AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement is entered into as of
the 1st day of November, 1998, by and between INTERSTATE NATIONAL DEALER
SERVICES, INC., a Delaware corporation (the "Company"), and XXXXXXX X. XXXX (the
"Executive").
RECITALS:
WHEREAS, the Company and the Executive are parties to an Employment
Agreement entered into as of December 1, 1993, as amended by the Amendment to
the Employment Agreement, dated as of March 16, 1995, by the Amendment to the
Employment Agreement, dated as of May 1, 1996, by the Amendment to the
Employment Agreement, dated as of October 1, 1997 and by the Amendment to the
Employment Agreement, dated as of February 13, 1998 (collectively, the "Prior
Employment Agreement") and the Company and the Executive are parties to certain
split dollar insurance agreements dated as of January 23, 1995 and February 9,
1995 (the "Split Dollar Insurance Agreements"); and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Executive
by providing him with compensation and benefit arrangements that are competitive
with those of other similar corporations;
WHEREAS, in furtherance of the foregoing, the Board has deemed it
advisable to amend and restate in full the Prior Employment Agreement as
provided herein; and
WHEREAS, the Board approved the execution and delivery of this
Agreement by the Company at a meeting of the Board held on September 29, 1998;
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereby agree as follows:
1. Position and Duties. The Company agrees to employ the Executive,
and the Executive agrees to be employed, as Chairman of the Board and Chief
Executive Officer of the Company, subject to the supervision of, and reporting
only to, the Board. Executive shall have such duties, responsibilities, titles
and authority normally associated with the position of chairman of the board and
chief executive officer of a company the size and structure of the Company,
limited, however, to those duties and responsibilities as historically performed
by the Executive.
During the Term (as defined in Section 4 below) and excluding
any periods of Personal Time-Off (as defined in Section 3(g) below), the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company, and, to the extent necessary
to discharge the duties and responsibilities assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to perform faithfully
and efficiently such duties and responsibilities.
It shall not be a violation of this Agreement for the Executive
to engage in the following activities, so long as such activities do not
significantly interfere with the performance of Executive's duties and
responsibilities: (a) serve on corporate, civic or charitable boards or
committees; (b) deliver lectures, fulfill speaking engagements or teach at
educational institutions; (c) manage personal investments; or (d) attend
conferences conducted by business organizations including but not limited to the
World Presidents Organization and the Chief Executives Organization. It is
expressly understood and agreed that to the extent that any activities described
in (a), (b), (c) or (d) above have been conducted by the Executive prior to the
date of this Agreement, the continued conduct of such activities (or the conduct
of activities similar in nature and scope thereto) during the Term shall not be
deemed to interfere with the performance of the Executive's duties and
responsibilities to the Company. The Company agrees that Executive's current
activities with respect to, and without any material changes in the financial
structure or operations of, Target Agency, Inc., Target Insurance Ltd. and
Dealers Extended Services, Inc. do not significantly interfere with the
performance of the Executive's duties and responsibilities to the Company and
shall not constitute a violation of this Agreement.
2. Compensation. For all services rendered by the Executive pursuant
to this Agreement, the Company shall annually pay to the Executive the
compensation set forth in clauses 2(a), (b) and (c) below (each an "Element"),
the sum of which Elements shall be Executive's "Total Compensation" for any such
year.
(a) Annual Salary. The Company shall pay Executive a salary at
the rate of $250,000 per year during the Term, subject to future increases (the
"Annual Salary") and subject to applicable tax, Social Security and other
legally required withholding ("Withholding"). The Annual Salary shall be paid in
accordance with the customary payroll practices of the Company at regular
intervals, but in no event less frequently than every month, as the Company may
establish from time to time for employees of the Company generally. The Company
shall conduct an annual performance appraisal and salary review on behalf of the
Executive and adjust the Annual Salary accordingly but never below $250,000.
