Exhibit 10.4
EXECUTIVE EMPLOYMENT AGREEMENT
Employment Agreement ("Agreement") dated as of June 10, 1998 between Arbor
National Holdings, Inc., a New York corporation (the "Company"), and Xxxx
Xxxxxxx (the "Executive").
ARTICLE I
EMPLOYMENT
The Company hereby employs Executive, and Executive accepts employment with
the Company, upon the following terms and conditions:
1.1 EMPLOYMENT.
(a) The Company hereby employs Executive, and Executive agrees to
serve, as the President and Chief Executive Officer of the Company and as
President and Chief Executive Officer of the Company's subsidiaries including
Arbor National Commercial, LLC and Arbor Secured Funding, Inc. (such
subsidiaries together with such other subsidiaries and/or affiliated entities as
the Company's Board of Directors may designate are collectively called the
"Subsidiaries") during the Employment Term (herein defined) of this Agreement.
Subject to the Board of Directors of the Company and the Board of Directors of
each Subsidiary, the Executive shall actively manage, and have responsibility
for and supervision over, the business activities and affairs of the Company and
the Subsidiaries, and he shall, manage, supervise and
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direct its and their officers, employees and agents.
(b) Commencing January 1, 1999, the Executive agrees to devote
substantially his full business time and attention and best efforts to the
affairs of the Company and the Subsidiaries. Prior thereto and after the
effective date of the Company's Initial Public Offering, the Executive will
devote no less than three quarters of his business time and attention and best
efforts to the affairs of the Company and the subsidiaries.
(c) The Company agrees that during the Employment Term it will not,
without the prior written consent of Executive, (i) relocate its headquarters
more than fifteen (15) miles from its present location in Uniondale, L.I., New
York; (ii) assign to Executive any duties materially inconsistent with those
contemplated by Article I of this Agreement; or (iii) reduce Executive's base
salary or otherwise fail to comply with any financial or other material
obligation to Executive imposed on the Company by this Agreement.
(d) The Company agrees that during the Employment Term it will use
its best efforts to cause the Executive to be nominated and elected as the
Chairman of the Company's Board of Directors, and will vote its stock to elect
the Executive as the Chairman of the Board of Directors of each subsidiary.
(e) Executive represents and warrants to the Company that he is free
to accept employment with the Company as contemplated herein and has no other
written or oral obligations or commitments of any kind or nature which would in
any way
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interfere with his acceptance of employment pursuant to the terms hereof or the
full performance of his obligations hereunder or the exercise of his best
efforts in his employment hereunder or which would otherwise pose any conflict
of interest.
1.2 TERM. Subject to the provisions for earlier termination set forth in
Article IV hereof, this Agreement shall commence on the effective date of the
Company's Initial Public Offering and thereafter continue for the period ending
December 31, 1998 (the "Interim Period"). It shall thereafter be extended until
the close of business on December 31, 2003 (the "Permanent Period"). The
Interim Period and the Permanent Period are collectively referred to as the
"Employment Term".
ARTICLE II
COMPENSATION
2.1 ANNUAL SALARY; BONUS.
(a) During the Interim Period, the Company shall pay to the
Executive, on a pro rata basis, a base annual salary of $175,000. For the
Permanent Period, the Company shall pay to the Executive a base annual salary of
$250,000, which shall increase at a rate of 10% per year. The "Base Salary"
shall be payable in accordance with the Company's customary procedures.
(b) The Executive shall be entitled to participate in the bonus pool
and any other compensation plans established for executive officers.
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(c) The Executive shall receive such award of stock incentives
pursuant to the Company's 1998 Long-Term Incentive Plan as described on Exhibit
"A" annexed hereto.
2.2 REIMBURSEMENT OF EXPENSES. The Executive shall be entitled to receive
prompt reimbursement of all reasonable expenses incurred by the Executive in
performing services hereunder, including all expenses of travel, entertainment
and living expenses while away from home on business at the request of, or in
the service of, the Company or any Subsidiary, provided that such expenses are
incurred and accounted for in accordance with the policies and procedures
established by the Company.
