EXHIBIT 10B
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), made as of the 23rd day of March, 1999 by and
between MFN Financial Corporation, a Delaware corporation ("Company"), and Xxxx
X. Xxxxxx ("Executive").
WITNESSETH THAT:
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to be employed by the Company, in accordance with the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
the Company and the Executive hereby agree as follows:
19. Employment. The Company hereby agrees to employ the Executive, and the
Executive agrees to serve the Company, in the capacities described herein during
the Period of Employment (as defined in Section 2 of this Agreement), in
accordance with the terms and conditions of this Agreement.
20. Period of Employment. The term "Period of Employment" shall mean the
period which commences on March 23, 1999 (the "Effective Date") and, unless
earlier terminated pursuant to Section 6, ends on the third anniversary of the
Effective Date.
21. Duties During the Period of Employment.
(1) Duties. During the Period of Employment, the Executive shall be
employed as Executive Vice President, General Counsel and Secretary of the
Company with overall charge and responsibility for the financial matters and
affairs of the Company, and shall perform such appropriate duties as the
Executive shall reasonably be directed to perform by the Company's President and
Chief Executive Officer.
(2) Scope. During the Period of Employment, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the Executive
shall devote substantially all of his business time and attention to the
business and affairs of the Company. It shall not be a violation of this
Agreement for the Executive to (i) serve on corporate, civic or charitable
boards or committees, (ii) deliver lectures, fulfill speaking engagements or
teach at educational institutions, or (iii) manage personal investments, so long
as such activities under clauses (i), (ii) and (iii) do not interfere, in any
substantial respect, with the Executive's responsibilities hereunder.
22. Compensation and Other Payments.
(1) Salary. During the Period of Employment the Company shall pay the
Executive an annual base salary ("Base Salary") of two hundred fifty
thousand dollars
($150,000) per year. The Executive's Base Salary shall be paid in advance, in
equal monthly installments. The Base Salary shall be reviewed annually as of the
end of each fiscal year of the Company (the "Applicable Year") during the Period
of Employment by the Compensation Committee (the "Committee") of the Board of
Directors of the Company (the "Board"). Each annual review shall be completed by
January 1 following the Applicable Year. Based upon such reviews, the Committee
may increase, but shall not decrease, the Base Salary. Any increase in Base
Salary shall not serve to limit or reduce any other obligation to the Executive
under this Agreement.
(2) Annual Bonuses. The Executive shall be eligible to participate in
the Company's annual bonus program pursuant to which Executive's targeted bonus
amount shall be forty percent (40%) of the Base Salary, subject to a guaranteed
bonus of sixty thousand dollars ($60,000) for the first year of the Period of
Employment.
(3) Initial Stock Options. On the effective date of a plan of
reorganization for the Company which is confirmed by a bankruptcy court pursuant
to a final order which is no longer subject to appeal, the Company shall grant
the Executive a ten (10) year option to purchase one hundred thousand (100,000)
shares of stock of the Company, which option shall vest and be exercisable as
set forth below and which option shall be transferable by the Executive to
members of his immediate family or to trusts or partnerships formed for the
benefit of the Executive or members of his immediate family:
(1) 50,000 is fully vested and is exercisable from and after the
date of grant ("Grant Date");
(2) 25,000 shall vest and become exercisable in twelve (12)
equal monthly portions, beginning with the first anniversary of the Grant
Date, with one-twelfth (1/12) vesting on the first anniversary and an
additional one-twelfth (1/12) vesting on the first day of each of the next
eleven (11) calendar months thereafter; and
(3) 25,000 shall vest and become exercisable in twelve (12)
equal monthly portions, beginning with the second anniversary of the Grant
Date, with one-twelfth (1/12) vesting on the first day of each of the next
eleven (11) calendar months thereafter.
The Company shall take such reasonable efforts as may be necessary to
cause any shares to be issued in connection with such option awards to be
registered under the Federal Securities Act of 1933, as amended, or under
applicable state securities laws, or to secure an appropriate exemption from
such registration. The terms and conditions of the said option awards are to be
included in a Stock Option Agreement in the form attached hereto as Exhibit A.
