FIG LLC EMPLOYMENT, NON-COMPETITION AND NON-SOLICITATION AGREEMENT
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FIG LLC EMPLOYMENT, NON-COMPETITION AND NON-SOLICITATION AGREEMENT
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THIS EMPLOYMENT, NON-COMPETITION AND NON-SOLICITATION AGREEMENT (together with the exhibits hereto, this “Agreement”) is entered into as of the fourth day of August, 2011, by and between FIG LLC, a Delaware limited liability company (the “Company”), and Michael E. Novogratz (“Executive”).
W I T N E S S E T H:
WHEREAS, the Company desires to secure the services of the Executive for the benefit of the Company and its “Affiliates” (as defined below) from and after the date hereof; and
WHEREAS, Executive desires to provide such services.
NOW, THEREFORE , in consideration of the mutual promises, covenants and agreements herein contained, together with other good and valuable consideration the receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows:
1. SERVICES AND DUTIES .
(a) General . From and after January 1, 2012 (which shall be the “Effective Date” of this Agreement), Executive shall be employed by the Company in the capacity of Principal; in such capacity Executive shall be a member of the Company’s Management Committee. The principal location of Executive’s employment with the Company shall be the present location in which the Executive performs such services, although Executive understands and agrees that Executive may also be required to travel from time to time for business reasons. Executive shall be a full-time employee of the Company and shall dedicate all of Executive’s working time to the Company and its Affiliates and shall have no other employment and no other business ventures which are undisclosed to the Company or which conflict with Executive’s duties under this Agreement. Executive will perform such duties as are required by the Company from time to time and normally associated with Executive’s position, together with such additional duties, commensurate with Executive’s positions with the Company and with its Affiliates, as may be assigned to Executive from time to time by the Board of Directors of Fortress Investment Group LLC (the “Board”). Notwithstanding the foregoing, nothing herein shall prohibit Executive from (i) subject to prior approval of the Board, accepting directorships unrelated to the Company that do not give rise to any conflict of interests with the Company or its Affiliates and (ii) engaging in charitable and civic activities, so long as such outside interests do not interfere individually or in the aggregate with the performance of the Executive’s duties hereunder. The Company acknowledges and approves the current activities of the Executive.
(b) As to Affiliates . The Executive shall report directly to the Board. Parent agrees that during the Term the Executive shall serve as an officer of Fortress Investment Group LLC (the “Parent”) and as a director and officer of each of the Company, FIG Asset Co. LLC and FIG Corp. and each of their directly controlled entities.
(c) Prior Agreement . The Employment, Non-Competition and Non-Solicitation Agreement dated as of January 17, 2007 (the “Prior Agreement”), shall terminate immediately prior to the Effective Date.
2. TERM . Executive’s employment under the terms and conditions of this Agreement will commence on the Effective Date. The term of this Agreement (the “Term”) shall consist of the “Initial Term” and “Renewal Terms” (as defined below), which, in any case, may be terminated earlier pursuant to Section 5 hereof. The Initial Term of this Agreement shall commence on the Effective Date and end on the fifth anniversary of the Effective Date. The Initial Term shall automatically renew for additional one-year periods (each such one-year period, a Renewal Term), unless either party delivers to the other party, at least ninety (90) days prior to the end of the Initial Term or the relevant Renewal Term, a written notice indicating that such party intends not to extend the Term hereof. The delivery by the Company pursuant to this Section 2 of a notice not to extend the Term shall not be deemed a termination of Executive’s employment by the Company without Cause for purposes of this Agreement. If the Term expires, and Executive is employed by the Company thereafter, such employment shall be “at-will.” Notwithstanding the foregoing provisions of this Section 2, the Executive will have the right to voluntarily terminate his employment with the Company at any time, any such termination being effective on the date on which a written notice thereof is delivered to the Company.
