EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the ______ day of ____________
1998, by and between PENN TREATY NETWORK AMERICA INSURANCE COMPANY, a
Pennsylvania corporation, and its affiliates and parent corporation
(collectively, the "Company"), and X. X. XXXXXX, residing at 0000 Xxxxxxx Xxxx,
Xxxxxxxxx, XX 00000 ("Executive").
WHEREAS, Executive is presently employed by the Company as its Executive Vice
President; and
WHEREAS, the Company and Executive desire to set forth the terms on which
Executive shall continue to be
employed by the Company;
NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein and intending to be legally bound, the parties agree as follows:
1. Employment Duties.
(a) Capacity. The Company shall employ Executive, and Executive shall
serve as Executive Vice President of Penn Treaty Network America
Insurance Company, its parent, Penn Treaty American Corporation and
its affiliates, American Network Insurance Company and American
Independent Network Insurance Company of New York, on the terms and
subject to the conditions set forth in this Agreement. Executive shall
retain said titles and positions for at least the first two years of
the term of this Agreement, unless terminated sooner pursuant to
section 4 herein.
The Penn Treaty American Corporation directorship position currently
held by Executive shall continue until its term expires at the Penn
Treaty American Corporation annual meeting to be held in the year
2000, unless terminated sooner pursuant to section 4 herein. All
directorships currently held by Executive with Penn Treaty American
Corporation subsidiaries shall also continue until the companies'
respective annual meetings held in the year 2000, unless terminated
sooner pursuant to section 4 herein.
(b) Scope and Duties. Executive shall perform such executive and
managerial duties as are normally associated with the position of
Executive Vice President of the Company. The duties of Executive shall
be performed primarily in Pennsylvania and as otherwise agreed by the
parties hereto. Executive's principal place of business shall be at
the offices of the Company in Allentown, Pennsylvania or at such other
location(s) as the parties may agree from time to time. Executive
shall use his best efforts and devote reasonable time and attention to
the business and affairs of the Company and to use his best efforts to
perform faithfully and efficiently the responsibilities incidental to
Executive's position.
(c) Permitted Activities. Executive shall devote all of his business time
to his obligations to the Company pursuant to this Agreement, and
shall not, without the approval of the Board, render services of a
business nature to any other person or entity, if such activities
would materially interfere with the performance of Executive's duties
under this Agreement.
2. Terms of Employment. The term of Executive's full-time employment under
this Agreement will commence effective on January 1, 1999 and terminate on
December 31, 2001, unless terminated sooner pursuant to Section 4 herein
(the "Term").
3. Compensation and Other Benefits.
(a) Base Salary. During the term of this Agreement, the Company shall pay
to Executive a base salary as set forth below ("Base Salary").
Executive's Base Salary shall be payable at the usual times for the
payment of the Company's other salaried employees, subject to
adjustment as provided herein.
(i) For the period from January 1, 1999 through December 31, 1999,
the Company shall pay to Executive an annual Base Salary of
$100,000.00 (one hundred thousand dollars).
(ii) For the period from January 1, 2000 through December 31, 2000,
the Company shall pay to Executive an annual Base Salary of
$80,000.00 (eighty thousand dollars).
(iii)For the period from January 1, 2001 through December 31, 2001,
the Company shall pay to Executive an annual Base Salary of
$60,000.00 (sixty thousand dollars).
(b) Expenses. During the term of employment hereunder, Executive shall be
entitled to receive prompt reimbursement for all reasonable and
necessary expenses incurred by him in performing services hereunder,
provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the
Company. As of the effective date of this Agreement and during the
term of the Agreement and thereafter, Executive shall be solely
responsible for any and all payments related to the use of his
automobile.
(c) Other Benefits. During the term of Executive's employment under this
Agreement, Executive shall be entitled to receive all benefits (such
as medical, dental, disability and life insurance, paid vacation, sick
days and retirement plan coverage) as are generally available from
time to time to similarly situated employees of the company and the
portion of such benefits paid by Executive shall be consistent with
the portion of such benefits paid by similarly situated employees of
the Company. Executive shall, at his option, be eligible to
participate in any incentive compensation, stock option, stock
purchase or similar plans or programs as the Company may maintain for
compensating similarly situated employees at such level of
participation as the Board may determine in its reasonable discretion
based upon Executive's responsibilities and performance.
Any and all Penn Treaty American Corporation stock option grants
awarded to Executive prior to the term of this Agreement, shall remain
in force until their original expiration date of ten (10) years after
their respective grant date, regardless of whether such expiration
date extends beyond the term of this Agreement.
4. Termination.
(a) Termination by the Company. Executive's employment hereunder may be
terminated by the Company without any breach of this Agreement only
under the following circumstances:
(i) Death. Executive's employment hereunder shall terminate upon his
death.
(ii) Disability. If, as a result of Executive's incapacity due to
physical or mental illness, Executive shall have been absent from
his duties hereunder on a full-time basis for the entire period
of two consecutive months, and within thirty (30) days after
written notice of termination is given (which may occur before or
after the end of such two-month period) shall not have returned
to the performance of his duties hereunder on a full-time basis,
the Company may terminate Executive's employment hereunder.
