EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
the 22nd day of December, 2000 by and among XXXX X. XXXXXXX (the "Employee"),
FIDUCIARY TRUST COMPANY INTERNATIONAL, a bank organized under the New York State
Banking Law ("Company"), and FRANKLIN RESOURCES, INC., a Delaware corporation
("Parent").
WHEREAS, Company is a bank organized and existing under Article III
of the New York State Banking Law (the "NYBL"); and
WHEREAS, Company and Parent entered into an agreement whereby Parent
will acquire all the shares of Company (the "Agreement and Plan of Share
Acquisition"); and
WHEREAS, pursuant to the Agreement and Plan of Share Acquisition,
the parties desire to enter into an employment agreement under which the
Employee shall be employed by Company and under which Company shall compensate
the Employee following the closing date of the acquisition (the "Closing Date");
provided, that if prior notification to or approval of the Board of Governors of
the Federal Reserve System, the New York State Banking Department or any other
governmental entity is required in connection with the employee entering into
this Agreement, such employment and compensation will begin, and this Agreement
shall only be effective, following the date on which any required notification
periods have expired or been terminated, such approvals have been obtained and
any waiting period or periods shall have passed.
NOW, THEREFORE, in consideration of the foregoing recitals, the
mutual promises and agreements hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Company, Parent, and the Employee agree as follows:
ARTICLE I
EMPLOYMENT
1.1 OFFICE; RESPONSIBILITIES. Subject to the terms hereof, Company shall
employ the Employee, and the Employee shall be employed by Company, as Chairman
and Chief Executive Officer, effective as of the Closing Date, subject to the
direction and supervision of the Chief Executive Officer of Parent ("Parent's
CEO"). The Employee shall report directly to Parent's CEO. The Employee's
responsibilities will be as determined by Parent's CEO and shall include, among
other things, assisting in maintaining and enhancing the material business
relationships of Company. In addition, the Employee shall be a member of
Company's Executive Committee and Management Committee and shall be a member of
Parent's Board of Directors, so long as the Employee meets the requirements to
be a director of a corporation organized under Delaware Corporation Law and
shall be a member of the office of the Chairman of Parent, for so long as such
office is in existence.
1.2 FULL-TIME COMMITMENT. The Employee hereby accepts such employment
hereunder, and agrees that she will devote substantially all of her working
time, attention, knowledge and skills, faithfully, diligently, and to the best
of her ability in furtherance of the business of Company and as otherwise
reasonably necessary to such employment. During the term of her employment
hereunder, the Employee will not accept employment or compensation from or
perform services of any nature for any business enterprise other than Company
and its subsidiaries; PROVIDED, HOWEVER, that nothing in this Agreement shall be
deemed to restrict the Employee from serving on (i) the unpaid boards of
charitable, not-for-profit or community organizations or (ii) the boards of the
organizations set forth on Schedule A attached hereto, or any other boards with
the prior written consent of Company's Board of Directors and Parent's CEO, in
each case so long as such activities do not interfere with the performance of
her duties hereunder.
ARTICLE II
TERM OF EMPLOYMENT
2.1 TERM. The employment of the Employee pursuant hereto shall commence on
the Closing Date (or if later, the date of regulatory approval referred to in
the third whereas clause above) and remain in effect for a term expiring at
12:01 A.M. New York City time five (5) years from the Closing Date (the "Term")
unless sooner terminated pursuant to the provisions hereof. The Employee must be
employed by Company on and prior to the Closing Date for this Agreement to
become effective. Employment after the expiration of the Term, if any, shall be
on an employment at-will basis unless otherwise negotiated by the parties.
ARTICLE III
COMPENSATION OF EMPLOYEE
3.1 SALARY. During the Term, Company shall pay to the Employee a base
salary ("Base Salary") equal to five hundred and ninety thousand dollars
($590,000) per year, payable in accordance with the regular payroll practices of
Company, but not less frequently than monthly. Such Base Salary shall be subject
to review on an annual basis by Parent's CEO, subject to review by Parent's
Compensation Committee, which review shall not result in a decrease in Base
Salary. The Base Salary and all other compensation payments to the Employee
under this Agreement or any other agreement shall be subject to withholding
taxes and other applicable deductions.
3.2 BONUS AND INCENTIVE COMPENSATION. The Employee shall be eligible for
short-term and long-term bonus (each as specified below, and collectively, the
"Bonus") and incentive compensation plan participation, on terms and conditions
2
no less favorable than those available for senior management employees of
Parent. The amount and payment of such Bonus and incentive compensation plan
participation shall be subject to the attainment of such performance objectives
as Parent's CEO shall determine, with the approval of Company and Parent
Compensation Committees. Performance objectives may include management, Parent,
Company, and individual targets, and overall Parent performance.
