EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of the 1st day of
October, 1997, by and between National Capital Reciprocal Insurance Company
("NCRIC"), National Capital Underwriters, Inc. ("Employer") and R. Xxx Xxxx, Xx.
("Xxxx").
RECITALS:
A. Employer, for itself and on behalf of NCRIC and its subsidiaries,
National Capital Insurance Brokerage, Ltd., and NCRIC Agency, Inc.
(collectively, the "Affiliated Companies"), desires to retain Xxxx as its
President and Chief Executive Officer on the terms and conditions hereinafter
set forth; and
X. Xxxx desires to continue such employment, on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
set forth herein, the parties hereto agree as follows:
1. EMPLOYMENT.
Employer hereby agrees to continue to employ Xxxx for a term of five
(5) years from the effective date of this Agreement as President and Chief
Executive Officer under the conditions hereinafter specified. Xxxx accepts this
employment under the conditions hereinafter specified and agrees to devote his
best efforts, energies and abilities to the service of Employer on a full-time
basis.
2. DUTIES.
(a) Xxxx shall serve as President and Chief Executive Officer of Employer
and in such other commensurate executive capacities of Employer and/or any one
or more of the Affiliated Companies as he may from time to time be assigned by
Employer or elected in accordance with direction from the Board of Directors.
Xxxx shall perform all of his duties diligently and faithfully. However, it is
understood and agreed that Xxxx shall not receive compensation beyond that
specified herein for services provided to the Affiliated Companies.
(b) Xxxx shall at all times devote his entire working time, attention,
energies, efforts and skills to the business of Employer, and shall not,
directly or indirectly, engage in any other business activity, whether or not
for profit, gain or other pecuniary advantages, without the express written
permission of Employer. Notwithstanding the foregoing, Xxxx may serve on the
board of directors of any non-competing company and receive compensation
therefor provided he obtains the advance written approval of Employer, which
shall not be unreasonably withheld, and provided that any such service does not
adversely affect his performance of his duties for Employer. Employer
acknowledges that Xxxx is serving on the boards of directors of the companies
listed on Exhibit 2B attached hereto and hereby grants its approval to such
service. Xxxx will not be required to account
to Employer for any compensation he may receive for such approved service on the
board of directors of a non-competing company, and such compensation shall not
diminish in any way the compensation or benefits to which he is entitled under
this Agreement.
3. COMPENSATION.
Employer shall pay Xxxx basic compensation of Two Hundred Forty Thousand
Dollars ($240,000) per year, payable in equal semimonthly installments. Any
incentive compensation which may be paid to Xxxx from time to time shall have no
impact upon Xxxx'x basic compensation.
4. BENEFITS.
A. RETIREMENT AND/OR PENSION PLAN(S). Xxxx shall be entitled to
participate in any retirement and/or pension plan(s) offered to Employer's
senior executives and/or key management employees as a group in accordance with
the terms of such plan(s), as they may be modified at Employer's discretion from
time to time.
B. AUTOMOBILE ALLOWANCE. Employer shall pay Xxxx a monthly allowance of
$700 for his use in operating and maintaining an automobile necessary in
connection with the performance of his duties hereunder with any expenses not
covered by said $700 allowance being the sole responsibility of Xxxx.
C. HEALTH AND MEDICAL INSURANCE. Xxxx shall be entitled to participate
in any health and medical insurance plan(s) offered to Employer's senior
executives and/or key management employees as a group in accordance with the
terms of such plan(s), as they may be modified at Employer's discretion from
time to time.
D. PAID SICK LEAVE. Xxxx shall accrue one (1) day of paid sick leave per
month, up to a maximum of twelve (12) days of paid sick leave at any given time.
All accrued, but unused, paid sick leave shall be forfeited upon termination of
employment if said termination shall be for cause.
E. PAID VACATION. Xxxx shall accrue four weeks of paid vacation during
each calendar year; however, in no event shall Xxxx use more than three weeks at
anytime. Accrued, but unused, paid vacation in excess of ten days shall expire
on December 31st of the year in which it accrues. No more than ten days of
accrued, but unused, paid vacation may be carried over from one year to the
next. All accrued, but unused, paid vacation is forfeited upon termination of
employment by either party; provided, however, that if Xxxx provides advance
notice of his intent to terminate his employment in accordance with paragraph 7
of this Agreement, Employer shall pay him for all of his accrued, but unused,
paid vacation, less standard withholdings and deductions.
