EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of April 9, 1998 (this
"Agreement"), by and between Axe-Houghton Associates, Inc., a Delaware
corporation (the "Company"), and Xxxx X. Xxxx, Xx. ("Executive").
WHEREAS, the Company desires to continue to employ Executive
as President of the Company and also as Managing Director of the Axe Core
Disciplines, and Executive desires to continue to be retained in such
capacities, on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements made herein, the Company and Executive agree as follows:
1. Employment; Duties.
(A) The Company shall employ Executive as President
of the Company and Managing Director of the Axe Core Disciplines for the
"Employment Period" as defined in Section 2. The Executive, in his capacity as
President and Managing Director of the Axe Core Disciplines, shall have such
duties, responsibilities and authority with the Company normally incident to
such offices, subject to the provisions of the By-laws of the Company, and shall
be responsible for overseeing the Axe Core Disciplines. The "Axe Core
Disciplines" as used herein shall mean the Core International American
Depositary Receipts (ADR) investment discipline, balanced account management,
the fixed income special assignment from the Arizona State Retirement System,
the domestic index account managed on behalf of the City and County of San
Francisco Employees' Retirement System, diversified small capitalization value
equity management, and such other disciplines as may be developed or managed by
Executive on behalf of the Company from time to time during the Employment
Period. Notwithstanding anything to the contrary set forth herein, no discipline
may be removed from the Axe Core Disciplines without the mutual agreement of the
parties hereto. Subject to the provisions of Section 4 herein, the precise
duties, responsibilities and authority of Executive may be expanded, limited or
modified, from time to time, at the discretion of the Board of Directors of the
Company (the "Board"), consistent with the ordinary duties, responsibilities and
authority of President and Managing Director of the Axe Core Disciplines and the
policies and procedures of the Company.
(B) During the Employment Period, Executive shall
render his services solely in the performance of his duties and responsibilities
hereunder. Executive agrees that, during the Employment Period, he shall devote
his full working time, attention, knowledge and experience and give his best
effort, skill and abilities, exclusively to promote the business and interests
of the Company and its direct or
indirect parents, subsidiaries and affiliates (collectively referred to as
"Affiliates"). The Executive may not serve as an officer or director of, make
investments in, or otherwise participate in any other entity without the prior
written approval of the Board; provided, however, that the foregoing shall not
be deemed to prohibit Executive from acquiring, directly or indirectly, solely
as an investment, not more than two percent (2%) of any securities of any class
that are registered under Section 12(b) or 12(g) of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), or investments in non-public entities, in
all events consistent with Section 8 of this Agreement and the policies and
procedures generally applicable to executives of the Company and its Affiliates;
and provided further, that so long as it does not interfere with Executive's
employment, Executive may serve as an officer, director or otherwise participate
in purely educational, welfare, social, religious and civic organizations.
(C) The parties acknowledge and agree that Executive
also serves currently as a director on the Company's Board. The Company shall
use its best efforts to nominate and continue to have Executive serve as a
member of the Board during the Employment Period.
2. Employment Period. (A) Executive's employment under this
Agreement shall commence on April 9, 1998 and end on April 8, 2001 (the "Initial
Period"), unless sooner terminated in accordance with the provisions of Section
4.
(B) On the expiration of the Initial Period and on
each yearly anniversary thereof, such employment shall automatically renew for
an additional one-year period (each such one-year period being referred to as a
"Renewal Period"), unless sooner terminated in accordance with the provisions of
Section 4; provided, however, that no renewal shall occur if the Company or
Executive notifies the other in writing of its or his intention not to renew the
employment not less than six (6) months prior to such expiration date or
anniversary, as the case may be. The period of Executive's employment under this
Agreement, as in effect from time to time, is referred to herein as the
"Employment Period".
3. Compensation and Benefits. Executive shall be entitled to
the following compensation and benefits, in each case subject to applicable
deductions and withholdings:
(A) Base Compensation. Executive shall be paid an
aggregate base salary (the "Base Salary") at the rate of $350,000 per annum. The
Base Salary shall be payable in a manner consistent with the normal payroll
practices of the Company in effect from time to time. The Board, in its sole
discretion, or at the recommendation of the Compensation and Stock Option
Committee of the Board of Directors of Xxxxxx Group Inc. (the "Compensation
Committee"), may increase (but not decrease) the Base Salary, at any time.
