Exhibit 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, effective as of the
2nd day of January, 2003, is hereby made and entered into between SCPIE
MANAGEMENT COMPANY (formerly named Physicians Insurance Management, Inc.), a
California corporation ("SCPIE Management"), and XXXXXX X. XXX ("Executive").
RECITALS
A. Executive is and has been employed for a number of years in a
senior capacity in the administration of casualty insurance, including
particularly medical professional liability insurance. Through such employment
he has acquired outstanding experience and special skills and abilities in the
management and administration of professional liability insurance programs,
including the marketing, underwriting, loss prevention and claims management
aspects of such business.
B. Because of the unique nature of the employment position involved
and the experience, skills, abilities, background and knowledge of Executive,
SCPIE Management desires to continue to retain the services of Executive for the
term of this Agreement on the terms and conditions set forth in this Agreement.
Executive desires to remain in the employ of SCPIE Management and is willing to
accept such employment on the terms and conditions set forth in this Agreement.
C. Executive originally served as the President and Chief Executive
Officer of SCPIE Management pursuant to the terms of an Employment Agreement
dated as of April 28, 1988, which was replaced by a new Employment Agreement
dated as of December 3, 1991 (the "December 1991 Agreement"). The December 1991
Agreement was amended and restated each subsequent year to extend the term and
termination provisions for a period of one additional year,
and most recently on January 2, 2002, SCPIE Management and Executive further
amended and restated the December 1991 Agreement to extend the term and
termination provisions for an additional period of one year (the "2002 Amended
and Restated Agreement"). SCPIE Management and Executive desire to further amend
and restate the 2002 Amended and Restated Agreement to extend the term and
termination provisions for an additional period of one year.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual promises and covenants set forth herein, SCPIE Management and Executive
agree as follows:
1. Employment, Duties and Term.
(a) SCPIE Management hereby hires and employs Executive, and
Executive agrees to serve as an executive of SCPIE Management under and subject
to all of the terms, conditions and provisions hereof, for the period commencing
December 3, 1991 and terminating on December 31, 2007, unless earlier terminated
pursuant to paragraph 3 hereof. Executive agrees to serve as President and Chief
Executive Officer of SCPIE Management and its parent corporation, SCPIE Holdings
Inc. ("SCPIE Holdings"), and in such other positions as may be determined by the
Board of Directors of SCPIE Management. Executive's duties shall be as
designated by SCPIE Management's Board of Directors and shall be subject to such
policies and directives as may be established or given by such Board of
Directors from time to time. Executive agrees that, as an officer of SCPIE
Management, he will faithfully serve in such capacities during the term of this
Agreement, except as herein otherwise provided. Executive further agrees to
devote his best efforts and his entire attention and energy to such service.
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2. Compensation and Benefits.
(a) SCPIE Management agrees to pay to Executive, for his
services to SCPIE Management hereunder, compensation at the initial rate of
$344,800 per annum commencing December 9, 1991. Said compensation shall be
payable in bi-weekly payments. During the term hereof, Executive's yearly
compensation rate under this paragraph 2(a) shall be increased annually
(commencing as of January 1, 1992 and continuing as of each succeeding January
1) by a percentage equal to the percentage increase (if any) in the United
States Department of Labor, Bureau of Labor Statistics Consumer Price Index for
All Items, All Urban Consumers (CPI-U), for the Los Angeles area, for the
preceding calendar year. In the event that such Index (or a successor Index) is
not available, a reliable governmental publication evaluating the information
theretofore used in determining the Index shall be used in lieu of such Index.
(Pursuant to the terms of this provision, Executive's yearly compensation rate
was increased to $593,264 as of January 1, 2001, and was also maintained by the
Board of Directors of SCPIE Management as of January 1, 2003 at that amount
before inclusion of the CPI-U adjustment of the 2002 salary level.)
(b) Annually during the term hereof, the Board of Directors of
SCPIE Management will consider whether to provide bonuses to Executive and
additional increases in Executive's compensation rate; provided, however, that
during the time that SCPIE Management is a wholly-owned subsidiary of SCPIE
Holdings, SCPIE Management shall not provide any bonuses or additional increases
in Executive's compensation rate under this paragraph unless such bonus or
increase has been specifically approved in writing by SCPIE Holdings. Additional
increases in Executive's compensation rate which are made pursuant to this
paragraph (if any) and which are in effect at the time this Agreement is
terminated, shall, for the purposes of paragraphs 3(a)(i) or (ii),
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3(c)(ii) or 3(e)(ii), be considered to be included in the compensation rate in
effect under paragraph 2(a) at the date of such termination.
(c) During the term hereof, Executive shall be entitled to
participate in such medical, dental, life and disability insurance programs,
pension and other retirement programs and other benefits as are now and may from
time to time become generally available to executives of SCPIE Management in
accordance with the then existing personnel policies of SCPIE Management. During
the term hereof, Executive shall also be entitled to one month of annual
vacation, the dates to be selected each year by Executive.
