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Exhibit 10.41
RETENTION AND MODIFICATION OF AT WILL EMPLOYMENT AGREEMENT
THIS RETENTION AND MODIFICATION OF AT WILL EMPLOYMENT AGREEMENT (the
"Agreement") is made and entered into as of the 3rd day of February, 1999, by
and between NATIONAL INFORMATION GROUP, a California corporation (the
"Company"), and XXXXX XXXXX, an individual (the "Employee").
Recitals
A. The Employee is an at will employee of the Company pursuant to that
certain letter agreement dated as of July 1, 1996, together with any and
all amendments (the "Current At Will Employment Agreement"), between the
Employee and National Information Group ("XXXX").
B. On or about November 18, 1998, XXXX entered into that certain Agreement
and Plan of Merger by and among The First American Financial Corporation
("First American"), Pea Soup Acquisition, Inc., a wholly owned affiliate
of First American ("Pea Soup"), and XXXX (the "Agreement of Merger"),
pursuant to which XXXX will be merged with and into Pea Soup and the
Company will become an indirect subsidiary of First American (the
"Merger").
C. The Merger is subject to certain conditions precedent, including,
without limitation, regulatory approvals and approval of the
shareholders of XXXX. For purposes of this Agreement, the date on which
the Merger shall occur and become effective shall be referred to as the
"Effective Date of the Merger".
D. The Company and First American desire to provide an incentive to
Employee in order to keep the services of Employee available to the
Company during the pendency of the Merger and thereafter, in each case
subject to the terms and conditions of this Agreement.
Agreement
NOW, THEREFORE, the Company and the Employee agree as follows:
1. CURRENT AT WILL EMPLOYMENT AGREEMENT. The Current At Will Employment
Agreement continues in full force and effect except as modified by this
Agreement.
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2. TERM.
2.1 Section 4 of the Current At Will Employment Agreement (regarding at
will employment) is deleted in its entirety and replaced with the agreement set
forth in Paragraph 2.2 below.
2.2 Employee shall be employed by the Company for fifteen (15) months,
commencing as of January 1, 1999 and ending on March 31, 2000 (the "Initial
Term"), unless sooner terminated in accordance with the provisions of this
Agreement, including without limitation, Paragraph 4 of this Agreement. Upon
expiration of the Initial Term, the provisions of Section 4 of the Current At
Will Employment Agreement in effect immediately before the execution of this
Agreement shall once again govern and Employee's employment shall continue on an
"at will" basis in accordance with the provisions of the Current At Will
Employment Agreement. Notwithstanding Employee's at will employment status at
the expiration of the Initial Term, the Company agrees that it will provide
Employee four (4) months notice prior to terminating Employee unless such
termination is for Cause as set forth in Paragraph 4 of this Agreement. If
Employee is terminated other than for Cause, then Employee shall for the Initial
Term continue to be treated as an employee of the Company for all purposes
including, payment of salary and benefits and the vesting of any stock options
granted to Employee, but excluding the accrual of any bonus pursuant to Section
3.3.3. Notwithstanding the foregoing sentence, during any such termination
period, Employee shall not have or exercise any of the powers or authority
granted to employees and/or officers by the Company and/or by its subsidiaries
and/or by law or regulation.
2.3 During the Initial Term, unless sooner terminated in accordance with
the provisions of this Agreement, including without limitation, Paragraph 4 of
this Agreement, and unless the Employee is promoted to a higher office,
Employee's title shall be Executive Vice President and General Manager of
Pinnacle Management Solutions Insurance Services, and Employee shall not be
assigned to any duties that materially diminish such position, duties,
responsibilities or status.
3. COMPENSATION.
3.1. Base Salary. The bi-weekly salary currently in effect for Employee
shall continue to be paid during the Initial Term in accordance with the payroll
practices and procedures of the Company; provided, however, the Company may, at
the option of the Company, increase the bi-weekly salary of the Employee during
the Initial Term.
