EMPLOYMENT AGREEMENT
Exhibit 10.2
This EMPLOYMENT AGREEMENT (“Agreement”), dated January 28, 2008 effective as of the
1st day of January, 2008 (the “Commencement Date”) is entered into by and between ASTA
FUNDING, INC., a Delaware corporation, with offices at 000 Xxxxxx Xxx., Xxxxxxxxx Xxxxxx, Xxx
Xxxxxx 00000 (the “Company”) and XXXXXXX XXXXXXXX (the “Employee”).
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pursued for gain, profit or other pecuniary advantage; provided, however, that it is understood
that this Section 1(c) shall not preclude Employee from making passive investments (constituting
ownership of less than two (2%) percent of any class of equity interest) in a publicly held
business, firm or entity. The Employee’s principal base of operation for the performance of the
Employee’s duties under this Agreement shall be in Englewood Cliffs, New Jersey; provided, however,
that the Employee shall perform such duties and responsibilities at such other places as shall from
time to time be reasonably necessary to fulfill the Employee’s obligations under this Agreement in
the discretion of the Company.
2. Compensation and Benefits. For all services rendered by the Employee in any capacity during the
Employment Period, including, without limitation, services as an officer, director or member of any
committee of the Company, its subsidiaries or any division thereof, the Employee shall be
compensated as follows (subject, in each case, to the provisions of Section 11 below):
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(a) The Employee acknowledges and understands that, in view of the position that the Employee
will hold as an employee of the Company, the Employee’s relationship with the Company will afford
the Employee extensive access to Confidential Information (as defined below) of the Company and its
affiliates. Employee therefore agrees that during the course of Employee’s employment with the
Company and for a period of 18 months after termination of the Employee’s employment with the
Company (for any reason or no reason) (collectively, “Restricted Period”), the Employee
shall not: anywhere within the United States of America or any other country in which the Company
or its affiliates then conducts or proposes to conduct
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business, either directly or indirectly, as an owner, stockholder, member, partner, joint venturer,
investor, officer, director, consultant, independent contractor, agent or employee, engage in any
business or other commercial activity which is engaged in or is seeking to engage in a “competitive
business.” As used in this Agreement, the term “competitive business” shall mean any individual or
enterprise engaged in the business of acquiring, managing, collecting and/or servicing receivables
or any other business competitive with the type of business conducted by the Company or its
affiliates on the date of termination of the Employee’s employment with the Company.
(b) The Employee further agrees that, during the Restricted Period, the Employee shall not,
directly or indirectly, either on the Employee’s own behalf or on behalf of any other individual or
commercial enterprise: (i) contact, communicate, solicit or transact any business with or assist
any third party in contacting, communicating, soliciting or transacting any business with (A) any
of the customers or vendors of the Company or its affiliates (including but not limited to
suppliers of consumer receivables), (B) any prospective customers of the Company or its affiliates
being solicited at the time of the termination of the Employee’s employment, or (C) any individual
or entity who or which was within the most recent twelve (12) month period a customer or vendor of
the Company or its affiliates, for the purpose of inducing such customer, potential customer or
vendor to be connected to or benefit from any competitive business or to terminate its or their
business relationship with the Company or its affiliates; (ii) solicit, induce or assist any third
party in soliciting or inducing any individual or entity who or which is then (or was at any time
within the preceding 12 months) an employee, consultant, independent contractor or agent of the
Company or its affiliates to leave the employment of the Company or its affiliates or cease
performing services for the Company or its affiliates; (iii) hire or engage or assist any third
party in hiring or engaging, any individual or entity that is or was (at any time within the
preceding 12 months) an employee, consultant, independent contractor or agent of the Company or its
affiliates, or (iv) solicit, induce or assist any third party in soliciting or inducing any other
person or entity (including, without limitation, any third-party service provider or distributor)
to terminate its relationship with the Company or its affiliates or otherwise interfere with such
relationship.
4. Non-Disparagement. The Employee will not at any time (during or after Employee’s employment
with the Company disparage the reputation of the Company, its affiliates and its or their
respective customers or vendors and its or their respective officers, directors, agents or
employees. The Company will not at any time (during or after Employee’s employment with the
Company) disparage the reputation of the Employee.
