EXHIBIT 10.19
First Amended and Restated Employment Agreement
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This Employment Agreement dated May 29, 1998, is between Medallion
Financial Corp., a Delaware corporation with its principal place of business at
000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000 (the "Company"), and Xxxxx
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Murstein residing at [OMITTED] (the "Executive").
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Whereas, the Executive is presently employed by the Company as the Chief
Executive Officer of the Company;
Whereas, the Board of Directors of the Company (The "Board") desires to
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provide for the continued employment of the Executive, which the Board believes
is in the best interests of the Company and its shareholders, the Executive is
willing to commit himself to serve the Company, on the terms and conditions
herein provided;
Now, Therefore, in considerationof the mutual covenants and promises
contained herein, the other good and valuable consideration, the receipts and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto hereby agree as follows:
The Company agrees to employ the Executive, and the Executive agrees to
serve the Company, on the terms and conditions set forth herein.
1. Title; Capacity. The Executive shall serve as Chief Executive
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Officer of the Company and shall be based at the Company's headquarters in New
York City. The Executive hereby accepts such employment and agrees to undertake
the duties and responsibilities inherent in such position and such other duties
and responsibilities as the Board or its designee shall from time to time
reasonably assign to him. The Executive agrees to abide by the rules,
regulations, instructions, personnel practices and policies of the Company and
any changes therein which may be adopted from time to time by the Company.
2. Term of Employment. The Company agrees to employ the Executive,
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and the Executive agrees to serve the Company for a period commencing on
May 29, 1998 (the
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"Commencement Date") and continuing for five years thereafter (such period,
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including all extensions thereto, to be collectively referred to as the
"Employment Period"), unless otherwise terminated pursuant to the terms hereof.
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The Employment Period shall automatically renew annually for a new five-year
term unless prior to the end of the first year of each five-year term, either
the Company or the Executive provides notice to the other party to this
Agreement of its intention not to extend the Employment Period beyond the then
current five-year term. Any notice given pursuant to this Section shall be
provided in accordance with the terms of Section 8.1 hereof and shall be
provided not later than 30 days prior to the end of such one-year period.
3. Compensation and Benefits.
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3.1 Salary. The Company shall pay the Executive, Payable as
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customairy paid by the Company, an annual base salary of $300,000 for the one-
year period commencing on the Commencement Date. Such salary shall be reviewed
at least annually thereafter and may be increased but not decreased from the
current annual salary.
3.2 Bonus and Fringe Benefits. The Executive shall be entitled to
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participate in all bonus and benefit programs or plans that the Company
establishes and makes available to its employees to the extent that the
Executive's position, tenure, salary, and other qualifications make him eligible
to participate. The Company will pay or reimburse the lease cost of the
automobile currently leased by the Executive and upon expiration or termination
of the lease will continue to provide the Executive with a suitable automobile
for his business and personal use. The Company will pay or reimburse all
maintenance, insurance, garage and other operating expenses of the automobile
currently leased by Executive or any replacement provided by the Company
hereunder. The Company will pay or reimburse the Executive for the membership
dues, entry fees, and all business related expenses for his membership in
[OMITTED] Club.
3.3 Reimbursement of Expenses. The Company shall reimburse the
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Executive for all reasonable travel, entertainment and other expenses incurred
or paid by the Executive in connection with, or related to, the performance of
his duties, responsibilities or services under this Agreement, upon presentation
by the Executive of documentation,
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expense statements, vouchers and/or such other supporting information as the
Company may reasonably request, provided, however, that the amount available for
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such travel, entertainment and other expenses may be fixed in advance by the
Board.
3.4 Insurance. The Company shall continue to maintain all existing
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life, health and disability programs which currently cover the Executive and
which the Company currently pays. The Executive shall be entitled to participate
in all employee benefit programs or plans maintained by the Company for
employees of similar positions.
3.5 Vacation. The Executive shall be entitled to six weeks paid
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vacation per year.
4. Employment Termination. The employment of the Executive by the
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Company pursuant to this Agreement may be terminated under the following
circumstances:
4.1 Expiration of Term. Expiration of the Employment Period in
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accordance with Section 2.
4.2 Death. Upon the death of the Executive.
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4.3 Disability. If, as a result of the Executive's incapacity due to
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physical or mental illness, the Executive shall have failed to perform the
services contemplated under this Agreement for a period of 270 consecutive days,
or a total of at least 300 calendar days during any 365-day period, or a
determination of disability shall have been made by a physician satisfactory to
both the Executive and the Company, provided that if the Executive and the
Company do not agree on a physician, the Executive and the Company shall each
select a physician and these two together shall select a third physician whose
determination as to disability shall be binding on both parties.
