EXECUTIVE EMPLOYMENT AGREEMENT
EXHIBIT
10.35
This
EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”)
is
made November 21, 2006 between CITIZENS FINANCIAL CORPORATION, a Kentucky
corporation (“Employer”),
and
XXXX X. XXXXXXX, an individual currently residing in Houston, Texas
(“Employee”).
RECITALS
Employer
desires to employ Employee for the Employer Group, and Employee wishes to accept
such employment, upon the terms and conditions set forth in this
Agreement.
AGREEMENT
The
parties, intending to be legally bound, agree to the following terms and
conditions of Employee’s employment by Employer. Anything to the contrary
notwithstanding, however, this Agreement and any and all obligations hereunder
are subject to the condition precedent that all of Employee’s obligations under
the Xxxxxxx Employment Agreement dated April 1, 2006 between Employee and
American Capitol Insurance Company and any related agreements (excluding
continuing confidentiality obligations) shall have been fully and finally
terminated prior to the Effective Date. Employee undertakes to deliver to
Employer evidence of such termination in form and substance satisfactory to
Employer as soon as it becomes available.
1. DEFINITIONS
For
the
purposes of this Agreement, the following terms have the meanings specified
or
referred to in this Section 1.
“Agreement”
--
this
Executive Employment Agreement, as amended from time to time.
“Benefits”
--
as
defined in Section 3.3.
“Boards
of Directors”
--
the
boards of directors of the constituents of the Employer Group.
“Bonuses”
--
as
defined in Section 3.2.
“Change
in Control”
means
the occurrence of any of the following events:
(a) any
“person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rule 13d-3
of such Act), directly or indirectly, of securities of Employer representing
more than fifty percent (50%) of the total voting power represented by
Employer’s then outstanding voting securities, excluding
(A)
those persons and entities included in the Schedule 13D filed by Xxxxxxx X.
Xxxxx with the Securities and Exchange Commission with respect to Employer
securities, as heretofore and hereafter amended from time to time, and Xxxxxxxx
Xxx Xxxxx, his wife, and all current or
Page
1
of
19
future
heirs, successors and affiliates to and of such persons and all trusts or other
entities established or maintained, or to be established or maintained, for
the
benefit of such persons and their heirs, successors and affiliates
(collectively, the “Xxxxx
Family Interests”),
(B)
any employee benefit plan or related trust sponsored or maintained by Employer,
and (C) any corporation or other entity owned, directly or indirectly, by all
or
substantially all of the shareholders of Employer immediately prior to the
transaction in substantially the same proportions as their ownership of stock
of
Employer; provided, that, at the time of the acquisition of such beneficial
ownership interest, such person’s beneficial ownership interest in Employer
exceeds that of the Xxxxx Family Interests;
(b) the
consummation of the sale or disposition by Employer of all or substantially
all
of Employer’s assets, other
than
a sale
or disposition that would result in the voting securities of Employer
outstanding immediately prior thereto continuing to represent (by being
converted into voting securities of the acquiring corporation or entity or
its
parent) more than fifty percent (50%) of the total voting power represented
by
the voting securities of the acquiring corporation or entity or its parent
outstanding immediately after such sale or disposition; or
(c) the
consummation of a merger or consolidation of Employer with any other corporation
or entity, other
than
a merger
or consolidation that would result in the voting securities of Employer
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving corporation or entity or its parent) more than fifty percent (50%)
of
the total voting power represented by the voting securities of Employer or
such
surviving corporation or entity or its parent outstanding immediately after
such
merger or consolidation.
“Confidential
Information”
--
any
and all:
(a) trade
secrets concerning the business and affairs of the Employer Group, including
without limitation products, past, current, and planned research and
development, current and planned distribution methods and processes, customer
lists, agent lists, current and anticipated customer requirements, market
studies, business plans, computer software and programs (including object code
and source code), and any other information, however documented, that is a
trade
secret within the meaning of the Uniform Trade Secrets Act, KRS
365.880-.900;
(b) information
concerning the business and affairs of the Employer Group including without
limitation historical internal financial statements, financial projections
and
budgets, historical and projected sales data, the names and backgrounds of
key
personnel, and personnel training and techniques and materials, however
documented; and
(c) notes,
analyses, compilations, studies, summaries, and other material prepared by
or
for the Employer Group containing or based, in whole or in part, on any
information included in the foregoing.
“Contract
Year”
--
a
period of 12 months from the Effective Date or any anniversary
thereof.
Page
2 of
19
“disability”
--
as
defined in Section 6.2.
“Effective
Date”
--
January 1, 2007.
“Employee”
--
as
defined in the heading of this Agreement.
“Employee
Invention”
--
any
idea, invention, technique, modification, process, or improvement (whether
patentable or not) and any work of authorship (whether or not copyright
protection may be obtained for it) created, conceived or developed by Employee,
either solely or in conjunction with others, during the Employment Period,
or a
period that includes a portion of the Employment Period, that relates in any
way
to, or is useful in any manner in, the business then being conducted or proposed
to be conducted by the Employer Group, and any such item created by Employee,
either solely or in conjunction with others, following termination of Employee’s
employment with Employer, that is based upon or uses Confidential Information.
