Exhibit 10.25

FIRST AMENDED AND RESTATED

EXECUTIVE EMPLOYMENT AGREEMENT

THIS FIRST AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this
“Agreement”) is made and entered into as of the 30th day of March, 2009 (the
“Effective Date”) by and between Affirmative Insurance Holdings, Inc. (the
“Company”) and Kevin R. Callahan (“Executive”).

PRELIMINARY STATEMENTS

 

  A. The Company has employed Executive as Chief Executive Officer since
October 5, 2006;

 

  B. In connection with such employment, the Company and Executive entered into
an Executive Employment Agreement dated October 5, 2006 (the “Anniversary
Date”);

 

  C. The Company and Executive desire to extend the Term of and amend other
terms of the Executive Employment Agreement; and

 

  D. Each party desires to set forth in writing the terms and conditions of
their understandings and agreements.

NOW, THEREFORE, in consideration of the mutual covenants and obligations
contained herein, the Company hereby agrees to employ Executive and Executive
hereby accepts such employment upon the terms and conditions set forth in this
Agreement:

STATEMENT OF AGREEMENT

1. Position.

(a) The Company agrees to employ Executive in the position of Chief Executive
Officer. Executive shall serve and perform the duties which may from time to
time be assigned to him by the Company’s Board of Directors (the “Board”).

(b) Executive agrees to serve as Chief Executive Officer and agrees that he will
devote his best efforts and all of his business time and attention to all facets
of the business of the Company and will faithfully and diligently carry out the
duties of these positions; provided, however, that Executive may participate on
the Board of Directors for Corus Bankshares, Inc. and the Advisory Board for
AlphaConnect (or its affiliates), so long as neither entity beneficially owns or
disposes of or acquires beneficial ownership in the stock of a Competitor or
operates a Competitor, as defined in Section 8(b)(i) below, and so long as such
participation does not interfere with the performance of his duties hereunder.
Executive agrees to comply with all Company policies in effect from time to
time, and to comply with all laws, rules and regulations applicable to the
Company, including, but not limited to, those established by the Department of
Insurance, the Securities and Exchange Commission, or any self-regulatory
organization having jurisdiction or authority over Executive or the Company.

(c) Executive will serve on the Company’s Board of Directors (“Board”), at the
continuing discretion of the stockholders, during the Term of this Agreement.
Further and upon request by the Board of the Company and consent by Executive,
Executive shall serve as a Director of any and all of Company’s subsidiaries,
provided, however, such consent shall not be unreasonably withheld.

(d) Executive agrees to travel as necessary to perform his duties under this
Agreement.

(e) The Company, in its sole discretion, may require that Executive be
designated an employee of one or more of the Company’s subsidiaries or
affiliates for such purposes as payroll and benefits administration. The
employment of Executive by any such subsidiary or affiliate to facilitate the
Company’s internal administrative purposes shall be considered employment by the
Company within the meaning of this Agreement and shall not otherwise affect any
of the rights or responsibilities of the Company or Executive hereunder,
including, but not

 

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limited to, Executive’s level of compensation. Notwithstanding the foregoing,
the Company shall not be entitled to redesignate Executive’s employment as
contemplated in this Section, if such redesignation would preclude him from
being represented in all public filings as the Chief Executive Officer of the
Company.

(f) The position of Chief Executive Officer shall be located at the Company’s
administrative offices, presently located in Chicago, Illinois.

2. Term of Agreement.

(a) Extension of Initial Term. The Initial Term of this Agreement shall be
extended to seven (7) years from the Anniversary Date (“Initial Term”), unless
otherwise terminated pursuant to Section 5 of this Agreement. For the avoidance
of doubt, absent a termination pursuant to Section 5, the Initial Term of this
Agreement shall expire on October 4, 2013. The Initial Term, and any further
extension thereof shall be referred to herein as the “Term.”

(b) Expiration of Term. This Agreement will terminate automatically upon the
expiration of the Term, or any extension thereof. The Company shall provide
notice of its intention to renew or extend this Agreement to Executive at least
one (1) year before the last day of the Term. In the event that the Company and
the Executive do not agree to a renewal or extension of this Agreement, then as
of the last day of the Term: (1) One hundred percent (100%) of Executive’s
then-unvested stock options will immediately vest, (2) One hundred percent
(100%) of Executive’s then-unvested restricted stock will immediately vest, and
(3) Executive shall be entitled to an amount equal to the previous year’s Bonus
paid to Executive prorated on a daily basis for the number of days employed in
the year of expiration of the Term, through the date of expiration of the Term.

3. Compensation and Benefits.

(a) Base Salary. Through October 4, 2009, the Company shall pay Executive an
annual salary of at least Six Hundred Fifty Thousand Dollars ($650,000) (the
“Base Salary”). Commencing on October 5, 2009 and throughout the remaining
duration of the Term, the Base Salary amount shall be at least Seven Hundred Ten
Thousand Dollars ($710,000). The Base Salary shall be paid on a bi-weekly basis
pursuant to the Company’s standard payroll practices. Executive’s Base Salary
shall be reviewed at least annually for consideration of appropriate merit
increases and, once established, the Base Salary shall not be decreased during
the Term without the consent of Executive.

(b) Bonus Opportunities. In addition to the Base Salary, Executive will be
eligible to participate in the Company’s bonus plan(s) (“Bonus”) with
eligibility for a target annual bonus of 100% of Base Salary. Annual bonus
amount to be determined based on achieving objectives as determined by the Board
of Directors and the Compensation Committee.

