Employment Agreement - Smith Barney Inc. and Joseph J. Plumeri II
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 30th day of July, 1994, by and among
Smith Barney Inc., a Delaware corporation (the "Company"), and
Joseph J. Plumeri II (the "Executive").
The Board of Directors of the Company desires that the Company
employ the Executive, and the Executive is willing to serve the
Company, on the terms and conditions herein provided.
In order to effect the foregoing, the parties hereto wish to
enter into an employment agreement on the terms and conditions
set forth below. Accordingly, in consideration of the premises
and the respective covenants and agreements of the parties herein
contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Employment. The Company hereby agrees to employ the
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Executive, and the Executive hereby agrees to serve the
Company, on the terms and conditions set forth herein.
2. Term. The employment term of this Agreement shall commence
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on July 30, 1994 (the "Commencement Date") and, subject to
the provisions of Section 10, will end on the third
anniversary of the Commencement Date unless further extended
or sooner terminated as hereinafter provided.
3. Position and Duties. The Executive shall serve as Vice
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Chairman of The Travelers Inc. (or if there shall be a
corporate reorganization such that The Travelers Inc. is
replaced by a different ultimate parent company, then of
that other company ("Travelers"), the indirect parent of the
Company and shall report only to the Chairman of the Board
of Directors, a Vice Chairman, the Chief Executive Officer
or the Chief Operating Officer of Travelers. The Executive
shall have such responsibilities, duties and authorities
commensurate with his position as may from time to time be
assigned to the Executive by the individual to whom the
Executive shall then report. During the term of this
Agreement, the Executive shall devote substantially all his
time and best efforts during normal business hours to the
business and affairs of Travelers (including the Company and
other Travelers' subsidiaries) except for vacations, illness
or incapacity. Nothing in this Agreement shall preclude the
Executive, subject to compliance with such other policies
and procedures that may be in effect at the Travelers, from
devoting reasonable periods required for (i) serving as a
director or member of a committee of any organization
involving no conflict of interest with the Company, (ii)
delivering lectures and fulfilling speaking engagements, and
(iii) engaging in charitable and community activities
provided that such
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activities do not materially interfere with the performance
of his duties hereunder.
4. Place of Performance. In connection with the Executive's
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employment by the Company, the Executive shall be based at
the principal executive offices of Travelers in the City of
New York, except for required travel on business.
5. Compensation and Related Matters.
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(a) Compensation. During the period of the Executive's
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employment hereunder, the Company shall pay to the
Executive compensation as set forth on Attachment A
hereto. The compensation shall be paid in accordance
with the Company's normal payroll practices, as in
effect from time to time and any bonus for 1997 shall,
subject to the other provisions of this Agreement, be
paid when 1997 bonuses are generally paid by the
Company notwithstanding whether or not Executive is
then employed by the Company.
(b) Expenses. During the period of the Executive's
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employment hereunder, the Executive shall be entitled
to receive prompt reimbursement for all reasonable and
customary expenses incurred by the Executive in
performing services hereunder, including all expenses
of travel and living expenses while away from home on
business, provided that such expenses are incurred and
accounted for in accordance with the policies and
procedures established by the Company.
(c) Other Benefits. The Executive shall be entitled to
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participate in all of the employee benefit plans and
arrangements generally available to senior executives
of Travelers (including without limitation each
retirement plan, supplemental and excess retirement
plans, annual and long-term incentive compensation
plans, stock option and purchase plans, group life
insurance (presently group universal life insurance)
and accident plan, medical and dental insurance plans,
financial planning and disability plan). The Executive
shall participate in the Travelers Supplemental
Retirement Plan through maintenance of the existing
frozen benefit and, if and to the extent that it shall
be reopened to participation generally by senior
officers of the Company or of Travelers, accrual of
future benefits, all in accordance with the plan
provisions as in effect from time to time except that
the Executive's service at Shearson will be counted for
the purpose of vesting only. During the period of the
Executive's employment hereunder, the Company will
reimburse the Executive for annual premium to purchase
a term life insurance policy from Primerica Financial
Services ("PFS") carrying a death benefit of up to
$1,500,000.
