exv10w1






Exhibit 10.1




EXECUTION COPY




ADDENDUM TO EMPLOYMENT AGREEMENT




     This ADDENDUM TO EMPLOYMENT AGREEMENT (this “Addendum”), dated as of July 23, 2008, is by and
among Philadelphia Consolidated Holding Corp., a Pennsylvania corporation (the “Company”), Maguire
Insurance Agency, Inc., a Pennsylvania Corporation (the “Employer”), Tokio Marine Holdings, Inc. a
Japanese corporation (“Parent”), and James J. Maguire (Employee”).



     WHEREAS, Employee has served the Company and its subsidiaries pursuant to an Amended and
Restated Employment Agreement dated as of January 1, 2004 (as it exists on the date of this
Addendum, the “Unamended Employment Agreement”);



     WHEREAS, the Company has entered into an Agreement and Plan of Merger, dated as of the date of
this Addendum (the “Merger Agreement”), with Parent and Merger Sub (as defined in the Merger
Agreement) whereby, at the “Effective Time” (as defined in the Merger Agreement) (i) Merger Sub
will be merged with and into the Company (the “Merger”), (ii) the separate corporate existence of
Merger Sub will thereupon cease, and the Company will be the surviving corporation in the Merger,
and (iii) the Company and the Employer will become direct or indirect wholly owned subsidiaries of
Parent;



     WHEREAS, Employee is an integral part of the management of the Employer, and is a key
participant in the decision-making process relative to short-term and long-term planning and policy
of the Employer and the Company, and the parties hereto believe that it is critical to the
continued success of the Company, and to the ultimate success of the Merger, that Employee continue
to be employed by the Employer after the Merger; and



     WHEREAS, the parties agree that is in their best interests to enter into this Addendum, with
effect as described in Section 1 of this Addendum, on the terms set forth in this Addendum.



     NOW, THEREFORE, in consideration of the promises and mutual covenants herein and for other
good and valuable consideration, the parties hereby agree as follows:



          1. Effectiveness.





     (a) This Addendum shall be effective immediately as of the Effective Time
(other than with respect to the covenants set forth in the immediately following
sentence, which shall be effective immediately); in the event that the Merger does
not occur for any reason or the Merger Agreement terminates prior to the occurrence
of the Merger, this Addendum shall terminate, and shall be of no further force or
effect. From and after the date of this Addendum and continuing until the Effective
Time, the parties hereto acknowledge and agree that (i) Employee’s employment shall
continue to be subject to the terms and conditions of the Unamended Employment
Agreement, (ii) Employee agrees not to terminate his employment with the Company for
any reason (including, without limitation, for “Good Reason” (as defined in the
Unamended Employment
Agreement)) on or prior to the Effective Time, and (iii) the Company agrees not



 









 







to take any actions that would constitute “Good Reason” for Employee to terminate
his employment, and not to otherwise terminate the employment of Employee for any
reason, on or prior to the Effective Time, other than for unlawful activity related
to employment, demonstrable fraud or material malfeasance against the Company after
a two thirds majority vote of the Board with prompt and reasonable prior written
notice to Parent, and an opportunity for Parent to investigate and respond prior to
the effectiveness of such termination.




     (b) As of the Effective Time, Employee shall continue Employee’s employment
with the Company in an uninterrupted manner under the terms of the Unamended
Employment Agreement as amended by this Addendum (the “Amended Employment
Agreement”) for the Term set forth herein. Employee acknowledges and agrees that he
shall not terminate his employment pursuant to either the Unamended Employment
Agreement or the Amended Employment Agreement for “Good Reason” due to any
consequences arising from (i) the occurrence of the Merger, (ii) the Company no
longer being a publicly traded company (which may result in a change in Employee’s
duties), (iii) the Company becoming a subsidiary of Parent (which may result in a
change in Employee’s duties), and/or (iv) Employee no longer participating in equity
compensation plans, except that, notwithstanding the foregoing, (x) any reduction in
or failure to timely pay Employee’s base salary as set forth in Section 5 of this
Addendum, or (y) any change in Employee’s duties set forth in Section 3 of this
Addendum without the written consent of Employee, shall constitute Good Reason. The
parties represent, acknowledge and agree that the Merger shall not constitute a
Hostile Change in Control. For purposes of clarity, notwithstanding any of the
foregoing, it shall not be a breach of the Unamended Employment Agreement or of the
Amended Employment Agreement if the Employee resigns from his or her employment with
or without Good Reason after the Effective Time (it being acknowledged that if
Employee resigns without Good Reason, he shall not receive any severance
compensation of any kind under the Unamended Employment Agreement or the Amended
Employment Agreement).



