AdvisorShares Investments, LLC Employment Agreement
EXHIBIT
10.3
AdvisorShares
Investments, LLC
THIS EMPLOYMENT AGREEMENT
(this “Agreement”), dated as
of October 31, 2008, is made by and between AdvisorShares Investments, LLC, a
Delaware limited liability company (the “Company”), and ▇▇.
▇▇▇▇ ▇▇▇▇▇▇ residing at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the “Executive”).
RECITALS
WHEREAS, the Company wishes to
employ the Executive as the Chief Executive Officer of the Company;
and
WHEREAS, the Company desires
to enter into this Agreement and to accept such employment and service, subject
to the terms set forth herein;
WHEREAS, the Executive agrees to
accept such employment by the Company on the terms set forth
herein.
NOW, THEREFORE, in
consideration of the mutual covenants and agreements herein contained, and other
good and valuable consideration, the receipt and sufficiency of which is
mutually acknowledged, the Company and the Executive hereby agree as
follows:
SECTION
1: CERTAIN
DEFINITIONS.
1.1. “Base Salary” shall
mean $240,000.
1.2. “Board” shall mean the
Board of Directors of the Company, and in any references to the Board in this
Agreement that are in connection with decisions of the Board that solely affect
the rights or obligations of the Executive, “Board” shall exclude the Executive
to the extent then serving as a director.
1.3. “Code” shall mean the
Internal Revenue Code of 1986, as amended.
1.4. “Effective Date” shall
mean the first day of Executive’s employment, which shall be November 1,
2008.
1.5. “Employment Period”
shall mean the period of time beginning on the Effective Date and ending on the
third anniversary of the Effective Date, unless terminated earlier in accordance
with Section 5.
1.6. “Milestones” shall
have the meaning set forth in the Purchase and Contribution
Agreement.
1.7. “Purchase and Contribution
Agreement” shall mean the Purchase and Contribution Agreement, dated as
of October 31, 2008, between the Company and ▇▇▇▇.▇▇▇, and joined by ▇▇▇▇▇▇ ▇▇▇▇
Group, LLC.
1.8. “Specified Employee”
shall mean a “specified employee” within the meaning of Section 409A(a)(2)(B)(i)
of the Code, as determined by the Compensation Committee of the Board of
Directors.
SECTION
2: EMPLOYMENT. Subject
to the terms and conditions provided herein, the Company hereby agrees, during
the Employment Period, to employ the Executive as its Chief Executive
Officer. The Executive hereby agrees to accept such employment during
the Employment Period. This Agreement shall automatically renew for a
1-year term unless either party provides 60-days written notice prior to the end
of each term.
SECTION
3: EMPLOYMENT
DUTIES. During the Employment Period, the Executive shall have
such duties and responsibilities as are assigned to the Executive by the Board
and consistent with the normal and customary responsibilities and duties of a
Chief Executive Officer of comparable companies. Executive shall take
direction from and report to the Board. During the Employment Period,
the Executive agrees to devote substantially all of his business attention and
time to the business and affairs of the Company and its subsidiaries, and to use
the Executive’s reasonable best efforts to perform faithfully the duties and
responsibilities assigned to the Executive under this Agreement.
SECTION
4: COMPENSATION.
4.1. Base
Salary. The Executive shall receive the Base Salary, payable
in accordance with the Company’s payroll practices in effect from time to
time.
4.2. Minimum Guaranteed
Bonus. The Executive shall be entitled to receive a minimum
guaranteed bonus of $100,000 per annum (the “Initial Minimum
Bonus”) upon (a) the Company’s total assets under management
reaching $500 million and (b) the Company achieving a positive three-month
rolling EBITDA, and an additional minimum guaranteed bonus of $100,000 per annum
(the “Second Minimum
Bonus” and together with the Initial Minimum Bonus, the “Aggregate Minimum
Bonus” and together with the Base Salary, the “Aggregate Cash
Compensation”) upon (x) the Company’s total assets under management
reaching $1 billion and (y) the Company achieving a positive three-month
rolling EBITDA, in each case payable in four equal quarterly installments for so
long as the Executive remains employed by the Company.
