XXXXXXX X. X'XXXXX
EMPLOYMENT AGREEMENT
This Agreement (this "Agreement"), dated as of September 16, 2001, is made
by and among Ascent Assurance, Inc., a Delaware corporation, having its
principal offices at 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxx 00000
("AAI"), Ascent Management, Inc., a Delaware corporation, having its principal
offices at 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxx 00000 (the
"Corporation"), and Xx. Xxxxxxx X. X'Xxxxx (the "Executive"), residing at 0000
Xxxxxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxx 00000.
RECITALS
1. The Corporation and AAI each desire to retain the Executive as an
employee of the Corporation and AAI and to employ him as the Executive Vice
President, General Counsel, and Secretary of AAI and the Corporation, and to
enter into an agreement embodying the terms of those relationships which upon
proper execution shall supercede all prior written employment agreements between
the parties.
2. The Executive is willing to serve as the Executive Vice President,
General Counsel, and Secretary of AAI and the Corporation on the terms set forth
herein.
AGREEMENT
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, and other good and valuable consideration, the Corporation, AAI, and
the Executive hereby agree as follows:
1. Definitions.
1.1 "Affiliate" means any person or entity controlling, controlled by or
under common control with AAI or the Corporation.
1.2 "Annual Compensation" means the Executive's highest Base Salary and
Annual Bonus during the Term of Employment.
1.3 "Board" means the Board of Directors of AAI.
1.4 "Cause" means (a) Executive's material breach of any term or condition
of this Agreement; (b) Executive's (i) personal dishonesty, willful
misconduct or intentional breach of fiduciary duty, in each such case
involving AAI, the Corporation or any Affiliate's property, personnel
or business operations, in each case materially detrimental to the
goodwill of AAI, the Corporation or any Affiliate, or materially
damaging to AAI's, the Corporation's or any Affiliate's relationships
with its respective customers, clients or employees; or (ii)
intentional failure to perform the current material duties of his
employment or his other material obligations hereunder, or any other
intentional act by Executive which in either case is materially
detrimental to the goodwill of AAI, the Corporation or any Affiliate,
or materially damaging to AAI's, the Corporation's or any Affiliate's
relationships with its customers, clients or employees; (c)
Executive's conviction or entry of a no-contest plea with respect to a
felony; (d) Executive's material misappropriation (or attempted
material misappropriation) of any of AAI's, the Corporation's or any
Affiliate's, funds or property or of a business opportunity of AAI,
the Corporation or any Affiliate (including attempting to secure or
securing any personal profit in connection with any transaction
entered into on behalf of AAI, the Corporation or any Affiliate)
materially detrimental to the goodwill of AAI, the Corporation or any
Affiliate, or materially damaging to AAI's, the Corporation's or any
Affiliate's relationships with its respective customers, clients or
employees; or (e) Executive's gross negligence in connection with the
performance of Executive's obligations hereunder which is materially
detrimental to the goodwill of AAI and the Corporation or any
Affiliate, or materially damaging to AAI's, the Corporation's or any
Affiliate's relationships with its customers, clients or employees.
1.5 "Date of Termination" means (a) in the case of a termination for which
a Notice of Termination is required, the date of actual receipt of
such Notice of Termination or, if later, the date specified therein
(in no event, however, shall such date be later than seven (7) days
after the date of actual receipt of such notice), as the case may be,
and (b) in all other cases, the actual date on which the Executive's
employment terminates during the Term of Employment.
1.6 "Disability" means mental or physical impairment or incapacity
rendering the Executive substantially unable to perform his duties
under this Agreement for at least than 180 days out of any 360 day
period during the Term of Employment.
1.7 "Good Reason" means and shall be deemed to exist if, without the prior
express written consent of the Executive, (a) the Executive is
assigned any duties or responsibilities inconsistent in any material
respect with the scope of the duties or responsibilities associated
with the Executive's titles or positions, as set forth and described
in Section 4 of this Agreement; (b) the Executive suffers a reduction
in the duties, responsibilities, titles, positions, or effective
authority associated with such titles and positions, as set forth and
described in Section 4 of this Agreement; (c) the Executive is not
appointed to, or is removed from, the offices or positions provided
for in Section 4 of this Agreement; (d) the Executive's Base Salary is
decreased by AAI or the Corporation, or the Executive's benefits under
employee benefit or health or welfare plans or programs of AAI or the
Corporation are decreased, except as provided in Section 5.1 hereof as
a result of a good faith change in benefits applicable to all
employees of AAI and the Corporation, or the Executive fails to timely
receive his Base Salary, 2001 Annual Bonus, 2002 Annual Bonus, LTIP
Award, expense reimbursement, or any other benefit to which he is
entitled under this Agreement; (e) AAI and the Corporation fail to
maintain, or cause to be maintained, adequate directors and officers
liability insurance coverage for the Executive or fail to comply with
Section 4.3 of this Agreement; (f) AAI and the Corporation purport to
terminate the Executive's employment for Cause and such purported
termination of employment is not effected in accordance with the
requirements of this Agreement; or (g) there occurs a Change in
Control.
