EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day of July,
2002, by and between LIBERTE INVESTORS INC., a Delaware corporation (the
"COMPANY"), having a business address at 000 Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxx,
Xxxxx 00000, and XXXXXX X. XXXXXXX (the "EXECUTIVE"), having a mailing address
at 0000 X. Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000.
RECITALS
The Board of Directors of the Company has determined that it is in the
best interests of the Company to retain the Executive's services in accordance
with the terms and conditions set forth herein.
The Executive also wishes to serve in the employ of the Company in
accordance with such terms and conditions.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. EMPLOYMENT. Upon the terms and subject to the conditions contained
in this Agreement, the Executive agrees to provide full-time services for the
Company during the term of this Agreement. The Executive agrees to devote his
best efforts to the business of the Company, and shall perform his duties in a
diligent, trustworthy, and business-like manner, all for the purpose of
advancing the business of the Company. The parties acknowledge that during the
term of this Agreement, the Executive also may conduct investment activities
through one or more newly organized investment funds (the "EQUITY INVESTMENT
FUNDS"), and as an executor, a trustee, an officer and/or a director of entities
with whom the Executive has had a continuing relationship so long as such
activities do not interfere in any material way with the Executive's duties
hereunder, and furthermore that nothing contained herein shall be deemed to
prevent or limit the Executive's right to (i) engage in religious, charitable or
other non-profit activities, (ii) make passive investments in the securities of
any publicly-owned corporation as contemplated by Section 11 herein, and (iii)
make any other passive investments which do not conflict with Section 11 herein
and which do not otherwise constitute a breach of Executive's duty of loyalty to
the Company or interfere in any material respect with the Executive's duties
hereunder.
2. CAPACITY AND DUTIES.
(a) The Executive shall serve the Company as and shall have
the title of President and Chief Executive Officer. The duties of the
Executive shall be those duties which can reasonably be expected to be
performed by a person with the titles of President and Chief Executive
Officer, and he will be responsible for supervision and general
management of the business and operations of the Company. The Executive
shall report directly and regularly
to the Board of Directors of the Company. The duties to be performed
under this Agreement shall be performed primarily at the office of the
Company to be established in Chicago, Illinois (the "CHICAGO OFFICE"),
subject to reasonable travel requirements on behalf of the Company.
(b) The Company agrees that the Executive shall be elected as
a Director of the Company substantially concurrently with the execution
of this Agreement, and the Company shall nominate and use its
commercially reasonable efforts to cause the election of the Executive
as a Director during any period in which he serves as an employee of
the Company.
(c) Each of the Company and the Executive acknowledges that a
principal goal of the Company and its management will be to purchase a
controlling interest in and to actively manage one or more operating
companies (each such transaction involving the acquisition of a
majority equity interest, an "ACQUISITION TRANSACTION") that can be
consolidated for tax purposes and to operate such companies; provided
that the business of the Company may involve the acquisition of
minority interests from time to time. The Executive will use his
reasonable best efforts to manage the Company within the budget
approved by the Board of Directors of the Company from time to time. It
is envisioned that the initial budget for the Company following the
Effective Date will provide for total operating expenses of the Company
(excluding expenses relating to the pursuit of an Acquisition
Transaction) of not more than $2,000,000 per year (including management
salaries) in excess of the Company's most recent annual expenditures
(the "ANNUAL BUDGETED AMOUNT") prior to the consummation of an
Acquisition Transaction. It is contemplated that this limitation on
operating expenses will not include initial capital expenditures by the
Company ("INITIAL CAPITAL EXPENDITURES") arising in connection with the
Company's establishment of the Chicago Office (e.g., tenant improvement
expenses and costs relating to initial equipment purchases), and that
all such Initial Capital Expenditures will be borne by the Company and
one of the Equity Investment Funds and will be allocated in amounts to
be determined by the Company and such Equity Investment Fund at a later
date. The Company hereby agrees to fund operating expenses of not less
than the Annual Budgeted Amount in pursuit of Acquisition Transactions
through the consummation of the first such Acquisition Transaction. The
Executive will submit budgets for approval by the Board of Directors
from time to time in accordance with requests of the Board of
Directors.
(d) To assist Executive in the performance of his duties
hereunder, the Company may obtain corporate services from either of the
following two sources: (i) the Company may hire (on terms reasonably
similar to those relating to Executive, other than base salary and
stock arrangements) additional employees to assist Executive in
sourcing and identifying possible Acquisition Transactions, or (ii) the
Company may obtain corporate services from employees of the Equity
Investment Funds.