(a) MINIMUM BONUS THROUGH SEPTEMBER 30, 2002. Notwithstanding the
other provisions of this Section 3.2, the Bonus for the period (i)
commencing January 1, 2001 and ending December 31, 2001 and (ii) commencing
January 1, 2002 and ending September 30, 2002, on an annualized basis shall
not be less than six hundred and nine thousand, two hundred and eighty one
dollars ($609,281). The Bonus for such periods shall be payable as follows:
(i) SHORT-TERM BONUS. Employee shall receive an annualized
short-term bonus ("Short-Term Bonus") of no less than two hundred
ninety six thousand, five hundred dollars ($296,500), which shall be
payable in cash within forty-five (45) days following the end of the
applicable period to which such Short-Term Bonus relates.
(ii) LONG-TERM BONUS. Employee shall receive an annualized
long-term bonus ("Long-Term Bonus") of no less than three hundred and
twelve thousand, seven hundred and eighty one dollars($312,781), which
shall be granted to Employee on the last day of the applicable period,
and shall be in the form of Parent restricted stock, which shall vest
in three (3) equal one-third (1/3) increments on the first, second,
and third anniversaries of the date of grant. The Parent restricted
stock granted shall be for a number of Parent shares equal to the
Long-Term Bonus divided by the eleven (11) day average per share New
York Stock Exchange closing price of Parent stock (which shall include
the date of grant, the five trading days prior to the date of grant
and the five trading days following the date of grant).
(b) BONUS AND INCENTIVE COMPENSATION AFTER SEPTEMBER 30, 2002. After
September 30, 2002, the Employee shall become a participant in an incentive
compensation plan established by Parent, and will be eligible to receive
awards, grants or payments thereunder, in amounts comparable to, senior
management employees of Parent. Such incentive compensation plan (or
program) will consist of, among other components and without limitation by
specification, a cash bonus, a long-term stock incentive bonus distributed
in the form of Parent restricted stock and/or stock options. To the extent
employment is not continued beyond the Term, the bonus and incentive
compensation for the period commencing October 1, 2005 through the end of
the Term shall not be less than the pro-rated amount of the prior fiscal
year's incentive compensation payments to the Employee pursuant to this
Section 3.2(b) but shall not extinguish any rights the Employee has under
any then-existing award or grant.
3
3.3 ADDITIONAL SERVICES COMPENSATION. (a) In consideration of additional
services to be rendered by the Employee in order to facilitate the integration
of the business of Company and Parent following the consummation of the
Agreement and Plan of Share Acquisition, during the Term, the Employee shall be
eligible to receive additional services cash compensation ("Additional Services
Cash Compensation") in the aggregate amount of two million, one hundred
twenty-five thousand dollars ($2,125,000) payable as follows: twenty percent
(20%) of such Additional Services Cash Compensation (equal to $425,000) shall be
payable on each of the first, second, third, fourth and fifth anniversaries of
the Closing Date. Such Additional Services Cash Compensation shall be payable in
cash as soon as practicable after each such anniversary of the Closing Date, but
in no event later than thirty (30) days after each such anniversary of the
Closing Date.
(b) In addition, Employee shall be eligible to receive stock options
calculated using the amount of $530,000 ("Additional Services Stock
Compensation"). The Additional Services Stock Compensation shall be
distributed in the form of stock options granted on the Closing Date, fifty
percent (50%) of which shall become exercisable if the Employee remains
employed by Company through the third anniversary of the Closing Date and
the remaining fifty percent (50%) shall become exercisable if the Employee
remains employed by Company through the fourth anniversary of the Closing
Date. Such stock options shall be for the number of Parent shares equal to
(i) the Additional Services Stock Compensation divided by the per share New
York Stock Exchange closing price of Parent stock on the Closing Date, (ii)
multiplied by three. Once such stock options become exercisable, they shall
remain exercisable until the earlier of: (x) the fifth anniversary of the
date of grant, (y) the first anniversary of a Disabling Event or (z) ninety
(90) days following termination of employment with Company. The exercise
price of such options shall be the per share New York Stock Exchange
closing price of Parent stock on the Closing Date.
