Exhibit 10(m)(1)
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AMENDMENT TO EMPLOYMENT AGREEMENT
BETWEEN
FPIC INSURANCE GROUP, INC.
AND
XXXX X. XXXXX
THIS AMENDMENT is made, entered into and effective as of the 14th day
of December 2001, by and between FPIC Insurance Group, Inc., a Florida Employer
(hereinafter referred to as "Employer"), and Xxxx X. Xxxxx (hereinafter referred
to as "Employee").
1. Paragraph 1 of the Employment Agreement between Employer and
Employee dated as of January 1, 1999 (the "Employment Agreement") is amended to
read in its entirety as follows:
"This Employment Agreement is made and entered into as of the
1st day of January, 1999 by and between FPIC Insurance Group, Inc., a
Florida Employer, with its principal place of business at 000 Xxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxxxxxxx, Xxxxxxx 00000 (hereinafter referred
to as "Employer"), and Xxxx X. Xxxxx, an individual presently residing
at 0000 Xxxxx Xxx Xxxx, Xxxxxxxxxxxx, Xxxxxxx 00000 (hereinafter
referred to as "Employee")."
2. The first WHEREAS paragraph of the Employment Agreement is
amended to read in its entirety as follows:
"WHEREAS, Employer desires to retain the services of Employee
as the President and Chief Executive Officer of Employer, and Employee
desires to perform such services for Employer on the terms and
conditions set forth herein;"
3. The second WHEREAS paragraph of the Employment Agreement is
amended to read in its entirety as follows:
"WHEREAS, Employee represents and Employer acknowledges that
Employee is fully qualified, without the benefit of any further
training or experience, to perform the responsibilities and duties,
with commensurate authorities, of the position of President and Chief
Executive Officer."
4. Section 1(b) of the Employment Agreement is amended to read in
its entirety as follows:
"1. Terms of Employment.
(b) In the event Employer does not give notice to
Employee prior to the end of any calendar year
that it wishes to extend this Employment
Agreement as specified in subparagraph (a)
above, Employee may voluntarily terminate
Employee's employment under this Employment
Agreement by giving at least ninety (90) days
written notice to Employer. Following the
effective date of such voluntary termination,
Employee shall continue to receive Employee's
annual salary, payable as
immediately prior to termination, plus all
benefits to which Employee is then entitled
under subparagraph 2(e) below, for the balance
of the term of this Employment Agreement;
provided, that if Employer is unable to continue
to provide such benefits to Employee at
substantially the same cost it would incur were
Employee still employed by Employer (the
"Benefit Cost"), Employer shall have the right
to pay Employee the Benefit Cost of such
benefits in lieu of continuing to provide such
benefits to Employee. It is provided, however,
if Employee directly or indirectly engages in or
acts as an Employee of or consultant for any
trade or occupation that is in competition with
Employer, such salary and benefits shall
thereupon terminate."
5. Section 4(b) of the Employment Agreement is amended to read in
its entirety as follows:
"4. Termination.
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(b) Voluntary Termination by Employer.
---------------------------------
Employer may terminate this Employment
Agreement at any time for any reason
sufficient to it, by act of its Board. Such
termination shall be immediately effective.
Following such voluntary termination,
Employee shall continue to receive
Employee's annual salary, payable
immediately prior to termination, together
with any benefits accrued to the date of
termination, plus all benefits to which
Employee is then entitled under subparagraph
2(e) above, for the balance of the then
current Employment Agreement; provided, that
if Employer is unable to continue to provide
such benefits to Employee at substantially
the same cost it would incur were Employee
still employed by Employer, Employer shall
have the right to pay Employee the Benefit
Cost of such benefits in lieu of continuing
to provide such benefits to Employee. It is
provided, however, if Employee directly or
indirectly engages in or acts as an Employee
of or consultant for any trade or occupation
that is in competition with Employer, such
salary and benefits shall thereupon
terminate."
6. Section 4(c) of the Employment Agreement is amended to read in
its entirety as follows:
"4. Termination.
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(c) Permanent Disability of Employee.
--------------------------------
If Employee has been, for substantially all
the normal working days during three (3)
consecutive months, unable to perform
Employee's responsibilities and duties and
to exercise Employee's authorities in a
satisfactory manner due to mental or
physical disability, then Employee may be
deemed "permanently disabled," and
Employee's employment may be terminated at
the election of the Board of Employer. Any
determination of permanent disability made
by Employer shall be final and conclusive.
