EXHIBIT 10.15

 

HILB, ROGAL AND HAMILTON COMPANY

 

Senior Executive

 

Employment Agreement With

 

MARTIN L. VAUGHAN, III

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EMPLOYMENT AGREEMENT

 

THIS AGREEMENT, effective the 6th day of May, 2003, by and between MARTIN L.
VAUGHAN, III, an individual residing in the County of Goochland, Virginia (the
“Executive”), and HILB, ROGAL AND HAMILTON COMPANY, a Virginia corporation with
corporate offices located at 4951 Lake Brook Drive, Suite 500, Glen Allen,
Virginia 23060 (the “Company”).

 

WHEREAS, the Company has promoted the Executive to the position of Chairman and
Chief Executive Officer of the Company and wants to assure itself of the benefit
of the Executive’s services and experience;

 

WHEREAS, the Executive has assumed the position of Chairman and Chief Executive
Officer and is willing to continue in the employ of the Company upon the terms
and conditions herein set forth; and

 

WHEREAS, recent legal changes no longer permit “split dollar” insurance
arrangements for executives such as Executive, thereby requiring the abolition
of his former benefit with respect to split dollar insurance;

 

NOW, THEREFORE, in consideration of the premises and covenants contained herein,
and intending to be legally bound hereby, the parties hereto agree as follows:

 

I. Term of Employment.

 

(A) The term of the employment of the Executive under this Agreement shall be
for the period commencing on May 6, 2003, and ending on May 31, 2005; provided,
however, that commencing on May 31, 2004, and on each annual anniversary of such
date (such date and each annual anniversary being hereinafter referred to as the
“Renewal Date”) unless previously terminated, the term of employment shall
automatically extend so as to terminate two (2) years from such Renewal Date,
unless notice that the term of employment will not be extended is given by
either party to the other at least 60 days prior to the Renewal Date.

 

(B) Notwithstanding the foregoing provision (A) of this Section I., the term of
employment of the Executive under this Agreement shall be subject to earlier
termination by:

 

(1) determination of disability of the Executive pursuant to Section IV.; or

 

(2) dismissal of the Executive from his position as Chairman and Chief Executive
Officer pursuant to resolution by the Board of Directors of the Company, or
failure or refusal of the Board of Directors to re-elect the Executive to the
position of Chairman and Chief Executive Officer;

 

(3) resignation by Executive; or

 

(4) death of the Executive;

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provided, however, that

 

(i) in the event of termination for determination of disability pursuant to
Paragraph (1) above, Section IV. shall apply;

 

(ii) in the event of termination pursuant to Paragraph (2) above for Proper
Cause (as defined in Section V.(A)) or pursuant to Paragraph (3) above for other
than Good Reason (as defined in Section VI.(A)), Section V.(B) shall apply;

 

(iii) in the event of termination pursuant to Paragraph (2) above without Proper
Cause or pursuant to Paragraph (3) above for Good Reason, Section VI.(B) shall
apply;

 

(iv) in the event of retirement of the Executive upon the expiration of the term
set forth in Section I.(A), Section VII shall apply; or

 

(v) in the event of termination due to the death of the Executive pursuant to
Paragraph (4) above, Section VIII. shall apply.

 

II. Services To Be Rendered.

 

The Company agrees to employ the Executive as the Chairman and Chief Executive
Officer of the Company, subject to the terms, conditions and provisions of this
Agreement. The Executive hereby accepts such employment and agrees that he shall
devote the same degree of skill and diligence in rendering services to the
Company under this Agreement as he applied during his prior employment by the
Company. The Executive agrees that his employment as Chairman and Chief
Executive Officer of the Company pursuant to this Agreement is a full time
position. Notwithstanding the foregoing, the Executive may devote a reasonable
amount of his time to serving as an officer and director of other companies
affiliated with the Company; to his personal investments and business affairs,
including service as a director of unaffiliated companies; and to civic,
political and charitable activities; provided however, the Executive shall not
accept any position as a director of any unaffiliated for-profit business
organization, other than positions presently held by him, without prior approval
of the Board of Directors of the Company (which approval will not be
unreasonably withheld).

 

III. Compensation.

 

In consideration for the services rendered to the Company under this Agreement,
the Company shall pay and provide to the Executive the following compensation
and benefits:

 

(A) Salary.

 

The Company shall pay the Executive an annual base salary of $488,000, payable
in twenty-four equal semi-monthly installments. This annual base salary shall be
reviewed annually by the Board of Directors to consider appropriate increases,
but in no event shall the amount of the base salary be reduced.

