XXXXXXX EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into by
and between AMERICAN CAPITOL INSURANCE COMPANY ("Employer"), a Texas life
insurance company, and XXXX X. XXXXXXX ("Employee"), an individual
resident of Houston, Xxxxxx County, Texas.
1. Employment. Employer hereby employs Employee to perform the
duties and render the services hereinafter set forth and Employee hereby
accepts said employment and agrees to perform and render said duties and
services faithfully and diligently, all upon the terms and conditions and
for the term hereinafter set forth.
2. Duties. During the term of this Agreement, Employee will,
during customary working hours, devote his full time and attention and
give his best efforts and skill exclusively to the business, progress,
success, profit, advantage, benefit and interests of Employer and its
parent, subsidiary and/or affiliated corporations in the capacity of
President, Chief Operating Officer and a director of Employer, and shall
diligently perform such tasks and services as from time to time may be
assigned to him by the Board of Directors of the Employer or the Executive
Committee of such Board, or as may be specified in the Bylaws of Employer,
or other reasonable duties all of which duties, tasks, and/or services
shall be such as are usually considered to be within the scope of the
position for which he is employed or to which he may be assigned.
3. Term. The term of Employee's employment under this Agreement is
three years and six months, commencing April 1, 1997, and ending
September 30, 2000, subject, however, to termination upon the occurrence
of any of the events specified in Section 8, 9 or 10 of this Agreement.
4. Compensation. As compensation for all services to be rendered
by Employee in any capacity hereunder, including services as a director or
officer of any parent, subsidiary, or affiliate of Employer as may be
properly designated or requested by Employer, Employer shall pay to
Employee a salary in equal semimonthly installments at an annual rate of
one hundred twenty thousand dollars ($120,000.00) per year.
5. Expenses. In addition to his base salary as provided in
paragraph 4, Employee shall be reimbursed for any and all reasonable costs
and expenses incurred by Employee in performance of his services and
duties as specified in this Agreement, including, but not limited to,
business expenses incurred in connection with travel and entertainment if,
and only if, such expenses are of a type deductible, in whole or in part,
by Employer for federal income tax purposes pursuant to the Internal
Revenue Code of 1986, as amended, and are otherwise within the travel and
entertainment expense guidelines published, from time to time, by Employer
for its executive officers and employees.
6. Employee Benefit Plans and Practices. During the term of this
Agreement, Employee shall have the right to participate in each of
Employer's benefit plans available to employees of Employer on terms
commensurate with Employee's position and compensation level, and
consistent with the terms of such plans. Employee shall also be entitled
to reasonable vacations, holidays and sick leave, as provided to other
officers of Employer and commensurate with his position and length of
service with Employer.
7. Other Benefits. The compensation and other benefits agreed to
be paid to Employee by Employer in this Agreement shall not operate in any
manner as a limitation of any type upon or as a direction, express or
implied, against the exercise by the Board of Directors of Employer, of
its power, authority and discretion to grant bonuses or other additional
direct or indirect benefits or compensation to or on behalf of Employee
if, in the business judgment of such Board, such action is in the best
interest of Employer.
8. Employee's Disability or Death.
(a) (1) In the event Employee shall, during the term of this
Agreement, become physically or mentally disabled (as hereinafter
defined), and if such disability may be reasonably expected to continue
for thirty (30) days or more, or in fact does continue for such period,
two-thirds of the semi-monthly salary payment provided in Section 4 hereof
shall be paid to him so long as he shall remain disabled during the
balance of the term of this Agreement.
(2) For federal income tax purposes, all payments provided for
in this section, to the extent that they do not represent disability
benefits provided under an insurance policy premiums for which are paid by
Employee, are intended to be taxable to Employee and deductible by the
Employer.
