AGREEMENT AND GENERAL RELEASE
This Agreement and General Release is entered into among
Reliance Group Holdings, Inc., Park Avenue Plaza, 55 East 52nd Street, 29th
Floor, New York, New York 10055 ("RGH"), Reliance Insurance Company, 0 Xxxxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 ("RIC") (RGH and RIC are sometimes referred to
together as "Reliance"), and Xxxxxx X. Xxxxxxxxx, 0 Xxxxxxx Xxxx, Xxxxxxxxxxxxx,
Xxx Xxxxxx 00000 ("Xxxxxxxxx"):
WHEREAS, Xxxxxxxxx and Reliance mutually desire to terminate
Xxxxxxxxx'x employment with Reliance and his service as an officer and director
of RGH, RIC, and their parent companies, subsidiaries and affiliates; and
WHEREAS, Xxxxxxxxx and Reliance disagree with respect to
certain aspects of the Employment Agreement dated as of February 15, 1996
between Xxxxxxxxx and RGH, as amended (the "RGH Employment Agreement") and the
Employment Agreement dated as of February 15, 1996 between Xxxxxxxxx and XXX
(the "XXX Employment Agreement"); and
WHEREAS, in order to resolve this disagreement and to settle
Xxxxxxxxx'x and Reliance's rights and obligations in connection with the
termination of Xxxxxxxxx'x employment with Reliance, Xxxxxxxxx and Reliance
agree to enter into this Agreement and General Release, intending to fully
supersede and cancel the RGH Employment Agreement and the RIC Employment
Agreement; and
WHEREAS, Xxxxxxxxx understands that, by entering into this
Agreement and General Release, which fully supersedes and cancels the RGH
Employment Agreement and the RIC Employment Agreement, he relinquishes any and
all right he has to future employment with Reliance; and
WHEREAS, Xxxxxxxxx further understands that, as provided in
paragraph "10" below, this Agreement and General Release waives, settles and
releases any and all claims that he has or might have against RGH and RIC and
their past, present and future direct and indirect parent companies,
subsidiaries, affiliates, divisions, predecessors, successors and assigns and
the past, present and future officers, directors, employees and agents of each
of the foregoing entities, arising up to and including the date of his execution
of this Agreement and General Release; and
WHEREAS, the terms of this Agreement and General Release are
the product of mutual negotiation and compromise between Reliance and Xxxxxxxxx;
and
WHEREAS, Xxxxxxxxx has been afforded 21 days to consider the
meaning and effect of this Agreement and General Release and has used that time
to read it and consider the
general release by him set forth in this Agreement and General Release; and
WHEREAS, Xxxxxxxxx is advised to consult with an attorney of
his choosing prior to his execution of this Agreement and General Release, and
Xxxxxxxxx has in fact consulted with and been represented by Xxxx X. Xxxxxx,
Esq. and Xxxxxxx X. Xxxxxxxx, Esq., of Xxxxxxx Berlin Shereff Xxxxxxxx, LLP,
with respect to this Agreement and General Release; and
WHEREAS, Xxxxxxxxx has carefully considered alternatives to
executing this Agreement and General Release.
THEREFORE, RGH, RIC, and Xxxxxxxxx, for the good and
sufficient consideration set forth below and in consideration of the mutual
promises contained herein, hereby agree as follows:
1. The terms and conditions of this Agreement and General
Release shall become effective, operable, and enforceable immediately upon the
expiration of the seven-day revocation period referred to below without there
having been a revocation by Xxxxxxxxx of this Agreement and General Release.
2. (a) Xxxxxxxxx acknowledges and agrees that his last day of
employment with Reliance shall be the date of his execution of this Agreement.
Xxxxxxxxx hereby resigns from any and all officer and director positions he
holds with RGH and RIC, and their parent companies, subsidiaries and affiliates,
such resignation to be effective upon his execution of this Agreement and
General Release.
(b) Xxxxxxxxx acknowledges and agrees that he is not
entitled to, and shall not receive, any bonus for any past, present or future
year or any part thereof.
3. (a) Xxxxxxxxx shall be entitled to participate in the
Reliance group medical and dental plans for one year after his last day of
employment with Reliance (on the same terms and with the same level of benefits
as were provided prior to the date hereof), provided that he pays to Reliance
the cost allocated to an employee for such participation.
(b) Xxxxxxxxx acknowledges and agrees that the period, if
any, under paragraph "3(a)" above for which he participates in the Reliance
group medical and dental plans after his last day of employment with Reliance
shall be counted toward the maximum period under COBRA for which Xxxxxxxxx is
entitled to participate in such plans after his employment with Reliance has
ceased.
(c) Xxxxxxxxx acknowledges and agrees that, except as
provided in paragraph "3(a)" above, his eligibility for and participation in all
Reliance employee benefits and benefit plans shall cease as of his last day of
employment with Reliance.
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(d) Xxxxxxxxx acknowledges and agrees that any and all
contributions, benefit accruals and vesting service by him in the Reliance
Savings Incentive Plan, the RGH Pension Plan, the RIC Employee Retirement Plan,
and the RGH Benefit Equalization Plan shall cease as of his last day of
employment with Reliance.
(e) Xxxxxxxxx acknowledges and agrees that his eligibility
for and use of all Reliance fringe benefits and perquisites (including but not
limited to car allowances, cellular phone allowances and club memberships) shall
cease as of his last day of employment with Reliance.
