Exhibit 10.12
[On July 15, 2008, the
Board of Directors of the Company approved amended and
restated Change of Control Employment Agreements for
executives in order to bring the agreements into compliance with
the provisions of Section 409A of the Internal Revenue Code of
1986, as amended, and to clarify the Company’s obligation to
pay retirement plan benefits upon termination of an executive in
certain circumstances following a change of
control.]
HILB ROGAL & HOBBS
COMPANY
AMENDED AND RESTATED CHANGE OF
CONTROL
EMPLOYMENT
AGREEMENT
WITH
Peter S. Gruenberg
CHANGE OF CONTROL EMPLOYMENT
AGREEMENT
AGREEMENT by and between Hilb
Rogal & Hobbs Company , a Virginia corporation (the
“Company”), and Peter S. Gruenberg (the
“Executive”), dated as of the 30th day of July,
2008.
The Board of Directors of the
Company (the “Board”), has determined that it is in the
best interests of the Company and its shareholders to assure that
the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change
of Control (as defined below) of the Company. The Board
believes it is imperative to diminish the inevitable distraction of
the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to
encourage the Executive’s full attention and dedication to
the Company currently and in the event of any threatened or pending
Change of Control, and to provide the Executive with compensation
and benefits arrangements upon a Change of Control which ensure
that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives,
the Board has caused the Company to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED
AS FOLLOWS:
1. Certain Definitions
.
(a) The “Effective
Date” shall mean the first date during the Change of Control
Period (as defined in Section 1(b)) on which a Change of
Control (as defined in Section 2) occurs. Anything in
this Agreement to the contrary notwithstanding, if a Change of
Control occurs and if the Executive’s employment with the
Company is terminated within the 12 months prior to the date on
which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment
(i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a
Change of Control (such a termination of employment, an
“Anticipatory Termination”) and if such Change of
Control is consummated, then for all purposes of this Agreement,
the “Effective Date” means the date immediately prior
to the date of such termination of employment.
(b) The “Change of Control
Period” shall mean the period commencing on the date hereof
and ending on the third anniversary of the date hereof; provided,
however, that commencing on the date one year after the date
hereof, and on each annual anniversary of such date (such date and
each annual anniversary thereof shall be hereinafter referred to as
the “Renewal Date”), unless previously terminated, the
Change of Control Period shall be automatically extended so as to
terminate three years from such Renewal Date, unless at least 60
days prior to the Renewal Date the Company shall give notice to the
Executive that the Change of Control Period shall not be so
extended.
(c) “Subsidiary” shall
mean any corporation that is directly, or indirectly though one or
more intermediaries, controlled by the Company.
2. Change of Control . For
the purpose of this Agreement, a “Change of Control”
shall be deemed to have taken place if:
(a) any individual, entity or
“group” (within the meaning of
Sections 13(d)(3) or 14(d)(2) of the Exchange
Act) becomes the beneficial owner of shares of the Company
having 25 percent or more of the total number of votes that may be
cast for the election of directors of the Company, other than
(i) as a result of any acquisition directly from the Company,
or (ii) as a result of any acquisition by any employee benefit
plans (or related trusts) sponsored or maintained by the
Company or its Subsidiaries; or
(b) there is a change in the
composition of the Board such that the individuals who, as of the
date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, for purposes of this
definition, that any individual who becomes a member of the Board
subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a
vote of at least a majority of those individuals who are members of
the Board and who were also members of the Incumbent Board (or
deemed to be such pursuant to this proviso) shall be
considered as though such individual were a member of the Incumbent
Board; but, provided further, that any such individual whose
initial assumption of office occurs as a result of either an actual
or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board shall not
be so considered as a member of the Incumbent Board; or
(c) if at any time,
(i) the Company shall consolidate with, or merge with, any
other Person and the Company shall not be the continuing or
surviving corporation, (ii) any Person shall consolidate with,
or merge with, the Company, and the Company shall be the continuing
or surviving corporation and in connection therewith, all or part
of the outstanding Common Stock shall be changed into or exchanged
for stock or other securities of any other Person or cash or any
other property, (iii) the Company shall be a party to a
statutory share exchange with any other Person after which the
Company is a Subsidiary of any other Person, or (iv) the
Company shall sell or otherwise transfer 50% or more of the assets
or earning power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons.
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3. Employment Period;
Guaranty . If the Executive is employed by the Company and/or a
Subsidiary on the Effective Date, the Company hereby agrees to
continue to employ and to cause such Subsidiary to continue to
employ the Executive, and the Executive hereby agrees to remain in
the employ of the Company and/or such Subsidiary, subject to the
terms and conditions of this Agreement, for the period commencing
on the Effective Date and ending on the third anniversary of such
date (the “Employment Period”). For purposes of this
Agreement, unless expressly limited to Hilb Rogal & Hobbs
Company, “Company” hereinafter shall mean each of Hilb
Rogal & Hobbs Company and/or any of its Subsidiaries that
employ the Executive.
