EXHIBIT 10.3
EXECUTION COPY
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of the 29th day of May, 2002 (the "Effective Date"), between Xxxxxxx X.
Xxxxxxxx, an individual resident of the State of Wisconsin (the "Executive"),
and Cobalt Corporation, a Wisconsin corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Company desires to retain the services of the Executive
and the Executive desires to be employed by the Company on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and the mutual benefits to be derived from this Agreement, the parties
hereto, intending to be legally bound, hereby agree as follows:
1. POSITIONS AND DUTIES. Subject to the terms and conditions of this
Agreement, from the Effective Date until such date not later than December 1,
2002 that Xxxxxx X. Xxxxx ceases to be the Company's Chief Executive Officer and
Chairman of the Board, the Company shall employ the Executive as its President,
and after such date through the remainder of the Employment Term (as defined
herein), the Company shall employ the Executive as its Chief Executive Officer
and Chairman of the Board. The Company shall cause the Executive to be appointed
as a member of the Board of Directors (the "Board") of the Company on the first
day following the Effective Date that a vacancy on the Board shall exist, but
not later than December 1, 2002, and the Board shall propose the Executive for
re-election to the Board thereafter and throughout the Employment Term. In each
case, the Executive shall have such duties and responsibilities as are
prescribed to such positions in the Company's bylaws, and such other duties and
responsibilities not inconsistent therewith as may from time to time be assigned
to him by the Board. The Company shall take all steps necessary to effect such
appointments, including amending the Company's bylaws if necessary. The
Executive agrees to serve, as and when reasonably requested by the Board, on the
board of directors of any entity that during the Employment Term is a subsidiary
of the Company. The Executive agrees to devote his full business attention and
time to the business affairs of the Company and its affiliates and to faithfully
and efficiently perform his duties hereunder.
2. TERM. Unless this Agreement is earlier terminated in accordance with
the terms hereof, the Company's employment of the Executive hereunder shall
continue until the third (3rd) anniversary of the Effective Date; provided,
however, that the term of this Agreement shall be automatically extended for an
additional one-year period on each anniversary of the Effective Date unless, at
least thirty (30) days prior to such anniversary of the Effective Date, either
party shall deliver written notice to the other party of such party's intent not
to extend the term of this Agreement as of the end of its then current term.
References herein to the "Employment Term" shall refer to both the initial term
and any extended term.
3. PLACE OF PERFORMANCE. In performing the services required under this
Agreement, the Executive shall be based at the Company's principal executive
offices located in Milwaukee, Wisconsin. During the Employment Term, the
Executive shall not be required to relocate from the Milwaukee metropolitan
area. In the event of a relocation of the Company's principal offices, the
Company will promptly pay (or reimburse the Executive for) all reasonable moving
expenses
incurred by the Executive relating to a change of his principal residence in
connection with any such relocation of the Company's principal executive
offices, and will indemnify the Executive for any losses incurred by the
Executive in connection with the sale of his principal residence. Such
indemnification shall be computed as the difference (if such difference is a
positive number) between (a) the average of two (2) appraisal prices determined
by such two (2) independent appraisers, one of which shall be designated by the
Company and one designated by the Executive; and (b) the actual sale price of
the Executive's principal residence.
4. COMPENSATION. During the Employment Term, the Executive shall be
entitled to the following compensation:
a. ANNUAL BASE SALARY. From the Effective Date through December 31,
2002, the Executive shall be entitled to an initial annual base salary
("Base Salary") at the rate of Five Hundred Thousand Dollars ($500,000) per
year payable ratably in monthly installments. For 2003, the Executive shall
be entitled to a Base Salary at the rate of Five Hundred Fifty Thousand
Dollars ($550,000) per year. Thereafter, the Management Review Committee of
the Board shall determine the Base Salary of the Executive; provided,
however, that the Base Salary of the Executive will not decrease from any
previous level, except that the Executive's Base Salary may be reduced as
part of, and consistent with, any across-the-board reduction in the
salaries of senior executives of the Company. To that end, the Management
Review Committee will review annually the performance of the Executive and
a written copy thereof will be forwarded to the Executive. The Executive's
performance will be evaluated based upon mutually approved criteria
developed jointly by the Management Review Committee and the Executive. In
connection with the annual review of the Executive's performance, the
Management Review Committee shall also review and consider appropriate
adjustments to the Executive's Base Salary and other compensation
commensurate with the Executive's position and may retain a qualified
compensation consultant to assist in its review.