F. LIFE INSURANCE. Employer shall procure a term life insurance policy
in a face amount of no less than twice the amount of Xxxx'x annual base
compensation provided that Xxxx is insurable at standard rates. Xxxx shall be
entitled to designate the beneficiary or beneficiaries of such policy in his
sole discretion. In the event that Xxxx is not insurable at standard rates, and
desires to be
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insured, Xxxx shall be responsible for payment of any premiums or amounts
charged in excess of the standard rates for such insurance.
G. DISABILITY INSURANCE. Employer shall procure a disability income
insurance policy (both long and short term) providing the highest benefits
commercially available, and provided Xxxx is insurable at standard rates. In
the event that Xxxx is not insurable at standard rates, and desires to be
insured, Xxxx shall be responsible for payment of any premiums or amounts
charged in excess of the standard rates. In the event that any disability income
insurance policy provided by Employer shall require any waiting or elimination
period during which Xxxx is not entitled to collect disability income insurance
payments even though he is disabled from working, then during such waiting or
elimination period, until the commencement of payments under the disability
income insurance policy, Employer shall pay Xxxx a supplemental disability
income benefit equal to his regular bi-weekly salary. If, and when, Xxxx should
begin to receive disability payments under the terms of Employer's disability
income insurance policy then in force, Employer agrees to supplement said
monthly disability payments by paying to Xxxx the difference between such sums
paid by the disability insurer and Xxxx'x compensation set forth in Section 3
above for a maximum period of twelve (12) consecutive months. Following
expiration of said twelve (12) months, the coverage and provisions of Employer's
disability income insurance policy shall constitute the entire wage continuation
plan provided in this Agreement and, except for the payment of the premiums on
such policy, Employer shall have no further liability to Xxxx for wage
continuation. It is further understood that Xxxx'x employment with Employer
shall be terminated following twelve (12) consecutive months of total disability
(i.e., being unable to carry out the normal functions and requirements of his
position with Employer) regardless of how and when the aforementioned disability
income payments from Employer's disability income insurance policy may be paid
or due to Xxxx.
5. EXPENSES.
A. BUSINESS EXPENSES. Employer shall reimburse Xxxx for ordinary,
necessary and reasonable business expenses incurred by him in the discharge of
his duties hereunder, including but not limited to travel, lodging and
entertainment expenses, provided Xxxx furnishes appropriate documentation for
such expenses and that said expenses are in accordance with the company's then
prevailing policies and procedures regarding said expenditures.
B. CONTINUING EDUCATION EXPENSES. Employer shall pay the ordinary and
necessary costs associated with continuing education classes or continuing
education programs Xxxx participates in which are related to the company's
business interests, provided Xxxx furnishes appropriate documentation to
Employer for such costs and gives the Chairman of the Board of Employer
reasonable notice of any expenditures for continuing education. All such
expenses in excess of One Thousand Dollars ($1,000) must be approved by the
Board in advance.
C. COUNTRY CLUB DUES. Employer shall pay the dues for Xxxx'x membership
in one country club or similar institution as well as the Georgetown Club.
Employer shall not pay or reimburse Xxxx for any non-mandatory costs associated
with such membership, including but not
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limited to food, beverage and entertainment costs, greens fees, and court fees,
unless Xxxx is otherwise entitled to reimbursement of such costs pursuant to
paragraph 5(a) of this Agreement.
X. XXXXX PRESIDENTS ORGANIZATION. Should Xxxx join the Young Presidents
Organization (YPO), Employer shall pay the dues and related membership fees
associated therewith.
E. EFFECT OF TERMINATION OF EMPLOYMENT: All payment or reimbursement of
expenses authorized by Section 5 hereof shall cease upon Xxxx'x termination of
employment regardless of cause for said termination.
6. TERMINATION OF EMPLOYMENT BY EMPLOYER.
A. TERMINATION FOR CAUSE. The employment of Xxxx under this Agreement,
and the term hereof, may be terminated for "cause" by Employer at any time by
action of the Board upon the occurrence of any one or more of the following
events:
(i) Xxxx'x fraud, dishonesty, gross negligence or willful misconduct in
the performance of his duties hereunder, including willful failure to perform
such duties as may properly be assigned him hereunder; or
(ii) Xxxx'x material breach of any provision of this Agreement.
Any termination by reason of the foregoing shall not be in limitation of
any right or remedy which Employer may have under this Agreement or otherwise.
Should Xxxx dispute whether Employer possessed legitimate "cause" in
accordance herewith, then in such event a neutral arbitrator shall be chosen in
accordance with the procedures set forth in paragraph 17 of this Agreement to
decide that issue. If Employer terminates Xxxx'x employment for "cause"
pursuant to this subparagraph 6(a) (and such termination is decided to be just
by an arbitrator appointed for that purpose in accordance with the provisions
herein), his right to any compensation, including but not limited to severance
pay, shall cease immediately.
