EX-10.5 8 dex105.htm EMPLOYMENT, CONSULTING AND NONCOMPETITION AGREEMENT
EXHIBIT 10.5
EMPLOYMENT, CONSULTING AND NONCOMPETITION AGREEMENT (the “Agreement”), dated as of May 15, 2003, between Arvest Holdings, Inc., an Arkansas corporation (“Parent”), Superior Financial Corp., a Delaware corporation (the “Company”) and Xxxx X. Xxxxxxx (the “Consultant”).
WHEREAS Parent, AHI Acquisition, Inc., an Arkansas corporation (“Sub”) and the Company intend to enter into an Agreement and Plan of Merger, dated the date hereof (the “Merger Agreement”), pursuant to which the Company shall become a subsidiary of Parent upon the consummation of the transactions contemplated by the Merger Agreement;
(b) During the Consulting Term, the Consultant shall provide special advice, information and guidance to Parent and the Company with respect to strategic, legal and global matters (including without limitation, outstanding lawsuits involving the Company) drawing on the Consultant’s prior service with the Company and his knowledge regarding the business and operations of the Company. During the Consulting Term, the Consultant shall be available to Parent and the Company at all reasonable times via email and telephone and shall be reasonably available to meet with Parent and the Company on an as-needed basis.
(c) During the Employment Term and the Consulting Term, the Consultant shall report directly to the Parent Board or such other member or members of senior management of Parent or the Company as designated from time to time by the Parent Board.
(b) During the Consulting Term, for services rendered under this Agreement, the Company shall pay the Consultant compensation, payable monthly or quarterly as mutually agreed, at an annual rate of $51,000 for the first year of the Consulting Term and an annual rate of $25,500 for the second year of the Consulting Term (the “Consulting Fee”). For each year during the Consulting Term, the Company shall pay the Consultant, upon presentation of evidence satisfactory to the Company, an additional amount equal to the self-employment tax actually paid by the Consultant in respect of the Consulting Fee for such year (after giving effect to all self-employment taxes and payroll taxes paid by the Consultant in respect of all other wages and other self-employment income earned by the Consultant for such year) less fifty (50%) percent of the Medicare portion of self-employment taxes paid in respect of the Consulting Fee for such year.
(c) In consideration of the Consultant’s agreement to the restrictive covenants set forth in Sections 6, 7 and 8, the Company shall pay the Consultant additional consideration in an amount equal to $685,950 (the “Restrictive Covenant Consideration”), payable in substantially equal monthly installments over the Applicable Period (as defined in Section 7(a)).
(d) During the Employment Term, the Consultant shall be entitled to participate in the employee benefit plans and programs generally available to senior executives of the Company as made available by the Company to such executives from time to time, subject to the terms of such plans and programs; provided, however, that the Consultant expressly agrees that the Consultant shall not be entitled to participate in any cash or equity-based incentive plans or programs of the Company (and, for the avoidance of doubt, shall not be entitled to participate in any plans or programs of any kind sponsored or maintained by Parent and its subsidiaries and affiliates (other than the Company and its subsidiaries and affiliates) except to the extent required by law). Parent and the Company shall reimburse the Consultant for the Consultant’s reasonable and necessary business expenses in accordance with its then prevailing policy for senior executives (which shall include appropriate itemization and substantiation of expenses incurred).
