EXHIBIT 10.7
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated June 2, 2003 by and between American Physicians Assurance
Corporation, a Michigan corporation having a principal place of business in East
Lansing, Michigan, its successors, assigns, affiliates, and related companies
(the "Company") and Thomas Chase (the "Executive").
WHEREAS, the Executive currently serves as the Chief Information Officer of
APCapital;
WHEREAS, the Company desires to obtain the Executive's agreement to continue to
serve as Chief Information Officer of the Company, and to obtain certain
restrictions on the Executive's potential competition with the Company during
the term of the Executive's employment and when and if Executive's employment
with the Company terminates; and
WHEREAS, the Company desires to employ the Executive in accordance with the
terms and conditions of this Agreement and Executive desires to be so employed
by the Company.
NOW, THEREFORE, in consideration of the mutual covenants and promises and other
valuable consideration, contained herein, the parties hereto hereby agree as
follows:
1. EMPLOYMENT.
The Company employs the Executive to render services as Chief Information
Officer of APCapital, the Executive accepts such employment, in accordance
with the terms, and conditions hereinafter set forth. This Agreement
supersedes and replaces in its entirety any prior or contemporaneous
employment agreements or understandings between the Company, its present or
former affiliates or subsidiaries, and the Executive.
2. PLACE OF EMPLOYMENT.
The Executive shall be located, and shall render such services (subject to
necessary and appropriate business related travel), at the Company's office
in East Lansing, Michigan. The Company may relocate Executive, subject to
Executive's rights under Sections 6(d) involuntary termination and Section
6(e) following a Change in Control.
3. TERM.
The term of the Executive's employment with the Company shall be for a
period commencing on date signed and continue, unless terminated sooner
under Section 6, for a period of one (1) year. Thereafter, the term shall
automatically be extended for one (1) additional day for each successive
day of the Executive's employment with the Company unless replaced, or
unless terminated in accordance with Section 6, below.
4. DUTIES AND RESPONSIBILITIES.
(a) At the commencement of this Agreement, the Executive is employed by
the Company in the position of Chief Information Officer of APCapital.
As such, the Executive shall have duties and such authorities as are
consistent with such position subject to the direction of the President
and Chief Executive Officer (CEO) and the Board of Directors of
American Physicians Capital, Inc. ("ACAP"), the parent company of
American Physicians Assurance Corporation. The Company may change or
amend the duties of the Executive from time to time to other duties or
positions at a
1
(b) comparable level. References in this Agreement to the "Board" shall be
understood as references to the ACAP Board.
(c) The Executive will devote exclusively his or her best efforts and full
working time to the performance of the duties of the Executive's?
position and will not engage in any other employment during the term of
this agreement except that with the prior approval of the Board the
Executive may serve as a compensated member of the board of directors
of other, "for profit" unaffiliated corporations.
5. COMPENSATION, INCENTIVE COMPENSATION & BENEFITS.
In consideration for the services of the Executive to be performed
hereunder, the Company shall compensate the Executive as follows:
(a) ANNUAL BASE SALARY. The Company shall pay to the Executive a minimum
annual base salary of $185,000, payable (less applicable taxes) in
accordance with Company normal payroll practices. Under no
circumstances shall the Executive's base salary be reduced during the
term of this Agreement. The Executive's base salary shall be
periodically reviewed by the Compensation Committee of the ACAP Board
and may be increased as deemed warranted by the Compensation Committee.
(b) INCENTIVE COMPENSATION. The Executive will be eligible to participate
in any short-term incentive plan adopted for senior executive staff.
The Executive will also be eligible to participate in long-term
incentive plans available to other senior executive employees.
(c) DISABILITY INSURANCE. During employment, the Company shall maintain, at
its expense, an individual long-term disability insurance policy
("Policy") for the Executive providing the Executive with benefits in
the event of a disability as such term is defined in the Policy (a
"Disability"), provided the Executive satisfies the eligibility
requirements for coverage under the disability insurance Policy which
the Company has chosen for its executive staff.
