EMPLOYMENT AGREEMENT
EXHIBIT 10.4
THIS EMPLOYMENT AGREEMENT (the “Agreement”), made this ___day of ___2007, between Xxxxxxx
Xxxxx (“Executive”) and Sovereign Holdings, LLC (the “Company”), a North Carolina limited liability
corporation.
1. Term of Employment. The Company hereby agrees to employ Executive, and Executive
hereby accepts employment with the Company, upon the terms set forth in this Agreement, for the
period commencing on the date hereof (the “Commencement Date”) and ending on the fourth anniversary
of the Commencement Date, unless sooner terminated in accordance with the provisions of Section 5
or extended as hereinafter provided (such period, as it may be extended or terminated, is the
“Agreement Term”). Beginning on the fourth anniversary of the Commencement Date, and on each
anniversary of the Commencement Date thereafter, the Agreement Term shall extend for an additional
one year period from the then current expiration date of the Agreement Term unless at least 60 days
prior to the anniversary date either Executive or the Company provides written notice to the other
party electing not to extend the Agreement Term.
2. Title; Capacity. The Company will employ Executive, and Executive agrees to work
for the Company, as its Chief Executive Officer to perform the duties and responsibilities inherent
in such position and such other duties and responsibilities as the Company shall from time to time
assign to Executive. Executive shall report to the Board of Directors of the company and shall be
subject to the supervision of, and shall have such authority as is delegated by such board, which
authority shall be sufficient to perform Executive’s duties hereunder. Executive shall devote
Executive’s full business time and reasonable best efforts in the performance of the foregoing
services, provided that Executive may accept other board memberships or other charitable
organizations that are not in conflict with Executive’s primary responsibilities and obligations to
the Company.
3. Compensation and Benefits.
3.1 Salary. As of the Commencement Date, the Company shall pay Executive a base
salary of $240,000 per year, payable in accordance with the Company’s customary payroll practices
(the “Base Salary”). The Base Salary thereafter shall be subject to annual review and adjustment
as determined by the Company in its discretion on the anniversary of the Commencement Date each
year of the Agreement Term.
3.2 Annual Incentive. Executive will be eligible to receive an annual cash bonus in
an amount equal to 3% of the Company’s Net Annual Advisor Revenue, for each year of the Agreement
Term. For purposes of this Agreement, the term “Net Annual Advisory Revenue” means the gross
investment advisory fee revenue (including performance fees) earned by the Company during a
calendar year, less advisory fee waivers during such year to the extent such fees are included in
investment advisory fee revenue and are not repaid to the
Company (it being understood that
any such amounts that are repaid in a subsequent year shall be deemed to be investment advisory
fee revenue in such year). The bonus, if payable, shall be paid within 30 days of the
determination of Company’s Net Annual Advisor revenue in conjunction with the preparation of the
Company’s annual financial statements.
3.3 Fringe Benefits. Executive shall be entitled to participate in all bonus and
benefit programs that the Company establishes and makes available to its executive employees, if
any, to the extent that Executive’s position, tenure, salary, age, health and other
qualifications make Executive eligible to participate, including, but not limited to, health care
plans, life insurance plans, disability insurance, retirement plans, and all other benefit plans
from time to time in effect.
3.4 Reimbursement of Certain Expenses. Executive shall be reimbursed for such
reasonable business expenses as Executive documents in writing to the Company on a regular basis
and in accordance with Company policy.
4. Termination of Employment Period. The Employment Period shall terminate upon the
occurrence of any of the following:
4.1 Termination of the Agreement Term. At the expiration of the Agreement Term, but
only if appropriate notice is given in accordance with Section 1.
