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EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT effective April 1, 1997 (the "Agreement")
by and between GRANITE FINANCIAL, INC. (the "Company") with principal offices
located at 0000 X. 00xx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxx 00000 and XXXXXXX X.
XXXXXX (the "Executive").
NOW THEREFORE, in consideration of the foregoing premises and mutual
covenants herein contained, the parties hereto agree as follows:
1. Employment. The Company agrees to employ the Executive and the
Executive agrees to serve the Company as its Chairman, Chief Executive Officer
and President.
2. Position and Responsibilities. The Executive shall exert his best
efforts and devote full time and attention to the affairs of the Company. The
Executive shall be in charge of formulating strategic policy and direction of
the Company and developing, negotiating and concluding acquisitions, and shall
have full authority and responsibility with respect thereto, subject to the
general direction, approval and control of the Board of Directors and to the
restrictions, limitations and guidelines set forth by the Board of Directors in
resolutions adopted in the minutes of the Board of Directors meetings, copies
of which will be provided to the Executive from time to time and will be
incorporated herein by reference. His powers shall include the authority to
hire and fire personnel of the Company except for executive officers and
members of the Board of Directors and to retain consultants when he deems
necessary in order to implement Company policies.
3. Board of Directors. The Executive shall at all times discharge his
duties in consultation with and under the supervision of the Board of Directors
of the Company. In the performance of his duties the Executive shall make his
principal office at the corporate headquarters of the Company in Westminster,
Colorado.
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4. Term of Employment. The term of the Executive's employment under this
Agreement be deemed to have commenced on April 1, 1997, and shall continue
until June 30, 2000, subject to extension or termination as hereinafter
provided.
5. Duties. During the period of his employment hereunder and except for
illness, specified vacation periods and reasonable leaves of absence, the
Executive shall devote his best efforts and full, attention and skill to the
business and affairs of the Company and its affiliated companies. as such
business and affairs now exist and as they may be hereinafter changed or added
to, under and pursuant to the general direction of the Board of Directors of
the Company.
6. Compensation. The Company shall pay to the Executive as compensation
for his services the sum of $250,000 per year, payable monthly, or such higher
salary as may be from time to time approved by the Board of Directors. In
addition, the Executive shall receive such additional compensation and/or
bonuses or stock options as may be voted to him at the discretion of the Board
of Directors in connection with Executive's annual review as provided under
Paragraph 15 herein.
7. Expense Reimbursement. The Company will reimburse the Executive, at
least monthly, for all reasonable and necessary expenses incurred by him in
carrying out his duties under this Agreement. The Executive shall present to
the Chief Financial Officer or Controller each month an itemized account of
such expenses in such form as is reasonably required by the Board of Directors.
Such expenses shall include attorneys' fees and disbursements of Executive in
connection with any legal proceedings (including, but not limited to,
arbitration), whether or not instituted by the Company or Executive, relating
to the interpretation or enforcement of any provision of this Agreement;
provided, however, that in the case of any such proceeding to which the Company
and the Executive are adverse parties, the losing party shall reimburse the
prevailing party for all costs and expenses, including attorneys' fees and
disbursements, incurred by the prevailing party in defense or prosecution of
any such
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proceeding. Prior to advancing costs and expenses to Executive, the Board of
Directors shall have the right to obtain an agreement, and to require
acceptable security therefor, from Executive requiring him to repay Company for
the same should it be determined that Executive is not entitled to payment of
such costs and expenses.
8. Medical and Dental Coverage. The Executive, his wife, and those
children who qualify will be entitled to participate in the Company's employee
group medical and other group insurance programs on the same basis as other
executives of the Company.
9. Medical Examination. The Executive agrees to submit himself for
physical examination on one occasion per year as requested by the Company for
the purpose of the Company's obtaining life insurance on the life of the
Executive for the benefit of the Company; provided, however, that the Company
shall bear the entire cost of such examinations and shall pay all premiums on
any key man life insurance obtained for the benefit of the Company as
beneficiary.
10. Life Insurance Premiums. If the Executive qualifies for coverage, the
Company agrees to reimburse the Executive up to $ 10,000 per year for life
insurance premiums which the Executive may pay as premiums on any policy of
life insurance he may purchase for the benefit of his designated beneficiary or
beneficiaries.
11. Automobile or Automobile Allowance. The Company will provide the
Executive with an automobile or with an automobile allowance in the amount of
$10,000 for the duration of his employment with the Company under this
Agreement. The Company shall also provide insurance on such automobile or will
include a reimbursement for insurance in the automobile allowance.
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12. Vacation Time. The Executive shall be entitled to take four (4) weeks
paid vacation per calendar year. Such vacation may not be taken in any greater
than consecutive two (2) week increments. Vacation not used by the Executive
during the calendar year will be carried forward up to a maximum of eight (8)
weeks accrual going forward.
13. Benefits Payable on Disability. If the Executive becomes disabled from
properly performing services hereunder by reason of illness or other physical or
mental incapacity, the Company shall continue to pay the Executive his then
current salary hereunder for the first twelve (12) months of such continuous
disability commencing with the first date of such disability.