b. SHORT-TERM INCENTIVE COMPENSATION. In addition to Base Salary,
the Executive shall be entitled to receive such incentive compensation as
the Management Review Committee may approve pursuant to the Company's
short-term incentive programs commensurate with the Executive's position
("Short-Term Incentive Compensation"), including, without limitation, the
following:
i. PROFIT SHARING PLAN. Without limiting the generality of the
foregoing, the Executive shall be entitled to participate in the
Company's Profit Sharing Plan (the "Profit Sharing Plan") to the same
extent as other senior executives of the Company. For the purpose of
computing the Executive's payment under the Profit Sharing Plan for
2002, the Executive shall be entitled to an aggregate profit sharing
payment up to twenty-one percent (21%) of his total Base Salary for
2002.
ii. MANAGEMENT INCENTIVE PLAN. Without limiting the generality
of the foregoing, the Executive shall be entitled to participate in
the Company's Management Incentive Plan (the "Management Incentive
Plan") to the same extent as other senior executives of the Company.
For the purpose of computing the Executive's payment under the
Management Incentive Plan for 2002, the Executive's Target Award (as
such term is defined in the Management Incentive Plan) shall not be
less than fifty percent (50%) of his total Base Salary for 2002,
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which Target Award shall include payments under the following
components of the Management Incentive Plan:
COMPONENT PERCENT OF PRORATED BASE SALARY DURING PERIOD
-------------------- ------------------------------------------------
JANUARY 1-MAY 28, 2002 MAY 29-DECEMBER 31, 2002
---------------------- ------------------------
Profit Sharing Match 0-21% 0-42%
Objectives/Individual 0-18% 0-18%
For the purpose of computing the Executive's payment under the
Management Incentive Plan after 2002, the Executive's Target Award for
each year during the Employment Term after 2002 shall not be less than
eighty percent (80%) of his Base Salary for such year.
For any period less than a full year during the Employment Term, the
Executive shall be entitled to receive an amount equal to the prorated
portion of the Short-Term Incentive Compensation payable pursuant the
Company's short-term incentive programs.
c. LONG-TERM INCENTIVE COMPENSATION. On the Effective Date, the
Company shall grant to the Executive pursuant to terms of the Company's
Equity Incentive Plan, as amended (the "Equity Plan"), an option to
purchase 90,000 shares of the Company's common stock, no par value ("Common
Stock"), at a per share exercise price equal to one hundred percent (100%)
of the Fair Market Value (as such term is defined in the Equity Plan) of
one share of Common Stock on the Effective Date. The Executive shall
thereafter be eligible to participate in the Company's current long-term
incentive programs (including annual grants of options under the Equity
Plan) and any other long-term incentive programs hereafter established for
senior officers of the Company (subject to modifications to such programs
as the Management Review Committee shall determine to be necessary and
appropriate to preserve the deductibility of bonus awards) at participation
levels commensurate with the Executive's position determined in connection
with the Executive's annual performance evaluation and granted on each
anniversary of the Effective Date during the Employment Term. In
determining the value of each annual option grant to be made to the
Executive under the Equity Plan, the economic value of each such annual
option grant shall be set at the grant value range midpoint of the
benchmark competitive data for the Executive's position within the
Company's industry as annually recommended by Xxxxxx Associates, an
independent compensation consultant, or its successor.
d. FRINGE BENEFITS. During the Employment Term, (i) the Executive
shall be entitled to participate in all applicable incentive, savings and
retirement plans, practices, policies and programs of the Company and its
affiliates to the same extent as other senior executives of the Company;
and (ii) the Executive and/or the Executive's family, as the case may be,
shall be eligible for immediate participation in (and without any
limitation for preexisting conditions), and shall receive all benefits
under, all applicable welfare benefit plans, practices, policies and
programs provided by the Company and its affiliates, other than severance
plans, practices, policies and programs, but including, without limitation,
medical, prescription, dental, disability, salary continuance, employee
life insurance, group life insurance, accidental death and travel accident
insurance plans and programs, to the same extent as other senior executives
of the Company.
