AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement ("Agreement"), is entered
into as of January 1, 1998, by and between Insignia Financial Group, Inc., a
Delaware corporation with an office at One Insignia Financial Plaza, Greenville,
South Carolina (the "Company"), and Xxxxxx Xxxxxxxx Xxxxxx an individual with an
office at 000 Xxxx Xxxxxx, Xxx Xxxx, X.X. (the "Executive ").
Background
The Company and the Executive have previously entered into an Employment
Agreement, which agreement has been previously amended. The Company desires to
assure itself of the services of the Executive for the additional period
provided in this Agreement, and the Executive is willing to serve in the employ
of the Company for such period upon the terms and conditions provided in this
Agreement.
Statement of Agreement
In consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Employment. The Company hereby agrees to employ the Executive,
and the Executive hereby accepts such employment, in each case upon the terms
and conditions set forth herein, for a period commencing on January 1, 1998 (the
"Commencement Date") and ending on December 31, 2000 or such earlier date as
provided herein (the "Expiration Date") (such period, as it may be so
terminated, being referred to herein as the "Employment Period").
Section 2. Duties and Services.
(a) Offices. During the Employment Period, the Executive shall serve
as Chief Executive Officer of the Company and, at the Company=s request, as
an officer or director of one or more of its subsidiaries. In the
performance of his duties hereunder, the Executive shall report to and
shall be responsible only to the Board of Directors of the Company. The
Executive agrees to his employment as described in this Section 2, and
agrees to devote substantially all of his working time and efforts to the
performance of his duties hereunder. The parties hereto understand and
agree that the Executive has business interest outside of the scope of this
Agreement, including, without limitation, at Metropolitan Asset
Enhancement, L.P. ("MAE"), as a strategic partner at Charterhouse, and as a
director of Northstar Bank. The parties hereto hereby agree that,
notwithstanding any provision of this Agreement to the contrary, (i) the
Executive shall be entitled to devote up to fifteen percent (15%) of his
working time to the performance of duties in connection with MAE, its
general partner, and its subsidiaries, and (ii) the Executive shall not be
entitled to pursue any other business interests outside of the scope of
this Agreement without the prior consent of the Company, which consent
shall not be unreasonably delayed or withheld. The Executive shall be
available to travel as the needs of the business of the Company reasonably
require.
(b) Nomination To The Board of Directors and Committees Thereof. The
Company agrees that the Executive shall be nominated by its Board of
Directors to be elected to such Board of Directors as a Director of the
Company at each meeting of its stockholders at which Directors of the
Company are to be elected for so long as the Executive shall be employed by
the Company. The Company further agrees that, for so long as the Executive
shall be employed by the Company and shall be a Director of the Company, he
shall be elected or appointed, as the case may be, to serve (i) as Chairman
of the Board of Directors of the Company, (ii) on the Executive Committee
of the Board of Directors of the Company as the Chairman thereto, and (iii)
on the Compensation Committee of the Board of Directors as an ex officio
member thereof (collectively, the "Board Positions ").
(c) Location of Office. During the Employment Period, the Executive
shall have an office in both the principal executive offices of the Company
in Greenville, South Carolina, and at the Company's offices in New York
City, New York or, at the Executive's sole option, in only one of such
locations. The Company will provide the Executive with two (2) executive
secretaries acceptable to him, and other support appropriate to his duties
hereunder in the sole discretion of the Executive.
(d) Primary Responsibilities. During the Employment Period, the
Executive shall have primary responsibility for the business of the Company
and its subsidiaries, including, without limitation, the following areas:
(i) Underwriting decisions;
(ii) Securitization decisions;
(iii) Acquisition and disposition decisions;
(iv) Hiring and termination of employees;
(v) Setting executive and other employee compensation;
(vi) Setting the location of the Company=s principal executive
offices at any time and from time to time; and
(vii)Other similar general management decisions affecting the
operations of the Company, in each case subject to the
approval of the Board of Directors of the Company or the
appropriate committee thereof to the extent required by the
laws of the State of Delaware or the By-Laws of the Company.
(e) Consulting. Upon an Influence Change Event (as defined in Section
8(a)(iv)) after or in connection with an Extraordinary Transaction (as
defined in Section 4(d)), an Extraordinary Stock Event (as defined in
Section 8(a)(v)), or a Material Asset Disposition (as defined in Section
4(e)), other than as a result of a Termination For Cause (as defined in
Section 7(a)(iv)), without the prior written consent of Executive, then
Executive can elect in writing to convert this Agreement into a consulting
agreement. Under the terms of the consulting agreement, the Executive shall
consult with respect to the assets and liabilities of the Company as they
existed immediately before the Extraordinary Transaction or the Material
Asset Disposition. Such consultation shall be at the reasonable times
convenient to the Executive on no less than five business days' notice, the
parties recognizing that the Executive during the consulting period will
have significant other business interests. The terms and conditions of this
Agreement (including all rights hereunder of the Executive as to salary,
bonus, payments and benefits) shall continue unabridged during the period
of consulting. The other provisions of this Agreement also shall remain in
effect except for Section 2 as modified by this Section 2(d) and except
that Section 7(a)(iv)(B) and Section 7(a)(iv)(C) shall be deleted. The
"Employment Period " shall be deemed to include the period during which the
Executive is obligated to provide consulting services hereunder and
therefore, to the extent permitted by law, the conversion shall not be
deemed a termination for any purpose and, if the law requires that the
conversion be treated as a termination, then the Company must provide the
Executive with benefits equivalent to those he would have received had
there been no termination.
