EXHIBIT 10K
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), made as of the 23rd day of March, 1999
by and between MFN Financial Corporation, a Delaware corporation ("Company"),
and Xxxxxx X. Xxxxxxxxxx ("Executive").
WITNESSETH THAT:
WHEREAS, the Company desires to employ the Executive, and the
Executive desires to be employed by the Company, in accordance with the terms
and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, the Company and the Executive hereby agree as follows:
1. Employment. The Company hereby agrees to employ the Executive, and
the Executive agrees to serve the Company, in the capacities described herein
during the Period of Employment (as defined in Section 2 of this Agreement), in
accordance with the terms and conditions of this Agreement.
2. Period of Employment. The term "Period of Employment" shall mean
the period which commences on the effective date of a plan of reorganization for
the Company which is confirmed by the bankruptcy court pursuant to a final order
which is no longer subject to appeal (the "Effective Date") and, unless earlier
terminated pursuant to Section 6, ends on the third anniversary of the Effective
Date.
3. Duties During the Period of Employment.
(a) Duties. During the Period of Employment, the Executive shall be employed as
the President and Chief Executive officer of the Company with overall
charge and responsibility for the business and affairs of the Company, and
shall perform such appropriate duties as the Executive shall reasonably be
directed to perform by the Company's Board of Directors (the "Board"). The
Company shall also elect the Executive as a member and Chairman of the
Company's Board. In addition, in connection with each election of
directors, the Executive may nominate two (2) other individuals to serve as
outside members of the Board, who shall be included in the slate of
nominees presented to the shareholders by the Board.
(b) Scope. During the Period of Employment, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
shall devote substantially all of his business time and attention to the
business and affairs of the Company. It shall not be a violation of this
Agreement for the Executive to (i) serve corporate, civic or charitable
boards or committees, (ii) deliver lectures, fulfill speaking engagements
or teach at educational institutions, or (iii) manage personal investments,
so long as such activities under clauses (i), (ii) and (iii) do not
interfere, in any substantial respect, with the Executive's
responsibilities hereunder.
4. Compensation and Other Payments.
(a) Salary. During the Period of Employment the Company shall pay the Executive
an annual base salary ("Base Salary") of one million dollars ($1,000,000)
per year. The Executive's Base Salary shall be paid in advance, in equal
monthly installments. The Base Salary shall be reviewed annually as of the
end of each fiscal year of the Company (the "Applicable Year") during the
Period of Employment by the Compensation Committee of the Board (the
"Committee"). Each annual review shall be completed by January 1 following
the Applicable Year. Based upon such reviews, the Committee may increase,
but shall not decrease the Base Salary. Any increase in Base Salary shall
not serve to limit or reduce any other obligation to the Executive under
this Agreement.
(b) Annual Bonuses. The Committee or the Board shall at least annually review
the Executive's performance under this Agreement. The Executive shall be
awarded annual bonuses at the discretion of the Board or the Committee;
provided, however, that for each of the second and third years of the
Period of Employment the Executive's minimum annual bonus shall be five
hundred thousand dollars ($500,000), subject to achieving such reasonable
minimum performance levels as shall be agreed upon in writing by the
Executive and the Company.
(c) Signing Bonus. As an incentive to join the Company and as compensation for
terminating his present employment and foregoing other opportunities, the
Executive shall be paid a cash signing bonus in the amount of four million
dollars ($4,000,000) ("Signing Bonus"), which shall be due and payable on
the Effective Date. The payment of the Signing Bonus is contingent on the
Executive signing this Agreement but is not contingent on the performance
of services for the Company and does not represent compensation for
services rendered.
