Exhibit 10.3
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This is an EMPLOYMENT AGREEMENT (the "Agreement"), dated as of July 1,
2001, by and between KENT FINANCIAL SERVICES, INC., a Delaware corporation (the
"Company"), and Xxxx X. Xxxxxxxx, Xx. (the "Executive").
Recitals
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The Executive currently serves as Executive Vice President of the Company.
The Company desires the Executive to continue to serve as the Company's
Executive Vice President, and the Executive desires to continue to serve the
Company as its Executive Vice President, on the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Employment. The Company hereby employs the Executive as Executive Vice
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President of the Company, and the Executive hereby accepts such employment, upon
the terms and conditions set forth herein.
2. Duties and Powers.
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2.1 Duties. The Executive shall serve as Executive Vice President of the
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Company and perform the duties of Executive Vice President as defined in the
Bylaws of the Company in effect on the date of this Agreement. The Executive
Vice President shall receive the compensation provided herein notwithstanding
any future amendment to the Bylaws of the Company which diminishes or alters the
duties of the Executive Vice President of the Company. The Executive shall not
be required to devote his entire working time to the business of the Company,
and may devote time to other business interests, including directorships of
other companies public and private.
2.2 Service as Director. If elected, the Executive shall serve as a
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director of the Company without additional compensation, and shall have the
right at any time to serve as a director of any subsidiary of the Company.
3. Term of Agreement. The initial term of employment under this Agreement
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shall be three years commencing effective as of July 1, 2001 (the "Effective
Date") and shall extend until June 30, 2004 unless sooner terminated pursuant to
Section 6 below. The term of the Executive's employment under this Agreement
shall be automatically extended one day for each day elapsed after the Effective
Date. Employment of the Executive by the Company prior to the Effective Date
shall, subject to the terms and conditions of the benefit plans and arrangements
referred to in Section 5.1 below, be counted in determining the Executive's
continuous service with the Company for purposes of any benefit computation.
4. Compensation. For all services rendered by the Executive under this
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Agreement, the Company shall pay the Executive an annual salary of $190,000 (the
"Base Salary"), payable in equal semi-monthly installments. The Board of
Directors of the Company shall from time to time review the compensation to be
paid to the Executive under this Agreement and shall increase (but not decrease)
the compensation in such amounts, if any, as the Board of Directors determines.
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5. Benefits, Expenses, Reimbursement, etc.
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5.1 Benefit Plans. The Company shall provide the Executive with such
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medical and disability insurance, hospital insurance and group life insurance
and other benefits made available to executive level employees of the Company,
subject to the terms and conditions of such benefit plans and arrangements.
5.2 Expenses. The Company shall pay all expenses incurred by the Executive
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in furtherance of or in connection with the business of the Company and its
subsidiaries and affiliates including, without limitation, all (i) travel and
living expenses while away from home on business or at the request and in the
service of the Company or its subsidiary or affiliate, and (ii) entertainment
expenses, upon submission of appropriate receipts or vouchers and in accordance
with the standard expense reimbursement policies of the Company as in effect
from time to time. If any such expenses are paid by the Executive, the Company
shall reimburse him promptly for those expenses. The Executive shall also be
entitled to reimbursement for the annual fee(s) of any credit cards the
Executive acquires for use in charging expenditures incurred in the performance
of his duties under this Agreement.
5.3 Vacations. The Executive shall be entitled each year to a vacation of
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four weeks (twenty working days), during which time his compensation shall be
paid in full and such holidays and other non-working days as are consistent with
the policies of the Company for executives generally. All vacations shall be
scheduled so as to cause minimal interference with the operations of the
Company. If the Executive's employment under this Agreement is terminated
pursuant to Section 6, the Executive shall be entitled to payment for all
untaken vacation days.
