Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of the 1st day of
March, 1998, by and between LandAmerica Financial Group, Inc., a Virginia
corporation (the "Company"), and Xxxxxxx X. Xxxxxx, Xx. (the "Executive").
WITNESSETH:
WHEREAS, pursuant to the terms of that certain Stock Purchase
Agreement, as amended (the "Stock Purchase Agreement"), dated August 20, 1997,
by and among Lawyers Title Corporation ("LTC"), Lawyers Title Insurance
Corporation, Reliance Insurance Company ("RIC") and Reliance Group Holdings,
Inc., LTC agreed to purchase all of the issued and outstanding shares of
Commonwealth Land Title Insurance Company and Transnation Title Insurance
Company from Reliance Insurance Company (the "Acquisition"); and
WHEREAS, following the consummation of the Acquisition, LTC was renamed
LandAmerica Financial Group, Inc.; and
WHEREAS, prior to the Acquisition, the Executive was employed by LTC;
and
WHEREAS, the Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to maintain the services of the Executive for the benefit of the Company and to
encourage the Executive's full attention and dedication to the Company and to
provide the Executive with compensation and benefits arrangements which ensure
that the compensation and benefits expectations of the Executive will be
satisfied and which are competitive with those of other corporations.
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth in this Agreement, the Company and the Executive agree as follows:
1. Certain Definitions. (a) The term "affiliated companies" shall
include any company controlled by, controlling or under common control with the
Company.
(b) Every capitalized term used herein, but not otherwise
defined herein, shall have the meaning ascribed to such term in the Stock
Purchase Agreement.
2. Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company, in accordance with the terms and provisions of this Agreement,
for the period commencing on March 1, 1998 and ending on the third anniversary
thereof (the "Employment Period"), unless this Agreement is earlier terminated
pursuant to Section 10 below.
3. Terms of Employment. (a) Position and Duties. During the Employment
Period, and excluding any periods of vacation and leave to which the Executive
is entitled, the Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the Company and, to the
extent necessary to discharge the responsibilities assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to perform faithfully
and efficiently such responsibilities. During the Employment Period it shall not
be a violation of this Agreement for the Executive to (A) serve on corporate,
civic, charitable, title insurance industry association or professional
association boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (C) manage personal
investments, so long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the Company in
accordance with this Agreement.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary of five hundred
thousand dollars ($500,000.00) (the "Annual Base Salary"), which shall be paid
in equal installments on a semi-monthly basis. The Annual Base Salary shall be
reviewed at least annually and may be increased at any time and from time to
time, but in no event shall the Annual Base Salary be reduced. The Annual Base
Salary shall not be reduced after any such increase and the term Annual Base
Salary as utilized in this Agreement shall refer to the Annual Base Salary as so
increased.
(ii) Annual Bonus. In addition to the Annual Base
Salary, the Executive shall be entitled to an annual bonus (the "Annual Bonus")
as established by the Compensation Committee of the Board (the "Compensation
Committee"). Each such Annual Bonus shall be paid no later than the end of the
third month of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive shall elect to defer the receipt
of such Annual Bonus pursuant to a Company deferral plan. In the event that this
Agreement is terminated prior to the close of the Employment Period pursuant to
either Section 4 or 10 below, the Compensation Committee, in its sole discretion
following a review of all relevant factors, may award the Executive a pro-rata
portion of the Annual Bonus measured to the date of termination for any partial
year completed, or the entire Annual Bonus if Executive terminates as of the
close of the fiscal year.
(iii) Annual Stock Options. The Executive may receive
annual stock options as provided at the discretion of the Compensation
Committee.
(iv) Incentive, Savings and Retirement Plans. During
the Employment Period, the Executive shall be entitled to participate in all
incentive (including, without limitation, stock incentive), savings and
retirement plans, practices, policies and programs applicable generally to other
peer executives of the Company and its affiliated companies. For all purposes of
this Agreement, the term "peer executives" means the most senior executives of
the Company.
