EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement, dated as of December 29, 1999 (this
"Agreement"), is by and between American Home Mortgage Holdings, Inc., a
Delaware corporation having (the "Company"), and Xxx Xxxxxx (the "Executive").
Whereas the Company wishes to assure itself of the services of the
Executive, and the Executive desires to be employed by the Company, upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, the Company and the Executive hereby agree as follows:
1. Definitions. Unless defined elsewhere in this Agreement,
capitalized terms contained herein shall have the meanings set forth or
incorporated by reference in Section 17.
2. Employment. The Company agrees to employ the Executive, and the
Executive hereby accepts such employment by the Company and/or any subsidiary of
the Company, during the term set forth in Section 3 and on the other terms and
conditions of this Agreement.
3. Term.
(a) The term of this Agreement shall commence as of the closing of the
transactions contemplated by that certain Agreement and Plan of Merger, dated as
of the date hereof, by and among the Company, American Home Mortgage Sub I,
Inc., Marina Mortgage Company, Inc. (the "Subsidiary") and the stockholders of
the Subsidiary listed on the signature pages thereto (the "Merger Agreement"),
and, subject to Section 3(b), shall terminate at the close of business on the
fifth anniversary of that date.
(b) The term of this Agreement set forth in Section 3(a) shall be
extended or further extended, as the case may be, without any action by the
Company or the Executive, on the fifth anniversary of the date hereof and on
each subsequent anniversary of the date hereof, for an additional period of one
year, until either party gives written notice to the other party in advance of
any anniversary of the date hereof, in the manner set forth in Section 14, that
the term in effect when such notice is given is not to be extended or further
extended, as the case may be, beyond the year following the next anniversary. If
the Executive shall continue in the full-time employment of the Company after
the term of this Agreement, such continued employment shall be at will, and
otherwise subject to the terms and conditions of this Agreement.
4. Position, Duties and Responsibilities, Rights.
(a) During the term of this Agreement, the Executive shall serve as,
and be elected to and hold the office and title of President of the Subsidiary
or a similar division of the Company. As such, the Executive shall report only
to the Chairman of the Board of Directors of the Company and the Subsidiary or a
similar division of the Company and the Boards of Directors of the Company and
the Subsidiary or a similar division of the Company, and shall have all of the
powers and duties usually incident to the office of President of the Subsidiary
or a similar division of the Company, and shall have powers to perform such
other reasonable additional duties as may from time to time be lawfully assigned
to the Executive by the Chairman of the Board of Directors of the Company and
the Subsidiary and the Boards of Directors.
(b) During the term of this Agreement, the Executive agrees to devote
substantially all the Executive's time, efforts and skills to the affairs of the
Company during the Company's normal business hours, except for vacations,
illness and incapacity, but nothing in this Agreement shall preclude the
Executive from devoting reasonable periods to (i) manage the Executive's
personal investments, (ii) participate in professional, educational, public
interest, charitable, civic or community activities, including activities
sponsored by trade organizations, and (iii) serve as a director or member of an
advisory committee of any corporation not in competition with the Company or any
of its subsidiaries, or as an officer, trustee or director of any charitable,
educational, philanthropic, civic, social or industry organizations, or as a
speaker or arbitrator; provided, however, that the performance of the
Executive's duties or responsibilities in any of such capacities does not
materially interfere with the regular performance of the Executive's duties and
responsibilities hereunder.
5. Place of Performance. In connection with the Executive's employment
by the Company, the Executive shall be based at the Subsidiary's principal
executive offices, and shall not be required to be absent therefrom on travel
status or otherwise for more than a reasonable time each year as necessary or
appropriate for the performance of the Executive's duties hereunder.