Notwithstanding the foregoing, Employee Invention does not include the business
process described in a certain provisional patent application filed with the
United States Patent and Trademark Office (the “Patent
Application”),
a
copy of which Employee has furnished to Employer on a confidential basis, and
any idea, invention, technique, modification, process, or improvement and any
work or authorship that developed by or for the business Employee and others
may
establish to prosecute the Patent Application and commercialize the business
process it describes.
“Employer”
--
as
defined in the heading of this Agreement.
“Employer
Group”
--
Employer and one or more of the Principal Subsidiaries.
“Employment
Period”
--
the
actual term of Employee’s employment by Employer, beginning on the Effective
Date and terminating as provided herein.
“for
cause”
--
as
defined in Section 6.3.
“for
convenience of Employer”
--
as
defined in Section 6.5
“for
good reason”
--
as
defined in Section 6.4.
“Nominal
Expiration Date”
--
as
defined in Section 2.2.
“person”
--
any
individual, corporation (including any non-profit corporation), general or
limited partnership, limited liability company, joint venture, estate, trust,
association, organization or governmental body.
“Post-Employment
Limitation Period”
--
as
defined in Section 9.3.
“President
of Employer”
--
Xxxxxxx X. Xxxxx and his successors in office as president of
Employer.
“Principal
Subsidiaries”
--
the
subsidiaries through which Employer may conduct insurance or related businesses
from time to time, presently consisting of (but without
Page
3
of
19
limitation)
Citizens Security Life Insurance Company, United Liberty Life Insurance Company,
Citizens Insurance Company and Citizens Security Benefit Services, Inc.
“Proprietary
Items”
--
as
defined in Section 8.2.
“Salary”
--
as
defined in Section 3.1.
2. EMPLOYMENT
TERMS AND DUTIES
2.1 Employment.
Employer hereby employs Employee, and Employee hereby accepts employment by
Employer, upon the terms and conditions set forth in this
Agreement.
2.2 Term.
The
term of Employee’s employment under this Agreement will begin on the Effective
Date and shall terminate on December 31, 2008 (the “Nominal
Expiration Date”).
The
Nominal Expiration Date shall be automatically extended for successive periods
of one year each ending on the next anniversary of the Effective Date, unless
either party shall give at least sixty (60) days notice of termination of this
Agreement as of the original or last extended Nominal Expiration Date. This
Agreement is subject to earlier termination as provided in Section 6.
2.3 Duties.
(a) Employee
will have such offices and duties for the Employer Group as are assigned or
delegated to Employee by the President of Employer or the Boards of Directors
of
the Employer Group, and will initially serve as executive vice president and
chief operating officer of Employer and as president and chief operating officer
of the Principal Subsidiaries.
(b) Employee
will devote substantially his entire business time, attention, skill and energy
exclusively to the business of the Employer Group in and from its executive
offices in Louisville, will use his best efforts to promote the success of
the
Employer Group’s business, and will cooperate fully with the President of
Employer and the Boards of Directors of the Employer Group in the advancement
of
the best interests of the Employer Group.
(c) Employee
may devote insubstantial amounts of time during Employer’s office hours, as such
office hours are listed from time to time in Employer’s Employee Handbook
(“Office
Hours”)
to the
business Employee and others may establish to prosecute the Patent Application
and commercialize the business process it describes. Employee may serve as
a
director and officer of the business but shall not engage in day-to-day
management and operation of the business. Employee shall maintain reasonably
detailed records of any time he devotes during Office Hours to the business
and
furnish such records to the President of Employer upon request. The President
of
Employer may present any concerns to Employee, who shall have five (5) days
to
provide assurances reasonably acceptable to the President of Employer regarding
the extent of his commitments to the business in the future. Employee may also
devote insubstantial amounts of time to activities in connection with personal
investments and
Page
4
of 19
community
affairs so long as they do not interfere with Employee’s duties under this
Agreement.
2.4 Relocation.
Employee agrees to relocate his family residence and domicile from Texas to
Kentucky not later than June 30, 2007, subject to extension for reasons beyond
the control of Employee (such as an unfavorable Houston real estate market)
with
the approval of Employer, which shall not be unreasonably withheld.
3. COMPENSATION
3.1 Salary.
During
the Employment Period, Employer will pay Employee a salary at the annual rate
of
$195,000.00 (the
“Salary”),
which
will be payable bi-weekly less withholding according to applicable law and
Employer’s customary payroll practices.
3.2 Bonuses.
Employer will pay the following additional sums to Employee (“Bonuses”):
(a) Employer
will pay Employee a guaranteed bonus of $60,000, less the amount of costs paid
or reimbursed by Employer pursuant to Section 4.2, and less withholding
according to applicable law and Employer’s customary payroll practices, on the
first regular payday falling next after January 1, 2008.
(b) During
the Employment Period, Employee shall be eligible to participate in bonus plans
established by the Board of Directors of Employer, in its discretion, for which
senior executives are generally eligible, on the same terms and conditions
applicable to other senior executives.
