EMPLOYMENT AGREEMENT
AGREEMENT made as of the 13th day of August, 2003 by and between DELTA
FINANCIAL CORPORATION, a Delaware corporation (the "Corporation"), and Xxxxxxx
X. Xxxxxxxx (the "Executive").
W I T N E S S E T H:
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In consideration of the representations, warranties and conditions
contained herein, the parties hereto agree as follows:
1. POSITION AND RESPONSIBILITIES
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1.1. The Executive shall serve in an executive capacity as Executive
Vice President of the Corporation. The Executive shall perform such functions
and undertake such responsibilities as are customarily associated with such
capacity. The Executive shall hold such directorships and executive officerships
in the Corporation and any subsidiary to which, from time to time, he may be
elected or appointed during the term of this Agreement.
1.2. The Executive shall devote his full time and best efforts to
the business and affairs of the Corporation and to the promotion of its
interests.
2. TERM OF EMPLOYMENT
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2.1. The term of employment shall be three years, commencing with
the date hereof, unless sooner terminated as provided in this Agreement. The
initial term of employment and any extension thereof is herein referred to as
the "Term."
2.2. Notwithstanding the provisions of Section 2.1 hereof, the
Corporation shall have the right, on written notice to the Executive, to
terminate the Executive's employment for Reasonable Cause, such termination to
be effective as of the date on which notice is given or as of such later date
otherwise specified in the notice.
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2.3. For purposes of this Agreement, the term "Reasonable Cause"
shall mean any of the following actions by the Executive: (a) failure to comply
with any of the material terms of this Agreement, which shall not be cured
within 30 days after the Executive's receipt of written notice from the Board of
Directors; (b) engagement in gross misconduct injurious to the Corporation or an
affiliate of the Corporation, which shall not be cured within 30 days after the
Executive's receipt of written notice from the Board of Directors; (c) knowing
and willful neglect or refusal to attend to the material duties reasonably
assigned to him by the Board of Directors, which shall not be cured within 30
days after the Executive's receipt of written notice from the Board of Directors
or the President of the Corporation; (d) intentional misappropriation of
property of the Corporation or an affiliate of the Corporation to the
Executive's own use; (e) the commission by the Executive of an act of
embezzlement; (f) Executive's conviction for a felony or if criminal penalties
are imposed on Executive relating to any individual income taxes due and owing
by Executive; or (g) Executive's engaging in any activity which would constitute
a material conflict of interest with the Corporation which shall not be cured
within 30 days after the Executive's receipt of written notice from the Board of
Directors. If the provisions contained in subsections (a), (b), (c) or (g) above
cannot be cured within 30 days due to the nature of the breach, the cure period
shall then be extended for a reasonable period of time; provided, however, the
Executive undertakes and continues in good faith to cure the same.
2.4. If the Executive's employment with the Corporation shall be
terminated by the Corporation other than pursuant to Sections 2.2, 4.1 or 4.2
hereof, then the Corporation shall pay to the Executive: (a) if such termination
occurs within the first two (2) years of the Term of this Agreement, the sum of
(i) one (1) year's salary, less withholding and payroll taxes and (ii) twelve
times the average commissions per month earned by the Executive pursuant to this
Agreement over the six calendar months immediately preceding the date of
termination, less withholding and payroll taxes, or (b) if such termination
occurs after the second year of the Term of this Agreement, an amount equal to
the sum of (i) the lesser of six month's salary and the total
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salary due over the remaining Term, in each case less withholding and payroll
taxes and (ii) six times the average commissions per month earned by the
Executive pursuant to this Agreement over the six calendar months immediately
preceding the date of termination, less withholding and payroll taxes. Any
payments made under clause (a)(i) or (b)(i) of this Section 2.4 shall be based
upon the Executive's salary as it existed immediately prior to such termination,
and any payments made under clause (a)(i), (b)(i), (b)(i) or (b)(ii) of this
Section 2.4 shall be paid in equal installments over the six months following
any such termination; provided, however that the Executive shall only be
entitled to such payments under either clause (a) or clause (b) of this Section
2.4 as long as he is in compliance with the provisions of Section 5 below.
