EXHIBIT 10.8
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of the 1st day of
December, 1997, by and between National Capital Reciprocal Insurance Company
("NCRIC"), National Capital Underwriters, Inc. ("Employer") and Xxxxxxx X.
Xxxxxx ("Xxxxxx").
RECITALS:
A. Employer, for itself and on behalf of NCRIC and its subsidiaries,
National Capital Insurance Brokerage, Ltd., and NCRIC Agency, Inc.
(collectively, the "Affiliated Companies"), desires to retain Xxxxxx as its
Senior Vice President of Marketing & Underwriting; and
X. Xxxxxx desires to continue such employment, on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
set forth herein, the parties hereto agree as follows:
1. EMPLOYMENT.
Employer hereby agrees to continue to employ Xxxxxx for a term of three (3)
years from the effective date of this Agreement as Senior Vice President of
Marketing & Underwriting and to perform such other duties as may be assigned
under the conditions hereinafter specified. Xxxxxx accepts this employment
under the conditions hereinafter specified and agrees to devote his best
efforts, energies, and abilities to the service of Employer on a full-time
basis.
2. DUTIES.
X. Xxxxxx shall serve as Senior Vice President of Marketing & Underwriting
of Employer and in such other commensurate executive capacities of Employer
and/or any one or more of the Affiliated Companies as he may from time to time
be assigned by Employer or elected in accordance with direction from the Board
of Directors. Xxxxxx shall perform all of his duties diligently and faithfully.
However, it is understood and agreed that Xxxxxx shall not receive compensation
beyond that specified herein for services provided to the Affiliated Companies.
X. Xxxxxx shall at all times devote his entire working time, attention,
energies, efforts, and skills to the business of Employer, and shall not,
directly or indirectly, engage in any other business activity, whether or not
for profit, gain, or other pecuniary advantages, without the express written
permission of Employer. Notwithstanding the foregoing, Xxxxxx may serve on the
board of directors of any non-competing company and receive compensation
therefor provided he obtains the advance written approval of Employer, which
shall not be unreasonably withheld, and provided that any such service does not
adversely affect his performance of his duties for Employer. Xxxxxx will not be
required to account to Employer for any compensation he may receive for such
approved service on the board of directors of a non-competing company, and such
compensation shall not diminish in any way the compensation or benefits to which
he is entitled under this Agreement.
3. COMPENSATION.
Employer shall pay Xxxxxx basic compensation of One Hundred Fifty Thousand
Dollars ($150,000.00) per year, payable in equal bi-weekly installments. Any
incentive compensation which may be paid to Xxxxxx from time to time shall have
no impact upon Xxxxxx' basic compensation.
4. BENEFITS.
A. RETIREMENT AND/OR PENSION PLAN(S). Xxxxxx shall be entitled to
participate in any retirement and/or pension plan(s) offered to Employer's
senior executives and/or key management employees as a group in accordance with
the terms of such plan(s), as they may be modified at Employer's discretion from
time to time.
B. AUTOMOBILE ALLOWANCE. Employer shall pay Xxxxxx a monthly allowance
of $700.00 for his use in operating and maintaining an automobile necessary in
connection with the performance of his duties hereunder with any expenses not
covered by said $700.00 allowance being the sole responsibility of Xxxxxx.
C. HEALTH AND MEDICAL INSURANCE. Xxxxxx shall be entitled to participate
in any health and medical insurance plan(s) offered to Employer's senior
executives and/or key management employees as a group in accordance with the
terms of such plan(s), as they may be modified at Employer's discretion from
time to time.
D. PAID SICK LEAVE. Xxxxxx shall accrue one (1) day of paid sick leave
per month, up to a maximum of twelve (12) days of paid sick leave at any given
time. All accrued, but unused, paid sick leave shall be forfeited upon
termination of employment.
E. PAID VACATION. Xxxxxx shall accrue four weeks of paid vacation during
each calendar year; however, in no event shall Xxxxxx use more than three weeks
at any one time. Accrued, but unused, paid vacation in excess of ten days
shall expire on December 31st of the year in which it accrues. No more than ten
days of accrued, but unused, paid vacation may be carried over from one year to
the next. All accrued, but unused, paid vacation is forfeited upon termination
of employment by either party; provided, however, that if Xxxxxx provides
advance notice of his intent to terminate his employment in accordance with
paragraph 7 of this Agreement, Employer shall pay him for all of his accrued,
but unused, paid vacation, less standard withholdings and deductions.
