JOHN J. TICKNER
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is dated effective as of
February 16, 1995 (the "Effective Date), between ZENITH NATIONAL INSURANCE
CORP., a Delaware corporation (the "Company"), and JOHN J. TICKNER (the
"Employee");
WHEREAS, the parties desire to enter into this Agreement setting forth the
terms and conditions for the employment relationships of the Employee with the
Company.
NOW, THEREFORE, it is AGREED as follows:
1. EMPLOYMENT.
(a) Subject to earlier termination as provided herein, the Employee
is employed as a Senior Vice President and Secretary of the Company, and Senior
Vice President, General Counsel and Secretary of its insurance subsidiaries from
the Effective Date through the Term of this Agreement (as defined below). In
this capacity the Employee 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 this Agreement, the Employee shall have no other employment
other than with a subsidiary of the Company, except with the prior written
approval of the Board of Directors of the Company (the "Board"). The Employee
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 designate that are not
inconsistent with the Employee's position with the Company.
(b) During his employment hereunder, the Employee shall report to the
Company's Chief Executive Officer.
2. TERM. This Agreement shall be in effect for a term commencing on the
Effective Date and expiring on October 1, 1998, and such period shall be
referred to herein as the "Term" of this Agreement, and such Term shall not be
affected by the termination of the Employee's employment hereunder.
3. SALARY. Commencing as of the Effective Date, the Company shall pay
the employee an annual base salary at the minimum rate of $242,000, which shall
be payable in installments in conformity with the Company's policy relating to
salaried employees. The Employee's base salary may be sub-
ject to annual adjustment (but not below the then current amount) in the sole
discretion of the Board.
4. DISCRETIONARY BONUSES. During the Term of this Agreement, the
Employee shall be entitled to such discretionary bonuses as may be authorized,
declared, and paid by the Board in its sole discretion.
5. PARTICIPATION IN RETIREMENT AND EMPLOYEE BENEFIT PLANS. During his
employment hereunder, the Employee shall be entitled to participate in any plan
of the 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 Employee 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 Employee.
6. FRINGE BENEFITS; AUTOMOBILE. In addition to the benefit plans
referred to in Section 5 hereof, the Employee 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, and any other benefits that are commensurate with
the duties and responsibilities to be performed by the Employee 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 Employee with a Company-leased
vehicle. The benefits provided under this Section 6 shall cease upon the
Employee's Date of Termination (as defined below).
7. VACATION. During his employment hereunder, the Employee shall be
entitled to an annual paid vacation in accordance with the Company's standard
employment practices of at least four weeks per year or such longer period as
the Board may approve (pro-rated on a daily basis for any period that is less
than one calendar year). Up to four weeks of accrued vacation time that is not
used in a calendar year may be carried over into the following calendar year.
Upon termination of the Employee's employment for any reason, the Employee shall
be entitled to payment for any accrued but unused vacation time based upon his
then current salary.
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The timing of paid vacations shall be scheduled in a reasonable manner by the
Employee.
8. TERMINATION.
(a). DISABILITY. If, as a result of the Employee'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, 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 Employee's employment for "Cause" at any time.
Termination for "Cause" shall mean termination upon (1) the continued willful
failure by the Employee 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 the physical or mental illness,
injury or similar incapacity) after a written demand for substantial performance
is delivered to him by the Board, which demand specifically identifies the
manner in which the Board believes that he has failed to substantially perform
his duties, or has otherwise breached this Agreement, (2) the Employee's
conviction of a felony, (3) the Employee's willful misconduct that is materially
and demonstrably injurious to the Company, or (4) the violation by the Employee
of Section 10 hereof; provided, however, that the Employee shall not be
terminated for "Cause" unless and until the Board has given the Employee
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 copy of a resolution duly adopted by the Board
regarding such action.
