Exhibit 10.16
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated June 21, 1993, is made between HILB,
XXXXX AND XXXXXXXX COMPANY OF ARIZONA, an Arizona corporation
("Employer"), and XXXXXXX X. XXXXX ("Employee"), a resident of
Phoenix, Arizona.
RECITALS
WHEREAS, Employer is a wholly-owned subsidiary of HILB,
XXXXX AND XXXXXXXX COMPANY, a Virginia corporation ("HRH");
WHEREAS, Employee has been a Vice President of Employer;
WHEREAS, the former president of Employer has terminated
employment and Employer desires for Employee to be promoted to
President;
WHEREAS, HRH and Employer desire that Employee be employed
as President with primary responsibility for the overall
management and profitability of Employer, and secondary
responsibility for the production of new business and for the
servicing of business coded to Employee for service and for the
period of time specified herein;
WHEREAS, Employee desires to accept such employment subject
to the terms and conditions specified herein; and
WHEREAS, HRH and Employer aver and Employee acknowledges
that HRH and Employer will incur substantial costs in developing,
increasing and protecting its business, including costs for
training employees and advertising the business of the Employer;
NOW, THEREFORE, in consideration of the premises stated
above and the sum of $1.00, receipt of which is acknowledged by
Employee, Employer's employment or continued employment of
Employee, and the mutual promises contained in this Agreement,
the parties agree as follows:
1. EMPLOYMENT: TERM' COMPENSATION: RENEWAL. Employer
agrees to employ Employee for an initial term of three (3) years
("Initial Term"), effective as of April 1, 1993 ("Effective
Date"), and to compensate Employee as described on Exhibit A
attached hereto and incorporated herein by this reference.
Upon the expiration of the Initial Term, this Agreement
shall renew for one (1) year terms; provided that this Agreement
shall not renew if either party gives written notice to the other
not less than thirty (30) days prior to the end of the Initial
Term (or any renewals thereof) of its intent not to renew the
Agreement, and provided further that either party may terminate
this Agreement at any time after the Initial Term, with or
without cause, upon the giving of thirty (30) days written notice
to the other of its intent to do so. If this Agreement is
terminated by either party on thirty (30) days notice, Employee
shall continue to render services faithfully during such period
and his employment hereunder shall terminate at the end of the
notice period. At its sole option, Employer may elect to pay
Employee, as severance pay, the base salary due Employee for the
unexpired portion of the notice period, thereby immediately
terminating Employee's employment in lieu of permitting Employee
to continue performing his duties during the notice period.
Except as limited in the next following sentence, Employee's
compensation shall be reviewed by Employer not less frequently
than annually during the term of this Agreement and any
extensions or renewals thereof, may be adjusted upward or
downward in Employer's sole exercise of its reasonable business
discretion and shall be full compensation for all services
performed by Employee under this Agreement. During the Initial
Term, Employee's compensation may be reduced only for "Cause."
2. FULL EFFORTS OF EMPLOYEE. Employee represents to
Employer that he has no employment or other relationship with any
competitor of Employer which would restrict him in performing the
duties contemplated herein. Employee agrees to indemnify and hold
Employer harmless from all claims and damages (including
reasonable attorneys' fees and costs) suffered by Employer and
arising out of a breach of the foregoing representation. Employee
agrees (i) to devote his full business time and energies to the
business and affairs of Employer, (ii) to use his best efforts,
skills and abilities to promote the interests of the Employer and
the related business interests of HRH and its other subsidiaries
and (iii) to perform faithfully and to the best of his ability
all assignments of work given to him by Employer. During the
course of his employment hereunder, Employee shall not, directly
or indirectly, enter into or engage in any other activity or
other gainful employment without the prior written consent of
HRH.
3. FULL COMPENSATION FOR SERVICES. All business, including
insurance, bond, risk management, self-insurance and other
services (collectively, the "HRH Business"), transacted through
the efforts of Employee or any other employee of HRH or any of
its subsidiary corporations (HRH and its subsidiary corporations,
including Employer, are herein referred to as the "HRH
Companies.") shall be the sole property of the Employer and the
HRH Companies, and Employee acknowledges that he shall have no
right to any commission or fee resulting from the conduct of such
business other than in the form of the compensation referred to
in paragraph 1. Premiums, commissions or fees on the HRH Business
transacted through the efforts of Employee shall be invoiced to
the insured or purchaser by Employer or one of the other HRH
Companies. All checks or bank drafts received by Employee from
any insured or purchaser shall be made payable to such company
and all amounts collected by Employee shall be promptly turned
over to Employer.