F. LIFE INSURANCE. Employer shall procure a term life insurance policy
in a face amount of no less than twice the amount of Xxxxxx' annual base
compensation provided that Xxxxxx is insurable at standard rates. Xxxxxx shall
be entitled to designate the beneficiary or beneficiaries of such policy in his
sole discretion. In the event that Xxxxxx is not insurable at standard rates,
and desires to be insured, Xxxxxx shall be responsible for payment of any
premiums or amounts charged in excess of the standard rates for such insurance.
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G. DISABILITY INSURANCE. Xxxxxx shall be entitled to participate in any
disability income insurance policy (both long and short term) offered to
Employer's senior executives and/or key management employees as a group in
accordance with the terms of such policies(s), as they may be modified at
Employer's discretion from time to time. In the event that any disability
income insurance policy provided by Employer shall require any waiting or
elimination period during which Xxxxxx is not entitled to collect disability
income insurance payments even though he is disabled from working, then during
such waiting or elimination period, until the commencement of payments under the
disability income insurance policy, Employer shall pay Xxxxxx a supplemental
disability income benefit equal to his regular bi-weekly salary. If, and when,
Xxxxxx should begin to receive disability payments under the terms of Employer's
disability income insurance policy then in force, Employer agrees to supplement
said monthly disability payments by paying to Xxxxxx the difference between such
sums paid by the disability insurer and Xxxxxx' compensation set forth in
Section 3 above for a maximum period of twelve (12) consecutive months.
Following expiration of said twelve (12) months, the coverage and provisions of
Employer's disability income insurance policy shall constitute the entire wage
continuation plan provided in this Agreement and, except for the payment of the
premiums on such policy, Employer shall have no further liability to Xxxxxx for
wage continuation. It is further understood that Xxxxxx' employment with
Employer shall be terminated following twelve (12) consecutive months of total
disability (i.e., being unable to carry out the normal functions and
requirements of his position with Employer) regardless of how and when the
aforementioned disability income payments from Employer's disability income
insurance policy may be paid or due to Xxxxxx.
5. EXPENSES.
A. BUSINESS EXPENSES. Employer shall reimburse Xxxxxx for ordinary,
necessary, and reasonable business expenses incurred by him in the discharge of
his duties hereunder, including but not limited to travel, lodging and
entertainment expenses, provided Xxxxxx furnishes appropriate documentation for
such expenses and that said expenses are in accordance with the company's then
prevailing policies and procedures regarding said expenditures.
B. CONTINUING EDUCATION EXPENSES. Employer shall pay the ordinary and
necessary costs associated with continuing education classes or continuing
education programs Xxxxxx participates in which are related to the company's
business interests, provided Xxxxxx furnishes appropriate documentation to
Employer for such costs and gives the Chief Executive Officer of Employer
reasonable notice of any expenditures for continuing education. All such
expenses in excess of One Thousand Dollars ($1,000) must be approved by the
Chief Executive Officer in advance.
C. CLUB DUES. Employer shall pay up to Twenty Thousand Dollars ($20,000)
in initiation fees and $2,500 in annual membership dues as reimbursement for
Xxxxxx' membership in one country club. Employer shall not pay or reimburse
Xxxxxx for any non-mandatory costs associated with such membership, including
but not limited to food, beverage and entertainment costs, greens fees, and
court fees, unless Xxxxxx is otherwise entitled to reimbursement of such costs
pursuant to paragraph 5(a) of this Agreement.
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D. PROFESSIONAL DUES. Employer agrees to pay Xxxxxx' annual dues to the
American College of Health Care Executives.
E. EFFECT OF TERMINATION OF EMPLOYMENT: All payment or reimbursement of
expenses authorized by Section 5 hereof shall cease upon Xxxxxx' termination of
employment regardless of cause for said termination.
6. TERMINATION OF EMPLOYMENT BY EMPLOYER.
A. TERMINATION FOR CAUSE. The employment of Xxxxxx under this Agreement,
and the term hereof, may be terminated for "cause" by Employer at any time upon
the occurrence of any one or more of the following events:
(i) Xxxxxx' fraud, dishonesty, gross negligence or willful misconduct in
the performance of his duties hereunder, including willful failure to
perform such duties as may properly be assigned him hereunder; or
(ii) Xxxxxx' material breach of any provision of this Agreement.
Any termination by reason of the foregoing shall not be in limitation of
any right or remedy which Employer may have under this Agreement or otherwise.
Should Xxxxxx dispute whether Employer possessed legitimate "cause" in
accordance herewith, then in such event the procedures set forth in paragraph 17
of this Agreement shall be followed to resolve that issue. If Employer
terminates Xxxxxx' employment for "cause" pursuant to this subparagraph 6(a)
(and such termination is decided to be just by an arbitrator appointed for that
purpose in accordance with the provisions herein), his right to any
compensation, including but not limited to severance pay, shall cease
immediately.
