CHANGE OF CONTROL EMPLOYMENT AGREEMENT
Exhibit
10.3
AGREEMENT by and between LandAmerica
Financial Group, Inc., a Virginia corporation (the “Company”), and _[each Named
Executive Officer listed on Exhibit A]_ (the “Executive”), dated as of the 27th
day of October, 2008.
The Board of Directors of the Company
(the “Board”) has determined that it is in the best interests of the Company and
its shareholders to assure that the Company will have the continued dedication
of the Executive, notwithstanding the possibility, threat or occurrence of a
Change of Control (as defined below) of the Company. The Board
believes it is imperative to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created by a pending
or threatened Change of Control and to encourage the Executive’s full attention
and dedication to the Company currently and in the event of any threatened or
pending Change of Control, and to provide the Executive with compensation and
benefits arrangements upon a Change of Control which ensure that the
compensation and benefits expectations of the Executive will be satisfied and
which are competitive with those of other corporations. Therefore, in
order to accomplish these objectives, the Board has caused the Company to enter
into this Agreement.
NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain
Definitions.
(a) “Board”
shall mean the Board of Directors of the Company. In the event the
Company is no longer traded on an established securities market and any parent
of the company is publicly traded, Board shall mean the Board of Directors of
the publicly traded parent corporation.
(b) “Change
of Control Period” shall mean the period commencing on the date hereof and
ending on December 31, 2009; provided, however, that on December 31, 2009 and
each annual anniversary of such date thereafter (each annual anniversary shall
be hereinafter referred to as the “Renewal Date”), unless previously terminated,
the Change of Control Period shall be automatically extended so as to terminate
one year from such Renewal Date, unless at least 60 days prior to the Renewal
Date the Company shall give notice to the Executive that the Change of Control
Period shall not be so extended.
(c) “Code”
shall mean the Internal Revenue Code of 1986, as amended.
(d) “Effective
Date” shall mean the first date during the Change of Control Period (as defined
in Section 1(b)) on which a Change of Control (as defined in Section 2)
occurs. Anything in this Agreement to the contrary notwithstanding,
if the Executive’s employment with the Company is terminated and it is
reasonably demonstrated by the Executive that such termination of employment (i)
was at the request of a third party who has taken steps
reasonably
calculated to effect a Change of Control or (ii) otherwise arose in connection
with or anticipation of a Change of Control (such a termination of employment an
“Anticipatory Termination”), then for all purposes of this Agreement the
“Effective Date” means the date immediately prior to the date of such
termination of employment.
(e) “Subsidiary”
shall mean any corporation that is directly, or indirectly though one or more
intermediaries, controlled by the Company.
2. Change of
Control. For the purpose of this Agreement, a “Change of
Control” shall mean:
(a) The
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the
then outstanding shares of common stock of the Company (the “Outstanding Company
Common Stock”) or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however, that
for purposes of this subsection (a), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by any corporation
pursuant to a transaction, which complies with clauses (i), (ii) and (iii) of
subsection (c) of this Section 2; or
(b) Individuals
who, as of the date hereof, constitute the Board (the “Incumbent Board”), cease
for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company’s shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board; or
(c) Consummation
of a reorganization, merger or consolidation or sale or other disposition of all
or substantially all of the assets of the Company (a “Business Combination”), in
each case, unless, following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation a corporation which as a result of
such transaction owns the
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Company
or all or substantially all of the Company’s assets either directly or through
one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may
be, (ii) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(d) Approval
by the shareholders of the Company of a complete liquidation or dissolution of
the Company.
Notwithstanding the foregoing, for
purposes of subsection (a) of this Section 2, a Change of Control shall not be
deemed to have taken place if, as a result of an acquisition by the Company
which reduces the Outstanding Company Common Stock or the Outstanding Company
Voting Securities, the beneficial ownership of a Person increases to 20% or more
of the Outstanding Company Common Stock or the Outstanding Company Voting
Securities; provided, however, that if a Person shall become the beneficial
owner of 20% or more of the Outstanding Company Common Stock or the Outstanding
Company Voting Securities by reason of share purchases by the Company and, after
such share purchases by the Company, such Person becomes the beneficial owner of
any additional shares of the Outstanding Company Common Stock or the Outstanding
Company Voting Stock, for purposes of subsection (a) of this Section 2, a Change
of Control shall be deemed to have taken place.