Section 3. Key Man Life Insurance. The Company shall have the right to
place a "key man" life insurance policy, providing a death benefit of up to
$15,000,000 upon the life of the Executive, for which the Company is the
beneficiary (the "Key Man Insurance Policy "). In connection therewith, the
Executive hereby authorizes the Company, at its sole cost and expense, to
purchase and maintain upon the life of the Executive such insurance policy, and
agrees to submit to such reasonable medical examinations, and to provide and/or
consent to the release of such medical information, as may be necessary or
desirable in order to secure the issuance thereof. Except as may be required in
order to obtain insurance coverage as described in this Section 3, any and all
information about Employee's health or medical records shall be kept
confidential by the Company and shall not be disclosed by the Company to any
party without the Executive's prior written consent.
Section 4. Compensation. As full compensation for his services hereunder,
the Company shall pay, grant, issue or give, as the case may be, to the
Executive the compensation and benefits specified below:
(a) Base Salary. Subject to the provisions of Sections 7 and 8, a base
salary at the rate of $1, 000,000 per annum ("Base Salary"), which Base
Salary shall be paid to the Executive in accordance with the customary
executive payroll policy of the Company as in effect from time to time;
provided, however, that the Base Salary, as in effect at any time and from
time to time, may be further increased by action of the Board of Directors;
and further provided, however, that in no event shall the Base Salary be
decreased at any time or from time to time without the prior consent of the
Executive, which consent may be granted or withheld in the Executive's sole
discretion.
(b) Annual Discretionary Bonus. An annual discretionary bonus
("Discretionary Bonus"), the amount of which, if any, shall be determined
by the Board of Directors of the Company in its sole and absolute
discretion, which shall be paid to the Executive, with respect to any
fiscal year of the Company, before the expiration of 74 days after the end
of such fiscal year. In making bonus determinations, the Company shall
evaluate the Executive's performance in accordance with the standard bonus
guidelines used by the Company for the Chief Executive Officer of the
Company and shall follow the plan approved by stockholders. If an
Extraordinary Transaction, an Influence Change Event, or an Extraordinary
Stock Event (all as defined in Section 8(a)) takes place in any year, then
the Company shall, promptly after the Extraordinary Transaction, the
Influence Change Event, or the Extraordinary Stock Event, pay an amount
equal to the discretionary bonus the Executive received with respect to the
year prior to the year in which the Extraordinary Transaction, the
Influence Change Event, or the Extraordinary Stock Event occurred,
multiplied by a fraction the numerator of which is the number of days
between the beginning of the year and the occurrence of the Extraordinary
Transaction, the Influence Change Event, or the Extraordinary Stock Event
and the denominator of which is 365.
(c) Loan. The Company will, upon written request from the Executive,
provide a loan to the Executive in a principal amount not to exceed
$1,500,000 (the "Loan"). Interest on the Loan shall accrue at a rate of
6.5% per annum and shall be payable at maturity. The Loan shall mature on
January 6, 2001. Subject to the other terms of this paragraph, the Loan
will be forgiven pro-rata over five years beginning January 1, 1998. All
accrued interest on the Loan shall be forgiven on the same basis as set
forth in this Section 4(c). In the event of a Death Termination Event or a
Disability Termination Event (both as hereinafter defined), all outstanding
principal of and accrued interest on the Loan shall be forgiven. In the
event of a Termination for Cause of the Executive or the voluntary
resignation by Executive prior to December 31, 2000, any and all amounts
outstanding under the Loan, including accrued and unpaid interest, shall be
due and payable to the Company within 20 business days of such event. In
the event the Executive is Terminated Without Cause or remains employed by
the Company through December 31, 2000, the Loan will continue thereafter to
be forgiven as provided above over such five-year period.
(d) Extraordinary Transaction, Influence Change Event, or
Extraordinary Stock Event. Upon the occurrence of an Extraordinary
Transaction, an Influence Change Event, or an Extraordinary Stock Event,
whether or not the Executive elects to convert this Agreement into a
consulting agreement, the Company shall, in addition to remaining obligated
under the terms of this Agreement, pay the Executive a payment (the
"Extraordinary Transaction Payment") equal to (i) an amount equal to the
difference between the discretionary bonus the Executive received from the
Company with respect to the year prior to the year in which the
Extraordinary Transaction, the Influence Change Event, or the Extraordinary
Stock Event occurred, and the amount paid pursuant to the last sentence of
Section 4(b), since the Executive may be forfeiting the right to receive
the balance of such bonus, and (ii) $5,000,000 if the Extraordinary
Transaction, the Influence Change Event, or the Extraordinary Stock Event
occurs in the first 12 months of the Employment Period, $6,000,000 if the
Extraordinary Transaction, the Influence Change Event, or the Extraordinary
Stock Event occurs in the second 12 months of the Employment Period, and
$7,000,000 if the Extraordinary Transaction, the Influence Change Event, or
the Extraordinary Stock Event occurs in the third 12 months of the
Employment Period. In addition, the Company shall pay the Executive the
amounts and benefits contemplated in Section 7(e).