6. Compensation.
(a) During the term of this Agreement, the Company shall pay the
Executive, and the Executive agrees to accept a base salary at the rate of not
less than $150,000.00 per year (the annual base salary as increased from time to
time during the term of this Agreement being hereinafter referred to as the
"Base Salary"). The Base Salary shall be paid in installments no less frequently
than monthly. Any increase in Base Salary or other compensation shall not limit
or reduce any other obligation of the Company hereunder, and once established at
an increased specified rate, the Executive's Base Salary hereunder shall not
thereafter be reduced.
(b) On June 30 and December 31 of each calendar year during the term
of this Agreement, the Executive shall be entitled to semi-annual bonus payment
at the discretion of the Board of Directors of the Company in the total amount
of not less than $50,900 per annum.
(c) During the term of this Agreement, the Executive shall be entitled
to (i) perquisites, including, without limitation, an office and secretarial and
clerical staff, and (ii) fringe benefits, including, without limitation, health
insurance, in each case at least equal to, benefits attributed to executives in
similar positions of the Company as well as to reimbursement, upon proper
accounting, of all reasonable expenses and disbursements incurred by the
Executive in the course of the Executive's duties.
(d) The Executive, the Executive's dependents and beneficiaries shall
be entitled to all benefits and service credit for benefits during the term of
this Agreement to which senior officers of the Company and their dependents and
beneficiaries are entitled as the result of the employment of such officers
during the term of this Agreement under the terms of employee plans and
practices of the Company and its subsidiaries, including, without limitation,
any pension plans, profit sharing plans, any non-qualified deferred compensation
plans and related "rabbi" trusts, the Company's life insurance plans, its
disability benefit plans, its vacation and holiday pay plans, its medical,
dental and welfare plans, and other present or successor plans and practices of
the Company and its subsidiaries for which senior officers, their dependents and
beneficiaries are eligible, and to all payments and other benefits under any
such plan or practice subsequent to the term of this Agreement as a result of
participation in such plan or practice during the term of this Agreement.
7. Termination of Employment.
(a) The term of this Agreement shall terminate upon the death of the
Executive.
(b) The Company may terminate the Executive's employment during the
term of this Agreement for Cause as provided in Section 7(b)(i) or in the event
of Disability as provided in Section 7(b)(ii).
(i) This Agreement shall be considered terminated for "Cause"
only:
(A) if the Executive willfully and repeatedly fails to
substantially perform the Executive's duties hereunder, other than by
reason of a Disability;
(B) if the Executive is grossly negligent or engages in
misconduct in the performance of the Executive's duties hereunder;
(C) if the Executive knowingly engages in an act of
dishonesty, an act of fraud or embezzlement, or any conduct resulting
in a felony indictment;
(D) if the Executive violates the provisions of the
Non-Competition Agreement of even date hereof between the Executive
and the Company (the "Non-Competition Agreement") in substantially the
form of Exhibit A hereof.
and, in the case of each of clauses (A), (B), (C) and (D) above, the
applicable conditions set forth in Section 7(e) are satisfied.
Anything in this Section 7(b) to the contrary notwithstanding, the
Executive's employment shall in no event be considered terminated by the
Company for Cause if termination takes place (I) as the result of bad
judgment or negligence on the part of the Executive other than gross
negligence or willful or reckless misconduct, (II) for any act or omission
in respect of which a determination could properly be made that the
Executive met the applicable standard of conduct prescribed for
indemnification or reimbursement or payment of expenses of an officer or
director under the Bylaws or Certificate of Incorporation of the Company or
the Subsidiary or the laws of the State of Delaware or the directors' or
officers' liability insurance of the Company or the Subsidiary in each case
as in effect at the time of such act or omission, (III) as the result of an
act or omission which occurred more than three calendar months prior to the
Executive's having been given Notice of Termination for such act or
omission unless the commission of such act or such omission was not or
could not reasonably have been, at the time of such commission or omission,
known to a member of the Boards of Directors (other than the Executive) ,
in which case more than three calendar months from the date the commission
of such act or such omission was or could reasonably have been so known,
(IV) as the result of a continuing course of action which commenced and was
or could reasonably have been known to a member of the Boards of Directors
(other than the Executive) more than three calendar months prior to Notice
of Termination having been given to the Executive for such course of
action, or (V) because of an act or omission believed by the Executive in
good faith to have been in, or not opposed to, the interests of the
Company.
