EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is executed this ___ day of
_______, 1997 by and between RESOURCE ASSET INVESTMENT TRUST, a Maryland real
estate investment trust (the "Company") and XXX X. XXXXXX (the "Executive").
WHEREAS, the Executive has been offered employment by the Company as
President and Chief Operating Officer (the "Office"); and
WHEREAS, the Executive wishes to be employed in the Office by the
Company; and
WHEREAS, the Company desires to assure the availability of the
Executive's services in the Office.
NOW, THEREFORE, in consideration of the premises and mutual obligations
hereinafter set forth the parties agree as follows:
1. Employment.
The Company hereby employs the Executive in the Office and the
Executive hereby accepts such employment, positions and responsibilities, and
agrees to serve the Company in such capacities upon the terms and conditions set
forth herein.
2. Services.
(a) The Executive will devote his best efforts, skills and abilities
and his full-time services and undivided attention during regular business hours
to the business and affairs of the Company and its subsidiaries during the Term.
The Executive's services shall be performed within a reasonable commuting
distance of Philadelphia except for reasonable travel.
(b) The Executive's duties shall include such duties, authorities and
responsibilities as may be consistent with his Office, including, but not
limited to, the management of the day-to-day operation of the Company. He shall
have the authority to hire and fire non- executive Company personnel, to retain
consultants when he deems necessary to implement the Company's policies and to
execute contracts on behalf of the Company in the ordinary course of business,
and such different duties as may be designated by the Chief Executive Officer of
the Company or the Board of Trustees.
(c) In carrying out his duties, the Executive shall report to and
accept direction from the Chief Executive Officer of the Company.
3. Term.
The Executive's employment hereunder shall continue in full force and
effect for a period of one (1) year, unless sooner terminated in accordance with
the provisions hereof.
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Such term shall automatically extend so that on any day that this Agreement is
in effect, it shall have a then current term of one (1) year (the "Contract
Period"). Such automatic extensions shall cease upon the Company's written
notice to the Executive of its election to terminate this Agreement at the end
of the one (1) year period then in effect. Subsequent to the initial one (1)
year term, Executive may terminate this Agreement upon not less than ninety (90)
days' notice to the Company.
4. Compensation.
(a) Base Salary. During the Contract Period, the Company shall pay to
the Executive a Base Salary of One Hundred Fifty Thousand Dollars ($150,000) per
annum, payable in equal monthly installments. It is understood that the Company
will review annually and may, in the discretion of the Board of Trustees,
increase or decrease (but not below $150,000) the Base Salary, as adjusted, in
light of the Executive's performance and other factors. It is understood that
the Executive may perform other services for entities owned directly or
indirectly by the Company and the Base Salary shall be intended to compensate
for such services.
(b) Incentive Compensation Plan. During the Contract Period, the
Executive shall be eligible to receive bonus payments as determined by the
compensation committee of the Board of Trustees. Payment of any such bonus shall
be made within fifteen (15) days of the receipt by the Company of its audited
financial statements for the preceding fiscal year, but in no event later than
105 days after the end of the preceding fiscal year. In addition, Executive
shall receive, upon completion of the initial public offering of the Company,
options to acquire seventy-five thousand (75,000) shares of the Company's stock
at the initial offering price. Executive shall be eligible for further grants of
incentive stock options on an annual basis as determined by the compensation
committee of the Board of Trustees, issuable simultaneously with the payment of
the bonuses as described above.
5. Benefits.
During the period of employment, the Executive shall be entitled to
participate on a substantially equal basis as all other employees of the Company
in all employee benefit plans and arrangements now in effect or which may
hereafter be established and which are generally applicable to other employees
of the Company or any of its subsidiaries.
6. Termination.
Anything herein contained to the contrary notwithstanding, the
Executive's employment hereunder shall terminate as a result of any of the
following events:
(a) The Executive's death;
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(b) Termination by the Company, for Cause (as hereinafter defined).
"Cause" shall encompass the following: (i) material and willful misconduct of
the Executive in connection with the performance of any of his duties,
including, without limitation, misappropriation of funds or property of the
Company or any of its affiliates or securing or attempting to secure personally
any profit in connection with any transaction entered into on behalf of the
Company or any of its affiliates; (ii) conduct by the Executive that would
result in material injury to the reputation of the Company, if he were retained
in his position with the Company, by reason of conviction of a felony involving
any material conflict of interest or self dealing related to the Company, moral
turpitude, bankruptcy, insolvency or general assignment for the benefit of his
creditors; or (iii) continued, deliberate negligent performance or
non-performance by the Executive of his duties hereunder.