The options shall become exercisable immediately upon vesting and shall remain
exercisable until they expire or otherwise terminate in accordance with this
Agreement or the terms and conditions set forth in Exhibit A. To the extent the
Company is unable to provide sufficient shares to comply with this Section 4(c),
the Company shall provide the Executive with the economic equivalent of the
value of the option award(s) described in this Section 4(c) in the form
of a stock appreciation right based upon substantially the same terms and
conditions as set forth in Exhibit A.
(4) Reimbursement of Professional Fees. The Company shall pay on the
Executive's behalf all reasonable fees and expenses shown on statements
submitted to the Executive by the Executive's attorneys, accountants and other
advisors in connection with the negotiation and execution of this Agreement.
23. Other Executive Benefits.
(1) Regular Reimbursed Business Expenses. The Company shall promptly
reimburse the Executive for all expenses and disbursements reasonably incurred
by the Executive in the performance of his duties hereunder during the Period of
Employment.
(2) Benefit Plans. The Executive and his eligible family members
shall be entitled to participate, on terms no less favorable to the Executive
and his eligible family members than the terms offered to other senior
executives of the Company, in any group and/or executive life, hospitalization
or disability insurance plan, health program, vacation policy, pension, profit
sharing, ESOP, 401(k) and similar benefit plans (qualified, non-qualified and
supplemental) or other fringe benefits of the Company, including an automobile
allowance, club memberships and dues, and similar programs (collectively
referred to as the "Benefits"). In the event that any health programs or
insurance policies applicable to the Benefits provided hereunder contain a
preexisting conditions clause, the Company shall either obtain a waiver from
such clause with respect to the Executive and/or his eligible family members or
self-insure the Executive and/or his eligible family members with respect to
such conditions. Anything contained herein to the contrary notwithstanding, the
benefits described herein shall not duplicate benefits made available to the
Executive pursuant to any other provision of this Agreement. In the event that
any benefits coverage requires an interim waiting period, the Company shall pay
all interim premiums on behalf of the Executive and his family for such
coverage. The Company shall reimburse the Executive for all taxes payable by the
Executive due to payments made by the Company pursuant to this paragraph (b),
including tax reimbursement payments; provided however, that such tax
reimbursement shall not apply to payments which constitute vacation pay or
pension, profit-sharing or similar retirement or deferred compensation benefits
normally taxable to recipients.
(3) Perquisites. The Company shall provide the Executive such
perquisites of employment as are commonly provided to other senior
executives of the Company.
24. Termination.
(1) Death or Disability. This Agreement and the Period of Employment
shall terminate automatically upon the Executive's death. If the Company
determines in good faith that the Disability of the Executive has occurred
(pursuant to the definition of "Disability" set forth below), it may give to the
Executive written notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the thirtieth day after receipt by the Executive of such
notice given at any
time after a period of one hundred twenty (120 consecutive days of Disability or
a period of one hundred eighty (180) days of Disability within any twelve (12)
consecutive months, and, in either case, while such Disability is continuing
("Disability Effective Date"); provided that, within the thirty (30) days after
such receipt, the Executive shall not have returned to full-time performance of
the Executive's duties. For purposes of this Agreement, "Disability" means the
Executive's inability to substantially perform his duties hereunder, with
reasonable accommodation, as evidenced by a certificate signed either by a
physician mutually acceptable to the Company and the Executive or, if the
Company and the Executive cannot agree upon a physician, by a physician selected
by agreement of a physician designated by the Company and a physician designated
by the Executive. Until the Disability Effective Date, the Executive shall be
entitled to all compensation and benefits provided for under Section 4 and
Section 5 hereof. It is understood that nothing in this Section 6(a) shall serve
to limit the Company's obligations under Section 7(b) hereof.
(2) By the Company for Cause. The Company may terminate the
Executive's employment hereunder for "Cause" upon five (5) days' written notice.
For purposes of this Agreement, "Cause" shall mean (i) Executive's commission of
an act materially and demonstrably detrimental to the Company, which act
constitutes gross negligence or willful misconduct by Executive in the
performance of his material duties to the Company or (ii) Executive's commission
of any material act of dishonesty or breach of trust resulting or intended to
result in material personal gain or enrichment of Executive at the expense of
the Company, or (iii) Executive's conviction of a felony involving theft or
moral turpitude, but specifically excluding any conviction based entirely on
vicarious liability.
