Document:

exv10w2

 

Exhibit 10.2

EXECUTIVE AGREEMENT

This Agreement is made as of this xx
of xxx,
200x, by and between Tellabs, Inc., a
Delaware corporation (the “Corporation”) and (the
“Executive”).

WITNESSETH:

WHEREAS, the Corporation wishes to attract and retain well-qualified executive
and key personnel and to assure both itself and the Executive of continuity of
management in the event of any actual or threatened Change in Control (as
defined in Paragraph 2) or Change in Management (as defined in Paragraph 3) of
the Corporation; and

WHEREAS, to achieve this purpose, the Board of Directors of the Corporation
considered and approved this agreement to be entered into with the Executive as
being in the best interests of the Corporation and its shareholders;

NOW, THEREFORE, in consideration of the premises and mutual covenants set forth
herein, the parties hereto agree as follows:

	1.	 	Operation of Agreement
	 
	 	 	The “effective date of this Agreement” shall be the date on which the
first to occur of a Change in Control or Change in Management occurs, and
this Agreement shall not have any force or effect whatsoever prior to that
date. This Agreement shall supersede, in its entirety, any previously
existing Change in Control Employment Agreement between Executive and the
Corporation.
	 
	2.	 	Change in Control
	 
	For the purposes of this Agreement, a “Change in Control” means the first of
the following events to occur:

	 	(d)	 	Any “person” (as defined in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)),
excluding for this purpose, the Corporation or any subsidiary of the
Corporation, or any employee benefit plan of the Corporation or any
subsidiary of the Corporation, or any person or entity organized,
appointed or established by the Corporation for or pursuant to the
terms of any such plan which acquires beneficial ownership of voting
securities of the Corporation, is or becomes the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly of securities of the Corporation representing 20% or more
of the combined voting power of the Corporation’s then outstanding
securities; provided, however, that no Change in Control will be
deemed to have occurred as a result of a change in ownership
percentage resulting solely from an acquisition of securities by the
Corporation; and provided further that no Change in Control will be
deemed to have occurred if a person inadvertently acquires an
ownership interest of 20% or more but then promptly reduces that
ownership interest below 20%;
	 
	 	(b)	 	During any two consecutive years, individuals who at the
beginning of such two-year period constitute the Board and any new
director (except for a director designated by a person who has
entered into an agreement with the Corporation to effect a
transaction described elsewhere in this definition of Change in
Control) whose election by the Board or nomination for election by
the Corporation’s stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved (such individuals
and any such new director, the “Incumbent Board”) cease for any
reason to constitute at least a majority of the Board;
	 
	 	(c)	 	Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets
of the Corporation (a “Business Combination”), in each case, unless,
following such Business Combination,

	 	 	 
	(i)	 	
all or substantially all of the individuals and
entities who were the beneficial owners of outstanding voting
securities of the Corporation immediately prior to such Business
Combination beneficially own, directly or indirectly, more than
50% of the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from
such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the
Corporation or all or substantially all of the Corporation’s
assets either directly or through one or

 

 

	 	 	 
	 	 	more subsidiaries) (the “Resulting Corporation”) in substantially the same proportions
as their ownership, immediately prior to such Business
Combination of the outstanding voting securities of the
Corporation;
	 	 	 
	(ii)	 	no person (as defined in Section 13(d) and 14(d) of
the Exchange Act)(other than the Corporation, the Resulting
Corporation or any employee benefit plan (or related trust) of
the Corporation or such Resulting Corporation) beneficially
owns, directly or indirectly, 20% or more of, respectively, the
then combined voting power of the then outstanding voting
securities of the Resulting Corporation, except to the extent
that such ownership resulted solely from ownership of
securities of the Corporation prior to the Business
Combination; and
	 	 	 
	(iii)	 	at least a majority of the members of the board of
directors of the Resulting Corporation were members of the
Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such
Business Combination;

	 	(d)	 	Approval by the stockholders of the Corporation of a complete
liquidation or dissolution of the Corporation; or
	 
	 	(e)	 	A tender offer (for which a filing has been made with the
Securities and Exchange Commission “SEC”) which purports to comply
with the requirements of Section 14(d) of the Securities Exchange Act
of 1934 and the corresponding SEC rules) is made for the stock of the
Corporation, and then the first to occur of:

	 	 	 	 	 
	 	 	
(i)
	 	Any time during the offer when the person making the
offer owns or has accepted for payment stock of the Corporation
with 25% or more of the total voting power of the Corporation’s
securities, or
	 	 	 	 	 
	 	 	
(ii)
	 	Three business days before the offer is to terminate
unless the offer is withdrawn first if the person making the
offer could own, by the terms of the offer plus any shares owned
by the person, stock with 50% or more of total voting power of
the Corporation’s securities when the offer terminates.

3. Change in Management

For purposes of this Agreement, a “Change in Management” shall occur in the
event that (a) Michael J. Birck is not for any reason the Chief Executive
Officer of the Corporation, or (b) if a Business Combination which is not a
Change in Control shall occur, Michael J. Birck is not for any reason the Chief
Executive Officer of the Resulting Corporation.