3. COMPENSATION
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3.1. (a) The Corporation shall pay or cause Delta Funding
Corporation to pay to the Executive for the services to be rendered by the
Executive hereunder a salary at the rate of $200,000 per annum. The salary shall
be payable in equal installments in accordance with the Corporation's normal
payroll practices. Such salary will be reviewed at least annually and shall be
increased (but not decreased) by the Board of Directors of the Corporation in
such amount as determined in its sole discretion.
(b) In addition to the salary, the Corporation will pay to the
Executive commissions and bonuses as agreed to by the Executive and the
Corporation in writing from time to time.
(c) In addition, the Corporation may also pay the Executive an
annual bonus with respect to each fiscal year of the Corporation, either on an
"ad hoc" basis or pursuant to a bonus plan or arrangement as may be established
at the Corporation's discretion for Executive Vice Presidents of this
Corporation. Nothing herein contained shall, however, obligate the Corporation
to pay any annual bonus to the Executive, it being understood that any such
bonus shall be in the sole discretion of the Board of Directors and that the
amount thereof, if any,
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may vary depending upon actual performance of the Corporation and the Executive
as determined in the discretion of the Board.
3.2. In consideration of entering into this Agreement, the
Executive shall be entitled to receive on the date hereof:
(a) A sign-up bonus of One Hundred Fifty Five Thousand
($155,000) dollars in cash (less lawful deductions), payable upon the signing of
this Agreement; and
(b) a grant a non-qualified option pursuant to the terms of
Delta Financial Corporation's 1996 Stock Option Plan to purchase 50,000 shares
of Delta Financial Corporation Common Stock, par value $.01 per share (the
"Common Stock") at a price per share equal to the closing price of the Common
Stock on the American Stock Exchange on the date hereof, which option shall have
a term of seven years and shall vest 20% per year.
3.3. The Executive shall be entitled to participate in, and receive
benefits from, any insurance, medical, disability, bonus, incentive compensation
(including grants of non- qualified stock options under Delta's 1996 Stock
Option Plan, as determined by the Corporation) or other employee benefit plan,
if any are adopted, of the Corporation or any subsidiary which may be in effect
at any time during the course of his employment by the Corporation and which
shall be generally available to the Executive on terms no less favorable than to
other senior executives of the Corporation or its subsidiaries, including,
without limitation, Delta's current disability insurance policy covering the
Executive, as the same may be amended from time to time.
3.4. Upon the occurrence of a Change in Control (as defined herein),
all stock options held by the Executive beneficially (in trust or otherwise)
and/or of record shall vest and become immediately exercisable on the date of
the Change of Control. For purposes of this Section 3.4, the term "Change of
Control" shall be deemed to have occurred if (i) any "person" (as such term is
used in Section 13 (d) and 14 (d) (2) of the Securities Exchange Act of 1934),
becomes the beneficial owner, directly or indirectly, of securities of the
Corporation representing
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50% or more of the combined voting power of the Corporation's then outstanding
securities, (ii) during any period of 12 months, individuals who at the
beginning of such period constitute the Board of Directors of the Corporation
cease for any reason to constitute a majority thereof unless the election, or
the nomination for the election by the Corporation's stockholders of each new
director was approved by a vote of at least a majority of the directors then
still in office who were directors at the beginning of the period or (iii) a
person (as defined in clause (i) above) acquires (or, during the 12-month period
ending on the date of the most recent acquisition by such person or group or
persons, has acquired) all or substantially all of the Corporation's assets.
3.5. The Corporation agrees to reimburse the Executive for all
reasonable and necessary business expenses incurred by him on behalf of the
Corporation in the course of his duties hereunder upon the presentation by the
Executive of appropriate vouchers therefor.
3.6. The Executive will be entitled each year of this Agreement to a
paid vacation of four weeks.
3.7. Upon termination of this Agreement for Reasonable Cause or due
to the death or incapacity of the Executive (as defined in Section 4.1), the
Executive shall be entitled to all compensation and benefits accrued and unpaid
up to the date of termination.