1.8 "Term of Employment" has the meaning ascribed to it in Section 3.
1.9 "Change in Control" means
(a) the acquisition, during the Term of Employment, by an individual,
entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 34% or more of
(A) the outstanding shares of common stock of AAI, (the "Common
Stock"), or (B) the combined voting power of the voting
securities of AAI entitled to vote generally in the election of
directors (the "Voting Securities"); provided, however, the
following acquisitions shall not constitute a Change in Control:
(x) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or AAI or
Affiliate, or (y) any acquisition by any corporation if,
immediately following such acquisition, more than 66% of the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities
of such corporation (entitled to vote generally in the election
of directors) is beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who,
immediately prior to such acquisition, were the beneficial owners
of the Common Stock and the Voting Securities in substantially
the same proportions, respectively, as their ownership,
immediately prior to such acquisition, of the Common Stock and
Voting Securities; or
(b) circumstances occurring, during the Term of Employment, whereby
individuals who constitute the Board (the "Incumbent Board")
cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director
subsequent to the date of this Agreement whose election, or
nomination for election by AAI's shareholders, was approved by a
vote of at least a majority of the directors then serving and
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents; or
(c) approval, during the Term of Employment, by the shareholders of
AAI of a plan of reorganization, merger or consolidation, other
than a reorganization, merger, or consolidation with respect to
which all or substantially all of the individuals and entities
who were the beneficial owners of the Common Stock and Voting
Securities immediately prior to such reorganization, merger or
consolidation who continue to beneficially own immediately after
such reorganization, merger or consolidation, more than 66% of
the then outstanding common stock and voting securities (entitled
to vote generally in the election of directors) of the
corporation resulting from such reorganization, merger or
consolidation in substantially the same proportions as their
respective ownership, immediately prior to such reorganization,
merger or consolidation, of the Common Stock and Voting
Securities, or
(d) approval, during the Term of Employment, by the shareholders of
AAI of (i) a complete liquidation or dissolution AAI, or (ii) the
sale or other disposition of all or substantially all of the
assets of AAI, other than to a direct or indirect wholly-owned
subsidiary of AAI. For purposes of this Agreement and without
limiting the generality of the preceding sentence, the sale or
other disposition of AAI of more than 50% of the common stock or
Voting Securities (entitled to vote generally in the election of
directors) of AAI shall be deemed to constitute a sale or other
disposition of substantially all of the assets of AAI.
2. Employment. Subject to the terms and provisions set forth in this
Agreement, AAI hereby agrees that the Executive shall be the chief legal officer
of AAI and the Corporation and report exclusively to the Chairman of the Board,
President and Chief Executive Officer of AAI and the Corporation with the title
of Executive Vice President, General Counsel, and Secretary during the Term of
Employment and each of AAI and the Corporation agrees during the Term of
Employment to employ the Executive as Executive Vice President, General Counsel,
and Secretary of each of AAI and the Corporation, and the Executive hereby
accepts such employment.
3. Term of Employment. The term of employment under this Agreement shall
commence on September 16, 2001, (the "Commencement Date") and shall continue
until the earlier to occur of March 15, 2003 (the "Expiration Date") or the date
on which the Executive is terminated or resigns pursuant to Section 6 hereof
(the "Term of Employment").
4. Positions, Responsibilities and Duties.
4.1 Positions. During the Term of Employment, the Executive (i) shall be
employed and serve as Executive Vice President, General Counsel, and
Secretary of each of AAI and the Corporation, as well as the
equivalent or higher title and position of each of the subsidiaries of
AAI; and (ii) shall be elected and serve as a director of the
Corporation. Notwithstanding the foregoing, Executive shall serve from
time to time as a "loaned employee" or "borrowed employee" of National
Foundation Life Insurance Company, Freedom Life Insurance Company of
America, American Insurance Company of Texas and National Financial
Insurance Company in accordance with the administrative services
agreement executed by such insurance companies and the Corporation. In
such positions with AAI, the Executive shall have the duties,
responsibilities and authority normally associated with the office and
position of executive vice president, general counsel, and secretary
of a publicly-traded corporation. The Executive shall report solely
and directly to the President and Chief Executive Officer. The
Executive shall perform his duties and responsibilities hereunder at
his current office located at 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000,
Xxxx Xxxxx, Xxxxx 00000, or at such other home office of AAI and the
Corporation situated in or reasonably near the City of Fort Worth,
Texas. Notwithstanding the above, the Executive shall not be required
to perform any duties and responsibilities which would be likely to
result in a non-compliance with or violation of any applicable law or
regulation.
