THIS AGREEMENT
(the “Agreement”), dated as of March 23, 2009, is
by and between Tower Group, Inc., a Delaware corporation (the
“Company”), and Richard Barrow (the
“Executive”).
WHEREAS, the
Executive and the Company wish to enter into a written agreement
setting forth the terms and conditions of the Executive’s
employment with the Company; and
WHEREAS, this
Agreement is the entire agreement between the parties concerning
the subject matter hereof and supersedes all prior agreements
concerning the same subject.
NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained
herein, the Company and the Executive hereby agree as
follows:
(i) The
Company shall employ the Executive, and the Executive shall serve
the Company, on the terms and subject to the conditions set forth
in this Agreement, commencing on or prior to March 23, 2009 (the
“Effective Date”) and, unless sooner terminated
pursuant to section 4, continuing until the date that is the
two-year anniversary of the Effective Date or such later date as
provided in subsection 1(a)(ii) below (the “Term of
Employment”).
(ii) The
Term of Employment shall be extended automatically for one
additional year on the last day before the second anniversary of
the Effective Date and for one additional year on each anniversary
thereafter unless and until either party gives written notice to
the other not to extend this Agreement at least one year before
such extension would be effectuated.
(b)
Term of the Agreement . This Agreement shall become
effective on the Effective Date and shall continue in effect
throughout the Term of Employment; provided, however, the
restrictive covenants contained in section 10 of this Agreement
and, as applicable, the Company’s and the Executive’s
obligations under the other provisions of this Agreement shall
survive the Term of Employment and shall continue in effect through
the periods provided therein and/or until the Company’s
and/or the Executive’s obligations, as applicable, thereunder
are satisfied.
(a)
Positions, Duties, and Responsibilities . The Executive
shall serve as the Senior Vice President, Chief Accounting Officer
of the Company with such duties and responsibilities as are
customarily assigned to such position, and such other duties and
responsibilities not inconsistent therewith as may from time to
time be assigned to him by the Chief Financial Officer (the
“CFO”) of the Company. The Executive shall report
solely to the CFO unless the CFO, Chief Executive Officer
(CEO) or the Board of Directors of the Company (the
“Board”) determines otherwise. The Executive agrees to
serve without additional compensation in such capacities
(including, without limitation, as an employee or director) with
Company affiliates as the CFO, CEO or the Board may in its
discretion prescribe; provided, that upon termination of the
Executive’s employment with the Company, any employment,
board membership or other service relationship with such affiliate
shall automatically terminate unless otherwise determined by the
parties hereto.
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(b)
Time and Attention . Excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive shall
devote substantially all of his attention and time during normal
working hours to the business and affairs of the Company and its
affiliates. It shall not be considered a violation of the
foregoing, however, for the Executive to (i) serve on
corporate, industry, educational, religious, civic, or charitable
boards or committees or (ii) make and attend to passive
personal investments in such form as will not require any material
time or attention to the operations thereof during normal working
time and will not violate the provisions of section 10 hereof, so
long as such activities in clauses (i) and (ii) do not
materially interfere with the performance of the Executive’s
responsibilities as an employee of the Company in accordance with
this Agreement or violate section 10 of this Agreement.
3.
Compensation . Except as otherwise expressly set forth
below, the Executive’s compensation shall be determined by,
and in the sole discretion of, the Board.
(a)
Annual Base Salary . Subject to adjustment pursuant to this
subsection 3(a), the Executive shall receive an annual base salary
of $326,000 during the Term of Employment (the annual base salary
in effect from time to time, “Annual Base Salary”). The
Annual Base Salary shall be payable in accordance with the
Company’s regular payroll practice for its senior officers,
as in effect from time to time. The Annual Base Salary shall be
reviewed from time to time, but not less frequently than annually,
and, in the sole discretion of the Board, may be adjusted but not
decreased below the amount set forth in the first sentence of this
subsection 3(a). To the extent Annual Base Salary is adjusted, then
such adjusted salary shall be the Executive’s Annual Base
Salary for all purposes of this Agreement.
(b)
Adjusted Base Salary .: For purposes of calculating the
annual bonus award and the annual equity award the
Executive’s adjusted base salary will be $286,000. The
Adjusted Base Salary shall be reviewed from time to time, but not
less frequently than annually, and, in the sole discretion of the
Board, may be adjusted but not decreased below the amount set forth
in the first sentence of this subsection 3(b). To the extent
Adjusted Base Salary is adjusted, then such adjusted salary shall
be the Executive’s Adjusted Base Salary for all purposes of
this Agreement.
