1
TERMINATION AGREEMENT EXHIBIT 10.16a
TERMINATION AGREEMENT dated as of May 3, 2001, by and between SELECTIVE
INSURANCE COMPANY OF AMERICA (the "Company"), a New Jersey corporation, having
an office at 00 Xxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxx Xxxxxx 00000, and XXXXXX X.
XXXXXX, (the "Executive"), having an address at 00 Xxxxxxxx Xxxxx, Xxxxxx, Xxx
Xxxxxx 00000.
W I T N E S S E T H:
WHEREAS, the Company recognizes the Executive to be a valuable
management employee of the Company; and
WHEREAS, the Company recognizes that a change in control of Selective
Insurance Group, Inc., the Company's parent corporation ("Selective"), could
occur in the future, and that it is of importance to the Company and to
Selective and its stockholders to provide for the continuity of management and
its uninterrupted attention and dedication to the business affairs of the
Company; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that appropriate steps should be taken to encourage the continued
attention and dedication of principal members of the Company's management to
their assigned duties in circumstances arising from the possibility of a change
in control of Selective; and
WHEREAS, the Company has determined that an arrangement of the type set
forth herein will serve the purpose of attracting desirable persons for
executive positions with the Company, will induce the Executive to remain with
the Company, and will enhance the Executive's ability to assess and advise the
Board as to whether any proposal involving a change in the control would be in
the best interests of the Company, Selective and its shareholders and to take
such other action regarding such proposal without being influenced by the
prospects of his own future employment with the Company; and
WHEREAS, the Company and the Executive wish to set forth their
agreements as to the subject and procedures contemplated hereunder
acknowledging, however, that this Agreement supplements any employment agreement
that may be in effect from time to time between the
2
Executive and the Company and sets forth the severance benefits which the
Company agrees will be provided to the Executive in the event the Executive's
employment with the Company is terminated subsequent to a change of control of
Selective under the circumstances hereinbelow described.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Company and the Executive hereby agree as follows:
1. TERM OF AGREEMENT.
The term of this Agreement (the "Term") shall commence on the date
hereof and shall continue in effect until May 3, 2004, provided, however, that
commencing on May 3, 2004, and each May 3rd thereafter (each such May 3rd being
hereinafter referred to as an "Extension Date"), the Term shall automatically be
extended for one (1) additional year, unless at least twenty-four (24) months
prior to an Extension Date, the Company or the Executive shall have given
written notice in the manner hereinafter prescribed that the Term shall not be
extended as of the next Extension Date; and, provided further, that if a "Change
in Control" of Selective, as defined in Section 2 hereof, shall have occurred
during the term, as the same may be extended, this Agreement shall terminate on
the last day of the twenty-four (24) month period commencing on the date that
such Change in Control shall have occurred. Notwithstanding anything in this
Section 1 to the contrary, this Agreement shall terminate if the Executive or
the Company terminates the Executive's employment prior to the date on which a
Change in Control shall occur.
2. CHANGE IN CONTROL.
(a) For the purposes of this Agreement, a "change in control of
Selective" (a "Change in Control") shall mean the occurrence of an event of a
nature that would be required to be reported in response to Item 1(a) of a
Current Report on Form 8-K, as in effect on the date hereof, pursuant to
Sections 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") provided, however, that a Change in Control shall, in any event,
conclusively be deemed to have occurred upon the first to occur of any one of
the following events:
(i) The acquisition by any person or group, including,
without limitation, any current shareholder or shareholders of
Selective, of securities of Selective resulting in such person's
or
-2-
3
group's owning of record or beneficially twenty-five percent
(25%) or more, of any class of voting securities of Selective;
(ii) The acquisition by any person or group, including,
without limitation, any current shareholder or shareholders of
Selective, of securities of Selective resulting in such person's
or group's owning of record or beneficially twenty percent (20%)
or more, but less than twenty-five percent (25%), of any class of
voting securities of Selective, if the Board adopts a resolution
that such acquisition constitutes a Change in Control;
(iii) The sale or disposition of all or substantially all
of the assets of Selective;
(iv) The reorganization, recapitalization, merger,
consolidation or other business combination involving Selective
the result of which is the ownership by the shareholders of
Selective of less than eighty percent (80%) of those voting
securities of the resulting or acquiring entity having the power
to elect a majority of the board of directors of such entity; or
(v) A change in the membership in the Board of Directors
of Selective (the "Selective Board") which, taken in conjunction
with any other prior or concurrent changes, results in twenty
percent (20%) or more of the Selective Board's membership being
persons not nominated by Selective's management or Selective's
Board as set forth in Selective's then most recent proxy
statement, excluding changes resulting from substitutions by
Selective's Board because of retirement or death of a director or
directors, removal of a director or directors by Selective's
Board or resignation of a director or directors due to
demonstrated disability or incapacity.
