Exhibit 10.26
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made as of the 14th day of
June, 2002, by and between Triad Guaranty Insurance Corporation, an Illinois
insurance corporation (the "Company"), and Xxx Xxxxxx ("Employee").
WITNESSETH:
WHEREAS, the Company desires to employ Employee and Employee is willing
to accept such employment, all upon the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT AND TERM. The Company hereby employs Employee and Employee
accepts employment with the Company as Senior Vice President-Risk Management of
the Company, on the terms and conditions herein set forth, for a period
commencing on June 14, 2002, and expiring on December 31, 2004, and thereafter
for successive six-month periods unless either party gives written notice of the
nonrenewal of this Agreement at least one year prior to the commencement of any
such additional six-month period. Employee's duties and responsibilities in this
position shall be determined by the Company's Board of Directors (the "Board"),
consistent with Employee's qualifications and the best interests of the Company.
Employee shall also perform such other or additional duties on behalf of the
Company and its parent corporation, Triad Guaranty Inc., a Delaware corporation
("TGI"), as may be assigned to him by the Board from time to time.
2. EXTENT OF SERVICES. During the term hereof, Employee shall devote his
entire attention and energy to the business and affairs of the Company and TGI
on a full-time basis and shall not be engaged in any other business activity,
regardless of whether such business activity is pursued for gain, profit or
other pecuniary advantage, unless the Company otherwise consents; but this shall
not be construed as preventing Employee from investing his assets in such form
or manner as will not require any services on the part of Employee in the
operation of the affairs of the companies in which such investments are made and
will not otherwise conflict with the provisions of this Agreement. Full-time, as
used above, shall mean a forty (40) hour work week, or such longer work week as
the Board shall from time to time adopt. The foregoing shall not be deemed to
prevent Employee from participating in any charitable or not-for-profit
organization to a reasonable extent, provided however that Employee does not
receive any salary or other remuneration from such charity or not-for-profit
organization.
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3. Compensation.
(a) SALARY. During the term of this Agreement, the Company shall pay
Employee an annual salary of $150,000.00 ("Annual Salary"), payable in
accordance with the Company's regular payroll procedures. During each year that
this Agreement is in effect, the Company will review possible increases in
Employee's salary at least annually, with any such increases subject to the
determination of the Board.
(b) BONUS. In addition to his Annual Salary, Employee shall be eligible to
receive an annual bonus in an amount as may be determined by the Board, pursuant
to a bonus plan which may then be in effect or otherwise.
4. BENEFITS. Employee shall be entitled to participate in all medical and other
employee plans of the Company and TGI, if any, on the same basis as other
executives of the Company, subject in all cases to the respective terms of such
plans.
5. PTO. Employee shall be entitled to paid time off ("PTO") in accordance with
the Company's PTO policy in effect at the time the PTO is taken. In the event
that the full PTO is not taken by Employee, no PTO time shall accrue for use in
future years, except in accordance with the Company's then existing policy for
the carry forward of accrued PTO.
6. Expenses. Employee shall be entitled to prompt reimbursement for all
reasonable expenses incurred by him in furtherance of the business of the
Company and TGI in connection with his performance of his duties hereunder, in
accordance with the policies and procedures established for executive officers
of the Company and TGI, and provided Employee properly accounts for such
expenses.
7. TERMINATION.
(a) DEATH. This Agreement and Employee's employment hereunder shall
terminate immediately upon Employee's death. In such event, the Company shall be
obligated to pay Employee's salary only to the end of the month in which he
dies.
(b) INCAPACITY. If Employee is absent from his employment for reasons of
illness or other physical or mental incapacity which renders him unable to
perform the essential functions of his position, with or without reasonable
accommodation, for more than an aggregate number of days totaling twelve (12)
weeks, whether or not consecutive, in any period of twelve (12) consecutive
months, then upon at least sixty (60) days' prior written notice to Employee, if
such is consistent with applicable law, the Company may terminate this Agreement
and Employee's employment hereunder. In such event, the Company shall be
obligated to pay Employee his salary to the earlier of (i) the date on which
coverage commences under the long-term disability insurance policy maintained by
the Company for the benefit of Employee, if any, or (ii) the date two months
after the date of termination.
(c) TERMINATION BY THE COMPANY.
