Document:

Exhibit 10.1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

BY AND BETWEEN

HARTVILLE GROUP, INC.

AND

DENNIS C. RUSHOVICH

EFFECTIVE: MAY 1, 2005

 

 

EMPLOYMENT AGREEMENT

TABLE OF CONTENTS

	 	 	 	 	 	 
	 	 	 	 	PAGES
	1.

	 	EMPLOYMENT
	 	 	1
	 

	 	1.1 General Duties and Title
	 	 	1
	 

	 	1.2 Other Positions of Executive
	 	 	2
	2.

	 	TERM 2	 	 	 
	3.

	 	REMUNERATION
	 	 	2
	4.

	 	WITHHOLDING
	 	 	3
	5.

	 	INSURANCE AND OTHER BENEFIT PLANS
	 	 	3
	6.

	 	VACATIONS, ILLNESS AND HOLIDAYS
	 	 	3
	7.

	 	BUSINESS EXPENSES
	 	 	3
	8.

	 	INDEMNIFICATION
	 	 	4
	9.

	 	TERMINATION OF EMPLOYMENT
	 	 	4
	 

	 	9.1 Termination by the Company for Cause
	 	 	4
	 

	 	9.2 Definition of Cause
	 	 	5
	 

	 	9.3 Determination of For Cause Termination
	 	 	5
	 

	 	9.4 Termination by the Company Without Cause
	 	 	6
	 

	 	9.5 Voluntary Termination by the Executive
	 	 	6
	 

	 	9.6 Disability Termination
	 	 	6
	 

	 	9.7 Termination Due to Executive’s Death
	 	 	7
	10.

	 	RESTRICTIVE COVENANTS; CONFIDENTIALITY; OWNERSHIP OF PROCEEDS OF EMPLOYMENT
	 	 	7
	 

	 	10.1 Solicitation of Employees; Customers; Agents or Representatives etc.
	 	 	7
	 

	 	10.2 Confidential Records
	 	 	8
	 

	 	10.3 Ownership of Proceeds of Employment
	 	 	8
	 

	 	10.4 Survival
	 	 	9
	 

	 	10.5 Enforceability; Remedies
	 	 	9
	11.

	 	MISCELLANEOUS PROVISIONS
	 	 	9
	 

	 	11.1 Severability
	 	 	9
	 

	 	11.2 Execution in Counterparts
	 	 	9
	 

	 	11.3 Notices
	 	 	9
	 

	 	11.4 Entire Agreement and Subsequent Amendments
	 	 	10
	 

	 	11.5 Applicable Law
	 	 	10
	 

	 	11.6 Headings
	 	 	11
	 

	 	11.7 Binding Effect; Successors and Assigns
	 	 	11
	 

	 	11.8 Waiver
	 	 	11
	 

	 	11.9 Warranty and Capacity to Contract
	 	 	11
	 

	 	11.10 Arbitration
	 	 	11
	 

	 	11.12 Survival
	 	 	12
	 

	 	11.13 Costs of Preparation and Negotiation of Agreement
	 	 	12

 

 

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) dated as of the 1st day of May,
2005 (the “Effective Date”) by and among HARTVILLE GROUP, INC. (the “Company”) a Nevada
corporation, and DENNIS C. RUSHOVICH an individual currently residing at 56 Greens Circle,
Stamford, CT 06903 (“Executive”).

WITNESSETH THAT

WHEREAS, the Company desires to employ Executive in accordance with the terms of this Agreement
and Executive desires to be so employed by the Company; and

WHEREAS, the parties desire to set forth the employment understanding and terms and conditions
of employment in a written agreement; and Executive wishes to accept such employment upon the
terms and subject to the conditions hereinafter set forth;

NOW THEREFORE, in consideration of the mutual promises contained herein, the parties hereto
hereby agree as follows:

	1.	 	EMPLOYMENT
	 
	1.1	 	General Duties and Title
	 
	 	 	On the Effective Date, the Company hereby employs Executive with the
title/s designated in Exhibit A (the “Position Description”) attached
hereto and forming a part of this Agreement.

	 
	 	 	Executive’s primary responsibilities and duties are as described in
Exhibit A. The primary responsibilities and duties of the Executive
may be altered or amended by either (i) the mutual agreement of the
Company and the Executive; or (ii) the establishment of new or
modified duties, as determined by the Company after consultation with
the Board of Directors of the Company (the “Board”). Any modifications
or alterations to the duties assigned to the Executive will be
consistent with the customary duties of a Chief Executive Officer and
the education, background and experience of the Executive. Executive
shall faithfully and substantially perform for the Company all such
duties. Executive shall report to and take direction primarily from
the Board. Executive agrees to act in the capacity of a member or
officer of such boards as he may be appointed without remuneration
other than the remuneration to which Executive Is otherwise entitled
under this Agreement.
	 
	 	 	Services rendered by Executive shall be rendered in accordance with
recognized insurance and financial industry standards and recognized
codes of conduct or ethics. Executive shall further promote and
enhance the business purposes of the Company by
entertainment and other means, including participation in professional
organizations and activities, attendance at insurance, financial, or
industry conventions and seminars, and membership in insurance or
financial industry societies.

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	1.2	 	Other Positions of Executive
	 
	 	 	Notwithstanding the foregoing, the Company acknowledges that the
Executive has other business interests and ownerships as well as
serving on the Boards of Directors of other companies including
companies in which the Employee is a stockholder or owner. Subject to
the provisions of Section 10 hereof, the Company acknowledges and
consents to the continuation of these ownerships and relationships,
provided they do not materially impair performance of the Executive’s
duties under this Agreement.
	 
	2.	 	TERM
	 
	 	 	The employment of Executive hereunder shall commence on the Effective Date and shall,
unless this Agreement is sooner terminated as provided in Section 9 hereof, continue until
April 30, 2006 and thereafter for additional one (1) year terms until each successive
April 30 (each an “Anniversary Date”) provided, however, that if written notice of
termination of this Agreement is given by party hereto to the other party hereto at feast
ninety (90) days prior to an Anniversary Date, then this Agreement shall terminate no
later than the Anniversary Date next following the date of such notice.
	 
	3.	 	REMUNERATION
	 
	 	 	The Company (and/or an affiliate acting on behalf of the Company) will pay, or provide, to
Executive as compensation for services to be rendered under Section 1 hereof, the
following amounts:

	 	(a)	 	Monthly Base Salary
	 
	 	 	 	A base salary (“Base Salary”) at the monthly equivalent rate of Two Hundred Thousand
Dollars ($200,000) per annum.
	 
	 	(b)	 	Stock Rights under the Company’s 2004 Nonstatutory Stock Option Plan,
as, Amended (“Option Plan”)
	 
	 	 	 	Options under the Option Plan to purchase up to 500,000 shares of the common stock
of the Company on the terms and conditions set forth in the Stock Option Agreement
being adopted by the parties simultaneously herewith.
	 
	 	(c)	 	Living Expenses
	 
	 	 	 	The Company shall provide the Executive with appropriate living quarters in or
proximate to Canton, Ohio, and use of an automobile for the term hereof. Weekly
round trip air travel on a regularly scheduled passenger airline carrier between
Canton, Ohio and the Executive’s residence in Stamford, Connecticut will be paid for
by the Company.
	 
	 	(d)	 	Discretionary Cash Bonus

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	 	 	 	A cash bonus payable to the Executive at such times and in such amounts as the
Company may, in its sole discretion, determine.

	4.	 	WITHHOLDING
	 
	 	 	Executive agrees that the Company shall withhold from any and all payments required to be
made to Executive pursuant to this Agreement all actual or potential Federal, State, local
and/or other taxes the Company determines are required or potentially will be required, to
be withheld in accordance with applicable statutes and/or regulations from time to time in
effect.
	 
