EXHIBIT 10.16
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), made and entered into as of
the 1st day of January, 1997 (the "Effective Date"), by and between CGA
Investment Management, Inc., a Delaware corporation (referred to herein as the
Employer"), and Xxx X. Xxxxxxx (the "Employee").
RECITALS
A. The Employer desires to employ the Employee for a
specified term; and
B. The Employee is willing to be employed by the Employer upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, it is covenanted and agreed by and between the
parties hereto as follows:
AGREEMENTS
1. Position and Duties. The Employer hereby employs the Employee as
the Principal of the Employer or in such other capacity as shall be mutually
agreed between the Employee and the Employer. During the period of the
Employee's employment hereunder, the Employee shall devote the Employee's best
efforts and full business time, energy, skills and attention to the business and
affairs of the Employer; provided, however, that the Employee shall perform on
behalf of the Employer and the Employer's parent corporation, CGA Group, Ltd.
("CGA Group") in the United States of America only such duties that are of a
ministerial nature and the performance of which are in compliance with the
Operating Guidelines (the "Operating Guidelines," as such term is defined in the
Investment Units Subscription Agreement dated as of June 4, 1997 by and among
CGA Group and the other parties named therein (the "Subscription Agreement").
The Employee's duties and authority shall consist of and include all duties and
authority customarily performed and held by persons holding equivalent positions
with business organizations similar in nature and size to the Employer, as such
duties and authority are, subject to the immediately preceding sentence,
reasonably defined, modified and delegated from time to time by the Board of
Directors of the Employer (the "Board") or that person to whom the Board has
delegated such authority. The Employee shall have the powers necessary to
perform the duties assigned to him, and shall be provided such supporting
services, staff, secretarial and other assistance, office space and
accoutrements as shall be reasonably necessary and appropriate in light of such
assigned duties.
2. Compensation. As compensation for the services to be provided by
the Employee hereunder, the Employee shall receive the following compensation
and other benefits:
(a) Base Salary. The Employee shall receive an aggregate
annual minimum base salary ("Base Salary") at the rate of Two Hundred Twenty
Five Thousand Dollars ($225,000) payable in installments in accordance with the
regular payroll practices of the Employer; provided that, any amount paid by CGA
Group or CGA Funding, L.P. with respect to the period commencing after December
31, 1996 and ending prior to May 31, 1997 shall be credited against the
aggregate minimum base salary for 1997 payable to the Employee.
(b) Bonuses. The Employee shall receive a cash bonus, payable
within (30) days after the end of the 1997 calendar year, in the amount of not
less than Two Hundred Thousand Dollars ($200,000) ("Base Bonus"). The Employee
may receive a discretionary annual cash bonus ("Annual Bonus"), also payable
within thirty (30) days after the end of each subsequent calendar year during
which this Agreement is in effect, which shall be based upon an annual incentive
plan approved by the compensation committee of the board of directors of the
Employer's ultimate parent.
(c) Reimbursement of Expenses. In accordance with the expense
reimbursement policies of the Employer, as promulgated and in effect from time
to time, the Employee shall be reimbursed, upon submission of appropriate
vouchers and supporting documentation, for all travel, entertainment and other
out-of-pocket expenses reasonably and necessarily incurred by the Employee in
the performance of his duties hereunder.
(d) Other Benefits. The Employee shall be entitled to all
benefits specifically established for him by the Board or a committee thereof
and, when and to the extent he is eligible therefor, to participate in all plans
and benefits generally accorded to employees of the Employer, under and subject
to all of the forms thereof, including, but not limited to, as applicable,
pension, profit-sharing, supplemental retirement, incentive compensation, bonus,
disability income, split-dollar life insurance, group life, medical and
hospitalization insurance, and similar or comparable plans, and also to
perquisites extended to similarly situated senior employees. Additionally, the
Employer shall obtain for the benefit of the Employee's estate a term life
insurance policy with a value of two times the Employee's base salary as
presented in paragraph 2(a).
(e) Vacations. The Employee shall be entitled to an annual
vacation in accordance with the operative vacation policy of the Employer in
effect from time to time, which vacation shall be taken at a time or times
mutually agreeable to the Employee and the Employer.
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(f) Withholding. The Employer shall be entitled to withhold,
from amounts payable to the Employee hereunder, any federal, state or local
withholding or other taxes or charges which it is from time to time required to
withhold.