(ii) The term "Disability" as used in this Agreement means an
accident or physical or mental illness which prevents the Executive from
substantially performing the Executive's duties hereunder for six
consecutive months. The term of this Agreement shall end as of the close of
business on the last day of such six month period but without prejudice to
any payments due to the Executive in respect of disability under this
Agreement or any plan or practice of the Company. The amount of any
payments payable under Section 6(a) during such six month period shall be
reduced by any payments to which the Executive may be entitled for the same
period because of disability under any disability or pension plan or
arrangement of the Company or any subsidiary or affiliate thereof.
(c) The Executive may terminate the Executive's employment during the
term of this Agreement for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean (i) a reduction of the Executive's rate of compensation or
any other failure by the Company to comply with Section 6, (ii) failure by the
Company to comply with Section 5, (iii) failure by the Company to obtain the
assumption of, and the agreement to perform, this Agreement by any successor as
contemplated in Section 11(a), or (iv) such reduction described in the foregoing
clause (i) or failure described in the foregoing clauses (ii) or (iii), as the
case may be, is not cured within 30 days after receipt by the Company of written
notice from the Executive describing such event.
(d) Notwithstanding anything to the contrary set forth herein, the
Company shall have the right to terminate the Executive's employment for any
reason other than Cause at any time, subject to the consequences of such
termination as set forth in Section 8.
(e) In no event shall the Company be entitled to terminate the
Executive's employment during the term of this Agreement for Cause pursuant to
Section 7(b), unless and until all of the following take place, provided that
Sections 7(e)(i) through (iii) shall not apply to any termination for Cause
pursuant to Section 7(b)(i)(C):
(i) the Secretary of the Company gives written notice to the
Executive (the "Warning Notice") setting forth (A) the specific provision
of this Agreement that the Executive is alleged to have failed to satisfy,
(B) the acts or omissions alleged to constitute such failure, (C) the date
on which the Executive shall be given a reasonable opportunity to appear
before and be heard by the Board of Directors of the Company concerning the
allegations, which date shall be not less than 30 nor more than 90 days
after the Executive's receipt of the Warning Notice, and (D) the loss of
rights under this Agreement that shall occur unless the Executive
diligently and in good faith takes reasonable steps to remedy such failure
within 30 days after the Executive's receipt of the Warning Notice;
(ii) the Executive does not diligently and in good faith take all
reasonable steps to remedy such failure within 30 days after the
Executive's receipt of the Warning Notice; and
(iii) the Executive is given a reasonable opportunity to appear
before and be heard by the Board of Directors concerning the allegations,
in accordance with the Warning Notice.
(f) Any termination by the Company pursuant to Section 7(b) or by the
Executive pursuant to Section 7(c) shall be communicated by a written Notice of
Termination to the other party hereto. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which indicates the specific termination
provision in this Agreement relied upon and sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provisions so indicated.
(g) "Date of Termination" shall mean (i) if the Executive's employment
is terminated by the Executive's death, the date of the Executive's death, (ii)
if the Executive's employment is terminated pursuant to Section 7(b)(ii), 30
days after Notice of Termination is given (provided that the Executive shall not
have returned to the performance of the Executive's duties on a full-time basis
during such 30 day period), and (iii) if the Executive's employment is
terminated for any other reason, the date on which a Notice of Termination is
given.
8. Compensation on Termination. The parties recognize and agree that,
if the Company terminates the Executive's employment during the term of this
Agreement other than pursuant to Section 7(b), or if the Executive terminates
the Executive's employment during the term of this Agreement for Good Reason
pursuant to Section 7(c), the actual damages to the Executive would be difficult
if not impossible to ascertain and agree that the Executive's sole remedy shall
be a right to receive amounts determined and paid in accordance with the
provisions of this Section 8. The Executive shall not be required to mitigate
the amount of any payment provided for in this Section 8 by seeking other
employment or otherwise, nor shall any compensation earned by the Executive in
other employment or otherwise reduce the amount of any payment provided for in
this Section 8.