	5.	 	INSURANCE AND OTHER BENEFIT PLANS
	 
	 	 	Executive shall be entitled, during the period of employment with the Company, to
participate in (i) the life insurance and disability insurance plans available to
executives of the Company, including such accidental death or other benefits as may be
provided under such plans, and (ii) the health and dental and vision plans available to
officers (and their immediate families) of the Company, and (iii) such other employee
benefit plans, including all employee welfare benefit plans and employee pension benefit
plans, that currently are or will be made generally available to executives and salaried
employees of the Company. Participation by or inclusion of the Executive in any benefit
plan maintained by the Company shall be provided only to the extent that the Executive Is
eligible under the terms and conditions of the applicable plan and, if required pursuant
to the plan, the employee meets any insurance underwriting or other conditions validly
required by the provider or carrier of the plan or the contracts, policies, or other terms
of eligibility or participation issued in connection with the plan.
	 
	6.	 	VACATIONS, ILLNESS AND HOLIDAYS
	 
	 	 	Without any loss or reduction of remuneration, Executive shall be entitled to be absent
from Executive’s duties with the Company by reason of vacation for four (4) weeks for each
year or illness for (4) four weeks for each year during the term of this Agreement. In
addition, the Executive shall be entitled to such national and religious holidays as
generally approved by the Company. The Executive shall be entitled to carry forward any
unused sickness, vacation or holiday time accrued during a year to successive years of
this Agreement until used.
	 
	7.	 	BUSINESS EXPENSES
	 
	 	 	The Company recognizes that, in connection with Executive’s performance of his duties,
functions and responsibilities hereunder, Executive will incur certain reasonable and
necessary expenses. The Company agrees to pay or promptly reimburse Executive for all such
reasonable business expenses, which are incurred in connection with the Company’s
business, upon the presentation of statements setting forth the nature and amount of such
expenses in reasonable detail, in accordance with the Company’s generally applicable
guidelines and procedures from time to time.

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	8.	 	INDEMNIFICATION
	 
	 	 	The Company shall indemnify, defend and hold harmless Executive, and shall cause each
applicable entity controlled by the Company (defined for purposes of this Section 8 as a
“Subsidiary”) to indemnify, defend and hold harmless Executive for general directors
and/or officers liability in the normal course of Executive’s services on Company business
or Subsidiary business, to the fullest extent allowed by law.
	 
	 	 	To secure its indemnification obligations the Company has and shall maintain in full force
and effect through the term of this Agreement directors and officers insurance coverage
the provisions of which are summarized at Exhibit B. The use of the Company’s insurance
coverage or policy to secure its or any Subsidiary’s indemnification on litigation shall
not, however, limit the obligation of the Company or any Subsidiary to indemnify the
Executive for claims or expenses either below the annual or periodic deductible limit in
the policy or in excess of the policy limits or for items or events not covered by the
policy.
	 
	 	 	The Company shall be obligated, and shall cause each applicable Subsidiary, to pay the
claims or expenses of the Executive required under this Section 8, including defense cost,
directly to the third party to whom payment is due and owing, without the necessity of the
Executive making such payment and seeking reimbursement from the Company or the
Subsidiary.
	 
	 	 	To the extent that the Executive is successful on the merits or otherwise in defense of
any action, suit, or proceeding, or in defense of any claim, issue or matter brought
against the Executive, the Executive shall be indemnified by the Company, and the Company
shall cause each applicable Subsidiary to indemnify the Company, against all expenses,
including defense and legal fees, incurred by the Executive.
	 
	 	 	The provisions of this Section 8 shall survive the termination or expiration of
Executive’s employment under this Agreement irrespective of the reason for such
termination, provided that nothing herein shall be construed to provide Executive with any
greater coverage or coverage for any period longer than Executive would have been entitled
to receive under the terms of such insurance policy referred to herein (other than
deductible and policy dollar limits).
	 
	9.	 	TERMINATION OF EMPLOYMENT
	 
	9.1	 	Termination by the Company for Cause
	 
	 	 	In the event that Executive is removed from office by the Company for cause (as hereinafter defined), the employment of
Executive under this Agreement shall terminate and Executive shall be entitled to receive all remuneration and benefits
accrued hereunder to the date of such termination except for unvested Options under the Option Plan and Insurance which
would by its terms lapse.

	 
	 	 	
No other or further payment of benefits under this Agreement will be due upon Termination for Cause, except as required by
law, or under the Company’s insurance and other employee benefit plans and the procedures referred to in Sections 5 and 7.

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	9.2	 	Definition of Cause
	 
	 	 	For purposes of this Agreement, the term “cause” shall mean (1) any willful material neglect by Executive, or material
failure by Executive to substantially perform the duties and responsibilities of the Executive’s office or offices (other
than any such failures resulting from Executive’s incapacity due to illness or injury), or (ii) any malfeasance or gross
misconduct by Executive in connection with the performance of any of the duties or responsibilities or otherwise which
would, in the view of a reasonable person, be materially prejudicial to the interests of the Company or any of its
affiliates if Executive were retained in the respective office or offices, including without limitation, conviction of a
felony, or (iii) actual indictment for, or formal admission to a felony or crime of moral turpitude, dishonesty, breach of
trust or unethical business conduct or any crime involving the Company, or (iv) repeated material failure to adhere to the
policies and directions of the Board of Directors, or failure of the Executive to devote sufficient time and efforts to the
business of the Company and the duties and responsibilities hereunder so as to result In material impairment of the
Executive’s performance hereunder, and with respect to 9.2.(i) or 9.2.(ii) or 9.2.(iv) herein, there has been a failure to
cure such breach or a failure to modify Executive’s conduct within 30 days of receiving written notice of such breach
specifying the factual reasons supporting the proposed dismissal for cause.
	 
	9.3	 	Determination of For Cause Termination
	 
	 	 	A determination of a for cause termination shall be made by the Company as follows:

	 	(a)	 	The Chairman of Board shall first make a preliminary determination that the
Executive should be reviewed for discharge for cause, The Company will not be
required to provide any preliminary notice to the Executive of its intention to
investigate the possible discharge of the Executive for cause.
	 
	 	(b)	 	After investigating the circumstances surrounding the possible for cause
termination of the Executive, the Company, through the Chairman, may immediately
relieve or suspend the Executive from the Executive’s position by providing notice to
the Executive. Upon notice of the suspension, the Executive shall immediately vacate
the premises and remove all personal property from the premises of the Company. The
Company shall have the absolute right to review any and all material in the
possession of the Executive on the Company premises to determine those items, which
are proprietary to the Company. After sorting the appropriate items, all personal
items shall be delivered to the Executive at the location designation reasonably
selected by the Executive.
	 
	 	(c)	 	After concluding its investigation, the Company, through the Chairman of the
Board, shall make a determination whether the Executive should be discharged for
cause. The determination for discharge for cause shall be timely communicated in
writing to the Executive.
	 
	 	(d)	 	Until terminated, notwithstanding that any of the foregoing procedures are
taking place, or have taken place, the Executive shall be entitled to and shall
continue to accrue all remuneration and benefits provided for under this Agreement.

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	9.4	 	Termination by the Company Without Cause
	 
	 	 	The Company expressly reserves the right to terminate the employment,
or materially reduce the responsibilities, of Executive at any time
for no reason or for any reason.

	 
	 	 	
In the event that Executive’s employment is so terminated or altered
under this Section, Executive shall be entitled to receive:
	 
	 	 	Six (6) monthly payments of the current monthly Base Salary, paid
pursuant to the Company’s normal payroll practices
	 
	 	 	
In addition to the above payments if permitted under the appropriate
plan documentation and if allowed by law, all health, dental and life
insurance coverage provided to Executive under the employee benefit
plans will be extended for such period as the Company is obligated to
make monthly Base Salary payments to Executive in terms of this
Section, unless Executive becomes covered by other employer plans. if
coverage extensions are not permitted by law or under the plans, the
Company shall pay to the Executive periodic bonuses equal to the
insurance premium cost which would have been required as if the
Executive were covered under the plan.
	 
