EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 12th day of September, 2002 by and between DELTA
FINANCIAL CORPORATION, a Delaware corporation (the "Corporation"), and Xxxxxx X.
Xxxxxx (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
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1.1. The Executive shall serve in an executive capacity as Chairman
of the Board 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.
1.3. The principal executive offices of the Corporation shall be
maintained in Long Island, New York and the Executive shall not be required to
relocate outside of Long Island, New York without his consent.
2. TERM OF EMPLOYMENT
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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
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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.
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; (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; (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; (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. 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 (a) by the Corporation other than pursuant to Sections 2.2, 4.1 or
4.2 hereof or (b) by the Executive for Good Reason (as defined herein), then the
Corporation shall pay to the Executive as severance an amount equal to the
product of (1) the lesser of (A) the remaining Term in years plus 1, multiplied
by 100% or (B) 299%, multiplied by (2) the last five years' average annual
compensation as calculated in accordance with Section 280G of the Internal
Revenue Code of
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1986, as amended (the "Code"). All such payments shall be made within fifteen
days of such termination. In addition, for the balance of the Term following
such termination (or for a period of one year following such termination, if
greater), the Corporation shall provide the Executive all benefits (including
medical coverage) which may be in effect at such time which are generally
available to other senior executives of the Corporation or its subsidiaries;
provided, however that the Executive shall only be entitled to such payments and
benefits as long as he is in compliance with the provisions of Section 5 below,
to the extent applicable. Health benefits otherwise receivable by the Executive
pursuant to this Section 2.4shall be reduced to the extent comparable benefits
are actually available to the Executive during such period from a subsequent
Employer. The Executive shall have the right for a period of 30 days after the
occurrence of a Good Reason event to terminate this Agreement for Good Reason.
2.5 For purposes of this Section, "Good Reason" shall mean any of
the following, which occurs subsequent to the date of this Agreement:
(i) a reduction by the Corporation of the Executive's base salary as
then in effect, without the Executive's written consent;
(ii) a relocation or an actual change in the Executive's place of
employment outside of Long Island, New York without Executive's prior consent;
(iii) prior to a Change in Control, failure of the Corporation to
continue to maintain the same medical benefit plans covering the Executive as
are made available to other senior executives of the Corporation;
(iv) any material breach by the Corporation of any provision of this
Agreement which shall not be cured within 30 days after the Board of Directors'
receipt of written notice from the Executive;
(v) any failure by the Corporation to obtain the assumption of this
Agreement by any successor entity.
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3. COMPENSATION
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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 $250,000 per annum. The salary shall
be payable in equal installments in accordance with the Corporation's normal
payroll practices.
(b) In addition, at the discretion of the Compensation
Committee of the Board of Directors (the "Compensation Committee"), after
consideration of the Corporation's actual performance relative to its financial
and operational objectives for any particular period, and the performance of the
Executive, as well as such other factors deemed appropriate by the Compensation
Committee in its discretion, the Corporation may also pay the Executive an
annual bonus with respect to each fiscal year of the Corporation. Such Bonus, if
any, may be paid in cash, in shares of Delta Financial Corporation's Common
Stock, par value $.01 per share (the "Common Stock") or in any combination of
cash and shares of Common Stock, as determined in the discretion of the
Compensation Committee. Nothing herein contained shall, however, obligate the
Corporation to pay any annual bonus to the Executive, it being understood that
any such bonus shall be in the sole discretion of the Compensation Committee and
that the amount thereof, if any, may vary depending upon actual performance of
the Corporation and the Executive as determined in the discretion of the Board.
3.2. The Executive shall be entitled to participate in, and receive
benefits from, any insurance, medical, disability, bonus, incentive compensation
(including grants of non- qualified stock options under any of Delta's Stock
Option 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 his 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
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the Corporation's group medical plans, up to an aggregate maximum amount of
$100,000 per annum, upon submission of appropriate and itemized documentation.