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3.2. Retention and Non-Competition Payment. Subject to the terms,
covenants, agreements, and conditions set forth below, Employee shall be
entitled to a retention and non-competition payment in the aggregate amount of
$100,000 less any applicable withholdings, taxes as required by law and/or
regulation and deductions authorized by Employee or required by law and/or
regulation(the "Retention Payment"), payable as follows:
3.2.1 The Company shall pay to Employee an amount equal to twenty
percent of the Retention Payment upon execution of this Agreement; provided,
however, such amount shall not be paid prior to January 1, 1999 and shall be
paid with Employee's first regular pay check in January 1999.
3.2.2 In the event that (i) Employee remains employed by the
Company on a full-time basis until the expiration of this Agreement or Employee
has been terminated by the Company without Cause, regardless of whether the
Merger is successfully consummated, the Company shall pay to Employee an amount
equal to eighty percent of the Retention Payment upon the expiration of the
Initial Term.
3.2.3 If Employee (i) resigns, retires, goes on leave, or is
terminated for Cause before the expiration of the Initial Term, the eighty
percent payment referred to herein will not be earned or paid.
3.2.3 In the event Employees dies during the Initial Term while
he is employed by the Company, the Company will pay to his estate an amount
equal to eighty percent of the Retention Payment. Employee will not, however, be
entitled to any remaining payments that would have otherwise be paid to him
under Paragraph 2.1 or any other provision of this Agreement, except for any
fully earned but unpaid bonus.
3.3 Bonus. In addition to Base Salary, but subject to the terms,
covenants, agreements and conditions set forth below, Employee shall be entitled
to a bonus as follows:
3.3.1 Employee shall be paid a guaranteed bonus for the calendar
year 1999 of One Hundred Thousand Dollars ($100,000) payable with the first pay
check paid to Employee by the Company in January 2000. This guaranteed bonus
shall not be prepaid by the Company. If Employee resigns, retires, goes on
leave, or is terminated for Cause before December 31, 1999, the foregoing
guaranteed bonus will not be earned or paid.
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3.3.2 In addition to the guaranteed bonus set forth in Section
3.3.1, if the Merger is successfully consummated such that XXXX is merged with
and into Pea Soup, the Company shall pay to Employee an additional bonus of
Twenty Five Thousand Dollars ($25,000) payable with the first pay check paid to
Employee by the Company in January 2000. This additional bonus shall not be
prepaid by the Company. If Employee resigns, retires, goes on leave, or is
terminated for Cause before December 31, 1999, the foregoing additional bonus
will not be earned or paid.
3.3.3 Employee shall be paid a bonus for the year 2000 and for
each subsequent year thereafter as determined below; provided, however, if
Employee has resigned, retired, gone on leave, or been terminated with or
without Cause before the end of any such year no such bonus shall be earned or
paid for such year. The amount of such bonus shall equal five percent (5%) of
the combined net income (the "Combined Net Income") of Great Pacific Insurance
Company, a California corporation ("GPIC"), and Pinnacle Management Solutions
Insurance Services, a California corporation ("PMSIS"), on a combined basis as
follows: Combined Net Income shall be determined using the following criteria:
The net income of GPIC shall be deemed to be the net underwriting profit of the
lender placed and REO fire and flood insurance business of GPIC, as determined
pursuant to statutory accounting procedures or practices prescribed or permitted
by the Insurance Commissioner of the State of California, the Department of
Insurance of the State of California and insurance departments of other states
and Washington, D.C. or any applicable insurance commission or other
governmental entity having such authority over GPIC, and as such net
underwriting profit is reported by GPIC to the California Department of
Insurance on a statutory basis in its written annual "Convention Statement" as
filed with the California Department of Insurance. The net income of GPIC shall
be increased or decreased by the net profit or net loss, respectively, of PMSIS
determined pursuant to generally accepted accounting principles, consistently
applied. From any amount so determined an amount shall be subtracted equal to
the amount of corporate overhead charged by the Company (or its parent or
successor, as the case may be)to GPIC and PMSIS; provided, however, for the
purposes of such determination of Combined Net Income such corporate overhead
shall not exceed four percent (4%) of net earned premium of GPIC for the
applicable period and four percent (4%) of the fee income of PMSIS for the
applicable period. Such bonus as determined above shall be paid annually as soon
as practicable after the Combined Net Income is determined by the Company.