(e) Material Asset Disposition Bonus. In the event of a Material Asset
Disposition, as defined below, in consideration of the services performed
by the Executive and consistent with the prior terms of the Executive=s
employment, the Company (or, in the case of clause (iii) below, the
spin-off entity or, in default thereof, the Company) shall pay to the
Executive within 15 days of the consummation of such Material Asset
Disposition, a cash bonus equal to 1.00% of the consideration (valued as
set forth below) received by the Company or its shareholders as a result of
such Material Asset Disposition. A "Material Asset Disposition" as used
herein means, without duplication for the same matter: (i) a transaction
which results in a majority of the equity interest in the Company being
beneficially owned by any "person," including any "group " (as such terms
are used in Section 13(d) and 14(d) of the Exchange Act), other than any of
the Company=s present Affiliates; (ii) a sale or series of sales by the
Company of subsidiaries, divisions, assets (other than marketable
securities), or operating businesses representing in the aggregate 20% or
more of the Company's 1998 budgeted EBITDA and each such sale after such
threshold has been reached; (iii) a spin off, or series of spin offs, of
any of the Company's divisions, operating businesses or subsidiaries that
meet the 1998 budgeted EBITDA threshold set forth in (ii) above which is
followed by a subsequent Extraordinary Transaction (as defined above, but
with reference to the spun off entity rather than the Company) of the
subsidiary, division or business spun off within five years following such
spin off; or (iv) any transaction which results in any one or more of the
Company's divisions, subsidiaries or operating businesses, representing in
the aggregate 20% or more of the Company's EBITDA, being owned by a third
party. In the event a Material Asset Disposition is consummated in one or
more steps, including, without limitation, by way of second-step merger,
any additional consideration paid or to be paid in any subsequent step in
the Material Asset Disposition in respect of (x) subsidiaries, divisions,
assets (other than marketable securities), or operating businesses of the
Company and (y) capital stock of the Company (and any securities
convertible into, or options, warrants or other rights to acquire, such
capital stock) shall be included for purposes of calculating the bonus
payable pursuant to this Section 4(e). "Consideration" shall not include
the assumption, directly or indirectly, or repayment of indebtedness or
other liabilities of the Company but shall include the assumption, directly
or indirectly, or repayment of the Trust Convertible Preferred Securities
presently outstanding or any similar securities. If all or a portion of the
consideration paid in the Material Asset Disposition is other than cash or
securities, then the value of such non-cash consideration shall be the fair
market value thereof on the date the Material Asset Disposition is
consummated as mutually agreed upon in good faith by the Company's Board of
Directors and the Executive. If such non-cash consideration consists of
common stock, options, warrants or rights for which a public trading market
existed prior to the consummation of the Material Asset Disposition, then
the value of such securities shall be determined by the closing or last
sales price thereof on the date of the consummation of the Material Asset
Disposition; provided, however, that if such non-cash consideration
consists of newly-issued, publicly-traded common stock, options, warrants
or rights for which no public trading market existed prior to the
consummation of the Material Asset Disposition, then the value thereof
shall be the average of the closing prices for the 20 trading days
subsequent to the fifth trading day after the consummation of the Material
Asset Disposition. In such event, the portion of the bonus payable to the
Executive pursuant to this Section 4(e) attributable to such securities
shall be paid on the 30th trading day subsequent to consummation of the
Material Asset Disposition. If no public market exists for the common
stock, options, warrants or other rights issued in the Material Asset
Disposition, then the value of thereof shall be as mutually agreed upon in
good faith by the Company=s Board of Directors and the Executive. If the
non-cash consideration paid in the Material Asset Disposition consists of
preferred stock or debt securities (regardless of whether a public trading
market existed for such preferred stock or debt securities prior to
consummation of the Material Asset Disposition or exists thereafter), the
value hereof shall be the face or principal amount, as the case may be. Any
amounts payable by a purchaser to the Company, any shareholder of the
Company or any Affiliate of either the Company or any shareholder of the
Company in connection with a non-competition, employment, consulting,
licensing, supply or other agreement shall be deemed to be part of the
consideration paid in the Material Asset Disposition. If all or a portion
of the consideration payable in connection with the Material Asset
Disposition includes contingent future payments, then the Company shall pay
to the Executive, upon consummation of such Material Asset Disposition, an
additional cash fee, determined in accordance with this Section 4(e) as,
when and if such contingency payments are received. However, in the event
of an installment purchase at a fixed price and a fixed time schedule, the
Company agrees to pay the Executive, upon consummation of the Material
Asset Disposition, a cash fee determined in accordance with this Section
4(e) based on the present value of such installment payments using a
discount rate of 6.5%.
(f) Fringe Benefit Programs. In addition to the other benefits
provided to the Executive hereunder and to the extent he satisfies the
eligibility requirements thereof and to the extent permitted by law,
participation in fringe benefit programs made available generally to
employees of the Company, including, without limitation, pension, profit
sharing, stock purchase, savings, bonus, disability, life insurance, health
insurance, hospitalization, dental, deferred compensation and other plans
and policies authorized on the date hereof or in the future.
(g) Expense Reimbursement. Reimbursement of the Executive for all
out-of-pocket expenses incurred by him in connection with the performance
of his duties hereunder, including professional activities and membership
fees and dues relating to professional organizations of which the Executive
currently is a member or of which he becomes a member and including,
without limitation, expenses required for professional licensing of the
Executive, and business related mobile or cellular phone expense in
accordance with the Company's written policies and procedures, all upon the
presentation of appropriate documentation therefore in accordance with the
then regular procedures of the Company.
(h) Perquisites. In addition to the other benefits provided to the
Executive hereunder, and at the sole cost and expense of the Company except
as otherwise provided herein:
(i) Memberships at Xxx Xxxxxxx Xxxx, Xxx Xxxx Xxxx, Xxx Xxxx,
and Beachfront Club, Mamaroneck, New York;
(ii) Membership in the Greenville Country Club, Greenville, South
Carolina;
(iii)All other club dues for clubs and other similar
organizations of which the Executive is currently a member
and which he uses primarily for business purposes;
(iv) An annual physical examination;
(v) Reasonable consultations with financial and tax advisors or
counselors, including annual income tax return preparation
and audits relating to the period during which the Executive
was employed by the Company (whether or not under this
Agreement) and whether such audit expense is incurred during
or after the Employment Period;
(vi) Unlimited access to, consultations with, and financial and
legal services and advice provided by, the Chief Financial
Officer of the Company and the General Counsel of the
Company, in each case with respect to the interests of the
Executive and the members of the his family and regardless
of whether or not such interests are related to the business
and affairs of the Company, at the Company=s sole cost and
expense;
(vii)Reimbursement for the fees and expenses of counsel chosen
by the Executive incurred in connection with the negotiation
of this Employment Agreement, determined at such counsel's
regular hourly rate, plus an amount equal to any tax payable
by the Executive upon such amount taking into account that
such amount, in and of itself, may be taxable;
(viii) During the Employment Period, so long as the Executive
shall travel more than eight (8) days per month (average
during the course of a calendar year), the Company shall
maintain a corporate jet aircraft no smaller than a Citation
VII such as that in use by the Company as of the date of
this Agreement. The Executive shall have unlimited use of
the Company's aircraft during his employment by the Company.
