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EXHIBIT 10.2
EMPLOYMENT AND
CONFIDENTIALITY AGREEMENT
THIS EMPLOYMENT AND CONFIDENTIALITY AGREEMENT (the "Agreement") is made as
of , 1997, between SUMMIT HOLDING SOUTHEAST, INC., a Florida
corporation (the "Company"), and XXXXXXX X. XXXX, a resident of the State of
Florida ("Executive").
BACKGROUND
Prior to the date hereof, Executive was employed by Summit Holding
Corporation ("SHC"), a wholly-owned subsidiary of Employers Self Insurers Fund
("ESIF"), as its Vice President and Chief Financial Officer. On the date hereof,
in accordance with that certain Amended Plan of Conversion and Agreement of
ESIF, several transactions have occurred: (i) ESIF has converted from a group
self-insurance fund to an assessable mutual insurance company, an interim step
required to satisfy the Florida Insurance Code; (ii) the assessable mutual
company has converted to a stock insurance company with the name Bridgefield
Employers Insurance Company ("Bridgefield"); and (iii) certain policyholders of
ESIF have exchanged their rights to receive common stock of Bridgefield for,
among other things, the Company's Series A Preferred Stock, causing Bridgefield
to become a wholly-owned subsidiary of the Company. The Company desires to
continue the employment of Executive in the capacities and on the terms and
conditions set forth below. Executive desires to accept employment on the terms
and conditions set forth below.
AGREEMENT
NOW, THEREFORE, for and in consideration of the employment and continued
employment of Executive by the Company, the premises, and the mutual agreements
hereinafter set forth, the parties agree as follows:
1. Definitions. The following terms used herein shall have the
definitions set forth below:
(a) "Affiliate" means any person or entity directly or indirectly
controlling, controlled by, or under common control with another person.
(b) "Area" means the States of Florida, Georgia, Kentucky,
Louisiana and North Carolina.
(c) "Business" or "Business of the Company" means the business of
insurance related administrative services for self insurer funds,
including, without limitation, marketing, policy issuance and servicing,
claims processing and administration, loss control, brokerage, audits,
financial and data processing services, and risk management services.
(d) "Cause" means (i) conduct amounting to fraud or dishonesty
against the Company; (ii) willful violation of any directives to
Employee from the Board of Directors of the Company, where such
violation is not cured to the reasonable satisfaction of the Board of
Directors of the Company within five (5) days after written notice of
such violation has been given to Executive; (iii) a conviction or plea
of guilty or nolo contendere to a felony or a crime involving dishonesty
against the Company; or (iv) Executive's failure to observe the
requirements of Sections 2(c), 5 and 6 hereof.
(e) "Competing Enterprise" means any person or any business
organization of whatever form, engaged directly or indirectly within the
Area in the Business of the Company.
(f) "Disability" means (i) the inability of Executive to perform
the duties of Executive's employment due to physical or emotional
incapacity or illness, where such inability is expected to be of
long-continued and indefinite duration or (ii) Executive shall be
entitled to (x) disability retirement benefits under the federal Social
Security Act or (y) recover benefits under any long-
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term disability plan or policy maintained by the Company. In the event
of a dispute, the determination of Disability shall be made reasonably
by the Board of Directors of the Company and shall be supported by
advice of a physician competent in the area to which such Disability
relates.
(g) "Excluded Information" means any data or information that is a
Trade Secret hereunder (1) that has been voluntarily disclosed to the
public by the Company or any Affiliate thereof or has become generally
known to the public (except where such public disclosure has been made
by or through the Executive or by a third person or entity with the
knowledge of the Executive without authorization by the Company); (2)
that has been independently developed and disclosed by parties other
than the Executive or the Company or any Affiliate thereof to the
Executive or to the public generally without a breach of any obligation
of confidentiality by any such person running directly or indirectly to
the Company or any Affiliate thereof; or (3) that otherwise enters the
public domain through lawful means.