(c) Stock. Executive will also be eligible to participate in the Company’s 2004
Amended and Restated Stock Incentive Plan (“Stock Plan”), as may be amended from
time to time. Except as expressly provided herein, nothing in this Agreement
shall affect, alter or amend any prior grants by the Company to Executive of
restricted stock or stock options pursuant to the Executive Employment
Agreement.

(d) Automobile Allowance. The Company shall provide Executive either with:
(1) access to an automobile and driver for business-related ground
transportation services; or (2) an automobile allowance in an amount to be
determined from time to time by the Board or the Company’s Compensation
Committee, provided that such amount shall be no less than one thousand two
hundred dollars ($1,200) per month.

(e) Payment. Payment of all compensation to Executive hereunder shall be made in
accordance with the terms of this Agreement and applicable Company policies in
effect from time to time, including normal payroll practices, and shall be
subject to all applicable withholdings and taxes.

(f) Benefits Generally. The Company shall make available to Executive,
throughout the term of this Agreement, benefits as are generally provided by the
Company to its executive officers, including but not limited to any group life,
health, dental, vision, disability or accident insurance, 401(k) plan,
supplemental retirement plan,

 

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deferred compensation plan, or other such benefit plan or policy which may
presently be in effect or which may hereafter be adopted by the Company for its
executive officers and key management personnel; provided, however, that nothing
herein contained shall be deemed to require the Company to adopt or maintain any
particular plan or policy.

(g) Vacation. Executive shall be entitled to paid time off (“PTO”) of no less
than thirty (30) days during each calendar year, consistent with the policies
then applicable to executive officers.

4. Reimbursement of Expenses. The Company shall reimburse Executive for all
business expenses, which are reasonable and necessary and are incurred by
Executive while performing his duties under this Agreement, upon presentation of
expense statements, receipts and/or vouchers, or such other information and
documentation as the Company may reasonably require. The Board reserves the
right to deny any unreasonable business expense.

5. Termination.

(a) Termination by the Company.

(i) Without Cause. The Company may terminate this Agreement for any reason or no
reason upon thirty (30) days written notice to Executive. If the Company
terminates this Agreement pursuant to this provision, the Company will provide
Executive with the following: (1) the payment of all earned but unpaid Base
Salary and PTO (“Accrued Compensation”), (2) an amount equal to the previous
year’s Bonus paid to Executive prorated on a daily basis for the number of days
employed in year of termination through the date of termination (the “Pro Rata
Bonus”), (3) the payment of an amount equal to two (2) times the sum of (a) the
Executive’s then-current Base Salary and (b) an amount equal to the previous
year’s Bonus paid to Executive (this item (3) constituting the “Additional
Severance Payment”), and (4) the continuation of substantially similar medical,
life, dental, vision and disability insurance for Executive and Executive’s
eligible spouse and family members, for the twenty-four (24) month period
following termination or until Executive accepts new employment and becomes
eligible for any such insurance, whichever time period is shortest. Executive
shall provide Company with written notice within five (5) business days after he
accepts new employment. The continued medical benefits will initially be
provided through COBRA, and will subsequently be provided through coverage
purchased by the Company for Executive and his eligible spouse and family
members.

(ii) For Cause. The Company may terminate this Agreement at any time for Cause.
Upon termination by the Company for Cause, Executive shall only be entitled to
Accrued Compensation. “Cause” means any of the following:

a) Executive’s commission of theft, embezzlement, any other act of dishonesty
relating to his employment with the Company, or any material violation of
Company policies (including the Company’s ethics policies), or any law, rules,
or regulations applicable to the Company, including, but not limited to, those
established by the Department of Insurance, the Securities and Exchange
Commission, or any self-regulatory organization having jurisdiction or authority
over Executive or the Company or any failure by Executive to inform the Company
of any violation of any law, rule or regulation by the Company or one of its
direct or indirect subsidiaries of which Executive has knowledge;

b) Executive’s conviction of, or pleading guilty or nolo contendere to, a felony
or any lesser crime having as its predicate element fraud, dishonesty,
misappropriation, or moral turpitude;

c) Executive’s neglect of duties or failure to perform obligations under this
Agreement (other than due to disability) that materially causes harm to the
Company or that has materially damaged or interfered with the Company’s
relationships with its customers, suppliers, employees or other agents;
provided, however, that the Company shall give the Executive written notice of
any actions or omissions alleged to constitute Cause under this subsection
(c) and the Executive shall have thirty (30) days to cure any such alleged
Cause;

d) Executive’s substance abuse or illegal use of drugs that impairs Executive’s
performance, that materially causes harm to the Company or that, in the
reasonable judgment of the Board, has damaged or interfered with the Company’s
relationships with its customers, suppliers, employees or other agents;

 

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e) Executive’s commission of an act or acts in the performance of his duties
under this Agreement amounting to gross negligence or willful misconduct; or

f) Executive’s breach of Sections 7 or 8 of this Agreement.

g) The Company may place Executive on paid administrative leave from work during
any investigation by the Company of a “cause” reason for Executive’s
termination, and may prohibit Executive from coming into work, accessing the
Company’s computer system, and contacting its employees or customers during this
time; provided, however, upon a failure of the Board of Directors to find that
Cause exists, such placing of Executive on leave two times during the Term shall
constitute Good Reason under Section 5 below.