(d) PAID TIME OFF. The Executive shall be entitled to not less than 4 weeks
of vacation and 10 days of occasional sick days during each calendar
year.
(e) OTHER EMPLOYMENT BENEFITS. During employment, the Executive shall have
the opportunity to participate in and shall be entitled to receive
benefits in accordance with, the provisions of any health, life
insurance, disability, deferred compensation, profit sharing or other
employee benefit plan or plans adopted, or to be adopted, by the
Company and which are generally applicable to other similarly situated
senior executive employees of the Company.
(f) BUSINESS EXPENSES. The Company shall pay or reimburse the Executive
promptly, upon presentation of appropriate vouchers, for all necessary
business travel and entertainment expenses reasonably incurred by the
Executive in connection with Company? business in accordance with
Company policy.
6. TERMINATION.
Subject to the terms and conditions of this Agreement, the Company or the
Executive may terminate the Executive's ?employment as provided below, and
such termination shall not be deemed a breach of this Agreement.
(a) DEATH OR DISABILITY. The Executive? employment shall terminate upon the
Executives' death or Disability. Disability is defined as meeting the
requirements for benefits under the long-term
2
Disability Insurance Policy provided by the Company for the Executive.
If the Executive qualifies or may qualify for disability benefits under
the Policy, Executive agrees to apply for such benefits in a timely
basis and submit any necessary medical and other information. If the
Executive is not covered by the Policy or is not entitled to disability
benefits under the Policy, the Company may determine that the Executive
is disabled and terminate the Executive's employment by treating it as
an Involuntary Termination under Section 6(d) of this Agreement.
(b) CAUSE. The Company may terminate the Executive's employment under this
Agreement for Cause. The Executive shall be given written notice of
termination, specifying with particularity the basis for termination;
and the Executive shall not in such case have to be given an
opportunity to cure the basis for such Cause. For the purposes of this
Agreement, the Company shall have Cause upon: (A) the commission by the
Executive of dishonesty, or for intentional commission of a wrongful or
illegal act, (B) or for the willful and continued breach of this
Agreement, or failure to perform the duties of the Executive's position
in a competent and conscientious manner (other than as a result of
incapacity due to physical or mental injury or illness). (C) The
failure of the Executive to comply with the policies or procedures of
the Company.
(c) VOLUNTARY RESIGNATION. The Executive may terminate his or her
employment for any reason whatsoever.
(d) INVOLUNTARY TERMINATION. The Company may terminate the Executive's
employment at any time for any reason or no reason. A termination under
Section 6(a), (b) or (e) will not be considered an Involuntary
Termination. For the purpose of this Agreement, Involuntary Termination
includes, but is not limited to, , the termination of this agreement by
the Company, a permanent relocation of the Executive's duties that
would require the Executive to commute a distance of more than 90 miles
further from the Executive's principal place of employment (the
Executive shall have 60 days from the notification date of relocation
to accept or decline continued employment), the resignation of
Executive within 60 days after an act by the Company which materially
reduces the Executive's duties and responsibilities. The Executive's
duties and responsibilities shall not be deemed materially reduced
solely by virtue of a change in reporting relationship between the
Executive and the Company.
(e) CHANGE IN CONTROL. At anytime within one (1) year following the date in
which a Change in Control shall have occurred, the Board may terminate
the Executive's employment for any reason whatsoever, or the Executive
may terminate his Term of employment for Qualifying Reasons as set
forth below.
For purposes of this Agreement, a Change in Control means any one of
the following events:
(1) The sale by American Physicians Capital, Inc. ("ACAP") of all
or substantially all of its assets to a single purchaser or
group of associated purchasers;
(2) The sale, exchange or other disposition of ACAP, in one
transaction to any entity or entities not affiliated with ACAP,
of more than fifty percent (50%) of the outstanding common
stock of ACAP other than by a sale, exchange, or disposition of
the common stock of ACAP resulting from a public or private
offering of common stock of which offering is sponsored or
initiated by ACAP and approved by its Board;
(3) The merger or consolidation of ACAP in a transaction in which
the stockholders of ACAP receive less than fifty percent (50%)
of the outstanding voting stock of the new or continuing
entity;
3
(4) A change of more than 50% of the directors of the ACAP Board
within any 24-month period; except that, a new director elected
pursuant to nomination by a majority of the Continuing
Directors (as defined below) will not be considered a change of
a director for this purpose.
