Exhibit 10.18
EMPLOYMENT AGREEMENT
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THIS AGREEMENT is made the 26th day of March, 2001, between THE NAVIGATORS GROUP, INC., a Delaware
corporation (unless otherwise specified, hereinafter referred to as "Navigators") and XXXXXXX X. XXXXXXXX
(hereinafter referred to as the "Employee").
WHEREAS, Navigators desires to employ the Employee, and the Employee wishes to become employed by
Navigators, as Executive Vice President and Chief Operating Officer of Navigators and as President and Chief
Operating Officer of the Navigators Insurance Companies, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions contained
herein, Navigators and Employee covenant and agree as follows:
1. Employment. Navigators hereby employs Employee, and Employee hereby accepts and agrees to
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employment as Executive Vice President and Chief Operating Officer of The Navigators Group, Inc., and as
President and Chief Operating Officer of Navigators Insurance Companies.
2. Responsibility. Employee will be responsible for Navigators' operations, (subject to
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consultation with the Chairman and Board of Directors of Navigators), including underwriting, marketing,
staffing, administration, and profit and loss. Employee will report to the Chairman of The Navigators Group,
Inc. and to its Board of Directors.
Employee shall devote his full working time and best efforts to further the interests of Navigators.
Employee shall perform all duties commensurate with such positions, as well as such other related duties as may
be assigned to him from time to time by the Board of Directors.
3. Additional Responsibilities/Directorships. Upon execution of this employment agreement,
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Employee shall be elected as a Director to the Boards of Directors of both The Navigators Group, Inc. and
Navigators' Insurance Companies. Within 18 months of Employee's employment with Navigators, Employee shall be
designated as the President and Chief Executive Officer of The Navigators Group, Inc. and of Navigators Insurance
Companies, subject to acceptable performance as determined by the Board of Directors and the Chairman of
Navigators.
4. Location. Employee's position will be based in the New York City headquarters of Navigators,
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subject to any possible relocation of the office at some future date.
5. Term. The initial term of Employee's employment will continue through March 31, 2004, and will
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continue for additional one-year periods, unless either party elects to terminate the employment relationship by
written notice to the other party at least 120 days prior to March 31, 2004 or prior to the expiration of any
subsequent one-year period.
6. Compensation. For the services described in paragraph 2 above to be rendered by Employee
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hereunder, Navigators agrees as follows:
(a) Base Salary. Employee's initial annual base salary shall be $325,000, subject to
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applicable withholdings. Future base salaries shall be no less than this amount, but shall be subject
to annual review by the Compensation Committee each July in accordance with Navigators' regular practice.
(b) Bonus. Employee will be eligible for an annual performance bonus based upon
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Navigators' actual performance as compared to targets pre-established by the Board of Directors of
Navigators.
(c) Employee Benefits. Employee shall be eligible to participate in all Navigators
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benefit plans made available to executive level employees, including health insurance, money purchase
pension plan and the 401-K plan.
(d) Vacation; Time Off. Employee shall be entitled to take such holidays and sick leave
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as Navigators may reasonably determine, consistent with the performance of his duties hereunder and the
then current policies of Navigators in respect to such matters. Notwithstanding any current policies of
Navigators with respect to vacation, however, Employee shall be entitled to four weeks vacation
"annually." Annually shall be defined by the contract year (e.g., the start date of this Agreement to
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the same date the following year). Employee may "carry over" up to two weeks of unused vacation days to
the following contract year. In no event, however, shall Employee be entitled to accumulate a total of
more than two weeks of time from prior contract years. Vacation schedules shall be approved by the
Chairman.
(e) Expenses. Navigators agrees to pay, or reimburse Employee for, reasonable
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expenses incurred in connection with Employee's performance of his duties hereunder, upon presentation
of appropriate receipts or other documentation of such expense in accordance with Navigators' published
policies pertaining to business expenses.