h) Cause shall be determined by the affirmative vote of at least a majority of
the members of the Board (excluding the Executive, if a Board member). Executive
shall be given fifteen (15) days written notice of the Board meeting at which
Cause shall be decided, and shall be given an opportunity prior to the vote on
Cause to appear before the Board, with or without counsel, at Executive’s
election, to present arguments on his own behalf. The notice to Executive of the
Board meeting shall identify with reasonable detail the reasons for such
consideration of Cause. The pendency of the notice period described herein shall
not prevent or delay the Company’s ability to enforce the restrictive covenants
contained herein.

iii) Change in Control. If following a Change in Control, (A) the Company
terminates this Agreement for reasons other than Cause, or, (B) Executive
terminates this Agreement for Good Reason, the Company shall provide Executive
with the following: (1) Accrued Compensation, (2) a Pro Rata Bonus, (3) an
amount equal to the Additional Severance Payment, (4) the full and immediate
vesting of all outstanding equity or equity based awards, and (5) the
continuation of all medical, life, dental, vision and disability insurance for
Executive and Executive’s eligible spouse and family members, for the
twenty-four (24) month period following termination. The term “Change in
Control” shall mean a transaction or event (or series of transactions or events)
as a result of which any “person” as such term is used in Section l3(d) and
14(d) of the Exchange Act (other than any Excluded Person, the Company or any
Company employee benefit plan, including its trustees) is or becomes the
“beneficial owner” (as defined in Rule l3d-3 under the Exchange Act), directly
or indirectly, of all of the securities of the Company held by New Affirmative
LLC held immediately prior to such transaction or event (or series of
transactions or events) and all director designees of New Affirmative LLC are no
longer on the Company’s Board; provided, however, that in no event shall the
distribution, sale, transfer, or acquisition of securities of the Company held
by New Affirmative LLC or any Excluded Persons (or any successor thereof) to any
Excluded Person trigger a “Change in Control.” “Excluded Person” shall mean any
of New Affirmative LLC, Affirmative Investment LLC, The Enstar Group, Inc. and
any of their respective stockholders, members, affiliates, subsidiaries, or any
such persons under common control.

(b) Termination by Executive.

(i) No Good Reason. Executive may terminate this Agreement for any reason upon
providing thirty (30) days written notice to the Company. If Executive
terminates this Agreement pursuant to this provision, the Company will pay
Executive the Accrued Compensation.

(ii) For Good Reason. For purposes of this Agreement, the term “Good Reason”
shall mean termination of Executive’s employment with the Company by the
Executive by giving at least thirty (30) days advance written notice within
thirty (30) days of the occurrence of one of the following events:

a) the Company’s material breach of any provision of this Agreement or any of
the covenants contained herein that, if capable of being cured, remains uncured
after Executive has delivered a written notice of breach to the Company and
after the Company has had thirty (30) days after receipt of such written notice
to cure such breach;

b) in the event of a requirement that Executive relocate Executive’s principal
office to a location that is more than forty (40) miles from the location of the
Company’s administrative offices in Chicago, Illinois; provided, however, that
travel as necessary to perform duties under this Agreement shall not be deemed a
violation of this subsection (b).

 

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c) without the Executive’s written consent: (A) a material adverse change in the
Executive’s status, office, title, position or responsibilities (including
reporting responsibilities) as Chief Executive Officer which represents a
material adverse change from his status, office, title, position or
responsibilities as Chief Executive Officer as in effect at any time within 90
days preceding such occurrence or at any time thereafter; provided, however,
that if Executive holds the position of Chairman of the Board at any time during
this Agreement, then any such change as to the position of Chairman of the Board
shall not be deemed a violation of this subsection (c); (B) the assignment to
Executive of any duties or responsibilities which are materially inconsistent
with and adverse to his status, office, title, position or responsibilities as
Chief Executive Officer in effect at any time within 90 days preceding such
occurrence or at any time thereafter; provided, however, that if Executive holds
the position of Chairman of the Board at any time during this Agreement, then
any such assignment as to the position of Chairman of the Board shall not be
deemed a violation of this subsection (c); or (C) any removal of the Executive
from any such material status, office, title, position or responsibility as
Chief Executive Officer; provided, however, that if Executive holds the position
of Chairman of the Board at any time during this Agreement, then any such
removal as to the position of Chairman of the Board shall not be deemed a
violation of this subsection (c);

d) without the Executive’s written consent, a reduction in the Executive’s Base
Salary or any failure to pay the Executive any compensation or benefits to which
he is entitled within five days of the date due; provided, however, that the
Executive shall give the Company written notice of any actions or omissions
alleged to constitute Good Reason under this subparagraph (d) and the Company
shall have ten (10) business days to cure any such alleged Good Reason; or

e) without the Executive’s written consent, the Company fails to nominate
Executive for a position on the Board in connection with the Company’s regularly
scheduled annual stockholders’ meeting.

Upon termination for “Good Reason” pursuant to this provision, Executive shall
be entitled to all benefits and payments as provided in Section 5(a)(i) hereof
for a termination by the Company without Cause. Executive shall only be required
to give notice one time under this Section 5(b)(ii) and shall not be required to
provide notice and a cure period for any breach or other action that is not
capable of cure.

(c) Disability. The Company may terminate this Agreement at any time Executive
shall be deemed by the Board to have sustained a “disability.” Executive shall
be deemed to have sustained a “disability” if he shall have been unable, with
reasonable accommodation, to perform his duties for a period of more than ninety
(90) consecutive days in any twelve (12) month period. Upon termination of this
Agreement for disability, the Company shall pay Executive his Accrued
Compensation, and the Pro Rata Bonus.

