Exhibit A
This is an EMPLOYMENT AGREEMENT (the "Agreement"), dated as of December 1,
2002, by and between KENT FINANCIAL SERVICES, INC., a Delaware corporation (the
"Company"), and Xxxx X. Xxxxxxx (the "Executive").
Recitals
--------
The Executive currently serves as Chairman of the Company. The Company
desires the Executive to continue to serve as the Company's Chairman, and the
Executive desires to continue to serve the Company as its Chairman, 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 Chairman of the
----------
Company, and the Executive hereby accepts such employment, upon the terms and
conditions set forth herein.
2. Duties and Powers.
-----------------
2.1 Duties. The Executive shall serve as Chairman of the Company and
------
perform the duties of Chairman as defined in the Bylaws of the Company in
effect on the date of this Agreement. The Chairman shall receive the
compensation provided herein notwithstanding any future amendment to the
Bylaws of the Company which diminishes or alters the duties of the Chairman
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
--------------------
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
-----------------
shall be three years commencing effective as of December 1, 2002 (the "Effective
Date") and shall extend until November 30, 2005 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
------------
Agreement, the Company shall pay the Executive an annual salary of $240,000 (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.
5. Benefits, Expenses, Reimbursement, etc.
---------------------------------------
5.1 Benefit Plans. The Company shall provide the Executive with such
---------------
medical and disability insurance, hospital insurance and group life
insurance and other benefits made available to executive level employees of
2
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 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 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 of this Agreement or thereafter during the period of any disability
described in Section 5.5(C), the Company shall pay to such beneficiaries as
3
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.
5.5 Disability.
----------
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 80% 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 75, and the
Executive suffers from a Condition (defined below), then the Executive shall be
paid the amount specified in Section 5.5(B) 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
4
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 80% 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 75.
The total amount payable to the Executive under this Section 5.5(B) 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.
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 5.5(A) and 5.5(B) 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
------------
under the following circumstances:
6.1 Cause. The Company may terminate the Executive's employment
------
hereunder for "cause" upon not less than five days prior written notice of
5
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.
6
6.2 Termination by the Executive. The Executive may terminate his
-------------------------------
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.
------------------
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
7
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
(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
8
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.
7. Interest and Counsel Fees.
--------------------------
7.1 Interest. All amounts payable to the Executive under this
---------
Agreement 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 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
9
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.
8. No Conflicting Commitments.
---------------------------
8.1 Representation and Warranty. The Executive represents and warrants
----------------------------
that 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 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
---------------
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
10
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.
10. Notices. All notices hereunder shall be in writing and personally
--------
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. Xxxxxxx
000 Xxxxxxxxx Xxxx
P. O. Xxx 00
Xxx Xxxxx, 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
--------
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
--------------
without the written consent of the Executive, except that if the Company shall
11
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.
13. Severability. Each provision of this Agreement constitutes a separate
-------------
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. Xxxxxxxx, Xx.
-------------------------------
Title: Executive Vice President
-------------------------------
/s/Xxxx X. Xxxxxxx
------------------------------
Xxxx X. Xxxxxxx
12
