Exhibit 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "AGREEMENT") is made as of March
1, 2007, by and among ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ Holding, LLC, a Delaware limited
liability company ("Holding") and ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLC, a Delaware limited
liability company ("R&R"), each having its principal place of business at ▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, and ▇▇▇▇ ▇. ▇▇▇▇▇, III, with a
principal place of business c/o ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(the "EXECUTIVE").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Executive is currently employed by R&R as its Chief
Executive Officer and serves as a member of the board of directors (the "BOARD")
of each of R&R and Holding;
WHEREAS, R&R and Holding (collectively the "COMPANY"),
recognizing the unique skills and abilities of the Executive, wishes to insure
that the Executive will continue to be employed by the Company; and
WHEREAS, the Executive desires to continue in the employment of
the Company as Senior Managing Director of R&R and as a member of the Board of
each of R&R and Holding; and
WHEREAS, the parties desire by this Agreement to set forth the
terms and conditions of the employment relationship between the Company and the
Executive.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants in this Agreement, the Company and the Executive agree as follows:
1. EMPLOYMENT AND DUTIES. The Company hereby employs the
Executive as Senior Managing Director of R&R and a senior executive of Holding
on the terms and conditions provided in this Agreement, and the Executive agrees
to accept such employment, subject to the terms and conditions of this
Agreement. In addition, the Executive serves and shall continue to serve as a
member of the Board of each of R&R and Holding. The Executive shall perform the
duties and responsibilities as are customary for the Senior Managing Director of
an investment bank, and shall perform such other duties and responsibilities as
are reasonably determined from time to time by the Board. The Executive shall
report to and be supervised by the Board. The Executive shall be based at the
Company's offices in New York City, New York or such other place, within a
twenty-five (25) mile radius of the Company's offices in New York City on the
date of this Agreement, as may be agreed upon by the Executive with the Company,
and, except for business travel incident to his employment under this Agreement,
the Company agrees the Executive shall not be required to relocate. The
Executive agrees to devote substantially all his attention and time during
normal business hours to the business and affairs of the Company and to use his
reasonable best efforts to perform faithfully and efficiently the duties and
responsibilities of his positions and to accomplish the goals and objectives of
the Company as may be established by the Board. Notwithstanding the foregoing,
the Executive may engage in the following activities (and shall be entitled to
retain all economic benefits thereof including fees paid in connection
therewith) as long as (x) they do not interfere in any material respect with the
performance of the Executive's duties and responsibilities hereunder, and (y)
with respect to (A) service on the board of directors of a corporation or other
business or (B) any activity described in clause (ii) below, such activity is
pre-approved by the Board of Holding: (i) serve on corporate, civic, religious,
educational and/or charitable boards or committees, provided that
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the Executive shall not serve on any board or committee of any corporation or
other business which competes with the "Business" (as defined in Section 10(a)
below); (ii) deliver lectures, fulfill speaking engagements, or teach on a
part-time basis at educational institutions; and (iii) make investments in
businesses or enterprises and manage his personal investments; provided that
with respect to such activities Executive shall comply with any business conduct
and ethics policy applicable to employees of the Company.
2. TERM. The term of this Agreement shall commence on March
1, 2007 (the "COMMENCEMENT DATE"), and shall terminate on February 28, 2010,
unless extended or earlier terminated in accordance with the terms of this
Agreement (the "TERMINATION DATE"). Such term of employment is herein sometimes
referred to as the "EMPLOYMENT TERM". The Employment Term shall be extended for
successive one year periods unless either party notifies the other in writing at
least 90 days before the Termination Date, or any anniversary of the Termination
Date, as the case may be, that he or it chooses not to extend the Employment
Term.
3. COMPENSATION. As compensation for performing the
services required by this Agreement, and during the term of this Agreement, the
Executive shall be compensated as follows:
(a) BASE COMPENSATION. The Company shall pay to the
Executive an annual salary ("BASE COMPENSATION") of One Hundred Fifty Thousand
Dollars ($150,000), payable in equal installments pursuant to the Company's
customary payroll procedures in effect for its executive personnel at the time
of payment, but in no event less frequently than monthly, subject to withholding
for applicable federal, state, and local income and employment related taxes.
The Executive shall be entitled to such increases in Base Compensation with
respect to each calendar year during the term of this Agreement as shall be
determined by the Company's
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Compensation Committee (the "COMMITTEE"), in its sole and absolute discretion,
based on an annual review of the Executive's performance. The Committee shall be
appointed by the Board of Holding and the members of the Committee may include,
but are not required to be members of such Board. From and after the date on
which the equity interests of Holding (or such equity securities into which the
equity interests have been converted or exchanged) are traded, listed or quoted,
as the case may be, on any of the New York Stock Exchange, the American Stock
Exchange, the NASDAQ National Market, the NASDAQ Capital Market, the Over the
Counter Bulletin Board or the AIM Stock Exchange (each a "PUBLIC MARKET"), a
majority of the Committee shall be comprised of individuals who are not current
or former employees of the Company or its subsidiaries. If no Committee is
appointed, the Board of Holding shall have the duties and authority of the
Committee as referred to herein.
