Exhibit 99.1
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into by
and between ProAssurance Corporation, a Delaware corporation ("ProAssurance")
and W. Xxxxxxx Xxxxxxx, an individual (the "Executive") as of May 1, 2007 (the
"Commencement Date"). This Agreement is offered by ProAssurance to induce the
Executive to accept employment. ProAssurance and the Executive, each intending
to be legally bound by the terms hereof, agree as follows:
1. Employment Term. ProAssurance hereby employs Executive, and
Executive accepts employment, upon the terms and conditions of this Agreement
for an initial term running from the Commencement Date to and including June 30,
2012 (the "Term"). The Term shall be extended automatically and without any
action on the part of either party for one (1) year on each July 1 during the
Term, beginning July 1, 2008, provided that the Term shall become fixed and
shall not be further extended upon the first to occur of either: (i) July 1,
2013, in which event the Term will expire on June 30, 2018; or (ii) either party
notifies the other in writing that such party does not wish to continue to
automatically extend the Term, in which event the Term will expire on the fifth
anniversary of June 30 next following delivery of said notice.
2. Offices; Directorship; Other Activities.
2.1 Office and Duties.
(a) Until July 1, 2007 (the "Effective Date"), Executive shall
report to the Chairman of the Board of ProAssurance and shall perform such
duties as may be assigned to Executive by the Chairman.
(b) From and after the Effective Date, Executive shall serve
as Chief Executive Officer of ProAssurance. Executive shall have the duties and
authority as are prescribed by the bylaws of ProAssurance for such office on the
date of this Agreement, such other duties and responsibilities as have
customarily been performed by the Chief Executive Officer, and other duties and
responsibilities as may be assigned to him by ProAssurance's Board of Directors
(the "Board"), provided that such assignments by the Board are customary and
appropriate for the Chief Executive Officer of ProAssurance. During the Term of
this Agreement, Executive shall report directly to the Board and the committees
of the Board. Executive shall be given such authority as is appropriate to carry
out his duties.
2.2 Efforts and Other Activities. During the Term, except for periods
of vacation, sick leave, personal leave granted by the Board, or leave to which
the Executive is entitled under law, Executive shall devote reasonable attention
and time to the business and affairs of ProAssurance to the extent necessary to
discharge his duties under this Agreement. With the prior approval of the Board,
Executive may serve as a director or trustee of other corporations or businesses
which do not compete with ProAssurance or its subsidiaries. Executive currently
serves as a director of Alabama National BanCorporation and may continue as a
director during the Term of this Agreement. Executive may also serve on civic,
trade or charitable boards or committees. Executive may invest in real estate
for his own account or become a passive partner or passive stockholder in any
corporation, partnership or other venture; provided that Executive may not
invest in any business that does business with, or competes with, the Company
except for investment in a business where Executive's percentage of ownership is
insignificant. Executive may invest in mutual funds or similar investment
vehicles in which Executive does not provide active management services.
Executive may deliver lectures, fulfill speaking engagements or teach at
educational institutions and may manage personal investments, provided that such
activities do not materially interfere with Executive's responsibilities to
ProAssurance.
2.3 Place of Business. Executive's services shall be performed
primarily at the headquarters of ProAssurance in Jefferson County, Alabama.
3. Compensation and Benefits.
3.1 Base Salary. ProAssurance will pay to Executive a base salary
at the rate of $750,000 per annum for the calendar years ending December 31,
2007 and not less than $750,000 per annum for the calendar year ending December
31, 2008, provided that the base salary shall be prorated based on the number of
days of employment of Executive with ProAssurance for any partial calendar year
during the Term ("Base Salary"). Base Salary will be payable in periodic
installments in accordance with ProAssurance's customary practices for executive
officers. Amounts payable will be reduced by standard withholding and other
authorized deductions. For calendar years beginning after December 31, 2007,
ProAssurance shall review Executive's Base Salary at least annually and the Base
Salary shall be subject to increase, at the discretion of the Board, effective
on the date salary adjustments are made for other senior executive officers of
ProAssurance consistent with past practice.
3.2 Annual Incentive Compensation.
(a) ProAssurance will pay Executive an annual bonus equal to
100% of the Base Salary paid to Executive in the calendar year ending December
31, 2007 and an annual bonus not less than 100% of the Base Salary paid to
Executive in the calendar year ending December 31, 2008. Unless otherwise
provided in this Agreement, the annual bonus for each calendar year will be paid
at such time as annual incentive compensation is paid to ProAssurance's senior
executive officers consistent with past practice but not later than April 1 in
the next succeeding calendar year; provided that payment of such annual bonus
shall be subject to and conditioned upon Executive's employment with
ProAssurance on the payment date. The annual bonus shall be payable in cash and
shares of ProAssurance's common stock ("Common Stock") based on the closing
price of a share of Common Stock on the date that annual incentive compensation
is awarded to ProAssurance's executive officers, or if none, on the date of
payment of the bonus to Executive. ProAssurance will pay Executive a cash
allowance for tax assistance consistent with the cash allowance paid to other
executive officers with respect to the shares of Common Stock received as annual
incentive compensation. The annual incentive compensation payable hereunder for
calendar years 2007 and 2008 shall be in lieu of any other annual incentive
compensation program offered by ProAssurance to executive officers unless
otherwise provided by the Board or as specifically provided in this Agreement.
(b) For calendar years beginning after December 31, 2007,
Executive shall be eligible for annual incentive compensation based on objective
corporate performance criteria established by the Board or its Compensation
Committee consistent with the criteria for other senior executive officers of
ProAssurance, provided that the annual incentive compensation payable hereunder
for the calendar year ending December 31, 2008 shall not be less than 100% of
Executive's Base Salary for such calendar year and shall be in lieu of and not
in addition to the annual incentive compensation otherwise payable to Executive
under Section 3.2(a) hereof. The annual incentive compensation with respect to a
calendar year, if any, will be payable to Executive after the close of the
calendar year at such time as annual incentive compensation is paid to
ProAssurance's senior executive officers consistent with past practice but not
later than April 1 in the next succeeding calendar year. The annual incentive
compensation may be payable in cash and/or shares of ProAssurance's common stock
on a basis that is consistent with the annual incentive compensation payable to
other senior executive officers of ProAssurance.
3.3 Long Term Incentive Compensation.
(a) To induce Executive to accept employment by ProAssurance,
ProAssurance agrees to grant to Executive options to purchase 100,000 shares of
Common Stock on the date that Executive assumes the duties of the Chief
Executive Officer of ProAssurance. The options will be granted under the terms
of the ProAssurance Corporation 2004 Equity Incentive Plan (the "Equity Plan").
For purposes of the Equity Plan, the date of grant will be the first business
day after the Effective Date (July 2, 2007) and the exercise price for the
shares subject to the option will be the closing price of a share of Common
Stock on said date. The options shall vest and become exercisable on January 3,
2008, and shall be evidenced by a stock option agreement between ProAssurance
and Executive in substantially the form as the Stock Option Agreement attached
hereto as Exhibit A.
(b) For each calendar year after December 31, 2007, Executive
will be granted long term incentive compensation under the Equity Plan (or a
successor or other equity compensation plan) in the form of options, restricted
stock and/or performance shares having an aggregate value on date of grant equal
to $500,000 (the "Annual Equity Awards"). The value of the Annual Equity Awards
shall be determined using the same method that ProAssurance uses to calculate
compensation income with respect to such awards for financial reporting purposes
in accordance with generally accepted accounting principles, except that the
value of the Annual Equity Awards as so determined shall be subject to the
following adjustments if and to the extent applicable: (i) the value of the
options granted to Executive shall include all unvested options based on the
market price of the underlying shares of Common Stock on the date of grant
without regard to estimated forfeiture relating to service based vesting
conditions; and (ii) the value of performance shares shall include the number of
shares to be awarded at the target performance level with the value of each
target share based on the market price of a share of Common Stock on the date of
grant excluding any consideration of the achievement of performance based
vesting criteria. The Annual Equity Awards shall be on such terms and conditions
as shall be established by the Board or its Compensation Committee in accordance
with the Equity Plan (or a successor or other equity compensation plan) and
shall be on terms no less favorable than the terms of awards of long term
compensation granted to other executive officers of ProAssurance.
3.4 Other Savings and Retirement Plans. Except as specifically
provided herein, Executive shall be entitled to participate in all savings and
retirement plans, practices, policies and programs applicable generally to other
executive officers of ProAssurance. The current savings and retirement plans,
all of which may be terminated or amended by the Board, include the Equity Plan,
the Executive Non-Qualified Excess Plan and Trust, the Amended and Restated
ProAssurance Corporation Stock Ownership Plan, and the ProAssurance Group
Savings and Retirement Plan.
