EMPLOYMENT AGREEMENT
Exhibit
10.1
AGREEMENT
made as of the 12th
day of
October, 2006 by and between DELTA FINANCIAL CORPORATION, a Delaware corporation
(the “Corporation”), and Xxxxxxx X. Xxxxxxxx (the “Executive”).
W
I T
N E S S E T H:
In consideration of the representations, warranties and conditions contained
herein, the parties hereto agree as follows:
1. Position
and Responsibilities
1.1. The
Executive shall serve in an executive capacity as Executive Vice President
of
the Corporation. The Executive shall perform such functions and undertake
such
responsibilities as are customarily associated with such capacity. The Executive
shall hold such directorships and executive officerships in the Corporation
and
any subsidiary to which, from time to time, he may be elected or appointed
during the term of this Agreement.
1.2.
The
Executive shall devote his full time and best efforts to the business and
affairs of the Corporation and to the promotion of its interests.
2.
Term
of Employment
2.1 The
term
of employment shall be three years, commencing with the date hereof, unless
sooner terminated as provided in this Agreement. The initial term of employment
and any extension thereof is herein referred to as the “Term.”
2.2. Notwithstanding
the provisions of Section 2.1 hereof, the Corporation shall have the right,
on
written notice to the Executive, to terminate the Executive’s employment for
Reasonable Cause, such termination to be effective as of the date on which
notice is given or as of such later date otherwise specified in the notice.
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2.3.
For
purposes of this Agreement, the term “Reasonable Cause” shall mean any of the
following actions by the Executive: (a) failure to comply with any of the
material terms of this Agreement, which shall not be cured within 30 days
after
the Executive’s receipt of written notice from the Board of Directors or
President of the Corporation; (b) engagement in gross misconduct injurious
to
the Corporation or an affiliate of the Corporation, which shall not be cured
within 30 days after the Executive’s receipt of written notice from the Board of
Directors or President of the Corporation; (c) knowing and willful neglect
or
refusal to attend to the material duties reasonably assigned to him by the
Board
of Directors, which shall not be cured within 30 days after the Executive’s
receipt of written notice from the Board of Directors or the President of
the
Corporation; (d) intentional misappropriation of property of the Corporation
or
an affiliate of the Corporation to the Executive’s own use; (e) the commission
by the Executive of an act of embezzlement; (f) Executive’s conviction for a
felony or if criminal penalties are imposed on Executive relating to any
individual income taxes due and owing by Executive; or (g) Executive’s engaging
in any activity which would constitute a material conflict of interest with
the
Corporation which shall not be cured within 30 days after the Executive’s
receipt of written notice from the Board of Directors or President of the
Corporation. If the provisions contained in subsections (a), (b), (c) or
(g)
above cannot be cured within 30 days due to the nature of the breach, the
cure
period shall then be extended for a reasonable period of time; provided,
however, the Executive undertakes and continues in good faith to cure the
same.
2.4.
If
the Executive’s employment with the Corporation shall be terminated prior to the
expiration of the Term by the Corporation other than pursuant to Sections
2.2,
4.1 or 4.2 hereof, then the Corporation shall pay to the Executive as severance
and amount equal to: (a) if such termination occurs within the first two
years
of the Term of this Agreement, the sum of (i) one year’s salary, less
withholding and payroll taxes and (ii) twelve times the average commissions
per
month earned by the Executive pursuant to this Agreement over the six calendar
months immediately preceding the date of termination, less withholding and
payroll taxes, or (b) if such termination occurs after the second year of
the
Term of this Agreement, the sum of (i) the lesser of six month’s salary and the
total salary due over the remaining Term, in each case less withholding and
payroll taxes and (ii) six times the average commissions per month earned
by the
Executive pursuant to this Agreement over the six calendar months immediately
preceding the date of termination, less withholding and payroll taxes. Any
payments made under clause (a)(i) or (b)(i) of this Section 2.4 shall be
based
upon the Executive’s salary as it existed immediately prior to such termination,
and any payments made under clause (a)(i), (a)(ii), (b)(i) or (b)(ii) of
this
Section 2.4 shall be paid in equal installments over the six months following
any such termination; provided, however that the Executive shall only be
entitled to such payments under either clause (a) or clause (b) of this Section
2.4 as long as the Executive is in compliance with the provisions of
Section 5 below.
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3.
Compensation
3.1.
(a) The
Corporation shall pay or cause Delta Funding Corporation to pay to the Executive
for the services to be rendered by the Executive hereunder a salary at the
rate
of $225,000 per annum. The salary shall be payable in equal installments
in
accordance with the Corporation’s normal payroll practices. Such salary will be
reviewed at least annually and shall be increased (but not decreased) by
the
Board of Directors of the Corporation in such amount as determined in its
sole
discretion.
