EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made as of the 24 day of October
2000, by and between HARBOURTON FINANCIAL CORPORATION, a Delaware corporation,
having its principal place of business at 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000,
XxXxxx, Xxxxxxxx 00000 (the "Company"), and J. Xxxxxxx XxXxxxxx, an individual
having a residence at 0000 Xxxxxxxxxx Xxxx, XxXxxx, Xxxxxxxx 00000 (the
"Employee"). The Company and the Employee in consideration of the mutual
premises contained herein, mutually agree as follows:
1. Employment. The Company employs the Employee and the Employee agrees to serve
the Company as President of the Company. It is intended that the Employee shall
serve as a member of the board of directors of the Company (the "Board"). The
Employee shall devote the Employee's full business time and best efforts to
Company business. Employee shall perform such duties commensurate with the
Employee's position as may be specified from time to time by the Chairman of the
Board or the Board.
2. Term. The initial term of this Agreement shall commence on the date set forth
above, and shall end at the close of business on December 31, 2002, (the
"Term"). Notwithstanding the foregoing, commencing on January 1, 2002, the Term
shall extend one day at the end of every day during its length, and the new
closing date of the term shall be that additional day, unless either party shall
notify the other of its intention to stop such extensions, in which case the
closing date of the Term shall be one year from the date of such notice.
3. Salary. During the Term, the Company shall pay to the Employee a
base salary at a rate of One Hundred Fifty Thousand dollars ($150,000) per
annum, which amount may be increased from time to time at the discretion of
the Board.
4. Benefits and Other Compensation. The Company shall provide the
Employee with the following additional compensation during the Term:
(a) Subject to meeting eligibility provisions, any and all
existing and future general Employee benefit plans, including
without limitation, medical, health, life and disability
insurance, stock option and pension plans, now or hereafter
provided by the Company to the employees of the Company as a
group, or to the executive officers of the Company as a group,
shall be provided to the Employee.
(b) An annual profit sharing/incentive bonus to be paid to
Employee, predicated on achieving mutually agreed upon
earnings targets for the Company (the "Bonus Plan"). The bonus
for any calendar year shall be deemed fully accrued as of
December 31 of the applicable year and shall be paid no later
than March 31 of the following year.
(c) Receipt of an automobile allowance of $500 per month.
(d) The Company shall pay the $3,670 annual premium on a $2.0
million "key man" life insurance policy on the life of
Employee.( Policy in place; the Company will be named
Beneficiary of $1,000,000; JKM Designates beneficiaries for
$1,000,000.)
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5. Reimbursement. Bona fide business expenses incurred by the Employee in
connection with the performance of the Employee's duties hereunder shall be
reimbursed by the Company. Such allowances shall, without limitation, include
expenses such as travel, meals, hotels, telephone, automobile, telegraph,
postage and other normal and customary business expenses.
6. Vacation. During the term, Employee shall be entitled to four (4) weeks
paid vacation per year. The dates of any vacation periods shall be arranged in
order that such vacation days shall not materially hinder the normal functioning
of the Company's business activities.
7. Trade Secrets; Non-Competition:
(a) In the course of the Employee's employment, the Employee will have access
to confidential records, data, pricing information, lists of clients and
prospective clients, lists of vendors, books and promotional literature,
leases and agreements, policies and similar material and information of the
Company or used in the course of its business (hereinafter collectively
referred to as "Confidential Information"). All such Confidential
Information which the Employee shall use or come into contact with shall
remain the sole property of the Company. The Employee will not, directly or
indirectly, disclose or use any such Confidential Information, except as
required in the course of such employment. The Employee shall not for a
period of one (1) year following the end of the Term, disclose or use in
any fashion any Confidential Information of the Company or any of its
subsidiaries or affiliates, whether such Confidential Information is in the
Employee's memory or embodied in writing or other physical form, provided,
that the foregoing requirements shall not apply to any information (i) that
(prior to disclosure by the Employee) has been disclosed by the Company or
any third party or (ii) that Employee discloses (A) to any branch, agency
or regulatory authority of any federal, state or local government to comply
with any statute, regulation, rule, order or ordinance or (B) to any
federal, state or local court, tribunal or other adjudicatory body in
connection with any suit, claim or question arising before such court,
tribunal or other adjudicatory body or otherwise. In the event of a breach
or a threatened breach by the Employee of the provisions of this
subparagraph (a), the Company shall be entitled to an injunction
restraining the Employee from disclosing any of the aforementioned
Confidential Information. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other remedies available to the
Company for such breach or threatened breach, including the recovery of
damages from the Employee. Subject to subparagraph (c) below, this
provision shall survive the termination of this Agreement.