In the event that Employer deems Employee
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"permanently disabled," Employee shall be
entitled to receive the unpaid balance of
Employee's annual salary, together with
other accrued benefits pursuant to
subparagraph 2(e) above, to the date of the
determination of being permanently disabled,
payable as immediately prior to termination
for the remaining term of this Employment
Agreement, less any amount received by
Employee under any Employer-provided long
term disability coverage and/or program;
provided, that if Employer is unable to
continue to provide such benefits to
Employee at substantially the same cost it
would incur were Employee still employed by
Employer, Employer shall have the right to
pay Employee the Benefit Cost of such
benefits in lieu of continuing to provide
such benefits to Employee. It is provided,
however, if Employee directly or indirectly
engages in or acts as an Employee of or
consultant for any trade or occupation that
is in competition with Employer, such salary
and benefits shall thereupon terminate."
7. Section 4(d) of the Employment Agreement is amended to read in
its entirety as follows:
"4. Termination.
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(d) Death of Employee.
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This Employment Agreement shall terminate on
the date of Employee's death, and Employer
shall pay, in a lump sum, to the estate or
personal representative of Employee the
unpaid balance of Employee's annual salary,
together with other accrued benefits under
subparagraph 2(e) above, to the date of
death."
8. Section 4(f) of the Employment Agreement is amended to read in
its entirety as follows:
"4 Termination.
------------
(f) Constructive Discharge. Employee may terminate
this Employment Agreement in the event of
Constructive Discharge by providing written notice
to Employer within three months after the
occurrence of such event, specifying the event
relied upon for a Constructive Discharge.
"Constructive Discharge" shall mean any (i)
material change by Employer of Employee's
position, functions, or duties to an inferior
position, functions, or duties from that in effect
on the date of this Agreement, (ii) assignment,
reassignment, or relocation by Employer of
Employee without Employee's consent to another
place of employment more than 50 miles from
Employee's current place of employment, (iii)
liquidation, dissolution, consolidation or merger
of Employer, or transfer of all or substantially
all of its assets, other than a transaction or
series of transactions in which the resulting or
surviving transferee entity has, in the aggregate,
a net worth at least equal to that of Employer
immediately before such transaction and expressly
assumes this Employment Agreement and all
obligations and undertakings of Employer here-
under, or (iv) reduction in Employee's base salary
or target bonus opportunity (if greater than the
target bonus opportunity, the average of the
annual
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bonuses paid to Employee in the three calendar
years prior to the calendar year of the
Constructive Discharge). Following termination of
Employee's employment in the event of a
Constructive Discharge, Employee shall continue to
receive Employee's annual salary, payable as
immediately prior to termination, plus all
benefits to which Employee is then entitled, under
subparagraph 2(e) above, for the balance of this
Employment Agreement; provided, that if Employer
is unable to continue to provide such benefits to
Employee at substantially the same cost it would
incur were Employee still employed by Employer,
Employer shall have the right to pay Employee the
Benefit Cost of such benefits in lieu of
continuing to provide such benefits to Employee.
It is provided, however, if Employee directly or
indirectly engages in or acts as an Employee of or
consultant for any trade or occupation that is in
competition with Employer, such salary and
benefits shall thereupon terminate. Employer and
Employee, upon mutual agreement, may waive any of
the foregoing provisions that would otherwise
constitute a Constructive Discharge. Within ten
days of receiving such written notice from
Employee, Employer may cure the event that
constitutes a Constructive Discharge."
9. A new Paragraph 8. Gross Up Provisions shall be added to the
Employment Agreement, which shall read as follows:
"8. Gross Up Provisions. In the event that the payments to
Employee under this Employment Agreement are subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended, and/or any
successor provision or any comparable provision of state or local income tax
law, the Employer will make Gross Up Payments (as defined at Exhibit A hereto)
to Employee on the terms described in Exhibit A."
10. Exhibit A to this Amendment shall be added to the Employment
Agreement as Exhibit A thereto.
Except as amended by this Amendment, the Employment Agreement and the
Extension of Employment Agreement dated December 19, 2001 shall remain in full
force and effect in accordance with their terms.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
FPIC INSURANCE GROUP, INC.
