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Exhibit 10.12
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is dated
as of March 4, 1998, and is entered into between Asset Alliance Corporation, a
Delaware corporation (the "Company"), and Xxxxxx X. Xxxxx (the "Employee").
WHEREAS, the Employee and the Company are parties to an Employment
Agreement, dated as of July 8, 1996 (the "Prior Agreement"); and
WHEREAS, the Employee and the Company have agreed to amend the Prior
Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and for other good and valuable consideration, receipt of which is hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
1. EMPLOYMENT AND TERM.
(a) The Employee shall continue to serve on the Board of Directors of the
Company (the "Board") and as Executive Vice President and Chief Operating
Officer of the Company and in such other executive managerial position or
positions with the Company or its subsidiaries or affiliates as shall hereafter
be designated by the Board of Directors of the Company (the "Board"), to perform
such managerial duties consistent with the usual duties of an officer of his
status. Such employment shall be on the terms and conditions set forth herein.
The Employee hereby accepts such employment and agrees to devote substantially
all of his business time to the faithful and diligent performance of the duties
provided herein.
(b) The term of the Employee's employment by the Company shall commence as
of January 1, 1998 (the "Effective Date") and continue for a period of five
years from such date (the "Initial Employment Period"), which Initial Employment
Period shall be automatically extended for an additional one year period on each
anniversary of this Agreement (such that the remaining term as of each
anniversary shall be five years) unless and until the Employee's employment is
terminated pursuant to the terms hereof.
2. COMPENSATION.
(a) Salary. The Company shall compensate the Employee with a base salary
of $395,000 per annum, commencing on the Effective Date and payable in
accordance with the normal payroll practices of the Company. The base salary
shall be reviewed annually and may be increased (but shall not be decreased) in
the sole discretion of the Board.
(b) Incentive Bonus. The Company shall pay Employee each year during the
Term as additional compensation amounts determined by reference to the Company's
earnings before
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income taxes, depreciation and amortization ("EBITDA") per share of the Common
Stock, par value $0.01 per share, of the Company (the "Common Stock"), as
determined by the Board and the Company's independent accountants in accordance
with Exhibit A.
(c) Discretionary Bonus. Employee shall be eligible to receive a
discretionary annual bonus in the sole discretion of the Board.
(d) Stock Options. In consideration of the Employee's agreement to
substitute this Agreement for the Prior Agreement, and subject to the approval
of the Company's Board, the Company shall grant to the Employee options to
purchase 50,000 shares of the Common Stock as of the date hereof on the
following terms and such other terms as the Board or the Stock Option or
Compensation Committee thereof may determine: (1) the options shall be exercised
within ten (10) years of the date hereof; (2) the options shall vest and become
exercisable on the date of grant; and (3) the exercise price shall be $10 per
share.
(e) Benefits. The Employee shall be entitled to participate in a Company
sponsored 401(k) plan, and any Company sponsored group health, medical,
hospitalization, disability, accident and life insurance plans, all on such
terms as the Board shall determine in establishing such benefit programs as
promptly as is reasonably practicable after the date hereof, and such other
employee benefits as the Board may hereafter make available to the executives of
the Company. The Company agrees to pay to the Employee up to $15,000 per year
for the Employee to use to pay the premiums on (i) a personal life insurance
policy for Employee providing death benefits for Employee's designated
beneficiaries and (ii) a personal disability policy for the benefit of Employee.
(f) Expenses. The Company shall pay or reimburse the Employee for all
expenses normally reimbursed by the Company and reasonably incurred by him in
furtherance of his duties hereunder including, without limitation, expenses for
a Company leased automobile and related expenses consistent with the Company's
automobile policies as adopted by the Board, and for traveling, meals, hotel
accommodations and the like upon submission by him of vouchers or an itemized
list thereof prepared in compliance with such rules relating thereto as the
Board may, from time to time, adopt and as may be required in order to permit
such payments as proper deductions to the Company under the Internal Revenue
Code of 1986, as amended (the "Code"), and the rules and regulations adopted
pursuant thereto now or hereafter in effect.
(g) Vacations. During each year of employment, the Employee shall be
entitled to paid vacations for an aggregate of the greater of (A) four weeks, or
(B) such period as may be provided from time to time in the Company's vacation
policy.
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3. TERMINATION.
(a) This Agreement shall be terminated upon the happening of any of the
following events: (i) in the case of a termination by the Company for Cause (as
defined in Section 3(e) hereof), on the date set forth in the notice of
termination; (ii) in the case of other terminations, whenever the Company or the
Employee shall give at least six months' advance written notice of termination,
in which event the Agreement shall be terminated on the date set forth in such
notice; (iii) upon the death of the Employee; or (iv) upon the Permanent
Disability (as such term is defined in Section 3(f) hereof) of the Employee.
