Exhibit 10.1.2
EXECUTIVE COMPENSATION AGREEMENT
This Executive Compensation Agreement dated as of the 18th day of October,
1997, between Rushmore Financial Group, Inc., a Texas Corporation (hereinafter
referred to as "Rushmore") and Xxx X. Xxxxx, (hereinafter referred to as
"Officer").
WITNESSETH:
WHEREAS, Officer is President and Chief Operating Officer of Rushmore
Securities Corporation ("RSC"), a Texas corporation and licensed securities
brokerage, a wholly owned subsidiary of Rushmore, (Rushmore, its subsidiaries
and RSC are hereinafter collectively referred to as the "Companies"), and
Officer has other supervisory responsibilities for other functions of the
Companies; and
WHEREAS, Rushmore desires that Officer continue to use his experience and
abilities in the business of the Companies in a capacity similar to that in
which he has heretofore served; and
WHEREAS, Officer desires to accept such employment upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is hereby agreed as follows:
1. Employment. Rushmore hereby agrees to continue to employ Officer and
----------
Officer hereby agrees to continue to serve Rushmore as President and Chief
Operating Officer of Rushmore Securities Corporation and in other
capacities similar to those in which he has heretofore served, for the term
and on the conditions hereinafter set forth. Officer shall have such
executive duties to Companies during the term of this Agreement as shall be
determined by the Board of Directors of Rushmore; however, Officer shall
not be assigned to a position which shall substantially diminish his
prestige or responsibility compared to that which he has heretofore enjoyed
with Rushmore. Subject to the foregoing, Officer hereby agrees to serve in
any comparable executive position in the State of Texas to which he shall
be directed by the Board of Directors of Rushmore, excluding service in the
insurance related businesses of Rushmore, and further agrees to use his
best efforts to promote the efficient and profitable operation of the
business of Rushmore.
2. Term of Employment. The term of Officer's employment shall continue
------------------
subject to the provisions of this Agreement, commencing as of the date
hereof, until December 31, 2000. Beginning January 1, 1998, and each
January 1st thereafter, the term shall annually be extended for a
successive additional one-year period unless either party notifies the
other at least ninety (90) days before any January 1st, or January 1st, of
any later year
immediately following the year terminating a thirty-six month renewal
period, that it intends to terminate. If such a notice is given, this
Agreement will terminate on December 3 Ist following the date of the
notice.
3. Compensation.
------------
a. Base Compensation. As base compensation for services provided
-----------------
pursuant to this Agreement, Rushmore shall initially pay Officer
compensation at the rate of $96,000.00 per year, which amount shall be
paid beginning January 1, 1998. Within three months prior to each
January 1st, the Board of Directors of Rushmore will evaluate the
performance of Officer and the compensation paid to executives in
other companies in the Financial Services Sector of similar size and
scope of operations, during the previous year and fix his Base
Compensation for the next following year at an amount which shall not
be less than the prior year's Base Compensation as determined by the
Board of Directors. When a new Base Compensation is fixed by the Board
of Directors of Rushmore under this paragraph, it shall become the new
Base Compensation and thereafter the Base Compensation shall not be
less than that amount, without regard to any elective deferral of
compensation by Officer. The Base Compensation provided for in this
Paragraph 3 shall be payable in equal semimonthly installments on the
first and fifteenth business day of each month.
b. Additional Compensation. Officer shall also earn commissions and
-----------------------
overrides for accounts serviced by him personally as broker for RSC,
and override commissions on commissions earned by persons introduced
by Officer to Rushmore and its subsidiaries or affiliates, in
accordance with the commission rates applicable to him, which shall be
paid semimonthly as provided above. The Board of Directors of Rushmore
reserves the right to pay to Officer compensation and any other bonus
or incentive compensation, in money, stock options, or any other form,
as the Board in its discretion deems appropriate. The total of the
Base Compensation and Additional Compensation shall be Combined
Compensation hereunder. In any year in which Officer shall elect to
defer a portion of the Base Compensation to which he is entitled, such
deferred amount shall be paid to Officer in the following year of this
Agreement or its termination.
c. Reimbursement. Rushmore shall provide Officer with an automobile,
-------------
or an allowance for such, for his business use and pay all expenses of
operating it. So long as Officer shall be employed by Rushmore, he
shall be entitled and authorized to incur reasonable and necessary
expenses in connection with or related to his business duties,
including without limitation, expenses for travel, entertainment,
maintaining membership in various clubs and similar expenses. Rushmore
will pay all such expenses directly or will reimburse Officer for
them.
4. Participation in Employee Benefit Programs. Officer will be entitled to
------------------------------------------
participate on the same basis as other executive employees in any employee
benefit programs presently in force or subsequently adopted by Rushmore,
including such pension and profit-sharing plans, hospitalization, medical
and health and accident insurance programs, policies and benefits, life
insurance programs and pension and retirement benefit plans as may from
time to time be in effect.
5. Payments Upon Death or Disability
---------------------------------
a. In the event that Officer should die, Rushmore shall pay to the
beneficiary as may have been designated in writing by Officer or,
failing such designation, to Officer's estate, the sum of three (3)
years' Combined Compensation at the then existing rate. Such payment
shall be made either in cash within one hundred twenty (120) days
after Officer's death or disability, or in thirty-sixty (36) equal
monthly installments, as determined by Rushmore.
b. Rushmore shall acquire for the benefit of Officer, disability
insurance to pay to Officer a benefit of 75% of his Combined
Compensation for the last complete year of employment, in the event
Officer shall become totally disabled. Officer's occasional absence
from work for reasonable periods of time because of sickness (not
resulting in total disability) shall not result in any adjustment in
his compensation or rights under this Agreement. For the purpose of
this Agreement, the term "totally disabled" or "total disability" mean
Officer's inability on account of sickness or accident to regularly
engage or to adequately perform his assigned duties under this
Agreement.
