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EXHIBIT 10.13
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement"), dated and effective as
of March 12, 1997 (the "Effective Date"), by and between Strategic Data
Systems, Inc. (the "Company"), a Wisconsin corporation, and Xxxxxx Xxxxxxxxxx
("Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to retain the services of Executive with
respect to the management of the Company's operations and the implementation of
the Company's business plan; and
WHEREAS, the Company considers the employment of Executive pursuant to
the terms of this Agreement to be in the best interests of the Company in order
to facilitate continuity of experienced management and wishes to assure that
Executive serves the Company by providing adequate compensation, incentives and
employment security in return for the services of Executive; and
WHEREAS, Executive is willing, on the terms and subject to the
conditions provided in this Agreement, to undertake the management
responsibilities contemplated herein, and furnish services to the Company as
provided herein.
NOW, THEREFORE, in consideration of the premises, the covenants,
representations and warranties herein contained and other good, valuable and
binding consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, the parties hereto agree as follows:
1. Employment Term. The employment term shall commence on the
Effective Date and shall be for a term of one year (the "Employment Term").
2. Responsibilities and Authority. The Company hereby employs
Executive to serve as its Chief Executive Officer. During the Employment Term,
Executive shall assume and discharge the responsibilities of the Chief
Executive Officer, as well as such other responsibilities as may be assigned to
him by the Board of Directors of the Company (the "Board of Directors").
3. Acceptance of Employment. Executive hereby accepts employment
by the Company on the terms and conditions herein provided and agrees, subject
to the terms of this Agreement, to devote substantially all of his business
time to advance the interests of the Company and perform the services of
Executive contemplated hereby. Notwithstanding the foregoing, the Company
acknowledges that Executive serves on certain boards and committees and that
this Section 3 is not intended to prohibit such service.
4. Compensation and Benefits. As compensation for his services
hereunder, Executive shall be entitled to the following amounts and benefits.
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4.1 Base Compensation. Executive shall receive a base
cash salary from the Company at the aggregate rate of $190,500 per
annum for the Employment Term. The compensation received by Executive
pursuant to this Section 4.1 shall be hereinafter referred to as "Base
Compensation." Base Compensation shall be payable in semi-monthly
installments on the first and sixteenth days of each month throughout
the Employment Term.
4.2 Annual Cash Incentives. During the Employment Term,
Executive shall be entitled to participate in the 1997 Annual Cash
Incentive Plan of MiliRisk, Inc. (f/k/a Millers Integrated Claims
Resources, Inc.) ("MiliRisk"), a copy of which has been provided to
Executive.
4.3 Annual Stock Incentives. During the Employment Term,
Executive shall be entitled to participate in the 1997 Management
Recognition Plan of MiliRisk, a copy of which has been provided to
Executive.
4.4 Stock Options. Executive shall be granted stock
options for 865 shares of common stock of MiliRisk pursuant to the
terms of a Stock Option Agreement granted under the MiliRisk 1997
Stock Option Plan, a copy of which has been provided to Executive.
4.5 Deferred Compensation.
4.5.1 The Company and Executive entered into a
Deferred Compensation Agreement, dated as of January 1, 1993
(the "Compensation Agreement"), whereby the Company agreed to
pay the Annual Benefit (as such term is defined in the
Compensation Agreement) to Executive depending on the vesting
of the Annual Benefit and the nature of the termination of
Executive's employment with the Company.
4.5.2 The Compensation Agreement shall hereby be
terminated and no longer in effect.
4.5.3 The Company shall pay to Executive, and if
Executive's spouse, Xxxxx X. Xxxxxxxxxx (the "Spouse"),
survives him, to Spouse, $40,000 per year during the 20-year
period commencing as of January 1, 1999 and ending on December
31, 2018 (the "Deferred Annual Compensation"). The Deferred
Annual Compensation shall be payable to Executive or to Spouse
if Spouse survives Executive in equal monthly installments on
or before the tenth (10th) day of each month.
