendere); (b) the commission by Executive of an act
constituting a breach of his fiduciary duty, gross negligence or willful
misconduct; (c) the commission by Executive of an act of fraud, dishonesty,
illegal conduct in connection with his employment, embezzlement or material
misrepresentation; (d) a material breach by Executive of his obligations under
this Agreement or any other written agreement with the Company or its
affiliates, provided that, to the extent an act or omission giving rise to a
material breach is reasonably susceptible to cure, the Executive shall be given
a reasonable opportunity, not to exceed thirty (30) days, after written notice
by the Company to the Executive to cure such act or omission; (e) Executive’s
neglect or failure to apply his best efforts to, or satisfactorily perform, his
material duties and responsibilities as a chief executive officer of the
Company, (f) the Executive’s failure to reasonably comply with any valid and
legal directive of the Company’s Chairman of the Board (the “Company Chairman”)
or the Company’s Board of Managers (the “Company Board”) or (g) Executive’s
material failure to comply with the written rules and policies of Asta or the
Company as in effect from time to time, provided that, to the extent the failure
giving rise to a material breach is reasonably susceptible to cure, the
Executive shall be given a reasonable opportunity, not to exceed thirty (30)
days, after written notice by the Company to the Executive to cure such failure.

 

 

 
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1.4     “Good Reason” means a termination by Executive of his employment
hereunder upon the occurrence of any of the following events taking place
without Executive’s prior written approval: (a) a Change in Control (as defined
below) of the Company; (b) the required relocation of the place at which
Executive must render a majority of his ordinary duties for the Company to more
than 35 miles from New York City, New York; (c) any material diminution in the
Executive’s title, authority or responsibilities, provided such diminution of
the Executive’s authority or responsibilities does not result from the
Executive’s inadequate job performance; (d) any reduction, in the Executive’s
Base Salary (as defined below) or (e) a material breach by the Company of any of
its obligations contained in this Agreement, provided that, to the extent an act
or omission giving rise to a material breach is reasonably susceptible to cure,
the Company shall be given a reasonable opportunity, not to exceed thirty (30)
days, after written notice by the Executive to the Company to cure such act or
omission. For purposes of this Agreement, "Change in Control" shall mean the
occurrence of any of the following: (i) the consummation of any transaction, or
a series of transactions (including, without limitation, any merger or
consolidation) the result of which is that one person (or more than one person
acting as a group) becomes the beneficial owner, directly or indirectly, of more
than 50% of the total voting power of the stock of Asta; provided that, this
clause (i) shall not apply to any beneficial ownership of Asta stock by Gary
Stern, his immediate family members or trusts or other entities controlled by
the foregoing; (ii) a majority of the members of the Asta Board are replaced by
directors whose nomination, appointment or election is not approved by a
majority of the Asta Board as of the date hereof or by directors subsequently
approved by a majority of the Asta Board as of the date hereof; (iii) the direct
or indirect sale, transfer, conveyance or other disposition, in one or more
series of related transactions, of all or substantially all of Asta's and its
subsidiaries’ assets, taken as a whole; or (iv) the adoption of a plan providing
for Asta’s liquidation or dissolution.

 

2.     Employment and Duties.

 

2.1     The Company agrees to continue to employ Executive for the Employment
Period, and Executive agrees to remain in the employ of the Company for the
Employment Period, subject to the terms and conditions in this Agreement. The
term of this Agreement shall continue as described therein, and until such time
as the employment of Executive is terminated pursuant to Section 7 below.

 

2.2     The Company is employing Executive hereunder as the Company’s Chief
Executive Officer and Executive shall be expected to perform and fulfill all of
the job functions commonly associated with that position on behalf of the
Company including without limitation those set forth on the attached Exhibit A.
In this regard, Executive agrees to perform such duties and responsibilities in
good faith and for the exclusive benefit of the Company, as are prescribed for
him under this Agreement, the Company’s and Asta’s charter documents, and Asta’s
written policies that are in effect from time to time and are available to
Executive, and as otherwise reasonably directed by the Company Board or Company
Chairman.

 

2.3     Executive’s entire business time, attention, energies and skills shall
be devoted to the Company and the Business; provided, however, that Executive
shall nonetheless be permitted to retain his current board positions with the
companies listed in Exhibit B, and Executive shall be entitled to participate in
social, civic or professional associations or engage in passive outside
investment activities and functions reasonably related to the board positions
referenced above, which may require a limited portion of time and effort to
manage (consistent at all times with Company’s requirements, and Asta’s policies
and procedures), so long as such activities, including the above referenced
board positions, do not interfere with the performance of Executive’s duties nor
involve persons or companies that directly compete with the Business or the
products or services offered by or through Company or its affiliates.