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(B) Annual Bonus. In addition to the Base Salary,
Executive shall be entitled to participate in a bonus pool (the "Bonus Pool")
for employees of the group responsible for providing separate account management
of institutional assets invested in the Axe Core Disciplines (the "Axe Core
Group"), and the Company shall pay to Executive a minimum annual bonus for the
Fiscal Year (as specified below) ended December 31, 1998 at the rate of $100,000
per annum (the "Minimum Bonus Award"), which shall operate as a draw against,
and be deducted from, the Bonus Pool. The composition of the Axe Core Group
shall be determined by the Board from time to time. The Bonus Pool for a
particular Fiscal Year shall equal thirty percent (30%) of the Pre-Bonus Pre-Tax
Profits (as defined below), less the deductions specified in Section 3(B)(2)
below. The Minimum Bonus Award plus any additional amounts paid to Executive out
of the Bonus Pool, including any deferred bonus amounts as hereinafter provided,
are collectively referred to herein as the "Bonus Award". To the extent
necessary to avoid the limitation on the federal tax deductibility of the Bonus
Award for any year under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), payment thereof may, at the sole discretion of the Board,
or at the recommendation of the Compensation Committee, be deferred only to the
extent necessary to avoid exceeding such Section 162(m) limitation to the first
taxable year of the Company in which the payment would be fully deductible;
provided, however, that the Bonus Award or portion thereof shall be deferred
only in the event that the compensation of other executives of the Company whose
compensation is subject to Section 162(m) is deferred under circumstances
similar to those of Executive. Except as provided in the previous sentence, the
Bonus Award for a Fiscal Year shall be payable as soon as practicable after the
release of Xxxxxx Group Inc.'s audited financial statements for such Fiscal
Year, but in no event later than ninety (90) days after the end of such Fiscal
Year. In the case of a deferral as described above, amounts deferred shall be
credited with such interest and on such other terms as the Company and Executive
shall mutually agree. All deferred Bonus Awards shall be payable within thirty
(30) days after the beginning of the first Fiscal Year in which such amounts may
be paid.
(1) "Pre-Bonus Pre-Tax Profits" shall mean the
amount, if any, determined in accordance with Generally Accepted Accounting
Principles ("GAAP") consistently applied from year to year, by which the total
revenues of the Axe Core Group for a particular Fiscal Year exceed all direct
expenses incurred in generating such revenues and in the operation and conduct
of the Axe Core Group's business during that Fiscal Year. Such expenses include,
but are not limited to: (a) all salaries and non-bonus compensation paid to all
employees of the Axe Core Group, including Executive, which includes related
payroll taxes, insurance and other benefits, any profit-sharing contributions
made on behalf of such employees, the cost of any stock options or other equity
awards made to such employees and any amounts paid to such employees upon
termination of employment; (b) rent (at the Company's cost per square foot); (c)
telephones; (d) quotation, pricing, portfolio management and client accounting
systems; (e) computer hardware and software; (f) electronic and other office
equipment; (g) sales commissions payable to Company sales personnel and
third-parties, (h) consulting and solicitation fees; (i) business travel and
entertainment determined in accordance with the
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Company's policies; (j) legal and professional fees; and (k) membership dues and
subscriptions.
(2) For each Fiscal Year during the Employment
Period, the following amounts shall be deducted from the Bonus Pool prior to the
award of bonuses to any employees, including Executive, of the Axe Core Group:
(a) the Minimum Bonus Award, if any, and any minimum bonuses paid to other
members of the Axe Core Group with respect to the particular Fiscal Year and (b)
any Bonus Shortfall (as defined below) from prior Fiscal Years.
(3) The amount remaining in the Bonus Pool after
making the deductions specified in Section 3(B)(2) shall be distributed by
Executive to employees of the Axe Core Group, including Executive, as Executive
shall determine, subject to the approval of the Board and, where appropriate,
the Compensation Committee. In the event that, after making the necessary
deductions specified in Section 3(B)(2), the Bonus Pool for a particular Fiscal
Year is not sufficient to pay bonuses to employees of the Axe Core Group other
than any Minimum Bonus Award paid to Executive and minimum bonuses paid to any
other employee entitled to guaranteed minimum bonuses, the Company may
determine, in its sole discretion, to pay bonuses to such employees. The amount
by which the total bonuses paid to employees of the Axe Core Group, including
Executive and the other employees entitled to guaranteed minimum bonuses,
exceeds the amount of the Bonus Pool (the "Bonus Shortfall") shall be deducted
from the Bonus Pool for the next Fiscal Year, as described in Section 3(B)(2).
