EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into effective as of
the 20 of October, 1997 ("Effective Date"), on this 22 day of October, 1997
between ZENITH INSURANCE COMPANY, a California corporation (the "Company")
and wholly owned subsidiary of Zenith National Insurance Corp., a Delaware
corporation ("Zenith"), and XXXXXX X. XXXXX (hereinafter referred to as
"Executive").
WHEREAS, Executive has substantial experience as an executive in the
field of workers compensation insurance; and
WHEREAS, Company and Executive deem it in their respective best interests
to enter into an employment relationship and to enter into this Agreement
setting forth the terms and conditions of their relationship;
NOW, THEREFORE, it is AGREED as follows:
1. EMPLOYMENT.
(a) Subject to earlier termination as provided herein, the
Executive is employed as Senior Vice and President Chief Actuary of the
workers compensation business of the Company from the Effective Date through
the Term of this Agreement
(as defined below). In this capacity, Executive shall devote his full
business time and energy to the business, affairs and interests of the
Company and matters related thereto. During the Term of the Agreement the
Executive shall have no other employment other than with Zenith or a
subsidiary or an affiliate of the Company, except with the prior written
approval of the Board of Directors of the Company (the "Board"). The
Executive shall have such duties and responsibilities and such executive
power and authority as is customary for an officer in his position and as
shall be allocated to him in such capacity and such other duties and
responsibilities as the Board or the President of the Company, or the
designee of either, shall assign from time to time provided such assignments
shall not be inconsistent with the Executive's position with the Company. The
Company hereby acknowledges and agrees that the Executive shall have the
right to serve in any capacity with civic, educational, charitable and
professional organizations and to make and manage personal business
investments that do not violate the noncompetition provisions of Section 11
of this Agreement so long as such activities do not interfere with the
discharge of his duties to the Company hereunder.
(b) The Executive shall not be required to relocate outside of
Southern California in order to perform the services hereunder, without the
Executive's consent, except for travel reasonably required in the performance
of his duties hereunder. The Company shall pay reasonable expenses in
connection with Executive's relocation from Northern California to Southern
California.
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2. TERM. This Agreement shall be in effect for a term commencing on the
Effective Date and expiring on October 31, 2002 ("Expiration Date"), and such
period shall be referred to herein as the "Term" of this Agreement, and such
Term shall not be affected by a termination of employment as elsewhere
provided herein.
3. SALARY. Executive shall be paid the sum of Two Hundred and Fifty
Thousand Dollars per year, subject to such other increases as the Board of
Directors of Company may from time to time determine ("Base Salary").
4. DISCRETIONARY BONUSES. During the Term of this Agreement, the
Executive shall be entitled to such discretionary bonuses as may be
authorized, declared, and paid by the Board in its sole discretion.
5. DEFERRED COMPENSATION. In advance of the annual period for which
earned, the Executive shall have the right to defer all or any portion of his
salary and bonus to a specified date or event. Any such deferred compensation
shall not be forfeitable and shall bear interest at a rate to be determined
by the Board. Any election to defer compensation shall be disregarded, and
any compensation so deferred shall be added back, in the calculation of
those of Executive's rights and benefits under this Agreement that are based
upon Executive's salary or bonus or the sum thereof.
6. PARTICIPATION IN RETIREMENT AND EXECUTIVE BENEFIT PLANS. During his
employment hereunder, the Executive shall be entitled to participate in any
plan of the
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Company relating to stock options, stock purchases, pension, thrift, profit
sharing, life insurance, medical coverage, disability insurance, education,
and other retirement or employee benefits that the Company has adopted or may
adopt for the benefit of its executive employees, and the Company shall
provide the Executive with such insurance or other provisions for
indemnification, defense or hold-harmless of officers that are generally in
effect for other senior executive officers of the Company. Notwithstanding
the foregoing, nothing contained in this Agreement shall prohibit or limit
the right of the Company to discontinue, modify or amend any plan or benefit
in its absolute discretion at any time; provided, however, that any such
discontinuance, modification or amendment shall apply to employees of the
Company generally, or to a defined group of such employees and shall not apply
solely to the Executive.
