Document:

Exhibit 10.4

Exhibit 10.4

EXECUTION
COPY

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

BETWEEN

RANDOLPH L. HUTTO

AND

AMERICAN SAFETY ADMINISTRATIVE SERVICES, INC.

Dated: August 8, 2011

 

 

 

EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into
this 8th day of August, 2011, by and between American Safety Administrative Services, Inc., a
Georgia corporation with its principal executive offices located in Atlanta, Georgia (the
“Company”), and Randolph L. Hutto, an individual resident of the State of Georgia (“Executive”), to
be effective as of the Effective Date, as defined in Section 1.

BACKGROUND

Executive currently serves as the President and General Counsel of the Company pursuant to the
terms of an employment agreement, dated August 29, 2007 by and between Executive and the Company
(the “2007 Agreement”). Executive and the Company desire to amend and restate the 2007 Agreement
pursuant to the terms of this Amended and Restated Agreement, which as of the Effective Date
supersedes and replaces the 2007 Agreement.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

1. Effective Date. The effective date of this Agreement (the “Effective
Date”) is August 1, 2011.

2. Employment. Executive is hereby employed as the President, General
Counsel and Secretary of the Company. In such capacity, Executive will have the
duties and responsibilities commensurate with such position and as may be reasonably
assigned to him by the Chief Executive Officer of American Safety Insurance
Holdings, Ltd., the Company’s ultimate parent (the “CEO”) Executive’s reporting
responsibilities will be to the CEO.

3. Employment Period. Executive’s employment hereunder will begin on
the Effective Date and end on the third anniversary of the Effective Date, unless
extended as hereinafter provided in this Section 3 or terminated in accordance with
the provisions of Section 7 (the “Employment Period”). As of the third anniversary
of the Effective Date and on each succeeding anniversary of the Effective Date
during the Employment Period, Executive’s Employment Period will automatically be
extended by one year so as to end on the next anniversary of the Effective Date,
unless the Company otherwise provides Executive with written notice of non-renewal
at least 120 days prior to the third anniversary of the Effective Date or, following
any automatic extension, any succeeding anniversary of the Effective Date.

4. Extent of Service. During the Employment Period, Executive will
render his services to the Company (or to its successor following a Change in
Control, as defined below) in conformity with professional standards, in a prudent
and workmanlike manner and in a manner consistent with the obligations imposed on
officers of corporations under applicable law. Executive will promote the interests
of the Company and its subsidiaries and affiliated entities in carrying out
Executive’s duties and will not deliberately take any action that could, or fail to
take any action which failure could, reasonably be expected to have a material
adverse effect upon the business of the Company or any of its affiliates or any of
their respective subsidiaries. Executive agrees to devote his business time,
attention, skill and efforts exclusively to the faithful performance of his duties
hereunder (both before and after a Change in Control); provided, however, that it
will not be a violation of this Agreement for Executive to (i) devote reasonable
periods of time to charitable and community activities and, with the approval of the
Company, industry or professional activities, and/or (ii) manage personal
investments, so long as such activities do not materially interfere with the
performance of Executive’s responsibilities under this Agreement.

 

 

 

5. Compensation and Benefits.

(a) Base Salary. During the Employment Period, Executive will be entitled to receive a
base salary in the amount of $308,850.00 per year (“Initial Base Salary”), less normal
withholdings, payable in equal semi-monthly installments or other installments (not less
frequently than monthly) as are customary under the Company’s payroll practices from time to time.
The Compensation Committee of the Board will review Executive’s then current Base Salary
periodically, but no less frequently than annually, and in its sole discretion may increase
Executive’s Base Salary from time to time (as so increased, the “Base Salary”). The periodic review
of Executive’s salary by the Board will consider, among other things, Executive’s own performance
and the Company’s performance.

(b) Incentive and Savings Plans. During the Employment Period, Executive will be
entitled to participate in incentive and savings plans, practices, policies and programs applicable
generally to employees of the Company. Certain executive programs will be made available on a
selective basis at the discretion of the Compensation Committee of the Board. Without limiting the
foregoing, the following will apply:

(i) Annual Bonus. Executive will have an annual bonus opportunity based on specific
objectives established by the Compensation Committee. The annual bonus opportunity will be per an
annual bonus plan as approved by the Compensation Committee. Such annual bonus shall be paid, if
at all, no later than the 15th day of the third month following the end of the year to
which the annual bonus relates.

(ii) Incentive Awards. On or about the Effective Date (or previously), the Company
will make (or has made) a grant of restricted stock, stock options, restricted stock units, stock
appreciation rights and/or similar stock-based awards to Executive as a long-term incentive for
performance and in consideration for entering into this Agreement. Executive shall be entitled to
further grants of incentive awards as determined by the Compensation Committee.

(c) Vacation. Executive will be entitled to 4 weeks of vacation during each fiscal
year of employment hereunder. Executive agrees that he will schedule such vacation time so as not
to materially impair the performance of Executive’s duties hereunder. During the term, up to a
maximum of forty (40) hours of unused vacation time to which Executive shall become entitled in any
given fiscal year may be carried over to the immediately next succeeding fiscal year, and such
carried-over vacation time may be used in such immediately next succeeding fiscal year. If such
carried-over vacation time is not used within such immediately next succeeding fiscal year, such
unused vacation time shall not accrue for use in any subsequent period. Subject to the foregoing
sentence, payment shall be made for accrued and unused vacation time through the date of
termination of this Agreement as described herein.

(d) Welfare Benefit Plans. During the Employment Period, Executive and Executive’s
family will be eligible for participation in, and will receive all benefits under, the welfare
benefit plans, practices, policies and programs generally provided by the Company (including,
without limitation, medical, prescription, dental, disability, employee life, group life,
accidental death and travel accident insurance plans and programs), subject to the same terms that
such benefits are made available to other senior executives of the Company generally. During the
Employment Period, the Company will provide a supplemental disability plan in addition to the
disability plan available to employees generally, which supplemental disability plan will provide
Executive with disability benefits that, when added to the disability benefits payable under the
general disability plan, will equal 60% of Executive’s Base Salary as of the Disability Effective
Date. The Company will impute taxable income to Executive equal to the premium amount for such
supplemental disability plan during each calendar year.

(e) Expenses. During the Employment Period, Executive will be entitled to receive
prompt reimbursement for all reasonable expenses incurred by Executive in accordance with the
policies, practices and procedures of the Company. In no event will such reimbursements be made,
if at all, later than the last day of Executive’s taxable year next following Executive’s taxable
year in which Executive incurs the expense.

(f) Fringe Benefits. During the Employment Period, Executive will be entitled, during
each calendar year, to up to $15,000.00 per calendar year for a Universal Life Insurance Policy on
Executive’s life (or other instrument mutually agreed upon by Executive and the Company) and up to
$6,500.00 per year to reimburse Executive for country club dues and the Company will impute taxable
income to Executive equal to the amounts paid. Executive will be entitled to such other fringe
benefits as may be consistent with the plans, practices, programs and policies of the Company.