(d) Initial Stock Options. On the Effective Date, the Company shall grant the
Executive the following options to purchase stock of the Company, which
options shall be transferable by the Executive to members of his immediate
family or to trusts or partnerships formed for the benefit of the Executive
or members of his immediate family:
(i) A ten (10)-year option, exercisable from and after the date of grant, to
purchase a number of shares equal to five percent (5%) of the Company's
stock outstanding as of the Effective Date (the "First Installment"), for
an aggregate exercise price equal to five percent (5%) of the total deemed
equity value of the Company as of the Effective Date (referred to
hereinafter as the "Reorganization Equity Value"), which for purposes of
this Agreement shall be eighty-five million dollars ($85,000,000);
provided, however, that if the post-reorganization capital structure of the
Company or any other economic feature of the plan of reorganization
referred to in Section 2, above, differs materially from those described in
the Disclosure Statement approved by the bankruptcy court on October 15,
1998, the Reorganization Equity Value shall be adjusted appropriately;
(ii) A ten (10)-year option to purchase a number of shares equal to two and
one-half percent (2.5%) of the Company's stock outstanding as of the
Effective Date (the "Second Installment"), for an aggregate exercise price
equal to two and seven-eighths
percent (2.875%) of the Reorganization Equity Value (i.e., a premium of
fifteen percent (15%) over the pro rata Reorganization Equity Value), which
option shall vest in twelve (12) equal monthly portions, beginning with the
first anniversary of the date of grant, with one-twelfth (1/12) vesting on
such first anniversary and an additional one-twelfth (1/12) vesting on the
first day of each of the next eleven (11) calendar months thereafter; and
(iii) A ten (10)-year option to purchase a number of shares equal to two and
one-half percent (2.5%) of the Company's stock outstanding as of the
Effective Date (the "Third Installment"), for an aggregate exercise price
equal to three and one-fourth percent (3.25%) of the Reorganization Equity
Value (i.e., a premium of thirty percent (30%) over the pro rata
Reorganization Equity Value), which option shall vest in twelve (12) equal
monthly portions, beginning with the second anniversary of the date of
grant, with one-twelfth (1/12) vesting on such second anniversary and an
additional one-twelfth (1/12) vesting on the first day of each of the next
eleven (11) calendar months thereafter.
The Company shall take such reasonable efforts as may be
necessary to cause any shares to be issued in connection with such
option awards to be registered under the Federal Securities Act of
1933, as amended, or under applicable state securities laws, or to
secure an appropriate exemption from such registration. The terms and
conditions of the said option awards are to be included in a Stock
Option Agreement in the form attached hereto as Exhibit A. Options
included in the Second and Third Installments shall become exercisable
immediately upon vesting and shall remain exercisable until they
expire or otherwise terminate in accordance with this Agreement or the
terms and conditions set forth in Exhibit A. To the extent the Company
is unable to provide sufficient shares to comply with this Section
4(d), the Company shall provide the Executive with the economic
equivalent of the value of the option award(s) described in this
Section 4(d) in the form of a stock appreciation right based upon
substantially the same terms and conditions as set forth in Exhibit A.
(e) Future Awards and Option Grants. The Company shall make available a pool of
stock representing Five percent (5%) of the Company's stock, on a fully
diluted basis, for option awards to other employees of the Company, and the
Executive shall not be eligible to receive additional option awards from
that pool.
(f) Reimbursement of Professional Fees. The Company shall pay on the
Executive's behalf all reasonable fees and expenses shown on statements
submitted to the Executive by the Executive's attorneys, accountants and
other advisors in connection with the negotiation and execution of this
Agreement and in connection with the provision of advice regarding this
Agreement after its execution.
(g) Travel and Housing. The Company shall pay all reasonable local housing,
transportation and commutation expenses for the Executive and his spouse
incurred in connection with the Executive rendering services to the
Company. Reasonable commutation and transportation
expenses include, but are not limited to, air travel between California and
Chicago and an appropriate automobile for local transportation in the
Chicago area. The Company shall reimburse the Executive for all taxes
payable by the Executive because of travel and housing payments by the
Company, including tax reimbursement payments.
5. Other Executive Benefits.
(a) Regular Reimbursed Business Expenses. The Company shall promptly reimburse
the Executive for all expenses and disbursements reasonably incurred by the
Executive in the performance of his duties hereunder during the Period of
Employment.