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(d) Capital Accumulation Plan. The Executive shall
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participate in the Travelers Capital Accumulation Plan
("CAP"), and any successor or replacement plan
generally applicable to senior executives of the
Company (provided that (i) the "Other Payments" set
forth in Attachments A or B hereof and (ii) any
amounts payable under Section 7 at or following a
termination of employment, shall not be subject to
CAP). The provisions of such plan, as in effect from
time to time, shall govern the participation by the
Executive except as provided in Attachment C hereto.
(e) Vacations. The Executive shall be entitled to no less
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than the number of vacation days in each calendar year
determined in accordance with the Company's vacation
policy. The Executive shall also be entitled to all
paid holidays and personal days given by the Company to
its executives.
(f) Services Furnished. The Company shall cause Travelers
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to furnish the Executive with office space, secretarial
assistance and such other facilities and services as
shall be suitable to the Executive's position and
adequate for the performance of his duties as set forth
in Section 3 hereof.
(g) Stock Option. As of the date hereof, the Executive
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holds options to purchase 200,000 shares of common
stock of Travelers pursuant to the provisions of the
Travelers Stock Option Plan. In addition to the
existing stock options, the Executive will be
recommended for an additional grant of options to
purchase 100,000 shares of common stock of Travelers
pursuant to the Travelers Stock Option Plan (on a
standard five (5) year vesting schedule) at the
September, 1994 meeting of the Nominations and
Compensation Committee. In the event of (i) the
termination of this Agreement on account of the death
or disability of the Executive or by the Company
without Cause or by the Executive for Good Reason, the
Executive shall be entitled to two (2) years of
additional vesting and exercise of both grants of stock
options, or any longer periods of vesting and exercise
provided for in the Stock Option Plan, or (ii) the
termination of this Agreement by the Executive but
without Good Reason, the Executive shall be entitled to
the remainder (if any) of a two (2) year period running
from the date hereof of additional vesting and exercise
for the original grant of stock options, in both cases
subject to the other provisions of the Stock Option
Plan.
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(h) The Executive shall be entitled to have, at the
Company's expense, a car and driver at the level
similar to other senior executives of Travelers.
6. Termination. The Executive's employment hereunder may be
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terminated under the following circumstances:
a) Death. The Executive's employment hereunder shall
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terminate upon his death.
b) Disability. If, as a result of the Executive's
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incapacity due to physical or mental illness, the
Executive shall have been absent from his duties
hereunder on a full-time basis for the entire period of
six (6) consecutive months, and within thirty (30) days
after written notice of termination is given (which may
occur before or after the end of such six (6) months
period) shall not have returned to the performance of
his duties hereunder on a full-time basis, the Company
may terminate the Executive's employment hereunder.
(c) Cause. The Company may terminate the Executive's
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employment hereunder for Cause. For purposes of this
Agreement, the Company shall have "Cause" to terminate
the Executive's employment hereunder upon the
Executive's willful refusal to perform his properly
assigned duties, or if the Executive shall be convicted
of or plead guilty or nolo contendre to conduct
constituting a felony, or in the event of a material
violation of Section 10(a) of this Agreement. Such
termination for reason of the Executive's willful
refusal to perform his duties shall only be effective
upon the Company's written notice of termination to the
Executive and the Executive's failure within ten (10)
days following such notice to cure the breach specified
in such notice.
(d) Any termination of the Executive's employment by the
Company or by the Executive (other than termination
pursuant to subsection (a) hereof) shall be
communicated by written Notice of Termination to the
other party hereto in accordance with Section 12. For
purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for
termination of the Executive's employment under the
provision so indicated.
