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EMPLOYMENT AGREEMENT
AGREEMENT made the 1st day of January, 1998 between
INTERCARGO CORPORATION, a Delaware corporation (hereinafter referred to as
"Intercargo" or "Employer") and XXXXXX XXXXXXX (hereinafter referred to as the
"Employee").
WHEREAS, Intercargo is an insurance holding company which itself or
through its related or affiliated entities, sells and/or underwrites surety
bonds (including U.S. customs bonds), marine cargo insurance, errors and
omissions insurance and other lines, and through its own agency and various
sub-producers sells the said insurance products of Intercargo and of its related
or affiliated entities and of other insurance companies, and engages in such
other lawful business which it may pursue from time to time:
WHEREAS, Employee wishes to be employed by Intercargo to perform
management and executive services for it and its subsidiaries; and
WHEREAS, Employee is willing to be employed by Intercargo, and
Intercargo is willing to employ Employee, on the terms and conditions
hereinafter set forth.
WHEREAS, Intercargo and Employee agree that this Agreement will
supersede the terms and conditions of any and all prior understandings and past
practices between them regarding employment, whether written or oral.
NOW, THEREFORE, intending to be legally bound and in consideration of
the mutual covenants contained herein and other valuable consideration, the
receipt of which is hereby acknowledged, Intercargo and Employee hereby agree as
follows:
1. TERM. The term of this Agreement (the "Term") shall commence on the date
hereof and, subject to the terms and conditions contained herein, shall
continue for a period of one (1) year. Thereafter, should Employee wish to
remain employed and should Intercargo wish to continue to employ Employee,
this Agreement shall continue and have full force and effect, except that
either party may terminate the Agreement for any reason and at anytime,
with 30 days' written notice to the other party. Upon termination of
Employee's employment, all conditions and covenants of this Agreement
remain in full force and effect.
2. DUTIES. Employee shall serve as President of Trade Insurance Services, Inc.
("TIS"), and will be responsible for all aspects of management of
Intercargo's agency operations, including administrative, sales, marketing,
other executive services and other duties which may be assigned by the
President of Intercargo. Employee shall faithfully, industriously and the
best of his ability and talent perform all duties that may be required of
and from
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him. Employee agrees to devote substantially all of his business
time and attention (except for permitted vacation periods and reasonable
periods of illness) to the business and affairs of Intercargo and its
subsidiaries.
3. COMPENSATION. For all the services to be rendered by Employee hereunder,
Intercargo agrees to pay Employee:
(A) BASE SALARY.
i. An annual salary of Two Hundred Fifteen Thousand Dollars
($215,000.00), payable periodically in accordance with
Intercargo's regular compensation payment schedule;
ii. Employee shall be entitled to an annual salary review beginning in
January 1998; however, whether Employee shall receive any
increase in salary is in the discretion of the President of
Intercargo and subject to approval of the Compensation Committee
of the Board of Directors.
(B) BONUS. Employee shall be eligible to participate in any Executive
Incentive Compensation Plan for calendar years 1998 and beyond.
Whether Employee shall receive a bonus at any time shall be in the
sole discretion of the President of Intercargo subject to approval of
the Compensation Committee of the Board of directors.
(C) EMPLOYEE BENEFITS. Employee shall be entitled to benefits under and in
accordance with the terms and conditions of any pension or profit
sharing plan, disability income plan, group insurance plan, hospital
and surgical benefit plan, or any other incentive, retirement or
employee benefit plan for which senior executive employees of
Intercargo generally are eligible. Nothing herein, however, shall be
construed to either create an employee benefit if none presently
exists or prevent the alteration or termination of an employee benefit
for similarly situated employees of Intercargo.
(D) VACATION: TIME OFF. Employee shall be entitled to take such holidays
and sick leave as Intercargo may reasonably determine, consistent with
the performance of his duties hereunder and the then current policies
of Intercargo in respect to such matters. Notwithstanding any current
policies of Intercargo with respect to vacation, however, Employee
shall be entitled to four weeks vacation "annually." Annually shall be
defined by the term year. Employee may "carry over" up to two weeks of
unused vacation days to the following contract year. In no event,
however, shall employee be entitled to accumulate a total of more than
two weeks of time from prior contract years.
