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EMPLOYMENT AGREEMENT
This Employment Agreement dated as of the 30th day of June, 1999,
between Rushmore Investment Advisors, Inc., a Texas corporation (hereinafter
referred to as "Rushmore"), Xxxx X. Xxxx (hereinafter referred to as
"Officer"), and Rushmore Financial Group, Inc., a Texas corporation ("RFG")
(which joins herein as co-obligor with Rushmore as and to the same extent as
Rushmore is obligated herein).
WITNESSETH:
WHEREAS, Officer is Chairman and Chief Executive Officer of Rushmore,
a Texas corporation and registered investment advisor, a wholly owned subsidiary
of Rushmore Financial Group, Inc. ("RFG") (Rushmore, its subsidiaries and RFG
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 employ Officer and Officer
hereby agrees to serve Rushmore as Chairman, Chief Executive Officer
and Chief Investment Officer of Rushmore; as Chief Investment Officer
and Chairman of the Investment Committees of RFG and Rushmore Life
Insurance Company ("RLICO"); and as a director of Rushmore and RFG to
fill a vacancy in the Board created by a resignation for the term and
on the conditions hereinafter set forth. The duties of Officer as
Chief Investment Officer of Rushmore, RFG and RLICO are set forth on
attached Exhibit A. These offices shall not be abolished nor the
duties described in Exhibit A changed without Officer's consent during
the tenure of his employment. Officer shall have such executive duties
to the Companies during the term of this Agreement as shall be
determined by the Board of Directors of Rushmore and RFG; however,
Officer shall not be assigned to a position which shall substantially
diminish his prestige or responsibility compared to that which he
enjoys during the first 90 days of this Agreement. 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 the Companies, 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 commence as
of the date hereof and shall be deemed to recommence on each day of
the term hereof and continue in effect for a period of three years,
unless terminated due to death, disability, or good cause as specified
in Section 6.
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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 $100,000.00 per year,
which amount shall be paid beginning July 1, 1999. 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 fifteenth and last business
days of each month.
b. Incentive Compensation. As incentive compensation for the
management of Rushmore, Rushmore shall pay to Officer: (i)
monthly payments equal to 1/12 of 0.01% (one basis point) of
total assets under management by Rushmore as of the previous
month end; and (ii) quarterly payments equal to 2-1/2% of the
net profit of Rushmore as of the previous quarter end (with
net profit including an allocation of occupancy, tax and
other indirect expenses of Rushmore that are paid by RFG),
pursuant to existing policies and practices of RFG and its
profit centers.
c. Additional Compensation. 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. Stock options shall be issued in amounts
commensurate with the amount of options granted to other
senior executive officers. The total of the Base
Compensation, Incentive 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.
d. Reimbursement. Rushmore shall provide Officer with an
automobile allowance of $500.00 per month. 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, 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
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basis as other senior 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. In the event that Officer should
die or become disabled, 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 90 days Combined
Compensation at the then existing rate. Such payment shall be made in
cash within one hundred twenty (120) days after Officer's death or
disability.
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 and indictment for a felony offense;
c. Stealing, dishonesty, fraud or embezzlement;
d. Deliberate neglect of duty;
e. Resignation; or
f. Willful and material insubordination.
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 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.
Upon termination of officer's employment by Rushmore, whether such
termination in initiated by Rushmore or by Officer, Rushmore shall
assign to Officer the name "The Xxxx Xxxx Company."
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 RFG and its subsidiaries including
Rushmore.
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Officer acknowledges that such information constitutes valuable and
confidential information of RFG. 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 RFG, whether prepared by Officer or
otherwise coming into Officer's possession, shall remain the exclusive
property of RFG and shall not be removed from the premises of RFG
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 RFG.
8. Restrictive Covenants. In consideration the severance provisions of
this Agreement and of the provision to Officer of RFG's trade secrets
and confidential information, and in order to protect the rights of
RFG and its subsidiaries including Rushmore to its trade secrets,
confidential information, and client relationships, Officer hereby
agrees as follows:
a. Officer agrees that during the term of this Agreement and for
a period of 18 months 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 (excluding Xxxxxx Xxxxxxx),
agents or representatives of RFG and its subsidiaries
including Rushmore to terminate their position as employee,
agent or representative therewith.
b. Officer agrees that, during the term of this Agreement and
for a period of 18 months 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 and that solicits business from any person that was
a client of Rushmore or other RFG subsidiary at or within 12
months prior to the time of termination, anywhere within the
State of Texas or any city of the United States in which RFG
and its subsidiaries including Rushmore maintains a retail
office at the time of Officer's termination.
c. 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.
d. Officer agrees that irreparable harm would occur if any of
the provisions of Section 8 or
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9 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
shall not accrue.
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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
RUSHMORE INVESTMENT ADVISORS, INC.
By: /s/ X. X. Xxxxx, Xx
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X. X. Xxxxx, Xx., Chairman
RUSHMORE FINANCIAL GROUP, INC.
By: /s/ X. X. Xxxxx, Xx.
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X. X. Xxxxx, Xx., Chairman
/s/ Xxxx X. Xxxx
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XXXX X. XXXX
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EXHIBIT A
(DUTIES OF CHIEF INVESTMENT OFFICER)
1. To preside over meetings of the Investment Committees of Parent and
each affiliate; and
2. To direct and supervise implementation of such investment committees'
decisions.