(a) If the Company shall terminate the Executive's employment during
the term of this Agreement other than pursuant to Section 7(b), or if the
Executive shall terminate the Executive's employment during the term of this
Agreement for Good Reason pursuant to Section 7(c), then, as severance pay or
liquidated damages or both:
(i) the Company shall pay the Executive a lump sum payment equal
to the Executive's full Base Salary times three at the rate in effect at
the time Notice of Termination is given, together with any other amounts
payable to the Executive under Section 6 for periods prior to the Date of
Termination; and
(ii) the Company shall make any payments, if and when, due to the
Executive under the Merger Agreement.
(b) Notwithstanding anything herein to the contrary, if the Company
shall terminate the Executive's employment during the term of this Agreement
other than pursuant to Section 7(b), the Executive shall be subject to
restrictions set forth in the Non-Competition Agreement for a period of two
years from the Date of Termination.
(c) Notwithstanding anything herein to the contrary, if the Executive
shall terminate the Executive's employment during the term of this Agreement for
Good Reason pursuant to Section 7(c), the Executive shall be subject to
restrictions set forth in the Non-Competition Agreement for a period of nine
months from the Date of Termination.
(d) If the Executive's employment terminates under any circumstance
that does not entitle the Executive to payments under Section 8(a) (including a
termination by reason of the death or Disability of the Executive, or by reason
of the Company or the Executive electing not to extend or further extend the
term of this Agreement pursuant to Section 3(b)), the Executive shall (i) not be
entitled to receive any compensation under Section 6 accruing after the Date of
Termination, or any payment under Section 2.4(f) of the Merger Agreement and
(ii) be subject to the restrictions set forth in the Non-Competition Agreement
until the expiration of the Non-Competition Period (as defined in the
Non-Competition Agreement); provided, however, that if the termination is a
result of the death or Disability of the Executive, the Executive shall be
entitled to payments under the Merger Agreement as if the Executive were still
in the employ of the Company.
9. Indemnification. The Company shall indemnify the Executive to the
fullest extent permitted by the General Corporation Law of the State of
Delaware, as amended from time to time.
10. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the extent
that the Company would be required to perform it if no such succession had taken
place; provided, however, that no such agreement with a successor shall release
the Company without the Executive's express written consent. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the Executive
to compensation from the Company in the same amount and on the same terms as the
Executive would be entitled to hereunder if the Executive's employment were
terminated by the Company other than pursuant to Section 7(b), except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
(b) If the Executive should die while any amounts are due and payable
to the Executive hereunder, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of the Agreement to the Executive's
devisees, legatee, or other designee or, if there be no such designee, to the
Executive's estate.
(c) Except as to withholding of any tax under the laws of the United
States or any state or locality, neither this Agreement nor any right or
interest hereunder nor any amount payable at any time hereunder shall be subject
in any manner to alienation, sale, transfer, assignment, pledge, attachment, or
other legal process, or encumbrance of any kind by the Executive or the
beneficiaries of the Executive or by legal representatives without the Company's
prior written consent, nor shall there be any right of set-off or counterclaim
in respect of any debts or liabilities of the Executive, the Executive's
beneficiaries or legal representatives against any right or interest hereunder
or any amount payable at any time hereunder to the Executive, the Executives
beneficiaries or legal representatives; provided, however, that nothing in this
Section 10 shall preclude the Executive from designating a beneficiary to
receive any benefit payable on the Executive's death, or the legal
representatives of the Executive from assigning any rights hereunder to the
Person or Persons entitled thereto under the Executive's will or, in case of
intestacy, to the Person or Persons entitled thereto under the laws of intestacy
applicable to the Executive's estate.
