EMPLOYMENT AGREEMENT
EXHIBIT 10.6
This Employment Agreement (this “Agreement”) is entered into this 2nd day of January, 2007, by
and between UVEST Financial Services Group Inc., a North Carolina corporation (“Employer”), and Xxx
X. Xxxxxx (“Employee”).
WITNESSETH:
WHEREAS, Employee is currently employed as the President and Chief Operating Officer of
Employer;
WHEREAS, the shareholders of Employer, LPL Holdings, Inc., a Massachusetts corporation
(“LPL”), and LPL Investment Holdings, Inc., a Delaware corporation, have entered into a Stock
Purchase Agreement dated as of August 14, 2006 (the “Purchase Agreement”), pursuant to which LPL
will acquire all of the shares of Employer;
WHEREAS, Employer and LPL desire to be ensured of Employee’s continued active participation
in the business of Employer; and
WHEREAS, in order to induce Employee to remain in the employ of Employer and in consideration
of Employee agreeing to remain in the employ of Employer, the parties desire to specify the terms
of such employment;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained,
Employer and Employee hereby agree as follows:
1. Effectiveness; Employment and Term.
(a) Effectiveness. This Agreement shall constitute a binding agreement between the
parties as of the date hereof; provided that, notwithstanding any other provision of this
Agreement, the operative provisions of this Agreement shall become effective only upon the “Closing
Date” (as defined in the Purchase Agreement (such date being hereinafter referred to as the
“Effective Date”)). In the event the Purchase Agreement is terminated for any reason without the
Closing Date having occurred, this Agreement shall be terminated without further obligation or
liability of either party.
(b) Term. Upon the terms and subject to the conditions of this Agreement, Employer
hereby employs Employee, and Employee hereby accepts employment. The term of this Agreement shall
commence on the Effective Date and shall end three years from the Effective Date (the “Term”);
provided, however, that commencing with the third anniversary and each anniversary thereafter (each
an “Extension Date”), the Employment Term shall be automatically extended for an additional
one-year period, unless the Company or Employee provides the other at least 90 days prior written
notice before the next Extension Date that the Term shall not be so extended (a “Notice of
Nonrenewal”).
-1-
2. Duties of Employee.
(a) General Duties and Responsibilities. Employee shall serve as President and Chief
Operating Officer of Employer. Subject to the direction of the Board of Directors of Employer (the
“Board”), Employee shall perform all duties which are commonly incident to such office or which,
consistent therewith, are delegated to Employee by the Board.
(b) Devotion of Entire Time to the Business of Employer. Employee shall devote
Employee’s entire productive time, attention, and best efforts during reasonable business hours
throughout the Term to the faithful performance of Employee’s duties under this Agreement. Employee
shall not directly or indirectly render any services of a business, commercial or professional
nature to any person or organization other than Employer and its affiliates without the prior
written consent of the Board; provided, however, that Employee shall not be precluded from (i)
vacations and other leave time in accordance with Employer’s policies and (ii) reasonable
participation in community, civic, charitable or similar organizations so long as such
participation does not interfere or conflict with the performance of Employee’s duties to Employer
and is not breach or conflict with Employee’s covenants in Sections 6 or 7 hereof.
3. Compensation.
(a)(i) Base Salary. During the Term, Employee shall receive an annual base salary
(the “Base Salary”) of not less than $375,000 payable in substantially equal installments in
accordance with Employer’s usual policy.
(ii) Quarterly Payments. In addition to the Base Salary, Employee will receive (A)
with respect to the 2007 calendar year, $125,000 which will be payable in substantially equal
quarterly installments; and (B) with respect to the 2008 calendar year, $75,000 which will be
payable in substantially equal quarterly installments.
(iii) Bonus. Employee may be entitled to receive a discretionary bonus for calendar
year 2007 and each year thereafter during the Term in such amount, if any, as shall be determined
by the Board in its sole and complete discretion (the “Bonus”). Attached as Schedule A is a target
Bonus for the calendar year 2007 and 2008. The amount of Bonus, if any, shall be paid to Employee
within two and one-half (2.5) months after the end of the applicable calendar year.
(b) Employee Benefit Programs. During the Term, Employee shall be entitled to
participate in all formally established employee health and welfare benefit plans and similar
programs that are maintained for similarly situated employees of LPL, in accordance with the terms
and conditions of such plans and programs. Notwithstanding any statement to the contrary contained
elsewhere in this Agreement, Employer may at any time discontinue or terminate any benefit plan or
program now existing or hereafter adopted and shall not be required to compensate Employee for
such discontinuance or termination to the extent such discontinuance or termination pertains to
all employees of Employer who are eligible participants at the time.