(f) Automobile. Employee shall receive a monthly automobile expense allowance in the
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amount of $1,000.
(g) Moving Allowance. In the event that Navigators relocates its office from its current
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New York City location to a location requiring a significantly increased commutation from Employee's
current residence in Ridgefield, Connecticut, Navigators agrees to reimburse Employee for the following
expenses if Employee elects to move his residence closer to Navigators' new office:
(i) brokerage commission and reasonable legal expenses incurred in connection with
the sale of his existing residence;
(ii) reasonable legal expenses incurred in connection with the purchase of a new
home;
(iii) moving costs for furniture and other household possessions;
(iv) temporary accommodations for Employee (and, if necessary, for Employee's
family) if required in connection with such move, and reasonable and necessary family
transportation expenses.
(h) Stock Grant. Employee is hereby granted a total of 100,000 shares of common stock of
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Navigators, with such grant vesting in four 25,000 share increments on each of the first four
anniversary dates of the commencement of Employee's employment. In the event of one or more of (i) the
sale or other transfer, except for a transfer to an affiliated entity of Navigators which does not cause
a change of control of Navigators, of substantially all of the assets of Navigators, (ii) a merger of
Navigators with another business entity in which Navigators is not the surviving entity, (iii) the
liquidation of Navigators, or (iv) Xxxxxxx X. Xxxxx or his family members or family interests selling or
otherwise transferring a sufficient number of shares of Navigators' common stock that they own or
control so that they no longer have effective day to day control over Navigators, then the shares
granted hereunder shall vest in their entirety immediately as of the closing date of any such
transaction. In the event of the termination of the Employee's employment for any reason before all of
the stock grants have vested, any unvested shares will revert to Navigators, unless the termination of
employment arises for Good Reason or one of the events set forth in the preceding sentence occurs.
7. TERMINATION OF EMPLOYMENT.
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(a) Termination For Cause; Resignation. Employee's employment may be terminated at any
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time for cause, as defined herein, in which case Employee will not be entitled to any compensation
beyond the date of the termination of Employee's employment and all unvested stock grants will revert to
Navigators. If Employee resigns his employment (other than for Good Reason), Employee will not be
entitled to any compensation beyond the date of the termination of Employee's employment and all
unvested stock grants will revert to Navigators. If Employee's employment is terminated by Navigators
during the initial term for other than cause, Employee will be entitled to receive his base salary for
the remainder of the initial term. In the event there is a change of control of Navigators, whether
through a merger or sale of Navigators, and such change of control results in the termination of
Employee's employment or any other material adverse change in Employee's position constituting Good
Reason, as set forth in Section (c)(iii) below, Employee will be entitled to receive his base salary for
the remainder of the initial term and all stock grants will immediately vest.
(b) Disability; Death. If Employee becomes Permanently Disabled prior to the expiration
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of the Term of this Agreement, Employee shall be deemed to have voluntarily resigned from his employment
hereunder as of the date the disability is deemed permanent as defined in section (c)(ii) below, but
only if Navigators provides written notice to that effect to Employee, within thirty (30) days of such
date. If Employee dies during the Term of this Agreement, Employee shall be deemed to have
involuntarily resigned from his employment hereunder as of the date of death.
(c) Definitions.
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(i) For Cause. The Company shall be entitled to terminate the employment of
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Employee For Cause if any of the following shall occur during the term of this Agreement:
(A) The commission by Employee of a felony;
(B) Employee engages in conduct involving fraud, moral turpitude,
dishonesty, gross misconduct, embezzlement, or theft;
(C) The failure of Employee to perform material duties assigned to him by
the Chairman or the Board of Directors, after written notice to Employee of such
failure specifying in detail the circumstances constituting such failure, and the
expiration of a thirty (30) day period following Employee's receipt of such written
notice, during which Employee has failed to cure such failure to perform; provided,
however, that in circumstances where such cure reasonably requires more than thirty
(30) days to accomplish, Employee's failure to diligently commence effecting such a
cure and continue efforts at effecting such cure so as to cure such failure as
promptly as may be practicable will constitute Cause under this Section 7(c)(i)(C).
