EXHIBIT 10.47
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, effective as of December 1, 2002, by and between
USI INSURANCE SERVICES CORP. a Delaware corporation ("Company") and XXXXXX X.
X'XXXX ("Executive"). Company and Executive are referred to hereinafter as the
"Parties".
R E C I T A L S :
WHEREAS, the Company is a wholly owned subsidiary of U.S.I. Holdings
Corporation, a Delaware corporation ("USI") and;
WHEREAS, the Executive is presently employed by USI Northeast Inc., a
wholly owned subsidiary of the Company, pursuant to a Restated and Amended
Employment Agreement effective as of January 1, 1999, and amended, as of March
27, 2002 (the "USI Northeast Agreement"); and
WHEREAS, the Company, USI Northeast Inc. and Executive desire to
terminate the USI Northeast Agreement and all respective rights and obligations
therein except as expressly provided herein; and
WHEREAS, the Company desires to employ the Executive on the terms and
subject to the conditions set forth herein, and Executive is willing to accept
such employment on such terms and conditions; and
WHEREAS, by virtue of such employment, Executive will have access to
Confidential Information of the USI Companies; and
WHEREAS, Executive acknowledges and agrees that the Company (on behalf
of itself and the USI Companies) has a reasonable, necessary and legitimate
business interest in protecting its own and the USI Companies' Confidential
Information, Client Accounts, relationships with Active Prospective Clients,
Goodwill and ongoing business, and that the terms and conditions set forth below
are reasonable and necessary in order to protect these legitimate business
interests.
NOW THEREFORE, in consideration of the representations, warranties,
covenants, and agreements contained herein, and for other good and valuable
consideration, the receipt and adequacy of which are conclusively acknowledged,
the Parties, intending to become legally bound, agree as follows:
1
A G R E E M E N T :
1. DEFINITIONS
1.1 Specific Definitions. Capitalized terms not defined elsewhere
herein shall have the following meanings ascribed to them:
"Active Prospective Acquisition" means any business or enterprise
engaged in providing USI Business, (i) with which a specified Person (or any of
its agents) had engaged in negotiations (whether or not successfully) within the
24 months preceding a specified date, regarding the acquisition of, sale of
assets by, or merger or joint venture with, such business or enterprise or (ii)
which had been identified by a specified Person (or any of its agents) in the
business records of such specified Person within the 24 months preceding a
specified date, and actively considered as a candidate, for possible
acquisition, merger, sale of assets or joint venture.
"Active Prospective Client" means any Person, or a group of Persons,
(i) who or which had been identified with reasonable particularity by a
specified Person (or any of its agents) in the business records of such
specified Person within the 24 months preceding a specified date, with
reasonable particularity as a possible client or customer of such specified
Person, or (ii) to whom or which a specified Person (or any of its agents) had
communicated in the business records of such specified Person within the 24
months preceding a specified date, in writing or otherwise, with respect to the
provision of any services that such specified Person provides in the conduct of
its business.
"Change of Control" means the occurrence of any of the following:
(i) any transaction, or series of related transactions (including
any merger or consolidation), the result of which is that any "person" or
"group" (as such terms are defined for purposes of the Securities Exchange Act
of 1934, as amended), becomes the "beneficial owner" (as so defined in Rule
13-d3 under such Act, except that a Person shall be deemed to have "beneficial
ownership" of all securities that such Person has the right to acquire, whether
such right is currently exercisable or is exercisable only upon the occurrence
of a subsequent condition), directly or indirectly, of 50% or more of USI's
aggregate outstanding voting stock (measured by voting power rather than number
of shares);
(ii) USI consolidates with, or merges with or into, any Person, or
any Person consolidates with or merges with or into USI, in any such event
pursuant to a transaction in which any of the outstanding voting stock of USI is
converted into or exchanged for cash, securities or other property, other than
any such transaction where the voting stock of USI outstanding immediately prior
to such transaction is converted into or exchanged for voting stock of the
surviving or transferee Person constituting 50% or more (immediately after
giving effect to such conversion or exchange) of the aggregate outstanding
shares of such voting stock of such surviving or transferee Person or
2
(iii) substantially all of USI's assets or earnings power is sold in
any transaction or series of related transactions.
