Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made as of
July 7, 1997 by and among PREFERRED EMPLOYERS HOLDINGS, INC. (the "Company"),
having an address at 00000 Xxxxxxxx Xxxxxxxxx, 00xx Xxxxx, Xxxxx, Xxxxxxx 00000
and D. XXXX XXXXX, an individual having an address at 0000 Xxxxxxxxx Xxxxx,
Xxxxxxx, Xxxxxxx 00000 ("Xxxxx").
W I T N E S S E T H
WHEREAS, the Company and Xxxxx wish to set forth the terms and
conditions upon which Xxxxx shall hereinafter be employed by the Company.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Term. Xxxxx shall be employed by the Company commencing on
the date hereof and terminating three years from such date, unless sooner
terminated in accordance with the terms of this Agreement (such period is
referred to herein as the "Term").
2. Positions. During the Term, Xxxxx shall serve as the Vice
Chairman and Chief Operating Officer of the Company, reporting directly to the
Chief Executive Officer and the Board of Directors, and shall perform such
duties as shall be delegated to him by the Board of Directors, the Executive
Committee of the Board of Directors and the Chief Executive Officer of the
Company. Xxxxx shall receive notice of and may attend the meetings of the
Executive Committee of the Board of Directors of the Company when invited to
such meetings.
3. Compensation. (a) Xxxxx shall receive an annual salary of
$250,000 during the Term, which shall be payable in the same manner as the other
senior executives of the Company. Xxxxx shall also receive perquisites similar
to those perquisites made available to other senior executives of the Company.
(b) The Company and Xxxxx shall use their respective
best efforts to agree on a business plan within forty-five days from the date
hereof (the "Business Plan"), which shall be annexed hereto as Exhibit X. Xxxxx
shall receive bonus payments of up to $250,000 annually (the "Bonus Payments")
during the Term based on obtaining the objectives (the "Objectives") set forth
in the Business Plan, as follows:
(i) if Xxxxx achieves less than 75% of the
annual Objectives, Xxxxx shall not receive any Bonus Payments; provided,
however, that Xxxxx shall receive not
less than $50,000 in Bonus Payments for the first year of the Term (the
"Guaranteed Bonus Payment");
(ii) if Xxxxx achieves between 75% and 99%
of the annual objectives, Xxxxx shall receive 75% of the Bonus Payments; and
(iii) if Xxxxx achieves 100% of the annual
Objectives, Xxxxx shall receive 100% of the Bonus Payments
4. Expenses. (a) The Company will reimburse Xxxxx for up to
$10,000 for all reasonable costs and expenses incurred by Xxxxx in connection
with Xxxxx'x relocation to the Miami, Florida area, promptly upon presentation
to the Company of receipts for such costs and expenses.
(b) The Company will reimburse Xxxxx for the amount,
if any, by which the amount paid by Xxxxx for the purchase of his current
residence, plus capital improvements, exceeds the amount received by Xxxxx in
the sale of such residence, up to $25,000.
(c) The Company will reimburse Xxxxx for costs and
expenses of an automobile and club membership fees, in an amount not to
collectively exceed $12,000 annually.
(d) During the Term, Xxxxx shall be entitled to
prompt reimbursement of all reasonable business expenses in accordance with the
Company's policy for such reimbursements.
5. Time Commitment; Other Interests. (a) During the Term,
Xxxxx shall devote his full working time to the operations of the Company and
shall not, directly or indirectly, alone or as a member of a partnership, or as
an officer, director or shareholder of any other corporation, be engaged in any
other commercial duties or pursuits, except that nothing contained herein shall
prohibit Xxxxx from acquiring publicly traded securities of companies which are
involved, directly or indirectly, in the insurance industry, provided that such
securities are traded on a national securities exchange or on an over the
counter market and in no event shall Xxxxx'x ownership of such securities exceed
5% of the outstanding common stock of such company.
(b) It is acknowledged that Xxxxx is the sole
stockholder of Xxxxx Eagle Management and Xxxxx Consulting, two inactive
management consulting companies. Inasmuch, although Xxxxx is not actively
involved in these businesses and does not intend to spend any time in the future
in these businesses, Xxxxx continues to receive, from time to time, residual
fees for services previously performed. Receipts of these residual fees is
permitted and shall not be considered a conflict under the terms of this
Agreement.
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(c) It is further acknowledged that Xxxxx is an
accomplished and sought after public speaker. Inasmuch, Xxxxx is occasionally
asked to provide keynote addresses, typically on weekends, to corporations in
the securities and insurance industries. Xxxxx typically earns speaker's fees
for his appearances. Receipt of these fees is permitted and shall not be
considered a conflict under the terms of this Agreement provided they do not
impinge upon the time necessary for Xxxxx to provide his services hereunder.
