EXHIBIT 31
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT is made this 14th day of December, 1994, by and
between Xxxx X. Xxxxx ("Xxxxx") and ALLIED Group, Inc. ("AGI"), ALLIED Mutual
Insurance Company ("Mutual"), and ALLIED Life Financial Corporation ("ALFC").
AGI, Mutual, and ALFC shall be known collectively as "ALLIED".
WHEREAS, the purpose of this Consulting Agreement ("Agreement") is to set
forth the services which Xxxxx is to render to ALLIED following his retirement
as an employee and officer on December 31, 1994;
WHEREAS, due to the intercompany relationships of AGI, Mutual, and ALFC,
the parties intend that Xxxxx will provide consulting services to all three
entities;
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
covenants set forth below and other valuable consideration, the receipt of which
is hereby acknowledged, the parties agree as follows:
I. CONSULTING AND ADVISORY SERVICES
Xxxxx shall make himself available at all reasonable times upon the request
of ALLIED to provide the following consulting and advisory services:
(a) Provide advice and consultation to the Board of Directors and the
President of each of AGI, Mutual, and ALFC on such matters as strategic
planning, personnel and organization activities, marketing and product
planning, and acquisitions and divestitures;
(b) Assist in developing and maintaining relationships with key
shareholders of AGI and ALFC, major financial institutions, and primary
insurance agents and agencies;
(c) Assist in advancing ALLIED and industry positions in various
legislative, political, and industry forums;
(d) Offer the full benefit of his knowledge, expertise, advice, and
recollections as to the ALLIED business; and
(e) Provide such other consultation services as may be requested from time
to time by the Board of Directors or the President of each of AGI, Mutual,
and ALFC.
Although this Agreement does not require a fixed schedule or a required
minimum number of hours, Xxxxx shall be expected to make himself available to
devote up to fifty percent (50%) of his time during the calendar year to render
the services described above as well as to serve in the additional capacities
contemplated in Section II below. Xxxxx shall designate the times, places, and
manner in which these services and duties will be performed. These
aforementioned services are to be performed in close association with each of
the Presidents of AGI, Mutual, and ALFC and under the general auspices of the
Boards of AGI, Mutual, and ALFC. It is anticipated that Xxxxx will make
periodic reports to the Boards at their request on the nature and scope of his
consulting and advisory activities.
II. ADDITIONAL CAPACITIES
In addition to performing services as a consultant during the term of this
Agreement, it is anticipated that Xxxxx will be nominated for re-election to the
Board of Directors of each of AGI, Mutual, and ALFC, and also nominated for re-
election to the Board of Directors of their subsidiaries on which he is a member
as of the date of this Agreement. If elected to the Board of Directors of each
of AGI, Mutual, and ALFC, it is anticipated that Xxxxx will serve (in addition
to any capacities to which he is appointed or elected) as Chairman of the Board
of Directors and as Chairman of the Executive and Investment Committees of each
of AGI, Mutual, and ALFC. For the term of this Agreement and in accordance with
Mutual's nomination rights under the Stock Rights Agreement with AGI, Mutual
agrees to nominate Xxxxx for re-election to the AGI Board of Directors. In
addition, for the term of this Agreement and in accordance with Mutual's
nomination rights
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under the Stock Rights Agreement with ALFC, Mutual agrees to nominate Xxxxx for
re-election to the ALFC Board of Directors.
Xxxxx understands that any such Board or committee nominations, elections,
or appointments would be within the purview of individuals then serving as
members of the Board of Directors, the shareholders of AGI and ALFC, or the
policyholders of Mutual. Accordingly, Xxxxx' obligation to perform the
consulting services for ALLIED as contemplated in Section I above is an
obligation independent from any obligations which may result from his service in
any of the Board capacities contemplated in this Section II, and his obligation
to perform such consulting services shall continue regardless of whether he is
nominated, elected, or appointed to serve in any such capacities.
