EMPLOYMENT AGREEMENT
WHEREAS, Xxxxxx International Group, Inc. ("SIG") and Goran Capital
Inc. ("Goran") (collectively, SIG and Goran are referred to as the "Company")
consider it in their best interests to employ Xxxx X. Xxxxxx ("you" or the
"Executive") upon the terms and conditions hereinafter set forth; and WHEREAS,
the Executive is an individual with substantial experience in the business of
nonstandard automobile insurance;
WHEREAS, the Company desires to employ an executive who will make a
significant contribution to effect profitability in its nonstandard automobile
insurance business; and
WHEREAS, the Executive desires to be employed by the Company upon the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of the covenants and agreements set
forth below, the parties agree as follow:
1. Employment
1.1 Term of Agreement. The Company agrees to employ the Executive
as Executive Vice President of Goran, Executive Vice President
of SIG, and President of Superior Insurance Group, Inc.
("Superior") effective as of January 10, 2000 and continuing
for a period of sixty (60) months through January 10, 2005
unless such employment is terminated pursuant to Section 3
below; provided, however, that the term of the Agreement shall
automatically be extended without further action of either
party for additional one-year periods thereafter unless, not
later than six months prior to the end of the effective term,
either the Company or the Executive shall have given written
notice that such party does not intend to extend this
Agreement (the "Term").
1.2 Terms of Employment. During the Term, you agree to be a
full-time employee of SIG and Goran serving in the positions
of Executive Vice President of SIG and Goran and President of
Superior and further agree to devote substantially all of your
working time and attention to the business and affairs of the
Company and, to the extent necessary to discharge the
responsibilities associated with your position as Executive
Vice President of SIG and Goran and President of Superior, to
use your best efforts to perform faithfully and efficiently
such responsibilities. Executive shall perform such duties and
responsibilities as may be determined from time to time by the
Board of Directors of the Company, which duties shall be
consistent with the position of Executive Vice President of
SIG and Goran, which shall grant Executive authority,
responsibility, title and standing comparable to that of an
executive vice president of a publicly held insurance company.
Nothing herein shall prohibit you from devoting your time to
civic and community activities or managing personal
investments, as long as the foregoing do not interfere with
the performance of your duties hereunder.
1.3 Director. The Company will appoint the Executive as a member
of the Board of Directors of SIG and Superior at their first
meeting(s) following the effective date of this Agreement. The
Companies will provide Officers and Directors Liability
insurance in an amount equal to $10 million. The Executive
agrees to resign as a director of SIG and Superior and other
affiliates of the Company upon the termination or expiration
of this Agreement.
2. Compensation, Benefits and Prerequisites
2.1 Salary: During the term of this Agreement, the Company shall
pay Executive a salary at the minimum annual rate of Five
Hundred Thousand Dollars ($500,000). The salary shall be
payable in bi-weekly equal installments.
2.2 Bonus Plan:
A. Bonus A. Based on Superior's GAAP combined ratios, including
billing fees being below 100% and gross written premium for
2000 being greater than $250,000,000. A bonus of $25,000 per
.25% improvement in combined ratio (as an example at 98%
combined ratio the bonus would equal $200,000). For the year
2001 the gross written premium must exceed $300,000,000 and
grow thereafter at 15% per annum. A guaranteed minimum bonus of
$125,000 is payable should the combined ratio be 101.5% or
better for the year 2000. The minimum is increased to $166,000
at combined ratio of 100% for the year 2000. The minimum is
increased to $250,000 should the combined ratio be better than
99% for the year 2000. All of the above adjusted to eliminate
prior years' development. Payment of the bonus is based on
audit and actuary report of combined ratio with deficit or
credit of reserves for year 2000 forward adjusting the bonus
paid.
Bonus A is payable by April 15 of the year following the year on
which the bonus is based. The year 2000 bonus is payable by
April 15, 2001. The year 2001 bonus is payable by April 15, 2002
and so on and so forth.
B. Bonus B. In addition to the foregoing, should Superior equal or
exceed the pre-tax profit as shown below in the year shown
below a lump sum bonus as shown will be payable.
Year Ended
December 31, PRE-TAX PROFIT AT SUPERIOR BONUS PAYABLE
2000 $25,893,000 $500,000
2001 $29,777,000 $500,000
2002 $34,243,000 $500,000
2003 $39,380,000 $500,000
2004 $45,287,000 $500,000
Bonus B is payable by April 15 of the year following
the year on which the bonus is based. The year 2000
bonus is payable by April 15, 2001. The year 2001
bonus is payable by April 15, 2002 and so on and so
forth.