B. TERMINATION WITHOUT CAUSE.
(i) Employer may terminate Xxxx'x employment without cause and without
notice at any time.
(ii) If Employer terminates Xxxx'x employment without cause, and Xxxx
waives all claims against Employer and the Affiliated Companies relating to or
arising out of his employment or the termination of his employment by executing
a General Release of such claims in a form provided to him by Employer, Xxxx
shall receive, as severance pay, an amount equal to two (2) years basic
compensation at the basic compensation rate in effect on the date of
termination, exclusive of benefits and less standard withholdings and
deductions. Such amount shall represent agreed-upon liquidated damages for any
loss, cost, expense, or damages suffered as a result of such termination, as
well as consideration for Xxxx'x execution of a General Release of all claims
against Employer and
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the Affiliated Companies. Employer shall pay such amount to Xxxx in equal
monthly installments over a two year period commencing on the date of
termination. Any payment pursuant to the preceding sentence shall be in lieu of
any other compensation which might otherwise be due Xxxx under this Agreement.
(iii) If a "Change of Control" of Employer's business occurs, Employer
shall be deemed to have terminated Xxxx'x employment without cause for the
purposes of this paragraph. "Change of Control" shall be deemed to have
occurred if: (1) Employer merges with or consolidates with, or sells, leases, or
otherwise transfers all or substantially all of its assets to another entity
(which for the purpose of this Agreement shall include the sale or transfer of
fifty percent or more of the ownership of Employer, but only if such sale shall
be made to an entity not affiliated with Employer); and (2) a material change in
the nature, terms or conditions of Xxxx'x employment occurs, including but not
limited to a material change in his duties, authority, responsibilities, or job
location. However, in no event shall it be deemed a "change of control" should
Employer (or NCRIC) elect to change its business form by converting to a stock
company pursuant to a mutual holding company or demutualization law (or similar
act) so long as no material change in the nature, terms or conditions of Xxxx'x
occurs along therewith.
7. TERMINATION OF EMPLOYMENT BY XXXX.
Xxxx may voluntarily terminate his employment with Employer provided that
he gives Employer twelve (12) months prior notice of such termination or pays
Employer liquidated damages equal to the amount of twelve (12) months basic
compensation at the basic compensation rate in effect on the date Xxxx gives
Employer notice of his intent to terminate his employment. It is agreed that
such liquidated damages are to compensate Employer for injury by reason of
Xxxx'x termination of his employment and not as a penalty, it being impossible
to ascertain or estimate the entire or exact cost, damages or injury that
Employer may sustain by reason of such termination. Xxxx shall have the right
to terminate his employment hereunder without paying Employer liquidated damages
and without in any way affecting his right to compensation or reimbursement
(including, but not limited to, the right to receive severance payments set
forth in this Agreement), or any other right under this Agreement, if Employer
commits a material breach of the terms and conditions of this Agreement and such
breach is not cured within sixty (60) days of Employer receiving written notice
of such breach from Xxxx.
8. PROTECTION OF EMPLOYER
A. CONFIDENTIAL INFORMATION. Xxxx shall not at any time during or after
his employment with Employer directly or indirectly disclose, discuss, divulge,
copy, or otherwise suffer confidential information of Employer or the Affiliated
Companies to be used, except as required by the performance of his duties
hereunder. For the purposes of this Agreement, "confidential information" shall
mean all information disclosed to Xxxx by Employer or the Affiliated Companies,
or known by him as a consequence of or through his employment with Employer,
where such information is not generally known in the trade or industry, and
where such information refers or relates in any manner whatsoever to the
business activities, processes, services, or products of Employer or the
Affiliated Companies. Such information includes, but is not limited to,
Employer's
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or the Affiliated Companies' business and development plans (whether
contemplated, initiated or completed), development sites, business contacts,
customer lists, actuarial tables, loss data, marketing information, policy
forms, contracts, research of any kind, methods of operation, results of
analysis, business forecasts, financial data, costs, revenues, and similar
information. Upon termination of this Agreement, Xxxx shall immediately return
to Employer all of its property, and all copies thereof, including without
limitation all confidential information which has been reduced to tangible form,
in his possession, custody, or control.
