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EXHIBIT 10.19
EMPLOYMENT AGREEMENT
WHEREAS, Goran Capital Inc., and its subsidiaries (collectively, the
"Company") considers it essential to its best interests and the best interests
of its stockholders to foster the continuous employment of its key management
personnel and, accordingly, the Company desires to employ Gary, P. Hutchcraft
("You", "Your" or "Executive"), upon the terms and conditions hereinafter set
forth; and
WHEREAS, the Executive desires to continue to be employed by the
Company, upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the covenants and agreements set
forth below, the parties agree as follows:
1. EMPLOYMENT
1.1 Term of Agreement. The Company agrees to employ Executive as
Vice President and Chief Financial Officer, effective as of June 30, 1996 and
continuing until December 31, 1996, unless such employment is terminated
pursuant to Section 3 below; provided, however, that the term of this
Agreement shall automatically be extended without further action of either
party for additional one (1) year periods thereafter unless, not later than six
(6) months prior to the end of the then effective term, either the Company or
the Executive shall have given written notice that such party does not intend
to extend this Agreement. If Company gives Executive such a notice of
non-renewal, Executive's employment shall terminate as of the expiration date
of this Agreement. It is expressly understood and agreed that a notice of
non-renewal issued by the Company shall not extinguish the Executive's
non-competition obligations pursuant to Section 4 herein.
1.2 Terms of Employment. During the Term, You agree to be a full-time
employee of the Company serving in the position of Vice President and Chief
Financial Officer of the Company and further agree to devote substantially all
of Your working time and attention to the business and affairs of the Company
and, to the extent necessary to discharge the responsibilities associated with
Your position as Vice President and Chief Financial Officer of the Company and
to use Your best efforts to perform faithfully and efficiently such
responsibilities. Executive shall perform such duties and responsibilities as
may be determined from time to time by the Chairman and/or Chief Executive
Officer of the Company and the Board of Directors of the Company, which duties
shall be consistent with the position of Vice President and Chief Financial
Officer of the Company, which shall grant Executive authority, responsibility,
title and standing comparable to that of the vice president and chief financial
officer of a stock insurance holding company of similar standing and which will
not require Executive to relocate his principal place of residence from the
metropolitan Indianapolis, Indiana area. Nothing herein shall prohibit You
from devoting Your time to civic and community activities or managing personal
investments, as long as the foregoing do not interfere with the performance of
Your duties hereunder.
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1.3 Appointment and Responsibility. The Boards of Directors of the
Company shall, following the effective date of this Agreement, elect and
appoint Executive as Vice President and Chief Financial Officer. Consistent
with Section 1.2 of this Agreement, Executive shall be primarily responsible
for the financial affairs of the Company.
2. COMPENSATION, BENEFITS AND PREREQUISITES
2.1 Salary. Company shall pay Executive a salary, in equal
bi-weekly installments, equal to an annualized salary rate of $120,000.
Executive's salary as payable pursuant to this Agreement may be increased from
time to time as mutually agreed upon by Executive and the Company.
Notwithstanding any other provision herein, the catch-up payment shall be paid
to Executive by April 1 of each year of this Agreement. For the calendar year
beginning January 1, 1997 and for each succeeding calendar year thereafter,
Company shall pay Executive the salary applicable to that calendar year in
twenty-six (26) bi-weekly installments. Notwithstanding any other provision of
this Agreement, Executive's salary paid by Company for any year covered by this
Agreement shall not be less than such salary paid to Executive for the
immediately preceding calendar year. All salary and bonus amounts paid to
Executive pursuant to this Agreement shall be in U.S. dollars.
2.2 Bonus. The Company and Executive understand and agree that the
Company expects to achieve significant growth during the term of this Agreement
and that Executive will make a material contribution to that growth which will
require certain personal and familial sacrifices on the part of Executive.
Accordingly, it is the desire and intention of the Company to reward Executive
for the attainment of that growth through bonus and other means (including, but
not limited to, stock options, stock appreciation rights and other forms of
incentive compensation). Therefore, the Company will pay Executive a lump-sum
bonus (subject to normal withholdings) within ten (10) business days from
receipt by Company of its consolidated, annual audited financial statements in
an amount which shall be determined in accordance with the following Bonus
Table. All amounts used for calculation purposes in this section shall be
based on the audited, consolidated financial statements of Goran Capital Inc.
