Document:

exv10w31

 

Exhibit 10.31

FIRST MERCURY HOLDINGS, INC.

RESTRICTED STOCK GRANT NOTICE AND AGREEMENT

This grant
of Restricted Stock is made this 4th day of October 2006 (“Award Date”), by First Mercury
Holdings, Inc. (the “Company”) to John A. Marazza (the “Grantee” or “you”).

WHEREAS, the grant is a special grant of First Mercury Holdings, Inc. Restricted Stock; and

WHEREAS, it is a condition to Grantee receiving the Restricted Stock that Grantee execute and
deliver to the Company an agreement evidencing the terms, conditions and restrictions applicable to
the Restricted Stock.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and
valuable consideration, the Company hereby awards Restricted Stock to Grantee on the terms and
conditions in this Restricted Stock Grant Notice and Agreement (this “Agreement”):

     1. Acceptance of Terms and Conditions. By signing and accepting this Agreement, you agree to
be bound by the terms and conditions herein, and understand that this grant does not confer any
legal or equitable right (other than those rights constituting the grant itself) against the
Company or any Subsidiary (together the “First Mercury Companies”) directly or indirectly, or give
rise to any cause of action at law or in equity against the Company.

     2. Award of Restricted Stock. The Company hereby grants to Grantee a total of fifty-two (52)
shares of Company common stock, par value $0.01 per share subject to the terms and conditions set
forth below (the “Restricted Stock”). The shares shall be issued from the Company’s available
treasury shares.

     3. Restrictions. The Restricted Stock is being awarded to Grantee subject to the transfer and
forfeiture conditions set forth below (the “Restrictions”) which shall lapse, if at all, as
described in Section 4 below.

     a. Grantee may not directly or indirectly, by operation of law or otherwise,
voluntarily or involuntarily, sell, assign, pledge, encumber, charge or otherwise transfer
any of the Restricted Stock still subject to Restrictions. The Restricted Stock shall be
forfeited if Grantee violates or attempts to violate these transfer restrictions.

     b. Any Restricted Stock still subject to the Restrictions shall be automatically
forfeited upon the Grantee’s voluntary termination of employment with Company or a
Subsidiary for any reason, other than death, Total and Permanent Disability, or Good Reason
(as defined in Grantee’s employment agreement with the Company). For purposes of this
Agreement, a “Subsidiary” is any corporation or other entity in which a 50 percent or
greater interest is held directly or indirectly by Company and which is consolidated for
financial reporting purposes. Total and Permanent Disability is defined in Section 4(a)
below.

The Company will not be obligated to pay Grantee any consideration whatsoever for forfeited
Restricted Stock.

     4. Lapse of Restrictions.

     a. The Restrictions applicable to 50% of the Restricted Stock granted pursuant to this
Agreement lapse on the Award Date.

     b. As long as the Restricted Stock has not been forfeited as described in Section 3
above, the Restrictions applicable to the remaining 50% of Restricted Stock shall lapse, as
follows:

 

 

     1. Restrictions applicable to 1.04167% of Restricted Stock shall lapse on the
first month anniversary of the Award Date and on each subsequent monthly anniversary
of the Award Date the until the Restrictions have lapsed relative to entire amount
of Restricted Stock granted under this Agreement.

     2. Restrictions applicable to the Restricted Stock shall lapse six (6) months
after the consummation of an Initial Public Offering or Change in Control of the
Company.