3. Term and Termination.
(a) Basic Term. The Employee's employment under this
Agreement shall be for a term of one (1) year commencing as of the Effective
Date, and shall automatically extend for one (1) year commencing on each
anniversary of the Effective Date, unless terminated by either party effective
as of the last day of the then current Agreement term by written notice to that
effect delivered to the other not less than thirty (30) days prior to the
expiration of such Agreement term.
(b) Voluntary Termination by Employee. The Employee may
voluntarily terminate this Agreement, at any time, by written notice to that
effect delivered to the Employer not less than thirty (30) days prior the
effective date of Employee's voluntary termination. Upon Employee's voluntary
termination, Employee shall have no obligations to the Employer other than as
provided for in Sections 4 and 5 hereof, together with an obligation to provide
Employee's reasonable transitional assistance to the Employer for a period of
not more than thirty (30) days in connection with matters for which the Employee
was responsible during the term of this Agreement and which were not concluded
prior to Employee's voluntary termination. Upon Employee's voluntary
termination, no Annual Bonus (or Base Bonus, if applicable) for the year in
which such termination occurs shall be payable to the Employee and no further
payments of any kind shall be due hereunder, except for compensation and
benefits accrued as of the date of such termination.
(c) Premature Termination Without Cause and Constructive
Discharge.
(i) In the event of the termination of the Employee's
employment under this Agreement prior to the last day of the then current
term, either (A) by the Employer for any reason other than a termination
in accordance with the provisions of paragraph 3(d), 3(e) or 3(f) or (B)
by the Employee by written notice to the Employer given within thirty (30)
days of Constructive Discharge (as hereinafter defined) effective as of
thirty (30) days after such notice, then the Employer shall: (A) pay the
Employee the greater of (x) the Base Salary the Employee would have
received had he remained employed through the end of the then current term
of the Agreement and (y) six (6) months of salary; (B) pay the Employee,
if such termination occurs in the 1997 calendar year, the Base Bonus and
(C) continue to provide coverage for the Employee under the medical
benefit program maintained by
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the Employer through the remainder of the term of the Agreement (if
permitted to do so under such program).
(ii) Payments to the Employee under this paragraph 3(c)
will be made in accordance with the regular payroll practices of the
Employer during the remaining term of this Agreement or, at the election
of the Employer, such payments may be made in a lump sum. Such payments
shall not be reduced in the event the Employee obtains other employment
following the termination of employment by the Employer.
(iii) For purposes of this Agreement, the Employee
shall be deemed "Constructively Discharged" if the Employer changes the
primary employment location of the Employee to a place that is more than
forty (40) miles from the primary employment location of the Employee as
of the Closing Date (as defined in the Subscription Agreement).
(d) Termination For Cause. Notwithstanding any other
provision of this Agreement, in the event of the termination of the Employee's
employment under this Agreement for cause, no Annual Bonus (or Base Bonus, if
applicable) for the year in which such termination occurs shall be payable to
the Employee and no further payments shall be due hereunder except for
compensation or benefits accrued as of the date of such termination. For
purposes of this Agreement, "cause" shall mean: (i) a material violation by the
Employer, in which the Employee materially and directly participated, of any law
or regulation respecting the business of the Employer or any affiliate, other
than a material violation which is a direct result of the operation of the
Employer and/or its affiliates in accordance with the Operating Guidelines; (ii)
the Employee being found guilty by a court of competent jurisdiction or a plea
of guilty or nolo contendere to a charge of (A) any felony or (B) an act of
dishonesty in connection with the performance of his duties for the Employer; or
(iii) the willful or negligent failure of the Employee to perform his duties
hereunder in any material respect.
(e) Termination Upon Death. If the Employee dies during the
term of this Agreement, payment of any accrued compensation due to the Employee
at the time of death including the bonus payable with respect to the prior
calendar year if death occurs prior to payment of such bonus, shall be made to
such beneficiary as the Employee may designate in writing, or failing such
designation, to the executor, administrator or other representative of his
estate (provided, however, that the Employee's Base Bonus or Annual Bonus
payable with respect to the calendar year in which such termination occurs (with
such Annual Bonus calculated based on the bonus(es) payable to Employee with
respect to the immediately preceding year) shall be payable on a pro rata basis
to the date of the Employee's death). Such payments shall be in addition to any
other death benefits of the
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Employer for the benefit of the Employee and in full settlement and satisfaction
of all payments provided for in this Agreement.