4. Terms of Employment
.
(a) Position and Duties
.
(i) During the Employment Period,
(A) the Executive’s position (including status, offices,
titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and
assigned at any time during the 120-day period immediately
preceding the Effective Date and (B) the Executive’s
services shall be performed at the location where the Executive was
employed immediately preceding the Effective Date or any office or
location less than 35 miles from such location.
(ii) During the Employment Period,
and excluding any periods of vacation and sick leave to which the
Executive is entitled, the Executive agrees to devote reasonable
attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use
the Executive’s reasonable best efforts to perform faithfully
and efficiently such responsibilities. During the Employment Period
it shall not be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking engagements
or teach at educational institutions and (C) manage personal
investments, so long as such activities do not significantly
interfere with the performance of the Executive’s
responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the
extent that any such activities have been conducted by the
Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and
scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the
Executive’s responsibilities to the Company.
(b) Compensation .
(i) Base Salary . During the
Employment Period, the Executive shall receive an annual base
salary (“Annual Base Salary”), which shall be paid at a
monthly rate, at least equal to twelve times the highest monthly
base salary paid or payable, including any base salary which has
been earned but deferred, to the Executive by the Company and its
affiliated companies in respect of the twelve-month period
immediately preceding the month in which the Effective Date occurs.
During the Employment Period, the Annual Base Salary shall be
reviewed no more than 12 months after the last salary increase
awarded to the Executive prior
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to the Effective Date and thereafter at least
annually. Any increase in Annual Base Salary shall not serve to
limit or reduce any other obligation to the Executive under this
Agreement. Annual Base Salary shall not be reduced after any such
increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As
used in this Agreement, the term “affiliated companies”
shall include any company controlled by, controlling or under
common control with the Company.
(ii) Annual Bonus . In
addition to Annual Base Salary, the Executive shall be awarded, for
each fiscal year ending during the Employment Period, an annual
bonus (the “Annual Bonus”) in cash at least equal
to the greater of (a) any minimum bonus amount for the
Executive agreed to by the Company in a written agreement that was
entered into during the twelve-month period immediately preceding
the month in which the Effective Date occurs or (b) the
Executive’s highest bonus under annual incentive plans of the
Company and its affiliated companies or any comparable bonus under
any predecessor or successor plan, for the last three full fiscal
years prior to the Effective Date (annualized in the event that the
Executive was not employed by the Company for the whole of such
fiscal year) (such greater amount, the “Recent Annual
Bonus”). Each such Annual Bonus shall be paid no later than
two and a half months following the fiscal year for which the
Annual Bonus is awarded, unless the Executive shall elect to defer
the receipt of such Annual Bonus.
(iii) Incentive, Savings and
Retirement Plans . During the Employment Period, the Executive
shall be entitled to participate in all incentive, savings and
retirement plans, practices, policies and programs applicable
generally to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices,
policies and programs provide the Executive with incentive
opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company
and its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during
the 120-day period immediately preceding the Effective Date or if
more favorable to the Executive, those provided generally at any
time after the Effective Date to other peer executives of the
Company and its affiliated companies.
(iv) Welfare Benefit Plans .
During the Employment Period, the Executive and/or the
Executive’s family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the
Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, employee
life, group life, accidental death and travel accident insurance
plans and programs) to the extent applicable generally to
other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs
provide the Executive with benefits which are less favorable, in
the aggregate, than the most favorable of such plans,
practices,
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policies and programs in effect for the
Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective
Date to other peer executives of the Company and its affiliated
companies.
(v) Expenses . During the
Employment Period the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive
in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect
for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(vi) Fringe Benefits . During
the Employment Period, the Executive shall be entitled to fringe
benefits, including, without limitation, tax and financial planning
services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, in accordance with the
most favorable plans, practices, programs and policies of the
Company and its affiliated companies in effect for the Executive at
any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
(vii) Office and Support
Staff . During the Employment Period, the Executive shall be
entitled to an office or offices of a size and with furnishings and
other appointments, and to exclusive personal secretarial and other
assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated
companies at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(viii) Vacation . During the
Employment Period, the Executive shall be entitled to paid vacation
in accordance with the most favorable plans, policies, programs and
practices of the Company and its affiliated companies as in effect
for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
5. Termination of Employment
.
