Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the ____ day of _______________, 2001 (the
"Effective Date"), between:
XXXXXXXX ADVISORS, INC.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000-0000
(the "Company")
and
XXXX X. XXXXXXXX
__________________
__________________
(the "Employee")
WHEREAS, the Company desires to retain the services of the Employee, and
the Employee desires to be employed by the Company in accordance with the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements set
forth herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Employment and Duties.
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(a) The Company hereby employs the Employee and the Employee
hereby accepts such employment by the Company, upon the terms and conditions
contained in this Agreement. The Employee shall have such duties and
responsibilities as may be from time to time reasonably designated by the
Company's Board of Directors. The Employee shall perform his duties in a
conscientious, reasonable and competent manner, shall devote his best efforts,
skill and abilities to promote the Company's interests, and shall devote his
full time and attention to the performance of his duties. The Employee shall
initially serve in the capacity of Chairman of the Board and Chief Executive
Officer and President of the Company and as Chief Investment Officer and
Portfolio Manager for the Company's mutual funds and shall at all times
discharge his duties as an officer and employee of the Company subject to the
direction of the Company's Board of Directors (the "Board").
(b) Until such time as Employee's duties and
responsibilities are changed in writing by the Board of Directors of the
Company, Employee's responsibilities shall include without limitation:
(i) Managing or overseeing the management of the
Company's mutual funds;
(ii) Attracting mutual fund accounts, attracting or
managing accounts for high net worth individuals or retirement accounts or
otherwise generating revenue; and
(iii) Supervising all Company officers and employees
instructed to report directly to him.
2. Term.
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The initial term (the "Initial Term") of this Agreement shall
commence on the Effective Date and shall continue until the fifth anniversary of
the Effective Date (the "Initial Expiration Date"), unless earlier terminated as
provided herein. On the Initial Expiration Date and each anniversary of the
Initial Expiration Date, the term of this Agreement automatically shall be
extended for an additional one year term (the "Extended Term") unless either
party hereto shall have provided written notice to the other party hereto of
its, or his, intent not to extend this Agreement not less than sixty (60) days
prior to the end of the Initial Term or the Extended Term, as the case may be.
For purposes of this Agreement, "Term" means the Initial Term and, if so
extended, the Extended Term.
3. Compensation.
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(a) Base Salary. Initially, the Company shall pay the
Employee an annual base salary of $180,000. The Employee shall be eligible to
receive an increase in salary at the start of each calendar year starting
January 1, 2002. This increase, if any, shall be in an amount as decided by the
Board in its sole discretion.
(b) Bonus Compensation. The Board shall grant to Employee an
annual bonus equal to 10% of the pre-tax profit of the Company, as computed for
financial reporting purposes in accordance with generally accepted accounting
principles ("Annual Bonus"). The Annual Bonus shall be payable within 30 days
after the Company's accountants have completed their audit of the Company's
financial statements.
(c) Employee Benefits. The Employee shall be eligible for
all benefits on the same basis as otherwise generally available to other
similarly situated employees. The Employee will be eligible to participate
in any 401(k) plan or profit sharing plan of the Company as in effect from time
to time or such other benefit plans as may be approved by the Board, subject to
the Employee's satisfaction of any applicable eligibility requirements, for so
long as such plans are in effect. In addition, the Employee shall be eligible
to participate in any supplemental pension, retirement, hospitalization, health
plan, bonus plan, or other employee benefits which the Company offers or which
the Board may, from time to time, make available to similarly situated employees
of the Company.
(d) Other Terms and Benefits. The Company shall pay ____%
of the premiums for life insurance coverage of up to $_________________for the
Employee. The Company shall pay ____% of the premiums for disability insurance
coverage of up to $____________ for the Employee.
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(e) Automobile Allowance. In recognition of the Employee's
need for an automobile for business purposes, the Company will provide the
Employee with an automobile allowance of $1,250 per month, which automobile
allowance shall not preclude Employee from receiving reimbursement for business
travel expenses.
(f) Taxes. The Company shall deduct from any payments or
deemed payments or other income to the Employee taxes required as determined by
the Company to be withheld and paid to any federal, state or local government as
a result of the Employee's employment.
(g) Bonus/Incentive Programs. During the Term, Employee
shall be eligible to participate in any bonus/incentive compensation programs
available to senior Employee officers of the Company as may be adopted by the
Company.
