EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is entered
into as of September 23, 1997, between XXXX Investment Services,
Inc., a Delaware corporation (the "Company"), and Xxxxx X.
XxxXxxxxx ("Employee").
RECITALS
A. PMC International, Inc. ("PMCI") has entered into a
stock purchase agreement, dated as of July 25, 1997 (the "Stock
Purchase Agreement"), pursuant to which PMCI will acquire all of
the outstanding capital stock of the Company (the "Acquisition").
B. Employee is a member of the leadership team of the
Company and PMCI desires Employee to continue his affiliation
with the Company in such capacity. Therefore, the Company has
offered, and Employee has accepted, employment with the Company.
This Agreement sets forth the terms on which the Company employs
Employee.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and
of the representations, warranties, covenants and agreements
contained herein, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the
following terms have the following meanings:
"Base Salary" has the meaning set forth in
Section 3(a).
"Company" means XXXX Investment Services, Inc.,
a Delaware corporation, its successors and assigns, and
any of its present or future subsidiaries.
"Competitive Advisory Business" means services,
products or software in the wrap-fee or privately
managed account business (whether using mutual funds or
separate accounts) and/or services, products or software
in the performance reporting business to the extent such
services, products or software are provided to or through
financial intermediaries, including, but not limited to,
investment advisors, broker-dealers, banks, insurance
companies, accounting firms and financial planners for
use in providing services to the retail and small
institutional accounts (typically under $30 million in assets)
of such financial intermediaries. The term "Competitive
Advisory Business" includes the offering of any of the
following products or services through financial
intermediaries, either alone or in combination, whether
or not such products or services are generally or
customarily understood to be included in the term
"wrap-fee" or "privately managed account" business, and
whether or not such products or services are offered for
a single fee or are charged for separately: (1)
investment recommendations or portfolio management
services based on or tailored to the specific investment
needs and/or risk tolerance of the client whose assets
are
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being managed, (2) access to the asset management services of
separate account managers, (3) automated trading services that
involve the exercise of discretionary authority, a limited power
of attorney or similar authorization granted by an asset
management client and (4) the preparation of reports or
statements that show the securities transactions in a client
account and/or calculate, display or analyze the performance or
investments held in a client account. The term "Competitive
Advisory Business" does not include personally providing
investment advisory products or services directly to clients
through a financial planning, investment management or investment
consulting firm, as long as either (1) at least 75% of the
clients of such firm have assets under management or under
advisement by such firm in excess of $30 million, or (2) such
clients are not primarily secured by such firm through referrals
or solicitations by individuals not employed by such firm who
derive a fee or other compensation for such referrals or
solicitations. The term "Competitive Advisory Business"
specifically includes, but is not limited to, any investment
advisory services or products provided to financial
intermediaries by Xxxxxxxx Financial Services, Inc.; Xxxxxxxxxx
Xxxxx Xxxxx Advisory Services; Advisory Consulting Group; SEI
Investments; Xxxxxxx Capital; Meridian Investment Management;
Xxxxx Xxxxxxx Company and Xxxxxx Associates, Inc. The term
"Competitive Advisory Business" also includes "turn key asset
management programs."
"Employee" has the meaning set forth in the preamble to
this Agreement.
"Expiration Date" has the meaning set forth in Section 4.
"Inventions" means inventions, discoveries, trade
secrets, products, processes, devices, methods, designs,
formulas, techniques, programs, computer software as well as
improvements thereof, in each case whether or not patentable,
that are (a) based on or comprising Proprietary Information, (b)
made or conceived by Employee, whether or not during the hours of
his engagement with the Company or with the use or assistance of
the Company's facilities, materials or personnel, either solely
or jointly with others, (c) related to or arising out of
Employee's employment by the Company, and (d) during the term of
this Agreement or any extension hereof. Notwithstanding the
foregoing, "Inventions" does not include inventions of Employee
that Employee establishes, by competent proof, are neither
derived from or made in connection with Proprietary Information
nor developed for the Company.
"Participate In" means directly or indirectly,
individually or with or through any other person or entity, own,
manage, operate, control, lend money to or participate in the
ownership, management, operation or control of, or be connected
to as a director, officer, employee, partner, consultant, agent,
independent contractor or otherwise, or acquiesce in the use of
his name in. Notwithstanding the foregoing, Employee will not be
deemed to Participate In a business merely because he owns 5% or
less of the outstanding common stock of a corporation if, at the
time of his acquisition thereof, such stock is listed on a
national securities exchange, is reported on Nasdaq, or is
regularly traded in the over-the-counter market by a member of a
national securities exchange.