(e) "Date of Termination" shall mean (i) if the Executive's
employment is terminated by his death, the date of his
death, (ii) if the Executive's employment is terminated
pursuant to subsection (b) above, the later to
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expire of thirty (30) days after Notice of Termination
is given pursuant to subsection (b) above or the six
(6) month disability period (provided that the
Executive shall not have returned to the performance of
his duties on a full-time basis prior to expiration of
the thirty (30) day notice period or the six (6) month
disability period, whichever shall expire later) (iii)
if the Executive's employment is terminated pursuant to
subsection (c) above, the date specified in the Notice
of Termination, and (iv) if the Executive's employment
is terminated for any other reason, the date specified
in the Notice of Termination (or, if no date is so
specified, on the date on which a Notice of Termination
is given).
(f) Good Reason. The Executive may terminate his
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employment hereunder for Good Reason. For purposes of
this Agreement, the Executive shall have "Good Reason"
to terminate his employment if the Company shall
materially breach its obligations under this Agreement
as to position, reporting relationship,
responsibilities, duties, authority or place of
performance, as specified in Sections 3 and 4. Such
termination for Good Reason shall only be effective
upon the Executive's written notice of termination to
the Company and the Company's failure within ten (10)
days following such notice to cure the breach specified
in such notice.
(g) The Executive may terminate his employment hereunder
without Good Reason. Such termination shall only be
effective upon receipt of Executive's written notice of
termination to the Company. In such event, the
Company's obligations with regard to compensation shall
be as provided in Section 7(a). Except as otherwise
provided for herein, the provisions of the Stock Option
Plan, the Capital Accumulation Plan and other employee
plans will govern as to participation in such plans.
Such a termination shall not affect the Executive's
other obligations under this Agreement, including
without limitation Section 10.
(h) In the event the Executive shall terminate his
employment with or without Good Reason or if the
Company shall terminate the Executive s employment
other than for Cause, the Company shall furnish to the
Executive appropriate office space, his then
administrative assistant (if employed by the Company or
Travelers or, if not, other appropriate secretarial
assistance) and his existing car and driver until the
earlier of his commencing other employment or six (6)
months after such date of termination.
7. Compensation Upon Termination.
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(a) During any period that the Executive fails to perform
his duties hereunder as a result of incapacity due to
physical or mental illness ("disability period"), the
Executive shall continue to receive his full base
salary at the rate then in effect until his employment
is terminated pursuant to Section 6(b) hereof (provided
that payments so made to the Executive during the
disability period shall be reduced by the sum of the
amounts, if any, payable to the Executive at or prior
to the time of any such payment under disability
benefit plans of the Company and which amounts were not
previously applied to reduce any such payment).
If the Executive's employment is terminated (i) on
account of disability or (ii) by the Executive but not
for Good Reason and with an effective date on or prior
to July 30, 1996, or (iii) by the Company for Cause,
the Company shall pay to the Executive the unpaid
amounts, if any, set forth in Attachment B. In
addition, Executive shall retain his rights, if any,
under any deferred compensation or other benefit plans
in which he participates as specifically provided
herein, or, if not otherwise specifically provided for
in this Agreement, as provided in such plan and the
Company shall have no further obligations to the
Executive under this Agreement.
(b) If the Executive's employment is terminated by his
death, the Company shall pay to the Executive's estate
or as may be directed by the legal representatives of
such estate, the unpaid amounts, if any, set forth in
Attachment B. In addition, the Executive shall retain
his rights, if any, under any deferred compensation or
other benefit plans in which he participates as
specifically provided herein or, if not otherwise
specifically provided for in this Agreement, as
provided in such plan and the Company shall have no
further commitments under this Agreement.
(c) [Intentionally Omitted]
(d) If the Executive's employment is terminated (i) by the
Company other than for Cause (ii) by the Executive for
Good Reason, or (iii) by the Executive but not for Good
Reason and with an effective date after July 30, 1996
then the Company shall pay the Executive his full
compensation (as specified in Attachment A ) through
the full employment term of this Agreement (as
specified in Section 2 and, for these purposes, as if
such earlier termination had not occurred and not
subject to change as specified in Sections 6(a) and (b)
and 7(a) and (b) in the event of the death or
disability of the Executive subsequent to such a
termination), payable when otherwise due under this
Agreement. In addition, the Executive shall retain his
rights, if any, under any deferred compensation or
other benefit plans in which he participates
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as specifically provided herein or, if not otherwise
specifically provided for in this Agreement, as
provided in such plan and the Company shall have no
further obligations to the Executive under this
Agreement.