4.4 Cause. The Company may terminate the Executive's employment
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hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder in the event:
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(i) the Executive shall have willfully failed and
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continued to fail substantially to perform the duties (other than any
failure resulting from the Executive's incapacity due to physical or mental
illness or any actual or anticipated failure after the issuance by him of a
Notice of Termination, as defined in Section 4.6), for 30 days after a
written demand for performance is delivered to the Executive on behalf of
the Company which specifically identifies the manner in which it is alleged
that the Executive has not substantially performed his duties; provided
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that the Company's economic performance or failure to meet any specific
projection shall not, in and of itself, constitute "Cause"; or
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(ii) the Executive shall have engaged in (A) any material
misappropriation of funds, properties or assets of the Company, it being
understood that "material" for these purposes shall take into account both
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the amount of funds, properties or assets misappropriated and the
circumstances thereof (including the intent of the Executive in connection
therewith) or (B) any malicious damage or destruction of any property or
assets of the Company, whether resulting from the Executive's willful
actions or omissions or the Executive's gross negligence; or
(iii) the Executive shall (A) have been convicted of a crime involving
moral turpitude or constituting a felony or (B) entered a plea of nolo
contendere to any such crime, either of which has had a material adverse
effect upon the business of the Company; or
(iv) the Executive shall have (A) materially breached his obligations
under Section 6 hereof or (B) breached any of the other material provisions
of this Agreement and such breach shall remain uncured by the Executive
within 30 days following receipt of notice from the Company specifying such
breach.
4.5 Termination by the Executive. The Executive may terminate his
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employment hereunder (I) upon 90 days written notice or (ii) for Good Reason (as
defined below).
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For purpose of this Agreement, "Good Reason" shall exist if there is a
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Change in Control (as defined below) of the Company and one or more of the
following events shall have occurred (without the Executive's express
written consent):
(a) the assignment to the Executive of any duties inconsistent with his
status as Chief Executive Officer of the Company, his removal from the
position of Chief Executive Officer of the Company, or a substantial
alteration in the nature or status of his responsibilities from those in
effect immediately prior to the Change in Control;
(b) a reduction by the Company of the Executive's annual base salary in
effect on the date immediately prior to the Change in Control;
(c) the relocation of the Company's principal Executive offices to a
location outside mid-town New York City or a requirement that the Executive
shall be based anywhere other than the Company's principal Executive
offices except for required travel on the Company's business to an extent
substantially consistent with his business travel obligations prior to the
Change in Control;
(d) the failure by the Company to continue in effect any bonus plan in
which the Executive was participating immediately prior to the Change in
Control; or
(e) the failure by the Company to continue to provide the Executive
with benefits at least as favorable as those enjoyed by him under any of
the Company's pension, life insurance, medical, health and accident,
disability, deferred compensation or savings plans in which he was
participating at the time of the Change in Control, the taking of any
action by the Company which would directly or indirectly materially reduce
any of such benefits or deprive him of any material fringe benefit enjoyed
by him at the time of the Change in Control, or the failure by the Company
to provide the Executive with the number of paid
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vacation days to which he was entitled at the time of the Change in
Control.
For purpose of this Agreement, a "Change in Control" of the Company
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shall mean a change in control of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended.
4.6 Notice of Termination. Any termination of the Executive's
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employment by the Company or by the Executive other than termination pursuant to
Section 4.2) shall be communicated by Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
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written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances which provide a basis for termination of the Executive's
employment under the provision so indicated.
4.7 Date of Termination. "Date of Termination" shall mean (I) if the
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Executive's employment is terminated pursuant to Section 4.1, the date on which
the Employment Period expires pursuant to Section 2, (ii) if the Executive's
employment is terminated pursuant to Section 4.2, the date of the Executive's
death, (iii) if the Executive's employment is terminated pursuant to Section
4.3, 30 days after the Notice of Termination is given (provided that the
Executive shall not have returned to the performance of his duties on a full-
time basis during such 30 day period), (iv) if the Executive's employment is
terminated pursuant to Section 4.4 or subsection (i) of Section 4.5, the date
specified in the Notice of Termination, provided that in the case of Section
4.5, the date specified in the Notice of Termination, provided that in the case
of a Section 4.4 termination it is at least 30 days subsequent to the date of
the issuance of such Notice of Termination and in the case of a subsection (i)
of Section 4.5 termination it is at least 90 days subsequent to the date of the
issuance of such Notice of Termination, (v) if the Executive's employment is
terminated pursuant to subsection (ii) of Section 4.5, the date specified in
such Notice of Termination, and (vi) if the Executive's employment is terminated
other than as provided herein, the date specified in the Notice of Termination,
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provided that it is at least 30 days subsequent tot he date of the issuance of
such Notice of Termination.
