EXHIBIT 10.18
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This AMENDED AND
RESTATED EMPLOYMENT AGREEMENT (
“Agreement” ) is entered into effective
as of the 1st day of September, 2008 (the “Effective
Date” ), among HCC, as hereinafter defined, and Cory
L. Moulton ( “Executive” ).
“HCC” shall mean HCC Insurance Holdings,
Inc., a Delaware corporation, and, where applicable, any direct or
indirect subsidiary of HCC. HCC and Executive are sometimes
collectively referred to herein as the
“Parties” and individually as a
“Party . ”
RECITALS:
WHEREAS,
Executive is to be
employed as an officer or key employee of HCC;
WHEREAS,
it is the desire of HCC
to engage Executive as an officer or key employee;
WHEREAS,
Executive is desirous
of being employed by HCC on the terms herein
provided; and
WHEREAS,
this Agreement amends
and restates that certain Employment Agreement (the
“Original Agreement” ) dated effective as
of January 1, 2008 by and among the Executive, HCC and
Professional Indemnity Agency, Inc., which Original Agreement is
deemed to be cancelled, terminated and of no further force or
effect, as of September 1, 2008.
NOW,
THEREFORE, in
consideration of the foregoing and of the respective covenants and
agreements set forth below, the Parties agree as
follows:
AGREEMENT
|
|
|
1.
|
Termination of Original Agreement
and Term .
|
(a)
Effective as of the
Effective Date, the Original Agreement shall be cancelled,
terminated and of no further force or effect.
(b)
Effective as of the
Effective Date, HCC hereby employs Executive, and Executive hereby
accepts such employment, on the terms and conditions set forth
herein, for the period (the “Term” )
commencing on the Effective Date and expiring at the earlier to
occur of (a) 11:59 p.m. on August 31, 2011 (the
“Expiration Date” ) or (b) the
Termination Date (as hereinafter defined).
(a) Duties
as Executive of HCC . Executive shall, subject
to the supervision of the Chief Executive Officer of HCC (the
“CEO” ) and the President and Chief
Operating Officer of HCC ( “COO” ) or
such other person designated by the CEO, act as the Executive Vice
President – U.S. Property and Casualty Operations
of HCC in the ordinary course of business with all such powers
reasonably incident to the position or other such responsibilities
or duties that may be from time to time assigned by the CEO or
President and COO. Executive may be reassigned or transferred to
another management position provided such position provides the
same or greater level of responsibility, as designated by the CEO.
During normal business hours, Executive shall devote his full time
and attention to diligently attending to the business of HCC.
During the Term, Executive shall not directly or indirectly render
any services of a business, commercial, or professional nature to
any other person, firm, corporation, or organization, whether for
compensation or otherwise, without the prior written consent of the
CEO. However, Executive shall have the right to engage in such
activities as may be appropriate in order to manage his personal
investments and in educational, charitable and philanthropic
activities so long as such activities do not materially interfere
or conflict with the performance of his duties to HCC hereunder.
The conduct of such activity shall not be deemed to materially
interfere or conflict with Executive’s performance of his
duties until Executive has been notified in writing thereof and
given a reasonable period in which to cure the same.
(b) Other
Duties .
(1)
If elected, Executive
agrees to serve as a member of such managerial committees of HCC
and of any of its direct or indirect parents or subsidiaries
(collectively, “Affiliates” ) and in one
or more executive offices of any of HCC’s Affiliates,
provided Executive is indemnified for serving in any and all such
capacities in a manner acceptable to HCC and Executive. If elected,
Executive agrees that he shall not be entitled to receive any
compensation for serving as a director of HCC, or in any capacities
for HCC or its Affiliates other than the compensation to be paid to
Executive by HCC pursuant to this Agreement.
