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MANAGING DIRECTOR'S AGREEMENT
Agreement made as of September 11, 1997, by and between Xxxxxxxxxx Xxxxxxx
Partners Inc., a New York corporation with offices at 000 Xxxxxxx Xxxxxx, 0xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 10017(the "Corporation") and Xxxxxxx Xxxxxxx, residing
at 000 Xxxx Xxxxxxx, Xxxxxx, Xxx Xxxxxx 07605("Hillary").
W I T N E S S E T H:
Whereas, the Corporation desires to continue to engage the services of Hillary
as a Managing Director of the Corporation for a three (3) year period commencing
on September 11, 1997 (the "Term"); and
Whereas, Hillary is willing to continue such employment by the Corporation for
the Term on the terms and conditions set forth herein.
Now, therefore, in consideration of the premises, the mutual covenants
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Employment. The Corporation hereby continues its employment of Hillary for
the Term and Hillary hereby accepts such employment upon the terms and
conditions hereinafter set forth.
2. Term. The Term of this agreement is three (3) years, commencing on September
11, 1997 and ending on September 10, 2000, unless earlier terminated by the
Corporation or by Hillary in accordance with the provisions hereof. This
agreement shall be automatically renewed for periods of one (1) year each (the
"Renewal Term") unless either party shall give the other notice of her or its
desire to terminate this agreement no later than on the June 1st immediately
preceding the expiration of the then current term, in which event Hillary's
employment shall terminate at the end of the Term or the applicable Renewal
Term, as the case may be. The Term and the Renewal Term are hereinafter
collectively referred to as the Term. If Hillary has not given notice to the
Corporation on or before June 1, 2000 that she elects not to renew this
agreement at the expiration of the Term and the Corporation gives notice to
Hillary that it elects not to renew this agreement at the expiration of the
Term, then and only in such event, in addition to and without limitation of any
other compensation, severance payments or benefits which may be or become due
from the Corporation to Hillary pursuant to this agreement, the Corporation
shall pay to Hillary within ten (10) days following the expiration of the Term,
a severance payment in the amount of Two Hundred Fifty Thousand ($250,000.00)
Dollars.
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3. Duties. Hillary is engaged for the term hereof as a Managing Director of the
Corporation and shall perform and discharge well and faithfully the duties which
may be undertaken by Hillary in such capacity from time to time, such duties to
be substantially similar to the duties heretofore undertaken by Hillary as a
Managing Director of the Corporation. The duties of Hillary shall include
jointly managing with Xxxxx Xxxxxxxxxx or her successor ("Xxxxx"), the
Corporation's day-to-day operations, including, without limitation, hiring,
training, supervising and terminating employees, determining employee
compensation (including incentives) and employment policy, including assignment
of employees' duties and how same are to be performed, all aspects of client
relationships, and maintaining the Corporation's books and records, serving as a
member of the Board of Directors and any other duties as may be determined by
the Board of Directors; it being the intent of the parties that Hillary and
Xxxxx shall together exercise full management control of the day-to-day
operations of the Corporation for so long as both Hillary and Xxxxx are employed
by the Corporation.
4. Extent of Services. During the period in which Hillary is employed by the
Corporation, Hillary shall devote Hillary's entire active business time, best
efforts, attention, skill and energies to the business of the Corporation and
shall not during such period be engaged in any other business activity pursued
for gain, profit or other pecuniary advantage; but this shall not be construed
as preventing Hillary from investing Hillary's personal assets in businesses
which do not compete with the Corporation in such form or manner as will not
require any active business services on the part of Hillary in the operation of
the affairs of the companies in which such investments are made and in which
Hillary's participation is solely that of a passive investor.
5. Compensation.
(a) For all services rendered by Hillary pursuant to this agreement,
the Corporation shall pay Hillary an annual salary of One Hundred Fifty Thousand
($150,000.00) Dollars, payable bi-weekly, in arrears. Such salary shall be
subject to periodic increases as shall be determined by the Board of Directors
of the Corporation.