2.3 Stock Options. Executive shall be eligible to participate in
the Company's stock option plan and will be granted 100,000
options for shares of Goran at the market price on the first
day of the Term. Executive's stock options shall be issued
pursuant to the Goran Capital Inc. Share Option Plan and a
Stock Option Agreement with respect thereto which shall be
substantially in the Form of Exhibit A attached hereto. These
options shall vest and become exercisable by the Executive
pro-rata over a five (5) year period from the date of grant.
However, should the Executive be terminated for other than
material cause, the options shall vest immediately and
Executive may exercise such options within four (4) weeks of
the date of termination of employment. In the event Executive
shall fail to exercise the options within four (4) weeks of
termination of employment, the options shall expire.
2.4 Privatization: Should the majority stockholders of Goran
complete a privatization of SIG and Goran, the Executive will
be entitled to an ownership interest in the new entity. The
Executive's ownership interest shall be in the form of stock
options in the parent holding company of Superior (the "New
Entity"). Executive will be entitled to options which equal
2.5% of the ownership interests of the New Entity. The
exercise price of the options in the New Entity shall be based
upon the value of the Company at the time of the
privatization. As a condition of the grant of such replacement
options, the options referred to in paragraph 2.3 shall be
canceled and any shares of stock of Goran which have
theretofore been issued upon the exercise of the options
referred to in paragraph 2.3 shall be exchanged for the
replacement options all as more fully set forth in the Stock
Option Agreement. The vesting period of such replacement
options will be over the remaining initial term of this
Agreement. The amount of the exercise price of such
replacement options shall be based upon a formula which shall
be the same formula utilized for valuing the options of other
executives of the Company in comparable positions, including
the president and chief operating officer of the Company.
Should the Company authorize and/or issue additional stock the
Executive will be issued additional stock sufficient to
maintain a 2.5% interest in the Company. There shall be no
dissolution of interest without the Executive's express
written consent.
In the event Executive elects or is required to sell his
vested options or shares to the Company or New Entity, the
price for each option or share shall be as determined by the
Company pursuant to the Company's plan for its Executives as
determined by the Board of Directors and which shall be
comparable to those of similar entities. Notwithstanding the
foregoing, the value of such options or shares shall be
determined in accordance with the same formula or price
utilized for valuing the options or shares of other executives
of the Company in comparable positions, including the
president and chief executive officer of the Company.
2.5 Employee Benefits: The Executive shall be entitled to
receive all benefits and prerequisites which are comparable
to those provided to other Executives of the Company and in
accordance with the policies of the Company.
2.6 Additional Perquisites: During the term of this Agreement,
the Company shall provide the Executive with:
A. A minimum of six (6) weeks paid vacation during each calendar year.
B. A monthly motor vehicle allowance equal to the value of a
luxury car or the Company will provide the Executive with a
luxury car (Defined as a BMW 740iL or its equivalent.) and
will reimburse for all operational expenses. Executive will be
entitled to trade the car in at the time the car has in excess
of 75,000 miles or four (4) years, whichever first occurs.
C. Monthly dues incurred by Executive at the country club and
city club of his choice located within reasonable geographic
limits of the corporate offices of the Company, including the
entrance fees to become a member of the country club and city
club.
2.7 Expenses: During the period of the Executive's employment
hereunder, the Executive shall be entitled to receive
reimbursement from the Company (in accordance with the
policies and procedures in effect for the Company's Executive
employees) for all reasonable travel, entertainment and other
business expenses incurred by him in connection with his
services hereunder.
2.8 Insurance: The Company will allow the Executive to include in
his expense account the cost of personal insurance for up to
two (2) private cars, homeowner's insurance on his principal
residence in the city of employment of the Executive,
including $2 million umbrella liability.
2.9 401(k): Executive will be eligible for the SIG 401(k) plan in
accordance with the policies of the Company.
2.10 Hiring Bonus: The Company will pay Executive Two Hundred Fifty
Thousand Dollars ($250,000) upon commencement of employment.
Should the Executive leave the Company within the first twelve
(12) months of employment, including termination for material
cause, and excluding termination by the Company, the Executive
shall immediately reimburse the Company the sum of Twenty
Thousand Eight Hundred Dollars ($20,800) for each remaining
month of the first twelve (12) months of employment
2.11 Relocation Expense
A. Company will cover the direct costs of moving the Executive
and his family from Dallas, Texas to Indianapolis, Indiana,
including visits to Indianapolis, packing, moving costs,
insurance and unpacking.
