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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), made and entered into
this 1st day of July, 2000, to be effective on July 1, 2000 (the "Effective
Date"), by and between INSpire Insurance Solutions, Inc., a Texas corporation
("Employer"), and Xxxxxx X. Xxxx, a resident of Texas ("Employee").
WITNESSETH:
WHEREAS, Employer is a corporation engaged in business in the State of
Texas and throughout the United States;
WHEREAS, Employer desires to employ Employee in the capacity of
Executive Vice President and Chief Technology Officer, upon the terms and
conditions hereinafter set forth; and
WHEREAS, Employee is willing to enter into this Agreement with respect
to his employment and services upon the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained herein, Employer hereby employs Employee and Employee
hereby accepts such employment upon the terms and conditions hereinafter set
forth:
1. Term of Agreement. The term of this Agreement shall commence on the
effective date of this Agreement and shall terminate on July 1, 2001. The term
of this Agreement shall automatically be extended for additional one-year
periods commencing on July 1, 2001 and on each July 1 thereafter, unless either
Employee or Employer gives written notice to the other on or before April 1,
2001 or any April 1 thereafter of his or its intention not to extend this
Agreement.
2. Duties of Employee.
(a) Executive Vice President and Chief Technology Officer.
Employee agrees that during the term of this Agreement, he will devote
his full professional and business-related time, skills and best
efforts to the businesses of Employer in the capacity of Executive Vice
President and Chief Technology Officer, or such other capacity as
Employer and Employee may agree upon. If there are major significant
changes in the duties or responsibilities of Employee from those listed
as Prohibited Activities on Exhibit A attached hereto, that are not
mutually agreed upon, Employee may terminate his employment within
sixty (60) days of any such change. In addition, Employee shall devote
all necessary time and his best efforts in the performance of any other
duties as may be assigned to him from time to time by the Board of
Directors of Employer. Employee shall devote his full professional and
business skills to Employer as his primary responsibility. Employee may
engage in personal, passive investment activities provided such
activities do not interfere with the performance of his duties
hereunder and violate the noncompetition and nondisclosure provisions
set forth herein.
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(b) Other Positions. Nothing herein shall be construed to
prohibit Employee from serving on the boards of non-competitive
businesses or non-profit community organizations or similar entities.
3. Compensation.
(a) Base Salary. Employer shall pay Employee an annual base
salary of two hundred and twenty thousand dollars ($220,000) per annum
(or fraction for portions of a year). Such base salary will be adjusted
from time to time in accordance with then current standard salary
administration guidelines of Employer. Employee's salary shall be
subject to all appropriate federal and state withholding taxes and
shall be payable in accordance with the normal payroll procedures of
Employer.
(b) Annual Bonus. In addition to the salary set forth in
Section 3(a) hereof, Employee shall be entitled to participate in the
Bonus Plan each year during the term of this Agreement- Employer agrees
that the Bonus Plan shall not be terminated by Employer prior to the
termination of this Agreement.
4. Fringe Benefits. The terms of this Agreement shall not foreclose
Employee from participating with other employees of Employer in such fringe
benefit or incentive compensation plans as may be authorized and adopted from
time to time by Employer, provided, however, that Employee must meet any and all
eligibility provisions required under said fringe benefit or incentive
compensation plans. Employee may be granted such other fringe benefits or
perquisites as Employee and Employer may from time to time agree upon.
5. Vacations. Employee shall be entitled to the number of paid vacation
days in each calendar year as shall be determined by the Board of Directors of
Employer from time to time. In no event, however, shall Employee be entitled to
less than four weeks paid vacation during each calendar year.
6. Reimbursement of Expenses. Employer recognizes that Employee will
incur legitimate business expenses in the course of rendering services to
Employer hereunder. Accordingly, Employer shall reimburse Employee, upon
presentation of receipts or other adequate documentation, for all necessary and
reasonable business expenses incurred by Employee in the course of rendering
services to Employer under this Agreement.