(b) In the event that the Employee's employment with the Company is
terminated by the Company without Cause (as defined in Section 3(e) hereof) or
is terminated by the Employee for Good Reason (as defined in Section 3(g)
hereof), then during the period from the effective date of termination through
the date on which the then-current term of this Agreement was to expire, the
Employee shall continue to receive the full amount of his then current base
salary plus all other benefits to which the Employee is entitled pursuant to
Section 2(e) hereof and otherwise (including, without limitation, the continued
vesting and exercisability during such period of all stock options held by the
Employee) and in a single lump sum within 5 days after the date of the
Employee's employment is terminated three (3) times the average of the Incentive
Bonus paid or payable to the Employee in the last two years pursuant to Section
2(b) of the Agreement, provided, however, that if such termination is the result
of a Change of Control, then the full amount which would be payable to the
Employee under this subparagraph (b) during the foregoing period through the end
of the then-current term of this Agreement will be paid to the Employee in a
single lump sum within five days after the date the Employee's employment is
terminated.
(c) In the event the Employee's employment with the Company is terminated
upon the Employee's death or Permanent Disability (as such term is defined in
Section 3(f) hereof), the Employee or his legal representative shall continue to
receive his then current base salary for a two year period and all stock options
held by Employee shall, to the extent vested, continue to be exercisable during
such period.
(d) In the event of a termination of Employee by the Company for Cause (as
defined in Section 3(e)), the Company shall not be obligated to pay Employee any
compensation or benefits after the date of termination and Employee must
exercise any vested stock options held by Employee within 30 days of such date.
(e) For purposes hereof, "Cause" shall mean any of the following: (i) the
continued, intentional failure, neglect or refusal of the Employee to
substantially fulfill his material duties as an employee after ninety (90) days'
notice of breach is received from the Company; (ii) a material breach of any
fiduciary duty or other material dishonesty by the Employee with respect to the
Company or any affiliate thereof resulting in actual material harm to the
Company or such affiliate; or (iii) the conviction of the Employee for a felony.
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(f) For purposes hereof, "Permanent Disability" shall mean the total
incapacitation of the Employee so as to preclude performance of the duties of
his employment hereunder for an aggregate period of six months in any twelve
month period.
(g) For purposes hereof, "Good Reason" shall exist if the Company shall:
(i) be in breach of or default under any material provision of this Agreement
and not cure such breach within 30 days of receiving notice of such breach from
the Employee; (ii) change the principal work location of the Employee away from
Manhattan, New York, without the consent of the Employee, which consent may be
withheld by the Employee for any reason; (iii) materially change the duties of
the Employee without the Employee's consent, which consent may be withheld by
the Employee for any reason; (iv) reduce the Employee's base salary or benefits
without the Employee's consent, which consent may be withheld by the Employee
for any reason; (v) become insolvent or bankrupt or file a voluntary or
involuntary petition in bankruptcy or make an assignment for the benefit of
creditors or consent to the appointment of a trustee or receiver; or (vi)
undergo a Change of Control (as defined in Section 3(f) hereof).
(h) For purposes hereof, a "Change of Control" of the Company shall have
occurred if (a) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the U.S. Securities Exchange Act of 1934), other than the Company or
any subsidiary of the Company or any employee benefit plan sponsored by the
Company or any subsidiary of the Company, shall become the beneficial owner
(within the meaning of Rule 13d-3 under the U.S. Securities Exchange Act of
1934), directly or indirectly, of securities of the Company representing in
excess of 50% of the combined voting power of the Company's then outstanding
securities, or if (b) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of the
Company cease for any reason to constitute a majority of the directors thereof,
unless each new director was elected by, or on the recommendation of, a majority
of the directors then still in office who were directors at the beginning of
such period.
(i) In the event Employee shall become subject to the excise tax imposed
by Section 4999 of the Code and any related penalties or interest (the "Excise
Tax") by reason of any compensation payable to him hereunder, as determined by
the Company's independent accountants on the request of Employee, the Company
agrees to make an additional "gross-up" payment to the Employee in an amount
such that, after payment by Employee of all taxes (including any Excise Tax,
interest and penalties) imposed upon the gross-up payment, Employee shall retain
an amount equal to the Excise Tax.
(j) Employee shall have no obligation to seek to mitigate any amounts
payable under this Section 3 and any amounts he receives from other employment
shall not be offset against or otherwise reduce the amount due Employee
hereunder.
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4. NONCOMPETITION; NONINTERVENTION.