B. Company will pay realtor fees up to 7% on the sale of the Dallas home.
C. Company will pay all closing costs on an Indianapolis home and buy
down the mortgage to 6.75% for a mortgage loan of up to $300,000.
D. Company will hire a relocation firm or give you a minimum
price on your home based on fair market value. If your Dallas
home does not sell within 120 days of the agreed move date,
the Company will purchase the home at the agreed fair market
value or the relocation firm will take it over. The Company
will help with any bridging loans required.
E. Company will reimburse the Executive for weekly travel to and from
Dallas until the relocation is complete.
3. Termination of Executive's Employment
3.1 Termination of Employment and Severance Pay. The Executive's
employment under this Agreement may be terminated by
either party at any time for any reason.
In the event Executive is terminated for any reason other than
for material cause, the Executive shall be entitled to receive
a continuation of his salary and benefits in effect under this
Agreement on the date of his employment termination for a
period of two (2) years provided that the Executive has not
breached the terms of this Agreement. Should the Executive be
terminated by the Company for other than material cause, all
of Executive's stock options shall immediately vest and
Executive shall be entitled to exercise the options within
four (4) weeks of termination. If Executive shall fail to
exercise the options within four (4) weeks of termination of
employment, the options shall expire. All bonuses that shall
have become earned as of the most recently preceding year end
shall be due and payable in accordance with the bonus payment
dates as set forth in Section 2.2 hereof. Bonuses, which would
have been earned for the year in which the Executive is
terminated, shall be paid pro rata to the date of termination.
Termination shall be effective as of the date specified by the
party initiating the termination in a written notice delivered
to the other party.
In the event this Agreement is not renewed by Company,
Employee shall be entitled to receive a continuation of his
salary and benefits in effect under this Agreement on the date
of non-renewal for a period of one (1) year from the date of
such non-renewal provided that the Executive has not breached
the terms of this Agreement.
Upon termination of employment by the Executive, for whatever
reason, the Executive will not be entitled to receive any
further salary, benefits or bonuses and all stock options
which have not then vested shall expire.
3.2 Change of Control. Notwithstanding any other provisions of
this Agreement, if (i) a Change of Control shall occur; and
(ii) within twelve (12) months of any such Change of Control,
(a) Company (including its successors, if any) shall require
Executive to perform his duties and obligations pursuant to
this Agreement in a location other than the city of employment
of Executive at the time of such Change of Control, or (b)
Company (including its successors, if any) shall materially
change the duties, authority or responsibilities of Executive
such that the same are materially inconsistent with the
duties, authority or responsibilities of Executive at the time
of such Change of Control, then Executive's employment under
this Agreement shall be deemed to have terminated for other
than material cause pursuant to Section 3.1 hereof, and
Executive shall be entitled to receive salary, benefits and
rights with respect to stock options as provided in such
Section 3.1.
"Change of Control" shall mean the inability of the Xxxxxx
family to cause the election of a majority of the members of
the Board of Directors of Goran or their respective
successors.
3.3 Transition of Duties. Should the Executive terminate his
employment with the Company, the Executive will make himself
readily available to the Company for a reasonable period of
time, at the Company's discretion, to facilitate the
transition of information and knowledge to a new executive. At
the discretion of the Company, this period shall be a maximum
of six (6) weeks following notice of termination.
3.4 Material Cause: For purposes of this Agreement, "material
cause" shall mean only the following: (i) the committing of
any act by Executive which would be considered a criminal
offense (other than minor traffic violations) or conviction of
or admission to conversion of Company assets in an amount
greater than Five Thousand Dollars ($5,000)) under the laws of
either Indiana or the United States of America; (ii) the
failure by Executive to perform his material duties under this
Agreement (excluding nonperformance resulting from Executive's
disability) or disobedience to lawful directives from those
persons or bodies outlined in Section 1.2 which have the
authority to determine and direct Executive's work and
activities where such failure is not cured by Executive within
fifteen (15) days of his receipt of written notification from
Company specifying Executive's failure or breach and the steps
the Executive must take to cure that failure or breach;
however, during the fifteen (15) days the Company has the
option to put the Executive on leave of absence with pay; or
(iii) disability as provided in Section 3.5.
