Employment Agreement with Jeffrey G. Rubin
Exhibit
10.2
NEWTEK
BUSINESS SERVICES, INC.
Employment
Agreement with
Xxxxxxx
X. Xxxxx
PREAMBLE.
This
Agreement entered into this 30th
day of
June 2006, by and between Newtek Business Services, Inc. (the “Company”) and
Xxxxxxx X. Xxxxx (the “Executive”), effective immediately.
WHEREAS,
the
Executive is to be employed by the Company as an executive officer;
and
WHEREAS,
the
parties desire by this writing to set forth the employment relationship of
the
Company and the Executive.
NOW,
THEREFORE,
it is
AGREED
as
follows:
1. Defined
Terms
When
used
anywhere in the Agreement, the following terms shall have the meaning set forth
herein.
(a) “Board”
shall
mean the Board of Directors of the Company.
(b) “Change
in Control”
shall
mean any one of the following events: (i) the acquisition of ownership, holding
or power to vote 50% or more of the Company’s voting stock, (ii) the acquisition
of the ability to control the election of a majority of the Company’s directors,
(iii) the acquisition of a controlling influence over the management or policies
of the Company by any person or by persons acting as a “group” (within the
meaning of Section 13(d) of the Securities Exchange Act of 1934), or (iv) during
any period of two consecutive years, individuals (the “Continuing Directors”)
who at the beginning of such period constitute the Board of Directors of the
Company (the “Existing Board”) cease for any reason to constitute at least one
half thereof, provided that any individual whose election or nomination for
election as a member of the Existing Board was approved by a vote of at least
two-thirds of the Continuing Directors then in office shall be considered a
Continuing Director. For purposes of this paragraph only, the term “person”
refers to an individual or a corporation, partnership, trust, association,
joint
venture, pool, syndicate, sole proprietorship, unincorporated organization
or
any other form of entity not specifically listed herein.
(c) “Code”
shall
mean the Internal Revenue Code of 1986, as amended from time to time, and as
interpreted through applicable rulings and regulations in effect from time
to
time.
(d) “Code
§280G Maximum”
shall
mean the product of 2.99 and the Executive’s “base amount” as defined in Code
§280G(b)(3).
(e) “Company”
shall
mean Newtek Business Services, Inc., and any successor to its
interest.
(f) “Common
Stock”
shall
mean common stock of the Company.
(g) “Effective
Date”
shall
mean the date of execution referenced in the Preamble of this
Agreement.
(h) “Executive”
shall
mean Xxxxxxx Xxxxx.
(i) “Good
Reason”
shall
mean any of the following events, which has not been consented to in advance
by
the Executive in writing: (i) the requirement that the Executive move his
personal residence, or perform his principal executive functions, more than
fifty (50) miles from his primary office as of the Effective Date; (ii) a
material reduction in the Executive’s base compensation as the same may be
increased from time to time; (iii) the failure by the Company to continue to
provide the Executive with compensation and benefits provided for on the
Effective Date, as the same may be increased from time to time, or with benefits
substantially similar to those provided to him under any of the Executive
benefit plans in which the Executive now or hereafter becomes a participant,
or
the taking of any action by the Company which would directly or indirectly
reduce any of such benefits or deprive the Executive of any material fringe
benefit enjoyed by him; (iv) the assignment to the Executive of duties and
responsibilities materially different from those associated with his position
on
the Effective Date; (v) a failure to elect or reelect the Executive to the
Board
of Directors of the Company; (vi) a material diminution or reduction in the
Executive’s responsibilities or authority (including reporting responsibilities)
in connection with his employment with the Company.
(j) “Just
Cause”
shall
mean the Executive’s willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, conviction for
a
felony, or material breach of any provision of this Agreement. No act, or
failure to act, on the Executive’s part shall be considered “willful” unless he
has acted, or failed to act, with an absence of good faith and without a
reasonable belief that his action or failure to act was in the best interests
of
the Company.
(k) “Protected
Period”
shall
mean the period that begins on the date six months before a Change in Control
and ends on the earlier of six months following the Change in Control or the
expiration date of this Agreement.
