s/ CL____ Schedule 1 /s/ JPB___ CHL Brown & Brown, Inc. Schedule 1 Non-Compete Companies Arthur J. Gallagher & Co AssuredPartners Gallagher HUB International Marsh BB&T Insurance Services Wells Fargo Insurance Services And any person or entity owning,...
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FINAL EXECUTION VERSION
Page 1 of 17
TRANSITION AGREEMENT
THIS TRANSITION AGREEMENT (this “Agreement”), effective as of July 1, 2016 (the
“Effective Date”), is made and entered into by and between XXXXX & XXXXX, INC., a Florida
corporation (together with its present and future Subsidiaries and affiliates, the “Company”), and
XXXXXXX X. XXXXXXXX, a resident of the State of Florida (“Executive”). The Company and
Executive are each a “Party” and collectively, the “Parties.”
BACKGROUND
In connection with Executive’s voluntary resignation from the Company in July 2016
(“Resignation”), the Company and the Executive wish to memorialize their agreement concerning
Executive’s remaining period of employment with the Company, and with respect to the period following
Executive’s departure from the Company. In recognition of Executive’s career with the Company, and as
consideration for Executive’s agreement to abide by certain post-resignation obligations as set forth in this
Agreement following Executive’s departure from the Company, the Company desires to provide Executive
the consideration described in this Agreement in return for the agreements of the Executive set forth herein.
The date upon which Executive’s Resignation from the Company is effective shall be described herein as
the “Resignation Date.”
The Company, on behalf of itself, its shareholders and its employees, has a compelling interest in
maintaining the confidentiality of Confidential Information and/or Trade Secrets (as such terms are defined
in Section 5(a) of this Agreement), retaining its employees, and maintaining the customer relationships and
business goodwill the Company develops and acquires. By virtue of Executive’s position, Executive has
been afforded extensive and intimate knowledge of the Company’s strategic goals, including particularized
plans and processes developed by the Company, whether through the Executive’s efforts or otherwise,
which are not known to others in the industry and which give the Company and its Subsidiaries competitive
advantage. In addition, Executive has had full access to information concerning the performance and results
of various leaders, business units, divisions, profit centers and Subsidiaries of the Company and information
related to the development and execution of strategic plans, including potential acquisitions, for the
Company and/or its Subsidiaries. Executive’s role has been such that the Company’s Confidential
Information and Trade Secrets have necessarily become inextricably entwined with Executive’s own
knowledge and experience.
NOW, THEREFORE, the Parties, intending to be legally bound, agree as follows:
TERMS
1. The Executive’s Resignation and Future Relationship.
(a) The Executive’s employment with the Company and its Subsidiaries shall end as
of the close of business on July 1, 2016, which shall also be deemed to be the Resignation Date. Pursuant
to a Consulting Agreement in the form attached to this Agreement as Exhibit “A” (the
“Consulting Agreement”), the Executive agrees that, after the Resignation Date, he will make himself
available to the Company at reasonable times and locations to fulfill his duties under the Consulting
Agreement. The level of services that the Executive provides after the Resignation Date shall in no event
exceed 20 percent of the average level of services performed by the Executive for the Company during the
36-month period immediately preceding the Resignation Date and, except as set forth in the Consulting
Agreement, shall not extend beyond twelve (12) months following the Resignation Date. Therefore, the
services performed by the Executive after the Resignation Date shall not exceed the level of services
permitted under Treasury Regulation §1.409A-1(h)(1)(ii) under which the Executive is presumed to have
had a “separation from service” (as such term is defined for purposes of Section 409A of the Internal
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CHL Xxxxx & Xxxxx, Inc.