(b) In
addition to the salary, the Corporation will pay to the Executive commissions
and bonuses as agreed to by the Executive and the Corporation in writing
from
time to time.
(c) In
addition, the Corporation may also pay the Executive an annual bonus with
respect to each fiscal year of the Corporation, either on an “ad hoc” basis or
pursuant to a bonus plan or arrangement as may be established at the
Corporation’s discretion for Executive Vice Presidents of this Corporation, of
at least Fifty Thousand ($50,000) dollars for each year of this Agreement.
Nothing herein contained shall, however, obligate the Corporation to pay
any
annual bonus to the Executive in any amount exceeding $50,000 per year, it
being
understood that any such bonus shall be in the sole discretion of the Board
of
Directors and that the amount thereof, if any, may vary depending upon actual
performance of the Corporation and the Executive as determined at the
discretion of the Board of Directors.
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3.2. In
consideration of entering into this Agreement, the Executive shall be entitled
to receive on the date hereof:
(a) a
non-qualified stock option grant pursuant to the terms of Delta Financial
Corporation’s 1996 Stock Option Plan to purchase 25,000 shares of Delta
Financial Corporation Common Stock, par value $.01 per share (the “Common
Stock”) at a price per share equal to the closing price of the Common Stock on
the American Stock Exchange on the date hereof, which option shall have a
term
of seven years and shall vest 25% on the date of grant and 25% on each
succeeding anniversary of the grant date thereafter; and
(b) a
restricted stock grant pursuant to the terms of Delta Financial Corporation’s
2005 Stock Incentive Plan for 25,000 shares of Delta Financial Corporation’s
Common Stock, which stock grant shall 100% vest on the third anniversary
date of grant.
3.3 The
Corporation agrees to pay the Executive a car allowance of $1,000 per
month.
3.4. The
Executive shall be entitled to participate in, and receive benefits from,
any
insurance, medical, disability, bonus, incentive compensation (including
additional grants of restricted stock and/or non- qualified stock options
under
any of the Corporation's stock plans, as determined by the
Corporation) or other employee benefit plan, if any are adopted, of the
Corporation or any subsidiary which may be in effect at any time during the
course of the Executive's employment by the Corporation and which shall be
generally available to the Executive on terms no less favorable than to other
senior executives of the Corporation or its subsidiaries. The Corporation
agrees
to reimburse Executive for all medical costs and expenses incurred by him
which
are not covered by the Corporation’s group medical plans, up to an aggregate
maximum amount of $100,000 per annum, upon submission of appropriate and
itemized documentation.
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3.5. Upon
the
occurrence of a Change in Control (as defined herein), all stock options
and
restricted stock held by the Executive beneficially (in trust or otherwise)
and/or of record shall vest and become immediately exercisable on the date
of
the Change of Control.
For purposes hereof, a “Change in Control” shall be deemed to have occurred if
(a) during any period of 12 months, individuals who at the beginning of such
period constitute the Board of Directors of the Corporation cease for any
reason
to constitute a majority thereof unless the election, or the nomination for
the
election by the Corporation’s stockholders of each new director was approved by
a vote of at least a majority of all of
the
directors then still in office who were directors at the beginning of the
period, (b) a person or group of persons acting in concert (as defined in
Section 13 (a) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), other than one or more members of the Xxxxxx Family (hereinafter
defined), acquires beneficial ownership, within the meaning of Rule 13 (d)
(3)
of the Rules and Regulations of the United States Securities and Exchange
Commission promulgated pursuant to the Exchange Act, of a number of voting
shares of the Corporation which constitutes 35%
or more
of the Corporation’s outstanding voting shares,
(c) the
Corporation
is merged, consolidated or reorganized into or with another corporation or
another legal entity and, as a result of such merger, consolidation or
reorganization, less than 50% of the combined voting power of the
then-outstanding securities of such corporation or entity immediately after
such
transaction is held in the aggregate by the holders of the combined voting
power
of the securities of the Corporation entitled to vote generally in the election
of directors of the
Corporation immediately prior to such transaction, or
(d)
the Corporation undergoes a liquidation or dissolution or, in one or more
related transactions or one or more transactions
occurring within a consecutive 12-month period, a sale of all or substantially
all of the assets of the Corporation. No
merger, consolidation or corporate reorganization in which the owners of
the
combined voting power of the Corporation’s then outstanding voting securities
entitled to vote generally prior to said combination, own 50% or more of
the
resulting entity’s outstanding voting securities shall, by itself, be considered
a Change in Control.
