EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into effective as of
the 1st day of January, 1998 (the "Effective Date"), between HCC INSURANCE
HOLDINGS, INC. ("HCC" or "Company"), and XXXXX X. XXXXX, XX. ("Executive"),
sometimes collectively referred to herein as the "Parties."
R E C I T A L S:
WHEREAS, Executive is to be employed as Executive Vice President of HCC,
and as an integral part of its management who participates in the
decision-making process relative to short and long term planning and policy
for the Company, will serve on the Company's Executive Committee;
WHEREAS, it is the desire of the Board of Directors of HCC (the "Board")
to (i) directly engage Executive as an officer of HCC and its subsidiaries;
and (ii) directly engage, if elected, the services of Executive as a director
of HCC and its subsidiaries; and
WHEREAS, Executive is desirous of committing himself to serve HCC on the
terms herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the Parties agree as follows:
1. TERM. The Company hereby agrees to employ Executive as an
Executive Vice President, and Executive hereby agrees to accept such
employment, on the terms and conditions set forth herein, for the period
commencing on the Effective Date and expiring as of 11:59 p.m. on December
31, 2002 (the "Basic Term") (unless sooner terminated as hereinafter set
forth).
2. DUTIES.
(a) Duties as Employee of the Company. Executive shall, subject
to the supervision of the Chief Executive Officer, President, and Board, have
general management responsibilities in the ordinary course of HCC's business
with all such powers with respect to such management as may be reasonably
incident to such responsibilities. During normal business hours, Executive
shall devote his full time and attention to diligently attending to the
business of the Company during the Basic Term. During the Basic Term,
Executive shall not directly or indirectly render any services of a business,
commercial, or professional nature to any other person, firm, corporation, or
organization, whether for compensation or otherwise, without the prior
written consent of the Chairman of the Board. However, Executive shall have
the right
EMPLOYMENT AGREEMENT - Page 1
to engage in such activities as may be appropriate in order to manage his
personal investments so long as such activities do not materially interfere
or conflict with the performance of his duties to the Company hereunder. The
conduct of such activity shall not be deemed to materially interfere or
conflict with Executive's performance of his duties until Executive has been
notified in writing thereof and given a reasonable period in which to cure
the same.
(b) OTHER DUTIES. At all times during the Basic Term the Company
shall use its best efforts to cause Executive to be elected a director and to
serve on the Executive Committee and Senior Management Committee of HCC. Any
such failure to use its best efforts prior to a Change of Control shall be a
material breach of this Agreement for purposes of Paragraph 4(a)(iv). If
elected, Executive agrees to serve as a director, member of the Executive
Committee and member of the Senior Management Committee of HCC and of any of
its subsidiaries and in one or more executive offices of any of HCC's
subsidiaries, provided Executive is indemnified for serving in any and all
such capacities in a manner acceptable to the Company and Executive.
Executive will serve as President and Chief Executive Officer of Houston
Casualty Company, U.S. Specialty Insurance Company and Trafalgar Insurance
Company and as Chairman of Avemco Insurance Company. If elected, Executive
agrees that he shall not be entitled to receive any compensation for serving
as a director of HCC or in any capacities of HCC's subsidiaries other than
the compensation to be paid to Executive by the Company pursuant to this
Agreement.
3. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. Executive shall receive a base salary paid by
the Company at the annual rate of $325,000, during the period beginning on
the Effective Date payable not less frequently than in substantially equal
monthly installments. Such Base Salary shall increase $25,000 each January 1,
commencing January 1, 1999 until Executive's base salary reaches $425,000.
For purposes of this Agreement, "Base Salary" shall mean the Executive's
initial base salary and, when increased, the increased base salary.
(b) BONUS PAYMENTS. Each year, Executive shall be entitled to
receive, in addition to the Base Salary, an annual bonus payment based on
HCC's annual operating earnings per share ("OEPS"), as set forth below:
$37,500 bonus if OEPS growth is 10% or more in any one year period;
$75,000 bonus if OEPS growth is 15% or more in any one year period;
and
$150,000 bonus if OEPS growth is 20% or more in any one year period.