3.5 Welfare Benefit Plans. Executive shall be eligible for
participation in and shall receive all benefits under welfare benefit plans
(including group health, disability and life insurance plans and programs) as
shall be in effect from time to time, to the extent applicable to other
executive officers of ProAssurance.
3.6 Fringe Benefits. Executive shall be entitled to fringe benefits
comparable to those provided to the Chief Executive Officer of ProAssurance in
accordance with past practice, and such other plans, practices, programs and
policies as may be approved by the Board from time to time with respect to other
senior executive officers of ProAssurance. During such time that ProAssurance
owns or regularly leases corporate aircraft for business purposes, the fringe
benefits shall include, without limitation, Executive's personal use of
corporate aircraft owned or leased by ProAssurance, if any, in accordance with
policies and procedures established by the Board; provided that the policies and
procedures shall allow the Executive an annual allowance of up to 50 hours of
personal use on an owned or leased corporate aircraft.
3.7 Reimbursement of Expenses. Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by Executive in
accordance with the policies, practices and procedures generally applicable to
senior executive officers of ProAssurance.
3.8 Office and Support Staff. Executive shall be entitled to an
office of a size and with furnishing and other appointments as shall be approved
by the Chair of the Compensation Committee and to personal secretarial and other
assistants as shall be (i) reasonably necessary to perform his duties hereunder,
and (ii) not be less than the office and clerical support provided to other
senior executive officers of ProAssurance.
3.9 Vacations and Leave.
(a) During the Term, at such reasonable times as the Board
shall permit, Executive shall be entitled, without loss of pay, to be absent
from the performance of his duties under this Agreement. In addition, Executive
shall be entitled to annual vacation in accordance with policies established by
ProAssurance for senior executive officers of ProAssurance.
(b) Executive shall be entitled to sick leave (without loss of
pay) in accordance with ProAssurance's policies in effect from time to time, and
other personal and family leave as may be provided by law.
3.10 Continuing Legal Education and Professional Dues and Fees.
ProAssurance will pay the annual dues and/or fees necessary for the Executive to
maintain his license to practice law in the federal and state courts in which he
is currently admitted. ProAssurance shall reimburse Executive for reasonable
expenses paid by Executive in connection with his attendance at professional
seminars, courses or conferences to fulfill continuing legal education ("CLE")
or licensing requirements necessary for Executive to maintain his license to
practice law. ProAssurance shall pay dues and fees for Executive to maintain his
membership in the Alabama State Bar, the Birmingham Bar Association and other
professional associations of which Executive is currently a member.
3.11 Conflict. In the event of any conflict between this Agreement and
the terms of any benefit, severance, deferred compensation, incentive or similar
plan or agreement in which the Executive is or becomes a participant during the
Term (other than a stockholder-approved plan or ERISA plan), the provisions of
this Agreement shall apply unless the Executive makes specific written election
otherwise, but Executive shall not be entitled to duplicative payments or
benefits.
4. Termination of Employment.
4.1 Death, Disability or Retirement. Executive's employment shall
terminate upon the Executive's death, Disability or Retirement during the Term.
(a) For purposes of this Agreement, "Disability" means a
serious injury or illness that requires Executive to be under regular care of a
licenses medical physician and renders the Executive incapable of performing the
essential function of the Executive's position for twelve (12) consecutive
months as determined by the Board in good faith and upon receipt of and in
reliance on competent medical advice from one or more individuals selected by
the Board, who are qualified to give professional medical advice. Executive will
submit to such medical or psychiatric examinations and tests as such medical
professional deems necessary to make any determination of Executive's Disability
and consent to such medical professional sharing the results of such examination
with a representative of the Board.
(b) For purposes of this Agreement, "Retirement" means
retirement of Executive when eligible to receive retirement benefits under a
retirement plan then in effect for ProAssurance, the Executive having reached
the age of mandatory retirement (if such requirement then exists for
ProAssurance's senior executive officers) or any other retirement by Executive
with the consent of the Board.
4.2 Termination by ProAssurance with Cause. ProAssurance may
terminate the Executive's employment during the Term for Cause. For purposes of
this Agreement, the term "Cause" means: (i) the Executive has been convicted in
a federal or state court of a crime classified as a felony; (ii) action or
inaction by the Executive (A) that constitutes embezzlement, theft,
misappropriation or conversion of assets of ProAssurance or its subsidiaries
which alone or together with related actions or inactions involve assets of more
than a de minimus amount or that constitutes intentional fraud, gross
malfeasance of duty, or conduct grossly inappropriate to Executive's office, and
(B) such action or inaction has adversely affected or is likely to adversely
affect the business of ProAssurance or its subsidiaries, taken as a whole, or
has resulted or is intended to result in a direct or indirect gain or personal
enrichment of Executive to the detriment of ProAssurance; or (iii) Executive has
been grossly inattentive to, or in a grossly negligent manner failed to
competently perform, Executive's job duties and the failure was not cured within
45 days after written notice from ProAssurance. Any termination of Executive's
employment by ProAssurance for Cause shall be communicated by a Notice of
Termination (as defined in Section 4.5 below) to the Executive, which Notice of
Termination shall be in writing and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment under this provision. Executive shall not be deemed to
have been terminated for Cause unless and until (x) he receives a Notice of
Termination from ProAssurance; (y) he is given the opportunity to be heard
before the Board; and (z) the Board finds in its good faith opinion, the
Executive was guilty of the conduct set forth in the Notice of Termination.
4.3 Termination by Executive for Good Reason. Executive may terminate
his employment with ProAssurance for Good Reason. For purposes of this
Agreement, "Good Reason" shall constitute any of the following circumstances if
they occur without the Executive's express written consent during the Term: (i)
if the Board shall refuse or fail to reelect Executive to the office of Chief
Executive Officer of ProAssurance or should change the duties and
responsibilities of Executive in a manner that is inconsistent with the duties
and responsibilities of the Chief Executive Officer under the bylaws of
ProAssurance as currently in effect; (ii) ProAssurance shall require that the
Executive's primary location of employment be more than 50 miles from the
location of ProAssurance's principal offices as of the date of this Agreement;
(iii) a reduction in the Executive's Base Salary as set forth in Section 3.1
hereof; (iv) a breach by ProAssurance of any provision of this Agreement in any
material respect; or (v) the election by ProAssurance not to automatically
extend the Term of this Agreement as provided in Section 1 hereof. Executive
must provide ProAssurance with a Notice of Termination no later than 45 calendar
days after Executive knows or should have known that Good Reason has occurred.
Following delivery of Executive's Notice of Termination, ProAssurance shall have
45 calendar days to rectify the circumstances causing the Good Reason. If
ProAssurance fails to rectify the events causing Good Reason within said 45 day
period, or if ProAssurance delivers to Executive written notice stating that the
circumstances cannot or shall not be rectified, Executive shall be entitled to
assert Good Reason and terminate employment as of the expiration of the 45 day
period after delivery of the Executive's Notice of Termination. Should Executive
fail to provide the required Notice of Termination in a timely manner, Good
Reason shall not be deemed to have occurred as a result of the event. The Term
shall not be deemed to have expired during the notice period, however, as long
as Executive has provided Notice of Termination within the Term.
4.4 Notice and Date of Termination. Any termination by ProAssurance,
or by Executive, shall be communicated by Notice of Termination to the other
party given in accordance with Section 9 hereof. For purposes of this Agreement,
a "Notice of Termination" is a written notice which indicates the specific
termination provision in this Agreement relied upon and sets forth such
additional information as may be required in Section 4.2 or Section 4.3 hereof,
to the extent applicable. The "Date of Termination" means (i) if Executive's
employment is terminated by ProAssurance for Cause, the Date of Termination
shall be as of the date of Executive's receipt of ProAssurance's Notice of
Termination; (ii) if Executive's employment is terminated by Executive for Good
Reason, the Date of Termination shall be the last day of the 45 day period after
delivery of Executive's Notice of Termination; (iii) if Executive's employment
is terminated by reason of death of the Executive, the date of death shall be
the Date of Termination; (iv) if the Executive's employment is terminated by
reason of Disability, the Date of Termination shall be the date of determination
of Disability by the Board; (v) if Executive's employment is terminated by
reason of Retirement, the Date of Termination shall be the last day of
employment of Executive; (vi) if the Executive's employment is terminated by
ProAssurance other than for Cause, death, Disability or Retirement, the Date of
Termination shall be the date of receipt of the Notice of Termination by
Executive; or (vii) if the Executive terminates his employment other than for
Good Reason, the Date of Termination shall be date of receipt of the Notice of
Termination by ProAssurance.