3. Employment
Period. If the Executive is employed by the Company and/or a
Subsidiary on the Effective Date, the Company hereby agrees to continue to
employ and to cause such Subsidiary to continue to employ the Executive, and the
Executive hereby agrees to remain in the employ of the Company and/or such
Subsidiary, subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the third anniversary of
such date (the “Employment Period”). For purposes of this Agreement,
unless expressly limited to LandAmerica Financial Group, Inc., “Company”
hereinafter shall mean each of LandAmerica Financial Group, Inc. and/or any of
its Subsidiaries or affiliated companies that employ the
Executive. As used in this Agreement, the term “affiliated companies”
shall include any company controlled by, controlling or under common control
with the Company.
4. Terms of
Employment.
(a) Position and
Duties.
(i) During
the Employment Period, (A) the Executive’s position (including status, offices,
titles and reporting requirements), authority, duties and
responsibilities
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shall be
at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 120-day period
immediately preceding the Effective Date and (B) the Executive’s services shall
be performed at the location where the Executive was employed immediately
preceding the Effective Date or any office or location less than 35 miles from
such location.
(ii) During
the Employment Period, and excluding any periods of paid time off to which the
Executive is entitled, the Executive agrees to devote reasonable attention and
time during normal business hours to the business and affairs of the Company
and, to the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive’s reasonable best efforts to perform
faithfully and efficiently such responsibilities. During the
Employment Period it shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive’s
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive’s
responsibilities to the Company.
(b) Compensation.
(i) Base
Salary. During the Employment Period, the Executive shall
receive an annual base salary (“Annual Base Salary”), which shall be paid at a
monthly rate, at least equal to 12 times the highest monthly base salary paid or
payable, including any base salary which has been earned but deferred, to the
Executive by the Company in respect of the 12-month period immediately preceding
the month in which the Effective Date occurs. During the Employment
Period, the Annual Base Salary shall be reviewed no more than 12 months after
the last salary increase awarded to the Executive prior to the Effective Date
and thereafter at least annually. Any increase in Annual Base Salary
shall not serve to limit or reduce any other obligation to the Executive under
this Agreement. Annual Base Salary shall not be reduced after any
such increase and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased.
(ii) Annual
Bonus. In addition to Annual Base Salary, the Executive shall
be awarded, for each fiscal year ending during the Employment Period, an annual
bonus (the “Annual Bonus”) in cash at least equal to the Executive’s highest
bonus under annual incentive plans of the Company or any comparable bonus under
any predecessor or successor plan, for the last three full fiscal years prior to
the Effective Date (annualized in the event that the Executive was not employed
by the Company for the whole of such fiscal year) (the “Recent Annual
Bonus”). Each such Annual Bonus shall be paid no later than two and a
half months following the fiscal year for which the Annual Bonus is awarded,
unless the Executive shall elect to defer the receipt of such Annual
Bonus.
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(iii) Incentive, Savings and
Retirement Plans. During the Employment Period, the Executive
shall be entitled to participate in all incentive, savings and retirement plans,
practices, policies and programs applicable generally to other peer executives
of the Company, but in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the extent, if
any, that such distinction is applicable), savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the aggregate, than the
most favorable of those provided by the Company and its affiliated companies for
the Executive under such plans, practices, policies and programs as in effect at
any time during the 120-day period immediately preceding the Effective Date or
if more favorable to the Executive, those provided generally at any time after
the Effective Date to other peer executives of the Company.
(iv) Welfare Benefit
Plans. During the Employment Period, the Executive and/or the
Executive’s family, as the case may be, shall be eligible for participation in
and shall receive all benefits under written welfare benefit plans, practices,
policies and programs provided by the Company (including, without limitation,
medical, prescription, dental, disability, employee life, group life, accidental
death and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company, but in no event shall such
plans, practices, policies and programs provide the Executive with benefits
which are less favorable, in the aggregate, than the most favorable of such
written plans, practices, policies and programs in effect for the Executive at
any time during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Executive, those provided generally at any time after
the Effective Date to other peer executives of the Company.
