EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of January 1, 1997 between LIFE
USA HOLDING, INC., a Minnesota corporation (the "Company"), and XXXX X. XXXXXXXX
(the "Executive").
R E C I T A L S:
WHEREAS, the Executive is now and has been the Executive Vice President and
Chief Financial Officer of the Company and serves as an officer and/or director
of certain subsidiaries of the Company;
WHEREAS, the Executive and the Company wish to enter into this Agreement to
provide for the continued employment of Executive; and
WHEREAS, the Executive and the Company are willing to enter into this
Agreement upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual premises and agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Employment and Duties. The parties hereby agree that, during the term of
this Agreement as set forth in paragraph 2 below, the Executive shall be
employed as the Executive Vice President and Chief Financial Officer of the
Company with the duties and responsibilities attendant to such positions. In
discharging such duties and responsibilities, the Executive may also serve as an
executive officer and/or director of any direct or indirect subsidiary of the
Company (collectively the "Subsidiaries"). The salary, other compensation and
benefits provided herein may be allocated among the Company and the Subsidiaries
based upon the portion of the Executive's services provided to the Company and
each of the Subsidiaries, respectively, and the Executive shall assist the
Company in making such allocation as the Company may reasonably request. During
the term of this Agreement, the Executive shall apply on a full-time basis
(allowing for usual vacations and sick leave) all of the Executive's skill and
experience to the performance of the Executive's duties hereunder with the
Company and the Subsidiaries. It is understood that the Executive may have other
business investments and participate in charitable organizations which may, from
time to time, require minor portions of Executive's time, but which shall not
interfere or be inconsistent with the Executive's duties under this Agreement.
The Executive shall perform the Executive's duties at the Company's principal
executive offices in Minneapolis, Minnesota or at such other location as may be
mutually agreed upon by the Executive and the Company; provided that the
Executive shall travel to other locations at such times as may be necessary for
the performance of the Executive's duties under this Agreement.
2. Term of Employment. Unless sooner terminated as provided in paragraph 4
below, the term of this Agreement shall commence on the date hereof and shall
continue through December 31, 1999; provided that the term shall be
automatically extended for one year on each December 31st commencing December
31, 1997 unless either party gives written notice to the other prior to the date
on which the automatic extension would be effective; provided that the term
shall not be extended beyond Executive's sixty-fifth (65th) birthday.
3. Compensation and Benefits. During the term of this Agreement, the
Executive shall be entitled to the following compensation and benefits for
service to the Company and the Subsidiaries, including service as a director of
the Company or its Subsidiaries:
(a) Base Salary. The Executive shall be paid a base salary at a minimum
annual rate of $250,000, payable in accordance with the Company's customary
payroll policy, which salary shall be reviewed and may be increased from time to
time at the discretion of the Board of Directors of the Company or the
Compensation Committee of the Board of Directors (the "Base Salary"); provided
that the amount of the Base Salary shall not be reduced after it has been
increased by the Board of Directors or the Compensation Committee without the
Executive's written consent. The performance of the Executive shall be reviewed
at least once each calendar year which may be at the same time as any adjustment
to the Base Salary of the Executive.
(b) Bonus. The Executive shall, in addition to the Base Salary, also be
entitled to a cash annual bonus (the "Annual Bonus") based on the achievement by
the Company of performance goals established by the Board of Directors or the
Compensation Committee of the Company's Board of Directors.
(c) Stock Incentives. The Executive shall be eligible to receive stock
options under any stock based plan from time to time adopted by the Company (the
"Stock Plans"), as from time to time determined by the Board of Directors or
Stock Option Committee of the Company's Board of Directors.
(d) Reimbursement of Expenses. The Company shall reimburse the Executive
for all business expenses properly documented in accordance with the Company's
expense reimbursement policy.
(e) Other Benefits. The Executive shall be entitled to participate and
shall be included in any employee benefit plan, medical/dental coverage plan,
life insurance plan, disability coverage plan, or similar benefit plan of the
Company now existing or established hereafter which are generally applicable to
executives of the Company.
