Exhibit 10.1
AGREEMENT
This Agreement is made this 26th day of September, 1995, by and
between Inter-Regional Financial Group, Inc., a Delaware
corporation ("IFG"), and David A. Smith, a resident of Texas
("Employee").
Employee has been the President and Chief Executive Officer and
a director of Rauscher Pierce Refsnes, Inc. ("Rauscher") and an
Executive Vice President and director of IFG. IFG and Employee
wish to effect the termination of Employee's officer and director
status and his employment at the times and on the terms and
conditions set forth herein.
In consideration of the mutual covenants contained in this
Agreement, IFG and Employee hereby agree as follows:
1. Resignation.
(a) Except as otherwise specifically provided herein, Employee
hereby resigns all officer, director and other positions with IFG
and each of its subsidiaries effective September 30, 1995.
Subject to the terms hereof, including the terms of Section 1(c)
and Section 3, Employee's employment shall be terminated
effective at the close of business on the date (the "Employment
Termination Date") which is earliest to occur of: (i) December
31, 1998; (ii) any date as of which Employee elects to terminate
his obligations under Section 3(a) as provided therein; (iii) any
date as of which Employee becomes employed by another firm or
entity and becomes eligible for health and welfare benefits; and
(iv) any date as of which Employee's employment is terminated
pursuant to Section 6. IFG and its subsidiaries hereby accept
Employee's resignations effective as of such dates and times.
(b) From October 1, 1995 through December 31, 1995 (or such
earlier date as Employee may choose), Employee shall be provided
with office space and telephone, secretarial and other support
services comparable to what he received prior to September 30,
1995, except that Employee's office assignment shall be dependent
upon available space. During the period from October 1, 1995
through December 31, 1995, Employee shall perform such duties as
shall be requested or approved by the Chief Executive Officer of
IFG.
(c) From January 1, 1996 (or such earlier date as Employee
leaves the Rauscher executive offices), through the Employment
Termination Date, Employee shall occupy such office space and
receive such telephone, secretarial and other support as he shall
arrange. Employee shall be reimbursed for costs incurred
therefor through December 31, 1996, in accordance with the
provisions of Section 2(e). From January 1, 1996, through the
Employment Termination Date, Employee will perform the duties of
a retail commissioned salesperson for Rauscher (or such other
duties as shall be mutually agreeable to IFG and Employee) and
will operate for regulatory purposes as a satellite of another
branch office of Rauscher. At all times on or prior to the
Employment Termination Date, Employee agrees to abide by all
compliance and other policies and procedures of Rauscher and IFG,
including all policies relating to approval of outside business
activities.
2. Severance Compensation and Arrangements. As consideration
for past services to IFG and its subsidiaries, the noncompetition
and other covenants set forth in Section 3 and the release of any
and all claims relating to employment as set forth in Section 7,
and subject to the terms hereof, IFG agrees as follows:
(a) IFG will pay to Employee the sum of $16,666.67 per month,
for the months of October 1995 through December 31, 1995. Unless
otherwise mutually agreed, such amount will be paid in semi-
monthly installments in accordance with Rauscher's regular
payroll procedures and shall have deducted from it all applicable
federal and state withholding taxes, FICA and benefits deductions
currently applicable to Employee. In addition, IFG will pay to
Employee the lump sum of $400,000 (less the amount Employee
previously elected to defer pursuant to the IFG Executive
Deferred Compensation Plan) in complete payment of Employee's
bonus for the year ended December 31, 1995. Such bonus shall be
paid in late January or early February 1996, at substantially the
same time as other employee discretionary bonuses for 1995 are
paid (but, in any event, no later than February 29, 1996), and
shall have deducted from it all applicable federal and state
withholding taxes and FICA . Employee shall receive the employer
matching contribution on the deferred portion of such bonus in
accordance with his previous election pursuant to the IFG
Executive Deferred Plan, but shall reimburse IFG for the cost of
any contribution related thereto under IFG's Profit Sharing or
other benefit plans. Employee agrees to execute a "Termination
of Pretax Payroll Deduction" form (SB/PS02) terminating his
voluntary participation in IFG's Profit Sharing and Stock Bonus
Plans and to return such form immediately to IFG's Benefits
Administration Department.