(c) CONSTRUCTIVE TERMINATION. If at any time during the Term of this
Agreement, any of the following events shall occur, the Employee 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:
(i) Mr. Stanley R. Zax ceases to be full-time Chairman of the
Board and President of the Company other than by reason of death or disability;
(ii) The Employee is removed or otherwise prohibited or
restricted in the performance of his duties as set forth in Section 1 hereof;
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(iii) Any payment due under this Agreement shall remain unpaid
for more than 60 days;
(iv) A Change in Control of the Company (as defined below) shall
occur during the Term of his Agreement, and within 180 days after the effective
date of any such Change in Control, the Employee 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 any 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 11(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 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
Employee's employment by the Company of 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 Employee's employment under the provision so indicated.
(e) DATE OF TERMINATION, ETC. "Date of Termination" shall mean (1)
if the Employee's employment is terminated by his death, the date of his death;
(2) if the Employee's employment is terminated for Disability, thirty days after
Notice of Termination is given; (3) if the Employee's employment is terminated
for Cause, the date specified in the Notice of Termination, which shall not be
less than thirty days from the date such Notice of Termination is given; and (4)
if the Employee's employment is terminated for any other reason, the date
specified in the Notice of Termination.
9. COMPENSATION UPON TERMINATION OR DURING DISABILITY. The Employee
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 during the Term of this Agreement:
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(a) During any period that the Employee 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, together with all compensation
payable to him under the Company's disability plan or program or other similar
plan during such period, until his employment is terminated pursuant to Section
8(a) hereof. Thereafter, or in the event the Employee's employment shall be
terminated by reason of his death, his benefits shall be determined 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 Employee'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 8(c)
hereof), the Company shall pay him (or his appropriate payee, as determined in
accordance with Section 11(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 to which he is entitled under any compensation plan of
the Company 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 the
Employee's employment is terminated by reason of the Employee's death or
Disability, the Employee (or his appropriate payee) shall be entitled to receive
a pro rata portion of any bonus that would otherwise have been payable to the
Employee with respect to the year in which the Employee's employment is
terminated. For purposes of this provision, if the Employee's bonus for such
year has not been determined, the Employee shall be deemed to have been entitled
to a bonus equal to the bonus paid or payable to the Employee with respect to
the immediately preceding year.
(c) If the Employee's employment should be terminated by the Company
other than for Cause or Disability or by the Employee by reason of a
constructive termination pursuant to Section 8(c) hereof, he shall be entitled
to the benefits provided below:
(i) The Company shall pay to the Employee 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;
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(ii) The Company shall pay the Employee, at the time such
payments would have been made had the Employee's employment not been terminated
hereunder, all salary payments that would have been payable to the Employee
pursuant to this Agreement had the Employee continued to be employed for the
greater of (x) the remaining Term of this Agreement, or (y) one year (the
"Severance Period") (assuming for the purpose of such continuing payments that
the Employee's salary for each year of such period is equal to his salary at the
Date of Termination), plus a pro rata portion of any bonus that would otherwise
have been payable to the Employee with respect to the year in which the
Employee's employment is terminated; provided, however, that if the Employee's
bonus for such year has not been determined, the Employee shall be deemed to
have been entitled to a bonus equal to the bonus paid or payable to the Employee
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 Employee, including, but
not limited to, the Employee'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 Employee 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 Employee
that are outstanding on the Date of Termination shall lapse as of the Date of
Termination;
(iv) During the Severance Period the Company shall, at its cost,
arrange to provide the Employee 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 Employee 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 Employee pursuant to this subparagraph if an
equivalent benefits is actually received by him at any time during the Severance
Period and any such benefit actually received by him shall be reported to the
Company.
(d) The Company shall continue in effect for the benefit of the
employee all insurance or other provisions for the indemnification, defense of
hold-harmless of officers or directors of the Company that are in effect on the
date the Notice of Termination is sent to the Employee or the Company with
respect to all of his acts and omissions while an officer or director as fully
and completely as if such termination had not occurred, and until the final
expi-
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ration or running of all periods of limitation against actions that may be
applicable to such acts or omissions.
(e) The Employee shall have the right to terminate his employment
under this Agreement upon thirty (30) days notice to the Company without
liability to the Company for damages incurred solely by reason of such
termination.
