GKN Securities Corp.
0 Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
November 28, 2000
Investec Ernst & Company
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxxx
Re: Registered Employees of GKN Securities Corp. ("GKN")
----------------------------------------------------
Dear Xxxx:
This letter agreement is meant to set forth our mutual understanding
regarding the terms by which certain registered employees of GKN will be
terminated by GKN and subsequently offered employment by Investec Ernst &
Company ("Investec Ernst").
1. Subject to the fulfillment of the conditions set forth in paragraph 2
below, Investec Ernst agrees to offer employment to those registered employees
of GKN mutually agreed upon by the parties and set forth on Annex A attached
hereto (the "Employees") on or about December 18, 2000, or such other date as
GKN and Investec Ernst shall mutually agree upon (the "Employment Date"). GKN
shall file all Form U-5s and Investec Ernst shall file all Form U-4s required in
connection with the respective terminations and hirings of the Employees.
2. As a condition to Investec Ernsts agreement to offer employment to the
Employees, GKN agrees:
a) to terminate the Employees on or before the Employment Date;
b) to refer all of the Employees to the employ of Investec Ernst;
c) to grant an electronic, negative transfer of the Employees' client
accounts to Investec Ernst;
d) prior to the Employment Date and at the sole discretion of Investec
Ernst, to either enforce or waive any and/or all rights of GKN
and its subsidiaries regarding noncompetition of the Employees
and nonsolicitation of customers by the Employees under the
Association Agreements previously entered into between each
Employee and GKN; and
e) at the sole discretion of Investec Ernst, to either enforce or
waive any and/or all rights of GKN and its subsidiaries regarding any
advances, bonuses, commissions, or other payments remitted to any of
the Employees by GKN pursuant to letter agreements previously entered
into between such Employees and GKN setting forth the respective
terms of such Employees' employment with GKN.
3. In consideration of the foregoing, Investec Ernst will pay to GKN
certain fees (the "Override Fees") as set forth on Annex B hereto. Such fees
shall be payable to GKN as set forth on Annex B hereto, via bankcheck and
accompanied by reasonable supporting documentation as requested by GKN.
4. Other than the Employees, without the prior consent of GKN, Investec
Ernst shall not, for a period of 180 days following the Employment Date, hire
directly from GKN any individual who was a registered employee of GKN on the
Employment Date (each, a "Later Employee"). Except as otherwise set forth
herein, if any Later Employees are hired by Investec Ernst, whether with GKNs
consent (in cases of hires made within 180 days of the Employment Date) or
without GKNs consent (in cases of hires made after 180 days from the Employment
Date), the other provisions of this Agreement, including Section 3, shall apply
with respect to the Later Employees to the same extent as with the Employees,
whether or not expressed.
5. In the event Investec Xxxxx xxxxxx with another company and is not the
survivor of the merger, or shall otherwise be purchased, or shall sell the
assets comprising its brokerage business, a condition to such transaction shall
be the buyers assumption of all obligations owed by Investec Ernst to GKN
hereunder on the terms set forth herein.
6. The parties agree that if any Employee shall leave the employ of
Investec Ernst at any time during the three year period following the Employment
Date, Investec Ernst shall use its reasonable efforts to reassign all of such
Employee's customer accounts to one or more of the Employees remaining at
Investec Ernst.
7. Each of GKN and Firebrand Financial Group, Inc., a Delaware corporation
("Firebrand"), covenants and agrees and shall cause each of their respective
affiliates, subsidiaries, officers, directors, shareholders, control persons,
employees, affiliates, agents and representatives not to solicit, employ or
otherwise entice away from Investec Ernst or any of its affiliates or
subsidiaries any Employee or Later Employee or any client account for a period
of four and one-half (4-1/2) years from the date hereof.