5. Certain Benefits Upon Termination.
5.1 Accrued Salary and Benefits. Executive shall be entitled to
receive the following upon any termination of employment: (i) accrued and unpaid
Base Salary as of the Date of Termination; (ii) if the termination occurs during
2007 or 2008, unpaid annual incentive compensation payable under Section 3.2(a)
hereof, prorated from the commencement of the applicable calendar year to the
Date of Termination; (iii) accrued vacation and sick leave, if any, on Date of
Termination in accordance with the then current policy of ProAssurance with
respect to terminated employees generally; and (iv) vested benefits under
ProAssurance's employee benefit plans in which the Executive was a participant
on the Date of Termination, which vested benefits shall be paid or provided in
accordance with the terms of said employee benefit plans.
5.2 Severance Benefits.
(a) If, during the Term, ProAssurance terminates the
employment of Executive for any reason other than Cause, death, Disability or
Retirement, or if Executive terminates his employment with ProAssurance for Good
Reason, or if this Agreement is automatically terminated upon a Change of
Control (as provided in Section 8.2 hereof), and the Executive signs the release
form that is attached to this Agreement as Exhibit C (the "Release"), the
Executive shall receive an amount equal to a sum of the amounts payable as Base
Salary from the Date of Termination to the end of the Term at the then current
rate (the "Severance Benefits"). Subject to the delivery of the executed Release
by Executive, the Severance Benefits shall be paid in cash or good funds in
equal monthly installments during the period that the covenant set forth in
Section 6.1 shall be in effect commencing on the first day of the calendar month
that occurs 30 days after the Date of Termination; provided that the obligation
of ProAssurance to pay such Severance Benefits to the Executive shall be subject
to termination under provisions of Section 6.2 hereof in the event Executive
should violate the covenant set forth therein; and provided further that the
payment of such Severance Benefits shall be payable in lump sum by ProAssurance
on termination of this Agreement upon a Change of Control. ProAssurance shall
withhold from any amounts payable under this Agreement all federal, state, city
or other income and employment taxes that shall be required. Notwithstanding the
foregoing, the payment schedule for Severance Benefits may be modified or
adjusted if the Executive is a "specified employee" within the meaning of
Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986, as amended, to
the extent necessary to comply with such Section and the regulations thereunder,
but in no event shall the aggregate amount of the Severance Benefits be reduced
as a result of such modification or adjustment.
(b) ProAssurance shall fund the obligation to pay Severance
Benefits under this Section 5.2 by depositing in escrow an amount equal to the
sum of the amounts payable to Executive hereunder (the "Escrow Funds") with a
financial institution with total assets of more than One Billion Dollars
($1,000,000,000) as escrow agent (the "Escrow Agent"). The Escrow Funds shall be
the property of ProAssurance and shall be held, invested, and distributed by the
Escrow Agent in accordance with the following provisions. At the time of
delivery of the Escrow Funds, the Escrow Agent shall acknowledge receipt of the
Escrow Funds and agree to be bound by the provisions of this Agreement in a
separate written document. The Escrow Agent shall invest the Escrow Funds in a
money market account for the benefit of Executive and Escrow Agent shall
distribute the earnings to Executive with each monthly installment. Unless and
until the Escrow Agent receives notice from ProAssurance that Executive has
breached this Agreement, the Escrow Agent shall distribute the Escrow Funds to
the Executive in the same number of equal monthly installments as the number of
whole calendar months in the Restricted Period (as defined in Section 6.1
hereof). The monthly installments shall be distributed to Executive on the first
day of each calendar month in the Restricted Period together with accrued and
undistributed earnings of the Escrow Fund. If ProAssurance delivers written
notice to the Escrow Agent and the Executive that Severance Benefits payable to
Executive are subject to termination under Section 6.2 of this Agreement, the
Escrow Agent shall distribute the balance of the Escrow Funds and accrued and
undistributed earnings thereon to ProAssurance unless the Escrow Agent receives
a written notice of objection from Executive within 15 days after delivery of
ProAssurance's notice. If Executive provides timely notice of objection, Escrow
Agent shall hold the Escrow Funds until it receives written notice of
distribution from the arbitrator appointed pursuant to Section 10 hereof or a
joint written notice of distribution from Executive and ProAssurance. Failure of
Executive or ProAssurance to deliver notice to the Escrow Agent as herein
provided shall not be a waiver of any of their respective rights under this
Agreement.
(c) Executive shall not be entitled to receive Severance
Benefits if employment with ProAssurance is terminated by reason of the death of
the Executive, the Disability of the Executive as defined in Section 4.1(a), the
Retirement of the Executive as defined in Section 4.1(b); or by reason of
termination of employment by ProAssurance with Cause as defined in Section 4.2;
or by reason of termination of employment by the Executive unless the employment
is terminated for Good Reason as defined in Section 4.3 hereof.
(d) The Executive shall be under no duty or obligation to seek
or accept other employment and shall not be required to mitigate the amount of
severance benefits provided under this Agreement by seeking employment or
otherwise.
Section 5.3 - Parachute Payment Tax Reimbursement.
(a) If any payment or benefit within the meaning of Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code"), to
Executive for his benefit paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise in connection with, or
arising out of, his employment with ProAssurance or a Change of Control (as
defined in Section 8.1(d) hereof) (a "Payment" or "Payments"), will be subject
to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with such interest and penalties are collectively referred
to as the "Excise Tax"), then the Executive will be entitled to receive an
additional payment (a "Gross Up Payment"). The amount of the Gross Up Payment
will be such that after payment by the Executive of all taxes (including any
interest or penalties, other than interest and penalties imposed by reason of
the Executive's failure to file a timely tax return or pay taxes shown due on
his return, imposed with respect to such taxes and the Excise Tax), including
any Excise Tax imposed upon the Gross Up Payment, the Executive retains an
amount of the Gross Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) An initial determination as to whether a Gross Up Payment
is required pursuant to this Agreement and the amount of such Gross Up Payment
shall be made by the income tax accountants of ProAssurance. The tax accountants
shall provide their determination ("Determination") together with detailed
supporting calculations and documentation to ProAssurance and the Executive
within a reasonable time after the Date of Termination and if the tax
accountants determine that no Excise Tax is payable by the Executive with
respect to a Payment or Payments, it shall furnish the Executive with an opinion
reasonably acceptable to the Executive that no Excise Tax will be imposed with
respect to any Payment or Payments. Within ten days of the delivery of the
Determination to the Executive, the Executive shall have the right to dispute
the Determination. The Gross Up Payment, if any, as determined pursuant to this
Section 7.3(b) shall be paid by ProAssurance to the Executive within 30 days of
the receipt of the Determination. The existence of the Dispute shall not in any
way affect the Executive's right to receive Gross Up Payments in accordance with
the Determination. Upon the final resolution of a Dispute, ProAssurance shall
promptly pay the Executive any additional amount required by such resolution. If
there is no Dispute, the Determination shall be binding, final and conclusive
upon ProAssurance and the Executive subject to the application of subparagraph
(c) below.
(c) Notwithstanding anything contained in this Agreement to
the contrary, if according to the Determination an Excise Tax will be imposed on
any Payment or Payments, ProAssurance shall pay to applicable government taxing
authority as Excise Tax withholding, the amount of the Excise Tax that
ProAssurance has actually withheld from the Payment or Payments.
6. Non-Competition.
6.1 Non-Competition; Nonsolicitation of Employee. The Executive will
not during the Restricted Period (herein defined):
(a) become Employed by a Competitor Company that offers, sells or
markets medical professional liability insurance in the primary market area of
the Companies, except that Executive may be employed with a Competitor Company
so long as and on the condition that the Executive does not participate in the
medical professional liability insurance business of the Competitor Company; or
(b) solicit or induce any employees of the Companies to leave
such employment or accept employment with any other person or entity, or solicit
or induce any insurance agent of the Companies to offer, sell or market medical
professional liability insurance for a competitor company in the primary market
area of the Companies;
provided, however, that nothing in this Agreement shall be construed to preclude
the private practice of law by Executive after this Agreement is terminated so
long as the Executive does not represent any Competitor Company during the
Restricted Period.
"Companies" means any company that is a direct or indirect subsidiary
of ProAssurance, now or in the future, and any other company that has succeeded
to the business of any of the Companies.
"Competitor Company" means an insurance company, insurance agency,
business, for profit or not for profit organization (other than the Companies)
that provides, or offers to provide medical professional liability insurance to
health care providers.
"Employed" includes activities as an owner, proprietor, employee,
agent, solicitor, partner, member, manager, principal, shareholder (owning more
than 1% of the outstanding stock), consultant, officer, director or independent
contractor.
"Health care providers" means physicians, dentists, podiatrists,
physician assistants, nurse practitioners, other individual health care
providers and hospital and other institutional health care providers.
"Medical professional liability insurance" means medical malpractice
insurance and reinsurance, and equivalent self-insured services such as
administration of self-insured trusts, claims management services and risk
management services for health care providers. "Medical professional liability
insurance" does not include services provided as an employee of a health care
provider if such services are rendered solely for the purpose of servicing
medical professional liability risk of the employer or that of its employees.
