EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (“Agreement”) is dated as of December 4, 2006, and is
entered into by and between Xxxxx X. Xxxxx (“Executive”), Direct General
Corporation, a Tennessee corporation (the “Company”), and Elara Holdings, Inc.,
a Delaware corporation (“Holdco” or "Parent"). Except where otherwise noted, all
capitalized terms not defined herein shall have the meaning set forth in the
“Merger Agreement,” as defined below.
RECITALS
WHEREAS,
pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”)
by and among the Company, Holdco, and Elara
Merger Corporation, a Tennessee corporation, and a wholly-owned subsidiary
of
Holdco ("Merger
Sub"),
Merger
Sub will be merged with and into the Company, with the Company surviving as
a
wholly-owned
subsidiary of Holdco
(the
"Merger");
WHEREAS,
the
Company and Holdco desire to secure the exclusive services and employment of
Executive on behalf of the Company, and Executive desires to be employed
exclusively by the Company, upon the terms and conditions set forth in this
Agreement, which shall become effective as of and contingent upon the occurrence
of the Effective Time, as defined in the Merger Agreement;
WHEREAS,
in
connection with and as a result of the Merger, Executive will receive
substantial consideration in exchange for the sale of her ownership interest
in
the Company;
WHEREAS,
the
Merger Agreement requires the execution and delivery of this Agreement by
Executive as a condition precedent to Holdco’s obligation to enter into the
Merger Agreement;
WHEREAS,
the
Company and Employee have entered into that certain Executive Employment
Agreement, dated July 21, 2003 (the “Employment Agreement”); and
WHEREAS,
the
Company and Employee desire to terminate the Employment Agreement effective
as
of and contingent upon the occurrence of the Effective Time and to enter into
this Agreement in lieu of the Employment Agreement, also effective as of and
contingent upon the occurrence of the Effective Time.
AGREEMENT
NOW,
THEREFORE,
in
consideration of the mutual covenants and promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the parties hereto, each intending to be legally bound
hereby, agree as follows:
1. Effective
Date of Agreement
This
Agreement shall be executed and delivered by Executive prior to Holdco’s
execution of the Merger Agreement, and shall become effective only as of the
Effective Time and conditioned on the consummation of the Merger. In the event
that the Merger is not consummated, the parties hereto agree that this Agreement
shall have no effect and shall be null and void.
2. The
Position
The
Company hereby employs Executive as President of the Company, and Executive
accepts such exclusive employment.
3. Duties
During
her employment with the Company, Executive will serve the Company and its
affiliates faithfully, diligently and to the best of her ability and will devote
all or substantially all of her time, energy, experience and talents during
regular business hours and as otherwise reasonably necessary to such employment,
to the exclusion of all other business activities. During her employment with
the Company, Executive shall perform all duties and accept all responsibilities
commensurate with such position as may be reasonably assigned to her from time
to time by the Board of Directors of the Company (the “Board”), and/or the Chief
Executive Officer (the "CEO") of the Company. Executive shall also be subject
to
and shall abide by all policies and procedures of the Company, except to the
extent that such policies and procedures conflict with the other provisions
of
this Agreement, in which case this Agreement shall control.
4. Compensation
Executive
shall be paid the following as compensation for all services to be rendered
by
Executive pursuant to this Agreement:
(a) Base
salary. During
the Term (as defined in Section 6 hereof), Executive shall be entitled to a
base
salary (the “Base Salary”), payable in equal biweekly installments, according to
the Company’s normal payroll practices, at an annual rate of three hundred
thousand dollars ($300,000), less all applicable federal, state and/or local
taxes and all other authorized payroll deductions. Executive’s Base Salary will
be subject to an approximately annual review, and increases (but not reductions)
may be made to Executive’s Base Salary at any time based upon the Board’s and/or
CEO's review of Executive’s performance and the performance of the Company.
(b) Bonus
eligibility.
During
the Term, Executive shall be entitled to participate in a Company bonus plan
or
program to be adopted by the Board, pursuant to which she shall be eligible
to
receive annual bonuses up to a specified percentage of Executive's Base Salary
and subject to a combination of the Executive's achievement of pre-established
performance goals and the Company's achievement of pre-determined financial
objectives, in each case, as determined in the sole and absolute discretion
of
the Board, and further subject to the terms and conditions of such plan or
program.
(c)
Holdco
stock option plan.
During
the Term, Executive shall be eligible to participate in, and receive an award
or
awards of stock options under, a Holdco stock option plan to be adopted by
the
Board, effective as of or following the Effective Time, as determined in the
sole and absolute discretion of the Board (or any committee designated by the
Board for this purpose) and subject to such other terms and conditions,
including the terms of the applicable award agreements, as are determined from
time to time by the Board or such committee; provided, however, that Executive
shall be granted such number of options as are commensurate with her position
as
President of the Company.
5. Treatment
of Company Stock Options.