At any time within one (1) year following the date on which a Change in
Control shall have occurred, the Executive shall have the right to
terminate the Executive's employment upon written notice to the Company
within sixty (60) days following the occurrence of one or more of the
following Qualifying Reasons. For the purposes of this Agreement
Qualifying Reason shall mean:
(1) The position or responsibilities of the Executive are
significantly reduced (including, without limitation, the
elimination of such position, a substantial reduction in the
size of the Company or other substantial change in the
character or scope of the Company's operations), or the
Executive is assigned without his or her written consent to any
duties which in scope are not comparable with his or her
position with the Company immediately prior to such assignment,
or the status and stature of those with whom the Executive is
asked to work is significantly reduced from the Executive's
position immediately preceding the Change in Control;
(2) The Company reduces the Executive's then current annual base
salary, contrary to Section 5(a), above;
(3) The annual incentive compensation opportunity provided to the
Executive is eliminated or significantly reduced, the
Executive's participation level is reduced or the manner of
assessing actual performance is changed in a manner that
results in the Executive earning significantly less annual
incentive compensation for a given period than he or she would
have for the same period absent such change, except if such
reduction occurs prior to a Change in Control and is part of an
across-the-board reduction in such benefits applicable to all
senior level executives of the Company;
(4) The Executive's aggregate level of benefits under the Company's
benefit plans is significantly reduced, except if such
reduction occurs prior to a Change in Control and is part of an
across-the-board reduction in such benefits applicable to all
senior level executives of the Company;
(5) The Company fails to provide the Executive with benefits and
perquisites which are substantially equivalent in the aggregate
to those to which the Executive is entitled under the Company's
benefit plans in which the Executive was participating
immediately prior to the Change in Control, or fails to provide
the Executive with directors' or officers' insurance, as
applicable, at least at the level maintained immediately prior
to the Change in Control;
(6) The Company permanently changes the geographic location of the
performance of the Executive duties that requires the Executive
to commute a distance more than 40 miles further from the
Executive's principal place of employment existing at the time
of the Change in Control;
(7) The Company fails to pay the Executive any amount otherwise
vested and due hereunder or under any plan or policy of the
Company, or fails to comply with any other provision of or
perform any of its other obligations under this Agreement.
4
(f) NOTICE OF TERMINATION. Any termination by the Company of the
Executive's employment pursuant to Section 6(b), (d) or (e) must, in
order to be effective, be preceded by a written notice to the Executive
("Notice of Termination") indicating the specific provision of this
Agreement relied upon, and for any termination under Section 6(b)
setting forth in reasonable detail the facts and circumstances
supporting the termination under the provision so indicated, and the
Date of Termination. Any termination by the Executive of his active
employment pursuant to Section 6(e) must, in order to be effective, be
preceded by a written notice to the Company indicating the specific
provision of Section 6(e) relied upon and setting forth in reasonable
detail the facts and circumstances supporting the termination under the
provision so indicated and the Date of Termination. After receipt of
such notice, the Company shall have ten (10) business days to
reasonably remedy the event described therein, upon which such event
shall no longer constitute "Qualifying Reason" for purposes of this
Agreement.
(g) DATE OF TERMINATION. "Date of Termination" shall mean (A) if the
Executive's employment is terminated by the Executive's death, the date
of the Executive's death, or by reason of the Executive's Disability,
the date the conditions to constitute a Disability have occurred, or if
upon expiration of the Term, the last day of the Term, (B) if the
Executive's employment is terminated by the Company pursuant to Section
6(b), 6(d) or 6(e), the date specified in the Notice of Termination,
and (C) if the Executive's employment is terminated by Executive
pursuant to Section 6(c) or 6(e) the date which is ten (10) business
days after the date of receipt of the Executive's notice of intention
to terminate or such other date as may be agreed by the Executive and
the Board.
