This NonCompetition Agreement involves
Title: EMPLOYMENT AND NON-COMPETITION AGREEMENT
Governing Law: Ohio Date: 12/21/2015
Industry: Insurance (Prop. and Casualty) Sector: Financial
EMPLOYMENT AND NON-COMPETITION AGREEMENT
This Employment and Non-Competition Agreement (“Agreement”) is effective this 21 st day of December 2015 (“Effective Date”) by and between National Interstate Corporation (“NATL”) and David W. Michelson, the current Chief Executive Officer of NATL (“Michelson”).
As part of an orderly transition of NATL’s management structure, Michelson has agreed to resign as Chief Executive Officer of NATL, and NATL and Michelson have agreed that Michelson will continue to be employed by NATL as a Senior Advisor following such resignation, in each case in accordance with the terms of this Agreement.
In consideration of the mutual covenants set forth in this Agreement, NATL and Michelson agree as follows:
1. Employment Term . Michelson shall continue to serve as Chief Executive Officer of NATL from the Effective Date until May 5, 2016 (the “Transition Date”) at the base salary level in effect as of the Effective Date. Effective as of the Transition Date, Michelson shall resign as Chief Executive Officer of NATL and from all directorships or officer positions Michelson may hold with any Affiliates (as defined below). Immediately following such resignation, Michelson will be employed by NATL as Senior Advisor for a period of two (2) years following the Transition Date, subject to prior termination as provided in Section 17 (“Term”).
2. Duties and Responsibilities . During the Term, Michelson shall perform such duties and have such responsibilities as may be assigned to him by the Chairman of NATL’s Board of Directors (the “Board”) or the successor Chief Executive Officer of NATL. Michelson shall devote such time as is reasonably necessary to perform such duties and responsibilities.
3. Compensation . Following the Transition Date and during the remainder of the Term, NATL shall pay Michelson a base salary of $250,000 per year, subject to applicable withholdings and in accordance with NATL’s (or its Affiliate’s) normal payroll cycle (with a partial installment due at the end of the Term if the end of the Term does not coincide with the end of a payroll period).
4. Management Bonus Plan . Upon Michelson’s resignation on the Transition Date, Michelson shall participate in NATL’s Management Bonus Plan for the 2016 Accident Year on a pro rata basis from January 1, 2016 through the Transition Date, payable no later than March 31, 2017 in accordance with the terms of such plan. In addition, any amounts accrued for Michelson but not yet paid for any Accident Years prior to the 2016 Accident Year shall also be paid in full no later than March 2017 in accordance with the terms of such plan. Michelson shall no longer be eligible to participate in NATL’s Management Bonus Plan for any years following the 2016 Accident Year.
5. Service on the Board . Unless this Agreement is terminated by NATL for Cause, Michelson will continue to serve on the Board until his current directorship term expires in 2017. Michelson will not be entitled to any director compensation for his service on the Board during the Term. Following the Term, if Michelson continues to serve as director, he shall be entitled to
receive director compensation consistent with NATL’s then-current policy for the compensation of directors. Notwithstanding any other provision of this Agreement, upon the termination of Michelson’s employment for Cause, Michelson shall immediately resign from the Board. Michelson agrees to execute any and all documentation to effectuate such resignation upon request by NATL, but Michelson shall be deemed for all purposes as having so resigned upon termination of his employment for Cause, regardless of when or whether he executed any such documentation.
6. Restricted Share Agreement . NATL and Michelson are parties to a Restricted Share Agreement, dated November 7, 2007 (the “Restricted Share Agreement”), whereby Michelson was granted 84,000 Common Shares of NATL to be vested in one-seventh portions every January 1 st for seven consecutive years. It is acknowledged by NATL and Michelson that two one-seventh portions, equaling a total of 24,000 Common Shares, still remain to be vested to Michelson at 12,000 Common Shares on January 1, 2016 and January 1, 2017, respectively. Nothing in this Agreement shall be construed to impact the Restricted Share Agreement and it is acknowledged that the Restricted Share Agreement remains in full force and effect pursuant to its terms.
7. Health, Life, and Disability Coverage.
(a) NATL will continue to provide to Michelson, throughout the Term, coverage under NATL’s health insurance plan, life and disability benefits plans, including the Flexible Spending Account program, subject to normal deductibles, premiums, and co-payments in effect from time to time and in accordance with the terms of such plans and programs. If, upon termination of his employment with NATL, Michelson is eligible for continued benefits under COBRA, NATL will provide him with written notification of such under separate cover.