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"PMCI" has the meaning set forth in the
recitals to this Agreement.
"Proprietary Information" means information
and materials disclosed to or known or developed by Employee
about the Company's plans, strategies, prospects, products,
processes and services, including information and materials
relating to the Company's research, development, inventions,
purchasing, accounting, engineering, marketing, merchandising and
selling, but excluding information that Employee establishes, by
competent proof, (i) was known, other than under an obligation of
confidentiality, to Employee prior to his engagement by the
Company; (ii) has passed into the public domain prior to or after
its development by or for the Company other than through acts or
omissions attributable to Employee; or (iii) was subsequently
obtained other than under an obligation of confidentiality from a
third party not acquiring the information under an obligation of
confidentiality from the disclosing party.
2. Employment; Capacity; Duties; Reporting Structure;
Location. The Company will employ Employee as its President or in
such other capacity as the Company determines. During his
employment by the Company, Employee will perform the duties and
bear the responsibilities commensurate with his position and will
serve the Company faithfully and to the best of his ability.
Employee will devote his entire working time, attention and
energy to the business of the Company. Employee will not at any
time discredit the Company or any of its products or services.
Except for his involvement in personal investments, as long as
such involvement does not require any significant services on his
part, Employee will not engage in any other business activity
that requires significant personal services by Employee or that,
in the Company's judgment, may conflict with the proper
performance of Employee's duties under this Agreement. Employee
will report directly to the President of PMCI, currently Mr.
Xxxxxxx Xxxxxxxx. Employee initially will be based at the
Company's facilities in Denver, Colorado, where he will move
promptly after the date of this Agreement if he has not already
done so.
3. Base Salary; Bonuses; Benefits; Equity
Incentives: Sick Leave;
Vacation; Expenses.
(a) As compensation for all services provided
by Employee, the Company will pay Employee a salary of $240,000
per year ("Base Salary"), prorated for any portion of a year, for
each year during the term of this Agreement, payable in arrears
in the same manner as the Company customarily pays the salaries
of its employees or as the parties hereto may otherwise agree. In
the event the Board of Directors of PMCI institutes
across-the-board or tiered salary reductions for employees of
PMCI and its subsidiaries, Employee agrees that his Base Salary
will be subject to such salary reductions, provided however that
such reductions will not exceed a total of 10% of his Base Salary.
(b) Employee will be eligible for an annual
bonus of up to $50,000, based upon criteria to be mutually agreed
upon by Employee and PMCI.
(c) In addition to Base Salary, the Company
will provide Employee with the benefits of such insurance plans,
hospitalization plans, pension or profit sharing plans and other
employee fringe benefit plans as are customarily provided to
employees of the
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Company and for which Employee is eligible under the
terms of such plans. Nothing in this Agreement requires the
Company to adopt or maintain any such plan. During Employee's
employment by the Company, Employee will be entitled to four
weeks of paid vacation. If Employee does not use all of such
vacation time during a given year, then all of such unused time
up to a maximum of 40 hours may be carried over to the following
year, and any accumulated but unused vacation time in excess of
such 40 hours will be forfeited.
(d) In addition to the options to purchase up
to 250,000 shares of PMCI common stock granted to Employee by
PMCI, the Company may also award or grant Employee such stock
options and other equity incentives as are approved by the
Company in its sole discretion. Nothing in this Agreement
requires the Company to establish an equity incentive program or
confer on Employee any right to receive any stock option or other
equity incentive not awarded on or before the date hereof.
(e) The Company will reimburse Employee for all
reasonable out-of-pocket expenses incurred by Employee at the
request of the Company in the performance of his duties under
this Agreement and such other expenses as may be approved by the
Company in accordance with the Company's reimbursement policies
as in effect from time to time, in each case upon presentation to
the Company of an itemized accounting of such expenses with
reasonable supporting data.
(f) On the one-year anniversary of the date of
this Agreement, the Employee's salary will be reviewed with
respect to the one-year period then ended and, as appropriate,
his salary may be adjusted effective as of such date and his
salary will be reviewed annually thereafter during the term of
this Agreement or any renewal term hereof. Except as provided in
Section 3(a) above, for the salary review on the one-year
anniversary of the date of this Agreement Employee's salary will
not be subject to reduction without Employee's consent.