(h) Stock Options. During the Term, Employee shall be
eligible for stock or stock option grants and similar awards under any plans of
the Company or its affiliates adopted by the Board in which executive officers
of the Company are entitled to participate.
(i) Expenses. The Employee shall be reimbursed in full for
all reasonable and necessary expenses incurred during the performance of those
services relating to his employment by the Company in accordance with the
policies established by the Board from time to time.
4. Vacations and Holidays.
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The Employee shall be entitled to receive five weeks annual
vacation with pay during each year of his employment hereunder. Such vacation
may be taken, in Employee's discretion, at such time or times as are not
inconsistent with the reasonable business needs of the Company. Employee shall
not be entitled to any additional compensation in the event that Employee, for
whatever reason, fails to take such vacation during any year. Employee shall
also be entitled to all paid holidays given by the Company to its executives.
5. Confidentiality.
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At all times after termination of employment hereunder for any
reason, the Employee shall not, directly or indirectly, in any fashion, form or
manner, divulge, disclose, furnish, communicate or make accessible to any person
who is not authorized by the Company to receive such information any client or
prospect list, financial data, sales data, advertising or marketing plans,
technological information or any other confidential information of the Company.
All files, records, documents, forms, plans, policy and procedures manuals,
client or prospective client lists, written memoranda and similar materials
relating to the business of the Company or its affiliates whether prepared by
the Employee or otherwise coming into the Employee's possession or knowledge
during the term of this Agreement, shall remain the exclusive property of the
Company or its affiliates.
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6. Termination.
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(a) Cause. Employee shall be terminated for cause if he:
(i) Is convicted of, or enters a plea of nolo
contendere to, a felony (other than a traffic related offense) under any state,
federal or local law or any felony involving the Company. Conviction includes
any final disposition of the charge which does not result in the charges being
completely dismissed or Employee being completely acquitted.
(ii) Materially breaches (A) this Agreement or (B)
the Company's policies and procedures, which breach is not cured, if capable
of cure, after written notice within thirty (30) days of the date such notice is
received by Employee.
(iii) Engages in willful or gross misconduct or
willful or gross negligence in performing his duties, or fraud, misappropriation
or embezzlement.
(b) Termination in the Event of Death or Disability. This
Agreement shall terminate automatically upon the death of the Employee or
termination by the Company on account of disability. In such event, the Company
shall pay to the Employee or the Employee's legal representative, as applicable,
only the salary due to the Employee up to the date of termination as well as the
benefits and reimbursed expenses due to the Employee at the time of death or
disability, including all bonuses earned or accrued as of the date of
termination. Notwithstanding the foregoing, in the event that this Agreement
terminates on account of disability, Employee shall continue to receive salary
and benefits for a period not to exceed three (3) months from the date of such
termination until the date that Employee begins receiving benefits under a plan
or policy of disability insurance. For purposes of this Section 6(b), disability
shall mean physical or mental disability or infirmity that prevents Employee
from performing substantially the duties assigned to him (based upon such
competent medical evidence as shall be presented to the Company by any physician
or group of physicians or other competent medical experts employed by the
Company) for a continuous period of more than 180 days. Employee shall
cooperate fully with the Company in providing all medical information reasonably
requested by such medical experts and shall provide such medical experts with
the medical records of Employee's personal physician which relate to the
disability, provided that such medical experts give adequate assurances of
protecting the confidentiality of such records if requested by Employee. If
reasonably requested by the Company, the Employee will submit to an examination
by a physician designated by the Company, which examination shall be at the
Company's expense.
7. Severance.
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(a) If the Employee is terminated by the Company without
Cause (other than due to death or disability), or the Employee terminates his
employment hereunder for "Good Reason" (as defined below), during the Term of
this Agreement (including any Extended Term), he shall be entitled to receive a
severance payment equal to the greater of
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(i) full base salary and an Allocable Bonus (as defined below) for the remaining
Term, or (ii) one year's full base salary and an Allocable Bonus. The term
"Allocable Bonus" shall mean (x) the average Annual Bonus (annualized with
respect to any partial period bonus) actually paid to the Employee for each year
or partial year of service during the term of his employment, times (y) seventy-
five percent (75.0%). In the case of any partial year for which the Employee is
entitled to receive the Allocable Bonus, such payment shall be prorated for the
actual number of days in such partial year.
