EMPLOYMENT RETENTION AGREEMENT
THIS AGREEMENT between Arcadia Financial Ltd. (the "Company")
and Xxxxxxx X. Xxxxxxxxxx (the "Executive") is dated as of this 27 day of
January, 1998.
W I T N E S S E T H :
WHEREAS, the Company and the Executive have agreed to enter
into an agreement providing the Company and the Executive with certain rights
to assure the Company of continuity of management;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is hereby agreed by and between the Company
and the Executive as follows:
1. EFFECTIVE DATE; TERM. This Agreement shall govern the
terms and conditions of Executive's employment commencing as of the date
hereof (the "Effective Date").
2. PRIOR EMPLOYMENT AGREEMENT. As of the Effective Date,
this Agreement shall supersede the Executive's Employment Agreement with the
Company dated January 6, 1997, as amended.
3. RETENTION PERIOD. The Company agrees to continue the
Executive in its employ, and the Executive agrees to remain in the employ of
the Company, for the period (the "Retention Period") commencing on the
Effective Date and ending on the date of any termination of the Executive's
employment in accordance with Section 6 of this Agreement.
POSITION AND DUTIES. (a) CHANGE IN POSITION. During the
Retention Period, the Executive's position (including titles), authority and
responsibilities as an officer of the Company shall be at least commensurate
with the highest of those held or exercised by him at any time during the
90-day period immediately preceding the Effective Date.
(b) BUSINESS TIME. During the Retention Period, the
Executive shall devote his full business time during normal business hours to
the business and affairs of the Company and use his best efforts to perform
faithfully and efficiently the responsibilities assigned to him hereunder, to
the extent necessary to discharge such responsibilities, except for
(i) reasonable time spent in serving on corporate, civic or
charitable boards or committees of the nature similar to those on which
the Executive served prior to the Effective Date, in each case only if
and to the extent not substantially interfering with the performance of
such responsibilities, and
(ii) periods of vacation and sick leave to which he is
entitled.
It is expressly understood and agreed that the Executive's continuing to
serve on any boards and committees on which he is serving or with which he is
otherwise associated immediately preceding the Effective Date shall not be
deemed to interfere with the performance of the
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Executive's services to the Company. The Executive shall be entitled to
serve on additional outside boards and committees with the prior written
consent by the Board of Directors of the Company.
(c) PLACE OF PERFORMANCE. During the Retention Period,
the Executive's principal places of performance will be at the Company's
offices in Minneapolis, Minnesota and at a location to be determined in or
near Philadelphia, Pennsylvania, with the Executive dividing his time between
the two locations on such basis as shall be mutually agreeable to the
Executive and the Company, except for reasonably required travel on behalf of
the Company.
5. COMPENSATION AND BENEFITS. (a) BASE SALARY. During the
Retention Period, the Executive shall receive a base salary ("Base Salary")
at a monthly rate at least equal to the monthly salary paid to the Executive
by the Company and any of its affiliated companies immediately prior to the
Effective Date. The Base Salary shall be reviewed at least once each year
after the Effective Date, and may be increased (but not decreased) at any
time and from time to time by action of the Board or any committee thereof or
any individual having authority to take such action in accordance with the
Company's regular practices. Neither payment of the Base Salary nor payment
of any increased Base Salary after the Effective Date shall serve to limit or
reduce any other obligation of the Company hereunder. For purposes of the
remaining provisions of this Agreement, the term "Base Salary" shall mean
Base Salary as defined in this Section 5(a) or, if increased after the
Effective Date, the Base Salary as so increased.