          2. Term. Notwithstanding the first three sentences of Section 4 of the Unamended
Employment Agreement (which the parties agree shall not be effective after the Effective Time), the
Term under the Amended Employment Agreement will expire on the second anniversary of the Effective
Time, unless the Parent requests in writing, exercisable by notice given to Employee at least 60
days prior to such expiration date, that the Term continue for an additional year, in which case
the Amended Employment Agreement will expire on the third anniversary of the Effective Time.




          3. Position and Responsibilities. Section 3(a) of the Unamended Employment Agreement
is amended to delete such provision in its entirety, and to insert the following in its place:



“Employee shall serve the Employer, the Company and Parent, as a Senior International Advisor and
shall serve as the Chairman of the Company. Employee’s responsibilities will include
advising the parties on creating shareholder value; advising the Company and Parent on


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 integration
and synergies with the Parent’s other business, and advising the Parent on its international
business development. Employee shall also serve on the Parent’s International Strategic Committee.”




          4. Restrictive Covenants and Confidentiality. Section 7 of the Unamended Employment
Agreement is amended to delete the provisions therein in their entirety, and to insert the
following in its place:





     (a) Non-Compete. During Employee’s employment with the Employer, and for a
two-year period after the date Employee’s employment is terminated for any reason
(the “Restricted Period”), Employee shall not directly or indirectly:




     i. hold a 5% or greater equity (including stock options whether or not
exercisable), voting or profit participation interest in a Competitive
Enterprise, or




     ii. associate (including as a director, officer, employee, partner,
consultant, agent or advisor) with a Competitive Enterprise, or




     iii. engage, or directly or indirectly manage or supervise personnel
engaged, in any activity on behalf of any Competitive Enterprise:



(A) that is substantially related to any activity that
Employee was engaged in with the Employer during the 12
months prior to Employee’s termination date;




(B) that is substantially related to any activity for
which Employee had direct or indirect managerial or
supervisory responsibility with the Employer during the 12
months prior to Employee’s termination date; or




(C) that calls for the application of specialized knowledge
or skills substantially related to those used by Employee in
his activities with the Employer during the 12 months prior
to Employee’s termination date.


For purposes of this Agreement, “Competitive Enterprise” means any business enterprise that either
(i) engages in any activity in the insurance business or industry, or in insurance related
services, such as the insurance agent and broker businesses, or (ii) holds a 5% or greater equity,
voting or profit participation interest in any enterprise that engages in the insurance business or
industry, or in insurance related services, such as the insurance agent and broker businesses.





     (b) Non-Solicit. During the Restricted Period, Employee shall not, in any
manner, directly or indirectly (without the prior written consent of the Employer):
(i) Solicit any Client to transact business with a Competitive
Enterprise or to reduce or refrain from doing any business with the Employer,



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(ii) transact business with any Client that would cause Employee to be a Competitive
Enterprise, (iii) interfere with or damage any relationship between the Employer and
a Client or (iv) Solicit anyone who is then an employee or consultant of the
Employer (or who was an employee of the Employer within the prior 12 months) to
resign from the Employer or to apply for or accept employment or engagement with any
other business or enterprise.


For purposes of this Agreement, a “Client” means any client or prospective client of the Employer
to whom Employee provided services, or for whom Employee transacted business, or whose identity
became known to Employee in connection with his relationship with or employment by the Employer,
and “Solicit” means any direct or indirect communication of any kind, regardless of who initiates
it, that in any way invites, advises, encourages or requests any person to take or refrain from
taking any action.





     (c) Confidential Information. Employee hereby acknowledges that, as an
employee of the Employer, he will be making use of, acquiring and adding to
confidential information of a special and unique nature and value relating to the
Employer and its strategic plan and financial operations. Employee further
recognizes and acknowledges that all confidential information is the exclusive
property of the Employer, is material and confidential, and is critical to the
successful conduct of the business of the Employer. Accordingly, Employee hereby
covenants and agrees that he will use confidential information for the benefit of
the Employer only and shall not at any time, directly or indirectly, during the Term
and thereafter divulge, reveal or communicate any confidential information to any
person, firm, corporation or entity whatsoever, or use any confidential information
for his own benefit or for the benefit of others. Notwithstanding the foregoing,
Employee shall be authorized to disclose confidential information (i) as may be
required by law or legal process after providing the Employer with prior written
notice and an opportunity to respond to such disclosure (unless such notice is
prohibited by law), (ii) in any criminal proceeding against him after providing the
Employer with prior written notice and an opportunity to seek protection for such
confidential information and (iii) with the prior written consent of the Employer.




     (d) Survival. Any termination of Employee’s employment shall have no effect on
the continuing operation of this Section 7.