(E) EXPENSES. Intercargo agrees to pay reasonable expenses of Employee
incurred in connection with Employee's execution of his duties
hereunder.
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(F) AUTOMOBILE. Employee shall be entitled to an Intercargo leased
automobile or an auto allowance not to exceed $750 per month.
(G) COUNTRY CLUB MEMBERSHIP. Employee shall be entitled to use of an
Intercargo owned country club membership at Royal Melbourne Country
Club so long as Intercargo maintains a corporate country club
membership at that country club. In the event Intercargo elects to
terminate it's corporate membership, Employee shall have the
opportunity to convert the membership to one for his individual use,
and Employee shall be responsible for the costs of converting and
maintaining that membership.
(H) STOCK OPTIONS. In consideration of this Agreement and pursuant to
Intercargo Corporation's Non-Qualified and Incentive Stock Option Plan
dated July 28, 1987, as amended, (the "Plan"), Employee shall be
issued an award agreement dated as of the date of this Agreement (the
"Award Agreement"), granting Employee the option rights to acquire
10,000 shares of common stock of Intercargo ("Common Stock"). The
Award Agreement shall provide that the stock options exercise rights
shall vest at a rate of 2,000 shares on each of the following dates
provided that Employee remains employed by Intercargo in the years
1998, 1999, 2000, 2001 and 2002, and may otherwise be exercisable
thereafter within the maximum period allowed by applicable law and the
terms of the Plan. The purchase price for a share of Common Stock
under the Award Agreement shall be based on the closing market price
on the signing date of this Agreement.
4. TERMINATION FOR CAUSE. During the first year of this Agreement, Employer
may terminate this Agreement and immediately discharge Employee for the
following reasons: failure to properly service the business assigned to or
produced by Employee; failure to meet performance standards or sales goals;
any violation of any rule or regulation that may be established from time
to time for the conduct of Employer's business; failure of Employee to
perform any of his duties or obligations under this Agreement; breach of
any covenants or agreements under this Agreement; failure to render
services satisfactory to Employer; or failure of Employee to conduct all of
his activities, both business and personal, with full ethical and moral
propriety. Any termination by Employer pursuant to this paragraph shall be
made by Employer in its sole discretion, but shall be made reasonably and
in good faith.
5. TERMINATION UPON DISABILITY. If Employee is unable to perform the essential
functions of his or her position by reason of illness or incapacity for a
period in excess of any absence authorized by Employer, but not less than
six (6) months or, in the event of a disability as defined under the
American with Disabilities Act which materially interferes with Employee's
ability to perform the essential tasks of his responsibilities, even with
Employer's reasonable accommodation of Employee's disability (unless
reasonable accommodation would
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present undue hardship to Employer), this Agreement shall be terminated.
Employee shall be entitled to participate in Employer's long-term
disability program, to the extent Employee is qualified and entitled.
6. TERMINATION UPON DEATH DURING EMPLOYMENT. If Employee dies during the term
of this employment, this Agreement shall terminate and Employer shall pay
to the estate of Employee the compensation which would otherwise be payable
to Employee up to the date of Employee's death, subject to the right of
Employer to set-off any amounts due and owing by Employee to Employer.
7. PROPERTY RIGHTS. For purposes of this paragraph 7 and paragraphs 8 through
13, the term Intercargo shall include Intercargo and all related and
affiliated entities, and references to Intercargo shall also be deemed
references to such related and affiliated entities as the context may
require.
(a) All information determined by the facts and applicable law to be
confidential which relates to the business of Intercargo, which may
include, but not be limited to policy forms, agency and sub-producer
relationships, product and financial plans, information on pricing and
customers, fees and services provided therefore, shall be treated as
confidential by Employee both during and after the termination of
Employee's employment.
(b) All data, whether written or electronically stored, computer
print-outs and other records and written material prepared or compiled
by Employee or furnished to Employee while in the employ of Intercargo
and which relate to the business of Intercargo are the property of
Intercargo, and shall be the sole and exclusive property of Intercargo
and none of such data, computer printouts or other records, or copies
thereof, shall be retained by Employee upon separation of his
employment for any reason.
