Exhibit 10.7
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of ________, 1998, is by and between
CAPITAL LEASE FUNDING, INC., a Maryland corporation (the "Company"), and XXXXXXX
X. XXXXXXX ("Executive").
RECITALS
The Board of Directors of the Company (the "Board") desires to employ
Executive in an executive capacity and to provide Executive with compensation
and other benefits on the terms and conditions set forth in this Agreement.
Executive desires to accept such employment and perform services for the
Company on the terms and conditions set forth in this Agreement.
It is therefore hereby agreed by and between the parties as follows:
AGREEMENT
1. EMPLOYMENT.
1.1 Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive during the term hereof as Chairman, President and
Chief Executive Officer of the Company, and Executive hereby agrees to serve as
President and Chief Executive Officer of the Company. In his capacity as a
senior executive officer of the Company, Executive shall have the customary
powers, responsibilities and authorities of a senior executive officer of the
Company, as they exist from time to time.
1.2 The Company shall, during the term of this Agreement, use its best
efforts to insure the election and retention of Executive as a member of the
Board.
1.3 During the term of this Agreement, Executive agrees to devote
substantially his full working time and efforts, to the best of his ability,
experience and talent, to the performance of services, duties and
responsibilities in connection therewith. Executive shall perform such duties
and exercise such powers as a senior executive officer of the
Company as the Board shall from time to time delegate to him on such terms and
conditions and subject to such restrictions as the Board may from time to time
impose. Nothing in this Agreement shall preclude Executive from engaging, so
long as, in the reasonable determination of the Board, such activities do not
interfere with his duties and responsibilities hereunder, in charitable and
community affairs, or from serving, subject to the prior approval of the Board,
as an officer or member of boards of directors or as a trustee of any other
company, association or entity.
2. TERM OF EMPLOYMENT. Executive's term of employment under this
Agreement shall commence on the date of an initial public offering and sale of
the common stock, par value $.01 per share, of the Company and, subject to the
terms hereof, shall terminate on the earlier of (i) two years from the date
hereof (the "Termination Date") or (ii) termination of Executive's employment
pursuant to this Agreement; PROVIDED, HOWEVER, that on the Termination Date and
on each subsequent anniversary of such Termination Date, the Termination Date
shall be automatically extended for a period of two years, unless either party
shall have given written notice to the other party not less than 90 days prior
to any such date that the Termination Date shall not be so extended.
3. COMPENSATION.
3.1 SALARY. In consideration of the services to be furnished by Executive
to the Company and its subsidiaries pursuant to the provisions of this
Agreement, the Company shall pay Executive a base salary ("Base Salary") at the
rate of [$ ____] per annum, payable in accordance with the ordinary payroll
practices of the Company. Executive's rate of Base Salary shall be reviewed
periodically by the Board (at intervals of not longer than [12] months) for the
purposes of considering increases thereof, but the decision of whether to award
such an increase shall be made in the sole discretion of the Board. Executive's
Base Salary for any partial year shall be prorated based upon the number of days
elapsed in such year.
3.2 BONUSES. In addition to his Base Salary, the Company may, in its sole
discretion, grant bonuses to Executive in such amounts and at such times as the
Compensation Committee of the Board shall determine.
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3.3 OPTIONS. Upon consummation of an initial public offering (the "IPO")
of the common stock, par value $.01 per share, of the Company (the "Common
Stock"), the Company shall grant to Executive pursuant to the [Capital Lease
Funding 1998 Employee Stock Option Plan (the "Option Plan")] such number of
incentive stock options as would give Executive the right to acquire _____
shares of Common Stock at an exercise price equal to the price to the public of
the Common Stock in the IPO. Thereafter, the Compensation Committee of the
Board may, from time to time and in its discretion, grant additional options to
Executive pursuant to the Option Plan or other option plans or compensation
arrangements of the Company.
