EXHIBIT 10.38
TRANSITION AGREEMENT
This Transition Agreement ("Agreement") is made as of the 15th day of
April 2002 by and between Ceres Group, Inc., a Delaware corporation ("Company"),
and Xxxxx X. Xxxxxx ("Xxxxxx").
RECITALS
A. The Company and Xxxxxx are parties to an Employment Agreement, dated
as of April 10, 2001 ("Employment Agreement"), pursuant to which Xxxxxx serves
as the Chief Executive Officer ("CEO") of the Company. A copy of the Employment
Agreement is attached to this Agreement as Annex X.
X. Xxxxxx also serves as President of the Company and Chairman of the
Company's board of directors.
X. Xxxxxx has announced his intention to retire from service with the
Company, and the Company and Xxxxxx have agreed that he will cease to serve as
the CEO and President of the Company, before the end of the term set forth in
the Employment Agreement.
D. The board of directors of the Company approved this Agreement at a
special meeting of the board.
Now, therefore, the parties agree as follows:
1. SEVERANCE.
(a) The Employment Agreement shall be terminated with effect as of the
seventh day after the date Xxxxxx executes this Agreement ("Effective Date"),
unless this Agreement is sooner revoked by Xxxxxx in accordance with Section
11(b). Thereafter, the Company shall continue to engage Xxxxxx, and Xxxxxx
agrees to continue to serve, as CEO in accordance with Section 2(a) until the
earliest of the following four dates: (i) the effective date of employment as
CEO of another individual hired by the board of directors to serve as the
Company's CEO; (ii) the effective date on which the board of directors
terminates Xxxxxx'x service as CEO, prior to hiring a new CEO, by providing
written notice of termination to Xxxxxx; (iii) the effective date upon which
Xxxxxx may elect to retire as CEO, prior to the board of directors hiring a new
CEO, by providing written notice of retirement to the board of directors, or
(iv) June 1, 2002. The earliest of said four dates is hereinafter referred to as
the "Severance Date." After the Severance Date, Xxxxxx will cease to be an
employee of the Company.
If the board of directors requests, and Xxxxxx agrees, Xxxxxx may
continue as CEO beyond June 1, 2002 for such period of time as the board of
directors and Xxxxxx shall agree upon. Such extension shall not change the
Severance Date as defined above.
(b) Contemporaneously with the execution and delivery of this
Agreement, with effect as of the Severance Date, Xxxxxx will resign as President
of the Company by executing and
delivering to the Company a letter of resignation in the form of Annex B hereto.
In addition, contemporaneously with the execution and delivery of this
Agreement, with effect as of the Effective Date, Xxxxxx hereby resigns from each
and every position that he holds with any affiliate or subsidiary of the
Company.
(c) The Company agrees that Xxxxxx will be nominated for a position on
the board of directors of the Company at the Company's 2002 annual meeting of
stockholders, with a staggered term ending in 2005 (if staggered terms are
approved by the Company's stockholders at that meeting). If elected by the
stockholders to the board of directors, Xxxxxx shall be elected to continue to
be, and agrees to continue to serve as, chairman of the board of directors until
the 2003 annual meeting of stockholders, unless prior to said date, Xxxxxx is
removed as chairman pursuant to the bylaws of the Company or elects to resign as
chairman. Notwithstanding the foregoing two sentences, if, in the reasonable
judgment of two-thirds of the board of directors of the Company (i.e. six
directors), Xxxxxx (i) is not acting in the best interests of the Company or
(ii) is engaging in conduct that is financially detrimental to the best
interests of the Company, Xxxxxx will resign as a member of the Company's board
of directors and as its chairman forthwith upon notice to him by the board of
directors describing relevant particulars. No later than thirty (30) days before
the 2003 annual meeting of stockholders (if Xxxxxx has not previously resigned),
Xxxxxx will resign as chairman effective as of the date of the 2003 annual
meeting of stockholders.
(d) Xxxxxx and the Company agree and acknowledge that this Agreement
sets forth the parties' mutual understanding with respect to Xxxxxx'x xxxxxxxxx
from employment with the Company and the termination of the Employment
Agreement. Xxxxxx and the Company agree that the severance set forth herein is
not a termination by Xxxxxx for "Good Reason" or a termination by the Company
with or without "Cause" within the meaning of, or for purposes of, the
Employment Agreement. In addition, the Company and Xxxxxx agree that Xxxxxx'x
xxxxxxxxx from employment pursuant to this Agreement is deemed not to be a
"Severanceable Event" within the meaning of, and for purposes of, the Employment
Agreement.
