January 1, 2008 Mr. W. Stancil Starnes ProAssurance Corporation 100 Brookwood Place, Suite 300 Birmingham, AL 35209 Re: Employment Agreement Dear Stan:
Exhibit 10.6b
January 1, 2008
Dear Xxxx:
Effective as of May 1, 2007, you entered into an Employment Agreement with ProAssurance Corporation
(the “Agreement”). Since that date, we have been engaged in an extensive review of all of the
company’s agreements, plans, and practices to determine whether modifications are required in order
to comply with the requirements of Section 409A of the Internal Revenue Code and the final
regulations that were issued by the Internal Revenue Service in the spring. Based on a review of
the Agreement, it has been determined that minor modifications to the Agreement are required. This
letter and your acceptance of its provisions will be considered an amendment to the Agreement.
Sections 3.2(a) and 3.2(b) of the Agreement are amended to provide that annual incentive
compensation will be paid by March 15th of the year following the year to which such compensation
is attributable.
Section 4.3 of the Agreement is amended to revise the definition of “Good Reason” to conform to the
Code Section 409A safe harbor for involuntary separation from service by deleting the first two
sentences in Section 4.3 from the Agreement and by substituting the following in lieu thereof as
the first two sentences in Section 4.3 of the Agreement:
4.3 Termination by Executive for Good Reason. Executive may terminate his
employment with ProAssurance for Good Reason. For purposes of this Agreement, “Good
Reason” shall constitute any of the following circumstances if they occur without
the Executive’s express written consent during the Term: (i) if the Board shall
refuse or fail to reelect Executive to the office of Chief Executive Officer of
ProAssurance or should change the duties and responsibilities of Executive in a
manner that is a material diminution of the duties and responsibilities of the Chief
Executive Officer under the bylaws of ProAssurance as currently in effect; (ii)
ProAssurance shall require that the Executive’s primary location of employment be
more than 100 miles from the location of ProAssurance’s principal offices as of the
date of this Agreement; (iii) a material reduction in the Executive’s Base Salary as
set forth in Section 3.1 hereof; (iv) a material breach by ProAssurance of any
provision of this Agreement; or (v) the
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election by ProAssurance not to automatically extend the Term of this Agreement as
provided in Section 1 hereof.
Section 5.2 of the Agreement is amended to provide for the payment of Severance Benefits in
accordance with the requirements of Code Section 409A by deleting Section 5.2(a) in its entirety
from the Agreement and substituting the following in lieu thereof as Section 5.2(a) of the
Agreement:
(a) If, (I) during the Term, (x) ProAssurance terminates the employment of Executive
for any reason other than Cause, death, Disability or Retirement, or (y) Executive
terminates his employment with ProAssurance for Good Reason, or (z) this Agreement
is automatically terminated upon a Change of Control (as provided in Section 8.2
hereof), and (II) the Executive signs the release form that is attached to this
Agreement as Exhibit C (the “Release”) within sixty (60) days after either the Date
of Termination or the effective date of the Change of Control, whichever is
applicable, the Executive shall receive an amount equal to a sum of the amounts
payable as Base Salary from the Date of Termination to the end of the Term at the
then current rate (the “Severance Benefits”). Subject to the delivery of the
executed Release by Executive, the Severance Benefits shall be paid in cash or good
funds in equal monthly installments during the Restricted Period (as defined in
Section 6.1 hereof) commencing on the fifteenth day of the calendar month that
occurs not less than seven (7) days after the execution of the Release and ending on
the first day of the last full calendar month in the Restricted Period; provided
that the obligation of ProAssurance to pay such Severance Benefits to the Executive
after termination of employment shall be subject to termination as herein provided
in the event Executive violates the covenants under Section 6.1 hereof; and provided
further that the payment of such Severance Benefits shall be payable by ProAssurance
in lump sum on the automatic termination of this Agreement upon a Change of Control.
ProAssurance shall withhold from any amounts payable under this Agreement all
federal, state, city or other income and employment taxes that shall be required.
Notwithstanding the foregoing, if the Executive is a “specified employee” within the
meaning of Code Section 409A(a)(2)(b)(i), the payment schedule for Severance
Benefits shall be modified or adjusted to provide that no payments shall be made
until the expiration of six (6) months following the Date of Termination. In the
event that payments are so delayed, a lump sum payment of the accumulated unpaid
amounts attributable to the six (6) month period shall be made to Executive on the
first day of the seventh month following the Date of Termination. This six month
delay shall not apply to any Severance Benefits which are not subject to the
requirements of Section 409A of the Code by reason of (i) their being separation pay
upon an involuntary separation from service or their being paid on account of a
Change of Control and (ii) their otherwise
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meeting the requirements and limitations of the regulations under the above
referenced Code section. In no event shall the aggregate amount of Severance
Benefits be reduced as a result of such modification or adjustment.
The amendments to the Agreement will be effective January 1, 2008. If you are in agreement with
these amendments, please return a signed copy of this letter to me.
Sincerely,
ProAssurance Corporation
By
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Accepted on this 26th day of February, 2008.
