EMPLOYMENT AGREEMENT
Exhibit
10.2
EMPLOYMENT
AGREEMENT (this “Agreement”) made as of the first day of March, 2009, 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 0000 Xxxxxxx Xxxx Xxxxxxxx Xxxx, Xxxxxxxx, XX
00000 (the “Employee”).
By this
Agreement, FAMC and the Employee agree as follows:
1. Employment. FAMC
employs the Employee, and the Employee accepts employment 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 June 30, 2011 or any earlier effective date of termination
pursuant to Section 9 hereof (as it may be extended by mutual agreement of the
parties, the “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 Bylaws 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 Thousand Dollars ($500,000) 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 during the preceding Planning Year
(July 1 through June 30), or portion thereof as follows:
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(i)
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In
respect of the Planning Year ending June 30, 2009, the Incentive Salary
shall be paid in two (2) installments, a first installment in the amount
of Two Hundred and Eight Thousand Three Hundred and Thirty Three Dollars
($208,333) shall be paid to the Employee by the later of:
(a) ten (10) business days of the Effective Date and (b) five
(5) business days of the execution of this Agreement, and a second
installment (the "Second Installment") of One Hundred Sixty Six Thousand
Six Hundred and Sixty-Seven Dollars ($166,667) shall be paid when annual
incentives are paid to FAMC executives generally in the third calendar
quarter of 2009. If the Employee voluntarily resigns his
employment with FAMC (other than pursuant to Section 9(e)) or the
Employee's employment is terminated by the Employer for cause, in either
case on or before February 28, 2010, the Employee shall repay FAMC a
portion of the Second Installment equal to the Second installment
multiplied by a fraction, (A) the numerator of which is 365
minus the number of days between March 1, 2009 and the date of the
Employee's termination of employment, and (B) the denominator of which is
365.
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(ii)
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For
the Planning Year commencing on July 1, 2009, the Employee will be covered
by the Incentive Salary arrangement for such Planning Year applicable to
senior executives of FAMC
generally.
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(iii)
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For
subsequent Planning Years during the Term, the Employee shall be covered
by the Incentive Salary arrangement for such Planning 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 Planning Year and subject to the
Employee's continued employment through the applicable date of
payment.
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(c) Long Term Incentive
Compensation. In addition to the foregoing, effective as of
July 1, 2009, the Employee shall be granted long term incentive compensation in
an amount equal to Two Hundred Thousand Dollars ($200,000.00), in a form, and
subject to such conditions, as determined by the Board or the Compensation
Committee in its sole discretion.
(d) Base Salary
Differential. The Employee will be paid a one-time lump sum
cash payment of Seventy-Two Thousand Nine Hundred Seventeen Dollars ($72,917),
payable by the later of: (a) ten (10) business days of the Effective
Date and (b) five (5) business days of the execution of this
Agreement. Such payment is intended to compensate the Employee for
the reduced base salary received by the Employee for the period commencing
October 1, 2008 through the Effective Date.
(e) One-Time Signing
Bonus. The Employee will be paid a one-time lump sum cash
payment as a signing bonus (the “Signing Bonus”) in the amount of One Hundred
and Fifty Thousand Dollars ($150,000.00), payable by the later of:
(a) ten (10) business days of the Effective Date and (b) five (5)
business days of the execution of this Agreement. If the Employee
voluntarily resigns his employment with FAMC (other than pursuant to Section
9(e)) or the Employee's employment is terminated by the Employer for cause, in
either case on or before February 28, 2010, the Employee shall repay FAMC a
portion of the Signing Bonus equal to the Signing Bonus multiplied by a
fraction, (A) the numerator of which is 365 minus the number of days between
March 1, 2009 and the date of the Employee's termination of employment, and (B)
the denominator of which is 365.
5. Expenses. FAMC
shall reimburse the Employee for his reasonable and necessary expenses incurred
in carrying out his duties under this Agreement, including, without limitation,
expenses for: travel; attending business meetings, conventions and
similar gatherings; home and portable telephone bills; business entertainment
and professional association dues, 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.
6. Vacation and Sick
Leave. The Employee shall be entitled to four (4) weeks of
paid vacation per year, with any vacation exceeding two consecutive weeks
requiring the advance approval of the Chairman of the Board. Vacation
rights shall vest on July 10th of each year during the Term, and must be
exercised within fourteen (14) months thereafter or forfeited, unless FAMC
policy for non-contract employees provides for less restrictive vacation rights
carry-over. The Employee shall be entitled to reasonable and
customary amounts of sick leave.
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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: the best level of personal and
family health insurance obtainable by FAMC on reasonable terms; 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. 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. Relocation
Expenses. The Employee shall relocate his residence from that
stated in the first paragraph of this Agreement to the Washington, D.C.
metropolitan area. In lieu of reimbursing the Employee’s moving and
ancillary expenses and providing other relocation assistance, FAMC shall pay the
Employee a one-time lump-sum cash payment in the amount of Seventy-Five Thousand
Dollars ($75,000) to cover packing, moving, and other ancillary expenses, to be
paid by the later of: (a) ten (10) business days of the Effective Date and
(b) five (5) business days of the execution of this Agreement.
Reimbursement for expenses for travel by Employee and his spouse between the
current residence in New York and Washington, DC shall also be paid to the
Employee promptly following his submission to FAMC of invoices
therefor. Xxxxxx Mac will also reimburse, or pay directly, the
Employee’s temporary living expenses in the DC metropolitan area for up to 180
days from the date of execution of this Agreement and, not later than 180 days
from the Date of execution of this Agreement, will purchase the residence at the
address in the first paragraph for an amount equal to the average of two
appraisals by appraisers acceptable to Xxxxxx Mac.
9. 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.
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(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, 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 without Cause for purposes of this
Agreement.
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 9(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 9(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 Internal Revenue Code of 1986, as amended.
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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, annual incentive payments, expense reimbursements,
vacation pay, and similar amounts accrued and unpaid as of the date of such
termination. With respect to annual incentive payments, the term
“accrued” means that the amount of the payment to the Employee has been
definitively determined by Xxxxxx Mac but the payment has not been
made. 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 9(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
preceding subsection (a)(i), FAMC shall continue to pay the Employee (or his
estate or heirs, as the case may be) for the lesser of twenty-four (24) months
or the balance of the Term 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 preceding subsection
9(a)(iii) or pursuant to Section 9(e) below, or as a result of the Xxxxxx Mac'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 mutually agreeable to the parties
within five (5) days following such termination and the Employee not revoking
such release, FAMC shall pay the Employee within thirty (30) days after such
termination an aggregate amount in cash equal to two times the Base
Salary.
The
amount to be paid by FAMC to the Employee under this Section 9(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 (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 9(d).
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10. 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 Vice
President – General Counsel or, in the case of the Employee, 0000 Xxxxxxx Xxxx
Xxxxxxxx Xxxx, Xxxxxxxx, 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.
11. 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 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.
12. 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 20% of
the common stock in a public company.
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13. 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 13), 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 13 shall survive the
termination of this Agreement and the termination of the Employee's employment
hereunder.
14. 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, 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 12 hereof. “Member of management” means
the President, any Senior Vice President, Vice President or the Controller of
Xxxxxx Mac.
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Employee
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By:
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/s/ Xxxxxx X. Xxxxxxx
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/s/ Xxxxxxx X. Xxxxxx
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Acting
Chairman
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Xxxxxxx
X. Xxxxxx
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