(e) In order to ensure Xxxxxx'x nomination and election as set forth
above in Section 1(c) and the Company's compliance with its obligations under
this Agreement, it is understood that the Company, and its board of directors
approving this Agreement, shall take all lawful steps within their power
necessary to assure that such obligations are met.
2. TRANSITIONAL SERVICES.
(a) As CEO, Xxxxxx will render only such services to the Company as are
specified by the board of directors, acting through the Executive Committee or
its designee. Xxxxxx shall devote such productive time, ability and attention to
the business of the Company as may be requested by the board of directors, which
time may be up to 40 hours per week. Xxxxxx shall not while serving as CEO,
directly or indirectly, render any services of a business, commercial or
professional nature to any other person, corporation, firm, or organization,
whether for compensation or otherwise, without the prior written consent of the
board of directors, provided that the mere ownership of 5% or less of the stock
of a company whose shares are traded on a
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national securities exchange or are quoted on the National Association of
Securities Dealers Automated Quotation System shall not be deemed competition
which is prohibited hereunder.
(b) As chairman of the board, Xxxxxx will render such services to the
Company as are from time to time specified by the board of directors. Xxxxxx
will devote such time to the business and affairs of the Company as is
reasonably necessary and customary to discharge his duties as chairman. While he
is chairman of the board, Xxxxxx shall continue to serve as a member of the
Executive Committee.
3. PAYMENTS.
(a) The Company will continue to pay Xxxxxx a salary at the rate of
$750,000.00 per year ("Base Salary") until, and ending as of the close of
business, on May 31, 2002.
(b) The Company will pay Xxxxxx a stock award as set forth below
("Stock Award"), payable in shares of common stock of the Company ("Common
Stock") together with a cash payment equal to the federal, state and local taxes
("Tax Payment") payable by Xxxxxx with respect to the Stock Award. The Stock
Award shall be paid to Xxxxxx on July 1, 2002 and shall equal that number of
shares of Common Stock equal to the product obtained by multiplying (i) $125,000
divided by the average closing price of the Common Stock for the three-month
period ended June 30, 2002, by (ii) a fraction the denominator of which is 91
and the numerator of which is 61. Xxxxxx shall receive the Tax Payment prior to
April 15, 2003; provided, however, that in no event shall the Tax Payment with
respect to the taxes exceed 50% of the "Fair Market Value" of the Stock Award
received by Xxxxxx pursuant to this Section 3(b). The Tax Payment shall be
determined in accordance with past practices between the Company and Xxxxxx in
this connection. For purposes of Sections 83 and 162 of the Internal Revenue
Code of 1986, as amended ("Code"), the "Fair Market Value" of the Stock Award
shall be equal to the product of (i) the number of shares of Common Stock,
including fractional shares, paid to Xxxxxx multiplied by (ii) the closing price
of one (1) share of Common Stock on July 1, 2002.
All Common Stock paid to Xxxxxx pursuant to this Section 3(b) shall be
fully vested immediately upon issuance. All stock certificates issued to Xxxxxx
pursuant to this Section 3(b) shall, if considered necessary by the Company
(and, in the case of the first such legend, if and for such period as the Voting
Agreement referred to below remains in effect), contain any or all of the
following legends and any other legend considered reasonably necessary by the
Company:
THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE SUBJECT
TO TRANSFER RESTRICTIONS, VOTING LIMITATIONS, AND OTHER TERMS
AND CONDITIONS CONTAINED IN AN AMENDED AND RESTATED VOTING
AGREEMENT DATED JULY 25, 2000 BY AND AMONG THE COMPANY AND
CERTAIN OF ITS STOCKHOLDERS, A COPY OF WHICH IS ON FILE WITH
THE SECRETARY OF THE COMPANY.
THIS SECURITY IS SUBJECT TO CERTAIN RIGHTS AND RESTRICTIONS
SET FORTH IN THE STOCKHOLDERS AGREEMENT DATED AS OF JULY 1,
1998, A COPY OF WHICH
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MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE
OFFICES.
