EXHIBIT 10.2(a)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), is entered into on May 18,
2000, effective as of January 1, 2000 (the "Effective Date"), by and between
Insignia Financial Group, Inc., a Delaware corporation with an office at 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), and Xxxxxx Xxxxxxxx
Xxxxxx, an individual with an office at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx (the
"Executive").
BACKGROUND
The Company desires to assure itself of the services of the Executive
for the period provided in this Agreement, and the Executive is willing to serve
in the employ of the Company for such period upon the terms and conditions
provided in this Agreement.
STATEMENT OF AGREEMENT
In consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. EMPLOYMENT
The Company hereby agrees to employ the Executive, and the Executive
hereby accepts such employment, in each case upon the terms and conditions set
forth herein, for a period commencing on the Effective Date and ending on
December 31, 2002, or on such earlier date as provided herein (the "Expiration
Date") (such period, as it may be so terminated, being referred to herein as the
"Employment Period").
SECTION 2. DUTIES AND SERVICES
(a) OFFICES. Subject to Section 2(e), during the Employment Period the
Executive shall serve as Chief Executive Officer of the Company and, at the
Company's request, for no additional consideration, as an officer or director of
one or more of its subsidiaries. In the performance of his duties hereunder, the
Executive shall report to and shall be responsible only to the Board of
Directors of the Company. The Executive agrees to his employment as described in
this Section 2. The parties hereto understand and agree that the Executive has
substantial business interests outside of the scope of this Agreement,
including, without limitation, as a strategic partner at Charterhouse, and under
a consulting agreement with Apartment Investment and Management Company, and
both parties hereby consent to such arrangements. The Executive shall be
available to travel as the needs of the business of the Company reasonably
require.
(b) NOMINATION TO THE BOARD OF DIRECTORS AND COMMITTEES THEREOF. The
Company agrees that the Executive shall be nominated by its Board of Directors
to be elected to such Board of Directors as a Director of the Company at each
meeting of its stockholders at which Directors of the Company are to be elected
for so long as the Executive shall be
employed by the Company. The Company further agrees that, for so long as the
Executive shall be employed by the Company and shall be a Director of the
Company, he shall be elected or appointed, as the case may be, to serve (i) as
Chairman of the Board of Directors of the Company, and (ii) on the Executive
Committee of the Board of Directors of the Company as the Chairman thereto
(collectively, the "Board Positions"). This Section 2(b) shall terminate upon
the conversion of this Agreement into a consulting agreement pursuant to Section
2(e) of this Agreement.
(c) LOCATION OF OFFICE. Subject to Section 2(e), during the Employment
Period the Company shall provide the Executive with an office in the principal
executive office of the Company in New York, New York. The Company will provide
the Executive with two executive secretaries acceptable to him, and other
support appropriate to his duties hereunder, in the sole discretion of the
Executive.
(d) PRIMARY RESPONSIBILITIES. Subject to Section 2(e), during the
Employment Period, the Executive shall have primary responsibility and authority
for the business of the Company and its subsidiaries, including, without
limitation, the following areas:
(i) Underwriting decisions;
(ii) Securitization decisions;
(iii) Acquisition and disposition decisions;
(iv) Hiring and termination of employees;
(v) Setting executive and other employee compensation;
(vi) Setting the location of the Company's principal executive
offices at any time and from time to time; and
(vii) Other similar general management decisions affecting the
operations of the Company, in each case subject to the
approval of the Board of Directors of the Company or the
appropriate committee thereof to the extent required by the
laws of the State of Delaware or the By-Laws of the Company.
(e) CONSULTING. If (i) without the prior written consent of the
Executive the Executive's title, powers or duties within the Company have been
substantially diminished, other than as a result of a Termination For Cause, or
(ii) if an Influence Change Event (as defined in Section 8(a)(iv)) after or in
connection with an Extraordinary Transaction (as defined in Section 8(a)(i), an
Extraordinary Stock Event (as defined in Section (8(a)(v)), or a Material Asset
Disposition (as defined in Section 4(k)), has taken place, then Executive may
elect in writing to convert this Agreement into a consulting agreement. Under
the terms of the consulting agreement, the Executive shall consult with respect
to the assets and liabilities of the Company as they existed immediately before
his election to convert this Agreement into a consulting agreement. Such
consultation shall be at the reasonable times convenient to the Executive on no
less than five business days' notice, the parties recognizing that the Executive
during the consulting period likely will have substantial other business
interests, including, without
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limitation, as a strategic partner at Charterhouse, and under a consulting
agreement with Apartment Investment and Management Company. The terms,
conditions and provisions of this Agreement (including all rights hereunder of
the Executive as to compensation, bonus, advance payments and benefits) shall
continue unabridged during the period of consulting, except that: (i) Section
2(a) shall be deleted and the remainder of Section 2 shall be modified by this
Section 2(e) and (ii) references to salary (and Base Salary) in Section 4(a) and
elsewhere in this Agreement shall be deemed to refer to a consulting fee (and
Base Consulting Fee), and such Base Consulting Fee shall be paid to the
executive in twelve monthly installments, payable on the first day of each
calendar month. The "Employment Period" shall be deemed to include the period
during which the Executive is obligated to provide consulting services hereunder
and therefore, to the extent permitted by law, the conversion shall not be
deemed a termination or resignation for any purpose and, if the law requires
that the conversion be treated as a termination, then the Company must provide
the Executive with benefits equivalent to those he would have received had there
been no termination. The Executive shall not be obligated to consult for more
than five days or portions of a day in any calendar month.
SECTION 3. KEY MAN LIFE INSURANCE
The Company shall have the right to place a "key man" life insurance
policy, providing a death benefit of up to $15,000,000 upon the life of the
Executive, for which the Company is the beneficiary (the "Key Man Insurance
Policy"). In connection therewith, the Executive hereby authorizes the Company,
at its sole cost and expense, to purchase and maintain upon the life of the
Executive such insurance policy, and agrees to submit to such reasonable medical
examinations, and to provide and/or consent to the release of such medical
information, as may be necessary or desirable in order to secure the issuance
thereof. Except as may be required in order to obtain insurance coverage as
described in this Section 3, any and all information about Executive's health or
medical records shall be kept confidential by the Company and shall not be
disclosed by the Company to any party without the Executive's prior written
consent.
SECTION 4. COMPENSATION
As full compensation for his services hereunder, the Company shall pay,
grant, issue or give, as the case may be, to the Executive the compensation and
benefits specified below:
(a) BASE SALARY. Subject to the provisions of Sections 7 and 8, a base
salary at the rate of $1,000,000 per annum ("Base Salary"), which Base Salary
shall be paid to the Executive in accordance with the customary executive
payroll policy of the Company as in effect from time to time; provided, however,
that the Base Salary, as in effect at any time and from time to time, may be
further increased by action of the Board of Directors; and further provided,
however, that in no event shall the Base Salary be decreased at any time or from
time to time without the prior consent of the Executive, which consent may be
granted or withheld in the Executive's sole discretion.
(b) SIGNING BONUS. The Executive shall be paid a non-refundable Signing
Bonus of $146,000 simultaneously with the execution and delivery of this
Agreement. This amount is intended to adjust the Executive's total Base Salary
to an annual rate of $1,000,000 for the period commencing June 1, 1999.
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(c) ANNUAL PERFORMANCE BONUS UNDER EXECUTIVE PERFORMANCE INCENTIVE
PLAN. With respect to each calendar year during the Employment Period, the
Executive shall be paid a bonus (the "EPIP Bonus") under the Company's Executive
Performance Incentive Plan (the "EPIP") having a "Performance Target" equal to
$2,000,000, and an "Exceptional Performance Target" equal to $3,000,000, based
upon his performance against objectives determined in accordance with the EPIP.
