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Exhibit 10.7
EMPLOYMENT AGREEMENT
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PARTIES
1.1 PARTIES. This Employment Agreement (the "Reserve Agreement") is made
this 15th day of December, 1997, effective January 1, 1998, by and
between Xxxx Lick, Jr. ("Employee") and Central Reserve Life Insurance
Company, an Ohio corporation engaged in the insurance business, having
its principal offices at 00000 Xxxxxxxx Xxxx, Xxxxxxxxxxxx, Xxxx
00000-0000 ("Reserve").
II
RECITALS
2.1 EMPLOYEE. Employee is Chairman of Reserve.
2.2 CANCELLATION OF EXISTING AGREEMENTS. Reserve and Employee intend that
all prior existing Employment Agreements are cancelled and supplanted
by this new Employment Agreement, effective January 1, 1998 (the
"Reserve Agreement").
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III
TERMS OF THE AGREEMENT
3.1 NEW AGREEMENT CONTROLS. In consideration of their mutual covenants
herein of Employee's continuing his employment with Reserve, except as
hereinafter specifically provided to the contrary, Reserve and Employee
agree with each other as provided in this Reserve Agreement.
3.2 POSITION AND INITIAL EMPLOYMENT TERM AND COMPENSATION. From January 1,
1998 through December 31, 1999, Employee shall be and shall act as
Chairman of Reserve, with primary responsibilities for sales and
marketing of Reserve's insurance products, for the same annual salary
as set forth in Section 3.1 of the Employment Agreement effective
January 1, 1998 between Employee and Central Reserve Life Corporation
("Central").
3.3 SUBSEQUENT EMPLOYMENT TERM AND COMPENSATION. For the two-year period
from January 1, 2000 through December 31, 2001,
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Reserve will negotiate in good faith with Employee for his continued
employment on the basis of an incentive-based compensation program.
Provided however that, in the event that such good faith negotiations
do not result in a satisfactory compensation agreement, this Reserve
Agreement shall terminate as of December 31, 1999.
It is fully understood that, insofar as and so long as Reserve is able
to do so, Reserve shall bear the responsibility for fully compensating
Employee for all services he performs for both Reserve and Central
pursuant to the applicable provisions of the Reserve Agreement and the
Central Agreement, and Reserve shall bear the responsibility for fully
paying for all of the costs of Employee's benefits and expenses as set
forth in such agreements, and Central shall have no responsibility in
this regard, and no arrangement has been made between Reserve and
Central for allocation of any such compensation or costs; provided
however that, if for any reasons whatsoever Reserve is unable or
unwilling to fulfill its said responsibilities
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to fully compensate Employee and fully pay for all of the costs of
Employee's benefits and expenses, in part or in whole, then and in that
event, the responsibility for so fully compensating Employee and for so
paying for all the costs of Employee's benefits and expenses under both
the Reserve Agreement and the Central Agreement shall be assumed by and
borne by Central and any other affiliate, subsidiary or successor.
3.4 FRINGE BENEFITS. In addition to all other benefits which Employee is
receiving or may receive from Reserve from time to time, Reserve shall
continue to provide Employee at no cost to him fringe benefits no less
than those which he is now receiving. Moreover, Employee shall be
entitled to retain his current office for as long as he is employed by
Reserve.
3.5 AUTOMOBILE AND BUSINESS EXPENSES. Every two (2) years, Reserve shall
furnish Employee a Company-owned or leased automobile, with a buy-out
provision for the Employee,
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comparable in quality to the automobile furnished Employee by Reserve
during 1997, and shall bear the entire expense of such automobile,
including operational and maintenance expenses. Employee shall be
entitled to reimbursement of all travel and entertainment expenses
incurred in the performance of the responsibilities and duties of
Employee.
3.6 VACATION. Employee shall be entitled to receive a total of six (6)
weeks' paid vacation annually for the performance of his
responsibilities for both Central and Reserve, the unused portions of
which are cumulative and may be carried over from year to year on and
after January 1, 1998. No vacation time prior to January 1, 1998 shall
so cumulate.
3.7 TAX COUNSELING. In order that distractions imposed upon Employee by
unavoidable personal concerns may be kept to a minimum, Reserve agrees
to provide without expense to Employee reasonable legal counseling and
representation concerning such personal concerns as tax liability and
tax planning.
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3.8 INSURANCE BENEFITS. At all times during this Reserve Agreement and any
renewal thereof, Reserve shall pay Employee his total compensation as
set forth in Sections 3.2 or 3.3, as the case may be, during any time
that he shall suffer either partial or total disability (whether such
disability be temporary or permanent), reduced only by the amounts
which are paid to Employee under any insurance program purchased by
Reserve, Central or any affiliate. In addition, Reserve shall furnish
Employee at no cost to him, throughout the term of this Reserve
Agreement and any renewals thereof, fringe benefits including, but not
limited to, Group Life Insurance, AD&D, medical and hospital insurance
benefits no less than those covering Employee on January 1, 1998, and
Employee shall be entitled to such additional fringe benefits, if any,
as may be provided from time to time to any executive officer of
Reserve.
3.9 RETIREMENT BENEFITS. At all times during the term of this Reserve
Agreement and any renewal thereof, Reserve's pension
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plan and retirement plan fully paid for by Reserve in effect on January
1, 1982 shall not be terminated or its benefits reduced below the level
in effect on December 31, 1997 as it applies to the Employee.