(b) ANNUAL BONUS. In addition to the Base Salary, the
Executive shall be eligible for each fiscal year of the Company ending during
the Retention Period an annual bonus, with the target amount at least equal
to $300,000 and vesting and payment thereof to be based on reasonable and
customary criteria consistent with the Company's practices for the Chief
Executive Officer of the Company (the "Annual Bonus"); provided however, for
the years 1998 through 2000 the Executive's Annual Bonus shall be applied
toward participation in the Company's 1998-2000 Restricted Stock Election
Plan on a basis commensurate with an executive having a base salary of
$500,000 (or, if greater, the Executive's annual Base Salary). If a fiscal
year of the Company begins, but does not end, during the Retention Period,
the Executive shall receive an amount with respect to such fiscal year at
least equal to the amount of the Annual Bonus multiplied by a fraction, the
numerator of which is the number of days in such fiscal year occurring during
the Retention Period and the denominator of which is 365. In the event the
Executive has elected to receive his or her Annual Bonus for such year in the
form of restricted shares of the Common Stock of the Company, upon
termination of the Executive's employment for any reason the Executive shall
be deemed to have revoked such election as to any then unvested shares of
such restricted stock and the Executive's pro-rated Annual Bonus for such
year shall be determined based upon the amount of the cash Annual Bonus the
Executive would have received absent such election. Each amount payable in
respect of the Executive's Annual Bonus shall be paid not later than 90 days
after the fiscal year next following the fiscal year for which the Annual
Bonus (or pro-rated portion) is earned or awarded. Neither the Annual Bonus
nor any bonus amount paid in excess thereof after the Effective Date shall
serve to limit or reduce any other obligation of the Company hereunder.
(c) FRINGE BENEFITS. During the Retention Period, the
Company shall provide the following fringe benefits to Executive:
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(i) HEALTH, DISABILITY AND LIFE INSURANCE. Subject to
satisfaction of the eligibility requirements of such plans and the rules
and regulations applicable thereto, Executive and his family members
shall be entitled to be covered by the Company's group health and dental
insurance plans presently in effect or hereafter adopted by the Company
and applicable to employees of the Company generally and Executive shall
be entitled to be covered by the Company's group disability and life
insurance plans presently in effect or hereafter adopted by the Company
and applicable to the employees of the Company in general. The Company
shall pay the premiums associated with such coverage. In the event
Executive makes a claim against any disability policy provided to
Executive by the Company pursuant to this Section 5(c)(i) and such
policy calls for a waiting period which is applicable to Executive's
claim, the Company shall pay to Executive during such waiting period his
monthly base salary due during such period and shall provide the other
benefits due him under this Section 5(c)(i).
(ii) VACATION. Executive shall be entitled to four weeks of
vacation without loss of compensation or other benefits pursuant to such
general policies and procedures of the Company as are from time to time
adopted by the Company.
(iii) EXPENSE REIMBURSEMENT. Executive shall be reimbursed by
the Company for all reasonable expenses incurred by him in connection
with the conduct of the Company's business for which he furnishes
appropriate documentation.
(iv) AUTOMOBILE. The Company shall at the Company's option
either (A) provide to Executive use of an automobile to be used by
Executive in conducting the Company's business; or (B) pay to Executive
a monthly auto expense in the amount of not less than Four Hundred
Dollars ($400) per month. In addition, in the event the Company
provides to Executive an automobile the Company shall reimburse
Executive (1) an amount equal to the reasonable cost of insuring and
maintaining the automobile used by Executive for the Company's business,
and (2) the cost of maintenance and the cost of gasoline and oil used in
the automobile and in the event of a loss under the policies insuring
said automobile, the amount of any deductible thereunder applicable to
such loss. Such insurance and the coverage and deductibles thereof
shall cover both the business and personal use of such automobile by
Employee, his family and invitees and shall include such other terms and
conditions as are reasonably acceptable to Executive. Any such
reimbursements shall be made upon the Company's receipt of invoices
evidencing incurrence of such expenses. Executive shall also be paid a
monthly amount equal to the reasonable value of personal use of such
automobile, determined in accordance with applicable federal income tax
regulations.
(v) CLUB DUES. The Company shall reimburse Executive the
reasonable cost of the monthly or annual dues, as the case may be, paid
by Executive to maintain his status as a member of the Flagship Athletic
Club or of any other athletic club having equal or lesser membership
costs in lieu of such club. The Company shall also provide to Executive
and his family a membership at Olympic Hills Golf Club and shall
reimburse the Executive for the reasonable cost of the monthly or annual
dues, as the case may be, paid by Executive to maintain such membership.
If either such membership is a corporate membership, upon termination of
Executive's employment other than for Cause or Death, such membership
shall be converted to an individual membership. The
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Company shall reimburse Executive for any fees charged in connection
with such conversion.