(iii)Cause. The Company may terminate Executive's employment
hereunder for "Cause." For purposes of this Agreement, "Cause"
shall include theft, falsification of records, fraud,
embezzlement, gross negligence or willful misconduct, causing the
Company or its successor to violate any federal, state, or local
law, or administrative regulation or ruling having the force and
effect of law, insubordination, conflict of interest, diversion
of corporate opportunity, failure to satisfy any performance
objectives for Executive which the Company has provided to
Executive in writing, conviction of Executive in connection with
a felony or conduct that results in publicity that has a material
adverse effect on the Company or its successor. Notwithstanding
the foregoing, Executive shall not be deemed to have been
terminated for Cause without (A) reasonable notice to Executive
setting forth the reasons for the Company's intention to
terminate him for Cause, (B) an opportunity for Executive,
together with his counsel, to be heard before the full Board with
reasonable advance notice of the time and place of meeting, and
(C) delivery to Executive of a Notice of Termination (as defined
in Section 4(c) hereof) stating that in the good faith opinion of
the Board, Executive was guilty of conduct constituting "Cause,"
and specifying the particulars thereof in detail.
(b) Termination Procedure.
(i) Notice of Termination. Any termination of Executive's employment
by the Company or by Executive (other than termination due to
Executive's death) shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this
Agreement, a 'Notice of Termination" shall mean a written notice
which 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 Executive's employment under the provision so
indicated, and (C) specify the Date of Termination (as defined
below).
(ii) Date of Termination. "Date of Termination" shall mean:
(A) if Executive's employment is terminated by his death, the
date of his death,
(B) if the Executive's employment is terminated pursuant to
Section 4(a)(ii), thirty (30) days after Notice of
Termination is given (provided that Executive shall not have
returned to the performance of his duties on a full-time
basis during such thirty (30) day period),
(C) if Executive's employment is terminated pursuant to Section
4(a)(iii), the date specified in the Notice of Termination,
and
(D) if Executive's employment is terminated for any other
reason, the date on which a Notice of Termination is given,
provided that if within thirty (30) days after any Notice of
Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be
the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding and
final arbitration award or by a final judgment, order or
decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been
perfected).
5. Compensation Upon Termination.
(a) Death. If Executive's employment is terminated by reason of his death,
this Agreement shallterminate without further obligations to
Executive's legal representatives under this Agreement, other than
those obligations accrued or earned and vested (if applicable) by
Executive as of the Date of Termination, including, for this purpose
[(i)] Executive's full Base Salary as earned through the Date of
Termination at the rate in effect on the Date of Termination. All such
Base Salary shall be paid to Executive's spouse or other designated
beneficiary (or if he leaves no spouse or other designated
beneficiary, to his estate) in a lump sum in cash within thirty (30)
days after the Date of Termination.
(b) Disability. If Executive's employment is terminated by reason of
disability pursuant to Section 4 (a) (ii), this Agreement shall
terminate without further obligations to Executive, other than the
obligation to pay to Executive all Base Salary as earned through the
Date of Termination. All such Base Salary shall be paid to Executive
in a lump sum in cash within thirty (30) days after the Date of
Termination.
(c) Termination for Cause; Termination by Executive in Breach of
Agreement. If Executive's employment is terminated for Cause or if
Executive terminates his employment for any reason other than Good
Reason, this Agreement shall terminate without further obligations to
Executive other than the Company's obligation to pay to Executive Base
Salary accrued to the Date of Termination. Such salary shall be paid
to Executive in a lump sum in cash within thirty (30) days after the
Date of Termination.
6. Confidentiality.
(a) Executive shall keep confidential and not disclose or use in any way,
at any time, either during or subsequent to Executive's employment,
any trade secrets, information, knowledge, data or other confidential
information relating to the Company's products, know-how, data,
customer lists, business plans, marketing plans and strategies,
pricing strategies or other subject matter pertaining to the business
of the Company or any of its clients, customers, consultants or
affiliates, except as otherwise provided herein or with the prior
written consent of the Company. Moreover, Executive shall not deliver,
reproduce or in any way allow any trade secrets, information,
knowledge, data or other confidential information, or any
documentation relating thereto, to be delivered or used by any third
party, without the prior written consent of the Company.
(b) Executive recognizes that the Company has received and will receive
confidential information from third parties and that the Company has a
duty to maintain the confidentiality of this information and to use it
only for certain limited purposes. Executive shall maintain the
confidentiality of information received from third parties and shall
not disclose it to any person or entity without the prior written
consent of the Company, except as may be necessary to satisfy the
obligations of the Company to the third party or for the benefit of
the third party, consistent with the Company's agreement with such
third party.
7. Return of Confidential Material. In the event of termination of Executive's
employment for any reason whatsoever, Executive agrees to promptly
surrender and deliver to the Company all records, materials, equipment,
drawings, data and all other documents, as well as any copies thereof,
pertaining to any endeavor, development, invention, trade secret or other
confidential information of the Company.
