EXHIBIT 10.18
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (this "Agreement"), made and entered into as of
the 30th day of June, 1997 (the "Effective Date"), by and between CGA Investment
Management, Inc., a Delaware corporation (referred to herein as the Employer"),
and Xxxxxxx Xxxxx (the "Employee").
RECITALS
--------
A. The Employer desires to employ the Employee for a specified term; and
B. The Employee is willing to be employed by the Employer upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, it is covenanted and agreed by and between the
parties hereto as follows:
AGREEMENTS
----------
1. Position and Duties. The Employer hereby employs the Employee as the
General Counsel of the Employer or in such other capacity as shall be mutually
agreed between the Employee and the Employer. During the period of the
Employee's employment hereunder, the Employee shall devote the Employee's best
efforts and full business time, energy, skills and attention to the business and
affairs of the Employer; provided, however, that the Employee shall perform on
behalf of the Employer and the Employer's parent corporation, CGA Group, Ltd.
("CGA Group") in the United States of America only such duties that are of a
ministerial nature and the performance of which are in compliance with the
Operating Guidelines (the "Operating Guidelines," as such term is defined in the
Investment Units Subscription Agreement dated as of June 4, 1997 by and among
CGA Group and the other parties named therein (the "Subscription Agreement").
The Employee's duties and authority shall consist of and include all duties and
authority customarily performed and held by persons holding equivalent positions
with business organizations similar in nature and size to the Employer, as such
duties and authority are, subject to the immediately preceding sentence,
reasonably defined, modified and delegated from time to time by the Board of
Directors of the Employer (the "Board") or that person to whom the Board has
delegated such authority. The Employee shall have the powers necessary to
perform the duties assigned to him, and shall be provided such supporting
services, staff, secretarial and other assistance, office space and
accoutrements as shall be reasonably necessary and appropriate in light of such
assigned duties.
2. Compensation. As compensation for the services to be provided by the
Employee hereunder, the Employee shall receive the following compensation and
other benefits:
(a) Base Salary. The Employee shall receive an aggregate annual minimum
base salary ("Base Salary") at the rate of Two Hundred Thousand Dollars
($200,000) payable in installments in accordance with the regular payroll
practices of the Employer.
(b) Bonuses. The Employee shall receive a cash bonus, payable within (30)
days after the end of the 1997 calendar year, in the amount of not less than One
Hundred Fifty Thousand Dollars ($150,000) ("Base Bonus"). The Employee may
receive a discretionary annual cash bonus ("Annual Bonus"), also payable within
thirty (30) days after the end of each subsequent calendar year during which
this Agreement is in effect, which shall be based upon an annual incentive plan
approved by the compensation committee of the board of directors of the
Employer's ultimate parent.
(c) Reimbursement of Expenses. In accordance with the expense reimbursement
policies of the Employer, as promulgated and in effect from time to time, the
Employee shall be reimbursed, upon submission of appropriate vouchers and
supporting documentation, for all travel, entertainment and other out-of-pocket
expenses reasonably and necessarily incurred by the Employee in the performance
of his duties hereunder.
(d) Other Benefits. The Employee shall be entitled to all benefits
specifically established for him by the Board or a committee thereof and, when
and to the extent he is eligible therefor, to participate in all plans and
benefits generally accorded to employees of the Employer, under and subject to
all of the forms thereof, including, but not limited to, as applicable, pension,
profit-sharing, supplemental retirement, incentive compensation, bonus,
disability income, split-dollar life insurance, group life, medical and
hospitalization insurance, and similar or comparable plans, and also to
perquisites extended to similarly situated senior employees. Additionally, the
Employer shall obtain for the benefit of the Employee's estate a term life
insurance policy with a value of two times the Employee's base salary as
presented in paragraph 2(a).
(e) Vacations. The Employee shall be entitled to an annual vacation in
accordance with the operative vacation policy of the Employer in effect from
time to time, which vacation shall be taken at a time or times mutually
agreeable to the Employee and the Employer.
(f) Withholding. The Employer shall be entitled to withhold, from amounts
payable to the Employee hereunder, any federal, state or local withholding or
other taxes or charges which it is from time to time required to withhold.