-3-
4
(b) Notwithstanding anything in the foregoing Section 2(a) to
the contrary, no Change in Control shall be deemed to have occurred for the
purposes of this Agreement by virtue of any transaction which results in the
Executive, or a group of persons which includes the Executive, acquiring,
directly or indirectly, voting securities of Selective.
(c) For the purpose of Section 2(a) the following definitions
shall apply:
(i) the terms "person" and "beneficial owner" shall
have the meanings set forth in Regulation 13D under the Exchange
Act, as such Regulation exists on the date hereof;
(ii) the term "voting security" shall include any
security that has, or may have upon an event of default or in
respect to any transaction, a right to vote on any matter upon
which the holder of any class of common stock of Selective would
have a right to vote;
(iii) the term "group" shall have the meaning set forth
in Section 13(d)(3) of the Exchange Act; and
(iv) the term "substantially all of the assets of
Selective" shall mean more than fifty percent (50%) of
Selective's assets on a consolidated basis, as shown in
Selective's most recent audited balance sheet.
3. CONTINUATION OF EMPLOYMENT.
Notwithstanding any termination date as may be specified in any
employment agreement in effect from time to time between the Company and the
Executive, in the event of a Change in Control, the Company agrees to continue
to employ the Executive, and, subject to the provisions of Section 4 hereof, the
Executive agrees to continue in the employ of the Company, in the capacity in
which the Executive was serving, and with the duties, responsibilities and
status of the Executive immediately prior to such Change in Control or in such
other capacity as shall be agreeable to the Executive, for a term commencing on
the date on which the Change in Control shall have occurred and ending three (3)
years after the date on which the Change in Control shall have occurred.
Commencing on the date three (3) years after the date on which the Change in
Control shall have occurred and each anniversary date of the Change in Control
thereafter (each
-4-
5
such date being hereinafter referred to as a "Renewal Date"), the term of the
Executive's employment shall automatically be renewed for one (1) additional
year unless at least twenty-four (24) months prior to a Renewal Date the Company
or the Executive shall have given written notice in the manner hereinafter
prescribed that such employment shall not be renewed as of such Renewal Date.
The provisions of this Section 3 shall survive any termination of this Agreement
pursuant to Section 1 hereof after a Change in Control and shall continue in
full force and effect.
4. TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL.
The Executive shall be entitled to the benefits provided in
Section 5 hereof upon the termination of his employment during the term of this
Agreement, as the same may be extended, after a Change in Control has occurred,
unless such termination is: (a) due to the Executive's death or Retirement, (b)
by the Company for Cause or Disability, or (c) by the Executive other than for
Good Reason (as such foregoing capitalized terms are hereinafter defined).
(i) Termination by the Executive or by the Company of
the Executive's employment based on "Retirement" shall mean
termination: (A) at such age as shall be established by the
Board prior to a Change in Control for mandatory or normal
retirement of Company executives in general, which shall not be
less than age 65, or (B) at any other retirement age set by
mutual agreement of the Company and the Executive and approved
by the Board.
(ii) Termination by the Company of the Executive's
employment based on "Disability" shall mean termination because
of the Executive's physical injury or physical or mental illness
which causes him to be absent from his duties with the Company on
a full-time basis for a continuous period in excess of the
greater of: (A) the period of disability constituting permanent
disability as specified under the Company's long-term disability
insurance coverage applicable to the Executive prior to a Change
in Control or (B) six (6) calendar months, unless within thirty
(30) days after Notice of Termination (as hereinafter defined) is
thereafter given the
-5-
6
Executive shall have returned to the full-time performance of his
duties.