(b) Annual Bonus. In addition to the Annual Salary, the Company
shall pay each fiscal year to the Executive an amount equal to four and one half
per cent (4-1/2%) of the Company's Earnings Before Interest and Taxes ("EBIT")
for such fiscal year (the "Annual Bonus"). EBIT shall be as reflected on the
Company's audited consolidated financial statements and computed in accordance
with United States generally accepted accounting principles. However, in no
event shall any Annual Bonus be less than $150,000.
The Company shall pay each Annual Bonus to the Executive no later than
thirty (30) days after the completion of the Company's audited consolidated
financial statements by the Company's auditors for the subject fiscal year (the
"Bonus Payment Deadline"). Each Annual Bonus payment shall be subject to
Withholding.
Along with the payment of each Annual Bonus, the Company shall also deliver
to the Executive a written statement setting forth the basis of its calculation
of such Annual Bonus. The Executive and the Executive's representatives shall
have the right, at the Executive's cost, to inspect the records of the Company
with respect to the calculation of any such Annual Bonus, to make copies of said
records utilizing the Company's facilities without charge, and to have free and
full access thereto upon reasonable notice during the normal business hours of
the Company.
In the event that such inspection reveals an
underpayment by the Company of any Annual Bonus due the Executive, then the
Company shall immediately pay to the Executive the balance of all such amounts
found to be due ("Bonus Balance") plus interest, at the Prime Rate in effect
during such period as set forth in The Wall Street Journal, Eastern Edition, on
such Bonus Balance from (and including) the date the Annual Bonus for the
subject fiscal year was paid to (but excluding) the date such Bonus Balance is
received by Executive. If such inspection discloses that the Company has
underpaid the Annual Bonus due for the period by ten percent (10%) or more, then
the Company shall also pay the reasonable professional fees of the Executive's
representatives engaged to conduct or review such inspection or audit.
(c) Performance Bonus. In addition to any other compensation
provided for in this Section 2, the Company may award to the Executive a
performance bonus at any time in such amount as the Board may determine (the
"Performance Bonus"), in its sole discretion, after taking into consideration
other compensation paid or payable to the Executive under this Agreement, as
well as the financial and non-financial progress of the business of the Company
and the contributions of the Executive toward that progress. Any Performance
Bonus shall be subject to Withholding.
(d) Elements Earned Pro Rata. Each Element of the Executive's
Total Compensation shall be deemed to be earned by Executive on a pro rata basis
throughout each fiscal year, based on the number of days elapsed in such fiscal
year, for purposes of determining amounts accrued or owing but not yet paid
under this Agreement. The pro rata portion of any Annual Bonus accrued or owing
as a result of an Early Termination (as defined in Section 5 below) shall be
paid to the Executive on or before the Bonus Payment Deadline.
3. Benefits.
(a) Medical, etc. The Executive shall be entitled to such
medical and other benefits as are customarily made available to executive
officers of the Company and upon the same terms. The Executive shall also be
entitled to receive those benefits and privileges that the Corporation
currently, and may at any time in the future, provide for its executive officers
upon the same terms.
(b) Company Car. For the Executive's sole use in fulfilling his
obligations under this Agreement and for personal use, the Company shall provide
the Executive with an automobile in a style comparable to the BMW 740 IL model
(the "Company Car"). The Company Car shall be leased by the Company in the
Executive's name and on terms acceptable to the Company. The Company shall pay
for or reimburse the Executive for the annual garage expenses at one location as
the Executive shall select and for all automobile insurance premiums for the
Company Car. With respect to other expenses incurred in connection with the use
and maintenance of the Company Car, the Company shall pay for or reimburse the
Executive for all reasonable expenses incurred by the Executive solely in
connection with the performance of his duties and responsibilities under this
Agreement upon submission of appropriate receipts. The Executive shall not be
reimbursed for expenses, such as tolls and any other expenses, incurred by the
Executive in connection with his personal use of the Company Car, other than
those expenses as historically reimbursed by the Company.
(c) Expenses. The Executive shall: (i) receive a non-accountable expense
allowance of $1,000 per month; and (ii) be reimbursed by the Company, in
accordance with customary procedures, for all expenses actually and necessarily
incurred by Executive in the performance of his services.