(f) Notwithstanding anything to the contrary in this Agreement, in
the event that, in the opinion of counsel for the Company, it is more likely
than not that any payment or benefit under this Agreement or under any other
plan or agreement would not be deemed to be deductible in whole or in part in
the calculation of the federal income tax of the Company, or of any other person
making such payment or providing such benefit, by reason of Section 280G of the
Internal Revenue Code of 1986, including the rules and regulations promulgated
thereunder, as amended from time to time and including any successor legislation
thereto (the "Code"), the aggregate payments and benefits provided by this
Agreement shall be reduced (if necessary, to zero) (with the cash payments
provided by this Agreement being the first reduced) to the minimum extent
necessary so that no portion of such aggregate payments and benefits is not
deductible for federal income tax purposes by reason of Section 280G of the
Code. The Company shall hold such portions not paid to the Employee in escrow.
At the end of each calendar quarter during the term of such escrow, the Company
shall deposit into escrow an amount equal to interest accrued during such
calendar quarter on the amount held in escrow during such calendar quarter at a
rate equal to the rate than payable on judgments in California. If it shall be
determined at any point in time, by counsel selected by the Company and the
Employee, that it is more likely than not that the payment to the Employee of
any or all of such amount held in escrow would be deductible for tax purposes,
such amount shall be paid out of escrow to the Employee. In the event of a
final determination by the Internal Revenue Service or of an arbitration aware
pursuant to Section 16 hereof, that any such amount held in escrow would not be
deductible for tax purposes under the then applicable provisions of the Code if
paid to the Employee, or if it shall be determined at any point in time, by
counsel selected by the company and the Employee, that it is more likely than
not that the payment to the Employee of any such amount held in escrow would not
be deductible for tax purposes under the then applicable provisions of the Code,
such amount shall be paid out of escrow to the Company. For purposes of this
Subsection 9(f),(i) the value of any non-cash benefits or any deferred or
contingent payment or benefit shall be determined by the company's independent
public accountants in accordance with the principles of Section 280G of the
Code, (ii) no payment or benefit not constituting, in the opinion of such
accountants, a "parachute payment" within
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the meaning of Section 280G of the code shall be included in determining the
aggregate amount of such payments and benefits, and (iii) no payment or benefit
the receipt or enjoyment of which has been waived in writing by the Employee
shall be included in determining the aggregate amount of such payments and
benefits.
10. CONFIDENTIAL INFORMATION AND NON-COMPETITION.
(a) During the Term of this Agreement and thereafter, the Employee
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 Employee 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 Employee 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
this employment for any reason whatsoever, the Employee shall promptly deliver
to the Company all documents (and all copies thereof) containing any
Confidential Information.
(b) During the term of his employment hereunder, the Employee shall
not, directly or indirectly, without the prior written consent of the Company,
provide consultative service (with or without pay) to, own, manage, operate,
join, control, participate in, or be connected (as a stockholder, partner, or
otherwise) with, any business, individual, partner, form, corporation, or other
entity that is then in competition with the Company, any of its subsidiaries or
affiliates (a "Competitor of the Company"), PROVIDED, however, that the
"beneficial ownership" by the Employee, 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 9134, 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 Employee
were to compete with the Company or any subsidiary or affiliate of the company
in violation of this Agreement and that the company would by reason of such
competition be entitled to injunctive relief in a court of appropriate
jurisdiction, and the Employee further consents and stipulates to the entry of
such injunctive relief in
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such a court prohibiting the Employee from competing with the Company or any
subsidiary or affiliate of the Company in violation of this Agreement.