(h) "Subsidiaries" means Bridgefield, SHC, Summit Consulting, Inc.,
Summit Claims Management, Inc., Summit Loss Control Services, Inc.,
Commercial Insurance of Central Florida, Inc., Bridgefield Casualty
Insurance Company and Summit Healthcare Holdings, Inc.
(i) "Trade Secrets" means information which derives economic value,
actual or potential, from not being generally known and not being
readily ascertainable to other persons who can obtain economic value
from its disclosure or use and which is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy or
confidentiality. Trade Secrets may include either technical or
non-technical data, including without limitation, (1) any useful
process, machine, chemical formula, composition of matter, or other
device which (A) is new or which Executive has a reasonable basis to
believe may be new, (B) is being used or studied by the Company or a
Subsidiary and is not described in a printed patent or in any literature
already published and distributed externally by the Company or such
Subsidiary, and (C) is not readily ascertainable from inspection of a
product of the Company; (2) any engineering, technical, or product
specifications including those of features used in any current product
of the Company or to be used, or the use of which is contemplated, in a
future product of the Company or a Subsidiary; (3) any application,
operating system, communication system, or other computer software
(whether in source or object code) and all flow charts, algorithms,
coding sheets, routines, subroutines, compilers, assemblers, design
concepts, test data, documentation, or manuals related thereto, whether
or not copyrighted, patented or patentable, related to or used in the
Business of the Company or a Subsidiary; or (4) information concerning
the customers, suppliers, products, pricing strategies of the Company or
its Subsidiaries, personnel assignments and policies of the Company, or
matters concerning the financial affairs and management of the Company
or any Affiliate; provided however, that Trade Secrets shall not include
any Excluded Information.
2. Terms of Engagement; Duties. (a) The Company hereby employs Executive
as the Vice President and Chief Financial Officer of the Company and each of its
Subsidiaries. In such capacity Executive shall report to the President and Chief
Executive Officer of the Company and shall perform such other duties and
responsibilities relating to the Business of the Company as may be assigned or
delegated to him from time to time by the President and Chief Executive Officer
of the Company.
(b) Executive accepts such employment and agrees to:
(i) devote substantially all of Executive's effort, time, energy, and
skill (reasonable vacations and reasonable absences due to illness
excepted) during regular business hours to the duties of his employment
hereunder;
(ii) faithfully, loyally, and industriously perform such duties,
subject to the supervision of the Board of Directors of the Company; and
(iii) diligently follow and implement all lawful management policies
and decisions of the Company and its Subsidiaries that are communicated to
Executive.
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(c) During the Term of this Agreement, Executive shall not engage (whether
or not during normal business hours) in any other business or professional
activity, whether or not such activity is pursued for gain, profit or other
pecuniary advantage; but this shall not be construed as preventing Executive
from (i) investing his personal assets in businesses which do not compete with
the Business of the Company in such form or manner as will not require any
services on the part of Executive in the operation or the affairs of the
entities in which such investments are made and in which his participation is
solely that of an investor, (ii) purchasing securities in any corporation whose
securities are regularly traded on a national securities exchange provided that
such purchase shall not result in his collectively owning beneficially at any
time five (5%) percent or more of the equity securities of any corporation
engaged in a business competitive to the Business of the Company, or (iii)
participating in conferences, preparing or publishing papers or books or
teaching so long as the President and Chief Executive Officer approves of such
activities prior to Executive's engaging in them. Prior to commencing any
activity described in clause (iii) above, Executive shall inform the President
and Chief Executive Officer in writing of any such activity.
3. Compensation. (a) In consideration of the services rendered by
Executive pursuant to this Agreement, the Company shall pay to Executive a base
salary of Two Hundred Thirty Thousand Dollars ($230,000) per annum (the "Base
Salary"), which Base Salary will be reviewed periodically and may be increased
(but not decreased) by the Company from time to time. The Base Salary shall be
paid in accordance with the Company's standard payroll practices in effect from
time to time, and shall be subject to such deductions and withholdings as are
required by law or by policies of the Company.
