1
Exhibit 10.25
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT is entered into as of the 1st day of October, 1998, by
and between Xxxxxxx Xxxxxx ("Xxxxxx") and Central Reserve Life Corporation, an
Ohio corporation (the "Company").
WHEREAS, Xxxxxx possesses valuable skills, expertise and abilities in the life,
accident and health insurance business; and
WHEREAS, the Company wishes to secure the services of Xxxxxx as Executive Vice
President and Chief Financial Officer ("CFO") of the Company for a three-year
term, and Xxxxxx is willing to serve in such capacity, all upon the terms and
conditions set forth.
NOW THEREFORE, in consideration of the covenants set forth herein, the parties
hereto agree as follows:
1. EMPLOYMENT. The Company hereby employs Xxxxxx as its CFO
commencing on October 1, 1998 (the "Commencement Date") and,
unless sooner terminated as hereinafter provided, ending on the
third anniversary of the Commencement Date (the "Term"). Xxxxxx
hereby agrees to render such services to the Company upon the
terms
2
EMPLOYMENT AGREEMENT
Page 2
and conditions set forth in this Agreement. Xxxxxx shall devote
his full time and attention to the business and affairs of the
Company.
2. COMPENSATION.
(a) BASE SALARY. The Company agrees to pay Xxxxxx a base salary
at the annual rate of $175,000 per year, as increased from
time to time, payable in installments consistent with the
Company's payroll practices, subject to review on April 1,
1999.
(b) STOCK OPTIONS. As an inducement to Xxxxxx to enter into
this Agreement, the Company will grant to Xxxxxx on the
Commencement Date, options to purchase an aggregate of
100,000 shares of Common Stock (the "Options") at an
exercise price of $6.50 per share. 40,000 of the Options
will vest immediately upon issuance. 30,000 of such Options
shall vest on October 1, 2000, and the remaining 30,000
Options shall vest on the third anniversary of the
Commencement Date. Xxxxxx shall forfeit all unvested
Options if his employment with the Company is terminated,
except as otherwise provided in Paragraph 6.
3
EMPLOYMENT AGREEMENT
Page 3
(c) OTHER COMPENSATION. Xxxxxx may also receive such cash
bonuses or other such cash-incentive compensation as the
Board of Directors of the Company may approve from time to
time in its sole discretion. In addition, Xxxxxx shall
receive a "sign-on" bonus of $50,000 on the Commencement
Date.
3. EXPENSES. The Company will pay or reimburse Xxxxxx for all
reasonable business expenses incurred by Xxxxxx in the performance
of his duties. In addition, the Company will reimburse Xxxxxx for
$4,000 per month with respect to his travel to and from his
Florida home to the Company's offices in Cleveland, Ohio, and
temporary residence in Cleveland through April 1, 1999, at which
time Xxxxxx will relocate to Cleveland or the then headquarters of
the Company. In addition, when Xxxxxx relocates to the
headquarters of the Company, all reasonable expenses of
relocation, including moving expenses, real estate commissions and
closing costs related to the sale of his Florida residence, shall
be paid by the Company.
4
EMPLOYMENT AGREEMENT
Page 4
4. DEATH. Xxxxxx'x employment by the Company will terminate
immediately upon his death; provided, that in the event of
Xxxxxx'x death during the Term, Xxxxxx'x estate shall be entitled
to receive the payment described in Paragraph 6(b).
5. DISABILITY. If Xxxxxx becomes totally or partially disabled during
the Term, the Company shall continue to pay to Xxxxxx, as long as
such disability continues during the Term, the level of
compensation payable to Xxxxxx at the date his disability is
determined, reduced dollar-for-dollar to the extent of any
disability insurance payments paid to Xxxxxx through insurance
programs, the premiums for which were paid by the Company or its
subsidiaries. For purposes of this Agreement, the term "total
disability" shall mean Xxxxxx'x inability due to illness, accident
or other physical or mental incapacity to engage in the full-time
performance of his duties under this Agreement, as reasonably
determined by the Board of Directors of the Company based on such
evidence as such Board shall deem appropriate. For purposes of
this Agreement, "partial disability" shall mean Xxxxxx'x due to
illness, accident or other physical or mental incapacity to
5
EMPLOYMENT AGREEMENT
Page 5
engage in only the partial performance of his duties under this
Agreement, as reasonably determined by the Board of Directors of
the Company based on such evidence as such Board shall deem
appropriate.
