Exhibit 10.38
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), having an effective date of
August 20, 2001, among THE MIIX GROUP, INCORPORATED, a Delaware corporation
("MIIX Group"), NEW JERSEY STATE MEDICAL UNDERWRITERS, INC., a New Jersey
corporation ("Underwriter"), each having offices at Two Princess Road,
Lawrenceville, New Jersey (together, the "Company") and XXXXXXX X. XXXXXXXXXXX
(the "Executive"), residing at 00 Xxxxxxxx Xxxx, Xxxx Xxxxxxxx, Xxxxxxxxxxx.
WITNESSETH:
WHEREAS, MIIX Group is the parent company of Underwriter owning all of the
issued and outstanding common stock of Underwriter; and
WHEREAS, the Company deems it to be in its best interest to secure and
retain for the Company the services of the Executive and the Executive desires
to work for the Company upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises and undertakings
contained herein and intending to be legally bound hereby, the parties hereto
agree, as follows:
1. POSITION, DUTIES AND TERM.
1.1. POSITION AND DUTIES. The Executive is engaged hereunder as
President and Chief Executive Officer of MIIX Group and agrees to perform the
duties and services incident to that position, or such other or further duties
and services of a similar nature consistent with such position as may be
required of him by the Board of Directors of MIIX Group. The Executive agrees
that, if requested, he shall serve as a director or an officer of the Company
and/or of any affiliate, without additional compensation.
1.2. AUTHORITY. The Executive shall have such power and authority
customarily associated with the position of president and chief executive
officer and as shall reasonably be required to enable him to perform his duties
under this Agreement in an efficient manner. The Executive shall be required to
report only to the Board of Directors as a whole and not to any individual or
committee thereof. During the Term of this Agreement, the Executive shall be
appointed a member of the Board of Directors and, in connection with the next
annual meeting of shareholders and upon expiration of his term as a director
thereafter, shall be nominated and recommended to shareholders for election to
the Board of Directors, in accordance with the Company's by-laws.
1.3. TIME COMMITMENT. The Executive agrees to perform the duties and
responsibilities called for hereunder to the best of his ability and to devote
his full time, energies and skills to such duties and to the promotion of the
business and interests of the Company and any affiliate. The Executive may
participate in charitable and similar activities, may be a director of a company
that does not compete with the Company or any affiliate (which shall not include
a "competitor" as defined by Section 5.1 of this Agreement) and may have
business interests in passive investments which, from time to time, may require
portions of his time, but such activities shall be performed in a manner
consistent with his obligations hereunder.
1.4. TERM. Unless the Term is earlier terminated as provided in
Section 3 below, the term of this Agreement shall be two years; provided that,
each day the term of this Agreement shall be extended an additional day such
that there shall always be two years remaining in the term of this Agreement
(the "Term").
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2. COMPENSATION AND OTHER BENEFITS.
2.1. BASE SALARY. The Company shall pay to the Executive for the
performance of his duties hereunder, an initial base salary of $425,000 per
annum (the "Base Salary"), payable in accordance with the Company's normal
payroll practices. The amount of the Base Salary shall be reviewed and adjusted
annually as appropriate by the Board of Directors of MIIX Group in accordance
with executive compensation review practices.
2.2. BONUS. The Executive shall be eligible to receive an annual
bonus of up to 80% of Base Salary pursuant to MIIX Group's Cash Incentive Plan,
or similar plans which may be in effect from time to time, at the discretion of
the Board of Directors of MIIX Group, based on the Company's and the Executive's
achievement of goals and objectives established by the Board on an annual basis.
Such goals and objectives shall be determined in consultation with the Executive
not later than the close of the first quarter of the fiscal year to which they
are to apply and shall, in the reasonable judgment of the Board, be achievable
such that the Executive can be expected to earn the full amount of the bonus.
The Board shall use its reasonable judgment in determining whether such goals
and objectives have been met and the amount, if any, of the bonus to be paid to
the Executive. Without regard to performance goals and objectives, the Executive
shall receive a prorated bonus for the 2001 calendar year based on the number of
biweekly pay periods worked by the Executive in 2001. Any bonus will be paid on
or before March 31 of the succeeding year, without regard to whether or not the
Executive is employed by the Company at the time of payment.
2.3. STOCK OPTIONS. The Executive shall be entitled to participate
in MIIX Group's Long Term Incentive Equity Plan, or similar plans which may be
in effect from time to
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time for executives of the Company. The Executive is hereby granted, effective
as of the date of this Agreement, a Non-Qualified Stock Option, as defined in
the Long Term Incentive Equity Plan, to purchase 100,000 shares of common stock
of MIIX Group pursuant to and which shall vest in accordance with the terms of
the Long Term Incentive Equity Plan Non-Qualified Stock Option Agreement, the
form of which is attached as Exhibit A (the "Stock Option Agreement"). The per
share strike price set forth in the Stock Option Agreement shall be the average
of the high and low trading prices of the common stock of MIIX Group on the date
of this Agreement or, if no sale was made on such date, the last preceding day
on which the stock was traded. The Executive shall be entitled to receive
dividend equivalents on such option shares as dividends are declared and paid on
the common stock of MIIX Group, provided, however, that until paid to the
Executive any such dividend equivalents, and the interest earned thereon, shall
be forfeited as to any unvested option shares that are forfeited by the
Executive pursuant to the terms of the Long Term Incentive Equity Plan. Dividend
equivalents, and any earnings thereon, that are subject to forfeiture shall be
accumulated under the Company's Deferred Compensation Plan. The Executive and
MIIX Group shall, simultaneous with the execution of this Agreement, execute the
Stock Option Agreement. The grant of any additional options to purchase shares
of common stock of MIIX Group under the Long Term Incentive Equity Plan shall be
at the sole discretion of the Board.
2.4. RESTRICTED STOCK GRANT. The Executive is hereby granted,
effective as of the date of this Agreement, the right to receive 30,000 shares
of MIIX Group common stock that is restricted from transfer prior to vesting and
for a period of one year from the date of vesting, of which one-third shall vest
as of the date of this Agreement and one-third shall vest on each of the
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two succeeding annual anniversary dates of this Agreement; provided, however,
that if the Executive's employment with the Company is terminated for any
reason, either voluntarily or involuntarily, his right to receive any shares of
such restricted stock that have not vested as of the date of such termination of
employment shall be forfeited. Upon vesting, upon the request of the Executive,
the Company shall make a loan to the Executive on the same terms and conditions
as loans under the Company's Stock Purchase and Loan Agreement attached as
Exhibit B hereto, in an amount equal to the tax that would be imposed in respect
of such vesting at the highest marginal rate applicable to individuals under the
Internal Revenue Code and to residents in the state of residence of the
Executive.
2.5. STOCK PURCHASE AND LOAN. The Executive shall participate in
MIIX Group's Stock Purchase and Loan Program by which the Executive shall
purchase, within five years of the date of this Agreement, $850,000 of MIIX
Group common stock, rounded to the nearest whole share, and MIIX Group shall
loan to the Executive the funds necessary to do so. The Executive may select the
date or dates on which to purchase such shares and the number of shares to
purchase on each such date or dates within such five year period. At the
Executive's option, the Executive may purchase up to an additional $425,000 of
MIIX Group common stock, rounded to the nearest whole share, and MIIX Group
shall loan to the Executive the funds necessary to do so. Such stock purchase(s)
and loan(s) shall be made pursuant to the terms and upon the execution of the
form of Stock Purchase and Loan Agreement attached hereto as Exhibit B.
2.6. DEFERRED COMPENSATION. The Executive shall be eligible to
participate in the Company's Deferred Compensation Plan, or similar plans which
may be in effect from time
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to time, by which the Executive is permitted to defer compensation and receive
benefits in a future year in accordance with the terms of the Deferred
Compensation Plan. The Executive and the Company shall, simultaneous with the
execution of this Agreement, execute the Deferred Compensation Plan, a copy of
which is attached hereto as Exhibit C.
2.7. EXECUTIVE BENEFITS. During the term of this Agreement, the
Executive shall be entitled to participate in all of the benefit programs
provided to executive employees of the Company, including, without limitation,
all medical, disability, dental and life insurance benefits, retirement
programs, incentive compensation plans, executive perk accounts, automobile
allowance programs (at not less than $12,000 annually for the Executive) and
other employee benefit programs now in existence or hereafter adopted by the
Company, as such plans, programs, practices or policies may be in effect from
time to time.
2.8. PAID TIME OFF. The Executive shall be entitled to 6 paid
holidays and 35 days of paid time off in accordance with the Company's Paid Time
Off policy, as in effect from time to time, during which his compensation shall
be paid; provided, however, that the Executive may not take more than two
consecutive weeks of vacation without the prior approval of the Board of
Directors of MIIX Group. Unused paid time off can be carried over only in
accordance with the Company's Paid Time Off policy.