(e) Within five (5) business days following the Effective Time, Parent shall cause to be deposited in escrow with Miller, Hamilton, Xxxxxx & Xxxx, LLC (the “Escrow Agent”) an amount equal to the sum of (i) aggregate Consulting Fee payable to the Consultant for the entire Consulting Term and (ii) the Restrictive Covenant Consideration. The Escrow Agent shall cause such escrowed funds to be deposited in an account maintained at Citibank, N.A. (or such other nationally recognized banking institution as mutually agreed by the parties). The parties acknowledge and agree that the Consultant, in the Consultant’s sole discretion, selected Miller, Hamilton, Xxxxxx & Xxxx, LLC as Escrow Agent. During the Consulting Term, except as provided below, the Escrow Agent shall make payments (from such deposited amounts) of the Consulting Fee to the Consultant in accordance with the first sentence of Section 3(b). During the Applicable Period, except as provided below, the Escrow Agent shall make payments (from such deposited amounts) of the Restrictive Covenant Consideration to the Consultant in accordance with Section 3(c). The Consultant may direct the investment of amounts deposited with the Escrow Agent, and any earnings or losses on such amounts shall inure to the benefit of the Consultant and be distributed at the end of the Applicable Period. The obligations of Parent and the Company under this Agreement to pay or cause to be paid the aggregate Consulting Fees and Restrictive Covenant Consideration shall be deemed satisfied by the deposit of such amounts with the Escrow Agent, and the Consultant shall bear the risk of any loss of principal with respect to such deposited amounts. Notwithstanding anything to the contrary in this Section 3(e), the Escrow Agent shall cease making future payments of the Consulting Fee or Restrictive Covenant Consideration to the Consultant if Parent or the Company obtains a judgment from a court of competent
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jurisdiction that (i) holds that the Consultant has materially breached the Consultant’s obligations under this Agreement and (ii) awards monetary damages to Parent or the Company, in which case the Escrow Agent shall pay to Parent or the Company from such deposited amounts the amount so awarded as damages, and the remaining funds on deposit, if any, shall continue to be paid to the Consultant in accordance with the foregoing provisions of this Section 3(e).
(b) Following any termination by the Consultant of the Consultant’s obligation to provide consulting services during the Consulting Term, or by Parent or the Company for Cause (as defined below) at any time, (i) Parent shall pay or cause to be paid to Consultant all Base Salary and Consulting Fee payments accrued through the date of termination, to the extent unpaid, and any unreimbursed business expenses pursuant to Section 3, (ii) Parent and the Company shall cease to have any obligations to Consultant under this Agreement to make any further Consulting Fee payments and (iii) the undistributed portion of the amount deposited in respect of Consulting Fees with the Escrow Agent under Section 3(e) shall at such time be returned to Parent or the Company.
(c) Following any termination of the Consultant’s obligation to provide consulting services by Parent or the Company without Cause, or by reason of the Consultant’s death or disability (for this purpose, the Consultant shall be deemed to have a disability if the Consultant would be entitled to long-term disability benefits under the Company’s long-term disability plan as in effect on the date hereof, without regard to any waiting period under such plan or whether the Consultant is actually participating in such plan at such time), Parent shall continue to pay or cause to be paid to Consultant (or Consultant’s estate, as the case may be), at such times as such payments would have been made had the Consultant’s obligation to provide consulting services not been so terminated, the Consulting Fee payments that Consultant would have received through the remainder of the Consulting Term had the Consultant’s services not been so terminated, and any unreimbursed business expenses pursuant to Section 3.
(d) For purposes of this Agreement, “Cause” means a material breach by Consultant of his duties and obligations under this Agreement, which Consultant fails to cure within 5 days following receipt by Consultant of written notice from Parent or the Company describing such breach in reasonable detail.
(e) Notwithstanding the termination of the Consultant’s obligation to provide consulting services under this Agreement, the Consultant shall remain subject to the Consultant’s other obligations under this Agreement (including under Sections 6, 7 and 8) and, for the avoidance of doubt, the Company shall continue to be obligated to make payments of the Restrictive Covenant Consideration to Consultant (or Consultant’s estate, as the case may be) in accordance with Section 3(c).
(b) The Consultant acknowledges that Parent and the Company have a legitimate business interest and right in protecting Parent’s and the Company’s Confidential Information, goodwill, employee and customer relationships, and that Parent and the Company would be seriously damaged by the disclosure of Confidential Information and the loss or deterioration of its customer and employee relationships. The Consultant further acknowledges that Parent is entitled to protect and preserve the going concern value of the Company to the extent permitted by law and that Parent and Sub would not have entered into the Merger Agreement without the Consultant’s agreement to enter into this Agreement.