"Primary market area" means any state in which the Companies derived
more than $10 million in direct written premiums from the sale of medical
professional liability insurance to health care providers in the most recent
complete fiscal year prior to the Date of Termination and any state in which the
Companies have on the Date of Termination a plan for expansion of marketing
activities for the sale of medical professional liability insurance in that
state which is likely to result in direct written premiums from the sale of
medical professional liability insurance of more than $15 in the 18 months
following the Date of Termination.
"Restricted Period" means a period of 36 months from the Date of
Termination.
6.2 Remedies for Breach. If the Executive is deemed to have
materially breached the non-competition covenants set forth in Section 6.1 of
this Agreement, ProAssurance may, in addition to seeking an injunction or any
other remedy they may have, withhold or cancel any remaining payments of
Severance Benefits due to the Executive pursuant to Section 5.2 of this
Agreement. ProAssurance shall give prior or contemporaneous written notice of
such withholding or cancellation of payments in accordance with Section 5.2
hereof. If the Executive violates any of these restrictions, the Companies shall
be further entitled to an immediate preliminary and permanent injunctive relief,
without bond, in addition to any other remedy which may be available to
ProAssurance.
6.3 Reasonableness of Restrictions. ProAssurance and Executive agree
that the restrictions in this Agreement are fair and reasonable in all respects,
including the geographic and temporal restrictions, and that the benefits
described in this Agreement, to the extent any separate or special consideration
is necessary, are fully sufficient consideration for the Executive's obligations
under this Agreement.
6.4 Confidentiality. Executive will remain obligated under any
confidentiality or nondisclosure agreement with the Companies (or any of them)
that is currently in effect or to which the Executive may in the future be
bound. In the event that the Executive is at any time not the subject of a
separate confidentiality or nondisclosure agreement with the Companies (or any
of them), Executive expressly agrees that Executive shall not use for the
Executive's personal benefit, or disclose, communicate or divulge to, or use for
the direct or indirect benefit of any person, firm, association or company any
confidential or competitive material or information of the Companies or their
subsidiaries, including without limitation, any information regarding insureds
or other customers, actual or prospective, and the contents of their files;
marketing, underwriting or financial plans or analyses which is not a matter of
public record; claims practices or analyses which are not matters of public
record; pending or past litigation in which the Companies have been involved and
which is not a matter of public record; and all other strategic plans, analyses
of operations, computer programs, personnel information and other proprietary
information with respect to the Companies which are not matters of public
record. Executive shall return to the Companies promptly, and in no event later
than the Date of Termination, all items, documents, lists and other materials
belonging to the Companies or their subsidiaries, including but not limited to,
credit, debit or service cards, all documents, computer tapes, or other business
records or information, keys and all other items in the Executive's possession
or control.
7. Indemnification. In addition to any indemnification required by
law, under the Certificate of Incorporation or Bylaws of ProAssurance or any of
the Companies (as defined in Section 6.1 hereof), or under a policy of insurance
owned by ProAssurance or the Companies, ProAssurance shall provide the Executive
indemnification under the terms and conditions of the Indemnification Agreement
attached hereto as Exhibit C. The Indemnification Agreement shall be executed
and effective as of the Commencement Date.
8. Change of Control.
8.1 Definitions. For purposes of this Agreement, the following terms
have the meanings set forth below:
(a) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(b) "Person" is used as such term is used for purposes of Section
13(d) or 14(d) of the Exchange Act.
(c) "Beneficial Ownership" is used as such term is used within
the meaning of Rule 13d-3 promulgated under the Exchange Act.
(d) "Change of Control" shall mean the occurrence during the Term
of any one of the following events:
(i) an acquisition of the voting securities of ProAssurance
by any Person, immediately after which such Person has Beneficial Ownership of
more than 50.1% of the combined voting power of ProAssurance's then outstanding
voting securities;
(ii) a merger, consolidation or reorganization involving
ProAssurance in which an entity other than ProAssurance is the surviving entity
or in which ProAssurance is the surviving entity and the stockholders of
ProAssurance immediately preceding such transaction will own less than 50.1% of
the outstanding voting securities of the surviving entity; or
(iii) the sale or other disposition of substantially all of
the assets of ProAssurance (as defined in the regulations under Section 409A of
the Code) and ProAssurance ceases to function on a going forward basis as an
insurance holding company system that provides medical professional liability
insurance.
The transactions as described in (i), (ii) and (iii) shall be referred to as
"Change of Control Transactions." In no event shall a Change of Control be
deemed to have occurred, with respect to Executive, if the Executive is part of
a purchasing group which consummates a Change of Control Transaction. The
Executive shall be deemed "part of a purchasing group" for purposes of the
preceding sentence if the Executive is an equity participant or has agreed to
become an equity participant in the purchasing company or group (except for
passive ownership of less than 5% of the stock of the purchasing company or
ownership of equity participation in the purchasing company or group as a result
of the conversion or exchange of Common Stock Beneficially Owned by Executive.
8.2. Effect of Change of Control. If a Change of Control
occurs, this Agreement shall be deemed automatically terminated and the
Executive shall be entitled to the following in addition to the payments
required in Section 5.1 and Section 5.2 hereof:
(a) Executive shall be entitled to any amounts of the annual
incentive compensation payable to Executive under Section 3.2(a) hereof which
has not been previously paid to Executive;
(b) All options granted to Executive under Section 3.3(a) hereof
shall immediately vest and become exercisable; and
(c) All Annual Equity Awards granted Executive pursuant to
Section 3.3(b) hereof prior to the Date of Termination shall vest and accelerate
in accordance with the following:
(i) all stock options shall immediately vest and become
exercisable;
(ii) any restricted stock shall vest immediately and all
restrictions on the transferability of such stock shall immediately terminate;
and
(iii) the performance shares shall be deemed to have been
earned at the target performance level.
Notwithstanding the fact that this Agreement shall be deemed automatically
terminated as a result of a Change in Control, Executive may, in the discretion
of the successor or surviving entity, be employed by such entity on such terms
and conditions as the board of directors of such entity shall approve.
9. Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered by hand or commercial courier or
mailed by certified or registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses as set forth below or to such
other address as one party may have furnished to the other in writing in
accordance herewith.
Notice to the Executive:
W. Xxxxxxx Xxxxxxx
[address withheld from filing for privacy]
Xxxxxxxxxx, Xxxxxxx 00000
Notice to the Companies:
ProAssurance Corporation
Mailing Address:
P. X. Xxx 000000
Xxxxxxxxxx, Xxxxxxx 00000-0000
Street Address:
000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Corporate Secretary
10. Arbitration. ProAssurance and Executive agree that final and
binding arbitration shall be the sole recourse to settle any claim or
controversy arising out of or relating to a breach or the interpretation of this
Agreement, except as either party may be seeking injunctive relief. Either party
may file a demand for arbitration. The arbitration shall be held at a mutually
agreeable location, and shall be subject to and in accordance with the
Employment Arbitration Rules of the American Arbitration Association then in
effect; provided that if the location cannot be agreed upon the arbitration
shall be held in Birmingham, Alabama. The arbitrator may award any and all
remedies allowable by the cause of action subject to the arbitration, but the
arbitrator's sole authority shall be to interpret and apply the provisions of
this Agreement. In reaching its decision the arbitrator shall have no authority
to change or modify any provision of this Agreement or other written agreement
between the parties. The arbitrator shall have the power to compel the
attendance of witnesses at the hearing. Any court having jurisdiction may enter
a judgment based upon such arbitration. All decisions of the arbitrator shall be
final and binding on the parties without appeal to any court. Upon execution of
this Agreement, the Executive shall be deemed to have waived any right to
commence litigation proceedings regarding this Agreement outside of arbitration
or injunctive relief without the express consent of ProAssurance. ProAssurance
shall pay all arbitration fees and the arbitrator's compensation. If the
Executive prevails in the arbitration proceeding, ProAssurance shall reimburse
to the Executive the reasonable fees and expenses of Executive's personal
counsel for his or her professional services rendered to the Executive in
connection with the enforcement of this Agreement.
11. Miscellaneous.
(a) Except insofar as this provision may be contrary to applicable
law, no sale, transfer, alienation, assignment, pledge, collateralization or
attachment of any benefits under this Agreement shall be valid or recognized by
ProAssurance.
(b) This Agreement sets forth the entire agreement between the
parties with respect to the matters set forth herein. This Agreement may not be
modified or amended except by written agreement intended as such and signed by
all parties.
(c) This Agreement shall benefit and be binding upon the parties and
their respective directors, officers, employees, representatives, agents, heirs,
successors, assigns, devisees, and legal or personal representatives.
(d) ProAssurance, from time to time, shall provide government
agencies with such reports concerning this Agreement and copies thereof as may
be required by law, and shall provide Executive with such disclosure concerning
this Agreement as may be required by law or as ProAssurance may deem
appropriate.