4. Employment

The Corporation hereby agrees to continue the Executive in its employ and/or
the employ of one or more of its subsidiaries and the Executive hereby agrees
to remain in the employ of the Corporation and/or such subsidiaries, for the
period commencing on the effective date of this Agreement and ending on the
third anniversary of such date (the “employment period”), to exercise such
authority and perform such executive duties as are commensurate with the
authority being exercised and duties being performed by the Executive
immediately prior to the effective date of this Agreement, which services shall
be performed at a location within the metropolitan area in which the Executive
was employed immediately prior to the effective date of this Agreement or such
other location as the Corporation may reasonably request. The Executive agrees
that during the employment period he/she shall devote his/her full business
time exclusively to his/her executive duties and shall perform such duties
faithfully and efficiently.

	5.	 	Compensation, Compensation Plans, Benefits and Perquisites
	 
	 	 	During the employment period, the Executive shall be compensated as
follows:

	 	(a)	 	He/she shall receive an annual salary at a rate which is not
less than his/her rate of annual salary immediately prior to the
effective date of this Agreement, with the opportunity for increases
from time to time thereafter which are in accordance with the
Corporation’s regular practices; provided, however, that such annual
salary shall be subject to reduction to the extent there is a general
reduction in the base salaries of executives with comparable duties.
	 
	 	(b)	 	He/she shall be eligible to participate on a reasonable basis
in the Corporation’s stock option plans, the annual incentive bonus
program and any other bonus and incentive compensation plans (whether
now or hereinafter in

 

 

	 	 	 	effect) in which executives with comparable
duties are eligible to participate, which plans must provide
opportunities to receive compensation which are at least as great as
the opportunities under the plans in which the Executive was
participating immediately prior to the effective date of this
Agreement.
	 
	 	(c)	 	He/she shall be entitled to receive employee benefits and
perquisites which are the greater of the employee benefits and
perquisites provided by the Corporation to executives with comparable
duties or the employee benefits and perquisites to which he/she was
entitled immediately prior to the effective date of this Agreement.
Such benefits and perquisites shall include, but not be limited to,
the benefits and perquisites included under the Tellabs Advantage
Program, and the Tellabs, Inc. Employee Welfare Benefits Plan.

	6.	 	Termination Following Change in Control or Change in Management

	 	(a)	 	For purposes of this Agreement, the term “termination” shall
mean (i) termination by the Corporation of the employment of the
Executive with the Corporation and all of its subsidiaries for any
reason other than death, disability or “cause” (as defined below), or
(ii) resignation of the Executive for “good reason” (as defined
below).
	 
	 	(b)	 	The term “good reason” shall mean:

	 	 	 
	 	 	
(i) the material reduction or material adverse modification of
Executive’s authority or duties, such as a substantial diminution or
adverse modification in Executive’s title, status, or
responsibilities;
	 	 	 
	 	 	
(ii) any reduction in Executive’s Base Salary (other than as may be
permitted under Paragraph 5(a));
	 	 	 
	 	 	
(iii) any failure to provide to Executive the opportunities to
receive compensation as required to be provided under Paragraph 5(b);
	 	 	 
	 	 	
(iv) any failure to pay or provide the benefits and perquisites
required to be provided under Paragraph 5(c);
	 	 	 
	 	 	
(v) any requirement that Executive relocate his principal place of
employment by more than a 50-mile radius from its location
immediately prior to the effective date of this Agreement, excluding,
if a Change in Control has not occurred, a move to the Corporation’s
headquarters, or if the Executive’s position is that of a functional
head for a region or a division, the headquarters of such region or
division;
	 	 	 
	 	 	
(vi) any material breach of this Agreement by the Corporation; or
	 	 	 
	 	 	
(vii) if a Change in Control has occurred, a reasonable determination
by the Executive that, as a result of a Change in Control and a
change in circumstances thereafter significantly affecting his/her
position, he/she is unable to exercise the authorities, powers,
function or duties attached to his/her position and contemplated by
Paragraph 4 of the Agreement.
	 	 	 
	 	 	
Notwithstanding the foregoing, any of the circumstances described in
this Paragraph 6(b) may not serve as a basis for resignation for
“good reason” by Executive unless the Executive has provided written
notice to the Corporation that such circumstance exists and the
Corporation has failed to cure such circumstance within 15 days
following such notice.

	 	(c)	 	The term “cause” means (i) the willful and continued failure by
the Executive to substantially perform his/her duties with the
Corporation and/or, if applicable, one or more of its subsidiaries
(other than any such failure resulting from his/her incapacity due to
physical or mental illness) after a demand for substantial
performance is delivered to him/her by the Board of Directors of the
Corporation which specifically identifies the manner in which the
Board believes the Executive has not substantially performed his/her
duties, (ii) the willful engaging by the Executive in gross
misconduct materially and demonstrably injurious to the property or
business of the Corporation or any of its subsidiaries, or (iii)
fraud, misappropriation or commission of a felony. For purposes of
this paragraph, no act or failure to act on the Executive’s part will
be considered “willful” unless done, or omitted to be done, by
him/her in bad faith and without reasonable belief that his/her
action or omission was in the interests of the Corporation or not
opposed to the interests of the Corporation.

