EXHIBIT 10.4
FORM OF
NONCOMPETITION AND NONSOLICITATION AGREEMENT
BETWEEN
XXXXX XXXXXXXXX INCORPORATED
AND
EMPLOYEE [EXECUTIVE]
DATED AS OF ____________, 1998
FORM OF
NONCOMPETITION AND NONSOLICITATION AGREEMENT
This Noncompetition And Nonsolicitation Agreement (the "Agreement"), dated
as of _______________, is entered by and between Xxxxx XxxXxxxxx Incorporated.,
a Washington corporation ("RMI"), and __________________________ ("Employee").
W I T N E S S E T H:
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WHEREAS, Employee has been and is presently employed by RMI; and
WHEREAS, RMI currently proposes to effect a recapitalization of its
business, in light of which both RMI and Employee have an interest in entering
an agreement reflecting their respective obligations to one another in the event
of termination of their employment relationship during the Term (defined below),
and the other matters set forth below;
A G R E E M E N T S:
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NOW, THEREFORE, for and in consideration of the foregoing premises and for
other good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, RMI and Employee hereby agree as follows:
1. TERM; CONDITION PRECEDENT; TERMINATION OF EMPLOYMENT RELATIONSHIP
The term of this Agreement shall be the thirty-month period (such thirty-
month period, the "Term") that commences on the date of closing of a firm
commitment underwritten public offering of shares of common stock of Xxxxx
XxxXxxxxx Group Incorporated ("Holding Company") in which the aggregate gross
proceeds to Holding Company and selling shareholders from such offering shall be
at least $15,000,000, and which shall have occurred on or before December 31,
1998 (an "IPO Closing"). The obligations of RMI and Employee under this
Agreement shall be subject to an IPO Closing. In the event that an IPO Closing
does not occur on or before December 31, 1998, this Agreement shall be null and
void, and shall have no further force or effect.
The employment relationship between RMI and Employee may be terminated by
either party, pursuant to the terms of this Agreement. The provisions of
Section 3 hereof shall survive the termination of Employee's employment for any
and all of the period from Employee's employment termination date until the end
of the Term, except that (a) the provisions of subsections 3.2 and 3.3 shall not
survive RMI's termination of Employee's employment without Cause, as defined
below and (b) the provisions of subsection 3.5 shall survive the termination of
Employee's employment and the end of the
Term. The provisions of Section 7 hereof shall survive the termination of
Employee's employment and the end of the
1.1. BY RMI
With or without Cause (as defined below), RMI may terminate the employment
of Employee at any time during the Term upon giving Notice of Termination (as
defined below).
1.2. BY EMPLOYEE
Employee may terminate Employee's employment at any time, for any reason,
upon giving Notice of Termination.
1.3. AUTOMATIC TERMINATION
This Agreement and Employee's employment hereunder shall terminate
automatically upon the death or total disability of Employee. The term "total
disability" as used herein shall mean Employee's inability to perform the duties
normally performed in Employee's employment with RMI for a period or periods
aggregating 90 calendar days in any 12-month period as a result of physical or
mental illness, loss of legal capacity or any other cause beyond Employee's
control, unless Employee is granted a leave of absence by the Board of Directors
of RMI. Termination hereunder shall be deemed to be effective (a) at the end of
the calendar month in which Employee's death occurs or (b) immediately upon a
determination by the Board of Directors of RMI of Employee's total disability,
as defined above.
1.4. NOTICE
The term "Notice of Termination" shall mean at least 14 days' written
notice of termination of Employee's employment, during which period Employee's
employment and performance of services will continue; provided, however, that
RMI may, upon notice to Employee and without reducing Employee's compensation
during such period, excuse Employee from any or all of Employee's duties during
such period. The effective date of the termination of Employee's employment
hereunder shall be the date on which such 14 day period expires.
2. TERMINATION PAYMENTS
In the event of termination of the employment of Employee, all compensation
and benefits set forth in this Agreement shall terminate except as specifically
provided in this Section 2.