(b) INCENTIVE COMPENSATION. In addition to Base
Compensation, the Executive shall participate, for the duration of his
employment under this Agreement, in the Bonus Plan described on Exhibit A hereto
("INCENTIVE COMPENSATION"). For purposes of this Agreement, the Executive's "Pro
Rata Share" of Incentive Compensation for any fiscal year of the Company in
which the employment of the Executive terminates shall be the product of (i) an
amount equal to his Incentive Compensation if he had been employed by the
Company for the entire year (which shall be not less than the product of the
aggregate Incentive Compensation paid under the Bonus Plan for the year of
termination of employment, multiplied by the Executive's percentage share of the
aggregate amount paid under the Plan for the immediately preceding year)
multiplied by (ii) a fraction the numerator of which shall be the number of days
in the portion of the year ending with the date of termination of employment and
the denominator of which shall be the number of days in such fiscal year.
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4. EMPLOYEE BENEFITS; LIFE INSURANCE.
(a) During the Employment Term and subject to the
limitations set forth in this Section 4, the Executive and his eligible
dependents shall have the right to participate in any retirement plans
(qualified and non-qualified), pension, insurance, health, disability or other
benefit plan or program that has been or is hereafter adopted by the Company (or
in which the Company participates), in each case according to the terms of such
plan or program, on terms no less favorable than the most favorable terms
granted to senior executives of the Company.
(b) LIFE INSURANCE. The Executive hereby consents to
the purchase by the Company of one or more "key man" life insurance policies on
the life or lives of the Executive and/or the other Principals (as defined on
Exhibit A) in an aggregate amount not to exceed $5 million of death benefit per
Principal, with such policies to be owned by the Company and the death benefits
being payable solely to the Company. The Executive shall have no interest in any
such life insurance policy. Upon termination of the Executive's employment by
the Company for any reason, and except as the Executive and the Company may
otherwise agree, such insurance policy or policies shall be promptly terminated
insofar as they relate to the Executive; provided, however, that the Executive
shall have the right, upon notice to the Company within 30 days of the date of
termination of employment, to purchase the policy or policies relating to him
(if transferable by the Company) for an amount equal to their cash value (if
any) plus prepaid premiums.
5. VACATION AND LEAVES OF ABSENCE. The Executive shall be
entitled to the normal and customary amount of paid vacation provided to senior
executive officers of the Company, but in no event less than twenty (20) days
during each twelve (12) month period,
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beginning on the Commencement Date of this Agreement. Any vacation days that are
not taken in a given twelve (12) month period shall not accrue or carry-over
from year to year except as may otherwise be agreed by the Company and the
Executive. Upon any termination of this Agreement for any reason whatsoever,
accrued and unused vacation for the year in which this Agreement terminates will
be paid to the Executive within ten (10) days of such termination based on his
annual rate of Base Compensation in effect on the date of such termination. In
addition, the Executive may be granted leaves of absence with or without pay for
such valid and legitimate reasons as the Company in its sole and absolute
discretion may determine, and the Executive shall be entitled to the same sick
leave and holidays as is provided to other senior executives of the Company.
6. EXPENSES.
The Executive shall be promptly reimbursed for all
reasonable and necessary expenses incurred by him in connection with the
performance of his duties hereunder, subject to the provision of copies of
receipts and such other substantiation as may reasonably be requested by the
Company.
7. INDEMNIFICATION.
(a) GENERAL. The Company agrees that if the
Executive is made a party or is threatened to be made a party to any action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"PROCEEDING"), by reason of the fact that he is or was a director or officer of
the Company, is or was serving at the request of the Company as a director,
officer, member, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including, without limitation, service
with respect to employee benefit plans, whether or not the basis of such
Proceeding is alleged to be action in an official capacity as a
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director, officer, member, employee or agent while serving as a director,
officer, member, employee or agent, the Executive shall, except as otherwise
provided below, be indemnified and held harmless by the Company to the fullest
extent authorized by applicable law (in accordance with the certificate of
incorporation bylaws, and/or other governing documents of the Company), as the
same exists or may hereafter be amended, against all Expenses (as defined below)
incurred or suffered by the Executive in connection therewith, and such
indemnification shall continue as to the Executive even if the Executive has
ceased to be an officer, director or agent, or is no longer employed by the
Company and shall inure to the benefit of his heirs, executors and
administrators. Notwithstanding the foregoing, the Company shall not be required
to indemnify or hold harmless the Executive with respect to Expenses in
connection with any Proceeding which is the result of Executive's willful
misconduct or gross negligence.
(b) EXPENSES. As used in this Agreement, the term
"EXPENSES" shall include, without limitation, damages, losses, judgments,
liabilities, fines, penalties, excise taxes, settlements and costs, attorneys'
fees, accountants' fees, and disbursements and costs of attachment or similar
bonds, investigations, and any expenses of establishing a right to
indemnification under this Agreement.
(c) ENFORCEMENT. If a claim or request under this
Agreement is not paid by the Company, or on their behalf, within fifteen days
after a written claim or request has been received by the Company, the Executive
may at any time thereafter bring suit against the Company to recover the unpaid
amount of the claim or request and if successful in whole or in part, the
Executive shall also be entitled to be paid the expenses of prosecuting such
suit. The burden of proving that the Executive is not entitled to
indemnification for any reason shall be upon the Company.
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(d) SUBROGATION. In the event of payment under this
Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of the Executive.