4.3. Incentive, Savings and
Retirement Plans. During the Employment Period the Executive
shall be eligible to participate in any bonus or incentive compensation plans
and programs established by the Board from time to time for the benefit of
senior executives of the Company. During the Employment Period, the
Executive shall be eligible to participate in all savings and retirement plans
and programs (as the plan terms allow) maintained by the Company from time to
time on or after the Effective Date for the benefit of employees and/or senior
executives of the Company. Nothing contained herein shall require the
establishment or continuation of any particular plan or program.
4.4. Health Care
Plans. During the Employment Period, the Executive and/or the
Executive’s family (as the terms allow) shall participate in all health care
benefit plans, programs or arrangements maintained by the Company from time to
time on or after the Effective Date for the benefit of employees and/or senior
executives or employees of the Company.
4.5. Vacation; Fringe
Benefits. During the Employment Period, the Executive shall be
entitled to three (3) weeks of vacation annually, in accordance with Company
policy. Vacation shall be taken at times mutually convenient to the
Company and the Executive. During the Employment Period, the
Executive shall receive such perquisites and fringe benefits as are generally
provided to senior executives of the Company.
4.6. Expenses. The
Executive shall be reimbursed for reasonable and necessary business expenses
incurred in connection with the performance of his duties
hereunder. Such reimbursement shall be made within 30 days after
submission of appropriate documentation and in no case later than March 15 of
the year following the year in which such expense was incurred; provided, however, that the Employee
shall, as a condition of such reimbursement, submit verification of the nature
and amount of such expenses in accordance with the reimbursement policies from
time to time adopted by the Company.
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SECTION
5: TERMINATION.
5.1. Death. The
Employment Period shall terminate automatically upon the Executive’s
death.
5.2. Disability. If,
during the Employment Period, the Disability (as defined below) of the Executive
has occurred, the Company may give to the Executive written notice of its
intention to terminate the Executive’s employment due to such
Disability. The Executive’s employment with the Company shall be
terminated by the Company on the 15th day after receipt by the Executive of such
notice (the “Disability Effective
Date”), if, within such fifteen (15) day period, the Executive shall not
have returned to full-time performance of the Executive’s duties. For
purposes of this Agreement, “Disability” means the
inability of the Executive to perform his normal duties and responsibilities
hereunder due to a physical, mental, or emotional impairment, as determined by
an independent qualified physician (selected by the Company and reasonably
acceptable to the Executive) during any consecutive one hundred and eighty day
(180) period or for an aggregate of two hundred and seventy (270) days during
any three hundred sixty-five (365) day period. Nothing in this
Section 5.2 is intended to be inconsistent with or in any way alter the parties’
responsibilities under applicable federal or state law regarding disabilities,
if any.
5.3. Cause. The
Board may terminate the employment of the Executive for Cause by written notice
to the Executive. For purposes of this Agreement, “Cause” shall mean (a)
an act or acts of material personal dishonesty (including fraud,
misappropriation or embezzlement) taken by, or committed at the request of,
Executive, at the expense of the Company, or any of its affiliates; (b) willful
violations by Executive of the material terms of this Agreement, which have not
been cured within twenty (20) business days after written notice has been given
by the Board to the Executive; (c) intentional refusal or failure to act in
accordance with any lawful and proper direction or order of the Board, or
otherwise a failure to adequately perform his assigned duties or
responsibilities, which refusal or failure is not corrected within twenty (20)
business days after written notice has been given by the Board to the Executive;
(d) Executive’s habitual drunkenness or use of illegal substances;
(e) a material breach by Executive of the Executive’s obligations under the
Protection of Company Property Agreement (as defined below), which has not, to
the extent practicable, been cured within twenty (20) business days after
written notice has been given by the Board to the Executive; (f) the conviction
of, a plea of nolo contendre, a guilty plea or a confession by Executive to, a
felony or a crime of moral turpitude; or (g) any act of material neglect or
gross misconduct with respect to the Company’s business that the Company that
the Board deems to be injurious to the Company or it reputation.