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2.1. TERMINATION BY RMI
If RMI terminates Employee's employment without Cause during the Term,
Employee shall be entitled to receive (a) termination payments equal to the
lesser of (i) three months' annual base salary or (ii) the annual base salary
Employee would have received if Employee's employment hereunder had continued
until the end of the Term, and (b) any unpaid annual base salary which has
accrued for services already performed as of the date termination of Employee's
employment becomes effective. If Employee is terminated by RMI for Cause,
Employee shall not be entitled to receive any of the foregoing benefits, other
than those set forth in clause (b) above.
2.2. TERMINATION BY EMPLOYEE
In the case of the termination of Employee's employment by Employee,
Employee shall not be entitled to any payments hereunder, other than those set
forth in clause (b) of subsection 2.1.
2.3. TERMINATION AFTER THE END OF THE TERM
In the case of a termination of Employee's employment after the end of the
Term, Employee shall not be entitled to receive any payments hereunder, other
than those set forth in clause (b) of subsection 2.1.
2.4. PAYMENT SCHEDULE
All payments under this Section 2 shall be made to Employee at the same
intervals as payments of salary were made to Employee immediately prior to
termination.
2.5. CAUSE
Wherever reference is made in this Agreement to termination being with or
without Cause, "Cause" shall include, without limitation, the occurrence of one
or more of the following events:
(a) Failure or refusal to carry out the lawful duties normally
performed in Employee's position with RMI or any lawful directions of the
Board of Directors of RMI;
(b) Except by reason of death or disability, failure by Employee in
any material respect to devote Employee's full business attention and time
to the business and affairs of RMI or to use Employee's reasonable best
efforts to perform his or her professional or job responsibilities in a
professional manner;
(c) The rendering of any business, commercial or professional services
to any other firm or business without the prior written consent of RMI;
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(d) Temporary loss (for a period of at least 90 days) or permanent
loss of Employee's license or other such qualification or authorization to
do business, or Employee's causing RMI or any other RMI Group Entity (as
defined in subsection 3.8) to so lose (or to be declined in an application
or notice to acquire) a license or such other qualification or
authorization to do business that is material to RMI or any other RMI Group
Entity, provided that whether a license or other qualification or
authorization to do business is material to RMI shall be determined by the
Board of Directors of RMI and such determination shall be binding on the
parties hereto;
(e) Conviction of or entry of a plea of nolo contendere by Employee in
a proceeding alleging violation by Employee of a state or federal criminal
law involving the commission of a crime against RMI or any other RMI Group
Entity, or a felony;
(f) Current use by Employee of illegal substances; deception, fraud,
misrepresentation or dishonesty by Employee; any incident materially
compromising Employee's reputation or ability to represent RMI with the
public; any act or omission by Employee which substantially impairs the
business, good will or reputation of RMI or any other RMI Group Entity; or
any other misconduct; or
(g) Any other material violation of any provision of this Agreement.
3. NONCOMPETITION, NONSOLICITATION AND NONDISPARAGEMENT
3.1. APPLICABILITY
If Employee's employment with RMI terminates for any reason during the
Term, Employee's obligations under this Section 3 shall continue in full force
and effect until the end of the Term, except that in the event of RMI's
termination of Employee's employment without Cause, as defined above, the
Employee's obligations under subsections 3.2 and 3.3 shall terminate.
3.2. SCOPE OF NONCOMPETITION
Employee agrees that Employee will not, directly or indirectly, during
Employee's employment and, if Employee's employment terminates before the end of
the Term, the remaining period of time until the end of the Term, be employed
by, consult with or otherwise perform services for, own, manage, operate, join,
control or participate in the ownership, management, operation or control of or
be connected with, in any manner, any organization which, by reason of its
activities as a broker, dealer, investment advisor, investment company,
underwriter or related business, is subject to regulation by the
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Securities and Exchange Commission and which conducts business in any state or
province in which RMI conducts business (a "Competitor"). Employee shall be
deemed to be related to or connected with a Competitor if such Competitor is (a)
a partnership in which Employee is a general or limited partner, member or
employee, (b) a corporation, limited liability company or association of which
Employee is a shareholder, member, officer, manager, employee or director, or
(c) a partnership, corporation, limited liability company or association of
which Employee is a consultant or agent; provided, however, that nothing herein
shall prevent the purchase or ownership by Employee of shares which constitute
less than five percent of the outstanding equity securities of a publicly or
privately held corporation, if Employee has no other relationship with such
corporation.