4.2 Termination for Cause. At the election of the Company, for cause upon written
notice by the Company to Executive. For the purposes of this Section, “Cause” for termination
shall be deemed to exist upon the occurrence of any of the following:
(a) a good faith finding by the Company that Executive has engaged in dishonesty, gross
negligence or gross misconduct that is materially injurious to the Company which, if curable, has
not been cured by Executive within 30 days after he shall have received written notice from the
Company stating with reasonable specificity the nature of such conduct;
(b) Executive’s conviction or entry of nolo contendere to any felony or crime involving moral
turpitude, fraud or embezzlement of Company property; or
(c) Executive’s material breach of his duties under this Agreement, which, if curable, has not
been cured by Executive within 30 days after he shall have received written notice from the Company
stating with reasonable specificity the nature of such breach.
4.3 Voluntary Termination by the Company or for Good Reason. At the election of the
Company, without Cause, at any time upon 30 days prior written notice by the Company to Executive
or by Executive for Good Reason (as defined below).
4.4 Death or Disability. Thirty days after the death or determination of disability
of Executive. As used in this Agreement, the determination of “disability” shall occur when
Executive, due to a physical or mental disability, for a period of 90 consecutive days, or 180
days in the aggregate whether or not consecutive, during any 360-day period, is
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unable to perform
the services contemplated under this Agreement. A determination of disability shall be made by a
physician satisfactory to both Executive and the Company, provided that if
Executive and the Company do not agree on a physician, Executive and the Company shall each
select a physician and these two together shall select a third physician, whose determination as
to disability shall be binding on all parties.
4.5 Voluntary Termination by Executive. At the election of Executive upon not less
than 30 days prior written notice by him to the Company.
5. Effect of Termination.
5.1 Termination for Cause, at the Election of Executive, at Death, or Upon Expiration of
the Agreement Term. In the event that Executive’s employment is terminated for Cause, upon
Executive’s death, at the election of Executive, or upon the expiration of the Agreement, the
Company shall have no further obligations under this Agreement other than to pay to Executive
salary and accrued vacation through the last day of Executive’s actual employment by the Company.
5.2 Voluntary Termination by the Company or for Good Reason. In the event that
Executive’s employment is terminated without Cause, or due to Executive’s disability, or
Executive’s resignation for Good Reason, beginning immediately after the date of such
termination, the Company shall continue to pay to Executive the greater of (a) the annual Base
Salary then in effect for twelve (12) months on a regular payroll basis, or (b) the annual Base
Salary then in effect on a regular payroll basis for the remainder of the Agreement Term. In
addition to the foregoing amounts, the Company shall pay Executive in a single lump sum,
immediately upon the effective date of the release described herein, payment for a pro rata
portion of any bonus for the year in which termination occurs. In addition, the Company shall
continue its contributions toward Executive’s health care, dental, disability and life insurance
benefits on the same basis as immediately prior to the date of termination, except as provided
below, for the greater of (a) twelve months from the last day of Executive’s employment; or (b)
the remainder of the Agreement Term. Notwithstanding the foregoing, the Company shall not be
required to provide any health care, dental, disability or life insurance benefit otherwise
receivable by Executive if Executive is actually covered or becomes covered by an equivalent
benefit (at the same cost to Executive, if any) from another source. Any such benefit made
available to Executive shall be reported to the Company. No benefits shall be payable under
this provision until after the effective date of a release that Executive executes in favor of
the Company substantially in the form annexed hereto as Exhibit A.
5.3 Notwithstanding any other provision with respect to the timing of payments under Section
5.2, if, at the time of the Executive’s termination, the Executive is deemed to be a “specified
employee” (within the meaning of Section
409A of the Internal Revenue Code of 1986, as amended, and the provisions of United States
Treasury Notice 2005-1, and any successor statute, regulation and guidance thereto, collectively
hereafter, the “Code”) of the Company, then only to the extent necessary to comply with the
requirements of Section 409A of the Code, any payments to which the Executive may become entitled
under Section 5.2 which are subject to Section 409A of the Code (and not otherwise exempt from
its
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application) will be withheld until the first business day of the seventh month following the
date of termination, at which time the Executive shall be paid an aggregate amount equal to six
months of payments otherwise due to the Executive under the terms of Section 5.2, as applicable.