(3) Upon the return to full-time employment by the Employee
with the Employer within one hundred eighty (180) days from the date of
inception of disability, the Employee shall receive his full compensation
commencing with the first calendar month following his resumption of full-
time employment. If the period of disability continues beyond one hundred
eighty (180) days after the inception of disability and Employee is, in
the opinion of Employer's Medical Director, after consultation with
Employee's personal physician, unable to resume full-time employment with
the Employer, the Employer may, by notice in writing, terminate this
Agreement and the disability benefits specified in (1) above shall be paid
through the end of the term of this Agreement.
(4) For purposes of this paragraph 13, "full-time employment"
shall mean the amount of time and attention which is commensurate and
necessary to perform the functions an duties which Employee was performing
at the inception of disability.
(5) "Disability" shall mean the inability, either mental or
physical, to perform the necessary functions of the Employee's position of
employment with the Employer, by reason of the illness or incapacity of
Employee. Employee shall be deemed to be disabled for the purpose of this
Agreement if Employer's Medical Director, after consultation with a
licensed physician or physicians of Employee's choice, shall determine
that Employee, whether by reason of accident, illness or mental or
physical infirmity, is permanently no longer able to carry on with
adequate vigor and competence the duties assigned him under this
Agreement. Such determination shall be binding on Employer and Employee.
(b) Employer and Employee understand and agree that Employer carries
group disability insurance on behalf of Employee, premiums for which are
shared by Employer and Employee. As long as Employer maintains such
insurance coverage on behalf of Employee during the term of this
Agreement, Employee agrees to pay his share of the costs thereof at the
same proportional rate at which he is presently paying for such coverage.
All salary payments by Employer to Employee under this Section 8 shall be
reduced by the amount of any disability payments made to Employee during
the same period of disability and by reason of such disability from any
Employer plan then in effect and providing disability benefits.
Notwithstanding anything in this Section 8 to the contrary, any
determination of the disability of the Employee shall be made by the
carrier providing such disability insurance under the Employer plan then
in effect, and consistent with the definition of disability set forth in
the insurance policy funding such plan, and such determination will be
binding on Employer and Employee.
(c) In the event that Employee shall die during the term of this
Agreement, the Agreement shall terminate as of the last day of the
calendar month during which his death shall occur, and Employer shall pay
to the estate of Employee the compensation which would otherwise be
payable to Employee up to the end of the month in which his death occurs,
and no further payments hereunder will be due to the estate or heirs of
Employee.
9. Termination Without Cause. This Agreement may be terminated
without cause by Employer or Employee as follows:
9.1 By Employer. Without cause, Employer may terminate this
Agreement at any time upon sixty (60) days written notice to
Employee. If the date of such termination is prior to October 1,
1999, Employee shall receive a severance allowance equal to the base
salary specified in paragraph 4 of this Agreement, which shall be
paid to him in equal semi-monthly installments for a period of
eighteen (18) months following such termination. If the date of such
termination by Employer occurs during the term of this Agreement but
on or after October 1, 1999, Employer shall be obligated to continue
to pay Employee his base salary specified in paragraph 4 of this
Agreement for the number of months remaining between the date of such
termination and the end of the term of this Agreement, or a minimum
of six (6) months, whichever is greater. Notwithstanding the
foregoing, if during such severance allowance period, Employee shall
become employed or otherwise receives any earnings (other than
investment income), Employee shall notify Employer of the same, and
Employer shall reduce the sums otherwise due Employee pursuant to
this Section 9.1 by the amount of such earnings. Beginning not later
than 30 days following such termination, Employee shall use
reasonable efforts to become gainfully employed or to be gainfully
occupied so as to mitigate Employer's obligation to Employee as set
forth in this Section 9.1, provided, however, Employee shall be under
no obligation to seek out or accept any employment or gainful
occupation that is not commensurate with his experience or
profession. Any payments made by Employer to Employee under this
Section 9.1 shall be in lieu of any accrued vacation or other
benefits otherwise due Employee.