(f) Termination Upon Disability. The Employer may terminate
the Employee's employment after the Employee is determined to be disabled under
the then current Employer program if such a program exists at the time the
Employee is disabled. If no such program exists, the Employee will be considered
disabled if the Employee suffers an illness or injury of a potentially permanent
nature which results in the Employee's inability to substantially perform his
duties hereunder as determined by the board of directors of the Employer's
ultimate parent for a period of either six (6) consecutive months, or one
hundred and twenty (120) business days within a consecutive twelve (12) month
period. If the Employer terminates the Employee after it is determined that the
Employee is disabled, the Employer shall pay the Employee the compensation
accrued through the date of the Employee's termination of employment, including
the bonus payable with respect to the prior calendar year if the termination
occurs prior to payment of such bonus (provided, however, that the Employee's
Base Bonus or Annual Bonus payable with respect to the calendar year in which
such termination occurs (with such Annual Bonus calculated based on the
bonus(es) payable to the Employee with respect to the immediately preceding
year) shall be payable on a pro rata basis to the date of the Employee's
termination). In the event of a dispute regarding the Employee's disability,
each party shall choose a physician who together will choose a third physician
to make a final determination. The Employee shall be entitled to the
compensation and benefits provided for under this Agreement for any period
during the term of this Agreement and prior to the establishment of the
Employee's disability. Notwithstanding anything contained in this Agreement to
the contrary, until the date specified in a notice of termination relating to
the Employee's disability, the Employee shall be entitled to return to his
position with the Employer as set forth in this Agreement, in which event no
disability of the Employee will be deemed to have occurred.
4. Confidentiality and Loyalty. The Employee acknowledges that
during the course of the Employee's employment, the Employee will produce and
have access to material, records, data, trade secret and information not
generally available to the public regarding the Employer and its subsidiaries
and affiliates (collectively, "Confidential Information"). Accordingly, during
and subsequent to termination of this Agreement, the Employee shall hold in
confidence and not directly or indirectly disclose, use, copy or make lists of
any such Confidential Information, except to the extent that such information is
or thereafter becomes lawfully available from public sources, or such disclosure
is authorized in writing by the Employer, required by a law or any competent
administrative agency or judicial authority, or otherwise as reasonably
necessary or appropriate in connection with the Employee's performance of the
Employee's duties
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hereunder. All records, files, documents and other materials or copies thereof
relating to the Employer's business which the Employee shall prepare or use
shall be and remain the sole property of the Employer, shall not be removed from
the Employer's premises without its written consent other than in the ordinary
course of business, and shall be promptly returned to the Employer upon
termination of the Employee's employment hereunder. The Employee agrees to abide
by the Employer's reasonable policies, as in effect from time to time, respects
avoidance of interests conflicting with those of the Employer.
5. Non-Solicitation and Non-Competition Covenants.
(a) Restrictive Covenant. The Employee and the Employer have
jointly reviewed the operations of the Employer and have agreed that the
covenants contained in this Section 5 are an essential ingredient of this
Agreement and are made in consideration for the payment of the amounts described
in Sections 2 and 3 hereof. The Employee hereby agrees that, except with the
express prior written consent of the Employer, for a period of one (1) year
after the termination of the Employee's employment with the Employer, with
respect to clause (i) below, for any reason and, with respect to clause (ii)
below, for any reason other than a termination pursuant to Section 3(c) (the
"Restrictive Period"), the Employee (i) will not (a) solicit employees of the
Employer or of any subsidiary or affiliate of the Employer or (b) solicit
clients or customers of the Employer or of any subsidiary or affiliate of the
Employer in respect of any transaction, matter or business that directly or
indirectly competes with any of the businesses then conducted by the Employer or
any of its subsidiaries or affiliates, and (ii) will not directly or indirectly
compete with the business of the Employer, by directly or indirectly being a
shareholder or partner of or serving as an employee, officer or director of or
consultant to, or in any other capacity with, any person, firm, partnership,
corporation, subsidiary, division, joint venture, trust or other entity, or any
division, subsidiary or separate enterprise of any such entity, which (x) was
created during the term of the Employee's employment with the Employer or is
expected to be created within a period of one (1) year after the Employee's
termination of employment with the Employer, and (y) which owns or operates a
business which is either: (A) an insurer or reinsurer of asset backed
securities, mortgage backed securities or commercial mortgage backed securities;
or (B) an investment company that is directly or indirectly owned by, affiliated
with, attached to or otherwise related to an insurer or reinsurer of asset
backed securities, mortgage backed securities or commercial mortgage backed
securities; or (C) an investment advisory firm that is directly or indirectly
owned by, affiliated with, attached to or otherwise related to an insurer or
reinsurer of asset backed securities, mortgage backed securities or commercial
mortgage backed securities (the "Restrictive Covenant"). If the Employee
violates the Restrictive Covenant and the Employer brings legal action for
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injunctive or other relief, the Employer shall not, as a result of the time
involved in obtaining such relief, be deprived of benefit of the full period of
the Restrictive Covenant. Accordingly, the Restrictive Covenant shall be deemed
to have the duration specified in this paragraph 5(a) computed from the date the
relief is granted but reduced by the time between the period when Restrictive
Period began to run and the date of the first violation of the Restrictive
Covenant by the Employee. The Restrictive Covenant shall not prohibit the
Employee from owning directly or indirectly capital stock or similar securities
which are listed on a securities exchange or quoted on the National Association
of Securities Dealers Automated Quotation System which do not represent more
than five percent (5%) of the outstanding capital stock of any business similar
to that of the Employer's.