(v) Expenses. During
the Employment Period the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive in
accordance with the most favorable written policies, practices and procedures of
the Company in effect for the Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other peer
executives of the Company.
(vi) Fringe
Benefits. During the Employment Period, the Executive shall be
entitled to fringe benefits, including, without limitation, tax and financial
planning services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, in accordance with the most
favorable written plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company.
(vii) Office and Support
Staff. During the Employment Period, the Executive shall be
entitled to an office or offices of a size and with furnishings and other
appointments, and to exclusive personal secretarial and other assistance, at
least equal to the most favorable of the foregoing provided to the Executive by
the Company and its affiliated
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companies
at any time during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as provided generally at any time
thereafter with respect to other peer executives of the Company.
(viii) Paid Time
Off. During the Employment Period, the Executive shall be
entitled to paid time off in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies as in effect
for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company.
5. Termination of
Employment.
(a) Death or
Disability. The Executive’s employment shall terminate
automatically upon the Executive’s death during the Employment
Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 12(b) of this Agreement of its intention to
terminate the Executive’s employment. In such event, the Executive’s
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the “Disability Effective Date”),
provided that, within the 30 days after such receipt, the Executive shall not
have returned to full-time performance of the Executive’s duties. For
purposes of this Agreement, “Disability” shall mean that the Executive is
unable, by reason of physical or mental incapacity, to perform Executive’s
duties to the Company on a full-time basis for a period longer than 3
consecutive months or more than 6 months in any consecutive 12-month period. The
existence of a Disability shall be determined by the Board of Directors of the
Company, based upon due consideration of the opinion of the Executive’s personal
physician or physicians and of the opinion of any physician or physicians
selected by the Board of Directors for these purposes. If the
Executive’s personal physician disagrees with the physician retained by the
Company, the Board of Directors will retain an impartial physician selected by
the Executive’s personal physician and the Company’s physician and the opinion
of the impartial physician shall be binding upon the Company and the
Executive. The Executive shall submit to examination by any physician
or physicians so selected by the Board of Directors, and shall otherwise
cooperate with the Board of Directors in making the determination contemplated
hereunder, such cooperation to include, without limitation, consenting to the
release of information by any such physician(s) to the Board of
Directors.
(b) Cause. The
Company may terminate the Executive’s employment during the Employment Period
for Cause. For purposes of this Agreement, “Cause” shall
mean:
(i) the
willful and continued failure of the Executive to perform substantially the
Executive’s duties with the Company (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to the Executive by the Board or the Chief
Executive Officer of the Company which
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specifically
identifies the manner in which the Board or Chief Executive Officer believes
that the Executive has not substantially performed the Executive’s duties,
or
(ii) the
willful engaging by the Executive in illegal conduct or gross misconduct, which
is materially and demonstrably injurious to the Company.
For
purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in 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 upon the instructions of
the Chief Executive Officer or a senior officer of the Company or based upon the
advice of counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Company. The cessation of employment of the Executive shall not
be deemed to be for Cause 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 three-quarters of the entire membership of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice is provided
to the Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board), finding that, in the good faith opinion
of the Board, the Executive is guilty of the conduct described in subparagraph
(i) or (ii) above, and specifying the particulars thereof in
detail.
(c) Good Reason; Window
Period. The Executive’s employment may be terminated (i)
during the Employment Period by the Executive for Good Reason or (ii) during the
Window Period by Executive without any reason. For purposes of this
Agreement, “Window Period” shall mean the 30-day period immediately following
the first anniversary of the Effective Date. For purposes of this
Agreement, “Good Reason” shall mean:
(i) the
assignment to the Executive of any duties inconsistent in any respect with the
Executive’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section
4(a) of this Agreement, or any other action by the Company, which results in a
diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any
failure by the Company to comply with any of the provisions of Section 4(b) of
this Agreement, other than an isolated, insubstantial and inadvertent failure
not occurring in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the
Company’s requiring the Executive to be based at any office or location other
than as provided in Section 4(a)(i)(B) hereof or the Company’s requiring the
Executive to travel on Company business to a substantially greater extent than
required immediately prior to the Effective Date;
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(iv) any
purported termination by the Company of the Executive’s employment otherwise
than as expressly permitted by this Agreement; or
(v) any
failure by the Company to comply with and satisfy Section 11(c) of this
Agreement.
