Exhibit 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated September 12, 1995, between THE
SHERWOOD GROUP, INC., a Delaware corporation (the "Company"), having its
principal office at One Exchange Plaza, New York, New York, and ▇▇▇▇▇▇ ▇▇▇▇▇▇
(the "Executive"), residing at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇-▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
The Company desires to obtain the services of the Executive,
and the Executive desires to be employed by the Company, as Vice
Chairman of the Board, President and Chief Executive Officer of
the Company and certain of its subsidiaries.
In consideration of the premises and of the mutual covenants
and agreements herein contained, the parties hereto do hereby
agree as follows:
1. Term of Employment.
1.1. The Executive's "term of employment," as this
phrase is used throughout this Agreement, shall be for a period
beginning as of June 1, 1995 and ending on May 31, 1996.
1.2. The Executive shall have the option to extend the
term of employment under this Agreement for one additional year
from June 1, 1996 until May 31, 1997. The following conditions
shall apply to the Executive's right to extend the term of
employment pursuant to this Paragraph 1.2:
(i) the option to extend the terms of employment
may be exercised at any time prior to January 1, 1996 by
delivering to the Company a written notice which refers to this
Agreement and states that the Executive, by his delivery of such
notice, is exercising his right to extend the term of employment
under this Agreement. The delivery of such notice shall
constitute an irrevocable exercise of this extension, which
exercise cannot be revoked without the prior written consent of
the Board of Directors of the Company.
(ii) In no event shall the Company be required to
extend the term of employment pursuant to this Paragraph 1.2
unless as of May 31, 1996, this Agreement shall be in full force
and effect and the Company shall not have the right to terminate
this Agreement in accordance with its terms.
(iii) In no event shall the Company be required to
extend the term of employment under this Agreement if as of May
31, 1996, the Executive shall have exercised any right he may
have to terminate this Agreement or the Executive shall have
received or be entitled to receive any payments as a result of a
Change in Control.
2. Employment. The Company shall employ the Executive as
Vice Chairman of the Board, President and Chief Executive Officer
of the Company and certain of its subsidiaries as determined by
the Board of Directors of the Company. The Executive accepts
such employment and agrees that through his term of employment he
will devote substantially all his business time, attention,
knowledge, and skills to the business of the Company and its
subsidiaries. The services of the Executive shall in all
respects be subject to the reasonable direction of the Board of
Directors of the Company.
3. Base Salary During Full-Time Employment. From and after
the date hereof, the Company shall pay or cause to be paid to the
Executive during the term of employment a base salary at a rate
equal to $300,000 per year. Such salary shall be paid in
accordance with the Company's regular payroll practices
4. Bonus
4.1. The Executive shall receive as additional
compensation a bonus (the "Bonus") based on the Company's
"Income" (as hereinafter defined) with respect to each May 31
fiscal year of the Company during the term of employment. The
Bonus shall be calculated as follows: ten percent of the
Company's first $5 million of Income during the fiscal year; 15
percent of the Company's next $8 million of Income during the
fiscal year; and 18 percent of the Company's Income over $13
million during the fiscal year. In the event that the
Executive's employment were to terminate prior to the end of a
fiscal year, the Bonus to the Executive for such partial fiscal
year shall be calculated on a pro rata basis as to the portion of
the fiscal year in which the Executive was employed hereunder;
such pro rata portion to be calculated on the basis of the
Company's Income during the portion of the fiscal year prior to
such termination with the dollar amounts of the Company's Income
to be adjusted on a pro rata basis. The Company's obligation as
to any unpaid Bonus shall survive termination of this Agreement.
4.2. As used in this Agreement, "Income" shall refer
to the Company's consolidated pre-tax net income during any
fiscal year in which this Agreement is in effect without any
deductions for amounts payable as Bonus hereunder or related
accruals.
4.3. On or prior to the 75th day after the end of a
fiscal year (or such other date a determination of Bonus is to be
made in the event of termination of this Agreement prior to the
end of a fiscal year), the Company's independent public
accountants shall deliver their written determination of the
amount of Income for such fiscal year to the Company. The public
accountants' determination of the foregoing shall be made in
accordance with generally accepted accounting principles
consistently applied which, in the case of any subsidiary of the
Company engaged in the business as a broker-dealer shall be such
generally accepted accounting principles in common use in the
securities brokerage industry. The determination of the public
accountants shall be conclusive and shall be certified by the
Employment Agreement Committee of the Company's Board of
Directors.
4.4. The Company shall each month of a fiscal year pay
to the Executive as an advance against the Bonus for such fiscal
year an amount equal to one half of the aggregate Bonus accrued
for such fiscal year through the last day of the month
immediately preceding the month in which such payment is to be
made less all amounts previously paid as a Bonus advance to the
Executive for such fiscal year pursuant to this Paragraph 4.4;
provided that the Company shall not be obligated to pay a Bonus
advance during any month if the Company' s Income through the end
of the preceding month of the fiscal year has averaged less than
$250,000 per month. In determining the aggregate Bonus accrual,
the dollar amounts of the Company's Income shall be calculated on
a pro rata basis.
