EMPLOYMENT AGREEMENT
WHEREAS, Goran Capital Inc. ("Goran"), and Xxxxxx International Group,
Inc. ("SIG"), jointly and severally, and their respective subsidiaries
(collectively, the "Company") consider it essential to its best interests and
the best interests of its stockholders to xxxxxx the continuous employment of
its key management personnel and, accordingly, the Company desires to employ
Xxxxxxx X. Xxxxxx ("You", "Your"or "Executive"), upon the terms and conditions
hereinafter set forth; and
WHEREAS, the Executive desires to continue to be employed by the
Company, upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the covenants and agreements set
forth below, the parties agree as follows:
1. Employment
1.1 Term of Agreement. The Company agrees to employ Executive as
President and Chief Operating Officer of Xxxxxx International Group, Inc. and as
Senior Executive Vice President and Chief Operating Officer of Goran Capital
Inc., (the "Positions"), effective as of March 8, 1999 and continuing until
March 31, 2001, unless such employment is terminated pursuant to Section 3
below; provided, however, that the term of this Agreement shall automatically be
extended without further action of either party for additional one (1) year
periods thereafter unless, not later than six (6) months prior to the end of the
then effective term, either the Company or the Executive shall have given
written notice that such party does not intend to extend this Agreement ("Notice
of Non-Renewal"). If Company gives Executive such a Notice of Non-Renewal,
Executive's employment shall terminate as of the expiration date of this
Agreement. It is expressly understood and agreed that a notice of non-renewal
issued by the Company shall not extinguish the Executive's non-competition
obligations pursuant to Section 4 herein, nor shall such Notice of Non-Renewal
extinguish Executive's right to severance pay pursuant to Section 3 herein.
1.2 Terms of Employment. During the Term of this Agreement as set forth
in Section 1.1, You agree to be a full-time employee of the Company serving in
the positions and further agree to devote substantially all of Your working time
and attention to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities associated with the positions and to
use Your best efforts to perform faithfully and efficiently such
responsibilities. Executive shall perform such duties and responsibilities as
may be determined from time to time by the Board of Directors of the Company,
which duties shall be consistent with the positions, which shall grant Executive
authority, responsibility, title and standing comparable to the positions in a
stock insurance holding company of similar standing. Your primary place of work
will be at the company's U.S. headquarters in Indianapolis, Indiana, but it is
understood and agreed that your duties may require travel. In the event you are
relocated to another Company location, the Company agrees to pay for the cost of
your move (including temporary lodging expenses) and to facilitate the sale of
your Indianapolis home so that you will be enabled to purchase a new home in
your new location that is comparable in price to your existing home and have
your family join you at such new location within two (2) months of your transfer
or such other period as is reasonable considering market and location. Nothing
herein shall prohibit You from devoting Your time to civic and community
activities or managing personal investments, as long as the foregoing do not
interfere with the performance of Your duties hereunder.
1.3 Appointment and Responsibility. The Boards of Directors of the
Company shall, following the effective date of this Agreement, elect and appoint
Executive to the positions.
2. Compensation, Benefits and Prerequisites
2.1 Salary. Company shall pay Executive a salary, in equal bi-weekly
installments, equal to an annualized salary rate of Three Hundred Seventy-Five
Thousand Dollars ($375,000). Executive's salary as payable pursuant to this
Agreement may be increased from time to time as mutually agreed upon by
Executive and the Company. Notwithstanding any other provision of this
Agreement, Executive's salary paid by Company for any year covered by this
Agreement shall not be less than such salary paid to Executive for the
immediately preceding calendar year. All salary and bonus amounts paid to
Executive pursuant to this Agreement shall be in U.S. dollars.
2.2 Bonus. The Company and Executive understand and agree that the
Company expects to achieve significant growth during the term of this Agreement
and that Executive will make a material contribution to that growth which will
require certain personal and familial sacrifices on the part of Executive.
Accordingly, it is the desire and intention of the Company to reward Executive
for the attainment of that growth through bonus and other means (including, but
not limited to, stock options, stock appreciation rights and other forms of
incentive compensation). Therefore, the Company will pay Executive a lump-sum
bonus (subject to normal withholdings) within thirty (30) business days from
receipt by Company of its consolidated, annual audited financial statements in
an amount which shall be determined in accordance with the following Bonus
Table. All amounts used for calculation purposes in this section shall be based
on the audited, consolidated financial statements of SIG (or any successor
thereto), with such financial statements having been prepared in accordance with
applicable Generally Accepted Accounting Principles, applied on a consistent
basis with that of prior years.