(or any successor thereto), with such financial statements having been prepared
in accordance with applicable Generally Accepted Accounting Principles, applied
on a consistent basis with that of prior years.
BONUS TABLE
If Audited Net % of Annual Salary
Income (as a % of Payable to Executive
Budgeted Net Income Is As Bonus
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Less Than 75% -0-
75% or more, but less than 100% 10%
100% or more, but less than 125% 20%
125% or more 30%
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It is expressly agreed and understood that if this Agreement is
terminated or fails to be renewed at the expiration thereof, that Company shall
pay Executive's Bonus as calculated in accordance with this Section 2.2 with
such Bonus to be prorated on a day's basis if Executive is not employed for a
full year in which such Bonus is earned.
2.3 Employee Benefits. Executive shall be entitled to receive all
benefits and prerequisites which are provided to other Executives of Company
under the applicable Company plans and policies, and to future benefits and
prerequisites made generally available to executive employees of the Company
with duties and compensation comparable to that of Executive upon the same
terms and conditions as other Company participants in such plans.
2.4 Additional Prerequisites. During the term of this Agreement,
Company shall provide Executive with:
(a) Not less than three (3) weeks paid vacation during each
calendar year.
(b) A vehicle commensurate with Executive's position.
2.7 Expenses. During the period of his employment hereunder,
Executive shall be entitled to receive reimbursement from the Company (in
accordance with the policies and procedures in effect for the Company's
employees) for all reasonable travel, entertainment and other business expenses
incurred by him in connection with his services hereunder.
3. TERMINATION OF EXECUTIVE'S EMPLOYMENT
3.1 Termination of Employment and Severance Pay. Executive's
employment under this Agreement may be terminated by either party at any time
for any reason; provided, however, that if Executive's employment is terminated
for any reason other than for cause, he shall receive, as severance pay, one
(1) month's current salary for each full and partial year of service. Further,
if Executive shall be terminated without cause, receipt of severance payments
described in the preceding sentence are conditioned upon execution by Executive
and the Company of that mutual Waiver and Release attached hereto as Exhibit A.
Further, Executive shall receive severance pay in accordance with this Section
3.1 if Executive shall terminate this Agreement due to a breach thereof by the
Company or if Executive is directed by the Company (including, if applicable,
any successor) to engage in any act or action constituting fraud or any
unlawful conduct relating to the Company or its business as may be determined
by application of applicable law.
3.2 Cause. For purposes of this Section 3, "cause" shall mean:
(a) the Executive being convicted in the United States of America,
any State therein, or the District of Columbia, or in Canada
or any Province therein (each, a "Relevant Jurisdiction"), of
a crime for which the maximum penalty may include imprisonment
for one year or longer (a "felony") or the Executive having
entered against him or
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consenting to any judgment, decree or order (whether criminal
or otherwise) based upon fraudulent conduct or violation of
securities laws;
(b) the Executive's being indicted for, charged with or otherwise
the subject of any formal proceeding (criminal or otherwise) in
connection with any felony, fraudulent conduct or violation of
securities laws, in a case brought by a law enforcement or
securities regulatory official, agency or authority in a
Relevant Jurisdiction;
(c) the Executive engaging in fraud, or engaging in any unlawful
conduct relating to the Company or its business, in either
case as determined under the laws of any Relevant Jurisdiction;
(d) the Executive breaching any provision of this Agreement; or
(e) gross negligence or willful misconduct by the Executive in the
performance of his duties hereunder.
3.3 Change of Control. Notwithstanding any other provisions of this
Agreement, if (i) a Change of Control shall occur; and (ii) within twelve (12)
months of any such Change of Control, Executive (a) receives a Notice of
Non-Renewal, (b) is terminated for any reason other than for cause, or (c)
Company (including its successors, if any) is in breach of this Agreement, then
Executive shall continue to receive his current salary (in bi-weekly payments)
until the earlier to occur of:
(a) Executive shall commence employment with a firm or entity other
than the Company such that his base salary is at or greater
than existing base salary pursuant to this Agreement; or
(b) The expiration of seventy-eight (78) weeks from Executive's
Date of Termination.