5.4 Death Benefits. In the event of the Executive's death during the term
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of this Agreement or thereafter during the period of any disability described in
Section 5.5C, the Company shall pay to such beneficiaries as the Executive shall
designate in writing prior to the Executive's death, or if he fails to designate
a beneficiary, to the Executive's spouse or, if none, to the Executive's estate,
an annual benefit equal to three times the Executive's Base Salary (the "Death
Benefit"). The Death Benefit shall be payable in equal monthly installments for
a period of 3 years, commencing on the first day of the next month following the
month in which the Executive's death occurs. Payments made pursuant to this
Section 5.4 shall be made in lieu of any and all payments provided for in
Section 4 of this Agreement.
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5.5 Disability.
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A. The Executive shall be paid such benefits to which he is entitled
under the terms of such long-term disability insurance as the Company
has provided under Section 5.1 of this Agreement. However, if at any time during
the term of this Agreement (i) the Company is not providing the Executive with
long-term disability insurance coverage, or (ii) the amount of coverage provided
pays benefits less than an annual benefit of 70% of the Executive's Base Salary,
which the Executive is being paid prior to the commencement of disability
benefits, or (iii) fails to pay benefits to age 65, and the Executive suffers
from a Condition (defined below), then the Executive shall be paid the amount
specified in Section 5.5B of this Agreement.
B. If during the term of this Agreement (i) the Executive shall be
deemed disabled and unable to perform his duties hereunder by an insurance
company under any disability insurance policy covering the Executive, (ii)
the Executive suffers any illness, disability or incapacity which renders
him unable to perform his duties hereunder and such illness, disability or
incapacity is deemed by a duly licensed physician (who may be the Executive's
personal physician) to be permanent, or (iii) the Executive is unable to render
services to the Company of the nature required by this Agreement because of
illness, disability or incapacity for a period of 90 days, whether or not such
days are consecutive, during any year of the term hereof (each of the events
described in paragraphs (i),(ii) and(iii) above being defined as a "Condition"),
then the Executive shall continue to use his best efforts to render advisory and
consulting services as he is able and as may be reasonably requested by the
Company and the Company shall pay to the Executive disability payments equal to
the difference, if any, between 70% of the Executive's Base Salary and the
amount the Executive actually receives under the Company's long-term disability
insurance policy. The disability payments shall be paid to the Executive in
equal monthly installments until the Executive attains age 65. The total amount
payable to the Executive under this section 5.5B shall be the "Disability
Benefit." Such payments shall commence on the first day of the month following
the month in which the Condition occurs and shall be made even if the Executive
is unable to render any services to the Company. Such payments shall be paid in
lieu of any and all compensation provided for in Section 4 of this Agreement.
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C. In the event of the Executive's death at any time during the period
in which payments in respect of the Disability Benefit are required to be paid
pursuant to Sections 5.5A and 5.5B above, the Company shall cease paying any
such payments and shall pay the Death Benefit provided in Section 5.4.
6. Termination. The Executive's employment hereunder may be terminated only
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under the following circumstances:
6.1 Cause. The Company may terminate the Executive's employment hereunder
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for "cause" upon not less than five days prior written notice of such
termination. For purposes of this Agreement, the Company shall have "cause" to
terminate the Executive's employment hereunder upon (A) the continued failure by
the Executive to substantially perform his duties hereunder (other than any such
failure resulting from the Executive's incapacity due to physical or mental
illness or the removal of the Executive's office to a location more than 5 miles
from its current location), which failure has not been cured (i) within three
days after a written demand for substantial performance is delivered to the
Executive by the Company that specifically identifies the manner in which the
Company believes the Executive has not substantially performed his duties (the
"Three Day Period"), or (ii) in the event such failure cannot be reasonably
cured within the Three Day Period, within 20 days thereafter, provided that the
Executive promptly commences and thereafter diligently prosecutes the cure
thereof, or (B) the Executive's conviction of any criminal act or fraud with
respect to the Company. Notwithstanding the foregoing, the Executive's
employment may not be terminated for cause unless and until the Company has
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than 80 percent of the entire Board of Directors at
a meeting of the Board (of which the Executive was given at least 20 days prior
written notice and an opportunity, together with his counsel, to be heard before
the Board), finding that in the good faith opinion of the Board, the Executive
has not substantially performed his duties (which failure shall be described in
detail) and such failure has not been cured within the period described in (ii)
above. In addition, the Company shall not have cause to terminate the
Executive's employment hereunder as a result of any event occurring prior to the
date hereof and previously disclosed to the Company. The burden of establishing
cause shall be upon the Company.
