Exhibit 99.1
ARISTA INVESTORS CORP.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
September ___, 1998
Xx. Xxxxxxx X. Xxxxxx
00 Xxxxxx Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Xxxxxxx:
This letter will confirm our agreement with respect to your
relationship with Arista Investors Corp., a Delaware corporation (the
"Company"), which shall be effective (the "Effective Date") upon the closing
date (the "Closing Date") of the sale of substantially all of the Company's
assets pursuant to an Assumption Reinsurance Agreement by and among Arista
Insurance Company (a wholly-owned subsidiary of the Company), the Company and
The Guardian Life Insurance Company of America ("The Guardian").
In connection with the foregoing, we agree that:
1. Employment With the Company.
(a) During the period commencing on the Effective Date and
ending on the later to occur of (i) the second anniversary of the Effective
Date, or (ii) the termination date of that certain Administrative Services
Agreement between the Company and The Guardian (the "Administrative Services
Agreement"), (hereinafter referred to as the "Employment Period"), you shall
serve as President of the Company, subject to the terms and conditions specified
herein; provided, however,
that the Employment Period shall terminate not later than the fifth anniversary
of the Effective Date, subject to the conditions set forth in paragraph 2(b).
(b) Notwithstanding anything contained herein to the contrary,
in the event this Agreement is being terminated pursuant to either paragraph
1(a)(i) or 1(a)(ii) (the "Proposed Termination"), the Company or such successor
or surviving corporation, at its sole option, shall have the right to elect to
extend the Employment Period for up to three additional one-year periods upon
not less than sixty (60) days prior written notice mailed to you prior to the
Proposed Termination; provided, however, that the Employment Period shall
terminate not later than the fifth anniversary of the Effective Date, subject to
the conditions set forth in paragraph 2(b).
(c) As President you shall assist, to the best of your
ability, in the operation of the Company, which shall include, but shall not be
limited to, the sale, promotion and development of the products and business of
the Company. You shall have the powers and duties commonly ascribed to a senior
executive officer of a corporation and shall report to and shall be responsible
to the Board of Directors of the Company. During the Employment Period, the
Board of Directors agrees to nominate you for election to the Company's Board of
Directors.
(d) Except during vacation periods or absences due to
temporary illness, you shall devote substantially all of your business time,
attention and energies to your duties and responsibilities hereunder and, except
for business trips which shall be necessary or desirable in connection with the
Company's business, shall render such services at the principal office of the
Company. Nothing herein contained shall prevent or be construed as preventing
you from holding or purchasing up to five (5%) percent of any class of stock or
securities of any corporation which is listed on a national securities exchange
or is regularly traded in the over-the-counter market, or
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from holding or making other investments in or from participating in any other
business venture, so long as no such investment or participation in such
business venture shall involve any requirement that you devote substantial time
during normal business hours thereto and, so long as such investment or your
participation in such business venture does not involve any conflict with your
duties or obligations to the Company as provided in this Agreement.
2. Compensation.
(a) In consideration for services to be rendered by you
hereunder during the Employment Period:
(i) You shall receive a salary at the rate of One
Hundred and Eighty-Five Thousand Dollars ($185,000) per annum, which salary
shall be subject to all applicable federal, state and other tax withholdings.
Such salary shall be paid to you in twenty-six (26) equal bi-weekly
installments, payable in arrears or on such other basis as other employees of
the Company generally are paid;
(ii) With respect to the period commencing January 1
of each fiscal year of the Company, commencing with the fiscal year beginning
January 1, 1999, and ending on December 31 of each fiscal year or the portion of
such fiscal year during which you are an employee of the Company (each a "Bonus
Period"), the Company will pay to you as additional compensation no later than
One Hundred Twenty (120) days after the end of such fiscal year, such bonus in
light of your contributions to the Company's performance for such Bonus Period.
Such bonus shall be based upon a weighted formula to be determined by the
Company's Board of Directors. The weighted formula referred to herein to be
applied by the Board of Directors for the bonus to be paid by the Company to you
for any Bonus Period will be equal to eight percent (8%) of the Company's
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annual earnings before income taxes from third party administration operations
for such Bonus Period. As used herein, the term "earnings before income taxes
from third party administration operations" shall mean the income of the
Company's current operations before taxes and extraordinary or non-recurring
items from third party administration operations for such Bonus Period.
(iii) In recognition of your services to the Company,
it is contemplated that the Company may, but shall not be obligated to, grant
stock options to you to purchase shares of the Company's Class A Common Stock
when, and if, determined by the Board of Directors of the Company.