7. Working Facilities. Employee shall be furnished an office, personal
secretary and such other facilities and services suitable to his position and
adequate for the performance of his duties, which shall be consistent with the
policies of Employer.
8. Termination. The employment relationship between Employee and
Employer created hereunder shall terminate before the expiration of the stated
term of this Agreement upon the occurrence of any one of the following events:
(a) Death or Permanent Disability. The death or permanent
disability of Employee. For the purpose of this Agreement the
"permanent disability" of Employee shall mean Employee's inability,
because of his injury, illness, or other incapacity (physical or
mental), to perform the essential functions of the position
contemplated
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herein, with or without reasonable accommodation to Employee with
respect to such injury, illness or other incapacity, for a continuous
period of 150 days or for 180 days out of a continuous period of 360
days. Such permanent disability shall be deemed to have occurred on the
150th consecutive day or on the 180th day within the specified period,
whichever is applicable.
(b) Termination for Cause. The following events, which for
purposes of this Agreement shall constitute "cause" for termination:
(1) The willful breach by Employee of any provision
of Sections 2, 11, 12, or 13 hereof (including but
not limited to a refusal to follow lawful directives
of the Board of Directors of Employer) after notice
to Employee of the particular details thereof and a
period of 10 days thereafter within which to cure
such breach and the failure of Employee to cure such
breach within such 10 day period;
(2) Any act of fraud, misappropriation or
embezzlement by Employee with respect to any aspect
of Employer's business,
(3) The illegal use of drugs by Employee during the
term of this Agreement that, in the determination of
the Board of Directors of Employer, substantially
interferes with Employee's performance of his duties
hereunder;
(4) Substantial failure of performance by Employee
that is repeated or continued after 30 day written
notice to Employee of such failure and that is
reasonably determined by the Board of Directors of
Employer to be materially injurious to the business
or interests of Employer and which failure is not
cured by Employee within such 30 day period; or
(5) Conviction of Employee by a court of competent
jurisdiction of a felony or of a crime involving
moral turpitude.
Any notice of discharge shall describe with reasonable specificity the
cause or causes for the termination of Employee's employment, as well as the
effective date of the termination (which effective date may be the date of such
notice). If Employer terminates Employee's employment for any of the reasons set
forth above, Employer shall have no further obligations hereunder from and after
the effective date of termination (other than as set forth below) and shall have
all other rights and remedies available under this or any other agreement and at
law or in equity.
(c) Termination by Employee with Notice. Employee may
terminate this Agreement without liability to Employer arising from the
resignation of Employee upon thirty days written notice to Employer.
Employer retains the right after proper notice of Employee's voluntary
termination to require Employee to cease employment immediately;
provided, however, in such event, Employer shall remain obligated to
pay Employee his salary during the thirty days notice period or the
remaining term of this Agreement, whichever is less. During such thirty
days notice period, Employee shall
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provide such consulting services to Employer as Employer may reasonably
request and shall assist Employer in training his successor and
generally preparing for an orderly transition.
(d) Termination by Employer with Notice. Employer may
terminate this Agreement at any time upon one (1) year written notice
to Employee; provided, however, upon such notice Employee shall not be
required to perform any services for Employer other than during the
period of three (3) months immediately following the receipt of such
notice of termination in which Employee shall assist Employer in
training his successor and generally preparing for an orderly
transition. Notice by Employer of its intention to not extend this
Agreement under Section I will constitute termination under this
provision.
9. Compensation Upon Termination.
(a) General. Upon the termination of Employee's employment
under this Agreement before the expiration of the stated term hereof
for any reason, Employee shall be entitled to (i) the salary earned by
him before the effective date of termination, as provided in Section
3(a) hereof, prorated on the basis of the number of full days of
service rendered by Employee during the year to the effective date of
termination, (ii) any accrued, but unpaid, vacation or sick leave
benefits, (iii) any authorized but unreimbursed business expenses, and
(iv) any accrued, but unpaid annual bonus.