7. FRINGE BENEFITS; AUTOMOBILE. In addition to the benefit plans
referred to in Section 6 hereof, the Executive shall be entitled to
participate in any other fringe benefits that are now or may be or become
applicable to the Company's executive employees, including the payment of
reasonable expenses for attending annual and periodic meetings of trade or bar
associations, and any other benefits that are commensurate with the duties and
responsibilities to be performed by the Executive under this Agreement and
reimbursement for reasonable expenses incurred in the course of his duties
hereunder in accordance with the Company's policy with respect thereto.
In addition, the Company shall provide the Executive with a monthly car
allowance in the amount of $1,300. The benefits provided under this Section
7 shall cease upon the Executive's Date of Termination (as defined below).
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8. VACATION; MEMBERSHIPS. During his employment hereunder, the
Executive shall be entitled to an annual paid vacation in accordance with
the Company's standard employment practices; provided, however, Executive
shall be treated for purposes of vacation as an employee with more than 120
months of service. Upon termination of the Executive's employment for any
reason, the Executive shall be entitled to payment for any accrued but
unused vacation time based upon his then current salary. The timing of paid
vacations shall be scheduled in a reasonable manner by the Executive.
During his employment hereunder, the Executive shall be entitled to
appropriate professional association and business club memberships, including
reimbursement of payment of dues and assessments pertaining thereto.
9. TERMINATION.
(a) DISABILITY. If, as a result of the Executive's incapacity due
to physical or mental illness, injury or similar incapacity, he shall have
been absent from the full-time performance of his duties with the Company for
six months within any eighteen-month period, and have exhausted his Family
Medical Leave and its California equivalent, his employment may be terminated
by written notice (as provided below) from the Company for "Disability".
(b) CAUSE. Subject to the notice provisions set forth below, the
Company may terminate the Executive's employment for "Cause" at any time.
Termination for "Cause" shall mean termination upon (1) the Executive's
continued
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willful failure to substantially perform his duties with the Company or his
other willful breach of this Agreement (other than any such failure or breach
resulting from his incapacity due to physical or mental illness, injury or
similar incapacity) after a written demand for substantial performance is
delivered to him by the President or the Board, which demand specifically
identifies the manner in which the President or the Board believes that he
has failed to substantially perform his duties, or has otherwise breached
this Agreement, (2) the Executive's conviction of a felony, (3) the
Executive's willful misconduct that is materially and demonstrably injurious
to the Company (4) the Executive's violation of Section 11 hereof; provided,
however, that the Executive shall not be terminated for "Cause" unless and
until the President or the Board has given the Executive reasonable notice of
its intended actions and the alleged events or activities giving rise thereto
and with respect to those events or activities for which a cure is possible,
a reasonable opportunity to cure such breach, and there shall have been
delivered to him a written notice from the President or a copy of a
resolution duly adopted by the Board regarding such actions.
(c) CONSTRUCTIVE TERMINATION. If at any time during the Term of
this Agreement, any of the following events shall occur, the Executive shall
be entitled to terminate his employment hereunder and be treated as if his
employment had been terminated by the Company other than for Cause:
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(i) The Executive is removed or otherwise prohibited or
restricted in the performance of his duties as set forth in Section 1
hereof, other than through fault of the Executive;
(ii) Any payment due under this Agreement shall remain unpaid
for more than 60 days, after notice of non-payment and request for
payment have been given to Company by Executive pursuant to Section 13;
(iii) A Change in Control of the Company (as defined below)
shall occur during the Term of this Agreement and, within 180 days
after the effective date of any such Change in Control, the Executive
delivers to the Company a written notice of his election to terminate
the Agreement effective as of the date set forth in such notice,
which effective date shall not be less than 30 days nor more than 90
days after the date of delivery of such written notice.
For purposes of this paragraph, a Change in Control shall mean either
(i) a merger or consolidation of the Company with or into another company in
which the Company does not survive; or (ii) an assignment of this Agreement
by the Company under the provisions of Section 12(b) hereof; or (iii) the
sale of all or substantially all of the Company's assets; or (iv) a change in
the identities of a majority of the members of the Board within a one-year
period or less; or (v) any other transaction that would
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require a party or affiliated group of parties to obtain approval from or
require such transactions to be presented for approval by, the California
Insurance Commissioner (assuming there is no preemption of California
insurance laws by federal law).