2.3 AUTOMOBILE. At the Executive's option, the Company shall pay
directly, or shall reimburse the Executive, for the full cost of leasing one
automobile selected by the Executive up to a monthly sum of $1,500. The Company
shall also pay directly, or reimburse the Executive, for all reasonable costs
and expenses incurred by the Executive in connection with the maintenance,
insurance and operation of the automobile.
2.4 BENEFITS. The Company shall pay the Executive as additional salary
the annual cost of a disability insurance policy which provides for payments
equal to 75% of Base Salary during the term of disability, with payments
commencing six months after the
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commencement of the disability. The Executive shall be entitled to participate
in and be covered by all health, insurance, pension and other employee plans and
benefits established by the Company (collectively referred to herein as the
"Company Benefit Plans") for its executive employees generally, subject to
meeting applicable eligibility requirements.
2.5 VACATIONS AND HOLIDAYS. The Executive shall be entitled to an annual
vacation leave of six (6) weeks at full pay. The Executive shall be entitled to
such holidays as are established by the Company for all employees.
2.6 KEY-MAN INSURANCE. The Company shall obtain a life insurance policy
or policies on the life of Executive, in amounts determined by the Board of
Directors of the Company, but in no event less than $5,000,000. Executive
agrees to make himself available for such physical examinations and will execute
such applications and other documents and otherwise cooperate with the Company,
as may be necessary to facilitate the issuance of such policy or policies. In
the event that the Company does obtain an insurance policy (the "Policy") on the
life of Executive, all proceeds payable in respect thereof shall be the property
solely of the Company. In the event that Executive's employment terminates for
any reason other than Executive's death, Executive may request that the Policy
be assigned to Executive by giving written notice to the Company to that effect.
Subject to
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obtaining any requisite consent from the insurer, the Company shall, if
Executive has so requested, assign the Policy to Executive subject to
Executive's reimbursement to the Company of any premiums paid by the Company
which relate to any period following the date of termination of Executive's
employment together with any cash value of the Policy.
ARTICLE III
CONFIDENTIALITY; NONDISCLOSURE; NON-COMPETE
3.1 CONFIDENTIALITY. Executive understands and acknowledges that during
his employment with the Company he will be exposed to Confidential information
(as defined below), all of which is proprietary and which will rightfully belong
to the Company. Executive shall hold in a fiduciary capacity for the benefit of
the Company such Confidential Information obtained by Executive during his
employment with the Company and shall not, directly or indirectly, at any time,
either during or after his employment with the Company, without the Company's
prior written consent, use any of such Confidential Information or disclose any
of such Confidential Information to any individual or entity other than the
Company or its employees, except as required in the performance of his duties
for the Company or as otherwise required by law. Executive shall take all
reasonable steps to safeguard such Confidential Information and to protect such
Confidential Information against disclosure, misuse, loss or theft. The term
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"Confidential Information" shall mean any information not generally known in the
relevant trade or industry or otherwise not generally available to the public,
which was obtained by Executive from the Company, its subsidiary, or which was
learned, discovered, developed, conceived, originated or prepared by Executive
during or as a result of the performance of any services by Executive on behalf
of the Company. For purposes of this Article III, the Company shall be deemed
to include any entity which is controlled, directly or indirectly, by the
Company and any entity of which a majority of the economic interest is owned,
directly or indirectly, by the Company.
3.2 NON-SOLICITATION. The Executive agrees that for a period of three (3)
years following his termination of employment with the Company, the Executive
will not, on behalf of himself or any other party, directly or indirectly,
solicit, recruit, hire or cause to be hired, any individual or individuals who
are employed by or act as agents or contractors for the Company or its
subsidiaries/affiliates on or after his date of termination.
3.3 RETURN OF DOCUMENTS. Except for such items which are of a personal
nature to Executive (E.G., daily business planner), all writings, records, and
other documents and things containing any Confidential Information shall be the
exclusive property of the Company and shall not be copied, summarized, extracted
from or removed from the premises of the Company, except in pursuit of the
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business of the Company at the direction of the Company and shall be delivered
to the Company, without retaining any copies, upon the termination of
Executive's employment or at any time thereafter as requested by the Company.
