Exhibit 10.2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Amended
Employment Agreement") is made as of November 11, 2005, to be effective as of
the date hereof, by and between DARWIN PROFESSIONAL UNDERWRITERS, INC., a
Delaware corporation (the "Company"), and ▇▇▇▇ ▇. ▇▇▇▇▇ (the "Executive").
WHEREAS, prior to the date hereof, the Executive has been employed as
Senior Vice President of the Company pursuant to an Employment Agreement dated
as of May 18, 2004 by and among the Executive, the Company and, for purposes of
joining in certain provisions thereof, Alleghany Insurance Holdings LLC ("AIHL,"
and such Employment Agreement, the "Employment Agreement"); and
WHEREAS, AIHL is the sole stockholder of Darwin Group, Inc., a
Delaware corporation ("Darwin Group"); and
WHEREAS, AIHL intends to contribute $135,000,000 to the capital of
Darwin Group (the "Capital Contribution") and, subsequent to the Capital
Contribution, to contribute Darwin Group to the Company, which contribution may
take the form of a merger of Darwin Group with and into the Company, with the
Company as the surviving corporation in the merger, or, alternatively, the
exchange of shares of common stock of Darwin Group owned by AIHL for shares of
Series B Preferred Stock of the Company, all as provided in the Contribution and
Exchange Agreement by and among the Company, Darwin Group and AIHL (the
"Contribution Agreement"), a copy of which is attached hereto as Exhibit A; and
WHEREAS, in connection with the Capital Contribution and the
contribution of Darwin Group to the Company, the Company and the Executive
mutually desire to enter into this Amended Employment Agreement to provide for
the modifications of the terms of the Employment Agreement as are set forth
herein and to set forth certain additional agreements between the Executive and
the Company; and
WHEREAS, since AIHL has no continuing obligations to the Company or to
the Executive under the terms of this Amended Employment Agreement, each of the
Company and the Executive is willing to release AIHL from all of its obligations
under the Employment Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
representations contained herein, the Company and the Executive hereby agree as
follows:
1. Employment Period.
The Company will employ the Executive, and the Executive will serve
the Company, under the terms of this Amended Employment Agreement for a period
beginning as of the date hereof and terminating on July 28, 2007 (the "Initial
Term Expiration Date"), unless such period shall have been earlier terminated in
accordance with the terms hereof. Following July 28, 2007, the term of the
Executive's employment hereunder shall automatically be renewed for renewal
terms of one year each, unless either the Company or the Executive gives written
notice of non-renewal of the Executive's employment at least ninety days prior
to the end of the initial term or any subsequent renewal term. The period of the
Executive's employment hereunder, including any renewal term, is referred to
herein as the "Employment Period".
2. Duties and Status.
(a) The Company hereby engages the Executive as a full-time executive
employee for the Employment Period, and the Executive accepts such employment,
on the terms set forth in this Amended Employment Agreement. The Executive shall
serve as Senior Vice President of the Company and as a member of the Board of
Directors of the Company. During the Employment Period, the Executive shall
exercise such authority and perform such executive duties and functions, and
discharge such responsibilities, as are assigned to him by the President and
Chief Executive Officer of the Company,
(b) During the Employment Period, the Executive shall devote his full
business time and efforts to the business of the Company and accept such
additional office or offices to which he may be elected by the Board of
Directors of the Company (the "Board of Directors"), provided that the
performance of the duties of such office or offices shall be consistent with the
scope of the duties provided for in Section 2(a) hereof.
(c) If requested by the President and Chief Executive Officer of the
Company, the Executive shall also serve, without additional compensation, as an
officer and/or director of any or all of the Subsidiaries of the Company.
(d) Nothing in this Amended Employment Agreement shall preclude the
Executive from devoting reasonable periods of time required for engaging in
charitable, religious, civic and community activities, provided that such
activities do not interfere with his duties hereunder.
3. Compensation.
(a) Base Salary. During the Employment Period, the Company will pay to
the Executive, as compensation for the performance of his duties and obligations
hereunder, a base salary at the rate of $318,270 per annum, subject to normal
withholding and other taxes, payable in arrears not less frequently than monthly
in accordance with the normal payroll schedule of the Company. Such base salary
will be subject to review prior to January 1 of each year for possible increase
by the Compensation Committee of the Board of Directors (the "Compensation
Committee"), but shall in no event be decreased from its then existing level
during the Employment Period.
