Contract
EMPLOYMENT AGREEMENT,
dated and effective as of January 1, 2019 (the
“Agreement”) by and between
KINGSTONE COMPANIES, INC., a
Delaware corporation (the “Company”), and
XXXX X. XXXXXXXX (the
“Employee” or the
“Executive”).
RECITALS
WHEREAS, the
Company and the Employee desire to enter into an employment
agreement which will set forth the amended terms and conditions
upon which the Employee shall be employed by the Company and upon
which the Company shall compensate the Employee for his
services.
NOW, THEREFORE, in
consideration of the foregoing and the mutual covenants hereinafter
set forth, the parties hereto hereby agree as
follows:
1. EMPLOYMENT;
TERM
1.1. The
Company will employ the Employee in its business, and the Employee
will work for the Company therein, as its President and Chief
Executive Officer for a term commencing as of January 1, 2019 (the
“Effective Date”) and terminating on December 31, 2021
(the “Expiration Date”), subject to earlier termination
as hereinafter provided (the employment period, or as earlier
terminated as provided for herein, being referred to as the
“Term”).
1.2. Upon
the expiration of the Term or the termination of the
Employee’s employment with the Company for any reason
whatsoever, whether during or following the Term, he shall be
deemed to have resigned all of his positions as an employee,
officer and director of the Company and of each and every
subsidiary thereof.
2. DUTIES
2.1. During
the Term, the Employee shall serve as the Company’s President
and Chief Executive Officer and shall have and perform executive,
administrative, and managerial duties customary for such a
position, and such further duties of an executive character as
shall, from time to time, be delegated or assigned to him by the
Board of Directors of the Company (the “Board”), the
Executive Committee of the Board or the Chairman of the Board of
the Company consistent with the Employee’s
position.
3. DEVOTION
OF TIME
3.1. During
the Term, the Employee shall expend substantially all of his
working time for the Company, shall devote his best efforts, energy
and skill to the services of the Company and the promotion of its
interests and shall not take part in any outside business
activities that conflict with his duties to the Company.
Notwithstanding the foregoing, during the term of the Employment
Agreement between Kingstone Insurance Company (“KICO”)
and the Employee of even date (the “KICO Employment
Agreement”), the Employee shall be entitled to devote such
time as is necessary to the fulfillment of his duties and
responsibilities as President and CEO of KICO, it being understood
and agreed that such permitted activity is subject to the reduction
in Base Salary (as hereinafter defined) provided for in Section 4.2
hereof.
3.2. The
Employee shall be permitted to engage in the following activities:
(a) charity, social or civic work, (b) tend to personal financial
and legal affairs, (c) serve on the Board of Directors of Service
King, Inc., and (d) subject to the prior written consent of the
Company (following Board approval), serve on the Board of Directors
of, or advisor to, other business organizations, in each case
(i.e., (a) through (d) above), provided that such activities do not
interfere or conflict with his full-time services to the
Company.
4. COMPENSATION
4.1. For
all services to be rendered by the Employee during the Term, and in
consideration of the Employee’s representations and covenants
set forth in this Agreement, the Employee shall be entitled to
receive from the Company compensation as set forth in Exhibit A
(provided, however, that any equity grants will be subject to the
approval of the Board or an applicable committee thereof at the
time of the grant and will have terms and conditions (such as
vesting) that are consistent with grants of equity made to other
executives of the company at the relevant time except as
specifically provided in this Agreement).
4.2. During
the Term, the Employee shall be entitled to receive a salary, bonus
and restricted stock award as outlined in Exhibit A (the
“Compensation”); provided, however, the Base Salary
reflected on Exhibit A (the “Base Salary”) shall be
reduced on a dollar-for-dollar basis to the extent of the salary
paid by KICO to the Employee for the same period pursuant to the
KICO Employment Agreement. Employee’s Base Salary shall be
paid in accordance with the Company’s usual payroll
schedule.
4.3. Subject
to the terms and conditions hereof, the Employee shall also be
entitled to receive from the Company, for each fiscal year during
the Term, a bonus (the “Bonus”) equal to three percent
(3%) of the Company’s Net Income (as hereinafter defined) for
such fiscal year (the “Bonus Payments”); provided,
however, that the Bonus amount payable to the Employee for any
fiscal year pursuant to this Section 4.3 (the “Company
Bonus”) shall be reduced on a dollar-for-dollar basis to the
extent of any bonus paid by KICO to or for the benefit of the
Employee for such fiscal year (the “KICO Bonus”), it
being understood and agreed that, in the event the amount of the
KICO Bonus is greater than the amount of the Company Bonus for any
fiscal year, the excess of the KICO Bonus over the Company Bonus
shall not be an offset against the Base Salary payable to the
Employee hereunder. In addition, the total Bonus shall
not exceed two times the Base Salary of the Employee.
4.4. For
purposes hereof, the term “Net Income” for any
particular fiscal period shall mean the Company's consolidated
income from operations before taxes for such period determined in
accordance with generally accepted accounting principles
consistently applied, as audited and reported upon by the
independent auditors of the Company, except that the
Company’s consolidated net investment income (loss) and net
realized gains (losses) on investments shall be
excluded.
4.5. For
purposes hereof, in the event that this Agreement shall terminate
on a date other than December 31 of any fiscal year and for such
fiscal year, pursuant to the terms of this Agreement, the Employee
is entitled to receive a Bonus through the termination date (the
“Termination Date”), then the Company’s Net
Income for such fiscal year shall be determined for the period from
the first day of such fiscal year (the “Termination
Year”) until the Termination Date by multiplying the
Company’s Net Income for the period from the first day of the
Termination Year until the end of the fiscal quarter in which the
Termination Date falls (the “Termination Quarter”) by a
fraction, the numerator of which shall be the number of days from
the first day of the Termination Year until the Termination Date
and the denominator of which shall be the number of days from the
first day of the Termination Year until the end of the Termination
Quarter. In the event the Termination Quarter shall be other
than the last fiscal quarter of the Termination Year,
notwithstanding that the term “Net Income” shall have
the meaning ascribed to it by Section 4.4 hereof (as adjusted by
the provisions of this Section 4.5), the application of such term
to this Section 4.5 shall not be subject to any adjustment based
upon an audit or report of the Company’s independent auditors
with respect to the Termination Year but instead shall be
calculated and paid as provided for in Section 4.6 hereof. Any
Bonus calculated in accordance with this Section 4.5 shall be paid
in accordance with Section 4.6.