(e) Executive and ProAssurance respectively acknowledge that each of
them has read and understand this Agreement, that they have each had adequate
time to consider this Agreement and discuss it with each of their attorneys and
advisors, that each of them understands the consequences of entering into this
Agreement, that each of them is knowingly and voluntarily entering into this
Agreement, and that they are each competent to enter into this Agreement.
(f) If any provision of this Agreement is determined to be
unenforceable, at the discretion of ProAssurance the remainder of this Agreement
shall not be affected but each remaining provision shall continue to be valid
and effective and shall be modified so that it is enforceable to the fullest
extent permitted by law.
(g) This Agreement will be interpreted as a whole according to its
fair terms. It will not be construed strictly for or against either party.
(h) Except to the extent that federal law controls, this Agreement is
to be construed according to Delaware law.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
May 12, 2007 to be effective as of the Commencement Date
EXECUTIVE:
/s/ W. Xxxxxxx Xxxxxxx
----------------------------------
W. Xxxxxxx Xxxxxxx
PROASSURANCE CORPORATION
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Xxxxxx X. Xxxxx, President
EXHIBIT A
---------
Stock Option Agreement No. PA-07-63
PROASSURANCE CORPORATION
SAMPLE STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is entered into as of
this 2nd day of July 2007, by and between ProAssurance Corporation, a Delaware
corporation (the "Company"), and W. Xxxxxxx Xxxxxxx (the "Optionee").
WHEREAS, the Board of Directors and Shareholders of the Company have
adopted the "ProAssurance Corporation 2004 Equity Incentive Plan," (the "Plan");
and
WHEREAS, the Board of Directors through its Compensation Committee has
granted Optionee a stock option to purchase the number of shares of the
Company's common stock as set forth Schedule A attached hereto and incorporated
herein by reference in accordance with the Plan; and
WHEREAS, the Company and the Optionee desire to enter into a written
agreement to evidence the terms of such option in accordance with the Plan.
NOW, THEREFORE, as an employment incentive and to encourage stock
ownership, and also in consideration of the mutual covenants contained herein,
the parties hereto agree as follows.
1. Incorporation of Plan. This option is granted pursuant to the
provisions of the Plan and the terms and conditions of the Plan are incorporated
herein by reference and made a part hereof. A copy of the Plan is available upon
request from the Company. Capitalized terms not otherwise defined herein shall
have the meanings attributable to them under the Plan.
2. Grant of Option. Subject to the terms, restrictions, limitations
and conditions stated herein, the Company hereby evidences its grant to the
Optionee, not in lieu of salary or other compensation, of the right and option
(the "Options") to purchase all or any part of the number of shares of the
Company's Common Stock, par value $0.01 per share (the "Stock"), set forth on
Schedule A attached hereto and incorporated herein by reference. Schedule A
states whether the Options are intended to be an Incentive Stock Option or a
Non-Qualified Stock Option.
3. Purchase Price. The price per share to be paid by the Optionee
for the shares subject to this Option (the "Exercise Price") shall be as
specified on Schedule A, which price shall be an amount not less than the Fair
Market Value of a share of Stock on the Date of Grant as set forth in Schedule
A.
4. Exercise Terms. The Options shall vest (or become exercisable)
and may be exercised in the amounts and at the times specified in Schedule A.
The Optionee must exercise the Options for at least the lesser of 100 shares or
the number of shares of Stock that are presently exercisable but remain
unexercised under the Options. In the event the Options are not exercised with
respect to all or any part of the shares subject to the Options prior to
expiration date set forth on Schedule A, the Options shall be null and void and
the shares with respect to which the Options were not exercised shall no longer
be subject to the Options.
5. Restrictions on Transferability.
(a) No Incentive Stock Option may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated by Optionee, other
than by will or by the laws of descent and distribution. Incentive Stock Options
shall be exercisable only by Optionee during his or her lifetime.
(b) Unless otherwise provided on Schedule A, no Nonqualified
Stock Option may be sold, transferred, pledged, or assigned, or otherwise
alienated or hypothecated by Optionee, other than by will or by the laws of
descent and distribution.
6. Notice of Exercise of Option.
(a) The Options may be exercised by the Optionee by a written
notice (in substantially the form of the Notice of Exercise attached hereto as
Schedule B) signed by the Optionee, or by any permitted successor or assign, and
delivered or mailed to the Company as specified in Section 11(c) hereof to the
attention of the Corporate Secretary or such other officer as the Company may
designate. Any such notice shall (x) specify the number of shares of Stock which
the Optionee then elects to purchase hereunder, (y) contain such information as
may be reasonably required pursuant to Section 9 hereof, and (z) be accompanied
by payment of the Exercise Price for the shares of Stock to be purchased upon
the exercise of the Option. The methods of payment and the definition of Fair
Market Value are set forth on Schedule B.
(b) Except as set forth in Section 6(c) below, the date of
exercise of the Option shall be deemed to be the date on which the Notice of
Exercise is given or made in accordance with Section 11(c) hereof; provided that
the Notice of Exercise, when so given or made, must be properly completed and
executed and payment of the Exercise Price must have been made or authorized in
accordance with the terms of the Notice of Exercise.
(c) The Optionee may elect to arrange for payment of the
Exercise Price and applicable income tax withholdings through the sale of shares
issuable upon the exercise of the Option in a broker transaction. In such event,
the Optionee shall direct the Company to deliver the shares to a designated
broker who shall be reasonably acceptable to the Company in a properly completed
and executed Notice of Exercise delivered in accordance with Section 11(c)
hereof. (At the request of the broker, the Company shall provide reasonable
confirmation of its obligation to deliver the shares issuable upon the exercise
of the Option and to be sold in the broker transaction upon payment of the
Exercise Price on the settlement date for such transaction.) For purposes of
this method of exercise, the date of exercise of the Option shall be the date of
the sale of such number of shares as is necessary to pay the Exercise Price as
reflected in the broker's written confirmation of the sale.
(d) Unless the Optionee delivers to the Company funds in cash
and/or Stock having a Fair Market Value sufficient to fund Optionee's tax
withholding obligations, the Company shall have the authority to make any
withholdings for federal and state taxes required upon the exercise of the
Options by retaining a number of shares of Stock otherwise issuable upon the
exercise of the Options whose Fair Market Value on the date of exercise is equal
to the amount of taxes required to be withheld by the Company.
(e) Upon delivery of the Notice of Exercise and the
accompanying payment as herein provided, and subject to the terms hereof, the
Company shall cause to be issued the number of shares of Stock to be issued upon
the exercise of the Options with such shares to be registered as specified by
the Optionee (or his permitted successor or assign) in the Notice of Exercise.
Fractional shares of Stock resulting from the payment of the Exercise Price in
shares of Stock shall be applied to the taxes withheld by the Company.
7. Adjustment in Option. The number of Shares subject to the
Options, the Exercise Price and other matters are subject to adjustment during
the term of the Options in accordance with Section 4(c) of the Plan.
8. Termination of Employment.
(a) The employment of Optionee shall not be considered
terminated (i) in the case of an approved sick leave or other bona fide leave of
absence (not to exceed one year) or (ii) if the Optionee continues to provide
bona fide services to the Company or a Subsidiary as an Employee, Consultant or
Director.
(b) If the employment terminates by reason of the death or
Disability of Optionee, all unexercised Options shall become exercisable
regardless of whether then vested and the Optionee's beneficiary or legal
representative may purchase some or all of the shares of Stock subject to the
unexercised Options upon the exercise of such Options at any time after
Termination of employment and prior to the earlier of either (i) the date the
Options expire as set forth on Schedule A; or (ii) the expiration of ninety (90)
days after Termination of employment.
(c) If employment of Optionee terminates by reason of Normal
Retirement or early retirement with the consent of the Committee, all
unexercised Options shall become exercisable regardless of whether then vested
and the Optionee may purchase some or all of the shares subject to the
unexercised Options upon the exercise of such Options at any time after
Termination of employment and prior to the earlier of either (i) the date the
Options expire as set forth on Schedule A or (ii) the first anniversary of the
Termination of employment.
(d) If employment of Optionee is terminated for Cause or if
after Termination of employment the Committee determines that Optionee could
have been terminated for cause had the Optionee still been employed or that the
Optionee has otherwise engaged in conduct detrimental to the interests of the
Company or a Subsidiary, all unexercised Options shall immediately terminate
regardless of whether then vested and otherwise exercisable, .
(e) If employment of Optionee is terminated for any reason
other than those set forth in subparagraphs (b), (c) and (d) of this Section 8,
Optionee may purchase some or all of the shares subject to the unexercised
Options that were vested and exercisable on the date of Termination of
employment upon the exercise of such Options at any time after Termination of
employment and prior to the earlier of (i) the date the Options expire as set
forth on Schedule A or (ii) the expiration of thirty (30) days after Termination
of employment.
