EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made as of the 5th day of
March, 1996 by and between FIDELITY LEASING, INC., a Pennsylvania corporation
(the "Company") and XXXXXXX XXXXXXXXX (the "Executive").
WHEREAS, Executive has been offered employment by the Company as
Chairman, President and Chief Executive Officer (the "Office") and
WHEREAS, Executive wishes to be employed in the Office by the Company;
and
WHEREAS, the Company desires to assure itself of the availability of
Executive's services in the Office;
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the adequacy of which is hereby acknowledged, the Company and Executive
agree as follows:
1. Employment.
The Company hereby employs Executive in the Office and
Executive hereby accepts such employment, positions and responsibilities, and
agrees to serve the Company in such capacities upon the terms and conditions set
forth herein.
2. Services.
In carrying out his duties Executive shall report to and
accept direction from the Board of Directors of the Company; provided, however,
Executive's duties shall be limited to those normally associated with those of
Chairman, President and Chief Executive Officer of a company in the equipment
leasing industry.
Executive shall serve the Company diligently, competently, and
to the best of his abilities during the period of employment. Executive shall
devote substantially all of his time and attention to the business of the
Company. Executive's services shall be performed within a reasonable commuting
distance of Philadelphia except for reasonable travel.
Executive's duties shall include the development and the day
to day oversight of the Company's leasing business, and such other matters as
may be designated from time to time by the Company's Board of Directors and
which are appropriate to the Office.
3. Term.
The term of employment of Executive under this Agreement shall
commence on the date hereof and unless sooner terminated pursuant to Section 6,
shall continue in full force and effect for a period of three (3) years
thereafter (such three (3) year period herein referred to as the "Contract
Period"). Such Contract Period shall be extended for additional one year terms
unless either Executive or Company shall have given notice to the contrary at
least two months before each termination date.
4. Compensation.
(a) Base Salary. During the period of employment, the Company
shall pay to Executive a Base Salary of One Hundred Fifty Thousand Dollars
($150,000) per annum, payable monthly. It is understood that Company will review
annually and may, in the discretion of the Board Directors, increase or decrease
(but not below $150,000) the Base Salary, as adjusted, in light of the
Executive's performance and other factors.
(b) Incentive Compensation Plan. During the period of
employment the Executive shall receive bonus payments equal to 2.75% of the
annual after tax earnings of the Company, but not more than 2.0% of the pre-tax
earnings of the Company. After Tax Earnings shall mean the before tax earnings
of Newco determined by Newco's independent auditors in accordance with generally
acceptable accounting principles consistently applied adjusted for the taxes
that would be payable if Newco were a corporation that filed a separate tax
return. Payment of such bonus shall be made within fifteen (15) days of the
receipt by the Company of its audited financial statement for the preceding
fiscal year, but in no event later than 105 days after the end of the preceding
fiscal year.
(c) Payments in Lieu of Dividends. In the case of any dividend
paid by the Company at a time during which Xxxxxxxxx has unvested or unexercised
stock options to acquire Company stock, Xxxxxxxxx shall receive, contemporaneous
with the payment of such dividend, an amount hereunder equal to that amount to
which he would have been entitled had he previously exercised his stock options.
5. Benefits.
During the period of employment, Executive shall be entitled
to receive the following additional benefits:
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(a) Participation in Benefit Plans. Executive will participate
on a substantially equal basis as all other employees of Resource in all
employee benefit plans and arrangements now in effect or which may hereafter be
established which are generally applicable to other employees of the Company or
any of its subsidiaries, except that, in lieu of any health care benefits,
Xxxxxxxxx shall receive an allowance of Six Hundred Seventeen Dollars ($617) per
month for the purchase of health insurance.
(b) Car Allowance. The Company agrees to pay Executive a car
allowance not to exceed Five Hundred Dollars ($500) per month.
6. Termination.
Anything herein contained to the contrary notwithstanding,
Executive's employment hereunder shall terminate as a result of any of the
following events:
(a) Executive's death;
(b) Termination by the Company, for Cause. "Cause" shall
encompass the following: (i) Executive has committed any act of fraud or gross
negligence or engaged in any other material misconduct, neglect of duties or
failure to act which adversely affects the business or affairs of the Company
and/or any of its subsidiaries or affiliates; (ii) Executive has been convicted
of a felony or committed any act not approved in writing by the Board of
Directors of the Company involving any material conflict of interest or
self-dealing related to any aspect of the Company and/or any of its
subsidiaries; or (iii) Executive has failed to follow written directions of the
Board of Directors or the Chief Executive Officer of Resource Leasing, Inc.