(d) NOTICE OF TERMINATION. Any purported termination of the
Executive's employment by the Company or by him shall be communicated by a
written notice ("Notice of Termination") that shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
(e) DATE OF TERMINATION, ETC. "Date of Termination" shall mean (1)
if the Executive's employment is terminated by his death, the date of his
death; (2) if the Executive's employment is terminated for Disability, thirty
days after Notice of Termination is given; (3) if the Executive's employment is
terminated for Cause, the date specified in the Notice of Termination; and
(4) if the Executive's employment is terminated for any other reason, the
date specified in the Notice of Termination.
10. COMPENSATION UPON TERMINATION OR DURING DISABILITY. The Executive
shall be entitled to the following benefits during a period of disability,
or upon termination of his employment, as the case may be, if such period or
termination occurs prior to Executive's termination:
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(a) During any period that the Executive fails to perform his
full-time duties with the Company as a result of incapacity due to physical
or mental illness, injury or similar incapacity, he shall continue to
receive his compensation and other benefits payable to him under this
Agreement at the rate in effect at the commencement of any such period, less
any amounts payable to him under the Company's disability plan or program or
other similar plan during such period, or under any governmental program,
until his employment is terminated pursuant to Section 9(a) hereof. If,
during any period of disability, the Executive's employment shall be
terminated by reason of his death, disability or the expiration of this
Agreement, not withstanding the provisions of Section 20, his pay shall cease
and his benefits, if any, shall, be determined solely under the Company's
retirement, insurance and other compensation programs then in effect in
accordance with the terms of such programs, and the Company shall have no
further obligations to him under this Agreement.
(b) If at any time the Executive's employment shall be terminated
(i) by reason of his death, (ii) by the Company for Cause or Disability or
(iii) by him (other than by reason of a constructive termination pursuant to
Section 9(c) hereof), the Company shall pay him (or his appropriate payee, as
determined in accordance with Section 12(c) hereof) his full base salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts, if any, to which he is entitled
from the Company through the Date of Termination under any compensation plan
in each case at the time such payments are due, and the Company shall have no
further obligations to him under this Agreement. In addition, in the event
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the Executive's employment is terminated by reason of the Executive's death
or Disability, the Executive (or his appropriate payee) shall be entitled to
receive a pro rata portion of any bonus that would otherwise have been
payable to the Executive with respect to the year in which the Executive's
employment is terminated. For purposes of this provision, if the Executive's
bonus for such year has not been determined, the Executive shall be deemed to
have been entitled to a bonus equal to the bonus paid or payable to the
Executive with respect to the immediately preceding year.
(c) If the Executive's employment should be terminated by the
Company other than for Cause or Disability or by the Executive by reason of a
constructive termination pursuant to Section 9(c) hereof, he shall be
entitled, in exchange for a release of the Company, Zenith and any
subsidiaries and affiliates of the Company and their respective officers,
directors, shareholders employees and agents, to the benefits provided below
("Severance Payments"):
(i) The Company shall pay to the Executive his full base
salary through the Date of Termination, at the rate in effect at the
time Notice of Termination is given, plus all other amounts to which
he is entitled under any compensation plan of the Company, in each
case at the time such payments are due;
(ii) The Company shall pay the Executive, at the time such
payments would have been made had the Executive's employment not
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been terminated hereunder, all salary payments that would have been
payable to the Executive pursuant to this Agreement had the
Executive continued to be employed for the greater of (x) the
remaining Term of this Agreement or (y) two years (the "Severance
Period") (assuming for the purpose of such continuing payments that
the Executive's salary for each year of such period is equal to his
salary at the Date of Termination), plus any bonus that would
otherwise have been payable to the Executive with respect to the
Severance Period; provided, however, that to the extent the
Executive's bonus for any portion of such Severance Period had not
been determined, the Executive shall be deemed to have been
entitled to a bonus equal to the bonus paid or payable to the
Executive with respect to the immediately preceding year;
(iii) All stock option rights, stock appreciation rights, and
any and all other similar rights theretofore granted to the
Executive, including, but not limited to, the Executive's right to
receive cash in lieu of exercising stock options, as may be
provided in his stock option agreements, shall vest and shall then
be exercisable in full, and the Executive shall have 90 days
following his termination within which to exercise any and all such
rights and the restrictions on any and all shares of restricted stock
granted to the Executive that are outstanding on the Date of
Termination shall lapse as of the Date of Termination;
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(iv) During the Severance Period the Company shall, at its
cost, arrange to provide the Executive with life, disability, dental,
accident and group health insurance benefits substantially similar to
those that he was receiving immediately prior to the Notice of
Termination plus an additional amount necessary to reimburse the
Executive for any taxes imposed solely by reason of his receipt of
such benefits following his termination of employment. Notwithstanding
the foregoing, the Company shall not provide any benefit otherwise
receivable by the Executive pursuant to this subparagraph if an
equivalent benefit is actually received by him from another employer
or source at any time during the Severance Period. Executive agrees to
report any such benefit actually received by him.
