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[CROWN NORTHCORP LOGO]
October 1, 1996
Xx. Xxx X.
Xxxxxxx
0000 Xxxxxx
Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Dear Xxx:
We are pleased that we have been able to reach a definitive
understanding regarding your employment with Crown NorthCorp,
Inc. ("Crown" or the "Company"). This letter will constitute
our agreement ("Agreement") and the terms of your employment
with Crown shall be as follows:
1. Positions/Duties.
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During the term of this Agreement, you shall serve as
Executive Vice President of Crown. You will also serve as the
President of the Eastern Realty divison of the Company. You
will serve on various Crown committees including the Credit
Committee and the New Business Committee, of which you will be
the chairman of the New Business Committee.
2. Term
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This Agreement shall be for the term commencing with Crown's
acquisition of Eastern Realty (anticipated to take place on or
about October 1, 1996) and ending December 31, 1998. The
period beginning with the date of closing and ending December,
1996 shall be referred to as the "Stub Year". This initial
term ending December 31, 1998 may be extended, unless
terminated earlier pursuant to this Agreement, by the mutual
consent of the parties.
3. Compensation.
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The Company will compensate you for your services rendered as follows:
(A) Base Compensation. You shall receive a base
salary at the annual rate of One Hundred Twenty-Five
Thousand Dollars ($125,000) (the "Base Salary")
during the Initial Term of this Agreement, with such
Base Salary payable in installments consistent with
the Company's normal payroll schedule. The Base
Salary shall be reviewed annually, and may be
adjusted to reflect merit or cost of living increases
as deemed appropriate.
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(B) Bonus Compensation
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(2) STUB YEAR BONUS. The Stub Year will be defined as October 1, 1996
through December 31, 1996. You shall be eligible to be paid a bonus
of $31,250 for your ability to achieve certain goals during the Stub
Year. These goals will be attached as an Exhibit to this letter and
will be jointly determined between you and I. We will meet to
determine these goals prior to October 3 1, 1996.
(3) ANNUAL INCENTIVE BONUS. During your tenure at Crown/NorthCorp you
will be entitled to receive an annual incentive bonus of up to 100%
of your base salary, presently $125,000. Your annual incentive bonus
will begin after the Stub Year and will run from January 1 through
December 31. The specifics of the bonus structure will be reset each
year in an annual planning meeting with the Chairman, and will be
attached as an Exhibit to this contract. This meeting will take place
no later than February 15th of each year. That bonus opportunity
shall have four components as follows:
1. PERSONAL GOALS. A minimum of three and a maximum of five personal
goals will be set each year by you and the Chairman. This category
will represent 25% of your annual Incentive Bonus.
2. EASTERN PERFORMANCE. For the next two years, a portion of your
annual Incentive Bonus will be based upon actual financial results of
Eastern Realty, compared to Eastern budgeted financial results. The
budgeted results for Eastern will be those represented in the "Final
Merger Pricing Model." It is understood that the pricing model
expenses were based upon a liquidation of Eastern, therefore, it will
be necessary to allocate the actual expenses between Eastern
activities and Crown activities. You and I will meet every six
months, beginning January 1, 1997, to compute expense allocations
attributable to Eastern Realty activities. These allocations will be
performed on a "look back" basis. After two years, a portion of your
incentive compensation will be reallocated to another performance
category mutually agreeable to you and the Chairman. This category
will represent between 25% and 50% of your annual bonus compensation.
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1 Strikeout initialed by both parties on original document.
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3. CROWN NORTHCORP PERFORMANCE. A portion of your annual
incentive bonus will be based on the financial results of
Crown NorthCorp as compared to Crown's budgeted financial
results. This portion of your annual incentive bonus is based
on the assumption that in your position as Executive Vice
President of Crown, you will have direct impact and influence
on corporate operations, including both existing and new
business platforms. If your duties become such where you do
not have direct influence and impact on corporate operations,
this bonus portion will be revised to reflect more
appropriate criteria (at the same compensation amounts) to
reflect your role and responsibilities. This category will
represent between 25% and 50% of your annual bonus
compensation .