(a) While in the employ of the Company, the Employee agrees to devote
substantially all of his time, attention and energies to the performance of the
business of the Company and the Employee shall not, directly or indirectly,
alone or as a member of any partnership or other business organization, or as a
partner, officer, director, employee, stockholder, consultant or agent of any
other corporation, partnership or other business organization, be actively
engaged in or concerned with any other duties or pursuits which interfere with
the performance of his duties as an employee of the Company, or which, even if
noninterfering, may be contrary to the best interests of the Company (provided,
however, that the Employee may continue his business activities involving the
providing of investment management and advisory services for a cash alternative
fund and involving market neutral strategies and convertible arbitrage programs
or, with the Board's prior consent, any other strategy which is not in
competition with the Company or its affiliates at the time such strategy
commences (the "Existing Activities")).
(b) Until two years after the termination or cessation of the Employee's
employment with the Company for any reason (including termination of employment
by the Company without Cause), the Employee shall not, directly or indirectly,
alone or as a member of any partnership or other business organization, or as a
partner, officer, director, employee, stockholder, consultant or agent of any
corporation, partnership or business organization, engage in the business of
acquiring equity interests of, or otherwise investing in, investment management
firms other than (i) continuation of the Existing Activities, and (ii) after
termination of the Employee's employment with the Company for any reason,
investing in or acting as a partner, officer, director, employee, stockholder,
consultant or agent of any investment management firm in which the Employee is a
principal executive officer involved in management of the business on a
day-to-day basis. For a period of two years after the termination or cessation
of the Employee's employment with the Company for any reason (including
termination of employment by the Company without Cause) the Employee shall not,
directly or indirectly, alone or as a member of any partnership or other
business organization, or as a partner, officer, director, employee,
stockholder, consultant or agent of any corporation, partnership or business
organization (A) request or cause any customer of the Company or its Affiliates
who was introduced to the Company or its affiliates by the Employee to cancel or
terminate any business relationship with the Company or such affiliate, or (B)
solicit or otherwise cause any employee of the Company or its affiliates to
terminate such employee's relationship with the Company or such affiliate.
5. CONFIDENTIAL INFORMATION.
(a) The Employee will not at any time, whether during or after the
termination or cessation of his employment, reveal to any person, association or
company any of the trade secrets or confidential information concerning the
organization, business or finances of the Company so far as they have come or
may come to his knowledge, except as may be required in the ordinary course of
performing his duties as an employee of the Company or except as may be in the
public domain through no fault of the Employee, and the Employee shall keep
secret all matters entrusted
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to him and shall not use or attempt to use any such information in any manner
which may injure or cause loss or may be calculated to injure or cause loss
whether directly or indirectly to the Company.
(b) The Employee agrees that during his employment he shall not make, use
or permit to be used any notes, memoranda, drawings, specifications, programs,
data or other materials of any nature relating to any matter within the scope of
the business of the Company or concerning any of its dealings or affairs
otherwise than for the benefit of the Company. The Employee shall not, after the
termination or cessation of his employment, use or permit to be used any such
notes, memoranda, drawings, specifications, programs, data or other materials,
it being agreed that any of the foregoing shall be and remain the sole and
exclusive property of the Company and that immediately upon the termination or
cessation of his employment the Employee shall deliver all of the foregoing, and
all copies thereof, to the Company, at its main office.
6. BINDING EFFECT.
This Agreement shall inure to the benefit of and shall be binding upon the
parties hereto and the Company's successors or assigns (whether resulting from
any reorganization, consolidation or merger of the Company or any business to
which all or substantially all of the assets of the Company are sold) and the
Employee's heirs, executors and legal representatives.
7. ENTIRE AGREEMENT.
This Agreement contains the entire agreement and understanding of the
parties with respect to the subject matter hereof, supersedes all prior
agreements and understandings with respect thereto and cannot be modified,
amended, waived or terminated, in whole or in part, except in writing signed by
the party to be charged.
8. ARBITRATION.
(a) All disputes between Employee and the Company of any kind whatsoever,
including, without limitation, all disputes relating in any manner to the
employment or termination of Employee and all disputes arising under this
Agreement, but excluding (at the Company's option) any proceedings pursuant to
Section 9, shall be resolved by arbitration ("Arbitrable Claims"). Arbitration
shall be final and binding upon the parties and shall be the exclusive remedy
for all Arbitrable Claims. THE PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO
TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS.
(b) Arbitration of Arbitrable Claims shall be in accordance with the
Employment Dispute Resolution Rules of the American Arbitration Association
("AAA Employment Rules"), except as provided otherwise in this Agreement. There
shall be one arbitrator selected in accordance with the AAA Employment Rules. In
any arbitration, the burden of proof shall be allocated as provided by
applicable law. Either party may bring an action in court to compel
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arbitration under this Agreement and to enforce an arbitration award. Otherwise,
neither party shall initiate or prosecute any lawsuit or administrative action
in any way related to any Arbitrable Claim. All arbitration hearings under this
Agreement shall be conducted in New York, New York. The Federal Arbitration Act
shall govern the interpretation and enforcement of this Section 8. The fees of
the arbitrator shall be split between both parties equally.