("Resource Leasing") which are consistent with Executive's duties hereunder and
not in violation of applicable law; provided, however, Termination by the
Company for Cause shall be effective in the case of (i) (except for an act of
fraud) or (iii) only if such failure has not been cured within thirty (30) days
after notice of such failure has been given to the Executive by Company. If
notice has been given under the previous sentence for a failure by Executive,
Executive may be discharged without notice in the case of a similar failure;
(c) The Executive becomes disabled by reason of any physical
or mental disability whatsoever for more than ninety (90) days in the aggregate
during any 365-day period and the Board of Directors determines, in good faith
and in writing, that the Executive, by reason of such physical or mental
disability, is rendered unable to perform his duties and services hereunder (a
"Disability"); or
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(d) Termination by Executive for "Good Reason" upon forty-five
(45) days' prior written notice to the Company. "Good Reason" shall mean: (i)
without the written consent of Executive, a substantial change in the services
or duties (including relocation in contravention of Paragraph 2 of this
Agreement) required of the Executive hereunder or the imposition of any services
or duties substantially inconsistent with, or in diminution of Executive's
position, services or duties, or status with the Company; (ii) failure to
continue Executive's coverage under any Company benefit plan as required under
paragraph 5(a) except pursuant to a change to a benefit plan that applies to
senior executives of the Company generally or is required by law or regulation;
(iii) any material breach by the Company of any provision of this Agreement; or
(iv) Xxxxxx X. Xxxxx is neither an officer nor the owner directly or indirectly
(including ownership through Bryn Mawr Resources, Inc.) of at least five percent
(5%) of the Class A voting stock of Resource America, Inc. ("RAI"); provided,
however, that Termination by Executive for Good Reason shall be effective in the
case of (i)-(iii) only if such failure has not been cured within thirty (30)
days after notice of such failure has been given to the Company. If notice has
been given under the previous sentence for a failure of the Company, Executive
may terminate this Agreement for Good Reason without notice in the case of a
similar failure.
7. Consideration Payable to Executive Upon Termination or in the Event
of Disability.
(a) During any period that the Executive fails to perform his
duties hereunder as a result of incapacity due to physical or mental illness
("Disability Period"), the Executive shall continue to receive his full salary
at the rate then in effect for such period until his employment is terminated
pursuant to subparagraph 6(c) hereof (together with his bonus, so long as any
such disability is for less than sixty (60) days in the aggregate in any bonus
year), provided that payments so made to the Executive shall be reduced by the
sum of the amounts, if any, payable to the Executive at or prior to the time of
any such payment under disability benefits of Company and which were not
previously applied to reduce any such payment.
(b) If Executive's employment shall terminate pursuant to
subparagraph 6(a),(b) or (c), Executive shall receive his full Base Salary,
together with all benefits required pursuant to paragraph 5, through the date of
termination, but shall not be entitled to receive any additional payments,
benefits or compensation otherwise due subsequent to the date of termination.
(c) If Executive's employment by the Company under this
Agreement shall be terminated for "Good Reason" a specified under subparagraph
6(d), Company shall pay to Executive the Base Salary and benefits required
pursuant to paragraph 5, for the term of one (1) year plus bonus and payable at
the time when the same would have become due and payable if termination had not
occurred. Executive shall not be required to mitigate the amount of any payment
provided for in this subparagraph 7(c) by seeking other employment or otherwise,
nor shall the amount of any payment or benefit provided for therein be reduced
by any compensation of any retirement benefit heretofore or hereafter earned by
Executive as the result of employment by any other person, firm or corporation.
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8. Confidential Information.
All confidential information or trade secrets which Executive
currently has or may obtain during the period of employment relating to the
business of the Company and its affiliates shall not be published, disclosed, or
made accessible by him to any other person, firm, or corporation except in the
business and for the benefits of the Company, Resource Leasing and its
affiliates. The provisions of this paragraph 8 shall survive the termination of
this Agreement, but shall not apply to any information which is or becomes
publicly available otherwise than by any breach of this paragraph 8.