(3) By Executive for Good Reason. The Executive's employment
hereunder may be terminated by the Executive for Good Reason upon five (5) days'
written notice. For purposes of this Agreement, "Good Reason" shall mean:
(1) The assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including status, offices,
titles and reporting relationships), authority, duties or responsibilities
as contemplated by Section 3 of this Agreement, or any other action by the
Company which results in a significant diminution in such position,
authority, duties or responsibilities, excluding for this Section 6(c) any
isolated, immaterial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice thereof
given by the Executive;
(2) Any failure by the Company to comply with any of the
provisions of this Agreement, other than an isolated, immaterial and
inadvertent failure not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(3) The filing of any involuntary bankruptcy petition against
the Company which is not dismissed within sixty (60) days of the filing of
the petition;
(4) The revocation of any significant business license of the
Company by any state, except such a revocation which does not have a
material adverse effect on the business or prospects of the Company taken
as a whole; or
(5) Any criminal indictment of the Company, except for any such
indictment (A) which (1) is based upon the investigation by the federal
Securities and Exchange Commission into actions of the Company which
preceded the July 15, 1998 filing date of the bankruptcy petition of the
Company and (2) does not have a material adverse effect on the business or
prospects of the Company taken as a whole or (B) which is based primarily
upon the Executive's own actions, but excluding any indictment based upon
an allegation of vicarious liability on the part of the Executive, with
vicarious liability meaning liability which is based on actions of the
Company for which the Executive is alleged to be responsible solely as a
result of his offices with the Company and in which he was not directly
involved and of which he did not have prior knowledge.
(4) By Executive Other Than for Good Reason. The Executive may,
without liability to the Company, terminate his employment hereunder at any time
other than for Good Reason, upon thirty (30) days' written notice to the
Company.
(5) By the Company Without Cause. The Company may, subject to Section
7(d) hereof, terminate the Executive's employment hereunder at any time upon
thirty (30) days' written notice to the Executive.
(6) Notice of Termination. Any termination of employment under this
Agreement by the Company or by the Executive shall be communicated by Notice of
Termination to the other party hereto. For purposes of this Agreement, a "Notice
of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail, if applicable, the facts and circumstances claimed to provide
a basis for termination of the Executive's employment under the provision so
indicated, and (iii) specifies the Date of Termination (as defined below). The
failure by the Executive or Company to set forth in the Notice of Termination
any fact or circumstance which contributes to a showing of the basis for
termination shall not waive any right of such party hereunder or preclude such
party from asserting such fact or circumstance in enforcing his or its rights
hereunder.
(7) Date of Termination. "Date of Termination" means the date
specified in the Notice of Termination; provided, however, that if the
Executive's employment is terminated by reason of death or Disability, the Date
of Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
25. Obligations of the Company Upon Termination.
(1) Death. If the Executive's employment is terminated by reason of
the Executive's death, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement, other
than those obligations accrued or earned and vested (if applicable) by the
Executive as of the Date of Termination, including, but not limited
to, (i) the Executive's Base Salary through the Date of Termination at the rate
in effect on the Date of Termination disregarding any reduction in Base Salary
in violation of this Agreement and (ii) any other rights and benefits
(including, without limitation, payments due pursuant to Section 5(a) or Section
5(b) of this Agreement) available to the Executive under employee compensation
and benefit arrangements of the Company (without duplication) in which the
Executive was a participant on the Date of Termination, determined in accordance
with the applicable terms and provisions of such arrangements (such amounts
specified in clauses (i) and (ii) being hereinafter referred to as "Accrued
Obligations").
(2) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability, this Agreement shall terminate without further
obligations to the Executive, other than those obligations accrued or earned and
vested (if applicable) by the Executive as of the Date of Termination,
including, but not limited to, all Accrued Obligations.
(3) Cause; Other Than Good Reason. If the Executive's employment
shall be terminated by the Company for Cause or by the Executive other than for
Good Reason, this Agreement shall terminate without further obligations to the
Executive, other than those obligations accrued or earned and vested (if
applicable) by the Executive through the Date of Termination, including, but not
limited to, all Accrued Obligations.