4. Term. Subject to Section 10(j), this Agreement will
become effective on the closing date of the Acquisition and,
unless earlier terminated in accordance with Section 5, will
expire two years from the date hereof (the "Expiration Date"). If
this Agreement expires or is terminated, this Agreement will
forthwith become void and there will be no liability or
obligation on the part of the parties hereto, except as otherwise
provided herein and except that the provisions of this Section 4
and Sections 6, 7, 8, 9 and 10 will remain in full force and
effect and survive any termination or expiration of this
Agreement.
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5. Termination.
(a) In the event of the death of the Employee,
except with respect to any benefits that have accrued and have
not been paid to the Employee under this Agreement, the
provisions of this Agreement will terminate immediately. However,
the Employee's estate will have the right to receive compensation
due to the Employee as of and to the date of his death and,
furthermore, to receive an additional amount equal to one-twelfth
(1/12) of the Employee's annual compensation then in effect as
specified in Section 3(a).
(b) If the Employee is prevented by illness,
accident, or other incapacity from properly performing his duties
under this Agreement (and, if required by the Company, upon the
furnishing of evidence satisfactory to the Company of such
disability), the Company will, during the continuance of his
disability, but only for the remaining term of this Agreement,
pay the Employee his compensation payable under the provisions of
Section 3 (other than the bonus provided for in Section 3(b) and
less the amount of any benefits paid to the Employee under any
disability insurance provided by the Company) and continue to
provide the Employee all other benefits provided under this
Agreement. As used herein, the term "disability" means the
complete and total inability of the Employee, due to illness,
physical or comprehensive mental impairment to substantially
perform all of his duties as described in this Agreement for a
consecutive period of 30 days or more.
(c) The Company may terminate this Agreement at any time
for Cause by giving written notice of termination to Employee.
For purposes of this Agreement, "Cause" means any one or more of
the following: (i) a breach of this Agreement, which breach
either (A) is not cured within 30 days after notice from the
Company specifying the action which constitutes the breach and
demanding its discontinuance, or (B) is cured and the breach
recurs during or after such 30-day period, (ii) the Employee's
(A) exhibition of willful disobedience to, or repeated failure to
perform, reasonable directions of the Company's Board of
Directors or PMCI's President, (B) commission of gross
malfeasance in the performance of his duties under this Agreement
or acts resulting in an indictment charging the Employee with the
commission of a felony; engaging in fraud, misappropriation or
embezzlement; (C) disclosure of confidential information in
violation of this Agreement; (D) willfully engaging in conduct
materially injurious to the Company; or (E) breach or threatened
breach by Employee of any provision of Sections 6, 7 or 8. A
material failure to perform his duties hereunder that results
from the disability of the Employee will not be considered Cause
for purposes of his termination. If Employee is terminated for
Cause, then Employee's right to receive Base Salary and benefits
will terminate as of the date of such notice and Employee will
return to the Company any and all stock options or other equity
interests that have been granted to Employee during the term of
this Agreement.
(d) The Company may terminate this Agreement at
any time after the one-year anniversary of the date of this
Agreement by giving six months' prior written notice of
termination to Employee. In that event Employee's right to
receive Base Salary and benefits will terminate as of the date of
termination.
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6. Non-Disclosure of Information.
(a) Except as specifically permitted by the
Company in writing and as required for Employee to perform his
services and duties hereunder, during the period beginning on the
date of this Agreement and ending on the date that is two years
after the expiration or termination of this Agreement (the
"Non-Disclosure Period") Employee will not disclose any
Proprietary Information to any person or entity for any purpose
or use or permit the use of any Proprietary Information. In
addition, during the Non-Disclosure Period Employee will not
undertake on behalf of any other person or entity any commercial
project, employment or consultancy that would result in use or
disclosure of Proprietary Information unless the Company has
consented in writing to such undertaking, employment or
consultancy. The Company may require that Employee and any person
or entity proposing to engage Employee in such a capacity provide
appropriate written assurances regarding the avoidance of any
such conflict.
(b) Upon the termination or expiration of this
Agreement, Employee will deliver to the Company or with the
Company's permission cause to be destroyed all notes, letters,
prints, records, forms, contracts, studies, reports, appraisals,
financial data, lists of names or other customer data, and any
other articles or papers, software, computer tapes and materials
that have come into his possession by reason of his engagement by
the Company, whether or not prepared by him, and he will not
retain any memoranda, summaries, or copies of any of those items.