Executive
acknowledges that all outstanding options to purchase shares of the Company's
common stock that Executive has or that are attributable to the Executive as
of
the Effective Time (the "Company Options") shall be treated solely pursuant
to
the applicable terms of the Merger Agreement and that Executive shall have
no
further or greater rights other than those specified therein; provided, however,
that in the event that Executive exercises any options to purchase shares of
Holdco stock, following the Effective Time, Executive agrees that at the time
of
each such exercise, she shall execute and become a party to that certain
Management Stockholders' Agreement dated as of December __, 2006, between
Holdco, Fremont and Management Stockholders (as each such entity or person
is
defined in such agreement).
6. Term;
Employment At Will
Subject
to the terms of this Agreement (including, without limitation, Section 10
hereof), the term of this Agreement (the “Term”) shall commence on the Effective
Time and shall be and continue on an at-will basis, until such time as
Executive’s employment is terminated by the Company or Executive. Executive’s
employment shall not be for a fixed term, and may be terminated at any time,
with or without cause, by either the Company or Executive.
7. Perquisites/Expenses
Executive
shall be entitled to reimbursement of reasonable expenses incurred by Executive
in the course of Executive’s duties, to the extent allowed under applicable
policies of the Company.
8. Benefits
(a) During
the Term, Executive and, to the extent applicable, Executive’s eligible
dependents, shall be entitled to compensation and benefits that are in the
aggregate not materially less favorable than such benefits that the Company
provides to similarly-situated executives of the Company as of the Effective
Time; provided, however that such benefits shall include (i) continued use
of an
automobile provided by the Company under substantially similar terms and
conditions as were applicable immediately prior to the Effective Time and (ii)
a
rate of annual vacation accrual that is no less than that to which Executive
was
entitled immediately prior to the Effective Time.
(b) Nothing
in this Agreement shall preclude the Company from amending or terminating any
employee benefit plan or practice.
9. Effect
of Death or Disability
In
the
event of Executive’s termination of employment by reason of death or
“disability” (as defined from time to time in any applicable disability plan or
program of the Company) during the Term, this Agreement shall terminate
effective as of the date of Executive’s death or, subject to any applicable
disability plan or program of the Company or federal or state disability or
leave laws, disability, and Executive shall receive such compensation and
benefits (if any) in connection with such termination consistent with Section
8
of this Agreement.
10. Termination
of Employment and Severance
| (a) |
General
|
(i) Termination
by the Company for Cause or by Executive other than for Good
Reason.
At any
time during the Term, the Company may terminate Executive’s employment under
this Agreement for “Cause” (as hereinafter defined), or Executive may terminate
her employment with the Company other than for “Good Reason” (as hereinafter
defined), after which Executive shall be entitled to the payment of any amount
of unpaid Base Salary and any unreimbursed reasonable expenses incurred in
the
performance of Executives' duties in accordance with the Company's policies,
in
each case accrued through such termination date. Except as set forth in the
preceding sentence, the Company shall have no further obligation hereunder
to
Executive.
(ii) Termination
by Executive for Good Reason or by the Company other than for Death, Disability
or Cause.
At any
time during the Term, if Executive’s employment is terminated by Executive for
Good Reason, or by the Company for any reason other than Executive’s death,
disability or for Cause, Executive shall be entitled to the following payments
(less all applicable federal, state and/or local taxes and all other authorized
payroll deductions): (A) payment of any amount of unpaid Base Salary and
unreimbursed reasonable expenses incurred in the performance of Executives'
duties in accordance with the Company's policies, in each case accrued through
the termination date and (B) provided that Executive complies with the
notice requirements of this Section and this Agreement and signs and returns
to
the Company a Severance Agreement and General Release of All Claims (“Release”)
that is acceptable (in form and substance) to the Company and such Release
has
become irrevocable by Executive, severance compensation equal to (I) two hundred
percent (200%) of Executive’s annual Base Salary at the rate in effect at the
time of termination, payable in equal biweekly installments over a twenty-four
(24) calendar-month period, in accordance with the Company’s normal payroll
practices; plus (II) if Executive’s annual bonus has not been paid and is
payable for the applicable plan or program year commencing immediately prior
to
her termination of employment because Executive is not a participant for the
full plan or program year by reason of her termination of employment, a lump-sum
payment equal to the annual bonus award that she would have received from the
Company had she remained employed through the remainder of the plan or program
year (or any longer period required under the terms of such annual bonus award),
prorated to reflect the number of days in the plan or program year ending as
of
her date of termination, calculated based on such other assumptions as the
Company shall reasonably determine, and payable no later than at such time
as
the Company pays such annual bonuses to other eligible participants and (III)
continued health benefits for twenty-four (24) months, during which time
Executive will be required to pay the same portion of such health benefits
as
she was required to pay during employment; provided, however, that to the extent
the applicable health plan does not permit Executive to continue to participate
in the plan during all or a part of the 24-month period, the Company shall
pay
the premiums relating to such continued coverage under the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA"), less any portion of the premium
that Executive would otherwise have been required to pay had the plan permitted
continued coverage following termination of employment. Except as set forth
in
the preceding sentence, the Company shall have no further obligation hereunder
to Executive.
