<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 10, 1999.
REGISTRATION NO. 333-59371
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
THE MIIX GROUP, INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 6719 22-3586492
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
TWO PRINCESS ROAD
LAWRENCEVILLE, NEW JERSEY 08648
(609) 896-2404
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
DANIEL GOLDBERG
PRESIDENT AND CHIEF EXECUTIVE OFFICER
THE MIIX GROUP, INCORPORATED
TWO PRINCESS ROAD
LAWRENCEVILLE, NJ 08648
(609) 896-2404, EXT. 1274
(NAME, ADDRESS INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
WITH COPIES TO:
<TABLE>
<S> <C>
JAMES J. MARINO, ESQ. ALLAN G. SPERLING, ESQ.
CHRISTOPHER G. KARRAS, ESQ. CLEARY, GOTTLIEB, STEEN & HAMILTON
DECHERT PRICE & RHOADS ONE LIBERTY PLAZA
997 LENOX DRIVE NEW YORK, NY 10006
BUILDING #3, SUITE 210 (212) 225-2260
LAWRENCEVILLE, NJ 08648
(609) 620-3200
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the conditions to the consummation of the reorganization of
the Registrant are satisfied.
------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [X] 333-59371
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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- --------------------------------------------------------------------------------
<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
The following exhibits are filed herewith unless otherwise indicated:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
2.1 Plan of Reorganization of Medical Inter-Insurance
Exchange.(1)
2.2 Stock Purchase Agreement between The Medical Society of New
Jersey and the MIIX Group, Incorporated (incorporated by
reference to Exhibit 2.1).
2.3 Amendment No. 1 to Stock Purchase Agreement between The
Medical Society of New Jersey and the MIIX Group,
Incorporated, dated as of September 20, 1998.(1)
2.4 Amendment No. 2 to Stock Purchase Agreement between The
Medical Society of New Jersey and The MIIX Group,
Incorporated, dated as of December 21, 1998.(1)
2.5 Resolution of the Medical Inter-Insurance Exchange of New
Jersey Board of Governors amending the Plan of
Reorganization.(1)
3.1 Restated Certificate of Incorporation of the MIIX Group,
Incorporated.(1)
3.2 Bylaws of The MIIX Group, Incorporated.(1)
5.1 Opinion of Dechert Price & Rhoads.(1)
8.1 Tax Opinion of PricewaterhouseCoopers LLP.(1)
10.1 Lease Between the Medical Society of New Jersey and New
Jersey State Medical Underwriters, Inc. dated June 29,
1981.(1)
10.2 Extension of Lease between the Medical Society of New Jersey
and New Jersey State Medical Underwriters, dated June 26,
1998.(1)
10.3 Lease Between Princeton Pike Corporate Center Associates IV
and Physician Healthcare Plan of New Jersey Inc. dated May
24, 1991 and assigned to New Jersey State Medical
Underwriters, Inc. on February 11, 1997.(1)
10.4 Specific Excess Reinsurance Contract, effective January 1,
1997, among Medical Inter-Insurance Exchange of New Jersey
and Swiss Reinsurance Company; Hannover Ruckversicherungs;
Underwriters Reinsurance Company; Kemper Reinsurance
Company; and London Life and Casualty Reinsurance
Corporation.(1)
10.5 Specific Excess Reinsurance Contract, effective January 1,
1997, between Medical Inter-Insurance Exchange of New Jersey
and American Re-Insurance Company.(1)
10.6 Combined Quota Share, Aggregate and Specific Excess of Loss
Reinsurance Treaty, effective November 1, 1996, among
Medical Inter-Insurance Exchange of New Jersey and Hannover
Reinsurance (Ireland) Ltd.; E&S Reinsurance (Ireland) Ltd.;
Underwriters Reinsurance Company (Barbados) Inc.; London
Life and Reinsurance Corporation; and Lawrenceville Re,
Ltd.(1)
10.7 Specific Excess Reinsurance Contract, effective January 1,
1996 and terminated December 31, 1996, among Medical
Inter-Insurance Exchange of New Jersey and Swiss Reinsurance
Company; Hannover Ruckversicherungs; Underwriters
Reinsurance Company; American Re-Insurance Company; Kemper
Reinsurance Company; and London Life and Casualty
Reinsurance Corporation.(1)
</TABLE>
II-1
<PAGE> 3
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.8 Combined Aggregate and Casualty Catastrophe Excess of Loss
Reinsurance Treaty, effective January 1, 1996 among Medical
Inter-Insurance Exchange of New Jersey and Hannover
Reinsurance (Ireland) Ltd.; Eisen und Stahl Reinsurance
(Ireland) Ltd.; London Life and Casualty Reinsurance
Corporation; and Scandinavian Reinsurance Company, Ltd.; and
Lawrenceville Re, Ltd.(1)
10.9 Specific Excess Reinsurance Contract, effective January 1,
1995 and terminated December 31, 1995 among Medical
Inter-Insurance Exchange of New Jersey and Swiss Reinsurance
Company; Hannover Ruckversicherungs; Underwriters
Reinsurance Company; and PMA Reinsurance Corporation.(1)
10.10 Combined Aggregate and Casualty Catastrophe Excess of Loss
Reinsurance Treaty, effective January 1, 1995 among Medical
Inter-Insurance Exchange of New Jersey and Hanover
Reinsurance (Ireland) Ltd.; Eisen und Stahl Reinsurance
(Ireland) Ltd.; London Life and Casualty Reinsurance
Corporation; and Scandinavian Reinsurance Company Ltd.(1)
10.11 Combined Aggregate and Casualty Catastrophe Excess of Loss
Reinsurance Treaty, effective January 1, 1994 among Medical
Inter-Insurance Exchange of New Jersey and Scandinavian
Reinsurance Company Ltd.; Hannover Reinsurance (Ireland)
Ltd.; and Eisen und Stahl Reinsurance (Ireland) Ltd.(1)
10.12 Combined Aggregate and Casualty Catastrophe Excess of Loss
Reinsurance Treaty, effective January 1, 1993 among Medical
Inter-Insurance Exchange of New Jersey and Scandinavian
Reinsurance Company Ltd.; Hannover Reinsurance (Ireland)
Ltd.; and Eisen und Stahl Reinsurance (Ireland) Ltd.(1)
10.13 Combined Aggregate and Casualty Catastrophe Excess of Loss
Reinsurance Treaty, effective December 15, 1992 among
Medical Inter-Insurance Exchange of New Jersey and Hannover
Reinsurance (Ireland) Ltd.; and Eisen und Stahl Reinsurance
(Ireland) Ltd.(1)
10.14 1998 Long Term Incentive Equity Plan of The MIIX Group,
Incorporated.(1)
10.15 Employment Agreement among The MIIX Group, Incorporated, New
Jersey State Medical Underwriters, Inc. and Daniel Goldberg.
10.16 Employment Agreement among The MIIX Group, Incorporated, New
Jersey State Medical Underwriters, Inc. and Kenneth Koreyva.
10.17 Employment Agreement among The MIIX Group, Incorporated, New
Jersey State Medical Underwriters, Inc. and Joseph Hudson.
10.18 Employment Agreement between New Jersey State Medical
Underwriters, Inc. and Lisa Kramer.(1)
10.19 Employment Agreement between New Jersey State Medical
Underwriters, Inc. and Ronald Wade.(1)
10.20 Form of Stock Purchase and Loan Agreement between The MIIX
Group, Incorporated and Daniel Goldberg.
10.21 Form of Stock Purchase and Loan Agreement between The MIIX
Group, Incorporated and Kenneth Koreyva.
10.22 Form of Stock Purchase and Loan Agreement between The MIIX
Group, Incorporated and Joseph Hudson.
10.23 Restricted Split-Dollar Life Insurance Agreement between
Daniel Goldberg and Medical Underwriters, Inc. dated
September 12, 1996.(1)
10.24 Split-Dollar Life Insurance Agreement dated November 3, 1995
between Daniel Goldberg and Medical Underwriters, Inc.(1)
</TABLE>
II-2
<PAGE> 4
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.25 Split-Dollar Life Insurance Agreement dated June 8, 1995
between Medical Underwriters, Inc. and Joseph Hudson.(1)
10.26 Split-Dollar Life Insurance Agreement dated December 27,
1991 between Medical Inter-Insurance Exchange, Inc. and
Kenneth Koreyva.(1)
10.27 Split-Dollar Life Insurance Agreement dated December 27,
1991 between Medical Underwriters, Inc. and Lisa Kramer.(1)
15.1 Letter of Independent Auditor regarding Unaudited Interim
Financial Information.(1)
21.1 Subsidiaries of The MIIX Group, Incorporated.(1)
23.1 Consent of Dechert Price & Rhoads (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP.(1)
23.3 Consent of PricewaterhouseCoopers LLP (included in Exhibit
8.1).
24.1 Powers of Attorney.(1)
27.1 Financial Data Schedules.(1)
99.1 Consent of Salomon Smith Barney Inc.(1)
99.2 Form of Proxy Cards.(1)
99.3 Form of Share Allocation Cards.(1)
99.4 Miscellaneous communications materials.(1)
</TABLE>
- ---------------
(1) Previously filed.
II-3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Lawrenceville and State of New Jersey on March 10, 1999.
By: /s/ DANIEL GOLDBERG
-----------------------------------
Daniel Goldberg
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
/s/ DANIEL GOLDBERG President, Chief Executive Officer March 10, 1999
- ------------------------------------------------ and Director (principal executive
Daniel Goldberg officer)
/s/ KENNETH KOREYVA Executive Vice President and Chief March 10, 1999
- ------------------------------------------------ Financial Officer (principal
Kenneth Koreyva financial accounting officer)
* Director March 10, 1999
- ------------------------------------------------
Angelo S. Agro, M.D.
* Director March 10, 1999
- ------------------------------------------------
Hillel M. Ben-Asher, M.D.
* Director March 10, 1999
- ------------------------------------------------
Harry M. Carnes, M.D.
* Director March 10, 1999
- ------------------------------------------------
Palma E. Formica, M.D.
* Director March 10, 1999
- ------------------------------------------------
John S. Garra, M.D.
* Director March 10, 1999
- ------------------------------------------------
Paul Hirsch, M.D.
* Director March 10, 1999
- ------------------------------------------------
Louis L. Keeler, M.D.
* Director March 10, 1999
- ------------------------------------------------
Henry R. Liss, M.D.
* Director March 10, 1999
- ------------------------------------------------
Arganey Lucas, Jr., M.D.
* Director March 10, 1999
- ------------------------------------------------
S. Stuart Mally, M.D.
</TABLE>
II-4
<PAGE> 6
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
* Director March 10, 1999
- ------------------------------------------------
Vincent A. Maressa, Esq.
* Director March 10, 1999
- ------------------------------------------------
Murray N. Matez, D.O.
* Director March 10, 1999
- ------------------------------------------------
Robert S. Maurer, D.O.
* Director March 10, 1999
- ------------------------------------------------
A. Richard Miskoff, D.O.
* Director March 10, 1999
- ------------------------------------------------
Charles J. Moloney, M.D.
* Director March 10, 1999
- ------------------------------------------------
Eileen Marie Moynihan, M.D.
* Director March 10, 1999
- ------------------------------------------------
John J. Pastore, M.D.
* Director March 10, 1999
- ------------------------------------------------
Pascal A. Pironti, M.D.
* Director March 10, 1999
- ------------------------------------------------
Joseph A. Riggs, M.D.
* Director March 10, 1999
- ------------------------------------------------
Bernard Robins, M.D.
* Director March 10, 1999
- ------------------------------------------------
Herman M. Robinson, M.D.
* Director March 10, 1999
- ------------------------------------------------
Gabriel F. Sciallis, M.D.
* Director March 10, 1999
- ------------------------------------------------
Martin L. Sorger, M.D.
* Director March 10, 1999
- ------------------------------------------------
Bessie M. Sullivan, M.D.
* Director March 10, 1999
- ------------------------------------------------
Harvey P. Yeager, M.D.
*By: /s/ DANIEL GOLDBERG
-------------------------------------------
Daniel Goldberg
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 1
Exhibit 10.15
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated as of October 9,
1998 among THE MIIX GROUP, INCORPORATED ("The MIIX Group"), NEW JERSEY STATE
MEDICAL UNDERWRITERS, INC. (hereinafter called the "Company") and DANIEL
GOLDBERG, (hereinafter called the "Executive").
BACKGROUND
Executive presently serves as President and Chief Executive Officer of
the Company pursuant to an Employment Agreement dated July 1, 1996 (the
"Underwriter Employment Agreement"). Pursuant to a Plan of Reorganization which
was approved by the Insurance Commissioner of the State of New Jersey on March
5, 1998, shares of common stock of The MIIX Group will be distributed to certain
past and present policyholders of insurance issued by the Medical Inter-
Insurance Exchange of New Jersey ("MIIX"), and all of the assets of MIIX
will be assigned and transferred to MIIX Insurance Company, a wholly-owned
subsidiary of The MIIX Group (the "Reorganization"). At the closing of the
Reorganization, The MIIX Group will acquire all of the issued and outstanding
common stock of the Company.
The Company deems it to be in its best interest to secure and retain
the services of Executive and Executive desires to work for the Company upon the
<PAGE> 2
terms and conditions hereinafter set forth. This Agreement shall be effective
upon the date set forth above (the "Effective Date"), at which time the
Underwriter Employment Agreement shall terminate and have no legal force and
effect, except to the extent of any unsatisfied obligations owing by the Company
to the Executive.
NOW, THEREFORE, in consideration of the mutual promises and
undertakings herein contained, and intending to be legally bound hereby, the
parties hereto agree, as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
meanings set forth below:
1.1 "Base Amount" shall mean the Executive's "Base Amount" as
determined in accordance with Section 280G of the Internal Revenue Code of 1986,
as amended.
1.2 "Base Salary" shall mean the annual salary payable to the Executive
pursuant to Section 4.1 hereof.
1.3 "Board" shall mean the Board of Directors of The MIIX Group.
1.4 "Cause" shall mean the termination of the Executive's employment
with the Company or The MIIX Group as a result of:
1.4.1 the willful engaging by the Executive in misconduct
which is materially injurious to the Company, monetarily or otherwise; or
1.4.2 the willful failure by the Executive to perform such
services as may be delegated or assigned to the Executive by the Board; or
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<PAGE> 3
1.4.3 the Executive's conviction of, or a plea of nolo
contendre to, a felony or a crime involving moral turpitude; or
1.4.4 the repeated and consistent failure of Executive to
devote his full-time best efforts to the performance of his duties under this
Agreement (other than any such failure resulting from the Executive's incapacity
due to physical or mental illness); or
1.4.5 the commission by Executive of an act of, or omission of
an act, that would constitute a material breach of this Agreement.
1.5 "Change in Control" shall mean any of the following events:
1.5.1 the acquisition in one or more transactions by any
"Person" (as such term is used for purposes of Section 13(d) or Section 14(d) of
the Securities Exchange Act of 1934) but excluding, for this purpose, The MIIX
Group or its subsidiaries or any employee benefit plan of The MIIX Group or its
subsidiaries, of "Beneficial Ownership" (within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934) of thirty-five percent (35%) or more of the
combined voting power of The MIIX Group's then outstanding voting securities
(the "Voting Securities");
1.5.2 the individuals who, as of the Effective Date,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that if the election, or
nomination for election by The MIIX Group's shareholders, of any new director
was approved by a vote of at
-3-
<PAGE> 4
least a majority of the Incumbent Board, such new director shall be considered
as a member of the Incumbent Board, and provided further that any reductions in
the size of the Board that are instituted voluntarily by the Incumbent Board
shall not constitute a Change in Control, and after any such reduction the
"Incumbent Board" shall mean the Board as so reduced;
1.5.3 a merger or consolidation involving The MIIX Group if
the shareholders of The MIIX Group, immediately before such merger or
consolidation, do not own, directly or indirectly, immediately following such
merger or consolidation, more than sixty-five percent (65%) of the combined
voting power of the outstanding Voting Securities of the corporation resulting
from such merger or consolidation or a complete liquidation or dissolution of
The MIIX Group or a sale or other disposition of all or substantially all of the
assets of The MIIX Group; or
1.5.4 the acceptance by the shareholders of The MIIX Group of
shares in a share exchange if the shareholders of The MIIX Group, immediately
before such share exchange, do not own, directly or indirectly, immediately
following such share exchange, more than sixty-five percent (65%) of the
combined voting power of the outstanding Voting Securities of the corporation
resulting from such share exchange.
1.6 "Good Reason" shall mean:
1.6.1 the assignment to the Executive, without the Executive's
expressed written approval, of duties or responsibilities, inconsistent with the
-4-
<PAGE> 5
Executive's position of President and Chief Executive Officer of the Company and
The MIIX Group or the reduction in Executive's duties, responsibilities or
authority from those in effect on the date hereof, but excluding any increase in
duties or responsibilities resulting from The MIIX Group's merger, consolidation
or combination with any other entity;
1.6.2 a reduction by the Company in the Executive's "Base
Salary" as in effect on the date hereof or as the same is increased from time to
time during the term of this Agreement by more than ten percent (10%) unless
such reduction is part of a salary reduction program instituted by the Company
and affects all officers of the Company;
1.6.3 any material breach by the Company or The MIIX Group of
the terms of this Agreement; or
1.6.4 any purchaser, assignee, surviving entity or successor
of the Company or The MIIX Group or their respective businesses or assets
(regardless of the form of any transaction) fails or refuses to expressly assume
this Agreement in writing, and all of the duties and obligations of the Company
hereunder.
2. Term of Employment. Subject to the terms and conditions of this Agreement,
the Company hereby employs the Executive and the Executive hereby accepts
employment by the Company. The initial term of employment hereunder shall be for
a three (3) year period commencing on the Effective Date and, unless sooner
terminated as provided for herein, ending on the third anniversary thereof (the
-5-
<PAGE> 6
"Initial Term"). Except as otherwise provided for herein, unless either party
gives written notice to the other party at least thirty (30) days before the end
of the Initial Term or any extended term (a "Nonrenewal Notice"), the Agreement
shall automatically be extended for additional one-year periods.
3. Position and Duties. The Executive is engaged hereunder to serve as the
President and Chief Executive Officer of the Company and The MIIX Group and he
agrees to perform the duties and services incident to those positions, or such
other or further duties and services of a similar nature as may be required of
him by the Board. The Executive agrees to perform the duties and
responsibilities called for hereunder to the best of his ability and to devote
his full time, energies and skills to such duties and to the promotion of the
business and interests of the Company and of any corporate subsidiaries or
affiliated companies. The Executive may participate in charitable and similar
activities, may be a director of a company that does not compete with The MIIX
Group or its affiliates, and may have business interests in passive investments
which may, from time to time, require portions of his time, but such activities
shall be done in a manner consistent with his obligations hereunder.
4. Compensation and Other Benefits.
4.1 Salary. The Company shall pay to the Executive for the performance
of his duties hereunder, an initial base salary of $430,000 per annum (the "Base
Salary"), payable in accordance with the Company's normal payroll practices.
