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EXHIBIT 10.2(e)
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
AND NON-COMPETITION AGREEMENT;
CONTINGENT CONSULTING AGREEMENT
WHEREAS, ON JULY 16, 1996, Richard P. Davis ("Davis") and The John Nuveen
Company ("JNC") entered into an Employment Agreement (the "Employment
Agreement") setting forth the terms and conditions of Davis' employment and
compensation by JNC and a Non-Competition Agreement;
WHEREAS, the parties desire to enter into this amendment to the Employment
Agreement and the Non-Competition Agreement (as so amended, the "Amended
Agreement") to reflect certain specific agreed upon changes in such terms and
conditions, but to otherwise leave the provisions of the Employment Agreement
and the Non-Competition Agreement in effect;
WHEREAS, the parties also desire to enter into a Contingent Consulting Agreement
to address certain contingencies which agreement is set forth in this Amended
Agreement;
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises
and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, JNC
and Davis agree as follows:
1 Services - Davis will provide services to JNC and its subsidiaries or
affiliates (collectively "JNC") during the term of the Amended Agreement
which are expected to relate principally to JNC's sales and marketing
efforts. Davis will be based in Dayton and will work under the direction of
the Nuveen Executive Committee. While John Amboian will serve as the
representative of such committee for day-to-day reporting purposes, Davis
will be expected to work closely with others at JNC on a project-by-project
basis. Davis' new title will be Senior Consultant.
2. Communications - The agreed upon internal and external communications with
respect to Davis' new role with JNC are as set forth in Exhibit A hereto.
The parties anticipate making such communication on February 3, 1998.
3. Term - The Amended Agreement will not change the December 31, 2001
termination date provided in the Employment Agreement. JNC may not
terminate the Amended Agreement without Cause and Davis may not terminate
his employment hereunder for Good Reason (other than for non-payment of
amounts due hereunder) as such terms are defined in the Employment
Agreement.
4. Time Commitment - Davis will devote his efforts to JNC matters, special
projects and business relationships that are appropriate for a professional
with Davis'
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experience and stature, as reasonably requested by JNC with at least 10
days' notice. JNC will make reasonable accommodation for prior personal
commitments of Davis (e.g., formalized vacation plans). The parties
acknowledge that the amount of services requested by JNC hereunder may vary
significantly from period to period for various reasons. The availability
of Davis for and scheduling of services in excess of 200 hours during any
calendar year is subject to the mutual agreement of the parties.
5. Compensation - Davis will receive $250,000 per year of annual base
compensation. Davis will also continue to participate in the JNC annual
bonus plan and receive a $750,000 cash bonus payment for each of 1998
through 2001 respectively. Payments will not be due in the event of a
breach of the Amended Agreement, including the Employment Agreement, or in
the event that Davis disparages the JNC business with JNC's business
partners and investors, with the public or within the industry, other than
in statements that are required by law. Upon Davis' request, JNC will use
its best efforts to obtain term life insurance covering Davis with death
benefits in the amount of $1.5 million, which insurance shall remain in
effect until the earlier of December 31, 2001 or the termination of the
Amended Agreement, subject to the insurability of Davis under applicable
life insurance underwriting standards.
6. Benefits - During the term of the Amended Agreement, Davis will continue to
be an employee and to participate in all benefit plans generally available
to other senior management of JNC, including group insurance, profit
sharing and retirement plans and the Nuveen scholarship program. For
purposes of the JNC defined benefit plan, Davis will be entitled to the
additional years of service credit for serving through the term of the
Amended Agreement in accordance with the step up for service credits set
forth in the Employment Agreement.
7. Support Services - JNC will provide Davis office space and secretarial
services in Dayton for as long as Nuveen maintains an office in Dayton.
Thereafter, JNC will pay Davis $2,750 per month for support services
relating to his services hereunder (e.g., office space, storage, telephone,
secretarial). Davis will be reimbursed for all other approved expenses
(e.g., travel and entertainment) relating to his services under the Amended
Agreement in accordance with Nuveen policies. Davis' administrative
assistant will be entitled to all benefits awarded other similarly situated
Nuveen employees in Dayton in the event her services are no longer needed
by Nuveen.