(d) Annual Conferences. The Executive shall be reimbursed for
any and all expenses he incurs, including travel, in connection with attending
the annual meetings or conferences of both the World Presidents Organization and
the Chief Executive Organization.
(e) Insurance Benefits. The Company shall maintain split dollar
life insurance policies for the Executive and his family in accordance with the
terms of the Split Dollar Insurance Agreements (the "Split Dollar Policies").
(f) Office and Support Staff. During the Term, the Executive
shall be entitled to an office or offices of a size and with furnishings and
other appointments, including exclusive personal secretarial and other
assistance, at least equal to the most favorable of the foregoing provided to
the Executive by the Company at any time during the 90-day period immediately
preceding the date of this Agreement, or, if more favorable to the Executive, as
provided at any time after such date to Executive or other executive officers of
the Company.
(g) Personal Time-Off. The Executive shall be entitled each
fiscal year during the Term to such number of personal days off, for purposes of
vacations or other personal affairs ("Personal Time-Off"), as are approved by
the Board, but not less than the greater of: (i) thirty (30) business days; or
(ii) the Personal Time-Off generally given by the Company to its executive
officers. Personal Time-Off shall be in addition to regular paid holidays
provided to all employees of the Company and shall be taken as determined by the
Executive in his reasonable and good faith discretion. The Executive shall be
fully compensated with respect to Personal Time-Off but shall not be permitted
to carry forward into a subsequent fiscal year any accrued but unused Personal
Time-Off.
(h) Tax and Financial Services. The Company shall provide
Executive with tax and financial advisory and tax return preparation services at
an annual cost to the Company not to exceed five thousand dollars ($5,000),
adjusted annually to reflect inflation as measured by changes in the Consumer
Price Index or other comparable index.
4. Term. The term of this Agreement (the "Term") shall terminate on
December 31, 2008 (the "Termination Date"); provided, however, that on December
31 of each year commencing December 31, 1999, the Term and Termination Date
shall automatically extend for an additional one-year period unless either party
hereto provides written notice not less than 60 days prior to December 31 of any
year that no further automatic extensions shall be granted. In the event that
the Executive continues his employment after the Termination Date, his
employment will be deemed "at will" under the same terms as provided herein
unless otherwise expressly agreed to by further written agreement between the
Company and the Executive.
5. Early Termination. The employment by the Company of the Executive
shall be terminated prior to the Termination Date as a result of the death or
disability of the Executive and may be terminated prior to the Termination Date
for proper cause by the Company, for good reason by the Executive or upon the
Executive's retirement (each an "Early Termination") as set forth below:
(a) Death. If the Executive shall die during the Term, this
Agreement shall thereupon terminate, except that notwithstanding such
termination the Company shall:
(i) pay to the legal representative of the
Executive's estate, within thirty (30) days of Executive's date of death, all
amounts accrued or owing but not yet paid under this Agreement and any other
benefits in accordance with the terms of any applicable plans and programs of
the Company;
(ii) pay to the legal representative of the
Executive's estate an amount equal to a factor of five (5) multiplied by the
dollar amount of the Annual Salary paid or payable to the Executive hereunder
for the Company's most recent fiscal year immediately prior to the Executive's
date of death (the "Death Benefit"). Such Death Benefit shall be paid in one
lump sum within sixty (60) days of the Executive's date of death;
(iii) provide the Executive's spouse until
her death with the same level of health/medical insurance or coverage that was
provided to her immediately prior to the Executive's death, with the cost of
such continued insurance or coverage being borne by the Company. Alternatively,
the Executive's spouse may elect to receive from the Company until her death a
monthly payment equal to her monthly cost to obtain comparable health/medical
insurance or coverage through another provider; and
(iv) pay the premiums on the Split Dollar
Policies in accordance with the terms of the Split Dollar Insurance Agreements.
(b) Disability. The Company or the Executive, upon not less than
thirty (30) days written notice to the other party, may terminate the employment
by the Company of the Executive if the Executive has been unable, by reason of
physical or mental disability, to render, for 90 successive days or for shorter
periods aggregating 180 days or more in any twelve month period, services of the
character contemplated by this Agreement and will be unable to resume providing
such services within a reasonable period of time by reason of such disability.