4.2 Duties. During the Term of Employment, the Executive shall use his
best efforts to perform faithfully and efficiently the duties and
responsibilities contemplated by this Agreement, including, without
limitation, the responsibilities normally associated with the highest
ranking legal officer and secretary and shall devote substantially all
of his business time, skill and attention to such services, including
the service as a "loaned employee" or "borrowed employee" of National
Foundation Life Insurance Company, Freedom Life Insurance Company of
America, American Insurance Company of Texas and National Financial
Insurance Company; provided, however, that the Executive shall be
allowed, to the extent other activities do not substantially interfere
with the full performance by the Executive of his duties and
responsibilities hereunder, to (a) manage the Executive's personal,
financial and legal affairs, which may include non-competing, passive
business activities and (b) serve on civil or charitable boards or
committees. The Executive shall at all times comply with and be
subject to AAI's and the Corporation's policies, procedures,
directives, and regulations as may be reasonably established by the
Board from time to time.
4.3 Working Conditions. AAI and the Corporation will provide the Executive
with a private office, secretarial and stenographic services, and any
other facilities and services as are currently in place or otherwise
suitable to the Executive's position or required for the performance
of his duties
5. Compensation, Other Benefits and Payment of Certain Wages.
5.1 Base Salary. During the Term of Employment, the Executive shall
receive a base salary of no less than $286,000.00 per annum ("Base
Salary") payable in equal semi-monthly installments. Such Base Salary
shall be reviewed annually for increase in the sole discretion of the
Board or the Executive Committee thereof. Any such salary increase
shall then be the "Base Salary" for purposes of this Agreement.
5.2 Short-Term Incentive. For fiscal year 2001 of AAI (in addition to the
Base Salary), the Executive shall be eligible to receive an annual
cash bonus ("2001 Annual Bonus") in an amount, if any, reasonably
determined by the Board or a committee thereof. Such 2001 Annual Bonus
shall be payable to the Executive in February, 2002 or at such time as
such bonuses or similar bonuses are paid to other officers or members
of the Corporation's or AAI's senior management. For fiscal year 2002
of AAI (in addition to Base Salary), the Executive shall be eligible
to receive an annual cash bonus ("2002 Annual Bonus") based upon AAI
achieving reasonable consolidated financial targets consistent with
the October 2001 Business Plan as more specifically provided and set
forth in the summary attached hereto as Exhibit "A" and by this
reference is incorporated for all purposes herein. Such 2002 Annual
Bonus shall be payable to the Executive in February 2003 or at such
time as such bonuses or similar bonuses are paid to other members of
the Corporation's or AAI's senior management.
5.3 Retirement Plans. During the Term of Employment, the Executive shall
be entitled to participate in all incentive, pension, retirement,
savings, 401(k) and other employee pension benefit plans and programs
maintained by AAI and/or the Corporation from time to time for the
benefit of senior executives and/or other employees.
5.4 Welfare Benefit Plans. During the Term of Employment, the Executive,
the Executive's spouse, if any, and their eligible dependents, if any,
shall be entitled to participate in and be covered under all the
welfare benefit plans or programs maintained by the Corporation and
AAI from time to time including, without limitation, all medical
hospitalization, dental, disability, life, accidental death and
dismemberment and travel accident insurance plans and programs.
Executive shall also earn and receive a minimum of five (5) weeks
vacation each year with an unlimited year-end accrual of unused
vacation.
5.5 Long-Term Incentive Plan. The Executive shall be entitled to
participate in any long-term incentive plan or program adopted by the
boards of AAI and the Corporation ("LTIP Award") based on the
achievement of reasonable corporate objectives determined in good
faith by AAI or the Corporation. An LTIP Award may be in the form of
performance shares, performance units, stock options, restricted
stock, or other types of awards deemed appropriate by the Board, the
Executive Committee or such other committees of the Board.
5.6 Expense Reimbursement. During the Term of Employment, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in promoting AAI and/or its
Affiliates and in otherwise performing his duties and responsibilities
hereunder.
5.7 Payment of Deferred Wages. As of September 15, 2001, AAI and the
Corporation owed Executive wages in the amount of $437,216.88.