8. CONFIDENTIALITY: NON-SOLICITATION OF EMPLOYEES: NON-DISPARAGEMENT.
From and after the date hereof,
(a) Employee will maintain in confidence and will not, directly or
indirectly, use, publish or otherwise disclose to any competitor of
Intercargo or other third party, except as required by law or as may
be expressly permitted by Intercargo, any trade secrets, confidential,
proprietary, and other non-public information of a similar nature
belonging to Intercargo or to which Intercargo has any rights, except
to the extent, if any, that any such information is or becomes
generally known or is readily ascertainable by proper means
("Confidential Information"), whether or not such Confidential
Information is in written or electronic form, or exists as "know how"
or as knowledge gained through his employment by Intercargo. Such
Confidential Information includes, but is not limited to, proprietary
technical and business information relating to any non-public
financial information, business or product plans or costs, existing or
prospective customers or customer lists, pricing data or other terms
of sales, customer requirements, buying history or underwriting
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or risk assessment information, the identity of agents or customers or
prospective agents or customers, products, coverages, the terms of any
reinsurance, fronting or other agreements of Intercargo, subject to
the same exception stated in the preceding sentence;
(b) Employee will not solicit or induce, either directly or through
others, any employees of Intercargo to terminate such relationship, or
make contact with any such employees with the principal purpose of
violating this section; and
(c) Employee shall not disparage the business, employees, officers or
directors of Intercargo. All duties and obligations set forth herein
shall be in addition to those which exist by common law or statute.
Employee's obligations under this Agreement with respect to
Confidential Information shall extend to information belonging to any
client, vendor or customer of Intercargo and their agents and
employees, where such information is considered by such client, vendor
or customer of Intercargo and by their agents and employees to be
Confidential.
9. NON-COMPETITION: NON-SOLICITATION OF CUSTOMERS AND AGENTS.
(a) Employee shall not for 12 months following his separation from
Intercargo for any reason ("Restricted Period"), call upon, or solicit
through any independent agent, any person, entity or business who was
an existing insured of Intercargo at any time during the period
commencing sixty (60) months prior to Employee's separation from
Intercargo's employment through the end of the Restricted Period for
the purpose of selling to or through such customers or agents any
insurance coverages or surety bonds of a type offered by Intercargo
during such period. The term "existing or prospective customers" of
Intercargo as used in this paragraph shall be defined and construed to
mean any and all persons, corporations, partnerships, firms,
associations, businesses or other entities for whom or through whom
Intercargo engages in the business of providing insurance, surety
bonds or conducting related business or for whom or through whom
Intercargo actively sought or seeks to engage in such business during
the period commencing sixty (60) months prior to Employee's separation
from Intercargo's employment through the end of the Restricted Period
and shall include agents and subagents of Intercargo notwithstanding
that such persons or entities may have been induced to become
customers and/or agents and given their patronage to Intercargo by the
efforts and solicitations of Employee, or someone on his behalf;
(b) Employee shall not, during the Restricted Period, directly or
indirectly, own an interest in, manage, operate, join, control, lend
money or render financial or other assistance to or participate in or
be connected with, as an officer, employee, partner, agent,
stockholder, consultant, independent contractor or otherwise, any
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individual, partnership, firm, corporation, proprietorship,
association or other business organization or entity which causes the
diversion of the business of Intercargo to competitors.
The restrictions in this paragraph 9 shall be limited to any county of any
state of the United States or any comparable jurisdiction of any foreign
country in which Intercargo, directly or through subsidiaries during the
Term of this Agreement or the Restricted Period, has been or is engaged in
the business described in the Recitals or this paragraph.
10. EMPLOYEE ACKNOWLEDGEMENT. Employee has carefully considered the nature and
extent of the restrictions upon him and the rights and remedies conferred
upon Intercargo under this Agreement, and hereby acknowledges and agrees
that the same is reasonable in time and territory, are designed to
eliminate competition which otherwise would be unfair to Intercargo, do not
stifle the inherent skill and experience of Employee, do not operate as a
bar to Employee's sole means of support, are fully required to protect the
legitimate interest of Intercargo and do not confer a benefit upon
Intercargo disproportionate to the detriment of the Employee.