3.4 BENEFITS; OTHER COMPENSATION. (a) The Employee shall be entitled to
such health, life, disability or other insurance benefits, such qualified or
nonqualified profit sharing, pension or other deferred compensation or
supplemental retirement plan benefits, and such paid vacation and other fringe
benefits and other perquisites (collectively, "Benefits") as are generally
applicable to other senior management employees of Company from time to time. In
addition, retiree medical (including prescription drug and dental) insurance
benefits currently provided to retired employees of Company and its subsidiaries
shall be provided upon retirement to the Employees and shall not be reduced from
the levels provided prior to the Closing Date. The Employee shall be entitled to
participate in such plans or programs as are generally applicable to senior
management employees of Parent from time to time (it being the intent of the
parties hereto that the Employee be treated with respect to Benefits in a manner
similar to Senior management employees of Parent) unless the Employee is
participating in Benefit plans of Company that provide substantially similar
Benefits to the Employee. If the Employee becomes subject to any Benefits of
Parent, (i) the Employee's prior years of service with Company shall be taken
into account by Company with respect to eligibility, benefits and vesting under
4
any Parent employee Benefit plan, program or arrangement and (ii) Parent shall
cause any and all pre-existing condition limitations, eligibility waiting
periods and evidence of insurability requirements under any group plan to be
waived, or not applicable, with respect to the Employee and her eligible
dependents to the same extent waived under Company's Benefit plans; PROVIDED,
HOWEVER, that prior years of service provided in (i) shall not be taken into
account to the extent it would result in the duplication of benefits accrued in
any prior year; and PROVIDED FURTHER, HOWEVER, that if the Employee commences
participation in any Benefit plan of Parent, the Employee shall not be entitled
to participate in the corresponding benefit plan maintained by the Company.
Notwithstanding anything to the contrary contained herein, for a period of
eighteen (18) months following the Closing Date, Parent shall, or shall cause
Company to, provide the Employee Benefits no less favorable in the aggregate
than the Benefits provided prior to the Closing Date.
3.5 EXPENSES. During the term of this Agreement, the Employee shall be
entitled to receive prompt reimbursement for all reasonable business expenses
incurred by the Employee in performing services hereunder, provided such
expenses are properly accounted for in accordance with Company policy and
practices, as in effect from time to time.
3.6 ALLOWANCE FOR FINANCIAL AND TAX PLANNING. Company shall reimburse
Employee for up to fifteen thousand dollars ($15,000) for the fiscal year ending
September 30, 2001 and five thousand dollars ($5,000) for each subsequent fiscal
year, for actual expenses incurred in retaining an outside financial and/or tax
planner, provided such expenses are properly accounted for in accordance with
Company policy and practices, as in effect from time to time.
3.7 ADDITIONAL BENEFITS. Company shall provide the Employee with such
luncheon club memberships and other such memberships in accordance with Company
policy and practices as in effect on the date hereof. Employee shall be entitled
to business travel in accordance with Company policy and practices as in effect
on the date hereof.
3.8 WAIVER. Employee acknowledges that as of the effective date of this
Agreement she is waiving all rights under Company's Change of Control Severance
Plan, as in effect on the date hereof, which as to Employee shall be deemed null
and void and shall have no further force and effect.
ARTICLE IV
TERMINATION
4.1 DISCHARGE FOR CAUSE. The Employee may be terminated by Company from her
employment hereunder for Cause. Discharge for Cause shall mean the termination
of the Employee's employment with Company by reason of any one or more of the
following events: (a) the conviction of the Employee, by a court of competent
5
jurisdiction, or entry of a plea of guilty or NOLO CONTENDERE, of any crime
(whether or not involving Company) which constitutes a felony in the
jurisdiction involved, (b) the Employee's embezzlement or intentional
misappropriation of any property of Company or its affiliates or any clients of
any of them including any violation of Section 6.4 or 6.5 of this Agreement, (c)
the commission by the Employee of an act that would cause the Employee, Company
or any of its affiliates to be disqualified in any manner under Section 9 of the
Investment Advisers Act of 1940, if the Securities and Exchange Commission (the
"Commission") were not to grant an exemptive order under Section 9(c) thereof
(irrespective of whether such order is granted), or that would constitute
grounds for the Commission to deny, revoke or suspend registration of Company or
any of its affiliates as an investment advisor, broker/dealer or transfer agent,
as applicable, with the Commission, (d) if the Employee is an associated person
of a broker-dealer, the commission by the Employee of any act that would
constitute grounds for any order by the Commission against the Employee pursuant
to Section 15(b)(4) or 15(b)(6) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), (e) a material breach of this Agreement by the
Employee, continued insubordination or dereliction of duties or serious multiple
infractions of regulatory compliance requirements such as Company's Code of
Ethics, in each case after written notice specifying in reasonable detail the
nature of the breach, insubordination or dereliction of duties or infractions
and an opportunity to cure of not less than 30 days having been given to the
Employee, (f) continued alcohol or other substance abuse or addiction that
renders the Employee incapable of satisfactorily performing her duties, after
written notice and an opportunity to cure in the first such instance of not less
than 30 days (90 days if the Employee enters an approved rehabilitation program
within such 30-day period) have been given to the Employee or (g) the commission
by the Employee of an act that results in any bank regulatory authority (i)
making a determination to the effect that Parent may no longer maintain its
status as a financial holding company ("FHC") or bank holding company ("BHC")
(as each such term is defined in the Bank Holding Company Act of 1956, as
amended, the "BHCA") or (ii) pursuant to the BHCA, to Section 8 of the Federal
Deposit Insurance Act (12 U.S.C. ss. 1818), as amended, or to New York Banking
Law imposing any civil or criminal penalties on the Employee, Parent or Company,
or issuing an order for the removal or suspension of the Employee from office or
the prohibition of the Employee from participating in the conduct of the affairs
of Company; PROVIDED, HOWEVER, that there shall be no discharge for Cause under
clauses (c), (d), or (g) to the extent such act is performed by the Employee at
the direction of Parent's CEO.