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(c) The Consultant agrees that the covenants contained in this Agreement are reasonable and appropriate in light of the consideration to be paid by Parent, and to be received by the Consultant, in connection with the transactions contemplated by the Merger Agreement and under this Agreement. The Consultant further acknowledges that, notwithstanding the Consultant’s compliance with the covenants contained in this Agreement, the Consultant has other opportunities to earn a livelihood and adequate means of support for the Consultant and the Consultant’s dependents.
(i) | as required by, or on behalf of, Parent or the Company in furtherance of Parent’s and the Company’s business, or otherwise with the advance written consent of a duly authorized officer of Parent and the Company; |
(ii) | as required by law or as ordered by a court; provided, however, that in such event, or if the Consultant receives a request to disclose Confidential Information to a court, (A) the Consultant shall promptly notify in writing the Company, and consult with and assist Parent and the Company in seeking a protective order or request for other appropriate remedy, (B) in the event that such protective order or remedy is not obtained, or if Parent and the Company waive compliance with the terms hereof, the Consultant shall disclose only that portion of the Confidential Information which, in the written opinion of the Consultant’s legal counsel, is legally required to be disclosed and shall exercise its commercially reasonable efforts to assure that confidential treatment shall be accorded such Confidential Information by the receiving person or entity and (C) Parent and the Company shall be given an opportunity to review the Confidential Information prior to disclosure thereof; or |
(iii) | with respect to matters that are generally known to the public other than as a result of the Consultant’s breach of this Agreement. |
(b) For purposes of this Agreement, “Confidential Information” means trade secrets and confidential or proprietary information, knowledge or data, whether or not reduced to writing or other tangible medium of expression, including confidential or proprietary matters relating to the business, operations and strategies (including products, services, processes, know-how, designs, developments, techniques, formulas, methods, mask works, developmental or experimental work, improvements, discoveries, inventions, ideas, source and object codes, programs, matters of a literary, musical, dramatic or otherwise creative nature, writings and other works of authorship, plans for research and development, marketing and selling, reengineering, customers, contact persons, software, licenses, suppliers, possible new business ventures and/or expansion plans), financial affairs (including costs and profits, business plans, budgets and projections and related information) and organizational and personnel matters (including skills evaluations, compensation, personal employee information, personnel files, organizational structure, reporting lines, succession planning and historical records) of (i) Parent or the Company or (ii) customers, suppliers or contractors of Parent or the Company and any other third parties in respect of which Parent or the Company has a business relationship or owes a duty of confidentiality. Without limiting the foregoing, the existence of, and any information concerning, any dispute between the Consultant and
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Parent or the Company shall constitute Confidential Information, except that the Consultant may disclose information concerning such dispute to the court that is considering such dispute or to the Consultant’s legal counsel (provided that such counsel agrees not to disclose any such information other than as necessary to the prosecution or defense of such dispute).
(c) The Consultant further agrees that the Consultant shall not publicly disclose the terms of this Agreement, except to the Consultant’s immediate family and the Consultant’s financial and legal advisors, or as may be required by law or ordered by a court or as otherwise required herein.
(i) | form, or acquire a five (5%) percent or greater equity ownership, voting or profit participation interest in, or actively participate in, control, manage, finance a five (5%) percent or greater interest of, or invest a five (5%) percent or greater interest in, any Competitor (as defined below); or |
(ii) | except as set forth in Section 7(c), associate (which, as used in this Section 7, shall include association as an officer, employee, partner, director, consultant, agent, representative or advisor) with any Competitor. |
The Consultant acknowledges that engaging in any of the activities described in the preceding sentence shall inevitably require the use and/or disclosure of Confidential Information.
(b) For purposes of this Agreement, a “Competitor” is any bank, savings and loan or other financial institution, that operates or has a physical location within the State of Arkansas and/or Oklahoma, excluding for this purpose the Oklahoma City MSA (i.e., the metropolitan statistical area for census purposes that includes Oklahoma City) (collectively, the “Restricted Area”) or could reasonably be construed to be in competition with Parent and the Company within the Restricted Area.