The determination of whether the Executive has become disabled within the
meaning of this Section 5(b) shall be made (i) in the case of a termination of
employment by the Company, by a medical doctor selected by the Company, or (ii)
in the case of a termination of employment by the Executive, by Executive's
medical doctor. In the event the Company gives a notice of termination of
employment under this Section 5(b), the Executive or his representative may at
any time prior to the effective date of termination contest the termination and
cause a determination of disability to be made by Executive's medical doctor. In
the event the Executive gives a notice of termination of employment under this
Section 5(b), the Company may at any time prior to the effective date of
termination contest the termination and cause a determination of disability to
be made by a medical doctor selected by the Company. In either case, if such
medical doctors do not agree with regard to the determination of disability,
they shall mutually choose a third medical doctor to examine the Executive, and
the disability determination of such third medical doctor shall be binding upon
both the Company and the Executive.
If the employment by the Company of the
Executive is terminated by reason of Executive's disability, the Company shall:
(i) pay to the Executive, within thirty (30)
days of such disability termination date, all amounts accrued or owing but not
yet paid under this Agreement and any other benefits in accordance with the
terms of any applicable plans and programs of the Company;
(ii) pay to the Executive annually, in
installments at least as frequent as monthly, an amount equal to fifty percent
(50%) of the average Total Compensation paid or payable to the Executive
hereunder for the Company's three most recent fiscal years immediately prior to
the Executive's disability termination less the amount, if any, of any payments
received by the Executive from the Company's disability insurance plan (the
"Disability Benefit"). Such Disability Benefit shall be subject to Withholding
and shall be payable until the Executive's death;
(iii) for the longer of two (2) years or the
balance of the Term, provide Executive and/or his spouse with the same level of
health/medical insurance or coverage provided to them immediately prior to such
disability termination, with the cost of such continued insurance or coverage
being borne by the Company. Alternatively, the Executive, or his spouse after
Executive's death, may elect to receive from the Company instead of such
insurance or coverage, a monthly payment equal to the cost to the Executive
and/or his spouse to obtain comparable health/medical insurance or coverage
through another provider; and
(iv) pay the premiums on the Split Dollar
Policies in accordance with the terms of the Split Dollar Insurance Agreements.
Any payments due to the Executive hereunder
may be paid to his spouse or legal representative for Executive's benefit, to
the extent warranted by Executive's incapacity.
(c) Proper Cause. The Company, upon not less than ten (10) days
written notice to the Executive, may terminate the employment by the Company of
the Executive if the Board has established and unanimously concluded (excluding
the vote of the Executive and/or any member of his immediate family who is then
on the Board), during a properly called meeting or meetings, that the Executive
has engaged in any of the following conduct (each a "Proper Cause"): (1)
willfully refused or failed to carry out specific directions of the Board which
are not inconsistent with the duties and responsibilities set forth in Section 1
hereof and which are material to the performance of his duties and
responsibilities under said Section 1, or willfully refused or failed to perform
a material part of such duties and responsibilities hereunder; (2) committed a
material breach of any of the provisions of Sections 8, 9 or 10 of this
Agreement; (3) acted fraudulently or dishonestly in his relations with the
Company; (4) been convicted of a felony involving an act of moral turpitude,
fraud or misrepresentation; (5) engaged in the use of illegal substances or
alcohol, which use has impaired the Executive's ability, on an ongoing basis, to
perform his duties and responsibilities; or (6) willfully engaged in misconduct
which materially injured the reputation, business or business relationships of
the Company, monetarily or otherwise.
No act, or failure to act, on the part of the
Executive shall be deemed "willful" unless done, or omitted to be done, by the
Executive otherwise than in good faith and in a manner that the Executive
reasonably believed was in or not opposed to the best interests of the Company
and its shareholders. In no event shall the employment by the Company of the
Executive be terminated for Proper Cause unless and until the Board has provided
the Executive with the following: (x) written notice specifying the details of
the Proper Cause (the "Notice"); (y) an opportunity or opportunities to appear
before the Board to respond to such Notice; and (z) thirty (30) days after
receiving such Notice during which to remedy, terminate, cure or correct the
conduct referred to therein.