2.9. RELOCATION EXPENSES. The Executive shall be reimbursed up to
the sum of $106,250, to defray expenses incurred by the Executive for temporary
living expenses and the relocation of his home and family to an area in the
vicinity of the Company's headquarters, upon the submission of invoices for
qualified expenses in accordance with the Company's relocation expense policy,
without regard to the time periods specified therein, including limitation on
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temporary living accommodations, and without regard to expense limitations as
long as the total expenses do not exceed $106,250.
2.10. REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Executive for all reasonable expenses incurred by the Executive in connection
with his employment hereunder, provided, however, that such expenses were
incurred in conformance with the policies of the Company, as established from
time to time, and the Executive submits detailed vouchers and other records
reasonably required by the Company in support of the amount and nature of such
expenses.
2.11. TAXES AND WITHHOLDING. All compensation payable and other
benefits provided under this Agreement shall be subject to customary withholding
for income, F.I.C.A. and other employment taxes.
2.12. PHYSICAL EXAMINATION. The Executive shall submit to a physical
examination by a qualified physician on an annual basis which shall be paid for
by the Company and the results of such examination shall be made available to
the Company, which shall maintain such information in strict confidence, and
nothing herein shall be deemed a waiver of any applicable state or federal law
protection of confidentiality of medical records or of policies otherwise in
place at the Company to protect the confidential medical records of employees
generally.
3. TERMINATION OF EMPLOYMENT.
3.1. DEATH OF THE EXECUTIVE. The Executive's employment under this
Agreement shall terminate immediately upon the Executive's death and the
Executive's estate (or his beneficiary as may be appropriate) shall be entitled
to receive:
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(a) the balance of his accrued and unpaid Base Salary and
prior year Bonus,
(b) unreimbursed expenses,
(c) unused accrued paid time off through the date of his
death, and
(d) any other benefits earned by the Executive and vested (if
applicable) as of the date of his death under any employee benefit
plan of MIIX Group or its affiliates in which the Executive
participates.
3.2. DISABILITY OF EXECUTIVE. If the Executive, in the reasonable
opinion of the Company, is unable to perform his duties under this Agreement by
reason of incapacity, either physical or mental, as determined in accordance
with the MIIX Group of Companies Long Term Disability Group Benefit Plan (the
"LTD Plan"), or similar plan which may be in effect from time to time, the
Company shall have the right to terminate the Executive's employment upon
written notice to the Executive, whereupon such termination shall be effective
as of the date specified in such notice (the "Termination Date") and the Company
shall have no further obligations under this Agreement, except the obligation to
pay to the Executive:
(a) the balance of his accrued and unpaid Base Salary and
prior year Bonus,
(b) unreimbursed expenses,
(c) unused, accrued paid time off through the Termination
Date,
(d) any other applicable severance payments provided for in
Section 4 hereof, and
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(e) any other benefits earned by the Executive and vested (if
applicable) as of the Termination Date under any employee benefit
plan of the Company or its affiliates in which the Executive
participates.
If the Company determines not to terminate the Executive's employment in the
event of a disability as allowed under this Section 3.2, the Company shall
continue to pay Base Salary and Bonus to the Executive for a period of up to
ninety days, and shall pay the difference between Base Salary and Bonus and
benefits paid to the Executive under the LTD Plan for a period of up to six
months thereafter, paid in accordance with the Company's normal payroll
practices, while the Executive is not working. If the Executive, in the
reasonable opinion of the Company, remains disabled at the end of such nine
month period, his employment shall be deemed terminated and he shall receive the
benefits provided for in this Section 3.2. Nothing in this section shall be
interpreted to treat the termination of the Executive as occurring prior to the
expiration of such nine month period for purposes of all vesting provisions
under applicable stock option, restricted stock or any other plan or agreement
of the Company in respect of the Executive.
3.3. TERMINATION FOR CAUSE.
For purposes of this Agreement, "for cause" shall mean the
termination of the Executive's employment with the Company as a result of any of
the following:
(a) the willful engaging by the Executive in conduct that is
materially injurious to the Company, monetarily or otherwise;
(b) the willful failure by the Executive to perform such
duties as may be reasonably delegated or assigned to the Executive
by the Board of Directors of
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MIIX Group in accordance with the terms of this Agreement and
consistent with his role as President and Chief Executive Officer;
(c) the willful failure by the Executive to follow the lawful
directives or instructions of the Board of Directors of MIIX Group
in accordance with the terms of this Agreement and consistent with
his role as President and Chief Executive Officer;
(d) the repeated and consistent failure of the Executive to be
present at work and devote his full time to the performance of his
duties under this Agreement, except as set forth above in connection
with the Executive's disability or as otherwise provided for under
this Agreement;
(e) reckless disregard in the performance of his duties on
behalf of the Company, which action has or with the passage of time
will have a material and adverse impact on the financial condition
of the Company; or
(f) the Executive's conviction of, or plea of no contest to, a
felony or any crime involving moral turpitude.
The Executive's employment under this Agreement shall terminate
immediately upon written notice from the Company that the Company is terminating
the Executive for cause, provided that the Executive shall have had an
opportunity to be heard by the Executive Committee of the Board of Directors and
an affirmative vote of the Board of Directors calling for such termination. Upon
the Company's termination of the Executive for cause, the Company shall be
required to pay to the Executive:
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(a) the balance of his accrued and unpaid Base Salary and
prior year Bonus,
(b) unreimbursed expenses,
(c) unused, accrued paid time off through the Termination
Date, and
(d) any other benefits earned by the Executive and vested (if
applicable) as of the Termination Date under any employee benefit
plan of the Company or any affiliate in which the Executive
participates.
3.4. TERMINATION BY THE COMPANY WITHOUT CAUSE AND BY THE EXECUTIVE
FOR GOOD REASON. The Company may terminate the Executive's employment without
cause under this Agreement at any time upon written notice to the Executive
specifying the date of termination. The Executive may terminate the Executive's
employment hereunder for Good Reason upon written notice to the Company
specifying the basis for such determination by the Executive. A termination for
Good Reason shall be effective if the basis for such notice is not cured to the
Executive's reasonable satisfaction within 5 days of the Executive's notice to
the Company. In the event of a termination by the Company without cause or by
the Executive for Good Reason, the Company shall make payments to the Executive
in accordance with Section 4 below. "Good Reason" for termination by the
Executive of the Executive's employment shall mean the occurrence (without the
Executive's express written consent) of any one of the following acts by the
Company, or failures by the Company to act:
(a) the assignment to the Executive of any duties inconsistent
with the Executive's status as president and chief executive officer
of the Company or a
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substantial adverse alteration in the nature or status of the
Executive's responsibilities from those in effect immediately prior
to the date thereof;
(b) a reduction by the Company in the Executive's annual Base
Salary or Bonus potential as the same may be increased from time to
time;
(c) the relocation of the Executives principal place of
employment at the Company's headquarters more than 50 miles from its
current location;
(d) the failure by the Company to pay to the Executive any
portion of the Executive's current compensation, or to pay to the
Executive any portion of an instalment of deferred compensation
under any deferred compensation program of the Company, within seven
(7) days of the date such compensation is due;
(e) except for any changes required by applicable law, the
failure by the Company to continue in effect any compensation plan
in which the Executive participates immediately prior to the date
hereof which is material to the Executive's total compensation,
including but not limited to the Company's plans in effect on the
date hereof, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such
plan, or the failure by the Company to continue the Executive's
participation therein (or in such substitute or alternative plan) on
a basis not materially less favourable, both in terms of the amount
or timing of payment of benefits provided and the level of the
Executive's participation relative to other participants, as existed
immediately prior to the date thereof; or
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(f) the Company's breach of a material term or condition of
the Agreement, including without limitation its obligations under
Sections 1.1, 1.2 and 2 hereof.
The Executive's right to terminate the Executive's employment for Good Reason
shall not be affected by the Executive's incapacity due to physical or mental
illness. The Executive's continued employment shall not constitute consent to,
or a waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder. For purposes of any determination regarding the existence
of Good Reason which is made after the occurrence of a Change in Control (as
hereinafter defined) or during the six-month period immediately preceding the
occurrence of a Change in Control, any claim by the Executive that Good Reason
exists shall be presumed to be correct unless the Company establishes to the
Committee by clear and convincing evidence that Good Reason does not exist.