For purposes of this Agreement, OEPS is defined as HCC's consolidated net
earnings less capital
EMPLOYMENT AGREEMENT - Page 2
gains/losses, currency gains/losses, and any nonrecurring merger and
acquisition income or expenses as reported in HCC's Annual Report on Form
10-K.
(c) STOCK OPTIONS. In addition to stock options previously
granted to Executive, in partial consideration for Executive's
non-competition agreements, set forth herein, effective December 31, 1998,
Executive shall be provided with additional options to purchase HCC shares as
follows:
(1) On January 7, 1998, an option to acquire 100,000 shares,
exercisable at a price of $16.50 per share and vesting at 20% per year
beginning on December 31, 1998 and for each of the four years thereafter;
(2) For each year beginning with the year ending December 31,
1999, of Executive's employment hereunder;
10,000 shares if, on such December 31, the price of the HCC Common
Stock has increased since the previous January 1, by an amount that
is greater than or equal to 10%, but less than 15%;
15,000 shares if, on such December 31, the price of the HCC Common
Stock has increased since the previous January 1, by an amount that
is greater than or equal to 15%, but less than 20%;
20,000 shares if, on such December 31, the price of the HCC Common
Stock has increased since the previous January 1, by an amount that
is greater than or equal to 20%, but less than 25%; and
25,000 shares if, on such December 31, the price of the HCC Common
Stock has increased since the previous January 1, by an amount that
is greater than or equal to 25%.
Each of such options set forth in this subparagraph (ii) shall be
priced at the average of the closing prices of HCC shares for the
month of December of the year of the grant and shall vest
immediately. For purposes of this Subparagraph, the granting of
any option shall not be pro-rated if the criteria set forth herein
are not achieved in full.
(d) EXPENSES. During the Basic Term, Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred
by him in accordance with the policies and procedures established by the
Compensation Committee for the Company's senior executive officers in
performing services hereunder, provided that Executive properly accounts
therefor in accordance with Company policy.
(e) OTHER BENEFITS. Executive shall be entitled to participate
in or receive
EMPLOYMENT AGREEMENT - Page 3
benefits under any compensatory employee benefit plan or other arrangement
made available by the Company now or in the future to its senior executive
officers, subject to and on a basis consistent with the terms, conditions,
and overall administration of such plan or arrangement. Nothing paid to
Executive under any plan or arrangement presently in effect or made available
in the future shall be deemed to be in lieu of the Base Salary payable to
Executive pursuant to Paragraph (a) of this Section. The Company shall not
make any changes in any employee benefit plans or other arrangements in
effect on the date hereof or subsequently in effect in which Executive
currently or in the future participates (including, without limitation, each
pension and retirement plan, supplemental pension and retirement plan,
savings and profit sharing plan, stock or unit ownership plan, stock or unit
purchase plan, stock or unit option plan, life insurance plan, medical
insurance plan, disability plan, dental plan, health and accident plan, or
any other similar plan or arrangement) that would adversely affect
Executive's rights or benefits thereunder, unless such change occurs pursuant
to a program applicable to substantially all executives of the Company and
does not result in a proportionately greater reduction in the rights of or
benefits to Executive as compared with any other executive of the Company.
(f) VACATIONS. Executive shall be entitled to twenty five (25)
paid vacation days per year during the Basic Term. There shall be no
carryover of unused vacation from year to year. For purposes of this
Paragraph, weekends shall not count as vacation days, and Executive shall
also be entitled to all paid holidays and personal days given by the Company
to its senior executive officers.
(g) PERQUISITES. Executive shall be entitled to receive the
perquisites and fringe benefits appertaining to an executive officer of HCC
in accordance with any practice established by the Compensation Committee.
Notwithstanding, and in addition to, any perquisites to which Executive is
entitled pursuant to the preceding sentence, Executive shall: (i) have use
of a 1998 Mercedes SEL automobile, and the Company shall pay all expenses
related to Executive's use of such car, including gasoline, insurance, and
maintenance; (ii) be allowed to travel on business utilizing first class
passage (whether domestic or international); (iii) receive annual club dues
for the Houston City Club, the Country Club of Fairfield, and Lochinvar Golf
Club; and (iv) receive a total of $1,000,000 term life insurance (which shall
be an addition to the standard benefits provided to Executive under the
Company's group life insurance program that covers officers).
