EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into effective as of
the 20 of October, 1997 ("Effective Date"), on this 21 day of October, 1997
between ZENITH INSURANCE COMPANY, a California corporation (the "Company")
and wholly owned subsidiary of Zenith National Insurance Corp., a Delaware
corporation ("Zenith"), and XXXX X. XXXXXX (hereinafter referred to as
"Executive").
WHEREAS, Executive has substantial experience as an executive in the field
of workers compensation insurance; and
WHEREAS, Company and Executive deem it in their respective best interests
to enter into an employment relationship and to enter into this Agreement
setting forth the terms and conditions of their relationship;
NOW, THEREFORE, it is AGREED as follows:
1. EMPLOYMENT.
(a) Subject to earlier termination as provided herein, the
Executive is employed as Executive Vice President and President Designate of the
Company's RISCORP Operations from the Effective Date through the Term of this
Agreement (as defined below). In this capacity, Executive shall devote his full
business time and energy to the business, affairs and interests of the Company
and matters related thereto.
During the Term of the Agreement the Executive shall have no other employment
other than with Zenith or a subsidiary or an affiliate of the Company, except
with the prior written approval of the Board of Directors of the Company (the
"Board"). The Executive shall have such duties and responsibilities and such
executive power and authority as is customary for an officer in his position and
as shall be allocated to him in such capacity and such other duties and
responsibilities as the Board or the President of the Company shall assign from
time to time provided such assignments shall not be inconsistent with the
Executive's position with the Company. The Company hereby acknowledges and
agrees that the Executive shall have the right to serve in any capacity with
civic, educational, charitable and professional organizations and to make and
manage personal business investments that do not violate the noncompetition
provisions of Section 11 of this Agreement so long as such activities do not
interfere with the discharge of his duties to the Company hereunder.
(b) During his employment hereunder, the Executive shall
report to the Company's Chief Executive Officer.
(c) The Executive, once relocated to Florida, shall not be
required to relocate outside of the general vicinity of his office in Florida in
order to perform the services hereunder, without the Executive's consent, except
for travel reasonably required in the performance of his duties hereunder, and
except for a possible relocation to Southern California. The Company shall pay
reasonable expenses in connection with Executive's relocation to Florida from
Northern California.
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2. TERM. This Agreement shall be in effect for a term commencing on
the Effective Date and expiring on October 31, 2002 ("Expiration Date"), and
such period shall be referred to herein as the "Term" of this Agreement, and
such Term shall not be affected by a termination of employment as elsewhere
provided herein.
3. SALARY. Executive shall be paid the sum of Four Hundred Thousand
Dollars per year, subject to such other increases as the Board of Directors of
Company may from time to time determine ("Base Salary").
4. DISCRETIONARY BONUSES. During the Term of this Agreement, the
Executive shall be entitled to such discretionary bonuses as may be authorized,
declared, and paid by the Board in its sole discretion.
5. DEFERRED COMPENSATION. In advance of the annual period for which
earned, the Executive shall have the right to defer all or any portion of his
salary and bonus to a specified date or event. Any such deferred compensation
shall not be forfeitable and shall bear interest at a rate to be determined by
the Board. Any election to defer compensation shall be disregarded, and any
compensation so deferred shall be added back, in the calculation of those of
Executive's rights and benefits under this Agreement that are based upon
Executive's salary or bonus or the sum thereof.
6. PARTICIPATION IN RETIREMENT AND EXECUTIVE BENEFIT PLANS. During his
employment hereunder, the Executive shall be entitled to participate in any plan
of the
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Company relating to stock options, stock purchases, pension, thrift, profit
sharing, life insurance, medical coverage, disability insurance, education, and
other retirement or employee benefits that the Company has adopted or may adopt
for the benefit of its executive employees, and the Company shall provide the
Executive with such insurance or other provisions for indemnification, defense
or hold-harmless of officers that are generally in effect for other senior
executive officers of the Company. Notwithstanding the foregoing, nothing
contained in this Agreement shall prohibit or limit the right of the Company to
discontinue, modify or amend any plan or benefit in its absolute discretion at
any time; provided, however, that any such discontinuance, modification or
amendment shall apply to employees of the Company generally, or to a defined
group of such employees and shall not apply solely to the Executive.