(b) In the event this Agreement shall terminate in the manner
contemplated in sub-paragraph 8(b)(v), the Company shall have the option,
exercisable on sixty (60) days prior written notice, to advise you that the
Company has elected to cause you not to engage in any activity described in
sub-paragraph 8(a)(i) and 8(a)(ii) for a period of twelve (12) months following
the date of such termination in consideration of the payment by the Company of
the sum of One Hundred Eighty-Five Thousand Dollars ($185,000) to you, which
payment shall be paid to you in twelve (12) equal monthly installments, payable
on the first day of the month, commencing in the month subsequent to the month
in which your employment with the Company terminates. In the event the Company
fails to send such written notice to you, such failure shall be deemed to be an
election by the Company not to require you to forebear from engaging in any of
the activities described in sub-paragraph 8(a)(i) and 8(a)(ii) from and after
the date of such termination.
3. Fringe Benefits. You shall be entitled to participate in any and all
insurance fringe benefits and/or retirement plans generally afforded to the
other executives of the Company (to the
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extent you otherwise qualify therefor under the specific terms and conditions of
each such benefit or plan) including, without limitation, group disability
insurance, life insurance, medical insurance and pension plans which are, or
which may become available generally to senior executive officers of the
Company. You shall be entitled to four (4) weeks vacation during each twelve
(12) month period falling within the Employment Period, to be taken at such time
or times as the reasonable needs of the Company's business shall allow.
4. Reimbursement of Expenses.
(a) The Company shall reimburse you for all reasonable
expenses incurred in connection with the promotion of the business of the
Company, including expenses for travel, entertainment and similar expenses
incurred by you on the Company's behalf. No such reimbursement shall be made
except upon the presentation by you of an itemized account of such expenses or
other evidence thereof for which reimbursement then is being sought, all in form
reasonably satisfactory to the Company.
(b) The Company shall provide a Five Thousand Dollar ($5,000)
nonallocated expense allowance for expenses incurred by you in carrying on the
business of the Company for each twelve (12) month period falling within the
Employment Period, payable in twelve (12) equal monthly installments on the
first (1st) day of each month falling within the Employment Period.
5. Termination of Employment. During the Employment Period, your
employment may be terminated by the Board of Directors of the Company on the
occurrence of any one or more of the following events:
(a) Your death;
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(b) Your failure substantially to perform your duties and
responsibilities hereunder owing to physical or mental incapacity (hereinafter
referred to as a "disability"), which disability shall continue for more than
six (6) consecutive months;
(c) For "Cause," which shall mean (i) your willful failure
substantially to perform your duties hereunder, for reasons other than death or
disability; (ii) your willful engaging in misconduct materially injurious to the
Company; or (iii) your commission of an act constituting common law fraud or a
felony against the Company;
(d) A "Change of Control" of the Company, in accordance with
paragraph 9 below; or
(e) Pursuant to the provisions of paragraph 1(a) above, upon
the termination of the Administrative Services Agreement.
6. Indemnity. The Company shall indemnify you and hold you harmless
from any and all liability arising out of any act or failure to act undertaken
by you in good faith while performing services for the Company and shall use its
best efforts to obtain coverage for you under any insurance policy not in force
or hereafter obtained during the Employment Period covering officers and
directors of the Company against claims made against them or any of them for any
act or failure to act in such capacities. The Company shall pay all expenses,
including reasonable attorneys' fees actually or necessarily incurred by you in
connection with the defense of any action, suit or proceeding arising out of any
such claim and in connection with any appeal arising therefrom.
7. Disclosure of Information. All memoranda, notes, records or other
documents made or compiled by you or made available to you during the Employment
Period concerning the business of the Company or any of its subsidiaries, shall
be the Company's property and shall be delivered
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to the Company by you on the termination of your employment. You shall not use
for yourself or others or divulge to others, any proprietary or confidential
information of the Company obtained by you as a result of your employment unless
authorized by the Company. For purposes of this paragraph 7, the term
"proprietary or confidential information" shall mean all information which is
known only to you or to you and other employees, former employees, consultants
or others in a confidential relationship with the Company which relates to
specific matters such as trade secrets, customers, potential customers, vendor
lists, pricing and credit techniques, research and development activities, books
and records and commission schedules, as they may exist from time to time, which
you may have acquired or obtained by virtue of work heretofore or hereafter
performed for or on behalf of the Company or which you may acquire or may have
acquired knowledge of during the performance of such work, and which is not
known to others, or is not readily available to others from sources other than
you, or is not in the public domain. In the event of a breach or a threatened
breach by you of the provisions of this paragraph 7, the Company shall be
entitled to an injunction restraining you from disclosing, in whole or in part,
the aforementioned proprietary or confidential information of the Company, or
from rendering any services to any person, firm, company, association or other
entity to whom or to which such proprietary or confidential information, in
whole or in part, has been disclosed or is threatened to be disclosed. Nothing
herein contained shall be construed as prohibiting the Company from pursuing any
other remedies available to the Company for such breach or threatened breach,
including the recovery of damages from you.
