EXHIBIT 10(g)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, entered into this 17th day of May, 2000, by and
between the Ohio Indemnity Company, an Ohio corporation (hereinafter referred to
as the "Employer"), and Daniel J. Stephan, an individual (hereinafter referred
to as the "Employee");
WITNESSETH:
WHEREAS, the Employer desires to employ the Employee as its Vice President
of Marketing;
WHEREAS, the Employee desires to serve as the Vice President of Marketing
of the Employer; and
WHEREAS, the Employer and the Employee desire to enter into this Agreement
to set forth the terms and conditions of the employment relationship between
them;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the Employer and the Employee hereby agree as follows:
Section 1. EMPLOYMENT AND Term. Upon the terms and subject to the
conditions of this Agreement, the Employer hereby employs the Employee, and the
Employee hereby accepts employment, as Vice President of Marketing of the
Employer. The term of this Agreement shall commence on the date hereof (the
"Effective Date") and shall end on May 16, 2003, subject, however, to prior
termination or extension, as herein provided. Further, the Employer and the
Employee agree that the Employer shall, based upon recommendations of its
President, review the Employee's performance with the intent that, if the
Employee's performance so warrants, the Employer may extend the term of this
Agreement for additional three-year periods. By the day preceding the first
anniversary date of the Effective Date, the Employer shall notify the Employee
of its decision whether to grant an extension of this Agreement for an
additional three-year period. To the extent that the Employer fails to notify
the Employee, on or before the date described in the preceding sentence, of the
extension of the term of this Agreement, the term of this Agreement shall be
automatically extended for an additional three-year period. By way of
illustration of the provisions of this provision, if, by May 16, 2001, the
Employer notifies the Employee that it intends to grant an extension of the term
of this Agreement (or, if by such date, the Employer fails to notify the
Employee that it does not intend to grant such an extension), the term of this
Agreement shall be extended for an additional three-year period beginning on May
17, 2001 and ending on May 16, 2004. This Agreement shall be subject to
extension in the manner set forth in this paragraph for an additional three-year
period on the first anniversary date of the effective date of the immediately
preceding extension. For purposes of this Agreement, the initial term of this
Agreement and any extensions of such term provided for herein shall hereinafter
be referred to as the "Term".
Section 2. DUTIES OF EMPLOYEE.
(a) GENERAL DUTIES AND RESPONSIBILITIES. As the Vice President of
Marketing of the Employer, the Employee shall perform the duties and carry out
the responsibilities customary for such office to the best of his ability and in
accordance with the policies reasonably established by the President of the
Employer, and with all applicable laws and regulations. The Employee shall
perform such other duties not inconsistent with his position as may be assigned
to him from time to time by the President.
(b) DEVOTION OF ENTIRE TIME TO THE ACTIVITIES OF THE EMPLOYER. The
Employee shall devote his time, ability and attention to the faithful
performance of his duties under this Agreement. The Employee shall not directly
or indirectly render any services of a business, commercial or professional
nature to any person or organization without the prior written consent of the
President of the Employer; provided, however, that the Employee shall not be
precluded from (i) vacations and other leave time in accordance with Section
3(g) hereof; (ii) reasonable participation in community, civic, charitable or
similar organizations; or (iii) the pursuit of personal investments which do not
interfere or conflict with the performance of his duties to the Employer.
10(g) - 1
Section 3. COMPENSATION, BENEFITS AND REIMBURSEMENTS.
(a) SALARY. The Employee shall receive during the Term an annual
salary payable in equal installments not less often than monthly. The amount of
such annual salary shall be $120,000 until changed by the President in
accordance with Section 3(b) of this Agreement.,
(b) ANNUAL SALARY REVIEW. Prior to each anniversary of the date of
this Agreement, (hereinafter referred to as the "Anniversary Date"), the annual
salary of the Employee shall be reviewed by the President of the Employer and
shall be increased, effective as of the next Anniversary Date, based upon
individual performance (hereinafter referred to as the "Annual Review"). The
results of the Annual Review shall be reflected in the personnel records
maintained by the Employer with respect to the Employee. Notwithstanding any
provision contained herein, for each year during the Term, the Employee's annual
salary shall be increased by at least five percent (5%) from the annual salary
paid to him during the prior year.
