EMPLOYMENT AGREEMENT
AGREEMENT made as of this 31st day of October, 1996, by and between
FIRST CENTRAL FINANCIAL CORPORATION, a New York corporation, with offices at 000
Xxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 (the "Corporation") and Xxxxxx X.
Xxxxxxxxxxx, residing at 000 Xxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000 (the
"Executive").
W I T N E S S E T H :
WHEREAS, the Corporation and Executive desire to enter into an
agreement, which will set forth all of the terms of employment of Executive.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties hereto agree as follows:
1. The Corporation hereby employs Executive as its President and Chief
Operating Officer to perform such duties incidental thereto and such other
duties as the Chairman of the Board or the Board of Directors of the Corporation
may from time to time reasonably assign consistent with such offices. In such
capacity, Executive shall report to and be subject to the direction and control
of the Chairman of the Board and the Board of Directors of the Corporation.
2. Executive hereby accepts such employment and agrees that throughout
the period of his employment hereunder, he will devote his full time, attention,
knowledge and skills, faithfully, diligently and to the best of his ability, in
furtherance of the business of the Corporation. During the period of Executive's
employment hereunder, Executive shall not be
entitled to additional compensation for serving as a director, officer or
employee of the Corporation or any of its subsidiaries or affiliates. The
principal place of performance by Executive of his duties hereunder shall be the
Corporation's corporate headquarters located in the New York City metropolitan
area.
3. This Agreement shall become effective as of October 31, 1996 (the
"Effective Date"). The initial term of Executive's employment hereunder shall be
for a period commencing October 31, 1996 and ending on December 31, 1999 (the
"Initial Term"), unless his employment is terminated prior to the expiration of
said period pursuant to the provisions hereof. Executive's employment hereunder
shall be automatically renewed for successive twelve month periods thereafter
(each a "Renewal Term"), unless (i) either party shall advise the other, by
written notice delivered not less than three months prior to the then current
expiration date, of his or its desire not to extend the term of Executive's
employment hereunder beyond such date or (ii) Executive's employment hereunder
is terminated prior to the expiration of any Renewal Term pursuant to the
provisions hereof.
4. The Corporation may terminate Executive's employment upon written
notice for any reason effective upon the date of such notice if for cause and
otherwise effective as set forth in subparagraph (b) below.
(a) If Executive's employment is terminated for "cause,"
Executive will receive only the salary actually earned and payable to Executive
through the date of the termination of Executive's employment, together with any
accrued employee benefits through the date of termination, and Executive will
not otherwise be entitled to any further compensation of any kind. For purposes
of this Agreement, "cause" shall mean: an action by Executive constituting
actual (as distinguished from statutory) fraud against the Corporation;
misappropriation of funds or property of the Corporation for Executive's own
use; embezzlement of the Corporation's property; or a material and intentional
breach by Executive of the provisions to be performed by him pursuant to this
Agreement.
(b) If Executive's employment is terminated (i) other than for
"cause" (which shall be effective on not less than 60 days notice) or, (ii) by
the Corporation advising the Executive pursuant to Paragraph 3 above that it
does not desire to extend the term of Executive's employment hereunder beyond
the then current expiration date of the Initial Term or any Renewal Term, as the
case may be, under circumstances where the Executive has advised the
Corporation, not less than three months prior to the then current expiration
date of the Initial Term or such Renewal Term, that Executive desires to extend
the term of Executive's employment hereunder into the first or following Renewal
Term, Executive will receive, as damages, and as Executive's sole right and
remedy on account of such termination, the total compensation and benefits, as
set forth in subparagraphs (a), (b), (c) and (d) of Paragraph 5 below
(hereinafter referred to as "Total Compensation and Benefits") to which
Executive would otherwise have been entitled under this Agreement for a period
equal to one year from the date of such termination. Notwithstanding the above,
in the event that Executive's employment with the Corporation is terminated by
Executive within six months after a "change of control" (as hereinafter
defined), Executive shall receive the Total Compensation and Benefits (i) for a
period equal to one year from the date of such termination or (ii) in the event
such Termination occurs during the Initial Term, for one year from the date of
such termination or the remaining portion of the Initial Term, whichever is
longer. The Total Compensation and Benefits shall be payable
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when and as the same would otherwise have been payable in accordance with the
Corporation's normal procedures. Executive shall not be required to mitigate
Executive's damages by seeking other employment and any compensation earned by
Executive on account of other employment during the period referred to above
(without regard to when such compensation is paid), shall not be applied in
reduction of the Corporation's obligations to Executive. For purposes of this
Paragraph 4, a resignation by Executive for any of the following reasons shall
be deemed a termination of Executive's employment by the Company without cause:
(i) Executive shall be assigned duties, performance requirements or working
conditions significantly different from or at significant variance with those
provided in Paragraph 1 hereof, (ii) Executive's authority shall be reduced or
Executive shall be placed in a position of lesser stature than provided in
Paragraph 1 hereof or (iii) Executive's Total Compensation and Benefits shall be
decreased. A "change of control" shall mean any transaction or series of
transactions (as a result of a tender offer, merger, consolidation or otherwise)
that results in, or that is in connection with any person, entity or group
acting in concert acquiring "beneficial ownership" (as defined in Rule 13d-3
under the Securities Exchange Act of 1934), directly or indirectly, of greater
than twenty percent of the aggregate voting power of all classes of common
equity of the Corporation.