4.6. The
Bonus for any fiscal year shall be payable within thirty (30) days
following the receipt by the Company of the report of its
independent auditors, with regard to the Company’s Net Income
for such fiscal year (and in no event later than 2-1/2 months after
the end of such fiscal year), calculated in accordance with Section
4.4 or 4.5 hereof, as applicable, and otherwise consistent with the
consolidated financial statements of the Company for the fiscal
year (the “Audited Financial Statements”), as set forth
in any Form 10-K filed by the Company with the Securities and
Exchange Commission (the “SEC”); provided, however,
that, in the event the Audited Financial Statements are not
available by February 28 of any fiscal year, an interim Bonus
payment, if any, shall be made based upon the unaudited
consolidated financial statements of the Company for such fiscal
year, as determined by the Company’s chief financial officer
and approved by the Company’s Compensation Committee.
Following receipt of the Audited Financial Statements, an
appropriate adjustment will be made to the Bonus amount, and the
Company will pay any underpayment in the calendar year following
the fiscal year to which the Bonus relates), or the Employee will
return any overpayment, within fifteen (15) days of receipt of the
Audited Financial Statements. Notwithstanding the foregoing,
with respect to any Termination Year in which the Termination
Quarter is other than the last fiscal quarter of the Termination
Year, the Bonus shall be payable within thirty (30) days following
the determination by the Company’s chief financial officer of
the Company’s Net Income through the end of the Termination
Quarter, if any, calculated in accordance with Section 4.5 hereof
and otherwise consistent with the consolidated financial statements
of the Company for the period ended with the end of the Termination
Quarter, as set forth in any Form 10-Q filed by the Company with
the SEC but in no event more than 2-1/2 months following the fiscal
year in which the Termination Quarter occurs.
5. REIMBURSEMENT
OF EXPENSES
5.1. Subject
to Section 5.3 hereof, the Company shall pay directly, or reimburse
the Employee for, all reasonable and necessary expenses and
disbursements incurred by the Employee for and on behalf of the
Company in the performance of his duties during the
Term.
5.2. The
Employee shall periodically submit to the Company reports of such
expenses and disbursements in a form and at a frequency normally
used by the Company, and receipts with respect thereto, and the
Company’s obligations under Section 5.1 hereof shall be
subject to compliance therewith.
5.3. During
the Term, the Employee shall be entitled to receive a monthly
automobile allowance of one thousand dollars ($1,000) for any and
all expenses related to the Employee’s automobile (i.e.,
lease payments, insurance, gas, tolls, parking and the like).
Except for reimbursement of directly related automobile expenses
(i.e., parking and tolls) incurred by the Employee while fulfilling
his duties and responsibilities to the Company, but which are
outside of the Employee’s normal day to day commuting usage
of his automobile, the Employee will not be entitled to any
additional or alternative reimbursement for any other automobile
related expenses.
6. DISABILITY;
INSURANCE
6.1. If,
during the Term, the Employee, in the opinion of an independent
physician selected by the Company and reasonably acceptable to
Employee, shall become physically or mentally incapacitated to
perform his duties for the Company hereunder
(“Disabled”) for a continuous period, then for the
first three (3) months of such period he shall receive his full
salary payable in accordance with the normal payroll practices of
the Company.. In no event, however, shall the Employee be entitled
to receive any salary continuation payments pursuant to this
Section 6.1 beyond the expiration or termination date of this
Agreement. For the avoidance of doubt, the immediately preceding
sentence is not intended to limit Employee’s other
entitlements related to any termination of employment. Effective
with the date of his resumption of full employment, the Employee
shall be re-entitled to receive his full salary. If such illness or
other incapacity shall endure for a continuous period of at least
three (3) months or for at least sixty (60) business days during
any six (6) month period, the Company shall, subject to applicable
law, have the right to terminate the Employee’s employment
hereunder without Cause in accordance with the provisions of
Section 11.1. The Employee agrees to submit himself for appropriate
medical examination by a physician of the Company’s
reasonable designation as necessary for purposes of this Section
6.1.
6.2. The
obligations of the Company under this Article 6 may be satisfied,
in whole or in part, by payments to the Employee under a disability
insurance policy provided by the Company and/or
KICO.
6.3. Notwithstanding
the foregoing, in the event that, at the time of any apparent
incapacity, the Company has in effect a disability policy with
respect to the Employee, the Employee shall be considered Disabled
for purposes of Section 6.1 only if he is considered disabled for
purposes of the policy.
7. RESTRICTIVE
COVENANTS
7.1. (a) The
services of the Employee are unique and extraordinary and essential
to the business of the Company, especially since the Employee shall
have access to the Company’s customer lists, producer lists,
trade secrets and other privileged and confidential information
essential to the Company’s business. Therefore, the Employee
agrees that, if the term of his employment hereunder shall expire
or his employment shall be terminated by the Company for Cause (as
hereinafter defined) or by the Employee (with or without Good
Reason, as hereinafter defined), the Employee will not at any time
during the Restrictive Covenant Period (as hereinafter defined),
without the prior written consent of the Company, directly or
indirectly, whether individually or as a principal, officer,
employee, partner, shareholder, member, manager, director, agent
of, or consultant or independent contractor to, any person,
corporation, limited liability company, partnership, limited
partnership or other entity (collectively,
“Person”):
(i) cause
or seek to persuade any director, officer, employee, customer,
client, account, agent, producer, reinsurer or supplier of, or
consultant or independent contractor to, the Company, or others
with whom the Company has a business relationship (collectively,
“Business Associates”), to discontinue or materially
modify the status, employment or relationship of such Person with
the Company;
(ii) cause
or seek to persuade any prospective customer, client, account or
other Business Associate of the Company (which at or about the
Cessation Date was then actively being solicited by the Company) to
determine not to enter into a business relationship with the
Company or to materially modify its contemplated business
relationship; or
(iii) hire,
retain or associate in a business relationship with, directly or
indirectly, any director, officer or employee of the
Company.