As a result of any such termination for
Proper Cause, the Company shall pay, within thirty (30) days of such
termination, all amounts accrued or owing but not yet paid under this Agreement
through the date of termination and any other benefits in accordance with the
terms of any applicable plans and programs of the Company.
(d) By Executive For Good Reason; Other Termination. The
Executive may terminate the employment by the Company of the Executive upon not
less than ten (10) days' written notice to the Company based upon his reasonable
determination that one or more of the following events has occurred (each a
"Good Reason"):
(1) any of the Company's representations or warranties in this Agreement is
not materially true, accurate and/or complete;
(2) the Company intentionally and continually
breached or wrongfully failed to fulfill or perform (A) its obligations,
promises or covenants under this Agreement; or (B) any warranties, obligations,
promises or covenants of the Company in any agreement (other than this
Agreement) entered into between the Company and the Executive, without cure, if
any, as provided in such agreement;
(3) the Company terminated the Executive's employment hereunder, and such
termination does not constitute Proper Cause (as defined herein);
(4) without the consent of the Executive, the
Company: (A) substantially altered or materially diminished the position,
nature, status, prestige or responsibilities of the Executive from those in
effect by mutual agreement of the parties from time-to-time; (B) assigned
additional duties or responsibilities to the Executive which were wholly and
clearly inconsistent with the position, nature, status, prestige or
responsibilities of the Executive then in effect; or (C) removed or failed to
reappoint or re-elect the Executive to the Executive's offices under this
Agreement (as they may be changed or augmented from time-to-time with the
consent of the Executive), or as Chairman of the Board, except in connection
with the death or disability of the Executive;
(5) without the consent of the Executive, the
Company relocated the Company's principal operating offices from their present
location and as a result increased the Executive's ordinary commute from the
Executive's residence by more than thirty (30) miles;
(6) the Company intentionally required the
Executive to commit or participate in any felony or other serious
crime;
(7) there has been a Change in Control of the
Company (as defined in Section 6(a) below); and/or
(8) the Company engaged in other conduct
constituting legal cause for termination.
If any event of Good Reason occurs, and such
event is reasonably susceptible of being cured, the Company shall be entitled to
one period of thirty (30) days during which to cure such event, following the
receipt of written notice of such event from Executive. As a result of any such
termination for Good Reason, or if the Company terminates the employment of the
Executive for any reason other than as set forth in Sections 5(a), 5(b) or 5(c),
the Company shall:
(i) within thirty (30) days of such
termination, pay to the Executive all amounts accrued or owing but not yet paid
under this Agreement and any other benefits in accordance with the terms of any
applicable plans and programs of the Company;
(ii) pay Executive an amount equal to
the dollar amount of the Total Compensation paid or payable to the Executive
hereunder for the Company's most recent fiscal year immediately prior to the
Executive's termination multiplied by a factor which shall be the greater of two
(2) or the number of years (including fractions thereof) remaining in the Term
(the "Severance Benefit"). Such Severance Benefit shall be paid in one lump sum
within forty-five (45) days of the Executive's termination date and shall be
subject to Withholding;
(iii) for the longer of two (2) years
or the balance of the Term: (x) provide Executive and/or his spouse with the
same level of health/medical insurance or coverage provided to them immediately
prior to such termination, with the cost of such continued insurance or coverage
being borne by the Company; alternatively, the Executive, or his spouse after
Executive's death, may elect to receive from the Company, instead of such
insurance or coverage, a monthly payment equal to the monthly cost to the
Executive and/or his spouse to obtain comparable health/medical insurance or
coverage through another provider; and (y) continue the benefits associated with
both the Company Car and the Tax and Financial Services as set forth above in
Section 3(b) and 3(h) respectively; and
(iv) pay the premiums on the Split
Dollar Policies in accordance with the terms of the Split Dollar Insurance
Agreements.