5. (a) As compensation for his services, the Corporation will pay to
Executive the following gross salary amounts during the term of Executive's
employment hereunder.
(i) A base salary payable in equal installments no less
frequently than semi-monthly at the rate of $175,000 per annum during the period
from the Effective Date through August 31, 1997, $225,000 per annum during the
period from September 1, 1997 through August 31, 1998, $275,000 per annum during
the period from September 1, 1998
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through August 31, 1999, and during the period from September 1, 1999 through
December 31, 1999 either (x) $275,000 per annum in the event this Agreement is
not extended for the first Renewal Term or (y) the rate per annum to be paid
during the first Renewal Term as determined in accordance with the following
sentence. Executive's base salary for any Renewal Term shall be determined by
the Board of Directors (or the Compensation Committee thereof) at least four
months in advance of the expiration of the Initial Term or any Renewal Term, as
appropriate.
(ii) Any amounts payable to Executive under existing incentive
or bonus plans or those adopted by the Corporation for the benefit of senior
executive employees.
(b) Executive shall also be entitled to participate, to the extent
he is eligible under the terms and conditions thereof, (i) in any
hospitalization, life insurance and medical service plan generally available to
senior executive employees of the Corporation which is in effect at the time and
during the term of his employment hereunder, and (ii) in any pension,
profit-sharing, retirement or other plan, and all other employee benefits and
perquisites, including, without limitation, not less than four weeks vacation.
In the event that Executive is ineligible to participate due to government
regulations in any pension, profit-sharing, retirement or other plan, the
Corporation shall provide to Executive an amount equal to the benefit such plan
would have provided had Executive been so eligible. The Corporation shall be
under no obligation to institute or continue the existence of any such employee
plan, benefit or perquisite.
(c) Upon the commencement of employment of Executive and every two
years thereafter, the Corporation agrees to provide Executive with use of a
luxury vehicle of Executive's choice from the following list:
(i) Cadillac Seville STS; or
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(ii) Lincoln Signature Series.
At his discretion, Executive shall be entitled to substitute a luxury
vehicle of comparable value. The Corporation further agrees to reimburse
Executive for all necessary vehicle expenses.
(d) Notwithstanding anything to the contrary herein contained,
nothing shall prevent the Board of Directors or the Compensation Committee
thereof from increasing the base salary or other compensation of Executive
during the period of employment hereunder but in no event shall such
compensation be decreased without the written consent of Executive.
6. The Corporation shall reimburse Executive for all reasonable
expenses incurred by him in connection with the performance of his duties
hereunder or which may inure to the benefit of the Corporation.
7. Subject to ratification by the Corporation's shareholders, in
consideration of the acceptance by Executive of the terms and conditions of this
Agreement, the Corporation shall grant to Executive an option to purchase from
the Corporation shares of the Corporation's common stock, par value $.10 per
share. The aggregate number of shares subject to such option, the exercise price
and the other terms and conditions of such option are specified in the form of
Stock Option Agreement attached as Exhibit A hereto. The Corporation shall
submit the grant of options to Executive for ratification at the next regularly
scheduled annual meeting of the Corporation's shareholders.
8. During the period of his employment hereunder, Executive will not
directly or indirectly own, manage, operate, join, control, participate in,
invest in, or otherwise be connected with, in any manner, whether as an officer,
director, employee, partner, investor or
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otherwise, any business entity which is engaged in any business in which the
Corporation or any of its subsidiaries is engaged. Nothing herein contained
shall be deemed to prohibit Executive from investing in securities of a company
if the securities of such company are listed for trading on a national stock
exchange or traded in the over-the-counter market and Executive's holdings
therein represent less than three percent of the total number of shares or
principal amount of other securities of such company outstanding.