For
purposes of this Section 5(c), any good faith determination of “Good
Reason” made by the Executive shall be conclusive.
Executive’s mental or physical
incapacity following the occurrence of an event described in clauses (i) through
(v) shall not affect Executive’s ability to terminate for Good Reason and
Executive’s eligibility for retirement shall not be a basis to deny benefits
payable to Executive under this Agreement following his resignation for Good
Reason if Executive otherwise has Good Reason to resign.
(d) Notice of
Termination. Any termination by the Company for Cause, or by
the Executive during the Window Period or for Good Reason, shall be communicated
by Notice of Termination to the other party hereto given in accordance with
Section 12(b) of this Agreement. For purposes of this Agreement, a
“Notice of Termination” means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets 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 (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than thirty days after the giving of such
notice). The failure by the Executive or the Company to set forth in
the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or
the Company, respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights hereunder.
(e) Date of
Termination. “Date of Termination” means (i) if the
Executive’s employment is terminated by the Company for Cause, or by the
Executive during the Window Period or for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as the case may
be, (ii) if the Executive’s employment is terminated by the Company other than
for Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (iii) if the Executive’s
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be. The Company and the Executive
shall take all steps necessary (including with regard to any post-termination
services by Executive) to ensure that any termination described in this Section
5 constitutes a “separation from service” within the meaning of Section 409A of
the Code, and notwithstanding anything contained herein to the contrary, the
date on which such separation takes place shall be the “Date of
Termination.”
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6. Obligations of the Company
upon Termination.
(a) During the Window
Period. If, during the Employment Period, the Executive shall terminate
employment without any reason during the Window Period:
(i) the
Company shall pay to the Executive in a lump sum in cash within 30 days after
the Date of Termination, except as provided in Section 6(f) of this Agreement,
the aggregate of the following amounts:
(A)
the sum of (1) the Executive’s Annual Base Salary through the Date of
Termination to the extent not theretofore paid and (2) the product of (x) the
higher of (I) the Recent Annual Bonus and (II) the Annual Bonus paid or payable,
including any bonus or portion thereof which has been earned but deferred (and
annualized for any fiscal year consisting of less than twelve full months or
during which the Executive was employed for less than 12 full months), for the
most recently completed fiscal year during the Employment Period, if any (such
higher amount being referred to as the “Highest Annual Bonus”) and (y) a
fraction, the numerator of which is the number of days in the current fiscal
year through the Date of Termination, and the denominator of which is 365, in
each case to the extent not theretofore paid (the amount described in clause (2)
shall be referred to as the “Pro-Rata Bonus,” and the sum of the amounts
described in clauses (1) and (2) shall be hereinafter referred to as the
“Accrued Obligations”); and
(B) the
amount equal to the sum of (x) the Executive’s Annual Base Salary and (y) the
Highest Annual Bonus;
(ii) for
three years after the Executive’s Date of Termination, the Company shall
continue benefits to the Executive and/or the Executive’s family at least equal
to those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 4(b)(iv) of this Agreement
if the Executive’s employment had not been terminated or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies and their
families at a cost to the Executive no greater than the cost the Executive would
have paid for such benefits if he had remained employed, provided, however, that
(i) if continuation is not possible under the terms of the applicable plan,
program, practice or policy, then the Company shall pay in cash in a lump sum
within thirty (30) days following Executive’s Date of Termination, subject to
Section 6(f) of this Agreement, an amount equal to the present value of the
contributions the Company would have made thereunder on behalf of Executive
and/or Executive’s family for the three years following the Executive’s Date of
Termination, calculated using (a) Company contribution levels in effect on the
Date of Termination and (b) a present value discount rate, equal to 120% of the
Federal short-term rate (using monthly compounding) as defined in Section
1274(d) of the Code and as published for the month immediately preceding the
month of payment; and (ii) if the Executive becomes
reemployed with another employer and is eligible to receive medical or other
welfare benefits under another employer provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility. For purposes of