7. COMPENSATION AND BENEFITS UPON TERMINATION.
(a) DEATH OR DISABILITY. In the event of the Executive's termination due to
the Executive's death or Disability while actively employed, the
Company shall pay or provide to the Executive ??or the Executive's
named beneficiary (in the event of the Executive's death):
i Annual Base Salary - The Executive's earned but unpaid base
salary through the Date of Termination;
ii Bonus -- A prorated portion of the Executive's annual bonus, if
any, as determined by the Board based on the actual performance
by the Company during its fiscal year of the Executive's death
or Disability. Such determination and payment will be made at
the same time that bonus consideration and payments, if any, for
other senior executives for the same performance period are
made; and
iii Benefits -- The Executive shall be paid or be provided such
other benefits for which the Executive is entitled under the
terms of any employee benefit plan or program of the Company in
which the Executive may be, or may have been, a participant
including any earned but unpaid Paid Time Off through the Date
of Termination.
(b) CAUSE. In the event the Executive is terminated for Cause, the
Executive shall receive only such benefits, if any, as may be provided
to him under the terms of any employee benefit, incentive, option,
stock award and other plans or programs of the Company in which he may
be, or may have been, a participant and shall be paid any balance of
the Executive's earned but unpaid Annual Base Salary and any Paid Time
Off for the period through the Date of Termination.
(c) VOLUNTARY RESIGNATION. In the event the Executive voluntarily
terminates his employment while actively employed, or breaches this
agreement following termination, the Company shall pay or provide to
the Executive only such benefits, if any, as may be provided to him
under the terms of
5
any employee benefit plans or programs of the Company in which the
Executive may be, or may have been, a participant, and shall be paid
any balance of the Executive's earned but unpaid Annual Base Salary
and accrued but unpaid Paid Time Off through the Date of Termination.
(d) INVOLUNTARY TERMINATION. In the event the Executive's employment is
involuntarily terminated by the Company under Section 6(d), the
Company shall pay or provide to the Executive, subject to the
Executive signing and delivering to the Company a release and
separation agreement reasonably acceptable to the Company:
i. Severance Pay -- The Executive shall receive severance pay equal
to 24 months of Executive's then current base salary, payable in
regular installments on the Company's normal payroll dates over
a 12 month period;
ii. Bonus -- The Executive shall receive one (1) times the greater
of: the full year annual bonus at 100% target for the calendar
year in which severance occurs, or the average of last 2 annual
bonuses paid to the Executive. Such payment will be made at the
same time that bonus consideration and payments for other senior
executives for the same performance period are made;
iii. Medical & Dental - The Executive shall upon finalization of the
agreement and release, receive a lump-sum payment in the amount
of eighteen (18) times the then current monthly premiums for the
Executive's medical and dental insurance coverage. All other
welfare and insurance benefits shall cease as of the Date of
Termination; and
iv. Benefit Payment -- The Executive shall upon finalization of the
agreement and release, receive a $4,000 payment to be applied
toward the purchase of individual disability, life or any other
insurances or coverages that terminated upon the Executive's
Date of Termination; and
v. Long-Term Incentive -- The Executive shall continue to have
rights associated with any vested benefits as of the Date of
Termination. Following the Date of Termination, all non-vested
stock or stock options or other long-term incentives are
forfeited pursuant to and subject to the terms set forth in the
incentive plans.
vi. 401(k), Pension and Supplemental Benefits -- The Executive shall
be paid or be provided such other benefits for which the
Executive is entitled under the terms of any employee benefit
plan or program of the Company in which the Executive may be, or
may have been, a participant including any earned but unpaid
Paid Time Off through the Date of Termination.
