EXHIBIT 10.2
------------
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is entered into
as of the 28th day of January, 2000 (the "Effective Date"), by and between
PENNCORP FINANCIAL GROUP, INC., a Delaware corporation (the "Company"), and
Xxxxx X. Xxxx (the "Executive").
WHEREAS, the Company has entered into a Stock Purchase Agreement dated
January 7, 2000 with Reassure America Life Insurance Company and a separate
Stock Purchase Agreement dated January 8, 2000 with Pioneer-Occidental Holding
Company;
WHEREAS, the Company intends to file a petition under Chapter 11 of the
Bankruptcy Code and to liquidate; and
WHEREAS, the Company desires to ensure the availability of the
Executive's services to complete the sales in accordance with the Stock Purchase
Agreements and to manage the Company's affairs during its bankruptcy proceeding
and its liquidation, and the Executive is willing to provide such services;
IN CONSIDERATION of the mutual covenants and agreements hereinafter set
forth, Company and Executive agree as follows:
1. Agreement Term.
--------------
The term of this Agreement shall be the period commencing on the
Effective Date and ending on the earliest of (i) December 31, 2000, (ii)
completion of the Chapter 11 bankruptcy proceeding of the Company, and (iii) the
termination date determined by the Board of Directors of the Company (the
"Agreement Term").
2. Employment.
----------
(a) Employment by the Company. Executive agrees to be
employed by Company for the Agreement Term upon the
terms and subject to the conditions set forth in this
Agreement. Throughout the Agreement Term, Executive
shall serve as President and the Chief Executive
Officer of Company and be responsible for the general
management of the operations of Company, and serve as
Chairman of Company's Operating Committee. Executive
shall be elected or appointed as a member of the
Board of Directors of Company ("Board") and shall
continue to serve as such for the balance of the
Agreement Term.
(b) Performance of Duties. Throughout the Agreement Term,
Executive shall faithfully and diligently perform
such duties (i) as are consistent with his position
as the President and the Chief Executive Officer of
Company and as Chairman of Company's Operating
Committee, and (ii) as the Executive
Committee of the Board (or, if the Executive
Committee does not exist, the liquidating Trustee)
may reasonably and in good faith request.
(c) Place of Performance. During the Agreement Term,
Executive shall be based at Company's executive
offices in Dallas, Texas or at such other location
within an 00-xxxx xxxxxx xx Xxxxxx, Xxxxx. Company
shall not request or require Executive to relocate
his principal place of employment outside of an
00-xxxx xxxxxx xx Xxxxxx, Xxxxx.
3. Compensation and Benefits.
-------------------------
(a) Base Salary. Company agrees to pay to Executive a
base salary at the annual rate of $250,000 ("Base
Salary"), payable in installments consistent with the
Company's payroll practices.
(b) Performance Bonus. Executive shall have a performance
bonus opportunity of up to, but not exceeding,
$300,000. The amount of bonus to which Executive is
entitled shall be determined solely at the discretion
of the Board of Directors of the Company, and such
bonus, if any, shall be payable upon termination of
Executive's employment under this Agreement (except
as set forth in Section 8(d) of this Agreement).
(c) Receipt and Escrow of 1999 Bonus-Related Amount.
Executive acknowledges receipt on the Effective Date
of $232,464.96 (the "Bonus- Related Amount"), which
is the sum of the maximum amount of the bonus payable
to Executive for achievement of budgeted financial
results of operations for 1999 (the "1999 Operations
Bonus") plus certain related amounts, and agrees that
such Bonus-Related Amount is being deposited in
escrow on his behalf with Gardere & Xxxxx, L.L.P., as
escrow agent (the "Escrow") to secure his obligation
to repay to Company such portion, if any, of the
Bonus-Related Amount to which he is not entitled
after his 1999 Operations Bonus is finally determined
by Company. The Bonus-Related Amount to which
Executive is entitled (which will equal the amount
deposited into the Escrow if 110% of statutory
budgeted performance was achieved in 1999 and
$103,697.37 if 100% of statutory budgeted performance
was achieved in 1999) shall be released from the
Escrow and paid to Executive no later than the filing
of Company's statutory annual statement with the
State of Texas.
4. Employee Benefit Programs.
-------------------------
During the Agreement Term, Executive shall be entitled to participate
in all employee pension and welfare benefit plans and programs made available to
the senior-level executives of Company or to its employees generally, as such
plans or programs may be in effect from time to
EXECUTIVE EMPLOYMENT AGREEMENT - Page 2
------------------------------
time, including, without limitation, pension, profit sharing, savings and other
retirement plans or programs, medical, dental, hospitalization, short-term and
long-term disability and life insurance plans, accidental death and
dismemberment protection, travel accident insurance, and any plans that
supplement the above-listed types of plans or programs, whether funded or
unfunded, but excluding any severance benefit plan or program. Company shall, to
the extent possible without penalty for a failure to provide similar treatment
to other employees of Company, waive the waiting or grace period applicable
under any such plan or program before Executive's participation therein can
begin.
