<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission file number 0-24800
THE TENERE GROUP, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S><C>
Missouri 43-1675969
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
</TABLE>
1903 E. Battlefield, Springfield, MO 65804
(Address of principal executive offices) (Zip code)
417-889-1010
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant 1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and 2) has been subject to such filing
requirements for the past 90 days.
Yes x No
---- ----
As of September 30, 1996 there were 1,999,774 shares of Common Stock, $.01 par
value, issued and outstanding.
<PAGE> 2
THE TENERE GROUP, INC.
<TABLE>
<CAPTION>
PAGE NO.
-------
<S> <C>
INDEX
PART I. FINANCIAL INFORMATION 3
ITEM 1. Financial Statements (unaudited) 3
Consolidated Balance Sheets - 3
September 30, 1996 and December 31, 1995
Consolidated Statements of Operations - 4
Three Months ended September 30, 1996 and 1995
Consolidated Statements of Operations - 5
Nine months ended September 30, 1996 and 1995
Consolidated Statements of Cash Flows - 6
Nine months ended September 30, 1996 and 1995
Notes to Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis of Financial 13
Condition and Results of Operations
PART II. OTHER INFORMATION 17
ITEM 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 17
EXHIBIT INDEX 18
</TABLE>
2
<PAGE> 3
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
THE TENERE GROUP, INC.
and Subsidiaries
Consolidated Balance Sheets
September 30, 1996 and December 31, 1995
ASSETS
<TABLE>
<CAPTION>
UNAUDITED
1996 1995
---- ----
<S> <C> <C>
Investments:
Bonds held to maturity, at amortized cost
(market - $1,822,615 in 1996; $1,854,359 in 1995) $ 1,840,573 $ 1,867,111
Bonds held available for sale, at market value (amortized cost -
$31,890,905 in 1996; $19,961,424 in 1995) 31,709,586 20,536,518
Common stock 340 340
----------- -----------
Total investments 33,550,499 22,403,969
Other assets:
Cash and cash equivalents, including interest-bearing
deposits of $12,782,920 and $29,614,311 in 1996 and 1995,
respectively 12,844,828 31,180,925
Premiums receivable 2,702,418 3,720,202
Reinsurance recoverable 4,748,564 1,162,495
Prepaid reinsurance premiums 286,000 1,175,252
Accrued investment income 484,764 567,306
Deferred policy acquisition costs 89,992 140,450
Deferred income taxes 1,756,828 1,772,314
Reinsurance premiums recoverable 165,659 -
Income taxes recoverable 1,576,611 -
Other 1,074,461 491,101
----------- -----------
Total other assets 25,730,125 40,210,045
----------- -----------
Total assets $59,280,624 $62,614,014
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserve for losses and loss adjustment expenses $29,964,287 $26,623,138
Unearned premium reserve 7,051,787 10,447,006
Reinsurance premiums payable - 137,878
Policyholder dividends payable (8,329) 152,042
Income taxes payable - 214,444
Other 64,303 502,228
----------- -----------
Total liabilities 37,072,048 38,076,736
Stockholders' equity:
Common stock, $.01 par value; 7,000,000 authorized shares,
1,999,774 issued and outstanding 19,998 19,998
Gross paid in and contributed capital 21,940,828 21,940,828
Retained earnings 247,750 2,576,452
----------- -----------
Total stockholders' equity 22,208,576 24,537,278
----------- -----------
$59,280,624 $62,614,014
=========== ===========
</TABLE>
See notes to consolidated financial statements
<PAGE> 4
THE TENERE GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
UNAUDITED
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Revenues:
Direct premiums written $ 1,827,409 $ 3,643,094
Premiums ceded to reinsurers 1,755,253 345,479
----------- -----------
Net premiums written 72,156 3,297,615
(Increase)/Decrease in unearned premium reserve 1,333,936 (701,570)
----------- -----------
Net premiums earned 1,406,092 2,596,045
Net investment income 671,134 704,786
Other income (expense) 4,143 (1,359)
----------- -----------
Total revenues 2,081,369 3,299,472
Expenses:
Sales and marketing expenses 309,291 320,172
Other underwriting expenses 442,208 379,788
Losses and loss adjustment expenses 4,504,681 1,782,916
Dividends to policyholders 159 215,204
----------- -----------
Total expenses 5,256,339 2,698,080
----------- -----------
Income (loss) before income taxes (3,174,970) 601,392
Income tax (benefit) expense (1,082,713) 139,977
----------- -----------
Net income (loss) $(2,092,257) $ 461,415
=========== ===========
Net income (loss) per share $ (1.05) $ 0.23
=========== ===========
</TABLE>
See notes to consolidated financial statements
4
<PAGE> 5
THE TENERE GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
UNAUDITED
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Revenues:
Direct premiums written $ 6,029,116 $ 7,650,065
Premiums ceded to reinsurers 3,240,592 1,161,618
----------- -----------
Net premiums written 2,788,524 6,488,447
Decrease in unearned premium income 3,253,715 1,287,045
----------- -----------
Net premiums earned 6,042,239 7,775,492
Net investment income 2,050,991 2,011,447
Net realized investment gains -- 28,427
Other income (expense) 7,491 (1,696)
----------- -----------
Total revenues 8,100,721 9,813,670
Expenses:
Sales and marketing expenses 795,713 740,547
Other underwriting expenses 1,390,466 1,199,291
Losses and loss adjustment expenses 8,729,337 5,378,179
Dividends to policyholders (13,921) 646,272
----------- -----------
Total expenses 10,901,595 7,964,289
----------- -----------
Income (loss) before income taxes (2,800,874) 1,849,381
Income tax (benefit) expense (971,405) 554,434
----------- -----------
Net income (loss) $(1,829,469) $ 1,294,947
=========== ===========
Net income (loss) per share $ (0.91) $ 0.65
=========== ===========
Stockholders' equity:
Beginning of period $24,537,278 $19,368,556
Change in unrealized investment gains (losses) (499,233) 2,179,187
Net income (loss) (1,829,469) 1,294,947
----------- -----------
End of period $22,208,576 $22,842,690
=========== ===========
</TABLE>
See notes to consolidated financial statements
5
<PAGE> 6
THE TENERE GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
UNAUDITED
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Net income $ (1,829,469) $ 1,294,947
Adjustments to reconcile net income to net cash
provided by operating activities
Net realized investment gains -- (28,428)
Depreciation and amortization expense 133,783 123,777
Amortization of deferred acquisition costs 50,458 60,795
Deferred income taxes 272,665 109,117
Net amortization of discount on bonds 85,631 443,653
Change in operating assets and liabilities:
Premiums receivable 1,017,784 (79,006)
Reinsurance balances (3,000,354) 40,461
Accrued investment income 82,542 766,309
Prepaid expenses and other assets (201,166) 28,982
Reserve for losses and loss adjustment expenses 3,320,994 (451,231)
Unearned premium reserve (3,395,219) (1,241,930)
Income taxes payable/recoverable (1,791,055) 523,883
Policyholder dividends payable (160,371) (125,134)
Other liabilities (417,770) (130,980)
------------ ------------
Net cash provided by (used in) operating activities (5,831,547) 1,335,215
------------ ------------
Cash flows from investing activities:
Maturity of bonds held to maturity or available for sale 1,700,000 --
Sale of bonds held available for sale -- 6,930,859
Purchase of bonds held to maturity or available for sale (13,688,573) --
Purchase of furniture and equipment (515,977) (248,186)
------------ ------------
Net cash provided by (used in) investing activities (12,504,550) 6,682,673
------------ ------------
Net increase (decrease) in cash and cash equivalents (18,336,097) 8,017,888
Cash and cash equivalents at beginning of period 31,180,925 1,650,059
------------ ------------
Cash and cash equivalents at end of period $ 12,844,828 $ 9,667,947
============ ============
</TABLE>
See notes to consolidated financial statements
6
<PAGE> 7
THE TENERE GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The accompanying consolidated financial statements are unaudited and are
prepared in accordance with the rules and regulations of the Securities
and Exchange Commission with regard to interim financial statements. In
the opinion of management, all adjustments necessary for a fair
presentation of such financial statements have been made. Such
adjustments consisted of only normal recurring items. The results of
operations for the three and nine months ended September 30, 1996 are not
necessarily indicative of the results which may occur for the full year.
The accompanying unaudited financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the 1995 Annual Report.
(2) INVESTMENTS
The amortized cost and estimated market values of investments in bonds as
of September 30, 1996 and December 31, 1995 are as follows:
<TABLE>
<CAPTION>
September 30, 1996 Gross Gross Estimated
Amortized unrealized unrealized market
Type of Investment cost gains losses value
- ------------------ ---- ----- ------ -----
<S> <C> <C> <C> <C>
Fixed Maturities
Held-to-maturity:
United States government,
government agencies and
authorities $ 1,840,573 ---- $ (17,958) $ 1,822,615
----------- -------- --------- ------------
Available-for-sale:
United States government,
government agencies and
authorities 28,015,913 221,863 (397,792) 27,839,984
States, municipalities and
political subdivisions 3,874,992 6,180 (11,570) 3,869,602
----------- -------- --------- ------------
Total available-for-sale 31,890,905 228,043 (409,362) 31,709,586
----------- -------- --------- ------------
Total fixed maturities $33,731,478 $228,043 $(427,320) $ 33,532,201
=========== ======== ========= ============
</TABLE>
7
<PAGE> 8
<TABLE>
<CAPTION>
December 31, 1995 Gross Gross Estimated
Amortized unrealized unrealized market
Type of Investment cost gains losses value
- ------------------ ---- ----- ------ -----
<S> <C> <C> <C> <C>
Fixed Maturities
Held-to-maturity:
United States government,
government agencies and
authorities $ 1,867,111 ----- $(12,752) $ 1,854,359
----------- ---------- -------- -----------
Available-for-sale:
United States government,
government agencies and
authorities 17,960,592 579,886 ----- 18,540,478
States, municipalities and
political subdivisions 2,000,832 ----- (4,792) 1,996,040
----------- ---------- -------- -----------
Total available-for-sale 19,961,424 579,886 (4,792) 20,536,518
----------- ---------- -------- -----------
Total fixed maturities $21,828,535 $ 579,886 $(17,544) $22,390,877
=========== ========== ======== ===========
</TABLE>
The amortized cost and estimated market value of investments in fixed maturities
at September 30, 1996 are shown below by contractual maturity. Expected
maturities may differ from contractual maturities because borrowers may have the
right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
Held to maturity Available for sale
----------------- ------------------
Amortized Estimated Amortized Estimated
Cost Market Value Cost Market Value
---- ------------ ---- ------------
<S> <C> <C> <C> <C>
Due in one year or less $1,316,668 $1,307,223 $3,325,292 $3,338,121
Due after one year
through five years 415,967 411,064 2,051,745 2,040,563
Due after five years
through ten years 107,938 104,328 26,513,868 26,330,902
---------- ---------- ----------- -----------
$1,840,573 $1,822,615 $31,890,905 $31,709,586
========== ========== =========== ===========
</TABLE>
Proceeds from the sale of available-for-sale securities were $-0- and $6,570,859
in the nine-month periods ended September 30, 1996 and 1995, respectively.
Gross gains of $-0- and $134,615 and gross losses of $-0-and $106,188 were
realized on those sales for the nine months ended September 30, 1996 and 1995,
respectively.
8
<PAGE> 9
Net investment income for the nine months ended September 30, 1996 and 1995 is
comprised of the following:
<TABLE>
<CAPTION>
September 30, September 30,
1996 1995
------------- --------------
<S> <C> <C>
Investment income:
Interest on certificates of
deposit and interest-bearing
cash accounts $ 926,208 $ 273,288
Interest on bonds 1,185,804 1,812,694
---------- ----------
Gross investment income 2,112,012 2,085,982
Investment expenses 61,021 74,535
---------- ----------
Net investment income $2,050,991 $2,011,447
========== ==========
</TABLE>
The net change in unrealized investment gains (losses) is as follows:
<TABLE>
<CAPTION>
September 30, September 30,
1996 1995
-------------- --------------
<S> <C> <C>
Gross unrealized investment gains (losses) $(756,413) $3,301,806
Federal income taxes (257,180) 1,122,619
--------- ----------
$(499,233) $2,179,187
========= ==========
</TABLE>
(3) RESERVE FOR LOSSES AND LOSS
ADJUSTMENT EXPENSES AND REINSURANCE
A summary of the reserves for losses and loss adjustment expenses
follows:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
-------------- ------------
<S> <C> <C>
Undiscounted reserve for losses and loss
adjustment expenses $32,523,263 $29,555,760
Less discount 2,558,976 2,932,622
----------- -----------
Discounted reserve for losses and loss
adjustment expenses $29,964,287 $26,623,138
=========== ===========
</TABLE>
9
<PAGE> 10
Premiums, premium related reinsurance amounts and reinsurance recoveries
for the nine months ended September 30, 1996 and 1995 are summarized as
follows:
<TABLE>
<CAPTION>
September 30, September 30,
1996 1995
-------------- --------------
<S> <C> <C>
Ceded premiums on an earned basis $3,386,408 $1,187,562
============ ============
Ceded loss and loss adjustment expenses $3,893,257 $ 10,173
============ ============
</TABLE>
Activity in the reserve for loss and loss adjustment expenses during
the periods ended September 30, 1996 and December 31, 1995 was:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
-------------- ------------
<S> <C> <C>
Balance at January 1 $26,623,138 $26,279,977
Less reinsurance 1,162,495 (584,913)
-------------- -----------
25,460,643 25,695,064
-------------- -----------
Incurred related to:
Current year 7,148,697 8,629,800
Prior year 1,580,640 (953,312)
-------------- -----------
Total incurred 8,729,337 7,676,488
-------------- -----------
Paid related to:
Current year 1,983,046 3,077,457
Prior year 6,805,282 4,833,452
-------------- -----------
Total paid 8,788,328 7,910,909
-------------- -----------
23,376,380 25,460,643
Plus reinsurance 4,562,635 1,162,495
-------------- -----------
Balance at end of period $29,964,287 $26,623,138
============== ===========
</TABLE>
(4) FEDERAL INCOME TAXES
The Company files a consolidated federal income tax return. Income tax
expense varies from the amount which would be provided by applying the
federal income tax rates to income before income taxes. The following
reconciles the expected provision for income tax expense using the
federal statutory tax rate of 34% to the provision for income tax expense
reported herein for the nine months ended September 30, 1996 and
September 30, 1995:
<TABLE>
<CAPTION>
September 30, September 30,
1996 1995
-------------- ------------------
<S> <C> <C>
Expected tax expense <benefit> using
statutory rates ($952,298) $628,788
Other, net (19,107) (74,354)
------------- ------------
($971,405) $554,434
============= ============
</TABLE>
10
<PAGE> 11
Income taxes consist of the following at September 30, 1996 and 1995:
<TABLE>
<CAPTION>
September 30, September 30,
1996 1995
-------------- --------------
<S> <C> <C>
Current expense ($1,244,072) $446,101
Deferred expense 272,665 108,333
------------ --------------
Income taxes ($971,405) $554,434
============= ==============
</TABLE>
Deferred income taxes arise from timing differences resulting from income
and expense items reported for financial accounting and tax purposes in
different periods. The sources of these differences and the tax effect
of each are as follows:
<TABLE>
<CAPTION>
September 30, September 30,
1996 1995
--------------- --------------
<S> <C> <C>
Losses and loss adjustment expenses
incurred for financial reporting
purposes but not deductible for
tax purposes ($26,656) ($21,137)
Unearned premiums not deductible for
tax purposes (221,252) 87,520
Other, net (24,757) 41,950
------------- -------------
($272,665) $ 108,333
============= =============
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
September 30, 1996 and December 31, 1995 are presented below:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
-------------- ------------
<S> <C> <C>
Deferred tax assets:
Discounted unpaid loss reserves $1,478,340 $1,504,996
Discounted unearned premium reserves 473,306 694,558
Investments adjusted to market value 61,648 ------
Deferred commissions payable 23,281 26,747
Net operating loss carryforwards 163,144 201,591
------------- -----------
Total gross deferred tax assets 2,199,719 2,427,892
Less valuation allowance (400,000) (400,000)
------------- -----------
Net deferred tax assets $1,799,719 $2,027,892
Deferred tax liabilities:
Investments adjusted to market value ------ (195,531)
Deferred acquisition costs (30,597) (47,753)
Other (12,294) (12,294)
------------- -----------
Total gross deferred liabilities (42,891) (255,578)
------------- -----------
Net deferred tax asset $1,756,828 $1,772,314
============= ===========
</TABLE>
11
<PAGE> 12
The valuation allowance for deferred tax assets at September 30, 1996 was
$400,000. Based on the Company's historical earnings, future
expectations of adjusted taxable income and its ability to change its
investment strategy, as well as reversing gross deferred tax liabilities,
management believes it is more likely than not that the Company will
fully realize the gross deferred tax assets less the valuation allowance.
However, there can be no assurances that the Company will generate the
necessary adjusted taxable income in any future period.
(5) RECONCILIATION TO STATUTORY ACCOUNTING
The Company's two wholly-owned insurance subsidiaries, Intermed Insurance
Co. and Interlex Insurance Co., are required to file statutory financial
statements with state regulatory authorities. Accounting principles used
to prepare the statutory financial statements differ from financial
statements prepared on the basis of generally accepted accounting
principles.
Reconciliations of statutory net income, as determined using statutory
accounting principles, to the amounts included in the accompanying
consolidated financial statements for the nine months ended September
30, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
September 30, September 30,
1996 1995
-------------- --------------
<S> <C> <C>
Net income <loss> of insurance companies ($1,457,798) $1,286,005
Increase (decrease):
Deferred policy acquisition costs (50,458) (60,795)
Deferred income taxes (272,665) (108,333)
Other adjustments, net (48,548) 178,068
------------- ------------
Net income (loss) as reported herein ($1,829,469) $1,294,947
============= ============
</TABLE>
Reconciliations of statutory capital and surplus, as determined using
statutory accounting principles, to stockholders' equity included in the
accompanying consolidated financial statements at September 30, 1996 and
December 31, 1995 are as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
-------------- ------------
<S> <C> <C>
Statutory capital and surplus of insurance companies $25,554,113 $25,558,424
Stockholder's equity of noninsurance subsidiaries 221,171 500
------------- -----------
Combined capital and surplus 25,775,284 25,558,924
Increase (decrease):
Deferred policy acquistion costs 89,992 140,450
Deferred income taxes 1,756,828 1,772,314
Unrealized gain (loss) on securities available for sale (181,318) 575,094
Excess statutory over statement reserves ---- 1,760,000
Non-admitted assets and other adjustments, net 882,911 561,006
Consolidating eliminations and adjustments (6,115,121) (5,830,510)
------------- -----------
Stockholders' equity as reported herein $22,208,576 $24,537,278
============= ===========
</TABLE>
12
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis addresses the Company's financial
condition at September 30, 1996 as compared with December 31, 1995 and results
of operations for the three and nine month periods ended September 30, 1996 and
1995.
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1996
Direct premiums written in the quarter ended September 30, 1996 totaled $1.8
million, a decrease of $1.8 million or 50% from the comparable period in 1995.
The shortfall occurred in medical malpractice premiums; legal malpractice
premiums were $71 thousand or 127% higher than the prior year period. The
decline in medical malpractice premiums was due to:
- - Direct premiums written were $1.2 million or 33% below the prior year
period due to a net loss of 195 insureds over the past twelve months as
well as to a significant change in renewal patterns between years due to
the conversion of claims-paid policyholders to claims-made coverages.
- - The Company implemented a claim-free discount program effective September
1, 1995 and those discounts totaled $458 thousand in the current quarter.
Other market-driven discounts totaled $249 thousand. There were no
comparable discounts in the prior year period.
Premiums ceded to reinsurers increased from $345 thousand in the 1995 period to
$1.8 million in the quarter ended September 30, 1996. The increase was due to
a new reinsurance treaty effective January 1, 1996 as well as to a significant
increase in the actuarial estimate of losses and loss adjustment expenses that
will be recovered from the Company's reinsurers as a result of losses sustained
in the current period.
There was a $1.3 million decrease in the unearned premium reserve (UPR) in the
third quarter of 1996 compared with a $702 thousand increase in the comparable
quarter of 1995. The decrease was in unearned medical malpractice premiums due
to the conversion of claims-paid policies to claims-made coverages. (The
death, disability and retirement reserve (DD&R) is a part of the UPR and the
DD&R requirement for claims-made coverages is significantly less than for
claims-paid.) The conversion resulted in a release of $2.3 million in DD&R
reserves.
As a result of the above, net premiums earned in the quarter ended September
30, 1996 were $1.2 million or 46% below net premiums earned in the prior year
period.
Net investment income of $671 thousand was $34 thousand or approximately 5%
below the prior year period due to changes in the composition of the portfolio
between periods.
Expenses other than losses and loss adjustment expenses were $52 thousand or
7.4% higher in the 1996 period than in the comparable period of 1995. Start-up
costs of a new sales office in
13
<PAGE> 14
Austin, TX was the primary reason for the increase. The expense ratio in the
quarter ended September 30, 1996 was 41% compared with 19% in the prior year
period.
Losses and loss adjustment expenses totaled $4.5 million in the quarter versus
$1.8 million in the prior year period. The establishment of reserves for
reported claims on claims-paid policies converting to claims-made coverages in
the 1996 period was the primary reason for the increase. (Reserves are
established for reported claims on claims-made coverages; the liability for
claims-paid policies was established at time of payment.) Due primarily to the
impact of claims-paid reserves, the loss ratio in the 1996 period was 320%
compared with 69% in the comparable period of 1995.
The reduction in dividends to policyholders ($215 thousand in the 1995 period
vs. $159 in the current year period) is due to elimination of the dividend
program effective September 1, 1995.
The loss before income taxes in the quarter ended September 30, 1996 was $3.2
million. After an estimated income tax benefit of $1.1 million, the net loss
for the quarter was $2.1 million or $1.05 per share. Net income in the prior
year period was $461 thousand or $.23 per share.
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1996
Direct premiums written in the first nine months of 1996 totaled $6.0 million,
a decrease of $1.6 million or 21% from the comparable period in 1995. The
shortfall was in medical malpractice premiums; legal malpractice premiums were
$226 thousand or 181% higher than the prior year period. Reasons for the
decline in medical malpractice premiums were:
- - The Company implemented a claim-free discount program for medical
malpractice insurance effective September 1, 1995 in lieu of dividends to
policyholders. During the nine month period ended September 30, 1996,
claim-free discounts totaled $1.6 million or 20% of gross premiums. Other
market driven discounts totaled $742 thousand or 9% of gross premiums. By
comparison, dividends to policyholders totaled only $646 thousand or 9% of
gross premiums in the prior year period.
- - Gross premiums written (before discounts) were $523 thousand or 7% higher
than the prior year period. The higher premiums paid by policyholders who
converted from claims-paid to claims-made coverages in the period offset a
net loss of 195 insureds.
Premiums ceded to reinsurers were $2.1 million higher in the nine months ended
September 30, 1996 than in the prior year period. Of the increase, $1.2
million was due to a new reinsurance treaty which was effective January 1, 1996
and the balance represents the actuarial estimate of losses and loss adjustment
expenses that will ultimately be recovered from the Company's reinsurers.
The unearned premium reserve (UPR) declined $3.3 million in the nine month
period ended September 30, 1996 compared with a decrease of $1.3 million in the
comparable period of 1995. Of the 1996 decrease, $2.3 million was attributable
to the release of death, disability and retirement (DD&R) reserves associated
with policyholders who converted from claims-paid to claims-
14
<PAGE> 15
made coverages. The DD&R reserve is part of the UPR and the DD&R requirement
for claims-made coverages is less than for claims-paid.
As a result of the above, net premiums earned in the nine months ended
September 30, 1996 were $1.7 million or 22% less than the prior year period.
Net investment income in the nine months ended September 30, 1996 was $2.0
million, roughly level with the prior year period.
Expenses other than losses and loss adjustment expenses were $246 thousand or
13% higher in the nine month period ended September 30, 1996 than in the prior
year period. Start-up costs of a new sales office in Austin, TX were the
primary reason. The expense ratio in the nine month period ended September 30,
1996 was 36% compared with 25% in the prior year period.
Losses and loss adjustment expenses totaled $8.7 million in the nine month
period ended September 30, 1996, $3.4 million or 62% higher than the prior year
period. The increase was primarily attributable to the establishment of the
liability for reported claims on claims-paid policies which converted to
claims-made coverages in the period. The loss ratio in the nine month period
ended September 30, 1996 was 144% compared with a loss ratio of 69% in the
comparable period of 1995.
There was a loss before taxes of $2.8 million in the nine months ended
September 30, 1996 compared with income of $1.8 million in the prior year
period. Because of the loss incurred in the current period, there was an
income tax benefit of $971 thousand compared with an income tax expense of $554
thousand in the nine months ended September 30, 1995.
The net loss for the 1996 period was $1.8 million or $.91 per share compared
with net income of $1.3 million or $.65 per share in the comparable period of
1996.
FINANCIAL CONDITION
Assets declined from $62.6 million at December 31, 1995 to $59.3 million at
September 30, 1996, a decline of $3.3 million or 5.3%. The decline was
primarily due to the effect of negative cash flow from operations of $5.8
million compared with a positive cash flow of $1.3 million in the comparable
period of 1995. Reasons for the negative cash flow were discussed above under
Results of Operations.