 

2

 

6. Change in Control. For the purposes of this Agreement, a “Change in Control” means:

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
35% or more of the combined voting power of the then outstanding voting securities of American
Safety Insurance Holdings, Ltd., a Bermuda corporation (“Parent”), entitled to vote generally in
the election of directors (the “Outstanding Parent Voting Securities”); provided, however, that for
purposes of this subsection (a), the following acquisitions will not constitute a Change in
Control: (i) any acquisition directly from the Parent to the extent that the Parent’s board of
directors expressly provides in a resolution approving such issuance that such securities shall not
be considered in determining whether a Change in Control occurs, (ii) any acquisition by the Parent
which reduces the number of Outstanding Parent Voting Securities and thereby results in any Person
having beneficial ownership of more than 35% of the Outstanding Parent Voting Securities provided
that such Person does not acquire any additional Outstanding Parent Voting Securities, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Parent
or any corporation controlled by the Parent, or (iv) any acquisition by any corporation pursuant to
a transaction which complies with clauses (i) and (ii) of subsection (b) of this Section 6; or

(b) Consummation of a reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Parent (a “Business Combination”), in each case,
unless, following such Business Combination, (i) outstanding Parent common stock (or outstanding
securities issued by a surviving entity in exchange therefore) constitutes more than 50% of the
then outstanding shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination, and (ii) no Person (excluding the Parent
or any employee benefit plan (or related trust) of the Parent or such corporation resulting from
such Business Combination) beneficially owns, directly or indirectly, 35% or more of the combined
voting power of the then outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination; or

(c) The election of a majority of the members of the board of directors of Parent, without the
recommendation or approval by a majority of the existing members of the board of directors of
Parent;

(d) The shareholders of the Parent approve a plan of complete liquidation or dissolution of
the Parent (other than by a reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Parent); or

(e) The failure of Parent, directly or indirectly, to own all or substantially all of the
voting securities of the Company.

Notwithstanding anything in this definition to the contrary, a restructuring and/or separation
of any line of business or business unit from the Parent will not of itself constitute a Change in
Control;

For the avoidance of doubt, the term “Person” as used in this Section 6 includes the
shareholders of a corporation or other entity that is a party to a merger, consolidation or
business combination to which the Parent also is a party, including a forward or reverse subsidiary
merger pursuant to which voting securities of the Parent are issued to such shareholders.

7. Termination of Employment.

(a) Death, Disability or Retirement. Executive’s employment and the Employment Period
will terminate automatically upon Executive’s death or Retirement. For purposes of this Agreement,
“Retirement” means normal retirement as defined in the Company’s then-current retirement plan, or
if there is no such retirement plan, “Retirement” means voluntary termination after age 65 with ten
years of service. If the Company determines in good faith that a Disability of the Executive has
occurred (pursuant to the definition of Disability set forth below), it may give Executive written
notice of its intention to terminate Executive’s employment. In such event, Executive’s employment
with the Company will terminate effective on the 30th day after receipt of such written
notice by Executive (the “Disability Effective Date”) provided that, within the 30 days after such
receipt, Executive has not returned to full-time performance of Executive’s duties. For purposes
of
this Agreement, “Disability” means a mental or physical disability as determined by the Board
in accordance with standards and procedures similar to those under the Company’s employee long-term
disability plan, if any. At any time that the Company does not maintain such a long-term disability
plan, Disability will mean the inability of Executive, as determined by the Board, to substantially
perform the essential functions of his regular duties and responsibilities due to a medically
determinable physical or mental illness which has lasted (or can reasonably be expected to last)
for a period of six consecutive months.

 

3

 

(b) Termination by the Company. The Company may terminate Executive’s employment for
Poor Performance, or with or without Cause. For purposes of this Agreement:

“Poor Performance” means the failure of Executive to meet reasonable and achievable
performance expectations (other than any such failure resulting from incapacity due to physical or
mental illness); provided, however, that termination for Poor Performance will not be effective
unless at least 30 days prior to such termination Executive has received written notice from the
Board which specifically identifies the manner in which the Board believes that Executive has not
met performance expectations and Executive has failed after receipt of such notice to resume the
diligent performance of his duties to the satisfaction of the Board; and

“Cause” means:

(i) the continued failure of Executive to perform substantially Executive’s duties with the
Company (other than any such failure resulting from incapacity due to physical or mental illness,
and specifically excluding any failure by Executive, after reasonable efforts, to meet performance
expectations), after a written demand for substantial performance is delivered to Executive by the
Board which specifically identifies in detail the manner in which the Board believes that Executive
has not substantially performed Executive’s duties, or

(ii) any act of fraud, misappropriation, embezzlement or similar dishonest or wrongful act by
Executive, or

(iii) Executive’s abuse of alcohol or any substance which materially interferes with
Executive’s ability to perform services on behalf of the Company, or

(iv) Executive’s conviction for, or plea of guilty or nolo contendere to, a felony, or

(v) Executive’s acceptance of employment with an employer other than the Company or any
affiliate or subsidiary of the Company, or

(vi) Executive’s conviction for any crime of moral turpitude.

(c) Termination by Executive. Executive’s employment may be terminated by Executive
for Good Reason or no reason. For purposes of this Agreement, “Good Reason” means:

(i) a reduction by the Company in Executive’s Base Salary or benefits as in effect on the
Effective Date or as the same may be increased from time to time, unless a similar reduction is
made in salary or benefits of substantially all senior executives of the Company (or any of its
affiliates and any of their respective subsidiaries with respect to which the Company exerts
control over compensation policies); or

(ii) the Company’s requiring Executive, without his consent, to be based at any office or
location other than in the greater metropolitan area of the city in which his office is located at
the Effective Date; or

(iii) the Company’s changing the reporting structure so that Executive no longer reports
directly to the Board; or

(iv) any significant change in Executive’s title, position, duties or responsibilities.

(d) Notice of Termination. Any termination by the Company for Poor Performance, or
Cause, or by Executive for Good Reason, will be communicated by Notice of Termination to the other
party hereto given in accordance with Section 17(f) of this Agreement. For purposes of this
Agreement, a “Notice of Termination” means a written notice that (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for termination of
Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice, specifies the termination date
(which date will be not more than 30 days after the giving of such notice). The failure by
Executive or the Company to set forth in
the Notice of Termination any fact or circumstance which contributes to a showing of Good
Reason, Poor Performance or Cause will not waive any right of Executive or the Company,
respectively, hereunder or preclude Executive or the Company, respectively, from asserting such
fact or circumstance in enforcing Executive’s or the Company’s rights hereunder.

 

4

 

(e) Date of Termination. “Date of Termination” means (i) if Executive’s employment is
terminated other than by reason of death, Disability or Retirement, the date of receipt of the
Notice of Termination, or any later date specified therein (which will not be more than 30 days
after the date of delivery of the Notice of Termination), which also shall be the date Executive’s
employment is terminated, or (ii) if Executive’s employment is terminated by reason of death,
Disability or Retirement, the Date of Termination will be the date of death or Retirement, or the
Disability Effective Date, as the case may be. In no event will the Date of Termination be after
the end of Executive’s Employment Period, as provided for in Section 3 of this Agreement.

8. Obligations of the Company upon Termination.

(a) Prior to or More than Two Years after a Change in Control: Termination by Executive
for Good Reason; Termination by the Company Other Than for Poor Performance, Cause or Disability;
Expiration of Executive’s Employment Period. If, prior to or more than two years after a Change
in Control and during the Executive’s Employment Period, the Company terminates Executive’s
employment other than for Poor Performance, Cause or Disability, or Executive terminates his
employment for Good Reason within a period of 90 days after the occurrence of the event giving rise
to Good Reason, or Executive’s employment terminates upon the expiration of the Executive’s
Employment Period, as described in Section 3, then, subject to Section 8(f) below (and with respect
to the payments and benefits described in clauses (ii) through (vii) below, only if Executive
executes a Release in substantially the form of Exhibit A hereto and the period for revoking such
Release (the “Release”) has expired before the 30th day after the Date of Termination):

(i) the Company will pay to Executive in a lump sum in cash within 30 days after the Date of
Termination (with Executive not having any right to designate the taxable year of the payment) the
sum of (A) Executive’s Base Salary through the Date of Termination to the extent not theretofore
paid, and (B) any accrued vacation pay to the extent not theretofore paid (the sum of the amounts
described in clauses (A) and (B) will be hereinafter referred to as the “Accrued Obligations”); and