(iii) Termination by the Company of the Executive's
employment based on "Cause" shall mean termination upon: (A) the
Executive's conviction of a felony (as evidenced by a binding and
final judgment, order or decree of a court of competent
jurisdiction, in effect after exhaustion or lapse of all rights
of appeal), (B) the continued willful failure by the Executive to
perform substantially his duties with the Company (other than any
such failure resulting from his incapacity due to physical injury
or physical or mental illness) for a period of thirty (30) days
after a demand for substantial performance is delivered to the
Executive by the Board of Directors of the Company which
specifically identifies the manner in which the Board of
Directors believes that the Executive has not substantially
performed his duties, or (C) willful misconduct in the
performance of the Executive's duties and obligations to the
Company which constitute common law fraud or other gross
malfeasance of duty; provided, however, that no termination for
Cause pursuant to clauses (B) or (C) shall occur unless and until
there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than
sixty-six and two thirds percent (66 2/3%) of the entire
membership of the Board, excluding the Executive, at a meeting of
the Board called and held for the purpose (after reasonable
notice to the Executive and an opportunity for the Executive,
together with his counsel, to be heard before the Board), finding
that in good faith opinion of the Board the Executive was guilty
of the conduct set forth in such clause (B) or (C) and specifying
the particulars thereof in reasonable detail. For purposes of
this clause (iii), no act, or
-6-
7
failure to act, on the part of the Executive shall be considered
"willful" unless done or omitted to be done by the Executive in
bad faith and without reasonable belief that his action or
omission was in, or not opposed to, the best interests of the
Company. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon
the advice of counsel for the Company shall be conclusively
presumed to have been done or omitted to have been done by the
Executive in good faith and in the best interests of the Company.
(iv) Termination by the Executive of his employment for
"Good Reason" shall mean (A) termination by the Executive based
on: (1) any reduction in his base salary below the annualized
rate in effect on the date preceding the date on which a Change
in Control shall have occurred or the Company's failure to
increase (within 12 months of the Executive's last increase in
base salary) the Executive's base salary after a Change in
Control in an amount which at least equals, on a percentage
basis, changes in the Consumer Price Index, all items, for New
Jersey in the preceding twelve (12) months; or (2) a failure by
the Company to continue in effect, or the material reduction of
any of Executive's benefits under, any Plan (as hereinafter
defined) in which the Executive was participating on the date
preceding the date on which a Change in Control shall have
occurred (or Plans providing the Executive with at least
substantially similar benefits) other than as a result of the
normal expiration of any such Plan in accordance with its terms
as in effect on the date preceding the date on which a Change in
Control shall have occurred, or the taking of any action, or the
failure to act, by the Company which would adversely affect the
Executive's continued participation in any of such Plans on at
least as favorable a
-7-
8
basis to him as was the case on the date preceding the date on
which a Change in Control shall have occurred or which would
materially reduce the Executive's benefits in the future under
any such Plans or deprive the Executive of any material benefit
enjoyed by him at the time of the Change in Control; or (3)
without the Executive's express prior written consent, the
assignment to the Executive of any duties inconsistent with his
positions, duties, responsibilities and status with the Company
immediately prior to a Change in Control, or any diminution in
the Executive's responsibilities as an executive of the Company
as compared with those he had as an executive of the Company
immediately prior to a Change in Control, or any change in the
Executive's titles or office as in effect immediately prior to a
Change in Control, or any removal of the Executive from, or
failure to re-elect him to, any of such positions, except in
connection with the termination of the Executive's employment for
Cause, Disability or Retirement or as a result of the Executive's
death or by his termination of his employment other than for Good
Reason; or (4) without the Executive's express prior written
consent, the imposition of a requirement by the Company that the
Executive be based anywhere other than where the Executive's
office is located on the date preceding the date on which a
Change in Control shall have occurred; or (5) without the
Executive's express prior written consent, any reduction in the
number of paid vacation days to which the Executive was entitled
