Agency Employment Agreement

AGENCY EMPLOYMENT AGREEMENT

THIS AGREEMENT made this day of , 20 by and between [AGENCY PRINCIPAL NAME] d/b/a [NAME OF INSURANCE AGENCY], having a principal place of business at [BUSINESS ADDRESS] (hereinafter referred to as 'Agency') and [EMPLOYEE] of [EMPLOYEE ADDRESS/CITY,STATE] (hereinafter referred to as 'Employee').

WHEREAS, [EMPLOYEE] is duly licensed by the [STATE] to engage in the insurance business for the purposes set forth herein, and

WHEREAS, [Agency] conducts a general insurance agency business duly licensed as such by the Commonwealth of Massachusetts, and

WHEREAS, [Agency] desires to employ [Employee] and [Employee] desires to be so employed upon the terms and conditions hereinafter set forth,

NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties agree and contract as follows:

1. Effective as of , 20 , [Employee] shall serve in the employ of [Agency] upon the terms and conditions hereinafter set forth.
2. The initial term of this agreement shall be for a period of two (2) years commencing on 20 and continuing through ,20 and thereafter for successive twelve (12) month periods unless either party shall elect to terminate the employment with or without cause, effective at the end of said term by notice delivered no later than thirty (30) days prior to said date or effective on the last day of any succeeding twelve (12) month period by notice delivered no later than thirty (30) days prior to the end of such period. Notwithstanding the foregoing, this agreement shall terminate immediately upon the death of [Employee] and, at the option of [Agency], after [Employee] has been unable to perform a substantial portion (meaning 40% or more) of his normal and customary duties for a continuous period of ninety (90) days on account of any cause including, but not limited to, mental or physical disability. Further, [Agency] may terminate the employment of [Employee] for cause at any time upon written notice to [Employee] five (5) business days (defined as days on which the office of [Agency] is generally open for business), prior to the effective date of termination upon the occurrence of any of the following events:
• Breach of a material and substantial provision of this agreement by [Employee] or dishonesty by [Employee] relating to his professional obligation hereunder and adversely effecting [Agency]'s reputation and/or business.
• Final conviction of [Employee] of any criminal offense that would have the effect of jeopardizing [Agency]'s business reputation.
• Failure of [Employee] for any reason to hold the necessary insurance licenses required by the laws of the Commonwealth of Massachusetts in order to effectively carry out his duties hereunder.
• In the event [Agency] shall terminate [Employee]'s employment for cause, said notice of termination shall specify each and every ground upon which the termination is based.
3. Except for the provisions of paragraph 10(f) hereof, any controversy or claim, including, but not limited to questions of termination for\
• cause,
• ability of [Employee] to perform a substantial portion of his normal and customary duties as referred to in Paragraph 2 hereinabove, or
• [Employee]'s devoting his full and exclusive working time and efforts on behalf of [Agency], arising out of or relating to this contract or breach thereof, shall be submitted to and determined by the American Arbitration Association ('AAA') in [City, State]. The parties hereto agree that the decision rendered by the AAA will be binding, conclusive and final on the parties. The prevailing party in any arbitration proceedings hereunder shall be entitled to reimbursement from the losing party for all out of pocket expenses, including reasonable attorneys' fees sustained or incurred as a result of such arbitration proceedings. In the event that [Agency] shall terminate [Employee]'s employment for the reasons referred to as (a) (b) or (c) of this paragraph 3, and [Employee] shall elect to contest the same, he shall do so by notice in writing to [Agency] within five (5) days of [Employee]'s receipt of said notice of termination. Pending a determination of such issue by the AAA, [Employee] shall remain suspended as an employee without pay and/or other compensation. In the event the AAA shall determine that [Agency] did not have just and proper grounds to terminate [Employee] as an employee, he shall be entitled to retroactive payment of such pay and/or other compensation to which he otherwise would have been entitled had no suspension of his employment occurred.
4. During the term of this agreement, [Employee] agrees to devote his full and exclusive working time and efforts on behalf of [Agency] with the exception of any teaching positions he may hold on a part-time evening basis. He shall be primarily responsible for the solicitation and production of general property and casualty insurance business for commercial and personal lines accounts, however, he shall be free to solicit all lines of insurance business including life insurance and related lines of insurance, all on behalf of [Agency]. He shall be generally available to assist in the servicing of the needs of [Agency]'s accounts and serving as a liaison between [Agency], its markets, accounts and such account executives or employees as may be assigned to such accounts in order to assist in the retention and growth of such business. In all matters, [Employee] shall act in accordance with the basic policy decisions and operational procedures established from time to time by [Agency]. In that regard, [Agency] agrees to provide [Employee] with a copy, in writing, of all basic policy decisions and operational procedures which may be established by [Agency].