BONUS TABLE
If Audited Net % of Annual Salary
Income (as a % of Payable to Executive
Budgeted Net Income) Is As Bonus
----------------------- -----------------------
Less Than 75% -0-
75% or more, but less than 85% 25%
85% or more, but less than 90% 30%
90% or more, but less than 95% 35%
95% or more, but less than 96% 50%
96% or more, but less than 97% 60%
97% or more, but less than 98% 70%
98% or more, but less than 99% 80%
99% or more, but less than 100% 90%
100% or more of budget 100%
2.3 Employee Benefits. Executive shall be entitled to receive all
benefits and perquisites which are provided to other executives of Company under
the applicable Company plans and policies, and to future benefits and
perquisites made generally available to executive employees of the Company with
duties and compensation comparable to that of Executive upon the same terms and
conditions as other Company participants in such plans.
2.4 Additional Prerequisites. During the term of this Agreement,
Company shall provide Executive with:
(a) Not less than five (5) weeks paid vacation during each
calendar year.
(b) A vehicle commensurate with Executive's position.
(c) A golfing membership at various Social Clubs, or in the event
of Executive's relocation, other comparable country club,
including payment by the Company of all charges incurred by
Executive at such club.
(d) A resident membership at the Social Club (e.g. Skyline Club or
Columbia Club) of Executives choice, or in the event of
Executive's relocation, other comparable social club,
including payment by the Company of all charges incurred by
Executive at such club.
2.5 Expenses. During the period of his employment hereunder, Executive
shall be entitled to receive reimbursement from the Company (in accordance with
the policies and procedures in effect for the Company's employees) for all
reasonable travel, entertainment and other business expenses incurred by him in
connection with his services hereunder.
3. Termination of Executive's Employment
3.1 Termination of Employment and Severance Pay. Executive's employment
under this Agreement may be terminated by either party at any time for any
reason; provided, however, that if Executive's employment is terminated by the
Company for any reason other than for Cause (as such term is defined herein), he
shall receive, as severance pay, one (1) year's current salary paid in regular
bi-weekly payments (the "Salary Continuation") plus a lump sum payment equal to
one (1) years current salary (the "Lump Sum Payment"). The Lump Sum Payment
shall be paid to Executive within five (5) business days of Executives
termination for any reason other than for cause. Executive and his family shall
continue to be covered by Company's health and dental plan for the period of
time Executive shall receive Salary Continuation pursuant to the preceding
sentence upon the same terms and conditions under which Executive and his family
were covered at the time of his termination. Further, if Executive shall be
terminated without Cause, receipt of Salary Continuation and the Lump Sum
Payment described above is conditioned upon execution by Executive and the
Company of that mutual Waiver and Release attached hereto as Exhibit A. Further,
Executive shall receive Salary Continuation and the Lump Sum Payment in
accordance with this Section 3.1 if Executive shall terminate this Agreement due
to a breach thereof by the Company or if Executive is directed by the Company
(including, if applicable, any successor) to engage in any act or action
constituting fraud or any unlawful conduct relating to the Company or its
business as may be determined by application of applicable law. If Executive
shall become entitled to receive Salary Continuation pursuant to this Section
3.1; (a) all stock options of SIG and Goran (including any subsidiary of either
SIG or Goran) existing as of the date hereof previously granted Executive shall
vest in full and become exercisable as of the date of Executive's Termination;
and (b) Executive shall have 180 days from the date of Termination of his
employment with Company in which to exercise any unexercised stock options
previously granted to Executive.
3.2 Cause. For purposes of this Agreement including, but not
limited to, this Section 3, "Cause" shall mean:
(a) the Executive being convicted in the United States of
American, any State therein, or the District of
Columbia, or in Canada or any Province therein (each,
a "Relevant Jurisdiction"), of a crime for which the
maximum penalty may include imprisonment for one year
or longer (a "felony") or the Executive having
entered against him or consenting to any judgment,
decree or order (whether criminal or otherwise) based
upon fraudulent conduct or violation of securities
laws;
(b) the Executive's being indicted for, charged with or
otherwise the subject of any formal proceeding (criminal or
otherwise) in connection with any felony, fraudulent conduct
or violation of securities laws, in a case brought by a law
enforcement or securities regulatory official, agency or
authority in a Relevant Jurisdiction;
(c) the Executive engaging in fraud, or engaging in any unlawful
conduct relating to the Company or its business, in either
case as determined under the laws of any Relevant
Jurisdiction; or
(d) the Executive breaching any provision of this Agreement.