5. Reimbursement of Business and Other Expenses.
--------------------------------------------
Executive is authorized to incur reasonable travel and business
expenses that are consistent with his position and incurred in carrying out his
duties and responsibilities under this Agreement, and Company shall promptly
reimburse him for all such travel and business expenses incurred in connection
with carrying out the business of the Company, subject to reasonable
documentation in accordance with the reasonable policies of Company.
6. Perquisites.
-----------
During the Agreement Term, Executive shall be entitled to participate
in all of Company's executive fringe benefits (other than financial consulting
benefits) in accordance with the terms and conditions of such arrangements as
are in effect from time to time for the senior-level executives of Company.
Executive is also entitled to reimbursement from Company for, or Company's
payment of, all reasonable attorneys' and other professional fees and expenses
incurred by or on behalf of Executive relating in any manner to the negotiation
and preparation of this Agreement, including (without limitation) the conditions
to Executive's employment relationship with Company under this Agreement.
7. Vacation.
--------
Executive shall be entitled to six weeks' paid vacation each calendar
year, which vacation shall be earned on a pro-rata basis for each day during the
calendar year that Executive is employed by Company. Company shall pay Executive
any earned and unused vacation at the end of the Agreement Term or, if earlier,
upon the termination of Executive's employment.
8. Termination of Employment.
-------------------------
(a) Company may terminate Executive's employment with
Company, at any time for any (or no) reason, prior to
termination of employment by the expiration of the
Agreement Term under Section 1(i) or Section 1(ii) of
this Agreement, upon at least 30 days' written notice
to Executive. Such termination shall be effective
upon the expiration of the notice period (of at least
30 days) specified in the notice of termination.
EXECUTIVE EMPLOYMENT AGREEMENT - Page 3
------------------------------
(b) In light of his importance to Company during the
Agreement Term, Executive is not entitled to
voluntarily terminate his employment with Company at
any time before termination by the expiration of the
Agreement Term under Section 1 of this Agreement. In
addition, Executive and Company acknowledge that the
calculation of the damages to Company as a result of
Executive's voluntary termination of his employment
under this Agreement would be difficult, expensive
and time-consuming, and accordingly, the parties have
agreed to a liquidated damage amount due Company in
the event of an Improper Executive Termination (as
defined below). Therefore, if Executive terminates
his employment hereunder before termination by the
expiration of the Agreement Term, other than by death
or because of Disability (an "Improper Executive
Termination"), then Executive shall pay Company, as
liquidated damages (and not as a penalty), $500,000
in cash within ten days after the effective date of
such Improper Executive Termination. In this Section
8(b), "Disability" means Executive's inability,
because of any mental or physical illness, to perform
his duties under this Agreement that extends, or is
reasonably expected to extend, for at least 30
consecutive days.
(c) Upon any termination of Executive's employment
hereunder, Executive shall perform, for up to six
months following such date of termination and without
additional compensation or benefits, such consulting
or transition services consistent with his
experience, expertise and prior services to the
Company as the Board of Directors of the Company (or,
if the Board of Directors does not exist, the
liquidating Trustee) may reasonably request. Such
services by Executive shall be rendered at such times
and in such manner as are mutually satisfactory to
the Company and Executive, without material
interference with Executive's employment or other
business activities during such period.
(d) Upon any termination of Executive's employment
hereunder, Company shall pay to Executive, within ten
days of the effective date of such termination, (i)
any Base Salary and any earned and unused vacation,
in each case accrued through the date of such
termination, and (ii) any expenses that have not been
reimbursed in accordance with Section 5 herein. Also,
upon any termination other than an Improper Executive
Termination, (A) Company shall pay to Executive,
within ten days of the effective date of such
termination, any bonus awarded to Executive in
accordance with Section 3(b) herein, and (B) Company
shall cause the release from the Escrow of all or
that portion of the Bonus-Related Amount to which
Executive is entitled under Section 3(c) herein, if
not already released and paid to Executive (but if
already released and paid to Executive, shall not be
recoverable by the Company).