"Client Account" means the account of any client (including, without
limitation, any retail insurance agent or broker, individual insured,
association and any member thereof, and any insurance carrier or other entity to
the extent third party administration claims processing or underwriting is
performed by such specified Person for such carrier or other entity) who or
which is serviced, as of a specified date, by a specified Person in connection
with such specified Person's business, regardless of whether such services are
provided by, or through the licenses of, such specified Person or any
shareholder, employee or agent of such specified Person.
"Confidential Information" means any information of a specified
Person, determined as of a specified date, that is not already generally
available to the public (unless such information has entered the public domain
and become available to the public through fault on the part of the Party to be
charged hereunder), all of which the Parties agree constitute trade secrets
under the governing trade secrets law, including but not limited to:
(i) the identity of any client (including, without limitation, any
retail insurance agent or broker, individual insured,
association and any member thereof, and any insurance carrier
or other entity to the extent third party administration claims
processing or underwriting is performed by such specified
Person for such carrier or other entity) whose account
constituted a Client Account of such specified Person at any
time within the 24 months preceding such specified date, as
well as the identity of any Active Prospective Client of such
specified Person as of such date;
(ii) the identity, authority and responsibilities of key contacts at
each such client and Active Prospective Client;
(iii) the service cost burden with respect to each such client and
Active Prospective Client;
(iv) the identities of markets or companies (including, but not
limited to, managed care programs, physician networks and the
surgical review board) from which insurance coverages or other
commitments, benefits or services for clients are obtained, the
surgical review boards of such companies and the commission
rates and/or fees with respect thereto;
(v) the types of consulting, third-party administration, employee
communication, investment management, managed care, human
resource and other services, and insurance coverages, provided
or to be provided specifically to any such client or Active
Prospective Client, and the internal corporate policies
relating thereto;
(vi) the specific insurance policies purchased by or for such
clients or Active Prospective Clients;
(vii) the expiration dates, commission rates, fees, premiums and
other terms and conditions of such policies;
(viii) the risk specifications and other characteristics, and claims
loss histories of such clients or Active Prospective Clients;
3
(ix) the nature of programs and plans, including their design,
funding and administration, demographic characteristics and any
other information supplied by, or developed for, such clients
or Active Prospective Clients;
(x) operations manuals, prospecting manuals and guidelines, pricing
policies and related information, marketing manuals and plans,
and business strategies, techniques and methodologies; (xi)
financial information, including information set forth in
internal records, files and ledgers, or incorporated in profit
and loss statements, fiscal reports and business plans;
(xii) Active Prospective Acquisitions of such specified Person as of
such date, and all financial data, pricing terms, information
memoranda and due diligence reports relating thereto;
(xiii) Technology and e-commerce strategies, business plans and
implementations, inventions, algorithms, computer hardware,
software and applications (including but not limited to any
source code, object code, documentation, diagrams, flow charts,
associated with the development or use of the foregoing
computer software);
(xiv) all internal memoranda and other office records, including
electronic and data processing files and records; and
(xv) any other information constituting a trade secret under the
governing trade secrets law.
"Goodwill" means the expectation of continued patronage from Client
Accounts and new patronage from prospective clients.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, a limited liability company, or a governmental entity (or any
department, agency, or political subdivision thereof).
"USI Company" means any USI Company to which Executive provides
services on behalf of the Company during the term of this Agreement.
"USI Business" means the businesses provided by any of the USI
Companies (including, without limitation, the providing of (i) insurance agency
and brokerage, and related insurance services, including, without limitation,
risk management and loss control, medical xxxx review, utilization review, cost
containment, analysis of loss exposures and designs, catastrophic case
management, loss reserves and rate reviews, performance of cash flow studies,
administration of risk funding and transfer techniques, captive company
formation, self-insurance consulting, reinsurance and excess stop loss (both
specific and aggregate) placement, management of insurance programs (including
programs with respect to membership associations and congregations), third party
administration, actuarial and administrative services for pension and health
plans, compensation programs and employee communications; (ii) managed care
consulting services and related legal assistance; (iii) human resource and
employee compensation consulting services and related legal assistance; and (iv)
any insurance or financial services relating to any of the foregoing).