(l) “Trigger
Event”
shall
mean (i) the Executive’s voluntary termination of employment either for any
reason within the 30-day period beginning on the date of a Change in Control,
or
within 90 days of an event that both occurs during the Protected Period and
constitutes Good Reason, or (ii) the termination by the Company or its
successor(s) in interest, of the Executive’s employment for any reason other
than Just Cause during the Protected Period.
2. Employment.
The
Executive is employed as President of the Company. The Executive shall render
such administrative and management services for the Company and its subsidiaries
as set forth in the attached Position Description and at the request of the
Board as are currently rendered and as are customarily performed by persons
situated in a similar executive capacity and consistent with the duties of
the
President as set forth in the bylaws of the Company. The Executive shall also
promote, by entertainment or otherwise, as and to the extent permitted by law,
the business of the Company and its subsidiaries. The Executive’s other duties
shall be such as the Company's Chief Executive Officer may from time to time
reasonably direct, including normal duties as an officer of the
Company.
3. Base
Compensation.
The
Company agrees to pay the Executive during the term of this Agreement a salary
at the rate of $285,000 per annum, payable in cash not less frequently than
monthly. Additionally, the Board shall review, not less often than annually,
the
rate of the Executive’s salary and may decide to further increase his
salary.
4. Cash
Bonuses; Incentive Compensation.
(a) The
Board
shall determine the Executive’s right to receive incentive compensation in the
form of cash bonuses and other awards. No other compensation provided for in
this Agreement shall be deemed a substitute for such incentive compensation.
Cash bonuses shall be awarded pursuant to the terms of the Company’s Annual Cash
Bonus Plan if one has been adopted by the Board and if not, then by action
of
the Board.
(b) Incentive
bonus: in addition to all other compensation payable hereunder, the Executive
shall be entitled to participate in consideration for a cash bonus out of a
pool
to be established for this purpose by the Board. The amount of the Executive’s
bonus participation shall be fixed by the Compensation Committee following
consultation with the Chief Executive Officer of the Board if it finds the
Executive’s performance to have been a major contributing factor to the success
of the Company.
5. Other
Benefits.
(a) Participation
in Retirement, Medical and Other Plans.
The
Executive shall participate in any plan that the Company maintains for the
benefit of its employees if the plan relates to (i) pension, profit-sharing,
or
other retirement benefits, (ii) medical insurance or the reimbursement of
medical or dependent care expenses, or (iii) other group benefits, including
disability and life insurance plans.
(b) Executive
Benefits; Expenses.
The
Executive shall participate in any fringe benefits which are or may become
available to the Company’s senior management Executives, including for example
incentive compensation plans, club memberships, and any other benefits which
are
commensurate with the responsibilities and functions to be performed by the
Executive under this Agreement. The Executive shall be reimbursed for all
reasonable out-of-pocket business expenses which he shall incur in connection
with his services under this Agreement upon substantiation of such expenses
in
accordance with the policies of the Company.
(c) Split-Dollar
Life Insurance.
The
Company shall provide the Executive with split-dollar life insurance coverage.
The coverage shall be provided under a separate Split-Dollar Life Insurance
Agreement (the "Split-Dollar Agreement") entered into between the Executive
and
the Company, the terms of which shall include the following:
(i) Amount
of Insurance.
The
Company shall obtain an insurance policy (the "Policy") in the face amount
of $2
million on the life of the Executive.
(ii) Ownership.
The
Company shall be the sole owner of the Policy.
(iii) Payment
of Premiums.
The
Company shall pay all premiums for each Policy year.
(iv) Death
Benefits.
Upon
the death of the Executive, the death benefit payable under the Policy shall
be
paid to the Company in an amount equal to the lesser of (i) the aggregate
premiums paid by the Company and (ii) the cash surrender value of the Policy.
The balance shall be paid to the Executive's designated beneficiary or, if
none
is validly designated, his estate.
(v) Dividends.
All
dividends on the Policy shall be used to purchase additions to insurance issued
by the insurer.
(vi) Termination
of Employment.
Upon
termination of Executive’s employment for any reason, the Executive may elect,
by written notice to the Company within 30 days of such termination, to purchase
the Policy and assume all premium obligations there under from the Company
by
paying the lesser of (i) the total premiums paid by the Company or (ii) the
cash
surrender value of the Policy.