7. FRINGE BENEFITS; AUTOMOBILE. In addition to the benefit plans
referred to in Section 6 hereof, the Executive shall be entitled to participate
in any other fringe benefits that are now or may be or become applicable to the
Company's executive employees, including the payment of reasonable expenses for
attending annual and periodic meetings of trade or bar associations, and any
other benefits that are commensurate with the duties and responsibilities to be
performed by the Executive under this Agreement and reimbursement for reasonable
expenses incurred in the course of his duties hereunder in accordance with the
Company's policy with respect thereto. In addition, the Company shall provide
the Executive with a monthly car allowance in the amount of $1,300. The
benefits provided under this Section 7 shall cease upon the Executive's Date of
Termination (as defined below).
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8. VACATION; MEMBERSHIPS. During his employment hereunder, the
Executive shall be entitled to an annual paid vacation in accordance with the
Company's standard employment practices; provided, however, Executive shall be
treated for purposes of vacation as an employee with more than 120 months of
service. Upon termination of the Executive's employment for any reason, the
Executive shall be entitled to payment for any accrued but unused vacation time
based upon his then current salary. The timing of paid vacations shall be
scheduled in a reasonable manner by the Executive.
During his employment hereunder, the Executive shall be entitled to
appropriate professional association and business club memberships, including
reimbursement of payment of dues and assessments pertaining thereto.
9. TERMINATION.
(a) DISABILITY. If, as a result of the Executive's
incapacity due to physical or mental illness, injury or similar incapacity, he
shall have been absent from the full-time performance of his duties with the
Company for six months within any eighteen-month period, and have exhausted his
Family Medical Leave and its California equivalent, his employment may be
terminated by written notice (as provided below) from the Company for
"Disability".
(b) CAUSE. Subject to the notice provisions set forth
below, the Company may terminate the Executive's employment for "Cause" at any
time. Termination for "Cause" shall mean termination upon (1) the Executive's
continued
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willful failure to substantially perform his duties with the Company or his
other willful breach of this Agreement (other than any such failure or breach
resulting from his incapacity due to physical or mental illness, injury or
similar incapacity) after a written demand for substantial performance is
delivered to him by the President or the Board, which demand specifically
identifies the manner in which the President or the Board believes that he has
failed to substantially perform his duties, or has otherwise breached this
Agreement, (2) the Executive's conviction of a felony, (3) the Executive's
willful misconduct that is materially and demonstrably injurious to the Company
(4) the Executive's violation of Section 11 hereof; provided, however, that the
Executive shall not be terminated for "Cause" unless and until the President or
the Board has given the Executive reasonable notice of its intended actions and
the alleged events or activities giving rise thereto and with respect to those
events or activities for which a cure is possible, a reasonable opportunity to
cure such breach, and there shall have been delivered to him a written notice
from the President or a copy of a resolution duly adopted by the Board regarding
such actions.
(c) CONSTRUCTIVE TERMINATION. If at any time during the
Term of this Agreement, any of the following events shall occur, the Executive
shall be entitled to terminate his employment hereunder and be treated as if his
employment had been terminated by the Company other than for Cause:
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(i) The Executive is removed or otherwise
prohibited or restricted in the performance of his duties as set
forth in Section 1 hereof, other than through fault of the
Executive;
(ii) Any payment due under this Agreement shall
remain unpaid for more than 60 days, after notice of non-payment and
request for payment have been given to Company by Executive pursuant
to Section 13;
(iii) A Change in Control of the Company (as
defined below) shall occur during the Term of this Agreement and,
within 180 days after the effective date of any such Change in
Control, the Executive delivers to the Company a written notice of
his election to terminate the Agreement effective as of the date set
forth in such notice, which effective date shall not be less than 30
days nor more than 90 days after the date of delivery of such
written notice.
For purposes of this paragraph, a Change in Control shall mean either (i)
a merger or consolidation of the Company with or into another company in which
the Company does not survive; or (ii) an assignment of this Agreement by the
Company under the provisions of Section 12(b) hereof; or (iii) the sale of all
or substantially all of the Company's assets; or (iv) a change in the identities
of a majority of the members of the Board within a one-year period or less; or
(v) any other transaction that would
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require a party or affiliated group of parties to obtain approval from or
require such transactions to be presented for approval by, the California
Insurance Commissioner (assuming there is no preemption of California insurance
laws by federal law).