3.3 Benefits.
Employee will, during the Employment Period, be permitted to participate in
all
such life insurance, hospitalization, major medical and dental plans of Employer
that may be in effect from time to time, on the same terms and conditions under
which other senior executives of Employer are eligible under the terms of those
plans (collectively, the “Benefits”).
4. FACILITIES
AND EXPENSES
4.1 Standard
Items.
During
the Employment Period, Employer will furnish Employee suitable office space,
equipment, supplies and such other facilities and personnel (including an
assigned administrative assistant) for the performance of Employee’s duties
under this Agreement. Employer will pay on behalf of Employee (or reimburse
Employee for) actual and reasonable expenses incurred by Employee at the request
of, or on behalf of, Employer in the performance of Employee’s duties pursuant
to this Agreement, and in accordance with Employer’s employment policies, but
specifically including the following whether or not addressed in such employment
policies:
(a) charges
for cellular telephone usage not exceeding $1,000 per Contract Year;
Page
5
of
19
(b) continuing
education and license fees not exceeding $1,200 per Contract Year;
and
(c) use
of an
automobile supplied by Employer or an automobile expense allowance of $500
per
calendar month.
Employee
must file expense reports with respect to such expenses in accordance with
or
corresponding to Employer’s policies regarding expense
reimbursements.
4.2 Relocation
Expenses.
During
the first Contract Year, Employer will also pay on behalf of Employee (or
reimburse Employee for) actual expenses incurred by Employee in relocating
his
family residence and domicile from Houston to Louisville and interim living
expense in Louisville, including trips to and from Houston and Louisville,
up to
a maximum of $60,000.
5. VACATIONS
AND HOLIDAYS
Employee
will be entitled to paid vacation, holiday, personal, and sick days in
accordance with the policies of Employer in effect for its senior executives
from time to time, except that Employee’s paid vacation shall be not less than
four (4) weeks per Contract Year. Vacation may be taken by Employee at such
time
or times as reasonably chosen by the Employee, on notice to the President of
Employer.
6. TERMINATION
6.1 Events
of Termination.
Subject
to the other provisions of this Section 6, the Employment Period, Basic
Compensation, Bonuses, Benefits, and any and all other rights of Employee under
this Agreement or otherwise as an employee of Employer will terminate:
(a) on
the
Nominal Expiration Date;
(b) upon
the
death of Employee;
(c) upon
the
disability of Employee (as defined in Section 6.2) and its continuation for
sixty (60) consecutive days or ninety (90) days during any twelve (12) month
period, immediately upon notice from either party to the other;
(d) for
cause
(as defined in Section 6.3), immediately upon notice from Employer to Employee,
or at such later time as such notice may specify or at such earlier time as
Employee may then determine;
(e) for
good
reason (as defined in Section 6.4), immediately upon notice from Employee to
Employer;
(f) upon
the
resignation of Employee other than for good reason, upon not less than two
(2)
weeks notice from Employee to Employer or at such earlier time as Employer
may
then determine; or
Page
6
of
19
(g) for
the
convenience of Employer (as defined in Section 6.5), immediately upon notice
from Employer to Employee, or at such later time as such notice may specify
or
at such earlier time as Employee may then determine.
6.2 Definition
of Disability.
For
purposes of Section 6.1, Employee will be deemed to have a “disability”
if,
by
reason of a change in his physical or mental condition, Employee is unable
to or
does not perform Employee’s duties under this Agreement. Employer shall notify
Employee if Employer at any time claims that Employee has a disability. If
Employee contests Employer’s claim, the questions of the existence of the
claimed disability and the approximate date of its onset submitted to a medical
doctor selected by written agreement of Employer and Employee. If Employer
and
Employee cannot agree on the selection of a medical doctor, each of them will
select a medical doctor and the two medical doctors will select a third medical
doctor who will determine whether Employee has a disability. The professional
opinion of the medical doctor selected under this Section 6.2 will be binding
on
both parties as to the questions submitted. Employee must submit to a reasonable
number of examinations by the medical doctor selected under this Section 6.2,
and Employee hereby authorizes the disclosure and release to Employer of such
determination and all supporting medical records. If Employee is not legally
competent, Employee’s legal guardian or duly authorized attorney-in-fact will
act in Employee’s stead, under this Section 6.2, for the purposes of submitting
Employee to the examinations, and providing the authorization of disclosure,
required under this Section 6.2.
6.3 Definition
of “For Cause.”
For
purposes of Section 6.1, the phrase “for
cause”
means:
(a) Employee’s material breach of this Agreement, which breach continues for a
period of ten (10) days after Employer has given Employee written notice
thereof; (b) Employee’s failure to adhere to any written Employer policy
(including without limitation, its Code of Business Ethics and Conduct and
Xxxxxxx Xxxxxxx Policy) if Employee has been given a reasonable opportunity
to
comply with such policy or cure his failure to comply (which reasonable
opportunity must be granted during the ten (10) day period preceding termination
of this Agreement); (c) the failure for more than ten (10) days of Employer
and
Employee to agree on acceptable specific limitations on the time Employee may
devote to the business described in Section 2.3(c), (d) the appropriation (or
attempted appropriation) of a material business opportunity of the Employer
Group, including attempting to secure or securing any personal profit in
connection with any transaction entered into on behalf of the Employer Group,
except that this Section 6.3(d) shall not prohibit Employee’s purchase of equity
securities of Employer subject to its Xxxxxxx Xxxxxxx Policy and other generally
applicable policies; (e) the misappropriation (or attempted misappropriation)
of
any of the Employer Group’s funds or property; or (f) the conviction of, the
indictment for (or its procedural equivalent), or the entering of a guilty
plea
or plea of no contest with respect to, a felony, the equivalent thereof, or
any
other crime with respect to which imprisonment is a possible punishment.