(e) The provisions of this Section 7 (together with (i) the
provisions of any vacation, deferred compensation or
other benefit plans in which he participates and which
are not otherwise specifically provided for in this
Agreement, (ii) the provisions of the CAP and Stock
Option Plans as in effect from time to time and as
specifically provided for in this Agreement in the
event of a termination and (iii) the continuation of
services provision set forth in Section 6(h)) are the
exclusive rights of the Executive regarding a severance
or termination occurring prior to expiration of the
employment term. The rights of the Executive regarding
a severance or termination occurring after expiration
of the employment term shall be governed exclusively by
the Company's regular severance policies as in effect
at such time, except as otherwise specifically provided
for herein.
8. Mitigation. The Executive shall not be required to mitigate
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amounts payable pursuant to Section 7 hereof by seeking
other employment or otherwise and any amounts received from
other employment shall not reduce any amounts due under
Section 7.
9. [Intentionally Omitted]
10. Confidentiality and Non-Solicitation.
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(a) Confidentiality. During the employment term of this
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Agreement and thereafter, the Executive will not,
without the written consent of the Company, make use of
or divulge to any person, firm or corporation, any
trade or business secret which may be disclosed to him
by the Company or Travelers or as a result of his
employment with the Company hereunder or his position
with Travelers excepting only such information which
shall be made public without the fault of the Executive
and such information as the Executive shall be
obligated to disclose pursuant to legal process. In
addition, the foregoing provision shall not impair the
ability of the Executive to exercise his good faith
judgment as to disclosures in connection with his
duties hereunder.
(b) Non-Solicitation. In the event the Executive's
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employment hereunder is terminated for any reason the
Executive (i) shall not be personally involved,
directly or indirectly, in hiring any employee of the
Company or Travelers or any of their subsidiaries who
either is a financial
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consultant (or similar position) for the Company or
whose annual compensation is in excess of $100,000 or
any independent representative of the Company or
Travelers or any of its subsidiaries who is intended to
act as a full-time representative (e.g., at Primerica
Financial Services, a sales force designation of RVP
or higher ) (any of the foregoing being a "Protected
Person") unless the Company or Travelers shall agree in
writing to such hiring, and (ii) shall not be
personally involved, directly or indirectly, in
soliciting any Protected Person to leave their
employment or terminate their relationship (it being
agreed that simply responding to a request for a
reference will not be deemed direct or indirect
solicitation), in either case until the latest to occur
of the following:
- one year after termination of employment (but not
longer than July 30, 1998).
- the date the last payment of base salary or bonus
actually payable to the Executive is due and
payable under the provisions of Section 7.
- the date the last payment actually payable to the
Executive is due and payable under Attachment B.
- in the event the Executive shall voluntarily
terminate his employment but without Good Reason,
July 30, 1996 (notwithstanding the fact that such
date may be more than one year after such
termination of employment).
(c) The provisions of this Section 10 shall survive the
termination, for any reason, or expiration of this
Agreement.
11. Indemnification. Both during and after the employment term,
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the Company shall indemnify the Executive to the full extent
permitted by law for all expenses, costs, liabilities and
legal fees which the Executive may incur by reason of
entering into this Agreement and in the discharge of all his
duties hereunder, other than for any such expenses, costs,
liabilities or legal fees incurred resulting from the
Executive's bad faith or gross negligence. The provisions
of this Section shall be in addition to, and not in lieu of,
any other rights of indemnification available to the
Executive and shall apply to the Executive when serving in
other capacities at the written request of the Company.
Legal fees covered by this indemnification shall be advanced
as incurred. The provisions of this Section 11 shall
survive the termination, for any reason, or expiration of
this Agreement.