 

 

 
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3.     Compensation. For services rendered by Executive during the Employment
Period, the Company shall compensate Executive as follows:

 

3.1     Executive shall receive an annual base salary of $250,000 (the “Base
Salary”) that will be paid in accordance with the Company’s normal payroll
cycle. During the Employment Period, the Compensation Committee of the Asta
Board (the “Comp Committee”) will review the Base Salary no less frequently than
annually and may, in connection with any review, increase the Base Salary. Any
decision by the Company Board to increase the Base Salary shall not serve to
limit or reduce any other obligation of the Company to Executive under this
Agreement.

 

3.2     Executive shall be eligible for an annual cash bonus, grant of shares or
stock options in Asta (the “Annual Bonus”) in the sole and exclusive discretion
of the Comp Committee.

 

3.3     Asta will create a bonus plan (the “Plan”) for the Executive and the
rest of the Company’s management team (collectively, the “Management Team”). The
Plan will be reasonably acceptable to Executive and subject to the Comp
Committee approval. The Company agrees to contribute to the Plan an aggregate
amount equal to 20% of the profit (“Profit”) of the Business (“Profit Bonus”)
for each full fiscal year that the Business has achieved an internal rate of
return of 18% or more, for that fiscal year, as determined by Asta in accordance
with the calculation set forth on the attached Exhibit C. The Profit will be
calculated as the revenue of the Business minus the expenses of the Business,
determined on a cash basis. The Plan shall state that Asta’s Comp Committee in
its sole discretion, after consultation with Executive (so long as the Executive
is an employee), will set the allocation of the Profit to the Executive (not
less than 10% nor more than 15% of the Profit constituting part of the Profit
Bonus) and the remainder to the other members of the Company’s Management Team.
The payment of 50.0% of any Profit Bonus shall be deferred for a period of two
years and shall be subject to reduction during such time, pro rata to the
members of the Management Team, for losses, penalties and fines, and third party
claims relating to, the portfolios or the Business. The Profit Bonus may be paid
in cash or (restricted) Asta stock (at fair market value based on the 20 day
VWAP prior to the payment date), at the discretion of the Comp Committee, so
long as Asta remains a publicly traded company, provided, however, that if any
portion of the Profit Bonus is to be paid in stock, Asta shall include a cash
portion to be deducted from the applicable aggregate Profit Bonus due and
payable that is sufficient for the eligible employees to pay the estimated taxes
that they would be required to pay upon receipt of that stock. “VWAP” means, as
of any date, the average of the volume-weighted average price for the shares of
common stock of Asta on the NASDAQ Global Select Market (as reported by
Bloomberg for the hours 9:30 a.m. to 4:00 p.m. New York City time) on each
trading day during the applicable period.

 

3.4     In addition to Base Salary, any Annual Bonus and/or Profit Bonus payable
as above provided, Executive shall be entitled during the Employment Period to
participate in all incentive, savings, and retirement plans, practices, policies
and programs made available from time to time to other management-level
employees of Asta and its subsidiaries.

 

3.5     Executive and Executive’s qualified family members, as the case may be,
shall be eligible to participate in, and shall receive all benefits under, the
welfare benefit plans, practices, policies and programs (specifically including
but not limited to health insurance benefits) made available from time to time
to other management-level employees of Asta and its subsidiaries.

 

3.6     During the Employment Period, Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by Executive in
connection with the Business of the Company in accordance with the applicable
policies, practices and procedures of the Company and its affiliates.

 

3.7     During the Employment Period, Executive shall be entitled to four weeks
of paid vacation per year pursuant to the terms and conditions in Asta’s
policies in effect from time to time. Executive shall accrue vacation days at
the rate of 1.67 days per month. Vacation days cannot be carried over to the
next year and Executive shall not be entitled to any pay for accrued and unused
vacation days. Upon termination of employment, other than if Executive’s
employment is terminated for Cause or if he resigns with Good Reason pursuant to
Section 7(e), Executive shall be entitled to be paid for accrued and unused
vacation days.

 

 

 
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                       3.8 If the Business is sold to a third party in a
stand-alone sale of the Business during the Employment Period, the Management
Team will receive an amount (“Sale Bonus”) equal to 20.0% of the value of (x)
the closing cash or other fixed non-cash consideration received at closing and
(y) the fixed deferred cash amount, received by Asta from that sale, net of
expenses, taxes (including without limitation transactional and Asta corporate
taxes attributable to the transaction) and payment of debt and other liabilities
(the “Value”). Asta’s Comp Committee in its sole discretion, after consultation
with Executive (so long as the Executive is an employee), will set the
allocation of the Value to Executive (not less than 10% nor more than 15% of the
Value constituting part of the Sale Bonus) and the remainder to the other
members of the Company’s Management Team. The payment of 50.0% of the Sale Bonus
will be deferred for a period of two years and remain subject to reduction
during such time pro rata to the members of the Management Team (A) on a first
loss basis for indemnification claims or offsets related to fraud or
misrepresentations attributable to the actions or inactions of any members of
the Management Team and (B) for 20.0% of all other indemnification claims or
offsets, in each case, against the purchase price for the Business. One half of
the deferred amount will be paid on the one-year anniversary of the deferral and
the second half paid on the second anniversary of deferral. Any fixed non-cash
consideration shall be valued at fair market value as determined by the Board,
in good faith, which value shall be deemed to be final and conclusive.