 

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(B) Annual Incentive Bonus.

 

In addition to the base salary to be paid to the Executive under Section
III.(A), the Executive may also be entitled to an annual incentive bonus as
established and modified, from time to time, by the Board of Directors.

 

(C) Ancillary Benefits.

 

The Executive shall also be entitled to vacations, participation in the
Company’s Profit Sharing Savings Plan (401K), Executive Voluntary Deferral Plan
and Supplemental Executive Retirement Plan, sick leave benefits, post-retirement
benefit plan, and all other ancillary benefits provided by the Company,
including, but not limited to, group life, health and disability insurance
coverage, consistent with the compensation policies and practices of the Company
from time to time prevailing with respect to persons who are executive officers
of the Company.

 

(D) Stock Based Awards.

 

The Executive shall receive such stock option awards each year as determined by
the Board of Directors in its sole discretion.

 

IV. Disability.

 

(A) The term of employment of the Executive may be terminated at the election of
the Company upon the Board of Director’s receiving evidence that the Executive
is disabled as that term is defined in the Group Long Term Disability Insurance
Certificate and Summary Plan Description for the Company’s Group Disability
Plan.

 

(B) In the event of such termination for disability, the Company shall thereupon
be relieved of its obligations to pay any compensation and benefits under
Section III., except for accrued and unpaid items, but shall, in addition, pay
to the Executive such disability compensation as set forth in any disability
plan established by the Company for its executive officers.

 

V. Termination For Proper Cause or Without Good Reason.

 

(A) The occurrence of any of the following events shall constitute “Proper
Cause” for termination of the employment of the Executive under this Agreement,
at the election of the Board of Directors of the Company:

 

(1) the Executive shall voluntarily resign as a director, officer or employee of
the Company or any of its affiliates without the written consent of the Board of
Directors of the Company;

 

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(2) the Executive shall breach this Agreement in any material respect and fail
to cure such breach within sixty (60) calendar days after receiving written
notice of such breach from the Company; or

 

(3) the commission of a fraud, or other criminal act, by the Executive directly
involving the Company or any of its affiliates which would constitute a felony
if prosecuted under criminal law;

 

provided, however, the inability of the Executive to achieve favorable results
of operations shall clearly not be deemed Proper Cause for termination
hereunder.

 

(B) In the event of termination of the Executive’s employment by the Company
pursuant to Section I.(B)(2) for Proper Cause or by the Executive pursuant to
Section I.(B)(3) other than for Good Reason (as defined in Section VI.(A)), the
Company shall thereupon be relieved of its obligations to pay any compensation
and benefits under Section III., except for accrued and unpaid items.

 

VI. Termination for Good Reason or Without Proper Cause.

 

(A) The occurrence of any of the following events shall constitute “Good Reason”
for termination of employment by Executive:

 

(1) the assignment to the Executive of any duties inconsistent in any respect
with the Executive’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section
II. of this Agreement, or any other action by the Company which results in a
diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;

 

(2) any failure by the Company to comply with any of the provisions of Section
III. of this Agreement, other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Executive; or

 

(3) the Company’s requiring the Executive to be principally based at any office
or location other than within the Richmond, Virginia metropolitan area.

 

(B) In the event of termination of the Executive by the Company pursuant to
Section I.(B)(2) without Proper Cause or by the Executive pursuant to Section
I.(B)(3) for Good Reason, the Company shall thereafter be and remain obligated
to the Executive (or his estate or designated beneficiary) for the following:

 

(1) continuation of the compensation and benefits provided under Section III.(A)
and III.(B) and such benefits under III.(C) as are payable to a terminated
employee until expiration of the term of employment established by Section I.(A)
or for one (1) year, whichever is greater;

 

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(2) immediate full vesting of all unvested stock options and awards of
restricted stock; and

 

(3) immediate full vesting of all benefits in the Company’s Supplemental
Executive Retirement Plan.

 

(C) In the event of a dispute as to whether Executive was terminated for or
without Proper Cause, or for or without Good Reason, or regarding the amount of
compensation Executive is entitled to receive under this Section VI., the
Company shall be obligated to continue to pay to the Executive (or his estate or
designated beneficiary) all of the compensation and benefits reserved under this
Section VI. until the dispute is resolved by an arbitrator pursuant to Section
XVIII. hereof.

 

(D) For purposes of calculating the annual incentive bonus payable under Section
III.(B), the Company shall make to the Executive (or his estate or designated
beneficiary), an annual payment equal to the greater of (i) the highest annual
incentive bonus payment received by Executive pursuant to Section III.(B) for
the last four (4) fiscal years prior to the date of termination or (ii) fifty
percent (50%) of his annual base salary.