(c) SIGNING BONUS. Within ten (10) business days of the execution of
this Agreement by all parties, the Employer shall make a lump sum payment to the
Employee in the amount of $25,000 as a signing bonus. In the event that the
employment of the Employee with the Employer is terminated before the second
anniversary of the Effective Date (May 17, 2002) for any reason other than those
described in either Section 4(b) (Termination by Employer Without Cause),
Section 4(d) (Termination Upon Employee's Death or Permanent Disability) or
Section 5(b) (Termination Following Change in Control), the Employee shall be
required to repay a portion of this signing bonus to the Employer. The amount to
be repaid by the Employee pursuant to the preceding sentence of this paragraph
(c) shall be equal to $25,000, multiplied by a fraction, where the numerator is
24 minus the number of months during which the Employee was employed by the
Employer prior to his termination of employment; and the denominator is 24.
To the extent that the Employee is required to repay any of his signing bonus,
such repayment shall be made to the Employer, in a single lump sum payment,
within 90 days following his termination of employment.
(d) ANNUAL BONUS. In addition to his annual salary, for each year
during the Term, the Employee will earn an incentive bonus. The amount of this
incentive bonus will be equal to a minimum of 15% and a maximum of 100% of the
Employee's annual salary for each such year. The actual amount of the Employee's
incentive bonus for each year shall, subject to the 15% minimum, be determined
by the President in his sole discretion, based upon the Employee's satisfaction
in that year of various reasonable goals and objectives of the Employer, which,
prior to the beginning of each such year, are to be mutually agreed upon between
the Employee and the President.
(e) EXPENSES. In addition to any compensation received by the Employee
under Section 3(a), (b), (c) or (d) of this Agreement, the Employer shall pay or
reimburse the Employee for all reasonable travel, entertainment and
miscellaneous expenses incurred in connection with the performance of his duties
under this Agreement. Such reimbursement shall be made in accordance with the
existing policies and procedures of the Employer pertaining to reimbursement of
expenses to management employees. In addition, Employer shall indemnify Employee
in accordance with the applicable provisions of its Articles of Incorporation,
as such provisions apply to directors, officers and employees of the Employer
generally.
(f) EMPLOYEE BENEFIT PROGRAMS. During the Term, the Employee shall be
entitled to participate in all formally established employee benefit plans,
retirement plans and similar programs maintained by the Employer from time to
time, including programs in respect of group health, disability or life
insurance and all employee benefit plans or programs hereafter adopted in
writing by the Board for which management personnel are eligible (hereinafter
collectively referred to as the "Benefit Plans"). Notwithstanding the foregoing
provisions of this paragraph (f), the Employer may discontinue or terminate at
any time any such Benefit Plan, now existing or hereafter adopted, which is
provided to employees of the Employer generally, to the extent permitted by the
terms of such plan and shall not be required to compensate the Employee for such
discontinuance or termination.
10(g) - 2
(g) VACATION. The Employee shall be entitled to an annual vacation of
the greater of (i) three (3) weeks; or (ii) the number of weeks of vacation that
the Employee would otherwise be entitled to under the Employer's normal vacation
policy for employees generally. Vacation time shall be scheduled by the Employee
in a reasonable manner and shall be subject to the existing policies and
procedures of the Employer pertaining to vacation and leave.
