EMPLOYMENT AGREEMENT
This
Employment Agreement (this “Agreement”) is made effective as December 15, 2007
by and between Unico American Corporation (“Company”) and Xxxx X. Cheldin
(“Emp1oyee”) with reference to the following facts:
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A. Company
is engaged in the business of insurance and related operations. Employee
will primarily perform the job duties at
the following location: 00000 Xxxxxxxxxx Xxxxx,
Xxxxxxxx Xxxxx, Xxxxxxxxxx.
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B. Company
desires to have the services of
Employee.
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C. Employee
is willing to be employed by
Company.
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Therefore,
the parties agree as follows:
1. EMPLOYMENT. Company
shall employ Employee as an Executive Vice President of
Company. Employee shall provide to Company the following services:
Duties as needed including day to day management of Company and its
subsidiaries; and serve as President, Vice President or other officer of all
Company subsidiaries, as required by Company. Employee accepts and
agrees to such employment, and agrees to be subject to the general supervision,
advice and direction of Company by Company’s Board of Directors. This
Employment Agreement supersedes all prior Employment Agreements between the
parties hereto.
2. BEST EFFORTS OF
EMPLOYEE. Employee agrees to perform faithfully,
industriously, and to the best of Employee’s ability, experience, and talents,
all of the duties that may be required by the terms of this
Agreement. Under no circumstances shall Employee be obligated without
his consent to relocate his residence in order to render the services or, except
for occasional business trips, to perform his duties outside of the Woodland
Hills, California area.
3. COMPENSATION
OF EMPLOYEE.
3.1 Salary. As
compensation for the services provided by Employee under this Agreement, Company
will pay Employee an annual salary of no less than $297,400 payable in
accordance with Company’s usual payroll procedures. The annual salary shall be
subject to increase from time to time at the discretion of the Board of
Directors of Company.
3.2 Bonus.
The Company shall pay to the Employee a bonus (the “Mandatory
Bonus”) on or before December 31 of each year, provided that the consolidated
net income of the Company (prior to deductions for income taxes and current
Mandatory Bonuses paid to all executive officers of Company, including Employee
but including deductions for discretionary bonuses paid to all employees) for
the most recent four (4) fiscal quarters ending prior to such payment date is
equal to or greater than $4,000,000 (the “Net Income Goal”). The amount of the
Mandatory Bonus shall be in an amount determined by the Board of Directors, in
its discretion, but shall not be less than $54,000, less any amounts paid to
Employee as a discretionary bonus since the immediately preceding January
1.
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Nothing
herein shall prevent the Board of Directors from electing, in its discretion, to
grant a discretionary bonus to the Employee, in such amount as may be determined
by the Board of Directors in the event the Net Income Goal is not
met. Notwithstanding the foregoing, if the Employee’s Agreement is
terminated by the Company other than for Cause or by Employee on account of a
breach of this Agreement by the Company, the Employee will be entitled for the
remainder of the term of this Agreement (without giving effect to the
termination) to the minimum Mandatory Bonus amount of $54,000 regardless of
whether the Net Income Goal is attained.
3.3. Upon
Termination by Company for Cause or By Employee for other than Breach by
Company. Upon termination of this Agreement by Company
for Cause or by the Employee for other than a breach of this Agreement by
Company, payments under this Section 3 shall cease; provided, however, that
Employee shall be entitled to payments of accrued but unpaid salary and vacation
for periods or partial periods that occurred prior to the date of
termination.
3.4. Upon
Termination Without Cause or Breach by Company. Upon
termination of this Agreement by Company without Cause or by Employee on account
of a breach of this Agreement by Company and the execution of a general release
of the Company by the Employee to the reasonable satisfaction of the Company,
except as provided in Section 3.6 hereof, (a) Employee shall be entitled to
immediate payment in full of his salary for the remainder of the term of this
Agreement, without discount or mitigation, (b) Employee shall be entitled to his
Mandatory Bonus paid as and when provided herein for the remainder of the term
of this Agreement (without giving effect to the termination) and (c) Employee
shall be entitled to his benefits for the remainder of the term of this
Agreement (without giving effect to the termination) as described in Section
5.
3.5. Accrued
Vacation. Accrued but unpaid vacation will be paid in
accordance with the laws of the State of California and Company’s customary
procedures.