4. CONFIDENTIAL INFORMATION. For purposes of this
paragraph 4, the following words shall have the following
respective meanings:
"Employer" shall mean Hilb, Xxxxx and Xxxxxxxx Company of Arizona, any of
its predecessors and any person or entity from which it has, now or at the
time of termination, acquired insurance accounts;
"HRH Companies" means Employer, HRH and any
subsidiary of HRH;
"HRH Customers" means the customers of the HRH
Companies; and
"Confidential Information" shall mean any and all
information of a proprietary or confidential nature
and trade secrets of Employer and the HRH Companies.
Such confidential information shall include, but not
be limited to, information about the HRH Customers
such as customer lists, customer risk
characteristics, policy expiration dates, policy
terms, conditions and rates, information about
prospective customers, and information about the HRH
Companies such as financial data, marketing programs
and specialized insurance markets. Confidential
information may be acquired from any source during
Employee's term of employment, whether or not such
information was expressly disclosed to Employee
during the term of his employment.
Employee acknowledges that, in the course of his employment
hereunder, he will become acquainted and entrusted with the
Confidential Information which is the exclusive property of
Employer. Employee agrees and covenants that he will safeguard
the Confidential Information from exposure to, or appropriation
by, unauthorized persons, either within or outside the employment
of Employer or the HRH Companies, and that he will not, directly
or indirectly, without the prior written consent of Employer and
HRH during the term of this Agreement and any time in the three
year period following termination of this Agreement, divulge or
make any use of the Confidential Information except as may be
required in the course of his employment hereunder. Upon
termination of his employment, Employee covenants to deliver to
Employer all information and materials, including personal notes
and reproductions, relating to the Confidential Information, the
HRH Companies, and the HRH Customers, which are in his possession
or control.
5. NONPIRACY COVENANTS. For the purpose of this paragraph
5, the following terms shall have the following meanings:
"Customers" shall be limited to those customers of
Employer for whom there is an insurance policy or bond
in force or to or for whom Employer is rendering
services as of the date of termination of Employee's
employment;
"Known Customers" shall be limited to those "Customers"
with whom Employee had personal contact, or for whom
Employee handled insurance or bonds, or whose names
became known to Employee, in the course of the
performance of his employment duties for Employer;
"Prohibited Services" shall mean (i) services in the
fields of insurance or bonds or (ii) services performed
by Employer, its agents or employees in any other
business engaged in by Employer on the date of
termination of Employee's employment. "Field of
insurance" does not include title insurance, but does
include all other lines of insurance sold by Employer,
including, without limitation, property and casualty,
life, group, accident, health, disability, and
annuities;
"Prospective Customers" shall be limited to those
parties known by Employee to have been solicited for
business within any Prohibited Service within the
twelve (12) month period preceding the date of
termination of Employee's employment, by an employee
(including Employee) or agent of Employer and with or
from whom, within the twelve (12) month period
preceding the date of termination of Employee's
employment, an employee (including Employee) or agent
of Employer either had met for the purpose of offering
any Prohibited Service or had received a written
response to an earlier solicitation to provide a
Prohibited Service; and
"Restricted Period" shall mean the period of three (3)
years immediately following the date of termination of
Employee's employment.
Employee recognizes that over a period of many years the
Employer (specifically including for the purposes of this
paragraph 5 any predecessors of Employer or entities from which
it might have acquired insurance accounts) has developed, at
considerable expense, relationships with, and knowledge about,
Customers and Prospective Customers which constitute a major part
of the value of the Employer. During the course of his employment
by Employer, Employee will have substantial contact with these
Customers and Prospective Customers. In order to protect the
value of the Employer's business, Employee covenants and agrees
that, in the event of the termination of his employment, whether
voluntary or involuntary, whether with or without cause, he shall
not, directly or indirectly, for his own account or for the
account of any other person or entity, as an owner, stockholder,
director, employee, partner, agent, broker, consultant or other
participant during the Restricted Period:
(a) solicit a Customer or Prospective Customer for the
purpose of providing Prohibited Services to such Customer or
Prospective Customer;
(b) solicit a Known Customer or Prospective Customer for
the purpose of providing Prohibited Services to such Known
Customer or Prospective Customer; and
(c) accept an unsolicited invitation from a Known Customer
or Prospective Customer to provide Prohibited Services to such
Known Customer or Prospective Customer without first complying
with the provisions of paragraph 8(b) hereof.