-2-
(c) Expenses. During the Term, Employer shall reimburse Employee for reasonable
business expenses incurred in the ordinary course of Employee’s duties and in accordance with
Employer’s policies.
(d) Withholding Taxes. Employer may withhold from any amounts payable to Employee
(whether under this Agreement or otherwise) such Federal, state and local taxes as may be required
to be withheld pursuant to any applicable law or regulation.
4. Termination of Employment. Employee’s employment hereunder may be terminated
prior to the expiration of the Term as follows:
| (a) | Automatically in the event of the death of Employee; | ||
| (b) | At the option of Employer, by written notice to Employee or Employee’s personal representative in the event of the Permanent Disability of Employee. As used herein, the term “Permanent Disability” shall mean a physical or mental incapacity or disability which is determined by a qualified third party medical expert to render Employee unable substantially to render the services required hereunder (i) for one hundred twenty (120) days in any twelve (12) month period or (ii) for a period of ninety (90) successive days; | ||
| (c) | At the option of Employer for “Cause”. As used herein, “Cause” shall mean Employee’s: (i) failure to substantially perform Employee’s duties hereunder (other than as a result of a Permanent Disability) for a period of 10 days following notice by Employer to Employee of such failure; (ii) fraud, embezzlement, dishonesty or theft in connection with Employee’s duties hereunder; (iii) an act or acts constituting a felony, a violation of any federal or state securities or banking laws or a misdemeanor involving moral turpitude; (iv) willful malfeasance, willful misconduct or gross negligence in connection with Employee’s duties hereunder or an act or omission which is injurious to the financial condition or business reputation of Employer and its affiliates; or (v) breach of Sections 6 or 7; | ||
| (d) | At the option of Employer at any time without Cause; | ||
| (e) | At the option of Employee at any time for Good Reason on sixty (60) days prior written notice thereof to Employer. As used herein, “Good Reason” shall mean (i) a material and sustained diminishment in Employee’s responsibilities or working conditions from those described in this Agreement, (ii) a relocation of Employee’s principal place of employment by more than 75 miles unless agreed to by Employee, (iii) a material reduction in the Base Salary unless such reduction is consistent with reductions made in the applicable annual base salaries of other similarly situated employees of LPL or (iv) a failure of Employer to pay Base Salary or Bonus, when due, that is not cured within thirty (30) days after written notice thereof by Employee to Employer; provided that “Good |
-3-
| Reason” shall cease to exist for an event on the 60th day following the later of its occurrence or Employer’s knowledge thereof, unless Employer has given Employee written notice thereof prior to such date; or | |||
| (f) | At the option of Employee at any time without Good Reason on sixty (60) days prior written notice thereof to Employer. |
5. Severance Payments.
(a) Death. Upon the termination of Employee’s employment due to death, Employee or
Employee’s legal representatives shall be entitled to receive (i) Base Salary payable through the
month in which Employee’s termination of employment occurs, (ii) reimbursement for reasonable
business expenses incurred in the ordinary course of Employees duties and in accordance with
Employer policies; provided claims for such reimbursement are submitted to Employer within 60 days
following the date of Employee’s termination of employment, (iii) such employee benefits, if any,
as to which Employee may be entitled notwithstanding a termination of employment under the employee
benefit plans of Employer (the amounts described in clauses (i) through (iii) hereof being referred
to as the “Accrued Rights”) and (iv) a pro rata portion of Employee’s Bonus, if any, for the year
in which Employee’s death occurs (which portion of the Bonus shall be an amount reasonably
determined by the Board as of the date of Employee’s death), payable within 30 days. Following
Employee’s termination of employment due to death, except as set forth in this Section 5(a),
Employee and Employee’s legal representatives shall have no further rights to any compensation or
any other benefits under this Agreement.
(b) Permanent Disability. Upon the termination of Employee’s employment due to
Permanent Disability, Employee or Employee’s legal representatives shall be entitled to receive (i)
the Accrued Rights, (ii) Employee’s Base Salary for twelve (12) months, payable in accordance with
the usual payroll practices in effect at Employer as if Employee was employed at the time (but
reduced by the amount of any benefits payable to Employee under any applicable long-term disability
plan) and (iii) a pro rata portion of Employee’s Bonus, if any, for the year in which such
termination occurs (which portion of the Bonus shall be reasonably determined by the Board as of
the date of such termination), payable at the same time as such payment would have been made had
such termination not occurred. Following Employee’s termination of employment due to Permanent
Disability, except as set forth in this Section 5(b), Employee and Employee’s legal representatives
shall have no further rights to any compensation or any other benefits under this Agreement.