(b) Hillary shall be eligible to participate in the Corporation's
annual incentive compensation pool (the "Bonus Pool") in an amount to be
determined annually by the Corporation's Board of Directors based upon the joint
recommendation of Hillary and Xxxxx. The portion of the Bonus Pool to which
Hillary shall become entitled for any fiscal year of the Corporation is
hereinafter referred to as "Hillary's Annual Bonus". For any fiscal year of the
Corporation, the Bonus Pool shall not exceed in the aggregate an amount equal to
thirty (30%) percent of the Corporation's annual net profits before taxes
determined by the Corporation's outside accounting firm, subject to review and
approval by the accounting firm which prepares the consolidated financial
statements for all of the companies affiliated with FPC, in accordance with
generally accepted accounting principles, consistently applied, as if the
Corporation were not a member of an affiliated
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group of corporations. Hillary's Annual Bonus shall be payable in cash or, if
agreed to by Hillary, the Board of Directors of the Corporation and the Board of
Directors of Financial Performance Corporation ("FPC"), such amount may be
payable, in whole or in part, in options or warrants to acquire common stock or
other securities of FPC (hereinafter, the "Bonus Securities") which shall have
typical "piggy-back" registration rights and which shall contain such other
terms and conditions, including, without limitation, term, exercise price and
number of securities issued, as the Board of Directors of the Corporation and
FPC shall jointly reasonably determine represents equivalent value to the cash
bonus or portion thereof which would otherwise be payable to Hillary. Further,
during the six (6) month period commencing on the date of issuance of the Bonus
Securities (hereinafter, the "Sales Period") FPC shall use its reasonable
efforts together with the investment banking firms then providing financial
services to FPC, to the extent reasonably practicable and appropriate, to assist
Hillary in arranging for the exercise and sale of the Bonus Securities. The term
"Bonus Securities", as used herein, shall mean and include all options,
warrants, common stock or other securities of FPC issued to Hillary in full or
partial payment of Hillary's Annual Bonus and, in the case of derivative
securities such as options and warrants, all of the common stock underlying such
derivative securities. The "piggy-back" registration rights referred to above
shall apply to all common stock underlying any derivative securities and shall
obligate FPC to register such stock at such time as FPC registers other common
stock in connection with a public offering of securities, at FPC's sole cost and
expense.
(c) If (i) Hillary shall exercise and sell all of the Bonus Securities
during the Sales Period and (ii) the aggregate gross sales price received by
Hillary for the sale of the Bonus Securities less the aggregate amount of all
warrant or option exercise consideration in respect of the Bonus Securities paid
by Hillary to FPC during the Sales Period (hereinafter, the "Gross Sales
Proceeds") shall be less than the agreed-upon equivalent cash value of Hillary's
Bonus which shall have been paid by issuance of the Bonus Securities as set
forth in subsection (b) above (hereinafter, the "Equivalent Cash Value"), then
within thirty (30) days after the Corporation's receipt from Hillary of notice
thereof setting forth, in reasonable detail, the calculation of such difference
together with copies of all pertinent supporting documentation relating thereto,
the Corporation shall pay to Hillary, in cash, an amount (hereinafter, the
"Shortfall") equal to the difference between the Equivalent Cash Value and the
Gross Sales Proceeds. The Corporation shall not be obligated to make payment of
the Shortfall to Hillary unless all of the Bonus Securities are exercised and
sold by Hillary prior to the expiration of the Sales Period.
6. Benefits. Hillary shall be entitled to four (4) weeks vacation for each one
(1) year of Hillary's employment pursuant to this agreement, during which
Hillary's salary shall be paid in full. Hillary shall be entitled to
reimbursement of reasonable out-of-pocket business expenses incurred on behalf
of the Corporation, provided that such expenses are reasonably necessary and are
properly documented. Hillary shall be entitled to privileges under any
retirement, pension, long-term or short-term disability insurance plan which may
hereafter be adopted by the Corporation for the benefit of its employees. The
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Corporation agrees to provide Hillary with and shall pay all premiums for family
coverage under a group health insurance plan reasonably comparable to the
coverage currently provided to Hillary by the Corporation, to the extent same is
reasonably obtainable by the Corporation. The Corporation shall also provide
Hillary with (i) a clothing expense allowance in the amount of ten thousand and
00/100 ($10,000.00) dollars for each year of the term of this agreement and (ii)
a leased automobile of Hillary's choice throughout the term of this agreement.