(ii) for the longer of (A) 18 months from the Date of Termination or (B) the remaining term of
Executive’s Employment Period (the “Normal Severance Period”), the Company will continue to pay
Executive an amount equal to his monthly Base Salary, payable in equal semi-monthly or other
installments (not less frequently than monthly) as are customary under the Company’s payroll
practices from time to time, with the installments that otherwise would be paid within the first 30
days after the Date of Termination being paid in a lump sum on the 30th day after the
Date of Termination and the remaining installments being paid as otherwise scheduled assuming
payments had begun immediately after the Date of Termination; provided, however, that the Company’s
obligation to make or continue such payments will cease if Executive violates any of the
Restrictive Covenants (as defined in Section 13(b) of this Agreement) and fails to remedy such
violation to the satisfaction of the Board within 10 days of notice of such violation; and

(iii) during the Normal Severance Period, if and to the extent Executive timely elects COBRA
continuation coverage and such coverage remains available, the Company no less frequently than
monthly will pay for the full premium amount of such COBRA continuation coverage and will impute
taxable income to the Executive equal to the full premium amount; with Executive being required to
pay the amount of such premiums for the first 30 days after the Date of Termination and having the
right to reimbursement from the Company on the 30th day after the Date of Termination
for the payments made during that time and the balance of the premiums being paid as otherwise
scheduled assuming payment of the premiums had begun immediately after the Date of Termination;
provided, however that the Company’s obligation to provide such benefits will cease if Executive
violates any of the Restrictive Covenants (as defined in Section 13(b) of this Agreement) and fails
to remedy such violation to the satisfaction of the Board within 10 days of notice of such
violation; provided further, that to the extent Executive continues COBRA continuation coverage
beyond his Normal Severance Period, Executive will be responsible for paying the full cost of the
COBRA continuation coverage in accordance with the procedures of the Company generally
applicable to all qualified beneficiaries receiving COBRA continuation coverage; and

 

5

 

(iv) on the 30th day after the Date of Termination, Executive will be paid a bonus
for the year in which the Date of Termination occurs in a lump sum in cash an amount equal to 100%
of his bonus opportunity (prorated through the Date of Termination) adjusted up or down by
reference to his year-to-date performance at the Date of Termination in relation to the prior
established performance objectives under Executive’s bonus plan for such year; provided, however
that the bonus payment described in this Section 8(b)(iv) will be reduced by the amount (if any) of
the bonus opportunity that Executive had previously elected to receive in the form of restricted
stock of the Company; and

(v) all grants of restricted stock, restricted stock units and similar Company stock-based
awards (“Restricted Stock”) held by Executive as of the Date of Termination will become immediately
vested as of the Date of Termination; and

(vi) all of Executive’s options to acquire Common Stock of the Company, stock appreciation
rights in Common Stock of the Company and similar Company stock-based awards (“Options”) that would
have become vested (by lapse of time) within the 24-month period following the Date of Termination
had Executive remained employed during such period will become immediately vested as of the Date of
Termination; and

(vii) notwithstanding the provisions of the applicable Option agreement, all of Executive’s
vested but unexercised Options as of the Date of Termination (including those with accelerated
vesting pursuant to Section 8(a)(vi) above) will remain exercisable through the earlier of (A) the
original expiration date of the Option, (B) the 90th day following the end of the Normal Severance
Period or (C) 10 years from the date of grant of the options; and

(viii) to the extent not theretofore paid or provided, the Company will timely pay or provide
to Executive his other benefits pursuant to the plans, policies, practices and programs under which
such Other Benefits are provided.

(b) Prior to or More than Two Years after a Change in Control: Termination by the Company
for Poor Performance. If, prior to or more than two years after the occurrence of a Change in
Control, the Company terminates Executive’s employment for Poor Performance, then, subject to
Section 8(f) below (and with respect to the payments and benefits described in clauses (ii) through
(vi) below, only if Executive executes the Release and the period for revoking such Release expires
before the 30th day after the Date of Termination):

(i) the Company will pay to Executive the Accrued Obligations in a lump sum in cash within 30
days after the Date of Termination (with Executive not having any right to designate the taxable
year of the payment); and

(ii) for a period of 12 months after the Date of Termination (the “Poor Performance Severance
Period”), the Company will continue to pay Executive an amount equal to his monthly Base Salary,
payable in equal semi-monthly installments or other installments (not less frequently than monthly)
as are customary under the Company’s payroll practices from time to time, with the installments
that otherwise would be paid within the first 30 days after the Date of Termination being paid in a
lump sum on the 30th day after the Date of Termination and the remaining installments
being paid as otherwise scheduled assuming payments had begun immediately after the Date of
Termination; provided, however that the Company’s obligation to make or continue such payments will
cease if Executive violates any of the Restrictive Covenants (as defined in Section 13(b) of this
Agreement) and fails to remedy such violation to the satisfaction of the Board within 10 days of
notice of such violation; and

(iii) during the Poor Performance Severance Period, if and to the extent Executive timely
elects COBRA continuation coverage and such coverage remains available, the Company no less
frequently than monthly will pay for the full premium amount of such COBRA continuation coverage
and will impute taxable income to the Executive equal to the full premium amount; with Executive
being required to pay the amount of such premiums for the first 30 days after the Date of
Termination and having the right to reimbursement from the Company on the 30th day after
the Date of Termination for the payments made during that time and the balance of the premiums
being paid as otherwise scheduled assuming payment of the premiums had begun immediately after the
Date of Termination; provided, however that the Company’s obligation to provide such benefits
will cease if Executive violates any of the Restrictive Covenants (as defined in Section 13(b)
of this Agreement) and fails to remedy such violation to the satisfaction of the Board within 10
days of notice of such violation; provided further, that to the extent Executive continues COBRA
continuation coverage beyond his Poor Performance Severance Period, Executive will be responsible
for paying the full cost of the COBRA continuation coverage in accordance with the procedures of
the Company generally applicable to all qualified beneficiaries receiving COBRA continuation
coverage; and

 

6

 

(iv) all grants of Restricted Stock held by Executive as of the Date of Termination that would
have become vested (by lapse of time) within the 12-month period following the Date of Termination
had Executive remained employed during such period will become immediately vested as of the Date of
Termination; and

(v) subject to the specific approval of the Compensation Committee, all of Executive’s Options
that would have become vested (by lapse of time) within the 12-month period following the Date of
Termination had Executive remained employed during such period will become immediately vested and
exercisable as of the Date of Termination; and

(vi) notwithstanding the provisions of the applicable Option agreement, all of Executive’s
vested but unexercised Options as of the Date of Termination (including those with accelerated
vesting pursuant to the Section 8(b)(v) above) will remain exercisable through the earlier of (A)
the original expiration date of the Option, (B) the 90th day following the end of the later of (1)
six months from the Date of Termination, or (2) the end of the Poor Performance Severance Period or
(C) 10 years from the date of grant of the options; and

(vii) to the extent not theretofore paid or provided, the Company will timely pay or provide
to Executive his other benefits pursuant to the plans, policies, practices and programs under which
such Other Benefits are provided.