(i) The Executive’s base salary as earned through the Resignation Date, to be
paid upon the Company’s next regularly occurring payroll date following the Resignation Date;
(ii) The Executive's cash balance (if any) in the Company's Employee Stock
Purchase Plan as of the Resignation Date, according to such plan's terms and conditions;
(iii) promptly after the Resignation Date, the papers necessary for the
Executive to elect continuation of any group medical insurance coverage pursuant to the Consolidated
Omnibus Budget Reconciliation Act (“COBRA”) and the terms and conditions of the Company's medical
plan; if the Executive elects continued coverage pursuant to COBRA, the Executive shall be solely
responsible for all matters relating to his continuation of coverage pursuant to federal COBRA law,
including, without limitation, the election of such coverage and the timely payment of premiums;
(iv) the opportunity to elect the timing of distribution of any existing account
balance in the Company's Employee Savings Plan, according to the terms and conditions of the Employee
Savings Plan; the Company will not make any further contribution to the Executive’s account under the
Employee Savings Plan after the Resignation Date and he remains responsible for repayment of any loans
from his Employee Savings Plan account; and
(v) distribution of the Executive’s existing account balance (if any) in the
Company’s Deferred Compensation Plan, according to the terms and conditions of the Deferred
Compensation Plan.
(b) In addition to the cash compensation paid in accordance with Section 2(a) above,
the Company will waive, subject to approval by the Compensation Committee of the Company’s Board of
Directors, effective on the Resignation Date, the remaining time-based employment conditions for vesting
the following 111,000 shares of restricted common stock of the Company that were granted to the Executive
under the Xxxxx & Xxxxx, Inc. Performance Stock Plan (the “PSP”) and the 2010 Xxxxx & Xxxxx, Inc.
Stock Incentive Plan (the “SIP”), as applicable (collectively, the “Restricted Stock”):
(i) The following “awarded” but unvested restricted stock awards:
(A) 13,712 shares granted on April 1, 2003 under the PSP;
(B) 8,000 shares granted on February 27, 2008 under the PSP;
(C) 9,316 shares granted on April 27, 2010 under the PSP; and
(D) 33,418 shares granted on January 18, 2011 under the SIP.
(ii) The following Performance-Triggered Stock Grants (PTSGs):
(A) 31,017 shares granted on July 1, 2013 under the SIP;
(B) 9,214 shares granted on January 22, 2014 under the SIP; and
(C) 6,323 shares granted on January 21, 2015 under the SIP.
For purposes of this Agreement, the shares of Restricted Stock, if any, with respect to which the remaining
time-based employment conditions for vesting of the Restricted Stock are waived will be referred to as the
"Accelerated Restricted Stock." Failure of the Compensation Committee of the Board of Directors to
approve the waiver of the remaining time-based employment conditions for vesting of the 111,000 shares
in Executive, as contemplated in this subparagraph 2(b), shall render this Agreement and the Consulting
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CHL Xxxxx & Xxxxx, Inc.
about any possible violation of federal securities law or making any disclosure protected under the
whistleblower provisions of federal law or regulation.
4. Informed, Voluntary Signature.
(a) The Executive agrees he has had a full and fair opportunity to review this
“Transition Agreement” and signs it knowingly, voluntarily and without duress or coercion. Further, in
executing this Agreement, the Executive agrees that he has not relied on any representation or statement
not set forth in this Agreement and its attachments.
(b) To the extent necessary to comply with Code Section 409A, if the date on which
the Company provides this “Transition Agreement” to the Executive and the Retirement Date are in two
separate taxable years, any payment of amounts under Section 2 or the Consulting Agreement that constitute
deferred compensation within the meaning of Code Section 409A shall be payable on the later of (i) the
date such payment is otherwise payable under the Agreement, or (ii) the first business day of such second
taxable year.
(c) Notwithstanding anything else contained in this Agreement to the contrary,
Executive understands that he is not releasing any rights to indemnity from the Company for any claims
against him arising out of his capacity or service rendered to the Company (or any of its Subsidiaries) that
are within the scope of: (a) § 607.0850, Florida Statutes; (b) any similar statute in another relevant
jurisdiction or (c) the Bylaws or the Articles of Incorporation of the Company or any of its Subsidiaries of
(d) applicable decisional law. It is understood that any such indemnification (which, if appropriate will
include advancement of expenses) is governed by Florida law.
5. Post-Resignation Restrictive Covenants and Related Matters.
(a) Defined Terms.