(d) NOTICE OF TERMINATION. Any purported termination of the
Executive's employment by the Company or by him shall be communicated by a
written notice ("Notice of Termination") that shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
(e) DATE OF TERMINATION, ETC. "Date of Termination" shall
mean (1) if the Executive's employment is terminated by his death, the date of
his death; (2) if the Executive's employment is terminated for Disability,
thirty days after Notice of Termination is given; (3) if the Executive's
employment is terminated for Cause, the date specified in the Notice of
Termination; and (4) if the Executive's employment is terminated for any other
reason, the date specified in the Notice of Termination.
10. COMPENSATION UPON TERMINATION OR DURING DISABILITY. The Executive
shall be entitled to the following benefits during a period of disability, or
upon termination of his employment, as the case may be, if such period or
termination occurs prior to Executive's termination:
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(a) During any period that the Executive fails to perform
his full-time duties with the Company as a result of incapacity due to physical
or mental illness, injury or similar incapacity, he shall continue to receive
his compensation and other benefits payable to him under this Agreement at the
rate in effect at the commencement of any such period, less any amounts payable
to him under the Company's disability plan or program or other similar plan
during such period, or under any governmental program, until his employment is
terminated pursuant to Section 9(a) hereof. If, during any period of
disability, the Executive's employment shall be terminated by reason of his
death, disability or the expiration of this Agreement, not withstanding the
provisions of Section 20, his pay shall cease and his benefits, if any, shall,
be determined solely under the Company's retirement, insurance and other
compensation programs then in effect in accordance with the terms of such
programs, and the Company shall have no further obligations to him under this
Agreement.
(b) If at any time the Executive's employment shall be
terminated (i) by reason of his death, (ii) by the Company for Cause or
Disability or (iii) by him (other than by reason of a constructive termination
pursuant to Section 9(c) hereof), the Company shall pay him (or his appropriate
payee, as determined in accordance with Section 12 (c) hereof) his full base
salary through the Date of Termination at the rate in effect at the time Notice
of Termination is given, plus all other amounts, if any, to which he is entitled
from the Company through the Date of Termination under any compensation plan in
each case at the time such payments are due, and the Company shall have no
further obligations to him under this Agreement. In addition, in the event
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the Executive's employment is terminated by reason of the Executive's death or
Disability, the Executive (or his appropriate payee) shall be entitled to
receive a pro rata portion of any bonus that would otherwise have been payable
to the Executive with respect to the year in which the Executive's employment is
terminated. For purposes of this provision, if the Executive's bonus for such
year has not been determined, the Executive shall be deemed to have been
entitled to a bonus equal to the bonus paid or payable to the Executive with
respect to the immediately preceding year.