5. Confidential Information. While working or performing services for the Company or otherwise,
the Employee may develop or acquire knowledge of (or may previously have developed or acquired
knowledge of) Confidential Information relating to the Company, its business, potential business or
that of its affiliates and its or their respective customers and vendors. “Confidential
Information” includes all trade secrets, know-how, show-how, theories, technical, operating,
financial, and other business information, whether or not reduced to writing or other medium and
whether or not marked or labeled confidential, proprietary or the like, specifically including, but
not limited to, information regarding source codes, software programs, computer systems,
algorithms, formulae, apparatus, concepts, creations, costs, plans,
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enhancements, research, specifications, works of authorship, techniques, documentation, models and
systems, sales and pricing techniques, designs, inventions, discoveries, products, improvements,
modifications, methodology, processes, concepts, records, files, memoranda, reports, plans,
proposals, price lists, customer, vendor, collaborator/partner or distributor information, product
development and project procedures. Confidential Information does not include general skills,
experience or information that is generally available to the public, other than information which
has become generally available as a result of Employee’s direct or indirect act or omission. With
respect to Confidential Information of the Company, its affiliates and its and their respective
customers and vendors:
(a) The Employee will use Confidential Information only in the performance of Employee’s
duties for the Company. The Employee will not use Confidential Information at any time (during or
after the Employee’s employment with the Company) for Employee’s personal benefit, for the benefit
of any other individual or entity, or in any manner adverse to the interests of the Company, its
affiliates and its or their respective customers and vendors;
(b) The Employee will not disclose Confidential Information at any time (during or after
Employee’s employment with the Company) except to authorized Company personnel, unless the Company
consents in advance in writing or unless the Confidential Information indisputably becomes of
public knowledge or enters the public domain (other than through an unauthorized disclosure by the
Employee or through a disclosure not by the Employee which the Employee knew or should have known
was an unauthorized disclosure);
(c) The Employee will safeguard the Confidential Information by all reasonable steps and abide
by all policies and procedures of the Company in effect from time to time regarding storage,
copying, destroying, publication, posting and handling of such Confidential Information, in
whatever medium or format that Confidential Information takes;
(d) The Employee will execute and abide by all confidentiality agreements which the Company
reasonably requests the Employee to sign or abide by, whether those agreements are for the benefit
of the Company, an affiliate or an actual or potential customer thereof; and
(e) The Employee will return all materials, substances, models, software, prototypes and the
like containing and/or relating to Confidential Information, together with all other property of
the Company and its affiliates (all of which shall remain the exclusive property of the Company)
and its and their respective customers and vendors, to the Company when the Employee’s employment
relationship with the Company terminates, or otherwise on demand. The Employee shall not retain
any copies or reproductions of correspondence, memoranda, reports, notebooks, drawings,
photographs, databases, diskettes, or other documents or electronically stored information of any
kind relating in any way to the business, potential business or affairs of the Company, its
affiliates and its and their respective customers and vendors.
6. Reasonable Restrictions/Damages Inadequate Remedy. The Employee acknowledges that the
restrictions contained in Sections 3-5 (inclusive) are reasonable and necessary to protect the
legitimate business interests of the Company and its affiliates and that any breach by the
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Employee of any provision contained therein will result in immediate irreparable injury to the
Company or its affiliates for which a remedy at law would be inadequate. The Employee further
acknowledges that the restrictions contained in Sections 3-5 (inclusive) will not prevent Employee
from earning a livelihood during the Restricted Period. Accordingly, the Employee acknowledges
that, in the event of any breach or threatened breach by the Employee of the provisions of Sections
3-5 (inclusive), the Company and/or its subsidiaries shall be entitled to temporary, preliminary
and permanent injunctive or other equitable relief against the Employee (without being obligated to
post a bond or other collateral) and to an equitable accounting of all earnings, profits and other
benefits arising, directly or indirectly, from such violation, which rights shall be cumulative and
in addition to (rather than instead of) any other rights or remedies available at law or in equity.