	7.	 	Confidentiality
	 
	 	 	The Executive agrees that during and after the employment period, he/she
shall retain in confidence any confidential information known to him/her
concerning the Corporation and its subsidiaries and their respective
businesses for as long as such information is not publicly disclosed.

 

 

	8.	 	No Obligation to Mitigate Damages
	 
	 	 	The Executive shall not be obligated to seek other employment in
mitigation of amounts payable or arrangements made under the provisions of
this Agreement and the obtaining of any such other employment shall in no
event effect any reduction of the Corporation’s obligations under this
Agreement.
	 
	9.	 	Severance Allowance

	 	(a)	 	In the event of termination of the Executive during the
employment period, the Executive shall be entitled to receive a lump
sum severance allowance within five days of such termination, in an
amount which is equal to the sum of the following:

	 	 	 
	 	(i)	
 The amount equivalent to salary payments for 36 (24,
if a Change in Control has not occurred) calendar months, at the
rate required by Paragraph 5(a) and in effect immediately prior
to termination (or, if greater, at the highest rate in effect
under Paragraph 5(a) at any time during the period commencing on
the effective
date of this Agreement and ending on the termination date),
plus a pro rata share of the estimated amount of any bonus
which would have been payable for the bonus period which
includes the termination date; and
	 	 	 
	 	(ii)	
 In the event of a Change in Control the amount
equivalent to 36 calendar months of bonus at the target rate for
the year which includes his/her termination date.

	 	(e)	 	In addition to such amount under Paragraph 9(a) above, the
Executive shall also receive in cash the value of the incentive
compensation (including, but not limited to, employer contributions
to the Tellabs Advantage Program and the right to receive stock
awards and to exercise stock options and other bonus and similar
incentive compensation benefits) to which he/she would have been
entitled under all incentive compensation plans maintained by the
Corporation if he/she had remained in the employ of the Corporation
for 36 (24, if a Change in Control has not occurred) months after
such termination. The amount of such payment shall be determined as
of the date of termination and shall be paid as promptly as
practicable and in no event later than 30 days after such
termination.
	 
	 	(f)	 	The Corporation shall maintain in full force and effect for the
Executive’s continued benefit (and, to the extent applicable, the
continued benefit of his dependents) all of the employee benefits
(including, but not limited to, coverage under any medical and
insurance plans, programs or arrangements) to which he/she would have
been entitled under all employee benefit plans, programs or
arrangements maintained by the Corporation if he/she had remained in
the employ of the Corporation for 36 (24, if a Change in Control has
not occurred) calendar months after his/her termination, or if such
continuation is not possible under the terms and provisions of such
plans, programs or arrangements, the Corporation shall arrange to
provide benefits substantially similar to those which the Executive
(and, to the extent applicable, his/her dependents) would have been
entitled to receive if the Executive had remained a participant in
such plans, programs or arrangements for such 36-month (or, if
applicable, 24-month) period, as the case may be.

	10.	 	Adjustments in Case of
“Excess Parachute Payments”
	 
	 	 	If any payments or benefits received or to be received by the Executive in
connection with the Executive’s employment (whether pursuant to the terms
of this Agreement or any other plan, arrangement or agreement with the
Corporation, or any person affiliated with the Corporation) (the
“Payments”), will be subject to the tax (the “Excise Tax”) imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”)
(or any similar tax that may hereafter be imposed), the Corporation shall
pay at the time specified below, an additional amount (the “Gross-Up
Payment”) such that the net amount retained by the Executive, after
deduction of any Excise Tax on the Payments and any federal, state and
local income or other applicable tax and Excise Tax upon the payment
provided for by this paragraph, shall be equal to the Payments. For
purposes of determining the amount of the Gross-Up Payment, the Executive
shall be deemed to pay federal income taxes at the Executive’s highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the
Executive’s highest marginal rate of taxation in the state and locality of
the Executive’s residence on the date on which the Excise Tax is
determined, net of the maximum reduction in federal income

 

 

	 	 	taxes which
could be obtained from deduction of such state and local taxes. The
computations required by this paragraph shall be made by the independent
public accountants not then regularly retained by the Corporation, in
consultation with tax counsel selected by them and acceptable to the
Executive. The Corporation shall provide the Executive with sufficient
tax and compensation data to enable the Executive or his/her tax advisor
to verify such computations and shall reimburse the Executive for
reasonable fees and expenses incurred with respect thereto. In the event
that the Excise Tax is subsequently determined to be less than the amount
taken into account hereunder, the Executive shall repay to the Corporation
at the time that the amount of such reduction in Excise Tax is finally
determined the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable to the
Excise Tax and federal and state and local income tax imposed on the
Gross-Up Payment being repaid by the Executive) plus interest on the
amount of such repayment
from the date the Gross-Up Payment was initially made to the date of
repayment at the rate provided in Section 1274(b)(2)(B) of the Code (the
“Applicable Rate”). In the event that the Excise Tax is determined by the
Internal Revenue Service or by such independent public accountants to
exceed the amount taken into account hereunder (including by reason of any
payment the existence or amount of which cannot be determined at the time
of the Gross-Up Payment), the Corporation shall make an additional
Gross-Up Payment in respect of such excess (plus any interest, penalties,
fines or additions to tax payable with respect to such excess) at the time
that the amount of such excess if finally determined. Any payment to be
made under this paragraph shall be payable within five (5) days of the
determination of the accountants that such a payment is required hereunder
and, if applicable, within five (5) days of such determination that the
Excise Tax is greater or less than initially calculated but, in no event,
later than thirty (30) days after the Executive’s receipt of the Payments
resulting in such Excise Tax.
	 