4. EMPLOYEE BENEFITS.
4.1 EMPLOYEE BENEFIT PROGRAMS, PLANS AND PRACTICES.
During the term of his employment hereunder, Executive shall be included,
to the extent eligible, in all employee benefit programs as are or may be made
available from time to time to executives and other salaried employees of the
Company. In addition to the foregoing, Executive shall be provided, at the
expense of the Company, a level of disability and life insurance, the terms,
conditions and amounts of which are no less favorable to Executive than those in
effect on the date hereof; PROVIDED, HOWEVER, that Executive shall have
submitted to a physical examination and met other criteria established by the
Company in its sole discretion.
4.2 VACATION AND FRINGE BENEFITS. Executive shall be entitled to no less
than 25 business days paid vacation in each year. In addition, Executive shall
be entitled to the perquisites and other fringe benefits made available to other
comparable senior executives of the Company, commensurate with his position with
the Company.
5. EXPENSES. Executive is authorized to incur reasonable expenses
necessary in carrying out his duties and responsibilities under this Agreement.
The Company will reimburse Executive for all such expenses upon presentation by
Executive from time to time of appropriately itemized and approved (consistent
with the Company's policy) accounts of such expenditures.
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6. TERMINATION OF EMPLOYMENT.
6.1 TERMINATION NOT FOR CAUSE OR FOR GOOD REASON. (a) The Company may
terminate Executive's employment at any time for any reason, and Executive may
terminate his employment at any time in accordance with the terms of this
Agreement. If Executive's employment is terminated by the Company other than
for Cause (as defined in Section 6.3 hereof) or if Executive terminates his
employment for Good Reason (as defined in Section 6.1 (c) hereof) prior to the
Termination Date, as then in effect, Executive shall be entitled to continue to
receive the benefits provided for in Section 4 of this Agreement for the greater
of one year or until the Termination Date, as then in effect, and shall further
be entitled to receive, in lieu of any other future compensation, an amount
(calculated as set forth below, the "Termination Amount") which shall be payable
in equal monthly installments commencing on the first day of the month following
such termination until the Termination Date. The Termination Amount shall
consist of (i) Executive's Base Salary at its then current annual rate,
multiplied by the number of full years and partial years (measured in whole
months) occurring between the date Executive's employment with the Company is
terminated and the Termination Date; PROVIDED, HOWEVER, that such amount shall
be no less than 100% of Executive's Base Salary at its then current annual rate,
PLUS (ii) the average of the bonuses paid to Executive for the three preceding
years under Section 3.2 or, if no bonus was paid during such preceding years, an
amount equal to 50% of Executive's Base Salary at its then current annual rate.
(b) Notwithstanding anything to the contrary, if Executive terminates his
employment following a Change of Control (as defined in Section 6.1 (c) hereof)
prior to the Termination Date, as then in effect, Executive shall only be
entitled hereunder, in lieu of any other future compensation, to receive an
amount equal to (i) 200% of Executive's Base Salary at its then current annual
rate, PLUS (ii) the bonus paid to Executive during the prior year under Section
3.2 or, if no bonus was paid during the prior year, an amount equal to 50% of
Executive's Base Salary at its then current annual rate, which amount shall be
payable in equal monthly installments commencing on the first day of the month
following such termination until the Termination Date.