Subparagraphs (a), (b) and (c) are separate and divisible
covenants; if for any reason any one covenant is held to be
illegal, invalid or unenforceable, in whole or in part, the
remaining covenants shall remain valid and enforceable and shall
not be affected thereby. Further, the periods and scope of the
restrictions set forth in any such subparagraph shall be reduced
by the minimum amount necessary to reform such subparagraph to
the maximum level of enforcement permitted to Employer by the law
governing this Agreement.
6. NONRAIDING OF EMPLOYEES. Employee covenants that during
his employment hereunder (including renewals) and for twelve (12)
months after termination of his employment, whether voluntary or
involuntary, with or without cause, he will not hire any
individuals who, as of the date of termination of Employee's
employment, were employees of Employer or had been preceding
Employee's termination, nor will employees of Employer within the
six (6) month period he directly or indirectly solicit, induce or
encourage any of the Employer's employees to seek employment with
any other business, whether or not Employee is then affiliated
with such business.
7. NOTIFICATION OF FORMER AND NEW EMPLOYMENT. During the
term of this Agreement and the Restricted Period specified in
paragraph 5 hereof, Employee covenants to notify any prospective
employer or joint venturer, which is a competitor of Employer
located within the Restricted Area, of this Agreement with
Employer; and if Employee accepts employment or establishes a
relationship with such competitor, Employee covenants to notify
Employer immediately of such relationship.
8. REMEDIES UPON EMPLOYEE BREACH OF AGREEMENT. If Employee
breaches any provision of this Agreement, each of Employer and
the HRH Companies reserves the right to avail itself of any
remedy available to it at law or in equity. Further, Employer
may, at its sole option, employ disciplinary procedures against
Employee for any breach, up to and including discharge.
Additionally, where allowed by law, Employer reserves the right
to offset against any sums due Employer from Employee any amounts
which may otherwise be due from Employer to Employee. Employee
acknowledges and agrees that Employer and the HRH Companies shall
be entitled to injunctive relief against Employee for any
violation by Employee paragraph 4, 5, 6 or 7 of this Agreement.
Employee agrees that the foregoing remedies shall be cumulative
and not exclusive, shall not be waived by any partial exercise or
nonexercise thereof and shall be in addition to any other
remedies available to Employer and the HRH Companies at law or in
equity.
(a) Notwithstanding the foregoing, if Employee breaches
paragraph S(a) or S(b) of this Agreement, Employer may, at its
sole option, seek liquidated damages with respect to each
Customer, Known Customer or Prospective Customer procured by or
through Employee, directly or indirectly, in violation of
paragraph S(a) or S(b) of this Agreement (with such Customers and
Known Customers being hereafter referred to as "Lost Customers"
and with such Prospective Customers being hereafter referred to
as "Lost Prospects"). Employee acknowledges that it would be
difficult to calculate damages incurred by Employer in the event
of such a breach and that the following liquidated damages
clause, when so elected by Employer, is necessary and reasonable
for the protection of Employer. Employer agrees that, if it
elects to exercise the liquidated damages provision with respect
to a Lost Customer or Lost Prospect, it shall not seek an
injunction with respect thereto if Employee pays such liquidated
damages. Employee also acknowledges that Employer may or may not
choose to exercise this liquidated damages provision and that
Employer may, at its sole option, seek injunctive relief with
respect to some Lost Customers and Lost Prospects and liquidated
damages with respect to other Lost Customers and Lost Prospects.
Finally, Employee acknowledges that he has no right whatsoever to
force Employer to exercise this liquidated damages provision, and
that such choice remains entirely Employer's.
Liquidated damages shall be calculated as follows:
A Lost Customer shall be valued at 150% of the gross revenue to
Employer in the most recent twelve (12) month period preceding
the date of loss of such account. If such Lost Customer had not
been a Customer or Known Customer of Employer for an entire
twelve (12) month period, such liquidated damages shall be 150%
of the gross revenue which would have been, in the absence of a
breach by Employee, realized by Employer in the initial twelve
(12) month period of such customer being served by Employer. A
Lost Prospect shall be valued at 150% of the gross revenue
realized in the initial twelve (12) month period of such Lost
Prospect being served by any one or more persons or entities
receiving such revenue as a result of Employee's breach.