(c) The Executive becomes disabled by reason of any permanent
disability (defined as physical or mental inability, confirmed by a licensed
physician, to perform the essential functions of the services described herein)
for more than one hundred eighty (180) days in the aggregate during any 365-day
period (a "Disability"); or
(d) Termination by the Executive for "Good Reason" upon forty-five (45)
days' prior written notice to the Company. "Good Reason" shall mean the
occurrence of any of the following events: (i) relocation in contravention of
Paragraph 2 of this Agreement; (ii) subsequent to a Change in Control (as
defined hereinafter) and without the written consent of the Executive, a
substantial change in the services or duties required of the Executive hereunder
or the imposition of any services or duties substantially inconsistent with, or
in diminution of, the Executive's position, services or duties, or status with
the Company; (iii) failure to continue the Executive's coverage under any
benefit plan as required under paragraph 5 except pursuant to a change to a
benefit plan that applies to senior executives of the Company generally or is
required by law or regulation; or (iv) any material breach by the Company of any
provision of this Agreement; provided, however, that Termination by the
Executive for Good Reason shall be effective only if such failure has not been
cured to the Executive's reasonable satisfaction within thirty (30) days after
notice of such failure has been given to the Company. If notice has been given
under the previous sentence for a failure of the Company, the Executive may
terminate this Agreement for Good Reason without further notice in the case of a
similar failure.
For the purposes of this subparagraph 6(d), "Change in Control" means
the occurrence of any of the following events:
i) any person, corporation, partnership or
unincorporated association (each a "Person") or Persons acting together,
excluding employee benefit plans of the Company, are or become the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act or any
successor provisions thereto), directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the combined voting power of
the Company's then outstanding securities;
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ii) the Company's shareholders approve (or, in the
event no approval of the Company's shareholders is required, the Company
consummates) a merger, consolidation, share exchange, division or other
reorganization or transaction of the Company (a "Fundamental Transaction") with
any other entity, other than a Fundamental Transaction which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least sixty percent (60%) of
the combined voting power immediately after such Fundamental Transaction of (a)
the Company's outstanding securities, (b) the surviving entity's outstanding
securities, or (c) in the case of a division, the outstanding securities of each
entity resulting from the division;
iii) the shareholders of the Company approve a plan
of complete liquidation or winding-up of the Company or an agreement for the
sale or disposition (in one transaction or a series of transactions) of all or
substantially all of the Company's assets; or
iv) during any period of twenty-four (24) consecutive
months, individuals who at the beginning of such period constituted the
Company's Board (including for this purpose any new director whose election or
nomination for election by the Company's shareholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office who were
directors at the beginning of such period) cease for any reason to constitute at
least a majority of the Board.
7. Consideration Payable to Executive Upon Termination or in the
Event of Disability.
(a) During any period that the Executive fails to perform his duties
hereunder as a result of incapacity due to Permanent Disability ("Disability
Period"), the Executive shall continue to receive his full salary at the rate
then in effect for such period until his employment is terminated pursuant to
subparagraph 6(c)hereof (together with his bonus, so long as any such disability
is for less than sixty (60) days in the aggregate in any bonus year), provided
that payments so made to the Executive shall be reduced by the sum of the
amounts, if any, payable to the Executive at or prior to the time of any such
payment under disability benefits of the Company and which were not previously
applied to reduce any such payment.
(b) If the Executive's employment shall terminate pursuant to
subparagraph 6(b), the Executive shall receive his full Base Salary, together
with all benefits required pursuant to paragraph 5, through the date of
termination, but shall not be entitled to receive any additional payments,
benefits or compensation otherwise due subsequent to the date of termination.