5. Compensation Upon Termination.
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5.1 If the Executive's employment is terminated under the provision of
Sections
4.1, 4.4 or subsection (I) of Section 4.5, the Company shall pay to the
Executive his full salary, bonus and benefits through the Date of Termination.
5.2 If the Executive's employment is terminated by the Executive's
death under the provision of Section 4.2, the Company shall pay to the
Executive's estate the Executive's full salary, bonus and benefits to the
Executive through the Date of Termination.
5.3 If the Executive's employment is terminated under the provisions of
Section 4.3, the Company shall pay to the Executive his full salary, bonus and
benefits through the Date of Termination. During any period that the Executive
fails to perform his duties hereunder as a result of disability (as defined in
Section 4.3), the Executive shall continue to receive his full salary, bonus and
benefits through the Date of Termination.
5.4 If the Company shall terminate the Executive's employment other
than as provided herein or the Executive shall terminate his employment pursuant
to subsection (ii) of Section 4.5, then:
(i) The Company shall pay the Executive his full salary, bonus and
benefits through the date of termination.
(ii) Subject to subsection (iv) of this Section 5.4, in lieu of any
further salary payments to the Executive for periods subsequent to the Date
of Termination, the Company shall pay as severance pay to the Executive an
amount equal to the remainder of the salary, bonus and value of the fringe
benefits which the Executive would be entitled to receive for the balance
of the Employment Period.
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(iii) The Company shall pay all other damages to which the
Executive may be entitled as a result of such termination, including damages for
any and all legal fees and expenses incurred by him as a result of such
termination.
(iv) In the event that (A) any payment or benefit received or to be
received by the Executive in connection with a Change in Control of the
Company or the termination of the Executive's employment (whether pursuant
to the terms of this Agreement or any other plan, arrangement or agreement
with the Company) (collectively referred to herein as "Severance Payments")
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would not be deductible (in whole or part) as a result of section 280G of
the Internal Revenue Code of 1986, as amended, (the "Code") by the Company,
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an affiliate or other person making such payment or providing such benefit
and (B) it shall be determined that the net amount retained by the
Executive, after deduction of the excise tax imposed by section 4999 of the
Code and any federal, state and local income and employment taxes on the
Severance Payments, does not exceed 110% of the net amount retained by the
Executive after applying the limitations of this subsection (iv) of Section
5.4 and after deduction of any federal, state and local income and
employment taxes on the Severance Payments as so reduced, the Severance
Payments shall be reduced until no portion of the Severance Payments is not
deductible, or the Severance Payments are reduced to zero. For purposes of
this limitation (I) no portion of the Severance Payments the receipt or
enjoyment of which the Executive shall have effectively waived in writing
prior tot he date of payment of the Severance Payments shall be taken into
account, (ii) no portion of the Severance Payments shall be taken into
account which in the opinion of tax counsel selected by the Company's
independent auditors and acceptable to the Executive does not constitute a
"parachute payment" within the meaning of section 280G(b)(2) of the Code,
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(iii) the Severance Payments shall be reduced only to the extent necessary
so that the Severance Payments (other than those referred to in clauses (i)
or (ii)) in their entirety constitute reasonable compensation for services
actually rendered within
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the meaning of section 280G(b)(4) of the code or are otherwise not subject
to disallowance as deductions, in the opinion of the tax counsel referred
to in clause (ii); and (iv) the value of any non-cash benefit or any
deferred payment or benefit included in the Severance Payments shall be
determined by the Company's independent auditors in accordance with the
principles of sections 280G(d)(3) and (4) of the code. For purposes of
determining the income taxes on the Severance Payments, the Executive shall
be deemed to pay federal income tax at the highest marginal rate of federal
income taxation in the calendar year in which the Severance Payments are to
be made and local income taxes at the highest marginal rate of taxation in
the state and locality of the Executive's residence on the Date of
Termination, net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes.
