AMENDED AND RESTATED EMPLOYMENT AGREEMENT
EXHIBIT 10.2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) made as of the first day of April, 2011, by and between the Federal Agricultural Mortgage Corporation, a federally-chartered instrumentality of the United States with its principal place of business at 0000 Xxxxxx-Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. (“FAMC” or “Xxxxxx Mac”) and Xxxxxxx X. Xxxxxx, residing at 00000 Xxxxx Xxxxx Xxxxx, Xxxxxxx, XX 00000 (the “Employee”).
WHEREAS, the Employee was hired by FAMC as its President and Chief Executive Officer, effective as of March 1, 2009, pursuant to an employment agreement between FAMC and the Employee dated as of the same date (the “Prior Employment Agreement”); and
WHEREAS, FAMC and the Employee desire to continue the employment relationship and to amend and restate the Prior Employment Agreement as provided herein.
NOW, THEREFORE, by this Agreement, FAMC and the Employee agree as follows:
1. Employment. FAMC shall continue to employ the Employee, and the Employee shall continued to be employed by FAMC pursuant to this Agreement, as of the date first above written (the “Effective Date”) upon the terms and conditions set forth in this Agreement.
2. Term. The Employee's employment pursuant to this Agreement shall commence on the Effective Date and shall continue until January 1, 2012, unless sooner terminated pursuant to Section 8 hereof. The term of this Agreement shall renew automatically for successive one-year periods unless and until terminated pursuant to Section 8 hereof (the “Term”); provided, however, that the Agreement shall not renew at the end of any Term unless the Board of Directors of Xxxxxx Mac affirmatively votes to renew the contract prior to 60 days before the end of such Term.
3. Scope of Authority and Employment.
(a) Scope of Authority. The Employee shall be employed as an officer of FAMC, with the title of President and Chief Executive Officer. The Employee shall report directly to the Board of Directors of FAMC (the "Board"), and there shall be no other employee of FAMC with equal or senior authority. The Employee shall have responsibility for the administrative and operational affairs of FAMC, as set forth in the By-Laws of FAMC, subject to the general supervision and control of the Board. In addition, the Employee shall have those rights, duties, responsibilities and authority normally reserved for officers with similar positions of similarly situated companies, together with such other rights, duties, responsibilities and authority as may be set forth in said Bylaws.
(b) Full Time Employment. The Employee shall devote his best efforts and substantially all his time and endeavor to his duties hereunder, and shall not engage in any other gainful occupation without the prior written consent of the Board; provided, however, that this provision shall not be construed to prevent the Employee from personally, and for his own account or that of members of his immediate family, investing or trading in real estate, stocks, bonds, securities, commodities, or other forms of investment, so long as such investing or trading is not in conflict with the best interests of FAMC.
(c) Place of Employment. The Employee shall be employed to perform his duties under this Agreement at the principal office of FAMC. Notwithstanding this, it is expected that the Employee shall be required to travel a reasonable amount of time in the performance of his duties under this Agreement.
4. Compensation. FAMC will pay to the Employee the following aggregate compensation for all services rendered by the Employee under this Agreement:
(a) Base Salary. The Employee will be paid a base salary (the “Base Salary”) during the Term of Five Hundred and Sixty-seven Thousand Dollars ($567,000) per year, payable in arrears on a bi-weekly basis. The Base Salary will be reviewed periodically by FAMC and may be increased (but not decreased) in the sole discretion of the Board or the Compensation Committee of the Board.
(b) Incentive Compensation. In addition to the Base Salary, the Employee will be eligible to be paid an additional amount (the “Incentive Salary”) during the Term in respect of work performed by the Employee during the preceding calendar year, or portion thereof. The Incentive Salary target (the “Incentive Salary Target”) each year shall be 100 percent of the Base Salary. The Target will be reviewed periodically by FAMC and may be increased (but not decreased) in the sole discretion of the Board or the Compensation Committee of the Board. The Employee shall be covered by the Incentive Salary arrangement for such calendar year applicable to senior executives of FAMC generally, with any Incentive Salary determined pursuant to this sentence payable when annual incentives are paid to FAMC executives generally with respect to such calendar year and subject to the Employee's continued employment through the applicable date of payment; provided, however that in no event shall the Incentive Salary be paid later than the first payroll period following the first Board meeting after FAMC files its SEC Form 10-K in respect of the year in which the Incentive Salary was earned.
(c) Long Term Incentive Compensation. In addition to the foregoing, the Employee shall be eligible to receive awards of long-term incentive compensation from time to time during the Term. The Employee shall be covered by the long-term incentive compensation arrangements applicable to senior executives of FAMC generally, and shall receive awards in a form, and subject to such conditions, as determined by the Board or the Compensation Committee in its sole discretion.