However, a deferral of the payment of such wages would enhance the
financial condition of AAI and the Corporation, and AAI and the
Corporation has requested, and the Executive has agreed to the
deferral of the payment of such wages. Accordingly, in consideration
of the mutual promises and covenants contained herein, the Executive
agrees that he shall accept the following described deferred payments
from AAI and the Corporation, and AAI and the Corporation agree that
they shall make such deferred payments to the Executive in the
principal amount of $437,216.88, together with interest on any unpaid
portion thereof at the rate of 10% per year of 360 days from September
15, 2001 until the date paid, as deferred wages and not as severance
(the "Deferred Payment"), in accordance with the following schedule
without the necessity of any further resolution or vote approving such
payment by either of their respective board of directors once a
resolution of each such board or authorized committee thereof
approving the execution of this Agreement has been made:
The amount of such Deferred Payment shall be paid by AAI and the
Corporation to the Executive in four equal installments of
$109,304.22, together with accrued interest as of the date of
such installment payment, as described below, unless prior to any
such installment payment due date (i) Executive dies whether or
not during the Term of Employment, (ii) Executive's employment is
terminated hereunder due to Disability, (iii) Executive's
employment hereunder is terminated by AAI or the Corporation
without Cause, or (iv) Executive's employment hereunder is
terminated by the Executive for Good Reason, in any of which
events the payment due date(s) of the remaining unpaid portion of
the Deferred Payment shall accelerate such that the unpaid
portion of the Deferred Payment shall be then immediately due and
payable. In the absence of the occurrence of the events described
in clauses (i) through (iv) above, (a) the first installment
payment shall be due and paid on or before December 21, 2001, (b)
the second installment payment shall be due and paid on March 15,
2002, (c) the third installment payment shall be due and paid on
June 15, 2002, and (d) the final installment payment shall be due
and paid on September 15, 2002.
6. Termination.
6.1 Termination Due to Death or Disability. A determination of whether the
Executive is Disabled shall be made by AAI, the Corporation or any
Affiliate in its sole, but good faith, discretion upon its own
initiative after obtaining certification from a duly licensed
physician or upon request of the Executive or a person acting on his
behalf. The Executive shall cooperate with any necessary medical
examination in connection with a determination of Disability. Upon
seven (7) days prior written notice to the Executive, AAI and the
Corporation may terminate the Executive's employment hereunder due to
Disability. In the event of the Executive's death or a termination of
the Executive's employment by AAI and the Corporation due to
Disability, the Executive, his estate or his legal representative, as
the case may be, shall be entitled to receive from AAI and the
Corporation without duplication the following:
(a) a lump sum payment of the Base Salary continuation at the rate in
effect (as provided for by Section 5.1 of this Agreement) at the
time of such termination through the Date of Termination;
(b) a lump sum payment of any Annual Bonus and LTIP Award awarded but
not yet paid as of the Date of Termination;
(c) a lump sum payment on the Date of Termination of the unpaid
portion of the Deferred Payment;
(d) a lump sum payment of accrued but unused vacation through the
Date of Termination;
(e) reimbursement of all expenses incurred, but not yet paid prior to
such death or Disability;
(f) in the case of death, any other compensation and benefits,
including life insurance, as may be provided in accordance with
the terms and provisions of any applicable plans and programs of
AAI or the Corporation, except any other severance benefit of AAI
or the Corporation; and
(g) in the case of Disability, (i) continuation of the Executive's
health and welfare benefits (as described in Section 5.5 of this
Agreement) at the level in effect (as provided for by Section
5.5) on the Date of Termination through the end of the one year
period following the termination of the Executive's employment
due to Disability (or the Corporation and/or AAI shall provide
the economic equivalent thereof), and (ii) any other compensation
and benefits as may be provided in accordance with the terms and
provisions of any applicable plans and programs of AAI and the
Corporation, except any other severance benefit of AAI or the
Corporation other than the Deferred Payment.
6.2 Termination by AAI and the Corporation for Cause. AAI and the
Corporation may terminate the Executive's employment hereunder for
Cause as provided in this Section 6.2. If AAI and the Corporation
terminate the Executive's employment hereunder for Cause, the
Executive shall be entitled to receive from AAI and the Corporation
without duplication the following:
(a) a lump sum payment of the Base Salary continuation at the rate in
effect (as provided for by Section 5.1 of this Agreement) at the
time of such termination through the Date of Termination;
(b) a lump sum payment of any Annual Bonus and LTIP Award awarded but
not yet paid as of the Date of Termination;
(c) a lump sum payment of the Deferred Payment payable in accordance
with Section 5.7 on the applicable installment payment due
date(s), the date of the Executive's death after such
termination, or the date on which the Executive becomes mentally
or physically impaired or incapacitated to the extent rendering
him unable to perform the type of duties contemplated herein for
any other employer for 180 days of any 360 day period after the
date of such termination;
(d) a lump sum payment of accrued but unused vacation through the
Date of Termination;
(e) reimbursement for all expenses incurred, but not yet paid prior
to such termination of employment; and
(f) any other compensation and benefits as may be provided in
accordance with the terms and provisions of any applicable plans
and programs of AAI and the Corporation, except any other
severance benefit of AAI or the Corporation.
In any case described in this Section 6.2, the Executive shall be given
written notice authorized by a vote of at least a majority of the members of the
Board that AAI and the Corporation intend to terminate the Executive's
employment hereunder for Cause. Such written notice, given in accordance with
Section 6.7 of this Agreement, shall specify the particular act or acts, or
failure to act, which is or are the basis for the decision to so terminate the
Executive's employment for Cause. Except with respect to the grounds set forth
in Section 1.4(c), as to which the following shall not apply, the Executive
shall be given the opportunity within thirty (30) calendar days after the
receipt of such notice to meet with the Board to defend such act or acts, or
failure to act, and the Executive shall be given thirty (30) business days after
such meeting to correct such act or failure to act. Upon failure of the
Executive, as fairly and reasonably determined by the Board, within such latter
thirty (30) day period, to correct such act or failure to act, or if the
Executive fails to meet with the Board after being provided an opportunity to do
so, the Executive's employment by AAI and the Corporation shall be automatically
terminated under this Section 6.2 for Cause as of the date determined under
Section 1.5 of this Agreement.
