Employment Agreement - David L. Pederson

EMPLOYMENT AGREEMENT


THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of the 13th the day of April, 1998 (the "Effective Date"), by and between First Sierra Financial, Inc., a Delaware corporation (the "Employer" or "Company"), and David L. Pederson (the "Employee"). Employer and Employee may be referred to herein collectively as the "Parties" and individually as a "Party." All capitalized terms not otherwise defined in this Agreement shall have the meaning ascribed to such terms in the Stock Purchase Agreement among David L. Pederson, William A. Moore, Geoffrey Harrison, Nexsoft, Inc. and First Sierra Financial, Inc.


ARTICLE I


TERM


Employer hereby agrees to employ Employee and Employee hereby agrees to accept employment with Employer for a period beginning on the Effective Date and ending on the earlier to occur of (i) the fifth anniversary of the Effective Date and (ii) the date this Agreement is terminated pursuant to the terms hereof (the "Term").


ARTICLE II


DUTIES OF EMPLOYEE


2.01 Duties. Employee is engaged, during the Term, to be an Executive Vice President and Chief Information Officer (CIO) of Employer and a member of the Executive Management Team and the General Manager of Employer's Information Systems Division. Employee's duties and powers shall be determined from time to time by the CEO of Employer and during the Term shall be consistent with the duties of the general manager of the Information System's Division. Employee shall perform and discharge such duties in a businesslike manner and faithfully as an officer of Employer, and shall be subject to the supervision and direction of the CEO of Employer and Employer's Board of Directors. Employee shall discharge such duties during Employer's normal business hours. Employer shall not require Employee to relocate from the Highlands Ranch, Colorado, area without Employee's consent. Employee's travel shall not exceed twenty percent.


2.02 Full Time Employment. Employee shall devote his productive time, ability and attention to the business of Employer during the Term. Employee shall not, directly or indirectly, during the Term render any services of a business, commercial or professional nature to any other person, corporation, form or organization, whether for compensation or otherwise, without the prior written consent of Employer, provided, however, Employee may comply with his obligations under that certain agreement with American Business Leasing to provide software service and support.


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ARTICLE III


COMPENSATION AND BENEFITS


3.01 Base Compensation. As compensation for services rendered and Employee's covenants and agreements under this Agreement, during the Term Employee shall be entitled to receive from Employer a base salary of $175,000 per year, payable in equal semi-monthly installments, subject to withholding and similar taxes. Employee's base salary will be reviewed on an annual basis, tied to the Effective Date, by the Compensation Committee of Employer's Board of Directors to determine (in the discretion of such Committee) whether any increase will be granted.


3.02 Benefit Plans. During the Term, and thereafter, to the extent provided in the applicable plan, Employer agrees to include Employee in any retirement, insurance, medical, disability, dental or health benefit plans adopted by Employer for the general benefit of the similar level employees of Employer including, without limitation, Employer's 401K plan. Employee shall be entitled to take 4 weeks paid vacation each year.


3.03 Expenses. Employer, in accordance with the rules and regulations that the Board of Directors shall issue and revise from time to time, shall timely reimburse Employee for business expenses directly and reasonably incurred in the performance of his duties.


3.04 Incentive Plans. Employee shall be entitled to participate in any stock option plan and bonus plan adopted by the Board of Directors for executive level officers of the Company (i.e., those officers constituting an executive vice president or the president). Employee acknowledges and agrees that the extent to which Employee is entitled to participate in any such plan, and the terms of such participation, the amount of compensation, the number of options and the terms of such options shall be subject to the sole control and discretion of the Board of Directors (and neither the Company nor any member of its Board of Directors shall owe any duty or be subject to any standard of care in making such determination).


ARTICLE IV


TERMINATION


This Agreement shall terminate prior to the expiration of its Term upon the occurrence of any one of the following events:


4.01 Disability. If Employee is unable to perform his duties and responsibilities hereunder to the extent required by the Board of Directors of Employer by reason of illness, injury or incapacity for 60 consecutive days (during such 60 day period Employee shall continue to be compensated as provided in Section 3.01), this Agreement may be terminated by Employer, and Employer and Employee shall have no further liability or obligations hereunder other than Employer's obligation to pay Employee amounts that may be due (if any) under Section 3.03 through the date of such termination and not previously paid to Employee and any rights of Employee with respect to the plans described in Section 3.02 that, in accordance with the terms of the applicable plan, provide for benefits to Employee beyond such termination date. In the


3 event of any dispute under this Section 4.01, Employee shall submit to a physical examination by a licensed physician selected by Employer.


4.02 Death. If Employee dies during the Term, Employer shall pay to Employee's executors, legal representatives or administrators the base compensation specified in Section 3.01 hereof in respect of the period through the date of such death together with any amount that may be due (if any) under Section 3.03 through the date of such death and not previously paid to Employee.


4.03 Cause. Nothing in this Agreement shall be construed to prevent the termination of this Agreement by Employer at any time for "cause." For purposes of this Agreement, "cause" shall mean (i) Employee shall commit an act of theft or embezzlement from or fraud on Employer, (ii) Employee shall willfully neglect his duties while employed by Employer and not cease such neglect within 15 days following receipt of a notice from Employer stating with reasonable specificity what duties are being willfully neglected and requesting that Employee no longer neglect his duties, (iii) Employee shall habitually breach Employer's policies and fail to comply with Employer's policies within 15 days following receipt of a notice from Employer requesting such compliance, (iv) Employee shall be in material breach or default of this Agreement, and shall remain in material default or breach 15 days after notice in writing, of such breach or default, or (v) Employee shall commit an act of moral turpitude or a crime that brings the reputation of the Company into public disrepute or causes Employer to be viewed unfavorably by customers or suppliers, in any event in the reasonable determination of the Company's Board of Directors. Upon termination for cause, Employer shall pay to Employee all sums due to Employee through the date of such termination under Section 3.01 and 3.03 (to the extent the same have accrued), and not previously paid to Employee. Following such termination and payment as described in the preceding sentence, Employer shall have no further duties or obligations to Employee. Employee will also have all rights with respect to the plans described in Section 3.02 that in accordance with the terms of the applicable plan provides for benefits to Employee beyond such termination date. In the event of a termination under this Section, Employee shall remain subject to all provisions of Article V.


If Employee is terminated for cause and Employee disputes such termination, such dispute shall be resolved by a binding mediation conducted by a mediator with ADR Group, Inc., 1980 Post Oak Blvd., Suite 2210, Houston, Texas 77056, (713) 621-2200. Such mediation shall be held in Houston, Texas, within 5 days after notice terminating Employee for cause. The losing party shall pay the mediator's fees.


4.04 Termination Without Cause by Employer. Employer, in its discretion and for any reason, may terminate this Agreement at any time by delivering 30 days' prior written notice to Employ ...