5.4. Without
Cause. During the Employment Period, upon written notice given
to the Executive, the Board may terminate the Executive’s employment hereunder
other than for Cause, in the Board’s sole discretion.
5.5. Termination by Executive for
Good Reason. During the Employment Period, the Executive may
terminate his employment hereunder by written notice for Good
Reason. For purposes of this Agreement, “Good Reason” shall
mean the occurrence of any of the following events which is not cured by the
Company within thirty (30) days of Executive’s written notice to the Company of
same: (a) the reduction of the Executive’s Base Salary; (b) a material
diminution, without his consent, of the Executive’s title, authority, duties or
responsibilities as specified hereunder, or the assignment of duties and
responsibilities that are inconsistent with his positions as Chief Executive
Officer (it being understood that the Company is a “start-up,” Executive will be
required to perform administrative type functions (routine copying, faxing,
etc.)); (c) the Company requiring the Executive, without his consent, to be
based in any office or location outside of a 10-mile radius of Washington, D.C.;
(d) any material violation by ▇▇▇▇.▇▇▇ of its funding obligations under the
Purchase and Contribution Agreement, which has not been cured within twenty (20)
business days after written notice has been given by the Executive to ▇▇▇▇.▇▇▇;
or (e) any other willful and intentional material violation by the Company or
▇▇▇▇.▇▇▇ of the provisions of the Purchase and Contribution Agreement or the
Amended and Restated Limited Liability Company Agreement of the Company, which
has not been cured within twenty (20) business days after written notice has
been given by the Executive to ▇▇▇▇.▇▇▇, and which shall render achievement of
the Milestones impossible or impracticable in the reasonable judgment of
Executive. The Executive must give the Company notice of the event
within thirty (30) days of the date of the event and the Executive must resign
effective upon no less than fourteen (14) days and no more than thirty (30) days
after the expiration of the Company’s thirty (30) day cure period.
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5.6. Termination by Executive
Without Good Reason. During the Employment Period the
Executive may terminate employment hereunder upon ninety (90) day’s prior
written notice without Good Reason, and such termination shall not be deemed to
be a breach of this Agreement.
5.7. Date of
Termination. “Date of Termination”
shall mean:
(a) if
the Executive’s employment is terminated by the Company, other than for Cause or
Disability, the Date of Termination shall be the date set forth in the Company’s
written notice of such termination under Section 5.4;
(b) if
the Executive’s employment is terminated by the Company for Cause, the Date of
Termination shall be the date upon which the applicable cure period provided
under Section 5.3 expires;
(c) if
the Executive’s employment is terminated by the Executive, the date of
termination shall be fifteen 15 days after the date on which the Executive
notifies the Company of such termination, or earlier if the Company
elects;
(d) 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.
SECTION
6: OBLIGATIONS
OF THE COMPANY UPON TERMINATION.
6.1. Termination. If
the Executive’s employment is terminated for any reason, the Executive, or the
Executive’s legal representative, as the case may be, shall be entitled to
receive (a) the Executive’s Base Salary through the Date of Termination; (b) any
bonus earned in the previous year and not yet paid by the Company; and (c) a pro
rata bonus for the year of termination calculated and payable after year-end, if
any, provided, however, that no such pro
rata bonus shall be paid to the Executive if his employment is terminated for
Cause or voluntarily by the Executive without Good Reason. Such
amounts specified in clauses (a), (b) and (c) shall be paid to the Executive or
to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash
within thirty (30) days after the Date of Termination. In addition to
the foregoing, the Executive and/or his successors and assigns shall be entitled
to receive the benefits described in Sections 4.3 and 4.4 for a period of 9
months following the Date of Termination and an additional severance payment in
an amount equal to the pro-rated portion of the Executive’s Aggregate Cash
Compensation for such nine-month period (“Executive
Severance”), provided, however, that no Executive
Severance shall be paid to the Executive if his employment is terminated for
Cause or voluntarily by the Executive without Good Reason.
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6.2. Full
Satisfaction. The payments actually received, accepted and
retained by the Executive (or his legal representatives) under this Agreement
that are attributable to the termination of the Executive’s employment shall be
in full and complete satisfaction of any and all claims the Executive (or his
legal representatives) may have against the Company which are in any way related
to the employment relationship (including the Executive’s hiring) between the
Executive and the Company or the termination of that relationship.