 

VII. Retirement at Expiration of the Term of Contract.

 

In the event Executive elects to retire upon expiration of the term set forth in
Section I.(A), all unvested stock options and grants of restricted stock shall
immediately vest and the Executive shall become fully vested in the Company’s
Supplemental Executive Retirement Plan.

 

VIII. Death.

 

In the event of termination of the Executive’s employment pursuant to Section
I.(B)(4) above, the Company shall pay the Executive’s estate or designated
beneficiary such death benefits as may be set forth in any life insurance plan
established by the Company for its executive officers.

 

IX. Confidentiality.

 

For purposes of this Agreement, “Confidential Information” shall mean any
information of a proprietary or confidential nature and trade secrets of the
Company and its affiliates relating to the business of the Company and its
affiliates that have not previously been publicly released by duly authorized
representatives of the Company. The Executive agrees to regard and preserve as
confidential all Confidential Information pertaining to the Company’s business
that has been or may be obtained by the Executive in the course of his
employment with the Company, whether he has such information in his memory or in
writing or other physical form. The Executive shall not, without written
authority from the Company to do so, use for his personal benefit or his
personal purposes, unrelated to business of the Company, nor disclose to others,
either during the

 

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term of his employment hereunder or thereafter, except as required by the
conditions of his employment hereunder, any Confidential Information of the
Company. This provision shall not apply after the Confidential Information has
been voluntarily disclosed to the public by a duly authorized representative of
the Company, independently developed and disclosed by others, or otherwise
enters the public domain through lawful means.

 

X. Removal Of Documents Or Objects.

 

The Executive agrees not to remove from the premises of the Company, except as
an employee of the Company in pursuit of the business of the Company or any of
its affiliates, or except as specifically permitted in writing by the Company,
any document or object containing or reflecting any Confidential Information of
the Company. The Executive recognizes that all documents or material containing
Confidential Information developed by him or by someone else in the course of
employment by the Company, are the exclusive property of the Company.

 

XI. Nonpiracy Covenants.

 

(A) For the purpose of this Agreement, the following terms shall have the
following meanings:

 

(1) “HRH Customers” shall be limited to those customers of the Company or its
affiliates for whom there is an insurance policy or bond in force or to or for
whom the Company or its affiliates are rendering services as of the date of
termination of the Executive’s employment;

 

(2) “Affiliates of the Company” shall mean each of the subsidiary corporations
of Hilb, Rogal and Hamilton Company engaged in business as an insurance agency
as of the date of termination of the Executive’s employment;

 

(3) “Prohibited Services” shall mean services in the fields of insurance
performed by the Company or its affiliates, their agents or employees in any
other business engaged in by the Company or its affiliates on the date of
termination of the Executive’s employment. “Fields of Insurance” does not
include title insurance, but does include all lines of insurance sold by the
Company or its affiliates, including, without limitation, property and casualty,
life, group, accident, health, disability, and annuities;

 

(4) “Restricted Period” shall mean: (i) in the case of termination by the
Company for Proper Cause or by the Executive without Good Reason, the period of
two (2) years immediately following the date of termination of the Executive’s
employment; and (ii) in the case of termination by the Company without Proper
Cause or by the Executive for Good Reason, the period following the date of
termination of the Executive’s employment during which the Executive is
receiving compensation under this Agreement.

 

(B) The Executive recognizes that over a period of many years the Company has
developed, at considerable expense, relationships with, and knowledge about,
Customers which

 

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constitute a major part of the value of the Company. During the course of his
employment by the Company, the Executive will either have substantial contact
with, or obtain substantial knowledge about, these Customers. In order to
protect the value of the Company’s business, the Executive covenants and agrees
that, in the event of the termination of his employment for any reason, whether
voluntary or involuntary and whether with or without Proper Cause or Good
Reason, he shall not, directly or indirectly, for his own account or for the
account of any other person or entity, as an owner, stockholder, director,
employee, partner, agent, broker, consultant or other participant during the
Restricted Period:

 

(1) solicit a Customer for the purpose of providing Prohibited Services to such
Customer; and

 

(2) accept an invitation from a Customer for the purpose of providing Prohibited
Services to such Customer.