(vi) OFFICE AND SUPPORT STAFF. In the event a Change of
Control occurs during the Retention Period, the Executive shall
thereafter be entitled to an office or offices of a size and with
furnishings and other appointments, and to secretarial and other
assistance, substantially equal to the most favorable of the foregoing
provided to the Executive at any time during the 90-day period
immediately preceding the date of the Change of Control.
6. TERMINATION. (a) DEATH OR DISABILITY. The Executive's
employment shall terminate automatically upon his death. The Company may
terminate Executive's employment during the Retention Period, after having
established the Executive's Disability, by giving the Executive written
notice of its intention to terminate his employment, and his employment with
the Company shall terminate effective on the 90th day after receipt of such
notice if, within 90 days after such receipt, the Executive shall fail to
return to full-time performance of his duties. For purposes of this
Agreement, "Disability" means disability which, after the expiration of more
than 26 weeks after its commencement, is determined to be total and permanent
by a physician selected by the Company or its insurers and acceptable to the
Executive or his legal representatives (such agreement to acceptability not
to be withheld unreasonably).
(b) VOLUNTARY TERMINATION. Notwithstanding anything in
this Agreement to the contrary, the Executive may, upon not less than 15
days' advance written notice to the Company, voluntarily terminate employment
during the Retention Period for any reason, provided that any termination by
the Executive pursuant to Section 6(d) of this Agreement on account of Good
Reason (as defined therein) shall not be treated as a voluntary termination
under this Section 6(b).
(c) CAUSE. The Company may terminate the Executive's
employment during the Retention Period for Cause. As used in this Agreement,
the term "Cause" shall mean (i) any fraud, misappropriation or embezzlement
by the Executive in connection with the business of the Company or any of its
subsidiaries, (ii) any conviction of a felony or a gross misdemeanor by the
Executive that has or can reasonably be expected to have a detrimental effect
on the Company or any of its subsidiaries, (iii) any gross neglect by the
Executive of the duties assigned to him or her hereunder which continues for
a period of 90 days after written notice to the Executive of such neglect,
or, (iv) any material breach by Executive of any provisions of Section 12 of
this Agreement. It is understood and agreed that the Company may not
terminate Executive's employment for Cause in the event Executive is unable
to perform his or her duties due to partial or permanent or temporary or
total disability from injury or sickness.
(d) GOOD REASON. The Executive may terminate his
employment during the Retention Period for Good Reason. For purposes of this
Agreement, "Good Reason" means
(i) without the Executive's prior written consent,
the Company or any of its officers takes or fails to take any action
which changes the Executive's position (including titles), authority or
responsibilities which is inconsistent with Section 4 of this Agreement;
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(ii) any failure by the Company to comply with any of
the provisions of Section 5 of this Agreement, other than an
insubstantial or inadvertent failure remedied by the Company promptly
after receipt of notice thereof from the Executive;
(iii) the Company's requiring the Executive to be
employed at any location more than 35 miles further from his principal
residence than the places of performance described in Subsection 4(f) of
this Agreement; or
(iv) any failure by the Company to obtain the
assumption of and agreement to perform this Agreement by a successor as
contemplated by Section 13(b) of this Agreement.
(e) WITHOUT CAUSE. The Company may terminate the
Executive's employment during the Retention Period without Cause. The
Company shall give Executive at least 15 days' advance written notice of any
termination of Executive's employment which is not for Cause and not on
account of Executive's Disability.
(f) NOTICE OF TERMINATION. Any termination of
Executive's employment by the Company for Cause or by the Executive for Good
Reason during the Retention Period shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 14(c)
of this Agreement. For purposes of this Agreement, a "Notice of Termination"
means a written notice given, in the case of a termination by the Company for
Cause, within 10 business days of the Company's having actual knowledge of
all of the events giving rise to such termination, and in the case of a
termination by Executive for Good Reason, within 180 days of the Executive's
having actual knowledge of the events giving rise to such termination, and
which (i) indicates the specific termination provision in this Agreement
relied upon, (ii) sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
under the provision so indicated, and (iii) if the termination date is other
than the date of receipt of such notice, specifies such termination date
(which date shall be not more than 15 days after the giving of such notice).
