Exhibit 10.8
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") dated as of October 23, 2001 between
Arch Capital Group Ltd., a Bermuda corporation (the "Company"), and Xxxx X.
Xxxxxxxx (the "Executive").
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. For purposes of this Agreement, the following
terms have the meanings set forth below:
"Base Salary" has the meaning set forth in Section 4.01.
"Cause" means (a) theft or embezzlement by the Executive with respect to
the Company or its Subsidiaries; (b) malfeasance or gross negligence in the
performance of the Executive's duties without the same being corrected within
twenty (20) days after being given written notice thereof; (c) the commission by
the Executive of any felony or any crime involving moral turpitude; (d)
continued and habitual use of alcohol by the Executive to an extent which
materially impairs the Executive's performance of his duties without the same
being corrected within twenty (20) days after being given written notice
thereof; or (e) the Executive's use of illegal drugs without the same being
corrected within twenty (20) days after being given written notice thereof.
"Confidential Information" means information that is not generally known to
the public and that was or is used, developed or obtained by the Company or its
Subsidiaries in connection with its business. It shall not include information
(a) required to be disclosed by court or administrative order, (b) lawfully
obtainable from other sources or which is in the public domain through no fault
of the Executive; or (c) the disclosure of which is consented to in writing by
the Company.
"Date of Termination" has the meaning set forth in Section 5.06.
"Employment Period" has the meaning set forth in Section 2.01.
"Good Reason" means, without the Executive's written consent, (a) the
material diminution of the duties or responsibilities of the Executive without
the same being corrected within twenty (20) days after being given written
notice thereof; provided, however, that the Company shall have the right to
receive notice and, therefore, the right to make such a correc-
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tion only once during any twelve (12) month period; or (b) a reduction in the
Executive's Base Salary.
"Intellectual Property" has the meaning set forth in Section 7.01.
"Notice of Termination" has the meaning set forth in Section 5.05.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, an estate, a trust, a
joint venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
"Permanent Disability" means those circumstances where the Executive is
unable to continue to perform the usual customary duties of his assigned job or
as otherwise assigned in accordance with the provisions of this Agreement for a
period of six (6) months in any twelve (12) month period because of physical,
mental or emotional incapacity resulting from injury, sickness or disease. Any
questions as to the existence of a Permanent Disability shall be determined by a
qualified, independent physician selected by the Company and approved by the
Executive (which approval shall not be unreasonably withheld). The determination
of any such physician shall be final and conclusive for all purposes of this
Agreement.
"Reimbursable Expenses" has the meaning set forth in Section 4.03.
"Subsidiary" or "Subsidiaries" means, with respect to any Person, any
corporation, partnership, limited liability company, association or other
business entity of which (a) if a corporation, fifty (50) percent or more of the
total voting power of shares of stock entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or combination
thereof; or (b) if a partnership, limited liability company, association or
other business entity, fifty (50) percent or more of the partnership or other
similar ownership interest thereof is at the time owned or controlled, directly
or indirectly, by any Person or one or more Subsidiaries of that Person or a
combination thereof. For purposes of this definition, a Person or Persons will
be deemed to have a fifty (50) percent or more ownership interest in a
partnership, limited liability company, association or other business entity if
such Person or Persons are allocated fifty (50) percent or more of partnership,
limited liability company, association or other business entity gains or losses
or control the managing director or member or general partner of such
partnership, limited liability company, association or other business entity.
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ARTICLE 2
EMPLOYMENT
SECTION 2.01. Employment. The Company shall employ the Executive, and the
Executive shall accept employment with the Company, upon the terms and
conditions set forth in this Agreement for the period beginning on the date
hereof and ending as provided in Section 5.01. The period beginning on the date
hereof and ending as provided in Section 5.01 is referred to herein as the
"Employment Period."
ARTICLE 3
POSITION AND DUTIES
SECTION 3.01. Position and Duties. The Executive shall serve as
Vice-Chairman of the Company, reporting to, and subject to the control of, the
Board of Directors of the Company. The Executive shall be responsible for the
oversight of capital allocation and investment with respect to the Company. The
Executive will devote such time to his employment hereunder as is necessary to
carry out his duties and responsibilities. The Executive's services hereunder
shall not be required to be provided from a location other than San Francisco,
California. In addition, if requested by the Company the Executive will provide
the services set forth above as an employee of a wholly-owned United States
subsidiary of the Company.