(e) PARTIAL INDEMNIFICATION. If the Executive is
entitled under any provision of this Agreement to indemnification by the Company
for some or a portion of any Expenses, but not, however, for the total amount
thereof, the Company shall nevertheless indemnify the Executive for the portion
of such Expenses to which the Executive is entitled.
(f) ADVANCES OF EXPENSES. Expenses incurred by the
Executive in connection with any Proceeding shall be paid by the Company in
advance upon request of the Executive that the Company pay such Expenses.
(g) NOTICE OF CLAIM. The Executive shall give to the
Company notice of any claim made against him for which indemnity will or could
be sought under this Agreement. In addition, the Executive shall give the
Company such information and cooperation as it may reasonably require and as
shall be within the Executive's power and at such times and places as are
convenient for the Executive.
(h) DEFENSE OF CLAIM. With respect to any Proceeding
as to which the Executive notifies the Company of the commencement thereof: (i)
the Company will be entitled to participate therein at its own expense; and (ii)
except as otherwise provided below, to the extent that it may wish, the Company
jointly with any other indemnifying party similarly notified will be entitled to
assume the defense thereof, with counsel reasonably satisfactory to the
Executive. The Company shall not be entitled to assume the defense of any
action, suit or proceeding brought by or on behalf of the Company or as to which
the Executive shall have reasonably concluded that there may be a conflict of
interest between the Company and the
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Executive in the conduct of the defense of such action.
The Company shall not be liable to indemnify the
Executive under this Agreement for any amounts paid in settlement of any action
or claim effected without its written consent. The Company shall not settle any
action or claim in any manner which would impose any penalty or limitation on
the Executive without Executive's written consent. Neither the Company nor the
Executive shall unreasonably withhold or delay their consent to any proposed
settlement.
(i) NON-EXCLUSIVITY. The right to indemnification
and the payment of expenses incurred in defending a Proceeding in advance of its
final disposition conferred in this Section 7 shall not be exclusive of any
other right which the Executive may have or hereafter may acquire under any
statute, provision of the certificate of incorporation, by-laws, or other
governing documents of the Company, agreement, vote of stockholders, members or
disinterested directors or otherwise.
(j) DIRECTORS AND OFFICERS LIABILITY INSURANCE. The
Company agrees to use reasonable efforts to maintain one or more directors and
officers liability insurance policies (collectively, the "POLICY") in a
reasonable and adequate amount determined by the Board of Holding that provides
coverage of at least $1,000,000, with the Executive included as a named insured
or as member of a group or class within the definition of a named insured in the
Policy.
8. TERMINATION AND TERMINATION BENEFITS.
(a) TERMINATION BY THE COMPANY.
(i) FOR CAUSE. Notwithstanding any provision
contained herein, the Company may terminate this Agreement at any time during
the Employment Term for "Cause". For purposes of this subsection 8(a)(i),
"CAUSE" shall mean (1) the continuing
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willful failure by the Executive to substantially perform his duties hereunder
for any reason other than total or partial incapacity due to physical or mental
illness, (2) intentional misconduct on the part of the Executive in the
performance of his duties hereunder that causes material harm to the Company,
(3) failure to maintain any license or registration required to be maintained by
the rules and regulations of the National Association of Securities Dealers,
Inc., the Securities and Exchange Commission, or any other federal or state
regulatory agency having jurisdiction over the business conduct of the Executive
as an employee of the Company; or (4) conviction of a felony, or of a
misdemeanor involving moral turpitude, that in either case causes material harm
to the Company. Termination pursuant to this subsection 8(a)(i) shall be
effective immediately upon giving the Executive written notice thereof stating
the reason or reasons therefor with respect to clause (4) above, and thirty (30)
days after written notice thereof from the Company to the Executive specifying
the acts or omissions constituting the failure and requesting that they be
remedied with respect to clauses (1), (2) and (3) above, but only if the
Executive has not cured such failure within such thirty (30) day period. In the
event of a termination pursuant to this subsection 8(a)(i), the Executive shall
be entitled to payment of his Base Compensation as computed through the date of
termination, and any unpaid Incentive Compensation for periods ended prior to
the date of termination, and the benefits pursuant to Section 4(a) hereof up to
the effective date of such termination. It is the intention and agreement of the
Company that Executive shall not be deprived by reason of termination for Cause
of any payments, options or benefits which have been vested or have been earned
or to which Executive is entitled as of the effective date of such termination.
(ii) DISABILITY. If due to illness, physical
or mental disability, or other incapacity, the Executive shall fail, for a total
of any six (6) consecutive months
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("DISABILITY"), to substantially perform the principal duties required by this
Agreement, the Company may terminate this Agreement upon thirty (30) days'
written notice to the Executive. In such event, the Executive shall be (1) paid
his Base Compensation until the Termination Date and his Pro Rata Share of any
Incentive Compensation to which he would have been entitled for the fiscal year
in which such termination occurs, and (2) provided with employee benefits
pursuant to Section 4(a), to the extent available, for 12 months following the
date of such termination; PROVIDED, HOWEVER, that any compensation to be paid to
the Executive pursuant to this subsection 8(a)(ii) shall be offset against any
payments received by the Executive pursuant to any policy of disability
insurance the premiums of which are paid for by the Company.
(b) TERMINATION BY THE EMPLOYEE.