The Compensation Committee will meet with the Executive not later than March
30th of each calendar year to determine the objectives to be met in order to
achieve the Performance Target and the Exceptional Performance Target for such
calendar year. To the extent that the Executive achieves objectives that exceed
50% of the Performance Target, but are less than the Performance Target, the
amount of the Performance Bonus shall be pro-rated. The EPIP Bonus shall also be
pro-rated if the Executive achieves objectives that exceed the Performance
Target but are less than the Exceptional Performance Target. The Executive shall
not receive an EPIP Bonus if less than 50% of the Performance Targets are
achieved. The Executive's EPIP Bonus for each calendar year, if any, shall be
payable by February 28th of the following year.
(d) ADDITIONAL PERFORMANCE BONUS. In addition to the EPIP Bonus, with
respect to each calendar year during the Employment Period, the Executive shall
be paid an additional performance bonus (the "Additional Performance Bonus")
based on his performance against the Exceptional Performance Target developed
for the EPIP Bonus for such year. The Exceptional Performance Target amount for
such bonus shall be $1,000,000. To the extent that the Executive achieves
objectives that exceed the Performance Target, but are less than the Exceptional
Performance Target, the amount of the Additional Performance Bonus shall be
pro-rated. The Executive's Additional Performance Bonus for each calendar year,
if any, shall be payable by February 28th of the following year.
(e) DISCRETIONARY BONUS. In addition to the EPIP Bonus and the
Additional Performance Bonus, the Compensation Committee may also elect to pay
the Executive such additional amounts in respect of his performance in a
calendar year during the Employment Period as it shall determine are
appropriate.
(f) QUARTERLY ADVANCE PAYMENTS. The Company shall pay $375,000 (each
such payment being herein referred to as an "Advance") to the Executive on the
first day of each calendar quarter during each calendar year of the Employment
Term, commencing as of the Effective Date. The four Advances paid during each
year shall be recoupable from all cash amounts paid by the Company in respect of
that calendar year as payment(s) in respect of real estate promote
participations, interests or assignments; an EPIP Bonus payment, an Additional
Performance Bonus payment, a discretionary bonus payment pursuant to Section
4(e), a cash payment in connection with the equity grants described in Section
4(h), and/or an Extraordinary Transaction Payment or Material Asset Disposition
Bonus (each as defined below) and any other cash amount payable by the Company
in respect of the year in which such Advances are made other than base salary.
(g) STOCK OPTIONS. On January 14, 2000, the Executive was granted an
option and a warrant exercisable for an aggregate of 1,000,000 shares of Common
Stock of the Company, having an exercise price of $8.00 per share of the
Company's Common Stock (the "Signing Grant").
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(h) EQUITY GRANTS.
(i) The Executive shall have the right to receive equity interests
("Equity Grants") in certain subsidiaries or affiliates of the
Company ("New Investment Entities" and "New Operating
Entities") as defined in the Equity Grant Resolution which is
attached as Exhibit A hereto. The terms, eligibility, vesting
rules and conditions of the Equity Grants are as set forth in
the Equity Grant Resolution.
(ii) SECTION 83(B) ELECTION. If the Executive shall determine to
make an election in accordance with Section 83(b) of the
Internal Revenue Code of 1986, as amended, in connection with
any equity interests granted to the Executive pursuant to this
Section 4(h), the Company and it affiliates shall cooperate
with the Executive in making such election.
(i) CO-INVESTMENT PROGRAMS. During the Employment Period, the Executive
shall continue to participate in the Company's co-investment programs on the
basis currently in place or as may be amended by the Compensation Committee of
the Company.
(j) EXTRAORDINARY TRANSACTION, INFLUENCE CHANGE EVENT, OR EXTRAORDINARY
STOCK EVENT. Upon the occurrence of an Extraordinary Transaction, an Influence
Change Event, or an Extraordinary Stock Event, the Company shall, in addition to
remaining obligated under the terms of this Agreement, immediately before the
Extraordinary Transaction, Influence Change Event, or Extraordinary Stock Event,
pay the Executive a payment (the "Extraordinary Transaction Payment") equal to
one percent (1%) of the total equity market capitalization of the Company on the
date the Extraordinary Transaction, the Influence Change Event, or the
Extraordinary Stock Event occurred. Notwithstanding the foregoing, (A) the
Company shall not be obligated to make any payment under this Section 4(j) (or
under Section 8(b)(iii)) with respect to a matter if it must also make a payment
with respect to such matter under Section 4(k) and (B) no more than one payment
shall be made under this Section 4(j) (or under Section 8(b)(iii)) with respect
to any single matter, regardless of whether that matter qualifies as more than
one of an Extraordinary Transaction, an Influence Change Event, or an
Extraordinary Stock Event.
(k) MATERIAL ASSET DISPOSITION BONUS. In the event of a Material Asset
Disposition, as defined below, in consideration of the services performed by the
Executive and consistent with the prior terms of the Executive's employment, the
Company (or, in the case of clause (iii) below, the spin-off entity or, in
default thereof, the Company) shall pay to the Executive immediately before the
consummation of such Material Asset Disposition, a cash bonus equal to one
percent (1%) of the consideration (valued as set forth below) received by the
Company or its shareholders as a result of such Material Asset Disposition. A
"Material Asset Disposition" as used herein means, without duplication for the
same matter: (i) a transaction which results in a majority of the equity
interest in the Company being beneficially owned by any "person" or "persons,"
including any "group" (as such terms are used in Section 13(d) and 14(d) of the
Exchange Act), other than any of the Company's present Affiliates; (ii) a sale
or series of sales by the Company of subsidiaries, divisions or assets (other
than marketable securities), or operating businesses, regardless of size; (iii)
a spin off, or series of spin offs, of any of the Company's divisions, operating
businesses or subsidiaries which is followed by a subsequent
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Extraordinary Transaction (as defined above, but with reference to the spun off
entity rather than the Company) of the subsidiary, division or business spun off
within five years following such spin off; (iv) any transaction which results in
any one or more of the Company's divisions, subsidiaries or operating
businesses, being owned by a third party. In the event a Material Asset
Disposition is consummated in one or more steps, including, without limitation,
by way of second-step merger, any additional consideration paid or to be paid in
any subsequent step in the Material Asset Disposition in respect of (x)
subsidiaries, divisions, assets (other than marketable securities), or operating
businesses of the Company and (y) capital stock of the Company (and any
securities convertible into, or options, warrants or other rights to acquire,
such capital stock) shall be included for purposes of calculating the bonus
payable pursuant to this Section (i). "Consideration" shall not include the
assumption, directly or indirectly, or repayment of indebtedness or other
liabilities of the Company but shall include the assumption, directly or
indirectly, or repayment of securities similar to the IFG Trust Convertible
Preferred Securities now outstanding. If all or a portion of the consideration
paid in the Material Asset Disposition is other than cash or securities, then
the value of such non-cash consideration shall be the fair market value thereof
on the date the Material Asset Disposition is consummated as mutually agreed
upon in good faith by the Company's Board of Directors and the Executive. If the
Board of Directors and the Executive are unable to come to agreement on the fair
market value of such non-cash consideration following the provisions of this
Section 4(k), then, at the request of either, an independent valuation expert
agreeable to both shall be appointed to determine the fair market value of such
non-cash consideration, and the determination of such independent expert shall
be binding on both the Executive and the Company. If such non-cash consideration
consists of common stock, options, warrants or rights for which a public trading
market existed prior to the consummation of the Material Asset Disposition, then
the value of such securities shall be determined by the closing or last sales
price thereof on the date of the consummation of the Material Asset Disposition;
provided, however, that if such non-cash consideration consists of newly-issued,
publicly-traded common stock, options, warrants or rights for which no public
trading market existed prior to the consummation of the Material Asset
Disposition, then the value thereof shall be the average of the closing prices
for the 20 trading days subsequent to the fifth trading day after the
consummation of the Material Asset Disposition. In such event, the portion of
the bonus payable to the Executive pursuant to this Section (i) attributable to
such securities shall be paid on the 30th trading day subsequent to consummation
of the Material Asset Disposition. If no public market exists for the common
stock, options, warrants or other rights issued in the Material Asset
Disposition, then the value thereof shall be as mutually agreed upon in good
faith by the Company's Board of Directors and the Executive. If the non-cash
consideration paid in the Material Asset Disposition consists of preferred stock
or debt securities (regardless of whether a public trading market existed for
such preferred stock or debt securities prior to consummation of the Material
Asset Disposition or exists thereafter), the value hereof shall be the face or
principal amount, as the case may be. Any amounts payable by a purchaser to the
Company, any shareholder of the Company or any Affiliate of either the Company
or any shareholder of the Company in connection with a non-competition,
employment, consulting, licensing, supply or other agreement shall be deemed to
be part of the consideration paid in the Material Asset Disposition. If all or a
portion of the consideration payable in connection with the Material Asset
Disposition includes contingent future payments, then the Company shall pay to
the Executive, upon consummation of such Material Asset Disposition, an
additional cash fee, determined in accordance with this Section 4(k) as, when
and if such contingency payments are
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received. However, in the event of an installment purchase at a fixed price and
a fixed time schedule, the Company agrees to pay the Executive, upon
consummation of the Material Asset Disposition, a cash fee determined in
accordance with this Section 4(k) based on the present value of such installment
payments using a discount rate of 6.5%. For purposes of this Section 4(k), in no
case shall the "consideration" received by the Company be greater than the total
market capitalization of the Company at the time of the Material Asset
Disposition.