	 	 	
Any unvested employer contributions attributable to Executive under
any pension plan, shall be accelerated and deemed vested as of the
date of termination of employment without cause. If the acceleration
of vesting is not permitted by law or under the terms of the plan, the
Company shall, in lieu of accelerated vesting, pay a bonus to the
Executive in the amount of the account forfeiture under the plan.
	 
	9.5	 	Voluntary Termination by the Executive
	 
	 	 	Executive shall be entitled, with not less than ninety (90) days
written notice, to voluntarily terminate employment with the Company.
If Executive elects such termination, Executive shall be entitled to
receive the Executive’s monthly Base Salary defined under Section 3
and benefits defined under Section 5 until the end of such notice
period. Executive shall also be entitled to exercise any vested rights
under Sections 5 and 6.

	 
	 	 	
Even though the Executive is required to give not less than ninety
(90) days advance written notice, the Company shall have the option to
require that the Executive discontinue service on behalf of the
Company at any time upon receipt of advance written notice of the
Executive’s election to terminate; provided, however, that in such
event the Company shall be required to continue the Base Salary and
benefit payments through the ninety (90) day notice period.
	 
	9.6	 	Disability; Termination
	 
	 	 	The Executive’s employment shall terminate if the Executive becomes so
disabled as to be unable to substantially perform the services of the
character contemplated by this Agreement, and such disability
continues for a period of ninety (90) consecutive days. The
Executive’s employment shall terminate at the conclusion of the
90-consecutive day disability. In such event, the Executive shall be
entitled to receive the Executive’s

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	 	 	monthly Base Salary defined under Section 3 and benefits defined under Section
5 until the end of the 90-consecutive day disability period. Executive shall
also be entitled to exercise any vested rights under Sections 5 and 6.
	 
	 	 	For purposes of this Agreement the term “disability”
or “disabled” shall mean a physical or mental
condition resulting from a bodily injury or disease
or mental disorder which renders the Executive
incapable of engaging in substantial gainful activity
of the character contemplated by this Agreement and
which can be expected to be of a long and continued
duration. The disability of the Executive shall be
determined by the Board based upon competent medical
authority. The determination of a disability may be
made by the Board independent of such determination
being made under any other disability insurance plan
sponsored or funded by the Company.
	 
	9.7	 	Termination Due to Executive’s Death
	 
	 	 	This Agreement shall terminate if the Executive shall
die, in which event the Executive’s estate or
personal representative shall not be entitled to
continue to receive Base Salary payments permitted
under Section 3 or other benefits permitted under
this Agreement, other than the monthly Base Salary
for the period until death and those benefit
continuation requirements imposed as a matter of law.
With respect to other benefit entitlement under the
bonus plan or other similar plans, the Executive’s
estate shall only be permitted to such rights or
benefits as otherwise provided in those plan
documents.
	 
	10.	 	RESTRICTIVE COVENANTS; CONFIDENTIALITY; OWNERSHIP OF PROCEEDS OF EMPLOYMENT
	 
	10.1	 	Solicitation of Employees; Customers; Agents or Representatives etc.
	 
	 	 	Executive agrees that, during the term of employment hereunder, and for a period of one
(1) year after the Company no longer employs Executive, Executive shall not, directly or
indirectly:

	 	(a)	 	solicit, entice, persuade or induce any individual who is then or has been
within the preceding six-month period, an employee of the Company or any of its
subsidiaries or affiliates, to terminate his or her employment with the Company or
any company controlled by or under common control with the Company. (defined for
purposes of this Section 10 as an “Affiliate”), or to become employed by or enter
into contractual relations with any other individual or entity, and the Executive
shall not approach any such employee for any such purpose or authorize or knowingly
approve the taking of any such actions by, any other individual or entity; or,
	 
	 	(b)	 	except in accordance with Executive’s duties hereunder, solicit, entice,
persuade or induce any individual or entity which is then, or has within the
preceding twelve month period been, a customer, distributor or supplier, or policy
owner, agent or representative of the Company or any of its Affiliates to terminate
or materially reduce his, her or its contractual or other relationship with the
Company or any of its subsidiaries or affiliates, and the Executive shall not
approach any such customer, distributor, supplier, policy owner, agent or
representative for such

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	 	 	 	purpose or authorize or knowingly approve the taking of any such actions by any
other individual or entity.
	 
	 	(c)	 	For purposes of this Agreement, where the Executive has been Terminated without
Cause under Section 9.4, such restrictive period of one (1) year shall commence at
the time provided under 9.4 for the Executive’s receipt of the final monthly payment
under Section 9.4.

	10.2	 	Confidential Records
	 
	 	 	In the course of employment, Executive will have access to
confidential information, records, data, specifications, and other
knowledge owned by the Company or its subsidiaries or affiliates,
Executive agrees that at no time during or after the term of
employment shall the Executive remove or cause to be removed from the
premises of the Company or its subsidiaries or affiliates, any
record, file, memorandum, document, equipment or like item relating
to the business of the Company or its subsidiaries or affiliates
except in furtherance of Executive’s duties hereunder, and
immediately following the termination of Executive’s employment
hereunder or at any other time at the request of the Board of
Directors, all such records, files, memoranda, documents, equipment
and like items then in Executive’s possession will promptly be
returned to the Company. Executive further agrees that, during and
after the term of employment, Executive shall not without the written
consent of the Company or a person authorized thereby, disclose to
any person, other than an employee of the Company its subsidiaries or
affiliates or a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by Executive of duties
as an executive of the Company, any confidential information obtained
by Executive while in the employ of the Company with respect to any
business methods, plans, policies, products and/or personnel of the
Company or its subsidiaries or affiliates, the disclosure, including
speaking with the press, of which would, in the view of a reasonable
person, be injurious or damaging to the business of the Company or
its subsidiaries, or affiliates, 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 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.
	 
	10.3	 	Ownership of Proceeds of Employment
	 
	 	 	Executive acknowledges that the Company shall be the sole owner of
all the fruits and proceeds of the Executive’s services hereunder,
including without limitation all ideas, concepts, formats,
suggestions, developments, arrangements, designs, packages, programs,
promotions and other properties relating to the businesses of the
Company, which Executive may create in connection with and during the
term of employment hereunder, free and clear of any claims by the
Executive of any kind or character whatsoever (other than Executive’s
right to compensation and benefits hereunder).

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	10.4	 	Survival
	 
	 	 	The provisions of this Section 10 shall survive any termination or
expiration of Executive’s employment under this Agreement,
irrespective of the reason therefore.
	 
	10.5	 	Enforceability; Remedies
	 
	 	 	The parties hereto agree that a breach by Executive of any of the
provisions of Section 10. hereof will cause the Company great and
irreparable injury and damage. By reason of this, Executive
acknowledges that, in the event of a breach by Executive of any of
the provisions of Section 10 hereof, the Company shall be entitled,
in addition and as a supplement to any other rights or remedies it
may have at law, to the remedies of injunction, specific performance
and other equitable relief. This section 10 shall not, however, be
construed as a waiver of any of the rights which the Company may have
for damages or otherwise.
	 
	11.	 	MISCELLANEOUS PROVISIONS
	 
	11.1	 	Severability
	 
	 	 	Executive acknowledges and agrees that (i) Executive has had an opportunity to seek advice of counsel in connection with
this agreement and (ii) the Restrictive Covenants contained in Section 10.1 hereof are reasonable in temporal and
geographic scope and In all other respects. If in any jurisdiction any term or provision hereof is determined to be
invalid or unenforceable, (a) the remaining terms and provisions hereof shall be unimpaired, (b) any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other
jurisdiction, and the remaining provisions hereof shall be given full force and effect without regard to the invalid
portions. The Employer and the Executive intend to and hereby confer jurisdiction to endorse the Restrictive Covenants
upon the Courts of any jurisdiction within the geographical scope of the covenants.
	 