(e) Retirement. The Executive may retire at any time during the
Term upon ten (10) days written notice to the Company. As a result of any such
retirement, the Company shall:
(i) within thirty (30) days of such
retirement, pay to the Executive all amounts accrued or owing but not yet paid
under this Agreement and any other benefits in accordance with the terms of any
applicable plans and programs of the Company;
(ii) pay Executive annually, in
installments at least as frequently as monthly, an amount equal to fifty percent
(50%) of the dollar amount of the Total Compensation paid or payable to the
Executive hereunder for the Company's most recent fiscal year immediately prior
to the Executive's retirement (the "Retirement Benefit"). Such Retirement
Benefit shall be subject to Withholding and shall be payable until the
Executive's death;
(iii) for the longer of two (2) years or the
balance of the Term: (x) provide Executive and/or his spouse with the same level
of health/medical insurance or coverage provided to them immediately prior to
such retirement, with the cost of such continued insurance or coverage being
borne by the Company; alternatively, the Executive, or his spouse after
Executive's death, may elect to receive from the Company, instead of such
insurance or coverage, a monthly payment equal to the monthly cost to the
Executive and/or his spouse to obtain comparable health/medical insurance or
coverage through another provider; and (y) continue the benefits associated with
both the Company Car and the Tax and Financial Services as set forth above in
Section 3(b) and 3(h) respectively; and
(iv) pay the premiums on the Split Dollar
Policies in accordance with the terms of the Split Dollar Insurance Agreements.
6. Change Of Control. In the event that the
Executive is an employee of the Company at the moment immediately
prior to a Change in Control of the Company (as defined below),
the Executive shall be entitled to receive all benefits described
in this Section 6.
(a) For purposes of this Agreement, a "Change in Control of the
Company" shall be deemed to occur if:
(i) there shall have occurred a change in
control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange
Act of 1934, as amended, as in effect on the date hereof, whether or not the
Company is then subject to such reporting requirement, provided, however, that
there shall not be deemed to be a Change in Control of the Company if: (A)
immediately prior to the occurrence of what would otherwise be a Change in
Control of the Company, the Executive is the other party to the transaction (a
"Control of the Company Event"); or (B) immediately prior to the occurrence of
what would otherwise be a Change in Control of the Company, the Executive is an
executive officer, trustee, director or more than 25% equity holder of the other
party to the Control of the Company Event or of any entity, directly or
indirectly, controlling such other party;
(ii) the Company merges or consolidates
with, or sells all or substantially all of its assets to, another company (each,
a "Transaction"), provided, however, that a Transaction shall not be deemed to
result in a Change in Control of the Company if (A) immediately prior thereto
the circumstances in (a)(i)(A) or (a)(i)(B) above exist, or (B)(1) the
shareholders of the Company, immediately before such Transaction own, directly
or indirectly, immediately following such Transaction in excess of fifty percent
(50%) of the combined voting power of the outstanding voting securities of the
corporation or other entity resulting from such Transaction (the "Surviving
Corporation") in substantially the same proportion as their ownership of the
voting securities of the Company immediately before such Transaction ("Shares")
and (2) the individuals who were members of the Company's Board of Directors
immediately prior to the execution of the agreement providing for such
Transaction constitute at least a majority of the members of the board of
directors of the Surviving Corporation, or of a corporation or other entity
beneficially directly or indirectly owning a majority of the outstanding voting
securities of the Surviving Corporation; or
(iii) the Company acquires assets of another
company or a subsidiary of the Company merges or consolidates with another
company (each, an "Other Transaction") and (A) the shareholders of the Company,
immediately before such Other Transaction own, directly or indirectly,
immediately following such Other Transaction, 50% or less of the combined voting
power of the outstanding voting securities of the corporation or other entity
resulting from such Other Transaction (the "Other Surviving Corporation") or (B)
the individuals who were members of the Company's Board of Directors immediately
prior to the execution of the agreement providing for such Other Transaction
constitute less than a majority of the members of the board of directors of the
Other Surviving Corporation, or of a corporation or other entity beneficially
directly or indirectly owning a majority of the outstanding voting securities of
the Other Surviving Corporation, provided, however, that an Other Transaction
shall not be deemed to result in a Change in Control of the Company if
immediately prior thereto the circumstances in (a)(i)(A) or (a)(i)(B) above
exist.