(h) PRORATION. Any payments or benefits payable to Executive
hereunder in respect of any calendar year during which Executive is employed
by the Company for less than the entire year, unless otherwise provided in
the applicable plan or arrangement, shall be prorated in accordance with the
number of days in such calendar year during which he is so employed.
Notwithstanding the foregoing, any payments pursuant to Paragraphs 4(c) or
4(d) of this Agreement shall not be subject to proration.
5. TERMINATION.
(a) DEFINITIONS.
EMPLOYMENT AGREEMENT - Page 4
(1) "CAUSE" shall mean:
(i) Material dishonesty which is not the result of an
inadvertent or innocent mistake of Executive with respect to the Company or
any of its subsidiaries;
(ii) Willful misfeasance or nonfeasance of material duty
by Executive intended to injure or having the effect of injuring in some
material fashion the reputation, business, or business relationships of the
Company or any of its subsidiaries or any of their respective officers,
directors, or employees;
(iii) Material violation by Executive of any material term
of this Agreement; or
(iv) Conviction of Executive of any felony, any crime
involving moral turpitude or any crime other than a vehicular offense which
could reflect in some material fashion unfavorably upon the Company or any of
its subsidiaries.
Executive may not be terminated for Cause unless and until there has been
delivered to Executive written notice from the Board supplying the
particulars of Executive's acts or omissions that the Board believes
constitute Cause, a reasonable period of time (not less than 30 days) has
been given to Executive after such notice to either cure the same or to meet
with the Board, with his attorney if so desired by Executive, and following
which the Board by action of not less than two-thirds of its members
furnishes to Executive a written resolution specifying in detail its findings
that Executive has been terminated for Cause as of the date set forth in the
notice to Executive.
(2) A "CHANGE OF CONTROL" shall be deemed to have occurred if:
(i) Any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) other
than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934), directly or
indirectly, of 50% or more of the Company's then outstanding voting common
stock; or
(ii) At any time during the period of three (3)
consecutive years (not including any period prior to the date hereof),
individuals who at the beginning of such period constituted the Board (and
any new director whose election by the Board or whose nomination for election
by the Company's shareholders were approved by a vote of at least two-thirds
of the directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority
thereof; or
EMPLOYMENT AGREEMENT - Page 5
(iii) The shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger
or consolidation (a) in which a majority of the directors of the surviving
entity were directors of the Company prior to such consolidation or merger,
and (b) which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being changed into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the surviving entity outstanding immediately after such merger
or consolidation; or
(iv) The shareholders approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
(3) A "DISABILITY" shall mean the absence of Executive from
Executive's duties with the Company on a full-time basis for 180 consecutive
days, or 180 days in a 365 day period, as a result of incapacity due to
mental or physical illness which results in the Executive being unable to
perform the essential functions of his position, with or without reasonable
accommodation.
(4) A "GOOD REASON" shall mean any of the following (without
Executive's express written consent):
(i) Following a Change of Control, a material alteration
in the nature or status of Executive's title, duties or responsibilities,
or the assignment of duties or responsibilities inconsistent with
Executive's status, title, duties and responsibilities;
(ii) A failure by the Company to continue in effect any
employee benefit plan in which Executive was participating, or the taking
of any action by the Company that would adversely affect Executive's
participation in, or materially reduce Executive's benefits under, any such
employee benefit plan, unless such failure or such taking of any action
adversely affects the senior members of corporate management of the Company
generally to the same extent;
(iii) A relocation of the Company's principal executive
offices, or Executive's relocation to any place other than the principal
executive offices, exceeding a distance of fifty (50) miles from the
Company's current executive office located in Houston, Texas, except for
reasonably required travel by Executive on the Company's business;
(iv) Any material breach by the Company of any provision
of this Agreement; or
(v) Any failure by the Company to obtain the assumption
and
EMPLOYMENT AGREEMENT - Page 6
performance of this Agreement by any successor (by merger, consolidation,
or otherwise) or assign of the Company.
However, Good Reason shall exist with respect to an above specified matter
only if such matter is not corrected by the Company within thirty (30) days
of its receipt of written notice of such matter from Executive, and in no
event shall a termination by Executive occurring more than ninety (90) days
following the date of the event described above be a termination for Good
Reason due to such event.