3.5. TERMINATION FOLLOWING A CHANGE IN CONTROL.
In the event that the Company terminates the Executive's employment
during the 24 month period following a Change in Control (as hereinafter
defined), the Executive shall be entitled to the following:
(a) the accrued and unpaid balance of his Base Salary and
prior year Bonus,
(b) Base Salary for the 36 month period following the
Termination Date, paid, at the option of the Company, in accordance
with the Company's normal payroll practices if the total of such
amounts have been deposited with a trustee, reasonably acceptable to
the Executive, under a trust established in
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accordance with the provisions of the Section 1.16 of the Deferred
Compensation Plan or in a lump sum,
(c) unreimbursed expenses,
(d) unused, accrued paid time off through the Termination
Date,
(e) any other benefits earned by the Executive and vested (if
applicable) as of the Termination Date under the terms of any
employee benefit plan of the Company or its affiliates in which the
Executive participates,
(f) except to the extent otherwise more favorably accelerated
in accordance with the provisions of any applicable plan or action
of the Board of Directors, acceleration of the vesting of 50% of the
balance of any restricted stock, option, equity or other plan of any
kind or nature in which the Executive is a participant and, in the
case of any options, the right of exercise thereof shall continue
without regard to such termination but not later than the date such
option would have otherwise expired, and
(g) for the 36 month period following the Termination Date,
coverage for the Executive and his dependents (if applicable) under
the standard health and life benefits plans of the Company in which
the Executive participates.
The Company shall also pay a Tax Gross-Up Payment in accordance with the
procedures provided for on Exhibit D hereto in the event that the Change in
Control results in the application of the provisions of Sections 4999 or 280G of
the Internal Revenue Code of 1986, as amended.
For purposes of this Agreement, "Change in Control" shall mean the
occurrence of any of the following events:
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(a) the acquisition in one or more transactions by any
"Person" (as such term is used for purposes of Section 13(d) or
Section 14(d) of the Securities Exchange Act of 1934, as amended)
but excluding, for this purpose, MIIX Group or its affiliates or any
employee benefit plan of MIIX Group or its affiliates, of
"Beneficial Ownership" (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of thirty-five percent
(35%) or more of the combined voting power of MIIX Group's then
outstanding voting securities.
(b) the individuals who, as of the date hereof, constitute the
Board of Directors of MIIX Group (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board; provided,
however, that if the election, or nomination for election by MIIX
Group's shareholders, of any new director was approved by a vote of
at least a majority of the Incumbent Board, such new director shall
be considered as a member of the Incumbent Board, and provided
further that any reductions in the size of the Board that are
instituted voluntarily by the Incumbent Board shall not constitute a
Change in Control, and after any such reduction the "Incumbent
Board" shall mean the Board as so reduced;
(c) a merger or consolidation involving MIIX Group if the
shareholders of MIIX Group, immediately before such merger or
consolidation, do not own, directly or indirectly, immediately
following such merger or consolidation, more than sixty-five percent
(65%) of the combined voting power of the outstanding voting
securities of the corporation resulting from such merger
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or consolidation or a complete liquidation or dissolution of MIIX
Group or a sale or other disposition of all or substantially all of
the assets of MIIX Group; or
(d) the acceptance by the shareholders of MIIX Group of shares
in a share exchange if the shareholders of MIIX Group, immediately
before such share exchange, do not own, directly or indirectly,
immediately following such share exchange, more than sixty-five
percent (65%) of the combined voting power of the outstanding voting
securities of the corporation resulting from such share exchange.
3.6. TERMINATION BY THE EXECUTIVE OTHER THAN FOR GOOD REASON. In
addition to a termination for Good Reason as provided for in Section 3.4 above,
the Executive may terminate his employment under this Agreement at any time upon
not less than thirty days prior written notice to the Company. The Company may,
however, elect to accelerate the date of termination. In the event of such a
termination, the Company shall be required to pay to the Executive:
(a) the balance of his accrued and unpaid Base Salary and
prior year Bonus,
(b) unreimbursed expenses,
(c) unused, accrued paid time off (up to a maximum of three
weeks) through the Termination Date,
(d) any other benefits earned by the Executive and vested (if
applicable) as of the Termination Date under any employee benefit
plan of the Company or its affiliates in which the Executive
participates.
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4. SEVERANCE.
4.1. PAYMENTS BY THE COMPANY. In the event that the Executive
terminates his employment for Good Reason, or the Company terminates the
Executive's employment without cause, or in the event that the Company
determines to terminate the Executive's employment under Section 3.2 hereof, the
Executive shall be entitled to receive:
(a) the balance of his accrued and unpaid Base Salary and
prior year Bonus,
(b) unreimbursed expenses,
(c) unused, accrued paid time off through the Termination
Date,
(d) any other benefits earned by the Executive and vested (if
applicable) as of the Termination Date under any employee benefit
plan of the Company or any affiliate in which the Executive
participates,
(e) except to the extent otherwise more favorably accelerated
in accordance with the provisions of any applicable plan or action
of the Board of Directors, acceleration of the vesting of 50% of the
balance of any restricted stock, option, equity or other plan of any
kind or nature in which the Executive is a participant and, in the
case of any options, the right of exercise thereof shall continue
without regard to such termination but not later than the date such
option would have otherwise expired,
(f) for the 24 month period following the Termination Date,
coverage for the Executive and his dependents (if applicable) under
the standard health and life benefits plans of the Company in which
the Executive participates, and
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(g) for the 24 month period following the Termination Date,
Base Salary paid, at the option of the Company, in accordance with
the Company's normal payroll practices if the total of such amounts
have been deposited with a trustee, reasonably acceptable to the
Executive, under a trust established in accordance with the
provisions of the Section 1.16 of the Deferred Compensation Plan or
in a lump sum.
4.2. RESIGNATIONS FROM POSITIONS. The Executive specifically agrees
that upon his termination of employment with the Company, whether voluntary or
involuntary, his position as an officer or as a member of the Board of Directors
of MIIX Group, MIIX Insurance Company, Underwriter or any affiliate shall cease
and this Agreement shall constitute notice of the Executive's resignation in
such regard.
5. NON-COMPETITION.
5.1. DEFINITION OF "COMPETITOR". For purposes of this Agreement,
"competitor" shall mean any company engaged in or about to be engaged in the
business of selling or marketing a product or service in the medical
professional liability insurance business which is similar to any product or
service sold or marketed or about to be sold or marketed by the Company or any
affiliate and the successors thereof, respectively.
5.2. TERM OF NON-COMPETITION. The Executive agrees that for so long
as he is employed by the Company and for a period of two years after the
termination thereof, whether voluntary or involuntary, he will not, directly or
indirectly, whether for compensation or not: (1) own, manage, operate, join,
control or participate in, or be connected as a stockholder, officer, partner,
creditor, guarantor or otherwise, with a competitor that is engaged in or about
to be
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engaged in the medical professional liability insurance business in any
geographic area where the Company or any affiliate are doing business; or (2)
become an employee of or consultant to a competitor having any responsibility
with respect to medical professional liability insurance business in any
geographic area where the Company or any affiliate are doing business. The
foregoing shall not be construed, however, as preventing the Executive from (a)
investing his assets in such form or manner as will not require services on the
part of the Executive in the operations of the businesses in which such
investments are made and provided that any such business is publicly-owned and
the interest of the Executive therein is solely that of a passive investor
owning not more than five (5%) percent of the outstanding equity securities of
any such business. The Executive will not be considered to have violated this
covenant by employment with a company that competes with the Company as long as
(x) the competing division is not managed and operated directly by the
Executive; provided that the reporting of the division to the Executive in a
capacity as senior management of a company not principally engaged in the
competing business shall not be deemed to be managed or operated by the
Executive and (y) the competing division or divisions do not represent more than
15% of the revenues of the Company.
5.3. SOLICITATION OF COMPANY CLIENTS. For the period of two year
after the termination of the Executive's employment with the Company or any
affiliate, whether voluntary or involuntary, the Executive shall not, directly
or indirectly (excluding for this purpose any activity permitted by Section
5.2), call upon or solicit insurance business or consulting business from any
person or entity who is or was a client of the Company or any affiliate at any
time within a period of twelve months immediately prior to the Termination Date,
or any broker, agent or consultant of such person or entity, without the express
written consent of the Company.
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5.4. SOLICITATION OF COMPANY EXECUTIVES. For the period of one year
after the termination of the Executive's employment with the Company or any
affiliate, whether voluntary or involuntary, the Executive shall not, directly
or indirectly, affirmatively solicit or entice any person or persons, and for a
one year after termination shall not hire or retain any person or persons, who
are employed by the Company or any affiliate or who were at any time within a
period of six months immediately prior to the Termination Date employed by the
Company or any affiliate to become an employee, agent, consultant, advisor to
his new employer, without the express written consent of the Company.