(d) During the term hereof, SCPIE Management shall pay for or
reimburse Executive for amounts incurred or advanced by him (as membership fees,
initiation fees and monthly dues) in obtaining and maintaining a membership at
the Xxxxxxxx Club, Los Angeles, California. Effective January 1, 1999, SCPIE
Management Company shall pay for the cost of a golf membership at the Riviera
Country Club, Los Angeles, California, or a comparable country club, which shall
be in the name of and become the property of Executive. Executive shall be
responsible for the dues and fees with respect to such membership. SCPIE
Management shall also pay for or reimburse Executive for such ordinary and
necessary business expenses as Executive shall from time to time incur or
advance in the performance of his duties hereunder.
(e) During the term hereof, SCPIE Management shall provide to
Executive an automobile allowance consistent with such allowance as is furnished
to executives of SCPIE Management.
(f) With respect to the payment of counsel fees for Executive,
SCPIE Management agrees to pay for such fees in connection with the drafting of
this Agreement.
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3. Termination of Service.
(a) SCPIE Management may terminate this Agreement at any time,
with or without cause, by giving 60 days' written notice to Executive. In the
event of such termination under this paragraph 3(a), SCPIE Management shall be
under no obligation except to pay to Executive his accrued and unpaid prorated
compensation up to and including the date of such termination, including earned
but unused vacation, plus either (i) in the event this Agreement is so
terminated on or prior to December 31, 2005, additional compensation equal to
the amount payable to Executive hereunder for two years at the rate in effect
under paragraph 2(a) hereof at the date of such termination, or (ii) in the
event this Agreement is so terminated after December 31, 2005, additional
compensation equal to the amount payable to Executive hereunder for one year at
the rate in effect under paragraph 2(a) hereof at the date of such termination.
Such amount (if any) payable under this paragraph 3(a) shall be payable between
the 60th day after the date of such termination and the 30th day after the first
anniversary of the date of such termination in such installments as Executive
shall specify by written notice given to SCPIE Management within ten days after
the date of such termination; provided, however, that if Executive does not give
such written notice within said ten-day period, such amount (if any) payable
under this paragraph 3(a) shall be payable in full on the 60th day after the
date of such termination.
(b) This Agreement also shall be terminated by the death of
Executive. In the event of the death of Executive during the term of this
Agreement, SCPIE Management shall be under no obligation except to pay to the
Executive's personal representative the Executive's accrued but unpaid prorated
compensation up to and including the date of his death, including earned but
unused vacation.
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(c) This Agreement shall also be terminated at such time as
Executive becomes disabled (as hereinafter defined) from performing his duties
under this Agreement in his normal and regular manner. In the event this
Agreement is terminated by such disability, SCPIE Management shall be under no
obligation except to pay to Executive (i) his accrued but unpaid prorated
compensation up to and including the date of such termination including earned
but unused vacation, plus (ii) additional compensation equal to the amount
payable to Executive hereunder for six months, at the rate in effect under
paragraph 2(a) hereof at the date of such termination. Such amount (if any)
payable under paragraph 3(c)(ii) shall be payable in equal bi-weekly payments.
Executive shall be considered "disabled" if, at the end of any month, Executive
then is and has been, either for the four consecutive full calendar months then
ending or on sixty percent or more of his normal working days during the six
consecutive full calendar months then ending, unable due to mental or physical
illness or injury to perform his duties under this Agreement in his normal and
regular manner.
(d) Executive may terminate this Agreement at any time, with or
without cause, by giving 90 days' written notice to SCPIE Management. In the
event of such termination under this paragraph 3(d), SCPIE Management shall be
under no obligation except to pay Executive his accrued but unpaid prorated
compensation up to and including the date of such termination, including earned
but unused vacation.
(e) Unless this Agreement is terminated earlier pursuant to any
of the foregoing subparagraphs of this paragraph 3, this Agreement shall
automatically terminate on December 31, 2007, and, in the event of such
termination on such date, SCPIE Management shall be under no obligation except
to pay to Executive (i) his accrued and unpaid prorated compensation up to and
including such date, including earned but unused vacation, plus (ii) additional
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compensation equal to the amount payable to Executive hereunder for one year at
the rate in effect under paragraph 2(a) hereof on December 31, 2007. Such amount
(if any) payable under paragraph 3(e)(ii) shall be payable between March 1, 2008
and January 10, 2009 in such installments as Executive shall specify by written
notice given to SCPIE Management on or before January 10, 2008; provided,
however, that if Executive does not give such written notice on or before
January 10, 2008, such amount (if any) payable under paragraph 3(e)(ii) shall be
payable in full on March 1, 2008.