 

3.9       Notwithstanding any other provision of this Agreement, the Company
retains the right, in its sole discretion, to refuse to enter into any
agreement, understanding or arrangement that might or would lead to revenue or
business for the Company. Asta will, as sole owner of the Company following the
date hereof, be entitled to operate the Company in its sole discretion, as it
deems appropriate, including any sale. Nothing herein shall cause “Profit Bonus”
or “Sale Bonus” to be construed as constituting an equity interest in the
Company in any form or manner. The Company shall maintain a standalone
profit-and-loss statement.

 

4.      Inventions.

 

4.1     Executive agrees that any Invention, as defined below, shall be the sole
and exclusive property of the Company, and further agrees to: (a) promptly and
fully inform the Company in writing of any such Inventions; (b) assign to the
Company all of Executive’s rights in and to such Inventions, and to applications
for patents and copyright registrations and to patents and copyright
registrations granted upon such Inventions in the United States or in any
foreign country; and (c) promptly acknowledge and deliver to the Company,
without charge to the Company but at the Company’s expense, such written
instruments and perform such other acts as may be necessary, in the reasonable
opinion of the Company, to obtain and maintain patents and copyright
registrations and to vest the entire rights, interest in and title thereto in
the Company.

 

4.2     Executive and the Company understand that the provisions of this
Agreement requiring assignment of Inventions to the Company will not apply to
any particular Invention that Executive can demonstrate meets each and all of
the following criteria: (a) Executive develops entirely on his own time,
completely outside of Executive’s normal working hours; (b) Executive develops
without using Company equipment, supplies, facilities or trade secret or
Confidential Information, as defined below; (c) does not result from any work
performed by Executive for the Company; and (d) does not, either at the time of
conception or at the time of reduction to practice, directly relate to the
Business, as then conducted or planned to be conducted at the time of conception
or at the time of reduction to practice. Any such Invention meeting all of the
criteria set forth in clauses (a) through (d) above will be owned entirely by
Executive, even if developed by Executive during the Employment Period or
otherwise during the time period of his employment or association with the
Company. Finally, Executive agrees and covenants that he will not individually
file any patent applications relating to Inventions without first obtaining an
express release from a duly authorized Company representative.

 

 

 
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4.3     For purposes of this Agreement, the term “Inventions” means all
discoveries, improvements, inventions, ideas and works of authorship, whether
patentable or copyrightable, conceived or made by Executive either solely or
jointly with others, and relating to any consultation, work or services
performed by Executive with, for on behalf of or in conjunction with Asta, the
Company or their affiliates or based on or derived from Confidential
Information.

 

5.     Confidential Information.

 

5.1     Executive will hold all Confidential Information, as defined below, in
the strictest confidence and never use, disclose, or publish any Confidential
Information without the prior express written permission obtained from a
representative duly authorized by the Company Board. Executive agrees to
maintain control over any Confidential Information obtained prior to or during
the term of this Agreement, and restrict access thereto to Asta, the Company or
their affiliates or their respective employees, agents or other associated
parties who have a need to use such Confidential Information for its intended
purpose.

 

5.2     Promptly upon the Company’s written request (but in any event within ten
days), all records and any compositions, articles, devices and other items which
disclose or embody Confidential Information in Executive’s possession, including
all copies, excerpts or specimens thereof, regardless of whether prepared or
made by Executive or by others, will be destroyed or returned to the Company, at
the Company’s option, by Executive and Executive will certify in writing to the
Company that he has destroyed or returned all Confidential Information and
embodiments thereof as required under this Agreement.