(4) "Fiscal Year" shall mean the year beginning
on each January 1st and ending on each December 31st of the same year; provided,
however, that for purposes of this Agreement, the first Fiscal Year shall
commence on April 9, 1998 and end on December 31, 1998 and, in the case of a
termination of employment during a particular Fiscal Year, the Fiscal Year shall
consist of the Pre-Termination Period (as defined below).
(C) Benefits. Executive also shall be entitled to
participate in the employee and fringe benefit and group insurance programs
provided by the Company for its officers and employees generally in accordance
with the terms of the applicable plan documents as they may be revised from time
to time. Executive shall be entitled to receive such other benefits as are
generally provided to executives of the Company. Executive also shall be
entitled to reimbursement for reasonable out-of-pocket expenses incurred in
connection with the business of the Company in accordance with the Company's
policies and procedures. Such policies and procedures shall be consistent with
prior practice unless Executive is provided with written notice of such changes.
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4. Termination.
(A) The Company may, with or without prior notice,
terminate the Employment Period with or without Cause (as defined below) or for
Disability (as defined below). Executive may terminate the Employment Period
only for Good Reason (as defined below) or pursuant to Section 4(G). The
Employment Period shall automatically terminate upon Executive's death or upon
expiration of the Initial Period or a Renewal Period, as the case may be, in the
event that the Company or Executive elects not to renew Executive's employment
under this Agreement in accordance with Section 2(B) herein. Except as otherwise
provided in this Agreement, Executive's rights and the obligations of the
Company hereunder shall cease as of the date of the termination of the
Employment Period (the "Termination Date"); provided, however, that Executive
shall be entitled to receive (i) any accrued but unpaid Base Salary as of the
Termination Date; (ii) any awarded but unpaid Bonus Awards (including any
deferred Bonus Awards) as of the Termination Date; and (iii) any amount accrued
under Company benefit plans as of the Termination Date as provided pursuant to
the terms of such plans. The amounts referred to in subsections (i) through
(iii) of this Section 4(A) shall constitute the "Accrued Obligations."
(B) In the event the Company terminates the
Employment Period for any reason other than Cause, or if Executive terminates
the Employment Period for Good Reason, Executive shall be entitled to receive,
in addition to the Accrued Obligations, termination payments, in each case
subject to applicable deductions and withholdings, as follows:
(1) a pro-rated bonus for the year in which the
termination of employment occurs for the period commencing on the first day of
the Fiscal Year in which the termination occurs and ending on the Termination
Date (the "Pre-Termination Period"), calculated as follows:
(a) in the event that the Termination Date
occurs on or before December 31, 1998, the greater of (i) an amount equal to
$100,000 multiplied by a fraction, the numerator of which is the number of days
in the Pre-Termination Period and the denominator of which is 365; or (ii) an
amount equal to the Bonus Pool for the Pre-Termination Period multiplied by the
percentage, if any, of the Bonus Pool that was paid to Executive with respect to
the Fiscal Year immediately preceding the Fiscal Year in which termination of
employment occurred; or
(b) in the event that the Termination Date
occurs after December 31, 1998 an amount equal to the Bonus Pool for the
Pre-Termination Period, multiplied by the percentage, if any, of the Bonus Pool
that was paid to Executive with respect to the Fiscal Year immediately preceding
the Fiscal Year in which termination of employment occurred.
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(2) in the event the Termination Date occurs on
or before December 31, 1998, an amount equal to $450,000, multiplied by the
number of years or fraction thereof beginning with the Termination Date and
ending on December 31, 1998, plus $350,000 multiplied by the number of years or
fraction thereof beginning with January 1, 1999 and ending on the date the
Initial Period expires; or
(3) in the event the Termination Date occurs
after December 31, 1998, an amount equal to $350,000 multiplied by the number of
years or fraction thereof beginning with the Termination Date and ending on the
date the Initial Period or Renewal Period, as the case may be, expires.
The amounts referred to above in subsections 4(B)(2) and (3) shall be referred
to herein as the "Termination Amount". Such Termination Amount shall be paid out
over the remaining term of the Initial Period or the Renewal Period, as the case
may be, in equal monthly installments ("Termination Payments").
(C) Except as otherwise provided herein, the Accrued
Obligations and any amounts due under Section 4(B)(1) shall be payable within
thirty (30) days following the Termination Date.
(D) In the event of Executive's death after the
Employment Period has been terminated by the Company other than for Cause or by
Executive for Good Reason, the Company shall make any Termination Payments due
under Section 4(B) and shall pay any unpaid Accrued Obligations which would
otherwise have been payable to Executive to Executive's estate or designated
beneficiary.