(b) Annual Bonus Plan. The Company has established and will maintain
an annual incentive compensation plan in which the Executive does and will
continue to participate. Under such plan, the Executive is eligible to receive
an annual bonus with a target of not less than 50% of the Executive's base
salary for each such year of employment, commencing on January 1 of each year.
The amount of each target annual bonus paid to the Executive will depend upon
the extent to which, in the judgment of the Compensation Committee, the Company
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and the Executive have achieved reasonable performance objectives previously
established and mutually agreed to by the Executive and the Compensation
Committee.
(c) Long-Term Incentive Plan. The Company has established and will
maintain a long-term incentive plan (the "LTIP") for the Executive and other
officers nominated by the Executive and approved by the Board of Directors or
Compensation Committee (including the Executive, the "LTIP Participants"). The
LTIP consists of interests in successive annual profit pools established for
each calendar year (each such profit pool, a "Profit Pool," and each such year,
a "Profit Pool Year").
It is the intention of the Company that 100% of the interests in each
Profit Pool established under the LTIP shall be awarded for each Profit Pool
Year. The Executive shall be entitled to receive an interest of 15% in the
Profit Pool for each full Profit Pool Year for which the Executive serves as
Senior Vice President of the Company; provided, however, that in the event that,
for any Profit Pool Year during the Employment Period, the interest of the
President and Chief Executive Officer of the Company in the Profit Pool for such
Profit Pool Year is increased above 40% or decreased below 40%, the Executive's
interest in the Profit Pool shall be increased or decreased by a proportionate
amount (for example, if the interest of the President and Chief Executive
Officer in a Profit Pool were increased from 40% to 50%, then the Executive's
interest in the Profit Pool would be increased from 15% to 18.75%).
The Executive consents to the amendment and restatement of the LTIP in
the form attached hereto as Exhibit B.
4. Employee Benefits.
During the Employment Period, the Executive will be entitled to
participate in the employee benefit plans and programs of the Company to the
extent that his position, tenure, salary, age, health and other qualifications
make him eligible to participate. Such plans and programs shall include all
life, accident, disability and health insurance plans of the Company, all
pension plans of the Company, and any other similar plans and programs of the
Company, as in existence at any time during the Employment Period (including the
initial term and any renewal term). The Executive will be entitled to four weeks
vacation time during each calendar year in which he is employed hereunder.
5. Restricted Stock.
The Executive has received a grant of 5,000 shares of restricted stock
of the Company (representing, as of the date of this Amended Employment
Agreement, 1% of the outstanding shares of common stock of the Company),
pursuant to a restricted stock plan (the "Restricted Stock Plan") established by
the Company for the benefit of the Executive and other officers nominated by the
President and Chief Executive Officer and approved by the Board of Directors or
the Compensation Committee. Such shares of restricted stock were granted to the
Executive pursuant to a restricted stock award agreement (the "Restricted Share
Agreement").
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The Executive consents to the amendment and restatement of the
Restricted Stock Plan in the form attached hereto as Exhibit C and to the
amendment and restatement of the Restricted Share Agreement in the form attached
hereto as Exhibit D.
6. Consent.
The Executive consents to the terms of the Contribution Agreement, a
copy of which is attached hereto as Exhibit A, including without limitation the
terms and conditions of Section 2 (Darwin Group Transfer; Exchange of DPUI
Common Stock), Section 4 (Related Party Transactions) and Section 6 (Certain
Activities) thereof, and the terms and conditions set forth on Exhibit C
thereto.
7. Termination of Employment.
(a) Termination for Cause. The Executive's employment with the Company
may be terminated for "cause," which is defined to mean the following:
(i) the commission by the Executive of gross misconduct in
connection with the performance of any of the Executive's duties;
(ii) willful failure by the Executive to implement reasonable
directives of the President and Chief Executive Officer of the Company,
after written notice of such failure to the Executive, which failure is not
corrected within 10 days following delivery of such written notice; or
(iii) the Executive's conviction of a felony.