4
"USI Companies" means USI, its subsidiaries (including the Company),
its "affiliates" and "associates" (as defined in Rule 12b-2 of the regulations
promulgated under the Exchange Act, without regard to whether any party is a
"registrant" under such Act), and any of their successors or assigns.
2. POSITION, RESPONSIBILITIES AND TERM
2.1. Executive's Position. On the terms and subject to the
conditions set forth in this Agreement, the Company shall employ Executive to
serve as Senior Vice President and Chief Operating Officer of the Company and
USI. Executive shall report to the CEO of USI (the "USI CEO").
2.2 Executive's Responsibilities. The Executive shall perform all
duties customarily attendant to these positions and shall perform such services
and duties commensurate with such positions as may from time to time be
reasonably prescribed by the USI CEO.
2.3 No Conflicts of Interest. Executive further agrees that
throughout the period of his employment hereunder, he will not perform any
activities or services, or accept such other employment which would be
inconsistent with this Agreement, the employment relationship between the
Parties, or would interfere with or present a conflict of interest concerning
Executive's employment with USI or the Company; provided, that Executive shall
be permitted to serve on the boards of directors of such other companies as the
USI CEO shall approve, such approval not to be unreasonably withheld, and that
Executive may make personal investments and may act as a director and engage in
other activities for any charitable, educational, or other nonprofit
institution, as long as such investments and activities do not materially
interfere with the performance of Executive's duties hereunder. Executive agrees
to adhere to and comply with any and all business practices and requirements of
ethical conduct set forth in writing from time to time by the Company in its
employee manual or similar publication.
2.4. Term. Executive shall be employed for a five-year and one month
term commencing on December 1, 2002, and ending on December 31, 2007, unless
sooner terminated in accordance with the provisions of Section 8 of this
Agreement; provided however that such employment shall be automatically extended
on the same terms and conditions as contained herein, unless the Company
provides Executive written notice, no later than 120 days prior to the then
scheduled termination of employment, of its intent not to extend such
employment. The foregoing term of employment shall be referred to hereinafter as
the "Term".
3. ACCEPTANCE
3.1 Executive hereby accepts such employment and agrees that
throughout the period of employment hereunder, Executive shall devote
substantially all of his business time, attention, knowledge and skills
faithfully, diligently and to the best of his ability, in the furtherance of the
business of the USI Companies.
5
4. COMPENSATION
4.1. Base Salary. As compensation for the services to be rendered by
Executive hereunder, the Company agrees to pay Executive, and Executive agrees
to accept, a base salary ("Base Salary") during employment hereunder at the
annual rate of not less than $350,000; provided, however, that the USI CEO may
determine to increase but not decrease the Executive's Base Salary in such
amount as the USI CEO may determine. The Base Salary shall be payable in equal
installments by the Company according to its normal payroll practices.
4.2 Performance Bonus. As additional compensation for the services
to be rendered by Executive hereunder, Executive shall be eligible to receive
from time to time during the term hereof, a bonus under the USI Management
Incentive Plan, as may be amended from time to time at the sole discretion of
the Board or Compensation Committee of the Board (the "USI Plan"). As Senior
Vice President and Chief Operating Officer of the Company, Executive is entitled
to a percentage of Base Salary award which is in turn based upon the USI
Companies performance criteria set forth in the USI Plan. At no time during the
Term hereof will Executive's "target" award opportunity be any less than 70% of
Executive's then Base Salary and will Executive's "threshold" award opportunity
be any less than 56% of Executive's then Base Salary. Any awards under the USI
Plan which exceed target performance will be in such amount as the USI CEO may
determine, and any decision of USI CEO shall be in his sole and unreviewable
discretion. Any award under the USI Plan will be paid to the Executive no later
than 90 days following the end of the performance year.
4.3 2002 Equity Incentive Plan. As additional compensation for the
services to be rendered by Executive hereunder, Executive shall be eligible to
receive from time to time during the Term hereof, stock based compensation
awards under the 2002 Equity Incentive Plan, as may be amended from time to time
at the sole discretion of the Board or Compensation Committee of the Board.
Moreover, as additional specific consideration to the Executive for entering
into this Agreement, Executive will receive an award of 60,000 options to
purchase USI stock pursuant to a Notice of Stock Option Grant delivered to the
Executive contemporaneous with the execution of this Agreement.