(c) Termination Without Cause or for Good Reason; Failure to Renew. Upon the
termination of Employee’s employment hereunder (i) by Employer without Cause pursuant to Section
4(d), (ii) by Employee for Good Reason pursuant to Section 4(e) or (iii) at the end of the Term as
a result the delivery by the Company of a Notice of Nonrenewal, Employee shall be entitled to
receive (A) the Accrued Rights, (B) Employee’s Base Salary for the longer of (x) the remainder of
the Term and (y) 24 months, payable in each case in accordance with the usual payroll practices in
effect at Employer as if Employee was employed at the time, (C) a pro rata portion of Employee’s
Bonus, if any, for the year in which such termination occurs (which portion of the Bonus shall be
reasonably determined by the Board as of the date of such termination), payable at the same time as
such payment would have been made had such
-4-
termination not occurred and (D) an amount equal to twice the Bonus paid (or payable) to
the Employee for the most recently completed calendar year, payable in 24 monthly installments in
accordance with the usual payroll policies in effect at Employer as if Employee was employed at
the time. Following Employee’s termination of employment by Employer without Cause (other than by
reason of Employee’s death or Disability) or by Employee’s resignation for Good Reason, except as
set forth in this Section 5(c), Employee shall have no further rights to any compensation or any
other benefits under this Agreement.
(d) Termination for Cause or Without Good Reason. Upon the termination of Employee’s
employment hereunder by Employer for Cause pursuant to Section 4(c) or by Employee without Good
Reason pursuant to Section 4(f), Employee shall be entitled to receive the Accrued Rights.
Following Employee’s termination of employment by Employer for Cause or by Employee’s resignation
without Good Reason, except as set forth in this Section 5(d), Employee shall have no further
rights to any compensation or any other benefits under this Agreement.
The duties and obligations of Employer and Employee under this Section 5 shall survive any
termination or expiration of this Agreement.
6. Noncompetition and Nonsolicitation
(a) During the Term and for a period of two (2) years thereafter (the “Restricted Period”),
Employee will not, and will not permit any of Employee’s affiliates to, alone, together or in
association with others, either as principal, employee, agent, owner, shareholder, officer,
director, partner, lender, investor, independent contractor, consultant or in any other capacity,
engage in, have a financial interest in or be in any way connected or affiliated with, or render
advice or services to a Person who engages in the business of providing asset management,
brokerage, investment advisory and insurance services through banks, credit unions or other similar
financial institutions or to otherwise engages in any business that would compete with the
businesses conducted by or planned to be conducted by Employer or its subsidiaries as of the date
of Employee’s termination.
(b) During the Restricted Period, Employee will not, and will not permit any affiliate,
directly or indirectly, to solicit, divert, take away or interfere with, the relationship of
Employer, LPL or any of their respective subsidiaries or affiliates with any person who is or was a
customer, a prospective customer whom Employee learned of during the Term or employee or supplier
of Employer, LPL or any of their respective subsidiaries or affiliates at any time.
(c) Nothing in this Section 6 shall limit or restrict Employee’s ownership of 2% or less of
any securities of a company filing periodic reports with the Securities and Exchange Commission
under the Securities Exchange Xxx 0000.
7. Nondisclosure and Use of Proprietary Information. Employee acknowledges that during
Employee’s employment he will learn and have access to proprietary information regarding Employer,
LPL and their respective affiliates (collectively in this Section 7, “Protected Parties”) and their
respective customers and businesses (“Proprietary Information”). Employee agrees and covenants not
to disclose or use for Employee’s own benefit, or the benefit of any other person
-5-
or entity, any Proprietary Information, unless or until the Proprietary Information is now or
hereafter becomes known or available to the public other than because of a breach of this Agreement
by Employee, or such disclosure is or becomes required by law or valid legal process or is
necessary to carry out the duties of Employee’s employment. Employee shall not disclose or reveal
to any unauthorized person any Proprietary Information relating to one or more of the Protected
Parties, and Employee confirms that the Proprietary Information constitutes the exclusive property
of one or more of the Protected Parties. As used herein the term “Proprietary Information” shall
mean trade secrets or proprietary or confidential information of any of the Protected Parties or of
any third party which any one of the Protected Parties is under an obligation to keep confidential
(including, but not limited to, Intellectual Property Rights (as hereinafter defined)) respecting
products, product plans, marketing and other plans, methods, know-how, techniques, technology,
systems, processes, strategies, software programs, works of authorship, customer lists, user lists,
vendor lists, content provider lists, supplier lists, pricing information, projects, notes,
memoranda, reports, lists, records, specifications, software programs, data, documentation,
budgets, plans, projections, forecasts, financial information and proposals in whatever form,
tangible or intangible or other materials of any nature reasonably relating to any matter within
the scope of the business of any one of the Protected Parties or concerning any of the dealings or
affairs of any one of the Protected Parties. As used herein, the term “Intellectual Property
Rights” shall mean all intellectual property rights, including without limitation, patent rights,
trademarks, trademark applications, trade names, service marks, service xxxx applications,
copyrights, copyright applications or registrations, databases, algorithms, computer programs and
other software, know-how, trade secrets, proprietary processes and formulae, inventions, trade
dress, logos, design and all documentation and media constituting, describing or relating to the
above.