determining
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eligibility
(but not the time of commencement of benefits) of the Executive for retiree
benefits pursuant to such plans, practices, programs and policies, the Executive
shall be considered to have remained employed until three years after the Date
of Termination and to have retired on the last day of such period. To
the extent required by Code Section 409A, (i) a reimbursement made under this
Section 6(a)(ii) shall occur on or before December 31 of the calendar year
following the calendar year during which the applicable expense is incurred and
(ii) no reimbursement or in-kind benefit provided under this Section 6(a)(ii)
during one calendar year shall affect the expenses eligible for reimbursement or
in-kind benefits provided during another calendar year (nor may the underlying
rights be liquidated or exchanged for any other benefit); and
(iii) to
the extent not theretofore paid or provided, the Company shall timely pay or
provide to the Executive any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive under any written plan,
program, policy or practice or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be hereinafter
referred to as the “Other Benefits”).
(b) Good Reason; Other Than for
Cause, Death or Disability. If, during the Employment Period,
the Company shall terminate the Executive’s employment other than for Cause,
Death or Disability or the Executive shall terminate employment for Good
Reason:
(i) the
Company shall pay to the Executive in a lump sum in cash within 30 days after
the Date of Termination, except as provided in Section 6(f) of this Agreement,
the aggregate of the following amounts:
(A) the
Accrued Obligations; and
(B) the
amount equal to the product of (1) three times, and (2) the
sum of (x) the Executive’s Annual Base Salary and (y) the Highest Annual
Bonus;
(ii) for
three years after the Executive’s Date of Termination, the Company shall
continue benefits to the Executive and/or the Executive’s family at least equal
to those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 4(b)(iv) of this Agreement
if the Executive’s employment had not been terminated or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies and their
families at a cost to the Executive no greater than the cost the Executive would
have paid for such benefits if he had remained employed, provided, however, that
(i) if continuation is not possible under the terms of the applicable plan,
program, practice or policy, then the Company shall pay in cash in a lump sum
within thirty (30) days following Executive’s Date of Termination, subject to
Section 6(f) of this Agreement, an amount equal to the present value of the
contributions the Company would have made thereunder on behalf of Executive
and/or Executive’s family for the three years following the Executive’s Date of
Termination, calculated using (a) Company contribution levels in effect on the
Date of Termination and (b) a present value discount rate, equal to 120% of the
Federal short-term rate (using monthly compounding) as
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defined
in Section 1274(d) of the Code and as published for the month immediately
preceding the month of payment; and (ii) if the Executive becomes
reemployed with another employer and is eligible to receive medical or other
welfare benefits under another employer provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility. For
purposes of determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to have
remained employed until 3 years after the Date of Termination and to have
retired on the last day of such period. To the extent required by
Code Section 409A, (i) a reimbursement made under this Section 6(b)(ii) shall be
paid on or before December 31 of the calendar year following the calendar year
during which the applicable expense is incurred and (ii) no reimbursement or
in-kind benefit provided under this Section 6(b)(ii) during one calendar year
shall affect the expenses eligible for reimbursement or in-kind benefits
provided during another calendar year (nor may the underlying rights be
liquidated or exchanged for any other benefit);
(iii) the
Company shall, at its sole expense as incurred, provide the Executive with
reasonable outplacement services the scope and provider of which shall be
selected by the Executive in his sole discretion (to the extent such selection
is reasonable and directly related to Executive’s termination of employment with
the Company). The outplacement services provided to the Executive
under this Section 6(b)(iii) shall cease to be provided no later than December
31 of the second calendar year following the calendar year of Executive’s Date
of Termination and any reimbursement made to Executive under this Section
6(b)(iii) shall be paid no later than December 31 of the third calendar year
following the calendar year of Executive’s Date of Termination; and
(iv) to
the extent not theretofore paid or provided, the Company shall timely pay or
provide to the Executive any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive under any written plan,
program, policy or practice or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be hereinafter
referred to as the “Other Benefits”).