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE.
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES
ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. THE COMPANY MAY REQUIRE
AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE COMPANY TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE
IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
(c) In addition to any payments made pursuant to Section 3(a) and (b),
the Company will pay Xxxxxx (or to Xxxxxx'x estate or designated beneficiary, in
the event of Xxxxxx'x death) the sum of Two and One-Half Million Dollars ($2.5
million) in cash, payable in equal monthly installments commencing on June 1,
2002 and ending on the date of the 2003 annual meeting of stockholders (but in
no event later than June 1, 2003).
(d) Notwithstanding any other term of this Agreement, the aggregated
payments by the Company to Xxxxxx under this Agreement or otherwise that are
determined to be "parachute payments" for purposes of Section 280G of the Code
and the regulations promulgated thereunder ("Section 280G"), shall not exceed
299% of Xxxxxx'x "base amount" as determined for purposes of Section 280G.
Determinations and computations for this purpose, including the interpretation
of Section 280G and its application to the matters set forth herein, will be
made by the Compensation Committee, and will be final and binding unless Xxxxxx
notifies the Committee that he disputes all or part of the same, including a
description of and reasons for the dispute, within fifteen (15) business days
after Xxxxxx is informed of the same. To the extent that this provision requires
a reduction in the amount of payment(s) that would otherwise be due and owing by
the Company to Xxxxxx under this Agreement or otherwise, the Compensation
Committee shall determine the method of reducing any such payment(s) in order to
meet the limitations imposed by this provision, which will be final and binding
unless Xxxxxx notifies the Committee that he disputes all or part of the same,
including a description of and reasons for the dispute, within fifteen (15)
business days after Xxxxxx is informed of the same. In the event Xxxxxx notifies
the Company of a dispute under this paragraph, and Xxxxxx and the Company are
unable to resolve between themselves any dispute regarding any issue under this
paragraph, including any dispute as to such determination, computation, method
and/or reduction, then the dispute shall be resolved in the following manner,
promptly upon written notice by either party to the other: Each party shall
designate a certified public accountant as said party's accounting
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representative, and the two accounting representatives shall select a third,
neutral certified public accountant to decide the dispute.
(e) (i) Any other provision of this Agreement or the
Employment Agreement to the contrary notwithstanding, Xxxxxx shall, as of the
Effective Date, become vested in 200,000 of the 250,000 options to purchase
shares of Common Stock of the Company referred to in Section 2(c) of the
Employment Agreement. The remaining 50,000 options are hereby forfeited and
terminated as of the Effective Date.
(ii) The 200,000 options referred to in Section 3(e)(i) above
and the 500,000 options to purchase shares of Common Stock granted pursuant to
Xxxxxx'x employment agreement dated June 30, 1998, as amended (the "June 1998
Agreement"), shall be exercisable until June 1, 2003, at which time any
unexercised options will be forfeited and terminated, notwithstanding any
provision of the Employment Agreement or the June 1998 Agreement to the
contrary.
(f) Notwithstanding anything herein to the contrary, Xxxxxx may assign
up to 25% of his right to receive payments pursuant to this Section 3 to a third
party and Xxxxxx may assign up to 100% of his right to receive payments pursuant
to this Section 3 to Geneva Capital, Inc., a Nevada corporation, if Xxxxxx or
his immediate family owns a controlling interest in Geneva Capital at the time
of such assignment; provided, however, that (i) such assignment does not violate
any restrictions on transferability and assignability of Common Stock awarded
under Section 3(b) of this Agreement, (ii) the assignment of any stock options
is permitted under the plan pursuant to which they were granted, and (iii) such
assignment creates no tax disadvantage to the Company, in each case as
reasonably determined by the General Counsel of the Company.
(g) If Xxxxxx'x service as CEO is extended beyond June 1, 2002 pursuant
to the last sentence of Section 1(a) above, Xxxxxx shall be entitled to no
additional compensation other than as provided for in this Section 3.
4. BENEFITS.
(a) The Company will provide Xxxxxx with an office in Chicago, Illinois
at 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000, or such other office as is designated by
the board of directors with Xxxxxx'x approval, until June 1, 2003. The Company
will reimburse Xxxxxx up to $65,000.00 per year for the cost of one secretary
for the Chicago office until such date.