(b) Benefit Plans. The Executive and his eligible family members shall be
entitled to participate, on terms no less favorable to the Executive and
his eligible family members than the terms offered to other senior
executives of the Company, in any group and/or executive life,
hospitalization or disability insurance plan, health program, vacation
policy, pension, profit sharing, ESOP, 401(k) and similar benefit plans
(qualified, non-qualified and supplemental) or other fringe benefits of the
Company, including an automobile allowance, club memberships and dues, and
similar programs (collectively referred to as the "Benefits"). In the event
that any health programs or insurance policies applicable to the Benefits
provided hereunder contain a preexisting conditions clause, the Company
shall either obtain a waiver from such clause with respect to the Executive
and/or his eligible family members or self-insure the Executive and/or his
eligible family members with respect to such conditions. Anything contained
herein to the contrary notwithstanding, the benefits described herein shall
not duplicate benefits made available to the Executive pursuant to any
other provision of this Agreement. In the event that any benefits coverage
requires an interim waiting period, the Company shall pay all interim
premiums on behalf of the Executive and his family for such coverage. The
Company shall reimburse the Executive for all taxes payable by the
Executive due to payments made by the Company pursuant to this paragraph
(b), including tax reimbursement payments; provided however, that such tax
reimbursement shall not apply to payments which constitute vacation pay or
pension, profit-sharing or similar retirement or deferred compensation
benefits normally taxable to recipients.
(c) Perquisites. The Company shall provide the Executive such perquisites of
employment as are commonly provided to other senior executives of the
Company.
6. Termination.
(a) Death or Disability. This Agreement and the Period of Employment shall
terminate automatically upon the Executive's death. If the Company
determines in good faith that the Disability of the Executive has occurred
(pursuant to the definition of "Disability" set forth below), it may give
to the Executive written notice of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the thirtieth day after receipt by the
Executive of such notice given at any time after a period of one hundred
twenty (120) consecutive days of Disability or a period of one hundred
eighty (180) days of Disability within any twelve (12) consecutive months,
and, in either case, while such Disability is continuing ("Disability
Effective Date"),
provided that, within the thirty (30) days after such receipt, the
Executive shall not have returned to full-time performance of the
Executive's duties. For purposes of this Agreement, "Disability" means the
Executive's inability to substantially perform his duties hereunder, with
reasonable accommodation, as evidenced by a certificate signed either by a
physician mutually acceptable to the Company and the Executive or, if the
Company and the Executive cannot agree upon a physician, by a physician
selected by agreement of a physician designated by the Company and a
physician designated by the Executive. Until the Disability Effective Date,
the Executive shall be entitled to all compensation and benefits provided
for under Section 4 and Section 5 hereof. It is understood that nothing in
this Section 6(a) shall serve to limit the Company's obligations under
Section 7(b) hereof.
(b) By the Company for Cause. The Company may terminate the Executive's
employment hereunder for "Cause" upon five (5) days' written notice. For
purposes of this Agreement, "Cause" shall mean (i) Executive's commission
of an act materially and demonstrably detrimental to the Company, which act
constitutes gross negligence or willful misconduct by Executive in the
performance of his material duties to the Company or (ii) Executive's
commission of any material act of dishonesty or breach of trust resulting
or intended to result in material personal gain or enrichment of Executive
at the expense of the Company, or (iii) Executive's conviction of a felony
involving theft or moral turpitude, but specifically excluding any
conviction based entirely on vicarious liability. Notwithstanding the
foregoing, the Company may not terminate the Executive's employment for
Cause unless (i) a determination that Cause exists is made and approved by
a majority of the Board, (ii) the Executive is given at least five (5) days
written notice of the Board meeting called to make such determination, and
(iii) the Executive is given the opportunity to address such meeting.
