EMPLOYMENT AGREEMENT
Exhibit 10.10
THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of the 27th day of
February, 2004, by and between FIRST MERCURY FINANCIAL CORPORATION, a Delaware corporation
(“Employer”), and XXXXXXX X. XXXXXX (“Employee”).
R E C I T A L S:
R.1. Employer is a Delaware corporation which holds ownership of various businesses in the
insurance and insurance related fields.
R. 2. Employee has skill and experience in the operations of insurance businesses.
R. 3. Employer desires to employ Employee under the terms and conditions contained herein.
R. 4. Employee desires to be employed by Employer under such terms and conditions.
NOW, THEREFORE, in consideration of the above premises and the mutual covenants and
conditions contained herein. Employer and Employee agree as follows:
1. EMPLOYMENT.
Employer employs Employee as its Chief Financial Officer, Senior Vice President and Treasurer
to perform the duties described in Section 3 of this Agreement, and Employee accepts such
employment upon all of the terms and conditions set forth in this Agreement for the term specified
in Section 2 of this Agreement.
2. TERM.
The term of employment under this Agreement (the “Term”) shall be continuous until Employee’s
employment is terminated pursuant to and in accordance with the terms hereof.
3. DUTIES.
A. Employee, as the Chief Financial Officer, Senior Vice President and Treasurer of Employer,
agrees and promises to perform and discharge in an efficient and competent manner the duties
assigned to Employee by Employer and shall devote his full business and professional time, energy
and diligence to the performance of such duties, for the conduct of Employer’s business. The duties
shall be those duties in connection with Employer’s business and affairs as are customarily
incident to the offices which Employee holds. In addition, Employee shall serve as a director of
Employer and as an officer and director of the subsidiaries and affiliates of Employer. Those
duties shall include those generally assigned to the chief financial officer, senior vice president
and treasurer of insurance holding and insurance businesses. Employee agrees to perform
those duties necessary to meet the reasonable expectations of Employer as established from time to
lime by Employer.
B. Employee shall devote such time, attention, and energies to the business of Employer as is
necessary for Employee to satisfactorily perform his duties as Chief Financial Officer, Senior Vice
President and Treasurer. Except as otherwise provided in this Agreement or Employer’s policies as
adopted by its Board of Directors, Employee shall not during the Term of
this Agreement be engaged
in any other business activity or accept any other employment, whether or not such business
activity is pursued for gain, profit, or other pecuniary advantage, without prior approval of
Employer.
C. During the Term of this Agreement, Employee agrees that he will not without the prior written
consent of Employer, either directly or indirectly, alone, or as a member of any other corporation,
partnership, organization or entity, engage in or become concerned with any other duties or
pursuits which are contrary to the best interest of Employer, except for personal investments which
do not conflict with the business of Employer or the time which Employee is required to devote to
Employer’s business activities.
4. COMPENSATION.
A. Base Salary: Employer shall pay to Employee an annual salary (“Base Salary”), payable in
installments twice each month in conformity with Employers ordinary executive payroll procedures in
effect during the Term. Employee’s initial Base Salary shall be TWO HUNDRED TWENTY FIVE THOUSAND
($225,000.00) Dollars.
B. Bonus Compensation: Employer may but shall not be obligated to pay Employee additional
compensation in the term of a bonus. Employer’s Chairman of the Board and Chief Executive Officer,
Xxxxxx X. Xxxx, and/or the Board of Directors may, at the end of each calendar year, evaluate
Employer, the performance of Employer, and determine Employee’s contribution to the performance.
Based upon this evaluation, Employer may, but shall not under any circumstances be obligated to,
pay Employee additional bonus compensation. Under no circumstances may Employees Base Salary be
reduced without Employee’s written consent.
5. BENEFITS.
Employer shall provide for Employee those employee welfare, pension and other benefits as
Employer from time to time provides to managerial employees. Anything contained in this Agreement
to the contrary notwithstanding, it is understood that Employer may modify, amend, change, alter,
revoke or terminate any Employer welfare, pension, or other plan currently maintained by Employer,
provided that such change shall apply to all managerial employees and not be specifically targeted
to or against Employee.