3. COMPENSATION .
(a) Base Salary . In consideration of Executive’s full and faithful satisfaction of Executive’s duties under this Agreement, the Company agrees to pay to Executive a salary in the amount of two hundred thousand dollars ($200,000) per annum (the “Base Salary”), payable in accordance with the current regular payroll practices of the Company. This means that Executive will be paid his base salary on a semi-monthly basis on the 15 th (the “First Payday”) and the last day of each month (the “Second Payday”). If the First Payday falls on a holiday or a day outside the regular workweek, then Executive will be paid on the business day immediately prior to the First Payday, and if the Second Payday falls on a holiday or a day outside the regular workweek, then Executive will be paid on the business day immediately prior to the Second Payday. The Company reserves the right to modify its payroll practices and payroll schedule at its sole discretion. The Base Salary shall be reviewed on an annual basis by the Board and adjusted at the Board’s sole discretion; provided, however, in no event shall the Base Salary be reduced without Executive’s approval.
(b) Withholding . The Company may withhold from any benefits or taxable compensation due under this Agreement such Federal, state, and local taxes as may be required or permitted to be withheld pursuant to any applicable law or regulation. The Company may determine that any compensation hereunder constitutes guaranteed payment under Section 707 of the Code.
4. BENEFITS AND EXPENSE REIMBURSEMENT .
(a) Retirement and Welfare Benefits . During the Term, Executive will be entitled to all the usual benefits offered to employees at Executive’s level, including sick time and participation in the Company’s medical, dental and insurance programs, as well as the ability to participate in the Company’s 401(k) retirement savings plan, subject to the applicable limitations and requirements imposed by the terms of such benefit plans, in each case in accordance with the terms of such plans as in effect from time to time. Nothing in this Section 4, however, shall require the Company to maintain any benefit plan or provide any type or level of benefits to its employees, including Executive.
(b) Vacation/Paid Time Off . Notwithstanding anything to the contrary in the Company’s vacation or paid time off (“PTO”) policies, for each calendar year during the Term, Executive shall be entitled to four (4) weeks (20 business days) vacation and paid time off under the Company’s “PTO” plan for each calendar year.
(c) Reimbursement of Expenses . Subject to Section 5(f) below, the Company shall reimburse Executive for any expenses reasonably and necessarily incurred by Executive in furtherance of Executive’s duties hereunder, including travel, meals and accommodations, upon submission by Executive of vouchers or receipts and in compliance with such rules and policies relating thereto as the Company may from time to time adopt.
5. TERMINATION . Executive’s employment shall be terminated at the earliest to occur of the following: (i) at the end of the Term unless Executive agrees to continue working for the Company on an “at-will” basis (as described above in Section 2), (ii) the date on which the Board delivers written notice that Executive is being terminated for Disability (as defined below), or (iii) the date of Executive’s death. In addition, Executive’s employment with the Company may be terminated (i) by the Company for “Cause” (as defined below), effective on the date on which a written notice to such effect is delivered to Executive; (ii) by the Company at any time without Cause, effective on the date on which a written notice to such effect is delivered to Executive or such other date as is reasonably designated by the Company; or (iii) by Executive at any time, effective on the date on which a written notice to such effect is delivered to the Company.
(a) Termination by Company with Cause . If Executive’s employment with the Company is terminated by the Company with Cause, Executive shall not be entitled to any further compensation or benefits other than accrued but unpaid Base Salary (payable as provided in Section 3(a) hereof) and accrued and unused vacation pay through the date of such termination (collectively, the “Accrued Benefits”), which Accrued Benefits shall be payable to Executive within thirty (30) days following the termination date.
(b) Termination by Company without Cause . If Executive’s employment is terminated by the Company without Cause prior to the end of the Term hereof, then Executive shall be entitled to the Accrued Benefits, and, subject to Executive’s execution (within forty-five (45) days following termination of employment) and non-revocation of a signed release of claims in a form adopted by the Board from time to time (a “Release”), a lump sum separation payment equal to three (3) times the Executive’s then-current Base Salary. Amounts due
pursuant to the preceding sentence shall be payable to you on or before March 15 th of the year immediately following the year in which termination of employment occurs. Termination by the Company without Cause is subject to the approval of the holders of the Class B shares of the Parent pursuant to the Shareholders Agreement in effect between the Executive, certain other individuals and the Parent, as such may be amended from time to time.