Change of Control. Notwithstanding any other provisions of this
Agreement, if (i) a Change of Control shall occur; and (ii) within twelve (12)
months of any such Change of Control, Executive (a) receives a Notice of
Non-Renewal, (b) is terminated for any reason other than for Cause, or (c)
Company (including its successors, if any) is in breach of this Agreement, then
Executive shall receive the Lump Sum Payment plus his current salary (in
bi-weekly payments) as severance pay until the expiration of fifty-two (52)
weeks from Executive's Date of Termination.
The receipt by Executive of payments pursuant to this Section 3.3 is
specifically conditioned, and no payments pursuant to this Section 3.3 shall be
made to Executive if he is, at the time of his Termination, in breach of any
provision (specifically including, but not limited to, the provisions of this
Agreement pertaining to non-competition and confidentiality) of this Agreement
and, further, if such payments have already begun, the continuation of payments
to Executive pursuant to this Section 3.3 shall cease at the time Executive
shall fail to comply with the non-competition and confidentiality provisions of
Article 4 herein.
"Change of Control" shall mean the inability of the Xxxxxx family to
cause the election of a majority of the members of the Board of Directors of
either Goran, SIG or their respective successors.
3.4 Disability. So long as otherwise permitted by law, if Executive has
become permanently disabled from performing his duties under this Agreement, the
Company's Chairman of the Board, may, in his discretion, determine that
Executive will not return to work and terminate his employment as provided
below. Upon any such termination for disability, Executive shall be entitled to
such disability, medical, life insurance, and other benefits as may be provided
generally for disabled employees of Company during the period he remains
disabled. Permanent disability shall be determined pursuant to the terms of
Executive's long term disability insurance policy provided by the Company. If
Company elects to terminate this Agreement based on such permanent disability,
such termination shall be for cause.
3.5 Indemnification. Executive shall be indemnified by Company to the
maximum extent permitted by applicable law for actions undertaken for, or on
behalf of, the Company and its subsidiaries.
4. Non-Competition, Confidentiality and Trade Secrets
4.1 Noncompetition. In consideration of the Company's entering into
this Agreement and the compensation and benefits to be provided by the Company
to You hereunder, and further in consideration of Your exposure to proprietary
information of the Company, You agree as follows:
(a) Until the date of termination or expiration of this
Agreement for any reason (the "Date of Termination") You
agree not to enter into competitive endeavors and not to
undertake any commercial activity which is contrary to the
best interests of the Company or its affiliates, including,
directly or indirectly, becoming an employee, consultant,
owner (except for passive investments of not more than one
percent (1%) of the outstanding shares of, or any other
equity interest in, any company or entity listed or traded
on a national securities exchange or in an over-the-counter
securities market), officer, agent or director of, or
otherwise participating in the management, operation,
control or profits of (a) any firm or person engaged in the
operation of a business engaged in the acquisition of
insurance businesses or (b) any firm or person which either
directly competes with a line or lines of business of the
Company accounting for five percent (5%) or more of the
Company's gross sales, revenues or earnings before taxes or
derives five percent (5%) or more of such firm's or person's
gross sales, revenues or earnings before taxes from a line
or lines of business which directly compete with the
Company.
(b) If Your employment is terminated by You, or by reason of
Your Disability, by the Company for cause, or pursuant to a
notice of non-renewal as outlined in Section 1.1, then for
two (2) years after the Date of Termination, You agree not
to become, directly or indirectly, an employee, consultant,
owner (except for passive investments of not more than one
percent (1%) of the outstanding shares of, or any other
equity interest in, any company or entity listed or traded
on a national securities exchange or in an over-the-counter
securities market), officer, agent or director of, or
otherwise to participate in the management, operation,
control or profits of, any firm or person which directly
competes with a business of the Company which at the Date of
Termination produced any class of products or business
accounting for five percent (5%) or more of the Company's
gross sales, revenues or earnings before taxes at which the
Date of Termination derived five percent (5%) or more of
such firm's or person's gross sales, revenues or earnings
before taxes. It is expressly agreed and understood that
this Section 4.1(b) shall not apply to a public accounting,
consulting or law firm.