Investments increased from $22.4 million at December 31, 1995 to $33.5 million
at September 30, 1996 due to the reinvestment of $13.7 million which was held
in cash and cash equivalents at the prior year end. Reinvestment in long-term
bonds and the negative cash flow from operations discussed above resulted in a
reduction in cash and cash equivalents from $31.2 million at December 31, 1995
to $12.8 million at September 30, 1996. Approximately $10.0 million currently
held in cash and cash equivalents is slated to be reinvested long-term when
interest rates improve.
15
<PAGE> 16
There was an unrealized loss of $181 thousand in bonds held available for sale
and carried on the balance sheet at market compared with an unrealized gain of
$575 thousand at the prior year end. The change in unrealized gains and losses
is reflected in the equity account net of taxes.
Reinsurance recoverable of $4.7 million at September 30, 1996 represents the
actuarial estimate of losses and loss adjustment expenses that will eventually
be recovered from the Company's reinsurers under reinsurance treaties. The
increase during 1996 is attributable to a new reinsurance treaty that was
effective January 1, 1996, to cover reserves established for reported claims on
claims-paid policies which were converted to claims-made coverages during the
period and to losses incurred in the third quarter of 1996.
Income taxes recoverable of $1.6 million represented estimated recoveries of
taxes paid in the first half of 1996 and in prior years. The current period
loss will be carried back to prior year periods when profitable operations
resulted in a tax liability.
The increase in other assets in 1996 was primarily attributable to the purchase
of computer hardware and software and to goodwill associated with the purchase
of Trout Insurance Services, an agency which previously wrote approximately 40%
of the Company's medical malpractice premium.
Reserves for losses and loss adjustment expenses increased from $26.6 million
at December 31, 1995 to approximately $30.0 million at September 30, 1996. The
increase was primarily due to establishment of a $3.0 million reserve for
claims-paid policies which converted to claims-made coverages in 1996 and to an
$800 thousand increase in the claims-paid reserve established at December 31,
1995.
The unearned premium reserve (UPR) declined from $10.4 million at December 31,
1995 to approximately $7.0 million at September 30, 1996. The conversion of
claims-paid policyholders to claims-made coverages was responsible for $2.3
million of the decline. Death, disability and retirement reserves (DD&R) are
included in the UPR and the requirement for claims-made coverages is
significantly less than for claims-paid coverages.
Retained earnings declined from $2.3 million at December 31, 1995 to $248
thousand at September 30, 1996 due to a net loss of $1.8 million and a
reduction of $499 thousand in the market value of bonds held available for sale
and carried at market on the balance sheet.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operations was a negative $5.8 million in the nine months ended
September 30, 1996 compared with a positive cash flow of $1.3 million in the
prior year period. Reasons for this variance are discussed under Results of
Operations. Losses and loss adjustment expenses paid in 1996 were $3.2 million
higher than the comparable period of 1995 and reinsurance premiums exceeded the
prior year period by $1.8 million. Expenses and purchases of computer hardware
and software exceeded comparable expenditures in the prior year period by $731
thousand.
16
<PAGE> 17
The Company anticipates net investment income of $2.8 million in 1996 which,
together with a cash position of $12.8 million at September 30, 1996, will
provide sufficient liquidity to fund operations without necessitating the sale
of bonds or obtaining alternative financing to meet cash requirements.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS: SEE INDEX
(B) REPORTS ON FORM 8-K: NONE
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE TENERE GROUP, INC.
(Registrant)
November 12, 1996 /s/ J D Williams
- ----------------- ------------------------------------
Date Joseph D. Williams, CPA
Vice President - Finance,
Chief Financial Officer and
Chief Accounting Officer
17
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
3.1 Articles of Incorporation of the Registrant, filed as Exhibit 3.1
to the Registrant's Registration Statement on Forms S-1 (Reg. No.
33-78702) is incorporated herein by this reference.
3.2 Bylaws of the Registrant, filed as Exhibit 3.2 to the Registrant's
Registration Statement on Form S-1 (Reg. No. 33-78702) is
incorporated herein by this reference.
4.1 Form of common stock certificate, filed as Exhibit 4.1 to the
Registrant's Registration Statement on Form S-1 (Reg. No.
33-78702) is incorporated herein by this reference.
10.1 Management Contract, dated July 8, 1994, by and between RCA
Mutual Insurance Company, Interlex Insurance Co. and Insurance
Services, Inc., filed as Exhibit 10.1 to the Registrant's Annual
Report on Form 10K for the year ended December 31, 1995, is
incorporated herein by reference.
10.2 Lease Agreement, dated December 7, 1994, by and between Georgetown
Square II, Ltd. and Insurance Services, Inc., filed as Exhibit
10.2 to the Registrant's Quarterly Report on Form 10-Q for the
nine months ended September 30, 1995, is incorporated herein by
reference.
10.3 Medical Practitioners' Liability Primary Excess of Loss
Reinsurance Contract, dated October 1, 1993, by and between RCA
Mutual Insurance Company and Certain Reinsurers of Lloyd's of
London, filed as Exhibit 10.3 to the Registrant's Quarterly Report
on Form 10-Q for the nine months ended September 30, 1995, is
incorporated herein by reference.
10.4 Addendum No. 1 to Medical Practitioners' Liability Primary Excess
of Loss Reinsurance Contract, dated February 1, 1995, by and
between RCA Mutual Insurance Company and Certain Reinsurers of
Lloyd's of London, filed as Exhibit 10.4 to the Registrant's
Quarterly Report on Form 10-Q for the nine months ended September
30, 1995, is incorporated herein by reference.
10.5 Addendum No. 2 to Medical Practitioners' Liability Primary Excess
of Loss Reinsurance Contract, effective April 27, 1995, by and
between RCA Mutual Insurance Company and Certain Reinsurers of
Lloyd's of London, filed as Exhibit 10.5 to the Registrant's
Quarterly Report on Form 10-Q for the nine months ended September
30, 1995, is incorporated herein by reference.
10.6 Reinsurance Cover Note: 95/1146/RM to Medical Practitioners'
Liability Primary Excess of Loss Reinsurance Contract, dated
October 16, 1995, by and between RCA Mutual Insurance Company and
Certain Reinsurers of Lloyd's of London, filed as Exhibit 10.6 to
the Registrant's Quarterly Report on Form 10-Q for the nine months
ended September 30, 1995, is incorporated herein by reference.
</TABLE>
18
<PAGE> 19
EXHIBIT
NO. DESCRIPTION
- --- -----------
10.7 Reinsurance Cover Note: 95/1212/RM(A) to Catastrophe "Awards Made" Excess
of Loss Reinsurance Contract, dated October 16, 1995, by and between RCA
Mutual Insurance Company and Certain Reinsurers of Lloyd's of London,
filed as Exhibit 10.7 to the Registrant's Quarterly Report on Form 10-Q
for the nine months ended September 30, 1995, is incorporated herein by
reference.
10.8 Catastrophe "Awards Made" Excess of Loss Reinsurance Contract, commencing
February 1, 1995, by and between RCA Mutual Insurance Company and Certain
Reinsurers of Lloyd's of London including Amendment No. 1, effective
April 27, 1995, filed as Exhibit 10.8 to the Registrant's Quarterly
Report on Form 10-Q for the nine months ended September 30, 1995, is
incorporated herein by reference.
10.9 Reinsurance Cover Note: 95/1249/IP to Lawyers' Professional Liability
Primary Excess of Loss Reinsurance Treaty, dated October 16, 1995, by and
between Interlex Insurance Company and Certain Reinsurers of Lloyd's of
London, filed as Exhibit 10.9 to the Registrant's Quarterly Report on
Form 10-Q for the nine months ended September 30, 1995, is incorporated
herein by reference.
10.10 Lawyers' Professional Liability Primary Excess of Loss Reinsurance
Contract, commencing July 1, 1995, by and between Interlex Insurance
Company and Certain Reinsurers of Lloyd's of London, filed as Exhibit
10.10 to the Registrant's Quarterly Report on Form 10-Q for the nine
months ended September 30, 1995, is incorporated herein by reference.
10.11 Reinsurance Cover Note: 95/1250/IP to Prior Agreement Excess of Loss
Reinsurance Contract, dated October 16, 1995, by and between Interlex
Insurance Company and Certain Reinsurers of Lloyd's of London, filed as
Exhibit 10.11 to the Registrant's Quarterly Report on Form 10-Q for the
nine months ended September 30, 1995, is incorporated herein by
reference.
10.12 Prior Agreement Excess of Loss Reinsurance Contract, commencing July 1,
1995, by and between Interlex Insurance Company and Certain Reinsurers of
Lloyd's of London, filed as Exhibit 10.12 to the Registrant's Quarterly
Report on Form 10-Q for the nine months ended September 30, 1995, is
incorporated herein by reference.
10.13 Draft Reinsurance Slip by and between Intermed Insurance Company and
American Re-Insurance Company filed as Exhibit 10.13 to the Registrant's
Quarterly Report on Form 10-Q for the three months ended March 31, 1996,
is incorporated herein by reference.
10.14 Employment Agreement dated May 6, 1996 between The Tenere Group, Inc. and
Raymond A. Christy, M.D., President and Chief Executive Officer.
10.15 Employment Agreement dated May 6, 1996 between The Tenere Group, Inc. and
Andrew K. Bennett, Vice President-Claims and General Counsel.
10.16 Employment Agreement dated May 6, 1996 between The Tenere Group, Inc. and
Andrew C. Fischer, Vice President-Underwriting and Policy Services.
10.17 Employment Agreement dated May 6, 1996 between The Tenere Group, Inc. and
Clifton R. Stepp, Vice President-Marketing.
19
<PAGE> 20
<TABLE>
<S> <C>
10.18 Employment Agreement dated May 6, 1996 between The Tenere Group, Inc. and
Joseph D. Williams, Vice President-Finance, Chief Financial Officer and
Assistant Treasurer.
10.19 The Tenere Group, Inc. Retirement Plan for Directors effective May 17, 1996.
10.20 The Tenere Group, Inc. 1996 Long Term Incentive Plan effective April 17,
1996, filed as Annex A to the Registrant's definitive proxy statements for
the 1996 Annual Meeting of Shareholders, is incorporated herein by
reference.
27 Financial Data Schedules.
</TABLE>
20
<PAGE> 1
EXHIBIT 10.14
THE TENERE GROUP, INC.
EMPLOYMENT AGREEMENT
This agreement ("Agreement") has been entered into as of this
6th day of May, 1996, by and between The Tenere Group, Inc., a Missouri
corporation ("Company"), and Raymond A. Christy, M.D., an individual
("Executive").
RECITALS
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to reinforce and encourage the continued attention and dedication of the
Executive to the Company as a member of the Company's management and to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change in Control
(as defined below) of the Company. The Board desires to provide for the
continued employment of the Executive, and the Executive is willing to commit
himself to continue to serve the Company. Additionally, the Board believes it
is imperative to diminish the inevitable distraction of the Executive by virtue
of the personal uncertainties and risks created by a pending or threatened
Change in Control and to encourage the Executive's full attention and
dedication to the Company currently and in the event of any threatened or
pending Change in Control, and to provide the Executive with compensation and
benefits arrangements upon the breach of this Agreement by the Company or upon
a termination of employment after Change in Control which ensure that the
compensation and benefits expectations of the Executive will be satisfied and
which are competitive with those of other corporations. Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into
this Agreement.
IT IS AGREED AS FOLLOWS:
SECTION 1: DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. For purposes of this Agreement, the
following words and phrases, whether or not capitalized, shall have the
meanings specified below, unless the context plainly requires a different
meaning.
1.1(a) "BOARD" means the Board of Directors of the
Company.
1.1(b) "CHANGE IN CONTROL" means:
(i) The acquisition by any
individual, entity or group, or (within the
meaning of Section 13(d)(3) or 14(d)(2), the
Exchange Act), a Person of beneficial
ownership of twenty percent (20%) or more of
either (a) the then outstanding shares of
common stock of the Company (the "Outstanding
Company Common Stock") or (b) the combined
voting power of the then outstanding voting
securities of the Company entitled to vote
generally in the election of directors (the
"Outstanding Company Voting Securities");
provided, however, that the following
acquisitions shall not constitute a Change in
Control: (a) any acquisition directly from
the Company (excluding an acquisition by
virtue of the exercise of a conversion
privilege), (b) any acquisition by the
Company, (c) any acquisition by any employee
benefit plan (or related trust) sponsored or
<PAGE> 2
maintained by the Company or any corporation
controlled by the Company or (d) any
acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if,
following such reorganization, merger or
consolidation, the conditions described in
clauses (a), (b) and (c) of subsection (iii)
of this Section are satisfied; or
(ii) Individuals who, as of
the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to
constitute at least a majority of the Board;
provided, however, that any individual
becoming a director subsequent to the date
hereof whose election, or nomination for
election by the Company's shareholders, was
approved by a vote of at least a majority of
the directors then comprising the Incumbent
Board shall be considered as though such
individual were a member of the Incumbent
Board, but excluding, as a member of the
Incumbent Board, any such individual whose
initial assumption of office occurs as a
result of either an actual or threatened
election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or
threatened solicitation of proxies or
consents by or on behalf of a Person other
than the Board; or
(iii) Approval by the
shareholders of the Company of a
reorganization, merger or consolidation, in
each case, unless, following such
reorganization, merger or consolidation, (a)
more than fifty percent (50%) of,
respectively, the then outstanding shares of
common stock of the corporation resulting
from such reorganization, merger or
consolidation and the combined voting power
of the then outstanding voting securities of
such corporation entitled to vote generally
in the election of directors is then
beneficially owned, directly or indirectly,
by all or substantially all of the
individuals and entities who were the
beneficial owners, respectively, of the
Outstanding Company Common Stock and
Outstanding Company Voting Securities
immediately prior to such reorganization,
merger or consolidation in substantially the
same proportions as their ownership,
immediately prior to such reorganization,
merger or consolidation, of the Outstanding
Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (b) no
Person (excluding the Company, any employee
benefit plan (or related trust) of the
Company or such corporation resulting from
such reorganization, merger or consolidation
and any Person beneficially owning,
immediately prior to such reorganization,
merger or consolidation, directly or
indirectly, twenty percent (20%) or more of
the Outstanding Company Common Stock or
Outstanding Voting Securities, as the case
may be) beneficially owns, directly or
indirectly, twenty percent (20%) or more of,
respectively, the then outstanding shares of
common stock of the corporation resulting
from such reorganization, merger or
consolidation or the combined voting power of
the then outstanding voting securities of
such corporation, entitled to vote generally
in the election of directors and (c) at least
a majority of the members of the board of
directors of the corporation resulting from
such reorganization, merger or consolidation
were members of the Incumbent
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<PAGE> 3
Board at the time of the execution of the
initial agreement providing for such
reorganization, merger or consolidation; or
(iv) Approval by the
shareholders of the Company of (a) a complete
liquidation or dissolution of the Company or
(b) the sale or other disposition of all or
substantially all of the assets of the
Company, other than to a corporation, with
respect to which following such sale or other
disposition, (1) more than fifty percent
(50%) of, respectively, the then outstanding
shares of common stock of such corporation
and the combined voting power of the then
outstanding voting securities of such
corporation entitled to vote generally in the
election of directors is then beneficially
owned, directly or indirectly, by all or
substantially all of the individuals and
entities who were the beneficial owners,
respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or
other disposition in substantially the same
proportion as their ownership, immediately
prior to such sale or other disposition, of
the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the
case may be, (2) no Person (excluding the
Company and any employee benefit plan (or
related trust) of the Company or such
corporation and any Person beneficially
owning, immediately prior to such sale or
other disposition, directly or indirectly,
twenty percent (20%) or more of the
Outstanding Company Common Stock or
Outstanding Company Voting Securities, as the
case may be) beneficially owns, directly or
indirectly, twenty percent (20%) or more of,
respectively, the then outstanding shares of
common stock of such corporation and the
combined voting power of the then outstanding
voting securities of such corporation
entitled to vote generally in the election of
directors and (3) at least a majority of the
members of the board of directors of such
corporation were members of the Incumbent
Board at the time of the execution of the
initial agreement or action of the Board
providing for such sale or other disposition
of assets of the Company.
1.1(c) "CHANGE IN CONTROL DATE" shall mean the date
of the Change in Control.
1.1(d) "CODE" shall mean the Internal Revenue Code
of 1986, as amended.
1.1(e) "COMPANY" means The Tenere Group, Inc., a
Missouri corporation.
1.1(f) "EFFECTIVE DATE" shall mean May 6, 1996.
1.1(g) "EMPLOYMENT PERIOD" means the period
beginning on the Effective Date and ending on
the later of (i) May 6, 1999, or (ii) May 6
of any succeeding fiscal year during which
notice is given by either party (as described
in Section 1.1(j)) of such party's intent not
to renew this Agreement.
1.1(h) "EXCHANGE ACT" means the Securities Exchange
Act of 1934, as amended.
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<PAGE> 4
1.1(i) "PERSON" means any "person" within the
meaning of Sections 13(d) and 14(d) of the
Exchange Act.
1.1(j) "TERM" means the period that begins on the
Effective Date and ends on the earlier of:
(i) the Date of Termination as defined in
Section 3.6, or (ii) the close of business on
the later of May 6, 1999 or May 6 of any
renewed term as set forth in Section 2.1 of
this Agreement.
1.2 GENDER AND NUMBER. When appropriate, pronouns in
this Agreement used in the masculine gender include the feminine gender, words
in the singular include the plural, and words in the plural include the
singular.
1.3 HEADINGS. All headings in this Agreement are
included solely for ease of reference and do not bear on the interpretation of
the text. Accordingly, as used in this Agreement, the terms "Article" and
"Section" mean the text that accompanies the specified Article or Section of
the Agreement.
1.4 APPLICABLE LAW. This Agreement shall be governed by
and construed in accordance with the laws of the state of Missouri, without
reference to its conflict of law principles.
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 PERIOD OF EMPLOYMENT. The Executive shall remain in
the employ of the Company throughout the Term of this Agreement in accordance
with the terms and provisions of this Agreement. This Agreement will
automatically renew for annual one-year periods unless either party gives the
other written notice, by February 1, 1999 or February 1 of any succeeding year,
of such party's intent not to renew this Agreement.
2.2 POSITIONS AND DUTIES.
2.2(a) Throughout the Term of this
Agreement, the Executive shall serve as President and Chief
Executive Officer of the Company and shall have overall
responsibility for the operations and strategic planning of
the Company, subject to the reasonable directions of the
Board.
2.2(b) Throughout the Term of this
Agreement (but excluding any periods of vacation and sick
leave to which he is entitled), the Executive shall devote
reasonable attention and time during normal business hours to
the business and affairs of the Company and shall use his
reasonable best efforts to perform faithfully and efficiently
such responsibilities as are assigned to him under or in
accordance with this Agreement; provided that, it shall not be
a violation of this paragraph for the Executive to (i) serve
on corporate, civic or charitable boards or committees, (ii)
deliver lectures or fulfill speaking engagements, or (iii)
manage personal investments, so long as such activities do not
significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in
accordance with this Agreement or violate the Company's
conflict of interest policy as in effect immediately prior to
the Effective Date.
2.3 SITUS OF EMPLOYMENT. Throughout the Term of this
Agreement, the Executive's services shall be performed within 20 miles of the
location where the Executive was employed immediately prior to the Effective
Date.
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<PAGE> 5
2.4 COMPENSATION.
2.4(a) ANNUAL BASE SALARY. For the first
calendar year within the Term of this Agreement, the Executive
shall receive an annual base salary ("Annual Base Salary") of
Two Hundred Eleven Thousand Five Hundred Twenty-One Dollars
($211,521), which shall be paid in equal or substantially
equal bi-weekly installments. During the Term of this
Agreement, the Annual Base Salary payable to the Executive
shall be reviewed at least annually and may be increased
consistent with Company's compensation policies for similarly
situated executives.
2.4(b) INCENTIVE BONUSES. In addition to
Annual Base Salary, the Executive may be awarded an incentive
bonus ("Incentive Bonus") provided through any incentive
compensation plan which is generally available to other peer
executives of the Company.
2.4(c) INCENTIVE, SAVINGS AND RETIREMENT
PLANS AND SUPPLEMENTAL PAYMENTS. Throughout the Term of this
Agreement, the Executive shall be entitled to participate in
all incentive, savings and retirement plans generally
available to other peer executives of the Company. In
addition, upon the earlier to occur of (i) Executive's
retirement after attainment by the Executive of 70 years of
age, such retirement being in accordance with the Company's
then existing retirement policy, if any, (ii) the termination
of the Executive's employment by reason of the Executive's
death or Disability (as defined in Section 3.2) during the
Employment Period, or (iii) the termination of the Executive's
employment by the Company without Cause or by the Executive
for Good Reason, then the Executive, or in the event of
Executive's death the Executive's estate or legal
representative, shall be entitled to a supplemental retirement
payment (the "Supplemental Retirement Payment") of $80,000 per
year for a period of ten years with the first payment due and
owing within 30 days of the date of the Executive's retirement
or termination of employment as provided above, and payments
in subsequent years due and owing on the anniversary date of
the such date of the Executive's retirement or termination. In
the event of the Executive's death at any time prior to the
last of the Supplemental Retirement Payments to which
Executive is entitled to receive pursuant to this Section
2.4(c), any unpaid annual Supplemental Retirement Payment to
which the Executive was entitled to receive pursuant to this
Section 2.4(c) shall be paid to the Executive's estate or
legal representative.
2.4(d) WELFARE BENEFIT PLANS. Throughout
the Term of this Agreement (and thereafter, subject to Section
4.1(c) hereof), the Executive and/or the Executive's family,
as the case may be, shall be eligible for participation in and
shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and
programs) to the extent generally available to other peer
executives of the Company.
2.4(e) EXPENSES. Throughout the Term of
this Agreement, the Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by
the
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<PAGE> 6
Executive in accordance with the most favorable policies,
practices and procedures generally applicable to other peer
executives of the Company.
2.4(f) FRINGE BENEFITS. Throughout the
Term of this Agreement, the Executive shall be entitled to
such fringe benefits as generally are provided to other peer
executives of the Company.
2.4(g) OFFICE AND SUPPORT STAFF.
Throughout the Term of this Agreement, the Executive shall be
entitled to an office or offices of a size and with
furnishings and other appointments, and to personal
secretarial and other assistance.
2.4(h) VACATION. Throughout the Term of
this Agreement, the Executive shall be entitled to paid
vacation in accordance with the most favorable plans,
policies, programs and practices generally provided with
respect to other peer executives of the Company. Initially,
the Executive shall be entitled to three (3) weeks paid
vacation and such vacation time may not be decreased below
such level during the Term of this Agreement.
SECTION 3: TERMINATION OF EMPLOYMENT.
3.1 DEATH. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
3.2 DISABILITY. If the Company determines in good faith
that the Disability of the Executive has occurred during the Employment Period
(pursuant to the definition of Disability set forth below), it may give to the
Executive written notice in accordance with Section 7.1 of its intention to
terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the thirtieth (30th)
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the thirty (30) days after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall mean that the
Executive has been unable to perform the services required of the Executive
hereunder on a full-time basis for a period of one hundred eighty (180)
consecutive business days by reason of a physical and/or mental condition.
"Disability" shall be deemed to exist when certified by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be withheld
unreasonably). The Executive will submit to such medical or psychiatric
examinations and tests as such physician deems necessary to make any such
Disability determination.
3.3 TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment during the Employment Period for "Cause," which shall
mean termination based upon: (i) the Executive's willful and continued failure
to substantially perform his duties with the Company (other than as a result of
incapacity due to physical or mental condition), after a demand for substantial
performance is delivered to him by the Company, which specifically identifies
the manner in which the Executive has not substantially performed his duties,
(ii) the Executive's commission of an act constituting a criminal offense
involving moral turpitude, dishonesty, or breach of trust, or (iii) the
Executive's material breach of any provision of this Agreement. For purposes
of this Section, no act, or failure to act on the Executive's part shall be
considered "willful" unless done, or omitted to be done, without good faith and
without reasonable belief that the act or omission was in the best interest of
the Company. Notwithstanding the foregoing, the Executive shall not be deemed
to have been terminated for Cause unless and until (i) he receives a Notice of
Termination (as defined in Section 3.5) from the Company,
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<PAGE> 7
(ii) he is given the opportunity, with counsel, to be heard before the Board,
and (iii) the Board finds, in its good faith opinion, the Executive was guilty
of the conduct set forth in the Notice of Termination.
3.4 GOOD REASON. The Executive may terminate his
employment with the Company for "Good Reason," which shall mean termination
based upon:
(i) the assignment to the Executive of
any duties inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by Section 2.2(a) or any other action by the
Company which results in a material diminution in such
position, authority, duties or responsibilities, excluding for
this purpose any action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) (a) the failure by the Company to
continue in effect any benefit or compensation plan, stock
ownership plan, life insurance plan, health and accident plan
or disability plan to which the Executive is entitled as
specified in Section 2.4, (b) the taking of any action by the
Company which would adversely affect the Executive's
participation in, or materially reduce the Executive's
benefits under, any plans described in Section 2.4, or deprive
the Executive of any material fringe benefit enjoyed by the
Executive as described in Section 2.4(f), or (c) the failure
by the Company to provide the Executive with the number of
paid vacation days to which the Executive is entitled as
described in Section 2.4(h).