2
3. Term and Termination.
(a) Basic Term. The Employee's employment under this Agreement shall be for
a term of one (1) year commencing as of the Effective Date, and shall
automatically extend for one (1) year commencing on each anniversary of the
Effective Date, unless terminated by either party effective as of the last day
of the then current Agreement term by written notice to that effect delivered to
the other not less than thirty (30) days prior to the expiration of such
Agreement term.
(b) Voluntary Termination by Employee. The Employee may voluntarily
terminate this Agreement, at any time, by written notice to that effect
delivered to the Employer not less than thirty (30) days prior the effective
date of Employee's voluntary termination. Upon Employee's voluntary termination,
Employee shall have no obligations to the Employer other than as provided for in
Sections 4 and 5 hereof, together with an obligation to provide Employee's
reasonable transitional assistance to the Employer for a period of not more than
thirty (30) days in connection with matters for which the Employee was
responsible during the term of this Agreement and which were not concluded prior
to Employee's voluntary termination. Upon Employee's voluntary termination, no
Annual Bonus (or Base Bonus, if applicable) for the year in which such
termination occurs shall be payable to the Employee and no further payments of
any kind shall be due hereunder, except for compensation and benefits accrued as
of the date of such termination.
(c) Premature Termination Without Cause and Constructive Discharge.
(i) In the event of the termination of the Employee's employment under
this Agreement prior to the last day of the then current term, either (A)
by the Employer for any reason other than a termination in accordance with
the provisions of paragraph 3(d), 3(e) or 3(f) or (B) by the Employee by
written notice to the Employer given within thirty (30) days of
Constructive Discharge (as hereinafter defined) effective as of thirty (30)
days after such notice, then the Employer shall: (A) pay the Employee the
greater of (x) the Base Salary the Employee would have received had he
remained employed through the end of the then current term of the Agreement
and (y) six (6) months of salary; (B) pay the Employee, if such termination
occurs in the 1997 calendar year, the Base Bonus and (C) continue to
provide coverage for the Employee under the medical benefit program
maintained by the Employer through the remainder of the term of the
Agreement (if permitted to do so under such program).
(ii) Payments to the Employee under this paragraph 3(c) will be made
in accordance with the regular
3
payroll practices of the Employer during the remaining term of this
Agreement or, at the election of the Employer, such payments may be made in
a lump sum. Such payments shall not be reduced in the event the Employee
obtains other employment following the termination of employment by the
Employer.
(iii) For purposes of this Agreement, the Employee shall be deemed
"Constructively Discharged" if the Employer changes the primary employment
location of the Employee to a place that is more than forty (40) miles from
the primary employment location of the Employee as of the Closing Date (as
defined in the Subscription Agreement).
(d) Termination For Cause. Notwithstanding any other provision of this
Agreement, in the event of the termination of the Employee's employment under
this Agreement for cause, no Annual Bonus (or Base Bonus, if applicable) for the
year in which such termination occurs shall be payable to the Employee and no
further payments shall be due hereunder except for compensation or benefits
accrued as of the date of such termination. For purposes of this Agreement,
"cause" shall mean: (i) a material violation by the Employer, in which the
Employee materially and directly participated, of any law or regulation
respecting the business of the Employer or any affiliate, other than a material
violation which is a direct result of the operation of the Employer and/or its
affiliates in accordance with the Operating Guidelines; (ii) the Employee being
found guilty by a court of competent jurisdiction or a plea of guilty or nolo
contendere to a charge of (A) any felony or (B) an act of dishonesty in
connection with the performance of his duties for the Employer; or (iii) the
willful or negligent failure of the Employee to perform his duties hereunder in
any material respect.
(e) Termination Upon Death. If the Employee dies during the term of this
Agreement, payment of any accrued compensation due to the Employee at the time
of death including the bonus payable with respect to the prior calendar year if
death occurs prior to payment of such bonus, shall be made to such beneficiary
as the Employee may designate in writing, or failing such designation, to the
executor, administrator or other representative of his estate (provided,
however, that the Employee's Base Bonus or Annual Bonus payable with respect to
the calendar year in which such termination occurs (with such Annual Bonus
calculated based on the bonus(es) payable to Employee with respect to the
immediately preceding year) shall be payable on a pro rata basis to the date of
the Employee's death). Such payments shall be in addition to any other death
benefits of the Employer for the benefit of the Employee and in full settlement
and satisfaction of all payments provided for in this Agreement.
