AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.2
Execution Copy
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”) is entered into effective as of
the 30th day of November, 2009 (the “Effective Date”), among HCC, as hereinafter
defined, and Xxxx X. Xxxxxxx (“Executive”). “HCC” shall mean HCC Insurance Holdings, Inc., a
Delaware corporation, and, where applicable, any direct or indirect subsidiary of HCC. HCC and
Executive are sometimes collectively referred to herein as the “Parties” and individually as a
“Party.”
RECITALS:
WHEREAS, Executive is to be employed as an officer or key employee of HCC;
WHEREAS, it is the desire of HCC to engage Executive as an officer or key employee;
WHEREAS, Executive is desirous of being employed by HCC on the terms herein provided; and
WHEREAS, this Agreement amends and restates that certain Amended and Restated Employment
Agreement (the “Original Agreement”) dated effective as of September 1, 2008 by and among the
Executive and HCC, which Original Agreement is deemed to be cancelled, terminated and of no further
force or effect, as of November 30, 2009.
NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and
agreements set forth below, the Parties agree as follows:
AGREEMENT
1. Termination of Original Agreement and Term.
(a) Effective as of the Effective Date, the Original Agreement shall be cancelled, terminated
and of no further force or effect.
(b) Effective as of the Effective Date, HCC hereby employs Executive, and Executive hereby
accepts such employment, on the terms and conditions set forth herein, for the period (the “Term”)
commencing on the Effective Date and expiring at the earlier to occur of (a) 11:59 p.m. on August
31, 2011 (the “Expiration Date”) or (b) the Termination Date (as hereinafter defined).
2. Duties.
(a) Duties as Executive of HCC. Executive shall, subject to the supervision of the
Chief Executive Officer of HCC (the “CEO”) and the President and Chief Operating Officer of HCC
(“COO”) or such other person designated by the CEO, act as the Executive Vice President — U.S.
Property and Casualty Operations of HCC in the ordinary course of business with all such
powers reasonably incident to the position or other such responsibilities or duties that may
be from
time to time assigned by the CEO or President and COO. Executive may be reassigned or
transferred to another management position provided such position provides the same or greater
level of responsibility, as designated by the CEO. During normal business hours, Executive shall
devote his full time and attention to diligently attending to the business of HCC. During the
Term, Executive shall not directly or indirectly render any services of a business, commercial, or
professional nature to any other person, firm, corporation, or organization, whether for
compensation or otherwise, without the prior written consent of the CEO. However, Executive shall
have the right to engage in such activities as may be appropriate in order to manage his personal
investments and in educational, charitable and philanthropic activities so long as such activities
do not materially interfere or conflict with the performance of his duties to HCC hereunder. The
conduct of such activity shall not be deemed to materially interfere or conflict with Executive’s
performance of his duties until Executive has been notified in writing thereof and given a
reasonable period in which to cure the same.
(b) Other Duties.
(1) If elected, Executive agrees to serve as a member of such managerial committees of
HCC and of any of its direct or indirect parents or subsidiaries (collectively,
“Affiliates”) and in one or more executive offices of any of HCC’s Affiliates, provided
Executive is indemnified for serving in any and all such capacities in a manner acceptable
to HCC and Executive. If elected, Executive agrees that he shall not be entitled to receive
any compensation for serving as a director of HCC, or in any capacities for HCC or its
Affiliates other than the compensation to be paid to Executive by HCC pursuant to this
Agreement.
(2) Executive acknowledges and agrees that he has read and considered the written
business policies and procedures of HCC as posted on HCC’s intranet and that he will abide
by such policies and procedures throughout the term of his employment with HCC. Executive
further agrees that he will familiarize himself with any amendments to the policies and
procedures and that he will abide by such policies and procedures as they may change from
time to time.
3. Compensation and Related Matters.
(a) Base Salary. Executive shall receive an initial base salary paid by HCC of
$525,000 per year during each year of the Term. At the sole discretion of HCC, the base salary may
be increased. For purposes of this Agreement, “Base Salary” shall mean Executive’s initial base
salary or, if increased, then the increased base salary. The Base Salary shall be paid in
substantially equal semi-monthly installments.