(c) If the Executive's employment by the Company under this Agreement
shall be terminated for "Good Reason" as specified under subparagraph 6(d), or
pursuant to subparagraphs 6(a) or 6(c) hereof, the Company shall pay to the
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Executive (or Executive's estate, if applicable) a lump sum severance payment,
in cash, without discount, in an amount equal to the sum of (i) Executive's
Average Compensation, multiplied by (ii) the number of years, or fraction
thereof, remaining under the term thereof. For the purposes of this subparagraph
7(c) "Average Compensation" shall mean the average of the three highest annual
total compensation received by the Executive during any of the then current
calendar year (on an annualized basis) and the then preceding five (5) calendar
years during which the Executive was employed by the Company for the entire
calendar year. If the Executive has been employed for fewer than three years,
Average Compensation shall be the Executive's highest compensation during any
consecutive 12 month period. The Executive shall not be required to mitigate the
amount of any payment provided for in this subparagraph 7(c) by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for therein be reduced by any compensation of any retirement benefit heretofore
or hereafter earned by the Executive as the result of employment by any other
person, firm or corporation.
(d) Upon termination of this Agreement pursuant to subparagraphs 6(a),
6(b)(iii), 6(c) and 6(d), the vesting of all options to purchase securities of
the Company granted to the Executive during his employment with the Company
shall be accelerated to the later of the effective date of termination of this
Agreement, or six months after the date the option was granted, and any
provision contained in the agreements under which such options were granted that
is inconsistent with such acceleration is hereby modified to the extent
necessary to provide for such acceleration; such acceleration shall not apply to
any option that by its terms would vest prior to the date provided for in this
paragraph 7(d).
8. Confidential Information.
All confidential information or trade secrets which the Executive
currently has or may obtain during the period of employment relating to the
business of the Company and its affiliates shall not be published, disclosed, or
made accessible by him to any other person, firm, or corporation except in the
business and for the benefits of the Company and its affiliates. The provisions
of this paragraph 8 shall survive the termination of this Agreement, but shall
not apply to any information which is or becomes publicly available otherwise
than by any breach of this paragraph 8.
9. Covenant Not to Compete.
The Executive shall not, for a period of one (1) year following the
termination of Executive's employment with the Company, for whatever reason,
without the prior written consent of the Company, engage in direct or indirect
competition with the Company or with any mortgage Real Estate Investment Trust
focusing on subordinate financing. For purposes of this paragraph, "engage"
shall include the Executive's acting as an owner (of more than 10%), employee,
shareholder, consultant, director or officer, directly or indirectly, of an
entity so engaged. In addition, Executive shall not at any time for a period of
one (1) year following the termination of Executive's employment with the
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Company, without the prior written consent of the Company, directly or from
third parties who were customers or potential customers of the Company during
the two (2) years prior to the termination of Executive's employment hereunder,
business similar to the business transacted by the Company in general or by the
Company with such customers in particular. For purposes of this paragraph, a
"customer" shall mean any person in whom the Company has made an investment
through mortgage or other debt financing, any person whose mortgage or other
debt financing has been acquired by the Company, and a "potential customer" is a
person to whom the Company has made a written proposal regarding mortgage or
other debt financing (or the acquisition of any such financing from a third
party), whether or not the proposal was consummated.
10. Remedies in Case of Breach of Certain Covenants or Termination.
The Company and the Executive agree that the damages that may result to
the Company from misappropriation of confidential information or competition as
prohibited by paragraphs 8 and 9 could be estimated only by conjecture and not
by any accurate standard, and, therefore, any breach by the Executive of the
provisions of such paragraphs, in addition to giving rise to monetary damages,
will be enjoined.
11. Representations and Warranties.
(a) The Executive represents and warrants to the Company that he is
under no contractual or other restriction or obligation which would prevent the
performance of his duties hereunder, or which interfere with the rights of the
Company hereunder. The Executive represents and agrees that he has no agreements
or arrangements with the Company or any of its affiliates providing for the
compensation of the Executive in any respect other than as set forth in this
Agreement.
(b) The Company represents and warrants to the Executive that it has
all requisite power and authority to execute, deliver, and perform this
Agreement and all necessary' corporate proceedings of the Company have been duly
taken to authorize the execution, delivery, and performance of this Agreement by
the Company.