Xxxxx is typically required to provide a biographical profile for inclusion in
the meeting's printed program and to wear a name badge identifying his employer.
Xxxxx agrees to identify his affiliation with the Company, thus providing the
Company valuable publicity within the securities and insurance industries.
6. Stock Options. (a) On the date hereof, (i) the Company has
granted stock options to Xxxxx which are exercisable for 37,500 shares of the
Company's Common Stock, and which are subject to the vesting schedule and other
terms and conditions contained in the Option Agreement by and between the
Company and Xxxxx, a copy of which is attached hereto as Exhibit B, and (ii)
Xxxxxx Xxxxx has granted stock options to Xxxxx which are exercisable for 37,500
shares of the Company's Common Stock, and which are subject to the vesting
schedule and other terms and conditions contained in the Option Agreement by and
among the Company, Xxxxxx Xxxxx, Xxxxx and Xxxx Marks & Xxxxx LLP, as escrow
agent, a copy of which is attached hereto as Exhibit C.
(b) On the date hereof, (i) the Company has granted
stock options to Xxxxx (the "Company Bonus Options") which are exercisable for
37,500 shares of the Company's Common Stock, and which are subject to the
vesting schedule and other terms and conditions contained herein and in the
Bonus Option Agreement by and between the Company and Xxxxx, a copy of which is
attached hereto as Exhibit D, and (ii) Xxxxxx Xxxxx has granted stock options to
Xxxxx (the "Odzer Bonus Options and, together with the Company Bonus Options,
the "Bonus Options") which are exercisable for 37,500 shares of the Company's
Common Stock and which are subject to the vesting schedule and other terms and
conditions contained herein and in the Bonus Option Agreement by and among the
Company, Xxxxxx Xxxxx, Xxxxx and Xxxx Marks & Xxxxx LLP, as escrow agent, a copy
of which is attached hereto as Exhibit E.
(c) Notwithstanding anything contained in the Bonus
Options, the vesting of the Bonus Options shall be adjusted based on Xxxxx
obtaining the Objectives set forth in the Business Plan, as follows:
(i) if Xxxxx achieves less than 75% of the
annual Objectives, none of the Bonus Options which would otherwise vest at the
end of such year shall vest;
(ii) if Xxxxx achieves between 75% and 99% of
the annual Objectives, 75% of the Bonus Options which would otherwise vest at
the end of such year shall vest;
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(iii) if Xxxxx achieves 100% of the annual
Objectives, 100% of the Bonus Options for such year shall vest; and
(iv) if Xxxxx achieves greater than 100% of the
annual Objectives, the amount of any Bonus Options which did not vest through
such date shall vest to the extent of the annual Objectives actually achieved,
in excess of the annual Objectives.
7. Change of Control of the Company. (a) In the event Xxxxx is
terminated (other than for Cause) in connection with a Change of Control (as
hereinafter defined) of the Company, Xxxxx (i) shall receive a lump sum payment
equal to his compensation, at the annual rate in effect at the time of such
Change of Control through the end of the Term, and (ii) all of the Options
(other than the Bonus Options) granted to Xxxxx shall immediately vest to the
extent such options would otherwise have vested by the end of the Term.
(b) As used in this Agreement, a "Change of Control"
shall mean any sale, merger, transfer or acquisition of the Company in which the
Company is not the surviving corporation.
8. Benefit Plans. Xxxxx shall be entitled to participate in
the Company's benefit plans in the same manner and subject to the same terms and
conditions as the other senior executives of the Company. The Company shall
reimburse Xxxxx for the cost of his COBRA coverage, which coverage shall not be
more broad than the coverage currently enjoyed by Xxxxx, for a period of 90 days
from the date hereof.
9. Non-Competition. For a period of one (1) year after the
Term, Xxxxx shall not, directly or indirectly, compete with or be engaged in the
same business as the Company, or be employed by, or act as consultant or lender
to, or be a director, officer, employee, owner or partner of, any business
organization which directly or indirectly competes with or is engaged in the
same business as the Company is in at the end of the Term; provided, however,
that Xxxxx shall be permitted to own no more than 5% of the outstanding common
stock of any company, the stock of which is traded on a national securities
exchange or on an over the counter market; provided, further, that nothing in
this Agreement shall prohibit Xxxxx from serving as an employee of or a
consultant to a diversified business organization which derives no more than 5%
of its consolidated gross revenues from a line of business competing with that
of the Company. Under no circumstances, however, may Xxxxx'x services to such
organization consist of any activities in competition with the business of the
Company.