3.3. SCOPE OF NONSOLICITATION
Employee shall not directly or indirectly solicit, influence or entice, or
attempt to solicit, influence or entice, any employee or consultant of RMI to
cease his or her relationship with RMI or solicit, influence, entice or in any
way divert any client, customer, distributor, partner, joint venturer, supplier
or service provider of RMI to do business or in any way become associated with
any Competitor. This subsection 3.3 shall apply during the time period and
geographical area described in subsection 3.2 hereof.
3.4. NONDISPARAGEMENT
Employee agrees that Employee will not at any time before the end of the
Term make any statements that disparage RMI, its directors, officers, employees
and representatives or that damage the reputation or goodwill of RMI.
3.5. NONDISCLOSURE; RETURN OF MATERIALS
During the term of Employee's employment by RMI and following termination
of such employment, Employee will not disclose (except as required by Employee's
duties to RMI), any concept, design, process, technology, trade secret, customer
list, plan, embodiment, or invention, any other intellectual property or any
other confidential information, whether patentable or not, of any RMI Group
Entity of which Employee becomes informed or aware during Employee's employment,
whether or not developed by Employee. In the event of the termination of
Employee's employment with RMI, Employee will return all documents, data and
other materials of whatever nature, including, without limitation, drawings,
specifications, research, reports, embodiments, software and manuals to RMI
which pertain to Employee's employment with RMI or to any intellectual property
and shall not retain or cause or allow any third party to retain photocopies or
other reproductions of the foregoing.
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3.6. EQUITABLE RELIEF
Employee acknowledges that the provisions of this Section 3 are essential
to RMI, that RMI would not enter into this Agreement if it did not include this
Section 3 and that damages sustained by RMI as a result of a breach of this
Section 3 cannot be adequately remedied by damages, and Employee agrees that
RMI, notwithstanding any other provision of this Agreement, including, without
limitation, Section 7 hereof, and in addition to any other remedy it may have
under this Agreement or at law, shall be entitled to injunctive and other
equitable relief to prevent or curtail any breach of any provision of this
Agreement, including, without limitation, this Section 3.
3.7. EFFECT OF VIOLATION
Employee and RMI acknowledge and agree that additional consideration has
been given for Employee entering into this Section 3, such additional
consideration including, without limitation, certain provisions for termination
payments pursuant to Section 2 of this Agreement. Violation by Employee of this
Section 3 shall relieve RMI of any obligation it may have to make such
termination payments, but shall not relieve Employee of Employee's obligations
under this Section 3.
3.8. DEFINITION OF RMI
For purposes of subsection 3.2, subsection 3.3 and subsection 3.4 hereof,
"RMI" shall include any subsidiaries of RMI (whether existing currently or in
the future), any parent corporation of RMI and any business ventures in which
RMI, its subsidiaries or its parent corporation may participate (whether
existing currently or in the future) (each of RMI, any direct or indirect
subsidiary thereof and any parent corporation thereof, an "RMI Group Entity").
4. FORM OF NOTICE
All notices given hereunder shall be given in writing, shall specifically
refer to this Agreement and shall be personally delivered or sent by telecopy or
other electronic facsimile transmission or by registered or certified mail,
return receipt requested, at the address set forth below or at such other
address as may hereafter be designated by notice given in compliance with the
terms hereof:
If to Employee:
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If to RMI: Xxxxx XxxXxxxxx Incorporated
000 Xxxxx Xxxxxx, Xxxxx 0000
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Xxxxxxx, XX 00000
Attn: General Counsel
Copy to: Xxxxxxx Coie LLP
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000-0000
Attn: Xxxxxxx Xxxxxxxxx
If notice is mailed, such notice shall be effective upon mailing, or if notice
is personally delivered or sent by telecopy or other electronic facsimile
transmission, it shall be effective upon receipt.