(b) Subject to the provisions of Sections 2 (c), 3(a) and 6,
for the period commencing January 1, 1996, and ending December
31, 1998, IFG will pay to Employee the aggregate sum of
$500,000 ($200,000 per year annualized for the first two years
and $100,000 per year annualized for the third year), payable in
equal monthly installments of $16,666.67 for the first twenty-
four months and $8,333.34 for the final twelve months. Such
amounts (which shall be characterized as payment for Employee's
noncompetition/ nonsolicitation covenant and not as recognized
compensation for purposes of IFG's various benefit plans) shall
be paid in monthly installments along with, and on substantially
the same schedule as, any commissions to be paid Employee as a
result of activities contemplated in Section 1(c). All such
payments shall have deducted from them all applicable federal and
state withholding taxes, FICA and benefits deductions currently
applicable to Employee except as otherwise provided herein. In
the event of Employee's death prior to the Employment Termination
Date, such payments shall continue to be made to the beneficiary
designated for Employee in connection with his interest in the
IFG Profit Sharing Plan.
(c) From October 1, 1995 through the Employment Termination
Date, Employee will continue to receive coverage under IFG's
health insurance plan and basic group life insurance plan at the
levels and upon the terms currently being provided to Employee,
subject, in each case, to the terms and provisions of such plan.
From and after December 31, 1996, Employee shall be required to
reimburse IFG for the premiums incurred in providing Employee
such benefits. After the Employment Termination Date, Employee
shall become eligible to continue his health insurance coverage
at his own expense for up to eighteen months under the federal
COBRA rules and shall be entitled to any other continuation,
conversion or distribution rights then available under the terms
of IFG's plans or federal or state laws. Except as otherwise
specifically provided herein, Employee agrees to reimburse IFG
for all costs incurred in providing any benefits under any
employee benefit plans to Employee from October 1, 1995 through
the Employment Termination Date. Employee agrees that any costs
to be paid or reimbursed to IFG hereunder shall be deducted from
the compensation otherwise payable to Employee pursuant to
Sections 2(a) and (b) or from any commissions to be paid Employee
as a result of activities pursuant to Section 1(c). IFG agrees
that Employee's resignations from his director and officer
positions effective September 30, 1995, execution of this
Agreement, including specifically the
noncompetition/nonsolicitation covenant contained in Section
3(a)(1), and termination of his employment on the Employment
Termination Date shall, as of the Employment Termination Date,
constitute an "Approved Retirement" under the terms of IFG's
Executive Deferred Compensation Plan and Deferred Compensation
Plan for Excess Contributions.
(d) IFG will pay or reimburse Employee's club membership fees
(excluding meals and other use charges) for the balance of 1995
and for the period beginning January 1, 1996 (or such earlier
date as Employee leaves the Rauscher executive offices) and
ending December 31, 1996, and will transfer at its expense
ownership of the corporate membership at Glen Eagles Country Club
to Employee (subject to any applicable rules, regulations or
restrictions imposed by such club).
(e) IFG will reimburse Employee an aggregate of up to $60,000
for expenses incurred for the period through December 31, 1996,
for office space, telephone, secretarial and clerical services,
parking, and outplacement, tax, accounting, financial planning
and legal services related to Employee's resignations.
(f) To the extent permissible under all applicable laws, rules
and regulations (including the rules and regulations of any
securities exchange or self-regulatory body of which IFG or any
of its subsidiaries is a member), as determined in the sole
discretion of IFG, IFG agrees to continue to do all things
necessary to assist Employee in maintaining the currency of
Employee's securities licenses and registrations from October 1,
1995 through the Employment Termination Date.