(c) By Executive for Good Reason. The Executive's employment hereunder may be
terminated by the Executive for Good Reason upon five (5) days' written
notice. For purposes of this Agreement, "Good Reason" shall mean:
(i) The assignment to the Executive of any duties inconsistent in any respect
with the Executive's position (including status, offices, titles and
reporting relationships), authority, duties or responsibilities as
contemplated by Section 3 of this Agreement, or any other action by the
Company which results in a significant diminution in such position,
authority, duties or responsibilities, excluding for this Section 6(c) any
isolated, immaterial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice thereof
given by the Executive;
(ii) Any failure by the Company to comply with any of the provisions of this
Agreement, other than an isolated, immaterial and inadvertent failure not
taken in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) The filing of any bankruptcy petition against the Company which is not
dismissed within sixty (60) days of the filing of the petition;
(iv) The revocation of any significant business license of the Company by any
state, except such a revocation which does not have a material adverse
business or prospects of the Company taken as a whole; or
(v) Any criminal indictment of the Company, except for any such indictment (A)
which (1) is based upon the investigation by the federal Securities and
Exchange Commission into actions of the Company which preceded the July 15,
1998 filing date of the bankruptcy petition of the Company and (2) does not
have a material adverse effect on the business or prospects of the Company
taken as a whole or (B) which is based primarily upon the Executive's own
actions, but excluding any indictment based upon an allegation of vicarious
liability on the part of the Executive, with vicarious liability meaning
liability which is based on actions of the Company for which the Executive
is alleged to be responsible solely as a result of his offices with the
Company and in which he was not directly involved and of which he did not
have prior knowledge.
(d) By Executive Other Than for Good Reason. The Executive may, without
liability to the Company, terminate his employment hereunder at any time
other than for Good Reason, upon thirty (30) days' written notice to the
Company.
(e) By the Company Without Cause. The Company may, subject to Section 7(d)
hereof, terminate the Executive's employment hereunder at any time upon
thirty (30) days' written notice to the Executive.
(f) Notice of Termination. Any termination of employment under this Agreement
by the Company or by the Executive shall be communicated by Notice of
Termination to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets
forth in reasonable detail, if applicable, the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
under the provision so indicated, and (iii) specifies, the Date of
Termination (as defined below). The failure by the Executive or Company to
set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of the basis for termination shall not waive any
right of such party hereunder or preclude such party from asserting such
fact or circumstance in enforcing his or its rights hereunder.
(g) Date of Termination. "Date of Termination" means the date specified in the
Notice of Termination; provided, however, that if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
7. Obligations of the Company Upon Termination or a Change in Control.
(a) Death. If the Executive's employment is terminated by reason of the
Executive's death, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement,
other than those obligations accrued or earned and vested (if
applicable) by the Executive as of the Date of Termination, including, but
not limited to, (i) the Executive's Base Salary through the Date of
Termination at the rate in effect on the Date of Termination disregarding
any reduction in Base Salary in violation of this Agreement, (ii) any other
rights and benefits (including, without limitation, payments due pursuant
to Section 5(a) or Section 5(b) of this Agreement) available to the
Executive under employee compensation and benefit arrangements of the
Company (without duplication) in which the Executive was a participant on
the Date of Termination, determined in accordance with the applicable terms
and provisions of such arrangements (such amounts specified in clauses (i)
and (ii) being hereinafter referred to as "Accrued Obligations"); and (iii)
any amounts that remain unpaid pursuant to Section 4(c).
(b) Disability. If the Executive's employment is terminated by reason of the
Executive's Disability, this Agreement shall terminate without further
obligations to the Executive, other than those obligations accrued or
earned and vested (if applicable) by the Executive as of the Date of
Termination, including, but not limited to, all Accrued Obligations and any
amounts that remain unpaid pursuant to Section 4(c).
(c) Cause; Other Than Good Reason. If the Executive's employment shall be
terminated by the Company for Cause or by the Executive other than for Good
Reason, this Agreement shall terminate without further obligations to the
Executive, other than those obligations accrued or earned and vested (if
applicable) by the Executive through the Date of Termination, including,
but not limited to, all Accrued Obligations. In addition, Executive will
forfeit any unpaid amounts that he is entitled to pursuant to Section
7(d)(i) if he terminates his employment other than for Good Reason prior to
January 1, 2000.