Employee acknowledges that the foregoing damage amounts are
fair and reasonable, that an industry rule of thumb for the
valuation of an agency is 150~o of revenue and that, on the
margin, selected accounts may be worth much more than 150% of
their annual revenue to an agency.
Employee shall pay such liquidated damages to Employer
within five (5) business days after written demand therefor.
Thereafter, such liquidated damages shall bear interest at the
maximum lawful rate.
(b) If in accordance with the provisions of paragraph 5(c)
hereof, a Known Customer or Prospective Customer desires to have
Employee as its agent of record, then Employee, upon making
arrangements reasonably satisfactory to Employer for payment, may
purchase such Known Customer or Prospective Customer account from
Employer for a price equal to the price established above for a
Lost Customer or Lost Prospect, whichever is applicable. The
payment of half of such purchase price upon binding of coverage
or bonding in the first year Employee accepts such account during
the Restricted Period and of the remaining half of the purchase
price on the anniversary date in the following year is hereby
covenanted by Employer to be reasonably satisfactory to it.
Employee acknowledges that failure to pay timely for such
accounts permitted to be purchased herein pursuant to paragraphs
5(c) and 8(b) hereof shall entitle Employer to receive injunctive
relief. Employer acknowledges that payment for such accounts
permitted to be purchased by Employee pursuant to paragraphs S(c)
and 8(b) shall prohibit Employer from obtaining injunctive relief
with respect to such accounts.
(c) Employee acknowledges that a broker of record letter
written during the Restricted Period, as a result of Employee's
efforts, by a Customer, Known Customer or Prospective Customer in
favor of Employee or any person or entity with whom or which
Employee is directly or indirectly affiliated shall be prima
facie evidence of, and shall establish a rebuttable presumption
of, a violation of paragraph S of this Agreement and establishes
a rebuttable presumption in favor of Employer that paragraph 5 of
this Agreement has been violated by Employee. Further, Employee
acknowledges that he has an affirmative duty to inform such Known
Customer or Prospective Customer that he cannot accept its
business unless he pays for such business pursuant to paragraph
8(b) hereof, until
after the Restricted Period and that he must minimize all contact
with such Known Customer or Prospective Customer during the
Restricted Period.
9. TOLLING OF RESTRICTIVE COVENANTS DURING VIOLATION. If a
violation by Employee of any of the restrictive covenants of this
Agreement occurs, Employee agrees that the restrictive period of
each such covenant so violated shall be extended by a period of
time equal to the period of such violation by Employee. It is the
intent of this paragraph that the running of the restricted
period of a restrictive covenant shall be tolled during any
period of violation of such covenant so that the Employer shall
get the full and reasonable protection for which it contracted
and so that an Employee may not profit by his breach.
10. STANDARDS OF PERFORMANCE: CAUSE. In addition to the
full efforts required of Employee in paragraph 2 hereof and
notwithstanding anything herein to the contrary, Employee's
employment may be terminated or altered, immediately upon notice
to the Employee, in the discretion of Employer, prior to the
expiration (including renewals) of this Agreement, for "Cause."
For purposes hereof and without limitation Cause shall be solely
determined in good faith by Employer and shall include any
dishonest, criminal or immoral conduct or any one or more acts
having a material adverse effect on Employer or any of the HRH
Companies. Also, Employer agrees that the settlement of the
lawsuits with Xxxx Xxxxxx Touche ("ALT") and The Xxxxxxx Group
and the potential settlement of a lawsuit with Xxxx Xxxxxxx are
not factors to be considered in determining "Cause," and
specifically, the reversal of the accrual for a receivable from
ALT and the return of overpaid purchase price to ALT are not due
to Employee's doing anything wrong.
11. ATTORNEYS' FEES. In addition to any other remedies and
damages available to Employer or the HRH Companies, if Employee
violates paragraph 4, 5, 6 or 7 of this Agreement, which
violation becomes the gravamen of an action by Employer or the
HRH Companies against Employee, then Employee shall pay all costs
and fees, including attorneys' fees and costs, incurred by
Employer and the HRH Companies in enforcing such one or more
restrictive covenants.
