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EXHIBIT 99.2
[U S F + G LOGO]
Executive
December 18, 1994
Mr. Kenneth R. Rosen
30 Church Street
Chagrin Falls, Ohio 44022
Dear Ken:
It provides me with great pleasure to invite you to join the management
team of United States Fidelity and Guaranty Company ("USF&G") as Chairman and
Senior Executive Officer of Victoria Financial Corporation, the successor
company in the proposed merger between Victoria Financial Corporation and
Queensland, Inc. (such successor company is hereinafter referred to as the
"Company"). The business you have helped build and the leadership you have
demonstrated will play critical roles in fulfilling USF&G's strategies moving
forward. The title of Chairman and the position of Senior Executive Officer
will become effective upon the effective date (the "Effective Date") of the
proposed merger between Victoria Financial Corporation and Queensland, Inc.
(the "Merger"), subject to the successful completion of the Merger.
TERM AND DUTIES
This agreement will extend for a period of four years from the
Effective Date. During the first one and one-half years of this agreement
after the Effective Date (the "Employment Period"), you will serve as Senior
Executive Officer of the Company. As part of your duties, you will be
expected, among other things, to play a critical role in the Company's
transition into the USF&G insurance group, develop business strategies for the
Company, identify potential synergies between USF&G and the Company, assist in
the distribution of the Company's products through USF&G's agents, and provide
tactical advice relating to new market entry opportunities for the Company and
USF&G. In performing these functions, you will report directly to Jim Lewis,
Senior Vice President of Personal Lines for USF&G. In addition, you will be
expected to support USF&G's business development efforts as directed by Andy
Stern, Senior Vice President of Strategic Planning, Corporate Marketing and
Corporate Communications. In this capacity you will explore and investigate
new business ventures and projects on behalf of
United States Fidelity and Guaranty Company
100 Light Street
Baltimore, MD 21202
Tel 410.547.3000
US Mail
PO Box 1138
Baltimore, MD 21203-1138
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Mr. Kenneth R. Rosen
December 18, 1994
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USF&G. Any business ventures or opportunities which you identify as
appropriate for USF&G will be presented to USF&G with a view toward and with a
right by USF&G (but with no obligation whatsoever) to make investments. It is
expected that in the first portion of the Employment Period most of your duties
will be focused on assisting in the transition of the Company; as that
transition progresses successfully, your attention increasingly will be devoted
to the business development aspects of your role. During the Employment Period,
you may not accept employment from any other person or entity, although you may
engage in other business ventures (including ventures declined by USF&G) which
do not unreasonably interfere with your duties as Senior Executive Officer and
which are not in violation of our agreement regarding non-competition.
During the last two and one-half years of this agreement (the
"Consulting Period"), you will serve as a consultant to the Company, providing
such services as the Company may reasonably request, and as to which you may
reasonably agree, related to the non-standard automobile insurance business and
other business opportunities; provided that you will not be required to provide
services that would unreasonably interfere with your regular employment or
other ventures and you will not be required to provide services for more than
two days in any week and no more than three weeks in any calendar quarter. In
this capacity, you will be expected to play an advisory role in the general
business areas described above and in such other areas related to non-standard
automobile insurance as USF&G or the Company may reasonably request. During
this period, you will not be precluded from accepting employment with another
person or entity, provided such employment is not in violation of our agreement
regarding non-competition.
During the term of this agreement, you will remain as Chairman of the
Board of the Company at the discretion of USF&G. However, your removal from
that title will not reduce your responsibilities under this agreement and will
not affect your compensation.
COMPENSATION AND BENEFITS
During the first twelve months of the Employment Period, you will be
paid $850,000, payable in bi-weekly installments. During the last six months of
the Employment Period, you will be paid $450,000, payable in bi-weekly
installments.
During the first eighteen months of the Consulting Period, you will be
paid $525,000, payable in bi-weekly installments. During the last twelve months
of the Consulting Period, you will be paid $275,000, payable in bi-weekly
installments.
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Mr. Kenneth R. Rosen
December 18, 1994
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You will be provided with the following benefits during the Employment
Period:
(1) You will participate in the Company's pension and welfare benefit
plans on the same basis as other employees;
(2) You will be entitled to a total of nine weeks of paid vacation;
(3) You will be provided with the same fringe benefits currently
provided to you by Victoria Financial Corporation, including, without
limitation, those listed on Schedule I hereto, as well as any benefits
provided to employees of Victoria Financial Corporation generally;
(4) You will be provided with an office suitable to your position as
Senior Executive Officer and other support, including secretarial, as is
required or appropriate for you to fulfill your responsibilities hereunder; and
(5) You will be reimbursed for reasonable business-related expenses
in accordance with and subject to Company policy.
In addition, upon termination of the Employment Period:
(1) You will be entitled to assume the Company's lease on your
Company car;
(2) You will have the right to purchase at cash surrender value (or
assume the rights and premium obligations under) the Company's Key Man
insurance policy and any additional life or disability insurance policies held
for you, subject to the terms of such policies; and
(3) The Company will cover the reasonable expenses of moving your
computers, office furniture, art work and antiques from your current office and
the area immediately outside your current office to your home or other
designated location within the Cleveland area.