(b) The Employee further agrees that, during the Term, the Employee will not,
except with the prior written consent of the Board of Directors, (i) be
employed as an employee, consultant, officer or director, by any other real
estate finance company, (ii) solicit any business from or have any business
dealings with, either directly or indirectly or through corporate or other
entities or associates, any client of the Company, or (iii) initiate any
action, either directly or indirectly or through corporate or other
entities or associates, that would reasonably be expected to encourage or
to induce any employee of the Company or of any subsidiary or affiliate of
the Company to leave the employ of the Company or of any such subsidiary or
affiliate. The Employee specifically acknowledges the necessity for this
subparagraph (b), given the nature of the Company's business. The Employee
agrees that the Company shall be entitled to injunctive relief in the event
of a breach of the provisions of this subparagraph (b), the legal remedies
being inadequate to fully protect the Company. Nothing contained herein
shall be construed as prohibiting the Company from pursuing any other
remedies available to the Company for such breach, including the recovery
of damages from the Employee. Subject to subparagraph (c) below, this
provision shall survive the termination of this Agreement.
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(c) In the event of a Business Combination or Change of Control (as defined
below) involving the Company (whether or not the Company's Board of
Directors recommends such Business Combination or Change of Control for
approval by the Company's shareholders), subparagraphs (a) and (b) of this
paragraph 7 shall, at the time such Business Combination or Change of
Control is consummated, but only in the event Employee's employment is
terminated or the employee's Salary, Benefits and Other Compensation and/or
duties and responsibilities are substantially reduced and/or changed in
connection therewith under the terms of subparagraph 8(c) below, be null
and void and of no further force or effect. For purposes of this Agreement,
"Business Combination" shall mean (i) a merger, a consolidation or any
other business combination of the Company with any non-affiliated party,
(ii) the disposition of all or substantially all of the securities,
business or assets of the Company or (iii) a joint venture, reorganization
or other transaction (or series of transactions) as a result of which all
or substantially all of the business or assets of the Company are
transferred, with or without a Change of Control, or any other similar
corporate combination or transaction (or series of related transactions).
For purposes of this Agreement, a "Change of Control" shall mean a
transaction (or series of transactions) or other event (or series of
events) that results in the acquisition of a Controlling Interest in the
Company by a person or entity (or group of persons and/or entities) that
did not have a Controlling Interest in the Company prior to such
transaction (or series of transactions) or event (or series of events). As
used in the preceding sentence, the term "Controlling Interest" means
possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of voting
securities, by contract or otherwise); provided that, in any event, any
person or entity (or group of persons and/or entities) which beneficially
acquires, directly or indirectly, 25% or more (in number of votes) of the
securities having ordinary voting power for the election of directors of
the Company shall be conclusively presumed to have a Controlling Interest
in the Company. This provision shall be construed so that if a Business
Combination or Change of Control (as defined herein) occurs on more than
one occasion, the terms and provisions of this Agreement shall apply to the
most recent Business Combination or Change of Control.
(d) In the event the Employee is terminated for a reason other than cause,
Subparagraphs (a) and (b) of this paragraph shall become null and void.
8. Payments Upon Termination. The Company and the Employee shall have the
right to terminate the Employee's employment hereunder for any reason. The
Company shall pay to the Employee upon termination of employment during the
Term, as follows:
(a) If the Employee's employment is terminated by death, the Company shall
continue to pay and provide to the estate of the Employee for a period
equal to three months, Employee's then applicable base salary pursuant to
the provisions of paragraph 3 for such period, in monthly installments. In
addition, the Company, as soon as reasonably possible, but not past the end
of the fiscal year of the death of the Employee, shall also pay to the
estate of the Employee (on a pro rata basis up to the date of the
Employee's death) the Benefits and Other Compensation otherwise due and
unpaid to the Employee as of the date of, or in connection with, the
Employee's death, pursuant and subject to the provisions of subparagraphs
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4(a), 4(b) and 4(c) herein. In addition, the Board will consider in good
faith the payment of an incentive bonus for the calendar year in which the
termination occurs, taking into account the portion of the year completed
prior to such termination, the Company's performance for the year, and the
Employee's contributions to that performance.
(b) In the event the Employee's employment is terminated because of permanent
disability (as defined below), then following such termination the Company
shall continue to pay and provide to the Employee for a period equal to six
months, the Employee's then applicable salary for such period in monthly
installments, pursuant to the provisions of paragraph 3 herein, and the
Benefits and Other Compensation for such period as if the Employee were
still employed to be paid not later than the last day of such period under
subparagraphs 4(a), 4(b) and 4(c) herein. In addition, the Board will
consider in good faith the payment of an incentive bonus for the calendar
year in which the termination occurs, taking into account the portion of
the year completed prior to such termination, the Company's performance for
the year, and the Employee's contributions to that performance.