4. Termination of Employment.
(a) Death or Disability. In the event of the Executive's death or
disability as defined in the Company's long term disability plan then in effect,
the employment of the Executive hereunder shall terminate and the Company's
obligation to make further Base Salary and Annual Bonus (to the extent not yet
earned) payments hereunder shall thereupon terminate as of the end of the month
in which such death or disability occurs. The Executive's rights to other
compensation and benefits shall be determined under the Company's benefit plans
and policies applicable to Company executives then in effect.
(b) Termination for Cause by the Company. By following the procedure set
forth in paragraph 4(e), the Company shall have the right to terminate the
employment of the Executive for "Cause" in the event the Executive: (i) has
repeatedly failed to perform the Executive's duties under this Agreement, which
failure is willful and deliberate; (ii) has engaged in an act or acts of
dishonesty which is or are intended to result in substantial personal enrichment
for the Executive; (iii) has knowingly engaged in conduct which is materially
injurious to the Company; (iv) is convicted of, or pleads nolo contendere to (A)
any felony (other than any felony arising out of negligence), or (B) any crime
or offense involving dishonesty with respect to the Company or any of the
Subsidiaries; (v) has failed to comply with the covenants contained in paragraph
5 of this Agreement; or (vi) knowingly provides materially misleading
information concerning the Company to the Board of Directors of the Company or
any of its Subsidiaries, any governmental body or regulatory agency or to any
lender or other financing source or proposed financing source of the Company or
its Subsidiaries. If the employment of the Executive is terminated by the
Company for Cause, the Company's obligation to make further Base Salary and
Annual Bonus (to the extent not yet earned) payments hereunder shall thereupon
terminate, except the Executive shall receive the Base Salary through the end of
the month during which such a termination occurs. The Executive's rights to
other compensation and benefits shall be determined under the Company's benefit
plans and policies applicable to executives of the Company then in effect.
(c) Termination for Good Reason by the Executive. By following the
procedure set forth in paragraph 4(e), the Executive shall have the right to
terminate the Executive's employment with the Company for "Good Reason" in the
event (i) the Executive is not at all times the duly elected the Executive Vice
President and Chief Financial Officer of the Company; (ii) there is any material
reduction in the scope of the Executive's authority and responsibility; (iii)
there is a reduction in the Executive's Base Salary, a material reduction in the
amount of Annual Bonus for which the Executive is eligible, an amendment to any
Stock Plan or employee retirement plan applicable to the Executive which is
materially adverse to the Executive, or a material reduction in the other
benefits to which the Executive is entitled under paragraph 3(e) above; (iv) the
Company requires the Executive's principal place of employment to be anywhere
other than the Company's principal executive offices, or there is a relocation
of the Company's principal executive offices outside of Minneapolis/St. Xxxx,
Minnesota metropolitan area; or (v) the Company otherwise fails to perform its
obligations under this Agreement. If the employment of the Executive is
terminated by the Executive for Good Reason before a Change in Control (as
defined below) or following twenty-four (24) months after a Change in Control,
the Executive shall be entitled to the severance benefits set forth in paragraph
4(f) below. If the employment of the Executive is terminated by the Executive
for Good Reason upon or within (and including) twenty-four (24) months after a
Change in Control, the Executive shall be entitled to the severance benefits set
forth in paragraph 4(g) below. In addition, in the event a Change in Control has
occurred and the Executive elects upon ten (10) days prior notice to the
Company, to terminate employment with the Company within the sixty (60) period
following the first anniversary of the Change in Control, such termination shall
be considered a termination by the Executive for Good Reason and the Executive
shall be entitled to the severance benefits under paragraph 4(g) below.
(d) Termination Without Cause. The Company may terminate the Executive's
employment without Cause prior to the expiration of the term of this Agreement.