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e. PERQUISITES. During the Employment Term, the Executive shall be
entitled to receive such perquisites as the Company may establish from time
to time which are commensurate with his position and not less favorable
than those received by any other senior executive at the Company.
f. EXPENSE REIMBURSEMENT. The Company shall reimburse the Executive
for all reasonable and documented expenses incurred by the Executive in the
performance of the Executive's duties under this Agreement.
g. VACATIONS. The Executive shall be entitled to the number of paid
vacation days in each calendar year determined by the Company from time to
time for its senior executive officers, but not less than four (4) weeks in
any calendar year (prorated in any calendar year during which the Executive
is employed hereunder for less than the entire year in accordance with the
days in such calendar year during which he is so employed). The Executive
shall also be entitled to all paid holidays given by the Company to its
senior executive officers.
h. RELOCATION EXPENSES. The Company shall reimburse the Executive for
all reasonable moving expenses, including reasonable legal fees and
expenses, incurred by the Executive relating to a change of his principal
residence from his current principal residence located in Dane County,
Wisconsin to a new principal residence located in the Milwaukee,
Wisconsin
metropolitan area, and the Company will indemnify the Executive for any
losses incurred by the Executive in connection with the sale of his current
principal residence. Such indemnification shall be computed as the
difference (if such difference is a positive number) between (a) the
average of two (2) appraisal prices determined by such two (2) independent
appraisers, one of which shall be designated by the Company and one by the
Executive; and (b) the actual sale price of the Executive's current
principal residence. It is the intention of the parties that the benefits
provided in this Paragraph (h) be at least equal to (although they may
exceed) the benefits provided by the Company's relocation package.
5. TERMINATION OF EMPLOYMENT.
a. DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Term. The
Company shall be entitled to terminate the Executive's employment because
of the Executive's Disability (as defined herein) during the Employment
Term. For the purposes of this Agreement, the term "Disability" means that
(i) the Executive has been unable, for a period of 180 consecutive days, to
perform the Executive's duties under this Agreement, as a result of
physical or mental illness or injury, and (ii) a physician selected by the
Company or its insurers, and acceptable to the Executive or the Executive's
legal representative, has determined that the Executive's incapacity is
total and permanent. A termination of the Executive's employment by the
Company for Disability shall be communicated to the Executive by written
notice, and shall be effective on the thirtieth (30th) day after receipt of
such notice by the Executive (the "Disability Effective Date"), unless the
Executive returns to full-time performance of the Executive's duties before
the Disability Effective Date.
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b. BY THE COMPANY. The Company may terminate the Executive's
employment at any time for Cause (as defined herein) or without Cause. For
the purposes of this Agreement, the term "Cause" means:
i. the willful and continued failure of the Executive to
substantially perform the Executive's duties under this Agreement
(other than as a result of physical or mental illness or injury) after
the Board delivers to the Executive a written demand for substantial
performance that specifically identifies the manner in which the Board
believes that the Executive has willfully failed to substantially
perform the Executive's duties and after the Executive has failed to
resume substantial performance of his duties on a continuous basis
within thirty (30) calendar days of receiving such demand;
ii. the Executive willfully engaging in conduct (other than
conduct covered under paragraph (1) above) which is demonstrably and
materially injurious to the Company, monetarily or otherwise; or
iii. the Executive having been convicted of a felony (as
evidenced by binding and final judgment, order or decree of a court of
competent jurisdiction, in effect after exhaustion of all rights of
appeal) which substantially impairs the Executive's ability to perform
his duties or responsibilities.