(b) In the event that the Executive is an employee of the
Company at the moment immediately prior to a Change of Control of the Company:
(i) the Company shall pay to the Executive
additional compensation in the form of cash equal to, on the date of a Change in
Control of the Company and with respect to each option to purchase Shares held
by the Executive whether or not such option has vested or is exercisable on such
date (an "Option"), the number of Shares underlying the Option, multiplied by
the amount, if any, that the exercise price of the Option or the Closing Share
Value (as defined below), whichever is less, exceeds the Initial Share Value (as
defined below);
(ii) with respect to each Option, in the
event that the Closing Share Value is greater than the exercise price of such
Option, then the Executive can (A) retain the Option or (B) exercise the Option,
or (C) forfeit the Option and receive, in exchange therefor, a cash payment
equal to the number of Shares underlying the Option multiplied by the amount
that the Closing Share Value exceeds the exercise price of the Option;
(iii) upon the occurrence of a Change of
Control, all Options then held by the Executive shall immediately
vest and become exercisable; and
(iv) for purposes of this subsection, the
"Initial Share Value" of an Option shall mean the average of the Closing Prices
of the Shares for the period commencing on the 180th day prior to the date of
the Change in Control of the Company and ending on the 150th day prior to the
date of the Change in Control of the Company, and the "Closing Share Value"
shall mean the Closing Price of the Shares on the date of the Change in Control
of the Company. For purposes of this subsection, the "Closing Price" of a Share
on any date shall mean the last sale price, regular way, or, in case no such
sale takes place on such date, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Shares are listed or admitted to
trading or, if the Shares are not listed or admitted to trading on any national
securities exchange, the last quoted price, or if not so quoted, the average of
the highest bid and lowest ask prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System or, if such system is no longer used, the principal other
automated quotation system that may then be in use or, if the Shares are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making the market in the Shares as
such person is selected from time to time by the Board of Directors of the
Company or, if there are no professional market makers making a market in the
Shares, then the value as determined in good faith judgement of the Board of
Directors of the Company.
7. Advances. The Company may, upon written consent of the Board, make
an advance to the Executive against any compensation or other amounts to be paid
by the Company to the Executive (an "Advance"). Any amounts due under this
Agreement to the Executive shall, at the election of the Company, be offset by
any then outstanding Advances. In the event of Executive's termination of
employment, Executive agrees that the Company shall have the right to offset the
amount of any and all outstanding Advance(s) against any compensation or any
other amounts due to the Executive from the Company, and that any remaining
balance of the Advance(s) shall be repaid by the Executive within ninety (90)
days after the termination of Executive's employment by the Company.
8. Non-Competition. In order to induce the Company to enter into and
perform this Agreement and, as additional consideration for the payment of the
Total Compensation provided herein, so long as the Executive is employed by the
Company and for the three (3) year period following the termination of the
Executive's employment pursuant to Section 5(b) (pertaining to disability),
Section 5(c) (pertaining to proper cause) or Section 5(e) (pertaining to
retirement), the Executive will not, either separately or in association with
others, directly or indirectly, in the continental United States, (i) establish,
engage in or become interested in, as an employee, consultant, advisor, agent,
owner, partner, co-venturer, principal, stockholder, director or otherwise, any
company the primary business of which is the administration of vehicle service
contracts and warranties, or (ii) solicit, interfere with, or endeavor to entice
away from the Company any dealers, independent agents or insurance underwriters
party to an agreement with the Company as of the date of Executive's termination
of employment. Mere passive ownership of stock representing five percent (5%) or
less of the capital stock of a publicly held company shall not be deemed a
breach of this Section 8. However, Company agrees that Executive's current and
future activities with respect to Target Agency, Inc., Target Insurance Ltd. and
Dealers Extended Services, Inc. shall not constitute a violation of this Section
8.