(b) Until the date on which Xxxxxx is no longer serving as the
Company's chairman of the board of directors, Xxxxxx will be entitled to
participate in any employee benefit plans (except vacation after the Severance
Date) and insurance programs offered by the Company for its executive management
or supervisory personnel generally, in accordance with the eligibility
requirements for participation therein. After such date, and during the time
that Xxxxxx is a member of the board of directors of the Company, he will be
entitled to the same benefits as other non-employee members of the board.
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(c) During the time that Xxxxxx serves as CEO and/or chairman of the
board of the Company under this Agreement, and thereafter while he is a member
of the Company's board of directors, the Company will reimburse Xxxxxx for any
and all reasonable, necessary and customary business expenses incurred by
Xxxxxx, such reimbursement to be approved by the successor CEO or a designee of
the board of directors. In addition, and without limitation, Xxxxxx will not
travel on behalf of the Company except at the direction of the successor CEO or
a designee of the board of directors.
5. DEATH OR DISABILITY.
(a) Xxxxxx'x employment by the Company and membership on the board of
directors of the Company will terminate immediately upon his death; provided
that, in the event of Xxxxxx'x death before the Severance Date, in addition to
the payments due under Section 3(c), Xxxxxx'x estate shall be entitled to
receive the following: (i) that portion of Xxxxxx'x aggregate compensation that
is accrued through the date of death to the extent not theretofore paid; (ii)
any amounts or benefits required to be paid or provided which Xxxxxx is eligible
to receive under any plan, program, policy, practice, contract or agreement of
the Company to the extent not theretofore paid or provided; and (iii) the Base
Salary and Stock Award that would have been payable to Xxxxxx pursuant to
Sections 3(a) and (b) had Xxxxxx remained CEO and chairman of the board of
directors of the Company until June 1, 2002, said Base Salary to be paid out
during normal payroll periods until said date.
(b) If Xxxxxx becomes totally or partially disabled prior to the
Severance Date, in addition to the payments due under Section 3(c), the Company
shall continue to pay Xxxxxx, as long as such disability continues to the
applicable payment date(s), (i) the Base Salary payable to Xxxxxx at the date
his disability is determined, reduced dollar-for-dollar to the extent of any
disability insurance payments paid to Xxxxxx through insurance programs, the
premiums for which were paid by the Company or its subsidiaries, and (ii) the
Stock Award. For purposes of this Agreement the term "total disability" shall
mean Xxxxxx'x inability due to illness, accident or other physical or mental
incapacity to engage in the full time performance of his duties under this
Agreement as reasonably determined by the board of directors of the Company
based upon objective evidence. For purposes of this Agreement, "partial
disability" shall mean Xxxxxx'x disability due to illness, accident or other
physical or mental incapacity to engage in only the partial performance of his
duties under this Agreement, as reasonably determined by the board of directors
of the Company based upon objective evidence. In the event the parties are
unable to resolve any dispute between them regarding any issue under this
paragraph, including but not limited to the existence, nature or extent of any
disability, then the dispute shall be resolved in the following manner, promptly
upon written notice by either party to the other: Each party shall designate a
licensed physician or licensed mental health professional as said party's
representative, and the two representatives shall select a third, neutral party,
who shall be a licensed physician or licensed mental health professional, to
decide the dispute.
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6. CERTAIN COVENANTS.
(a) During Xxxxxx'x service hereunder as CEO and/or chairman of the
board of directors of the Company, or thereafter as a director of the Company,
Xxxxxx will enjoy access to the Company's "confidential information" and "trade
secrets." For purposes of this Agreement, "confidential information" shall mean
information which is not publicly available including without limitation,
information concerning customers, material sources, suppliers, financial
projections, marketing plans and operation methods, Xxxxxx'x access to which
derives solely from Xxxxxx'x service as CEO, chairman, or member of the board of
directors of the Company. For purposes of this Agreement, "trade secrets" shall
mean the Company's processes, methodologies and techniques known only to those
employees of the Company who need to know such secrets in order to perform their
duties on behalf of the Company. The Company takes numerous steps, including
these provisions, to protect the confidentiality of its confidential information
and trade secrets, which it considers unique, valuable and special assets.