6. TERMINATION.
(a) FOR CAUSE. The Company shall have the right to terminate
Xxxxxx'x employment hereunder at any time during the Term
for Cause. For purposes of this Agreement, "Cause" shall be
limited to Xxxxxx'x conviction of a felony or the gross
neglect of, and continued failure to perform substantially
Xxxxxx'x duties under the Agreement. Notwithstanding
anything herein to the contrary, Xxxxxx'x inability to
perform the duties of his position due to his death or his
total or partial disability shall not be deemed to
constitute Cause.
If, in the opinion of the Board of Directors of the
Company, Xxxxxx'x employment shall become subject to
termination for Cause, the Board of Directors shall give
Xxxxxx notice to that effect, which notice shall describe
the matter or matters
6
EMPLOYMENT AGREEMENT
Page 6
constituting such Cause. If, within thirty (30) days of
receipt of such notice, Xxxxxx has not substantially
eliminated or cured each such matter or matters, then the
Company shall have the right to give Xxxxxx notice of the
termination of his employment. Xxxxxx'x employment
hereunder shall be considered terminated for Cause as of
the date specified in such notice of termination unless and
until there is a final determination by a court of
competent jurisdiction that the cause of termination of
Xxxxxx'x employment did not exist at the time of giving
said notice of termination. Upon termination of Xxxxxx'x
employment for Cause, this Agreement shall terminate
without further obligations to Xxxxxx other than the
Company's obligation (i) to pay to Xxxxxx within thirty
(30) days after the date of termination that portion of
Xxxxxx'x aggregate compensation that is accrued through the
date of termination to the extent not theretofore paid and
(ii) to pay or provide to pay, to Xxxxxx on a timely basis
any other amounts or benefits required to be paid or
provided or which Xxxxxx is eligible to receive under any
plan, program, policy, practice, contract or
7
EMPLOYMENT AGREEMENT
Page 7
agreement of the Company to the extent not theretofore paid
or provided.
(b) WITHOUT CAUSE. The Company shall have the right to
terminate Xxxxxx'x employment hereunder without Cause at
any time during the Term. If the Board of Directors
determines to terminate Xxxxxx'x employment without Cause,
the Company shall give notice of such termination to
Xxxxxx, and Xxxxxx'x employment hereunder shall be
considered terminated without Cause as of the date
specified in such notice of termination. Upon termination
of Xxxxxx'x employment without Cause, Xxxxxx shall be paid
the following on the date of termination (except as
otherwise noted): (i) that portion of Xxxxxx'x aggregate
compensation and benefits that is accrued through the date
of termination to the extent not theretofore paid and (ii)
all cash payments that would have been payable to Xxxxxx
pursuant to Paragraph 2(a) had Xxxxxx remained employed by
the Company for one year following the date of termination
pursuant to this Paragraph.
8
EMPLOYMENT AGREEMENT
Page 8
(c) CHANGE OF CONTROL. In the event that Xxxxxx'x employment is
terminated in connection with a "change of control" of the
Company, in addition to the compensation described in
Paragraph 6(b) above, Xxxxxx shall be entitled to receive
cash compensation equal to the difference between the cash
compensation paid to him under Paragraph 6(b) above and the
cash compensation he would have received under the
Agreement had Xxxxxx remained employed by the Company
through the third anniversary of the Commencement Date.
Xxxxxx shall also be entitled to become vested in any
Options not previously vested under the terms of Paragraph
2 above. "Change of Control" shall mean the occurrence of
any of the following events:
(i) Any person (as that term is defined in Section 13
(d) of the Securities Exchange Act of 1934, as
amended) shall become the "beneficial owner" of
securities of the Company representing more than the
greater of (x) fifty-one percent (51%) of the
combined voting power of the Company's then
outstanding voting securities on a fully
9
EMPLOYMENT AGREEMENT
Page 9
diluted basis or (y) the largest percentage
shareholders on a fully diluted basis;
(ii) Any consolidation or merger to which the Company is
a party, if following such consolidation or merger,
the stockholders of the Company immediately prior to
such consolidation or merger shall not beneficially
own securities representing at least fifty-one
percent (51%) of the combined voting power of the
outstanding voting securities of the surviving or
continuing corporation on a fully diluted basis; or
(iii) Any sale, lease, exchange or other transfer (in one
transaction or in a series of related transactions)
of all, or substantially all, of the assets of the
Company, other than to an entity (or entities) of
which the Company or the stockholders of the Company
immediately prior to such transaction beneficially
own securities representing at least fifty-one
percent (51%) of the combined
10
EMPLOYMENT AGREEMENT
Page 10
voting power of the outstanding voting securities on
a fully diluted basis.
