EMPLOYMENT AND COMPENSATION AGREEMENT
This EMPLOYMENT AND COMPENSATION AGREEMENT ("Agreement") is made as of the first
day of September, 1998, by and between ALLSTATE FINANCIAL CORPORATION, a
Virginia corporation, having its principal place of business at 0000 Xxxxx
Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000 (the "Company"), and C. Xxxx
Xxxxxxx, (the "Employee"). The Company and the Employee in consideration of the
mutual premises contained herein, mutually agree as follows: 1. Employment. The
Company employs the Employee and the Employee agrees to serve the Company as
Senior Vice President and Chief Credit Officer of the Company. The Employee
shall devote the Employee's full business time and best efforts to Company
business. Employee shall perform such other duties commensurate with the
Employee's position as may be specified from time to time by the Chairman, the
Chief Executive Officer or the Board of Directors of the Company. 2. Term. The
initial term of this Agreement shall commence on the date set forth above, and
shall end at the close of business on August 31,1999 (the "Term").
Notwithstanding the foregoing, the Term shall extend one day at the end of every
day during its length, and the new closing date of the term shall be that
additional day, unless either party may notify the other of its intention to
stop such extensions, in which case the closing date of the Term shall be one
year from the date of such notice
3. Compensation. During the Term, the Company shall pay to the Employee the
Employee's salary at an annual rate of one hundred seventy five thousand dollars
($175,000) per annum, which amount may be increased from time to time at the
discretion of the Board of Directors of the Company. In addition, Employee shall
receive on the date of execution of this Agreement options (which shall be
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1966,as amended) under the Allstate Financial Corporation Stock
Option Plan (a copy of which has been provided to Employee) (the "Plan") to
purchase 30,000 shares of the Company's stock at a price equal to 100% of the
highest trading price of such shares on the date of issuance of such options
(according to the NASDAQ,) 15,000 of which shall be exercisable upon issuance
and 15,000 of which shall be exercisable one year from the date of issuance.
Said options will expire on the earlier of (i) ten years from the date of
issuance and (ii) in connection with any termination of Employee's employment,
the date provided under the terms and provisions of the Plan or subparagraph
8(c) hereunder. 4. Other Compensation. The Company shall provide the Employee
with the following additional compensation during the Term: (i) Subject to
meeting eligibility provisions, any and all general Employee benefit plans,
including without limitation medical, health, life and disability insurance,
pension and profit sharing plans, now or hereafter granted by the Company to the
employees of the Company as a group, or to the executive officers of the Company
as a group, shall be granted to the Employee. If a disability insurance plan is
not provided to all employees, the Company will provide a reasonable substitute
for Employee. (ii) Yearly bonuses to be paid to Employee at the discretion of
the Board of Directors of the Company; and (iii) Receipt of an automobile
allowance of $500.00 per month. 5. Reimbursement. Usual and normal monetary
allowances for bona fide business expenses incurred by the Employee in
connection with the performance of the Employee's duties hereunder shall be
reimbursed by the Company. Such allowances shall, without limitation, include
expenses such as travel, meals, hotels, telephone, telegraph, postage and such
other normal and customary business expenses.
6. Vacation. The Employee shall be entitled to four (4) weeks paid vacation per
year during the Term of employment hereunder. The dates of any vacation periods
shall be arranged in order that such vacation days shall not materially hinder
the normal functioning of the Company's business activities. 7. Trade Secrets;
Non-Competition. (a) In the course of the Employee's employment, the Employee
will have access to confidential records, data, pricing information, lists of
customers and prospective customers, lists of vendors, books and promotional
literature, leases and agreements, policies and similar material and information
of the Company or used in the course of its business (hereinafter collectively
referred to as "confidential information"). All such confidential information
which the Employee shall use or come into contact with shall remain the sole
property of the Company. The Employee will not, directly or indirectly, disclose
or use any such confidential information, except as required in the course of
such employment. The Employee shall not for a period of one (1) year following
the end of the Term, disclose or use in any fashion any confidential information
of the Company or any of its subsidiaries or affiliates, whether such
confidential information is in the Employee's memory or embodied in writing or
other physical form, provided, that the foregoing requirements shall not apply
to any information (A) that (prior to disclosure by the Employee) has been
disclosed by the Company or any third party or (B) that Employee discloses (i)
to any branch, agency or regulatory authority of any federal, state or local
government to comply with any statute, regulation, rule, order or ordinance or
(ii) to any federal, state or local court, tribunal or other adjudicatory body
in connection with any suit, claim or question arising before such court,
tribunal or other adjudicatory body or otherwise.