(c) If the Executive's employment should be terminated by the
Company other than for Cause or Disability or by the Executive by reason of a
constructive termination pursuant to Section 9(c) hereof, he shall be entitled,
in exchange for a release of the Company, Zenith and any subsidiaries and
affiliates of the Company and their respective officers, directors, shareholders
employees and agents, to the benefits provided below ("Severance Payments"):
(i) The Company shall pay to the Executive his
full base salary through the Date of Termination, at the rate in
effect at the time Notice of Termination is given, plus all other
amounts to which he is entitled under any compensation plan of the
Company, in each case at the time such payments are due;
(ii) The Company shall pay the Executive, at the
time such payments would have been made had the Executive's
employment not
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been terminated hereunder, all salary payments that would have been
payable to the Executive pursuant to this Agreement had the Executive
continued to be employed for the greater of (x) the remaining Term of this
Agreement or (y) two years (the "Severance Period") (assuming for the
purpose of such continuing payments that the Executive's salary for each
year of such period is equal to his salary at the Date of Termination),
plus any bonus that would otherwise have been payable to the Executive
with respect to the Severance Period; provided, however, that to the
extent the Executive's bonus for any portion of such Severance Period had
not been determined, the Executive shall be deemed to have been entitled
to a bonus equal to the bonus paid or payable to the Executive with
respect to the immediately preceding year;
(iii) All stock option rights, stock appreciation
rights, and any and all other similar rights theretofore granted to
the Executive, including, but not limited to, the Executive's right
to receive cash in lieu of exercising stock options, as may be
provided in his stock option agreements, shall vest and shall then
be exercisable in full, and the Executive shall have 90 days
following his termination within which to exercise any and all such
rights and the restrictions on any and all shares of restricted
stock granted to the Executive that are outstanding on the Date of
Termination shall lapse as of the Date of Termination;
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(iv) During the Severance Period the Company
shall, at its cost, arrange to provide the Executive with life,
disability, dental, accident and group health insurance benefits
substantially similar to those that he was receiving immediately
prior to the Notice of Termination plus an additional amount
necessary to reimburse the Executive for any taxes imposed solely by
reason of his receipt of such benefits following his termination of
employment. Notwithstanding the foregoing, the Company shall not
provide any benefit otherwise receivable by the Executive pursuant
to this subparagraph if an equivalent benefit is actually received
by him from another employer or source at any time during the
Severance Period. Executive agrees to report any such benefit
actually received by him.
(d) The Company shall continue in effect for the benefit of
the Executive all insurance or other provisions for indemnification, defense or
hold-harmless of officers or directors of the Company that are in effect on the
date the Notice of Termination is sent to the Executive or the Company with
respect to all of his acts and omissions while an officer or director (if
applicable) as fully and completely as if such termination had not occurred, and
until the final expiration or running of all periods of limitation against
actions that may be applicable to such acts or omissions.
(e) Notwithstanding anything to the contrary in this
Agreement, in the event that Executive becomes entitled to the Severance
Payments, if any of the
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Severance Payments will be subject to the tax (the "Excise Tax") imposed by
section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"),
Company shall pay to Executive an additional amount (the "Gross-Up Payment")
such that the net amount retained by Executive, after deduction of any Excise
Tax on the Total Payments (as hereinafter defined) and any federal, state and
local income and other tax and Excise Tax upon the payment provided for by this
Paragraph 10(f), shall be equal to the Total Payments. For purposes of
determining whether any of the Total Payments will be subject to the Excise Tax
and the amount of such Excise Tax, (i) any other payments or benefits received
or to be received by Executive in connection with a Change in Control or
Executive's termination of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with Company, any person
whose actions result in a change in control or any person affiliated with
Company or such person (which, together with Severance Payments, shall
constitute "Total Payments"), shall be treated as "parachute payments" within
the meaning of section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of section 280G(b)(1) shall be treated as subject
to the Excise Tax, unless in the opinion of tax counsel selected by Company's
independent auditors and acceptable to Executive, such other payments or
benefits (in whole or in part) do not constitute parachute payments, or such
excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of section
280G(b)(4) of the Code in excess of the base amount, within the meaning of
section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax,
(ii) the amount of the Total Payments which shall be treated as subject to the
Excise Tax shall be equal to the lesser
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of (A) the total amount of the Total Payments or (B) the amount of excess
parachute payments within the meaning of section 280G(b)(1) (after applying
clause (i), above), and (iii) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by Company's independent auditors in
accordance with the principles of sections 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment, Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be made
and state and local income taxes at the highest marginal rate of taxation in the
state and locality of Executive's residence on the date of termination of
employment, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes. In the event that the
Excise Tax is subsequently determined to be less than the amount taken into
account hereunder at the time of termination of Executive's employment,
Executive shall repay to Company, at the time that the amount of such reduction
in Excise Tax is finally determined, the portion of the Gross-Up Payment
attributable to such reduction (plus that portion of the Gross-Up Payment
attributable to the Excise Tax and federal, state and local income tax imposed
on the Gross-Up Payment being repaid by the Executive to the extent that such
repayment results in a reduction in Excise Tax and/or a federal, state or local
income tax deduction) plus interest on the amount of such repayment at the rate
provided in section 1274(b)(2)(B) of the Code. In the event that the Excise Tax
is determined to exceed the amount taken into account hereunder at the time of
the termination of Executive's employment (including by reason of any payment
the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), Company shall make an
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additional Gross-Up Payment in respect of such excess (plus any interest,
penalties or additions payable by the Executive with respect to such excess) at
the time that the amount of such excess is finally determined.