5. Expenses. FAMC shall reimburse the Employee for his actual reasonable and necessary business expenses incurred in carrying out his duties under this Agreement, in each case in accordance with FAMC's policies as in effect from time-to-time. Reimbursement shall be made to the Employee in accordance with FAMC’s standard expense reimbursement protocol after presentation to FAMC of an itemized accounting and documentation of such expenses in accordance with FAMC’s expense reimbursement policies.
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6. Vacation. The Employee shall be entitled to five (5) weeks of paid vacation per year in accordance with FAMC policy.
7. Employee Benefits. During the Term, FAMC will provide the Employee with all employee benefits regularly provided to employees of FAMC and the following other (or upgraded) benefits: continued participation in the health and welfare benefit program available to employees of FAMC and their respective beneficiaries; an annual medical examination; business travel and personal accident insurance; life insurance in an amount approximately equal to the Employee’s Base Salary; disability benefits at least equal to statutory benefits in the District of Columbia; participation in the Xxxxxx Mac Money Purchase Plan; and participation in a savings plan established under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”). The providers of any insurance will be listed in Best’s Insurance Guide. All of the foregoing is subject to the limitation that the total cost thereof will not exceed twenty five percent (25%) of the Employee's Base Salary, exclusive of administrative expense. In the event that such cost limitation would be exceeded in any year, the Employee may be required to select from among the foregoing a group of benefits within that cost limitation.
8. Termination.
(a) Events of Termination. The Employee's employment shall be terminated and the employment relationship between the Employee and FAMC shall be severed as set forth below:
(i) FAMC may terminate the employment of the Employee effective upon notice to the Employee if the Employee dies or is incapacitated or disabled by accident, sickness or otherwise so as to render him (in the opinion of an independent medical consultant selected by the Board in its reasonable discretion) mentally or physically incapable of performing the services required to be performed by him under the terms of this Agreement for a period of at least ninety (90) consecutive days, or for ninety (90) days (whether consecutive or not) during any six-month period.
(ii) FAMC may terminate the employment of Employee effective upon notice to the Employee at any time for “cause.” For the purposes of this subsection, “cause” shall mean only: (A) the Employee’s material breach of an obligation or representation under this Agreement or of any material fiduciary duty to FAMC, including the duty to supervise, or any willful act of fraud or willful misrepresentation or willful concealment to FAMC or the Board, in each case that results or could reasonably be expected to result in material harm to FAMC; (B) the Employee's material failure to adhere to (i) any Code of Conduct in effect from time to time and applicable to officers and/or employees generally or (ii) any written policy, in each case that results or could reasonably be expected to result in material harm to FAMC; (C) the Employee is convicted of, or pleads guilty or nolo contendere to, any felony or to a misdemeanor involving moral turpitude; (D) the Employee's willful violation of any law relating to his employment with FAMC (including, for the avoidance of doubt, any xxxxxxx xxxxxxx law); or (E) conduct by the Employee in connection with his employment hereunder that constitutes willful misconduct or willful neglect, in each case that results or should reasonably be expected to result in material harm to FAMC. For purposes of this subsection, no act, or failure to act on the Employee's part, shall be considered “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that the Employee's action or omission was in the best interests of Xxxxxx Mac. For the avoidance of doubt, termination of the Employee's employment for any reason upon the end of the Term shall not be treated as a termination with “cause” for purposes of this Agreement.
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Notwithstanding the foregoing, the Employee shall not be deemed to have been terminated for cause unless and until there shall have been delivered to the Employee a copy of a resolution, duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board duly called and held for the purpose (after five (5) days’ prior written notice to the Employee and an opportunity for him, together with his counsel, to be heard before such meeting of the Board, finding that, in the good faith opinion of the Board, the Employee was guilty of conduct set forth above in one or more of clauses (A) through (E) of this Section 8(a)(ii) and specifying the particulars in detail. Such a resolution shall constitute notice of termination hereunder. In addition, the Board may place the Employee on administrative leave at any time if it is considering whether the Employee's employment may be terminated for cause. In such event, during the period the Employee is on administrative leave, the Employee shall continue to receive the payments and benefits specified in Sections 4 and 7 hereof.
(iii) Xxxxxx Mac may terminate the employment of the Employee without “cause” at any time.
(iv) Notwithstanding the provisions of subsection 8(a)(iii) above, FAMC may terminate the employment of the Employee at any time after the passage by the Board of a resolution authorizing the dissolution of FAMC. Such termination of the Employee’s employment shall become effective on the later of eighteen (18) months after notice of termination or the date that such dissolution of FAMC becomes final as a matter of law, provided, however, that neither of the following shall be deemed to be a dissolution for purposes of this Agreement: (1) dissolution of FAMC which becomes final as a matter of law more than twelve (12) months after adoption of the resolution of dissolution; or (2) incorporation, organization or reorganization of a corporation or other business entity which is substantially similar to FAMC and which uses substantially the same assets or equity as FAMC, within twelve (12) months of adoption of the resolution of dissolution. As used herein, the term “reorganization” shall have the same meaning as in Section 368(a) of the Code.