6.4 Definition
of “For Good Reason.”
For
purposes of Section 6.1, the phrase “for
good reason”
means
(a) Employer’s breach of this Agreement, which breach continues for a period of
ten (10) days after Employee has given Employer written notice thereof, (b)
a
material reduction in the duties or title of Employee, (c) a relocation of
Employer’s offices in and from which Employee is expected to work beyond fifty
(50) miles from where such offices are located on the Effective Date of this
Agreement, and (d) a Change of Control.
Page
7
of
19
6.5 Definition
of “For Convenience of Employer.”
For
purposes of Section 6.1, the phrase “for
convenience of Employer”
means
a
termination by Employer for a reason other than pursuant to Section 6.1(c)
or
(d).
6.6 Termination
Pay.
Effective upon the termination of this Agreement, Employer will be obligated
to
pay Employee (or, in the event of his death, his designated beneficiary as
defined below) only such compensation as is provided in this Section 6.6, and
in
lieu of all other Salary or Bonus, which shall be in settlement and complete
release of all claims Employee may have against the Employer Group. For purposes
of this Section 6.6, Employee’s designated beneficiary will be Employee’s spouse
or such other individual beneficiary or trust located at such address, as
Employee may designate by notice to Employer from time to time. Notwithstanding
the preceding sentence, Employer will have no duty, under any circumstances,
to
attempt to determine whether any beneficiary designated by Employee is alive
or
to ascertain the address of any such beneficiary, to determine the existence
of
any trust, to determine whether any person or entity purporting to act as
Employee’s personal representative (or the trustee of a trust established by
Employee) is duly authorized to act in that capacity, or to locate or attempt
to
locate any beneficiary, personal representative or trustee.
(a) Termination
upon Nominal Expiration Date.
If this
Agreement is terminated because the term has reached the Nominal Expiration
Date
(as extended, if applicable) and has not been extended, Employer will pay
Employee his Salary through such Nominal Expiration Date. In addition, if the
Nominal Expiration Date is not extended because Employer gave a notice of
termination as contemplated by Section 2.2, Employer will continue to pay
Employee his Salary in bi-weekly installments for an additional period of three
(3) months after the Nominal Expiration Date. The parties agree that Employer’s
liability under this paragraph (a) is to be reduced by any unemployment
compensation benefits Employee may receive after termination and that Employer
may reduce its payments to the extent of any such benefits.
(b) Termination
upon Death.
If this
Agreement is terminated because of Employee’s death, Employer will pay Employee
his Salary only through the end of the pay period in which his death occurs.
If
such termination occurs prior to the payment of the bonus described in Section
3.2(a), Employer will also pay such bonus at the end of the pay period in which
such termination occurs.
(c) Termination
upon Disability.
If this
Agreement is terminated by either party as a result of Employee’s disability, as
determined under Section 6.2, Employer will pay Employee his Salary only through
the end of the pay period in which the effective date of such termination
occurs. If such termination occurs prior to the payment of the bonus described
in Section 3.2(a), Employer will also pay such bonus at the end of the pay
period in which such termination occurs.
(d) Termination
by Employer for Cause.
If
Employer terminates this Agreement for cause, Employer will pay Employee his
Salary only through the end of the pay period in which the effective date of
such termination occurs.
Page
8
of
19
(e) Termination
by Employee by Resignation Other than for Good Reason.
If
Employee terminates this Agreement by resignation other than for good reason,
Employer will pay Employee his Salary only through the end of the pay period
in
which the effective date of such resignation occurs.
(f) Termination
by Employee for Good Reason or by Employer for the Convenience of
Employer.
If
Employee terminates this Agreement for good reason or Employer terminates this
Agreement for the convenience of Employer, Employer will pay Employee his Salary
through the end of the pay period in which the effective date of such
termination occurs. In addition, at the option of Employee but subject to his
obligation in Section 9.2(b) and if the effective date of such termination
occurs prior to the Nominal Expiration Date (as extended if applicable),
Employer will continue to pay Employee his Salary in bi-weekly installments
for
an additional period of one year from the end of the pay period in which the
effective date occurs. If such termination occurs prior to the payment of the
bonus described in Section 3.2(a), Employer will also pay such bonus at the
end
of the pay period in which such termination occurs.
(g) Benefits.
Employee’s accrual of, or participation in plans providing for, the Benefits
will cease at the effective date of the termination of this Agreement, and
Employee will be entitled to accrued and post-employment Benefits, including
accrued vacation time, pursuant to such plans only as provided in such plans
or
applicable law (including without limitation “COBRA benefits”).