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3.3.4 For the year 2000 only, in addition to the bonus set forth
in Section 3.3.3, if the Merger is successfully consummated such that XXXX is
merged with and into Pea Soup, the Company shall pay to Employee an additional
bonus of Twenty Five Thousand Dollars ($25,000) payable with the first pay check
paid to Employee by the Company in January 2001. This additional bonus shall not
be prepaid by the Company. If Employee resigns, retires, goes on leave, or is
terminated for Cause before December 31, 2000, the foregoing additional bonus
will not be earned or paid.
3.4 Vacation. Section 6 of the Current At Will Employment Agreement is
amended to provide that effective with the commencement of the Initial Term and
for each Working Year thereafter, subject to the terms and conditions set forth
in the Policies and Procedures (as defined in the Current At Will Employment
Agreement), Employee's vacation time will accrue 0.0577 of a vacation day for
each full working day worked at the Companies (as defined in the Current At Will
Employment Agreement) during each Working Year (as defined in the Current At
Will Employment Agreement)(15 days of Vacation Time for each Working Year).
4. TERMINATION FOR CAUSE. For purposes of this Agreement, "Cause" shall
mean:
4.1 The failure of the Employee to discharge or perform his duties and
obligations under this Agreement with due diligence and care;
4.2 The refusal of the Employee to implement or adhere to written
policies, procedures, practices or directives of the Board of Directors of the
Company and/or of First American as the case may be, or the Chairman or Chief
Executive Officer of Pinnacle Management Solutions Insurance Services or of
Great Pacific Insurance Company;
4.3 Conduct which is in violation of Employee's common law duty of
loyalty to the Company;
4.4 Fraudulent conduct in connection with the business affairs of
Employer, regardless of whether said conduct is designed to defraud the Company
or others,
4.5 Conduct which is in violation of any provision of this Agreement, or
4.6 Conviction of a felony.
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5. OTHER BENEFITS. So long as Employee is employed, he shall be entitled to
the same Company-provided benefits provided by the Company for its employees in
accordance with the Current At Will Employment Agreement and the Personnel
Policy and Practice Manual of XXXX and its subsidiaries or, after the Effective
Date of the Merger, at the election of the Company, the policies and procedures
applicable to First American and its subsidiaries (the "Company's Personnel
Practices and Policy Manual").
6 COVENANTS.
6.1 Confidentiality; Trade Secrets. Employee acknowledges and agrees
that he continues to be bound by the terms of the Proprietary Information
Agreement executed by Employee concurrently with the execution of the Current At
Will Employment Agreement, and that such agreement continues in full force and
effect.
6.2 [Intentionally Left Blank]
6.3 Remedies for Breach of Certain Covenants. The covenants and
agreements set forth in Paragraph 6 of this Agreement shall continue to be
binding upon Employee, notwithstanding the termination of his employment with
the Company for any reason whatsoever. Such covenants and agreements shall be
deemed and construed as separate agreements independent of any other provisions
of this Agreement and any other agreement between the Company and Employee. The
existence of any claim or cause of action by Employee against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of any or all of such covenants and
agreements. It is expressly agreed that the remedy at law for the breach of the
covenants and agreements in Paragraph 6 are inadequate and that injunctive
relief shall be available to prevent the breach or any threatened breach
thereof.
7. SEPARATE AND SEVERABLE. Each term, clause, condition, covenant,
agreement, and provision of this Agreement is separate and independent, and
should any term, clause or provision of this Agreement be found to be invalid,
the validity of the remaining terms, clauses and provisions shall not be
affected.
8. WAIVER OR MODIFICATION INEFFECTIVE UNLESS IN WRITING. No waiver or
modification of this Agreement shall be valid unless in writing and executive by
duly authorized officers of the Company and Employee. Oral agreements are not
binding on the parties.
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9. GOVERNING LAW. This Agreement and performance under it, and any suits or
special proceedings brought under it, shall be construed in accordance with the
laws of the United States of American and the State of California and any
arbitration, mediation or other proceeding arising hereunder shall be filed and
adjudicated in San Mateo County, California.
10. ARBITRATION OF DISPUTES. Except as provided in Paragraph 6, any dispute
or controversy arising from or relating to this Agreement, or from any other
aspect of Employee's employment or the termination thereof, shall be decided by
arbitration in South San Francisco or any other city in San Mateo County,
California, in accordance with the rules and regulations of the American
Arbitration Association.
