Exhibit 10.7
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into and as of the 29th day of
February, 2000, by and between XXXXXX X. XXXXX (the "Executive") and RELIANCE
GROUP HOLDINGS, INC., a Delaware corporation having its principal place of
business at Park Avenue Plaza, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(the "Company").
1. Employment.
(a) The Company agrees to employ the Executive, and the Executive
agrees to be employed by the Company, as the President and Chief Executive
Officer of the Company. During the term hereinafter specified, the Executive
agrees to perform the duties customarily performed by chief executive officers
of publicly held corporations and to perform such other duties as from time to
time may be reasonably requested of him by the Board of Directors of the Company
or any duly empowered committee thereof (the "Board of Directors").
(b) During the term of this Agreement, the Executive shall devote
his full working time during customary business hours and his best efforts, and
apply all of his skill and experience, to the proper performance of his duties
hereunder and to the business and affairs of the Company and its subsidiaries.
2. Term. Subject to Sections 4 and 5 hereof, the term of employment
of the Executive hereunder shall be for the period commencing on the date
hereof and ending on February 28, 2002.
3. Compensation.
(a) Base Salary. The Company will pay to the Executive during the
term of his employment hereunder a salary ("Base Salary") of not less than the
Executive's annual base salary on the date hereof, payable in accordance with
the Company's usual and customary pay procedures.
(b) Bonus. For each calendar year of the Company during the term of
the Executive's employment, the Executive shall be eligible to receive a bonus
based on a percentage of his Base Salary for such year (not less than 115%) as
determined pursuant to the Company's existing Executive Bonus Plan (or any other
subsequent executive bonus compensation plan in which the chief executive
officer participates and which has been approved by the stockholders and does
not reduce the Executive's bonus potential below 100% of Base Salary), provided
that, except in the case of the bonus for the calendar year in which this
Agreement terminates in accordance with Section 2 hereof, the Executive has not
"voluntarily resigned" or been terminated for "cause" prior to the time of
payment of the bonus.
(c) Reimbursement of Expenses. The Company shall pay or reimburse
the Executive for all reasonable business expenses actually incurred or paid by
the Executive during the term of his employment under this Agreement in the
performance of his services hereunder in accordance with the current policies of
the Company applicable to the Executive, subject to modification from time to
time hereafter, provided that such modification does not significantly and
adversely affect the Executive's payments or reimbursements thereunder. Such
payment or reimbursement shall be made upon presentation of expense statements
or vouchers or such other supporting information as the Company may customarily
require of its senior executives.
(d) Vacations. The Executive shall be entitled to not less than four
weeks' paid vacation. Vacation shall be taken at times reasonably consistent
with the needs of the Company. Vacation earned for a year but not taken during
that year shall not be paid for nor taken in a subsequent year.
(e) Perquisites. The Executive shall be entitled to such other
perquisites as are currently provided to the Executive.
(f) Withholding. The Executive acknowledges and agrees that the
Company shall be entitled to withhold from his compensation, or otherwise
provide for, all federal, state or local income or other taxes which the Company
determines are required to be withheld on amounts payable to the Executive
pursuant to this Agreement or otherwise.
4. Termination of Employment.
(a) With or Without Cause; Resignation. The Company shall have the
right to terminate the employment of the Executive with or without "cause" (as
hereinafter defined) and the Executive shall have the right to resign from his
employment by the Company. If (i) the Executive's employment with the Company is
(i) terminated for "cause", or (ii) the Executive has "voluntarily resigned" (as
hereinafter defined) his employment, the Company shall have no further
obligation to the Executive hereunder, except, in the case of clause (ii), to
pay to the Executive the amounts, if any, due him pursuant to subsection (c) of
Section 3 hereof.
(b) Definitions of Cause and Voluntarily Resigned. For purposes of
this Agreement, "cause" shall mean:
(i) conviction of the Executive of a felony, or of any lesser
crime or offense involving the property of the Company or any
of its subsidiaries or affiliates;
(ii) willful misconduct by the Executive in connection with
the performance of his duties hereunder, or material and
willful breach by him of any of the provisions of this
Agreement and failure to cure such misconduct or breach within
two (2) weeks after receipt of written notice thereof;
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(iii) the Executive's conviction in a court of law of any
criminal offense involving moral turpitude under the laws of
the United States or any other jurisdiction the laws of which
may apply; and
(iv) the Executive's willful failure to perform specific
written directives of the Board of Directors of the Company,
which directives are consistent with the scope and nature of
the Executive's existing duties and responsibilities as set
forth in Section 1 hereof, and failure to cure such failure
within two (2) weeks after receipt of written notice thereof.