3.8. The Executive shall not be required to mitigate damages or the
amount of any payment provided to him under this Agreement by seeking other
employment or otherwise.
3.9. Nothing contained herein shall prohibit the Board of Directors
of the Corporation, in its sole discretion, from increasing the compensation
payable to the Executive pursuant to this Agreement and/or making available to
the Executive other benefits in addition to those to which the Executive is
entitled hereunder.
4. INCAPACITY; DEATH
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4.1. If, during the period of employment hereunder, because of
illness or other incapacity, the Executive shall fail for a period of 90
consecutive days, or for shorter periods aggregating more than 90 days during
any twelve month period, to render the services
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contemplated hereunder, then the Corporation, at its option, may terminate the
term of employment hereunder, upon not less than 30 days written notice from the
Corporation to the Executive, effective on the 30th day after giving of such
notice; PROVIDED, HOWEVER, that no such termination will be effective if prior
to the 30th day after giving such notice, the Executive's illness or incapacity
shall have terminated and he shall be physically and mentally able to perform
the services required hereunder and shall be performing such services.
4.2. In the event of the death of the Executive during the term
hereof, the employment hereunder shall terminate on the date of death of the
Executive.
4.3. The Corporation (or its designee) shall have the right to
obtain for its benefit an appropriate life insurance policy on the life of the
Executive, naming the Corporation (or its designee) as the beneficiary. If
requested by the Corporation, the Executive agrees to cooperate with the
Corporation in obtaining such policy.
4.4. In the event the employment of Executive is terminated by the
Corporation as the result of the death or incapacity of the Executive, the
Corporation agrees to continue to pay the Executive (or his estate) one year's
salary at his then rate of salary, less withholding and payroll taxes, plus
twelve times the average commissions per month earned by the Executive pursuant
to the Commission Agreement over the six calendar months immediately preceding
the date of termination, less withholding and payroll taxes. Any payments made
under this Section 4.4 shall be paid in equal installments over a period of one
year after such termination.
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5. OTHER ACTIVITIES DURING EMPLOYMENT; NON-COMPETITION;
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SOLICITATION.
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5.1. The Executive shall not during the term of this Agreement
undertake or engage in other employment, occupation or business enterprise.
Subject to compliance with the provisions of this Agreement, the Executive may
engage in reasonable activities with respect to personal investments of the
Executive.
5.2. During the Term of this Agreement, and for the Restricted
Period (hereinafter defined), if any, neither the Executive nor any entity in
which he may be interested as a partner, trustee, director, officer, employee,
shareholder, option holder, lender of money, guarantor or consultant, shall be
engaged directly or indirectly in any business engaged in by the Corporation in
any area where the Corporation, or any subsidiary, conducts such business at any
time during this Agreement; provided however, that the foregoing shall not be
deemed to prevent the Executive from investing in securities if such class of
securities in which the investment is so made is listed on a national securities
exchange or is issued by a company registered under Section 12(g) of the
Securities Exchange Act of 1934, so long as such investment holdings do not, in
the aggregate, constitute more than 5% of the voting stock of any company's
securities. For purposes of this Section 5.2, the term "Restricted Period" shall
mean : (i) in the event that the Corporation terminates the Executive's
employment with the Corporation pursuant to Section 4.1 at any time during the
Term of this Agreement, or the Executive terminates his employment with the
Corporation for any reason, a period of one year after the Executive leaves the
employ of the Corporation. The Restricted Period shall not be in effect if the
Executive's employment is terminated pursuant to Section 2.2 or 2.4 hereof.
5.3. The Executive will not at any time during his employment with
the Corporation, and for a period of one year after Executive leaves the
Corporation's employ for any reason, solicit (or assist or encourage the
solicitation of) any employee of the Corporation or any of its subsidiaries or
affiliates to work for Executive or for any business, firm corporation or other
entity in which the Executive, directly or indirectly, in any capacity described
in Section 5.2
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hereof, participates or engages (or expects to participate or engage) or has (or
expects to have) a financial interest or management position.