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12. Notice. For the purposes of this Agreement, notices,
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demands and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have
been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered
mail, return receipt requested, postage prepaid, addressed
as follows:
If to the Executive:
Joseph J. Plumeri II
1461 Martine Avenue
Scotch Plains, New Jersey 07076
With a copy to:
Michael S. Sirkin, Esq.
Proskauer Rose Goetz & Mendelsohn
1585 Broadway
New York, New York 10036
If to the Company:
333 West 34th Street
New York, New York 10001
Attention: General Counsel
with a copy to:
The Travelers Inc.
65 East 55th Street
New York, New York 10022
Attention: General Counsel
or to such other address either party may have furnished to
the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon
receipt.
13. Miscellaneous. No provision of this Agreement may be
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modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and
signed by the Executive and a duly authorized officer of the
Company. No waiver by either party hereto at any time of
any breach of 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 or at any
prior or subsequent time. This Agreement
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shall not be assignable by the Executive. This Agreement
shall not be assignable by the Company except in connection
with the sale of all or substantially all of the retail
brokerage business of the Company, in which case it shall be
assumed by Travelers, all references to the Company shall be
deemed thereafter to be references to Travelers and the
obligations of the Company hereunder shall cease; thereafter
it shall not be assignable by Travelers except in connection
with the sale of all or substantially all of the assets of
Travelers. This Agreement shall be binding on the
successors and permitted assigns of the Company. The
validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of
Delaware without regard to its conflicts of law principles.
In the event the Company breaches this Agreement by non-
payment of any amounts due to the Executive hereunder, the
Executive shall be entitled to recover his costs of
collection. Whenever in this Agreement reference is made to
a pro rata portion of an amount, it shall be calculated by
multiplying an annual amount by a fraction, the numerator of
which is the number of elapsed days in a period (e.g., the
number of days in a calendar year prior to a termination of
employment) and the denominator of which is 365.
14. Validity. The invalidity or unenforceability of any
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provision or provisions of this Agreement shall not affect
the validity or enforceability of any other provision of
this Agreement, which shall remain in full force and effect.
15. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and
the same instrument.
16. Arbitration. Any controversy or claim arising out of or
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relating to this Agreement, whether arising before or after
the expiration or other termination of this Agreement, shall
be settled by arbitration in New York City in accordance
with the commercial rules of the American Arbitration
Association, except to the extent specifically described in
a document signed by both of the parties hereto and which
specifically refers to this Section. Any decision by the
arbitrators shall be final and binding on the parties and
may be entered into in any court of competent jurisdiction.
17. Entire Agreement. This Agreement sets forth the entire
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agreement of the parties hereto in respect of the subject
matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications,
representations or warranties, whether oral or written,
express or implied, by any officer, employee or
representative of either party hereto, including without
limitation the prior employment agreement between the
parties dated as of July 30, 1993, except to the extent
specifically described in a document signed by both of the
parties hereto and which specifically refers to this
Section.
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date and year first above written.
EXECUTIVE
/s/ Joseph J. Plumeri II
_________________________________
Joseph J. Plumeri II
SMITH BARNEY, INC.
/s/ James Dimon
By:_______________________________
Name: James Dimon
Title: Chief Operating Officer
The Travelers Inc. hereby agrees, for the benefit of Joseph J.
Plumeri II, to guarantee the obligations of Smith Barney Inc.
pursuant to that certain Employment Agreement dated as of July
30, 1994. This is a guarantee of payment and not of collection.
The Employment Agreement may be amended by Joseph J. Plumeri II
and Smith Barney Inc., with or without notice to The Travelers
Inc., without affecting this guarantee and this guarantee shall
extend to such Employment Agreement as amended even if it
increases the obligations and liabilities of The Travelers Inc.
THE TRAVELERS INC.
