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EXHIBIT 10(d)
DEFERRED COMPENSATION AND
NON-COMPETE AGREEMENT
THIS DEFERRED COMPENSATION AND NON-COMPETE AGREEMENT (the
"Agreement"), dated this 3 day of October, 1996 is by and between Xxxxxxx X.
Xxxxxxx ("Xxxxxxx"), and Southland National Insurance Corporation ("the
Company").
WHEREAS, Xxxxxxx is presently employed by the Company as its
President and Chief Executive Officer; and
WHEREAS, Xxxxxxx and the Board of Directors (the "Board") of
the Company had executed a longstanding prior employment agreement, which
provided for, among other things, payments to Xxxxxxx following cessation of
his active employment with the Company; and
WHEREAS, the prior employment agreement was rescinded at
Xxxxxxx'x request in order to avoid the necessity of the Company accruing
certain of the deferred obligations under such employment agreement; and
WHEREAS, the Board desires to reinstate certain of the
provisions of that prior employment agreement; and
WHEREAS, the parties wish to evidence their agreement in
writing;
NOW, THEREFORE, in consideration of the premises, the prior
and future services of Xxxxxxx as President and Chief Executive Officer of the
Company, the agreement of Xxxxxxx not to compete with the Company in the
future, the mutual covenants of the parties, and One Dollar ($1.00) and other
good and valuable consideration paid by each to the other, the receipt and
sufficiency whereof is hereby acknowledged, the parties agree as follows:
1. DEFERRED COMPENSATION. The Company shall pay Xxxxxxx
on a periodic basis consistent with regular payroll payments of the Company,
upon Xxxxxxx'x retirement (as that term is defined in Section 6) from his
positions as President and Chief Executive Officer of the Company, Thirty-five
Thousand and 00/100 Dollars ($35,000.00) per year to be paid for a period of
ten years, and following such ten year period, the Company shall pay Xxxxxxx
Seventy-five Thousand and 00/100 Dollars ($75,000.00) per year for the
remainder of his life.
The Company will provide to Xxxxxxx and his spouse
group health and life benefits that are offered to the officers of the Company,
provided Xxxxxxx is eligible for those benefits. In the event that the Company
does not provide to its officers any such benefits or Xxxxxxx does not qualify
to participate in such benefits, then Xxxxxxx shall receive health benefits
equivalent to those he is receiving immediately prior to his retirement.
Not withstanding any provisions in the previous
paragraph, any health reimbursement benefits will be provided to Xxxxxxx only
to the extent needed to supplement any other form of insurance Xxxxxxx may
have, including Medicare.
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2. COVENANT NOT TO COMPETE. For the ten (10) year
period described in the last paragraph of Section 2, Xxxxxxx shall not, either
as an individual on his own account; as a partner, joint venturer, employee,
agent, or salesman for any person; as an officer, director or stockholder
(other than a beneficial holder of not more than 5% of the outstanding voting
stock of a company having at least 250 holders of voting stock) of a
corporation; or otherwise, directly or indirectly;
(a) enter into or engage in, or render any
services for or on behalf of, any insurance business directly competitive with
that carried on by the Company within:
(i) any area of the United States in
which the Company is then doing business;
(ii) in the event that any court
determines that the area set forth in the preceding
subparagraph is too broad to be enforceable, the
States of Alabama, Tennessee and Mississippi; or
(iii) in the event that any court
determines that the area set forth in the preceding
subparagraphs is too broad to be enforceable, the
State of Alabama.
(b) solicit or attempt to solicit any of the
Company's customers or prospective customers with whom Xxxxxxx has had contact
during the period of his association with the Company with the intent or
purpose to perform for such customer the same or similar services that Xxxxxxx
performed for or sold to such customer during the period of his association
with the Company;
(c) solicit or recruit any person who is an
employee or agent of the Company either now or during such period, for
employment in the insurance business, or for the purpose of soliciting or
attempting to solicit any of the Company's customers or prospective customers
as prohibited by Section 2(b) above.