12. Indemnification.
(a) If the Executive is made a party or is threatened to be made a
party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (herein a "Proceeding"), by reason of
the fact that he is or was an employee (which term includes officer, director,
agent and any other capacity) of the Company or is or was serving at the request
of the Company as an employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such Proceeding is
alleged action in an official capacity as an employee or agent or in any other
capacity while serving as an employee or agent, the Executive shall be
indemnified and held harmless by the Company to the fullest extent authorized
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by the Maryland General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Company to provide broader indemnification rights than
said law permitted the Company to provide prior to such amendment), against all
expense, liability and loss (including, but not limited to, attorneys' fees,
judgments, fines, ERISA excise taxes and penalties and amounts paid or to be
paid in settlement) incurred or suffered by the Executive in connection
therewith and such indemnification shall continue as to the Executive after he
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of the Executive's heir, executors, and administrators; provided,
however, that the Company shall indemnify any such person seeking
indemnification in connection with a Proceeding (or part thereof) initiated by
the Executive (other than a proceeding to enforce this Section 12) only if such
Proceeding (or part thereof) was authorized directly or indirectly by the Board
of the Company. The right to indemnification conferred in this paragraph shall
be a contract right and shall include the right to be promptly upon request,
paid by the Company the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that if the Maryland
General Corporation Law requires the payment of such expenses incurred by an
employee in his capacity as an employee (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, payment shall be made only upon
delivery to the Company of an undertaking, by or on behalf of the Executive, to
repay all amounts so advanced if it shall ultimately be determined that such
employee is not entitled to be indemnified under this paragraph or otherwise.
(b) The indemnification provided by this Paragraph 12 shall not be
limited or exclude any rights, indemnities or limitations of liability to which
the Executive may be entitled, whether as a matter of law, under the Trust
Agreement or Bylaws of the Company, by agreement, vote of the stockholders or
disinterested directors of the Company or otherwise.
(c) The Executive (an "Indemnitee"), in seeking indemnification under
this Agreement, shall give the Company (the "Indemnitor") prompt written notice
of any claim, suit or demand that the Indemnitee believes will give rise to
indemnification under this Agreement; provided, however, that the failure to
give such notice shall not affect the liability of the Indemnitor under this
Agreement unless the failure to give such notice materially and adversely
affects the ability of the Indemnitor to defend itself against or to cure or
mitigate the damages. Except as hereinafter provided, the Indemnitor shall have
the right (without prejudice to the right of the Indemnitee to participate at
its expense through counsel of its own choosing) to defend and to direct the
defense against any such claim, suit or demand, at the Indemnitor's expense and
with counsel chosen jointly by Indemnitor and Indemnitee, and the right to
settle or compromise any such claim, suit or demand; provided, however, that the
Indemnitor shall not, without the Indemnitee's written consent, which shall not
be unreasonably withheld, settle or compromise any claim or consent to any entry
of judgment. The Indemnitee shall, at the Indemnitor's expense, cooperate in the
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defense of any such claim, suit or demand. If the Indemnitor, within a
reasonable time after notice of a claim fails to defend the Indemnitee, the
Indemnitee shall be entitled to undertake the defense, compromise or settlement
of such claim at the expense of and for the account and risk of the Indemnitor.
(d) The Executive will be covered during the entire term of this
Agreement by Officer and Director liability insurance in amounts and on terms
similar to that afforded to other executives of the Company or its affiliates,
which such insurance shall be paid by the Company.
(e) The provisions of this paragraph 12 shall survive termination of
this Agreement, unless Executive's employment is terminated for cause.
13. Severability.
In case any one or more of the provisions contained herein shall, for
any reason, be held to be invalid, illegal, or unenforceable in any respect such
validity, 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(s) had never been contained herein, provided
that such invalid, illegal or unenforceable provision(s) shall first be
curtailed, limited or eliminated only to the extent necessary to remove such
invalidity, illegality or unenforceability with respect to the applicable law as
it shall then be applied.
14. Modification Agreement.
This Agreement shall not be modified by any oral agreement, either
expressed or implied, and all modifications thereof shall be in writing and
signed by the parties hereto.
15. Waiver.
The waiver of any right under this Agreement by any of the parties
hereto shall not be construed as a waiver of the same right at a future time or
as a waiver of any other rights under this Agreement.
16. Governing Law.
This Agreement shall be governed by and construed in accordance with
the internal laws of the Commonwealth of Pennsylvania, without giving affect to
the principles of conflicts of laws.
17. Notices.
Any notice to be given pursuant to this Agreement shall be sufficient
if in writing and mailed by certified or registered mail, postage-prepaid, to
the addresses listed below:
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If to Company:
Resource Asset Investment Trust
0000 Xxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
If to Executive:
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IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this Agreement as of the date first written above.
RESOURCE ASSET INVESTMENT TRUST
By: ___________________________
Xxxxxx Xxxxxxxx, Trustee
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XXX X. XXXXXX
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