The aircraft shall also be available for use by the other
executives and directors of the Company, subject to
availability. In addition, the Company shall provide the
Executive with the use of the aircraft (or a similar
chartered aircraft in the event that the Company no longer
has full time use of the aircraft) for fifty (50) hours per
year for two (2) years subsequent to the Executive=s
termination by the Company for any reason other than a
Termination for Cause or voluntary resignation by the
Executive. To the extent the Executive uses the aircraft for
personal use, the cost of such use shall be added to and
included in the Executive=s compensation for federal, state
and local income tax purposes;
(ix) The cost of term life insurance, providing a death benefit
of up to five million dollars ($5,000,000) upon the life of
the Executive, the beneficiaries and owner of which shall be
designated by the Executive and which term insurance shall
be upon terms and conditions, and in form and substance
available at the time, and otherwise reasonably satisfactory
to the Executive in his sole discretion and which term life
insurance shall be paid for by the Company during the
Employment Period at the Company's sole cost and expense. If
the Company is the owner of such policy, upon termination of
the Executive's employment by the Company, the ownership of
such term life insurance shall be transferred to the
Executive or his designee. At Executive's option, Executive
may apply the cost of such a policy to some other benefit of
Executive's choice; and
(x) Use of a full time car and driver both in Greenville, South
Carolina and New York City, New York, which car and driver
shall also be available for use by all other executives of
the Company as the need shall arise.
(i) Disability Protection Underwriting. Subject to the provisions of
Sections 7 and 8 hereof, the Company will underwrite and provide to the
Executive disability insurance coverage identical to the disability
insurance coverage provided to senior executives of the Company from time
to time at the Company=s sole cost and expense.
(j) Vacations, etc. Leaves-of-absence in accordance with the then
regular procedures of the Company governing senior executives, and four
weeks of paid vacation per year on a non-cumulative basis.
(k) Parachute Limit. Notwithstanding anything else herein, to the
extent the Executive would be subject to the excise tax under Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), on such
amounts or benefits received from the Company required to be included in
the calculation of parachute payments for purposes of Sections 280G and
4999 of the Code (the "Parachute Payments "), the amounts of any Parachute
Payments shall be automatically reduced as described herein to an amount
one dollar less than an amount that would subject the Executive to the
excise tax under Section 4999 of the Code (the "Parachute Limit ");
provided, however, that this Section 4(k) shall apply only if the reduced
Parachute Payments received by the Executive (after taking into account
further reductions for applicable federal, state and local income, social
security and other taxes) would be greater than the unreduced Parachute
Payments to be received by the Executive minus (i) the excise tax payable
under Section 4999 of the Code with respect to such Parachute Payments and
(ii) all applicable federal, state and local income, social security and
other taxes on such Parachute Payments. The foregoing reduction shall be
applied to the Parachute Payments as follows: (i) first by reducing the
amounts payable under Section 4(d) (if such amounts are included in such
computation) until such amounts have been exhausted up to the Parachute
Limit, (ii) then by reducing any such other amounts and benefits (other
than awards described in (iii) below) as determined by the Company, and
(iii) notwithstanding anything contained herein or in an option, warrant or
restricted stock agreement, award or plan relating to the Executive then,
on a pro-rata basis up to the Parachute Limit, by failing to accelerate the
vesting (without affecting the right to vest) upon a change in ownership or
effective control or change in ownership of a substantial portion of assets
(as described in Code Section 280G(b)(2)(A)(i)) of any unvested awards of
shares of restricted stock of the Company previously granted to Executive
and options or warrants to purchase shares of the Company previously
granted to Executive. Notwithstanding the foregoing, the Company shall
treat any of the amounts described in (i) through (iii) above as a
Parachute Payment solely to the extent required under applicable law.
(l) Registration Rights. The Company hereby ratifies the Executive=s
registration rights with respect to all of the securities of the Company
beneficially owned by the Executive as set forth in the Registration Rights
Agreement heretofore executed by the Executive and the Company.
(m) Vesting. In the event of (a) a termination of Executive's
employment for any reason other than a Termination for Cause or voluntary
termination by the Executive, including, but not limited to a Death
Termination Event, Disability Termination Event, Termination Without Cause
or in the event of (b) the occurrence of an Extraordinary Transaction, an
Influence Change Event, or an Extraordinary Stock Event (whether or not
resulting in a termination of Executive=s employment), all options and
warrants then held by and/or granted to the Executive will immediately vest
and be exercisable by the Executive.
(n) Signing Bonus. The Company shall transfer its interest in
Metropolitan Asset Enhancement L.P. to Executive and pay the Executive
$2,000,000 upon execution of this Agreement.
Section 5. Representations, Warranties and Covenants of the Executive.
The Executive represents and warrants to the Company as follows:
(a) He is under no contractual or other restriction or obligation
which is inconsistent with the execution of this Agreement, the performance
of his duties hereunder, or the other rights of the Company hereunder; and
(b) He is able to perform the essential functions of his duties
hereunder with or without reasonable accommodations.
Section 6. Non-Solicitation; Confidentiality.
(a) Non-Solicitation.
(1) In recognition of the close personal contact the Executive
has or will have with the Company's and its affiliates' trade secrets,
confidential information, records and business relationships, and the
position of trust in which the Company holds the Executive, the
Executive further covenants and agrees that while the Executive is
employed by the Company and for a period lasting for one (1) year
following the date of cessation of the Executive's employment with the
Company, the Executive will not, either for himself or an officer,
director, employee, agent, representative, independent contractor or
in any relationship to any person, partnership, corporation, or other
entity (except the Company or its Affiliates or subsidiaries),
solicit, directly or by assisting others, business from any of the
Company's customers or clients with whom the Executive has had
material contact (as defined below) during the twelve (12) month
period preceding the date of cessation of the Executive's employment
with the Company, for the purpose of providing goods or services to
said customers and clients. For purposes of this Agreement, "material
contact" exists between the Executive and any of the Company's
customers or clients (i) with whom the Executive actually dealt; or
(ii) whose dealings with the Company were handled, coordinated or
supervised by the Executive; or (iii) about whom the Executive
obtained confidential information in the ordinary course of business
through the Executive's association with the Company.