8. Non-Compete - The non-compete provisions in the Employment Agreement and
the Non-Competition Agreement are amended so that all non-compete periods
will end on December 31, 2001. Notwithstanding the foregoing, the Amended
Agreement does not change in any way the scope of the non-compete
arrangements set forth in the Employment Agreement and the Non-Competition
Agreement, provided that the non-compete in the Non-Competition Agreement
shall not be read to be more
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restrictive than in the Amended Agreement. However, the parties agree to
the following procedures regarding the application of the non-compete
provisions and requests by Davis to provide services to other entities that
are subject to the non-compete provisions:
(i) 1998 - 1999 Calendar Years - During this period, JNC will consider requests
that Davis may make to provide services that would otherwise violate the
non-compete provisions, it being understood that such requests will be
considered at JNC's sole discretion and there can be no assurance that any
such request will be granted. Any permission by JNC to provide such
services must be evidenced by a writing signed by JNC that makes reference
to this provision.
(ii) 2000 - 2001 Calendar Years - During this period, Davis may request
permission to provide services that would otherwise violate the non-compete
provisions, and JNC will consider such requests in good faith and will not
unreasonably withhold such permission provided: (1) Davis' primary
responsibility will not involve, and Davis will not provide more than
incidental services to, any area or line of business that directly competes
with JNC and (2) JNC is reasonably satisfied that there are procedures in
place to monitor such limitations and any changes in Davis'
responsibilities or the scope of the third parties' business activities.
Notwithstanding the foregoing, Davis may not provide services in any
capacity (A) involving the distribution of securities or other investment
products at or on behalf of any regional or national broker-dealer firm,
(B) for or on behalf of a mutual fund sponsor or manager or (C) for or on
behalf of any other person if such services would involve (A) or (B) above.
Any permission by JNC to provide such services must be evidenced by a
writing signed by JNC that makes reference to this provision. In the event
of such employment, JNC will be entitled to reduce the bonus payable to
Davis hereunder by one-half of the compensation received or payable to
Davis in respect of such arrangement in any calendar year. During this
period, Davis will also be permitted to elect to be released from all
non-compete obligations to JNC so that Davis may accept any employment
position or otherwise provide services without regard to the non-compete
provisions, provided that Davis agrees to (1) relinquish both his base
compensation and bonus payments under the remaining term of the Amended
Agreement and his payments under the remaining term of the Non-Competition
Agreement and (2) resign his employment at JNC with the attendant loss of
employee benefits. Any such exercise of this right by Davis must be
evidenced by a writing signed by Davis, that makes reference to this
provision. Notwithstanding anything to the contrary, Davis will not be
entitled to exercise his right to make the above election prior to January
1, 2000.
(iii)In the event Davis is performing services to or for another entity in
accordance with the terms of the Amended Agreement and such other entity
increases the scope of its business activity so as to cause Davis'
arrangement to be prohibited by the non-compete, Davis shall have the right
to cure such breach by promptly
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terminating his arrangement with the third party upon learning of such
increased business activities.
9. Form of Contract - The Amended Agreement constitutes an amendment to the
Employment Agreement and the Non-Competition Agreement. Except for the
changes specifically described herein, all of existing provisions of
Employment Agreement and the Non-Competition Agreement (e.g., change of
control, termination for cause, retirement or resignation, death and
disability, confidential information, non-disclosure) will not change.
10. Other Flagship Acquisition Arrangements: Contingent Consulting Agreement -
The Amended Agreement will effect no change in any of the other agreements
entered into in connection with the Merger Agreement by and among the
selling shareholders of Flagship and JNC, including the contingent merger
consideration provisions, subject to the following. The parties hereby
enter into a Contingent Consulting Agreement which will be triggered in the
event that the contingent merger consideration payable to Davis and his
related trusts (or their successors) does not aggregate to the threshold
amount of $4.75 million (the "threshold").