5.5. REMEDIES. The parties acknowledge and agree that the
Executive's services hereunder are special, unique, unusual and extraordinary,
giving them peculiar value, the loss of which cannot be reasonably or adequately
compensated solely by damages, and in the event that the Executive breaches any
provision of this Section 5, the Company shall be entitled to equitable relief
by way of injunction or otherwise. In the event that the period of time or
geographic area herein specified should be adjudged unreasonable in any court
proceeding, then the period of time shall be reduced by such number of months or
the geographic area shall be reduced by elimination of such portion thereof as
deemed unreasonable, so that this Agreement may be enforced during such period
of time and in such geographic area as is adjudged to be reasonable. In the
event that the Executive breaches any of the provisions of this Section 5, the
Company also shall be entitled to cease all payments and benefits under the
terms of this Agreement and to pursue all remedies which the Company might have
including, but not limited to, those contained in this Agreement.
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6. CONFIDENTIALITY.
6.1. DEFINITION OF "CONFIDENTIAL INFORMATION". For the purposes of
this Agreement, "Confidential Information" shall mean all information about the
Company or any affiliate relating to any of their products or services or any
phase of their operations, including, without limitation, business plans and
strategies, trade secrets, marketing and distribution information, business
results, underwriting information and methods, identities of insureds and claims
defense and recovery methods and procedures not generally known through
legitimate means to any of its competitors, with which the Executive becomes
acquainted during the term of his employment.
6.2. CONFIDENTIAL TREATMENT. During the time of employment, or at
any time thereafter, the Executive shall not disclose or make available to any
person or entity any Confidential Information without the express prior written
authorization of the Company. All records, files, materials and Confidential
Information obtained by the Executive in the course of his employment with the
Company are confidential and proprietary and shall remain the exclusive property
of the Company or its affiliates, as the case may be. Upon the termination of
the Executive's employment with the Company or any affiliate, or at any time
upon the request of the Company, the Executive (or his heirs or personal
representatives, as applicable) shall deliver to the Company all documents and
materials containing Confidential Information relating to the business or
affairs of the Company or its affiliates, or their customers or clients, and all
other documents, materials and other property belonging to the Company or its
affiliates, or their customers or clients that are in the possession or under
the control of the Executive.
21
6.3. REMEDIES. The parties acknowledge and agree that Confidential
Information is vital to the operations of the Company and its affiliates and
that the loss suffered by breach of any of the provisions of this Section 6
cannot be reasonably or adequately compensated for by damages, and in the event
that the Executive breaches any provision of this Section 6 during the Term and
for a two year period thereafter, the Company shall be entitled to equitable
relief by way of injunction or otherwise. In the event that the Executive
breaches any of the provisions of this Section 6, the Company also shall be
entitled to cease all payments and benefits under the terms of this Agreement
and shall be entitled to pursue all remedies which the Company might have
including, but not limited to, those contained in this Agreement.
7. SEVERABILITY. The terms of this Agreement and each Paragraph and
Section hereof shall be considered severable and the invalidity or
unenforceability of any part thereof shall not affect the validity or
enforceability of the remaining portions or provisions hereof.
8. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient, if in writing and delivered by mail or overnight
delivery service, to his residence, in the case of the Executive or to its
principal office in the case of the Company.
9. ASSIGNMENT. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and be binding upon its successors and
assigns. Neither this Agreement nor any rights or interests herein or created
hereby may be assigned or otherwise transferred voluntarily or involuntarily by
the Executive.
10. WAIVER. The waiver by the Company or the Executive of a breach of any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any subsequent breach.
22
11. APPLICABLE LAW. This Agreement shall be interpreted and construed
under the laws of the State of New Jersey without reference to principles of
conflicts of laws.
12. JURISDICTION. Executive and the Company agree to submit to the
jurisdiction of the federal and state courts in New Jersey for purposes of the
enforcement of or any dispute concerning this Agreement and that any proceeding
to enforce or involving any dispute concerning this Agreement shall be brought
exclusively in the federal or state courts in New Jersey.
13. ENTIRE AGREEMENT. This Agreement, together with the agreements and
plans referred to herein, contains the entire agreement of the parties with
respect to the subject matter hereof and supersedes all prior or contemporaneous
agreements with respect to the subject matter hereof. This Agreement may not be
changed, altered or amended except by an agreement in writing signed by the
party against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
14. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which taken together shall
constitute one and the same instrument.
23
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
THE MIIX GROUP, INCORPORATED
By:__________________________________
NEW JERSEY STATE MEDICAL
UNDERWRITERS, INC.
By:__________________________________
_____________________________________
XXXXXXX X. XXXXXXXXXXX
24
EXHIBIT A
Option No. ___
THE MIIX GROUP, INCORPORATED
1998 LONG-TERM INCENTIVE EQUITY PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
This Agreement made as of the 20th day of August, 2001, ("Grant Date")
witness that The MIIX Group, Incorporated ("Company") hereby grants to Xxxxxxx
X. Xxxxxxxxxxx ("Participant") the right and option to purchase, as hereinafter
provided, all or part of One Hundred Thousand (100,000) shares of the common
stock of the Company at __________________ ($____) per share. This Option is
hereby designated a Non-Qualified Stock Option as defined in the Amended and
Restated 1998 Long-Term Incentive Equity Plan ("Plan") document and as such is
not subject to the provisions of Section 422 of the Internal Revenue Code of
1986, as amended from time to time.
This Option may not be exercised after August 20, 2011 ("Expiration
Date"), and shall expire at the end of such ten-year period. Notwithstanding the
foregoing, this Option may be exercised upon the Participant's termination of
employment with the Company and all its subsidiaries and affiliates only in
accordance with the Plan.
This Option shall be exercisable at such time or times as set forth below,
and shall remain exercisable subject to the terms of the Plan until the
Expiration Date, when the right to exercise this Option shall terminate
absolutely:
Twenty-five percent (25%) of the Common Stock subject to this Option
will be available for exercise on the Grant Date. An additional
twenty-five percent (25%) of the Common Stock subject to this Option
will become available for exercise on each anniversary of the Grant
Date for the next three years.
This Option, or a portion thereof, shall be exercisable by a written
notice which shall: (a) state the election to exercise this option, the number
of shares of Common Stock with respect to which the option is being exercised,
the name, address and Social Security Number of the person (or persons) in whose
name the stock certificate(s) for such shares of Common Stock is to be
registered; (b) state the preference as to the manner in which the option price
shall be paid (i.e., cash or shares of Common Stock or a combination thereof);
(c) be signed by the person (or persons) entitled to exercise the Option and, if
the Option is being exercised by any person (or persons) other than the
Participant, be accompanied by proof satisfactory to counsel for the Company, of
the right of such person or persons to exercise the Option; (d) be delivered in
person, by registered or certified mail, or telecopied to the Corporate
Secretary of the Company. In no event shall shares of Common Stock held by the
Participant for less than six months be used to satisfy payment for the Option
price. The written notice shall be deemed to have been given when
hand-delivered, mailed or telecopied, and shall be irrevocable once given.
The Participant (or where appropriate, the Participant's transferee,
personal representative, heir or legatee) shall not have rights as a stockholder
with respect to any shares of Common Stock until the date of issuance to him or
her of a certificate or certificates for such shares of Common Stock.
Page 1 of 2
As promptly as is reasonably practicable after the exercise of the Option
as determined by the Company, a certificate for the shares of Common Stock
issuable on the exercise of the Option shall be delivered to the Participant or
his personal representative, heir or legatee.
This Option may not be transferred or assigned by the Participant other
than by will or the laws of descent and distribution or be exercised other than
by the Participant or, in the case of his death, by his personal representative,
heir or legatee. Following any such transfer, the terms of this Option shall
remain the same except that the transferee shall be considered the Participant.
The aforesaid Plan is hereby incorporated in and made a part of this
Agreement as if fully set forth herein, and the Participant hereby acknowledges
receipt of a copy of such Plan prior to the execution of this Agreement.
This Agreement executed in two counterparts with the Plan referenced above
shall constitute the entire Agreement between the Company and the Participant.
The execution of this Agreement shall be binding upon the Company and its
successors and upon the Participant and his legal representative and shall
constitute their acceptance of the provisions contained herein and in the Plan
incorporated by reference herein.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its corporate seal to be affixed hereto by its officers thereunto duly
authorized, and the Participant has hereunto set his hand and seal as of the
date first hereinabove set forth.
ATTEST THE MIIX GROUP, INCORPORATED
________________________________ By:_________________________
Xxxxxxxxx X. Xxxxxxxx Xxxxxxx X. Xxxxxxx, Esq.
Vice President & Corporate Secretary Chairman
ACCEPTED:
By:_________________________(L.S.)
Xxxxxxx X. Xxxxxxxxxxx
(Participant)
Page 2 of 2
EXHIBIT B
STOCK PURCHASE AND LOAN AGREEMENT
BY AND BETWEEN
THE MIIX GROUP INCORPORATED
AND
XXXXXXX X. XXXXXXXXXXX
DATED:
STOCK PURCHASE AND LOAN AGREEMENT
THIS STOCK PURCHASE AND LOAN AGREEMENT (the "Agreement"), made as of
this ___ day of ___________, 200__, by and between THE MIIX GROUP, INCORPORATED,
a Delaware corporation (the "Company"), and XXXXXXX X. XXXXXXXXXXX (the
"Executive").