8. Non-Competition.
(a) Executive understands that Executive is a key and significant employee
of the Company. In addition, Executive agrees that the Company is
engaged in its business in all fifty (50) states (the "Geographic
Scope'). Executive further agrees that the Company will continue
conducting its business in all parts of the Geographic Scope and
intends to sell its products in the Geographic Scope. As a result of
the foregoing, Executive expressly understands and agrees that the
non-competition provisions contained in this Agreement are intended to
be permissible and enforceable pursuant to the provisions of
applicable law.
Executive agrees that during his employment by the Company and its
successors and assigns, he will not, alone or as a member, employee,
agent, consultant, advisor, independent contractor, general partner,
officer, director, shareholder, investor, lender or guarantor of any
corporation, partnership or other entity, or in any other capacity,
directly or indirectly:
(i) participate or engage in the production, marketing, sale or
servicing of any product, or the provision of any service, that
directly relates to the business of the Company (a "Competitive
Business') in the Geographic Scope; or
(ii) permit the name of Executive to be used in connection with a
Competitive Business.
9. Equitable Relief. Executive agrees and acknowledges that a breach by him of
any of the promises contained in this Agreement will cause irreparable
damage to the Company and that it will be impossible to estimate the damage
suffered by the Company in the event of any breach. Executive, therefore,
agrees that the Company shall be entitled as a matter of course to specific
performance as well as temporary and permanent injunctive relief from any
court of competent jurisdiction, thereby preventing further breach of this
Agreement. Each party further agrees that if the other prevails in a suit
under this Agreement, the nonprevailing party will reimburse the prevailing
party for its or his expenses, including costs and reasonable attorneys'
fees, incurred in connection with such a suit.
10. Governing Law. This Agreement shall be interpreted and construed in
accordance with the laws of the Commonwealth of Pennsylvania. If any
provision of this Agreement is determined to contravene applicable law, it
shall be deemed to be modified to the extent necessary to comply with any
such law or, if such modification is not possible, such provision shall be
deemed null and void, but shall not affect the obligations under any other
provision of this Agreement.
11. Arbitration. In the event of any dispute between Executive and the Company
under or related to the terms of this Agreement, the parties hereto agree
to submit such dispute to final and binding arbitration in Lehigh County,
Pennsylvania pursuant to the Arbitration Rules of the American Arbitration
Association. The decision of the arbitrator shall be final and binding on
both parties, provided, however, that in arriving at a decision, the
arbitrator shall find in favor of one party or the other, and shall not in
rendering his decision fashion a compromise or otherwise order an outcome
different than that proposed by one of the parties. Such arbitration
proceedings shall be completed not later than 90 days following submission,
except and only to the extent that such delay is attributable to the
unavoidable delay of the arbitrator.
12. Assignment. Executive acknowledges that the services to be rendered by him
hereunder are unique and personal. Accordingly, Executive may not assign
any of his rights or delegate any of his duties or obligations hereunder
without the prior written consent of the Company. Upon such consent, the
rights and obligations of Executive under this Agreement shall be binding
upon his heirs, assigns and legal representatives.
13. Miscellaneous.
(a) All notices, requests or other communications required or permitted
hereunder shall be by (i) personal delivery, (ii) first class United
States mail, postage prepaid, (iii) overnight delivery service,
charges prepaid or (iv) telecopy or other means of electronic
transmission, if confirmed promptly by any of the methods specified in
clauses (i), (ii) or (iii) of this sentence, and in writing as
follows:
If to Executive:
X. X. Xxxxxx
0000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
If to the Company:
Penn Treaty Network America Insurance Company
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Telefax: 000-000-0000
; or to such other addresses as may be specified by like notice.
Notices shall be deemed given on the earlier of (I) physical delivery,
(ii) if given by facsimile transmission, upon transmission to the
telefax number specified in this Agreement, (iii) two calendar days
after mailing by prepaid first class mail and (iv) one calendar day
after mailing by prepaid overnight delivery service.
(b) This Agreement sets forth the entire agreement of the parties with
respect to the subject matter hereof, and supersedes all prior
agreements, whether written or oral, including without limitation that
certain Change in Control Agreement between Executive and the Company
dated June 6, 1996. This Agreement may be amended only by writing
signed by both parties hereto.
(c) The Company may withhold from any amounts payable under this Agreement
such federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(d) No waiver of any provision of this Agreement shall be valid until it
is in writing and signed by the person or party against whom it is
charged.
(e) The invalidity or unenforceability of any provision of this Agreement
shall not affect the otherprovisions hereof, and this Agreement shall
be construed as if such invalid or unenforceable provision were
omitted.
(f) Sections 6, 7, 8, 9 and 10 shall survive the termination of this
Agreement for any reason whatsoever.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
PENN TREATY NETWORK AMERICA EXECUTIVE
INSURANCE COMPANY
By:
--------------------------- ------------------------
X. X. Xxxxxx
Title:
------------------------
