August 5, 2009 Mr. Dayl W. Pearson Locust Valley, NY 11560 Dear Dayl:
August 5,
2009
Xx. Xxxx
X. Xxxxxxx
000 Xxxxx
Xxxx
Xxxxxx
Xxxxxx, XX 00000
Dear
Dayl:
This
letter will confirm our offer to you of employment with Kohlberg Capital
Corporation (the "Company"), under the terms and conditions that
follow. This letter supersedes the letter agreement dated December
11, 2006 between you and the Company in its entirety effective as of the date
hereof.
1. Term, Position and
Duties.
(a)
Subject to earlier termination as hereafter provided, your employment shall
continue through December 31, 2010, and will be automatically extended for one
year on January 1, 2011 and on each succeeding January 1 unless previously
terminated in writing by you or an expressly authorized representative of the
Company, in either case, on not less than thirty (30) days written
notice. The term of this Agreement, as from time to time extended is
hereafter referred to as “the term of this agreement” or “the term
hereof”. You will be employed by the Company as its President and
Chief Executive Officer. You will report to the Board of Directors of
the Company (the “Board”).
(b)
You agree to perform the duties of your position and such other duties as may
reasonably be assigned to you from time to time including, but not limited
to: investing in debt and equity securities of middle market
companies, as directed by the Board; implementing and investing “warehouse”
lines; negotiating, documenting, and selling debt and equity securities of the
Company; and purchasing and trading non-investment grade loans, high yield
bonds, and other permitted securities on behalf of the Company. You
also agree that you will devote your full business time and your best efforts,
business judgment, skill and knowledge exclusively to the advancement of the
business and interests of the Company.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx ● Xxx Xxxx, XX 00000
Telephone
(000) 000-0000 ● Facsimile (000) 000-0000
Xx. Xxxx
Xxxxxxx
Page
2
August 5,
2009
2. Compensation and
Benefits. During your employment, as compensation for all
services performed by you for the Company and its Affiliates, the Company will
provide you the following pay and benefits:
(a)
Base
Salary. The Company will pay you a base salary at the rate of
Four Hundred Thousand Dollars ($400,000) per year, payable in
accordance with the regular payroll practices of the Company and subject to
increase from time to time by the Committee in its discretion.
(b) Bonus
Compensation. During employment, you will be considered for an
annual discretionary bonus of not less than Four Hundred Fifty Thousand Dollars
($450,000). Bonus awards will be determined by the Committee, based
on your performance and that of the Company against goals established annually
by the Board after consultation with you and will be paid on or about January 31
of each succeeding calendar year.
(c) Participation in Employee
Benefit Plans. You will be entitled to participate in all
employee benefit plans from time to time in effect for employees of the Company
generally, except to the extent such plans are duplicative of benefits otherwise
provided you under this agreement. Your participation will be subject
to the terms of the applicable plan documents and generally applicable Company
policies.
3.
Confidential
Information and Restricted Activities.
(a)
Confidential
Information. During the course of your employment with the
Company, you will learn of Confidential Information, as defined below, and you
may develop Confidential Information on behalf of the Company. You
agree that you will not use or disclose to any Person (except as required by
applicable law or for the proper performance of your regular duties and
responsibilities for the Company) any Confidential Information obtained by you
incident to your employment or any other association with the Company or any of
its Affiliates. You understand that this restriction shall continue
to apply after your employment terminates, regardless of the reason for such
termination.
(b)
Protection of
Documents. All documents, records and files, in any media of
whatever kind and description, relating to the business, present or otherwise,
of the Company or any of its Affiliates, and any copies, in whole or in part,
thereof (the "Documents"), whether or not prepared by you shall be the sole and
exclusive property of the Company. You agree to safeguard all Documents and to
surrender to the Company, at the time your employment terminates or at such
earlier time or times as the Committee or its designee may specify, all
Documents then in your possession or control.
Xx. Xxxx
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3
August 5,
2009
(c)
Non-Competition. You
acknowledge that in your employment with the Company you will have access to
Confidential Information which, if disclosed, would assist in competition
against the Company and its Affiliates and that you will also generate goodwill
for the Company and its Affiliates in the course of your employment. Therefore,
you agree that the following restrictions on your activities during and after
your employment are necessary to protect the goodwill, Confidential Information
and other legitimate interests of the Company and its Affiliates:
(i) While you are employed
by the Company and for the greater of (x) the remaining term of this agreement
or (y) six (6) months after your employment terminates (in the aggregate, the
Non-Competition Period), you agree that you will not, without the prior written
consent of the Company, directly or indirectly, own, manage, operate, join,
control, finance, or participate in the ownership, marketing, management,
operation, control, fundraising or financing of, or be connected as an officer,
director, employee, partner, principal, agent, representative, consultant, or
otherwise use or permit your name to be used in connection with any business or
enterprise engaged in the United States in the business of structuring middle
market lending vehicles, analyzing and acquiring loans and other assets to be
held by such vehicles, arranging for the issuance of debt and preferred
securities by such vehicles, acting as collateral managers for such
securitizations, or performing similar functions.