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6.2 Termination by the Executive. The Executive may terminate his
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employment hereunder for "good reason" upon not less than five days prior
written notice to the Company. For purposes of this Agreement, "good reason"
shall mean the continued failure by the Company to perform its obligations under
this Agreement (including any material change by the Company in the duties,
responsibilities and powers of the Executive as set forth herein or the removal
of the Executive's office to a location more than 5 miles from its current
location) which failure has not been cured (i) within three days after a written
demand for performance is delivered to the Company by the Executive that
specifically identifies the manner in which the Executive believes the Company
has not performed its obligations (the "Three Day Period"), or (ii) in the event
such a failure cannot be reasonably cured within the Three Day Period, within
twenty (20) days thereafter provided that the Company promptly commences and
thereafter diligently prosecutes the cure thereof.
6.3 Change in Control.
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A. The Executive may terminate his employment under this Agreement at
any time for "good reason" (as defined below) within 36 months after the date of
a Change in Control (as defined below) of the Company.
B. A "Change in Control"of the Company shall be deemed to have occurred
if:
(1) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934 (the "Exchange Act") as in effect on
the date hereof), other than individuals beneficially owning, directly or
indirectly, common stock of the Company representing 30% or more of the
Company's issued and outstanding common stock as of the Effective Date, is
or becomes the beneficial owner, directly or indirectly, of common stock
of the Company representing 30% or more of the Company's then issued and
outstanding common stock; or
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(2) individuals who constitute the Company's Board of Directors on
the date hereof (the "Incumbent Board") cease for any reason to constitute
at least a majority thereof, provided that any person becoming a Director
subsequent to the date hereof whose election, or nomination for election
by the Company's stockholders, was approved by a vote of at least a
majority of the Directors comprising the Incumbent Board (either by a
specific vote or by approval of the proxy statement of the Company in
which such person is named as a nominee for Director, without objection to
such nomination) shall be, for purposes of this clause, considered as though
such person were a member of the Incumbent Board. For purposes of this
Section 6.3(A), "good reason" shall mean a determination solely by the
Executive, in good faith, that as a result of the Change of Control of
the Company he may be adversely affected (i) in carrying out his duties
and powers in the fashion he previously enjoyed or (ii) in his future
prospects with the Company.
C. If the Executive terminates his employment after a Change of Control
of the Company, he shall notify the Company in writing of the effective date
of the termination (the "Termination Date") of his employment and he shall be
paid the greater of (i) the Base Salary payable to the Executive under this
Agreement through to the Termination Date, or (ii) an amount equal to the
product of (a) the average annual Base Salary paid to the Executive during
the five years preceding the Termination Date, multiplied by (b) three.
The amount payable under this Section 6.3(C) shall be paid in a lump sum on or
before the fifth day following the Termination Date.
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7. Interest and Counsel Fees.
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7.1 Interest. All amounts payable to the Executive under this Agreement
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shall be due and payable at the time specified herein and any payment which is
not made within five days of the date of written demand shall be made with
interest on the amount due from the due date until paid in full at an annual
rate equal to 2% over the prime rate of interest generally published in The Wall
Street Journal as in effect from time to time during the period from such due
date until the date such payment is made.
7.2 Counsel Fees. The Company hereby irrevocably authorizes the Executive
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from time to time to retain counsel of his choice at the expense of the Company
to represent the Executive in connection with the Executive's initiation or
defense of any litigation, arbitration or other legal action relating to this
Agreement or any provision hereof (whether such action is by or against the
Company or any director, officer, stockholder or other person affiliated with
the Company, or in any jurisdiction). Notwithstanding any existing or prior
attorney-client relationship between the Company and such counsel, the Company
irrevocably consents to the Executive entering into an attorney-client
relationship with such counsel, and in that connection the Company and the
Executive agree that a confidential relationship shall exist between the
Executive and such counsel. The reasonable fees and expenses of counsel selected
by the Executive shall be paid or reimbursed to the Executive by the Company on
a regular, periodic basis upon presentation by the Executive of a statement or
statements prepared by such counsel in accordance with its customary practices,
up to a maximum aggregate amount of $250,000. Notwithstanding the preceding, if
it should be finally determined by judgment or order of a court of competent
jurisdiction (the time for the appeal of which judgment or order shall have
expired), that the Executive has not prevailed in any such litigation,
arbitration or other legal action, the Executive shall promptly return to the
Company, upon its demand, any amounts so advanced in connection with such action
together with interest thereon at the rate provided in Section 7.1 above.