(c) All proceedings and all documents prepared in connection with any
Arbitrable Claim shall be confidential and, unless otherwise required by law,
the subject matter thereof shall not be disclosed to any person other than the
parties to the proceedings, their counsel, witnesses and experts, the arbitrator
and, if involved, the court and court staff.
(d) The rights and obligations of Employee and the Company as set forth in
this Section 8 with respect to arbitration shall survive the termination of
Employee's employment and the expiration of this Agreement.
9. RIGHT TO INJUNCTION.
The Employee acknowledges and agrees that irreparable and immediate damage
will result to the Company if Employee breaches his obligations under Section 4
or Section 5 hereof. In the event of a breach by the Employee of Section 4 or
Section 5 hereof, the Company shall be entitled to such equitable and injunctive
relief as may be available to restrain the Employee from the violation of such
provisions. The remedies provided in this Agreement shall be deemed cumulative
and the exercise of one shall not preclude the exercise of any other remedy at
law or in equity for the same event or any other event.
10. INDEMNIFICATION.
The Company shall indemnify Employee to the fullest extent permitted by
law (including, without limitation, advancement of legal fees on a current
basis) for all matters related to or arising from Employee's service as an
officer, director and/or fiduciary of any benefit plan of the Company. The
Company shall cover Employee during and after Employee's employment under the
Company's director and officer liability insurance to the greatest extent
afforded any senior officer and director of the Company.
11. MISCELLANEOUS.
(a) Amendments. No amendment, modification or waiver of any of the terms
of this Agreement shall be valid unless made in writing and signed by the
Employee and the Company.
(b) Successors in Interest. All provisions of this Agreement shall survive
the termination or cessation of the Employee's employment with the Company and
shall be binding upon and inure to the benefit of and be enforceable by and
against the respective heirs, executors,
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administrators, personal representatives, successors and assigns of either of
the parties to this Agreement.
(c) Waiver. The waiver by the Company of a breach of this Agreement by the
Employee shall not operate or be construed as a waiver of any subsequent breach
by the Employee.
(d) Notices. All notices to be given hereunder shall be in writing and
personally delivered or sent certified mail, return receipt requested. Notices
to be given to the Employee shall be sent to the address indicated below the
Employee's signature below. Notices to be given to the Company shall be sent to
Asset Alliance Corporation, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, to the
attention of Xxxxx X. Xxxxxxx, President. Notices of any changes in the above
addresses shall be given to the other party in writing.
(e) Severability. If any provision of this Agreement shall contravene any
law of any particular state where the Employee shall perform services for the
Company, then this Agreement shall be first construed to be limited in scope and
duration so as to be enforceable in that state, and if still unenforceable,
shall then be construed as if such provision is not contained herein.
(f) Governing Law. This Agreement shall be governed by the laws of the
State of New York without regard to the conflict of laws principles thereof.
(g) Counterparts. This Agreement may be executed in two or more
counterparts, and by each party on separate counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
ASSET ALLIANCE CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
/s/ Xxxxxx X. Xxxxx
-------------------------------------
Xxxxxx X. Xxxxx
Employee's Address:
000 Xxxx 00xx Xxxxxx, Xxxxxxxxx 00X
Xxx Xxxx, Xxx Xxxx 00000
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EXHIBIT A
INCENTIVE BONUS SCHEDULE
EARNINGS BEFORE INCOME
TAXES, DEPRECIATION AND
AMORTIZATION ("EBITDA") PER MAXIMUM INCENTIVE
SHARE BONUS PAYMENT
----------------------------------------------------------------------
0 - <.75 0
.75 - < 1.0 $ 75,000
1.0 - < 1.25 $150,000
1.25 - < 1.50 $225,000
1.50 - < 1.75 $300,000
1.75 - < 2.25 $375,000
2.25 - < 3.0 $450,000
3.0 - < 4.0 $525,000
4.0 - < 5.0 $600,000
5.0 - < 6.0 $675,000
6.0 and above $750,000
The Company's EBITDA per share shall be equitably determined by the
Board and the Company's independent accountants each year, taking into account
changes in the Company's capital structure, including by reason of stock
dividends, stock splits, recapitalizations, reorganizations, mergers and other
relevant changes in the Company's capitalization. The Incentive Bonus Payment
for EBITDA per share levels falling between the low and high range shall be
computed on a straight-line basis. For example, if EBITDA should be 2.0 (the
mid-point between 1.75 and 2.25), the Incentive Bonus Payment shall be $412,500
(the mid-point between $375,000 and $450,000).
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