4.5.4 If the death of the second to die of Executive
or Spouse or the contemporaneous deaths of Executive and
Spouse occur prior to the distribution to Executive and Spouse
of all amounts payable to them under Section 4.5.3 hereof as
Deferred Annual Compensation, any amounts otherwise payable
under Section 4.5.3 hereof to Executive and/or Spouse shall be
distributed to the duly designated beneficiary(ies) of the
second to die of Executive and Spouse or, in the
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event of their contemporaneous deaths, of Executive. All
beneficiary designations shall be made by Executive and Spouse
in such form and subject to such limitations as from time to
time may be prescribed by the Board of Directors and shall be
delivered to the Secretary of the Company. Executive and
Spouse from time to time may revoke or change any beneficiary
designation on file with the Company. If there is no
effective beneficiary designation on file with the Company at
the time of the death of the second to die of Executive and
Spouse or at the time of their contemporaneous deaths,
distribution of amounts otherwise payable to Executive or
Spouse, as the case may be, under Section 4.5.3 hereof shall
be made to the estate of the second to die of Executive and
Spouse or, in the event of their contemporaneous deaths, to
the estate of Executive. If a beneficiary designated
hereunder by Executive or Spouse to receive benefits payable
under Section 4.5.3 hereof shall survive Executive or Spouse,
as the case may be, but die before receiving all distributions
under Section 4.5.3 hereof, the balance thereof shall be paid
to such deceased beneficiary's estate, unless the beneficiary
designation of Executive or Spouse, as the case may be,
provides otherwise. The Company shall have no responsibility
with respect to the validity of any beneficiary designation
made by Executive or Spouse and shall be fully protected if it
acts thereon in good faith.
4.6 Fringe Benefits. During the Employment Term,
Executive shall be entitled to (i) participate in or receive benefits
under any employee benefit plan and/or arrangement applicable to all
management level employees of the Company generally, (ii) receive
reimbursement for all reasonable out-of-pocket expenses (including
incidentals) relating to the performance of his duties and obligations
under this Agreement, including, without limitation, business
entertainment at any location and all expenses relating to travel,
meals and accommodations while performing his duties and obligations
from locations other than from the Company's offices in Sheboygan,
Wisconsin; provided, however, that such expenses may be subject to any
advance authorization as may be determined from time to time by the
Chairman of the Board of the Company (the "Chairman of the Board")
consistent with corporate policies established by the Board of
Directors or the Chairman of the Board and (iii) in addition to the
usual public holidays, receive up to 22 days of vacation each calendar
year, provided however that unused vacation days may not be carried
forward to any succeeding calendar year.
4.7 Benefits as Compensation. Nothing paid to Executive
pursuant to Sections 4.2, 4.3, 4.4, 4.5 or 4.6 above shall be deemed
to be in lieu of any portion of the Base Compensation of Executive set
forth in Section 4.1 above.
5. Termination. This Agreement may be terminated upon the
following terms:
5.1 Termination Upon Death. In the event of Executive's
death during the Employment Term, this Agreement will terminate upon
the first day of the month following Executive's date of death. In
such event, Executive's estate shall be paid all amounts owed pursuant
to Section 5.5 hereof earned prior to termination of employment and
Section 4.5 hereof shall remain in full force and effect.
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5.2 Termination Upon Total Disability. The Company may
terminate this Agreement for "total disability" upon at least 30 days'
notice to Executive. As used herein, "total disability" means illness
or other physical or mental disability of Executive which shall
continue for a period of at least two months in the aggregate during
any 12-month period during the Employment Term, which such illness or
disability shall make it impossible or impracticable for Executive to
substantially perform his duties and responsibilities hereunder. If a
disagreement arises between Executive and the Company as to whether
Executive is suffering from "total disability", as defined herein, the
question of Executive's disability shall be determined by a physician
designated by the Company. In the event of termination of this
Agreement as a result of Executive's total disability, Executive (or
his legal representative) shall be paid all amounts owed pursuant to
Section 5.5 hereof earned prior to termination of employment and
Section 4.5 hereof shall remain in full force and effect.
5.3 Termination by the Company Without Cause. The
Company shall have the right to terminate Executive's employment at
any time, on 30 days' notice, without Cause (as defined in Section 5.4
hereof). In the event of termination of Executive's employment
without Cause (whether during or after the Employment Term), (a)
Executive shall be paid (i) all amounts owed pursuant to Section 5.5
hereof and (ii) the Base Compensation payable hereunder until the
later of the expiration of the Employment Term or six months after the
date of termination and payable in semi-monthly installments during
such period; and (b) Section 4.5 hereof shall remain in full force and
effect.