3.6. Limitation On
Payments. Notwithstanding the foregoing, in the
event that it is determined that the aggregate value of payment
or distribution by the Company to Employee pursuant to this Agreement whether
paid or payable (a “Payment”) constitutes an “excess parachute payment” as
defined in Section 280G(b) of the Internal Revenue Code of 1986, as amended (the
“Code”) subject to the excise tax imposed under Section 4999 of the Code (the
“Excise Tax”), the aggregate present value of the Payment shall be reduced to an
amount expressed in a present value without causing any Payment to be subject to
the limitation of deduction under Section 280G of the Code. In the
event any portion of the amounts payable is reduced pursuant to this Section
3.6, the Employee and the Company shall mutually agree on the type of payment
that will be reduced. If the Employee and the Company are unable to
reach an agreement as to the type of payments to be reduced, all payments to the
Employee shall be reduced proportionately to achieve the necessary reduction.
All determinations made pursuant to this Section 3.6 shall be made by the
Company’s independent accounting firm, in their reasonable discretion in
consultation with the Employee’s accountants.
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3.7. Compliance with
Section 409A. Notwithstanding any other provision
of this
Agreement, to the extent that (a) any payment pursuant to this Agreement is
treated as nonqualified deferred compensation pursuant to Section 409A of the
Code and (b) Employee is a “specified employee” pursuant to Section 409A (2) (B)
of the Code, then the amount of such payment that is payable to Employee during
the first 6 months following Employee’s termination of employment shall not
exceed the lesser of (i) 2 times Employee’s salary or (ii) 2 times the maximum
amount that may be taken into account under a qualified plan pursuant to Section
401(a)(17) of the Code for the year in which such termination
occurred. Except for the amounts described in the preceding sentence,
any amount otherwise due and payable to the Employee during the first six months
after the Employee’s termination of employment shall be paid as soon as
administratively practicable following the 6 month anniversary of the Employee’s
termination of employment, but in no event later than the next regularly
scheduled payroll period following such 6 month anniversary, in accordance with
the Company’s typical payroll practices.
4. EXPENSE
REIMBURSEMENT. Company will reimburse Employee for
“out-of-pocket” expenses incurred by Employee in accordance with Company’s
policies in effect from time to time.
5. BENEFITS. Employee
shall be entitled to employment benefits, including holidays, personal leave,
sick leave, vacation, health insurance, disability insurance, life insurance,
and pension plan as provided by Company’s policies in effect from time to time.
These benefits shall cease upon the effective date of termination of employment
provided that this Agreement is terminated by Company for Cause or by Employee
for other than a breach of this Agreement by Company. Upon
termination of this Agreement by Company without Cause or by the Employee on
account of a breach of this Agreement by Company, subject to the limitation
described in Section 3.6, these benefits shall continue to be provided by
Company to Employee for the remaining term of this Agreement (without giving
effect to the termination). Notwithstanding the foregoing, disability
insurance shall be an amount sufficient to provide compensation to Employee, if
disabled, equal to 70% of the compensation that Employee would be entitled
pursuant to Sections 3.1. Further,
during the term of this Agreement, the benefits hereunder shall not be reduced
from those provided to Employee as of December 15, 2007.
6. TERM/TERMINATION. Employee’s
employment under this Agreement shall be for a term beginning on December 15,
2007 and ending December 31, 2012. Notwithstanding the foregoing, this Agreement
may be terminated at any time by Company for Cause or by Employee for other than
breach of this Agreement by the Company upon thirty days written notice. This
Agreement may also be terminated by Company without Cause upon thirty days
written notice or by the Employee at any time on account of the breach of this
Agreement by Company; however, in either of such events, subject to the
limitation described in Section 3.6, the Company shall pay Employee, as and in
the manner provided in Section 3.4, all salary, bonuses and benefits as provided
herein for the remainder of the term of this Agreement.
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7. CAUSE OR BREACH
BY THE COMPANY. The term “Cause” as used in this
Agreement shall mean (i) chronic alcoholism or drug addiction, (ii) fraud, (iii)
unlawful appropriation of any money or other assets or properties of the Company
or any affiliate of the Company, (iv) a material breach by the Employee of the
terms of this Agreement which is not cured within ten (10) days after Company
has given Employee written notice describing such material breach with
particularity, (v) the conviction of the Employee of any felony involving moral
turpitude or other serious crime involving moral turpitude, (vi) the Employee’s
gross moral turpitude relevant to his office or employment with the Company or
any affiliate of the Company, and (vii) the Employee’s willful engagement in
misconduct which is demonstrably and materially injurious to the Company and its
subsidiaries taken as a whole. No act, or failure to act, on the part
of the Employee shall be considered “willful” unless done, or omitted to be
done, by the Employee not in good faith and without a reasonable belief that the
action or omission was in the best interests of the Company and its
subsidiaries. The Company shall be in breach of this Agreement if
there is a material breach by the Company of the terms of this Agreement which
is not cured within ten (10) days after Employee has given Company written
notice describing such material breach with particularity.