The failure by the Executive to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Good Reason shall not
waive any right of the Executive hereunder or preclude the Executive from
asserting such fact or circumstance in enforcing his rights hereunder.
(g) DATE OF TERMINATION. For purposes of this
Agreement, the term "Date of Termination" means (i) in the case of a
termination for which a Notice of Termination is required, the date of
receipt of such Notice of Termination or, if later, the date specified
therein and (ii) in all other cases, the actual date on which the Executive's
employment terminates during the Retention Period.
7. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a)
DEATH. If the Executive's employment is terminated during the Retention
Period by reason of the Executive's death, this Agreement shall terminate
without further obligations to the Executive's legal representatives under
this Agreement other than those obligations accrued hereunder at the date of
his death, including, for this purpose (i) the Executive's full Base Salary
through the Date of Termination, (ii) the product of the target Annual Bonus
for the year in which the death occurred and a fraction, the numerator of
which is the number of days in the current fiscal year of the Company through
the Date of Termination, and the denominator of which is 365 (the
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"Pro-rated Bonus Obligation"). For the purposes of computing the Pro-rated
Bonus Obligation, the Executive shall be deemed to have revoked his election,
if any, to receive such bonus in the form of restricted stock of the Company
and to have earned the maximum cash Annual Bonus which he was eligible to
earn for the year in which the termination occurred, (iii) any compensation
previously deferred by the Executive (together with any accrued earnings
thereon) and not yet paid by the Company, (iv) any other amounts or benefits
then owing to the Executive under any of the Company's incentive compensation
plans, stock option plans, restricted stock plans or other similar plans as
determined pursuant to the terms of such plans and this Agreement and (v) any
amounts or benefits owing to the Executive under any of the Company's
employee benefit plans or policies (such amounts specified in clauses (i),
(ii), (iii), (iv) and (v) are hereinafter referred to as "Accrued
Obligations"). Unless otherwise directed by the Executive prior to his
death, all Accrued Obligations shall be paid to the Executive's estate.
(b) DISABILITY. If the Executive's employment is
terminated by reason of the Executive's Disability, the Executive shall
receive all Accrued Obligations and, in addition, from the Date of
Termination until the date when the Retention Period would otherwise have
terminated, shall continue to participate in or be covered under the benefit
plans and programs referred to in Section 5(c)(i) of this Agreement or, at
the Company's option, to receive equivalent benefits by alternate means at
least equal to those provided in accordance with Section 5(c)(i) of this
Agreement. Anything in this Agreement to the contrary notwithstanding, the
Executive shall be entitled to receive disability and other benefits at least
equal to the most favorable level of benefits available to disabled employees
and/or their families in accordance with the plans, programs and policies
maintained by the Company or its affiliates relating to disability at any
time during the 90-day period immediately preceding the Effective Date.
(c) CAUSE AND VOLUNTARY TERMINATION. If, during the
Retention Period, the Executive's employment shall be terminated for Cause or
voluntarily terminated by the Executive (other than on account of Good
Reason), the Executive shall receive all Accrued Obligations other than the
Pro-rated Bonus Obligation.
(d) TERMINATION BY COMPANY OTHER THAN FOR CAUSE OR
DISABILITY AND TERMINATION BY EXECUTIVE FOR GOOD REASON. LUMP SUM PAYMENT.
If, during the Retention Period, the Company terminates the Executive's
employment other than for Cause or Disability, or the Executive terminates
his employment for Good Reason, the Executive shall receive all Accrued
Obligations. In addition, the Company shall pay to the Executive in a lump
sum, a cash amount equal to two (2) times the sum of the following amounts:
(1) the Executive's annual Base Salary at the rate
specified in Section 5(a) of this Agreement;
(2) an amount equal to the target cash Annual Bonus
determined without proration payable to the Executive in respect
to the calendar year in which the termination event occurred;
(3) an amount equal to the average annual amount
paid and/or reimbursed to the Executive pursuant to Section
5(c)(iv) and (v) hereof during the two calendar years preceding
the Date of Termination; and
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(4) the present value, calculated using the annual
federal short-term rate as determined under Section 1274(d) of
the Code, of (without duplication) the annual cost to the
Company (based on the premium rates or other costs to it) of
obtaining coverage equivalent to the coverage under the plans
and programs described in Section 5(c)(i) of this Agreement;
provided, however, that with respect to the life and medical
insurance coverage referred to in Section 5(c)(i) of this
Agreement, at the Executive's election made prior to the Date of
Termination, the Company shall use its best efforts to secure
conversion coverage and shall pay the cost of such coverage in
lieu of paying the lump sum amount attributable to such life or
medical insurance coverage.