(5) "TERMINATION DATE" shall mean the date Executive is
terminated for any reason pursuant to this Agreement.
(b) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON: BENEFITS. In
the event there is a termination by the Company without Cause, or if
Executive terminates for Good Reason (a "Termination Event"), this Agreement
shall terminate and Executive shall be entitled to the following severance
benefits:
(1) For a period of twelve (12) months after the Termination
Date (unless the remainder of the Basic Term is less than twelve (12)
months, in which case, for an amount of time equal to the remainder of the
Basic Term), Base Salary (as defined in Paragraph 3(a), at the rate, and
payable quarterly unless such termination is by the Company without Cause,
in which event such amount of Base Salary shall be paid in a lump sum
within ten (10) days of the Termination Event.
(2) If there is a Change of Control or if there is a
termination by the Company without Cause or by Executive for Good Reason,
any stock options and other stock-related grants ("Stock Awards") which
Executive has received under any of the HCC stock plans shall vest
immediately; provided, however, that the right to receive options
referenced in Paragraph 3(c)(2) above shall terminate upon termination from
employment for any reason, and further, if there is a termination for Good
Reason, or by the Company other than for Cause, all options shall be
exercisable for one year or the remainder of their term, whichever is less.
(3) To the extent not theretofore paid or provided, the
Company shall timely pay or provide to Executive any other amounts or
benefits required to be paid or provided or which Executive is eligible to
receive under any plan, program, policy or practice, or contract or
agreement of the Company and its affiliated companies for the period of time
equal to the remainder of the Basic Term (such other amounts and benefits
shall be hereinafter referred to as the "Other Benefits"). Without
limiting the preceding sentence, through December 31, 2002 the Company, at
its sole expense, shall continue to provide (through its own plan and/or
individual policies) Executive (and Executive's dependents) with health
benefits no less favorable than the group health plan benefits provided
during such period to any senior executive officer of the Company or any
affiliated company (to the extent any such coverage or benefits are taxable
to Executive
EMPLOYMENT AGREEMENT - Page 7
by reason of being provided under a self-insured health plan of the Company
or an affiliate, the Company shall make Executive "whole" for the same on
an after-tax basis). In any event the Other Benefits provided for pursuant
to this Paragraph shall be secondary to any benefits and coverage Executive
(or his dependents) receive from another employer.
(4) If Executive receives any payments whether or not pursuant
to this Agreement which are subject to an excise tax imposed under Section
4999 of the Internal Revenue Code of 1986, as amended, or any similar tax
imposed under federal, state, or local law (collectively, "Excise Taxes"),
the Company shall pay to Executive (on or before the date on which the
Company is required to withhold such Excise Taxes), 1) an additional amount
equal to all Excise Taxes then due and payable, and 2) the amount necessary
to defray Executive's increased (federal, state, and local) tax liability
arising due to payment of the amount specified in this Subsection (4) which
shall include any costs and expenses, including penalties and interest
incurred by Executive in connection with any audit, proceedings, etc.
related to the payment of such Excise Taxes or this payment. For purposes
of calculating the amount payable to Executive under this Paragraph, the
federal and state income tax rates used shall be the highest marginal
federal and state rates applicable to ordinary income in Executive's state
of residence, taking into account any federal income tax deductions or
credits available to Executive for state income taxes. The Company shall
cause its independent auditors to calculate such amount and provide
Executive a copy of such calculation at least ten (10) days prior to the
date specified above for payment of such amount. It is the intent of the
Parties that this Subsection (4) shall place Executive in the same net
after-tax position Executive would have been in had no payment been subject
to an Excise Tax and, notwithstanding anything herein to the contrary, it
shall be construed to effectuate said result;
(5) All accrued compensation and unreimbursed expenses through
the Termination Date. Such amounts shall be paid to Executive in a lump
sum in cash within thirty (30) days after the Termination Date; and
(6) Executive shall be free to accept other employment during
such period, and there shall be no offset of any employment compensation
earned by Executive in such other employment during such period against
payments due Executive under this Paragraph (4) and there shall be not
offset in any compensation received from such other employment against the
Base Salary set forth above.