	11.2	 	Execution In Counterparts
	 
	 	 	This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts,
each of which shall be deemed to be an original but all of which taken together shall constitute one and the same
agreement (and all signatures need not appear on any one counterpart),and this Agreement shall become effective when one
or more counterparts has been signed by each of the parties hereto and delivered to each of the other parties hereto.

	 
	11.3 	 	Notices
	 
	 	 	Any notice or other communication in connection with this Agreement shall be deemed to be delivered if in writing (or in
the form of a fax) addressed as provided below and if either (a) actually delivered at said address, or (b) in the case of
a letter, three business days shall have elapsed after the same shall have been deposited in the US mail, postage prepaid
and registered or certified, and (c) in the case of fax, one business day shall have elapsed after dispatch.

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	 	 	If to the Company, to it at the following address:

Hartville Group, Inc.

3840 Greentree Avenue SW

Canton, Ohio 44706

FAX 330-484-8051

Attention: Chairman of the Board

	 	 	with a copy to:

Baker & Hostetler

Capitol Square, Suite 2100

Columbus, Ohio 43215-4260

Attn: Jack Bjerke

	 	 	or at such other address as the Company shall have specified by written notice actually received by the addresser.
	 
	 	 	If to Executive, to Executive at the address provided in the preamble or to :

FAX 772-679-5814

	 	 	with a copy to:

McCarthy Fingar, LLP

11 Martine Avenue

White Plains, New York 10606

FAX (914) 946-0134

Attn: Robert J. Kiggins, Esq.

	 	 	or at such other address as Executive shall have specified by written notice actually received by the addresser.
	 
	11.4	 	Entire Agreement and Subsequent Amendments
	 
	 	 	This Agreement constitutes the entire agreement between the Company and Executive relating to Executive’s employment and
supersedes all prior agreements and understandings of the parties hereto, whether oral or written with respect to the
subject matter herein.
This Agreement may be amended or altered only by the written agreement of the Company and Executive.
	 
	11.5	 	Applicable Law
	 
	 	 	This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio without regard to
principles of conflict of law.

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	11.6	 	Headings
	 
	 	 	The descriptive headings of the several sections of this Agreement are inserted for the sole purpose of convenience of
reference, and do not constitute part of this Agreement or in any way limit or affect the meaning or interpretation of any
of the terms or provisions of this Agreement.
	 
	11.7	 	Binding Effect; Successors and Assigns
	 
	 	 	This Agreement shall be binding upon and shall inure to the benefit of:

	 	(a)	 	the Company and its successors and assigns; and
	 
	 	(b)	 	Executive and to the benefit of Executive’s heirs, executors, administrators
and legal representatives. Executive’s duties and obligations hereunder are personal
and shall not be assignable or delegable in any manner whatsoever.

	 	 	The Company may assign the obligations under this Agreement (subject to a right of recourse by Executive to the Company in
the event of any default under the obligations to Executive hereunder), to an affiliate or to any intermediate parent of
the Company.
	 
	11.8	 	Waiver
	 
	 	 	The failure of either of the parties hereto at any time, to enforce any of the provisions of this agreement shall not be
deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this agreement or any
provision hereof or the right of either of the parties hereto, to thereafter enforce each and every provision of this
Agreement. No waiver of any breach of any of the provisions of this Agreement shall be effective unless set forth in a
written instrument executed by the party against whom or which enforcement of such waiver is sought, and no waiver of any
such breach shall be construed or deemed to be a waiver of any other or subsequent breach.
	 
	11.9	 	Warranty and Capacity to Contract
	 
	 	 	The Company and Executive hereby represent and warrant to the other that:

	 	(a)	 	they have full power and authority to execute this Agreement, and to perform
their respective obligations hereunder;
	 
	 	(b)	 	such execution, delivery and performance will not (and with the giving of
notice or !apse of time or both would not) result in any breach of any agreements or
other obligations to which Executive or the Company is otherwise bound; and
	 
	 	(c)	 	this Agreement is a valid binding obligation on Executive and the Company.

	11.10	 	Arbitration

11

 

	 	 	Except to the extent necessary for Executive or the Company to enforce
rights under Section 11.9 above, or for the Company to enforce its rights under
Section 10 above, or for the Executive to enforce his rights under Section 8,
above, any case or controversy arising among the parties hereto under this
Agreement, or the subject matter hereof, shall be settled by binding
arbitration in Canton, Ohio under the then prevailing rules of the American
Arbitration Association. The decision of the arbitrators shall be final and
binding and the party against whom the award is rendered (“the non-prevailing
party”) shall be specifically instructed in any such award to pay all
reasonable attorney’s fees, disbursements of the prevailing party’s legal
counsel, arbitration costs, expenses and filing fees incurred by the prevailing
party in the arbitration proceeding. The American Arbitration Association shall
appoint three (3) arbitrators to preside at the said arbitration proceeding and
the arbitrators will determine in their decision and award, which is the
prevailing party, which is the non-prevailing party, the amount of the fees and
expenses of the prevailing party and the amount of the arbitration expenses.
The arbitrators will render their award, upon the concurrence of at least two
(2) of their number, no later than thirty (30) days after the conclusion of the
arbitration proceedings. Judgment may be entered on the award of the
arbitrators and may be enforced in any court of competent Jurisdiction.
	 
	11.11	 	Remedies
	 
	 	 	All remedies hereunder are cumulative, are in addition to any other
remedies provided by law and may be exercised concurrently or separately, and
the exercise of any one remedy shall not be deemed to be an election of such
remedy exclusively or to preclude the exercise of any other remedy. No failure
or delay in exercising any right or remedy shall operate as a waiver thereof or
modify the terms of this Agreement.
	 
	11.12	 	Survival
	 
	 	 	Anything contained in this Agreement to the contrary notwithstanding, the
provisions of Section 8; and Section 9; and Section 10; and Section 11.1; and
the other provisions of this Section 11 (to the extent necessary to effectuate
the survival of Section 11) shall survive termination of this Agreement and any
termination of Executive’s contract hereunder.
	 
	11.13	 	Costs of Preparation and Negotiation of Agreement
	 
	 	 	The Company shall be responsible for payment or reimbursement to Executive
for all of Executive’s costs and expenses, Including but not limited to all
attorneys fees of legal counsel to the Executive, incurred in the preparation
and negotiation of this Agreement and all documents related thereto.

	 
	 	 	The Company shall be fully responsible for payment of its own costs and
expenses incurred in the preparation and negotiation of this Agreement and all
documents related thereto.

IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto as
of the date first written above.

12

 

BY DENNIS C. RUSHOVICH (“Executive”)

Executed at Canton, OH on February 1, 2006

	 	 	 
	/s/ Dennis C. Rushovich
 

Dennis C. Rushovich

	 	 
	 
	 	 
	BY HARTVILLE GROUP, INC.
	 	 

Executed at Canton, OH on February 1, 2006

	 	 	 
	/s/ Nicolas Leighton
 

Director and Audit Committee Chairman

	 	 

13

 

Exhibit A — Position Description,

	 	 	 
	Titles:

	 	President and C.E.O of Hartville Group, Inc
	Reporting Lines:

	 	Board of Directors of Hartville Group, Inc

Responsibilities and Duties with regard to Companies Manacled by Executive

As provided in Bylaws of Hartville Group Inc.