(v) All options previously granted and unvested shall immediately
vest.
6. Proprietary Information and Developments.
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6.1 Proprietary Information.
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(i) Th Executive agrees that all information and know how, whether or
not in writing, of a private, secret, or confidential nature concerning the
Company's business or financial affairs (collectively, "Proprietary
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Information") is and shall be the exclusive property of the Company. By way
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of illustration, but not limitation, Proprietary Information may include
inventions, products, processes, methods, techniques, projects
developments, plans, research data, financial data, personnel data, and
lists of borrowers, advertisers, fleet and taxi owners. The Executive will
not disclose any Proprietary Information to others outside the Company or
use the same for any unauthorized purposes without written approval by the
board, either during or after his employment, unless and until such
Proprietary Information has become public knowledge without fault by the
Executive.
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(ii) The Executive agrees that all files, letters, memoranda, reports,
records, data, sketches, drawings, or other written, photographic, or other
tangible material containing Proprietary Information, whether created by
the Executive or others, which shall come into his custody or
possession, shall be and are the exclusive property of the Company to be
used by the Executive only in the performance of his duties for the
Company.
(iii) The Executive agrees that his obligation not to disclose or use
information, know-how and records of the types set forth in subsection (I) and
(ii) above, also extends to such types of information, know-how,
records and tangible property of borrowers, advertisers, fleet and taxi
owners or other third parties who may have disclosed or entrusted the same
to the Company or the Executive in the course of the Company's business.
6.2 Other Agreements. The Executive hereby represents that he is not
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bound by the terms of any agreement with any previous employer or other party to
refrain from using or disclosing any trade secret or confidential or proprietary
information in the course of his employment with the Company or to refrain from
competing, directly or indirectly, with the business of such previous employer
or any other party. The Executive further represents that his performance of all
the terms of this Agreement and as an employee of the Company dos not and will
not breach any agreement to keep in confidence proprietary information,
knowledge or data acquired by him in confidence or in trust prior to his
employment with the Company.
7. Non-Competition, Non-Solicitation.
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7.1 Non-solicitation of Employees. The Executive agrees that during the
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term of the Executive's employment with the Company and for a period of one year
after the termination of the Executive's employment with the Company for any
reason, the Executive shall not directly recruit, solicit or otherwise induce or
attempt to induce any
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employees of the Company to leave the employment of the Company.
7.2 Non-competition. The Executive agrees that during the term of the
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Executive's employment with the Company and for a period of one year after the
termination of the Executive's employment with the Company for any reason, the
Executive shall not directly or indirectly, except as a passive investor in
publicly held companies and except for investments held at the date hereof,
engage in competition with the Company or any of its subsidiaries, or own or
control any interest in, or act as director, officer or employee of, or
consultant to, any firm, corporation or institution directly engaged in
competition with the Company or any of its subsidiaries; provided the Company or
one of its subsidiaries are actively engaged in such business at the time the
Executive's employment by the Company is terminated.
8. Miscellaneous.
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8.1 Notices. All notices required or permitted under this Agreement
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shall be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 8.1.
8.2 Pronouns. Whenever the context may require any pronouns used in
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this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the plural,
and vice versa.
8.3 Entire Agreement. This Agreement constitutes the entire
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agreement between the parties and supersedes all prior agreements and
understandings, whether written or oral, relating t the subject matter of this
Agreement.
8.4 Amendment. This Agreement may be amended or modified only by a
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written instrument executed by both the Company and the Executive.
8.5 Governing Law. This Agreement shall be construed, interpreted and
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enforced in accordance with the laws of the State of Delaware.
8.6 Successors and Assigns. This Agreement shall be binding upon and
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inure to the benefit of both parties and their respective successors and
assigns, including any corporation with which or into which the Company may be
merged or which may succeed to its assets or business, provided, however, that
the obligations of the Executive are personal and shall not be assigned by him.
8.7 Waivers. No delay or omission by the Company is exercising any
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right under this Agreement shall operate as a waiver of that or any other right.
A waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
8.8 Captions. The captions of the sections of this Agreement are for
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convenience of reference only and in no way define, limit or affect the scope or
substance eof any section of this Agreement.
8.9 Severability. In case any provision of this Agreement shall be
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invalid illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
In Witness Whereof, the parties hereto have executed this Agreement as of
the day and year set forth above.
Medallion Financial Corp.
By: /s/ Xxxxxx X. Xxxxxxxx
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Title: President
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Executive
/s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx
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