(b) Termination for Good Reason. The Executive shall have the right at
any time to terminate his employment with the Company for any reason. The
termination of the Executive's employment shall be deemed to be for "good
reason" if and only if such termination shall be the result of:
(i) a material reduction, without the Executive's consent, of the
Executive's responsibilities;
(ii) relocation of the principal executive offices of the
Company, without the Executive's consent, to a location more than 25 miles
from their current location in Farmington, Connecticut;
(iii) termination by any of the Capitol Companies, prior to
December 31, 2007, of the fronting arrangements currently in place between
the Capitol Companies and the insurance company subsidiaries of Darwin
Group;
(iv) a material breach by the Company in the performance of any
of its obligations under this Amended Employment Agreement (including its
obligation to cause any successor to assume the obligations of the Company
hereunder as provided in Section 15 hereof), after written notice of such
breach to the President and Chief
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Executive Officer of the Company, which breach is not corrected within 10
days following delivery of such written notice; or
(v) the Company's delivery to the Executive of written notice of
nonrenewal of the Executive's employment upon the expiration of the initial
term or any renewal term (provided that, unless otherwise agreed by the
Company, termination by the Executive of his employment following the
Company's delivery of such notice of non-renewal shall be deemed to be for
"good reason" pursuant to this clause (v) only if the Executive remains in
the employment of the Company until the expiration of the initial term or
such renewal term, as the case may be).
(c) Consequences of Termination Without Cause or for Good Reason. In
the event of a termination of the Executive's employment during the Employment
Period (x) by the Company, which termination is not a termination for "cause"
(as defined above) or (y) by the Executive for "good reason" (as defined above),
and provided that such termination is not by reason of death, Retirement (as
defined in Section 7(d) hereof) or Disability (as defined in Section 7(d)
hereof), then (i) the Executive shall be entitled to continued payment of base
salary for a period of 12 months following the date of termination, (ii) the
Executive shall be entitled to payment of his target annual bonus for the year
in which the date of termination occurs, such payment to be made at the time
other officers of the Company receive bonus payments in respect of such year,
(iii) the Executive shall be entitled to a Medical Coverage Subsidy (as defined
under Section 7(l) below), (iv) all LTIP interests held by the Executive shall
fully and immediately vest, with payouts to the Executive in respect of his
interests in outstanding Profit Pools thereunder to be made at the times, in the
amounts and in the manner provided in the LTIP for payments to other LTIP
Participants whose employment with the Company is continuing, (v) all shares of
restricted stock previously awarded to the Executive shall fully and immediately
vest, and (vi) following the determination of Fair Market Value in accordance
with the provisions of the Restricted Stock Plan and the Restricted Share
Agreement, the Executive shall sell to the Company, and the Company shall
purchase from the Executive, all shares of restricted stock which have vested as
of the date of termination (including shares of restricted stock which have
vested by reason of such termination), and any other shares of common stock of
the Company which may then be owned by the Executive; provided, however, that
the provisions of this Section 7(c)(vi) shall not apply if an IPO has occurred
prior to the date of such termination of the Executive's employment hereunder.
(d) Termination Upon Death, Retirement or Disability. The Employment
Period shall be terminated by the death of the Executive. The Employment Period
may be terminated by the Executive by reason of the Executive's retirement
("Retirement") at any time on or after December 31, 2007. The Employment Period
may be terminated by the Board of Directors if the Executive is unable to
discharge his duties hereunder due to physical or mental illness for one or more
periods totaling six months during any consecutive twelve-month period
("Disability").
(e) Consequences of Termination Upon Death or Disability. In the event
of a termination of the Executive's employment during the Employment Period by
reason of the Executive's death or Disability (as defined above), then (i) the
Executive shall be entitled to continued payment of base salary through the date
of termination, (ii) the Executive shall not be
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entitled to any payment of annual bonus provided for in Section 3(b) above in
respect of the year in which the date of termination occurs, (iii) the Executive
shall be entitled to receive payouts in respect of all LTIP interests held by
the Executive which have vested at the date of termination, such payouts to the
Executive in respect of his interests in outstanding Profit Pools thereunder to
be made at the times, in the amounts and in the manner provided in the LTIP for
payments to other LTIP Participants whose employment with the Company is
continuing, (iv) all LTIP interests held by the Executive which have not vested
at the date of termination shall be forfeited, (v) all shares of restricted
stock previously awarded to the Executive shall fully and immediately vest, and
(vi) following the determination of Fair Market Value in accordance with the
provisions of the Restricted Stock Plan and the Restricted Share Agreement, the
Executive shall sell to the Company, and the Company shall purchase from the
Executive, all shares of restricted stock which have vested as of the date of
termination (including shares of restricted stock which have vested by reason of
such termination), and any other shares of common stock of the Company which may
then be owned by the Executive; provided, however, that the provisions of this
Section 7(e)(vi) shall not apply if an IPO has occurred prior to the date of
such termination of the Executive's employment hereunder. In addition to the
foregoing, in the event of a termination of the Executive's Employment Period
during the Employment Period by reason of the Executive's Disability (as defined
above), the Company shall provide a Medical Coverage Subsidy (as defined under
Section 7(1) below).
