Exhibit
10.1
EMPLOYMENT
AGREEMENT
AGREEMENT made
as of the 12 th day of October, 2006 by and between
DELTA FINANCIAL CORPORATION, a Delaware corporation (the
“Corporation”), and Randall F. Michaels (the
“Executive”).
W I T N E S S E T
H:
In consideration of the representations, warranties and conditions
contained herein, the parties hereto agree as follows:
1.
Position and Responsibilities
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.
2.1 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.
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 or President of the Corporation; (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 or President of the Corporation; (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 or President of the
Corporation. 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 prior to the expiration of the Term
by the Corporation other than pursuant to Sections 2.2, 4.1 or 4.2
hereof, then the Corporation shall pay to the Executive as
severance and amount equal to: (a) if such termination occurs
within the first two years of the Term of this Agreement, the sum
of (i) one 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, the sum of (i)
the lesser of six month’s salary and the total 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), (a)(ii),
(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 the Executive is in compliance with the
provisions of Section 5 below.
3. Compensation
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 $225,000 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, of at least Fifty Thousand
($50,000) dollars for each year of this Agreement. Nothing herein
contained shall, however, obligate the Corporation to pay any
annual bonus to the Executive in any amount exceeding $50,000 per
year, 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, may vary depending upon actual performance of the
Corporation and the Executive as determined at the discretion
of the Board of Directors.
3.2.
In
consideration of entering into this Agreement, the Executive shall
be entitled to receive on the date hereof:
(a) a non-qualified
stock option grant pursuant to the terms of Delta Financial
Corporation’s 1996 Stock Option Plan to purchase 25,000
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 25% on the date of grant and 25% on
each succeeding anniversary of the grant date thereafter;
and
(b) a restricted stock
grant pursuant to the terms of Delta Financial Corporation’s
2005 Stock Incentive Plan for 25,000 shares of Delta Financial
Corporation’s Common Stock, which stock grant shall 100%
vest on the third anniversary date of grant.
3.3
The Corporation agrees to pay the Executive a
car allowance of $1,000 per month.
3.4.
The Executive shall be entitled to participate
in, and receive benefits from, any insurance, medical, disability,
bonus, incentive compensation (including additional grants of
restricted stock and/or non- qualified stock options under any
of the Corporation's stock plans, 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 the Executive's 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. The Corporation agrees to
reimburse Executive for all medical costs and expenses incurred by
him which are not covered by the Corporation’s group medical
plans, up to an aggregate maximum amount of $100,000 per annum,
upon submission of appropriate and itemized
documentation.
3.5.
Upon the occurrence of a Change in Control (as
defined herein), all stock options and restricted stock 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 hereof, a “Change in Control” shall be
deemed to have occurred if (a) during any period of 12