ARTICLE 4
BASE SALARY AND BENEFITS
SECTION 4.01. Base Salary. During the Employment Period, the Executive's
base salary will be $30,000 per annum (the "Base Salary"). The Base Salary will
be payable bimonthly on the fifteenth and last working days of each month in
arrears. The Executive acknowledges that, as an executive officer of the
Company, he will not be entitled to any additional compensation for his service
as a member of the Board of Directors of the Company.
SECTION 4.02. Benefits. In addition to the Base Salary, the Executive shall
be entitled to benefits under any plan or arrangement available generally for
senior executive officers of the Company, subject to and consistent with the
terms and conditions and overall administration of such plans as set forth from
time to time in the applicable plan documents.
SECTION 4.03. Expenses. The Company shall reimburse the Executive for all
reasonable expenses incurred by him (including business class airfare) in the
course of performing his duties under this Agreement which are consistent with
the Company's policies in effect from time to time with respect to travel,
entertainment and other business expenses, ("Reimbursable Expenses"), subject to
the Company' requirements with respect to reporting and documentation of
expenses.
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SECTION 4.04. Stock Options Restricted Stock and Stock Purchase. On the
date hereof, the Company shall grant to the Executive an option to acquire
375,473 shares of the Company's common stock at an exercise price of $20.00 per
share. The other terms of the stock option shall be as set forth in the form of
Stock Option Agreement attached hereto as Exhibit A. The stock option award
provided for in this Section 4.04 is made as an inducement essential to the
Executive's entering into this Agreement.
ARTICLE 5
TERM AND TERMINATION
SECTION 5.01. Term. The Employment Period will terminate one day following
the second anniversary hereof; provided that (a) the Employment Period shall
terminate prior to such date upon the Executive's death or Permanent Disability,
(b) the Employment Period may be terminated by the Company for any reason prior
to such date, and (c) the Employment Period may be terminated by the Executive
at any time prior to such date.
SECTION 5.02. Unjustified Termination. Except as otherwise provided in
Section 5.03, if the Employment Period shall be terminated prior to the
expiration of the second anniversary of the date hereof by the Executive for
Good Reason or by the Company not for Cause (collectively, an "Unjustified
Termination") (it being understood that a termination (a) for Cause, (b) as a
result of the Executive's resignation or leaving his employment other than for
Good Reason, or (c) as a result of the death or Permanent Disability of the
Executive shall not constitute an Unjustified Termination), the Executive shall
be paid solely (except as provided in Section 5.04 below) the amount of six
months' of his Base Salary, provided the Executive shall be entitled to such
payments only if the Executive has not breached and does not breach the
provisions of Sections 6.01, 7.01, 8.01 or 9.01 and the Executive has entered
into and not revoked a general release of claims reasonably satisfactory to the
Company. Such amounts will be payable in equal monthly installments for a period
of six (6) months commencing on the first month anniversary of the Date of
Termination, and such amounts will be reduced by any amount earned by the
Executive during such six (6) month period from other employment, including
self-employment. In addition, promptly following an Unjustified Termination, the
Executive shall also be reimbursed all Reimbursable Expenses incurred by the
Executive prior to such Unjustified Termination.
SECTION 5.03. Justified Termination. If the Employment Period shall be
terminated prior to the expiration of the second anniversary of the date hereof
(a) for Cause, (b) as a result of the Executive's resignation or leaving of his
employment, other than for Good Reason, or (c) as a result of the death or
Permanent Disability of the Executive (collectively, a "Justified
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Termination"), the Executive shall be entitled to receive solely (except as
provided in Section 5.04 below) his Base Salary through the Date of Termination
and reimbursement of all Reimbursable Expenses incurred by the Executive prior
to such Justified Termination.
SECTION 5.04. Benefits. Except as otherwise required by mandatory
provisions of law or as otherwise provided in any stock option agreement with
the Company, all of the Executive's rights to fringe and other benefits under
this Agreement or otherwise, if any, accruing after the termination of the
Employment Period as a result of a Justified Termination will cease upon such
Justified Termination. Notwithstanding the foregoing, the provisions of the
stock option agreements between the Company and the Executive shall govern the
consequences of termination of the Executive's employment on such stock options.