7. Termination.
(a) The Corporation may, at its election in accordance with the
procedures more particularly set forth below, terminate this agreement for
cause. For purposes of this agreement, "cause" shall include, without
limitation, the following: (i) a material breach by Hillary of any term of this
agreement; (ii) a continued failure of Hillary after notice of a prior failure
to devote Hillary's full active business time (as more particularly described in
Section 4 above) to the performance of Hillary's duties hereunder; (iii) an act
of willful misconduct causing injury to another person or substantial damage to
the reputation or property of the Corporation, any of the Corporation's
affiliates or any of the Corporation's customers including, without limitation,
any oral or written misrepresentation relating to the Corporation or any of its
customers; (iv) an act of dishonesty, moral turpitude or conviction of a felony;
and (v) substantial, continuing and willful improper performance or
non-performance of any of Hillary's material duties hereunder. For purposes of
this subsection (a), no act, or failure to act, on Hillary's part shall be
considered "willful" unless done, or omitted to be done, by her not in good
faith or without reasonable belief that her action or omission was in the best
interests of the Corporation. Notwithstanding the foregoing, Hillary shall not
be deemed to have been terminated for cause without (i) reasonable notice to
Hillary setting forth the reasons for the Corporation's intention to terminate
for cause, (ii) an opportunity for Hillary, together with her counsel, to be
heard before the Corporation's board of directors, and (iii) delivery to Hillary
of a Notice of Termination as defined in subsection(d) below from an executive
officer of the Corporation finding that in the good faith opinion of the
Corporation's Board of Directors or in the good faith opinion of the Board of
Directors of FPC, Hillary was guilty of conduct set forth or described above in
justifying the Corporation's termination of Hillary's employment for cause and
specifying the particulars thereof in detail.
(b) Hillary may terminate her employment under this agreement for Good
Reason (as hereinafter defined). For purposes of this agreement, "Good Reason"
shall mean (i) a change in control of the Corporation (as defined below) which
shall have been in effect for a period of at least ninety (90) consecutive days;
provided, however, that Hillary shall be unable to work harmoniously and
effectively with the personnel constituting the new management of the
Corporation, (ii) a failure by the Corporation to comply with any material
provision of this agreement which noncompliance shall have a material adverse
effect upon Hillary and which shall not have been cured within thirty
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(30) days after notice of such noncompliance has been given by Hillary to the
Corporation pursuant to this agreement, (iii) if Hillary's management functions,
duties or responsibilities or any other material aspect of Hillary's employment
shall have been materially and adversely changed by the Corporation for a period
in excess of thirty (30) consecutive days notwithstanding Hillary's written
objection thereto or (iv) any purported termination of Hillary's employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of subsection (d) below (and for purposes of this agreement no such
purported termination shall be effective).
(c) For the purpose of this agreement, a "Change of Control" shall be
deemed to have taken place if: (i) a third person, including a "group" as such
term is defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
becomes (other than as a result of a purchase from the Corporation) the
beneficial owner of shares of the Corporation or of FPC having more than thirty
(30%) percent of the total number of votes that may be cast for the election of
directors of the Corporation or of FPC and such beneficial ownership continues
for thirty (30) consecutive days, or (ii) as a result of, or in connection with,
any cash tender or exchange offer, merger or other business combination of the
foregoing transactions relating to the Corporation or to FPC (hereinafter
referred to as a "Transaction") the persons who were directors of the
Corporation or of FPC before the Transaction shall cease for any reason to
constitute at least a majority of the Board of Directors of the Corporation or
of FPC, as the case may be, or any successor(s) of either of such entities.
(d) Any termination of Hillary's employment by the Corporation or by
Hillary (other than termination by reason of Hillary's death or disability as
set forth in Section 14 below) shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Hillary's employment under the provision so indicated.
(e) "Date of Termination" shall mean (i) if Hillary's employment is
terminated by her death, the date of her death, (ii) if Hillary's employment is
terminated pursuant to subsection (c) above, the date specified in the Notice of
Termination, and (iii) if Hillary's employment is terminated for any other
reason, the date on which a Notice of Termination is given; provided that if
within thirty (30) days after any Notice of Termination is given the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual written agreement of
the parties, by a binding and final arbitration award or by a final judgment,
order or decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been perfected).
8. Compensation Upon Termination or During Disability.
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(a) During any period that Hillary fails to perform her duties
hereunder as a result of incapacity due to physical or mental illness
("disability period"), Hillary shall continue to receive her full salary at the
rate then in effect for such period until her employment is terminated pursuant
to Section 7 above, provided that payments so made to Hillary during the
disability period shall be reduced by the sum of the amounts, if any, payable to
Hillary at or prior to the time of any such payment under disability benefit
plans of the Corporation and which were not previously applied to reduce any
such payment.
(b) If Hillary's employment is terminated by her death, the Corporation
shall pay to Hillary's spouse, or if she leaves no spouse, to her estate, within
thirty (30) days of Hillary's death, all salary and employment benefits due to
Hillary accrued through the date of her death.
(c) If Hillary's employment shall be terminated for cause, the
Corporation shall pay Hillary her full salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given and the
Corporation shall have no further obligations to Hillary under or pursuant to
this Agreement.