(b) Bonus Plan. During the Term, Executive shall be eligible to receive, in addition
to the Base Salary, an annual cash and/or stock bonus payment in an amount, which may be zero, to
be determined at the sole discretion of the CEO in accordance with HCC’s policies. The CEO or such
other person may unilaterally reduce or eliminate any annual bonus payment, if any, up until the
time the bonus is actually paid (and notwithstanding any earlier, tentative determination of the
bonus amount). Subject to Sections 4(c) and 4(d), no bonus payment shall be paid to Executive
for a year if Executive’s Termination Date occurs at any time during such year. Moreover,
even if Executive is employed by HCC on the last day of the year for which a bonus may be payable,
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Executive shall not be eligible for the payment of bonus compensation for such year if this
Agreement or his employment with HCC terminates for any reason, other than Death or Disability,
prior to the payment of such bonus compensation. Such bonus shall not exceed two hundred percent
(200%) of Executive’s Base Salary for the bonus year.
(c) Expenses. During the Term, Executive shall be entitled to receive prompt
reimbursement for all reasonable business expenses incurred by him (in accordance with the policies
and procedures established by HCC) in performing services hereunder, provided that Executive
properly accounts therefor in accordance with HCC policy.
(d) Other Benefits. From time to time HCC may make available other compensation and
employee benefit plans and arrangements. Executive shall be eligible to participate in such other
compensation and employee benefit plans and arrangements on the same basis as similarly situated
employees, subject to and on a basis consistent with the terms, conditions, and overall
administration of such plans and arrangements, as amended from time to time. Nothing in this
Agreement shall be deemed to confer upon Executive or any other person (including any beneficiary)
any rights under or with respect to any such plan or arrangement or to amend any such plan or
arrangement, and Executive and each other person (including any beneficiary) shall be entitled to
look only to the express terms of any such plan or arrangement for his or her rights thereunder.
Nothing paid to Executive under any such plan or arrangement presently in effect or made available
in the future shall be deemed to be in lieu of the Base Salary payable to Executive pursuant to
Section 3(a).
(e) Vacation. Executive shall be entitled to twenty-five (25) vacation days each year
of full employment during the Term, exclusive of holidays, as long as the scheduling of Executive’s
vacation does not interfere with the Company’s normal business operation. Vacation not used by
Executive during the calendar year will be forfeited. For purposes of this Paragraph, weekends
shall not count as Vacation days. Executive shall also be entitled to all paid holidays given by
the Company.
(f) Perquisites. During the Term, Executive shall be entitled to receive the
perquisites provided for on Appendix 1 hereof.
(g) Proration. The Base Salary and perquisites payable to Executive hereunder in
respect of any calendar year during which Executive is employed by HCC for less than the entire
year, unless otherwise provided on Appendix 1, shall be prorated in accordance with the number of
days in such calendar year during which he is so employed.
(h) Stock Options. Stock options, if any, issued to Executive during the Term shall
be issued under a stock option agreement containing terms with respect to vesting and exercise upon
the occurrence of certain termination events that are substantially the same as those set forth on
Exhibit 3(h) hereto, subject to any then required approval by the Compensation Committee of the
Board. Further, HCC shall amend the grant agreements with respect to outstanding options and
shares of restricted stock held by Executive on the Effective Date to provide that in the event of
the termination of Executive’s employment with HCC for any reason other than for “Cause” as
defined in Sections 4(a)(1)(ii)-(iv), specifically excluding “Cause” as defined in Sections
4(a)(1)(i) and 4(a)(1)(v), any unvested stock options and shares of restricted stock the Executive
owns on the
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Termination Date shall be accelerated such that all such options and shares of
restricted stock will become immediately vested as of the Termination Date.
4. Termination.
(a) Definitions.
(1) “Cause” shall mean:
(i) Executive’s failure or refusal to perform substantially his material duties,
responsibilities and obligations (other than a failure resulting from the Executive’s
incapacity due to physical or mental illness or other reasons beyond the control of the
Executive) as determined in the sole discretion of the CEO;
(ii) any act involving fraud, misrepresentation, theft, embezzlement, dishonesty or
moral turpitude (“Fraud”) which results in material harm to HCC;
(iii) conviction of (or a plea of nolo contendere) to an offense which is a felony in
the jurisdiction or which is a misdemeanor in the jurisdiction involved but which involves
Fraud;
(iv) a material breach of this Agreement by the Executive, including without
limitation, any breach of the non-competition or confidentiality provisions of this
Agreement; or
(v) Executive’s failure to act or discharge or negligently acting or discharging any
material part of his duties or obligations as determined in the sole discretion of the CEO.