After the first business day of the seventh month following the date of termination and
continuing each month thereafter, the Executive shall be paid the regular payments otherwise due
to the Executive in accordance with the terms of Section 5.2, as thereafter applicable.
5.4 As used in this Agreement, “Good Reason” means, without Executive’s written
consent, (a) the assignment to Executive of duties inconsistent in any material respect with the
duties of an officer of the Company; or (b) a material reduction in Base Salary or other
benefits. Notwithstanding the occurrence of any of events enumerated in this paragraph, an event
shall not be deemed to constitute Good Reason if, within 30 days after the giving by Executive of
notice of the occurrence or existence of an event that Executive believes constitutes Good
Reason, the Company has fully corrected such event.
5.5 Limitation on Benefits. In the event that the benefits provided for in this
Agreement or otherwise payable to Executive (i) constitute “Parachute payments” within the
meaning of Section 280G of the Internal Revenue Code of 1986 and (ii) but for this Section 5.5,
would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986,
then Executive’s benefits shall be either:
(a) delivered in full, or
(b) delivered as to such lesser extent which would result in no portion of such severance
benefits being subject to excise tax under Section 4999 of the Internal Revenue Code of 1986,
whichever of the foregoing amounts, taking into account the applicable federal, state and local
income taxes and the excise tax imposed by Section 4999, results in the receipt by the Executive on
an after-tax basis, of the greatest amount of severance benefits, notwithstanding that all or some
portion of such severance benefits may be taxable under Section 4999 of the Internal Revenue Code
of 1986.
6. Nondisclosure and Noncompetition.
6.1 Proprietary Information.
(a) Executive agrees that all information and know-how, whether or not in writing, of a
private, secret or confidential nature concerning the Company’s business or financial affairs
(collectively, “Proprietary Information”) is and
shall be the exclusive property of the Company. By way of illustration, but not limitation,
Proprietary Information may include inventions, products, processes, methods, techniques, formulas,
designs, drawings, slogans, tests, logos, ideas, practices, projects, developments, plans, research
data, financial data, personnel data, computer programs and codes, and customer and supplier lists.
Executive will not disclose any Proprietary Information to others outside the Company except in
the performance of his
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duties or use the same for any unauthorized purposes without written
approval by an officer of the Company, either during or after his employment, unless and until such
Proprietary Information has become public knowledge or generally known within the industry without
fault by Executive, or unless otherwise required by law.
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(b) Executive agrees that all files, letters, memoranda, reports, records, data, sketches,
drawings, laboratory notebooks, program listings, or other written, photographic, electronic or
other material containing Proprietary Information, whether created by Executive or others, which
shall come into his custody or possession, shall be and are the exclusive property of the Company
to be used by Executive only in the performance of his duties for the Company.
(c) Executive agrees that his obligation not to disclose or use information, know-how and
records of the types set forth in paragraphs (a) and (b) above, also extends to such types of
information, know-how, records and tangible property of subsidiaries and joint ventures of the
Company, customers of the Company or suppliers to the Company or other third parties who may have
disclosed or entrusted the same to the Company or to Executive in the course of the Company’s
business.
6.2 Inventions
(a) Disclosure. Executive shall disclose promptly to an officer or to attorneys of
the Company in writing any idea, invention, work of authorship, whether patentable or
unpatentable, copyrightable or uncopyrightable, including, but not limited to, any computer
program, software, command structure, code, documentation, compound, genetic or biological
material, formula, manual, device, improvement, method, process, discovery, concept, algorithm,
development, secret process, machine or contribution (any of the foregoing items hereinafter
referred to as an “Invention”) Executive may conceive, make, develop or work on, in whole or in
part, solely or jointly with others. The disclosure required by this Section applies (a) during
the period of Executive’s employment with the Company and for one year thereafter; (b) with
respect to all Inventions whether or not they are conceived, made, developed or worked on by me
during Executive’s regular hours of employment with the Company; (c) whether or not the Invention
was made at the suggestion of the Company; (d) whether or not the Invention was reduced to
drawings, written description, documentation, models or other tangible form; and (e) whether or
not the Invention is related to the general line of business engaged in by the Company.