(g) IFG agrees that all stock options previously granted to
Employee having vesting dates on or before March 1, 1997 are
listed in Exhibit A hereto, that the vesting of all such options
with original vesting dates occurring after the date of this
Agreement has been accelerated and that such options are vested
in full as of the date of this Agreement, that the terms of all
options listed on Exhibit A have been modified to provide that
they expire on March 1, 1996 unless exercised prior to that date
by Employee and that Employee may exercise such options, in
whole or in part, at any time and from time to time prior to
March 1, 1996, at which time any unexercised options will be
forfeited.
3. Covenants of Employee.
(a) Noncompetition/Nonsoliciation.
(1) "Approved Retirement" Agreement. In order for Employee's
resignations pursuant to Section 1 hereof and the execution of
this Agreement to constitute an "Approved Retirement" under the
terms and conditions of IFG's Executive Deferred Compensation
Plan and Deferred Compensation Plan for Excess Contributions,
Employee agrees, for the one-year period commencing October 1,
1995 and ending September 30, 1996, to refrain from performing
any services for or otherwise participating, directly or
indirectly, in the business of any broker/dealer or other entity
(other than IFG and its subsidiaries) engaged in any business in
which IFG or any IFG Affiliate (as defined in the IFG Executive
Deferred Compensation Plan) is engaged in any state in which IFG
or any IFG Affiliate has an office.
(2) Basic Agreement. Except as other wise provided in this
Section (2)(a)(2), through the close of business on December 31,
1998, Employee will not, directly or indirectly, without the
prior written consent of IFG, (A) accept employment in or
otherwise become affiliated or associated any manner or capacity
(e.g., as an advisor, principal, agent, partner, officer,
director, stockholder, employee, independent consultant or
otherwise) with any of the firms (or any affiliate of any firm)
listed on Exhibit B attached hereto or any other firm or unit
within any firm primarily engaging in any general retail or
institutional investment banking or securities brokerage or
trading business of any type generally engaged in by IFG or its
subsidiaries in any state in which Rauscher maintains an office,
unless the total revenues derived by such firm or unit, together
with all of its affiliates, from such investment banking,
securities brokerage or trading business does not exceed $5
million per year, or (B) in any manner assist or encourage any
employee or client of IFG or any subsidiary of IFG to leave the
firm or to remove, transfer or materially reduce any investment
account with IFG or its subsidiaries or open an investment
account with any other brokerage firm, or assist any other person
in carrying out any activity that would be prohibited hereunder
if such activity were carried out by Employee, either directly or
indirectly. Ownership by Employee, as a passive investment, of
less than 5% of the outstanding shares of stock of any firm (or
an affiliate of any firm) listed on Exhibit B shall not
constitute a breach of this Section, nor shall acceptance by
Employee of employment with a firm primarily engaged in the
business of banking, merchant banking, asset management or
venture capital, so long as the department or unit of such firm
in which Employee is engaged does not derive more that $5 million
in revenues per year from investment banking, securities
brokerage or trading activities. Notwithstanding the foregoing,
Employee shall be entitled to terminate his obligation under this
Section (a)(2) for the period beginning January 1, 1998 and
ending December 31, 1998 (or any portion thereof) by giving
written notice to IFG of his desire to do so, provided, however,
that Employee will thereupon forfeit his entitlement to all
payments under Section 2(b) of this Agreement payable on or after
the date of such written notice. In such event, Employee shall
forfeit the $100,000 annualized payment provided in Section 2(b)
(or a pro rata portion thereof representing payment for the month
in which such written notice is given through December 31, 1998).
In addition Employee shall be obligated to pay $100,000 to IFG as
consideration for the acceleration of the vesting of options
referred to in Section 2(g). Employee agrees that such amount
shall be deducted from amounts otherwise required to be
distributed to Employee following the Employment Termination Date
from the IFG Deferred Compensation Plan for Excess Contributions.