as of the date preceding the date on which a Change in Control
shall have occurred; or (6) a failure by the Company to provide
the Executive with office, secretarial, computer and other
support services and facilities consistent with his position in
the Company and substantially equivalent to those available to
the Executive on the date preceding the date on which a Change in
-8-
9
Control shall have occurred; or (7) the failure by the Company to
obtain from any successor to the business of the Company, as set
forth in Section 13, the assent to this Agreement, as described
in such Section 13; or (8) subsequent to a Change in Control, any
purported termination of the Executive's employment which is not
effected pursuant to a Notice of Termination (as hereinafter
defined) satisfying the requirements of Section 4(v) (and, if
applicable, Section 4(iii)), and for purposes of this Agreement
no such purported termination shall be effective; or (9) any
breach by the Company of any of the terms and conditions of any
employment agreement between the Company and the Executive or any
agreement between the Company and the Executive providing for
incentive compensation, stock options, stock appreciation rights,
stock bonuses, pension benefits, group insurance or any similar
benefits; or (10) any requirement by the Company that the
Executive be absent from Executive's office on business travel or
otherwise more than forty-five (45) days in any calendar year or
for more than fourteen (14) consecutive days at any time, or (B)
a voluntary termination by the Executive upon Notice of
Termination given by the Executive to the Company no later than
six (6) months after the occurrence of a Change in Control,
provided that Executive shall not thereafter violate the
provisions of any agreement between the Executive and the Company
relating to nondisclosure of confidential information or
noncompetition with the Company. For purposes of this Agreement,
a "Plan" shall mean any plan, contract, authorization or
arrangement, whether or not set forth in any formal written
documents, providing for compensation, incentive compensation,
non-qualified supplemental retirement benefits, stock options
(whether or not in tandem with stock appreciation rights), stock
-9-
10
appreciation rights, long-term incentives, stock bonuses or
restricted stock grants or any employee benefit plan such as a
pension, retirement, profit sharing, medical, disability,
accident, life insurance plan or a relocation plan or policy or
any other plan, program, policy or arrangement of the Company
intended to benefit the Executive or employees of the Company
generally.
(v) Any termination of the Executive's employment by
the Company or by the Executive shall be communicated by a Notice
of Termination to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a written notice
given in the manner hereinafter prescribed which shall indicate
the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and shall
specify the date of termination in accordance with this
Agreement.
(vi) "Date of Termination" following a Change in
Control shall mean: (A) if the employment is to be terminated by
the Company for Disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have
returned to the performance of the Executive's duties on a
full-time basis during such thirty (30) day period), or (B) if
the employment is to be terminated by either party for any other
reason, the date on which Notice of Termination is given.
(vii) In the event of dispute as to the Executive's
termination under Section 4(iv) the matter shall
be forthwith submitted to binding arbitration as
hereinafter provided.
-10-
11
5. PAYMENT OF BENEFITS.
(a) If an event has occurred pursuant to Section 4 hereof which
entitles the Executive to the benefits and rights set forth in this Section 5,
the Executive shall receive from the Company, or from the Escrow Agent (as
hereinafter defined), as the case may be, within five (5) days following the
Date of Termination (except as otherwise provided) all of the following
benefits, other than those benefits which he specifically elects by written
notice to the Company or to the Escrow Agent, as the case may be, not to
receive:
(i) earned but unpaid base salary through the Date of
Termination at the rate in effect immediately prior to the time a
Notice of Termination is given plus any incentive compensation,
benefits or awards (including both the cash and stock components)
which pursuant to the terms of any Plans have been accrued,
earned or have become payable, but which have not yet been paid
to the Executive (including any amounts which previously had been
deferred at the Executive's request); and
(ii) as severance pay and in lieu of any further salary
for periods subsequent to the Date of Termination (including any
payments of salary provided for by any employment agreement with
the Company), an amount in cash equal to the Executive's
"annualized includible compensation for the base period" (as
defined in Section 280G(d)(1) of the Internal Revenue Code of
1986, as amended (the "Code")), multiplied by a factor of 2.99.