(h) STOCK OPTIONS. In each of the first five years during which the
Employee is employed by the Employer pursuant to the terms of this Agreement,
the Employee shall be granted an option to acquire 10,000 shares of the common
stock, without par value, of Bancinsurance Corporation, the parent corporation
of the Employer. Options under this paragraph (h) shall be granted annually,
with the first grant occurring on the Effective Date and the other grants
occurring on the second, third, fourth and fifth anniversaries of the Effective
Date. The options granted each year shall vest over a period of five years, with
options to purchase 2,000 shares vesting on the annual anniversaries of the
Effective Date. For example, options to purchase 2,000 shares shall vest on the
first anniversary of the Effective Date, and options to purchase an additional
4,000 shares (2,000 from the 10,000 granted during the first year of the Term
and 2,000 from 10,000 the second year of the Term) shall vest on the second
anniversary of the Effective Date. Such options shall be granted under, and
shall be subject to, all of the terms and conditions of the Bancinsurance
Corporation 1994 Stock Option Plan (the "Stock Option Plan"), or any successor
stock option plan that may be adopted from time to time by either Bancinsurance
Corporation or by the Employer; provided, however, in the event of any conflict
between the provisions of this Agreement and the Stock Option Plan, the
provisions of this Agreement shall govern.
(i) MOVING AND STORAGE EXPENSES. In addition to the compensation
provided to Employee in this Agreement, the Employer shall pay to the Employee
the sum of up to Ten Thousand and 00/100 Dollars ($10,000.00) as reimbursement
for Employee's moving, storage, and travel expenses in connection with
relocating Employee's family and household possessions from Richmond Virginia to
the greater Columbus, Ohio metropolitan area.
Section 4. TERMINATION OF EMPLOYMENT. In addition to the termination of the
employment of the Employee upon the expiration of the Term, the employment of
the Employee shall terminate at any other time during such Term upon the
Employee's Death or Permanent Disability, or upon the delivery, by either the
Employee to the Employer or by the Employer to the Employee, of written notice
of employment termination; provided, such written notice is provided to the
other party at least thirty (30) days prior to the date of the Employee's
termination of employment. Without limiting the generality of the foregoing
sentence, the following paragraphs (a), (b), (c), and (d) of this Section 4
shall set forth the only obligations of the Employer to the Employee upon the
occurrence of the events described in such subparagraphs:
(a) TERMINATION BY THE EMPLOYER FOR CAUSE. In the event that the
Employer terminates the employment of the Employee during the Term because of
the Employee's breach of fiduciary duty involving personal profit, a final
decree finding Employee's commission of any sexual or other unlawful harassment
in the workplace, Employee's conviction of a felony or conviction for fraud or
embezzlement, or Employee's breach of any provision of this Agreement ("Breach")
(such reasons hereinafter collectively referred to as "Cause"), the Employee
shall not receive, and shall have no right to receive, any compensation or other
benefits for any period after such termination of employment; provided, however,
if the Employee shall be guilty of any Breach:
(i) The Employer shall give the Employee written notice of the
Breach;
(ii) The Employee shall immediately cease any behavior giving
rise to the Breach and shall, within ten (10) business days of the receipt of
such notice, cure the Breach; and,
(iii) Only if the Employee has not ceased such actions and cured
the breach within such ten (10) business day period, may the Employer give
notice to the Employee, in which case the Employee's employment under this
Agreement shall terminate as of the effective date of such notice.
10(g) - 3
(b) TERMINATION BY THE EMPLOYER WITHOUT CAUSE. In the event that the
Employer terminates the employment of the Employee during the Term for any
reason other than Cause: (i) the Employee shall become immediately vested in any
stock options previously granted to him pursuant to Section 3(h) as of the date
of his termination of employment; (ii) Employee shall be granted such number of
fully vested options to enable the Employee to acquire a total of 50,000 common
shares of Bancinsurance Corporation, taking into consideration any and all
options granted to the Employee pursuant to Section 3(h) as of the date of the
termination of the Employee's employment; and, (iii) the Employer shall pay to
the Employee his annual salary and bonuses (at the rate in effect at the
termination of the Employee's employment; provided that such bonuses shall be
calculated at 15% of the Employee's salary) and continue his group health
insurance benefits during the remainder of the Term as of the date of the
termination of the Employee's employment, and upon the expiration of the Term
Employee shall thereafter be entitled to his COBRA election rights. All payments
to be made under this paragraph shall be made at the times that they would have
been made had the Employee remained employed by the Employer.