Provided that in the event that any of the foregoing events is capable of being cured, HCC
shall provide written notice to the Executive describing the nature of such event and the
Executive shall thereafter have ten (10) calendar days to cure such event to the
satisfaction of HCC.
(2) A ”Disability” shall mean the inability of Executive to engage in any
substantial gainful activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months. Executive shall be considered to
have a Disability (i) if he is determined to be totally disabled by the Social Security
Administration or (ii) if he is determined to be disabled under HCC’s long-term disability
plan in which Executive participates and if such plan defines “disability” in a manner that
is consistent with the immediately preceding sentence.
(3) A ”Good Reason” shall mean any of the following (without Executive’s
express written consent):
(i) A material diminution in Executive’s Base Salary;
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(ii) Executive’s involuntary relocation to any place exceeding a distance of
50 miles from the place of Executive’s normal place of employment on the Effective
Date, except for reasonably required travel by Executive on HCC’s business; or
(iii) Any material breach by HCC of any material provision of this Agreement.
However, Good Reason shall exist with respect to an above specified matter only if such
matter is not corrected by HCC within thirty (30) days after HCC’s receipt of written notice
of such matter from Executive. Any such notice from Executive must be provided within
thirty (30) days after the initial existence of the specified event. In no event shall a
termination by Executive occurring more than ninety (90) days following the initial date of
the event described be a termination for Good Reason due to such event, whether that event
is corrected or not.
(4) “Termination Date” shall mean the date Executive’s employment with HCC
terminates or is terminated for any reason pursuant to this Agreement.
(5) A “Change of Control” shall be deemed to have occurred if:
(i) Any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934) other than a trustee or other fiduciary
holding securities under an employee benefit plan of HCC becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934),
directly or indirectly, of 50% or more of HCC’s then outstanding voting common
stock; or
(ii) The shareholders of HCC approve a merger or consolidation of HCC with any
other corporation, other than a merger or consolidation (a) in which a majority of
the directors of the surviving entity were directors of HCC prior to such
consolidation or merger, or (b) which would result in the voting securities of HCC
outstanding immediately prior thereto continuing to represent (either by remaining
outstanding or by being changed into voting securities of the surviving entity) more
than 50% of the combined voting power of the voting securities of the surviving
entity outstanding immediately after such merger or consolidation; or
(iii) The shareholders approve a plan of complete liquidation of HCC or an
agreement for the sale or disposition by HCC of all or substantially all of HCC’s
assets.
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(b) Termination Without Cause or for Good Reason: Benefits. In the event HCC
involuntarily terminates Executive’s employment with HCC without Cause or if Executive terminates
employment with HCC for Good Reason (a “Termination Event”), this Agreement shall terminate and
Executive shall be entitled to the following severance benefits:
(1) An amount equal to the greater of (i) the Base Salary (as defined in Section 3(a))
that would have been payable after the Termination Date and before the Expiration Date, at
the rate in effect immediately prior to the Termination Event, or (ii) one(1) year’s Base
Salary at the Executive’s then current Base Salary in effect at the Termination Date, in
either case, payable in a lump sum discounted at the rate of return on 90-day Treasury bills
in existence on the Termination Date to take into consideration the lump sum early payment
within ninety (90) days after the Termination Date; provided that such payment shall in any
event occur on or after such Termination Date and before March 15 of the year following the
year containing such Termination Date; and
(2) Payment of all accrued Base Salary and unreimbursed business expenses through the
Termination Date in accordance with Section 3(c). Such amounts shall be paid to Executive
in a lump sum in cash within thirty (30) days after the Termination Date.
(c) Termination In Event of Death: Benefits. If Executive’s employment with HCC is
terminated by reason of Executive’s death during the Term, this Agreement shall terminate without
further obligation to Executive’s legal representatives under this Agreement, other than for
payment of all accrued Base Salary through the Termination Date, unreimbursed business expenses
through the Termination Date in accordance with Section 3(c), the amount of any bonus under Section
3(b) that relates to a prior year and that is unpaid as of the date of death, and an amount equal
to six (6) months’ Base Salary. Such amounts shall be paid to Executive’s estate in a lump sum in
cash within ninety (90) days after the date of death; provided that such payment shall in any event
occur on or after such date of death and before March 15 of the year following the year of death.