(e) CHANGE IN CONTROL. If, at anytime within one (1) year following the
date in which a Change in Control shall have occurred, the Company
terminates the Executive's employment for any reason whatsoever
(except in the case of commission of a felonious act); or the
Executive terminates his Term of employment for Qualifying Reasons as
set forth above, the Company shall pay or provide the following to the
Executive, subject to the Executive signing a release and separation
agreement reasonably acceptable to the Company:
i. Severance Pay -- The Executive shall receive a lump-sum
severance payment equal to 24 months the Executive's then
current base salary. Within 7 days of the Date of Termination,
the Company shall submit to the Executive a release and
separation agreement which is consistent
6
with the terms of this Agreement. The severance payment under
this subsection will be paid to Executive within 7 days after
the release and separation agreement become final and binding;
and
ii. Bonus -- The Executive shall receive one (1) times the greater
of: the full year annual performance bonus at 100% target for
the calendar year in which severance occurs, or the average of
last 2 performance bonuses paid to the Executive. Such payment
will be made within 7 days after the release and separation
agreement become final and binding; and
iii. Medical & Dental -- The Executive shall, upon finalization of
the agreement and release, receive a lump-sum payment in the
amount of eighteen (18) times the then current monthly premiums
for the Executive's medical and dental insurance. All other
welfare and insurance benefits shall cease as of the Date of
Termination; and
iv. Benefit Payment --The Executive shall, upon finalization of the
agreement and release, receive a lump-sum payment of $4,000 to
be applied toward the purchase of individual disability, life or
any other insurances or coverages that terminated upon the
Executive's Date of Termination; and
v. Long-Term Incentive -- The Executive shall receive all awards
made to the Executive under long-term incentive plans or
programs, pursuant to and subject to the terms set forth in the
incentive plans; and
vi. 401(k) Pension and Supplemental Benefits -- The Executive shall
be paid or be provided such other benefits for which the
Executive is entitled under the terms of any employee benefit
plan or program of the Company in which the Executive may be, or
may have been, a participant including any earned but unpaid
Paid Time Off through the Date of Termination; and
vii. The Company shall reimburse the Executive for reasonable
attorney fees incurred by the Executive in connection with the
enforcement of this Section 7(e).
8. REDUCTION OF PAYMENTS.
Notwithstanding any other provision of this Agreement or of any other
agreement, understanding or compensation plan, the Company shall not pay,
and the Executive shall not receive, any payment which, taking into account
all payments, rights, and benefits whether or not under this Agreement,
would be deemed to be an "excess parachute payment" under Section 280G of
the Internal Revenue Code of 1986, as amended, and the amount of payment
hereunder shall be reduced to the extent necessary to ensure that the
Executive receives no "parachute payment" in connection with such Change in
Control if, as determined by the Company, the reduction would be beneficial
to the Executive.
9. SUCCESSORS AND ASSIGNS.
This Agreement shall not be terminated by voluntary or involuntary
dissolution of the Company or by the merger or consolidation where the
Company is not the surviving or resulting corporation. This Agreement is
binding upon and will be enforceable by the Company and by its successors
and by the assignees of all or substantially all of its business, and by
any other corporation into which the Company may be merged or consolidated.
Upon assignment of this Agreement by Company, the provisions of this
Agreement, including but not limited to the provisions of Section 12, will
be enforceable by the company receiving the assignment.
7
10. NON-ASSIGNABILITY BY EXECUTIVE.
The obligations of the Executive hereunder may not be assigned or
transferred by the Executive in any manner whatsoever, nor are such
obligations subject to involuntary alienation, assignment or transfer.
11. RELATED COMPANIES.
Notwithstanding Section 9, above, the Company may assign the Executive to
perform services for other companies that are under common ownership or
control with the Company, and may assign this Agreement to other companies
that are under common ownership or control with the Company. Such
assignment may be made without the Executive's consent.