(f) Termination Upon Disability. The Employer may terminate the Employee's
employment after the Employee is determined to be disabled under the then
current Employer program
4
if such a program exists at the time the Employee is disabled. If no such
program exists, the Employee will be considered disabled if the Employee suffers
an illness or injury of a potentially permanent nature which results in the
Employee's inability to substantially perform his duties hereunder as determined
by the board of directors of the Employer's ultimate parent for a period of
either six (6) consecutive months, or one hundred and twenty (120) business days
within a consecutive twelve (12) month period. If the Employer terminates the
Employee after it is determined that the Employee is disabled, the Employer
shall pay the Employee the compensation accrued through the date of the
Employee's termination of employment, including the bonus payable with respect
to the prior calendar year if the termination occurs prior to payment of such
bonus (provided, however, that the Employee's Base Bonus or Annual Bonus payable
with respect to the calendar year in which such termination occurs (with such
Annual Bonus calculated based on the bonus(es) payable to the Employee with
respect to the immediately preceding year) shall be payable on a pro rata basis
to the date of the Employee's termination). In the event of a dispute regarding
the Employee's disability, each party shall choose a physician who together will
choose a third physician to make a final determination. The Employee shall be
entitled to the compensation and benefits provided for under this Agreement for
any period during the term of this Agreement and prior to the establishment of
the Employee's disability. Notwithstanding anything contained in this Agreement
to the contrary, until the date specified in a notice of termination relating to
the Employee's disability, the Employee shall be entitled to return to his
position with the Employer as set forth in this Agreement, in which event no
disability of the Employee will be deemed to have occurred.
4. Confidentiality and Loyalty. The Employee acknowledges that during the
course of the Employee's employment, the Employee will produce and have access
to material, records, data, trade secret and information not generally available
to the public regarding the Employer and its subsidiaries and affiliates
(collectively, "Confidential Information"). Accordingly, during and subsequent
to termination of this Agreement, the Employee shall hold in confidence and not
directly or indirectly disclose, use, copy or make lists of any such
Confidential Information, except to the extent that such information is or
thereafter becomes lawfully available from public sources, or such disclosure is
authorized in writing by the Employer, required by a law or any competent
administrative agency or judicial authority, or otherwise as reasonably
necessary or appropriate in connection with the Employee's performance of the
Employee's duties hereunder. All records, files, documents and other materials
or copies thereof relating to the Employer's business which the Employee shall
prepare or use shall be and remain the sole property of the Employer, shall not
be removed from the Employer's premises without its written consent other than
in the ordinary course of business, and shall be promptly returned to the
Employer
5
upon termination of the Employee's employment hereunder. The Employee agrees to
abide by the Employer's reasonable policies, as in effect from time to time,
respects avoidance of interests conflicting with those of the Employer.
5. Non-Solicitation and Non-Competition Covenants.
(a) Restrictive Covenant. The Employee and the Employer have jointly
reviewed the operations of the Employer and have agreed that the covenants
contained in this Section 5 are an essential ingredient of this Agreement and
are made in consideration for the payment of the amounts described in Sections 2
and 3 hereof. The Employee hereby agrees that, except with the express prior
written consent of the Employer, for a period of one (1) year after the
termination of the Employee's employment with the Employer, with respect to
clause (i) below, for any reason and, with respect to clause (ii) below, for any
reason other than a termination pursuant to Section 3(c) (the "Restrictive
Period"), the Employee (i) will not (a) solicit employees of the Employer or of
any subsidiary or affiliate of the Employer or (b) solicit clients or customers
of the Employer or of any subsidiary or affiliate of the Employer in respect of
any transaction, matter or business that directly or indirectly competes with
any of the businesses then conducted by the Employer or any of its subsidiaries
or affiliates, and (ii) will not directly or indirectly compete with the
business of the Employer, by directly or indirectly being a shareholder or
partner of or serving as an employee, officer or director of or consultant to,
or in any other capacity with, any person, firm, partnership, corporation,
subsidiary, division, joint venture, trust or other entity, or any division,
subsidiary or separate enterprise of any such entity, which (x) was created
during the term of the Employee's employment with the Employer or is expected to
be created within a period of one (1) year after the Employee's termination of
employment with the Employer, and (y) which owns or operates a business which is
either: (A) an insurer or reinsurer of asset backed securities, mortgage backed
securities or commercial mortgage backed securities; or (B) an investment
company that is directly or indirectly owned by, affiliated with, attached to or
otherwise related to an insurer or reinsurer of asset backed securities,
mortgage backed securities or commercial mortgage backed securities; or (C) an
investment advisory firm that is directly or indirectly owned by, affiliated
with, attached to or otherwise related to an insurer or reinsurer of asset
backed securities, mortgage backed securities or commercial mortgage backed
securities (the "Restrictive Covenant"). If the Employee violates the
Restrictive Covenant and the Employer brings legal action for injunctive or
other relief, the Employer shall not, as a result of the time involved in
obtaining such relief, be deprived of benefit of the full period of the
Restrictive Covenant. Accordingly, the Restrictive Covenant shall be deemed to
have the duration specified in this paragraph 5(a) computed from the date the
relief is granted but reduced by the time between the period
6
when Restrictive Period began to run and the date of the first violation of the
Restrictive Covenant by the Employee. The Restrictive Covenant shall not
prohibit the Employee from owning directly or indirectly capital stock or
similar securities which are listed on a securities exchange or quoted on the
National Association of Securities Dealers Automated Quotation System which do
not represent more than five percent (5%) of the outstanding capital stock of
any business similar to that of the Employer's.