4. (a) Within two (2) business days after the expiration of
the seven-day revocation period referred to below (five (5) business days in the
case of (ii) and (iii) below) without there having been a revocation by
Xxxxxxxxx of this Agreement and General Release:
(i) Reliance will pay into an account at M&T Bank (the
account name and number of which is to be supplied
jointly by M&T Bank and Xxxxxxxxx immediately upon
the expiration of the seven-day revocation period
referred to below) One Million Five Hundred Thousand
Dollars ($1,500,000.00) by a check or checks drawn on
the account of RGH and/or RIC;
(ii) Reliance will assign to Xxxxxxxxx any and all
interest Reliance has or may have in the following
life insurance policies heretofore maintained on
Xxxxxxxxx'x life: (x) Nationwide Life Insurance
Company Policy No. N100224770; (y) Phoenix American
Life Insurance Company Account No. A000433; and (z)
Security Mutual Life Insurance Company of New York
Policy No. 915837; and
(iii) Xxxxxxxxx will surrender to Reliance all of his
options to purchase RGH common stock with an exercise
price greater than $5.00 per share and, in exchange
therefor, Reliance will permit Xxxxxxxxx to exercise
his remaining options until April 16, 2002.
(b) Within five (5) business days after the later of (x)
the expiration of the seven-day revocation period referred to below without
there having been a revocation by Xxxxxxxxx of this Agreement and General
Release and (y) the occurrence of the Effectiveness Event (as defined in
paragraph "4(c)" below):
(i) Reliance will pay Xxxxxxxxx Two Million Five Hundred
Thousand Dollars ($2,500,000.00) by a
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check or checks drawn on the account of RGH and/or
RIC; and
(ii) Reliance will deliver to Xxxxxxxxx two million
(2,000,000) shares of RGH common stock (the "Shares")
or, in the event of a merger of RGH with or into
another company at or before the Effectiveness Event,
the merger consideration which the holder of such
Shares immediately prior to the merger would be
entitled to receive, provided, however, that Reliance
shall have the right in its sole and absolute
discretion to elect (the "Election"), in lieu of and
in full satisfaction of any obligation to deliver the
Shares or merger consideration, to pay Xxxxxxxxx Five
Million Dollars ($5,000,000.00) by a check or checks
drawn on the account of RGH and/or RIC. The Election
shall be made, if at all, only after the occurrence
of the Effectiveness Event and may be made by sending
written notice to Xxxxxxxxx at the address specified
above.
(c) The term "Effectiveness Event" shall mean the first to
occur of the following: (i) RGH's receipt of a firm written commitment for at
least $350,000,000 in new and additional capital through an equity investment in
RGH by a third party unaffiliated with RGH as of the date of Xxxxxxxxx'x
execution of this Agreement and General Release; (ii) the successful refinancing
(or extension of the maturity until at least August 31, 2001) of the
$237,500,000 in debt due to be repaid by RGH's subsidiary Reliance Financial
Services Corp. on August 31, 2000; (iii) the closing of an acquisition, whether
by merger, stock purchase, or tender offer, approved by the Board of Directors
of RGH of more than 50% of RGH's outstanding common stock by a third party
unaffiliated with RGH; or (iv) the expiration of the four (4) year term of the
consultancy as provided for in Section 2.2 of the Consulting Agreement (as
defined in paragraph "21" below).
5. Xxxxxxxxx represents and agrees that any Shares he may
acquire under this Agreement and General Release are for his own account and are
acquired with no present intention of distributing or reselling the Shares in
any transaction which would be in violation of the securities laws of the United
States of America or any state thereof. Xxxxxxxxx acknowledges that: (i) the
Shares are "restricted securities" as defined in the Securities Act of 1933, as
amended (the "Act"), and are therefore subject to restrictions on resale; and
(ii) Xxxxxxxxx is an "accredited investor" as such term is defined in Regulation
230.501(a) under the Act. Xxxxxxxxx acknowledges and agrees that, in making any
subsequent offering or sale of the Shares, he will be acting only for himself
and not as part of a sale or planned distribution which would be in violation of
the Act.
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6. If at any time within two (2) years of the date of
Reliance's delivery of the Shares to Xxxxxxxxx, RGH proposes to register any
shares of its common stock under the Act, whether or not for sale for its own
account or for the account of any stockholder (other than shares to be issued
pursuant to (i) an employee compensation program or (ii) a merger, acquisition
or similar transaction), in a manner which would permit registration of the
shares for sale to the public under the Act, it will each such time give written
notice to Xxxxxxxxx of its intention to do so and, upon the written request of
Xxxxxxxxx made within ten (10) business days after his receipt of any such
notice (which request shall specify the Shares intended to be disposed of by
Xxxxxxxxx and the intended method of disposition thereof), RGH will use its best
efforts to effect the registration under the Act of all Shares which RGH has
been so requested to register by Xxxxxxxxx, to the extent requisite to permit
the disposition (in accordance with the intended methods thereof as aforesaid)
of the Shares so to be registered; provided that if, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the Registration Statement filed in connection with such
registration, RGH shall determine for any reason not to register such
securities, RGH may, at its election, give written notice of such determination
to Xxxxxxxxx and, thereupon, shall be relieved of its obligation to register any
Shares in connection with such registration.