4.2 RESIGNATION. The Employee's employment hereunder shall automatically
terminate upon her Resignation during the Term. "Resignation" shall mean the
termination of the Employee's full-time employment with Company other than by
reason of a (i) Disabling Event (as defined below), (ii) termination by Employee
for Good Reason (as defined below), (iii) termination by Company without Cause,
or (iv) termination by Company for Cause.
4.3 DISABLING EVENT. In the event of a Disabling Event with respect to the
Employee, Company may terminate the Employee's employment hereunder. Disabling
6
Event shall mean the Employee's death or the Employee's physical or mental
disability (as determined under Company's long-term disability plan), which
renders the Employee incapable of performing her material duties and services as
an employee of Company and which continues for more than six consecutive months
or more than six months in total during any 12-month period.
4.4 GOOD REASON. The Employee may terminate her employment hereunder for
Good Reason (as defined below) during the 60-day period following the 30th day
after the Employee has notified Company of the circumstances constituting Good
Reason if Company has failed to eliminate the circumstances constituting such
Good Reason within such 30-day period. As used herein, the Employee shall have
Good Reason to terminate her employment with Company in the event of (i) a
relocation of Company's principal office more than 50 miles from New York, New
York, without the Employee's prior written consent, (ii) an adverse change in
the Employee's title, position or responsibility level set forth in Section 1.1
from that in effect as of the Closing Date, taking into account the effect of
changes to Company and the Employee's responsibilities as a result of the
consummation of the Agreement and Plan of Share Acquisition, without the
Employee's prior written consent, (iii) a reduction in the Employee's Base
Salary, (iv) failure to pay or grant Base Salary, Bonus, Additional Services
Cash or Stock Compensation or any amounts to which the Employee shall become
entitled to in accordance with Section 3.2(b) of this Agreement, in each case as
provided by the terms hereof, (v) a failure to comply in all material respects
with the provisions of Section 3.4 of this Agreement, (vi) an increase in
required travel on Company's business from that which is required on the date
hereof, except that the Employee acknowledges that additional travel will be
required due to the global nature of Parent's business, the California location
of Parent's headquarter's office and the provisions of Section 6.20(vi) of the
Agreement and Plan of Share Acquisition, (vii) a Change of Control (as defined
below), (viii) a material breach by Company or Parent of this Agreement or (ix)
any voluntary termination of employment by the Employee with a termination date
during the twelve (12) month period following the Change of Control, in each
case after written notice specifying in reasonable detail the nature of the
breach and an opportunity to cure of not less than 30 days having been given to
Company or Parent, as the case may be.
4.5 CHANGE OF CONTROL. A "Change of Control" shall be deemed to have
occurred if at any time before the end of the Term there is a change of control
under any of clause (a), (b), (c), or (d), below. For these purposes, Parent
will be deemed to have become a subsidiary of another corporation if any one
other corporation owns, directly or indirectly, fifty percent (50%) or more of
the total combined voting power of all classes of stock of Parent or any
successor to Parent by merger, consolidation, or otherwise.
(a) A Change of Control will have occurred under this clause (a) if
Parent is a party to a transaction pursuant to which Parent is merged with
or into, or is consolidated with, or becomes the subsidiary of another
corporation and, at any time within twenty-four (24) months after the
effective date of that transaction, individuals who were directors of
Parent on the day after the last annual meeting of stockholders of Parent
occurring before the transaction cease for any reason to constitute at
7
least fifty-one percent (51%) of the directors of the surviving or
resulting corporation or (if Parent becomes a subsidiary in the
transaction) of the ultimate parent of Parent.