12. PROTECTION OF CONFIDENTIAL INFORMATION AND TRADE SECRETS; COMPANY BUSINESS
ASSETS; NON COMPETE AND NON-SOLICITATION.
(a) CONFIDENTIAL INFORMATION AND TRADE SECRETS. The Executive acknowledges
that he or she will be working with or exposed to confidential
information and trade secrets, which are the property of the Company
and/or its affiliates. Such information includes, but is not limited
to: client lists and information; medical data; financial data; sales
data; marketing data; policyholder data; claims data; personnel
information; business files; contracts; documents; business strategies;
business opportunities; any and all information pertaining to potential
or actual corporate acquisitions, mergers, consolidations, conversions,
joint ventures, or other similar agreements; computer software,
software codes, and software documentation, and other documents or
information deemed confidential by the Company and so designated to the
Executive. During and after employment with the Company, the Executive
agrees not to share such information with any person outside of the
Company, except upon prior written authorization from the Company
following notice to and approval by its Board.
(b) COMPANY BUSINESS ASSETS. The Parties agree that the business assets of
the Company include information regarding Company clients, and
relationships with Company clients, and confidential information and
trade secrets of the Company, including those items listed in Section
12 (a) above. The Executive also agrees that the work product of the
Executive produced in the course of employment with Company will be the
property of Company and/or its affiliates. The Executive agrees that
the Company and/or its affiliates shall own the copyright, patent, and
other property rights in such work product, and that this work product
will be work made for hire for copyright purposes. Upon termination of
employment, the Executive shall deliver to the Company all work
product, and all confidential information and trade secrets, including
but not limited to the items listed in Section 12 (a), and the
Executive shall not retain any copies. If there is any breach or
threatened breach by the Executive of the provisions of this Section or
Section 12 (a), the Company shall be entitled to injunctive relief
against the Executive or those persons or entities with whom the
Executive is then affiliated, and to reasonable damages, including
reasonable attorneys' fees. Such reasonable damages shall include at a
minimum but not exclusively the amount of any benefit that the
Executive would receive from disclosing or using the information.
(c) NON-SOLICITATION. The Executive agrees that for a period of one (1)
year after termination of employment with the Company, the Executive
will not directly or indirectly solicit business from or sell any
service or product to any clients of the Company or clients of any
subsidiary or affiliate of the Company for any types of insurance or
other services or products which are offered by or through the Company
or its affiliates. Clients include current insureds and any persons or
entity insured or serviced for a fee by the Company or its affiliates
during the one-year period preceding
8
termination of the Executive's employment. The Executive also expressly
agrees that for a period of two (2) years after termination of
employment with the Company, the Executive will not directly or
indirectly induce, attempt to induce, or enable or support the
inducement of any employee to depart from or cease employment with the
Company or its affiliates, nor will the Executive interfere with or
disrupt the Company's or its affiliates' relationships with other
employees. If there is any breach or threatened breach of this Section,
the Company and its affiliates shall be entitled to injunctive relief
against the Executive or those persons or entities with whom the
Executives is then affiliated, and reasonable damages, including
reasonable attorneys' fees.
(d) NON-COMPETE. Executive agrees that for a period of one (1) year after
termination of employment, Executive will not directly or indirectly
accept a position with or provide any managerial or executive services
to any business entity which competes with Company or Company's
affiliates in their core lines of business, including but not limited
to professional liability insurance and worker's compensation
insurance, in any states where Company or its affiliates are doing
business in the United States at the time of termination. This
non-compete provision applies to providing services to a competitor in
any capacity, directly or indirectly, including as an employee,
consultant, owner, partner, shareholder (other than a minority
shareholder in a publicly traded corporation), and also applies to
aiding or assisting any other person or entity in providing such
services. Provided that, the Board or CEO of ACAP may give prior
written consent to the Executive accepting a position which would
otherwise be in violation of this non-compete provision. If there is
any breach or threatened breach of this section, the Company and its
affiliates shall be entitled to injunctive relief against the Executive
and those entities with whom Executive is then affiliated, and
reasonable damages, including reasonable attorneys' fees.