EXECUTIVE EMPLOYMENT AGREEMENT - Page 4
------------------------------
(e) In the event of any termination of Executive's
employment hereunder, Executive shall be under no
obligation to seek other employment, and there shall
be no offset against amounts due to Executive under
this Agreement on account of any remuneration
attributable to any subsequent employment (including,
without limitation, any self-employment) that he may
obtain.
(f) Executive and his eligible dependents shall be
entitled, for a period of three (3) years following
the date of any termination of Executive's employment
hereunder, to continued coverage, at the cost of the
Company, under the Company's group health, dental and
life insurance plans as in effect from time to time
(but not any other welfare benefit plans or any
retirement plans); provided, that coverage under any
particular benefit plan shall expire with respect to
the period after Executive becomes covered under
another employer's plan providing for a similar type
of benefit. In the event the Company is unable to
provide such coverage on account of any limitations
under the terms of any applicable contract with an
insurance carrier or third- party administrator, the
Company shall pay Executive an amount equal to the
cost of such coverage.
9. Confidentiality; Assignment of Rights.
-------------------------------------
(a) During the Agreement Term and thereafter, Executive
shall not disclose to anyone or make use of any trade
secret or proprietary or confidential information of
Company, including such trade secret or proprietary
or confidential information of any customer or other
entity to which Company owes an obligation not to
disclose such information, which he acquires during
the Agreement Term, including but not limited to
records kept in the ordinary course of business,
except (i) as such disclosure or use may be required
or appropriate in connection with his work as an
employee of Company or (ii) when required to do so by
a court of law, by any governmental agency or
authority having supervisory authority over the
business of Company or by any governmental agency or
authority or administrative or legislative body
(including a committee thereof) with apparent
jurisdiction to order him to divulge, disclose or
make accessible such information.
(b) Executive hereby sells, assigns and transfers to
Company all of his right, title and interest in and
to all inventions, discoveries, improvements and
copyrightable subject matter (the "Rights") which
during his employment by Company are made or
conceived by him, alone or with others and which are
within or arise out of any general field of Company's
business or arise out of any work he performs or
information he receives regarding the business of
Company while employed by Company. During his
employment by Company, Executive shall fully disclose
to Company as promptly as available all information
known or possessed by him concerning the rights
referred to
EXECUTIVE EMPLOYMENT AGREEMENT - Page 5
------------------------------
in the preceding sentence, and upon request by
Company and without any further remuneration in any
form to him by Company, but at the expense of
Company, execute all applications for patents and for
copyright registration, assignments thereof and other
instruments and do all things which Company may deem
necessary to vest and maintain in it the entire
right, title and interest in and to all such Rights.
10. Nonsolicitation.
---------------
(a) Executive covenants and agrees that he shall not
directly or indirectly solicit Company's or any of
its subsidiaries' (i) employees during the 18-month
period following the date of the termination of his
employment by Company hereunder and (ii) agents,
brokers and/or policyholders during the Agreement
Term.
(b) The parties acknowledge that in the event of a breach
of Section 10(a) above, Company shall not have an
adequate remedy at law. Accordingly, in the event of
any breach of Section 10(a) above, Company shall be
entitled to such equitable and injunctive relief as
may be available to restrain Executive and any
business, firm, partnership, individual, corporation
or entity participating in the breach from the
violation of the provisions of Section 10(a) above.
Nothing in this Agreement shall be construed as
prohibiting Company from pursuing any other remedies
available at law or in equity for breach of Section
10(a) above, including the recovery of damages.
11. Indemnification.
---------------
(a) Company agrees that if Executive is or becomes a
party, or is threatened to be made a party, to any
threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative
or investigative and whether brought by or in the
right of the Company or otherwise ("Proceeding"), by
reason of the fact that (whether before or after the
Effective Date) he is or was a director, officer or
employee of Company or is or was serving at the
request of Company as a director, officer, member,
employee or agent of another corporation,
partnership, joint venture, trust or other
enterprise, including (without limitation) service
with respect to employee benefit plans, whether or
not the basis of such Proceeding is Executive's
alleged action in an official capacity while serving
as a director, officer, member, employee or agent,
Executive shall be indemnified and held harmless by
Company to the fullest extent legally permitted or
authorized by Company's certificate or articles of
incorporation or bylaws (or other applicable
governing documents) or resolutions of the Board (or
other applicable governing body) or the stockholders
of Company or, if greater, by the laws of the State
of Delaware or any other applicable state of
organization
EXECUTIVE EMPLOYMENT AGREEMENT - Page 6
------------------------------
or formation, against all cost, expense, liability
and loss (including, without limitation, attorneys,
fees, judgments, costs of appeal, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by
Executive in connection therewith, and such
indemnification shall continue as to Executive even
if he has ceased to be a director, member, employee
or agent of Company or other entity and shall inure
to the benefit of Executive's heirs, executors and
administrators. In this Section 11, (i) each
reference to "Company" (other than for the purpose of
any notice) shall include, without limitation, all
entities that are subsidiaries and affiliates of
Company, and (ii) all obligations of Company shall be
joint and several as to all entities included in such
definition of "Company." Company shall pay or provide
such indemnification to Executive in connection with
a Proceeding within 60 days after written request by
Executive for that indemnification. During that
60-day period, Executive shall have an opportunity to
be heard and to present evidence in connection with
the consideration by the board of directors,
independent legal counsel, or stockholders, as the
case may be, of any findings required by applicable
law in connection with that indemnification request.