(b) Assignment of Inventions to Company; Exemption of Certain Inventions. Executive
hereby assigns to the Company without royalty or any other further consideration Executive’s
entire right, title and interest in and to all Inventions which Executive conceives, makes,
develops or works on during employment and for one year thereafter, except those Inventions that
Executive develops entirely on
Executive’s own time after the date of this Agreement without using the Company’s equipment,
supplies, facilities or trade secret information unless those Inventions either (a) relate at the
time of conception or reduction to practice of the Invention to the Company’s business, or actual
or demonstrably anticipated research or development of the Company; or (b) result from any work
performed by Executive for the Company.
(c) Records. Executive will make and maintain adequate and current written records
of all Inventions. These records shall be and remain the property of the Company.
(d) Patents. Subject to Section 6.4, Executive will assist the Company in
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obtaining, maintaining and enforcing patents and other proprietary rights in connection with any
Invention covered by Section 6.1. Executive further agrees that his obligations under this
Section shall continue beyond the termination of his employment with the Company, but if he is
called upon to render such assistance after the termination of such employment, he shall be
entitled to a fair and reasonable rate of compensation for such assistance. Executive shall, in
addition, be entitled to reimbursement of any expenses incurred at the request of the Company
relating to such assistance.
6.3 Prior Contracts and Inventions; Information Belonging to Third Parties.
Executive represents that there are no contracts to assign Inventions between any other person or
entity and Executive. Executive further represents that (a) Executive is not obligated under any
consulting, employment or other agreement which would affect the Company’s rights or Executive’s
duties under this Agreement, (b) there is no action, investigation, or proceeding pending or
threatened, or any basis therefor known to Executive involving Executive’s prior employment or
any consultancy or the use of any information or techniques alleged to be proprietary to any
former employer, and (c) the performance of Executive’s duties as an employee of the Company will
not breach, or constitute a default under any agreement to which Executive is bound, including,
without limitation, any agreement limiting the use or disclosure of proprietary information
acquired in confidence prior to engagement by the Company. Executive will not, in connection with
Executive’s employment by the Company, use or disclose to the Company any confidential, trade
secret or other proprietary information of any previous employer or other person to which
Executive is not lawfully entitled.
6.4 Noncompetition and Nonsolicitation.
(a) During the Employment Period and for a period of twelve (12) months after the termination
of Executive’s employment with the Company for any reason, Executive will not directly or
indirectly, absent the Company’s prior written approval, render services of a business,
professional or commercial nature to any other person or entity that competes with the Company in
the same geographical area where the Company does business at the time this covenant is in effect
(or where the Company has made, as of the effective date of termination, active plans to do
business), whether such services are for compensation or otherwise, whether alone or in conjunction
with others, as an employee, as a partner, or as a shareholder (other than as the holder of not
more than 1% of the combined voting power of the outstanding stock of a public company),
officer or director of any corporation or other business entity, or as a trustee, fiduciary or in
any other similar representative capacity.
(b) During the Employment Period and for a period of twelve (12) months after the termination
of Executive’s employment for any reason, Executive will not, directly or indirectly, recruit,
solicit or induce, or attempt to recruit, solicit or induce any employee or employees of the
Company to terminate their employment with, or otherwise cease their relationship with, the
Company.
(c) During the Employment Period and for a period of twelve (12) months after termination of
Executive’s employment for any reason, Executive will not, directly or indirectly, solicit, divert
or take away, or attempt to solicit, divert or take away, the business or
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patronage of any of the
clients, customers or accounts, or prospective clients, customers or accounts, of the Company.
6.5 If any restriction set forth in this Section is found by any court of competent
jurisdiction to be unenforceable because it extends for too long a period of time or over too great
a range of activities or in too broad a geographic area, it shall be interpreted to extend only
over the maximum period of time, range of activities or geographic area as to which it may be
enforceable.