(i) TERMINATION WITHOUT CAUSE OR TERMINATION
FOR GOOD REASON. The Company may terminate the Executive's employment hereunder
without Cause and the Executive may terminate his employment hereunder for "Good
Reason" (as defined below). If the Company terminates the Executive's employment
hereunder without Cause, other than due to death or Disability, or if the
Executive terminates his employment for Good Reason, the Executive shall be
paid: (i) his Base Compensation at the rate in effect at the time of
termination, through the date of such termination of employment (the
"Termination Date"); (ii) his Pro Rata Share of any Incentive Compensation to
which he would have been entitled for the year in which such termination occurs;
(iii) a lump sum payment equal to the product of twelve (12) times the "Monthly
Salary Amount" as defined below; (iv) any deferred compensation (including,
without limitation, interest or other credits on the deferred amounts) and any
accrued vacation pay; (v) continuation, for the remainder of the scheduled
Employment Term (or, if longer, for the one-year period ending on the first
anniversary of the Termination Date), of the
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health and welfare benefits of the Executive and any long-term disability
insurance generally provided to senior executives of the Company in accordance
with Section 4(a) of this Agreement (or the Company shall provide the economic
equivalent thereof); provided, however, if the Executive obtains new employment
and such employment makes the Executive eligible for health and welfare or
long-term disability benefits which are equal to or greater in scope then the
benefits then being offered by the Company, then the Company shall no longer be
required to provide such benefits to the Executive; and (vi) any other
compensation and benefits as may be provided in accordance with the terms and
provisions of any applicable plans or programs of the Company.
As used herein, "MONTHLY SALARY AMOUNT" shall
mean an amount equal to one-twelfth of the sum of (y) the Executive's then
current annual Base Salary plus (z) the average of the annual Incentive
Compensation paid to the Executive for the full fiscal year periods immediately
preceding the Termination Date, commencing with the fiscal year period ended
December 31, 2006 (for which period the Executive received Incentive
Compensation equal to $1,919,310.00).
As used herein, "GOOD REASON" means and shall be
deemed to exist if, without the prior express written consent of the Executive,
(a) the Company breaches this Agreement in any material respect; (b) the Company
fails to obtain the full assumption of this Agreement by a solvent successor;
(c) the Company fails to use its reasonable best efforts to maintain, or cause
to be maintained directors and officers liability insurance coverage providing
for liability coverage of not less than $1,000,000, with the Executive as a
named insured or a member of a group or class which is a named insured; (d) the
Company purports to terminate the Executive's employment for Cause and such
purported termination of employment is not
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effected in accordance with the requirements of this Agreement, or (e) a Change
in Control shall have occurred within twelve months prior to the termination of
the employment of Executive; provided, however, that with respect to items (a)
through (c) above, within thirty (30) days of written notice of termination by
the Executive, the Company has not cured such failure or breach.
For purposes of this Agreement, a "CHANGE OF
CONTROL" shall mean any of the following, as effected through one transaction or
a series of related transactions: (1) any merger by, or other combination of the
Company into another corporation or business entity which results in the other
holders of equity interests or of the Company immediately prior to such
transaction owning less than fifty (50%) percent of the surviving corporation or
other business entity; (2) any acquisition (by purchase, lease or otherwise) of
50% or more of the assets of the Company by any person, corporation or other
entity or group thereof acting jointly; (3) the acquisition of beneficial
ownership, directly or indirectly, of voting securities of the Company (defined
as Common Stock of the Company or any securities having voting rights that the
Company may issue in the future) and rights to acquire voting securities of the
Company (defined as including, without limitation, securities that are
convertible into voting securities of the Company (as defined above) and rights,
options, warrants and other agreements or arrangements to acquire such voting
securities) by any person, corporation or other entity or group thereof acting
jointly, in such amount or amounts as would permit such person, corporation or
other entity or group thereof acting jointly to elect a majority of the members
of the Board of the Company, as then constituted; or (4) the acquisition of
beneficial ownership, directly or indirectly, of voting securities and rights to
acquire voting securities having voting power equal to thirty-five (35%) percent
or more of the combined voting power of the
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Company's then outstanding voting securities by any person, corporation or other
entity or group thereof acting jointly unless such acquisition as is described
in this clause (4) is expressly approved by resolution of the Board of Holding
passed upon affirmative vote of not less than a majority of the Board and
adopted at a meeting of the Board held not later than the date of the next
regularly scheduled or special meeting held following the date Holding obtains
actual knowledge of such acquisition (which approval may be limited in purpose
and effect solely to affecting the rights of Executive under this Agreement).
Notwithstanding the preceding sentence, any transaction that involves a mere
change in identity form or place of organization within the meaning of Section
368(a)(1)(F) of the Internal Revenue Code of 1986, as amended, and any
transaction of similar effect shall not constitute a Change in Control. In
addition, a distribution of all or a portion of the business or assets of the
Company to one or more of its direct or indirect owners, in respect of their
direct or indirect equity interests in the Company and with the prior approval
of the Board of Holding, shall not constitute a Change in Control.
(ii) TERMINATION OTHER THAN FOR GOOD REASON.