(i) “Client Account” means any person or entity for which Company has been
compensated for services provided to that person or entity during the Executive’s employment with
Company or the Restricted Period. Client Account does not include insurance carriers, wholesale brokers,
brokers, syndicates or other entities which pay Company, or share with Company, fees or commissions
related to the Insurance Business.
(ii) “Confidential Information” means any of the following: (1) financial
Information of any kind relating to the Company’s Insurance Business including, but not limited to the
financial relationships of the Company with carriers, brokers and intermediaries [Financial Information
includes, but is not limited to, commission structures, incentive arrangements and discounts]; (2) material
Information from or about an issuer of securities including, specifically, Xxxxx & Xxxxx, Inc. that could
reasonably be expected to influence Executive or any other Person to purchase or sell securities of such
issuer; (3) sales training and producer training materials and programs produced or developed by Xxxxx &
Xxxxx University or otherwise customized and maintained as formal training programs for producers and
sales personnel of Company; (4) strategic planning, marketing and sales Information, whether general or
client-specific; (5) Information regarding the Company’s contractual, relationships and communications
with other entities in the Insurance Business; (6) all Information relating to Client Accounts; (7) personnel
Information including compensation structures and plans; (8) Information containing Trade Secrets; (9)
Information concerning communications with, and advice of, corporate or retained attorneys; and (10) any
nonpublic information obtained from Xxxxx & Xxxxx regarding current or past mergers, if the information
is subject to a nondisclosure or confidentiality agreement. Confidential Information does not include any
information that is publicly available or independently provided to Executive (except for such public
disclosures made in violation of this Agreement) or any information generally known within the insurance
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CHL Xxxxx & Xxxxx, Inc.
industry. However, Confidential Information includes the compilation of otherwise public information by
the Company for a specific business purpose, where such compilation has independent economic value.
(iii) “Information” means any and all non-public information, and data of the
Company that relates to the Insurance Business, regardless whether kept in a document or electronic storage
medium, and includes, but is not limited to, all compilations, programs, devices, strategies, and methods.
Information that is provided to Company by third parties is not deemed public even though the third party
may provide limited access to the Information to others in the course of the third party’s business or
financial dealings. Information is public only if it is widely and easily available to anyone, whether within
or outside of the Insurance Business, and is not a unique compilation of public information prepared by
Company for use in the Insurance Business.
(iv) “Insurance Business” means the business of selling and servicing
insurance, risk transfer alternatives, and related services including, but not limited to, quoting, proposing,
soliciting, selling, placing, providing, servicing and/or renewing insurance, reinsurance, and surety
products, as well as loss control, claims administration, risk management, program administration,
Medicare secondary payer compliance, Social Security disability and Medicare benefits advocacy services.
Relationships of the Company with insurance carriers, intermediaries, vendors, parties to whom Company
provides risk management, administrative, or any other service offered by Company, form a part of the
Company’s Insurance Business; provided, however, that the term “Insurance Business” is not intended to
include the risk-bearing activities of insurance carriers.
(v) “Subsidiary” or “Subsidiaries” means any business organization formed,
owned and controlled by Company for purposes of engaging in the Insurance Business as of the Effective
Date of this Agreement.
(vi) “Trade Secret” means the same as defined by the Florida Uniform Trade
Secrets Act, as enacted in Florida and construed by Florida decisional law, as amended from time to time,
and has been patented, trademarked or copyrighted at the time of the execution of this Agreement by the
USPTO or other governmental agency with jurisdiction to enforce and/or protect Trade Secrets.
(b) Confidential Information and Trade Secrets Covenant. The Company is engaged
in the highly competitive Insurance Business, and has expended and will expend significant sums of money
and has invested and will invest a substantial amount of time to develop and use, and maintain the secrecy
of, the Confidential Information and/or Trade Secrets. The Company has thus obtained, and will obtain, a
valuable economic asset which has enabled, and will enable, it to develop an extensive reputation and to
establish long-term business relationships with its Client Accounts and other entities in the Insurance
Business. Executive has had access to portions of the Confidential Information and Trade Secrets owned
by the Company. If such Confidential Information and/or Trade Secrets were disclosed to or used for the
benefit of anyone other than the Company, the Company would suffer irreparable harm, loss and damage.