The foregoing restrictions set forth in this Section 7.1(a) shall
apply likewise during the Term.
7.1.1) For
purposes hereof, the term “Restrictive Covenant Period”
shall mean the eighteen (18) month period commencing with the
Cessation Date;
provided,
however,
that, in the event that the Employee’s employment is
terminated by the Employee for Good Reason, the term
“Restrictive Covenant Period” shall mean the period
commencing with the Cessation Date and ending on the earlier of:
(x) the Expiration Date, and (y) the date that is six (6) months
after the Cessation Date. “Cessation Date” shall mean
the last day of the Term, which, for the avoidance of doubt, may
precede the Expiration Date pursuant to the terms of this
Agreement.
7.2. The
Employee agrees to timely disclose to the Board all material ideas,
processes, methods, devices, business concepts, inventions,
improvements, discoveries, know-how and other creative
achievements, whether or not the same or any part thereof is
capable of being patented, trademarked, copyrighted, or otherwise
protected, which the Employee, while employed by the Company,
conceives, makes, develops, acquires or reduces to practice,
whether acting alone or with others and whether during or after
usual working hours, and which are related to the Company’s
business or interests, or are used or usable by the Company, or
arise out of or in connection with the duties performed by the
Employee (hereinafter referred to collectively as
“Discoveries”). The Employee hereby transfers and
assigns to the Company all right, title and interest in and to such
Discoveries, including any and all domestic and foreign copyrights
and patent and trademark rights therein and any renewals thereof.
On request of the Company, the Employee will, without any
additional compensation, from time to time during, and after the
expiration or termination of, the Term, execute such further
instruments (including, without limitation, applications for
copyrights, patents, trademarks and assignments thereof) and do all
such other acts and things as may be deemed necessary or desirable
by the Company to protect and/or enforce its right in respect of
such Discoveries. All expenses of filing or prosecuting any patent,
trademark or copyright application shall be borne by the Company,
but the Employee shall cooperate, at the Company’s expense,
in filing and/or prosecuting any such
application.
7.3. (a) The
Employee represents that he has been informed that it is the policy
of the Company to maintain as confidential all confidential and/or
proprietary information relating to the Company, including, without
limitation, any and all knowledge or information with respect to
confidential methods, processes, plans, materials, customer,
producer and reinsurer lists or data, or with respect to any other
confidential or secret aspect of the Company’s activities,
and further acknowledges that such confidential information is of
great value to the Company. The Employee recognizes that, by reason
of his employment with the Company, he has acquired and will
acquire confidential information as aforesaid. The Employee
confirms that it is reasonably necessary to protect the
Company’s goodwill, and, accordingly, hereby agrees that he
will not, directly or indirectly (except where authorized by the
Board), at any time during the Term or thereafter divulge to any
Person, or use, or cause or authorize any Person to use, any such
confidential information.
7.3.2) The
Employee agrees that he will not, at any time, remove from the
Company’s premises any drawings, notebooks, software, data or
other confidential information relating to the business and
procedures heretofore or hereafter acquired, developed and/or used
by the Company, except where necessary in the fulfillment of his
duties hereunder.
7.3.2) The
Employee agrees that, upon the expiration or termination of this
Agreement or the termination of his employment with the Company for
any reason whatsoever, he shall promptly deliver to the Company any
and all drawings, notebooks, software, data and other documents and
material, including all copies thereof, in his possession or under
his control relating to any confidential information or
discoveries, or which is otherwise the property of the
Company.
7.3.3) For
purposes hereof, the term “confidential information”
shall mean all information given to the Employee, directly or
indirectly, by the Company and all other information relating to
the Company otherwise acquired by the Employee during the course of
his employment with the Company (whether on or prior to the
Effective Date or hereafter), other than information which (i) was
in the public domain at the time furnished to, or acquired by, the
Employee, or (ii) thereafter enters the public domain other than
through disclosure, directly or indirectly, by the Employee or
others in violation of an agreement of confidentiality or
nondisclosure.
7.4. For
purposes of this Article 7, the term “Company” shall
mean and include the Company and any and all subsidiaries and
affiliated entities of the Company in existence from time to
time.
7.5. In
connection with his agreement to the restrictions set forth in this
Article 7, the Employee acknowledges the benefits accorded to him
pursuant to the provisions of this Agreement, including, without
limitation, the agreement on the part of the Company to employ the
Employee during the Term (subject to the terms and conditions
hereof). The Employee also acknowledges and agrees that the
covenants set forth in this Article 7 are reasonable and necessary
in order to protect and maintain the proprietary and other
legitimate business interests of the Company and that the
enforcement thereof would not prevent the Employee from earning a
livelihood.
7.6. Notwithstanding
any other provision of this Article 7 to the contrary, the
Executive may disclose confidential or proprietary information of
the Company and its subsidiaries as follows: (a) disclosures to
directors, officers, key employees, independent accountants and
counsel of the Company and its subsidiaries as may be necessary or
appropriate in the performance of the Executive’s duties
hereunder, (b) disclosures that do not have a material adverse
effect on the business or operations of the Company and its
subsidiaries taken as a whole, (c) disclosures that the Executive
is required to make by law or by any court, arbitrator or
administrative or legislative body (including any committee
thereof) with apparent jurisdiction to order the Executive to
disclose or make accessible any information, (d) disclosures with
respect to any other litigation, arbitration or mediation involving
this Agreement, and (e) disclosures of any such confidential or
proprietary information that is, at the time of such disclosure,
generally known to and available for use by the public and not by
the Executive’s wrongful act or omission.
7.7. If
Executive believes that he may be required to disclose any such
confidential or proprietary information pursuant to applicable law,
court order or subpoena, he shall immediately notify the Company in
writing by overnight delivery, directed to the Chairman, of any
such perceived requirement so that the Company may seek an
appropriate protective order or other appropriate remedy or waive
compliance with this confidentiality requirement. Executive shall
also reasonably cooperate with the Company to obtain such a
protective order or other remedy.