(c) After or in Connection with a Change in Control: Termination by Executive for Good
Reason; Termination by the Company Other Than for Cause or Disability. If a Change in Control
occurs and, within two years following such Change in Control (or if Executive can reasonably show
that termination by the Executive or by the Company was prior to and in anticipation of the Change
in Control this Section 8(c) will apply in lieu of Sections 8(a) or (b) for purposes of determining
the amounts to which Executive will be entitled), the Company terminates Executive’s employment
other than for Cause or Disability or Executive’s employment terminates upon the expiration of the
Employment Period, as described in Section 3, or Executive terminates his employment for Good
Reason, then, subject to Section 8(f) below (and with respect to the payments and benefits
described in clauses (ii) through (vii) below, only if Executive executes the Release and the
period for revoking the Release expires before the 30th day after the Date of
Termination):

(i) the Company (or its successor) will pay to Executive the Accrued Obligations in a lump sum
in cash within 30 days after the Date of Termination (with Executive not having any right to
designate the taxable year of the payment); and

(ii) the Company (or its successor) will pay to Executive a lump sum cash amount equal to 36
times his monthly Base Salary on the 30th day after the Date of Termination if the
Change in Control qualifies as a change in ownership or effective control of the Parent or the
Company, or in the ownership of a substantial portion of their assets, within the meaning of
Section 409A(a)(2)(A)(v) and such lump sum is permitted under Section 409A; otherwise, payment will
be made in equal semi-monthly installments or other installments (not less frequently than monthly)
as are customary under the Company’s payroll practices from time to time, with the installments
that otherwise would be paid within the first 30 days after the Date of Termination being paid in a
lump sum on the 30th day after the Date of Termination and the remaining installments
being paid as otherwise scheduled assuming payments had begun immediately after the Date of
Termination; provided, however, that the Company’s obligation to make or continue such payments
will cease if Executive violates any of the Restrictive Covenants (as defined in Section 13(b) of
this Agreement), other than the Restrictive Covenant contained in Section 13(c)(iv), and fails to
remedy such violation to the satisfaction of the Board within 10 days of notice of such violation;
and

 

7

 

(iii) for 18 months after the Date of Termination, if and to the extent Executive timely
elects COBRA continuation coverage and such coverage remains available, the Company no less
frequently than monthly will pay for the full premium amount of such COBRA continuation coverage
and will impute taxable income to the Executive equal to the full premium
amount, with Executive being required to pay the amount of such premiums for the first 30 days
after the Date of Termination and having the right to reimbursement from the Company on the
30th day after the Date of Termination for the payments made during that time and the
balance of the premiums being paid as otherwise scheduled assuming payment of the premiums had
begun immediately after the Date of Termination; provided, however that the Company’s obligation to
provide such benefits will cease if Executive violates any of the Restrictive Covenants (as defined
in Section 13(b) of this Agreement), other than the Restrictive Covenant contained in Section
13(c)(iv), and fails to remedy such violation to the satisfaction of the Board within 10 days of
notice of such violation; and

(iv) on the 30th day after the Date of Termination, Executive will be paid a lump
sum cash amount equal to 100% of his bonus opportunity for the year in which the Date of
Termination occurs (as defined in Section 5(b)(i)); provided, however that the total bonus payment
described in this Section 8(c)(iv) will be reduced by the amount (if any) of the bonus opportunity
that Executive had previously elected to receive in the form of restricted stock of the Company;
and

(v) all grants of Restricted Stock held by Executive as of the Date of Termination will become
immediately vested as of the Date of Termination; and

(vi) all of Executive’s Options held by Executive as of the Date of Termination will become
immediately vested and exercisable as of the Date of Termination; and

(vii) notwithstanding the provisions of the applicable Option agreement, all of Executive’s
vested but unexercised Options as of the Date of Termination (including those with accelerated
vesting pursuant to the Section 8(c)(vi) above) will remain exercisable through the earlier of (A)
the original expiration date of the Option, (B) the 90th day following the end of the 36-month
period beginning on the Date of Termination or (C) 10 years from the date of grant of the options;
and

(viii) to the extent not theretofore paid or provided, the Company will timely pay or provide
to Executive his other benefits pursuant to the plans, policies, practices and programs under which
such other benefits are provided; and

(ix) the restrictions on Executive’s conduct contained in Section 13(c)(iv) of this Agreement
will cease to apply.

(d) Death, Disability or Retirement. Regardless of whether or not a Change in Control
has occurred, if Executive’s employment is terminated by reason of Executive’s death, Disability or
Retirement, this Agreement will terminate without further obligations to Executive or his estate or
legal representatives under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of other benefits. The Accrued Obligations will be paid to Executive
or Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days after the
Date of Termination (with no recipient having any right to designate the taxable year of the
payment). With respect to the provision of other benefits, the term other benefits as used in this
Section 8(e) will include, without limitation, and Executive or his estate and/or beneficiaries
will be entitled to receive, benefits under such plans, programs, practices and policies relating
to death or retirement benefits, if any, as are applicable to Executive on the Date of Termination.

(e) Cause or Voluntary Termination without Good Reason. Regardless of whether or not a
Change in Control has occurred, if Executive’s employment is terminated for Cause, or if Executive
voluntarily terminates employment without Good Reason (other than upon the expiration of the
Employment Period), this Agreement will terminate without further obligations to Executive, other
than for payment of Accrued Obligations within 30 days after the Date of Termination (with
Executive not having any right to designate the taxable year of the payment) and the timely payment
or provision of other benefits pursuant to the plans, policies, practices and programs under which
such other benefits are provided.

 

8

 

(f) Effect of Section 409A. It is expressly contemplated by the parties that this
Agreement will conform to, and be interpreted to comply with, Section 409A of the Internal Revenue
Code, as amended (the “Code”). Notwithstanding any other provision of this Agreement, if Executive
is a “specified employee” as defined in Section 409A(a)(2)(B)(i) of the Code, then the payment of
any amount or the provision of any benefit under this Agreement which is considered deferred
compensation subject to Section 409A of the Code shall be deferred for six (6) months after
Executive’s “separation from service” or, if earlier, Executive’s death as required by Section
409A(a)(2)(B)(i) of the Code (the “409A Deferral Period”). In the event payments are otherwise due
to be made in installments or periodically during the 409A Deferral Period, the payments which
would
otherwise have been made in the 409A Deferral Period shall be accumulated and paid in a lump
sum as soon as the 409A Deferral Period ends, and the balance of the payments shall be made as
otherwise scheduled. In the event benefits are required to be deferred, any such benefit may be
provided during the 409A Deferral Period at Executive’s expense, with Executive having the right to
reimbursement from the Company once the 409A Deferral Period ends, and the balance of the benefits
shall be provided as otherwise scheduled. If Executive incurs any additional tax, interest or
penalties under Section 409A of the Code as a result of the violation thereof, the Company at that
time will pay Executive an additional amount so that, after all taxes on such amount, Executive has
an amount remaining equal to such additional taxes, interest or penalties. Such gross-up payment
shall be made no later than the time the related taxes, interest or penalties are to be remitted.
For purposes of this Agreement, Executive shall not be deemed to have terminated employment unless
Executive has a “separation from service” within the meaning of Section 409A of the Code where it
is reasonably anticipated that no further services will be performed after such date or that the
level of bona fide services Executive will perform after that date (whether as an employee or
independent contractor) will permanently decrease to no more than 20 percent of the average level
of bona fide services performed by Executive over the immediately preceding 36-month period. All
rights to payments and benefits under this Agreement shall be treated as rights to receive a series
of separate payments and benefits to the fullest extent allowed by Section 409A of the Code.

9. Non-exclusivity of Rights. Nothing in this Agreement will prevent or
limit Executive’s continuing or future participation in any plan, program, policy or
practice provided by the Company and for which Executive may qualify, nor, subject to
Section 16(d), will anything herein limit or otherwise affect such rights as
Executive may have under any contract or agreement with the Company. Amounts which
are vested benefits or which Executive is otherwise entitled to receive under any
plan, policy, practice or program of the Company or under any contract or agreement
with the Company at or subsequent to the Date of Termination will be payable in
accordance with such plan, policy, practice or program or contract or agreement
except as explicitly modified by this Agreement.