(c) You acknowledge and agree that damages for breach of the
covenant not to compete in this Section 4.1 will be
difficult to determine and will not afford a full and
adequate remedy, and therefore agree that the Company shall
be entitled to an immediate injunction and restraining order
(without the necessity of a bond) to prevent such breach or
threatened or continued breach by You and any persons or
entities acting for or with You, without having to prove
damages, and to all costs and expenses (if a court or
arbitrator determines that the Executive has breached the
covenant not to compete in this Section 4.1, including
reasonable attorneys' fees and costs, in addition to any
other remedies to which the Company may be entitled at law
or in equity. You and the Company agree that the provisions
of this covenant not to compete are reasonable and necessary
for the operation of the Company and its subsidiaries.
However, should any court or arbitrator determine that any
provision of this covenant not to compete is unreasonable,
either in period of time, geographical area, or otherwise,
the parties agree that this covenant not to compete should
be interpreted and enforced to the maximum extent which such
court or arbitrator deems reasonable.
4.2 Confidentiality. You shall not knowingly disclose or reveal to any
unauthorized person, during or after the Term, any trade secret or other
confidential information (as outlined in the Indiana Uniform Trade Secrets Act)
relating to the Company or any of its affiliates, or any of their respective
businesses or principals, and You confirm that such information is the exclusive
property of the Company and its affiliates. You agree to hold as the Company's
property all memoranda, books, papers, letters and other data, and all copies
thereof or therefrom, in any way relating to the business of the Company and its
affiliates, whether made by You or otherwise coming into Your possession and, on
termination of Your employment, or on demand of the Company at any time, to
deliver the same to the Company.
Any ideas, processes, characters, productions, schemes, titles, names,
formats, policies, adaptations, plots, slogans, catchwords, incidents,
treatment, and dialogue which You may conceive, create, organize, prepare or
produce during the period of Your employment and which ideas, processes, etc.
relate to any of the businesses of the Company, shall be owned by the Company
and its affiliates whether or not You should in fact execute an assignment
thereof to the Company, but
You agree to execute any assignment thereof or other instrument or
document which may be reasonably necessary to protect and secure such rights to
the Company.
5. Miscellaneous
5.1 Amendment. This Agreement may be amended only in writing, signed
by both parties.
5.2 Entire Agreement. This Agreement contains the entire understanding
of the parties with regard to all matters contained herein. There are no other
agreements, conditions or representations, oral or written, expressed or
implied, with regard to the employment of Executive or the obligations of the
Company or the Executive. This Agreement supersedes all prior employment
contracts and non-competition agreements between the parties. Notwithstanding
the foregoing sentence, paragraph 12 of that certain Employment Agreement
between Xxxxxxx X. Xxxxxx and GGS Management Holdings, Inc. dated October 30,
1996 shall remain in full force and effect.
5.3 Notices. Any notice required to be given under this Agreement shall
be in writing and shall be delivered either in person or by certified or
registered mail, return receipt requested. Any notice by mail shall be addressed
as follows:
If to the Company, to:
Secretary
Xxxxxx International Group, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
If to Executive, to:
Xxxxxxx X. Xxxxxx
or to such other addresses as one party may designate in writing to the other
party from time to time.
5.4 Waiver of Breach. Any waiver by either party of compliance with any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any other provision of this Agreement, or of any subsequent
breach by such party of a provision of this Agreement.
5.5 Due Authority. The Company represents and warrants that the
execution of this Agreement and the performance by the Company of the terms and
conditions of this Agreement have been duly and validly authorized by Company
and, further, that no other authorization or consent is required to be obtained
by Company for its performance hereunder.
5.6 Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
5.7 Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of conflict of law principles.
5.8 Headings. The headings of articles and sections herein are included
solely for convenience and reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
5.9 Counterparts. This Agreement may be executed by either of the
parties in counterparts, each of which shall be deemed to be an original, but
all such counterparts shall constitute a single instrument.
5.10 Survival. Company's obligations under Sections 3.1, 3.3 and 3.5
and Executive's obligations under Section 4 shall survive the termination and
expiration of this Agreement in accordance with the specific provisions of those
Paragraphs and Sections and this Agreement in its entirety shall be binding
upon, and inure to the benefit of, the successors and assigns of the parties
hereto.
5.11 Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by You and such officer as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior
subsequent time. IN WITNESS WHEREOF, the parties have executed this Agreement
this 8th day of March, 1999.
XXXXXX INTERNATIONAL GROUP, INC. GORAN CAPITAL INC.
By:__________________________________ By:_______________________________
Title:________________________________ Title:____________________________
XXXXXXX X. XXXXXX
("Executive")