(e) RETURN OF COMPANY PROPERTY. Immediately upon the termination of the
Executive's employment with the Company and at any time upon the
Company's request, the Executive shall deliver to the Company all the
Company property in the Executive's possession, custody or control
including notebooks, reports, manuals, programming data, listings and
materials, engineering or patent drawings, patent applications, any
other documents, files or materials which contain, mention or relate to
Confidential Information, and all copies and summaries of such
materials whether in written, mechanical, electromagnetic, analog,
digital or any other format or medium.
(f) CONSENT TO MODIFICATION BY THE COURTS. It is the express intention of
the parties to this Agreement that, if it should appear that any of the
terms or covenants of this section are in conflict with any rule of law
or statutory provision of the State of Michigan or any other
jurisdiction where this Agreement is being enforced, which conflict
would ordinarily render such terms or covenants inoperative or null and
void, the parties request that the Courts of such state modify any such
term or covenant so that the intention of the parties hereto is carried
out to as great a degree and extent as the Court deems reasonable in
order to conform with any rule of law or statutory provision regarding
restrictive covenants of the State of Michigan or of such other
jurisdiction.
13. ARBITRATION OF DISPUTES.
The Executive and the Company agree that any controversy or claim arising
out of or relating to this Agreement, the breach thereof, or the coverage
of this arbitration provision shall be settled by arbitration, rather than
by litigation, administered by the American Arbitration Association in
accordance with the National Rules for the Resolution of Employment
Disputes in effect on the date of delivery of demand for arbitration. The
Executive waives the right to submit any discrimination claims or other
employment-related claims in a court proceeding, and elects instead to
submit any such claims
9
to arbitration. This Agreement to resolve disputes through arbitration is
not a waiver of any of the Executive's substantive rights or remedies under
law, and the arbitrator shall have the authority to grant any remedy or
relief that could be granted in a court proceeding. The arbitration of such
issues, including the determination of the amount of any damages suffered
by either party hereto by reason of the acts or omissions of the other,
shall be to the exclusion of any court. The decision of the arbitrators
shall be final and binding on the parties and their respective heirs,
executors, administrators, successors and assignees. Judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction. There shall be three arbitrators, one to be chosen directly
by each party and the third arbitrator to be selected by the two
arbitrators so chosen. The arbitration shall be conducted in Michigan or at
such other location as agreed by the parties. All decisions and awards
shall be made by a majority of the arbitrators. Each party shall pay the
fees and expenses of that party's arbitrator and any representatives,
witnesses and all other expenses related to the presentation of that
party's case. The cost of the third arbitrator, the record or any
transcripts, any administrative fees, and all other fees and costs shall be
borne equally by the parties. The arbitrators shall have the authority to
award reimbursement of reasonable attorneys' fees and other fees and
expenses as part of the remedy, in accordance with applicable law.
By agreeing to arbitration under this Section, the Company and the
Executive understand that they are each waiving any right to a trial by
jury and each party makes that waiver knowingly and voluntarily with full
consideration of the ramifications of such waiver.
Nothing contained herein shall be construed or interpreted to preclude the
Company prior to, or pending the resolution of, any matter subject to
arbitration from seeking injunctive relief in any court for any breach or
threatened breach of any of the Executive's obligations in Section 12
hereof.
14. RESOLUTION OF DISPUTES.
The parties agree that this Agreement will be governed by and interpreted
in accordance with the laws of the State of Michigan, without application
of choice of law rules.