(ii) You agree that during the
Non-Competition Period, you will not, directly or through any other Person, (i)
hire any employee of the Company or any of its Affiliates or seek to persuade
any employee of the Company or any of its Affiliates to discontinue employment,
(ii) solicit or encourage any customer or investor of the Company or any of its
Affiliates or independent contractor providing services to the Company or any of
its Affiliates to terminate or diminish its relationship with them or (iii) seek
to persuade any customer or investor or prospective customer or investor of the
Company or any of its Affiliates to conduct with anyone else any business or
activity that such customer or investor or prospective customer or investor
conducts or could conduct with the Company or any of its
Affiliates.
(d)
In signing this agreement, you give the Company assurance that you have
carefully read and considered all the terms and conditions of this agreement,
including the restraints imposed on you under this Section 3. You
agree without reservation that these restraints are necessary for the reasonable
and proper protection of the Company and its Affiliates and that each and every
one of the restraints is reasonable in respect to subject matter, length of time
and geographic area. You further agree that, were you to breach any
of the covenants contained in this Section 3, the damage to the Company and its
Affiliates would be irreparable. You therefore agree that the
Company, in addition to any other remedies available to it, shall be entitled to
preliminary and permanent injunctive relief against any breach or threatened
breach by you of any of those covenants, without having to post
bond. You and the Company further agree that, in the event that any
provision of this Section 3 is determined by any court of competent jurisdiction
to be unenforceable by reason of its being extended over too great a time, too
large a geographic area or too great a range of activities, that provision shall
be deemed to be modified to permit its enforcement to the maximum extent
permitted by law. It is also agreed that each of the Company's
Affiliates shall have the right to enforce all of your obligations to
that Affiliate under this agreement, including without limitation pursuant to
this Section 3.
Xx. Xxxx
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4
August 5,
2009
4.
Termination of
Employment. Your employment under this agreement may be
terminated prior to the expiration of the term hereof pursuant to this Section
4.
(a)
The Company may terminate your employment for Cause upon notice to you setting
forth in reasonable detail the nature of the Cause. The following
shall constitute Cause for termination: (i) your repeated material
failure to perform (other than by reason of disability), or material gross
negligence in the performance of, your duties and responsibilities to the
Company or any of its Affiliates which failure is not cured within thirty (30)
days after written notice of such failure or negligence is delivered to you;
(ii) your material breach of this agreement or any other agreement between you
and the Company or any of its Affiliates which breach is not cured within thirty
(30) days after written notice of such breach is delivered to you; or (iii)
commission by you of a felony involving moral turpitude or fraud with respect to
the Company or any of its Affiliates. The Company also may terminate
your employment at any time without Cause upon notice to you.
(b)
This agreement shall automatically terminate in the event of your death during
employment, and you shall be entitled to the severance payments set forth under
5 (a) below. In the event of your death, any amounts owed to you
under this agreement will be paid to your estate, or designated successor or
assigns. In the event you become disabled during employment and, as a
result, are unable to continue to perform substantially all of your duties and
responsibilities under this agreement, the Company will continue to pay you your
base salary and to provide you benefits in accordance with Section 2(a) above,
to the extent permitted by plan terms, for up to twelve (12) weeks of disability
during any period of three hundred and sixty-five (365) consecutive calendar
days. If you are unable to return to work after twelve (12) weeks of
disability, the Company may terminate your employment, upon written notice to
you, and you shall be entitled to the severance payments set forth under 5(a)
below. If any question shall arise as to whether you are disabled to
the extent that you are unable to perform substantially all of your duties and
responsibilities for the Company and its Affiliates, you shall, at the Company's
request, submit to a medical examination by a physician selected by the Company
to whom you or your guardian, if any, has no reasonable objection to determine
whether you are so disabled and such determination shall for the purposes of
this agreement be conclusive of the issue. If such a question arises
and you fail to submit to the requested medical examination, the Company's
determination of the issue shall be binding on you.
