EXHIBIT 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, effective as
of the 2nd day of January, 2002, is hereby made and entered into between SCPIE
MANAGEMENT COMPANY (formerly named Physicians Insurance Management, Inc.), a
California corporation ("SCPIE Management"), and XXXXXX X. XXX ("Executive").
RECITALS
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A. Executive is and has been employed for a number of years in
a senior capacity in the administration of casualty insurance, including
particularly medical professional liability insurance. Through such employment
he has acquired outstanding experience and special skills and abilities in the
management and administration of professional liability insurance programs,
including the marketing, underwriting, loss prevention and claims management
aspects of such business.
B. Because of the unique nature of the employment position
involved and the experience, skills, abilities, background and knowledge of
Executive, SCPIE Management desires to continue to retain the services of
Executive for the term of this Agreement on the terms and conditions set forth
in this Agreement. Executive desires to remain in the employ of SCPIE Management
and is willing to accept such employment on the terms and conditions set forth
in this Agreement.
C. Executive originally served as the President and Chief
Executive Officer of SCPIE Management pursuant to the terms of an Employment
Agreement dated as of April 28, 1988, which was replaced by a new Employment
Agreement dated as of December 3, 1991 (the "December 1991 Agreement"). The
December 1991 Agreement was amended and restated each subsequent year to extend
the term and termination provisions for a period of one additional year,
and most recently on January 2, 2001, SCPIE Management and Executive further
amended and restated the December 1991 Agreement to extend the term and
termination provisions for an additional period of one year (the "2001 Amended
and Restated Agreement"). SCPIE Management and Executive desire to further amend
and restate the 2001 Amended and Restated Agreement to extend the term and
termination provisions for an additional period of one year.
AGREEMENT
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NOW, THEREFORE, in consideration of the foregoing Recitals and
the mutual promises and covenants set forth herein, SCPIE Management and
Executive agree as follows:
1. Employment, Duties and Term.
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(a) SCPIE Management hereby hires and employs
Executive, and Executive agrees to serve as an executive of SCPIE Management
under and subject to all of the terms, conditions and provisions hereof, for the
period commencing December 3, 1991 and terminating on December 31, 2006, unless
earlier terminated pursuant to paragraph 3 hereof. Executive agrees to serve as
President and Chief Executive Officer of SCPIE Management and its parent
corporation, SCPIE Holdings Inc. ("SCPIE Holdings"), and in such other positions
as may be determined by the Board of Directors of SCPIE Management. Executive's
duties shall be as designated by SCPIE Management's Board of Directors and shall
be subject to such policies and directives as may be established or given by
such Board of Directors from time to time. Executive agrees that, as an officer
of SCPIE Management, he will faithfully serve in such capacities during the term
of this Agreement, except as herein otherwise provided. Executive further agrees
to devote his best efforts and his entire attention and energy to such service.
2. Compensation and Benefits.
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(a) SCPIE Management agrees to pay to
Executive, for his services to SCPIE Management hereunder, compensation at the
initial rate of $344,800 per annum commencing December 9, 1991. Said
compensation shall be payable in bi-weekly payments. During the term hereof,
Executive's yearly compensation rate under this paragraph 2(a) shall be
increased annually (commencing as of January 1, 1992 and continuing as of each
succeeding January 1) by a percentage equal to the percentage increase (if any)
in the United States Department of Labor, Bureau of Labor Statistics Consumer
Price Index for All Items, All Urban Consumers (CPI-U), for the Los Angeles
area, for the preceding calendar year. In the event that such Index (or a
successor Index) is not available, a reliable governmental publication
evaluating the information theretofore used in determining the Index shall be
used in lieu of such Index. (Pursuant to the terms of this provision,
Executive's yearly compensation rate was increased to $581,062 as of January 1,
2001, and was also maintained by the Board of Directors of SCPIE Management as
of January 1, 2002 at that amount before inclusion of the CPI-U adjustment of
the 2001 salary level.)
(b) Annually during the term hereof, the Board
of Directors of SCPIE Management will consider whether to provide bonuses to
Executive and additional increases in Executive's compensation rate; provided,
however, that during the time that SCPIE Management is a wholly-owned subsidiary
of SCPIE Holdings, SCPIE Management shall not provide any bonuses or additional
increases in Executive's compensation rate under this paragraph unless such
bonus or increase has been specifically approved in writing by SCPIE Holdings.
Additional increases in Executive's compensation rate which are made pursuant to
this paragraph (if any) and which are in effect at the time this Agreement is
terminated, shall, for the purposes of paragraphs 3(a)(i) or (ii),
3(c)(ii) or 3(e)(ii), be considered to be included in the compensation rate in
effect under paragraph 2(a) at the date of such termination.