(f) Consequences of Termination Upon Retirement. In the event of a
termination of the Executive's employment during the Employment Period by reason
of the Executive's Retirement (as defined above), then (i) the Executive shall
be entitled to continued payment of base salary through the date of termination,
(ii) the Executive shall not be entitled to any payment of annual bonus provided
for in Section 3(b) above in respect of the year in which the date of
termination occurs (unless the date of Retirement is December 31, in which case
the Executive will be entitled to an annual bonus for the year in which he
retires), (iii) all LTIP interests held by the Executive in Profit Pools for
Profit Pool Years ending on or prior to the date of termination shall fully and
immediately vest, with payouts to the Executive in respect of his interests in
such outstanding Profit Pools to be made at the times, in the amounts and in the
manner provided in the LTIP for payments to other LTIP Participants whose
employment with the Company is continuing, (iv) all shares of restricted stock
previously awarded to the Executive shall fully and immediately vest, and (v)
following the determination of Fair Market Value in accordance with the
provisions of the Restricted Stock Plan and the Restricted Share Agreement, the
Executive shall sell to the Company, and the Company shall purchase from the
Executive, all shares of restricted stock which have vested as of the date of
termination (including shares of restricted stock which have vested by reason of
such termination), and any other shares of common stock of the Company which may
then be owned by the Executive; provided, however, that the provisions of this
Section 7(f)(v) shall not apply if an IPO has occurred prior to the date of such
termination of the Executive's employment hereunder. Following a termination of
the Executive's employment hereunder by reason of Retirement, the Executive and
the Company may, but shall not be required to, mutually agree that the Executive
will continue to provide services to the Company on a part-time basis, with the
Executive's compensation and benefit package for such post-Retirement service to
be agreed by the Company and the Executive. The parties presently contemplate
that, during any such period of post-Retirement service, the Executive would, to
the extent permitted by the Company's group
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medical insurance policy (and, unless otherwise agreed, at the Executive's
expense), be permitted to maintain coverage under the Company's group medical
insurance policy.
(g) Other Terminations of Employment. In the event that the
Executive's employment with the Company is terminated by the Company for "cause"
(as defined above) or by the Executive other than for "good reason" (as defined
above), and provided that such termination is not as a result of death,
Retirement (as defined above) or Disability (as defined above), then (i) the
Executive shall be entitled to continued payment of base salary through the date
of termination, (ii) the Executive shall not be entitled to any payment of
annual bonus provided for in Section 3(b) above in respect of the year in which
the date of termination occurs, (iii) all LTIP interests held by the Executive,
whether vested or unvested, shall be forfeited, (iv) all shares of restricted
stock previously awarded to the Executive which have not vested at the date of
termination shall be forfeited, and (v) the Executive shall sell to the Company,
and the Company shall purchase from the Executive, all of the shares of
restricted stock previously awarded to the Executive which have vested at the
date of termination, and any other shares of common stock of the Company which
may then be owned by the Executive, at a price per share equal to the GAAP Book
Value of one share of common stock of the Company as of the Determination Date,
with such sale to occur promptly following the Determination Date, as determined
in accordance with the provisions of the Restricted Stock Plan and the
Restricted Share Agreement; provided, however, that the provisions of this
Section 7(g)(v) shall not apply if an IPO has occurred prior to the date of such
termination of the Executive's employment hereunder.
(h) Change of Control Event. In the event of a Change of Control
Event, (i) all LTIP interests held by the Executive shall fully and immediately
vest on the date of such Change of Control Event, with payouts to the Executive
in respect of his interests in outstanding Profit Pools thereunder to be made at
the times, in the amounts and in the manner provided in the LTIP for payments to
other LTIP Participants whose employment with the Company is continuing (whether
or not the Executive elects to terminate the Employment Period in connection
with such Change of Control Event as provided in the succeeding sentence of this
Section 7(h)), and (ii) all shares of restricted stock previously awarded to the
Executive shall fully and immediately vest. In addition, in connection with the
occurrence of a Change of Control Event, the Executive shall have the right to
terminate the Employment Period, such termination to be effective on the date of
such Change of Control Event, and, in the event that the Executive elects to
terminate the Employment Period, (i) the Executive shall be entitled to
continued payment of base salary through the date of termination and (ii) the
Executive shall be entitled to receive payment, on the date of such Change of
Control Event, of an amount equal to (x) (A) his target annual bonus provided
for in Section 3(b) above in respect of the year in which the date of
termination occurs multiplied by (B) the number of days elapsed between January
1 of such year and the date of such Change of Control Event, divided by (y) 365.