If the Executive terminates his employment other than for Good Reason, the
Executive shall be paid: (i) his Base Compensation at the rate in effect at the
time of termination, through the date of such termination of employment (the
"TERMINATION DATE"); (ii) his Pro Rata Share of any Incentive Compensation to
which he would have been entitled for the year in which such termination occurs;
(iii) any deferred compensation (including, without limitation, interest or
other credits on the deferred amounts) and any accrued vacation pay; and (iv)
any other compensation and benefits as may be provided in accordance with the
terms and provisions of any applicable plans or programs of the Company.
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(c) NONEXCLUSIVITY OF RIGHTS. Nothing in this
Agreement shall prevent or limit the Executive's continuing or future
participation in any benefit, bonus, incentive or other plan or program provided
or maintained by the Company and for which the Executive may qualify, nor shall
anything herein limit or otherwise prejudice such rights as the Executive may
have under any other existing or future agreements with the Company. Except as
otherwise expressly provided for in this Agreement, amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plans
or programs of the Company at or subsequent to the date of termination shall be
payable in accordance with such plans or programs.
(d) VESTING OF STOCK GRANTS AND STOCK OPTIONS. In
the event of any termination of this Agreement, Executive's rights with regard
to any stock grants, loan agreements or stock options shall be as set forth in
the respective agreement containing the terms and conditions pertaining thereto.
Notwithstanding the foregoing, in the event that the Executive is terminated for
reasons other than for "Cause" or in the event the Executive terminates this
Agreement for "Good Reason", any stock options then held by the Executive shall
immediately vest in the Executive and shall remain exercisable for the period
specified in the grant agreement notwithstanding any provision therein to the
contrary.
(e) DEATH BENEFIT. Notwithstanding any other
provision of this Agreement, this Agreement shall terminate on the date of the
Executive's death. In such event the Company shall continue to pay Executive's
Base Compensation to his wife, if she survives him, or, if she does not survive
him, to his estate, through the end of the twelfth month following the month in
which such death occurs. In addition, the Company shall pay to Executive's wife,
if she survives him, or, if she does not survive him, to his estate, the Pro
Rata Share of any
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Incentive Compensation to which Executive would have been entitled for the year
in which such death occurs.
(f) TERMINATION PAYMENT. In the event Company does
not elect to extend the Employment Term as provided for in Section 2 hereof, in
consideration for the post-employment covenant against competition set forth in
Section 10(a) of this Agreement, the Executive shall be entitled to a lump-sum
payment, on the last day of the Employment Term, equal to the product of twelve
(12) times the Monthly Salary Amount (the "TERMINATION PAYMENT").
Notwithstanding the foregoing, the Company may, in its sole discretion by notice
to the Executive at least 90 days before the Termination Date, elect, in lieu of
its obligation to make the Termination Payment, to relieve the Executive of the
post-employment covenant against competition set forth in Section 10(a) of this
Agreement, whereupon Section 10(a) shall be null and void effective as of the
Termination Date.
(g) PAYMENT. Except as otherwise provided in this
Agreement, any payments to which the Executive shall be entitled under this
Section 8, including, without limitation, any economic equivalent of any
benefit, shall be made as promptly as possible following the Termination Date.
If the amount of any payment due to the Executive cannot be finally determined
within 90 days after the Termination Date, such amount shall be estimated on a
good faith basis by the Company and the estimated amount shall be paid ninety
(90) days after such Termination Date. As soon as practicable hereafter, the
final determination of the amount due shall be made and any adjustment requiring
a payment to or from the Executive shall be made as promptly as practicable.
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(h) NO MITIGATION. The Executive shall not be
required to mitigate the amount of any payments provided for by this Agreement
by seeking employment or otherwise, nor shall the amount of any payment or
benefit provided in this Agreement be reduced by any compensation or benefit
earned by the Executive after termination of his employment.
9. COMPANY PROPERTY. All confidential and proprietary
information furnished to the Executive by the Company or developed by the
Executive on behalf of the Company or at the Company's direction or for the
Company's use or otherwise in connection with the Executive's employment
hereunder, are and shall remain the sole and confidential property of the
Company. If the Company requests the return of such materials in connection with
or after the termination of the Executive's employment, the Executive shall
immediately deliver the same to the Company.
10. COVENANT NOT TO COMPETE; OTHER COVENANTS.
(a) COVENANT AGAINST COMPETITION. The Executive
acknowledges that, as of the date of execution of this Employment Agreement: (i)
R&R is, directly and through its subsidiaries, engaged in the investment banking
businesses of corporate finance and mergers and acquisitions as a broker-dealer
(the "BUSINESS"); (ii) the Business is conducted currently by R&R and its
subsidiaries throughout the United States, and may be expanded to other
locations; (iii) his employment with Holding and R&R will have given him access
to confidential information concerning the Business as so conducted; and (iv)
the agreements and covenants contained in this Agreement are essential to
protect the business and goodwill of Holding and R&R. Accordingly, the Executive
covenants and agrees that, without the prior written consent of the Board of
Holding, the Executive shall not during the Restricted Period and within the
Restricted Area (each as defined below), except in the Executive's capacity as
an officer of the Company or
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any of its affiliates: (A) engage or participate in the Business; (B) enter the
employ of, or render any services (whether or not for a fee or other
compensation) to, any person engaged in the Business; or (C) acquire an equity
interest in any person engaged in the Business; provided, that the foregoing
restrictions shall not apply at any time if the Executive's employment is
terminated during the Term by the Executive for Good Reason (as defined above)
or by the Company other than for "Cause"; provided, further, that during the
Restricted Period the Executive may own, directly or indirectly, solely as a
passive investment, securities of any company traded on any national securities
exchange or on the National Association of Securities Dealers Automated
Quotation System. In addition, in the event that all or any portion of the
business or assets of the Company are transferred to one or more business
entities owned in whole or in part by one or more of the direct or indirect
owners of the Company as a distribution in respect of their equity interests,
this subsection 10(a) shall not prevent the Executive from being employed
thereafter on a full or part-time basis by any such entity that continues such
business or that uses such assets of the Company in its business.