11. CONFIDENTIAL INFORMATION AND NON-COMPETITION.
(a) During the Term of this Agreement and thereafter, the
Executive shall not, except as may be required to perform his duties hereunder
or as required by applicable law, disclose to others or use, whether directly or
indirectly, any Confidential Information regarding the Company. "Confidential
Information" shall mean information about the Company, its subsidiaries and
affiliates, and their respective clients and customers that is not available to
the general public and that was learned by the Executive in the course of his
employment by the Company, including (without limitation) any data, formulae,
information, proprietary knowledge, trade secrets and client and customer lists
and all papers, resumes, records and the documents containing such Confidential
Information. The Executive acknowledges that such Confidential Information is
specialized, unique in nature and of great value to the Company, and that such
information gives the Company a competitive advantage. Upon the termination of
his employment for any reason whatsoever, the Executive shall promptly deliver
to the Company all documents (and all copies hereof) containing any Confidential
Information.
(b) During the term of this Agreement and any period the
Executive is entitled to benefits hereunder, the Executive shall not, directly
or indirectly, without prior written consent of the Company, provide
consultative service (with or without pay)
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to, own, manage, operate, join, control, participate in, or be connected (as a
stockholder, partner, or otherwise) with, any business, individual, partner,
firm, corporation, or other entity that is then in competition with the Company
or any of its subsidiaries or affiliates (a "Competitor of the Company");
provided, however, that the "beneficial ownership" by the Executive, either
individually or as a member of a "group," as such terms are used in Rule 13d of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), of not more than one percent (1%) of the voting
stock of any publicly held corporation shall not be a violation of this
Agreement. It is further expressly agreed that the Company will or would suffer
irreparable injury if the Executive were to compete with the Company or any
subsidiary or affiliate of the Company in violation of this Agreement.
(c) During the Term of this Agreement or for the period
ending on the last day of the one year period following termination of his
employment, the Executive shall not, directly or indirectly, influence or
attempt to influence customers or suppliers of the Company or any of its
subsidiaries or affiliates, to divert their business to any Competitor of the
Company.
(d) Executive recognizes that he will possess confidential
information about other employees of Company relating to their education,
experience, skills, abilities, compensation and benefits, and interpersonal
relationships with customers of Company. The Executive recognizes that the
information he will possess about these other employees is not generally known,
is of substantial value to Company in
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developing its products and in securing and retaining customers, and will be
acquired by him because of his business position with Company. Executive agrees
that, during the Term of this Agreement and for the period ending on the last
day of the one-year period following termination of his employment, Executive
will not, directly or indirectly, solicit or recruit any employee of Company for
the purpose of being employed by his, or any business, individual, partner,
firm, corporation or other entity that is then in competition with Company
("Competitor"). The Executive further agrees that he will not convey any such
confidential information or trade secrets about other employees of Company to
anyone affiliated with him or to any Competitor.
(e) Executive further acknowledges that the remedy at law
for any breach by him of the covenants contained in this Paragraph 11 will be
inadequate and that in the event of a breach, or threatened breach, by Executive
of the covenants contained therein, Company shall be entitled to an injunction
restraining Executive from using, for his own benefit, and/or from disclosing,
in whole or in part, the list of Company's customers, and/or Company's trade
secrets or other confidential information, and/or from rendering any services to
any person, firm, corporation, association or other entity to whom such a list,
and/or such trade secrets or other confidential information, in whole or in
part, have been disclosed, or are threatened to be disclosed and such other
declaratory relief as is proper to cause Executive to return to Company any and
all memoranda, specifications, documents and all other material relating to
Company's business that he may have under his possession or control. Nothing
herein shall be construed as prohibiting Executive from pursuing professional
employment or
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investments utilizing his own skills and knowledge or Company from pursuing any
other remedies available to Company from such breach or threatened breach,
including the recovery of damages from Executive. The provisions of this
Paragraph 11 shall survive the expiration or termination, for any reason, of
this Agreement and of Executive's employment.