9. Confidential Information. During the Term and at any time
thereafter, the Executive shall not divulge, furnish or make accessible to any
person or business entity any of the Company's trade secrets or other
information of a confidential nature including, but not limited to, the
Company's business methods, operational procedures and cost and price
information, without the prior written consent of the Company.
10. Non-Interference. The Executive, during the time period referred
to in Section 8 hereof, will not cause or influence any employee, consultant or
advisor now employed or in the future to be employed by the Company, to work in
any way for the Executive or in any enterprise in which the Executive owns a
participation, directly or indirectly.
11. Unenforceability. If any provision of Sections 8, 9 or 10 herein
is held to be unenforceable because of the scope, duration or area of its
applicability, such scope, duration or area, or all of them, shall be modified
to the minimum extent possible to make such provision(s) enforceable, and such
provision(s) shall then be applicable in such modified form.
12. Return of Property. Upon Executive's termination of employment
with the Company, the Executive shall promptly deliver to the Company all
memoranda, notes, records, reports, manuals, drawings, blueprints and other
documents (and all copies thereof) relating to the business of the Company, and
all property associated therewith, which he may then possess or have under his
control.
13. Injunctive Relief. The Executive agrees that the restrictions and
covenants contained in Sections 8, 9, 10 and 12 herein are necessary for the
protection of the Company and any breach thereof will cause the Company
irreparable damages for which there is no adequate remedy at law. The Executive
further agrees that, in the event of a breach of his obligations thereunder, the
Company shall have the absolute right, in addition to any other remedy that
might be available to it, to obtain from any court having jurisdiction, such
equitable relief as might be appropriate, including temporary, interlocutory,
preliminary and permanent decrees or injunctions enjoining any further breach of
such provisions.
14. Miscellaneous.
(a) Severability. If any provision of this Agreement is
determined to be invalid or unenforceable, it shall not affect the validity or
enforceability of any of the other remaining provisions hereof.
(b) Notices. Any and all notices or other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand or if mailed, first class, postage prepaid,
registered or certified mail, return receipt requested to the addresses of the
parties set forth below or, as to each party, at such other address as shall be
designated in a written notice to the other party.
To the Company:
Interstate National Dealer Services, Inc.
The Omni, Suite 700
333 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx, XX, 00000
To the Executive:
Xx. Xxxxxxx X. Xxxx
00 Xxxx Xxxx Xxxx
Xxxxxx Xxx, XX 00000
(c) Waiver. No waiver by either party hereto of any breach of
any provision of this Agreement shall be deemed a waiver of any preceding or
succeeding breach of such provision or any other provision herein contained.
(d) Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of New York, without giving effect to the conflict of law
principles thereof.
(e) Entire Agreement. This Agreement, together with the Split
Dollar Insurance Agreements, sets forth the entire agreement of the parties
hereto with respect to the subject matter hereof, and is intended to supersede
all prior employment negotiations, understandings and agreements. No provision
of this Agreement may be waived or changed, except by a writing signed by the
party to be charged with such waiver or change. The Split Dollar Insurance
Agreements shall continue in accordance with their terms notwithstanding any
termination or amendment of this Agreement; provided, however, that Article VII,
Section 1(b) of each of such agreements shall be and hereby is amended to refer
to Section 5(c) of this Amended and Restated Employment Agreement instead of
Section 4(b)(ii) as is currently written in each of such agreements.
(f) Successors: Binding Agreement.
(i) The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company, by
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 that the Company would be required to perform it if no such succession
had taken place.
(ii) This Agreement and all rights of the
Executive hereunder, shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
(g) Counterparts. This Agreement may be executed
in counterparts, each of which shall be an original, but together
shall constitute one and the same instrument.
The rest of this page intentionally left blank.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
INTERSTATE NATIONAL DEALER
SERVICES, INC.
By:
Name:Xxxxx X. Xxxx
Title: President