(l) FRINGE BENEFIT PROGRAMS. In addition to the other benefits provided
to the Executive hereunder and to the extent he satisfies the eligibility
requirements thereof and to the extent permitted by law, participation in fringe
benefit programs made available to senior executives and to employees or
independent contractors of the Company, including, without limitation, pension,
profit sharing, stock purchase, savings, bonus, disability, life insurance,
health insurance, hospitalization, dental, deferred compensation and other plans
and policies authorized on the date hereof or in the future. The Executive's
level of participation in all such plans and benefits shall be commensurate with
his status as the most senior executive of the Company.
(m) EXPENSE REIMBURSEMENT. Reimbursement of the Executive for all
out-of-pocket expenses incurred by him in connection with the performance of his
duties hereunder, and business related mobile or cellular phone expense in
accordance with the Company's written policies and procedures, all upon the
presentation of appropriate documentation therefore in accordance with the then
regular procedures of the Company.
(n) PERQUISITES. In addition to the other benefits provided to the
Executive hereunder, and at the sole cost and expense of the Company, except as
otherwise provided in Section 7(d), the Company shall provide to the Executive:
(i) $3,750 on the first day of each month, for car and driver
expenses; and
(ii) full reimbursement for expenses incurred in respect of
professional continuing education.
(o) DISABILITY PROTECTION. Subject to the provisions of Sections 7 and
8 hereof, the Company will provide to the Executive disability insurance
coverage identical to the disability insurance coverage provided to senior
executives of the Company from time to time at the Company's sole cost and
expense.
(p) PARACHUTE LIMIT. Notwithstanding anything else herein, to the
extent the Executive would be subject to the excise tax under Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"), on such amounts or
benefits received from the Company required to be included in the calculation of
parachute payments for purposes of Sections 280G and 4999 of the Code (the
"Parachute Payments "), the amounts of any Parachute Payments shall be
automatically reduced as described herein to an amount one dollar less than an
amount that would subject the Executive to the excise tax under Section 4999 of
the Code (the "Parachute Limit"); provided, however, that this Section 4(k)
shall apply only if the reduced Parachute Payments to be received by Executive
(after taking into account further reductions for applicable federal, state and
local income, social security and other taxes) would be greater than the
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unreduced Parachute Payments to be received by the Executive minus (i) the
excise tax payable under Section 4999 of the Code with respect to such Parachute
Payments and (ii) all applicable federal, state and local income, social
security and other taxes on such Parachute Payments. The foregoing reduction
shall be applied to the Parachute Payments as follows: (i) first by reducing the
amounts payable under Section 4(f) (if such amounts are included in such
computation) until such amounts have been exhausted up to the Parachute Limit,
(ii) then by reducing any such other amounts and benefits (other than awards
described in (iii) below) as determined by the Company, and (iii)
notwithstanding anything contained herein or in an option, warrant or restricted
stock agreement, award or plan relating to the Executive then, on a pro-rata
basis up to the Parachute Limit, by failing to accelerate the vesting (without
affecting the right to vest) upon a change in ownership or effective control or
change in ownership of a substantial portion of assets (as described in Code
Section 280G(b)(2)(A)(i)) of any unvested awards of shares of restricted stock
of the Company previously granted to the Executive and options or warrants to
purchase shares of the Company previously granted to the Executive.
Notwithstanding the foregoing, the Company shall treat any of the amounts
described in clauses (i) through (iii) in the preceding sentence as a Parachute
Payment solely to the extent required by law.
(q) REGISTRATION RIGHTS. The Company hereby agrees to continue the
Executive's registration rights with respect to all of the securities of the
Company beneficially owned by the Executive as set forth in the Registration
Rights Agreement heretofore executed by the Executive and the Company.
(r) GENERAL VESTING TERMS. In the event of (a) a termination of
Executive's employment for any reason other than a Termination for Cause or a
voluntary termination by the Executive, including, but not limited to a Death
Termination Event, Disability Termination Event, Termination Without Cause, or
in the event of (b) the occurrence of an Extraordinary Transaction, an Influence
Change Event, or an Extraordinary Stock Event (whether or not resulting in a
termination of Executive's employment), then all options and warrants (but not
Equity Grants) that have been previously granted to the Executive (including,
without limitation, the Signing Grant granted to the Executive under Section
4(g)) will immediately vest and be exercisable by the Executive. Nothing herein
is intended to modify the separate vesting provisions that relate to the Equity
Grants referred to in Section 4(h) above and set forth in Exhibit A.
(s) PURCHASE OF INSURANCE. Provided Executive does not voluntarily
terminate his employment during the Employment Period or is not subject to a
Termination For Cause by the Company, the Company will continue, at the
Company's sole cost, individual and dependent care health insurance coverage on
the Executive through the Employment Period, or through the date three years
from the Effective Date, whichever is later, and, following Executive's
cessation of employment with the Company for any reason, (i) thereafter, the
Executive shall have the right to continue, at the Executive's sole cost, any or
all life insurance policies on the life of the Executive maintained by the
Company during the Employment Period and to determine the beneficiaries and
owners thereof, and (ii) thereafter, the Executive and his dependents shall have
the right to purchase from or through the Company or its successor, at the
Executive's or his dependents' sole cost, individual and dependent care health
insurance coverage upon terms and conditions identical to the terms and
conditions upon which health insurance coverage is provided to employees of the
Company and their dependents. Notwithstanding anything in this
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Agreement to the contrary, the provisions of this Section 4(1) shall continue
regardless of the cessation of the Executive's employment with the Company. In
the case of the death of the Executive, whether during or after the Employment
Period, the rights under Section 4(1)(ii) of the persons who were the
Executive's dependents at the time of his death shall continue in fill force and
effect for the duration of each of their lives.
SECTION 5. REPRESENTATIONS. WARRANTIES AND COVENANTS OF THE EXECUTIVE
The Executive represents and warrants to the Company as follows:
(a) He is under no contractual or other restriction or obligation which
is inconsistent with the execution of this Agreement, the performance of his
duties hereunder, or the other rights of the Company hereunder; and
(b) He is able to perform the essential functions of his duties
hereunder with or without reasonable accommodations.
SECTION 6. NON-SOLICITATION: CONFIDENTIALITY
(a) NON-SOLICITATION.