(2) The Executive covenants and agrees that, for a period ending
on the second anniversary of the date on which the Executive's
employment with the Company ceases, the Executive will not solicit,
employ, engage or in any manner encourage any employee, broker or
sales person of the Company, or any of its respective subsidiaries or
affiliates to leave their employ for the employ of a person or entity
which directly or indirectly competes with the Company, or any of its
respective subsidiaries or affiliates.
(3) The Executive covenants and agrees that, for a period ending
on the second anniversary of the date on which the Executive's
employment with the Company ceases, the Executive will not purchase
for his own account any limited partnership units of partnerships
that, on the date of purchase, are controlled directly or indirectly
by the Company, except that the provisions of this sentence shall not
be deemed breached merely because the Executive owns, immediately
after a purchase, not more than one percent of the outstanding units.
Should the Executive breach the foregoing sentence, all his options
issued by the Company or any of its subsidiaries shall be cancelled
and all of his restricted stock issued by the Company or any of its
subsidiaries (whether or not then vested) which he then owns shall be
forfeited. For purposes of this Section 6(a)(3), "purchase" shall mean
the payment of cash only for such limited partnership units and shall
not include payment of cash for interests in an entity whose assets
consist in whole or in part of such limited partnership units.
The Executive acknowledges that the foregoing provisions are intended
to protect the Company's and its subsidiaries' and Affiliates' business and
customer contacts, not to prevent the Executive from pursuing a livelihood
in the general area of his previous training, and they should be
interpreted accordingly.
(b) Confidentiality. All confidential information which the Executive
may now possess, may obtain during or after his employment with Company, or
may create prior to the end of his employment with the Company or otherwise
relating to the business of the Company or any of its subsidiaries or
affiliates or of any customer or supplier of any of them shall not be
published, disclosed, or made accessible by him to any other person, either
during or after the cessation of his employment, or used by him except
during his employment with the Company in the business and for the benefit
of the Company and its subsidiaries and Affiliates. In addition, the
Executive agrees not to disclose, publish or make accessible to any other
person, from and after the date of this Agreement, during the Employment
Period or at any time thereafter, any of the terms or provisions of this
Agreement, except the Executive's accountants or legal counsel who need
such information to advise him, prepare his tax returns, make required
filings, represent him and the like; provided, however, that the Executive
will be responsible for causing any such accountants and legal counsel to
be aware of and to abide by the obligations contained in this Section 6(b)
and will be responsible for any breach of such obligations by any of them.
In the event that the Executive becomes legally compelled to disclose any
of the confidential information, the Executive will provide the Company
with prompt written notice so that the Company may seek a protective order
or other appropriate remedy and/or waive in writing compliance with the
provisions of this Section 6(b) and in the event that such protective order
or other remedy is not obtained, or should the Company waive in writing
compliance with the provisions of this Section 6(b), the Executive will
furnish only that portion of the confidential information which is so
legally required. The Executive shall return all tangible evidence of such
confidential information to the General Counsel of the Company prior to or
at the cessation of his employment.
(c) Interpretation. Since a breach of the provisions of this Section 6
could not adequately be compensated by money damages, the Company shall be
entitled, in addition to any other right and remedy available to it, to an
injunction restraining such breach and the Company shall not be required to
post a bond in any proceeding brought for such purpose. The Executive
agrees that the provisions of this Section 6 are necessary and reasonable
to protect the Company in the conduct of its businesses. If any restriction
contained in this Section 6 shall be deemed to be invalid, illegal, or
unenforceable by reason of the extent, duration, or geographical scope
thereof, or otherwise, then the court making such determination shall have
the right to reduce such extent, duration, geographical scope, or other
provisions hereof, and in its reduced form such restriction shall then be
enforceable in the manner contemplated hereby. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies, at
law or in equity, for such breach or threatened breach.
Section 7. Termination.
(a) Definitions.
(i) Death Termination Event. As used herein, "Death
Termination Event" shall mean the death of the Executive.
(ii) Disability Termination Event. As used herein,
"Disability Termination Event" shall mean a circumstance where
the Executive is physically or mentally incapacitated or disabled
or otherwise unable to fully discharge his duties hereunder for a
period of 185 consecutive days.
(iii) Estate. As used herein, "Estate" shall mean (A) in the
event that the last will and testament of the Executive has not
been probated at the time of determination, the estate of the
Executive and (B) in the event that the last will and testament
of the Executive has been probated at the time of determination,
the legatees of the Executive who are entitled under such will to
the assets or payments at issue.
(iv) Termination For Cause. As used herein, the term
"Termination For Cause" shall mean the termination by the Company
of the Executive's employment hereunder upon a good faith
determination by a majority vote of the members of the Board of
Directors of the Company that termination of this Agreement is
necessary by reason of (A) the Executive shall be convicted of a
felony, unless in any such case the Executive performed such act
in good faith and in a manner the Executive reasonably believed
to be in or not opposed to the best interests of the Company, (B)
the Executive shall commit any act or omit to take any action in
bad faith and to the material detriment of the Company and
Executive shall not have cured the same within 30 days after the
Company sends written notice thereof, or (C) Executive shall
breach in a material way any material term of this Agreement and
fail to correct such breach within 30 days after the Company
sends written notice thereof; provided, however, that if any such
breach is capable of being cured, but a reasonable person of
sound mind and business judgment could not reasonably expect such
breach to be cured within 30 days, such breach shall not
constitute a basis for a Termination For Cause unless the
Executive does not diligently prosecute such cure to completion.