(b) If an event has occurred pursuant to Section 4 hereof which
entitles the Executive to the benefits and rights set forth in this Section 5,
the Executive shall be entitled to the benefits of any stock options, stock
appreciation rights, restricted stock grants, stock bonuses or other benefits
theretofore granted by the Company to the Executive under any Plan, whether or
not provided for in any agreement with the Company, provided, however, that,
except to the extent requiring approval of Selective's stockholders, (i) all
unvested stock options, stock appreciation rights, restricted stock grants,
stock bonuses, long-term incentives and similar benefits shall be deemed to be
vested in full on the Date of Termination, notwithstanding any provision to the
contrary or any provision requiring any act or acts by the Executive in any
agreement with the Company or Selective or any
-11-
12
Plan, and (ii) to the extent that any such stock options, stock appreciation
rights, restricted stock grants, stock bonuses, long-term incentives or similar
benefits shall require by its terms the exercise thereof by the Executive, the
last date to exercise the same shall, notwithstanding any provision to the
contrary in any agreement or any Plan, shall be the later to occur of (A) the
last date provided for such exercise in any agreement or Plan evidencing any
such stock options, stock appreciation rights, restricted stock grants, stock
bonuses, long-term incentives or similar benefits or (B) the close of business
on the date which shall be one hundred twenty (120) days after the Date of
Termination and (iii) if the vesting pursuant hereto of any such stock options,
stock appreciation rights, restricted stock grants, stock bonuses, long-term
incentives or similar benefits shall have the effect of subjecting the Executive
to liability under Section 16(b) of the Exchange Act or any similar provision of
law, the vesting date thereof shall be deemed to be the first day after the
Termination Date on which such vesting may occur without subjecting the
Executive to such liability.
(c) If an event has occurred pursuant to Section 4 hereof which entitles
the Executive to the benefits and rights set forth in this Section 5, the
Company shall maintain in full force and effect, for the continued benefit of
the Executive and his dependents for a period terminating on the earliest of:
(i) three (3) years after the Date of Termination or (ii) the commencement date
of equivalent benefits from a new employer, all insured and self-insured
employee welfare benefit Plans in which the Executive was entitled to
participate immediately prior to the Date of Termination, provided that the
Executive's continued participation is not barred under the general terms and
provisions of such Plans. In the event that the Executive's participation in any
such Plan is barred by its terms, the Company, at its sole cost and expense,
shall arrange to have issued for the benefit of the Executive and his dependents
individual policies of insurance providing benefits substantially similar (on an
after-tax basis) to those which the Executive otherwise would have been entitled
to receive under such Plans pursuant to this Section 5(c). If, at the end of
three (3) years after the Termination Date, the Executive has not previously
received or is not receiving equivalent benefits from a new employer, or is not
otherwise receiving such benefits, the Company shall arrange, at its sole cost
and expense, to enable him to convert his and his dependents' coverage
-12-
13
under such Plans to individual policies or programs upon the same terms as
employees of the Company may apply for such conversions upon termination of
employment.
(d) Except as specifically provided in Section 5(c) above, the amount of
any payment provided for in this Section 5 shall not be reduced, offset or
subject to recovery by the Company by reason of any compensation earned by the
Executive as the result of employment by another employer after the Date of
Termination, or otherwise. The Executive shall not be required to mitigate any
amounts payable or benefits provided under this Agreement by seeking or
accepting other employment.
(e) The rights and benefits provided herein shall be in addition to, and
not (except as provided in this Agreement) to the exclusion of, any other rights
and benefits that may be available to the Executive in regard to or arising out
of the termination of the Executive's employment, including claims for breach of
contract or for violation of relevant employment, worker's compensation or
employee benefits laws. The prosecution or enforcement of rights granted by this
Agreement or the election to take benefits under this Agreement shall in no
manner constitute an election of rights or remedies by the Executive other than
in respect of this Agreement.
(f) Notwithstanding anything in this Agreement to the contrary, if any of
the payments or benefits provided for in this Agreement, together with any other
payments or benefits which the Executive has the right to receive from the
Company (including, without limitation, any amounts payable under any employment
contract with the Company), would constitute a "parachute payment" (as defined
in Section 280G(b)(2) of the Code), the payments and benefits due to the
Executive shall be reduced, in such order of priority and amount as the
Executive shall elect, to the largest amount as will result in no portion of
such payments being subject to the excise tax imposed by Section 4999 of the
Code. Notwithstanding anything in the foregoing to the contrary, any dispute or
controversy regarding whether any payments under this Agreement must be reduced
pursuant to this Section 5(f) shall be conclusively settled by an independent
accounting firm acceptable to each of the parties hereto, or, if no firm is
acceptable to both parties hereto, each of the Executive and the Company shall
select an accounting firm acceptable to it, and such accounting firms shall
together designate an independent accounting firm to settle such dispute or
controversy, and such settlement shall be binding upon both parties, provided,
however, that any
-13-
14
accounting firm designated to settle any dispute or controversy hereunder shall
not have been previously retained by either party for a period of a least two
(2) years subsequent to the date of this settlement of such dispute or
controversy. The Company or the Escrow Agent, as the case may be, may withhold
from any benefits payable under this Agreement all federal, state, city or other
taxes as shall be required pursuant to any law or governmental regulation or
ruling.