9. (a) Executive represents and warrants to the Corporation that
neither: the execution and delivery of this Agreement by Executive nor the
performance by Executive of any of Executive's obligations hereunder constitute
or will constitute a violation or breach of, or a default under, any agreement,
arrangement or understanding, or any other restriction of any kind, to which
Executive is a party or by which Executive is bound; provided however that
Executive is a party to an agreement dated May 9, 1996 with his prior employer,
Empire Insurance Group (the "Separation Agreement") which contains the following
restriction (the "Restriction") (the term "you" refers to the Executive and the
term "Empire" refers to Empire Insurance Group):
"2. Through December 31, 1997, you agree
not to (a) call upon or solicit any customer of
Empire or any of Empire's affiliates with a view to
engaging in the property and casualty business, ..."
Executive and the Corporation agree that until January 1, 1998 Executive's
duties hereunder do not include, and Executive agrees that he will refrain from,
the calling upon or solicitation of, or discussions with any other employee of
the Corporation which discussions contemplate the
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calling upon or solicitation of, any agency, broker, producer or policyholder
which does business with or is a customer of Empire or any of Empire's
affiliates. While the Executive's duties are subject to the foregoing
limitations, the Executive duties as Chief Operating Officer do include general
supervision of all of the operations of the Corporation and its insurance
subsidiaries including the Corporation's marketing and selling efforts. The
Corporation will indemnify and defend and hold Executive harmless against any
loss, damage, claim or action suffered by Executive which loss, damage, claim or
action is based upon a claim by Empire that the exercise of Executive's duties
in accordance with the foregoing violates the Restriction contained in the
Separation Agreement.
(b) Paragraph 2 of the Separation Agreement also contains a hiring
restriction in subparagraph (b) of Paragraph 2 of the Separation Agreement (the
"Hiring Restriction") and an agreement not to disclose the terms of the
Separation Agreement in the third paragraph of Paragraph 2 of the Separation
Agreement (the "Non-Disclosure Restriction").
With respect to each of the Hiring Restriction and the
Non-Disclosure Restriction, provided that the Executive has fully observed and
complied with such restriction, the Corporation will indemnify and hold
Executive harmless against any loss, damage, claim or action suffered by
Executive which loss, damage, claim or action is based upon a claim by Empire
that Executive has breached such restriction.
10. Executive shall hold in a fiduciary capacity for the benefit of the
Corporation all information, knowledge and data relating to or concerned with
its operations, sales, business and affairs ("Information"), and, except as may
be required by law, he shall not, at any time hereafter, use, disclose or
divulge any Information to any person, firm or corporation other than
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to the Corporation or its designees or except as may otherwise be required in
connection with the business and affairs of the Corporation. The term
"Information" shall not include information that becomes generally available to
the public other than as a result of a disclosure by Executive.
11. (a) In the event that, at any time during the period of his
employment hereunder, Executive shall become "Disabled" (as that term is
hereinafter defined), he shall continue to receive the full amount of the Total
Compensation and Benefits to which he was otherwise entitled under Paragraph 5
hereof until the expiration of twenty-four months after the date he shall be
deemed to have become Disabled. Upon the expiration of twenty-four months from
the date Executive is deemed to have become Disabled (i) Executive shall not be
entitled to receive any further Total Compensation and Benefits until he shall
cease to be Disabled and shall have resumed his duties hereunder and (ii) either
the Corporation or the Executive shall have the right to terminate Executive's
employment hereunder by three months written notice given at any time prior to
the time Executive shall have resumed his duties hereunder. In the event that
Executive shall cease to be Disabled and, prior to any such termination he shall
resume his duties hereunder, he shall be entitled to receive, from and after the
date on which he shall have resumed his duties, the full amount of Total
Compensation and Benefits to which he is otherwise entitled hereunder as if he
had never been Disabled.
(b) For the purposes of this Agreement, Executive shall be deemed
to have become Disabled when by reason of physical or mental incapacity,
Executive shall not be able to perform his duties hereunder for a period of six
consecutive months or for an aggregate of nine months in any consecutive period
of twelve months. In the event that Executive shall
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dispute any determination of his Disability hereunder, the matter shall be
resolved by the determination of three physicians qualified to practice medicine
in the State of New York, one to be selected by each of the Corporation and
Executive and the third to be selected by the designated physicians. During the
period in which the determination of Executive's Disability shall be under
review, Executive shall continue to be treated for all purposes of this
Agreement as an employee of the Corporation, enjoying the full status with full
compensation to which he would otherwise be entitled under this Agreement.