Company shall also advance to Executive all
reasonable costs and expenses incurred by him
(including, without limitation, all reasonable fees
and costs of counsel selected by Executive, and all
other indemnifiable liabilities covered by this
paragraph (a)) in connection with a Proceeding within
30 days after written request by Executive for such
advance. Such request shall include an undertaking by
Executive to repay the amount of such advance if it
shall ultimately be determined that he is not
entitled to be indemnified against such costs and
expenses. In the event Company does not properly
indemnify or advance expenses to Executive in
accordance with the terms of this paragraph (a)
(including, without limitation, the time period set
forth above), Executive shall be entitled to bring an
action or proceeding against Company in any state or
federal court in Dallas County, Texas, in accordance
with Section 19 hereof, or before a panel of
arbitrators in accordance with Section 20 hereof, to
enforce Company's indemnification or
expense-advancement obligations, and (in either case)
Executive shall be reimbursed by Company for the
reasonable costs and expenses (including, without
limitation, reasonable attorneys fees and costs) of
any successful enforcement of Company's
indemnification or expense-advancement obligations.
(b) Neither the failure of Company (including, without
limitation, its board of directors, independent legal
counsel or stockholders) to have made any
determination that indemnification of Executive is
proper because he has met the applicable standard of
conduct, nor a determination by Company (including,
without limitation, its board of directors,
independent legal counsel or stockholders) that
Executive has not met such applicable standard of
conduct, shall create a presumption that Executive
has not met the
EXECUTIVE EMPLOYMENT AGREEMENT - Page 7
------------------------------
applicable standard of conduct or shall be a defense
to any action or proceeding to enforce Company's
indemnification or expense-advancement obligations.
Company shall have the burden of proof in
establishing that Executive has not met the
applicable standard of conduct. The termination of
any Proceeding by judgment, court order, settlement,
or conviction, or upon a plea of nolo contenders or
its equivalent, shall not, of itself, create a
presumption that Executive did not meet the
applicable standard of conduct. Where Executive is
entitled to indemnification under this Section 11 for
a portion of the indemnifiable liabilities described
in paragraph (a) of this Section 11, but not for the
total amount of liabilities of that kind, Company
shall nevertheless indemnify Executive for such
portion of the indemnifiable liabilities to which
Executive is entitled.
(c) Executive's rights provided in this Section 11 shall
not be exclusive of any other rights of
indemnification or advancement of expenses (or any
similar rights) that Executive may have against
Company or under any liability insurance covering
Executive.
(d) Company agrees to continue and maintain one or more
directors, and officers, liability insurance policies
that cover Executive (with reputable and financially
sound insurers) at a level that is commercially
reasonable (in light of Company's business and the
risks of litigation or claims) and not less than the
level of coverage provided as of the Effective Date,
and otherwise to the fullest extent Company provides
such coverage for any of its other executive
officers.
(e) Without limiting the generality of Section 17 hereof,
the rights of indemnity and advancement of expenses
in favor of Executive in this Section 11 shall
continue and survive any expiration or termination of
this Agreement or Executive's ceasing to be a
director, officer, or employee of Company.
12. Assignability; Binding Nature.
-----------------------------
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors, heirs (in the case of Executive) and
permitted assigns. No rights or obligations of Company under this Agreement may
be assigned or transferred by Company (including, without limitation, by merger,
consolidation, or other operation of law). No rights or obligations of Executive
under this Agreement may be assigned or transferred by Executive other than his
rights to compensation and benefits, which may be transferred only by will or
operation of law, except as provided in Section 18 below.
13. Representation.
--------------
EXECUTIVE EMPLOYMENT AGREEMENT - Page 8
------------------------------
Company represents and warrants that it is fully authorized and
empowered to enter into this Agreement and that the performance of its
obligations under this Agreement will not violate any agreement between it and
any other person, firm or organization. Executive represents that he knows of no
agreement between him and any other person, firm or organization that would be
violated by the performance of his obligations under this Agreement.