6.3 Termination without Cause or Termination for Good Reason. Upon seven
(7) days prior written notice to the Executive, AAI and the
Corporation may terminate the Executive's employment hereunder without
Cause, and upon thirty (30) days notice to AAI and the Corporation,
the Executive may terminate his employment hereunder for Good Reason.
If AAI and the Corporation terminate the Executive's employment
hereunder without Cause, other than due to death or Disability, or if
the Executive terminates his employment for Good Reason, the Executive
shall be entitled to receive from AAI and the Corporation without
duplication the following:
(a) a lump sum payment equal in amount to 117% of the sum of (i) the
Executive's Base Salary (as provided for by Section 5.1 of this
Agreement), and (ii) the highest of either the 2001 Annual Bonus,
2002 Annual Bonus, or any other annual or incentive bonus awarded
to the Executive within five (5) years prior to the Date of
Termination;
(b) a lump sum payment of any Base Salary accrued or any 2001 Annual
Bonus, 2002 Annual Bonus, and LTIP Award awarded but not yet paid
as of the Date of Termination;
(c) a lump sum payment on the Date of Termination of the Deferred
Payment;
(d) a lump sum payment of accrued but unused vacation through the
Date of Termination;
(e) reimbursement of all expenses incurred, but not yet paid prior to
such termination of employment; and
(f) any other compensation and benefits as may be provided in
accordance with the terms and provisions of any applicable plans
or programs of the Corporation and AAI, except any other
severance benefit of AAI or the Corporation.
In the case of termination by Executive for Good Reason pursuant to this
Section 6.3, AAI and the Corporation shall be given written notice that the
Executive intends to terminate his employment hereunder for Good Reason. Such
written notice, given in accordance with Section 6.7 of this Agreement, shall
specify the particular act or acts, or failure to act, which is or are the basis
for the decision to so terminate the Executive's employment for Good Reason.
Upon failure of AAI and the Corporation, as fairly and reasonably determined by
the Executive, within the thirty (30) day notice period referred to above, to
correct such act or failure to act, or if AAI and the Corporation fail to meet
with the Executive after being provided an opportunity to do so, the Executive's
employment by AAI and the Corporation shall be automatically terminated under
this Section 6.3 for Good Reason as of the date determined under Section 1.5 of
this Agreement.
6.4 Voluntary Termination. The Executive may effect, upon seven (7) days
prior written notice to AAI and the Corporation, a Voluntary
Termination of his employment hereunder. A "Voluntary Termination"
shall mean a termination of employment by the Executive on his own
initiative other than (a) a termination due to death or Disability, or
(b) a termination for Good Reason. A Voluntary Termination shall not
be a breach of this Agreement. If the Executive's employment hereunder
is so terminated, the Executive shall be entitled to receive from AAI
and the Corporation the following:
(a) a lump sum payment of any accrued but unpaid Base Salary at the
rate in effect (as provided for by Section 5.1 of this Agreement)
at the time of such termination through the Date of Termination;
(b) a lump sum payment on the applicable installment payment due date
under Section 5.7 of the Deferred Payment, together with a lump
sum payment on the Date of Termination of any 2001 Annual Bonus,
2002 Annual Bonus, or LTIP Award awarded but not yet paid as of
the Date of Termination;
(c) reimbursement for expenses incurred, but not yet paid prior to
the Date of Termination; and
(d) any other compensation and benefits as may be provided in
accordance with the terms and provisions of any applicable
employee benefit plans or programs maintained by AAI and the
Corporation, except any other severance benefit of AAI or the
Corporation.
6.5 Termination of Agreement by Expiration. If this Agreement expires
pursuant to Section 3 hereof, the Executive shall be entitled to
receive on the Expiration Date from AAI and the Corporation the
following:
(a) a lump sum payment of any accrued but unpaid Base Salary at the
rate in effect (as provided for by Section 5.1 of this Agreement)
through the Expiration Date;
(b) a lump sum payment of any 2001 Annual Bonus, 2002 Annual Bonus,
and LTIP Award awarded but not yet paid as of the Expiration
Date;
(c) a lump sum payment of accrued but unused vacation through the
Expiration Date;
(d) reimbursement of all expenses incurred, but not yet paid prior to
such termination of employment;
(e) any other compensation and benefits as may be provided in
accordance with the terms and provisions of any applicable plans
or programs of the Corporation and AAI, except any other
severance benefit of AAI or the Corporation.