(f) Notwithstanding the provisions of this Section 8, the
Committee and Optionee may agree to increase or decrease the period for the
exercise of the Options after Termination of employment so long as the period
for the exercise of the Options does not extend beyond the expiration date of
the Options on Schedule A.
9. Compliance with Regulatory Matters. The Optionee acknowledges
that the issuance of shares of Stock of the Company is subject to limitations
imposed by federal and state law, and the Optionee hereby agrees that the
Company shall not be obligated to issue any shares of Stock upon exercise of
this Option that would cause the Company to violate law or any rule, regulation,
order or consent decree of any regulatory authority (including without
limitation the Securities and Exchange Commission) having jurisdiction over the
affairs of the Company. The Optionee agrees that he or she will provide the
Company with such information and representation as is reasonably requested by
the Company or its counsel to determine whether the issuance of Stock complies
with the provisions described by this Section, including, without limitation, a
representation that the Optionee shall not sell or otherwise dispose of the
Stock in the absence of registration of such shares under applicable federal and
state securities laws or an opinion of counsel, satisfactory to the Company,
that such registration is not required.
10. Beneficiary. Optionee may designate a beneficiary or
beneficiaries (which beneficiary may be an entity other than a natural person)
to exercise any Options following the Optionee's death. Such designation may be
changed or canceled at any time without the consent of any such beneficiary. Any
such designation, change or cancellation must be made in a form approved by the
Committee and shall not be effective until received by the Committee. If no
beneficiary has been named, or the designated beneficiary or beneficiaries shall
have predeceased the Optionee, the beneficiary shall be the Optionee's spouse
or, if no spouse survives the Optionee, the Optionee's estate. If an Optionee
designates more than one beneficiary, the rights of such beneficiaries shall be
payable in equal shares, unless the Optionee has designated otherwise.
11. Miscellaneous.
(a) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their representatives, successors and assigns.
(b) This Agreement shall be governed by the laws of the State
of Delaware.
(c) Any requests or notices to be given hereunder shall be
addressed, if to the Optionee, at the address set forth below and, if to the
Company, to the executive offices of the Company at ProAssurance Corporation,
Attn: Corporate Secretary, 000 Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000
[Mailing Address: Post Office Box 590009, Zip 35259-0009], Facsimile (205)
877-4405. The request or notice shall be deemed given, and any elections or
exercises to be made or accomplished shall be deemed made or accomplished, upon:
(i) the actual receipt by the Company if delivered by hand
or facsimile or electronically; or
(ii) the postmark on the transmittal envelope if delivered
to the Company by U.S. Mail; or
(iii) the receipt by the courier if delivered to the Company
by commercial courier.
(d) This Agreement may not be modified except in writing
executed by each of the parties hereto.
IN WITNESS WHEREOF, the Board of Directors of the Company has caused
this Stock Option Agreement to be executed on behalf of the Company, and the
Optionee has executed this Stock Option Agreement, all as of the day and year
first above written.
COMPANY:
PROASSURANCE CORPORATION
Attest:
By:
-------------------------------- --------------------------------------
Xxxxxxx X. Xxxxxxx Secretary
Name: Xxxxxx X. Xxxxx
[SEAL]
Title: President
OPTIONEE:
------------------------------------------
Name:
-----------------------------------
Address:
---------------------------------
---------------------------------
---------------------------------
SCHEDULE A
TO
STOCK OPTION AGREEMENT
BETWEEN
PROASSURANCE CORPORATION
AND
W. XXXXXXX XXXXXXX
------------------
Dated as of
July 2, 2007
OPTION AGREEMENT NO. PA-07-63
1. Number of Shares Subject to Option: 100,000.
2. This Option (Check one) [ ] is an Incentive Stock Option [x ] is a
Non-Qualified Stock Option.
3. Option Exercise Price: $XX.XX per Share.
4. Date of Grant: July 2, 2007
5. Option Vesting Schedule: Options are exercisable with respect to the
number of shares indicated below on or after the date indicated next to
the number of shares:
No. of Shares Vesting Date
------------- ------------
100% of Option Shares January 3, 2008
6. Option Exercise Period: Unless sooner terminated upon a Change of
Control pursuant to Section 11 of the Plan or upon a termination of employment
under Section 8 of the Stock Option Agreement:
Check One:
(X) All options expire and are void unless exercised on or
before July 1, 2017
( ) Options expire and are void unless exercised on or before
the date indicated next to the number of shares:
No. of Shares Expiration Date
------------- ---------------
7. Transferability of Nonqualified Stock Options: [ ] Check if applicable.
The Options may be transferred to the spouse or lineal descendants of Optionee
(the "immediate family") or to a trust for the exclusive benefit of Optionee and
his or her immediate family or to a partnership or limited liability company in
which Optionee and his or her immediate family comprise all of the partners or
members; provided that the Options so transferred shall remain subject to the
terms and provisions of the Plan; provided further that the transfer of the
Option shall be prohibited if SEC Rule 16b-3, or any comparable rule, as then in
effect and applicable to the Company, were to provide that the transfers herein
permitted shall result in the Options or the Plan being disqualified from the
exemption provided by SEC Rule 16b-3.
8. Other Provisions [Optional]:
Options shall not expire on death or Disability unless and until the Company
provides at least 60 days' prior written notice of such expiration to the
Optionee or his personal representative.
SCHEDULE B
ProAssurance Corporation
Notice of Exercise
------------------
Secretary*
ProAssurance Corporation
000 Xxxxxxxxx Xxxxx
P. O. Box 590009 Birmingham, Alabama 35259-0009
This letter will serve as notice of my exercise of options ("Options")
to purchase shares ("Shares") of ProAssurance common stock, par value $0.01 per
share, that were previously granted to me under the ProAssurance Corporation
2004 Equity Incentive Plan (the "Plan"). Capitalized terms not otherwise defined
herein have the meanings attributable to them under the Plan and the Stock
Option Agreement(s) evidencing the terms of the Options.
Notice of Exercise. I hereby elect to purchase the Number of Shares
listed below pursuant to the Options granted under the Stock Option Agreement(s)
listed below (the "Agreement"):
Agreement No. Purchase Price Number of Shares
------------- -------------- ----------------
Method of Payment. I am paying the Exercise Price in the following
manner:
|_| I have enclosed my check or money order payable to the Company in
good funds in the amount of the Exercise Price; or
|_| I am delivering shares of the Company's Stock that I presently
own in such form as is acceptable to the Company, either alone or in combination
with my check payable to the Company, which shares of Stock when added to the
amount of the check, if any, have a Fair Market Value (as herein determined)
equal to the amount of the Exercise Price. I certify to the Company that [I have
owned these shares for six months or more], and that these shares are not
subject to any pledge or security interest; or
|_| I am exercising the Options through a broker transaction and I
have instructed the stockbroker to sell such number of Shares as may be
necessary to deliver good funds payable to the Company in the amount of the
Exercise Price; or
|_| I hereby direct and authorize the Company to withhold from the
Shares subject to the Options exercised hereunder such number of shares of Stock
whose Fair Market Value (as herein determined) is equal to the amount of the
Exercise Price. In connection with this election, I certify to the Company that
I presently own _____________ shares of the Company's common stock and that [I
have continuously owned these shares for six months or more] and that these
shares are available for delivery to the Company as may be required in
connection with the payment of the Exercise Price.
I understand that withholding for applicable federal and state taxes
will be effected by retention of Shares subject to the Options based on their
"Fair Market Value" (as herein determined) unless I deliver herewith sufficient
cash or Stock to fully fund the withholding obligations.
The "Fair Market Value," shall be determined in accordance with the
Plan using the closing price of ProAssurance Corporation common stock on the New
York Stock Exchange as of the date of exercise of the Option as determined under
the Agreement.
Delivery of Shares. I request delivery of the Shares to be issued upon
my exercise of the Option as follows:
|_| Stock Certificate registered in the following name(s) and address:
Name(s) to appear on certificate:
------------------------------------
Address: ------------------------------------
------------------------------------
------------------------------------
|_| Direct Registration registered in the following name(s) and
address:
Name(s) of registered owner(s):
------------------------------------
Address: ------------------------------------
------------------------------------
------------------------------------
|_| Transfer via DWAC or DTC to the following brokerage account:
Name of Broker:
---------------------------------------------
DTC Account Number of Broker:
------------------------------------
Name(s) of Account:
----------------------------------------------
Account Number:
-------------------------------------------------
Dated:
------------------- ------------------------------------
Optionee Signature
------------------------------------
Print Name
------------------------------------
Print Address
*It is also suggested that you forward a copy to Xxxxx X'Xxxx at the same
address.