4. NEW BUSINESS BONUS.
1 you shall also be entitled to a bonus based on new business
origination. These bonuses will include, but are not
limited to, the following:
(A) New Management Contracts.
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(B) New Contract/Portfolio Acquisitions.
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(C) New Single Asset Acquisitions.
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4. Benefits.
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Throughout the term of this Agreement, you shall be entitled to participate in
and receive benefits under any program, plan, policy or arrangement made
available by the Company presently or in the future to senior management at
the same level and to the same degree as such benefits are made available to
them. For purposes of this Section 4, the term "benefits" shall mean all
benefits provided by the Company, including, without limitation, all medical
and hospitalization insurance, life insurance, disability insurance, deferred
compensation and/or retirement plans, profit sharing plans, automobile
allowance, parking privileges, club memberships, travel and entertainment
privileges, vacation and sick leave. Such benefits shall include, at a
minimum, any and all benefits outlined in the Company Employee Handbook.
Notwithstanding the above, as part of your compensation, the Company has
agreed to provide you with the following benefits:
(A) Company paid medical and hospitalization insurance for you and
your dependents, at no charge to you; and
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1 Strikeout initialed by both parties on original document.
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(B) The Company has agreed to lease you a car at a monthly
cost not to exceed $500.00 per month.
5. STOCK WARRANTS. Within 30 days of your starting employment
date, you shall receive a grant of stock warrants for 125,000
shares of Crown at $1.00 per share, vesting in equal amounts over
three years. In the event Crown should be acquired by or merged
into a non- publicly traded third party at any time subsequent to a
date two years from the date hereof, the options described in this
Paragraph 5, to the extent unvested, shall be deemed to be fully
vested prior to such acquisition or merger. In the event Crown
should be acquired by or merged into a publicly-traded third party
prior to a date two years from the date hereof, any warrants not
yet vested under this Paragraph 5 shall be terminated provided you
are issued comparable warrants having an equivalent value and terms
with the acquiring entity. Such new warrants shall be issued
pursuant to any acquisition or merger agreement.
6. PERFORMANCE BASED STOCK OPTIONS. The company is presently
developing a senior management stock option plan. The purpose is to
provide senior executives in the company with incentives through stock
ownership. You will play an active role in establishing this program
and once established, you will be immediately eligible. Your
participation level in the stock option plan will be based on various
factors, including salary, title, responsibility and tenure.
7. CHANGE IN CONTROL. In the event at any time during the term of this
letter agreement there is a change I control of Crown by merger,
acquisition or otherwise such that Xxxxxx Xxxxx is no longer Chief
Executive Officer and you are not retained in a position of equal or
greater title, authority, responsibility, compensation and benefits of
comparable or greater value, you may, at your option, within six
months of such change in control, terminate your employment and in
such event you shall be paid your base compensation as described in
Paragraph 3 (A) for the balance of the Term of this Agreement.
8. TENURE. As part of the merger, the Company will recognize your
tenure at Eastern Realty as equal tenure in Crown.
9.TERMINATION FOR CAUSE.
(A) Notwithstanding anything to the contrary contained in
this Agreement, the Company may terminate your employment for
"Cause". For purposes of this Agreement, "Cause" shall mean
only (i) your willful and continuing refusal to perform a
material duty hereunder; (ii) your final, non appealable
conviction for or plea of guilty to engaging in fraud or
embezzlement against the Company; or (iii) your final, non
appealable conviction for or plea of guilty to the commission
of a felony.
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(B) PROCEDURE FOR TERMINATION.
(1) The Company shall provide you with written notice of any
intention to terminate your employment for Cause described
in Section 8(A)(i) and you shall have a period of thirty
(30) days in which to cure such violation.