10. Certain Additional Payments by the Company.

(a) Anything in this Agreement to the contrary notwithstanding and except as set forth below,
in the event it will be determined that any payment or distribution by the Company to or for the
benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional payments required
under this Section 10) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by Executive with respect to such excise tax
(such excise tax, together with any such interest and penalties, are hereinafter collectively
referred to as the “Excise Tax”), then Executive will be entitled to receive an additional payment
(a “Gross-Up Payment”) in an amount such that after payment by Executive of all taxes (including
any interest or penalties imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 10(a), if
it is determined that Executive is entitled to a Gross-Up Payment, but that Executive, after taking
into account the Payments and the Gross-Up Payment, would not receive a net after-tax benefit of at
least $25,000 (taking into account both income taxes and any Excise Tax) as compared to the net
after-tax proceeds to Executive resulting from an elimination of the Gross-Up Payment and a
reduction of the Payments, in the aggregate, to an amount (the “Reduced Amount”) such that the
receipt of Payments would not give rise to any Excise Tax, then no Gross-Up Payment will be made to
Executive and the Payments, in the aggregate, will be reduced to the Reduced Amount. In that event,
the order of reduction shall be first all cash payments on a pro rata basis, then any equity
compensation on a pro rata basis and lastly any benefits on a pro rata basis.

 

9

 

(b) Subject to the provisions of Section 10(c), all determinations required to be made under
this Section 10, including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, will be made by BDO Seidman LLP or such other certified public accounting firm
reasonably acceptable to the Company as may be designated by Executive (the “Accounting Firm”)
which will provide detailed supporting calculations both to the Company and Executive within 15
business days of the receipt of notice from Executive that there has been a Payment, or such
earlier time as is requested by the Company. In the event that the accounting firm is serving as
accountant or auditor for the individual, entity or group effecting the Change in Control, or in
the event that serving as the Accounting Firm for purposes of this Section 10(b) would jeopardize
the accounting firm’s status as the Company’s independent auditor, Executive will appoint another
nationally recognized accounting firm to make the determinations required hereunder (which
accounting firm will then be referred to as the Accounting Firm hereunder). All fees and expenses
of the Accounting Firm will be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 10, will be paid by the Company to Executive within five days of the
receipt of the Accounting Firm’s determination but must be paid in any event by the time the
related taxes are to be remitted. Any determination by the Accounting Firm will be binding upon
the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been made
(“Underpayment”), consistent with the calculations required to be made hereunder. In the event that
the Company exhausts its remedies pursuant to Section 10(c) and Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm will determine the amount of the Underpayment
that has occurred and any such Underpayment will be promptly paid by the Company to or for the
benefit of Executive.

(c) The Executive will notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such
notification will be given as soon as practicable but no later than ten business days after
Executive is informed in writing of such claim and apprises the Company of the nature of such claim
and the date on which such claim is requested to be paid. The Executive will not pay such claim
prior to the expiration of the 30-day period following the date on which it gives such notice to
the Company (or such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, Executive will:

(i) give the Company any information reasonably requested by the Company relating to such
claim,

(ii) take such action in connection with contesting such claim as the Company reasonably
requests in writing from time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably selected by the Company,

(iii) cooperate with the Company in good faith in order effectively to contest such claim, and

(iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company will bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and will indemnify and
hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such representation and payment
of costs and expenses. Without limitation of the foregoing provisions of this Section 10(c), the
Company will control all proceedings taken in connection with such contest and, at its sole option,
may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with
the taxing authority in respect of such claim and may, at its sole option, either direct Executive
to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and
Executive agrees to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the Company will
determine; provided, however, that if the Company directs Executive to pay such claim and sue for a
refund, the Company will advance the amount of such payment to Executive, on an interest-free basis
and will indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed
income with respect to such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested amount. Furthermore,
the Company’s control of the contest will be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and Executive will be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other taxing authority. All
payments to be made hereunder must be made by the end of Executive’s taxable year next following
Executive’s taxable year in which the taxes are remitted or, if no taxes are remitted, the taxable
year in which the matter is resolved, and all reimbursements to be made hereunder must be made by
the end of Executive’s taxable year next following Executive’s taxable year in which the expenses
are incurred.

 

10

 

(d) If, after the receipt by Executive of an amount advanced by the Company pursuant to
Section 10(c), Executive becomes entitled to receive any refund with respect to such claim,
Executive will (subject to the Company’s complying with the requirements of Section 10(c)) promptly
pay to the Company the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the
Company pursuant to Section 10(c), a determination is made that Executive is not entitled to any
refund with respect to such claim and the Company does not notify Executive in writing of its
intent to contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance will be forgiven and will not be required to be repaid and the
amount of such advance will offset, to the extent thereof, the amount of Gross-Up Payment required
to be paid.

11. Costs of Enforcement. Unless otherwise provided by the arbitrator(s)
in an arbitration proceeding pursuant to Section 14 hereof, in any action taken in
good faith relating to the enforcement of this Agreement or any provision herein,
Executive will be entitled to be paid any and all costs and expenses incurred by him
in enforcing or establishing his rights thereunder, including, without limitation,
reasonable attorneys’ fees, whether suit be brought or not, and whether or not
incurred in trial, bankruptcy or appellate proceedings, but only if Executive is
determined to be the substantially prevailing party in the enforcement proceeding.
Such reimbursement shall be paid as soon as administratively practicable (and within
30 days) after any final judgment, decision or settlement of such action.

12. Representations and Warranties. Executive hereby represents and
warrants to the Company that Executive is not a party to, or otherwise subject to,
any covenant not to compete with any person or entity, and Executive’s execution of
this Agreement and performance of his obligations hereunder will not violate the
terms or conditions of any contract or obligation, written or oral, between Executive
and any other person or entity.

13. Restrictions on Conduct of Executive.

(a) General. Executive and the Company understand and agree that the purpose of the
provisions of this Section 13 is to protect legitimate business interests of the Company, as more
fully described below, and is not intended to eliminate Executive’s post-employment competition
with the Company per se, nor is it intended to impair or infringe upon Executive’s right to work,
earn a living, or acquire and possess property from the fruits of his labor. Executive hereby
acknowledges that the post-employment restrictions set forth in this Section 13 are reasonable and
that they do not, and will not, unduly impair his ability to earn a living after the termination of
this Agreement. Therefore, subject to the limitations of reasonableness imposed by law, Executive
will be subject to the restrictions set forth in this Section 13.

(b) Definitions. The following terms used in this Section 13 have the meanings
assigned to them below, which definitions apply to both the singular and the plural forms of such
terms:

“Competitive Position” means any employment with a Competitor in which Executive will
use or is likely to use any Confidential Information or Trade Secrets, or in which Executive has
duties for such Competitor that relate to Competitive Services and that are the same or similar to
those services actually performed by Executive for the Company;

 

11

 

“Competitive Services” means the provision of specialty insurance and insurance
services in the excess and surplus and alternative risk transfer markets in the United States and
Bermuda.

“Competitor” means any Person engaged, wholly or in part, in Competitive Services in
active and direct competition with the Company.

“Confidential Information” means all information regarding the Company, its
activities, business or clients that is the subject of reasonable efforts by the Company to
maintain its confidentiality and that is not generally disclosed by practice or authority to
persons not employed by the Company, but that does not rise to the level of a Trade Secret.
“Confidential Information” includes, but is not limited to, financial plans and data concerning the
Company; management planning information; business plans; operational methods; market studies;
marketing plans or strategies; product development techniques or plans; lists of current or
prospective customers; details of customer contracts; current and anticipated customer
requirements; past, current and planned research and development; business acquisition plans; and
new personnel acquisition plans. “Confidential Information” does not include information that has
become generally available to the public by the act of one who has the right to disclose such
information without violating any right or privilege of the Company. This definition will not limit
any definition of “confidential information” or any equivalent term under state or federal law.

“Determination Date” means the date of termination of Executive’s employment with the
Company for any reason whatsoever or any earlier date of an alleged breach of the Restrictive
Covenants by Executive.

“Person” means any individual or any corporation, partnership, joint venture, limited
liability company, association or other entity or enterprise.

“Principal or Representative” means a principal, owner, partner, shareholder, joint
venturer, investor, member, trustee, director, officer, manager, employee, agent, representative or
consultant.