(d) Death. This Agreement will terminate automatically upon Executive’s death.
Upon termination of this Agreement because of Executive’s death, the Company
shall pay Executive’s estate his Accrued Compensation, and the Pro Rata Bonus.

(e) Employment. Upon termination of this Agreement for any reason, including
expiration of the Term pursuant to Section 2 or a termination for a reason
specified in this Section 5, Executive’s employment shall also terminate and
cease, and Executive will voluntarily resign any Director or Board positions he
holds, unless otherwise requested by the Company.

(f) Transition Period. Upon termination of this Agreement, and for a period of
thirty (30) days thereafter (the “Transition Period”), Executive agrees to make
himself available to assist the Company with transition projects reasonably
assigned to him by the Board. Executive will be paid at a daily rate of Two
Thousand Five Hundred Dollars ($2,500.00) dollars per day, for each day which
Executive worked on behalf of the Company pursuant to this Section 5(f).

 

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(g) Severance Payment. Any payment to Executive under this Section 5 (other than
pursuant to Section 5(a)(iii)) will be payable in equal monthly installments due
on the first day of each month during the course of the Non-Interference Period.
In the event of a payment to be made to Executive pursuant to Section 5(a)(iii),
such payment shall be made within five (5) business days of such termination.
Executive shall not be entitled to, and the Company shall not pay, any severance
under any other plan, program or policy of the Company.

(h) Notwithstanding the foregoing severance provisions, if the Board (or its
delegate) determines in its or his or her discretion that Executive is a
“Specified Employee” (as defined in Section 409A of the United States Internal
Revenue Code of 1986, as amended (“Section 409A”)), as of the date of
termination, and that Section 409A applies with respect to any payment(s) to
Executive pursuant to any of the paragraphs of this Section 5, such payment(s)
shall not (solely to the extent required by Section 409A) begin until the six
(6) month anniversary of the date of termination, and at which time Executive
shall be paid a single lump sum equal to those payment(s) he would otherwise
have received during such six (6) months, and then the balance of the payment(s)
will continue in monthly installments thereafter through completion of the
Non-Interference Period (with each monthly installment being paid in the gross
sum of the full payment(s) divided by 24) as may be provided herein; provided,
however, that if the Board (or its delegate) determines in its or his or her
discretion that Executive is not a Specified Employee as of the date of
termination (or that Section 409A does not apply with respect to a payment to
Executive pursuant to Section 5), such payment shall be made in accordance with
the provisions of this Section 5, provided that the requirements set forth in
Section 6 have been met by Executive.

6. Release. Notwithstanding any other provision in this Agreement to the
contrary, as a condition precedent to receiving any payment set forth in
Section 5 of this Agreement, Executive agrees to execute (and not revoke) a
severance and release agreement in the form attached hereto as Exhibit A (the
“Release”). If Executive fails to execute and deliver the Release, or revokes
the Release, Executive agrees that he shall not be entitled to receive the
above-stated severance payments. For purposes of this Agreement, the Release
shall be considered to have been executed by Executive if it is signed by his
legal representative in the case of legal incompetence or on behalf of
Executive’s estate in the case of his death. No payments shall be made under
Section 5 until the period to revoke the release has terminated.

7. Nondisclosure.

(a) The Company shall, immediately after executing this Agreement, provide
Executive with some or all of the Company’s various trade secrets and
confidential or proprietary information, including information he has not
received before, consisting of, but not limited to, all information: that is
non-public or proprietary to the Company, or its affiliates including, but not
limited to, information concerning its business activities including, but not
limited to, the present marketing and administration of certain insurance
business and processes, including but not limited to any and all information
concerning non-standard automobile insurance business, financial information,
administrative procedures, pricing methods and policies, client lists and
information, business and marketing strategies, claims and underwriting
procedures and guidelines, claims and underwriting files, utilization review and
manuals, data format, data gathering retrieval systems and methods, ideas about
current and future services. Confidential Information shall not include:
(i) information that Executive may furnish to third parties regarding his
obligations under Sections 7 and 8; or (ii) information that becomes generally
available to the public by means other than Executive’s breach of Section 7 (for
example, not as a result of Executive’s unauthorized release of marketing
materials).

(b) Executive agrees that all Confidential Information, whether prepared by
Executive or otherwise coming into his possession, shall remain the exclusive
property of the Company during Executive’s employment with the Company and
thereafter. Executive further agrees that he shall not, without the prior
written consent of the Company, use or disclose to any third party any of the
Confidential Information described herein, directly or indirectly, either during
Executive’s employment with the Company or at any time following the termination
of Executive’s employment with the Company, except as Executive may be required
by Court Order. If such Court Order is issued, Executive shall inform the
Company a reasonable time prior to compliance.

(c) Upon termination of this Agreement, Executive agrees that all Confidential
Information and other files, documents, materials, records, notebooks, customer
lists, business proposals, contracts, agreements and other repositories
containing information concerning the Company or the business of the Company
(including all copies thereof) in Executive’s possession, custody or control,
whether prepared by Executive or others, shall remain with or be returned to the
Company promptly (within seventy-two (72) hours) after the termination or
expiration of this Agreement for any reason.

 

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8. Noncompete, Nonsolicitation, and Non-Disparagement.