14

 

Exhibit B — Summary of D & O Coverage

Carrier — Chubb Group of Insurance Companies

Policy Number — 6800-2391

Insured Persons — All directors and officers of Hartville Group, Inc. and its Subsidiaries
acting in such capacities

Type of Coverage — Executive Liability for Wrongful Acts and Executive indemnification for
Wrongful Acts

Amount of Coverage — $1,000,000 per loss and up to $1,000,000 aggregate for each Policy
Period

Premium — $23,357 for Policy Period

	 	 	 
	Deductibles —

	 	(a) Executive Liability — $5,000 per insured — $20,000 all insureds
	 

	 	(b) Executive Indemnification — $100,0000

Mode of Coverage — Claims Made

Policy Period — January 1, 2005 to December 31, 2005

Right of Extension (Tail Coverage) — One year for 100% of annual premium

Duty of Company to Defend — None

Exclusions — Prior Acts before January 1, 2004; fiduciary liability under retirement and
employee welfare plans; short swing profits under Exchange Act 16(b), most claims inter se;
deliberate torts; fraudulent or criminal acts or omissions; willful violations; acts or
omissions involving personal profit to Insured Person; and as otherwise stated in the Policy

Majority Shareholder Exclusion — No coverage for claim by Petsmarketing, Inc. or any 10% or
greater voting shareholder of Hartville Group, Inc.

Outside Directorship Extension — Certain Policy coverages are extended to Insured Persons
acting in certain capacities for non-profit type organizations at the request of Hartville
Group Inc or any of its Subsidiaries

15Exhibit 10.2

 

Exhibit 10.2

EMPLOYMENT AGREEMENT

BY AND BETWEEN

HARTVILLE GROUP, INC.

AND

CHRISTOPHER R. SACHS

EFFECTIVE: September 19, 2005

 

 

EMPLOYMENT AGREEMENT

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	PAGES	 
	1.
	 	EMPLOYMENT	 	 	1	 
	 
	 	1.1     General Duties and Title	 	 	1	 
	2.
	 	TERM	 	 	2	 
	3.
	 	REMUNERATION	 	 	2	 
	4.
	 	WITHHOLDING	 	 	2	 
	5.
	 	INSURANCE AND OTHER BENEFIT PLANS	 	 	3	 
	6.
	 	VACATIONS, ILLNESS AND HOLIDAYS	 	 	3	 
	7.
	 	BUSINESS EXPENSES	 	 	3	 
	8.
	 	INDEMNIFICATION	 	 	3	 
	9.
	 	TERMINATION OF EMPLOYMENT	 	 	4	 
	 
	 	9.1 Termination by the Company for Cause	 	 	4	 
	 
	 	9.2 Definition of Cause	 	 	4	 
	 
	 	9.3 Determination of For Cause Termination	 	 	5	 
	 
	 	9.4 Termination by the Company Without Cause	 	 	5	 
	 
	 	9.5 Voluntary Termination by the Executive	 	 	6	 
	 
	 	9:6 Disability Termination	 	 	6	 
	 
	 	9.7 Termination Due to Executive's Death	 	 	7	 
	10.
	 	RESTRICTIVE COVENANTS; CONFIDENTIALITY; OWNERSHIP OF PROCEEDS OF EMPLOYMENT	 	 	7	 
	 
	 	10.1 Solicitation of Employees;
Customers; Agents or Representatives etc.	 	 	7	 
	 
	 	10.2 Confidential Records	 	 	8	 
	 
	 	10.3 Ownership of Proceeds of Employment	 	 	8	 
	 
	 	10.4 Survival	 	 	8	 
	 
	 	10.5 Enforceability; Remedies	 	 	9	 
	MISCELLANEOUS PROVISIONS	 	 	9	 
	 
	 	11.1 Severability	 	 	9	 
	 
	 	11.2 Execution in Counterparts	 	 	9	 
	 
	 	11.3 Notices	 	 	9	 
	 
	 	11.4 Entire Agreement and Subsequent Amendments	 	 	10	 
	 
	 	11.5 Applicable Law	 	 	10	 
	 
	 	11.6 Headings	 	 	10	 
	 
	 	11.7 Binding Effect; Successors and Assigns,	 	 	10	 
	 
	 	11.8 Waiver	 	 	11	 
	 
	 	11.9 Warranty and Capacity to Contract	 	 	11	 
	 
	 	11.10 Arbitration	 	 	11	 
	 
	 	11.11 Remedies	 	 	12	 
	 
	 	11.12 Survival	 	 	12	 
	 
	 	11.13 Costs of Preparation and Negotiation of Agreement	 	 	12	 

 

 

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) dated as of the September 19, 2005 (the
“Effective Date”) by and among HARTVILLE GROUP, INC. (the “Company”) a Nevada corporation, and
CHRISTOPHER R. SACHS an individual currently residing at 3287 Lander Road, Pepper Pike, OH
44124 (“Executive”).

WITNESSETH THAT,

WHEREAS, the Company desires to employ Executive in accordance with the terms of this
Agreement and Executive desires to be so employed by the Company; and

WHEREAS, the parties desire to set forth the employment understanding and terms and conditions
of employment in a written agreement; and Executive wishes to accept such employment upon the
terms and subject to the conditions hereinafter set forth;

NOW THEREFORE, in consideration of the mutual promises contained herein, the parties hereto
hereby agree as follows:

	1.	 	EMPLOYMENT
	 
	1.1	 	General Duties and Title
	 
	 	 	On the Effective Date, the Company hereby employs Executive with the title/s designated
in Exhibit A (the “Position Description”) attached hereto and forming a part of this
Agreement.
	 
	 	 	Executive’s primary responsibilities and duties are as described in Exhibit A. The
primary responsibilities and duties of the Executive may be altered or amended by either
(i) the mutual agreement of the Company and the Executive; or (ii) the establishment of
new or modified duties, as determined by the Chief Executive Officer (CEO) after
consultation with the Board of Directors of the Company (the “Board”). Any
modifications or alterations to the duties assigned to the Executive will be consistent
with the customary duties of a Chief Financial Officer and the education, background and
experience of the Executive. Executive shall faithfully and substantially perform for
the Company all such duties. Executive shall report to and take direction primarily
from the CEO. Executive agrees to act in the capacity of a member or officer of such
boards as he may be appointed without remuneration other than the remuneration to which
Executive is otherwise entitled under this Agreement.
	 
	 	 	Services rendered by Executive shall be rendered in accordance with recognized insurance
and financial industry standards and recognized codes of conduct or ethics. Executive
shall further promote and enhance the business purposes of the Company’ by entertainment
and other means, including participation in professional organizations and activities,
attendance at insurance, financial, or industry conventions and seminars, and membership
in insurance or financial industry societies.

1

 

	2.	 	TERM
	 
	 	 	The employment of Executive hereunder shall commence on the Effective Date and shall,
unless this Agreement is sooner terminated as provided in Section 9 hereof, continue for
one year and thereafter for additional one (1) year terms, provided however, that if
written notice of termination of this Agreement is given by party hereto to the other
party hereto at least ninety (90) days prior to an Anniversary Date, then this Agreement
shall terminate no later than the Anniversary Date next following the date of such
notice.
	 
	3.	 	REMUNERATION
	 
	 	 	The Company (and/or an affiliate acting on behalf of the Company) will pay, or provide,
to Executive as compensation for services to be rendered under Section 1 hereof, the
following amounts:

	 	(a)	 	Monthly Base Salary
	 
	 	 	 	A base salary (“Base Salary”) at the monthly equivalent rate of One Hundred and
Fifty Thousand Dollars ($150,000) per annum.
	 
	 	(b)	 	Stock Option Rights
	 
	 	 	 	Options under a nonstatutory stock option plan to be adopted
by the Company in 2006 to purchase up to 350,000 shares of the common stock
of the Company on the terms and conditions set forth in a Stock Option Agreement
to be adopted by the parties.
	 
	 	(c)	 	Travel Expenses
	 
	 	 	 	The Company shall provide the Executive with a car allowance of $500.00 per month.
	 