For purposes hereof, the term "Good Reason" shall mean
(i) the assignment to the Employee of duties materially inconsistent with the
Employee's position, authority, duties or responsibilities on the date of this
Agreement, or (ii) any action which results in a material diminution of the
position, authority, duties or responsibilities of the Employee on the date of
this Agreement; provided, however, that the Company fails to promptly reverse or
remedy within thirty (30) days any assignment or action described in subsection
(i) or (ii) above, after notice thereof is delivered by the Employee to the
Board. Good Reason shall not exist at any time that the Employee could be
terminated for Cause.
(b) In the event the Employee is terminated for cause or
voluntarily terminates his employment hereunder, other than for Good Reason, no
severance shall be due or payable and salary and benefits shall be payable to
Employee only through the date of such termination.
8. Nonrenewal. Subject to the second paragraph of Section 2 of this
Agreement, notice by the Company to the Employee that the Company will not renew
this Agreement after the expiration of the Initial Term or any Extended Term
shall not be considered a termination without Cause and will not entitle the
Employee to terminate for Good Reason as contemplated herein. In the event of
any such nonrenewal, the Employee shall be entitled to the base salary, benefits
and all bonuses earned or accrued through the expiration date of this Agreement.
9. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Employee and his heirs and personal representatives
and the Company and its successors, assigns and legal representatives. This
Agreement is for the personal services of the Employee. The benefits hereunder
are personal to the Employee and are not assignable or transferable by the
Employee. In the event of any sale, transfer or other disposition of all or
substantially all of the Company's assets or business, whether by merger,
consolidation or otherwise, the Company may assign this Agreement and its rights
hereunder, provided that the assignee assumes all of the obligations of the
Company hereunder, and upon such assignment and assumption, Employee shall have
no right to look to Employer for obligations arising hereunder after the
effective date of such assignment.
10. Indemnification. The Company agrees that it shall indemnify,
defend and hold harmless Employee to the fullest extent permitted by applicable
law from and against any and all liabilities, costs, claims and expenses
including, without limitation, all costs
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and expenses incurred in defense of litigation, including attorneys' fees,
arising out of the employment of Employee hereunder, except to the extent
arising out of or based upon the gross negligence or willful misconduct of
Employee.
11. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given when delivered to, or on the fifth (5th)
day after being deposited in the United States mail, certified mail, return
receipt requested, postage prepaid, to the person at the address first listed
above or to such other person and/or address as may be designated from time to
time in writing.
12. Entire Agreement. This Agreement constitutes the entire
understanding between the Company and the Employee with respect to the subject
matter hereof.
13. Modification and Waiver. No provision of this Agreement may be
amended, modified or waived unless such amendment, modification or waiver shall
be agreed to in writing and signed by the Employee and by a person duly
authorized by the Board. Any waiver by either party of any breach of any of the
terms of this Agreement shall not be considered a waiver of any subsequent
breach.
14. No Assignment of Compensation. No right to or interest in any
compensation or reimbursement payable hereunder shall be assignable or divisible
by the Employee; provided, however, that this provision shall not preclude the
Employee from designating one or more beneficiaries to receive any amount that
may be payable after his death and shall not preclude his executor or
administrator from receiving or assigning any right hereunder to the person or
persons entitled thereto.
15. No Attachments. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge or hypothecation, or
to execution, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.
16. Headings. The heading of sections and subsections hereof are
included solely for convenience of reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
17. Governing Law. This Agreement shall be construed in accordance
with and governed for all purposes by the laws of the State of California.
18. Severability. In the event that any provision of this Agreement
shall be held invalid and unenforceable for any reason whatsoever, such
provision shall be deleted and the remainder of the Agreement shall not be
affected and shall be valid and enforceable to the fullest extent permitted by
law without the deleted provision or provisions.
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19. Counterparts. This Agreement shall become effective only upon
execution hereof by the Company and the Employee. It may be executed in several
counterparts, any one of which shall constitute the agreement between the
parties.
20. Existing Agreements. The Employee represents to the Company that
he is not subject or a party to any employment or consulting agreement,
confidentiality, non-competition covenant or other agreement, covenant or
understanding which might prohibit him from executing this Agreement or limit
his ability to fulfill his responsibilities hereunder.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed all as of the day and year first above written.
COMPANY:
XXXXXXXX ADVISORS, INC.
By:______________________________________
EMPLOYEE:
_________________________________________
XXXX X. XXXXXXXX
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