If the employment of the Executive is terminated by the Company without Cause
before a Change in Control or following twenty-four (24) months after a Change
in Control, the Executive shall be entitled to the severance benefits set forth
in paragraph 4(f) below. If the employment of the Executive is terminated by the
Company without Cause upon or within (and including) twenty-four (24) months
after a Change in Control, the Executive shall be entitled to the severance
benefits set forth in paragraph 4(g) below.
(e) Notice and Right to Cure.
(i) Termination by Company for Cause. If the Company proposes to
terminate the employment of the Executive for Cause under paragraph
4(b), the Company shall give written notice to the Executive specifying
the reasons for such proposed determination with particularity and, in
the case of a termination for Cause under paragraph 4(b)(i), the
Executive shall have a reasonable opportunity to correct any curable
situation to the reasonable satisfaction of the Board of Directors of
the Company, which period shall be no less than thirty (30) days from
the Executive's receipt of the notice of proposed termination.
Notwithstanding the foregoing, the Executive's employment shall not be
terminated for Cause unless and until there shall be delivered to the
Executive a copy of the resolution duly adopted by the affirmative vote
of not less than the majority of the members of the Board of Directors
of the Company at a meeting called and held for the purpose (after
reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's legal counsel, to be heard
before the Board of Directors) finding that, in the opinion of the
Company's Board of Directors, the Executive has engaged in conduct
justifying a termination for Cause.
(ii) Termination by Executive for Good Reason. If the Executive
proposes to terminate the Executive's employment for Good Reason under
paragraph 4(c) above (other than the last sentence of paragraph 4(c)
above), the Executive shall give written notice to the Company,
specifying the reason therefor with particularity. In the event the
Executive proposes to terminate employment for Good Reason under
paragraph 4(c)(i), (ii), (iii) or (iv) above, the termination shall be
effective on the date of such notice. In the event the Executive
proposed to terminate employment for Good Reason under paragraph
4(c)(v) above, the Company will have an opportunity to correct any
curable situation to the reasonable satisfaction of the Executive
within the period of time specified in the notice which shall not be
less than thirty (30) days. If such correction is not so made or the
circumstances or situation is such that it is not curable, the
Executive may, within thirty (30) days after the expiration of the time
so fixed within which to correct such situation, give written notice to
the Company that the Executive's employment is terminated for Good
Reason effective forthwith.
(f) Severance Benefits. If the Executive is entitled to severance benefits
under this paragraph 4(f) pursuant to paragraph 4(c) or (d) prior to a Change in
Control or following twenty-four months after a Change in Control, the Executive
shall be provided to the following benefits (regardless of the death or
disability of the Executive after the Termination Date):
(i) Base Salary. The Company shall continue to pay to the Executive the
Base Salary when and as such Base Salary would have been paid from the
date of termination (the "Termination Date") through the end of the
term of this Agreement under paragraph 2 as if such termination did not
occur and there were no further automatic extensions of the term
pursuant to paragraph 2 (the "Severance Period") as if the Executive
continued to be employed by the Company during the Severance Period and
regardless of the death or disability of the Executive subsequent to
the Termination Date.
(ii) Annual Bonus. If the effective date of such termination occurs
before the Annual Bonus for any preceding calendar year has been paid,
the Company shall, within thirty (30) days after the Termination Date,
pay to the Executive the amount of the Executive's Annual Bonus for
such preceding calendar year when and as it would have been paid if the
Executive remained employed by the Company.
(iii) Disability, Life Insurance and Medical/Dental Coverage. The
Executive shall be entitled to the disability coverage, life insurance
and medical/dental coverage which the Executive and the Executive's
family received under paragraph 3(e) as if the Executive continued to
be employed by the Company during the Severance Period; provided that
if Executive obtains new employment with comparable benefits during the
Severance Period, all entitlements under this paragraph 4(f)(iii) shall
cease. Nothing in this paragraph shall be construed as providing
Executive with coverage under any plan of Employer to which Executive
would not otherwise be entitled and in the event any coverage is
unavailable, e.g., if Executive is uninsurable, Employer's obligations
under this paragraph may be satisfied by paying to Executive the cost
of such coverage if it were available, as determined in good faith by
the Company.