Accordingly, Executive acknowledges and agrees that:
(i) The Confidential Information and Trade Secrets are, and at all times
hereafter shall remain, the sole and exclusive property of the Company;
(ii) Executive shall not, at any time, make an unauthorized disclosure of
Confidential Information or Trade Secrets, and shall use reasonable diligence to guard and protect the
Confidential Information and Trade Secrets from any unauthorized disclosure;
(iii) Upon execution of this Agreement, unless the Company gives Executive
prior express permission, Executive shall not, at any time, use for Executive’s own exclusive benefit, or
use for or disclose to any competitor, Client Account, insurance or reinsurance carrier, managing general
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CHL Xxxxx & Xxxxx, Inc.
terms of this agreement, each hereby agrees that to provide advance written notice to the other party’s
designee, as set forth herein, specifically stating the grounds therefor.
(iii) In the event of a breach or threatened breach of the provisions of this
Section 5, the Company shall be entitled to seek injunctive relief as well as any other applicable remedies
at law or in equity. Executive understands and agrees that without such protection, the Company’s business
would be irreparably harmed.
(iv) It is the intention of the Parties that the terms and provisions of this
Agreement be enforceable to the maximum extent permitted by applicable law. To that end, the Parties
agree that if a court should declare any of the covenants in this Section 5 unenforceable, the court shall be
authorized to modify or “blue pencil” the covenants to the extent necessary to cure any legal impediment
to enforcement.
(v) This Agreement does not relieve the Executive of other legal
responsibilities and liabilities that Executive has to the Company under applicable state and federal statutes
and common law. Instead, Executive acknowledges that this Agreement only creates additional rights and
responsibilities for protecting the Company’s interests.
6. Mutual Non-Disparagement Covenant. The Parties agree that they will not, directly or
indirectly, disparage the other including, the Company’s current or former officers, directors or employees
orally, in writing or in any other manner (such as through the use of emails, blogs, photographs, social
media (Facebook, Twitter, etc.), etc.) or any other electronic or web-based media). Further, the Parties
agree that they will not make disparaging statements or comments in any form, manner or medium about
the other including Company’s current or former officers, directors or employees or about his employment
by or end of employment with the Company. Disparaging statements or comments shall be those that meet
the common law meaning of defamation per se under Florida law. The Parties acknowledge that it would
be impossible to monitor or enforce this covenant as to Company’s entire employee base of over 7,800
employees. In order to preserve the spirit and intent of the covenant, the Parties agree that this covenant
shall apply solely to the present and future composition of the Company’s Leadership Council. In the event
that either Party has a good faith belief that the other Party has violated the terms of this covenant, each
hereby agrees to provide advance written notice to the other Party’s designee, as set forth under Section 8,
specifically stating the grounds therefor. Each Party agrees to an in-person meeting, with or without a
mediator, to give the other Party a reasonable opportunity to cure said claimed breach, as a condition
precedent to any action or right(s) against the other Party. If said alleged breach cannot be cured, then both
Parties shall consider said pre-suit meeting as a settlement conference and protected by Section 90.48, Fla.
Stat., and by the Florida Mediation Privilege set forth in Chapter 44, Fla. Stat. This Section 6 shall not be
interpreted either Party from giving truthful testimony under legal process or compulsion, subject to
notification provisions of this Agreement.
7. Waivers, Modifications and Amendments. No waiver or modification or amendment of
this Agreement or of any covenant, condition, or limitation herein shall be valid unless in writing and duly
executed by the Party to be charged therewith.
8. Notices. Notices shall be addressed by certified mail and emailed as indicated below, or
to such other addressee or to such other address as may be designated by either Party:
If to the Company: Xxxxx & Xxxxx, Inc.
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, General Counsel
Facsimile No.: (000) 000-0000
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CHL Xxxxx & Xxxxx, Inc.