(c) TERMINATION BY THE EMPLOYEE. In the event that the Employee
terminates his employment during the term of this Agreement for any reason,
except his death or Permanent Disability, the Employer shall not be required to
pay, and the Employee shall have no right to receive, any compensation or other
benefits for any period after such termination of employment.
(d) TERMINATION UPON EMPLOYEE'S DEATH OR PERMANENT DISABILITY. If the
Employee's employment is terminated during the Term because of the Employee's
death, the Employer shall pay to the Employee's surviving spouse, if any, or
equally to his surviving children, if any, as the case may be, the Employee's
annual salary and bonuses (at the rate in effect at the termination of the
Employee's employment; provided that such bonuses shall be calculated at 15% of
the Employee's salary) during the remainder of the Term as of the date of the
Employee's death. If the Employee's employment is terminated during the Term
because of the Employee's Permanent Disability, the Employer shall pay to the
Employee the annual salary and bonuses described in the preceding sentence for a
period of twelve (12) months following the date of the Employee's Permanent
Disability. All payments to be made under this paragraph shall be made at the
times that they would have been made had the Employee remained employed by the
Employer. Notwithstanding anything to the contrary in this paragraph, if at the
time of the Employee's death he has no surviving spouse or surviving children,
the Employer shall not be required to make any payment under this paragraph (d).
For the purposes of this Agreement, the Employee's "Permanent Disability" shall
mean the incapacity of Employee due to physical or mental illness or other
physical disability to perform Employee's duties under this Agreement, where a
physician selected by agreement of Employee (or Employee's legal guardian) and
the Employer is of the opinion that such incapacity will continue for a period
of at least 180 days. If Employee (or Employee's legal guardian) and the
Employer are unable to agree upon the selection of a physician, they shall each
select a physician, and a physician selected by the agreement of these two
physicians shall make the determination whether such incapacity will continue
for a period of at least 180 days. The Employee hereby consents to any medical
examination required under this paragraph, agrees to furnish any medical
information requested by any examining physician, and waives any applicable
physician-patient privilege that may arise because of such examinations.
Section 5. CHANGE IN CONTROL.
(a) OCCURRENCE OF CHANGE IN CONTROL. Immediately upon the occurrence
of a "Change in Control", the Employee shall: (i) become fully vested in all
employee benefit programs (other than any tax qualified retirement plan, the
Employee's interest in which shall vest in accordance with such plan's terms),
including, without limitation, all stock options previously granted to the
Employee in paragraph 3(h) or to which the Employee may become entitled pursuant
to subparagraph (ii) hereof at the time of the Change in Control; and (ii) be
granted such number of fully vested options to enable the Employee to acquire a
total of 50,000 common shares of Bancinsurance Corporation, taking into
consideration any and all options granted to the Employee pursuant to Section
3(h) as of the date of the Change in Control. For purposes of this Agreement,
the term "Change in Control" shall mean the occurrence of any of the following
events after the Effective Date: (i) the acquisition (in one transaction or a
series of transactions) by an individual, entity or group [within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the
10(g) - 4
"Exchange Act")] (a "Person") of beneficial ownership (within the meaning of
Rule l3d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of
the combined voting power of the then outstanding voting securities of
Bancinsurance Corporation entitled to vote generally in the election of
directors ("Voting Securities"); provided, however, that the following
acquisitions shall not constitute a Change in Control: (A) any acquisition by
Bancinsurance Corporation, (B) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by Bancinsurance Corporation or any
corporation controlled by Bancinsurance Corporation, or ( any acquisition by any
Person who on the Effective Date was the beneficial owner of forty-five percent
(45%) or more of the combined voting power of the Voting Securities of
Bancinsurance Corporation outstanding on such date; or (ii) the consummation of
any reorganization, merger or consolidation other than a reorganization, merger
or consolidation which would result in the Voting Securities of Bancinsurance
Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into Voting Securities of
the surviving entity) at least fifty-one percent (51%) of the combined voting
power of the Voting Securities of Bancinsurance Corporation or such surviving
entity outstanding immediately after such reorganization, merger or
consolidation; or (iii) the consummation of a plan of complete liquidation of
Bancinsurance Corporation or of any agreement for the sale or disposition by
Bancinsurance Corporation (in one transaction or a series of transactions) of
all or substantially all of the assets of Bancinsurance Corporation; or (iv) the
disposition by Bancinsurance Corporation of either (A) more than fifty percent
(50%) of the outstanding voting securities of the Employer, or (B) all or
substantially all of the assets of the Employer.