(iii) Executive
may terminate her employment with the Company, whether for Good Reason or not,
only by giving the Company thirty (30) days’ advance notice in writing, in
accordance with the notice provisions of this Agreement.
(b) Definitions.
For
purposes of this Agreement, the following definitions shall apply:
(i) “Cause”
shall mean any of the following: (A) Executive’s engaging in and/or failure
to take all appropriate action in response to any acts of fraud, theft,
embezzlement, or any other acts or omissions that are harmful or injurious
to
the Company and/or any of its affiliates; (B) Executive’s unreasonable
neglect or refusal to perform any of the duties or responsibilities: (I)
assigned to Executive by the Board and/or the CEO, (II) assigned to Executive
pursuant to any employment agreement or other agreement that Executive now
has
or later has with the Company and/or any of its affiliates, and/or (III)
otherwise appropriate to Executive’s position after Executive's failure to cure
such conduct within thirty (30) days following her receipt of written notice
from the Board and/or the CEO; (C) Executive’s failure to timely carry out any
reasonable directive of the Board and/or the CEO or concerning the operations
of
the Company, provided, however, that Executive shall be subject to termination
under this subsection (C) only upon Executive’s failure to carry out the
directive for thirty (30) days following written notice from the Board of such
failure; (D) Executive’s engaging in any act of dishonesty, disloyalty, or moral
turpitude in connection with Executive’s responsibilities to the Company and/or
any of its affiliates as an employee, officer, director, or otherwise;
(E) Executive’s commission of, or conviction for, any felony, including any
plea of guilty or nolo contendere or placement in a pretrial diversion program;
(F) Executive’s material violation of any policies or procedures of the
Company and/or any of its affiliates; and/or (G) Executive’s breach of any
of the material terms of this Agreement or any other agreement that Executive
now has or later has with the Company and/or any of its affiliates, and failure
to cure such breach within thirty (30) days following Executive's receipt of
written notice of such breach from the Board and/or the CEO; provided, however,
that notice shall not be required if it is reasonably determined by the Board
that the breach cannot be cured by Executive. ; provided, however, that notice
required with respect to subparts (B), (C) and (G) of this Section 10(b)(1)
shall not be required if the conduct of Executive involves intentional
misconduct.
(ii) “Good
Reason” shall mean Executive's termination of her employment following the
Executive's giving notice of her voluntary resignation within thirty (30) days
after the occurrence of any of the following, without Executive’s written
consent: (A) a material reduction in Executive's base salary or aggregate
benefits, (B) a material demotion in position and/or a material reduction in
job
duties and responsibilities, (C) a required relocation from the Memphis,
Tennessee metropolitan area, or (D) a material breach by the Company of any
of
its obligations under this Agreement and failure by the Company to cure such
breach within ten (10) days following receipt of written notice from Executive
of such breach. "Good Reason": shall also mean Executive's termination of her
employment following the Executive's giving 180 days written notice of her
voluntary resignation within thirty (30) days following the termination of
Xxxxxx Xxxxxxxx or his removal as Chief Executive Officer of the Company.
11. Exclusive
Services, Non-Solicitation and Non-Disclosure of Confidential
Information
(a) Executive
agrees that, during the Term and for a period of five (5) years immediately
following the termination of Executive’s employment with the Company, Executive
shall not, either directly or indirectly, make known to any person, firm,
corporation or other legal entity the names or addresses of any of the
prospective (to Executive’s knowledge) or current customers, clients, insureds,
insurers, reinsurers, brokers, lenders, suppliers, service providers, employees,
agents, representatives, and/or shareholders of the Company or any of its
affiliates (hereinafter collectively referred to as “Business Contacts”) or any
other information pertaining to them. Executive further agrees that, for a
period of five (5) years immediately following the end of Executive’s employment
with the Company, Executive shall not, either directly or indirectly, either
for
Executive or for any other person, firm, corporation, or other legal entity,
divert, take away, or attempt to divert, or take away any prospective (to
Executive’s knowledge) or current Business Contacts or any persons or legal
entities that were prospective (to Executive’s knowledge) or current Business
Contacts at any point during Executive’s term of employment with the Company.
Nor shall Executive during the Term and for the Non-Compete Period (defined
below) solicit or contact or attempt to solicit or contact any prospective
(to
Executive’s knowledge) or current Business Contacts for any reason in any way
relating to or arising out of the providing of (whether proposed (to Executive's
knowledge) or actual) of products and/or services similar in kind or purpose
to
those provided or, to Executive's knowledge expected to be provided, by the
Company and/or any of its affiliates other than ordinary course contact by
Executive as a consumer.
