EXHIBIT 10.3
NONCOMPETITION AND NONSOLICITATION AGREEMENT
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THIS NONCOMPETITION AND NONSOLICITATION AGREEMENT (the "Agreement") between
X.X. Xxxx & Company, Inc. ("Xxxx"), a Delaware corporation, and Xxxx X. Xxxxxxx
("Employee"), is dated this _________ day of September, 1999.
WITNESSETH:
WHEREAS, Employee has been and is presently employed by Xxxx; and
WHEREAS, Xxxx proposes to effect a recapitalization of its business, in
light of which both Xxxx and Employee have an interest in entering into an
agreement reflecting their respective obligations to one another in the event of
termination of their employment relationship during the Term (defined below),
and the other matters set forth below.
NOW, THEREFORE, for and in consideration of the foregoing premises and for
other good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, Xxxx and Employee hereby agree as follows:
1. Term; Condition Precedent.
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1.1 The Term. The term of this Agreement shall be the thirty-month
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period that commences on the date of closing of a firm commitment underwritten
public offering of shares of common stock of Xxxx in which the aggregate gross
proceeds to Xxxx from such offering shall be approximately $10,000,000 to
$14,000,000 (the "Term"), and which shall have occurred on or before (an "IPO
Closing").
1.2 The Condition Precedent. The obligations of Xxxx and Employee
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under this Agreement shall be subject to an IPO Closing. In the event that an
IPO Closing does not occur on or before, this Agreement shall be null and void,
and shall have no further force or effect.
2. Definition of "Xxxx".
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For purposes of subsection 4.2, subsection 4.3 and subsection 4.4 hereof,
"Xxxx" shall include any subsidiaries of Xxxx (whether existing currently or in
the future), any parent corporation of Xxxx and any business ventures in which
Xxxx, its subsidiaries or its parent corporation may participate (whether
existing currently or in the future) (Xxxx, any direct or
indirect subsidiary thereof and any parent corporation thereof, may hereinafter
be referred to as a "Xxxx Group Entity").
3. Termination of Employment Relationship; Effect of Termination of
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Employment Relationship; Notice of Termination; Termination Payments;
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Cause.
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3.1 Termination of Employment Relationship. Pursuant to this
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Agreement, the employment relationship between Xxxx and Employee may be
terminated by either party.
3.1.1 Termination by Xxxx. With or without Cause (as defined
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below), Xxxx may terminate the employment of Employee at any time during the
Term upon giving Notice of Termination (as defined below).
3.1.2 Termination by Employee. Employee may Employee's
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employment at any time, for any reason, upon giving Notice of Termination.
3.1.3 Automatic Termination. This Agreement and Employee's
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employment hereunder shall terminate automatically upon the death or total
disability of Employee. The term "total disability" as used herein shall mean
Employee's inability to perform the duties normally performed in Employee's
employment with Xxxx for a period or periods aggregating 90 calendar days in any
12-month period as a result of physical or mental illness, loss of legal
capacity or any other cause beyond Employee's control, unless Employee is
granted a leave of absence by the Board of Directors of Xxxx. Termination
hereunder shall be deemed to be effective (a) at the end of the calendar month
in which Employee's death occurs or (b) immediately upon a determination by the
Board of Directors of Xxxx of Employee's total disability, as defined above.
3.2 Effect of Termination of Employment Relationship. The provisions
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of Section 3 hereof shall survive the termination of Employee's employment for
any and all of the period from Employee's employment termination date until the
end of the Term, except that (a) the provisions of subsections 4.2 and 4.3 shall
not survive Xxxx'x termination of Employee's employment without Cause, as
defined below, and (b) the provisions of subsection 4.5 shall survive the
termination of Employee's employment and the end of the Term. The provisions of
Section 8 hereof shall survive the termination of Employee's employment and the
end of the Term.
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3.3 Notice of Termination. The term "Notice of Termination" shall
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mean at least 14 days' written notice of termination of Employee's employment,
during which period Employee's employment and performance of services will
continue; provided, however, that Xxxx may, upon notice to Employee and without
reducing Employee's compensation during such period, excuse Employee from any or
all of Employee's duties during such period. The effective date of the
termination of Employee's employment hereunder shall be the date on which such
14 day period expires.