(d) The Company shall continue in effect for the benefit of the
Executive all insurance or other provisions for indemnification, defense or
hold-harmless of officers or directors of the Company that are in effect on
the date the Notice of Termination is sent to the Executive or the Company
with respect to all of his acts and omissions while an officer or director
(if applicable) as fully and completely as if such termination had not
occurred, and until the final expiration or running of all periods of
limitation against actions that may be applicable to such acts or omissions.
(e) Notwithstanding anything to the contrary in this Agreement, in
the event that Executive becomes entitled to the Severance Payments, if any
of the
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Severance Payments will be subject to the tax (the "Excise Tax") imposed by
section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"),
Company shall pay to Executive an additional amount (the "Gross-Up Payment")
such that the net amount retained by the Executive, after deduction of any
Excise Tax on the Total Payments (as hereinafter defined) and any federal,
state and local income and other tax and Excise Tax upon the payment provided
for by this Paragraph 10(f), shall be equal to the Total Payments. For purposes
of determining whether any of the Total Payments will be subject to the Excise
Tax and the amount of such Excise Tax, (i) any other payments or benefits
received or to be received by Executive in connection with a Change in Control
or Executive's termination of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with Company, any person
whose actions result in a change in control or any person affiliated with
Company or such person (which, together with Severance Payments, shall
constitute "Total Payments"), shall be treated as "parachute payments" within
the meaning of section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of section 280G(b)(1) shall be treated as subject
to the Excise Tax, unless in the opinion of tax counsel selected by Company's
independent auditors and acceptable to Executive, such other payments or
benefits (in whole or in part) do not constitute parachute payments, or such
excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of section
280G(b)(4) of the Code in excess of the base amount, within the meaning of
section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax,
(ii) the amount of the Total Payments which shall be treated as subject to the
Excise Tax shall be equal to the lesser
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of (A) the total amount of the Total Payments or (B) the amount of excess
parachute payments within the meaning of section 280G(b)(1) (after applying
clause (i), above), and (iii) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by Company's independent auditors in
accordance with the principles of sections 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment, Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be made
and state and local income taxes at the highest marginal rate of taxation in the
state and locality of Executive's residence on the date of termination of
employment, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes. In the event that the
Excise Tax is subsequently determined to be less than the amount taken into
account hereunder at the time of termination of Executive's employment,
Executive shall repay to Company, at the time that the amount of such reduction
in Excise Tax is finally determined, the portion of the Gross-Up Payment
attributable to such reduction (plus that portion of the Gross-Up Payment
attributable to the Excise Tax and federal, state and local income tax imposed
on the Gross-Up Payment being repaid by the Executive to the extent that such
repayment results in a reduction in Excise Tax and/or a federal, state or local
income tax deduction) plus interest on the amount of such repayment at the rate
provided in section 1274(b)(2)(B) of the Code. In the event that the Excise Tax
is determined to exceed the amount taken into account hereunder at the time of
the termination of Executive's employment (including by reason of any payment
the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), Company shall make an
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additional Gross-Up Payment in respect of such excess (plus any interest,
penalties or additions payable by the Executive with respect to such excess) at
the time that the amount of such excess is finally determined.