As used herein, the Employee shall be deemed to be permanently disabled in
the event that the Employee has not been able(due to mental or physical
illness or incapacity) to render services required by this Agreement for a
period of ninety (90) consecutive days. Any salary payments to be made by
the Company under the provisions of this subparagraph (b) are to be offset
by payments, if any, made to the Employee under any disability insurance
plan maintained by the Company.
(c) In the event the Employee's employment is terminated(i)by the Company
other than for Cause,or (ii) by the Employee for Good Reason, as defined in
subparagraph (d) below, the Employee shall receive:
(1) a lump sum payment, payable within thirty (30) days
following such termination without discount, equal to
the Employee's then current base salary otherwise
payable through the later of the end of the Term, or
one year;
(2) continuation of the benefits described in
subparagraph 4(a) above for a period of one year
following termination of employment (provided that if
the Company cannot continue the Employee's
participation under the terms of any applicable plan
it shall pay the employee an amount equal to the cost
the Company would have incurred in providing such
participation);
(3) any declared but unpaid bonus paid pursuant to
subparagraph 4(b) above for any prior calendar year,
and
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(4) a bonus, for the year in which such termination
occurs, in an amount no less than the bonus declared
or paid pursuant to subparagraph 4(b) above,
as the case may be, for the prior year (but not less
than an amount equal to one year's salary),pro-rated
to reflect the number of weeks in which the Employee
was employed in the calendar year of termination,
such bonus to be paid within thirty (30) days
following such termination, provided,however, that
if termination occurs prior to December 31, 2002,
Employee will receive a bonus payment or payments
equal to the bonus Employee would otherwise have
earned for fiscal year 2001 (if not previously paid)
and 2002 paid in accordance with and pursuant to the
terms of the Bonus Plan.
(d) For this purpose Good Reason shall mean:
(i) any material breach of this Agreement by the Company
at any time, including (A) loss of the Employee's
position as an executive officer of the Company, (B)
failure to elect, or re-elect the Employee as a
member of the Board or (C) reduction in Employee's
Salary, Benefits and Other Compensation.
(ii) failure of the Company to obtain the agreement of any
successor to perform this agreement at least ten (10)
days prior to a Business Combination or Change in
Control in which the Company will not be the
surviving entity; or
(iii) following a Business Combination or Change in
control, assignment of duties inconsistent with
Employee's position or any reduction in Employee's
authority or direct support.
(e) Notwithstanding anything else contained in subparagraph (c) above, no
compensation shall be payable under subparagraph (c) above if the
Employee's employment was or is terminated for Cause (as defined below). As
used herein, the term "Cause" shall mean (i) the Employee's conviction of
(or entry of a plea of nolo contendere with respect to) a felony or other
crime involving moral turpitude or (ii) a willful, substantial and
continual failure by the Employee in breach of this Agreement to perform
the lawful duties, responsibilities or obligations assigned to the Employee
pursuant to the terms hereof and the failure to cure such breach within
fifteen (15) days following written notice from the Company containing
specific findings by the Board of Directors of the Company detailing such
failures.
9. Validity. In the event that any provision or portion of this Agreement shall
be determined to be invalid or unenforceable for any reason, the remaining
provisions and portions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
10. Amendment and Waiver. This Agreement constitutes the entire agreement
between the parties as to employment by the Company of the Employee and may not
be changed orally but only by a written document signed by both parties. No
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waiver by either party hereto at any time of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of any other breach by such party at that
time or any other 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. Arbitration. Any dispute whatsoever relating to the interpretation,
validity, or performance of this Agreement and any other dispute arising out of
this Agreement which cannot be resolved by the parties to such a dispute shall,
upon thirty (30) days written notice by either party, be settled upon
application of any such party by arbitration in Fairfax County, Virginia, in
accordance with the rules then prevailing of the American Arbitration
Association, and judgment upon the award rendered by the arbitrators may be
entered in any court of competent jurisdiction. The cost of any arbitration
proceedings under this paragraph shall be shared equally by the parties to such
a dispute. Nothing contained in this paragraph shall limit the Company's rights
to obtain injunctive relief to enforce the provisions of paragraphs 7(a) and
8(b) above.
12. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia (without regard to
conflicts of law principles).
13. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns and shall become effective upon execution by the Company.
14. Notice. All notices and other communications made pursuant to this Agreement
shall be made in writing and shall be deemed to have been given if delivered
personally or mailed, postage prepaid, to the applicable party hereto at the
applicable address first above written, or in either case, to such other address
as the Company or Employee shall have specified by written notice to the other
party.
IN WITNESS WHEREOF, the parties have executed this agreement, the Company acting
herein by its duly authorized officer, the day and year first above written.
HARBOURTON FINANCIAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
------------------------
Xxxxxxx X. Xxxxx, Director
EMPLOYEE
By: /s/ J. Xxxxxxx XxXxxxxx
---------------------------
J. Xxxxxxx XxXxxxxx
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