9.2 By Employee. Without cause, Employee may terminate this
Agreement upon thirty (30) days' written notice to Employer, at any
time on and after April 1, 2000. In such event, Employee shall
continue to render his services at the option of Employer up to the
effective date of termination and if such services are continued, he
shall be paid his regular compensation up to the date of his
termination, but no severance allowance shall be paid to him. Upon
the payment of regular compensation up to the effective date of his
termination (and payment for accrued, but unused vacation, if any),
all obligations of Employer to Employee hereunder shall be satisfied.
10. Termination for Cause. The Employer may terminate this
Agreement at any time for cause upon giving the Employee written notice of
such termination at least thirty (30) days prior to the date on which such
termination shall take effect. As used herein, "cause" shall mean any of
the following events:
(a) The Employee's conviction of, or plea of guilty or nolo
contendere to a felony or a crime involving moral
turpitude; or
(b) Willful misconduct or a substantial neglect of duties which
in the judgment of the Employer's Board of Directors may
adversely affect the Employer; or
(c) Upon the Employee's failure to perform substantially all of
the services reasonably required of him pursuant to this
Agreement for any reason, other than Employee's sickness,
disability, or absence for vacation or personal or family
emergency circumstances.
If the Employer terminates this Agreement pursuant to the provisions
of this Section, all salary and benefits due the Employee pursuant to this
Agreement shall be paid to Employee to the date of termination, and upon
such payment all obligations of Employer to Employee hereunder shall be
satisfied.
11. Disclosure of Information. Employee recognizes and acknowledges
that he will have access to certain confidential information and data of
the Employer and of corporations affiliated with Employer, and that such
information and data constitutes valuable, special and unique property of
the Employer. The Employee will not, during or after the term of this
Agreement, without the prior approval of the Board of Directors of
Employer, voluntarily disclose any such confidential information or data
to any person or firm, corporation, association or other entity, or use
such confidential information or data for any reason or purpose, otherwise
than for the benefit of Employer. As used herein, "confidential
information and data" means information disclosed to Employee or known by
Employee as a consequence of or through his employment by the Employer,
not generally known in the life and health insurance industry in which the
Employer is engaged, about the products, processes, systems and services
of Employer and its affiliated corporations, including, but not
necessarily limited to, computer programs and software, identities of and
information concerning companies or blocks of business that may be
available for acquisition, lists of policyholders and reinsurers, copies
of insurance policies and reinsurance agreements, information contained in
accounting or actuarial studies or reports performed by or at the request
of Employer and its affiliated corporations, and internal documents
relating to company policies, procedures, methods or positions. Upon
termination of his employment with the Company, all documents, records,
notebooks, and similar collections or compilations of such confidential
information or data, including all copies thereof, then in Employee's
possession or in the possession of third parties under the control of
Employee, whether prepared by him or others, will be delivered to the
Employer by Employee. The obligations of
this Section shall not apply to confidential information and data that:
(i) at the time of Employee's employment by Employer was in the public
domain; (ii) is or becomes generally available in the public domain other
than pursuant to a breach by Employee of his obligations under this
Section; or (iii) Employee can show was acquired, or is acquired after the
date of this Agreement, from a third party and such third party did not
obtain such confidential information and data from any Employee of
Employer subject to or in violation of obligations similar to those set
forth in this Section.
12. Other Employment. During the term of this Agreement, Employee
shall not, without the prior written approval of Employer, seek out,
engage in, negotiate for or accept any employment, commercial activity or
enterprise or gainful occupation with any other employer, person or
entity. Employee shall promptly report to Employer in writing any offer
of employment or proposal that Employee enter into negotiations leading to
an offer of employment received by Employee from any other party.
Notwithstanding anything to the contrary herein contained, at any time on
or after April 1, 2000, Employee may seek out, negotiate for and accept
employment or gainful occupation with any other employer, person or
entity. If Employee accepts such alternate employment or gainful
occupation he shall provide to Employer not less than one month advance
written notice specifying the date on which his employment with Employer
shall terminate, and at the end of such time, all obligations of Employer
to Employee or Employee to Employer hereunder shall terminate. During
such period beginning on or after April 1, 2000, while making reasonable
efforts to continue to perform his responsibilities for Employer, Employee
may devote such time in the office or outside of the office of Employer,
during or after regular office hours, as may reasonably be appropriate to
pursue alternate employment or gainful occupation, and for such purpose he
may make reasonable use of Employer's facilities and secretarial
assistance.