As used herein, "RESTRICTED PERIOD" shall mean
the period commencing on the Commencement Date and ending on the first
anniversary of the Executive's termination of employment; and "RESTRICTED AREA"
shall mean any place within the United States and any other country in which the
Company is conducting the Business at the time of Executive's termination.
(b) CONFIDENTIAL INFORMATION; PERSONAL
RELATIONSHIPS. The Executive acknowledges that the Company has a legitimate and
continuing proprietary interest in the protection of its confidential
information and has invested substantial sums and will continue to invest
substantial sums to develop, maintain and protect confidential information. The
Executive
18
agrees that, during the Restricted Period and for a period thereafter ending on
the third anniversary of the termination of employment of Executive, without the
prior written consent of the Board of Holding, the Executive shall keep secret
and retain in strictest confidence, and shall not knowingly use for the benefit
of himself or others all confidential matters relating to the Company's Business
including, without limitation, operational methods, marketing or development
plans or strategies, business acquisition plans, joint venture proposals or
plans, and new personnel acquisition plans, learned by the Executive heretofore
or hereafter (such information shall be referred to herein collectively as
"CONFIDENTIAL INFORMATION"); provided, that nothing in this Agreement shall
prohibit the Executive from disclosing or using any Confidential Information (A)
in the performance of his duties hereunder, (B) as required by applicable law,
(C) in connection with the enforcement of his rights under this Agreement or any
other agreement with the Company, or (D) in connection with the defense or
settlement of any claim, suit or action brought or threatened against the
Executive by or in the right of the Company. Notwithstanding any provision
contained herein to the contrary, the term Confidential Information shall not be
deemed to include any general knowledge, skills or experience acquired by the
Executive or any knowledge or information known or available to the public in
general. Moreover, the Executive shall be permitted to retain copies of, or have
access to, all such Confidential Information relating to any disagreement,
dispute or litigation (pending or threatened) involving the Executive.
(c) EMPLOYEES OF THE COMPANY AND ITS AFFILIATES.
During the Restricted Period, without the prior written consent of the Board of
Holding, the Executive shall not, directly or indirectly, hire or solicit, or
cause others to hire or solicit, for employment by any person other than the
Company or any affiliate or successor thereof, any person who was
19
employed by the Company and its affiliates or successors at any time within the
six-month period ending on the date of termination of employment of the
Executive, or encourage any such employee to leave his employment. For this
purpose, any person whose employment has been terminated involuntarily by the
Company shall be excluded from those persons protected by this Section for the
benefit of the Company.
(d) BUSINESS RELATIONSHIPS. During the Restricted
Period, the Executive shall not, directly or indirectly, request or advise a
person that has a business relationship with the Company to curtail or cancel
such person's business relationship with the Company.
(e) RIGHTS AND REMEDIES UPON BREACH. If the
Executive breaches, threatens to commit a breach of, any of the provisions
contained in Section 10 of this Agreement (the "RESTRICTIVE COVENANTS"), the
Company shall, in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity, have the right and remedy to
have the Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to the Company and that
money damages would not provide an adequate remedy to the Company.
(f) SEVERABILITY OF COVENANTS. The Executive
acknowledges and agrees that the Restrictive Covenants are reasonable and valid
in duration and geographical scope and in all other respects. If any court
determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of the Restrictive Covenants shall not
thereby be affected and shall be given full effect without regard to the invalid
portions. The provisions set forth in Section 10 above shall be in addition to
any other provisions of the
20
business conduct and ethics policy applicable to employees of the Company and
its subsidiaries during the term of Executive's employment.
(g) SAVINGS CLAUSE. If the period of time or the
area specified in subsection (a) above should be adjudged unreasonable in any
proceeding, then the period of time shall be reduced by such number of months or
the area shall be reduced by the elimination of such portion thereof or both so
that such restrictions may be enforced in such area and for such time as is
adjudged to be reasonable.
11. EXECUTIVE'S REPRESENTATION AND WARRANTIES. Executive
represents and warrants that he has the full right and authority to enter into
this Agreement and fully perform his obligations hereunder, that he is not
subject to any non-competition agreement other than with the Company, and that
his past, present and anticipated future activities have not and will not
infringe on the proprietary rights of others. Executive further represents and
warrants that he is not obligated under any contract (including, but not limited
to, licenses, covenants or commitments of any nature) or other agreement or
subject to any judgment, decree or order of any court or administrative agency
which would conflict with his obligation to use his best efforts to perform his
duties hereunder or which would conflict with the Company's business and
operations as presently conducted or proposed to be conducted. Neither the
execution nor delivery of this Agreement, nor the carrying on of the Company's
business as officer and employee by Executive will conflict with or result in a
breach of the terms, conditions or provisions of or constitute a default under
any contract, covenant or instrument to which Executive is currently a party.