6. REIMBURSEMENT FOR EXPENSES
Employee shall be entitled to monthly reimbursements for reasonable costs and expenses of
travel and customer entertainment in the pursuit of Employer’s business; provided, however, that no
reimbursement shall be paid by Employer until Employee submits paid receipts and other
documentation acceptable to Employer and as required
by the Internal Revenue Service to qualify as ordinary and necessary business expenses
pursuant to the applicable provisions of the Internal Revenue Code of 1986, as amended.
7. VACATION
Employee shall receive such paid vacations as Employer may determine to be appropriate.
8. DEATH DURING EMPLOYMENT PERIOD
In the event Employee dies during the Term, Employer agrees and shall be obligated to pay to a
beneficiary named by Employee, and in the event that Employee shall not name a beneficiary then to
Employee’s estate, the balance of Employee’s Base Salary set forth in Section 4A above for the
remainder of the calendar year in which death occurs.
9. TERMINATION OF EMPLOYMENT
A. Employer shall have the right to immediately terminate Employee’s employment under this
Agreement in the following circumstance:
(i) For Reasonable Cause. As used in this Agreement, “Reasonable Cause” shall include any one or
more of the following: (a) willful misconduct on the part of Employee which causes material harm or
damage to Employer, (b) misappropriation by Employee of any material property of Employer, (c)
conviction of Employee of a felony, (d) the failure to perform competently the duties and
obligations assigned by Employer to Employee under the terms of this Agreement, or (e) any other
material breach by Employee of any of his obligations under this Agreement. Termination for
Reasonable Cause may occur with or without prior notice, in Employer’s sole discretion.
(ii) Upon a Change of Control. As used in this Agreement, “Change of Control” shall occur if:
(a) Any individual, partnership, firm, corporation, association. trust,
joint-stock company, unincorporated association or other entity, or any syndicate or
group deemed to be a person under Section 14(d)(2) of the Securities Exchange Act of
1934, as amended from time to time (the “Exchange Act”) (other than shareholders
holding more than 20% of Employer’s voting securities as of the effective date of this
Agreement), is or becomes the “beneficial owner” (as defined in Rule 13d-3 of the
General Rules and Regulations under the Exchange Act), directly or indirectly, of
securities of Employer representing 50% or more of the combined voting power of
Employer’s then outstanding securities entitled to vote in the election of directors
of Employer; or
(b) Xxxxxx X. Xxxx no longer shall be entitled either (i) pursuant to that
certain Agreement Among Stockholders of Mercury Insurance Group, Inc., (n/k/a First
Mercury Financial Corporation), effective as of January 1, 1994, amended and restated
by agreement effective October 23, 1998, as such agreement may be amended and/or
restated from time to time, or
(ii) as a stockholder of Employer pursuant to its By-Laws, to nominate for election
to Employer’s Board that number of individuals which will constitute a majority of
Employer’s Board; or
(c) All or substantially all of the assets of Employer are transferred,
liquidated or distributed.
B. Employer, at any time, shall have the right to terminate Employee’s employment under this
Agreement without cause upon ninety (90) days written notice, but, in that event, Employer shall be
required to pay to Employee severance pay in an amount equal to two times the Base Salary plus
bonus which Employee received in the calendar year prior to the year in which such termination
notice was given. Employee’s severance pay shall be paid to Employee in equal monthly installments,
the first installment to commence on the first day of the month after the ninety (90) day notice
expires, and a like payment to be paid to Employee on the first day of each month thereafter until
twenty four (24) consecutive equal monthly payments
have been made. The severance pay to be paid to
Employee shall be deemed to be in consideration for the agreement of Employee not to compete as set
forth in Section 10 below, and shall be in lieu of any benefits which Employee may have been
entitled to receive from Employer as an employee, which benefits shall terminate on the date of
Employee’s termination. The severance pay to be paid pursuant to this Section 98 shall be due and
payable only in the event that Employer elects in Employer’s sole discretion to terminate
Employee’s employment pursuant to this Section 9B. In addition, the severance pay to be paid to
Employee shall be in lieu of and shall not be in addition to benefits which Employee may have been
entitled to under the First Mercury Financial Corporation Executive Benefit Plan effective October
1, 1998, as amended, which plan is being terminated by Employer, and Employee consents to the
termination of such plan.