Xxxxxx, recognizing the Company's significant investment of time, efforts and
money in developing and preserving its confidential information, shall not,
prior to the Severance Date and for a one (1) year period thereafter, use for
his direct or indirect personal benefit any of the Company's confidential
information or trade secrets. Prior to the Severance Date and for a one (1) year
period thereafter, Xxxxxx shall not disclose to any person any of the Company's
confidential information or trade secrets.
(b) During the time that Xxxxxx serves as chairman of the board, Xxxxxx
shall not become an officer or director of any company that competes with the
Company, and will not engage, directly or indirectly, whether as an owner,
partner, employee, officer, director, agent, consultant or otherwise, in any
location where the Company or any of its subsidiaries is engaged in business
after the date hereof and prior to the date Xxxxxx ceases to be chairman of the
board, in a business the same or similar to any business now, or at the time
after the date hereof and prior to the termination of said service by Xxxxxx as
chairman, conducted by the Company or any of its subsidiaries; provided,
however, that the mere ownership of 5% or less of the stock of a company whose
shares are traded on a national securities exchange or are quoted on the
National Association of Securities Dealers Automated Quotation System, shall not
be deemed ownership that is prohibited hereunder.
(c) During the time that Xxxxxx serves as chairman of the board, Xxxxxx
shall not (i) hire, retain or recruit any of the Company's insurance agents or
personnel for the purpose of performing services for Xxxxxx or another company,
or (ii) knowingly contact or solicit, directly or indirectly, any person, firm
or entity connected with the Company, including its customers, clients or
consultants, for the purpose of diverting work or business from the Company.
(d) Without limiting any other remedies that may be available at law or
in equity, in the event of a breach or threatened breach by Xxxxxx of any of the
provisions of this Section 6, the Company or any of its affiliates shall be
entitled to seek in any court of proper jurisdiction all appropriate remedies,
including without limitation injunctive relief and monetary damages; provided,
however, that before doing so, the Company shall give Xxxxxx written notice of
any such alleged breach or threatened breach, and, if the alleged breach or
threatened breach is
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curable, Xxxxxx shall have five (5) business days to cure said breach or provide
reasonable assurance that said threatened breach shall not occur.
(e) The covenants in this Section 6 shall survive the termination of
this Agreement.
(f) If the Company defaults in meeting any of its obligations to Xxxxxx
under this Agreement in any material respect, and fails to cure such default
within thirty (30) days after receiving written notice of same from Xxxxxx, then
the covenants in this Section 6 shall be void.
7. CONFIDENTIALITY; DISCLOSURE.
(a) Xxxxxx agrees not (i) to discuss, orally or in writing, any aspect
of this Agreement or its subject matter with anyone inside the Company other
than its board of directors, its General Counsel, or the successor CEO, and (ii)
to discuss, orally or in writing, any aspect of this Agreement or its subject
matter with anyone outside the Company other than his spouse, immediate family,
health care service providers, legal counsel and tax advisors.
(b) The parties agree that the Company may make such disclosure
regarding Xxxxxx'x xxxxxxxxx as CEO and President of the Company and Xxxxxx'x
continued membership on the Company's board of directors as is required by law,
regulation or the listing rules of The Nasdaq Stock Market, Inc.
(c) The agreements in this Section 7 shall survive the termination of
this Agreement.
8. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; RESPONSIBILITY.
(a) Xxxxxx represents and warrants to the Company that to the best of
his knowledge he has not engaged in any violation of law or any breach of any
fiduciary duty owed as a director or officer of the Company that could give rise
to the Company having a claim against him.
(b) The Company represents and warrants to Xxxxxx that to the best of
the Company's knowledge the Company has not engaged in any violation of law that
could give rise to Xxxxxx having a claim against the Company.
9. RELEASES.
(a) The Company forever releases, remises and discharges Xxxxxx, together with
his heirs, personal representatives, executors, conservators, successors and
assigns (collectively the "Employee Released Parties") from any and all claims,
claims for relief, demands, actions and causes of action of any kind or
description whatsoever, known or unknown, whether arising out of contract, tort,
statute, treaty or otherwise, in law or in equity, which the Company now has or
has had against any Employee Released Party from the beginning of the world to
the date of this Agreement arising from, connected with, or in any way growing
out of, directly or indirectly, Xxxxxx'x employment with the Company, his
service on behalf of the Company, or any other transaction between the parties
prior to the date of this Agreement and all effects, consequences, losses,
damages, negotiations and dealings relating thereto; provided, however, that
nothing in
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this Section 9(a) will bar, impair or affect any of the obligations, covenants
and agreements of Xxxxxx set forth in this Agreement.