(f) In the event that Executive's services hereunder are
terminated under any of the provisions of this Agreement (except by death),
Executive agrees that if at that time he is President of SCPIE Management, he
will, promptly upon the written request of the Board of Directors of SCPIE
Management, deliver his written resignation as such President to the Board of
Directors, such resignation to become effective immediately.
(g) Notwithstanding anything contained herein, Executive shall
be entitled to the payments, if any, under paragraphs 3(a), (b), (c), (d) and
(e) 0above only in the event that the termination of Executive's employment
which gives rise to such payments occurs prior to a Change in Control, as
defined in that certain letter agreement, dated as of December 14, 2000, between
SCPIE Holdings and Executive relating to severance benefits in the event of a
change in control of SCPIE Holdings.
4. Assignment and Binding Effect.
This Agreement shall not be transferable or assignable by
Executive or SCPIE Management, nor shall Executive's or SCPIE Management's
interest herein be transferred or assigned by operation of law, and any
assignment or attempted assignment, transfer, mortgage, hypothecation, or pledge
of this Agreement or of his interest herein by Executive or SCPIE
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Management shall be null and void. This provision, however, shall have no
application to transfers made by reason of the death of the Executive.
5. Arbitration.
Any controversy or claim arising out of or relating to this
Employment Agreement shall be settled by arbitration in accordance with the
Rules of the American Arbitration Association, and judgment upon the award
rendered by the Arbitrators may be entered in any Court having jurisdiction
thereof. If a controversy or claim results in an award, that award shall also
provide that the prevailing party be reimbursed by the non-prevailing party for
the prevailing party's reasonable attorneys' fees and costs incurred in
connection with the arbitration.
6. Notices.
Any notice required or permitted to be given under this Agreement
by one party hereto to the other shall be sufficient if given or confirmed in
writing, first class mail, postage prepaid, or by telegraph addressed as
respectively indicated:
To SCPIE Management: SCPIE Management Company
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Chairman of the Board
To Executive: Xxxxxx X. Xxx
c/o SCPIE Management Company
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
or to such other address as the respective parties may designate in writing to
the other designate.
7. Unique Nature of Executive's Services.
Executive is obligated under this Agreement to render services of
special, unusual, extraordinary and intellectual character, thereby giving his
Agreement peculiar value, so that the loss thereof could not be reasonably or
adequately compensated in damages or an action of
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law. In addition to other remedies provided by law, SCPIE Management shall have
the right during the term of this Agreement to compel specific performance
hereof by Executive and/or to obtain injunctive relief against the performance
of services elsewhere by Executive.
8. Withholdings.
All payments made by SCPIE Management under any provision of this
Agreement shall be subject to any deductions and withholdings required by
applicable law.
9. Governing Law.
This Agreement shall be governed by the laws of the State of
California.
10. Amendment of the December 1991 Agreement.
The 2002 Amended and Restated Agreement between Executive and
SCPIE Management is hereby amended and restated in its entirety by this Amended
and Restated Employment Agreement.
IN WITNESS WHEREOF, SCPIE Management has caused this Agreement to be
executed by its officer thereunto duly authorized and Executive has executed
this instrument, all effective as of the day and year first above written.
SCPIE MANAGEMENT COMPANY
By: /s/ Xxxxxx X. Xxxxxx
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Its: Secretary
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EXECUTIVE:
/s/ Xxxxxx X. Xxx
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Xxxxxx X. Xxx
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GUARANTY
1. FOR VALUE RECEIVED and in consideration for, and as an inducement
to Xxxxxx X. Xxx (the "Executive") concurrently entering into an Amended and
Restated Employment Agreement dated as of January 2, 2003, in place of the
Amended and Restated Employment Agreement made and entered into as of January 2,
2002 with SCPIE Management Company, SCPIE Holdings Inc. ("SCPIE Holdings")
guarantees to Executive, and his successors and assigns, the full payment by
SCPIE Management Company to Executive of the compensation required to be paid by
SCPIE Management Company to Executive under paragraph 2 and paragraphs 3(a)(i)
or (ii), 3(c)(ii) or 3(e)(ii) of said Agreement on the terms and conditions set
forth in said Agreement.
2. This Guaranty cannot otherwise be terminated or modified without
the written consent of Xx. Xxxxxx X. Xxx.
3. If any dispute arises pertaining to this Guaranty, such dispute
will be submitted to binding arbitration in accordance with the Rules of the
American Arbitration Association, and judgment upon such award rendered by the
Arbitrators may be entered in any court having jurisdiction. If the controversy
or claim results in an award, that award shall provide the prevailing party be
reimbursed by the non-prevailing party for the prevailing party's reasonable
attorneys' fees and costs incurred in connection with the Arbitration.
Executed in Los Angeles, California, as of January 2, 2003.
SCPIE HOLDINGS INC.
By /s/ Xxxxxx X. Xxxxxx
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Its: Secretary
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