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EXHIBIT 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is hereby made
and entered into this 2nd day of January, 1998, 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
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year, and most recently on January 2, 1997, SCPIE Management and Executive
further amended and restated the Agreement to extend the term and termination
provisions for an additional period of one year (the "1997 Amended and Restated
Agreement"). SCPIE Management and Executive desire to further amend and restate
the 1997 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.
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, 2002, unless earlier
terminated pursuant to paragraph 3 hereof. Executive agrees to serve as
President and Chief Executive Officer of SCPIE Management, 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 $435,200.00 as of January 1, 1997, and was also increased by
the Board of Directors of SCPIE Management as of January 1, 1998 to $475,000.00
before inclusion of the CPI-U adjustment of the 1997 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 Inc. ("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,
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for the purposes of paragraphs 3(a)(i) or (ii), 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. 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.
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
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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, 2000, 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, 2000, 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.
(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
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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, 2002, 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 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, 2002.
Such amount (if any) payable under paragraph 3(e)(ii) shall be payable between
March 1, 2003 and January 10, 2004 in such installments as Executive shall
specify by written notice given to SCPIE Management on or
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before January 10, 2003; provided, however, that if Executive does not give such
written notice on or before January 10, 2003, such amount (if any) payable under
paragraph 3(e)(ii) shall be payable in full on March 1, 2003.
(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.
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 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.
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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 X. Xxxxxxx Xxxxxxxxx Xxxxxxx Xxxxx, XX 00000 Attn: Chairman of the
Board
To SCPIE Management: SCPIE Management Company
0000 X. Xxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx, XX 00000
Attn: Chairman of the Board
To Executive: Xxxxxx X. Xxx
c/o SCPIE Management Company
0000 X. Xxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx, XX 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 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.
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10. Amendment of the December 1991 Agreement.
The 1997 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 as of the day and year first above written.
SCPIE MANAGEMENT COMPANY
By: /s/ XXXXXX X. XXXXXX
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Its: Senior V.P. & Secretary
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, 1998, in place
of the Amended and Restated Employment Agreement made and entered into as of
January 2, 1997 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, 1998.
SCPIE HOLDINGS INC.
By: /s/ XXXXXX X. XXXXXX
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Its: Senior V.P. & Secretary