12. ASSIGNMENTS/MITIGATION.
(a) This Agreement and the rights, interest and benefits
hereunder are personal to the Executive and shall not be assigned, transferred,
pledged, or hypothecated in any way by the Executive, and shall not be subject
to execution, attachment or similar process. Any attempted assignment,
transfer, pledge, or hypothecation, or the levy of any execution, attachment or
similar process thereon, shall be null and void and without effect.
(b) The Company shall have the right to assign this
Agreement and to delegate all of its rights, duties and obligations hereunder,
whether in whole or in part, to any parent, affiliate, successor, or subsidiary
organization of the Company or corporation with which the Company may merge or
consolidate or which acquires by purchase or otherwise all or substantially all
of the Company's consolidated assets, but such assignment shall not release the
Company from its obligations under this Agreement, and in the event of any such
assignment by the Company, the Executive may, at his sole option, exercise his
termination rights under the provisions of Section 9(c)(iv) of this Agreement.
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(c) This Agreement shall inure to the benefit of and be
enforceable by the Executive and his personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would still be payable
to him hereunder had he continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
his devisee, legatee or other designee or, if there is no such designee, to his
estate.
(d) The Executive shall have no duty to mitigate the
Company's obligations hereunder by seeking other employment or by becoming
self-employed; provided, however, that compensation including life, disability,
dental, accident, group health insurance and other health and welfare benefits
as well as salary, wage or other compensation received by the Executive during
or with respect to the Severance Period and attributable to services rendered
during such period by the Executive to persons or entities other than the
Company shall be applied to reduce the Company's obligation to provide
compensation and benefits under this Agreement. The Executive shall promptly
notify the Company of his securing other employment or his become self-employed
and shall account to the Company as to the amount of such compensation and
benefits; if the Company has paid amounts in excess of those to which the
Executive was entitled (after giving effect to the offsets provided above), the
Executive shall reimburse the Company promptly thereafter for such excess.
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13. NOTICE. Notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered or five business days after being mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed (a) if to
the Executive, to _______________________________ and (b) if to the Company, to
00000 Xxxxxx Xxxxxx, Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxx X.
Xxx, with a copy to the Secretary of the Company; or to such other address as
either party may have furnished to the other in writing in accordance herewith,
except that notice of change of address shall be effective only upon receipt
thereof.
14. SECTION HEADINGS. The Section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.
15. SEVERABILITY. Any provision of this Agreement which is deemed
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this paragraph be ineffective to the extent of such
invalidity, illegality or unenforceability, without affecting in any way the
remaining provisions hereof in such jurisdiction or rendering that or any other
provisions of this Agreement invalid, illegal, or unenforceable in any other
jurisdiction. Moreover, if any provision should be deemed invalid, illegal or
unenforceable because its scope is considered excessive, such provision shall be
modified so that the scope of the provision is reduced only to the minimum
extent necessary to render the modified provision valid, legal and enforceable.
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16. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. ARBITRATION. In the event there is any dispute between
Executive and Company which the parties are unable to resolve themselves,
including any dispute with regard to the application, interpretation or validity
of this Agreement or any dispute with regard to any aspect of Executive's
employment or the termination of Executive's employment, both Executive and
Company agree by entering into this Agreement that the exclusive remedy for
determining any such dispute, regardless of its nature, will be by arbitration
in accordance with the then most applicable rules of the American Arbitration
Association; provided, however, the breach of the obligation to provide services
under this Agreement or of the obligations of Paragraph 11 may be enforced by an
action for injunctive relief and damages in a court of competent jurisdiction.
In the event the parties are unable to agree upon an arbitrator, the
parties shall select a single arbitrator from a list designated by the Los
Angeles office of the American Arbitration Association of seven arbitrators all
of whom shall be retired judges who have had experience in the employment law,
who are actively involved in hearing private cases and who are resident in the
greater Los Angeles area. If the parties are unable to select an arbitrator
from the list provided by the American Arbitration Association, then the parties
shall each strike names alternatively from the list, with the first to strike
being determined by lot. After each party has used three strikes, the
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remaining name on the list shall be the arbitrator. Any arbitration shall be
administered by the American Arbitration Association only if both parties so
agree.