(b) Remedies for Breach of Restrictive Covenant. The Employee
acknowledges that the restrictions contained in Sections 4 and 5 of this
Agreement are reasonable and necessary for the protection of the legitimate
business interests of the Employer, that any violation of these restrictions
would cause substantial injury to the Employer and such interests, that the
Employer would not have entered into this Agreement with the Employee without
receiving the additional consideration offered by the Employee in binding
himself to these restrictions and that such restrictions were a material
inducement to the Employer to enter into this Agreement. In the event of any
violation of these restrictions, the Employer shall be relieved of all further
obligations under this Agreement and shall be entitled to any rights, remedies
or damages available to the Employer under this Agreement or otherwise at law or
in equity. In addition, in the event of any violation or threatened violation of
these restrictions, the Employer shall be entitled to preliminary and permanent
injunctive relief to prevent or restrain any such violation by the Employee and
any and all periods directly or indirectly acting for the Employee, as the case
may be.
6. Interest in Assets. Neither the Employee nor the Employee's
estate shall acquire hereunder any rights in funds or assets of the Employer,
otherwise than by and through the actual payment of amounts payable hereunder;
nor shall the Employee or the Employee's estate have any power to transfer,
assign, anticipate, hypothecate or otherwise encumber in advance any of said
payments; nor shall any of such payments be subject to seizure for the payment
of any debt, judgment, alimony, separate maintenance or be transferable by
operation of law in the event of bankruptcy, insolvency or otherwise of the
Employee.
7. Indemnification. The Employer shall indemnify the Employee (and
his legal representatives or other successors) to the fullest extent permitted
(including payment of expenses in advance of final disposition of a proceeding)
by the laws of the State of New York, as in effect at the time of the subject
act or omission, or the Certificate of Incorporation and By-Laws of the
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Employer, as in effect at such time or on the effective date of this Agreement,
whichever affords or afforded greater protection to the Employee, and the
Employee shall be entitled to the protection of any insurance policies the
Employer may elect to maintain generally for the benefit of its directors and
officers, against any and all fines, losses, liabilities, claims, assessments,
damages, deficiencies, judgments, costs, charges and expenses whatsoever
incurred or sustained by him or his legal representatives in connection with any
claim, action, suit, proceeding or investigation (whether civil, criminal,
administrative or investigative) to which he (or his legal representatives or
other successors) may be made party by reason of his becoming, but not being or
having been, a director, officer or employee of the Employer or any of its
subsidiaries or affiliates; provided, however, that the Employee shall assign to
the Employer all rights of the Employee to indemnification under any policy of
directors' and owners' liability insurance or otherwise, to the extent of the
amount actually paid by the Employer to or on behalf of the Employee.
8. General Provisions.
(a) Neither party hereto may assign his or its rights or delegate
his or its duties under this Agreement without the prior written consent of the
other party; provided, however, that (i) this Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the Employer upon
any sales of all or substantially all of the Employer's assets, or upon any
merger, consolidation or reorganization of the Employer with or into any other
corporation, all as though such successors and assigns of the Employer and their
respective successors and assigns were the Employer; and (ii) this Agreement
shall inure to the benefit of and be binding upon the heirs, assigns or
designees of the Employee to the extent of any payments due to them hereunder.
