EXHIBIT 10.3
EMPLOYMENT AGREEMENT
Employment Agreement, dated as of January 1, 2005, ("Effective Date"), by
and between Xxxxxxx Xxxxxxx, an individual with an address at 000 Xxxx 00xx
Xxxxxx, Xxx. 00 G/H, Xxx Xxxx, Xxx Xxxx 00000 ("Executive"), and Xxxxxx Capital
Financial Group, Inc., a Delaware corporation with its principal office located
at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company").
RECITALS
A. The Company desires to retain Executive as Chief Financial Officer of
the Company during the Term (as defined below).
B. Executive desires to be employed by the Company during the Term, all
upon the terms and conditions set forth herein.
NOW, THEREFORE, the Company and Executive agree as follows:
1 Engagement; Duties. Subject to the terms and conditions set forth herein, the
Company shall employ Executive, and Executive shall serve the Company, as Chief
Financial Officer during the Term (as defined in Section 2). In such capacity,
Executive shall perform duties and be assigned responsibilities that are
customary for a person serving in such capacities for an entity engaged in a
business similar to that of the Company as may be assigned to him from time to
time by the Board of Directors of the Company. During the Term, the Executive
shall report to the Chief Executive Officer and the Board of Directors of the
Company. During the Term, Executive shall promote the interests of the Company,
shall perform his duties faithfully and diligently, consistent with sound
business practices and shall devote his full business time to the performance of
his duties for the Company in accordance with the terms hereof, except as
otherwise may be approved in writing by the Chief Executive Officer.
Notwithstanding the foregoing, the parties acknowledge and agree that Executive
may spend a portion of his business time as an advisor to the board of directors
of an unaffiliated company for which he presently performs services, provided
that, and only for so long as, such duties do not interfere with, or present
conflict of interest issues with respect to, Executive's duties to the Company
hereunder as determined in good faith by the Board of Directors of the Company.
2 Term. Unless this Agreement is terminated pursuant to Section 5, the term of
this Agreement ("Term") shall be for a period of one (1) year from the Effective
Date and shall expire on December 31, 2005.
3 Compensation. As consideration for the performance by Executive of Executive's
obligations under this Agreement, the Company shall pay Executive as follows:
(A) During the Term, the Company shall pay Executive a base salary at the
rate of One Hundred Seventy Five Thousand ($175,000.00) Dollars per year ("Base
Salary").
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(B) In addition to the Base Salary, the Company shall pay Executive, if
and when earned by Executive, a bonus ("Bonus") based on Executive's performance
as determined by performance criteria and objectives established by the Chief
Executive Officer and the Board of Directors or the compensation committee of
the Board of Directors, but which bonus shall in no event exceed the Base Salary
in effect at the time of the determination of such Bonus.
(C) The Base Salary shall be payable in accordance with the Company's
normal monthly payroll run. The Bonus, if any, shall be paid within sixty (60)
days of the end of each fiscal year. If the Bonus is based upon financial
results for the fiscal year and such results are not known within sixty (60)
days of the end of the fiscal year, then eighty (80%) of the projected Bonus
shall be paid within sixty (60) days of the end of such fiscal year and the
balance shall be payable within thirty (30) days of delivery of audited
financial statements. The Company shall deduct from the Base Salary and any
Bonus any federal, state or local withholding taxes, social security
contributions and any other amounts which may be required to be deducted or
withheld by the Company pursuant to any federal, state or local laws, rules or
regulations.
4 Reimbursement of Expenses; Fringe Benefits.
(A) Expenses. The Board of Directors of the Company will authorize an
expense budget for Executive commensurate with reasonable business requirements,
including reimbursement for reasonable travel and entertainment expenses. During
the Term, the Company shall reimburse Executive for ordinary and necessary
business expenses incurred by Executive in the performance of Executive's duties
on behalf of the Company, provided, however, that such expenses were incurred in
the furtherance of the Company's business in accordance with the foregoing
budget, and that Executive presents evidence of such expenses as may be required
under the policies of the Company as are then in effect.