7.8. Notwithstanding
any other provision of this Article 7 to the contrary, the
Executive upon leaving the employ of the Company shall be entitled
to retain (i) papers and other materials of a personal nature,
including but not limited to, photographs, correspondence, personal
diaries, personal contact lists, calendars and personal files,
except to the extent business-related information is set forth
therein, (ii) information showing his compensation or relating to
his reimbursement of expenses, (iii) information that he reasonably
believes may be needed for tax purposes, and (iv) copies of plans,
programs and agreements relating to his employment, or termination
thereof, with the Company.
7.9. This
Agreement does not prohibit Executive from making any disclosure
required by law, communicating with, making a report to, or
otherwise participating in any investigation or proceeding that may
be conducted by the Company’s designated legal, compliance or
human resources personnel, the Securities and Exchange Commission
(“SEC”) and/or its Office of the Whistleblower, the
Equal Employment Opportunity Commission (“EEOC”), the
Occupational Safety and Health Administration (“OSHA”),
the National Labor Relations Board (“NLRB”), or other
federal, state or local government agencies or entities. Executive
is not prohibited from disclosing this Agreement or its contents,
or from providing documents or other information, to the SEC and/or
the Office of the Whistleblower, EEOC, OSHA, NLRB or any other such
federal, state or local governmental entity. Executive does not
need to provide notice to or obtain the prior authorization of
Company’s Chairman or General Counsel to make any such report
or disclosure and Executive is not required to notify the Company
that Executive has made such reports or
disclosures.
7.10. Notice
Under Defend Trade Secrets Act:
Notwithstanding the requirements contained in this Agreement, in
accordance with the Defend Trade Secrets Act, Executive will not be
held criminally or civilly liable under any federal or state trade
secret law if Executive discloses a Trade Secret in confidence to
federal, state or local government officials, to Executive’s
attorney solely for the purpose of reporting or investigating a
suspected violation of law, or in a sealed complaint or other
document filed in a lawsuit or other proceeding. Further, if
Executive files a lawsuit alleging retaliation by the Company for
reporting a suspected violation of law, Executive may disclose the
Trade Secret to his attorney and use the Trade Secret information
in the court proceeding if Executive: (i) files the document
containing the Trade Secret in a sealed court document; and (ii)
does not disclose the Trade Secret, except pursuant to court order.
However, if Executive engages in conduct otherwise prohibited by
law, such as, but not limited to, accessing Trade Secrets
unlawfully or by unauthorized means, no immunity shall apply and
the Company reserves the right to pursue all available
remedies.
7.11. Notwithstanding
anything to the contrary in this Agreement, Executive has the right
to:
7.11.2) Report,
respond to or cooperate with an investigation into possible
violations of state or federal laws or regulations involving a
governmental agency or entity including the Congress, the
Department of Justice, the SEC and/or its Office of the
Whistleblower (xxx.xxx.xxx/xxxxxxxxxxxxx); Office of the
Whistleblower Hotline (000) 000-0000, the EEOC, the OSHA, the NLRB,
and any other such federal, state or local agency. This includes
reporting violations of the federal securities laws or
regulations;
7.11.3) Make
disclosures that are protected by federal, state or local
whistleblower laws;
7.11.4) Cooperate
in an investigation, respond to an inquiry, or provide testimony
before the SEC or any other federal, state or local regulatory or
law enforcement authority; and
7.11.5) Make
reports or disclosures to law enforcement or regulatory authorities
without authorization from the Company, without notifying the
Company that a report or disclosure will be or was made, and
without revealing the substance of the report or disclosure to the
Company.
Executive will not be retaliated against for reporting to the
Company or to any governmental agency or entity, including the SEC,
information that Executive reasonably believes relates to a
possible violation of securities laws or for reporting misconduct.
Retaliation under such circumstances is prohibited by
law.
7.12 This
Agreement does not prevent, interfere with or limit
Executive’s ability to file a charge or complaint with,
report conduct to, provide information to or participate in any
investigation or proceeding conducted by the Equal Employment
Opportunity Commission, the National Labor Relations Board, the
Occupational Safety and Health Administrative, the Securities and
Exchange Commission or any other federal, state or local government
agency or commission. Executive agrees that, if such a charge or
complaint is made, or investigation or proceeding is initiated
against the Company, Executive will not accept, be entitled to,
receive, or recover any monetary damages or any other form of
relief or remedy to the fullest extent permitted by law EXCEPT THAT
THIS AGREEMENT DOES NOT WAIVE OR LIMIT EXECUTIVE’S RIGHT TO
RECEIVE A MONETARY AWARD FOR INFORMATION PROVIDED TO THE SEC AS AN
SEC WHISTLEBLOWER OR TO RECEIVE A MONETARY AWARD FROM ANY OTHER
FEDERAL OR STATE AGENCY PURSUANT TO A SIMILAR WHISTLEBLOWER
PROGRAM.
8. VACATIONS;
LEAVE
8.1. The
Employee shall be entitled to an aggregate of six (6) weeks of
vacation time per annum during the Term. Any vacation time not used
by the end of the Term shall be forfeited without compensation. In
addition, the Employee shall not be entitled to carry over or use
any vacation time that is unused as of the end of the Term.
Further, the Employee shall be entitled to the number of sick,
personal, family and other days off during the Term as set forth in
KICO’s employee handbook.
9. PARTICIPATION
IN EMPLOYEE BENEFIT PLANS; RESTRICTED STOCK
GRANT
9.1. The
Employee shall be accorded the right to participate in and receive
benefits under and in accordance with the provisions of any
pension, profit sharing, insurance, medical and dental insurance or
reimbursement (with family coverage) or other plan or program of
the Company or KICO, either in existence as of the Effective Date
or thereafter adopted for the benefit generally of its executive
employees. Additionally, in the event of termination of the
Employee's employment by the Company without Cause, or by the
Employee for Good Reason, the Company or KICO shall continue to
provide to the Employee health, dental, and vision insurance
coverage at no cost to the Employee (with family coverage) until
the Expiration Date or such time as the Employee becomes eligible
for similar coverage, whichever is sooner.