(a) Business Relationships and Goodwill. Executive acknowledges and agrees that,
as an employee and representative of the Company, Executive will be given
Confidential Information. Executive acknowledges and agrees that this creates a
special relationship of trust and confidence between the Company, Executive and
the Company’s current and prospective customers, limited partners, and
investors. Executive further acknowledges and agrees that there is a high risk
and opportunity for any person given such responsibility and Confidential
Information to misappropriate the relationship and goodwill existing between the
Company and the Company’s current and prospective customers, limited partners,
and investors. Executive therefore acknowledges and agrees that it is fair and
reasonable for the Company to take steps to protect itself from the risk of such
misappropriation. Consequently, Executive agrees to the following noncompetition
and nonsolicitation covenants.

(b) Scope of Noncompetition Obligation.

(i) Executive acknowledges and agrees that the period of two (2) years following
the termination or expiration of this Agreement for any reason will constitute
the non-compete, non-solicit and non-divert period (the “Non-Interference
Period”). During his employment and during the Non-Interference Period,
Executive will not engage in duties or provide services to a Competitor which
are substantially similar to those Executive provided to the Company under this
Agreement, in any capacity, upon the termination or expiration of this Agreement
in states where the Company is doing business or has expended resources in
pursuit of, or in preparation to do, business (“Prohibited Market); provided,
however, that the foregoing shall not apply in the event that the Term of this
Agreement expires by reason of the Company’s election not to renew or extend
this Agreement. The term “Competitor” means (i) insurance companies providing
non-standard automobile insurance coverage of any type or class as a primary
line of business (in excess of fifteen percent (15%) of aggregate revenues),
(ii) underwriting agencies (or managing general agencies) that produce and
administer non-standard automobile insurance as a primary line of business, and
(iii) retail agencies that sell non-standard automobile insurance policies as a
primary line of business.

(ii) Executive agrees that he shall not at any time during his employment divert
away or attempt to divert away any business from the Company to another company,
business, or individual. Additionally, Executive shall not, during the
Non-Interference Period, solicit, divert away or attempt to divert away business
from any Company Customer, either directly or indirectly. “Company Customer” is
defined as any then-current customer that Executive contacted, solicited,
serviced, or had accessed Confidential Information about. “Solicit” is defined
as soliciting, inducing, attempting to induce, or assisting any other person,
firm, entity, business or organization, whether direct or indirect, in any such
solicitation, inducement or attempted inducement, in all cases regardless of
whether the initial contact was by Executive, the Company Customer, or any other
person, firm, entity, business, or organization.

(iii) Executive further agrees that during the Non-Interference Period, he will
not directly or indirectly: (a) solicit, entice, persuade or induce any
employee, agent or representative of the Company, who was an employee, agent or
representative of the Company upon the termination or expiration of this
Agreement, to terminate such person’s relationship with the Company or to become
employed by any business or person other than the Company; (b) approach any such
person for any of the foregoing purposes; (c) authorize, solicit or assist in
the taking of such actions by any third party; or (d) take actions to hire any
such person.

(iv) Executive further agrees that, during the Non-Interference Period, he shall
not own, manage, operate, control, invest or acquire an interest in, or
otherwise similarly engage or participate in (whether as a proprietor, owner,
member, partner, stockholder, director, officer, employee, consultant, joint
venturer, investor, sales representative or other participant) any Competitor or
business or entity that owns or operates, or controls another business or entity
that owns or operates a Competitor located in the Prohibited Market; provided,
however, that the foregoing provisions shall not prohibit the Employee from:
(a) being a passive investor in any publicly traded entity, as long as any such
investment does not exceed ten percent (10%) of the outstanding equity
securities of such entity; (b) continuing as a non controlling investor in any
entity which subsequent to the date of the Executive’s

 

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investment therein becomes the owner or operator of, or acquires control of
another business or entity that owns or operates, a Competitor in a Prohibited
Market (provided that if any entity in which the Executive is a non controlling
investor acquires a non-standard automobile insurance in a Prohibited Market,
the Executive shall limit his participation in such entity to a passive role);
or (c) investing in or becoming employed by any entity whose ownership,
operation or control of a Competitor is not material relative to its principal
business activities provided Executive’s participation in such a Competitor is
not a material part of Executive’s duties.

(c) Non-Disparagement. During the term of Executive’s employment with the
Company and following the termination or expiration of this Agreement for any
reason, Executive shall not disparage, discredit or otherwise criticize,
directly or indirectly, verbally or in writing, the Company or any of its
subsidiaries, or any of their respective businesses, products, practices,
trademarks, employees, officers, or directors. Further, during the term of
Executive’s employment with the Company and following the termination or
expiration of this Agreement, the officers of the Company shall not disparage,
discredit or otherwise criticize, directly or indirectly, verbally or in
writing, including issuing a public statement, Executive.

(d) Acknowledgement. Executive acknowledges that the compensation and
Confidential Information provided to Executive pursuant to this Agreement, give
rise to the Company’s interest in restraining Executive from competing with the
Company, that the noncompetition and nonsolicitation covenants are designed to
enforce such consideration and that any limitations as to time, geographic scope
and scope of activity to be restrained as defined herein are reasonable and do
not impose a greater restraint than is necessary to protect the goodwill or
other business interest of the Company.

(e) Survival of Covenants. Sections 7 and 8 shall survive the expiration or
termination of this Agreement for any reason. Executive agrees not to challenge
the enforceability or scope of Sections 7 and 8. Executive further agrees to
notify all future persons, businesses, or other entities, with which he becomes
affiliated or employed by, of the restrictions set forth in Sections 7 and 8,
prior to the commencement of any such affiliation or employment.

