1
Exhibit 10.6
EMPLOYMENT AGREEMENT
I
PARTIES
1.1 PARTIES. This Employment Agreement (the "Central Agreement") is made
this 15th day of December, 1997, effective January 1, 1998, by and
between ▇▇▇▇ Lick, Jr. ("Employee") and Central Reserve Life
Corporation, an Ohio corporation having its principal offices at ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Central").
II
RECITALS
2.1 PARENT. Central is the parent of Central Reserve Life Insurance Company
("Reserve").
2.2 EMPLOYEE. Employee is Chairman of Central. He holds the same office
with Reserve.
2.3 CENTRAL PRIOR AGREEMENTS. Employee and Central are parties to prior
employment agreements commencing on January 1,
2
EMPLOYMENT AGREEMENT
PAGE 2
1980. It is the intention of the parties that the January 1, 1980
Employment Agreement and all subsequent employment agreements be
cancelled and supplanted by this Central Agreement.
2.4 RESERVE PRIOR AGREEMENTS. Employee and Reserve are parties to separate
employment agreements commencing on January 1, 1980. By a separate
employment agreement (the "Reserve Agreement") signed contemporaneously
with the signing of this Central Agreement, the January 1, 1980
Employment Agreements and all subsequent employment agreements between
Employee and Reserve have been cancelled and supplanted by the Reserve
Agreement. A copy of the Reserve Agreement is attached hereto and for
reference purposes made a part hereof.
3
EMPLOYMENT AGREEMENT
PAGE 3
III
TERMS OF THE AGREEMENT
3.1 INITIAL EMPLOYMENT TERM AND COMPENSATION. Central agrees to continue
the employ of Employee for a term of two (2) years commencing January
1, 1998 and ending December 31, 1999, to serve as Chairman of Central
and Reserve, with primary responsibilities devoted to sales and
marketing of Reserve's insurance products. Employee shall be paid a
salary at the annual rate of $500,000 during said two-year period,
payable in accordance with Central's normal payroll practices.
Thereafter, Employee's employment with Central shall be subject to the
terms and conditions of Section 3.2 hereof.
3.2 SUBSEQUENT EMPLOYMENT TERM AND COMPENSATION. For the two-year period
from January 1, 2000 through December 31, 2001, Central 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
4
EMPLOYMENT AGREEMENT
PAGE 4
that such good faith negotiations do not result in a satisfactory
compensation agreement, this Central 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 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
5
EMPLOYMENT AGREEMENT
PAGE 5
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.
Moreover, Employee shall be entitled to retain his current office for
as long as he is employed by Central.
3.3 VACATION. Employee is entitled to six (6) weeks' paid vacation annually
under the Reserve Agreement, which vacation Employee may cumulate from
year to year on and after January 1, 1998. No vacation time prior to
January 1, 1998 shall so cumulate.
3.4 RELOCATION. 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 time to time within or without Cuyahoga
County at his sole election.
6
EMPLOYMENT AGREEMENT
PAGE 6
3.5 BOARD OF DIRECTORS. Employee shall remain on the Central and Reserve
Board of Directors for the duration of his Employment Agreements with
Central and Reserve.
IV
GENERAL COVENANTS
4.1 GENERAL COVENANTS.
(a) TERMINATION BY EMPLOYEE. At no time within the Initial or Subsequent
Employment term of this Central Agreement shall Employee terminate this
contract or refuse to perform his duties and responsibilities for
Central, except upon a material breach of the terms hereof by Central
or of the terms of the Reserve Agreement by Reserve. Upon termination
by Employee because of such breach by Reserve or Central, the rights of
Employee and the obligations of Central shall be the same as those
provided as to Employee and Reserve in Article V of the Reserve
Agreement.
7
EMPLOYMENT AGREEMENT
PAGE 7
(b) TERMINATION BY CENTRAL. At no time within the Initial or Subsequent
Employment term of this Central Agreement shall Central terminate its
employment of Employee. If, however, Central shall attempt for any
reason whatsoever to terminate its employment of Employee, then and in
that event, Employee may deem this a material breach of the terms of
this Agreement by Central or of the terms of the Reserve Agreement by
Reserve, and the rights of the Employee and the obligations of Central
shall be the same as those provided in Article V of the Reserve
Agreement.
Notwithstanding the provisions of this Section 4.1(b), this Central
Agreement and the Reserve Agreement and Employee's employment
thereunder may be terminated by Central 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
8
EMPLOYMENT AGREEMENT
PAGE 8
Employee to Central's reasonable satisfaction, or gross or repeated
insubordination or a major conflict or interference with Employer's
best interests or business operations.
(c) ASSIGNABILITY. Neither party shall have the right to assign this
Central 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 Central to another corporation or entity, or upon the
merger or consolidation of Central with another corporation or entity,
this Central 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 Central Agreement.
9
EMPLOYMENT AGREEMENT
PAGE 9
V
MISCELLANEOUS
5.1 ENTIRE AGREEMENT. This Central Agreement and the Reserve Agreement of
even date which is attached constitute the entire agreement between the
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.
5.2 NO THIRD-PARTY BENEFICIARIES. This Central Agreement is intended solely
for the benefit of Reserve, Central and Employee and confers no right
or benefit upon any other person, including stockholders of Reserve and
Central and other officers and directors of Reserve and Central.
5.3 SEPARABILITY. Each provision of this Central 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.
10
EMPLOYMENT AGREEMENT
PAGE 10
5.4 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.
5.5 COUNTERPARTS. This Central 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.
EMPLOYEE: CENTRAL:
CENTRAL RESERVE LIFE CORPORATION
/s/ ▇▇▇▇ Lick, Jr. By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------- ---------------------------------
▇▇▇▇ Lick, Jr.
Its: CFO
--------------------------------