(g) In the event that a court of competent jurisdiction shall determine
that any portion of the payment and benefits paid to the Executive pursuant to
this Agreement shall have constituted a "parachute payment" (as defined in
Section 280G(b)(2) of the Code) and subject to an excise tax under Section
4999(a) of the Code, the Company shall pay to the Executive in cash such
additional amount as is necessary so that the total amount received by the
Executive under this Agreement, after payment of any applicable taxes on such
total amount (including, without limitation, federal, state or local income
taxes, any taxes imposed by Section 4999(a) of the Code and any taxes in respect
of any amount payable to the Executive under this Section 5(g)) shall not be
less than the net after tax amount that the Executive would have been entitled
to receive under this Agreement had such excise tax under Section 4999(a) not
been imposed. The Company shall pay such additional amount to the Executive
within thirty (30) days after the Executive gives written notice to the Company
that such determination has been made by a court of competent jurisdiction.
6. ESCROW OF BENEFITS.
(a) At any time after the occurrence of a Change in Control, the Company
shall, upon the written request of the Executive, promptly deliver to a bank or
other institution acceptable to the Executive, as escrow agent (the "Escrow
Agent"), an amount of cash or certificates of deposit, treasury bills or
irrevocable letters of credit adequate to fully fund the obligations of the
Company under this Agreement.
(b) The escrow agreement or arrangement between the Company and the Escrow
Agent shall provide that amounts payable to the Executive under this Agreement
shall be paid by the Escrow Agent to the Executive five (5) days after written
demand therefore by the Executive to the Escrow Agent, with a copy to the
Company, certifying that such amounts are due and payable under this Agreement
because of the occurrence of an event specified under Section 4 hereof. Such
escrow agreement or arrangements shall also provide that if the Company shall,
prior to
-14-
15
payment by the Escrow Agent, object in writing to the Escrow Agent, with a copy
to the Executive, as to the payment of any amounts demanded by the Executive
under this Agreement, certifying that such amounts are not due and payable to
the Executive because an event specified in Section 4 hereof has not occurred,
such dispute shall be resolved by binding arbitration as hereinafter set forth.
(c) Such escrow agreement or arrangements shall further provide that any
dispute described in Section 6(b) hereof shall be forthwith submitted to binding
arbitration as hereinafter provided.
7. ARBITRATION.
Any disputes arising under Section 4(iv) or Section 6(b) hereof shall be
forthwith submitted to binding arbitration by three (3) arbitrators in Newark,
New Jersey, under the expedited rules of the American Arbitration Association
then obtaining. One such arbitrator shall be selected by each of the Company and
the Executive, and the two arbitrators so selected shall select the third
arbitrator. Selection of all three arbitrators shall be made within thirty (30)
days after the date the dispute arose. Such arbitration shall be limited solely
to a determination of whether or not an event has occurred pursuant to Section 4
of this Agreement which entitles the Executive to the benefits and rights set
forth in Section 5 of this Agreement. The written decision of the arbitrators
shall be rendered within ninety (90) days after selection of the third
arbitrator. The decision of the arbitrators shall be final and binding on the
Company and the Executive and may be entered by either party in any court having
jurisdiction.
8. ENFORCEMENT OF RIGHTS.
The Company, and any survivor of any business combination with the Company
causing rights to accrue to the Executive under this Agreement, shall pay all
the Executive's legal, accounting and arbitration fees and expenses and costs as
they become due, which the Executive may become obligated to pay in obtaining,
enforcing, retaining or defending any right or benefit provided by this
Agreement, whether in respect of any enforcement undertaken or demand made by
the Executive that is successful or in respect of any enforcement undertaken or
demand made in good faith by the Executive that is not successful. If judgment
is rendered against any of such persons, it will pay the Executive, unless
expressly included in the judgment, prejudgment interest
-15-
16
from the date of the Notice of Termination at the prime rate being charged by
Midlantic National Bank on the date of the Notice of Termination.