C. Employee’s right to terminate his employment with Employer under this Agreement shall be limited
to the following circumstances: (i) any material breach by Employer of any of its obligations under
this Agreement; (ii) the institution of any bankruptcy or similar proceeding against Employer, if
such proceeding is not dismissed within sixty (60) business days: (iii) the involuntary dissolution
of Employer; or (iv) for any reason or no reason following 90 days written notice to Employer.
10. CONFIDENTIAL INFORMATION
During employment and after termination of employment, Employee will not, unless otherwise
required to do so by law, divulge or furnish any of Employer’s confidential information to any
person, firm, company or corporation or use any such confidential information directly or
indirectly for Employee’s own benefit or for the benefit of any person, firm or entity other than
Employer. Employee acknowledges that all confidential information is to be and shall, at all times,
remain the property of Employer Confidential information as used herein shall mean, without
limitation, the names and addresses of brokers that do business with Employer, customer lists,
customer files, customer information including, but not limited to, expiration information and
types of coverages that customers require, pricing information, and product information of
Employer, marketing techniques and programs of Employer and methods that Employer procures
business, as well as information concerning Employer’s dealing with third parties such as
reinsurance companies.
Upon termination. Employer shall have the right to request that Employee enter into and
execute a separate agreement which reasonably incorporates the terms and conditions of this Section
10.
11. DISPUTE RESOLUTION.
Employer and Employee agree that any dispute arising out of or related to this Agreement, or
the breach thereof, whether occurring during the Term of the Agreement or after the Agreement
expires or is terminated, shall be submitted exclusively to binding arbitration in the following
manner:
A. Within ninety (90) days of a dispute arising, the aggrieved party shall send written notice to
the other party. Such notice shall describe the nature of the dispute that is claimed and the
relief demanded by the aggrieved party.
B. Within the next thirty (30) days, the parties shall attempt to resolve the dispute between
themselves through informal discussion.
C. If at the end of such thirty (30) days there is no resolution of the dispute, either party may
submit the dispute to binding arbitration pursuant to the Voluntary Labor Arbitration Rules of the
American Arbitration Association, as amended, which are incorporated herein by this reference. In
addition to those rules, the following provisions shall apply:
(i) The decision of the arbitrator shall be final and binding upon the parties.
(ii) Except as explicitly provided in this Agreement, in reaching his or her decision, the
arbitrator shall have no authority to add, subtract from or modify any provisions of this
Agreement.
(iii) In reaching his or her decision, the arbitrator may award damages and/or order the parties to
provide specific performance of the terms of this Agreement. However, the arbitrator may not under
any circumstances award punitive, exemplary or similar damages to either party.
D. By agreeing to this arbitration provision, both parties waive any and all rights they have to
pursue any other claims arising out of this Agreement or Employee’s employment with the Employer
through civil litigation in any local, state and/or federal court or administrative agency.
E. Neither Employer nor Employee shall have the right to appeal any decision or order of the
arbitrators or of arbitration to any court. Either party may enter any order, decision or judgment
of any arbitration panel or arbitrator in a court of competent jurisdiction.
F. Anything contained in this Agreement to the contrary notwithstanding, Employee acknowledges that
in the event that Employee were to violate the terms and conditions of Section 10 of this
Agreement, Confidential Information, Employer would suffer immediate and irreparable harm. In the
event of a violation or breach of the terms and conditions of Section 10, Employee agrees that
Employer is entitled to and shall be entitled to injunctive relief in addition to any other relief
or damages that Employer shall incur and which may be recoverable in any manner. Employer may seek
injunctive relief in any manner and in any form that Employer deems suitable in Employer’s sole
discretion, and shall be entitled to enforce injunctive relief in a court of competent
jurisdiction.