(4) Good Reason; Other Than for Cause or Disability. If the Company
shall terminate the Executive's employment other than for Cause or Disability,
or if the Executive shall terminate his employment for Good Reason:
(1) Subject to the limitation set forth in Section 7(c), the
Company shall cause the Executive to receive the aggregate of the following
amounts:
(1) Continuation of Base Salary through the third
anniversary of the Effective Date;
(2) Any options or stock awards previously granted and not
yet vested as of the Date of Termination shall be fully vested
immediately, and all options shall remain exercisable through the end
of their original term; and
(3) All unpaid and vested compensation and Benefits accrued
or earned by the Executive as of the Date of Termination, including,
but not limited to, all Accrued Obligations.
(2) Through the third anniversary of the Effective Date, or such
longer period as any plan, program, practice or policy may provide, the
Company shall continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided to them in
accordance with Section 5(b) of this Agreement if the Executive's
employment had not been terminated, including health insurance and life
insurance. Thereafter, the Executive shall be treated as a retired senior
executive of the Company for purposes of Benefits provided by the Company
to such retirees.
It is understood that the Executive's rights under this Section 7 are in lieu of
all other rights which the Executive may otherwise have had upon termination of
this Agreement; provided, however, that no provision of this Agreement is
intended to adversely affect the Executive's rights under the Consolidated
Omnibus Budget Reconciliation Act of 1985.
26. Mitigation. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement, and such amounts
shall not be reduced whether or not the Executive obtains other employment.
27. Indemnification. The Company shall maintain, for the benefit of the
Executive, director and officer liability insurance in form at least as
comprehensive as, and in an amount that is at least equal to, that maintained by
the Company on October 1, 1998. The Executive's rights to such insurance shall
continue so long as the Company maintains director and office liability
insurance for any then current director or officer; provided that such insurance
shall in any event be maintained through December 31, 2003. In addition, the
Executive shall be indemnified by the Company against liability as an officer of
the Company or any subsidiary or affiliate of the Company to the maximum extent
permitted by applicable law.
28. Confidential Information and Noncompetition.
(1) The Executive shall hold in a fiduciary capacity for the benefit
of the Company all secret or confidential information, knowledge or data
relating to the Company, or any of its subsidiaries, affiliates and businesses,
which shall have been obtained by the Executive pursuant to his employment by
the Company or any of its subsidiaries and affiliates and which shall not have
become public knowledge (other than by acts by the Executive or his
representatives in violation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall not, without the
prior written consent of the Company, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. However, in no event shall an asserted violation of the
provisions of this Section 10 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.
(2) During the Period of Employment and during the one (1)-year
period immediately following (i) the Company's termination of the Executive's
employment for Cause or (ii) the Executive's termination of his employment other
than for Good Reason, the Executive shall not, directly or indirectly, engage
in, be employed by, act as a consultant to, or be a director, officer, owner or
partner of, any business activity or entity which competes significantly and
directly with the Company or any of its subsidiaries in lines of business
conducted by the Company or its subsidiaries during the Period of Employment or,
for purposes of applying this noncompetition restriction after the Period of
Employment, in lines of business conducted by the Company or its subsidiaries as
of the Date of Termination and, in either event, in any geographic area in which
the Company or its subsidiaries engage in such business; provided, however, that
it shall not be a violation of this paragraph (b) for the Executive to continue
to serve in those current directorships which are disclosed to the Company by
the Executive in writing at the time of his execution of this Agreement; and
provided further that it shall not be a violation of this
Agreement for the Executive to own an interest of less than five percent (5%) in
any entity whose ownership interests are publicly traded.
29. Remedy for Violation of Section 10. The Executive acknowledges that
the Company has no adequate remedy at law and will be irreparably harmed if the
Executive breaches or threatens to breach the provisions of Section 10 of this
Agreement and, therefore, agrees that the Company shall be entitled to
injunctive relief to prevent any breach or threatened breach of such section and
that the Company shall be entitled to specific performance of the terms of such
section in addition to any other legal or equitable remedy it may have. Nothing
in this Agreement shall be construed as prohibiting the Company from pursuing
any other remedies at law or in equity that it may have or any other rights that
it may have under any other agreement.
30. Withholding. Anything in this Agreement to the contrary
notwithstanding, all payments required to be made by the Company hereunder to
the Executive shall be subject to withholding of such amounts, at the time
payments are actually made to the Executive and received by him, relating to
taxes as the Company may reasonably determine it should withhold pursuant to any
applicable law or regulation. In lieu of withholding such amounts, in whole or
in part, the Company may, in its sole discretion, accept other provision for
payment of taxes as required by law, provided that it is satisfied that all
requirements of law affecting its responsibilities to withhold such taxes have
been satisfied.
