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Exhibit 10.18
EMPLOYMENT/CONSULTING AGREEMENT
I
PARTIES
1.1 PARTIES. This Employment/Consulting Agreement ("Agreement") is made
this 30th day of June, 1998, effective July 1, 1998, by and between
Xxxxx Xxxxxxx ("Employee") and Central Reserve Life Insurance Company,
and Central Reserve Life Corporation, Ohio corporations having their
principal offices at 00000 Xxxxxxxx Xxxx, Xxxxxxxxxxxx, Xxxx 00000-
5197 (hereinafter, collectively "Company").
II
RECITALS
2.1 COMPANY. Central Reserve Life Insurance Company is the wholly-owned
subsidiary of Central Reserve Life Corporation, a holding company
organized under the laws of the State of Ohio.
2.2 EMPLOYEE. Employee is currently Senior Executive Vice President, Chief
Financial Officer of Company, and will continue to serve as Chief
Financial Officer at the pleasure of the Company through June 30, 1999,
at which time Employee may resign from this office.
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2.3 PRIOR AGREEMENTS. Employee and Company are parties to prior employment
agreements. It is the intention of the parties that all such prior
employment agreements be cancelled and supplanted in their entirety by
this Agreement.
III
TERMS OF THE AGREEMENT
3.1 TERM AND COMPENSATION. Company agrees to continue the employment of
Employee for a term of six (6) months, commencing July 1, 1998 and
ending December 31, 1998, with primary responsibilities devoted to the
financial affairs of Company. Commencing January 1, 1999 and continuing
to December 31, 2000, Employee shall assume the duties of consultant
regarding the financial affairs of Company.
Employee shall devote no more than fifty percent (50%) of his time to
his duties as a consultant to Company (e.g., no more than 970 hours per
calendar year), at reasonable times and places to be mutually agreed
upon. During the term from July 1, 1998 to December 31, 1998, Employee
shall be paid a salary at the annual rate of $250,000, payable in
accordance with Central's normal payroll practices.
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Beginning January 1, 1999 and continuing to December 31, 2000, unless
otherwise terminated according to the terms of this Agreement, in
consideration for the performance of his duties as a financial
consultant to Company, Employee shall be paid a consulting fee in the
amount of $10,417 per month.
During the term of this Agreement, Company shall reimburse Employee for
all reasonable travel expenses in accordance with Company's usual
reimbursement practices for Employee's expenses incurred in connection
with the performance of his duties as an employee of Company from July
1, 1998 until December 31, 1998 and, thereafter, in connection with the
performance of his duties as a consultant.
Upon termination of his employment, Company shall reimburse Employee
for the cost of continuing his health insurance for himself and for his
spouse, Xxxx Xxxxxxx, pursuant to COBRA, for a period of eighteen (18)
months; thereafter, Company shall reimburse Employee for the cost of a
health insurance plan available to Eligible Individuals, as defined
under the laws of the State of North Carolina, for himself and for his
his spouse, Xxxx Xxxxxxx, until each is eligible for Medicare, at which
time such reimbursement shall terminate.
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During the term beginning July 1, 1998 and continuing until December
31, 1998, Employee shall continue to receive his fringe benefits on the
same basis as he was receiving them as of June 1, 1998, including an
allowance for a leased automobile, plus insurance, maintenance and
operational expenses through September 30, 1998.
Beginning January 1, 1999 and continuing to the termination of this
Agreement, unless set forth to the contrary elsewhere in this
Agreement, all compensation in any form whatsoever shall terminate,
including, but not limited to, any salary, reimbursement and fringe
benefits, at which time Employee shall be entitled only to receive the
consulting fee, reimbursement for reasonable travel (including full
coach air fare) and lodging and car rental, and health insurance, plus
his home office expenses for services as a consultant, to include
phone, fax, and office supplies and reimbursement for appropriate
continuing education seminars.
3.2 VACATION. During the employment term beginning January 1, 1998 to
December 31, 1998, Employee is entitled to three (3) weeks' paid
vacation. No vacation time prior to January 1, 1998 shall so cumulate.
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3.3 INSURANCE BENEFITS AS EMPLOYEE. During the employment term beginning
July 1, 1998 to December 31, 1998, Company shall pay Employee the
compensation set forth in Section 3.1 herein during any time that he
shall suffer either partial or total disability (whether such
disability be temporary or permanent), reduced only by the amounts
which are paid to Employee under any insurance program purchased by
Company or any affiliate. In addition, during Employee's term of
employment (July 1, 1998 to December 31, 1998), Company shall furnish
Employee, at no cost to him, group life insurance, AD&D, medical and
hospital insurance benefits and directors and officers insurance no
less than those covering Employee on June 1, 1998, unless mutually
agreed upon, and Employee shall be entitled to such additional fringe
benefits, if any, that are provided to an executive of his level in
Company.
3.4 RETIREMENT BENEFITS. From January 1, 1998 to December 31, 1998,
Employee may participate in Company's 401(k) under the same terms and
conditions that apply to an executive of his level in Company.