7. Xxxxxxxxx shall not: (a) in any manner acquire, agree to
acquire, or make any proposal to acquire, directly or indirectly, any securities
or property of Reliance, except at the specific written request of Reliance or
pursuant to his exercise of outstanding stock options; (b) propose to enter
into, directly or indirectly, any merger or business combination involving
Reliance or to purchase, directly or indirectly, a material portion of the
assets of Reliance; (c) make, or in any way participate in, directly or
indirectly, any "solicitation" of "proxies" (as such terms are used in the proxy
rules of the Securities and Exchange Commission) to vote, or seek to advise or
influence any person with respect to the voting of, any voting securities of
Reliance; (d) form, join, or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934) with respect
to any voting securities of Reliance; (e) otherwise act, alone or in concert
with others, to seek to control or influence the management, Board of Directors,
or policies of Reliance; (f) disclose any intention, plan, or arrangement
inconsistent with the foregoing; or (g) advise, assist, or encourage any other
person in connection with any of the foregoing. Xxxxxxxxx'x obligations under
this paragraph shall terminate six (6) years from the date of his execution of
this Agreement and General Release. Xxxxxxxxx also agrees during such six-year
period not to (x) request Reliance (or its directors, officers, employees or
agents), directly or indirectly, to amend or waive any provision of this
paragraph (including this sentence), or (y) take any
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action which might require Reliance to make a public announcement regarding the
possibility of a business combination or merger.
8. All payments to be made to Xxxxxxxxx under this Agreement
and General Release shall be made subject to all withholding obligations, if
any, of Reliance, as determined by Reliance's tax department and tax advisors.
Based on current law, Reliance believes that, currently, withholding obligations
do not apply to the payments provided for in paragraph "4" above.
9. RGH and RIC shall indemnify and hold harmless, and provide
advancement of expenses to, Xxxxxxxxx, to the same extent he had the right to
indemnification or advancement of expenses immediately prior to the termination
of his employment or resignation from any positions with Reliance or its
subsidiaries, pursuant to RGH's and RIC's certificates of incorporation, bylaws,
and indemnification agreements, if any, in existence on the date of Xxxxxxxxx'x
execution of this Agreement and General Release, but only with respect to claims
actually and first asserted against him during the six (6) years after his
execution of this Agreement and General Release by reason of the fact that he
was a director, officer, employee, fiduciary, or agent of Reliance or its
subsidiaries.
10. Xxxxxxxxx, of his own free will, voluntarily releases and
forever discharges RGH and RIC and their past, present and future direct and
indirect parent companies, subsidiaries, affiliates, divisions, predecessors,
successors and assigns and the past, present and future officers, directors,
employees and, in their capacities as such, agents of each of the foregoing
entities (the foregoing released parties are referred to collectively in this
Agreement and General Release as "Releasees") of and from any and all actions,
causes of action, suits, claims, debts, charges, complaints, and promises
whatsoever, known or unknown, in law or equity, arising up to and including the
date of Xxxxxxxxx'x execution of this Agreement and General Release, which
Xxxxxxxxx, his heirs, executors, administrators, successors and assigns may now
have or hereafter can, shall or may have against the Releasees, or any of them,
for, upon, or by reason of any matter, cause or thing whatsoever. The foregoing
general release and discharge includes but is not limited to any and all matters
arising out of or relating to Xxxxxxxxx'x ownership of Reliance securities, his
employment with Reliance, the termination of said employment, any and all
breaches of the RGH Employment Agreement and the RIC Employment Agreement, and
any and all violations of Title VII of the Civil Rights Act of 1964 (as amended
by, inter alia, the Civil Rights Act of 1991), the Americans With Disabilities
Act of 1990, the Age Discrimination in Employment Act, the Older Workers Benefit
Protection Act, Sections 1981 through 1988 of Title 42 of the United States
Code, the Immigration Reform and Control Act of 1986, the Employee Retirement
Income Security Act of 1974, the Consolidated Omnibus Budget Reconciliation Act
of 1985, the National Labor Relations Act, the Fair Labor Standards Act, the
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Occupational Safety and Health Act, the Family and Medical Leave Act, the New
York Human Rights Law (New York Executive Law ss. 290, et seq.), the New York
Equal Pay Act, the New York Wage and Hour Laws, the New York City Human Rights
Law (New York City Administrative Code ss. 8-101, et seq.), or any other
federal, state or local civil, labor, wage-hour or human rights law, and any and
all alleged violations of any other federal, state or local law, regulation or
ordinance, or of any public policy, contract or tort or common law having any
bearing whatsoever on the terms and conditions of or termination of Xxxxxxxxx'x
employment with Reliance. Notwithstanding anything in this paragraph to the
contrary, the foregoing release shall not be construed to release (x) any claim
Xxxxxxxxx may have for vested benefits under the RGH Pension Plan, the RIC
Employee Retirement Plan, and the RGH Benefit Equalization Plan; or (y) any
rights under this Agreement and General Release or the Consulting Agreement (as
defined in paragraph "21" below).
11. To the fullest extent permitted by law:
(a) Xxxxxxxxx affirms and agrees that he has not caused
or permitted to be filed, nor will he cause or permit to be filed, nor will he
accept any relief or recovery from, any charge, complaint or action brought
before any federal, state or other agency or court, within the United States or
elsewhere, against the Releasees, or any of them, which arises out of any
conduct, acts or omissions of the Releasees, or any one or more of them,
occurring on or before the date of Xxxxxxxxx'x execution of this Agreement and
General Release, other than to enforce his rights under this Agreement and
General Release or the Consulting Agreement (as defined in paragraph "21"
below).
