Exhibit 10.3


 


EXECUTION COPY


 


EMPLOYMENT AGREEMENT


 


THIS AGREEMENT (“Agreement”)
is made as of this 28th day of April, 2016 (the “Effective Date”), between NI Holdings, Inc., a North Dakota business
corporation, (the “Corporation”), NODAK Mutual Insurance Company, a North Dakota mutual insurance company (the “Company”),
and Michael J. Alexander, an adult individual (“Executive”).


 


WITNESSETH:


 


WHEREAS, the Corporation, the Company,
and Executive desire to enter into an agreement providing for the terms of Executive’s employment with the Corporation and
the Company.


 


AGREEMENT


 


NOW, THEREFORE, the parties hereto,
intending to be legally bound, agree as follows:


 


1. Employment. The Corporation
and the Company employ Executive and Executive hereby accepts employment with the Corporation and the Company, on the terms and
conditions set forth in this Agreement.


 


2. Duties of Employee. Executive
shall serve as President and Chief Executive Officer of the Corporation and the Company and shall report directly to the Chairman
of the Board of Directors of the Corporation (the “Corporation Board”) and the Company (the “Company Board”).
Executive shall submit such direct reports as are needed, from time to time, and shall be responsible for the day-to-day operations
of the Corporation and the Company and shall perform all reasonable duties assigned by the respective Board. Executive shall devote
his full time, attention and energies to the business of the Corporation and the Company during the Employment Period (as defined
in Section 3 of this Agreement); provided, however, that this Section 2 shall not be construed as preventing Executive
from (a) engaging in activities incident or necessary to personal investments, (b) acting as a member of the board of
directors of any non-profit association or corporation, or (c) being involved in any other business activity with the prior
approval of the Corporation Board. Executive shall not engage in any business or commercial activities, duties or pursuits which
compete with the business or commercial activities of the Corporation or the Company, nor may Executive serve as a director or
officer or in any other capacity in a company which competes with the Corporation or the Company.


 


3. Term of Agreement.


 


(a) Employment Period. This Agreement
shall be for a period (the “Employment Period”) beginning on the Effective Date, and if not previously terminated pursuant
to the terms of this Agreement, continuing until the third anniversary hereof; provided, however, that on a daily basis, one additional
day shall be added to the term of this Agreement, so that the Employment Period shall always be three (3) years, unless either
the Executive or the Corporation shall have provided the other with written notice of its intention to cease extending the term
of this Agreement.


 




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(b) Notwithstanding anything herein contained
to the contrary, nothing in this Agreement shall mandate or prohibit a continuation of Executive’s employment following the
expiration of the term of this Agreement upon such terms as the Corporation Board and Executive may mutually agree.


 


(c) Termination for Cause. Notwithstanding
the provisions of Section 3(a) of this Agreement, this Agreement may be terminated by the Corporation and the Company for
Cause (as defined herein). As used in this Agreement, “Cause” shall mean any of the following:


 


(i) Executive willfully fails or refuses
to substantially perform the Executive’s responsibilities under this Agreement, after demand for substantial performance
has been given by the Corporation Board that specifically identifies how the Executive has failed to perform such responsibilities;


 


(ii) Executive engages in gross misconduct
which is materially and demonstrably injurious to the Corporation or the Company;


 


(iii) Executive is convicted of a felony
or pleads guilty or nolo contendere to a felony;


 


(iv) Executive materially breaches Section
6 of this Agreement;


 


(v) Executive engages in any act of
fraud (including misappropriation of the Corporation’s or the Company’s funds or property) in connection with the business
of the Corporation or the Company which is materially and demonstrably injurious to the Corporation or the Company; or


 


(vi) Executive is disqualified or
barred by any governmental or self-regulatory authority from serving in the capacity contemplated by this Agreement.


 


If this Agreement is terminated for Cause,
all of Executive’s rights under this Agreement shall cease as of the effective date of such termination, except that:


 


(i) the Company shall pay to Executive
the unpaid portion, if any, of his Annual Base Salary through the date of termination; and


 


(ii) the Company shall provide to Executive
such post-employment benefits, if any, as may be provided for under the terms of the employee benefit plans of the Company then
in effect.


 


(d) Death. Notwithstanding the provisions
of Section 3(a) of this Agreement, this Agreement shall terminate automatically upon Executive’s death and Executive’s
rights under this Agreement shall cease as of the date of such termination, except that (i) the Company shall pay to Executive’s
spouse, personal representative, or estate the unpaid portion, if any, of his Annual Base Salary through date of death and (ii) the
Company shall provide to Executive’s dependents any benefits due under the Company’s employee benefit plans.