8. GKN and Firebrand, jointly and severally, agree to indemnify, defend and
hold harmless Investec Ernst and its respective successors, assigns, directors,
officers, shareholder, control persons, employees, affiliates, agents,
representatives, accountants and attorneys (collectively, the "Investec
Parties") from and against any and all costs and expenses (including, without
limitation, reasonable attorneys' fees and reasonable expenses of
investigation), judgments, fines, losses, claims, damages, liabilities and
amounts paid in settlement imposed on, incurred or suffered by or asserted
against any Investec Party, directly or indirectly, as a result of, arising out
of or in connection with: (i) each Employee's prior employment with GKN;
(ii) any alleged successor liability of Investec Ernst; and (iii) any breach by
GKN of its representations, warranties, covenants or agreements contained in
this Agreement.
9. Investec Ernst agrees to indemnify, defend and hold harmless each of
Firebrand and GKN and their respective successors, assigns, directors, officers,
shareholders, control persons, affiliates, agents, representatives, accountants
and attorneys (collectively, the "GKN Parties") from and against any and all
costs and expenses (including, without limitation, reasonable attorneys' fees
and reasonable expenses of investigation), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement imposed on, incurred or
suffered by or asserted against any GKN Party, directly or indirectly, as a
result of, arising out of or in connection with: (i) each Employee's employment
with Investec Ernst to the extent and only to the extent that any such matter
arises solely out of such Employee's employment with Investec Ernst; and (ii)
any breach by Investec Ernst of its representations, warranties, covenants or
agreements contained in this Agreement.
10. Each party hereto agrees to use all reasonable efforts to take or cause
to be taken all actions, and to do or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to expeditiously consummate and make effective the transactions
contemplated by this letter agreement, including, without limitation, the making
of any filings with, and the procurement of any authorizations and consents
from, regulatory agencies or other persons or entities. If for any reason the
transactions set forth in this letter agreement cannot be consummated due to no
fault of either party hereto, this letter agreement shall be deemed terminated
and shall be of no further force and effect. In the event of a termination,
neither party shall possess any further rights and obligations hereunder, except
that neither party shall hire the employees of the other for a period of 180
days from the date hereof.
11. Both parties hereto shall maintain the provisions of this letter
agreement in confidence. Neither party shall make any disclosure, or shall make
or issue or cause to be made or issued any announcement or statement, to any
third party or the general public, regarding this letter agreement or any
activities under this letter agreement without the prior written consent of the
other party; provided however Firebrand may make such disclosure as is required
by any applicable law, rule or regulation; provided further that if such
disclosure is required to be made and Firebrand reasonably believes that it is
required to name Investec Ernst or any of its subsidiaries or affiliates,
Firebrand will provide written notice to Investec Ernst of such requirement at
least 5 business days prior to any such filing.
12. This letter agreement constitutes the entire agreement and understanding
of the parties hereto in respect of the subject matter hereof and supersedes all
prior agreements and understandings, both written and oral, between the parties.
13. The respective rights and obligations of the parties contained in this
letter agreement shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns.
14. This letter agreement shall be governed by the laws of the State of New
York, without regard to conflicts of law principals.
15. Any and all disputes arising under this letter agreement shall be
submitted to binding arbitration in New York City using the facilities of the
New York Stock Exchange, Inc. Judgment upon any such arbitration award may be
entered in any court of competent jurisdiction in New York City, and each party
hereto expressly consents to the jurisdiction of any such court and to venue
therein.
16. Any term or provision of this letter agreement which for any reason and
to any extent is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability, without rendering invalid or unenforceable the remaining terms
and provisions of this letter agreement in that jurisdiction, and without
affecting the validity or enforceability of any of the terms or provisions of
this letter agreement in any other jurisdiction.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
If this letter correctly sets forth our understanding, please so
acknowledge by signing in the space indicated below.
Sincerely,
GKN SECURITIES CORP.
By: /s/ Xxxxx X. Xxxx
FIREBRAND FINANCIAL GROUP, INC.