(v) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the case may be, shall
be eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life, accidental
death and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated companies.
(vi) Supplemental Pension Plan. During the Employment
Period, the Executive shall be entitled to participate in the Lawyers Title
Insurance Corporation 1995 Benefit Restoration Plan, as such plan may be amended
from time to time, to the extent applicable generally to other peer executives
of the Company and its affiliated companies.
(vii) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all reasonable
employment expenses incurred by the Executive in accordance with the policies in
effect generally at any time with respect to other peer executives of the
Company and its affiliated companies.
(viii) Fringe Benefits. During the Employment Period,
the Executive shall be entitled to fringe benefits in accordance with the plans,
practices, programs and policies of the Company and its affiliated companies in
effect generally at any time with respect to other peer executives of the
Company and its affiliated companies.
(ix) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to personal secretarial and other
assistance as provided generally at any time to other peer executives of the
Company and its affiliated companies.
(x) Deferred Compensation. During the Employment
Period, the Executive shall be entitled to deferred compensation benefits in
accordance with the plans, practices, programs and policies of the Company and
its affiliated companies in effect generally at any time with respect to other
peer executives of the Company and its affiliated companies.
(xi) Vacation. During the Employment Period, the
Executive shall be entitled to a minimum of four weeks paid vacation in
accordance with the plans, policies, programs and practices of the Company and
its affiliated companies as in effect generally at any time with respect to
other peer executives of the Company and its affiliated companies.
(xii) Financial, Tax and Estate Planning Allowance.
During the Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive for the
purpose of personal financial, tax and estate planning, up to a maximum amount
of ten thousand dollars ($10,000.00) for fiscal year 1998, and five thousand
dollars ($5,000.00) per fiscal year thereafter, in accordance with the policies
in effect generally at any time with respect to other peer executives of the
Company and its affiliated companies.
4. Termination of Employment. (a) Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive, as defined in the Company's long-term disability plan, has
occurred during the Employment Period, it may give to the Executive written
notice in accordance with Section 11(b) of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such notice
by the Executive (the "Disability Effective Date"), provided that, within the
thirty (30) days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties.
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean (i) a material breach by the Executive of the
Executive's obligations under Section 3(a) (other than as a result of incapacity
due to physical or mental illness) which is demonstrably willful and deliberate
on the Executive's part, which is committed in bad faith or without reasonable
belief that such breach is in the best interests of the Company and which is not
remedied in a reasonable period of time after receipt of written notice from the
Company specifying such breach or (ii) the conviction of the Executive of a
felony involving moral turpitude.
(c) Good Reason. The Executive's employment may be terminated
during the Employment Period by the Executive for Good Reason. For purposes of
this Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent generally with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities as
contemplated by Section 3(a) or any other action by the Company which results in
a diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Section 3(b), other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this Agreement;
or
(iv) any failure by the Company to comply with and
satisfy Section 9(c), provided that such successor has received at least ten
days prior written notice from the Company or the Executive of the requirements
of Section 9(c).
For purposes of this Section 4(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 11(b).
For purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than fifteen (15) days after
the giving of such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which contributes to
a showing of Good Reason or Cause shall not waive any right of the Executive or
the Company hereunder or preclude the Executive or the Company from asserting
such fact or circumstance in enforcing the Executive's or the Company's rights
hereunder.
(e) Date of Termination. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.
5. Obligations of the Company upon Termination. (a) Good Reason; Other
than for Cause or Disability. If, during the Employment Period, the Company
shall terminate the Executive's employment other than for Cause or Disability or
the Executive shall terminate employment for Good Reason:
(i) All stock options held by the Executive on the
Date of Termination shall vest and be immediately exerciseable.
(ii) This Agreement shall terminate and the Executive
shall receive, until the end of the initial employment term, (i) his Annual Base
Salary; plus (ii) one-half (1/2) of the sum of the highest Annual Bonus paid for
any two (2) fiscal years in the five (5) fiscal years immediately preceding that
year in which the Date of Termination occurs.