3.4 Termination Payments. In the event of termination of the
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employment of Employee, all compensation and benefits set forth in this
Agreement shall terminate except as specifically provided in this Subsection
3.4.
3.4.1 Termination by Xxxx. If Xxxx terminates Employee's
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employment without Cause during the Term, Employee shall be entitled to receive
(a) termination payments equal to the lesser of (i) three months' annual base
salary, or (ii) the annual base salary Employee would have received if
Employee's employment hereunder had continued until the end of the term, and (b)
any unpaid annual base salary which has accrued for services already performed
as of the date termination of Employee' employment becomes effective. If
Employee is terminated by Xxxx for Cause, Employee shall not be entitled to
receive any of the foregoing benefits, other than those set forth in clause (b)
above.
3.4.2 Termination by Employee. In the case of the termination of
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Employee's employment by Employee, Employee shall not be entitled to any
payments hereunder, other than those set forth in clause (b) of subsection
3.4.1.
3.4.3 Termination after the End of the Term. In the case of a
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termination of Employee's employment after the end of the Term, Employee shall
not be entitled to receive any payments hereunder, other than those set forth in
clause (b) of subsection 3.4.1.
3.4.4 Payment Schedule. All payments under this subsection 3.4
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shall be made to Employee at the same intervals as payments of salary were made
to Employee immediately prior to termination.
3.5 Cause. Wherever reference is made in this Agreement to
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termination being with or without Cause, "Cause" shall include, without
limitation, the occurrence of one or more of the following events:
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(a) Failure or refusal to carry out the lawful duties normally performed
in Employee's position with Xxxx or any lawful directions of the Board of
Directors of Xxxx;
(b) Except by reason of death or disability, failure by Employee in any
material respect to devote Employee's full business attention and time to the
business and affairs of Xxxx or to use Employee's reasonable best efforts to
perform his or her professional or job responsibilities in a professional
manner;
(c) The rendering of any business, commercial or professional services
to any other firm or business without the prior written consent of Xxxx;
(d) Temporary loss (for a period of at least 90 days) or permanent loss of
Employee's license or other such qualification or authorization to do business,
or Employee's causing Xxxx or any other Xxxx Group Entity (as defined in Section
2) to so lose (or to be declined in an application or notice to acquire) a
license or such other qualification or authorization to do business that is
material to Xxxx or any other Xxxx Group Entity, provided that whether a license
or other qualification or authorization to do business is material to Xxxx shall
be determined by the Board of Directors of Xxxx and such determination shall be
binding on the parties hereto;
(e) Conviction of or entry of a plea of nolo contendere by Employee in a
proceeding alleging violation by Employee of a state or federal criminal law
involving the commission of a crime against Xxxx or any other Xxxx Group Entity,
or a felony;
(f) Current use by Employee of illegal substances; deception, fraud,
misrepresentation or dishonesty by Employee; any incident materially
compromising Employee's reputation or ability to represent Xxxx with the public;
any act or omission by Employee which substantially impairs the business, good
will or reputation of Xxxx or any other Xxxx Group Entity; or any other
misconduct; or
(g) Any other material violation of any provision of this Agreement.
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4. Applicability and Scope of Noncompetition, Nonsolicitation,
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Nondisparagement, and Nondisclosure and Return of Materials
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Provisions; Equitable Relief; Effect of Violation.
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4.1. Applicability. If Employee's employment with Xxxx terminates
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for any reason during the Term, Employee's obligations under this Section 4
shall continue in full force and effect until the end of the Term, except that
in the event of Xxxx'x termination of Employee's employment without Cause, as
defined above, the Employee's obligations under subsections 4.2 and 4.3 shall
terminate.