(1) In recognition of the close personal contact the
Executive has or will have with the Company's and its
affiliates' trade secrets, confidential information,
records and business relationships, and the position
of trust in which the Company holds the Executive,
the Executive further covenants and agrees that while
the Executive is employed by the Company and for a
period lasting for one (1) year following the date of
cessation of the Executive's employment with the
Company, the Executive will not, if such action would
have a material adverse effect on the Company, in
direct competition with the Company (where
competition is measured as of the date the Executive
ceases to be employed by the Company), either for
himself or as an officer, director, employee, agent,
representative, independent contractor or in any
relationship to any person, partnership, corporation,
or other entity (except the Company or its Affiliates
or subsidiaries), solicit, directly or by assisting
others, business from any of the Company's customers
or clients who were customers or clients of the
Company as of the date of the cessation of the
Executive's employment and with whom the Executive
has had material contact (as defined below) during
the twelve (12) month period preceding the date of
cessation of the Executive's employment with the
Company in the event of a cessation of employment
with the Company or, absent such cessation, during
the twelve (12) month period preceding the
solicitation, for the purpose of providing goods or
services to said customers and clients. For purposes
of this Agreement, "material contact" exists between
the Executive and any of the Company's
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customers or clients (i) with whom the Executive
actually dealt; or (ii) whose dealings with the
Company were handled, coordinated or supervised by
the Executive; or (iii) about whom the Executive
obtained confidential information in the ordinary
course of business through the Executive's
association with the Company.
(2) The Executive covenants and agrees that, for a period
ending on the second anniversary of the date on which
the Executive's employment with the Company ceases,
the Executive will not solicit any employee, broker
or sales person of the Company, or any of its
respective subsidiaries or affiliates to leave their
employ for the employ of a person or entity which
directly competes with the Company, or any of its
respective subsidiaries or affiliates.
(3) The Executives covenants and agrees that he will not,
either for himself or as an officer, director,
employee, agent, representative, or independent
contractor of any person, partnership, corporation,
or other entity (except the Company or its Affiliates
or subsidiaries), interfere with any contract that
exists between the Company and any customers or
clients of the Company as of the effective date of
this Agreement.
The Executive acknowledges that the foregoing provisions are intended
to protect the Company's and its subsidiaries' and Affiliates' business and
customer contacts, not to prevent the Executive from pursuing a livelihood in
the general area of his previous training, and they should be interpreted
accordingly.
(b) CONFIDENTIALITY. All confidential information which the Executive
may now possess, may obtain during or after his employment with Company, or may
create prior to the end of his employment with the Company or otherwise relating
to the business of the Company or any of its subsidiaries or affiliates or of
any customer or supplier of any of them shall not be published, disclosed, or
made accessible by him to any other person, either during or after the cessation
of his employment, or used by him except during his employment with the Company
in the business and for the benefit of the Company and its subsidiaries and
Affiliates. In addition, the Executive agrees not to disclose, publish or make
accessible to any other person, from and after the date of this Agreement,
during the Employment Period or at any time thereafter, any of the terms or
provisions of this Agreement, except the Executive's accountants or legal
counsel who need such information to advise him, prepare his tax returns, make
required filings, represent him and the like; provided, however, that the
Executive will be responsible for causing any such accountants and legal counsel
to be aware of and to abide by the obligations contained in this Section 6(b)
and will be responsible for any breach of such obligations by any of them. In
the event that the Executive becomes legally compelled to disclose any of the
confidential information, the Executive will provide the Company with prompt
written notice so that the Company may seek a protective order or other
appropriate remedy and/or waive in writing compliance with the provisions of
this Section 6(b) and in the event that such protective order or other remedy is
not obtained, or should the Company waive in writing compliance with the
provisions of this Section 6(b), the Executive will furnish only that portion of
the confidential
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information which is so legally required. The Executive shall return all
tangible evidence of such confidential information to the General Counsel of the
Company prior to or at the cessation of his employment.
(c) INTERPRETATION. Since a breach of the provisions of this Section 6
could not adequately be compensated by money damages, the Company shall be
entitled, in addition to any other right and remedy available to it, to an
injunction restraining such breach and the Company shall not be required to post
a bond in any proceeding brought for such purpose. The Executive agrees that the
provisions of this Section 6 are necessary and reasonable to protect the Company
in the conduct of its businesses. If any restriction contained in this Section 6
shall be deemed to be invalid, illegal, or unenforceable by reason of the
extent, duration, or geographical scope thereof, or otherwise, then the court
making such determination shall have the right to reduce such extent, duration,
geographical scope, or other provisions hereof, and in its reduced form such
restriction shall then be enforceable in the manner contemplated hereby. Nothing
herein shall be construed as prohibiting the Company from pursuing any other
remedies, at law or in equity, for such breach or threatened breach.
(d) INVESTORS. Notwithstanding anything contained herein to the
contrary, nothing in this Agreement shall restrict the right of the Executive to
solicit or receive, on his own behalf or on behalf of others, any investment or
any funds in any form from any person, regardless of whether such person is an
investor in the Company or in any current or former affiliate of the Company.
SECTION 7. TERMINATION
(a) DEFINITIONS.
(i) Death Termination Event. As used herein, "Death
Termination Event" shall mean the death of the
Executive.
(ii) Disability Termination Event. As used herein,
"Disability Termination Event" shall mean a
circumstance where the Executive is physically or
mentally incapacitated or disabled and is unable to
fully discharge his duties hereunder for a period of
185 consecutive days. Any dispute regarding whether
the Executive has incurred physical or mental
incapacity or disability shall be resolved by an
independent medical doctor mutually agreeable to the
Company and the Executive.
(iii) Estate. As used herein, "Estate" shall mean (A) in
the event that the last will and testament of the
Executive has not been probated at the time of
determination, the estate of the Executive and (B) in
the event that the last will and testament of the
Executive has been probated at the time of
determination, the legatees of the Executive who are
entitled under such will to the assets or payments at
issue.
(iv) Termination For Cause. As used herein, the term
"Termination For Cause" shall mean the termination by
the Company of the Executive's employment hereunder
upon a good faith determination by a majority vote
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of the members of the Board of Directors of the
Company that termination of this Agreement is
necessary by reason of (A) the Executive's conviction
of a felony, (B) the Executive's commission of an
Act, or his failure to take any action, in bad faith
and to the material detriment of the Company, and the
Executive's failure to cure such act or failure
within 30 days after the Company sends written notice
thereof, or (C) the Executive's breach in a material
way of any material term of this Agreement and
failure to correct such breach within 30 days after
the Company sends written notice thereof.
(v) Termination Without Cause. As used herein,
"Termination Without Cause" shall mean any
termination of the Executive's employment by the
Company hereunder that is not a Termination For
Cause, a Death Termination Event or a Disability
Termination Event, and shall include, without
limitation, a termination of the Executive's
employment hereunder due to the scheduled expiration
of the Employment Period on the date three years from
the Effective Date or (as contemplated by Section
8(b)(i)), an Extraordinary Transaction, an Influence
Change Event, or an Extraordinary Stock Event.
(b) DEATH TERMINATION EVENT. Upon the occurrence of a Death Termination
Event, this Agreement shall terminate automatically upon the date that such
Death Termination Event occurred (subject to the last sentence of this Section
7), whereupon the Executive's estate shall receive the consideration set forth
in Sections 4(a), and 4(n)(i) and (ii), through the date three years from the
Effective Date. In addition, the Executive's Estate shall be entitled to receive
the payments contemplated by Section 4(j) and Section 4(k) if the event giving
rise to such payment occurs, or a definitive agreement regarding such event is
executed, before or within 180 days after the Death Termination Event.