6. Term.
The
Company hereby employs the Executive, and the Executive hereby accepts such
employment under this Agreement, for the period commencing on the Effective
Date
and ending on December 31, 2007 or such earlier date as is determined in
accordance with Section 11 (the "Term").
7. Loyalty;
Noncompetition.
(a) During
the period of his employment hereunder and except for illnesses, reasonable
vacation periods, and reasonable leaves of absence, the Executive shall devote
substantially all his full business time, attention, skill, and efforts to
the
faithful performance of his duties hereunder; provided, however, from time
to
time, Executive may serve on the boards of directors of, and hold any other
offices or positions in, companies or organizations, at the request of the
Company or which will not present, in the opinion of the Board, any conflict
of
interest with the Company or any of its subsidiaries or affiliates, nor
unfavorably affect the performance of Executive’s duties pursuant to this
Agreement, nor violate any applicable statute or regulation. “Full business
time” is hereby defined as that amount of time usually devoted to like companies
by similarly situated executive officers. During the term of his employment
under this Agreement, the Executive shall not engage in any business or activity
contrary to the business affairs or interests of the Company.
(b) Nothing
contained in this Paragraph 7 shall be deemed to prevent or limit the
Executive’s right to invest in the capital stock or other securities of any
business dissimilar from that of the Company or, solely as a passive or minority
investor, in any business.
8. Standards.
The
Executive shall perform his duties under this Agreement in accordance with
such
reasonable standards as the Board may establish from time to time. The Company
will provide Executive with the working facilities and staff customary for
similar executives and necessary for him to perform his duties.
9. Vacation
and Sick Leave.
At such
reasonable times as the Board shall in its discretion permit, the Executive
shall be entitled, without loss of pay, to absent himself voluntarily from
the
performance of his employment under this Agreement, all such voluntary absences
to count as vacation time; provided that:
(a) The
Executive shall be entitled to an annual vacation in accordance with the
policies that the Board periodically establishes for senior management
Executives of the Company.
(b) The
Executive shall not receive any additional compensation from the Company on
account of his failure to take a vacation, and the Executive shall not
accumulate unused vacation from one fiscal year to the next, except in either
case to the extent authorized by the Board.
(c) In
addition to the aforesaid paid vacations, the Executive shall be entitled
without loss of pay, to absent himself voluntarily from the performance of
his
employment with the Company for such additional periods of time and for such
valid and legitimate reasons as the Board may in its discretion determine.
Further, the Board may grant to the Executive a leave or leaves of absence,
with
or without pay, at such time or times and upon such terms and conditions as
such
Board in its discretion may determine.
(d) In
addition, the Executive shall be entitled to an annual sick leave benefit as
established by the Board.
10. Indemnification.
The
Company shall indemnify and hold harmless Executive from any and all loss,
expense, or liability that he may incur due to his services for the Company
as
an officer and or director (including any liability he may ever incur under
Code
§ 4999, or a successor, as the result of severance benefits he collects
pursuant to Sections 11 or 13) during the full Term of this Agreement and
shall at all times maintain adequate insurance for such purposes.
11. Termination
and Termination Pay.
Subject
to Section 13 hereof, the Executive’s employment hereunder may be terminated
under the following circumstances:
(a) Just
Cause.
The
Board may, based on a good faith determination and only after giving the
Executive written notice and a reasonable opportunity to cure, immediately
terminate the Executive’s employment at any time, for Just Cause. The Executive
shall have no right to receive compensation or other benefits for any period
after termination for Just Cause.
(b) Without
Just Cause.
The
Board may, by written notice to the Executive, immediately terminate his
employment for a reason other than Just Cause, in which case the Executive
shall
be paid an amount equal to the balance of compensation provided for by Sections
3 and 4 hereof for the balance of the Term.
(c) Resignation
by Executive with Good Reason.
The
Executive may at any time immediately terminate employment for Good Reason,
in
which case the Executive shall be entitled to receive the following compensation
and benefits: (i) the salary and cash bonus provided pursuant to Sections 3
and
4 hereof, up to the expiration date (the “Expiration Date”) of the Term,
including any renewal term, of this Agreement, and (ii) the cost to the
Executive of obtaining all health, life, disability and other benefits which
the
Executive would have been eligible to participate in through the Expiration
Date
based upon the benefit levels substantially equal to those that the Company
provided for the Executive at the date of termination of employment. Said
payment shall be made in a lump sum payment within 10 days after his termination
of employment.