3. EMPLOYMENT TERM. Subject to the terms and conditions hereof, the
Company agrees to employ the Executive for a term commencing as of July 1, 2002
(the "EFFECTIVE DATE") and continuing through July 1, 2007,
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unless renewed under this Section 3. Beginning with July 1, 2007, this Agreement
may be renewed by the parties each July 1 for successive one-year terms,
provided that the Company and the Executive agree upon such renewal in writing
at least 270 days before the applicable July 1. As used herein, all references
to the "TERM OF THIS AGREEMENT" shall be deemed to be to the original term of
this Agreement, unless such term is renewed as provided above, in which case
such references shall be deemed to be the original term plus each renewed term.
4. SALARY AND BENEFITS.
(a) Base Salary. The Company shall, during the term of this
Agreement, pay the Executive an annual base salary of $500,000
beginning on the Effective Date, pro rated for periods of fewer than 12
months ("BASE SALARY"). Such Base Salary shall be paid in semi-monthly
installments less applicable withholding and salary deductions.
(b) Bonus. The Executive shall be eligible to be paid an
annual bonus as determined by the Board of Directors based on the
recommendations of the Executive.
(c) Executive Benefit Plans. The Executive shall receive
medical and dental insurance coverage for himself and his family on
terms and in amounts consistent with medical and dental insurance
coverage generally provided for chief executive officers of public
companies. In addition, the Executive shall be eligible to participate
in any benefit plans maintained by the Company for the benefit of its
senior executives, subject to the terms and conditions of the related
benefit plans.
(d) Paid Time Off. The Executive shall be entitled to paid
time off ("PTO") during each full year of his employment hereunder in
accordance with the applicable policies adopted by the Company. In no
event shall Executive be entitled to fewer than four weeks PTO during
any calendar year. Such PTO shall be taken at such times as are
consistent with the reasonable business needs of the Company.
(e) Reimbursement of Expenses. The Company shall reimburse the
Executive for all reasonable out-of-pocket expenses incurred by the
Executive in the course of his duties, in accordance with normal
policies, and in connection with the negotiation and preparation of (i)
this Agreement, and (ii) the Stock Option Agreement (defined below),
the related registration rights agreement and the indemnification
agreement executed concurrently herewith (collectively, the
"TRANSACTION AGREEMENTS").
(f) Office. The Company shall establish, or cause to be
established, and maintain (including the payment of rent, repairs,
utilities, furnishings, improvements, insurance, and all other
reasonable ancillary costs), in addition to its offices at 000 Xxxxxxxx
Xxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, the Chicago Office. The lease
relating to the Chicago Office will be held in the name of the Company
or one of the Equity Investment Funds, or by both entities jointly.
(g) Insurance. The Company will provide exculpation and
indemnification (including advancement of expenses) to the maximum
extent permitted by law under its
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charter and by-laws and in accordance with the terms and conditions of
an indemnification agreement executed by the Company and Executive
contemporaneously herewith. The Company also will use commercially
reasonable efforts to maintain in effect a director and officer
insurance policy with a reputable insurer in an amount of not less than
$10 million, naming Executive as a named insured and subject to the
terms and conditions set forth in the policy previously delivered by
the Company to Executive.
(h) Stock Arrangements. Substantially concurrently herewith,
the Company will grant the Executive an aggregate of 2,573,678
nonqualified stock options ("OPTIONS") pursuant to a Nonqualified Stock
Option Agreement (the "STOCK OPTION AGREEMENT") in the form attached
hereto as Exhibit A, representing 10% of the Company's fully diluted
capital stock as of the date hereof (with such fully diluted
calculation including the 10% Management Equity pool referred to in the
following paragraph and the 333,333 shares of the Company's common
stock (subject to adjustment in the event of stock splits and the like)
which may be acquired by the Executive within one (1) year of the date
hereof, as provided below (the "PURCHASED SHARES")); provided, however,
that in the event that the number of Purchased Shares acquired by the
Executive within one (1) year of the date hereof is less than 333,333
shares of common stock, then the number of nonqualified stock options
granted to the Executive under the Stock Option Agreement shall be
adjusted accordingly. The Stock Option Agreement also includes the
agreement of the Company to grant additional stock options (the
"ADDITIONAL GRANT") to the Executive in order to maintain Executive's
10% fully diluted equity ownership position in the Company under
certain circumstances, as set forth in Section 12 of the Stock Option
Agreement. The grant of Options to the Executive and the adoption of
the related incentive plan (the "PLAN") are subject to stockholder
approval. The Company shall use commercially reasonable efforts to
secure stockholder approval of the Plan and the grant of the Options to
the Executive (together with approval of the Additional Grant and
related Plan amendments, if necessary) at its next meeting of
stockholders following the Effective Date.