(iii) the Company's requiring the
Executive to be based at any office or location other than
that described in Section 2.3;
(iv) a material breach by the Company of
any provision of this Agreement;
(v) any purported termination by the
Company of the Executive's employment otherwise than as
expressly permitted by this Agreement;
(vi) within a period ending at the close
of business on the date two (2) years after the Change in
Control Date, if the Company has failed to comply with and
satisfy Section 6.2 on or after the Change in Control Date; or
(vii) within a period ending at the close
of business on the date two (2) years after the Change in
Control Date, if the Executive, in his sole and absolute
discretion, determines and notifies the Company in writing,
that he does not wish to continue his employment with the
Company.
For purposes of this Section any good faith determination of "Good Reason" made
by the Executive shall be conclusive.
3.5 NOTICE OF TERMINATION. Any termination by the
Company for Cause or Disability, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party, given in accordance
with Section 7.1. For purposes of this Agreement, a "Notice of Termination"
means a written notice which (i) indicates the specific termination provision
in this Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the
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provision so indicated, and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination
date (which date shall be not more than fifteen (15) days after the giving of
such notice). The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing
of Good Reason or Cause shall not waive any right of the Executive or the
Company hereunder or preclude the Executive or the Company from asserting such
fact or circumstance in enforcing the Executive's or the Company's rights
hereunder.
3.6 DATE OF TERMINATION. "Date of Termination" means (i)
if the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the Date of Termination shall be the date of receipt
of the Notice of Termination or any later date specified herein, as the case
may be, (ii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the Executive
or the Disability Effective Date, as the case may be, or (iii) if the
Executive's employment is terminated by the Company other than for Cause,
death, or Disability, the Date of Termination shall be the date of receipt of
the Notice of Termination; provided that if within thirty (30) days after any
Notice of Termination is given, the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the termination, the
Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, or by a final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected).
SECTION 4: CERTAIN BENEFITS UPON TERMINATION.
4.1 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON PRIOR TO
A CHANGE IN CONTROL. If, prior to a Change in Control during the Employment
Period: (i) the Company shall terminate the Executive's employment without
Cause, or (ii) the Executive shall terminate employment with the Company for
Good Reason the Executive shall be entitled to the benefits provided below;
4.1(a) "Accrued Obligations": Within
thirty (30) days after the Date of Termination, the Company
shall pay to the Executive the sum of (1) the Executive's
Annual Base Salary through the Date of Termination to the
extent not previously paid, (2) any compensation previously
deferred by the Executive (together with any accrued interest
or earnings thereon) and (3) any accrued vacation pay; in each
case to the extent not previously paid.
In addition, on the date that Incentive Bonuses are
paid to other peer executives for the year in which the
Executive's employment is terminated, the Executive will be
paid an amount equal to the product of the Current Incentive
Bonus multiplied by a fraction, the numerator of which is the
number of days during the fiscal year for which the Incentive
Bonus is paid prior to the Date of Termination and denominator
of which is 365. For purposes of this Section the term
"Current Incentive Bonus" means the Incentive Bonus that would
have been paid to the Executive for the fiscal year in which
the termination of employment occurred, if the Executive's
employment had not been so terminated.
4.1(b) "Annual Base Salary Continuation":
For the remainder of the Employment Period, the Company shall
pay to the Executive, the Executive's then-current Annual Base
Salary as would have been paid to the Executive had the
Executive remained in the Company's employ throughout the
Employment Period; provided that in all cases the Executive
shall receive, at minimum, the then-current Annual Base Salary
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for a period beginning on the Date of Termination and ending
one (1) year thereafter. The Company at any time may elect to
pay the balance of such payments then remaining in a lump sum,
in which case the total of such payments shall be discounted
to present value as determined according to Code Section
280G(d)(4).
4.1(c) "Welfare Benefit Continuation": For
the remainder of the Employment Period (but in no case less
than one (1) year after the Date of Termination), or such
longer period as any plan, program, practice or policy may
provide, the Company shall continue benefits to the Executive
and/or the Executive's family at least equal to those which
would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 2.4(d)
if the Executive's employment had not been terminated, in
accordance with the most favorable plans, practices, programs
or policies of the Company as those provided generally to
other peer executives and their families during the ninety
(90) day period immediately preceding the Effective Date or,
if more favorable to the Executive, as those provided
generally at any time after the Effective Date to other peer
executives of the Company and their families; provided,
however, that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare
benefits under another employer-provided plan, the medical and
other welfare benefits described herein shall be secondary to
those provided under such other plan during such applicable
period of eligibility. For purposes of determining
eligibility of the Executive for retiree benefits pursuant to
such plans, practices, programs and policies, the Executive
shall be considered to have remained employed until the later
of the end of the Employment Period or one (1) year after the
Date of Termination and to have retired on the last day of
such period.
4.1(d) "Other Benefits": To the extent not
previously paid or provided, the Company shall timely pay or
provide to the Executive and/or the Executive's family any
other amounts or benefits required to be paid or provided for
which the Executive and/or the Executive's family is eligible
to receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the
Company as those provided generally to other peer executives
and their families during the ninety (90) day period
immediately preceding the Effective Date or, if more favorable
to the Executive, as those provided generally after the
Effective Date to other peer executives of the Company and
their families.
The Executive shall not be required to mitigate the amount of
any payment provided for in this Section by seeking other
employment or otherwise, nor shall the amount of any payment
provided for, in this Section, be reduced by any compensation
earned by the Executive as the result of employment by another
employer after the Date of Termination, or otherwise.
4.2 BENEFITS UPON TERMINATION AFTER A CHANGE IN CONTROL.
If Change in Control occurs during the Employment Period and within two (2)
years after a Change in Control: (i) the Company shall terminate the
Executive's employment without Cause, or (ii) the Executive shall terminate
employment with the Company for Good Reason, then the Executive shall be
entitled to the benefits provided below:
4.2(a) "Accrued Obligations": Within thirty
(30) days after the Date of Termination, the Company shall pay
to the Executive the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the extent not
previously paid,
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(2) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and
(3) any accrued vacation pay; in each case to the extent not
previously paid.
In addition, on the date that Incentive Bonuses are
paid to other peer executives for the year in which the
Executive's employment is terminated, the Executive will be
paid an amount equal to the product of the Current Incentive
Bonus multiplied by a fraction, the numerator of which is the
number of days during the fiscal year for which the Incentive
Bonus is paid prior to the Date of Termination and denominator
of which is 365. For purposes of this Section the term
"Current Incentive Bonus" means the Incentive Bonus that would
have been paid to the Executive for the fiscal year in which
the termination of employment occurred, if the Executive's
employment had not been so terminated.
4.2(b) "Severance Amount": Within thirty
(30) days after the Date of Termination, the Company shall pay
to the Executive as severance pay in a lump sum, in cash, an
amount equal to 2.99 times his then-current Annual Base
Salary.
4.2(c) "Stock Options": To the extent not
otherwise provided for under the terms of the Company's stock
option plan or the Executive's stock option agreement, all
such stock options shall become fully exercisable as of the
Date of Termination and, except for "incentive stock options"
within the meaning of Code Section 422 granted prior to the
date hereof, shall remain fully exercisable for six months
following the Date of Termination.
4.2(d) "Other Benefits": To the extent not
previously paid or provided, the Company shall timely pay or
provide to the Executive and/or the Executive's family any
other amounts or benefits required to be paid or provided for
which the Executive and/or the Executive's family is eligible
to receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the
Company as those provided generally to other peer executives
and their families during the ninety (90) day period
immediately preceding the Effective Date or, if more favorable
to the Executive, as those provided generally after the
Effective Date to other peer executives of the Company and
their families.
4.2(e) "Excess Parachute Payment":
Anything in this Agreement to the contrary notwithstanding, in
the event that an independent accountant shall determine that
any payment or distribution by the Company to or for the
benefit of Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or
otherwise) (a "Payment") would be nondeductible by the Company
for Federal income tax purposes because of Code Section 280G
or would constitute an "excess parachute payment" (as defined
in Code Section 280G), then the aggregate present value of
amounts payable or distributable to or for the benefit of
Executive pursuant to this Agreement (such payments or
distributions pursuant to this Agreement are hereinafter
referred to as "Agreement Payments") shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this
paragraph, the "Reduced Amount" shall be an amount expressed
in present value which maximizes the aggregate present value
of Agreement Payments without causing any Payment to be
nondeductible by the Company because of Code Section 280G or
without causing any portion of the Payment to be subject to
the excise tax imposed by Code Section 4999.
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If the independent accountant determines that any Payment
would be nondeductible by the Company because of Code Section
280G or that any portion of the Payment will be subject to the
excise tax imposed by Code Section 4999, the Company shall
promptly give Executive notice to that effect and a copy of
the detailed calculation thereof and of the Reduced Amount.
The Executive may then elect, in his sole discretion, which
and how much of the Agreement Payments shall be eliminated or
reduced (as long as after such election the aggregate present
value of the Agreement Payments equals the Reduced Amount),
and shall advise the Company in writing of his election within
ten (10) days of his receipt of such notice. If no such
election is made by Executive within such ten-day period, the
Company may elect which and how much of the Agreement Payments
shall be eliminated or reduced (as long as after such election
the aggregate present value of the Agreement Payments equals
the Reduced Amount) and shall notify the Executive promptly of
such election. For purposes of this paragraph, present value
shall be determined in accordance with Code Section
280G(d)(4). All determinations made by the independent
accountant under this Section shall be binding upon the
Company and the Executive and shall be made within sixty (60)
days of a termination of employment of the Executive. As
promptly as practicable following such determination and the
elections hereunder, the Company shall pay to or distribute to
or for the benefit of the Executive such amounts as are then
due to the Executive under this Agreement and shall promptly
pay to or distribute for the benefit of the Executive in the
future such amounts as become due to the Executive under this
Agreement.
As a result of the uncertainty in the application of Code
Sections 280G and 4999 at the time of the initial
determination by the independent accountant hereunder, it is
possible that Agreement Payments will be made by the Company
which should not have been made ("Overpayment") or that
additional Agreement Payments which have not been made by the
Company should have been made ("Underpayment"), in each case,
consistent with the calculation of the Reduced Amount
hereunder. In the event that the independent accountant,
based upon the assertion of a deficiency by the Internal
Revenue Service against the Company or the Executive which the
independent accountant believes has a high probability of
success, determines that an Overpayment has been made, any
such Overpayment shall be treated for all purposes as a loan
to the Executive which the Executive shall repay to the
Company together with interest at the applicable Federal rate
provided for in Code Section 7872(f)(2); provided, however,
that no amount shall be payable by the Executive to the
Company if and to the extent such payment would not reduce the
amount which is subject to taxation under Code Section 4999 or
if the period of limitations for assessment of tax under Code
Section 4999 against the Executive shall have expired. In the
event that the independent accountant, based upon controlling
precedent, determines that an Underpayment has occurred, any
such Underpayment shall be promptly paid by the Company to or
for the benefit of the Executive together with interest at the
applicable Federal rate provided for in Code Section
7872(f)(2)(A).
4.3 DEATH. If the Executive's employment is
terminated by reason of the Executive's death during the Employment Period
(either prior or subsequent to a Change in Control), this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for (i) payment of the Supplemental Retirement
Payment (as defined in Section 2.4(c)) which shall be paid to the Executive's
estate or beneficiary, as applicable, (ii) payment of Accrued Obligations (as
defined in Section 4.1(a)) (which shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within thirty (30) days of
the Date of Termination), and (iii) the timely payment
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or provision of Other Benefits (as defined in Section 4.1(d)), including death
benefits pursuant to the terms of any plan, policy, or arrangement of the
Company.
4.4 DISABILITY. If the Executive's employment is
terminated by reason of the Executive's Disability during the Employment Period
(either prior or subsequent to a Change in Control), this Agreement shall
terminate without further obligations to the Executive, other than for (i)
payment of the Supplemental Retirement Payment (as defined in Section 2.4(c),
(ii) payment of Accrued Obligations (as defined in Section 4.1(a)) (which shall
be paid to the Executive in a lump sum in cash within thirty (30) days of the
Date of Termination), and (iii) the timely payment or provision of Other
Benefits (as defined in Section 4.1(d)) including disability benefits pursuant
to the terms of any plan, policy or arrangement of the Company.
4.5 TERMINATION FOR CAUSE; OTHER THAN GOOD REASON. If
the Executive's employment shall be terminated for Cause during the Employment
Period (either prior to or subsequent to a Change in Control), this Agreement
shall terminate without further obligations to the Executive other than the
obligation to pay to the Executive his Accrued Compensation (as defined in this
Section). If the Executive terminates employment with the Company during the
Employment Period, (excluding a termination for Good Reason), this Agreement
shall terminate without further obligations to the Executive, other than for
the payment of Accrued Compensation (as defined in this Section) and the timely
payment or provision of Other Benefits (as defined in Section 4.1(d)). In such
case, all Accrued Compensation shall be paid to the Executive in a lump sum in
cash within thirty (30) days of the Date of Termination.
For purposes of this Section the term "Accrued Compensation"
means the sum of (i) the Executive's Annual Base Salary through the Date of
Termination to the extent not previously paid, (ii) any compensation previously
deferred by the Executive (together with any accrued interest or earnings
thereon), and (iii) any accrued vacation pay in each case to the extent not
previously paid.
4.6 NON-EXCLUSIVITY OF RIGHTS. Except as provided in
Sections 4.1(c) nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company and for which the Executive may qualify, nor
shall anything herein limit or otherwise affect such rights as the Executive
may have under any contract or agreement with the Company. Amounts which are
vested benefits of which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of, or any contract or agreement with,
the Company at or subsequent to the Date of Termination, shall be payable in
accordance with such plan, policy, practice or program or contract or agreement
except as explicitly modified by this Agreement.
4.7 FULL SETTLEMENT. The Company's obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Executive or others. In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and, except as provided in Sections 4.1(c), such amounts shall not be reduced
whether or not the Executive obtains other employment. The Company agrees to
pay promptly as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonable incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive regarding the amount of any payment
pursuant to this Agreement), plus in each case interest on any delayed payment
at the applicable Federal rate provided for in Code Section 7872(f)(2)(A).
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4.8 RESOLUTION OF DISPUTES. If there shall be any
dispute between the Company and the Executive (i) in the event of any
termination of the Executive's employment by the Company, whether such
termination was for Cause, or (ii) in the event of any termination of
employment by the Executive, whether Good Reason existed, then, unless and
until there is a final, nonappealable judgment by a court of competent
jurisdiction declaring that such termination was for Cause or that the
determination by the Executive of the existence of Good Reason was not made in
good faith, the Company shall pay all amounts, and provide all benefits, to the
Executive and/or the Executive's family or other beneficiaries, as the case may
be, that the Company would be required to pay or provide pursuant to Section
4.1 or 4.2 as though such termination were by the Company without Cause or by
the Executive with Good Reason; provided, however, that the Company shall not
be required to pay any disputed amounts pursuant to this Section except upon
receipt of an undertaking by or on behalf of the Executive to repay all such
amounts to which the Executive is ultimately adjudged by such court not to be
entitled.
SECTION 5: NON-COMPETITION.
5.1 NON-COMPETE AGREEMENT.
5.1(a) It is agreed that during the period
beginning on the date the Term of this Agreement expires and
ending two (2) years thereafter, the Executive shall not,
without prior written approval of the Board, become an
officer, employee, agent, partner, or director of any business
enterprise in substantial direct competition (as defined in
Section 5.1(b)) with the Company; provided that, the Executive
shall not be subject to the restrictions of this Section if
(i) the Executive is terminated by the Company without Cause,
(ii) the Executive terminates his employment for Good Reason,
or (iii) the Term of this Agreement expires after delivery by
the Company of written notice of the Company's intent not to
renew this Agreement pursuant to Section 2.1.
5.1(b) For purposes of Section 5.1, a
business enterprise with which the Executive becomes
associated as an officer, employee, agent, partner, or
director shall be considered in substantial direct
competition, if such entity competes with the Company in any
business in which the Company is engaged and is within in the
Company's market area (as defined herein) as of the date the
Term of this Agreement expires. The Company's market area is
defined for this purpose, as the States of Missouri, Illinois
and Kansas.
5.1(c) The above constraint shall not
prevent the Executive from making passive investments, not to
exceed five percent (5%), in any enterprise.
5.2 CONFIDENTIAL INFORMATION. The Executive shall hold
in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any of
its affiliated companies, and their respective businesses, which shall have
been obtained by the Executive during the Executive's employment by the Company
and which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company, or as may
otherwise be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
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SECTION 6: SUCCESSORS.
6.1 SUCCESSORS OF EXECUTIVE. This Agreement is personal
to the Executive and, without the prior written consent of the Company, the
rights (but not the obligations) shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
6.2 SUCCESSORS OF COMPANY. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle the Executive to terminate the Agreement at
his option on or after the Change in Control Date for Good Reason. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
SECTION 7: MISCELLANEOUS.
7.1 NOTICE. For purposes of this Agreement, notices and
all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by certified
or registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses as set forth below; provided that all notices to the
Company shall be directed to the attention of the President, or to such other
address as one party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.
Notice to Executive:
Raymond A. Christy, M.D.
2738 South Marlan
Springfield, Missouri 65804
Notice to Company:
The Tenere Group, Inc.
1903 East Battlefield
Springfield, Missouri 65804
7.2 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
7.3 WITHHOLDING. The Company may withhold from any
amounts payable under this Agreement such Federal, state or local taxes as
shall be required to be withheld pursuant to any applicable law or regulation.
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7.4 WAIVER. The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right the Executive or the
Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 3.4 shall
not be deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
IN WITNESS WHEREOF, the Executive and, the Company, pursuant
to the authorization from its Board, have caused this Agreement to be executed
in its name on its behalf, all as of the day and year first above written.
EXECUTIVE
________________________________________
Raymond A. Christy, M.D.
THE TENERE GROUP, INC.
By______________________________________
Name:___________________________________
Title:__________________________________
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EXHIBIT 10.15
THE TENERE GROUP, INC.
EMPLOYMENT AGREEMENT
This agreement ("Agreement") has been entered into as of this
6th day of May, 1996, by and between The Tenere Group, Inc., a Missouri
corporation ("Company"), and Andrew K. Bennett, an individual ("Executive").
RECITALS
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to reinforce and encourage the continued attention and dedication of the
Executive to the Company as a member of the Company's management and to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change in Control
(as defined below) of the Company. The Board desires to provide for the
continued employment of the Executive, and the Executive is willing to commit
himself to continue to serve the Company. Additionally, the Board believes it
is imperative to diminish the inevitable distraction of the Executive by virtue
of the personal uncertainties and risks created by a pending or threatened
Change in Control and to encourage the Executive's full attention and
dedication to the Company currently and in the event of any threatened or
pending Change in Control, and to provide the Executive with compensation and
benefits arrangements upon the breach of this Agreement by the Company or upon
a termination of employment after Change in Control which ensure that the
compensation and benefits expectations of the Executive will be satisfied and
which are competitive with those of other corporations. Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into
this Agreement.
IT IS AGREED AS FOLLOWS:
SECTION 1: DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. For purposes of this Agreement,
the following words and phrases, whether or not capitalized, shall have the
meanings specified below, unless the context plainly requires a different
meaning.
1.1(a) "BOARD" means the Board of Directors of the
Company.
1.1(b) "CHANGE IN CONTROL" means:
(i) The acquisition by any
individual, entity or group, or (within the
meaning of Section 13(d)(3) or 14(d)(2), the
Exchange Act), a Person of beneficial
ownership of twenty percent (20%) or more of
either (a) the then outstanding shares of
common stock of the Company (the "Outstanding
Company Common Stock") or (b) the combined
voting power of the then outstanding voting
securities of the Company entitled to vote
generally in the election of directors (the
"Outstanding Company Voting Securities");
provided, however, that the following
acquisitions shall not constitute a Change in
Control: (a) any acquisition directly from
the Company (excluding an acquisition by
virtue of the exercise of a conversion
privilege), (b) any acquisition by the
Company, (c) any acquisition by any employee
benefit plan (or related trust) sponsored or
<PAGE> 2
maintained by the Company or any corporation
controlled by the Company or (d) any
acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if,
following such reorganization, merger or
consolidation, the conditions described in
clauses (a), (b) and (c) of subsection (iii)
of this Section are satisfied; or
(ii) Individuals who, as of
the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to
constitute at least a majority of the Board;
provided, however, that any individual
becoming a director subsequent to the date
hereof whose election, or nomination for
election by the Company's shareholders, was
approved by a vote of at least a majority of
the directors then comprising the Incumbent
Board shall be considered as though such
individual were a member of the Incumbent
Board, but excluding, as a member of the
Incumbent Board, any such individual whose
initial assumption of office occurs as a
result of either an actual or threatened
election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or
threatened solicitation of proxies or
consents by or on behalf of a Person other
than the Board; or
(iii) Approval by the
shareholders of the Company of a
reorganization, merger or consolidation, in
each case, unless, following such
reorganization, merger or consolidation, (a)
more than fifty percent (50%) of,
respectively, the then outstanding shares of
common stock of the corporation resulting
from such reorganization, merger or
consolidation and the combined voting power
of the then outstanding voting securities of
such corporation entitled to vote generally
in the election of directors is then
beneficially owned, directly or indirectly,
by all or substantially all of the
individuals and entities who were the
beneficial owners, respectively, of the
Outstanding Company Common Stock and
Outstanding Company Voting Securities
immediately prior to such reorganization,
merger or consolidation in substantially the
same proportions as their ownership,
immediately prior to such reorganization,
merger or consolidation, of the Outstanding
Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (b) no
Person (excluding the Company, any employee
benefit plan (or related trust) of the
Company or such corporation resulting from
such reorganization, merger or consolidation
and any Person beneficially owning,
immediately prior to such reorganization,
merger or consolidation, directly or
indirectly, twenty percent (20%) or more of
the Outstanding Company Common Stock or
Outstanding Voting Securities, as the case
may be) beneficially owns, directly or
indirectly, twenty percent (20%) or more of,
respectively, the then outstanding shares of
common stock of the corporation resulting
from such reorganization, merger or
consolidation or the combined voting power of
the then outstanding voting securities of
such corporation, entitled to vote generally
in the election of directors and (c) at least
a majority of the members of the board of
directors of the corporation resulting from
such reorganization, merger or consolidation
were members of the Incumbent
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Board at the time of the execution of the
initial agreement providing for such
reorganization, merger or consolidation; or
(iv) Approval by the
shareholders of the Company of (a) a complete
liquidation or dissolution of the Company or
(b) the sale or other disposition of all or
substantially all of the assets of the
Company, other than to a corporation, with
respect to which following such sale or other
disposition, (1) more than fifty percent
(50%) of, respectively, the then outstanding
shares of common stock of such corporation
and the combined voting power of the then
outstanding voting securities of such
corporation entitled to vote generally in the
election of directors is then beneficially
owned, directly or indirectly, by all or
substantially all of the individuals and
entities who were the beneficial owners,
respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or
other disposition in substantially the same
proportion as their ownership, immediately
prior to such sale or other disposition, of
the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the
case may be, (2) no Person (excluding the
Company and any employee benefit plan (or
related trust) of the Company or such
corporation and any Person beneficially
owning, immediately prior to such sale or
other disposition, directly or indirectly,
twenty percent (20%) or more of the
Outstanding Company Common Stock or
Outstanding Company Voting Securities, as the
case may be) beneficially owns, directly or
indirectly, twenty percent (20%) or more of,
respectively, the then outstanding shares of
common stock of such corporation and the
combined voting power of the then outstanding
voting securities of such corporation
entitled to vote generally in the election of
directors and (3) at least a majority of the
members of the board of directors of such
corporation were members of the Incumbent
Board at the time of the execution of the
initial agreement or action of the Board
providing for such sale or other disposition
of assets of the Company.
1.1(c) "CHANGE IN CONTROL DATE" shall mean the date
of the Change in Control.
1.1(d) "CODE" shall mean the Internal Revenue Code
of 1986, as amended.
1.1(e) "COMPANY" means The Tenere Group, Inc., a
Missouri corporation.
1.1(f) "EFFECTIVE DATE" shall mean May 6, 1996.
1.1(g) "EMPLOYMENT PERIOD" means the period
beginning on the Effective Date and ending on
the later of (i) May 6, 1999, or (ii) May 6
of any succeeding fiscal year during which
notice is given by either party (as described
in Section 1.1(j)) of such party's intent not
to renew this Agreement.
1.1(h) "EXCHANGE ACT" means the Securities Exchange
Act of 1934, as amended.
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1.1(i) "PERSON" means any "person" within the
meaning of Sections 13(d) and 14(d) of the
Exchange Act.
1.1(j) "TERM" means the period that begins on the
Effective Date and ends on the earlier of:
(i) the Date of Termination as defined in
Section 3.6, or (ii) the close of business on
the later of May 6, 1999 or May 6 of any
renewed term as set forth in Section 2.1 of
this Agreement.
1.2 GENDER AND NUMBER. When appropriate, pronouns in
this Agreement used in the masculine gender include the feminine gender, words
in the singular include the plural, and words in the plural include the
singular.
1.3 HEADINGS. All headings in this Agreement are
included solely for ease of reference and do not bear on the interpretation of
the text. Accordingly, as used in this Agreement, the terms "Article" and
"Section" mean the text that accompanies the specified Article or Section of
the Agreement.