9. Severability and Reformation. If any one or more of the terms, provisions,
covenants or restrictions of this Agreement shall be determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions shall remain in full force and
effect, and the invalid, void or unenforceable provisions shall be deemed
severable. Moreover, if any one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to duration,
geographical scope, activity or subject, it shall be reformed by limiting and
reducing it to the minimum extent necessary, so as to be enforceable to the
extent compatible with the applicable law as it shall then appear.

10. Entire Agreement. This Agreement sets forth the entire agreement between the
parties hereto and fully supersedes any and all prior agreements or
understandings, written or oral, between the parties hereto pertaining to the
subject matter hereof.

11. Notices. All notices and other communications required or permitted to be
given hereunder shall be in writing and shall be deemed to have been duly given
if delivered personally, mailed by certified mail (return receipt requested) or
sent by overnight delivery service, or electronic mail, or facsimile
transmission (with electronic confirmation of successful transmission) to the
parties at the following addresses or at such other addresses as shall be
specified by the parties by like notice, in order of preference of the
recipient: if to the Company, General Counsel, 150 Harvester Drive, Suite 300,
Burr Ridge, Illinois 60527, and if to Executive, to such address as specified by
the Executive to the Company from time to time in writing. Notice so given
shall, in the case of mail, be deemed to be given and received on the fifth
calendar day after posting, in the case of overnight delivery service, on the
date of actual delivery and, in the case of facsimile transmission or personal
delivery, on the date of actual transmission or, as the case may be, personal
delivery.

12. Governing Law and Venue. This Agreement will be governed by and construed in
accordance with the laws of the State of Illinois, without regard to any
conflict of laws rule or principle which might refer the governance or
construction of this Agreement to the laws of another jurisdiction. Any action
or arbitration in regard to this Agreement or arising out of its terms and
conditions, pursuant to Sections 26 and 27, shall be instituted and litigated
only in Chicago, Illinois.

 

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13. Assignment. This Agreement is personal to Executive and may not be assigned
in any way by Executive without the prior written consent of the Company. The
Company may assign its rights and obligations under this Agreement.

14. Counterparts. This Agreement may be executed in counterparts, each of which
will take effect as an original, and all of which shall evidence one and the
same Agreement.

15. Amendment. This Agreement may be amended only in writing signed by Executive
and by a duly authorized representative of the Company (other than Executive).

16. Construction. The headings and captions of this Agreement are provided for
convenience only and are intended to have no effect in construing or
interpreting this Agreement. The language in all parts of this Agreement shall
be in all cases construed in accordance to its fair meaning and not strictly for
or against the Company or Executive.

17. Non-Waiver. The failure by either party to insist upon the performance of
any one or more terms, covenants or conditions of this Agreement shall not be
construed as a waiver or relinquishment of any right granted hereunder or of any
future performance of any such term, covenant or condition, and the obligation
of either party with respect hereto shall continue in full force and effect,
unless such waiver shall be in writing signed by the Company (other than
Executive) and Executive.

18. Announcement. Company shall have the right to make public announcements
concerning the execution of this Agreement and the terms contained herein, at
the Company’s discretion.

19. Use of Name, Likeness and Biography. Company shall have the right (but not
the obligation) to use, publish and broadcast, and to authorize others to do so,
the name, approved likeness and approved biographical material of Executive to
advertise, publicize and promote the business of Company and its affiliates, but
not for the purposes of direct endorsement without Executive’s consent. This
right shall terminate upon the termination of this Agreement. An “approved
likeness” and “approved biographical material” shall be, respectively, any
photograph or other depiction of Executive, or any biographical information or
life story concerning the professional career of Executive that is approved in
advance by Executive.

20. Corporate Opportunities. Executive acknowledges that during the course of
Executive’s employment by Company, Executive may be offered or become aware of
business or investment opportunities in which Company may or might have an
interest (a “Corporate Opportunity”) and that Executive has a duty to advise
Company of any such Corporate Opportunities before acting upon them.
Accordingly, Executive agrees: (a) that Executive will disclose to the Board any
Corporate Opportunity offered to Executive or of which Executive becomes aware,
and (b) that Executive will not act upon any Corporate Opportunity for
Executive’s own benefit or for the benefit of any Person other than Company
without first obtaining consent or approval of the Board (whose consent or
approval may be granted or denied solely at the discretion of the Board;
provided, that Executive, at Executive’s election, may act upon any such
Corporate Opportunity for Executive’s benefit or the benefit of any other Person
if the Board has not caused Company to act upon any such Corporate Opportunity
within sixty (60) days after disclosure of such Corporate Opportunity to Company
by Executive.

21. Right to Insure. Company shall have the light to secure, in its own name or
otherwise, and at its own expense, life, health, accident or other insurance
covering Executive, and Executive shall have no right, title or interest in and
to such insurance. Executive shall assist Company in procuring such insurance by
submitting to reasonable examinations and by signing such applications and other
instruments as may be reasonably required by the insurance carriers to which
application is made for any such insurance.