(v) Termination Without Cause. As used herein, "Termination
Without Cause" shall mean any termination of the Executive=s
employment hereunder that is not a Termination For Cause, a Death
Termination Event, or a Disability Termination Event, and shall
include, without limitation, a termination of the Executive=s
employment hereunder due to the scheduled expiration of the
Employment Period on December 31, 2000 or (as contemplated by
Section 8(b)(i)), an Extraordinary Transaction, an Influence
Change Event, or an Extraordinary Stock Event but not a
conversion to a consulting agreement.
(b) Death Termination Event. Upon the occurrence of a Death
Termination Event, this Agreement shall terminate automatically upon
the date that such Death Termination Event occurred (subject to the
last sentence of this Section 7), whereupon (i) the Company shall
continue to pay the then-current Base Salary to the Estate for a
period equal to the remaining term of the Employment Period
(determined upon the assumption that the Employment Period will not be
terminated prior to December 31, 2000), and (ii) the Company will
continue to provide health insurance to the surviving spouse and
surviving issue of the Executive, at their sole cost and expense but
otherwise upon terms and conditions identical to the terms and
conditions upon which health insurance is provided to the spouses and
issue of employees of the Company at such time, until such time as
such surviving spouse and surviving issue elect to terminate such
health insurance coverage.
(c) Disability Termination Event. Upon the occurrence of a
Disability Termination Event, this Agreement shall terminate
automatically upon the date that such Disability Termination Event
occurred (subject to the last sentence of this Section 7), whereupon
(i) the Company shall continue to pay seventy-five percent (75%) of
the then-current Base Salary to the Executive for twice the period
equal to the remaining term of the Employment Period (determined upon
the assumption that the Employment Period will not be terminated prior
to December 31, 2000, and will not in any event be less than two years
for purposes of such calculation), (ii) the Company shall continue to
provide to the Executive the disability protection contemplated by
Section 4(i) of this Agreement until such time as the Executive elects
to discontinue such coverage, (iii) the Company will continue to
provide health insurance to the Executive, his spouse, and his issue,
at the Executive=s sole cost and expense and otherwise upon terms and
conditions identical to the terms and conditions upon which health
insurance is provided to employees of the Company and their spouses
and issue, the Company will arrange for the Executive (x) to have the
ability to maintain the Key Man Insurance Policy thereafter at the
sole expense of the Executive, and (y) to designate the beneficiaries
thereof, in each case to the exclusion of the Company and as promptly
as practicable after such termination.
(d) Termination For Cause. The Executive and the Company agree
that the Company shall have the right to effectuate a Termination for
Cause prior to December 31, 2000. Upon the occurrence of a Termination
For Cause, this Agreement shall terminate upon the date of that such
Termination For Cause occurs (subject to the last sentence of this
Section 7), whereupon (i) the Executive shall be entitled to receive
the Base Salary, as then in effect, to and including the date that
such Termination for Cause occurs, and (ii) the Company will arrange
for the Executive (x) to have the ability to maintain the Key Man
Insurance Policy thereafter at the sole expense of the Executive, and
(y) to designate the beneficiaries thereof, in each case to the
exclusion of the Company and as promptly as practicable after such
termination.
(e) Termination Without Cause. Upon the occurrence of a
Termination Without Cause, this Agreement shall terminate upon the
date that such Termination Without Cause occurs (subject to the last
sentence of this Section 7), whereupon (i) the Company shall (A) in
the event that such Termination Without Cause is not an Extraordinary
Transaction, an Influence Change Event, or an Extraordinary Stock
Event, continue to pay the then-current Base Salary to the Executive
until December 31, 2000, and (B) in the event that such Termination
Without Cause is an Extraordinary Transaction, an Influence Change
Event, or an Extraordinary Stock Event, the Company shall pay to the
Executive the Extraordinary Transaction Payment (as defined in Section
4(d)) in accordance with the provisions of Section 8, (ii) the Company
shall continue to provide to the Executive the disability protection
contemplated by Section 4(i) of this Agreement until such time as the
Executive elects to discontinue such coverage, (iii) the Company will
continue to provide health insurance to the Executive, his spouse, and
his issue, at the Executive=s sole cost and expense and otherwise upon
terms and conditions identical to the terms and conditions upon which
health insurance is provided to employees of the Company and their
spouses and issue, until such time as the Executive elects to
terminate such health insurance coverage, and (iv) the Company will
arrange for the Executive (x) to have the ability to maintain the Key
Man Insurance Policy thereafter at the sole expense of the Executive,
and (y) to designate the beneficiaries thereof, in each case to the
exclusion of the Company and as promptly as practicable after such
termination. In addition, the Company shall pay the Executive the
amounts and benefits contemplated by Section 4(d).
Notwithstanding anything in this Agreement to the contrary, (i) Sections 3,
4(g), 4(l), 5, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18 and 19 of this
Agreement shall survive any termination of this Agreement or of the Executive=s
employment hereunder until the expiration of the statute of limitations
applicable hereto, and (ii) Section 7 of this Agreement shall survive any
termination of this Agreement or of the Executive=s employment hereunder other
than a Termination Without Cause, it being understood and agreed by the parties
hereto that in the event of a Termination Without Cause, Section 7 of this
Agreement shall be terminated in its entirety as of the date of such Termination
Without Cause.
Section 8. Extraordinary Transaction.
(a) Definitions.