(b) Prior to and as a condition precedent to the filing
by Xxxxxxxxx of any such charge, complaint or action, and in addition to any and
all other remedies to which Reliance is, or would under such circumstances be,
entitled under this Agreement and General Release and applicable law, Xxxxxxxxx
agrees to and shall return to Reliance any and all amounts paid to him and any
Shares or merger consideration delivered to him under paragraph "4" above. In
the event that (i) Xxxxxxxxx becomes obliged, pursuant to the preceding
sentence, to return any and all amounts paid to him and any and all Shares or
merger consideration delivered to him under paragraph "4" above and (ii)
Xxxxxxxxx has theretofore sold or otherwise disposed of some or all of the
Shares or merger consideration, Xxxxxxxxx shall, in lieu of returning the Shares
or merger consideration theretofore sold or otherwise disposed of by him (and in
addition to returning to Reliance any and all amounts paid to him under
paragraph "4" above and any and all Shares or merger consideration still in his
possession, custody or control), pay Reliance an amount equal to the value of
the consideration received for the Shares or merger consideration so sold or
otherwise disposed of.
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(c) In addition to any and all other remedies to which
the Releasees are, or would under such circumstances be, entitled under this
Agreement and General Release and applicable law, if any such charge, complaint
or action is filed by Xxxxxxxxx, Xxxxxxxxx acknowledges and agrees that it shall
be dismissed with prejudice upon presentation of a copy of this Agreement and
General Release to the pertinent agency or court.
(d) In addition to any and all other remedies to which
the Releasees are, or would under such circumstances be, entitled under this
Agreement and General Release and applicable law, Xxxxxxxxx shall reimburse the
Releasees for the costs, including but not limited to reasonable attorneys'
fees, of defending against any such charge, complaint or action filed by
Xxxxxxxxx.
12. To the fullest extent permitted by law, Xxxxxxxxx agrees
to release the Releasees, as specifically provided in paragraph "10" above, not
only from any and all claims which he could make on his own behalf, but also
from those which may be made by any other person or entity on his behalf, and
specifically waives any right to become, and promises not to become, a member of
any class in a case in which a claim or claims against the Releasees, or any of
them, are made involving any events up to and including the date of his
execution of this Agreement and General Release. To the fullest extent permitted
by law, Xxxxxxxxx further agrees that he shall not in any way, except as
compelled by a court order or subpoena, assist or cooperate with any other
person or entity in commencing or prosecuting any action or proceeding against
the Releasees, or any of them, or receive any proceeds as a result thereof. In
the event that Xxxxxxxxx is served with such a court order or subpoena,
Xxxxxxxxx agrees to notify the General Counsel of RGH of such service within 24
hours after obtaining actual knowledge of the service or receiving the court
order or subpoena, whichever occurs first.
13. Xxxxxxxxx agrees to cooperate fully with and to make
himself available to Reliance and/or the other Releasees, at his expense (except
as provided for in the next sentence of this paragraph) and at such times and
locations and for such durations as Reliance may request, on such notice to
Xxxxxxxxx as Reliance may give, in connection with any and all investigations,
enforcement actions, subpoenas, litigation, arbitrations, proceedings, claims,
or other matters, whether pending, threatened or otherwise, and whether or not
Xxxxxxxxx or Reliance or any other Releasee is a party thereto, including but
not limited to making himself available for witness interviews and court
appearances and to prepare for and give testimony and depositions. In the event
that Reliance requests Xxxxxxxxx, in writing, pursuant to the preceding sentence
of this paragraph, to travel to and make himself available at a location more
than 100 miles from Xxxxxxxxx'x residence referred to above, then Reliance shall
pay Xxxxxxxxx'x reasonable expenses actually incurred in
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making himself available at that location. Xxxxxxxxx'x obligations as set forth
in this paragraph shall not be subject to prior business or social commitments
or vacations.
14. Except as compelled by a court order or subpoena,
Xxxxxxxxx agrees not to disclose, directly or indirectly, any information
regarding the existence, substance or terms of this Agreement and General
Release, except to his spouse (who shall be deemed to be bound by this
confidentiality provision) and any attorney or certified public accountant with
whom he chooses to consult regarding this Agreement and General Release. In
addition, Xxxxxxxxx represents and affirms that heretofore he has not disclosed
any information regarding the existence, substance or terms of this Agreement
and General Release, except to his spouse and any attorney or certified public
accountant with whom he chose to consult regarding this Agreement and General
Release.
15. Xxxxxxxxx agrees not to disparage or impugn Reliance or
any of its past, present and future employees, officers and directors to or in
the presence of any third party, or otherwise to refer to Reliance or any of its
past, present and future employees, officers and directors in derogatory terms,
or in terms or in a manner intended or tending to subject any of them to
ridicule or contempt, to or in the presence of any third party.
16. Except as otherwise specified in this Agreement and
General Release, Xxxxxxxxx agrees to direct all communications relating to this
Agreement and General Release or any matters relating to his employment with
Reliance, or the termination of such employment, to the Chief of Corporate
Operations of RGH. In addition, Xxxxxxxxx agrees to direct all prospective
employers and other third parties to communicate with Reliance concerning
Xxxxxxxxx only through the Chief of Corporate Operations of XXX.
00. Xxxxxxxxx agrees not to be interviewed by, answer
questions of, or otherwise communicate in any way with any reporter, journalist,
broadcaster, editor, or other representative of any broadcast, print, or other
medium regarding Reliance, any of Reliance's past, present and future employees,
officers and directors, his employment with Reliance, or the termination of such
employment. Xxxxxxxxx further agrees that he will not cause or permit anyone
else to do so on his behalf. Xxxxxxxxx shall direct all such press and media
inquiries to the Chief of Corporate Operations of XXX.