(b) Executive
agrees that, during the Term and for the Non-Compete Period (defined below)
following the termination of Executive’s employment with the Company, Executive
shall not disrupt, damage, impair or interfere with the business of the Company
and/or any of its affiliates, whether by way of interfering with or raiding
their employees, disrupting their relationships with any prospective (to
Executive’s knowledge) or current Business Contacts, or otherwise. Nor shall
Executive during the same period either
directly or indirectly solicit, induce, recruit, or encourage to leave the
employment of the Company and/or any of its affiliates for any reason and/or
to
perform work for a competitor of the Company and/or any of its affiliates (as
an
employee, independent contractor, or otherwise) (such conduct is collectively
referred to as “solicitation”) any person who is then employed by the Company
and/or any of its affiliates or who left the employ of the Company and/or any
of
its affiliates less than one (1) year prior to the solicitation.
(c) During
the Term and for the Non-Compete Period (defined below) following the
termination of Executive’s employment with the Company, Executive shall not,
either directly or indirectly, without the written consent of the Company,
in
any state in the United States in which the Company is doing Business (as
defined below) at the time the Executive's employment with the Company
terminates: (i) engage in the business of providing private passenger automobile
insurance services or products or financing of private passenger automobile
insurance premiums or providing any other services or products that the Company
offers as of the time Executive's employment terminates (the "Business"); (ii)
enter the employ of, or render any consulting or any other services to, any
entity that is principally engaged in the Business; or (iii) become interested
in any such entity in any capacity, including, without limitation, as an
individual, partner, shareholder, officer, director, principal, agent, trustee
or consultant; provided, however, Executive may own, directly or indirectly,
solely as a passive investment, securities of any entity traded on any national
securities exchange if Executive is not a controlling person of, or a member
of
a group which controls, such entity and does not, directly or indirectly, own
5%
or more of any class of securities of such entity, and provided, further that
it
shall not be a violation of this Section 11 for Executive to become employed
by
an entity that competes in the Business if such employment is solely in a line
of the entity's business that is wholly unrelated to the Business. For the
purposes of this Section 11, the "Non-Compete Period" is defined as follows:
upon Executive's termination of employment from the Company after less than
two
(2) years of employment, the Non-Compete Period shall be four (4) years; upon
Executive's termination from the Company after two (2) years but less than
three
(3) years of employment, the Non-Compete period shall be three (3) years; upon
Executive's termination from the Company after three (3) years but less than
four (4) years of employment, the Non-Compete period shall be two (2) years;
upon Executive's termination from the Company at or anytime after four (4)
years, the Non-Compete period shall be one (1) year. If the applicable
Non-Compete Period is determined to be one (1) year, as referenced above, the
Company shall have the option, which it may exercise in its sole and absolute
discretion, of extending the Non-Compete Period an additional one (1) year,
provided that Executive is paid 100% of her Base Salary during such one (1)
year
period, and regardless of the reason for the termination of Executive's
employment. The Company shall have thirty (30) days following Executive's
termination to notify Executive in writing of its intention to exercise its
option with respect to the potential one (1) year period. Such written notice
shall be provided to Executive at the address referenced below or such other
address as Executive may later provide to the Company in writing.
(d) Executive
acknowledges that, in her employment hereunder, she will occupy a position
of
trust and confidence with the Company and/or its affiliates and will receive
training which will enhance Executive's skill and experience. Executive agrees
that Executive shall not, except as may be required to perform her duties
hereunder with the written consent of the Company or as required by applicable
law and without the written consent of the Company, without limitation in time
or until such information shall have become public other than by Executive’s
unauthorized disclosure, use, disclose or disseminate any trade secrets,
confidential information or any other information of a secret, proprietary,
confidential or generally undisclosed nature (hereinafter collectively referred
to as “Confidential Information”) relating to the Company and/or any of its
affiliates, or their respective businesses, contracts, projects, proposed
projects, revenues, costs, operations, methods or procedures. Executive
acknowledges that said information is specialized, unique in nature and of
great
value to the Company and/or its affiliates, and that such information gives
the
Company and/or its affiliates a competitive advantage in their businesses.
Except where otherwise noted
(e) For
purposes of this Section 11, Confidential Information shall not include
information that: (i) is or becomes generally available to the public other
than
as a result of an unauthorized disclosure by Executive; (ii) becomes available
to Executive in a manner that is not in contravention of applicable law from
a
source (other than the Company) that is not known by Executive, after reasonable
investigation, to be bound by a confidential relationship with the Company;
or
(iii) is required to be disclosed by law, court order or other legal
process.