(d) If (i) in breach of this agreement, the Corporation shall terminate
Hillary's employment other than pursuant to subsection 7(a) above (termination
for cause) or Section 14 below (termination by reason of death or disability)(it
being understood that a purported termination by the Corporation pursuant to
subsection 7(a) above or Section 14 below which is disputed and finally
determined not to have been proper shall be deemed a termination by the
Corporation in breach of this agreement) or (ii) Hillary shall terminate her
employment for Good Reason, then
(I) the Corporation shall pay Hillary her full salary through
the Date of Termination at the rate in effect at the time the Notice of
Termination is given;
(II) in lieu of any further salary payments to Hillary for
periods subsequent to the Date of Termination, the Corporation shall pay to
Hillary, as severance pay (and not as a penalty to the Corporation), an amount
equal to the product of (A) Hillary's annual base salary rate in effect as of
the Date of Termination, multiplied by (B) the number two (2), such payment to
be made (X) if resulting from a termination based on a change of control of the
Corporation, in a lump sum on or before the thirtieth (30th) day following the
Date of Termination, or (Y) if resulting from any other cause, in substantially
equal semimonthly installments on the fifteenth and last days of each month
commencing with the month in which the Date of Termination occurs and continuing
for forty-eight (48) consecutive semimonthly payment dates (including the first
such date as aforesaid), without interest; and
(III) if termination of Hillary's employment arises out of a
breach by the Corporation of this agreement, the Corporation shall pay all other
damages to which
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Hillary may be entitled as a result of such breach, including damages for any
and all loss of benefits to Hillary under the Corporation's employee benefit
plans (other than the Corporation's Bonus Compensation Plan) which Hillary would
have received if the Company had not breached this agreement and had Hillary's
employment continued for the full term provided in Section 2 hereof.
(e) Unless Hillary's employment is terminated by the Corporation for
cause, the Corporation shall maintain in full force and effect, for the
continued benefit of Hillary for the greater of the number of years (including
partial years) remaining in the term of employment hereunder or the number two
(2), all employee benefit plans and programs in which Hillary was entitled to
participate immediately prior to the Date of Termination, provided that
Hillary's continued participation is possible under the general terms and
provisions of such plans and programs. In the event that Hillary's participation
in any such plan or program is barred, the Corporation shall arrange to provide
Hillary with benefits substantially similar to those which Hillary would
otherwise have been entitled to receive under such plans and programs from which
her continued participation is barred.
(f) The Corporation may withhold from any payments or other benefits
payable to Hillary pursuant to this Section 8 or any other provision of this
agreement all federal, state, city or other taxes as shall be required pursuant
to any law, government regulation or ruling.
9. Disclosure of Information. Hillary recognizes and acknowledges that the
Corporation's trade secrets and know-how as they may exist from time to time are
a valuable, special and unique asset of the Corporation's business, access to
and knowledge of which are essential to the performance of Hillary's duties
hereunder. For the purposes of this agreement, Confidential Information includes
any and all information (i) disclosed or made available to Hillary or known by
Hillary in consequence of or through the employment of Hillary by the
Corporation and not generally known in the industry in which the Corporation or
any of the Corporation's customers is or may be engaged, or which is beneficial
to the Corporation, or any of the Corporation's customers in the promotion or
operation of their respective businesses, (ii) relating to the business,
business practices, operation, affairs, practices, procedures, policies or
methods of the Corporation, (iii) customer lists, (iv) marketing information and
(v) training materials. Since the services of Hillary are unique, extraordinary
and of a specialized character which will require Hillary to handle Confidential
Information of the Corporation and of the Corporation's suppliers and customers,
Hillary shall not, at any time during the term of this agreement or thereafter,
make use of any Confidential Information for the benefit of any person or entity
(other than the Corporation) nor shall Hillary disclose any Confidential
Information to any person or entity for any reason or purpose whatsoever.
10. Covenants Not to Solicit. Hillary, either as a proprietor, partner,
employee, agent, consultant, director, officer, controlling stockholder or in
any other capacity or manner whatsoever, for a period of one (1) year after the
date of expiration or other termination of
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this agreement, shall not interfere with, disrupt or attempt to disrupt the
relationship, contractual or otherwise, between the Corporation and any
customer, client, employee or independent contractor of the Corporation or
solicit or provide services to, as the case may be, any accounts, clients or
customers of the Corporation (or any accounts, clients or customers which were
contacted or solicited by the Corporation during the term of this Agreement)
with whom Hillary had any direct or indirect contact during her employment
hereunder.
11. Return of Documents. Upon termination of employment with the Corporation,
Hillary shall promptly return to the Corporation all documents, notes, records
and other materials of the Corporation in Hillary's possession, whether prepared
by Hillary or others, including, without limitation all materials and
information stored on computer disk or other electronic media.