7. STOCK
PURCHASE AGREEMENT.
7.1 Purchase
Following Termination.
At
Employee’s request received within thirty (30) days following the termination of
this Agreement, other than a termination pursuant to Section 6.1(d) (Termination
by Employer for Cause) or 6.1(e) (Termination by Employee by Resignation Other
Than for Good Reason), and subject to the limitations hereinafter stated,
Employer shall use its best efforts to arrange for an offer or offers to
purchase for cash a number of shares designated by Employee of Employer’s Class
A Stock acquired by Employee after the date of this Agreement (“Employee
Class A Stock”),
in
one or more privately negotiated transactions with one or more third party
purchasers at a price or prices not less than the average of the reported
transaction prices per share for the Class A Stock in the preceding twenty
(20)
trading days on the principal trading market for the Class A Stock or, if there
is then no organized trading market for the Class A Stock, at the value per
share of the Class A Stock as determined by the most recent annual appraisal
of
the Class A Stock obtained by Employer in the ordinary course of business (which
Employer agrees to obtain in the event there no longer is an organized trading
market for the Class A Stock). If Employer is able to arrange such offers,
Employee shall sell all of the number of shares that he so designated at the
cash price or prices so offered and other usual and customary terms and
conditions. If despite its best efforts, Employer is unable to arrange for
such
offer or offers within ninety (90) days after its receipt of Employee’s request,
Employer shall, at Employee’s option, exchange the number of shares that he so
designated for shares of a new series of Class B Stock having the
characteristics substantially as described in Exhibit
A
attached
hereto and made a part hereof and valued at $100 per share for purposes of
the
exchange.
Page
9
of
19
7.2 Purchase
Following Change of Control.
At
Employee’s request received within thirty (30) days following a Change of
Control either [i] during the Employment Period or [ii] after a termination
of
the Employment Period other than pursuant to Section 6.1(d) (Termination by
Employer for Cause) or 6.1(e) (Termination by Employee by Resignation Other
Than
for Good Reason) but not later than December 31, 2016, and in either case
subject to the limitations hereinafter stated, Employer shall use its best
efforts to arrange for an offer or offers to purchase for cash all but not
less
than all shares of Employee Class A Stock acquired by Employee after the date
of
this Agreement, in one or more privately negotiated transactions with one or
more third party purchasers at a price or prices not less than the after-tax
economic equivalent of the consideration per share (in cash, securities or
other
property) received by the persons who transferred control. If Employer is able
to arrange such offers, Employee shall sell all such shares at the cash price
or
prices so offered and other usual and customary terms and conditions. If despite
its best efforts, Employer is unable to arrange for such offer or offers within
ninety (90) days after its receipt of Employee’s request, Employer shall, at
Employee’s option, exchange all such shares for shares of a new series of Class
B Stock having the characteristics substantially as described in Exhibit
A
attached
hereto and made a part hereof and valued at $100 per share for purposes of
the
exchange.
7.3 Employer’s
obligations under this Section 7 to arrange for offer or offers to purchase
or
to exchange shares of a new series of Class B Stock for shares of Employee
Class
A Stock shall be limited to a maximum of one hundred thousand (100,000) shares
of Employee Class A Stock so purchased or exchanged.
8. NON-DISCLOSURE
COVENANT.
8.1 Acknowledgments
by Employee.
Employee acknowledges that (a) during the Employment Period and as a part of
his
employment, Employee will be afforded access to Confidential Information; (b)
public disclosure of such Confidential Information could have an adverse effect
on the Employer Group and its business and/or violate or create liability under
federal securities laws and securities exchange regulations; (c) the Employer
Group will be at a substantial competitive disadvantage if it fails to acquire
exclusive ownership of each Employee Invention; and (d) the provisions of this
Section 8 are reasonable and necessary to prevent the improper use or disclosure
of Confidential Information and to provide Employer with exclusive ownership
of
all Employee Inventions.
8.2 Agreements
of Employee.
In
consideration of the compensation and benefits to be paid or provided to
Employee by Employer under this Agreement, Employee covenants as
follows:
(a) Confidentiality
(i) During
and following the Employment Period, Employee will hold in confidence the
Confidential Information and will not disclose it to any person except with
the
specific prior written consent of Employer or except as otherwise expressly
permitted by the terms of this Agreement.
Page
10
of
19
(ii) Any
trade
secrets of the Employer Group will be entitled to all of the protections and
benefits under the Uniform Trade Secrets Act (KRS 365.880-.900) and any other
applicable law. Employee hereby waives any requirement that Employer submit
proof of the economic value of any trade secret or post a bond or other
security.
(iii) None
of
the foregoing obligations and restrictions applies to any part of the
Confidential Information that Employee demonstrates was or became generally
available to the public other than as a result of a disclosure by
Employee.
(iv) Employee
will not remove from the Employer Group’s premises (except to the extent such
removal is for purposes of the performance of Employee’s duties at home or while
traveling, or except as otherwise specifically authorized by the President
of
Employer) any document, record, or computer software or code, whether embodied
in a disk or in any other form (collectively, the “Proprietary
Items”).