-6-
<PAGE> 7
Thereafter, the amount of the Base Salary will be reviewed and adjusted as
appropriate by the Board in accordance with executive compensation review
practices. The Company shall pay, and The MIIX Group shall cause the Company to
pay, all other amounts payable to Executive hereunder.
4.2 Bonus. Executive shall be eligible to receive an annual bonus
pursuant to The MIIX Group's Cash Incentive Plan, at the discretion of the
Board, based on Executive's achievement of goals and objectives established by
the Board on an annual basis. The Board shall use its reasonable judgment in
determining whether such goals and objectives have been met and the amount, if
any, of bonus to be paid to Executive. It is anticipated that any bonus will be
paid on or by March 31 of the succeeding year.
4.3 Stock Options. On or by the date upon which The MIIX Group
consummates an initial public offering of shares of its common stock, The MIIX
Group shall grant to Executive options to acquire 175,000 shares of the common
stock of The MIIX Group at an exercise price equal to the fair market value of
the common stock as of the date of grant. Such options shall be granted under
The MIIX Group's 1998 Long Term Incentive Equity Plan and shall be the subject
of a separate stock option agreement. Twenty-five percent (25%) of the options
shall vest on the date of grant with an additional twenty-five percent (25%)
vesting on each anniversary of the date of grant. In addition, Executive shall
be entitled to participate in The MIIX Group's Long Term Incentive Equity Plan
or similar plans
-7-
<PAGE> 8
which may be made available from time to time to executives of the Company or
The MIIX Group. The grant of any such options shall be at the sole discretion of
the Board and shall be based on the achievement of performance goals established
by the Board.
4.4 Supplemental Executive Retirement Plan. The parties acknowledge
that under the terms of the Underwriter Employment Agreement, the Executive was
the beneficiary of a life insurance policy that provided for certain payments at
age 65. In addition, the Company established a supplemental executive retirement
plan ("SERP") which was funded annually after giving consideration to the
accumulated asset value of the life insurance policy and the amounts accrued for
the benefit of Executive under the Company's defined benefit retirement plan.
The Company shall provide Executive with a SERP on terms no less favorable than
made available pursuant to the Underwriter Employment Agreement.
4.5 Employee Benefits. During the term of this Agreement, the Executive
shall be entitled to participate in all of the benefit programs provided to all
executives of The MIIX Group or its affiliates, including, without limitation,
all medical, disability, dental and life insurance benefits, retirement
programs, and other employee benefit programs now in existence or hereafter
adopted by The MIIX Group or its affiliates, as such plans, programs, practices
or policies may be in effect from time to time. The Executive shall also be
eligible to participate in a deferred compensation plan on terms no less
favorable to the Executive than those
-8-
<PAGE> 9
contained in the Non-Qualified Deferred Compensation Agreement dated November 1,
1996 by and between the Executive and the Company.
4.6 Vacation. In addition to such holidays, sick leave and other time
off as are established by the policies of the Company, Executive shall be
entitled to at least four (4) weeks of vacation in accordance with the Company's
vacation policy for executives, during which his compensation shall continue to
be paid to him; provided, however, that the Executive may not take more than two
(2) consecutive weeks of vacation without the prior approval of the Board.
Unused vacation time can be carried over in accordance with Company policy.
4.7 Automobile. During the term of this Agreement, the Company shall
make available to the Executive an automobile in accordance with and subject to
the conditions of the Company's standard automobile policy or practices as in
effect from time to time.
4.8 Reimbursement of Expenses. The Company shall reimburse the
Executive for all reasonable expenses incurred by Executive in connection with
his employment hereunder provided, however, that such expenses were incurred in
conformance with the policies of the Company, as established from time to time,
and Executive submits detailed vouchers and other records reasonably required by
the Company in support of the amount and nature of such expense.
-9-
<PAGE> 10
4.9 Taxes and Withholding. All compensation payable and other benefits
provided under this Agreement shall be subject to customary withholding for
income, F.I.C.A. and other employment taxes.
5. Termination of Employment.
5.1 Death of Executive. The Executive's employment under this Agreement
shall terminate immediately upon the Executive's death and the Executive's
estate (or his beneficiary, as may be appropriate) shall be entitled to receive
(a) the Executive's Base Salary earned through his date of death, to the extent
theretofore unpaid, (b) unreimbursed expenses, and (c) such retirement and other
benefits earned by the Executive and vested (if applicable) as of the date of
his death under any employee benefit plan of The MIIX Group or its affiliates in
which the Executive participates, all of the foregoing to be paid in the normal
course for such payments. In the event the Executive dies during a period for
which payments are required to be made under the terms of this Agreement, all
such remaining payments and benefits shall continue to be payable to the
Executive's estate or as may be directed by the personal representative of his
estate.
5.2 Disability of Executive. If the Executive is unable to perform his
duties under this Agreement because of a long term disability as determined in
accordance with The MIIX Group's Long Term Disability Plan, the Company may
terminate the Executive's employment by giving written notice to the Executive.
Such termination shall be effective as of the date of such notice and the
Company and
-10-
<PAGE> 11
The MIIX Group shall have no further obligations under this Agreement, except
(a) for the obligation to pay to the Executive any Base Salary earned through
the date of such termination, to the extent theretofore unpaid, (b) unreimbursed
expenses, and (c) such retirement and other benefits earned by the Executive and
vested (if applicable) prior to his termination under any employee benefit plan
of The MIIX Group or its affiliates in which the Executive participates, all of
the foregoing to be paid in the normal course for such payments.
5.3 Termination for Cause. Executive's employment under this Agreement
shall terminate immediately upon written notice from the Company that the
Company is terminating the Executive for Cause. If the event or circumstances
specified in the Company's notice of termination are capable of being cured, the
Executive will have fifteen (15) days to correct or eliminate such Cause
provided the Executive is taking reasonable and demonstrable action to do so
during such period. If the Executive has not corrected or eliminated such Cause
by the end of such fifteen (15) day period, the Executive's employment shall
then terminate. Upon the Company's termination of Executive for Cause, the
Company's and The MIIX Group's obligations under this Agreement shall terminate,
except for the obligation to pay to Executive (a) the balance of his accrued and
unpaid Base Salary, (b) unreimbursed expenses, and (c) retirement and other
benefits earned by the Executive and vested (if applicable) under any employee
benefit plan of The MIIX
-11-
<PAGE> 12
Group or its affiliates in which the Executive participates, all of the
foregoing to be paid in the normal course for such payments.
5.4 Termination Without Cause.
5.4.1 The Company may terminate Executive's employment under
this Agreement at any time upon six (6) months prior written notice to the
Executive. Such termination shall be effective six (6) months following the date
of such notice, provided that during such notice period the Board in its
absolute discretion may relieve the Executive of all his duties,
responsibilities and authority in respect to the Company and restrict the
Executive's access to the Company's property. If the Company terminates the
Executive's employment without Cause except during the one (1) year period
following a Change in Control, the Executive shall be entitled to receive (a)
the accrued and unpaid balance of his Base Salary through the termination date,
(b) the greater of his Base Salary for the eighteen (18) month period following
the date of termination or his Base Salary payable (in the absence of such
termination) from the date of termination through the end of the Initial Term,
paid, at the option of the Company, in accordance with the Company's normal
payroll practice or in a lump sum, (c) unreimbursed expenses, (d) such
retirement and other benefits earned by the Executive and vested (if applicable)
under the terms of any employee benefit plan maintained by The MIIX Group or its
affiliates in which the Executive participates paid in the normal course for
such payments, and (e) for the eighteen (18) month period following the date of
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termination, coverage for the Executive and his dependents (if applicable) under
The MIIX Group's and its affiliates' health, life and benefits plans and
programs. In the event a Change in Control occurs during the period of payments
required under this Section, the remaining payments shall be accelerated and
paid in a lump sum within thirty (30) days of the Change in Control.
5.4.2 If the Executive's employment is terminated by the
Company without Cause during the one (1) year period following a Change in
Control, the Company shall pay to Executive (a) the accrued and unpaid balance
of his Base Salary through the termination date, (b) within thirty (30) days of
such termination a lump sum payment equal to 2.99 multiplied by the Executive's
Base Amount, (c) unreimbursed expenses, (d) such retirement and other benefits
earned by the Executive and vested (if applicable) under the terms of any
employee benefit plan maintained by The MIIX Group or its affiliates in which
the Executive participates paid in the normal course for such payments, and (e)
for an eighteen (18) month period following the date of termination, coverage
for the Executive and his dependents (if applicable) under The MIIX Group's and
its affiliates' health, life and benefit plans and programs.
For purposes of both Sections 5.4.1 and 5.4.2, termination
arising at the end of a term as a result of the Company providing a Non-Renewal
Notice shall be treated as termination without Cause and Executive shall be
entitled to receive the payments provided in Sections 5.4.1 or 5.4.2, as the
case may be.
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5.5 Termination by Executive.
5.5.1 Executive may terminate his employment hereunder at any
time upon not less than thirty (30) days prior written notice. If the Executive
voluntarily terminates his employment without Good Reason, the Executives shall
be entitled to receive (a) the balance of his accrued and unpaid Base Salary as
of the termination date, (b) unreimbursed expenses, and (c) such retirement and
other benefits earned by the Executive and vested (if applicable) prior to his
termination under the terms of any employee benefit plan maintained by The MIIX
Group or its affiliates, all of the foregoing to be paid in the normal course
for such payments.
5.5.2 If the Executive voluntarily terminates his employment
with the Company prior to a Change in Control with Good Reason, the Executive's
required notice of termination shall specify the circumstances that constitute
Good Reason and must be given within thirty (30) days of the event or
circumstances which constitute such Good Reason. In such event, the Company will
have thirty (30) days to correct or eliminate such Good Reason. If the Company
has not corrected or eliminated such Good Reason, by the end of such thirty (30)
day period, the Executive's employment shall terminate and the Executive shall
be entitled to receive (a) his accrued and unpaid Base Salary through the
termination date, (b) unreimbursed expenses, (c) his Base Salary for the
eighteen (18) month period following the termination date paid, at the Company's
option, in accordance with the Company's normal payroll practice or in a lump
sum, (d) such retirement and
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other benefits earned by the Executive and vested (if applicable) under the
terms of any employee benefit plan maintained by The MIIX Group or its
affiliates in which the Executive participates paid in the normal course for
such payments, and (e) during the eighteen (18) month period following
termination, coverage for the Executive and his dependents (if applicable) under
The MIIX Group's or its affiliates' health, life and benefit plans and programs.
In the event a Change in Control occurs during the period of payments required
under this Section 5.5.2, the remaining payments shall be accelerated and paid
in a lump sum within thirty (30) days of the Change in Control.
5.5.3 During the one (1) year period following a Change in
Control, the Executive may terminate his employment with Good Reason upon thirty
(30) days written notice of termination to the Board. If the Executive elects to
terminate his employment with the Company pursuant to this Section 5.5.3 for
Good Reason, the Executive's required notice of termination shall specify the
circumstances that constitute Good Reason and must be given within thirty (30)
days of the event or circumstances which constitute such Good Reason. In such
event, the Company will have thirty (30) days to correct or eliminate such Good
Reason. If the Company has not corrected or eliminated such Good Reason by the
end of that thirty (30) day period, the Executive's employment shall terminate
and the Company shall pay to Executive (a) the accrued and unpaid balance of his
Base Salary through the termination date, (b) unreimbursed expenses, (c) within
thirty (30) days of such
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termination, a lump sum payment equal to 2.99 multiplied by the Executive's Base
Amount, (d) such retirement and other benefits earned by the Executive and
vested (if applicable) under the terms of any employee benefit plan maintained
by The MIIX Group or its affiliates in which the Executive participates, paid in
the normal course for such payments, and (e) for an eighteen (18) month period
following the termination date, coverage for the Executive and his dependents
(if applicable) under The MIIX Group's and its affiliates' health, life and
benefit plans and programs.
5.6 Board of Directors. The Executive specifically agrees that upon his
termination of employment with the Company, whether voluntarily or
involuntarily, his position as a member of the Board shall immediately end and
this Agreement shall act as notice of resignation by the Executive.
6. Confidential Information. Except as required in the performance of his duties
to the Company under this Agreement, the Executive shall not, during or after
the term of this Agreement, use for himself or others, or disclose to others,
any confidential information of The MIIX Group or its affiliates including
without limitation, trade secrets, data, know-how, design, formulas,
developmental or experimental work, claims defense and recovery methods and
procedures and broker and agent relationships, computer programs, proprietary
information bases and systems, databases, customer lists, business plans,
financial information of or about The MIIX Group or any of its affiliates,
customers or clients, unless
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authorized in writing to do so by the Board, but excluding any information
generally available to the public or information (except information related to
The MIIX Group or its affiliates) which Executive possessed prior to his
employment with the Company. The Executive understands that this undertaking
applies to information of either a technical or commercial or other nature and
that any information not made available to the general public is to be
considered confidential. The Executive acknowledges that such confidential
information as is acquired and used by The MIIX Group or its affiliates is a
special, valuable and unique asset. All records, files, materials and
confidential information obtained by Executive in the course of his employment
with the Company are confidential and proprietary and shall remain the exclusive
property of The MIIX Group or its affiliates, as the case may be.
7. Return of Documents and Property. Upon the termination of Executive's
employment from the Company, or at any time upon the request of the Company,
Executive (or his heirs or personal representative) shall deliver to the Company
(a) all documents and materials containing confidential information relating to
the business or affairs of The MIIX Group or any of its affiliates, customers or
clients, and (b) all other documents, materials and other property belonging to
The MIIX Group or its affiliates, customers or clients that are in the
possession or under the control of Executive.
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8. Non-Competition.
8.1 For purposes of this Agreement, "competitor" shall mean any company
engaged in or about to be engaged in the business of developing, producing or
distributing, in The MIIX Group's (including its affiliated companies)
geographic area of distribution, a product or service in the medical
professional liability insurance business which is similar to any product or
service produced or performed or about to be produced or performed by The MIIX
Group and/or any of its affiliated companies.
8.2 The Executive agrees that so long as he is employed by the Company,
and for a period of one (1) year thereafter, he will not, directly or
indirectly, whether for compensation or not, own, manage, operate, join, control
or participate in, or be connected as a stockholder, officer, employee, partner,
creditor, guarantor, advisor or otherwise, with a competitor. The foregoing
shall not be construed, however, as preventing the Executive from investing his
assets in such form or manner as will not require services on the part of the
Executive in the operations of the businesses in which such investments are made
and provided any such business is publicly owned and the interest of Executive
therein is solely that of an investor owning not more than five percent (5%) of
the outstanding equity securities of any such business. Should Executive breach
the provisions of this Section, the Company and The MIIX Group shall be entitled
to cease all payments and benefits under the
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<PAGE> 19
terms of this Agreement and shall be entitled to pursue all remedies it might
have including, but not limited to, those contained in this Agreement.
8.3 For the period of six (6) months after the termination of this
Agreement for any reason whatsoever, Executive shall not offer employment or
otherwise solicit as a director, officer, employee, agent or in any other
capacity any person or persons who are employed by The MIIX Group or any of its
affiliates or who were at any time (within a period of six (6) months
immediately prior to the date of the Executive's termination) employed by The
MIIX Group or any of its affiliates or otherwise interfere with the relationship
between such persons and The MIIX Group or any of its affiliates, provided that
the foregoing shall not prohibit a general solicitation for employment.
8.4 It is agreed that the Executive's services hereunder are special,
unique, unusual and extraordinary giving them peculiar value, the loss of which
cannot be reasonably or adequately compensated for by damages, and in the event
of the Executive's breach of Sections 6 or 8 hereof, the Company and The MIIX
Group shall be entitled to equitable relief by way of injunction or otherwise.
If the period of time or area herein specified should be adjudged unreasonable
in any court proceeding, then the period of time shall be reduced by such number
of months or the area shall be reduced by elimination of such portion thereof as
deemed unreasonable, so that this covenant may be enforced during such period of
time and in such area as is adjudged to be reasonable.
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9. Severability. The terms of this Agreement and each Section hereof shall be
considered severable and the invalidity or unenforceability of any part thereof
shall not affect the validity or enforceability of the remaining portions or
provisions hereof.
10. Notices. Any notice required or permitted to be given under this Agreement
shall be sufficient, if in writing and delivered by registered or certified mail
or overnight delivery service, to his principal residence, in the case of the
Executive, or to its principal office in the case of the Company or The MIIX
Group.
11. Assignment. The rights and obligations of the Company and The MIIX Group
under this Agreement shall inure to the benefit of and be binding upon their
respective successors and assigns. Neither this Agreement nor any rights or
interests herein or created hereby may be assigned or otherwise transferred
voluntarily or involuntarily by the Executive.
12. Arbitration. Except in the event of a breach or threat of breach of Sections
6 or 8 of this Agreement, any controversy or claim arising out of or relating
directly or indirectly to this Agreement, including but not limited to
transactions pursuant hereto, the rights and obligations of the parties
hereunder, and the performance or breach hereof, which are not capable of
satisfactory amicable resolution, and whether sounding in contract, tort, or any
other legal theory shall be finally and conclusively settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") then in force, and judgment
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upon the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The award shall be made by one (1) arbitrator. The
arbitrator shall interpret this Agreement in accordance with the substantive
laws of the State of New Jersey. The arbitrator shall have no power to add to,
subtract from, or otherwise modify the terms of this Agreement. All awards shall
be reasoned awards in writing setting forth the facts, the issues and the legal
or other basis for the decisions of the arbitrator. No party shall be precluded
hereby from seeking provisional remedies in the courts of any jurisdiction or
from the arbitrator, including, but not limited to, temporary restraining orders
and preliminary injunctions to protect its rights and interests, and the posting
of pre-award security, but such shall not be sought as a means to avoid or
unduly delay arbitration.
The parties hereby acknowledge the validity and enforceability of this
arbitration clause, and will not challenge the validity thereof in any court or
before the arbitrator. Each party shall bear its own respective legal fees,
costs and expenses in connection with any arbitration, court action or
proceeding, and shall bear one-half of the arbitrator's fees and expenses, if
any.
13. Waiver. Any term or provision of this Agreement may be waived in writing at
any time by the party entitled to the benefit thereof. The failure of either
party at any time to require performance of any provision of this Agreement
shall not affect such party's right at a later time to enforce such provision.
No consent or waiver by
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either party to any default or to any breach of a condition or term in this
Agreement shall be deemed or construed to be a consent or waiver to any other
breach or default.
14. Applicable Law. Except to the extent such laws are superceded by Federal
laws, this Agreement shall be interpreted and construed under the laws of the
State of New Jersey, without reference to principles of conflicts of laws.
15. Entire Agreement. This instrument contains the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior or
contemporaneous agreements with respect to such subject matter. It may not be
changed or altered, except by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
THE MIIX GROUP, INCORPORATED
By: /s/ Vincent A. Maressa
------------------------------------------
Name: Vincent A. Maressa
Title: Director
NEW JERSEY STATE MEDICAL UNDERWRITERS, INC.
