EXHIBIT 10.16
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") dated as of September 21, 2007
between XXXXXX X. XXXXXXXXX XX. (the "EXECUTIVE") and EMPIRE FINANCIAL HOLDING
COMPANY (the "COMPANY").
WHEREAS, the Company would like to continue to employ the Executive as
its Chief Executive Officer and President, and President of its wholly owned
subsidiary, Empire Financial Group, Inc. ( the "Subsidiary"); and
WHEREAS, the Company and the Executive desire to provide for the terms
and conditions of the employment of the Executive by the Company.
NOW, THEREFORE, in consideration of the premises and covenants herein
contained, the parties hereto agree as follows:
1. EMPLOYMENT TERM. Subject to the terms and conditions hereof, the
Company employs the Executive and the Executive accepts such employment for the
period commencing June 1, 2007 and ending May 31, 2010 (the "TERM") unless
earlier terminated as provided in Section 7, hereof. Upon expiration of the
Term, this Agreement shall automatically continue on a month to month basis
until either party provides the other party with at least 30 days prior written
notice of termination.
2. DUTIES AND RESPONSIBILITIES. The Executive shall serve as the Chief
Executive Officer and President of the Company, as President of the Subsidiary
and as the holder of such other senior executive positions consistent therewith
as may be determined by the Company's Board of Directors (the "Board"). He shall
report to, and be subject to, the direction of the Board with such duties and
responsibilities as are commensurate with his title and position. The Executive
shall work on a full-time basis and shall devote his time, energy and attention
to the business of the Company.
1
3. COMPENSATION.
(a) BASIC COMPENSATION. In payment for services to be rendered by the
Executive hereunder, the Executive shall be entitled to annual basic
compensation ("Basic Compensation") consisting of the cash component and the
equity component described below less any withholding required by law.
(i) The cash component shall consist of $300,000 per
annum, payable monthly or on such more frequent
schedule as the Company may elect.
(ii) The equity component shall consist of one or more of
the following:
o an annual stock option grant;
o an annual restricted stock grant ; or
o a combination of an annual option grant and
an annual restricted stock grant
in all cases for the benefit of the Executive and to be made at the beginning of
each calendar year during the Term as provided in (A) 1 or (A) 2 below and
issued as provided in (B) below.
(A) 1. The annual option Grant (the "Annual
Option Grant") shall consist of options
exercisable for such number of shares of the
Company's Common Stock ("Shares") as have a
fair market value equal to $300,000, based
on the closing price on the American Stock
Exchange or on such other market or exchange
on which such Shares are then traded which
publish actual closing prices, or at the
average of the closing bid and asked prices
in the absence of closing prices, on the
first business day of each calendar year
during the Term (the "Determination Date"),
except that for the year ending December 31,
2007, the fair market value for the Annual
Option Grant shall consist of
2
Options exercisable for such number of
Shares having a fair market value equal to
$250,000 and the Determination Date shall be
June 1, 2007.
2. The annual restricted stock grant (the
"Annual Restricted Stock Grant"), if any,
shall be a grant in lieu of some or all of
the Annual Option Grant and shall consist of
a number of shares of restricted stock equal
to the fair market value of that portion of
the Annual Option Grant for which the
Restricted Stock Grant is substituted when
the value of that portion of the Annual
Option Grant is determined using the Black
Scholes valuation formula and the restricted
shares are valued on the Determination Date
in the same manner as Shares valued under
paragraph (A)1. The Restricted Stock Grant
shall be made under the Company's
stockholder approved Incentive Compensation
Plan.
(B) The options or restricted shares grants
included in the annual allotments shall be
issued and delivered to the Executive within
fifteen (15) days after the Determination
Date.