(iv) Stock Options. Not later than thirty (30) days after the date on
which the Executive's employment terminates, the Company shall pay the
Executive a lump sum cash payment equal to the amount by which the fair
market value (determined as of the Termination Date) of the number of
shares of stock subject to any stock option granted under the Stock
Plans which was not exercisable on the Termination Date and which would
have become vested and exercisable during the Severance Period if the
Executive had remained employed by the Company during the Severance
Period.
(g) Severance Benefits for Change in Control. In the event of a Change in
Control and either upon or within (and including) twenty-four (24) months after
such Change in Control, the Executive terminates employment for Good Reason or
the Executive's employment is terminated by the Company for any reason other
Cause, then (regardless of the death or disability of the Executive after the
Termination Date) the Company shall pay the Executive a lump sum cash payment
within five (5) days after the Termination Date, in an amount equal to the
amounts referred to in paragraph 4(f)(i), (ii) and (iv), plus the amount of the
Deemed Bonus (as defined below), and the Company shall also provide the
Executive the severance benefits referred to in paragraph 4(f)(iii) as provided
therein. In addition, the Company shall pay the Executive the Gross-Up Payment
in accordance with the following provisions:
(i) Gross-Up Payment. Anything to the contrary notwithstanding, in the
event it shall be determined that any payment, distribution or benefit
made or provided by the Company to or for the benefit of the Executive
(whether pursuant to this Agreement or otherwise) (a "Payment"), would
be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended, (the "Code") or any interest or
penalties with respect to such excise tax (such excise tax, together
with any such interest and penalties, are collectively referred to as
the "Excise Tax"), then the Company shall pay the Executive in cash an
amount (the "Gross-Up Payment") such that after payment by the
Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including but not limited to income taxes
(and any interest and penalties imposed with respect thereto) and the
Excise Tax, imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-up Payment equal to the Excise Tax imposed on the
Payments.
(ii) Determination of Gross-Up Payment. Subject to paragraph 4(g)(iii)
below, all determinations required to be made under this paragraph
4(g)(i), including whether a Gross-Up Payment is required and the
amount of the Gross-Up Payment, shall be made by the firm of
independent public accountants selected by the Company to audit its
financial statements for the year immediately preceding the Change in
Control (the "Accounting Firm") which shall provide detailed supporting
calculations to the Company and the Executive within thirty (30) days
after the Termination Date. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group
effecting the Change in Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations
required under this paragraph 4(g) (which accounting firm shall then be
referred to as the "Accounting Firm"). All fees and expenses of the
Accounting Firm in connection with the work it performs pursuant to
this paragraph 4(g) shall be promptly paid by the Company. An Gross-Up
Payment (as determined pursuant to paragraph 4(g)(i) above) shall be
paid by the Company to the Executive within five (5) days of the
receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall
furnish the Executive with a written opinion that failure to report the
Excise Tax on the Executive's applicable federal income tax return
would not result in the imposition of a negligence or a similar
penalty. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm, it is possible that Gross-up
Payments which will not have been made by the Company should have been
made ("Underpayment"). In the event that the Company exhausts its
remedies pursuant to paragraph 4(g)(iii) below, and the Executive is
thereafter required to make a payment of Excise Tax, the Accounting
Firm shall promptly determine the amount of the Underpayment that has
occurred and any such Underpayment shall be paid by the Company to the
Executive within five (5) days after such determination.