“Protected Customers” means any Person to whom the Company has sold its products or
services or solicited to sell its products or services during the twelve (12) months prior to the
Determination Date; provided, however, that Protected Customers shall not include brokers or
agents.

“Protected Employees” means employees of the Company who were employed by the Company
at any time within six (6) months prior to the Determination Date.

“Restricted Period” means the Employment Period plus the period extending for the
longer of: (i) twelve (12) months from the termination of Executive’s employment with the Company
or (ii) the end of the applicable severance period.

“Restricted Territory” means the state of Georgia, any other state in which the
Company or one of its affiliates writes insurance coverage.

“Restrictive Covenants” means the restrictive covenants contained in Section 13(c)
hereof.

“Trade Secret” means all information, without regard to form, including, but not
limited to, technical or non-technical data, a formula, a pattern, a compilation, a program, a
device, a method, a technique, a drawing, a process, financial data, financial plans, product
plans, distribution lists or a list of actual or potential customers, advertisers or suppliers
which is not commonly known by or available to the public and which information: (A) derives
economic value, actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value from its disclosure
or use; and (B) is the subject of efforts that are reasonable under the circumstances to maintain
its secrecy. Without limiting the foregoing, Trade Secret means any item of Confidential
Information that constitutes a “trade secret(s)” under the common law or applicable state law.

 

12

 

(c) Restrictive Covenants.

(i) Restriction on Disclosure and Use of Confidential Information and Trade Secrets.
Executive understands and agrees that the Confidential Information and Trade Secrets constitute
valuable assets of the Company and its affiliated entities, and may not be converted to Executive’s
own use. Accordingly, Executive hereby agrees that Executive will not, directly or indirectly, at
any time during the Restricted Period reveal, divulge, or disclose to any Person not
expressly authorized by the Company any Confidential Information, and Executive will not,
directly or indirectly, at any time during the Restricted Period use or make use of any
Confidential Information in connection with any business activity other than that of the Company.
Throughout the term of this Agreement and at all times after the date that this Agreement
terminates for any reason, Executive will not directly or indirectly transmit or disclose any Trade
Secret of the Company to any Person, and will not make use of any such Trade Secret, directly or
indirectly, for himself or for others, without the prior written consent of the Company. The
parties acknowledge and agree that this Agreement is not intended to, and does not, alter either
the Company’s rights or Executive’s obligations under any state or federal statutory or common law
regarding trade secrets and unfair trade practices.

Anything herein to the contrary notwithstanding, Executive will not be restricted from
disclosing or using Confidential Information that is required to be disclosed by law, court order
or other legal process; provided, however, that in the event disclosure is required by law,
Executive will provide the Company with prompt notice of such requirement so that the Company may
seek an appropriate protective order prior to any such required disclosure by Executive.

(ii) Nonsolicitation of Protected Employees. Executive understands and agrees that the
relationship between the Company and each of its Protected Employees constitutes a valuable asset
of the Company and may not be converted to Executive’s own use. Accordingly, Executive hereby
agrees that during the Restricted Period Executive will not directly or indirectly on Executive’s
own behalf or as a Principal or Representative of any Person or otherwise solicit or induce any
Protected Employee to terminate his or her employment relationship with the Company or to enter
into employment with any other Person.

(iii) Restriction on Relationships with Protected Customers. Executive understands and
agrees that the relationship between the Company and each of its Protected Customers constitutes a
valuable asset of the Company and may not be converted to Executive’s own use. Accordingly,
Executive hereby agrees that, during the Restricted Period, Executive will not, without the prior
written consent of the Company, directly or indirectly, on Executive’s own behalf or as a Principal
or Representative of any Person, solicit, divert, take away or attempt to solicit, divert or take
away a Protected Customer for the purpose of providing or selling Competitive Services; provided,
however, that the prohibition of this covenant will apply only to Protected Customers with whom
Executive had Contact on the Company’s behalf during the twelve (12) months immediately preceding
the termination of his employment hereunder. For purposes of this Agreement, Executive had
“Contact” with a Protected Customer if (a) he had business dealings with the Protected Customer on
the Company’s behalf; (b) he was responsible for supervising or coordinating the dealings between
the Company and the Protected Customer; or (c) he obtained Trade Secrets or Confidential
Information about the Protected Customer as a result of his association with the Company.

(iv) Noncompetition with the Company. The parties acknowledge:

A) that Executive’s services under this Agreement require special expertise and talent in the
provision of Competitive Services and that Executive will have substantial contacts with customers,
suppliers, advertisers and vendors of the Company;

(B) that pursuant to this Agreement, Executive will be placed in a position of trust and
responsibility and he will have access to a substantial amount of Confidential Information and
Trade Secrets and that the Company is placing him in such position and giving him access to such
information in reliance upon his agreement not to compete with the Company during the Restricted
Period;

(C) that due to his management duties, Executive will be the repository of a substantial
portion of the goodwill of the Company and would have an unfair advantage in competing with the
Company;

(D) that due to Executive’s special experience and talent, the loss of Executive’s services to
the Company under this Agreement cannot reasonably or adequately be compensated solely by damages
in an action at law;

(E) that Executive is capable of competing with the Company; and

(F) that Executive is capable of obtaining gainful, lucrative and desirable employment that
does not violate the restrictions contained in this Agreement.

 

13

 

In consideration of the compensation and benefits being paid and to be paid by the Company to
Executive hereunder, Executive hereby agrees that, during the Restricted
Period, Executive will not, without prior written consent of the Company, directly or
indirectly seek or obtain a Competitive Position in the Restricted Territory with a Competitor;
provided, however, that the provisions of this Agreement will not be deemed to prohibit the
ownership by Executive of any securities of the Company or its affiliated entities or not more than
five percent (5%) of any class of securities of any corporation having a class of securities
registered pursuant to the Securities Exchange Act of 1934, as amended.

(v) Cooperation.

A) Executive. Throughout the term of this Agreement and at all times after the date
that this Agreement terminates for any reason, Executive will not make statements detrimental to
the interests of nor engage in any activities detrimental to the Company or its officers,
directors, stockholders, trustees, employees, agents, parent corporations, subsidiaries,
affiliates, estates, successors, assigns and attorneys, nor will Executive make any statements
about any of the aforementioned parties to the press (including without limitation any newspaper,
magazine, radio station or television station) without the prior written consent of the Company,
except as may be required by applicable law or regulation. Executive will also cooperate with the
Company and its affiliates as a witness in all matters about which he has knowledge as a result of
his position with the Company and its affiliates if the Company requests his testimony.

(B) Company. The Company will not at any time make derogatory statements or statements
detrimental to the interests of nor engage in any activities detrimental to the Executive, nor will
the Company make any statements about the Executive to the press (including without limitation any
newspaper, magazine, radio station or television station) without the prior written consent of the
Executive, except as may be required by applicable law or regulation.

(d) Enforcement of Restrictive Covenants.

(i) Rights and Remedies Upon Breach. In the event Executive breaches, or threatens to
commit a breach of, any of the provisions of the Restrictive Covenants, the Company will have the
following rights and remedies, which will be independent of any others and severally enforceable,
and will be in addition to, and not in lieu of, any other rights and remedies available to the
Company at law or in equity:

(A) the right and remedy to enjoin, preliminarily and permanently, Executive from violating or
threatening to violate the Restrictive Covenants and to have the Restrictive Covenants specifically
enforced by any court of competent jurisdiction, it being agreed that any breach or threatened
breach of the Restrictive Covenants would cause irreparable injury to the Company and that money
damages would not provide an adequate remedy to the Company; and

(B) the right and remedy to require Executive to account for and pay over to the Company all
compensation, profits, monies, accruals, increments or other benefits derived or received by
Executive hereunder after his Date of Termination, excluding any Accrued Obligations.