(c) DISABILITY TERMINATION EVENT. Upon the occurrence of a Disability
Termination Event, this Agreement shall terminate automatically upon the date
that such Disability Termination Event occurred (subject to the last sentence of
this Section 7), whereupon (i) the Company shall continue to pay seventy-five
percent (75%) of the then-current Base Salary to the Executive for twice the
period equal to the remaining term of the Employment Period (such calculation
will be determined upon the assumptions: (A) that the Employment Period will not
be terminated prior to the date three years from the Effective Date, and (B)
that the remaining term of the Employment Period will not in any event be less
than two years), (ii) the Company shall continue to provide to the Executive the
disability protection contemplated by Section 4(m) of this Agreement until such
time as the Executive elects to discontinue such coverage, (iii) the Company
will arrange for the Executive (x) to have the ability to maintain the Key Man
Insurance Policy thereafter at the sole expense of the Executive, and (y) to
designate the beneficiaries thereof, in each case to the exclusion of the
Company and as promptly as practicable after such termination, and (iv) the
Executive shall receive the consideration set forth in Sections 4(c) and 4(n)(i)
and (ii) through the date three years from the Effective Date. In addition, the
Executive shall be entitled to receive the payments contemplated by Section 4(j)
and Section 4(k) if the event giving rise to such payment occurs, or a
definitive agreement
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regarding such event is executed, before or within 185 days after the Disability
Termination Event.
(d) TERMINATION FOR CAUSE. The Executive and the Company agree that the
Company shall have the right to effectuate a Termination for Cause prior to the
date three years from the Effective Date. Upon the occurrence of a Termination
For Cause, this Agreement will terminate upon the date of that such Termination
For Cause occurs (subject to the last sentence of this Section 7), whereupon (i)
the Executive shall be entitled to receive the Base Salary, as then in effect,
to and including the date that such Termination for Cause occurs, and (ii) the
Company will arrange for the Executive (x) to have the ability to maintain the
Key Man Insurance Policy thereafter at the sole expense of the Executive, and
(y) to designate the beneficiaries thereof, in each case to the exclusion of the
Company and as promptly as practicable after such termination.
(e) TERMINATION WITHOUT CAUSE. Upon the occurrence of a Termination
Without Cause, this Agreement shall terminate upon the date that such
termination occurs (subject to the last sentence of this Section 7), whereupon
(i) the Company shall (A) in the event that such termination is not by reason of
an Extraordinary Transaction, an Influence Change Event, or an Extraordinary
Stock Event, continue to pay to the Executive the then-current Base Salary for
the period ending three years after the Effective Date, and (B) in the event
that such termination is by reason of an Extraordinary Transaction, an Influence
Change Event, or an Extraordinary Stock Event, the Company shall pay to the
Executive the Extraordinary Transaction Payment (as defined in Section 4(j)) in
accordance with the provisions of Section 8, and (ii) the Company shall continue
to provide to the Executive the disability protection contemplated by Section
4(m) of this Agreement until such time as the Executive elects to discontinue
such coverage, and (iii) the Company will arrange for the Executive (x) to have
the ability to maintain the Key Man Insurance Policy thereafter at the sole
expense of the Executive, and (y) to designate the beneficiaries thereof, in
each case to the exclusion of the Company and as promptly as practicable after
such termination. In addition, in any of the foregoing events, the Company shall
continue, during the three-year period following such termination, to pay the
Executive the amounts and benefits set forth in Sections 4(n)(i) and (ii). Also,
the Executive shall be entitled to receive the payments contemplated by Section
4(j) and Section 4(k) if the event giving rise to such payment occurs, or a
definitive agreement regarding such event is executed, on or before the date
three years from the Effective Date.
Notwithstanding anything in this Agreement to the contrary, (i)
Sections 3, 4(p), 4(q), 5, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20
and 21 of this Agreement shall survive any termination of this Agreement or of
the Executive's employment hereunder until the expiration of the statute of
limitations applicable hereto; and (ii) the Company will pay to the Executive
(or the Estate), regardless of the termination of this Agreement for any reason
other than a Termination For Cause, any amounts pursuant to Sections 4(j), 4(k)
and 8(b) with regard to Material Asset Disposition, Extraordinary Transaction,
Extraordinary Stock Event, or Influence Change Event (A) where definitive
agreements regarding such transaction have been executed before the termination
of this Agreement or (B) in the event of a Termination Without Cause, where the
event giving rise to such payment occurs, or a definitive agreement regarding
such event is executed, on or before the date three years from the Effective
Date.
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(f) ADDITIONAL PAYMENT OBLIGATIONS. Upon the termination of the
Employment Period for any reason: (a) the Executive will be entitled to receive
any benefits then vested, and to make all elections and receive all rights,
under all employee benefit, pension, profit sharing, insurance and other plans
in which the Executive participated in accordance with the provisions of the
plan concerned; and (b) the Executive will be entitled to receive all accrued
and unused vacation pay as limited in accordance with Company policy, and the
payment of all business expenses that have not been reimbursed, at the time of
such termination. Anything contained herein to the contrary notwithstanding, the
obligations of the Company to make payments to the Executive in accordance with
this Agreement shall survive any termination of the Employment Period or this
Agreement.
SECTION 8. EXTRAORDINARY TRANSACTION
(a) DEFINITIONS.
(i) Extraordinary Transaction. As used herein,
"Extraordinary Transaction" shall mean the occurrence
of any one or more of the following:
(1) the Company ceases to be required to file
reports under Section 13 of the Securities
Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor to that
Section;
(2) a majority of the members of the Board of
Directors of the Company are not persons who
(a) had been directors of the Company for at
least the preceding 12 consecutive months or
(b) when they initially were elected to the
Board (x) were nominated (if they were
elected by the stockholders) or elected (if
they were elected by the directors) with the
affirmative vote of two-thirds of the
directors who were Continuing Directors at
the time of the nomination or election by
the Board and (y) were not elected as a
result of an actual or threatened
solicitation of proxies or consents by a
person other than the Board of Directors of
the Company or an agreement intended to
avoid or settle such a proxy solicitation
(the directors described in clauses (a) and
(b) being "Continuing Directors");
(3) any "person," including a "group" (as such
terms are used in Sections 13(d) and 14(d)
of the Exchange Act, but excluding the
Company, any of its present affiliates (as
such term is defined in Rule 405 promulgated
under the Securities Act of 1933, as
amended) ("Affiliates"), or any employee
benefit plan of the Company or any of its
present Affiliates) is or becomes the
"beneficial owner" (as defined in Rule 13(d)
(3) under the Exchange Act), directly or
indirectly, of securities of the Company
representing 30% or more of the combined
voting power of the Company's then
outstanding securities;
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(4) the purchase of Common Stock of the Company
("Common Stock") pursuant to any tender or
exchange offer or otherwise made by any
"person," including a "group" (as such terms
are used in Sections 13(d) and 14(d) of the
Exchange Act), other than the Company, any
of its present Affiliates, or any employee
benefit plan of the Company or any of its
present Affiliates, which results in
"beneficial ownership" (as so defined) of
30% or more of the outstanding Common Stock;
(5) the execution and delivery of a definitive
agreement by the Company that provides for a
merger or consolidation, or a transaction
having a similar effect (unless such merger,
consolidation or similar action is with a
subsidiary of the Company or with another
company, a majority of whose outstanding
capital stock is owned by the same persons
or entities who own a majority of the
Company's outstanding Common Stock at such
time), where (A) the majority of the Common
Stock of the Company is no longer held by
the persons who were the stockholders of the
Company immediately prior to the
transaction, (B) the sale, lease, exchange
or other disposition of all or substantially
all of the assets of the Company, but
excluding the trading of marketable
securities held as portfolio securities or
(C) the Company's Common Stock is converted
into cash, securities or other property
(other than the common stock of a company
into which the Company is merged), provided,
however, that, in the event that the
contemplated merger, consolidation or
similar transaction is not consummated, then
any rights that may arise under this
paragraph (5) by virtue of such Change of
Control shall not apply;
(6) upon the consummation of any transaction
requiring stockholder approval for the
acquisition of the Company by an entity
other than the Company or a subsidiary
through purchase of assets, or by merger, or
otherwise;
(7) the election to the Board of Directors of
the Company, by vote of the stockholders of
the Company, of one individual under
circumstances where (A) the Board of
Directors of the Company, after such
election, is comprised of one individual,
and (B) all of the Xxxxxx Shares (as defined
in Section 8(a)(iii)) at the time of such
election were not voted for such election to
the Board of Directors of the Company of
such individual;
(8) the appointment to the Board of Directors of
the Company, by vote of the Board of
Directors of the Company, of one individual
under circumstances where (A) the Board of
Directors of the Company, after such
appointment, is comprised of one individual,
and (B) the Executive did not so vote for
such appointment to the Board of
-15-
Directors of the Company of such individual,
either because the Executive was not a
Director of the Company at such time or
because the Executive did not vote
affirmatively for the appointment to the
Board of Directors of the Company of such
individual;
(9) the election to the Board of Directors of
the Company, by the stockholders of the
Company, of one or more individuals under
circumstances where (A) the Board of
Directors of the Company, after such
election, is comprised of more than one
individual under the By-Laws of the Company,
as then in effect, and (B) a majority of the
Directors of the Company in office after
such election did not receive Executive
Approval (as defined in Section 8(a)(ii));
or
(10) the appointment to the Board of Directors of
the Company, by vote of the Board of
Directors of the Company, of one or more
individuals under circumstances where (A)
the Board of Directors of the Company, after
such appointment, is comprised of more than
one individual under the By-Laws of the
Company, as then in effect, and (B) a
majority of the Directors of the Company in
office after such appointment did not
receive Executive Approval.