Employee recognizes that, as between Employer and Employee, all of the
Proprietary Items, whether or not developed by Employee, are the exclusive
property of Employer. Upon termination of this Agreement by either party, or
upon the request of Employer during the Employment Period, Employee will return
to Employer all of the Proprietary Items in Employee’s possession or subject to
Employee’s control, and Employee shall not retain any copies or other physical
embodiment of any of the Proprietary Items.
(b) Employee
Inventions.
Each
Employee Invention will belong exclusively to Employer. Employee acknowledges
that all of Employee’s Employee Inventions are works made for hire and the
property of Employer, including any copyrights, patents or other intellectual
property rights pertaining thereto. If it is determined that any such works
are
not works made for hire, Employee hereby assigns to Employer all of Employee’s
right, title, and interest, including all rights of copyright, patent and other
intellectual property rights, to or in such Employee Inventions. Employee
covenants that he will promptly:
(i) disclose
to Employer in writing any Employee Invention;
(ii) assign
to
Employer or to a party designated by Employer, at Employer’s request and without
additional compensation, all of Employee’s right, title, and interest to or in
Employee Invention;
(iii) execute
and deliver to Employer such applications, assignments, and other documents
as
Employer may request in order to apply for and obtain patents or other
registrations with respect to any Employee Invention;
(iv) sign
all
other papers necessary to carry out the above obligations; and
(v) give
testimony and render any other assistance but without expense to Employee in
support of Employer’s rights to any Employee Invention.
Page
11
of
19
8.3 Disputes
or Controversies.
Employee recognizes that should a dispute or controversy arising from or
relating to this Agreement be submitted for adjudication to any court,
arbitration panel, or other third party, the preservation of the secrecy of
Confidential Information may be jeopardized. All pleadings, documents,
testimony, and records relating to any such adjudication will be maintained
in
secrecy and will be available for inspection by Employer, Employee, and their
respective attorneys and experts, who will agree, in advance and in writing,
to
receive and maintain all such information in secrecy, except as may be limited
by them in writing.
9. NON-COMPETITION,
NON-SOLICITATION AND NON-INTERFERENCE
9.1 Acknowledgments
by Employee.
Employee acknowledges that: (a) the services to be performed by him under this
Agreement are of a special, unique, unusual, extraordinary, and intellectual
character; and (b) the provisions of this Section 9 are reasonable and necessary
to protect the Employer Group’s business.
9.2 Covenants
of Employee.
In
consideration of the acknowledgments by Employee, and in consideration of the
compensation and benefits to be paid or provided to Employee by Employer,
Employee covenants that he will not, directly or indirectly:
(a) during
the Employment Period, except as permitted in Section 2.3 and except in the
course of his employment hereunder, engage or invest in, own, manage, operate,
finance, control, or participate in the ownership, management, operation,
financing, or control of, be employed by, associated with, or in any manner
connected with, lend Employee’s name or any similar name to, lend Employee’s
credit to or render services or advice to, any business whose products or
activities compete in whole or in part with the products or activities of the
Employer Group anywhere; provided, however, that Employee may purchase or
otherwise acquire up to (but not more than) five percent of any class of
securities of any enterprise (but without otherwise participating in the
activities of such enterprise) if such securities are listed on any securities
exchange or have been registered under Section 12(g) of the Securities Exchange
Act of 1934;
(b) for
as long
as Employee is receiving salary continuation payments pursuant to Section
6.6(f), engage or invest in, own, manage, operate, finance, control, or
participate in the ownership, management, operation, financing, or control
of,
be employed by, associated with, or in any manner connected with, lend
Employee’s name or any similar name to, lend Employee’s credit to or render
services or advice to, any business whose products or activities compete in
whole or to any substantial degree with the products or third-party
administration activities of the Employer Group in any market; provided,
however, that Employee may purchase or otherwise acquire up to (but not more
than) five (5) percent of any class of securities of any enterprise (but without
otherwise participating in the activities of such enterprise) if such securities
are listed on any securities exchange or have been registered under Section
12(g) of the Securities Exchange Act of 1934.
(c) whether
for Employee’s own account or for the account of any other person, at any time
during the Employment Period and the Post-Employment
Page
12
of
19
Limitation
Period, solicit business of the same or similar type being carried on by the
Employer Group, from any person known by Employee to be a customer of the
Employer Group, whether or not Employee had personal contact with such person
during and by reason of Employee’s employment with the Employer
Group;
(d) whether
for Employee’s own account or the account of any other person (i) at any
time during the Employment Period and the Post-Employment Limitation Period
solicit as an employee or agent any person who is or was an employee or agent
of
the Employer Group at any time during the Employment Period or in any manner
induce or attempt to induce any employee or agent of the Employer Group to
terminate his employment or agency with the Employer Group; or (ii) at any
time
during the Employment Period and the Post-Employment Limitation Period,
interfere with the Employer Group’s relationship with any person, including any
person who at any time during the Employment Period was an employee or agent
of
the Employer Group; or
(e) at
any
time disparage the Employer Group or any of its shareholders, directors,
officers, employees, or agents.
9.3 Additional
Provisions.