	11.	 	Interest; Indemnification

	 	(c)	 	In the event any payment to Executive under this Agreement is
not paid within five business days after it is due, such payment
shall thereafter bear interest at the prime rate from time to time as
published in The Wall Street Journal, Midwest Edition.
	 
	 	(d)	 	The Corporation hereby indemnifies the Executive for all legal
fees and expenses incurred by Executive in contesting any action of
the Corporation with respect to this Agreement, including the
termination of Executive’s employment hereunder, or incurred by
Executive in seeking to obtain or enforce any right or benefit
provided by this Agreement.

	12.	 	Notices

Any notices, requests, demands and other communications provided for by this
Agreement shall be sufficient if in writing and if sent by registered or
certified mail to the Executive at the last address he/she has filed in writing
with the Corporation or, in the case of the Corporation, at its principal
executive offices.

 

 

	13.	 	Arbitration of Disputes and Reimbursements of Legal Costs
	 
	 	 	Any controversy or claim arising out of or relating to this Agreement (or the
breach thereof) shall be settled by final, binding and non-appealable
arbitration in Chicago, Illinois by three arbitrators. Subject to the
following provisions, the arbitration shall be conducted in accordance with
the rules of the American Arbitration Association (the “Association”) then in
effect. One of the arbitrators shall be appointed by the Corporation, one
shall be appointed by the Executive, and the third shall be appointed by the
first two arbitrators. If the first two arbitrators cannot agree on the
third arbitrator within 30 days of the appointment of the second arbitrator,
then the third arbitrator shall be appointed by the Association and shall be
experienced in the resolution of disputes under employment agreements for
executives of major corporations. Any award entered by the arbitrators shall
be final, binding and non-appealable and judgment may be entered thereon by
either party in accordance with applicable law in any court of competent
jurisdiction. This arbitration provision shall be specifically enforceable.
The arbitrators shall have no authority to modify any provision of this
Agreement or to award a remedy for a dispute involving this Agreement other
than a benefit specifically provided under or by virtue of the Agreement. If
the Executive prevails on any material issue which is the subject of such
arbitration or lawsuit, the Corporation shall be responsible for all of the
fees of the American Arbitration Association and the arbitrators and any
expenses relating to the conduct of the arbitration (including the
Corporation’s and the Executives’ reasonable attorneys’ fees and expenses).
Otherwise, each party shall be responsible for its own expenses relating to
the conduct of the arbitration (including reasonable attorneys’ fees and
expenses) and shall share the fees of the American Arbitration Association
equally.
	 
	14.	 	Non-Alienation
	 
	 	 	The Executive shall not have any right to pledge, hypothecate, anticipate
or in any way create a lien upon any amounts provided under this
Agreement; and no benefits payable hereunder shall be assignable in
anticipation of payment either by voluntary or involuntary acts, or by
operation of law, except by will or the laws of descent and distribution.
	 
	15.	 	Governing Law
	 
	 	 	The provisions of this Agreement shall be construed in accordance with the
laws of the State of Illinois.
	 
	16.	 	Amendment
	 
	 	 	This Agreement may be amended or canceled by mutual agreement of the
parties in writing without the consent of any other person and, so long as
the Executive lives, no person, other than the parties hereto, shall have
any rights under or interest in this Agreement or the subject matter
hereof.
	 
	17.	 	Successor to the Corporation
	 
	 	 	This Agreement shall be binding upon and inure to the benefit of the
Corporation and the Executive and their respective successors, heirs (in
the case of the Executive) and assigns (subject, in the case of the
Executive, to Paragraph 14 above) and any successor of the Corporation.
The Corporation shall require any successor to expressly assume the
liabilities, obligations and duties of the Corporation hereunder.
	 
	18.	 	Severability

In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, the remaining
provisions of this Agreement shall be unaffected thereby and shall remain in
full force and effect.

 

 

IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to
the authorization from its Board of Directors, the Corporation has caused this
Agreement to be executed in its name on its behalf, and its corporate seal to
be hereunto affixed and attested by its Secretary, all as of the day and year
first above written.

	 	 	 
	 	

Executive
	 	 	 

	 	TELLABS, INC.,

a Delaware corporation
	 	 	 

	 	By:	 

	 	 	

	 	Chief Executive Officer

ATTEST:

Secretary

(Seal)<PAGE>

                                                                    EXHIBIT 10.1

                               EMPLOYMENT CONTRACT

This Contract is entered into between United Financial Mortgage Corp., an
Illinois corporation (hereafter called "Company"), and Joseph Khoshabe
(hereafter called "Employee") this 1st day of August, 2003 and shall become
effective as of August 1, 2003.