III. COMPENSATION
A. Consulting Services
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In consideration for the consulting and advisory services to be rendered
hereunder, Xxxxx will be entitled to receive $250,000 per year, payable on a
monthly basis within fifteen (15) days after the end of each calendar month.
Xxxxx shall be entitled to receive the aforementioned consulting fees
regardless (i) of whether requests for his consulting services result in
devotion of less than fifty percent (50%) of his time or (ii) of whether he
serves in the capacities contemplated in Section II above.
AGI, Mutual, and ALFC shall prorate the consulting fee and reimbursable
expenses payable under this Agreement in such proportion as is mutually agreed
upon by such companies.
B. Director Compensation
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It is agreed that during the term of this Agreement Xxxxx will be entitled
to any director fees (e.g., retainer, Board or committee meeting fees) with
respect to any service by
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Xxxxx as a director on the Board or any Board committee. Xxxxx shall also be
entitled to the reimbursement of expenses and to the other nonmonetary benefits
available to nonemployee members of the Board of Directors of AGI, Mutual, and
ALFC.
C. Benefits Upon Retirement
------------------------
Upon Xxxxx' retirement as an officer and employee effective December 31,
1994, Xxxxx will be entitled to all compensation and benefits payable or
distributable to him pursuant to the provisions of any ALLIED qualified or non-
qualified retirement, welfare benefit, and other compensation or benefit plan,
program, or policy applicable to him as a retiree or any contractual
arrangements in effect with him by reason of his employment with AGI prior to
such retirement. Xxxxx will be regarded by AGI as a retired employee for
purposes of AGI's qualified retirement and welfare benefit plans. Nothing
herein, including, without limitation, any failure or inability on his part to
perform any of the services or duties required or contemplated hereby or any
breach by him of any of the provisions herein, shall result in any reduction,
offset, or ineligibility for any such compensation or benefits.
IV. SUPPORT STAFF AND SERVICES
ALLIED will make available during the term of this Agreement for Xxxxx'
use, in connection with and to facilitate his performance of consulting services
hereunder, the following support facilities and resources:
(a) An office with appropriate equipment and facilities, together with a
full-time executive secretary; and
(b) Reimbursement of reasonable travel and other business expenses.
V. TERM AND TERMINATION
This Agreement shall commence on January 1, 1995, upon
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Xxxxx' retirement as an employee effective December 31, 1994, and shall continue
in effect until the earlier of:
(a) December 31, 1996;
(b) Xxxxx' death;
(c) the effective date of any written notice of termination from Xxxxx to
ALLIED (which notice, in the event of any failure by ALLIED to perform any
of its obligations hereunder, shall not prejudice any legal or equitable
remedies available to Xxxxx); or
(d) the effective date of any written notice of termination from ALLIED
which ALLIED may provide in the event of:
(i) Xxxxx' physical or mental disability if he is unable to perform
the duties required by this Agreement (such determination to be in the
sole discretion of the Board of Directors of AGI, Mutual, and ALFC)
for a period of six (6) months or more (in the aggregate) in any
twelve (12) month period;
(ii) Xxxxx' breach of the provisions of Sections VII or VIII hereof
followed by a failure or inability by Xxxxx to cure such breach in a
timely manner;
(iii) Xxxxx' personal dishonesty in the course of his duties, his
breach of a fiduciary duty to ALLIED involving personal profit or
conflict of interest, or his conviction of any crime; or
(iv) Xxxxx' conduct is determined by the Board of Directors of AGI,
Mutual, and ALFC to be inconsistent with the dignity and character of
a representative of ALLIED, and it is determined by such Boards that
Xxxxx' conduct has a material
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adverse effect on the business of ALLIED.
If this Agreement has been not terminated in accordance with any of the
aforementioned items (b) through (d) by December 15, 1996, this Agreement may be
renewed on an annual basis by December 15th of each year (provided the Agreement
has not been terminated in accordance with any of the aforementioned items (b)
through (d)) upon the mutual agreement of Xxxxx and ALLIED.