(i) Extraordinary Transaction. As used herein, "Extraordinary
Transaction" shall mean the occurrence of any one or more of the following:
(1) the Company ceases to be required to file reports under Section 13
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
any successor to that Section;
(2) a majority of the members of the Board of Directors of the Company
are not persons who (a) had been directors of the Company for at least the
preceding 12 consecutive months or (b) when they initially were elected to
the Board (x) were nominated (if they were elected by the stockholders) or
elected (if they were elected by the directors) with the affirmative vote
of two-thirds of the directors who were Continuing Directors at the time of
the nomination or election by the Board and (y) were not elected as a
result of an actual or threatened solicitation of proxies or consents by a
person other than the Board of Directors of the Company or an agreement
intended to avoid or settle such a proxy solicitation (the directors
described in clauses (a) and (b) being "Continuing Directors");
(3) any "person," including a "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act, but excluding the Company,
any of its present affiliates (as such term is defined in Rule 405
promulgated under the Securities Act of 1933, as amended) ("Affiliates"),
or any employee benefit plan of the Company or any of its present
Affiliates) is or becomes the "beneficial owner" (as defined in Rule 13(d)
(3) under the Exchange Act), directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of the
Company's then outstanding securities;
(4) the purchase of Class A Common Stock of the Company ("Common
Stock") pursuant to any tender or exchange offer or otherwise made by any
"person," including a "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act), other than the Company, any of its present
Affiliates, or any employee benefit plan of the Company or any of its
present Affiliates, which results in "beneficial ownership" (as so defined)
of 30% or more of the outstanding Common Stock;
(5) the execution and delivery of a definitive agreement by the
Company that provides for a merger or consolidation, or a transaction
having a similar effect (unless such merger, consolidation or similar
action is with a subsidiary of the Company or with another company, a
majority of whose outstanding capital stock is owned by the same persons or
entities who own a majority of the Company's outstanding Common Stock at
such time), where (A) the Company is not the surviving corporation, (B) the
majority of the Common Stock of the Company is no longer held by the
persons who were the stockholders of the Company immediately prior to the
transaction, (C) the sale, lease, exchange or other disposition of all or
substantially all of the assets of the Company but not the spin off of one
division, the sale of one division, or both (where "division" means the
present residential business (including IPT) and the present commercial
business), and not the trading of marketable securities held as portfolio
securities or (D) the Company's Common Stock is converted into cash,
securities or other property (other than the common stock of a company into
which the Company is merged), provided, however, that, in the event that
the contemplated merger, consolidation or similar transaction is not
consummated, then any rights that may arise under this paragraph (v) by
virtue of such Change of Control shall not apply;
(6) upon the consummation of any transaction requiring stockholder
approval for the acquisition of the Company by an entity other than the
Company or a subsidiary through purchase of assets, or by merger, or
otherwise but not the spin off of one division, the sale of one division,
or both;
(7) the election to the Board of Directors of the Company, by vote of
the stockholders of the Company, of one individual under circumstances
where (A) the Board of Directors of the Company, after such election, is
comprised of one individual, and (B) all of the Xxxxxx Shares (as defined
in Section 8(a)(iii)) at the time of such election were not voted for such
election to the Board of Directors of the Company of such individual;
(8) the appointment to the Board of Directors of the Company, by vote
of the Board of Directors of the Company, of one individual under
circumstances where (A) the Board of Directors of the Company, after such
appointment, is comprised of one individual, and (B) the Executive did not
so vote for such appointment to the Board of Directors of the Company of
such individual, either because the Executive was not a Director of the
Company at such time or because the Executive did not vote affirmatively
for the appointment to the Board of Directors of the Company of such
individual;
(9) the election to the Board of Directors of the Company, by the
stockholders of the Company, of one or more individuals under circumstances
where (A) the Board of Directors of the Company, after such election, is
comprised of more than one individual under the By-Laws of the Company, as
then in effect, and (B) a majority of the Directors of the Company in
office after such election did not receive Executive Approval (as defined
in Section 8(a)(ii)); or
(10) the appointment to the Board of Directors of the Company, by vote
of the Board of Directors of the Company, of one or more individuals under
circumstances where (A) the Board of Directors of the Company, after such
appointment, is comprised of more than one individual under the By-Laws of
the Company, as then in effect, and (B) a majority of the Directors of the
Company in office after such appointment did not receive Executive
Approval.
(ii) Executive Approval. As used herein, the term "Executive Approval"
shall mean, with respect to any member of the Board of Directors of the Company
in office at the time of determination, (A) if such individual is not then a
member of the Board of Directors of the Company by virtue of election to the
Board of Directors of the Company by vote of the stockholders of the Company,
the Executive, as a Director of the Company, voted for the appointment of such
individual to the Board of Directors of the Company pursuant to which such
individual is then a member of the Board of Directors of the Company, and (B) if
such individual is then a member of the Board of Directors of the Company by
virtue of election to the Board of Directors of the Company by vote of the
stockholders of the Company, all of the Xxxxxx Shares at the time of such
election were voted in favor of the election of such individual to the Board of
Directors of the Company pursuant to which such individual is then a member of
the Board of Directors of the Company.
(iii) Xxxxxx Shares. As used herein, the term "Xxxxxx Shares," as of any
time, shall mean the securities of the Company entitled to vote generally in the
election of Directors of the Company as to which, at such time, the Executive
had the sole power to vote or to direct the voting of.
(iv) Influence Change Event. As used herein "Influence Change Event" shall
mean the occurrence of the loss by the Executive of any of the Board Positions
or if the Executive=s title, powers and duties within the Company or the Board
of Directors of the Company have been diminished, in each case other than as a
result of a Termination For Cause, without the prior written consent of the
Executive.
