EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated November 10, 1995, is made
between HILB, XXXXX AND XXXXXXXX COMPANY, a Virginia
corporation ("Employer"), and XXXXXX X. XXXXX ("Employee"),
formerly a resident of Pittsburgh, Pennsylvania, and now a resident of
Richmond, Virginia.
RECITALS
WHEREAS, Employer is a publicly traded holding company for
a network of insurance agencies in the United States and Canada;
WHEREAS, Employee has since 1982 been an employee of
Employer's Pittsburgh office;
WHEREAS, Employee was named President of Employer on
February 8, 1995, and has recently moved to Richmond;
WHEREAS, Employee, as President of Employer, will have
access to sensitive knowledge about all aspects of Employers'
operations, including, without limitations, information about the
customer base and financial capabilities of each of Employer's other
offices;
WHEREAS, Employer desires to protect its operations and to
limit disclosure or use of the knowledge of each such office;
WHEREAS, Employee desires to accept employment as
President for the term specified herein, subject to the terms,
covenants and conditions specified herein; and
WHEREAS, Employer avers and Employee acknowledges that
Employer will incur substantial costs in developing, increasing,
improving, and protecting its business;
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 as its President for an initial
term of three (3) years ("Initial Term"), effective as of
January 1, 1996 ("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
ninety (90) 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 ninety (90) days
written
notice to the other of its intent to do so. If this Agreement is
terminated by either party on 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. Employee's compensation shall be reviewed by
the Compensation Committee of the Board of Directors of 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.
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 employer 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 employer.
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 Employer or any of its
subsidiary corporations (Employer and its subsidiary corporations 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:
"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 identities and lists, revenues from
customers' accounts, customer risk characteristics and
requirements, key contact personnel, financial data and
performance, payroll, policy expiration dates, policy
terms, conditions and rates, information about
prospective customers; information about the HRH
Companies such as methods of soliciting business,
documents, financial data, marketing programs and
specialized insurance markets; and nonpublic
information about Employer such as financial results and
operations and pending or threatened litigation.
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.
"Employer" shall mean Hilb, Xxxxx and Xxxxxxxx
Company, 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 and any subsidiary
of Employer; and
"HRH Customers" means the customers of the HRH
Companies, specifically including, without limitation,
"Customers" and "Prospective Customers" (each as
defined in paragraph 5).
Employee acknowledges that, in the course of his employment
hereunder, he will become acquainted and entrusted with Confidential
Information which is the exclusive property of Employer. Employee
further acknowledges that (i) Employer and the HRH Companies
derive actual and potential economic value from the Confidential
Information not being generally known to the public or to other
persons who can obtain economic value from its disclosure or use,
and (ii) Employer and the HRH Companies have expended and
currently expend substantial effort to acquire Confidential Information,
and expend substantial effort, and expect their employees to expend
substantial effort, to maintain the secrecy of the Confidential
Information. Employee agrees and covenants that he will safeguard
such 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 any 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 any 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;
"Employer" shall mean Hilb, Xxxxx and Xxxxxxxx
Company, its predecessors and successors, and each of
the subsidiary corporations of Hilb, Xxxxx and Xxxxxxxx
Company engaged in business as an insurance agency
as of the date of termination of Employee's employment;
"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, and with or from whom, within
the twelve (12) month period preceding the date of
termination of Employee's employment, someone acting
on behalf 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;
"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 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 Hilb, Xxxxx and Xxxxxxxx Company,
Employee will either have substantial contact with, or obtain
substantial knowledge about, 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 for the purpose of providing Prohibited
Services to such Customer;
(b) accept an invitation from a Customer for the purpose of
providing Prohibited Services to such Customer;
(c) solicit a Prospective Customer for the purpose of providing
Prohibited Services to such Prospective Customer; and
(d) accept an invitation from a Prospective Customer for the
purpose of providing Prohibited Services to such Prospective
Customer.
Subparagraphs (a), (b), (c) and (d) 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.