12. NOTICES.
Any and all notices given in connection with this Agreement shall be deemed adequately given
only if in writing and personally delivered or sent by first class registered or certified mail (or
any other means which are at least as fast and reliable as registered or certified mail), postage
prepaid, to the party for whom such notices are intended. A written notice shall be deemed to have
been given to the recipient party on the earlier of. (a) the date it shall be delivered to the
address required by this Agreement; or (b) the date delivery shall have been refused at the address
required by this Agreement; or (c) with respect to notices sent by mail or other means, the date as
of which the postal service or other carrier shall have indicated such notice to be undeliverable
at the address required by this Agreement. Any and all notices referred to in this Agreement, or
which either party desires to give to the other, shall be addressed as follows:
| To Employer: | First Mercury Financial Corporation | |||
| 00000 Xxxxxxxxxxxx Xxxxxxx | ||||
| Xxxxxxxxxx, Xx 00000 | ||||
| Attention: Xxxxxx X. Xxxx | ||||
| To Employee: | Xxxxxxx X. Xxxxxx | |||
| 00000 Xxxx Xxxxx Xxxxx | ||||
| Xxxxxxxxxx, Xx 00000 |
The above addresses may be changed by notice of such change, given as provided herein, to the
last address designated.
13. REPRESENTATION AND WARRANTY.
Employee represents and warrants that lie is in no way restricted, whether by an employment
agreement. a noncompetition agreement or otherwise, from entering into and performing under this
Agreement or from becoming employed by Employer.
14. MISCELLANEOUS.
A. CAPTIONS AND HEADINGS: The captions and headings herein are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the scope of this Agreement
or the intent of any provision thereof
B. GOVERNING LAW AND VENUE: This Agreement shall be construed and enforced in accordance with and
interpreted by the internal laws of the State of Illinois, without regard to principles of
conflicts of law.
C. WAIVER: No restriction, condition, obligation or provision contained in this Agreement shall be
deemed to have been abrogated or waived by reason of any failure
to enforce the same, irrespective of the number of violations or breaches thereof which may occur
D. SEVERABILITY: The provisions hereof shall be deemed independent and severable, and the
invalidity or partial invalidity or unenforceability of any provision shall not affect the validity
or enforceability of the remainder of this Agreement. In the event any provision is deemed
unenforceable, the remainder of this Agreement shall be modified to the minimum extent necessary to
render this Agreement valid and enforceable.
E. ASSIGNMENT: This Agreement is Employee’s personal undertaking, and Employee may not transfer or
assign any of his obligations or rights hereunder; however, this Agreement shall be binding upon
Employees heirs, executors, administrators and personal representatives. The rights and obligations
of Employer under this Agreement shall inure to the benefit of and shall be binding upon its
successors and assigns of Employer.
F. NO CONFLICTING OBLIGATIONS: Employee represents and warrants to Employer that he is not under,
or bound to be under in the future, any obligation to any person, firm or corporation that is or
would be inconsistent or conflict with this Agreement or would prevent, limit or impair in any way
the performance by Employee of his obligations hereunder.
G. COUNTERPARTS: This Agreement may be executed in multiple counterparts, each of which shall be
considered an original, but all of which, together. shall constitute a single agreement.
H. GENDER: The use of any gender in this Agreement shall be deemed to include either or both of the
genders, and the use of the singular shall be deemed to include the plural whenever the context so
requires.
I. AMENDMENT: This Agreement may be amended only by a written instrument signed by the parties
hereto
J. COMPLETE AGREEMENT: This Agreement constitutes the entire agreement and understanding among the
parties concerning the subject matter hereof and this Agreement supersedes any and all prior
negotiations, proposed agreements or understandings, if any, among the parties concerning any of
the provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed
as of the date first above written.
| EMPLOYER: | ||||||||
| FIRST MERCURY FINANCIAL CORPORATION | ||||||||
| By: | /s/ Xxxxxx X. Xxxx | |||||||
| Its: | Chairman | |||||||
| EMPLOYEE: | ||||||||
| /s/ Xxxxxxx X. Xxxxxx | ||||||||
| XXXXXXX X. XXXXXX | ||||||||