5.4 Termination by the Company for Cause. The Company
shall be entitled to terminate Executive's employment at any time for
Cause, as hereinafter defined, immediately upon written notice to
Executive. In the event of such termination for Cause, all of
Executive's rights and benefits provided for in this Agreement shall
then and thereupon terminate, except as expressly provided in Sections
4.5 and 5.5 hereof. For the purpose of this Agreement, "Cause" shall
mean, (i) the failure by Executive to remedy a breach of any of
Executive's material obligations under this Agreement within five
business days after receipt of written notice of such breach from the
Chairman of the Board or the Board of Directors, (ii) the arrest for,
or conviction of Executive of, a felony, (iii) the abuse of illegal
drugs or other controlled substances or the intoxication of Executive
during business hours, (iv) the unexcused absence by Executive from
Executive's regular job location for more than five consecutive days
or for more than the aggregate number of days permitted to Executive
under Company vacation and sick leave policies applicable to
Executive, (v) any conduct or activity of Executive deemed injurious
to the Company in the discretion of the Chairman of the Board or the
Board of Directors or (vi) the breach of Executive's representations
set forth in Section 18.1 of this Agreement.
5.5 Effect of Termination. Notwithstanding any other
provision of this Agreement, in addition to any other payments payable
to Executive under any other provision of this Agreement, within 15
days after the earlier of the date of termination of this Agreement
for any reason whatsoever or the date of expiration of the Employment
Term, the Company shall pay to Executive any accrued and unpaid
amounts for Base
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Compensation, benefits, or reimbursable expenses payable prior to the
date of termination of this Agreement.
6. Disclosure of Information. Executive hereby acknowledges that
he will have access to certain trade secrets and confidential information of
the Company and of corporations and/or other business enterprises directly or
indirectly owned, controlled and/or operated by the Company ("Affiliates") and
that such information constitutes valuable, special and unique property of the
Company and such corporations. Executive shall not, during or after the term
of his employment hereunder, disclose any such trade secrets or confidential
information to any person or entity for any reason or purpose whatsoever except
as may be required by law or use such confidential information for any purpose
not authorized by the Chairman of the Board. Confidential information shall
include (i) all information designated as confidential by the Chairman of the
Board and (ii) all information the disclosure of which Executive knows, or in
the exercise of reasonable care should know, would be damaging to the Company;
provided, however, that confidential information shall not include any
information known generally to the public (other than as a result of
unauthorized disclosure by Executive) or any information not otherwise
considered by the Chairman of the Board or the Board of Directors to be
confidential.
7. Agreement Not to Compete. Executive agrees that during the
term of his employment by the Company and for a period of 24 months following
the termination of his employment with the Company, he shall not, at any place
within the States in which the Company or its Affiliates is conducting business
operations at the time of such termination, without the prior written consent
of the Chairman of the Board, either in his own behalf or as a partner,
officer, director, employee, agent or shareholder (other than as the holder of
less than 10% of the outstanding capital stock of any corporation whose stock
is traded on a national securities exchange) engage in, be interested in or
render services to any business then competitive with the Company.
8. Agreement Not to Solicit Customers and Employees. Executive
agrees that during the term of his employment by the Company and for a period
of 24 months following the termination of his employment pursuant to this
Agreement, he shall not, either alone or on behalf of any business competing
with the Company or any Affiliate, directly or indirectly (i) solicit or
induce, or in any manner attempt to solicit or induce any person employed by,
or an agent of, the Company or any Affiliate to terminate his contract of
employment or agency, as the case may be, with the Company or any Affiliate, as
the case may be, or (ii) solicit, divert, or attempt to solicit or divert, as a
supplier or customer, any person, concern or entity which, as of the date of
termination or during the one year period prior thereto, furnishes products or
services to, or receives products and services from the Company or any
Affiliate, nor will he attempt to induce any such supplier or customer to cease
being (or any prospective supplier or customer not to become) a supplier or
customer of the Company or any Affiliate.
9. Termination of Rights in Other Plans. Executive has no
rights, compensation or benefits under any plan, agreement or arrangement of
the Company, except as provided in this Agreement. Any employment arrangements
or agreements between the Company and Executive that existed at any time prior
to the execution and delivery of this Agreement are hereby terminated.
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10. Injunctive Relief. In the event of a breach or threatened
breach by Executive of the provisions of this Agreement, the Company and any
Affiliate shall be entitled to an injunction without bond or security to
prevent irreparable injury to the Company or such Affiliate. Nothing herein
shall be construed as prohibiting the Company or such Affiliate from pursuing
any other remedies available to the Company or such Affiliate for such breach
or threatened breach, including the recovery of damages from the Executive.
11. Nature of Agreement. No right, title, interest, or benefit
hereunder shall ever be liable for or charged with any of the torts or
obligations of Executive or of any person claiming under Executive, or subject
to seizure by any creditor of Executive or any person claiming under Executive.