11. CONFIDENTIAL INFORMATION AND NON-COMPETITION
(a) During the Term of this Agreement and thereafter, the
Executive shall not, except as may be required to perform his duties hereunder
or as required by applicable law, disclose to others or use, whether directly
or indirectly, any Confidential Information regarding the Company. "Confidential
Information" shall mean information about the Company, its subsidiaries and
affiliates, and their respective clients and customers that is not available to
the general public and that was learned by the Executive in the course of his
employment by the Company, including (without limitation) any data, formulae,
information, proprietary knowledge, trade secrets and client and customer lists
and all papers, resumes, records and the documents containing such Confidential
Information. The Executive acknowledges that such Confidential Information is
specialized, unique in nature and of great value to the Company, and that such
information gives the Company a competitive advantage. Upon the termination of
his employment for any reason whatsoever, the Executive shall promptly deliver
to the Company all documents (and all copies hereof) containing any Confidential
Information.
(b) During the term of this Agreement and any period the
Executive is entitled to benefits hereunder, the Executive shall not, directly
or indirectly, without prior written consent of the Company, provide
consultative service (with or without pay)
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to, own, manage, operate, join, control, participate in, or be connected (as
a stockholder, partner, or otherwise) with, any business, individual,
partner, firm, corporation, or other entity that is then in competition with
the Company or any of its subsidiaries or affiliates (a "Competitor of the
Company"); provided, however, that the "beneficial ownership" by the
Executive, either individually or as a member of a "group", as such terms are
used in Rule 13d of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), of not more than one
percent (1% of the voting stock of any publicly held corporation shall not be
a violation of this Agreement. It is further expressly agreed that the
Company will or would suffer irreparable injury if the Executive were to
compete with the Company or any subsidiary or affiliate of the Company in
violation of this Agreement.
(c) During the Term of this Agreement or for the period ending on the
last day of the one year period following termination of his employment, the
Executive shall not, directly or indirectly, influence or attempt to influence
customers or suppliers of the Company or any of its subsidiaries or affiliates,
to divert their business to any Competitor of the Company.
(d) Executive recognizes that he will possess confidential information
about other employees of Company relating to their education, experience,
skills, abilities, compensation and benefits, and interpersonal relationships
with customers of Company. The Executive recognizes that the information he will
possess about these other employees is not generally known, is of substantial
value to Company in
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developing its products and in securing and retaining customers, and will be
acquired by him because of his business position with Company. Executive agrees
that, during the Term of this Agreement and for the period ending on the last
day of the one-year period following termination of his employment, Executive
will not, directly or indirectly, solicit or recruit any employee of Company for
the purpose of being employed by his, or any business, individual, partner,
firm, corporation or other entity that is then in competition with Company
("Competitor"). The Executive further agrees that he will not convey any such
confidential information or trade secrets about other employees of Company to
anyone affiliated with him or to any Competitor.
(e) Executive further acknowledges that the remedy at law for any
breach by him of the covenants contained in this Paragraph 11 will be
inadequate and that in the event of a breach, or threatened breach, by
Executive of the covenants contained therein, Company shall be entitled to an
injunction restraining Executive from using, for his own benefit, and/or from
disclosing, in whole or in part, the list of Company's customers, and/or
Company's trade secrets or other confidential information, and/or from
rendering any services to any person, firm, corporation, association or other
entity to whom such a list, and/or such trade secrets or other confidential
information, in whole or in part, have been disclosed, or are threatened to
be disclosed and such other declaratory relief as is proper to cause
Executive to return to Company any and all memoranda, specifications,
documents and all other material relating to Company's business that he may
have under his possession or control. Nothing herein shall be construed as
prohibiting Executive from pursuing professional employment or
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investments utilizing his own skills and knowledge or Company from pursuing
any other remedies available to Company from such breach or threatened
breach, including the recovery of damages from Executive. The provisions of
this Paragraph 11 shall survive the expiration or termination, for any
reason, of this Agreement and of Executive's employment.