3.4 NON-COMPETE. During the Employment Term and for the "Non-Compete
Period" (herein defined), the Executive will not, directly or indirectly: (i)
own, manage, operate, join, control, or participate in or be connected with, as
an officer, employee partner, stockholder, director, adviser, consultant, or
agent (whether paid or unpaid), any business, individual, partnership, firm or
corporation (collectively "Entity"), which is at the time engaged in a business
which is, directly or indirectly, in competition with the business of the
Company or any Subsidiary; the foregoing provision being also intended to
prohibit the Executive from acquiring or holding more than one (1%) percent of
any issue of stock or securities of any Entity which has any securities listed
on a national securities exchange or quoted in the daily listing of
over-the-counter market securities; or (ii) solicit any person or entity to
terminate such person's or entity's contractual and/or business relationship
with the Company or any Subsidiary.
For the purposes of this Paragraph, the term "Non-Compete Period"
shall mean (i) in the case the Executive's employment is terminated for Cause
pursuant to Paragraph "4.2" hereof, a three (3) year period from the date of
termination, and
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(ii) in the case the Executive terminates his employment pursuant to paragraph
"4.3" without Good Reason a three (3) year period from the date of termination.
3.5 RIGHT TO INJUNCTIVE AND EQUITABLE RELIEF. The Executive's obligations
not to disclose or use Confidential Information and to refrain from the
non-solicitation and non-compete activities described in this Article III are of
a special and unique character which gives them a peculiar value, and which is
supported by valuable consideration. The Company cannot be reasonably or
adequately compensated in damages in an action at law in the event Executive
breaches such obligations. Therefore, the Executive expressly agrees that the
Company shall be entitled to injunctive and other equitable relief without bond
or other security in the event of such breach in addition to any other rights or
remedies which the Company may possess. Furthermore, the obligations of the
Executive and the rights and remedies of the Company under this Article III are
cumulative and in addition to, and not in lieu of, any obligations, rights, or
remedies created by applicable law relating to mis-appropriation or theft or
trade secrets of confidential information.
ARTICLE IV
TERMINATION
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4.1 DEFINITIONS. For purposes of this Article IV, the
following definitions shall apply to the Terms set forth below:
"Cause" shall mean only the following:
(i) the willful and continued failure by the Executive to
substantially perform his duties hereunder (other than
such failure resulting from the Executive's incapacity
due to physical or mental illness) after demand for
performance is delivered by the Company that
specifically identifies the manner in which the Company
believes the Executive has not substantially performed
his duties.
(ii) personal dishonesty, incompetence or willful misconduct
by the Executive (which includes a willful, material
breach of this Agreement by the Executive) which is
materially injurious to the Company;
(iii) a willful violation of any law, rule or regulation, as
determined by the final judgement of an agency or court
of competent jurisdiction, which violation is
materially injurious to the Company or any Subsidiary
or the imposition of a
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final order issued by any regulatory authority against
Company which prohibits the Executive from holding the
position of President and Chief Executive Officer of
the Company.
(iv) the willful violation by Executive of the provisions of
Article III.
(a) For purposes of this Agreement, no act, or failure to act, on the
Executive's part shall be considered "willful" unless done, or omitted to be
done, by the Executive in bad faith and without a reasonable belief that such
action or omission by the Executive was in the best interests of the Company.
Notwithstanding anything to the contrary in this Agreement, no termination or
other action shall be considered to be for Cause under this Agreement unless (i)
the Executive first shall have received at least 30 days written notice setting
forth the reasons for the Company's intention to terminate or take other action
and shall have been provided an opportunity to appear, accompanied by counsel,
and be heard before the Board of Directors; (ii) after such appearance before
the Board, the Board of Directors shall have duly adopted by a majority of the
Directors of the Company then in office, and shall have provided to the
Executive a certified resolution finding that in the good faith opinion of such
Directors the Executive was found to have committed conduct constituting Cause,
as set forth above, and specifying the
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particulars thereof in detail; and (iii) the Executive shall have failed to cure
or remedy the event constituting Cause within thirty (30) days after the
Executive's receipt of such certified resolution from the Board of Directors.