The Company hereby further agrees to reserve and make
available for grant to the Company's employees (other than Executive)
as options, stock awards or otherwise additional shares of its Common
Stock (the "MANAGEMENT EQUITY"), representing an additional 10% of the
Company's fully diluted capital stock as of the date hereof (with such
fully diluted calculation including the Options granted to the
Executive pursuant to the Stock Option Agreement (as adjusted in
accordance with the immediately preceding paragraph) and the Purchased
Shares), and shall reserve additional shares in the event additional
options are granted to the Executive as part of the Additional Grant to
enable such Management Equity to maintain a 10% fully diluted equity
ownership position in the Company including all options granted to the
Executive pursuant to the Stock Option Agreement and the Purchased
Shares; provided, however, that in the event that the number of
Purchased Shares acquired by the Executive is less than 333,333 shares
of common stock, then the Management Equity granted or issued under the
Stock Option Agreement shall be adjusted accordingly. Such Management
Equity shall have the same exercise price as the Executive's stock
options and shall otherwise be on such terms as the Executive shall
approve or recommend. The Company agrees that the Executive will have
full discretion as to the allocation and terms
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of all Management Equity awards referred to in this Section 4(h);
provided, however, that the Executive may, at his discretion, request
that a committee established pursuant to the terms of the Plan grant
such Management Equity awards.
The Company will use commercially reasonable efforts
to ensure that the Purchased Shares and all options granted to the
Executive pursuant to the Stock Option Agreement (including the
Additional Grant, if applicable) will qualify for exemption under Rule
16b-3 under Section 16 of the Securities Exchange Act of 1934, as
amended.
Within one (1) year of the date hereof, the Executive
may purchase the Purchased Shares from the Company at a price equal to
$3.00 per Purchased Share. In connection therewith, the Company will
make a nonrecourse loan or loans, on substantially the terms of the
promissory note attached hereto as Exhibit B (the "NOTE"), to the
Executive in an amount equal to the highest marginal rate of tax
applicable to such amount for federal, state and local income taxes
(the "PURCHASED SHARE TAX") incurred by the Executive directly as a
result of his purchase of the Purchased Shares. The Company further
agrees to pay a cash bonus to the Executive on each date on which
interest is due under the terms of the Note in an amount equal to the
amount of the respective interest payment then due to the Company.
(i) Benefits Not in Lieu of Compensation. No benefit or
perquisite provided to the Executive shall be deemed to be in lieu of
base salary, bonus, or other compensation.
(j) COBRA. Nothing herein shall be construed to limit the
right of the Executive or his family to receive continuation of group
health plan benefits to the extent authorized by and consistent with 29
U.S.C. Section 1161 et seq. (commonly known as "COBRA").
5. TERMINATION OF EMPLOYMENT. The Board of Directors of the Company may
terminate the employment of the Executive at any time as it deems appropriate,
and the Executive may resign such employment. The following provisions shall
apply with respect to the termination of the Executive's employment:
(a) Death. If the Executive shall die before termination of
his employment hereunder, the Executive's estate shall be entitled to
receive continued payments in an amount equal to 60% of the Executive's
Base Salary at the time of his death during the remaining term of this
Agreement (in accordance with Section 4(a) above).
(b) Disability. The Company may terminate the Executive's
employment for disability if the Executive is incapacitated and absent
from his duties hereunder on a full-time basis for six consecutive
months or for at least 180 days during any 12-month period as a result
of mental or physical illness or physical injury. If, during the term
of this Agreement, the Executive's employment terminates due to
disability:
(i) The Executive shall be entitled to receive
continued payments in an amount equal to 60% of the
Executive's Base Salary at the time of such termination
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through the remaining term of this Agreement (in accordance
with Section 4(a) above).
(ii) The Company shall maintain in full force and
effect and on substantially the same terms for the continued
benefit of the Executive and his family, during the remaining
term of this Agreement, medical and dental coverage and all
other employee benefit plans and programs or arrangements in
which the Executive was entitled to participate immediately
prior to the date of termination of employment, provided that
his continued participation in such other plans and programs
or arrangements is possible under the general terms and
provisions of such plans and programs or arrangements. In the
event that the participation of the Executive or his family in
any such plan and program or arrangement is barred, the
Company shall arrange to provide the Executive and his family
with benefits substantially similar to those which they are
entitled to receive under such plans and programs or
arrangements. At the end of the period of coverage, the
Executive shall have the option to have assigned to him at no
cost and with no apportionment of prepaid premiums, any
assignable insurance policy owned by the Company and relating
specifically to him. No provision of this Agreement shall be
deemed to waive any rights of the Executive under the Family
and Medical Leave Act of 1993, 29 U.S.C. Section 2601 et seq.
and the Americans with Disabilities Act, 42 U.S.C. Section
12101 et seq.