(a) Death or Disability . The
Executive’s employment shall terminate automatically upon the
Executive’s death during the Employment Period. If the
Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to
the definition of Disability set forth below), it may give to the
Executive written notice in
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accordance with Section 12(b) of this
Agreement of its intention to terminate the Executive’s
employment. In such event, the Executive’s employment with
the Company shall terminate effective on the 30th day after receipt
of such notice by the Executive (the “Disability Effective
Date”), provided that, within the 30 days after such receipt,
the Executive shall not have returned to full-time performance of
the Executive’s duties. For purposes of this Agreement,
“Disability” shall mean that the Executive is unable,
by reason of physical or mental incapacity, to perform his duties
to the Company on a full-time basis for a period longer than three
(3) consecutive months or more than six (6) months in any
consecutive twelve (12)-month period. The existence of a Disability
shall be determined by the Board of Directors of the Company, based
upon due consideration of the opinion of the Executive’s
personal physician or physicians and of the opinion of any
physician or physicians selected by the Board of Directors for
these purposes. If the Executive’s personal physician
disagrees with the physician retained by the Company, the Board of
Directors will retain an impartial physician selected by the
Executive’s personal physician and the Company’s
physician and the opinion of the impartial physician shall be
binding upon the Company and the Executive. The Executive shall
submit to examination by any physician or physicians so selected by
the Board of Directors, and shall otherwise cooperate with the
Board of Directors in making the determination contemplated
hereunder, such cooperation to include, without limitation,
consenting to the release of information by any such
physician(s) to the Board of Directors.
(b) Cause . The Company may
terminate the Executive’s employment during the Employment
Period for Cause. For purposes of this Agreement,
“Cause” shall mean:
(i) the willful and continued
failure of the Executive to perform substantially the
Executive’s duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief
Executive Officer of the Company which specifically identifies the
manner in which the Board or Chief Executive Officer believes that
the Executive has not substantially performed the Executive’s
duties, or
(ii) the willful engaging by the
Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company.
For purposes of this provision, no
act or failure to act, on the part of the Executive, shall be
considered “willful” unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief
that the Executive’s action or omission was in the best
interests of the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board
or upon the instructions of the Chief Executive Officer or a senior
officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be
done, by the Executive in good faith and in the best interests of
the Company. The cessation of employment of the Executive shall not
be deemed to be for Cause unless and until there
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shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is
given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the
Executive is guilty of the conduct described in subparagraph
(i) or (ii) above, and specifying the particulars thereof
in detail.
(c) Good Reason; Window
Period . The Executive’s employment may be terminated
(i) during the Employment Period by the Executive for Good
Reason or (ii) during the Window Period by Executive without
any reason. For purposes of this Agreement, “Window
Period” shall mean the 30-day period immediately following
the first anniversary of the Effective Date. For purposes of this
Agreement, “Good Reason” shall mean:
(i) the assignment to the Executive
of any duties inconsistent in any respect with the
Executive’s position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as
contemplated by Section 4(a) of this Agreement, or any
other action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken
in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(ii) any failure by the Company to
comply with any of the provisions of Section 4(b) of this
Agreement, other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the
Executive;
(iii) the Company’s requiring
the Executive to be based at any office or location other than as
provided in Section 4(a)(i)(B) hereof or the
Company’s requiring the Executive to travel on Company
business to a substantially greater extent than required
immediately prior to the Effective Date;
(iv) any purported termination by
the Company of the Executive’s employment otherwise than as
expressly permitted by this Agreement; or
(v) any failure by the Company to
comply with and satisfy Section 11(c) of this
Agreement.
For purposes of this
Section 5(c), any good faith determination of “Good
Reason” made by the Executive shall be conclusive.
(d) Notice of Termination .
Any termination by the Company for Cause, or by the Executive
during the Window Period or for Good Reason, shall be communicated
by Notice of Termination to the other party hereto given in
accordance with Section 12(b) of this Agreement. For
purposes of this Agreement, a “Notice of Termination”
means a written notice which (i) indicates the
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specific termination provision in this Agreement
relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the
provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not
more than thirty days after the giving of such notice). The failure
by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing
of Good Reason or Cause shall not waive any right of the Executive
or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive’s or the
Company’s rights hereunder.
(e) Date of Termination .
“Date of Termination” means (i) if the
Executive’s employment is terminated by the Company for
Cause, or by the Executive during the Window Period or for Good
Reason, the date of receipt of the Notice of Termination or any
later date specified therein, as the case may be, (ii) if the
Executive’s employment is terminated by the Company other
than for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Executive of such
termination and (iii) if the Executive’s employment is
terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be. The Company and the
Executive shall take all steps necessary (including with regard to
any post-termination services by the Executive) to ensure that any
termination described in this Section 5 constitutes a
“separation from service” within the meaning of
Section 409A of the Internal Revenue Code (the
“Code”), and notwithstanding anything contained herein
to the contrary, the date on which such separation from service
takes place shall be the “Date of
Termination.”
6. Obligations of the Company
upon Termination .
(a) During the Window Period
. If, during the Employment Period, the Executive shall terminate
employment without any reason during the Window P