5. Expenses. The Company shall also reimburse the
Executive for all expenses incurred by the Executive in
connection with the performance of his duties and the discharge
of his responsibilities hereunder, including all legal fees and
other costs incurred by the Executive in enforcing (whether by
adjudication or settlement) his rights hereunder in the event of
a breach of this Agreement by the Company.
6. Termination.
6.1. Voluntary. Executive may terminate this
Agreement for any reason upon 30 days prior written notice to the
Company; provided, however, that such 30-day notice shall not be
required for a voluntary termination by the Executive in
connection with, or within one year after, a Change in Control of
the Company, as defined in Paragraph 6.4 hereof.
6.2. Termination For Cause. The Company may terminate
this Agreement, and all of its obligations hereunder (other than
payment obligations that have accrued prior to such termination),
for cause if and only if during the term of employment (i) the
Executive has engaged in fraudulent or illegal conduct to the
material detriment of the Company or (ii) the Executive has
engaged in practices to the material detriment of the Company,
which constitute a substantial disregard for his responsibilities
as an employee of the Company. The Company shall have the burden
to establish by clear and preponderance of evidence that cause
exists. In the event the Company terminates this Agreement
without cause as described above, the Executive shall be entitled
to receive as liquidated damages an amount equal to the amount of
liquidated damages he would have been entitled to receive for a
termination of employment in connection with a Change in Control
as provided in Paragraph 6.4 hereof.
6.3. Termination by Death or Disability. If the
Executive dies during the term of employment or if, during the
term of employment, the Executive becomes disabled so that he is
unable substantially to perform his services hereunder (i) for a
period of six consecutive months, or (ii) for an aggregate of
nine months within any period of 18 consecutive months, this
Agreement and the Company's obligations hereunder shall
terminate. Prior to such termination, the Executive shall
continue to receive the compensation provided for in Paragraphs 3
and 4.
6.4. Termination by Reason of Change of Control.
In the event that a Change in Control of the Company occurs
during the term of this Agreement, and in connection with such
Change in Control or within one year thereafter, the Executive's
employment with the Company is terminated either voluntarily or
involuntarily, the Executive shall be entitled to receive as
liquidated damages an amount equal to three times his average
compensation (including base salary, Bonus, and any other
compensation) from the Company and its subsidiaries, as reported
for federal income tax purposes by the Executive, for the five
calendar year period preceding such termination (or such shorter
period of time in the event such employment with the Company and
its subsidiaries has been less than five years), less $1.00. A
Change in Control shall be deemed to have occurred in the event
that any person (other than the Executive or persons under his
control) or group acting in concert acquires beneficial ownership
of more than 50 percent of the outstanding voting stock of the
Company or options or convertible or exchangeable securities or
other rights to acquire more than 50 percent of such voting
stock, if the control so acquired is exercised in any manner
(including, but not limited to, any change in the composition of
the Company' s Board of Directors or any attempt to influence or
change the policies of such Board). Notwithstanding the
foregoing, the liquidated damages to be paid to the Executive
shall be reduced to the extent necessary so as not to constitute
a parachute payment under Section 280G(b)(2) of the Internal
Revenue Code, as then in effect.
7. Additional Benefits. During the term of employment, the
Executive, in addition to the compensation provided in Paragraphs
3 and 4 hereof, will be entitled to participate in any insurance
(other than key man insurance), health plans, pension, profit-
sharing, stock purchase, or other benefit plans of the Company
now existing or hereafter adopted for the benefit of its
employees generally or of the executives of the Company;
provided, that where the participation and the extent of
participation by an employee or executive of the Company in any
such plans are dependent upon the discretion of the Company, then
the participation, if any, and the extent of such participation
of the Executive shall be subject in all respects to the
reasonable determination of the Board of Directors of the
Company. Furthermore, the Executive shall be entitled to such
additional benefits as may be granted to him from time to time by
the Board of Directors of the Company. The Executive shall also
be entitled to reasonable vacations.
8. Restrictions.
8.1. The following provisions shall be applicable
during the term of this Agreement, irrespective of whether
Executive is an employee of the Company, except as provided in
Paragraph 8.1.4. hereof:
8.1.1. Non-Competition. Executive will not, in
any geographic area within a 30-mile radius of any sales
office operated by the Company at the time of termination or
within 24 months prior thereto, directly or indirectly, in any
capacity whatever, compete with the activities of the Company's
sales offices or otherwise engage in the retail brokerage
industry as owner, financier, five percent stockholder, partner,
sole proprietor, joint venturer, or otherwise manage, operate,
control, assist, participate in, be connected with, or render any
consultation or business advice with respect to, any businesses
engaged in the wholesale market-making of securities or any
businesses that compete with activities conducted by the sales
offices of the Company, except with the approval of the Company's
Board of Directors. The parties agree that the foregoing
territorial and time limitations are reasonable, and that in the
event that any such territorial or time limitation is deemed to
be unreasonable by a court of competent jurisdiction, Executive
agrees and submits to the reduction of either said territorial or
time limitation, or both, to such an area or a period of time as
said court shall deem reasonable.