This agreement to resolve any disputes by binding arbitration shall extend
to claims against any shareholder or partner of the Company, any brother-sister
company, parent, subsidiary or affiliate of the Company, any officer, director,
employee, or agent of the Company, or of any of the above, and shall apply as
well to claims arising out of state and federal statutes and local ordinances as
well as to claims arising under the common law. The arbitrator shall apply the
same substantive law as would be applied by a court having jurisdiction over the
parties and their dispute and the remedial authority of the arbitrator shall be
the same as, but no greater than, would be the remedial power of a court having
jurisdiction over the parties and their dispute. The arbitrator shall, upon an
appropriate motion, dismiss any claim brought in arbitration if the arbitrator
determines that the claim does not state a claim or a cause of action which
could have been properly pursued through court litigation. In the event of a
conflict between the then most-applicable rules of the American Arbitration
Association and these procedures, the provisions of these procedures shall
govern.
Each party may be represented by counsel or other representative of the
party's choice and each party shall initially be responsible for the costs and
fees of its counsel or other representative. Any filing or administrative fees
shall be borne by the party incurring such fees. The fees and costs of the
arbitrator shall be borne equally between the parties. The prevailing party in
such arbitration proceeding, as determined by the
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arbitrator, and in any enforcement or other court proceedings, shall be entitled
to the extent permitted by law, to reimbursement from the other party for all of
the prevailing party's costs (including but not limited to the arbitrator's
compensation), expenses and attorneys' fees.
The arbitrator shall render an award and opinion in the form typical of
that rendered in labor arbitrations and the award of the arbitrator shall be
final and binding upon the parties. If any of the provisions of this paragraph
are determined to be unlawful or otherwise unenforceable, in whole or in part,
such determination shall not affect the validity of the remainder of these
provisions and this paragraph shall be reformed to the extent necessary to
insure that the resolution of all conflicts between you and the Company
including those arising out of statutory claims, shall be resolved by neutral,
binding arbitration. In the event a court finds that the arbitration procedure
set forth herein is not absolutely binding, then it is the intent of the parties
that any arbitration decision should be fully admissible in evidence, given
great weight by any finder of fact and treated as determinative to the maximum
extent permitted by law.
Unless mutually agreed by the parties otherwise, any arbitration shall
take place in Los Angeles. In the event the parties are unable to agree upon a
location for the arbitration, the location within Los Angeles shall be
determined by the arbitrator.
In the event of a good faith dispute regarding the payment of salary or
benefits under this Agreement, the Company shall make the disputed payments to
the Executive
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as if such dispute did not exist during the pendency of such good faith dispute,
and, following the resolution of such dispute, the Executive shall reimburse the
Company for any overpayments.
18. COMPANY PROPERTY. The Executive agrees that at the time he leaves
the employment of the Company he will deliver to the Company, and will not keep
or deliver to anyone else, all notebooks, memoranda, documents, computer discs,
and any and all other material relating to the Company's business or
constituting the Company's property, whether or not the Executive was the author
or recipient of such material.
19. MISCELLANEOUS.
(a) No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
(b) This instrument contains the entire agreement of the
parties hereto relating to the subject matter hereof and it replaces and
supersedes all prior agreements and understandings, oral and written, between
the parties hereto. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter
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hereof have been made by either party which are not expressly set forth in this
Agreement.
(c) The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California without regard to its conflicts of law principles.
(d) All references to Sections of the Exchange Act or the
Code shall be deemed also to refer to any successor provisions to such Sections.
(e) Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law.
(f) The obligations created under the provisions of Sections
5, 8, 10, 11, 12, 17 and 18 shall survive the expiration, suspension or
termination, for any reason, of this Agreement or the Executive's employment
hereunder until such obligations created thereunder are fully satisfied. This
provision is not intended to create additional rights
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or obligations or to expand or otherwise alter rights and obligations created by
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ZENITH INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxx
----------------------------
XXXXXXX X. XXX, Chairman
EMPLOYEE:
/s/ Xxxx X. Xxxxxx
--------------------------------
XXXX X. XXXXXX
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