(b) A Change of Control will have occurred under this clause (b) if
Parent is a party to a transaction pursuant to which Parent is merged with
or into, or is consolidated with, or becomes the subsidiary of another
corporation and, (i) after giving effect to such transaction, less than
forty percent (40%) of the then outstanding voting securities of the
surviving or resulting corporation or (if Parent becomes a subsidiary in
the transaction) of the ultimate parent of Parent represent or were issued
in exchange for voting securities of Parent outstanding immediately prior
to such transaction and (ii) at any time within twenty-four (24) months
after the effective date of that transaction, individuals who were
directors of Parent on the date after the last annual meeting of
stockholders of Parent occurring before that effective date cease for any
reason to constitute at least fifty-one percent (51%) of the directors of
the surviving or resulting corporation or (if Parent becomes a subsidiary
in the transaction) of the ultimate parent of Parent.
(c) A Change of Control will have occurred under this clause (c) if
any of the events described in clause (i), (ii), (iii), or (iv) of this
clause (c) (a "Change Event") occurs:
(i) There is a report filed on Schedule 13D of Schedule 14D-1 (or
any successor schedule, form, or report), each as adopted under the
1934 Act, disclosing the acquisition of twenty-five percent (25%) or
more of the voting stock of Parent in a transaction or series of
transactions by any person (as the term "person" is used in Section
13(d) and Section 14(d)(2) of the 1934 Act, a "Person").
(ii) Parent is a party to a transaction pursuant to which Parent
is merged with or into, or is consolidated with, or becomes the
subsidiary of another corporation and, after giving effect to such
transaction, less than fifty percent (50%) of the then outstanding
voting securities of the surviving or resulting corporation represent
or were issued in exchange for voting securities of Parent outstanding
immediately prior to such transaction.
(iii) There is a sale, lease, exchange, or other transfer (in one
transaction or a series of a related transactions) of all or
substantially all of the assets of Parent.
(iv) The stockholders of Parent approve any plan or proposal for
the liquidation or dissolution of Parent.
(d) A Change of Control will have occurred under this clause (d) if
any Person announces an intention to engage in an "election contest" (as
that term is defined in Regulation 14 under the 0000 Xxx) relating to the
election of Directors of Parent and, at any time within the twenty-four
(24) month period immediately following the date of the announcement of
that intention, individuals who, on the day after the last annual meeting
8
of stockholders of Parent occurring before that announcement, constituted
the directors of Parent cease for any reason to constitute at least a
majority thereof.
ARTICLE V
EFFECT OF TERMINATION
5.1 CAUSE OR RESIGNATION. If the Employee's employment is terminated (i) by
Company for Cause or (ii) by the Employee by her Resignation, the Employee's
Base Salary, Bonus, and Additional Services Compensation, and other benefits
specified in Article III hereof shall cease at the time of such termination and
Employee shall not be entitled to any unpaid Bonus or unpaid Additional Services
Cash Compensation or Additional Services Stock Compensation; PROVIDED HOWEVER,
that if the Employee's employment is terminated for such reasons after the
second anniversary of the Closing Date, then the Employee shall be entitled to
any unpaid Additional Services Cash Compensation paid as soon as practicable
after the termination of employment and any Additional Services Stock
Compensation shall be exercisable, to the extent vested, in accordance with the
provisions of such stock option grant.
5.2 DISABLING EVENT. If the Employee's employment is terminated by Company
by reason of a Disabling Event, the Employee shall be entitled to receive:
(1) all unpaid Base Salary up to the date of the Disabling
Event, paid periodically in accordance with Company's regular
payroll practices;
(2) pro-rated Short-Term Bonus up to the date of the
Disabling Event, based on the amount of the prior fiscal year's
Short-Term Bonus, and any unpaid Short-Term Bonus relating to the
fiscal year prior to the fiscal year in which the Disabling Event
occurs, paid as soon as practicable following the Disabling
Event;
(3) (i) pro-rated Long-Term Bonus up to the date of the
Disabling Event, based on the amount of the prior fiscal year's
Long-Term Bonus, and any undistributed Long-Term Bonus relating
to the fiscal year prior to the fiscal year in which the
Disabling Event occurs, distributed as soon as practicable
following the Disabling Event, where the restricted stock shall
vest immediately and the stock options shall become immediately
exercisable and shall remain exercisable through the first
anniversary of the Disabling Event and (ii) the lapse of any
restrictions on prior year's grants of restricted stock and
acceleration of exercisability on prior year's grants of stock
options;
(4) Additional Services Cash Compensation, paid as soon as
practicable following the Disabling Event, and Additional
Services Stock Compensation shall become immediately exercisable
and shall remain exercisable through the first anniversary of the
Disabling Event; and
9
(5) other benefits provided for in Section 3.4 hereof, which
shall continue or be paid or provided to the Employee in
accordance with the terms of such plans.