B. TERMINATION WITHOUT CAUSE.
(i) Employer may terminate Xxxxxx' employment without cause and without
notice at any time.
(ii) If Employer terminates Xxxxxx' employment without cause, and Xxxxxx
waives all claims against Employer, the Affiliated Companies, and their
predecessors, successors, assigns, directors, officers, partners, agents,
employees, former employees, heirs, executors, attorneys, and administrators
relating to or arising out of his employment or the termination of his
employment by executing a General Release of such claims in a form provided to
him by Employer, Xxxxxx shall receive, as severance pay, an amount equal to two
(2) years salary at the salary rate in effect on the date of termination,
exclusive of benefits and less standard withholdings and deductions. Such
amount shall represent agreed-upon liquidated damages for any loss, cost,
expense, or damages suffered as a result of such termination, as well as
consideration for Xxxxxx' execution of a General Release of all claims against
Employer and the Affiliated Companies. Employer shall pay such amount to Xxxxxx
in equal monthly installments over a one year period commencing on the date of
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termination. Any payment pursuant to the preceding sentence shall be in lieu of
any other compensation which might otherwise be due Xxxxxx under this Agreement.
(iii) If a "Change of Control" of Employer's business occurs, Employer
shall be deemed to have terminated Xxxxxx' employment without cause for the
purposes of this paragraph. "Change of Control" shall be deemed to have
occurred if: (1) Employer merges with or consolidates with, or sells, leases, or
otherwise transfers all or substantially all of its assets to another entity
(which for the purpose of this Agreement shall include the sale or transfer of
fifty percent or more of the ownership of Employer, but only if such sale shall
be made to an entity not affiliated with Employer); and (2) a material change in
the nature, terms, or conditions of Xxxxxx' employment occurs, including but not
limited to a material change in his duties, authority, responsibilities, or job
location. However, in no event shall it be deemed a "change of control" should
Employer (or NCRIC) elect to change its business form by converting to a stock
company pursuant to a mutual holding company or demutualization law (or similar
act) so long as no material change in the nature, terms, or conditions of
Xxxxxx' employment occurs along therewith.
7. TERMINATION OF EMPLOYMENT BY XXXXXX.
Xxxxxx may voluntarily terminate his employment with Employer provided that
he gives Employer three (3) months prior notice of such termination or pays
Employer liquidated damages equal to the amount of three (3) months basic
compensation at the basic compensation rate in effect on the date Xxxxxx gives
Employer notice of his intent to terminate his employment. It is agreed that
such liquidated damages are to compensate Employer for injury by reason of
Xxxxxx' termination of his employment and not as a penalty, it being impossible
to ascertain or estimate the entire or exact cost, damages, or injury that
Employer may sustain by reason of such termination. Xxxxxx shall have the right
to terminate his employment hereunder without paying Employer liquidated damages
and without in any way affecting his right to compensation or reimbursement
(including, but not limited to, the right to receive severance payments set
forth in this Agreement), or any other right under this Agreement, if Employer
commits a material breach of the terms and conditions of this Agreement and such
breach is not cured within sixty (60) days of Employer receiving written notice
of such breach from Xxxxxx.
8. PROTECTION OF EMPLOYER
A. CONFIDENTIAL INFORMATION.
Xxxxxx shall not at any time during or after his employment with Employer
directly or indirectly disclose, discuss, divulge, copy, or otherwise suffer
confidential information of Employer or the Affiliated Companies to be used,
except as required by the performance of his duties hereunder. For the purposes
of this Agreement, "confidential information" shall mean all information
disclosed to Xxxxxx by Employer or the Affiliated Companies, or known by him as
a consequence of or through his employment with Employer, where such information
is not generally known in the trade or industry, and where such information
refers or relates in any manner whatsoever to the business activities,
processes, services or products of Employer or the Affiliated Companies. Such
information includes, but is not limited to, Employer's or the Affiliated
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Companies' business and development plans (whether contemplated, initiated, or
completed), development sites, business contacts, customer lists, actuarial
tables, loss data, marketing information, policy forms, contracts, research of
any kind, methods of operation, results of analysis, business forecasts,
financial data, costs, revenues, and similar information. Upon termination of
this Agreement, Xxxxxx shall immediately return to Employer all of its property,
and all copies thereof, including without limitation all confidential
information which has been reduced to tangible form, in his possession, custody,
or control.