9.2. In
the event the Company elects to discontinue any term life insurance
policy purchased by it during the Term with respect to the
Employee, prior to any such discontinuance and/or in the event the
Employee’s employment with the Company ceases for any reason,
the Employee shall be offered the opportunity to have such policy
transferred to him without cost, it being understood that the
Employee shall be responsible for the payment of any and all
premiums thereafter due.
9.3. Concurrently
herewith and annually thereafter, as outlined in Exhibit A and
pursuant to the Company’s 2014 Equity Participation Plan and
a Stock Grant Agreement of even date between the Company and the
Employee, the Company is granting and will grant to the Employee
shares of restricted common stock of the Company in an amount equal
to the aggregate market value indicated in Exhibit A based on the
closing share price on the day granted. Such shares are to vest in
three (3) equal annual installments commencing one (1) year from
the date of the grant or according to such modified vesting as
outlined in and subject to the provisions of the Stock Grant
Agreement.
10. SERVICE
AS OFFICER AND DIRECTOR
10.1. During
the Term, the Employee shall, if elected or appointed, serve as (a)
an officer of the Company and/or any subsidiaries of the Company in
existence or hereafter created or acquired and (b) a director of
the Company and/or any such subsidiaries of the Company in
existence or hereafter created or acquired, in each case without
any additional compensation for such services. During the Term the
Company shall maintain in effect a directors and officers liability
insurance policy of not less than $10 million in coverage limits,
and the Company will include the Employee therein as a named
insured.
11. EARLIER
TERMINATION
11.1. The
Employee’s employment hereunder (a) shall automatically
terminate upon his death, (b) may terminate at any time during the
Term at the option of the Company upon written notice to the
Employee for Cause or without Cause, (c) may terminate at any time
during the Term at the option of the Employee upon written notice
to the Company for Good Reason or without Good Reason and (d) may
terminate at the option of the Company in the event the Employee
becomes Disabled, as provided for in Article 6.
11.2. As
used in this Agreement, “Cause” shall mean (a) the
Employee’s conviction by a court of competent jurisdiction of
the commission of any act in the performance of his duties
constituting common law fraud or a felony, (b) the Employee’s
commission of any act involving moral turpitude which the Board
reasonably believes may have a material adverse effect on the
Company and its subsidiaries taken as a whole (“Material
Adverse Effect”), (c) any misrepresentation by the Employee
(including, without limitation, a breach of any representation set
forth in Section 13.1 hereof) which the Board reasonably believes
may have a Material Adverse Effect, (d) any breach of any material
covenant on the Employee’s part herein set forth (which
breach, if curable, is not cured by the Employee within thirty (30)
days of the Employee’s receipt of written notice thereof from
the Company), or (e) the Employee’s engagement in gross
negligence or willful misconduct which the Board reasonably
believes may have a Material Adverse Effect. The parties agree that
the term “Material Adverse Effect” includes the loss or
suspension of any license for the Company or KICO to operate or any
disqualification or suspension for the Employee to serve as an
officer or director thereof under applicable law. No act or failure
to act by the Executive shall be considered “Cause” if
the Executive’s act or failure to act was based on authority
or express direction given by the Chairman or the advice of counsel
for the Company.
11.3. As
used in this Agreement, “Good Reason” shall mean (a)
any breach of any material obligation on the Company’s part
(which breach, if curable, is not cured by the Company within
thirty (30) days of the Company’s receipt of written notice
thereof from the Employee), (b) a material diminution in the
Employee’s duties and responsibilities (other than following
an event constituting Cause) in his capacity as President and Chief
Executive Officer of the Company, (c) a change in the Employee's
current reporting structure (other than following an event
constituting Cause), or (d) a decrease in the compensation payable
to the Employee from the compensation payable pursuant to this
Agreement.
11.4. In
the event of the termination of the Employee’s employment by
the Company for Cause or by the Employee without Good Reason, the
Company shall have no further obligations to the Employee, and the
Employee shall be entitled to no further compensation from the
Company, except for any pro-rata amounts due to the Employee at
such date of termination, as provided for in Section 4.2 hereof and
as set forth in Section 11.5 hereof. In the event of the
termination of the Employee’s employment by the Company for
Cause or by the Employee without Good Reason, the amount to be paid
to the Employee pursuant to this Section 11.4 shall constitute the
sole and exclusive remedy of the Employee, and the Employee shall
not be entitled to any other or further compensation, rights or
benefits hereunder or otherwise, except as specifically provided in
the concurrently executed Stock Grant Agreement or any other
written agreement subsequently entered into between the
parties.
11.5. In
the event of the termination of the Employee’s employment as
the result of Retirement: (a) the Company shall have no further
obligation as to Base Salary to the Employee for the remainder of
the Term after the termination date; (b) the Company shall pay to
the Employee any outstanding bonus not already paid to the Employee
together with a pro-rata share of the bonus relating to the year in
which the termination occurs (no later than 2-1/2 months after the
end of such year), based on the portion of the year completed
through the termination date and shall have no further obligation
to award bonus payments in respect of the remaining years in the
Term or any other period; (c) the Company shall have no obligation
to award the stock grants scheduled in Exhibit A in respect of the
remaining years in the Term or any other period, if any; and (d)
all stock grants previously granted to Employee by the time of
Employee’s termination of employment will continue to vest
according to their original schedule as if the Employee were still
employed by the Company. For purposes of this agreement,
“Retirement” shall mean an event whereby the Employee
conveys his intent to retire to the Board in writing at least six
months prior to his expected termination date, Employee retires
(terminates employment) on or about such expected termination date
or on such other date that is mutually agreed between the Employee
and the Board, and Employee covenants at or preceding the time of
his termination (including through the execution of documentation
prepared by the Company for this sole purpose at such time) that he
shall not accept any operating executive role with another property
and casualty insurance company for a period of three years
following his separation from the Company.
11.6. In
the event of the termination of the Employee’s employment by
the Company without Cause or by the Employee for Good Reason, as
severance, the Employee shall be entitled to receive the
compensation to which he would have been entitled until the
expiration of the Term pursuant to Section 4.2. The compensation
payable pursuant to this Section 11.6 shall be payable to the
Employee in accordance with the Company’s standard payroll
practices as if his employment had continued. The amount to be paid
to the Employee pursuant to this Section 11.6 shall constitute the
sole and exclusive remedy of the Employee, and the Employee shall
not be entitled to any other or further compensation, rights or
benefits hereunder or otherwise, except as specifically provided in
the concurrently executed Stock Grant Agreement or any other
written agreement subsequently entered into between the
parties.