The Company and/or its subsidiaries are engaged in the business of providing
mortgage, banking, brokerage and other financial and administrative services.
Company desires to engage the services of Employee as one of its key executives,
and Employee is willing and able to perform in that capacity.

Accordingly, in consideration of the mutual covenants herein contained, the
parties to this Contract agree as follows:

1.       Employment. Company hereby agrees to employ Employee, and Employee
         hereby accepts such employment with Company and/or one or more of its
         subsidiaries, on the terms and conditions in this Contract.

2.       Term of Employment. Subject to the provisions for termination hereafter
         provided, the term of Employee's employment under this Contract shall
         be for a period of two (2) years beginning on August 1, 2003, provided
         that the term of employment shall be automatically renewed for one
         additional year on each anniversary date beginning in 2005, unless
         either party has given the other written notice of non-renewal at least
         thirty (30) days prior to that anniversary date.

3.       Duties of Employee. Employee is employed as Chairman of the Board of
         Directors of the Company and Chairman of the Company. It is understood
         and agreed that Employee is subject to the direction and control of
         Company's Board of Directors, and shall, if requested by Company's
         Board of Directors during the term of this Contract, serve in any other
         additional executive capacity with Company or one or more of its
         subsidiaries, taking into consideration his experience and performance
         record to date with Company. Employee shall devote substantially all of
         his business time, attention, efforts, and energy to the business of
         Company, and may not, during the term of this Contract, be engaged in
         any other business activities which interfere with his ability to carry
         out his obligations hereunder. However, such restriction shall not be
         construed as preventing Employee from participating in civic and
         charitable activities or from making investments in non-competitive
         business enterprises so long as Employee will not be required to render
         personal services to any such activity or enterprise during Employee's
         normal business hours with Company.

4.       Compensation.

         a.       Base Salary. Commencing August 1, 2003, Company shall pay to
                  Employee an annual base salary of $450,000 (from which federal
                  withholding and social security taxes will be deducted)
                  payable monthly or semi-monthly in the same manner as salary
                  payments are paid to other key executives of Company. Such

                                       1

<PAGE>

                  annual base salary may be reset annually by action of the
                  Board of Directors, but shall not be reduced below $250,000
                  without the written consent of the Employee.

         b.       Employee shall be entitled to participate in such incentive
                  plan or plans as Company may have in effect from time to time.
                  Any bonus for fiscal year 2003 shall be in accordance with
                  Exhibit A attached hereto and incorporated herein by
                  reference. Thereafter, any plan or bonus arrangement shall be
                  at the established by the Compensation Committee or the Board
                  of Directors.

5.       Fringe Benefits.

         a.       Business Expenses. Employee shall, during his employment by
                  Company, be entitled to reimbursement for business and related
                  expenses subject to compliance with Company's policies
                  relating to such reimbursements.

         b.       Medical and other Benefits. Employee shall receive the same
                  benefits as are given to Company's other key executives as to
                  medical, dental, disability, retirement and other similar
                  benefits. In addition, Employee shall be provided with full
                  family medical and dental coverages with plan terms and equal
                  to the coverages that are provided to other employees.

         c.       Paid Vacation. Each fiscal year (or portion thereof) beginning
                  with fiscal year ending April 30, 2004, Employee may take four
                  (4) weeks of vacation which time his compensation shall be
                  paid in full. Unused vacation will not be carried over and
                  will not be paid unless by prior consent or request of the
                  Board.

         d.       Automobile. Company shall provide an automobile selected by
                  Employee for Employee's use at a cost of up to $2,000.00 per
                  month, and such automobile shall be replaced at least every 36
                  months. In the alternative, at Employee's option, Company
                  shall provide an allowance for the use of a late model vehicle
                  owned or leased by Employee in the amount of $2,000.00 per
                  month. Whether Employee is using an automobile owned or leased
                  by Company or by Employee, (i) Company shall pay or reimburse
                  Employee for maintenance and repair expenses of the automobile
                  upon submission of vouchers or itemized lists of such expenses
                  prepared in compliance with Company's policy, and (ii)
                  insurance shall be provided for or reimbursed by Company for
                  such vehicle. Employee shall be named as an additional insured
                  on any Company provided insurance policy covering such
                  automobile for public liability, and Company shall be named as
                  an additional insured on any Employee insurance policy
                  covering such vehicle for public liability. In the event the
                  automobile is damaged or destroyed by reason of accident,
                  theft, vandalism, or otherwise, Employee will not have any
                  liability to Company for any such loss or damage (including
                  out-of- pocket deductibles).

         e.       Life Travel/Accident and D&O Insurance. During the term of
                  this Contract, Company shall pay for and keep in full force
                  and effect life insurance policies on the life of, and with
                  the proceeds payable to, Employee (or his designated
                  beneficiary), it being understood that the proceeds payable
                  under such life insurance policies (whether provided by
                  Company and/or anyone or more of its

                                       2

<PAGE>

                  subsidiaries) shall at all times be a minimum of $350,000. If
                  the insurer that issues such policies permits Employee to
                  purchase additional insurance, Employee may do so at
                  Employee's expense.

         f.       Other Benefits. Company shall provide such other benefits for
                  its key executives and other employees as it may determine
                  from time to time. No provision of this Contract shall
                  preclude Employee from participating in any benefit plan now
                  in effect or hereafter adopted by Company for its key
                  executives, but Company shall be under no obligation to
                  provide for Employee's participation in, or to institute, any
                  such plan or to make any contribution under any such plan,
                  unless such opportunities are provided to all Company
                  employees as a group, or to all of Company's key executives as
                  a group.