10. Termination. (a) This Agreement may be terminated by the
Company at any time "For Cause." For purposes of this Agreement, "For Cause"
shall mean the following: (i) if Xxxxx has persistently and wilfully failed to
devote substantially all of his working time to the operations of the Company,
after specific notice to Xxxxx of such alleged failure and a 20 day opportunity
to cure, (ii) if Xxxxx has been convicted of (whether or not subject to appeal)
or plead "nolo contendere" or has made any similar plea to any criminal offense
involving a violation of federal or state securities laws or regulations,
embezzlement, fraud, wrongful taking
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or misappropriation of property, theft, or any other crime involving dishonesty,
(iii) if Xxxxx has violated or materially breached any material provision of
this Agreement, after specific notice to Xxxxx of such alleged violation or
breach and a 20 day opportunity to cure, (iv) if Xxxxx takes any action which
directly or indirectly causes the Company or any of its subsidiaries to have any
license, permit or other authorization necessary for the operations of its
business (a "License") to be suspended or revoked, (v) if the Company receives
any notice from any governmental or other agency which regulates the operations
of the Company or its subsidiaries which indicates that Xxxxx'x employment with
the Company could have an adverse affect on the ability of the Company or its
subsidiaries to retain or obtain any License or to otherwise conduct its
operations in the manner then conducted, or (vi) failure of Xxxxx to comply with
the terms of the Business Plan.
(b) In the event this Agreement shall be terminated
by the Company for any reason other than pursuant to Section 10(a) or Section 11
hereof, Xxxxx shall be entitled to receive all payments and benefits to which he
was entitled pursuant to this Agreement to the end of the Term excluding (i) any
Bonus Options which have not vested in accordance with their terms and as
adjusted pursuant to Section 6(c) hereof through such date, and (ii) any Bonus
Payments not earned through such date, except for the Guaranteed Bonus Payment..
(c) If the Company and Xxxxx are unable to agree on
the Business Plan within forty-five days from the date hereof, either party
shall be entitled to terminate this Agreement within ten days thereafter and
receive all payments and benefits to which he was entitled pursuant to this
Agreement through such termination date.
11. Disability; Death. (a) If, during the Term, Xxxxx becomes
physically or mentally disabled, whether by injury, illness or otherwise, so
that he is unable to perform his duties for a period of six successive months,
then the Company may, at its option, terminate this Agreement upon thirty days'
written notice to Xxxxx without further obligation; provided, however, that the
Company shall continue to pay Xxxxx his monthly salary until the earlier of (i)
the end of such period of disability and notice, or (ii) the end of the Term.
(b) In the event of Xxxxx'x death during the Term,
this Agreement shall terminate and be of no further force and effect, provided
that Xxxxx shall be entitled to all salary and other benefits to which he is
entitled through the date of death.
12. Authority; No Conflict. Xxxxx represents and warrants to
the Company that (a) he has the full power and authority to enter into this
Agreement and to perform his obligations hereunder, and (b) the execution,
delivery and performance by Xxxxx of this Agreement will not (i) violate,
conflict with, or result in a breach of any contract or other agreement by which
Xxxxx is bound, (ii) require Xxxxx to obtain the consent of, or give any notice
to, or make any filing with, any Federal, state, or local government, or any
agency thereof (a "Governmental Body"), or any other third person, or (iii)
violate any law, statute or other requirement of any Governmental Body.
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13. Miscellaneous. This Agreement (i) contains the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements of the parties, written or oral, of any nature
whatsoever, (ii) shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors, and (iii) shall be governed by
the laws of the State of Florida, without giving effect to the conflicts of law
provisions thereof.
14. Arbitration. Any dispute or controversy arising out of or
relating to this Agreement, any document or instrument delivered pursuant to, in
connection with, or simultaneously with this Agreement, or any breach of this
Agreement or any such document or instrument shall be settled by arbitration to
be held in the County of Dade, State of Florida in accordance with the
Commercial Arbitration Rules then in effect of the American Arbitration
Association or any successor thereto, and judgment upon the award rendered by
the Arbitrator(s) may be entered in an Court having jurisdiction thereof. The
Arbitrator(s) may grant injunctions or other relief in such dispute or
controversy. The costs and expenses of such arbitration shall be assumed as
determined by the Arbitrator(s), and each party shall separately pay his own
attorneys' fees and expenses.
15. Notices. Any notice or other communication to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or delivered against receipt to the party to whom it is to be
given at the address of such party set forth below.
Xx. Xxxxx: D. Xxxx Xxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
with a copy to:
Xxxx XxXxxxxx
Xxxxx & XxXxxxxx
00 Xxxx Xxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
The Company: 00000 Xxxxxxxx Xxxxxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
with a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxx Marks & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the date first written above.
PREFERRED EMPLOYERS HOLDINGS, INC.
By: /s/ Xxx Xxxxxx
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Xxx Xxxxxx
Chairman of the Board and
Chairman Chief Executive Officer
/s/ D. Xxxx Xxxxx
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D. Xxxx Xxxxx
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