By: /s/ Vincent A. Maressa
------------------------------------------
Vincent A. Maressa
Chairman
/s/ Daniel Goldberg
----------------------------------------(L.S.)
Daniel Goldberg
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<PAGE> 1
Exhibit 10.16
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated as of October 9,
1998 among THE MIIX GROUP, INCORPORATED ("The MIIX Group"), NEW JERSEY STATE
MEDICAL UNDERWRITERS, INC. (hereinafter called the "Company") and KENNETH
KOREYVA, (hereinafter called the "Executive").
BACKGROUND
Executive presently serves as Vice-President and Chief Financial
Officer of the Company pursuant to an Employment Agreement dated September 30,
1991 (the "Underwriter Employment Agreement"). Pursuant to a Plan of
Reorganization which was approved by the Insurance Commissioner of the State of
New Jersey on March 5, 1998, shares of common stock of The MIIX Group will be
distributed to certain past and present policyholders of insurance issued by the
Medical Inter-Insurance Exchange of New Jersey ("MIIX"), and all of the assets
of MIIX will be assigned and transferred to MIIX Insurance Company, a
wholly-owned subsidiary of The MIIX Group (the "Reorganization"). At the closing
of the Reorganization, The MIIX Group will acquire all of the issued and
outstanding common stock of the Company.
The Company deems it to be in its best interest to secure and retain
the services of Executive and Executive desires to work for the Company upon the
<PAGE> 2
terms and conditions hereinafter set forth. This Agreement shall be effective
upon the date set forth above (the "Effective Date"), at which time the
Underwriter Employment Agreement shall terminate and have no legal force and
effect, except to the extent of any unsatisfied obligations owing by the Company
to the Executive.
NOW, THEREFORE, in consideration of the mutual promises and
undertakings herein contained, and intending to be legally bound hereby, the
parties hereto agree, as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
meanings set forth below:
1.1 "Base Amount" shall mean the Executive's "Base Amount" as
determined in accordance with Section 280G of the Internal Revenue Code of 1986,
as amended.
1.2 "Base Salary" shall mean the annual salary payable to the Executive
pursuant to Section 4.1 hereof.
1.3 "Board" shall mean the Board of Directors of The MIIX Group.
1.4 "Cause" shall mean the termination of the Executive's employment
with the Company or The MIIX Group as a result of:
1.4.1 the willful engaging by the Executive in misconduct
which is materially injurious to the Company, monetarily or otherwise; or
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1.4.2 the willful failure by the Executive to perform such
services as may be delegated or assigned by the Chief Executive Officer of the
Company or The MIIX Group; or
1.4.3 the Executive's conviction of, or a plea of nolo
contendre to, a felony or a crime involving moral turpitude; or
1.4.4 the repeated and consistent failure of Executive to
devote his full-time best efforts to the performance of his duties under this
Agreement (other than any such failure resulting from the Executive's incapacity
due to physical or mental illness); or
1.4.5 the commission by Executive of an act of, or omission of
an act, that would constitute a material breach of this Agreement.
1.5 "Change in Control" shall mean any of the following events:
1.5.1 the acquisition in one or more transactions by any
"Person" (as such term is used for purposes of Section 13(d) or Section 14(d) of
the Securities Exchange Act of 1934) but excluding, for this purpose, The MIIX
Group or its subsidiaries or any employee benefit plan of The MIIX Group or its
subsidiaries, of "Beneficial Ownership" (within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934) of thirty-five percent (35%) or more of the
combined voting power of The MIIX Group's then outstanding voting securities
(the "Voting Securities"), and a change in the identity of the Chief Executive
Officer of The MIIX Group during the six months following such acquisition;
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1.5.2 the individuals who, as of the Effective Date,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board and a change in the identity of the Chief
Executive Officer of The MIIX Group during the six months following such change
in the majority of the Board; provided, however, that if the election, or
nomination for election by The MIIX Group's shareholders, of any new director
was approved by a vote of at least a majority of the Incumbent Board, such new
director shall be considered as a member of the Incumbent Board, and provided
further that any reductions in the size of the Board that are instituted
voluntarily by the Incumbent Board shall not constitute a Change in Control, and
after any such reduction the "Incumbent Board" shall mean the Board as so
reduced;
1.5.3 a merger or consolidation involving The MIIX Group if
the shareholders of The MIIX Group, immediately before such merger or
consolidation, do not own, directly or indirectly, immediately following such
merger or consolidation, more than sixty-five percent (65%) of the combined
voting power of the outstanding Voting Securities of the corporation resulting
from such merger or consolidation and a change in the identity of the Chief
Executive Officer of The MIIX Group during the six months following such merger
or consolidation; or a complete liquidation or dissolution of The MIIX Group or
a sale or other disposition of all or substantially all of the assets of The
MIIX Group; or
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<PAGE> 5
1.5.4 the acceptance by the shareholders of The MIIX Group of
shares in a share exchange if the shareholders of The MIIX Group, immediately
before such share exchange, do not own, directly or indirectly, immediately
following such share exchange, more than sixty-five percent (65%) of the
combined voting power of the outstanding Voting Securities of the corporation
resulting from such share exchange and a change in the identity of the Chief
Executive Officer of The MIIX Group during the six months following such share
exchange.
1.6 "Good Reason" shall mean:
1.6.1 the assignment to the Executive, without the Executive's
expressed written approval, of duties or responsibilities, inconsistent with the
Executive's position of Executive Vice-President and Chief Financial Officer of
the Company and The MIIX Group or the reduction in Executive's duties,
responsibilities or authority from those in effect on the date hereof, but
excluding any increase in duties or responsibilities resulting from The MIIX
Group's merger, consolidation or combination with any other entity;
1.6.2 a reduction by the Company in the Executive's "Base
Salary" as in effect on the date hereof or as the same is increased from time to
time during the term of this Agreement by more than ten percent (10%) unless
such reduction is part of a salary reduction program instituted by the Company
and affects all officers of the Company;
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1.6.3 any material breach by the Company or The MIIX Group of
the terms of this Agreement; or
1.6.4 any purchaser, assignee, surviving entity or successor
of the Company or The MIIX Group or their respective businesses or assets
(regardless of the form of any transaction) fails or refuses to expressly assume
this Agreement in writing, and all of the duties and obligations of the Company
hereunder.
2. Term of Employment. Subject to the terms and conditions of this Agreement,
the Company hereby employs the Executive and the Executive hereby accepts
employment by the Company. The initial term of employment hereunder shall be for
a three (3) year period commencing on the Effective Date and, unless sooner
terminated as provided for herein, ending on the third anniversary thereof (the
"Initial Term"). Except as otherwise provided for herein, unless either party
gives written notice to the other party at least thirty (30) days before the end
of the Initial Term or any extended term (a "Nonrenewal Notice"), the Agreement
shall automatically be extended for additional one-year periods.
3. Position and Duties. The Executive is engaged hereunder to serve as the
Executive Vice-President and Chief Financial Officer of the Company and The MIIX
Group and he agrees to perform the duties and services incident to those
positions, or such other or further duties and services of a similar nature as
may be required of him by the President and Chief Executive Officer of the
Company and The MIIX Group. The Executive agrees to perform the duties and
responsibilities called for
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hereunder to the best of his ability and to devote his full time, energies and
skills to such duties and to the promotion of the business and interests of the
Company and of any corporate subsidiaries or affiliated companies. The Executive
may participate in charitable and similar activities, may be a director of a
company that does not compete with The MIIX Group or its affiliates, and may
have business interests in passive investments which may, from time to time,
require portions of his time, but such activities shall be done in a manner
consistent with his obligations hereunder.
4. Compensation and Other Benefits.
4.1 Salary. The Company shall pay to the Executive for the performance
of his duties hereunder, an initial base salary of $275,000 per annum (the "Base
Salary"), payable in accordance with the Company's normal payroll practices.
Thereafter, the amount of the Base Salary will be reviewed and adjusted as
appropriate by the Board in accordance with executive compensation review
practices. The Company shall pay, and The MIIX Group shall cause the Company to
pay, all other amounts payable to Executive hereunder.
4.2 Bonus. Executive shall be eligible to receive an annual bonus
pursuant to The MIIX Group's Cash Incentive Plan, at the discretion of the
Board, based on Executive's achievement of goals and objectives established by
the Board on an annual basis. The Board shall use its reasonable judgment in
determining whether such goals and objectives have been met and the amount, if
any, of bonus to be paid
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to Executive. It is anticipated that any bonus will be paid on or by March 31 of
the succeeding year.
4.3 Stock Options. On or by the date upon which The MIIX Group
consummates an initial public offering of shares of its common stock, The MIIX
Group shall grant to Executive options to acquire 80,000 shares of the common
stock of The MIIX Group at an exercise price equal to the fair market value of
the common stock as of the date of grant. Such options shall be granted under
The MIIX Group's 1998 Long Term Incentive Equity Plan and shall be the subject
of a separate stock option agreement. Twenty-five percent (25%) of the options
shall vest on the date of grant with an additional twenty-five percent (25%)
vesting on each anniversary of the date of grant. In addition, Executive shall
be entitled to participate in The MIIX Group's Long Term Incentive Equity Plan
or similar plans which may be made available from time to time to executives of
the Company or The MIIX Group. The grant of any such options shall be at the
sole discretion of the Board and shall be based on the achievement of
performance goals established by the Board.
4.4 Employee Benefits. During the term of this Agreement, the Executive
shall be entitled to participate in all of the benefit programs provided to all
executives of The MIIX Group or its affiliates, including, without limitation,
all medical, disability, dental and life insurance benefits, retirement
programs, and other employee benefit programs now in existence or hereafter
adopted by The
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<PAGE> 9
MIIX Group or its affiliates, as such plans, programs, practices or policies may
be in effect from time to time.
4.5 Vacation. In addition to such holidays, sick leave and other time
off as are established by the policies of the Company, Executive shall be
entitled to at least four (4) weeks of vacation in accordance with the Company's
vacation policy for executives, during which his compensation shall continue to
be paid to him; provided, however, that the Executive may not take more than two
(2) consecutive weeks of vacation without the prior approval of the Chief
Executive Officer of the Company. Unused vacation time can be carried over in
accordance with Company policy.
4.6 Automobile. During the term of this Agreement, the Company shall
make available to the Executive an automobile in accordance with and subject to
the conditions of the Company's standard automobile policy or practices as in
effect from time to time.
4.7 Reimbursement of Expenses. The Company shall reimburse the
Executive for all reasonable expenses incurred by Executive in connection with
his employment hereunder provided, however, that such expenses were incurred in
conformance with the policies of the Company, as established from time to time,
and Executive submits detailed vouchers and other records reasonably required by
the Company in support of the amount and nature of such expense.
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4.8 Taxes and Withholding. All compensation payable and other benefits
provided under this Agreement shall be subject to customary withholding for
income, F.I.C.A. and other employment taxes.
5. Termination of Employment.
5.1 Death of Executive. The Executive's employment under this Agreement
shall terminate immediately upon the Executive's death and the Executive's
estate (or his beneficiary, as may be appropriate) shall be entitled to receive
(a) the Executive's Base Salary earned through his date of death, to the extent
theretofore unpaid, (b) unreimbursed expenses, and (c) such retirement and other
benefits earned by the Executive and vested (if applicable) as of the date of
his death under any employee benefit plan of The MIIX Group or its affiliates in
which the Executive participates, all of the foregoing to be paid in the normal
course for such payments. In the event the Executive dies during a period for
which payments are required to be made under the terms of this Agreement, all
such remaining payments and benefits shall continue to be payable to the
Executive's estate or as may be directed by the personal representative of his
estate.
5.2 Disability of Executive. If the Executive is unable to perform his
duties under this Agreement because of a long term disability as determined in
accordance with The MIIX Group's Long Term Disability Plan, the Company may
terminate the Executive's employment by giving written notice to the Executive.
Such termination shall be effective as of the date of such notice and the
Company and
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<PAGE> 11
The MIIX Group shall have no further obligations under this Agreement, except
(a) for the obligation to pay to the Executive any Base Salary earned through
the date of such termination, to the extent theretofore unpaid, (b) unreimbursed
expenses, and (c) such retirement and other benefits earned and vested (if
applicable) by the Executive prior to his termination under any employee benefit
plan of The MIIX Group or its affiliates in which the Executive participates,
all of the foregoing to be paid in the normal course for such payments.
5.3 Termination for Cause. Executive's employment under this Agreement
shall terminate immediately upon written notice from the Company that the
Company is terminating the Executive for Cause. If the event or circumstances
specified in the Company's notice of termination are capable of being cured, the
Executive will have fifteen (15) days to correct or eliminate such Cause
provided the Executive is taking reasonable and demonstrable action to do so
during such period. If the Executive has not corrected or eliminated such Cause
by the end of such fifteen (15) day period, the Executive's employment shall
then terminate. Upon the Company's termination of Executive for Cause, the
Company's and The MIIX Group's obligations under this Agreement shall terminate,
except for the obligation to pay to Executive (a) the balance of his accrued and
unpaid Base Salary, (b) unreimbursed expenses, and (c) retirement and other
benefits earned by the Executive and vested (if applicable) under any employee
benefit plan of The MIIX
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Group or its affiliates in which the Executive participates, all of the
foregoing to be paid in the normal course for such payments.
5.4 Termination Without Cause.
5.4.1 The Company may terminate Executive's employment under
this Agreement at any time upon thirty (30) days prior written notice to the
Executive. Such termination shall be effective thirty (30) days following the
date of such notice, provided that during such notice period the Board in its
absolute discretion may relieve the Executive of all his duties,
responsibilities and authority in respect to the Company and restrict the
Executive's access to the Company's property. If the Company terminates the
Executive's employment without Cause except during the one (1) year period
following a Change in Control, the Executive shall be entitled to receive (a)
the accrued and unpaid balance of his Base Salary through the termination date,
(b) the greater of his Base Salary for the twelve (12) month period following
the date of termination or his Base Salary payable (in the absence of
termination) from the date of termination through the end of the Initial Term,
paid, at the option of the Company, in accordance with the Company's normal
payroll practice or in a lump sum, (c) unreimbursed expenses, (d) such
retirement and other benefits earned by the Executive and vested (if applicable)
under the terms of any employee benefit plan maintained by The MIIX Group or its
affiliates in which the Executive participates paid in the normal course for
such payments, and (e) for the twelve (12) month period following the date of
termination, coverage
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for the Executive and his dependents (if applicable) under The MIIX Group's and
its affiliates' health, life and benefits plans and programs. In the event a
Change in Control occurs during the period of payments required under this
Section, the remaining payments shall be accelerated and paid in a lump sum
within thirty (30) days of the Change in Control.
5.4.2 If the Executive's employment is terminated by the
Company without Cause during the one (1) year period following a Change in
Control, the Company shall pay to Executive (a) the accrued and unpaid balance
of his Base Salary through the termination date, (b) within thirty (30) days of
such termination a lump sum payment equal to 2.0 multiplied by the Executive's
Base Amount, (c) unreimbursed expenses, (d) such retirement and other benefits
earned by the Executive and vested (if applicable) under the terms of any
employee benefit plan maintained by The MIIX Group or its affiliates in which
the Executive participates paid in the normal course for such payments, and (e)
for the twelve (12) month period following the date of termination, coverage for
the Executive and his dependents (if applicable) under The MIIX Group's and its
affiliates' health, life and benefit plans and programs.
For purposes of both Sections 5.4.1 and 5.4.2, termination
arising at the end of a term as a result of the Company providing a Non-Renewal
Notice shall be treated as termination without Cause and Executive shall be
entitled to receive the payments provided in Sections 5.4.1 or 5.4.2, as the
case may be.
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5.5 Termination by Executive. 1
5.5.1 Executive may terminate his employment hereunder at any
time upon not less than thirty (30) days prior written notice. If the Executive
voluntarily terminates his employment without Good Reason, the Executive shall
be entitled to receive (a) the balance of his accrued and unpaid Base Salary as
of the termination date, (b) unreimbursed expenses, and (c) such retirement and
other benefits earned by the Executive and vested (if applicable) prior to his
termination under the terms of any employee benefit plan maintained by The MIIX
Group or its affiliates, all of the foregoing to be paid in the normal course
for such payments.
5.5.2 If the Executive voluntarily terminates his employment
with the Company prior to a Change in Control with Good Reason, the Executive's
required notice of termination shall specify the circumstances that constitute
Good Reason and must be given within thirty (30) days of the event or
circumstances which constitute such Good Reason. In such event, the Company will
have thirty (30) days to correct or eliminate such Good Reason. If the Company
has not corrected or eliminated such Good Reason, by the end of such thirty (30)
day period, the Executive's employment shall terminate and the Executive shall
be entitled to receive (a) his accrued and unpaid Base Salary through the
termination date, (b) unreimbursed expenses, (c) his Base Salary for the twelve
(12) month period following the termination date paid, at the Company's option,
in accordance with the Company's normal payroll practice or in a lump sum, (d)
such retirement and
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other benefits earned by the Executive and vested (if applicable) under the
terms of any employee benefit plan maintained by The MIIX Group or its
affiliates in which the Executive participates paid in the normal course for
such payments, and (e) during the twelve (12) month period following
termination, coverage for the Executive and his dependents (if applicable) under
The MIIX Group's and its affiliates' health, life and benefit plans and
programs. In the event a Change in Control occurs during the period of payments
required under this Section 5.5.2, the remaining payments shall be accelerated
and paid in a lump sum within thirty (30) days of the Change in Control.
5.5.3 During the one (1) year period following a Change in
Control, the Executive may terminate his employment with Good Reason upon thirty
(30) days written notice of termination to the Board. If the Executive elects to
terminate his employment with the Company pursuant to this Section 5.5.3 for
Good Reason, the Executive's required notice of termination shall specify the
circumstances that constitute Good Reason and must be given within thirty (30)
days of the event or circumstances which constitute such Good Reason. In such
event, the Company will have thirty (30) days to correct or eliminate such Good
Reason. If the Company has not corrected or eliminated such Good Reason by the
end of that thirty (30) day period, the Executive's employment shall terminate
and the Company shall pay to Executive (a) the accrued and unpaid balance of his
Base Salary through the termination date, (b) unreimbursed expenses, (c) within
thirty (30) days of such
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termination, a lump sum payment equal to 2.0 multiplied by the Executive's Base
Amount, (d) such retirement and other benefits earned by the Executive and
vested (if applicable) under the terms of any employee benefit plan maintained
by The MIIX Group or its affiliates in which the Executive participates, paid in
the normal course for such payments, and (e) for the twelve (12) month period
following the termination date, coverage for the Executive and his dependents
(if applicable) under The MIIX Group's and its affiliates' health, life and
benefit plans and programs.