(b) Remedies for Breach of Restrictive Covenant. The Employee acknowledges
that the restrictions contained in Sections 4 and 5 of this Agreement are
reasonable and necessary for the protection of the legitimate business interests
of the Employer, that any violation of these restrictions would cause
substantial injury to the Employer and such interests, that the Employer would
not have entered into this Agreement with the Employee without receiving the
additional consideration offered by the Employee in binding himself to these
restrictions and that such restrictions were a material inducement to the
Employer to enter into this Agreement. In the event of any violation of these
restrictions, the Employer shall be relieved of all further obligations under
this Agreement and shall be entitled to any rights, remedies or damages
available to the Employer under this Agreement or otherwise at law or in equity.
In addition, in the event of any violation or threatened violation of these
restrictions, the Employer shall be entitled to preliminary and permanent
injunctive relief to prevent or restrain any such violation by the Employee and
any and all periods directly or indirectly acting for the Employee, as the case
may be.
6. Interest in Assets. Neither the Employee nor the Employee's estate shall
acquire hereunder any rights in funds or assets of the Employer, otherwise than
by and through the actual payment of amounts payable hereunder; nor shall the
Employee or the Employee's estate have any power to transfer, assign,
anticipate, hypothecate or otherwise encumber in advance any of said payments;
nor shall any of such payments be subject to seizure for the payment of any
debt, judgment, alimony, separate maintenance or be transferable by operation of
law in the event of bankruptcy, insolvency or otherwise of the Employee.
7. Indemnification. The Employer shall indemnify the Employee (and his
legal representatives or other successors) to the fullest extent permitted
(including payment of expenses in advance of final disposition of a proceeding)
by the laws of the State of New York, as in effect at the time of the subject
act or omission, or the Certificate of Incorporation and By-Laws of the
Employer, as in effect at such time or on the effective date of this Agreement,
whichever affords or afforded greater protection to the Employee, and the
Employee shall be entitled to the protection of any insurance policies the
Employer may elect to maintain generally for the benefit of its directors and
officers, against any and all fines, losses, liabilities, claims,
7
assessments, damages, deficiencies, judgments, costs, charges and expenses
whatsoever incurred or sustained by him or his legal representatives in
connection with any claim, action, suit, proceeding or investigation (whether
civil, criminal, administrative or investigative) to which he (or his legal
representatives or other successors) may be made party by reason of his
becoming, but not being or having been, a director, officer or employee of the
Employer or any of its subsidiaries or affiliates; provided, however, that the
Employee shall assign to the Employer all rights of the Employee to
indemnification under any policy of directors' and owners' liability insurance
or otherwise, to the extent of the amount actually paid by the Employer to or on
behalf of the Employee.
8. General Provisions.
(a) Neither party hereto may assign his or its rights or delegate his or
its duties under this Agreement without the prior written consent of the other
party; provided, however, that (i) this Agreement shall inure to the benefit of
and be binding upon the successors and assigns of the Employer upon any sales of
all or substantially all of the Employer's assets, or upon any merger,
consolidation or reorganization of the Employer with or into any other
corporation, all as though such successors and assigns of the Employer and their
respective successors and assigns were the Employer; and (ii) this Agreement
shall inure to the benefit of and be binding upon the heirs, assigns or
designees of the Employee to the extent of any payments due to them hereunder.