_____________________________ By:______________________________________
Attest Xxx X. Xxxxxx
Executive Vice President and
Chief Financial Officer
_____________________________ _________________________________________
Attest XXXX X. XXXXX
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EXHIBIT A
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GROSS UP PAYMENTS
(a) In the event it is determined (pursuant to clause (b) below) or
finally determined (as defined in clause (c)(iii) below) that any payment,
distribution, transfer, benefit or other event with respect to Employer or its
predecessors, successors, direct or indirect subsidiaries or affiliates (or any
predecessor, successor or affiliate of any of them, and including any benefit
plan of any of them), to or for the benefit of Employee or Employee's
dependents, heirs or beneficiaries pursuant to the terms of the Employment
Agreement (but determined without regard to any additional payments required
under this Exhibit A) (each a "Payment" and collectively the "Payments") is or
was subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code"), and/or any successor provision or any
comparable provision of state or local income tax law (collectively, "Section
4999"), or any interest, penalty or addition to tax is or was incurred by
Employee with respect to such excise tax (such excise tax, together with any
such interest, penalty or addition to tax, hereinafter collectively referred to
as the "Excise Tax"), then, within ten (10) days after such determination or
final determination, as the case may be, Employer shall pay to Employee an
additional cash payment (hereinafter referred to as the "Gross Up Payment") in
an amount such that after payment by Employee of all taxes, interest, penalties
and additions to tax imposed with respect to the Gross Up Payment (including,
without limitation, any income and excise taxes imposed upon the Gross Up
Payment), Employee retains an amount of the Gross Up Payment equal to the Excise
Tax imposed upon such Payment or Payments and the Gross Up Payment. This
provision is intended to put Employee in the same position as Employee would
have been had no Excise Tax been imposed upon or incurred as a result of any
Payment.
(b) Except as provided in clause (c) below, the determination that a
Payment is subject to an Excise Tax shall be made in writing by a certified
public accounting firm selected by Employee ("Employee's Accountant"). Such
determination shall include the amount of the Gross Up Payment and detailed
computations thereof, including any assumptions used in such computations (the
written determination of Employee's Accountant, hereinafter, "Employee's
Determination"). Employee's Determination shall be reviewed on behalf of
Employer by a certified public accounting firm selected by Employer ("Employer's
Accountant"). Employer shall notify Employee within ten (10) business days after
receipt of Employee's Determination of any disagreement or dispute therewith,
and failure to so notify within that period shall be considered an agreement by
Employer with Employee's Determination, and any agreement by Employer with
Employee's Determination shall obligate Employer to make payment as provided in
clause (a) above within ten (10) days from the expiration of such ten (10)
business-day period. In the event of an objection by Employer to Employee's
Determination, any amount not in dispute shall be paid within ten (10) days
following the ten (10) business-day period referred to herein, and with respect
to the amount in dispute Employee's Accountant and Employer's Accountant shall
jointly select a third nationally recognized certified public accounting firm to
resolve the dispute and the decision of such third firm shall be final, binding
and conclusive upon Employee and Employer. In such a case, the third accounting
firm's findings shall be deemed the binding determination with respect to the
amount in dispute, obligating Employer to make
any payment as a result thereof within ten (10) days following the receipt of
such third accounting firm's determination. All fees and expenses of each of the
accounting firms referred to in this Exhibit A shall be borne solely by
Employer.
(c) The rights of Employee under this Exhibit A shall be contingent
on the agreement by Employee to the provisions set forth in this clause (c):
(i) Employee shall notify Employer in writing of any claim by the
Internal Revenue Service (or any successor thereof) or any state or local taxing
authority (individually or collectively, the "Taxing Authority") that, if
successful, would require the payment by the Employer of a Gross Up Payment.