Executive shall be entitled to consideration for a bonus payment under Section 3(b) with respect to
the year in which Executive dies; provided that the payment of any such bonus, if any, shall in any
event occur on or after such date of death and before March 15 of the year following the year of
death.
(d) Termination In Event of Disability: Benefits. If Executive’s employment with HCC
is terminated by reason of Executive’s Disability during the Term, this Agreement shall terminate,
but HCC shall pay the Executive all accrued Base Salary through the Termination Date, unreimbursed
business expenses through the Termination Date in accordance with Section 3(c), the amount of any
bonus under Section 3(b) that relates to a prior year and that is unpaid as of the date of
Disability, and an amount equal to six (6) months’ Base Salary. Such amounts shall be paid to
Executive in a lump sum in cash within ninety (90) days after the Termination Date due to
Disability; provided that such payment shall in any event occur on or after such Termination Date
and before March 15 of the year following the year containing such Termination Date. Executive
shall be entitled to consideration for a bonus payment under Section 3(b) with respect to the year
in which Executive’s employment terminates due to Disability; provided that any payment of such
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bonus, if any, shall in any event occur on or after such Termination Date and before March 15 of the
year following the year containing such Termination Date.
(e) Voluntary Termination by Executive and Termination for Cause: Benefits. Executive
may voluntarily terminate his employment with HCC without Good Reason by giving written notice of
his intent and stating an effective Termination Date at least ninety (90) days after the date of
such notice; provided, however, that HCC may accelerate such effective date by paying Executive
through the proposed Termination Date (but not to exceed ninety (90) days). Upon such a
termination by Executive or upon termination of Executive’s employment with HCC for Cause by HCC,
this Agreement shall terminate and HCC shall pay to Executive all accrued Base Salary and all
unreimbursed business expenses through the Termination Date in accordance with Section 3(c);
provided, however, that in the event Executive is terminated for Cause as defined in Sections
4(a)(1)(i) or 4(a)(1)(v), Executive shall be entitled to a lump sum payment in the amount of one(1)
year’s Base Salary at Executive’s then current Base Salary in effect at the Termination Date. Such
amounts shall be paid to Executive in a lump sum in cash within thirty (30) days after the
Termination Date. Executive shall have no entitlement to any bonus for the year in which the
Termination Date occurs or for any unpaid bonus for the prior year.
(f) Voluntary Termination by Executive after a Change of Control: Benefits. If
Executive’s authority, duties, or responsibilities are materially diminished within twelve (12)
months after a Change of Control occurs, Executive notifies HCC of such diminution within thirty
(30) days, and HCC does not fully correct the condition within thirty (30) days after receiving
such notice, Executive may voluntarily terminate his employment with HCC and shall be entitled to
the following severance benefits:
(1) An amount equal to the Base Salary (as defined in Section 3(a)) that would have
been payable after the Termination Date and before the Expiration Date, at the rate in
effect immediately prior to the Termination Date, payable in a lump sum discounted at the
rate of return on 90-day Treasury bills in existence on the Termination Date to take into
consideration the lump sum early payment within ninety (90) days after the Termination Date;
provided that such payment shall in any event occur on or after such Termination Date and
before March 15 of the year following the year containing such Termination Date; and
(2) All unreimbursed business expenses through the Termination Date in accordance with
Section 3(c). Such amounts shall be paid to Executive in a lump sum in cash within thirty
(30) days after the Termination Date.
(g) Director and Officer Positions. Executive agrees that upon termination of
employment, for any reason, Executive will immediately tender his resignation from any and all
Board or officer positions held with HCC and/or any of its Affiliates.
5. Non-Competition, Non-Solicitation and Confidentiality. HCC agrees to give
Executive access to Confidential Information (including, without limitation, Confidential
Information, as defined below, of HCC’s Affiliates) that Executive has not had access to or
knowledge of before the execution of this Agreement. At the time this Agreement is made, HCC
agrees to provide Executive with initial and ongoing Specialized Training, which Executive has not
had access to or knowledge of before the execution of this Agreement. “Specialized Training”
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includes the training HCC provides to its employees that is unique to its business and enhances
Executive’s ability to perform Executive’s job duties effectively. Specialized Training includes,
without limitation, orientation training; sales methods/techniques training; operation methods
training; and computer and systems training.