Xx. Xxxx
Xxxxxxx
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5
August 5,
2009
(c)
You may terminate your employment hereunder for “Good Reason” by providing
written notice to the Company of the condition giving rise to the Good Reason no
later than thirty (30) days following the occurrence of the condition; by giving
the Company thirty (30) days to remedy the condition; and, if the Company fails
to remedy the condition, by terminating your employment within ten (10) days
following the expiration of such thirty (30) day period. For purposes
of this letter agreement, the term “Good Reason” means, without your consent,
the occurrence of one or more of the following events: (i) material
diminution in the nature or scope of your responsibilities, duties or authority
as contemplated by this letter agreement; (ii) failure by the Company to pay the
minimum Bonus Compensation set forth in 2(b) above in any year under this letter
agreement if you have achieved the annual financial target referenced therein;
or (iii) your being required to relocate to a principal place of employment
outside of the New York metropolitan area. For purposes of this
paragraph 4(c) a change in reporting relationships resulting from a Change in
Control will constitute Good Reason. In addition, a termination of
your employment by you for any reason during the 90-day period immediately
following a Change in Control shall be deemed to be a termination for Good
Reason for all purposes of this letter agreement.
5.
Severance
Payments and Other Matters Related to Termination.
(a)
In the event of termination of your employment by the Company without Cause, by
death, or disability, or a termination by you for Good Reason, for the remaining
term of this agreement, the Company will continue to pay you your base salary
(“severance payments”) and will continue to contribute to the premium cost of
your health insurance on the same terms and conditions as it contributes for
active employees provided that you make a timely election under the federal law
known as “COBRA”. The Company may, in its sole discretion, elect to
cease the continuation of base salary and contributions toward health insurance
premiums at any point after you have received six (6) months of base salary
continuation and health insurance contributions (or one (1) year if you are
terminated by the Company within ninety (90) days of the completion of a Change
in Control.) provided that it also releases you from your remaining obligation
under Section 3(c)(i) above. The Company will also pay you on the
date of termination any base salary earned but not paid through the date of
termination and pay for any vacation time accrued but not used to that
date. In addition, the Company will pay you any bonus compensation
and profit sharing payment to which you are entitled in accordance with Sections
2(b) and 2(c) above, prorated to the date of termination and payable at the time
such monies are payable to Company executives generally. Any
obligation of the Company to provide you severance payments or other payments or
benefits under this Section 5(a) is conditioned, however, upon your signing a
release of claims in the form provided by the Company (the "Employee Release")
substantially in the form of the attached Exhibit A and upon your not revoking
the Employee Release thereafter. All severance payments will be in
the form of salary continuation, payable in accordance with the normal payroll
practices of the Company, and will begin at the Company's next regular payroll
period following the effective date of the Employee Release, but shall be
retroactive to the date of termination. Notwithstanding anything else
contained in this agreement, no bonus or severance payments or other payments or
benefits will be due and payable under any provision of this Section 5(a) until
the next regular Company payday following the effective date of the Employee
Release.
Xx. Xxxx
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6
August 5,
2009
(b) In the event of
termination of your employment by the Company for Cause or by you for any
reason, the Company will pay you any base salary earned but not paid through the
date of termination and pay for any vacation time accrued but not used to that
date. The Company shall have no obligation to you for any bonus or
other incentive compensation, benefits continuation or severance
payments.
(c) In the event of
termination of your employment by expiration of the term hereof or non-renewal
of this agreement, the Company will pay you any base salary earned but not paid
through the date of termination, pay for any vacation time accrued but not used
to that date, and any bonus or other incentive compensation to which you are
entitled in accordance with Sections 2(b) and 2(c) above, prorated to the date
of termination and payable at the time such bonuses are payable to Company
executives generally. The Company shall have no obligation to you for
any severance payments or benefits continuation.
(d) Except for any rights you
may have under Section 5(a) above or under the federal law known as "COBRA" to
continue participation in the Company's group health and dental plans at your
cost, benefits shall terminate in accordance with the terms of the applicable
benefit plans based on the date of termination of your employment, without
regard to any continuation of base salary or other payment to you following
termination. Your Option Agreement will
govern your exercise, if any, of your option following termination of
employment.
(e) Provisions of this
agreement shall survive any termination if so provided in this agreement or if
necessary or desirable to accomplish the purposes of other surviving provisions,
including without limitation your obligations under Section 3 of
this agreement. The obligation of the Company to make
payments to you under this Section 5 is expressly conditioned upon your
continued full performance of obligations under Section 3
hereof. Upon termination by either you or the Company, all
rights, duties and obligations of you and the Company to each other shall cease,
except as otherwise expressly provided in this agreement.
6.
Definitions. For
purposes of this agreement, the following
definitions apply:
"Affiliates"
means all persons and entities directly or indirectly controlling, controlled by
or under common control with the Company, where control may be by management
authority, equity interest or otherwise.