3.10 CONTINUANCE OF FRINGE BENEFITS. If the employment of Employee
shall be terminated in any manner or for any reason other than the
voluntary resignation of Employee or for significant just and
sufficient cause pursuant to the applicable provisions of Section
6.1(b) hereof, the benefits as set forth in Sections 3.8 and 3.9 above
shall continue to be provided to Employee at the same times and in the
same manner as if this Reserve Agreement were still in full force for
the full initial or subsequent term of this Reserve Agreement, as the
case may be, for the duration of the then-current term thereof.
3.11 LOCATION OF EMPLOYMENT. Employee shall not be required to relocate his
place of employment or his residence outside of Cuyahoga County, Ohio,
but may relocate his residence from
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time to time within or without Cuyahoga County at his sole election.
IV
EXTENSION
4.1 EXTENSION OF AGREEMENT. This Agreement shall be subject to extension
for an additional two-year period, provided in Section 3.3 hereof.
V
TERMINATION PAYMENTS
5.1 TERMINATION OBLIGATIONS OF RESERVE. Where applicable, the termination
payment obligations of Reserve shall be discharged by Reserve as
follows:
(a) Employee's annual salary shall become fixed for the unexpired remainder
of the Initial and/or Subsequent Employment term of this Reserve
Agreement;
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(b) Such annual salary shall then be paid to Employee in one lump sum
within thirty (30) days of the effective date of his termination;
(c) The fringe benefits to which Employee is entitled at no cost to
Employee under the terms of this Reserve Agreement shall be continued
by Reserve for Employee at no cost to Employee for the remainder of
such Initial and/or Subsequent Employment term of this Reserve
Agreement; provided, however, if it is not legally possible for Reserve
itself to so provide a certain fringe benefit to Employee, Reserve
shall pay the cost of a comparable benefit which Employee may obtain
elsewhere.
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VI
GENERAL COVENANTS
6.1 GENERAL COVENANTS.
(a) TERMINATION BY EMPLOYEE. At no time within the Initial or Subsequent
Employment term of this Reserve Agreement shall Employee terminate this
Agreement or refuse to perform his duties and responsibilities for
Reserve, except upon a material breach of the terms hereof by Reserve
or of the terms of the Central Agreement by Central. Upon termination
by Employee because of such breach by Reserve or Central, the rights of
Employee and the obligations of Reserve shall be the same as those
provided in Article V.
(b) TERMINATION BY RESERVE. At no time within the Initial or Subsequent
Employment term of this Reserve Agreement shall Reserve terminate its
employment of Employee. If, however, Reserve shall attempt for any
reason whatsoever to terminate its employment of Employee, then and in
that event, Employee
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may deem this a material breach of the terms of this Agreement by
Reserve or of the terms of the Central Agreement by Central, and the
rights of the Employee and the obligations of Reserve shall be the same
as those provided in Article V of this Agreement.
Notwithstanding the provisions of this Section 6.1(b), this Reserve
Agreement and the Central Agreement and Employee's employment
thereunder may be terminated by Reserve at any time without further
compensation for significant just and sufficient cause. For purposes of
this paragraph, "significant just and sufficient cause" shall mean any
action or non-action involving a material breach of the terms and
conditions of the Central or Reserve Agreements by Employee, which
cannot be promptly cured or rectified by Employee to Reserve's
reasonable satisfaction, or gross or repeated insubordination or a
major conflict or interference with Employer's best interests or
business operations.
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(c) ASSIGNABILITY. Neither party shall have the right to assign this
Reserve Agreement or any rights or obligations hereunder without the
prior written consent of the other party. Provided however that, upon
the sale of all or substantially all of the assets, business and
goodwill of Reserve to another corporation or entity, or upon the
merger or consolidation of Reserve with another corporation or entity,
this Agreement shall inure to the benefit of, and be binding upon, both
Employee and the corporation or entity purchasing such assets, business
and goodwill, or surviving such merger or consolidation, as the case
may be, in the same manner and to the same extent as though such other
corporation or entity were the original party to this Reserve
Agreement.
VII
MISCELLANEOUS
7.1 ENTIRE AGREEMENT. This Reserve Agreement and the Central Agreement of
even date, to which this Reserve Agreement is attached, constitute the
entire agreement between the
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parties hereto in relation to the subject matter hereof, and no other
representations, warranties, covenants, understandings or agreements,
oral or otherwise, exist in relation thereto between the parties.
7.2 NO THIRD-PARTY BENEFICIARIES. This Reserve Agreement is intended solely
for the benefit of Reserve, Central and Employee and confers no right
or benefit upon any other person, including shareholders of Reserve and
Central and other officers and directors of Reserve and Central.
7.3 SEPARABILITY. Each provision of this Reserve Agreement is separable
from each other provision, and if any provision shall be found invalid
for any reason, the remaining provisions shall continue in full force
and effect.
7.4 SECTION HEADINGS. The article and section headings herein are intended
only as aids to the location of subject matter, and are neither a part
of the substance of the Agreement nor a guide to construction.
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7.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original, and all such
counterparts together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have signed this Agreement on the day and year
first above written, effective January 1, 1998.
/s/ Xxxx Lick, Jr.
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Xxxx Lick, Jr.
(Employee)
CENTRAL RESERVE LIFE INSURANCE
COMPANY
By: Xxxxx X. Xxxxxxx
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Its: CFO
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