00. No later than his last day of employment with Reliance,
Xxxxxxxxx shall return to Reliance any and all property of Reliance and its
direct and indirect parent companies, subsidiaries and affiliates, including but
not limited to: files, documents, records, manuals and other things relating to
the business of Reliance and its direct and indirect parent companies,
subsidiaries and affiliates; company cars; employee
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identification cards; keys to vehicles, desks, offices, rooms and buildings;
security and "key" cards; and computer equipment, printers, modems, telephones,
telecopiers, beepers, pagers and other office equipment and supplies. In
addition, no later than his last day of employment with Reliance, Xxxxxxxxx
shall surrender any and all club memberships for which Reliance bears any
liability or responsibility (including but not limited to any liability to pay
any dues, costs, or expenses in connection with any such membership), and shall
obtain the return to Reliance of any and all deposits made on behalf of
Xxxxxxxxx by Reliance in connection with any such membership.
19. Xxxxxxxxx and Reliance acknowledge and agree that this
Agreement and General Release, the terms and provisions hereof, and the
furnishing by Reliance of the consideration specified herein are the product of
mutual negotiation and compromise between Reliance and Xxxxxxxxx, and may not
and shall not be used against Reliance or the other Releasees, or any of them,
in any action or proceeding other than an action by Xxxxxxxxx to enforce the
terms of this Agreement and General Release. Xxxxxxxxx agrees that neither this
Agreement and General Release nor the furnishing by Reliance of the
consideration specified herein shall be deemed or construed at any time as an
admission by Reliance of any liability for unlawful or improper conduct of any
kind.
20. This Agreement and General Release may not be modified,
altered or changed except upon the express written consent of Xxxxxxxxx, RGH,
and RIC, in which specific reference is made to this Agreement and General
Release.
21. This Agreement and General Release fully supersedes and
cancels any and all prior agreements and understandings between Xxxxxxxxx and
RGH and between Xxxxxxxxx and RIC, including but not limited to the RGH
Employment Agreement and the RIC Employment Agreement. Notwithstanding anything
herein to the contrary, however, this Agreement and General Release does not
supersede or cancel that certain Consulting Agreement (the "Consulting
Agreement") made as of the 23rd day of June, 2000 by and between RIC and
Xxxxxxxxx, which Consulting Agreement shall not become effective, operable or
enforceable unless and until executed by the parties thereto, and which RIC and
Xxxxxxxxx hereby agree to execute (in the form annexed hereto) within five (5)
business days after the expiration of the seven-day revocation period referred
to below without there having been a revocation by Xxxxxxxxx of this Agreement
and General Release.
22. This Agreement and General Release shall be governed by
the laws of the State of New York without regard to any choice of law or
conflicts of law principles.
23. Should any provision of this Agreement and General
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Release be declared illegal or unenforceable by any court of competent
jurisdiction and it cannot be modified to be enforceable, said provision shall
immediately become null and void, leaving the remainder of this Agreement and
General Release in full force and effect. However, if any portion of paragraph
"10," "11," or "12" above is ruled to be unenforceable, in whole or in part, for
any reason, Xxxxxxxxx agrees to and shall return to Reliance any and all amounts
paid to him and any Shares or merger consideration delivered to him under
paragraph "4" above. In the event that (i) Xxxxxxxxx becomes obliged, pursuant
to the preceding sentence, to return any and all amounts paid to him and any and
all Shares or merger consideration delivered to him under paragraph "4" above
and (ii) Xxxxxxxxx has theretofore sold or otherwise disposed of some or all of
the Shares or merger consideration, Xxxxxxxxx shall, in lieu of returning the
Shares or merger consideration theretofore sold or otherwise disposed of by him
(and in addition to returning to Reliance any and all amounts paid to him under
paragraph "4" above and any and all Shares or merger consideration still in his
possession, custody or control), pay Reliance an amount equal to the value of
the consideration received for the Shares or merger consideration so sold or
otherwise disposed of.
24. This Agreement and General Release has been, and shall be
deemed to have been, jointly prepared by the parties hereto, and the terms
hereof shall not be construed in favor of or against any party hereto by reason
of its or his participation or role in such preparation.
25. This Agreement and General Release shall inure to the
benefit of and be binding on RGH and RIC and their successors and assigns and
Xxxxxxxxx and his heirs, administrators, executors, successors and assigns.