(c) Notwithstanding the foregoing provisions of this Section 7, the Consultant shall be deemed not to violate the provisions of Section 7(a) with respect to a Competitor that is headquartered outside of the Restricted Area if the Consultant is associated with such Competitor in an executive or operational capacity outside the Restricted Area so long as the operations of such Competitor in the Restricted Area do not constitute such Competitor’s principal business and any responsibility that the Consultant has for the local operations of such Competitor in the Restricted Area are not directly included within the Consultant’s personal responsibilities for such Competitor (it being understood, however, that it would be a violation of Section 7(a) for such Consultant to associate with a Competitor and either (i) direct or have more than an indirect and secondary responsibility for the introduction or strategic expansion of a Competitor’s business in the Restricted Area or (ii) solicit or cause others to solicit customers or employees of Parent or the Company in connection with such introduction or strategic expansion).
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(b) The Consultant agrees that during the Employment Term and the Applicable Period the Consultant shall not (i) solicit or cause others to solicit (whether by mail, telephone, personal meeting or otherwise) or induce any client, customer or supplier of Parent or the Company to transact business with a Competitor or reduce or refrain from doing any business with Parent or the Company, (ii) interfere with or damage (or attempt to interfere with or damage) any relationship between Parent or the Company and their customers or suppliers (or any person or entity in respect of which the Consultant has actual knowledge that Parent or the Company has approached or has made significant plans to approach as a prospective client, customer or supplier) or (iii) disparage (including by relative comparison) Parent or the Company or any of its products or activities.
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15. Consent to Jurisdiction; Waiver of Jury Trial. (a) Except as otherwise specifically provided herein, the parties hereto each hereby irrevocably submits to the exclusive jurisdiction of any federal court located within the State of Arkansas (or, if subject matter jurisdiction in that court is not available, in any state court located within the State of Arkansas) over any dispute arising out of or relating to this Agreement. The Consultant also irrevocably submits to the following jurisdictions: (i) if the Consultant’s then principal residence is not in the State of Arkansas, the jurisdiction of the state and federal courts sitting in the country or locality in which the Consultant’s then principal residence is located; and (ii) the jurisdiction of any court competent to take jurisdiction under its own rules, in each case for purposes of enforcing a judgment obtained by Parent or the Company in support of injunctive relief to prevent or stop a violation by the Consultant of Sections 6, 7 or 8. The parties undertake not to commence any suit, action or proceeding arising out of or relating to this Agreement in a forum other than a forum described in this Section 15(a); provided, however, that nothing herein shall preclude Parent or the Company from bringing any suit, action or proceeding in any other court for the purposes of enforcing the provisions of Section 15 or enforcing any judgment obtained by Parent or the Company.
(b) The agreement of the parties to the forum described in Section 15(a) is independent of the law that may be applied in any suit, action, or proceeding and the parties agree to such forum even if such forum may under applicable law choose to apply non-forum law. The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter have to personal jurisdiction or to the laying of venue of any such suit, action or proceeding brought in an applicable court described in Section 15(a), and each party agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court. The parties agree that, to the fullest extent permitted by applicable law, a final and non-appealable judgment in any suit, action or proceeding brought in any applicable court described in Section 15(a) shall be conclusive and binding upon the parties and may be enforced in any other jurisdiction.
(c) Each party hereto irrevocably consents to the service of any and all process in any suit, action or proceeding arising out of or relating to this Agreement by the mailing of copies of such process to such party at such party’s address specified in Section 26. In addition, the Consultant irrevocably appoints Feld, Hyde, Xxxxxxxxxx & Xxxxxx, P.C. as the Consultant’s agent for service of process in connection with any suit, action or proceeding, who shall promptly advise the Consultant of any such service of process.
(d) Each party hereto hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding arising out of or relating to this Agreement. Each party hereto (i) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such party would not, in the event of any action, suit or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other party hereto has been induced to enter into this Agreement by, among other things, the mutual waiver and certifications in this Section 15(d).