In consideration of the Company's payment of the amounts payable to the
Executive pursuant to this Subsection 7(d) and the Executive's acceptance
thereof, the Executive and the Company shall enter into a mutual release in a
form acceptable to the Company releasing each other and their respective
agents from all claims arising from or in any way related to the Executive's
employment by the Company and the termination of such employment
relationship. The Executive shall not receive any of the amounts payable
pursuant to this Subsection 7(d) until after the Executive has executed and
delivered the release to the Company and all rescission periods under
applicable state and federal laws have expired without rescission of the
release by the Executive. The Company shall make such payment within fifteen
(15) days after the longest applicable rescission period has elapsed without
rescission.
8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in
any benefit, bonus, incentive or other plan or program provided by the
Company or any of its affiliated companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise prejudice such rights
as the Executive may have with respect to awards granted to him prior to or
during the Retention Period under any stock option, restricted stock or other
plans or agreements with the Company or any of its affiliated companies
except as to restrictions on the Executive's rights to any restricted stock
received by the Executive in lieu of a cash Annual Bonus as set forth in
Sections 5(b), 7(a) and 7(d) of this Agreement. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any
plan or program of the Company or any of its affiliated companies shall be
payable in accordance with such plan or program.
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment,
distribution, acceleration of vesting or other benefit which the Executive
receives or becomes entitled to receive, whether alone or in combination, and
whether pursuant to the terms of this Agreement or any other agreement, plan
or arrangement with the Company or any of its affiliates or any of their
respective successors or assigns, but determined without regard to any
additional payments required under this Section 9 (collectively, the
"Payments"), would be subject to the excise tax imposed by Section 4999 of
the Code (or any successor provision), or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the
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Executive of (i) all taxes with respect to the Gross-Up Payment (including
any interest or penalties imposed with respect to such taxes) including,
without limitation, any income taxes (and any interest and penalties imposed
with respect thereto), and (ii) the Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed on the Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by KPMG Peat Marwick or such other nationally recognized
accounting firm then auditing the accounts of the Company (the "Accounting
Firm") which shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is unwilling
or unable to perform its obligations pursuant to this Section 9, the
Executive shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment,
determined pursuant to this Section 9, shall be paid by the Company to the
Executive within five days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the potential uncertainty
in the application of Section 4999 of the Code (or any successor provision)
at the time of the initial determination by the Accounting Firm hereunder, it
is possible that Gross-Up Payments which will not have been made by the
Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 9(c) and the Executive thereafter
is required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
the Executive.
(c) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification shall
be given as soon as practicable but no later than 20 business days after the
Executive is informed in writing of such claim and shall apprise the Company
of the nature of such claim and the date on which such claim is requested to
be paid. The Executive shall not pay such claim prior to the expiration of
the 30-day period following the date on which he gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest
such claim, the Executive shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing
from time to time, including, without limitation,
accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company,
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(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation
and payment of costs and expenses. Without limiting the foregoing provisions
of this Section 9(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with
the taxing authority in respect of such claim and may, at its sole option,
either direct the Executive to pay the tax claimed and xxx for a refund or
contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as
the Company shall determine; provided, however, that if the Company directs
the Executive to pay such claim and xxx for a refund, the Company shall
advance the amount of such payment to the Executive, on an interest-free
basis, and shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect to
any imputed income with respect to such advance; and further provided that
any extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested amount
is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive
shall (subject to the Company's complying with the requirements of Section
9(c)) promptly pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes applicable thereto). If,
after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 9(c), a determination is made that the Executive shall
not be entitled to any refund with respect to such claim and the Company does
not notify the Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
10. FULL SETTLEMENT. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right which the Company may have against the Executive or others whether by
reason of the subsequent employment of the Executive or otherwise. In no
event shall the
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Executive be obligated to seek other employment by way of mitigation of the
amounts payable to the Executive under any of the provisions of this
Agreement, and no amount payable under this Agreement shall be reduced on
account of any compensation received by the Executive from other employment.