(b) Xxxxxx, for himself and his heirs, personal representatives,
successors and assigns, forever releases, remises and discharges the Company and
each of its past, present, and future officers, directors, shareholders,
members, trustees, agents, representatives, affiliates, successors and assigns
(collectively the "Employer Released Parties") from any and all claims, claims
for relief, demands, actions and causes of action of any kind or description
whatsoever, known or unknown, whether arising out of contract, tort, statute,
treaty or otherwise, in law or in equity, which Xxxxxx now has, has had, or may
hereafter have against any of the Employer Released Parties from the beginning
of the world to the date of this Agreement, arising from, connected with, or in
any way growing out of, directly or indirectly, Xxxxxx'x employment by the
Company, the services provided by Xxxxxx to the Company, or any transaction
between the parties prior to the date of this Agreement and all effects,
consequences, losses and damages relating thereto, including, but not limited
to, all claims arising under the Civil Rights Acts of 1866 and 1964, the Fair
Labor Standards Act of 1938, the Equal Pay Act of 1963, the Age Discrimination
in Employment Act of 1967, the Rehabilitation Act of 1973, the Older Workers
Benefit Protection Act of 1990, the Americans With Disabilities Act of 1990, the
Civil Rights Act of 1991, the Family and Medical Leave Act of 1993, each as
amended to date, and all other federal or state laws governing employers and
employees; provided, however, that nothing in this Section 9(b) will bar, impair
or affect the obligations, covenants and agreements of the Company set forth in
this Agreement.
10. COVENANT NOT TO XXX.
Xxxxxx, on behalf of himself and the Employee Released Parties, agrees
that neither he nor any of them will now or hereafter commence or initiate any
claim or charge of employer discrimination with any governmental agency or xxx
the Company concerning any claims relating to his employment, service and/or
termination of employment and/or service with the Company, except as the same
may affect Xxxxxx'x rights with respect to the enforcement of this Agreement.
This Agreement may be pled as a full and complete defense to, and may be used as
a basis for injunction against, any action or proceeding Xxxxxx may institute,
prosecute, or maintain in breach of this Agreement.
The Company, on behalf of itself and the Employer Released Parties,
agrees that neither it nor any of them will now or hereafter commence or
initiate any claim or charge with any governmental agency or xxx Xxxxxx
concerning any claims relating to his employment, service and/or termination of
employment and/or service with the Company, except as the same may affect the
Company's rights with respect to the enforcement of this Agreement. This
Agreement may be pled as a full and complete defense to, and may be used as a
basis for injunction against, any action or proceeding the Company may
institute, prosecute, or maintain in breach of this Agreement.
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11. ACKNOWLEDGMENT.
(a) By entering into this Agreement, and in connection with Xxxxxx'x
release of claims and covenant not to xxx set forth in Sections 9 and 10, Xxxxxx
acknowledges that:
(i) Xxxxxx is knowingly and voluntarily entering into this
Agreement;
(ii) The Company is not admitting any liability or violation of any
law, contract or other agreement;
(iii) No promise or inducement has been offered to Xxxxxx except as
set forth herein;
(iv) This Agreement is being executed by Xxxxxx without reliance
upon any statements by the Company or any of its
representatives concerning the nature or extent of any claims
or damages or legal liability therefor;
(v) This Agreement has been written in understandable language,
and all provisions hereof are understood by Xxxxxx;
(vi) Xxxxxx has been advised in writing to consult with an attorney
prior to executing this Agreement;
(vii) Xxxxxx has had a period of at least 21 days within which to
consider this Agreement before accepting the same and, by
signing this Agreement earlier than 21 days following receipt
of it (if Xxxxxx has done so), Xxxxxx acknowledges that he has
knowingly and voluntarily waived the 21 day period; and
(viii) Xxxxxx has the right to revoke this Agreement for a period of
seven days following his execution hereof, and this Agreement
will not become effective or enforceable until such seven-day
period has expired.