12. Enforcement of Non-Disclosure and Non-Solicitation Provisions. It is the
desire and intent of the parties that the provisions of Sections 9, 10 and 11
shall be enforced to the fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any portion or portions of such Sections 9, 10 or 11 shall be
adjudicated to be invalid or unenforceable, such Sections shall be deemed
amended to delete therefrom the portion or portions thus adjudicated to be
invalid or unenforceable, such deletion to apply only with respect to the
operation of such Sections in the particular jurisdiction in which such
adjudication is made. The provisions of Sections 9, 10, 11 and 13 shall survive
the expiration or earlier termination of this agreement.
13. Injunctive Relief. If there is a breach or threatened breach of any of the
provisions of Sections 9, 10 or 11 of this agreement, the Corporation shall be
entitled to an injunction restraining Hillary from such breach. Nothing herein
shall be construed as prohibiting the Corporation from pursuing any other
remedies for such breach or threatened breach.
14. Disability/Death. Hillary's employment under this agreement shall terminate
upon the death or, at the election of the Corporation, the physical or mental
disability of Hillary. For purposes of this agreement, Hillary shall be deemed
to be disabled if she is unable to perform her services for twelve (12)
consecutive months. If the Corporation elects to terminate this agreement
pursuant to this Section 14, the Corporation shall notify Hillary of the
Corporation's decision to terminate Hillary's employment hereunder by means of a
Notice of Termination pursuant to the provisions of subsection (d) of Section 7
above. From and after such termination of employment of Hillary pursuant to this
Section 14, Hillary's compensation and rights thereto and all of Hillary's other
rights under this agreement shall terminate.
15. Notices. Any notice required or permitted to be given under this agreement
shall be sufficient if in writing and if sent by certified mail, return receipt
requested, to
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Hillary's mailing address set forth above, or by personal delivery to Hillary,
in the case of Hillary, with a copy sent in like manner to Xxxxx Xxxxxx, Esq.,
Loeb & Loeb, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, or to its office address set
forth above, in the case of the Corporation, with a copy sent in like manner to
Xxxxxxx Xxxxxxxx Xxxxxxxxx & Grun, LLP, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 Attention: Xxxx X. Xxxxxxxx, Esq. Notices shall be deemed given two (2)
business days after mailing, or on the date personal delivery is effected, as
the case may be.
16. Waiver of Breach. The waiver by any party of a breach of any provision of
this agreement by the other party shall not operate or be construed as a waiver
of any subsequent or other breach by the other party. Any waiver must be in
writing.
17. Entire Agreement. This instrument contains the entire agreement of the
parties. It may not be waived, changed, modified or extended orally but only by
an agreement in writing signed by the party against whom enforcement of any
waiver, change, modification or extension is sought.
18. Applicable Law. This agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York without
regard to the application of conflict of laws.
19. Severability. If any provision of this agreement is found to be void or
unenforceable by a court of competent jurisdiction, the remaining provisions of
this agreement shall nevertheless be binding upon the Corporation and Hillary
with the same effect as though the void or unenforceable provision had been
severed and deleted.
20. Conflict. If any provision of this agreement is found to be in conflict with
any provision of any other agreement to which the Corporation and Hillary are
parties, the provision of such other agreement shall control.
21. Arbitration. If any dispute shall arise between the Corporation and Hillary
with regard to this agreement, such dispute shall be promptly submitted to and
decided by arbitration by the American Arbitration Association in the City and
County of New York in accordance with the Expedited Procedures of the Commercial
Arbitration Rules of the American Arbitration Association. The award rendered by
the arbitrators shall be final, shall include an award of reasonable legal fees
and costs to the prevailing party as determined by the arbitrator(s) and
judgment may be entered upon the award in accordance with applicable law in any
court having jurisdiction.
22. Prior Managing Director's Agreement. Notwithstanding anything herein
contained to the contrary, the prior Managing Director's Agreement between the
Corporation and Hillary dated as of October 17, 1994 is hereby deemed terminated
and is superseded in all respects by this agreement.
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In witness whereof, the parties hereto have caused this agreement to be duly
executed as of the day and year first above written.
Corporation:
Xxxxxxxxxx Xxxxxxx Partners Inc.
By:/s/________________________________
Xxxxx Xxxxxxxxxx,
Managing Director
Managing Director:
/s/___________________________________
Xxxxxxx Xxxxxxx
The provisions of Sections 5(b) and 5(c) relating to the possible issuance of
Bonus Securities are hereby consented to:
Financial Performance Corporation
By:/s/____________________________
Xxxxxxx X. Xxxxxx, President
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