B. COVENANT NOT TO COMPETE. Xxxx agrees that he shall not, during his
employment and for a period of one (1) year after the date on which either Xxxx
gives notice of his intention to terminate his employment or Employer gives
notice to Xxxx to terminate his employment for cause, directly or indirectly,
either as an officer, director, employee, agent, adviser, consultant, principal,
stockholder, partner, owner, or in an other capacity, on his own behalf or
otherwise, in any way engage in, represent, be connected with, or have a
financial interest in, any other insurance company, or any corporation, firm,
association, or other business entity which is, or to the best of Xxxx'x
knowledge, is about to become, engaged in the same or similar business as
Employer or any of its affiliates or which otherwise competes with or is about
to compete with Employer or any of its affiliates in the District of Columbia or
any states where NCRIC or any of its Affiliated Companies may operate or are
licensed to operate. Xxxx'x ownership of not more than one percent (1%) of the
stock of any publicly traded corporation shall not be deemed a violation of this
covenant. Xxxx agrees that the restrictions imposed upon him by the provisions
of this paragraph are fair and reasonable considering the nature of Employer's
business, and are reasonably required for the protection of Employer.
C. REMEDIES AND ACKNOWLEDGMENT OF REASONABLENESS. Xxxx acknowledges that
compliance with this paragraph is necessary for the protection of the goodwill
and other proprietary interests of Employer, and that, after carefully
considering the extent of the restrictions upon him and the rights and remedies
conferred upon Employer under this paragraph, the same are reasonable in time
and territory, are designed to eliminate competition which otherwise would be
unfair to Employer, do not stifle the inherent skill and experience of Xxxx,
would not operate as a bar to Xxxx'x sole means of support, are fully required
to protect the legitimate interests of Employer, and do not confer a benefit
upon Employer disproportionate to the detriment to Xxxx.
Xxxx further acknowledges and agrees that in the event of a breach of this
paragraph, Employer would not have an adequate remedy at law because the damages
flowing from such breach would not be readily susceptible of measurement in
monetary terms and that Employer shall be entitled to injunctive relief and may
obtain a temporary order restraining any threatened breach or future breach in
addition to any other remedies which may be available at law or equity. Nothing
in this paragraph shall be deemed to limit Employer's remedies at law or in
equity for breach of this or any other paragraph of this Agreement.
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9. DEATH OR INCAPACITATION.
In the event that Xxxx dies or, due to a physical or mental impairment,
becomes unable to perform the essential functions of his position with or
without reasonable accommodation, this Agreement shall be deemed terminated and
Xxxx or his estate, as the case may be, shall be entitled to no further salary,
compensation or benefits hereunder, except (i) any unpaid salary, incentive
payments, and vacation accrued and earned by Xxxx up to and including the date
of such termination, and (ii) any disability, life insurance, or other benefits
to which Xxxx or his estate may be entitled on the date of such termination in
accordance with the terms and conditions of any applicable benefit plan(s) as
set forth in official plan documents.
10. ASSIGNMENT.
This Agreement is a personal service agreement and neither party shall have
the right to assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other party. Notwithstanding the
foregoing, if NCRIC changes its form of business or ceases to contract with
Employer, Employer shall assign this Agreement to NCRIC or any successor of
NCRIC. Pursuant to paragraph 21 hereof, NCRIC shall continue to guarantee
payment and performance of all obligations of Employer or Employer's assignee,
unless the parties agree otherwise in writing.
11. NOTICES.
All notices required or permitted hereunder shall be in writing and shall
be deemed properly given if delivered personally or sent by certified or
registered mail, postage prepaid, return receipt requested. If mailed to
Employer, such notices shall be addressed in care of National Capital
Underwriters, Inc., at its principal place of business, attention: Chairman of
the Board, or at such other address as Employer may hereafter designate in
writing to Xxxx. If mailed to Xxxx, such notices shall be addressed to him at
his home address last known on the records of Employer, or at such other address
as Xxxx may hereafter designate in writing to Employer.
12. SUCCESSORS BOUND.
This Agreement shall bind and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, estates and permitted
successors and assigns.
13. WAIVER.
No provision hereof may be waived, except by a written instrument signed by
the party against whom such waiver is sought to be enforced. The failure or
waiver of either party hereto at any time, or from time to time, to require
performance by the other party of such other party's obligation hereunder, shall
not deprive that party of the right to insist upon strict adherence to such
obligation at any subsequent time. Each party hereto agrees that any waiver of
its rights arising out of any breach of this Agreement by the other party shall
not be construed as a waiver of any subsequent breach.
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14. AMENDMENT.
No provision hereof may be altered or amended, except by a written
instrument signed by the party against whom such alteration or amendment is
sought to be enforced.