5.3 WITHOUT CAUSE; GOOD REASON. If (i) Company desires to terminate the
Employee's employment without Cause or (ii) the Employee terminates her
employment for Good Reason, the Employee shall remain on the payroll of Company
and shall be entitled to receive:
(1) all unpaid Base Salary and unpaid Bonus Amount (as
defined in Section 5.4 below) for the balance of the Term, paid
in all cash, and paid periodically in accordance with Company's
regular payroll practices;
(2) Additional Services Cash Compensation, paid in
accordance with the Additional Services Cash Compensation vesting
provisions, and any Additional Services Stock Compensation shall
be exercisable in accordance with the provisions of such stock
option grant; and
(3) other benefits provided for in Section 3.4 hereof, which
shall continue to be paid or provided to the Employee for the
remainder of the Term, subject to such deductibles and
co-payments as applicable under such plan or, if for any reason
the Employee is no longer treated as an employee of Company and
such benefits are not so payable, the cash value of such benefits
shall be paid to the Employee.
5.4 BONUS AMOUNT. Bonus Amount shall mean an amount equal to the greater of
(i) the annual target Bonus for the Employee for the fiscal year in which the
termination occurs or (ii) the annual Bonus that was paid to the Employee for
the fiscal year preceding the fiscal year in which the termination occurs.
5.5 COMPANY LIABILITY. If the Internal Revenue Service (i) challenges the
deductibility of payments made to the Employee by Company or (ii) imposes any
excise tax on the Employee, in each case pursuant to this Agreement, in
connection with the consummation of the Agreement and Plan of Share Acquisition
or in the event of a Change of Control, Company shall make the Employee whole in
connection therewith and exclusively defend such action with counsel of its own
choice.
5.6 RETIREE MEDICAL BENEFITS. Notwithstanding anything to the contrary
contained in this Article V, the Employee shall be entitled to retiree medical
benefits as described in Section 3.4.
ARTICLE VI
CONFIDENTIAL INFORMATION AND NONCOMPETITION
6.1 ACKNOWLEDGEMENT. The Employee agrees and acknowledges that in the
course of rendering services to Company, its Affiliates, and their respective
10
clients and customers she has had and shall continue to have access to and has
become and shall become acquainted with confidential information about the
professional, business and financial affairs of Company, its Affiliates, and
their respective clients and customers and may have contributed to or may in the
future contribute to such information. The Employee acknowledges that Company is
engaged in a highly competitive business and that the success of Company in the
marketplace depends upon its goodwill and reputation. The Employee agrees and
acknowledges that reasonable limits on her ability to engage in activities
competitive with Company are warranted to protect its substantial investment in
developing and maintaining its status in the marketplace, reputation and
goodwill. The Employee recognizes that in order to guard the legitimate
interests of Company it is necessary to protect all such confidential
information, goodwill and reputation.
6.2 PROPRIETARY INFORMATION. In the course of her service to Company and
her future service to Company, the Employee has had and shall continue to have
access to confidential information relating to Company or its Affiliates,
including, without limitation, trade secrets, client or customer lists,
information regarding marketing or sales plans, management organization
information (including but not limited to data and other information relating to
members of the Board), operating policies or manuals, business plans, financial
records, or other financial commercial business or technical information
relating to the Company or to the Company's clients, customers, or others who do
business with the Company (collectively, "Proprietary Information"). Proprietary
Information shall include, without limitation, any and all items enumerated in
the preceding sentence, whether previously existing, now existing or arising
hereafter, whether or not conceived or developed by others or by the Employee
alone or by the Employee with others, and whether or not conceived or developed
during regular working hours; PROVIDED, HOWEVER, that "Proprietary Information"
shall not include (i) any information which is in the public domain, so long as
such information is not in the public domain as a consequence of disclosure by
the Employee in violation of this Agreement, (ii) any information that becomes
available to the Employee, after she ceases to be an employee of Company, on a
non-confidential basis from a source other than Company or any of its Affiliates
and (iii) information of a general nature, not pertaining primarily to the
business of Company, which would generally be acquired in similar employment
with a comparable company.
For purposes of this Article VI, the term Affiliates of Company shall mean
persons controlling, controlled by or under common control with Company.
6.3 FIDUCIARY OBLIGATIONS. The Employee agrees and acknowledges that
Proprietary Information is of critical importance to Company and that violation
of this Article VI would seriously and irreparably impair and damage the
business of Company. The Employee therefore agrees to keep, at all times,
whether during the Term or thereafter, all Proprietary Information in a
fiduciary capacity for the sole benefit of Company and its clients and
customers.