BACKGROUND
WHEREAS, the Company desires to ensure that key members of its senior
management share with its stockholders the common goal of achieving long-term
growth in the market value of the Company which equals or exceeds the growth of
competitive companies in the insurance industry; and
WHEREAS, to achieve this objective, the Company requires that the
Executive purchase that number of shares of common stock of the Company having
an aggregate purchase price of $850,000, rounded to the nearest whole share,
within three years of the date of his Employment Agreement with the Company on
such date or dates and in such amounts as the Executive shall select and the
Company shall loan to the Executive the funds necessary to do so; and
WHEREAS, the Company and the Executive have agreed that the Executive
may, at his option, purchase up to an additional number of shares of common
stock of the Company having an aggregate purchase price of $425,000, rounded to
the nearest whole share, on such date or dates and in such amounts as the
Executive shall select and the Company shall loan to the Executive the funds
necessary to do so; and
WHEREAS, the Executive has determined to purchase ___ shares of common
stock of the Company (the "Purchased Shares") as of the date of this Agreement
having an aggregate purchase price of $__________, based on the average of the
high and low daily trading price per share of the common stock of the Company on
such date (the "Purchase Price"); and
WHEREAS, the Company intends to make a loan to the Executive in an
amount equal to the Purchase Price, and the Executive intends to secure such
loan with a pledge of the Purchased Shares.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein and other good and valuable consideration, the parties hereto
agree as follows:
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TERMS
1. Loan.
1.1. Loan. Subject to the terms and conditions hereof, the
Company shall lend to the Executive the aggregate principal amount of $_________
(the "Loan").
1.2. Purpose of Loan. The Executive shall use the proceeds of
the Loan solely for the purpose of purchasing the Purchased Shares pursuant to
Section 2 hereof.
1.3. Promissory Note. The obligation of the Executive to repay
the Loan shall be evidenced by the Executive's promissory note, substantially in
the form attached hereto as Exhibit A (the "Note"), in the original principal
amount of $_______. The Note shall be dated as of the date of this Agreement,
the date of the purchase of the Purchased Shares, shall mature and become due
and payable on the Maturity Date (hereinafter defined) and shall bear interest
as set forth in Section 1.4(b).
1.4. Principal Payments; Maturity; Interest Rate.
(a) Principal Payments. Unless sooner accelerated as
provided herein, the principal amount of the Loan shall be due
and payable in full on _________________, the fifth
anniversary date of the Note (the "Maturity Date").
Notwithstanding the collateral pledged to the Company pursuant
to Section 3 hereof, Executive shall have personal liability
for the full payment of the Loan, together with accrued
interest thereon.
(b) Interest Rate and Payment. The principal amount
of the Loan shall bear interest from the date of the Note
until the Maturity Date (unless otherwise accelerated as
provided herein) at a rate per annum equal to the minimum
interest rate necessary to avoid income imputation under the
Internal Revenue Code as of the date of the Note. Interest
shall be due and payable on the Maturity Date.
1.5. Voluntary Prepayments. The Executive shall have the right
to prepay the Loan in whole or in part from time to time, without penalty or
premium.
1.6. Mandatory Prepayments. In the event that Executive sells
any of the Purchased Shares during the term of the Loan, the Executive shall,
within five (5) days of such sale, make a mandatory prepayment of the Loan in an
amount equal to the product of the number of Purchased Shares sold and the
Purchase Price. In the event that such sale is made on an installment basis,
Executive shall make a mandatory prepayment as and when proceeds of the sale are
received by the Executive.
2
1.7. Tender of the Purchased Shares. The Executive may, at his
option, either prior to or at the Maturity Date of the Note, tender all or any
portion of the Purchased Shares to the Company and, upon such tender, the
principal amount due under the Note shall be reduced by an amount equal to the
prior day average high/low per share market price of the Company's common stock
times the number of Purchased Shares tendered by the Executive; provided,
however, that no tender of Purchased Shares shall be made while the Executive is
employed by the Company that would reduce his ownership of common stock of the
Company to an aggregate value less than as provided in the Company's executive
stock ownership guidelines, based on the then current market price of such
common stock, without the consent of the Company's board of directors.
1.8. Events of Default. Each of the following shall constitute
an event of default (each, an "Event of Default") under this Agreement:
(a) the failure of the Executive to pay when due any principal
or interest or other amount due hereunder or under the Note.
(b) any warranty or representation made by the Executive in
this Agreement shall prove to have been false or incorrect on the date
as of which made.
(c) the termination of Executive's employment with the Company
for any reason.
(4) the occurrence of any of the following with respect to
the Executive:
(i) he shall apply for or consent to the appointment of a
receiver, custodian, trustee or liquidator of all or a
substantial part of his property;
(ii) he shall make a general assignment for the benefit of
his creditors;
(iii) he shall commence a voluntary case under the Federal
Bankruptcy Code; or
(iv) he shall file a petition to take advantage of any other
law providing for the relief of debtors.
3
1.9. Remedies Upon Default. Upon the occurrence and during the
continuance of an Event of Default, all indebtedness, obligations and
liabilities of the Executive arising hereunder shall, at the option of the
Company, become immediately due and payable. The Company may, in addition to all
other remedies available to it, exercise a right of setoff against the Pledged
Collateral (as defined below).
1.10. Extension of Payment Date. Notwithstanding anything in
Section 1.8(c) hereof to the contrary, in the event that Executive's employment
with the Company is terminated and such termination arises from the disability
or retirement of the Executive or is without Cause, then, at the option of the
Executive and upon delivery of written notice to that effect, the obligation to
repay the Loan in full, together with accrued interest thereon, may be extended
to the fifth anniversary date of such termination or retirement or the Maturity
Date, whichever is earlier. For purposes of this Section, the term "Cause" shall
have the meaning assigned to it in the Employment Agreement among the Executive,
the Company and New Jersey State Medical Underwriters, Inc. dated August 20,
2001.
1.11. Forgiveness of Loan on Death or Disability.
Notwithstanding any provision of this Agreement to the contrary, the Executive's
obligation to pay the Loan shall be forgiven in the event of the Executive's
death or total permanent disability (to be verified by a physician selected by
the Company) prior to the Maturity Date; provided, however, that the Executive
or his estate shall have transferred to the Company following such death or
disability all right, title and interest in or to the Pledged Collateral or, in
the event the fair market value of the Pledged Collateral exceeds the amount of
principal and accrued interest owed under the Loan, the remaining Pledged
Collateral, if any, with a fair market value in excess of the amount owed under
the Loan shall be paid over to the Executive or his estate, as applicable, less
applicable deductions, including, without limitation, federal and state
withholding.
2. Purchase and Sale of Common Stock.
2.1. Sale and Purchase. The Company shall issue and sell to
the Executive, subject to and in reliance upon the representations, warranties,
terms and conditions of this Agreement, and Executive shall purchase, the
Purchased Shares for the Purchase Price.
2.2. Payment of Purchase Price. Upon payment in full of the
Purchase Price, receipt of which shall be deemed acknowledged by the Company on
the date hereof, the Company shall issue to Executive a stock certificate,
registered in the name of Executive, representing the Purchased Shares.
2.3. Lock-up. The Executive agrees that, for a one (1) year
period following the date of the issuance of the Purchased Shares, the Executive
shall not sell, transfer or otherwise dispose of any of the Purchased Shares
without the written consent of the Company.
4
3. Collateral.
3.1. Pledged Collateral. As security for the performance of
this Agreement and for the prompt and complete payment of the Loan, together
with accrued interest thereon, when due (whether at the Maturity Date, by
acceleration or otherwise), the Executive hereby grants to the Company the
following property (collectively, the "Pledged Collateral"):
(a) the Purchased Shares and the certificates or
instruments representing such stock and all dividends,
interest, cash, instruments, and other property from time to
time received, receivable, or otherwise distributed or
distributable in respect of or in exchange for any or all of
such stock;
(b) all proceeds of the foregoing.
3.2. Delivery of Purchased Shares. Promptly after his receipt
of stock certificates representing the Purchased Shares, the Executive shall
deliver to the Company such stock certificates, together with stock powers duly
executed in blank by the Executive.
3.3. Voting Rights, Dividends, Etc.
(a) The Executive shall be entitled to exercise any
and all of Executive's voting and other consensual rights
pertaining to the Pledged Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement;
and notwithstanding Section 3.1 but subject to Section 3.3(c)
shall be entitled to receive and retain free and clear of the
security interest of Company hereunder, any and all of such
dividends, interest and other distributions permitted to all
other holders of the Company's Common Stock.