(b) In addition to the Base Salary, Executive shall receive an annual bonus
in an amount equal to five percent (5%) of the net earnings after taxes ("Net
Income") of the Company and the Subsidiaries, on a consolidated basis, to the
extent the Net Income exceeds Eight Million Two Hundred Fifty Thousand Dollars
($8,250,000), for 1997, and to the extent the Net Income exceeds Twelve Million
One Hundred Sixty Thousand Dollars ($12,160,000) for each of 1998 and 1999. Net
Income shall be calculated by the Company's Chief Financial Officer, in
consultation with, and with the approval of, the Audit Committee of the Board of
Directors, after deduction of all expenses, including, without limitation,
taxes, interest, depreciation and amortization, and all salaries and bonuses.
The Company shall pay Executive his annual bonus within ten (10) days after
calculation thereof by the Company's Chief Executive Officer.
(c) Executive shall also have the right to participate in any medical,
hospitalization, dental, disability income, life or other similar insurance
plans maintained by the Company from time to time to the extent that Executive's
position, tenure, salary, age, health and other qualifications make him eligible
to participate, and such other fringe benefits as are provided to the other
senior management employees of the Company, provided that the Company shall not
be required to adopt or continue any insurance plans or fringe benefit plans.
(d) The Company shall reimburse Executive for all reasonable business
expenses (including a $1,000 per month car allowance) incurred by Executive in
connection with the business of the Company subject to compliance with the
expense reimbursement policies established by the Company and in sufficient
detail to comply with Internal Revenue Service Regulations.
(e) The remuneration and benefits set forth in this Section 3 shall be the
only compensation payable to Executive with respect to his employment hereunder,
and Executive shall not be entitled to receive any compensation in addition to
that set forth in this Section 3 for any services rendered by him in any
capacity to the Company or any affiliated corporation unless agreed to in
writing by the Company or such affiliated corporation.
4. Term and Termination of this Agreement. The term of employment of
Executive (the "Term") pursuant to this Agreement shall commence on the date
hereof and shall continue for a term of three (3) years from the date hereof or
until sooner terminated as provided herein.
(a) Executive's employment hereunder may be terminated only (i) upon the
death or Disability of Executive; and (ii) by the Company for Cause.
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(b) Upon termination of Executive's employment hereunder pursuant to this
Section 4, the Company shall have no further obligation to Executive or his
personal representative with respect to remuneration due under this Agreement,
except for Base Salary earned but unpaid at date of termination and, except
where Executive's employment hereunder is terminated pursuant to clauses (i) or
(iii) of the definition of "Cause," a pro rata portion (based on the number of
days of the fiscal year of the Company during which this Agreement was in
effect) of the bonus payable under Section 3(b) with respect to the fiscal year
of the Company in which Executive's employment hereunder was terminated;
provided however, Executive's covenants in Sections 5 and 6 of this Agreement
shall survive the termination of Executive's employment hereunder.
5. Ownership, Non-Disclosure, and Non-Use of Trade Secrets. (a) Executive
acknowledges and agrees that all Trade Secrets, and all physical embodiments
thereof, are confidential to and shall be and remain the sole and exclusive
property of the Company and its Subsidiaries and that any Trade Secrets produced
by the Executive during the period of Executive's employment by the Company
shall be considered "work for hire" as such term is defined in 17 U.S.C. Section
101, the ownership and copyright of which shall be vested solely in the Company.