11.7. In
order to protect the Employee against the possible consequences and
uncertainties of a Change of Control of the Company and thereby
induce the Employee to remain in the employ of the Company, the
Company agrees that:
11.7.0.1) If,
during the Term, the Employee’s employment is terminated
within eighteen (18) months subsequent to a Change of Control by
the Company other than for Cause or by the Employee for Good
Reason, the Company shall pay to the Employee an amount in cash
equal to one and one-half (1.5) times the Base Salary plus Bonus
(as reduced pursuant to Section 4.2) (the “Change of Control
Payment”). The Change of Control Payment shall be payable in
one lump sum payment within ten (10) days following the date of
termination of employment. In addition, in such event, the Company
shall continue to pay for the Employee's health insurance premiums,
including family coverage, for the remainder of the Term (provided
that the cost of such premiums shall be reported as income to the
Employee to the extent necessary to enable the health plan to
continue to satisfy applicable nondiscrimination requirements
applicable to group health plans, as determined in good faith by
the Company). The Change of Control Payment shall be in lieu of the
amount payable to the Employee pursuant to Section 11.6 hereof. The
amount to be paid to the Employee pursuant to this Section 11.7
shall constitute the sole and exclusive remedy of the Employee, and
the Employee shall not be entitled to any other or further
compensation, rights or benefits hereunder or otherwise, except as
specifically provided in the concurrently executed Stock Grant
Agreement or any other written agreement subsequently entered into
between the parties.
11.7.0.2) As
used in this Section 11.7, a “Change of Control” shall
be deemed to have occurred if:
() any
“person” or “group of persons” (as such
terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “1934 Act”)
(other than the Employee or any “group of persons” that
includes the Employee), becomes the “beneficial owner”
(as defined in Rule 13d-3 promulgated under the 1934 Act), directly
or indirectly, of securities of the Company representing more than
twenty-five percent (25%) of the Company’s then outstanding
securities having the right to vote on the election of directors
(“Voting Securities”);
(i) any
person or group of persons (other than persons whose Voting
Securities of the Company would be excluded under clause (i) above)
becomes the beneficial owner, directly or indirectly, of securities
representing a majority of the then outstanding securities of the
Company having the right to vote on the election of
directors;
(ii) when
individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board;
or
(iii) the
Company consummates a reorganization, merger or consolidation of
KINS, with respect to which in each case all or substantially all
of the Persons who were the beneficial owners of the Voting
Securities of the Company immediately prior to such reorganization,
merger or consolidation do not, following such reorganization,
merger or consolidation, beneficially own, directly and indirectly,
more than 50% of the then combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors of the corporation or other Person resulting
from such reorganization, merger of
consolidation;
(iv) the
Company consummates a reorganization, merger or consolidation of
the Company, with respect to which in each case the Company does
not, following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 50% of the then
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the
corporation or other Person resulting from such organization ,
merger or consolidation; or
(v) the
Company consummates the sale or other disposition of all or
substantially all of the assets of the Company.
Notwithstanding the foregoing, no transaction or event shall
constitute a Change of Control hereunder unless such transaction or
event also constitutes a change in ownership or effective control
of the Company within the meaning of Treasury Regulation Section
1.409A-3(i)(5)(v) or (vi)(A)(2).
11.8. In
the event of the death of the Employee during the Term, as
liquidated damages, the Employee’s estate (the
“Estate”) shall be entitled to receive the Base Salary
to which the Employee is entitled until the date of death of the
Employee pursuant to Section 4.2. The amount to be paid to the
Estate pursuant to this Section 11.8 shall constitute the sole and
exclusive remedy of the Estate and any beneficiaries thereof, and
neither the Estate nor any beneficiaries thereof shall be entitled
to any other or further compensation, rights or benefits hereunder
or otherwise, including pursuant to this Article 11 other than as
provided in the concurrently executed Stock Grant
Agreement.
11.9. The
termination or expiration of this Agreement shall not affect the
continuing operation and effect of Article 7 hereof, which shall
continue in full force and effect according to its terms. In
addition, the termination or expiration of this Agreement will not
result in a termination or waiver of any rights and remedies that
the Company may have under this Agreement and applicable
law.
12. INJUNCTIVE
RELIEF; REMEDIES
12.1. The
Employee acknowledges and agrees that, in the event he shall
violate or threaten to violate any of the restrictions of Article 3
or 7 hereof, the Company will be without an adequate remedy at law
and will therefore be entitled to enforce such restrictions by
temporary or permanent injunctive or mandatory relief in any court
of competent jurisdiction without the necessity of proving monetary
damages.
12.2. The
Employee agrees further that the Company shall have the following
additional rights and remedies:
(i) the
right and remedy to require the Employee to account for and pay
over to the Company all monies and other consideration derived or
received by him as the result of any transactions determined by an
arbitrator or a court of competent jurisdiction to be a breach of
any of the provisions of Section 7.1, and the Employee hereby
agrees to account for and pay over such monies and other
consideration to the Company; and
(ii) the
right to recover attorneys’ fees incurred in any action or
proceeding in which it seeks to enforce its rights under Article 7
hereof and is successful on any grounds; provided, however, that,
in the event the Employee is the prevailing party in any such
action or proceeding, the Company will pay to the Employee all
reasonable attorneys’ fees and costs incurred by the Employee
in defending such action or proceeding.
12.3. Each
of the rights and remedies enumerated above shall be independent of
the other, and shall be severally enforceable, and all of such
rights and remedies shall be in addition to, and not in lieu of,
any other rights and remedies available to the Company under law or
in equity.