6.6 No Mitigation; No Offset. In the event of any termination of
employment under this Section 6, the Executive shall be under no
obligation to seek other employment and there shall be no offset
against any amounts due the Executive under this Agreement on account
of any remuneration attributable to any subsequent employment that the
Executive may obtain. Any amounts due under this Section 6, with the
exception of the Deferred Payment, are in the nature of severance
payments, or liquidated damages, or both, and in no event are either
such severance payments, liquidated damages or the Deferred Payment in
the nature of a penalty.
6.7 Notice of Termination. Any termination by AAI and the Corporation for
Cause or by the Executive for Good Reason shall be communicated by a
notice of termination to the other party hereto given in accordance
with Section 13.3 of this Agreement (the "Notice of Termination"). The
Notice of Termination shall be given, in the case of a termination for
Cause, within ninety (90) business days after the Chief Executive
Officer, President, or a director of the Corporation (excluding the
Executive) knew or should have known of the events giving rise to such
purported termination, and in the case of a termination by the
Executive for Good Reason, within ninety (90) days of the Executive
having actual knowledge of the events giving rise to such termination,
except in the case of termination for Good Reason resulting from a
Change in Control then within one hundred eighty (180) days of the
effective date of such Change in Control. Such notice shall (a)
indicate the specific termination provision in this Agreement relied
upon, (b) set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (c) if the
termination date is other than the date of receipt of such notice,
specify the date on which the Executive's employment is to be
terminated (which date shall not be earlier than the date on which
such notice is actually given).
6.8 Certain Other Payments. Notwithstanding any other provisions of this
Agreement, in the event that any payment or benefit received or to be
received by the Executive in connection with a Change in Control or
the termination of the Executive's employment, whether pursuant to the
terms of this Agreement or any other plan, arrangement or agreement
with AAI and the Corporation or any of their Affiliates (all such
payments and benefits being hereinafter called the "Total Payments")
would subject the Executive to the excise tax imposed under Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code") or
any successor section thereto (the "Excise Tax"), and if, and only if,
such Total Payments less the Excise Tax is less than the maximum
amount of the Total Payments which could be payable to the Executive
without the imposition of the Excise Tax, then and only then, and only
to the extent necessary to eliminate the imposition of the Excise Tax
(and after taking into account any reduction in the Total Payments
provided by reason of Section 280G of the Code in any such other plan,
arrangement or agreement), (A) any cash payments hereunder shall first
be reduced (if necessary, to zero), and (B) all other non-cash
payments hereunder shall next be reduced. For purposes of this
limitation (i) no portion of the Total Payments the receipt or
enjoyment of which the Executive shall have effectively waived in
writing prior to the Date of Termination shall be taken into account,
(ii) no portion of the Total Payments shall be taken into account
which in the opinion of tax counsel selected by AAI's independent
auditors and reasonably acceptable to the Executive does not
constitute a "parachute payment" within the meaning of Section
280G(b)(2) of the Code, including by reason of Section 280G(b)(4)(A)
of the Code, (iii) all payments shall be reduced only to the extent
necessary so that the Total Payments (other than those referred to in
clauses (i) or (ii)) in their entirety constitute reasonable
compensation for services actually rendered within the meaning of
Section 280G(b)(4)(B) of the Code or are otherwise not subject to
disallowance as deductions under Code Section 280G, in the opinion of
the tax counsel referred to in clause (ii); and (iv) the value of any
non-cash benefit or any deferred payment or benefit included in the
Total Payments shall be determined by AAI's independent auditors in
accordance with the principles of Sections 280G(d)(3) and (4) of the
Code.
6.9 Payment. Except as otherwise provided in this Agreement, any payments
to which the Executive shall be entitled to under this Section 6,
including, without limitation, any economic equivalent of any benefit,
shall be made immediately on the Date of Termination. If the amount of
any payment due to the Executive cannot be finally determined within
thirty (30) days after the Date of Termination, such amount shall be
estimated on a good faith basis by AAI and the estimated amount shall
be paid no later than thirty (30) days after such Date of Termination.
As soon as practicable thereafter, the final determination of the
amount due shall be made and any adjustment requiring a payment to or
from the Executive shall be made as promptly as practicable.
7. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided or maintained by AAI and/or the
Corporation for which the Executive may qualify, nor shall anything herein limit
or otherwise prejudice such rights as the Executive may have under any other
existing or future agreements with the Corporation, AAI, and/or any Affiliate of
either, including, without limitation, any stock option agreements or plans.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plans or programs of the Corporation, AAI and/or any
Affiliate of either at or subsequent to the Date of Termination shall be payable
in accordance with such plans or programs. Notwithstanding the foregoing,
payments to the Executive under Section 6 hereof with the exception of the
Deferred Payment by AAI and the Corporation, shall be in lieu of payments under
any severance plan or program.