No act or failure to act on the part of the Executive shall be considered
"willful" unless it is done, or omitted to be done, by the Executive in bad
faith or without reasonable belief that the Executive's action or omission
was in the best interests of the Company.
c. BY THE EXECUTIVE FOR GOOD REASON.
i. The Executive may terminate his employment at any time for
Good Reason (as defined herein) or without Good Reason. For the
purposes of this Agreement, the term "Good Reason" means:
(1) the assignment to the Executive of any duties
materially inconsistent with Section 1 of this Agreement, or any
other action by the Company that results in a diminution in the
Executive's position, authority, duties or responsibilities,
other than an isolated, insubstantial and inadvertent action that
is not taken in bad faith and is remedied by the Company promptly
after receipt of notice thereof from the Executive;
(2) the failure of the Company to cause the Executive to be
named the Company's Chief Executive Officer and Chairman of the
Board by December 1, 2002;
(3) any breach of this Agreement by the Company, other than
an isolated, insubstantial and inadvertent failure that is not
taken in bad faith and which the Company or any successor
remedies promptly after notice from the Executive;
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(4) the failure of the Company to obtain a satisfactory
agreement from any successor to the Company to assume and agree
to perform this Agreement, as contemplated in (c) of Section 18
of this Agreement;
(5) any purported termination of the Executive's employment
by the Company for a reason or in a manner not expressly
permitted by this Agreement; or
(6) any other substantial breach of this Agreement by the
Company that either is not taken in good faith or is not remedied
by the Company promptly after receipt of notice thereof from the
Executive.
ii. A termination of employment by the Executive for Good Reason
shall be effectuated by giving the Company written notice ("Notice of
Termination for Good Reason") of the termination, setting forth in
reasonable detail the specific conduct of the Company that constitutes
Good Reason and the specific provision(s) of this Agreement on which
the Executive relies. A termination of employment by the Executive for
Good Reason shall be effective on the fifth (5th) business day
following the date when the Notice of Termination for Good Reason is
given, unless the notice sets forth a later date (which date shall in
no event be later than thirty (30) days after the notice is given).
iii. A termination of the Executive's employment by the Executive
without Good Reason shall be effected by giving the Company written
notice of the termination.
d. DATE OF TERMINATION. The term "Date of Termination" means the
date of the Executive's death, the Disability Effective Date, the date on
which the termination of the Executive's employment by the Company for
Cause or without Cause or by the Executive for Good Reason is effective, or
the date on which the Executive gives the Company notice of a termination
of employment without Good Reason, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
a. DEATH AND DISABILITY. If the Executive's employment is terminated
by reason of the Executive's death or Disability during the Employment
Term, then the Executive shall be entitled to the following benefits:
i. A lump sum cash payment from the Company to the Executive
or, in the case of the Executive's death, to the Executive's
designated beneficiaries (or, if there is no such beneficiary, to the
Executive's estate or legal representative), made within thirty (30)
days after the Date of Termination, equal to the sum of the following
amounts (the "Accrued Obligations"): (1) any portion of the
Executive's Base Salary through the Date of Termination that has not
yet been paid; (2) an amount representing any Short-Term Incentive
Compensation for the period that includes the Date of Termination,
computed by assuming that the amount of all such Short-Term Incentive
Compensation would be equal to the maximum amount of such Short-Term
Incentive Compensation that the Executive would have been eligible to
earn for such period, and multiplying that amount by a fraction, the
numerator of
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which is the number of days in such period through the Date of
Termination, and the denominator of which is the total number of days
in the relevant period; (3) any compensation previously deferred by
the Executive (together with any accrued interest or earnings thereon)
that has not yet been paid; and (4) any accrued but unpaid Short-Term
Incentive Compensation and vacation pay; and the Company shall have no
further obligations under this Agreement, except as specified in
Section 7 below. Any deferred compensation (together with any accrued
interest or earnings thereon, if any) that has not yet been paid, will
be paid in accordance with the terms and conditions applicable to such
deferred compensation.
ii. All options to purchase equity interests in the Company
granted to the Executive by the Company under the terms of the Equity
Plan outstanding on the Date of Termination shall immediately become
fully vested and exercisable in accordance with the terms of the
Equity Plan and the respective option agreements covering such options
and shall remain in effect and exercisable through the end of the
respective option agreements covering such options, without regard to
the termination of the Executive's employment.