(c) During the Term of this Agreement, the Employee 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) The Employee recognizes that he will possess confidential
information about other employees of the Company relating to their education,
experience, skills, abilities, compensation and benefits, and interpersonal
relationships with customers of the Company. The Employee recognizes that the
information he will possess about these other employees is not generally known,
is of substantial value to the Company in developing its products and in
securing and retaining Customers, and will be acquired by him because of his
business position with the Company. The Employee agrees that, during the period
ending on the last day of the three-year period following his Date of
Termination, he will not, directly or indirectly, solicit or recruit any
employee of the Company for the purpose of being employed by him, or any
Competitor of the Company on whose behalf he is acting as an agent,
representative or employee. The Employee further agrees that he will not convey
any such confidential information or trade secrets about other employees of the
Company to anyone affiliated with him or to any Competitor of the Company.
(e) If it is determined by a court of competent jurisdiction in any
state or applicable arbitration proceeding in accordance with Section 16, that
any restriction in this Section 10 is excessive in duration or scope or is
unreasonable or unenforceable under the laws of that state, it is the intention
of the parties that such restriction may be modified or amended by the court to
render it enforceable to the maximum extent permitted by the law of that state.
11. ASSIGNMENTS/MITIGATION.
(a) This Agreement and the rights, interest and benefits hereunder
are personal to the Employee and shall not be assigned, transferred, pledged, or
hypothecated in any way by the Employee, 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
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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 Employee may, at his sole option, exercise his termination rights under the
provisions of Section 8(c)(iv) of this Agreement.
(c) This Agreement shall inure to the benefit of and be enforceable
by the Employee and his personal or legal representatives, executors,
administrators, successors, heirs, distributes, devisees and legatees. If the
Employee 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 designees, or, if there is no such designee, to his estate.
(d) The Employee shall have no duty to mitigate the Company's
obligations hereunder by seeking other employment or by becoming self-employed;
provided, however, that life, disability, dental, accident, group health
insurance and other health and welfare benefits received by the Employee during
or with respect to the Severance Period and attributable to services rendered
during such period by the Employee to persons or entities other than the Company
shall be applied to reduce the Company's obligation to provide such benefits
hereunder. Not less frequently than annually (by the end of the month of the
month next following the month in which the Effective Date occurs), the Employee
shall account to the Company as to the amount of such benefits; if the Company
has paid amounts in excess of those to which the Employee was entitled (after
giving effect to the offsets provided above), the Employee shall reimburse the
Company promptly thereafter for such excess.
12. 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 Employee, to 3 Dapplegray Road, Bell Canyon, CA 91307, and (b) if to the
Company, to 21255 Califa Street, Woodland Hills, CA 91367, Attention: Stanley
R. Zax, 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.
13. SECTION HEADINGS. The Section headings used in this Agreement are
included solely for convenience and shall
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not affect, or be used in connection with, the interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. 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.
16. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement (other than an action for injunctive relief
pursuant to Section 10 hereof) shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators in Los Angeles, California, in
accordance with the rules of the American Arbitration Association then in
effect. Such arbitrators shall only have jurisdiction to award contract
damages. Judgment may be entered on the arbitrator's award in any court having
jurisdiction. The prevailing party shall be entitled to reimbursement of all of
its reasonable expenses in arbitration, including reasonable attorney's fees.
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
Employee as if such dispute did not exist during the pendency of such good faith
dispute, and, following the resolution of such dispute, the Employee shall
reimburse the Company for any overpayments.
17. COMPANY PROPERTY. The Employee 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 Employee was the author or recipient
of such material.
18. 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 Employee 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 time or at any prior or
subsequent time.
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(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 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 7, 9,
10, 11, 16 and 17 shall survive the expiration, suspension or termination, for
any reason, of this Agreement or the Employee's employment hereunder until such
obligations created thereunder are fully satisfied.
19. PRIOR AGREEMENT.
This Agreement replaces and supercedes the Employment Agreement dated
October 1, 1990 between the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
ZENITH NATIONAL INSURANCE CORP.
ATTEST:
/s/ Fredricka Taubitz By: /s/ Stanley R. Zax
- ---------------------- ---------------------------
Fredricka Taubitz STANLEY R. ZAX
Ass't Secretary Chairman and President
EMPLOYEE
/s/ John J. Tickner
------------------------------
JOHN J. TICKNER
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