14. Entire Agreement.
----------------
This Agreement contains the entire understanding and agreement between
the parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the parties with respect thereto; except that nothing
in this Agreement impairs or otherwise adversely affects any of Executive's
rights or Company's obligations under any other agreement or document executed
by Company and Executive contemporeously or concurrently herewith.
15. Amendment or Waiver.
-------------------
No provision in this Agreement may be amended unless such amendment is
agreed to in writing and signed by Executive and an authorized officer of
Company (other than Executive). No waiver by either party of any breach by the
other party of any condition or provision contained in this Agreement to be
performed by such other party shall be deemed a waiver of a similar or
dissimilar condition or provision at the same or any prior or subsequent time.
Any waiver must be in writing and signed by Executive or an authorized officer
of Company (other than Executive), as the case may be.
16. Severability.
------------
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
17. Survivorship.
------------
The respective rights and obligations of the parties hereunder shall
survive any termination of the Executive's employment, including (without
limitation) upon expiration of the Agreement Term, to the extent necessary to
the intended preservation of such rights and obligations.
18. Beneficiaries/References.
------------------------
Executive shall be entitled, to the extent permitted under any
applicable law, to select and change a beneficiary or beneficiaries to receive
any compensation or benefit payable hereunder following Executive's death or
incompetence by giving Company written notice thereof. In the event of
Executive's death or a judicial determination of his incompetence, reference in
this Agreement to
EXECUTIVE EMPLOYMENT AGREEMENT - Page 9
------------------------------
Executive shall be deemed, where appropriate, to refer to his beneficiary,
estate or other legal representative.
19. Governing Law/Jurisdiction.
--------------------------
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of Texas without reference to principles of conflict of
laws. Jurisdiction and venue of any action or proceeding relating to this
Agreement shall be exclusively in state or federal courts in Dallas County,
Texas.
20. Resolution of Disputes.
----------------------
Any disputes arising under or in connection with this Agreement (other
than injunctive or equitable relief sought to enforce Sections 9 or 10 hereof,
or any enforcement of Executive's rights under Section 11, which may (if
Executive so elects) be brought in any court having jurisdiction in accordance
with this Agreement) shall, at the election of Executive or Company, be resolved
by binding arbitration in accordance with the following terms and procedures:
(a) Arbitration of Claims. Company and Executive agree to
settle by arbitration any dispute or controversy
arising in connection with this Agreement, whether or
not such dispute involves a plan subject to the
Employee Retirement Income Security of 1974, as
amended ("ERISA"). Such arbitration shall be
conducted on an expedited basis in accordance with
the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association,
sitting in Dallas, Texas. The award of the
arbitrators shall be final and nonappealable, the
judgment may be entered on the award of the
arbitrators in any court having proper jurisdiction.
All expenses of such arbitration shall be borne by
the Company in accordance with subsection (b).
(b) Payment of Legal Fees and Costs. The Company agrees
to pay as incurred, to the full extent permitted by
law, all legal fees and expenses which Executive may
reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company,
Executive or others of any action taken pursuant to
the terms of this Agreement, or of the validity or
enforceablity of, or liability under, any provision
of this Agreement, or any guarantee of performance
thereof (including, without limitation, as a result
of any contest by Executive about the amount of
payment pursuant to this Agreement), plus in each
case interest on any delayed payment at the
applicable federal rate provided for in Section 7872
(f) (2) (A) of the Code.
21. Notices.
-------
EXECUTIVE EMPLOYMENT AGREEMENT - Page 10
------------------------------
Any notice given to a party shall be in writing and shall be deemed to
have been given when delivered personally or by courier, or upon receipt if sent
by certified or registered mail, postage prepaid, return receipt requested, duly
addressed to the party concerned at the address indicated below or to such
changed address as such party may subsequently give such notice of:
If to Company: PennCorp Financial Group, Inc.
000 Xxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
If to Executive: Xxxxx X. Xxxx
0000 Xxxxxx Xxxxx Xxxxx
Xxxxx, Xxxxx 00000
22. Headings.
--------
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
23. Counterparts.
------------
This Agreement may be executed in two or more counterparts.
IN WITNESS WHEREOF, the undersigned have executed this Agreement to be
effective as of the Effective Date.
PENNCORP FINANCIAL GROUP, INC.
By: /s/ Xxxxx X. Xxxxx
Its: Chairman of the Board
/s/ Xxxxx X. Xxxx
------------------
XXXXX X . XXXX
EXECUTIVE EMPLOYMENT AGREEMENT - Page 11
------------------------------