(E) A termination of the Employment Period (1) upon
expiration of the Initial Period or any Renewal Period pursuant to Section 2(B),
whether at the Company's or Executive's election, (2) by reason of Executive's
death or Disability, or (3) pursuant to Section 4(G) of this Agreement shall not
constitute a termination by the Company other than for Cause or by Executive for
Good Reason, and therefore, upon such termination, Executive shall be entitled
to receive only the Accrued Obligations and any amounts due under Section
4(B)(1).
(F) As a condition to his entitlement to receive
Termination Payments, Executive (or his estate or designated beneficiary) shall
(1) have executed and delivered to the Company an irrevocable waiver and release
satisfactory to the Company waiving and releasing all rights and claims against
the Company (other than the rights to receive Accrued Obligations and
Termination Payments) and its Affiliates and their respective officers, agents,
directors and employees, and such waiver and release shall have become
irrevocable, and (2) not engage in Prohibited Conduct (as defined below). The
Company shall have the right to discontinue the payment of any Termination
Payments in the event that Executive engages in Prohibited Conduct, but this
shall not
6
affect the Company's obligation to pay the Accrued Obligations and any amounts
due under Section 4(B)(1).
(G) In the event the Company appoints a new Chief
Executive Officer, Executive shall have the right to terminate the Employment
Period upon thirty (30) days' written notice to the Company; provided, however,
that Executive's right under this Section 4(G) to terminate the Employment
Period must be exercised no later than sixty (60) days after the date such new
Chief Executive Officer commences employment with the Company.
(H) In the event the Employment Period terminates for
any reason (except death), Executive agrees that, if at that time he is a
director or officer of the Company or any of its Affiliates, he will immediately
deliver his written resignation as such director or officer, such resignation to
become effective immediately.
(I) Notwithstanding anything contained herein to the
contrary, the Company may reduce the Termination Payments to the extent such
Termination Payments, when added to other payments made to Executive, constitute
an "excess parachute payment" as defined in Section 280G of the Code.
(J) For purposes of this Agreement:
(1) "Cause" shall mean an event where Executive:
(a) commits any act of fraud or dishonesty in connection with his employment or
willful misconduct or other act which materially injures the Company or any of
its Affiliates; (b) breaches Section 5, 6, 7, 8 or 9, or any other material
provision of this Agreement or any material representation, warranty, covenant
or condition in this Agreement or any material fiduciary duty to the Company or
any of its Affiliates which, if curable, is not cured within thirty (30) days
after the date the Company notifies Executive thereof or, if not curable within
thirty (30) days, Executive fails to commence curing such default within the
thirty (30) days and fails to diligently pursue such cure, but in no event shall
the cure period exceed forty-five (45) days after the date of notification of
the default; (c) fails, refuses or neglects to timely perform any material duty
or obligation under this Agreement and such failure, refusal or neglect is not
cured by Executive within thirty (30) days after the date the Company notifies
Executive thereof in writing in reasonable detail necessary for Executive to
correct the matter; (d) commits a material violation of any law, rule,
regulation or by-law of any governmental authority (state, federal or foreign),
any securities exchange or association or other regulatory or self-regulatory
body or agency applicable to the Company or any of its Affiliates or any general
policy or directive of the Company or any of its Affiliates communicated in
writing to Executive; (e) is convicted of a crime involving moral turpitude,
dishonesty, fraud or unethical business conduct, or a felony; (f) is subject to
the occurrence of an event or condition which makes it unlawful for Executive to
perform his duties hereunder, including the issuance of any order, decree,
decision or judgment, which remains in effect for eight (8) weeks or more; (g)
gives or accepts undisclosed commissions or other payments in cash
7
or in kind in connection with the affairs of the Company or any of its
Affiliates or their respective clients in violation of any law, rule, regulation
or by-law of any governmental authority (state, federal or foreign), any
securities exchange or association or other regulatory or self-regulatory body
or agency applicable to the Company or any of its Affiliates or any written
policy or directive of the Company or any of its Affiliates; (h) is expelled or
suspended in excess of eight (8) weeks, or is subject to an order temporarily
(for a period in excess of eight weeks) or permanently enjoining Executive from
the securities, investment management or investment banking business or from
acting in the capacity contemplated by this Agreement by the Securities and
Exchange Commission ("SEC"), the National Association of Securities Dealers
("NASD"), any securities exchange or any self-regulatory agency or governmental
authority (state, foreign or federal); or (i) fails to obtain or maintain any
registration, license or other authorization or approval that the Company or any
of its Affiliates in their discretion reasonably believes is required for
Executive to perform his duties and responsibilities hereunder. Any termination
for Cause under this Agreement shall be made by delivering written notice
thereof to Executive, which notice shall include the specific section(s) of this
Agreement which is relied upon and the reason(s) that has given rise to a
termination for Cause.