Xx. Xxxx
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August 5,
2009
“Change
in Control” means:
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(i)
|
The
acquisition by any person, entity or “group”, within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act, (excluding, for this
purpose, the Company or its Affiliates) of beneficial ownership of 33% or
more of either the then outstanding shares of the Company’s common stock
or the combined voting power of the Corporation’s then outstanding voting
securities entitled to vote generally in the election of
directors.
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(ii)
|
Individuals
who, as of the date hereof, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board,
provided that any person who first becomes a director subsequent to the
date hereof whose recommendation, election or nomination for election by
the Company’s stockholders was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of office
is in connection with an actual or threatened election contest relating to
the election of the directors of the Company as described in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) shall be, for the
purposes of this Agreement, considered as though such person were a member
of the Incumbent Board; or
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(iii)
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Approval
by the stockholders of the Company of a reorganization
share exchange, merger or consolidation with respect to which,
in any such case, the persons who were the stockholders of the Company
immediately prior to such reorganization, share exchange, merger or
consolidation do not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote in the election of directors of the
reorganized, merged or consolidated company;
or
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(iv)
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Liquidation
or dissolution of the Company or a sale of all or substantially all of the
assets of the Company.
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"Confidential
Information" means any and all information of the Company and its Affiliates
that is not generally available to the public. Confidential Information also
includes any information received by the Company or any of its Affiliates from
any Person with any understanding, express or implied, that it will not be
disclosed. Confidential Information does not include information that
enters the public domain, other than through your breach of your obligations
under this agreement.
"Person"
means an individual, a corporation, a limited liability company, an association,
a partnership, an estate, a trust or any other entity or organization, other
than the Company or any of its Affiliates.
Xx. Xxxx
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August 5,
2009
7.
Conflicting
Agreements. You hereby represent and warrant that your signing of this
agreement and the performance of your obligations under it will not breach or be
in conflict with any other agreement to which you are a party or are bound and
that you are not now subject to any covenants against competition or similar
covenants or any court order that could affect the performance of your
obligations under this agreement. You agree that you will not
disclose to or use on behalf of the Company any proprietary information of a
third party without that party's consent.
8.
Withholding. All
payments made by the Company under this agreement shall be reduced by any tax or
other amounts required to be withheld by the Company under applicable
law.
9.
Assignment. Neither
you nor the Company may make any assignment of this agreement or any interest in
it, by operation of law or otherwise, without the prior written consent of the
other; provided, however, that the Company may assign its rights and obligations
under this agreement without your consent to one of its Affiliates or to any
Person with whom the Company shall hereafter affect a reorganization,
consolidate with, or merge into or to whom it transfers all or substantially all
of its properties or assets. This Agreement shall inure to the
benefit of and be binding upon you and the Company, and each of our respective
successors, executors, administrators, heirs and permitted assigns.
10.
Severability. If
any portion or provision of this agreement shall to any extent be declared
illegal or unenforceable by a court of competent jurisdiction, then the
remainder of this agreement, or the application of such portion or provision in
circumstances other than those as to which it is so declared illegal or
unenforceable, shall not be affected thereby, and each portion and provision of
this agreement shall be valid and enforceable to the fullest extent permitted by
law.
11.
Miscellaneous. This
agreement sets forth the entire agreement between you and the Company and
replaces all prior and contemporaneous communications, agreements and
understandings, written or oral, with respect to the terms and conditions of
your employment. This agreement may not be modified or amended, and
no breach shall be deemed to be waived, unless agreed to in writing by you and
an expressly authorized representative of the Board. The headings and
captions in this agreement are for convenience only and in no way define or
describe the scope or content of any provision of this
Agreement. This agreement may be executed in two or more
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument. This is a Delaware contract and shall be
governed and construed in accordance with the laws of the State of Delaware,
without regard to the conflict of laws principles thereof.
12.
Notices. Any
notices provided for in this agreement shall be in writing and shall be
effective when delivered in person or deposited in the United States mail,
postage prepaid, and addressed to you at your last known address on the books of
the Company or, in the case of the Company, to it at its principal place of
business, attention of the Committee, or to such other address as either party
may specify by notice to the other actually received.
Xx. Xxxx
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August 5,
2009
If the
foregoing is acceptable to you, please sign this letter in the space provided
and return it to me. We will provide a countersigned copy for your
records.
Sincerely
yours,
/s/
Xxxxxxxxxxx Xxxxxxxx
Xxxxxxxxxxx
Xxxxxxxx
Vice
President
Accepted
and Agreed:
| /s/ Xxxx X. Xxxxxxx | |
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Xxxx
X. Xxxxxxx
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Date
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cc:
Xxxxxxx Xxxxx