If the Executive qualifies for coverage, during the term of this
Agreement, the Company shall purchase and maintain a policy of Disability
Insurance which, after twelve (12) continuous months of disability, will pay up
to $12,000 per month of the Executive's salary until Executive reaches the age
of 65. After the first twelve (12) months of disability, the Company has no
obligation to supplement or augment disability payments made under any such
disability policy or plan or make any other payment in connection with such
disability.
If the Company is unable to obtain a policy of Disability Insurance, the
Company shall pay up to $10,000 per month to the Executive for a twelve (12)
month period from the twelfth to the twenty-fourth month from the first date of
such disability.
14. Obligations of Executive During and After Employment.
(a) The Executive agrees that during the terms of his employment under
this Agreement, he will engage in no other business activities directly or
indirectly, which are competitive with or which might place him in a competing
position to that of the Company, or any affiliated company.
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(b) The Executive realizes that during the course of his employment,
Executive will have produced and/or have access to confidential business
plans, information, business opportunity records, notebooks, data, formula,
specifications, trade secrets, customer lists, account lists and secret
inventions and processes of the Company and its affiliated companies.
Therefore, during or subsequent to his employment by the Company, or by an
affiliated company, the Executive agrees to hold in confidence and not to
directly or indirectly disclose or use or copy or make lists of any such
information, except to the extent authorized by the Company in writing. All
records, files, business plans, documents, equipment and the like, or copies
thereof, relating to Company's business, or the business of an affiliated
company, which Executive shall prepare, or use, or come into contact with,
shall remain the sole property of the Company, or of an affiliated company,
and shall not be removed from the Company's or the affiliated company's premises
without its written consent, and shall be promptly returned to the Company
upon termination of employment with the Company and its affiliated companies.
The restrictions and obligations of Executive set forth in this Section 14(b)
shall not apply to (i) information that is or becomes generally available and
known to the equipment leasing industry (other than as a result of a disclosure
directly or indirectly by Executive); or (ii) information that was known to
Executive prior to Executive's employment by the Company or its predecessor,
Granite Financial, LLC.
(c) Because of his employment by the Company, Executive will have access
to trade secrets and confidential information about the Company, its business
plans, its business accounts, its business opportunities, its expansion plans
into other geographical areas and its methods of doing business. Executive
agrees that for a period of one (1) year(s) after termination of his employment
(except if such termination is as a result of termination by Executive with
cause under Section 17 or by the Company without cause), he will not, directly
or indirectly, compete with the Company in the business of providing equipment
lease financing
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to businesses and related services within seventy-five (75) miles of the
offices of lease originators doing business with the Company at the date
of termination hereof or offices operated by the Company or its affiliated
companies on the date of termination.
(d) In the event a court of competent jurisdiction finds any provision
of this Section 14 to be so overbroad as to be unenforceable, then such
provision shall be reduced in scope by the court, but only to the extent
deemed necessary by the court to render the provision reasonable and
enforceable, it being the Executive's intention to provide the Company with
the broadest protection possible against harmful competition.
15. Annual Review. Within 60 days following the effective date of this
Agreement, and prior to June 30, 1998, and each June 30 thereafter, the
Executive and the Compensation Committee of the Board of Directors (the
"Committee") shall agree upon financial objectives and goals for the Company for
the upcoming fiscal year of the Company (the "Annual Goals"). Beginning during
July 1998, and during each July thereafter during the term of Executive's
employment, the Committee shall review Executive's performance, including
performance of the Company against the Annual Goals. At such time, the
Committee shall consider and make a determination regarding an increase to
Executive's base pay, an award of a bonus to Executive in the form of cash,
stock options or other consideration and a one year extension of the term of
this Agreement. In making such determination, the Committee shall base its
decision upon Executive's review, the performance of the Company against the
Annual Goals and executive compensation packages being given to chief
executives of other public company's of comparable size.
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16. Termination for Cause by the Company. During the term of this
Agreement there can be no termination of the Executive by the Company except
for "Termination for Cause" as outlined below:
(1) Notwithstanding anything herein to the contrary the Company
may, without liability, terminate the Executive's employment hereunder
for cause at any time upon written notice from the Board of Directors
specifying such cause, and thereafter the Company's obligations
hereunder shall cease and terminate; provided, however, that the
Company shall pay the Executive two (2) weeks pay and that such
written notice shall not be delivered until after the Board of
Directors shall have given the Executive written notice specifying the
conduct alleged to have constituted such cause and the Executive has
failed to cure such conduct, if curable, within thirty (30) days
following receipt of such notice.
Grounds for termination "for cause" include but are not limited to one or
more of the following:
i) A willful breach of duty by the Executive during the course of
his employment;
ii) Habitual neglect of duty by the Executive;
iii) Action or inaction by the Executive which places the Company
in circumstances of financial peril; and
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iv) Disloyal, dishonest or illegal conduct of the Executive.
17. Termination by the Executive without Cause. The Executive, without
cause, may terminate this Agreement upon 90 days', written notice to the
Company. In such event, the Executive shall be required to render the services
required under this Agreement during such 90-day period unless otherwise
directed by the Board of Directors. Compensation for vacation time not taken by
Executive shall be paid to the Executive at the date of termination.