The Corporation may, but shall not be obligated to, apply for and pay
the premiums upon disability insurance covering Executive under policies
providing for the payment thereunder directly to Executive. If Executive shall
receive benefits under any of such policies, the Corporation shall be entitled
to deduct the amount equal to the benefits so received from the salary which it
otherwise would have been required to pay to Executive hereunder.
12. Executive's employment hereunder shall terminate upon his death,
and the Corporation shall pay the Total Compensation and Benefits to such person
or persons as Executive shall, at his option, from time to time designate by
written instrument delivered to the Corporation, each subsequent designation to
be deemed to revoke all prior designations (the "Beneficiary"), or if no such
designation is made, to Executive's estate. The Total Compensation and Benefits
shall be paid until the expiration of twenty-four months from the date of
Executive's death (the "Benefit Term") except that in the event that Executive
dies while Disabled, the Benefit Term shall be reduced by a period of time equal
to the period during which he shall have received payments pursuant to
subparagraph (a) of Paragraph 11 hereof. The health insurance portion of Total
Compensation and Benefits shall be equal to the cost of
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health insurance for members of Executive's family covered by the Corporation's
health insurance plans at the time of Executive's death. The Total Compensation
and Benefits shall be payable in equal installments no less frequently than
semi-monthly commencing with the Corporation's first payroll period after
Executive's death occurs, except that the cost of health insurance may, at the
Corporation's option, be paid directly by the Corporation to the Corporation's
health insurance carrier. After Executive's death, the Corporation shall pay to
the Beneficiary or Executive's estate, as appropriate, any amounts due Executive
under the Corporation's incentive, bonus, pension, profit sharing, retirement or
other employee benefit plans in accordance with the terms of such plans. For
purposes of this paragraph 12, Total Compensation and Benefits shall not include
vehicles or vehicle expenses.
13. The Corporation may, but shall not be obligated to, insure the
Executive's life for the benefit of the Corporation. The Executive will
cooperate with the Corporation in connection therewith, by submitting to medical
and other examinations and otherwise assisting the Corporation in obtaining such
insurance.
14. In the event of a breach by the Executive of any obligations under
this Agreement, the parties hereto acknowledge that the Corporation will not
have an adequate remedy at law, and shall be entitled to such equitable and
injunctive relief as may be available to restrain violations of the provisions
of this Agreement. Nothing herein shall be construed as prohibiting the parties
hereto from pursuing any other remedies available at law or in equity for such
breach, including the recovery of damages for such breach.
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15. This Agreement constitutes the entire agreement of the parties
hereto and no amendment or modification hereof shall be valid or binding unless
made in writing and signed by the party against whom enforcement thereof is
sought.
16. Any notice required, permitted or desired to be given pursuant to
any of the provisions of this Agreement shall be deemed to have been
sufficiently given or served for all purposes if delivered in person or sent by
certified mail, return receipt requested, postage and fees prepaid as follows:
If to the Corporation at:
First Central Financial Corporation
000 Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Secretary
If to Executive at:
Xx. Xxxxxx X. Xxxxxxxxxxx
000 Xxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Either of the parties hereto may at any time and from time to time change the
address to which notice shall be sent hereunder by notice to the other party
given under this Paragraph 16. The date of the giving of any notice sent by mail
shall be the date of the posting of the mail.
17. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors, heirs and assigns. The
Corporation agrees that in the event of a sale of assets it shall take whatever
action it legally can in order to cause such assignee to expressly assume the
liabilities, obligations and duties of the Corporation hereunder.
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18. No course of dealing nor any delay on the part of the
Corporation or Executive in exercising any rights hereunder shall operate as a
waiver of any such rights. No waiver of any default or breach of this Agreement
shall be deemed a continuing waiver or a waiver of any other breach or default.
19. This Agreement shall be governed, interpreted and construed
in accordance with the laws of the State of New York applicable to agreements
entered into and to be performed entirely therein.
20. If any clause, paragraph, section or part of this Agreement
shall be held or declared to be void, invalid or illegal, for any reason, by any
court of competent jurisdiction, such provision shall be ineffective but shall
not in any way invalidate or affect any other clause, paragraph, section or part
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
FIRST CENTRAL FINANCIAL
CORPORATION
By: /S/ XXXXXX X. XXXXX
-------------------------------------
Xxxxxx X. Xxxxx
Chairman and Chief Executive Officer
/S/ XXXXXX X. XXXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxxx
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