Executive’s
resignation for Good Reason shall not provide a basis for denying Executive any
retirement or other benefits if he otherwise qualifies for such
benefits.
(c) Death. If
the Executive’s employment is terminated by reason of the Executive’s death
during the Employment Period, this Agreement shall terminate without further
obligations to the Executive’s legal representatives under this Agreement, other
than for payment of Accrued Obligations and the timely payment or provision of
Other Benefits. Accrued Obligations shall be paid to the Executive’s
estate or beneficiary, as applicable, in a lump sum in cash within 30 days of
the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(c) shall
include, without limitation, and the Executive’s estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company to the estates and beneficiaries of peer
executives of the Company under such written plans, programs, practices and
policies relating to
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death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive’s estate and/or the
Executive’s beneficiaries, as in effect on the date of the Executive’s death
with respect to other peer executives of the Company and their
beneficiaries.
(d) Disability. If
the Executive’s employment is terminated by reason of the Executive’s Disability
during the Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued Obligations and
the timely payment or provision of Other Benefits. Accrued
Obligations shall, subject to Section 6(f)(ii), be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination. With respect to the
provision of Other Benefits, the term Other Benefits as utilized in this Section
6(d) shall include, and the Executive shall be entitled after the Disability
Effective Date to receive, disability and other benefits at least equal to the
most favorable of those generally provided by the Company to disabled executives
and/or their families in accordance with such written plans, programs, practices
and policies relating to disability, if any, as in effect generally with respect
to other peer executives and their families at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive and/or the Executive’s family, as in effect at any time thereafter
generally with respect to other peer executives of the Company and their
families.
(e) Cause; Other than for Good
Reason. If the Executive’s employment shall be terminated for
Cause during the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to pay to the
Executive (x) Executive’s Annual Base Salary through the Date of Termination and
(y) Other Benefits, in each case to the extent theretofore unpaid. If
the Executive voluntarily terminates employment during the Employment Period,
excluding a termination for Good Reason, this Agreement shall terminate without
further obligations to the Executive, other than for Accrued Obligations and the
timely payment or provision of Other Benefits. In such case, all
Accrued Obligations shall, subject to Section 6(f)(ii), be paid to the Executive
in a lump sum in cash within 30 days of the Date of Termination.
(f) Application of Code Section
409A.
(i) Notwithstanding
any other provision in this Agreement, the Executive and the Company intend for
this Agreement to comply with the provisions of Code Section 409A and any
Treasury Regulations issued thereunder. Each provision and term of
this Agreement should be interpreted accordingly. If any provision or
term of this Agreement would result in an additional tax under Code Section
409A(a)(1)(B) (“Section 409A Tax”), then such provision shall be deemed to be
conformed to comply with Code Section 409A or, if such conformation is not
possible, such provision shall be null and void to the extent, and only to the
extent, required to eliminate the Section 409A Tax without effecting the
remainder of this Agreement but only if such modification results in the
Executive realizing a greater after-tax benefit taking into consideration all
applicable federal, state and local income taxes and any
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interest
and penalties thereof, including any Section 409A Tax. Each provision
and term of this Agreement should be interpreted accordingly.
(ii) To
the extent required by Code Section 409A, in the event the Executive is a
“specified employee” as provided in Code Section 409A(a)(2)(i) on the Date of
Termination (based on the methodology set forth in Section 1.409A-1(i)(6)(i) of
the Treasury Regulations as it applies in connection with a merger) (a
“Specified Employee”) any amounts payable under Sections 6(a)(i)(A)(2),
6(a)(i)(B), 6(a)(ii) (with respect to the lump sum payment only), 6(b)(i)(A)
(with respect to the Pro-Rata Bonus only), 6(b)(i)(B), 6(b)(ii) (with respect to
the lump sum payment only), 6(d) (with respect to the Pro-Rata Bonus only) and
6(e) (with respect to the Pro-Rata Bonus only), shall be paid no earlier than
the first business day after the six month anniversary of the Date of
Termination (the “Delayed Payment Date”). Whether the Executive is a
Specified Employee and whether an amount payable to the Executive hereunder is
subject to Code Section 409A shall be determined by the Company.