5. All correspondence and all publicity and advertising shall be carried on in [Agency]'s name. All premiums shall be billed by and shall be owed to [Agency], all checks and drafts in payment of such premiums shall be made payable to [Agency], and all money received in payment of premiums or other fees shall be turned over to [Agency] in the form received and deposited in [Agency]'s account.
6. All insurance business, including renewals, whether property, casualty, life or other, produced by [Employee] during the continuation of this agreement shall be written through [Agency] or, if any such business has to be brokered elsewhere, it shall be done only in the name of [Agency] and only with [Agency]'s written consent, which said consent will not be unreasonably withheld. All such business produced by [Employee] may be coded or otherwise identified to indicate its source of production, however, notwithstanding such identification, all such business, including the expiration data and all files and records in connection therewith, shall be the exclusive property of [Agency] and shall continue to be so after the termination of this agreement, however caused, and [Employee] hereby waives and releases all claims of right or ownership thereto and covenants that he shall not make or retain copies of such property.
7. [Agency] shall be free to decline or accept any insurance business produced by [Employee], if in the sole opinion of [Agency] such business appears to be unprofitable or injurious to the reputation of [Agency]. Should [Agency] reject any such business, [Employee] shall not be free to place such business elsewhere either in his own name or in the name of [Agency] without the prior written consent of [Agency] which said written consent will not be unreasonably withheld.
8. As full compensation for his solicitation and production of insurance business hereunder and for such other services as [Employee] may render on behalf of [Agency] during the term of this agreement, he shall be entitled to receive the salary and/or commissions and benefits set forth on the annexed Schedule of Compensation. The terms of said Schedule are hereby incorporated into the within agreement and shall be binding upon both parties and their successors or assigns pursuant to paragraph 11 hereof unless an amendment or change thereto is agreed to in writing and signed by [Agency] and [Employee].
9. Any sums paid to [Employee] pursuant to this agreement shall be subject to an adjustment in the event that subsequent to said payment [Agency] shall be required to pay and return premiums on business for which [Employee] shall have been paid a portion of the premium on such business. The provisions of this paragraph shall continue after the termination of [Employee]'s employment, however caused, and [Agency] shall be entitled to set off against any sums due [Employee] such amount of return commissions he shall owe to [Agency] hereunder.
10. In recognition of the fact that [Agency] is engaged in a personal service involving confidential information and personal relationships with insureds, the success of which business is in large part due to the exclusive retention of such confidential information and continuation of such personal relationships with insureds, [Employee] does hereby covenant and agree as follows and acknowledges that the following covenants are reasonably necessary for the protection of [Agency] and may be enforced to the extent set forth herein or such extent as any court of competent jurisdiction may deem reasonable and proper:
• [Employee] agrees that all information governing the insurance of [Agency]'s customers (inclusive of those accounts produced by [Employee]), including expiration data in connection therewith and all special forms used by [Agency] are confidential information and will be treated by him as such, and that both during and after the term of [Employee]'s employment, however it may be terminated, he will not, directly or indirectly, make use of such information or any other confidential information concerning [Agency]'s business for his own benefit, nor divulge such information to any other parties not duly entitled thereto nor retain or create any lists of [Agency]'s customers for his own personal use nor reveal the same to any other party.
• [Employee] covenants and agrees that during the period of his employment hereunder he will not, directly or indirectly, compete with [Agency] in any manner, and that for a period of five (5) years after the termination of his employment by [Agency], however caused, he will not, directly or indirectly, solicit or attempt to obtain insurance business from any of [Agency]'s customers, inclusive of those accounts produced by [Employee] nor act in the capacity of an adviser, consultant or risk manager to said customers, nor directly or indirectly, assist or aid any other party in the solicitation of insurance business from such customers. Notwithstanding the above, the parties hereto agree that in the event any such customers produced by [Employee] actively seek out [Employee]'s assistance and, without the solicitation or interference of [Employee], request [Employee] to accept insurance from them, [Employee] may, at his discretion, accept said business. In the event any such business is accepted, however, [Employee] agrees to compensate [Agency] by way of paying to [Agency] two and one-half (2-1/2) times the first year's net commission received by [Employee]. Payment to [Agency] shall be made within thirty (30) days after the effective date of policies in question written by [Employee].