(c) Voluntary Resignation or Termination for Cause. If the
Executive shall voluntarily terminate his employment for other than
Good Reason or if the Company shall discharge the Executive for Cause,
this Agreement shall terminate immediately and the Company shall be
obligated to pay the Executive only the following amounts: (i) any
unpaid Base Salary due to the Executive in accordance with Section 4(a)
above for all periods prior to the date of termination of employment,
and (ii) Executive's accrued PTO. Further, in the event the Executive
voluntarily terminates his employment other than for Good Reason within
the 90-day period following any Change of Control (as defined in the
Company's 2001 Long-Term Incentive Plan as in effect on the date
hereof), the Company shall promptly make a lump sum payment to
Executive equal to the present value of one year's Base Salary at the
rate then in effect (based on an interest rate of 4.75% per annum) and
shall maintain in full force and effect and on substantially the same
terms for one year following such termination all benefit plans,
programs and arrangements in which the Executive and his family were
entitled to participate immediately prior to the date of the Change of
Control.
(d) Termination Without Cause; Resignation for Good Reason.
If, during the term of this Agreement, the Executive's employment is
terminated by the Company without Cause or the Executive voluntarily
terminates his employment for Good Reason (the date of such termination
being referred to herein as the "DATE OF TERMINATION"):
(i) The Company shall pay the Executive (A) any
unpaid Base Salary due to the Executive in accordance with
Section 4(a) above for all periods prior to the Date of
Termination, (B) the Executive's accrued PTO, and (C) promptly
following
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the Date of Termination, a lump sum amount equal to the
present value (based on a rate of 4.75% per annum) of all
remaining Base Salary obligations through the end of the term
of this Agreement plus an amount equal to the higher of the
Executive's most recent annual bonus or target bonus agreed
upon by the Board of Directors for the year in which
termination occurs; and
(ii) The Company shall maintain in full force and
effect and on substantially the same terms for the continued
benefit of the Executive and his family, during the remaining
term of this Agreement, the medical and dental insurance
benefits provided under Section 4(c) herein and all other
employee benefit plans and programs or arrangements in which
the Executive was entitled to participate immediately prior to
the Date of Termination, provided that his continued
participation in such other plans and programs or arrangements
is possible under the general terms and provisions of such
plans and programs or arrangements. In the event that the
Executive's participation in any such plan or program or
arrangements is barred, the Company shall arrange to provide
the Executive with benefits substantially similar to those
which he is entitled to receive under such plans and programs.
At the end of the period of coverage, the Executive shall have
the option to have assigned to him at no cost and with no
apportionment of prepaid premiums, any assignable insurance
policy owned by the Company and relating specifically to him.
(e) Definitions. For the purposes of this Agreement, "CAUSE"
shall mean (A) the willful and continued failure by the Executive to
substantially perform his duties with the Company (other than any such
failure resulting from incapacity due to physical or mental illness),
after a demand for substantial performance is delivered to the
Executive by the Board of Directors which specifically identifies the
manner in which the Board of Directors believes that he has not
substantially performed his duties and the failure by the Executive to
cure such failure within 30 days after delivery of such demand, or (B)
the willful engaging by the Executive in gross misconduct materially
and demonstrably injurious to the Company, or (C) Executive's personal
dishonesty, willful misconduct, breach of fiduciary duty of loyalty
involving personal profit, willful violation of any law, rule, or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, or (D) Executive's material breach of any
provision of this Agreement and the failure to cure such breach within
30 days following notice thereof by the Company. For purposes of this
paragraph, no act, or failure to act, on the Executive's part shall be
considered "willful" unless done, or omitted to be done, by him not in
good faith and without reasonable belief that his action or omission
was not in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not less
than two-thirds (2/3) of the entire authorized membership of the Board
of Directors at a meeting of the Board of Directors called and held for
the purpose (after reasonable notice and an opportunity for the
Executive, together with counsel, to be heard before the Board of
Directors), finding that in the good faith opinion of the Board of
Directors he was guilty of conduct set forth above in clauses (A), (B),
(C) or (D) of the first sentence of this paragraph
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and specifying the particulars thereof in detail. Any such
determination shall remain subject to review by arbitration in the
event of a dispute, as described in Section 15 below.