TERMINATION
In the event that the Company terminates your employment or consulting
relationship without Cause, or if you terminate your employment or consulting
relationship for Good Reason, you will be paid immediately upon such
termination the full balance of your compensation remaining under this
agreement, in a single-lump sum, without a present value discount. For
purposes of this Agreement:
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Mr. Kenneth R. Rosen
December 18, 1994
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(1) "Cause" means (i) your conviction of a felony involving moral
turpitude, or (ii) your deliberate and continued gross misconduct (continuing
after notice thereof by the Company) resulting in material damage to the
business of the Company or USF&G. For purposes of this definition, an act, or
failure to act, will be considered "deliberate" only if done by you in bad
faith and without a reasonable belief that your conduct was in the best
interests of the Company and USF&G;
(2) "Good Reason" means (i) during the Employment Period, actions by
USF&G or the Company which, without your consent, unreasonably increase the
amount of work or travel time required of you above what your current position
requires, or require you to relocate your principal place of business to a
place more than 25 miles from Mayfield Heights, Ohio, and (ii) during the
Consulting Period, actions by USF&G or the Company requiring you to perform
services which unreasonably interfere with your conduct of other business
activities permitted hereunder; provided, in each case, that you have first
given written notice to USF&G or the Company specifying such actions in
reasonable detail, and such actions are not cured promptly. "Good Reason" will
not include any exercise by USF&G of its right to determine the composition of
the Company's Board of Directors.
In the event that the Company terminates your employment or consulting
relationship for Cause, or you terminate your employment or consulting
relationship without Good Reason, you will not be entitled to any compensation
after the date of such termination.
In the event that you die during the Employment Period or the Consulting
Period, your estate or other designated beneficiary will receive as a death
benefit the remaining payments due to you under this agreement. If these
benefits are funded through an insurance policy, the premiums for which are
taxable to you, you will be grossed-up for the tax on such premiums.
NON-COMPETITION
(1) For a period of three years after the Effective Date (the
"Non-Competition Period"), you will not, directly or indirectly, whether as an
employee, consultant, independent contractor, partner, joint venturer or
otherwise, (i) engage in the business of underwriting non-standard automobile
insurance; (ii) solicit or induce, or in any manner attempt to solicit or
induce, any person employed by, or as agent of, the Company to terminate such
person's employment or agency, as the case may be, with the Company; or (iii)
divert, or attempt to divert, any person, concern, or entity from doing
business with the Company (except that this clause (iii) will not be construed
to prohibit you from
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Mr. Kenneth R. Rosen
December 18, 1994
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appointing or doing business with, other than non-standard automobile
insurance business, agents who are also doing business with the Company). This
covenant will not preclude you from (i) being associated in any way with a
company which underwrites non-standard automobile insurance but not as its
primary business, so long as you have no involvement in the underwriting of
non-standard automobile insurance of such company, or (ii) owning solely as a
passive investor not more than a five percent equity interest in any company,
or owning any interest in a Company for which non-standard insurance is an
incidental or insignificant part of its total business.
(2) You will at all times during and after this agreement keep in
confidence all confidential or proprietary information of the Company (or its
predecessor) or USF&G which you have acquired while an employee or consultant
of the Company (or its predecessor) or USF&G.
(3) You acknowledge that a remedy at law for any breach or threatened
breach by you of the provisions of the preceding two paragraphs would be
inadequate. You therefore agree that USF&G and the Company will be entitled to
injunctive relief in addition to any other available rights and remedies in
case of any such breach or threatened breach; provided, however, that nothing
contained herein shall be construed as prohibiting USF&G or the Company from
pursuing any other remedies available for any such breach or threatened breach.
OTHER MATTERS
Effective as of the Merger, this agreement will replace in all respects
your existing employment agreement with Victoria Financial Corporation. You
will not be entitled to any further compensation, benefits or other amounts
under that agreement.
USF&G will cause the Company to assign to you on the Effective Date its
rights to the Insurance Guild trademark. You and the Company will share any
research developed on the Insurance Guild as of the Effective Date.
For purposes of this agreement, references to the Company include its
subsidiaries.
I trust you find these terms acceptable and would ask you to
acknowledge your agreement by signing this letter in the space below.
We have major challenges and opportunities ahead of us at the Company
and USF&G. The acquisition of Victoria Financial Corporation represents a
great step
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Mr. Kenneth R. Rosen
December 18, 1994
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forward towards our vision for the future. I look forward to working with
you and your colleagues as we build a truly great company.
Regards,
United States Fidelity and Guaranty Company
/s/ Andrew A. Stern
By:----------------------------------------
Andrew A. Stern
Name:--------------------------------------
Sr. Vice President
Title:-------------------------------------
ACCEPTED:
/s/ Kenneth R. Rosen
- -----------------------------
Kenneth R. Rosen
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SCHEDULE I
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Payment of car expenses and related tax gross-up for Lexus LS400 or similar
model
Excess health plan payments - (deductible and co-payment)
Insurance premiums for $500,000 term life insurance, key man and disability
policies
Reasonable car phone expenses
Reasonable estate and financial planning expenses
December 18, 1994 - 11:59am - JCD
CLE2 - 137266.2B - 04735\1