9. Covenant Not to Compete.
Executive shall not, during the period of employment and for
the two years immediately following termination of employment, for whatever
reason, for himself, or on behalf of any other person, firm, partnership,
corporation, or other entity, directly or indirectly: (i) engage in the
equipment leasing business; or (ii) solicit or hire, or attempt to solicit or
hire, any employee of the Company or its affiliates away from the Company or its
affiliates or away from the Company's employ. For purposes of this clause (i) of
this paragraph, "to engage" shall include Executive's acting as an owner (of
more than 5%), employee, shareholder, consultant, director or officer, directly
or indirectly, of an entity so engaged. Notwithstanding the first sentence of
this Paragraph 9, if the termination occurs pursuant to subparagraph 6(d) or is
by mutual consent, Executive may engage in the equipment leasing business as an
independent consultant.
10. Remedies in Case of Breach of Certain Covenants or Termination.
The Company and Executive agree that the damages that may
result to the Company from misappropriation of confidential information or
competition as prohibited by paragraphs 8 and 9 could be estimated only by
conjecture and not by any accurate standard, and, therefore, any breach by
Executive of the provisions of such paragraphs, in addition to giving rise to
monetary damages, will be enjoined. In addition, if Executive breaches the
provisions of such paragraphs, or is terminated pursuant to subparagraphs 6(a)
or 6(c), Executive shall (solely for violation of Paragraph 8 or 9) forfeit any
right to receive the payments and benefits described under paragraph 7 and
Executive shall forfeit a portion of any stock options that have been or may be
granted pursuant to the Company's Key Executive Stock Option Plan or otherwise
in accordance with the following schedule:
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If Termination pursuant to a breach The following unvested stock
of Paragraphs 6(a) or 6(c) or stock options shall be
violation of Paragraphs 8 or 9 occurs: cancelled:
(i) On or prior to the first (i) All
anniversary of the date of
this Agreement
(ii) After the first but on or (ii) Stock options that vest
prior to the second in years three and four
anniversary of the date of
this Agreement
(iii) After the second but on or (iii) Stock options that vest in
prior to the third anni- year four
versary of the date of
this Agreement
(iv) After the third anniversary (iv) None
of the date of this Agreement
In the case of a termination pursuant to a breach of Paragraph 6(b), all
unvested or unexercised stock options shall be forfeited.
11. Representations and Warranties.
(a) Executive represents and warrants to the Company that he
is under no contractual or other restriction or obligation which would prevent
the performance of his duties hereunder, or which interfere with the rights of
the Company hereunder. Executive represents and agrees that he has no agreements
or arrangements with the Company or any of its affiliates providing for the
compensation of Executive in any respect other than as set forth in this
Agreement.
(b) The Company represents and warrants to Executive that it
has all requisite power and authority to execute, deliver, and perform this
Agreement and all necessary corporate proceedings of the Company have been duly
taken to authorize the execution, delivery, and performance of this Agreement by
the Company.
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12. Indemnification.
(a) If Executive is made a party or is threatened to be made a
party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (herein a "proceeding"), by reason of
the fact that he is or was an employee (which term includes officer, director,
agent and any other capacity) of the Company or is or was serving at the request
of the Company as an employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as an employee or agent or in any other
capacity while serving as an employee or agent, Executive shall be indemnified
and held harmless by RAI and the Company to the fullest extent authorized by the
Business Corporation Law of the Commonwealth of Pennsylvania, as the same exists
or may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits RAI and the Company to provide broader
indemnification rights than said law permitted RAI and the Company to provide
prior to such amendment), against all expense, liability and loss (including,
but not limited to, attorneys' fees, judgments, fines, ERISA excise taxes and
penalties and amounts paid or to be paid in settlement) incurred or suffered by
Executive in connection therewith and such indemnification shall continue as to
Executive after he has ceased to be a director, officer, employee or agent and
shall inure to the benefit of Executive's heir, executors, and administrators;
provided, however, that RAI and the Company shall indemnify any such person
seeking indemnification in connection with a proceeding (or part thereof)
initiated by Executive (other than a proceeding to enforce this Section 12) only
if such proceeding (or part thereof) was authorized directly or indirectly by
the Board of RAI and the Company. The right to indemnification conferred in this
paragraph shall be a contract right and shall include the right to be promptly
upon request, paid by RAI and the Company the expenses incurred in defending any
such proceeding in advance of its final disposition; provided, however, that if
the Business Corporation Law of the Commonwealth of Pennsylvania requires the
payment of such expenses incurred by an employee in his capacity as an employee
(and not in any other capacity in which service was or is rendered by such
person while a director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of a proceeding,
payment shall be made only upon delivery to RAI and the Company of an
undertaking, by or on behalf of Executive, to repay all amounts so advanced if
it shall ultimately be determined that such employee is not entitled to be
indemnified under this paragraph or otherwise.