6. Confidential Information. Except as required in the performance of his duties
to the Company under this Agreement, the Executive shall not, during or after
the term of this Agreement, use for himself or others, or disclose to others,
any confidential information of The MIIX Group or its affiliates including
without limitation, trade secrets, data, know-how, design, formulas,
developmental or experimental work, claims defense and recovery methods and
procedures and broker and agent relationships, computer programs, proprietary
information bases and systems, databases, customer lists, business plans,
financial information of or about The MIIX Group or any of its affiliates,
customers or clients, unless authorized in writing to do so by the Board, but
excluding any information generally available to the public or information
(except information related to The MIIX Group or its affiliates) which Executive
possessed prior to his employment with the Company. The Executive understands
that this undertaking applies to
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information of either a technical or commercial or other nature and that any
information not made available to the general public is to be considered
confidential. The Executive acknowledges that such confidential information as
is acquired and used by The MIIX Group or its affiliates is a special, valuable
and unique asset. All records, files, materials and confidential information
obtained by Executive in the course of his employment with the Company are
confidential and proprietary and shall remain the exclusive property of The MIIX
Group or its affiliates, as the case may be.
7. Return of Documents and Property. Upon the termination of Executive's
employment from the Company, or at any time upon the request of the Company,
Executive (or his heirs or personal representative) shall deliver to the Company
(a) all documents and materials containing confidential information relating to
the business or affairs of The MIIX Group or any of its affiliates, customers or
clients, and (b) all other documents, materials and other property belonging to
The MIIX Group or its affiliates, customers or clients that are in the
possession or under the control of Executive.
8. Non-Competition.
8.1 For purposes of this Agreement, "competitor" shall mean any company
engaged in or about to be engaged in the business of developing, producing or
distributing, in The MIIX Group's (including its affiliated companies)
geographic area of distribution, a product or service in the medical
professional liability
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<PAGE> 18
insurance business which is similar to any product or service produced or
performed or about to be produced or performed by The MIIX Group and/or any of
its affiliated companies.
8.2 The Executive agrees that so long as he is employed by the Company,
and for a period of one (1) year thereafter, he will not, directly or
indirectly, whether for compensation or not, own, manage, operate, join, control
or participate in, or be connected as a stockholder, officer, employee, partner,
creditor, guarantor, advisor or otherwise, with a competitor. The foregoing
shall not be construed, however, as preventing the Executive from investing his
assets in such form or manner as will not require services on the part of the
Executive in the operations of the businesses in which such investments are made
and provided any such business is publicly owned and the interest of Executive
therein is solely that of an investor owning not more than five percent (5%) of
the outstanding equity securities of any such business. Should Executive breach
the provisions of this Section, the Company and The MIIX Group shall be entitled
to cease all payments and benefits under the terms of this Agreement and shall
be entitled to pursue all remedies it might have including, but not limited to,
those contained in this Agreement.
8.3 For the period of six (6) months after the termination of this
Agreement for any reason whatsoever, Executive shall not offer employment or
otherwise solicit as a director, officer, employee, agent or in any other
capacity any person or persons who are employed by The MIIX Group or any of its
affiliates or who were at
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any time (within a period of six (6) months immediately prior to the date of the
Executive's termination) employed by The MIIX Group or any of its affiliates or
otherwise interfere with the relationship between such persons and The MIIX
Group or any of its affiliates, provided that the foregoing shall not prohibit a
general solicitation for employment.
8.4 It is agreed that the Executive's services hereunder are special,
unique, unusual and extraordinary giving them peculiar value, the loss of which
cannot be reasonably or adequately compensated for by damages, and in the event
of the Executive's breach of Sections 6 or 8 hereof, the Company and The MIIX
Group shall be entitled to equitable relief by way of injunction or otherwise.
If the period of time or area herein specified should be adjudged unreasonable
in any court proceeding, then the period of time shall be reduced by such number
of months or the area shall be reduced by elimination of such portion thereof as
deemed unreasonable, so that this covenant may be enforced during such period of
time and in such area as is adjudged to be reasonable.
9. Severability. The terms of this Agreement and each Section hereof shall be
considered severable and the invalidity or unenforceability of any part thereof
shall not affect the validity or enforceability of the remaining portions or
provisions hereof.
10. Notices. Any notice required or permitted to be given under this Agreement
shall be sufficient, if in writing and delivered by registered or certified mail
or
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overnight delivery service, to his principal residence in the case of the
Executive, or to its principal office in the case of the Company or The MIIX
Group.
11. Assignment. The rights and obligations of the Company and The MIIX Group
under this Agreement shall inure to the benefit of and be binding upon their
respective successors and assigns. Neither this Agreement nor any rights or
interests herein or created hereby may be assigned or otherwise transferred
voluntarily or involuntarily by the Executive.
12. Arbitration. Except in the event of a breach or threat of breach of Sections
6 or 8 of this Agreement, any controversy or claim arising out of or relating
directly or indirectly to this Agreement, including but not limited to
transactions pursuant hereto, the rights and obligations of the parties
hereunder, and the performance or breach hereof, which are not capable of
satisfactory amicable resolution, and whether sounding in contract, tort, or any
other legal theory shall be finally and conclusively settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") then in force, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The award
shall be made by one (1) arbitrator. The arbitrator shall interpret this
Agreement in accordance with the substantive laws of the State of New Jersey.
The arbitrator shall have no power to add to, subtract from, or otherwise modify
the terms of this Agreement. All awards shall be reasoned awards in writing
setting forth the facts, the issues and the legal or
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other basis for the decisions of the arbitrator. No party shall be precluded
hereby from seeking provisional remedies in the courts of any jurisdiction or
from the arbitrator, including, but not limited to, temporary restraining orders
and preliminary injunctions to protect its rights and interests, and the posting
of pre-award security, but such shall not be sought as a means to avoid or
unduly delay arbitration.
The parties hereby acknowledge the validity and enforceability of this
arbitration clause, and will not challenge the validity thereof in any court or
before the arbitrator. Each party shall bear its own respective legal fees,
costs and expenses in connection with any arbitration, court action or
proceeding, and shall bear one-half of the arbitrator's fees and expenses, if
any.
13. Waiver. Any term or provision of this Agreement may be waived in writing at
any time by the party entitled to the benefit thereof. The failure of either
party at any time to require performance of any provision of this Agreement
shall not affect such party's right at a later time to enforce such provision.
No consent or waiver by either party to any default or to any breach of a
condition or term in this Agreement shall be deemed or construed to be a consent
or waiver to any other breach or default.
14. Applicable Law. Except to the extent such laws are superceded by Federal
laws, this Agreement shall be interpreted and construed under the laws of the
State of New Jersey, without reference to principles of conflicts of laws.
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15. Entire Agreement. This instrument contains the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior or
contemporaneous agreements with respect to such subject matter. It may not be
changed or altered, except by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
THE MIIX GROUP, INCORPORATED
By: /s/ Daniel Goldberg
------------------------------------------
Name: Daniel Goldberg
Title: President and Chief Executive
Officer
NEW JERSEY STATE MEDICAL UNDERWRITERS, INC.
By: /s/ Vincent A. Maressa
------------------------------------------
Vincent A. Maressa
Chairman
/s/ Kenneth Koreyva
----------------------------------------(L.S.)
Kenneth Koreyva
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<PAGE> 1
EXHIBIT 10.17
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated as of October 9, 1998
among THE MIIX GROUP, INCORPORATED ("The MIIX Group"), NEW JERSEY STATE MEDICAL
UNDERWRITERS, INC. (hereinafter called the "Company") and JOSEPH HUDSON,
(hereinafter called the "Executive").
BACKGROUND
Executive presently serves as Vice-President, Marketing of the Company
pursuant to an Employment Agreement dated September 30, 1991 (the "Underwriter
Employment Agreement"). Pursuant to a Plan of Reorganization which was approved
by the Insurance Commissioner of the State of New Jersey on March 5, 1998,
shares of common stock of The MIIX Group will be distributed to certain past and
present policyholders of insurance issued by the Medical Inter-Insurance
Exchange of New Jersey ("MIIX"), and all of the assets of MIIX will be assigned
and transferred to MIIX Insurance Company, a wholly-owned subsidiary of The MIIX
Group (the "Reorganization"). At the closing of the Reorganization, The MIIX
Group will acquire all of the issued and outstanding common stock of the
Company.
The Company deems it to be in its best interest to secure and retain the
services of Executive and Executive desires to work for the Company upon the
terms and conditions hereinafter set forth. This Agreement shall be effective
upon
<PAGE> 2
the date set forth above (the "Effective Date"), at which time the Underwriter
Employment Agreement shall terminate and have no legal force and effect, except
to the extent of any unsatisfied obligations owing by the Company to the
Executive.
NOW, THEREFORE, in consideration of the mutual promises and undertakings
herein contained, and intending to be legally bound hereby, the parties hereto
agree, as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
meanings set forth below:
1.1 "Base Amount" shall mean the Executive's "Base Amount" as determined
in accordance with Section 280G of the Internal Revenue Code of 1986, as
amended.
1.2 "Base Salary" shall mean the annual salary payable to the Executive
pursuant to Section 4.1 hereof.
1.3 "Board" shall mean the Board of Directors of The MIIX Group.
1.4 "Cause" shall mean the termination of the Executive's employment with
the Company or The MIIX Group as a result of:
1.4.1 the willful engaging by the Executive in misconduct which is
materially injurious to the Company, monetarily or otherwise; or
1.4.2 the willful failure by the Executive to perform such services
as may be delegated or assigned by the Chief Executive Officer of the Company or
The MIIX Group; or
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1.4.3 the Executive's conviction of, or a plea of nolo contendre to,
a felony or a crime involving moral turpitude; or
1.4.4 the repeated and consistent failure of Executive to devote his
full-time best efforts to the performance of his duties under this Agreement
(other than any such failure resulting from the Executive's incapacity due to
physical or mental illness); or
1.4.5 the commission by Executive of an act of, or omission of an
act, that would constitute a material breach of this Agreement.
1.5 "Change in Control" shall mean any of the following events:
1.5.1 the acquisition in one or more transactions by any "Person"
(as such term is used for purposes of Section 13(d) or Section 14(d) of the
Securities Exchange Act of 1934) but excluding, for this purpose, The MIIX Group
or its subsidiaries or any employee benefit plan of The MIIX Group or its
subsidiaries, of "Beneficial Ownership" (within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934) of thirty-five percent (35%) or more of the
combined voting power of The MIIX Group's then outstanding voting securities
(the "Voting Securities"), and a change in the identity of the Chief Executive
Officer of The MIIX Group during the six months following such acquisition;
1.5.2 the individuals who, as of the Effective Date, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board and a change in the identity of the Chief Executive
Officer of The MIIX
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Group during the six months following such change in the majority of the Board;
provided, however, that if the election, or nomination for election by The MIIX
Group's shareholders, of any new director was approved by a vote of at least a
majority of the Incumbent Board, such new director shall be considered as a
member of the Incumbent Board, and provided further that any reductions in the
size of the Board that are instituted voluntarily by the Incumbent Board shall
not constitute a Change in Control, and after any such reduction the "Incumbent
Board" shall mean the Board as so reduced;
1.5.3 a merger or consolidation involving The MIIX Group if the
shareholders of The MIIX Group, immediately before such merger or consolidation,
do not own, directly or indirectly, immediately following such merger or
consolidation, more than sixty-five percent (65%) of the combined voting power
of the outstanding Voting Securities of the corporation resulting from such
merger or consolidation and a change in the identity of the Chief Executive
Officer of The MIIX Group during the six months following such merger or
consolidation; or a complete liquidation or dissolution of The MIIX Group or a
sale or other disposition of all or substantially all of the assets of The MIIX
Group; or
1.5.4 the acceptance by the shareholders of The MIIX Group of shares
in a share exchange if the shareholders of The MIIX Group, immediately before
such share exchange, do not own, directly or indirectly, immediately following
such share exchange, more than sixty-five percent (65%) of the combined voting
power of
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the outstanding Voting Securities of the corporation resulting from such share
exchange and a change in the identity of the Chief Executive Officer of The MIIX
Group during the six months following such share exchange.
1.6 "Good Reason" shall mean:
1.6.1 the assignment to the Executive, without the Executive's
expressed written approval, of duties or responsibilities, inconsistent with the
Executive's position of Executive Vice-President, Marketing and Business
Development of the Company and The MIIX Group or the reduction in Executive's
duties, responsibilities or authority from those in effect on the date hereof,
but excluding any increase in duties or responsibilities resulting from The MIIX
Group's merger, consolidation or combination with any other entity;
1.6.2 a reduction by the Company in the Executive's "Base Salary" as
in effect on the date hereof or as the same is increased from time to time
during the term of this Agreement by more than ten percent (10%) unless such
reduction is part of a salary reduction program instituted by the Company and
affects all officers of the Company;
1.6.3 any material breach by the Company or The MIIX Group of the
terms of this Agreement; or
1.6.4 any purchaser, assignee, surviving entity or successor of the
Company or The MIIX Group or their respective businesses or assets (regardless
of
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the form of any transaction) fails or refuses to expressly assume this Agreement
in writing, and all of the duties and obligations of the Company hereunder.
2. Term of Employment. Subject to the terms and conditions of this Agreement,
the Company hereby employs the Executive and the Executive hereby accepts
employment by the Company. The initial term of employment hereunder shall be for
a three (3) year period commencing on the Effective Date and, unless sooner
terminated as provided for herein, ending on the third anniversary thereof (the
"Initial Term"). Except as otherwise provided for herein, unless either party
gives written notice to the other party at least thirty (30) days before the end
of the Initial Term or any extended term (a "Nonrenewal Notice"), the Agreement
shall automatically be extended for additional one-year periods.
3. Position and Duties. The Executive is engaged hereunder to serve as the
Executive Vice-President, Marketing and Business Development of the Company and
The MIIX Group and he agrees to perform the duties and services incident to
those positions, or such other or further duties and services of a similar
nature as may be required of him by the President and Chief Executive Officer of
the Company and The MIIX Group. The Executive agrees to perform the duties and
responsibilities called for hereunder to the best of his ability and to devote
his full time, energies and skills to such duties and to the promotion of the
business and interests of the Company and of any corporate subsidiaries or
affiliated companies. The Executive may participate in charitable and similar
activities, may be a
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director of a company that does not compete with The MIIX Group or its
affiliates, and may have business interests in passive investments which may,
from time to time, require portions of his time, but such activities shall be
done in a manner consistent with his obligations hereunder.
4. Compensation and Other Benefits.
4.1 Salary. The Company shall pay to the Executive for the performance of
his duties hereunder, an initial base salary of $250,000 per annum (the "Base
Salary"), payable in accordance with the Company's normal payroll practices.
Thereafter, the amount of the Base Salary will be reviewed and adjusted as
appropriate by the Board in accordance with executive compensation review
practices. The Company shall pay, and The MIIX Group shall cause the Company to
pay, all other amounts payable to Executive hereunder.
4.2 Bonus. Executive shall be eligible to receive an annual bonus pursuant
to The MIIX Group's Cash Incentive Plan, at the discretion of the Board, based
on Executive's achievement of goals and objectives established by the Board on
an annual basis. The Board shall use its reasonable judgment in determining
whether such goals and objectives have been met and the amount, if any, of bonus
to be paid to Executive. It is anticipated that any bonus will be paid on or by
March 31 of the succeeding year.
4.3 Stock Options. On or by the date upon which The MIIX Group consummates
an initial public offering of shares of its common stock, The MIIX
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Group shall grant to Executive options to acquire 60,000 shares of the common
stock of The MIIX Group at an exercise price equal to the fair market value of
the common stock as of the date of grant. Such options shall be granted under
The MIIX Group's 1998 Long Term Incentive Equity Plan and shall be the subject
of a separate stock option agreement. Twenty-five percent (25%) of the options
shall vest on the date of grant with an additional twenty-five percent (25%)
vesting on each anniversary of the date of grant. In addition, Executive shall
be entitled to participate in The MIIX Group's Long Term Incentive Equity Plan
or similar plans which may be made available from time to time to executives of
the Company or The MIIX Group. The grant of any such options shall be at the
sole discretion of the Board and shall be based on the achievement of
performance goals established by the Board.
4.4 Employee Benefits. During the term of this Agreement, the Executive
shall be entitled to participate in all of the benefit programs provided to all
executives of The MIIX Group or its affiliates, including, without limitation,
all medical, disability, dental and life insurance benefits, retirement
programs, and other employee benefit programs now in existence or hereafter
adopted by The MIIX Group or its affiliates, as such plans, programs, practices
or policies may be in effect from time to time.
4.5 Vacation. In addition to such holidays, sick leave and other time off
as are established by the policies of the Company, Executive shall be entitled
to at
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<PAGE> 9
least four (4) weeks of vacation in accordance with the Company's vacation
policy for executives, during which his compensation shall continue to be paid
to him; provided, however, that the Executive may not take more than two (2)
consecutive weeks of vacation without the prior approval of the Chief Executive
Officer of the Company. Unused vacation time can be carried over in accordance
with Company policy.
4.6 Automobile. During the term of this Agreement, the Company shall make
available to the Executive an automobile in accordance with and subject to the
conditions of the Company's standard automobile policy or practices as in effect
from time to time.
4.7 Reimbursement of Expenses. The Company shall reimburse the Executive
for all reasonable expenses incurred by Executive in connection with his
employment hereunder provided, however, that such expenses were incurred in
conformance with the policies of the Company, as established from time to time,
and Executive submits detailed vouchers and other records reasonably required by
the Company in support of the amount and nature of such expense.
4.8 Taxes and Withholding. All compensation payable and other benefits
provided under this Agreement shall be subject to customary withholding for
income, F.I.C.A. and other employment taxes.
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<PAGE> 10
5. Termination of Employment.
5.1 Death of Executive. The Executive's employment under this Agreement
shall terminate immediately upon the Executive's death and the Executive's
estate (or his beneficiary, as may be appropriate) shall be entitled to receive
(a) the Executive's Base Salary earned through his date of death, to the extent
theretofore unpaid, (b) unreimbursed expenses, and (c) such retirement and other
benefits earned by the Executive and vested (if applicable) as of the date of
his death under any employee benefit plan of The MIIX Group or its affiliates in
which the Executive participates, all of the foregoing to be paid in the normal
course for such payments. In the event the Executive dies during a period for
which payments are required to be made under the terms of this Agreement, all
such remaining payments and benefits shall continue to be payable to the
Executive's estate or as may be directed by the personal representative of his
estate.
5.2 Disability of Executive. If the Executive is unable to perform his
duties under this Agreement because of a long term disability as determined in
accordance with The MIIX Group's Long Term Disability Plan, the Company may
terminate the Executive's employment by giving written notice to the Executive.
Such termination shall be effective as of the date of such notice and the
Company and The MIIX Group shall have no further obligations under this
Agreement, except (a) for the obligation to pay to the Executive any Base Salary
earned through the date of such termination, to the extent theretofore unpaid,
(b) unreimbursed expenses,
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and (c) such retirement and other benefits earned by the Executive and vested
(if applicable) prior to his termination under any employee benefit plan of The
MIIX Group or its affiliates in which the Executive participates, all of the
foregoing to be paid in the normal course for such payments.