 




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(e) Disability. Executive, the Corporation
and the Company agree that if Executive becomes Disabled, within the meaning of Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”) and the regulations thereunder, and becomes eligible for employer-provided short-term
and/or long-term disability benefits, or worker’s compensation benefits, then the Company’s obligation to pay Executive
his Annual Base Salary shall be reduced by the amount of the disability or worker’s compensation benefits received by Executive.


 


Executive, the Corporation and the Company
agree that if, in the judgment of the Corporation Board, Executive is unable, as a result of illness or injury, to perform the
essential functions of his position on a full-time basis with or without a reasonable accommodation and without posing a direct
threat to himself or others for a period of six months, the Company will suffer an undue hardship in continuing Executive’s
employment as set forth in this Agreement. Accordingly, this Agreement shall terminate at the end of the six-month period, and
all of Executive’s rights under this Agreement shall cease, with the exception of any unpaid Annual Base Salary through the
date of termination and those rights which Executive may have under the Company’s employee benefit plans.


 


(f) Resignation from Board of Directors.
In the event Executive’s employment under this Agreement is terminated for any reason, if applicable, Executive’s service
as a Director of the Corporation or the Company and any affiliate or subsidiary thereof shall immediately terminate. This Section 3(f)
shall constitute a resignation notice for such purposes.


 


4. Employment Period Compensation.
Benefits and Expenses.


 


(a) Annual Base Salary. For services
performed by Executive under this Agreement, the Company shall pay Executive an annual base salary during the Employment Period
at the rate of $525,000 per year, minus applicable withholdings and deductions, payable at the same times as salaries are payable
to other executive employees of the Company (the “Annual Base Salary”). The Annual Base Salary shall be reviewed annually
by the Company Board and the Company Board may, from time to time, increase Executive’s Annual Base Salary, and any and all
such increases shall be deemed to constitute amendments to this Section 4(a) to reflect the increased amounts, effective as
of the date established for such increases.


 


(b) Bonus. The Executive shall participate
in any equity incentive plan and short-term performance plan generally made available to executive officers of the Company.


 


(c) Vacations, Holidays, etc. During
the term of this Agreement, Executive shall be entitled to paid annual vacation in accordance with the policies as established
from time to time by the Company. Executive shall also be entitled to all paid holidays, sick days and personal days provided by
the Company to its regular full-time employees and senior executive officers.


 




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(d) Employee Benefit Plans. During
the term of this Agreement, Executive shall be entitled to participate in or receive the benefits of any employee benefit plan
currently in effect at the Company, subject to the eligibility and terms of each such plan, until such time that the Company authorizes
a change in such benefits.


 


(e) Business Expenses. During the
term of this Agreement, Executive shall be entitled to receive prompt reimbursement for all customary and usual expenses incurred
by him, which are properly accounted for, in accordance with the policies and procedures established by the Company.


 


5. Rights in Event of Termination
of Employment.


 


(a) If Executive’s employment is
involuntarily terminated by the Corporation and the Company without Cause (other than for death or Disability), or the Executive
voluntarily terminates employment for Good Reason (as defined below), Executive shall be entitled to receive the compensation and
benefits set forth below:


 


(i) Executive shall be entitled to receive
an annual amount equal to (A) his Annual Base Salary plus (B) the average annual bonus for the preceding three (3) calendar
years. Such annual amount shall be multiplied by the number of full calendar months remaining in the Employment Period divided
by twelve (12). The resulting amount shall be paid by the Company in one lump sum within ten (10) calendar days of such termination.


 


(ii) Also, in such event, Executive shall,
for the remaining Employment Period, continue to participate in any benefit plans of the Company that provide health (including
medical and dental) coverage, upon terms no less favorable than the most favorable terms provided to senior executives of the Company
during such period. In the event that the Company is unable to provide such coverage by reason of Executive no longer being an
employee, the Company shall provide Executive an amount equal to the total after-tax cost to Employee, for each month that is then
remaining in the Employment Period, of obtaining such coverage.


 


(b) “Good Reason” shall mean
(i) a material diminution in salary, (ii) a material diminution in authority, duties or responsibilities, (iii) a
change in Executive's title, or (iv) a reassignment which assigns full-time employment duties to Executive at a location more
than twenty (20) miles from the Company’s principal executive office on the date of this Agreement, in all cases after
notice from Executive to the Company within ninety (90) days after the initial existence of any such condition that the condition
constitutes Good Reason and the failure of the Company to cure such situation within thirty (30) days after said notice.


 


(c) Executive shall not be required to
mitigate the amount of any payment provided for in this Section 5 by seeking other employment or otherwise, nor shall the
amount of payment or the benefit provided for in this Section 5 be reduced by any compensation earned by Executive as the
result of employment by another employer or by reason of Executive’s receipt of or right to receive any retirement or other
benefits after the date of termination of employment or otherwise.