6.3. Other
Payments. Notwithstanding anything to the contrary contained
herein (including without limitation Section 6.2), any compensation or benefits,
if any, which are vested in the Executive or which the Executive is otherwise
entitled to receive under any plan, program or arrangement of the Company
before, at or subsequent to the Date of Termination shall be payable in
accordance with the terms and provisions of such plan, program or
arrangement.
SECTION
7: TAXES. The Company
may withhold from any amounts payable under this Agreement such federal, state
or local taxes or other withholdings as shall be required or permitted to be
withheld pursuant to any applicable law or regulation, the operation of any
incentive, savings, retirement, or welfare or fringe benefit plan, or by written
agreement with the Executive.
SECTION
8: CONFIDENTIAL INFORMATION AND
NON-COMPETITION. The Executive shall execute and deliver to
the Company on or prior to the Effective Date an Employee’s Proprietary
Information and Inventions and Non-Competition Agreement (“Protection of Company
Property Agreement”) in the form attached hereto, the terms of which are
incorporated herein by reference; provided, however, that to the extent
that a term or provision of this Agreement conflicts with any term or provision
of the Protection of Company Property Agreement, such term or provision of this
Agreement shall prevail over such term or provision of the Protection of Company
Property Agreement.
SECTION
9: SURVIVAL. The
Executive agrees that Section 8 of this Agreement shall survive the termination
of (a) this Agreement, (b) the Employment Period and/or (c) the Executive’s
employment with the Company.
SECTION
10: SUCCESSORS. This
Agreement is personal to the Executive and may not be assigned by the
Executive. This Agreement shall inure to the benefit of, and be
enforceable by, the Executive and the Executive’s legal representatives, as
applicable. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place.
SECTION
11: NOTICES. All
notices and other communications hereunder shall be in writing and shall be
given by facsimile transmission, hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid, to the
addresses set forth below:
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If
to the Company:
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AdvisorShares
Investments, LLC
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▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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Attn: Chief
Executive Officer
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With
copies to:
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▇▇▇▇.▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
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▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
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Attn: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
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Pillsbury
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ LLP
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▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
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Attn: ▇▇▇▇▇▇
▇▇▇▇▇▇▇
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and
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▇▇▇▇▇▇,
▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
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▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
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▇▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇▇▇
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Attn: W.
▇▇▇▇ ▇▇▇▇▇▇▇
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If to the
Executive, to Executive’s then current address on file with the
Company. In the event of an address change, to either party at such
other address as either party shall have furnished to the other in writing in
accordance herewith. Any such notice and communications shall be
effective when actually received by the addressee.
SECTION
12: MISCELLANEOUS.
12.1. Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of Maryland, without reference to
principles of conflict of laws thereunder.
12.2. ARBITRATION. DISPUTES
REGARDING THE EXECUTIVE’S EMPLOYMENT WITH THE COMPANY, INCLUDING, WITHOUT
LIMITATION, ANY DISPUTE UNDER THIS AGREEMENT, WHICH CANNOT BE RESOLVED BY
NEGOTIATIONS, SHALL BE SUBMITTED TO, AND SOLELY DETERMINED BY, FINAL AND BINDING
ARBITRATIONS CONDUCTED PURSUANT TO THE NEW YORK STOCK EXCHANGE, INC.’S
ARBITRATION RULE AND THE PARTIES AGREE TO BE BOUND BY THE FINAL AWARD OF THE
ARBITRATORS IN ANY SUCH PROCEEDING. THE ARBITRATORS SHALL APPLY THE
LAWS OF THE STATE OF NEW YORK WITH RESPECT TO THE INTERPRETATION OR ENFORCEMENT
OF ANY MATTER RELATING TO THIS AGREEMENT. ANY ARBITRATION HEREUNDER
SHALL BE HELD IN NEW YORK CITY, NY, OR SUCH OTHER PLACE AS THE PARTIES HERETO
MAY MUTUALLY AGREE. THE PREVAILING PARTY IN ANY SUCH ARBITRATION
SHALL BE ENTITLED TO RECOVER ITS OR HIS FULL REASONABLE COSTS AND REASONABLE
ATTORNEYS’ FEES INCURRED DURING OR IN CONNECTION WITH THE
ARBITRATION. JUDGMENT UPON THE AWARD BY THE ARBITRATORS MAY BE
ENTERED IN ANY COURT IN THE STATE OF NEW YORK HAVING JURISDICTION
THEREOF.