For purposes of this Agreement, "voluntarily resigned" shall mean the
Executive's decision to no longer serve as an executive officer of the Company,
which decision shall not have resulted from any of the following:
(i) a substantial diminution of the Executive's duties without
the Executive's written consent;
(ii) a demotion in title; or
(iii) a relocation or attempted relocation of the Executive
without the Executive's written consent to an office outside a
25-mile radius of New York City.
(c) Termination Without Cause; Resignation. If the Executive is
terminated without "cause" or has resigned, but not "voluntarily resigned", the
Company shall have no obligation to the Executive hereunder, except (i) to
continue to provide the Executive with the benefits under the medical and dental
plans of the Company then in effect for senior executives of the Company until
February 28, 2002, at the same charge to the Executive as he would have paid as
an active employee of the Company, (ii) to fully vest all stock option grants
held by the Executive and permit the immediate exercise thereof for a period of
12 months after the date of such termination or such resignation, (iii) to pay
to the Executive, within 20 days after the date of such termination or such
resignation, a lump sum in the amount determined by multiplying (A) the number
of years (including fractional years) remaining from the date of such
termination or such resignation to February 28, 2002, times (B) the sum of Base
Salary and the bonus, if any, paid Executive for the year immediately prior to
the date of such termination or such resignation and (iv) to pay the amounts due
him under subsection (c) of Section 3 hereof.
5. Death or Disability.
(a) Termination. The term of employment of the Executive shall
terminate forthwith in the event of the death of the Executive, and, at the
option of the Company upon written notice to the Executive, in the event that
the Executive shall fail for a period of four consecutive months to render and
perform the services required of him under this Agreement because of
"disability" (as currently defined in the Company's existing long-term
disability plan). Upon a
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termination of the Executive's employment hereunder because of death or
"disability", the Executive shall be entitled to receive and shall be paid as
provided for in subsection (b) of Section 5 hereof and the Company shall have no
further obligation to him hereunder, except (i) to pay to the Executive or his
estate, as the case may be, the amounts, if any, due him pursuant to subsection
(c) of Section 3 hereof and (ii) solely in the case of "disability", to continue
to provide the Executive with the benefits under the medical and dental plans of
the Company then in effect for senior executives of the Company until February
28, 2002, at the same charge to the Executive as he would have paid as an active
employee of the Company.
(b) Payments Required.
(i) In the event of the death of the Executive, his estate
shall be paid, within 20 days after the date of his death, a
lump sum in the amount equal to the Base Salary for one year
from the date of his death.
(ii) In the event of a "partial disability" or a "total
disability" (as such terms are currently defined in the
Company's existing long-term disability plan), the Executive
shall continue to be paid, until February 28, 2002, his Base
Salary.
(iii) All amounts payable pursuant to clause (ii) of this
subsection (b) shall be reduced by amounts paid to the
Executive under any of the Company's disability plans.
6. Covenant Not to Compete or Interfere; Proprietary Information;
and Injunctive Relief.
(a) Limited Covenants Not to Compete or Interfere. Executive
recognizes that a substantial part of the value of a company such as the
Company's resides in the expertise of its employees such as Executive and the
goodwill with its customers which Executive significantly influences, and that
the value of the Company will be significantly diminished if Executive attempts
to compete with the Company or interfere with its activities, or solicit its
clients in contravention of this Section 6. Executive also acknowledges that his
services are unique and special and that his compensation is partially in
consideration of and conditioned upon his not competing with the Company.
Executive agrees that, during the term of his employment and until 12 months
thereafter, Executive will not, directly or indirectly, (i) interfere with,
disrupt or attempt to interfere with or disrupt the relationship, contractual or
otherwise, between the Company and any customer, supplier, lessee, employee,
consultant or subcontractor of the Company, (ii) solicit or sell to any person
or entity who was a customer of the Company during the one-year period prior to
the termination of Executive's employment pursuant to this Agreement any service
or product or related service or product, which is offered, has been offered or
is being proposed to be offered by the Company or its subsidiaries within the
one-year period prior to such solicitations or (iii) hire or attempt to hire
directly or indirectly any non-clerical employee of the Company who was employed
by the Company during the six months preceding the termination of his
employment.