Executive agrees (i) immediately to disclose to the Company all Trade Secrets
developed in whole or part by Executive during the Term of Executive's
employment by the Company, and (ii) at the request and expense of the Company,
to do all things and sign all documents or instruments reasonably necessary in
the opinion of the Company to eliminate any ambiguity as to the rights of the
Company in such Trade Secrets including, without limitation, providing to the
Company Executive's full cooperation in any litigation or other proceeding to
establish, protect, or obtain such rights. Upon request by the Company, and in
any event upon termination of Executive's employment by the Company for any
reason, Executive shall promptly deliver to the Company all property belonging
to the Company or any of its Affiliates, including, without limitation, all
Trade Secrets (and all embodiments thereof) then in Executive's custody,
control, or possession.
(b) Executive agrees that all Trade Secrets of the Company or its
Subsidiaries received or developed by Executive as a result of Executive's
employment with the Company will be held in trust and strictest confidence, that
Executive will protect such Trade Secrets from disclosure, and that Executive
will make no use of such Trade Secrets, except in connection with Executive's
employment hereunder, without the Company's prior written consent. The
obligations of confidentiality contained in this Agreement will apply during
Executive's employment by the Company and (i) with respect to all Trade Secrets
consisting of scientific or technical data, at any and all times after
expiration or termination (for whatever reason) of such employment; and (ii)
with respect to all other Trade Secrets, for a period of two (2) years after
such expiration or termination, unless a longer period of protection is provided
by law.
6. Non-Compete: Non-Solicitation Covenants. (a) In consideration of the
amounts to be paid to Executive hereunder, Executive covenants that Executive
shall, during the Term of this Agreement, and for such period of time (not to
exceed one (1) year) following the termination or expiration of the Term of this
Agreement or Executive's employment hereunder as such payments continue, observe
the following separate and independent covenants:
(i) Neither Executive nor any Affiliate will, without the prior
written consent of the Company, within the Area, either directly or
indirectly, (1) become financially interested in a Competing Enterprise
(other than as a holder of less than five percent (5%) of the outstanding
voting securities of any entity whose voting securities are listed on a
national securities exchange or quoted by the National Association of
Securities Dealers, Inc. National Market System), or, (2) engage in or be
employed by any Competing Enterprise as a consultant, officer, director, or
executive or managerial employee.
(ii) Neither Executive nor any Affiliate will, without the prior
written consent of the Company, either directly or indirectly, on
Executive's own behalf or in the service or on behalf of others, solicit,
divert, or appropriate, or attempt to solicit, divert, or appropriate, to
any Competing Enterprise within the Area, any person or entity whose
account with the Company was serviced by the Company or one of its
Subsidiaries during the Term of this Agreement.
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(iii) Neither Executive nor any Affiliate will, without the Company's
prior written consent, either directly or indirectly, on Executive's own
behalf or in the service or on behalf of others, solicit, divert, or hire
away, or attempt to solicit, divert, or hire away, to any Competing
Enterprise, any person employed by the Company or one of its Subsidiaries,
whether or not such employee is a full-time or a temporary employee of the
Company or such Subsidiary and whether or not such employment is pursuant
to written agreement and whether or not such employment is at will.
(b) As consideration for Executive's agreements in this Section 6, Company
shall pay to executive the amount of $8,333.33 per month up to a maximum of
twelve (12) consecutive months following the termination or expiration of the
Term. Failure of the Company to make any such payments shall release Executive
from his obligations under this Section 6 from and after the date when such
payments cease to be made. All such monthly payments shall be subject to such
deductions for withholdings and like amounts as required by law, and shall
commence thirty (30) days after the effective date of the termination or
expiration of the Term, with subsequent monthly payments being due on the same
date (or if such date is not a business day of the Company, then on the next
business day) in each of the succeeding eleven (11) months thereafter.