3.3. The Corporation agrees to pay the Executive a car allowance of
$1,000 per month.
3.4. The Corporation agrees to reimburse the Executive for all
reasonable and necessary business expenses incurred by him on behalf of the
Corporation in the course of his duties hereunder upon the presentation by the
Executive of appropriate vouchers therefor.
3.5. The Executive will be entitled each year of this Agreement to a
paid vacation of five weeks, no more than half of which can be carried forward
to future years.
3.6. Upon termination of this Agreement for Cause or due to death or
incapacity of the Executive (as defined in Section 4.1), the Executive (or his
estate) shall be entitled to all unpaid compensation (including pro-rata Bonus)
and benefits accrued to the date of termination.
3.7. 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.
3.8. If the Executive's employment with the Corporation shall be
terminated by the Corporation due to death or incapacity of the Executive (as
defined in Section 4.1), then, effective upon the date of termination, all stock
options and restricted stock held by the Executive beneficially (in trust or
otherwise) and/or of record, including, without limitation, all stock options
and restricted stock held in trust for the benefit of the Executive in any Key
Employee Share Option Plan, or similar plan, as may be established at the
Corporation's discretion, shall vest and become immediately exercisable (and in
the case of stock options, shall remain exercisable by the Executive or his
estate for one year following such termination).
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4. INCAPACITY; DEATH
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4.1. If, during the period of employment hereunder, because of
illness or other incapacity, the Executive shall fail for a period of 120
consecutive days, or for shorter periods aggregating more than 120 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.
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 make a payment to the Executive (or his estate) within 15
days of such termination equal to the Executive's annual salary in effect as of
the date of such termination, plus the average of his annual bonuses over the
last three years, less the amount of employer-paid disability insurance received
by Executive under his benefit plan.
5. OTHER ACTIVITIES DURING EMPLOYMENT; NON-COMPETITION;
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SOLICITATION.
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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
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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 a period of one year
after the Executive leaves the employ of the Corporation, in the event that (a)
the Corporation terminates the Executive's employment with the Corporation
pursuant to Sections 2.2 or 4.1, or (b) the Executive terminates his employment
with the Corporation for any reason other than Good Reason following a Change in
Control, then:
5.2.1 Neither the Executive nor any entity in which he 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 ("Exchange Act"), so long as such
investment holdings do not, in the aggregate, constitute more than 5% of the
voting stock of any company's securities; and
5.2.2 The Executive shall not 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.
5.3. 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
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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.
5.4 The term "Confidential Information" shall mean information
disclosed to the Executive or known, learned, created or observed by him as a
consequence of or through his 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. CHANGE IN CONTROL.
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6.1. 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 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
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 50% 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
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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
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.
6.1.1. For purposes of this Agreement, the term "Xxxxxx
Family" shall mean Xxxx Xxxxxx, Xxxx X. Xxxxxx, Xxxxxx Xxxxxx and Xxx Xxxxxx,
any of their respective spouses or lineal descendants, or any trust the
beneficial interests of which are held by such persons.
6.2. If, upon a Change in Control, as defined under Section 6, the
Executive's employment with the Corporation is terminated by the Corporation, or
the Executive terminates his employment with the Corporation for Good Reason (as
defined in Section 2.6), in each case within a twenty-four (24) month period
following a Change in Control (each a "Change in Control Termination"), the
Executive shall be entitled to the following severance compensation and benefits
in lieu of any payments which would otherwise be payable under Section 2.4
(a) within 15 days of the date of the Change in Control
Termination (the "Change in Control Termination Date"), the Corporation shall
pay the Executive all amounts of earned or accrued compensation through the
Executive's termination date, including reasonable business expenses;
(b) within 15 days of the Change in Control Termination Date,
the Corporation shall pay the Executive as severance and in lieu of any further
compensation for periods subsequent to the Change in Control Termination Date an
amount equal to the product of (1) 299%, multiplied by (2) the last five years'
average annual compensation as calculated in accordance with Section 280G of the
Code; and
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(c) the Corporation shall continue on behalf of the Executive
and his dependents and beneficiaries the life insurance, disability, medical,
dental, prescription drug and hospitalization coverages and benefits provided to
the Executive immediately prior to the Change in Control Termination Date or, if
greater, the coverages and benefits generally provided at any time thereafter by
the Corporation to its senior officers for the remaining Term of this Agreement
following the Change in Control Termination Date. Health benefits otherwise
receivable by the Executive pursuant to this Section 6.2 shall be reduced to the
extent comparable benefits are actually available to the Executive during such
period from a subsequent Employer.