b. BY THE COMPANY OTHER THAN FOR CAUSE, DEATH OR DISABILITY; OR BY
THE EXECUTIVE FOR GOOD REASON. If, during the Employment Term, the Company
terminates the Executive's employment, other than for Cause, death, or
Disability, or the Executive terminates employment for Good Reason, then
the Executive shall be entitled, subject to Section 12 below, to the
following benefits:
i. The Company shall continue to provide the Executive with the
compensation and benefits set forth in paragraphs (a), (b), (c) and
(d) of Section 4 as if he had remained employed by the Company
pursuant to this Agreement through the end of the Employment Term and
then retired (at which time he will be treated as eligible for all
retiree welfare benefits and other benefits provided to retired senior
executives); provided, that any Short-Term Incentive Compensation for
such period shall be equal to the maximum Short-Term Incentive
Compensation that the Executive would have been eligible to earn for
such period; provided further that in lieu of stock options and other
stock-based awards, the Executive shall be paid in cash equal to 100%
of the fair market value (without regard to any restrictions) of the
stock-based awards that would otherwise have been granted; and
provided, further, that to the extent any benefits described in
paragraph (d) of Section 4 cannot be provided pursuant to the plan or
program maintained by the Company for its executives, the Company
shall provide such benefits outside such plan or program at no
additional cost (including without limitation tax cost) to the
Executive and his family; and provided, finally, that during any
period when the Executive is eligible to receive benefits of the type
described in paragraph (d) of Section 4 under another
employer-provided plan, the benefits provided by the Company under
this paragraph may be made secondary to those provided under such
other plan.
ii. All options to purchase equity interests in the Company
granted to the Executive by the Company under the terms of the Equity
Plan outstanding on the Date of Termination shall immediately become
fully vested and exercisable in accordance with the terms of the
Equity Plan and the respective option agreements covering such options
and shall remain in effect and exercisable through the end of
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their respective option agreements covering such options, without
regard to the termination of the Executive's employment.
iii. The Company shall cause the Executive to be fully and
immediately vested in his accrued benefit under any supplemental
executive retirement plan of the Company providing benefits for the
Executive (the "SERP"). In addition, the Executive shall be credited
with not less than 15 years of credited service under the SERP for
subsidized early retirement benefits regardless of the Executive's age
and service at the Date of Termination. In the event that the
Executive is credited with additional years of credited service under
the SERP pursuant to this Section 6(b)(iii), the Executive's
annualized Base Salary and Target Award in effect immediately
preceding the Date of Termination shall be used for purposes of
calculating the amounts credited to the Executive under the SERP for
those additional years and such additional years of credited service
shall be treated as the Executive's most recent years of service for
purposes of calculating Final Average Earnings under the SERP.
iv. In the event that on the Date of Termination the Executive's
principal residence is located in the Milwaukee,
Wisconsin
metropolitan area and within six (6) months following the Date of
Termination the Executive changes his principal residence to a new
principal residence located in Dane County,
Wisconsin, the Company
will promptly pay (or reimburse the Executive for) all reasonable
moving expenses, including reasonable legal fees and expenses,
incurred by the Executive relating to such change of his principal
residence, and will indemnify the Executive for any losses incurred by
the Executive in connection with the sale of his principal residence
in the Milwaukee,
Wisconsin metropolitan area on the Date of
Termination. Such indemnification shall be computed as the difference
(if such difference is a positive number) between (a) the average of
two (2) appraisal prices determined by such two (2) independent
appraisers, one of which shall be designated by the Company and one
designated by the Executive; and (b) the actual sale price of the
Executive's principal residence.
v. In the event that the Date of Termination occurs prior to
January 1, 2003 and at such time the Executive has contracted to
purchase, but has not yet then closed the purchase of, a principal
residence in the Milwaukee,
Wisconsin metropolitan area, as
contemplated by Section 4(h) above, the Company will indemnify the
Executive for any loss resulting from the Executive's inability to
recover any xxxxxxx money actually paid by the Executive in connection
with such pending purchase of his principal residence.