(d) BY XXXXXX. Xxxxxx may terminate his employment
hereunder at any time by retirement or resignation,
upon notice to the Company. Upon such termination by
Xxxxxx, no compensation for any period after the
date of such termination shall be payable to Xxxxxx.
7. COVENANTS.
(a) CONFIDENTIAL INFORMATION AND TRADE SECRETS. During Xxxxxx'x
employment by the Company, Xxxxxx will enjoy access to the
Company's "confidential information" and "trade secrets".
For purposes of this Agreement, "confidential information"
shall mean information which is not publicly available,
including, without limitation, information concerning
customers, material sources, suppliers financial
projections, marketing plans and operating methods.
Xxxxxx'x access to which derives solely from Xxxxxx'x
employment with the Company. For purposes of this
Agreement, "trade secrets" shall mean the Company's
processes,
11
EMPLOYMENT AGREEMENT
Page 11
methodologies and techniques known only to those employees
of the Company who need to know such secrets in order to
perform their duties on behalf of the Company. The Company
takes numerous steps, including these provisions, to
protect the confidentiality of its confidential information
and trade secrets, which it considers unique, valuable and
special assets.
(b) RESTRICTED USE AND NON-DISCLOSURE. Xxxxxx, recognizing the
Company's significant investment of time, efforts and money
in developing and preserving its confidential information,
shall not, during his employment hereunder and for a two
(2)-year period after the end of Xxxxxx'x employment
hereunder, use for his direct or indirect personal benefit
any of the Company's confidential information or trade
secrets. For a two (2)-year period after the end of
Xxxxxx'x employment hereunder, Xxxxxx shall not disclose to
any person any of the Company's confidential information or
trade secrets.
12
EMPLOYMENT AGREEMENT
Page 12
(c) RETURN OF THE COMPANY'S PROPERTY. Upon termination of
Xxxxxx'x employment with the Company, for whatever reason
and in whatever manner, Xxxxxx shall return to the Company
all copies of all writings and records relating to the
Company's business, confidential information or trade
secrets that are in Xxxxxx'x possession at such time.
(d) NON-COMPETITION. During Xxxxxx'x employment hereunder and,
in the event of a Change in Control or termination of
Xxxxxx'x employment for any reason other than for Cause,
for a period equal to the lesser of twelve (12) months or
the remainder of the original term of this Agreement,
Xxxxxx shall not engage, directly or indirectly, whether as
an owner, partner, employee, officer, director, agent,
consultant or otherwise, in any location where the Company
or any of its subsidiaries is engaged in business after the
date hereof and prior to the termination of Xxxxxx'x
employment, in a business the same or similar to, any
business now, or at any time after the date hereof and
prior to Xxxxxx'x termination, conducted by the
13
EMPLOYMENT AGREEMENT
Page 13
Company or any of its subsidiaries, provided, however, that
the mere ownership of 5% or less of the stock of a company
whose shares are traded on a national securities exchange
or are quoted on the National Association of Securities
Dealers Automated Quotation System shall not be deemed
ownership which is prohibited hereunder.
(e) NON-SOLICITATION. In the event of a Change in Control or
termination of Xxxxxx'x employment for any reason other
than for Cause, for the period equal to the lesser of
twelve (12) months or the remainder of the original term of
the Agreement, Xxxxxx shall not, directly or indirectly,
induce employees of the Company or any of its subsidiaries
to leave such employment with the result that such
employees would engage in business activities which are
substantially similar or are closely related to the
business activities such employee performed on behalf of
the Company and which compete against the Company.
14
EMPLOYMENT AGREEMENT
Page 14
(f) ENFORCEABILITY. The necessity of protection against the
competition of Xxxxxx and the nature and scope of such
protection has been carefully considered by the parties
hereto. The parties hereto agree and acknowledge that the
duration, scope and geograhic areas applicable to the
non-competition covenant in this Section 7 are fair,
reasonable and necessary, that adequate compensation has
been received by Xxxxxx for such obligations, and that
these obligations do not prevent Xxxxxx from earning a
livelihood. If, however, for any reason any court
determines that the restrictions in this Agreement are not
reasonable, that consideration is inadequate or that Xxxxxx
has been prevented from earning a livelihood, such
restrictions shall be interpreted, modified or rewritten to
include as much of the duration, scope and geographic area
identified in this Section 7 as will render such
restrictions valid and enforceable.