(C) The options shall be exercisable at a per
share purchase price equal to 100% of fair
market value on the date of grant or 110% of
fair market value if the Executive is the
owner of 10% or more of the Company's
outstanding shares. Such options shall have
a five (5) year duration and shall vest and
become exercisable to the extent of
one-third (1/3) of the options granted at
the expiration of each of the first three
(3) years from the date of grant. The vested
options shall be exercisable only while
Executive is employed by the Company or
within thirty (30)
3
days after any termination of employment, as
may be extended by the Board or, in the
event of Employee's death by his estate or
heirs within one year thereafter. The
options shall contain anti-dilution
protection in the event of stock dividends
and splits and such other provisions as are
customary in option grants of this kind.
(D) Restricted shares shall be subject to a risk
of forfeiture for a minimum of one year.
Notwithstanding the risk of forfeiture the
Employee shall have full voting and dividend
rights with respect to such shares. All
Restricted Shares on which the risk of
forfeiture has lapsed shall, in the event of
the Employee's death, be transferable to his
estate or heirs.
(b) BONUS. The Executive shall be entitled to a cash bonus not to
exceed a total aggregate amount of $600,000 each year during the Term based on
the Company achieving certain threshold operating targets, as described on
SCHEDULE A, up to the amount for each target as set forth on SCHEDULE A,
provided, however, that the maximum amount of the bonus shall be reduced by the
greater of (1)/12th or $50,000 for each month subsequent to the last day of the
fiscal year in which the Board of Directors has not received from the Executive
a budget for the ensuing year reasonably acceptable to it. The Compensation
Committee shall determine the amount of cash bonus to which the Executive is
entitled for each year, not later than 15 days after receipt by the Company of
its annual audited financial statements.
(c) TRADING DESK COMMISSION. The Executive shall receive a commission
equal to 5% of the net contribution of the trading desk to the Subsidiary's
revenues after all direct costs of operating the trading desk, excluding
corporate overhead, calculated on a pre-tax basis. The foregoing calculation
shall be made in a manner consistent with the subsidiary's calculation of
trading desk commissions for other employees receiving a
4
commission on, or sharing in, trading desk profits. Trading desk commissions
shall be paid monthly in accordance with the Subsidiary's usual practice.
5. EXPENSES. During the Term, the Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by him (in
accordance with the policies and procedures established from time to time by the
Board) in performing services hereunder, provided that such expenses are
incurred and accounted for in accordance with the policies and procedures
established by the Company.
6. OTHER BENEFITS. The Executive shall be entitled to the following
additional benefits:
(i) Four weeks of paid vacation during each year of the Term.
(ii) Paid holidays in accordance with the Company's usual holiday
schedule, plus eight additional paid holiday, or personal
days, to be taken at such time as the Executive determines.
(iii) Such major medical, and family health coverage benefits and
long-term disability group plan coverage generally available
to the Company's officers. To the extent the Executive
qualifies, the Executive may participate in, or benefit under,
any employee benefit plan, arrangement or perquisite made
available by the Company to its key executives.
(iv) Ordinary and necessary business related expenses as shall be
incurred by the Executive in the course of the performance of
his duties under this Agreement.
7. TERMINATION. During the Term, the Executive's employment hereunder
may be terminated under the following circumstances:
5
(a) The Company shall have the right to terminate the employment of the
Executive under this Agreement for disability in the event the Executive suffers
an injury, or physical or mental illness or incapacity of such character as to
substantially disable him from performing his duties hereunder for a period of
more than one hundred eighty (180) consecutive days upon the Company giving at
least thirty (30) days written notice of termination; provided, however, that if
the Executive is eligible to receive disability payments pursuant to a
disability insurance policy or policies paid for by the Company, the Executive
shall assign such benefits to the Company for all periods as to which he is
receiving payment under this Agreement.
(b) This Agreement shall terminate upon the death of Executive.