(b) Should Xxxxxx desire to revoke this Agreement, Xxxxxx must notify
the Company in writing at 00000 Xxxxxxxx Xxxx, Xxxxxxxxxxxx, Xxxx 00000,
attention: General Counsel, prior to the close of business on the seventh day
following the date when he signs this Agreement. If Xxxxxx declines to accept
the terms of this Agreement or, having accepted them, effectively revokes his
acceptance thereof, this Agreement will have no force or effect and neither its
terms, nor any of the discussions of the parties relative to its negotiation,
will be admissible in evidence in any proceeding brought by or on behalf of
Xxxxxx against the Company or any other person.
(c) By executing this Agreement, Xxxxxx is not admitting any liability
or violation of any law, contract or other agreement.
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12. NOTICE.
Any notice required or permitted to be given to a party pursuant to the
provisions of this Agreement must be in writing and will be deemed to have been
given on the date of receipt if delivered by messenger to, or if mailed to such
party by registered or certified mail, postage prepaid, at the address for such
party set forth below (or to such other address or party as such party shall
designate in writing by like notice to the other party from time to time).
If to the Company:
Ceres Group, Inc.
Attention: General Counsel
00000 Xxxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxx 00000
If to Xxxxxx:
Xxxxx X. Xxxxxx
000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
With a copy to:
---------------
Xxxx X. Xxxxx
Laner, Muchin, Dombrow, Becker, Xxxxx and Tominberg, Ltd.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
13. MODIFICATION AND WAIVER.
(a) No waiver or modification of this Agreement or of any covenant,
condition, or limitation herein contained will be valid or effective unless in
writing and duly executed by the party to be charged therewith and no evidence
of any waiver or modification will be offered or received in evidence in any
proceeding or litigation between the parties arising out of or affecting this
Agreement, or the rights or obligations of the parties hereunder, unless such
waiver or modification is in writing, duly executed as aforesaid.
(b) The parties further agree that the provisions of paragraph (a)
above may not be waived except as herein set forth. No waiver of any of the
provisions of this Agreement will be deemed, or will constitute, a waiver of any
other provision, whether or not similar, nor will any waiver constitute a
continuing waiver. No waiver of any breach of condition of this Agreement will
be deemed to be a waiver of any other subsequent breach of condition, whether of
like or different nature.
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14. CONSENT TO JURISDICTION, VENUE AND SERVICE OF PROCESS.
Subject to Section 6(d), each of the Company and Xxxxxx, after having
consulted with legal counsel, knowingly, voluntarily, intentionally, and
irrevocably: (i) consents to the jurisdiction of the Court of Common Pleas,
County of Cuyahoga, State of Ohio and the United States District Court for the
Northern District of Ohio with respect to any action, suit, proceeding,
investigation, or claim ("Litigation"); (ii) waives any objections to the
jurisdiction and venue of any Litigation in either such court; (iii) agrees not
to commence any Litigation except in either of such courts and agrees not to
contest the removal of any Litigation commenced in any other court to either of
such courts; (iv) agrees not to seek to remove, by consolidation or otherwise,
any Litigation commenced in either of such courts to any other court; and (v)
waives personal service of process in connection with any Litigation and
consents to service of process by registered or certified mail, postage prepaid,
addressed as set forth herein. These provisions will not be deemed to have been
modified in any respect or relinquished by any party except by written
instrument executed in accordance with Section 13.
15. SEVERABILITY.
If a judicial determination is made that any of the provisions of this
Agreement constitutes an unreasonable or otherwise unenforceable restriction
against any party, such determination shall not affect the validity of the
remaining provisions. In the event that a provision shall be declared to be
invalid, then the parties agree that they will, in good faith, negotiate with
one another to replace such invalid provision with a valid provision as similar
as possible to that which was held to be invalid.
16. ADVICE OF COUNSEL.
Xxxxxx acknowledges that he has been represented by competent counsel
in connection with the negotiation, preparation, and signing of this Agreement
and the other document(s) contemplated hereby, that he understands and agrees to
every term contained herein and therein, and that this Agreement and the other
document(s) were negotiated at arm's length. Any rule of construction which
would otherwise hold that any ambiguity in this Agreement should be construed
for or against one party over any other is hereby waived.