EXHIBIT B
---------
RELEASE IN CONJUNCTION WITH SEVERANCE COMPENSATION
--------------------------------------------------
This Release of Claims ("Release") is between ProAssurance Corporation
("ProAssurance"), and any successor company that has assumed the Agreement to
which this Release was an attachment (all such organizations being referred to
in this Release as the "Companies") and _______ ________ ("Executive").
The Companies and Executive have agreed to terminate their employment
relationship. To effect an orderly termination, the Executive, and the Companies
are entering into this Release.
1. For the purposes of this Release, "Date of Termination" is the
effective date of Executive's termination of employment from Companies.
Executive hereby waives any and all rights Executive may otherwise have to
continued employment with or re-employment by the Companies or any parent,
subsidiary or affiliate of Companies.
2. Effective with the Date of Termination, Executive is relieved of
all duties and obligations to the Companies, except as provided in this Release
or any applicable provisions of the Release and Severance Compensation Agreement
between Companies and Executive, effective as of _____________, 2007
("Agreement"), which survive termination of the employment relationship.
3. Executive agrees that this Release and its terms are confidential
and shall not be disclosed or published directly or indirectly to third persons,
except as necessary to enforce its terms, by Executive or to Executive's
immediate family upon their agreement not to disclose the fact or terms of this
Release, or to Executive's attorney, financial consultant or accountant, except
that Executive may disclose, as necessary, the fact that Executive has
terminated Executive's employment with the Companies.
4. Any fringe benefits that Executive has received or currently is
receiving from the Companies or its affiliates shall cease effective with the
Date of Termination, except as otherwise provided for in this Release, in the
Agreement or by law.
5. The parties agree that the terms contained and payments provided
for in the Agreement are compensation for and in full consideration of
Employee's release of claims under this Release, and Executive's
confidentiality, non-compete, non-solicitation and non-disclosure agreements
contained in the Agreement.
6. The Executive shall be under no duty or obligation to seek or
accept other employment and shall not be required to mitigate the amount of the
Severance Benefits (as defined and provided under the Agreement) by seeking
employment or otherwise, provided, however, that the Executive shall be required
to notify the Companies if the Executive becomes covered by a health or dental
care program providing substantially similar coverage, at which time health or
dental care continuation coverage provided under the Agreement shall cease.
7. Executive waives, releases, and forever discharges the Companies
and each of their direct or indirect parents, subsidiaries, affiliates, and any
partnerships, joint ventures or other entities involving or related to any of
the Companies, their parents, subsidiaries or affiliates, and all present or
former employees, officers, agents, directors, successors, assigns and attorneys
of any of these corporations, persons or entities (all collectively referred to
in this Release as the "Released") from any and all claims, charges, suits,
causes of action, demands, expenses and compensation whatsoever, known or
unknown, direct or indirect, on account of or growing out of Executive's
employment with and termination from the Companies, or relationship or
termination of such relationship with any of the Released, or arising out of
related events occurring through the date on which this Release is executed.
This includes, but is not limited to, claims for breach of any employment
contract; handbook or manual; any express or implied contract; any tort;
continued employment; loss of wages or benefits; attorney fees; employment
discrimination arising under any federal, state, or local civil rights or
anti-discrimination statute, including specifically any claims Executive may
have under the federal Age Discrimination in Employment Act, as amended, 29 USC
xx.xx. 621, et seq.; emotional distress; harassment; defamation; slander; and
all other types of claims or causes of action whatsoever arising under any other
state or federal statute or common law of the United States.
8. The Executive does not waive or release any rights or claims that
may arise under the federal Age Discrimination in Employment Act, as amended,
after the date on which this Release is executed by the Executive.
9. The Executive acknowledges and agrees that Executive has been
advised in writing by this Release, and otherwise, to CONSULT WITH AN ATTORNEY
before Executive executes this Release.
10. The Executive agrees that Executive received a copy of this
Release prior to executing the Agreement, that this Release incorporates the
Companies' FINAL OFFER; that Executive has been given a period of at least
twenty-two (22) calendar days within which to consider this Release and its
terms and to consult with an attorney should Executive so elect.
11. The Executive shall have seven (7) calendar days following
Executive's execution of this Release to revoke this Release. Any revocation of
this Release shall be made in writing by the Executive and shall be received on
or before the time of close of business on the seventh calendar day following
the date of the Employee's execution of this Release at ProAssurance's address
at 000 Xxxxxxxxx Xxxxx, P. O. Box 590009, Birmingham, Alabama 35259-0009,
Attention: Chairman, or such other place as the Companies may notify Executive
in writing. This Release shall not become effective or enforceable until the
eighth (8th) calendar day following the Executive's execution of this Release.
12. Executive and the Companies acknowledge that they have read and
understand this Release, that they have had adequate time to consider this
Release and discuss it with their attorneys and advisors, that they understand
the consequences of entering into this Release, that they are knowingly and
voluntarily entering into this Release, and that they are competent to enter
into this Release.
13. This Release shall benefit and be binding upon the parties and
their respective directors, officers, employees, agents, heirs, successors,
assigns, devisees and legal or personal representatives.
14. This Release, along with the attached Agreement, sets forth the
entire agreement between the parties at the time and date these documents are
executed, and fully supersedes any and all prior agreements or understandings
between them pertaining to the subject matter in this Release. This Release may
not be modified or amended except by a written agreement intended as such, and
signed by all parties.
15. Except to the extent that federal law controls, this Release is
to be construed according to the law of the state of Delaware.
16. If any provision of this Release is determined to be
unenforceable, at the discretion of ProAssurance the remainder of this Release
shall not be affected but each remaining provision or portion shall continue to
be valid and effective and shall be modified so that it is enforceable to the
fullest extent permitted by law.
17. To signify their agreement to the terms of this Release, the
parties have executed it on the date set forth opposite their signatures, or
those of their authorized agents, which follow.
EXECUTIVE
Dated:___________________ _____________________________________
PROASSURANCE CORPORATION
Dated:___________________ By:__________________________________
EXHIBIT C
---------
PROASSURANCE CORPORATION
------------------------
INDEMNIFICATION AGREEMENT
-------------------------
THIS Agreement is made effective as of the ____ day of _____________,
200_, by and between ProAssurance Corporation, a Delaware corporation (the
"Company"), and _____________ ("Indemnitee").
Recitals
--------
WHEREAS, the Company has adopted Bylaws (the "Bylaws") which provide
for the indemnification of the directors, officers, agents, and employees of the
Company in accordance with Section 145 of the General Corporation Laws of
Delaware (the "State Statute");
WHEREAS, the State Statute provides that it is not exclusive, and thus
contemplates that contracts may be entered into between the Company and the
members of its Board of Directors and Officers and employees of the Company with
respect to the indemnification of such individuals;
WHEREAS, developments with respect to the terms, cost and availability
of directors' and officers' liability insurance ("Liability Insurance") have
raised questions regarding the adequacy and reliability of the protection
afforded to directors and officers thereby; and
WHEREAS, in order to resolve such questions and thereby induce the
Indemnitee to continue to perform services on behalf of the Company, the Company
has determined and agreed to enter into this contract with the Indemnitee.
Agreement
---------
NOW, THEREFORE, in consideration of and for the Indemnitee's agreement
to serve as a director, associate committee member, officer, employee or agent
of the Company, and to render service on behalf of the Company, the parties
agree as follows:
1. Liability Insurance. The Company, as of the date of this
Agreement, has acquired a Liability Insurance policy. The Company shall use
reasonable efforts to maintain Liability Insurance during the term of this
Agreement, but shall not be required to continue to maintain Liability Insurance
if in the sole business judgment of the directors then in office, (i) the
premium cost for such insurance is excessive, (ii) the premium cost for such
insurance is not reasonably related to the amount of coverage provided, of (iii)
the coverage provided by such insurance is so limited by its terms and
exclusions or otherwise that sufficient benefit is not derived therefrom.
2. Indemnity. The Company agrees to indemnify and reimburse
Indemnitee to the full extent authorized and permitted by the provisions of the
Bylaws of the Company and the laws of the State of Delaware, and by any
amendment thereof, authorizing or permitting such indemnification which is
adopted after the date hereof.
3. Additional Indemnity.
(a) Subject only to the exclusions set forth in Section 4
hereof, the Company shall indemnify and reimburse Indemnitee under any
circumstances where Indemnitee was or is a party or is threatened to be made a
party to a threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative and whether formal or
informal, including an action by or in the right of the corporation, by reason
of the fact that he or she is or was a director, associate committee member,
officer, employee, or agent of the Company, or is or was serving at the request
of the Company as a director, associate committee member, officer, partner,
trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, or other enterprise, whether for profit or
not, against reasonable expenses, including attorneys' fees, judgments,
penalties, fines, and amounts paid in settlement actually and reasonably
incurred by him or her in connection with the action, suit, or proceeding, if
Indemnitee acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the Company or its shareholders or
policyholders, and with respect to a criminal action or proceeding, if
Indemnitee had no reasonable cause to believe his or her conduct was unlawful.