(v) Extraordinary Stock Event. As used herein "Extraordinary Stock Event"
shall mean either (i) the occurrence of more than fifteen (15%) percent of the
outstanding securities of the Company entitled to vote in the election of
directors of the Company being owned (by beneficial ownership, as such term is
used in Section 13(d) of the Exchange Act, and the rules and regulations
thereunder or otherwise) or acquired by any person (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than the Executive, a
person over whom the Executive has the power to exercise a controlling influence
exclusive of any other person, or a person whose beneficial ownership has been
approved by the Executive in writing (such person being referred to herein as
the "Acquiror") and the Acquiror either describes, is required to describe, or
would be required to describe in the event that the Acquiror was subject to
Section 13(d) of the Exchange Act, as in effect on the date hereof, any plans or
proposals which it may have which relate to or would result in any of the events
described in paragraphs (a) through (j) of Item 4 of Schedule 13D, as in effect
on the date hereof, in a Schedule 13D, or amendments thereto, filed with the
Securities and Exchange Commission with respect to such ownership or acquisition
or (ii) the occurrence of more than forty (40%) percent of the outstanding
securities of the Company entitled to vote in the election of directors of the
Company being owned (by beneficial ownership, as such term is used in Section
13(d) of the Exchange Act and the rules and regulations thereunder, or
otherwise) or acquired by any person (as such term is used in Sections 13(d) and
14(d) of the Exchange Act, whether or not such ownership has been consented to
by the Executive.
(b) Extraordinary Transaction; Influence Change Event; Extraordinary Stock
Event. Upon the occurrence of either an Extraordinary Transaction, an Influence
Change Event, or an Extraordinary Stock Event, (i) this Agreement may, at
Executive=s option exercised in writing, be terminated as of the date of such
Extraordinary Transaction, Influence Change Event, or Extraordinary Stock Event,
as the case may be (an "Extraordinary Transaction Termination"), (ii) this
Agreement may, at Executive's option exercised in writing, be converted into a
consulting agreement pursuant to Section 2(e) as of the date of an Influence
Change Event, the Extraordinary Transaction, or the Extraordinary Stock Event,
as the case may be, (iii) in the event of such termination contemplated by
Section 8(b)(i), the provisions of Section 7(e) of this Agreement shall be in
effect as of the date of such Extraordinary Transaction, Influence Change Event,
or Extraordinary Stock Event, as the case may be, and title to the car referred
to in Section 4(h)(x) shall be transferred to him, and (iv) whether or not there
is such termination or conversion, the Company shall pay to the Executive, in
immediately available funds, the Extraordinary Transaction Payment, as described
in Section 4(d), on the date of the occurrence of such Extraordinary
Transaction, Influence Change Event, or Extraordinary Stock Event, as the case
may be.
Section 9 Indemnification. The Company hereby ratifies the indemnification
of the Executive pursuant to the terms of an Indemnification Agreement
heretofore executed by the Executive and the Company.
Section 10 Withholding. The Company shall be entitled to withhold from
amounts payable to the Executive hereunder such amounts as may be required by
applicable law to be so withheld.
Section 11 Modification. This Agreement sets forth the entire understanding
of the parties hereto with respect to the subject matter hereof, supersedes all
existing agreements between them concerning such subject matter, and may be
modified only by a written instrument duly executed by each party.
Section 12 Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or delivered against receipt to the party to whom it
is to be given, at the address of such party set forth in the preamble to this
Agreement (or to such other address as such party shall have furnished in
writing in accordance with the provisions of this Section 12). Notice to the
Estate shall be sufficient if addressed to the Executive as provided in this
Section 12. Any notice or other communication given by certified mail shall be
deemed given at the time of certification thereof, except for a notice changing
a party's address which shall be deemed given at the time of receipt thereof.
Section 13 Waiver. Any waiver by either party of a breach of any provision
of Agreement shall not operate as a waiver of any other breach of such provision
or of any breach of any other provision of this Agreement. The failure of a
party to insist upon strict adherence to any term of this Agreement on one or
more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Agreement. Any waiver must be in writing.
Section 14 Binding Effect. The Executive's rights and obligations under
this Agreement shall not be transferable by assignment or otherwise, such rights
shall not be subject to commutation, encumbrance or the claims of the
Executive's creditors, and any attempt to do any of the foregoing shall be void.
The provisions of this Agreement shall be binding upon and inure to the benefit
of the Executive and his heirs and personal representatives, and shall be
binding upon and inure to the benefit of the Company and its successors.
Section 15 Third Party Beneficiaries. This Agreement does not create, and
shall not be construed as creating, any rights enforceable by any person not a
party to this Agreement; provided, however, that notwithstanding any provision
of this Agreement to the contrary, each of the successors, spouse, issue,
legatees, estate, administrators, executors, and legal representatives of the
Executive shall be entitled to rely upon and to enforce this Agreement as a
third party beneficiary hereof.
Section 16 Headings. The headings in this Agreement are solely for
convenience of reference, and shall be given no effect in the construction or
interpretation of this Agreement.
Section 17 Enforcement. Should the Executive xxx to enforce any of his
rights under this Agreement and should the Executive prevail on any issue in
such suit, then the Company shall pay all the Executive's costs of such suit
(including attorneys fees and disbursements). If any taxes are imposed on such
payment, the Company shall make such additional payments to the Executive as may
be necessary, so that after deducting the taxes imposed on all payments made to
the Executive pursuant to this paragraph, the Executive is left on an after tax
basis with an amount equal to his claim for indemnification prior to the
payments described in this sentence.
Section 18 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 19 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of South Carolina, without reference to
the conflict of law provisions thereof.
Section 20 Waiver of Trial by Jury. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY DEALING BETWEEN OR AMONG THEM RELATING TO THE SUBJECT
MATTER OF THIS AGREEMENT AND THE RELATIONSHIPS BEING ESTABLISHED. THE SCOPE OF
THIS WAIVER IS INTENDED TO ENCOMPASS ANY AND ALL DISPUTES THAT MAY BE FILED IN
ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING,
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS AGREEMENT, AND THAT EACH WILL
CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY
HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS
LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO THE TRIAL BY THE
COURT.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
INSIGNIA FINANCIAL GROUP, INC.
By: /s/Xxxxx X. Xxxxxxxx
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Name: /s/Xxxxx X. Xxxxxxxx
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Its: Executive Managing Director
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EXECUTIVE
/s/Xxxxxx Xxxxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxxxx Xxxxxx