Company's pension plan and retirement plan fully paid by Company in
effect on January 1, 1982 shall not be terminated or its benefits
reduced below the
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EMPLOYMENT/CONSULTING AGREEMENT Page 6
level in effect on December 31, 1997 as it applies to Employee;
provided that after the contribution for the year ending December 31,
1997, Company shall have no further obligation to make contributions to
such plan on behalf of Employee. Employee shall also be eligible for
Company stock options just like any other similarly situated employee.
3.5 RELOCATION. Employee shall not be required to relocate his place of
employment or his residence outside of Cuyahoga County, Ohio, but may
relocate his residence from time to time within or without Cuyahoga
County at his sole election (including the State of North Carolina).
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IV
GENERAL COVENANTS
4.1 GENERAL COVENANTS.
(a) TERMINATION BY EMPLOYEE. At no time within the term of this Agreement
shall Employee terminate this contract or refuse to perform his
reasonable and customary duties and responsibilities for Company,
except upon a material breach of the terms hereof by Company. Upon
termination by Employee because of such breach by Company, the rights
of Employee and the obligations of Company shall be the same as those
provided as to Employee and Company in Article V herein.
(b) TERMINATION BY COMPANY. At no time within the term of this Agreement
shall Company terminate this Agreement. If, however, Company shall
attempt for any reason whatsoever to terminate its employment of
Employee and/or its agreement to engage his services as a consultant,
then and in that event, Employee may deem this a material breach of the
terms of this Agreement by Company, and the rights of the Employee and
the obligations of Company shall be as set forth in Article V herein.
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Notwithstanding the provisions of this Section 4.1(b), this Agreement
and Employee's employment or agreement to be a consultant hereunder, as
the case may be, may be terminated by Company at any time without
further compensation for significant just and sufficient cause. For
purposes of this paragraph, "significant just and sufficient cause"
shall mean any action or non-action involving a material breach of the
terms and conditions of the Agreement by Employee, which cannot be
promptly cured or rectified by Employee to Company's reasonable
satisfaction, or gross or repeated insubordination or a major conflict
or interference with Employer's best interests or business operations.
(c) ASSIGNABILITY. Neither party shall have the right to assign this
Agreement or any rights or obligations hereunder without the prior
written consent of the other party. provided however that, upon the
sale of all or substantially all of the assets, business and goodwill
of Central to another corporation or entity, or upon the merger or
consolidation of Company with another corporation or entity, this
Agreement shall inure to the benefit of, and be binding upon, both
Employee and the corporation or entity purchasing such assets, business
and goodwill, or surviving such merger
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or consolidation, as the case may be, in the same manner and to the same extent
as though such other corporation or entity were the original party to this
Agreement.
V
TERMINATION PAYMENTS
5.1 TERMINATION OBLIGATIONS OF COMPANY. Where applicable, the termination
payment obligations of Company shall be Discharged as follows:
(a) Employee's annual salary shall become fixed for the unexpired
remainder of the initial employment term of this Agreement,
July 1, 1998 to December 31, 1998, and Employee's consulting
fee shall become fixed for the unexpired remainder of the term
of consulting (January 1, 1999 to December 31, 2000);
(b) Such annual salary and/or consulting fee owing for the
unexpired employment or consulting term, as the case may be,
shall then be paid to Employee in one lump sum within thirty
(30) days of the effective date of his termination;
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(c) Upon termination of employment or consulting services, the
reimbursement for health insurance to which Employee is
entitled at no cost to Employee under the terms and conditions
of Section 3.1 herein shall be continued by Company.
Notwithstanding the provisions of this Section 5.1(b) or any other
provision of this Agreement, Employee's employment or consulting
services, as the case may be, may be terminated by Company at any time
without further compensation for significant just and sufficient cause.
For purposes of this paragraph, "significant just and sufficient cause"
shall mean any action or non-action involving a material breach of the
terms and conditions of this Agreement, which cannot be promptly cured
or rectified by Employee to Company's reasonable satisfaction, or gross
or repeated insubordination or a major conflict or interference with
Employer's best interests or business operations.
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VI
MISCELLANEOUS
6.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto in relation to the subject matter hereof,
and no other representations, warranties, covenants, understandings or
agreements, oral or otherwise, exist in relation thereto between the
parties.
6.2 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended solely for the
benefit of Company and Employee and confers no right or benefit upon
any other person, including stockholders of Company and other officers
and directors of Company.
6.3 SEPARABILITY. Each provision of this Agreement is separable from each
other provision, and if any provision shall be found invalid for any
reason, the remaining provisions shall continue in full force and
effect.
6.4 SECTION HEADINGS. The article and section headings herein are intended
only as aids to the location of subject matter, and are neither a part
of the substance of the Agreement nor a guide to construction.
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6.5 INDEPENDENT CONTRACTOR. Employee's employment shall terminate as of
December 31, 1998, at which time, pursuant to the terms of this
Agreement, he will be engaged as an independent contractor to perform
financial consulting services to Company as provided herein.
6.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original, and all such
counterparts together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have signed this Agreement on the day and year
first above written, effective July 1, 1998.
EMPLOYEE: COMPANY:
CENTRAL RESERVE LIFE INSURANCE
COMPANY
/s/Xxxxx Xxxxxxx By: /s/
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Xxxxx Xxxxxxx
Its: /s/
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CENTRAL RESERVE LIFE CORPORATION
By: /s/
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Its: /s/
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