(B) Fringe Benefits. During the Term, Executive shall be entitled to those
fringe benefits and perquisites that are provided to other executives of the
Company generally, including any health or other insurance, pension and/or
retirement plan (including 401k) or welfare plan, as and when such benefit plans
are established. The foregoing shall not require the Company to establish any
such plan or program solely for Executive's benefit.
(C) Directors' and Officers' Liability Insurance. The Company shall use
reasonable commercial efforts to procure directors' and officers' insurance in
such form and providing such coverage for Executive, in his capacity as Chief
Financial Officer of the Company, as is customary for similarly situated
executives serving in similar capacities, provided only that the costs of such
coverage are not substantially greater than those at companies engaged in
similar business activities.
(D) Vacation. Executive shall be entitled to twenty (20) paid vacation
days during each year of the Term at such times as are mutually agreed upon by
Executive and Company.
(E) Warrant. Upon the execution and delivery of this Agreement, the
Executive shall be granted a warrant ("Warrant") to purchase 313,200 shares of
the Company's common stock, representing 2% of the sum of (i) number of shares
of the Company's common stock issued
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and outstanding on the date hereof (11,740,000) plus (ii) the number of shares
of the Company's common stock issuable upon the conversion of the Company's
Series A Preferred Stock on the date hereof (3,920,000), at an exercise price
per share equal to One-Sixth of One Dollar ($0.1666...), as adjusted from time
to time to reflect stock dividends, stock splits, reorganizations and similar
adjustments customarily included in common stock warrants. The Warrant shall be
exercisable at any time, and shall vest in twenty-four equal monthly
installments commencing February 1, 2005 or, if sooner, upon any sale or other
disposition of all or substantially all of the Company's assets, or upon a
merger, consolidation, reorganization or other similar transaction resulting in
a change of control of the Company's business. Any unvested portion of the
Warrant and any vested but unexercised portion of the Warrant shall
automatically become null and void and shall automatically terminate upon the
termination of Executive's employment hereunder for Cause (as defined below) or
upon Executive's voluntary termination of his employment hereunder other than
for Good Reason (as defined below). Upon the termination of Executive's
employment due to death, Disability (as defined below) or by the Company without
Cause, any unvested portion of the Warrant shall automatically become null and
void and shall terminate and any vested and unexercised portion of the Warrant
shall be exercisable for a period not less than ninety (90) days following the
date of termination of employment. In the event of any conflict between the
terms and provisions of this Agreement and those of the Warrant, the terms of
the Warrant shall govern and be controlling.
(F) Options. Provided that Executive is then employed by the Company,
stock options may be granted to Executive at the end of each calendar year of
employment based on the success of the Company's business in accordance with
criteria established by, and at the sole discretion of, the Board of Directors
of the Company.
5 Termination. The Company may terminate this Agreement upon Executive's death,
and may terminate this Agreement at any earlier time at the option of the
Company due to Executive's Disability (as defined below) or for Cause (as
defined below). Executive may terminate this Agreement for Good Reason (as
defined below).
(A) As used in this Agreement:
(i) The term "Disability" means the inability of Executive
substantially to perform his duties and obligations under this Agreement for
sixty (60) consecutive days or sixty (60) days in any one hundred twenty
(120)-day period because of any mental or physical incapacity.
(ii) The term "Cause" means (A) any act by Executive that damages,
in any material respect, the reputation, business or business relationships of
the Company, (B) any action by Executive that constitutes a fraud against the
Company, (C) the conviction of Executive of a crime (other than a traffic
violation), (D) Executive's refusal or failure to perform his duties that
continues without cure for a period of thirty (30) days after the notice of such
refusal or failure is given by the Company to Executive, or (E) any material
breach by Executive of this Agreement or any other agreement between Executive
and the Company, or any Affiliate (as defined below) of the Company, that
continues without cure for a period of thirty (30) days after notice of such
breach is given by the Company to Executive.
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(iii) The term "Good Reason" means (A) any material reduction in the
Base Salary or duties and responsibilities of Executive or (B) any material
breach by the Company of this Agreement or any other agreement between Executive
and the Company, or any Affiliate of the Company, that continues without cure
for a period of thirty (30) days after notice of such breach is given by
Executive to the Company.