(c) The Company may terminate this Agreement at any time for "Cause"
because of (i) his becoming the subject of criminal charges or violating such
rules and regulations of the Securities and Exchange Commission as may result in
criminal action or material fines against the Company, (ii) Executive's material
breach of any term of this Agreement or (iii) the willful engaging by the
Executive in misconduct which is materially injurious to the Company, monetarily
or otherwise; provided, in the case or (ii) or (iii), however, that the Company
shall not terminate this Agreement pursuant to this Section 7(c) unless the
Company shall first have delivered to the Executive a notice which specifically
identifies such breach or misconduct, specifies reasonable corrective action and
the Executive shall not have cured the breach or corrected the misconduct within
fifteen (15) days after receipt of such notice.
(d) The Executive may terminate his employment for "Good Reason" on
five days written notice if:
6
(i) he is assigned, without his express written consent,
any duties inconsistent with his positions, duties,
responsibilities, authority and status with the
Company as of the date hereof, or a change in his
reporting responsibilities or titles as in effect as
of the date hereof, except in connection with the
termination of his employment by him without Good
Reason; or
(ii) his compensation is reduced or
(iii) any purchaser or purchasers of substantially all of
the business or assets of the Company do not agree,
at or prior to the closing of any such transaction,
by agreement in form and substance satisfactory to
the Executive to perform this Agreement in the same
manner and to the same extent that the Company would
be required to perform if no sale was consummated.
8. NONDISCLOSURE; NONCOMPETITION.
(a) The Executive agrees not to use or disclose, either while in the
Company's employ or at any time thereafter, except with the prior written
consent of the Board, any trade secrets, proprietary information, or other
information that the Company considers confidential relating to processes,
customers (including but not limited to a list or lists of customers),
compositions, improvements, inventions, operations, processing, marketing and
pricing data, or master files utilized by the Company, not presently generally
known to the public, and which is, obtained or acquired by the Executive while
in the employ of the Company.
(b) During his employment and for a period of two years thereafter, the
Executive shall not, directly or indirectly; (i) persuade or attempt to persuade
any employee of the Company to leave the employ of the Company or to become
employed by any other entity, or (ii) persuade or attempt to persuade any
current client or former client with leaving, or to reduce the amount of
business it does or intends or anticipates doing with the Company.
7
(c) During his employment with the Company, and for two years
thereafter, the Executive shall not take any action which might divert from the
Company any opportunity learned about by him during his employment with the
Company which would be within the scope of any of the businesses then engaged in
or planned to be engaged in by the Company.
(d) In the event that this Agreement shall be terminated, then
notwithstanding such termination, the obligations of the Executive pursuant to
this Section 8 of this Agreement shall survive such termination, but in the case
of paragraph (b) of this Section the period shall be reduced to one year.
9. SUCCESSORS; BINDING AGREEMENT.
(a) The Company shall require any purchaser or purchasers of the
Company or any purchaser or purchasers of substantially all of the business or
assets of the Company, by agreement in form and substance satisfactory to the
Executive, to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
purchase had taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business or assets
which executes and delivers the agreement provided for in this Section 9(a) or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
(b) This agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amount would still be payable hereunder if the Executive had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's devisee,
legatee or other designee or, if there be no such designee, to the Executive's
estate.
10. AMENDMENT; WAIVER. No provisions of this Agreement may be modified,
supplemented, waived or discharged unless such waiver, modification or discharge
is agreed to in a writing signed by the Executive and the Company. No waiver by
either party hereto at any time
8
of any breach by the other party hereto of, or in compliance with, any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same or
at any prior or subsequent 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. APPLICABLE LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Florida without regard to its conflict of laws principles.
12. SEVERABILITY OF COVENANTS. In the event that any provision of this
Agreement, including any sentence, clause or part hereof, shall be deemed
contrary to law or invalid or unenforceable in any respect by a court of
competent jurisdiction, the remaining provisions shall not be affected, but
shall remain in full force and effect and any invalid and enforceable provisions
shall be deemed, without further action on the part of the undersigned,
modified, amended and limited solely to the extent necessary to render the same
valid and enforceable.