If the contingent amounts paid to Davis and his related trusts is less than
the threshold (a "shortfall"), the Contingent Consulting Agreement is
effective commencing January 1, 2002 for a period of five years (subject to
early termination as described below), under which Davis will continue to
be available to JNC for consulting (but would no longer have an employment
relationship) and will receive the amount of the shortfall over the term of
the Contingent Consulting Agreement. In this period, Davis will provide the
services, reporting arrangement and title set forth in Section 1 hereof.
The time commitment of Davis will be as set forth in Section 4 hereof,
except that services in excess of 100 hours in any calendar year will be
subject to the mutual agreement of the parties. The amount of the shortfall
will be paid in annual installments of $500,000 (or, if less, the total
remaining amount of the shortfall), beginning February 15, 2002. If the
total amount of the shortfall has not been paid, through such installments
prior to the scheduled termination of the Contingent Consulting Agreement,
the total remaining amount of the shortfall will be paid in a lump sum at
such time. The Contingent Consulting Agreement will (1) automatically
terminate early upon payment of the entire shortfall unless extended by the
parties upon mutual agreement, (2) not prohibit Davis from providing
professional services to other organizations so long as Davis discloses to
Nuveen before providing such services the identity of the other
organization(s) (in the event such services would have otherwise have been
prohibited under the non-compete contained in the Amended Agreement) and,
unless prohibited by the terms of Davis' arrangement with the other
organization(s), the nature of the services to be provided. All payments
due under the Contingent Consulting Agreement will be paid to Davis or his
estate in the event of his disability or death. Except as set forth in
Section 10 hereof, no provision of the
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Amended Agreement or the Non-Competition Agreement shall apply during the
term hereof.
If there is no shortfall, the Contingent Consulting Agreement will not
become effective and Davis' employment and other relationships with Nuveen
will terminate on December 31, 2001, unless the parties mutually agreed to
a new consulting or other arrangement at that time.
11. Most Favored Arrangements - If Bruce Bedford's status as a full-time
employee of Nuveen changes, and if Bedford enters into an agreement with
Nuveen in connection therewith that provides (1) consulting/employment
terms (other than compensation), non-compete terms or earnout threshold
terms that are more favorable to Bedford, the Trusts established for the
Bedford family, or Paddington Resources than the comparable terms of the
Amended Agreement or (2) compensation payable to Bedford during the
remaining term of the Amended Agreement that is in the aggregate greater
than that received by Davis in the aggregate hereunder during the entire
term of the Amended Agreement, this Amended Agreement will automatically be
amended to provide for such more favorable terms and/or additional
compensation. The parties acknowledge that the foregoing provision has no
application to compensation paid to Bedford in respect of periods during
which he is a full-time JNC employee.
IN WITNESS WHEREOF, each party has executed and delivered this Amendment
No. 1 to the Employment Agreement and the Non-Competition Agreement and
Contingent Consulting Agreement as of the date written below:
RICHARD P. DAVIS
Date:
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THE JOHN NUVEEN COMPANY
By: Date:
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John P. Amboian
Executive Vice President
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EXHIBIT A
After successfully integrating and building the post-merger Nuveen and Flagship
Broker/Dealer sales organization, RICHARD DAVIS will assume the new role of
Senior Consultant to the firm.
Dick was a driving force in completing the successful merger of the Nuveen and
Flagship Broker/Dealer sales organization and has spent the past 18 months
laying the foundation and fundamentals that have led to our sales success. In
addition, Dick has been instrumental in increasing the awareness of Nuveen's
distribution capabilities and product knowledge with our wirehouse and regional
firm partners.
Dick began his career at Mead Corporation in 1972 after completing his
undergraduate degree at the University of Dayton. He holds graduate degrees in
Finance and Economics from Wright State University. In 1976 he was named
President of Mead Money Management, successfully converting the in-house
investment department to an SEC registered investment company. Dick co-founded
Flagship in 1984 and was responsible for growing the firm's municipal mutual
fund and private account management business from $200 million to over $4.5
billion in assets.
In his new role, Dick will advise and consult Nuveen with respect to sales,
marketing and developmental initiatives under the direction of the Executive
Committee. Dick will continue to be based in Dayton, Ohio.
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