11. EXTENSION OF DURATION. In addition to the remedies Intercargo may seek and
obtain pursuant to paragraph 13 hereof, the restrictions of paragraphs 8
and 9 shall be extended by any and all periods during which the Employee
shall have been found by a court possessing personal jurisdiction over
Employee to have been in violation of the covenants in paragraphs 8 and 9.
12. JUDICIAL MODIFICATION. The parties hereby agree that if the scope or
enforceability of the covenants in paragraphs 8 and 9 hereof are in any way
disputed at any time, a court or other trier of fact may modify and enforce
said covenants to the extent that it believes them to be reasonable under
circumstances existing at that time.
13. INJUNCTIVE RELIEF. Employee acknowledges that compliance with the
restrictive covenants herein is necessary to protect the business and good
will of Intercargo, and that a breach of these restrictions will cause
irreparable damage to Intercargo for which monetary damages may not be
adequate. Consequently, Employee agrees that in the event that he breaches
or threatens to breach any of the restrictive covenants contained herein,
Intercargo shall be entitled to both (i) a temporary, preliminary and/or
permanent injunction in order to prevent the continuation of such harm, and
(ii) money damages insofar as they can be determined. Notwithstanding any
of the foregoing, nothing in this Agreement shall be construed to prohibit
Intercargo or Employee from also pursuing any other remedy, the parties
having agreed that all remedies are to be cumulative. As money damages for
the period of time during which Employee violates the restrictive
covenants, Intercargo shall be
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entitled to recover the amount of fees, compensation or other remuneration
earned by Employee as a result of any such breach.
14. NOTICES. Any and all notices required or permitted to be given under this
Agreement will be sufficient if furnished in writing, sent by personal
delivery, telex, telecopier or certified mail, return receipt requested, to
the applicable address set forth below (or such other address as may from
time to time be designated by notice by any party hereto for such purpose):
To Employee: Xxxxxx Xxxxxxx
0000 Xxxxxxxx
Xxxxxxxxxx, XX 00000
To Intercargo: Intercargo Corporation
Attn: President
0000 X. Xxxxxxxx Xxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Copy to: Xxxxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Notice shall be deemed given, if by personal delivery, on the date of
such delivery or, if by telex or telecopy, on the business day
following receipt of answer back or telecopy confirmation or, if by
certified mail, on the date shown on the applicable return receipt.
15. MISCELLANEOUS.
(a) Except for other documents referenced in this Agreement, this written
Agreement contains the sole and entire Agreement between the parties,
and supersedes any and all other agreements between them.
(b) The waiver by either party of a breach of any provision of this
Agreement, shall not operate as, or be construed a waiver of any
subsequent breach thereof. No waiver or modification of this Agreement
or of any covenant, condition or limitation herein contained shall be
valid unless in writing and duly executed by the party to be charged
therewith.
(c) In case any one or more of the provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall
not affect any other provision thereof and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
(d) In any action, special proceedings or other proceedings that may be
brought arising out of, in connection with, or by reason of this
Agreement, the laws of the State of Illinois shall be applicable and
shall govern to the exclusion of the law of any other forum, without
regard to the jurisdiction in which the action or special proceeding
may be instituted.
(e) The section headings contained herein are inserted for ease of
reference only and shall not control or affect the meaning or
construction of the provisions hereof.
(f) This Agreement shall be binding on and inure to the benefit of the
respective parties and their respective heirs, legal representatives,
successors and assigns.
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IN WITNESS WHEREOF, Intercargo has hereunto caused this Agreement to be
executed by its duly authorized officers and the Employee has hereunto set his
hand, all being done in duplicate originals with one being delivered to each
party on the 5th day of March, 1998.
Executed at Schaumburg, Illinois on the date first above written.
INTERCARGO CORPORATION EMPLOYEE
By: /s/ Xxxxxxx X. Xxxxxxxx /s/ Xxxxxx Xxxxxxx
------------------------ ---------------------------
Its: President Xxxxxx Xxxxxxx