Neither Executive nor any person claiming under Executive shall have the power
to anticipate or dispose of any right, title, interest, or benefit hereunder in
any manner until the same shall have been actually distributed to him free and
clear of the terms of this Agreement.
12. Notice. For the purpose of this Agreement, notices and all
other communications to either party hereunder provided for in this Agreement
shall be in writing and shall be deemed to have been duly given when delivered
in person, sent by facsimile with the appropriate mechanical answerback
received, or mailed by first-class mail or airmail, postage prepaid, addressed:
In the case of the Company, to:
Strategic Data Systems, Inc.
000 Xxxxxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Chairman of the Board
Facsimile No. (000) 000-0000
with a copy to:
MiliRisk, Inc.
000 Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000-0000
Attention: F. Xxxxxx Xxxxxx, III
Facsimile No. (000) 000-0000
In the case of Executive, to:
Xxxxxx Xxxxxxxxxx
0000 Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
or to such other address as either party shall designate by giving written
notice of such change to the other party.
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13. Assignment. This Agreement and the rights and obligations of
the parties hereto shall bind and inure to the benefit of each of the parties
hereto, and shall also bind and inure to the benefit of Executive's heirs and
legal representatives and any successor or successors of the Company by merger
or consolidation and any assignee of all or substantially all of the Company's
business and properties; except as to any such successor or assignee of the
Company, neither this Agreement nor any duties, rights or benefits hereunder
may be assigned by the Company or by Executive without the express written
consent of Executive or the Company, as the case may be.
14. Arbitration. Any dispute arising hereunder between Executive
and the Company which cannot be resolved by them to their mutual satisfaction
within a period of two weeks, unless mutually extended, shall be submitted to
arbitration by a panel of three arbitrators in Chicago, Illinois in accordance
with the rules of the American Arbitration Association then in effect. The
results of such arbitration shall be binding and conclusive upon the parties
hereto, and judgment on the award may be entered at the instance of either
party in any court of competent jurisdiction. The arbitrators shall be
empowered to award interest at "floating" prime rate, retroactive to the date
of breach of this Agreement, upon any award and to award arbitration costs
including reasonable actual legal fees, in their discretion, to the prevailing
party.
15. Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of Wisconsin.
16. Modification. No modification or waiver of any provision
hereof shall be made unless it be in writing and signed by both of the parties
hereto.
17. Scope of Agreement. This Agreement constitutes the whole of
the agreement between the parties on the subject matter, superseding all prior
oral and written conversations, negotiations, understandings, and agreements.
18. Representations and Indemnity.
18.1 No Violation of Other Agreements. Executive
represents and warrants to the Company that the execution, delivery
and performance by Executive of this Agreement and compliance by
Executive with the provisions hereof will not require any consent,
approval or notice under, violate, conflict with, or result in a
breach of any provisions of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a
default) under any of the terms, conditions or provisions of any
agreement (including, without limitation, any prior employment
agreement or noncompete agreement with any other party), instrument,
undertaking or arrangement to which Executive is a party or any
judicial order, administrative decision or arbitration decision
applicable to Executive.
18.2 Indemnification Against Breach of Representations.
Executive shall indemnify and hold harmless the Company from and
against any claims, damages, expenses (including, but not limited to,
attorney's fees and other expenses), judgments, fines and amounts paid
in settlement incurred by the Company in connection with any
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threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative to which the Company
is a party or is threatened to be made a party by reason of or arising
out of any actual or alleged breach of Executive's representations set
forth in Section 18.1 above.
18.3 Nonexclusivity of Indemnification Provisions.
Indemnification pursuant to Section 18 hereof shall be in addition to
any other rights which the Company may have under corporate governance
documents, other agreements or applicable law. The Company's right to
indemnification under this Section 18 shall survive the termination of
this Agreement.
19. Severability. To the extent that any provision of this
Agreement may be deemed or determined to be invalid or unenforceable for any
reason, such invalidity or unenforceability shall not impair or affect any
other provision, and this Agreement shall be interpreted so as to most fully
give effect to its terms and still be valid and enforceable.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of March 12, 1997.
STRATEGIC DATA SYSTEMS, INC.
By: /s/ F. XXXXXX XXXXXX, III
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F. Xxxxxx Xxxxxx, III
Chairman of the Board
/s/ XXXXXX XXXXXXXXXX
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Xxxxxx Xxxxxxxxxx
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