For purposes of this Agreement, "GOOD REASON" shall mean:
(i) Without the Executive's express written consent,
the assignment to the Executive of any duties inconsistent
with his positions, duties, responsibilities and status with
the Company, or a change in his reporting responsibilities,
titles or offices, or any removal of the Executive from or any
failure to re-elect the Executive to any of such positions
(including, without limitation, the failure of the Executive
at any time to be elected as a Director of the Company as
provided for herein), except in connection with the
termination of his employment by the Company for Cause, by the
Executive other than for Good Reason, or as a result of the
Executive's disability or death;
(ii) The Company's requiring the Executive, without
his express written consent, to be based at a location more
than 50 miles away from the Chicago Office; or
(iii) Any breach by the Company of any of its
payment, benefit or other material financial obligations
(including obligations with respect to stock option grants)
under this Agreement or any of the Transaction Agreements or
any event resulting in Executive not receiving one or more of
the benefits or rights contemplated by this Agreement or any
of the Transaction Agreements (including, without limitation,
the Company's failure to obtain stockholder approval of the
Plan and the grant of the Options to Executive, as
contemplated by Section 4(h) herein, and the Company's failure
to fund the Annual Budgeted Amount in pursuit of an
Acquisition Transaction as contemplated by Section 2(c)
herein), which breach has not been cured within 30 days after
written notice from Executive.
(f) Effect of Termination on Other Arrangements. The effect of
any termination of employment of Executive under any stock option plan,
restricted stock plan, incentive plan, deferred compensation
arrangement or other benefit plan or program in which Executive is
participating at the time of termination of his employment shall be
determined in accordance with the terms, conditions and limitations of
the relevant agreement between the Executive and the Company; provided,
however, that the Company shall continue to provide medical and dental
insurance coverage and the other employee benefits plans and programs
or arrangements as contemplated by this Section 5. Furthermore, the
Company agrees that after the termination of the Executive's
employment, the Executive will no longer be subject to any "xxxxxxx
xxxxxxx" or similar policy of the Company which would have the effect
of restricting Executive's ability to sell, transfer or assign any
equity securities of the Company; provided that the Executive shall
remain subject to all applicable laws proscribing trading in Company
securities while possessing material, non-public information.
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(g) Gross-Up Payments. Anything in this Agreement to the
contrary notwithstanding, in the event it shall be determined that any
payment or distribution made, or benefit provided, by the Company to or
for the benefit of the Executive (whether paid or payable or
distributed or distributable or provided pursuant to the terms hereof
or otherwise) would constitute a "parachute payment" as defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the
"CODE"), then the Company shall pay to the Executive in cash bonuses
equal to the amount of (i) any excise taxes imposed on such "parachute
payment" under Section 4999 of the Code and (ii) any taxes on such
bonuses.
(h) No Mitigation. The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by
seeking other employment or otherwise, nor shall the amount of any
payment provided for herein be reduced by any compensation earned by
the Executive as a result of employment by another employer or by
retirement benefits after the Date of Termination or otherwise.
6. CONFIDENTIAL INFORMATION. The Company will provide Executive access
to certain information of members of the Company Group (as defined below),
including information that is confidential and constitutes valuable, special and
unique property of such members of the Company Group. The Executive shall not at
any time, either during or subsequent to the term of this Agreement, disclose to
others, use, copy or permit to be copied, except in pursuance of his duties for
and on behalf of the Company, its successors, assigns or nominees, any
Confidential Information (as defined below) of any member of the Company Group
(regardless of whether developed by the Executive) without the prior written
consent of the Company, except as required (A) at the express direction of any
authorized governmental entity; (B) pursuant to a subpoena or other court
process; (C) as otherwise required by law or the rules, regulations or orders of
any applicable regulatory body; or (D) as otherwise necessary, in the opinion of
counsel for Executive, to be disclosed by Executive in connection with the
prosecution of any legal action or proceeding initiated by Executive against the
Company or any of its subsidiaries or the defense of any legal action or
proceeding initiated against Executive in his capacity as an employee or
director of the Company or any of its subsidiaries.
As used herein, "COMPANY GROUP" means the Company, and any entity that
directly or indirectly controls, is controlled by, or is under common control
with, the Company, and for purposes of this definition "CONTROL" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity, whether through the
ownership of voting securities, by contract or otherwise; provided that no
entity in which the Company has made an investment but of which the Company owns
less than a 50% interest shall be deemed a member of the "Company Group."
The term "CONFIDENTIAL INFORMATION" with respect to any person means
any secret or confidential information or know-how and shall include, but shall
not be limited to, the plans, customers, costs, prices, uses, and applications
of products and services, results of investigations, studies or experiments
owned or used by such person, and all apparatus, products, processes,
compositions, samples, formulas, computer programs, computer hardware designs,
computer firmware designs, and servicing, marketing or manufacturing methods and
techniques at any time
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used, developed, investigated, made or sold by such person, before or during the
term of this Agreement, that are not readily available to the public or that are
maintained as confidential by such person; provided, however, that Confidential
Information shall not include (i) information that is generally available to the
public other than by reason of breach of this Agreement by the Executive and
(ii) information received by the Executive from a third party not known to him
to be under an obligation of confidentiality to the Company. The Executive shall
maintain in confidence any Confidential Information of third parties received as
a result of his employment with the Company in accordance with the Company's
obligations to such third parties and the policies established by the Company.