(D) Employee's material breach of any of the terms of this Agreement or
of any written, lawful directive of Navigators' Board of Directors or Chairman or of
any Navigators policy set forth in Navigators' Employee Policy Manual.
(ii) Permanently Disabled. As used herein, subject to any applicable laws, the
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term "Permanently Disabled" shall mean injury or illness, mental or physical, or any other
condition or circumstance which materially interferes with the ability of the Employee to
fulfill the responsibilities described in Section 2 of this Employment Agreement for any
consecutive twelve-week period or for an aggregate of four months out of a twelve-month period
commencing with the onset of such injury or illness.
(iii) Good Reason. Navigators shall at all times during the Term of Employee's
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employment hereunder grant and provide to Employee the authority and support reasonably
required by Employee to perform the duties and responsibilities of his positions, as set forth
in Sections 2 and 3 above. In the event of the occurrence of any of the following, any one of
which shall constitute "Good Reason" as that term is used throughout this Employment Agreement,
Employee may elect to resign his employment with Navigators, in which case any unvested portion
of the stock grant referred to in Section 6(h) will immediately become vested and Employee
shall be entitled to receive his then-current base salary for the remainder of the initial term
of this Employment Agreement. Good Reason shall occur if:
(a) Navigators shall, without the prior written consent of Employee, materially
reduce or alter the rights, responsibilities, duties and authority of Employee, including,
without limitation, demoting Employee from the positions referred to in Sections 2 and 3 to a
lower level position;
(b) Employee shall be required to report to any person or entity other than
Xxxxxxx X. Xxxxx, who is the current Chairman of Navigators, or his successor, and Navigators'
Board of Directors, without Employee's prior written consent;
(c) The employment of the Employee has been involuntarily terminated during the
initial Term other than For Cause.
8. TERMINATION PAY IN CONSIDERATION OF RESTRICTIVE COVENANTS. Employee and Navigators acknowledge
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that, in consideration of the Employee's agreement to the restrictive covenants set forth in Sections 10 and 11,
Navigators has agreed that, if it elects by written notice to Employee to invoke and require Employee to comply
with the restrictions set forth in Sections 10 and 11 of this Employment Agreement, it will, notwithstanding the
provisions of Section 7 of this Employment Agreement, continue to pay to the Employee on Navigators' regular
payroll dates during the twelve (12) month period (the "Severance Period") following the effective date of such
termination of employment, base salary at the rate last in effect for the Employee (the "Termination Pay").
Notwithstanding the foregoing, in the event that Employee breaches any of the covenants set forth in Sections 9,
10, and 11, all payments of Termination Pay shall thereupon cease and no further payments to Employee shall be
made by Navigators. Navigators shall provide to Employee, within five (5) business days of the effective date of
the termination of the employment of Employee, written notice as to whether it elects to invoke and require
Employee to comply with the restrictions set forth in Sections 10 and 11 of this Employment Agreement. If
Navigators so elects, as set forth above, it shall pay to Employee the Termination Pay. Regardless of
Navigators' election with respect to Termination Pay, Employee shall in all events be required to comply with the
restrictions set forth in Section 9, entitled "Confidentiality."