11. Parties. This Agreement shall be binding upon and shall inure to
the benefit of the Company and the Executive, the Executive's heirs,
beneficiaries and legal representatives.
12. Entire Agreement; Amendment.
(a) This Agreement contains the entire understanding of the parties
with respect to the subject matter hereof and supersedes any and all other
agreements between the parties with respect to the subject matter hereof.
(b) Any amendment of this Agreement shall not be binding unless in
writing and signed by both (i) an officer or director of the Company duly
authorized to do so and (ii) the Executive.
13. Enforceability. In the event that any provision of this Agreement
is determined to be invalid or unenforceable, the remaining terms and conditions
of this Agreement shall be unaffected and shall remain in full force and effect,
and any such determination of invalidity or enforceability shall not affect the
validity or enforceability of any other provision of this Agreement.
14. Notices. All notices which may be necessary or proper for either
the Company or the Executive to give to the other shall be in writing and shall
be sent by hand delivery, registered or certified mail, return receipt
requested, overnight courier or facsimile, if to the Executive, to him at Marina
Mortgage Company, Inc., 00000 Xxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, XX 00000,
Attention: Xxx Xxxxxx, Facsimile: 000-000-0000, with a copy to King, Purtich,
Xxxxxx, Xxxxxxx & Xxxxxxxx, LLP, 0000 Xxxxxx xx xxx Xxxxx, Xxx Xxxxxxx, XX
00000-0000, Attention: Xxxxx X. Xxxxxx, Esq., Facsimile: 000-000-0000 and, if to
the Company, to it at its principal executive offices at 00 Xxxx 00xx Xxxxxx,
Xxx Xxxx, XX 00000, Attention: Human Resources Officer, Facsimile: 000-000-0000,
with a copy to Cadwalader, Xxxxxxxxxx & Xxxx, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxxx Xxxxxxxxxx, Esq., Facsimile: 000-000-0000, and
shall be deemed given when sent, provided that any Notice of Termination or
other notice given pursuant to Section 7 shall be deemed given only when
received. Either party may by like notice to the other party change the address
at which the Executive or it is to receive notices hereunder.
15. Governing Law. THIS AGREEMENT IS EXECUTED IN THE STATE OF NEW YORK
AND SHALL BE GOVERNED BY, AND BE ENFORCEABLE IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF.
16. Effective Date. This Agreement shall become effective upon
consummation of the transactions contemplated by the Merger Agreement.
17. Definitions. The following terms, when capitalized in this
Agreement, shall have the meanings set forth or incorporated by reference in
this Section 17.
(a) "Base Salary" shall have the meaning set forth in Section 6(a).
(b) "Board of Directors" means the Board of Directors of the Company,
as constituted from time to time.
(c) "Cause" shall have the meaning set forth in Section
7(b)(i).
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Company" means American Home Mortgage Holdings, Inc., a Delaware
corporation, and any successors to its business and/or assets, which executes
and delivers an agreement provided for in Section 11(a) or which otherwise
becomes bound by all the terms and conditions of this Agreement by operation of
law.
(f) "Date of Termination" shall have the meaning set forth in Section
7(g).
(g) "Disability" shall have the meaning set forth in Section 7(b)(ii).
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "Fair Market Value" means Fair Market Value as defined in the
Stock Incentive Plan.
(j) "Good Reason" shall have the meaning set forth in Section 7(c).
(k) "Non-Competition Period" shall have the meaning set forth in
Section 10(a).
(l) "Notice of Termination" shall have the meaning set forth in
section 7(f).
(m) "Person" means any individual, corporation, partnership, limited
liability company, limited duration company, trust or other entity of any nature
whatsoever.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.
American Home Mortgage Holdings, Inc.
By: /s/ Xxxxxxx Xxxxxxx
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Name: Xxxxxxx Xxxxxxx
Title: President and CEO
/s/ Xxx Xxxxxx
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Xxx Xxxxxx