XXXXXXXXX SPECIFICALLY REPRESENTS, AGREES, AND ACKNOWLEDGES THAT HE HAS BEEN
ALLOWED 21 DAYS WITHIN WHICH TO CONSIDER CAREFULLY AND, IF HE SO DESIRES, TO
EXECUTE THIS AGREEMENT AND GENERAL RELEASE. XXXXXXXXX FURTHER UNDERSTANDS THAT
HE WILL HAVE 7 DAYS AFTER EXECUTION OF THIS AGREEMENT AND GENERAL RELEASE WITHIN
WHICH TO REVOKE IT. THIS AGREEMENT MAY BE REVOKED BY XXXXXXXXX BY WRITTEN NOTICE
OF SUCH REVOCATION ADDRESSED AND ACTUALLY DELIVERED TO XXXXXX X. XXXXXXXXX,
EXECUTIVE VICE PRESIDENT AND CHIEF OF CORPORATE OPERATIONS, RELIANCE GROUP
HOLDINGS, INC., PARK AVENUE PLAZA, 55 EAST 52ND STREET, 29TH FLOOR, NEW YORK,
NEW YORK 10055, WITH SAID REVOCATION TO BE EFFECTIVE ONLY UPON RECEIPT. IN THE
EVENT OF SUCH REVOCATION, (1) THE RIGHTS, OBLIGATIONS AND DUTIES OF XXXXXXXXX
AND RELIANCE UNDER THIS AGREEMENT AND GENERAL RELEASE SHALL BE DEEMED TO HAVE
TERMINATED IN ALL RESPECTS AND (2) THIS AGREEMENT AND GENERAL RELEASE SHALL BE
DEEMED TO HAVE BEEN SOLELY FOR PURPOSES OF ATTEMPTED SETTLEMENT AND NO PARTY
SHALL REFER TO IT OR THE FACT THAT ANY PARTY EXECUTED IT IN ANY SUBSEQUENT LEGAL
PROCEEDING.
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RELIANCE AND XXXXXXXXX HAVE READ AND FULLY CONSIDERED THIS AGREEMENT AND GENERAL
RELEASE AND ARE MUTUALLY DESIROUS OF ENTERING INTO IT. THE TERMS OF THIS
AGREEMENT AND GENERAL RELEASE ARE THE PRODUCT OF MUTUAL NEGOTIATION AND
COMPROMISE BETWEEN RELIANCE AND XXXXXXXXX. XXXXXXXXX HAS BEEN ADVISED TO CONSULT
WITH AN ATTORNEY OF HIS CHOOSING PRIOR TO HIS EXECUTION OF THIS AGREEMENT AND
GENERAL RELEASE, AND HAS IN FACT CONSULTED WITH AN ATTORNEY REGARDING THIS
AGREEMENT AND GENERAL RELEASE. HAVING ELECTED TO EXECUTE THIS AGREEMENT AND
GENERAL RELEASE AND TO FULFILL THE PROMISES AND RECEIVE THE CONSIDERATION SET
FORTH HEREIN, XXXXXXXXX VOLUNTARILY, FREELY, AND KNOWINGLY, AND AFTER DUE
CONSIDERATION, ENTERS INTO THIS AGREEMENT AND GENERAL RELEASE INTENDING, AS MORE
SPECIFICALLY PROVIDED IN PARAGRAPH "10" ABOVE, TO WAIVE, SETTLE AND RELEASE ANY
AND ALL CLAIMS THAT HE HAS OR MIGHT HAVE AGAINST RGH AND RIC AND THEIR PAST,
PRESENT AND FUTURE DIRECT AND INDIRECT PARENT COMPANIES, SUBSIDIARIES,
AFFILIATES, DIVISIONS, PREDECESSORS, SUCCESSORS AND ASSIGNS AND THE PAST,
PRESENT AND FUTURE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS OF EACH OF THE
FOREGOING ENTITIES, ARISING UP TO AND INCLUDING THE DATE OF HIS EXECUTION OF
THIS AGREEMENT AND GENERAL RELEASE.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and General
Release on the dates shown below.
/s/ Xxxxxx X. Xxxxxxxxx
------------------------------
XXXXXX X. XXXXXXXXX
STATE OF ________________)
: ss.:
COUNTY OF _______________)
On the ___ day of ____________, 2000, before me personally came Xxxxxx
X. Xxxxxxxxx, to me known and known to me to be the individual described in and
who executed the foregoing instrument, and acknowledged to me that he executed
the same.
--------------------------------
Notary Public
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RELIANCE GROUP HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the ___ day of _____________, 2000, before me personally came
__________________, to me known, who being by me duly sworn, did depose and say
that he is _______________________ of RELIANCE GROUP HOLDINGS, INC., the
corporation described in and which executed the foregoing instrument; that he
signed the foregoing instrument on behalf of said corporation; and that he was
duly authorized to sign the foregoing instrument on behalf of said corporation
and to bind said corporation thereto.
--------------------------------
Notary Public
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RELIANCE INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxx
-------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the ___ day of _____________, 2000, before me personally came
__________________, to me known, who being by me duly sworn, did depose and say
that he is _______________________ of RELIANCE INSURANCE COMPANY, the
corporation described in and which executed the foregoing instrument; that he
signed the foregoing instrument on behalf of said corporation; and that he was
duly authorized to sign the foregoing instrument on behalf of said corporation
and to bind said corporation thereto.
--------------------------------
Notary Public
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CONSULTING AGREEMENT
This Consulting Agreement is made as of the 23rd day of June, 2000, by
and between Reliance Insurance Company ("Company") and Xxxxxx X. Xxxxxxxxx
("Consultant").
WHEREAS, Consultant has experience in the administration and operation
of insurance companies; and
WHEREAS, Company wishes to engage Consultant as a consultant to assist
in the administration and operation of Company and its insurance subsidiaries
and to obtain an agreement not to compete;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. EFFECTIVENESS
1.1 Effectiveness. The terms and conditions of this Agreement shall
become effective, operable and enforceable as of the date first recited above.
SECTION 2. CONSULTANCY
2.1 Engagement as Consultant. Company hereby engages Consultant and
Consultant agrees to serve as a consultant for the term and pursuant to the
terms and conditions hereinafter set forth.
2.2 Term of Consultancy. The term of the engagement of Consultant shall
commence on the first day of the month immediately following the date as of
which this Agreement is executed by the parties and shall terminate four (4)
years later.