(ii) Executive Approval. As used herein, the term
"Executive Approval" shall mean, with respect to any
member of the Board of Directors of the Company in
office at the time of determination, (A) if such
individual is not then a member of the Board of
Directors of the Company by virtue of election to the
Board of Directors of the Company by vote of the
stockholders of the Company, the Executive, as a
Director of the Company, voted for the appointment of
such individual to the Board of Directors of the
Company pursuant to which such individual is then a
member of the Board of Directors of the Company, and
(B) if such individual is then a member of the Board
of Directors of the Company by virtue of election to
the Board of Directors of the Company by vote of the
stockholders of the Company, all of the Xxxxxx Shares
at the time of such election were voted in favor of
the election of such individual to the Board of
Directors of the Company pursuant to which such
individual is then a member of the Board of Directors
of the Company.
(iii) Xxxxxx Shares. As used herein, the term "Xxxxxx
Shares," as of any time, shall mean the securities of
the Company entitled to vote generally in the
election of Directors of the Company as to which, at
such time, the Executive had the sole power to vote
or to direct the voting of.
(iv) Influence Change Event. As used herein "Influence
Change Event" shall mean the occurrence of the loss
by the Executive of any of the Board Positions or if
the Executive's title, powers and duties within the
Company or the Board of Directors of the Company have
been diminished, in each
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case other than as a result of a Termination For
Cause, without the prior written consent of the
Executive.
(v) Extraordinary Stock Event. As used herein
"Extraordinary Stock Event" shall mean either (i) the
occurrence of more than fifteen (15%) percent of the
outstanding securities of the Company entitled to
vote in the election of directors of the Company
being owned (by beneficial ownership, as such term is
used in Section 13(d) of the Exchange Act, and the
rules and regulations thereunder or otherwise) or
acquired by any person (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other
than the Executive, a person over whom the Executive
has the power to exercise a controlling influence
exclusive of any other person, or a person whose
beneficial ownership has been approved by the
Executive in writing (such person being referred to
herein as the "Acquiror") and the Acquiror either
describes, is required to describe, or would be
required to describe in the event that the Acquiror
was subject to Section 13(d) of the Exchange Act, as
in effect on the date hereof, any plans or proposals
which it may have which relate to or would result in
any of the events described in paragraphs (a) through
(j) of Item 4 of Schedule 13D, as in effect on the
date hereof, in a Schedule 13D, or amendments
thereto, filed with the Securities and Exchange
Commission with respect to such ownership or
acquisition or (ii) the occurrence of more than forty
(40%) percent of the outstanding securities of the
Company entitled to vote in the election of directors
of the Company being owned (by beneficial ownership,
as such term is used in Section 13(d) of the Exchange
Act and the rules and regulations thereunder, or
otherwise) or acquired by any person (as such term is
used in Sections 13(d) and 14(d) of the Exchange
Act), whether or not such ownership has been
consented to by the Executive.
(b) EXTRAORDINARY TRANSACTION: INFLUENCE CHANGE EVENT; EXTRAORDINARY
STOCK EVENT. Upon the occurrence of either an Extraordinary Transaction, an
Influence Change Event, or an Extraordinary Stock Event, (i) this Agreement may,
at Executive's option exercised in writing, be terminated as of the date of such
Extraordinary Transaction, Influence Change Event, or Extraordinary Stock Event,
as the case may be (an "Extraordinary Transaction Termination"), (ii) in the
event of such termination contemplated by the immediately preceding Section
8(b)(i), the provisions of Section 7(e) of this Agreement shall be in effect as
of the date of such Extraordinary Transaction, Influence Change Event, or
Extraordinary Stock Event, as the case may be, and (iii) whether or not there is
such termination, the Company shall pay to the Executive, in immediately
available funds, the Extraordinary Transaction Payment, as described in Section
4(j), immediately before the occurrence of such Extraordinary Transaction,
Influence Change Event, or Extraordinary Stock Event, as the case may be.
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SECTION 9. INDEMNIFICATION
The Company hereby ratifies the indemnification of the Executive
pursuant to the terms of an Indemnification Agreement between the Executive and
the Company, dated as of September 21, 1998.
SECTION 10. NO MITIGATION.
Anything contained herein to the contrary notwithstanding, if the
Executive's employment is terminated for any reason, he shall in no event be
required (i) to seek any other employment or take any other action by way of
mitigation or otherwise with respect to the amounts payable to the Executive
under this Agreement, or to pay any amounts to the Company that Executive may
receive from any other employment or otherwise at any time after the termination
of your employment (nor shall any such amounts be applied to reduce any payment
which the Executive is entitled to receive from the Company), or to account to
the Company for any such amounts.
SECTION 11. WITHHOLDING
The Company shall be entitled to withhold from amounts payable to the
Executive hereunder such amounts as may be required by applicable law to be so
withheld.
SECTION 12. MODIFICATION
This Agreement sets forth the entire understanding of the parties
hereto with respect to the subject matter hereof, supersedes all existing
agreements between them concerning such subject matter, including, without
limitation, the Employment Agreement dated August 3, 1998 between the Executive
and Insignia/ESG Holdings, Inc. This Agreement may be modified only by a written
instrument duly executed by each party.
SECTION 13. NOTICES
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or delivered against receipt to the party to whom it is to be
given, at the address of such party set forth in the preamble to this Agreement
(or to such other address as such party shall have furnished in writing in
accordance with the provisions of this Section 13). Notice to the Estate shall
be sufficient if addressed to the Executive as provided in this Section 13. Any
notice or other communication given by certified mail shall be deemed given at
the time of certification thereof, except for a notice changing a party's
address which shall be deemed given at the time of receipt thereof.
SECTION 14. WAIVER
Any waiver by either party of a breach of any provision of Agreement
shall not operate as a waiver of any other breach of such provision or of any
breach of any other provision of this
-18-
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions 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.
