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EXHIBIT 10.12
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is entered into as of the 5th
day of January, 2000 (the "Effective Date"), between HOUSTON CASUALTY COMPANY
("HC" or "Company"), and XXXXXXXX X. XXXXXX ("Executive"), sometimes
collectively referred to herein as the "Parties."
RECITALS:
WHEREAS, Executive is to be employed as President of and Chief
Executive Officer of HC and Senior Vice President of HCC Insurance Holdings,
Inc. ("HCC");
WHEREAS, it is the desire of the Boards of Directors of HC (the
"Board") and HCC to (i) directly engage Executive as an officer of HC and its
subsidiaries; and (ii) directly engage, if elected, the services of Executive as
a director of HC and its subsidiaries;
WHEREAS, Executive is desirous of committing himself to serve HC and
HCC on the terms herein provided; and
WHEREAS, Executive and HC have previously entered into an Employment
Agreement effective as of December 7, 1998 (the "1998 Contract") which is to be
cancelled, terminated and of no further force or effect.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the Parties agree as follows:
1. TERMINATION OF 1998 CONTRACT AND TERM. Effective as of the Effective
Date, the 1998 Contract shall be cancelled, terminated and of no further force
or effect. The Company hereby agrees to elect Executive as its President and
Chief Executive Officer and HCC hereby agrees to employ Executive as a Senior
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 Chairman of the Board and President of HCC, have general
management and control of HC, and its subsidiaries in the ordinary course of its
business with all such powers with respect to such management and control 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,
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without the prior written consent of the Chairman of the Board. However,
Executive shall have the right 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. Executive agrees to serve on the Senior
Management Committee of HCC and as a Director of HC and its subsidiaries,
provided Executive is indemnified for serving in any and all such capacities in
a manner acceptable to the Company and Executive. If elected, Executive agrees
that he shall not be entitled to receive any additional compensation for serving
as a director other than the compensation to be paid to Executive by the Company
pursuant to this Agreement.
3. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. From the Effective Date until December 31, 2000,
Executive shall receive a base salary equal to $315,000, payable not less
frequently than in substantially equal monthly installments. The base salary
shall be increased by $15,000 on each of January 1, 2001 and 2002. 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 effective as of
December 7, 2000, at the sole discretion of the Compensation Committee of HCC,
but not less than $50,000 per year.
(c) STOCK OPTIONS. In addition to the options previously provided
to Executive to purchase 100,000 shares of HCC Common Stock at a price per share
equal to $16-15/16, the terms of which shall remain in effect, Executive shall
be provided additional stock options pursuant to the terms set forth on Exhibit
A attached hereto.
(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 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 and key management employees, 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
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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 (20) 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 HC 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 a car
allowance of $1,250 per month; (ii) be allowed to travel on business utilizing
first class domestic passage and business class international passage (and, upon
approval of the Chief Executive Officer, will be entitled to travel with
Executive's spouse); (iii) receive annual country club dues at the Lochinvar
Golf and the Bayou Clubs; and (iv) receive a total of $1,000,000 life insurance
(either term or "split dollar" in HC's discretion), which shall be in addition
to the standard benefits provided to the Executive under the Company's or HCC's
group life insurance programs 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.
4. TERMINATION.
(a) DEFINITIONS.
(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;
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(ii) Willful misfeasance or nonfeasance of 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
(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
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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 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 one hundred eighty (180) days following the date of the event
described above be a termination for Good Reason due to such event.
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(5) "TERMINATION DATE" shall mean the date Executive is
terminated for any reason pursuant to this Agreement.
(b) TERMINATION WITHOUT CAUSE OR TERMINATION 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, except as provided in Paragraph 6, 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 a Termination Event,
any stock options ("Stock Awards") which Executive has received under
this Agreement shall vest immediately; and if there is a Termination
Event all such Stock Awards shall be exercisable for one (1) year from
the date of such Termination Event 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 or any other provision of this
Agreement, through December 31, 2003 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 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
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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 no 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, except as provided in Paragraph 6, 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 bonus as
Executive would otherwise have been awarded in such year if Executive's death
had not occurred. Such amounts shall be paid to 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
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accelerated, and Executive's estate or beneficiary shall be vested in such Stock
Awards as of the date of Executive's termination. Additionally, all Stock Awards
shall be vested immediately and shall be exercisable for the greater of one year
after the date of such vesting or the remaining term of such option.
(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 bonuses. In addition, all outstanding
Stock Awards shall vest immediately upon such termination due to Disability. If
Executive's Disability occurs prior to the commencement of the Consulting
Period, defined below, in addition to the amounts provided for herein, Executive
shall receive the Consulting Fee, defined below, at such time as it would have
otherwise been earned, whether or not Executive can perform Consulting Services,
defined below. Additionally, all Stock Awards shall be vested immediately and
shall be exercisable for the greater of one year after the date of such vesting
or the remaining term of such option.
(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 except as provided in Paragraph 6 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. All unvested options shall
be void. 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. If Executive
remains as a director, after such termination, Executive shall be compensated as
an outside director.