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(b) Payment of Accrued Compensation.
(i) Upon termination of the Employee's employment pursuant to preceding subsection (a), the Employee (or his estate or heirs, as the case may be) shall be entitled to receive all Base Salary, Incentive Salary, expense reimbursements, vacation pay, and similar amounts accrued and unpaid as of the date of termination, except that Incentive Salary shall not be paid upon termination of the Employee’s employment pursuant to subsection (a)(ii) above. With respect to Incentive Salary, the term “accrued” means an amount equal to the Employee’s annual Incentive Salary Target prorated for the number of months he was employed by Xxxxxx Mac during the year in which termination occurred. The obligations of FAMC under this subsection (b) shall survive any termination of this Agreement.
(ii) In the event of the Employee’s voluntary termination of employment hereunder, other than pursuant to Section 8(e) below, FAMC shall not be obligated to make any further compensation payments to Employee beyond those accrued prior to the effective date of such termination.
(c) Disability Pay. Upon termination of the Employee's employment pursuant to subsection 8(a)(i), FAMC shall continue to pay the Employee (or his estate or heirs, as the case may be) for twenty-four (24) months the difference between the Employee’s current Base Salary and the amount of disability insurance payments received by the Employee under insurance policies provided by FAMC in accordance with this Agreement.
(d) Severance Pay. Upon termination of the Employee's employment pursuant to subsection 8(a)(iii) or pursuant to Section 8(e) below, or as a result of FAMC's decision not to extend the Term pursuant to Section 2 by offering the Employee the right to continue employment pursuant to this Agreement, subject to the Employee's execution of a release of claims in favor of FAMC within thirty (30) days (or such longer period as required for a valid release under applicable law) following such termination and the Employee not revoking such release, FAMC shall, to the extent permitted by law and regulation, pay the Employee in the next payroll period following the expiration of the revocation period under the release but no later than sixty (60) days following the date on which the Employee experiences a “separation from service” as defined in Section 409A of the Code, an aggregate lump sum amount in cash equal to the sum of (a) two times the Base Salary and (b) two times the Base Salary multiplied by the Incentive Salary Target. The amount to be paid by FAMC to the Employee under this Section 8(d) will not be mitigated by any subsequent earnings by the Employee from any other source.
(e) Constructive Termination. The Employee may, at his option, terminate his employment with FAMC if FAMC materially breaches its obligations hereunder, the Employee so notifies FAMC of such breach in writing within thirty (30) days after the breach occurs, and FAMC does not remedy such breach within thirty (30) days after receiving such notice. Upon notice to FAMC of his exercise of this option, the Employee shall have the same rights under such a constructive termination as if FAMC had terminated his employment pursuant to the preceding subsection 8(a)(iii); provided, however, that if FAMC determines that it could have terminated the Employee's employment for "cause," the Employee shall have no right to receive any amounts described in Section 8(d).
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9. Notices. Any notice given under this Agreement will be sufficient if in writing and either: (a) mailed postage prepaid by registered or certified mail, return receipt requested; or (b) delivered by hand to, in the case of Xxxxxx Mac, 0000 Xxxxxx-Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, attention Senior Vice President – General Counsel or, in the case of the Employee, 00000 Xxxxx Xxxxx Xxxxx, Xxxxxxx, XX 00000 (or to such other addresses as may be from time to time designated by notice from the recipient party to the other). Any such notice will be effective upon actual receipt or refusal thereof.
10. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by, interpreted and enforced in accordance with the laws of the District of Columbia.
(b) Waiver. The waiver by any party of a breach of any provision of this Agreement shall not operate as a waiver of any other breach of any provision of this Agreement by any party.
(c) Entire Agreement. This Agreement sets forth the entire understanding of the parties concerning the subject matter hereof and supersedes all prior agreements between the parties regarding the subject matter hereof, including, without limitation, the Prior Employment Agreement, and may not be changed or modified except by a written instrument duly executed by or on behalf of the parties hereto.
(d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective, successors, heirs, personal representatives and assigns. This subsection is not to be construed to permit the Employee to assign his obligation to perform the duties of his employment hereunder. This subsection permits FAMC the right to assign this Agreement to a successor entity.