(a) Non-Competition During Employment. Executive agrees that, in consideration for
HCC’s promise to provide Executive with Confidential Information and Specialized Training, during
the Term, he will not compete with HCC by engaging in the conception, design, development,
production, marketing, or servicing of any product or service that is substantially similar to the
products or services which HCC provides, and that he will not work for, in any capacity, assist, or
become affiliated with as an owner, partner, etc., either directly or indirectly, any individual or
business which offers or performs services, or offers or provides products substantially similar to
the services and products provided by HCC; provided, however, Executive shall not be prevented from
owning no more than 2% of any company whose stock is publicly traded.
(b) Conflicts of Interest. Executive agrees that during the Term, he will not engage,
either directly or indirectly, in any activity (a “Conflict of Interest”) that might adversely
affect HCC or its Affiliates, including ownership of a material interest in any supplier,
contractor, distributor, subcontractor, customer or other entity with which HCC and/or its
Affiliates does business or accepting any material payment, service, loan, gift, trip,
entertainment, or other favor from a supplier, contractor, distributor, subcontractor, customer or
other entity with which HCC does business, and that Executive will promptly inform the CEO as to
each offer received by Executive to engage in any such activity. Executive further agrees to
disclose to HCC any other facts of which Executive becomes aware which in Executive’s good faith
judgment could reasonably be expected to involve or give rise to a Conflict of Interest or
potential Conflict of Interest.
(c) Non-Competition After Termination. Executive agrees that in order to protect
HCC’s Confidential Information, it is necessary to enter into the following restrictive covenant,
which is ancillary to the enforceable promises between HCC and Executive otherwise contained in
this Agreement. Executive agrees that Executive shall not, at any time during the Restricted
Period (as hereinafter defined), within any of the markets in which HCC has sold products or
services or formulated a plan to sell products or services into a market during the last twelve
(12) months of Executive’s employ, engage in or contribute Executive’s knowledge to any work which
is competitive with or similar to a product, process, apparatus, service, or development on which
Executive worked while employed by HCC. It is understood that the geographical area set forth in
this covenant is divisible so that if this clause is invalid or unenforceable in an included
geographic area, that area is severable and the clause remains in effect for the remaining included
geographic areas in which the clause is valid. For the purpose of this Agreement, “Restricted
Period” means a period of twelve (12) months after termination of Executive’s employment with HCC.
The Restricted Period shall commence at the time Executive ceases to be a full-time employee of
HCC.
(d) Confidential Information. Executive agrees that he will not, except as the HCC
may otherwise consent or direct in writing, reveal or disclose, sell, use, lecture upon, publish or
otherwise disclose to any third party any Confidential Information or proprietary information of
HCC, or authorize anyone else to do these things at any time either during or subsequent to
his
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employment with HCC. This Paragraph shall continue in full force and effect after termination
of Executive’s employment and after the termination of this Agreement. Executive’s obligations
under this Paragraph with respect to any specific Confidential Information and proprietary
information shall cease when that specific portion of the Confidential Information and proprietary
information becomes publicly known, in its entirety and without combining portions of such
information obtained separately. It is understood that such Confidential Information and
proprietary information of HCC includes matters that Executive conceives or develops, as well as
matters Executive learns from other employees of HCC. “Confidential Information” is defined to
include information: (1) disclosed to or known by Executive as a consequence of or through his
employment with HCC; (2) not generally known outside HCC; and (3) that relates to any aspect of
HCC, its Affiliates or their business, finances, operation plans, budgets, research, or strategic
development. “Confidential Information” includes, but is not limited to, HCC’s and its Affiliates’
trade secrets, proprietary information, financial documents, long range plans, customer lists,
employer compensation, marketing strategy, data bases, costing data, computer software developed by
HCC or its Affiliates, investments made by HCC or its Affiliates, and any information provided to
HCC or its Affiliates by a third party under restrictions against disclosure or use by HCC, its
Affiliates or others.
(e) Non-Solicitation. To protect the HCC’s Confidential Information, and in the event
of Executive’s termination of employment for any reason whatsoever, whether by Executive or HCC, it
is necessary to enter into the following restrictive covenant, which is ancillary to the
enforceable promises between HCC and Executive otherwise contained in this Agreement. Executive
covenants and agrees that during Executive’s employment and for a period of twenty-four (24) months
from the date of termination of Executive’s employment for any reason (the “Non-Solicitation
Period”), Executive will not, directly or indirectly, either individually or as a principal,
partner, agent, consultant, contractor, employee or as a director or officer of any corporation or
association, or in any other manner or capacity whatsoever, except on behalf of HCC and/or its
Affiliates, solicit business, or attempt to solicit business, and products or services competitive
with products or services sold by HCC, from HCC’s clients or customers, or those individuals or
entities with whom HCC did business during Executive’s employment. Executive further agrees that
during Executive’s employment and for the Non-Solicitation Period, Executive will not, either
directly or indirectly, or by acting in concert with others, solicit or influence any HCC or HCC
Affiliate employee to leave HCC’s employment.