(ii) Severability of Covenants. Executive acknowledges and agrees that the Restrictive
Covenants are reasonable and valid in time and scope and in all other respects. The covenants set
forth in this Agreement will be considered and construed as separate and independent covenants.
Should any part or provision of any covenant be held invalid, void or unenforceable in any court of
competent jurisdiction, such invalidity, voidness or unenforceability will not render invalid, void
or unenforceable any other part or provision of this Agreement. If any portion of the foregoing
provisions is found to be invalid or unenforceable by a court of competent jurisdiction because its
duration, the territory, the definition of activities or the definition of information covered is
considered to be invalid or unreasonable in scope, the invalid or unreasonable term will be
redefined, or a new enforceable term provided, such that the intent of the Company and Executive in
agreeing to the provisions of this Agreement will not be impaired and the provision in question
will be enforceable to the fullest extent of the applicable laws.

 

14

 

14. Arbitration. Any claim or dispute arising under this Agreement
(other than under Section 13) will be subject to arbitration, and prior to commencing
any court action, the parties agree that they will arbitrate all such controversies.
The arbitration will be conducted in Atlanta, Georgia in accordance with the
Employment Dispute Rules of the American Arbitration Association and the Federal
Arbitration Act, 9 U.S.C.
§ 1, et. seq. The arbitrator(s) will be authorized to award both liquidated and
actual damages, in addition to injunctive relief, but no punitive damages. The
arbitrator(s) may also award attorney’s fees and costs, without regard to any
restriction on the amount of such award under Georgia or other applicable law. Such
an award will be binding and conclusive upon the parties hereto, subject to 9 U.S.C.
§10. Each party will have the right to have the award made the judgment of a court of
competent jurisdiction. By initialing below, each of Executive and Company
specifically acknowledge and agree to arbitration pursuant to this Section 14.

	 	 	 
	 

	 	Executive RLH

Company MWH

15. Assignment and Successors.

(a) This Agreement is personal to Executive and without the prior written consent of the
Company will not be assignable by Executive otherwise than by will or the laws of descent and
distribution. This Agreement will inure to the benefit of and be enforceable by the Executive’s
legal representatives.

(b) This Agreement will inure to the benefit of and be binding upon the Company and its
successors and assigns.

(c) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place. As
used in this Agreement, “Company” means the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.

16. Miscellaneous.

(a) Waiver. Failure of either party to insist, in one or more instances, on
performance by the other in strict accordance with the terms and conditions of this Agreement will
not be deemed a waiver or relinquishment of any right granted in this Agreement or of the future
performance of any such term or condition or of any other term or condition of this Agreement,
unless such waiver is contained in a writing signed by the party making the waiver.

(b) Severability. If any provision or covenant, or any part thereof, of this Agreement
should be held by any court to be invalid, illegal or unenforceable, either in whole or in part,
such invalidity, illegality or unenforceability will not affect the validity, legality or
enforceability of the remaining provisions or covenants, or any part thereof, of this Agreement,
all of which will remain in full force and effect.

(c) Other Agents. Nothing in this Agreement is to be interpreted as limiting the
Company from employing other personnel on such terms and conditions as may be satisfactory to it.

(d) Entire Agreement. Except as provided herein, this Agreement contains the entire
agreement between the Company and Executive with respect to the subject matter hereof and, from and
after the Effective Date, this Agreement will supersede any other agreement between the parties
with respect to the subject matter hereof.

(e) Governing Law. Except to the extent preempted by federal law, and without regard
to conflict of laws principles, the laws of the State of Georgia will govern this Agreement in all
respects, whether as to its validity, construction, capacity, performance or otherwise.

(f) Notices. All notices, requests, demands and other communications required or
permitted hereunder will be in writing and will be deemed to have been duly given if delivered or
three days after mailing if mailed, first class, certified mail, postage prepaid:

	 	 	 	 	 
	 

	 	To Company:
	 	100 Galleria Parkway
	 

	 	 	 	Suite 700
	 

	 	 	 	Atlanta, Georgia 30339
	 
	 

	 	To Executive:
	 	the address of the Executive in the Company’s records

 

15

 

Any party may change the address to which notices, requests, demands and other communications
will be delivered by giving notice thereof to the other party in the same manner provided herein.

(g) Amendments and Modifications. This Agreement may be amended or modified only by a
writing signed by both parties hereto, which makes specific reference to this Agreement.

(h) Binding Effect. Except as otherwise provided in this Agreement, every covenant,
term and provision of this Agreement will bind and inure to the benefit of each party’s respective
successors, transferees and permitted assigns.

(i) Construction. In construing and enforcing this Agreement, the following rules will
be followed:

(1) Each provision of this Agreement will be construed simply according to its fair meaning
and not strictly for or against any party. No consideration will be given to the fact or
presumption that any party had a greater or lesser hand in drafting this Agreement.

(2) In construing and enforcing this Agreement, no consideration will be given to the captions
of the articles, sections, subsections, and clauses of this Agreement, which are inserted for
convenience in organizing and locating the provisions of this Agreement, not as an aid in its
construction.

(3) Plural words will be understood to include their singular forms, and vice versa.

(4) The word “include” and its syntactical forms mean “include, but are not limited to,” and
corresponding syntactical forms. The principal of ejusdem generis will not be used to limit the
scope of the category of things illustrated by the items mentioned in a clause introduced by the
word “including.”

(5) A defined term has its defined meaning through this Agreement, regardless of where in this
Agreement the term is defined.

(6) Except as otherwise provided in this Agreement, a reference to an Article, Section, or
clause means an article, section, or clause of this Agreement and may be understood to mean, for
example, “Section 5.1 of this Agreement” or “Section 5.1 hereof.” The term “Section” may be used
variously to identify entire Sections (as in “Section 6.8”), subsections (as in “Section 6.8(a)”),
and clauses (as in “Section 6.8(h)(iii)”).

(j) Incorporation by Reference. The exhibits to this Agreement are incorporated in
this Agreement by reference.

(k) Time. Time is of the essence in this Agreement.

(1) Counterparts. This Agreement may be executed in any number of counterparts with
the same effect as if all of the parties had signed the same document. All counterparts will be
construed together and will constitute one agreement.

* * * * * * * *

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Employment
Agreement as of the date first above written.

	 	 	 	 	 	 	 
	 	 	AMERICAN SAFETY ADMINISTRATIVE SERVICES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mark W. Haushill
 

Name: Mark W. Haushill
	 	 
	 

	 	 	 	Title: Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	EXECUTIVE:	 	 
	 
	 	 	/s/ Randolph L. Hutto	 	 
	 	 	 	 	 
	 

	 	Randolph L. Hutto
	 	 

 

16

 

EXHIBIT A

Form of Release

This Release is granted effective as of the
 _____ 
day of
 _____,
 _____, by
 _____ 

(“Executive”) in favor of American Safety Insurance Services, Inc. and its affiliates
(collectively, the “Company”). This is the Release referred to in that certain Employment Agreement
dated as of by and between the Company and Executive (the `Employment Agreement”). Executive gives
this Release in consideration of the Company’s promises and covenants as recited in the Employment
Agreement, with respect to which this Release is an integral part.