21
12. MISCELLANEOUS.
(a) INTEGRATION; AMENDMENT. This Agreement,
including the Exhibits hereto and such other documents as are referred to herein
or therein, constitutes the entire agreement between the parties hereto with
respect to the matters set forth herein and supersedes and renders of no force
and effect all prior understandings and agreements between the parties with
respect to the matters set forth herein. No amendments or additions to this
Agreement shall be binding unless in writing and signed by both parties.
(b) SEVERABILITY. If any part of this Agreement is
contrary to, prohibited by, or deemed invalid under applicable law or
regulations, such provision shall be inapplicable and deemed omitted to the
extent so contrary, prohibited, or invalid, but the remainder of this Agreement
shall not be invalid and shall be given full force and effect so far as
possible.
(c) WAIVERS. The failure or delay of any party at
any time to require performance by the other party of any provision of this
Agreement, even if known, shall not affect the right of such party to require
performance of that provision or to exercise any right, power, or remedy
hereunder, and any waiver by any party of any breach of any provision of this
Agreement shall not be construed as a waiver of any continuing or succeeding
breach of such provision, a waiver of the provision itself, or a waiver of any
right, power, or remedy under this Agreement. No notice to or demand on any
party in any case shall, of itself, entitle such party to other or further
notice or demand in similar or other circumstances.
(d) POWER AND AUTHORITY. The Company represents and
warrants to the Executive that it has the requisite corporate power to enter
into this Agreement and perform the terms hereof; that the execution, delivery
and performance of this Agreement by it has been
22
duly authorized by all appropriate corporate action; and that this Agreement
represents the valid and legally binding obligation of the Company and is
enforceable against it in accordance with its terms.
(e) BURDEN AND BENEFIT; SURVIVAL. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, executors, personal and legal representatives, successors and
assigns. The rights and obligations of either party hereunder shall not be
assignable except with the prior written consent of the other party. In addition
to, and not in limitation of, anything contained in this Agreement, it is
expressly understood and agreed that the Company's obligation to pay any
compensation as set forth herein that is payable following a termination of
employment shall survive any termination of this Agreement.
(f) GOVERNING LAW; HEADINGS. This Agreement and its
construction, performance, and enforceability shall be governed by, and
construed in accordance with, the laws of the State of New York. Headings and
titles herein are included solely for convenience and shall not affect, or be
used in connection with, the interpretation of this Agreement.
(g) JURISDICTION. Except as otherwise provided for
herein, each of the parties (i) submits to the nonexclusive jurisdiction of any
state court sitting in New York, New York or federal court sitting in New York
County in any action or proceeding arising out of or relating to this Agreement,
(ii) agrees that all claims in respect of the action or proceeding may be heard
and determined in any such court, (iii) agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court, and
(iv) waives any right such party may have to a trial by jury with respect to any
action or proceeding arising out of or relating to this Agreement. Each of the
parties waives any defense of inconvenient forum to the
23
maintenance of any action or proceeding so brought and waives any bond, surety
or other security that might be required of any other party with respect
thereto. Any party may make service on another party by sending or delivering a
copy of the process to the party to be served at the address and in the manner
provided for giving of notices in Section 12(h). Nothing in this Section,
however, shall affect the right of any party to serve legal process in any other
manner permitted by law.
(h) NOTICES. All notices called for under this
Agreement shall be in writing and shall be deemed given upon receipt if
delivered personally, mailed through the United States Postal Service by
registered or certified mail (return receipt requested), postage prepaid, or
delivered by nationally recognized overnight courier service to the parties at
their respective addresses as set forth on the first page of this Agreement (or
at such other address for a party as shall be specified by like notice, provided
that notices of a change of address shall be effective only upon receipt
thereof) as set forth on the first page of this Agreement, or to any other
address or addresses as any party entitled to receive notice under this
Agreement shall designate, from time to time, to others in the manner provided
in this subsection 12(h) for the service of notices.
Any notice delivered to the party hereto to whom
it is addressed shall be deemed to have been given and received on the day it
was delivered, if delivered personally or by overnight courier service;
otherwise, on the third business day after it is mailed in the manner provided
above.
(i) NUMBER OF DAYS. In computing the number of days
for purposes of this Agreement, all days shall be counted, including Saturdays,
Sundays and holidays; PROVIDED, HOWEVER, that if the final day of any time
period falls on a Saturday, Sunday or
24
holiday on which federal banks are or may elect to be closed, then the final day
shall be deemed to be the next day which is not a Saturday, Sunday or such
holiday.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇, III
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, III
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ HOLDING, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, Chief Financial Officer
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, Chief Financial Officer
25
SUMMARY OF BONUS PLAN
EXHIBIT A
The Executive shall participate in a Bonus Plan to be adopted by
the Company (the "PLAN") consistent with the terms summarized below. Capitalized
terms used but not defined below have the meaning assigned to such terms in the
Employment Agreement to which this summary is attached.