(f) Return of Documents, Equipment, Etc. All writings, records, and other documents
and things comprising, containing, describing, discussing, explaining, or evidencing any
Confidential Information, and all equipment, components, parts, tools, and the like in Executive’s
custody or possession that have been obtained or prepared in the course of Executive’s employment
with HCC shall be the exclusive property of HCC, shall not be copied and/or removed from the
premises of HCC, except in pursuit of the business of HCC, and shall be delivered to HCC, without
Executive retaining any copies, upon notification of the termination of Executive’s employment or
at any other time requested by HCC. HCC shall have the right to retain, access, and inspect all
property of Executive of any kind in the office, work area, and on the premises of HCC upon
termination of Executive’s employment and at any time during employment by HCC to ensure compliance
with the terms of this Agreement.
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(g) Reaffirm Obligations. Upon termination of Executive’s employment with HCC,
Executive, if requested by HCC, shall reaffirm in writing Executive’s recognition of the importance
of maintaining the confidentiality of HCC’s Confidential Information and proprietary information,
and reaffirm any other obligations set forth in this Agreement.
(h) Prior Disclosure. Executive represents and warrants that Executive has not used
or disclosed any Confidential Information he may have obtained from HCC prior to signing this
Agreement, in any way inconsistent with the provisions of this Agreement.
(i) No Previous Restrictive Agreements. Executive represents that, except as
disclosed in writing to HCC, Executive is not bound by the terms of any agreement with any previous
employer or other party to refrain from using or disclosing any trade secret or confidential or
proprietary information in the course of Executive’s employment by HCC or to refrain from
competing, directly or indirectly, with the business of such previous employer or any other party.
Executive further represents that Executive’s performance of all the terms of this Agreement and
Executive’s work duties for HCC does not and will not breach any agreement to keep in confidence
proprietary information, knowledge or data acquired by Executive in confidence or in trust prior to
Executive’s employment with HCC, and Executive will not disclose to HCC or induce HCC to use any
confidential or proprietary information or material belonging to any previous employer or other
party.
(j) Breach. Executive agrees that any breach of Sections 5(a) through (f) above
cannot be remedied solely by money damages, and that in addition to any other remedies HCC may
have, HCC is entitled to obtain injunctive relief against Executive. Nothing herein, however,
shall be construed as limiting HCC’s right to pursue any other available remedy at law or in
equity, including recovery of damages and termination of this Agreement and/or any termination or
offset against any payments that may be due pursuant to this Agreement.
(k) Right to Enter Agreement; Payment of Loans. Executive represents and covenants to
HCC that he has full power and authority to enter into this Agreement and that the execution and
performance of this Agreement will not breach or constitute a default of any other agreement or
contract to which he is a party or by which he is bound. Executive further acknowledges that he
has repaid all outstanding loans from HCC prior to entering into this Agreement.
(l) Enforceability. The agreements contained in this Section 5 are independent of the
other agreements contained herein. Accordingly, failure of HCC to comply with any of its
obligations outside of this Section does not excuse Executive from complying with the agreements
contained herein.
(m) Survivability. The agreements contained in this Section 5 shall survive the
termination of this Agreement for any reason.
(n) Reformation. If a court concludes that any time period or the geographic area
specified in Sections 5(c) or (e) of this Agreement are unenforceable, then the time period will be
reduced by the number of months, or the geographic area will be reduced by the elimination of
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the
overbroad portion, or both, so that the restrictions may be enforced in the geographic area
and for the time to the fullest extent permitted by law.
6. Assignment. This Agreement, and any rights and obligations hereunder, may not be
assigned by Executive and may be assigned by HCC only to a successor by merger or purchasers of
substantially all of the assets of HCC. HCC shall obtain the assumption and performance of this
Agreement by any such successor or purchasers; provided, however, that such commitment by HCC
(including a failure to satisfy such commitment) shall not give Executive the right to object to or
enjoin any transaction among HCC, any of its Affiliates, and any such successor or purchasers. To
the extent a failure by HCC to satisfy the foregoing commitment constitutes a material breach of
this Agreement and to the extent not cured in accordance with Section 4(a)(3), such failure shall
constitute “Good Reason” pursuant to Section 4(a)(3)(iii).