3.5 Disability: So long as otherwise permitted by law, if
Executive has become permanently disabled from performing his
duties under this Agreement, the Company's Chairman of the
Board may, in his discretion, determine that Executive will
not return to work and terminate his employment as provided
herein. Upon any such termination for disability, Executive
shall be entitled to such disability, medical, life insurance,
and other benefits as may be generally provided for disabled
employees of Company during the period he remains disabled.
Permanent disability shall be determined pursuant to the terms
of Executive's long term disability insurance policy provided
by the Company. If Company elects to terminate this Agreement
based on such permanent disability, such termination shall be
deemed to be for material cause.
Non-Competition, Confidentiality and Trade Secrets
4.1 Agreement Not To Compete: Until the expiration of the term of
this Agreement or for a period of two (2) years after the date
that the Executive's employment with the Company terminates,
whichever period is the later, the Executive will not, unless
he receives prior written approval of the Board of Directors
of the Company, directly or indirectly engage in any of the
following actions:
A. Directly or indirectly, attempt to move or transfer
business greater than 5% of the aggregate amount of
gross sales, revenues or earnings before taxes of the
Company; or
B. Directly or indirectly hire, solicit for hire or
engage in an activity that would entice employees of
the Company to move to a competitor or to a company
or business where the Executive has become employed;
or
C. Intentionally cause material damage to the Company.
4.2 Confidentiality: You shall not knowingly disclose or reveal to
any unauthorized person, during or after the Term, any trade
secret or other confidential information relating to the
Company or any of its affiliates, which you acquired during
your term of employment, or any of their respective businesses
or principals, and You confirm that such information is the
exclusive property of the Company and its affiliates. You
agree to hold as the Company's property all memoranda, books,
papers, letters and other data, and all copies thereof or
therefrom, in any way relating to the business of the Company
and its affiliates, whether made by You or otherwise coming
into Your possession and, on termination of Your employment,
or on demand of the Company at any time, to deliver the same
to the Company.
Any ideas, processes, characters, productions, schemes,
titles, names, formats, policies, adaptations, plots, slogans,
catchwords, incidents, treatment, and dialogue which You may
conceive, create, organize, prepare or produce during the
period of Your employment and which ideas, processes, etc.
relate to any of the businesses of the Company, shall be owned
by the Company and its affiliates whether or not You should in
fact execute an assignment thereof to the Company, but You
agree to execute any assignment thereof or other instrument or
document which may be reasonably necessary to protect and
secure such rights to the Company. Material knowledge and
information you bring to the Company are specifically excluded
from this Agreement
5. Miscellaneous
5.1 Mutuality. This Agreement is mutually binding on Goran
and SIG.
5.2 Binding Effect. This Agreement is binding on all assignees and
/or successors of the Company.
5.3 Amendment. This Agreement may be amended only in writing,
signed by both parties.
5.4 Entire Agreement. This Agreement contains the entire
understanding of the parties with regard to all matters
contained herein. There are no other agreements, conditions or
representations, oral or written, expressed or implied, with
regard to the employment of Executive or the obligations of
the Company or the Executive. This Agreement supersedes all
prior employment contracts and non-competition agreements
between the parties.
5.5 Notices. Any notice required to be given under this Agreement
shall be in writing and shall be delivered either in person or
by certified or registered mail, return receipt requested. Any
notice by mail shall be addressed as follows or to such other
address as shall be specified in writing:
If to the Company, to:
Xxxxxx International Group, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
If to Executive, to:
Xx. Xxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
5.6 Waiver of Breach. Any waiver by either party of compliance
with any provision of this Agreement by the other party shall
not operate or be construed as a waiver of any other provision
of this Agreement, or of any subsequent breach by such party
of a provision of this Agreement.
5.7 Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
5.8 Governing Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of
Indiana, without giving effect to conflict of law principles.
5.9 Headings. The headings of articles and sections herein are
included solely for convenience and reference and shall not
control the meaning or interpretation of any of the provisions
of this Agreement.
5.10 Counterparts. This Agreement may be executed by either of the
parties in counterparts, each of which shall be deemed to be
an original, but all such counterparts shall constitute a
single instrument.
5.11 Survival. Company's obligations under Section 3.1 and
Executive's obligations under Section 4 shall survive the
termination and expiration of this Agreement in accordance
with the specific provisions of those Sections.
5.12 Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by You and such
officer as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior
subsequent time.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the _____ day of December, 1999.
GORAN CAPITAL INC.
By: _____________________________
Title: _____________________________
XXXXXX INTERNATIONAL GROUP, INC.
By:__________________________________
Title:________________________________
XXXX X. XXXXXX
("Executive")
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