12.3. Compliance with Section 409A
of the Code. To the fullest extent applicable, amounts and
benefits payable under this Agreement are intended to be exempt from the
definition of “nonqualified deferred compensation” under Section 409A of the
Code in accordance with one or more of the exemptions available under the final
Treasury regulations promulgated under Code Section 409A and, to the extent that
any such amount or benefit is or becomes subject to Code Section 409A due to a
failure to qualify for an exemption from the definition of nonqualified deferred
compensation in accordance with such final Treasury regulations, this Agreement
is intended to comply with the applicable requirements of Section 409A of the
Code with respect to such amounts or benefits and will be interpreted and
administered to the extent possible in a manner consistent with the foregoing
statement of intent. Notwithstanding anything herein to the contrary,
(i) if on the date the Employee “separates from service” within the meaning of
Treasury Regulation section 1.409A-1(h), (A) the Company is publicly traded, (B)
the Employee is a Specified Employee, and (C) the Company reasonably determines
that (x) a payment or
benefit payable hereunder as a result of the Employee’s termination of
employment constitutes nonqualified deferred compensation that is subject to the
requirements of Section 409A of the Code and (y) the deferral of the
commencement of such payments or benefits is necessary in order to prevent any
accelerated or additional tax under Section 409A of the Code, then the Company
will withhold and accumulate such payments or benefits hereunder (without any
reduction in such payments or benefits ultimately paid or provided to Employee)
until the date that is six months following Employee’s separation from service
date (or the earliest date as is permitted under Section 409A of the Code), at
which time the withheld and accumulated payments shall be paid to the Employee
in a single lump sum payment and (ii) if any other payments of money or other
benefits due to Employee hereunder could cause the application of an accelerated
or additional tax under Section 409A of the Code, such payments or other
benefits shall be deferred if deferral will make such payment or other benefits
compliant under Section 409A of the Code, or otherwise such payment or other
benefits shall be restructured, to the extent possible, in a manner, determined
by the Company, that does not cause such an accelerated or additional
tax.
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12.4. Captions. The
captions of this Agreement are not part of the provisions hereof and shall not
have any force or effect.
12.5. Amendment. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors, assigns and legal
representatives.
12.6. Entire
Agreement. This Agreement contains the entire understanding of
the Company and the Executive with respect to the subject matter hereof and
supersedes any prior oral or written agreement between the Company and the
Executive.
12.7. Counterparts. This
Agreement may be executed in or counterparts, each of which will be deemed to be
an original thereof, but all of which together will constitute one and the same
instrument.
12.8. Waiver of
Breach. No waiver by the Company of any breach of this
Agreement will be a waiver of any preceding or subsequent breach. No
waiver by the Company of any right under this Agreement will be construed as a
waiver of any other right.
12.9. Enforceability. If
any provision of this Agreement is held invalid or unenforceable, either in its
entirety or by virtue of its scope of application to given circumstances, such
provision will thereupon be deemed modified only to the extent necessary to
render same valid, or not applicable to given circumstances, or excised from
this Agreement, as the situation may require, and this Agreement will be
construed and enforced as if such provision had been included herein as so
modified in scope or application, or had not been included herein, as the case
may be.
[Signature page
follows]
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IN
WITNESS WHEREOF, the Executive has signed this Agreement and, the Company has
caused this Agreement to be signed in its name and on its behalf, all as of the
day and year first above written.
AdvisorShares
Investments, LLC
By: /ss/ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
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Name:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: Director
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▇▇▇▇
▇▇▇▇▇▇
/ss/ ▇▇▇▇
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