11
6.4 NON-DISCLOSURE. The Employee shall not at any time, whether during the
Term or thereafter, disclose, directly or indirectly (except as required by law,
but only after prior consultation with Company), any Proprietary Information to
any person other than (a) authorized employees of Company or its Affiliates with
a legitimate need to know related to the business of Company or any such
Affiliate at the time of such disclosure, or (b) at the direction of Company,
and in all such cases only in the course of the Employee's service to Company.
Immediately upon cessation of her employment for any reason whatsoever, the
Employee shall deliver to Company all notes, letters, records, and other
documents then in her possession or control which may contain Proprietary
Information, and Employee shall not retain or use any copies or summaries
thereof.
6.5 COMPETITIVE ACTIVITIES. (a) While actively employed as an employee
during the Term or, in the event of the termination of the Employee's employment
by the Company for Cause or by the Employee without Good Reason prior to the
completion of the Term, for the two-year period following such termination, and
except as otherwise expressly consented to, approved or otherwise permitted by
Company in writing, and to the fullest extent permitted under applicable law,
the Employee shall not, directly or indirectly, (i) own, operate, control,
accept employment from, serve as an agent of or consultant to a business in
connection with its activity in providing investment advice, banking, trust, and
custodial services to registered investment companies, institutions,
individuals, or other clients and customers of Company or (ii) extend credit to
or assist in arranging credit to establish or conduct any such activity, or
(iii) permit her name, reputation or affiliations to be used in connection with
any such business. The restrictions in this Section 6.5 shall apply to all
geographical areas where Employee performed services for Company and to all
other places where Company does business and/or did business during the Term,
and at all places where, during the Term, the Company had plans to do business.
(b) During the Term, including any period during which Employee is on
the Company payroll, and for the two-year period after Employee is no
longer on the Company payroll, and except as otherwise expressly consented
to, approved or otherwise permitted by Company in writing, and to the
fullest extent permitted under applicable law, the Employee shall not,
directly or indirectly, request, induce or attempt to influence any client
or customer of Company or of any Affiliate to limit, curtail or cancel its
business with Company or any Affiliate or solicit such party for such
business. For the purpose of this Article VI, the term clients and
customers of Company or its Affiliates shall include any person that
received services from Company or any Affiliate during the twelve-month
period prior to cessation of the Employee's employment with Company, and
any person to which Company or any Affiliate had either submitted on or
prior to the Employee's date of termination a written response to such
client or customer's request for proposal or had other contacts, whether
oral or written, regarding retention of Company or such Affiliate as an
investment adviser, as well as any potential clients or customers to whom
Company or an Affiliate has made presentations within the twelve-month
period prior to cessation of the Employee's employment with Company.
12
(c) During the Term, including any period during which Employee is on
the Company payroll, and for the two-year period after Employee is no
longer on the Company payroll, and except as otherwise expressly consented
to, approved or otherwise permitted by Company in writing, and to the
fullest extent permitted under applicable law, the Employee shall not,
directly or indirectly, request, induce or attempt to influence any current
officer, director, employee, consultant, agent or representative of Company
or of any Affiliate, as well as any person with whom the Company or any
Affiliate is at such time engaged in discussions regarding potential
employment (i) to terminate his or her employment or business relationship
with Company or any Affiliate or (ii) to commit any act that, if committed
by the Employee, would constitute a breach of any provision hereof.
6.6 EQUITABLE REMEDIES. Notwithstanding any other provision of this
Agreement to the contrary, the Employee acknowledges and agrees that the
services to be rendered by the Employee hereunder are of irreplaceable value,
that Company will suffer irreparable injury and damage and will have no adequate
remedy at law and could not be reasonably or adequately compensated in damages
for any breach or threatened or attempted breach by the Employee of the
provisions of this Article VI, and that, in light of the foregoing, it is of the
utmost importance that the parties' respective obligations under Article VI of
this Agreement be maintained during any dispute resolution process. Accordingly,
the Employee expressly agrees that Company shall be entitled, in addition to the
other rights or remedies that may be available to it under this Agreement or at
law, to seek a temporary or permanent restraining order or injunction in any
court of competent jurisdiction (i) enjoining or restraining the Employee from
engaging in any conduct in violation or threatened violation of the provisions
of this Article VI or (ii) maintaining the strict performance of the parties'
respective obligations under Article VI of this Agreement during any dispute
resolution process. Employee agrees that any such restraining order or
injunction may be granted without the necessity of Company posting any bond.
Pending arbitration pursuant to Section 7.6 of this Agreement, Company shall be
entitled to cease making any payments or providing any benefits to the Employee
and to obtain temporary and preliminary injunctive relief as described in
Section 6.6(i) from a court of competent jurisdiction.