(c)
Annual Bonus Plan . The Executive shall have an opportunity
to receive an annual bonus during the Term of Employment (the
“Annual Bonus”), subject to such terms and conditions
as the Board or a delegatee thereof shall prescribe. The
Executive’s target Annual Bonus opportunity shall be equal to
30% of his Adjusted Base Salary, it being understood that the
actual Annual Bonus received by the Executive will depend on the
level of attainment of performance and other factors used by the
Company to determine Annual Bonus amounts and that there is no
guarantee that an Annual Bonus will be earned.
(d)
Annual Equity Award . The Executive shall have an
opportunity to receive an annual equity award (the “
Annual Equity Award ”) under the Company’s
long-term incentive plan during the Term of Employment, subject to
such terms and conditions as the Board or a delegate thereof shall
prescribe. The Executive’s target Annual Equity Award
opportunity shall be equal to 30% of his Adjusted Base Salary, it
being understood that the actual Annual Equity Award received by
the Executive will depend on the level of attainment of performance
and other factors used by the Company to determine Annual Equity
Awards and there is no guarantee that an Annual Equity Award will
be granted.
(e)
Employee Benefits; Fringe Benefits . In addition to the
foregoing, during the Term of Employment,
(i)
to the extent not duplicative of the specific benefits provided
herein, the Executive shall be eligible to participate in all
incentive compensation, retirement, supplemental
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executive
retirement, and deferred compensation plans, policies and
arrangements that are provided generally to other senior officers
of the Company;
(ii) the
Executive and, as applicable, the Executive’s covered
dependents shall be eligible to participate in all of the
Company’s health and welfare benefit plans (within the
meaning of Section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended); and
(iii) the
Executive shall be entitled to receive the fringe benefits that are
provided generally to other senior officers of the Company, and
shall be entitled to avail himself of paid holidays, as determined
from time to time by the Company.
(f)
Paid Time Off . The Executive shall be entitled to not less
than twenty-eight paid time off (“ PTO ”) days
per calendar year during the Term of Employment. PTO days not used
within the year shall be carried forward to subsequent years, as
determined by the Company; provided, however, that the maximum
carry forward of PTO shall be two weeks.
(g)
Expenses . The Executive shall be reimbursed by the Company
for reasonable business expenses actually incurred in rendering to
the Company the services provided for hereunder during the Term of
Employment, payable in accordance with customary Company practice,
after the Executive presents written expense statements or such
other supporting information as the Company may require of its
senior officers for reimbursement of such expenses.
(h)
Executive Medical Reimbursements : The Company will
reimburse the Executive for uncovered medical expenses, up to
$5,000 per calendar year, subject to receipt by the Company of
appropriate documentation from the Executive. Expenses that do not
meet the IRS criteria cannot be submitted for
reimbursement.
4.
Termination of Employment .
(a) The
Company or the Executive may terminate the Executive’s
employment at any time and for any reason in accordance with
subsection 4(b) below. The Term of Employment shall be deemed to
have ended on the last day of the Executive’s employment. The
Term of Employment shall terminate upon the Executive’s
death.
(b)
Notice of Termination . Any purported termination of the
Executive’s employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party
hereto to the other party hereto in accordance with the notice
provisions contained in subsection 16(b) below. For purposes of
this Agreement, a “Notice of Termination” shall mean a
notice that indicates the Date of Termination (as that term is
defined in subsection 4(c) below) and, with respect to a
termination due to Disability, Cause or Good Reason, sets forth in
reasonable detail the facts and circumstances that are alleged to
provide a basis for such termination. A Notice of Termination from
the Company shall specify whether the termination is with or
without Cause or due to the Executive’s Disability. A Notice
of Termination from the Executive shall specify whether the
termination is with or without Good Reason or due to the
Executive’s Disability or retirement.
(c)
Date of Termination . For purposes of this Agreement,
“Date of Termination” shall mean the date specified in
the Notice of Termination (but in no event shall such date be
earlier than the 30th day following the date the Notice of
Termination is given, unless expressly agreed to by the parties
hereto) or the date of the Executive’s death.
(d)
No Waiver . The failure to set forth any fact or
circumstance in a Notice of Termination, which fact or circumstance
was not known to the party giving the Notice of
Termination
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when the notice
was given, shall not constitute a waiver of the right to assert
such fact or circumstance in an attempt to enforce any right under
or provision of this Agreement.
(e)
Cause . For purposes of this Agreement, “Cause”
means: (i) the Executive’s gross negligence or gross
misconduct or (ii) the Executive’s having been convicted
of, or entered a plea of nolo contendere to, a felony involving
moral turpitude. No act or failure to act directly related to
Company action or inaction that constitutes Good Reason (as that
term is defined in subsection 4(g) below) shall constitute Cause
under this Agreement if the Executive has provided a Notice of
Termination based on such Good Reason event prior to the
Company’s giving of the Notice of Termination for Cause. The
Executive’s termination for Cause shall be effective when and
if a resolution is duly adopted by an affirmative vote of the
entire Board (less the Executive), stating that, in the good faith
opinion of the Board, the Executive is guilty of the conduct
described in the Notice of Termination, and such conduct
constitutes Cause under this Agreement; provided, however, that the
Executive shall have been given the opportunity (i) to cure
any act or omission that constitutes Cause if capable of cure and
(ii) together with counsel, during the 30-day period following
the receipt by the Executive of the Notice of Termination and prior
to the adoption of the Board’s resolution, to be heard by the
Board.
