Exhibit
10.1
EXECUTIVE EMPLOYMENT
AGREEMENT
This Employment
Agreement (this “ Agreement ”) is by and
between American Physicians Service Group, Inc., a Texas
corporation (“ Employer ”) and Kenneth S.
Shifrin, an individual (“ Executive ”),
and shall be effective as of April 1, 2009 (the “
Effective Date ”).
Preliminary
Statements
Executive desires to be
employed by Employer upon the terms and conditions stated herein,
and Employer desires to employ Executive provided that, in so
doing, it can protect its confidential information, business,
accounts, patronage and goodwill.
Employer and Executive
have specifically determined that the terms of this Agreement are
fair and reasonable.
Statement of
Agreement
NOW, THEREFORE, in
consideration of the premises and mutual covenants contained
herein, and for other good, valuable and binding consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I.
Term; Termination; Prior Agreements .
Section 1.1
Term
. Employer hereby
hires Executive and Executive accepts such employment for a term of
four years commencing on the Effective Date.
Section 1.2
Termination Upon
Expiration .
Unless earlier terminated by Employer or Executive in
accordance with the terms of this Agreement, this Agreement shall
terminate automatically upon the expiration of the four-year term
described in Section 1.1.
Section 1.3
Termination Upon
Death or Permanent Disability . This Agreement shall be
automatically terminated on the death of Executive or on the
permanent disability of Executive if Executive is no longer able to
perform in all material respects the usual and customary duties of
Executive’s employment hereunder. For purposes hereof, any
condition which in reasonable likelihood is expected to impair
Executive’s ability to materially perform Executive’s
duties hereunder for a period of three months or more shall be
considered to be permanent.
Section 1.4
Termination for
Cause .
If this Agreement has not been previously terminated, and no
party has previously given notice of termination pursuant to
Section 1.5, Section 1.6 or Section 1.7, then
Employer may terminate this Agreement “ for
cause ” if:
(a)
In connection with the
business of Employer, Executive is convicted of an offense
constituting a felony or involving moral turpitude; or
(b)
in a material and
substantial way, (i) Executive (A) violates any written
policy of Employer, (B) violates any provision of this
Agreement, (C) fails to follow reasonable written instructions
or directions from the Board of Directors of Employer (the “
Board ”), or (D) fails to use good-faith
efforts to perform the services required pursuant to this
Agreement; and (ii) Executive fails to materially cure such
violation or failure within fifteen days after receiving written
notice from the Board clearly specifying the act or circumstances
that gave rise to such violation or failure.
A notice of termination
pursuant to this Section shall be in writing and shall state
the alleged reason for termination. Executive, within not less than
fifteen nor more than thirty days after such notice, shall be given
the opportunity to appear before the Board, or a committee thereof,
to rebut or dispute the alleged reason for termination. If the
Board or committee determines, by a majority of the disinterested
directors, after having given Executive the opportunity to rebut or
dispute the allegations, that such reason is indeed valid, Employer
may immediately terminate Executive’s employment under this
Agreement for cause. Immediately upon giving the notice
contemplated by this paragraph, Employer may elect, during the
pendency of such inquiry, to relieve Executive of Executive’s
regular duties.
Section 1.5
Termination for Good
Reason . Any
termination by Executive of this Agreement pursuant to this
Section shall be deemed a termination by Executive for “
good reason. ” Executive may terminate this
Agreement for good reason any time after a Change of Control in
accordance with any of the following (with the further agreement
that any election by Executive to not terminate this Agreement
pursuant to this Section following a particular Change of
Control shall not prevent the application of this Section to a
subsequent Change of Control):
(a)
Executive may terminate
this Agreement for any or no reason upon six months’ prior
written notice, which notice cannot be given before the
consummation of such Change of Control or after the expiration of
the term of this Agreement pursuant to Section 1.1;
(b)
Executive may terminate
this Agreement upon thirty days’ prior written notice if
Executive’s base salary, as provided hereunder, is
diminished;
(c)
Executive may terminate
this Agreement upon thirty days’ prior written notice if
Employer requires that Executive move to a city other than
Austin;
(d)
Executive may terminate
this Agreement upon thirty days’ prior written notice if the
Board or any person authorized to act by the Board (for purposes of
this Agreement, any such authorized person is referred to as an
“ Authorized Board Designee ”) materially
and unreasonably interferes with Executive’s ability to
fulfill Executive’s job duties; or
(e)
Executive may terminate
this Agreement upon thirty days’ prior written notice if
Executive is reassigned to a position with diminished
responsibilities, or Executive’s job responsibilities are
materially narrowed or diminished.
Without limiting the
provisions of Section 1.8 hereof, Executive agrees that
Employer can relieve Executive of Executive’s duties
hereunder prior to the end of the applicable notice period provided
for in this Section and, in such event, Executive shall not
thereafter be entitled to any of the benefits or salary described
in Article III hereof. Furthermore, if the term of this
Agreement expires pursuant to Section 1.1 prior to the end of
any notice period otherwise required under this Section, then the
applicable notice period does not apply and notice may be given at
any time prior to expiration pursuant to
Section 1.1.
Section 1.6
Termination of
Agreement by Employer Without Cause . Employer has the right to
terminate this Agreement, other than “for cause,” on
thirty days’ prior written notice. Any termination of this
Agreement by Employer other than pursuant to the express terms of
Section 1.2, Section 1.3 or Section 1.4 shall be
deemed a termination pursuant to this Section, irrespective of
whether the notice required under this Section is properly
given.