(g) EQUITABLE REMEDIES. Notwithstanding the provisions of
Paragraph 10 hereof, in the event of a breach or threatened
breach by Xxxxxx of any of
15
EMPLOYMENT AGREEMENT
Page 15
the covenants set forth in this Paragraph, the Company or
any of its affiliates shall be entitled to seek in any
court of proper jurisdiction all appropriate remedies,
including, without limitation, injunctive relief and
monetary damages.
(h) SURVIVAL. The covenants set forth in this Paragraph shall
survive termination of this Agreement.
8. ARBITRATION OF DISPUTES. Any controversy or claim, arising out of
or relating to this Agreement or the breach thereof shall be
settled by arbitration in the City of Cleveland, Ohio, in
accordance with the laws of the State of Ohio by three
arbitrators, one of whom shall be appointed by the Company, one by
Xxxxxx and the third by the first two arbitrators. If the first
two arbitrators cannot agree on the appointment of a third
arbitrator, then the third arbitrator shall be appointed by the
Chief Judge of the United States District Court for the Northern
District of Ohio. The arbitration shall be conducted in accordance
with the rules of the American Arbitration Association, except
16
EMPLOYMENT AGREEMENT
Page 16
with respect to the selection of arbitrators which shall be
provided in this paragraph. Judgment upon the award rendered by
the arbitrators may be entered in any court having jurisdiction
thereof. The Company shall pay all the fees and expenses of such
arbitrator and the other costs of arbitration. In addition, the
Company shall pay (or Xxxxxx shall be entitled to recover from the
Company, as the case may be) his reasonable attorneys' fees and
costs and expenses in connection with the successful enforcement
of any of his rights hereunder.
9. NOTICES. Any notice required or permitted pursuant to this
Agreement shall be deemed to have been properly given if in
writing and when delivered personally or by a national overnight
courier service or five business days after being sent by United
States mail, certified or registered, postage prepaid, addressed
as follows:
If to the Company:
Central Reserve Life Corporation
00000 Xxxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxx 0000
Attention: General Counsel
17
EMPLOYMENT AGREEMENT
Page 17
If to Xxxxxx:
Mr. Xxxxxxx Xxxxxx
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
or to such other place as either party may designate to the other
by written notice in accordance with this Paragraph.
10. NO WAIVER. No waiver of any breach of any of the terms or
provisions of this Agreement shall be construed or held to be a
waiver of any other breach, or waiver of, acquiescence in or
consent to any further or succeeding breach thereof.
11. ASSIGNMENT. This Agreement shall not be assignable by either party
without the written consent of the other party. This Agreement
shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, personal
representatives, successors and permitted assigns.
18
EMPLOYMENT AGREEMENT
Page 18
12. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Ohio, without regard
to its principles of conflicts of law.
13. SEVERABILITY. If any provision of this Agreement is held for any
reason to be invalid, it will not invalidate any other provisions
of this Agreement which are in themselves valid, nor will it
invalidate the provisions of any other agreement between the
parties hereto. Rather, such invalid provision shall be construed
so as to give it the maximum effect allowed by applicable law. Any
other written agreement between the parties hereto shall be
conclusively deemed to be an agreement independent of this
Agreement.
14. HEADINGS. Paragraph headings hereunder are for convenience only
and shall not affect the meaning or interpretation of the
provisions of this Agreement.
15. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original without
production of the others.
19
EMPLOYMENT AGREEMENT
Page 19
16. ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the entire
agreement and understanding among the parties hereto relating to
the subject matters hereof, and supersedes all previous written or
oral negotiations, commitments and writings with respect to the
subject matter hereof. This Agreement may be amended only by a
written instrument signed by each party hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
CENTRAL RESERVE LIFE CORPORATION
By: /s/ Xxx Xxxxx
---------------------------------
Its: EXECUTIVE VICE PRESIDENT
/s/ Xxxxxxx Xxxxxx
------------------------------------
Xxxxxxx Xxxxxx