 




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6. Unauthorized Disclosure.
During the term of his employment hereunder, or at any later time, Executive shall not, without the written consent of the Company
Board or a person authorized thereby (except as may be required pursuant to a subpoena or other legal process), knowingly disclose
to any person, other than an employee of the Company or a person to whom disclosure is reasonably necessary or appropriate in connection
with the performance by Executive of his duties as an executive of the Company, any material confidential information obtained
by him while in the employ of the Company with respect to any of the Company’s or any of its subsidiaries’ services,
products, improvements, formulas, designs or styles, processes, customers, methods of business or any business practices the disclosure
of which could be or will be damaging to the Company; provided, however, that confidential information shall not include any information
known generally to the public (other than as a result of unauthorized disclosure by Executive or any person with the assistance,
consent or direction of Executive) or any information of a type not otherwise considered confidential by persons engaged in the
same business or a business similar to that conducted by the Company or any information that must be disclosed as required by law.


 


7. Requirement of Release.
Notwithstanding anything herein to the contrary, Executive’s entitlement to any payments under Section 5 shall be contingent
upon Executive’s prior agreement with and signature to a complete release agreement in the form as mutually agreed by the
parties. Such release agreement shall be executed, if at all, and the applicable payments and benefits contingent upon the execution
of such agreement shall be provided or commence being provided, if at all, within sixty (60) days following the date of termination;
provided, however, that if such sixty (60) day period begins in one taxable year and ends in a second taxable year, the payments
and benefits will be provided or commence being provided, if at all, in the second taxable year.


 


8. Notices. Except as otherwise
provided in this Agreement, any notice required or permitted to be given under this Agreement shall be deemed properly given if
in writing and if mailed by United States registered or certified mail, postage prepaid with return receipt requested, to Executive’s
address, in the case of notices to Executive, and to the principal executive office of the Company, in the case of notice to the
Company.


 


9. Waiver. No provision of
this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and
signed by Executive and an executive officer of the Corporation and the Company specifically designated by the respective Board.
No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision
of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.


 


10. Assignment. This Agreement
shall not be assignable by any party, except by the Company to any successor in interest to its business.


 


11. Entire Agreement. This
Agreement contains the entire agreement of the parties relating to the subject matter of this Agreement and supersedes and replaces
any prior written or oral agreements between them respecting the within subject matter.


 




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12. Successors; Binding Agreement.


 


(a) The Corporation and 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 Corporation or the Company to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Corporation and Company would be required to perform it if no such succession had taken
place. As used in this Agreement, “Corporation” and “Company” shall mean the Corporation and the Company
as defined previously and any successor to their respective business and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law or otherwise.


 


(b) This Agreement shall inure to the benefit
of and be enforceable by Executive’s personal or legal representatives, executors, administrators, heirs, distributees, devisees
or legatees. If Executive should die following termination of Executive’s employment without Cause, and any amounts would
be payable to Executive under this Agreement if Executive had continued to live, all such amounts shall be paid in accordance with
the terms of this Agreement to Executive’s devisee, legatee, or other designee, or, if there is no such designee, to Executive’s
estate.


 


13. Legal Expenses. The Company
shall reimburse Executive for all reasonable legal fees and expenses he may incur in seeking to obtain or enforce any right or
benefit provided by this Agreement, but only with respect to such claim or claims upon which Executive prevails. Such payments
shall be made within fourteen (14) days after delivery of Executive’s written request for payment accompanied with such evidence
of fees and expenses incurred as the Company may reasonably require.


 


14. 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, which shall remain in full force and effect.


 


15. Applicable Law. This
Agreement shall be governed by and construed in accordance with the laws of the State of North Dakota, without regard to its conflict
of laws principles.


 


16. Headings. The section
headings of this Agreement are for convenience only and shall not control or affect the meaning or construction or limit the scope
or intent of any of the provisions of this Agreement.


 


17. Limitations on Payments.


 


(a) Notwithstanding anything in this Agreement
to the contrary, in the event the payments and benefits payable hereunder to or on behalf of Executive, when added to all other
amounts and benefits payable to or on behalf of Executive, would result in the imposition of an excise tax under Section 4999 of
the Internal Revenue Code of 1986, as amended (the “Code”), the amounts and benefits payable hereunder shall be reduced
to such extent as may be necessary to avoid such imposition. All calculations required to be made under this subsection will be
made by the Company’s independent public accountants, subject to the right of Executive’s representative to review
the same. The parties recognize that the actual implementation of the provisions of this subsection are complex and agree to deal
with each other in good faith to resolve any questions or disagreements arising hereunder.