 

5.3     For purposes of this Agreement, the term “Confidential Information”
shall mean all information developed by Executive as a result of his work with,
for, on behalf of, or in conjunction with, Asta, the Company or their affiliates
(individually or collectively, an “Asta Company”) and any information relating
to an Asta Company’s processes and services, including information relating to
research, know-how, formulae, product or service ideas, inventions, trade
secrets, patents, patent applications, systems, products, programs and
techniques and any secret, proprietary or confidential information, knowledge or
data of an Asta Company, except such information that was developed by Executive
prior to his employment by the Company. All information disclosed to Executive
or to which Executive obtains access, whether originated by Executive or by
others, and which is treated by an Asta Company as “Confidential Information” or
which Executive has a reasonable basis to believe is “Confidential Information,”
will be presumed to be “Confidential Information” for purposes of this
Agreement. Notwithstanding the foregoing, the term “Confidential Information”
will not apply to information which (i) Executive can establish by documentation
was known to Executive prior to its receipt by Executive from an Asta Company,
(ii) is lawfully disclosed to Executive by a third party not deriving such
information from an Asta Company, (iii) is presently in the public domain or
becomes a part of the public domain through no fault of Executive, or (iv) is
required to be disclosed pursuant to applicable law, rule, regulation, or court
or administrative order; provided, however, that Executive shall take reasonable
steps to obtain confidential treatment for such items and shall promptly advise
Asta of Executive’s notice of any such requirement in order to permit the
Company to obtain such confidential treatment on its own behalf. Notwithstanding
anything to the contrary herein, if Executive has concerns about possible
violations of federal or state law or regulations, the Company encourages
Executive to report such concerns to the General Counsel of Asta. In addition,
nothing in this Agreement shall prohibit Executive from reporting or disclosing
information under the terms of Asta’s Reporting Suspected Violations of Law
Policy.

 

 

 
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6.      No Solicitation of Customers or Employees. Executive acknowledges that
each Asta Company has invested and will continue to invest substantial time,
effort and expense in acquiring and compiling its proprietary information, trade
secret and Confidential Information and in assembling its present staff of
personnel. In order to protect the business value of each Asta Company’s
proprietary information, trade secrets and Confidential Information, during
Executive’s employment with an Asta Company and for two years immediately
following the end of that employment with an Asta Company for any reason,
whether or not initiated by the Executive or the Company, Executive agrees: (a)
that all Confidential Information as defined above, also includes information
regarding customers and prospective customers of an Asta Company, of which
Executive learns during his employment with an Asta Company, and Executive
agrees not to disclose or share any Confidential Information during said two
year period; and (b) not to, directly or indirectly, induce or solicit any
employees or customers of an Asta Company or its affiliates to leave their
employment with an Asta Company or any of its affiliates without the unanimous
prior written consent of the Company Board. Each of the restrictive covenants
set forth above are separate and severable covenants under this Section 6.

 

7.      Termination. This Agreement will begin on the date first written above
and shall continue until the five-year anniversary of such date with possibility
for renewal if agreed upon by both parties in writing. Nevertheless, Executive’s
employment under this Agreement may be earlier terminated in any of the
followings ways: (a) immediately and automatically upon Executive’s death; (b)
by the Company, upon not less than 14 days prior written notice to Executive, as
a result of Executive’s incapacity due to physical or mental illness or injury
resulting in Executive’s absence from, or inability to perform, his full-time
duties hereunder for six consecutive weeks; (c) by the Company immediately for
Cause; (d) by the Company upon not less than 14 days prior written notice to
Executive for any reason or no reason; (e) by Executive immediately for Good
Reason; or (f) by Executive upon not less than 30 days prior written notice to
the Company for any reason or no reason.

 

8.     Effects of Termination. Following any termination of Executive’s
employment under this Agreement, all compensation and benefits provided to
Executive under this Agreement shall cease to accrue as of the date of such
termination, except as set forth in the paragraphs below.

 

8.1     In the case of a termination arising under Section 7(a) from Executive’s
death or under Section 7(b) from Executive’s incapacity, the Company shall, for
a period of one month following such death, pay to the estate of Executive an
amount equal to Executive’s monthly payment of Base Salary and continue the
welfare benefit programs contemplated under Section 3.5 above, including paying
all premiums for coverage for Executive’s dependent family members under all
health, hospitalization, disability, dental, life and other insurance plans that
the Company maintained at the time of Executive’s death. All deferred amounts,
cash, stock and/or stock options will vest immediately on termination and be
paid to the estate of Executive when they are scheduled to be paid pursuant to
this Agreement.

 

8.2     In the case of a termination arising under Section 7(d) from the
Company’s termination without Cause, or under Section 7(e) from Executive’s
resignation with Good Reason, then, subject in all cases to Executive’s
execution and delivery to the Company of a complete release and waiver of all
claims in customary and negotiated form reasonably acceptable to the parties,
the Company shall: (a) pay Executive severance pay in the form of continued
payment of the Base Salary in accordance with the Company’s normal payroll cycle
for two years after termination; and (b) if Executive elects continued coverage
under COBRA, reimburse Executive for his health insurance premiums (for both
Executive and his family) for a period of 24 months from the effective date of
the release, but only to the extent that the Company was paying such premiums at
the time of termination. All deferred amounts, cash, stock and/or stock options
will vest immediately on termination and be paid to Executive when they are
scheduled to be paid pursuant to this Agreement. In addition, Executive would be
entitled to any earned but unpaid Profit Bonus that has not been paid to
Executive for fiscal year(s) prior to the fiscal year in which the termination
hereunder occurs.