(iv) The term "Termination Date" shall mean the earlier of the
expiration of this Agreement or the effective date of the Company's termination
of this Agreement.
(B) Payments to Executive Upon Termination of This Agreement.
(i) In the event this Agreement is terminated prior to the
expiration of the Term by the Company without Cause, or by Executive for Good
Reason, the Company shall pay to Executive the amounts set forth in this Section
5(B)(i): (a) an amount equal to (i) Executive's accrued but unpaid Base Salary
through the Termination Date, payable within thirty (30) days of the Termination
Date, and (ii) any remaining unpaid Bonus for the prior fiscal year, payable
within thirty (30) days of the Termination Date or, if not determined as of that
date, then in accordance with Section 3(C) hereof; (b) reimbursement for any
reimbursable business expenses incurred in accordance with this Agreement prior
to the Termination Date, payable within thirty (30) days of the Termination
Date; (c) an amount equal to (i) Executive's Base Salary for the remainder of
the Term, payable within thirty (30) days of the Termination Date, and (ii)
Executive's Bonus for the period ending on the Termination Date, calculated on a
pro rata basis based on the number of days that the Executive was employed by
the Company prior to the Termination Date, payable within thirty (30) days of
the Company's determination thereof following the end of such fiscal year in
accordance with Section 3(C) hereof; and (d) any amounts or benefits due under
this Agreement and any benefit plan, or program through the remainder of the
Term in accordance with the terms of said plan or program, but without
duplication.
(ii) In the event this Agreement is terminated prior to the
expiration of the Term by the Company for Cause or due to Executive's death or
Disability, the Company shall pay to Executive the amounts set forth in this
Section 5(B)(ii) within thirty (30) days of the Termination Date: (a) an amount
equal to Executive's accrued but unpaid Base Salary prior to the Termination
Date; (b) reimbursement for any reimbursable business expenses incurred in
accordance with this Agreement prior to the Termination Date; and (c) any
amounts or benefits due through the Termination Date under this Agreement and
any benefit plan, or program in accordance with the terms of said plan or
program, but without duplication.
(iii) As consideration for the payments under Section 5(B)(i),
Executive shall execute and deliver to the Company a release of any and all
claims against the Company (excluding any claim for such payments) in form and
substance reasonably satisfactory to the Company.
6 Non-Disclosure; Non-Competition and Non-Solicitation.
(A) Non-Disclosure. Executive understands and agrees that the business of
the
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Company is based upon specialized work and Confidential Information (as
hereinafter defined). Executive agrees that he shall keep secret all
Confidential Information and that he will not, directly or indirectly, use for
his own benefit or for the benefit of others nor Disclose (as hereinafter
defined), without the prior written consent of the Company, any Confidential
Information. At any time upon the Company's request and upon expiration or
earlier termination of this Agreement, Executive shall turn over to the Company
all books, notes, memoranda, manuals, notebooks, records and other documents
made, compiled by, delivered to, or in the possession or control of Executive
containing or concerning any Confidential Information, including all copies
thereof, in any form or format, including any computer hard disks, wherever
located, containing any such information, it being agreed that the same and all
information contained therein are at all times the exclusive property of the
Company. The provisions of this Section 6(A) shall survive for a period of three
(3) years following the Termination Date.
As used in this Agreement, the term "Confidential Information" means any
information or compilation of information not generally known to the public or
the industry, that is proprietary or confidential to the Company, its Affiliates
and/or those doing business with the Company and/or its Affiliates, including
but not limited to know-how, process, techniques, methods, plans,
specifications, trade secrets, patents, copyrights, supplier lists, customer
lists, mailing lists, financial information, business plans and/or policies,
methods of operation, sales and marketing plans and any other information
acquired or developed by Executive in the course of his past, present and future
dealings with the Company, which is not readily available to the public.
"Confidential Information" shall not include information that Executive can
demonstrate was known to him prior to the Effective Date or that was made
available to Executive by a third party without obligation of confidentiality.