The receipt by Executive of payment pursuant to this Section 3.3 is
specifically conditioned, and no payments pursuant to this Section 3.3 shall
be made to Executive if he is, at the time of his Termination, in breach of any
provision (specifically including, but not limited to, the provisions of this
Agreement pertaining to non-competition and confidentiality) of this Agreement
and, further, if such payments have already begun, the continuation of payments
to Executive pursuant to this Section 3.3 shall cease at the time Executive
shall fail to comply with the non-competition and confidentiality provisions of
Article 4 herein. It is expressly understood and agreed that the amount of any
payment to Executive required pursuant to this Section 3.3 shall be reduced
(but not below zero) by any compensation received by Executive during the
period called for in this Section 3.3.
A Change of Control shall mean the inability of the Symons family to
cause the election of a majority of the members of the Board of Directors of
Goran Capital Inc., Symons International Group, Inc. or their respective
successors.
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3.4 Disability. So long as otherwise permitted by law, if
Executive has become permanently disabled from performing his duties under
this Agreement, the Company's Chairman of the Board, may, in his discretion,
determine that Executive will not return to work and terminate his employment
as provided below. Upon any such termination for disability, Executive shall
be entitled to such disability, medical, life insurance, and other benefits as
may be provided generally for disabled employees of Company during the period
he remains disabled. Permanent disability shall be determined pursuant to the
terms of Executive's long term disability insurance policy provided by the
Company. If Company elects to terminate this Agreement based on such permanent
disability, such termination shall be for cause.
3.5 Indemnification. Executive shall be indemnified by Company
(and, where applicable, its subsidiaries) to the maximum extent permitted by
applicable law for actions undertaken for, or on behalf of, the Company and its
subsidiaries.
4. NON-COMPETITION, CONFIDENTIALITY AND TRADE SECRETS
4.1 Noncompetition. In consideration of the Company's entering into
this Agreement and the compensation and benefits to be provided by the Company
to You hereunder, and further in consideration of Your exposure to proprietary
information of the Company, You agree as follows:
(a) Until the date of termination or expiration of this Agreement
for any reason (the "Date of Termination") You agree not to
enter into competitive endeavors and not to undertake any
commercial activity which is contrary to the best interests of
the Company or its affiliates, including, directly or
indirectly, becoming an employee, consultant, owner (except for
passive investments of not more than one percent (1%) of the
outstanding shares of, or any other equity interest in, any
company or entity listed or traded on a national securities
exchange or in an over-the-counter securities market), officer,
agent or director of, or otherwise participating in the
management, operation, control or profits of (a) any firm or
person engaged in the operation of a business engaged in the
acquisition of insurance businesses or (b) any firm or person
which either directly competes with a line or lines of business
of the Company accounting for five percent (5%) or more of the
Company's gross sales, revenues or earnings before taxes or
derives five percent (5%) or more of such firm's or person's
gross sales, revenues or earnings before taxes from a line or
lines of business which directly compete with the Company.
Notwithstanding any provision of this Agreement to the contrary, You
agree that Your breach of the provisions of this Section 4.1(a) shall permit
the Company to terminate Your employment for cause.
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(b) If Your employment is terminated by You, or by reason of Your
Disability, by the Company for cause, or pursuant to a notice
of non-renewal as outlined in Section 1.1, then for two (2)
years after the Date of Termination, You agree not to become,
directly or indirectly, an employee, consultant, owner
(except for passive investments of not more than one percent
(1%) of the outstanding shares of, or any other equity interest
in, any company or entity listed or traded on a national
securities exchange or in an over-the-counter securities
market), officer, agent or director of, or otherwise to
participate in the management, operation, control or profits
of, any firm or person which directly competes with a business
of the Company which at the Date of Termination produced any
class of products or business accounting for five percent (5%)
or more of the Company's gross sales, revenues or earnings
before taxes at which the Date of Termination derived five
percent (5%) or more of such firm's or person's gross sales,
revenues or earnings before taxes. It is expressly agreed and
understood that this Section 4.1(b) shall not apply to a public
accounting or consulting firm.