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provided hereunder, any amount or amounts in respect of income taxes or other employment taxes of any other nature on behalf of Consultant. Consultant shall be solely responsible for the payment of any federal, state, local or other income and/or self-employment taxes in respect of the amounts payable to Consultant in respect of such consulting services under this Agreement. For the avoidance of doubt, following the termination of Consultant’s employment upon the expiration of the Employment Term, under no circumstances shall Consultant (a) have or claim to have power of decision hereunder in any activity on behalf of Parent or the Company, (b) have the power or authority hereunder to obligate, bind or commit Parent or the Company in any respect or (c) direct the work of any employee of Parent or the Company or make any management decisions on behalf of Parent or the Company. During the Consulting Term, neither Parent nor the Company shall, with respect to Consultant’s consulting services, exercise or have the power to exercise such level of control over Consultant as would indicate or establish that a relationship of employer and employee exists between Consultant and Parent or the Company.
(b) This Agreement shall be binding on, and shall inure to the benefit of, the parties to it and their respective heirs, legal representatives, successors and permitted assigns (including, in the event of the Consultant’s death, the Consultant’s estate and heirs in the case of any payments due to the Consultant hereunder).
(c) Parent and the Company may assign this Agreement and its rights and obligations hereunder to any entity which, by way of merger, consolidation, purchase or otherwise, becomes, directly or indirectly, a successor to all or substantially all of the business and/or assets of Parent or the Company, respectively. Without impairing the Consultant’s obligations hereunder, Parent or the Company may at any time and from time to time assign its rights and obligations hereunder to any of its subsidiaries or affiliates (and have such rights and obligations reassigned to it or to any other subsidiary or affiliate). The Consultant acknowledges and agrees that all of the Consultant’s covenants and obligations to Parent and the Company, as well as the rights of Parent and the Company hereunder, shall run in favor of and shall be enforceable by Parent and the Company, their subsidiaries and affiliates and their successors and permitted assigns.
21. Governing Law. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of Arkansas without regard to principles of conflict of laws.
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If to Parent: | Arvest Holdings, Inc. 000 X. Xxxxxxx Xxxxxx Xxxxx 000 Xxxxxxxxxxx, XX 00000 fax: (000) 000-0000 | |
If to the Company: | Superior Financial Corp. 00000 XxXxxxxx Xxxxx Xxxxx 000 Xxxxxx Xxxx, XX 00000 fax: |
If to the Consultant: | Xxxx X. Xxxxxxx 00 Xxxxxx Xxxxx Xxxxxx Xxxx, XX 00000 fax: (000) 000-0000 |
or to such other address as either party shall have furnished to the other in writing. All notices and communications shall be deemed to have been duly given and received: (a) on the date of receipt, if delivered by hand; (b) three (3) business days after being sent by first class certified mail, return receipt requested, postage prepaid; (c) one (1) business day after sending by next-day delivery service with confirmation of receipt; or (d) if given by facsimile, at the time transmitted to the respective facsimile numbers set forth below, or to such other facsimile number as either party may have furnished to the other in writing in accordance herewith, and the appropriate confirmation received (or, if such time is not during a business day, at the beginning of the next such business day). As used herein, the term “business day” means any day that is not a Saturday, Sunday or legal holiday in the State of Arkansas.
(b) The parties agree and acknowledge that the use of the defined term “Consultant” throughout the Agreement in connection with the performance of services by Consultant during the Employment Term is not
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intended to imply that the status of the Consultant is anything other than an employee of the Company for all purposes during the Employment Term.
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ARVEST HOLDINGS, INC. | ||
By: | /s/ XXX XXXXXX | |
Name: Xxx Xxxxxx Title: |
SUPERIOR FINANCIAL CORP. | ||
By: | /s/ C. XXXXXX XXXXX | |
Name: C. Xxxxxx Xxxxx Title: President and COO |
/s/ XXXX X. XXXXXXX |
XXXX X. XXXXXXX |
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