7. Non-exclusivity of
Rights. Nothing in this Agreement shall prevent or limit the
Executive’s continuing or future participation in any plan, program, policy or
practice provided by the Company and for which the Executive may qualify, nor,
subject to Section 12(f), shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy, practice or program of or
any contract or agreement with the Company at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement.
8. Full
Settlement. The Company’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and such amounts shall not be reduced whether or not the Executive obtains other
employment. The Company agrees to pay as incurred, during the
Executive’s lifetime, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the Executive or others of
the validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any
contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
federal rate provided for in Code Section 7872(f)(2)(A); provided, however, in
the event the contest relates to whether an Anticipatory Termination has
occurred, the Company shall be required to pay the Executive’s legal fees and
expenses pursuant to this sentence only if it is determined that an Anticipatory
Termination occurred or if a Change of Control is consummated within 12 months
of the Executive’s Date of Termination. To the extent required
by Code Section 409A, any reimbursement under this Section 8 shall be made no
later than December 31 of the calendar year following the calendar year in which
the applicable expense is incurred.
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9. Certain Additional Payments
by the Company.
(a) Anything
in this Agreement to the contrary notwithstanding and except as set forth below,
in the event it shall be determined that any payment or distribution by the
Company to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 9) (a “Payment”) would be subject to the excise tax imposed
by Code Section 4999 or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the “Excise
Tax”), then the Executive shall be entitled to receive an additional payment (a
“Gross-Up Payment”) in an amount such that after payment by the Executive of all
taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. Notwithstanding the foregoing provisions
of this Section 9(a), if it shall be determined that the Executive is entitled
to a Gross-Up Payment, but that the Payments do not exceed 110% of
the greatest amount that could be paid to the Executive such that the receipt of
Payments would not give rise to any Excise Tax (the “Reduced Amount”), then no
Gross-Up Payment shall be made to the Executive and the Payments, in the
aggregate, shall be reduced to the Reduced Amount. The reduction of
the amounts payable hereunder, if applicable, shall be made by reducing the
payments and benefits under the following sections in the following
order: (i) Section 6(b)(iii), if applicable, (ii) Section 6(a)(i)(B)
or 6(b)(i)(B), as applicable, (iii) the Pro-Rata Bonus and (iv) Section 6(a)(ii)
or 6(b)(ii), as applicable.
(b) Subject
to the provisions of Section 9(c), all determinations required to be made under
this Section 9, including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by a nationally recognized
certified public accounting firm as may be designated by the Executive (the
“Accounting Firm”) which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change of Control, the Executive shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the
Company. Any Gross-Up Payment, as determined pursuant to this Section
9, shall be paid by the Company to the Executive within 5 days of the receipt of
the Accounting Firm’s determination, but no later than the last day of the
calendar year following the calendar year in which the Executive remits the
related taxes. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the
application of Code Section 4999 at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made
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(“Underpayment”),
consistent with the calculations required to be made hereunder. In
the event that the Company exhausts its remedies pursuant to Section 9(c) and
the Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
(c) The
Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company of
the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than 10 business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim, the
Executive shall:
(i) give
the Company any information reasonably requested by the Company relating to such
claim,
(ii) take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii) cooperate
with the Company in good faith in order effectively to contest such claim,
and
(iv) permit
the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Such tax indemnification shall be paid to
Executive no later than December 31 of the calendar year following the calendar
year in which the Executive remits the related taxes. In addition,
payment of such costs and expenses shall occur no later than December 31 of the
calendar year in which the taxes that are the subject of the proceedings are
remitted to the taxing authority or, if no taxes are remitted, the last day of
the calendar year following the taxable year in which the audit is completed or
there is a final and nonappealable settlement of the litigation. Without
limitation on the foregoing provisions of this Section 9(c), the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo 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 the Executive to pay the tax claimed and
xxx for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination
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before
any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however, that
any extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested
amount. Furthermore, the Company’s control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If,
after the receipt by Executive of a Gross-up Payment, Executive becomes entitled
to receive any refund with respect to the Excess Tax to which such Gross-up
Payment relates, Executive shall promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto).