     (e) Validity. The terms and provisions of this Section 7 are intended to be
separate and divisible provisions and if, for any reason, any one or more of them is
held to be invalid or unenforceable, neither the validity nor the enforceability of
any other provision of the Amended Employment Agreement shall thereby be affected.
The parties hereto acknowledge that the potential restrictions on Employee’s future
employment imposed by this Section 7 are reasonable in both duration and geographic
scope and in all other respects. If for any reason any court of competent
jurisdiction shall find any provisions of this Section 7 unreasonable in duration or
geographic scope or otherwise, Employee
and the Employer agree that the restrictions and prohibitions contained herein



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shall be effective to the fullest extent allowed under applicable law in such
jurisdiction.




     (f) Adequate Consideration. The parties acknowledge that this Addendum would
not have been entered into in the absence of Employee’s covenants under this Section
7. In addition, Employee agrees that the payments and benefits that he will receive
in connection with the Merger constitute adequate consideration for the promises
undertaken by him under this Addendum, including without limitation those
specifically set forth in this Section 7.




     (g) Remedies. Employee agrees that if Employee breaches or threatens to breach
any of the provisions of this Section 7 or Section 11 of the Amended Employment
Agreement, the Employer will have available, in additional to any other right or
remedy available, the right to obtain injunctive and equitable relief of any type
from a court of competent jurisdiction, including but not limited to restraining
such breach or threatened breach and to specific performance any such provision of
the Amended Employment Agreement. Employee further agrees that no bond or other
security shall be required in obtaining such equitable relief and Employee hereby
consents to the issuance of such injunction and to the ordering of specific
performance.




     (h) Definition of Employer. The term “Employer”, as used in this Section 7,
and in Section 2(b), and Section 11, of the Amended Employment Agreement, shall
include the Company, the Employer, Parent and all of their respective Affiliates.




          5. Compensation. As of the Effective Time, Employee’s base salary shall be increased
to a rate of $2,000,000 per year. As of the Effective Time, Employer shall provide Employee with
compensation opportunities comparable in the aggregate to those provided to Employee immediately
prior to the Merger, taking into account the increase in base salary set forth in the first
sentence of this paragraph, on a risk-adjusted basis.




          6. Gross up Under Section 280G. The parties confirm that Employee is (both prior to
the Effective Time, and on and following the Effective Time) entitled to the full “golden parachute
adjustment” as described and provided in Section 9 of the Unamended Employment Agreement. The
manner of making the computation of the amount provided in Section 9 with respect to the
acceleration provided in Sections 4.3(a), (b), (c), (d) and (e), respectively, of the Merger
Agreement (the “Acceleration”) will be as mutually agreed between Parent and the Company between
the date of this Addendum and the Effective Time, and such amount with respect to the Acceleration
will be paid to Employee within ten (10) business days of the Effective Time.




          7. Release Requirement Clarification. The first paragraph of Section 6(a) of the
Employment Agreement is amended to add, in the first sentence, after the word “Control)” and before
the comma, the words “which shall be provided to Employee within ten (10) days of the cessation of
Employee’s employment”.




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          8. General. Capitalized terms not otherwise defined in this Addendum have the
meanings ascribed to such terms in the Unamended Employment Agreement. All terms of the Unamended
Employment Agreement that have not been amended by this Addendum shall continue in full force and
effect under the Amended Employment Agreement from and after the Effective Time. Parent shall be a
party to the Amended Employment Agreement from and after the Effective Time, and shall be
considered a party for all relevant purposes, including, for clarity, for provisions relating to
Affiliates, amendments, notices to the parties, release of the Employer, Notice of Termination (at
the address for Parent set forth in the Merger Agreement), restrictive covenants, and protection of
Employer property and information, but, for clarity, not for purposes of employment, compensation,
benefits, position, authority, title or duties.





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          IN WITNESS WHEREOF, the parties hereto have executed this Addendum as of the date first above
written.




	 	 	 	 	 
	 	PHILADELPHIA CONSOLIDATED

HOLDING CORP. 

 	 
	 	By:  	/s/
Craig P. Keller

	 
	 	 	Name:  	Craig P. Keller	 
	 	 	Title:  	CFO	 
	 
	 
	 	MAGUIRE INSURANCE AGENCY, INC.

 	 
	 	By:  	/s/
Craig P. Keller	 
	 	 	Name:  	Craig P. Keller	 
	 	 	Title:  	CFO	 
	 
	 
	 	TOKIO MARINE HOLDINGS, INC.

 	 
	 	By:  	/s/
Shuzo Sumi	 
	 	 	Name:  	Shuzo Sumi 	 
	 	 	Title:  	President 	 
	 
	 
	 	JAMES J. MAGUIRE

 	 
	 	By:  	/s/
James J. Maguire