6.6 The restrictions contained in this Section are necessary for the protection of the
business and goodwill of the Company and are considered by Executive to be reasonable for such
purpose. Executive agrees that any breach of this Section will cause the Company substantial and
irrevocable damage and therefore, in the event of any such breach, in addition to such other
remedies which may be available, the Company shall have the right to seek specific performance and
injunctive relief. The Company shall be entitled to recover its reasonable attorneys’ fees in the
event it prevails in such an action.
7. Entire Agreement. This Agreement constitutes the entire agreement between the
parties and supersedes all prior agreements and understandings, whether written or oral relating to
the subject matter of this Agreement.
8. Jury Waiver. Executive and the Company agree to waive trial by jury with respect
to any claims arising out of or relating to this Agreement or Executive’s employment by the
Company.
9. Amendment. This Agreement may be amended or modified only by a written instrument
executed by both the Company and Executive.
10. Governing Law. This Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of Florida without regard to principles of conflicts of laws
thereunder.
11. Notices. Any notice or other communication required or permitted by this
Agreement to be given to a party shall be in writing and shall be deemed given if
delivered personally or by commercial messenger or courier service, or mailed by U.S.
registered or certified mail (return receipt requested), or sent via facsimile (with receipt of
confirmation of complete transmission) to the party at the party’s last known address or facsimile
number or at such other address or facsimile number as the party may have previously specified by
like notice. If by mail, delivery shall be deemed effective 3 business days after mailing in
accordance with this Section.
12. Successors and Assigns.
12.1 Assumption by Successors. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Company to assume in writing prior to such
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succession and to agree to
perform its obligations under 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. Successions by
virtue of the sale of stock shall be governed by operation of law.
12.2 Successor Benefits. This Agreement shall be binding upon and inure to the
benefit of both parties and their respective successors and assigns, including any corporation into
which the Company may be merged or which may succeed to its assets or business, provided,
however, that the obligations of Executive are personal and shall not be assigned by him.
13. Miscellaneous.
13.1 No Waiver. No delay or omission by the Company in exercising any right under
this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by
the Company on any one occasion shall be effective only in that instance and shall not be construed
as a bar or waiver of any right on any other occasion.
13.2 Severability. In case any provision of this Agreement shall be invalid, illegal
or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions
shall in no way be affected or impaired thereby.
13.3 Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set
forth above.
| /s/ Xxxxxxx Xxxxx | ||||
| Xxxxxxx Xxxxx | ||||
| SOVEREIGN HOLDINGS, LLC |
||||
| By: | /s/ Xxxxxxx Xxxxx | |||
| Its: | ||||
[Signature
Page to Sovereign Holdings Employment Agreement]
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Exhibit A
1. Your Release of Claims. You hereby agree and acknowledge that by signing this
Agreement, and for other good and valuable consideration, you are waiving your right to assert
any and all forms of legal claims against the Company1/ of any kind whatsoever, whether
known or unknown, arising from the beginning of time through the date you execute this Agreement
(the “Execution Date”). Except as set forth below, your waiver and release herein is intended to
bar any form of legal claim, complaint or any other form of action (jointly referred to as
“Claims”) against the Company seeking any form of relief including, without limitation, equitable
relief (whether declaratory, injunctive or otherwise), the recovery of any damages, or any other
form of monetary recovery whatsoever (including, without limitation, back pay, front pay,
compensatory damages, emotional distress damages, punitive damages, attorneys fees and any other
costs) against the Company, for any alleged action, inaction or circumstance existing or arising
through the Execution Date.