(b) The Company shall execute and deliver (or cause
to be executed and delivered) to the Executive all such
proxies and other instruments as Executive may reasonably
request for the purpose of enabling the Executive to exercise
the voting and other rights that he is entitled to exercise
pursuant to paragraph (a) above and to receive the dividends,
interest and other distributions that he is authorized to
receive and retain pursuant to paragraph (a) above.
(c) Upon the occurrence and during the continuance of
an Event of Default (i) all rights of the Executive to
exercise the voting and other consensual rights that he would
otherwise be entitled to exercise pursuant to Section 3.3(a)
hereof and to receive the dividends, interest and other
distributions that he would otherwise be authorized to receive
and retain pursuant to Section 3.3(a) hereof shall cease, and
all such rights shall thereupon become vested in Company which
shall thereupon have the sole right to exercise such voting
and other consensual rights and to receive such dividends,
interest, and other distributions; and all
5
dividends, interest and other distributions which are received
by Executive contrary to the provisions of this paragraph
shall be received in trust for the benefit of Company, shall
be segregated from other funds of Executive, and shall be
forthwith paid over to Company in the same form as so received
(with any necessary endorsement).
3.4. Further Assurances. Executive agrees that at any time and
from time to time, at the expense of Executive, Executive will promptly execute
and deliver all further instruments and documents, and take all further action
that may be necessary, or that Company may reasonably request, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable Company to exercise and enforce the rights and remedies
hereunder with respect to any of the Pledged Collateral.
3.5. Transfers and Liens. Executive will not (i) grant any
option with respect to any of the Pledged Collateral, or (ii) create or permit
to exist any lien, security interest, or other charge or encumbrance upon or
with respect to any of the Pledged Collateral.
3.6. Company Appointed Attorney-in-Fact. Executive hereby
appoints Company as Executive's attorney-in-fact, with full authority in the
place and stead of Executive and in the name of Executive, from time to time in
Company's discretion to take any action and to execute any instrument which
Company may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation, upon the occurrence and during the
continuance of an Event of Default to receive, endorse, and collect all
instruments made payable to Executive representing any dividend, interest, or
other distribution in respect of the Pledged Collateral or any part thereof and
to give full discharge for the same. Company shall not, in its capacity as such
attorney-in-fact, be liable for any acts or omissions, nor for any error of
judgment or mistake of fact or law, but only for bad faith, willful misconduct
or gross negligence. This power, being coupled with an interest, is irrevocable
until all obligations under the Note have been fully satisfied.
3.7. Company's Duties. The powers conferred on the Company
hereunder are solely to protect its interests in the Pledged Collateral and
shall not impose any duty to exercise any such powers. Except for the safe
custody of any Pledged Collateral in its possession and the accounting for
moneys actually received by it hereunder, Company shall not have any duty as to
any Pledged Collateral or as to the taking of any necessary steps to preserve
rights against any parties or any other rights pertaining to any Pledged
Collateral. Without limiting the generality of the foregoing, Company shall not
have any responsibility for ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders, or other matters relating to any
Pledged Collateral, whether or not Company has or is deemed to have knowledge of
such matters.
3.8. Prepayments. In the event of any prepayment, whether
voluntary or mandatory, the Company shall release from the Pledged Collateral,
and deliver to the Executive,
6
stock certificates evidencing that number of Purchased Shares which have an
aggregate fair market value equal to the amount of the prepayment. In no event,
however, shall the remaining Pledged Collateral have a fair market value less
than the unpaid principal balance of the Loan and accrued interest thereon.
3.9. Transfer of Title. After the occurrence and during the
continuance of an Event of Default, Company shall have the right, at any time in
its discretion without further notice to Executive, to transfer to or to
register in the name of Company or its nominees, any or all of the Pledged
Collateral. In addition, upon the occurrence and during the continuance of an
Event of Default, Company shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
3.10. Termination. The provisions of this Section 3 shall
terminate upon payment in full of the Loan, together with accrued interest
thereon, at which time the Company shall promptly deliver to Executive stock
certificates evidencing the Purchased Shares remaining in its possession.
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Executive as follows:
4.1. Organization. The Company (a) is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and (b) has all requisite corporate power and authority to execute,
deliver and perform this Agreement.
4.2. Authorization of Agreement.
(a) The execution, delivery and performance by the
Company of this Agreement has been duly authorized by all
requisite corporate action by the Company, and this Agreement
constitutes the valid and binding obligation of the Company.
(b) The issuance, sale and delivery of the Purchased
Shares have been duly authorized by all requisite corporate
action of the Company, and when issued, sold and delivered in
accordance with this Agreement, the Purchased Shares will be
validly issued and outstanding, fully paid and non-assessable,
and not subject to preemptive or any other similar rights of
the stockholders of the Company or others.
4.3. SEC Filings. The Company has made available to the
Executive, in the form filed with the SEC, its Form S-1 Registration Statement
(Registration No. 333-59371), as amended, and its most current 10-K and 10-Q
reports (the "SEC Filings"). The SEC Filings comply as to form in all material
respects with the requirements of the Securities Act of 1933
7
(the "Securities Act") and the rules and regulations thereunder, and did not, on
the date when declared effective or filed, as applicable, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein in
light of the circumstances under which they were made not misleading.
5. Representations of the Executive. The Executive represents, warrants
and covenants to the Company that:
(a) Executive has the full power and authority and
has full legal right to execute and deliver this Agreement and
the Note, to perform, observe and comply with all of his
agreements and obligations under each of this Agreement and
the Note and to obtain the proceeds of the Loan contemplated
by this Agreement;
(b) Executive has duly executed and delivered this
Agreement and this Agreement constitutes the valid and binding
obligation of Executive, enforceable in accordance with its
terms, except as such enforceability may be limited by
bankruptcy, moratorium or similar laws affecting creditors'
rights or by general principles of equity;
(c) Executive is acquiring the Purchased Shares for
his own account, for investment and not with a view to the
distribution thereof within the meaning of the Securities Act;
(d) Executive understands that the Purchased Shares
have not been and shall not be registered under the Securities
Act, by reason of their issuance by the Company in a
transaction exempt from the registration requirements of the
Securities Act; and any subsequent disposition thereof must be
registered under the Securities Act or must be exempt from
registration;
(e) Executive understands that: (i) the exemption
from registration afforded by Rule 144 (the provisions of
which are known to him) promulgated under the Securities Act
depends on the satisfaction of various conditions, and that,
if and when applicable, Rule 144 may only afford the basis for
sales in limited amounts; and (ii) the Company is under no
obligation to register the Purchased Shares on behalf of the
Executive or to assist the Executive in complying with any
exemption from registration;
(f) he is an accredited investor as defined in Rule
501(a) promulgated under the Securities Act.
6. Certain Restrictions.
8
6.1. Legend. The certificate for the Purchased Shares shall
bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED OR ANY APPLICABLE STATE
SECURITIES LAW. THESE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION EXCEPT UPON
DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL, WHICH
OPINION SHALL BE REASONABLY SATISFACTORY TO THE COMPANY,
STATING THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE CONDITIONS SET FORTH IN THAT
CERTAIN STOCK PURCHASE AND LOAN AGREEMENT BY AND BETWEEN THE
COMPANY AND XXXXXXX X. XXXXXXXXXXX."
6.2. Opinion. Company agrees to reimburse Executive for the
cost of obtaining any opinion required by the above legend.
7. Miscellaneous.
7.1. Amendments, Indulgences, Etc. No amendment or waiver of
any provision of this Agreement nor consent to any departure by Executive
herefrom shall in any event be effective unless the same shall be in writing and
signed by Company, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given. No failure
or delay on the part of Company in the exercise of any right, power, or remedy
under this Agreement shall constitute a waiver thereof, or prevent the exercise
thereof in that or any other instance.
7.2. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and, if to Executive,
mailed or telefaxed or delivered to them at the addresses therefor shown at the
time in Company's records, and, if to Company, mailed or delivered to it at Xxx
Xxxxxxxx Xxxx, Xxxxxxxxxxxxx, Xxx Xxxxxx 00000.
7.3. Continuing Security Interest. This Agreement creates a
continuing security interest in the Pledged Collateral and shall be binding upon
Executive, and his heirs, executors, administrators, successors, and assigns and
inure to the benefit of Company and its successors, transferees and assigns. The
execution and delivery of this Agreement shall in no
9
manner impair or affect any other security (by endorsement or otherwise) for the
payment or performance of the Note and no security taken hereafter as security
for payment or performance of the Note shall impair in any manner or affect this
Agreement or the security interest granted hereby, all such present and future
additional security to be considered as cumulative security. Any of the Pledged
Collateral may be released from this Agreement without altering, varying, or
diminishing in any way this Agreement or the security interest granted hereby as
to the Pledged Collateral not expressly released, and this Agreement and such
security interest shall continue in full force and effect as to all of the
Pledged Collateral not expressly released.