1.4 APPLICABLE LAW. This Agreement shall be governed by
and construed in accordance with the laws of the state of Missouri, without
reference to its conflict of law principles.
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 PERIOD OF EMPLOYMENT. The Executive shall remain in
the employ of the Company throughout the Term of this Agreement in accordance
with the terms and provisions of this Agreement. This Agreement will
automatically renew for annual one-year periods unless either party gives the
other written notice, by February 1, 1999 or February 1 of any succeeding year,
of such party's intent not to renew this Agreement.
2.2 POSITIONS AND DUTIES.
2.2(a) Throughout the Term of this
Agreement, the Executive shall serve as General Counsel and
Vice President - Claims of the Company and shall have
responsibility for the Company's corporate legal affairs and
for overall supervision of the claims department, subject to
the reasonable direction of the Chief Executive Officer.
2.2(b) Throughout the Term of this
Agreement (but excluding any periods of vacation and sick
leave to which he is entitled), the Executive shall devote
reasonable attention and time during normal business hours to
the business and affairs of the Company and shall use his
reasonable best efforts to perform faithfully and efficiently
such responsibilities as are assigned to him under or in
accordance with this Agreement; provided that, it shall not be
a violation of this paragraph for the Executive to (i) serve
on corporate, civic or charitable boards or committees, (ii)
deliver lectures or fulfill speaking engagements, or (iii)
manage personal investments, so long as such activities do not
significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in
accordance with this Agreement or violate the Company's
conflict of interest policy as in effect immediately prior to
the Effective Date.
2.3 SITUS OF EMPLOYMENT. Throughout the Term of this
Agreement, the Executive's services shall be performed within 20 miles of the
location where the Executive was employed immediately prior to the Effective
Date.
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2.4 COMPENSATION.
2.4(a) ANNUAL BASE SALARY. For the first
calendar year within the Term of this Agreement, the Executive
shall receive an annual base salary ("Annual Base Salary") of
One Hundred Forty Thousand Dollars ($140,000), which shall be
paid in equal or substantially equal bi-weekly installments.
The Annual Base Salary payable to the Executive shall be
increased by $10,000 per annum on July 1, 1997. Thereafter,
during the Term of this Agreement the Annual Base Salary
payable to the Executive shall be reviewed at least annually
and may be increased consistent with Company's compensation
policies for similarly situated executives.
2.4(b) INCENTIVE BONUSES. In addition to
Annual Base Salary, the Executive may be awarded an incentive
bonus ("Incentive Bonus") provided through any incentive
compensation plan which is generally available to other peer
executives of the Company.
2.4(c) INCENTIVE, SAVINGS AND RETIREMENT
PLANS. Throughout the Term of this Agreement, the Executive
shall be entitled to participate in all incentive, savings and
retirement plans generally available to other peer executives
of the Company.
2.4(d) WELFARE BENEFIT PLANS. Throughout
the Term of this Agreement (and thereafter, subject to Section
4.1(c) hereof), the Executive and/or the Executive's family,
as the case may be, shall be eligible for participation in and
shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and
programs) to the extent generally available to other peer
executives of the Company.
2.4(e) EXPENSES. Throughout the Term of
this Agreement, the Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the most favorable policies,
practices and procedures generally applicable to other peer
executives of the Company.
2.4(f) FRINGE BENEFITS. Throughout the
Term of this Agreement, the Executive shall be entitled to
such fringe benefits as generally are provided to other peer
executives of the Company.
OFFICE AND SUPPORT STAFF. Throughout the
Term of this Agreement, the Executive shall be entitled to an
office or offices of a size and with furnishings and other
appointments, and to personal secretarial and other
assistance.
2.4(h) VACATION. Throughout the Term of
this Agreement, the Executive shall be entitled to paid
vacation in accordance with the most favorable plans,
policies, programs and practices generally provided with
respect to other peer executives of the Company. Initially,
the Executive shall be entitled to three (3) weeks paid
vacation and such vacation time may not be decreased below
such level during the Term of this Agreement.
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SECTION 3: TERMINATION OF EMPLOYMENT.
3.1 DEATH. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
3.2 DISABILITY. If the Company determines in good faith
that the Disability of the Executive has occurred during the Employment Period
(pursuant to the definition of Disability set forth below), it may give to the
Executive written notice in accordance with Section 7.1 of its intention to
terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the thirtieth (30th)
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the thirty (30) days after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall mean that the
Executive has been unable to perform the services required of the Executive
hereunder on a full-time basis for a period of one hundred eighty (180)
consecutive business days by reason of a physical and/or mental condition.
"Disability" shall be deemed to exist when certified by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be withheld
unreasonably). The Executive will submit to such medical or psychiatric
examinations and tests as such physician deems necessary to make any such
Disability determination.
3.3 TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment during the Employment Period for "Cause," which shall
mean termination based upon: (i) the Executive's willful and continued failure
to substantially perform his duties with the Company (other than as a result of
incapacity due to physical or mental condition), after a demand for substantial
performance is delivered to him by the Company, which specifically identifies
the manner in which the Executive has not substantially performed his duties,
(ii) the Executive's commission of an act constituting a criminal offense
involving moral turpitude, dishonesty, or breach of trust, or (iii) the
Executive's material breach of any provision of this Agreement. For purposes
of this Section, no act, or failure to act on the Executive's part shall be
considered "willful" unless done, or omitted to be done, without good faith and
without reasonable belief that the act or omission was in the best interest of
the Company. Notwithstanding the foregoing, the Executive shall not be deemed
to have been terminated for Cause unless and until (i) he receives a Notice of
Termination (as defined in Section 3.5) from the Company, (ii) he is given the
opportunity, with counsel, to be heard before the Board, and (iii) the Board
finds, in its good faith opinion, the Executive was guilty of the conduct set
forth in the Notice of Termination.
3.4 GOOD REASON. The Executive may terminate his
employment with the Company for "Good Reason," which shall mean termination
based upon:
(i) the assignment to the Executive of
any duties inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by Section 2.2(a) or any other action by the
Company which results in a material diminution in such
position, authority, duties or responsibilities, excluding for
this purpose any action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice
thereof given by the Executive;
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<PAGE> 7
(ii) (a) the failure by the Company to
continue in effect any benefit or compensation plan, stock
ownership plan, life insurance plan, health and accident plan
or disability plan to which the Executive is entitled as
specified in Section 2.4, (b) the taking of any action by the
Company which would adversely affect the Executive's
participation in, or materially reduce the Executive's
benefits under, any plans described in Section 2.4, or deprive
the Executive of any material fringe benefit enjoyed by the
Executive as described in Section 2.4(f), or (c) the failure
by the Company to provide the Executive with the number of
paid vacation days to which the Executive is entitled as
described in Section 2.4(h).
(iii) the Company's requiring the
Executive to be based at any office or location other than
that described in Section 2.3;
(iv) a material breach by the Company of
any provision of this Agreement;
(v) any purported termination by the
Company of the Executive's employment otherwise than as
expressly permitted by this Agreement;
(vi) within a period ending at the close
of business on the date two (2) years after the Change in
Control Date, if the Company has failed to comply with and
satisfy Section 6.2 on or after the Change in Control Date; or
(vii) within a period ending at the close
of business on the date two (2) years after the Change in
Control Date, if the Executive, in his sole and absolute
discretion, determines and notifies the Company in writing,
that he does not wish to continue his employment with the
Company.
For purposes of this Section any good faith determination of "Good Reason" made
by the Executive shall be conclusive.
3.5 NOTICE OF TERMINATION. Any termination by the
Company for Cause or Disability, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party, given in accordance
with Section 7.1. For purposes of this Agreement, a "Notice of Termination"
means a written notice which (i) indicates the specific termination provision
in this Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated, and
(iii) if the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date shall be not
more than fifteen (15) days after the giving of such notice). The failure by
the Executive or the Company to set forth in the Notice of Termination any fact
or circumstance which contributes to a showing of Good Reason or Cause shall
not waive any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in enforcing
the Executive's or the Company's rights hereunder.
3.6 DATE OF TERMINATION. "Date of Termination" means (i)
if the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the Date of Termination shall be the date of receipt
of the Notice of Termination or any later date specified herein, as the case
may be, (ii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the Executive
or the Disability Effective Date, as the case may be, or (iii) if the
Executive's employment is terminated by the Company other than for Cause,
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<PAGE> 8
death, or Disability, the Date of Termination shall be the date of receipt of
the Notice of Termination; provided that if within thirty (30) days after any
Notice of Termination is given, the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the termination, the
Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, or by a final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected).
SECTION 4: CERTAIN BENEFITS UPON TERMINATION.
4.1 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON PRIOR TO
A CHANGE IN CONTROL. If, prior to a Change in Control during the Employment
Period: (i) the Company shall terminate the Executive's employment without
Cause, or (ii) the Executive shall terminate employment with the Company for
Good Reason the Executive shall be entitled to the benefits provided below;
4.1(a) "Accrued Obligations": Within
thirty (30) days after the Date of Termination, the Company
shall pay to the Executive the sum of (1) the Executive's
Annual Base Salary through the Date of Termination to the
extent not previously paid, (2) any compensation previously
deferred by the Executive (together with any accrued interest
or earnings thereon) and (3) any accrued vacation pay; in each
case to the extent not previously paid.
In addition, on the date that Incentive Bonuses are
paid to other peer executives for the year in which the
Executive's employment is terminated, the Executive will be
paid an amount equal to the product of the Current Incentive
Bonus multiplied by a fraction, the numerator of which is the
number of days during the fiscal year for which the Incentive
Bonus is paid prior to the Date of Termination and denominator
of which is 365. For purposes of this Section the term
"Current Incentive Bonus" means the Incentive Bonus that would
have been paid to the Executive for the fiscal year in which
the termination of employment occurred, if the Executive's
employment had not been so terminated.
4.1(b) "Annual Base Salary Continuation":
For the remainder of the Employment Period, the Company shall
pay to the Executive, the Executive's then-current Annual Base
Salary as would have been paid to the Executive had the
Executive remained in the Company's employ throughout the
Employment Period; provided that in all cases the Executive
shall receive, at minimum, the then-current Annual Base Salary
for a period beginning on the Date of Termination and ending
one (1) year thereafter. The Company at any time may elect to
pay the balance of such payments then remaining in a lump sum,
in which case the total of such payments shall be discounted
to present value as determined according to Code Section
280G(d)(4).
4.1(c) "Welfare Benefit Continuation": For
the remainder of the Employment Period (but in no case less
than one (1) year after the Date of Termination), or such
longer period as any plan, program, practice or policy may
provide, the Company shall continue benefits to the Executive
and/or the Executive's family at least equal to those which
would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 2.4(d)
if the Executive's employment had not been terminated, in
accordance with the most favorable plans, practices, programs
or policies of the Company as those provided generally to
other peer executives and their families during the ninety
(90) day period immediately preceding the Effective Date or,
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if more favorable to the Executive, as those provided
generally at any time after the Effective Date to other peer
executives of the Company and their families; provided,
however, that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare
benefits under another employer-provided plan, the medical and
other welfare benefits described herein shall be secondary to
those provided under such other plan during such applicable
period of eligibility. For purposes of determining
eligibility of the Executive for retiree benefits pursuant to
such plans, practices, programs and policies, the Executive
shall be considered to have remained employed until the later
of the end of the Employment Period or one (1) year after the
Date of Termination and to have retired on the last day of
such period.
4.1(d) "Other Benefits": To the extent not
previously paid or provided, the Company shall timely pay or
provide to the Executive and/or the Executive's family any
other amounts or benefits required to be paid or provided for
which the Executive and/or the Executive's family is eligible
to receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the
Company as those provided generally to other peer executives
and their families during the ninety (90) day period
immediately preceding the Effective Date or, if more favorable
to the Executive, as those provided generally after the
Effective Date to other peer executives of the Company and
their families.
The Executive shall not be required to mitigate the amount of
any payment provided for in this Section by seeking other
employment or otherwise, nor shall the amount of any payment
provided for, in this Section, be reduced by any compensation
earned by the Executive as the result of employment by another
employer after the Date of Termination, or otherwise.
4.2 BENEFITS UPON TERMINATION AFTER A CHANGE IN CONTROL.
If Change in Control occurs during the Employment Period and within two (2)
years after a Change in Control: (i) the Company shall terminate the
Executive's employment without Cause, or (ii) the Executive shall terminate
employment with the Company for Good Reason, then the Executive shall be
entitled to the benefits provided below:
4.2(a) "Accrued Obligations": Within thirty
(30) days after the Date of Termination, the Company shall pay
to the Executive the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the extent not
previously paid, (2) any compensation previously deferred by
the Executive (together with any accrued interest or earnings
thereon) and (3) any accrued vacation pay; in each case to the
extent not previously paid.
In addition, on the date that Incentive Bonuses are
paid to other peer executives for the year in which the
Executive's employment is terminated, the Executive will be
paid an amount equal to the product of the Current Incentive
Bonus multiplied by a fraction, the numerator of which is the
number of days during the fiscal year for which the Incentive
Bonus is paid prior to the Date of Termination and denominator
of which is 365. For purposes of this Section the term
"Current Incentive Bonus" means the Incentive Bonus that would
have been paid to the Executive for the fiscal year in which
the termination of employment occurred, if the Executive's
employment had not been so terminated.
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4.2(b) "Severance Amount": Within thirty
(30) days after the Date of Termination, the Company shall pay
to the Executive as severance pay in a lump sum, in cash, an
amount equal to 2.99 times his then-current Annual Base
Salary.
4.2(c) "Stock Options": To the extent not
otherwise provided for under the terms of the Company's stock
option plan or the Executive's stock option agreement, all
such stock options shall become fully exercisable as of the
Date of Termination and, except for "incentive stock options"
within the meaning of Code Section 422 granted prior to the
date hereof, shall remain fully exercisable for six months
following the Date of Termination.
4.2(d) "Other Benefits": To the extent not
previously paid or provided, the Company shall timely pay or
provide to the Executive and/or the Executive's family any
other amounts or benefits required to be paid or provided for
which the Executive and/or the Executive's family is eligible
to receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the
Company as those provided generally to other peer executives
and their families during the ninety (90) day period
immediately preceding the Effective Date or, if more favorable
to the Executive, as those provided generally after the
Effective Date to other peer executives of the Company and
their families.
4.2(e) "Excess Parachute Payment":
Anything in this Agreement to the contrary notwithstanding, in
the event that an independent accountant shall determine that
any payment or distribution by the Company to or for the
benefit of Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or
otherwise) (a "Payment") would be nondeductible by the Company
for Federal income tax purposes because of Code Section 280G
or would constitute an "excess parachute payment" (as defined
in Code Section 280G), then the aggregate present value of
amounts payable or distributable to or for the benefit of
Executive pursuant to this Agreement (such payments or
distributions pursuant to this Agreement are hereinafter
referred to as "Agreement Payments") shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this
paragraph, the "Reduced Amount" shall be an amount expressed
in present value which maximizes the aggregate present value
of Agreement Payments without causing any Payment to be
nondeductible by the Company because of Code Section 280G or
without causing any portion of the Payment to be subject to
the excise tax imposed by Code Section 4999.
If the independent accountant determines that any Payment
would be nondeductible by the Company because of Code Section
280G or that any portion of the Payment will be subject to the
excise tax imposed by Code Section 4999, the Company shall
promptly give Executive notice to that effect and a copy of
the detailed calculation thereof and of the Reduced Amount.
The Executive may then elect, in his sole discretion, which
and how much of the Agreement Payments shall be eliminated or
reduced (as long as after such election the aggregate present
value of the Agreement Payments equals the Reduced Amount),
and shall advise the Company in writing of his election within
ten (10) days of his receipt of such notice. If no such
election is made by Executive within such ten-day period, the
Company may elect which and how much of the Agreement Payments
shall be eliminated or reduced (as long as after such election
the aggregate present value of the Agreement Payments equals
the Reduced Amount) and shall notify the Executive promptly of
such election. For purposes of this paragraph, present value
shall be
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<PAGE> 11
determined in accordance with Code Section 280G(d)(4). All
determinations made by the independent accountant under this
Section shall be binding upon the Company and the Executive
and shall be made within sixty (60) days of a termination of
employment of the Executive. As promptly as practicable
following such determination and the elections hereunder, the
Company shall pay to or distribute to or for the benefit of
the Executive such amounts as are then due to the Executive
under this Agreement and shall promptly pay to or distribute
for the benefit of the Executive in the future such amounts as
become due to the Executive under this Agreement.
As a result of the uncertainty in the application of Code
Sections 280G and 4999 at the time of the initial
determination by the independent accountant hereunder, it is
possible that Agreement Payments will be made by the Company
which should not have been made ("Overpayment") or that
additional Agreement Payments which have not been made by the
Company should have been made ("Underpayment"), in each case,
consistent with the calculation of the Reduced Amount
hereunder. In the event that the independent accountant,
based upon the assertion of a deficiency by the Internal
Revenue Service against the Company or the Executive which the
independent accountant believes has a high probability of
success, determines that an Overpayment has been made, any
such Overpayment shall be treated for all purposes as a loan
to the Executive which the Executive shall repay to the
Company together with interest at the applicable Federal rate
provided for in Code Section 7872(f)(2); provided, however,
that no amount shall be payable by the Executive to the
Company if and to the extent such payment would not reduce the
amount which is subject to taxation under Code Section 4999 or
if the period of limitations for assessment of tax under Code
Section 4999 against the Executive shall have expired. In the
event that the independent accountant, based upon controlling
precedent, determines that an Underpayment has occurred, any
such Underpayment shall be promptly paid by the Company to or
for the benefit of the Executive together with interest at the
applicable Federal rate provided for in Code Section
7872(f)(2)(A).
4.3 DEATH. If the Executive's employment is terminated
by reason of the Executive's death during the Employment Period (either prior
or subsequent to a Change in Control), this Agreement shall terminate without
further obligations to the Executive's legal representatives under this
Agreement, other than for (i) payment of Accrued Obligations (as defined in
Section 4.1(a)) (which shall be paid to the Executive's estate or beneficiary,
as applicable, in a lump sum in cash within thirty (30) days of the Date of
Termination) and (ii) the timely payment or provision of Other Benefits (as
defined in Section 4.1(d)), including death benefits pursuant to the terms of
any plan, policy, or arrangement of the Company.
4.4 DISABILITY. If the Executive's employment is
terminated by reason of the Executive's Disability during the Employment Period
(either prior or subsequent to a Change in Control), this Agreement shall
terminate without further obligations to the Executive, other than for (i)
payment of Accrued Obligations (as defined in Section 4.1(a)) (which shall be
paid to the Executive in a lump sum in cash within thirty (30) days of the Date
of Termination) and (ii) the timely payment or provision of Other Benefits (as
defined in Section 4.1(d)) including disability benefits pursuant to the terms
of any plan, policy or arrangement of the Company.
4.5 TERMINATION FOR CAUSE; OTHER THAN GOOD REASON. If
the Executive's employment shall be terminated for Cause during the Employment
Period (either prior to or subsequent to a Change in Control), this Agreement
shall terminate without further obligations to the Executive other than the
obligation to pay to the Executive his Accrued Compensation (as defined in this
Section). If the
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<PAGE> 12
Executive terminates employment with the Company during the Employment Period,
(excluding a termination for Good Reason), this Agreement shall terminate
without further obligations to the Executive, other than for the payment of
Accrued Compensation (as defined in this Section) and the timely payment or
provision of Other Benefits (as defined in Section 4.1(d)). In such case, all
Accrued Compensation shall be paid to the Executive in a lump sum in cash
within thirty (30) days of the Date of Termination.
For purposes of this Section the term "Accrued Compensation"
means the sum of (i) the Executive's Annual Base Salary through the Date of
Termination to the extent not previously paid, (ii) any compensation previously
deferred by the Executive (together with any accrued interest or earnings
thereon), and (iii) any accrued vacation pay in each case to the extent not
previously paid.
4.6 NON-EXCLUSIVITY OF RIGHTS. Except as provided in
Sections 4.1(c) nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company and for which the Executive may qualify, nor
shall anything herein limit or otherwise affect such rights as the Executive
may have under any contract or agreement with the Company. Amounts which are
vested benefits of which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of, or any contract or agreement with,
the Company at or subsequent to the Date of Termination, shall be payable in
accordance with such plan, policy, practice or program or contract or agreement
except as explicitly modified by this Agreement.
4.7 FULL SETTLEMENT. The Company's obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Executive or others. In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and, except as provided in Sections 4.1(c), such amounts shall not be reduced
whether or not the Executive obtains other employment. The Company agrees to
pay promptly as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonable incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive regarding the amount of any payment
pursuant to this Agreement), plus in each case interest on any delayed payment
at the applicable Federal rate provided for in Code Section 7872(f)(2)(A).
4.8 RESOLUTION OF DISPUTES. If there shall be any
dispute between the Company and the Executive (i) in the event of any
termination of the Executive's employment by the Company, whether such
termination was for Cause, or (ii) in the event of any termination of
employment by the Executive, whether Good Reason existed, then, unless and
until there is a final, nonappealable judgment by a court of competent
jurisdiction declaring that such termination was for Cause or that the
determination by the Executive of the existence of Good Reason was not made in
good faith, the Company shall pay all amounts, and provide all benefits, to the
Executive and/or the Executive's family or other beneficiaries, as the case may
be, that the Company would be required to pay or provide pursuant to Section
4.1 or 4.2 as though such termination were by the Company without Cause or by
the Executive with Good Reason; provided, however, that the Company shall not
be required to pay any disputed amounts pursuant to this Section except upon
receipt of an undertaking by or on behalf of the Executive to repay all such
amounts to which the Executive is ultimately adjudged by such court not to be
entitled.
SECTION 5: NON-COMPETITION.
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5.1 NON-COMPETE AGREEMENT.
5.1(a) It is agreed that during the period
beginning on the date the Term of this Agreement expires and
ending two (2) years thereafter, the Executive shall not,
without prior written approval of the Board, become an
officer, employee, agent, partner, or director of any business
enterprise in substantial direct competition (as defined in
Section 5.1(b)) with the Company; provided that, the Executive
shall not be subject to the restrictions of this Section if
(i) the Executive is terminated by the Company without Cause,
(ii) the Executive terminates his employment for Good Reason,
or (iii) the Term of this Agreement expires after delivery by
the Company of written notice of the Company's intent not to
renew this Agreement pursuant to Section 2.1.
5.1(b) For purposes of Section 5.1, a
business enterprise with which the Executive becomes
associated as an officer, employee, agent, partner, or
director shall be considered in substantial direct
competition, if such entity competes with the Company in any
business in which the Company is engaged and is within in the
Company's market area (as defined herein) as of the date the
Term of this Agreement expires. The Company's market area is
defined for this purpose, as the States of Missouri, Illinois
and Kansas.
5.1(c) The above constraint shall not
prevent the Executive from making passive investments, not to
exceed five percent (5%), in any enterprise.
5.2 CONFIDENTIAL INFORMATION. The Executive shall hold
in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any of
its affiliated companies, and their respective businesses, which shall have
been obtained by the Executive during the Executive's employment by the Company
and which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company, or as may
otherwise be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
SECTION 6: SUCCESSORS.
6.1 SUCCESSORS OF EXECUTIVE. This Agreement is personal
to the Executive and, without the prior written consent of the Company, the
rights (but not the obligations) shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
6.2 SUCCESSORS OF COMPANY. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle the Executive to terminate the Agreement at
his option on or after the Change in Control Date for Good Reason. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and
any successor to its
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<PAGE> 14
business and/or assets which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
SECTION 7: MISCELLANEOUS.
7.1 NOTICE. For purposes of this Agreement, notices and
all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by certified
or registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses as set forth below; provided that all notices to the
Company shall be directed to the attention of the President, or to such other
address as one party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.
Notice to Executive:
Andrew K. Bennett
2475 E. Montclair Ct.
Springfield, Missouri 65804
Notice to Company:
The Tenere Group, Inc.
1903 East Battlefield
Springfield, Missouri 65804
7.2 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
7.3 WITHHOLDING. The Company may withhold from any
amounts payable under this Agreement such Federal, state or local taxes as
shall be required to be withheld pursuant to any applicable law or regulation.
7.4 WAIVER. The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right the Executive or the
Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 3.4 shall
not be deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
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<PAGE> 15
IN WITNESS WHEREOF, the Executive and, the Company, pursuant
to the authorization from its Board, have caused this Agreement to be executed
in its name on its behalf, all as of the day and year first above written.
EXECUTIVE
________________________________________
Andrew K. Bennett
THE TENERE GROUP, INC.
By______________________________________
Name:___________________________________
Title:__________________________________
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<PAGE> 1
EXHIBIT 10.16
THE TENERE GROUP, INC.
EMPLOYMENT AGREEMENT
This agreement ("Agreement") has been entered into as of this
6th day of May, 1996, by and between The Tenere Group, Inc., a Missouri
corporation ("Company"), and Andrew C. Fischer, an individual ("Executive").
RECITALS
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to reinforce and encourage the continued attention and dedication of the
Executive to the Company as a member of the Company's management and to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change in Control
(as defined below) of the Company. The Board desires to provide for the
continued employment of the Executive, and the Executive is willing to commit
himself to continue to serve the Company. Additionally, the Board believes it
is imperative to diminish the inevitable distraction of the Executive by virtue
of the personal uncertainties and risks created by a pending or threatened
Change in Control and to encourage the Executive's full attention and
dedication to the Company currently and in the event of any threatened or
pending Change in Control, and to provide the Executive with compensation and
benefits arrangements upon the breach of this Agreement by the Company or upon
a termination of employment after Change in Control which ensure that the
compensation and benefits expectations of the Executive will be satisfied and
which are competitive with those of other corporations. Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into
this Agreement.