/s/ Charles O. Prince, III
By: ________________________________
Name: Charles O. Prince, III
Title: Senior Vice President
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Attachment A
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Base Salary
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July 30, 1994 - July 30, 1996 at a rate of $950,000 per year
July 30, 1996 - July 30, 1997 at a rate to be determined within the
discretion of the Company
Bonus
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For calendar year 1994 $1,883,333
For calendar year 1995 $2,350,000
For calendar year 1996
for the period January 1 through July 30 $1,370,833
for the period August 1 through An amount to be
December 31 determined within the
discretion of the
Company
For the portion of the Agreement within An amount to be
1997 determined within the
discretion of the
Company
Other Payments
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July 30, 1996 $2,000,000
July 30, 1997 $3,400,000
NOTE:
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By way of example, in the event of a termination of employment by
the Executive whether with or without Good Reason or by the
Company but without Cause and, in either case, with an effective
date after July 30, 1996, compensation on termination to be paid
would be as follows:
- base salary - at then current rate through date of termination
- bonus - an amount for any period after July 30, 1996 to be
determined within the discretion of the Company (in addition,
if not already paid, to the amount specified above for the
period January 1, through July 30, 1996) - payable when
bonuses are generally paid for the calendar year in question.
- Other Payment - $3,400,000 payable July 30, 1997
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Attachment B
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It is the agreement of the parties hereto that a portion, but not
all, of the compensation payments specified in Attachment A shall
be payable notwithstanding certain types of terminations of this
Agreement. Specifically, in the event of a termination of
employment because of (i) death, (ii) disability (iii)
termination by the Executive but not for Good Reason and with an
effective date on or prior to July 30, 1996 or (iv) by the
Company for Cause, the following amounts of compensation, to the
extent unpaid , shall continue to be paid:
Base Salary
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If termination occurs during the period July 30, 1994 - July 30,
1996 - payment of base salary at a rate of $450,000 per year
through July 30, 1996. If termination occurs after July 30,
1996, at then current base salary through date of termination.
Bonus
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If termination occurs during the period July 30, 1994 - July 30,
1996, then payment of the following bonuses for the following
calendar years:
1994 $1,550,000
1995 $1,550,000
1996 $ 904,166
If termination occurs after July 30, 1996, $904,166 for the
period January-July, 1996 and an amount for any remaining period
to be determined within the discretion of the Company
Other Payments
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July 30, 1996 $2,000,000
July 30, 1997 $2,000,000
All such specified payments shall be made as and when otherwise
due under this Agreement except in the case of a termination of
employment because of death, in which case any such payments
shall be calculated as a present value amount using a discount
rate equal to the average of the then published "prime rates" of
the major money center banks headquartered in New York City and
paid in a lump sum.
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Attachment C
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It is the agreement of the parties hereto that special treatment
shall be accorded the Executive s participation in the CAP Plan
in the event of certain types of termination of this Agreement.
Specifically, in the event of termination by the Executive either
for Good Reason or without Good Reason the following shall apply
to CAP contributions to the extent not yet vested:
1 As to unvested CAP contributions made prior to the date
hereof:
1 without Good Reason (i) prior to July 30, 1995 - the
original cash amount of such contributions shall be
forfeited; or (ii) after July 30, 1995, treated under
the CAP Plan as an involuntary termination without
Cause and all such amounts shall be paid to the
Executive.
2 for Good Reason - treated under the CAP Plan as an
involuntary termination without Cause and all such
amounts shall be paid to the Executive.
2 As to unvested CAP contributions made after the date hereof:
1 relating to the portion of compensation identified in
Attachment B which is subject to CAP
1 for Good Reason or without Good Reason and whether
termination occurs before or after July 30, 1995 -
treated under the CAP Plan as an involuntary
termination without Cause and all such amounts
shall be paid to the Executive
2 relating to the balance of total compensation which is
subject to CAP in excess of that identified in
Attachment B
1 for Good Reason - treated under the CAP Plan as an
involuntary termination without Cause and all such
amounts shall be paid to the Executive
2 without Good Reason - such amounts shall be
forfeited.
Except as specifically provided in this Attachment C, all other
CAP contributions shall be treated in accordance with the
provisions of the CAP Plan, as in effect from time to time.
3