In addition (and not instead of those rights), the Employee further covenants that he shall be
responsible for payment of the fees and costs of the Company’s (and its affiliates’) attorneys and
experts, as well as the Company’s (and its affiliates’) court or other forum costs, pertaining to
any suit, arbitration, mediation, action or other proceeding (including the costs of any
investigation related thereto) arising direct or indirectly out of the Employee’s violation or
threatened violation of any of the provisions of Section 3-5 (inclusive).
7. Separate Covenants. In the event that any court of competent jurisdiction shall determine that
any one or more of the provisions contained in Sections 3-5 (inclusive) shall be unenforceable in
any respect, then such provision shall be deemed limited and restricted to the extent that the
court shall deem the provision to be enforceable. It is the intention of the parties to this
Agreement that the covenants and restrictions in Sections 3-5 (inclusive) be given the broadest
interpretation permitted by law. The invalidity or unenforceability of any provision of Sections
3-5 (inclusive) shall not affect the validity or enforceability of any other provision hereof.
8. Insurance. The Employee agrees to submit to such medical examinations as may be reasonably
required by the Company to enable the Company to obtain, at its option, key man life insurance on
the life of the Employee and disability insurance in such amount and with such insurer as the
Company may determine in its sole discretion. The Company will also provide the Employee with life
insurance with beneficiaries to be designated by Employee in an amount to be set by the Company and
will explore the possibility of providing Employee with personal disability insurance.
9. Employment Period. The period of Employee’s employment by the Company under this Agreement
shall commence on the effective date of this Agreement (the “Commencement Date”) and,
subject to earlier termination pursuant to Section 10 below, shall continue until December 31, 2009
(the “Employment Period”).
10. Events of Termination. This Agreement and the Employee’s employment hereunder shall terminate
upon the occurrence of any on or more of the following events:
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(i) The Employee’s failure or refusal to perform his duties and responsibilities as set forth
in Section 1 hereof; provided, however, in the event that such lack of performance is subject to
cure, the lack of performance shall not constitute “Cause” unless it is not cured by the Employee
within 10 days after written notice thereof;
(ii) The Employee’s conviction of a felony or of any crime involving moral turpitude;
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(iii) The commission by the Employee of a fraudulent, illegal or dishonest act, or act in
violation of the rules and regulations of the Securities and Exchange Commission, in connection
with the performance of his duties to the Company or its affiliates;
(iv) The commission by the Employee of any willful misconduct or gross negligence which
reasonably could be expected to have the effect of injuring the reputation, financial condition,
business or business relationships (monetarily or otherwise) of the Company (and its affiliates,
individually or taken as a whole) and/or the Employee;
(v) Violation by the Employee of the Company’s policies and procedures in place from time to
time; provided, however, in the event that such violation is subject to cure, the violation shall
not constitute “Cause” unless it is not cured by the Employee within 10 days after written notice
thereof; or
(vi) Any other material breach of any of the provisions of this Agreement (including without
limitation, a breach of the Employee’s obligations under Sections 3, 4 or 5).
12. Effect of Termination. Upon the termination of this Agreement and the Employee’s employment
hereunder pursuant to Section 10 or otherwise, but except as provided in Section 13, the Company’s
sole obligation to Employee under this Agreement or otherwise shall be to pay to the Employee any
Base Salary earned by Employee, but not yet paid to Employee, prior to the date of such
termination. Notwithstanding the foregoing, in the event that this Agreement and Employee’s
employment hereunder is terminated by the Company during the Employment Period by reason of
Disability pursuant to Section 10(c) or Without Cause pursuant to Section 10(e) above and subject
to Employee’s execution and delivery of a general release agreement (in a form satisfactory to the
Company) in favor of the Company and its subsidiaries and its and their respective officers,
directors, employees and agents (which general release agreement shall release the released parties
from all liability and include such other terms as are reasonably necessary to protect the
interests of the released parties), the Company shall continue (i) to pay to Employee the Base
Salary and (ii) continue to provide Employee with health, medical and other insurance coverage to
the extent available under the terms of the Company’s benefit plans (or make the COBRA payments if
health insurance benefits are not available under a plan to which COBRA is applicable, but coverage
by making COBRA payments is available), for the following period (a) the balance of term of this
Agreement if termination is for Disability or (b) 18 months following the effective date of
termination if termination is Without Cause; provided however, that if the Employee receives any
disability insurance payments from policies provided by the Company, the Company’s obligations
hereunder shall be reduced by the amount of such payments computed on an after tax basis. Employee
acknowledges and agrees that irrespective of the basis for the termination of the Employee’s
Employment with the Company, except as provided above, the Employee shall cease to participate in
all of the Company’s benefit plans and programs on the last day of his employment by the Company;
provided, however that nothing in this Agreement shall preclude the Employee from exercise his
rights if any, (i) under
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COBRA, or (ii) with respect to stock option grants in accordance with the terms of the applicable
grant agreements and the Option Plan.