IT IS AGREED AS FOLLOWS:
SECTION 1: DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. For purposes of this Agreement, the
following words and phrases, whether or not capitalized, shall have the
meanings specified below, unless the context plainly requires a different
meaning.
1.1(a) "BOARD" means the Board of Directors of the
Company.
1.1(b) "CHANGE IN CONTROL" means:
(i) The acquisition by any
individual, entity or group, or (within the
meaning of Section 13(d)(3) or 14(d)(2), the
Exchange Act), a Person of beneficial
ownership of twenty percent (20%) or more of
either (a) the then outstanding shares of
common stock of the Company (the "Outstanding
Company Common Stock") or (b) the combined
voting power of the then outstanding voting
securities of the Company entitled to vote
generally in the election of directors (the
"Outstanding Company Voting Securities");
provided, however, that the following
acquisitions shall not constitute a Change in
Control: (a) any acquisition directly from
the Company (excluding an acquisition by
virtue of the exercise of a conversion
privilege), (b) any acquisition by the
Company, (c) any acquisition by any employee
benefit plan (or related trust) sponsored or
<PAGE> 2
maintained by the Company or any corporation
controlled by the Company or (d) any
acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if,
following such reorganization, merger or
consolidation, the conditions described in
clauses (a), (b) and (c) of subsection (iii)
of this Section are satisfied; or
(ii) Individuals who, as of
the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to
constitute at least a majority of the Board;
provided, however, that any individual
becoming a director subsequent to the date
hereof whose election, or nomination for
election by the Company's shareholders, was
approved by a vote of at least a majority of
the directors then comprising the Incumbent
Board shall be considered as though such
individual were a member of the Incumbent
Board, but excluding, as a member of the
Incumbent Board, any such individual whose
initial assumption of office occurs as a
result of either an actual or threatened
election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or
threatened solicitation of proxies or
consents by or on behalf of a Person other
than the Board; or
(iii) Approval by the
shareholders of the Company of a
reorganization, merger or consolidation, in
each case, unless, following such
reorganization, merger or consolidation, (a)
more than fifty percent (50%) of,
respectively, the then outstanding shares of
common stock of the corporation resulting
from such reorganization, merger or
consolidation and the combined voting power
of the then outstanding voting securities of
such corporation entitled to vote generally
in the election of directors is then
beneficially owned, directly or indirectly,
by all or substantially all of the
individuals and entities who were the
beneficial owners, respectively, of the
Outstanding Company Common Stock and
Outstanding Company Voting Securities
immediately prior to such reorganization,
merger or consolidation in substantially the
same proportions as their ownership,
immediately prior to such reorganization,
merger or consolidation, of the Outstanding
Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (b) no
Person (excluding the Company, any employee
benefit plan (or related trust) of the
Company or such corporation resulting from
such reorganization, merger or consolidation
and any Person beneficially owning,
immediately prior to such reorganization,
merger or consolidation, directly or
indirectly, twenty percent (20%) or more of
the Outstanding Company Common Stock or
Outstanding Voting Securities, as the case
may be) beneficially owns, directly or
indirectly, twenty percent (20%) or more of,
respectively, the then outstanding shares of
common stock of the corporation resulting
from such reorganization, merger or
consolidation or the combined voting power of
the then outstanding voting securities of
such corporation, entitled to vote generally
in the election of directors and (c) at least
a majority of the members of the board of
directors of the corporation resulting from
such reorganization, merger or consolidation
were members of the Incumbent
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<PAGE> 3
Board at the time of the execution of the
initial agreement providing for such
reorganization, merger or consolidation; or
(iv) Approval by the
shareholders of the Company of (a) a complete
liquidation or dissolution of the Company or
(b) the sale or other disposition of all or
substantially all of the assets of the
Company, other than to a corporation, with
respect to which following such sale or other
disposition, (1) more than fifty percent
(50%) of, respectively, the then outstanding
shares of common stock of such corporation
and the combined voting power of the then
outstanding voting securities of such
corporation entitled to vote generally in the
election of directors is then beneficially
owned, directly or indirectly, by all or
substantially all of the individuals and
entities who were the beneficial owners,
respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or
other disposition in substantially the same
proportion as their ownership, immediately
prior to such sale or other disposition, of
the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the
case may be, (2) no Person (excluding the
Company and any employee benefit plan (or
related trust) of the Company or such
corporation and any Person beneficially
owning, immediately prior to such sale or
other disposition, directly or indirectly,
twenty percent (20%) or more of the
Outstanding Company Common Stock or
Outstanding Company Voting Securities, as the
case may be) beneficially owns, directly or
indirectly, twenty percent (20%) or more of,
respectively, the then outstanding shares of
common stock of such corporation and the
combined voting power of the then outstanding
voting securities of such corporation
entitled to vote generally in the election of
directors and (3) at least a majority of the
members of the board of directors of such
corporation were members of the Incumbent
Board at the time of the execution of the
initial agreement or action of the Board
providing for such sale or other disposition
of assets of the Company.
1.1(c) "CHANGE IN CONTROL DATE" shall mean the date
of the Change in Control.
1.1(d) "CODE" shall mean the Internal Revenue Code
of 1986, as amended.
1.1(e) "COMPANY" means The Tenere Group, Inc., a
Missouri corporation.
1.1(f) "EFFECTIVE DATE" shall mean May 6, 1996.
1.1(g) "EMPLOYMENT PERIOD" means the period
beginning on the Effective Date and ending on
the later of (i) May 6, 1999, or (ii) May 6
of any succeeding fiscal year during which
notice is given by either party (as described
in Section 1.1(j) of such party's intent not
to renew this Agreement.
1.1(h) "EXCHANGE ACT" means the Securities Exchange
Act of 1934, as amended.
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<PAGE> 4
1.1(i) "PERSON" means any "person" within the
meaning of Sections 13(d) and 14(d) of the
Exchange Act.
1.1(j) "TERM" means the period that begins on the
Effective Date and ends on the earlier of:
(i) the Date of Termination as defined in
Section 3.6, or (ii) the close of business on
the later of May 6, 1999 or May 6 of any
renewed term as set forth in Section 2.1 of
this Agreement.
1.2 GENDER AND NUMBER. When appropriate, pronouns in
this Agreement used in the masculine gender include the feminine gender, words
in the singular include the plural, and words in the plural include the
singular.
1.3 HEADINGS. All headings in this Agreement are
included solely for ease of reference and do not bear on the interpretation of
the text. Accordingly, as used in this Agreement, the terms "Article" and
"Section" mean the text that accompanies the specified Article or Section of
the Agreement.
1.4 APPLICABLE LAW. This Agreement shall be governed by
and construed in accordance with the laws of the state of Missouri, without
reference to its conflict of law principles.
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 PERIOD OF EMPLOYMENT. The Executive shall remain in
the employ of the Company throughout the Term of this Agreement in accordance
with the terms and provisions of this Agreement. This Agreement will
automatically renew for annual one-year periods unless either party gives the
other written notice, by February 1, 1999 or February 1 of any succeeding year,
of such party's intent not to renew this Agreement.
2.2 POSITIONS AND DUTIES.
2.2(a) Throughout the Term of this
Agreement, the Executive shall serve as Vice President -
Underwriting of the Company and shall have responsibility for
the overall supervision of the Company's underwriting
department and policy services, subject to the reasonable
direction of the Chief Executive Officer.
2.2(b) Throughout the Term of this
Agreement (but excluding any periods of vacation and sick
leave to which he is entitled), the Executive shall devote
reasonable attention and time during normal business hours to
the business and affairs of the Company and shall use his
reasonable best efforts to perform faithfully and efficiently
such responsibilities as are assigned to him under or in
accordance with this Agreement; provided that, it shall not be
a violation of this paragraph for the Executive to (i) serve
on corporate, civic or charitable boards or committees, (ii)
deliver lectures or fulfill speaking engagements, or (iii)
manage personal investments, so long as such activities do not
significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in
accordance with this Agreement or violate the Company's
conflict of interest policy as in effect immediately prior to
the Effective Date.
2.3 SITUS OF EMPLOYMENT. Throughout the Term of this
Agreement, the Executive's services shall be performed within 20 miles of the
location where the Executive was employed immediately prior to the Effective
Date.
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<PAGE> 5
2.4 COMPENSATION.
2.4(a) ANNUAL BASE SALARY. For the first
calendar year within the Term of this Agreement, the Executive
shall receive an annual base salary ("Annual Base Salary") of
One Hundred Twelve Thousand Nine Hundred Eighty Dollars
($112,980), which shall be paid in equal or substantially
equal bi-weekly installments. During the Term of this
Agreement, the Annual Base Salary payable to the Executive
shall be reviewed at least annually and may be increased
consistent with Company's compensation policies for similarly
situated executives.
2.4(b) INCENTIVE BONUSES. In addition to
Annual Base Salary, the Executive may be awarded an incentive
bonus ("Incentive Bonus") provided through any incentive
compensation plan which is generally available to other peer
executives of the Company.
2.4(c) INCENTIVE, SAVINGS AND RETIREMENT
PLANS. Throughout the Term of this Agreement, the Executive
shall be entitled to participate in all incentive, savings and
retirement plans generally available to other peer executives
of the Company.
2.4(d) WELFARE BENEFIT PLANS. Throughout
the Term of this Agreement (and thereafter, subject to Section
4.1(c) hereof), the Executive and/or the Executive's family,
as the case may be, shall be eligible for participation in and
shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and
programs) to the extent generally available to other peer
executives of the Company.
2.4(e) EXPENSES. Throughout the Term of
this Agreement, the Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the most favorable policies,
practices and procedures generally applicable to other peer
executives of the Company.
2.4(f) FRINGE BENEFITS. Throughout the
Term of this Agreement, the Executive shall be entitled to
such fringe benefits as generally are provided to other peer
executives of the Company.
2.4(g) OFFICE AND SUPPORT STAFF.
Throughout the Term of this Agreement, the Executive shall be
entitled to an office or offices of a size and with
furnishings and other appointments, and to personal
secretarial and other assistance.
2.4(h) VACATION. Throughout the Term of
this Agreement, the Executive shall be entitled to paid
vacation in accordance with the most favorable plans,
policies, programs and practices generally provided with
respect to other peer executives of the Company. Initially,
the Executive shall be entitled to three (3) weeks paid
vacation and such vacation time may not be decreased below
such level during the Term of this Agreement.
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<PAGE> 6
SECTION 3: TERMINATION OF EMPLOYMENT.
3.1 DEATH. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
3.2 DISABILITY. If the Company determines in good faith
that the Disability of the Executive has occurred during the Employment Period
(pursuant to the definition of Disability set forth below), it may give to the
Executive written notice in accordance with Section 7.1 of its intention to
terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the thirtieth (30th)
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the thirty (30) days after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall mean that the
Executive has been unable to perform the services required of the Executive
hereunder on a full-time basis for a period of one hundred eighty (180)
consecutive business days by reason of a physical and/or mental condition.
"Disability" shall be deemed to exist when certified by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be withheld
unreasonably). The Executive will submit to such medical or psychiatric
examinations and tests as such physician deems necessary to make any such
Disability determination.
3.3 TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment during the Employment Period for "Cause," which shall
mean termination based upon: (i) the Executive's willful and continued failure
to substantially perform his duties with the Company (other than as a result of
incapacity due to physical or mental condition), after a demand for substantial
performance is delivered to him by the Company, which specifically identifies
the manner in which the Executive has not substantially performed his duties,
(ii) the Executive's commission of an act constituting a criminal offense
involving moral turpitude, dishonesty, or breach of trust, or (iii) the
Executive's material breach of any provision of this Agreement. For purposes
of this Section, no act, or failure to act on the Executive's part shall be
considered "willful" unless done, or omitted to be done, without good faith and
without reasonable belief that the act or omission was in the best interest of
the Company. Notwithstanding the foregoing, the Executive shall not be deemed
to have been terminated for Cause unless and until (i) he receives a Notice of
Termination (as defined in Section 3.5) from the Company, (ii) he is given the
opportunity, with counsel, to be heard before the Board, and (iii) the Board
finds, in its good faith opinion, the Executive was guilty of the conduct set
forth in the Notice of Termination.
3.4 GOOD REASON. The Executive may terminate his
employment with the Company for "Good Reason," which shall mean termination
based upon:
(i) the assignment to the Executive of
any duties inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by Section 2.2(a) or any other action by the
Company which results in a material diminution in such
position, authority, duties or responsibilities, excluding for
this purpose any action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) (a) the failure by the Company to
continue in effect any benefit or compensation plan, stock
ownership plan, life insurance plan, health and accident plan
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<PAGE> 7
or disability plan to which the Executive is entitled as
specified in Section 2.4, (b) the taking of any action by the
Company which would adversely affect the Executive's
participation in, or materially reduce the Executive's
benefits under, any plans described in Section 2.4, or deprive
the Executive of any material fringe benefit enjoyed by the
Executive as described in Section 2.4(f), or (c) the failure
by the Company to provide the Executive with the number of
paid vacation days to which the Executive is entitled as
described in Section 2.4(h).
(iii) the Company's requiring the
Executive to be based at any office or location other than
that described in Section 2.3;
(iv) a material breach by the Company of
any provision of this Agreement;
(v) any purported termination by the
Company of the Executive's employment otherwise than as
expressly permitted by this Agreement;
(vi) within a period ending at the close
of business on the date two (2) years after the Change in
Control Date, if the Company has failed to comply with and
satisfy Section 6.2 on or after the Change in Control Date; or
(vii) within a period ending at the close
of business on the date two (2) years after the Change in
Control Date, if the Executive, in his sole and absolute
discretion, determines and notifies the Company in writing,
that he does not wish to continue his employment with the
Company.
For purposes of this Section any good faith determination of "Good Reason" made
by the Executive shall be conclusive.
3.5 NOTICE OF TERMINATION. Any termination by the
Company for Cause or Disability, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party, given in accordance
with Section 7.1. For purposes of this Agreement, a "Notice of Termination"
means a written notice which (i) indicates the specific termination provision
in this Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated, and
(iii) if the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date shall be not
more than fifteen (15) days after the giving of such notice). The failure by
the Executive or the Company to set forth in the Notice of Termination any fact
or circumstance which contributes to a showing of Good Reason or Cause shall
not waive any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in enforcing
the Executive's or the Company's rights hereunder.
3.6 DATE OF TERMINATION. "Date of Termination" means (i)
if the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the Date of Termination shall be the date of receipt
of the Notice of Termination or any later date specified herein, as the case
may be, (ii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the Executive
or the Disability Effective Date, as the case may be, or (iii) if the
Executive's employment is terminated by the Company other than for Cause,
death, or Disability, the Date of Termination shall be the date of receipt of
the Notice of Termination; provided that if within thirty (30) days after any
Notice of Termination is given, the party receiving such
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<PAGE> 8
Notice of Termination notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be the date on which the dispute
is finally determined, either by mutual written agreement of the parties, or by
a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been perfected).
SECTION 4: CERTAIN BENEFITS UPON TERMINATION.
4.1 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON PRIOR TO
A CHANGE IN CONTROL. If, prior to a Change in Control during the Employment
Period: (i) the Company shall terminate the Executive's employment without
Cause, or (ii) the Executive shall terminate employment with the Company for
Good Reason the Executive shall be entitled to the benefits provided below;
4.1(a) "Accrued Obligations": Within
thirty (30) days after the Date of Termination, the Company
shall pay to the Executive the sum of (1) the Executive's
Annual Base Salary through the Date of Termination to the
extent not previously paid, (2) any compensation previously
deferred by the Executive (together with any accrued interest
or earnings thereon) and (3) any accrued vacation pay; in each
case to the extent not previously paid.
In addition, on the date that Incentive Bonuses are
paid to other peer executives for the year in which the
Executive's employment is terminated, the Executive will be
paid an amount equal to the product of the Current Incentive
Bonus multiplied by a fraction, the numerator of which is the
number of days during the fiscal year for which the Incentive
Bonus is paid prior to the Date of Termination and denominator
of which is 365. For purposes of this Section the term
"Current Incentive Bonus" means the Incentive Bonus that would
have been paid to the Executive for the fiscal year in which
the termination of employment occurred, if the Executive's
employment had not been so terminated.
4.1(b) "Annual Base Salary Continuation":
For the remainder of the Employment Period, the Company shall
pay to the Executive, the Executive's then-current Annual Base
Salary as would have been paid to the Executive had the
Executive remained in the Company's employ throughout the
Employment Period; provided that in all cases the Executive
shall receive, at minimum, the then-current Annual Base Salary
for a period beginning on the Date of Termination and ending
one (1) year thereafter. The Company at any time may elect to
pay the balance of such payments then remaining in a lump sum,
in which case the total of such payments shall be discounted
to present value as determined according to Code Section
280G(d)(4).
4.1(c) "Welfare Benefit Continuation": For
the remainder of the Employment Period (but in no case less
than one (1) year after the Date of Termination), or such
longer period as any plan, program, practice or policy may
provide, the Company shall continue benefits to the Executive
and/or the Executive's family at least equal to those which
would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 2.4(d)
if the Executive's employment had not been terminated, in
accordance with the most favorable plans, practices, programs
or policies of the Company as those provided generally to
other peer executives and their families during the ninety
(90) day period immediately preceding the Effective Date or,
if more favorable to the Executive, as those provided
generally at any time after the Effective Date to other peer
executives of the Company and their families; provided,
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<PAGE> 9
however, that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare
benefits under another employer-provided plan, the medical and
other welfare benefits described herein shall be secondary to
those provided under such other plan during such applicable
period of eligibility. For purposes of determining
eligibility of the Executive for retiree benefits pursuant to
such plans, practices, programs and policies, the Executive
shall be considered to have remained employed until the later
of the end of the Employment Period or one (1) year after the
Date of Termination and to have retired on the last day of
such period.
4.1(d) "Other Benefits": To the extent not
previously paid or provided, the Company shall timely pay or
provide to the Executive and/or the Executive's family any
other amounts or benefits required to be paid or provided for
which the Executive and/or the Executive's family is eligible
to receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the
Company as those provided generally to other peer executives
and their families during the ninety (90) day period
immediately preceding the Effective Date or, if more favorable
to the Executive, as those provided generally after the
Effective Date to other peer executives of the Company and
their families.
The Executive shall not be required to mitigate the amount of
any payment provided for in this Section by seeking other
employment or otherwise, nor shall the amount of any payment
provided for, in this Section, be reduced by any compensation
earned by the Executive as the result of employment by another
employer after the Date of Termination, or otherwise.
4.2 BENEFITS UPON TERMINATION AFTER A CHANGE IN
CONTROL. If Change in Control occurs during the Employment Period and within
two (2) years after a Change in Control: (i) the Company shall terminate the
Executive's employment without Cause, or (ii) the Executive shall terminate
employment with the Company for Good Reason, then the Executive shall be
entitled to the benefits provided below:
4.2(a) "Accrued Obligations": Within thirty (30)
days after the Date of Termination, the Company shall pay to
the Executive the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the extent not
previously paid, (2) any compensation previously deferred by
the Executive (together with any accrued interest or earnings
thereon) and (3) any accrued vacation pay; in each case to the
extent not previously paid.
In addition, on the date that Incentive Bonuses are
paid to other peer executives for the year in which the
Executive's employment is terminated, the Executive will be
paid an amount equal to the product of the Current Incentive
Bonus multiplied by a fraction, the numerator of which is the
number of days during the fiscal year for which the Incentive
Bonus is paid prior to the Date of Termination and denominator
of which is 365. For purposes of this Section the term
"Current Incentive Bonus" means the Incentive Bonus that would
have been paid to the Executive for the fiscal year in which
the termination of employment occurred, if the Executive's
employment had not been so terminated.
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<PAGE> 10
4.2(b) "Severance Amount": Within thirty
(30) days after the Date of Termination, the Company shall pay
to the Executive as severance pay in a lump sum, in cash, an
amount equal to 2.99 times his then-current Annual Base
Salary.
4.2(c) "Stock Options": To the extent not
otherwise provided for under the terms of the Company's stock
option plan or the Executive's stock option agreement, all
such stock options shall become fully exercisable as of the
Date of Termination and, except for "incentive stock options"
within the meaning of Code Section 422 granted prior to the
date hereof, shall remain fully exercisable for six months
following the Date of Termination.
4.2(d) "Other Benefits": To the extent not
previously paid or provided, the Company shall timely pay or
provide to the Executive and/or the Executive's family any
other amounts or benefits required to be paid or provided for
which the Executive and/or the Executive's family is eligible
to receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the
Company as those provided generally to other peer executives
and their families during the ninety (90) day period
immediately preceding the Effective Date or, if more favorable
to the Executive, as those provided generally after the
Effective Date to other peer executives of the Company and
their families.
4.2(e) "Excess Parachute Payment":
Anything in this Agreement to the contrary notwithstanding, in
the event that an independent accountant shall determine that
any payment or distribution by the Company to or for the
benefit of Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or
otherwise) (a "Payment") would be nondeductible by the Company
for Federal income tax purposes because of Code Section 280G
or would constitute an "excess parachute payment" (as defined
in Code Section 280G), then the aggregate present value of
amounts payable or distributable to or for the benefit of
Executive pursuant to this Agreement (such payments or
distributions pursuant to this Agreement are hereinafter
referred to as "Agreement Payments") shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this
paragraph, the "Reduced Amount" shall be an amount expressed
in present value which maximizes the aggregate present value
of Agreement Payments without causing any Payment to be
nondeductible by the Company because of Code Section 280G or
without causing any portion of the Payment to be subject to
the excise tax imposed by Code Section 4999.
If the independent accountant determines that any Payment
would be nondeductible by the Company because of Code Section
280G or that any portion of the Payment will be subject to the
excise tax imposed by Code Section 4999, the Company shall
promptly give Executive notice to that effect and a copy of
the detailed calculation thereof and of the Reduced Amount.
The Executive may then elect, in his sole discretion, which
and how much of the Agreement Payments shall be eliminated or
reduced (as long as after such election the aggregate present
value of the Agreement Payments equals the Reduced Amount),
and shall advise the Company in writing of his election within
ten (10) days of his receipt of such notice. If no such
election is made by Executive within such ten-day period, the
Company may elect which and how much of the Agreement Payments
shall be eliminated or reduced (as long as after such election
the aggregate present value of the Agreement Payments equals
the Reduced Amount) and shall notify the Executive promptly of
such election. For purposes of this paragraph, present value
shall be
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<PAGE> 11
determined in accordance with Code Section 280G(d)(4). All
determinations made by the independent accountant under this
Section shall be binding upon the Company and the Executive
and shall be made within sixty (60) days of a termination of
employment of the Executive. As promptly as practicable
following such determination and the elections hereunder, the
Company shall pay to or distribute to or for the benefit of
the Executive such amounts as are then due to the Executive
under this Agreement and shall promptly pay to or distribute
for the benefit of the Executive in the future such amounts as
become due to the Executive under this Agreement.
As a result of the uncertainty in the application of Code
Sections 280G and 4999 at the time of the initial
determination by the independent accountant hereunder, it is
possible that Agreement Payments will be made by the Company
which should not have been made ("Overpayment") or that
additional Agreement Payments which have not been made by the
Company should have been made ("Underpayment"), in each case,
consistent with the calculation of the Reduced Amount
hereunder. In the event that the independent accountant,
based upon the assertion of a deficiency by the Internal
Revenue Service against the Company or the Executive which the
independent accountant believes has a high probability of
success, determines that an Overpayment has been made, any
such Overpayment shall be treated for all purposes as a loan
to the Executive which the Executive shall repay to the
Company together with interest at the applicable Federal rate
provided for in Code Section 7872(f)(2); provided, however,
that no amount shall be payable by the Executive to the
Company if and to the extent such payment would not reduce the
amount which is subject to taxation under Code Section 4999 or
if the period of limitations for assessment of tax under Code
Section 4999 against the Executive shall have expired. In the
event that the independent accountant, based upon controlling
precedent, determines that an Underpayment has occurred, any
such Underpayment shall be promptly paid by the Company to or
for the benefit of the Executive together with interest at the
applicable Federal rate provided for in Code Section
7872(f)(2)(A).
4.3 DEATH. If the Executive's employment is terminated
by reason of the Executive's death during the Employment Period (either prior
or subsequent to a Change in Control), this Agreement shall terminate without
further obligations to the Executive's legal representatives under this
Agreement, other than for (i) payment of Accrued Obligations (as defined in
Section 4.1(a)) (which shall be paid to the Executive's estate or beneficiary,
as applicable, in a lump sum in cash within thirty (30) days of the Date of
Termination) and (ii) the timely payment or provision of Other Benefits (as
defined in Section 4.1(d)), including death benefits pursuant to the terms of
any plan, policy, or arrangement of the Company.
4.4 DISABILITY. If the Executive's employment is
terminated by reason of the Executive's Disability during the Employment Period
(either prior or subsequent to a Change in Control), this Agreement shall
terminate without further obligations to the Executive, other than for (i)
payment of Accrued Obligations (as defined in Section 4.1(a)) (which shall be
paid to the Executive in a lump sum in cash within thirty (30) days of the Date
of Termination) and (ii) the timely payment or provision of Other Benefits (as
defined in Section 4.1(d)) including disability benefits pursuant to the terms
of any plan, policy or arrangement of the Company.