E-mail: xxxxxx@xxxxx.xxx
If to the Executive: Xxxxxxx X. Xxxxxxxx
000 X. Xxxxx Xx.
Xxxxxx Xxxxx, XX 00000
E-mail: xxxxxxxxxx@xxxxx.xxx
With copy to:
Xxxxxxx Xxxxxxxx, Senior Partner
Xxxxxxxx Xxxx
0000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, XX 00000
E-mail: XX@Xxxxxxxxxxxx.xxx
9. Assignment and Enforcement. Executive agrees that Company may freely assign this
Agreement or any of its rights or privileges hereunder in connection with any sale or transfer of some or all
of Company’s assets or Subsidiary corporations, Company’s sale of a controlling interest in the Company’s
stock, or the merger or other business combination by Company with or into any business entity. Executive
further agrees to be bound by the provisions of this Agreement for benefit of the Company to whose employ
Executive may be transferred, without the necessity that this Agreement or another employment agreement
be re-executed at the time of such transfer. No assignment, consent by Executive, or notice to Executive
shall be required to render this Agreement enforceable by any assignee, transferee, or successor. The
Company’s assignees, transferees, or successors are expressly authorized to enforce the Company’s rights
and privileges hereunder, including the restrictive covenants set forth in Section 5. Executive’s services
hereunder are personal in nature, and Executive may not assign or delegate Executive’s rights or obligations
hereunder in whole or in part without the Company’s prior written consent. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the Parties’ respective successors and permitted
assigns. Other than as contemplated in this Section 9, no term or provision of this Agreement is intended to
be, or shall be, for the benefit of any person or entity not a party hereto, and no such other person or entity
shall have any right or cause of action hereunder.
10. Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Florida, without regard to conflicts of laws principles.
11. Jurisdiction and Venue. This Agreement is entered into between Executive and Company
in Volusia County, Florida, and becomes binding on the parties in Volusia County, Florida. Should
Executive execute this Agreement at any location other than Volusia County, Florida, Executive hereby
acknowledges that such was for the sole convenience of the Executive, and Executive hereby waives any
claim that the situs of this Agreement is any place other than Volusia County, Florida. Any litigation or
other proceeding (“Proceeding”) arising out of, under or relating to this Agreement shall be brought,
prosecuted and maintained in either (a) the courts of the State of Florida, County of Volusia, or (b) if it has
or can acquire jurisdiction, the United States District Court for the Middle District of Florida, and each of
the Parties irrevocably submits to the exclusive jurisdiction of each such court in any such Proceeding,
waives any objection it may now or hereafter have to venue or to convenience of forum, agrees that all
claims in respect of the Proceeding shall be heard and determined only in any such court and agrees not to
bring any such Proceeding in any other court. The Parties agree that either or both of them may file a copy
of this Section 111 with any court as written evidence of the knowing, voluntary and bargained agreement
between the Parties irrevocably to waive any objections to venue or to convenience of forum. Each Party
agrees that the chosen exclusive forums are reasonable and shall not be so inconvenient that such Party
will, for all practical purposes, be deprived of such Party’s day in court. Process in any Proceeding referred
to in the first sentence of this Section 11 may be served on any Party anywhere in the world.
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CHL Xxxxx & Xxxxx, Inc.
IN WITNESS WHEREOF, the Parties have executed this Transition Agreement effective as of
the date first written above.
EXECUTIVE:
XXXXXXX X. XXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxx ___
Xxxxxxx X. Xxxxxxxx
Date Signed: July 1, 2016
COMPANY:
XXXXX & XXXXX, INC.
By: /s/ X. Xxxxxx Xxxxx
Name: X. Xxxxxx Xxxxx
Title: President and Chief Executive Officer
Date Signed: July 1, 2016
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/s/ CL____ Schedule 1 /s/ JPB___
CHL Xxxxx & Xxxxx, Inc.
Schedule 1
Non-Compete Companies
Xxxxxx X. Xxxxxxxxx & Co
AssuredPartners
Gallagher
HUB International
Xxxxx
BB&T Insurance Services
Xxxxx Fargo Insurance Services
And any person or entity owning, or entity owned by or under common ownership with, such entities.