As used in this Agreement, the term "Disclose" means to reveal, deliver,
divulge, disclose, publish, copy, communicate, show, allow or permit access to,
or otherwise make known or available to any third party, any of the Confidential
Information.
(B) Non-Competition; Non-Solicitation. Commencing on the date hereof and
ending on the first anniversary of the date of Executive's termination from
employment with the Company or any Affiliate thereof, or if Executive is
terminated without Cause or resigns for Good Reason, ending on the last day of
the period for which Executive receives severance pay under Section 5(B)(i)
hereof (in either event, the "Restricted Period"), Executive covenants and
agrees that he will not, without the Company's prior written consent, directly
or indirectly, either on behalf of himself or on behalf of any business venture,
as an employee, consultant, partner, principal, stockholder, officer, director,
trustee, agent, or otherwise (other than on behalf of the Company or its
Affiliates):
(i) be employed by, engage or participate in the ownership,
management, operation or control of, or act in any advisory, expert, consulting
or other capacity for, any entity or individual that competes with the Company
in the areas of pension administration, insurance product sales and investment
advisory services in the geographical area of New York and New England
(provided, however, that notwithstanding the foregoing, Executive may make
solely passive investments in such a competing entity, the common equity of
which is "publicly held" and of which Executive shall not own or control
securities which constitute more than one percent (1%) of the voting rights or
equity ownership of such entity);
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(ii) solicit or divert any business or any customer from the Company
or its Affiliates or assist any person, firm, corporation or other entity in
doing so or attempting to do so;
(iii) cause or seek to cause any person, firm or corporation to
refrain from dealing or doing business with the Company or its Affiliates or
assist any person, firm, corporation or other entity in doing so; or
(iv) hire, solicit or divert from the Company or its Affiliates any
of their respective employees, consultants or agents who have, at any time
during the immediately preceding one (1) year period from the date hereof or the
Restricted Period, been engaged by the Company or its Affiliates, nor assist any
person, firm, corporation or other entity in doing so.
As used in this Agreement, the term "Affiliates" shall mean any entity
controlling, controlled by or under the common control of the Company. For the
purpose of this Agreement, "control" shall mean the direct or indirect ownership
of fifty (50%) percent or more of the outstanding shares or other voting rights
of an entity or possession, directly or indirectly, of the power to direct or
cause the direction of management and policies of an entity.
(C) Injunctive Relief. If Executive shall breach or threaten to breach any
of the provisions of Section 6(A) and/or Section 6(B), in addition to and
without limiting any other remedies available to Company at law or in equity,
the Company shall be entitled to immediate injunctive relief in any court to
restrain any such breach or threatened breach and to enforce the provisions of
Section 6(A) and/or Section 6(B), as the case may be. Executive acknowledges and
agrees that there is no adequate remedy at law for any such breach or threatened
breach and, in the event that any proceeding is brought seeking injunctive
relief, Executive shall not use as a defense thereto that there is an adequate
remedy at law.
7 Indemnification. The Company shall defend, indemnify and hold harmless
Executive in his capacity as an officer and director of the Company to the
fullest extent permitted by applicable law against any losses or damages
incurred by Executive in connection with any action, suit or proceeding to which
Executive may be made a party by reason of his being or having been an officer
or director of the Company, or because of actions taken by Executive which were
believed by Executive to be in the best interests of the Company and not in
violation of applicable law, and Executive shall be entitled to be covered by
any directors' and officers' liability insurance policies which the Company
maintains for the benefit of its directors and officers, subject to the
limitations of any such policies. The Company shall have the right to assume,
with legal counsel of its choice, who shall be reasonably acceptable to
Executive, the defense of Executive in any such action, suit or proceeding for
which the Company is providing indemnification to Executive. Should Executive
determine to employ separate legal counsel in any such action, suit or
proceeding, any costs and expenses of such separate legal counsel shall be the
sole responsibility of Executive. If the Company does not assume the defense of
any such action, suit or proceeding, the Company shall, upon the request of
Executive, promptly advance or pay any amount for costs or expenses, including
the reasonable fees of counsel retained by Executive, incurred by Executive in
connection with such action, suit or proceeding; provided that Executive agrees
in writing to repay any such amounts advanced if it is ultimately determined by
the Company that Executive is not entitled to such indemnification. Executive
shall be entitled to indemnification under this clause regardless of any
subsequent amendment of the Certificate of Incorporation or By-Laws of the
Company.