2.3 Services as Consultant.
2.3.1 Consultant shall perform such services, consistent with his past
duties and responsibilities, as are reasonably requested by the Board of
Directors or the Chief Executive Officer of Company from time to time upon
reasonable advance notice, subject to Consultant's prior business commitments,
disabilities and vacations, involving the administration and operation of
Company or its insurance subsidiaries.
2.3.2 Consultant shall provide such services in a competent and
professional manner, using his own independent skills and judgment and the
manner and means that are reasonably suited to his performance of such services.
2.3.3 Consultant agrees to serve Company faithfully and to perform his
duties under this Agreement to the best of his ability and capacity. Consultant
further agrees to perform his consulting services and all other obligations
undertaken by him under this Agreement in a manner in all respects consistent
with his continuing fiduciary duties to Company (including but not limited to
the duty of loyalty), which duties Consultant hereby acknowledges and affirms.
2.3.4 Consultant's services will be rendered in such locations in New
York, New Jersey, or Pennsylvania as Company shall request at such times as may
be mutually agreed upon by Company and Consultant. The availability of
Consultant to perform such services shall be subject to his prior business
commitments, disabilities and vacations. Consultant shall not be required to
devote more than 480 man-hours per full calendar year to the performance of such
services.
2.3.5 In addition to his obligations set forth elsewhere in this
Section 2.3, Consultant agrees to cooperate fully with and to make himself
available to Company, at his expense (except as provided for in the next
sentence of this paragraph 2.3.5) and at such times and locations and for such
durations as Company may request, on such notice to Consultant as Company may
give, in connection with any and all investigations, enforcement actions,
subpoenas, litigation, arbitrations, proceedings, claims, or other matters,
whether pending, threatened or otherwise, and whether or not Consultant or
Company is a party thereto, including but not limited to making himself
available for witness interviews and court appearances and to prepare for and
give testimony and depositions. In the event that Company requests Consultant,
in writing, pursuant to the preceding sentence of this paragraph 2.3.5, to
travel to and make himself available at a location more than 100 miles from
Consultant's residence at 0 Xxxxxxx Xxxx, Xxxxxxxxxxxxx, Xxx Xxxxxx, then
Company shall pay Consultant's reasonable expenses actually incurred in making
himself available at that location. Consultant's obligations as set forth in
this Section 2.3.5 shall not be subject to prior business or social commitments
or vacations.
2.4 Consulting Fee.
2.4.1 In consideration of and subject to the punctilious performance by
Consultant of his obligations hereunder, Company shall pay Consultant an annual
consulting fee of Two Million Two-Hundred Fifty Thousand and 00/100 Dollars
($2,250,000.00), payable monthly in arrears on the last day of each month during
the term of the engagement of Consultant under this Agreement.
2.4.2 Consultant and Company acknowledge and agree that Consultant is
an independent contractor and not an agent or employee of Company and that
Consultant has no authority to bind Company. Inasmuch as Consultant is an
independent contractor under applicable current laws and regulations, Company
will not withhold income, social security or other taxes from payments made
under this Section 2.4. Consultant hereby agrees to be responsible for all
income, social security and other taxes that may be applicable to Consultant's
receipt of payments made under this Section 2.4.
2.4.3 Except insofar as Consultant is required under Section 2.3.5 to
make himself available at his own expense, Consultant will be reimbursed by
Company for certain verified expenses, but only to the extent such expenses are
required in and in furtherance of the performance of his duties hereunder, as
evidenced by an express written authorization from an officer of Company in
advance of the incurring of the expense.
2.4.4 In the event of Consultant's death during the term of his
engagement under this Agreement, Consultant's legal representatives shall be
entitled to receive the remaining monthly
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payments which otherwise would have been due Consultant under Section 2.4.1 at
the times such payments would have been due.
SECTION 3. NON-COMPETITION
3.1 Covenant Not to Compete.
3.1.1 Consultant hereby agrees that during the term of his engagement
under this Agreement, without the prior written consent of Company, he will not,
alone or with others, directly or indirectly, whether as principal, agent,
officer, director, employee, salesman, or consultant, enter into, participate
in, engage in or own any interest in the business of any person, firm,
corporation, or other organization which is engaged in or proposes to become
engaged in the property and casualty insurance business. Notwithstanding the
foregoing, this Covenant Not to Compete shall not prohibit (a) passive ownership
by Consultant of common stock of RGH, or of not more than five percent (5%) of
the equity securities of companies listed on any United States stock exchange or
traded over the counter, or (b) engagements which do not involve, directly or
indirectly, the business of insurance.
3.1.2 Consultant hereby agrees that during the term of his engagement
under this Agreement, he will not (directly or indirectly) recruit, solicit or
induce, or attempt to recruit, solicit or induce, any employee or employees of
Company or its parent companies, subsidiaries, or affiliates to terminate their
employment, or otherwise cease or modify their relationship, with Company or its
parent companies, subsidiaries, or affiliates.
3.1.3 Consultant hereby agrees that during the term of his engagement
under this Agreement, he will not (directly or indirectly) knowingly solicit,
divert or take away, or attempt to solicit, divert or take away, or accept,
regardless of whether solicited, the property and casualty insurance business or
patronage of any of the clients, customers or accounts of Company or its parent
companies, subsidiaries, or affiliates or prospective clients, customers or
accounts that were contacted or solicited while Consultant was employed by
Company.