B. COVENANT NOT TO COMPETE.
Xxxxxx agrees that he shall not, during his employment and for a period of
one (1) year after the termination of his employment for any reason, directly or
indirectly, either as an officer, director, employee, agent, adviser,
consultant, principal, stockholder, partner, owner, or in any other capacity, on
his own behalf or otherwise, in any way engage in, represent, be connected with
or have a financial interest in, any other insurance company, or any
corporation, firm, association, or other business entity which is, or to the
best of Xxxxxx' knowledge, is about to become, engaged in the same or similar
business as Employer or any of its Affiliated Companies and which otherwise
competes with or is about to compete with Employer or any of its Affiliated
Companies in the District of Columbia or any states where NCRIC or any of its
Affiliated Companies operate, has plans to operate, or are licensed to operate.
Xxxxxx' ownership of not more than one percent (1%) of the stock of any publicly
traded corporation shall not be deemed a violation of this covenant. Xxxxxx
agrees that the restrictions imposed upon him by the provisions of this
paragraph are fair and reasonable considering the nature of Employer's business,
and are reasonably required for the protection of Employer.
C. REMEDIES AND ACKNOWLEDGMENT OF REASONABLENESS.
Xxxxxx acknowledges that compliance with this paragraph is necessary for
the protection of the goodwill and other proprietary interests of Employer, and
that, after carefully considering the extent of the restrictions upon him and
the rights and remedies conferred upon Employer under this paragraph, the same
are reasonable in time and territory, are designed to eliminate competition
which otherwise would be unfair to Employer, do not stifle the inherent skill
and experience of Xxxxxx, would not operate as a bar to Xxxxxx' sole means of
support, are fully required to protect the legitimate interests of Employer, and
do not confer a benefit upon Employer disproportionate to the detriment to
Xxxxxx.
Xxxxxx further acknowledges and agrees that in the event of a breach of
this paragraph, Employer would not have an adequate remedy at law because the
damages flowing from such breach would not be readily susceptible of measurement
in monetary terms and that Employer shall be entitled to injunctive relief and
may obtain a temporary order restraining against any threatened breach or future
breach in addition to any other remedies that may be available at law or equity.
Nothing in this paragraph shall be deemed to limit Employer's remedies at law or
in equity for breach of this or any other paragraph of this Agreement.
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9. DEATH OR INCAPACITATION.
In the event that Xxxxxx dies or, due to a physical or mental impairment,
becomes unable to perform the essential functions of his position with or
without reasonable accommodation, this Agreement shall be deemed terminated and
Xxxxxx or his estate, as the case may be, shall be entitled to no further
salary, compensation, or benefits hereunder, except (i) any unpaid salary,
incentive payments, and vacation accrued and earned by Xxxxxx up to and
including the date of such termination, and (ii) any disability, life insurance,
or other benefits to which Xxxxxx or his estate may be entitled on the date of
such termination in accordance with the terms and conditions of this Agreement,
including but not limited to paragraph 4(g) hereof, and any applicable benefit
plan(s) as set forth in official plan documents.
10. ASSIGNMENT.
This Agreement is a personal service agreement and neither party shall have
the right to assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other party. Notwithstanding the
foregoing, if NCRIC changes its form of business or ceases to contract with
Employer, Employer shall assign this Agreement to NCRIC or any successor of
NCRIC. Pursuant to paragraph 21 hereof, NCRIC shall continue to guarantee
payment and performance of all obligations of Employer or Employer's assignee,
unless the parties agree otherwise in writing.
11. NOTICES.
All notices required or permitted hereunder shall be in writing and shall
be deemed properly given if delivered personally or sent by certified or
registered mail, postage prepaid, return receipt requested. If mailed to
Employer, such notices shall be addressed in care of National Capital
Underwriters, Inc., at its principal place of business, attention: Chief
Executive Officer, or at such other address as Employer may hereafter designate
in writing to Xxxxxx. If mailed to Xxxxxx, such notices shall be addressed to
him at his home address last known on the records of Employer, or at such other
address as Xxxxxx may hereafter designate in writing to Employer.
12. SUCCESSORS BOUND.
This Agreement shall bind and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, estates, and permitted
successors and assigns.
13. WAIVER.
No provision hereof may be waived, except by a written instrument signed by
the party against whom such waiver is sought to be enforced. The failure or
waiver of either party hereto at any time, or from time to time, to require
performance by the other party of such other party's obligation hereunder, shall
not deprive that party of the right to insist upon strict adherence to such
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obligation at any subsequent time. Each party hereto agrees that any waiver of
its rights arising out of any breach of this Agreement by the other party shall
not be construed as a waiver of any subsequent breach.
14. AMENDMENT.
No provision hereof may be altered or amended, except by a written
instrument signed by the party against whom such alteration or amendment is
sought to be enforced.