SECTION 15. BINDING EFFECT
The Executive's rights and obligations under this Agreement shall not
be transferable by assignment or otherwise, such rights shall not be subject to
commutation, encumbrance or the claims of the Executive's creditors, and any
attempt to do any of the foregoing shall be void. The provisions of this
Agreement shall be binding upon and inure to the benefit of the Executive and
his heirs and personal representatives, and shall be binding upon and inure to
the benefit of the Company and its successors.
SECTION 16. ASSIGNMENT; THIRD PARTY BENEFICIARIES
The Company may only assign this Agreement and its rights and
obligations hereunder: (a) to any entity controlled by, controlling or under
common control with the Company; or (b) to any entity which, by way of merger,
consolidation or sale of substantially all of the assets of the Company becomes
a successor to the Company, so long as such successor assumes in writing the
Company's obligations hereunder.
This Agreement does not create, and shall not be construed as creating,
any rights enforceable by any person not a party to this Agreement; provided,
however, that notwithstanding any provision of this Agreement to the contrary,
each of the successors, spouse, issue, legatees, estate, administrators,
executors, and legal representatives of the Executive shall be entitled to rely
upon and to enforce this Agreement as a third party beneficiary hereof.
SECTION 17. HEADINGS
The headings in this Agreement are solely for convenience of reference,
and shall be given no effect in the construction or interpretation of this
Agreement.
SECTION 18. ENFORCEMENT
Should the Executive xxx to enforce any of his rights under this
Agreement and should the Executive prevail on any issue in such suit, then the
Company shall pay all the Executive's costs of such suit (including attorneys
fees and disbursements). If any taxes are imposed on such payment, the Company
shall make such additional payments to the Executive as may be necessary, so
that after deducting the taxes imposed on all payments made to the Executive
pursuant to this paragraph, the Executive is left on an after tax basis with an
amount equal to his claim for indemnification prior to the payments described in
this sentence.
SECTION 19. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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SECTION 20. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York, without reference to the conflict of
law provisions thereof.
SECTION 21. WAIVER OF TRIAL BY JURY
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES TO THIS AGREEMENT
HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALING
BETWEEN OR AMONG THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE
RELATIONSHIPS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO
ENCOMPASS ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO
THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON
THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS
AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT
IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. THIS
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WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO THE TRIAL BY THE COURT.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
INSIGNIA FINANCIAL GROUP, INC.
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxx
-----------------------------------
Its: Executive Vice President
-----------------------------------
EXECUTIVE
/s/Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
EXHIBIT A
ACTION BY UNANIMOUS WRITTEN CONSENT
OF
THE COMPENSATION COMMITTEE
OF
THE BOARD OF DIRECTORS
OF
INSIGNIA FINANCIAL GROUP, INC.
January 14, 2000
THE UNDERSIGNED, being the members of the Compensation Committee of the
Board of Directors of Insignia Financial Group, Inc., a Delaware corporation
(the "Company"), in accordance with Section 141 of the General Corporation Law
of the State of Delaware, hereby consent to the taking of the following actions
and direct that this consent be filed with the minutes of the Company.
WHEREAS, the Compensation Committee of the Board of Directors
of the Company wishes to empower Xxxxxx X. Xxxxxx, in his capacity as
Chief Executive Officer of the Company (the "CEO"), to direct and
participate in the grants of equity interests in certain subsidiaries
of the Company on the terms and subject to the conditions hereinafter
set forth;
NOW, THEREFORE, BE IT:
RESOLVED, that for purposes of these resolutions, the
following terms have the meanings set forth below:
"Award" means a grant (by means of direct or indirect
transfer, contractual arrangement or otherwise) of Base NIE
Equity or Base XXX Equity pursuant to these resolutions.
"Base NIE Equity" means, with respect to any New
Investment Entity, the equity interests, in whatever kind or
form, issued to or held by the Company or one or more of its
subsidiaries in exchange for or as a result of their actual or
deemed (for accounting purposes) contributions to the equity
capital of such New Investment Entity, regardless of whether
such contributions are made in the form of cash, tangible
property or other assets (such as services).
"Base XXX Equity" means, with respect to any New
Operating Entity, the equity interests, in whatever kind or
form, issued to or held by the Company or one or more of its
subsidiaries in exchange for or as a result of their actual or
deemed (for accounting purposes) contributions to the equity
capital of such New Operating Entity, regardless of whether
such contributions are made in the form of cash, tangible
property or other assets (such as services), but only to the
extent that the total amount of such contributions does not
exceed $7,500,000 (or such greater amount as may be approved
by the Compensation Committee).
"Change of Control" means, with respect to any New
Operating Entity, any of the following events, provided such
event occurs following satisfaction of the Third-Party
Investment Condition: (i) the sale of all or substantially all
of the outstanding equity securities of such New Operating
Entity (or any successor thereto) to one or more persons or
entities not controlled by the Company; or (ii) a merger,
consolidation or similar transaction involving such New
Operating Entity (or any successor thereto) if as a result
thereof the equityholders of such New Operating Entity
immediately prior to such transaction own equity securities
representing less than 50% of either the common equity
securities of the surviving or resultant entity or the
combined voting power of all outstanding securities of the
surviving or resultant entity.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Liquidity Event" means, with respect to any New
Operating Entity, any of the following events: (i) a sale by
such New Operating Entity of all or substantially all of the
assets of such New Operating Entity (or any successor thereto)
to one or more persons or entities not controlled by the
Company, in exchange for consideration consisting primarily of
cash, Marketable Securities or a combination of both; (ii) a
sale of all or substantially all of the outstanding equity
securities of such New Operating Entity (or any successor
thereto) to one or more persons or entities not controlled by
the Company, in exchange for consideration consisting
primarily of cash, Marketable Securities or a combination of
both; (iii) the closing of an initial underwritten public
offering of common equity securities of such New Operating
Entity (or any successor thereto); (iv) a merger or
-2-
consolidation of such New Operating Entity (or any successor
thereto) with another entity, as a result of which the holders
of the common equity securities of such New Operating Entity
(or any successor thereto) receive consideration consisting
primarily of cash, Marketable Securities or a combination of
both; or (v) a liquidation of such New Operating Entity (or
any successor thereto).
"Marketable Security" means any security (A) of a
class (or series of a class) that is (i) registered under
Section 12 of the Exchange Act and (ii) traded or listed on a
national securities exchange or The NASDAQ Stock Market, or
(B) exchangeable or exercisable for or convertible into a
security of a class (or series of a class) that is (i)
registered under Section 12 of the Exchange Act and (ii)
traded or listed on a national securities exchange or The
NASDAQ Stock Market.
"Minimum Return Condition" means (A) with respect to
any New Investment Entity, the condition that the aggregate
value of the distributions made by such New Investment Entity
in respect of Base NIE Equity is at least equal to the
aggregate amount of actual or deemed (for accounting purposes)
contributions made to the equity capital of such New
Investment Entity in exchange for the Base NIE Equity, plus an
annual, compounded 10% return thereon; or (B) with respect to
any New Operating Entity, the condition that the value of the
portion of Base XXX Equity not subject to any outstanding
Award (regardless of whether such Base XXX Equity is still
owned by the Company or one or more of its subsidiaries at
such time) is at least equal to the aggregate amount of actual
or deemed (for accounting purposes) contributions made to the
equity capital of such New Operating Entity in exchange for
the Base XXX Equity, plus an annual, compounded 10% return
thereon.
"New Entity" means a New Investment Entity or a New
Operating Entity, as the context requires.
"New Investment Entity" means any special purpose
entity initially capitalized (and controlled) by the Company
or one or more of its subsidiaries on or after January 1, 2000
for the primary purpose of (i) making and/or holding a
minority, non-controlling investment by the Company in debt
and/or equity securities (including securities such as
warrants and options which may be received in exchange for
services to be performed by the Company or one of its
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subsidiaries) of one or more other companies or business
ventures not directly or indirectly controlled by the Company
at the time of the initial investment by the Company, provided
that the total actual or deemed (for accounting purposes)
contributions to the equity capital of such special purpose
entity does not exceed an amount authorized by the Board of
Directors of the Company (either specifically or pursuant to a
standing general grant of authority) or (ii) serving as a
managing general partner (or in a similar capacity) of an
entity that raises third-party capital to be invested in debt
and/or equity securities of businesses not directly or
indirectly controlled by the Company.