SECTION 5.05. Notice of Termination. Any termination by the Company for
Permanent Disability or Cause or without Cause or by the Executive for Good
Reason shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which 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 employment under the provision
indicated.
SECTION 5.06. Date of Termination. "Date of Termination" shall mean (a) if
the Employment Period is terminated as a result of a Permanent Disability, five
(5) days after a Notice of Termination is given, (b) if the Employment Period is
terminated for Good Reason, the date specified in the Notice of Termination, and
(c) if the Employment Period is terminated for any other reason (including for
Cause), the date designated by the Company in the Notice of Termination.
ARTICLE 6
CONFIDENTIAL INFORMATION
SECTION 6.01. Nondisclosure and Nonuse of Confidential Information. The
Executive will not disclose or use at any time during or after the Employment
Period any Confidential Information of which the Executive is or becomes aware,
whether or not such information is developed by him, except to the extent that
such disclosure or use is directly related to and required by the Executive's
performance of duties assigned to the Executive pursuant to this Agreement.
Under all circumstances and at all times, the Executive will take all
appropriate steps to safeguard Confidential Information in his possession and to
protect it against disclosure, misuse, espionage, loss and theft.
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ARTICLE 7
INTELLECTUAL PROPERTY
SECTION 7.01. Ownership of Intellectual Property. In the event that the
Executive as part of his activities on behalf of the Company generates, authors
or contributes to any invention, design, new development, device, product,
method of process (whether or not patentable or reduced to practice or
comprising Confidential Information), any copyrightable work (whether or not
comprising Confidential Information) or any other form of Confidential
Information relating directly or indirectly to the business of the Company as
now or hereinafter conducted (collectively, "Intellectual Property"), the
Executive acknowledges that such Intellectual Property is the sole and exclusive
property of the Company and hereby assigns all right title and interest in and
to such Intellectual Property to the Company. Any copyrightable work prepared in
whole or in part by the Executive during the Employment Period will be deemed "a
work made for hire" under Section 201(b) of the Copyright Act of 1976, as
amended, and the Company will own all of the rights comprised in the copyright
therein. The Executive will promptly and fully disclose all Intellectual
Property and will cooperate with the Company to protect the Company' interests
in and rights to such Intellectual Property (including providing reasonable
assistance in securing patent protection and copyright registrations and
executing all documents as reasonably requested by the Company, whether such
requests occur prior to or after termination of Executive's employment
hereunder).
ARTICLE 8
DELIVERY OF MATERLALS UPON TERMINATION OF EMPLOYMENT
SECTION 8.01. Delivery of Materials upon Termination of Employment. As
requested by the Company, from time to time and upon the termination of the
Executive's employment with the Company for any reason, the Executive will
promptly deliver to the Company all copies and embodiments, in whatever form or
medium, of all Confidential Information or Intellectual Property in the
Executive's possession or within his control (including written records, notes,
photographs, manuals, notebooks, documentation, program listings, flow charts,
magnetic media, disks, diskettes, tapes and all other materials containing any
Confidential Information or Intellectual Property) irrespective of the location
or form of such material and, if requested by the Company, will provide the
Company with written confirmation that all such materials have been delivered to
the Company.
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ARTICLE 9
NONSOLICITATION
SECTION 9.01. Nonsolicitation. The Executive hereby agrees that during the
Employment Period and for a period of two (2) years after the Date of
Termination (the "Nonsolicitation Period") the Executive will not, directly or
indirectly through another entity, induce or attempt to induce any employee of
the Company or its Subsidiaries to leave the employ of the Company or its
Subsidiaries, or in any way interfere with the relationship between the Company
or its Subsidiaries and any employee thereof.
SECTION 9.02. Enforcement. If, at the enforcement of Section 9.01, a court
holds that the duration or scope restrictions stated herein are unreasonable
under circumstances then existing, the parties agree that the maximum duration
or scope reasonable under such circumstances will be substituted for the stated
duration or scope and that the court will be permitted to revise the
restrictions contained in this Section 9 to cover the maximum duration and scope
permitted by law.