VI. INDEPENDENT CONTRACTOR
Xxxxx' status, commencing January 1, 1995 and at all times thereafter in
connection with the performance of consulting services hereunder, will be that
of an independent contractor and not, for any purpose, that of an employee or
officer with authority to bind ALLIED in any respect. Accordingly, among other
things, Xxxxx will not be entitled to participate in any compensation or benefit
plans, programs, or policies maintained by ALLIED solely for its employees,
unless such benefit plans, programs, or policies are available to other retired
employees of ALLIED. All payments and other consideration made or provided to
Xxxxx under this Agreement will be made or provided without withholding or
deduction of any kind, and Xxxxx assumes sole responsibility for all tax or
other obligations associated therewith, including but not limited to federal,
state, city, or other income taxes or social security taxes.
VII. CONFIDENTIALITY
Xxxxx shall continue to hold in confidence all secret or confidential
information, knowledge, or data relating to ALLIED that shall have been obtained
by him during his employment by or affiliation with ALLIED. Xxxxx agrees to
maintain the confidentiality of any material, nonpublic information concerning
the business and affairs of ALLIED which is disclosed to him or to which he
otherwise becomes privy in connection with the performance of the services and
duties under this Agreement.
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VIII. NONCOMPETE
During the term of this Agreement, Xxxxx agrees that he will not, directly
or indirectly, either as principal, agent, stockholder, employee, or in any
other capacity, without the prior written approval of the Board of Directors of
AGI, Mutual, and ALFC, engage in any activity, be employed, assist, or have an
equity interest in any business or other entity that competes in any material
respect with any of the principal businesses of ALLIED or which may be
detrimental or adverse to the interest of ALLIED; provided, however, that such
prohibited activity shall not include the ownership of 1% or less of the voting
securities of any publicly traded corporation regardless of the business of such
corporation.
IX. INDEMNIFICATION
ALLIED agrees to defend, indemnify, and hold Xxxxx harmless from and
against any losses, liabilities, damages, or expenses including reasonable
attorney's fees, incurred by him as a result of any lawsuits or claims against
him in connection with his performance of the consulting services contemplated
herein, provided that such services have been performed by Xxxxx in a good
faith, non-negligent, and, to the best of his knowledge, lawful manner.
X. SUCCESSORS
This Agreement shall inure to the benefit of and be binding upon AGI,
Mutual, and ALFC and any of their successors. Any successor of AGI, Mutual,
and/or ALFC (whether direct or indirect, by purchase, merger, consolidation, or
otherwise) to substantially all of the business and/or its assets will be
required to assume and agree to perform this Agreement in the same manner and to
the same extent that AGI, Mutual, and/or ALFC would be required to perform it if
no such succession had taken place.
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XI. MISCELLANEOUS
Neither Xxxxx nor ALLIED shall assign this Agreement or any rights, duties,
or obligations hereunder without the prior written consent of the other parties.
If any term or provision of this Agreement shall be invalid or unenforceable to
any extent, the remainder of this Agreement shall not be affected by such
invalidity or unenforceability and each remaining provision shall be valid and
enforceable to the fullest extent permitted by law. This Agreement constitutes
the entire agreement between ALLIED and Xxxxx concerning the subject matter
hereof and supersedes and cancels any and all other written or oral agreements
or understandings with respect to the subject hereof. No modification,
amendment, or waiver of any term or provision of this Agreement shall be
effective unless in writing and signed by and on behalf of each of the parties.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Iowa.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year above first written.
ALLIED Mutual Insurance Company
__________________________ By:___________________________
Xxxx X. Xxxxx Its:__________________________
ALLIED Group, Inc. ALLIED Life Financial Corporation
By:_______________________ By:___________________________
Its:______________________ Its:__________________________
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