Notwithstanding the foregoing, Xxxxxxx and the
Company agree and acknowledge that in the event that Xxxxxxx breaches any of
the provisions of this paragraph 2, the period of restriction referenced above
shall be extended one day for each day that Xxxxxxx is in breach hereof.
Xxxxxxx and the Company agree and acknowledge any
breach by Xxxxxxx of the restrictive covenant contained herein would
immeasurably and irreparably damage the Company. the Company and Xxxxxxx agree
and acknowledge that the duration, scope and geographic areas applicable to the
non-competition covenants in this Section 2 are fair, reasonable and necessary
to protect legitimate business interests of the Company, and that adequate
compensation has been received by Xxxxxxx for such obligations.
In consideration for his agreement not to compete
with the Company, the Company agrees to pay Xxxxxxx on a periodic basis
consistent with regular payroll payments of the Company Twenty-five Thousand
and 00/100 Dollars ($25,000.00) per year for a period of ten (10)
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years, which payments shall begin upon Xxxxxxx'x retirement from his position
as President and Chief Executive Officer of the Company. The above-described
payments shall cease in the event that Xxxxxxx violates any of the provisions
set forth in the preceding paragraph.
3. SURVIVOR BENEFITS. In the event of the death of
Xxxxxxx within eighteen (18) months from the date of Xxxxxxx'x retirement the
Company shall pay to the spouse of Xxxxxxx or to such other person as he shall
designate in writing, the sum of Five Thousand and 00/100 Dollars ($5,000.00)
per month for a period of forty (40) months. In the event of the death of
Xxxxxxx at any time eighteen (18) months after Xxxxxxx'x retirement but before
Xxxxxxx shall have attained the age of sixty-six (66) years, the Company shall
pay to the spouse of Xxxxxxx or to such other person as he shall designate in
writing the sum of Four Thousand and 00/100 Dollars ($4,000.00) per month for a
period of twelve (12) months from the date of Xxxxxxx'x death. In the event of
Xxxxxxx'x death after age sixty-six (66), the Company shall pay to his
surviving spouse or to such other person as he shall designate in writing Four
Thousand and 00/100 Dollars ($4,000.00) per month for a period of five (5)
months.
4. DISABILITY PAYMENTS. In addition to the payments in
Sections 1 and 2, in the event that Xxxxxxx becomes physically or mentally
unable to perform his duties as then exist at the time of such disability, and
if such disability occurs before age sixty-six (66), Xxxxxxx will receive Two
Thousand Five Hundred Eighty-three and 33/100 Dollars ($2,583.33) per month in
disability payments until the age of sixty-six (66) and after Xxxxxxx has
attained the age of sixty-six (66), then Xxxxxxx will receive One Thousand Two
Hundred Fifty and 00/100 Dollars ($1,250.00) per month until the age of
seventy-one (71). If Xxxxxxx becomes disabled after the age of sixty-six (66)
but before the age of seventy-one (71) Xxxxxxx will receive One Thousand Two
Hundred Fifty and 00/100 Dollars ($1,250.00) until the age of seventy-one (71).
No disability payment will be due to Xxxxxxx after Xxxxxxx attains the age of
seventy-one (71).