(i) The Company may terminate this Agreement and Employee's employment
hereunder at any time for Cause. As used herein, "Cause" shall mean:
(A) a material breach by Employee of his duties and obligations
hereunder, including but not limited to gross negligence in the
performance of his duties and responsibilities or the failure to
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follow the Board's directions; provided he shall be entitled to
reasonable notice of, and if feasible a reasonable opportunity to
cure, any such breach;
(B) willful misconduct by Employee which may be materially
injurious to the reputation or business of the Company or
TGI;
(C) any act of fraud, misappropriation or other dishonesty by
Employee; or
(D) Employee's conviction of a felony.
In the event of termination for Cause, the Company shall pay Employee his
salary up to the date of the delivery of the notice of termination, which date
shall be for all purposes of this Section 7(c)(i) the date of termination of his
employment. In the event of termination for Cause, Employee shall not receive
any previously unpaid bonus or bonuses except any earned but unpaid bonus with
respect to any full calendar year preceding the date of termination.
(ii) Notwithstanding anything contained herein to the contrary, the Company
also may terminate this Agreement and Employee's employment hereunder for any
reason whatsoever, upon no less than sixty (60) days' prior written notice to
Employee. In the event that the Company terminates this Agreement pursuant to
the provisions of this Section 7(c)(ii), Employee shall be entitled to receive
his salary up to the date of termination set forth in the notice of termination
and a severance payment equal to 200% of the total annual salary paid to
Employee by the Company and/or TGI during the two calendar years prior to the
year of termination (the "Severance Payment"). At the option of the Company, the
Severance Payment shall be payable either in a lump sum cash payment or in
twenty-four (24) monthly installments commencing on the first day of the month
following termination of this Agreement. If for any reason any court determines
that any of the restrictions contained in Section 8 hereof are not enforceable,
the Company shall have no obligation to pay the Severance Payment or any
remaining installment thereof to Employee.
(d) TERMINATION BY EMPLOYEE. Employee may terminate this Agreement and his
employment hereunder for any reason whatsoever, upon no less than sixty (60)
days' prior written notice to the Company. In the event that Employee terminates
this Agreement pursuant to the provisions of this Section 7(d), Employee shall
be entitled to receive his salary up to the date of termination set forth in the
notice of termination. In such event, Employee shall not receive any previously
unpaid bonus or bonuses except any earned but unpaid bonus with respect to any
full calendar year preceding the date of termination.
8. RESTRICTIVE COVENANT. During the term of this Agreement and for a period of
two (2) years after the termination of this Agreement by the Company or
Employee, except pursuant to the provisions of Section 1 above, Employee shall
not, either as an individual on his own account; as a partner, joint venturer,
employee, agent, or salesman for any person; as an officer, director or
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stockholder (other than a beneficial holder of not more than 5% of the
outstanding voting stock of a company having at least 250 holders of voting
stock) of a corporation; or otherwise, directly or indirectly:
(a) enter into or engage in the private mortgage insurance business
within:
(i) any area of the United States in which the Company or TGI is then
doing business;
(ii) in the event that any court determines that the area set forth in
the preceding subparagraph is too broad to be enforceable, each and
every state of the United States in which the Company had a market
share, based on industry data, of at least four percent (4%) of net
new mortgage insurance written as of the end of the quarter next
preceding the date of termination of this Agreement; or
(iii) in the event that any court determines that the area set forth
in the preceding subparagraphs is too broad to be enforceable, each
and every xxxxxxxxxxxx xxxxxxxxxxx xxxx xx xxx Xxxxxx Xxxxxx in which
the Company had a market share, based on industry data, of at least
four percent (4%) of net new mortgage insurance written as of the end
of the quarter next preceding the date of termination of this
Agreement; or
(iv) in the event that any court determines that the area set forth in
the preceding subparagraphs is too broad to be enforceable, the States
of Florida, Illinois and North Carolina; or
(v) in the event that any court determines that the area set forth in
the preceding subparagraphs is too broad to be enforceable, the State
of North Carolina.