In the event that the Executive shall in good faith give a Notice of
Termination for Good Reason and it shall thereafter be determined by mutual
consent of the Executive and the Company or by a tribunal having jurisdiction
over the matter that Good Reason did not exist, the employment of the
Executive shall, unless the Company and the Executive shall otherwise
mutually agree, be deemed to have terminated, at the date of giving such
purported Notice of Termination, by mutual consent of the Company and the
Executive and, except as provided in the last preceding sentence, the
Executive shall be entitled to receive only those payments and benefits which
he would have been entitled to receive at such date otherwise than under this
Agreement.
11. DISPUTES; LEGAL FEES AND EXPENSES. (a) Any dispute or
controversy arising under or in connection with this Agreement shall be
settled exclusively and finally by expedited arbitration, conducted before a
single arbitrator in Minneapolis, Minnesota, in accordance with the rules
governing employment disputes then in effect of the American Arbitration
Association. The arbitrator shall be approved by both the Company and the
Executive. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
(b) In the event that any claim by the Executive under
this Agreement is disputed, the Company shall pay all reasonable legal fees
and expenses incurred by the Executive in pursuing such claim, provided that
the Executive is successful as to at least part of the disputed claim by
reason of arbitration, settlement or otherwise.
12. CONFIDENTIAL INFORMATION; NONCOMPETITION. (a) The
Executive shall hold in a fiduciary capacity for the benefit of the Company
all secret or confidential information, knowledge or data relating to the
Company or any of its affiliated companies, and their respective businesses,
(i) obtained by the Executive during his employment by the Company or any of
its affiliated companies and (ii) not otherwise public knowledge (other than
by reason of an unauthorized act by the Executive). After termination of the
Executive's employment with the Company, the Executive shall not, without the
prior written consent of the Company, unless compelled pursuant to an order
of a court or other body having jurisdiction over such matter, communicate or
divulge any such information, knowledge or data to anyone other than the
Company and those designated by it.
(b) It is mutually acknowledged that by virtue of Employee's
former positions with the Company and its subsidiaries, he has become
possessed of certain valuable and confidential information concerning the
customers, business methods, procedures and techniques of the Company and its
subsidiaries. It is further understood that Employee has developed contacts
among the customers of the Company and its subsidiaries, and it is mutually
understood and agreed that the customers of the Company and its subsidiaries
and the business methods and procedures and techniques developed by the
Company and its subsidiaries are valuable assets and properties of the
Company and its subsidiaries. Without limitation, it is also specifically
acknowledged that great trust on the part of the Company and its subsidiaries
has resided in Employee, since Employee's former duties have included
involvement in the management, promotion and development of the Company's
business. Accordingly, the parties deem it
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necessary to enter into the protective covenants set forth below, the terms
and conditions of which have been negotiated by and between the parties
hereto:
(i) Employee agrees that during the Retention Period and
until the first anniversary of the Date of Termination, he will not, directly
or indirectly, on his own behalf or on the behalf of any third party, perform
management, accounting, financial, marketing, sales, administrative or
executive duties, in any business conducted within the Territories (as
defined below) whose primary business consists of originating or purchasing
automobile or truck loans or leases from automobile or truck dealers,
packaging such loans or leases, reselling such loans or leases or servicing
such loans or leases (the "Restricted Activities") or for any subdivision or
department of any business whose primary business does not consist of
Restricted Activities, but where the primary business of such subdivision or
department consists of Restricted Activities. As used in this Addendum, the
term "Territories" means any state in which any loans or leases originated or
acquired by the Company originated (determined by the location of the dealers
from whom the loans or leases were purchased or, in the case of loans or
leases, originated by the Company where the borrower or lessee resides).