7.4. Governing Law, Consent to Jurisdiction, Etc. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New Jersey applicable to contracts made and wholly performed within New
Jersey. Executive consents to the jurisdiction of the courts of New Jersey and
of the courts of the United States sitting in New Jersey in any litigation
concerning this Agreement, and Executive waives any objection based on venue or
inconvenient forum. Unless otherwise defined herein, terms defined in the
Uniform Commercial Code as in effect on the date hereof are used herein as
therein defined as of such date.
7.5. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
7.6. Severability. The provisions of this Agreement are
independent of and separable from each other, and no such provision, shall be
altered or rendered invalid or unenforceable by virtue of the fact that for any
reason any other such provision may be invalid or unenforceable in whole or in
part.
7.7. Headings. The section headings of this Agreement are for
convenience only, form no part of this Agreement and shall not affect its
interpretation.
7.8. Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and undertakings between the parties
hereto with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written.
10
IN WITNESS WHEREOF, the undersigned, intending to be legally bound
hereby, have executed this Agreement as of the date first above written.
THE MIIX GROUP, INCORPORATED
By:_______________________________
__________________________________
XXXXXXX X. XXXXXXXXXXX
11
EXHIBIT A
PROMISSORY NOTE
$_______ Lawrenceville, New Jersey
________________, 200__
The Undersigned, for value received and intending to be legally bound,
promises to pay to the order of THE MIIX GROUP, INCORPORATED (the "Lender"), as
and when due as set forth in the Stock Purchase and Loan Agreement dated the
date hereof between the Undersigned and Lender (as such agreement may be
amended, restated, modified or supplemented from time to time, the "Loan
Agreement"), the principal sum of $_______. Capitalized terms used herein and
not otherwise defined shall have the meanings given such terms in the Loan
Agreement.
The undersigned further promises to pay to the order of Lender interest
on the unpaid principal amount of the Loan from the date hereof until such
amounts have been repaid in full. Interest shall be at the annual rate of
[applicable Mid-Term Federal Rate on date of Note] percent (____%) and shall be
due and payable on the Maturity Date (unless accelerated sooner under the terms
of the Loan Agreement).
This is the Note mentioned in, and is entitled to the benefits of, the
Loan Agreement.
This Note may be prepaid at any time, in whole or in part, without
premium or penalty. All payments in respect of this Note shall be applied first
to accrued interest and then to principal outstanding hereunder. Mandatory
prepayments shall be required from time to time pursuant to Section 1.6 of the
Loan Agreement.
This Note shall be deemed to be a contract made under the laws of the
State of New Jersey and shall be construed in accordance with the laws of said
state without giving effect to principles of conflicts of law.
This Note shall be binding upon the undersigned and his heirs,
executors, administrators, transferees and assigns and the terms hereof shall
inure to the benefit of lender and its successors and assigns, including
subsequent holders hereof.
The undersigned hereby waives presentment, demand for payment, notice
of dishonor or acceleration, protest and notice of protest, and any and all
other notices or demands in connection with the delivery, acceptance,
performance, default or enforcement of this Note except any notice expressly
required in the Loan Agreement.
IN WITNESS WHEREOF, the undersigned executes this Note as of the day
and year first above written.
____________________________________
XXXXXXX X. XXXXXXXXXXX
EXHIBIT C
THE MIIX GROUP, INCORPORATED AND
NEW JERSEY STATE MEDICAL UNDERWRITERS, INC.
DEFERRED COMPENSATION PLAN
The Non-Qualified Deferred Compensation Agreement ("Agreement" or "Plan") is
entered into and effective August 20, 2001 ("Effective Date"), by and between
The MIIX Group, Incorporated, New Jersey State Medical Underwriters, Inc.
("Employer" or "Company") and Xxxxxxx X. Xxxxxxxxxxx (hereinafter sometimes
referred to as "Employee" or "Participant").
WITNESSETH THAT:
In consideration of the agreements hereinafter contained the parties hereto
agree as follows:
1.1. ESTABLISHMENT OF PLAN. Employer hereby establishes this Deferred
Compensation Plan which shall become effective as of the date selected by
Employer. The Plan shall be maintained for the exclusive benefit of
Employee.
1.2. NATURE OF PLAN. The Plan is intended to be and at all times shall be
interpreted and administered so as to qualify as an unfunded plan of
deferred compensation for purposes of the Internal Revenue Code of 1986,
as amended, and regulations thereunder, and the Employee Retirement
Income Security Act of 1974.
1.3. PURPOSE OF PLAN. The purpose of this Plan is to enable Employee to
enhance his financial security by permitting him to enter into this
agreement with Employer to defer his compensation and receive benefits in
a future year.
1.4. APPLICABLE COMPENSATION. Elections to defer compensation shall be made
with respect to compensation not yet earned. In the case of bonuses or
other nonperiodic payments, such compensation shall be treated as earned
no earlier than the day on which the amount payable has been determined.
In the case of periodic payments such as salary, such compensation shall
be treated as earned no earlier than the day prior to the day on which
the service period giving rise to the salary has commenced. In the case
of Dividend Equivalents (awarded pursuant to The MIIX Group, Incorporated
Amended and Restated 1998 Long Term Incentive Equity Plan) converted into
cash, such compensation shall be treated as earned no earlier than the
day prior to the day on which such Dividend Equivalents are credited to
the account maintained on behalf of the Participant under Sections 6.4
and 9.3 of the Equity Plan.
1.5. DEFERRAL OF COMPENSATION. Employee shall make an irrevocable election to
defer compensation to be paid by Employer by the signing of an Election
to Defer in the form approved by Employer. Deferrals under such elections
shall be effective on the date the Election to Defer is properly
completed by Employee and accepted by Employer.
Employer shall acknowledge receipt of Employee's deferral election by
signing the Election to Defer and returning it to Employee within 14 days
of receipt.
1.6. EARNINGS. Interest shall be credited monthly by Employer on amounts
deferred under this Plan at a rate of return equal to the aggregate
investment portfolio yield for The MIIX Group of Companies or, if
applicable, the return directly associated with any specific investment
alternatives chosen by Employee and approved by Employer, including, but
not limited to, any income (loss) and realized and unrealized gains
(losses). Employee may change selected investment alternatives on a
prospective basis only.
1.7. COMMENCEMENT OF DISTRIBUTIONS. Distribution of benefits to Participant
under the Plan shall commence no earlier than August 20, 2006, provided,
however, that distribution shall be accelerated in the event Employee
separates from service of Employer for any reason prior to August 20,
2006. In such event, Plan benefits shall commence within 60 days after
such separation from service. Notwithstanding the foregoing, if
Participant dies prior to the time his benefits under this Plan have been
distributed in full, any remaining portion of benefits yet to be
distributed under this Plan shall be distributed as soon as
administratively practicable to Participant's estate or such other
beneficiary as designated by Participant on a Beneficiary Designation
Form.
1.8. MANNER OF PAYMENT. Distributions shall be made in cash by Employer except
to the extent that Participant elects to receive payment in the form of
property that was designated as an investment alternative as provided in
Section 1.6 of this Agreement. In such case, any cash due shall be
reduced by the fair market value of such in kind payment at the time of
the distribution.
1.9. PLAN ADMINISTRATION. The Company shall be responsible for the
administration of the Plan, including any associated costs.
1.10. OWNERSHIP OF ASSETS. All amounts of compensation deferred under the Plan,
all property and rights purchased with such amounts, and all income
attributable to such amounts, property, or rights shall remain (until
made available to Participant) solely the property and rights of the
Company (without being restricted to the provisions of benefits under the
Plan) and shall be subject to the claims of the Company's general
creditors.
1.11. LIMITATION OF RIGHTS / EMPLOYMENT RELATIONSHIP. Neither the establishment
of this Plan nor any modification thereof, nor the creation of any fund
or account, nor the payment of any benefits, shall be construed as giving
Participant or any other person any legal or equitable right against
Employer except as provided in the Plan.
1.12. LIMITATION OF ASSIGNMENT. Benefits under the Plan may not be assigned,
sold, transferred, or encumbered, and any attempt to do so shall be void.
Participant's interest in benefits under the Plan shall not be subjected
to debts or liabilities of any kind and shall not be subject to
attachment, garnishment, or other legal process.
1.13. REPRESENTATIONS. Employer does not represent or guarantee that any
particular federal or state income, payroll, personal property, or other
tax consequence will result from participation in this Plan. Participant
should consult with professional tax advisors to determine the tax
consequences of his participation.
1.14. APPLICABLE LAW. This Plan shall be construed in accordance with
applicable federal law and, to the extent otherwise applicable, the law
of the State of New Jersey.
1.15. RESPONSIBILITY FOR TAXES. Participant is responsible for all federal,
state, and other taxes assessed on amounts deferred under this Plan.