The Executive shall not be entitled to any other payments or benefits hereunder
in connection with such a termination.
(i) No Mitigation. Following termination of the Executive's employment
with the Company, the Executive shall be under no obligation to seek
re-employment and there shall be no offset against amounts due the Executive
under this Amended Employment
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Agreement on account of any remuneration attributable to any subsequent
employment that he may obtain.
(j) Nature of Payments. Any amounts due under this Section 7 are in
the nature of severance payments considered to be reasonable by the Company and
are not in the nature of a penalty.
(k) Section 409A. Notwithstanding any other provision of this Amended
Employment Agreement to the contrary, in the event that any amounts of
compensation payable or benefits provided under this Amended Employment
Agreement upon the termination of the employment of the Executive are considered
as the deferral of compensation pursuant to a "nonqualified deferred
compensation plan" within the meaning of Section 409A of the Code, then this
Amended Employment Agreement shall be construed, and such compensation shall be
payable or benefits provided, so that this Amended Employment Agreement and the
payment of such compensation or benefits satisfies the requirements of Section
409A(2), (3) and (4) of the Code. The Company and the Executive shall use their
reasonable best efforts to mutually agree, prior to December 31, 2006, to such
reasonable amendments to this Amended Employment Agreement requested by the
Executive as to the time of payment (which time shall not be earlier than the
time presently provided herein) of any amounts of compensation payable or
benefits to be provided upon the termination of employment of the Executive so
as to conform this Amended Employment Agreement with the requirements of Section
409A and Proposed Treasury Regulations Sections 1.409A-1 et seq. The Company
shall have no liability either for any delay in the payment of any compensation
or the provision of any benefit (and it shall not be a breach of this Amended
Employment Agreement) that the Company reasonably believes is required by the
provisions of this Section 7(k) or for paying any amount of compensation or
providing any benefit that the Company reasonably believes will not violate the
requirements of Section 409A(2), (3) and (4) of the Code; provided, however,
that in the event of any such delay in the payment of compensation, the Company
shall pay interest on the amount of the payment so delayed, until the date of
payment, at a rate per annum equal to the 90-day U.S. Treasury rate.
(l) Medical Coverage Subsidy. If the Executive becomes entitled to a
"Medical Coverage Subsidy" under either Section 7(c) or Section 7(e) above, the
Company shall pay on the Executive's behalf (i) the monthly COBRA premium under
its group medical plans (the "Medical Plans") applicable to the Executive, his
spouse and dependents for the twelve-month period immediately following the
Executive's employment termination and (ii) a tax gross-up payment on each
monthly COBRA premium payable at the same time as each monthly COBRA premium.
The tax gross up payment under this Section 7(l) shall be an amount such that,
after payment of all federal, state and local income and employment taxes on
such amount (assuming that the Executive is subject to tax at the highest
marginal tax rates), there remains a balance sufficient to pay the taxes being
reimbursed. Notwithstanding the foregoing, if the Company is able to arrange for
direct payment of the medical insurance premiums of the Executive, his spouse
and dependents under the Company's medical plans for the twelve-month period in
which he would be entitled to a Medical Coverage Subsidy under either Section
7(c) or Section 7(e) above in a manner that does not result in taxable income to
the Executive, the Company shall be entitled to make such direct payment in such
alternative manner and no tax gross up payment shall be required.
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8. Excise Tax.