7. Binding Agreement. Executive understands that his obligations under this Agreement
are binding upon Executive’s heirs, successors, personal representatives, and legal
representatives.
8. Notices. All notices pursuant to this Agreement shall be in writing and sent
certified mail, return receipt requested, addressed as set forth below, or by delivering the same
in person to such party, or by transmission by facsimile to the number set forth below (which shall
not constitute notice). Notice deposited in the United States Mail, mailed in the manner described
hereinabove, shall be effective upon deposit. Notice given in any other manner shall be effective
only if and when received:
If to Executive:
|
Xxxx Xxxxxxx | |
| 00000 Xxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 00000 |
||
If to HCC:
|
HCC Insurance Holdings, Inc. | |
| 00000 Xxxxxxxxx Xxxxxxx | ||
| Xxxxxxx, Xxxxx 00000 | ||
| Attn: General Counsel | ||
| Fax: (000) 000-0000 |
9. Waiver. No waiver by either party to this Agreement of any right to enforce any
term or condition of this Agreement, or of any breach hereof, shall be deemed a waiver of such
right in the future or of any other right or remedy available under this Agreement.
10. Severability. If any provision of this Agreement is determined to be void,
invalid, unenforceable, or against public policy, such provisions shall be deemed severable from
the Agreement, and the remaining provisions of the Agreement will remain unaffected and in full
force and effect.
11. Entire Agreement. The terms and provisions contained herein shall constitute the
entire agreement between the parties with respect to Executive’s employment with HCC during the
time period covered by this Agreement. This Agreement replaces and supersedes any and all
existing agreements entered into between Executive and HCC relating generally to the same
subject
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matter, if any, and shall be binding upon Executive’s heirs, executors, administrators, or
other legal representatives or assigns. . Without limiting the foregoing, after the Effective
Date Executive shall have no right to any benefit, compensation, or remuneration under the Original
Agreement.
12. Modification of Agreement. This Agreement may not be changed or modified or
released or discharged or abandoned or otherwise terminated, in whole or in part, except by an
instrument in writing signed by Executive and an officer or other authorized executive of HCC.
13. Understand Agreement. Executive represents and warrants that he has read and
understood each and every provision of this Agreement, and Executive understands that he has the
right to obtain advice from legal counsel of his choice, if necessary and desired, in order to
interpret any and all provisions of this Agreement, and that Executive has freely and voluntarily
entered into this Agreement.
14. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, without regard to the conflicts of laws principles thereof.
15. Jurisdiction and Venue. With respect to any litigation regarding this Agreement,
Executive agrees to venue in the state or federal courts in Xxxxxx County, Texas, and agrees to
waive and does hereby waive any defenses and/or arguments based upon improper venue and/or lack of
personal jurisdiction. By entering into this Agreement, Executive agrees to personal jurisdiction
in the state and federal courts in Xxxxxx County, Texas.
16. Tolling. If Executive violates any of the restrictions contained in Sections 5(c)
or (e), the Restricted Period and the Non-Solicitation Period, respectively, will be suspended and
will not run in favor of Executive from the time of the commencement of any violation until the
time when Executive cures the violation to HCC’s satisfaction.
17. Compliance With Section 409A.
(a) Delay in Payments. Notwithstanding anything to the contrary in this Agreement, (i)
if upon the Termination Date, Executive is a “specified employee” within the meaning of Section
409A of the Internal Revenue Code of 1986, as amended, or any regulations or Treasury guidance
promulgated thereunder (the “Code”) and the deferral of any amounts otherwise payable under this
Agreement as a result of Executive’s termination of employment is necessary in order to prevent any
accelerated or additional tax to Executive under Code Section 409A, then HCC will defer the payment
of any such amounts hereunder until the date that is six (6) months following the date of
Executive’s termination of employment with HCC, at which time any such delayed amounts will be paid
to Executive in a single lump sum, with interest from the date otherwise payable at the United
States prime rate as published in the “Money Rates” section of The Wall Street Journal on the first
publication date coincident with or immediately following the Termination Date, and (ii) if any
other payments of money or other benefits due to Executive hereunder could cause the application of
an accelerated or additional tax under Code Section 409A, such payments or other benefits shall be
deferred if deferral will make such payment or other benefits compliant under Code
Section 409A and if this subsection (ii) does not otherwise cause the application of an
accelerated or additional tax under Code Section 409A.