8. Settlement. AAI's and the Corporation's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off (except set-off for a fixed and liquidated obligation),
counterclaim, recoupment, defense or other right which AAI and/or the
Corporation and/or any Affiliates may have against the Executive or others.
Notwithstanding anything contained herein to the contrary, the obligations of
AAI and the Corporation hereunder for the payment of severance under Section 6.3
(a) shall be subject to Executive having executed and delivered an instrument to
AAI and the Corporation on the date of the receipt of such severance payment
irrevocably waiving and releasing AAI, the Corporation, and each Affiliate from
any and all obligations or liabilities to Executive and his heirs and assigns
(i) for the specific severance payments called for in Section 6.3 (a), (ii)
arising from or in connection with Executive's employment with AAI and the
Corporation or (iii) the termination of such employment and any and all claims
Executive may have under federal, state or local statutes, regulations or
ordinances or under any common law principles or breach of contract or the
covenant of good faith and fair dealing, defamation, wrongful discharge,
intentional infliction of emotional distress or promissory estoppel; provided,
however, such instrument of waiver and release to be executed by Executive shall
not be applicable to, reduce or otherwise diminish or release either AAI or the
Corporation from their obligation to make the Deferred Payment. Further,
notwithstanding anything contained herein to the contrary, the obligations of
AAI and the Corporation for the timely and proper payment of the Deferred
Payment shall be subject to Executive having executed and delivered an
instrument to AAI and the Corporation on the date of the receipt of such
Deferred Payment irrevocably waiving and releasing AAI, the Corporation, and
each Affiliate from any and all obligations or liabilities to Executive and his
heirs and assigns for such Deferred Payment.
9. Legal Fees and Other Expenses. In the event that a claim for payment or
benefits under this Agreement is disputed, the Executive shall be reimbursed for
all attorney fees and expenses incurred by the Executive in pursuing such claim,
provided that the Executive is successful as to at least part of the disputed
claim by reason of litigation, arbitration or settlement. In addition, the
Executive shall be paid or reimbursed for all legal fees and expenses incurred
by the Executive in connection with the review, preparation and negotiation of
this Agreement and/or any other agreements or plans referenced herein. The
Executive shall also be entitled to recover pre-judgment interest at the rate of
10% per annum on the amount of any past due payment obligations under Sections
5.1, 5.2, 6.1 (a), (b), (d), (e), 6.2 (a), (b), (d), (e), 6.3 (a), (b), (d),
(e), 6.4 (a), (b), (c), (d) and 6.5 (a), (b), (c), (d) from the date any such
payment was due until the earlier of the date of payment in full of such
obligation or the date of entry of a final judgment against AAI and/or the
Corporation.
10. Confidential Information and Nonsolicitation.
10.1 Confidential Information. The Executive shall not, during the Term of
Employment and thereafter, without the prior express written consent
of AAI and/or the Corporation, disclose any confidential information,
knowledge or data relating to AAI, the Corporation, or any Affiliate
of either and their respective businesses, which (a) was obtained by
the Executive in the course of the Executive's employment with AAI and
the Corporation, and (b) which is not information, knowledge or data
otherwise in the public domain (other than by reason of a breach of
this provision by the Executive), unless required to do so by a court
of law or equity or by any governmental agency or other authority.
10.2 No Solicitation. The Executive hereby agrees that, if his employment
hereunder is terminated by AAI and the Corporation for Cause or by the
Executive under Section 6.4 of this Agreement, he shall not, for
twelve (12) months after the Date of Termination, directly or
indirectly, divert, solicit or take away the patronage of (a) any
customers or agents of the Corporation, AAI or any Affiliate of either
as of the relevant Date of Termination, or (b) any prospective
customers or agents of the Corporation, AAI or any Affiliate whose
business the Corporation and/or AAI was actively soliciting on the
relevant Date of Termination, and with which the Executive had
business contact while employed by the Corporation and AAI. The
Executive agrees that, under the circumstances and conditions
described above and for the same period of time, the Executive shall
not, directly or indirectly, induce or solicit any employees or agents
of the Corporation, AAI or any Affiliate of either to leave or
terminate their employment or agency relationship with the Corporation
or AAI. The Corporation and AAI agrees that (i) any announcement made
by the Executive, at any press conference or in any press release or
through individual notices, shall not, in and of itself, constitute an
attempt directly or indirectly to induce, divert, solicit or take away
customers or employees, (ii) any such announcement creates no
presumption with respect to any such inducement, diversion,
solicitation or taking, and (iii) in all cases both the burden of
production of evidence and the ultimate burden of persuasion with
respect to any allegations or claims that this Section 10.2 has been
breached or violated by the Executive shall be borne by AAI and the
Corporation. Executive agrees that all restrictions and agreements
contained in this Section 10, including without limitation, those
relating to duration and restricted territory, are necessary and
fundamental to the protection of the business of AAI, the Corporation
or any Affiliate, and are reasonable and valid, and all defenses to
the strict enforcement thereof by Executive are hereby waived.