13. Other Permissible Activities. Notwithstanding any provision
herein contained, Employee shall not be prohibited from engaging in non-
profit, charitable or community activities, investing or trading in stocks
or bonds or other forms of passive investment for Employee's account or
family account, so long as such activities do not substantially interfere
with Employee's performance hereunder.
14. Purchase of Xxxxxxx Stock. Contemporaneously with the execution
of this Agreement, and in consideration of Employee's entry into this
Agreement with Employer, Employer and Employee agree to execute and enter
into a certain "Xxxxxxx Stock Purchase Agreement," in the form attached to
this Agreement as Exhibit A and made a part hereof, which shall survive
any termination of this Agreement as provided therein and be separately
enforceable by Employee in accordance with its terms.
15. Miscellaneous.
15.1 Notices. Any notice required or permitted under this
Agreement shall be in writing and shall be deemed to be delivered three
business days after deposit in the United States mail, postage prepaid,
certified or registered mail, return receipt requested, addressed as
follows:
If to Employer: American Capitol Insurance Company
00000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Guest
If to Employee: Xxxx X. Xxxxxxx
10922 Xxxxxxxx
Xxxxxxx, Xxxxx 00000
Notice given in any other manner shall be effective when received by
the addressee. The address for notice may be changed by notice given in
accordance with this provision.
15.2 Amendments. This Agreement and any attachments
incorporated by reference constitute the entire agreement between the
parties and may not be amended, supplemented, waived, or terminated except
by written instrument executed by the parties.
15.3 Waiver. No waiver of any provision of this Agreement
shall constitute a waiver of any other provision of this Agreement, nor
shall such waiver constitute a waiver of any subsequent breach of such
provision.
15.4 Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successor
and assigns. Notwithstanding anything herein to the contrary, this
Agreement is not assignable by Employee.
15.5 Governing Law. The validity, construction, and
enforcement of this Agreement shall be governed by the laws of the State
of Texas. In the event of a dispute concerning this Agreement, the
parties agree that venue lies in a court of competent jurisdiction in
Xxxxxx County, Texas.
15.6 Severability. If any provision of this Agreement is
declared unenforceable by a court of last resort, such declaration shall
not effect the validity of any other provisions of this Agreement.
15.7 Construction. The headings contained in this Agreement
are for reference purposes only and shall not affect this Agreement in any
manner whatsoever. Whenever required by the context, any gender shall
include any other gender, the singular shall include the plural, and the
plural shall include the singular.
15.8 Time for Performance. If the time for performance of any
obligation set forth in this Agreement falls on a Saturday, Sunday, or
legal holiday, compliance with such obligation on the next business day
following such Saturday, Sunday or legal holiday shall be deemed
acceptable.
15.9 Counterparts. This Agreement may be executed in multiple
and/or separate counterparts, each of which shall be deemed an original
but all of which shall be deemed one instrument.
15.10 Expenses. Employer shall pay legal fees incurred by
Employee in connection with the preparation of this Agreement.
15.11 Authorization. The making and performance by Employer of
this Agreement have been duly authorized by all necessary corporate
actions of Employer, and the undersigned representative of Employer is
fully empowered and authorized to execute this Agreement on its behalf.
This Agreement is executed to be effective as of April 1, 1997.
EMPLOYER:
AMERICAN CAPITOL INSURANCE COMPANY
By:/s/Xxxxxxx X. Guest
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Xxxxxxx X. Guest, Chairman
EMPLOYEE:
/s/Xxxx X. Xxxxxxx
-------------------------------
Xxxx X. Xxxxxxx