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8 Representation and Warranty of Executive. Executive represents and warrants to
Company that the execution and delivery of this Agreement and the performance of
Executive's obligations pursuant hereto shall not conflict with or result in a
breach of any provisions of any (a) agreement, commitment, undertaking,
arrangement or understanding to which Executive is a party or by which Executive
is bound; or (b) order, judgment or decree of any court or arbitrator.
9 General Provisions.
(A) Notices. All notices and other communications under this Agreement
shall be in writing and may be given by personal delivery, registered or
certified mail, postage prepaid, return receipt requested or generally
recognized overnight delivery service. Notices shall be sent to the appropriate
party at that party's address set forth above or at such other address for that
party as shall be specified by notice given under this Section. All such notices
and communications shall be deemed received upon (a) actual receipt by the
addressee or (b) actual delivery to the appropriate address. Notices to the
Company hereunder shall be sent as follows: Xxxxxx Capital Financial Group,
Inc., 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Chief Executive Officer,
and to: Xxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP, 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000,
Xxx Xxxx, XX 00000, fax no. 000 000 0000, attention: Xxxx Xxxxx, Esq.
(B) Assignment. This Agreement shall be binding upon, and inure to the
benefit of, the parties' respective successors, permitted assigns, and heirs and
legal representatives. This Agreement shall be assigned to, and thereupon shall
inure to the benefit of, any organization which succeeds to substantially all of
the business or assets of the Company, whether by means of merger,
consolidation, acquisition of all or substantially all of the assets of the
Company or otherwise, including, without limitation, by operation of law. This
Agreement is a personal services contract and may not be assigned by Executive
nor may the duties of Executive hereunder be delegated by Executive to any other
person.
(C) Severability. If any provision of this Agreement, or the application
of any provision to any person or circumstance, shall for any reason or to any
extent be invalid or unenforceable, the remainder of this Agreement and the
application of that provision to other persons or circumstances shall not be
affected, but shall be enforced to the full extent permitted by law.
(D) No Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
(E) Governing Law; Arbitration. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in that state, without regard to any of its
principles of conflicts of laws or other laws that would result in the
application of the laws of another jurisdiction. This Agreement shall be
construed and interpreted without regard to any presumption against the party
causing this Agreement to be drafted. Each of the parties hereby unconditionally
and irrevocably waives the right to a trial by jury in any action, suit or
proceeding arising out of or relating to this Agreement
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or the transactions contemplated hereby. All disputes relating in any way to
this Agreement shall be resolved exclusively through arbitration conducted in
accordance with the Commercial Arbitration Rule of the American Arbitration
Association as then in effect. The arbitration hearing shall be held in New
York, New York and shall be before a single arbitrator selected by the parties
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association pursuant to its rules on selection of arbitrators. Any arbitrator
selected shall have reasonable experience as an arbitrator relating to the
dispute at issue. The arbitrator shall render a formal, binding non-appealable
resolution and award on each issue as expeditiously as possible but not more
than thirty days after the hearing. All discovery disputes shall be resolved by
the arbitrator. The parties shall use all reasonable efforts to keep arbitration
costs to a minimum.
(F) Counterparts. This Agreement may be executed in counterparts, both of
which shall be considered an original, but both of which together shall
constitute the same instrument.
(G) Entire Agreement; Amendment. This Agreement contains the complete
statement of all the arrangements between the parties with respect to its
subject matter, supersedes all prior agreements between them with respect to
that subject matter, and may not be changed or terminated orally. Any amendment
or modification must be in writing and signed by the party to be charged.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
XXXXXX CAPITAL FINANCIAL GROUP, INC.
By:
---------------------------------
Name:
Title:
------------------------------------
XXXXXXX XXXXXXX
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