 

 

 
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8.3     In the case of a termination arising under Section 7(c) from the
Company’s termination with Cause or under Section 7(f) from the resignation of
the Executive without Good Reason, then no severance or continued benefits shall
be due to Executive.

 

 

9.     Return of Company Property. All correspondence, reports, records, charts,
advertising materials, designs, patents, business plans, financial statements,
manuals, memoranda, lists, referral sources, and other property of the Company
or its affiliates and in the possession or custody of Executive shall be and
remain the property of the Company and its affiliates, as applicable. Any such
documentation, information or property that is in the possession or custody of
Executive shall be delivered promptly to the Company during the term of this
Agreement and/or upon termination of Executive’s employment.

 

10.     Non-Competition.

 

10.1     In consideration of the various benefits provided by the Company to
Executive under this Agreement, Executive agrees to be bound by the restrictive
covenant set forth in this Section during the Restricted Period (as defined
below). Executive recognizes and acknowledges the competitive and proprietary
nature of the Business. Accordingly, Executive agrees that, during the
applicable Restricted Period, as defined below, Executive shall not, without the
prior written consent of the Company (which the Company may withhold or
condition in its sole and complete discretion), for himself or on behalf of any
other person or entity, directly or indirectly, either as principal, agent,
stockholder, lender, consultant, officer, director, employee, agent,
representative or in any other capacity, own, manage, operate or control,
connected or employed by, in any manner with, or engage in or have any financial
interest in, any enterprise engaging in the Restricted Business, as defined
below, anywhere in the Restricted Territory, as defined below.

 

10.2     Nothing contained in this Agreement shall preclude Executive from
purchasing or owning common stock or equity in any company engaging in the
Restricted Business if such stock is publicly traded and Executive’s holdings
therein do not exceed one percent of the total number of issued and outstanding
shares of capital stock of such company.

 

10.3     For purposes of this Agreement: (a) “Restricted Period” means the
period commencing on the date of this Agreement and (x) ending of the earlier
the two-year anniversary of (i) the termination of this Agreement if Executive’s
employment is terminated for Cause pursuant to Section 7(c) or if he resigns
without Good Reason pursuant to Section 7(f) or (y) ending on the date of
termination of this Agreement if Executive’s employment is terminated without
Cause pursuant to Section 7(d) or if he resigns with Good Reason pursuant to
Section 7(e); (b) “Restricted Business” means the Business of the Company
(including any portion of the Business conducted through affiliates or
subsidiaries of the Company) as conducted as of the date of expiration or
termination of this Agreement (and as previously conducted within the two years
prior to the date of such expiration or termination ), and any new businesses
that are operated by the Company or any business that is operated by an Asta
Company with which the Executive has had involvement or received any
Confidential Information, including any substantially similar business that is
competitive with the Business or those new or other businesses; and (c)
“Restricted Territory” means anywhere in the United States where the Company or
any of its affiliates, directly or indirectly, conducts the Business as of the
date of expiration or termination of this Agreement or has conducted business
within one year thereof.

 

10.4     If any part of this Section 10 (or any of the restrictive covenants set
forth herein) should be determined by an arbitrator or court of competent
jurisdiction to be unreasonable in duration, geographic area, or scope, then
this Section 10 (and any other section herein) is intended to and shall extend
to the maximum extent permitted by law for such period of time, geographic area
activity as is determined by such arbitrator or court.

 

11.     Indemnification. Asta will indemnify the Executive as provided in Asta’s
Bylaws.

 

 

 
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13.      No Conflicting Agreements. Executive represents and warrants to the
Company that the execution of this Agreement by Executive and Executive’s
employment by the Company, and the performance of Executive’s duties hereunder,
will not violate or breach any agreement with any former or existing employer,
client, or any other person, firm or entity, to which agreement Executive is a
party or by which agreement Executive is bound. Except as disclosed on the
attached Exhibit A, Executive also represents and warrants that he is not
affiliated in any manner (whether as a stockholder, member, partner, manager,
director, officer, employee or otherwise) with any person or entity that has any
business relationship with the Company.

 

14.     Assignment; Binding Effect. Executive understands that the Company is
employing him on the basis of his personal qualifications, experience and
skills. Therefore, Executive agrees that he cannot delegate any portion of his
obligations under this Agreement. Executive may also not assign any of his
rights under this Agreement without the prior written consent of the Company,
which consent may be conditioned or withheld in the sole and complete discretion
of the Company. Subject to the preceding two sentences, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective heirs, legal representatives, and permitted successors and
assigns.