Employer shall have the right to withhold or reduce Plan benefits to
satisfy such withholding obligations, as it may deem necessary to ensure
proper withholding procedures.
1.16. ESTABLISHMENT OF TRUST. In the event of the termination of the Employee's
employment with the Company, whether voluntary or involuntary, or a
Change in Control as defined in Paragraph 1.19, the Employer shall
immediately establish the Employee's Trust with a trustee reasonably
acceptable to the Employee (the "Trust") and contribute assets to such
Trust in an amount equal to the Employer's obligations to the Participant
under this Plan determined as of the date of the termination of
employment or Change in Control, as applicable. Prior to such termination
of employment or Change in Control, the Employer may, at its option and
in its sole discretion, establish such a Trust. Such Trust shall be
established in accordance with the Internal Revenue Service model trust
agreement as set forth in Revenue Procedure 92-64.
1.17. EFFECT OF THE TRUST. The provisions of the Plan shall govern the rights
of the Participant to receive distributions pursuant to the Plan. The
provisions of the Trust shall govern the rights of the Participant and
the creditors of the Employer to the assets transferred to the Trust. The
Employer shall at all times remain liable to carry out its obligations
under the Plan. The Employee's obligations under the Plan may be
satisfied with Trust assets distributed pursuant to the terms of the
Trust, and any such distribution shall reduce the Employee's obligation
under the Plan.
1.18. DEFINITIONS. For purposes of Paragraph 1.16, the following capitalized
words shall have the meanings set forth below:
1.18.1 "CHANGE IN CONTROL" shall be as defined in Section 3.5 of
the Employment Agreement dated as of August 20, 2001 among
the MIIX Group, Incorporated, New Jersey State Medical
Underwriters, Inc. and Xxxxxxx X. Xxxxxxxxxxx.
3
IN WITNESS WHEREOF, the parties have executed this Agreement on one or more
counterparts which, taken together, shall constitute one Agreement, which
Agreement shall be effective as of the date recited above.
THE MIIX GROUP, INCORPORATED
By:________________________________ ____________________________
Date
NEW JERSEY STATE MEDICAL
UNDERWRITERS, INC.
By:________________________________ ____________________________
Date
____________________________________ ____________________________
XXXXXXX X. XXXXXXXXXXX Date
4
THE MIIX GROUP, INCORPORATED AND
NEW JERSEY STATE MEDICAL UNDERWRITERS, INC.
DEFERRED COMPENSATION PLAN
INVESTMENT ELECTION FORM
________________________________________________________________________________
Pursuant to the terms of the Non-Qualified Deferred Compensation Agreement
entered into between me, The MIIX Group, Incorporated, and New Jersey State
Medical Underwriters, Inc. effective August 20, 2001, ("Plan"), I hereby revoke
any prior investment designations for the amounts credited to my account balance
under the Plan, and I hereby elect the following investments for amounts
credited to my account. This election is to be effective at the earliest date
permissible under and subject to all of the terms of, the Plan:
Investment Options Percentage of Plan Account:
1. Specified Investments* $________________
2. Unspecified** 100%
3. ______________________________________ _________________
4. ______________________________________ _________________
5. ______________________________________ _________________
Total ______________________________________ $________________
* Specify Investment:__________________________________________________
** Therefore earning interest in an amount equal to the consolidated aggregate
investment portfolio yield for The MIIX Group of Companies.
Participant's Signature:________________________________________________________
Print Name:_____________________________________________________________________
Date:___________________________________________________________________________
Approved:_______________________________________________________________________
By:_____________________________________________________________________________
Print Name:_____________________________________________________________________
Date:___________________________________________________________________________
THE MIIX GROUP, INCORPORATED AND
NEW JERSEY STATE MEDICAL UNDERWRITERS, INC.
DEFERRED COMPENSATION PLAN
ELECTION TO DEFER
Pursuant to the terms of the Non-Qualified Deferred Compensation Agreement
entered into between me, The MIIX Group, Incorporated, and New Jersey State
Medical Underwriters, Inc. effective August 20, 2001, I hereby elect to defer
the following amounts or percentages of compensation:
Salary: Commencing on _________________________________________________________
In the amount of___________________________________________________
Bonus: That will be determined on ____________________________________________
In the amount of _______________________________________________
Stock Option
Dividend Equivalents: Commencing on ____________________________________________
Participant's Signature:________________________________________________________
Print Name:_____________________________________________________________________
Date:___________________________________________________________________________
Approved: The MIIX Group, Incorporated
By:_____________________________________________________________________________
Print Name:_____________________________________________________________________
Date:___________________________________________________________________________
Approved: New Jersey State Medical Underwriters, Inc.
By:_____________________________________________________________________________
Print Name:_____________________________________________________________________
Date:_________________________________________________________________________
EXHIBIT D
CHANGE IN CONTROL EXCISE TAX GROSS-UP PAYMENT PROCEDURES
The following procedures shall apply with respect to the right of the Executive
("you") to receive Gross-Up Payments as provided in Section 3.5 of the
Agreement:
(1) Right to Gross-Up Payment. In the event you become entitled to any
amounts payable in connection with a Change in Control (whether or
not such amounts are payable pursuant to this Agreement) (the
"Severance Payments"), if any of such Severance Payments are
subject to the tax (the "Excise Tax") imposed by Section 4999 of
the Code (or any similar federal, state or local tax that may
hereafter be imposed), the Company shall pay to you at the time
specified in subsection (d) hereof an additional amount (the
"Gross-Up Payment") such that the net amount retained by you,
after deduction of any Excise Tax on the Total Payments (as
hereinafter defined) and any federal, state and local income tax
and Excise Tax upon the payment provided for by this Excise Tax
Gross Up Procedure, shall be equal to the Total Payments.
(2) Determination of Parachute Payments. For purposes of determining
whether any of the Severance Payments will be subject to the
Excise Tax and the amount of such Excise Tax: (i) any other
payments or benefits received or to be received by you in
connection with a Change in Control or your termination of
employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any Person
whose actions result in a Change in Control or any Person
affiliated with the Company or such Person) (which, together with
the Severance Payments, constitute the "Total Payments") shall be
treated as "parachute payments" within the meaning of Section
280G(b)(2) of the Code, and all "excess parachute payments" within
the meaning of Section 280G(b)(1) of the Code shall be treated as
subject to the Excise Tax, unless in the opinion of
nationally-recognized tax counsel selected by you such other
payments or benefits (in whole or in part) do not constitute
parachute payments, or such excess parachute payments (in whole or
in part) represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code in
excess of the base amount within the meaning of Section 280G(b)(3)
of the Code, or are otherwise not subject to the Excise Tax; (ii)
the amount of the Total Payments which shall be treated as subject
to the Excise Tax shall be equal to the lesser of (A) the total
amount of the Total Payments and (B) the amount of excess
parachute payments within the meaning of Section 280G(b)(1) of the
Code (after applying Section 3(c)(i) hereof); and (iii) the value
of any non-cash benefits or any deferred payments or benefit shall
be determined by a nationally-recognized accounting firm selected
by you in accordance with the principles of Sections 280G(d)(3)
and (4) of the Code.
(3) Gross-Up Payment Calculation Assumptions/Final Determination
Adjustments. For purposes of determining the amount of the
Gross-Up Payment, you shall be deemed to pay federal income taxes
at the highest marginal rate of federal income taxation in the
calendar year in which the Gross-Up Payment is to be made and
state and local income taxes at the highest marginal rate of
taxation in the state and locality of your residence on the date
of the Change in Control, net of the maximum reduction in federal
income taxes that could be obtained from deduction of such state
and local taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder
at the time of termination of your employment, you shall repay to
the Company within ten days after the time that the amount of such
reduction in Excise Tax is finally determined the portion of the
Gross-Up Payment attributable to such reduction (plus the portion
of the Gross-Up Payment attributable to the Excise Tax and federal
and state and local income tax imposed on the Gross-Up Payment
being repaid by you if such repayment results in a reduction in
Excise Tax and/or federal and state and local income tax
deduction) plus interest on the amount of such repayment at the
rate provided in Section 1274(b)(2)(B) of the Code. In the event
that the Excise Tax is determined to exceed the amount taken into
account hereunder at the time of the termination of your
employment (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up
Payment), the Company shall make an additional gross-up payment in
respect of such excess within ten days after the time that the
amount of such excess is finally determined.
(4) Time of Payment. The payments provided for hereunder shall be made
not later than the fifth day following the date of termination of
your employment; provided, however, that if the amount of such
payments cannot be finally determined on or before such day, the
Company shall pay to you on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments
and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no
event later than the thirtieth day after the date of termination.
In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall
constitute a loan by the Company to you, payable on the fifteenth
day after the demand by the Company (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Code).