5.4. The Executive shall not at any time during this Agreement or
after the termination hereof directly or indirectly divulge, furnish, use,
publish or make accessible to any person or entity any Confidential Information
(as hereinafter defined). Any records of Confidential Information prepared by
the Executive or which come into Executive's possession during this Agreement
are and remain the property of the Corporation and upon termination of
Executive's employment all such records and copies thereof shall be either left
with or returned to the Corporation.
5.5. The term "Confidential Information" shall mean information
disclosed to the Executive or known, learned, created or observed by him as a
consequence of or through his employment by the Corporation, not generally known
in the relevant trade or industry, about the Corporation's or any of its
subsidiaries' or affiliates' business activities, services and processes,
including but not limited to information concerning advertising, sales
promotion, publicity, sales data, research, finances, accounting, methods,
processes, business plans, broker or correspondent lists and records and
potential broker or correspondent lists and records.
6. ASSIGNMENT. The Corporation shall require any successor or
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assign to all or substantially all the assets of the Corporation (whether by
merger or by acquisition of stock, assets or otherwise) prior to consummation of
any transaction therewith, to expressly assume and agree to perform in writing
this Agreement in the same manner and to the same extent that the Corporation
would be required to perform it if no such succession or assignment had taken
place. This Agreement shall inure to the benefit of and be binding upon the
Corporation, its successors and assigns, and upon the Executive and his heirs,
executors, administrators and legal representatives. This Agreement shall not be
assignable by the Executive.
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7. NO THIRD PARTY BENEFICIARIES. This Agreement does not create, and
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shall not be construed as creating, any rights enforceable by any person not a
party to this Agreement, except as provided in Section 7 hereof.
8. HEADINGS. The headings of the sections hereof are inserted for
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convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
9. INTERPRETATION. In case any one or more of the provisions
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contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. If, moreover, any one or more of the
provisions contained in this Agreement shall for any reason be held by a court
of competent jurisdiction to be unenforceable because it is excessively broad as
to duration, geographical scope, activity or subject, it shall be construed by
limiting and reducing it, so as to be enforceable to the extent compatible with
the applicable law as it shall then appear.
10. NOTICES. All notices under this Agreement shall be in writing
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and shall be deemed to have been given at the time when mailed by registered or
certified mail, addressed to the address below stated party to which notice is
given, or to such changed address as such party may have fixed by notice:
To the Corporation:
Delta Financial Corporation
0000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Attn: President
And
To the Executive:
Xxxxxxx X. Xxxxxxxx
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000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
provided, however, that any notice of change of address shall be effective only
upon receipt.
11. WAIVERS. If either party should waive any breach of any
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provision of this Agreement, he or it shall not thereby be deemed to have waived
any preceding or succeeding breach of the same or any other provision of this
Agreement.
12. COMPLETE AGREEMENT; AMENDMENTS. The foregoing is the entire
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agreement of the parties with respect to the subject matter hereof and may not
be amended, supplemented, canceled or discharged except by written instrument
executed by both parties hereto.
13. EQUITABLE REMEDIES. The Executive acknowledges that he has been
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employed for his unique talents and that his leaving the employ of the
Corporation would seriously hamper the business of the Corporation and that the
Corporation will suffer irreparable damage if any provisions of Section 5 hereof
are not performed strictly in accordance with their terms or are otherwise
breached. The Executive hereby expressly agrees that the Corporation shall be
entitled to seek injunctive or other equitable relief, in addition to all other
remedies permitted by law, to prevent a breach or violation by the Executive and
to secure enforcement of the provisions of Section 5. Resort to such equitable
relief, however, shall not constitute a waiver or any other rights or remedies,
which the Corporation may have.
14. GOVERNING LAW. This Agreement is to be governed by and construed
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in accordance with the laws of the State of New York, without giving effect to
principles of conflicts of law.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as the
date first above written.
DELTA FINANCIAL CORPORATION
By: /S/ XXXX XXXXXX
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Name: Xxxx Xxxxxx
Title: President and Chief Executive
Officer
By: /S/ XXXXXXX X. XXXXXXXX
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Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President
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