 

15.     Complete Agreement. This Agreement is not a promise of future
employment. Except as specifically provided herein, Executive has received no
oral representations, and has no other understandings or agreements with the
Company (oral or written) or any of its officers, directors or representatives
covering the same subject matter as this Agreement. This written Agreement,
together with its exhibits and schedules, is the final, complete and exclusive
statement and expression of the agreement between the Company and Executive
pertaining to Executive’s employment. This Agreement may not be later modified
except in a writing signed by a duly authorized officer of the Company and
Executive, and no term of this Agreement may be waived except by a writing
signed by the party waiving the benefit of such term. This Agreement hereby
supersedes any other employment or consulting agreements or understandings,
written or oral, between the Company and Executive.

 

16.      Notices. Whenever any notice is required hereunder, it shall be given
in writing addressed as follows:

 

If to the Company:               SIMIA CAPITAL, LLC

210 Sylvan Avenue

Englewood, NJ 07632

Attention: Bruce Foster, CFO

 

With a copy to:                     Mandelbaum Salsburg, P.C.

3 Becker Farm Road

Suite 105

Roseland, NJ 07068

Attention: Daniel J. Barkin, Esq.

 

If to Executive:                     Mr. Patrick Preece

20 Ocean View Drive

Stamford, CT 06902

 

Notice shall be deemed to be delivered four days after it is mailed by
registered or certified mail, postage prepaid, return receipt requested or one
day after it is sent by a reputable overnight courier service. Either party may
change the address for notice by notifying the other party of such change in
accordance with this Section.

 

 

 
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17.     Severability; Blue Pencil Doctrine. In the event that any one or more of
the provisions of this Agreement or any application thereof, shall be found to
be invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions and any application thereof, shall
not in any way be affected or impaired thereby. To the extent any provision of
this Agreement is determined by the Arbitration Tribunal (as defined below) or
court of competent jurisdiction to be unenforceable, the arbitrator or court of
competent jurisdiction shall reform any such provision to make it enforceable to
the maximum extent permitted by law. The provisions of this Agreement shall,
where possible, be interpreted so as to sustain their legality and
enforceability.

 

18.     Dispute Resolution.

 

18.1     To the greatest extent possible, the parties will endeavor to resolve
any disputes relating to the Agreement through amicable negotiations. Failing an
amicable settlement, any controversy, claim or dispute arising under or relating
to this Agreement, including the existence, validity, interpretation,
performance, termination or breach of this Agreement, other than as set forth
below, shall be settled by binding arbitration before a three person arbitration
panel (the “Arbitration Tribunal”) which will be jointly appointed by the
Parties. (If the Parties cannot agree on the Arbitration Tribunal, each side
shall select one arbitrator and the two selected arbitrators shall select the
third arbitrator). The Arbitration Tribunal shall self-administer the
arbitration proceedings utilizing the Commercial Rules of the American
Arbitration Association (“AAA”). The Arbitration Tribunal must consist of at
least one retired judge of a state or federal court of the United States or a
licensed lawyer with at least 20 years of corporate or commercial law
experience.

 

18.2     The arbitration will be held in New York, New York. Each party will
have discovery rights as provided by the Commercial Rules of the AAA within the
limits imposed by the arbitrators. It is the intent of the parties that any
arbitration will be concluded as quickly as reasonably practicable. Once
commenced, the hearing on the disputed matters will be held four days a week
until concluded, with each hearing date to begin at 10:00 a.m. and to conclude
at 5:00 p.m. The arbitrators will use all reasonable efforts to issue the final
written report containing the award or awards within a period of twenty (20)
business days after closure of the proceedings. Failure of the arbitrators to
meet the time limits of this Section will not be a basis for challenging the
award. The Arbitration Tribunal will not have the authority to award punitive
damages to either party. Each party will bear its own expenses, but the parties
will share equally the expenses of the Arbitration Tribunal. The Arbitration
Tribunal shall award attorneys’ fees and other related costs payable by the
losing party to the successful party. This Agreement will be enforceable, and
any arbitration award will be final and non-appealable, and judgment thereon may
be entered in any court of competent jurisdiction. Notwithstanding the
foregoing, claims for injunctive relief for breaches of Sections 4, 5, 6, 9 and
10, and claims to enforce arbitration awards, shall be brought in a state or
federal court in New York.

 

19.     Equitable Relief. Executive acknowledges and agrees that it would be
difficult to fully compensate the Company for damages resulting from the breach
or threatened breach of the covenants contained in Sections 4, 5, 6, 9 and 10 of
this Agreement, and that any such breach would cause the Company irreparable
harm. Accordingly, the Company will be entitled to seek injunctive relief,
including but not limited to temporary restraining orders, preliminary
injunctions and permanent injunctions, to enforce the terms thereof, without the
need to demonstrate irreparable harm or, to the extent permitted by applicable
law, the need to post any bond. This right to injunctive relief will not,
however, diminish any of the Company’s other legal rights and remedies under
this Agreement or at law.