(2) "Good Reason" shall mean (a) the Company
changes Executive's status, title or position as President of the Company or
Managing Director of the Axe Core Disciplines and such change represents a
material adverse change in the status, title or position conferred hereunder;
(b) the Company materially breaches this Agreement, (c) the Company wrongfully
fails to pay any Base Salary or Bonus Award when due; or (d) the Company seeks
to relocate Executive more than fifty (50) miles from the Company's current
office location. In order to terminate the Employment Period for Good Reason,
Executive must deliver to the Company a written notice of termination which
includes the specific section(s) of this Agreement which is relied upon and
reasonable detail as to the reason(s) that the Company's act or failure to act
has given rise to Executive's termination for Good Reason. With respect to a
termination for Good Reason within the meaning of Section 4(J)(2)(a), (b) or
(d), the Company shall have thirty (30) days after Executive delivers a notice
of termination for Good Reason to correct the matters constituting "Good Reason"
as specified in the notice or, if not curable within thirty (30) days, shall
have thirty (30) days in which to commence correcting the matters constituting
"Good Reason" as specified in the notice and diligently pursue such correction,
but in no event shall the period to correct such matters exceed forty-five (45)
days after the date of delivery of a notice of termination for Good Reason. With
respect to a termination for Good Reason within the meaning of Section
4(J)(2)(c), the Company shall have fifteen (15) days after the Executive
delivers a notice of termination for Good Reason to correct the matters
constituting Good Reason as specified in the notice. Notwithstanding the
foregoing, Executive acknowledges that the Company may appoint a new Chief
Executive Officer during the Employment Period and agrees that the appointment
of such a Chief Executive Officer, in and of itself, shall not constitute Good
Reason hereunder.
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(3) "Disability" shall mean Executive's
inability to perform his duties and responsibilities by reason of mental or
physical disability for at least one hundred and twenty (120) consecutive days
or any one hundred and twenty (120) days (whether or not consecutive) in any
one-hundred eighty (180) consecutive day period. In the event of a dispute as to
whether Executive is disabled within the meaning hereof, either party may from
time to time request a medical examination of Executive by a doctor appointed by
the chief of staff of a hospital selected by mutual agreement of the parties, or
as the parties may otherwise agree, and the written medical opinion of such
doctor shall be conclusive and binding upon the parties as to whether Executive
has become disabled and the date when such disability arose. The cost of any
such medical examination shall be borne by the Company.
(4) "Prohibited Conduct" shall mean conduct which:
(i) violates the terms of Sections 5, 6, 7, 8 or 9 of this Agreement; or (ii)
disparages the Company or any of its Affiliates or any of their respective
officers or directors.
5. Trade Secrets and Confidential Information. Executive
recognizes that it is in the legitimate business interests of the Company and
its Affiliates to restrict his disclosure and use of Trade Secrets and
Confidential Information (as defined below) relating to the Company and its
Affiliates for any purpose other than in connection with his performance of his
duties and responsibilities to the Company and its Affiliates, and to limit any
potential appropriation of such Trade Secrets and Confidential Information by
Executive. Executive therefore agrees that all Trade Secrets and Confidential
Information relating to the Company and its Affiliates heretofore or in the
future obtained by Executive shall be considered confidential and the
proprietary information of the Company and its Affiliates. During the Employment
Period, Executive shall not use or disclose, or authorize any other person or
entity to use or disclose, any Trade Secrets and Confidential Information, other
than as necessary to further the business objectives of the Company and its
Affiliates in accordance with the terms of his employment hereunder. The term
"Trade Secrets and Confidential Information" means information which is
confidential or proprietary to the Company, including, by way of example and
without limitation, matters of a technical nature, formulas, secret or
proprietary processes, works of authorship, computer programs (including
documentation of such programs), materials, patent applications, new product
plans, other plans, technical information, technical improvements, test data,
progress reports and research projects, and all other matters of a business
nature, such as business plans, prospects, financial information, marketing
plans and strategies, proprietary information about costs, profits, markets and
sales, lists of clients and suppliers of the Company and its Affiliates,
procurement and promotional information, credit and financial data concerning
clients or suppliers of the Company and its Affiliates, information relating to
the management, operation and planning of the Company and its Affiliates, plans
for future development, and other information of a similar nature, in each case
to the extent not available to the public. After termination of the Employment
Period for any reason, Executive shall not use or disclose Trade Secrets and
Confidential Information.