ARTICLE VII
MISCELLANEOUS
7.1 NOTICES. All notices hereunder, to be effective, shall be in writing
and shall be deemed delivered when delivered by hand, upon confirmation of
receipt by telecopy or when sent by first-class, certified mail, postage, and
fees prepaid, as follows:
(a) For notices and communications to Company:
Fiduciary Trust Company International
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
13
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
With a copy to Parent:
Franklin Resources, Inc.
000 Xxxxxxxx Xxxxxx Xxxx.
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
-and-
Attention: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
(b) For notices and communications to the Employee:
Xxxx X. Xxxxxxx
Fiduciary Trust Company International
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
By notice complying with the foregoing provisions of this Section 7.1, each
party shall have the right to change the address for future notices and
communications to such party.
7.2 MODIFICATION. As of the date of this Agreement, this Agreement (and the
other agreements and documents referred to herein) shall constitute the entire
agreement between the parties hereto with regard to the subject matter hereof,
superseding all prior understandings and agreements, whether written or oral.
Any amendment or modification shall require the written agreement of the parties
hereto. Notwithstanding anything herein to the contrary, this Agreement shall be
amended or modified prior to the Closing Date only with the written approval of
the Board of Directors of Company and Parent.
7.3 ASSIGNMENT. This Agreement and all rights hereunder are personal to the
Employee and may not, unless otherwise specifically permitted herein, be
assigned by him. If the Employee dies, payments hereunder may be made to the
Employee's estate. Notwithstanding anything else in this Agreement to the
contrary, Company may not assign its rights and obligations under this
Agreement.
14
7.4 CAPTIONS. Captions herein have been inserted solely for convenience of
reference and in no way define, limit or describe the scope or substance of any
provision of this Agreement.
7.5 SEVERABILITY. The provisions of this Agreement are severable, and the
invalidity of any provision shall not affect the validity of any other
provision. In the event that any provision of this Agreement or the application
thereof is held to be unenforceable because of the duration or scope thereof,
the parties hereto agree that the panel of arbitrators or court making such
determination shall have the power to reduce the duration and scope of such
provision to the extent necessary to make it enforceable, and that the Agreement
in its reduced form shall be valid and enforceable to the full extent permitted
by law.
7.6 ARBITRATION. Any controversy or claim arising from or relating to this
Agreement or breach thereof shall be settled exclusively by arbitration in New
York, New York in accordance with the commercial arbitration rules of the
American Arbitration Association then in effect. The arbitration shall take
place at a location mutually agreed by the parties or, if the parties are unable
to agree within 30 days of commencement of arbitration, in New York, New York.
Within 30 days after the commencement of arbitration, the parties shall mutually
select three arbitrators. Judgment on the award rendered by the arbitrators may
be entered in any court having jurisdiction thereof. The expense of such
arbitration shall be borne equally by the parties hereto. Notwithstanding the
foregoing, any controversy or claim arising out of or relating to any claim by
the Company for temporary or permanent relief with respect to Section 6 of this
Agreement need not be resolved by arbitration and may be resolved in accordance
with Section 6.6 of this Agreement.
7.7 LEGAL FEES. All legal fees incurred relating to any controversy or
claim arising from or relating to this Agreement or breach thereof shall be
borne by Parent if Parent is the non-prevailing party. If Employee is the
non-prevailing party, then each party shall be responsible for its own legal
fees.
7.8 GOVERNING LAW. This Agreement shall be construed under and governed by
the laws of the State of New York.
7.9 TERMINATION. In the event that the Closing Date does not occur prior to
October 25, 2001, or in the event of a Disabling Event to the Employee prior to
the effective date of this Agreement, this Agreement shall terminate and have no
force or effect.
15
IN WITNESS WHEREOF, the parties hereto, being duly authorized, have
duly executed this Agreement as a binding contract as of the day and year first
above written.
FRANKLIN RESOURCES, INC.
By:/s/ Xxxxxx X. Xxxxxxxx
----------------------
Xxxxxx X. Xxxxxxxx
FIDUCIARY TRUST COMPANY INTERNATIONAL
By: /s/ Xxxxxxx X. Xxxxxx
----------------------
Xxxxxxx X. Xxxxxx
Accepted and agreed to
this 22nd day of December 2000
/s/ Xxxx X. Xxxxxxx
------------------------
XXXX X. XXXXXXX
16
SCHEDULE A
Outside Paid Directorships
Fortune Brands, Inc.
Merck & Co., Inc.
American General Corp.
Xxxxxx X. Xxxxxx Foundation
17