• It is acknowledged and agreed that all leads and/or contracts obtained or made by [Employee] with new or prospective accounts during the term of his employment shall be deemed the property of [Agency] and the provisions of this paragraph shall apply to such accounts as if their business had been written by [Agency] during the term of this agreement.
• [Employee] covenants and agrees that for a period of five (5) years following the termination of his employment with [Agency], howsoever caused, he will not, directly or indirectly, on his own behalf or as an employee, associate or partner of another, engage in the insurance agency or brokerage business (including that of insurance adviser, consultant or risk manager), within the City of [City, State] or within any city or town within twenty (20) miles from the borders of said [City].
• [Employee] covenants and agrees that he will not during the term of his employment nor for a period of two (2) years thereafter, directly or indirectly, induce any employees of [Agency] or solicitor associated with [Agency] to leave the employ of or association with [Agency] as the case may be, nor will he, for said period, directly or indirectly, employ or become associated with any person who was an employee of or solicitor associated with [Agency] on the date of the termination of his employment or within six (6) months prior to such date.
• In the event of a breach or threatened breach by [Employee] of the provisions of this paragraph, the provisions of any paragraph hereof may be enforced by an injunction restraining [Employee] from the commission of such breach to the full extent hereof, or to such lesser extent as a court of competent jurisdiction may deem just and proper for the reasonable protection of the rights and interests of [Agency]. Nothing herein contained shall be construed as prohibiting [Agency] from pursuing any other remedies available for such breach or threatened breach including the recovery of money damages. The covenants contained in this paragraph shall be construed as independent of any other provisions of this agreement, and the existence of any other claim or cause of action by [Employee] against [Agency] shall not constitute a defense to the enforcement of the within covenants.
• In the event of a breach by [Employee] of the provisions of this paragraph, which breach shall have been the proximate cause of any loss of business to [Agency], and in the event a court of competent jurisdiction shall award damages to [Agency] as a result of such breach, then, it is agreed by the parties that the measure of such damages shall be as follows which shall constitute liquidated damages hereunder:
• Four (4) times the net annual commissions and/or fees earned by [Agency] during the preceding twelve (12) months from all insurance business written by [Agency] for all accounts lost to [Agency] as a result of [Employee]'s actions in breach of this paragraph. In the event such insurance shall not have been on the books of [Agency] (as in the case of leads referred to in sub-part © of this paragraph) the measure of damages shall be four (4) times net annual commissions and/or fees earned by [Employee] during the first twelve (12) months after he shall have written insurance for such accounts.
• Additionally, [Employee] shall be responsible and liable for all reasonable fees and expenses incurred by [Agency] in enforcing the provisions of this agreement, including but not limited to reasonable attorneys' fees.
11. In the event of the death of [Agency] during such time as [Employee] shall be employed by [Agency], [Employee] covenants and agrees that he shall continue in the employ of the business for the duration of his then current term of employment or for a period of six months from the date of [Agency]'s death, whichever is longer. During said period of time [Employee] shall assume authority and responsibility for the management and operation of the business subject to the ultimate control and authority of the Legal Representative of the Estate of [Agency]. [Employee] shall operate the business in accordance with the same general principals and practices as shall have been in effect prior to [Agency]'s death and shall not incur any liabilities on behalf of the business other than in the normal course of business without the prior approval of the Legal Representative of [Agency]'s Estate. In consideration for such services, [Employee] shall be paid, in addition to all other compensation to which he shall be entitled hereunder, the sum of $200.00 per week during such time as he shall serve as said manager.
12. In the event of the death of [Agency] during the term of [Employee]'s employment and [Employee] shall have assumed responsibility for the management of the business, then [Employee] shall have the option to purchase all of the assets of the business other than cash, accounts receivable and life insurance renewals, but including the tangible personal property, name, good will, insurance expirations and accompanying files and records at a price which shall be determined in accordance with the following provisions:
• The tangible personal property shall be valued at their then depreciated value as carried on the books of the business.
• The name and good will in connection therewith is agreed between the parties to be valued at $10,000.00 as of the date of this agreement, which value shall be increased by a cumulative factor of seven (7%) percent per annum.
• The Insurance expirations and accompanying files and records shall be deemed to be equal to the following multiples of the average net annual commission earned by the business during each of the three calendar years next preceding the year in which [Agency]'s death shall occur.