Executive agrees that the remedy at law for such breach of this
Agreement will be inadequate, and that the damages from such breach
are not readily susceptible to being measured in monetary terms.
Accordingly, Executive agrees that upon breach of this Xxxxxxx 00,
XXX, the Corporation or any Affiliate shall be entitled to immediate
injunctive relief and may obtain a temporary order restraining any
threatened further breach. Nothing in this Agreement shall be deemed
to limit AAI's, the Corporation's or any Affiliate's remedies at law
or in equity for any breach by Executive or any of the provisions of
this Agreement that may be pursued or availed of by AAI, the
Corporation or any Affiliate.
11. Successors.
11.1 The Executive. This Agreement is personal to the Executive and,
without the prior express written consent of AAI and the Corporation,
shall not be assignable by the Executive, except that the Executive's
rights to receive any compensation or benefits under this Agreement
may be transferred or disposed of pursuant to testamentary
disposition, intestate succession or pursuant to a domestic relations
order. This Agreement shall inure to the benefit of and be enforceable
by the Executive's heirs, beneficiaries and/or legal representatives.
11.2 AAI and the Corporation. This Agreement shall inure to the benefit of
and be binding upon AAI, the Corporation, and their respective
successors and assigns. AAI shall require any successor to all or
substantially all of the Corporation's and its Affiliates' business
and/or assets, whether direct or indirect, by purchase, merger,
consolidation, acquisition of stock, or otherwise, by an agreement in
form and substance satisfactory to the Executive, expressly to assume
and agree to perform this Agreement in the same manner and to the same
extent as AAI and the Corporation would be required to perform if no
such succession had taken place.
12. Indemnification. AAI and the Corporation agree that if the Executive is
made a party or is threatened to be made a party to any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he is or was a director or officer of
AAI, the Corporation, and/or any Affiliate of either or is or was serving at the
request of the Corporation, AAI and/or any Affiliate as a director, officer,
member, employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including, without limitation, service with
respect to employee benefit plans, whether or not the basis of such Proceeding
is alleged action in an official capacity as a director, officer, member,
employee or agent while serving as a director, officer, member, employee or
agent, he shall be indemnified and held harmless by AAI and the Corporation to
the fullest extent authorized by applicable law, as the same exists or may
hereafter be amended, against all Expenses incurred or suffered by the Executive
in connection therewith, and such indemnification shall continue as to the
Executive even if the Executive has ceased to be an officer, director or agent,
or is no longer employed by AAI and the Corporation and shall inure to the
benefit of his heirs, executors and administrators; provided, however, that
Executive shall not be indemnified for any act or omission that constitutes
gross negligence or willful misconduct.
13. Miscellaneous.
13.1 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, applied without
reference to the principles of conflict of laws.
13.2 Amendments. This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
13.3 Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand-delivery to the other parties or by
registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive: Xx. Xxxxxxx X. X'Xxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxx 00000
If to the Corporation: Ascent Management, Inc.
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
Attention: President and Chief Operating Officer
If to AAI: Ascent Assurance, Inc.
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
Attention: President and Chief Operating Officer
or to such other address as any party hereto shall have furnished to the others
in writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.
13.4 Withholding. AAI and the Corporation may withhold from any amounts
payable under this Agreement such federal, state or local income taxes
as shall be required to be withheld pursuant to any applicable law or
regulation.
13.5 Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
13.6 Captions. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
13.7 Beneficiaries/References. The Executive shall be entitled to select
(and change) a beneficiary or beneficiaries to receive any
compensation or benefit payable hereunder following the Executive's
death, and may change such election, in either case by giving AAI or
the Corporation written notice thereof. In the event of the
Executive's death or a judicial determination of his incompetence,
reference in this Agreement to the Executive shall be deemed, where
appropriate, to refer to his beneficiary(ies), estate or other legal
representative(s).
13.8 Entire Agreement. This Agreement contains the entire agreement between
the parties concerning the subject matter hereof and supersedes all
prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with
respect thereto.
13.9 Representations. AAI and the Corporation each represents and warrants
that it is fully authorized and empowered to enter into this
Agreement. The Executive represents and warrants that the performance
of the Executive's duties under this Agreement will not violate any
agreement between the Executive and any other person, firm,
partnership, corporation, or organization.
13.10Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement or the
Executive's Term of Employment hereunder for any reason to the extent
necessary to the intended provision of such rights and the intended
performance of such obligations.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and
AAI, as well as the Corporation have each caused this Agreement to be executed
in its name on its behalf, and attested to by their respective Secretaries, all
as of the day and year first above written.
Ascent Management, Inc.
Attest: By: /s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. X'Xxxxx Title: President and Chief Executive Officer
Ascent Assurance, Inc.
Attest: By: /s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. X'Xxxxx Title: President and Chief Executive Officer
/s/ Xxxxxxx X. X'Xxxxx
Xxxxxxx X. X'Xxxxx