(b) The indemnification provided by this paragraph shall not
be limited or exclude any rights, indemnities or limitations of liability to
which Executive may be entitled, whether as a matter of law, under the
Certificate of Incorporation, By-laws of RAI and the Company, by agreement, vote
of the stockholders or disinterested directors of RAI and the Company or
otherwise.
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(c) Xxxxxxxxx, in seeking indemnification under this Agreement
(an "Indemnitee"), shall give the other party or parties (the "Indemnitor")
prompt written notice of any claim, suit or demand that the Indemnitee believes
will give rise to indemnification under this Agreement; provided, however, that
the failure to give such notice shall not affect the liability of the Indemnitor
under this Agreement unless the failure to give such notice materially and
adversely affects the ability of the Indemnitor to defend itself against or to
cure or mitigate the damages. Except as hereinafter provided, the Indemnitor
shall have the right (without prejudice to the right of the Indemnitee to
participate at its expense through counsel of its own choosing) to defend and to
direct the defense against any such claim, suit or demand, at the Indemnitor's
expense and with counsel chosen jointly by Indemnitor and Indemnitee, and the
right to settle or compromise any such claim, suit or demand; provided, however,
that the Indemnitor shall not, without the Indemnitee's written consent, which
shall not be unreasonably withheld, settle or compromise any claim or consent to
any entry of judgment. The Indemnitee shall, at the Indemnitor's expense,
cooperate in the defense of any such claim, suit or demand. If the Indemnitor,
within a reasonable time after notice of a claim fails to defend the Indemnitee,
the Indemnitee shall be entitled to undertake the defense, compromise or
settlement of such claim at the expense of and for the account and risk of the
Indemnitor.
(d) Executive will be covered during the entire term of this
Agreement by Officer and Director liability insurance in amounts and on terms
similar to that afforded to other executive of RAI or its affiliates, which such
insurance shall be paid by the Company.
13. Severability.
In case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal, or unenforceable in any
respect such validity, illegality or unenforceability shall not affect any other
provisions of this Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision(s) had never been contained herein,
provided that such invalid, illegal or unenforceable provision(s) shall first be
curtailed, limited or eliminated only to the extent necessary to remove such
invalidity, illegality or unenforceability with respect to the applicable law as
it shall then be applied.
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14. Modification Agreement.
This Agreement shall not be modified by any oral agreement,
either expressed or implied, and all modifications thereof shall be in writing
and signed by the parties hereto.
15. Waiver.
The waiver of any right under this Agreement by any of the
parties hereto shall not be construed as a waiver of the same right at a future
time or as a waiver of any other rights under this Agreement.
16. Governing Law.
This Agreement shall be governed by and construed in
accordance with the internal laws of the Commonwealth of Pennsylvania, without
giving affect to the principles of conflicts of laws.
17. Notices.
Any notice to be given pursuant to this Agreement shall be
sufficient if in writing and mailed by certified or registered mail,
postage-prepaid, to the addresses listed below:
If to Company:
Fidelity Leasing, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
If to Executive:
Xxxxxxx Xxxxxxxxx
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
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IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this Agreement as of the date first written above.
FIDELITY LEASING, INC.
(the "Company")
By:_____________________________
_____________________________
(the "Executive")
Solely for the purpose of Paragraph 12 hereof
RESOURCE AMERICA, INC.
By:_____________________________
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