(b) Termination For Other Than Cause. If such termination is
the result of the discharge of Employee by Employer for any reason
other than (i) by Employer or Employee with notice pursuant to Section
8(d) or 8(c), respectively, or (ii) for cause (as defined in Section
8(b) hereof), then Employee shall be entitled to receive as a severance
payment an amount equal to the salary (excluding bonuses) that Employee
would have received for the remainder of the term of this Agreement in
accordance with the regular payroll periods during the remainder of the
term of this Agreement. If Employee's employment hereunder terminates
because of the death of Employee, all amounts that may be due to him
under the terms of this Agreement shall be paid to his administrators,
personal representatives, heirs and legatees, as may be appropriate.
(c) Termination For Cause. If the employment relationship
hereunder is terminated by Employer for cause (as defined in Section
8(b) hereof), Employee shall not be entitled to any severance
compensation, except as provided in Section 9(a) above.
(d) Termination by Employer with Notice. If the employment
relationship is terminated by Employer other than for cause, then
Employee shall be entitled to receive as a severance payment and as
compensation for all services performed hereunder pursuant to Section
8(d) hereof an amount equal to the salary that Employee would have
received for the remainder of the term of this Agreement in accordance
with the regular payroll periods of Employer during the applicable
period.
(e) Termination by Employee with Notice. If the employment
relationship is terminated by Employee pursuant to the provisions of
Section 8(c) hereof, Employee
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shall be entitled to receive as a severance payment and as compensation
for all services performed hereunder pursuant to Section 8(c) hereof
the salary that Employee would have received for the remainder of the
term of this Agreement or one (1) year, whichever is less, in
accordance with the regular payroll period of Employer during the
applicable period.
(f) Survival. The provisions of Sections 9, 11, 12, and 13
hereof shall survive the termination of the employment relationship
hereunder and this Agreement to the extent necessary or reasonably
appropriate to effect the intent of the parties hereto as expressed in
such provisions.
10. Other Agreements. This Agreement shall be separate and apart from,
and shall be deemed to alter the terms of, any executive compensation
agreements, deferred compensation agreements, bonus agreements, general
employment benefits plans, stock option plans and any other plans or agreements
entered into between Employee and Employer pursuant to which Employee has been
granted specific rights, benefits or options.
11. Noncompetition. Employee agrees that, during his employment with
Employer and for a period of two (2) years from the date of termination of his
employment with Employer, he will not directly or indirectly compete with
Employer by engaging in the activities set forth on Exhibit A attached hereto
and incorporated herein by reference (the "Prohibited Activities") within the
geographic area of the United States of America (the "Restricted Area"). For
purposes of this Section 11, Employee recognizes and agrees that Employer
conducts and will conduct business in the entire Restricted Area and that
Employee will perform his duties for Employer within the entire Restricted Area.
Employee shall be deemed to be engaged in and carrying on the Prohibited
Activities if he engages in the Prohibited Activities in any capacity
whatsoever, including, but not limited to, by or through a partnership of which
he is a general or limited partner or an employee engaged in such activities, or
by or through a corporation or association of which he owns five percent (5%) or
more of the stock or of which he is an officer, director, employee, member,
representative, joint venturer, independent contractor, consultant or agent who
is engaged in such activities. Employee agrees that during the two (2) year
period described above, he will notify Employer of the name and address of each
employer with whom he has accepted employment during such period. Such
notification shall be made in writing within five (5) days after Employee
accepts any employment or new employment by certified mail, return receipt
requested.
12. Confidential Data. Employee further agrees that, during his
employment with Employer and thereafter, he will keep confidential and not
divulge to anyone, disseminate nor appropriate for his own benefit or the
benefit of another any confidential information described in Exhibit C attached
hereto and incorporated by reference herein (the "Confidential Data"). Employee
hereby acknowledges and agrees that this prohibition against disclosure of
Confidential Data is in addition to, and not in lieu of, any rights or remedies
that Employer may have available pursuant to the laws of any jurisdiction or at
common law to prevent the disclosure of trade secrets, and the enforcement by
Employer of its rights and remedies pursuant to this Agreement shall not be
construed as a waiver of any other rights or available remedies that it may
possess in law or equity absent this Agreement.