(f) Executive
acknowledges and agrees that (a) the trade secrets and confidential and related
information referred to in this Agreement and (b) the relationships with the
Business Contacts referenced in this Agreement each are of substantial value
to
the Company and/or its affiliates and that a breach of any of the terms and
conditions of this Agreement relating to those subjects would cause irreparable
harm to the Company and/or its affiliates, for which the Company and/or its
affiliates would have no adequate remedy at law. Therefore, in addition to
any
other remedies that may be available to the Company and/or any of its affiliates
under this Agreement or otherwise, the Company and/or its affiliates shall
be
entitled to obtain temporary restraining orders, preliminary and permanent
injunctions and/or other equitable relief to specifically enforce Executive’s
duties and obligations under this Agreement, or to enjoin any breach of this
Agreement. Furthermore, Executive agrees that any damages suffered by the
Company and/or its affiliates as a result of Executive’s breach of Executive’s
duties and obligations under this Agreement shall entitle the Company and/or
its
affiliates to offset such damages against any payments to be made pursuant
to
this Agreement, to the extent permitted by applicable law.
(g) Executive
and the Company intend that: (i) this Section 11 concerning (among
other things) the exclusive services of Executive to the Company and/or its
affiliates shall be construed as a series of separate covenants; (ii) if
any portion of the restrictions set forth in this Section 11 should, for
any reason whatsoever, be declared invalid by an arbitrator or a court of
competent jurisdiction, the validity or enforceability of the remainder of
such
restrictions shall not thereby be adversely affected; and (iii) Executive
declares that in light of her knowledge of the Company and her position of
trust
and confidence as an executive officer of the Company who, pursuant to the
Merger will receive substantial consideration in exchange for the sale of her
interest in the Company, the territorial and time limitations set forth in
this
Section 11 are reasonable and properly required for the adequate protection
of the business of the Company and/or its affiliates. In the event that any
such
territorial or time limitation is deemed to be unreasonable by an arbitrator
or
a court of competent jurisdiction, Executive agrees to the reduction of the
subject territorial or time limitation to the area or period which such
arbitrator or court shall have deemed reasonable.
(h) All
of
the provisions of this Section 11 are in addition to any other written
agreements on the subjects covered herein that Executive may have with the
Company and/or any of its affiliates, and are not meant to and do not excuse
any
additional obligations that Executive may have under such
agreements.
12. Representations
and Covenants Relating to Confidential Information of Third
Parties
Executive
understands and acknowledges that it is the policy of the Company to respect
the
Confidential Information belonging to third parties. Therefore, in addition
to
agreeing not to disclose or use Confidential Information belonging to the
Company in violation of any applicable confidentiality agreement or Company
policies as may be in effect or amended from time to time, as a condition of
employment with the Company, Executive also hereby represents, covenants and
agrees as follows:
(a) Executive
is not subject to any agreement of any kind with any prior employer or other
person or entity relating in any way to Executive’s right or Executive’s ability
to be employed by and/or to perform services for the Company;
(b) The
Company has instructed Executive not to bring to, disclose to or use in
connection with Executive’s employment or potential employment with the Company
any Confidential Information from any prior employer or other person or
entity;
(c) Executive
has not brought to, disclosed to or used in connection with Executive’s
employment or potential employment with the Company any Confidential Information
from any prior employer or other person or entity;
(d) Executive
will not bring to, disclose to or use in connection with Executive’s employment
with the Company any Confidential Information from any prior employer or other
person or entity; and
(e) During
Executive’s employment with the Company and thereafter, Executive will not take,
disclose or use any Confidential Information acquired as a result of Executive’s
employment with the Company, except as authorized by the Company.
13. Return
of Company Property
Executive
agrees, upon the termination of her employment with the Company, to return
all
physical, computerized, electronic or other types of records, documents,
proposals, notes, lists, files and any and all other materials including,
without limitation, computerized and/or electronic information that refers,
relates or otherwise pertains to the Company and/or its affiliates, and any
and
all business dealings of said persons and entities. In addition, Executive
shall
return to the Company all property or equipment that Executive has been issued
during the course of Executive’s employment or which Executive otherwise
currently possesses, including, but not limited to, any computers, cellular
phones, BlackBerries, PDAs, and/or pagers. Executive shall immediately deliver
to the Company any such physical, computerized, electronic or other types of
records, documents, proposals, notes, lists, files, materials, property and
equipment that are in Executive’s possession. Executive acknowledges that
Executive is not authorized to retain any physical, computerized, electronic
or
other types of copies of any such physical, computerized, electronic or other
types of records, documents, proposals, notes, lists, files or materials, and
is
not authorized to retain any other property or equipment of the Company and/or
its affiliates. Executive further agrees that Executive will immediately forward
to the Company any business information regarding the Company and/or any of
its
affiliates that has been or is inadvertently directed to Executive following
Executive’s last day of employment with the Company. The provisions of this
Section are in addition to any other written agreements on this subject that
Executive may have with the Company and/or any of its affiliates, and are not
meant to and do not excuse any additional obligations that Executive may have
under such agreements.