Notwithstanding the foregoing, if necessary to comply with the restriction in Section
409A(a)(2)(B) of the Internal Revenue Code of 1986, as amended (the “Code”) concerning payments to
“specified employees”, the continued payments of Base Salary following the termination of
Employee’s employment pursuant to the preceding paragraph shall commence on the first business day
of the seventh month following the Employee’s date of termination and the first such payment shall
include the cumulative amount of any payments that would have been paid prior to such date if not
for such restriction, together with interest on such cumulative amount during the period of such
restriction at a rate, per annum, equal to the applicable federal short-term rate (compounded
monthly) in effect under Section 1274(d) of the Code on the date of termination. For purposes of
Sections 12 and 13 hereof, the Employee shall be a “specified employee” for the 12-month period
beginning on the first day of the fourth month following each “Identification Date” if he is a “key
employee” (as defined in Section 416(i) of the Code without regard to Section 416(i)(5) thereof) of
the Company at any time during the 12-month period ending on the “Identification Date.” For
purposes of the foregoing, the Identification Date shall be December 31. Notwithstanding anything
contained herein to the contrary, the Employee shall not be considered to have terminated
employment with the Company for purposes of Sections 12 and 13 hereof unless he would be considered
to have incurred a “termination of employment” from the Company within the meaning of Treasury
Regulation §1.409A-1(h)(1)(ii).
13. Change of Control. Notwithstanding the foregoing, if the Employee’s employment with the
Company is terminated for any reason by either party within 180 days following a Change of Control,
the Company shall, within twenty (20) days of Employee’s Date of Termination, pay Employee (or his
estate in the event of his death) (A) a lump sum amount in cash equal to two (2) times the sum of
(i) the per annum Base Salary in effect on the Date of Termination, and (ii) the highest annual
cash bonus compensation earned by Employee during his employment with the Company, and (B) any
unpaid reimbursable expenses outstanding, and any unused accrued vacation, as of the Date of
Termination provided, however, that if necessary to comply with the restriction in Section
409A(a)(2)(B) of the Code concerning payments to “specified employees”, the amount set forth in
clause (A) above shall be paid on the first business day of the seventh month following the
Employee’s date of termination (or death, if earlier), together with interest on such cumulative
amount during the period of such restriction at the rate set forth in Section 12 hereof. In
addition, the Company shall continue to provide Employee with the benefits and perquisites set
forth under Section 2(d) for two years from the Date of Termination, as though the Employee had not
terminated employment.
For purposes of this Agreement, the term “Change in Control” shall have the same meaning
assigned such term under the terms of the Stock Option Plan of the Company as in effect on the
Commencement Date or as amended or modified from time to time and any related terms set forth in
such plan used in defining Change in Control are hereby incorporated by reference. If Employee’s
employment is terminated by the Company without Cause prior to the date of a Change in Control, but
Employee reasonably demonstrates that the termination (A) was at the request of a third party who
has indicated an intention or taken steps reasonably calculated to effect a Change in Control or
(B) otherwise arose in connection with, or in anticipation of, a
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Change in Control which has been threatened or proposed, such termination shall be deemed to have
occurred after a Change in Control for purposes of this Agreement provided a Change in Control
shall actually have occurred.