13. REMEDIES.
(a) In the event of a breach or threatened breach of any of the
Executive's covenants under Section 8, the Executive acknowledges that the
Company will not have an adequate remedy at law. Accordingly, in the event of
any such breach or threatened breach, the Company will be entitled to such
equitable and injunctive relief as may be available to restrain the Executive
from the violation of the provisions thereof.
(b) If the Company terminates this Agreement at any time without Cause
(as defined above in section 7(c)) or the Executive terminates his employment
for a Good Reason (as defined above in Section 7(d)), the Executive shall be
entitled under this Section 13(b) to receive an amount equal to the amount of
the compensation payments that, but for his termination of employment, would
have been payable to the Executive under Section 4(a) for 12 months of
9
Basic Compensation and for any bonus payment under Section 4(b) with respect to
the year in which termination occurs.
(c) The above amounts shall be deemed liquidated damages, and not a
penalty. The Executive shall not be required to mitigate the amount of any
payment received pursuant to this paragraph nor shall the amount payable under
this paragraph be reduced by any compensation earned by the Executive after the
date of his termination of employment.
14. NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party to the other party shall be in writing and shall be
deemed to have been duly given when delivered personally or five (5) days after
dispatch by registered or certified mail, postage prepaid, return receipt
requested, to the party to whom the same is so given or made:
If to the Company
addressed to: Empire Financial Holding Company
0000 Xxxx Xxxxx Xxxx 000
Xxxxx 000, Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxxxxx,
Chairman of the Board
with a copy to: Morse, Zelnick, Rose & Lander, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
If to the Executive
addressed to: Xx. Xxxxxx X. Xxxxxxxxx Xx.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
or to such other address as the one party shall specify to the other party in
writing.
15. ARBITRATION. Except as provided in Section 13(a) of this Agreement,
any controversy between the parties regarding this Agreement and any claims
arising out of this Agreement or its breach shall be required to be submitted to
binding arbitration. Either party shall have the right to commence arbitration
proceedings. The arbitration proceedings shall be conducted in Seminole County,
Florida, in accordance with the Commercial Arbitration Rules of the National
Association, by a panel of three arbitrators, each of which shall be
knowledgeable in
10
employment law. The parties hereto agree to share equally the responsibility for
all fees of the arbitrators, abide by any decision rendered as final and
binding, and waive the right to appeal the decision or otherwise submit the
dispute to a court of law for a jury or non-jury trial. The parties hereto
specifically agree that neither party may appeal or subject the award or
decision of any such arbitrators to appeal or review in any court of law or in
equity or by any other tribunal, arbitration system or otherwise. Judgment upon
any award granted by such an arbitrator(s) may be enforced in any court having
jurisdiction thereof. The parties shall hold any award resulting from such
proceeding or settlement in connection therewith in strict confidence, unless
the disclosure of such award or settlement is required by law.
16. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein is
hereby terminated and canceled.
[SIGNATURE PAGE TO FOLLOW]
11
IN WITNESS WHEREOF, the parties have executed this Agreement on the date and
year first above written.
EMPIRE FINANCIAL HOLDING COMPANY
BY: /s/ Xxxxxx Xxxxxxxxxx
---------------------
XXXXX XXXXXXXXXX,
CHAIRMAN OF THE BOARD
/s/ Xxxxxx Xxxxxxxxx Xx.
------------------------
XXXXXX X. XXXXXXXXX XX.
12
SCHEDULE A
Amount of maximum bonus [$400,000]
% of annual budget pre-tax
income target Bonus Amount
-------------------------- ------------
105% $ [100,000]
110% [200,000]
120% [300,000]
130% or more [400,000]
Amount of Maximum bonus $[200,000]
% Annual budget
Trading Profit Bonus Amount
-------------------------- ------------
105% $ [50,000]
110% [100,000]
120% [150,000]
130% or more [200,000]
13