	 	(d)	 	Discretionary Cash Bonus
	 
	 	 	 	A cash bonus payable to the Executive at such times and in such amounts as the
Company may, in its sole discretion, determine.

	4.	 	WITHHOLDING
	 
	 	 	Executive agrees that the Company shall withhold from any and all payments required to
be made to Executive pursuant to this Agreement all actual or potential Federal, State,
local and/or other taxes the Company determines are required or potentially will be
required, to be withheld in accordance with applicable statutes and/or regulations from
time to time in effect.

2

 

	5.	 	INSURANCE AND OTHER BENEFIT PLANS
	 
	 	 	Executive shall be entitled, during the period of employment with the Company, to
participate in (i) the life insurance and disability insurance plans available to
executives of the Company, including such accidental death or other benefits as may be
provided under such plans, and (ii) the health and dental and vision plans available to
officers (and their immediate families) of the Company, and (iii) such other employee
benefit plans, including all employee welfare benefit plans and employee pension benefit
plans, that currently are or will be made generally available to executives and salaried
employees of the Company. Participation by or inclusion of the Executive in any benefit
plan maintained by the Company shall be provided only to the extent that the Executive
is eligible under the terms and conditions of the applicable plan and, if required
pursuant to the plan, the employee meets any insurance underwriting or other conditions
validly required by the provider or carrier of the plan or the contracts, policies, or
other terms of eligibility or participation issued in connection with the plan.
	 
	6.	 	VACATIONS, ILLNESS AND HOLIDAYS
	 
	 	 	Without any loss or reduction of remuneration, Executive shall be entitled to be absent
from Executive’s duties with the Company by reason of vacation for four (4) weeks for
each year or illness for (4) four weeks for each year during the term of this Agreement.
In addition, the Executive shall be entitled to such national and religious holidays as
generally approved by the Company. The Executive shall not be entitled to carry forward
any unused sickness, vacation or holiday time accrued during a year to successive years
of this Agreement until used.
	 
	7.	 	BUSINESS EXPENSES
	 
	 	 	The Company recognizes that, in connection with Executive’s performance of his duties,
functions and responsibilities hereunder, Executive will incur certain reasonable and
necessary expenses. The Company agrees to pay or promptly reimburse Executive for all
such reasonable business expenses, which are incurred in connection with the Company’s
business, upon the presentation of statements setting forth the nature and amount of
such expenses in reasonable detail, in accordance with the Company’s generally
applicable guidelines and procedures from time to time.
	 
	8.	 	INDEMNIFICATION
	 
	 	 	The Company shall indemnify, defend and hold harmless Executive, and shall cause each
applicable entity controlled by the Company (defined for purposes of this Section 8 as a
“Subsidiary”) to indemnify, defend and hold harmless Executive for general directors
and/or officers liability in the normal course of Executive’s services on Company
business or Subsidiary business, to the fullest extent allowed by Nevada law and the
bylaws of the Company.

3

 

	 	 	To secure its indemnification obligations the Company has and shall maintain in full
force and effect through the term of this Agreement directors and officers insurance
coverage as determined by the Company, but in no event in an amount less than $2
million. The use of the Company’s insurance coverage or policy to secure its or any
Subsidiary’s indemnification obligation shall not, however, limit the obligation of the
Company or any Subsidiary to indemnify the Executive for claims or expenses either below
the annual or periodic deductible limit in the policy or in excess of the policy limits
or for items or events not covered by the policy.
	 
	 	 	The Company shall be obligated, and shall cause each applicable Subsidiary, to pay the
claims or expenses of the Executive required under this Section 8, including defense
cost, directly to the third party to whom payment is due and owing, without the
necessity of the Executive making such payment and seeking reimbursement from the
Company or the Subsidiary.
	 
	 	 	To the extent that the Executive is successful on the merits or otherwise in defense of
any action, suit, or proceeding, or in defense of any claim, issue or matter brought
against the Executive, the Executive shall be indemnified by the Company, and the
Company shall cause each applicable Subsidiary to indemnify the Company, against all
expenses, including defense and legal fees, incurred by the Executive.
	 
	 	 	The provisions of this Section 8 shall survive the termination or expiration of
Executive’s employment under this Agreement irrespective of the reason for such
termination, provided that nothing herein shall be construed to provide Executive with
any greater coverage or coverage for any period longer than Executive would have been
entitled to receive under the terms of such insurance policy referred to herein (other
than deductible and policy dollar limits).
	 
	9.	 	TERMINATION OF EMPLOYMENT
	 
	9.1	 	Termination by the Company for Cause
	 
	 	 	In the event that Executive is removed from office by the Company for cause (as
hereinafter defined), the employment of Executive under this Agreement shall terminate
and Executive shall be entitled to receive all remuneration and benefits accrued
hereunder to the date of such termination except for unvested Options under the Option
Plan and insurance which would by its terms lapse.
	 
	 	 	No other or further payment of benefits under this Agreement will be due upon
Termination for Cause, except as required by law, or under the Company’s insurance and
other employee benefit plans and the procedures referred to in Sections 5 and 7.
	 
	9.2	 	Definition of Cause
	 
	 	 	For purposes of this Agreement, the term “cause” shall mean (i) any willful material
neglect by Executive, or material failure by Executive to substantially perform the
duties and responsibilities of the Executive’s office or offices (other than any such
failures resulting from Executive’s incapacity due to illness or injury), or (ii) any
malfeasance or gross misconduct by Executive in connection with the performance of any
of the duties or responsibilities or otherwise which would, in the view of a reasonable
person, be materially prejudicial to the interests of the Company or any of its

4

 

	 	 	affiliates if Executive were retained in the respective office or offices, including
without limitation, conviction of a felony, or (iii) actual indictment for, or formal
admission to a felony or crime of moral turpitude, dishonesty, breach of trust or
unethical business conduct or any crime involving the Company, or (iv) repeated material
failure to adhere to the policies and directions of the CEO or the Board of Directors,
or failure of the Executive to devote sufficient time and efforts to the business of the
Company and the duties and responsibilities hereunder so as to result in material
impairment of the Executive’s performance hereunder, and with respect to 9.2(i) or
9.2(ii) or 9.2(iv) herein, there has been a failure to cure such breach or a failure to
modify Executive’s conduct within 30 days of receiving written notice of such breach
specifying the factual reasons supporting the proposed dismissal for cause.
	 
	9.3	 	Determination of For Cause Termination
	 
	 	 	A determination of a for cause termination shall be made by the Company as follows:

	 	(a)	 	The CEO shall first make a preliminary determination that the Executive
should be reviewed for discharge for cause. The Company will not be required to
provide any preliminary notice to the Executive of its intention to investigate the
possible discharge of the Executive for cause.
	 
	 	(b)	 	After investigating the circumstances surrounding the possible for cause
termination of the Executive, the Company, through the CEO, may immediately relieve
or suspend the Executive from the Executive’s position by providing notice to the
Executive. Upon notice of the suspension, the Executive shall immediately vacate
the premises and remove all personal property from the premises of the Company.
The Company shall have the absolute right to review any and all material in the
possession of the Executive on the Company premises to determine those items, which
are proprietary to the Company. After sorting the appropriate items, all personal
items shall be delivered to the Executive at the location designation reasonably
selected by the Executive.
	 
	 	(c)	 	After concluding its investigation, the Company, through the CEO, shall
make a determination whether the Executive should be discharged for cause. The
determination for discharge for cause shall be timely communicated in writing to
the Executive.
	 
	 	(d)	 	Until terminated, notwithstanding that any of the foregoing procedures are
taking place, or have taken place, the Executive shall be entitled to and shall
continue to accrue all remuneration and benefits provided for under this Agreement.