31. Arbitration. Any dispute or controversy between the Company and the
Executive, whether arising out of or relating to this Agreement, the breach of
this Agreement, or otherwise, shall be settled by arbitration administered in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") then in effect, and judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction. Any arbitration
shall be held before a single arbitrator who shall be selected by the mutual
agreement of the Company and the Executive, unless the parties are unable to
agree to an arbitrator, in which case, the arbitrator will be selected by the
then President of the Chicago Bar Association. The arbitrator shall have the
authority to award any remedy or relief that a court of competent jurisdiction
could order or grant, including, without limitation, the issuance of an
injunction. However, either party may, without inconsistency with this
arbitration provision, apply to any court having jurisdiction over such dispute
or controversy and seek interim provisional, injunctive or other equitable
relief until the arbitration award is rendered or the controversy is otherwise
resolved. Except as necessary in court proceedings to enforce this arbitration
provision or an award rendered hereunder, or to obtain interim relief, or as
required by law, neither a party nor an arbitrator may disclose the existence,
content or results of any arbitration hereunder without the prior written
consent of the Company and the Executive. The Company and the Executive
acknowledge that this Agreement evidences a transaction involving interstate
commerce. Notwithstanding any choice of law provision included in this Agreement
the United States Federal Arbitration Act shall govern the interpretation and
enforcement of this arbitration provision. The arbitration proceeding shall be
conducted in Chicago, Illinois or such other location to which the parties may
agree. The Company shall pay the costs of any arbitrator appointed hereunder.
32. Reimbursement of Legal Expenses. In the event that the Executive is
the prevailing party, or is successful to a material degree, in pursuing or
defending, whether in arbitration or litigation, any claim or dispute involving
the Executive's employment with the Company, including any claim or dispute
relating to (a) this Agreement, (b) termination of the Executive's employment
with the Company or (c) the failure or refusal of the Company to perform fully
in accordance with the terms hereof, the Company shall promptly reimburse the
Executive for all reasonable costs and expenses (including, without limitation,
attorneys' fees) relating solely, or allocable, to such claim. In any other
case, the Executive and the Company shall each bear all their own costs and
attorneys' fees.
33. Taxes. In the event that the aggregate of all payments or benefits
made or provided to, or that may be made or provided to, the Executive under
this Agreement and under all other plans, programs and arrangements of the
Company (the "Aggregate Payment") is determined to constitute an "excess
parachute payment," as such term is defined in Section 280G(b) of the Internal
Revenue Code, the Company shall pay to the Executive prior to the time any
excise tax imposed by Section 4999 of the Internal Revenue Code ("Excise Tax")
is payable with respect to such Aggregate Payment, an additional amount which,
after the imposition of all income and excise taxes thereon, is equal to the
Excise Tax on the Aggregate Payment. The determination of whether the Aggregate
Payment constitutes an excess parachute payment and, if so, the amount to be
provided to the Executive and the time of payment pursuant to this Section 15
shall be made by an independent auditor (the "Auditor") jointly selected by the
Company and the Executive and paid by the Company. The Auditor shall be a
nationally recognized United States public accounting firm which has not, during
the two (2) years preceding the date of its selection, acted in any way on
behalf of the Company or any affiliate thereof. If the Executive and the Company
cannot agree on the firm to serve as the Auditor, then the Executive and the
Company shall each select one accounting firm and those two firms shall jointly
select the accounting firm to serve as the Auditor. Notwithstanding the
foregoing, in the event that the amount of the Executive's Excise Tax liability
is subsequently determined to be greater than the Excise Tax liability with
respect to which any initial payment to the Executive under this Section 15 has
been made, the Company shall pay to the Executive an additional amount (grossed
up for all taxes), with respect to such additional Excise Tax (and any interest
and penalties thereon) at the time and in the amount reasonably determined by
the Auditor. Similarly, if the amount of the Executive's Excise Tax liability is
subsequently determined to be less than the Excise Tax liability with respect to
which any prior payment to the Executive has been made under this Section 15,
the Executive shall refund to the Company the excess amount received, after
reduction for any nonrefundable tax, penalties and/or interest incurred by the
Executive in connection with the receipt of such excess, and such refund shall
be paid promptly after the Executive has received any corresponding refund of
excess Excise Tax paid to the Internal Revenue Service. The Executive and the
Company shall cooperate with each other in connection with any proceeding or
claim relating to the existence or amount of liability for Excise Tax, and all
expenses incurred by the Executive in connection therewith shall be paid by the
Company promptly upon notice of demand from the Executive.