12
(b) Overall Compliance. To the extent any provision of this Plan or any omission from
the Plan would (absent this Section 17(b)) cause amounts to be includable in income under Code
section 409A(a)(1), the Plan shall be deemed amended to the extent necessary to comply with the
requirements of Code section 409A; provided, however, that this Section 17(b) shall not apply and
shall not be construed to amend any provision of the Plan to the extent this Section 17(b) or any
amendment required thereby would itself cause any amounts to be includable in income under Code
section 409A(a)(1).
(c) Reformation. If any provision of this Agreement would cause Executive to occur any
additional tax under Code Section 409A, the parties will in good faith attempt to reform the
provision in a manner that maintains, to the extent possible, the original intent of the applicable
provision without violating the provision of Code Section 409A.
[signature page follows]
13
IN WITNESS WHEREOF, the Parties have executed this Agreement in multiple copies, effective as
of the date first written above.
| EXECUTIVE: | HCC: HCC Insurance Holdings, Inc. |
|||||||
/s/ Xxxx X. Xxxxxxx
|
By: | /s/ Xxxx X. Xxxxxxx, Xx. | ||||||
Xxxx X. Xxxxxxx
|
Xxxx X. Xxxxxxx, Xx., Chief Executive Officer |
|||||||
Date: November 23,
2009
|
Date: November 23, 2009 | |||||||
| Acknowledged by: | ||||||||
| By: | /s/ Xxxxxxx X. Xxxxxxx
Executive Vice President and Chief Financial Officer |
|||||||
| Date: November 23, 2009 | ||||||||
Signature Page
Employment Agreement — Xxxxxxx
Employment Agreement — Xxxxxxx
APPENDIX 1
PERQUISITES
PERQUISITES
| 1. | Executive shall be entitled to a company-provided membership (to be owned by Executive) at one country club and one health club to be agreed by the HCC CEO. Monthly dues for such memberships shall be paid by the Company and shall not exceed $12,000 per year, and the initial membership costs associated with such two memberships shall not exceed $100,000 in the aggregate. |
| 2. | First class domestic business travel and club class international business travel using upgrades through HCC travel department. | |
| 3. | $1 million term life policy. |
Exhibit 3(h)
Option Vesting and Exercise Provisions
Option Vesting and Exercise Provisions
Termination of Employment.
1. In the event the employment of the Employee is terminated by the Employee for Good Reason (as
such term is defined in the Amended and Restated Employment Agreement between the Company and the
Employee entered into effective as of November 30, 2008 (the “Employment Agreement”)) or by the
Company without Cause (as such term is defined in the Employment Agreement), the Employee shall
have the right to exercise this option for the full number of shares not previously exercised or
any portion thereof, except as to the issuance of fractional shares, to the full extent of this
option at any time within the unexpired term of this option.
2. In the event the employment of the Employee is terminated for Cause or by Employee without Good
Reason, the Employee shall have the right at any time within thirty (30) days after the termination
of such employment or, if shorter, during the unexpired term of this option, to exercise this
option for the full number of shares not previously exercised or any portion thereof, except as to
the issuance of fractional shares, but only to the extent this option was otherwise exercisable in
accordance with Paragraph 4 hereof as of the date of such termination of employment.
3. In the event the employment of the Employee is terminated by reason of Disability, then the
Employee shall have the right to exercise this option for the full number of shares not previously
exercised or any portion thereof, except as to the issuance of fractional shares, to the full
extent of this option at any time within the unexpired term of this option.
4. In the event of the death of the Employee while in the employ of the Company or the
Subsidiaries, this option may be exercised for the full number of shares not previously exercised,
or any portion thereof, except as to the issuance of fractional shares, to the full extent of this
option at any time within the unexpired term of this option, by the person or persons to whom the
Employee’s rights under this option shall pass by the Employee’s will or by the laws of descent and
distribution, whichever is applicable.
5. In the event the Employee terminates his employment on a Change of Control (as defined in the
Employment Agreement), then the Employee shall have the right to exercise this option for the full
number of shares not previously exercised or any portion thereof, except as to the issuance of
fractional shares, to the full extent of this option at any time within the unexpired term of this
option.