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6. Company Property; Return of Documents and Property.
(A) All records, files, documents, computer programs,
software, discs and magnetic tape, equipment and similar items relating to the
business of, or provided by, the Company or its Affiliates, including but not
limited to all correspondence, manuals, letters, notes, notebooks, reports,
flow-charts, proposals, documents concerning the clients, products, services or
processes, records relating to the Performance Record (as defined below), and
all materials derived therefrom, in each case in whatever medium, (collectively
"Company Property") which Executive shall prepare or receive from the Company or
its Affiliates shall remain the sole and exclusive property of the Company and
its Affiliates, as the case may be.
(B) Upon termination of the Employment Period, or at
any time upon the request of the Company, Executive (or his heirs or personal
representatives) shall deliver to the Company (1) all documents and materials
(including, without limitation, computer files) containing Trade Secrets and
Confidential Information relating to the business and affairs of the Company and
its Affiliates, and (2) all Company Property which is in the possession or under
the control of Executive (or his heirs or personal representatives).
7. Discoveries and Work.
(A) All Discoveries and Works (as defined below) made
or conceived by Executive during his employment by the Company, jointly or with
others, that relate to the present or anticipated activities of the Company or
its Affiliates, or are used by the Company or its Affiliates, shall be owned by
the Company or its Affiliates, as the case may be. The term "Discoveries and
Works" includes, by way of example and without limitation, Trade Secrets and
Confidential Information, patents and patent applications, trademarks and
trademark registrations and applications, service marks and service xxxx
registrations and applications, trade names, copyrights and copyright
registrations and applications. Executive shall (1) promptly notify, make full
disclosure to, and execute and deliver any documents requested by the Company or
any of its Affiliates, as the case may be, to evidence or better assure title to
Discoveries and Works in the Company or its Affiliates; (2) renounce any and all
claims, including without limitation claims of ownership and royalty, with
respect to all Discoveries and Works and all other property owned or licensed by
the Company or its Affiliates; (3) assist the Company and its Affiliates in
obtaining or maintaining for itself at its own expense United States and foreign
patents, copyrights, trade secret protection or other protection of any and all
Discoveries and Works; and (4) promptly execute, whether during his employment
with the Company or thereafter, at the Company's expense, all applications or
other endorsements necessary or appropriate to maintain patents and other rights
for the Company and its Affiliates and to protect the title of the Company and
its Affiliates thereto, including but not limited to assignments of such patents
and other
10
rights. Executive acknowledges that all Discoveries and Works shall be deemed
"works made for hire" under the Copyright Act of 1976, as amended, 17 U.S.C.
ss.101.
(B) Executive hereby acknowledges and agrees that the
investment performance record of each of the investment disciplines managed by
the Axe Core Group existing as of the date hereof as well as achieved during the
Employment Period, which includes without limitation the investment performance
records of each of the Axe Core Disciplines (each a "Performance Record",
collectively the "Performance Records"), is the sole and exclusive property of
the Company, and that the Company retains all rights, title and interest in the
Performance Records, including the sole right to advertise and market such
Performance Records. Executive further agrees that he shall not have any right,
during the Employment Period or thereafter, to use or claim any ownership
interest in any of the Performance Records, or any portion thereof, without the
prior written consent of the Company. Notwithstanding the foregoing provision
and subject to all applicable rules and laws and interpretations thereof,
including but not limited to the Investment Advisers Act of 1940, as amended,
the Investment Company Act of 1940, as amended, the rules of the NASD, the rules
of the Association for Investment Management and Research ("AIMR"), state
securities laws, and the other provisions of this Agreement, Executive may cite
and/or refer to the published Performance Records of the particular investment
discipline which Executive was responsible for managing for the sole and limited
purpose of informing third parties of Executive's prior employment experience.