(2)
Executive acknowledges
and agrees that he has read and considered the written business
policies and procedures of HCC as posted on HCC’s intranet
and that he will abide by such policies and procedures throughout
the term of his employment with HCC. Executive further agrees that
he will familiarize himself with any amendments to the policies and
procedures and that he will abide by such policies and procedures
as they may change from time to time.
|
|
|
3.
|
Compensation and Related
Matters .
|
(a) Base
Salary . Executive shall receive
an initial base salary paid by HCC of $525,000 per year during each
year of the Term. At the sole discretion of HCC, the base salary
may be increased. For purposes of this Agreement, “Base
Salary” shall mean Executive’s initial base
salary or, if increased, then the increased base salary. The Base
Salary shall be paid in substantially equal semi-monthly
installments.
(b) Bonus
Plan .
(1)
During the Term,
Executive shall be eligible to receive, in addition to the Base
Salary, an annual cash and/or stock bonus payment in an amount,
which may be zero, to be determined at the sole discretion of the
CEO in accordance with HCC’s policies. The CEO or such other
person may unilaterally reduce or eliminate any annual bonus
payment, if any, up until the time the bonus is actually paid (and
notwithstanding any earlier, tentative determination of the bonus
amount). Subject to Sections 4(c) and
4(d) , no bonus payment shall be paid to Executive
for a year if Executive’s Termination Date occurs at any time
during such year. Moreover, even if Executive is employed by HCC on
the last day of the year for which a bonus may be payable,
Executive shall not be eligible for the payment of bonus
compensation for such year if this Agreement or his employment with
HCC terminates for any reason, other than Death or Disability,
prior to the payment of such bonus compensation. Such bonus shall
not exceed two hundred percent (200%) of Executive’s Base
Salary for the bonus year.
(2)
Notwithstanding
Section 3(b)(1) , Executive’s bonus
payment for the bonus year ending December 31, 2008 shall be
not less than $400,000 and shall be paid in cash. Such payment
shall occur after December 31, 2008 and on or before
March 15, 2009.
(c)
Expenses . During the Term,
Executive shall be entitled to receive prompt reimbursement for all
reasonable business expenses incurred by him (in accordance with
the policies and procedures established by HCC) in performing
services hereunder, provided that Executive properly accounts
therefor in accordance with HCC policy.
(d) Other
Benefits . From time to time HCC
may make available other compensation and employee benefit plans
and arrangements. Executive shall be eligible to participate in
such other compensation and employee benefit plans and arrangements
on the same basis as similarly situated employees, subject to and
on a basis consistent with the terms, conditions, and overall
administration of such plans and arrangements, as amended from time
to time. Nothing in this Agreement shall be deemed to confer upon
Executive or any other person (including any beneficiary) any
rights under or with respect to any such plan or arrangement or to
amend any such plan or arrangement, and Executive and each other
person (including any beneficiary) shall be entitled to look only
to the express terms of any such plan or arrangement for his or her
rights thereunder. Nothing paid to Executive under any such plan or
arrangement presently in effect or made available in the future
shall be deemed to be in lieu of the Base Salary payable to
Executive pursuant to Section 3(a) .
2
(e) PTO
(Paid Time Off) . Executive shall be
entitled to twenty-five (25) PTO days per year during the Term
and any accrual of PTO shall terminate upon termination of
Executive’s employment. PTO days taken during the Term shall
be charged to Executive’s then accrued PTO. In no event shall
any unused PTO carry over from year-to-year. For purposes of this
Paragraph, weekends shall not count as PTO days, and Executive
shall also be entitled to all paid holidays given by the Company to
its senior executive officers.
(f)
Perquisites . During the Term,
Executive shall be entitled to receive the perquisites provided for
on Appendix 1 hereof.
(g)
Proration . The Base Salary and
perquisites payable to Executive hereunder in respect of any
calendar year during which Executive is employed by HCC for less
than the entire year, unless otherwise provided on
Appendix 1 , shall be prorated in accordance
with the number of days in such calendar year during which he is so
employed.
(h) Stock
Options . Stock options, if any,
issued to Executive during the Term shall be issued under a stock
option agreement containing terms with respect to vesting and
exercise upon the occurrence of certain termination events that are
substantially the same as those set forth on
Exhibit 3(h) hereto, subject to any then
required approval by the Compensation Committee of the
Board.