The termination of an action, suit, or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
does not, of itself, create a presumption that Indemnitee did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Company or its shareholders or
policyholders, and, with respect to a criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
(b) The indemnification provided shall extend to all expenses
and circumstances for which indemnification is permitted under paragraph 3(a)
above, that arise:
(i) During the term of this Agreement based upon the activities of
Indemnitee prior to or during the term of this Agreement; and,
(ii) Subsequent to the term of this Agreement based upon the activities
of Indemnitee prior to or during the term of this Agreement.
(c) The term "Company" shall for purposes of this Agreement
include ProAssurance Corporation and its direct and indirect majority-owned
subsidiaries.
4. Limitations on Indemnity. No indemnity pursuant to Section 3
hereof shall be paid by the Company:
(a) except to the extent the aggregate of losses to be
indemnified hereunder exceed the amount of such losses for which Indemnitee is
indemnified either: pursuant to Section 2 hereof; pursuant to an Indemnification
Agreement with any parent, subsidiary or affiliate of the Company; or, pursuant
to any Liability Insurance purchased and maintained by the Company pursuant to
Section 1 hereof;
(b) in respect to remuneration paid to Indemnitee if it shall
be determined by a final judgment or other final adjudication that such
remuneration was in violation of law;
(c) on account of any suit in which judgment is rendered
against Indemnitee for an accounting of profits made from the purchase or sale
by Indemnitee of securities of the Company pursuant to the provisions of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state, or local statutory law;
(d) on account of Indemnitee conduct which is finally adjudged
to have been knowingly fraudulent, deliberately dishonest or willful misconduct;
(e) if indemnification is prohibited by applicable law of the
State of Delaware;
(f) for a claim, issue, or matter in which Indemnitee has been
found liable to the Company unless and only to the extent that the Court of
Chancery in Delaware or the court in which the action or suit was brought has
determined upon application that, despite the adjudication of liability but in
view of all circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnification for the expenses which the court considers proper;
or
(g) if a final decision by a court having jurisdiction in the
matter shall determine that such indemnification is not lawful.
5. Term of Agreement. The original term of this Agreement shall be
the twelve month period between December 1, 2002, and November 30, 2003. This
Agreement shall renew for successive one year terms unless sooner terminated
upon termination of Indemnitee's position as an officer, director or employee of
the Company or upon delivery of written notice of termination by the Company to
the Indemnitee not less than 60 days prior to the date of termination stated in
the notice. Notwithstanding anything in this Agreement to the contrary, the
indemnification provided pursuant to this Agreement shall survive the
termination of this Agreement with respect to all actions or inactions occurring
or alleged to have occurred prior to or during the term of this Agreement, and
this Agreement shall remain binding upon the Company with respect to the covered
activities of Indemnitee occurring or alleged to have occurred prior to or
during the term of this Agreement.
6. Notification and Defense of Claim. Promptly after receipt by
Indemnitee of notice of the commencement or threatened commencement of any
action, suit or proceeding, Indemnitee will, if a claim in respect thereof is to
be made against the Company under this Agreement, notify the Company of the
commencement thereof; but the omission so to notify the Company will not relieve
it from any liability which it may have to Indemnitee otherwise than under this
Agreement. With respect to any such action, suit or proceeding as to which
Indemnitee notifies the Company of the commencement thereof:
(a) The Company will be entitled to participate therein at its
own expense; and
(b) Except as otherwise provided below, to the extent that it
may wish, the Company jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel selected
by the Company and consented to by Indemnitee, which consent shall not be
unreasonably withheld. After notice from the Company to Indemnitee of its
election so to assume the defense thereof, the Company will not be liable to
Indemnitee under this Agreement for any legal or other expenses subsequently
incurred by Indemnitee in connection with the defense thereof other than
reasonable costs of investigation or as otherwise provided below. Indemnitee
shall have the right to employ his own counsel in such action, suit or
proceeding but the fees and expenses of such counsel incurred after the notice
from the Company of its assumption of the defense thereof shall be at the
expense of Indemnitee unless (i) the employment of counsel by Indemnitee has
been authorized by the Company, (ii) a conflict of interest between the Company
and Indemnitee exists in the conduct of the defense of such action; or (iii) the
Company shall not in fact have employed counsel to assume the defense of such
action, in each of which cases the reasonable fees and expenses of counsel shall
be at the expense of the Company. The Company shall not be entitled to assume
the defense of any action, suit or proceeding brought by or on behalf of the
Company or as to which a conflict of interest exists between the Company and
Indemnitee.
The Company shall not be liable to indemnify Indemnitee under this Agreement for
any amounts paid in settlement of any action or claim effected without its
written consent. The Company shall not settle any action or claim in any manner
that would impose any penalty or limitation on Indemnitee without Indemnitee's
written consent. Neither the Company nor Indemnitee will unreasonably withhold
its consent to any proposed settlement.
7. Payment of Indemnity. Any indemnification or advance shall be
made promptly and in any event within forty-five (45) days, upon the written
request of the director, officer, employee or agent of the Company, unless a
determination is reasonably and promptly made that such director, officer,
employee or agent failed to meet the applicable standard of conduct set forth in
Section 1 hereof or that such director, officer or employee is not entitled to
indemnity under Section 3 hereof. Such determination shall be made (l) by the
Board of Directors by a majority vote of a quorum consisting of disinterested
directors, or (2) by a committee of such directors designated by majority vote
of such directors, even though less than a quorum, or (3) if such a quorum is
not obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (4) by the
stockholders. If the request for indemnification involves an action, suit or
proceeding that arises from the merger, consolidation, reorganization,
liquidation, sale of all or substantially all of the assets, or other
extraordinary transaction of the Company, the inquiry and resolution thereof
required by this Section 7, at the option of the person seeking indemnification,
shall be made by a neutral person mutually acceptable to the Company and the
person seeking indemnification. If no disposition of such claim for
indemnification is made within forty-five (45) days, a favorable determination
of entitlement to indemnification shall be deemed to have been made. The
expenses (including attorney's fees) incurred by the person seeking
indemnification in connection with successfully establishing such person's right
to indemnification, in whole or in part, shall also be indemnified by the
Company.
8. Repayment of Expenses. Indemnitee agrees that he or she will
reimburse the Company for all reasonable expenses paid by the Company in
defending any civil or criminal action, suit or proceeding against Indemnitee in
the event and only to the extent that it shall be ultimately determined that
Indemnitee is not entitled to be indemnified by the Company hereunder. The
undertaking to reimburse the Company for expenses is made pursuant to the
requirements of the State Statute. It is understood and agreed that no advances
or payments made to the Indemnitee hereunder shall be accounted for or treated
as a loan from the Company to the Indemnitee.
9. Enforcement.
(a) The Company expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on the Company
hereby in order to induce Indemnitee to serve and/or continue to serve the
Company, and acknowledges that Indemnitee is relying upon this Agreement in
continuing to serve in such capacity.
(b) In the event Indemnitee is required to bring any action to
enforce rights and/or to collect moneys due under this Agreement and is
successful in such action, Company shall reimburse Indemnitee for all of
Indemnitee's reasonable fees and expenses in bringing and pursuing such action.
10. Separability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable under applicable
federal or state law or for any other reason, such invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof.
11. Governing Law; Binding Effect; Amendment; Notice.
(a) This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware without effect to its conflict
of law provisions, except to the extent that the provisions of the
Xxxxxxxx-Xxxxx Act of 2002 and other federal laws preempt the applicable state
law to the enforceability or interpretation of this Agreement.
(b) This Agreement shall be binding upon Indemnitee and upon
the Company, its successors and assigns, and shall inure to the benefit of the
Indemnitee, his heirs, personal representatives and assigns and to the benefit
of the Company, its successors and assigns.
(c) No amendment, modification, termination or cancellation of
this Agreement shall be effective unless in writing signed by both parties
hereto.
(d) Any notice required to be given hereunder shall be deemed
given when deposited with the United States Postal Service, postage prepaid,
addressed to the person to receive notice at its address below, or such other
address as may have theretofore been specified by such person in a notice
pursuant hereto, or delivered in person to that person (or an executive officer
thereof in the case of the Company).
12. Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or the breach thereof, shall be settled by arbitration, in
Birmingham, Alabama, in accordance with the Commercial Arbitration rules of the
American Arbitration Association, except that the arbitrator(s) shall be
required to be familiar with the laws of the State of Delaware as they relate to
this Agreement. Judgment upon the award rendered by the Arbitrator(s) may be
entered in any court having jurisdiction thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
PROASSURANCE CORPORATION
(the "Company")
000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
By:
---------------------------------------
------------------
Its ________________
("Indemnitee")
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Signature
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Address
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