(a) For
purposes of this Section 9, the term “Post-Employment
Limitation Period”
means
the one-year period beginning on the date of termination of Employee’s
employment with Employer.
(b) If
any
covenant in this Section 9 is held to be unreasonable, arbitrary, or against
public policy, such covenant will be considered to be divisible with respect
to
scope, time, and geographic area, and such lesser scope, time, or geographic
area, or all of them, as a court of competent jurisdiction may determine to
be
reasonable, not arbitrary, and not against public policy, will be effective,
binding, and enforceable against Employee.
(c) The
period of time applicable to any covenant in this Section 9 will be extended
by
the duration of any violation by Employee of such covenant.
(d) Employee
will, while the covenants under this Section 9 is in effect, give notice to
Employer, within ten (10) days after accepting any other employment, of the
identity of Employee’s employer. Employer may notify such employer that Employee
is bound by this Agreement and, at Employer’s election, furnish such employer
with a copy of this Agreement or relevant portions thereof.
10. GENERAL
PROVISIONS
10.1 Injunctive
Relief and Additional Remedy.
Employee acknowledges that the injury that would be suffered by the Employer
Group as a result of a breach of the provisions of this Agreement (including
any
provision of Sections 8 and 9) would be irreparable and that an award of
monetary damages to the Employer Group for such a breach would be an inadequate
remedy. Consequently, Employer will have the right, in addition to any other
rights it may have, to obtain injunctive relief to restrain any breach or
threatened breach or otherwise to specifically
Page
13 of
19
10.2 Covenants
of Sections 8 and 9 are Essential and Independent Covenants.
(a) The
covenants by Employee in Sections 8 and 9 are essential elements of this
Agreement, and without Employee’s agreement to comply with such covenants,
Employer would not have entered into this Agreement or employed or continued
the
employment of Employee. Employer and Employee have independently consulted
their
respective counsel and have been advised in all respects concerning the
reasonableness and propriety of such covenants, with specific regard to the
nature of the business conducted by the Employer Group.
(b) Employee’s
covenants in Sections 8 and 9 are independent covenants and the existence of
any
claim by Employee against the Employer Group under this Agreement or otherwise
will not excuse Employee’s breach of any covenant in Section 8 or
9.
(c) This
Agreement will continue in full force and effect after termination of Employee’s
employment as is necessary or appropriate to enforce the covenants and
agreements of Employee in Sections 8 and 9.
10.3 Representations
and Warranties by Employee.
(a) Employee
represents and warrants to Employer that the execution and delivery by Employee
of this Agreement do not, and the performance by Employee of Employee’s
obligations hereunder will not, with or without the giving of notice or the
passage of time, or both: (a) violate any judgment, writ, injunction, or order
of any court, arbitrator, or governmental agency applicable to Employee; or
(b)
conflict with, result in the breach of any provisions of or the termination
of,
or constitute a default under, any agreement to which Employee is a party or
by
which Employee is or may be bound, including without limitation any covenant
not
to compete.
(b) Employee
further represents and warrants that the information contained in the [i] resume
and [ii] completed Questionnaire for Prospective Officer heretofore furnished
by
Employee to Employer is true, correct and complete in all material respects
as
of the date of his signature of this Agreement.
10.4 Waiver.
The
rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by either party in exercising
any
right, power, or privilege under this Agreement will operate as a waiver of
such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege.
To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement can be discharged by one party, in whole or in part,
by a
waiver or
Page
14
of 19
10.5 Binding
Effect; Delegation of Duties Prohibited.
This
Agreement shall inure to the benefit of, and shall be binding upon, the parties
hereto and their respective successors, assigns, heirs, and legal
representatives, including the other members of the Employer Group and any
entity with which any member of the Employer Group may merge or consolidate
or
to which all or substantially all of its assets may be transferred. The duties
and covenants of Employee under this Agreement, being personal, may not be
delegated or assigned.
10.6 Notices.
All
notices, consents, waivers, and other communications under this Agreement must
be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by facsimile (with
written confirmation of receipt), provided that a copy is mailed by certified
mail, return receipt requested, or (c) when received by the addressee, if
sent by a nationally recognized overnight delivery service (receipt requested),
in each case to the appropriate addresses and facsimile numbers set forth below
(or to such other addresses and facsimile numbers as a party may designate
by
notice to the other parties):
| If to Employer: |
Citizens Financial Corporation
Suite 300
The Marketplace
00000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: President
Facsimile No.: 502/212-267
|
|
| If to Employee: |
Xxxx Xxxxxxx
00000 Xxxxxxxx Xx.
Xxxxxxx, XX 00000
Facsimile No.: 713/784-4845
|
10.7 Entire
Agreement; Amendments.
This
Agreement contains the entire agreement between the parties with respect to
the
subject matter hereof and supersedes all prior agreements and understandings,
oral or written, between the parties hereto with respect to the subject matter
hereof. This Agreement may not be amended orally, but only by an agreement
in
writing signed by the parties hereto.
10.8 Governing
Law.
This
Agreement will be governed by the laws of the State of Kentucky without regard
to conflicts of laws principles.