Without limiting the foregoing general waiver and release, you specifically waive and release
the Company from any Claim arising from or related to your prior employment relationship with the
Company or the termination thereof, including, without limitation:
| ** | Claims under any state or federal discrimination, fair employment practices or other employment related statute, regulation or executive order (as they may have been amended through the Execution Date) prohibiting discrimination or harassment based upon any protected status including, without limitation, race, national origin, age, gender, marital status, disability, veteran status or sexual orientation. Without limitation, specifically included in this paragraph are any Claims arising under the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Equal Pay Act, the Americans With Disabilities Act and any similar Federal and state statute. | ||
| ** | Claims under any other state or federal employment related statute, regulation or executive order (as they may have been amended through the Execution Date) relating to wages, hours or any other terms and conditions of employment. | ||
| ** | Claims under any state or federal common law theory including, without limitation, wrongful discharge, breach of express or implied contract, promissory estoppel, unjust enrichment, breach of a covenant of good faith and fair dealing, violation of public policy, defamation, interference with contractual relations, intentional or negligent infliction of emotional distress, invasion of privacy, misrepresentation, deceit, fraud or negligence. | ||
| ** | Any other Claim arising under state or federal law. |
| 1/ | For purposes of this Agreement, the Company includes the Company and any of its divisions, affiliates (which means all persons and entities directly or indirectly controlling, controlled by or under common control with the Company), subsidiaries and all other related entities, and its and their directors, officers, employees, trustees, agents, successors and assigns. |
You acknowledge and agree that, but for providing this waiver and release, you would not be
receiving the economic benefits being provided to you under the terms of this Agreement.
It is the Company’s desire and intent to make certain that you fully understand the
provisions and effects of this Agreement. To that end, you have been encouraged and given the
opportunity to consult with legal counsel for the purpose of reviewing the terms of this
Agreement. Also, because you are over the age of 40, the Age Discrimination in Employment Act
(“ADEA”), which prohibits discrimination on the basis of age, allows you at least twenty-one (21)
days to consider the terms of this Agreement. ADEA also allows you to rescind your assent to this
Agreement if, within seven (7) days after you sign this Agreement, you deliver by hand or send by
mail (certified, return receipt and postmarked within such 7 day period) a notice of rescission to
me at the Company. The eighth day following your signing of this Agreement is the Effective Date.
Also, consistent with the provisions of the Federal Discrimination Laws, nothing in this
release shall be deemed to prohibit you from challenging the validity of this release under the
discrimination laws (the “Federal Discrimination Laws”) or from filing a charge or complaint of
employment-related discrimination with the Equal Employment Opportunity Commission (“EEOC”), or
from participating in any investigation or proceeding conducted by the EEOC. Further, nothing in
this release or Agreement shall be deemed to limit the Company’s right to seek immediate dismissal,
of such charge or complaint on the basis that your signing of this Agreement constitutes a full
release of any individual rights under the Federal Discrimination Laws, or to seek restitution to
the extent permitted by law of the economic benefits provided to you under this Agreement in the
event that you successfully challenge the validity of this release and prevail in any claim under
the Federal Discrimination Laws.
2. Confidentiality and Other Agreements.
You expressly acknowledge and agree to the following:
(a) that you promptly will return to the Company upon the separation date all Company
documents (and any copies thereof) and property. Further, you agree that you will abide by
any agreements regarding confidentiality or other post-employment obligations.
(b) that you will not make any statements that are professionally or personally disparaging
about, or adverse to, the interests of the Company (including its officers, directors,
employees and consultants) including, but not limited to, any statements that
disparage any person, product, service, finances, financial condition, capability or any other aspect of the business of the Company, and that you will not engage in any conduct which could reasonably be expected to harm professionally or personally the reputation of the Company (including its officers, directors, employees and consultants); likewise, the senior management of the Company shall not make any such disparaging remarks about you.
disparage any person, product, service, finances, financial condition, capability or any other aspect of the business of the Company, and that you will not engage in any conduct which could reasonably be expected to harm professionally or personally the reputation of the Company (including its officers, directors, employees and consultants); likewise, the senior management of the Company shall not make any such disparaging remarks about you.
| By: | ||||
| Employee | ||||
| Date signed: | ||||