(b) solicit or attempt to solicit any of the Company's or TGI's customers
or prospective customers with whom Employee has had contact as an
employee of the Company in the performance of his duties and
responsibilities hereunder with the intent or purpose to perform for
such customer the same or similar services or to sell to such customer
the same or similar products which Employee performed for or sold to
such customer during the term of his employment hereunder; or
(c) solicit or recruit any person who is an employee or agent of the
Company or TGI, either now or during such period, for employment in
the private mortgage insurance business or for the purpose of
soliciting or attempting to solicit any of the Company's or TGI's
customers or prospective customers as prohibited by Section 8(b)
above.
Employee and the Company agree and acknowledge that the Company and TGI do
business on a nationwide basis, with customers located throughout the United
States, and that any breach by Employee of the restrictive covenant contained
herein would immeasurably and irreparably damage the Company and TGI. Employee
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and the Company agree and acknowledge that the duration, scope and geographic
areas applicable to the noncompetition covenants in this Section 8 are fair,
reasonable and necessary to protect legitimate business interests of the Company
and TGI, and that adequate compensation has been received by Employee for such
obligations.
9. CONFIDENTIAL INFORMATION AND DISCOVERIES. Employee acknowledges that he will,
as a result of his duties as an employee of the Company, have access to and be
in a position to receive confidential information, including trade secrets,
relating to the Company and TGI. Therefore, Employee agrees that during his
employment by the Company and thereafter he will not divulge to, or use for the
benefit of, himself or any other person, any information concerning any
inventions, discoveries, improvements, processes, methods, trade secrets,
research or secret data (including, without limitation, customer or supplier
lists, formulas, computer programs, software development or executive monitor
systems), or other confidential matters possessed, owned or used by the Company
or TGI that may be obtained or learned by Employee in the course of or as a
result of his employment hereunder unless (i) such disclosure is authorized by
the Company, (ii) such confidential information becomes generally available to
and known by the public (other than as a result of disclosure directly or
indirectly by the Employee) or (iii) such confidential information becomes
available to Employee on a nonconfidential basis from a source other than the
Company, TGI or their employees or agents, provided that such source is not and
was not bound by a confidentiality agreement with or other obligation of secrecy
to the Company or TGI. The expiration or termination of employment shall not be
deemed to release Employee from his duties hereunder not to convert to his own
use or the use of others the rights or properties of the Company or TGI as
described herein.
10. CHANGE IN CONTROL.
(a) CHANGE IN CONTROL SEVERANCE COMPENSATION. Within two years following a
Change in Control (as defined below), in the event of (i) a material and adverse
change in the status or position of Employee as an executive officer of the
Company including, without limitation, a material diminution in duties or
responsibilities, except in connection with the incapacity of Employee, (ii) the
transfer or relocation by the Company of the office of Employee which would
require Employee to be based more than 50 miles distant from the location of his
office immediately prior to such transfer or relocation, or (iii) the
discontinuance of any bonus or incentive compensation plan for which the Company
or TGI has determined Employee to be eligible and which represents a material
portion of the Employee's annual compensation, Employee shall be entitled to
terminate this Agreement and his employment hereunder and receive from the
Company a payment equal to 200% the total annual salary paid to Employee by the
Company and/or TGI during the two calendar years prior to the year of
termination (the "Change in Control Compensation"). At the option of the
Company, the Change in Control Compensation shall be payable either in a lump
sum cash payment or in twenty-four (24) monthly installments commencing on the
first day of the month following termination of this Agreement. If for any
reason any court determines that any of the restrictions contained in Section 8
hereof are not enforceable, the Company shall have no obligation to pay the
Change in Control Compensation or any remaining installment thereof to Employee.