8. Restrictive Covenants.
(a) You hereby acknowledge and recognize the highly
competitive nature of the Company's business and, accordingly, agree that, in
consideration of the premises contained herein,
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you will not during the Employment Period and thereafter until the Designated
Date (as hereinafter defined): (i) directly or indirectly engage in any
Competitive Activity (as hereinafter defined), whether such engagement shall be
as an officer, director, employee, consultant, agent, lender, stockholder, or
other participant; or (ii) assist others in engaging in Competitive Activity. As
used herein, the term "Competitive Activity" shall mean and include the
development and marketing of and all activity involving the sale, administration
or servicing of statutory disability benefits insurance or any other insurance
product, then offered by the Company or by any subsidiary of the Company during
the calendar year immediately preceding the termination of your employment
hereunder.
(b) As used in this paragraph 8, the "Designated Date" shall
mean any of the following dates:
(i) in the event you willfully terminate your
employment with the Company in violation of this Agreement prior to the
expiration of the Employment Period, the term "Designated Date" shall mean the
one (1) year anniversary of the date of such termination; or
(ii) in the event the Company terminates your
employment under this Agreement for Cause, the term "Designated Date" shall mean
the one (1) year anniversary of the date of such termination; or
(iii) in the event the Company terminates your
employment without Cause, the term "Designated Date" shall mean the date of such
termination; or
(iv) in the event of any consolidation or merger of
the Company into or with another corporation during the Employment Period, and
the Company is not the surviving entity, or the sale of all or substantially all
of the assets of the Company to another corporation
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during the Employment Period, or in the event that fifty (50%) percent or more
of the voting common stock of the Company shall be owned by one or more
individuals or entities, who are acting in concert or as part of an affiliated
group (other than a group one of the members of which is you), at any time
during the Employment Period, and this Agreement is terminated by the Company or
any successor or surviving corporation, the term "Designated Date" shall mean
the one (1) year anniversary of the date of such termination; or
(v) subject to the provisions of sub-paragraph 2(b)
hereof, in the event this Agreement terminates at the end of the term of the
Employment Period, the term "Designated Date" shall mean the date of such
termination or the twelve (12) month anniversary of the date of such
termination, as the case may be.
It is the desire and intent of the parties that the provisions
of this paragraph 8 shall be enforced to the fullest extent permissible under
the laws and public policies applied in each jurisdiction in which enforcement
is sought. Accordingly, if any provision of this paragraph 8 shall be
adjudicated to be invalid or unenforceable in any such jurisdiction, such
provision of this paragraph 8 shall be deemed amended to delete therefrom the
portion thus adjudicated to be invalid or unenforceable, such deletion to apply
only with respect to the operation of such provision of this paragraph 8 in the
particular jurisdiction in which such adjudication is made. In addition, if the
scope of any restriction contained in this paragraph 8 is adjudicated to be too
broad to permit enforcement thereof to its fullest extent, then such restriction
shall be enforced to the maximum extent permitted by law and you hereby consent
and agree that such scope may be judicially modified accordingly in any
proceeding brought to enforce such restriction.
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(c) In the event of a breach or threatened breach by you of
the provisions of this paragraph 8, the Company shall be entitled to an
injunction restraining you from such breach. Nothing herein contained shall be
construed as prohibiting the Company from pursuing any other remedies available
for such breach or threatened breach or any other breach of this Agreement.