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For
purposes of this Agreement, the term “Xxxxxx Family” shall mean Xxxx Xxxxxx,
Xxxx X. Xxxxxx, Xxxxxx X. Xxxxxx and Xxx Xxxxxx, any of their respective
spouses
or lineal descendants, or any trust (a)
the
beneficial interests of which are directly or indirectly held
by
such persons or (b) of which any of such persons serves as a trustee.
3.6.
The
Corporation agrees to reimburse the Executive for all reasonable and necessary
business expenses incurred by the Executive on behalf of the Corporation
in the
course of the Executive's duties hereunder upon the presentation by the
Executive of appropriate vouchers therefor.
3.7. The
Executive will be entitled each year of this Agreement to a paid vacation
of
four weeks.
3.8. Upon
termination of this Agreement for Reasonable Cause or due to the death or
incapacity of the Executive (as defined in Section 4.1), the Executive shall
be
entitled to all unpaid compensation and benefits accrued to the date of
termination.
3.9. The
Executive shall not be required to mitigate damages or the amount of any
payment
provided to him under this Agreement by seeking other employment or otherwise.
3.10. Nothing
contained herein shall prohibit the Board of Directors of the Corporation,
in its sole discretion, from increasing the compensation payable to the
Executive pursuant to this Agreement and/or making available to the Executive
other benefits in addition to those to which the Executive is entitled
hereunder.
4. Incapacity;
Death
4.1 If, during the period
of employment hereunder, because of illness or other incapacity, the Executive
shall fail for a period of 90 consecutive days, or for shorter periods
aggregating more than 90 days during any twelve month period, to render the
services contemplated hereunder, then the Corporation, at its option, may
terminate the term of employment hereunder, upon not less than 30 days written
notice from the Corporation to the Executive, effective on the 30th day after
giving of such notice; provided, however, that no such
termination will be effective if prior to the 30th day after giving such
notice,
the Executive’s illness or incapacity shall have terminated and he shall be
physically and mentally able to perform the services required hereunder and
shall be performing such services.
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4.2 In
the
event of the death of the Executive during the term hereof, the employment
hereunder shall terminate on the date of death of the Executive.
4.3. The
Corporation (or its designee) shall have the right to obtain for its benefit
an
appropriate life insurance policy on the life of the Executive, naming the
Corporation (or its designee) as the beneficiary. If requested by the
Corporation, the Executive agrees to cooperate with the Corporation in obtaining
such policy.
4.4. In
the
event the employment of Executive is terminated by the Corporation as the
result
of the death or incapacity of the Executive, the Corporation agrees to continue
to pay the Executive (or his estate) one year’s salary at his then rate of
salary, less withholding and payroll taxes, plus twelve times the average
commissions per month earned by the Executive pursuant to the Commission
Agreement over the six calendar months immediately preceding the date of
termination, less withholding and payroll taxes. Any payments made under
this
Section 4.4 shall be paid in equal installments over a period of one year
after
such termination.
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5. Other
Activities During Employment; Non-Competition; Solicitation.
5.1. The
Executive shall not during the Term of this Agreement undertake or engage
in
other employment, occupation or business enterprise. Subject to compliance
with
the provisions of this Agreement, the Executive may engage in reasonable
activities with respect to personal investments of the Executive.
5.2 During
the Term of this Agreement, and for the Restricted Period (hereinafter defined),
if any, neither the Executive nor any entity in which the
Executive may be interested as a partner, trustee, director, officer,
employee, shareholder, option holder, lender of money, guarantor or consultant,
shall be engaged directly or indirectly in any business engaged in by the
Corporation, or any subsidiary, in any area where the Corporation, or any
subsidiary, conducts such business at any time during this Agreement; provided
however, that the foregoing shall not be deemed to prevent the Executive
from
investing in securities if such class of securities in which the investment
is
so made is listed on a national securities exchange or is issued by a company
registered under Section 12(g) of the Securities Exchange Act of 1934, so
long
as such investment holdings do not, in the aggregate, constitute more than
5% of
the voting stock of any company’s securities. For purposes of this Section 5.2,
the term “Restricted Period” shall mean: in the event that the Corporation
terminates the Executive pursuant to Section 2.2 of this Agreement or the
Executive terminates his employment with the Corporation for any reason (i)
during the first two years of the Term of this Agreement, a period of one
year
after the Executive leaves the employ of the Corporation, and (ii) if such
termination occurs after the second year of the Term of this Agreement, then
for
the remaining Term of this Agreement.
5.3. The
Executive shall not at any time during his employment with the Corporation,
and
for a period of one year after Executive leaves the Corporation’s employ for any
reason, solicit (or assist or encourage the solicitation of) any employee
of the
Corporation or any of its subsidiaries or affiliates to work for Executive
or
for any business, firm corporation or other entity in which the Executive,
directly or indirectly, in any capacity described in Section 5.2 hereof,
participates or engages (or expects to participate or engage) or has (or
expects
to have) a financial interest or management position.