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13. Nonsolicitation of Employee. Employee covenants that, during his
employment with Employer and for a period of one (1) year from the date of
termination of his employment with Employer, he will not (i) directly or
indirectly induce or attempt to induce any employee of Employer to terminate his
or her employment or (ii) without prior written consent of Employer, offer
employment either on behalf of himself or on behalf of any other individual or
entity to any employee of Employer or to any terminated employee of Employer.
14. Property of Employees. Employee acknowledges that from time to time
in the course of providing services pursuant to this Agreement he shall have the
opportunity to inspect and use certain property, both tangible and intangible,
of Employer and Employee hereby agrees that such property shall remain the
exclusive property of Employer, and Employee shall have no right or proprietary
interest in such property, whether tangible or intangible, including, without
limitation, Employee's customer and supplier lists, contract forms, books of
account, computer programs and similar property.
15. Equitable Relief. Employee acknowledges that the services to be
rendered by him are of a special, unique, unusual, extraordinary, and
intellectual character, which gives them a peculiar value, and the loss of which
cannot reasonably or adequately be compensated in damages in an action at law,
and that a breach by him of any of the provisions contained in this Agreement
will cause Employer irreparable injury and damage. Employee further acknowledges
that he possesses unique skills, knowledge and ability and that competition by
him in violation of this Agreement or any other breach of the provisions of this
Agreement would be extremely detrimental to Employer. By reason thereof,
Employee agrees that Employer shall be entitled, in addition to any other
remedies it may have under this Agreement or otherwise, to injunctive and other
equitable relief to prevent or curtail any breach of this Agreement by him.
16. "Change of Control". In the event (each such event a "Change of
Control"): (1) Employer becomes a subsidiary of another corporation or entity or
is merged or consolidated into another corporation or entity or substantially
all of the assets of Employer are sold to another corporation or entity; or (2)
any person, corporation, partnership or other entity, either alone or in
conjunction with its "affiliates," as that term is defined in Rule 405 of the
General Rules and Regulations under the Securities Act of 1933, as amended, or
other group of persons, corporations, partnerships or other entities who are not
"affiliates" but who are acting in concert, becomes the owner of record or
beneficially of securities of Employer that represent thirty-three and one-third
percent (331/3%) or more of the combined voting power of Employers then
outstanding securities entitled to elect Directors; or (3) the Board of
Directors of Employer or a committee thereof makes a determination in its
reasonable judgment that a "Change of Control" of Employer has taken place; or
(4) if the original Board of Directors of Employer that existed on the effective
date of this Agreement or those directors nominated by the original Board of
Directors no longer constitute a majority, then this is deemed to be a "Change
of Control"; the term during which this Agreement shall be effective shall be
two (2) years from the Change of Control, and Employee's compensation for such
period shall be based on the following formula, shall be subject to the
following conditions, and shall be in lieu of the compensation provided for
under Section 3 of this Agreement and in lieu of the compensation upon
termination provided for under Section 9 of this Agreement (except for Section
9(a), which shall still apply):
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(a) Employee shall be paid an annual salary two (2) years
consisting of one hundred percent (100%) of the average amount of total
cash compensation, excluding payments made under tax benefit bonuses
paid upon the lapse of resale restrictions on common stock for certain
officers, of Employee for the two (2) calendar years prior to the
Change of Control.
(b) Notwithstanding any other provision of this Agreement, if
(a) there is a change in the ownership or effective control of Employer
or in the ownership of a substantial portion of the assets of Employer
[within the meaning of Section 280G(b) (2) (A) of the Internal Revenue
Code (the "Code")], and (b) the payments otherwise to be made pursuant
to Section 16 and any other payments or benefits otherwise to be paid
to Executive in the nature of compensation to be received by or for the
benefit of Employee and contingent upon such event (the "Termination
Payments") would create an "excess parachute payment" within the
meaning of Section 280G of the Code, then Employer shall make the
Termination Payments in substantially equal installments, the first
installment being due within thirty days after the date of termination
and each subsequent installment being due on July 1 of each year, such
that the aggregate present value of all Termination Payments, whether
pursuant to this Agreement or otherwise, will be as close as possible
to, but not exceed, 299% of the Executive's base amount, within the
meaning of Section 280G.