 

20.      Governing Law; Jurisdiction and Venue. This Agreement shall in all
respects be construed according to the laws of the State of New York,
notwithstanding the conflicts-of-law provisions of such state. Subject to the
provisions of Section 18 above, any claims for injunctive relief arising under
this Agreement, and any claims to enforce an earlier issued arbitration award,
shall be exclusively decided by a state or federal court in the State of New
York. Executive hereby irrevocably waives his right, if any, to have any
disputes between him and the Company arising out of or related to this Agreement
decided in any jurisdiction or venue other than a state or federal court in the
State of New York. Furthermore, Executive hereby irrevocably (a) waives any
objection that he might have now or hereafter to the foregoing jurisdiction and
venue of any such proceeding, (b) submits to the exclusive jurisdiction of any
such court set forth above in any such proceeding, and (c) waives any claim or
defense of inconvenient forum.

 

 

 
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21.     WAIVER OF JURY TRIAL. EACH OF THE PARTIES HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING HEREUNDER OR BASED UPON ANY OF THE OTHER DEALINGS BETWEEN THEM RELATING
TO THE SUBJECT MATTER OF THIS AGREEMENT. EACH PARTY ACKNOWLEDGES THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP; THAT EACH
HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT; AND THAT EACH
WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY
FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A WRITTEN
AGREEMENT, SIGNED BY BOTH PARTIES, SPECIFICALLY REFERRING TO THIS SECTION 21).
FOR CLARITY, THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS OF THIS AGREEMENT.

 

22.     Further Assurances. Each party shall, without further consideration,
execute such additional documents as may be reasonably required in order to
carry out the purposes and intents of this Agreement.

 

23.     Interpretation. Executive has had a meaningful opportunity to work with
legal counsel of his choosing and has either availed himself of such opportunity
to his satisfaction or has independently determined not to seek such counsel.
Furthermore, Executive has a meaningful opportunity to review and negotiate the
terms and conditions of this Agreement. Since both parties have participated in
the negotiation, drafting and finalization of their business relationship and
documented such relationship in this Agreement, this Agreement will not be
interpreted as though it has been drafted solely by the Company.

 

24.     Waivers. No term or condition of this Agreement will be deemed to have
been waived nor shall there be any estoppel to enforce any provision hereof,
except by a written instrument executed by the party charged with waiver or
estoppel. A party’s delay, waiver or failure to enforce any of the terms of this
Agreement or any similar agreement in one instance shall not constitute a waiver
of its rights hereunder with respect to other violations of this or any other
agreement.

 

25.     No Third Party Beneficiaries. This Agreement is only for the benefit of
the Executive and the Company and no other person shall have any right, benefit
or interest under or because of this Agreement.

 

26.       Section 409A. (a) This Agreement is intended to comply with the
requirements of Section 409A of Internal Revenue Code of 1986, as amended (the
“Code”) and regulations promulgated thereunder (“Section 409A”) to the extent it
provides nonqualified deferred compensation (within the meaning of
Section 409A). To the extent that any provision in this Agreement is ambiguous
as to its compliance with Section 409A, the provision shall be read in such a
manner so that no payments due under this Agreement shall be subject to an
“additional tax” as defined in Section 409A(a)(1)(B) of the Code (the “Delay
Period”), except (A) to the extent of amounts that do not constitute a deferral
of compensation within the meaning of Treasury regulation Section 1.409A-1(b)
(including without limitation by reason of the safe harbor set forth in Treasury
regulation Section 1.409A-1(b)(9)(iii), as determined by the Company in its
reasonable good faith discretion); (B) benefits which qualify as excepted
welfare benefits pursuant to Treasury regulation Section 1.409A-1(a)(5); or (C)
other amounts or benefits that are not subject to the requirements of Section
409A of the Internal Revenue Code (the “Code”). For purposes of Section 409A,
each payment made under this Agreement shall be treated as a separate payment.
In no event may Executive, directly or indirectly, designate the calendar year
of payment. Notwithstanding anything contained herein to the contrary, Executive
shall not be considered to have terminated employment with the Company for
purposes of Section 7 hereof unless he would be considered to have incurred a
“termination of employment” from the Company within the meaning of Treasury
Regulation §1.409A-1(h)(1)(ii).