17. FURTHER ASSURANCES.
The parties agree to take such action and execute and deliver, promptly
upon request, such additional documents as may be necessary or appropriate to
implement the terms of this Agreement and effectuate its intent.
18. COSTS AND EXPENSES.
Each party shall bear his or its own costs and expenses incurred in
connection with the negotiation and preparation of this Agreement, including
without limitation the fees of such party's counsel(s); provided, however, that
the Company agrees to reimburse Xxxxxx for the actual fees of Laner, Muchin,
Dombrow, Becker, Xxxxx and Tominberg, Ltd. up to a maximum of $20,000.00,
promptly after receipt of a copy of the statement(s) for professional services
from
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Laner, Muchin, Dombrow, Becker, Xxxxx and Tominberg, Ltd which itemizes such
fees in reasonable detail.
In the event of a breach of this Agreement, the prevailing party shall
recover from the non-prevailing party all costs and expenses, including actual
attorney's fees, incurred in compelling compliance with this Agreement.
19. GOVERNING LAW.
This Agreement will be governed by and construed in accordance with the
laws of the State of Ohio, without giving effect to its principles of conflicts
of laws.
20. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements, representations, and understandings, whether oral or
in writing, of the parties. Any provision in the Employment Agreement to the
contrary notwithstanding, it is expressly agreed that neither party has any
further obligations under the Employment Agreement.
21. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which will be deemed to constitute an original but all of which together will
constitute one and the same instrument.
22. SUCCESSORS AND ASSIGNS.
(a) Except as otherwise specifically provided hereinabove, Xxxxxx may
not assign any rights or obligations under this Agreement without the prior
written consent of the Company, which consent shall not be unreasonably
withheld. This Agreement will be binding upon and inure to the benefit of Xxxxxx
and his heirs, personal representatives, executors, conservators and successors
and assigns.
(b) The Company may not assign any rights or obligations under this
Agreement without the prior written consent of Xxxxxx, which consent shall not
be unreasonably withheld. This Agreement will be binding upon and inure to the
benefit of the Company and its successors and assigns.
23. THIRD PARTY BENEFICIARIES.
Each of the Employer Released Parties that is not a party to this
Agreement will be a third party beneficiary of this Agreement. Each of the
Employee Released Parties that is not a party to this Agreement will be a third
party beneficiary of this Agreement. This Agreement will be enforceable by each
such Employer Released Party and each such Employee Released Party to the same
extent as if the Releasee were a party hereto.
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24. RETURN OF PROPERTY.
Xxxxxx agrees that he will, within thirty (30) days after the Severance
Date, return to the Company all Company credit cards and any other Company
property not needed by him to act as CEO or chairman. Xxxxxx agrees that he
will, within thirty (30) days after he ceases to be the chairman of the board of
directors, for whatever reason and in whatever manner, return to the Company (i)
all property of the Company, including but not limited to, any keys, office
furniture and equipment, provided that Xxxxxx may retain keys, office furniture
and equipment for the Chicago, Illinois office until June 1, 2003 in conjunction
with Section 4(a) above, and (ii) all originals and copies of writings and
records relating to the Company's business, confidential information or trade
secrets that are in Xxxxxx'x possession at such time; provided, however, the
Company may cancel any Company credit cards at any time following the Severance
Date.
25. CONDUCT OF PARTIES.
The parties agree that they shall act in good faith in connection with
the performance of this Agreement respecting each other's professional and
business standing.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
CERES GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------------------
Xxxxxxxx X. Xxxxx, Corporate Secretary
/s/ Xxxxx X. Xxxxxx
--------------------------------------------
Date: April 15, 0000 Xxxxx X. Xxxxxx
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ANNEX A
EMPLOYMENT AGREEMENT
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ANNEX B
FORM OF PRESIDENT'S RESIGNATION
Xxxxx X. Xxxxxx
April 15, 2002
Board of Directors
Ceres Group, Inc.
00000 Xxxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxx 00000
Ladies and Gentlemen:
I, Xxxxx X. Xxxxxx, hereby resign as President of Ceres Group, Inc.
effective as of the Severance Date (as defined in the Transition Agreement dated
as of April 15, 2002 between Ceres Group, Inc. and me), following which I plan
to retire.
Very truly yours,
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
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