9. CONFIDENTIALITY. For purposes of this Section 9, and Sections 8, 10 and 11 of this Employment
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Agreement, the term "Navigators" shall include The Navigators Group, Inc., Navigators Insurance Company, and all
related or affiliated entities. Employee covenants and agrees that, from and after the date hereof, Employee
shall not, directly or indirectly disclose any Confidential Information, as hereinafter defined, to any party
whatsoever, except to the extent required in the performance of his duties for Navigators, or use any
Confidential Information for the benefit of himself or any other person, firm, corporation or other entity. The
term "Confidential Information" shall mean any information related to Navigators' business including, without
limitation, policy forms, agency and subproducer relationships, product and financial plans, information on
pricing and customers, fees and services provided therefor, technical information and data, financial reserves,
other financial information, business or product plans or costs, existing or prospective customers or customer
lists, pricing data or other terms of sales, customer requirements, buying history or underwriting or risk
assessment information, the identity of agents or customers or prospective agents or customers, products,
coverages, the terms of any reinsurance, fronting or other agreements of Navigators, and all information to which
Employee has access during his employment with Navigators which belongs or relates to a third party and which
would constitute Confidential Information if it belonged to or related to Navigators. Confidential Information
shall also include knowledge gained by Employee through his employment by Navigators. Employee shall not be
required to maintain the confidentiality of any information which is or becomes part of the public domain through
no act or omission attributable to Employee.
All Confidential Information and all other data, whether written or electronically stored, computer
printouts and other records and written material prepared or compiled by Employee or furnished to Employee while
in the employ of Navigators and which relates to the business of Navigators, is the property of Navigators. Upon
the termination of Employee's employment with Navigators, Employee shall return to Navigators, all documents,
files, diskettes and other information storage media containing all such Confidential Information and other data,
and shall not retain copies thereof.
10. Non-Solicitation of Navigators' Employees. Employee covenants and agrees that, while employed by
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Navigators and for a period of one year thereafter, Employee will not, directly or indirectly, solicit, or assist
any other party in soliciting, or seek to influence any employee of Navigators to terminate employment with
Navigators or to become employed by any other party.
11. Non-Competition and Non-Solicitation of Customers, Agents and Others. Employee covenants and
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agrees that, for a period of one year following the termination of his employment with Navigators (the
"Restricted Period"), Employee shall not:
(a) directly or indirectly become employed by, own an interest in, manage, operate,
control, provide services to, or become associated with as an officer, director, partner, agent,
consultant, stockholder, or otherwise any individual, firm, partnership, corporation, proprietorship or
other business entity which competes with the business of Navigators, as conducted by, or contemplated
by, Navigators at the time of the termination of Employee's employment with Navigators.
(b) solicit or call upon any person, entity or business which was an existing or
prospective customer, agent, insured, client, broker or agent of Navigators at any time during the
period commencing thirty-six (36) months prior to the termination of Employee's employment with
Navigators for the purpose of selling to or through such parties any insurance coverage which has been
offered for sale by Navigators during Employee's employment with Navigators. The restrictions herein
shall extend to any persons, corporations, partnerships, firms, businesses or entities for whom or
through whom Navigators engages in the business of providing insurance or conducting related business or
for whom or through whom Navigators actively sought or seeks to engage in such business during the
period commencing thirty-six (36) months prior to the termination of Employee's employment with
Navigators through the end of the Restricted Period and shall include agents and subagents of Navigators
notwithstanding that such persons or entities may have been induced to enter into a business
relationship with Navigators by the efforts of Employee or someone on his behalf.
The restrictions in this Section 11 shall be limited to any county of any state or any
comparable jurisdiction of any foreign country in which Navigators, directly or through subsidiaries or
affiliates, during the period of Employee's employment with Navigators or during the Restricted Period,
has been or is engaged in the business of providing insurance or conducting related business.
Notwithstanding the foregoing, the restrictions set forth in this Section 11 shall not apply to any
jurisdiction whose laws prohibit enforcement of such restrictions.
12. JUDICIAL MODIFICATION. The parties hereby agree that if the scope or enforceability of the
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covenants in paragraphs 10 and 11 hereof are in any way disputed at any time, a court or other trier of fact may
modify and enforce said covenants to the extent that it believes them to be reasonable under circumstances
existing at that time.