(c) TERMINATION IN EVENT OF DEATH: BENEFITS. If Executive's
employment is terminated by reason of Executive's death during the Basic
Term, this Agreement shall terminate without further obligation to
Executive's legal representatives under this Agreement, other than for
payment of all accrued compensation, unreimbursed expenses, the timely
payment or provision of Other Benefits through the date of death, and, if
such death occurs on or after October 1 of any year, such cash or stock bonus
as Executive would otherwise have been awarded in such year if Executive's
death had not occurred. Such amounts shall be paid to
EMPLOYMENT AGREEMENT - Page 8
Executive's estate or beneficiary, as applicable, in a lump sum in cash
within ninety (90) days after the date of death. With respect to the
provision of Other Benefits, the term Other Benefits as used in this
Paragraph 4(c) shall include, without limitation, and Executive's estate
and/or beneficiaries shall be entitled to receive, benefits at least equal to
the most favorable benefits provided by the Company to the estates and
beneficiaries of other executive level employees of the Company under such
plans, programs, practices, and policies relating to death benefits, if any,
as in effect with respect to other executives and their beneficiaries at any
time during the 120-day period immediately preceding the date of death.
Additionally, all Stock Awards for which Executive would have been eligible
had he completed the Basic Term (except as set forth in Paragraph 4(b)(2)),
shall be accelerated, and Executive's estate or beneficiary shall be vested
in such Stock Awards as of the date of Executive's termination.
(d) TERMINATION IN EVENT OF DISABILITY: BENEFITS. If
Executive's employment is terminated by reason of Executive's Disability
during the Basic Term, this Agreement shall continue in full force for a
period of one (1) year following such Disability and if such Disability
occurs on or after October 1 of any year Executive shall be entitled to the
same cash or stock bonus in such year that Executive would have been awarded
if such Disability had not occurred. Following such one (1) year period, this
Agreement shall continue in full force except that (a) the Base Salary shall
be reduced by 50% and (b) Executive shall not be entitled to any subsequent
cash or stock bonuses. In addition, all outstanding Stock Awards shall vest
immediately upon such termination due to Disability.
(e) VOLUNTARY TERMINATION BY EMPLOYEE AND TERMINATION FOR CAUSE:
BENEFITS. Executive may terminate his employment with the Company without
Good Reason by giving written notice of his intent and stating an effective
Termination Date at least ninety (90) days after the date of such notice;
provided, however, that the Company may accelerate such effective date by
paying Executive through the proposed Termination Date and also vesting
awards that would have vested but for this acceleration of the proposed
Termination Date. Upon such a termination by Executive or upon termination
for Cause by the Company, this Agreement shall terminate, and the Company
shall pay to Executive all accrued compensation, unreimbursed expenses and
the Other Benefits through the Termination Date. Such amounts shall be paid
to Executive in a lump sum in cash within thirty (30) days after the date of
termination.
(f) DIRECTOR POSITIONS. Executive agrees that upon termination
of employment, for any reason, at the request of the Chairman of the Board,
he will immediately tender his resignation from any and all Board positions
held with the Company and/or any of its subsidiaries and affiliates.
6. NON-COMPETITION, NON-SOLICITATION, AND CONFIDENTIALITY. Executive
recognizes and agrees that the benefit of not being employed at-will, is
provided in consideration for, among other things, the agreements contained
in this Section as well as the Stock Options granted to Executive pursuant to
this Agreement. The Company agrees that while employed pursuant to this
Agreement, Executive will be provided with confidential information of
Company; specialized training on how to perform his duties; and contact with
the Company's customers and
EMPLOYMENT AGREEMENTS - Page 9
potential customers. Furthermore, in the event Executive is terminated
without Cause, or terminates for Good Reason, and more than one (1) year
remains on the existing Basic Term, then Executive shall receive additional
consideration in an amount equal to the quotient of the Base Salary divided
by 12, which shall thereupon be multiplied by the number of months remaining
in the Basic Term minus 12 months, and which shall be paid in one lump sum
within ten (10) days of such termination.