By: /s/ Xxxxx X. Xxxx
(as to paragraphs 7, 8
and 11 only)
AGREED TO AND ACCEPTED BY
INVESTEC ERNST & COMPANY
By: /s/ Xxxxxxx Xxxxxxxxxx
Xxxxxxx Xxxxxxxxxx
Senior Vice President
ANNEX A
New York Employees
------------------
Xxxxxx, Xxxx
Xxxxxx, Xxxxx
Xxxxxxxxx, Xxxxxxxxx
Xxxxxxxx, Xxxxxxx
Xxxxxxx, Xxxx
Xxxxx, Confrence
Xxxxxxxxxxx, Xxxxxxx
Gabdoullin, Xxxxxxx
Xxxxxxxx, Xxxxxx
Xxxxxx, Xxxxx
Xxxxxxxxxx, Xxxx
Xxxxxxx, Xxxxxx
Xxxxxxx, Xxxxxx
Xxxxxxx, Xxxxxxx
Xxxxxx, Xxxxx
Xxxxxx, Xxxx
Xxxxxxx, Xxxxx
Xxxxxxx, Xxxxx
Xxxxx, Xxxxxxx
Granther, Xxxxxxxx
Xxxxxxxx, Xxxxxx
Xxxxxxx, Xxxxxx
Xxxxxx, Xxxxx
Xxxxxxxxx, Xxxxxx
Xxxxxx, Xxxxxx
Xxxxxx, Xxxxxxxx
Iacobi, Xxxxxxxxx
Xxxxx, Xxxxxxx
Xxxxxx, Xxxxxxx
Xxxx, Xxxxx
Xxxxx, Xxxxxx
Xxxxx, Xxxxxxx
Peer, Xxxxxx
Xxxxxx, Xxxxxxx
Xxxxxxx, Xxxxx
Xxxxxxxxxxxxx, Xxxxxx
Xxxxxx, Xxxxx
Xxxxxxx, Xxxxxxxx
Xxxxxx, Xxxx
Ravens, Xxxxxxx
Xxxx, Chee Way
Xxxxxx, Xxxxxxxx
Xxxxx, Illasser
Xxxxxxxxx, Xxxx
Oro, Xxxxxx
Connecticut Employees
---------------------
Xxxx, Xxxxxx
Xxxxxxx, Xxxx
Xxxx, Xxxxx
Xxxx, Xxxxxx
Xxxxxx, Xxxxx
Xxxxxxx, Xxxxx
Xxxx, Donloy
Xxxxx, Xxxxxx
Xxxxx, Xxxxxxx
Annex B
Fees
Investec Ernst shall pay to GKN Override Fees equal to the percentage,
as set forth below, of the gross commissions and sales concessions generated,
in each of the respective years following the Employment Date, by the
Employees set forth on Annex A hereto and the Later Employees, if any;
provided, that if the amount of the Override Fee in any year does not
exceed the Guaranteed Payment for such year, any deficit between the
Guaranteed Prepayment and the amount of the Override Fee will be applied to
any payment due by Investec Ernst to GKN in the following year. For
purposes hereof, the calculation of Override Fees shall begin on the
Employment Date, except that if any Later Employee shall be hired in
accordance with the provisions of this Agreement, the portion of the
Override Fees generated in that year by such Later Employee shall be
calculated from the date of such Later Employee's employment with Investec
Ernst. For each respective year following the Employment Date, a guaranteed
prepayment (each, a "Guaranteed Prepayment") shall be paid to GKN which
shall count towards the total Override Fees for such year as follows:
Year Override Fee % Guaranteed Prepayment
---- -------------- ---------------------
1 6% $500,000
2 8% $400,000
3 8% $300,000
For example, the Override Fees for Year 1 shall exceed the Guaranteed
Prepayment only if the total commissions and sales concessions generated by
the Employees and the Later Employees, if any, in such year exceeds
$8,333,333 (as 6% of $8,333,333 equals the $500,000 prepayment).
The three Guaranteed Payments shall be paid to GKN on the Employment
Date, the first anniversary of the Employment Date and the second anniversary of
the Employment Date, respectively. Any Override Fees in excess of the
respective year's Guaranteed Prepayment shall be paid to GKN within 45 days
after the end of each quarter, to the extent earned.
Nothing contained herein shall be deemed an obligation of Investec
Ernst to retain any Employee or Later Employee for any period of time following
the Employment Date.