(c) During the term hereof, Executive shall be
entitled to participate in such medical, dental, life and disability insurance
programs, pension and other retirement programs and other benefits as are now
and may from time to time become generally available to executives of SCPIE
Management in accordance with the then existing personnel policies of SCPIE
Management. During the term hereof, Executive shall also be entitled to one
month of annual vacation, the dates to be selected each year by Executive.
(d) During the term hereof, SCPIE Management
shall pay for or reimburse Executive for amounts incurred or advanced by him (as
membership fees, initiation fees and monthly dues) in obtaining and maintaining
a membership at the Xxxxxxxx Club, Los Angeles, California. Effective January 1,
1999, SCPIE Management Company shall pay for the cost of a golf membership at
the Riviera Country Club, Los Angeles, California, or a comparable country club,
which shall be in the name of and become the property of Executive. Executive
shall be responsible for the dues and fees with respect to such membership.
SCPIE Management shall also pay for or reimburse Executive for such ordinary and
necessary business expenses as Executive shall from time to time incur or
advance in the performance of his duties hereunder.
(e) During the term hereof, SCPIE Management
shall provide to Executive an automobile allowance consistent with such
allowance as is furnished to executives of SCPIE Management.
(f) With respect to the payment of counsel fees
for Executive, SCPIE Management agrees to pay for such fees in connection with
the drafting of this Agreement.
3. Termination of Service.
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(a) SCPIE Management may terminate this
Agreement at any time, with or without cause, by giving 60 days' written notice
to Executive. In the event of such termination under this paragraph 3(a), SCPIE
Management shall be under no obligation except to pay to Executive his accrued
and unpaid prorated compensation up to and including the date of such
termination, including earned but unused vacation, plus either (i) in the event
this Agreement is so terminated on or prior to December 31, 2004, additional
compensation equal to the amount payable to Executive hereunder for two years at
the rate in effect under paragraph 2(a) hereof at the date of such termination,
or (ii) in the event this Agreement is so terminated after December 31, 2004,
additional compensation equal to the amount payable to Executive hereunder for
one year at the rate in effect under paragraph 2(a) hereof at the date of such
termination. Such amount (if any) payable under this paragraph 3(a) shall be
payable between the 60th day after the date of such termination and the 30th day
after the first anniversary of the date of such termination in such installments
as Executive shall specify by written notice given to SCPIE Management within
ten days after the date of such termination; provided, however, that if
Executive does not give such written notice within said ten-day period, such
amount (if any) payable under this paragraph 3(a) shall be payable in full on
the 60th day after the date of such termination.
(b) This Agreement also shall be terminated
by the death of Executive. In the event of the death of Executive during the
term of this Agreement, SCPIE Management shall be under no obligation except to
pay to the Executive's personal representative the Executive's accrued but
unpaid prorated compensation up to and including the date of his death,
including earned but unused vacation.
(c) This Agreement shall also be terminated at
such time as Executive becomes disabled (as hereinafter defined) from performing
his duties under this Agreement in his normal and regular manner. In the event
this Agreement is terminated by such disability, SCPIE Management shall be under
no obligation except to pay to Executive (i) his accrued but unpaid prorated
compensation up to and including the date of such termination including earned
but unused vacation, plus (ii) additional compensation equal to the amount
payable to Executive hereunder for six months, at the rate in effect under
paragraph 2(a) hereof at the date of such termination. Such amount (if any)
payable under paragraph 3(c)(ii) shall be payable in equal bi-weekly payments.
Executive shall be considered "disabled" if, at the end of any month, Executive
then is and has been, either for the four consecutive full calendar months then
ending or on sixty percent or more of his normal working days during the six
consecutive full calendar months then ending, unable due to mental or physical
illness or injury to perform his duties under this Agreement in his normal and
regular manner.
(d) Executive may terminate this Agreement at
any time, with or without cause, by giving 90 days' written notice to SCPIE
Management. In the event of such termination under this paragraph 3(d), SCPIE
Management shall be under no obligation except to pay Executive his accrued but
unpaid prorated compensation up to and including the date of such termination,
including earned but unused vacation.
(e) Unless this Agreement is terminated earlier
pursuant to any of the foregoing subparagraphs of this paragraph 3, this
Agreement shall automatically terminate on December 31, 2006, and, in the event
of such termination on such date, SCPIE Management shall be under no obligation
except to pay to Executive (i) his accrued and unpaid prorated compensation up
to and including such date, including earned but unused vacation, plus (ii)
additional
compensation equal to the amount payable to Executive hereunder for one year at
the rate in effect under paragraph 2(a) hereof on December 31, 2006. Such amount
(if any) payable under paragraph 3(e)(ii) shall be payable between March 1, 2007
and January 10, 2008 in such installments as Executive shall specify by written
notice given to SCPIE Management on or before January 10, 2007; provided,
however, that if Executive does not give such written notice on or before
January 10, 2007, such amount (if any) payable under paragraph 3(e)(ii) shall be
payable in full on March 1, 2007.