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(b) Proprietary Information. Executive agrees that all information,
whether or not in writing, of a private, secret or confidential nature relating
to the Company's or any of its affiliates' business, business relationships,
financial affairs or customers (collectively, the "Proprietary Information") is
and shall be the exclusive property of the Company or its affiliates during the
term of his employment and thereafter. Executive shall not, except as required
in the ordinary course of performance of his duties as an employee of the
Company, disclose, or use during the term of his employment and thereafter any
Proprietary Information. By way of illustration but not limitation, Proprietary
Information includes client, customer and supplier lists, data, records,
computer programs, manuals, processes, methods, contacts at or knowledge of
customers or prospective customers of the Company or any of its subsidiaries and
intangible rights which are either developed by Executive during the term of his
employment or to which Executive has access, which development or access was
rendered possible by virtue of Executive's employment.
Upon termination of employment, Executive shall promptly return to the
Company all materials and all copies of materials involving any Proprietary
Information in Executive's possession or control. Executive agrees to represent
to the Company that he has complied with the provisions of this Section 6 upon
termination of employment.
(c) Memoranda, Etc. Executive acknowledges and agrees that all
memoranda, notes, reports, records and other documents made or compiled by
Executive, or made available to Executive during the term of his employment
concerning the business of the Company or any of its affiliates, shall be the
Company's property and shall be delivered to the Company upon the termination of
Executive's employment hereunder or at any other time upon request by the Board
of Directors. Following the expiration or termination of Executive's employment
hereunder, Executive agrees to cooperate, for a period of five (5) years with
respect to legal matters and for a period of one (1) year with respect to all
other matters, with the Company and its affiliates with respect to matters with
which Executive was involved during the term of his employment.
(d) Survival. The provisions of this Section 6 shall survive the
termination or expiration of this Agreement and Executive's term of employment
hereunder.
(e) Injunctive Relief. Executive consents and agrees that, if he
violates any of the provisions of this Agreement with respect to
non-interference or confidentiality, the Company would sustain irreparable harm
and, therefore, in addition to any other remedies which the Company may have
under this Agreement or otherwise, the Company shall be entitled to apply to any
court of competent jurisdiction for an injunction restraining Executive from
committing or continuing any such violation of this Agreement, and Executive
shall not object to any such application.
(f) New or Prospective Employer Notification. Executive agrees that,
prior to the commencement of any new employment with a new employer during the
12-month period following the term of his employment, Executive will notify the
Company of the name and address of such new Company and will furnish such new
employer with a copy of Section 6 of this Agreement. Executive agrees that the
Company may advise any new or prospective employer of Executive of the existence
and terms of Section 6 of this Agreement and furnish such new or prospective
employer with a copy of Section 6 of this Agreement.
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(g) Challenge To Section 6. Executive agrees that, as a condition
precedent to the commencement or maintenance of any action, suit or proceeding
challenging, directly or collaterally, the validity or enforceability of this
Section 6, or any provision hereof, he will pay the Company an amount equal to
all payments received by him from the Company on and after the date of
termination of his employment. In addition, if Executive shall fail in such
challenge, Executive agrees to reimburse the Company for all costs (including
attorneys fees and expenses) of the Company's defense to such challenge.
7. Assignment.
(a) This Agreement is personal as to the Executive and shall not be
assignable by the Executive.
(b) This Agreement shall not be assigned by the Company without the
prior written consent of the Executive.
8. Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given if delivered
personally (when delivered), sent by registered mail, return receipt requested
(upon confirmation of receipt) or by recognized overnight courier (one day after
being sent) to such address as the Executive or the Company may designate by
notice to the other party.
9. Complete Understanding. This Agreement constitutes the sole and entire
agreement between the Executive and the Company with respect to the Company's
employment of the Executive and shall not be altered, modified or amended except
by written instrument signed by the party against whom such alteration,
modification or amendment is sought to be enforced. This Agreement does not
alter, amend or modify any rights of the Executive to indemnification under
either the Company's Charter or By-laws or his indemnification agreement with
the Company.
10. Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of and be enforceable by the parties hereto and their respective
heirs, executors, administrators, successors and assigns.
11. Termination of Agreement. This Agreement (other than the provisions of
Sections 4(c), 5(b) and 6 hereof) shall terminate upon the expiration or
termination, in accordance with the terms hereof, of the Executive's employment
hereunder.
12. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
13. Severability. The invalidity of all or any part of any provision
of this Agreement shall not invalidate the remainder of this Agreement or the
remainder of any paragraph which can be given effect without such invalid
provision.
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14. Paragraph Headings. The paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized representative and the Executive has executed
this Agreement, in each case, as of the day and year first above written.
RELIANCE GROUP HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
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Title: Executive Vice President
/s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