The benefits provided pursuant to this paragraph (b) of Section 6 are
intended as liquidated damages for a termination of the Executive's
employment by the Company other than for Cause, death or Disability or for
actions of the Company leading to a termination of the Executive's
employment by the Executive for Good Reason, and shall be the sole and
exclusive remedy thereof.
c. BY THE COMPANY FOR CAUSE; OR BY THE EXECUTIVE OTHER THAN FOR GOOD
REASON. If the Executive's employment is terminated by the Company for
Cause during the Employment Term, then the Company shall pay the Executive
his Base Salary through the Date of Termination and the amount of any
compensation previously deferred by the
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Executive (together with any accrued interest or earnings thereon), in each
case to the extent not yet paid, and the Company shall have no further
obligations under this Agreement, except as specified in Section 7 below.
If the Executive voluntarily terminates employment during the Employment
Term, other than for Good Reason, the Company shall pay the Accrued
Obligations to the Executive in a lump sum cash payment within thirty (30)
days of the Date of Termination, and the Company shall have no further
obligations under this Agreement, except as specified in Section 7 below.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliates for which
the Executive may qualify, nor shall anything in this Agreement limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with the Company or any of its affiliates relating to subject matter
other than that specifically addressed herein. Vested benefits and other amounts
that the Executive is otherwise entitled to receive under any plan, policy,
practice or program of, or any contract or agreement with, the Company or any of
its affiliates on or after the Date of Termination shall be payable in
accordance with the terms of each such plan, policy, practice, program, contract
or agreement, as the case may be, except as explicitly modified by this
Agreement.
8. MITIGATION. In the event the Executive's employment is terminated by
the Company (other than for Cause, death or Disability), or by the Executive for
Good Reason, the Executive shall be obligated to seek other full-time employment
for a business that does not violate Section 11 hereof and to take such other
reasonable action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement, provided, however, that this
shall not prevent Executive from accepting part-time employment, being
self-employed, consulting (including without limitation, government relations
consulting) or the private practice of law (the "Exceptions"). The amounts
otherwise payable to the Executive under Section 6(b)(i) hereof shall be reduced
(but not less than zero) by the amount of any compensation earned or received by
the Executive as a result of such other full-time employment (but not for any of
the Exceptions) engaged in by the Executive after termination of his employment
hereunder and prior to the expiration of the Employment Term (determined without
regard to Section 5 hereof). As a condition to the Company's obligation to make
payments under Section 6(b)(i), the Executive agrees to provide to the Company,
annually, true and correct copies of any
employment agreements or other
contracts setting forth compensation arrangements for full-time employment (but
not for any of the Exceptions) that may be in effect between the Executive and
any third party and copies of his Form W-2; provided, however, that the Company
agrees that it will not cease making payments to the Executive until it has
served notice to the Executive as to any claimed deficiency in the provision of
the foregoing documents and the Executive fails to cure such deficiency within
thirty (30) days following delivery of such notice. The Executive further agrees
to provide to the Company true and correct copies of his federal and state
income tax returns in the event that his compensation cannot be verified by the
information and documents referred to above.
9. WITHHOLDING. All compensation and other benefits to or on behalf of
the Executive pursuant to this Agreement shall be subject to such deductions and
withholding as may be agreed to by the Executive or required by applicable law.
10. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies and
their respective businesses that the Executive obtains
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during the Executive's employment by the Company or any of its affiliated
companies and that is not public knowledge (other than as a result of the
Executive's violation of this Section 10) ("Confidential Information"). The
Executive shall not communicate, divulge or disseminate Confidential Information
at any time during or after the Executive's employment with the Company, except
with the prior written consent of the Company or as otherwise required by law or
legal process. In no event shall any asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
11. COVENANT NOT TO COMPETE. The Executive agrees that during the
Employment Term and for a period of one (1) year thereafter, he will not,
directly or indirectly:
a. engage in, continue in or carry on any business of the type, or
which competes with the business, conducted by Company or any of its
affiliates during the Employment Term, including owning or controlling any
financial interest in any corporation, partnership, firm or other form of
business organization which is so engaged;
b. solicit for employment any person who is or was employed by the
Company or any of its affiliates during the then immediately preceding
twelve (12) months, or actively induce or otherwise assist any other person
or entity in soliciting for employment any person who is or was employed by
the Company of any of its affiliates during the then immediately preceding
twelve (12) months, without the prior written consent of the Company; or
c. solicit, request or seek any business from any then current
client or customer of the Company or any of its affiliates, or request,
induce or advise any such clients or customers to withdraw, curtail or
cancel their business with the Company or any of its affiliates;
PROVIDED, HOWEVER, that the foregoing shall not prohibit the ownership of
securities of businesses which are listed on a national securities exchange or
traded in the national over-the-counter market in an amount which shall not
exceed 5% of the outstanding shares of any such corporation; and PROVIDED,
FURTHER, that the foregoing shall not prohibit the Executive from the private
practice of law or the provision of government relations consulting services.