(b) TERMINATION OF EMPLOYMENT. Upon the occurrence of a Change in
Control, the Employee may notify the Employer, within thirty (30) days thereof,
that he desires to renegotiate the terms and conditions of this Agreement. If
the Employee fails to so notify the Employer, the terms of this Agreement will
remain in effect. If the Employee so notifies the Employer, the terms of this
Agreement will remain in effect during the negotiation period between the
Employee and the Employer. If the Employee and the Employer enter into
negotiations and they are unable to negotiate an Agreement which is satisfactory
to the Employee, then the Employee shall be entitled to terminate his employment
with the Employer, by providing 5 business days' advance written notice, and to
receive the following payments and benefits:
(i) A single lump sum payment, payable within five (5) days
following the Employee's termination of employment, equal to the sum of
twenty-four (24) months of the Employee's annual base salary (at the rate in
effect at the termination of his employment) plus Employee's bonus (which shall
be equal to 15% of the twenty-four (24) month annual base salary payment);
(ii) Continuation of his group health insurance benefits at the
level in effect at the termination of his employment for a period of twenty-four
(24) months following such termination of employment;
(iii) Reimbursement of all expenses incurred by the Employee
through the use of any executive outplacement services to assist him to seek
other employment, which shall include, but not be limited to (A) secretarial
services, use of an office, phone, office supplies and office services
comparable to the level of such services and supplies available to the Employee
prior to his termination of employment and (B) all unreimbursed travel expenses
incurred by the Employee to seek other employment up to a maximum amount of
$15,000; and
(iv) A complete release of all of the Employee's obligations
under Section 7 (Non-solicitation) of this Agreement.
Section 6. CONFIDENTIAL INFORMATION. The Employee acknowledges that during
his employment he will learn and have access to confidential information
regarding the Employer, its parent corporation, their affiliates and their
activities. The Employee agrees and covenants, except in the ordinary course of
the Employer's business, not to disclose or use for his own benefit, or the
benefit of any other person or entity, any confidential information, unless or
until the Employer consents to such disclosure or use or such information
becomes common knowledge in the industry or is otherwise legally in the public
domain. Except in the ordinary course of the Employer's business, the Employee
shall not knowingly disclose or reveal to any Unauthorized Person any
confidential information relating to the Employer, its parent
10(g) - 5
corporation, their affiliates, or to any of their activities. For the purpose of
this Agreement, Unauthorized Person shall mean any person other than the
Employer's employees, officers, directors, shareholders, or others in a
confidential relationship with the Employer.
Section 7. NON-SOLICITATION COVENANT. The Employee agrees that, during the
Term, and except as provided in Section 5(b)(iv), above, thereafter until the
later of. (a) one year after the date of his termination of employment with the
Employer; and (b) the date on which he receives his final severance payment from
the Employer pursuant to Section 4(b) of this Agreement, he shall not, without
the written consent of the Employer: (i) solicit any customer or supplier of the
Employer on behalf of any business entity which competes with a service or
product of the Employer; or (ii) hire or attempt to hire any employee of the
Employer including, but not limited to, encouraging any such employee to
terminate his or her employment with the Employer.