As used in this Agreement, the term "Employer" shall be deemed to refer to any
such successor or assign of the Employer referred to in the preceding sentence.
(b) Entire Agreement; Modifications. This Agreement
constitutes the entire agreement between the parties respecting the subject
matter hereof, and supersedes all prior negotiations, undertakings, agreements
and arrangements with respect thereto, whether written or oral. Except as
otherwise explicitly provided herein, this Agreement may not be amended or
modified except by written agreement signed by the Employee and the Employer.
(c) Enforcement and Governing Law. The provisions of this
Agreement shall be regarded as divisible and separate; if any of said provisions
should be declared invalid or unenforceable by a court of competent
jurisdiction, the validity and enforceability of the remaining provisions shall
not be affected thereby. This Agreement shall be construed and the legal
relations of the parties hereto shall be determined in accordance with the laws
of
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the State of New York, without reference to the law regarding conflicts of law.
(d) Arbitration. The provisions of paragraph 5(b) shall
supersede the provisions of this paragraph 8(d) in the event of a simultaneous
dispute between the Employer and the Employee so as to afford the Employer with
the remedy of injunctive relief, without the necessity for arbitration. Any
dispute or controversy arising under or in connection with this Agreement or the
Employee's employment by the Employer shall be settled exclusively by
arbitration, conducted by a single arbitrator sitting in New York City, New
York, in accordance with the rules of the American Arbitration Association (the
"AAA") then in effect. The arbitrator shall be selected by mutual agreement
between the Employer and the Employee. However, in the event that the parties
are unable to agree on an arbitrator within a period of one week, the arbitrator
shall be selected by the parties from a list of eleven (11) arbitrators provided
by the AAA, provided that no arbitrator shall be related to or affiliated with
either of the parties. If the parties mutually agree on an arbitrator from such
list, such arbitrator shall be selected. If the parties cannot agree on the
arbitrator within ten (10) days after the list of the proposed arbitrators is
received by the parties, then no later than twenty (20) days after such list is
received by the parties, the parties, or their respective representatives, shall
meet at a mutually convenient location in New York City, New York, or
telephonically. At that meeting, the party who sought arbitration shall
eliminate one (1) proposed arbitrator and then the other party shall eliminate
one (1) proposed arbitrator. The parties shall continue to eliminate names from
the list of proposed arbitrators in this manner until each party has eliminated
five (5) proposed arbitrators. The remaining arbitrator shall arbitrate the
dispute. Each party shall submit, in writing, the specific requested action or
decision it wishes to take, or make, with respect to the matter in dispute, and
the arbitrator shall be obligated to choose one (1) party's specific requested
action or decision, without being permitted to effectuate any compromise
position. The party whose requested action or decision is not selected by the
arbitrator shall bear the cost of all counsel, experts or other representatives
who are retained by both parties, together with all costs of the arbitration
proceeding, including, without limitation, the fees, costs and expenses imposed
or incurred by the arbitrator. Judgment may be entered on the arbitrator's award
in any court having jurisdiction; provided, however, that the Employee shall be
entitled to seek specific performance of the Employee's right to be paid through
the date of termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
(e) Waiver. No waiver by either party at any time of any
breach by the other party of, or compliance with, any condition or provision of
this Agreement to be performed by the other party, shall be deemed a waiver of
any similar or dissimilar
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provisions or conditions at the same time or any prior or subsequent time.
(f) Notices. Notices pursuant to this Agreement shall be in
writing and shall be deemed given when received; and, if mailed, shall be mailed
by United States registered or certified mail, return receipt requested, postage
prepaid; and if to the Employer, addressed to the principal headquarters of the
Employer, attention: Chairman; or, if to the Employee, to the address set forth
below the Employee's signature on this Agreement, or to such other address as
the party to be notified shall have given to the other.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CGA Investment Management, Inc. Xxx X. Xxxxxxx
By: /s/ XXXXXXX X. PRICE /s/ XXX X. XXXXXXX
------------------------- ---------------------------
Name: Xxxxxxx X. Price 0 Xxxxxxxx Xxxx Xxxxxx
Title: Xxxxxxxxx, Xxxxxx, Xxx Xxxxxx 00000
CGA Group, Ltd.
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