Notwithstanding anything contained herein to the contrary, the aggregate amount payable to the
Employee (or his estate in the event of his death) pursuant to this Section 13 shall be limited, if
necessary, to an amount that is no more than the maximum amount which can be paid to Employee (or
his estate) without causing any portion of such payment to be nondeductible by the Company solely
because of Section 280G of the Internal Revenue Code of 1986, as amended.
14. Governing Law and Dispute Resolution. Any and all actions or controversies arising out of
this Agreement or the Employee’s employment, including, without limitation, tort claims, shall be
construed and enforced in accordance with the internal laws of the State of New Jersey, without
regard to the choice of law principles thereof. Except with respect to the Company’s and the
Employee’s right to seek injunctive or other equitable relief (including, without limitation,
pursuant to Section 6), any dispute, controversy or claim based on, arising out of or relating to
the interpretation and performance of this Agreement, Employee’s employment or any termination
hereof or thereof or any matter relating to the foregoing shall be solely submitted to and finally
settled by arbitration by a single arbitrator in accordance with the then-current rules of the
American Arbitration Association (“AAA”), including without limitation any claims for
discrimination under any applicable federal, state or local law or regulation. Any such
arbitration shall be conducted in the New Jersey office of the AAA located closest to Englewood
Cliffs, New Jersey. The single arbitrator shall be appointed from the AAA’s list of arbitrators by
the mutual consent of the parties or, in the absence of such consent, by application of any party
to the AAA. A decision of the arbitrator shall be final and binding upon the parties. The parties
agree that this Section 14 shall be grounds for dismissal of any court action commenced by either
party with respect to this Agreement, other than (i) post-arbitration actions seeking to enforce an
arbitration award and (ii) actions seeking appropriate equitable or injunctive relief, including,
without limitation, pursuant to Section 6 hereof. The Company shall pay the pay the fees of the
arbitrator and each party shall be responsible for its own legal fees, costs of its experts and
expenses of its witnesses. The arbitrator’s remedial authority shall equal the remedial power that
a court with competent jurisdiction over the parties and their dispute would have. Any award
rendered shall be final, binding and conclusive (without the right to an appeal, unless such appeal
is based on fraud by the other party in connection with the arbitration process) upon the parties
and any judgment on such award may be enforced in any court having jurisdiction, unless otherwise
provided by law. The Company and the Employee acknowledge that it is the intention of the parties
that this Section 14 shall apply to all disputes, controversies and claims, including, without
limitation, any rights or claims the Employee may have under the Age Discrimination in Employment
Act of 1967, the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964, the
Equal Pay Act, the New Jersey Law Against Discrimination, the New Jersey Civil Rights Act, the
Conscientious Employee Protection Act and all other federal, state or local laws, rules or
regulations relating to employment discrimination or otherwise pertaining to this Agreement,
Employee’s employment or termination thereof. The Company and the Employee knowingly and
voluntarily agree to this arbitration provision and acknowledge that arbitration
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shall be instead of any civil litigation, meaning that Employee and the Company are each
waiving any rights to a jury trial.
15. Representations and Warranties by the Employee. The Employee represents and warrants to the
Company that (a) the Employee has the legal capacity to execute and perform this Agreement, (b)
this Agreement is a valid and binding agreement enforceable against the Employee according to its
terms, and (c) the Employee does not have any non-disclosure, non-solicitation, non-compete or
other similar obligations to any other individual or entity (including, without limitation, any
previous employer) that would conflict with, prohibit or inhibit the performance of the Employee’s
duties under this Agreement. The Employee further acknowledges that, while this Employment
Agreement is intended to comply with the requirements of Section 409A of the Code and Treasury
Regulations promulgated thereunder, any tax liability incurred by the Employee under Section 409A
of the Code is solely the responsibility of the Employee.
16. Modification. This Agreement sets forth the entire understanding of the parties with respect
to the subject matter hereof, supersedes all existing agreements between them concerning such
subject matter, and may be modified only by a written instrument duly executed by the Employee and
the President of the Company.