8.1.2. Cconfidentiality. Except as may be required by
applicable law or pursuant to a subpoena issued pursuant to a
governmental investigation or other legal process, Executive
shall not divulge to any person who is not an officer, director,
shareholder, employee, or agent of the Company or any subsidiary
any information of a privileged or confidential nature not
otherwise disclosed which shall have come to his attention by
virtue of his employment by or association with the Company or
any subsidiary.
8.1.3. No Solicitation. Except with the prior consent
of the Company, Executive will not, either for his own account or
any other person directly or in conjunction with or through any
person, hire, solicit, or entice away from the Company or any
subsidiary any officer, manager, employee, consultant, or
registered account executive who is employed or rendering
services to the Company or any subsidiary or had been employed or
rendered services within six months prior to such solicitation,
whether or not such person would thereby commit a breach of his
contract of employment of services with the Company or any
subsidiary.
8.1.4. Inapplicability Restrictions. Paragraphs 8.1.1
and 8.1.3 hereof shall not apply in the event that the employment
of the Executive is terminated without cause as set forth in
Section 6.2 hereof or is terminated voluntarily or involuntarily
in connection with or within one year after a Change in Control
of the Company, as defined in Section 6.4 hereof.
8.1.5. Injunctive Relief. The parties do hereby
acknowledge that money damages alone would not adequately
compensate the Company in the event of a breach by the Executive
of the foregoing provisions and, therefore, Executive does hereby
covenant and agree that, in addition to all other remedies
available to the Company at law or in equity, the Company shall
be entitled to injunctive relief for the enforcement thereof
without the necessity of proving actual damages.
8.1.6. NASD Arbitration. The parties agree to submit
any dispute concerning the terms of this Agreement, or the
performance of their obligations hereunder, to binding
arbitration by the National Association of Securities Dealers,
Inc. The cost of such arbitration shall be paid equally by the
Company and the Executive unless otherwise allocated in the
arbitration.
9. Notices. All notices, requests, consents, demands, and
other communications, required or permitted to be given
hereunder, shall be in writing and shall be deemed to have been
duly given on the date of personal delivery thereof, or, if sent
by prepaid, registered, overnight courier service, or certified
mail, on the date of deposit in the United States mail or
delivery to the courier service addressed to the parties hereto
at the addresses set forth at the beginning of this Agreement (or
to such other or additional address or to the attention of
additional parties which any party shall designate by notice in
writing to the other in accordance herewith).
10. General
10.1. Governing Law. This Agreement shall be governed
by and construed and enforced in accordance with the laws of the
State of New York applicable to agreements made and to be
performed entirely in New York.
10.2. Captions. The paragraph headings contained
herein are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.
10.3. Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties relating to the
subject matter hereof, and supersedes all prior agreements,
arrangements, and understandings, written or oral, between the
parties.
10.4. No Other Representations. No representation,
promise or inducement has been made by either party that is not
embodied in this Agreement, and neither party shall be bound by
or liable for any alleged representation, promise, or inducement
not so set forth.
10.5. Amendments/Waivers. This Agreement may be
amended, modified, superseded, cancelled, renewed, or extended
and the terms of covenants hereof may be waived, only by a
written instrument executed by both of the parties hereto or in
the case of a waiver, by the party waiving compliance. The
failure of either party at any time or times to require
performance of any provision hereto shall in no manner affect the
right at a later time to enforce the same. No waiver by either
party of the breach of any term of covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such breach, or a waiver of a breach of
any other term or covenant contained in this Agreement.
10.6. Effective Date; Condition to Effectiveness.
This Agreement shall not be effective and binding on the Company
or the Executive unless it shall be approved by the shareholders
of the Company. The Company agrees to submit this Agreement to
the shareholders of the Company promptly after execution thereof.
If the shareholders do not approve this Agreement it shall be
null and void. If this Agreement is approved by shareholders
this Agreement shall be deemed to be in effect on June 1, 1995
for all purposes. By execution of this Agreement, the Executive
and the Company hereby terminate as of the date of the meeting of
shareholders to consider this Agreement, the First Employment
Agreement as such term is defined in that certain Letter
Agreement between the Company and the Executive dated September
15, 1993 and such Letter Agreement. In no event shall the
Executive be entitled to payments with respect to the period June
1, 1995 until the date of said meeting of shareholder's under
both this Agreement and the First Employment Agreement.
IN WITNESS WHEREOF, THE SHERWOOD GROUP, INC. and the
Executive have duly executed this Agreement as of the date first
above written.
EXECUTIVE THE SHERWOOD GROUP, INC.
By: By:
▇▇▇▇▇▇ ▇▇▇▇▇▇ Chairman