In the event of a breach or a threatened breach by the Employee of the
provisions of this subparagraph (a), the Company shall be entitled to an
injunction restraining the Employee from disclosing any of the aforementioned
confidential information. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other remedies available to the
Company for such breach or threatened breach, including the recovery of damages
from the Employee. Subject to subparagraph (c) below, this provision shall
survive the termination of this Agreement.
(b) The Employee further agrees that, during the Term (or, if the Employee's
employment is terminated prior to the end of the Term (whether by the Company or
the Employee), during the period prior to such termination) and for a period of
one (1) year thereafter, the Employee will not, except with the prior written
consent of the Board of Directors, (i) be employed as an employee, consultant,
officer or director, by any other non-bank-owned commercial finance company,
(ii) solicit any business from or have any business dealings with, either
directly or indirectly or through corporate or other entities or associates, any
customer or client of the Company ,or (iii) initiate any action, either directly
or indirectly or through corporate or other entities or associates, that would
reasonably be expected to encourage or to induce any employee of the Company or
of any subsidiary or affiliate of the Company to leave the employ of the Company
or of any such subsidiary or affiliate. The Employee specifically acknowledges
the necessity for this subparagraph (b), given the nature of the Company's
business. The Employee agrees that the Company shall be entitled to injunctive
relief in the event of a breach of the provisions of this subparagraph (b), the
legal remedies being inadequate to fully protect the Company. Nothing contained
herein shall be construed as prohibiting the Company from pursuing any other
remedies available to the Company for such breach, including the recovery of
damages from the Employee. Subject to subparagraph (c) below, this provision
shall survive the termination of this Agreement.
(c) In the event of a Business Combination or Change of Control (as defined
below) involving the Company (whether or not the Company's Board of Directors
recommends such Business Combination or Change of Control for approval by the
Company's shareholders), subparagraphs (a) and (b) of this Paragraph 7 shall, at
the time such Business Combination or Change of Control is consummated, but only
in the event Employee's employment is terminated or the employee's duties and
responsibilities are substantially reduced in connection therewith under the
terms of subparagraph 8(c) below, be null and void and of no further force or
effect. For purposes of this Agreement, "Business Combination" shall mean (iii)
a merger, consolidation or any other business combination of the Company with
any non-affiliated party, (ivi) the disposition of all or substantially all of
the securities, business or assets of the Company or (iii) a joint venture,
reorganization or other transaction (or series of transactions) as a result of
which all or substantially all of the business or assets of the Company are
transferred, with or without a Change of Control, or any other similar corporate
combination or transaction (or series of related transactions). For purposes of
this Agreement, a "Change of Control" shall mean a transaction (or series of
transactions) or other event (or series of events) that results in the
acquisition of a controlling interest in the Company by a person or entity (or
group of persons and/or entities) that did not have a controlling interest in
AFC prior to such transaction (or series of transactions) or event (or series of
events). As used in the preceding sentence, the term "controlling interest"
means possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of voting
securities, by contract or otherwise); provided that, in any event, any person
or entity (or group of persons and/or entities) which beneficially acquires,
directly or indirectly, 25% or more (in number of votes) of the securities
having ordinary voting power for the election of directors of the Company shall
be conclusively presumed to have a controlling interest in the Company. This
provision shall be construed so that if a Business Combination or Change of
Control (as defined herein) occurs on more than one occasion, the terms and
provisions of this Agreement shall apply to the most recent Business Combination
or Change of Control. 8. Payments Upon Termination. The Company shall pay to the
Employee upon termination of employment during the Term, as follows: (a) If the
Employee's employment is terminated by death, the Company shall continue to pay
and provide to the estate of the Employee for a period equal to three months,
Employee's then applicable base salary pursuant to the provisions of Paragraph 3
for such period, in semi-monthly installments. In addition, the Company, as soon
as reasonably possible, but not past the end of the fiscal year of the death of
the Employee, shall also pay to the estate of the Employee (on a pro rata basis
up to the date of the Employee's death) compensation otherwise due and unpaid to
the Employee as of the date of, or in connection with, the Employee's death,
pursuant and subject to the provisions of subparagraphs 4(i), 4(ii) and 4(iii)
herein.
(b) In the event the Employee's employment is terminated because of permanent
disability (as defined below), for a period equal to six months, the Company
shall continue to pay and provide to the Employee the Employee's then applicable
salary for such period in semi-monthly installments, pursuant to the provisions
of Paragraph 3 herein, and benefits for such period as if the Employee were
still employed to be paid not later than the last day of such period under
subparagraphs 4(i), 4(ii) and 4(iii) herein. As used herein, the Employee shall
be deemed to be permanently disabled in the event that the Employee has not been
able (due to mental or physical illness or incapacity) to render services
required by this Agreement for a period of ninety (90) consecutive days. Any
salary payments to be made by the Company under the provisions of this
subparagraph (b) are to be offset by payments, if any, made to the Employee
under any disability insurance plan maintained by the Company.