3.2 Proprietary Information. Consultant agrees that all information and
know-how, whether or not in writing, of a private, secret or confidential nature
concerning the business or financial affairs of Company or its parent companies,
subsidiaries, or affiliates (collectively, "Proprietary Information") is and
shall be the exclusive property of Company or its parent companies,
subsidiaries, or affiliates so long as it is not in the public domain.
Consultant will not disclose any Proprietary Information to others outside
Company or its parent companies, subsidiaries, or affiliates or use the same for
any purpose without the prior written consent of Company or unless compelled to
do so by law.
3.3 Non-Disparagement. Consultant agrees not to disparage or impugn
Company or any of its past, present or future employees, officers and directors
to or in the presence of any third party, or otherwise to refer to Company or
any of its past, present and future employees, officers and directors in
derogatory terms or in a manner intended to or tending to subject any of them to
ridicule or contempt, to or in the presence of any third party.
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3.4 Communications With Media. Consultant agrees not to be interviewed
by, answer questions of, or otherwise communicate in any way with any reporter,
journalist, broadcaster, editor, or other representative of any broadcast,
print, or other medium regarding Company or any of its past, present and future
employees, officers and directors. Consultant further agrees that he will not
cause or permit anyone else to do so on his behalf. Consultant shall direct all
such press and media inquiries to the Chief of Corporate Operations of Reliance
Group Holdings, Inc.
3.5 Breach of Any Provisions.
3.5.1 Consultant and Company agree that the covenants set forth in
Section 3.1 are a material part of this Agreement and are reasonable as to time,
territory, and scope of prohibited activity. Consultant and Company acknowledge
that a breach of any of the provisions of Section 3.1 cannot, due to (among
other things) Consultant's unique skills, knowledge, reputation and ability,
reasonably or adequately be redressed in damages or in an action at law and may
cause Company or its successor or assign irreparable injury and damage.
Therefore, Consultant and Company agree that Company is entitled, in addition to
any other remedies it may have under this Agreement or otherwise, to preliminary
and permanent injunctive and other equitable relief to prevent or curtail any
breach of Section 3.1 of this Agreement, provided, however, that no
specification in this Agreement of a specific legal or equitable remedy shall be
construed as a waiver of or prohibition against the pursuing of other legal or
equitable remedies in the event of such a breach.
3.5.2 Company and Consultant agree that, in the event of a breach by
Consultant of any of the provisions of this Section 3 (regardless of whether
such breach is material or not), Company shall be entitled, at its sole option,
to terminate this Agreement, in addition to any other remedies it may have under
this Agreement or otherwise.
3.5.3 In the event that Company shall fail to make any payment under
Section 2.4.1 of this Agreement within thirty (30) days of the due date thereof,
then, upon written notice of default to Company, and upon Company's failure to
cure said default within twenty (20) business days of its actual receipt of said
notice, Consultant shall have the option to accelerate any of the then remaining
payments under this Agreement such that they are all immediately due and
payable.
SECTION 4. GENERAL
4.1 Binding Effect. This Agreement shall inure to the benefit of and be
binding upon and enforceable by Consultant and inure to the benefit of and be
binding upon and enforceable by Company and its successors and assigns. This
Agreement and the payments hereunder may not be assigned, pledged or otherwise
hypothecated by Consultant. The rights of Company hereunder may be assigned by
Company to successors and assigns of Company. In the event of any such
assignment by Company, all obligations of Company hereunder shall be assumed by
such successors and assigns of Company.
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4.2 Entire Agreement. This Agreement is intended by the parties hereto
to constitute the entire understanding of the parties with respect to the
engagement of Consultant by Company as a consultant and his agreement not to
compete and supersedes all prior agreements and understandings, oral or written,
relating to such engagement and agreement.
4.3 Enforceability. The parties hereto agree that, should any provision
of this Agreement be declared illegal or unenforceable by any court of competent
jurisdiction, said provision shall be modified to the least extent necessary to
be enforceable. Should any provision of Section 3 of this Agreement be declared
illegal or unenforceable by any court of competent jurisdiction, and said
provision cannot be modified to be enforceable, this Agreement shall immediately
become null and void in its entirety and Consultant shall return to Company any
and all amounts theretofore paid to him under Section 2.4.1.
4.4 No Conflicts. Consultant represents that the execution and
performance by him of this Agreement does not and will not conflict with or
breach the terms of any other agreement by which he is bound.
4.5 Employment Termination. Consultant agrees and affirms that any and
all employment relationships with Company have been voluntarily terminated by
Consultant no later than as of the commencement of the term of his engagement
under this Agreement, and this Agreement describes the only relationship
Consultant will have with Company following the commencement of said term.
4.6 Modifications. This Agreement may not be amended or modified except
in a writing signed by both parties hereto.
4.7 Waivers. The failure of any party to insist upon a strict
performance of any provision hereof shall not constitute a waiver of such
provision. All waivers must be in writing.
4.8 Attorneys' Fees. In any suit or proceeding between the parties
arising out of or relating to this Agreement, the prevailing party shall be
entitled to recover its or his costs thereof, including reasonable attorneys'
fees.
4.9 Governing Law. This Agreement shall be deemed to be made in and in
all respects shall be interpreted, construed and governed by and in accordance
with the laws of the State of New York without regard to applicable principles
of conflicts of law.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
RELIANCE INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxx
-------------------------
Title: Executive Vice President
/s/ Xxxxxx X. Xxxxxxxxx
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XXXXXX X. XXXXXXXXX
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