12. DELINQUENT CUSTOMER ACCOUNTS: COLLECTION. Employer may,
at its discretion, require Employee to take any and all actions
deemed necessary by Employer to recover the balance of any
customer account sold or serviced by Employee which account has
not been paid in a timely fashion and which has not been
collected in accordance with the normal procedures of Employer
due to a violation of such procedures by Employee (with such
account being referred to as a "Delinquent Customer Account"). If
a Delinquent Customer Account exists, Employee shall be
responsible for full payment of such amounts.
13. ESSENCE OF AGREEMENT. The restrictive covenants from
Employee for the benefit of the Employer set forth herein are the
essence of this Agreement with respect to Employer agreeing to
employ Employee and each such covenant shall be construed as
independent of any other provision in this Agreement. The
existence of any claim or cause of action of the Employee against
the Employer, whether predicated on this Agreement or not, shall
not constitute a defense to the enforcement by the Employer of
any of the restrictive covenants contained herein. Employer shall
at all times maintain the right to seek enforcement of these
provisions whether or not Employer has previously refrained from
seeking enforcement of any such provision as to Employee or any
other individual who has signed an agreement with similar
provisions.
14. SEVERABILITY AND INDEPENDENCE. If any provision of this
Agreement or any part of any provision of this Agreement is
determined to be unenforceable for any reason whatsoever, it
shall be severable from the rest of this Agreement and shall not
invalidate or affect the other portions or parts of the
Agreement, which shall remain in full force and effect and be
enforceable according to their terms. Furthermore, no covenant
herein shall be dependent upon any other covenant or provision
herein, each of which covenants shall stand independently and be
enforceable without regard to the other or to any other provision
of this Agreement.
15. INTERPRETATION. There shall be no presumption that this
Agreement is to be construed against the Employer or the HRH
Companies, since Employee acknowledges that he understands all
provisions of this Agreement, that the restrictive covenants
contained herein are ancillary to an enforceable agreement and
are fair, necessary for the protection of Employer and the HRH
Companies and relatively standard to the insurance agency
industry and that he was offered the opportunity to negotiate,
alter, and amend any and all provisions of this Agreement before
executing this Agreement and legally binding himself hereto.
16. GOVERNING LAW. This Agreement shall be construed under
and governed by the laws of the State of Arizona.
17. MISCELLANEOUS.
A. Case and Gender. Wherever required by the context
of this Agreement, the singular and plural cases and the
masculine, feminine and neuter genders shall be interchangeable.
B. Nonwaiver. The waiver by HRH or Employer of a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach or as a waiver of
any other provisions of this Agreement.
C. Captions. The captions provided in this Agreement
are intended for descriptive and reference purposes only and are
not intended to limit the applicability of the terms of any
paragraph to that caption.
D. Succession and Assignment. This Agreement shall be
binding upon the parties hereto and is not assignable by
Employee. This Agreement shall inure, however, to the benefit of
Employer's successors and assigns, including, without limitation,
successor corporations by way of merger or consolidation or any
entity which purchases substantially all of the assets of
Employer.
E. Entire Agreement. This Agreement supersedes any
prior written or unwritten agreement, representation or
understanding between the Employer and Employee and represents
the entire agreement, representations and understanding between
Employer and Employee concerning the subject matter hereof.
WITNESS the following signatures.
EMPLOYER:
HILB, XXXXX AND XXXXXXXX COMPANY
OF ARIZONA
By: /s/
---------------------------------
Its:
--------------------------------
EMPLOYEE:
/s/ XXXXXXX X. XXXXX
-------------------------------------
XXXXXXX X. XXXXX
EXHIBIT A
Employee shall be paid an annual salary of $150,000, payable
semi-monthly, as earned. Future changes in compensation need not
be reflected by amendment hereto as Employer may effect such
change through signature of a payroll authorization form.
Employer shall recommend to the Compensation Committee of
the Board of Directors of HRH for consideration at the May 4,
1993, meeting that Employee be granted a nonqualified stock
option at the market price that day for 4,000 shares of HRH
stock, vesting at the rate of 800 shares for each full year of
service from the date of grant.
Employee shall also be provided with an automobile allowance
in accordance with normal guidelines for Presidents of HRH
offices.