5. GROSS UP PROVISION.
(a) Notwithstanding anything to the contrary
herein, in the event it shall be determined that any fees, payment or
distribution by the Company or any subsidiary or affiliate of the Company, to
or for the benefit of Xxxxxxx, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended ("the Code"), or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then Xxxxxxx shall be entitled to receive an additional payment
(a "Gross-Up Payment") in an amount such that after payment by Xxxxxxx of all
taxes (including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, Xxxxxxx retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Xxxxxxx shall notify the Company in writing
of any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten (10) business days after
Xxxxxxx knows of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is required to be paid. Xxxxxxx shall
not pay such claim prior to the expiration of the thirty (30) day period
following the date on which he gives such notice
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to the Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies Xxxxxxx in
writing prior to the expiration of such period that it desires to contest such
claim, Xxxxxxx shall:
(i) give the Company any information
reasonably requested by the Company relating to such
claim;
(ii) take such action in connection with
contesting such claim as the Company shall reasonably
request in writing from time to time, including,
without limitation, accepting legal representation
with respect to such claim by an attorney reasonably
selected by the Company;
(iii) cooperate with the Company in good
faith in order effectively to contest such claim; and
(iv) permit the Company to participate in
any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Xxxxxxx harmless, on an
after-tax basis, for any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as the result of such representation
and payment of costs and expenses. Without limitation of the foregoing
provisions of this paragraph 5(b), the Company shall control all proceedings
taken in connection with such contest and, in its sole option, may pursue or
forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, in its
sole option, either direct Xxxxxxx to pay the tax claimed and xxx for a refund
or contest the claim in any permissible manner, and Xxxxxxx agrees to prosecute
such contest to a determination before any administrative tribunal, in a court
of initial jurisdiction, and in any one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs Xxxxxxx
to pay such claim and xxx for a refund, the Company shall advance the amount of
such payment to Xxxxxxx, on an interest free basis, and shall indemnify and
hold Xxxxxxx harmless, on an after-tax basis, from any Excise Tax or income
tax, including interest or penalties with respect thereto, imposed with respect
to such advance or with respect to any imputed income with respect to such
advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of Xxxxxxx with respect to
which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and Xxxxxxx shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
(c) If, after the receipt by Xxxxxxx of an amount
advanced by the Company pursuant to paragraph 5(b), Xxxxxxx becomes entitled to
receive any refund with respect to such claim, Xxxxxxx shall (subject to the
Company's compliance with the requirements of paragraph 5(b)), promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by
Xxxxxxx of an amount advanced by the Company pursuant to paragraph 5(b), a
determination is made that Xxxxxxx shall
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not be entitled to any refund with respect to such claim and the Company does
not notify Xxxxxxx in writing of its intent to contest such denial or refund
prior to the expiration of thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
6. RETIREMENT. The term retirement as used in this
Agreement is defined to include Xxxxxxx'x retirement from full-time employment
at the Company.
7. TERMINATION. Upon the death of Xxxxxxx the Survivor
Benefits in Section 3 shall be due, and any further payments in Sections 1 and
2 shall be terminated.
Notwithstanding the provisions of the previous
paragraph, any amounts owed to Xxxxxxx in Sections 1, 2, 4 or 5 shall remain
due and payable.
8. NO ASSIGNMENT. The Company shall not, including by
operation of law, assign any of the obligations under this Agreement without
the express written agreement of Xxxxxxx.
9. LEGAL FEES. The Company and Xxxxxxx agree that the
prevailing party in any litigation pertaining to or resulting from any dispute
arising out of or under this Agreement will be entitled to recover from the
other party, in addition to any other damages or relief such party may be
entitled to received, the costs and expenses of such party, including without
limitation, reasonable attorney's fees incurred by such prevailing party in
such dispute litigation.
10. MISCELLANEOUS.
Each of the parties hereto will execute such
additional instruments as may be reasonably required in order to carry out the
purposes and intent of this Agreement and to fulfill the obligations herein
stated.
The parties hereby agree that any number of
counterparts of this Agreement may be executed and that each counterpart shall
be deemed to be an original instrument, but all such counterparts taken
together shall constitute one Agreement.
This Agreement may not be amended, modified, altered,
or changed in any respect whatsoever, except by a further agreement in writing,
duly executed by the parties thereto.
This Agreement constitutes the entire agreement of
the parties and all understandings and agreements heretofore had between and
among the parties are merged in this Agreement, which alone, fully and
completely, expresses their understandings.
If any portion of this Agreement is deemed by a court
to be unenforceable or invalid then the remaining portions of the Agreement
shall be construed by a court to give maximum enforceability to the intention
of the parties.
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IN WITNESS WHEREOF, the parties have hereunto set their hands
and seals on this the 3 day October of 1996.
/s/ Xxxxxxx X. Xxxxxxx
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XXXXXXX X. XXXXXXX
SOUTHLAND NATIONAL INSURANCE
CORPORATION
By: /s/ Xxxxxx Xxxxxxxx
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As Its: Chairman of the Board
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