(iii) Contest. The Executive shall notify the Company in writing of any
claim made by the Internal Revenue Service that, if successful, would
require the Company to pay a Gross-Up Payment. Such notification shall
be given as soon as practicable but no later than ten (10) business
days after the Executive knows of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to
the expiration of the thirty (30) day period following the date on
which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the
Employee shall:
(A) give the Company any information reasonably requested by
the Company relating to such claim;
(B) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time
to time, without limitation, accepting legal representation
with respect to such claim by an attorney selected by the
Company and reasonably acceptable to the Executive;
(C) cooperate with the Company in good faith in order
effectively to contest such claim;
(D) permit the Company to participate in any proceedings
relating to such claim; provided, however, that the Company
shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with
such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income
tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing
provisions of this paragraph 4(g)(iii), the Company shall
control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at
its sole option, either direct the Executive to pay the tax
claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided,
however, that if the Company directs the Executive to pay such
claim and xxx for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free
basis, from any Excise Tax or income tax, including interest
or penalties with respect thereto, imposed with respect to
such advance or with respect to any imputed income with
respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with respect
to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service
or any other taxing authority.
(iv) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to paragraph 4(g)(iii), the Executive becomes
entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company's complying with the
requirements of paragraph 4(g)(iii)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to paragraph
4(g)(iii), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does
not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be paid.
(h) Benefits in Lieu of Severance Pay Policy. The severance benefits
provided for in this paragraph 4 are in lieu of any benefits that would
otherwise be provided to the Executive under the Company's severance pay policy
and the Executive shall not be entitled to any benefits under the Company's
severance pay policy.
(i) No Funding of Severance. Nothing contained in this Agreement or
otherwise shall require the Company to segregate, earmark or otherwise set aside
any funds or other assets to provide for any payments required to be made under
this paragraph 4 and the rights of the Executive to the severance benefits
hereunder shall be solely those of a general, unsecured creditor of the Company.
However, the Company may, in its discretion, deposit cash or property, or a
combination of both, equal in value to all or a portion of the amounts
anticipated to be payable hereunder into a trust, the assets of which are to be
distributed by such times as determined by the trustee of such trust; provided
that such assets shall be subject at all times to the rights of the Company's
general creditors.
(j) Definitions.
A "Change in Control" shall be deemed to have occurred if, prior to the
expiration of the term of the Employment Agreement:
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934) (other than the Company or any of
its subsidiaries or any employee benefit plan of the Company or any of
its subsidiaries) becomes a beneficial owner, directly or indirectly,
of securities of the Company representing 20% or more of the voting
power of all of the Company's then outstanding securities; or
(ii) during any period of two consecutive years individuals who at the
beginning of such period constituted the Board of Directors of the
Company (the "Incumbent Directors") together with any director (the
"New Incumbent Director") whose nomination or election was approved by
at least two-thirds of the Incumbent Directors and any New Incumbent
Director who was previously elected, in each case who are directors at
the time of the nomination or election of such director cease for any
reason to constitute at least a majority, the Board of Directors of the
Company; or
(iii) the shareholders of the Company approve the sale of all, or
substantially all, of the business or assets of the Company or the
liquidation or dissolution of the Company.
The "Deemed Bonus" shall be an amount equal to the number of calendar years
(including the calendar year in which the Termination Date occurs) multiplied by
the Company shall pay the Executive an amount equal to the greater of (A) the
Annual Bonus paid to the Executive for the period after the Change of Control or
(B) the average of the Annual Bonus paid or payable to the Executive in respect
of the two calendar years immediately preceding the calendar year in which the
Change in Control occurs.
5. Confidentiality; Non-Solicitation Covenant.
(a) Confidentiality. The Executive agrees that, at all times, both during
the Executive's employment and after the termination thereof, the Executive
shall not divulge to any other person, firm or corporation, or in any way use
for the Executive's own benefit, except as required in the conduct of the
business of the Company or any of its Subsidiaries or as authorized in writing
on behalf of the Company, any trade secrets or confidential information of the
Company or its Subsidiaries obtained during the course of the Executive's
employment with the Company or its Subsidiaries. The Executive also agrees that
the Executive will not, either subsequent to termination of employment or during
employment, except as required in the conduct of the business of the Company or
any of its Subsidiaries, or as authorized in writing on behalf of the Company,
interfere with or disturb or attempt to interfere with or disturb any
employment, contractual or business arrangements of the Company or any of its
Subsidiaries with any of its employees, agents, suppliers, customers, reinsurers
or other parties with which the Company or any of its Subsidiaries has a
contractual relationship, as the case may be.