The parties agree that the geographic scope of this covenant not to compete
shall extend throughout the State of
Wisconsin and, in the event the Company or
any of its affiliates provides products or services in jurisdictions outside of
the State of Wisconsin, then with respect only to the provision of such products
and services, in such other respective jurisdictions that the Company or any of
its affiliates provided such products or services during the twelve (12) months
immediately preceding the Date of Termination.
12. COORDINATION WITH OTHER AGREEMENTS. If at any time the Executive shall
be entitled to receive severance benefits under Section 6(b) of this Agreement
and Severance Benefits (as such term is defined in Article 4 of that certain
Executive Severance Agreement between the Company and the Executive, dated as of
June 19, 2001, as amended from time to time, including as provided in Section 13
hereof (the "Severance Agreement"), or in any subsequently adopted similar plan
or agreement), then the terms of the Severance Agreement shall control and the
Executive shall be entitled to receive such Severance Benefits as are provided
in the Severance Agreement, which Severance Benefits shall be in lieu of, and
acceptance by the Executive of such Severance Benefits shall constitute the
Executive's release of any rights to, any severance benefits under this
Agreement. The Company, or any successor to the Company following a Change of
Control (as such term is defined the Severance Agreement), shall be obligated to
provide all rights and benefits to which the
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Executive is entitled under this Agreement or under any plan or program of the
Company contemplated by this Agreement, and shall, as a condition to the
consummation of such Change of Control, agree to continue and assume all
obligations to provide all such rights and benefits to the Executive.
13. AMENDMENT OF SEVERANCE AGREEMENT. The parties hereby agree to cause
the Severance Agreement to be amended as follows:
a. Subsections (a) and (b) of Section 4.3 of the Severance Agreement
shall be amended so that the Severance Benefits provided thereunder shall
include an amount equal to three (3) times the Executive's annualized Base
Salary (as such term is defined in the Severance Agreement and target
award, as defined in Section 4.3(b) of the Severance Agreement);
b. Subsection (c) of Section 4.3 of the Severance Agreement shall be
amended so that the Severance Benefits provided thereunder shall include a
continuation of Supplemental Benefits (as defined in the Severance
Agreement) for three (3) full years after the Effective Date of Termination
(as defined in the Severance Agreement);
c. Section 4.3 of the Severance Agreement shall be amended so that
the Severance Benefits provided thereunder shall include the severance
benefits provided in subsections (ii), (iii), (iv) and (v) of Section 6(b)
hereof; and
d. Section 6.1 of the Severance Agreement shall be amended by
deleting the last two sentences of such section.
14. INDEMNIFICATION AND INSURANCE.
a. The Company shall at all times during and after the Employment
Term, to the fullest extent permitted or required by the applicable
Wisconsin Statutes, including any amendments thereto (but in the case of
any such amendment, only to the extent such amendment permits or requires
the Company to provide broader indemnification rights than prior to such
amendment), indemnify the Executive against any and all Liabilities (as
defined below), and advance any and all reasonable Expenses (as defined
below), incurred by him in any Proceeding (as defined below) in which the
Executive was a party because he is or was a director, officer or employee
of the Company. The rights to indemnification hereunder shall not be deemed
exclusive of any other rights to indemnification against Liabilities or the
advancement of Expenses to which the Executive may be entitled under any
other written agreement, bylaw of the Company, resolution approved by the
directors or shareholders of the Company, Wisconsin Statutes or otherwise.
b. For purposes of this Section 14:
i. "Liabilities" shall include, without limitation, judgments,
amounts incurred in settlement, fines, penalties and, with respect to
any employee benefit plan, any excise tax or penalty incurred in
connection therewith, and any and all liabilities of every type or
nature whatsoever.