• Two and one quarter (2.25) times the said average commissions on property and casualty insurance other than any and all business produced by [Employee] and coded to him and other than that written by the business for other brokers.
• One half (.50) of the said average commissions on property and casualty insurance business produced by [Employee] and coded to him.
• Three quarters (.75) of the said average commissions of property and casualty insurance business written by the business for other insurance brokers.
• The average net annual commissions shall be defined as gross annual commissions (on account of the writing or renewal of property and casualty insurance business thereby intending to exclude bonding business) less return commissions paid or allowed as credit exclusive of any so-called contingent, bonus or profit sharing commissions Installment billings on policies written for a period in excess of one year shall be deemed to be renewals for purposes of this computation and commissions on premiums prepaid for a period in excess of one year shall be included, but prorated to represent one year's portion thereof. Additional or return commissions on account of audits and average commission adjustments shall also be included in said computation. Further, fees received from insureds in addition to or in lieu of commissions on account of the handling or servicing of property and casualty insurance, risk management services, administration of self insured plans and other similar services (but excluding so-called late charges on delayed payment of premiums) shall be deemed to be commissions for purposes of this calculation.
• It is the intent of the parties that any and all commissions on account of the writing of life insurance (whether individual or group) shall be excluded from the within computation in that rights to receive such commissions shall not be sold to [Employee] hereunder. The reference to life insurance shall include all life related coverage commonly sold by life insurance companies such as disability income insurance, accident and health insurance and other similar coverages.
• In the event that [Employee] shall elect to exercise said option to purchase hereunder, he shall do so by notice in writing delivered to the Legal Representative of [Agency]'s Estate prior to the end of the third month following that in which [Agency] shall have died. Thereafter, [Employee] and said legal representative in good faith shall endeavor to complete the calculations necessary to agree upon the purchase price and to conclude the sale.
• Upon determination of said purchase price, unless [Employee] and the legal representative of [Agency]'s Estate shall agree to the contrary, shall be paid in twenty-eight (28) equal quarterly installments of principal with interest quarterly on the unpaid balance at the lowest rate then permissible by section 483 of the Internal Revenue Code and regulations thereunder in effect on the date of [Agency]'s death in order to avoid interest being imputed into the purchase price. The first quarterly installment shall be due upon execution of the purchase and sale agreement relative to said sale and quarterly thereafter.
• As security for the payment of the price, [Employee] shall execute a promissory note which shall be signed by him and by his wife, if he shall then be married which shall be secured by a second mortgage on his residence. As further security [Employee] shall incorporate the [Agency] agency with all of its stock issued to [Employee] and shall cause all of the assets he shall acquire to be transferred to said corporation. [Employee] shall then pledge all of such stock as additional security for the payment of said note. Counsel for [Agency]'s estate shall be designated as escrow agent to hold the pledged stock pursuant to a pledge agreement in a form agreed by such counsel and [Employee]. [Employee] shall execute a covenant not to compete with said corporation which shall provide that, in the event he shall default on said note and the business shall be sold in partial or full satisfaction of his remaining debt, then he shall not solicit or accept insurance business from any of the accounts then on the books of the agency for a period of ten years from the date of default nor shall he for said period, engage in any activity, on his own behalf or as an employee of another, which shall in any manner involve his transacting insurance business of any nature with any of the insurance accounts then on the books of the agency. Such covenant shall run to the benefit of the then incorporated agency and to any assignee of said agency.
13. This agreement shall supersede and take precedence over any other agreement or memorandum between the parties, whether written or oral which relates to the subject matters set forth herein.
14. This agreement and all the terms and conditions hereof shall be binding upon and inure to the benefit of the parties and the heirs and legal representatives of the estate of [Agency], but shall not be assignable by [Employee] nor shall it inure to the benefit of his heirs. The parties hereto agree to execute and deliver any and all instruments which may be necessary or proper in carrying out the intent of this agreement.
15. The invalidity or unenforceability of any particular provision of this agreement shall not affect the other provisions hereof, and this agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.
16. This agreement may be amended or modified only by mutual written agreement of the parties.
    In WITNESS WHEREOF, the said. [AGENCY PRINCIPAL] and the said [EMPLOYEE] have each set their hands hereunto, both as of the date first above written.