	9.4	 	Termination by the Company Without Cause
	 
	 	 	The Company expressly reserves the right to terminate the employment, or materially
reduce the responsibilities, of Executive at any time for no reason or for any reason.
	 
	 	 	In the event that Executive’s employment is so terminated or altered under this Section,
Executive shall be entitled to receive:

5

 

	 	 	Six (6) monthly payments of the current monthly Base Salary, paid pursuant to the
Company’s normal payroll practices
	 
	 	 	In addition to the above payments if permitted under the appropriate plan documentation
and if allowed by law, all health, dental and life insurance coverage provided to
Executive under the employee benefit plans will be extended for such period as the
Company is obligated to make monthly Base Salary payments to Executive in terms of this
Section, unless Executive becomes covered by other employer plans. If coverage
extensions are not permitted by law or under the plans, the Company shall pay to the
Executive periodic bonuses equal to the insurance premium cost which would have been
required as if the Executive were covered under the plan.
	 
	 	 	Any unvested employer contributions attributable to Executive under any pension plan,
shall be accelerated and deemed vested as of the date of termination of employment
without cause. If the acceleration of vesting is not permitted by law or under the
terms of the plan, the Company shall, in lieu of accelerated vesting, pay a bonus to the
Executive in the amount of the account forfeiture under the plan.
	 
	9.5	 	Voluntary Termination by the Executive
	 
	 	 	Executive shall be entitled, with not less than ninety (90) days written notice, to
voluntarily terminate employment with the Company. If Executive elects such
termination, Executive shall be entitled to receive the Executive’s monthly Base Salary
defined under Section 3 and benefits defined under Section 5 until the end of such
notice period. Executive shall also be entitled to exercise any vested rights under
Sections 5 and 6.
	 
	 	 	Even though the Executive is required to give not less than ninety (90) days advance
written notice, the Company shall have the option to require that the Executive
discontinue service on behalf of the Company at any time upon receipt of advance written
notice of the Executive’s election to terminate; provided, however, that in such event
the Company shall be required to continue the Base Salary and benefit payments through
the ninety (90) day notice period.
	 
	9.6	 	Disability Termination
	 
	 	 	The Executive’s employment shall terminate if the Executive becomes so disabled as to be
unable to substantially perform the services of the character contemplated by this
Agreement, and such disability continues for a period of ninety (90) consecutive days.
The Executive’s employment shall terminate at the conclusion of the 90-consecutive day
disability. In such event, the Executive shall be entitled to receive the Executive’s
monthly Base Salary defined under Section 3 and benefits defined under Section 5 until
the end of the 90-consecutive day disability period. Executive shall also be entitled
to exercise any vested rights under Sections 5 and 6.

6

 

	 	 	For purposes of this Agreement the term “disability” or “disabled” shall mean a physical
or mental condition resulting from a bodily injury or disease or mental disorder which
renders the Executive incapable of engaging in substantial gainful activity of the
character contemplated by this Agreement and which can be expected to be of a long and
continued duration. The disability of the Executive shall be determined by the Board
based upon competent medical authority. The determination of a disability may be made
by the Board independent of such determination being made under any other disability
insurance plan sponsored or funded by the Company.
	 
	9.7	 	Termination Due to Executive’s Death
	 
	 	 	This Agreement shall terminate if the Executive shall die, in which event the
Executive’s estate or personal representative shall not be entitled to continue to
receive Base Salary payments permitted under Section 3 or other benefits permitted under
this Agreement, other than the monthly Base Salary for the period until death and those
benefit continuation requirements imposed as a matter of law, With respect to other
benefit entitlement under the bonus plan or other similar plans, the Executive’s estate
shall only be permitted to such rights or benefits as otherwise provided in those plan
documents.
	 
	10.	 	RESTRICTIVE COVENANTS; CONFIDENTIALITY; OWNERSHIP OF
PROCEEDS OF EMPLOYMENT,

	 
	10.1 	 	Solicitation of Employees; Customers; Agents or
Representatives etc.
	 
	 	 	Executive agrees that, during the term of employment hereunder, and for a period of one
(1) year after the Company no longer employs Executive, Executive shall not, directly or
indirectly:

	 	(a)	 	solicit, entice, persuade or induce any individual who is then or has been
within the preceding six-month period, an employee of the Company or any of its
subsidiaries or affiliates, to terminate his or her employment with the Company or
any company controlled by or under common control with the Company (defined for
purposes of this Section 10 as an “Affiliate”), or to become employed by or enter
into contractual relations with any other individual or entity, and the Executive
shall not approach any such employee for any such purpose or authorize or knowingly
approve the taking of any such actions by any other individual or entity; or,
	 
	 	(b)	 	except in accordance with Executive’s duties hereunder, solicit, entice,
persuade or induce any individual or entity which is then, or has within the
preceding twelve month period been, a customer, distributor or supplier, or policy
owner, agent or representative of the Company or any of its Affiliates to terminate
or materially reduce his, her or its contractual or other relationship with the
Company or any of its subsidiaries or affiliates, and the Executive shall not
approach any such customer, distributor, supplier, policy owner, agent or
representative for such purpose or authorize or knowingly approve the taking of any
such actions by any other individual or entity.

7

 

	 	(c)	 	For purposes of this Agreement, where the Executive has been Terminated
without Cause under Section 9.4, such restrictive period of one (1) year shall
commence at the time provided under 9.4 for the Executive’s receipt of the final
monthly payment under Section 9.4.

	10.2	 	Confidential Records
	 
	 	 	In the course of employment, Executive will have access to confidential information,
records, data, specifications, and other knowledge owned by the Company or its
subsidiaries or affiliates. Executive agrees that at no time during or after the term of
employment shall the Executive remove or cause to be removed from the premises of the
Company or its subsidiaries or affiliates, any record, file, memorandum, document,
equipment or like item relating to the business of the Company or its subsidiaries or
affiliates, except in furtherance of Executive’s duties hereunder, and immediately
following the termination of Executive’s employment hereunder or at any other time at
the request of the CEO or the Board of Directors, all such records, files, memoranda,
documents, equipment and like items then in Executive’s possession will promptly be
returned to the Company. Executive further agrees that, during and after the term of
employment, Executive shall not without the written consent of the Company or a person
authorized thereby, disclose to any person, other than an employee of the Company its
subsidiaries or affiliates or a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by Executive of duties as an executive of
the Company, any confidential information obtained by Executive while in the employ of
the Company with respect to any business methods, plans, policies, products and/or
personnel of the Company or its subsidiaries or affiliates, the disclosure, including
speaking with the press, of which would, in the view of a reasonable person, be
injurious or damaging to the business of the Company or its subsidiaries, or affiliates,
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 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.
	 
	10.3	 	Ownership of Proceeds of Employment
	 
	 	 	Executive acknowledges that the Company shall be the sole owner of all the fruits and
proceeds of the Executive’s services hereunder, including without limitation all ideas,
concepts, formats, suggestions, developments, arrangements, designs, packages, programs,
promotions and other properties relating to the businesses of the Company, which
Executive may create in connection with and during the term of employment hereunder,
free and clear of any claims by the Executive of any kind or character whatsoever (other
than Executive’s right to compensation and benefits hereunder).
	 
	10.4	 	Survival
	 
	 	 	The provisions of this Section 10 shall survive any termination or expiration of
Executive’s employment under this Agreement, irrespective of the reason therefore.

8

 

	10.5	 	Enforceability; Remedies
	 
	 	 	The parties hereto agree that a breach by Executive of any of the provisions of Section
10 hereof will cause the Company great and irreparable injury and damage. By reason of
this, Executive acknowledges that, in the event of a breach by Executive of any of the
provisions of Section 10 hereof, the Company shall be entitled, in addition and as a
supplement to any other rights or remedies it may have at law, to the remedies of
injunction, specific performance and other equitable relief. This section 10 shall
riot, however, be construed as a waiver of any of the rights which the Company may have
for damages or otherwise.
	 