4.4 Benefits. In addition to such compensation, Executive shall be
entitled to the benefits which are afforded generally, from time to time to USI
executive employees. Notwithstanding the foregoing, nothing contained in this
Agreement shall require the USI Companies to establish, maintain or continue any
of the group benefits plans already in existence or hereafter adopted for the
employees of the USI Companies, or restrict the right of the USI Companies to
amend, modify or terminate such group benefit plans in a manner which does not
discriminate against Executive as compared to other executive employees of USI
Companies.
4.5 Vacation. Executive shall be entitled to vacation time and
holidays as are provided in general to executive employees of the USI Companies,
in accordance with usual practices and procedures, but shall in any event, be
entitled to no less than four weeks of vacation per year. Without limiting the
foregoing, Executive shall not be entitled to any additional compensation for
any unused vacation time.
6
5. EXPENSES
5.1 The Company shall reimburse Executive, in accordance with
Company policy, for all expenses reasonably and properly incurred by Executive
in connection with the performance of Executive's duties hereunder and the
conduct of the business of the Company, upon the submission to the Company (or
its designee) of appropriate vouchers therefor. Additionally, the Executive
shall be provided with $1000 a month for an automobile reimbursement during his
employment with the Company. The Company shall provide Executive with no less
than $500 per month for club and other organizational memberships.
6. CONFIDENTIAL INFORMATION AND PROPERTY
6.1. Property of the Company. Executive acknowledges and agrees that
all premiums, commissions, fees and other forms of compensation, and all
Confidential Information of the USI Companies relating thereto, which Executive
generates in the course of providing, directly or indirectly, any USI Business
during the Term hereof (including such items resulting from or relating to
services provided by Executive to the USI Companies), shall be the sole property
of the USI Companies, as the case may be.
6.2. Confidentiality during Term. During the Term hereof, Executive
will not use, or disclose to any Person, any Confidential Information
(determined as of any date during the Term hereof) of any USI Company, except
(a) in the normal course of business on behalf of such USI Company (b) with the
prior written consent of such USI Company or (c) to the extent necessary to
comply with law or the valid order of a court of competent jurisdiction, in
which event Executive shall notify such USI Company as promptly as practicable
(and, if possible, prior to the making of such disclosure). In addition,
Executive will use reasonable efforts to prevent any such prohibited use or
disclosure by any other person.
6.3. Confidentiality following Term. Following the Term hereof,
Executive will not use, or disclose to any Person, any Confidential Information
(determined as of the date of termination of Executive's employment with the
Company) of any USI Company, except (a) with the prior written consent of such
USI Company or (b) to the extent necessary to comply with law or the valid order
of a court of competent jurisdiction, in which event Executive shall notify such
USI Company as promptly as practicable (and, if possible, prior to the making of
such disclosure). In addition, Executive will use reasonable efforts to prevent
any such prohibited use or disclosure by any other person.
7. NON-SOLICITATION, NON-COMPETITION AND CONFLICTS OF INTEREST
7.1. Non-Solicitation. Except in the normal course of business on
behalf of any USI Company, Executive agrees that he will not, directly or
indirectly, (a) solicit, sell, provide or accept any request to provide, or
induce the termination, cancellation or non-renewal of, any USI Business from or
by any person, corporation, firm or other entity whose account constituted a
Client Account of such USI Company, at any time within the 24 months preceding
the earlier of
7
the date of such act or the date of termination of Executive's employment with
USI and the Company or (b) solicit, offer, negotiate or otherwise seek to
acquire any interest in any Active Prospective Acquisition of such USI Company,
determined as of the earlier of the date of such act or the effective date of
termination of Executive's employment with USI and the Company. The restrictions
contained in this Section 7.1 shall apply throughout the Term hereof and
thereafter until two (2) years after the effective date on which Executive's
employment with USI and the Company, or there respective successors in interest,
terminates.