(b) Cooperation. Employee agrees to cooperate with IFG and its
subsidiaries in effecting a smooth transition. Employee further
agrees to cooperate with IFG and its subsidiaries to the extent
requested or approved by the Chief Executive Officer of IFG in
the management and conduct of any litigation, arbitration or
agency or other investigation, whether commenced prior to or
after the date hereof. After December 31, 1995, IFG agrees to
pay Employee a per diem of $1,000 per day for each full day (over
3-1/2 hours) or $500 per day for each half day (3-1/2 hours or
less) for time spent by Employee at the request of IFG or its
subsidiaries engaged in consulting or other activities with
respect to the transition, any special projects mutually agreed
to by IFG or its subsidiaries and Employee or participating in
any interviews, analysis, file or document review, deposition or
testifying at or attending any trial, motion or arbitration
hearing or other event in connection with any litigation,
arbitration or agency or other investigation. IFG agrees to
provide Employee with reasonable advance notice of any such
requested activities and will reimburse Employee for reasonable
out-of-pocket travel expenses actually incurred in connection
therewith.
4. Additional Agreements of IFG. IFG shall use its best
efforts to offer Employee's current secretary, Virginia Morin,
another suitable position based on her abilities and tenure with
the company. If Ms. Morin is not offered or does not accept
another position with IFG or a subsidiary of IFG or resigns or is
dismissed on or prior to June 30, 1996 from any position which
she accepts, Ms. Morin will be offered severance arrangements no
less favorable than those typically offered by IFG or its
subsidiaries in the case of a job elimination.
5. Confidential Information. Employee agrees he will not at
any time divulge, furnish or make accessible to anyone any
knowledge or information held in confidence by IFG or its
subsidiaries which is not in the public domain, including, but
not limited to, the identity, financial situation or plans of
clients, the functions, responsibilities or production levels of
employees, the financial or competitive position, strategies or
plans of IFG or its subsidiaries or product or other business
information (including technological information) considered
proprietary by IFG or its subsidiaries.
6. Effect of Breach. If IFG believes Employee has breached or
violated any material obligation imposed under this Agreement,
IFG shall give Employee written notice specifying the breach in
reasonable detail. If Employee fails to cure the specified
breach within 10 days after Employee received such notice of
breach from IFG, IFG shall have the right to terminate this
Agreement and all further obligations to Employee hereunder or to
those others whose rights may derive from him and to terminate
Employee's employment. Provided, that if Employee disagrees with
IFG and gives written notice of such disagreement within 10 days
after Employee received such notice of breach from IFG, Employee
shall have the right to require that the matter be submitted to
arbitration within 30 days after the expiration of such 10-day
period pursuant to Section 17 hereof. If Employee's employment is
terminated pursuant to this Section 6, Employee shall be
obligated to pay $100,000 to IFG as consideration for the
acceleration of the vesting of options referred to in Section
2(g). Employee agrees that such amount shall be deducted from
amounts otherwise required to be distributed to Employee
following the Employment Termination Date from the IFG Deferred
Compensation Plan for Excess Contributions. Employee
acknowledges that it would be difficult to compensate IFG and its
subsidiaries for damages for any violation of this Agreement,
including without limitation the provisions of Sections 3 and 5.
Accordingly Employee specifically agrees that IFG shall be
entitled to temporary and permanent injunctive relief to enforce
the provisions of this Agreement and that such relief may be
granted without the necessity of proving actual damages. This
provision with respect to injunctive relief shall not, however,
diminish the right of IFG or its subsidiaries to claim and
recover damages in addition to injunctive relief.