Employee hereby agrees that any remedy at law for any breach of the provisions contained in
Section 6 and 7 shall be inadequate and that each of the Protected Parties shall be entitled to
injunctive relief in addition to any other remedy they might have under this Agreement. If a
judicial determination is made that any of the provisions of Section 6 and 7 constitutes an
unreasonable or otherwise unenforceable restriction against Employee, the provisions of Section 6
and 7 shall be rendered void but only to the extent that such judicial or arbitral determination
finds such provision to be unreasonable or otherwise unenforceable. In this regard, the parties
hereto hereby agree that any judicial authority construing this Agreement shall, without
limitation, be empowered to sever any prohibited business activity, geographic restriction, or any
time period from the coverage of Section 6 and 7 and to apply the provisions of Section 6 and 7 to
the remaining business activities, geographic area, and the remaining time period not so severed
by such judicial authority.
Employee agrees that each of the restrictions in Section 6 and 7 are reasonable for the
legitimate protection of the business and goodwill of the Protected Parties.
The covenants and agreements of Employee in Section 6 and 7 shall be in addition to any other
rights and remedies Employer may have hereunder or at law.
8. Assignability. Neither this Agreement nor any right or interest hereunder
shall be assignable by Employee, Employee’s beneficiaries or legal representatives; provided,
however,
-6-
that nothing in this Section 8 shall preclude Employee from designating a beneficiary to receive
any benefits payable hereunder upon Employee’s death or the executors, administrators or other
legal representatives of Employee or Employee’s estate from assigning any rights hereunder to the
person or persons entitled thereto. This Agreement may be assigned by Employer to a person or
entity which is an affiliate or a successor in interest to substantially all of the business
operations of Employer in which Employee participates. Upon any such assignment, the rights and
obligations of Employer hereunder shall become the rights and obligations of such affiliate or
successor person or entity.
9. Binding Agreement; Entire Agreement. This Agreement shall be binding upon, and inure to
the benefit of, Employee, Employer and the Protected Parties and their respective
permitted successors and assigns. This Agreement contains the entire understanding of the parties
with respect to the employment of Employee by Employer. There are no restrictions,
agreements, promises, warranties, covenants or undertakings between the parties with respect to the
subject matter herein other than those expressly set forth herein. This Agreement may not be
altered, modified, or amended except by written instrument signed by the parties hereto.
10. Mitigation; Set-Off; Cooperation. Employee shall not be required to mitigate the
amount of any payment provided for pursuant to this Agreement by seeking other employment. Employer’s
obligation to pay Employee the amounts provided and to make the arrangements provided hereunder
shall be subject to set-off, counterclaim or recoupment of amounts owed by Employee to Employer or
its affiliates. Employee shall provide Employee’s reasonable cooperation in connection with any
action or proceeding (or any appeal from any action or proceeding) which relates to events occurring
during Employee’s employment hereunder. This provision shall survive any termination of this
Agreement.
11. Amendment of Agreement. This Agreement may not be modified or amended, except by an
instrument in writing signed by the parties hereto.
12. Waiver. No term or condition of this Agreement shall be deemed to have been waived, nor
shall there be an estoppel against the enforcement of any provision of this Agreement, except by
written instrument of the party charged with such waiver or estoppel. No such written waiver shall
be deemed a continuing waiver, unless specifically stated therein, and each waiver shall
operate
only as to the specific term or condition waived and shall not constitute a waiver of such term or
condition for the future or as to any act other than the act specifically waived.
13. Severability. If, for any reason, any provision of this Agreement is held invalid,
such invalidity shall not affect the other provisions of this Agreement not held so invalid, and
each such other provision shall, to the full extent consistent with applicable law, continue in full
force and effect. If this Agreement is held invalid or cannot be enforced, then any prior
Agreement between Employer (or any predecessor thereof) and Employee shall be deemed reinstated to
the full extent permitted by law, as if this Agreement had not been executed.