(c) You acknowledge and agree that damages for breach of the
covenant not to compete in this Section 4.1 will be difficult
to determine and will not afford a full and adequate remedy,
and therefore agree that the Company shall be entitled to an
immediate injunction and restraining order (without the
necessity of a bond) to prevent such breach or threatened or
continued breach by You and any persons or entities acting for
or with You, without having to prove damages, and to all costs
and expenses (if a court or arbitrator determines that the
Executive has breached the covenant not to compete in this
Section 4.1, including reasonable attorneys' fees and costs,
in addition to any other remedies to which the Company may be
entitled at law or in equity. You and the Company agree that
the provisions of this covenant not to compete are reasonable
and necessary for the operation of the Company and its
subsidiaries. However, should any court or arbitrator
determine that any provision of this covenant not to compete is
unreasonable, either in period of time, geographical area, or
otherwise, the parties agree that this covenant not to compete
should be interpreted and enforced to the maximum extent which
such court or arbitrator deems reasonable.
4.2 Confidentiality. You shall not knowingly disclose or reveal
to any unauthorized person, during or after the Term, any trade secret or other
confidential information (as outlined in the Indiana Uniform Trade Secrets Act)
relating to the Company or any of its affiliates, or any of their respective
businesses or principals, and You confirm that such information is the
exclusive property of the Company and its affiliates. You agree to hold as the
Company's property all memoranda, books, papers, letters and other data, and
all copies thereof or therefrom, in any way relating to the business of the
Company and its affiliates, whether made by You or otherwise coming into Your
possession and, on termination of Your employment, or on demand of the Company
at any time, to deliver the same to the Company.
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Any ideas, processes, characters, productions, schemes, titles, names,
formats, policies, adaptations, plots, slogans, catchwords, incidents,
treatment, and dialogue which You may conceive, create, organize, prepare or
produce during the period of Your employment and which ideas, processes, etc.
relate to any of the businesses of the Company, shall be owned by the Company
and its affiliates whether or not You should in fact execute an assignment
thereof to the Company, but You agree to execute any assignment thereof or
other instrument or document which may be reasonably necessary to protect and
secure such rights to the Company.
5. MISCELLANEOUS
5.1 Amendment. This Agreement may be amended only in writing, signed
by both parties.
5.2 Entire Agreement. This Agreement contains the entire
understanding of the parties with regard to all matters contained herein.
There are no other agreements, conditions or representations, oral or written,
expressed or implied, with regard to the employment of Executive or the
obligations of the Company or the Executive. This Agreement supersedes all
prior employment contracts and non-competition agreements between the parties.
5.3 Notices. Any notice required to be given under this Agreement
shall be in writing and shall be delivered either in person or by certified or
registered mail, return receipt requested. Any notice by mail shall be
addressed as follows:
If to the Company, to:
Goran Capital, Inc.
4720 Kingsway Drive
Indianapolis, Indiana 46205
Attention: President and Chief Executive Officer
If to Executive, to:
Gary P. Hutchcraft
or to such other addresses as one party may designate in writing to the other
party from time to time.
5.4 Waiver of Breach. Any waiver by either party of compliance with
any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any other provision of this Agreement, or of any
subsequent breach by such party of a provision of this Agreement.
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5.5 Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
5.6 Governing Law. This Agreement shall be interpreted and enforced
in accordance with the laws of the State of Indiana, without giving effect to
conflict of law principles.
5.7 Headings. The headings of articles and sections herein are
included solely for convenience and reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
5.8 Counterparts. This Agreement may be executed by either of the
parties in counterparts, each of which shall be deemed to be an original, but
all such counterparts shall constitute a single instrument.
5.9 Survival. Company's obligations under Section 3.1 and Executive's
obligations under Section 4 shall survive the termination and expiration of
this Agreement in accordance with the specific provisions of those Paragraphs
and Sections and this Agreement in its entirety shall be binding upon, and
inure to the benefit of, the successors and assigns of the parties hereto.
5.10 Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by You and such officer as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior
subsequent time.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date set forth above.
GORAN CAPITAL INC. AND SUBSIDIARIES GARY P. HUTCHCRAFT
("COMPANY") ("EXECUTIVE")
By: /s/ Alan G. Symons /s/ Gary P. Hutchcraft
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Title: Pres CEO
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State of Indiana )
) SS:
County of Marion )
Before me the undersigned, a Notary Public for Johnson County, State
of Indiana, personally appeared Gary P. Hutchcraft, and acknowledged the
execution of this instrument this 12th day of July, 1996.
/s/ Pamela Sue Staal
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PAMELA SUE STAAL, Notary Public
State of Indiana, County of Johnson
My Commission Expires: 6-18-99
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