(b) NATL will continue to provide to Michelson, throughout the Term, the maximum levels of coverage available under NATL’s Basic Life Insurance/Accidental Death and Dismemberment Plan in accordance with the terms of such plan.
(c) NATL will continue to provide to Michelson, throughout the Term, group short term and long term disability coverage on substantially the same basis as was provided to him during 2016 in accordance with the terms of such coverages.
(d) It is agreed by NATL and Michelson that Michelson shall not accrue, earn or otherwise receive any Paid Time Off after the Transition Date for any reason.
8. National Interstate Savings and Profit Sharing Plan . Michelson will continue to be eligible, throughout the Term, to participate in NATL’s Savings and Profit Sharing Plan with payroll deductions, company matches and ultimate distributions to be made in accordance with the provisions of that plan.
9. Auto and Office . Throughout the Term, Michelson will be entitled to continued use of his current company leased automobile (under NATL’s Company Auto Program for Senior Officers). If the lease for such automobile expires during the Term, Michelson will be eligible to receive another company leased automobile at the same cost to NATL. During the Term, NATL shall assist Michelson in establishing a home office or reimburse Michelson for the reasonable and documented costs incurred by Michelson in connection with establishing a home office,
which shall include computer, telephone, and related support.
10. Reimbursement for Expenses . Subject to such limitations as may be reasonably imposed by NATL from time to time, NATL will reimburse Michelson for reasonable, ordinary, and necessary business expenses incurred by him in furtherance of NATL’s business, provided that Michelson accounts to NATL in a manner sufficient to substantiate deductions with respect to those expenses by NATL for federal and/or state income tax purposes. Such expenses will be submitted to NATL’s Chief Financial Officer and the Chairman of the Board will be responsible for approving Michelson’s expenses consistent with NATL’s then-current policy for the reimbursement of such expenses.
11. Confidential Information . Notwithstanding any other provision of this Agreement, upon the Effective Date and during and after the Term, Michelson agrees to maintain the confidentiality of all Confidential Information of NATL or any of its affiliates or subsidiaries (collectively “Affiliates”) and will refrain from using such Confidential Information (except in connection with his job responsibilities) and disclosing it to anyone other than NATL or its Affiliates, their respective officers and other employees, and other entities that have a business relationship with NATL or its Affiliates and have a need for such Confidential Information. For purposes of this Agreement, “Confidential Information” is information of NATL or its Affiliates that Michelson would not have acquired but for his employment by NATL and that NATL and its Affiliates endeavor to keep confidential, including without limitation, and regardless of whether such information is in a tangible medium of expression, accounting information, agency information, broker-marketing information, claims information, customer service information, employee information, financial information, information systems information, underwriting and rating information, and any other information provided by a third party to NATL or its Affiliates in confidence. Upon NATL’s request, Michelson will provide to NATL all records (including copies of such records) containing Confidential Information, including handwritten notes made or derived from any Confidential Information.
12. Activity Restraints . Subject to the exceptions listed below, Michelson agrees that he shall not, during the Term or at any time within 36 months after the Term, whether as an individual on his own account, or as an employee, officer, director, shareholder, partner, member, agent, independent contractor, or consultant of any person, firm, corporation, or other entity engage in the following activities:
(a) Enter into or engage in any business that competes, directly or indirectly, with NATL or its Affiliates;
(b) Have any contact, including discussions, negotiations, agreements, or understandings, with any insured, potential insured, agent, broker, or other person or entity with which NATL or its Affiliates had discussions, negotiations, agreements or understandings with at any time during Michelson’s employment relating in any manner to competing insurance products that are identical to, substantially the same as, or an adequate substitute for any insurance products of NATL or its Affiliates and that are, or could reasonably be anticipated to be, marketed or distributed in such a manner and in such a geographic area as to actually compete with such insurance products of NATL or its Affiliates.
13. Hiring or Soliciting NATL Employees . Without the prior written consent of NATL’s Chief Executive Officer, during the Term or at any time within 36 months after the Term, Michelson will not, directly or indirectly, hire or solicit for hire any employees of NATL or its Affiliates to work for him or any entity with which Michelson is associated.
14. Remedies . Michelson acknowledges that:
(a) The promises in Sections 11, 12 and 13 of this Agreement are reasonably necessary to protect the goodwill, trade secrets, and other business interests of NATL and will not cause Michelson undue hardship.
(b) Any breach of these promises will cause NATL immediate irreparable harm for which injunctive relief, including an ex parte temporary restraining order, may be necessary. Injunctive relief will not preclude NATL from receiving any other relief to which it might be entitled.
(c) The promises