4.5 TERMINATION FOR CAUSE; OTHER THAN GOOD REASON. If
the Executive's employment shall be terminated for Cause during the Employment
Period (either prior to or subsequent to a Change in Control), this Agreement
shall terminate without further obligations to the Executive other than the
obligation to pay to the Executive his Accrued Compensation (as defined in this
Section). If the
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<PAGE> 12
Executive terminates employment with the Company during the Employment Period,
(excluding a termination for Good Reason), this Agreement shall terminate
without further obligations to the Executive, other than for the payment of
Accrued Compensation (as defined in this Section) and the timely payment or
provision of Other Benefits (as defined in Section 4.1(d)). In such case, all
Accrued Compensation shall be paid to the Executive in a lump sum in cash
within thirty (30) days of the Date of Termination.
For purposes of this Section the term "Accrued Compensation"
means the sum of (i) the Executive's Annual Base Salary through the Date of
Termination to the extent not previously paid, (ii) any compensation previously
deferred by the Executive (together with any accrued interest or earnings
thereon), and (iii) any accrued vacation pay in each case to the extent not
previously paid.
4.6 NON-EXCLUSIVITY OF RIGHTS. Except as provided in
Sections 4.1(c) nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company and for which the Executive may qualify, nor
shall anything herein limit or otherwise affect such rights as the Executive
may have under any contract or agreement with the Company. Amounts which are
vested benefits of which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of, or any contract or agreement with,
the Company at or subsequent to the Date of Termination, shall be payable in
accordance with such plan, policy, practice or program or contract or agreement
except as explicitly modified by this Agreement.
4.7 FULL SETTLEMENT. The Company's obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Executive or others. In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and, except as provided in Sections 4.1(c), such amounts shall not be reduced
whether or not the Executive obtains other employment. The Company agrees to
pay promptly as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonable incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive regarding the amount of any payment
pursuant to this Agreement), plus in each case interest on any delayed payment
at the applicable Federal rate provided for in Code Section 7872(f)(2)(A).
4.8 RESOLUTION OF DISPUTES. If there shall be any
dispute between the Company and the Executive (i) in the event of any
termination of the Executive's employment by the Company, whether such
termination was for Cause, or (ii) in the event of any termination of
employment by the Executive, whether Good Reason existed, then, unless and
until there is a final, nonappealable judgment by a court of competent
jurisdiction declaring that such termination was for Cause or that the
determination by the Executive of the existence of Good Reason was not made in
good faith, the Company shall pay all amounts, and provide all benefits, to the
Executive and/or the Executive's family or other beneficiaries, as the case may
be, that the Company would be required to pay or provide pursuant to Section
4.1 or 4.2 as though such termination were by the Company without Cause or by
the Executive with Good Reason; provided, however, that the Company shall not
be required to pay any disputed amounts pursuant to this Section except upon
receipt of an undertaking by or on behalf of the Executive to repay all such
amounts to which the Executive is ultimately adjudged by such court not to be
entitled.
SECTION 5: NON-COMPETITION.
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<PAGE> 13
5.1 NON-COMPETE AGREEMENT.
5.1(a) It is agreed that during the period
beginning on the date the Term of this Agreement expires and
ending two (2) years thereafter, the Executive shall not,
without prior written approval of the Board, become an
officer, employee, agent, partner, or director of any business
enterprise in substantial direct competition (as defined in
Section 5.1(b)) with the Company; provided that, the Executive
shall not be subject to the restrictions of this Section if
(i) the Executive is terminated by the Company without Cause,
(ii) the Executive terminates his employment for Good Reason,
or (iii) the Term of this Agreement expires after delivery by
the Company of written notice of the Company's intent not to
renew this Agreement pursuant to Section 2.1.
5.1(b) For purposes of Section 5.1, a
business enterprise with which the Executive becomes
associated as an officer, employee, agent, partner, or
director shall be considered in substantial direct
competition, if such entity competes with the Company in any
business in which the Company is engaged and is within in the
Company's market area (as defined herein) as of the date the
Term of this Agreement expires. The Company's market area is
defined for this purpose, as the States of Missouri, Illinois
and Kansas.
5.1(c) The above constraint shall not
prevent the Executive from making passive investments, not to
exceed five percent (5%), in any enterprise.
5.2 CONFIDENTIAL INFORMATION. The Executive shall hold
in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any of
its affiliated companies, and their respective businesses, which shall have
been obtained by the Executive during the Executive's employment by the Company
and which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company, or as may
otherwise be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
SECTION 6: SUCCESSORS.
6.1 SUCCESSORS OF EXECUTIVE. This Agreement is personal
to the Executive and, without the prior written consent of the Company, the
rights (but not the obligations) shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
6.2 SUCCESSORS OF COMPANY. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle the Executive to terminate the Agreement at
his option on or after the Change in Control Date for Good Reason. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and
any successor to its
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<PAGE> 14
business and/or assets which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
SECTION 7: MISCELLANEOUS.
7.1 NOTICE. For purposes of this Agreement, notices and
all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by certified
or registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses as set forth below; provided that all notices to the
Company shall be directed to the attention of the President, or to such other
address as one party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.
Notice to Executive:
Andrew C. Fischer
3049 S. Arcadia
Springfield, Missouri 65804
Notice to Company:
The Tenere Group, Inc.
903 East Battlefield
Springfield, Missouri 65804
7.2 VALIDITY. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
7.3 WITHHOLDING. The Company may withhold from
any amounts payable under this Agreement such Federal, state or local taxes as
shall be required to be withheld pursuant to any applicable law or regulation.
7.4 WAIVER. The Executive's or the Company's
failure to insist upon strict compliance with any provision hereof or any other
provision of this Agreement or the failure to assert any right the Executive or
the Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 3.4 shall
not be deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
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<PAGE> 15
IN WITNESS WHEREOF, the Executive and, the Company, pursuant
to the authorization from its Board, have caused this Agreement to be executed
in its name on its behalf, all as of the day and year first above written.
EXECUTIVE
_______________________
Andrew C. Fischer
THE TENERE GROUP, INC.
By____________________________
Name:_________________________
Title:________________________
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<PAGE> 1
EXHIBIT 10.17
THE TENERE GROUP, INC.
EMPLOYMENT AGREEMENT
This agreement ("Agreement") has been entered into as of this
6th day of May, 1996, by and between The Tenere Group, Inc., a Missouri
corporation ("Company"), and Clifton R. Stepp, an individual ("Executive").
RECITALS
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to reinforce and encourage the continued attention and dedication of the
Executive to the Company as a member of the Company's management and to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change in Control
(as defined below) of the Company. The Board desires to provide for the
continued employment of the Executive, and the Executive is willing to commit
himself to continue to serve the Company. Additionally, the Board believes it
is imperative to diminish the inevitable distraction of the Executive by virtue
of the personal uncertainties and risks created by a pending or threatened
Change in Control and to encourage the Executive's full attention and
dedication to the Company currently and in the event of any threatened or
pending Change in Control, and to provide the Executive with compensation and
benefits arrangements upon the breach of this Agreement by the Company or upon
a termination of employment after Change in Control which ensure that the
compensation and benefits expectations of the Executive will be satisfied and
which are competitive with those of other corporations. Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into
this Agreement.
IT IS AGREED AS FOLLOWS:
SECTION 1: DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. For purposes of this Agreement, the
following words and phrases, whether or not capitalized, shall have the
meanings specified below, unless the context plainly requires a different
meaning.
1.1(a) "BOARD" means the Board of Directors of the
Company.
1.1(b) "CHANGE IN CONTROL" means:
(i) The acquisition by any
individual, entity or group, or (within the
meaning of Section 13(d)(3) or 14(d)(2), the
Exchange Act), a Person of beneficial
ownership of twenty percent (20%) or more of
either (a) the then outstanding shares of
common stock of the Company (the "Outstanding
Company Common Stock") or (b) the combined
voting power of the then outstanding voting
securities of the Company entitled to vote
generally in the election of directors (the
"Outstanding Company Voting Securities");
provided, however, that the following
acquisitions shall not constitute a Change in
Control: (a) any acquisition directly from
the Company (excluding an acquisition by
virtue of the exercise of a conversion
privilege), (b) any acquisition by the
Company, (c) any acquisition by any employee
benefit plan (or related trust) sponsored or
<PAGE> 2
maintained by the Company or any corporation
controlled by the Company or (d) any
acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if,
following such reorganization, merger or
consolidation, the conditions described in
clauses (a), (b) and (c) of subsection (iii)
of this Section are satisfied; or
(ii) Individuals who, as of
the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to
constitute at least a majority of the Board;
provided, however, that any individual
becoming a director subsequent to the date
hereof whose election, or nomination for
election by the Company's shareholders, was
approved by a vote of at least a majority of
the directors then comprising the Incumbent
Board shall be considered as though such
individual were a member of the Incumbent
Board, but excluding, as a member of the
Incumbent Board, any such individual whose
initial assumption of office occurs as a
result of either an actual or threatened
election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or
threatened solicitation of proxies or
consents by or on behalf of a Person other
than the Board; or
(iii) Approval by the
shareholders of the Company of a
reorganization, merger or consolidation, in
each case, unless, following such
reorganization, merger or consolidation, (a)
more than fifty percent (50%) of,
respectively, the then outstanding shares of
common stock of the corporation resulting
from such reorganization, merger or
consolidation and the combined voting power
of the then outstanding voting securities of
such corporation entitled to vote generally
in the election of directors is then
beneficially owned, directly or indirectly,
by all or substantially all of the
individuals and entities who were the
beneficial owners, respectively, of the
Outstanding Company Common Stock and
Outstanding Company Voting Securities
immediately prior to such reorganization,
merger or consolidation in substantially the
same proportions as their ownership,
immediately prior to such reorganization,
merger or consolidation, of the Outstanding
Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (b) no
Person (excluding the Company, any employee
benefit plan (or related trust) of the
Company or such corporation resulting from
such reorganization, merger or consolidation
and any Person beneficially owning,
immediately prior to such reorganization,
merger or consolidation, directly or
indirectly, twenty percent (20%) or more of
the Outstanding Company Common Stock or
Outstanding Voting Securities, as the case
may be) beneficially owns, directly or
indirectly, twenty percent (20%) or more of,
respectively, the then outstanding shares of
common stock of the corporation resulting
from such reorganization, merger or
consolidation or the combined voting power of
the then outstanding voting securities of
such corporation, entitled to vote generally
in the election of directors and (c) at least
a majority of the members of the board of
directors of the corporation resulting from
such reorganization, merger or consolidation
were members of the Incumbent
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<PAGE> 3
Board at the time of the execution of the
initial agreement providing for such
reorganization, merger or consolidation; or
(iv) Approval by the
shareholders of the Company of (a) a complete
liquidation or dissolution of the Company or
(b) the sale or other disposition of all or
substantially all of the assets of the
Company, other than to a corporation, with
respect to which following such sale or other
disposition, (1) more than fifty percent
(50%) of, respectively, the then outstanding
shares of common stock of such corporation
and the combined voting power of the then
outstanding voting securities of such
corporation entitled to vote generally in the
election of directors is then beneficially
owned, directly or indirectly, by all or
substantially all of the individuals and
entities who were the beneficial owners,
respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or
other disposition in substantially the same
proportion as their ownership, immediately
prior to such sale or other disposition, of
the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the
case may be, (2) no Person (excluding the
Company and any employee benefit plan (or
related trust) of the Company or such
corporation and any Person beneficially
owning, immediately prior to such sale or
other disposition, directly or indirectly,
twenty percent (20%) or more of the
Outstanding Company Common Stock or
Outstanding Company Voting Securities, as the
case may be) beneficially owns, directly or
indirectly, twenty percent (20%) or more of,
respectively, the then outstanding shares of
common stock of such corporation and the
combined voting power of the then outstanding
voting securities of such corporation
entitled to vote generally in the election of
directors and (3) at least a majority of the
members of the board of directors of such
corporation were members of the Incumbent
Board at the time of the execution of the
initial agreement or action of the Board
providing for such sale or other disposition
of assets of the Company.
1.1(c) "CHANGE IN CONTROL DATE" shall mean the
date of the Change in Control.
1.1(d) "CODE" shall mean the Internal Revenue Code
of 1986, as amended.
1.1(e) "COMPANY" means The Tenere Group, Inc., a
Missouri corporation.
1.1(f) "EFFECTIVE DATE" shall mean May 6, 1996.
1.1(g) "EMPLOYMENT PERIOD" means the period
beginning on the Effective Date and ending on
the later of (i) May 6, 1999, or (ii) May 6
of any succeeding fiscal year during which
notice is given by either party (as described
in Section 1.1(j)) of such party's intent not
to renew this Agreement.
1.1(h) "EXCHANGE ACT" means the Securities Exchange
Act of 1934, as amended.
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<PAGE> 4
1.1(i) "PERSON" means any "person" within the
meaning of Sections 13(d) and 14(d) of the
Exchange Act.
1.1(j) "TERM" means the period that begins on the
Effective Date and ends on the earlier of:
(i) the Date of Termination as defined in
Section 3.6, or (ii) the close of business on
the later of May 6, 1999 or May 6 of any
renewed term as set forth in Section 2.1 of
this Agreement.
1.2 GENDER AND NUMBER. When appropriate, pronouns in
this Agreement used in the masculine gender include the feminine gender, words
in the singular include the plural, and words in the plural include the
singular.
1.3 HEADINGS. All headings in this Agreement are
included solely for ease of reference and do not bear on the interpretation of
the text. Accordingly, as used in this Agreement, the terms "Article" and
"Section" mean the text that accompanies the specified Article or Section of
the Agreement.
1.4 APPLICABLE LAW. This Agreement shall be governed by
and construed in accordance with the laws of the state of Missouri, without
reference to its conflict of law principles.
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 PERIOD OF EMPLOYMENT. The Executive shall remain in
the employ of the Company throughout the Term of this Agreement in accordance
with the terms and provisions of this Agreement. This Agreement will
automatically renew for annual one-year periods unless either party gives the
other written notice, by February 1, 1999 or February 1 of any succeeding year,
of such party's intent not to renew this Agreement.
2.2 POSITIONS AND DUTIES.
2.2(a) Throughout the Term of this
Agreement, the Executive shall serve as Vice President -
Marketing of the Company and shall have responsibility for the
overall supervision of the Company's marketing department,
subject to the reasonable direction of the Chief Executive
Officer.
2.2(b) Throughout the Term of this
Agreement (but excluding any periods of vacation and sick
leave to which he is entitled), the Executive shall devote
reasonable attention and time during normal business hours to
the business and affairs of the Company and shall use his
reasonable best efforts to perform faithfully and efficiently
such responsibilities as are assigned to him under or in
accordance with this Agreement; provided that, it shall not be
a violation of this paragraph for the Executive to (i) serve
on corporate, civic or charitable boards or committees, (ii)
deliver lectures or fulfill speaking engagements, or (iii)
manage personal investments, so long as such activities do not
significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in
accordance with this Agreement or violate the Company's
conflict of interest policy as in effect immediately prior to
the Effective Date.
2.3 SITUS OF EMPLOYMENT. Throughout the Term of this
Agreement, the Executive's services shall be performed within 20 miles of the
location where the Executive was employed immediately prior to the Effective
Date.
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2.4 COMPENSATION.
2.4(a) ANNUAL BASE SALARY. For the first
calendar year within the Term of this Agreement, the Executive
shall receive an annual base salary ("Annual Base Salary") of
One Hundred Twelve Thousand Nine Hundred Eighty Dollars
($112,980), which shall be paid in equal or substantially
equal bi-weekly installments. During the Term of this
Agreement, the Annual Base Salary payable to the Executive
shall be reviewed at least annually and may be increased
consistent with Company's compensation policies for similarly
situated executives.
2.4(b) INCENTIVE BONUSES. In addition to
Annual Base Salary, the Executive may be awarded an incentive
bonus ("Incentive Bonus") provided through any incentive
compensation plan which is generally available to other peer
executives of the Company.
2.4(c) INCENTIVE, SAVINGS AND RETIREMENT
PLANS. Throughout the Term of this Agreement, the Executive
shall be entitled to participate in all incentive, savings and
retirement plans generally available to other peer executives
of the Company.
2.4(d) WELFARE BENEFIT PLANS. Throughout
the Term of this Agreement (and thereafter, subject to Section
4.1(c) hereof), the Executive and/or the Executive's family,
as the case may be, shall be eligible for participation in and
shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and
programs) to the extent generally available to other peer
executives of the Company.
2.4(e) EXPENSES. Throughout the Term of
this Agreement, the Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the most favorable policies,
practices and procedures generally applicable to other peer
executives of the Company.
2.4(f) FRINGE BENEFITS. Throughout the
Term of this Agreement, the Executive shall be entitled to
such fringe benefits as generally are provided to other peer
executives of the Company.
OFFICE AND SUPPORT STAFF. Throughout the
Term of this Agreement, the Executive shall be entitled to an
office or offices of a size and with furnishings and other
appointments, and to personal secretarial and other
assistance.
2.4(h) VACATION. Throughout the Term of
this Agreement, the Executive shall be entitled to paid
vacation in accordance with the most favorable plans,
policies, programs and practices generally provided with
respect to other peer executives of the Company. Initially,
the Executive shall be entitled to three (3) weeks paid
vacation and such vacation time may not be decreased below
such level during the Term of this Agreement.
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SECTION 3: TERMINATION OF EMPLOYMENT.
3.1 DEATH. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
3.2 DISABILITY. If the Company determines in good faith
that the Disability of the Executive has occurred during the Employment Period
(pursuant to the definition of Disability set forth below), it may give to the
Executive written notice in accordance with Section 7.1 of its intention to
terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the thirtieth (30th)
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the thirty (30) days after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall mean that the
Executive has been unable to perform the services required of the Executive
hereunder on a full-time basis for a period of one hundred eighty (180)
consecutive business days by reason of a physical and/or mental condition.
"Disability" shall be deemed to exist when certified by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be withheld
unreasonably). The Executive will submit to such medical or psychiatric
examinations and tests as such physician deems necessary to make any such
Disability determination.
3.3 TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment during the Employment Period for "Cause," which shall
mean termination based upon: (i) the Executive's willful and continued failure
to substantially perform his duties with the Company (other than as a result of
incapacity due to physical or mental condition), after a demand for substantial
performance is delivered to him by the Company, which specifically identifies
the manner in which the Executive has not substantially performed his duties,
(ii) the Executive's commission of an act constituting a criminal offense
involving moral turpitude, dishonesty, or breach of trust, or (iii) the
Executive's material breach of any provision of this Agreement. For purposes
of this Section, no act, or failure to act on the Executive's part shall be
considered "willful" unless done, or omitted to be done, without good faith and
without reasonable belief that the act or omission was in the best interest of
the Company. Notwithstanding the foregoing, the Executive shall not be deemed
to have been terminated for Cause unless and until (i) he receives a Notice of
Termination (as defined in Section 3.5) from the Company, (ii) he is given the
opportunity, with counsel, to be heard before the Board, and (iii) the Board
finds, in its good faith opinion, the Executive was guilty of the conduct set
forth in the Notice of Termination.
3.4 GOOD REASON. The Executive may terminate his
employment with the Company for "Good Reason," which shall mean termination
based upon:
(i) the assignment to the Executive of
any duties inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by Section 2.2(a) or any other action by the
Company which results in a material diminution in such
position, authority, duties or responsibilities, excluding for
this purpose any action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) (a) the failure by the Company to
continue in effect any benefit or compensation plan, stock
ownership plan, life insurance plan, health and accident plan
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<PAGE> 7
or disability plan to which the Executive is entitled as
specified in Section 2.4, (b) the taking of any action by the
Company which would adversely affect the Executive's
participation in, or materially reduce the Executive's
benefits under, any plans described in Section 2.4, or deprive
the Executive of any material fringe benefit enjoyed by the
Executive as described in Section 2.4(f), or (c) the failure
by the Company to provide the Executive with the number of
paid vacation days to which the Executive is entitled as
described in Section 2.4(h).
(iii) the Company's requiring the
Executive to be based at any office or location other than
that described in Section 2.3;
(iv) a material breach by the Company of any
provision of this Agreement;
(v) any purported termination by the
Company of the Executive's employment otherwise than as
expressly permitted by this Agreement;
(vi) within a period ending at the close
of business on the date two (2) years after the Change in
Control Date, if the Company has failed to comply with and
satisfy Section 6.2 on or after the Change in Control Date; or
(vii) within a period ending at the close
of business on the date two (2) years after the Change in
Control Date, if the Executive, in his sole and absolute
discretion, determines and notifies the Company in writing,
that he does not wish to continue his employment with the
Company.
For purposes of this Section any good faith determination of "Good Reason" made
by the Executive shall be conclusive.
3.5 NOTICE OF TERMINATION. Any termination by the
Company for Cause or Disability, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party, given in accordance
with Section 7.1. For purposes of this Agreement, a "Notice of Termination"
means a written notice which (i) indicates the specific termination provision
in this Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated, and
(iii) if the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date shall be not
more than fifteen (15) days after the giving of such notice). The failure by
the Executive or the Company to set forth in the Notice of Termination any fact
or circumstance which contributes to a showing of Good Reason or Cause shall
not waive any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in enforcing
the Executive's or the Company's rights hereunder.
3.6 DATE OF TERMINATION. "Date of Termination" means (i)
if the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the Date of Termination shall be the date of receipt
of the Notice of Termination or any later date specified herein, as the case
may be, (ii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the Executive
or the Disability Effective Date, as the case may be, or (iii) if the
Executive's employment is terminated by the Company other than for Cause,
death, or Disability, the Date of Termination shall be the date of receipt of
the Notice of Termination; provided that if within thirty (30) days after any
Notice of Termination is given, the party receiving such
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<PAGE> 8
Notice of Termination notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be the date on which the dispute
is finally determined, either by mutual written agreement of the parties, or by
a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been perfected).
SECTION 4: CERTAIN BENEFITS UPON TERMINATION.
4.1 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON PRIOR TO
A CHANGE IN CONTROL. If, prior to a Change in Control during the Employment
Period: (i) the Company shall terminate the Executive's employment without
Cause, or (ii) the Executive shall terminate employment with the Company for
Good Reason the Executive shall be entitled to the benefits provided below;
4.1(a) "Accrued Obligations": Within
thirty (30) days after the Date of Termination, the Company
shall pay to the Executive the sum of (1) the Executive's
Annual Base Salary through the Date of Termination to the
extent not previously paid, (2) any compensation previously
deferred by the Executive (together with any accrued interest
or earnings thereon) and (3) any accrued vacation pay; in each
case to the extent not previously paid.
In addition, on the date that Incentive Bonuses are
paid to other peer executives for the year in which the
Executive's employment is terminated, the Executive will be
paid an amount equal to the product of the Current Incentive
Bonus multiplied by a fraction, the numerator of which is the
number of days during the fiscal year for which the Incentive
Bonus is paid prior to the Date of Termination and denominator
of which is 365. For purposes of this Section the term
"Current Incentive Bonus" means the Incentive Bonus that would
have been paid to the Executive for the fiscal year in which
the termination of employment occurred, if the Executive's
employment had not been so terminated.
4.1(b) "Annual Base Salary Continuation":
For the remainder of the Employment Period, the Company shall
pay to the Executive, the Executive's then-current Annual Base
Salary as would have been paid to the Executive had the
Executive remained in the Company's employ throughout the
Employment Period; provided that in all cases the Executive
shall receive, at minimum, the then-current Annual Base Salary
for a period beginning on the Date of Termination and ending
one (1) year thereafter. The Company at any time may elect to
pay the balance of such payments then remaining in a lump sum,
in which case the total of such payments shall be discounted
to present value as determined according to Code Section
280G(d)(4).
4.1(c) "Welfare Benefit Continuation": For
the remainder of the Employment Period (but in no case less
than one (1) year after the Date of Termination), or such
longer period as any plan, program, practice or policy may
provide, the Company shall continue benefits to the Executive
and/or the Executive's family at least equal to those which
would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 2.4(d)
if the Executive's employment had not been terminated, in
accordance with the most favorable plans, practices, programs
or policies of the Company as those provided generally to
other peer executives and their families during the ninety
(90) day period immediately preceding the Effective Date or,
if more favorable to the Executive, as those provided
generally at any time after the Effective Date to other peer
executives of the Company and their families; provided,
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<PAGE> 9
however, that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare
benefits under another employer-provided plan, the medical and
other welfare benefits described herein shall be secondary to
those provided under such other plan during such applicable
period of eligibility. For purposes of determining
eligibility of the Executive for retiree benefits pursuant to
such plans, practices, programs and policies, the Executive
shall be considered to have remained employed until the later
of the end of the Employment Period or one (1) year after the
Date of Termination and to have retired on the last day of
such period.
4.1(d) "Other Benefits": To the extent not
previously paid or provided, the Company shall timely pay or
provide to the Executive and/or the Executive's family any
other amounts or benefits required to be paid or provided for
which the Executive and/or the Executive's family is eligible
to receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the
Company as those provided generally to other peer executives
and their families during the ninety (90) day period
immediately preceding the Effective Date or, if more favorable
to the Executive, as those provided generally after the
Effective Date to other peer executives of the Company and
their families.