18. Termination by the Executive with Cause. The Executive may terminate
his employment with the Company at any time, upon 30-day written notice and
opportunity for the Company to remedy any non-compliance, by reason of (i) the
Company's material failure to perform its duties pursuant to this Agreement,
(ii) any material diminishment in the duties and responsibilities, working
facilities, or compensation as described in Paragraphs 2, 5 and 6 of this
Agreement, or (iii) Executive's location of employment is moved more than 40
miles from where it is on the date of this Agreement; provided that such
termination takes place within 90 days after receipt by Executive of written
notice of such relocation. Executive shall be entitled to all base salary and
other benefits and consideration specified herein for the remaining term of
this Agreement.
19. Termination upon Death of Executive. In addition to any other
provision relating to termination, this Agreement shall terminate upon the
Executive's death. No severance allowance shall be paid to the Executive's
estate.
20. Lump Sum Compensation. In the event of (A) the occurrence of a
"Triggering Event" which shall be defined to include a non-negotiated (i)
change in ownership of 50% or more of the outstanding shares of the Company, or
(ii) merger, consolidation, reorganization or liquidation of the Company, and
(B) following the occurrence of the Triggering Event, the Executive's
employment is
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terminated (i) by the Company without cause or (ii) by Executive with cause
under Section 17, the Executive shall, in addition to all other rights and
benefits hereunder, receive lump sum compensation equal to 2.9 times his annual
salary and incentive or bonus payments, if any, as shall have been paid to the
Executive during the Company's most recent 12-month period within 30 days of
termination of Executive's employment. If the total amount of the change of
control compensation were to exceed three (3) times the Executive's base amount
(the average annual taxable compensation of the Executive for the five (5)
years preceding the year in which the change of control occurs), the Company
and the Executive may agree to reduce the lump sum compensation to be received
by Executive in order to avoid the imposition of the golden parachute tax as
provided in the Tax Reform Act of 1984, as amended by the Tax Reform Act of
1986.
In the event the Executive is required to hire counsel to negotiate on his
behalf in connection with his termination or resignation from the Company upon
the occurrence of a Triggering Event, or in order to enforce the rights and
obligations of the Company as provided in this Paragraph, the Company shall
reimburse to the Executive all reasonable attorneys' fees which may be expended
by the Executive in seeking to enforce the terms hereof. Such reimbursement
shall be paid every 30 days after the Executive provides copies of invoices
from the Executive's counsel to the Company. However, such invoices may be
redacted to preserve the attorney-client privilege, client confidentiality or
work product.
21. Arbitration. Any controversy, dispute or claim arising out of, or
relating to, this Agreement and/or its interpretation shall, unless resolved by
agreement of the parties, be settled by binding arbitration in Denver, Colorado
in accordance with the Rules of the American Arbitration Association then
existing. This Agreement to arbitrate shall be specifically enforceable under
the prevailing arbitration law of the State of Colorado. The award rendered by
the arbitrators shall be final and judgment may be entered upon the award in any
court of the State of Colorado having jurisdiction of the matter.
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22. General Provisions.
(a) The Executive's rights and obligations under this Agreement shall
not be transferrable by assignment or otherwise, nor shall Executive's
rights be subject to encumbrance or to the claims of the Company's
creditors. Nothing in this Agreement shall prevent the consolidation of
the Company with, or its merger into, any other corporation, or the sale
by the Company of all or substantially all of its property or assets.
(b) This Agreement constitutes the entire agreement between the parties
hereto in respect of the employment of the Executive by the Company and
supersede any and all other agreements either oral or in writing between
the parties hereto with respect to the employment of the Executive.
(c) Executive shall have no duty to mitigate the payment due him from
Company pursuant to this Agreement and any money earned by Executive from
other sources after his employment with the Company terminates shall not
reduce the amount owed him by the Company pursuant to this Agreement.
(d) The provisions of this Agreement shall be regarded as divisible,
and if any of said provisions or any part thereof are declared invalid or
unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder of such provisions or parts thereof and
the applicability thereof shall not be affected thereby.
(e) This Agreement may not be amended or modified except by a written
instrument executed by Company and Executive.
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(f) This Agreement and the rights and obligations hereunder shall be
governed by and construed in accordance with the laws of the State of
Colorado.
23. Construction. Throughout this Agreement the singular shall include the
plural, and the plural shall include the singular, and the masculine and neuter
shall include the feminine, wherever the context so requires.
24. Text to Control. The headings of paragraphs and sections are included
solely for convenience of reference. If any conflict between any heading and
the text of this Agreement exists, the text shall control.
25. Authority. The officer executing this agreement on behalf of the
Company has been empowered and directed to do so by the Board of Directors of
the Company.
26. Effective Date. This Agreement shall be effective as of April 1, 1997.
FOR THE COMPANY: GRANITE FINANCIAL, INC.
DATED ,1997 By:
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Title:
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FOR THE EXECUTIVE:
DATED ,1997 By:
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Xxxxxxx X. Xxxxxx
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