If any payments, rights or benefits (whether pursuant to the terms of
this Amended Employment Agreement or any other plan, arrangement or agreement
between the Executive and the Company or any Affiliate of the Company) (the
"Payments") received or to be received by Executive will be subject to the tax
(the "Excise Tax") imposed by Section 4999 of the Code (or any similar tax that
may hereafter be imposed), then the Company shall pay to Executive an amount in
addition to the Payments (the "Gross-Up Payment") as calculated below. The Gross
Up Payment shall be in an amount such that, after deduction of any Excise Tax on
the Payments and any federal, state and local income and employment tax and
Excise Tax on the Gross Up Payment, but before deduction for any federal state
or local income and employment tax on the Payments, the net amount retained by
the Executive shall be equal to the Payments. The process for calculating the
Excise Tax, determining the amount of any Gross-Up Payment and other procedures
relating to this Section 8 are set forth in Exhibit E attached hereto. For
purposes of making the determinations and calculations required herein, the
Accounting Firm (as defined in Exhibit E) may rely on reasonable, good faith
interpretations concerning the application of Section 280G and Section 4999 of
the Code, provided that the Accounting Firm shall make such determinations and
calculations on the basis of "substantial authority" (within the meaning of
Section 6662 of the Code) and shall provide opinions to that effect to both the
Company and to the Executive.
9. Certain Definitions.
"Affiliate," when used with reference to any Person, shall mean
another Person that directly, or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with the Person
specified. The term "control" (including the terms "controlled by" and "under
common control with") means the ability, directly or indirectly, to direct or
cause the direction of the management and policies of the Person in question.
"Alleghany" means Alleghany Corporation.
"Capitol Companies" means, collectively, Capitol Indemnity
Corporation, Capitol Specialty Insurance Corporation, and Platte River Insurance
Company.
"Change of Control Event" means (i) prior to an IPO, (x) the
occurrence of any Person, other than Alleghany or an Affiliate of Alleghany,
owning directly or indirectly more than 50% of the outstanding voting securities
(weighted by voting power) of the Company, or (y) a sale of more than 50% of the
total gross fair market value of the assets of the Company to any Person other
than Alleghany or an Affiliate of Alleghany, and (ii) subsequent to an IPO, (x)
the occurrence of any Person or Group, other than Alleghany or an Affiliate of
Alleghany, owning directly or indirectly more than 50% of the outstanding voting
securities (weighted by voting power) of the Company, or (y) a sale of more than
50% of the total gross fair market value of the assets of the Company to any
Person or Group other than Alleghany or an Affiliate of Alleghany.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder by the U.S. Treasury Department, as amended
from time to time.
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"Determination Date" means (i) the last day of the second calendar
year following the date of termination of Executive's employment, if the date of
termination is on or prior to June 30, and (ii) the last day of the third
calendar year following the date of termination of Executive's employment, if
the date of termination is on or after July 1.
"Fair Market Value" means Fair Market Value as determined in
accordance with the provisions of the Restricted Stock Plan and the Restricted
Share Agreement.
"GAAP Book Value" means GAAP Book Value as determined in accordance
with the provisions of the Restricted Stock Plan and the Restricted Share
Agreement.
"Group" has the meaning set forth in Rule 13d-5 under the Securities
Exchange Act of 1934, as amended, as of the date hereof; provided, however, that
no Person (including without limitation Alleghany and any Affiliate of
Alleghany) who holds shares of Series B Preferred Stock, or who holds shares of
common stock of the Company acquired upon conversion of shares of Series B
Preferred Stock, shall be deemed to be a member of a Group, notwithstanding such
Person's being party to a voting agreement or any other agreement with other
Persons who are holders of shares of Series B Preferred Stock or of shares of
common stock of the Company acquired upon conversion of shares of Series B
Preferred Stock.
"IPO" means the initial public offering of Company Common Stock
pursuant an effective registration statement under the Securities Act of 1933,
as amended, in connection with which the Company Common Stock becomes listed on
a U.S. national securities exchange or traded on the Nasdaq National Market
System.
"Person" shall mean any natural person, corporation, partnership,
limited partnership, limited liability company, joint venture, firm,
association, trust, unincorporated organization, government or governmental
agency or any other entity.
"Series B Preferred Stock" means the shares of Series B Convertible
Preferred Stock of the Company, par value $0.10 per share.
"Subsidiary" means, with respect to any Person, (i) a corporation of
which shares of stock having ordinary voting power (other than stock having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation are at the time
owned, directly or indirectly, through one or more intermediaries, by such
Person, or (ii) in the case of unincorporated entities, any such entity with
respect to which such Person has the power, directly or indirectly, to designate
more than 50% of the individuals exercising functions similar to a board of
directors.