7. DELIVERY OF DOCUMENTS UPON TERMINATION. The Executive shall deliver
to the Company or its designee at the termination of his employment all
correspondence, memoranda, notes, records, drawings, sketches, plans, customer
lists, product compositions, and other documents and all copies thereof, made,
composed or received by the Executive, solely or jointly with others, that are
in the Executive's possession, custody, or control at termination and that are
related in any manner to the past, present, or anticipated business or any
member of the Company Group. In this regard, the Executive hereby grants and
conveys to the Company all right, title and interest in and to, including
without limitation, the right to possess, print, copy, and sell or otherwise
dispose of, any reports, records, papers, summaries, photographs, drawings or
other documents, and writings, and copies, abstracts or summaries thereof, that
may be prepared by the Executive or under his direction or that may come into
his possession in any way during the term of his employment with the Company
that relate in any manner to the past, present or anticipated business of any
member of the Company Group.
8. DISCLOSURE AND RECEIPT OF CONFIDENTIAL INFORMATION. The Executive
shall not use or disclose to other employees of the Company, during his
employment with the Company, Confidential Information belonging to his former
employers, former business associates, or any other third parties unless written
permission has been given by such third parties to the Company and accepted by
the Company to allow the Company to use and/or disclose such information.
9. INTELLECTUAL PROPERTY. The Executive shall hold in trust for the
benefit of the Company, and shall disclose promptly and fully to the Company in
writing, and hereby assigns, and binds his heirs, executors, and administrators
to assign, to the Company any and all inventions, discoveries, ideas, concepts,
improvements, copyrightable works, and other developments (the "DEVELOPMENTS")
conceived, made, discovered or developed by him, solely or jointly with others,
during the term of his employment by the Company, whether during or outside of
usual working hours and whether on the Company's premises or not, that relate in
any manner to the past, present or anticipated business of any member of the
Company Group. All works of authorship created by the Executive, solely or
jointly with others, shall be considered works made for hire under the Copyright
Act of 1976, as amended, and shall be owned entirely by the Company. Any and all
such Developments shall be the sole and exclusive property of the Company,
whether patentable, copyrightable, or neither, and the Executive shall assist
and fully cooperate in every way, at the Company's expense, in securing,
maintaining, and enforcing, for the benefit of the Company or its designee,
patents, copyrights or other types of proprietary or intellectual property
protection for such Developments in any and all countries.
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10. FURTHER ACTS. At the request of the Company (but without additional
compensation from the Company during his employment by the Company) the
Executive shall execute any and all papers and perform all lawful acts that the
Company may deem necessary or appropriate to further evidence or carry out the
transactions contemplated in this Agreement including, without limitation, such
acts as may be necessary for the preparation, filing, prosecution, and
maintenance of applications for United States letters patent and foreign letters
patent, or for United States and foreign copyright, on the Developments.
11. NO COMPETITION. Beginning on the closing date of the first
Acquisition Transaction and continuing throughout the period in which the
Executive serves as an employee of the Company and for one year thereafter, the
Executive shall not directly or indirectly engage in any business that competes
with the business of the Company as such business may exist from time to time
or, following the termination of the Executive's employment, as such business
may exist on the date of such termination (it being understood that the business
of the Company shall be deemed to refer to the business or businesses of its
operating subsidiaries acquired in Acquisition Transactions and not to the
investment business generally); provided, however, that the restriction in this
Section 11 shall apply only to the reasonable and limited geographic area
consisting of any state in which the Company directly or indirectly conducts
business as contemplated above. For purposes of this Section 11, the Executive
shall be deemed to engage in a business if he directly or indirectly engages or
invests in, owns, manages, operates, controls or participates in the ownership,
management, operation or control of, is employed by, associated or in any manner
connected with, or renders services or advice to, any business which competes
with the business of the Company as defined herein; provided, further, that the
Executive may invest in the securities of any enterprise if (x) such securities
are listed on any national or regional securities exchange or have been
registered under Section 12(g) of the Securities Exchange Act of 1934 and (y)
the Executive does not beneficially own (as defined in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934) in excess of 5% of the outstanding
capital stock of such enterprise. Notwithstanding any of the foregoing, in no
event shall the Executive's activities with any Equity Investment Fund or in
connection with any activities otherwise permitted under or contemplated in
Section 1 of this Agreement be deemed a violation by Executive of this Section
11.