1. Release of the Company. Executive, for himself, his successors, assigns, attorneys,
and all those entitled to assert his rights, now and forever hereby releases and discharges the
Company and its respective officers, directors, stockholders, trustees, employees, agents, parent
corporations, subsidiaries, affiliates, estates, successors, assigns and attorneys (“the Released
Parties”), from any and all claims, actions, causes of action, sums of money due, suits, debts,
liens, covenants, contracts, obligations, costs, expenses, damages, judgments, agreements,
promises, demands, claims for attorney’s fees and costs, or liabilities whatsoever, in law or in
equity, which Executive ever had or now has against the Released Parties, including any claims
arising by reason of or in any way connected with any employment relationship which existed between
the Company or any of its parents, subsidiaries, affiliates, or predecessors, and Executive. It is
understood and agreed that this Release is intended to cover all actions, causes of action, claims
or demands for any damage, loss or injury, which may be traced either directly or indirectly to the
aforesaid employment relationship, or the termination of that relationship, that Executive has, had
or purports to have, from the beginning of time to the date of this Release, whether known or
unknown, that now exists, no matter how remotely they may be related to the aforesaid employment
relationship including but not limited to claims for employment discrimination under federal or
state law, except as provided in Paragraph 2; claims arising under Title VII of the Civil Rights
Act, 42 U.S.C. § 2000(e), et seq. or the Americans With Disabilities Act, 42 U.S.C. § 12101 et
seq.; claims for statutory or common law wrongful discharge, including any claims arising under the
Fair Labor Standards Act, 29 U.S.C. § 201 et seq.; claims for attorney’s fees, expenses and costs;
claims for defamation; claims for wages or vacation pay; claims for benefits, including any claims
arising under the Employee Retirement Income Security Act, 29 U.S.C. § 1001, et seq.; and provided,
however, that nothing herein will release the Company of its obligations to Executive under the
Employment Agreement or any other contractual obligations between the Company or its affiliates and
Executive, or any indemnification obligations to Executive under the Company’s bylaws, certificate
of incorporation, Delaware law or otherwise.

2. Release of Claims Under Age Discrimination in Employment Act. Without limiting the
generality of the foregoing, Executive agrees that by executing this Release, he has released and
waived any and all claims he has or may have as of the date of this Release for age discrimination
under the Age Discrimination in Employment Act, 29 U.S.C. § 621, et seq. It is understood that
Executive is advised to consult with an attorney prior to executing this Release; that he in fact
has consulted a knowledgeable, competent attorney regarding this Release; that he may, before
executing this Release, consider this Release for a period of twenty-one (21) calendar days; and
that the consideration he receives for this Release is in addition to amounts to which he was
already entitled. It is further understood that this Release is not effective until seven (7)
calendar days after the execution of this Release and that Executive may revoke this Release within
seven (7) calendar days from the date of execution hereof.

3. Executive agrees that he has carefully read this Release and is signing it voluntarily.
Executive acknowledges that he has had twenty one (21) days from receipt of this Release to review
it prior to signing or that, if Executive is signing this Release prior to the expiration of such
21-day period, Executive is waiving his right to review the Release for such full 21-day period
prior to signing it. Executive has the right to revoke this release within seven (7) days following
the date of its execution by him. However, if Executive revokes this Release within such seven (7)
day period, no severance benefit
will be payable to him under the Employment Agreement and he will return to the Company any
such payment received prior to that date.

 

17

 

EXECUTIVE HAS CAREFULLY READ THIS RELEASE AND ACKNOWLEDGES THAT IT CONSTITUTES A GENERAL
RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS AGAINST THE COMPANY UNDER THE AGE DISCRIMINATION IN
EMPLOYMENT ACT. EXECUTIVE ACKNOWLEDGES THAT HE HAS HAD A FULL OPPORTUNITY TO CONSULT WITH AN
ATTORNEY OR OTHER ADVISOR OF HIS CHOOSING CONCERNING HIS EXECUTION OF THIS RELEASE AND THAT HE IS
SIGNING THIS RELEASE VOLUNTARILY AND WITH THE FULL INTENT OF RELEASING THE COMPANY FROM ALL SUCH
CLAIMS.

	 	 	 	 	 
	 

	 	EXECUTIVE:	 	 
	 
	 	 	 	 
	 

	 	 

	 	 

 

18exv10w59

Exhibit 10.59

Memorandum of Understanding

Concerning the Lease Agreement between

The University of Tennessee Research Foundation and GTx, Inc.

As Amended July 20, 2009

RECITALS

WHEREAS, The University of Tennessee Research Foundation (the “SUBLESSOR”) and The University
of Tennessee (the “LESSOR”) have entered into a Lease dated March 7, 2001, which was subsequently
amended by agreements dated April 1, 2005 and July 20, 2009 (the “Lease”); and

WHEREAS, the SUBLESSOR and GTx, Inc., a Delaware corporation (the “SUBLESSEE”), have entered
into a Sublease dated October 1, 2009 with the consent of LESSOR (the “Sublease”);

WHEREAS, the SUBLESSOR and SUBLESSEE desire to reduce the portion of the premises leased to
the SUBLESSEE and the Rent to be paid by SUBLESSEE to SUBLESSOR, as hereinafter described;

NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration set
forth herein, the parties agree as follows:

	 	1.	 	The leased premises described in the Sublease shall be reduced as of the Effective Date
from 71,754 square feet to 41,628 square feet as described below and shown on the Floor
Plans attached to and incorporated within this Memorandum as Exhibit A:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	CURRENT AND PROPOSED ALLOCATION OF SPACE	 
	 	 	Current Areas	 	 	Proposed New Areas	 
	Floor	 	SUBLESSOR	 	 	LESSOR	 	 	SUBLESSOR	 	 	LESSOR	 
	Basement
	 	 	5,238	 	 	 	 	 	 	 	4,732	 	 	 	0	 
	1st floor
	 	 	12,563	 	 	 	3,625	 	 	 	8,210	 	 	 	10,010	 
	2nd floor
	 	 	23,326	 	 	 	5,771	 	 	 	22,708	 	 	 	6,210	 
	3rd floor
	 	 	30,626	 	 	 	 	 	 	 	5,978	 	 	 	23,302	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Totals
	 	 	71,754	 	 	 	9,396	 	 	 	41,628	 	 	 	39,522	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	88	%	 	 	12	%	 	 	51	%	 	 	49	%

	 	2.	 	Pursuant to Section 2 of the Sublease, as of the Effective Date, the Rent SUBLESSEE
will continue to pay to SUBLESSOR for the reduced leased premises will be based on that
portion of the “actual cost of operations” (as defined in the Sublease) for the Premises
commensurate with the amount of space leased by SUBLESSEE. With the reduction of the
leased premises, as of the Effective Date, SUBLESSEE will pay as Rent to SUBLESSOR 50% of
the actual cost of operations of the Premises (which includes the building located on the
Premises).

 

 

 

	 	3.	 	This MOU is to become effective on May 1, 2011 (the “Effective Date”) and will continue
in effect through the end of the current Sublease term on December 31, 2012. If SUBLESSEE
determines to exercise any option to extend the Sublease, this MOU will continue in effect
for up to an additional five (5) months through April 30, 2013.

	 
	 	4.	 	This MOU can be canceled with 90 days advance written notice and acceptance by all
parties., in which event the lease premises will automatically return to the entire leased
premises described in the Sublease.

	 
	 	5.	 	All parties agree to respect the privacy and confidentiality of intellectual property
of each other as provided by Tennessee and federal law.

IN WITNESS WHEREOF, the SUBLESSEE and the SUBLESSEE have executed this Sublease in duplicate
on the date written below.

	 	 	 	 	 	 	 	 	 
	THE UNIVERSITY OF TENNESSEE	 	GTx, Inc.	 	 
	RESEARCH FOUNDATION	 	(SUBLESSEE)	 	 
	(SUBLESSOR)	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Richard Magid
 

Richard Magid
	 	By:
	 	/s/ Henry P. Doggrell
 

Henry P. Doggrell
	 	 
	 

	 	Vice President
	 	 	 	Vice President, General Counsel	 	 
	 
	 	 	 	 	 	 	 	 
	Date: 14 April 2011	 	Date: April 13, 2011	 	 
	 
	 	 	 	 	 	 	 	 
	THE UNIVERSITY OF TENNESSEE

(LESSOR)	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Chares M. Peccolo
 

Charles M. Peccolo
	 	 	 	 	 	 
	 

	 	Treasurer	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Date: April 19, 2011	 	 	 	 	 	 

 

 

 

Exhibit A

Floor Plans

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00193-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00193-of-00352.parquet"}]]