8. Non-Competition. During the Non-Competition Period (as
defined below), Executive shall not (except as an officer, director, employee,
agent or consultant of the Company or any of its Affiliates), directly or
indirectly, own, manage, operate, join, or have a financial interest in, control
or participate in the ownership, management, operation or control of, or be
employed as an employee, agent or consultant, or in any other individual or
representative capacity whatsoever, or use or permit his name to be used in
connection with, or be otherwise connected in any manner with any business or
enterprise, wherever located, which is similar to or competitive with the Axe
Core Disciplines, the business carried on or planned by the Axe Core Group, or
the business carried on by Executive at any time during the one year immediately
preceding the termination of the Employment Period, unless Executive shall have
obtained the prior written consent of the Board; provided, however, that the
foregoing restriction shall not be construed to prohibit the ownership by
Executive of not more than two percent (2%) of any class of securities of any
corporation which is engaged in any of the foregoing businesses, having a class
of securities registered pursuant to Section 12(b) or 12(g) of the 1934 Act,
which securities are publicly owned and regularly traded on any national
securities exchange or in the over-the-counter market; provided further, that
such ownership represents a passive investment and that neither Executive nor
any group of persons including Executive in any way, either directly or
indirectly, manages or exercises control of any such corporation, guarantees any
of its financial obligations, otherwise takes part in its business other than
exercising his rights as a stockholder, or seeks to do any of the foregoing. For
purposes of this Agreement, the "Non-Competition
11
Period" shall mean (A) the Employment Period, (B) one year following termination
of the Employment Period if terminated by the Company for Cause or by Executive
for any reason other than either pursuant to Section 4(G) or for Good Reason;
and (C) any period during which Executive is receiving Termination Payments as a
result of the Company's termination of the Employment Period other than for
Cause or Executive's termination of the Employment Period for Good Reason. In
the event that the Company terminates the Employment Period other than for
Cause, or if Executive terminates the Employment Period for Good Reason,
Executive may elect at any time after such termination, by ten (10) days'
advance written notice to the Company, to terminate the Non-Competition Period.
On and after such election, the Company shall have no further obligation to make
any Termination Payments, except for such amounts as shall have been accrued
prior to the date of such election. Such election shall not affect any of the
rights of the Company with respect to the Non-Competition Period occurring prior
to such election. Notwithstanding anything contained herein to the contrary,
Executive shall be relieved of the provisions of this Section 8 upon termination
of the Employment Period by Executive pursuant to Section 4(G) or upon a
termination of the Employment Period as a result of non-renewal, whether at the
Company's or Executive's election.
(A) The parties acknowledge and agree that, except as
restricted by the terms of this Agreement, including without limitation Sections
5, 6, 7, 8 and 9, nothing in this Agreement is intended to preclude Executive
from obtaining employment in the investment management industry following
termination of the Employment Period.
9. Non-Solicitation. (A) During the Non-Competition Period and
for one year following termination of the Employment Period pursuant to Section
4(G), Executive shall not, directly or indirectly, whether for his own account
or for the account of any other individual or entity, solicit or canvass the
trade, business or patronage of any individuals or entities that were customers
of the Company, or any Affiliate for which Executive was working at the time of
such termination, during the twelve (12) months immediately preceding the
termination of the Employment Period, or prospective customers with respect to
whom a sales effort, presentation or proposal (other than just a mass mailing)
was made by the Company, or any Affiliate for which Executive was working at the
time of such termination, during the twelve (12) months immediately preceding
the date of termination. Upon the written request of Executive following
termination of the Employment Period, the Company shall provide a list of
customers and prospective customers subject to this Section 9(A).
(B) Executive further agrees that, during the
Non-Competition Period and for one year following termination of the Employment
Period pursuant to Section 4(G), he shall not, directly or indirectly, (1)
solicit, induce, enter into any agreement with, or attempt to influence any
individual who was an employee or consultant of the Company at any time during
the time Executive was employed by the Company, to terminate his employment or
other relationship with the Company or to become employed by or enter into any
other relationship with Executive or any individual
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or entity by which Executive is employed or associated with, or (2) interfere in
any other way with the employment or other relationship of any employee or
consultant of the Company.
10. Enforcement. (A) Executive agrees that the remedies at law
for any breach or threatened breach by him of any of the provisions of Sections
5 through 9 will be inadequate, and that, in addition to any other remedy to
which the Company may be entitled at law or in equity, the Company shall be
entitled to a temporary or permanent injunction or injunctions or temporary
restraining order or orders to prevent breaches of the provisions of Sections 5
through 9 and to enforce specifically the terms and provisions thereof, in each
case without the need to post any security or bond. Nothing herein contained
shall be construed as prohibiting the Company from pursuing, in addition, any
other remedies available to the Company for such breach or threatened breach. A
waiver by the Company of any breach of any provision hereof shall not operate or
be construed as a waiver of a breach of any other provision of this Agreement or
of any subsequent breach by Executive.