Such notification shall be given as soon as reasonably practicable and shall
apprise Employer of the nature of such claim and the date on which such claim is
requested to be paid. Employee shall not pay such claim prior to the expiration
of the fifteen (15)-day period following the date on which Employee gives such
notice to Employer (or such shorter period ending on the date that any payment
of taxes, interest, penalties or additions to tax with respect to such claim is
due). If Employer notifies Employee in writing prior to the expiration of such
fifteen (15)-day period that it desires to contest such claim (and demonstrates
to the reasonable satisfaction of Employee its ability to make the payments to
Employee that may ultimately be required under this section before assuming
responsibility for the claim), Employee shall:
(A) give Employer any information reasonably requested by
Employer relating to such claim;
(B) take such action in connection with contesting such
claim as Employer shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation
with respect to such claim by an attorney selected by Employer who is
reasonably acceptable to Employee;
(C) cooperate with Employer in good faith in order
effectively to contest such claim; and
(D) permit Employer to participate in any proceedings
relating to such claim; provided, however, that Employer shall bear and
pay directly all attorneys fees, costs and expenses (including
additional interest, penalties and additions to tax) incurred in
connection with such contest and shall indemnify and hold harmless
Employee, on an after-tax basis, for all taxes (including, without
limitation, income and excise taxes), interest, penalties and additions
to tax imposed in relation to such claim and in relation to the payment
of such costs and expenses or indemnification. Without limitation on
the foregoing provisions of this Exhibit A, and to the extent its
actions do not unreasonably interfere with or prejudice Employee's
disputes with the Taxing Authority as to other issues, Employer shall
control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the Taxing
Authority in respect of such claim and may, at its sole option, either
direct Employee to pay the tax, interest or penalties claimed and xxx
for a refund or contest the claim in any permissible manner, and
Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of
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initial jurisdiction and in one or more appellate courts, as Employer
shall determine; provided, however, that if Employer directs Employee
to pay such claim and xxx for a refund, Employer shall advance an
amount equal to such payment to Employee, on an interest-free basis,
and shall indemnify and hold harmless Employee, on an after-tax basis,
from all taxes (including, without limitation, income and excise
taxes), interest, penalties and additions to tax imposed with respect
to such advance or with respect to any imputed income with respect to
such advance; and, provided, further, that any extension of the statute
of limitations relating to payment of taxes, interest, penalties or
additions to tax for the taxable year of Employee with respect to which
such contested amount is claimed to be due is limited solely to such
contested amount; and, provided, further, that any settlement of any
claim shall be reasonably acceptable to Employee and the Employer's
control of the contest shall be limited to issues with respect to which
a Gross Up Payment would be payable hereunder, and Employee shall be
entitled to settle or contest, as the case may be, any other issue.
(ii) If, after receipt by Employee of an amount advanced by Employer
pursuant to clause (c)(i), Employee receives any refund with respect to such
claim, Employee shall (subject to Employer's complying with the requirements
of this Exhibit A) promptly pay to Employer an amount equal to such refund
(together with any interest paid or credited thereon after taxes applicable
thereto), net of any taxes (including without limitation any income or excise
taxes), interest, penalties or additions to tax and any other costs incurred
by Employee in connection with such advance, after giving effect to such
repayment. If, after the receipt by Employee of an amount advanced by
Employer pursuant to clause (c)(i), it is finally determined that Employee is
not entitled to any refund with respect to such claim, then such advance
shall be forgiven and shall not be required to be repaid and the amount of
such advance shall be treated as a Gross Up Payment and shall offset, to the
extent thereof, the amount of any Gross Up Payment otherwise required to be
paid.
(iii) For purposes of this Exhibit A, whether the Excise Tax is
applicable to a Payment shall be deemed to be "finally determined" upon the
earliest of: (A) the expiration of the 15-day period referred to in clause
(c)(i) above if Employer has not notified Employee that it intends to contest
the underlying claim, (B) the expiration of any period following which no right
of appeal exists, (C) the date upon which a closing agreement or similar
agreement with respect to the claim is executed by the Employee and the Taxing
Authority (which agreement may be executed only in compliance with this Exhibit
A), (D) the receipt by Employee of notice from Employer that it no longer seeks
to pursue a contest (which notice shall be deemed received if Employer does not,
within 15 days following receipt of a written inquiry from Employee,
affirmatively indicate in writing to Employee that Employer intends to continue
to pursue such contest).
(d) As a result of uncertainty in the application of Section 4999
that may exist at the time of any determination that a Gross Up Payment is due,
it may be possible that in making the calculations required to be made here-
under, the parties or their accountants shall determine that a Gross Up Payment
need not be made (or shall make no determination with respect to a Gross Up
Payment) that properly should be made ("Underpayment"), or that a Gross Up
Payment not properly needed to be made should be made ("Overpayment"). The
determination of any Underpayment shall be made using the procedures set forth
in clause (b) above and shall be paid to Employee as an additional Gross Up
Payment. Employer shall be entitled to use procedures
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similar to those available to Employee in clause (b) to determine the amount of
any Overpayment (provided that Employer shall bear all costs of the accountants
as provided in clause (b)). In the event of a determination that an Overpayment
was made, any such Overpayment shall be treated for all purposes as a loan to
Employee with interest at the applicable Federal rate provided for in Section
1274(d) of the Code; provided, however, that the amount to be repaid by Employee
to Employer shall be subject to reduction to the extent necessary to put
Employee in the same after-tax position as if such Overpayment were never made.
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