7.2. Non-Competition. In consideration of the payments and benefits
to be received by Executive under this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
Executive, Executive agrees that, during the Non-Competition Period (as
hereinafter defined), Executive will refrain from carrying on any business,
directly or indirectly, which provides any USI Business, except (i) in the
normal course of business on behalf of any USI Company during the term of
Executive's employment under this Agreement or (ii) with the Company's prior
written consent. The term "carrying on any business" shall mean to act as a sole
proprietor, partner, member of a limited liability company, stockholder,
officer, director, employee, manager, trustee, agent, advisor, joint venturer,
or consultant of, with or to, any business, or otherwise to own, manage,
operate, control or participate in the ownership, management, operation or
control of, or engage in, any business. The Non-Competition Period shall mean
the period beginning on the effective date of this Agreement and ending on the
following date: (1) the first anniversary of the date of Executive's termination
of employment in the case of a termination of Executive's employment pursuant to
Section 8.2, or 8.4; or (2) the last day of the period for which payments are
made to Executive pursuant to Section 8.1, 8.3 or 8.5 (b). It is expressly
agreed that this Section 7.2 is not intended to restrict or prohibit the
ownership by Executive of stock or other securities of a publicly-held
corporation in which Executive does not (a) possess beneficial ownership of more
than 5% of the voting capital stock of such corporation or (b) participate in
any management or advisory capacity. In addition, it is also agreed that this
Section 7.2 shall not prohibit Executive from serving as a director pursuant to
the terms of Section 2.3 during the term of his employment under this Agreement.
It is the desire and intent of the parties that the provisions of this Section
7.2 shall be enforced under the laws and public polices applied in each
jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Section 7.2 is adjudicated to be invalid or unenforceable or
shall for any reason be held to be excessively broad as to duration, geographic
scope, activity or subject, it shall be construed by limiting and reducing it,
so as to be enforceable to the extent compatible with applicable laws and such
provision shall be deemed modified and amended to the extent necessary to render
such provision enforceable in such jurisdiction. If Executive challenges the
enforceability of the provisions of this Section 7.2 in whole or in part,
Executive shall, immediately upon such challenge, forfeit any right to any
payments and benefits under this Agreement that he has not already received.
7.3. No Hiring. Executive further agrees that he will not, directly
or indirectly, solicit the employment, consulting or other services of any other
employee or independent producer of any USI Company or otherwise induce any of
such employees to leave such USI Company's employment or to breach an employment
or independent producer agreement therewith. The restrictions contained in this
Section 7.3 shall apply throughout the Term hereof and thereafter
8
until two (2) years following the date on which Executive's employment with USI
and the Company or their respective successors in interest terminates.
7.4 Non-disparagement. Subject to obligations under applicable laws
and regulations, in the event of a termination of this Agreement, neither the
Executive nor any of the USI Companies or their senior officers or directors,
shall publicly make any statements or comments that intentionally disparage the
reputation of the Executive, or any of the USI Companies or their senior
officers or directors. Either party should be entitled to (i) respond publicly
to incorrect disparaging or derogatory public statements to the extent
reasonably necessary to correct or refute such public statement or (ii) make any
truthful statement to the extent (x) necessary with respect to any litigation,
arbitration or mediation involving this Agreement or (y) required by law or by
any court, arbitrator, mediator or administrative or legislative body (including
any committee thereof) with apparent jurisdiction to order such person to
disclose or make accessible such information. The restrictions contained in this
Section 7.4 shall apply until two (2) years following the date on which
Executive's employment with USI and the Company or their respective successors
in interest terminates.
7.5. Miscellaneous. Without limiting the provisions of Section 16,
in the event of any assignment by the Company permitted under such section, the
restrictive periods contained in this Section 7 shall be determined by reference
to the termination of Executive's employment with any permitted assignee of the
Company.