(b) To the extent that any right to reimbursement of expenses or payment of any
benefit in-kind under this Agreement constitutes nonqualified deferred
compensation (within the meaning of Section 409A) it shall be made or provided
in accordance with the requirements of Section 409A, including, where
applicable, the requirement that (i) any reimbursement is for expenses incurred
during the term of this Agreement (or such other time specified in this
Agreement), (ii) the amount of expenses eligible for reimbursement during a
calendar year may not affect the expenses eligible for reimbursement in any
other calendar year, (iii) the reimbursement of an eligible expense will be made
on or before the last day of the calendar year following the year in which the
expense is incurred, and (iv) the right to reimbursement is not subject to
liquidation or exchange for another benefit.

(c) Any payment otherwise required to be made to the Executive under this
Agreement at any date as a result of his termination of employment shall be
delayed for such period of time as may be necessary to meet the requirements of
Section 409A(a)(2)(B)(i) of the Code (the “Delay Period”). On the first business
day following the expiration of the Delay Period, the Executive shall be paid,
in a single lump sum, an amount equal to the aggregate amount of all payments
delayed pursuant to the preceding sentence and any remaining payments not so
delayed shall continue to be paid pursuant to the payment schedule set forth
herein.

 

 

 
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27.      Counterparts and Delivery. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument. Counterpart
signatures delivered by facsimile or other means of electronic transmission
shall be valid and binding to the same as the delivery of original ink
signatures.

 

28. Parachute Payments. In the event any payment of benefit (any “Payment”)
Executive would receive from the Company pursuant to or in conjunction with a
Change in Control” as defined in the Treasury Regulations promulgated under Code
section 280G would (i) constitute a “parachute payment” within the meaning of
Code section 280G,, and (ii) but for this sentence be subject to the excise tax
imposed by code Section 4999 (the “Excise Tax”) then such Payment, then the
payment shall be made by the company notwithstanding the loss of the income tax
deduction to the Company. The Executive shall be personally responsible for any
Excise Tax imposed on the payment.

 

*  *  *  *  *  *  *

 

 

 
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In Witness Whereof, the parties have executed this Employment Agreement as of
the date first above written.

 

 

COMPANY:     EXECUTIVE:               SIMIA CAPITAL, LLC                      

 

 

 

 

 

By:

/s/ Gary Stern

 

 

/s/ Patrick Preece

 

Name: Gary Stern

 

 

Patrick Preece

 

Title: Chairman

 

 

 

 

 

   

 

 

 
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EXHIBIT A

 

 

●

Lead the Company’s and Asta’s efforts to monitor servicing of Asta’s current
portfolio and develop and grow the Business;

 

●

Manage all facility, syndicate and underwriting and pricing processes, ensuring
losses and yields are within approved tolerances (5% of principal advances and
18% yield);

 

●

Manage sales, marketing, compliance and KYC activities;

 

●

Propose a yearly operating plan and budget identifying all key objectives and
associating the appropriate amount of incentives thereto;

 

●

Create periodic business metrics reporting and analysis as determined by the
Company Board or Company Chairman;

 

●

Identify other business lines when appropriate and present strategies for these
new asset classes to ASTA’s management;

 

●

Perform other duties as assigned by the Company Board or Asta’s Chief Executive
Officer;

 

●

Spend at least two days a week at Asta’s offices; and

 

●

Manage all Company employees ensuring that all have documented objectives,
measurements and performance reviews;

 

 

 
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Exhibit B

 

List of Preece Board Seats

 

 

Saving Children, Building Families Foundation

The Wellington Group

Star Angel Network

Vital Neuro, LLC

IndicaTree, LLC

 

 
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EXHIBIT C

               

DETERMINATION IF EXECUTIVE/MANAGEMENT TEAM IS ELIGIBLE FOR BONUS (18%
REQUIREMENT):

         

PRINCIPAL COLLECTED DURING PERIOD

     

$ 10,000,000 

               

ADD: INTEREST COLLECTED

     

$ 2,000,000

 

SUBTRACT: BAD DEBTS WRITTEN OFF

   

(200,000)

                 

NET RETURN FOR THE PERIOD

       

$ 1,800,000 

               

RATE OF RETURN

         

18%

               

IF QUALIFIED FOR ANNUAL BONUS, THE CALCULATION IS AS FOLLOWS:

               

REVENUE - CASH BASIS

     

$ 2,000,000

                 

OPERATING EXPENSES, INCLUDING ORDINARY CHARGES INCURRED BY THE COMPANY - CASH
BASIS

 

1,500,000

                 

NET PROFIT INCURRED FOR THE PERIOD

     

$ 500,000 

               

BONUS RATE

         

20%

               

TOTAL BONUS AMOUNT

       

$ 100,000 

               

PAYABLE IN CASH AND/OR STOCK

     

$ 50,000 

               

DEFERRED PORTION SUBJECT TO HOLDBACK

   

$ 50,000 

 

 

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