(B) It is expressly understood and agreed that,
although the Company and Executive consider the restrictions contained in
Sections 5 through 9 to be reasonable for the purpose of preserving the
goodwill, proprietary rights and going concern value of the Company and its
Affiliates, if a final judicial determination is made by a court having
jurisdiction that the time or territory or any other feature of any restriction
contained in such Sections 5 through 9 is an unenforceable restriction on
Executive's activities, the provisions of such Sections 5 through 9 shall not be
rendered void but shall be deemed amended to apply as to such maximum time and
territory and to such other extent as such court may judicially determine or
indicate to be reasonable. Alternatively, if the court referred to above finds
that any restriction contained in Sections 5 through 9 or any remedy provided
herein is unenforceable, and such restriction or remedy cannot be amended so as
to make it enforceable, such finding shall not affect the enforceability of any
of the other restrictions contained therein or the availability of any other
remedy.
11. Executive's Representations. Executive represents
and warrants to the Company that (A) he is able to perform fully his duties,
responsibilities and authority contemplated by this Agreement and (B) there are
no restrictions, covenants, agreements or limitations of any kind on his right
or ability to enter into and fully perform the terms of this Agreement.
12. Assignment. The rights and obligations of the parties
under this Agreement shall not be assignable by either the Company or Executive;
provided, however, that this Agreement is assignable by the Company to any of
its Affiliates, to any successor in interest to the business of the Company, or
to a purchaser of all or substantially all of the assets of the Company which
agrees to be bound by the terms of this Agreement.
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13. Notices. Any notice required or permitted under this
Agreement shall be in writing and shall be deemed to have been effectively made
or given upon receipt if personally delivered, on the third business day after
having been mailed properly addressed in a sealed envelope, postage prepaid by
certified or registered mail, or on the first business day after having been
delivered to a reputable overnight delivery service. Unless otherwise changed by
notice, notice shall be properly addressed to Executive if addressed to:
Xxxx X. Xxxx, Xx.
00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
With a copy to:
Xxxxxxx & Xxxxxxxxx, LLP
Xxx Xxxxx Xxxxxxxx
Xxxxx Xxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx, Esq.
and properly addressed to the Company if addressed to:
Axe-Houghton Associates, Inc.
0 Xxxxxxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Chief Operating Officer
With a copy to:
Xxxxxx Group Inc.
0 Xxxxxxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attn: General Counsel
14. Severability. Except as otherwise provided in this
Agreement, wherever there is any conflict between any provision of this
Agreement and any statute, law, regulation or judicial precedent, the latter
shall prevail, but in such event the provisions of this Agreement thus affected
shall be curtailed and limited only to the extent necessary to bring them within
such requirements. In the event that any provision of this Agreement shall be
held by a court of proper jurisdiction to be illegal, invalid, void or voidable
or otherwise unenforceable, the balance of the Agreement shall continue in full
force and effect unless such construction would clearly be contrary to the
intentions of the parties or would result in an unconscionable injustice.
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15. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
16. Disputes and Jurisdiction. Any claim or controversy
arising out of or relating to this Agreement, or any breach thereof, or
otherwise arising out of or relating to Executive's employment, compensation and
benefits hereunder or the termination thereof, shall be brought in a court of
record in the State of New York, County of Westchester, or in the United States
District Court for the Southern District of New York, on the condition that,
with respect to any federal litigation, the jurisdictional requirements are met
with respect to such controversy for litigation in federal court. Each of the
parties hereto expressly submits to and consents to the jurisdiction and venue
of the courts specified in this Section 16 in connection with any claim or
controversy between them.
17. Legal Expenses. The Company shall pay Executive's
reasonable legal fees and expenses incurred in connection with this Agreement in
an amount not to exceed $7,500.
18. Miscellaneous; Choice of Law. This Agreement constitutes
the entire agreement, and supersedes all prior written or oral agreements or
understandings, of the parties hereto relating to the subject matter hereof, and
there are no written or oral terms or representations made by either party other
than those contained herein. This Agreement shall be governed by and construed
and enforced in accordance with the domestic laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
19. Mitigation. Executive shall not be required to mitigate
the amount of any payment provided for hereunder by seeking other employment or
otherwise. Nor shall the amount of any payment or benefit provided for hereunder
be reduced by any compensation earned by Executive as a result of employment by
another employer or by retirement benefits.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
AXE-HOUGHTON ASSOCIATES, INC.
By:
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Its:
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XXXX X. XXXX, XX.
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