In consideration of all of the foregoing, Executive agrees as follows:
(a) NON-COMPETITION DURING EMPLOYMENT. Executive agrees during
the Basic Term he will not compete with the Company by engaging in the
conception, design, development, production, marketing, or servicing of any
product or service that is substantially similar to the products or services
which the Company provides, and that he will not work for, in any capacity,
assist, or become affiliated with as an owner, partner, etc., either directly
or indirectly, any individual or business which offers or performs services,
or offers or provides products substantially similar to the services and
products provided by Company.
(b) CONFLICTS OF INTEREST. Executive agrees that during the
Basic Term, he will not engage, either directly or indirectly, in any
activity (a "Conflict of Interest") which might adversely affect the Company
or its affiliates, including ownership of a material interest in any
supplier, contractor, distributor, subcontractor, customer or other entity
with which the Company does business or accepting any material payment,
service, loan, gift, trip, entertainment, or other favor from a supplier,
contractor, distributor, subcontractor, customer or other entity with which
the Company does business, and that Executive will promptly inform the
Chairman of the Company as to each offer received by Executive to engage in
any such activity. Executive further agrees to disclose to the Company any
other facts of which Executive becomes aware which might in Executive's good
faith judgment reasonably be expected to involve or give rise to a Conflict
of Interest or potential Conflict of Interest.
(c) NON-COMPETITION AFTER TERMINATION. Executive agrees that
Executive shall not, at any time during the period of two (2) years after the
termination of the Basic Term, for any reason, within any of the markets in
which the Company has sold products or services or formulated a plan to sell
products or services into a market during the last twelve (12) months of
Executive's employ or which the Company enters into within three (3) months
thereafter, engage in or contribute Executive's knowledge to any work which
is competitive with or similar to a product, process, apparatus, service, or
development on which Executive worked or with respect to which Executive had
access to Confidential Information while employed by the Company; provided,
however, this Paragraph (c) shall not operate to prevent Executive from
engaging in retail insurance or re-insurance activities during such two-year
period to the extent such activities do not compete or permit any other
person or entity to compete with any business the Company or any of its
subsidiaries or affiliated companies were engaged in at the time of such
termination or which the Company enters into within three (3) months
thereafter. Following the expiration of said two (2) year period, Executive
shall continue to be obligated under the Confidential Information Paragraph
of this Agreement not to use or to disclose Confidential Information of
EMPLOYMENT AGREEMENT - Page 10
the Company so long as it shall not be publicly available. It is understood
that the geographical area set forth in this covenant is divisible so that if
this clause is invalid or unenforceable in an included geographic area, that
area is severable and the clause remains in effect for the remaining included
geographic areas in which the clause is valid.
(d) NON-SOLICITATION OF CUSTOMERS. Executive further agrees
that for a period of two (2) years after the termination of the Basic Term,
he will not solicit or accept any business from any customer or client or
prospective customer or client with whom Executive dealt or solicited while
employed by Company during the last twelve (12) months of his employment.
(e) NON-SOLICITATION OF EMPLOYEES. Executive agrees that for
the duration of the Basic Term, and for a period of two (2) years after the
termination of the Basic Term, he will not either directly or indirectly, on
his own behalf or on behalf of others, solicit, attempt to hire, or hire any
person employed by Company to work for Executive or for another entity, firm,
corporation, or individual.
(f) CONFIDENTIAL INFORMATION. Executive further agrees that he
will not, except as the Company may otherwise consent or direct in writing,
reveal or disclose, sell, use, lecture upon, publish or otherwise disclose to
any third party any Confidential Information or proprietary information of
the Company, or authorize anyone else to do these things at any time either
during or subsequent to his employment with the Company. This Section shall
continue in full force and effect after termination of Executive's employment
and after the termination of this Agreement. Executive's obligations under
this Paragraph with respect to any specific Confidential Information and
proprietary information shall cease when that specific portion of the
Confidential Information and proprietary information becomes publicly known,
in its entirety and without combining portions of such information obtained
separately. It is understood that such Confidential Information and
proprietary information of the Company include matters that Executive
conceives or develops, as well as matters Executive learns from other
employees of Company. Confidential Information is defined to include
information: (1) disclosed to or known by the Executive as a consequence of
or through his employment with the Company; (2) not generally known outside
the Company; and (3) which relates to any aspect of the Company or its
business, finances, operation plans, budgets, research, or strategic
development. "Confidential Information" includes, but is not limited to the
Company's trade secrets, proprietary information, financial documents, long
range plans, customer lists, employer compensation, marketing strategy, data
bases, costing data, computer software developed by the Company, investments
made by the Company, and any information provided to the Company by a third
party under restrictions against disclosure or use by the Company or others.