5.3 Termination for Cause. Executive's employment under this Agreement
shall terminate immediately upon written notice from the Company that the
Company is terminating the Executive for Cause. If the event or circumstances
specified in the Company's notice of termination are capable of being cured, the
Executive will have fifteen (15) days to correct or eliminate such Cause
provided the Executive is taking reasonable and demonstrable action to do so
during such period. If the Executive has not corrected or eliminated such Cause
by the end of such fifteen (15) day period, the Executive's employment shall
then terminate. Upon the Company's termination of Executive for Cause, the
Company's and The MIIX Group's obligations under this Agreement shall terminate,
except for the obligation to pay to Executive (a) the balance of his accrued and
unpaid Base Salary, (b) unreimbursed expenses, and (c) retirement and other
benefits earned by the Executive and vested (if applicable) under any employee
benefit plan of The MIIX Group or its affiliates in which the Executive
participates, all of the foregoing to be paid in the normal course for such
payments.
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5.4 Termination Without Cause.
5.4.1 The Company may terminate Executive's employment under this
Agreement at any time upon thirty (30) days prior written notice to the
Executive. Such termination shall be effective thirty (30) days following the
date of such notice, provided that during such notice period the Board in its
absolute discretion may relieve the Executive of all his duties,
responsibilities and authority in respect to the Company and restrict the
Executive's access to the Company's property. If the Company terminates the
Executive's employment without Cause except during the one (1) year period
following a Change in Control, the Executive shall be entitled to receive (a)
the accrued and unpaid balance of his Base Salary through the termination date,
(b) the greater of his Base Salary for the twelve (12) month period following
the date of termination or his Base Salary payable (in the absence of such
termination) from the date of termination through the end of the Initial Term,
paid, at the option of the Company, in accordance with the Company's normal
payroll practice or in a lump sum, (c) unreimbursed expenses, (d) such
retirement and other benefits earned by the Executive and vested (if applicable)
under the terms of any employee benefit plan maintained by The MIIX Group or its
affiliates in which the Executive participates paid in the normal course for
such payments, and (e) for the twelve (12) month period following the date of
termination, coverage for the Executive and his dependents (if applicable) under
The MIIX Group's and its affiliates' health, life and benefits plans and
programs.
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In the event a Change in Control occurs during the period of payments required
under this Section, the remaining payments shall be accelerated and paid in a
lump sum within thirty (30) days of the Change in Control.
5.4.2 If the Executive's employment is terminated by the Company
without Cause during the one (1) year period following a Change in Control, the
Company shall pay to Executive (a) the accrued and unpaid balance of his Base
Salary through the termination date, (b) within thirty (30) days of such
termination a lump sum payment equal to 2.0 multiplied by the Executive's Base
Amount, (c) unreimbursed expenses, (d) such retirement and other benefits earned
by the Executive and vested (if applicable) under the terms of any employee
benefit plan maintained by The MIIX Group or its affiliates in which the
Executive participates paid in the normal course for such payments, and (e) for
the twelve (12) month period following the date of termination, coverage for the
Executive and his dependents (if applicable) under The MIIX Group's and its
affiliates' health, life and benefit plans and programs.
For purposes of both Sections 5.4.1 and 5.4.2, termination arising
at the end of a term as a result of the Company providing a Non-Renewal Notice
shall be treated as termination without Cause and Executive shall be entitled to
receive the payments provided in Sections 5.4.1 or 5.4.2, as the case may be.
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<PAGE> 14
5.5 Termination by Executive.
5.5.1 Executive may terminate his employment hereunder at any time
upon not less than thirty (30) days prior written notice. If the Executive
voluntarily terminates his employment without Good Reason, the Executive shall
be entitled to receive (a) the balance of his accrued and unpaid Base Salary as
of the termination date, (b) unreimbursed expenses, and (c) such retirement and
other benefits earned by the Executive and vested (if applicable) prior to his
termination under the terms of any employee benefit plan maintained by The MIIX
Group or its affiliates, all of the foregoing to be paid in the normal course
for such payments.
5.5.2 If the Executive voluntarily terminates his employment with
the Company prior to a Change in Control with Good Reason, the Executive's
required notice of termination shall specify the circumstances that constitute
Good Reason and must be given within thirty (30) days of the event or
circumstances which constitute such Good Reason. In such event, the Company will
have thirty (30) days to correct or eliminate such Good Reason. If the Company
has not corrected or eliminated such Good Reason, by the end of such thirty (30)
day period, the Executive's employment shall terminate and the Executive shall
be entitled to receive (a) his accrued and unpaid Base Salary through the
termination date, (b) unreimbursed expenses, (c) his Base Salary for the twelve
(12) month period following the termination date paid, at the Company's option,
in accordance with the Company's normal payroll practice or in a lump sum, (d)
such retirement and
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<PAGE> 15
other benefits earned by the Executive and vested (if applicable) under the
terms of any employee benefit plan maintained by The MIIX Group or its
affiliates in which the Executive participates paid in the normal course for
such payments, and (e) during the twelve (12) month period following
termination, coverage for the Executive and his dependents (if applicable) under
The MIIX Group's and its affiliates' health, life and benefit plans and
programs. In the event a Change in Control occurs during the period of payments
required under this Section 5.5.2, the remaining payments shall be accelerated
and paid in a lump sum within thirty (30) days of the Change in Control.
5.5.3 During the one (1) year period following a Change in Control,
the Executive may terminate his employment with Good Reason upon thirty (30)
days written notice of termination to the Board. If the Executive elects to
terminate his employment with the Company pursuant to this Section 5.5.3 for
Good Reason, the Executive's required notice of termination shall specify the
circumstances that constitute Good Reason and must be given within thirty (30)
days of the event or circumstances which constitute such Good Reason. In such
event, the Company will have thirty (30) days to correct or eliminate such Good
Reason. If the Company has not corrected or eliminated such Good Reason by the
end of that thirty (30) day period, the Executive's employment shall terminate
and the Company shall pay to Executive (a) the accrued and unpaid balance of his
Base Salary through the termination date, (b) unreimbursed expenses, (c) within
thirty (30) days of such
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<PAGE> 16
termination, a lump sum payment equal to 2.0 multiplied by the Executive's Base
Amount, (d) such retirement and other benefits earned by the Executive and
vested (if applicable) under the terms of any employee benefit plan maintained
by The MIIX Group or its affiliates in which the Executive participates, paid in
the normal course for such payments, and (e) for the twelve (12) month period
following the termination date, coverage for the Executive and his dependents
(if applicable) under The MIIX Group's and its affiliates' health, life and
benefit plans and programs.
6. Confidential Information. Except as required in the performance of his duties
to the Company under this Agreement, the Executive shall not, during or after
the term of this Agreement, use for himself or others, or disclose to others,
any confidential information of The MIIX Group or its affiliates including
without limitation, trade secrets, data, know-how, design, formulas,
developmental or experimental work, claims defense and recovery methods and
procedures and broker and agent relationships, computer programs, proprietary
information bases and systems, databases, customer lists, business plans,
financial information of or about The MIIX Group or any of its affiliates,
customers or clients, unless authorized in writing to do so by the Board, but
excluding any information generally available to the public or information
(except information related to The MIIX Group or its affiliates) which Executive
possessed prior to his employment with the Company. The Executive understands
that this undertaking applies to
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<PAGE> 17
information of either a technical or commercial or other nature and that any
information not made available to the general public is to be considered
confidential. The Executive acknowledges that such confidential information as
is acquired and used by The MIIX Group or its affiliates is a special, valuable
and unique asset. All records, files, materials and confidential information
obtained by Executive in the course of his employment with the Company are
confidential and proprietary and shall remain the exclusive property of The MIIX
Group or its affiliates, as the case may be.
7. Return of Documents and Property. Upon the termination of Executive's
employment from the Company, or at any time upon the request of the Company,
Executive (or his heirs or personal representative) shall deliver to the Company
(a) all documents and materials containing confidential information relating to
the business or affairs of The MIIX Group or any of its affiliates, customers or
clients, and (b) all other documents, materials and other property belonging to
The MIIX Group or its affiliates, customers or clients that are in the
possession or under the control of Executive.
8. Non-Competition.
8.1 For purposes of this Agreement, "competitor" shall mean any company
engaged in or about to be engaged in the business of developing, producing or
distributing, in The MIIX Group's (including its affiliated companies)
geographic area of distribution, a product or service in the medical
professional liability
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<PAGE> 18
insurance business which is similar to any product or service produced or
performed or about to be produced or performed by The MIIX Group and/or any of
its affiliated companies.
8.2 The Executive agrees that so long as he is employed by the Company,
and for a period of one (1) year thereafter, he will not, directly or
indirectly, whether for compensation or not, own, manage, operate, join, control
or participate in, or be connected as a stockholder, officer, employee, partner,
creditor, guarantor, advisor or otherwise, with a competitor. The foregoing
shall not be construed, however, as preventing the Executive from investing his
assets in such form or manner as will not require services on the part of the
Executive in the operations of the businesses in which such investments are made
and provided any such business is publicly owned and the interest of Executive
therein is solely that of an investor owning not more than five percent (5%) of
the outstanding equity securities of any such business. Should Executive breach
the provisions of this Section, the Company and The MIIX Group shall be entitled
to cease all payments and benefits under the terms of this Agreement and shall
be entitled to pursue all remedies it might have including, but not limited to,
those contained in this Agreement.
8.3 For the period of six (6) months after the termination of this
Agreement for any reason whatsoever, Executive shall not offer employment or
otherwise solicit as a director, officer, employee, agent or in any other
capacity any person or persons who are employed by The MIIX Group or any of its
affiliates or who were at
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<PAGE> 19
any time (within a period of six (6) months immediately prior to the date of the
Executive's termination) employed by The MIIX Group or any of its affiliates or
otherwise interfere with the relationship between such persons and The MIIX
Group or any of its affiliates, provided that the foregoing shall not prohibit a
general solicitation for employment.
8.4 It is agreed that the Executive's services hereunder are special,
unique, unusual and extraordinary giving them peculiar value, the loss of which
cannot be reasonably or adequately compensated for by damages, and in the event
of the Executive's breach of Sections 6 or 8 hereof, the Company and The MIIX
Group shall be entitled to equitable relief by way of injunction or otherwise.
If the period of time or area herein specified should be adjudged unreasonable
in any court proceeding, then the period of time shall be reduced by such number
of months or the area shall be reduced by elimination of such portion thereof as
deemed unreasonable, so that this covenant may be enforced during such period of
time and in such area as is adjudged to be reasonable.
9. Severability. The terms of this Agreement and each Section hereof shall be
considered severable and the invalidity or unenforceability of any part thereof
shall not affect the validity or enforceability of the remaining portions or
provisions hereof.
10. Notices. Any notice required or permitted to be given under this Agreement
shall be sufficient, if in writing and delivered by registered or certified mail
or
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<PAGE> 20
overnight delivery service, to his principal residence, in the case of the
Executive, or to its principal office in the case of the Company or The MIIX
Group.
11. Assignment. The rights and obligations of the Company and The MIIX Group
under this Agreement shall inure to the benefit of and be binding upon their
respective successors and assigns. Neither this Agreement nor any rights or
interests herein or created hereby may be assigned or otherwise transferred
voluntarily or involuntarily by the Executive.
12. Arbitration. Except in the event of a breach or threat of breach of Sections
6 or 8 of this Agreement, any controversy or claim arising out of or relating
directly or indirectly to this Agreement, including but not limited to
transactions pursuant hereto, the rights and obligations of the parties
hereunder, and the performance or breach hereof, which are not capable of
satisfactory amicable resolution, and whether sounding in contract, tort, or any
other legal theory shall be finally and conclusively settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") then in force, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The award
shall be made by one (1) arbitrator.
The arbitrator shall interpret this Agreement in accordance with the substantive
laws of the State of New Jersey. The arbitrator shall have no power to add to,
subtract from, or otherwise modify the terms of this Agreement. All awards shall
be reasoned awards in writing setting forth the facts, the issues and the legal
or
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<PAGE> 21
other basis for the decisions of the arbitrator. No party shall be precluded
hereby from seeking provisional remedies in the courts of any jurisdiction or
from the arbitrator, including, but not limited to, temporary restraining orders
and preliminary injunctions to protect its rights and interests, and the posting
of pre-award security, but such shall not be sought as a means to avoid or
unduly delay arbitration.
The parties hereby acknowledge the validity and enforceability of this
arbitration clause, and will not challenge the validity thereof in any court or
before the arbitrator. Each party shall bear its own respective legal fees,
costs and expenses in connection with any arbitration, court action or
proceeding, and shall bear one-half of the arbitrator's fees and expenses, if
any.
13. Waiver. Any term or provision of this Agreement may be waived in writing at
any time by the party entitled to the benefit thereof. The failure of either
party at any time to require performance of any provision of this Agreement
shall not affect such party's right at a later time to enforce such provision.
No consent or waiver by either party to any default or to any breach of a
condition or term in this Agreement shall be deemed or construed to be a consent
or waiver to any other breach or default.
14. Applicable Law. Except to the extent such laws are superceded by Federal
laws, this Agreement shall be interpreted and construed under the laws of the
State of New Jersey, without reference to principles of conflicts of laws.
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<PAGE> 22
15. Entire Agreement. This instrument contains the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior or
contemporaneous agreements with respect to such subject matter. It may not be
changed or altered, except by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
THE MIIX GROUP, INCORPORATED
By: /s/ Daniel Goldberg
---------------------
Name: Daniel Goldberg
Title: President and Chief Executive
Officer
NEW JERSEY STATE MEDICAL
UNDERWRITERS, INC.
By: /s/ Vincent A. Maressa
----------------------
Vincent A. Maressa
Chairman
/s/ Joseph Hudson
------------------(L.S.)
Joseph Hudson
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<PAGE> 1
Exhibit 10.20
STOCK PURCHASE AND LOAN AGREEMENT
BY AND BETWEEN
THE MIIX GROUP INCORPORATED
AND
DANIEL GOLDBERG
DATED: October 9, 1998
<PAGE> 2
STOCK PURCHASE AND LOAN AGREEMENT
THIS STOCK PURCHASE AND LOAN AGREEMENT (the "Agreement"), made
as of this 9th day of October, 1998, by and between THE MIIX GROUP,
INCORPORATED, a Delaware corporation (the "Company"), and DANIEL GOLDBERG (the
"Executive").
BACKGROUND
WHEREAS, pursuant to the Plan of Reorganization approved by
the Commissioner of the New Jersey Department of Banking and Insurance on March
5, 1998 (the "Reorganization"), the Company owns all of the issued and
outstanding stock of MIIX Insurance Company; and
WHEREAS, as part of the Reorganization, certain policyholders
of the Medical Inter-Insurance Exchange of New Jersey will become stockholders
of the Company; and
WHEREAS, concurrently with the consummation of the
Reorganization, the Company intends to sell shares of its common stock through
an underwritten public offering (the "IPO"); and
WHEREAS, the Company desires to ensure that key members of its
senior management share with its stockholders the common goal of achieving
long-term growth in the market value of the Company which equals or exceeds the
growth of competitive companies in the insurance industry; and
WHEREAS, to achieve this objective, the Company requires that
upon the consummation of the IPO the Executive purchase that number of shares of
common stock of the Company (the "Purchased Shares") having an aggregate
purchase price of $1,290,000.00 based on the price per share of the common stock
offered in the IPO (the "Purchase Price"); and
WHEREAS, the Company intends to make a loan to the Executive
in an amount equal to the Purchase Price, and Executive intends to secure such
loan with a pledge of the Purchased Shares;
NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein and other good and valuable consideration, the
parties hereto agree as follows:
TERMS
1. Loan.
1.1. Loan. Subject to the terms and conditions
hereof, upon the consummation of the IPO, the Company shall lend to the
Executive the aggregate principal
<PAGE> 3
amount of ONE MILLION TWO HUNDRED NINETY THOUSAND DOLLARS ($1,290,000.00) (the
"Loan").
1.2. Purpose of Loan. The Executive shall use the
proceeds of the Loan solely for the purpose of purchasing the Purchased Shares
pursuant to Section 2 hereof.
1.3. Promissory Note. The obligation of the Executive
to repay the Loan shall be evidenced by the Executive's promissory note,
substantially in the form attached hereto as Exhibit I (the "Note"), in the
original principal amount of ONE MILLION TWO HUNDRED NINETY THOUSAND DOLLARS
($1,290,000.00). The Note shall be dated the date of the purchase of the
Purchased Shares, shall mature and become due and payable on the Maturity Date
(hereinafter defined) and shall bear interest as set forth in Section 1.4(b).
1.4. Principal Payments; Maturity; Interest Rate.
(a) Principal Payments. Unless sooner
accelerated as provided herein, the principal amount of the Loan shall be due
and payable in full on the fifth anniversary date of the Note (the "Maturity
Date"). Notwithstanding the collateral pledged to the Company pursuant to
Section 3 hereof, Executive shall have personal liability for the full payment
of the Loan, together with accrued interest thereon.
(b) Interest Rate and Payment. The principal
amount of the Loan shall bear interest from the date of the Note until the
Maturity Date (unless otherwise accelerated as provided herein) at a rate per
annum equal to the minimum interest rate necessary to avoid income imputation
under the Internal Revenue Code as of the date of the Note. Interest shall be
due and payable on the Maturity Date.
1.5. Voluntary Prepayments. The Executive shall have
the right to prepay the Loan in whole or in part from time to time, without
penalty or premium.
1.6. Mandatory Prepayments. In the event that
Executive sells any of the Purchased Shares during the term of the Loan, the
Executive shall, within five (5) days of such sale, make a mandatory prepayment
of the Loan in an amount equal to the product of the number of Purchased Shares
sold and the Purchase Price. In the event that such sale is made on an
installment basis, Executive shall make a mandatory prepayment as and when
proceeds of the sale are received by the Executive.
1.7. Events of Default. Each of the following shall
constitute an event of default (each, an "Event of Default") under this
Agreement:
(a) the failure of the Executive to pay when
due any principal or interest or other amount due hereunder or under the Note.
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<PAGE> 4
(b) any warranty or representation made by
the Executive in this Agreement shall prove to have been false or incorrect on
the date as of which made.
(c) the termination of Executive's
employment with the Company for any reason.
(d) the occurrence of any of the following
with respect to the Executive:
(i) he shall apply for or
consent to the
appointment of a
receiver, custodian,
trustee or liquidator
of all or a
substantial part of
his property;
(ii) he shall make a
general assignment for
the benefit of his
creditors;
(iii) he shall commence a
voluntary case under
the Federal Bankruptcy
Code; or
(iv) he shall file a
petition to take
advantage of any other
law providing for the
relief of debtors.
1.8. Remedies Upon Default. Upon the occurrence and
during the continuance of an Event of Default, all indebtedness, obligations and
liabilities of the Executive arising hereunder shall, at the option of the
Company, become immediately due and payable. The Company may exercise a right of
setoff against the Pledged Collateral (as defined below).