(e) Severability. If any term, condition, or provision of this Agreement or the application thereof to any party or circumstances shall, at any time or to any extent be invalid or unenforceable, the remainder of this Agreement, or the application of such term, condition or provision to parties or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby, and each term, condition and provision of their Agreement shall be valid and enforceable to the fullest extent permitted by law.
(f) Tax Withholding. All payments here under shall be subject to all applicable tax withholdings and other authorized deductions.
(g) Survival. The termination of the Employee’s employment by FAMC for any reason shall not relieve the Employee of any obligations to FAMC under Sections 11 through 15 of this Agreement, all of which shall survive the termination of such employment.
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11. Agreement Not to Compete with Xxxxxx Mac. Notwithstanding anything in this Agreement to the contrary, in the event of the termination of the Employee's employment either for cause or at the discretion of the employee, for a period of two years thereafter, the Employee shall not, without the prior written consent of Xxxxxx Mac, directly or indirectly, engage in any business or activity, whether as principal, agent, officer, director, partner, employee, independent contractor, consultant, stockholder or otherwise, alone or in association with any other person, firm, corporation or other business organization, that directly or indirectly competes with any of the businesses of Xxxxxx Mac in any manner, including without limitation, the acquisition and securitization (for capital market sale) of agricultural mortgage loans or USDA “guaranteed portions” (hereinafter referred to as “Xxxxxx Mac Qualified Loans”); provided, however, that such prohibited activity shall not include the ownership of up to 5% of the common stock in a public company.
12. Agreement Not to Use Confidential or Proprietary Information. Xxxxxx Mac and the Employee both recognize that the Employee has access to and acquire, and may assist in developing, confidential and proprietary information relating to the business and operations of Xxxxxx Mac as a result of the Employee's employment or association with Xxxxxx Mac. The Employee hereby covenants and agrees that he will retain all “Confidential Information” (as defined below) in trust for the sole benefit of Xxxxxx Mac and its successors and assigns. The Employee hereby covenants further that, in addition to his fiduciary responsibilities as an officer not to disclose certain information of or relating to Xxxxxx Mac, he will not, at any time during or after the term of this Agreement, without the prior written consent of Xxxxxx Mac, directly or indirectly communicate or divulge any such Confidential Information to any person, firm, corporation or other business organization, or use any such Confidential Information for the Employee's own account or for the account of any other person, except as required in connection with the performance of his services hereunder. The term “Confidential Information” shall mean any trade secret, data or other confidential or proprietary information related to the business and activities of Xxxxxx Mac. Notwithstanding the foregoing, Confidential Information shall not include any information that is or becomes a part of the public domain or generally available to the public (unless such availability occurs as a result of any breach by the Employee of this Section 12), or becomes available to the Employee on a non-confidential basis from a source (other than Xxxxxx Mac) that is not bound by a confidentiality agreement and does not breach his or her fiduciary responsibilities. The provisions of this Section 12 shall survive the termination of this Agreement and the termination of the Employee's employment hereunder.
13. Agreement Not to Solicit Xxxxxx Mac Employees. For a period of two years after the termination of the Employee's employment hereunder, the Employee shall not, directly or indirectly, without the prior written consent of Xxxxxx Mac induce any employee of Xxxxxx Mac who is a “member of management” (as defined below) or is directly involved in the acquisition and securitization (for capital market sale) of Xxxxxx Mac Qualified Loans to engage in any activity in which the Employee is prohibited from engaging in under this Agreement, or to terminate such person’s employment with Xxxxxx Mac. The Employee shall not directly or indirectly, either individually or as owner, agent, employee, consultant or otherwise, employ, offer employment to, lure, entice away or assist others in recruiting or hiring any person who is or was employed by Xxxxxx Mac unless such person shall have ceased to be employed by Xxxxxx Mac for a period of at least six months and is not subject to any non-compete covenants substantially similar in nature to those contained in Section 11 hereof. “Member of management” means the President, the Executive Vice President, any Senior Vice President, any Vice President or the Controller of Xxxxxx Mac.
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14. Agreement Not to Disparage Xxxxxx Mac. The Employee shall not, directly or indirectly, make any statement (oral or written), or take any other action, which is in any way disparaging to or tends to diminish the reputation of Xxxxxx Mac, its directors or employees.
15. Recoupment. Amounts payable to the Employee under this Agreement shall be subject to any recoupment or “clawback” policy as may implemented and interpreted by Xxxxxx Mac from time to time, including, but not limited to, any recoupment or “clawback” policy that may be implemented by Xxxxxx Mac to comply with the Xxxx-Xxxxx Xxxx Street Reform and Consumer Protection Act, or any other applicable law and regulation.
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Employee
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By:
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/s/ Xxxxxx Xxxxxxx
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/s/ Xxxxxxx X. Xxxxxx
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Chairman
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Xxxxxxx X. Xxxxxx
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