(b) Non-Solicitation Covenant. While the Executive is actively employed
with the Company and, in the event of a termination of employment with the
Company for any reason, for a period of two years after the Termination Date,
the Executive agrees that, except with the prior written permission of the Board
of Directors of the Company, the Executive will not offer to hire, entice away,
or in any manner attempt to persuade any officer, employee, or agent of the
Company or any of the Subsidiaries to discontinue his or her relationship with
the Company or any of the Subsidiaries nor will the Executive directly or
indirectly solicit, divert, take away or attempt to solicit any business of the
Company or any of its Subsidiaries as to which Executive has acquired any
knowledge during the term of the Executive's employment with the Company.
(c) Remedies. If the Executive commits a breach, or threatens to commit a
breach, of any of the provisions of this paragraph 5, the Company shall have the
following rights and remedies, in addition to any rights and remedies otherwise
available at law or equity:
(i) The right and remedy to have the provisions of this paragraph 5
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed by the Executive that any such breach or
threatened breach will cause irreparable injury to the Company and the
Subsidiaries and that money damages will not provide an adequate remedy
to the Company and the Subsidiaries; and
(ii) The right and remedy to require the Executive to account for and
pay over to the Company all compensation, profits, monies, accruals,
increments, or other benefits, other than those payable under this
Agreement, derived or received by the Executive or the enterprise in
competition with the Company or any of the Subsidiaries as the result
of any transactions constituting a breach of any part of this paragraph
5, and Executive agrees to account for and pay over to the Company such
amounts promptly upon demand therefor.
6. Beneficiaries. In the event of the Executive's death after termination
of employment, any amount or benefit payable or distributable to him pursuant to
this Agreement shall be paid to the beneficiary designated by the Executive for
such purpose in the last written instrument received by the Company prior to the
Executive's death, if any, or, if no beneficiary has been designated, to the
Executive's estate, but such designation shall not be deemed to supersede any
beneficiary designation under any benefit plan of the Company. Whenever this
Agreement provides for the written designation of a beneficiary of beneficiaries
of the Executive, the Executive shall have the right to revoke such designation
and to redesignate a beneficiary or beneficiaries by written notice to either
the Company to such effect, except to the extent, if any, restricted by law.
7. Rights in the Event of Dispute. In the event of a dispute between the
Company and the Executive regarding the Executive's employment or this
Agreement, it is the intention of this Agreement that the dispute shall be
resolved as expeditiously as possible, consistent with fairness to both sides,
and that during pendency of the dispute the Executive and the Company shall be
on equal footing, as follows:
(a) Arbitration. Any claim or dispute relating to the Executive's
employment or the terms and performance of this Agreement, shall be resolved by
binding private arbitration before three arbitrators and any award rendered by
any arbitration panel, or a majority thereof, may be filed and a judgment
obtained in any court having jurisdiction over the parties unless the relief
granted in the award is delivered within ten (10) days of the award. Either
party may request arbitration by written notice to the other party. Within
thirty (30) days of receipt of such notice by the opposing party, each party
shall appoint a disinterested arbitrator and the two arbitrators selected
thereby shall appoint a third neutral arbitrator; in the event the two
arbitrators cannot agree upon the third arbitrator within then (10) days after
their appointment, then the neutral arbitrator shall be appointed by the Chief
Judge of Hennepin County (Minnesota) District Court. Any arbitration proceeding
conducted hereunder shall be in the City of Minneapolis and shall follow the
procedures set forth in the Rules of Commercial Arbitration of the American
Arbitration Association, and both sides shall cooperate in as expeditious a
resolution of the proceeding as is reasonable under the circumstances. The
arbitration panel shall have the power to enter any relief it deems fair and
just on any claim, including interim and final equitable relief, along with any
procedural order that is reasonable under the circumstances.