12. ASSIGNMENTS/MITIGATION
(a) This Agreement and the rights, interest and benefits hereunder are
personal to the Executive and shall not be assigned, transferred, pledged, or
hypothecated in any way by the Executive, and shall not be subject to
execution, attachment or similar process. Any attempted assignment, transfer,
pledge, or hypothecation, or the levy of any execution, attachment or similar
process thereon, shall be null and void and without effect.
(b) The Company shall have the right to assign this Agreement and to
delegate all of its rights, duties and obligations hereunder, whether in
whole or in part, to any parent, affiliate, successor, or subsidiary
organization of the Company or corporation with which the Company may merge
or consolidate or which acquires by purchase or otherwise all or
substantially all of the Company's consolidated assets, but such assignment
shall not release the Company from its obligations under this Agreement, and
in the event of any such assignment by the Company, the Executive may, at his
sole option, exercise his termination rights under the provisions of Section
9(c)(iv) of this Agreement.
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(c) This Agreement shall inure to the benefit of and be
enforceable by the Executive and his personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would still be payable
to him hereunder had he continued to live, all such amounts, unless otherwise
provided herein, shall be pain in accordance with the terms of this Agreement
to his devisee, legatee or other designee or, if there is no such designee,
to his estate.
(d) The Executive shall have no duty to mitigate the Company's
obligations hereunder by seeking other employment or by becoming
self-employed; provided, however, that compensation including life,
disability, dental, accident, group health insurance and other health and
welfare benefits as well as salary, wage or other compensation received by
the Executive during or with respect to the Severance Period and attributable
to services rendered during such period by the Executive to persons or
entities other than the Company shall be applied to reduce the Company's
obligation to provide compensation and benefits under this Agreement. The
Executive shall promptly notify the Company of his securing other employment
or his become self-employed and shall account to the Company as to the amount
of such compensation and benefits; if the Company has paid amounts in excess
of those to which the Executive was entitled (after giving effect to the
offsets provided above), the Executive shall reimburse the Company promptly
thereafter for such excess.
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13. NOTICE. Notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given
when delivered or five business days after being mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed (a) if to the Executive, to ______________________ and (b) if to
the Company, to 00000 Xxxxxx Xxxxxx, Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxxx X. Xxx, with a copy to the Secretary of the Company; or to
such other address as either party may have furnished to the other in writing
in accordance herewith, except that notice of change of address shall be
effective only upon receipt thereof.
14. SECTION HEADINGS. The Section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.
15. SEVERABILITY. Any provision of this Agreement which is deemed
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this paragraph be ineffective to the extent of
such invalidity, illegality or unenforceability, without affecting in any way
the remaining provisions hereof in such jurisdiction or rendering that or
any other provisions of this Agreement invalid, illegal, or unenforceable in
any other jurisdiction. Moreover, if any provision should be deemed invalid,
illegal or unenforceable because its scope is considered excessive, such
provision shall be modified so that the scope of the provision is reduced
only to the minimum extent necessary to render the modified provision valid,
legal and enforceable.
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16. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
17. ARBITRATION. In the event there is any dispute between Executive
and Company which the parties are unable to resolve themselves, including any
dispute with regard to the application, interpretation or validity of this
Agreement or any dispute with regard to any aspect of Executive's employment
or the termination of Executive's employment, both Executive and Company
agree by entering into this Agreement that the exclusive remedy for
determining any such dispute, regardless of its nature, will be by
arbitration in accordance with the then most applicable rules of the American
Arbitration Association; provided, however, the breach of the obligation to
provide services under this Agreement or of the obligations of Paragraph 11
may be enforced by an action for injunctive relief and damages in a court of
competent jurisdiction.
In the event the parties are unable to agree upon an arbitrator, the
parties shall select a single arbitrator from a list designated by the Los
Angeles office of the American Arbitration Association of seven arbitrators
all of whom shall be retired judges who have had experience in the employment
law, who are actively involved in hearing private cases and who are resident
in the greater Los Angeles area. If the parties are unable to select an
arbitrator from the list provided by the American Arbitration Association,
then the parties shall each strike names alternatively from the list, with
the first to strike being determined by lot. After each party has used three
strikes, the
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remaining name on the list shall be the arbitrator. Any arbitration shall be
administered by the American Arbitration Association only if both parties so
agree.