(2) The Company may terminate your employment hereunder
immediately, and without notice or opportunity to cure, upon
the occurrence of any event described in Section 8(A)(ii) and
8(A)(iii).
(C) COMPENSATION UPON TERMINATION FOR CAUSE. In the event of any
termination of your employment pursuant to this Section 8,
the Company shall have no further obligations or liabilities
hereunder after that date of such discharge, other than for
payment of any unpaid Base Salary and Bonuses earned by you
prior to the date of such discharge and the reimbursement of
reasonable expenses incurred by you prior to the date of
such discharge.
10. DEATH. In the event of your death during the term of your employment, the
Company shall pay to your estate (i) any unpaid Base Salary and Bonuses earned
by you prior to the date of death and (ii) all unreimbused expenses reasonably
incurred by you prior to the date of death. Any unvested stock options described
in Sections 5 and 6 shall vest immediately. Any unvested stock options described
in Sections 5 and 6 shall vest immediately and be exercisable for five years
following your death.
11. VOLUNTARY TERMINATION. You shall have the right to terminate your employment
at any time upon sixty (60) days written notice to the Company. Upon your
resignation or other voluntary termination, the Company shall have no further
obligations or liabilities hereunder after the date of such termination, other
than for payment of any unpaid Base Salary and Bonuses earned by you prior to
the date of such termination.
12. TERMINATION WITHOUT CAUSE. Upon any termination of you by the Company
without Cause, the Company shall (i) pay to you any unpaid Base Salary earned by
you prior to the date of such termination, (ii) reimburse you for all reasonable
expenses incurred by you prior to the date of such termination and (iii) for the
longer of a period of twelve (12) months following the conclusion of the
Agreement or the remainder of the Term, as applicable, continue to pay to you
(A) the Base Salary and all Bonuses to which you would have been entitled in
accordance with the provisions of Section 3 and (B) continue to provide to you
all medical, hospitalization, disability and life insurance benefits to which
you were entitled immediately prior to such termination.
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13. MISCELLANEOUS
A. GOVERNING LAW. In the event of a dispute between you and the
Company, such dispute shall be governed by and construed in
accordance with the laws of the State of Delaware.
B. ATTORNEYS' FEES. In the event any suit or other legal proceeding
is brought for the enforcement of any of the provisions of this
Agreement, the parties hereto agree that the prevailing party shall
be entitled to recover from the other party upon final judgment on
the merits reasonable attorneys' fees, including attorneys' fees for
any appeal, and costs incurred in bringing such suit or proceeding.
C. NON-CIRCUMVENTION. For the term of this Agreement and for a period
of six (6) months from the termination date of this Agreement, or
until such earlier date as the Company may advise you in writing: (i)
you shall not appropriate for yourself, any business opportunity
which has been offered to the Company, or one for which the Company's
funds, facilities, or personnel have been used in developing such
business opportunity; (ii) where you, on behalf of the Company, enter
into or initiate any discussions, communications or negotiations in
connection with either existing or potential business opportunities
and/or clients, you shall preserve and protect the Company's
interests in such relationships; (iii) you shall promptly relay to
the Company all information obtained from such discussions,
communications or negotiations; and (iv) shall take no actions which
would have the purpose or effect of denying the Company of any and
all opportunities to participate in business, the nature of which the
Company, in its normal course, generally competes.
D. ENTIRE AGREEMENT. This letter Agreement constitutes our entire
agreement with respect to the subject matter hereof, and to the
extent of any conflict between the terms of this Agreement and any
other agreement, this Agreement then shall control.
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We are pleased to welcome you to the Crown NorthCorp organization.
Very truly yours,
CROWN NORTHCORP, INC.
By: /s/
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Xxxxxx X. Xxxxx
Chairman and CEO
Acknowledged and agreed this 1 day of October, 1996.
By: /s/
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Xxx X. Xxxxxxx
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