ARTICLE 10
EQUITABLE RELIEF
SECTION 10.01. Equitable Relief. The Executive acknowledges that (a) the
covenants contained herein are reasonable, (b) the Executive's services are
unique, and (c) a breach or threatened breach by him of any of his covenants and
agreements with the Company contained in Sections 6.01, 7.01, 8.01 or 9.01 could
cause irreparable harm to the Company for which they would have no adequate
remedy at law. Accordingly, and in addition to any remedies which the Company
may have at law, in the event of an actual or threatened breach by the Executive
of his covenants and agreements contained in Sections 6.01, 7.01, 8.01 or 9.01,
the Company shall have the absolute right to apply to any court of competent
jurisdiction for such injunctive or other equitable relief as such court may
deem necessary or appropriate in the circumstances.
ARTICLE 11
EXECUTIVE REPRESENTATIONS
SECTION 11.01. Executive Representations. The Executive hereby represents
and warrants to the Company that (a) the execution, delivery and performance of
this Agreement by the Executive does not and will not conflict with, breach,
violate or cause a default under any contract, agreement, instrument, order,
judgment or decree to which the Executive is a party or by which he is bound,
(b) as of the date hereof, the Executive is not a party to or
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bound by any written employment agreement or any noncompetition agreement or
confidentiality agreement with any other Person and (c) upon the execution and
delivery of this Agreement by the Company, this Agreement will be the valid and
binding obligation of the Executive, enforceable in accordance with its terms.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Remedies. The Company will have all rights and remedies set
forth in this Agreement, all rights and remedies which the Company have been
granted at any time under any other agreement or contact and all of the rights
which the Company have under any law. The Company will be entitled to enforce
such rights specifically, without posting a bond or other security, to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. There are currently no disciplinary or
grievance procedures in place, there is no collective agreement in place, and
there is no probationary period.
SECTION 12.02. Consent to Amendments. The provisions of this Agreement may
be amended or waived only by a written agreement executed and delivered by the
Company and the Executive. No other course of dealing between the parties to
this Agreement or any delay in exercising any rights hereunder will operate as a
waiver of any rights of any such parties.
SECTION 12.03. Successors and Assigns. All covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto will
bind and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not, provided that the Executive may not
assign his rights or delegate his obligations under this Agreement without the
written consent of the Company.
SECTION 12.04. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
SECTION 12.05. Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, any one of which need not contain the signatures of
more than one party, but all of which counterparts taken together will
constitute one and the same agreement.
SECTION 12.06. Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
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SECTION 12.07. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when delivered personally to
the recipient, two (2) business days after the date when sent to the recipient
by reputable express courier service (charges prepaid) or four (4) business days
after the date when mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications will be sent to the Executive and to the Company at the addresses
set forth below.
If to the Executive: To the last address delivered to the Company by the
Executive in the manner set forth herein.
Copies (which shall not constitute notice) of notices to the
Executive shall also be sent to:
Xxxxxx Xxxxxxxx Xxxxxxx & Share LLP
Xxxx Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
If to the Company: Arch Capital Group Ltd,
Executive Offices
00 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: General Counsel
Copies (which shall not constitute notice) of notices to the
Company shall also be sent to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx Xxxx, Esq.
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
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SECTION 12.08. Withholding. The Company may withhold from any amounts
payable under this Agreement such federal, state, local or foreign taxes as
shall be required to be withheld pursuant to any applicable law or regulation.
SECTION 12.09. No Third Party Beneficiary. This Agreement will not confer
any rights or remedies upon any person other than the Company, the Executive and
their respective heirs, executors, successors and assigns.
SECTION 12.10. Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the parties and
supersedes any prior understandings, agreements or representations by or among
the parties, written or oral, that may have related in any way to the subject
matter hereof.
SECTION 12.11. Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction will be applied against any party. Any
reference to any federal, state, local or foreign statute or law will be deemed
also to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. The use of the word "including" in this Agreement
means "including without limitation" and is intended by the parties to be by way
of example rather than limitation.
SECTION 12.12. Survival. Sections 6.01, 7.01, 8.01 and Articles 9 and 12
will survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Period.
SECTION 12.13. GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS AGREEMENT WILL BE GOVERNED BY THE INTERNAL
LAW OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
ARCH CAPITAL GROUP LTD.
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President,
General Counsel and
Secretary
/s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