(f) In the event that Executive's services
hereunder are terminated under any of the provisions of this Agreement (except
by death), Executive agrees that if at that time he is President of SCPIE
Management, he will, promptly upon the written request of the Board of Directors
of SCPIE Management, deliver his written resignation as such President to the
Board of Directors, such resignation to become effective immediately.
(g) Notwithstanding anything contained herein,
Executive shall be entitled to the payments, if any, under paragraphs 3(a), (b),
(c), (d) and (e) above only in the event that the termination of Executive's
employment which gives rise to such payments occurs prior to a Change in
Control, as defined in that certain letter agreement, dated as of December 14,
2000, between SCPIE Holdings and Executive relating to severance benefits in the
event of a change in control of SCPIE Holdings.
4. Assignment and Binding Effect.
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This Agreement shall not be transferable or
assignable by Executive or SCPIE Management, nor shall Executive's or SCPIE
Management's interest herein be transferred or assigned by operation of law, and
any assignment or attempted assignment, transfer, mortgage, hypothecation, or
pledge of this Agreement or of his interest herein by Executive or SCPIE
Management shall be null and void. This provision, however, shall have no
application to transfers made by reason of the death of the Executive.
5. Arbitration.
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Any controversy or claim arising out of or
relating to this Employment Agreement shall be settled by arbitration in
accordance with the Rules of the American Arbitration Association, and judgment
upon the award rendered by the Arbitrators may be entered in any Court having
jurisdiction thereof. If a controversy or claim results in an award, that award
shall also provide that the prevailing party be reimbursed by the non-prevailing
party for the prevailing party's reasonable attorneys' fees and costs incurred
in connection with the arbitration.
6. Notices.
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Any notice required or permitted to be given under
this Agreement by one party hereto to the other shall be sufficient if given or
confirmed in writing, first class mail, postage prepaid, or by telegraph
addressed as respectively indicated:
To SCPIE Management: SCPIE Management Company
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Chairman of the Board
To Executive: Xxxxxx X. Xxx
c/o SCPIE Management Company
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
or to such other address as the respective parties may designate in writing to
the other designate.
7. Unique Nature of Executive's Services.
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Executive is obligated under this Agreement to
render services of special, unusual, extraordinary and intellectual character,
thereby giving his Agreement peculiar value, so that the loss thereof could not
be reasonably or adequately compensated in damages or an action of
law. In addition to other remedies provided by law, SCPIE Management shall have
the right during the term of this Agreement to compel specific performance
hereof by Executive and/or to obtain injunctive relief against the performance
of services elsewhere by Executive.
8. Withholdings.
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All payments made by SCPIE Management under any
provision of this Agreement shall be subject to any deductions and withholdings
required by applicable law.
9. Governing Law.
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This Agreement shall be governed by the laws of the
State of California.
10. Amendment of the December 1991 Agreement.
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The 2001 Amended and Restated Agreement between
Executive and SCPIE Management is hereby amended and restated in its entirety by
this Amended and Restated Employment Agreement.
IN WITNESS WHEREOF, SCPIE Management has caused this Agreement
to be executed by its officer thereunto duly authorized and Executive has
executed this instrument, all effective as of the day and year first above
written.
SCPIE MANAGEMENT COMPANY
By: /s/ XXXXXX XXXXXX
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Its: Secretary
EXECUTIVE:
/s/ XXXXXX X. XXX
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Xxxxxx X. Xxx
GUARANTY
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1. FOR VALUE RECEIVED and in consideration for, and as an inducement to
Xxxxxx X. Xxx (the "Executive") concurrently entering into an Amended and
Restated Employment Agreement dated as of January 2, 2002, in place of the
Amended and Restated Employment Agreement made and entered into as of January 2,
2001 with SCPIE Management Company, SCPIE Holdings Inc. ("SCPIE Holdings")
guarantees to Executive, and his successors and assigns, the full payment by
SCPIE Management Company to Executive of the compensation required to be paid by
SCPIE Management Company to Executive under paragraph 2 and paragraphs 3(a)(i)
or (ii), 3(c)(ii) or 3(e)(ii) of said Agreement on the terms and conditions set
forth in said Agreement.
2. This Guaranty cannot otherwise be terminated or modified without the
written consent of Xx. Xxxxxx X. Xxx.
3. If any dispute arises pertaining to this Guaranty, such dispute will be
submitted to binding arbitration in accordance with the Rules of the American
Arbitration Association, and judgment upon such award rendered by the
Arbitrators may be entered in any court having jurisdiction. If the controversy
or claim results in an award, that award shall provide the prevailing party be
reimbursed by the non-prevailing party for the prevailing party's reasonable
attorneys' fees and costs incurred in connection with the Arbitration.
Executed in Los Angeles, California, as of January 2, 2002.
SCPIE HOLDINGS INC.
By: _/s/ XXXXXX HENKES______
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Its: Secretary