14. All
Developments the Property of the Company
All
confidential, proprietary or other trade secret information, all work performed,
and all other ideas, discoveries, inventions, designs, processes, methods and
improvements, conceived, developed, or otherwise made by Executive, during
her
employment with the Company, alone or with others, and in any way relating
to
the Company’s and/or any of its affiliates’ present or planned businesses or
products, whether or not patentable or subject to copyright protection and
whether or not reduced to tangible form or reduced to practice during the period
of Executive’s employment with the Company (“Developments”) shall be the sole
property of the Company, provided, however, that the foregoing shall not apply
to any invention made by Executive that was developed entirely on Executive’s
own time during the period of her employment with the Company, without using
the
Company’s equipment, supplies, facilities, or trade secret information except
for those inventions that either: (i) relate at the time of conception or
reduction to practice of the invention to the Company’s and/or any of its
affiliates’ businesses, or actual or demonstrably anticipated research or
development of the Company and/or its affiliates; or (ii) result from any work
performed by Executive for the Company. Executive agrees to advise the Company
promptly in writing of any inventions that Executive believes meet the preceding
criteria that are not otherwise disclosed pursuant to Section 15 below.
Executive further agrees to disclose all Developments promptly, fully and in
writing to the Company promptly after development of the same, and at any time
upon request. Executive understands that Company will keep in confidence and
will not disclose to third parties without Executive’s consent any confidential
information disclosed in writing to Company relating to inventions that meet
the
criteria set forth herein. Executive agrees to, and hereby does assign to the
Company all of Executive’s right, title and interest throughout the world in and
to all Developments. Executive agrees that each of the Developments shall
constitute a “work made for hire,” as defined in 17 U.S.C. § 101, and hereby
irrevocably assigns to the Company all copyrights, patents and any other
proprietary rights Executive may have in any Developments without any obligation
on the part of the Company to pay royalties or any other consideration to
Executive in respect of such Developments. Executive hereby grants to the
Company an irrevocable power of attorney to perform any and all acts and execute
any and all documents and instruments on behalf of Executive as the Company
may
deem appropriate in order to perfect or enforce the rights defined in this
Section. Executive agrees to assist the Company (without charge, but at no
cost
to Executive) to obtain and maintain for itself such rights, and agrees that
such obligation to assist the Company shall continue after the termination
of
this Agreement. The provisions of this Section are in addition to any other
written agreements on this subject that Executive may have with the Company
and/or any of its affiliates, and are not meant to and do not excuse any
additional obligations that Executive may have under such agreements.
15. Inventions
Retained and Licensed
Executive
has attached hereto, as
Exhibit 1,
a list
describing any and all inventions, original works of authorship, developments,
improvements, and trade secrets which were made by Executive prior to her
employment with Company (collectively referred to as “Prior Inventions”), which
belong to Executive, which relate to the Company’s and/or any of its affiliates’
actual or future businesses, products or research and development, and which
are
not assigned to the Company hereunder; or, if no such list is attached hereto
upon delivery of the signed Agreement to the Company, Executive represents
that
there are no such Prior Inventions. Executive agrees that Executive will not
incorporate, or permit to be incorporated, any Prior Invention owned by
Executive or in which Executive has an interest into a Company product, process
or machine without the Company’s prior written consent. Notwithstanding the
foregoing sentence, if, in the course of Executive’s employment with the
Company, Executive incorporates into a Company product, process or machine
a
Prior Invention owned by Executive or in which Executive has an interest, the
Company is hereby granted and shall have a nonexclusive, royalty-free,
irrevocable, perpetual, worldwide license to make, have made, modify, use and
sell such Prior Invention as part of or in connection with such product, process
or machine.
16. Indemnification
With
respect to any claim, loss, damage or expense (including attorneys’ fees)
arising from the performance by Executive of her duties as an officer or
director of the Company (but excluding any breach or alleged breach of the
terms
of this Agreement), Executive shall be entitled to indemnification by the
Company to the fullest extent permitted by law, as set forth in the Company's
Bylaws, and to reimbursement under any directors’ and officers’ liability
insurance policy of the Company that may be in effect from time to
time.
17. Survival
of Provisions
The
rights and obligations contained in Sections 8 through 30, inclusive, of
this Agreement shall survive the termination or expiration of this Agreement
or
of Executive’s employment with the Company, and shall be fully enforceable
thereafter. Further, all other rights
and obligations of the parties hereto, other than those applicable by their
express terms only during the Term, shall survive any termination or
expiration
of this
Agreement
or of
Executive’s employment with the Company, and shall be fully enforceable
thereafter.