22. Assistance in Litigation. Executive shall reasonably cooperate with the
Company in the defense or prosecution of any claims or actions now in existence
or that may be brought in the future against or on behalf of the Company that
relate to events or occurrences that transpired while Executive was employed by
the Company. Executive’s cooperation in connection with such claims or actions
shall include, but not be limited to, being available to meet with counsel to
prepare for discovery or trial and to act as a witness on behalf of the Company
at mutually convenient times. Executive also shall reasonably cooperate with the
Company in connection with any investigation

 

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or review by any federal, state, or local regulatory authority as any such
investigation or review relates to events or occurrences that transpired while
Executive was employed by the Company. The Company will pay Executive a
reasonable hourly rate for Executive’s cooperation pursuant to this Section 22.

23. No Inconsistent Obligations. Executive represents and warrants that to his
knowledge he has no obligations, legal, in contract, or otherwise, inconsistent
with the terms of this Agreement or with his undertaking employment with the
Company to perform the duties described herein. Executive will not disclose to
the Company, or use, or induce the Company to use, any confidential,
proprietary, or trade secret information of others. Executive represents and
warrants that to his knowledge he has returned all property and confidential
information belonging to all prior employers, if he is obligated to do so.

24. Notification of New Employer. Upon termination of this Agreement for any
reason, or expiration of this Agreement, Executive hereby consents to the
notification by the Company to Executive’s new employer of the provisions of
Sections 7, 8, and 9 of this Agreement. In addition, in the event that Executive
plans to render services to a company that works in a similar field as the
Company, Executive agrees to provide the Company with as much notice as possible
of Executive’s intention to join that company or business but in no event will
Executive provide less than two weeks notice of that intention; provided,
however, the provision of such notice and the Company’s receipt thereof shall
not constitute a waiver of any breach of any provision of this Agreement.

25. Binding Agreement. This Agreement shall inure to the benefit of and be
binding upon Executive, his heirs and personal representatives, and the Company,
its successors and assigns.

26. Remedies. The parties recognize and affirm that in the event of a breach of
Sections 7 and 8 of this Agreement, money damages would be inadequate and the
Company would not have an adequate remedy at law. Accordingly, the parties agree
that in the event of a breach or a threatened breach of Sections 7 and 8, the
Company may, in addition and supplementary to other rights and remedies existing
in its favor, apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive or other relief in order to enforce or
prevent any violations of the provisions hereof (without posting a bond or other
security). In addition, Executive agrees that in the event a court of competent
jurisdiction or an arbitrator finds that Executive violated Sections 7 or 8, the
time periods set forth in those Sections shall be tolled until such breach or
violation has been cured. Executive further agrees that the Company shall have
the right to offset the amount of any damages resulting from a breach by
Executive of Sections 7 or 8 against any payments due Executive under this
Agreement; provided, however, that any such amount offset will be deposited into
an escrow account pending adjudication of the dispute giving rise to the offset.
The parties agree that if one of the parties is found to have breached this
Agreement by a court of competent jurisdiction, the breaching party will be
required to pay the non-breaching party’s attorneys’ fees.

27. Arbitration. Other than as stated in Section 26, the parties agree that any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, shall be resolved by arbitration administered by the American
Arbitration Association (“AAA”) under its Commercial Arbitration Rules. The
arbitration will take place in Chicago, Illinois. All disputes shall be resolved
by a one (I) arbitrator. The method for selecting the arbitrator is set forth in
the AAA’s Commercial Arbitration Rules. The arbitrator will have the authority
to award the same remedies, damages, and costs that a court could award, and
will have the additional authority to award those remedies set forth in
Section 26. The arbitrator shall issue a reasoned award explaining the decision,
the reasons for the decision, and any damages awarded, including those set forth
in Section 26 where the arbitrator finds Executive violated Sections 7 or 8. The
arbitrator’s decision will be final and binding. The judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitration proceedings, any record of the same, and the award
shall be considered Confidential Information under this Agreement. This
provision and any decision and award hereunder can be enforced under the Federal
Arbitration Act.

28. Fees and Expenses. To induce the Executive to execute this Agreement and to
provide the Executive with reasonable assurance that the purposes of this
Agreement will not be frustrated by the cost of its enforcement should the
Company fail to perform its obligations under this Agreement:

(a) In the event that the Executive’s employment is terminated by the Company
prior to a Change in Control either for Cause or without Cause, the Company
shall reimburse the Executive for any reasonable attorneys’ fees, expenses and
court costs incurred by the Executive as a result of any litigation by the
Executive

 

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regarding the validity, enforceability or interpretation of any provision of
this Agreement (including as a result of any litigation by the Executive
regarding the benefits payable to the Executive pursuant to tins Agreement);
provided, however, that such reimbursement shall only be payable by the Company
(i) if the Executive prevails on any material issues involved in such litigation
and (ii) upon receipt of proof of such expenses.

(b) In the event that the Executive’s employment is terminated after a Change in
Control either by the Company either for Cause or Without Cause or by the
Executive for Good Reason, the Company shall reimburse the Executive for any
reasonable attorneys’ fees, expenses and court costs incurred by the Executive
as a result of any litigation by the Executive regarding the validity,
enforceability or interpretation of any provision of this Agreement (including
as a result of any litigation by the Executive regarding the benefits payable to
the Executive pursuant to this Agreement) upon receipt of proof of such expenses
regardless of which party, if any, prevails in the contest.

