EXHIBIT 10.2

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into this 22nd day
of April 2003, by and between Acceptance Insurance Companies Inc. (“Company”)
and John E. Martin (“Executive”).

 

WHEREAS, Company believes the retention of Executive as President and Chief
Executive Officer of Acceptance Insurance Company (“AIC”) is of great importance
to the accomplishment of the objectives of AIC and of the Company; and

 

WHEREAS, the Supervisor of AIC has declined to permit AIC to enter into any form
of retention or employment agreement with Executive; and,

 

WHEREAS, Company is desirous of assuring the continued employment of Executive
as President and Chief Executive Officer of AIC, and Executive is desirous of
continued employment, on the terms set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
contained herein, the parties agree as follows:

 

1. Definitions.

 

(a) Duties and Responsibilities. For purposes of this Agreement, the term
“Duties and Responsibilities” means general management of Company as its
President and Chief Executive Officer in accordance with policies established by
the Company’s Board of Directors (“Board”), together with such additional
duties, responsibilities, and functions of Executive relating to his employment
with Company as may from time to time be assigned to Executive by the Board.

 

(b) Employment Period. For purposes of this Agreement the term “Employment
Period” means a period commencing on the date of this Agreement and ending on
December 31, 2004.

 

(c) Continued Employment. For purposes of this Agreement the term “Continued
Employment” means the period commencing on January 1, 2005 and continuing
thereafter until terminated for Cause by Company or upon thirty (30) days prior
written notice by either Company or Executive. Notice of intent to continue
employment of Executive beyond the Employment Period shall be given by the
Company no less than 45 days prior to January 1, 2005.

 

(d) Cause. For purposes of this Agreement, the term “Cause” shall mean
Executive’s willful misconduct with respect to any of his material obligations
to Company including, but not limited to: commission by Executive of a felony;
perpetration of a dishonest act or common law fraud against Company; any injury
to Company or its affiliates resulting from Executive’s gross negligence or
willful or intentional act or failure to act; failure, after receipt of written
notice, to carry out reasonable and lawful direct orders from the Board to
perform any duties under this

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Agreement, or, to correct any serious or continuing breach by Executive of
substantial duties under this Agreement. Without limiting the generality of the
foregoing, the parties agree a determination that cause does or does not exist
with respect to Executive under this Agreement reasonably and lawfully made by
the Board shall be conclusive as to both Executive and Company.

 

(e) Good Reason. Executive shall have “Good Reason” for termination of
employment under this Agreement in the event of:

 

(i) Any material breach of this Agreement by Company, including specifically any
material breach by Company of its obligations as stated in Section 4 or Section
5 hereof; or

 

(ii) Company’s removal of Executive from or failure to continue Executive in any
of the positions included in Executive’s Duties and Responsibilities except in
the event such removal or failure to continue relates to the termination by
Company of Executive’s employment for Cause or by reason of disability pursuant
to Section 7 hereof; or

 

(iii) Material adverse change, without Executive’s written consent, in the
nature or scope of Executive’s Duties and Responsibilities.

 

(f) Termination Date. For purposes of this Agreement, the term “Termination
Date” means (i) the date of Executive’s death if Executive’s employment is
terminated by Executive’s death, or (ii) thirty (30) days after the delivery of
a written Notice of Termination by Company if Executive’s employment is
terminated by Company for any reason other than Cause or Executive’s disability,
or (iii) thirty (30) days after the delivery of a written Notice of Termination
if Executive terminates Executive’s employment for any reason.

 

2. Employment. Company shall continue to employ Executive, and Executive will
remain in the employ of Company, during the Employment Period and thereafter
during Continued Employment in accordance with and subject to the terms and
provisions of this Agreement.

 

3. Duties. During Executive’s employment under this Agreement, Executive shall,
in the capacities and positions included within the Duties and Responsibilities,
devote Executive’s best efforts and all of Executive’s business time, attention
and skill to the business and affairs of Company, as such business and affairs
now exist and as they may hereinafter be directed by Company’s Board.