As used in this Agreement, the term "Employer" shall be deemed to refer to any
such successor or assign of the Employer referred to in the preceding sentence.
(b) Entire Agreement; Modifications. This Agreement constitutes the entire
agreement between the parties respecting the subject matter hereof, and
supersedes all prior negotiations, undertakings, agreements and arrangements
with respect thereto, whether written or oral. Except as otherwise explicitly
provided herein, this Agreement may not be amended or modified except by written
agreement signed by the Employee and the Employer.
(c) Enforcement and Governing Law. The provisions of this Agreement shall
be regarded as divisible and separate; if any of said provisions should be
declared invalid or unenforceable by a court of competent jurisdiction, the
validity and enforceability of the remaining provisions shall not be affected
thereby. This Agreement shall be construed and the legal relations of the
parties hereto shall be determined in accordance with the laws of the State of
New York, without reference to the law regarding conflicts of law.
(d) Arbitration. The provisions of paragraph 5(b) shall supersede the
provisions of this paragraph 8(d) in the event of a simultaneous dispute between
the Employer and the Employee so
8
as to afford the Employer with the remedy of injunctive relief, without the
necessity for arbitration. Any dispute or controversy arising under or in
connection with this Agreement or the Employee's employment by the Employer
shall be settled exclusively by arbitration, conducted by a single arbitrator
sitting in New York City, New York, in accordance with the rules of the American
Arbitration Association (the "AAA") then in effect. The arbitrator shall be
selected by mutual agreement between the Employer and the Employee. However, in
the event that the parties are unable to agree on an arbitrator within a period
of one week, the arbitrator shall be selected by the parties from a list of
eleven (11) arbitrators provided by the AAA, provided that no arbitrator shall
be related to or affiliated with either of the parties. If the parties mutually
agree on an arbitrator from such list, such arbitrator shall be selected. If the
parties cannot agree on the arbitrator within ten (10) days after the list of
the proposed arbitrators is received by the parties, then no later than twenty
(20) days after such list is received by the parties, the parties, or their
respective representatives, shall meet at a mutually convenient location in New
York City, New York, or telephonically. At that meeting, the party who sought
arbitration shall eliminate one (1) proposed arbitrator and then the other party
shall eliminate one (1) proposed arbitrator. The parties shall continue to
eliminate names from the list of proposed arbitrators in this manner until each
party has eliminated five (5) proposed arbitrators. The remaining arbitrator
shall arbitrate the dispute. Each party shall submit, in writing, the specific
requested action or decision it wishes to take, or make, with respect to the
matter in dispute, and the arbitrator shall be obligated to choose one (1)
party's specific requested action or decision, without being permitted to
effectuate any compromise position. The party whose requested action or decision
is not selected by the arbitrator shall bear the cost of all counsel, experts or
other representatives who are retained by both parties, together with all costs
of the arbitration proceeding, including, without limitation, the fees, costs
and expenses imposed or incurred by the arbitrator. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however, that
the Employee shall be entitled to seek specific performance of the Employee's
right to be paid through the date of termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
(e) Waiver. No waiver by either party at any time of any breach by the
other party of, or compliance with, any condition or provision of this Agreement
to be performed by the other party, shall be deemed a waiver of any similar or
dissimilar provisions or conditions at the same time or any prior or subsequent
time.
(f) Notices. Notices pursuant to this Agreement shall be in writing and
shall be deemed given when received; and, if mailed, shall be mailed by United
States registered or certified
9
mail, return receipt requested, postage prepaid; and if to the Employer,
addressed to the principal headquarters of the Employer, attention: Chairman;
or, if to the Employee, to the address set forth below the Employee's signature
on this Agreement, or to such other address as the party to be notified shall
have given to the other.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
CGA Investment Management, Inc. Xxxxxxx Xxxxx
By: /s/ XXXXXXX X. PRICE /s/ XXXXXXX XXXXX
------------------------------- --------------------------------
Name: Xxxxxxx X. Price 00 Xxxxxx Xxxx
Title: President, Xxxxxxxxx, Xxx Xxxx 00000
CGA Group, Ltd.
10