This agreement to resolve any disputes by binding arbitration shall
extend to claims against any shareholder or partner of the Company, any
brother-sister company, parent, subsidiary or affiliate of the Company, any
officer, director, employee, or agent of the Company, or of any of the above,
and shall apply as well to claims arising out of state and federal statutes
and local ordinances as well as to claims arising under the common law. The
arbitrator shall apply the same substantive law as would be applied by a
court having jurisdiction over the parties and their dispute and the
remedial authority of the arbitrator shall be the same as, but no greater
than, would be the remedial power of a court having jurisdiction over the
parties and their dispute. The arbitrator shall, upon an appropriate motion,
dismiss any claim brought in arbitration if the arbitrator determines that
the claim does not state a claim or a cause of action which could have been
properly pursued through court litigation. In the event of a conflict between
the then most-applicable rules of the American Arbitration Association and
these procedures, the provisions of these procedures shall govern.
Each party may be represented by counsel or other representative of the
party's choice and each party shall initially be responsible for the costs
and fees of its counsel or other representative. Any filing or administrative
fees shall be borne by the party incurring such fees. The fees and costs of
the arbitrator shall be borne equally between the parties. The prevailing
party in such arbitration proceeding, as determined by the
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arbitrator, and in any enforcement or other court proceedings, shall be
entitled to the extent permitted by law, to reimbursement from the other
party for all of the prevailing party's costs (including but not limited to
the arbitrator's compensation), expenses and attorney's fees.
The arbitrator shall render an award and opinion in the form typical of
that rendered in labor arbitrations and the award of the arbitrator shall be
final and binding upon the parties. If any of the provisions of this
paragraph are determined to be unlawful or otherwise unenforceable, in whole
or in part, such determination shall not affect the validity of the remainder
of these provisions and this paragraph shall be reformed to the extent
necessary to insure that the resolution of all conflicts between you and the
Company including those arising out of statutory claims, shall be resolved by
neutral, binding arbitration. In the event a court finds that the arbitration
procedure set forth herein is not absolutely binding, then it is the intent
of the parties that any arbitration decision should be fully admissible in
evidence, given great weight by any finder of fact and treated as
determinative to the maximum extent permitted by law.
Unless mutually agreed by the parties otherwise, any arbitration shall
take place in Los Angeles. In the event the parties are unable to agree upon
a location for the arbitration, the location within Los Angeles shall be
determined by the arbitrator.
In the event of a good faith dispute regarding the payment of salary or
benefits under this Agreement, the Company shall make the disputed payments
to the Executive
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as if such dispute did not exist during the pendency of such good faith
dispute, and, following the resolution of such dispute, the Executive shall
reimburse the Company for any overpayments.
18. COMPANY PROPERTY. The Executive agrees that at the time he leaves the
employment of the Company he will deliver to the Company, and will not keep
or deliver to anyone else, all notebooks, memoranda, documents, computer
discs, and any and all other material relating to the Company's business or
constituting the Company's property, whether or not the Executive was the
author or recipient of such material.
19. MISCELLANEOUS.
(a) No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time.
(b) This instrument contains the entire agreement of the parties
hereto relating to the subject matter hereof and it replaces and supersedes
all prior agreements and understandings, oral and written, between parties
hereto. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter
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hereof have been made by either party which are not expressly set forth in this
Agreement.
(c) The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of California without
regard to its conflicts of law principles.
(d) All references to Sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such Sections.
(e) Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law.
(f) The obligations created under the provisions of Sections 5, 8, 10,
11, 12, 17 and 18 shall survive the expiration, suspension or termination,
for any reason, of this Agreement or the Executive's employment hereunder
until such obligations created thereunder are fully satisfied. This
provision is not intended to create additional rights
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or obligations or to expand or otherwise alter rights and obligations created
by this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ZENITH INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxx, Chairman
----------------------------
XXXXXXX X. XXX, Chairman
EMPLOYEE:
/s/ Xxxxxx X. Xxxxx
------------------------
XXXXXX X. XXXXX
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