"New Operating Entity" means any operating entity (or
holding company of an operating entity) initially capitalized
(and controlled) by the Company or one or more of its
subsidiaries on or after January 1, 2000 for the primary
purpose of engaging in a line of business which is outside of
the scope of the traditional lines of business engaged in by
the Company and its subsidiaries prior to June 1999, it being
acknowledged that for this purpose all Internet-oriented lines
of business fall into the category of a non-traditional line
of business, provided that it is contemplated at the time of
the formation of such entity that the capital to be invested
in such entity by unaffiliated third parties will be greater
than the capital invested in such entity by the Company.
"Third-Party Investment Condition" means, with
respect to any New Operating Entity, the condition that one or
more persons or entities not controlled by the Company shall
have made equity "investments" in such New Operating Entity in
an aggregate amount at least equal to the aggregate amount of
actual or deemed (for accounting purposes) contributions made
to the equity capital of such New Operating Entity made by the
Company and its subsidiaries in exchange for the Base XXX
Equity. For this purpose, (i) the term "investments" shall be
broadly interpreted to include any and all contributions of
cash or property to the equity capital of such New Operating
Entity, including pursuant to a merger or similar transaction
or an initial underwritten public offering of the common
equity securities of such New Operating Entity, and (ii)
contributions of property other than cash shall be valued at
fair market value at the time of contribution.
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"Vesting Rules" means, with respect to any Award that
is required to comply with the "Vesting Rules" as provided in
these resolutions, the following rules (all of which are
subject to any contrary terms contained in any employment
agreement between the Company (or one of its subsidiaries) and
the recipient of the Award, which contrary terms shall
control):
(1) Subject to the exceptions provided for in the
following rules regarding delays, acceleration and
forfeiture, the Award shall not vest (i.e., cease to
be subject to forfeiture back to the Company) more
rapidly than 1/48 per month on the last calendar day
of each month, commencing with the month in which the
applicable underlying investment was made or new
business operating initiative was commenced.
(2) In the case of an Award of Base XXX Equity, (i)
simultaneously with a Change of Control of the New
Operating Entity to which the Award relates, the
entire then unvested portion of the Award may vest,
and (ii) simultaneously with the closing of an
initial underwritten public offering of the common
equity securities of the New Operating Entity to
which such Award relates, 50% of the then unvested
portion of such Award may vest, provided that the
managing underwriter(s) of such offering do not
object in writing to such accelerated vesting.
(3) If the applicable Award agreement so provides, the
Award (or the applicable portion thereof) shall be
deemed "Time Vested" once it has vested in accordance
with Rules (1) and/or (2) above and will no longer be
subject to forfeiture back to the Company as a result
of termination of employment.
(4) Upon termination of all employment by the recipient
with the Company and its subsidiaries for any reason
(including death or disability), the entire portion
of the Award which is not then Time Vested must be
forfeited back to the Company; provided, however,
that if the termination of employment is without
cause and the applicable Award Agreement so provides,
then the entire portion of the Award which is not
then Time Vested will automatically become Time
Vested (and thus not subject to forfeiture back to
the Company as a result of termination of
employment).
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(5) Notwithstanding that the Award (or the applicable
portion thereof) may have been Time Vested, the Award
(or the applicable portion thereof) may not fully
vest, and no non-forfeitable distributions or other
payments may be made to the recipient in respect
thereof, unless and until:
(A) if the Award relates to a New Investment
Entity, the Minimum Return Condition has
been satisfied; and
(B) if the Award relates to a New Operating
Entity, both (x) a Liquidity Event has
occurred and (b) the Minimum Return
Condition has been satisfied; provided,
however, that in the event that the Minimum
Return Condition has not been satisfied
within 360 days following the applicable
Liquidity Event, the Company shall afford
the recipient of the Award a fair
opportunity (as determined by the
Compensation Committee in good faith) to
forfeit an appropriate portion of such Award
back to the Company in lieu of actual
satisfaction of the Minimum Return
Condition, and if the recipient accepts such
opportunity and forfeits the applicable
portion of the Award, the Minimum Return
Condition may be deemed satisfied; and
further provided that if (i) the Minimum
Return Condition is not satisfied (or deemed
satisfied pursuant to the foregoing proviso)
within the applicable period or (ii) at the
time the Minimum Return Condition is
satisfied (or deemed satisfied) the
Third-Party Investment Condition has not
been satisfied, the entire Award (including
the Time Vested portion thereof) shall be
forfeited back to the Company.
AND FURTHER RESOLVED, that from the date hereof and until the
sooner of December 31, 2002 or such time as the CEO ceases to serve as
the Chief Executive Officer of the Company for any reason, the CEO be,
and he hereby is, empowered to make restricted grants (by means of
direct transfer, contractual arrangement or otherwise), at any time and
from time to time, of up to 25% (in the aggregate) of the Base NIE
Equity in each New Investment Entity to one or more members of
management or other key employees of the Company or one of its
subsidiaries, including himself, upon such individual terms and in such
percentage amounts as he deems appropriate under the circumstances;
provided, however, that (i) the terms of each such Award must be set
forth in a written document signed by both the Company and the
recipient of such Award and (ii) with respect to any such Award granted
to himself or which relates to 3.0% or more of the Base NIE Equity, the
terms of such
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Award must comply with the Vesting Rules; and further provided that if
all or any portion of any Award granted to any person other than the
CEO is forfeited back to the Company (or one of its subsidiaries) in
accordance with the terms of such Award, then the Base NIE Equity
underlying the forfeited portion of such Award may be re-granted by the
CEO pursuant to a new Award to any other then-eligible person under
this resolution, including himself, subject to all of the foregoing
applicable conditions, limitations and restrictions.
AND FURTHER RESOLVED, that from the date hereof and until the
sooner of December 31, 2002 or such time as the CEO ceases to serve as
the Chief Executive Officer of the Company for any reason, the CEO be,
and he hereby is, empowered to make restricted grants (by means of
direct transfer, contractual arrangement or otherwise), at any time and
from time to time, of up to 30% (in the aggregate) of the Base XXX
Equity in each New Operating Entity to one or more members of
management or other key employees of the Company or one of its
subsidiaries, including himself, upon such individual terms and in such
percentage amounts as he deems appropriate under the circumstances;
provided, however, that (i) the terms of each such Award must be set
forth in a written document signed by both the Company and the
recipient of such Award and (ii) with respect to any such Award granted
to himself or which relates to 3.0% or more of the Base XXX Equity, the
terms of such Award must comply with the Vesting Rules; and further
provided that if all or any portion of any Award granted to any person
other than the CEO is forfeited back to the Company (or one of its
subsidiaries) in accordance with the terms of such Award, then the Base
XXX Equity underlying the forfeited portion of such Award may be
re-granted by the CEO pursuant to a new Award to any other
then-eligible person under this resolution, including himself, subject
to all of the foregoing applicable conditions, limitations and
restrictions.
AND FURTHER RESOLVED, that the Compensation Committee retains
the authority on behalf of the Company to interpret these resolutions
with respect to any ambiguity that may arise hereunder and regarding
their applicability in circumstances not contemplated hereby.
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IN WITNESS WHEREOF, the undersigned have executed this Written
Consent effective as of the 14th day of January, 2000, and direct that
it be filed with the minutes of the proceedings of both the Board of
Directors the Company and the Compensation Committee thereof.
/s/ H. Xxxxxxx Xxxxxxx
-----------------------------------
H. Xxxxxxx Xxxxxxx
/s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxx
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