(d) Good Reason; Change in Control; Other Than for Cause or Disability. If the
Company shall terminate the Executive's employment other than for Cause or
Disability, or if the Executive shall terminate his employment for Good
Reason, or if a Change in Control shall occur while Executive is employed
by the Company:
(i) Subject to the limitation set forth in Section 7(c), the Company shall
cause the Executive to receive the aggregate of the following amounts:
(A) Continuation of Base Salary through the third anniversary of the Effective
Date;
(B) Any options or stock awards previously granted and not yet vested as of
the Date of Termination or date of Change in Control shall be fully vested
immediately, and all options shall remain exercisable through the end of
their original term;
(C) All unpaid and vested compensation and Benefits accrued or earned by the
Executive as of the Date of Termination or date of Change in Control,
including, but not limited to, all Accrued Obligations;
(D) Any amounts that remain unpaid pursuant to Section 4(c); and
(E) Any additional compensation to which the Executive may become entitled
pursuant to this Agreement because of continued employment after a Change
in Control.
(ii) Through the third anniversary of the Effective Date, or such longer period
as any plan, program, practice or policy may provide, the Company shall
continue benefits to the Executive and/or the Executive's family at least
equal to those which would have been provided to them in accordance with
Section 5(b) of this Agreement if the Executive's employment had not been
terminated, including health insurance and life insurance. Thereafter, the
Executive shall be treated as a retired senior executive of the Company for
purposes of Benefits provided by the Company to such retirees.
(iii) For purposes of this Agreement, a "Change in Control" shall mean:
(A) The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") (excluding any of the Holders
(as defined in paragraph (iv), below) and their affiliates) of beneficial
ownership (within the meaning of Rule l3d-3 promulgated under the Exchange
Act) of more than 50% of either (i) the then outstanding shares of capital
stock of the Company (the "Outstanding Company Capital Stock") or (ii) the
combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Company Voting Securities"); provided, however, that if the Holders cease
to be, in the aggregate, beneficial owners of at least 20% of both the
Outstanding Company Capital Stock and the Company Voting Securities, a
Change in Control shall mean the acquisition by any individual, entity or
group (other than any of the Holders and their affiliates) of beneficial
ownership of 30% or more of either the Outstanding Company Capital Stock or
the Company Voting Securities; provided further that (X) any acquisition by
or from the Company or any of its subsidiaries which is recommended or
approved by the Executive, (Y) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any of its
subsidiaries or (Z) any acquisition by any entity with respect to which,
following such acquisition, more than 80% of, respectively, the then
outstanding shares of capital stock of such entity and the combined voting
power of the then outstanding voting securities of such entity entitled to
vote generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Capital Stock and Company Voting Securities immediately prior to
such acquisition, in substantially the same proportion as their ownership,
immediately prior to such acquisition, of the Outstanding Company Capital
Stock and Company Voting Securities, as the case may be, shall not
constitute a Change in Control; or
(B) A change in the composition of the Board such that individuals who, as of
the date hereof, constitute the Board (the "Incumbent Board") cease for any
reason to constitute a simple majority of the Board, provided that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was
approved by the Executive and by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the directors of the Company; or
(C) Approval by the shareholders of the Company of a reorganization, merger or
consolidation (a "Business Combination") with respect to which all or
substantially all of the individuals and entities who were the respective
beneficial owners of the Outstanding Company Capital Stock and Company
Voting Securities immediately prior to such Business Combination do not,
following such Business Combination, beneficially own, directly or
indirectly, more than 80% of, respectively, the then outstanding shares of
capital stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the
case may be, of the entity resulting from the Business Combination, in
substantially the same proportion as their ownership immediately prior to
such Business Combination of the Outstanding Company Capital Stock and
Company Voting Securities, as the case may be; or
(D) (1) A complete liquidation or dissolution of the Company or (2) a sale or
other disposition of all or substantially all of the assets of the Company
other than to an entity with respect to which, following such sale or
disposition, more than 80% of, respectively, the then outstanding shares
of capital stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors
is then owned beneficially, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Capital Stock and Company Voting
Securities immediately prior to such sale or disposition, in substantially
the same proportion as their ownership Of the Outstanding Company Capital
Stock and Company Voting Securities, as the case may be, immediately prior
to such sale or disposition.