The Executive agrees that if a court of competent jurisdiction
determines that the length of time or any other restriction, or portion thereof,
set forth in this Section 11 is overly restrictive and unenforceable, the court
may reduce or modify such restrictions to those which it deems reasonable and
enforceable under the circumstances, and as so reduced or modified, the parties
hereto agree that the restrictions of this Section 11 shall remain in full force
and effect. The Executive further agrees that if a court of competent
jurisdiction determines that any provision of this Section 11 is invalid or
against public policy, the remaining provisions of this Section 11 and the
remainder of this Agreement shall not be affected thereby, and shall remain in
full force and effect.
The Executive acknowledges that the business of the Company is national
in scope and that the restrictions imposed by this Agreement are legitimate,
reasonable and necessary to protect the Company's investment in its businesses
and the goodwill thereof. The Executive acknowledges that the scope and duration
of the restrictions contained herein are reasonable. The Executive further
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acknowledges that the restrictions contained herein are not burdensome to the
Executive in light of the consideration paid therefor and the other
opportunities that remain open to the Executive. Moreover, the Executive
acknowledges that he has other means available to him for the pursuit of his
livelihood.
12. NO TAMPERING. Throughout the period during which the Executive
serves as an employee of the Company and for one year thereafter, the Executive
shall not (a) request, induce or attempt to influence any distributor or
supplier of goods or services to any member of the Company Group to curtail or
cancel any business they may transact with any member of the Company Group; (b)
request, induce or attempt to influence any customers of any member of the
Company Group that is then doing business or which within the two-year period
prior to Executive's termination of employment had done business with any member
of the Company Group to curtail or cancel any business they may transact with
any member of the Company Group; or (c) request, induce or attempt to influence
any employee of any member of the Company Group (other than any employee with
whom the Executive had a relationship prior to his employment relationship with
the Company) to terminate his or her employment with such member of the Company
Group.
13. PUBLICITY AND ADVERTISING. The Executive agrees that the Company
may use his name, picture, or likeness for any advertising, publicity, or other
business purpose at any time, during the term of this Agreement by the Company
and may continue to use materials generated during the term of his employment
and for a period of six months thereafter. Such use of the Executive's name,
picture, or likeness shall not be deemed to result in any invasion of the
Executive's privacy or in a violation of any property right the Executive may
have; and the Executive shall receive no additional consideration if his name,
picture or likeness is so used. The Executive further agrees that any negatives,
prints or other material for printing or reproduction purposes prepared in
connection with the use of his name, picture or likeness by the Company shall be
and are the sole property of the Company.
14. REMEDIES. The Executive acknowledges that a remedy at law for any
breach or attempted breach of the Executive's obligations under Sections 6
through 13 may be inadequate, agrees that the Company may be entitled to
specific performance and injunctive and other equitable remedies in case of any
such breach or attempted breach, and further agrees to waive any requirement for
the securing or posting of any bond in connection with the obtaining of any such
injunctive or other equitable relief. The termination of the Executive's
employment pursuant to Section 3, 5(c) or 5(d) shall not be deemed to be a
waiver by the Company of any breach by the Executive of this Agreement or any
other obligation owed the Company, and notwithstanding such a termination the
Executive shall be liable for all damages attributable to such a breach.
15. DISPUTE RESOLUTION. Subject to the Company's right to seek
injunctive relief in court as provided in Section 14 of this Agreement, any
dispute, controversy or claim arising out of or in relation to or in connection
with this Agreement, including without limitation any dispute as to the
construction, validity, interpretation, enforceability or breach of this
Agreement, shall be exclusively and finally settled by arbitration, and any
party may submit such dispute, controversy or claim, including a claim for
indemnification under this Section 15, to arbitration.
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(a) Arbitrators. The arbitration shall be heard and determined
by one arbitrator, who shall be impartial and who shall be selected by
mutual agreement of the parties; provided, however, that if the dispute
involves more than $2,000,000, then the arbitration shall be heard and
determined by three (3) arbitrators. If three (3) arbitrators are
necessary as provided above, then (i) each side shall appoint an
arbitrator of its choice within thirty (30) days of the submission of a
notice of arbitration and (ii) the party-appointed arbitrators shall in
turn appoint a presiding arbitrator of the tribunal within thirty (30)
days following the appointment of the last party-appointed arbitrator.
If (x) the parties cannot agree on the sole arbitrator, (y) one party
refuses to appoint its party-appointed arbitrator within said thirty
(30) day period or (z) the party-appointed arbitrators cannot reach
agreement on a presiding arbitrator of the tribunal, then the
appointing authority for the implementation of such procedure shall be
the Senior United States District Judge for the Northern District of
Illinois, who shall appoint an independent arbitrator who does not have
any financial interest in the dispute, controversy or claim. If the
Senior United States District Judge for the Northern District of
Illinois refuses or fails to act as the appointing authority within
ninety (90) days after being requested to do so, then the appointing
authority shall be the Chief Executive Officer of the American
Arbitration Association, who shall appoint an independent arbitrator
who does not have any financial interest in the dispute, controversy or
claim. All decisions and awards by the arbitration tribunal shall be
made by majority vote.