(a)
Definitions .
(1) “
Cause ” shall mean:
(i) Executive’s failure
or refusal to perform substantially his material duties,
responsibilities and obligations (other than a failure resulting
from the Executive’s incapacity due to physical or mental
illness or other reasons beyond the control of the Executive) as
determined in the sole discretion of the CEO;
(ii) any act
involving fraud, misrepresentation, theft, embezzlement, dishonesty
or moral turpitude ( “Fraud” ) which
results in material harm to HCC;
(iii) conviction of
(or a plea of nolo contendere ) to an offense which is a
felony in the jurisdiction or which is a misdemeanor in the
jurisdiction involved but which involves Fraud;
(iv) a material
breach of this Agreement by the Executive, including without
limitation, any breach of the non-competition or confidentiality
provisions of this Agreement; or
(v) Executive’s failure
to act or discharge or negligently acting or discharging any
material part of his duties or obligations as determined in the
sole discretion of the CEO.
Provided that in the event that any
of the foregoing events is capable of being cured, HCC shall
provide written notice to the Executive describing the nature of
such event and the Executive shall thereafter have ten
(10) calendar days to cure such event to the satisfaction of
HCC.
(2)
A “
Disability ” shall mean the inability of
Executive to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months.
Executive shall be considered to have a Disability (i) if he
is determined to be totally disabled by the Social Security
Administration or (ii) if he is determined to be disabled
under HCC’s long-term disability plan in which Executive
participates and if such plan defines “disability” in a
manner that is consistent with the immediately preceding
sentence.
(3)
A “ Good
Reason ” shall mean any of the following (without
Executive’s express written consent):
(i) A material
diminution in Executive’s Base Salary;
3
(ii) Executive’s
involuntary relocation to any place exceeding a distance of
50 miles from the place of Executive’s normal place of
employment on the Effective Date, except for reasonably required
travel by Executive on HCC’s business; or
(iii) Any material
breach by HCC of any material provision of this
Agreement.
However, Good Reason shall exist
with respect to an above specified matter only if such matter is
not corrected by HCC within thirty (30) days after HCC’s
receipt of written notice of such matter from Executive. Any such
notice from Executive must be provided within thirty (30) days
after the initial existence of the specified event. In no event
shall a termination by Executive occurring more than ninety
(90) days following the initial date of the event described be
a termination for Good Reason due to such event, whether that event
is corrected or not.
(4) “
Termination Date ” shall mean the date
Executive’s employment with HCC terminates or is terminated
for any reason pursuant to this Agreement.
(5)
A “
Change of Control ” shall be deemed to have
occurred if:
(i) Any
“person” or “group” (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934) other than a trustee or other fiduciary holding
securities under an employee benefit plan of HCC becomes the
“beneficial owner” (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934), directly or indirectly, of
50% or more of HCC’s then outstanding voting common
stock; or
(ii) The
shareholders of HCC approve a merger or consolidation of HCC with
any other corporation, other than a merger or consolidation
(a) in which a majority of the directors of the surviving
entity were directors of HCC prior to such consolidation or merger,
or (b) which would result in the voting securities of HCC
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being changed into voting
securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the surviving entity
outstanding immediately after such merger or
consolidation; or
(iii) The
shareholders approve a plan of complete liquidation of HCC or an
agreement for the sale or disposition by HCC of all or
substantially all of HCC’s assets.
(6) “
Special Reason ” shall mean Executive’s
continued employment by HCC in the position of Executive Vice
President – U.S. Property and Casualty Operations
of HCC after December 31, 2009. However, Special Reason shall
exist only if HCC retains Executive in such position beyond thirty
(30) days after HCC’s receipt of written notice of such
matter from Executive. Any such notice from Executive must be
provided during the period beginning on December 1, 2009 and
ending on December 31, 2009. In no event shall a voluntary
termination of employment with HCC by Executive occurring more than
ninety (90) days following December 31, 2009 be a
termination for Special Reason due to retention in such position,
whether corrected or not.