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5.4. The
Executive shall not at any time during this Agreement or after the termination
hereof directly or indirectly divulge, furnish, use, publish or make accessible
to any person or entity any Confidential Information (as hereinafter defined).
Any records of Confidential Information prepared by the Executive or which
come
into Executive’s possession during this Agreement are and remain the property of
the Corporation and upon termination of Executive’s employment all such records
and copies thereof shall be either left with or returned to the Corporation.
5.5. The
term
“Confidential Information” shall mean information disclosed to the Executive or
known, learned, created or observed by the Executive as a consequence
of or through the Executive's employment by the Corporation, not
generally known in the relevant trade or industry, about the Corporation’s or
any of its subsidiaries’ or affiliates’ business activities, services and
processes, including but not limited to information concerning advertising,
sales promotion, publicity, sales data, research, finances, accounting, methods,
processes, business plans, broker or correspondent lists and records and
potential broker or correspondent lists and records.
6.
Assignment.
The
Corporation shall require any successor or assign to all or substantially
all
the assets of the Corporation (whether by merger or by acquisition of stock,
assets or otherwise) prior to consummation of any transaction therewith,
to
expressly assume and agree to perform in writing this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
it if no such succession or assignment had taken place. This Agreement shall
inure to the benefit of and be binding upon the Corporation, its successors
and
assigns, and upon the Executive and his heirs, executors, administrators
and
legal representatives. This Agreement shall not be assignable by the
Executive.
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7. No
Third Party Beneficiaries.
This
Agreement does not create, and shall not be construed as creating, any rights
enforceable by any person not a party to this Agreement, except as provided
in
Section 6 hereof.
8. Headings.
The
headings of the sections hereof are inserted for convenience only and shall
not
be deemed to constitute a part hereof nor to affect the meaning thereof.
9. Interpretation.
In case
any one or more of the provisions contained in this Agreement
shall, for any reason, be held to be invalid, illegal or unenforceable in
any
respect, such invalidity, illegality or unenforceability shall not affect
any
other provisions of this Agreement, and this Agreement shall be construed
as if
such invalid, illegal or unenforceable provision had never been contained
herein. If, moreover, any one or more of the provisions contained in this
Agreement shall for any reason be held by a court of competent jurisdiction
to
be unenforceable because it is excessively broad as to duration, geographical
scope, activity or subject, it shall be construed by limiting and reducing
it,
so as to be enforceable to the extent compatible with the applicable law
as it
shall then appear.
10. Notices.
All
notices under this Agreement shall be in writing and shall be deemed to have
been given at the time when mailed by registered or certified mail, addressed
to
the address below stated party to which notice is given, or to such changed
address as such party may have fixed by notice given as set forth
herein:
To
the
Corporation:
Delta
Financial Corporation
0000
Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx,
XX 00000
Attn:
General
Counsel
and
To
the
Executive:
Xxxxxxx
X. Xxxxxxxx
XXXXXXXXXXXX
XXXXXXXXXXXX
provided,
however, that any notice of change of address shall be effective only upon
receipt.
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11. Waivers.
If
either party should waive any breach of any provision of this Agreement,
that party shall not thereby be deemed to have waived any preceding or
succeeding breach of the same or any other provision of this Agreement.
12. Complete
Agreement; Amendments.
The
foregoing is the entire agreement of the parties with respect to the subject
matter hereof and may not be amended, supplemented, canceled or discharged
except by written instrument executed by both parties hereto.
13.
Equitable
Remedies.
The
Executive acknowledges that he has been employed for his unique talents and
that
his leaving the employ of the Corporation would seriously hamper the business
of
the Corporation and that the Corporation will suffer irreparable damage if
any
provisions of Section 5 hereof are not performed strictly in accordance with
their terms or are otherwise breached. The Executive hereby expressly agrees
that the Corporation shall be entitled as a matter of right to injunctive
or
other equitable relief, in addition to all other remedies permitted by law,
to
prevent a breach or violation by the Executive and to secure enforcement
of the
provisions of Section 5. Resort to such equitable relief, however, shall
not
constitute a waiver or any other rights or remedies, which the Corporation
may
have.
14. Governing
Law.
This
Agreement is to be governed by and construed in accordance with the laws
of the
State of New York, without giving effect to principles of conflicts of law.
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as the date
first above written.
DELTA
FINANCIAL CORPORATION
By:
_____________________________
Name:
Xxxx Xxxxxx
Title:
President and CEO
________________________________
XXXXXXX
X. XXXXXXXX
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