13. INJUNCTIVE RELIEF. Employee acknowledges that compliance with the restrictive covenants herein
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is necessary to protect the business and good will of Navigators, and that a breach of these restrictions will
cause irreparable damage to Navigators for which monetary damages may not be adequate. Consequently, Employee
agrees that in the event that he breaches or threatens to breach any of the restrictive covenants contained
herein, Navigators may be entitled, upon compliance with applicable requirements of law, to both (i) a temporary,
preliminary and/or permanent injunction in order to prevent the continuation of such harm, and (ii) money damages
insofar as they can be determined. Notwithstanding any of the foregoing, and subject to the requirements of law,
nothing in this Agreement shall be construed to prohibit Navigators from also pursuing any other remedy, the
parties having agreed that all remedies are to be cumulative to the extent permitted by law.
14. LITIGATION EXPENSE. In the event that Employee brings an action in any court of competent
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jurisdiction seeking a determination that Navigators' discharge of the Employee For Cause was not authorized by,
and in compliance with, the terms of this Employment Agreement, Employee, if he is the prevailing party in any
such court proceeding, shall be reimbursed by Navigators for Employee's legal fees and expenses incurred in
connection with such litigation. Similarly, in the event that Employee brings an action in any court of
competent jurisdiction seeking a determination that Navigators' discontinuance of the payment of Termination Pay
to the Employee was not authorized by, and in compliance with, the terms of this Employment Agreement, Employee,
if he is the prevailing party in any such court proceeding, shall be reimbursed by Navigators for Employee's
legal fees and expenses incurred in connection with such litigation. Any recovery of legal fees and expenses
hereunder shall be in addition to any other recovery or remedy directed by the court.
15. NOTICES. Any and all notices required or permitted to be given under this Agreement will be
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sufficient if furnished in writing, sent by personal delivery, telex, telecopier or certified mail, return
receipt requested, to each of the applicable addresses set forth below (or such other address as may from time to
time be designated by notice by any party hereto for such purpose):
To Employee: Xxxxxxx X. Xxxxxxxx
With a copy to: Xxxx Xxxxxxxx & Xxxxx, L.L.C.
00 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx
To Navigators: Xxxxxxx X. Xxxxx
The Navigators Group, Inc.
Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
With a copy to: Rosenman & Colin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Tract
Notice shall be deemed given, if by personal delivery, on the date of such delivery or, if by telex or telecopy,
on the business day following receipt of answer back or telecopy confirmation or, if by certified mail, on the
date shown on the applicable return receipt.
16. MISCELLANEOUS.
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(a) Except for other documents referenced in this Agreement, this written Agreement
contains the sole and entire Agreement between the parties, and supersedes any and all other agreements
between them.
(b) The waiver by either party of a breach of any provision of this Agreement shall not
operate as, or be construed a waiver of any subsequent breach thereof. No waiver or modification of
this Agreement or of any covenant, condition or limitation herein contained shall be valid unless in
writing and duly executed by the party to be charged therewith.
(c) In case any one or more of the provisions contained in this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision thereof and this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been contained herein.
(d) In any action, special proceedings or other proceedings that may be brought arising
out of, in connection with, or by reason of this Agreement, the laws of the State of New York shall be
applicable and shall govern to the exclusion of the law of any other forum, without regard to the
jurisdiction in which the action or special proceeding may be instituted.
(e) The section headings contained herein are inserted for ease of reference only and
shall not control or affect the meaning or construction of the provisions hereof.
(f) This Agreement shall be binding on and inure to the benefit of the respective parties
and their respective heirs, legal representatives, successors and assigns.
IN WITNESS WHEREOF, Navigators has hereunto caused this Agreement to be executed by its duly authorized
officer and the Employee has hereunto set his hand, all being done in duplicate originals with one being
delivered to each party on the day of ________, 2001.
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Executed at New York, New York on the date set forth above.
THE NAVIGATORS GROUP, INC. EMPLOYEE:
By:
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Its: XXXXXXX X. XXXXXXXX
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