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ii. "Expenses" shall include, without limitation, any and all
expenses, fees, costs, charges, attorneys' fees and disbursements,
other out-of-pocket costs, reasonable compensation for time spent by
the Executive in connection with the Proceeding for which he is not
otherwise compensated by the Company or any third party, and any and
all other direct or indirect costs of any type or nature whatsoever.
iii. "Proceeding" shall include, without limitation, any
threatened, pending or completed action, claim, litigation, suit or
proceeding, whether civil, criminal, administrative, arbitrative or
investigative, whether predicated on foreign, federal, state or local
law, whether brought under and/or predicated upon the Securities Act
of 1933, as amended, and/or the Securities Exchange Act of 1934, as
amended, and/or their respective state counterparts and/or any rule or
regulation promulgated thereunder, whether a derivative action and
whether formal or informal.
15. ARBITRATION.
a. Any disputes arising out of or in connection with this Agreement
or employment of the Executive by the Company that are not resolved between
the Company and the Executive shall be submitted to arbitration in
accordance with the rules of Commercial Arbitration of the American
Arbitration Association.
b. Any such arbitration shall take place in the city in which the
Executive resides at the time of the arbitration. The arbitrator shall be a
person experienced in employment and compensation of corporate business
executives who is mutually acceptable to the Company and the Executive. If
an arbitrator cannot be agreed upon within fifteen (15) days after a
dispute is submitted to arbitration, then the parties shall each select one
representative who is not and has never been associated with the Company
and who is nor related to the Executive, and these two representatives
shall choose a neutral arbitrator with the qualifications described above.
c. All actions and proceedings under this Section 15 shall be kept
confidential and neither party shall divulge any part thereof to third
parties without the prior written consent of the other party.
16. LEGAL FEES. The Company shall pay or reimburse the Executive for the
Executive's reasonable legal fees and expenses in connection with the
negotiation and execution of this Agreement.
17. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when delivered or mailed, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Xx. Xxxxxxx X. Xxxxxxxx
Cobalt Corporation
000 X. Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000 (AFTER PRIOR NOTICE TO XXXX XXXXXX BY
TELEPHONE AT (000) 000-0000)
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(with a copy to)
XxXxxx Xxxx & Xxxxxxx S.C.
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to the Company:
Cobalt Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Vice President of Human Resources
Facsimile: (000) 000-0000
(with a copy to)
Xxxxx & Xxxxxxx
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
18. SUCCESSORS AND ASSIGNMENT.
a. This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assigned by the Executive other
than by will or the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive's legal
representatives.
b. This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
c. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place.
19. MISCELLANEOUS.
a. AMENDMENT. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is
agreed to in a writing signed by
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Executive and an executive officer of the Company (other than Executive)
who has been authorized to execute such agreement by the Board.
b. NO WAIVER. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time.
c. MERGER CLAUSE. Other than the Severance Agreement, no agreements
or representations, oral or otherwise, express or implied, with respect to
the subject matter hereof have been made by either party which are not set
forth expressly in this Agreement, and, except for the Severance Agreement,
this Agreement supersedes any prior agreements with respect to the subject
matter hereof.
d. ENFORCEABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement. If any provision of this
Agreement shall be held invalid or unenforceable in part, the remaining
portion of such provision, together with all other provisions of this
Agreement, shall remain valid and enforceable and continue in full force
and effect to the fullest extent consistent with law.
e. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Wisconsin.
f. WAIVER. The waiver or failure of either party to insist in any
one or more instances upon performance of any term, covenant or condition
of this Agreement shall not be construed as a waiver of future performance
of any such term, covenant or condition, but the obligations of either
party with respect to such term, covenant or condition shall continue in
full force and effect. No course of dealing shall be implied or arise from
any waiver or series of waivers of any right or remedy hereunder.
g. HEADINGS. The paragraph and section headings in this Agreement
are intended for reference only, are not part of the provisions hereof and
shall have no force or effect.
h. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been executed by the parties as
of the date first set forth above.
COBALT CORPORATION
By: /s/ Xxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman & CEO
EXECUTIVE
/s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------------
Xxxxxxx X. Xxxxxxxx
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