	11.	 	MISCELLANEOUS PROVISIONS
	 
	11.1	 	Severability
	 
	 	 	Executive acknowledges and agrees that (i) Executive has had an opportunity to seek
advice of counsel in connection with this agreement and (ii) the Restrictive Covenants
contained in Section 10.1 hereof are reasonable in temporal and geographic scope and in
all other respects. If in any jurisdiction any term or provision hereof is determined
to be invalid or unenforceable, (a) the remaining terms and provisions hereof shall be
unimpaired, (b) any such invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction, and the
remaining provisions hereof shall be given full force and effect without regard to the
invalid portions. The Employer and the Executive intend to and hereby confer
jurisdiction to endorse the Restrictive Covenants upon the Courts of any jurisdiction
within the geographical scope of the covenants.
	 
	11.2	 	Execution in Counterparts
	 
	 	 	This Agreement may be executed in one or more counterparts, and by the different parties
hereto in separate counterparts, each of which shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement (and all signatures
need not appear on any one counterpart),and this Agreement shall become effective when
one or more counterparts has been signed by each of the parties hereto and delivered to
each of the other parties hereto.
	 
	11.3	 	Notices
	 
	 	 	Any notice or other communication in connection with this Agreement shall be deemed to
be delivered if in writing (or in the form of a fax) addressed as provided below and if
either (a) actually delivered at said address, or (b) in the case of a letter, three
business days shall have elapsed after the same shall have been deposited in the US
mail, postage prepaid and registered or certified, and (c) in the case of fax, one
business day shall have elapsed after dispatch.

	 	 	If to the Company, to it at the following address:

Hartville Group, Inc.

3840 Greentree Avenue SW

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Canton, Ohio

FAX                                        

Attention: C.E.O.

	 	 	with a copy to:

Jack Bjerke

Baker & Hostetler

Capitol Square, Suite 2100

Columbus, Ohio 43215-4260

	 	 	or at such other address as the Company shall have specified by written notice actually
received by the addresser.
	 
	 	 	If to Executive, to Executive at the address provided in the preamble or to
csachs@sbcglobal.net
	 
	 	 	or at such other address as Executive shall have specified by written notice actually
received by the addresser.
	 
	11.4	 	Entire Agreement and Subsequent Amendments
	 
	 	 	This Agreement constitutes the entire agreement between the Company and Executive
relating to Executive’s employment and supersedes all prior agreements and
understandings of the parties hereto, whether oral or written with respect to the
subject matter herein.
	 
	 	 	This Agreement may be amended or altered only by the written agreement of the Company
and Executive.
	 
	11.5	 	Applicable Law
	 
	 	 	This Agreement shall be governed by and construed in accordance with the laws of the
State of Ohio without regard to principles of conflict of law.
	 
	11.6	 	Headings
	 
	 	 	The descriptive headings of the several sections of this Agreement are inserted for the
sole purpose of convenience of reference, and do not constitute part of this Agreement
or in any way limit or affect the meaning or interpretation of any of the terms or
provisions of this Agreement.
	 
	11.7	 	Binding Effect; Successors and Assigns
	 
	 	 	This Agreement shall be binding upon and shall inure to the benefit of:

	 	(a)	 	the Company and its successors and assigns; and

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	 	(b)	 	Executive and to the benefit of Executive’s heirs, executors,
administrators and legal representatives. Executive’s duties and obligations
hereunder are personal and shall not be assignable or delegable in any manner
whatsoever.

	 	 	The Company may assign the obligations under this Agreement (subject to a right of
recourse by Executive to the Company in the event of any default under the obligations
to Executive hereunder), to an affiliate or to any intermediate parent of the Company.
	 
	11.8	 	Waiver
	 
	 	 	The failure of either of the parties hereto at any time, to enforce any of the
provisions of this agreement shall not be deemed or construed to be a waiver of any such
provision, nor to in any way affect the validity of this agreement or any provision
hereof or the right of either of the parties hereto, to thereafter enforce each and
every provision of this Agreement. No waiver of any breach of any of the provisions of
this Agreement shall be effective unless set forth in a written instrument executed by
the party against whom or which enforcement of such waiver is sought, and no waiver of
any such breach shall be construed or deemed to be a waiver of any other or subsequent
breach.
	 
	11.9	 	Warranty and Capacity to Contract
	 
	 	 	The Company and Executive hereby represent and warrant to the other that:

	 	(a)	 	they have full power and authority to execute this Agreement, and to
perform their respective obligations hereunder;
	 
	 	(b)	 	such execution, delivery and performance will not (and with the giving of
notice or lapse of time or both would riot) result in any breach of any agreements
or other obligations to which Executive or the Company is otherwise bound; and
	 
	 	(c)	 	this Agreement is a valid binding obligation on Executive and the Company.

	11.10	 	Arbitration
	 
	 	 	Except to the extent necessary for Executive or the Company to enforce rights under
Section 11.9 above, or for the Company to enforce its rights under Section 10 above, or
for the Executive to enforce his rights under Section 8, above, any case or controversy
arising among the parties hereto under this Agreement, or the subject matter hereof,
shall be settled by binding arbitration in Canton, Ohio under the then prevailing rules
of the American Arbitration Association. The decision of the arbitrators shall be final
and binding and the party against whom the award is rendered (“the non-prevailing
party”) shall be specifically instructed in any such award to pay all reasonable
attorney’s fees, disbursements of the prevailing party’s legal counsel, arbitration
costs, expenses and filing fees incurred by the prevailing party in the arbitration
proceeding. The American Arbitration Association shall appoint three (3) arbitrators to
preside at the said arbitration proceeding and the arbitrators will determine in their
decision and award, which is the prevailing party, which is the non-prevailing party,
the amount of the fees and expenses of the prevailing party and the amount of the
arbitration expenses. The arbitrators will render their award, upon the concurrence of
at least two (2) of their number, no later than thirty (30) days after the conclusion of
the arbitration proceedings. Judgment may be entered on the award of the arbitrators
and may be enforced in any court of competent jurisdiction.

11

 

	11.11	 	Remedies
	 
	 	 	All remedies hereunder are cumulative, are in addition to any other remedies provided by
law and may be exercised concurrently or separately, and the exercise of any one remedy
shall not be deemed to be an election of such remedy exclusively or to preclude the
exercise of any other remedy. No failure or delay in exercising any right or remedy
shall operate as a waiver thereof or modify the terms of this Agreement.
	 
	11.12	 	Survival
	 
	 	 	Anything contained in this Agreement to the contrary notwithstanding, the provisions of
Section 8; and Section 9; and Section 10; and Section 11.1; and the other provisions of
this Section 11 (to the extent necessary to effectuate the survival of Section 11) shall
survive termination of this Agreement and any termination of Executive’s contract
hereunder.
	 
	11.13	 	Costs of Preparation and Negotiation of Agreement
	 
	 	 	The Company shall be fully responsible for payment of its own costs and expenses
incurred in the preparation and negotiation of this Agreement and all documents related
thereto.

IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto as of
the date first written above.

BY CHRISTOPHER R. SACH   /s/ Christopher R. Sachs____(“Executive”)

Executed at Canton, OH on February 2, 2006

	 	 	 
	/s/ Dennis C. Rushovich
 

Dennis C. Rushovich, CEO

	 	 
	 
	 	 
	BY HARTVILLE GROUP, INC.
	 	 

Executed at Canton, OH on February 2, 2006

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Exhibit A — Position Description

	 	 	 
	Titles:

	 	Chief Financial Officer of Hartville Group, Inc
	Reporting Lines:

	 	Chief Executive Officer of Hartville Group, Inc

Responsibilities and Duties with regard to Companies Managed by Executive

As provided in Bylaws of Hartville Group Inc.

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