 




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(b) All payments made to the Executive
pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with applicable laws and any regulations
promulgated thereunder.


 


18. Recovery of Bonuses and Incentive
Compensation. Notwithstanding anything in this Agreement to the contrary, all bonuses and incentive compensation, but not
Annual Base Salary or payments due Executive under Section 5, paid hereunder (whether in equity or in cash) shall be subject to
recovery by the Company in the event that such bonuses or incentive compensation are based on materially inaccurate financial statements
or other materially inaccurate performance metric criteria; provided that a determination as to the recovery of a bonus or incentive
compensation shall be made within twenty-four (24) months following the date such bonus or incentive compensation was paid. In
the event that the Company Board determines that a bonus or incentive compensation payment to Executive is recoverable, Executive
shall reimburse all or a portion of such bonus or incentive compensation, to the fullest extent permitted by law, as soon as practicable
following written notice to Executive by the Company of the same.


 


19. Application of Code Section 409A.



 


(a) Notwithstanding anything in this Agreement
to the contrary, the receipt of any benefits under this Agreement as a result of a termination of employment shall be subject to
satisfaction of the condition precedent that Executive undergo a “separation from service” within the meaning of Treas.
Reg. § 1.409A-1(h) or any successor thereto. In addition, if Executive is deemed to be a “specified employee”
within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment or the provisions of any benefit
that is required to be delayed pursuant to Code Section 409A(a)(2)(B), such payment or benefit shall not be made or provided prior
to the earlier of (i) the expiration of the six (6) month period measured from the date of Executive’s “separation
from service” (as such term is defined in Treas. Reg. § 1.409A-1(h)), or (ii) the date of Executive’s death (the
“Delay Period”). Within ten (10) days following the expiration of the Delay Period, all payments and benefits delayed
pursuant to this Section (whether they would have otherwise been payable in a single sum or in installments in the absence of such
delay) shall be paid or reimbursed to Executive in a lump sum, and any remaining payments and benefits due under this Agreement
shall be paid or provided in accordance with the normal payment dates specified for them herein. Notwithstanding the foregoing,
to the extent that the foregoing applies to the provision of any ongoing welfare benefits to Executive that would not be required
to be delayed if the premiums therefore were paid by Executive, Executive shall pay the full costs of premiums for such welfare
benefits during the Delay Period and the Company shall pay Executive an amount equal to the amount of such premiums paid by Executive
during the Delay Period within ten (10) days after the conclusion of such Delay Period.


 




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(b) Except as otherwise expressly provided
herein, to the extent any expense reimbursement or other in-kind benefit is determined to be subject to Code Section 409A, the
amount of any such expenses eligible for reimbursement or in-kind benefits in one calendar year shall not affect the expenses eligible
for reimbursement or in-kind benefits in any other taxable year (except under any lifetime limit applicable to expenses for medical
care), in no event shall any expenses be reimbursed or in-kind benefits be provided after the last day of the calendar year following
the calendar year in which Executive incurred such expenses or received such benefits, and in no event shall any right to reimbursement
or in-kind benefits be subject to liquidation or exchange for another benefit.


 


(c) Any payments made pursuant to Section
5, to the extent of payments made from the date of termination through March 15th of the calendar year following such date, are
intended to constitute separate payments for purposes of Treas. Reg. §1.409A-2(b)(2) and thus payable pursuant to the “short-term
deferral” rule set forth in Treas. Reg. §1.409A-1(b)(4); to the extent such payments are made following said March 15th,
they are intended to constitute separate payments for purposes of Treas. Reg. §1.409A-2(b)(2) made upon an involuntary termination
from service and payable pursuant to Treas. Reg. §1.409A-1(b)(9)(iii), to the maximum extent permitted by said provision.


 


(d) To the extent it is determined that
any benefits described in Section 5(a)(ii) are taxable to Executive, they are intended to be payable pursuant to Treas. Reg. §1.409A-1(b)(9)(v),
to the maximum extent permitted by said provision.


 


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IN WITNESS WHEREOF, the parties have
executed this Agreement as of the Effective Date.


 


	ATTEST:	 	nodak Mutual Insurance Company 
	 	 	 	 
	 	 	By:	 
	 	 	 	 
	Secretary	 	 	 
	 	 	 	 
	ATTEST:	 	NI Holdings, inc. 
	 	 	 	 
	 	 	By:	 
	 	 	 	 
	Secretary	 	 	 
	 	 	 	 
	WITNESS:	 	MICHAEL J. ALEXANDER
	 	 	 	 
	 	 	 	 


 




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