(g) RETURN OF DOCUMENTS, EQUIPMENT, ETC. All writings, records,
and other documents and things comprising, containing, describing,
discussing, explaining, or evidencing any Confidential Information, and all
equipment, components, parts, tools, and the like in Executive's custody or
possession that have been obtained or prepared in the course of Executive's
employment with the Company shall be the exclusive property of the Company,
shall
EMPLOYMENT AGREEMENT - Page 11
not be copied and/or removed from the premises of the Company, except in
pursuit of the business of the Company, and shall be delivered to the
Company, without Executive retaining any copies, upon notification of the
termination of Executive's employment or at any other time requested by the
Company. The Company shall have the right to retain, access, and inspect all
property of Executive of any kind in the office, work area, and on the
premises of the Company upon termination of Executive's employment and at any
time during employment by the Company to ensure compliance with the terms of
this Agreement.
(h) REAFFIRM OBLIGATIONS. Upon termination of his employment
with the Company, Executive, if requested by Company, shall reaffirm in
writing Executive's recognition of the importance of maintaining the
confidentiality of the Company's Confidential Information and proprietary
information, and reaffirm any other obligations set forth in this Agreement.
(i) PRIOR DISCLOSURE. Executive represents and warrants that he
has not used or disclosed any Confidential Information he may have obtained
from Company prior to signing this Agreement, in any way inconsistent with
the provisions of this Agreement.
(j) CONFIDENTIAL INFORMATION OF PRIOR COMPANIES. Executive will
not disclose or use during the period of his employment with the Company any
proprietary or Confidential Information or Copyright Works which Executive
may have acquired because of employment with an employer other than the
Company or acquired from any other third party, whether such information is
in Executive's memory or embodied in a writing or other physical form.
(k) BREACH. Executive agrees that any breach of Paragraphs
5(a), (c), (d), (e) or (f) above cannot be remedied solely by money damages,
and that in addition to any other remedies Company may have, Company is
entitled to obtain injunctive relief against Executive. Nothing herein,
however, shall be construed as limiting Company's right to pursue any other
available remedy at law or in equity, including recovery of damages and
termination of this Agreement and/or any payments that may be due pursuant to
this Agreement.
(l) RIGHT TO ENTER AGREEMENT. Executive represents and
covenants to Company that he has full power and authority to enter into this
Agreement and that the execution of this Agreement will not breach or
constitute a default of any other agreement or contract to which he is a
party or by which he is bound.
(m) EXTENSION OF POST EMPLOYMENT RESTRICTIONS. In the event
Executive breaches Paragraphs 5(b), (d), or (e) above, the restrictive time
periods contained in those provisions will be extended by the period of time
Executive was in violation of such provisions.
(n) ENFORCEABILITY. The agreements contained in Section 5 are
independent of the other agreements contained herein. Accordingly, failure
of the Company to comply with any of its obligations outside of this
Paragraph do not excuse Executive from complying with the agreements
contained herein.
EMPLOYMENT AGREEMENT - Page 12
(o) SURVIVABILITY. The agreements contained in Paragraph
5(c)-(g) shall survive the termination of this Agreement for any reason.
7. ASSIGNMENT. The Company may assign this Agreement only to a
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and assets of the
Company provided such successor expressly agrees in writing reasonably
satisfactory to Executive to assume and perform this Agreement in the same
manner and to the same extent that the Company would be required to perform
it if no such succession and assignment had taken place. Failure of the
Company to obtain such written agreement prior to the effectiveness of any
such succession shall be a material breach of this Agreement.
8. BINDING AGREEMENT. Executive understands that his obligations
under this Agreement are binding upon Executive's heirs, successors, personal
representatives, and legal representatives.