6.       Termination of Employment.

         a.       By Company.

                  (i)      Date of Termination. Company may at any time
                           terminate Employee's employment, in which event
                           Employee shall leave the premises on such date (the
                           "Date of Termination") as is specified by Company in
                           the notice of termination (which date can be as early
                           as the date of such notice). If such termination is
                           not "for cause" (as defined herein) Company shall
                           provide Employee with written notice of such
                           termination thirty (30) days prior to the Date of
                           Termination.

                  (ii)     For Cause. If such termination is "for cause,"
                           Company will have no obligation to pay Employee any
                           compensation or fringe benefits (other than benefits
                           payable as of the Date of Termination pursuant to a
                           Company life insurance, disability, retirement or
                           other benefit plan) accrued after the Date of
                           Termination. For purposes of the preceding sentence,
                           the phrase "for cause" means:

                           (a)      Employee's death or absence from Company's
                                    offices for physical or mental illness, or
                                    any other reason, for a total period of one
                                    hundred and twenty (120) days in any twelve
                                    month period (except that any vacation
                                    periods, travel on Company business, or
                                    leaves of absence specifically granted by
                                    Company's Board of Directors shall not be
                                    considered as periods of absence from
                                    employment);

                           (b)      Employee's serious misconduct in or habitual
                                    neglect of the performance of his or her
                                    duties or obligations hereunder which in the
                                    commercially reasonable judgment of the
                                    Company's Board of Directors materially
                                    injures the Company;

                           (c)      Employee's conviction for any felony or act
                                    of fraud or breach of trust against Company,
                                    or Employee fails to observe any covenant
                                    referenced in Paragraph 7 below.

                                       3

<PAGE>

                           (d)      Employee is guilty of an act of moral
                                    turpitude or has a substance abuse problem
                                    that materially affects the performance of
                                    Employee's duties or materially injures the
                                    Company.

                           (e)      The willful or gross misconduct of the
                                    Employee which causes material financial
                                    harm or damage to the Company.

                           If Company intends to terminate Employee's employment
                           under any of Subparagraph (ii)(b), (c), (d) or (e)
                           above and if all of Employee's act or omissions
                           giving rise to such determination to terminate
                           Employee's employment are susceptible to cure by
                           Employee within a period of thirty (30) days, the
                           written notice given to Employee will state that the
                           effective date of termination will be thirty (30)
                           days from the date of such notice, and such notice
                           will be rescinded if Employee effects a substantially
                           cure within such thirty (30) day period.

                           Notwithstanding the foregoing, nothing herein shall
                           be deemed to waive the rights of Employee and the
                           obligations of Company under the American with
                           Disabilities Act.

                  (iii)    Not for Cause. If such termination is other than "for
                           cause" and occurs within the initial two (2) year
                           term:

                           (a)      Company shall be obligated to pay to
                                    Employee, in regular payroll period
                                    installments, a sum equal to the amount of
                                    Employee's then annual base salary and most
                                    recent incentive bonus, pro rated for the
                                    remaining unexpired term of this agreement.
                                    Such payments shall commence on the first
                                    regular payroll date unless terminated by
                                    Employee's breach of Section 7. At the
                                    option of the Board of Directors, the
                                    aggregate due hereunder may be paid in a
                                    lump sum, payable within ten (10) days of
                                    termination.

                           (b)      At the option of Employee, Company shall
                                    transfer the title (free and clear of any
                                    liens or other encumbrances) to any
                                    automobile then owned (or leased) for use
                                    by, or otherwise provided to, Employee upon
                                    the payment of the then wholesale value of
                                    the automobile to Company by Employee.
                                    Company shall pay any transfer taxes in
                                    connection with such transfer.

                           (c)      For a period of eighteen (18) months after
                                    the Date of Termination, Employee shall be
                                    eligible under COBRA, at Employees' expense
                                    to continue the medical and dental benefits
                                    referred to in Subparagraph 5.b.

                                       4

<PAGE>

                  (iv)     In cases of termination other than for death, the
                           Employee shall be deemed to have resigned effective
                           as of the Date of Termination from all positions held
                           in the Company, including without limitation any
                           position as a director, officer, agent, trustee or
                           consultant of the Company or any subsidiary of or
                           other entity under common control with the Company
                           and hereby irrevocably consents to all Board actions
                           to effectuate or acknowledge such resignation.

         b.       By Employee. Employee may terminate his employment at any
                  time. If termination is by Employee, Company will have no
                  obligation to pay to Employee any compensation or fringe
                  benefits (other than benefits payable as of the date of
                  termination pursuant to a Company life insurance, disability,
                  retirement or other benefit plan) accrued after the date of
                  termination.