(c) Death, Disability or Termination by Executive . If Executive’s employment is terminated voluntarily by Executive or by reason of Executive’s death or Disability prior to the end of the Term, in lieu of any other payments or benefits, Executive (or Executive’s estate, as applicable) shall be entitled to the Accrued Benefits, which Accrued Benefits shall be payable to Executive within thirty (30) days following the termination date.
(d) Definitions . For purposes of this Agreement:
“ Affiliate ” means an affiliate of the Company (or other referenced entity, as the case may be) as defined in Rule 405 promulgated under the Securities Act of 1933, as amended.
“ Cause ” means:
(i) the willful engaging by the Executive in illegal or fraudulent conduct or gross misconduct which, in each case, is materially and demonstrably injurious (x) to the Parent, the Company or any of Parent’s other controlled Affiliates other than the Fortress Funds (as defined in Section 8(l) hereof) and their Subsidiaries, (y) to the reputation of the Executive, the Parent, the Company or any of Parent’s other controlled Affiliates other than the Fortress Funds and their Subsidiaries, or (z) to any of the Parent’s or the Company’s material funds or businesses, or
(ii) conviction of a felony or guilty or nolo contendere plea by the Executive with respect thereto, or
(iii) a material breach by the Executive of the non-competition or non-solicitation covenants provided in Section 6 hereof and Exhibit A hereto, if such breach is curable and is not cured within thirty business days following receipt of a notice of such breach or if such breach is not curable.
For purposes of this provision, no act or failure to act on the part of the Executive shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company or was done or omitted to be done with reckless disregard to the consequences. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than two-thirds of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is
provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that in the good faith opinion of the Board, the Executive is guilty of the conduct constituting Cause and specifying the particulars thereof in detail.
“ Disability ” means, as determined by the Board in good faith, Executive’s inability, due to disability or incapacity, to perform all of the Executive’s duties hereunder on a full-time basis for (i) periods aggregating one-hundred-eighty (180) days, whether or not continuous, in any continuous period of three-hundred-and-sixty-five (365) days or, (ii) where Executive’s absence is adversely affecting the performance of the Company in a significant manner, periods greater than ninety (90) days and Executive is unable to resume Executive’s duties on a full time basis within ten (10) days following receipt of written notice of the Board’s determination under this clause (ii).
“ Subsidiary ” means a subsidiary of the Company (or other referenced entity, as the case may be) as defined in Rule 405 promulgated under the Securities Act of 1933, as amended.
(e) Resignation as Officer or Director . Upon the termination of employment for any reason, Executive shall resign each position (if any) that Executive then holds as an officer or director of the Company or any of its Subsidiaries. Executive’s execution of this Agreement shall be deemed the grant by Executive to the officers of the Company and its Affiliates of a limited power of attorney to sign in Executive’s name and on Executive’s behalf documentation solely for the limited purpose of effectuating such resignations.
(f) Section 409A . The intent of the parties is that payments and benefits under this Agreement (including all exhibits hereto) comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”), to the extent subject thereto, and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted and be administered to be in compliance therewith. Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Code Section 409A, Executive shall not be considered to have terminated employment with the Company for purposes of this Agreement, and no payment shall be due to Executive under this Agreement, until Executive would be considered to have incurred a “separation from service” from the Company within the meaning of Code Section 409A. Any payments described in this Agreement that are due within the “short-term deferral period” as defined in Code Section 409A shall not be treated as deferred compensation unless applicable law requires otherwise. The amount of expenses that are eligible for reimbursement in any taxable year shall not affect the amount of expenses eligible for reimbursement in another taxable year. Any reimbursements of such expenses shall be made by the end of the year following the year in which the related expenses were incurred, or, in the case of reimbursements for any taxes to which Executive becomes entitled, by the end of the year following the year in which Executive remits the related taxes, except, in each case, to the extent that the right to reimbursement does not provide for a “deferral of compensation” within the meaning of Code Section 409A.
Each amount to be paid or benefit to be provided to Executive pursuant to this Agreement that constitutes deferred compensation subject to Code Section 409A shall be
construed as a separate identified payment for purposes of Code Section 409A. Notwithstanding anything to the contrary in this Agreement, to the extent that any payments to be made in connection with Executive’s separation from service would result in the imposition of any individual penalty tax imposed under Code Section 409A, the payment shall instead be made on