(iv) For purposes of this Agreement, "Holder" means each shareholder of the
Company who, as of the Effective Date, owns ten percent (10%) or more of
the Company's stock outstanding as of the Effective Date.
It is understood that the Executive's rights under this Section 7 are in lieu of
all other rights which the Executive may otherwise have had upon termination of
this Agreement; provided,
however, that no provision of this Agreement is intended to adversely affect the
Executive's rights under the Consolidated Omnibus Budget Reconciliation Act of
1985.
8. Mitigation. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement, and such
amounts shall not be reduced whether or not the Executive obtains other
employment.
9. Indemnification. The Company shall maintain, for the benefit of the
Executive and all of the Executive's nominees to the Board, director and officer
liability insurance in form at least as comprehensive as, and in an amount that
is at least equal to, that maintained by the Company on October 1, 1998. The
Executive's rights to such insurance shall continue so long as the Company
maintains director and office liability insurance for any then current director
or officer; provided that such insurance shall in any event be maintained
through December 31, 2003. In addition, the Executive shall be indemnified by
the Company against liability as an officer and director of the Company or any
subsidiary or affiliate of the Company to the maximum extent permitted by
applicable law.
10. Confidential Information and Noncompetition.
(a) The Executive shall hold a fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge or data relating
to the Company, or any of its subsidiaries, affiliates and businesses,
which shall have been obtained by the Executive pursuant to his employment
by the Company or any of its subsidiaries and affiliates and which shall
not have become public knowledge (other than by acts by the Executive or
his representatives in violation of this Agreement). After termination of
the Executive's employment with the Company, the Executive shall not,
without the prior written consent of the Company, communicate or divulge
any such information, knowledge or data to anyone other than the Company
and those designated by it, However, in no event shall an asserted
violation of the provisions of this Section 10 constitute a basis for
deferring or withholding amounts otherwise payable to the Executive under
this Agreement.
(b) During the Period of Employment and during the one (1)-year period
immediately following (i) the Company's termination of the Executive's
employment for Cause or (ii) the Executive's termination of his employment
other than for Good Reason, The Executive shall not, directly or
indirectly, engage in, be employed by, act as a consultant to, or be a
director, officer, owner or partner of, any business activity or entity
which competes significantly and directly with the Company or any of its
subsidiaries in lines of business conducted by the Company or its
subsidiaries during the Period of Employment or, for purposes of applying
this noncompetition restriction after the Period of Employment, in lines of
business conducted by the Company or its subsidiaries as of the Date of
Termination and, in either event, in any geographic area in which the
Company or its subsidiaries engage in such business; provided, however,
that it shall not be a violation of this paragraph (b) for the Executive to
continue to serve in those current directorships which are disclosed to the
Company by the Executive in writing at the time of his execution of this
Agreement; and provided further that it shall not be a violation of this
Agreement for the Executive to own an
interest of less than five percent (5%) in any entity whose ownership
interests are publicly traded.
11. Remedy for Violation of Section 10. The Executive acknowledges
that the Company has no adequate remedy at law and will be irreparably harmed if
the Executive breaches or threatens to breach the provisions of Section 10 of
this Agreement and, therefore, agrees that the Company shall be entitled to
injunctive relief to prevent any breach or threatened breach of such section and
that the Company shall be entitled to specific performance of the terms of such
section in addition to any other legal or equitable remedy it may have. Nothing
in this Agreement shall be construed as prohibiting the Company from pursuing
any other remedies at law or in equity that it may have or any other rights that
it may have under any other agreement.