 

Subsections (1) and (2) are separate and divisible covenants; if for any reason
one covenant is held to be illegal, invalid or unenforceable, in whole or in
part, the remaining covenant shall remain valid and enforceable and shall not be
affected thereby. Further, the periods and scope of the restrictions set forth
in any such subsection shall be reduced by the minimum amount necessary to
reform such subsection to the maximum level of enforcement permitted to the
Company by the law governing this Agreement. Additionally, the Executive agrees
that no separate geographic limitation is needed for the foregoing nonpiracy
covenants as such are not a prohibition on the Executive’s employment in the
insurance agency business and are already limited to only those entities which
are included within the definition of “Customer.”

 

XII. Nonraiding of Employees.

 

The Executive covenants that during his employment hereunder and the Restricted
Period specified in Section XI. hereof, he will not solicit, induce or encourage
for the purposes of employing or offering employment to any individuals who, as
of the date of termination of the Executive’s employment, are employees of the
Company or its affiliates, nor will he directly or indirectly solicit, induce or
encourage any of the Company’s or its affiliates’ employees to seek employment
with any other business, whether or not the Executive is then affiliated with
such business.

 

XIII. Notification of Former and New Employment.

 

During the term of this Agreement and the Restricted Period specified in Section
XI. hereof, the Executive covenants to notify any prospective employer or joint
venturer, which is a competitor of the Company of this Agreement with the
Company; and if the Executive accepts employment or establishes a relationship
with such competitor, the Executive covenants to notify the Company immediately
of such relationship. If the Company reasonably believes that the Executive is
affiliated or employed by or with a competitor of the Company during the
Restricted Period, then the Executive grants the Company the right to forward a
copy of this Agreement to such competitor.

 

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XIV. Liquidated Damages.

 

(A) If the Executive breaches Sections X. or XI. of this Agreement, the Company
may, at its sole option, seek liquidated damages with respect to each Customer
procured by or through the Executive, directly or indirectly, in violation of
Sections X. or XI. of this Agreement (with such Customers being hereafter
referred to as “Lost Customers”). The Executive acknowledges that it would be
difficult to calculate damages incurred by the Company in the event of such a
breach and that the following liquidated damages clause, when so elected by the
Company, is necessary and reasonable for the protection of the Executive. The
Executive also acknowledges that the Company, at its sole option, may or may not
choose to exercise this liquidated damages provision as to some or all Lost
Customers. Whether or not the Company seeks liquidated or actual damages, the
Company shall retain the right to obtain injunctive relief with respect to any
Lost Customer and with respect to any other actions by the Executive which
breach this Agreement. Finally, the Executive acknowledges that he has no right
whatsoever to force the Company to exercise this liquidated damages provision,
and that such choice remains entirely the Company’s. Liquidated damages shall be
calculated as follows:

 

(1) A Lost Customer shall be valued at 150% of the gross revenue to the Company
in the most recent twelve (12) month period preceding the date of loss of such
account. If such Lost Customer had not been a Customer of the Company for an
entire twelve (12) month period, such liquidated damages shall be 150% of the
gross revenue which would have been, in the absence of a breach by the
Executive, realized by the Company in the initial twelve (12) month period of
such Customer being served by the Company.

 

(2) The Executive acknowledges that the foregoing damage amounts are fair and
reasonable, that an industry rule of thumb for the valuation of any agency is
150% of revenue and that, on the margin, selected accounts may be worth much
more than 150% of their annual revenue to an agency.

 

(B) The Executive shall pay such liquidated damages to the Company within ninety
(90) business days after a final order is entered by the Arbitrator and received
by the Executive ordering the Executive to make such payment. Thereafter, such
liquidated damages shall bear interest at the prime rate of interest in effect
at the Bank of Virginia. The Executive acknowledges that a broker of record
letter granted during the Restricted Period, if applicable, by a Customer in
favor of the Executive or any person or entity with whom or which the Executive
is directly affiliated shall be prima facie evidence of a violation of Section
XI. of this Agreement and establishes a rebuttable presumption in favor of the
Company that Section XI. of this Agreement has been violated by the Executive.
Further, the Executive acknowledges that if the Restricted Period is applicable
to him, he has an affirmative duty to inform such Customer that he cannot accept
its business until after the Restricted Period.

 

(C) The Executive agrees that the foregoing remedies shall be cumulative and not
exclusive, shall not be waived by any partial exercise or nonexercise thereof
and shall be in addition to any other remedies available to the Company at law
or in equity.

 

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XV. Tolling of Restrictive Covenants During Violation.