29. Tax Gross Up.

(a) If, as a result of payments provided for under or pursuant to this Agreement
together with all other payments in the nature of compensation provided to or
for the benefit of Executive under any other agreement in connection with a
Change in Control, Executive becomes subject to taxes of any state, local or
federal taxing authority that would not have been imposed on such payments but
for the occurrence of a Change in Control, including any excise tax under
Section 4999 of the Code an any successor or comparable provision, then, in
addition to any other benefits provided under or pursuant to this Agreement or
otherwise, Company (including any successor to Company) shall pay to Executive
at the time any such payments are made under or pursuant to this or the other
agreements, an amount equal to the amount of any such taxes imposed or to be
imposed on Executive (the amount of any such payment, the “Parachute Tax
Reimbursement”).

(b) In addition, Company (including any successor to Company) shall “gross up”
such Parachute Tax Reimbursement by paying to Executive at the same time an
additional amount equal to the aggregate amount of any additional taxes (whether
income taxes, excise taxes, special taxes, employment taxes or otherwise) that
are or will be payable by Executive as a result of the Parachute Tax
Reimbursement being paid or payable to Executive and/or as a result of the
additional amounts paid or payable to Executive pursuant to this sentence, such
that after payment of such additional taxes Executive shall have been paid on a
net after-tax basis an amount equal to the Parachute Tax Reimbursement.

(c) The amount of any Parachute Tax Reimbursement and of any such gross-up
amounts shall be determined by a nationally recognized accounting firm selected
by the Company (with all such cost borne by the Company), whose determination,
absent manifest error, shall be treated as conclusive and binding absent a
binding determination by a governmental taxing authority that a greater amount
of taxes is payable by Executive.

30. Voluntary Agreement. Each party to this Agreement has read and fully
understands the terms and provisions hereof, has had an opportunity to review
this Agreement with legal counsel, has executed this Agreement based upon such
party’s own judgment and advice of counsel (if any), and knowingly, voluntarily,
and without duress, agrees to all of the terms set forth in this Agreement. The
parties have participated jointly in the negotiation and drafting of this
Agreement. If an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if drafted jointly by the parties and no
presumption or burden of proof will arise favoring or disfavoring any party
because of authorship of any provision of this Agreement. Except as expressly
set forth in this Agreement, neither the parties nor their affiliates, advisors
and/or their attorneys have made any representation or warranty, express or
implied, at law or in equity with respect of the subject matter contained
herein. Without limiting the generality of the previous sentence, the Companies,
their affiliates, advisors, and/or attorneys have made no representation or
warranty to Executive concerning the state or federal tax consequences to
Executive regarding the transactions contemplated by this Agreement.

31. No Set-Off; No Mitigation. Except as provided herein, the Company’s
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any circumstances,
including any set-off, counterclaim, recoupment, defense or other right which
the Company may have against Executive or others. In no event shall Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to Executive under any of the provisions of this
Agreement, and such amounts shall not be reduced whether or not Executive
obtains other employment.

 

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32. Indemnification. The Company agrees that if Executive is made a party to or
involved in, or is threatened to be made a party to or otherwise to be involved
in, any action, suit or proceeding, whether civil, criminal, administrative or
investigative (a “Proceeding”), by reason of the fact that he is or was an
officer or employee of the Company or is or was serving at the request of the
Company as an officer, member, employee or agent of another corporation, limited
liability corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether or not the
basis of such Proceeding is Executive’s alleged action in an official capacity
while serving as an officer, member, employee or agent, Executive shall be
indemnified and held harmless by the Company against any and all liabilities,
losses, expenses, judgments, penalties, fines and amounts reasonably paid in
settlement in connection therewith, and shall be advanced reasonable expenses
(including attorneys’ fees) as and when incurred in connection therewith, to the
fullest extent legally permitted or authorized by the Company’s By-laws or, if
greater, by the laws of the State of Delaware, as may be in effect from time to
time, except that this Section 32 shall not apply to the following Proceedings:
(a) any Proceeding initiated or brought voluntarily by Executive against the
Company or its directors, officers employees or other indemnitees, unless the
Board of Directors has authorized or consented to the initiation of the
Proceeding (or any part of the Proceeding), and (b) for an accounting of profits
made from the purchase and sale (or sale and purchase) by Executive of
securities of the Company within the meaning of Section l6(b) of the Exchange
Act or any similar successor statute. The rights conferred on Executive by this
Section 32 shall not be exclusive of any other rights which Executive may have
or hereafter acquire under any statute, the By-laws, agreement, vote of
stockholders or disinterested directors, or otherwise. The indemnification and
advancement of expenses provided for by this Section 32 shall continue until and
terminate upon the latest of: (a) the statute of limitations applicable to any
claim that could be asserted against Executive with respect to which he may be
entitled to indemnification under this Section 32, (b) ten years after the date
that Executive has ceased to serve as a director or officer of the Company or as
a director, officer, employee, member, or agent of any other corporation,
limited liability corporation, partnership, joint venture, trust or other
enterprise at the request of the Company, or (c) if, at the later of the dates
referred to in (a) and (b) above, there is a pending Proceeding in respect of
which Executive is granted rights of indemnification under this Section 32, one
year after the final termination of such Proceeding, including any and all
appeals. The indemnification and advancement of expenses provided for by this
Section 32 shall inure to the benefit of his heirs, executors and
administrators.

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IN WITNESS WHEREOF, the Company and Executive have executed this Agreement,
effective as of the day and year first above written.

 

            COMPANY Dated:   March 30, 2009     By:   /s/ Joseph G. Fisher      
  Name: Joseph G. Fisher         Title: Executive Vice President

 

            EXECUTIVE Dated:   March 30, 2009     By:   /s/ Kevin R. Callahan  
      Name: Kevin R. Callahan

 

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