4.2. Scope of Noncompetition. Employee agrees that Employee will
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not, directly or indirectly, during Employee's employment and, if Employee's
employment terminates before the end of the Term, the remaining period of time
until the end of the Term, be employed by, consult with or otherwise perform
services for, own, manage, operate, join, control or participate in the
ownership, management, operation or control of or be connected with, in any
manner, any organization which, by reason of its activities as a broker, dealer,
investment advisor, investment company, underwriter or related business, is
subject to regulation by the Securities and Exchange Commission and which
conducts business in any state or province in which Xxxx conducts business (a
"Competitor"). Employee shall be deemed to be related to or connected with a
Competitor if such Competitor is (a) a partnership in which Employee is a
general or limited partner, member or employee, (b) a corporation, limited
liability company or association of which Employee s a shareholder, member,
officer, manager, employee or director, or (c) a partnership, corporation,
limited liability company or association of which Employee is a consultant or
agent; provided, however, that nothing herein shall prevent the purchase or
ownership by Employee of shares which constitute less than five percent of the
outstanding equity securities of a publicly or privately held corporation, if
Employee has no other relationship with such corporation.
4.3 Scope of Nonsolicitation. Employee shall not directly or
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indirectly solicit, influence or entice, or attempt to solicit, influence or
entice, any employee or consultant of Xxxx to cease his or her relationship with
Xxxx or solicit, influence, entice or in any way divert any client, customer,
distributor, partner, joint venturer, supplier or service provider of Xxxx to do
business or in any way become associated with any Competitor. This subsection
4.3 shall apply during the time period and geographical area described in
subsection 4.2 hereof.
4.4. Nondisparagement. Employee agrees that Employee will not at any
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time before the end of the Term make any statements that disparage Xxxx, its
directors, officers,
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employees and representatives or that damage the reputation or goodwill of Xxxx.
4.5. Nondisclosure and Return of Materials. During the term of
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Employee's employment by Xxxx and following termination of such employment,
Employee will not disclose (except as required by Employee's duties to Xxxx),
any concept, design, process, technology, trade secret, customer list, plan,
embodiment, or invention, any other intellectual property or any other
confidential information, whether patentable or not, of any Xxxx Group Entity of
which Employee becomes informed or aware during Employee's employment, whether
or not developed by Employee. In the event of the termination of Employee's
employment with Xxxx, Employee will return all documents, data and other
materials of whatever nature, including, without limitation, drawings,
specifications, research, reports, embodiments, software and manuals to Xxxx
which pertain to Employee's employment with Xxxx or to any intellectual property
and shall not retain or cause or allow any third party to retain photocopies or
other reproductions of the foregoing.
4.6. Equitable Relief. Employee acknowledges that the provisions of
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this Section 4 are essential to Xxxx, that Xxxx would not enter into this
Agreement if it did not include this Section 4 and that damages sustained by
Xxxx as a result of a breach of this Section 4 cannot be adequately remedied by
damages, and Employee agrees that Xxxx, notwithstanding any other provision of
this Agreement, including, without limitation, Section 8 hereof, and in addition
to any other remedy it may have under this Agreement or at law, shall be
entitled to injunctive and other equitable relief to prevent or curtail any
breach of any provision of this Agreement, including, without limitation, this
Section 4.
4.7. Effect of Violation. Employee and Xxxx acknowledge and agree
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that additional consideration has been given for Employee entering into this
Section 4, such additional consideration including, without limitation, certain
provisions for termination payments pursuant to Section 3 of this Agreement.
Violation by Employee of this Section 4 shall relieve Xxxx of any obligation it
may have to make such termination payments, but shall not relieve Employee of
Employee's obligations under this Section 4.
5. Form of Notice.
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All notices given hereunder shall be given in writing, shall specifically
refer to this Agreement and shall be personally delivered or sent by telecopy or
other electronic facsimile transmission or by registered or certified mail,
return receipt requested, at the address set forth below or at such other
address as may hereafter be designated by notice given in compliance with the
terms hereof:
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If to Employee: Xxxx X. Xxxxxxx
If to Xxxx: X.X. Xxxx & Company, Inc.
Attn: General Counsel
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
If notice is mailed, such notice shall be effective upon mailing, or if
notice is personally delivered or sent by telecopy or other electronic facsimile
transmission, it shall be effective upon receipt.