10. Representations; Release of AIHL.
(a) The Executive represents and warrants to the Company that he is
not subject to or bound by any agreement that would affect his ability to enter
into this Amended Employment Agreement, to serve as Senior Vice President of the
Company, to serve as a member of the Board of Directors of the Company, to serve
as an officer or director of any
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Subsidiary of the Company, or to solicit executives for employment by the
Company, and that this Amended Employment Agreement has been duly executed and
delivered by the Executive.
(b) The Company represents and warrants to the Executive that this
Amended Employment Agreement has been duly authorized, executed and delivered by
it.
(c) Each of the Company and the Executive hereby consents, and agrees
to the full release and discharge of AIHL from all of the obligations of AIHL
under the Employment Agreement.
11. Noncompetition; Nondisclosure; Nonsolicitation.
The Company and the Executive agree that the services rendered by the
Executive hereunder are unique and irreplaceable. The Executive hereby agrees
that he will not, during the Employment Period (including the initial term and
any renewal term) or during any period following the date of the Executive's
Retirement Period during which the Executive continues to provide services to
the Company on a part-time basis as contemplated by Section 7(f) above, and for
a period of 12 months thereafter:
(i) engage or participate, directly or indirectly, as an officer,
director, employee, partner or consultant with primary responsibility for
activities in the fields of D&O, E&O and/or professional liability
insurance or reinsurance in the United States of America (a "Competing
Activity"), or in any business which is, or as a result of the Executive's
engagement or participation would become, a Competing Activity; or
(ii) solicit or recruit any officer or employee of Alleghany or
any Subsidiary of Alleghany to join any other company to engage in a
Competing Activity, or solicit or recruit a substantial number of employees
of Alleghany or any Subsidiary of Alleghany to work with any company with
whom the Executive is associated.
The Executive further agrees that, during the Employment Period
(including the initial term and any renewal term) and at all times thereafter:
(i) he shall keep secret and retain in strictest confidence, and
will not use for his benefit or the benefit of others, any and all
confidential information relating to Alleghany, the Company or any of their
Affiliates disclosed to him in the course of his employment hereunder,
including, without limitation, trade secrets, customer lists and other
secret or confidential aspects of any of their businesses, and the
Executive further agrees that he shall not disclose such information to
anyone outside Alleghany, the Company or their Affiliates, except in the
performance by him of the services provided for hereunder or as required by
law in connection with any judicial or administrative proceeding or inquiry
(provided prior written notice thereof is given by the Executive to the
Company and to Alleghany) or with the prior written consent of the Company,
unless such information is known generally to the public or the trade
through sources other than the Executive's unauthorized disclosure; and
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(ii) he shall not engage in or participate in, directly or
indirectly, any business conducted under a name that shall be the same as
or similar to the name of, or any trade name used by, Alleghany, the
Company or any of their Affiliates.
The Executive acknowledges that irreparable damage would result
to the Company if the provisions of this Section 11 are not specifically
enforced, and agrees that the Company shall be entitled to any appropriate
legal, equitable or other remedy, including injunctive relief, in respect
of any failure to comply with the provisions of this Section.
12. Business Expenses.
The Company shall promptly reimburse the Executive for all
appropriately documented, reasonable business expenses incurred by the Executive
in the performance of his duties under this Amended Employment Agreement, in
accordance with the Company's policies.
13. Office.
The Company shall provide the Executive with a suitable workplace
appropriate for his responsibilities, secretarial and other business services at
the Company's principal executive offices, which office space shall initially be
located in the Company's current office space in Farmington, Connecticut.
14. Insurance.
The Company shall have the right at its own cost and expense to apply
for and to secure in its own name, or otherwise, life, health or accident
insurance, or any or all of them, covering the Executive, and the Executive
agrees to submit to the usual and customary medical examination and otherwise to
cooperate with the Company in connection with the procurement of any such
insurance, and any claims thereunder.
15. Waiver of Breach.
Any waiver of any breach of this Amended Employment Agreement shall
not be construed to be a continuing waiver or consent to any subsequent breach
on the part either of the Executive or of the Company.
16. Assignment.
(a) This Amended Employment Agreement shall be binding upon and shall
inure to the benefit of the Company, its successors and any person or other
entity that succeeds to all or substantially all of the business, assets or
property of the Company. Except as specifically provided otherwise herein or as
otherwise required by applicable law, the Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation, transfer or
otherwise) to all or substantially all of the business, assets or property of
the Company, to expressly assume and agree to perform the obligations of the
Company under this Amended Employment Agreement in the same manner and to the
same extent that the Company is required to perform hereunder. As used in this
Amended Employment Agreement, the "Company" shall
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mean the Company as hereinabove defined and any successor to its business,
assets or property as aforesaid which executes and delivers an agreement
provided for in this Section 16 or which otherwise becomes bound by all the
terms and provisions of this Amended Employment Agreement by operation of law.