(b) Proceedings. Unless otherwise expressly agreed in writing
by the parties to the arbitration proceedings:
(i) The arbitration proceedings shall be held in
Chicago, Illinois, at a site chosen by mutual agreement of the
parties, or if the parties cannot reach agreement on a
location within thirty (30) days of the appointment of the
last arbitrator, then at a site in Chicago, Illinois chosen by
the arbitrator(s);
(ii) The arbitrator(s) shall be and remain at all
times wholly independent and impartial;
(iii) The arbitration proceedings shall be conducted
in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, as amended from time to
time;
(iv) Any procedural issues not determined under the
arbitral rules selected pursuant to item (iii) above shall be
determined by the law of the place of arbitration, other than
those laws which would refer the matter to another
jurisdiction;
(v) The costs of the arbitration proceedings
(including reasonable attorneys' fees and costs) shall be
borne in the manner determined by the arbitrator(s);
(vi) The decision of the arbitrator(s) shall be
reduced to writing; final and binding without the right of
appeal; the sole and exclusive remedy regarding any
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claims, counterclaims, issues or accounting presented to the
arbitrator(s); made and promptly paid in United States dollars
free of any deduction or offset; and any costs or fees
incident to enforcing the award shall, to the maximum extent
permitted by law, be charged against the party resisting such
enforcement;
(vii) The award shall include interest from the date
of any breach or violation of this Agreement, as determined by
the arbitral award, and from the date of the award until paid
in full, at 6% per annum; and
(viii) Judgment upon the award may be entered in any
court having jurisdiction over the person or the assets of the
party owing the judgment or application may be made to such
court for a judicial acceptance of the award and an order of
enforcement, as the case may be.
(c) Acknowledgment Of Parties. Each party acknowledges that he
or it has voluntarily and knowingly entered into an agreement to
arbitration under this Section 15 by executing this Agreement.
16. MISCELLANEOUS PROVISIONS.
(a) Successors of the Company. The Company will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, by agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken
place; provided, that except as otherwise contemplated by the
foregoing, the Company may not assign this Agreement without the prior
written consent of the Executive. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle the Executive to
compensation from the Company in the same amount and on the same terms
as the Executive would be entitled hereunder if the Executive
terminated his employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in
this Agreement, "COMPANY" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid
which executes and delivers the agreement provided for in this Section
16 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
(b) Executive's Heirs, etc. The Executive may not assign his
rights or delegate his duties or obligations hereunder without the
written consent of the Company. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while
any amounts would still be payable to him hereunder as if he had
continued to live, all such amounts, unless other provided herein,
shall
14
be paid in accordance with the terms of this Agreement to his designee
or, if there be no such designee, to his estate.
(c) Notice. For the purposes of this Agreement, notices and
all other communications provide for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or
mailed by United States registered or certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses set
forth on the first page of this Agreement, provided that all notices to
the Company shall be directed to the attention of the Chairman of the
Company with a copy to the Secretary of the Company, or to such other
in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
(d) Amendment; Waiver. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and such
officer as may be specifically designated by the Board of Directors of
the Company. No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall
be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to
the subject matter hereof have been made by either party which are not
set forth expressly or referred to in this Agreement.
(e) Invalid Provisions. Should any portion of this Agreement
be adjudged or held to be invalid, unenforceable or void, such holding
shall not have the effect of invalidating or voiding the remainder of
this Agreement and the parties hereby agree that the portion so held
invalid, unenforceable or void shall, if possible, be deemed amended or
reduced in scope, or otherwise be stricken from this Agreement to the
extent required for the purposes of validity and enforcement thereof.
(f) Survival of the Executive's Obligations. The Executive's
obligations under this Agreement shall survive regardless of whether
the Executive's employment by the Company is terminated, voluntarily or
involuntarily, by the Company or the Executive, with or without Cause
or with or without Good Reason.
(g) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same instrument.
(h) Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Texas.
(i) Captions and Gender. The use of captions and Section
headings herein is for purposes of convenience only and shall not
affect the interpretation or substance of any provisions contained
herein. Similarly, the use of the masculine gender with respect to
pronouns in this Agreement is for purposes of convenience and includes
either sex who may be a signatory.
* * * * *
15
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the 1st day of July, 2002.
LIBERTE INVESTORS INC.,
A DELAWARE CORPORATION
By: /s/ Xxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
XXXXXX X. XXXXXXX
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
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