 

4. Compensation. During Executive’s employment under this Agreement, Executive
shall be compensated as follows:

 

(a) Base Salary. Executive shall receive, at such intervals and in accordance
with such standard policies of Company as are in effect from time to time, an
annualized salary of not less than $250,000, subject to such increases as may be
agreed to by the parties;

 

(b) Benefits. Executive shall be included to the extent eligible thereunder in
any and all plans providing general benefits for the employees of Company
including, but not limited to: (1) Paid time off for sick days, personal days
and vacation of 24 days per year; (2) Group medical insurance plan; (3) Group
dental insurance plan; (4) $50,000 of Company paid term life

 

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insurance; (5) Paid medical leave through the first three weeks of a temporary
disability; (6) Company paid short term disability plan; and, (7) Company paid
long term disability plan;

 

(c) Credit Support. Within thirty (30) days following the date of this
Agreement, Company will make available either to an independent trustee for
Executive and others, or to a national banking association in exchange for
issuance of an irrevocable letter of credit naming Executive as beneficiary,
Three Hundred Fifteen Thousand Dollars ($315,000.00) to partially secure
Company’s payment obligations under this Section 4; provided, however, that
Company may from time to time reduce the obligation of the independent trustee
to Executive or the amount of the letter of credit to any amount which is not
less than the greater of (i) the unpaid portion of Executive’s base salary for
the Employment Period, or (ii) eight-twelfths (8/12) of the Executive’s then
current annual base salary; and

 

(d) Assignment. Executive’s rights under this Agreement Section 4 cannot be
assigned, transferred or encumbered except by transfer to Executive’s estate
upon his death.

 

5. Incentive Bonus Pool. In addition to all compensation and other sums to be
paid under this Agreement, Executive shall be eligible to receive thirty-five
percent (35%) of an incentive bonus pool to be created by Company.

 

6. Termination For Cause or Without Good Reason. If Executive’s employment is
terminated by Company for Cause, or if Executive voluntarily terminates
Executive’s employment for other than Good Reason, Executive shall be entitled
only to compensation earned and benefits accrued through the Termination Date.

 

7. Termination Giving Rise to a Termination Payment.

 

(a) If, during the Employment Period, Executive’s employment is terminated by
Executive for Good Reason, or by Company other than by reason of (i) death, or
(ii) Cause, then upon Executive’s execution and delivery to Company of releases
and waivers under Company policies then in effect Executive shall be entitled to
receive and Company shall pay to Executive within ten (10) business days
following the Termination Date the greater of Executive’s full base salary
through December 31, 2004 or eight (8) months’ base salary (including, and not
in addition to, any severance pay available to Executive under Company policies
then in effect). In addition, Company shall pay the COBRA cost of continued
coverage under Company’s group health and dental plans if Executive so elects
through eight (8) months following such termination. Such termination payment
shall not be reduced by any present value or similar factor, and Executive shall
not be required to mitigate the amount of such payment by securing other
employment or otherwise, nor will such payment be reduced by reason of
Executive’s securing other employment or for any other reason.

 

(b) If, during the period of Continued Employment, Executive’s employment is
terminated by Company other than by reason of death or Cause, then upon
Executive’s execution and delivery to Company of releases and waivers under
Company policies then in effect Executive shall be entitled to receive and
Company shall pay to Executive within ten (10) business days following the
Termination Date the equivalent of eight (8) months’ base salary then in effect,
which sum shall not be reduced by any present value or similar factor, and
Company also shall pay for the cost of COBRA coverage if Executive so elects
through the earlier of loss of eligibility for such coverage or eight (8) months
following such termination.