10. Restrictive
Covenants.
(a) Confidential
Information. The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information, knowledge
or data relating to the Company, and their respective businesses, which shall
have been obtained by the Executive during the Executive’s employment by the
Company and which shall not be or become public knowledge (other than by acts by
the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive’s employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it.
(b) Nonraiding of
Employees. The Executive covenants that during Executive’s employment
hereunder and for a period of 2 years immediately following the date of
termination of Executive’s employment, but only if said termination is voluntary
or for Cause, Executive will not solicit, induce or encourage for the purposes
of employing or offering employment to any individuals who, as of the date of
termination of the Executive’s employment, are employees of the Company, nor
will Executive directly or indirectly solicit, induce or encourage any of the
Company’s employees to seek employment with any other business, whether or not
the Executive is then affiliated with such business.
In no
event shall an asserted violation of the provisions of this Section 10
constitute a basis for deferring or withholding any amounts otherwise payable to
the Executive under this Agreement.
11. Successors.
(a) This
Agreement is personal to the Executive and without the prior written consent of
the Company shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive’s legal
representatives.
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(b) This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.
(c) The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly 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.
12. Miscellaneous.
(a) This
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Virginia without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.
(b) All
notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed, if to the Executive, to
the Executive’s address, or record with the Company and, if to the Company, to
LandAmerica Financial Group, Inc., 0000 Xxx Xxxx, Xxxx Xxxxx, Xxxxxxxx 00000
Attention: Chairman & Chief Executive Officer, or to such other
address as either party shall have furnished to the other in writing in
accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this
Agreement.
(d) The
Company may withhold from any amounts payable under this Agreement such federal,
state, local or foreign taxes as shall be required to be withheld pursuant to
any applicable law or regulation.
(e) The
Executive’s or the Company’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right the Executive or
the Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Sections
5(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this
Agreement.
(f) The
Executive and the Company acknowledge that, except as may otherwise be provided
under any other written agreement between the Executive and the Company, the
employment of the Executive by the Company is “at will” and, subject to Section
1(b) hereof, prior to the Effective Date, the Executive’s employment and/or this
Agreement may be terminated by either the Executive or the Company at any time
prior to the Effective Date, in which case the Executive shall have no further
rights under this Agreement. From and after the
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Effective
Date, this Agreement shall become effective, and shall replace and supersede any
existing Employment Agreement between the Company and the Executive, to the
extent its terms are more advantageous to the Executive, except that any
covenants contained in any prior agreement between Executive and the Company
restricting Executive’s ability to compete with or to solicit the employees,
clients or customers of the Company, or to use or disclose any Confidential
Information (as that term is defined in any such agreement), shall remain in
full force and effect.
(g) The
Executive hereby acknowledges and agrees that this Agreement is intended to
replace and supersede the Change of Control Employment Agreement between
Executive and the Company dated January 1, 2008 and that such former agreement
is terminated as of the date hereof.
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IN WITNESS WHEREOF, the Executive has
hereunto set the Executive’s hand and, pursuant to the authorization from its
Board of Directors, the Company has caused these presents to be executed in its
name on its behalf, all as of the day and year first above written.
LANDAMERICA FINANCIAL GROUP,
INC.
By: _____________________________________
Xxxxxxxx X. Xxxxxxxx, Xx., Chairman
and
Chief Executive Officer
__________________________________________
[Name of Executive]
Exhibit A
– Named Executive Officers
Xxxxxxxx
X. Xxxxxxxx, Xx.
G.
Xxxxxxx Xxxxx
Xxxxxxx
Xxxxxxxxx
Xxxxxxx
Xxxx
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