5. ASSIGNMENT
This Agreement is personal to Employee and shall not be assignable by
Employee. RMI may assign its rights hereunder to (a) any corporation resulting
from any merger, consolidation or other reorganization to which RMI is a party,
(b) any parent corporation of RMI whether existing currently or in the future,
or (c) any corporation, partnership, association or other person to which RMI
may transfer all or substantially all of the assets and business of RMI existing
at such time. All of the terms and provisions of this Agreement shall be
binding upon and shall inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns.
6. WAIVERS
No delay or failure by any party hereto in exercising, protecting or
enforcing any of his, her or its rights, titles, interests or remedies
hereunder, and no course of dealing or performance with respect thereto, shall
constitute a waiver thereof. The express waiver by a party hereto of any right,
title, interest or remedy in a particular instance or circumstance shall not
constitute a waiver thereof in any other instance or circumstance. All rights
and remedies shall be cumulative and not exclusive of any other rights or
remedies.
7. ARBITRATION
Subject to the provisions of subsection 3.6 hereof, any controversies or
claims arising out of or relating to this Agreement shall be fully and finally
settled by final and binding arbitration in accordance with the rules,
constitutions, or by-laws of the National Association of Securities Dealers,
Inc., as may be amended from time to time. The prevailing party shall be
entitled to costs, expenses and reasonable attorneys' fees. Judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The provisions of this Section 7 continue in effect for any and all
covered controversies or claims, whether before or after the end of the Term.
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8. AMENDMENTS IN WRITING
No amendment, modification, waiver, termination or discharge of any
provision of this Agreement, nor consent to any departure therefrom by either
party hereto, shall in any event be effective unless the same shall be in
writing, specifically identifying this Agreement and the provision intended to
be amended, modified, waived, terminated or discharged and signed by RMI and
Employee, and each such amendment, modification, waiver, termination or
discharge shall be effective only in the specific instance and for the specific
purpose for which given. No provision of this Agreement shall be varied,
contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by RMI and Employee.
9. APPLICABLE LAW
This Agreement shall in all respects, including all matters of
construction, validity and performance, be governed by, and construed and
enforced in accordance with, the laws of the state of Washington, without regard
to any rules governing conflicts of laws.
10. SEVERABILITY
If any provision of this Agreement shall be held invalid, illegal or
unenforceable in any jurisdiction, for any reason, including, without
limitation, the duration of such provision, its geographical scope or the extent
of the activities prohibited or required by it, then, to the full extent
permitted by law (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intent of the parties hereto as nearly as may be possible, (b) such
invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of any other provision hereof, and (c) any court or
arbitrator having jurisdiction thereover shall have the power to reform such
provision to the extent necessary for such provision to be enforceable under
applicable law.
11. HEADINGS
All headings used herein are for convenience only and shall not in any way
affect the construction of, or be taken into consideration in interpreting, this
Agreement.
12. COUNTERPARTS
This Agreement, and any amendment or modification entered into pursuant to
Section 8 hereof, may be executed in any number of counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute one and the same
instrument.
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13. INTEGRATION
Except as set forth in the following sentence, this Agreement on and as of
the date of the commencement of the Term shall constitute the entire agreement
between RMI and Employee with respect to the subject matter hereof and all oral
or written communications, understandings or agreements between RMI and Employee
prior or contemporaneous to the commencement of the Term with respect to such
subject matter shall be hereby, as of the commencement of the Term, superseded
and nullified in their entireties. Notwithstanding the foregoing sentence, this
Agreement supplements and does not supersede any previously executed, written
employment agreement between RMI and Employee that may be currently in effect;
to the extent of any inconsistency or conflict between the terms of this
Agreement and the terms of any such previously executed employment agreement,
the terms of this Agreement shall, as of the commencement of the Term, control
and govern.
IN WITNESS WHEREOF, the parties have executed and entered into this
Agreement on the date set forth above.
EMPLOYEE:
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XXXXX XXXXXXXXX INCORPORATED:
By
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Its
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