13. NO
RESTRICTIONS
13.1. The
Employee hereby represents that neither the execution of this
Agreement nor his performance hereunder will (a) violate, conflict
with or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both,
would constitute a default) under the terms, conditions or
provisions of any contract, agreement or other instrument or
obligation to which the Employee is a party, or by which he may be
bound, or (b) violate any order, judgment, writ, injunction or
decree applicable to the Employee. In the event of a breach hereof,
in addition to the Company’s right to terminate this
Agreement, the Employee shall indemnify the Company and hold it
harmless from and against any and all claims, losses, liabilities,
costs and expenses (including reasonable attorneys’ fees)
incurred or suffered in connection with or as a result of the
Company’s entering into this Agreement or employing the
Employee hereunder.
14. ARBITRATION
14.1. Except
with regard to Section 12.1 hereof and any other matters that are
not a proper subject of arbitration, all disputes between the
parties hereto concerning the performance, breach, construction or
interpretation of this Agreement or any portion thereof, or in any
manner arising out of this Agreement or the performance thereof,
shall be submitted to binding arbitration, in accordance with the
rules of the American Arbitration Association. The arbitration
proceeding shall take place at a mutually agreeable location in
Nassau County, New York or such other location as agreed to by the
parties.
14.2. The
award rendered by the arbitrator shall be final, binding and
conclusive, shall be specifically enforceable, and judgment may be
entered upon it in accordance with applicable law in an appropriate
court in the State of New York, with no right of appeal
therefrom.
14.3. Each
party shall pay its or his own expenses of arbitration, and the
expenses of the arbitrator and the arbitration proceeding shall be
equally shared; provided, however, that, if, in the opinion of the
arbitrator (or a majority of the arbitrators if more than one), any
claim or defense was unreasonable, the arbitrator(s) may assess, as
part of their award, all or any part of the arbitration expenses of
the other party (including reasonable attorneys’ fees) and of
the arbitrator(s) and the arbitration proceeding against the party
raising such unreasonable claim or defense; provided, further,
that, if the arbitration proceeding relates to the issue of Cause
for termination of employment, (a) if, in the opinion of the
arbitrator (or a majority of the arbitrators if more than one),
Cause existed, the arbitrator(s) shall assess, as part of their
award, all of the arbitration expenses of the Company (including
reasonable attorneys’ fees) and of the arbitrator(s) and the
arbitration proceeding against the Employee or (b) if, in the
opinion of the arbitrator (or a majority of the arbitrators if more
than one), Cause did not exist, the arbitrator(s) shall assess, as
part of their award, all of the arbitration expenses of the
Employee (including reasonable attorneys’ fees) and of the
arbitrator(s) and the arbitration proceeding against the
Company.
15. CODE
SECTIONS 409A, 280G AND 4999.
15.1. The
intent of the parties is that payments and benefits under this
Agreement comply with Section 409A of the Code (together with the
regulations and guidance promulgated thereunder, “Code
Section 409A”), and, accordingly, to the maximum extent
permitted, this Agreement shall be interpreted to be in compliance
therewith. To the extent that any provision hereof is modified in
order to comply with Code Section 409A, such modification shall be
made in good faith and shall, to the maximum extent reasonably
possible, maintain the original intent and economic benefit to the
parties hereto of the applicable provision without violating the
provisions of Code Section 409A. In no event whatsoever shall the
Company be liable for any additional tax, interest or penalty that
may be imposed on the Employee by Code Section 409A as a result of
the Company’s compliance with the terms of this
Agreement.
15.2. A
termination
of employment shall not be deemed to have occurred for purposes of
any provision of this Agreement providing for the payment of any
amounts or benefits constituting deferred compensation under
Code Section 409A upon or following a termination of employment
unless such termination of employment is also a “separation
from service” within the meaning of Code Section 409A and,
for purposes of any such provision of this Agreement, references to
a termination of employment or like terms shall mean
“separation from service.” If the Employee is deemed on
the date of termination to be a “specified employee”
within the meaning of that term under Code Section 409A(a)(2)(B),
then with regard to any payment or the provision of any benefit
that is considered deferred compensation under Code Section 409A
payable on account of a “separation from service,” such
payment or benefit shall be made or provided at the date which is
the earlier of (i) the expiration of the six (6) month period
measured from the date of such “separation from
service” of the Employee, and (ii) the date of the
Employee’s death (the “Delay Period”). Upon the
expiration of the Delay Period, all payments and benefits delayed
pursuant to this Section 15.2 (whether they would have
otherwise been payable in a single sum or in installments in the
absence of such delay) shall be paid or reimbursed to the Employee
in a lump sum, and any remaining payments and benefits due under
this Agreement shall be paid or provided in accordance with the
normal payment dates specified herein.
15.3. All
expenses or other reimbursements under this Agreement shall be made
on or prior to the last day of the taxable year following the
taxable year in which such expenses were incurred by the Employee
(provided that if any such reimbursements constitute taxable income
to the Employee, such reimbursements shall be paid no later than
March 15th of the calendar year following the calendar year in
which the expenses to be reimbursed were incurred), and no such
reimbursement or expenses eligible for reimbursement in any taxable
year shall in any way affect the expenses eligible for
reimbursement in any other taxable year.
15.4. For
purposes of Code Section 409A, the Employee’s right to
receive any installment payments pursuant to this Agreement shall
be treated as a right to receive a series of separate and distinct
payments. Whenever a payment under this Agreement specifies a
payment period with reference to a number of days (e.g.,
“payment shall be made within sixty (60) days”),
the actual date of payment within the specified period shall be
within the sole discretion of the Company.
15.5. In
no event shall any payment under this Agreement that constitutes
“deferred compensation” for purposes of Code Section
409A be offset by any other payment pursuant to this Agreement or
otherwise.
15.6. Notwithstanding
any other provisions of this Agreement to the contrary, in the
event that any payments or benefits received or to be received by
the Employee in connection with the Employee’s employment
with the Company (or termination thereof) would subject the
Employee to the excise tax imposed under Section 280G or 4999 of
the Code (the “Excise Tax”), and, if the net-after tax
amount (taking into account all applicable taxes payable by the
Employee, including any Excise Tax) that the Employee would receive
with respect to such payments or benefits does not exceed the
net-after tax amount the Employee would receive if the amount of
such payment and benefits were reduced to the maximum amount which
could otherwise be payable to the Employee without the imposition
of the Excise Tax, then, to the extent necessary to eliminate the
imposition of the Excise Tax, (i) such cash payments and benefits
shall first be reduced (if necessary, to zero) and (ii) all other
non-cash payments and benefits shall next be reduced. The
determination of whether any reduction in such payments or benefits
to be provided under this Agreement or otherwise is required
pursuant to the preceding sentence will be made at the expense of
the Company by independent accountants or benefits consultants
selected by the Company, and the Employee shall have the right to
review such determination.