(b)
Termination Without Cause or for Good Reason: Benefits
. In the event HCC
involuntarily terminates Executive’s employment with HCC
without Cause or if Executive terminates employment with HCC for
Good Reason (a “Termination Event” ),
this Agreement shall terminate and Executive shall be entitled to
the following severance benefits:
(1)
An amount equal to the
Base Salary (as defined in Section 3(a) ) that
would have been payable after the Termination Date and before the
Expiration Date, at the rate in effect immediately prior to the
Termination Event, payable in a lump sum discounted at the rate of
return on 90-day Treasury bills in existence on the Termination
Date to take into consideration the lump sum early payment within
ninety (90) days after the Termination Date; provided that
such payment shall in any event occur on or after such Termination
Date and before March 15 of the year following the year containing
such Termination Date;
4
(2)
Payment of all accrued
Base Salary and unreimbursed business expenses through the
Termination Date in accordance with Section 3(c)
. Such amounts shall be paid to Executive in a lump sum in cash
within thirty (30) days after the Termination
Date; and
(3)
Executive shall be free
to accept other employment during such period, and other than as
set forth herein, there shall be no offset of any employment
compensation earned by Executive in such other employment during
such period against payments due Executive under this
Section 4 , and there shall be no offset in any
compensation received from such other employment against the
severance benefits set forth above, unless the Executive is
employed in a position of competing with HCC as described in
Section 5 below.
(c)
Termination In Event of Death: Benefits .
If
Executive’s employment with HCC is terminated by reason of
Executive’s death during the Term, this Agreement shall
terminate without further obligation to Executive’s legal
representatives under this Agreement, other than for payment of all
accrued Base Salary through the Termination Date, unreimbursed
business expenses through the Termination Date in accordance with
Section 3(c) , the amount of any bonus under
Section 3(b) that relates to a prior year and
that is unpaid as of the date of death, and an amount equal to six
(6) months’ Base Salary. Such amounts shall be paid to
Executive’s estate in a lump sum in cash within ninety
(90) days after the date of death; provided that such payment
shall in any event occur on or after such date of death and before
March 15 of the year following the year of death. Executive shall
be entitled to consideration for a bonus payment under
Section 3(b) with respect to the year in which
Executive dies; provided that the payment of any such bonus, if
any, shall in any event occur on or after such date of death and
before March 15 of the year following the year of death.
(d)
Termination In Event of Disability: Benefits .
If
Executive’s employment with HCC is terminated by reason of
Executive’s Disability during the Term, this Agreement shall
terminate, but HCC shall pay the Executive all accrued Base Salary
through the Termination Date, unreimbursed business expenses
through the Termination Date in accordance with
Section 3(c) , the amount of any bonus under
Section 3(b) that relates to a prior year and
that is unpaid as of the date of Disability, and an amount equal to
six (6) months’ Base Salary. Such amounts shall be paid
to Executive in a lump sum in cash within ninety (90) days
after the Termination Date due to Disability; provided that such
payment shall in any event occur on or after such Termination Date
and before March 15 of the year following the year containing such
Termination Date. Executive shall be entitled to consideration for
a bonus payment under Section 3(b) with respect
to the year in which Executive’s employment terminates due to
Disability; provided that any payment of such bonus, if any, shall
in any event occur on or after such Termination Date and before
March 15 of the year following the year containing such Termination
Date.
(e)
Voluntary Termination by Executive and Termination for Cause:
Benefits . Executive may
voluntarily terminate his employment with HCC without Good Reason
and without Special Reason by giving written notice of his intent
and stating an effective Termination Date at least ninety
(90) days after the date of such notice; provided,
however , that HCC may accelerate such effective date by paying
Executive through the proposed Termination Date (but not to exceed
ninety (90) days). Upon such a termination by Executive or
upon termination of Executive’s employment with HCC for Cause
by HCC, this Agreement shall terminate and HCC shall pay to
Executive all accrued Base Salary and all unreimbursed business
expenses through the Termination Date in accordance with
Section 3(c) . Such amounts shall be paid to
Executive in a lump sum in cash within thirty (30) days after
the Termination Date. Executive shall have no entitlement to any
bonus for the year in which the Termination Date occurs or for any
unpaid bonus for the prior year.