Additionally, Employee agrees that no separate geographic limitation
is needed for the foregoing nonpiracy covenants as such are not a
prohibition on Employee's employment in the insurance agency
business and are already limited to only those entities which are
included within the definition of "Customer" or "Prospective Customer."
6. NONRAIDING OF EMPLOYEES. Employee covenants that
during his employment hereunder (including renewals) and for twenty-
four (24) months after termination of his employment, whether
voluntary or involuntary, with or without cause, he 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
Employee's employment, were employees of Employer or had been
employees of Employer within the twelve (12) month period preceding
Employee's termination, nor will 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 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. If Employer
reasonably believes that Employee is affiliated or employed by or with
a competitor of Employer during the Restricted Period, then
Employee grants Employer the right to forward a copy of this
Agreement to such competitor.
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, whether for a violation of this
Agreement (such as paragraph 8 or 12 hereof) or any other obligation
or debt, 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 of 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.
Notwithstanding the foregoing, if Employee breaches
paragraph 4 or 5 of this Agreement, Employer may, at its sole option,
seek liquidated damages with respect to each Customer or
Prospective Customer procured by or through Employee, directly or
indirectly, in violation of paragraph 4 or 5 of this Agreement (with
such 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 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% 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. Employee acknowledges that a broker of
record letter granted during the Restricted Period by a 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 a violation of paragraph 5 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 Customer or Prospective Customer
that he cannot accept its business until after the Restricted Period and
that he must minimize all contact with such Customer or Prospective
Customer.
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 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.
11. 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. Further, Employee
grants to Employer the continuous and unilateral right, upon written
notice to Employee, to lessen the restrictions of any of the covenants
set forth in paragraphs 4, 5, 6 and 7 hereof by so much as Employer
deems necessary either to make this Agreement in accordance with
public policy of the Commonwealth of Virginia or to fit the
circumstances peculiar to Employee. Additionally, Employee
covenants that, during the Restricted Period, if he has any questions
about the scope or meaning of any restrictive covenants of this
Agreement, then he shall put such questions in writing to General
Counsel of Employer, who shall then endeavor to answer such
requests as soon as practicable.
12. 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.
13. 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.
14. GOVERNING LAW. This Agreement shall be construed
under and governed by the laws of the Commonwealth of Virginia.
15. 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 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.
F. WAIVER OF JURY TRIAL; PRAYER FOR
REFORMATION. EACH OF EMPLOYER AND EMPLOYEE
KNOWINGLY AND VOLUNTARILY (I) WAIVES THE RIGHT TO A
JURY TRIAL IN RESPECT OF ANY LEGAL PROCEEDINGS IN
STATE OR FEDERAL COURT ARISING IN CONNECTION
HEREWITH; AND (II) REQUESTS THAT ANY COURT OR ARBITER
BEFORE WHOM THIS EMPLOYMENT AGREEMENT IS IN
CONTROVERSY REFORM THE RESTRICTIVE COVENANTS
HEREIN, IF SUCH REFORMATION IS NECESSARY TO MAKE ANY
OF THEM ENFORCEABLE, TO THE MAXIMUM LEVEL OF
ENFORCEMENT PERMISSIBLE TO EMPLOYER AND EQUITABLE
UNDER THE CIRCUMSTANCES. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR EMPLOYER TO ENTER INTO THIS
AGREEMENT.
/s/ Xxxxxx X. Xxxx /s/ Xxxxxx X. Xxxxx
_______________________________ ________________________________
EMPLOYER EMPLOYEE
WITNESS the following signatures.
EMPLOYER:
HILB, XXXXX ANDHAMILTON COMPANY
/s/ Xxxxx X. Xxxx
By___________________________________
Chairman and CEO
Its___________________________________
EMPLOYEE:
/s/Xxxxxx X. Xxxxx
______________________________________
Xxxxxx X. Xxxxx
EXHIBIT A
At the beginning of the Initial Term, Employee shall be paid an
annual salary of $305,000, payable semi-monthly, as earned. Future
changes in compensation need not be reflected by amendment
hereto as the Compensation Committee of the Board of Directors of
Employer may cause such change to be effected through signature of
a payroll authorization form.