9. EXECUTIVE'S COMMITMENT.
The Executive agrees that subsequent to his period of employment with the
Company, he will not at any time communicate or disclose to any unauthorized
person, without the written consent of the Company, any proprietary or
confidential information concerning the business affairs, products or customers
of the Company which, if disclosed, would have a material adverse effect upon
the business or operations of the Company and its subsidiaries, taken as a
whole; it being understood, however, that the obligations of this Section 9
shall not apply to the extent that the aforesaid matters: (a) are disclosed in
circumstances where the Executive is legally required to do so or (b) become
generally known to and available for use by the public otherwise than by the
Executive's wrongful act or omission.
10. SEVERABILITY.
If any one or more of the provisions (or any part thereof) of this
Agreement would be, invalid, illegal or unenforceable in any respect under
applicable law, then such provision (or any part thereof) shall be deemed
modified to the extent necessary to render it valid while most nearly preserving
its original intent; no provision (or any part thereof) of this Agreement shall
be affected by another provision (or any part thereof) of this Agreement being
held invalid.
11. NOTICE.
For the purposes of this Agreement, notices, requests, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given: (i) when delivered personally, or (ii)
three (3) days after having been mailed by registered or certified mail, return
receipt requested, or (iii) one (1) day after having been sent by telegraph or
mailed by express mail or other overnight courier service, postage, telegraph,
courier and registry fees, as the case may be, prepaid and addressed to the
addresses set forth in the first paragraph of this Agreement or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt. All notices to the Company shall be directed to the attention of the
President of the Company.
-16-
17
12. MERGER; AMENDMENT; WAIVER.
(a) This Agreement supersedes all other agreements, arrangements and
understandings, and merges all negotiations and discussions, with respect to the
subject matter hereof; provided, however, that this Agreement shall not, except
to the extent specifically provided herein, supersede or limit the rights,
duties or obligations that the Executive may have under any written employment
agreement with the Company.
(b) This Agreement may be amended or modified only by a writing signed by
both parties. No further agreement between the parties shall be deemed to
supersede, amend or modify this Agreement unless a statement to that effect is
made in such future agreement or the enforcement of such agreement would give
rise to conflicting obligations between the Executive on the one hand and the
Company, its successor or other bound party on the other hand; in the latter
case, however, this Agreement shall be deemed to be superseded, amended or
modified only to the extent necessary to avoid such conflict.
(c) The waiver of the non-performance of any obligation under this
Agreement shall apply to that non-performance only and shall not constitute a
waiver, modification or amendment of this provision giving rise to such
obligation.
13. SUCCESSORS; BINDING AGREEMENT.
(a) The Company will require any successor (whether direct or indirect, by
merger, consolidation or other combination other than a sale of assets) to the
business of the Company, by agreement in form and substance satisfactory to the
Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall constitute
Good Reason for termination by the Executive of his employment, and, if a Change
in Control shall have occurred, the Executive shall be entitled to the benefits
set forth in Section 5 of this Agreement, except that for purposes of
implementing the foregoing, the date. On which any such succession becomes
effective shall be deemed the Date of Termination. As used in this Agreement,
the "Company" shall mean the Company as hereinbefore defined, and any successor
and assign to its business as
-17-
18
aforesaid which executes and delivers the agreement provided for in this Section
13 or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable by the
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devises and legatees of the Executive. If the Executive should die
while any amount would still be payable to him hereunder if he had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's devisee, legatee
or other designee or, if there be no such designee, to his estate.
14. GOVERNING LAW.
This Agreement is being made in the State of New Jersey and shall be
governed by, and interpreted and construed with reference to, the laws of New
Jersey.
15. HEADINGS.
Headings in this Agreement are for convenience of reference only and shall
not be used to construe or interpret this Agreement.
16. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereunder have executed this Agreement as
of the date first above written.
SELECTIVE INSURANCE COMPANY OF AMERICA
BY:/s/ XXXXXXX X. XXXXXX
---------------------------------------------
XXXXXXX X. XXXXXX,
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER
/s/ XXXXXX X. XXXXXX
------------------------------------------------
XXXXXX X. XXXXXX
-18-
19
In consideration of the covenants of the Executive hereinabove set forth,
Selective hereby guarantees to the Executive the full performance by the Company
of all of its obligations under the foregoing Termination Agreement.
SELECTIVE INSURANCE GROUP, INC.
BY: /s/ XXXXXXX X. XXXXXX
---------------------------------------------
XXXXXXX X. XXXXXX,
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER
-19-