6. Severance Pay Upon Termination. In the event Officer's employment is
------------------------------
terminated by Rushmore, except for "cause" and except for Officer's death
or total disability, Rushmore shall pay to Officer as severance pay the sum
of three years' Base Compensation at the then existing rate, plus any sums
due in respect of increases in Base Compensation pursuant to Paragraph 3(a)
hereof. Such payment shall be made in thirty-sixty (36) equal monthly
installments. Termination for "cause" shall mean termination by Rushmore
for any of the following reasons:
a. Willfully and significantly damaging Rushmore's property, business,
reputation or goodwill;
b. The commission of a felony;
c. Stealing, dishonesty, fraud or embezzlement;
d. Deliberate neglect of duty, or resignation.
Notwithstanding any other provision of this Agreement, if during any period
of time, Officer receives severance pay pursuant to this Paragraph 6 and
concurrently therewith is paid any Combined Compensation (as defined in
Paragraph 3(b) hereof), then the amount of severance pay to which Officer
would otherwise be entitled hereunder shall be reduced during such period
by an amount equal to the Combined Compensation paid during such period.
7. TRADE SECRETS AND CONFIDENTIAL INFORMATION. During the term of this
Agreement, Officer will have access to customer lists and compilations of
information and records specific to and regularly used in the operation of
the business of Rushmore and its subsidiaries including RISI. Officer
acknowledges that such information constitutes valuable and confidential
information of the Rushmore. Officer shall not disclose any of the
aforesaid private company secrets, directly or indirectly, nor use them in
any way, either during the term of this Agreement or after termination of
employment. All files, records, electronic and magnetic files, documents,
specifications, equipment and similar information relating to the business
of Rushmore, whether prepared by Officer or otherwise coming into Officer's
possession, shall remain the exclusive property of Rushmore and shall not
be removed from the premises of Rushmore except as shall be necessary for
Officer to perform Officer's duties under this Agreement. Upon termination
of this Agreement for any reason, Officer will deliver all such materials
in his possession and all copies thereof to Rushmore.
8. RESTRICTIVE COVENANTS. In consideration the severance provisions of this
Agreement and of the provision to Officer of Rushmore's trade secrets and
confidential information, and in order to protect the rights of Rushmore
and its subsidiaries including RISI to its trade secrets, confidential
information, and client relationships, the Officer hereby agrees as
follows:
8.1 Officer agrees that during the term of this Agreement and for a period
of two (2) years following any termination of employment, Officer shall not
be an officer, director, employee, agent or representative, or an owner of
more than five percent (5%) of the outstanding capital stock of any
corporation, or an owner of any interest in, or employee, agent or
representative of, any other form of business association, sole
proprietorship or partnership that solicits, hires (whether or not
solicited) or otherwise attempts to induce any employees, agents or
representatives of Rushmore and its subsidiaries including RISI to
terminate their position as employee, agent or representative therewith.
8.2 Officer agrees that, during the term of this Agreement and for a
period of two (2) years following termination for any reason, Officer shall
not, directly or indirectly by being an officer, director, employee, agent,
representative or consultant, or a record or beneficial owner of more than
five percent of the outstanding capital stock of any corporation or an
owner of any interest in, or employee of, any other form of business
association, sole proprietorship or partnership, conduct a financial
services business or organization which engages or participates, directly
or indirectly, in any business or activity that is engaged in the sale of
insurance, securities or other investment products or
otherwise competes with Rushmore and its subsidiaries including RISI
anywhere within the State of Texas or any city of the United States in
which the Rushmore and its subsidiaries including RISI maintains a retail
office.
8.3 In the event that any adjudicative body shall finally hold that this
Section 9 constitutes an unreasonable restriction upon Officer, the parties
hereby expressly agree that the provisions of this Section 9 shall not be
rendered void, but shall apply as to time and territory or to such other
extent as such body may indicate constitutes a reasonable restriction under
the circumstances involved.
8.4 Officer agrees that irreparable harm would occur if any of the
provisions of Section 7 or 8 were breached and that the Company shall be
entitled to obtain an injunction or other equitable relief to enforce
specifically the provisions thereof in any court of competent jurisdiction.
9. Vacation/Sick Days. Officer shall be entitled to an annual vacation of
------------------
three (3) weeks each year at full compensation at a time mutually
satisfactory to Rushmore and Officer. Unused vacation and sick days may be
accrued indefinitely.
10. Approval by the Board of Directors. This Agreement has been approved by
----------------------------------
the Board of Directors of Rushmore.
11. Agreement is Personal. This Agreement is a personal agreement and the
---------------------
rights and interests hereunder (except that of Rushmore) may not be sold,
transferred, assigned, pledged or hypothecated. This Agreement shall be
binding on the heirs, executors and administrators of Officer and on the
successors and assigns of Rushmore. During, Officer's lifetime, the parties
hereto by mutual agreement may amend, modify or rescind this Agreement
without the consent of any other person.
12. Severability of Provisions. If any of the provisions of this Agreement
--------------------------
shall be held invalid, the remainder of this Agreement shall not be
affected thereby.
13. Governing Law. This instrument contains the entire agreement between the
--------------
parties and shall be governed by the laws of the State of Texas. It may be
amended only by agreement in writing signed by each of the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
RUSHMORE FINANCIAL GROUP, INC.
By: /s/ Xxxxx X. Xxxxx, Xx
---------------------------------------------
Xxxxx X. (Xxxxx) Xxxxx, Jr., President
/s/ Xxx X. Xxxxx
--------------------------------------------------
Xxx X. Xxxxx