5. 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 Awards 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
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training on how to perform his duties; and contact with the Company's customers
and 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 and any Consulting Period, 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
later of the termination of the Basic Term or the Consulting Period, 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
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(c) shall not operate to prevent Executive from engaging in retail 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 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 not be copied and/or
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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.
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(o) SURVIVABILITY. The agreements contained in Paragraphs
5(c)-(g) shall survive the termination of this Agreement for any reason.
6. CONSULTING AGREEMENT. Effective upon Executive's termination of
employment for any reason other than Executive's termination prior to the end of
the Basic Term by the Company for Cause, HC hereby retains Executive as a
consultant (an independent contractor and not as an employee) for a period of
three (3) years (the "Consulting Period"). Termination of the Basic Term shall
not effect the Parties' rights and obligations under this Paragraph 6. Subject
to the following, Executive agrees to provide, if requested, a minimum of 166
hours of service per year, or, as requested by the Company, up to a total of 500
hours during any one year of the Consulting Period; provided, however, that the
total number of hours to be worked over the duration of the Consulting Period
shall not exceed 500 hours (the "Consulting Services"). The Consulting Services
to be provided shall be commensurate with Executive's training, background,
experience and prior duties with the Company. Executive agrees to make himself
reasonably available to provide such Consulting Services during the Consulting
Period; provided, however, the Company agrees that it shall provide reasonable
advance notice to Executive of its expected consulting needs and any request for
Consulting Services hereunder shall not unreasonably interfere with Executive's
other business activities and personal affairs as determined in good faith by
Executive. In addition, Executive shall not be required to perform any requested
Consulting Services which, in Executive's good faith opinion, would cause
Executive to breach any fiduciary duty or contractual obligation Executive may
have to another employer. Further, during the Consulting Period, Executive shall
not be subject to any non-competition provisions except for the two-year period
provided for in Paragraph 5(c). Unless waived by Executive, Executive shall not
be required to perform Consulting Services for more than four (4) days during
any week or for more than eight (8) hours during any day. Executive's travel
time shall not constitute hours of Consulting Services for purposes of this
Paragraph 6. The Parties contemplate that, when appropriate, the Consulting
Services shall be performed at Executive's office, residence or at the Company's
executive offices in Houston, Texas and may be performed at such other locations
only as they may mutually agree upon. Executive shall be properly reimbursed for
all travel and other expenses reasonably incurred by Executive in rendering the
Consulting Services. HCC shall pay Executive $200,000 per year (the "Consulting
Fee") during the Consulting Period, payable monthly in arrears. Executive may
elect to delay payment for services but not the services themselves. Except as
set forth below and in Paragraphs 4(c) or 4(d) hereof, if Executive fails to
provide the hours requested by the Company in any 24-month period, Executive's
rights to receive any further Consulting Fee shall immediately terminate. During
the Consulting Period, Executive shall receive no employment benefits from HCC.
If Executive dies or becomes Disabled during the Basic Term (or as an employee
of the Company following the Basic Term) or during the Consulting Period he (or,
on his death, his beneficiary or estate) shall receive or continue to receive as
the case may be the Consulting Fee during the remainder of the Consulting Period
as if such death or Disability had not occurred.
7. ASSIGNMENT. This Agreement cannot be assigned by Executive. The
Company may assign this Agreement only to a successor (whether direct or
indirect, by purchase, merger,
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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. 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: Xxxxxxxx X. Xxxxxx
0000 Xxxxxxxx
Xxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
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: Xxxxxx and Xxxxx, LLP
0000 Xxxxxxxxx Xxxxxx,
Xxxxx 0000
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.
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.
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12. ARBITRATION. In the event any dispute arises out of Executive's
employment with or by the Company, or separation/termination therefrom, whether
as an employee or as a consultant, 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 (or, if the dispute arises during the
Consulting Period, Executive's Base Salary as in effect immediately prior to the
beginning of the Consulting Period) 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 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.
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IN WITNESS WHEREOF, the Parties have executed this Agreement in
multiple copies, effective as of the date first written above.
EXECUTIVE COMPANY
HOUSTON CASUALTY COMPANY
/s/ Xxxxxxxx X. Xxxxxx By: /s/ Xxxxxxx L Way
------------------------------ -------------------------------------
XXXXXXXX X. XXXXXX XXXXXXX X. WAY,
Chairman of the Board
Dated: March 15, 2001 Dated: March 16, 2001
[SIGNATURE PAGE OF XXXXXX EMPLOYMENT AGREEMENT]
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EXHIBIT A
STOCK OPTIONS. Executive shall be provided with options to purchase
100,000 shares of HCC Common Stock at a price per share equal to $12.0625, the
closing price of HCC's Common Stock on the New York Stock Exchange on January 5,
2000 (the date of grant). Such shares will vest at 33-1/3% per year beginning on
December 31, 2000 and 33-1/3% on each of the two December 31sts thereafter. Such
options will expire on December 31, 2004 unless Executive is no longer a
full-time employee of the Company, in which event such option shall expire on
the later of the period otherwise set forth in Executive's Employment Agreement
for exercise after termination or December 31, 2003.