(c) Employee acknowledges that Proprietary
Information of the Company is a unique and valuable asset of the
Company, the loss or unauthorized disclosure or use of which
would cause the Company irreparable harm.
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7. Inventions.
(a) Employee hereby assigns and agrees to
assign to the Company, or to any person or entity designated by
the Company, without royalty or other consideration to Employee
therefor other than the compensation set forth in this Agreement,
all of his right, title and interest in and to all (i)
Inventions, (ii) applications for United States of America and
foreign letters patent, (iii) United States of America and
foreign letters patent granted upon Inventions, and (iv) material
related to any of the foregoing subject to copyright. Employee
further acknowledges that all copyrightable materials developed
or produced by Employee within the scope of his engagement by the
Company constitute works made for hire. Notwithstanding anything
to the contrary in this Section 7(a), Employee's obligations
under this Section 7(a) will only apply to the extent the items
set forth in clauses (i) through (iv) hereof relate to or arise
out of Employee's employment by the Company.
(b) Employee will communicate promptly and
disclose to the Company, in such form as the Company may
reasonably request, all information, details and data pertaining
to any of the items described in Section 7(a).
(c) At the request of the Company, Employee
will do all acts necessary or appropriate to secure for the
Company the full benefits of each item described in Section 7(a),
and otherwise to carry into full force and effect the assignment
contained in Section 7(a). Such acts may include giving testimony
in support of Employee's inventorship and promptly executing and
delivering to the Company such papers, instruments and documents,
without expense to Employee, as may be appropriate in the
Company's opinion to apply for, secure, maintain, reissue, extend
or defend the Company's worldwide rights in any item described in
Section 7(a).
8. Covenants Not to Compete or Interfere.
(a) In view of the unique and valuable services
that Employee has been engaged to provide to the Company and
Employee's current and future knowledge of the Company's
Proprietary Information, during the period beginning on the date
of the closing of the Acquisition and ending on the earlier of
(i) the two-year anniversary of the date on which Employee ceases
to be employed by the Company and (ii) the two-year anniversary
of the payment by PMCI of the Final Purchase Price Adjustment
pursuant to Section 2.3(d) of the Stock Purchase Agreement (such
period, the "Non-Compete Period"), Employee will not Participate
In any Competitive Advisory Business or any other business in
which the Company is engaged, or has taken material steps to be
engaged, at the time of such termination or expiration.
Notwithstanding the foregoing, Employee will not be deemed to
Participate In a business merely because he owns 5% or less of
the outstanding stock of a corporation (measured in voting power
or equity) if, at the time of his acquisition thereof, such stock
is listed on a national securities exchange, is reported on
Nasdaq, or is regularly traded in the over-the-counter market by
a member of a national securities exchange.
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(b) During the Non-Compete Period, Employee
will not (i) directly or indirectly cause, or attempt to cause,
to leave the employ of the Company any employee of the Company
that is an employee of the Company at any time during the period
beginning six months before the date of this Agreement and ending
at the end of the Non-Compete Period; (ii) directly or indirectly
solicit any customer of the Company as to which Employee obtained
knowledge during his affiliation with the Company as a member of
the leadership team of the Company or with any affiliate of the
Company; (iii) knowingly or recklessly interfere or attempt to
interfere with any transaction in which the Company was involved
during the term of this Agreement; or (iv) in any other way
knowingly or recklessly interfere with the relationship between
the Company and any of its employees, customers or suppliers.
(c) If any provision of this Section 8 is held
to be invalid, illegal or unenforceable in any
jurisdiction by any court of competent jurisdiction, then (i)
such invalidity, illegality or unenforceability will not affect
such provision with respect to any other jurisdiction, (ii) such
invalidity, illegality or unenforceability will not affect any
other provision of this Agreement with respect to such
jurisdiction, and (iii) such court may modify such provision to
make it valid, legal, and enforceable in such jurisdiction, and
such provision will thereafter be enforced in its modified form
in such jurisdiction.
9. Injunctive Relief. Employee acknowledges that the
breach or threatened breach by Employee of any of the provisions
of Sections 6, 7 or 8 would cause the Company irreparable harm.
Upon the breach or threatened breach of any provision of Sections
6, 7 or 8, the Company will be entitled to an injunction, without
bond, restraining Employee from committing such breach. This
right will not be construed to limit the Company's ability to
obtain any other remedies available to it for such breach or
threatened breach, including the recovery of damages.