34. Successors.
(1) This Agreement is personal to the Executive and, without the
prior written consent of the Company, the Executive's rights hereunder shall not
be assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's heirs and legal representatives.
(2) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(3) As used in this Agreement the term "Company" shall include any
successor to the Company's business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise. The Company
shall require any successor (whether direct or indirect, by purchase, merger,
reorganization, consolidation, acquisition of property or stock, liquidation, or
otherwise) to all or a substantial portion of its assets, by agreement in form
and substance reasonably satisfactory to the Executive, expressly 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 this Agreement if no such succession
had taken place.
35. Representations.
(1) The Company represents and warrants that (i) the execution of
this Agreement has been duly authorized by the Company, including action of the
Board, (ii) the execution, delivery and performance of this Agreement by the
Company does not and will not violate any law, regulation, order, judgment or
decree or any agreement, plan or corporate governance document of the Company
and (iii) upon the execution and delivery of this Agreement by the Executive,
this Agreement shall be the valid and binding obligation of the Company,
enforceable in accordance with its terms (subject to entry of a confirmation
order regarding the plan of reorganization referred to in Section 4, above),
except to the extent enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and by the effect of general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law).
(2) The Executive represents and warrants to the Company that (i) the
execution, delivery and performance of this Agreement by the Executive does not
and will not violate any law, regulation, order, judgment or decree or any
agreement to which the Executive is a party or by which he is bound; (ii) the
Executive is not a party to or bound by any employment agreement, noncompetition
agreement or confidentiality agreement with any other person or entity that
would interfere with this Agreement or his performance of services hereunder;
and (iii) upon the execution and delivery of this Agreement by the Company, this
Agreement shall be the valid and binding obligation of the Executive,
enforceable in accordance with its terms, except to the extent enforceability
may be limited by applicable bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and by the effect of general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
36. Miscellaneous.
(1) This Agreement shall be governed by and construed in accordance
with the laws of the State of Illinois, without reference to principles of
choice of law. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto or
their respective successors and legal representatives.
(2) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party, by overnight
courier, or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Xx. Xxxx X. Xxxxxx
000 X. Xxxxxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
If to the Company:
MFN Financial Corporation
000 Xxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxxxxxxx 00000
Attn: President and Chief Executive Officer
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Vedder, Price, Xxxxxxx & Kammholz
000 X. XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
or to such other addresses as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee, as evidenced by a delivery receipt.
(3) None of the provisions of this Agreement shall be deemed to be
a penalty.
(4) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or unenforceability of any other
provision of this Agreement.
(5) Either party's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or any
other provision hereof.
(6) This Agreement supersedes any prior agreements or understandings,
written or oral, between the Company and the Executive and contains the entire
understanding of the Company and the Executive with respect to the subject
matter hereof.
(7) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS HEREOF, the parties have executed this Agreement all as of the
day and year first above written.
MFN FINANCIAL CORPORATION
Xxxxxx X. Xxxxxxxxxx, President and Chief
Executive Officer
XXXX X. XXXXXX
_________________________________________
Exhibit A
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STOCK OPTION AGREEMENT
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Xxxx X. Xxxxxx
Executive Vice President, General Counsel and Secretary March 23, 1999
In accordance with the terms of your March 23, 1999 Employment Agreement
with MFN Financial Corporation (the "Company"), and in consideration of the
mutual covenants contained in that Employment Agreement and other good and
valuable consideration, you are hereby awarded a stock option with the following
terms and conditions:
1. Shares: This option is for a total of one hundred thousand (100,000)
shares of common stock of the Company.