14. Headings. The headings of the sections herein are included solely for convenience
of reference and shall not control the meaning or interpretation of any of the provisions of
this Agreement.
-7-
15.
Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of North Carolina, without regard to conflicts of laws principles thereof
that would direct the applicable of the law of any other jurisdiction.
16.
Effect of Prior Agreements; Shareholder Approval. This Agreement contains the
entire understanding between the parties hereto and supersedes any
prior employment agreement between
Employer or any predecessor of Employer and Employee. Employee hereby
represents to Employer that
the execution and delivery of this Agreement by Employee and Employer
and the performance by
Employee of Employee’s duties hereunder shall not constitute a
breach of, or otherwise contravene,
the terms of any employment agreement or other agreement or policy to which Employee is a party or
otherwise bound. This Agreement shall be subject to, and shall only be effective following, the
approval of Employer’s shareholders as of the date hereof who owned, as of the date hereof, more
than 75% of the voting power of all outstanding stock of Employer, determined and obtained in a
manner consistent with the methodology described in proposed Treasury
Regulation Section 1.280G.
17.
Compliance with IRC Section 409A. Notwithstanding anything herein to the contrary,
(i) if at the time of Employee’s termination of employment with Employer Employee is a
“specified employee” as defined in Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”) and the deferral of the commencement of any payments or benefits otherwise
payable hereunder as a result of such termination of employment is necessary in order to prevent
any accelerated or additional tax under Section 409A of the Code, then Employer will defer
the commencement of the payment of any 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 termination of employment with Employer (or
the earliest date as is permitted
under Section 409A of the Code) 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 Board,
that does not cause such an accelerated or additional tax. Employer shall consult with Employee in
good faith regarding the implementation of the provisions of this Section; provided that neither
Employer nor any of its employees or representatives shall have any liability to Employee with
respect to thereto.
18. Notices. Any notice or other communication required or permitted pursuant to
this Agreement shall be deemed delivered if such notice or communication is in writing and
is delivered personally or by facsimile transmission or is deposited in the United States
mail, postage prepaid, addressed as follows:
If to Employer:
UVEST Financial Services Group Inc.
000 X. Xxxxxxx Xx., 00xx Xx.
Xxxxxxxxx, XX 00000
000 X. Xxxxxxx Xx., 00xx Xx.
Xxxxxxxxx, XX 00000
-8-
Attention: General Counsel and Chief Financial Officer
With a copy to:
LPL Holdings, Inc.
0000 Xxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000-0000
Attention: Executive Vice President of Human Resources
0000 Xxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000-0000
Attention: Executive Vice President of Human Resources
and
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx & Xxxx Xxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx & Xxxx Xxxxxx
If to Employee, to the most recent address of Employee set forth in the personnel records of
Employer.
19. Miscellaneous.
(a) For
the purposes of this Agreement, the term “affiliate” of any specified person shall mean
(i) a person that directly or indirectly through one or more
intermediaries, controls, or is
controlled by, or is under common control with, such specified
person; (ii) any relative or spouse
of such person, or any relative of such spouse, any one of whom has
the same home as such person;
(iii) any trust or estate in which such person or any of the
persons specified in (ii) collectively
own ten percent or more of the total beneficial interest or of which
any of such persons serve as
trustee, executor or in any similar capacity; or (iv) any
corporation or other organization in which
such person or any of the persons specified in (ii) are the
beneficial owners collectively of ten
percent or more of any class of equity securities or ten percent or
more of the equity interest.
For the purposes of this definition, “control” when used
with respect to any specified person means
the power to direct the management and policies of such person,
directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise;
and the terms “controlling”
and “controlled” have meanings relative to the foregoing.
(b) For
purposes of this Agreement, the term “person” refers to an individual or corporation,
partnership, trust, association or other organization.
20. Survival.
The provisions of Section 6 and 7 shall survive the expiration, termination, or completion of
performance of this Agreement.
-9-
IN WITNESS WHEREOF, Employer has caused this Agreement to be executed by its duly authorized
officer, and Employee has signed this Agreement, each as of the day and year first above written.
| UVEST FINANCIAL SERVICES GROUP INC. | ||||
By: Name: |
/s/ Xxx X. Xxxxxx
|
|||
Title:
|
President | |||
/s/ Xxx X. Xxxxxx
|
Schedule A
Target 2007 and 2008 Bonus
Target 2007 and 2008 Bonus
2007 Target Bonus: $200,000
2008 Target Bonus: $250,000