7. Releases and Indemnities.
(a) Employee, for himself, his heirs, successors and assigns,
hereby releases and forever discharges IFG and its affiliates and
all directors, officers, agents, employees, successors and
assigns of IFG or any of its affiliates from any and all claims,
demands, actions, liability, damages or rights of any kind,
whether known or unknown, arising out of or resulting from any
matter, fact or thing occurring prior to the date of this
Agreement, including, without limitation, Employee's employment
with IFG and its subsidiaries, the resignation of Employee from
his director and officer positions, the termination of his
employment and the provisions made herein with respect thereto
(but excluding Employee's rights under this Agreement and the
various benefit plans of IFG and its subsidiaries, and Employee's
rights under the Indemnification Agreement dated June 20, 1987
between Employee and IFG or otherwise with respect to
indemnification under the Certificate of Incorporation or Bylaws
of IFG and/or its subsidiaries, directors and officers insurance
carried by IFG and its subsidiaries and under the laws of the
State of Delaware). Employee further agrees that he will not
institute nor authorize any other party, either governmental or
otherwise, to institute any administrative or legal proceedings
against IFG or its affiliates or any directors, officers, agents,
employees, successors and assigns of IFG or its affiliates as a
result of any claims of any kind or character which Employee
might have arising from or related to any matter, fact or thing
occurring prior to the date of this Agreement, including, without
limitation, Employee's employment with IFG and its subsidiaries,
the resignation of Employee from his director and officer
positions, the termination of his employment and the provisions
made herein with respect thereto.
(b) IFG, for itself, its successors and assigns, hereby
releases and forever discharges Employee from any and all claims,
demands, actions, liability, damages or rights of any kind,
whether known or unknown, arising out of or resulting from any
matter, fact or thing occurring prior to the date of this
Agreement, including, without limitation, Employee's employment
with IFG and its subsidiaries. IFG further agrees that it will
not institute nor authorize any other party, either governmental
or otherwise, to institute any administrative or legal
proceedings against Employee as a result of any claims of any
kind or character which IFG might have arising from or related to
any matter, fact or thing occurring prior to the date of this
Agreement, including, without limitation, Employee's employment
with IFG and its subsidiaries.
(c) This Agreement is intended to extend to and include, among
other things, any claim of discrimination, on the basis of age or
otherwise, arising under the Minnesota Human Rights Act, Minn.
Stat. Section 363.01 et seq., the Minnesota Age Discrimination
Law, Minn. Stat. Section 181.81 et seq., and the Age
Discrimination in Employment Act, 29 U.S.C. Section 621 et seq.,
and any claim arising under the Employee Retirement and Income
Security Act, 29 U.S.C. Section 1001 et seq. Employee has been
informed of his right to revoke this Agreement insofar as it
extends to potential claims under the Age Discrimination
Employment Act by informing IFG of his intent to revoke this
Agreement within seven (7) calendar days following his execution
of this Agreement. Employee has likewise been informed of his
right to rescind this release insofar as it relates to potential
claims under the Minnesota Human Rights Act by written notice to
IFG within fifteen (15) calendar days following the execution of
this Agreement. In the event of any such revocation or
rescission, IFG will have no obligations whatsoever under this
Agreement, and all payments previously made or benefits conferred
hereunder shall by returned by Employee to IFG.
(d) Employee has also been informed that the terms of this
Agreement will be open for acceptance and execution by him for a
period of twenty-one (21) days during which time he may consider
whether to accept this Agreement. No payments or benefits
pursuant to this Agreement shall become due until Employee has
executed this Agreement.
8. Successors and Assigns of Employee. Neither this Agreement
nor any of the rights, interests or benefits of Employee
hereunder shall be assigned, transferred, pledged, hypothecated
or otherwise disposed of or encumbered by Employee (except on
Employee's death or disability), and, to the extent permitted by
law, no such rights, interests or benefits shall be subject to
attachment, execution or similar process. Any attempted
assignment, transfer, pledge, hypothecation, encumbrance or other
disposition of this Agreement or of any such rights, interests or
benefits, and any such attachment, execution, levy or similar
process, shall be null and void and without effect. This
Agreement shall inure to the benefit of and be enforceable by
Employee's personal or legal representatives, executors,
administrators, successors, heirs and legatees. If Employee
should die and any amount is payable hereunder, such amounts
shall be paid in accordance with the terms of this Agreement to
Employee's devisee, legatee or other designee or, if there is no
such designee, to Employee's estate.