(c) Employer shall have no obligation to pay the amounts set
forth in paragraphs (a) of Section 16 as limited by paragraph (c) if
there is reasonable proof that the noncompetition or confidential data
provisions of Sections 11 and 12, respectively, of this Agreement are
being violated.
(d) In the event the employment relationship is terminated for
cause (pursuant to Section 8(b) hereof) following a Change of Control,
Employer shall not be obligated to make any further payments of the
compensation amounts provided for in this Agreement, except as provided
in Section 9(a) above. Notwithstanding any other provision of this
Agreement, except for paragraphs (e) and (j) of this Section 16, which
shall control in the event Employee terminates employment as provided
in paragraphs (e) and (j), in the event Employee voluntarily terminates
employment following a Change of Control for other than Good Reason, as
defined hereinafter, compensation amounts set forth in paragraphs (a)
and (b) shall be payable only for a one (1) year period following
termination of employment.
(e) "Good Reason" to terminate employment with Employer occurs
if: (1) duties are assigned that are materially inconsistent with
previous duties; (2) duties and responsibilities are substantially
reduced; (3) base compensation is reduced not as part of an across the
board reduction for all senior officers or executives; (4)
participation under compensation plans or arrangements generally made
available to persons at Employee's level of responsibility at Employer
is denied; (5) a successor fails to assume this Agreement; or (6)
termination is made without compliance with prescribed procedures.
(f) In the event Employee is involuntarily terminated by
Employer without cause, Employee voluntarily terminates employment for
Good Reason or the employment
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relationship is terminated by death or permanent disability of
Employee, Employer's obligation to pay the compensation amounts
provided in this Section 16 shall survive termination of employment.
(g) in the event of termination of employment during the
pendency of a "Potential Change of Control", as hereinafter defined,
paragraphs (g) and (h) of this Section 16 shall apply as if an actual
Change of Control had taken place. A "Potential Change of Control"
shall be deemed to have occurred if: (1) Employer has entered into an
agreement or letter of intent the consummation of which would result in
a Change of Control; (2) any person publicly announces an intention to
take or to consider taking actions that, if consummated, would
constitute a Change of Control; or (3) the Board of Directors of
Employer or a committee thereof in its reasonable judgment makes a
determination that a Potential Change of Control for purposes of this
Agreement has occurred. A Potential Change of Control remains pending
for purposes of receiving payments under this Agreement until the
earlier of the occurrence of a Change of Control or a determination by
the Board of Directors or a committee thereof (at any time) that a
Change of Control is no longer reasonably expected to occur.
(h) Notwithstanding anything contained in this Agreement to
the contrary, Employee and Employer, or the person, corporation,
partnership or other entity acquiring control of Employer pursuant to
this Section 16, with the concurrence of the Chief Executive Officer
and Compensation Committee of the Board of Directors of Employer, may
mutually agree that Employee, with three (3) months' notice, may
terminate his employment and receive a lump sum payment equal to the
present value of remaining payments under this Agreement discounted by
the then current Treasury Xxxx rate for the remaining term of this
Agreement
17. Successors Bound. This Agreement shall be binding upon Employer and
Employee, their respective heirs, executors, administrators or successors in
interest, including without limitation, any corporation, partnership or other
entity acquiring control of Employer pursuant to Section 16 hereof.
18. Severability and Reformation. The parties hereto intend all
provisions of this Agreement to be enforced to the fullest extent permitted by
law. It however, any provision of this Agreement is held to be illegal, invalid,
or unenforceable under present or future law, such provision shall be fully
severable, and this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision were never a part hereof, and the
remaining provisions shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its
severance.