8. TERMINATION FOR
DISABILITY OR DEATH. Company shall have the option to
terminate this Agreement, if Employee becomes permanently disabled and is no
longer able to perform the essential functions of his position with reasonable
accommodation, provided that Company has provided the disability insurance
benefit described in Section 5. Company
shall exercise this option by giving sixty days prior written notice of such
termination to Employee. This Agreement shall terminate on the death
of Employee. A termination of this Agreement pursuant to this Section
8 shall not be deemed a termination by Company of this Agreement without
Cause.
9. INDEMNIFICATION.
To the
fullest extent permitted under the law, the Company shall indemnify the
Employee, if the Employee is made a party, or threatened to be made a party, to
any threatened, pending, or contemplated action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, by reason of the fact that
the Employee is or was an employee, officer or director of the Company or any
affiliate of the Company, in which capacity the Employee is or was serving the
Company, against any and all liabilities, costs, expenses (including reasonable
attorneys’ fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit, or
proceeding. In the case of any claim being made, Company shall
advance reasonable costs of defense (including reasonable attorneys’ fees)
provided that Employee agrees to repay such advances if it is finally determined
that Employee was not entitled to indemnification with respect to such claim.
This Section shall not limit in any way the Employee’s rights under any
agreement relating specifically to indemnification. This section
shall survive the termination or expiration of this Agreement.
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10. CONFIDENTIALITY. Employee
recognizes that he has and will have information regarding matters such as trade
secrets, customer lists, product design, and other vital information
(collectively, “Information”) which are valuable, special, and unique assets of
Company. Employee agrees that he will not at any time or in any
manner, either directly or indirectly, divulge, disclose, or communicate in any
manner any Information to any third party without the prior written consent of
Company (which consent may not be signed by Employee on Company’s
behalf. Employee will protect the Information and treat it as
strictly confidential. A violation by Employee of this paragraph
shall be a material breach of this Agreement and will justify legal and/or
equitable relief. This section shall survive the termination or
expiration of this Agreement.
11. RETURN OF
PROPERTY. Upon termination of his employment, Employee
shall deliver to Company all property which is Company’s property or related to
Company’s business (including keys, records, notes, data, memoranda, models, and
equipment) that is in Employee’s possession or under Employee’s
control. Such obligation shall be governed by any separate
confidentiality or proprietary rights agreement signed by
Employee. This section shall survive the termination or expiration of
this Agreement.
12. NOTICES. All
notices required or permitted under this Agreement shall be in writing and shall
be deemed delivered when delivered in person or on the third day after being
deposited in the United States mail, postage paid, addressed as
follows:
Company:
Unico
American Corporation
Xxxxx
Cheldin, President
00000
Xxxxxxxxxx Xxxxx
Xxxxxxxx
Xxxxx, Xxxxxxxxxx 00000
Employee:
Xxxx X.
Cheldin
00000
Xxxxxxxxxx Xxxxx
Xxxxxxxx
Xxxxx, Xxxxxxxxxx 00000
Such
addresses may be changed from time to time by either party by providing written
notice in the manner set forth above.
13. ENTIRE
AGREEMENT. This Agreement contains the entire agreement
of the parties and there are no other promises or conditions in any other
agreement whether oral or written. This Agreement supersedes any prior written
or oral agreements between the parties.
14. AMENDMENT.
This Agreement may be modified or amended, if the amendment
is made in writing and is signed by both parties.
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15. SEVERABILITY. If
any provisions of this Agreement shall be held to be invalid or unenforceable
for any reason, the remaining provisions shall continue to be valid and
enforceable. If a court finds that any provision of this Agreement is
invalid or unenforceable, but that by limiting such provision it would become
valid or enforceable, then such provision shall be deemed to be written,
construed, and enforced as so limited.
16. WAIVER OF
CONTRACTUAL RIGHT. The failure of either party to
enforce any provision of this Agreement shall not be construed as a waiver or
limitation of that party’s right to subsequently enforce and compel strict
compliance with every provision of this Agreement.
17. COUNTERPARTS. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
18. HEADINGS. The
headings in the Agreement are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement.
19. APPLICABLE
LAW. This Agreement shall be governed by the laws of the
State of California.
COMPANY:
Unico
American Corporation
By /s/ Xxxxx
Cheldin
Date: March 17, 0000
Xxxxx Xxxxxxx, President
EMPLOYEE:
/s/ Xxxx
Cheldin
Date: March 17, 2008
Xxxx X.
Cheldin
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