6.3. Executive shall not be required to mitigate the amount of any
payment provided for in this Section 6 by seeking employment or otherwise.
6.4 Upon the occurrence of a Change in Control, all stock options
and restricted stock held by the Executive beneficially (in trust or otherwise)
and/or of record, including, without limitation, all stock options and
restricted stock held in trust for the benefit of the Executive in any Key
Employee Share Option Plan, or similar plan, as may be established at the
Corporation's discretion, shall vest and become immediately exercisable on the
date of the Change in Control (and in the case of stock options, shall remain
exercisable by the Executive until the termination date stated in the related
stock option certificates).
6.5. In the event that any payment or benefit received or to be
received by Executive in connection with a Change in Control of the Corporation
or the termination of Executive's employment (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the Corporation,
any person whose actions result in a Change in Control or any person affiliated
with the corporation or such person) (collectively the "Total Payments") would
not be deductible (in whole or in part) as a result of Section 280G of the Code,
by the Corporation, an affiliate or other person making such payment or
providing such benefit, the payments or benefits shall be so reduced until no
portion of the Total Payments is not deductible. Executive shall be entitled to
elect which payments or benefits shall be so reduced.
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For purposes of this limitation, (1) no portion of the Total Payments the
receipt or enjoyment of which the Executive shall have effectively waived in
writing prior to the date of payment shall be taken into account, (2) no portion
of the Total Payments shall be taken into account which in the opinion of tax
counsel selected by the Corporation and acceptable to the Executive does not
constitute a "parachute payment" within the meaning of Section 280G (b) (2) of
the Code, and (3) the value of any noncash benefit or deferred payment or
benefit included in the Total Payments shall be determined by the Corporation's
independent auditors in accordance with the principles of Section 280(d) (3) and
(4) of the Code.
7. ASSIGNMENT. The Corporation shall require any successor or assign
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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.
8. NO THIRD PARTY BENEFICIARIES. This Agreement does not create, and
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shall not be construed as creating, any rights enforceable by any person not a
party to this Agreement, except as provided in Section 7 hereof.
9. HEADINGS. The headings of the sections hereof are inserted for
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convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
10.INTERPRETATION. In case any one or more of the provisions
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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
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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.
11.NOTICES. All notices under this Agreement shall be in writing
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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, Xxx Xxxx 00000
Attn: General Counsel
And
To the Executive:
Xxxxxx X. Xxxxxx
00 Xxxxxxxxxx Xxxx
Xxxxx Xxxx, XX 00000
provided, however, that any notice of change of address shall be effective only
upon receipt.
12.WAIVERS. If either party should waive any breach of any provision
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of this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
13.COMPLETE AGREEMENT; AMENDMENTS. The foregoing is the entire
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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.
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14.EQUITABLE REMEDIES. The Executive acknowledges that he has been
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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.
15.GOVERNING LAW. This Agreement is to be governed by and construed
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in accordance with the laws of the State of New York, without giving effect to
principles of conflicts of law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as the
date first above written.
DELTA FINANCIAL CORPORATION
By:/S/ XXXXXXX XXXXX
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Name: Xxxxxxx Xxxxx
Title: Executive Vice President
/S/ XXXXXX X. XXXXXX
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XXXXXX X. XXXXXX
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