 

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8. Disability. If, during Executive’s employment under this Agreement, as a
result of Executive’s disability due to physical or mental illness or injury
(regardless of whether such illness or injury is job-related), Executive shall
have been absent from Executive’s duties hereunder on a full-time basis for two
(2) consecutive months Company may terminate Executive’s employment by delivery
of a written Notice of Termination, which shall be effective upon the
Termination Date specified in such Notice. Executive agrees he is a key
executive of Company within the meaning of Section 104(b) of the Family and
Medical Leave Act of 1993, his absence of two (2) consecutive months or more
will cause substantial and grievous economic injury to the operation of Company
and, therefore, if Executive is absent for two (2) consecutive months, this
Agreement may be terminated and Executive will have no further contractual or
statutory right of continued employment.

 

9. Confidential Information. During and following Executive’s employment under
this Agreement, Executive shall hold in confidence and not directly or
indirectly disclose or use or copy or make lists of any confidential information
or proprietary data of Company except as is reasonably necessary or appropriate
in connection with the performance of Executive’s duties under this Agreement.
Confidential information shall not include information known generally in the
public or information of the type not otherwise considered confidential by
persons engaged in the same business or a business similar to that of Company.
All records, files, documents and materials, or copies thereof, relating to the
business or affairs of Company Executive prepares, uses, or has access to shall
be and remain the sole property of Company, and shall be promptly returned to
Company on or prior to the Termination Date.

 

10. Nonsolicitation. During the term of this Agreement, and for a period of two
(2) years following the end of his employment hereunder, Executive shall not,
directly or indirectly, solicit, divert, interfere with, or attempt to induce
any customer, agent, employee, vendor or reinsurer of Company to leave his or
her employment or other relationship with Company.

 

11. Assistance With Claims. During and following employment, Executive shall,
upon reasonable notice, furnish such information and proper assistance to
Company as may reasonably be required by Company in connection with the defense
or prosecution of any claims in which Company or any of its affiliated
companies, is or may become a party. Company will indemnify and hold Executive
harmless from any claims or actions arising out of Executive’s good faith
performance of the Duties and Responsibilities.

 

12. Entire Agreement. This Agreement contains the entire understanding of the
parties and supersedes and renders void all present and preceding agreements. It
may not be changed orally, but only by an agreement in writing by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.

 

13. Successors. If Company sells, signs or transfers all or substantially all of
its business and assets of any person, or if Company merges into or consolidates
or otherwise combines with any person which is a continuing or successor entity,
then Company shall assign all of its right, title and interest in this Agreement
to the person which is either the acquiring or successor corporation.

 

14. Governing Law: Arbitration. This Agreement and the rights and obligations
hereunder shall be governed by and construed in accordance with the laws of the
State of Iowa. Any dispute arising out of the Agreement shall be determined by
arbitration in Council Bluffs, Iowa under the rules of the American Arbitration
Association then in effect and judgment upon any award pursuant to such
arbitration may be enforced in any court having jurisdiction thereof.

 

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15. Notice. Notices given pursuant to this Agreement shall be in writing and
shall be deemed given when received and, if mailed, shall be mailed by United
States registered or certified mail, return receipt requested, addressee only,
postage prepaid, if to Company to Chief Executive Officer and President, Suite
1600, 300 West Broadway, Council Bluffs, IA 51503, or if to Executive, at the
address set forth below Executive’s signature line of this Agreement, or to such
other address as the party to be notified shall have given to the other.

 

16. No Waiver. No waiver by either party at any time of any breach by the other
party of, or compliance with, any condition or provision of this Agreement to be
performed by the other party shall be deemed a waiver of similar or dissimilar
provisions or condition at the same time or any prior or subsequent time.

 

17. Headings. The headings herein contained are for reference only and shall not
affect the meaning or interpretation of any provision of this Agreement.

 

18. Severability. If any provision of this Agreement shall be determined to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
the remainder of this Agreement

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first written above.

 

ACCEPTANCE INSURANCE COMPANIES INC.

/S/    MICHAEL R. MCCARTHY        

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Michael R. McCarthy

Chairman

 

/S/    JOHN E. MARTIN        

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John E. Martin

Executive

 

Executive’s Address:

1620 Fair Avenue

Falls City, NE 68355

 

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