9. NOTICES. All notices pursuant to this Agreement shall be in
writing and sent certified mail, return receipt requested, addressed as set
forth below, or by delivering the same in person to such party, or by
transmission by facsimile to the number set forth below (which shall not
constitute notice). Notice deposited in the United States Mail, mailed in
the manner described hereinabove, shall be effective upon deposit. Notice
given in any other manner shall be effective only if and when received:
If to Executive: Xxxxx X. Xxxxx, Xx.
0000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
If to Company: HCC Insurance Holdings, Inc.
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
with a copy (which shall Xxxxxx X. Xxxxxx, Esq.
not constitute notice) to: Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
Suite 2400
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Fax: (000) 000-0000
10. WAIVER. No waiver by either party to this Agreement of any right
to enforce any term or condition of this Agreement, or of any breach hereof,
shall be deemed a waiver of such right in the future or of any other right or
remedy available under this Agreement.
EMPLOYMENT AGREEMENT - Page 13
11. SEVERABILITY. If any provision of this Agreement is determined to
be void, invalid, unenforceable, or against public policy, such provisions
shall be deemed severable from the Agreement, and the remaining provisions of
the Agreement will remain unaffected and in full force and effect.
12. ARBITRATION. In the event any dispute arises out of Executive's
employment with the Company, or separation therefrom, which cannot be
resolved by the Parties to this Agreement, such dispute shall be submitted to
final and binding arbitration. The arbitration shall be conducted in
accordance with the National Rules for the Resolution of Employment Disputes
of the American Arbitration Association ("AAA"). If the Parties cannot agree
on an arbitrator, a list of seven (7) arbitrators will be requested from AAA,
and the arbitrator will be selected using alternate strikes with Executive
striking first. The cost of the arbitration will be shared equally by
Executive and Company; provided, however, the Company shall promptly
reimburse Executive for all costs and expenses incurred in connection with
any dispute in an amount up to, but not exceeding 20 percent of Executive's
Base Salary unless such termination was for Cause in which event Executive
shall not be entitled to reimbursement unless and until it is determined he
was terminated other than for Cause. Arbitration of such disputes is
mandatory and in lieu of any and all civil causes of action and lawsuits
either party may have against the other arising out of Executive's employment
with Company, or separation therefrom. Such arbitration shall be held in
Houston, Texas.
13. ENTIRE AGREEMENT. The terms and provisions contained herein shall
constitute the entire agreement between the parties with respect to
Executive's employment with Company during the time period covered by this
Agreement. This Agreement replaces and supersedes any and all existing
Agreements entered into between Executive and the Company relating generally
to the same subject matter, if any, and shall be binding upon Executive's
heirs, executors, administrators, or other legal representatives or assigns.
14. MODIFICATION OF AGREEMENT. This Agreement may not be changed or
modified or released or discharged or abandoned or otherwise terminated, in
whole or in part, except by an instrument in writing signed by the Executive
and an officer or other authorized executive of Company.
15. UNDERSTAND AGREEMENT. Executive represents and warrants that he
has read and understood each and every provision of this Agreement, and
Executive understands that he has the right to obtain advice from legal
counsel of choice, if necessary and desired, in order to interpret any and
all provisions of this Agreement, and that Executive has freely and
voluntarily entered into this Agreement.
16. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.
17. JURISDICTION AND VENUE. With respect to any litigation regarding
this Agreement, Executive agrees to venue in the state or federal courts in
Xxxxxx County, Texas, and
EMPLOYMENT AGREEMENT - Page 14
agrees to waive and does hereby waive any defenses and/or arguments based
upon improper venue and/or lack of personal jurisdiction. By entering into
this Agreement, Executive agrees to personal jurisdiction in the state and
federal courts in Xxxxxx County, Texas.
IN WITNESS WHEREOF, the Parties have executed this Agreement in multiple
copies, effective as of the date first written above.
EXECUTIVE COMPANY
HCC INSURANCE HOLDINGS, INC.
/s/ Xxxxx X. Xxxxx, Xx. By: /s/ Xxxxxxx X. Way
-------------------------------- ----------------------------------
XXXXX X. XXXXX, XX. XXXXXXX X. WAY
Chief Executive Officer and
Chairman of the Board
Dated: 1/23/98 Dated: 1/23/98
-------------------------- -------------------------------
EMPLOYMENT AGREEMENT - Page 15