2. Price: The option price under this option is $8.50 per share.
3. When Exercisable: Your rights to purchase shares covered by this
option shall vest and be exercisable as set forth below and shall remain fully
exercisable by you (or by an authorized representative in the event of your
death or disability) throughout the term of this option, as described in Section
4, below, except as otherwise provided in Section 4:
(a) one-half (1/2) is fully vested and is exercisable from and after
the grant date of this option (the "Grant Date");
(b) one-quarter (1/4) shall vest and become exercisable in twelve
(12) equal monthly portions, beginning with the first anniversary of the Grant
Date, with one-
twelfth (1/12) vesting on such first anniversary and an additional one-twelfth
(1/12) vesting on the first day of each of the next eleven (11) calendar months
thereafter; and
(c) one-quarter (1/4) shall vest and become exercisable in twelve
(12) equal monthly portions, beginning with the second anniversary of the Grant
Date, with one-twelfth (1/12) vesting on such second anniversary and an
additional one-twelfth (1/12) vesting on the first day of each of the next
eleven (11) calendar months thereafter.
4. Term. This option shall remain in full force and effect for a term of
ten (10) years ending on March 23, 2009, without regard to the termination of
your employment with the Company; provided, however, that if your employment
with the Company is terminated by you other than for Good Reason (as that term
is defined in your Employment Agreement) or if your employment with the Company
is terminated by the Company for Cause (as that term is defined in your
Employment Agreement), the term of this option shall end immediately upon such
termination.
5. Manner of Exercise. You, or an authorized representative acting on
your behalf in the event of your death or disability, may exercise this option
in whole or in part, from time to time, by written notice delivered to the
Secretary of the Company, which includes the following:
(a) Your name, mailing address and Social Security number;
(b) The date of the notice;
(c) The number of shares with respect to which this option is being
exercised;
(d) The exercise price for the shares with respect to which this
option is being exercised;
(e) Payment, in accordance with Section 6, below, for the shares
being purchased; and
(f) Your signature or the signature of an authorized representative
acting on your behalf in the event of your death or disability.
6. Payment. Payment under this option may be made in cash or by
transferring shares of the Company's common stock valued at fair market value at
the effective date of exercising this option, or a combination of both. Shares
of Company common stock so delivered must have been held by you for at least six
(6) months. Shares shall be issued promptly after full payment has been made.
7. Tax Withholding. Tax withholding is required upon exercising this
option in whole or in part. Payment for tax withholding may be made in cash or,
pursuant to your election, by transferring shares of the Company's common stock
or the withholding of shares to be issued, or any combination of cash, shares
and withholding of shares. Any election to use or withhold shares must be made
in accordance with applicable tax and securities laws and established
administrative procedures and shall be subject to disapproval by the Company for
failure to comply with such laws and procedures.
8. Transferability. Your rights to purchase shares pursuant to this
option are transferable by you from time to time, in whole or in part, to
members of your immediate family or to trusts or partnerships formed for your
benefit or the benefit of members of your immediate family. Such transfer may be
effected by delivering to the
Treasurer of the Company a written notice identifying the transferee(s) and the
portion of the option which is being transferred to each transferee.
9. Adjustment. In the event of any change in the common stock of the
Company through stock dividends, stock splits, recapitalization,
reclassification or otherwise, or in the event that any other stock shall be
substituted for the present common stock of the Company as the result of any
merger, consolidation or reorganization, then the Board of Directors of the
Company (or a committee thereof) shall make appropriate adjustment or
substitution in the number, kind and/or price of the shares subject to this
option, so as to preserve the overall value of this option. In connection with
any merger, consolidation or reorganization in which the present common stock of
the Company is converted into the right to receive only cash, the Board of
Directors may require you to tender your options to the Company for cash in an
amount equal to the positive difference, if any, between the cash price per
share in such merger, consolidation or reorganization and the exercise price per
share of such options.
10. Registration of Shares. The Company shall take such reasonable efforts
as may be necessary to cause any shares to be issued in connection with this
option to be registered under the Federal Securities Act of 1933, as amended, or
under applicable state securities laws, or to secure an appropriate exemption
from such registration.
11. Nonstatutory Stock Option. This option shall be a nonstatutory stock
option and is not to be treated as an incentive stock option within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended.
MFN FINANCIAL CORPORATION
Xxxxxx X. Xxxxxxxxxx, President and Chief
Executive Officer
Accepted and agreed to this___
day of _______________, 1999.
--------------------------------
Xxxx X. Xxxxxx