(c) In the event that (i) the employment of the Employee is terminated by the
Company other than under the provisions as set forth in Paragraph 8(a) or (b)
herein or (ii) following a Business Combination or Change of Control, (A) the
Employee is not offered a position with the Company that involves duties,
responsibilities, powers and functions comparable to those enjoyed by the
Employee immediately prior to such Business Combination or Change of Control at
an annual rate of compensation (including commission rate) at least equal to
that annual rate paid to the Employee immediately prior to such Business
Combination or Change of Control and (B) the Employee's employment is terminated
prior to the end of the Term (whether by the Employee or the Company), then the
Company shall pay to the Employee in addition to any other amounts otherwise
payable to the Employee as of the date of, or in connection with, such
termination, on the date of such termination a lump sum payment equal to the
Employee's base salary for one year. In addition, for one year, the Company
shall provide to the Employee benefits for such period as if the Employee were
still employed to be paid not later than the last day of such period under
subparagraphs 4(i), 4(ii) and 4(iii) hereof. (d) Notwithstanding anything else
contained in subparagraphs (b) or (c) above, no compensation shall be payable
under subparagraphs (b) or (c) above if the Employee's employment was or is
terminated for Cause (as defined below). As used herein, the term "Cause" shall
mean (i) the Employee's conviction of (or entry of a plea of nolo contendere
with respect to) a felony or other crime involving moral turpitude or (ii) a
willful, substantial and continual failure by the Employee in breach of this
Agreement to perform the lawful duties, responsibilities or obligations assigned
to the Employee pursuant to the terms hereof and the failure to cure such breach
within fifteen (15) days following written notice from the Company containing
specific findings by the Board of Directors of the Company detailing such
failures. (e) Except as specifically set forth above, and except any amounts
that may otherwise be payable to the Employee as of the date of, or in
connection with, any termination, the Company shall have no obligation to make
any payments to Employee in the event the Employee's employment is terminated
prior to the end of the Term. 9. Validity. In the event that any provision or
portion of this Agreement shall be determined to be invalid or unenforceable for
any reason, the remaining provisions and portions of this Agreement shall be
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law. 10. Amendment and Waiver. This Agreement constitutes
the entire agreement between the parties as to employment by the Company of the
Employee and may not be changed orally but only by a written document signed by
both parties.
No waiver by either party hereto at any time of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of any other breach by such party at that
time or any other time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. 11.
Arbitration. Any dispute whatsoever relating to the interpretation, validity, or
performance of this Agreement and any other dispute arising out of this
Agreement which cannot be resolved by the parties to such a dispute shall, upon
thirty (30) days written notice by either party, be settled upon application of
any such party by arbitration in Arlington County, Virginia, in accordance with
the rules then prevailing of the American Arbitration Association, and judgment
upon the award rendered by the arbitrators may be entered in any court of
competent jurisdiction. The cost of any arbitration proceedings under this
paragraph shall be shared equally by the parties to such a dispute. Nothing
contained in this paragraph shall limit the Company's rights to obtain
injunctive relief to enforce the provisions of paragraphs 7(a) and 7(b) above.
12. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia (without regard to
conflicts of law principles). 13. Binding Effect. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, legal representatives, successors and assigns and shall become effective
upon execution by the Company.
14. Notice. All notices, and other communications made pursuant to this
Agreement shall be made in writing and shall be deemed to have been given if
delivered personally or mailed, postage prepaid, to the applicable party hereto
at the applicable address first above written, or in either case, to such other
address as the Company or Employee shall have specified by written notice to the
other party.
15. Paragraph Headings. All paragraph headings are included herein for
convenience and are not intended to affect in any way the meaning or
interpretation of this Agreement.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. Prior Agreements Superseded. In the event that the Employee has
heretofore entered into an employment agreement with the Company, then this
Agreement hereby revokes, replaces and supersedes the prior employment agreement
between the Company and the Employee.
IN WITNESS WHEREOF, the parties have executed this agreement, the Company acting
herein by its duly authorized officer, the day and year first above written.
ALLSTATE FINANCIAL CORPORATION
By:
Xxxxx X. Xxxxxxxx, Chairman of the Board
EMPLOYEE:
C. Xxxx Xxxxxxx
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