8. TERMINATION
8.1 Termination by the Company Without Cause; Failure to Extend.
Company shall have the right to terminate Executive's employment hereunder
"without cause" by giving Executive written notice to that effect. Any such
termination of employment shall be effective on the date specified in such
notice. The Company may also give notice of its election not to extend
Executive's employment hereunder for an additional Term. In the event of such
termination, or in the event of a failure to extend Executive's employment
hereunder for an additional Term under the same terms and conditions, the
Company shall (i) pay Executive his unpaid Base Salary through the effective
date of termination and any business expenses remaining unpaid on the effective
date of the termination for which Executive is entitled to be reimbursed under
Section 5 of this Agreement; (ii) to the extent it has not already been paid,
the final Buyout Installment due and payable on March 15, 2003 under the USI
Northeast Agreement; (iii) pay Executive any USI Plan performance bonus for any
prior period which was authorized by the Compensation Committee of the USI Board
but remained unpaid at the time of Executive's termination of employment, (iv)
pay Executive an amount per month equal to one-twelfth the sum of (1) his then
adjusted Base Salary plus (2) an amount equal to 100% of Executive's then
adjusted Base Salary for the period commencing on the date following the date of
termination and ending on the date which is twenty-four (24) months following
the effective date of termination; and (v) either continue to provide Executive
with healthcare coverage under the plan in which Executive participates
immediately prior to the effective date of such termination (where Executive
remains eligible to participate, and in accordance with the terms thereof) or in
the event Executive no longer remains eligible to participate under such
healthcare plan, to reimburse Executive for the amount of the premium Company
would have paid for
9
Executive's healthcare coverage had Executive remained employed hereunder, in
each case until (A) the date which is twenty-four (24) months following the
effective date of termination or (B) the commencement of Executive's coverage
under another employer's healthcare plan; provided, however, that without
limiting any other remedy available hereunder, all payments described in the
Section 8.1 shall be tendered to a mutually acceptable escrow agent upon any
arbitrator's or judge's determination that Executive has materially breached the
provisions of Section 6 or 7 hereof. In thes event such an escrow arrangement is
established pursuant to the preceding sentence, the escrow agent will be
instructed to tender the escrow funds (including interest), to the Company, and
the Company's obligation to make any remaining payments will immediately
terminate, upon an arbitrator's or judge's final determination that the
Executive has materially breached the provisions of Section 6 or 7 hereof. The
escrow agent will likewise be instructed to tender the escrow funds (including
interest) to the Executive, and the Company's obligation to make any remaining
payments will be reinstated, upon an arbitrator's or judge's final determination
that the Executive has not materially breached the provisions of Section 6 or 7
hereof.
8.2 Termination by the Company for Cause. The Company shall have
the right to terminate this Agreement and Executive's employment hereunder "for
cause" by giving Executive written notice to that effect. Any such termination
of employment shall be effective on the date specified in such notice. In the
event of such termination, the Company shall pay to Executive (a) his unpaid
Base Salary through the effective date of the termination, (b) to the extent it
has not already been paid, the final Buyout Installment due and payable on March
15, 2003 under the USI Northeast Agreement, (c) any business expenses remaining
unpaid on the effective date of the termination for which Executive is entitled
to be reimbursed under Section 5 of this Agreement, and (d) pay Executive any
USI Plan performance bonus for any prior period which was authorized by the
Compensation Committee of the USI Board but remained unpaid at the time of
Executive's termination of employment. For the purpose of this Agreement, "for
cause" shall mean (i) commission of a willful and material act of dishonesty in
the course of Executive's duties hereunder, (ii) conviction by a court of
competent jurisdiction of a crime constituting a felony or conviction in respect
of any act involving fraud, dishonesty or moral turpitude, (iii) Executive's
performance under the influence of controlled substances, or continued habitual
intoxication, during working hours, after the Company shall have provided
written notice to Executive and given Executive 30 days within which to commence
rehabilitation with respect thereto, and Executive shall have failed to commence
such rehabilitation or continued to perform under the influence after such
rehabilitation, (iv) frequent or extended, and unjustifiable (not as a result of
incapacity or disability) absenteeism which shall not have been cured within 90
days after the Company shall have advised Executive in writing of its intention
to terminate Executive's employment in accordance with the provisions of this
Section 8.2, in the event such condition shall not have been cured, (v)
Executive's personal, willful and continuing misconduct or refusal to perform
duties and responsibilities described in Section 1 above, or to carry out
reasonable and lawful directives of the USI CEO, which, if capable of being
cured, shall not have been cured within 90 days after the Company shall have
advised Executive in writing of its intention to terminate Executive's
employment in accordance with the provision of this Section 8.2 or (iv) material
non-compliance with the terms of this Agreement, including but not limited to
any breach of Section 6 or Section 7 of this Agreement.