17. Notices. Any notices, demands or other communications required or permitted to be given
hereunder by any party to the other shall be in writing and shall be deemed to have been duly given
(i) on the date delivered if personally delivered, (ii) on the date sent by telecopier with
automatic confirmation by the transmitting machine showing the proper number of pages were
transmitted without error, or (iii) on the date targeted for delivery if delivered by a nationally
recognized overnight courier or similar courier service, (iv) or three (3) days after the date sent
by registered or certified mail, postage prepaid, in each case addressed to the Company or the
Employee as follows:
(a)
|
if to the Company, addressed to it at: | |
| 000 Xxxxxx Xxxxxx | ||
| Xxxxxxxxx Xxxxxx, Xxx Xxxxxx 00000 | ||
| Attention: President | ||
| Fax No. 000.000.0000 | ||
| with copies to: | ||
| Xxxxxxxxxx Xxxxxxx PC | ||
| 00 Xxxxxxxxxx Xxxxxx | ||
| Xxxxxxxx, Xxx Xxxxxx 00000 | ||
| Attn: Xxxxxx X. Xxxxxx, Esq. | ||
| Fax No. 000.000.0000 | ||
(b)
|
If to the Employee, addressed to him at: | |
| 000 Xxxxxx Xxxxxx | ||
| Xxxxxxxxx Xxxxxx, Xxx Xxxxxx 00000 | ||
| Attention: Vice President |
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| Fax No. 000.000.0000 |
or to such other persons or addressed as may be designated in writing by the party to
receive such notice.
18. Waiver. Any waiver by either party of a breach of any provision of this Agreement shall not
operate as or be construed to be a waiver of any other breach of such provision or of any breach of
any other provision of this Agreement. The failure of a party to insist upon strict adherence to
any term of this Agreement on one or more occasions shall not be considered a waiver or deprive
that party of the right thereafter to insist upon strict adherence to that term or any other term
of this Agreement. Any waiver must be in writing and signed by the Employee or the President of
the Company, as applicable.
19. Assignment. The Employee’s rights and obligations under this Agreement shall not be
transferable by assignment or otherwise. The Company may assign its rights and obligations
hereunder to any of its subsidiaries or affiliates. The Company will provide notice of such
assignment to the Employee.
20. Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to
the benefit of the Employee and his heirs and personal representatives, and shall be binding
upon and inure to the benefit of the Company and its successors and assigns (including,
without limitation, the purchaser of all or substantially all of its assets).
21. Headings. The headings in this Agreement are solely for the convenience of reference and shall
be given no effect in the construction or interpretation of this Agreement.
22. Cooperation. Employee agrees to cooperate both during and after Employee’s employment with the
Company, at the Company’s sole cost and expense, with any investigation by the Company involving
the Company or any employee or agent of the Company.
23. Severability. The provisions of this Agreement are severable and should any provision hereof
be void, voidable or unenforceable under any applicable law, such void, voidable or unenforceable
provision shall not affect or invalidate any other provision of this Agreement, which shall
continue to govern the relative rights and duties of the parties as though the void, voidable or
unenforceable provision were not a part hereof.
24. Survival. The provisions of Sections 3-7 (inclusive); 12 and 14-25 (inclusive) shall survive
the expiration or earlier termination of this Agreement.
25. Acknowledgment. The Employee specifically acknowledges that: the Employee has read and
understands all of the terms of this Agreement; in executing this Agreement, the Employee does not
rely on any inducements, agreements, promises or representations of the Company or any agent of the
Company, other than the terms and conditions specifically set forth in this Agreement; the Employee
has had an opportunity to consult with independent counsel with respect to the terms of this
Agreement; that Xxxxxxxxxx Xxxxxxx PC is representing the Company in connection with this Agreement
and not the Employee; and that the Employee
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has made such investigation of the facts pertaining to this Agreement and of all the matters
pertaining hereto as he deems necessary.
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| COMPANY: ASTA FUNDING, INC. |
||||
| By: | /s/ Xxxx Xxxxx | |||
| Xxxx Xxxxx, President & CEO | ||||
| EMPLOYEE: |
||||
| /s/ Xxxxxxx Xxxxxxxx | ||||
| Xxxxxxx Xxxxxxxx | ||||
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