18. Cooperation
in Third-Party Disputes
At
all
times during and after Executive's employment with the Company, Executive shall
cooperate with the Company and/or its affiliates and each of their respective
attorneys or other legal representatives (collectively referred to as
“Attorneys”) in connection with any claim, litigation, or judicial or arbitral
proceeding which is now pending or may hereinafter be brought against the
Company and/or any of its affiliates by any third party. Executive’s duty of
cooperation shall include, but shall not be limited to, (a) meeting with the
Company’s and/or its affiliates’ Attorneys by telephone or in person at mutually
convenient times and places in order to state truthfully Executive’s knowledge
of the matters at issue and recollection of events; (b) appearing at the
Company’s and/or its affiliates’ and/or their Attorneys’ request (and, to the
extent possible, at a time convenient to Executive that does not conflict with
the needs or requirements of Executive’s then-current employer) as a witness at
depositions, trials or other proceedings, without the necessity of a subpoena,
in order to state truthfully Executive’s knowledge of the matters at issue; and
(c) signing at the Company’s and/or its affiliates’ and/or their Attorneys’
request declarations or affidavits that truthfully state the matters of which
Executive has knowledge. The Company shall promptly reimburse Executive for
Executive’s actual and reasonable travel or other out-of-pocket expenses that
Executive may incur in cooperating with the Company and/or its affiliates and/or
their Attorneys pursuant to this Section 18, and shall compensate Executive
at a
reasonable hourly or per diem rate to be agreed upon by the parties to the
extent such cooperation is required on more than an occasional and limited
basis. The provisions of this Section are in addition to any other written
agreements on this subject that Executive may have with the Company and/or
its
affiliates, and are not meant to and do not excuse any additional obligations
that Executive may have under such agreements.
19. Non-Disparagement
of the Company
During
Executive’s employment with the Company and at all times thereafter, Executive
agrees, to the fullest extent permissible by law, not to make, directly or
indirectly, any public or private statements, gestures, signs, signals or other
verbal or nonverbal, direct or indirect communications that are or could be
harmful to or reflect negatively on the Company and/or any of its affiliates
and/or their businesses, or that are otherwise disparaging of the Company and/or
any of its affiliates and/or their businesses, or any of their past, present
or
future officers, directors, employees, advisors, agents, policies, procedures,
practices, decision-making, conduct, professionalism or compliance with
standards. The provisions of this Section are in addition to any other written
agreements on this subject that Executive may have with the Company and/or
any
of its affiliates, and are not meant to and do not excuse any additional
obligations that Executive may have under such agreements.
20. Withholding
Obligations; Internal Revenue Code Section 409A
The
Company shall make such deductions and withhold such amounts from each payment
made to Executive hereunder as may be required from time to time by law,
governmental regulation and/or order. It is the intention of the Company and
Executive that this Agreement not result in unfavorable tax consequences to
Executive under section 409A of the Internal Revenue Code of 1986, as amended
(the "Code"). The Company and Executive agree to work together in good faith
in
an effort to comply with section 409A of the Code including, if necessary,
amending this Agreement based on further guidance issued by the Internal Revenue
Service from time to time, provided that the Company shall not be required
to
assume any increased economic burden.
21. Successor
in Interest
This
Agreement and the rights and obligations hereunder shall be binding upon and
inure to the benefit of the parties hereto and their respective legal
representatives, and shall also bind and inure to the benefit of any successor
of the Company by merger or consolidation or any purchaser or assignee of all
or
substantially all of its assets. Neither this Agreement nor any of the rights
or
benefits hereunder may be assigned by either party hereto, except to any such
aforementioned successor, purchaser, or assignee of the Company. Executive
may
not assign any of her obligations or duties under this Agreement.
22. Invalid
Provision
The
parties understand and agree that if any provision of this Agreement shall,
for
any reason, be adjudged by any court or arbitrator of competent jurisdiction
to
be invalid or unenforceable, such judgment shall not affect, impair, or
invalidate the remainder of this Agreement, but shall be confined in its
operation to the provision of this Agreement directly involved in the
controversy in which such judgment shall have been rendered.
23. Arbitration
of Disputes
Except
as
is necessary for Executive and the Company to preserve their respective rights
under this Agreement by seeking necessary equitable relief (including, but
not
limited to, the Company’s rights under Section 11 of this Agreement) from a
court of competent jurisdiction, the Company and Executive agree that any and
all disputes based upon, relating to or arising out of this Agreement,
Executive’s employment relationship with the Company and/or the termination of
that relationship, and/or any other dispute by and between the Company and
Executive, including any and all claims Executive may at any time attempt to
assert against the Company, shall be submitted to binding arbitration in
Davidson County, Tennessee, pursuant
to the American Arbitration Association’s (“AAA”) National Rules for the
Resolution of Employment Disputes (the “Rules”),
provided
that the Rules shall be modified by the arbitrator to the extent necessary
to be
consistent with applicable law. Executive
acknowledges and agrees that by agreeing to arbitrate claims pursuant to this
Section 23, she is irrevocably waiving her right to a jury trial of any and
all
claims relating to or arising out of this Agreement, Executive’s employment
relationship with the Company and/or the termination of that relationship,
and/or any other dispute by and between the Company and Executive.