Section 1.7
Termination of
Agreement by Executive Without Good Reason . Executive may terminate
Executive’s employment, other than for “good
reason,” upon thirty days’ prior written notice stating
that this Agreement is terminated other than for “good
reason.” Executive agrees that Employer can relieve Executive
of Executive’s duties hereunder prior to the end of such
thirty-day notice period and, in such event, Executive shall not
thereafter be entitled to any of the benefits or salary described
in Article III hereof.
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Section 1.8
Executive’s
Rights Upon Termination . Upon termination of this
Agreement, Executive shall be entitled to the following:
(a)
If this Agreement is
terminated pursuant to Section 1.2, Section 1.3,
Section 1.4 or Section 1.7 then Employer shall pay
Executive or Executive’s representative, as the case may be,
Executive’s then-current base salary (excluding any bonuses
and non-cash benefits) through the effective date of termination
(which, in the case of Section 1.7, shall follow any portion
of the applicable notice period during which Executive has not been
relieved of Executive’s duties hereunder), and, except as
specifically described in subsection 1.8(e) below, Employer
shall have no further obligations hereunder.
(b)
If Employer terminates
this Agreement without cause pursuant to Section 1.6, or
Executive terminates this Agreement pursuant to
Section 1.5(b), (c), (d) or (e) then, in addition to
receiving Executive’s then-current base salary through the
effective date of termination Executive shall receive within
fifteen days of the effective date of termination a lump sum
payment equal to four times the average annual total cash
compensation earned by Executive for the prior four years,
including, without limitation, salary and bonus, and excluding all
equity-based compensation, including, but not limited to, deferred
stock and stock options.
(c)
If Executive terminates
this Agreement for good reason pursuant to Section 1.5(a),
then, in addition to receiving Executive’s then-current base
salary through the effective date of termination Executive shall
receive within fifteen days of the effective date of termination a
lump sum payment equal to two times the average annual total cash
compensation earned by Executive for the prior four years,
including, without limitation, salary and bonus, and excluding all
equity-based compensation, including, but not limited to, deferred
stock and stock options.
(d)
Executive and Employer
agree that the effective date of any termination pursuant to
Section 1.5 shall be the earlier of the end of the applicable
notice period, if any, or the date on which Employer relieves
Executive of Executive’s duties hereunder. Executive and
Employer agree that the effective date of any termination pursuant
to Section 1.6 hereof shall be only upon the expiration of the
thirty-day notice period described in Section 1.6, regardless
of whether Employer earlier relieves Executive of Executive’s
duties hereunder. Furthermore, if this Agreement is terminated
after a Change of Control, and Executive holds any rights or
options exercisable or exchangeable for, or convertible into, a
class of capital stock of Employer that is not or will not be
publicly traded on the NASDAQ or another national exchange after
such termination or Change of Control, then Employer agrees to buy
from Executive all such rights and options that have an exercise
price below the per share price assigned to the capital stock in
the Change of Control, or if no price was assigned, the per share
market price on the date of the Change of Control (whichever price
is applicable, the “ Market Price ”). The
purchase price for each such right or option shall be determined by
multiplying the number of shares of capital stock that may be
acquired using such right or option by the difference between the
exercise price stated in such right or option and the Market
Price.
(e)
Notwithstanding anything
contained in this Agreement to the contrary, if Executive’s
employment is terminated by either Executive or Employer for any
reason other than (i) upon the death of Executive, or
(ii) by Employer “for cause” pursuant to
Section 1.4; then Executive shall be entitled to additional
health care benefits as described in this paragraph. Upon a
qualifying termination and thereafter for the remainder of
Executive’s life Employer will use its best efforts to
provide health insurance coverage to Executive and
Executive’s spouse at the same level as such coverage was
provided through Employer’s health insurance benefit plan
that provided health care coverage for Executive and
Executive’s spouse at the time of termination. Employer shall
be entitled to determine the method for securing such coverage from
time to time and may utilize government provided health benefits
such as Medicare coverage, if available, to satisfy this obligation
in whole or in part. Employer will not be obligated to maintain or
secure coverage from any specific provider to satisfy this
obligation. Executive agrees to cooperate fully with Employer in
securing and providing these additional benefits including, without
limitation, providing consulting services or working flexible hours
to the extent Executive is able to do so, so that Executive can
remain covered under Employer’s group benefit plan(s). In no
event will Employer be obligated to incur annual costs exceeding a
multiple of three times the actual annual cost to Employer for
Executive’s and Executive’s spouse’s health
insurance coverage in effect at the date of Executive’s
termination to satisfy the obligations described in this
paragraph.
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Section 1.9
Survival
. Any termination
of this Agreement and Executive’s employment as a result
thereof shall not release either Employer or Executive from their
respective obligations to the date of termination nor from the
provisions of this Agreement which, by necessary or reasonable
implication, are intended to apply after termination of this
Agreement, including, without limitation, the provisions of Article
IV. Furthermore, neither the termination of this Agreement nor the
termination of Executive’s employment under this Agreement
shall affect, limit, or modify in any manner the existence or
enforceability of any other written agreement between Executive and
Employer, even if such other agreements provide employment related
benefits to Executive.
Section 1.10
Change of
Control .
As used in this Agreement, “ Change of
Control ” shall mean the occurrence of any of the
following:
(a)
Any person, entity or
“group” within the meaning of Sections 13(d)
or 14(d) of the Securities and Exchange Act of 1934 (the
“ Exchange Act ”) becomes the beneficial
owner (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of more than 50% of the combined voting power of
the then