(b) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate and the Executive shall receive, until the end of the
initial employment term, (i) his Annual Base Salary; plus (ii) one-half (1/2) of
the sum of the highest Annual Bonus paid for any two (2) fiscal years in the
five (5) fiscal years immediately preceding that year in which the Date of
Termination occurs.
(c) Cause; Other than for Good Reason or Death. If the
Executive terminates employment during the Employment Period, excluding a
termination for Good Reason, or if the Executive's employment shall be
terminated for Cause or by reason of the Executive's death during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive his Annual Base
Salary through the Date of Termination plus the amount of any compensation
previously deferred by the Executive and vested on the Date of Termination.
6. Nonexclusivity of Rights. Except as provided in Section 5, nothing
in this Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliated companies and for which the Executive may qualify, nor
shall anything herein limit or otherwise affect such rights as the Executive may
have under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
7. Limitation of Benefits. It is the intention of the parties that
payments to be made to the Executive pursuant to Section 5 shall not constitute
"excess parachute payments" within the meaning of Section 280G of the Code and
any regulations thereunder. If the independent accountants serving as auditors
for the Company on the Effective Date (or any other accounting firm designated
by the Company) determine that any payment or distribution by the Company to or
for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise) would be
nondeductible by the Company under Section 280G of the Code (and any successor
provision) as amended from time to time, then the amounts payable or
distributable under this Agreement will be reduced to the maximum amount which
may be paid or distributed without causing such payments or distributions to be
nondeductible. The determination shall take into account (a) whether the
payments or distributions are "parachute payments" under Section 280G, (b) the
amount of payments and distributions under this Agreement that constitute
reasonable compensation, and (c) the present value of such payments and
distributions determined in accordance with Treasury Regulations in effect from
time to time. The Executive shall have the right to designate which payments or
distributions will be reduced.
8. Restrictive Covenants.
(a) Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or except as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it.
(b) Ownership of Information. The Executive acknowledges and
agrees that all memoranda, notes, reports, records and other documents made or
compiled by the Executive, or made available to the Executive during the term of
his employment concerning the business of the Company or any of its affiliated
companies, shall be the Company's property and shall be delivered to the Company
upon the termination of the Executive's employment hereunder or at any other
time upon request by the Board.
(c) Non-Competition. The Executive agrees that, for so long as
he is employed by the Company and for one (1) year after the termination of the
Executive's employment with the Company, he will not, without the prior written
consent of the Company, directly or indirectly, engage in or have an interest in
(as owner, partner, shareholder, employee, director, officer, consultant or
otherwise), with or without compensation, any business which is in competition
with the lines of business actually being conducted by the Company during the
term of employment or on the date that the employment terminates. Nothing
herein, however, will prohibit the Executive from acquiring or holding not more
than five percent (5%) of any class of publicly traded securities of any such
business, provided that such securities entitle the Executive to no more than
five percent (5%) of the total outstanding votes entitled to be cast by
security-holders of such business in matters in which such security-holders are
entitled to vote.
(d) Non-Interference. (i) The Executive agrees and covenants
that, for a period of one (1) year after the Date of Termination of this
Agreement, the Executive shall not, without the prior written approval of the
Board, Interfere directly or indirectly in any way with the Company or any of
its affiliated companies.
(ii) For purposes of this Agreement, "Interfere"
shall mean, to solicit, entice, persuade, induce, influence or attempt to
influence, directly or indirectly, clients or Prospective Clients, employees,
agents or independent contractors of the Company or any of its affiliated
companies to restrict, reduce, sever or otherwise alter their relationship with
the Company or any of its affiliated companies.
(iii) For purposes of this Agreement, "Prospective
Clients" shall mean persons or entities identified by the Company as prospective
clients of the Company or any of its affiliated companies within twelve (12)
months of the Date of Termination and with whom the Company or such affiliated
companies have had contact.