1.9. Extension of Payment Date. Notwithstanding
anything in Section 1.7(c) hereof to the contrary, in the event that Executive's
employment with the Company is terminated and such termination arises from the
death, disability or retirement of the Executive or is without Cause, then, at
the option of the Executive and upon delivery of written notice to that effect,
the obligation to repay the Loan in full, together with accrued interest
thereon, may be extended to the second anniversary date of such termination or
retirement or the Maturity Date, whichever is longer. For purposes of this
Section, the term "Cause" shall have the meaning assigned to it in that certain
Employment Agreement dated of even date herewith among the Executive, the
Company and New Jersey State Medical Underwriters, Inc.
2. Purchase and Sale of Common Stock.
2.1. Sale and Purchase. The Company shall, upon the
consummation of the IPO, issue and sell to the Executive, subject to and in
reliance upon the representations, warranties, terms and conditions of this
Agreement, and Executive shall purchase, the Purchased Shares for the Purchase
Price.
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<PAGE> 5
2.2. Payment of Purchase Price. Upon payment in full
of the Purchase Price, receipt of which shall be deemed acknowledged by the
Company at the consummation of the IPO, the Company shall deliver to Executive a
stock certificate, registered in the name of Executive, representing the
Purchased Shares.
2.3. Lock-up. The Executive agrees that, for a one
(1) year period following the date of the issuance of the Purchased Shares, the
Executive shall not sell, transfer or otherwise dispose of any of the Purchased
Shares without the consent of the Company.
3. Collateral.
3.1. Pledged Collateral. As security for the
performance of this Agreement and for the prompt and complete payment of the
Loan, together with accrued interest thereon, when due (whether at the Maturity
Date, by acceleration or otherwise), the Executive hereby grants to the Company
the following property (collectively, the "Pledged Collateral"):
(a) the Purchased Shares and the
certificates or instruments representing such stock and all dividends, interest,
cash, instruments, and other property from time to time received, receivable, or
otherwise distributed or distributable in respect of or in exchange for any or
all of such stock;
(b) all proceeds of the foregoing.
3.2. Delivery of Purchased Shares. Promptly after his
receipt of stock certificates representing the Purchased Shares, the Executive
shall deliver to the Company such stock certificates, together with stock powers
duly executed in blank by the Executive.
3.3. Voting Rights: Dividends: Etc.
(a) The Executive shall be entitled to
exercise any and all of Executive's voting and other consensual rights
pertaining to the Pledged Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement; and notwithstanding Section 3.1
but subject to Section 3.3(c) shall be entitled to receive and retain free and
clear of the security interest of Company hereunder, any and all of such
dividends, interest and other distributions permitted to all other holders of
the Company's Common Stock.
(b) The Company shall execute and deliver
(or cause to be executed and delivered) to the Executive all such proxies and
other instruments as Executive may reasonably request for the purpose of
enabling the Executive to exercise the voting and other rights that he is
entitled to exercise pursuant to paragraph (a) above and to receive the
dividends, interest and other distributions that he is authorized to receive and
retain pursuant to paragraph (a) above.
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<PAGE> 6
(c) Upon the occurrence and during the
continuance of an Event of Default (i) all rights of the Executive to exercise
the voting and other consensual rights that he would otherwise be entitled to
exercise pursuant to Section 3.3(a) hereof and to receive the dividends,
interest and other distributions that he would otherwise be authorized to
receive and retain pursuant to Section 3.3(a) hereof shall cease, and all such
rights shall thereupon become vested in Company which shall thereupon have the
sole right to exercise such voting and other consensual rights and to receive
such dividends, interest, and other distributions; and all dividends, interest
and other distributions which are received by Executive contrary to the
provisions of this paragraph shall be received in trust for the benefit of
Company, shall be segregated from other funds of Executive, and shall be
forthwith paid over to Company in the same form as so received (with any
necessary endorsement).
3.4. Further Assurances. Executive agrees that at any
time and from time to time, at the expense of Executive, Executive will promptly
execute and deliver all further instruments and documents, and take all further
action that may be necessary, or that Company may reasonably request, in order
to perfect and protect any security interest granted or purported to be granted
hereby or to enable Company to exercise and enforce the rights and remedies
hereunder with respect to any of the Pledged Collateral.
3.5. Transfers and Liens. Executive will not (i)
grant any option with respect to any of the Pledged Collateral, or (ii) create
or permit to exist any lien, security interest, or other charge or encumbrance
upon or with respect to any of the Pledged Collateral.
3.6. Company Appointed Attorney-in-Fact. Executive
hereby appoints Company as Executive's attorney-in-fact, with full authority in
the place and stead of Executive and in the name of Executive, from time to time
in Company's discretion to take any action and to execute any instrument which
Company may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation, upon the occurrence and during the
continuance of an Event of Default to receive, endorse, and collect all
instruments made payable to Executive representing any dividend, interest, or
other distribution in respect of the Pledged Collateral or any part thereof and
to give full discharge for the same. Company shall not, in its capacity as such
attorney-in-fact, be liable for any acts or omissions, nor for any error of
judgment or mistake of fact or law, but only for bad faith, willful misconduct
or gross negligence. This power, being coupled with an interest, is irrevocable
until all obligations under the Note have been fully satisfied.
3.7. Company's Duties. The powers conferred on the
Company hereunder are solely to protect its interests in the Pledged Collateral
and shall not impose any duty to exercise any such powers. Except for the safe
custody of any Pledged Collateral in its possession and the accounting for
moneys actually received by it hereunder, Company shall not have any duty as to
any Pledged Collateral or as to the taking of any necessary steps to preserve
rights against any parties or any other rights pertaining to any Pledged
Collateral. Without limiting the generality of the foregoing, Company shall not
have any responsibility for ascertaining
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<PAGE> 7
or taking action with respect to calls, conversions, exchanges, maturities,
tenders, or other matters relating to any Pledged Collateral, whether or not
Company has or is deemed to have knowledge of such matters.
3.8. Prepayments. In the event of any prepayment,
whether voluntary or mandatory, the Company shall release from the Pledged
Collateral, and deliver to the Executive, stock certificates evidencing that
number of Purchased Shares which have an aggregate fair market value equal to
the amount of the prepayment. In no event, however, shall the remaining Pledged
Collateral have a fair market value less than the unpaid principal balance of
the Loan and accrued interest thereon.
3.9. Transfer of Title. After the occurrence and
during the continuance of an Event of Default, Company shall have the right, at
any time in its discretion without further notice to Executive, to transfer to
or to register in the name of Company or its nominees, any or all of the Pledged
Collateral. In addition, upon the occurrence and during the continuance of an
Event of Default, Company shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
3.10. Termination. The provisions of this Section 3
shall terminate upon payment in full of the Loan, together with accrued interest
thereon, at which time the Company shall promptly deliver to Executive stock
certificates evidencing the Purchased Shares remaining in its possession.
4. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Executive as follows:
4.1. Organization. The Company (a) is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, and (b) has all requisite corporate power and authority to
execute, deliver and perform this Agreement.
4.2. Authorization of Agreement.
(a) The execution, delivery and performance
by the Company of this Agreement has been duly authorized by all requisite
corporate action by the Company, and this Agreement constitutes the valid and
binding obligation of the Company.
(b) The issuance, sale and delivery of the
Purchased Shares have been duly authorized by all requisite corporate action of
the Company, and when issued, sold and delivered in accordance with this
Agreement, the Purchased Shares will be validly issued and outstanding, fully
paid and nonassessable, and not subject to preemptive or any other similar
rights of the stockholders of the Company or others.
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<PAGE> 8
4.3. SEC Registration Statement. The Company has made
available to the Executive, in the form filed with the SEC and as amended prior
to the date hereof, the Form S-1 Registration Statement (Registration No.
333-59371) (the "Registration Statement"). The Registration Statement complies
as to form in all material respects with the requirements of the Securities Act
of 1933 (the "Securities Act") and the rules and regulations thereunder, and did
not, on the date when it was declared effective, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements made therein in light of the
circumstances under which they were made not misleading.
5. Representations of the Executive. The Executive represents,
warrants and covenants to the Company that:
(a) Executive has the full power and
authority and has full legal right to execute and deliver this Agreement and the
Note, to perform, observe and comply with all of his agreements and obligations
under each of this Agreement and the Note and to obtain the proceeds of the Loan
contemplated by this Agreement;
(b) Executive has duly executed and
delivered this Agreement and this Agreement constitutes the valid and binding
obligation of Executive, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, moratorium or similar laws
affecting creditors' rights or by general principles of equity;
(c) Executive is acquiring the Purchased
Shares for his own account, for investment and not with a view to the
distribution thereof within the meaning of the Securities Act;
(d) Executive understands that the Purchased
Shares have not been and shall not be registered under the Securities Act, by
reason of their issuance by the Company in a transaction exempt from the
registration requirements of the Securities Act; and any subsequent disposition
thereof must be registered under the Securities Act must be exempt from
registration;
(e) Executive understands that: (i) the
exemption from registration afforded by Rule 144 (the provisions of which are
known to him) promulgated under the Securities Act depends on the satisfaction
of various conditions, and that, if and when applicable, Rule 144 may only
afford the basis for sales in limited amounts; and (ii) the Company is under no
obligation to register the Purchased Shares on behalf of the Executive or to
assist the Executive in complying with any exemption from registration;
(f) he is an accredited investor as defined
in Rule 501(a) promulgated under the Securities Act.
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<PAGE> 9
6. Certain Restrictions.
6.1. Legend. The certificate for the Purchased Shares
shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED OR ANY APPLICABLE STATE SECURITIES
LAW. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION EXCEPT UPON
DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL,
WHICH OPINION SHALL BE REASONABLY SATISFACTORY TO THE
COMPANY, STATING THAT AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT AND
APPLICABLE STATE SECURITIES LAWS IS AVAILABLE. THE
TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE CONDITIONS SET FORTH IN
THAT CERTAIN STOCK PURCHASE AND LOAN AGREEMENT BY AND
BETWEEN THE COMPANY AND DANIEL GOLDBERG."
6.2. Opinion. Company agrees to reimburse Executive
for the cost of obtaining any opinion required by the above legend.
7. Miscellaneous.
7.1. Amendments, Indulgences, Etc. No amendment or
waiver of any provision of this Agreement nor consent to any departure by
Executive herefrom shall in any event be effective unless the same shall be in
writing and signed by Company, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No failure or delay on the part of Company in the exercise of any right,
power, or remedy under this Agreement shall constitute a waiver thereof, or
prevent the exercise thereof in that or any other instance.
7.2. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and, if to Executive,
mailed or telefaxed or delivered to them at the addresses therefor shown at the
time in Company's records, and, if to Company, mailed or delivered to it at Two
Princess Road, Lawrenceville, New Jersey 08648.
7.3. Continuing Security Interest. This Agreement
creates a continuing security interest in the Pledged Collateral and shall be
binding upon Executive, and his heirs, executors, administrators, successors,
and assigns and inure to the benefit of Company and its successors, transferees
and assigns. The execution and delivery of this Agreement shall in no
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<PAGE> 10
manner impair or affect any other security (by endorsement or otherwise) for the
payment or performance of the Note and no security taken hereafter as security
for payment or performance of the Note shall impair in any manner or affect this
Agreement or the security interest granted hereby, all such present and future
additional security to be considered as cumulative security. Any of the Pledged
Collateral may be released from this Agreement without altering, varying, or
diminishing in any way this Agreement or the security interest granted hereby as
to the Pledged Collateral not expressly released, and this Agreement and such
security interest shall continue in full force and effect as to all of the
Pledged Collateral not expressly released.
7.4. Governing Law; Consent to Jurisdiction; Etc.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New Jersey applicable to contracts made and wholly performed within
New Jersey. Executive consents to the jurisdiction of the courts of New Jersey
and of the courts of the United States sitting in New Jersey in any litigation
concerning this Agreement, and Executive waives any objection based on venue or
inconvenient forum. Unless otherwise defined herein, terms defined in the
Uniform Commercial Code as in effect on the date hereof are used herein as
therein defined as of such date.
7.5. Counterparts. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
7.6. Severability. The provisions of this Agreement
are independent of and separable from each other, and no such provision, shall
be altered or rendered invalid or unenforceable by virtue of the fact that for
any reason any other such provision may be invalid or unenforceable in whole or
in part.
7.7. Headings. The section headings of this Agreement
are for convenience only, form no part of this Agreement and shall not affect
its interpretation.
7.8. Entire Agreement. This Agreement sets forth all
of the promises, covenants, agreements, conditions and undertakings between the
parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written.
8. Closing Certificates.
(a) It shall be a condition to the
obligations of the Executive hereunder that, simultaneously with the execution
of the Note, the Company shall deliver to the Executive a certificate stating
that (i) at and as if made on the date thereof, the representations made by the
Company in Section 4 are true and complete and (ii) since the effective date of
the Registration Statement, the Company's financial condition, operations and
business have not experienced a material adverse change.
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<PAGE> 11
(b) It shall be a condition to the
obligations of the Company hereunder that, simultaneously with the execution of
the Note, the Executive shall deliver to the Company a certificate stating that
(i) at and as if made on the date thereof, the representations made by the
Executive in Section 5 are true and complete, and (ii) the Note has been duly
executed and delivered by the Executive, and the Note constitutes a valid and
binding obligation of the Executive enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, moratorium or
similar laws affecting creditors' rights or by general principles of equity.
IN WITNESS WHEREOF, the undersigned intending to be legally
bound, have executed this Agreement as of the date first above written.
/s/ Daniel Goldberg
---------------------------------------(L.S.)
Daniel Goldberg
THE MIIX GROUP INCORPORATED
By: /s/ Vincent A. Maressa
------------------------------------------
Name: Vincent A. Maressa
Title: Director
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<PAGE> 12
EXHIBIT I
PROMISSORY NOTE
$1,290,000.00 Princeton, New Jersey
__________, 1998
The Undersigned, for value received and intending to be
legally bound, promises to pay to the order of THE MIIX GROUP, INCORPORATED (the
"Lender"), as and when due as set forth in the Stock Purchase and Loan Agreement
dated the date hereof between the Undersigned and Lender (as such agreement may
be amended, restated, modified or supplemented from time to time, the "Loan
Agreement"), the principal sum of ONE MILLION TWO HUNDRED NINETY THOUSAND
DOLLARS ($1,290,000.00). Capitalized terms used herein and not otherwise defined
shall have the meanings given such terms in the Loan Agreement.
The undersigned further promises to pay to the order of Lender
interest on the unpaid principal amount of the Loan from the date hereof until
such amounts have been repaid in full. Interest shall be at the annual rate of
__ percent (__%) and shall be due and payable on the Maturity Date (unless
accelerated sooner under the terms of the Loan Agreement).
This is the Note mentioned in, and is entitled to the benefits
of, the Loan Agreement.
This Note may be prepaid at any time, in whole or in part,
without premium or penalty. All payments in respect of this Note shall be
applied first to accrued interest and then to principal outstanding hereunder.
Mandatory prepayments shall be required from time to time pursuant to Section
1.6 of the Loan Agreement.
This Note shall be deemed to be a contract made under the laws
of the State of New Jersey and shall be construed in accordance with the laws of
said state without giving effect to principals of conflicts of law.
This Note shall be binding upon the undersigned and his heirs,
executors, administrators, transferees and assigns and the terms hereof shall
inure to the benefit of lender and its successors and assigns, including
subsequent holders hereof.
The undersigned hereby waives presentment, demand for payment,
notice of dishonor or acceleration, protest and notice of protest, and any and
all other notices or demands in connection with the delivery, acceptance,
performance, default or enforcement of this Note except any notice expressly
required in the Loan Agreement.
IN WITNESS WHEREOF, the undersigned executes this Note on the
day and year first above written.
By: (L.S.)
--------------------------------------
Daniel Goldberg
<PAGE> 1
Exhibit 10.21
STOCK PURCHASE AND LOAN AGREEMENT
BY AND BETWEEN
THE MIIX GROUP INCORPORATED
AND
KENNETH KOREYVA
DATED: October 9, 1998
<PAGE> 2
STOCK PURCHASE AND LOAN AGREEMENT
THIS STOCK PURCHASE AND LOAN AGREEMENT (the "Agreement"), made
as of this 9th day of October, 1998, by and between THE MIIX GROUP,
INCORPORATED, a Delaware corporation (the "Company"), and KENNETH KOREYVA (the
"Executive").
BACKGROUND
WHEREAS, pursuant to the Plan of Reorganization approved by the
Commissioner of the New Jersey Department of Banking and Insurance on March 5,
1998 (the "Reorganization"), the Company owns all of the issued and outstanding
stock of MIIX Insurance Company; and
WHEREAS, as part of the Reorganization, certain policyholders of the
Medical Inter-Insurance Exchange of New Jersey will become stockholders of the
Company; and
WHEREAS, concurrently with the consummation of the Reorganization, the
Company intends to sell shares of its common stock through an underwritten
public offering (the "IPO"); and
WHEREAS, the Company desires to ensure that key members of its senior
management share with its stockholders the common goal of achieving long-term
growth in the market value of the Company which equals or exceeds the growth of
competitive companies in the insurance industry; and
WHEREAS, to achieve this objective, the Company requires that upon the
consummation of the IPO the Executive purchase that number of shares of common
stock of the Company (the "Purchased Shares") having an aggregate purchase price
of $550,000.00 based on the price per share of the common stock offered in the
IPO (the "Purchase Price"); and
WHEREAS, the Company intends to make a loan to the Executive in an
amount equal to the Purchase Price, and Executive intends to secure such loan
with a pledge of the Purchased Shares;
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein and other good and valuable consideration, the parties hereto
agree as follows:
TERMS
1. Loan.
1.1. Loan. Subject to the terms and conditions hereof, upon
the consummation of the IPO, the Company shall lend to the Executive the
aggregate principal amount of FIVE HUNDRED FIFTY THOUSAND DOLLARS ($550,000.00)
(the "Loan").
<PAGE> 3
1.2. Purpose of Loan. The Executive shall use the proceeds of
the Loan solely for the purpose of purchasing the Purchased Shares pursuant to
Section 2 hereof.
1.3. Promissory Note. The obligation of the Executive to repay
the Loan shall be evidenced by the Executive's promissory note, substantially in
the form attached hereto as Exhibit I (the "Note"), in the original principal
amount of FIVE HUNDRED FIFTY THOUSAND DOLLARS ($550,000.00). The Note shall be
dated the date of the purchase of the Purchased Shares, shall mature and become
due and payable on the Maturity Date (hereinafter defined) and shall bear
interest as set forth in Section 1.4(b).
1.4. Principal Payments; Maturity; Interest Rate.
(a) Principal Payments. Unless sooner accelerated as
provided herein, the principal amount of the Loan shall be due and payable in
full on the fifth anniversary date of the Note (the "Maturity Date").