The Executive shall not be required to mitigate the amount of
any payment provided for in this Section by seeking other
employment or otherwise, nor shall the amount of any payment
provided for, in this Section, be reduced by any compensation
earned by the Executive as the result of employment by another
employer after the Date of Termination, or otherwise.
4.2 BENEFITS UPON TERMINATION AFTER A CHANGE IN CONTROL.
If Change in Control occurs during the Employment Period and within two (2)
years after a Change in Control: (i) the Company shall terminate the
Executive's employment without Cause, or (ii) the Executive shall terminate
employment with the Company for Good Reason, then the Executive shall be
entitled to the benefits provided below:
4.2(a) "Accrued Obligations": Within thirty
(30) days after the Date of Termination, the Company shall
pay to the Executive the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the extent not
previously paid, (2) any compensation previously deferred by
the Executive (together with any accrued interest or earnings
thereon) and (3) any accrued vacation pay; in each case to the
extent not previously paid.
In addition, on the date that Incentive Bonuses are
paid to other peer executives for the year in which the
Executive's employment is terminated, the Executive will be
paid an amount equal to the product of the Current Incentive
Bonus multiplied by a fraction, the numerator of which is the
number of days during the fiscal year for which the Incentive
Bonus is paid prior to the Date of Termination and denominator
of which is 365. For purposes of this Section the term
"Current Incentive Bonus" means the Incentive Bonus that would
have been paid to the Executive for the fiscal year in which
the termination of employment occurred, if the Executive's
employment had not been so terminated.
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<PAGE> 10
4.2(b) "Severance Amount": Within thirty
(30) days after the Date of Termination, the Company shall pay
to the Executive as severance pay in a lump sum, in cash, an
amount equal to 2.99 times his then-current Annual Base
Salary.
4.2(c) "Stock Options": To the extent not
otherwise provided for under the terms of the Company's stock
option plan or the Executive's stock option agreement, all
such stock options shall become fully exercisable as of the
Date of Termination and, except for "incentive stock options"
within the meaning of Code Section 422 granted prior to the
date hereof, shall remain fully exercisable for six months
following the Date of Termination.
4.2(d) "Other Benefits": To the extent not
previously paid or provided, the Company shall timely pay or
provide to the Executive and/or the Executive's family any
other amounts or benefits required to be paid or provided for
which the Executive and/or the Executive's family is eligible
to receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the
Company as those provided generally to other peer executives
and their families during the ninety (90) day period
immediately preceding the Effective Date or, if more favorable
to the Executive, as those provided generally after the
Effective Date to other peer executives of the Company and
their families.
4.2(e) "Excess Parachute Payment":
Anything in this Agreement to the contrary notwithstanding, in
the event that an independent accountant shall determine that
any payment or distribution by the Company to or for the
benefit of Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or
otherwise) (a "Payment") would be nondeductible by the Company
for Federal income tax purposes because of Code Section 280G
or would constitute an "excess parachute payment" (as defined
in Code Section 280G), then the aggregate present value of
amounts payable or distributable to or for the benefit of
Executive pursuant to this Agreement (such payments or
distributions pursuant to this Agreement are hereinafter
referred to as "Agreement Payments") shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this
paragraph, the "Reduced Amount" shall be an amount expressed
in present value which maximizes the aggregate present value
of Agreement Payments without causing any Payment to be
nondeductible by the Company because of Code Section 280G or
without causing any portion of the Payment to be subject to
the excise tax imposed by Code Section 4999.
If the independent accountant determines that any Payment
would be nondeductible by the Company because of Code Section
280G or that any portion of the Payment will be subject to the
excise tax imposed by Code Section 4999, the Company shall
promptly give Executive notice to that effect and a copy of
the detailed calculation thereof and of the Reduced Amount.
The Executive may then elect, in his sole discretion, which
and how much of the Agreement Payments shall be eliminated or
reduced (as long as after such election the aggregate present
value of the Agreement Payments equals the Reduced Amount),
and shall advise the Company in writing of his election within
ten (10) days of his receipt of such notice. If no such
election is made by Executive within such ten-day period, the
Company may elect which and how much of the Agreement Payments
shall be eliminated or reduced (as long as after such election
the aggregate present value of the Agreement Payments equals
the Reduced Amount) and shall notify the Executive promptly of
such election. For purposes of this paragraph, present value
shall be
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determined in accordance with Code Section 280G(d)(4). All
determinations made by the independent accountant under this
Section shall be binding upon the Company and the Executive
and shall be made within sixty (60) days of a termination of
employment of the Executive. As promptly as practicable
following such determination and the elections hereunder, the
Company shall pay to or distribute to or for the benefit of
the Executive such amounts as are then due to the Executive
under this Agreement and shall promptly pay to or distribute
for the benefit of the Executive in the future such amounts as
become due to the Executive under this Agreement.
As a result of the uncertainty in the application of Code
Sections 280G and 4999 at the time of the initial
determination by the independent accountant hereunder, it is
possible that Agreement Payments will be made by the Company
which should not have been made ("Overpayment") or that
additional Agreement Payments which have not been made by the
Company should have been made ("Underpayment"), in each case,
consistent with the calculation of the Reduced Amount
hereunder. In the event that the independent accountant,
based upon the assertion of a deficiency by the Internal
Revenue Service against the Company or the Executive which the
independent accountant believes has a high probability of
success, determines that an Overpayment has been made, any
such Overpayment shall be treated for all purposes as a loan
to the Executive which the Executive shall repay to the
Company together with interest at the applicable Federal rate
provided for in Code Section 7872(f)(2); provided, however,
that no amount shall be payable by the Executive to the
Company if and to the extent such payment would not reduce the
amount which is subject to taxation under Code Section 4999 or
if the period of limitations for assessment of tax under Code
Section 4999 against the Executive shall have expired. In the
event that the independent accountant, based upon controlling
precedent, determines that an Underpayment has occurred, any
such Underpayment shall be promptly paid by the Company to or
for the benefit of the Executive together with interest at the
applicable Federal rate provided for in Code Section
7872(f)(2)(A).
4.3 DEATH. If the Executive's employment is terminated
by reason of the Executive's death during the Employment Period (either prior
or subsequent to a Change in Control), this Agreement shall terminate without
further obligations to the Executive's legal representatives under this
Agreement, other than for (i) payment of Accrued Obligations (as defined in
Section 4.1(a)) (which shall be paid to the Executive's estate or beneficiary,
as applicable, in a lump sum in cash within thirty (30) days of the Date of
Termination) and (ii) the timely payment or provision of Other Benefits (as
defined in Section 4.1(d)), including death benefits pursuant to the terms of
any plan, policy, or arrangement of the Company.
4.4 DISABILITY. If the Executive's employment is
terminated by reason of the Executive's Disability during the Employment Period
(either prior or subsequent to a Change in Control), this Agreement shall
terminate without further obligations to the Executive, other than for (i)
payment of Accrued Obligations (as defined in Section 4.1(a)) (which shall be
paid to the Executive in a lump sum in cash within thirty (30) days of the Date
of Termination) and (ii) the timely payment or provision of Other Benefits (as
defined in Section 4.1(d)) including disability benefits pursuant to the terms
of any plan, policy or arrangement of the Company.
4.5 TERMINATION FOR CAUSE; OTHER THAN GOOD REASON. If
the Executive's employment shall be terminated for Cause during the Employment
Period (either prior to or subsequent to a Change in Control), this Agreement
shall terminate without further obligations to the Executive other than the
obligation to pay to the Executive his Accrued Compensation (as defined in this
Section). If the
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<PAGE> 12
Executive terminates employment with the Company during the Employment Period,
(excluding a termination for Good Reason), this Agreement shall terminate
without further obligations to the Executive, other than for the payment of
Accrued Compensation (as defined in this Section) and the timely payment or
provision of Other Benefits (as defined in Section 4.1(d)). In such case, all
Accrued Compensation shall be paid to the Executive in a lump sum in cash
within thirty (30) days of the Date of Termination.
For purposes of this Section the term "Accrued Compensation"
means the sum of (i) the Executive's Annual Base Salary through the Date of
Termination to the extent not previously paid, (ii) any compensation previously
deferred by the Executive (together with any accrued interest or earnings
thereon), and (iii) any accrued vacation pay in each case to the extent not
previously paid.
4.6 NON-EXCLUSIVITY OF RIGHTS. Except as provided in
Sections 4.1(c) nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company and for which the Executive may qualify, nor
shall anything herein limit or otherwise affect such rights as the Executive
may have under any contract or agreement with the Company. Amounts which are
vested benefits of which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of, or any contract or agreement with,
the Company at or subsequent to the Date of Termination, shall be payable in
accordance with such plan, policy, practice or program or contract or agreement
except as explicitly modified by this Agreement.
4.7 FULL SETTLEMENT. The Company's obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Executive or others. In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and, except as provided in Sections 4.1(c), such amounts shall not be reduced
whether or not the Executive obtains other employment. The Company agrees to
pay promptly as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonable incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive regarding the amount of any payment
pursuant to this Agreement), plus in each case interest on any delayed payment
at the applicable Federal rate provided for in Code Section 7872(f)(2)(A).
4.8 RESOLUTION OF DISPUTES. If there shall be any
dispute between the Company and the Executive (i) in the event of any
termination of the Executive's employment by the Company, whether such
termination was for Cause, or (ii) in the event of any termination of
employment by the Executive, whether Good Reason existed, then, unless and
until there is a final, nonappealable judgment by a court of competent
jurisdiction declaring that such termination was for Cause or that the
determination by the Executive of the existence of Good Reason was not made in
good faith, the Company shall pay all amounts, and provide all benefits, to the
Executive and/or the Executive's family or other beneficiaries, as the case may
be, that the Company would be required to pay or provide pursuant to Section
4.1 or 4.2 as though such termination were by the Company without Cause or by
the Executive with Good Reason; provided, however, that the Company shall not
be required to pay any disputed amounts pursuant to this Section except upon
receipt of an undertaking by or on behalf of the Executive to repay all such
amounts to which the Executive is ultimately adjudged by such court not to be
entitled.
SECTION 5: NON-COMPETITION.
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5.1 NON-COMPETE AGREEMENT.
5.1(a) It is agreed that during the period
beginning on the date the Term of this Agreement expires and
ending two (2) years thereafter, the Executive shall not,
without prior written approval of the Board, become an
officer, employee, agent, partner, or director of any business
enterprise in substantial direct competition (as defined in
Section 5.1(b)) with the Company; provided that, the Executive
shall not be subject to the restrictions of this Section if
(i) the Executive is terminated by the Company without Cause,
(ii) the Executive terminates his employment for Good Reason,
or (iii) the Term of this Agreement expires after delivery by
the Company of written notice of the Company's intent not to
renew this Agreement pursuant to Section 2.1.
5.1(b) For purposes of Section 5.1, a
business enterprise with which the Executive becomes
associated as an officer, employee, agent, partner, or
director shall be considered in substantial direct
competition, if such entity competes with the Company in any
business in which the Company is engaged and is within in the
Company's market area (as defined herein) as of the date the
Term of this Agreement expires. The Company's market area is
defined for this purpose, as the States of Missouri, Illinois
and Kansas.
5.1(c) The above constraint shall not
prevent the Executive from making passive investments, not to
exceed five percent (5%), in any enterprise.
5.2 CONFIDENTIAL INFORMATION. The Executive shall hold
in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any of
its affiliated companies, and their respective businesses, which shall have
been obtained by the Executive during the Executive's employment by the Company
and which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company, or as may
otherwise be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
SECTION 6: SUCCESSORS.
6.1 SUCCESSORS OF EXECUTIVE. This Agreement is personal
to the Executive and, without the prior written consent of the Company, the
rights (but not the obligations) shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
6.2 SUCCESSORS OF COMPANY. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle the Executive to terminate the Agreement at
his option on or after the Change in Control Date for Good Reason. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and
any successor to its
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business and/or assets which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
SECTION 7: MISCELLANEOUS.
7.1 NOTICE. For purposes of this Agreement, notices and
all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by certified
or registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses as set forth below; provided that all notices to the
Company shall be directed to the attention of the President, or to such other
address as one party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.
Notice to Executive:
Clifton R. Stepp
2020 N. Steeple Chase
Nixa, Missouri 65714
Notice to Company:
The Tenere Group, Inc.
1903 East Battlefield
Springfield, Missouri 65804
7.2 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
7.3 WITHHOLDING. The Company may withhold from any
amounts payable under this Agreement such Federal, state or local taxes as
shall be required to be withheld pursuant to any applicable law or regulation.
7.4 WAIVER. The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right the Executive or the
Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 3.4 shall
not be deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
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IN WITNESS WHEREOF, the Executive and, the Company, pursuant
to the authorization from its Board, have caused this Agreement to be executed
in its name on its behalf, all as of the day and year first above written.
EXECUTIVE
______________________________
Clifton R. Stepp
THE TENERE GROUP, INC.
By____________________________
Name:_________________________
Title:________________________
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EXHIBIT 10.18
THE TENERE GROUP, INC.
EMPLOYMENT AGREEMENT
This agreement ("Agreement") has been entered into as of this
6th day of May, 1996, by and between The Tenere Group, Inc., a Missouri
corporation ("Company"), and Joseph D. Williams, an individual ("Executive").
RECITALS
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to reinforce and encourage the continued attention and dedication of the
Executive to the Company as a member of the Company's management and to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change in Control
(as defined below) of the Company. The Board desires to provide for the
continued employment of the Executive, and the Executive is willing to commit
himself to continue to serve the Company. Additionally, the Board believes it
is imperative to diminish the inevitable distraction of the Executive by virtue
of the personal uncertainties and risks created by a pending or threatened
Change in Control and to encourage the Executive's full attention and
dedication to the Company currently and in the event of any threatened or
pending Change in Control, and to provide the Executive with compensation and
benefits arrangements upon the breach of this Agreement by the Company or upon
a termination of employment after Change in Control which ensure that the
compensation and benefits expectations of the Executive will be satisfied and
which are competitive with those of other corporations. Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into
this Agreement.
IT IS AGREED AS FOLLOWS:
SECTION 1: DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. For purposes of this Agreement, the
following words and phrases, whether or not capitalized, shall have the
meanings specified below, unless the context plainly requires a different
meaning.
1.1(a) "BOARD" means the Board of Directors of the
Company.
1.1(b) "CHANGE IN CONTROL" means:
(i) The acquisition by any
individual, entity or group, or (within the
meaning of Section 13(d)(3) or 14(d)(2), the
Exchange Act), a Person of beneficial
ownership of twenty percent (20%) or more of
either (a) the then outstanding shares of
common stock of the Company (the "Outstanding
Company Common Stock") or (b) the combined
voting power of the then outstanding voting
securities of the Company entitled to vote
generally in the election of directors (the
"Outstanding Company Voting Securities");
provided, however, that the following
acquisitions shall not constitute a Change in
Control: (a) any acquisition directly from
the Company (excluding an acquisition by
virtue of the exercise of a conversion
privilege), (b) any acquisition by the
Company, (c) any acquisition by any employee
benefit plan (or related trust) sponsored or
<PAGE> 2
maintained by the Company or any corporation
controlled by the Company or (d) any
acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if,
following such reorganization, merger or
consolidation, the conditions described in
clauses (a), (b) and (c) of subsection (iii)
of this Section are satisfied; or
(ii) Individuals who, as of
the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to
constitute at least a majority of the Board;
provided, however, that any individual
becoming a director subsequent to the date
hereof whose election, or nomination for
election by the Company's shareholders, was
approved by a vote of at least a majority of
the directors then comprising the Incumbent
Board shall be considered as though such
individual were a member of the Incumbent
Board, but excluding, as a member of the
Incumbent Board, any such individual whose
initial assumption of office occurs as a
result of either an actual or threatened
election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or
threatened solicitation of proxies or
consents by or on behalf of a Person other
than the Board; or
(iii) Approval by the
shareholders of the Company of a
reorganization, merger or consolidation, in
each case, unless, following such
reorganization, merger or consolidation, (a)
more than fifty percent (50%) of,
respectively, the then outstanding shares of
common stock of the corporation resulting
from such reorganization, merger or
consolidation and the combined voting power
of the then outstanding voting securities of
such corporation entitled to vote generally
in the election of directors is then
beneficially owned, directly or indirectly,
by all or substantially all of the
individuals and entities who were the
beneficial owners, respectively, of the
Outstanding Company Common Stock and
Outstanding Company Voting Securities
immediately prior to such reorganization,
merger or consolidation in substantially the
same proportions as their ownership,
immediately prior to such reorganization,
merger or consolidation, of the Outstanding
Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (b) no
Person (excluding the Company, any employee
benefit plan (or related trust) of the
Company or such corporation resulting from
such reorganization, merger or consolidation
and any Person beneficially owning,
immediately prior to such reorganization,
merger or consolidation, directly or
indirectly, twenty percent (20%) or more of
the Outstanding Company Common Stock or
Outstanding Voting Securities, as the case
may be) beneficially owns, directly or
indirectly, twenty percent (20%) or more of,
respectively, the then outstanding shares of
common stock of the corporation resulting
from such reorganization, merger or
consolidation or the combined voting power of
the then outstanding voting securities of
such corporation, entitled to vote generally
in the election of directors and (c) at least
a majority of the members of the board of
directors of the corporation resulting from
such reorganization, merger or consolidation
were members of the Incumbent
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Board at the time of the execution of the
initial agreement providing for such
reorganization, merger or consolidation; or
(iv) Approval by the
shareholders of the Company of (a) a complete
liquidation or dissolution of the Company or
(b) the sale or other disposition of all or
substantially all of the assets of the
Company, other than to a corporation, with
respect to which following such sale or other
disposition, (1) more than fifty percent
(50%) of, respectively, the then outstanding
shares of common stock of such corporation
and the combined voting power of the then
outstanding voting securities of such
corporation entitled to vote generally in the
election of directors is then beneficially
owned, directly or indirectly, by all or
substantially all of the individuals and
entities who were the beneficial owners,
respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or
other disposition in substantially the same
proportion as their ownership, immediately
prior to such sale or other disposition, of
the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the
case may be, (2) no Person (excluding the
Company and any employee benefit plan (or
related trust) of the Company or such
corporation and any Person beneficially
owning, immediately prior to such sale or
other disposition, directly or indirectly,
twenty percent (20%) or more of the
Outstanding Company Common Stock or
Outstanding Company Voting Securities, as the
case may be) beneficially owns, directly or
indirectly, twenty percent (20%) or more of,
respectively, the then outstanding shares of
common stock of such corporation and the
combined voting power of the then outstanding
voting securities of such corporation
entitled to vote generally in the election of
directors and (3) at least a majority of the
members of the board of directors of such
corporation were members of the Incumbent
Board at the time of the execution of the
initial agreement or action of the Board
providing for such sale or other disposition
of assets of the Company.
1.1(c) "CHANGE IN CONTROL DATE" shall mean the date
of the Change in Control.
1.1(d) "CODE" shall mean the Internal Revenue Code
of 1986, as amended.
1.1(e) "COMPANY" means The Tenere Group, Inc., a
Missouri corporation.
1.1(f) "EFFECTIVE DATE" shall mean May 6, 1996.
1.1(g) "EMPLOYMENT PERIOD" means the period
beginning on the Effective Date and ending on
the later of (i) May 6, 1999, or (ii) May 6
of any succeeding fiscal year during which
notice is given by either party (as described
in Section 1.1(j)) of such party's intent not
to renew this Agreement.
1.1(h) "EXCHANGE ACT" means the Securities Exchange
Act of 1934, as amended.
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1.1(i) "PERSON" means any "person" within the
meaning of Sections 13(d) and 14(d) of the
Exchange Act.
1.1(j) "TERM" means the period that begins on the
Effective Date and ends on the earlier of:
(i) the Date of Termination as defined in
Section 3.6, or (ii) the close of business on
the later of May 6, 1999 or May 6 of any
renewed term as set forth in Section 2.1 of
this Agreement.
1.2 GENDER AND NUMBER. When appropriate, pronouns in
this Agreement used in the masculine gender include the feminine gender, words
in the singular include the plural, and words in the plural include the
singular.
1.3 HEADINGS. All headings in this Agreement are
included solely for ease of reference and do not bear on the interpretation of
the text. Accordingly, as used in this Agreement, the terms "Article" and
"Section" mean the text that accompanies the specified Article or Section of
the Agreement.
1.4 APPLICABLE LAW. This Agreement shall be governed by
and construed in accordance with the laws of the state of Missouri, without
reference to its conflict of law principles.
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 PERIOD OF EMPLOYMENT. The Executive shall remain in
the employ of the Company throughout the Term of this Agreement in accordance
with the terms and provisions of this Agreement. This Agreement will
automatically renew for annual one-year periods unless either party gives the
other written notice, by February 1, 1999 or February 1 of any succeeding year,
of such party's intent not to renew this Agreement.
2.2 POSITIONS AND DUTIES.
2.2(a) Throughout the Term of this
Agreement, the Executive shall serve as Vice President -
Finance and Chief Financial Officer of the Company and shall
have responsibility for the overall supervision of the
Company's finance department, including accounting, banking
and management information systems, subject to the reasonable
direction of the Chief Executive Officer.
2.2(b) Throughout the Term of this
Agreement (but excluding any periods of vacation and sick
leave to which he is entitled), the Executive shall devote
reasonable attention and time during normal business hours to
the business and affairs of the Company and shall use his
reasonable best efforts to perform faithfully and efficiently
such responsibilities as are assigned to him under or in
accordance with this Agreement; provided that, it shall not be
a violation of this paragraph for the Executive to (i) serve
on corporate, civic or charitable boards or committees, (ii)
deliver lectures or fulfill speaking engagements, or (iii)
manage personal investments, so long as such activities do not
significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in
accordance with this Agreement or violate the Company's
conflict of interest policy as in effect immediately prior to
the Effective Date.
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2.3 SITUS OF EMPLOYMENT. Throughout the Term of this
Agreement, the Executive's services shall be performed within 20 miles of the
location where the Executive was employed immediately prior to the Effective
Date.
2.4 COMPENSATION.
2.4(a) ANNUAL BASE SALARY. For the first
calendar year within the Term of this Agreement, the Executive
shall receive an annual base salary ("Annual Base Salary") of
One Hundred Twelve Thousand Nine Hundred Eighty Dollars
($112,980), which shall be paid in equal or substantially
equal bi-weekly installments. During the Term of this
Agreement, the Annual Base Salary payable to the Executive
shall be reviewed at least annually and may be increased
consistent with Company's compensation policies for similarly
situated executives.
2.4(b) INCENTIVE BONUSES. In addition to
Annual Base Salary, the Executive may be awarded an incentive
bonus ("Incentive Bonus") provided through any incentive
compensation plan which is generally available to other peer
executives of the Company.
2.4(c) INCENTIVE, SAVINGS AND RETIREMENT
PLANS. Throughout the Term of this Agreement, the Executive
shall be entitled to participate in all incentive, savings and
retirement plans generally available to other peer executives
of the Company.
2.4(d) WELFARE BENEFIT PLANS. Throughout
the Term of this Agreement (and thereafter, subject to Section
4.1(c) hereof), the Executive and/or the Executive's family,
as the case may be, shall be eligible for participation in and
shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and
programs) to the extent generally available to other peer
executives of the Company.
2.4(e) EXPENSES. Throughout the Term of
this Agreement, the Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the most favorable policies,
practices and procedures generally applicable to other peer
executives of the Company.
2.4(f) FRINGE BENEFITS. Throughout the
Term of this Agreement, the Executive shall be entitled to
such fringe benefits as generally are provided to other peer
executives of the Company.
2.4(g) OFFICE AND SUPPORT STAFF.
Throughout the Term of this Agreement, the Executive shall be
entitled to an office or offices of a size and with
furnishings and other appointments, and to personal
secretarial and other assistance.
2.4(h) VACATION. Throughout the Term of
this Agreement, the Executive shall be entitled to paid
vacation in accordance with the most favorable plans,
policies, programs and practices generally provided with
respect to other peer executives of the Company. Initially,
the Executive shall be entitled to three (3) weeks paid
vacation and
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such vacation time may not be decreased below such level
during the Term of this Agreement.
SECTION 3: TERMINATION OF EMPLOYMENT.
3.1 DEATH. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
3.2 DISABILITY. If the Company determines in good faith
that the Disability of the Executive has occurred during the Employment Period
(pursuant to the definition of Disability set forth below), it may give to the
Executive written notice in accordance with Section 7.1 of its intention to
terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the thirtieth (30th)
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the thirty (30) days after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall mean that the
Executive has been unable to perform the services required of the Executive
hereunder on a full-time basis for a period of one hundred eighty (180)
consecutive business days by reason of a physical and/or mental condition.
"Disability" shall be deemed to exist when certified by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be withheld
unreasonably). The Executive will submit to such medical or psychiatric
examinations and tests as such physician deems necessary to make any such
Disability determination.