10
8.3 Termination by Executive for Good Reason. Executive shall have
the right to terminate this Agreement and his employment hereunder for "good
reason," if (i) there is a Change of Control, and, within one year following
such Change of Control, Executive terminates his employment hereunder due to the
material diminution of his duties and responsibilities, as set forth herein,
(ii) a material diminution by USI of Executive's position as Senior Vice
President and Chief Operating Officer of USI and the duties relating thereto, or
(iii) default by the Company in the payment of or otherwise failure by the
Company to pay in a timely fashion after demand therefor any material sum or to
provide any material benefit due to the Executive pursuant to this Agreement;
provided that Executive shall give the Company prior written notice of the
reason therefore and a period of 30 days following receipt by the Company of
such notice shall have lapsed and the matters which constitute or give rise to
such "good reason" shall not have been cured or eliminated by the Company. In
the event of such termination, Executive shall be entitled to receive the same
payments and benefits as would be provided under Section 8.1 in the event of a
termination without cause.
8.4 Termination by Executive Without Good Reason. Executive shall
have the right to terminate this Agreement and his employment hereunder by
giving the Company not less than ninety (90) days prior written notice to that
effect. The termination of employment shall be effective on the date specified
in such notice. In the event that such notice is given, the Company may require
Executive to leave immediately, in which event, Executive must be compensated
under this Agreement for the notice period in a manner commensurate to the
compensation Executive would have received during the notice period had his
employment not been terminated by him. In the event of such termination,
Executive shall be entitled to receive the same payments as would be provided
under Section 8.2 in the event of termination for cause.
8.5 DEATH, INCAPACITATION OR DISABILITY.
a. Death. If Executive dies during his employment
hereunder, this Agreement shall terminate upon the date of Executive's death. In
the event of any such termination, the Company shall pay to Executive's
representative or his estate the same payments as would be provided under
section 8.2 in the event of termination for cause.
b. Incapacitation or Disability. In the event that
Executive is incapacitated or disabled by reason of illness or physical or
mental disability from performing Executive's duties hereunder (which shall be
deemed to have occurred (i) when Executive has receive total disability benefits
under the Company's long-term group disability policy for a continuous period of
six (6) months or, if no policy is then in effect, (ii) when such incapacity or
disability shall have existed for either (A) one continuous period of six months
or (B) a total of seven months out of any twelve consecutive months), the
Company shall have the right to terminate Executive's employment hereunder by
giving Executive 30 days prior written notice to that effect. In the event of
any such termination, the Company shall pay to the Executive the same payments
as would be provided under section 8.1 in the event of termination without
cause.
8.6 No Mitigation/No Offset. In the event of any termination of
employment, Executive shall be under no obligation to seek other employment, and
there shall be no offset
11
against amount due him under this Agreement or otherwise on account of any
remuneration attributable to any subsequent employment.
9. REMEDIES
9.1. Equitable Relief. Executive acknowledges that the services to
be rendered by him are of a special, unique and extraordinary character and that
it would be extremely difficult or impracticable to replace such services, that
the material provisions of this Agreement are of crucial importance to the
Company and that any damage caused by the breach of Sections 6 or 7 of this
Agreement would result in irreparable harm to the business of the Company for
which money damages alone would not be adequate compensation. Accordingly,
Executive agrees that if he violates Sections 6 or 7 of this Agreement, the
Company shall, in addition to any other rights or remedies of the Company
available at law, be entitled to equitable relief in any court of competent
jurisdiction, including, without limitation, temporary injunction and permanent
injunction.
9.2 Arbitration. The Parties agree that any controversy, claim or
dispute arising out of or relating to Executive's employment hereunder, or the
termination of such employment, shall be settled by arbitration before a
mutually selected arbitrator to be held in the State of New York in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
then in effect. The Parties agree that Executive's sole remedy for a breach of
this Agreement shall be monetary damages. Judgment may be entered on the
arbitrator's award in any court having jurisdiction, and the Parties consent to
the jurisdiction of the courts of the State of New York for this purpose. The
arbitrator shall determine which Party or Parties shall be entitled to costs and
expenses (including reasonable attorneys' fees) resulting from such dispute or
controversy. If such controversy, claim or dispute involves a claim (including,
without limitation, claims, arising under Section 6 or 7) for injunctive or
other equitable relief, and suit or cross-claim for such relief is filed in a
court of competent jurisdiction, the litigation shall be bifurcated to the
extent feasible, to the end that all issues other than those injunctive or
equitable issues required to be determined by the court shall be determined by
arbitration as hereinabove required.