(b) Expenses of Prosecution/Defense of Claim. During the pendency of a
dispute between the Company and the Executive relating to the Executive's
employment or the terms or performance of this Agreement, the Company shall
promptly pay the Executive's reasonable expenses of representation upon delivery
of periodic xxxxxxxx for same, provided that (i) Executive (or a person claiming
on the Executive's behalf) shall promptly repay all amounts paid hereunder at
the conclusion of the dispute if the resolution thereof includes a finding that
the Executive did not act in good faith in the matter in dispute or in the
dispute proceeding itself, and (ii) no claim for expenses of representation
shall be submitted by the Executive or any person acting on the Executive's
behalf unless made in writing to the Board of Directors within one year of the
performance of the services for which such claim is made.
8. No Obligation to Mitigate Damages. In the event the Executive becomes
eligible to receive compensation or benefits subsequent to the termination of
the Executive's employment under this Agreement, the Executive shall have no
obligation to seek other employment in an effort to mitigate damages. To the
extent the Executive shall accept other employment after the Executive's
termination of employment, the compensation and benefits received from such
employment shall not reduce the compensation and benefits otherwise due under
this Agreement, except as provided in paragraph 4(f)(iii) above.
9. Other Benefits. The benefits provided under this Agreement shall, except
to the extent otherwise specifically provided herein, be in addition to, and not
in derogation or diminution of, any benefits that Executive or the Executive's
beneficiary may be entitled to receive under any other plan or program now or
hereafter maintained by the Company, or its Subsidiaries.
10. Successors. The Company shall 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, to expressly
assume and agree to perform its obligations under this Agreement in the same
manner and to the same extent that the Company would be required to perform them
if no succession had taken place unless, in the opinion of legal counsel
mutually acceptable to the Company and the Executive, such obligations have been
assumed by the successor as a matter of law. Failure of the Company to obtain
such agreement prior to the effectiveness of any such succession (unless the
foregoing opinion is rendered to the Executive) shall entitle the Executive to
terminate the Executive's employment and to receive the payments provided for in
paragraph 4(f) above as if the Executive terminated this Agreement for Good
Reason. The Executive's rights under this Agreement shall inure to the benefit
of, and shall be enforceable by, the Executive's legal representative or other
successors in interest, but shall not otherwise be assignable or transferable.
11. Severability. If any provision of this Agreement or the application
thereof is held invalid or unenforceable, the invalidity or unenforceability
thereof shall not affect any other provisions or applications of this Agreement
which can be given effect without the invalid or unenforceable provision or
application.
12. Survival. The rights and obligations of the parties pursuant to this
Agreement shall survive the term of the employment to the extent that any
performance is required hereunder after the expiration or termination of such
term.
13. Notices. All notices under this Agreement shall be in writing and shall
be deemed effective when delivered in person (in the Company's case, to its
Secretary) or 48 hours after deposit thereof in the U.S. mails, postage prepaid,
addressed, in the case of the Executive, to the Executive's last known address
as carried on the personnel records of the Company and, in the case of the
Company, to the corporate headquarter,s, attention of the Secretary, or to such
other address as the party to be notified may specify by written notice to the
other party.
14. Amendments and Construction. This Agreement may only be amended in a
writing signed by the parties hereto. This Agreement shall be construed under
the laws of the State of Minnesota. Paragraph headings are for convenience only
and shall not be considered a part of the terms and provisions of the Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first written above.
LIFE USA HOLDING, INC.
By /s/ Xxxxxx X. XxxXxxxxx
---------------------------
Xxxxxx X. XxxXxxxxx, Chairman
and Chief Executive Officer
/s/ Xxxx X. Xxxxxxxx
---------------------
Xxxx X. Xxxxxxxx