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8. No Conflicting Commitments.
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8.1 Representation and Warranty. The Executive represents and warrants that
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he has no commitments or obligations of any kind whatsoever inconsistent with
this Agreement and is under no disability of any kind whatsoever which would
impair, infringe upon or limit Executive's ability to enter this Agreement or to
perform the services required hereunder.
8.2 Indemnification. The Executive agrees to indemnify and hold the Company
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harmless against any claim or other actions asserted against the Company based
upon circumstances in which it is alleged that the Executive has breached the
warranty set forth in Section 8.1.
9. Governing Law. This Agreement has been executed and delivered in the
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State of New Jersey, and shall in all respects be interpreted, construed, and
governed by and in accordance with the law of the State of New Jersey. Except as
otherwise herein provided, all actions or proceedings arising directly,
indirectly or otherwise in connection with, out of, related to, or from this
Agreement shall be litigated exclusively and only in courts having situs within
the State of New Jersey, and the parties hereby consent and submit to the
jurisdiction of any state or federal court located in the State of New Jersey.
Notwithstanding the preceding, the Executive, at his sole and exclusive option,
exercisable by written notice given to the Company at any time, may elect to
submit any dispute arising under this Agreement to resolution by arbitration
held in Somerset County, New Jersey in accordance with the rules of the American
Arbitration Association.
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10. Notices. All notices hereunder shall be in writing and personally
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delivered or mailed by registered or certified mail, return receipt requested,
to the following address:
If to the Company:
000 Xxxx Xxxxxx
P. O. Xxx 00
Xxxxxxxxxx, Xxx Xxxxxx 00000
If to the Executive:
Xxxx X. Xxxxxxxx, Xx.
X.X. Xxx 000
Xxxxxxxxx, Xxx Xxxxxx 00000
The Company or the Executive may hereafter designate another address to the
other in writing for purposes of notices under this Agreement.
11. Waivers. Any waiver by any party of any violation of, breach of or
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default under any provision of this Agreement by the other party shall not be
construed as, or constitute, a continuing waiver of such provision, or waiver of
any other violation of, breach of or default under any other provision of this
Agreement.
12. Assignability. This Agreement shall not be assignable by the Company
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without the written consent of the Executive, except that if the Company shall
merge or consolidate with or into, or transfer substantially all of its assets
to, another corporation or other form of business organization, this Agreement
shall be binding on the Executive and be for the benefit of and binding upon the
successor of the Company resulting from such merger, consolidation or transfer
without the Executive's consent, subject to the Executive's right to terminate
his employment under Section 6.3(C). The Executive may not assign, pledge, or
encumber any interest in this Agreement or any part thereof without the express
written consent of the Company, this Agreement being personal to the Executive.
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13.Severability. Each provision of this Agreement constitutes a separate
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and distinct undertaking, covenant and/or provision hereof. In the event that
any provision of this Agreement shall finally be determined to be unlawful, such
provision shall be deemed severed from this Agreement, but every other provision
of this Agreement shall remain in full force and effect, and in substitution for
any such provision held unlawful, there shall be substituted a provision of
similar import reflecting the original intent of the parties hereto to the
extent permissible under law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first set forth above.
KENT FINANCIAL SERVICES, INC.
By: /s/ Xxxx X. Xxxxxxx
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Title: Chairman
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/s/ Xxxx X. Xxxxxxxx, Xx.
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Xxxx X. Xxxxxxxx, Xx.
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