The
arbitrator shall be mutually agreed upon by the parties. If, however, the
parties are unable to agree upon such an arbitrator, then an arbitrator shall
be
selected by AAA in accordance with the Rules. The
Company and Executive further agree that each party shall pay its own costs
and
attorneys’ fees, if any; provided, however, that if either party prevails on a
claim which affords the prevailing party an award of attorneys’ fees, then the
arbitrator may award reasonable attorneys’ fees to the prevailing party,
consistent with applicable law. The Company and Executive further agree that
any
hearing must be transcribed by a certified shorthand reporter, and that the
arbitrator shall issue a written decision and award supported by essential
findings of fact and conclusions of law in order to facilitate judicial
review.
Said
award and decision shall be issued within thirty (30) days of the completion
of
the arbitration. Judgment in a court of competent jurisdiction may be had on
said decision and award of the arbitrator. For these purposes, the parties
agree
to submit to the jurisdiction of the state and federal courts located in
Nashville, Tennessee.
24. Governing
Laws
This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of Tennessee, without regard to its conflict of laws
rules.
25. Headings
Titles
or
captions of Sections contained in this Agreement are inserted only as a matter
of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or the intent of any provisions
hereof.
26. Interpretation
Executive
understands that this Agreement is deemed to have been drafted jointly by the
parties. Any uncertainty or ambiguity shall not be construed for or against
any
party based on attribution of drafting to any party.
27. Notice
Any
and
all notice given hereunder shall be in writing and shall be deemed to have
been
duly given when received, if personally delivered; when transmitted, if
transmitted by telecopy, or electronic or digital transmission method, upon
receipt of telephonic or electronic confirmation; the day after the notice is
sent, if sent for next day delivery to a domestic address using a generally
recognized overnight delivery service (e.g.,
FedEx);
and upon receipt, if sent by certified or registered mail, return receipt
requested. In each case notice will be sent as follows:
If
to the
Company: Direct
General Corporation
0000
Xxxxxxxxxxxx Xxxx
Xxxxxxxxx,
Xxxxxxxxx 00000
Attention:
[•]
Fax
Number: [•]
with
copies to: Elara
Holdings, Inc.
c/o
Fremont Partners III, L.P.
000
Xxxxxxx Xxxxxx
Xxx
Xxxxxxxxx, XX 00000
Attention:
Xxxxx Xxxxx, Esq.
Fax
Number: (000) 000-0000
and
Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP
000
Xxxxxxxxxx Xxxxxx
Xxxx
Xxxx, XX 00000
Attn:
Xxxxxx X. Xxxx, Esq.
Fax:
(000)-000-0000
If
to
Executive: Xxxxx
X.
Xxxxx
0000
Xxxxx Xxxxx
Xxxxxxxxx,
XX 00000
Telephone:
(000)
000-0000
Home
telephone: (000) 000-0000
Any
party
may change its address and/or facsimile number for notice purposes by duly
giving notice to the other party pursuant to this Section.
28. Entire
Agreement; Amendment
This
Agreement represents the entire agreement and understanding between the parties
and, except as expressly stated in this Agreement, supersedes any prior
agreement, understanding or negotiations respecting such subject, including,
without limitation, the Employment Agreement and any and all stock option or
other equity related agreements between Executive and the Company. No change
to
or modification of this Agreement shall be valid or binding unless it is in
writing and signed by Executive, a duly authorized director of the Company,
and
a duly authorized director of Holdco.
29. Waiver
Failure
to insist upon strict compliance with any of the terms, covenants, or conditions
hereof shall not be deemed a waiver of such term, covenant, or condition, nor
shall any waiver or relinquishment of, or failure to insist upon strict
compliance with, any right or power hereunder at any one or more times be deemed
a waiver or relinquishment of such right or power at any other time or times.
No
waiver of any breach of any term or provision of this Agreement shall be
construed to be, nor shall be, a waiver of any other breach of this Agreement.
No waiver shall be binding unless in writing and signed by the party waiving
the
breach.
30. Counterparts
This
Agreement may be executed in counterparts, which together shall constitute
one
and the same Agreement. The parties may execute more than one copy of this
Agreement, each of which copies shall constitute an original. A facsimile
signature shall be deemed to be the same as an original signature.
AM
IN
WITNESS WHEREOF,
the
parties hereto, intending to be legally bound, have hereunto executed this
Agreement on the day and year first written above.
XXXXX
X.
XXXXX
/s/
Xxxxx X.
Xxxxx
Xxxxx
X.
Xxxxx
DIRECT
GENERAL CORPORATION
By:
/s/ Xxxxxxx X. Xxxxx,
Xx.
Its:
Chairman and Chief Executive Officer
ELARA
HOLDINGS, INC.
By:
/s/ Xxxxx
Xxxxxx
Its:
Vice
President, Secretary and Treasurer
EXHIBIT
1
List
of Inventions
XXXXX
X.
XXXXX
____________________________________
Xxxxx
X.
Xxxxx
____________________________________
Date