(e) Severability and Reduction in Scope of Provisions. The
covenants and agreements of the Executive contained in paragraphs (a) through
(d) above are separate and distinct covenants and agreements of the Executive
and if any part of any such paragraph is void, invalid or unenforceable, such
paragraph shall be severed from this Agreement and shall not affect or impair
any other paragraph or the balance of this Agreement, and this Agreement with
the void, invalid or unenforceable paragraph stricken herefrom shall remain in
full force and effect. Further, the periods and scope of the restrictions set
forth in any such paragraph or subparagraph shall be reduced by the minimum
amount necessary to reform such paragraph or subparagraph to the maximum level
of enforcement permitted to the Company by the law governing this Agreement, if
such reform is permitted.
(f) Remedy for Breach. The Executive acknowledges that the
Company and its affiliated companies or any one of them will be irrevocably
damaged if all of the provisions of this Section 8 are not specifically
enforced. Accordingly, the Executive agrees that, in addition to any other
relief to which the Company may be entitled, any one of the Company or its
affiliated companies will be entitled to seek and obtain injunctive relief from
a court of competent jurisdiction for the purpose of restraining the Executive
from any actual or threatened breach of this Section 8.
(g) Validity of Covenant. The Executive agrees that the
covenants contained in this Section 8 are reasonably necessary to protect the
legitimate interests of the Company and its affiliated companies, are reasonable
with respect to time and territory, and do not interfere with the interests of
the public. The Executive further agrees that the descriptions of the covenants
contained in this Section 8 are sufficiently accurate and definite to inform the
Executive of the scope of the covenants. Finally, the Executive agrees that the
consideration provided for in this Agreement is full, fair and adequate to
support the Executive's obligations hereunder.
9. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
10. Termination of Agreement upon a Change of Control. Upon any Change
of Control, as that term is defined in that certain Change of Control Employment
Agreement, of even date herewith, between the Company and the Executive, the
Change of Control Employment Agreement shall become effective, and shall apply
to the extent its terms are more advantageous to the Executive.
11. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive to: If to the Company to:
Xxxxxxx X. Xxxxxx, Xx. LandAmerica Financial Group, Inc.
LandAmerica Financial Group, Inc. 0000 Xxxx Xxxxx Xxxxxx
0000 Xxxx Xxxxx Xxxxxx Xxxxxxxx, Xxxxxxxx 00000
Xxxxxxxx, Xxxxxxxx 00000 Attention: Xxxxxxx X. Xxxxxx, III, Esquire
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company may
have hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 4(c)(i)-(iv), shall not
be deemed to be a waiver of such provision or right or any other provision or
right of this Agreement.
(f) In the event of a dispute with respect to any term of this
Agreement, either party may elect, by delivering written notice to the other
stating the nature of the dispute, to have such dispute settled by arbitration.
Within ten (10) days of the delivery of the written notice electing arbitration
both parties shall appoint an arbitrator and within ten (10) days thereafter the
two arbitrators shall select a third. If a party does not appoint an arbitrator
within the ten-day period, such party shall forfeit the right to do so and the
matter shall be settled by the sole appointed arbitrator. The arbitrator(s)
shall follow the rules of arbitration established by the American Arbitration
Association and shall render a decision within ten (10) days of the hearing
which shall occur no later than twenty (20) days after the arbitrator(s) is/are
appointed. The decision of a majority of the arbitrators, or of the sole
arbitrator, as the case may be, shall be binding upon the respective parties to
the arbitration hearing, their heirs, legal representatives, assigns and
successors. Each party shall pay the fees and expenses of their chosen
arbitrator, and shall pay one-half of the fees and expenses of the third
arbitrator. If only one arbitrator is appointed each party shall pay one-half of
his or her fees and expenses. Judgment upon any award rendered by the
arbitrator(s) may be entered in any court of competent jurisdiction.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first above written.
LANDAMERICA FINANCIAL GROUP, INC. EXECUTIVE
By: /s/ Xxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxxx, Xx.
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Title: President Xxxxxxx X. Xxxxxx, Xx.