___________________________ _______________________________
[Agency Principal]                    [Employee]

SCHEDULE OF COMPENSATION AGREEMENT BY AND BETWEEN [AGENCY PRINCIPAL] and [EMPLOYEE]

1. [Employee] shall be entitled to a salary at the annual rate of $22,000.00 payable in periodic installments in accordance with the normal payroll practices of [Agency] from time to time.
2. In addition to the aforesaid salary, [Employee] shall be entitled to forty (40%) percent of all first year net annual commissions actually received by [Agency] on all new property-casualty and/or life insurance business written by [Agency] and produced exclusively through the efforts of [Employee]. [Employee] shall be entitled to ten (10%) percent of net annual commissions actually received by [Agency] on account of the renewal by [Agency] during the term of [Employee]'s employment of any business or which [Employee] shall have received a first year commission as aforesaid. Additionally, in the event [Employee]'s employment is terminated by [Agency] without cause pursuant to paragraph 2 of the Employment Agreement, then for a period of five (5) years after said termination of employment [Employee] shall continue to be entitled to receive ten (10%) percent of net annual commissions actually received by [Agency] on account of the renewal by [Agency] of any business on which [Employee] had received a first commission during the term of his employment. [Agency] shall account to [Employee] for all said commissions on a monthly basis.
• 'New property-casualty and/or life insurance business' shall be defined as business written for accounts not on the books of [Agency] at the effective date of the attached Employment Contract or produced thereafter by the efforts of persons other than [Employee]. Consolidations of existing coverages into combination or package policies shall not be deemed to be new lines of business.
• 'Net annual commissions' shall be defined as gross annual commissions less return commissions on property-casualty insurance business, the premium for which has been paid in full without regard to contingent, bonus or profit-sharing commissions. Fees received by [Agency] in lieu of or in addition to commissions (excluding so-called late charges or interest on unpaid premiums) shall be deemed to be commissions.
3. [Agency] shall provide [Employee] with the use of an automobile owned or leased by [Agency]. [Agency] shall pay all reasonable expenses of operation and maintenance thereof, subject to certain reimbursement as provided hereinafter. [Employee] shall reimburse [Agency] for ten percent (10%) of all reasonable operating expenses which shall be defined as fuel and normal periodic maintenance charges. Specifically excluded from said costs are the costs of insurance, registration, lease or purchase payments and repairs or maintenance charges other than the normal periodic maintenance required by the car manufacturer's warranty provisions. Said ten percent (10%) reimbursement of costs is to be made when and as billed by [Agency] and represents reimbursement to [Agency] for that portion of the time when said vehicle may be used for [Employee]'s personal use, however, said percentage shall not be meant to limit [Employee]'s personal use of said vehicle. [Employee] agrees to maintain, service and care for said vehicle in a proper and reasonable fashion. [Agency] agrees to keep said vehicle insured with [Employee] as a named insured with personal injury limit of at least $500,000.00 per person and $1,000,000.00 per accident and property damage limits of at least $50,000.00 per accident.
4. [Employee] shall be entitled to reimbursement for such ordinary and reasonable travel and business pro