Except as provided by the foregoing provisions of this Section 16, this Amended
Employment Agreement shall not be assign able by the Company without the prior
written consent of the Executive.
(b) This Amended Employment Agreement is personal in nature and the
rights and obligations of the Executive hereunder are not assignable to any
person. If the Executive should die while any cash amounts are due and payable
to the Executive hereunder, all such amounts, unless otherwise provided herein,
shall be paid to the Executive's designated beneficiary or, if there is no such
designated beneficiary, to the legal representatives of the Executive's estate.
If the Executive should die prior to an IPO and at the time of death shall own
any shares of common stock of the Company (whether restricted shares granted to
the Executive pursuant to the Restricted Stock Plan or otherwise), all of such
shares shall be sold by the Executive's designated beneficiary, or legal
representatives, as the case may be, to the Company for a purchase price equal
to the Fair Market Value as of the Determination Date, to be determined in
accordance with the provisions of the Restricted Stock Plan and the Restricted
Share Agreement; provided, however, that in the event that the Executive should
die prior to the occurrence of an IPO and an IPO subsequently occurred prior to
the Determination Date, then, upon the occurrence of the IPO, the requirement of
this Section 16(b) that the shares of common stock of the Company Owned by the
Executive at the time of death be sold to the Company will be terminated.
17. Severability.
To the extent any provision of this Amended Employment Agreement or
portion thereof shall be invalid or unenforceable, it shall be considered
deleted therefrom and the remainder of such provision and of this Amended
Employment Agreement shall be unaffected and shall continue in full force and
effect. In furtherance and not in limitation of the foregoing, should the
duration or geographical extent of, or business activities covered by, any
provision of this Amended Employment Agreement be in excess of that which is
valid and enforceable under applicable law, then such provision shall be
construed to cover only that duration, extent or activities which may be validly
and enforceably covered.
18. Third-Party Beneficiaries.
This Amended Employment Agreement is for the benefit of the parties
hereto and their respective successors and permitted assigns, and, except for
the release and discharge of AIHL by the Company and by the Executive provided
for in Section 10(c) hereof, is not intended to confer upon any other Person any
rights or remedies hereunder.
19. Survival.
This Amended Employment Agreement shall terminate upon the expiration
of the Employment Period or, if earlier, upon the termination of the Executive's
employment under any of the circumstances described in Section 7, except that
the terms of this Amended Employment
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Agreement which must survive the termination of this Amended Employment
Agreement in order to be effectuated (including the provisions of Sections 6, 7,
8, 9, 10, 11, 15, 16, 17, 18, 20, 21, 22, 23 and this Section 19) shall survive.
20. Notices.
All notices, requests and other communications pursuant to this
Amended Employment Agreement shall be in writing and shall be deemed to have
been duly given, if delivered in person or by courier, or sent by express,
registered or certified mail, postage prepaid, addressed as follows:
If to the Company:
Darwin Professional Underwriters, Inc.
▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chairman
with a copy to:
Alleghany Corporation
▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
If to the Executive:
▇▇▇▇ ▇. ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Any party may, by written notice to the other parties hereto, change the address
to which notices to such party are to be delivered or mailed.
21. Amendment.
This Amended Employment Agreement may be amended or modified only by a
written instrument executed by the Company and the Executive.
22. Government Law.
This Amended Employment Agreement shall be construed and enforced in
accordance with the laws of the State of Connecticut, without giving effect to
the choice of law principles thereof.
[Remainder of page intentionally blank]
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23. Entire Agreement.
This Amended Employment Agreement, together with the Exhibits hereto
and the other writings referred to herein or delivered pursuant hereto, which
form a part hereof, contains the entire agreement and understanding between the
Company and the Executive with respect to the subject matter hereof and
supersedes and preempts any prior understandings, agreements or representations
by or between the parties, written or oral, which may have related to the
subject matter hereof in any way.
IN WITNESS WHEREOF, the parties have executed this Amended Employment
Agreement as of the date first written above.
DARWIN PROFESSIONAL UNDERWRITERS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive
Officer
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
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