Notwithstanding the collateral pledged to the Company pursuant to Section 3
hereof, Executive shall have personal liability for the full payment of the
Loan, together with accrued interest thereon.
(b) Interest Rate and Payment. The principal amount
of the Loan shall bear interest from the date of the Note until the Maturity
Date (unless otherwise accelerated as provided herein) at a rate per annum equal
to the minimum interest rate necessary to avoid income imputation under the
Internal Revenue Code as of the date of the Note. Interest shall be due and
payable on the Maturity Date.
1.5. Voluntary Prepayments. The Executive shall have the right
to prepay the Loan in whole or in part from time to time, without penalty or
premium.
1.6. Mandatory Prepayments. In the event that Executive sells
any of the Purchased Shares during the term of the Loan, the Executive shall,
within five (5) days of such sale, make a mandatory prepayment of the Loan in an
amount equal to the product of the number of Purchased Shares sold and the
Purchase Price. In the event that such sale is made on an installment basis,
Executive shall make a mandatory prepayment as and when proceeds of the sale are
received by the Executive.
1.7. Events of Default. Each of the following shall constitute
an event of default (each, an "Event of Default") under this Agreement:
(a) the failure of the Executive to pay when due any
principal or interest or other amount due hereunder or under the Note.
(b) any warranty or representation made by the
Executive in this Agreement shall prove to have been false or incorrect on the
date as of which made.
(c) the termination of Executive's employment with
the Company for any reason.
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<PAGE> 4
(d) the occurrence of any of the following with
respect to the Executive:
(i) he shall apply for or consent to the
appointment of a receiver, custodian,
trustee or liquidator of all or a
substantial part of his property;
(ii) he shall make a general assignment for the
benefit of his creditors;
(iii) he shall commence a voluntary case under the
Federal Bankruptcy Code; or
(iv) he shall file a petition to take advantage
of any other law providing for the relief of
debtors.
1.8. Remedies Upon Default. Upon the occurrence and during the
continuance of an Event of Default, all indebtedness, obligations and
liabilities of the Executive arising hereunder shall, at the option of the
Company, become immediately due and payable. The Company may exercise a right of
setoff against the Pledged Collateral (as defined below).
1.9. Extension of Payment Date. Notwithstanding anything in
Section 1.7(c) hereof to the contrary, in the event that Executive's employment
with the Company is terminated and such termination arises from the death,
disability or retirement of the Executive or is without Cause, then, at the
option of the Executive and upon delivery of written notice to that effect, the
obligation to repay the Loan in full, together with accrued interest thereon,
may be extended to the second anniversary date of such termination or retirement
or the Maturity Date, whichever is longer. For purposes of this Section, the
term "Cause" shall have the meaning assigned to it in that certain Employment
Agreement dated of even date herewith among the Executive, the Company and New
Jersey State Medical Underwriters, Inc.
2. Purchase and Sale of Common Stock.
2.1. Sale and Purchase. The Company shall, upon the
consummation of the IPO, issue and sell to the Executive, subject to and in
reliance upon the representations, warranties, terms and conditions of this
Agreement, and Executive shall purchase, the Purchased Shares for the Purchase
Price.
2.2. Payment of Purchase Price. Upon payment in full of the
Purchase Price, receipt of which shall be deemed acknowledged by the Company at
the consummation of the IPO, the Company shall deliver to Executive a stock
certificate, registered in the name of Executive, representing the Purchased
Shares.
2.3. Lock-up. The Executive agrees that, for a one (1) year
period following the date of the issuance of the Purchased Shares, the Executive
shall not sell, transfer or otherwise dispose of any of the Purchased Shares
without the consent of the Company.
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<PAGE> 5
3. Collateral.
3.1. Pledged Collateral. As security for the performance of
this Agreement and for the prompt and complete payment of the Loan, together
with accrued interest thereon, when due (whether at the Maturity Date, by
acceleration or otherwise), the Executive hereby grants to the Company the
following property (collectively, the "Pledged Collateral"):
(a) the Purchased Shares and the certificates or
instruments representing such stock and all dividends, interest, cash,
instruments, and other property from time to time received, receivable, or
otherwise distributed or distributable in respect of or in exchange for any or
all of such stock;
(b) all proceeds of the foregoing.
3.2. Delivery of Purchased Shares. Promptly after his receipt
of stock certificates representing the Purchased Shares, the Executive shall
deliver to the Company such stock certificates, together with stock powers duly
executed in blank by the Executive.
3.3. Voting Rights: Dividends: Etc.
(a) The Executive shall be entitled to exercise any
and all of Executive's voting and other consensual rights pertaining to the
Pledged Collateral or any part thereof for any purpose not inconsistent with the
terms of this Agreement; and notwithstanding Section 3.1 but subject to Section
3.3(c) shall be entitled to receive and retain free and clear of the security
interest of Company hereunder, any and all of such dividends, interest and other
distributions permitted to all other holders of the Company's Common Stock.
(b) The Company shall execute and deliver (or cause
to be executed and delivered) to the Executive all such proxies and other
instruments as Executive may reasonably request for the purpose of enabling the
Executive to exercise the voting and other rights that he is entitled to
exercise pursuant to paragraph (a) above and to receive the dividends, interest
and other distributions that he is authorized to receive and retain pursuant to
paragraph (a) above.
(c) Upon the occurrence and during the continuance of
an Event of Default (i) all rights of the Executive to exercise the voting and
other consensual rights that he would otherwise be entitled to exercise pursuant
to Section 3.3(a) hereof and to receive the dividends, interest and other
distributions that he would otherwise be authorized to receive and retain
pursuant to Section 3.3(a) hereof shall cease, and all such rights shall
thereupon become vested in Company which shall thereupon have the sole right to
exercise such voting and other consensual rights and to receive such dividends,
interest, and other distributions; and all dividends, interest and other
distributions which are received by Executive contrary to the provisions of this
paragraph shall be received in trust for the benefit of Company, shall be
segregated from other funds of Executive, and shall be forthwith paid over to
Company in the same form as so received (with any necessary endorsement).
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<PAGE> 6
3.4. Further Assurances. Executive agrees that at any time and
from time to time, at the expense of Executive, Executive will promptly execute
and deliver all further instruments and documents, and take all further action
that may be necessary, or that Company may reasonably request, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable Company to exercise and enforce the rights and remedies
hereunder with respect to any of the Pledged Collateral.
3.5. Transfers and Liens. Executive will not (i) grant any
option with respect to any of the Pledged Collateral, or (ii) create or permit
to exist any lien, security interest, or other charge or encumbrance upon or
with respect to any of the Pledged Collateral.
3.6. Company Appointed Attorney-in-Fact. Executive hereby
appoints Company as Executive's attorney-in-fact, with full authority in the
place and stead of Executive and in the name of Executive, from time to time in
Company's discretion to take any action and to execute any instrument which
Company may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation, upon the occurrence and during the
continuance of an Event of Default to receive, endorse, and collect all
instruments made payable to Executive representing any dividend, interest, or
other distribution in respect of the Pledged Collateral or any part thereof and
to give full discharge for the same. Company shall not, in its capacity as such
attorney-in-fact, be liable for any acts or omissions, nor for any error of
judgment or mistake of fact or law, but only for bad faith, willful misconduct
or gross negligence. This power, being coupled with an interest, is irrevocable
until all obligations under the Note have been fully satisfied.
3.7. Company's Duties. The powers conferred on the Company
hereunder are solely to protect its interests in the Pledged Collateral and
shall not impose any duty to exercise any such powers. Except for the safe
custody of any Pledged Collateral in its possession and the accounting for
moneys actually received by it hereunder, Company shall not have any duty as to
any Pledged Collateral or as to the taking of any necessary steps to preserve
rights against any parties or any other rights pertaining to any Pledged
Collateral. Without limiting the generality of the foregoing, Company shall not
have any responsibility for ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders, or other matters relating to any
Pledged Collateral, whether or not Company has or is deemed to have knowledge of
such matters.
3.8. Prepayments. In the event of any prepayment, whether
voluntary or mandatory, the Company shall release from the Pledged Collateral,
and deliver to the Executive, stock certificates evidencing that number of
Purchased Shares which have an aggregate fair market value equal to the amount
of the prepayment. In no event, however, shall the remaining Pledged Collateral
have a fair market value less than the unpaid principal balance of the Loan and
accrued interest thereon.
3.9. Transfer of Title. After the occurrence and during the
continuance of an Event of Default, Company shall have the right, at any time in
its discretion without further notice to Executive, to transfer to or to
register in the name of Company or its nominees, any or all of the Pledged
Collateral. In addition, upon the occurrence and during the continuance of an
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<PAGE> 7
Event of Default, Company shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
3.10. Termination. The provisions of this Section 3 shall
terminate upon payment in full of the Loan, together with accrued interest
thereon, at which time the Company shall promptly deliver to Executive stock
certificates evidencing the Purchased Shares remaining in its possession.
4. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Executive as follows:
4.1. Organization. The Company (a) is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and (b) has all requisite corporate power and authority to execute,
deliver and perform this Agreement.
4.2. Authorization of Agreement.
(a) The execution, delivery and performance by the
Company of this Agreement has been duly authorized by all requisite corporate
action by the Company, and this Agreement constitutes the valid and binding
obligation of the Company.
(b) The issuance, sale and delivery of the Purchased
Shares have been duly authorized by all requisite corporate action of the
Company, and when issued, sold and delivered in accordance with this Agreement,
the Purchased Shares will be validly issued and outstanding, fully paid and
nonassessable, and not subject to preemptive or any other similar rights of the
stockholders of the Company or others.
4.3. SEC Registration Statement. The Company has made
available to the Executive, in the form filed with the SEC and as amended prior
to the date hereof, the Form S-1 Registration Statement (Registration No.
333-59371) (the "Registration Statement"). The Registration Statement complies
as to form in all material respects with the requirements of the Securities Act
of 1933 (the "Securities Act") and the rules and regulations thereunder, and did
not, on the date when it was declared effective, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements made therein in light of the
circumstances under which they were made not misleading.
5. Representations of the Executive. The Executive represents,
warrants and covenants to the Company that:
(a) Executive has the full power and authority and
has full legal right to execute and deliver this Agreement and the Note, to
perform, observe and comply with all of his agreements and obligations under
each of this Agreement and the Note and to obtain the proceeds of the Loan
contemplated by this Agreement;
(b) Executive has duly executed and delivered this
Agreement and this Agreement constitutes the valid and binding obligation of
Executive, enforceable in
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<PAGE> 8
accordance with its terms, except as such enforceability may be limited by
bankruptcy, moratorium or similar laws affecting creditors' rights or by general
principles of equity;
(c) Executive is acquiring the Purchased Shares for
his own account, for investment and not with a view to the distribution thereof
within the meaning of the Securities Act;
(d) Executive understands that the Purchased Shares
have not been and shall not be registered under the Securities Act, by reason of
their issuance by the Company in a transaction exempt from the registration
requirements of the Securities Act; and any subsequent disposition thereof must
be registered under the Securities Act or must be exempt from registration;
(e) Executive understands that: (i) the exemption
from registration afforded by Rule 144 (the provisions of which are known to
him) promulgated under the Securities Act depends on the satisfaction of various
conditions, and that, if and when applicable, Rule 144 may only afford the basis
for sales in limited amounts; and (ii) the Company is under no obligation to
register the Purchased Shares on behalf of the Executive or to assist the
Executive in complying with any exemption from registration;
(f) he is an accredited investor as defined in Rule
501(a) promulgated under the Securities Act.
6. Certain Restrictions.
6.1. Legend. The certificate for the Purchased Shares shall
bear the following legend:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED OR ANY APPLICABLE STATE SECURITIES
LAW. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION EXCEPT UPON
DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL,
WHICH OPINION SHALL BE REASONABLY SATISFACTORY TO THE
COMPANY, STATING THAT AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT AND
APPLICABLE STATE SECURITIES LAWS IS AVAILABLE. THE
TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE CONDITIONS SET FORTH IN
THAT CERTAIN STOCK PURCHASE AND LOAN AGREEMENT BY AND
BETWEEN THE COMPANY AND KENNETH KOREYVA."
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<PAGE> 9
6.2. Opinion. Company agrees to reimburse Executive for the
cost of obtaining any opinion required by the above legend.
7. Miscellaneous.
7.1. Amendments, Indulgences, Etc. No amendment or waiver of
any provision of this Agreement nor consent to any departure by Executive
herefrom shall in any event be effective unless the same shall be in writing and
signed by Company, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given. No failure
or delay on the part of Company in the exercise of any right, power, or remedy
under this Agreement shall constitute a waiver thereof, or prevent the exercise
thereof in that or any other instance.
7.2. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and, if to Executive,
mailed or telefaxed or delivered to them at the addresses therefor shown at the
time in Company's records, and, if to Company, mailed or delivered to it at Two
Princess Road, Lawrenceville, New Jersey 08648.
7.3. Continuing Security Interest. This Agreement creates a
continuing security interest in the Pledged Collateral and shall be binding upon
Executive, and his heirs, executors, administrators, successors, and assigns and
inure to the benefit of Company and its successors, transferees and assigns. The
execution and delivery of this Agreement shall in no manner impair or affect any
other security (by endorsement or otherwise) for the payment or performance of
the Note and no security taken hereafter as security for payment or performance
of the Note shall impair in any manner or affect this Agreement or the security
interest granted hereby, all such present and future additional security to be
considered as cumulative security. Any of the Pledged Collateral may be released
from this Agreement without altering, varying, or diminishing in any way this
Agreement or the security interest granted hereby as to the Pledged Collateral
not expressly released, and this Agreement and such security interest shall
continue in full force and effect as to all of the Pledged Collateral not
expressly released.
7.4. Governing Law; Consent to Jurisdiction; Etc. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New Jersey applicable to contracts made and wholly performed within New
Jersey. Executive consents to the jurisdiction of the courts of New Jersey and
of the courts of the United States sitting in New Jersey in any litigation
concerning this Agreement, and Executive waives any objection based on venue or
inconvenient forum. Unless otherwise defined herein, terms defined in the
Uniform Commercial Code as in effect on the date hereof are used herein as
therein defined as of such date.
7.5. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
7.6. Severability. The provisions of this Agreement are
independent of and separable from each other, and no such provision, shall be
altered or rendered invalid or
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<PAGE> 10
unenforceable by virtue of the fact that for any reason any other such provision
may be invalid or unenforceable in whole or in part.
7.7. Headings. The section headings of this Agreement are for
convenience only, form no part of this Agreement and shall not affect its
interpretation.
7.8. Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and undertakings between the parties
hereto with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written.
8. Closing Certificates.
(a) It shall be a condition to the obligations of the
Executive hereunder that, simultaneously with the execution of the Note, the
Company shall deliver to the Executive a certificate stating that (i) at and as
if made on the date thereof, the representations made by the Company in Section
4 are true and complete and (ii) since the effective date of the Registration
Statement, the Company's financial condition, operations and business have not
experienced a material adverse change.
(b) It shall be a condition to the obligations of the
Company hereunder that, simultaneously with the execution of the Note, the
Executive shall deliver to the Company a certificate stating that (i) at and as
if made on the date thereof, the representations made by the Executive in
Section 5 are true and complete, and (ii) the Note has been duly executed and
delivered by the Executive, and the Note constitutes a valid and binding
obligation of the Executive enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, moratorium or similar laws
affecting creditors' rights or by general principles of equity.
IN WITNESS WHEREOF, the undersigned intending to be legally
bound, have executed this Agreement as of the date first above written.
/s/ Kenneth Koreyva
--------------------(L.S.)
Kenneth Koreyva
THE MIIX GROUP INCORPORATED
By: /s/ Daniel Goldberg
---------------------
Name: Daniel Goldberg
Title: President and Chief
Executive Officer
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EXHIBIT I
PROMISSORY NOTE
$550,000.00 Princeton, New Jersey
________, 1998
The Undersigned, for value received and intending to be
legally bound, promises to pay to the order of THE MIIX GROUP, INCORPORATED (the
"Lender"), as and when due as set forth in the Stock Purchase and Loan Agreement
dated the date hereof between the Undersigned and Lender (as such agreement may
be amended, restated, modified or supplemented from time to time, the "Loan
Agreement"), the principal sum of FIVE HUNDRED FIFTY THOUSAND DOLLARS
($550,000.00). Capitalized terms used herein and not otherwise defined shall
have the meanings given such terms in the Loan Agreement.
The undersigned further promises to pay to the order of Lender
interest on the unpaid principal amount of the Loan from the date hereof until
such amounts have been repaid in full. Interest shall be at the annual rate of
__ percent (__%) and shall be due and payable on the Maturity Date (unless
accelerated sooner under the terms of the Loan Agreement).
This is the Note mentioned in, and is entitled to the benefits
of, the Loan Agreement.
This Note may be prepaid at any time, in whole or in part,
without premium or penalty. All payments in respect of this Note shall be
applied first to accrued interest and then to principal outstanding hereunder.
Mandatory prepayments shall be required from time to time pursuant to Section
1.6 of the Loan Agreement.
This Note shall be deemed to be a contract made under the laws
of the State of New Jersey and shall be construed in accordance with the laws of
said state without giving effect to principals of conflicts of law.
This Note shall be binding upon the undersigned and his heirs,
executors, administrators, transferees and assigns and the terms hereof shall
inure to the benefit of lender and its successors and assigns, including
subsequent holders hereof.
The undersigned hereby waives presentment, demand for payment,
notice of dishonor or acceleration, protest and notice of protest, and any and
all other notices or demands in connection with the delivery, acceptance,
performance, default or enforcement of this Note except any notice expressly
required in the Loan Agreement.
IN WITNESS WHEREOF, the undersigned executes this Note on the
day and year first above written.
By:____________________________(L.S.)
Kenneth Koreyva
<PAGE> 1
STOCK PURCHASE AND LOAN AGREEMENT
THIS STOCK PURCHASE AND LOAN AGREEMENT (the "Agreement"), made as of
this 9th day of October, 1998, by and between THE MIIX GROUP,
INCORPORATED, a Delaware corporation (the "Company"), and JOSEPH HUDSON (the
"Executive").
BACKGROUND
WHEREAS, pursuant to the Plan of Reorganization approved by the
Commissioner of the New Jersey Department of Banking and Insurance on March 5,
1998 (the "Reorganization"), the Company owns all of the issued and outstanding
stock of MIIX Insurance Company; and
WHEREAS, as part of the Reorganization, certain policyholders of the
Medical Inter-Insurance Exchange of New Jersey will become stockholders of the
Company; and
WHEREAS, concurrently with the consummation of the Reorganization, the
Company intends to sell shares of its common stock through an underwritten
public offering (the "IPO"); and
WHEREAS, the Company desires to ensure that key members of its senior
management share with its stockholders the common goal of achieving long-term
growth in the market value of the Company which equals or exceeds the growth of
competitive companies in the insurance industry; and
WHEREAS, to achieve this objective, the Company requires that upon the
consummation of the IPO the Executive purchase that number of shares of common
stock of the Company (the "Purchased Shares") having an aggregate purchase price
of $500,000.00 based on the price per share of the common stock offered in the
IPO (the "Purchase Price"); and
WHEREAS, the Company intends to make a loan to the Executive in an
amount equal to the Purchase Price, and Executive intends to secure such loan
with a pledge of the Purchased Shares;
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein and other good and valuable consideration, the parties hereto
agree as follows:
TERMS
1. Loan.
1.1. Loan. Subject to the terms and conditions hereof, upon
the consummation of the IPO, the Company shall lend to the Executive the
aggregate principal amount of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) (the
"Loan").