7. Remedies. Executive acknowledges and agrees that the Company is engaged
in the Business of the Company in and throughout the Area, and that by virtue of
the training, duties, and responsibilities attendant with Executive's employment
by the Company and the special knowledge of the Business and operations of the
Company that Executive will have as a consequence of Executive's employment by
the Company, great loss and irreparable damage would be suffered by the Company
if the Executive should breach or violate any of the terms or provisions of the
covenants and agreements set forth herein. Executive further acknowledges and
agrees that each such covenant and agreement is reasonably necessary to protect
and preserve the interest of the Company. Therefore, in addition to all the
remedies provided at law or in equity, Executive agrees and consents that the
Company shall be entitled to a temporary restraining order and a permanent
injunction to prevent a breach of any of the covenants or agreements of
Executive contained herein. The existence of any claim, demand, action or cause
of action of Executive against the Company shall not constitute a defense to the
enforcement by the Company of any of the covenants or agreements herein whether
predicated upon this Agreement or otherwise, and shall not constitute a defense
to the enforcement by the Company of any of its rights hereunder.
8. General Provisions. (a) In the event that any one or more of the
provisions, or parts of any provisions, contained in the Agreement shall for any
reason be held to be invalid, illegal, or unenforceable in any respect by a
court of competent jurisdiction, the same shall not invalidate or otherwise
affect any other provision hereof, and this Agreement shall be construed as if
such invalid, illegal, or unenforceable provision had never been contained
herein. Specifically, but without limiting the foregoing in any way, each of the
covenants of the parties to this Agreement contained herein shall be deemed and
shall be construed as a separate and independent covenant and should any part or
provision of any of such covenants be held or declared invalid by any court of
competent jurisdiction, such invalidity shall in no way render invalid or
unenforceable any other part or provision thereof or any other covenant of the
parties not held or declared invalid.
(b) This Agreement and the rights and obligations of the Company hereunder
may be assigned by the Company to any subsidiary of or successor to the Company,
and shall inure to the benefit of, shall be binding upon, and shall be
enforceable by any such assignee, provided that any such assignee shall agree to
assume and be bound by this Agreement. This Agreement and the rights and
obligations of Executive hereunder may not be assigned by Executive.
(c) The waiver by the Company of any breach of this Agreement by Executive
shall not be effective unless in writing, and no such waiver shall operate or be
construed as a waiver of the same or another breach on a subsequent occasion.
(d) This Agreement and the rights of the parties hereunder shall be
governed by and construed in accordance with the laws of the State of Florida.
The parties agree that any appropriate state court located in Polk County,
Florida or any Federal Court located in Hillsborough County, Florida shall have
exclusive jurisdiction of any case or controversy arising under or in connection
with this Agreement and shall be a proper
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forum in which to adjudicate such case or controversy. The parties hereto
consent to the jurisdiction of such courts.
(e) This Agreement embodies the entire agreement of the parties relating to
the employment of Executive by the Company. No amendment or modification of this
Agreement shall be valid or binding upon the Company or Executive unless made in
writing and signed by the parties. All prior understandings and agreements
relating to the employment of Executive by the Company are hereby expressly
terminated.
(f) Any notice, request, demand, or other communication required to be
given hereunder shall be made in writing and shall be deemed to have been fully
given if personally delivered or if mailed by overnight delivery (the date on
which such notice, request, demand, or other communication is received shall be
the date of delivery) to the parties at the following addresses (or at such
other addresses as shall be given in writing by any party to the other party
hereto):
If to Executive:
Xx. Xxxxxxx X. Xxxx
0000 X - X Xxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
If to Company:
Summit Holding Southeast, Inc.
0000 X - X Xxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx & Bird
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(g) This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, and it shall not be necessary for the
same counterpart of this agreement to be signed by all of the undersigned in
order for the agreements set forth herein to be binding upon all of the
undersigned in accordance with the terms hereof.
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IN WITNESS WHEREOF, the Company and Executive have each executed and
delivered this Agreement as of the date first above written.
COMPANY:
SUMMIT HOLDING SOUTHEAST, INC.
By:
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XXXXXXX X. XXXX
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
EXECUTIVE:
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XXXXXXX X. XXXX
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