a. The Participants in the Plan shall be ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇ ▇. ▇▇▇▇▇, III (each a "PRINCIPAL" and
collectively the "PRINCIPALS"). A Participant who ceases to be employed by the
Company for any reason shall not be entitled to any payment under the Plan with
respect to any fiscal year of the Company commencing after such termination of
employment, but the Participant (or his estate or designated beneficiary) may
receive a payment from the Plan with respect to the year of termination of the
Participant's employment to the extent so provided herein or in his employment
agreement with the Company.
b. The aggregate amount payable pursuant to the Plan to the
Principals for each fiscal year or portion thereof during the Employment Term of
each Participant shall be determined by the Committee before the end of each
fiscal year of the Company that commences on or after January 1, 2007. Such
determination shall be made by the Committee based on the overall revenue and
profits of the Company and the productivity of the Participants. The amount to
be paid under this Plan for the fiscal year that commenced January 1, 2007,
shall be determined by reference to the Company's and the Participant's
performance for the entire year, and no incentive compensation in addition to
that payable under the Plan shall be paid to the Participants for the two-month
period that ended February 28, 2007.
c. Until the occurrence of a "Trigger Event" described in
Section 1.6(b)(ii) or Section 1.6(b)(iii) of the Senior Convertible Debentures
issued by Holding pursuant to the Securities Purchase Agreement entered into
contemporaneously with the Employment Agreement of which this Exhibit A
constitutes a part (the "DEBENTURES AGREEMENT"), in no event will the sum of the
amounts payable under the Plan to or in respect of all the Principals with
respect to a fiscal year of the Company, together with the Base Compensation
payable to the Principals under their employment agreements and (without
duplication) the salary, bonuses, other current and deferred compensation and
benefits (excluding any insurance premiums paid for key man life insurance for
the benefit of the Company), and associated payroll taxes imposed on the
Company, with respect to all employees of the Company and its subsidiaries,
exceed 58% of the gross revenues of the Company and its subsidiaries as
determined under United States Generally Accepted Accounting Principles as
consistently applied and reflected on the consolidated financial statements of
the Company (the "REVENUE-BASED CAP") for that period. To the extent the
aggregate of the amounts paid under the Plan with respect to any fiscal year is
less than the Revenue-Based Cap amount, the difference shall be added to the
Revenue-Based Cap amount for subsequent fiscal years of the Company in
determining the amounts that may be paid under the Plan with respect to such
years. It is anticipated that, in general, the aggregate amounts paid annually
under the Bonus Plan with respect to each fiscal year or portion thereof to
which the Revenue-Based Cap is applicable will be approximately equal to the
Revenue-Based Cap amount for such year or portion thereof, except insofar as the
Board of Holding reasonably determines, in consultation with the Principals,
that amounts are required to be set aside to provide for expansion of the
business or businesses of the Company, for working capital, and to fund reserves
for the payment of its obligations.
2
d. The allocable share of each of the Principals of the
aggregate amount to be paid under the Plan for each fiscal year shall be
determined by the Committee before the end of each fiscal year, by reference to
the individual productivity of the Principal during such year and his overall
contribution to the profits and success of the Company during such period. The
amount payable to each Participant under the Plan with respect to any fiscal
year, to the extent not paid during that fiscal year, shall be paid on the 15th
day of the third month following the end of the fiscal year. It is anticipated
that amounts will be advanced to each Principal by the Company as compensation
on a quarterly basis during the fiscal year, or at such other intervals as the
Committee may determine to be appropriate, based on projections by such
committee as to the aggregate amounts expected to be paid to or in respect of
the Principals under this Plan for the fiscal year as further described in
paragraph (e) below. If the aggregate amount advanced to or in respect of a
Principal under the preceding sentence for a fiscal year of the Company exceeds
the amount ultimately determined to be payable in respect of that Principal
under the Plan for such year, the excess shall be refunded by the Principal (or
his successor, executor or administrator, as the case may be) to the Company
within 10 days after the Committee informs the Principal of such determination.
e. In determining the amounts to be advanced to each
Principal on an estimated basis during a fiscal year, the Committee is
authorized to cause estimated payments to be made from time to time under the
Plan equal in the aggregate to 90% of the payments under the Plan for the
preceding fiscal year, as and when made to the Participants in such preceding
fiscal year. If, however, a determination is made by the Committee, in
consultation with the Principals, that the maximum amount payable under this
Plan for a fiscal year is anticipated to be less than 90% of the amounts paid
under the Plan for the preceding fiscal year, the amounts
3
authorized to be advanced under this paragraph and the preceding paragraph (d)
shall be limited to 90% of the projected payments under the Plan for the current
fiscal year.
f. It is anticipated that, following the occurrence of any
"Trigger Event" described in Section 1.6(b)(ii) or Section 1.6(b)(iii) of the
Debentures Agreement, the Principals and the Board of Holding will endeavor in
good faith to agree upon an amendment to the Plan that, taking into account the
evolving circumstances of the Company at the time of the Trigger Event, is
expected to provide the Principals with the opportunity to receive incentive
compensation, for fiscal years or portions thereof following the Trigger Event,
that is no less favorable to the Principals than that which was provided to them
under the provisions of the Plan, as summarized in paragraphs (a) through (e)
above, for prior periods. The provisions of the Plan as set forth in the
preceding paragraphs shall continue to apply until such an amendment is agreed
upon by the parties and adopted by the Company.
4