<PAGE> 2
1.2. Purpose of Loan. The Executive shall use the proceeds of
the Loan solely for the purpose of purchasing the Purchased Shares pursuant to
Section 2 hereof.
1.3. Promissory Note. The obligation of the Executive to repay
the Loan shall be evidenced by the Executive's promissory note, substantially in
the form attached hereto as Exhibit I (the "Note"), in the original principal
amount of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00). The Note shall be dated
the date of the purchase of the Purchased Shares, shall mature and become due
and payable on the Maturity Date (hereinafter defined) and shall bear interest
as set forth in Section 1.4(b).
1.4. Principal Payments; Maturity; Interest Rate.
(a) Principal Payments. Unless sooner accelerated as
provided herein, the principal amount of the Loan shall be due and payable in
full on the fifth anniversary date of the Note (the "Maturity Date").
Notwithstanding the collateral pledged to the Company pursuant to Section 3
hereof, Executive shall have personal liability for the full payment of the
Loan, together with accrued interest thereon.
(b) Interest Rate and Payment. The principal amount
of the Loan shall bear interest from the date of the Note until the Maturity
Date (unless otherwise accelerated as provided herein) at a rate per annum equal
to the minimum interest rate necessary to avoid income imputation under the
Internal Revenue Code as of the date of the Note. Interest shall be due and
payable on the Maturity Date.
1.5. Voluntary Prepayments. The Executive shall have the right
to prepay the Loan in whole or in part from time to time, without penalty or
premium.
1.6. Mandatory Prepayments. In the event that Executive sells
any of the Purchased Shares during the term of the Loan, the Executive shall,
within five (5) days of such sale, make a mandatory prepayment of the Loan in an
amount equal to the product of the number of Purchased Shares sold and the
Purchase Price. In the event that such sale is made on an installment basis,
Executive shall make a mandatory prepayment as and when proceeds of the sale are
received by the Executive.
1.7. Events of Default. Each of the following shall constitute
an event of default (each, an "Event of Default") under this Agreement:
(a) the failure of the Executive to pay when due any
principal or interest or other amount due hereunder or under the Note.
(b) any warranty or representation made by the
Executive in this Agreement shall prove to have been false or incorrect on the
date as of which made.
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(c) the termination of Executive's employment with
the Company for any reason.
(d) the occurrence of any of the following with
respect to the Executive:
(i) he shall apply for or consent to the
appointment of a receiver, custodian,
trustee or liquidator of all or a
substantial part of his property;
(ii) he shall make a general assignment for the
benefit of his creditors;
(iii) he shall commence a voluntary case under the
Federal Bankruptcy Code; or
(iv) he shall file a petition to take advantage
of any other law providing for the relief of
debtors.
1.8. Remedies Upon Default. Upon the occurrence and during the
continuance of an Event of Default, all indebtedness, obligations and
liabilities of the Executive arising hereunder shall, at the option of the
Company, become immediately due and payable. The Company may exercise a right of
setoff against the Pledged Collateral (as defined below).
1.9. Extension of Payment Date. Notwithstanding anything in
Section 1.7(c) hereof to the contrary, in the event that Executive's employment
with the Company is terminated and such termination arises from the death,
disability or retirement of the Executive or is without Cause, then, at the
option of the Executive and upon delivery of written notice to that effect, the
obligation to repay the Loan in full, together with accrued interest thereon,
may be extended to the second anniversary date of such termination or retirement
or the Maturity Date, whichever is longer. For purposes of this Section, the
term "Cause" shall have the meaning assigned to it in that certain Employment
Agreement dated of even date herewith among the Executive, the Company and New
Jersey State Medical Underwriters, Inc.
2. Purchase and Sale of Common Stock.
2.1. Sale and Purchase. The Company shall, upon the
consummation of the IPO, issue and sell to the Executive, subject to and in
reliance upon the representations, warranties, terms and conditions of this
Agreement, and Executive shall purchase, the Purchased Shares for the Purchase
Price.
2.2. Payment of Purchase Price. Upon payment in full of the
Purchase Price, receipt of which shall be deemed acknowledged by the Company at
the consummation of
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the IPO, the Company shall deliver to Executive a stock certificate, registered
in the name of Executive, representing the Purchased Shares.
2.3. Lock-up. The Executive agrees that, for a one (1) year
period following the date of the issuance of the Purchased Shares, the Executive
shall not sell, transfer or otherwise dispose of any of the Purchased Shares
without the consent of the Company.
3. Collateral.
3.1. Pledged Collateral. As security for the performance of
this Agreement and for the prompt and complete payment of the Loan, together
with accrued interest thereon, when due (whether at the Maturity Date, by
acceleration or otherwise), the Executive hereby grants to the Company the
following property (collectively, the "Pledged Collateral"):
(a) the Purchased Shares and the certificates or
instruments representing such stock and all dividends, interest, cash,
instruments, and other property from time to time received, receivable, or
otherwise distributed or distributable in respect of or in exchange for any or
all of such stock;
(b) all proceeds of the foregoing.
3.2. Delivery of Purchased Shares. Promptly after his receipt
of stock certificates representing the Purchased Shares, the Executive shall
deliver to the Company such stock certificates, together with stock powers duly
executed in blank by the Executive.
3.3. Voting Rights: Dividends: Etc.
(a) The Executive shall be entitled to exercise any
and all of Executive's voting and other consensual rights pertaining to the
Pledged Collateral or any part thereof for any purpose not inconsistent with the
terms of this Agreement; and notwithstanding Section 3.1 but subject to Section
3.3(c) shall be entitled to receive and retain free and clear of the security
interest of Company hereunder, any and all of such dividends, interest and other
distributions permitted to all other holders of the Company's Common Stock.
(b) The Company shall execute and deliver (or cause
to be executed and delivered) to the Executive all such proxies and other
instruments as Executive may reasonably request for the purpose of enabling the
Executive to exercise the voting and other rights that he is entitled to
exercise pursuant to paragraph (a) above and to receive the dividends, interest
and other distributions that he is authorized to receive and retain pursuant to
paragraph (a) above.
(c) Upon the occurrence and during the continuance of
an Event of Default (i) all rights of the Executive to exercise the voting and
other consensual rights that he would otherwise be entitled to exercise pursuant
to Section 3.3(a) hereof and to receive
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the dividends, interest and other distributions that he would otherwise be
authorized to receive and retain pursuant to Section 3.3(a) hereof shall cease,
and all such rights shall thereupon become vested in Company which shall
thereupon have the sole right to exercise such voting and other consensual
rights and to receive such dividends, interest, and other distributions; and all
dividends, interest and other distributions which are received by Executive
contrary to the provisions of this paragraph shall be received in trust for the
benefit of Company, shall be segregated from other funds of Executive, and shall
be forthwith paid over to Company in the same form as so received (with any
necessary endorsement).
3.4. Further Assurances. Executive agrees that at any time and
from time to time, at the expense of Executive, Executive will promptly execute
and deliver all further instruments and documents, and take all further action
that may be necessary, or that Company may reasonably request, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable Company to exercise and enforce the rights and remedies
hereunder with respect to any of the Pledged Collateral.
3.5. Transfers and Liens. Executive will not (i) grant any
option with respect to any of the Pledged Collateral, or (ii) create or permit
to exist any lien, security interest, or other charge or encumbrance upon or
with respect to any of the Pledged Collateral.
3.6. Company Appointed Attorney-in-Fact. Executive hereby
appoints Company as Executive's attorney-in-fact, with full authority in the
place and stead of Executive and in the name of Executive, from time to time in
Company's discretion to take any action and to execute any instrument which
Company may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation, upon the occurrence and during the
continuance of an Event of Default to receive, endorse, and collect all
instruments made payable to Executive representing any dividend, interest, or
other distribution in respect of the Pledged Collateral or any part thereof and
to give full discharge for the same. Company shall not, in its capacity as such
attorney-in-fact, be liable for any acts or omissions, nor for any error of
judgment or mistake of fact or law, but only for bad faith, willful misconduct
or gross negligence. This power, being coupled with an interest, is irrevocable
until all obligations under the Note have been fully satisfied.
3.7. Company's Duties. The powers conferred on the Company
hereunder are solely to protect its interests in the Pledged Collateral and
shall not impose any duty to exercise any such powers. Except for the safe
custody of any Pledged Collateral in its possession and the accounting for
moneys actually received by it hereunder, Company shall not have any duty as to
any Pledged Collateral or as to the taking of any necessary steps to preserve
rights against any parties or any other rights pertaining to any Pledged
Collateral. Without limiting the generality of the foregoing, Company shall not
have any responsibility for ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders, or other matters relating to any
Pledged Collateral, whether or not Company has or is deemed to have knowledge of
such matters.
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3.8. Prepayments. In the event of any prepayment, whether
voluntary or mandatory, the Company shall release from the Pledged Collateral,
and deliver to the Executive, stock certificates evidencing that number of
Purchased Shares which have an aggregate fair market value equal to the amount
of the prepayment. In no event, however, shall the remaining Pledged Collateral
have a fair market value less than the unpaid principal balance of the Loan and
accrued interest thereon.
3.9. Transfer of Title. After the occurrence and during the
continuance of an Event of Default, Company shall have the right, at any time in
its discretion without further notice to Executive, to transfer to or to
register in the name of Company or its nominees, any or all of the Pledged
Collateral. In addition, upon the occurrence and during the continuance of an
Event of Default, Company shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
3.10. Termination. The provisions of this Section 3 shall
terminate upon payment in full of the Loan, together with accrued interest
thereon, at which time the Company shall promptly deliver to Executive stock
certificates evidencing the Purchased Shares remaining in its possession.
4. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Executive as follows:
4.1. Organization. The Company (a) is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and (b) has all requisite corporate power and authority to execute,
deliver and perform this Agreement.
4.2. Authorization of Agreement.
(a) The execution, delivery and performance by the
Company of this Agreement has been duly authorized by all requisite corporate
action by the Company, and this Agreement constitutes the valid and binding
obligation of the Company.
(b) The issuance, sale and delivery of the Purchased
Shares have been duly authorized by all requisite corporate action of the
Company, and when issued, sold and delivered in accordance with this Agreement,
the Purchased Shares will be validly issued and outstanding, fully paid and
nonassessable, and not subject to preemptive or any other similar rights of the
stockholders of the Company or others.
4.3. SEC Registration Statement. The Company has made
available to the Executive, in the form filed with the SEC and as amended prior
to the date hereof, the Form S-1 Registration Statement (Registration No.
333-59371) (the "Registration Statement"). The Registration Statement complies
as to form in all material respects with the requirements of the Securities Act
of 1933 (the "Securities Act") and the rules and regulations thereunder, and did
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not, on the date when it was declared effective, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements made therein in light of the
circumstances under which they were made not misleading.
5. Representations of the Executive. The Executive represents,
warrants and covenants to the Company that:
(a) Executive has the full power and authority and
has full legal right to execute and deliver this Agreement and the Note, to
perform, observe and comply with all of his agreements and obligations under
each of this Agreement and the Note and to obtain the proceeds of the Loan
contemplated by this Agreement;
(b) Executive has duly executed and delivered this
Agreement and this Agreement constitutes the valid and binding obligation of
Executive, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, moratorium or similar laws
affecting creditors' rights or by general principles of equity;
(c) Executive is acquiring the Purchased Shares for
his own account, for investment and not with a view to the distribution thereof
within the meaning of the Securities Act;
(d) Executive understands that the Purchased Shares
have not been and shall not be registered under the Securities Act, by reason of
their issuance by the Company in a transaction exempt from the registration
requirements of the Securities Act; and any subsequent disposition thereof must
be registered under the Securities Act or must be exempt from registration;
(e) Executive understands that: (i) the exemption
from registration afforded by Rule 144 (the provisions of which are known to
him) promulgated under the Securities Act depends on the satisfaction of various
conditions, and that, if and when applicable, Rule 144 may only afford the basis
for sales in limited amounts; and (ii) the Company is under no obligation to
register the Purchased Shares on behalf of the Executive or to assist the
Executive in complying with any exemption from registration;
(f) he is an accredited investor as defined in Rule
501(a) promulgated under the Securities Act.
6. Certain Restrictions.
6.1. Legend. The certificate for the Purchased Shares shall
bear the following legend:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
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HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED OR ANY APPLICABLE STATE SECURITIES
LAW. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION EXCEPT UPON
DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL,
WHICH OPINION SHALL BE REASONABLY SATISFACTORY TO THE
COMPANY, STATING THAT AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT AND
APPLICABLE STATE SECURITIES LAWS IS AVAILABLE. THE
TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE CONDITIONS SET FORTH IN
THAT CERTAIN STOCK PURCHASE AND LOAN AGREEMENT BY AND
BETWEEN THE COMPANY AND JOSEPH HUDSON."
6.2. Opinion. Company agrees to reimburse Executive for the
cost of obtaining any opinion required by the above legend.
7. Miscellaneous.
7.1. Amendments, Indulgences, Etc. No amendment or waiver of
any provision of this Agreement nor consent to any departure by Executive
herefrom shall in any event be effective unless the same shall be in writing and
signed by Company, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given. No failure
or delay on the part of Company in the exercise of any right, power, or remedy
under this Agreement shall constitute a waiver thereof, or prevent the exercise
thereof in that or any other instance.
7.2. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and, if to Executive,
mailed or telefaxed or delivered to them at the addresses therefor shown at the
time in Company's records, and, if to Company, mailed or delivered to it at Two
Princess Road, Lawrenceville, New Jersey 08648.
7.3. Continuing Security Interest. This Agreement creates a
continuing security interest in the Pledged Collateral and shall be binding upon
Executive, and his heirs, executors, administrators, successors, and assigns and
inure to the benefit of Company and its successors, transferees and assigns. The
execution and delivery of this Agreement shall in no manner impair or affect any
other security (by endorsement or otherwise) for the payment or performance of
the Note and no security taken hereafter as security for payment or performance
of the Note shall impair in any manner or affect this Agreement or the security
interest granted hereby, all such present and future additional security to be
considered as cumulative security. Any of the Pledged Collateral may be released
from this Agreement without altering, varying, or diminishing in any way this
Agreement or the security interest granted hereby as to the Pledged
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Collateral not expressly released, and this Agreement and such security interest
shall continue in full force and effect as to all of the Pledged Collateral not
expressly released.
7.4. Governing Law; Consent to Jurisdiction; Etc. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New Jersey applicable to contracts made and wholly performed within New
Jersey. Executive consents to the jurisdiction of the courts of New Jersey and
of the courts of the United States sitting in New Jersey in any litigation
concerning this Agreement, and Executive waives any objection based on venue or
inconvenient forum. Unless otherwise defined herein, terms defined in the
Uniform Commercial Code as in effect on the date hereof are used herein as
therein defined as of such date.
7.5. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
7.6. Severability. The provisions of this Agreement are
independent of and separable from each other, and no such provision, shall be
altered or rendered invalid or unenforceable by virtue of the fact that for any
reason any other such provision may be invalid or unenforceable in whole or in
part.
7.7. Headings. The section headings of this Agreement are for
convenience only, form no part of this Agreement and shall not affect its
interpretation.
7.8. Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and undertakings between the parties
hereto with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written.
8. Closing Certificates.
(a) It shall be a condition to the obligations of the
Executive hereunder that, simultaneously with the execution of the Note, the
Company shall deliver to the Executive a certificate stating that (i) at and as
if made on the date thereof, the representations made by the Company in Section
4 are true and complete and (ii) since the effective date of the Registration
Statement, the Company's financial condition, operations and business have not
experienced a material adverse change.
(b) It shall be a condition to the obligations of the Company
hereunder that, simultaneously with the execution of the Note, the Executive
shall deliver to the Company a certificate stating that (i) at and as if made on
the date thereof, the representations made by the Executive in Section 5 are
true and complete, and (ii) the Note has been duly executed and delivered by the
Executive, and the Note constitutes a valid and binding obligation of the
Executive enforceable in accordance with its terms, except as such
enforceability may be
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limited by bankruptcy, moratorium or similar laws affecting creditors' rights or
by general principles of equity.
IN WITNESS WHEREOF, the undersigned intending to be legally
bound, have executed this Agreement as of the date first above written.
/s/ Joseph Hudson
------------------(L.S.)
Joseph Hudson
THE MIIX GROUP INCORPORATED
By: /s/ Daniel Goldberg
--------------------
Name: Daniel Goldberg
Title: President and Chief
Executive Officer
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EXHIBIT I
PROMISSORY NOTE
$500,000.00 Princeton, New Jersey
___________, 1998
The Undersigned, for value received and intending to be legally bound,
promises to pay to the order of THE MIIX GROUP, INCORPORATED (the "Lender"), as
and when due as set forth in the Stock Purchase and Loan Agreement dated the
date hereof between the Undersigned and Lender (as such agreement may be
amended, restated, modified or supplemented from time to time, the "Loan
Agreement"), the principal sum of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00).
Capitalized terms used herein and not otherwise defined shall have the meanings
given such terms in the Loan Agreement.
The undersigned further promises to pay to the order of Lender interest
on the unpaid principal amount of the Loan from the date hereof until such
amounts have been repaid in full. Interest shall be at the annual rate of __
percent (__%) and shall be due and payable on the Maturity Date (unless
accelerated sooner under the terms of the Loan Agreement).
This is the Note mentioned in, and is entitled to the benefits of, the
Loan Agreement.
This Note may be prepaid at any time, in whole or in part, without
premium or penalty. All payments in respect of this Note shall be applied first
to accrued interest and then to principal outstanding hereunder. Mandatory
prepayments shall be required from time to time pursuant to Section 1.6 of the
Loan Agreement.
This Note shall be deemed to be a contract made under the laws of the
State of New Jersey and shall be construed in accordance with the laws of said
state without giving effect to principals of conflicts of law.
This Note shall be binding upon the undersigned and his heirs,
executors, administrators, transferees and assigns and the terms hereof shall
inure to the benefit of lender and its successors and assigns, including
subsequent holders hereof.
The undersigned hereby waives presentment, demand for payment, notice
of dishonor or acceleration, protest and notice of protest, and any and all
other notices or demands in connection with the delivery, acceptance,
performance, default or enforcement of this Note except any notice expressly
required in the Loan Agreement.
IN WITNESS WHEREOF, the undersigned executes this Note on the day and
year first above written.
By:____________________________(L.S.)
Joseph Hudson