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(b) Change in Control. For purposes of this Agreement, "Change in Control"
shall mean the occurrence of any of the following events:
(i) any person or persons acting as a group, other than a person which as
of the date of this Agreement is the beneficial owner of voting
securities of TGI and its affiliates, or any employee benefit plan of
the Company or TGI or Employee or a group including Employee, shall
become the beneficial owner of securities of TGI representing the
greater of (i) at least twenty-five percent (25%) of the combined
voting power of TGI's then outstanding securities, or (ii) at least
the combined voting power of TGI's outstanding securities then held by
Collateral Investment Corp., a Delaware corporation, and Collateral
Mortgage, Ltd., an Alabama limited partnership, and any of their
affiliates; or
(ii) individuals who constitute the board of directors of TGI upon
completion of the initial public offering of TGI's common stock (the
"Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election or nomination for
election was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board (either by a specific vote or
by approval of the proxy statement of TGI in which such person is
named as a nominee for director, without objection to such nomination)
shall be, for purposes of this clause (ii) considered as though such
person were a member of the Incumbent Board; or
(iii)any consolidation or merger to which TGI is a party, if following
such consolidation or merger, stockholders of TGI immediately prior to
such consolidation or merger shall not beneficially own securities
representing at least fifty-one percent (51%) of the combined voting
power of the outstanding voting securities of the surviving or
continuing corporation; or
(iv) any sale, lease, exchange or other transfer (in one transaction or in
a series of related transactions) of all, or substantially all, of the
assets of TGI, other than to an entity (or entities) of which TGI or
the stockholders of TGI immediately prior to such transaction
beneficially own securities representing at least fifty-one percent
(51%) of the combined voting power of the outstanding voting
securities.
11. ENFORCEMENT. Both parties recognize that the services to be rendered under
this Agreement by Employee are special, unique and of extraordinary character
and that in the event of the breach by Employee of any of the terms and
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conditions of this Agreement to be performed by him, then the Company shall be
entitled, if it so elects, to institute and prosecute proceedings in any court
of competent jurisdiction, either in law or in equity, to obtain damages for any
breach hereof, or to enforce the specific performance hereof by Employee or to
enjoin Employee from performing acts prohibited above during the period herein
covered, but nothing herein contained shall be construed to prevent such other
remedy in the courts as the Company may elect to invoke.
12. RETURN OF DOCUMENTS. Upon the termination of this Agreement for any reason,
Employee shall forthwith return and deliver to the Company and shall not retain
any original or copies of any books, papers, price lists or customer contracts,
bids or customer lists, files, books of account, notebooks and other documents
and data relating to the performance by Employee of his duties hereunder, all of
which materials are hereby agreed to be the property of the Company.
13. MISCELLANEOUS.
(a) NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered or
certified mail to Employee or the Company at the address set forth below their
signatures at the end of this Agreement or to such other address as they shall
notify each other in writing.
(b) ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns and Employee and his
personal representatives, heirs, legatees and beneficiaries, but shall not be
assignable by Employee.
(c) APPLICABLE LAW. This Agreement shall be construed in accordance with
the laws of the State of North Carolina in every respect, including, without
limitation, validity, interpretation and performance.
(d) HEADINGS. Section headings and numbers herein are included for
convenience of reference only and this Agreement is not to be construed with
reference thereto. If there be any conflict between such numbers and headings
and the text hereof, the text shall control.
(e) SEVERABILITY. If for any reason any portion of this Agreement shall be
held invalid or unenforceable, it is agreed that the same shall not affect the
validity or enforceability of the remainder hereof. The portion of the Agreement
which is not invalid or unenforceable shall be considered enforceable and
binding on the parties and the invalid or unenforceable provision(s), clause(s)
or sentence(s) shall be deemed excised, modified or restricted to the extent
necessary to render the same valid and enforceable and this Agreement shall be
construed as if such invalid or unenforceable provision(s), clause(s), or
sentences(s) were omitted. The provisions of this Section 13(e) shall survive
the termination of this Agreement for any reason.
(f) ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties with respect to its subject matter and supersedes all previous
agreements between the parties. No officer, employee, or representative of the
Company has any authority to make any representation or promise in connection
with this Agreement or the subject matter hereof that is not contained herein,
and Employee represents and warrants he has not executed this Agreement in
reliance upon any such representation or promise. No modification of this
Agreement shall be valid unless made in writing and signed by the parties
hereto.
(g) WAIVER OF BREACH. The waiver of the Company of a breach of any
provision of this Agreement by Employee shall not operate or be construed as a
waiver of any subsequent breach by Employee.
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(h) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and Employee has signed this Agreement all on the
day and year first above written.
TRIAD GUARANTY INSURANCE
CORPORATION, an Illinois corporation
By:
--------------------------------------
Xxxxxx X. Xxxxxxxx
Chief Executive Officer
Address: 000 Xxxxx Xxxxxxxxx Xxxx,
Xxxxx 000
Winston-Salem, N. C. 27104
EMPLOYEE:
-----------------------------------------
Xxx Xxxxxx
Address: X0X00000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
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