12. Withholding. Anything in this Agreement to the contrary
notwithstanding, all payments required to be made by the Company hereunder to
the Executive shall be subject to withholding of such amounts, at the time
payments are actually made to the Executive and received by him, relating to
taxes as the Company may reasonably determine it should withhold pursuant to any
applicable law or regulation. In lieu of withholding such amounts, in whole or
in part, the Company may, in its sole discretion, accept other provision for
payment of taxes as required by law, provided that it is satisfied that all
requirements of law affecting its responsibilities to withhold such taxes have
been satisfied.
13. Arbitration. Any dispute or controversy between the Company and
the Executive, whether arising out of or relating to this Agreement, the breach
of this Agreement, or otherwise, shall be settled by arbitration administered in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") then in effect, and judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction. Any arbitration
shall be held before a single arbitrator who shall be selected by the mutual
agreement of the Company and the Executive, unless the parties are unable to
agree to an arbitrator, in which case, the arbitrator will be selected by the
then President of the Chicago Bar Association. The arbitrator shall have the
authority to award any remedy or relief that a court of competent jurisdiction
could order or grant, including, without limitation, the issuance of an
injunction. However, either party may, without inconsistency with this
arbitration provision, apply to any court having jurisdiction over such dispute
or controversy and seek interim provisional, injunctive or other equitable
relief until the arbitration award is rendered or the controversy is otherwise
resolved. Except as necessary in court proceedings to enforce this arbitration
provision or an award rendered hereunder, or to obtain interim relief, or as
required by law, neither a party nor an arbitrator may disclose the existence,
content or results of any arbitration hereunder without the prior written
consent of the Company and the Executive. The Company and the Executive
acknowledge that this Agreement evidences a transaction involving interstate
commerce. Notwithstanding any choice of law provision included in this Agreement
the United States Federal Arbitration Act shall govern the interpretation and
enforcement of this arbitration provision. The arbitration proceeding shall be
conducted in Chicago, Illinois or such other location to which the parties may
agree. The Company shall pay the costs of any arbitrator appointed hereunder.
14. Reimbursement of Legal Expenses. In the event that the Executive
is the prevailing party, or is successful to a material degree, in pursuing or
defending, whether in arbitration or litigation, any claim or dispute involving
the Executive's employment with the Company, including any claim or dispute
relating to (a) this Agreement, (b) termination of the Executive's employment
with the Company or (c) the failure or refusal of the Company to perform fully
in accordance with the terms hereof, the Company shall promptly reimburse the
Executive for all reasonable costs and expenses (including, without limitation,
attorneys' fees) relating solely, or allocable, to such claim. In any other
case, the Executive and the Company shall each bear all their own costs and
attorneys' fees.
15. Taxes. In the event that the aggregate of all payments or benefits
made or provided to, or that may be made or provided to, the Executive under
this Agreement and under all other plans, programs and arrangements of the
Company (the "Aggregate Payment") is determined to constitute an "excess
parachute payment," as such term is defined in Section 280G(b) of the Internal
Revenue Code, the Company shall pay to the Executive prior to the time any
excise tax imposed by Section 4999 of the Internal Revenue Code ("Excise Tax")
is payable with respect to such Aggregate Payment, an additional amount which,
after the imposition of all income and excise taxes thereon, is equal to the
Excise Tax on the Aggregate Payment. The determination of whether the Aggregate
Payment constitutes an excess parachute payment and, if so, the amount to be
provided to the Executive and the time of payment pursuant to this Section 15
shall be made by an independent auditor (the "Auditor") jointly selected by the
Company and the Executive and paid by the Company. The Auditor shall be a
nationally recognized United States public accounting firm which has not, during
the two (2) years preceding the date of its selection, acted in any way on
behalf of the Company or any affiliate thereof. If the Executive and the Company
cannot agree an the firm to serve as the Auditor, then the Executive and the
Company shall each select one accounting firm and those two firms shall jointly
select the accounting firm to serve as the Auditor. Notwithstanding the
foregoing, in the event that the amount of the Executive's Excise Tax liability
is subsequently determined to be greater than the Excise Tax liability with
respect to which any initial payment to the Executive under this Section 15 has
been made, the Company shall pay to the Executive an additional amount (grossed
up for all taxes), with respect to such additional Excise Tax (and any interest
and penalties thereon) at the time and in the amount reasonably determined by
the Auditor. Similarly, if the amount of the Executive's Excise Tax liability is
subsequently determined to be less than the Excise Tax liability with respect to
which any prior payment to the Executive has been made under this Section 15,
the Executive shall refund to the Company the excess amount received, after
reduction for any nonrefundable tax, penalties and/or interest incurred by the
Executive in connection with the receipt of such excess, and such refund shall
be paid promptly after the Executive has received any corresponding refund of
excess Excise Tax paid to the Internal Revenue Service. The Executive and the
Company shall cooperate with each other in connection with any proceeding or
claim relating to the existence or amount of liability for Excise Tax, and all
expenses incurred by the Executive in connection therewith shall be paid by the
Company promptly upon notice of demand from the Executive.