15. CONFIDENTIALITY.
Except as otherwise agreed between the parties, each party agrees to
maintain the confidentiality of this Agreement, provided, however, that either
party may disclose provisions of this Agreement to others for the purpose of
protecting or enforcing their respective rights hereunder.
16. GOVERNING LAW.
The parties agree that this Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
District of Columbia, without regard to the principles of conflict of laws
thereof.
17. ARBITRATION.
Whenever a "dispute" arises between the parties concerning this Agreement
(other than a dispute arising under paragraph 8 hereof) or their employment
relationship, including without limitation the termination thereof, the parties
shall use their best efforts to resolve the "dispute" by mutual agreement. If
such a "dispute" cannot be so resolved, it shall be submitted to final and
binding arbitration to the exclusion of all other avenues of relief. For the
purposes of this paragraph, the term "dispute" means all controversies or claims
relating to terms, conditions or privileges of employment, including without
limitation claims for breach of contract, discrimination, harassment, wrongful
discharge, misrepresentation, defamation, emotional distress or any other
personal injury, but excluding claims for unemployment compensation or worker's
compensation. The dispute shall be submitted to the Washington, D.C. office of
the American Arbitration Association ("AAA") and adjudicated in accordance with
AAA's Rules for Commercial Arbitration then in effect, except that the parties
to such arbitration shall be entitled to engage in pre-hearing discovery, to the
extent permitted by and according to the provisions of the Federal Rules of
Civil Procedure. The decision of the Arbitrator must be in writing and shall be
final and binding on the parties, and judgment may be entered on the
arbitrator's award in any court having jurisdiction thereof. The expenses of
the arbitration shall be borne equally by the parties, and each party shall be
responsible for his or its own costs and attorneys' fees. The Arbitrator shall
be deemed to possess the powers to issue mandatory orders and restraining orders
in connection with such arbitration; provided, however, that nothing in this
paragraph shall be construed so as to deny Employer the right and power to seek
and obtain injunctive relief in a court of equity for any breach or threatened
breach by Xxxx of any of the provisions contained in paragraph 8 of this
Agreement. This paragraph shall survive the termination of this Agreement.
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18. SEVERABILITY.
In the event that any provision of this Agreement conflicts with the law
under which this Agreement is to be construed, or if any such provision is held
invalid or unenforceable by a court of competent jurisdiction or an arbitrator,
such provision shall be deleted from this Agreement and the Agreement shall be
construed to give full effect to the remaining provisions thereof.
19. HEADINGS AND CAPTIONS.
The paragraph headings and captions contained in this Agreement are for
convenience only and shall not be construed to define, limit or affect the scope
or meaning of the provisions hereof.
20. ENTIRE AGREEMENT.
This Agreement contains and represents the entire agreement of the parties
and supersedes all prior agreements, representations or understandings, oral or
written, express or implied with respect to the subject matter hereof. This
Agreement may not be modified or amended in any way unless in a writing signed
by both Xxxx and the Chairman of the Board of Employer. No representation,
promise or inducement has been made by either party hereto that is not embodied
in this Agreement, and neither party shall be bound or liable for any alleged
representation, promise, or inducement not specifically set forth herein.
21. GUARANTEE.
Inasmuch as Employer's sole corporate purpose is to serve as NCRIC's
Attorney-in-Fact under a contract without extended duration, NCRIC enters into
this Agreement for the sole purpose of guaranteeing the payment and performance
of all of the obligations of Employer hereunder.
22. EFFECTIVE DATE OF AGREEMENT.
This Agreement shall take effect only when it has been executed by all
parties and approved by the Executive Committee of Employer's Board at a duly
held meeting or by their unanimous written consent, but when executed and
approved shall be enforceable as of October 1, 1997.
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement on
the date and year first written above.
Employer:
NATIONAL CAPITAL UNDERWRITERS, INC.
By:/s/Xxxxxxx X. Xxxx, M.D.
---------------------------
Xxxxxxx X. Xxxx, M.D.
Chairman of the Board
and
By: /s/Xxxxx X. Xxxxxxxx, M.D.
--------------------------
Xxxxx X. Xxxxxxxx, M.D.
Treasurer
XXXX:
/s/R. Xxx Xxxx, Xx.
------------------------------
R. Xxx Xxxx, Xx.
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PAYMENT AND PERFORMANCE OF EMPLOYER GUARANTEED:
NATIONAL CAPITAL
RECIPROCAL INSURANCE COMPANY
By: /s/Xxxxxx X. Xxxxxxxx, M.D.
------------------------------------
Xxxxxx X. Xxxxxxxx, M.D.
Chairman of the Board of Governors
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