 

If a material breach by the Executive of any of the restrictive covenants of
this Agreement occurs, the Executive agrees that the restrictive period of each
such covenant so materially violated shall be extended by a period of time equal
to the period of such material violation by the Executive. It is the intent of
this Section that the running of the restricted period of a restrictive covenant
shall be tolled during any period of material violation of such covenant so that
the Company shall get the full and reasonable protection for which it contracted
and so that the Executive may not profit by his material breach.

 

XVI. Notices.

 

All notices and other communications which are required or may be given under
this Agreement shall be in writing and shall be deemed to have been given if
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid:

 

(A) If to the Company, to it at the following address:

 

4951 Lake Brook Drive, Suite 500

Glen Allen, Virginia 23060

Attn: Chairman of the Board

 

(B) If to the Executive, to him at the following address:

 

309 Running Cedar Trail

Manakin-Sabot, Virginia 23103

 

or to such other place as either party shall have specified by notice in writing
to the other. A copy of any notice or other communication given under this
Agreement shall also be sent to the Secretary and the Treasurer of the Company
addressed to such officers at the then principal office of the Company.

 

XVII. Governmental Regulation.

 

Nothing contained in this Agreement shall be construed so as to require
commission of any act contrary to law and whenever there is any conflict between
any provision of this Agreement and any statute, law, ordinance, order or
regulation, the latter shall prevail, but in such event any such provision of
this Agreement shall be curtailed and limited only to the extent necessary to
bring it within the legal requirements.

 

XVIII. Arbitration.

 

Any dispute or controversy as to the interpretation, construction, application
or enforcement of, or otherwise arising under or in connection with this
Agreement, shall be submitted at the request of either party hereto for
mandatory, final and binding arbitration in the City of Richmond, Virginia, in
accordance with the commercial arbitration rules then prevailing

 

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of the American Arbitration Association. The Company and Executive waive the
right to submit any controversy or dispute to a Court and/or a jury. Any award
rendered therein shall provide the full remedies available to the parties under
the applicable law and shall be final and binding on each of the parties hereto
and their heirs, executors, administrators, successors and assigns and judgment
may be entered thereon in any court having jurisdiction. The prevailing party in
any such arbitration shall be entitled to an award by the arbitrator of all
reasonable attorneys’ fees and expenses incurred in connection with the
arbitration.

 

XIX. Indemnification by the Company.

 

The Company shall defend, indemnify and hold harmless the Executive to the
fullest extent permitted by the laws of the Commonwealth of Virginia, against
any all claims, causes of actions, damages and expenses (including all legal
fees and expenses) in any threatened, pending or completed action, arising out
of or relating in any way to action or conduct by the Executive by reason of the
fact that he was a representative of the Company or was serving at the request
of the Company or acts or conduct within the course of his employment pursuant
to this Agreement or in his capacity as a director of the Company. If the
Company contends that any action or conduct by the Executive was not within the
course of his employment or is otherwise not subject to this provision, the
Company shall pay to the Executive all defense costs and expenses to defend such
an action and shall only be entitled to reimbursement of such fees and expenses
if after a final adjudication, including all available appeals, there is a
holding that the Executive was not entitled to the defense and indemnification
under this provision.

 

XX. Governing Law.

 

This Agreement shall be governed by and construed in accordance with the laws of
the Commonwealth of Virginia.

 

XXI. Divisibility.

 

Should an arbitrator declare any provision of this Agreement to be invalid, such
declaration shall not affect the validity of the remaining portion of any such
provision or the validity of any other term or provision of this Agreement as a
whole or any part thereof, other than the specific portion declared to be
invalid.

 

XXII. Headings.

 

The headings to the Sections and Paragraphs of this Agreement are for
convenience of reference only and in case of any conflict the text of this
Agreement, rather than the headings, shall control.

 

XXIII. Successors and Assigns.

 

This Agreement is binding upon and shall inure to the benefit of the successors
and assigns of the Company and the heirs, executors and legal representatives of
the Executive.

 

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XXIV. Entire Agreement.

 

This Agreement contains the entire understanding of the parties with respect to
the subject matter contained herein and supersedes all prior agreements,
arrangements and understandings relating to the subject matter and may only be
amended by a written agreement signed by the parties hereto or their duly
authorized representatives.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

WITNESS:

 

/s/    A. Brent King

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/s/    Martin L. Vaughan, III

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A. Brent King

           Martin L. Vaughan, III

ATTEST:

   HILB, ROGAL and HAMILTON COMPANY

/s/    Henry C. Kramer

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   By:  

/s/    Thomas H. O’Brien

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Henry C. Kramer

   Its:       Chairman of the Compensation              Committee of the Board
of Directors

 

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