7.       NON-COMPETITION. NON-SOLICITATION AND CONFIDENTIALITY

         a.       The Employee covenants and agrees with the Company as follows:

                  Confidential Information. Employee acknowledges that, in and
                  as a result of his employment by the Company, he will be
                  making use of, acquiring, and/or adding to confidential
                  information of a special and unique nature and value relating
                  to such matters as the Company's proprietary information,
                  copyrights, trade secrets, systems, procedures, manuals,
                  confidential reports, and lists of customers and brokers
                  (which are deemed for all purposes confidential and
                  proprietary), as well as the nature and type of services
                  rendered by the Company, the methods used and preferred by the
                  Company's customers and brokers, and the fees paid by or to
                  them. As a material inducement to the Company to enter into
                  this Agreement and to pay to Employee the compensation and
                  benefits stated in Paragraphs 4 & 5 above, Employee covenants
                  and agrees that he shall not, at any time during or for two
                  years following the term of his employment, directly or
                  indirectly, divulge or disclose for any purpose whatsoever any
                  confidential information that has been obtained by, or
                  disclosed to him, as a result of his employment by the
                  Company.

                  (i)      that he will not (without the prior written consent
                           of the Company), so long as he is employed by the
                           Company, and for a period of one (1) year thereafter,
                           directly or indirectly, in any manner whatsoever,
                           including, without limitation, either individually or
                           in partnership or jointly, or in conjunction with any
                           other person ("person" shall mean an individual,
                           trust, partnership, body corporate or politic,
                           association or other incorporated or unincorporated
                           organization), as principal, agent, shareholder, or
                           in any other manner whatsoever, carry on or be
                           engaged in or be concerned with interested in or
                           permit his name or any part thereof, to be used or
                           employed by any person that competes directly with
                           the Company, or any successor or subsidiary of the
                           Company, in the business of providing mortgage
                           banking, mortgage brokerage; mortgage servicing

                                       5

<PAGE>

                           and any other financial and administrative services
                           competitive with the business of the Company.

                  (ii)     that he will not, so long as he is employed by the
                           Company and for a period of one (1) year thereafter,
                           interfere with, disrupt or attempt to disrupt any
                           then existing relationship, contractual or otherwise,
                           between the Company or any successor or subsidiary of
                           the Company, and any of their suppliers, customers,
                           clients, executives, employees or other persons with
                           whom they deal.

         b.       In the event that any clause or portion of any covenant
                  contained in this Section 7 shall be unenforceable or declared
                  invalid for any reason whatsoever, such enforceability or
                  invalidity shall not affect the enforceability or validity of
                  the remaining portions of the covenant and such unenforceable
                  or invalid portion shall be severable from the remainder of
                  this Agreement.

         c.       The foregoing covenants are given by the Employee
                  acknowledging that he is an individual with specific knowledge
                  of the affairs of the Company and that the Company carries on
                  business in numerous states. The Employee hereby acknowledges
                  and agrees that all restrictions contained in this Agreement
                  are reasonable and valid as to time period and scope and are
                  reasonably required for the protection of the interests of the
                  Company and its parent or subsidiary corporations, officers,
                  directors, shareholders and other employees and were
                  negotiated by him and his counsel and that the term of this
                  agreement provides good and sufficient consideration for the
                  provisions contained herein.

         d.       It is understood and acknowledged by the parties hereto that
                  the covenants set out in this section are essential elements
                  to this Agreement.

8.       Injunctive Remedy. In the event of a breach or a threatened breach by
         the Employee of the provisions of Paragraph 7 of this Agreement,
         Company shall be without adequate remedy at law and, therefore, the
         provisions of that Paragraph 7 may be enforced by a preliminary and/or
         permanent injunction restraining Employee from commission of such
         breach to the full extent hereof, or to such lesser extent as a court
         of competent jurisdiction may deem just and proper for the reasonable
         protection of the rights, interests and remedies available to it for
         such breach or threatened breach, including the recovery of money
         damages. In addition, in the event that either party shall be required
         to retain counsel to enforce the provisions of this Agreement, it is
         understood and agreed that damages shall include, but shall not be
         limited to, reasonable attorneys' fees and expenses incurred by the
         prevailing party.

9.       Definition. For all purposes of this Agreement, the phrase "directly or
         indirectly" shall include, inter alia, employment by, ownership of any
         direct or indirect interest in, or rendering of any service to any
         person, partnership, association, limited liability company or
         corporation, whether as an individual employee, partner, shareholder,
         director,

                                       6

<PAGE>

         member, officer, principal, manager, agent, trustee, consultant,
         investor, single proprietor, or pursuant to any other relationship or
         capacity.

10.      Arbitration. All disputes, controversies or matters of interpretation
         arising out of or in connection with this Agreement, except for any
         disputes wherein a request is made for injunctive relief under
         Paragraph 8 of this Agreement, shall be submitted by either party for
         final and binding arbitration to be conducted in the State of Illinois
         in accordance with the Rules of the American Arbitration Association.
         The award rendered may be entered as a judgment in any court of
         competent jurisdiction in the State of Illinois and shall not be
         subject to appeal.