(ii) Employee agrees that during the Retention Period and
until the first anniversary of the Date of Termination, he will not, directly
or indirectly, solicit, divert, take away or attempt to solicit, divert, or
take away from the Company, or any subsidiary, any of the dealers and other
sources from which the Company or any subsidiary acquires loans or leases or
from whom the loan or lease packages are received by the Company or any
subsidiary.
(iii) Employee agrees that during the Retention Period and
until the first anniversary of the Date of Termination, he will not, directly
or indirectly, on his own behalf or in the service or on behalf of others,
solicit, divert or hire away, or in any manner attempt to solicit, divert or
hire away any person employed by the Company or any subsidiary, whether or
not such employee is a full-time employee or a temporary employee of the
Company or any subsidiary, and whether or not such employment was pursuant to
a written or oral contract of employment and whether or not such employment
was for a determined period or was at will.
(c) Employee acknowledges that the provisions of this
Section 12 constitute a material inducement to the Company to enter into the
Agreement. Employee further acknowledges that the Company's remedy at law
for a breach by him of the provisions of this Section 12 will be inadequate.
Accordingly, in the event of a breach or threatened breach by Employee of any
provision of this Section 12, the Company will be entitled to injunctive
relief in addition to any other remedy it may have. If any of the provisions
of, or covenants contained in, this Section 12 are hereafter construed to be
invalid or unenforceable in any jurisdiction, the same will not affect the
remainder of the provisions or the enforceability thereof in any other
jurisdiction, which will be given full effect, without regard to the
invalidity or unenforceability in such other jurisdiction. If any of the
provisions of, or covenants contained in, this Section 12 are held to be
unenforceable in any jurisdiction because of the duration or geographical
scope thereof, the parties agree that the court making such determination
will have the power to reduce the duration or geographical scope of such
provision or covenant and, in its reduced form, such provision or covenant
will be enforceable; provided, however, that the determination of such court
will not affect the enforceability of this Section 12 in any other
jurisdiction.
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(d) In no event shall an asserted violation of the
provisions of this Section 12 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement or under
any other agreement, plan or arrangement.
13. SUCCESSORS. (a) This Agreement is personal to the
Executive and, without the prior written consent of the Company, shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors. The Company shall require any
successor to all or substantially all of the business and/or assets of the
Company, whether direct or indirect, by purchase, merger, consolidation,
acquisition of stock, or otherwise, by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent as the Company would be
required to perform if no such succession had taken place.
14. MISCELLANEOUS. (a) APPLICABLE LAW. This Agreement
shall be governed by and construed in accordance with the laws of the State
of Minnesota, applied without reference to principles of conflict of laws.
(b) AMENDMENTS. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto
or their respective successors and legal representatives.
(c) NOTICES. All notices and other communications
hereunder shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive: Xxxxxxx X. Xxxxxxxxxx
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
If to the Company: Arcadia Financial Ltd.
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Secretary
(with a copy to the attention of
the General Counsel)
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be
effective when actually received by the addressee.
(d) TAX WITHHOLDING. The Company may withhold from any
amounts payable under this Agreement such Federal, State or local taxes as
shall be required to be withheld pursuant to any applicable law or regulation.
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(e) SEVERABILITY. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(f) CAPTIONS. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect.
15. ADDITIONAL CONSIDERATION. As additional consideration
for Executive's agreement to the terms and conditions hereof, the Company
shall within sixty (60) days of the date hereof (i) grant to Executive a
non-statutory stock option to purchase shares of the Company's Common Stock
at an exercise price equal to the fair market value of the stock on the grant
date; (ii) reissue certain stock options held by Executive on the date hereof
at exercise prices equal to the fair market value of the stock on the
reissuance date plus a premium to be determined by the Board (subject to new
vesting periods), and/or (iii) make an additional grant of Restricted Stock
pursuant to the Company's 1998-2000 Restricted Stock Election Plan, as
amended.
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and the Company has caused this Agreement to be executed in its name on its
behalf, all as of the day and year first above written.
ARCADIA FINANCIAL LTD.
By: /s/ Xxxxx Xxxxxxxx
--------------------------------
Name: Vice Chairman
------------------------------
Title: Xxxxx Xxxxxxxx
-----------------------------
/s/ Xxxxxxx Xxxxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxxxx
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