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(c) For purposes of this Agreement, "Good Reason" shall mean any of the
following (without Executive's express prior written consent):
(i) Any material breach by the Company of any provision of this
Agreement, including any material reduction by the Company of Executive's
duties or responsibilities, or any removal of the Executive or any failure
to re-elect Executive as President and Chief Executive Officer of the
Company (except in connection with the promotion of Executive, termination
of Executive's employment for Cause, as a result of Permanent Disability,
as a result of Executive's death or by Executive other than for Good
Reason) or a reduction by the Company in Executive's Base Salary;
(ii) A relocation of Executive's place of employment to a location
outside of the New York City metropolitan area;
(iii) A "Change of Control", which shall be deemed to have occurred
(A) upon the sale by the Company of all or substantially all of its assets
or (B) if any person (as such term is used in Section 13(d) and Section
14(d)(2) of the Securities Exchange Act as in effect on the date hereof
(the "ACT")), other than Executive, or related persons constituting a group
(as such term is used in Rule 13d-5 under the Act), other than a group with
which Executive is affiliated, become the "beneficial owners" (as such term
is used in Rule 13d-3 under the Act), directly or indirectly, of more than
51% of the total voting power of all classes then outstanding of the voting
stock of the Company; or
(iv) Any removal of Executive from or any failure to elect or re-elect
Executive to the Board; PROVIDED, HOWEVER, that any failure to elect or
re-elect Executive in connection with a termination of Executive's
employment hereunder (other than for Good Reason) shall not constitute Good
Reason.
6.2 PERMANENT DISABILITY OR DEATH. If Executive shall fail during the
term of his employment hereunder, because of illness, physical or mental
disability or other incapacity, for a period of 180 days in any 365 consecutive
days, to render the services provided for by this Agreement ("Permanent
Disability"), the Company or Executive may terminate Executive's employment on
written notice thereof, setting forth the facts and
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circumstances claimed to provide a basis for termination of Executive's
employment under this Section 6.2. If Executive should die during the term of
this Agreement, the Agreement shall terminate on the date of Executive's death.
In the event of termination under this Section 6.2 by reason of Permanent
Disability or death, the Company shall pay to Executive or Executive's estate,
Executive's Base Salary at its then current annual rate, prorated for the period
remaining until the Termination Date, in equal monthly installments commencing
on the first day of the month following such termination until the Termination
Date.
6.3 VOLUNTARY TERMINATION BY EXECUTIVE; DISCHARGE FOR CAUSE. The Company
shall have the right to terminate the employment of Executive for Cause, as
hereinafter defined. In the event that Executive's employment is terminated by
the Company for Cause, or by Executive (other than for Good Reason), prior to
the Termination Date, the Company shall only be obligated to pay Executive such
portion of his Base Salary payable to him up to the date of termination, and all
other obligations of the Company under this Agreement to make any further
payments, or provide any benefits specified herein, to Executive shall thereupon
cease and terminate. As used herein, the term "Cause" shall be limited to (i)
willful action by Executive involving malfeasance or misconduct in connection
with his employment, (ii) continuing refusal by Executive to perform his duties
hereunder or any lawful direction of the Board, (iii) any breach of the
provisions of Section 12 of this Agreement by Executive or any other material
breach of this Agreement by Executive, (iv) excessive abuse of alcohol or of any
controlled substance by Executive, (v) excessive absenteeism not relating to
illness or (vi) Executive being convicted of (a) any felony or (b) a misdemeanor
involving moral turpitude. Termination of Executive pursuant to this Section
6.3 shall be made by delivery to Executive of a copy of a resolution duly
adopted by the affirmative vote of not less than a majority of the directors (in
which vote Executive will not participate) at a meeting of the Board called and
held for the purpose (after reasonable notice and opportunity for Executive to
be heard before the Board prior to such vote), finding that in the judgment of
such Board, Executive was guilty of conduct set forth in any of clauses (i)
through (iv) above and specifying the particulars thereof.
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7. RIGHT OF OFFSET. The Company may offset the amounts of any
outstanding loans, advances or other disbursements made to or on behalf of the
Executive by the Company against any amounts the Company owes Executive
hereunder for severance pay, Base Salary, bonuses, benefits or other items of
compensation hereunder.
8. NOTICES. All notices or communications hereunder shall be in writing,
addressed as follows:
IF TO THE COMPANY:
Capital Lease Funding, Inc.
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. XxXxxxxx, Esq.
WITH A COPY TO:
Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: W. Xxxxxxxxxxx Xxxxx, Esq.