Notwithstanding the generality of the foregoing, if the Company's Board of
Directors believes that Cause for Executive's termination exists and that the
continued performance by Executive of his duties hereunder pending the
completion of the actions contemplated by this paragraph "4.1" could be
injurious to the Company, the Company's Board of Directors shall have the right
to suspend Executive's performance hereunder, effective as of the date on which
the Company so notifies Executive, provided that Executive shall remain entitled
to receive the compensation provided for in this Agreement from the date of any
such suspension through the date of the Board of Director's final determination
of whether Cause exists in accordance with the procedures set forth in this
paragraph "4.1".
(b) "Permanent Disability" shall mean a physical or mental incapacity
as a result of which the Executive becomes totally unable to continue the
performance of his duties hereunder for a period of one hundred eighty (180)
consecutive days or a period of an aggregate of two hundred seventy (270) days
in any consecutive twenty-four (24) month period. A determination of Permanent
Disability shall be subject to the certification of a qualified medical doctor
agreed to by the Company and the Executive or, in the event of the Executive's
incapacity to
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designate a doctor, the Executive's legal representative. In the absence of
agreement between the Company and the Executive, each party shall nominate a
qualified medical doctor and the two doctors so nominated shall select a third
doctor, who shall make the determination as to the occurrence and continuance of
a Permanent Disability.
4.2 TERMINATION BY COMPANY. The Company may only terminate the
Executive's employment hereunder for Cause and because of the Executive's
permanent disability.
4.3 TERMINATION BY EXECUTIVE. The Executive may voluntarily terminate
this Agreement[ upon ninety (90) days written notice to the Company, which
termination shall be deemed to be without Good Reason. The Executive may also
terminate this Agreement on thirty (30) days written notice to the Company with
Good Reason in the event the Company has materially breached its material
obligations to the Executive. In this case, the Executive shall state the
specific facts and circumstances of such breach in the written notice provided
to the Company.
4.4 DEATH OF EXECUTIVE. This Agreement shall terminate immediately upon
the death of the Executive.
4.5 SEVERANCE BENEFITS RECEIVED UPON TERMINATION.
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(a) If (i) the Executive's employment is terminated by death, or by
the Company for Cause or permanent disability, or (ii) the Executive terminates
his employment without Good Reason, then the Company shall pay the Executive his
Base Salary through the end of the month during which such termination occurs
(or at the Executive's election, the rate in effect on the first day of the
month preceding the month in which the date of termination occurs) plus credit
for any vacation earned but not taken and the Company shall thereafter have no
further obligations to the Executive under this Agreement; PROVIDED, HOWEVER,
that the Company will continue to honor any obligations that may have accrued
under the existing Company Benefit Plans or any other agreements or arrangements
applicable to the Executive.
(b) If the Executive's employment is wrongfully terminated by the
Company or by the Executive with Good Reason because the Company has materially
breached its material obligations to the Executive as set forth in this
Agreement, then the Company shall:
(1) pay to the Executive within two business days following the
date of termination his Base Salary through the end of the
month during which such Termination occurs (or at the
Executive's election, the rate in effect on the first day of
the month preceding the month in which the date of
Termination occurs) plus credit for any vacation earned
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but not taken;
(2) pay to the Executive as liquidated damages, severance pay in
a lump sum, in cash, within five business days following the
date of termination, an amount equal to (i) three times the
Executive's annual Base Salary in effect as of the date of
termination; and (ii) an amount equal to three times the
highest annual bonus received by the Executive from the
Company, pursuant to this Agreement during any of the
previous two years. The payment to Executive of severance
pay as liquidated damages shall be Executive's sole remedy
for any claim against the Company for wrongful termination
or breach of this Agreement by the Company. Executive and
Company agree that such amount is a reasonable approximation
of damages to the Executive in the event of a breach, and
that Executive and the Company are agreeing to this amount
in advance to avoid the need for costly or protracted
litigation on this issue; and,
(3) maintain, at the Company's expense, in full force and
effect, for the Executive's continued benefit until the
earlier of (i)
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eighteen (18) months after the date of termination or
(ii) the Executive's commencement of full time employment
with a new employer, all Company Benefit Plans and other
programs or arrangements in which the Executive was entitled
to participate immediately prior to the date of termination,
provided that the Executive's continued participation is
possible under the general terms and provisions of such
plans and programs. In the event that the Executive's
participation in any such plan or program is barred, the
Company shall arrange to provide the Executive with benefits
substantially similar to those which the Executive was
entitled to receive under such plans or programs.