6. Assignment.
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This Agreement is personal to Employee and shall not be assignable by
Employee. Xxxx may assign its rights hereunder to (a) any corporation resulting
from any merger, consolidation or other reorganization to which Xxxx is a party,
(b) any parent corporation of Xxxx whether existing currently or in the future,
or (c) any corporation, partnership, association or other person to which Xxxx
may transfer all or substantially all of the assets and business of Xxxx
existing at such time. All of the terms and provisions of this Agreement shall
be binding upon, shall inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns.
7. Waivers.
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No delay or failure by any party hereto in exercising, protecting or
enforcing any of his, her or its rights, titles, interests or remedies
hereunder, and no course of dealing or performance with respect thereto, shall
constitute a waiver thereof. The express waiver by a party hereto of any right,
title, interest or remedy in a particular instance or circumstance shall not
constitute a waiver thereof in any other instance or circumstance. All rights
and remedies shall be cumulative and not exclusive of any other rights or
remedies.
8. Arbitration.
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Subject to the provisions of subsection 4.6 hereof, any controversies or
claims arising out of or relating to this Agreement shall be fully and finally
settled by final and binding arbitration in accordance with the rules,
constitutions, or bylaws of the National Association
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of Securities Dealers, Inc., as may be amended from time to time. The prevailing
party shall be entitled to costs, expenses and reasonable attorneys' fees.
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The provisions of this Section 8 continue in effect
for any and all covered controversies or claims, whether before or after the end
of the Term.
9. Amendments in Writing.
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No amendment, modification, waiver, termination or discharge of any
provision of this Agreement, nor consent to any departure therefrom by either
party hereto, shall in any event be effective unless the same shall be in
writing, specifically identifying this Agreement and the provision intended to
be amended, modified, waived, terminated or discharged and signed by Xxxx and
Employee, and each such amendment, modification, waiver, termination or
discharge shall be effective only in the specific instance and for the specific
purpose for which given. No provision of this Agreement shall be varied,
contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by Xxxx and Employee.
10. Applicable Law.
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This Agreement shall in all respects, including all matters of
construction, validity and performance, be governed by, and construed and
enforced in accordance with, the laws of the State of Colorado, without regard
to any rules governing conflicts of laws.
11. Severability.
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If any provision of this Agreement shall be held invalid, illegal or
unenforceable in any jurisdiction, for any reason, including, without
limitation, the duration of such provision, its geographical scope or the extent
of the activities prohibited or required by it, then, to the full extent
permitted by law (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intent of the parties hereto as nearly as may be possible, (b) such
invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of any other provision hereof, and (c) any court or
arbitrator having jurisdiction thereover shall have the power to reform such
provision to the extent necessary for such provision to be enforceable under
applicable law.
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12. Headings.
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All headings used herein are for convenience only and shall not in any way
affect the construction of, or be taken into consideration in interpreting, this
Agreement.
13. Counterparts.
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This Agreement, and any amendment or modification entered into pursuant to
Section 8 hereof, may be executed in any number of counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute one and the same
instrument.
14. Integration.
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Except as set forth in the following sentence, this Agreement on and as of
the date of the commencement of the Term shall constitute the entire agreement
between Xxxx and Employee with respect to the subject matter hereof and all oral
or written communications, understandings or agreements between Xxxx and
Employee prior or contemporaneous to the commencement of the Term with respect
to such subject matter shall be hereby, as of the commencement of the Term,
superseded and nullified in their entireties. Notwithstanding the foregoing
sentence, this Agreement supplements and does not supersede any previously
executed, written employment agreement between Xxxx and Employee that may be
currently in effect; to the extent of any inconsistency or conflict between the
terms of this Agreement and the terms of any such previously executed employment
agreement, the terms of this Agreement shall, as of the commencement of the
Term, control and govern.
IN WITNESS WHEREOF, the parties have executed and entered into this
Agreement on the date set forth above.
EMPLOYEE:
_________________________________________
Xxxx X. Xxxxxxx
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X.X. XXXX & COMPANY, INC.
By: _________________________________________
Its: _________________________________________
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