9. Consolidation; Merger; Change of Control. (a) In the event of any
consolidation or merger of the Company into or with another corporation during
the Employment Period, and the Company is not the surviving entity, or the sale
of all or substantially all of the assets of the Company to another corporation
during the Employment Period, or in the event that fifty (50%) percent or more
of the voting common stock of the Company shall be owned by one or more
individuals or entities, who are acting in concert or as part of an affiliated
group (other than a group one of the members of which is you, your spouse, your
issue, your or your spouse's siblings or any issue thereof) at any time during
the Employment Period, (the occurrence of any of the foregoing, a "Change of
Control") then this Employment Agreement may be either (i) terminated by the
Company or any such successor or surviving corporation on sixty (60) days prior
written notice to you provided that such notice shall be accompanied by a
certified or cashier's check in an amount equal to Three Hundred and Seventy
Thousand Dollars ($370,000); (ii) assigned by the Company or any such successor
or surviving corporation on sixty (60) days prior written notice to you provided
that upon the first such assignment, such notice shall be accompanied by a
certified or cashier's check in an amount equal to Three Hundred and Seventy
Thousand Dollars ($370,000); or (iii) continued by the Company or any such
successor or surviving corporation by written notice provided that such notice
shall be accompanied by a certified or cashier's check in an amount equal to
Three Hundred and Seventy Thousand Dollars ($370,000).
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(b) Notwithstanding the provisions of paragraph 9 (a) above,
any such payments shall be made only in an amount which, when taken together
with the present value of all other payments to you that are contingent on a
Change in Control of the Company, computed in accordance with the provisions of
Section 280G(d)(4) of the Internal Revenue Code of 1986 (the "Code"), does not
equal or exceed three (3) times your "Base Amount," as computed in accordance
with Code Section 280G(b)(3).
10. Key-Man Insurance. You shall cooperate with the Company by
completing all necessary applications and take all required physical
examinations to enable the Company to obtain and maintain key-man life insurance
on your life in whatever amount the Company determines.
11. Notices. Any notices required or permitted to be given under the
provisions of this Agreement shall be in writing and delivered personally or by
certified or registered mail, return receipt requested, postage prepaid to the
following persons at the following addresses, or to such other person at such
other address as any party may request by notice in writing to the other party
to this Agreement:
To you: Xxxxxxx X. Xxxxxx
00 Xxxxxx Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
With a copy to: Xxxxx X. Xxxxxxxxx, Esq.
Weil, Gotshal & Xxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
To the Company: Arista Investors Corp.
000 Xxxx Xxxxxx,
Xxx Xxxx, XX 00000
Attn: Secretary
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With a copy to: Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxxx Xxxxx Singer &Weinstein, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Notice delivered via certified or registered mail pursuant to
this Section 11 shall be deemed received by the addressee upon the fifth (5th)
day after the sender deposits such notice with the U.S. Postal Service.
12. Entire Agreement. This instrument contains the entire understanding
and agreement between the parties relating to the subject matter hereof, and
neither this Agreement nor any provision hereof may be waived, modified,
amended, changed, discharged or terminated, except by an agreement in writing
signed by the party against whom enforcement of any waiver, modification,
change, amendment, discharge or termination is sought.
13. Binding Effect. This Agreement shall be binding on the successors
and assigns of the Company and shall inure to the benefit and be enforceable by
and against its successors and assigns. This Agreement is personal in nature and
may not be assigned or transferred by you without the prior written consent of
the Company.
14. Construction. This Agreement shall be construed in accordance with,
and be governed by, the laws of the State of New York for contracts entered into
and to be performed in New York.
15. Assignment. This Agreement is personal in its nature and the
Employee shall not assign this Agreement or any interest therein. The Company
may assign this Agreement or any of it rights and obligations under this
Agreement without the consent of the Employee.
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16. Employment Agreement with Arista Insurance Company. Except as
provided therein, the Employment Agreement between Arista Insurance Company and
you, made as of February 17, 1993, and as amended, shall terminate and be of no
further force and effect on the Effective Date.
17. Illegality. In case any one or more of the provisions of this
Agreement shall be invalid, illegal or unenforceable in any respect, the
validity, the legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
18. Counterparts. This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original, and all of which
counterparts shall together constitute a single agreement.
19. Captions. The captions of the paragraphs hereof are for convenience
only and shall not control or affect the meaning or construction of any of the
terms or provisions of this Agreement.
If the foregoing correctly reflects our understanding, please
so indicate by signing in the space provided.
ARISTA INVESTORS CORP.
By: /s/ Xxxxxxx Xxxxxx
----------------------------
Xxxxxxx Xxxxxx,
Chairman of the Board
Accepted and Agreed to:
/s/ Xxxxxxx X. Xxxxxx
---------------------
Xxxxxxx X. Xxxxxx
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