4.6 NO OBLIGATION TO MITIGATE DAMAGES. The Executive shall not be
required to mitigate damages for the amount of any payment provided for under
this Agreement in the case where the Executive terminates his employment because
the Company has materially breached its obligations hereunder, and no payment
provided for under this Agreement shall be reduced by any compensation earned by
the Executive as the result of employment by another employer after the date of
termination.
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ARTICLE V
ASSUMPTION OF OBLIGATIONS BY SUCCESSOR TO COMPANY
5.1 ASSUMPTION OF OBLIGATIONS. The Company will require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Executive,
expressly, absolutely and unconditionally 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 it if no such succession or assignment had taken place. Any
failure of the Company to obtain such agreement prior to the effectiveness of
any such succession or assignment shall be a material breach of this Agreement.
As used in this Agreement, "Company" shall mean the Company, as hereinbefore
defined and any successor or assign to its business and/or assets as aforesaid
which is required to execute and deliver the agreement provided for in this
Article V or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law. In such event, the Company agrees that it
shall pay or shall cause such employer to pay any amounts owed to the Executive
pursuant to this Agreement.
5.2 BENEFICIAL INTERESTS. This Agreement shall inure to the benefit of
and be enforceable by the Executive's personal and
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legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts are still payable to him or her hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee, or other designee or, if there be
no such designee, to the Executive's estate.
ARTICLE VI
GENERAL PROVISIONS
6.1 NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt required, postage prepaid, as follows:
If to the Company:
Arbor National Holdings, Inc.
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attn.: Chairman, Compensation Committee of
Board of Directors
If to the Executive:
Xxxx Xxxxxxx
00 Xxxxxxx Xxxx
00
Xxxxx Xxxxx, Xxx Xxxx 00000
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
6.2 NO WAIVERS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
signed by the Executive and the Company. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.
6.3 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of laws.
6.4 SEVERABILITY OF PARTIAL INVALIDITY. The invalidity or
un-enforceability of any provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
6.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original
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but all of which together will constitute one and the same instrument.
6.6 LEGAL FEES AND EXPENSES. Should any party institute any action or
proceeding to enforce this Agreement or any provision hereof, or for damages by
reason of any alleged breach of this Agreement or of any provision hereof, or
for a declaration of rights hereunder, the prevailing party in any such action
or proceeding shall be entitled to receive from the other party all costs and
expenses, including reasonable attorneys' fees, incurred by the prevailing party
in connection with such action or proceeding.
6.7 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings, and negotiations between the parties with
respect to the subject matter hereof. This Agreement is intended by the parties
as the final expression of their agreement with respect to such terms as are
included in this Agreement and may not be contradicted by evidence of any prior
or contemporaneous agreement. The parties further intend that this Agreement
constitutes the complete and
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exclusive statement of its terms and that no extrinsic evidence may be
introduced in any judicial proceeding involving this Agreement.
6.8 HEADINGS. The headings of the sections of this Agreement are inserted
for convenience only and shall not be deemed to constitute a part hereof and
shall not affect the validity or interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ARBOR NATIONAL HOLDINGS, INC.
a New York corporation
By: /s/ Xxxxxx Xxxx
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XXXX XXXXXXX
/s/ Xxxx Xxxxxxx
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