11.      Severability. The invalidity or unenforceability of any provision in
         the Agreement shall not in any way affect the validity or
         enforceability of any other provision and this Agreement shall be
         construed in all respects as if such invalid or unenforceable provision
         had never been in the Agreement.

12.      Notices. All notices allowed or required to be given hereunder must be
         in writing and sent by overnight courier to the address of the party
         entitled to such notice shown at the end of this Contract. Either party
         hereto may change the address to which any such notice is to be
         addressed by giving notice in writing to the other party of such
         change. Any time limitation provided for in this Contract shall
         commence with the date that the party actually receives such written
         notice, and the date or postmark of any return receipt or delivery
         notice indicating the date of delivery of such notice to the addressee
         shall be conclusive evidence of such receipt. In addition to the
         parties hereto, copies of all notices should be sent to:

         ___________________________

         ___________________________

         ___________________________

         ___________________________

         and

         ___________________________

         ___________________________

         ___________________________

         ___________________________

13.      Assignment. Neither Employee nor anyone claiming under Employee may
         commute, encumber, or dispose of the right to receive benefits
         hereunder. Such rights to receive benefits hereunder is expressly
         declared to be non-assignable and non-transferable by Employee, and in
         the event of any attempted assignment or transfer, Company shall have
         no further liability hereunder; provided, however, that the foregoing
         shall not apply to assignments by operation of law, such as to a
         guardian or to an executor of Employee's estate.

                                       7

<PAGE>

14.      Waiver. No waiver by either party of any breach of any provision hereof
         by the other party shall operate or be construed as a waiver of any
         subsequent breach by the waiving party.

15.      Binding Effect. This Contract shall be binding upon the parties hereto
         and their heirs, successors, and assigns.

16.      Survival of Provisions. All provisions of this Contract, including all
         representations, warranties, covenants, and agreements contained or
         referenced herein, will survive the execution and delivery hereof and
         any investigation of the parties with respect thereto. The provisions
         of Paragraphs 7 will survive the termination or amendment of this
         Contract.

17.      Validity. If any provision of this Contract is held by a court of law
         to be illegal or unenforceable, the remaining provisions of the Contact
         will remain in full force and effect. In lieu of such illegal or
         unenforceable provision, there shall be added automatically as a part
         of this Contract a provision as similar in terms to such illegal or
         unenforceable provision as may be possible and be legal and
         enforceable.

18.      Amendments. This Contract may be amended at any time and from time to
         time in whole or in part by an instrument in writing setting forth the
         particulars of such amendment and duly executed by Company and
         Employee.

19.      Duplicate Originals. This Contract may be executed in duplicate
         originals, each of which for all purposes is to be deemed an original,
         and all of which constitute, collectively, one agreement; but in making
         proof of this Contract, it will not be necessary to produce or account
         for more than one such duplicate.

20.      Captions. The captions or section headings of this Contract are
         provided for convenience and shall not limit or affect the
         interpretation of this Contract.

21.      Governing Law. This Contract has been made in, and its validity,
         interpretation, construction, and performance shall be governed by and
         be in accordance with, the laws of the State of Illinois, without
         reference to its laws governing conflicts of law. Each party hereby
         irrevocably agrees that any legal action or proceedings with respect to
         this Contract may be brought in the courts of the State of Illinois, or
         in any United States District Court of Illinois, and, by its execution
         and delivery of this Contract, each party hereby irrevocably submits to
         each such jurisdiction and hereby irrevocably waives any and all
         objections which it may have as to venue in any of the above courts.
         Each party further consents and agrees that any process in connection
         with any proceeding relating to this Contract may be served inside or
         outside the State of Illinois by registered or certified mail, return
         receipt requested, postage prepaid, and be effective as of the receipt
         thereof, or in such other manner as may be permissible under the rules
         of said Courts.

22.      Expenses. Company agrees to pay the reasonable attorneys' fees incurred
         by Employee in connection with the review and negotiation of this
         Contract up to the lesser of (i) the

                                       8

<PAGE>

         legal fees incurred by Company in the review and negotiation of this
         Contract; or (ii) the legal fees incurred by Employee in such review
         and negotiation.

23.      Complete Understanding. This Contract constitutes the complete
         understanding between the parties hereto, except as otherwise expressly
         provided or referenced herein, with respect to the employment of
         Employee. This Contract supersedes all prior agreements and
         understandings between the parties with respect to the subject matter
         hereof.

EMPLOYEE                            EMPLOYER:
Joseph Khoshabe                     United Financial Mortgage Corp.

/s/ Joseph Khoshabe                 /s/ James Zuhlke, Director
----------------------              -----------------------------------

                                       9

<PAGE>

                                    EXHIBIT A

                         Incentive Compensation Schedule

       10% of net income derived solely from commercial lending operations

         The Compensation Committee and the Board of Directors retain the right
         to amend the incentive compensation schedule as they deem appropriate.

                                       10

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