19. Integrated Agreement. This Agreement constitutes the entire
Agreement between the parties hereto with regard to the subject matter hereof,
and there are no agreements, understandings, specific restrictions, warranties
or representations relating to said subject matter between the parties other
than those set forth herein or herein provided for.
20. Attorneys' Fees. If any action at law or in equity, including any
action for declaratory or injunctive relief, is brought to enforce or interpret
the provisions of this
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Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees from the nonprevailing party, which fees may be set by the court
in the trial of such action, or may be enforced in a separate action brought for
that purpose, and which fees shall be in addition to any other relief which may
be awarded.
21. Notices. All notices and other communications required or permitted
to be given hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally, mailed by certified mail (return receipt
requested) or sent by overnight delivery service, cable, telegram, facsimile
transmission or telex to the parties at the following addresses or at such other
addresses as shall be specified by the parties by like notice:
(a) If to Employer: INSpire Insurance Solutions, Inc.
000 Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx
(b) If to Employee: 000 Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Notice so given shall, in the case of notice so given by mail, be
deemed to be given and received on the fourth calendar day after posting, in the
case of notice so given by overnight delivery service, on the date of actual
delivery and, in the case of notice so given by cable, telegram, facsimile
transmission, telex or personal delivery, on the date of actual transmission or,
as the case may be, personal delivery.
22. Further Actions. Whether or not specifically required under the
terms of this Agreement, each party hereto shall execute and deliver such
documents and take such further actions as shall be necessary in order for such
party to perform all of his or its obligations specified herein or reasonably
implied from the terms hereof.
23. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF
TEXAS.
24. Assignment. This Agreement is personal to Employee and may not be
assigned in any way by Employee without the prior written consent of Employer.
This Agreement shall not be assignable or delegable by Employer, other than to
an affiliate of Employer, except if there is a Change of Control as defined in
Section 16, Employer may assign its rights and obligations hereunder to the
person, corporation, partnership or other entity that has gained such control.
25. Counterparts. This Agreement may be executed in counterparts, each
of which will take effect as an original and all of which shall evidence one and
the same Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
INSpire Insurance Solutions, Inc.
By:
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Name:
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Title:
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EMPLOYEE:
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Xxxxxx X. Xxxx
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EXHIBIT A
PROHIBITED ACTIVITIES
Acting in any capacity, either individually or with any corporation,
partnership or other entity, directly or indirectly, in providing, or proposing
to provide, data processing software systems, related automation support
services and information services to the insurance industry, including, but not
limited to, application software, processing, consulting and related services,
in the performance of any of the following types of duties in any part of the
insurance industry:
1. The performance of the sales and marketing functions.
2. The responsibility for sales revenue generation.
3. The responsibility for customer satisfaction.
4. The responsibility for research and development of insurance
data base products.
5. The responsibility for the research and development of
information data processing systems and services.
6. The providing of input to pricing of products.
7. The planning and management of data processing services
resources.
8. The coordination of the efforts of the various aspects of
computer systems services organizations with other functions.
9. The planning and management of information services resources.
10. The providing and management of an operations staff to support
the above listed activities.
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EXHIBIT B
CONFIDENTIAL INFORMATION
1. All software/systems (including all present planned and future
software), whether licenses or unlicensed, developed by or on behalf of or
otherwise acquired by INSpire Insurance Solutions, Inc. or any of its
subsidiaries.
"All software/system" shall mean:
o all code in whatever form
o all data pertaining to the architecture and design of
such software systems
o all documentation in whatever form
o all flowcharts
o any reproduction or recreation in whole or in part of
any of the above in whatever form.
2. All business plans and strategies including:
o strategic plans
o product plans
o marketing plans
o financial plans
o operating plans
o resource plans
o all research and development plans including all data
produced by such efforts.
3. Internal policies, procedures, methods and approaches which are
unique to INSpire Insurance Solutions, Inc. and are not public.
4. Any information relating to the employment job responsibility,
performance, salary and compensation of any present or future officer or
employee of INSpire Insurance Solutions, Inc.