16. Successors.
(a) This Agreement is personal to the Executive and, without the prior written
consent of the Company, the Executive's rights hereunder shall not be
assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's heirs and legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
(c) As used in this Agreement the term, "Company" shall include any successor
to the Company's business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise. The
Company shall require any successor (whether direct or indirect, by
purchase, merger, reorganization, consolidation, acquisition of property or
stock, liquidation, or otherwise) to all or a substantial portion of its
assets, by agreement in form and substance reasonably satisfactory to the
Executive, expressly 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 this Agreement if no such succession had taken place.
17. Representations.
(a) The Company represents and warrants that (i) the execution of this
Agreement has been duly authorized by the Company, including action of the
Board, (ii) the execution, delivery and performance of this Agreement by
the Company does not and will not violate any law, regulation, order,
judgment or decree or any agreement, plan or corporate governance document
of the Company and (iii) upon the execution and delivery of this Agreement
by the Executive, this Agreement shall be the valid and binding obligation
of the Company, enforceable in accordance with its terms (subject to entry
of a confirmation order regarding the plan of reorganization referred to in
Section 2, above), except to the extent enforceability may be limited by
applicable bankruptcy, insolvency or similar laws affecting the enforcement
of creditors' rights generally and by the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding
in equity or at law).
(b) The Executive represents and warrants to the Company that (i) the
execution, delivery and performance of this Agreement by the Executive does
not and will not violate any law, regulation, order, judgment or decree or
any agreement to which the Executive is a party or by which he is bound;
(ii) the Executive is not a party to or bound by any employment agreement,
noncompetition agreement or confidentiality agreement with any other person
or entity that would interfere with this Agreement or his performance of
services hereunder; and (iii) upon the execution and delivery of this
Agreement by the Company, this Agreement shall be the valid and binding
obligation of the Executive, enforceable in accordance with its terms,
except to the extent enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding
in equity or at law).
18. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with the
laws of the State of Illinois, without reference to principles of choice of
law. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties
hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party, by overnight courier,
or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Xx. Xxxxxx X. Xxxxxxxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxxxx 0000
Xxxxxxx, XX 00000
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Vedder, Price, Xxxxxxx & Kammholz
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
If to the Company:
MFN Financial Corporation
000 Xxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxxxxxxx 00000
Attn: General Counsel
with a copy to:
Xxxxx X. Xxxxxxxxxx, Esq.
XxXxxxxxx, Will & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
or to such other addresses as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee, as evidenced by a delivery receipt.
(c) None of the provisions of this Agreement shall be deemed to be a penalty.
(d) The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or unenforceability of any other provision of this
Agreement.
(e) Either party's failure to insist upon strict compliance with any provision
hereof shall not be deemed to be a waiver of such provision or any other
provision hereof.
(f) This Agreement supersedes any prior agreements or understandings, written
or oral, between the Company and the Executive and contains the entire
understanding of the Company and the Executive with respect to the subject
matter hereof.
(g) This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS HEREOF, the parties have executed this Agreement all as of the
day and year first above written.
MFN FINANCIAL CORPORATION
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Xxxx X. Xxxxxx, General Counsel
XXXXXX X. XXXXXXXXXX
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