(d) Resignation
by Executive without Good Reason.
The
Executive may voluntarily terminate employment with the Company during the
Term
of this Agreement, upon at least 60 days’ prior written notice to the Board of
Directors, in which case the Executive shall receive only his compensation,
vested rights, and Executive benefits up to the date of his termination of
employment.
(e) Retirement,
Death, or Disability.
If the
Executive’s employment terminates during the Term of this Agreement due to his
death, a disability that results in his collection of any long-term disability
benefits, or retirement at or after age 62, the Executive (or the beneficiaries
of his estate) shall be entitled to receive the compensation and benefits that
the Executive would otherwise have become entitled to receive pursuant to
subsection (d) hereof upon a resignation without Good Reason.
(f) Termination
or Non-Renewal Payment. If
the
Executive’s employment hereunder is terminated pursuant to subsections (b),
without Just Cause, or (c), with Good Reason, or if the Term of this Agreement
is not extended for at least one additional year, the Executive shall be
entitled to compensation and benefits equal to six (6) months compensation
and
benefits under Sections 3 and 4 hereof, provided, however, that the Company
shall have the option of paying such compensation over a twelve (12) month
period.
12. No
Mitigation.
The
Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise, and no such
payment shall be offset or reduced by the amount of any compensation or benefits
provided to the Executive in any subsequent employment.
13. Change
in Control.
Notwithstanding any provision herein to the contrary, if a Trigger Event occurs
during the Protected Period, the Executive shall be paid an amount equal to
the
Code § 280G Maximum. Said sum shall be paid in one lump sum within ten (10)
days of such termination.
14. Reimbursement
for Litigation Expenses.
In
the
event
that any dispute arises between the Executive and the Company as to the terms
or
interpretation of this Agreement, whether instituted by formal legal proceedings
or otherwise, including any action that the Executive takes to enforce the
terms
of this Agreement or to defend against any action taken by the Company, the
Executive shall be reimbursed for all costs and expenses, including reasonable
attorneys’ fees, arising from such dispute, proceedings or actions, provided
that the Executive shall obtain a final judgment by a court of competent
jurisdiction in favor of the Executive. Such reimbursement shall be paid within
ten (10) days of Executive’s furnishing to the Company written evidence, which
may be in the form, among other things, of a cancelled check or receipt, of
any
costs or expenses incurred by the Executive.
15. Successors
and Assigns.
(a) This
Agreement shall inure to the benefit of and be binding upon any corporate or
other successor of the Company which shall acquire, directly or indirectly,
by
merger, consolidation, purchase or otherwise, all or substantially all of the
assets or stock of the Company.
(b) Since
the
Company is contracting for the unique and personal skills of the Executive,
the
Executive shall be precluded from assigning or delegating his rights or duties
hereunder without first obtaining the written consent of the
Company.
16. Corporate
Authority.
Company
represents and warrants that the execution and delivery of this Agreement by
it
has been duly and properly authorized by the Board and that when so executed
and
delivered this Agreement shall constitute the lawful and binding obligation
of
the Company.
17. Amendments.
No
amendments or additions to this Agreement shall be binding unless made in
writing and signed by all of the parties, except as herein otherwise
specifically provided.
18. Applicable
Law.
Except
to the extent preempted by Federal law, the laws of the State of New York shall
govern this Agreement in all respects, whether as to its validity, construction,
capacity, performance or otherwise.
19. Severability.
The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
20. Entire
Agreement.
This
Agreement, together with any understanding or modifications thereof as agreed
to
in writing by the parties, shall constitute the entire agreement between the
parties hereto with respect to the matters addressed and shall supersede all
previous agreements with respect to such matters.
IN
WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first hereinabove written.
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Witnessed
by:
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NEWTEK
BUSINESS SERVICES, INC.
|
|
/s/
Xxxxx
Xxxxxx
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By
/s/ Xxxxx
Xxxxxx
|
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Its:
Chairman & Chief Executive Officer
|
|
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Witnessed
by:
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XXXXXXX
X. XXXXX
|
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/s/
Xxxxx
Xxxxxx
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By:
/s/ Xxxxxxx X.
Xxxxx
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