11. ATTORNEYS' FEES. The prevailing party in any dispute with respect to
this Agreement and/or Employee's employment and/or termination shall be entitled
to all reasonable costs and attorneys' fees.
12. RELIANCE; INTERPRETATION. The parties hereto represent and acknowledge
that in executing this Agreement they do no rely and have not relied upon any
representation or statement made by any of the other parties or by any of the
other parties' agents, attorneys and representatives with regard to the subject
matter, basis or effect of this Agreement or otherwise, other than those
specifically stated in this written Agreement. This Agreement shall be
interpreted in accordance with the plain meaning of its terms and not strictly
for or against any of the parties hereto. This Agreement shall be construed as
if each party hereto was its author and each party hereby adopts the language of
this Agreement as if it were his, her or its own. The captions to this Agreement
and its paragraphs, subparagraphs are inserted only for convenience and shall
not be construed as part of this Agreement or as a limitation on or broadening
of the scope of this Agreement or any paragraph or subparagraph.
13. COMPANY PERSONNEL POLICIES AND PRACTICE MANUAL AND RELATIONSHIP TO THIS
AGREEMENT. Notwithstanding anything to the contrary herein, Employee's
employment shall continue to be governed by the Company's Personnel Policies and
Practice Manual. In the event any provision in the Company's Personnel Policies
and Practice Manual is inconsistent with this Agreement, the provisions of this
Agreement shall prevail over any inconsistent provision of the Company's
Personnel Policies and Practice Manual.
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14. MISCELLANEOUS.
14.1. Assignment. This Agreement shall be assigned to any purchaser of
substantially all of the Company's assets or stock, but shall not be assigned
upon the purchase of all or substantially all of the assets or stock of any
subsidiary. The sale of the Company's assets or its stock, or one or more of the
Company's subsidiaries' assets or their stock or the sale of less than
substantially all of their assets shall not comprise a termination of employment
under this Agreement. This Agreement shall not otherwise be assigned without the
prior written consent of both parties.
14.2. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties relating to the subject matter hereof, and supersedes and
replaces that certain Retention and Modification of At Will Employment Agreement
dated January 7, 1999 by and between the parties and such agreement shall for
all purposes be deemed null and void. Employee acknowledges that he has received
the payment referenced in Section 3.2.1 of this Agreement. The parties agree
that (i) there shall be no oral agreements between the parties, whether or not
allegedly entered into prior, during or subsequent to the term of this
Agreement, and (ii) in order for any agreement to be effective between the
parties, whether contemporaneous with or subsequent to the execution date of
this Agreement, it shall be set forth in writing and executed by a duly
authorized officer of the Company and Employee.
14.3. Waiver. The failure of either party to enforce any provision of
this Agreement shall not be construed as a waiver of or an acquiescence in or to
such provision.
14.4. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.5. No Inconsistent Obligations. Employee represents that he is not
aware of any obligations, legal or otherwise, inconsistent with the terms of
this Agreement or his undertakings under this Agreement.
14.6. Notices. All communications required or permitted to be made under
this Agreement shall be in writing and either shall be delivered personally or
sent by receipted private mail courier or United States Postal Service certified
or registered mail, postage prepaid and return receipt requested, to the
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address or addresses set forth below, or to such other address or addresses as a
party may notify another party pursuant to this Paragraph . Any such
communication shall be deemed to be properly given (i) if delivered personally
or by courier, upon written acknowledgment of receipt after delivery to the
address specified; (ii) if posted, the earlier of the actual date of delivery,
as set forth in the return receipt, or three (3) days from the date posted
pursuant to the foregoing. The address for each party is as follows:
To the Company:
National Information Group
000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxx Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxxxxx
To Employee:
Xxxxx Xxxxx
000 Xxx Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
agree to enter into and be bound by the provisions thereof, as of the date first
written above.
NATIONAL INFORMATION GROUP
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Chairman of the Board and
Chief Executive Officer
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
ACKNOWLEDGED AND AGREED TO:
THE FIRST AMERICAN FINANCIAL CORPORATION
By: ____________________
Its: ____________________
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