16. ASSIGNMENT
16.1. This
Agreement, as it relates to the employment of the Employee, is a
personal contract and the rights and interests of the Employee
hereunder may not be sold, transferred, assigned, pledged or
hypothecated.
17. NOTICES
17.1. Any
notice required or permitted to be given pursuant to this Agreement
shall be deemed to have been duly given when delivered by hand or
sent by certified or registered mail, return receipt requested and
postage prepaid, overnight mail or courier, e-mail, or fax as
follows:
If to the Employee:
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Xxxx.xxxxxxxx@xxxxxxxxxxxxxxxxxx.xxx
with a copy to:
Sidley Austin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxx, Esq.
Xxxx.xxxxxxx@xxxxxx.xxx
Fax Number: (000) 000-0000
If to the Company:
c/o Xxxxxxx Xxxxxx
Chairman, Compensation Committee
00 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxx 00000
xxxxxxx@xxxxxxx.xxx
or at such other address as any party shall designate by notice to
the other party given in accordance with this Section
17.1.
18. GOVERNING
LAW
18.1. This
Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York applicable to
agreements made and to be performed entirely in New York without
regard to conflicts of laws principles.
19. WAIVER
OF BREACH; PARTIAL INVALIDITY
19.1. The
waiver by either party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any
subsequent breach. If any provision, or part thereof, of this
Agreement shall be held to be invalid or unenforceable, such
invalidity or unenforceability shall attach only to such provision
and not in any way affect or render invalid or unenforceable any
other provisions of this Agreement, and this Agreement shall be
carried out as if such invalid or unenforceable provision, or part
thereof, had been reformed, and any court of competent jurisdiction
or arbitrators, as the case may be, are authorized to so reform
such invalid or unenforceable provision, or part thereof, so that
it would be valid, legal and enforceable to the fullest extent
permitted by applicable law.
20. ENTIRE
AGREEMENT; AMENDMENT
20.1. This
Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and there are no
representations, warranties or commitments except as set forth
herein; provided, however, that Employee’s existing
Employment Agreement dated as of March 14, 2018 (the “Prior
Agreement”) shall continue to govern the terms and conditions
of Employee’s employment until the Effective Date. As of the
Effective Date, this Agreement will supersede the terms of the
Prior Agreement in all respects and the Prior Agreement will have
no further force and effect. This Agreement supersedes all prior
agreements, understandings, negotiations and discussions, whether
written or oral, of the parties hereto relating to the subject
matter hereof. This Agreement may be amended, and any provision
hereof waived, only by a writing executed by the party sought to be
charged. No amendment or waiver on the part of the Company shall be
valid unless approved by its Board.
21. COUNTERPARTS
21.1. This
Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, and all of which taken together
shall constitute one and the same instrument.
22. FACSIMILE
AND EMAIL SIGNATURES
22.1. Signatures
hereon which are transmitted via facsimile or email shall be deemed
original signatures.
23. EXPENSES
23.1. The
Company agrees to pay the reasonable fees and expenses of legal
counsel and a compensation consultant incurred by the Employee in
connection with the drafting and negotiation of this Agreement;
provided, however, that the amount payable pursuant to this Section
23.1 shall not exceed $5,000 and shall be paid upon presentation of
documentation reasonably satisfactory to the Company and shall be
paid no later than December 31, 2018.
23.2. In
addition to the right to indemnification conferred in Article
Thirteenth of the Restated Certificate of Incorporation of the
Company, as amended (the “Certificate of
Incorporation”), and Article VII, Section 7 of the By-Laws of
the Company, as amended (the “By-Laws”), the Employee
shall have the right to have his expenses (including reasonable
attorneys’ fees) incurred in defending any action or
proceeding as to which the Employee is entitled to be indemnified
in advance of its final disposition advanced and paid promptly as
set forth below upon incurring such expenses; provided, however,
that an advancement of expenses incurred by the Employee shall be
made only upon delivery to the Company of an undertaking by the
Employee to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no
further right to appeal that the Employee is not entitled to be
indemnified for such expenses under the Certificate of
Incorporation or the By-Laws. The Company shall make advance
payments of such expenses (including reasonable attorneys' fees)
incurred within thirty (30) days of the Employee’s
presentation of an invoice for such expenses.
24. CONSTRUCTION
24.1. All
references in this Agreement to “includes” and
“including” shall be construed to include the words
“without limitation.”
25. REPRESENTATION
BY COUNSEL; INTERPRETATION
25.1. The
Employee acknowledges that he has been represented by counsel in
connection with this Agreement. Accordingly, any rule of law or any
legal decision that would require the interpretation of any claimed
ambiguities in this Agreement against the party that drafted it has
no application and is expressly waived by the Employee. The
provisions of this Agreement shall be interpreted in a reasonable
manner to give effect to the intent of the parties
hereto.
26. HEADINGS
26.1. The
headings and captions under articles and sections of this Agreement
are for convenience of reference only and do not in any way modify,
interpret or construe the intent of the parties or affect any of
the provisions of this Agreement.
[Remainder of page intentionally left blank. Exhibit A and
signature page follow.]
730284723.2
Exhibit
A1
2019
2020
2021
Base
Salary
500,000
630,000
630,000
Bonus
(estimated)
303,463
320,811
509,434
RSA
750,000
1,250,000
1,500,000
[Remainder of page intentionally left blank. Signature page
follows.]
1 KICO will pay 70% of the Base Salary and Bonus and KINS
will pay 30% of the Base Salary and Bonus.
730284723.2
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the day and year above written.
By:
Xxxxxxx
Xxxxxx
Chair, Compensation
Committee
Xxxx X. Xxxxxxxx
President and Chief Executive Officer
730284723.2