10. WITHHOLDING
10.1 Each payment to Executive under this Agreement shall be reduced
by any amounts required to be withheld by the Company from time to time under
applicable laws and regulations then in effect.
11. ENTIRE AGREEMENT; NO AMENDMENT
11.1 No agreements or representations, oral or otherwise, express or
implied, have been made by either Party, with respect to Executive's employment
by any USI Company, that are not set forth expressly in this Employment
Agreement. Except as provided for hereinafter,
12
this Agreement supersedes and cancels any prior agreement entered into between
Executive and the Company or its predecessors relating to Executive's employment
by any USI Company, including, but not limited to, the USI Northeast Agreement.
Notwithstanding the foregoing, the terms and conditions of the USI Northeast
Agreement shall remain applicable with respect to Executive's employment during
the portion of the Term (as defined therein) ended November 30, 2002. and
furthermore, the Company and USI Northeast Inc. shall remain obligated to pay
the remaining Buy Out Installment under Section 4 of the USI Northeast
Agreement. No amendment or modification of this Agreement shall be valid or
binding unless made in writing and signed by the Party against whom enforcement
thereof is sought.
12. NOTICES
12.1 All notices, demands and requests of any kind which either
Party may be required or may desire to serve upon the other Party hereto in
connection with this Agreement shall be delivered only by courier or other means
of personal service, which provides written verification of receipt, or by
registered or certified mail return receipt requested, or by telecopy, provided
that the telecopy is promptly followed by delivery of hard copy of such notice
which provides written verification of receipt (each, a "Notice"). Any such
Notice delivered by registered or certified mail shall be deposited in the
United States mail with postage thereon fully prepaid, or if by courier then
deposited with the courier. All Notices shall be addressed to the Parties to be
served as follows:
(a) If to the Company, at
USI Insurance Services Corp.
00 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Copy to:
USI Insurance Services Corp.
00 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) If to Executive, at
Xxxxxx X. X'Xxxx
00 Xxxxx Xxxxxxx Xxxx Xxxx
Xxxxx Xxxxx XX 00000
Either of the Parties hereto may at any time and from time to time
change the address to which notice shall be sent hereunder by notice to the
other Party given under this Section. All
13
such notices, requests, demands, and other communications shall be effective
when received at the respective address set forth above or as then in effect
pursuant to any such change.
13. WAIVERS
13.1 No waiver of any default or breach of this Agreement shall be
deemed a continuing waiver or a waiver of any other breach or default.
14. GOVERNING LAW
14.1 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW.
15. SEVERABILITY
15.1 The provisions of this Agreement are intended to be interpreted
in a manner which makes them valid, legal, and enforceable. In the event any
provision of this Agreement is found to be partially or wholly invalid, illegal
or unenforceable, such provision shall be modified or restricted to the extent
and in the manner necessary to render it valid, legal, and enforceable. It is
expressly understood and agreed between Executive and the Company that such
modification or restriction may be accomplished by mutual accord between the
Parties or, alternatively, by disposition of an arbitrator or a court of law. If
such provision cannot under any circumstances be so modified or restricted, it
shall be excised from this Agreement without affecting the validity, legality or
enforceability of any of the remaining provisions.
16. ASSIGNMENT
16.1 Executive may not assign any rights (other than the right to
receive income hereunder) under this Agreement without the prior written consent
of the Company. This Agreement may be assigned without the consent of Executive,
and the provisions of this Agreement shall be binding upon and shall inure to
the benefit of the assignee hereof.
[SIGNATURES ON NEXT PAGE]
14
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
USI INSURANCE SERVICES CORP.
By: /s/ Xxxxx X. Eslcik
--------------------------------
Name: Xxxxx X. Xxxxxx
Title: President, CEO
/s/ Xxxxxx X. X'Xxxx
--------------------------------
XXXXXX X. X'XXXX
15