9. Successors and Assigns of IFG. This Agreement shall inure
to the benefit of and be binding upon IFG, its successors and
assigns, including without limitation any person, partnership or
corporation that may acquire all or substantially all of IFG's
assets and business or with or into which IFG be consolidated or
merged or which may hold a majority of IFG's capital stock.
10. Non-Admissions. This Agreement does not constitute and
shall not in any way be construed as an admission by IFG that it
has acted wrongfully with respect to Employee or any other
person, or that Employee has any rights whatsoever against IFG or
its subsidiaries, and IFG specifically disclaims any liability to
Employee.
11. Applicable Law. This Agreement and all questions arising
in connection therewith shall be governed by the laws of the
State of Minnesota.
12. Severability. To the extent any provision of this
Agreement shall be determined to be invalid or unenforceable,
such provision shall be deleted from this Agreement, and the
validity and enforceability of the remainder of such provision
and of this Agreement shall be unaffected. In furtherance and
not in limitation of the foregoing, Employee expressly agrees
that should the duration or geographical extent of, or business
activities covered by, any provision of this Agreement be in
excess of that which is valid or enforceable under applicable
law, then such provision shall be construed to cover only that
duration, extent or activities that may validly or enforceably be
covered. Employee acknowledges the uncertainty of the law in
this respect and expressly stipulates that this Agreement shall
be construed in a manner that renders its provisions valid and
enforceable to the maximum extent (not exceeding its express
terms) possible under applicable law.
13. Waiver; Amendment. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by Employee and
the Chief Executive Officer of IFG. No waiver by either party
hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same time
or at any prior or subsequent time.
14. Reasonable Restrictions. Employee acknowledges and agrees
that the restrictions imposed in this Agreement are reasonable
both as to time and area. Employee further acknowledges and
agrees that his compliance with the covenants and restrictions
set forth herein are reasonable and necessary for the protection
of IFG's and its subsidiaries' future interest in and the value
of their respective businesses.
15. Employee's Acknowledgment. Employee hereby affirms and
acknowledges that he has read the foregoing Agreement and that he
has been given an opportunity to consult with, and has, in fact,
consulted with an attorney prior to signing this Agreement.
Employee acknowledges that he has entered into this Agreement
freely and voluntarily, having obtained such advice and
assistance of legal counsel as he, in his sole discretion,
determined to be necessary or prudent.
16. Notices. Any written notice permitted or required to be
given by Employee to IFG under the terms of this Agreement shall
be addressed and delivered in person or by first class or
certified U.S. mail, overnight delivery service or facsimile to:
Inter-Regional Financial Group, Inc.
Attn: Irv Weiser, Chairman, President
and Chief Executive Officer
Dain Bosworth Plaza
60 South Sixth Street
Minneapolis, MN 55402
Facsimile: (612)371-7203
Any written notice permitted or required to be given by IFG to
Employee under the terms of this Agreement shall be addressed and
delivered in person or by first class or certified U.S. mail,
overnight delivery service or facsimile to:
David A. Smith
17212 Graystone Drive
Dallas, Texas 75248
Facsimile: (214) 733-0130
17. Disputes. In the event of a dispute between the parties
regarding any matter relating to this Agreement, the parties
hereby agree to submit such dispute to binding arbitration. The
decision of the arbitrator(s) shall be final and binding on the
parties. All disputed matters shall be submitted to arbitration
in accordance with the rules of the National Association of
Securities Dealers. In connection with any such arbitration
proceeding, the parties shall have the same rights of discovery
as in a civil proceeding in this state courts of Minnesota,
except that the notice requirements shall be reduced to 14 days.
18. Counterparts. This Agreement may be executed in
counterparts with the same effect as if each of the parties had
signed the same document. All counterparts shall be construed
together and constitute one agreement. A facsimile signature
shall be binding upon any party providing the same and any party
providing a facsimile signature agrees to provide the original
thereof to the other party within a reasonable period of time.
INTER-REGIONAL FINANCIAL GROUP, INC.
By Irving Weiser
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Irving Weiser,
Chairman, President and
Chief Executive Officer
David A. Smith
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David A. Smith
("Employee")