10. General Provisions.
(a) Remedies. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a
party will be deemed cumulative with and not exclusive of any
other remedy conferred hereby, or by law or equity upon such
party, and the exercise by a party of any one remedy will not
preclude the exercise of any other remedy. No failure or delay on
the part of any party hereto in the exercise of any right
hereunder will impair such right or be construed to be a waiver
of, or acquiescence in, any breach of any representation,
warranty or agreement herein, nor will any single or partial
exercise of any such right preclude other or further exercise
thereof or of any other right.
(b) Governing Law. This Agreement, its
interpretation, and the legal relations between the parties
hereto will be governed by and construed in accordance with the
laws of the State of Colorado, without regard to the conflict of
laws rules thereof.
(c) Severability. If any provision of this
Agreement is held to be invalid, illegal or unenforceable in any
jurisdiction by any court of competent jurisdiction, then (i)
such invalidity, illegality or unenforceability will not affect
such provision with respect to any other jurisdiction, (ii) such
invalidity, illegality or unenforceability will not affect any
other
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provision of this Agreement with respect to such
jurisdiction, and (iii) such court may modify such provision to
make it valid, legal, and enforceable in such jurisdiction, and
such provision will thereafter be enforced in its modified form
in such jurisdiction if the parties hereto agree that such
modification will achieve, to the extent possible, the economic,
business and other purposes of such invalid, illegal or
unenforceable provision.
(d) Notices. All notices and other
communications hereunder must be in writing and will be deemed
given if delivered personally or by commercial delivery service,
or mailed by registered or certified mail, return receipt
requested, or sent via facsimile, with confirmation of receipt,
to the parties hereto at the following address or at such other
address for a party hereto as specified by notice hereunder:
(i) if to the Company, to:
XXXX Investment Services, Inc.
000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. XxxXxxxxx
Facsimile No.: 000-000-0000
with copies to:
PMC International, Inc.
000 00xx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile No: 000-000-0000
and
Holme Xxxxxxx & Xxxx LLP
0000 Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile No.: 303-866-0200
(ii) If to Employee:
Xxxxx X. MacKillop793 Xxx Xxxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
(e) Assignment; Binding Effect and Benefit.
Except as otherwise provided in this Section 10(e), neither party
hereto may assign its rights or delegate its obligations under
this Agreement without the prior written consent of the other
party. The Company may assign its rights and delegate its
obligations under this Agreement to any of its affiliates or to
any
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person or entity that acquires all or substantially all
of the business of the Company whether through merger,
purchase of assets, or otherwise. This Agreement will be
binding upon and inure to the benefit of the parties
hereto and their respective legal representatives,
heirs, and permitted successors and assigns.
(f) Entire Agreement. This Agreement
constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof and supersedes all prior
agreements and understandings, whether oral or written, among the
parties hereto with respect to the subject matter hereof
(g) Amendment. This Agreement may not be
amended except by an instrument in writing signed on behalf of
each of the parties hereto.
(h) Headings; "Including". When a reference is
made in this Agreement to a section, such reference is to a
section of this Agreement unless otherwise indicated. The words
"include," "includes" and "including" when used herein will be
deemed in each case to be followed by the words "without
limitation." The section headings contained in this Agreement are
for reference purposes only and will not affect in any way the
meaning or interpretation of this Agreement. Whenever the context
may require, each pronoun includes the corresponding masculine,
feminine and neuter forms.
(i) Representation by Counsel. The parties
hereto acknowledge that they have had the opportunity to consult
with counsel and have done so to the extent they deemed
appropriate during the negotiation, preparation and execution of
this Agreement.
(j) Counterparts; Effective Date. This
Agreement may be executed in counterparts, each of which shall be
deemed to be an original, and all of which together shall be
deemed to be one and the same instrument. This Agreement will
become effective when one or more counterparts have been signed
by each of the parties hereto and delivered to the other parties
hereto, it being understood that all parties hereto need not sign
the same counterpart.
(k) Enforcement Costs. In the event of any proceeding to
enforce this Agreement, the prevailing party will be entitled to
receive from the other party all reasonable costs and expenses,
including the reasonable fees of attorneys, accountants and other
experts, incurred by the prevailing party in investigating and
prosecuting (or defending) such action at trial or upon any
appeal.
* * *
* *
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IN WITNESS WHEREOF, the parties hereto have duly
executed this Employment Agreement as of the date first written
above.
THE COMPANY
XXXX INVESTMENT SERVICES, INC.
By: /s/
Its:
EMPLOYEE
/s/
Xxxxx X. XxxXxxxxx
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