15. CONFIDENTIALITY.
Except as otherwise agreed between the parties, each party agrees to
maintain the confidentiality of this Agreement, provided, however, that either
party may disclose provisions of this Agreement to others for the purpose of
protecting or enforcing their respective rights hereunder.
16. GOVERNING LAW.
The parties agree that this Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
District of Columbia, without regard to the principles of conflict of laws
thereof.
17. ARBITRATION.
(a) Whenever a "dispute" arises between the parties concerning this
Agreement (other than a dispute arising under paragraph 8 hereof) or their
employment relationship, including without limitation the termination thereof,
the parties shall use their best efforts to resolve the "dispute" by mutual
agreement.
(b) If such a "dispute" cannot be so resolved by the parties best efforts,
the parties agree to participate in mediation of the "dispute" with a mediator
designated by the American Arbitration Association ("AAA") or any other mediator
on whom the parties agree. The costs, if any, of the mediator shall be paid by
Employer.
(c) If such a "dispute" cannot be so resolved by mediation, it shall be
submitted to final and binding arbitration to the exclusion of all other avenues
of relief. For the purposes of this paragraph, the term "dispute" means all
controversies or claims relating to terms, conditions, or privileges of
employment, including without limitation claims for breach of contract,
discrimination, harassment, wrongful discharge, misrepresentation, defamation,
emotional distress, or any other personal injury, but excluding claims for
unemployment compensation or worker's compensation. The dispute shall be
submitted to the Washington, D.C. office of the American Arbitration Association
("AAA") and adjudicated in accordance with AAA's National Rules for the
Resolution of Employment Disputes then in effect, except that the parties to
such arbitration shall be entitled to engage in pre-hearing discovery, to the
extent permitted by and according to the provisions of the Federal Rules of
Civil Procedure. The decision of the Arbitrator must be in writing and shall be
final and binding on the parties, and judgment may be entered on the
arbitrator's award in any court
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having jurisdiction thereof. In addition to any relief granted by the
arbitrator, the prevailing party shall be entitled to recover reasonable
attorney's fees and costs from the non-prevailing party. The Arbitrator shall be
deemed to possess the powers to issue mandatory orders and restraining orders in
connection with such arbitration; provided, however, that nothing in this
paragraph shall be construed so as to deny Employer the right and power to seek
and obtain injunctive relief in a court of equity for any breach or threatened
breach by Xxxxxx of any of the provisions contained in paragraph 8 of this
Agreement. This paragraph shall survive the termination of this Agreement.
18. SEVERABILITY.
In the event that any provision of this Agreement conflicts with the law
under which this Agreement is to be construed, or if any such provision is held
invalid or unenforceable by a court of competent jurisdiction or an arbitrator,
such provision shall be deleted from this Agreement and the Agreement shall be
construed to give full effect to the remaining provisions thereof.
19. HEADINGS AND CAPTIONS.
The paragraph headings and captions contained in this Agreement are for
convenience only and shall not be construed to define, limit or affect the scope
or meaning of the provisions hereof.
20. ENTIRE AGREEMENT.
This Agreement contains and represents the entire agreement of the parties
and supersedes all prior agreements, representations, or understandings, oral or
written, express or implied with respect to the subject matter hereof. This
Agreement may not be modified or amended in any way unless in a writing signed
by both Xxxxxx and the Chief Executive Officer of Employer. No representation,
promise or inducement has been made by either party hereto that is not embodied
in this Agreement, and neither party shall be bound or liable for any alleged
representation, promise, or inducement not specifically set forth herein.
21. GUARANTEE.
Inasmuch as Employer's sole corporate purpose is to serve as NCRIC's
Attorney-in-Fact under a contract without extended duration, NCRIC enters into
this Agreement for the sole purpose of guaranteeing the payment and performance
of all of the obligations of Employer hereunder.
22. EFFECTIVE DATE OF AGREEMENT.
This Agreement shall take effect only when it has been executed by all
parties, but when executed and approved shall be enforceable as of December 1,
1997.
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement on
the date and year first written above.
EMPLOYER:
NATIONAL CAPITAL UNDERWRITERS, INC.
By: /s/R. Xxx Xxxx, Xx.
---------------------------------
R. Xxx Xxxx, Xx.
Chief Executive Officer
XXXXXX:
/s/Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx
PAYMENT AND PERFORMANCE OF EMPLOYER GUARANTEED:
NATIONAL CAPITAL
RECIPROCAL INSURANCE COMPANY
By: /s/Xxxxxx X. Xxxxxxxx, M.D.
--------------------------------
Xxxxxx X. Xxxxxxxx, M.D.
Chairman of the Board of Governors
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