(a) For the purposes of this Section 7, the terms customer, supplier,
and employee shall refer only to only those persons or entities which were
customers, suppliers, or employees of the Employer during the Term.
(b) The restrictions on solicitation provided herein may be enforced
by the Employer and/or any successor thereto by an action to recover payments
made under this Agreement, an action for injunction, and/or an action for
damages. The provisions of this Section 7 constitute an essential element of
this Agreement, without which the Employer would not have entered into this
Agreement. Notwithstanding any other remedy available to the Employer at law or
at equity, the parties hereto agree that the Employer or any successor thereto,
shall have the right, at any and all times, to seek injunctive relief in order
to enforce the terms and conditions of this Section 7.
(c) If the scope of any restriction contained in this Section is to
broad too permit enforcement of such restriction to its fullest extent, then
such restriction shall be enforced to the maximum extent permitted by law, and
the Employee hereby consents and agrees that such scope may be judicially
modified accordingly in any proceeding brought to enforce such restriction.
Section 8. NONASSIGNABILITY. Neither this Agreement nor any right or
interest hereunder shall be assignable by the Employee, his beneficiaries or
legal representatives, without the Employer's prior written consent; provided,
however, that nothing in this Section 8 shall preclude the Employee from
designating a beneficiary to receive any benefits payable hereunder upon his
death or the executors, administrators or other legal representatives of the
Employee or his estate from assigning any rights hereunder to the person or
persons entitled thereto.
Section 9. NO ATTACHMENT. Except as required by law, no right to receive
payment under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to
execution, attachment, levy, or similar process of assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.
Section 10. BINDING AGREEMENT. This Agreement shall be binding upon, and
inure to the benefit of, the Employer and the Employee and their respective
successors and assigns and supersedes all previous written or oral agreements
between the Employer and the Employee.
Section 11. AMENDMENT OF AGREEMENT. This Agreement may not be modified or
amended, except by an instrument in writing signed by the parties hereto.
Section 12. WAIVER. No term or condition of this Agreement shall be deemed
to have been waived, nor shall there be an estoppel against the enforcement of
any provision of this Agreement, except by written instrument of the party
charged with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver, unless specifically stated therein, and each waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than the act specifically waived.
10(g) - 6
Section 13. SEVERABILITY. If, for any reason, any provision of this
Agreement is held invalid, such invalidity shall not affect the other provisions
of this Agreement not held so invalid, and each such other provision shall, to
the full extent consistent with applicable law, continue in full force and
effect.
Section 14. NOTICES. Any notice or other communication required or
permitted pursuant to this Agreement shall be deemed delivered if such notice or
communication is in writing and is delivered personally or by facsimile
transmission or is deposited in the United States mail, postage prepaid, at the
following addresses (or any other address provided by either party to the other
after the Effective Date):
If to the Employer, to:
Ohio Indemnity Company
20 East Broad Street, 4th Floor
Columbus, Ohio 43215
Attention: President
If to the Employee to:
Daniel J. Stephan
3107 Old Brookewood Way
Richmond, Virginia 23233
Section 15. GOVERNING LAW. This Agreement has been executed and delivered
in the State of Ohio and its validity, interpretation, performance, and
enforcement shall be governed by the laws of this State of Ohio, except to the
extent that federal law is governing.
10(g) - 7
IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed
by its duly authorized officer, and the Employee has signed this Agreement, each
as of the day and year first above written.
OHIO INDEMNITY COMPANY
By: /s/ John S. Sokol
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Title: President
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/s/ Daniel J. Stephan
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Daniel J. Stephan
10(g) - 8