3.3 TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment during the Employment Period for "Cause," which shall
mean termination based upon: (i) the Executive's willful and continued failure
to substantially perform his duties with the Company (other than as a result of
incapacity due to physical or mental condition), after a demand for substantial
performance is delivered to him by the Company, which specifically identifies
the manner in which the Executive has not substantially performed his duties,
(ii) the Executive's commission of an act constituting a criminal offense
involving moral turpitude, dishonesty, or breach of trust, or (iii) the
Executive's material breach of any provision of this Agreement. For purposes
of this Section, no act, or failure to act on the Executive's part shall be
considered "willful" unless done, or omitted to be done, without good faith and
without reasonable belief that the act or omission was in the best interest of
the Company. Notwithstanding the foregoing, the Executive shall not be deemed
to have been terminated for Cause unless and until (i) he receives a Notice of
Termination (as defined in Section 3.5) from the Company, (ii) he is given the
opportunity, with counsel, to be heard before the Board, and (iii) the Board
finds, in its good faith opinion, the Executive was guilty of the conduct set
forth in the Notice of Termination.
3.4 GOOD REASON. The Executive may terminate his
employment with the Company for "Good Reason," which shall mean termination
based upon:
(i) the assignment to the Executive of
any duties inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by Section 2.2(a) or any other action by the
Company which results in a material diminution in such
position, authority, duties or responsibilities, excluding for
this purpose any action not taken in bad faith and which
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is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) (a) the failure by the Company to
continue in effect any benefit or compensation plan, stock
ownership plan, life insurance plan, health and accident plan
or disability plan to which the Executive is entitled as
specified in Section 2.4, (b) the taking of any action by the
Company which would adversely affect the Executive's
participation in, or materially reduce the Executive's
benefits under, any plans described in Section 2.4, or deprive
the Executive of any material fringe benefit enjoyed by the
Executive as described in Section 2.4(f), or (c) the failure
by the Company to provide the Executive with the number of
paid vacation days to which the Executive is entitled as
described in Section 2.4(h).
(iii) the Company's requiring the
Executive to be based at any office or location other than
that described in Section 2.3;
(iv) a material breach by the Company of
any provision of this Agreement;
(v) any purported termination by the
Company of the Executive's employment otherwise than as
expressly permitted by this Agreement;
(vi) within a period ending at the close
of business on the date two (2) years after the Change in
Control Date, if the Company has failed to comply with and
satisfy Section 6.2 on or after the Change in Control Date; or
(vii) within a period ending at the close
of business on the date two (2) years after the Change in
Control Date, if the Executive, in his sole and absolute
discretion, determines and notifies the Company in writing,
that he does not wish to continue his employment with the
Company.
For purposes of this Section any good faith determination of "Good Reason" made
by the Executive shall be conclusive.
3.5 NOTICE OF TERMINATION. Any termination by the
Company for Cause or Disability, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party, given in accordance
with Section 7.1. For purposes of this Agreement, a "Notice of Termination"
means a written notice which (i) indicates the specific termination provision
in this Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated, and
(iii) if the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date shall be not
more than fifteen (15) days after the giving of such notice). The failure by
the Executive or the Company to set forth in the Notice of Termination any fact
or circumstance which contributes to a showing of Good Reason or Cause shall
not waive any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in enforcing
the Executive's or the Company's rights hereunder.
3.6 DATE OF TERMINATION. "Date of Termination" means (i)
if the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the Date of Termination shall be the date of receipt
of the Notice of Termination or any later date specified herein,
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<PAGE> 8
as the case may be, (ii) if the Executive's employment is terminated by reason
of death or Disability, the Date of Termination shall be the date of death of
the Executive or the Disability Effective Date, as the case may be, or (iii) if
the Executive's employment is terminated by the Company other than for Cause,
death, or Disability, the Date of Termination shall be the date of receipt of
the Notice of Termination; provided that if within thirty (30) days after any
Notice of Termination is given, the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the termination, the
Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, or by a final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected).
SECTION 4: CERTAIN BENEFITS UPON TERMINATION.
4.1 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON PRIOR TO
A CHANGE IN CONTROL. If, prior to a Change in Control during the Employment
Period: (i) the Company shall terminate the Executive's employment without
Cause, or (ii) the Executive shall terminate employment with the Company for
Good Reason the Executive shall be entitled to the benefits provided below;
4.1(a) "Accrued Obligations": Within
thirty (30) days after the Date of Termination, the Company
shall pay to the Executive the sum of (1) the Executive's
Annual Base Salary through the Date of Termination to the
extent not previously paid, (2) any compensation previously
deferred by the Executive (together with any accrued interest
or earnings thereon) and (3) any accrued vacation pay; in each
case to the extent not previously paid.
In addition, on the date that Incentive Bonuses are
paid to other peer executives for the year in which the
Executive's employment is terminated, the Executive will be
paid an amount equal to the product of the Current Incentive
Bonus multiplied by a fraction, the numerator of which is the
number of days during the fiscal year for which the Incentive
Bonus is paid prior to the Date of Termination and denominator
of which is 365. For purposes of this Section the term
"Current Incentive Bonus" means the Incentive Bonus that would
have been paid to the Executive for the fiscal year in which
the termination of employment occurred, if the Executive's
employment had not been so terminated.
4.1(b) "Annual Base Salary Continuation":
For the remainder of the Employment Period, the Company shall
pay to the Executive, the Executive's then-current Annual Base
Salary as would have been paid to the Executive had the
Executive remained in the Company's employ throughout the
Employment Period; provided that in all cases the Executive
shall receive, at minimum, the then-current Annual Base Salary
for a period beginning on the Date of Termination and ending
one (1) year thereafter. The Company at any time may elect to
pay the balance of such payments then remaining in a lump sum,
in which case the total of such payments shall be discounted
to present value as determined according to Code Section
280G(d)(4).
4.1(c) "Welfare Benefit Continuation": For
the remainder of the Employment Period (but in no case less
than one (1) year after the Date of Termination), or such
longer period as any plan, program, practice or policy may
provide, the Company shall continue benefits to the Executive
and/or the Executive's family at least equal to those which
would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 2.4(d)
if the Executive's employment had not
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been terminated, in accordance with the most favorable plans,
practices, programs or policies of the Company as those
provided generally to other peer executives and their families
during the ninety (90) day period immediately preceding the
Effective Date or, if more favorable to the Executive, as
those provided generally at any time after the Effective Date
to other peer executives of the Company and their families;
provided, however, that if the Executive becomes reemployed
with another employer and is eligible to receive medical or
other welfare benefits under another employer-provided plan,
the medical and other welfare benefits described herein shall
be secondary to those provided under such other plan during
such applicable period of eligibility. For purposes of
determining eligibility of the Executive for retiree benefits
pursuant to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed until
the later of the end of the Employment Period or one (1) year
after the Date of Termination and to have retired on the last
day of such period.
4.1(d) "Other Benefits": To the extent not
previously paid or provided, the Company shall timely pay or
provide to the Executive and/or the Executive's family any
other amounts or benefits required to be paid or provided for
which the Executive and/or the Executive's family is eligible
to receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the
Company as those provided generally to other peer executives
and their families during the ninety (90) day period
immediately preceding the Effective Date or, if more favorable
to the Executive, as those provided generally after the
Effective Date to other peer executives of the Company and
their families.
The Executive shall not be required to mitigate the amount of
any payment provided for in this Section by seeking other
employment or otherwise, nor shall the amount of any payment
provided for, in this Section, be reduced by any compensation
earned by the Executive as the result of employment by another
employer after the Date of Termination, or otherwise.
4.2 BENEFITS UPON TERMINATION AFTER A CHANGE IN CONTROL.
If Change in Control occurs during the Employment Period and within two (2)
years after a Change in Control: (i) the Company shall terminate the
Executive's employment without Cause, or (ii) the Executive shall terminate
employment with the Company for Good Reason, then the Executive shall be
entitled to the benefits provided below:
4.2(a) "Accrued Obligations": Within thirty
(30) days after the Date of Termination, the Company shall pay
to the Executive the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the extent not
previously paid, (2) any compensation previously deferred by
the Executive (together with any accrued interest or earnings
thereon) and (3) any accrued vacation pay; in each case to the
extent not previously paid.
In addition, on the date that Incentive Bonuses are
paid to other peer executives for the year in which the
Executive's employment is terminated, the Executive will be
paid an amount equal to the product of the Current Incentive
Bonus multiplied by a fraction, the numerator of which is the
number of days during the fiscal year for which the Incentive
Bonus is paid prior to the Date of Termination and denominator
of which is 365. For purposes of this Section the term
"Current Incentive Bonus" means the Incentive Bonus that would
have been paid to the Executive for the fiscal year in which
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<PAGE> 10
the termination of employment occurred, if the Executive's
employment had not been so terminated.
4.2(b) "Severance Amount": Within thirty
(30) days after the Date of Termination, the Company shall pay
to the Executive as severance pay in a lump sum, in cash, an
amount equal to 2.99 times his then-current Annual Base
Salary.
4.2(c) "Stock Options": To the extent not
otherwise provided for under the terms of the Company's stock
option plan or the Executive's stock option agreement, all
such stock options shall become fully exercisable as of the
Date of Termination and, except for "incentive stock options"
within the meaning of Code Section 422 granted prior to the
date hereof, shall remain fully exercisable for six months
following the Date of Termination.
4.2(d) "Other Benefits": To the extent not
previously paid or provided, the Company shall timely pay or
provide to the Executive and/or the Executive's family any
other amounts or benefits required to be paid or provided for
which the Executive and/or the Executive's family is eligible
to receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the
Company as those provided generally to other peer executives
and their families during the ninety (90) day period
immediately preceding the Effective Date or, if more favorable
to the Executive, as those provided generally after the
Effective Date to other peer executives of the Company and
their families.
4.2(e) "Excess Parachute Payment":
Anything in this Agreement to the contrary notwithstanding, in
the event that an independent accountant shall determine that
any payment or distribution by the Company to or for the
benefit of Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or
otherwise) (a "Payment") would be nondeductible by the Company
for Federal income tax purposes because of Code Section 280G
or would constitute an "excess parachute payment" (as defined
in Code Section 280G), then the aggregate present value of
amounts payable or distributable to or for the benefit of
Executive pursuant to this Agreement (such payments or
distributions pursuant to this Agreement are hereinafter
referred to as "Agreement Payments") shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this
paragraph, the "Reduced Amount" shall be an amount expressed
in present value which maximizes the aggregate present value
of Agreement Payments without causing any Payment to be
nondeductible by the Company because of Code Section 280G or
without causing any portion of the Payment to be subject to
the excise tax imposed by Code Section 4999.
If the independent accountant determines that any Payment
would be nondeductible by the Company because of Code Section
280G or that any portion of the Payment will be subject to the
excise tax imposed by Code Section 4999, the Company shall
promptly give Executive notice to that effect and a copy of
the detailed calculation thereof and of the Reduced Amount.
The Executive may then elect, in his sole discretion, which
and how much of the Agreement Payments shall be eliminated or
reduced (as long as after such election the aggregate present
value of the Agreement Payments equals the Reduced Amount),
and shall advise the Company in writing of his election within
ten (10) days of his receipt of such notice. If no such
election is made by Executive within such ten-day period, the
Company may elect which and how much of the Agreement Payments
-10-
<PAGE> 11
shall be eliminated or reduced (as long as after such election
the aggregate present value of the Agreement Payments equals
the Reduced Amount) and shall notify the Executive promptly of
such election. For purposes of this paragraph, present value
shall be determined in accordance with Code Section
280G(d)(4). All determinations made by the independent
accountant under this Section shall be binding upon the
Company and the Executive and shall be made within sixty (60)
days of a termination of employment of the Executive. As
promptly as practicable following such determination and the
elections hereunder, the Company shall pay to or distribute to
or for the benefit of the Executive such amounts as are then
due to the Executive under this Agreement and shall promptly
pay to or distribute for the benefit of the Executive in the
future such amounts as become due to the Executive under this
Agreement.
As a result of the uncertainty in the application of Code
Sections 280G and 4999 at the time of the initial
determination by the independent accountant hereunder, it is
possible that Agreement Payments will be made by the Company
which should not have been made ("Overpayment") or that
additional Agreement Payments which have not been made by the
Company should have been made ("Underpayment"), in each case,
consistent with the calculation of the Reduced Amount
hereunder. In the event that the independent accountant,
based upon the assertion of a deficiency by the Internal
Revenue Service against the Company or the Executive which the
independent accountant believes has a high probability of
success, determines that an Overpayment has been made, any
such Overpayment shall be treated for all purposes as a loan
to the Executive which the Executive shall repay to the
Company together with interest at the applicable Federal rate
provided for in Code Section 7872(f)(2); provided, however,
that no amount shall be payable by the Executive to the
Company if and to the extent such payment would not reduce the
amount which is subject to taxation under Code Section 4999 or
if the period of limitations for assessment of tax under Code
Section 4999 against the Executive shall have expired. In the
event that the independent accountant, based upon controlling
precedent, determines that an Underpayment has occurred, any
such Underpayment shall be promptly paid by the Company to or
for the benefit of the Executive together with interest at the
applicable Federal rate provided for in Code Section
7872(f)(2)(A).
4.3 DEATH. If the Executive's employment is terminated
by reason of the Executive's death during the Employment Period (either prior
or subsequent to a Change in Control), this Agreement shall terminate without
further obligations to the Executive's legal representatives under this
Agreement, other than for (i) payment of Accrued Obligations (as defined in
Section 4.1(a)) (which shall be paid to the Executive's estate or beneficiary,
as applicable, in a lump sum in cash within thirty (30) days of the Date of
Termination) and (ii) the timely payment or provision of Other Benefits (as
defined in Section 4.1(d)), including death benefits pursuant to the terms of
any plan, policy, or arrangement of the Company.
4.4 DISABILITY. If the Executive's employment is
terminated by reason of the Executive's Disability during the Employment Period
(either prior or subsequent to a Change in Control), this Agreement shall
terminate without further obligations to the Executive, other than for (i)
payment of Accrued Obligations (as defined in Section 4.1(a)) (which shall be
paid to the Executive in a lump sum in cash within thirty (30) days of the Date
of Termination) and (ii) the timely payment or provision of Other Benefits (as
defined in Section 4.1(d)) including disability benefits pursuant to the terms
of any plan, policy or arrangement of the Company.
-11-
<PAGE> 12
4.5 TERMINATION FOR CAUSE; OTHER THAN GOOD REASON. If
the Executive's employment shall be terminated for Cause during the Employment
Period (either prior to or subsequent to a Change in Control), this Agreement
shall terminate without further obligations to the Executive other than the
obligation to pay to the Executive his Accrued Compensation (as defined in this
Section). If the Executive terminates employment with the Company during the
Employment Period, (excluding a termination for Good Reason), this Agreement
shall terminate without further obligations to the Executive, other than for
the payment of Accrued Compensation (as defined in this Section) and the timely
payment or provision of Other Benefits (as defined in Section 4.1(d)). In such
case, all Accrued Compensation shall be paid to the Executive in a lump sum in
cash within thirty (30) days of the Date of Termination.
For purposes of this Section the term "Accrued Compensation"
means the sum of (i) the Executive's Annual Base Salary through the Date of
Termination to the extent not previously paid, (ii) any compensation previously
deferred by the Executive (together with any accrued interest or earnings
thereon), and (iii) any accrued vacation pay in each case to the extent not
previously paid.
4.6 NON-EXCLUSIVITY OF RIGHTS. Except as provided in
Sections 4.1(c) nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company and for which the Executive may qualify, nor
shall anything herein limit or otherwise affect such rights as the Executive
may have under any contract or agreement with the Company. Amounts which are
vested benefits of which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of, or any contract or agreement with,
the Company at or subsequent to the Date of Termination, shall be payable in
accordance with such plan, policy, practice or program or contract or agreement
except as explicitly modified by this Agreement.
4.7 FULL SETTLEMENT. The Company's obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Executive or others. In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and, except as provided in Sections 4.1(c), such amounts shall not be reduced
whether or not the Executive obtains other employment. The Company agrees to
pay promptly as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonable incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive regarding the amount of any payment
pursuant to this Agreement), plus in each case interest on any delayed payment
at the applicable Federal rate provided for in Code Section 7872(f)(2)(A).
4.8 RESOLUTION OF DISPUTES. If there shall be any
dispute between the Company and the Executive (i) in the event of any
termination of the Executive's employment by the Company, whether such
termination was for Cause, or (ii) in the event of any termination of
employment by the Executive, whether Good Reason existed, then, unless and
until there is a final, nonappealable judgment by a court of competent
jurisdiction declaring that such termination was for Cause or that the
determination by the Executive of the existence of Good Reason was not made in
good faith, the Company shall pay all amounts, and provide all benefits, to the
Executive and/or the Executive's family or other beneficiaries, as the case may
be, that the Company would be required to pay or provide pursuant to Section
4.1 or 4.2 as though such termination were by the Company without Cause or by
the Executive with Good Reason; provided, however, that the Company shall not
be required to pay any disputed amounts pursuant
-12-
<PAGE> 13
to this Section except upon receipt of an undertaking by or on behalf of the
Executive to repay all such amounts to which the Executive is ultimately
adjudged by such court not to be entitled.
SECTION 5: NON-COMPETITION.
5.1 NON-COMPETE AGREEMENT.
5.1(a) It is agreed that during the period
beginning on the date the Term of this Agreement expires and
ending two (2) years thereafter, the Executive shall not,
without prior written approval of the Board, become an
officer, employee, agent, partner, or director of any business
enterprise in substantial direct competition (as defined in
Section 5.1(b)) with the Company; provided that, the Executive
shall not be subject to the restrictions of this Section if
(i) the Executive is terminated by the Company without Cause,
(ii) the Executive terminates his employment for Good Reason,
or (iii) the Term of this Agreement expires after delivery by
the Company of written notice of the Company's intent not to
renew this Agreement pursuant to Section 2.1.
5.1(b) For purposes of Section 5.1, a
business enterprise with which the Executive becomes
associated as an officer, employee, agent, partner, or
director shall be considered in substantial direct
competition, if such entity competes with the Company in any
business in which the Company is engaged and is within in the
Company's market area (as defined herein) as of the date the
Term of this Agreement expires. The Company's market area is
defined for this purpose, as the States of Missouri, Illinois
and Kansas.
5.1(c) The above constraint shall not
prevent the Executive from making passive investments, not to
exceed five percent (5%), in any enterprise.
5.2 CONFIDENTIAL INFORMATION. The Executive shall hold
in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any of
its affiliated companies, and their respective businesses, which shall have
been obtained by the Executive during the Executive's employment by the Company
and which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company, or as may
otherwise be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
SECTION 6: SUCCESSORS.
6.1 SUCCESSORS OF EXECUTIVE. This Agreement is personal
to the Executive and, without the prior written consent of the Company, the
rights (but not the obligations) shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
6.2 SUCCESSORS OF COMPANY. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the
-13-
<PAGE> 14
same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the Company to
obtain such agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle the Executive to terminate the
Agreement at his option on or after the Change in Control Date for Good Reason.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
SECTION 7: MISCELLANEOUS.
7.1 NOTICE. For purposes of this Agreement, notices and
all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by certified
or registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses as set forth below; provided that all notices to the
Company shall be directed to the attention of the President, or to such other
address as one party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.
Notice to Executive:
Joseph D. Williams
4730 S. Stewart
Springfield, Missouri 65804
Notice to Company:
The Tenere Group, Inc.
1903 East Battlefield
Springfield, Missouri 65804
7.2 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
7.3 WITHHOLDING. The Company may withhold from any
amounts payable under this Agreement such Federal, state or local taxes as
shall be required to be withheld pursuant to any applicable law or regulation.
7.4 WAIVER. The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right the Executive or the
Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 3.4 shall
not be deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
-14-
<PAGE> 15
IN WITNESS WHEREOF, the Executive and, the Company, pursuant
to the authorization from its Board, have caused this Agreement to be executed
in its name on its behalf, all as of the day and year first above written.
EXECUTIVE
________________________________________
Joseph D. Williams
THE TENERE GROUP, INC.
By______________________________________
Name:___________________________________
Title:__________________________________
-15-
<PAGE> 1
EXHIBIT 10.19
THE TENERE GROUP, INC.
RETIREMENT PLAN FOR DIRECTORS
THE TENERE GROUP, INC., a Missouri corporation, hereby
establishes The Tenere Group, Inc. Retirement Plan for Directors effective May
17, 1996.
1. PURPOSE. The purpose of the Plan is to provide retirement
benefits to certain Directors of The Tenere Group, Inc. who
have rendered extended service as a Director.
2. DEFINITIONS. Except where otherwise specifically provided,
the following terms shall have the following meanings for
purposes for this Plan:
(a) COMPANY means The Tenere Group, Inc., a Missouri
corporation.
(b) DIRECTOR means a member of the Board of Directors of
the Company.
(c) DISABILITY means the inability of an Outside Director
to perform the regular duties of a Director, as
determined by a majority vote of the remaining
Outside Directors.
(d) OUTSIDE DIRECTOR means a Director who for the entire
part of a Plan Year that he is a Director is not an
employee of the Company or any subsidiary of the
Company.
(e) PLAN means The Tenere Group, Inc. Retirement Plan for
Directors.
(f) PLAN YEAR means the period from one annual meeting of
shareholders of the Company until the next annual
meeting, except that the first Plan Year shall be the
period from May 18, 1995 until May 17, 1996.
(g) RETAINER means the annual fee payable to an Outside
Director without regard to attendance at meetings,
service on a committee or an election to defer
receipt of such fee.
(h) RETIREMENT means the termination of service as a
Director by an Outside Director other than (i)
because of death, or (ii) because of or following the
Outside Director's commission of an act involving
moral turpitude, dishonesty, malfeasance in office or
breach of trust in connection with or with respect to
his office as Outside Director.
(i) YEAR OF SERVICE means each Plan Year during which a
Director serves as an Outside Director. In addition,
each Outside Director shall be deemed to have accrued
one Year of Service for each 12-month period prior to
May 18, 1995 in which such Outside Director served as
a director of the
<PAGE> 2
Company, RCA Mutual Insurance Company or Risk Control
Associates, Inc.; provided, however, that
simultaneous service by a Director during any such
period on two or more of such boards of directors
shall not result in such Director being deemed to
have accrued more than one Year of Service for any
12-month period. Service during any part of a Plan
Year shall be counted as a Year of Service, but only
if the Director is an Outside Director during all of
such service. If an Outside Director dies while
serving as a Director, or ceases to be a Director
because of Disability, his Years of Service shall be
determined as if he had served through the end of his
elected term. No more than ten (10) Years of Service
shall be recognized under this Plan.
3. ELIGIBILITY. An Outside Director shall be eligible to receive
a benefit under this Plan if, after May 17, 1996, he retires
as a Director and has five (5) or more Years of Service at the
time of his retirement. An Outside Director whose service as
a Director ends other than because of Retirement or Disability
will not be eligible to receive a benefit under the Plan.
4. BENEFITS.
(a) AMOUNT. The benefit paid under this Plan shall be an
annual benefit equal to the Retainer at the date of
the Outside Director's retirement, multiplied by ten
percent (10%) for each Year of Service the Outside
Director has (or is deemed to have) at the time his
service as a Director ends, with a maximum annual
benefit equal to the full amount (100%) of the
Retainer at the date of the Outside Director's
retirement.
(b) PAYMENT. Benefits payable under this Plan shall be
paid in cash in quarterly installments beginning with
the February 1, May 1, August 1 or November 1
coinciding with or next following:
(i) In the case of an Outside Director whose
service as a Director ends before age 65 on
account of Disability, the date the Outside
Director's Disability is established; or
(ii) In the case of any other Director, the later
of (A) the date the Outside Director ceases
to serve as a Director or (B) the date the
Outside Director attains age 65.
(c) DURATION. Payments shall be made to an Outside
Director for 40 quarters, but if the Outside Director
dies before all such payments have been made no
further payments shall be made after the date of his
death.
5. INALIENABILITY. The rights and benefits inuring to any
Outside Director or beneficiary under this Plan may not be
assigned, alienated or anticipated.
- 2 -
<PAGE> 3
6. FUNDING. Nothing contained in this Plan and no action taken
pursuant to the provisions hereof shall create or be construed
to create a trust of any kind, or a fiduciary relationship
between the Company and any Outside Director or any other
person. Amounts due under this Plan at any time and from time
to time shall be paid from the general funds of the Company.
To the extent that any person acquires a right to receive
payments hereunder, such right shall be that of an unsecured
general creditor of the Company.
7. AMENDMENT AND TERMINATION. The Company reserves the right at
any time to amend or revoke this Plan without liability to any
Outside Director after the effective date of such amendment or
termination, provided, however, that any benefit which has
begun to be paid in accordance with the terms of the Plan may
not be reduced or eliminated.
8. NO RETENTION RIGHTS. Nothing in this Plan shall give any
Director the right to be retained as a Director of the
Company.
9. WITHHOLDING. All amounts otherwise payable under this Plan
shall be reduced by any amounts required to be withheld
therefrom pursuant to Federal, state or local law.
10. CONSTRUCTION. This Plan shall be construed in accordance with
and governed by the laws of the State of Missouri. Words in
the masculine include the feminine, and words in the singular
include the plural, as appropriate.
IN WITNESS WHEREOF, THE TENERE GROUP, INC. has caused this
instrument to be executed and to be attested and its corporate seal to be
affixed by its duly authorized officers this 17th day of May, 1996.
THE TENERE GROUP, INC.
By
____________________________________
Raymond A. Christy, M.D., President
and Chief Executive Officer
ATTEST
By ____________________________________
Michael D. Hoeman, M.D., Secretary
-3-
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<PERIOD-START> JAN-01-1996
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0
0
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<INCOME-TAX> (971,405)
<INCOME-CONTINUING> (1,829,469)
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