15. RIGHT TO INJUNCTIVE AND OTHER RELIEF; CONSENT TO JURISDICTION.
(a) The Executive acknowledges that the Company will suffer irreparable
harm, not readily susceptible of valuation in monetary damages, if the
Executive breaches any of his obligations in Section 12 of this
Agreement. Accordingly, the Executive agrees that the Company shall be
entitled to injunctive relief against any breach or prospective breach
by the Executive of his obligations in Section 12 in any federal or
state court of competent jurisdiction, and the Executive hereby submits
to the jurisdiction of any such federal or state court in the State of
Michigan for the purposes of any actions or proceedings instituted by
the Company to obtain such injunctive relief. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies
available to the Company for such breach or threatened breach,
including the recovery of damages from the Executive,
(b) In addition to the rights set forth in subsection (a), above, if
Executive breaches any of his obligations under Section 12 the Company
shall be entitled to cease making further payments to the Executive
pursuant to clauses (i) through (iv) of Section 7 (d) or (e), as the
case may be, as well as pursuant to clause (v) of Section 7 (d); and to
terminate Executive's rights of participation under clause (v) of
Section 7 (d) or (e), as the case may be,
10
(c) This section shall survive the termination of the Executive's
Employment
16. ENTIRE AGREEMENT.
This written Agreement sets forth the entire Employment Agreement between
the parties, and it supersedes all prior negotiations, employment
interviews, communications, and understandings between the Parties whether
written or oral. There are no other Employment Agreements between the
Parties.
17. AMENDMENT. This Agreement may not be changed orally but only by a written
agreement that expressly references this Agreement, signed by the Executive
and the Company's Chief Executive Officer, and approved by its Board of
Directors.
18. SEVERABILITY.
The various Sections of this Agreement are severable. If any Section
or an identifiable part thereof is held to be invalid or unenforceable by
any court of competent jurisdiction, then such invalidity or
unenforceability shall not affect the validity or enforceability of the
remaining Sections or identifiable parts thereof in this Agreement. The
parties hereto agree that the portion so held invalid, unenforceable or
void shall, if possible, be deemed amended or reduced in scope, or
otherwise be stricken from this Agreement, to the extent required for the
purposes of the validity and enforcement hereof.
19. BENEFICIARIES.
The Executive may select (and change, to the extent permitted under any
applicable law) a beneficiary or beneficiaries to receive any compensation
or benefit payable under this Agreement following the Executive's death or
disability, and may change such election by giving the Company written
notice thereof. In the event of the Executive's death, Disability or a
judicial determination of the Executive's incompetence, all references in
this Agreement to the Executive shall be deemed, where appropriate, to
refer to the Executive's named beneficiary, estate or other legal
representative.
20. NOTICES.
All notices which a party is required or may desire to give to the other
party under or in connection with this Agreement shall be sufficient if
given by hand delivery or by addressing same to the other party as follows:
(a) if to the Executive, to: the last known address of record with the
Company, or (b) if to the Company, to: Attn: Secretary, American Physicians
Assurance Corporation, 1301 North Hagadorn Road, East Lansing, MI
48826-1471; or at such other place as may be designated in writing by like
notice. Any notice shall be deemed to have been delivered when addressed as
required herein and deposited postage prepaid, in the United States Mail.
21. ACTION OF THE BOARD
Any reference in this Agreement to the Board shall include the Board, the
Compensation Committee thereof and any officers of the Company to which the
Board or the Compensation Committee thereof has by resolution delegated any
explicit authority or responsibilities with respect of this Agreement.
22. TAX WITHHOLDINGS
All payments to the Executive hereunder shall be subject to such
withholding of federal, state and local income and excise taxes and to such
employment taxes as may be reasonably determined by the Company to be
required.
11
23. SURVIVAL AND CONTINUATION OF AGREEMENT PROVISIONS.
The termination of the Executive's employment for any reason whatsoever
shall not operate to terminate this Agreement or otherwise adversely affect
the respective continuing rights and obligations of the parties, including
but not limited to, those under Sections 5(b), 7, 8, 9, 12, 13, 15 and 20
of this Agreement, all of which shall survive the effective date of such
termination of employment in accordance with their respective terms.
EXECUTIVE
AMERICAN PHYSICIANS ASSURANCE
CORPORATION
/s/ Thomas Chase /s/ William B. Cheeseman
- ------------------ -------------------------------------
President and Chief Executive Officer
12