(f)
Voluntary Termination by Executive after a Change of Control:
Benefits . If Executive’s
authority, duties, or responsibilities are materially diminished
within twelve (12) months after a Change of Control occurs,
Executive notifies HCC of such diminution within thirty
(30) days, and HCC does not fully correct the condition within
thirty (30) days after receiving such notice, Executive may
voluntarily terminate his employment with HCC and shall be entitled
to the following severance benefits:
(1)
An amount equal to the
Base Salary (as defined in Section 3(a) ) that
would have been payable after the Termination Date and before the
Expiration Date, at the rate in effect immediately prior to the
Termination Date, payable in a lump sum discounted at the rate of
return on 90-day Treasury bills
5
in existence on the Termination
Date to take into consideration the lump sum early payment within
ninety (90) days after the Termination Date; provided that
such payment shall in any event occur on or after such Termination
Date and before March 15 of the year following the year containing
such Termination Date;
(2)
All unreimbursed
business expenses through the Termination Date in accordance with
Section 3(c) . Such amounts shall be paid to
Executive in a lump sum in cash within thirty (30) days after
the Termination Date; and
(3)
Executive shall be free
to accept other employment during such period, and other than as
set forth herein, there shall be no offset of any employment
compensation earned by Executive in such other employment during
such period against payments due Executive under this
Section 4 , and there shall be no offset in any
compensation received from such other employment against the
severance benefits set forth above, unless the Executive is
employed in a position of competing with HCC as described in
Section 5 , below.
(g)
Voluntary Termination by Executive for Special Reason:
Benefits . If Executive
voluntarily terminates employment with HCC for Special Reason, this
Agreement shall terminate and Executive shall be entitled to the
following separation benefits:
(1)
An amount equal to the
Base Salary (as defined in Section 3(a) ) that
would have been payable after the Termination Date and before the
Expiration Date, at the rate in effect immediately prior to the
Termination Date, payable in a lump sum discounted at the rate of
return on 90-day Treasury bills in existence on the Termination
Date to take into consideration the lump sum early payment within
ninety (90) days after the Termination Date; provided that
such payment shall in any event occur on or after such Termination
Date and before March 15 of the year following the year containing
such Termination Date; provided, however, that if upon the
Termination Date Executive is a “specified employee”
within the meaning of Code section 409A, then payment of such
amount shall be deferred until the date that is six (6) months
following the Termination Date in accordance with
Section 17(a) . Executive shall not have the
right to designate the taxable year of such payment;
(2)
Payment of all accrued
Base Salary and unreimbursed business expenses through the
Termination Date in accordance with Section 3(c)
. Such amounts shall be paid to Executive in a lump sum in cash
within thirty (30) days after the Termination
Date; and
(3)
Executive shall be free
to accept other employment during such period, and other than as
set forth herein, there shall be no offset of any employment
compensation earned by Executive in such other employment during
such period against payments due Executive under this
Section 4 , and there shall be no offset in any
compensation received from such other employment against the
severance benefits set forth above, unless the Executive is
employed in a position of competing with HCC as described in
Section 5 below.
(h) Director
and Officer Positions . Executive agrees that
upon termination of employment, for any reason, Executive will
immediately tender his resignation from any and all Board or
officer positions held with HCC and/or any of its
Affiliates.
5.
Non-Competition, Non-Solicitation and Confidentiality
. HCC agrees to give
Executive access to Confidential Information (including, without
limitation, Confidential Information, as defined below, of
HCC’s Affiliates) that Executive has not had access to or
knowledge of before the execution of this Agreement. At the time
this Agreement is made, HCC agrees to provide Executive with
initial and ongoing Specialized Training, which Executive has not
had access to or knowledge of before the execution of this
Agreement. “Specialized Training”
includes the
|