(f)
Disability . For purposes of this Agreement, the Executive
shall be deemed to have a Disability if the Executive is entitled
to long-term disability benefits under the Company’s
long-term disability plan or policy, as the case may be, as in
effect on the Date of Termination (as that term is defined in
subsection 4(c) above)
(g)
Good Reason . For purposes of this Agreement, the term
“Good Reason” means the occurrence (without the
Executive’s express written consent) of any of the following
acts or failures to act by the Company:
(i) the
assignment to the Executive of duties materially inconsistent with
the Executive’s position of Senior Vice President, Chief
Accounting Officer, or a substantial diminution in the
Executive’s authority and duties;
(ii) any
reduction in the Executive’s Annual Base Salary, Adjusted
Base Salary, target Annual Bonus opportunity or target Annual
Equity Award opportunity;
(iii) requiring
the Executive to be based more than 50 miles away from the
Company’s headquarters in New York, New York;
(iv) the
material breach by the Company of any of its other obligations
under this Agreement; or
(v) the
failure of the Company to obtain the assumption of this Agreement
as contemplated in Subsection 13(b) hereof.
The
Executive’s continued employment shall not constitute consent
to, or a waiver of rights with respect to, any act or failure to
act constituting Good Reason hereunder; provided, however, that no
such event described above shall constitute Good Reason unless the
Executive has given a Notice of Termination to the Company
specifying the condition or event relied upon for such termination
within 90 days from the Executive’s actual knowledge of
the occurrence of such event and, if capable of cure, the Company
has failed to cure the condition or event constituting Good Reason
within the 30 day period following receipt of the
Executive’s Notice of Termination.
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5.
Obligations of the Company upon Termination .
(a)
Termination by the Company for other than Cause or by the
Executive for Good Reason . If the Executive’s employment
is terminated by the Company for any reason other than Cause or
Disability or by the Executive for Good Reason:
(i) The
Company shall pay to the Executive, within thirty business days of
the Date of Termination, any earned but unpaid Annual Base
Salary;
(ii) The
Company shall pay to the Executive, within thirty business days of
the Date of Termination, a prorated Annual Bonus based on
(A) the target Annual Bonus opportunity in the year in which
the Date of Termination occurs or the prior year if no target
Annual Bonus opportunity has yet been determined (disregarding any
reduction in target Annual Bonus opportunity that was the basis for
a termination by the Executive for Good Reason) and (B) the
fraction of the year the Executive was employed.
(iii) The
Company shall pay to the Executive, within thirty business days of
the Date of Termination, a lump-sum payment equal to the sum of
100% of (x) the Executive’s Annual Base Salary in effect
immediately prior to the Date of Termination (disregarding any
reduction in Annual Base Salary that was the basis for a
termination by the Executive for Good Reason), and (y) the
Executive’s target Annual Bonus opportunity for the year in
which the Date of Termination occurs or the prior year if no target
Annual Bonus opportunity has yet been determined (disregarding any
reduction in target Annual Bonus opportunity that was the basis for
a termination by the Executive for Good Reason);
(iv) For
a one (1) year period after the Date of Termination, the
Company will arrange to provide the Executive (and any covered
dependents), without cost to the Executive, with life, accident and
health insurance benefits substantially similar to those the
Executive and any covered dependents were receiving immediately
prior to the Notice of Termination, except for any such benefits
that were waived by the Executive in writing. If the Company
arranges to provide the Executive and covered dependents with life,
accident and health insurance benefits, those benefits will be
reduced to the extent comparable benefits are actually received by,
or made available to, the Executive by a subsequent employer
without cost during the one (1) year period following the
Executive’s Date of Termination. The Executive must report to
the Company any such benefits that he actually receives or are made
available. In lieu of the benefits described in this subsection
5(a)(iv), the Company, in its sole discretion, may elect to pay to
the Executive a lump sum cash payment equal to the annual premium
that would have been paid by the Company to provide such benefits
to the Executive and any covered dependents. Nothing in this
subsection 5(a)(iv) will affect the Executive’s right to
elect COBRA continuation coverage in accordance with applicable law
or extend the COBRA continuation coverage period; and
(v) The
Executive’s vested outstanding stock options shall remain
exercisable until the earlier of (i) the three month
anniversary of the Date of Termination and (ii) the last day
of the option term under the applicable option award
agreement.
(b)
Termination in Connection with a Change in Control
.
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