IF TO EXECUTIVE:
[Address]
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
such notice or communication shall be sent certified or registered mail, return
receipt requested, postage prepaid, addressed as above (or to such other address
as such party may designate in a notice duly delivered as described above), and
the actual date of receipt, as shown by the receipt therefor, shall constitute
the time at which notice was given.
9. SEPARABILITY. If any provision of this Agreement shall be declared to
be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
10. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the estate and representatives of Executive and the assigns and
successors of the
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Company, but neither this Agreement nor any rights hereunder shall be assignable
or otherwise subject to hypothecation by Executive.
11. AMENDMENT. This Agreement may only be amended by written agreement of
the parties hereto.
12. NONDISCLOSURE OF CONFIDENTIAL INFORMATION; NON-COMPETITION.
(a) Executive acknowledges that, as a consequence of his employment and
position with the Company, Executive will have access to and become acquainted
with confidential information of the Company, its affiliates and customers.
During the term of this Agreement and at all times thereafter, Executive shall
not, without the prior written consent of the Company, use, divulge, disclose or
make accessible to any other person, firm, partnership, corporation or other
entity any Confidential Information pertaining to the business of the Company or
any of its affiliates, except while employed by the Company, in the business of
and solely for the benefit of the Company. For purposes of this Section 12(a),
"Confidential Information" shall mean non-public information including, but not
limited to, trade secrets, designs, financial structures, financial data,
strategic business plans, product development (or other proprietary product
data), customer lists, information relating to suppliers and methods of
production, sales and marketing information and plans, and other technical,
creative and proprietary and confidential information of the Company, its
affiliates or its customers.
(b) Executive agrees that, without the prior written consent of the
Company, (A) during the period of his employment hereunder and for one year
thereafter, he shall not, directly or indirectly, either as principal, manager,
agent, consultant, officer, stockholder, partner, investor, lender or employee
or in any other capacity, carry on, be engaged in or have any financial interest
in, any business which is now or during his employment in competition with the
business of the Company and/or its affiliates, or any business which the Company
and/or its affiliates has taken substantial steps to commence, (B) during the
period of his employment hereunder and for six months thereafter, he shall not,
on his own behalf or on behalf of any person, firm or company, directly or
indirectly, have any dealings or contact with any correspondents, borrowers or
suppliers of the Company or (C) during the period of his employment hereunder
and for two years thereafter, he shall not, on his own behalf or on
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behalf of any person, firm or company, directly or indirectly, solicit or offer
employment to any person who has been employed by the Company or any of its
affiliates at any time during the six months immediately preceding such
solicitation.
(c) Executive and the Company agree that this covenant not to compete is a
reasonable covenant under the circumstances, and further agree that if in the
opinion of any court of competent jurisdiction such restraint is not reasonable
in any respect, such court shall have the right, power and authority to excise
or modify such provision or provisions of this covenant as to the court shall
appear not reasonable and to enforce the remainder of the covenant as so
amended. Executive agrees that any breach of the covenants contained in this
Section 12 would irreparably injure the Company. Accordingly, Executive agrees
that the Company may, in addition to pursuing any other remedies it may have in
law or in equity, obtain an injunction against Executive from any court having
jurisdiction over the matter, restraining any further violation of this
Agreement by Executive.
13. BENEFICIARIES; REFERENCES. Executive shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such election, in either case by giving the
Company written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative. Any reference to the masculine gender in this Agreement
shall include, where appropriate, the feminine.
14. SURVIVORSHIP. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 14 are in addition to the survivorship provisions of
any other section of this Agreement.
15. GOVERNING LAW. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of New York, without reference
to rules relating to conflicts of law.
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16. EFFECT ON PRIOR AGREEMENTS. This Agreement contains the entire
understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding between the Company or any affiliate
of the Company and Executive.
17. WITHHOLDING. The Company shall be entitled to withhold from payment
any amount of withholding required by law.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
CAPITAL LEASE FUNDING, INC.
By:
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Name:
Title:
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Xxxxxxx X. Xxxxxxx
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