10.9 Jurisdiction.
Any
action or proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be brought against either of the parties
in
the courts of the State of Kentucky, County of Jefferson, or, if it has or
can
acquire
Page
15
of
19
10.10 Section
Headings, Construction.
The
headings of Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to “Section”
or “paragraph” or “Sections” or “paragraphs” refer to the corresponding parts of
this Agreement unless otherwise specified. All words used in this Agreement
will
be construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the word “including” does not limit the preceding
words or terms.
10.11 Severability.
If any
provision of this Agreement is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain
in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to
the
extent not held invalid or unenforceable.
10.12 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement as
of
the date above first written above.
|
|
|
|
|
CITIZENS
FINANCIAL CORPORATION
|
|
|
|
|
|
By:
/s/ Xxxxxxx X.
Xxxxx
Xxxxxxx
X. Xxxxx, President
|
|
|
|
|
|
|
|
|
/s/ Xxxx X. Xxxxxxx
XXXX
X. XXXXXXX
|
Exhibit
A
per Section 7
Attachments
per Section 10.3(b)
Employee’s
Resume
Employee’s
completed Questionnaire for Prospective Officer
Page
16
of
19
Exhibit
A
per Section 7
Summary
of Principal Terms of [INSERT YEAR OF ISSUANCE] Class B Convertible Preferred
Stock
|
Dividends:
|
The
holders of [INSERT YEAR OF ISSUANCE] Class B Convertible Preferred
Stock
(the “Class
B Stock”)
shall be entitled to receive, when and as declared by the Board
of
Directors, out of funds legally available therefor, cumulative
quarterly
dividends payable in cash on the first business day of January,
April,
July and October in each year, beginning [INSERT FIRST DAY OF NEXT
CALENDAR QUARTER AFTER ISSUANCE, E.G. “APRIL 1, 2010”], at the annual rate
of $5 per share (as adjusted for any stock dividends, combinations
or
splits with respect to such shares), and no more. Dividends payable
on the
Class B Stock for each full dividend period shall be computed by
dividing
the annual dividend rate by four (4). No dividends (other than
those
payable solely in Class A Stock) shall be paid on any shares of
Class A
Stock at any time and for so long as there shall not have been
declared
and paid (or set aside for payment) all amounts necessary to pay
in full
any arrearage in dividends on the Class B Stock.
|
|
Liquidation
|
|
|
Preference:
|
The
holders of Class B Stock shall be entitled to be paid, upon the
voluntary
or involuntary liquidation, dissolution or winding up of the corporation,
and before any distribution is made to the holders of Class A Stock
in
respect of such shares, an amount equal to $100 per share (such
amount
being the agreed issuance price per share of the Class B Stock)
(the
“Class
B Issuance Price”),
as adjusted for any stock dividends, combinations or splits with
respect
to such shares, plus all declared or accrued but unpaid dividends
thereon.
The voluntary sale, lease, exchange or transfer of all or substantially
all of the corporation’s property or assets to, or its consolidation or
merger with, one or more corporations shall not be deemed to be
a
voluntary or involuntary liquidation, dissolution or winding up
of the
corporation.
|
|
Redemption:
|
At
its option at any time, the corporation may redeem all of the outstanding
shares of Class B Stock by paying in cash therefor an amount equal
to the
Class B Issuance Price, as adjusted for any stock dividends, combinations
or splits with respect to such shares, plus all declared but unpaid
dividends thereon. The corporation shall give each holder of Class
B Stock
not less than fifteen (15) days prior written notice of its election
to
redeem all of the outstanding shares of Class B Stock; provided,
however,
that each holder may thereupon elect, by giving written notice
to the
corporation prior to the expiration of such fifteen (15) day period,
to
convert all of his or its shares of Class B Stock into Class A
Stock as
described below, whereupon the redemption right of the corporation
as
described in this paragraph shall terminate.
|
|
Conversion:
|
Each
share of Class B Stock shall be convertible, at the option of the
holder
thereof at any time, into such number of fully paid and nonassessable
shares of Class A Stock equal to the number of Class A Stock from
which
the Class B
|
Page
17 of 19
|
Stock
was originally converted (as adjusted for any stock dividends,
combinations or splits).
|
|
|
Voting:
|
The
holders of the Class B Stock shall be entitled to vote on all matters
presented to the holders of Class A Stock for a vote. The holder
of each
share of Class B Stock shall have the right to one (1) vote for
each share
of Class A Stock into which such share of Class B Stock could then
be
converted. Except as provided below under the heading “Restrictive
Covenant,” the holders of the Class A Stock and Class B Stock shall vote
together as one class.
|
|
Restrictive
|
|
|
Covenant:
|
So
long as any shares of Class B Stock remain outstanding, the corporation
shall not, without the vote or written consent of the holders of
at least
a majority of the Class B Stock, amend its Articles of Incorporation
or
Bylaws to change any of the preferences, limitations or relative
rights
provided for the benefit of the Class B
Stock.
|
Page
18
of
19
Attachments
per Section 10.3(b)
Employee’s
Resume
Employee’s
Completed Questionnaire for Prospective Officer
[Intentionally
Omitted]
Page 19 of 19