     For purposes of this Agreement “Change of Control” means: (A) upon the
acquisition by any individual, entity or group, including any Person, of beneficial
ownership (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of 35% or more of the combined voting power of the then outstanding
capital stock of the Company that by its terms may be voted on all matters submitted
to stockholders of the Company generally (“Voting Stock”); provided, however, that
the following acquisitions shall not constitute a Change in Control: (i) any
acquisition directly from the Company (excluding any acquisition resulting from the
exercise of a conversion or exchange privilege in respect of outstanding convertible
or exchangeable securities unless such outstanding convertible or exchangeable
securities were acquired directly from the Company); (ii) any acquisition by the
Company; (iii) any acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the Company;
or (iv) any acquisition by any corporation pursuant to a reorganization, merger or
consolidation involving the Company, if, immediately after such reorganization,
merger or consolidation, each of the conditions described in clauses (i), (ii) and
(iii) of subsection (B) below shall be satisfied; and provided further that, for
purposes of clause (ii) above, if (1) any Person (other than the Company or any
employee benefit plan (or related trust) sponsored or maintained by the Company or
any corporation controlled by the Company) shall become the beneficial owner of 35%
or more of the Voting Stock by reason of an acquisition of Voting Stock by the
Company, and (2) such Person shall, after such acquisition by the Company, become
the beneficial owner of any additional shares of the Voting Stock and such
beneficial ownership is publicly announced, then such additional beneficial
ownership shall constitute a Change in Control; (B) upon the consummation of a
reorganization, merger or consolidation of the Company, or a sale, lease, exchange
or other transfer of all or substantially all of the assets of the Company;
excluding, however, any such reorganization, merger, consolidation, sale, lease,
exchange or other transfer with respect to which, immediately after consummation of
such transaction: (i) all or substantially all of the beneficial owners of the
Voting Stock of the Company outstanding immediately prior to such transaction
continue to beneficially own, directly or indirectly (either by remaining
outstanding or by being converted into voting securities of the entity resulting
from such transaction), more than 65% of the combined voting power of the voting
securities of the entity resulting from such transaction (including, without
limitation, the Company or an entity which as a result of such transaction owns the
Company or all or substantially all of the Company’s property or assets, directly or
indirectly) (the “Resulting Entity”) outstanding immediately after such transaction,
in substantially the same proportions relative to each other as their ownership
immediately prior to such transaction; (ii) no Person (other than any Person that
beneficially owned, immediately prior to such reorganization, merger, consolidation,
sale or other disposition, directly or indirectly, Voting Stock representing 35% or
more of the combined voting power of the Company’s then outstanding securities)
beneficially owns, directly or indirectly, 35% or more of the combined voting power
of the then outstanding securities of the Resulting Entity; and (iii) at least a
majority of the members of the board of directors of the entity resulting from such
transaction were Continuing Directors of the Company at the time of

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the execution of the initial agreement or action of the Board authorizing such
reorganization, merger, consolidation, sale or other disposition; (C) upon the
approval of a plan of complete liquidation or dissolution of the Company; or (D)
when the Continuing Directors cease for any reason to constitute at least a majority
of the Board.

     For purposes of this Agreement, “Continuing Directors” means those
individuals initially appointed as the directors of the Company; provided,
however, that any individual who becomes a director of the Company at or
after the first annual meeting of stockholders of the Company whose
election, or nomination for election by the Company’s stockholders, was
approved by the vote of at least a majority of the directors then comprising
the Board (or by the nominating committee of the Board, if such committee is
comprised of Continuing Directors and has such authority) shall be deemed to
have been a Continuing Director; and provided further, that no individual
shall be deemed to be a Continuing Director if such individual initially was
elected as a director of the Company as a result of: (i) an actual or
threatened solicitation by a Person (other than the Board) made for the
purpose of opposing a solicitation by the Board with respect to the election
or removal of directors; or (ii) any other actual or threatened solicitation
of proxies or consents by or on behalf of any Person (other than the Board).

     3. Restrictions applicable to the Restricted Stock shall lapse upon termination
of Grantee’s employment by Company or a Subsidiary for any reason.

     c. If during the Restricted Period the Grantee takes a Leave of Absence from Company or
a Subsidiary, the Restricted Stock will continue to be subject to this Agreement. If the
Restricted Period expires while the Grantee is on a Leave of Absence the Grantee will be
entitled to the Restricted Stock even if the Grantee has not returned to active employment.
“Leave of Absence” means a leave of absence from Company or a Subsidiary that is not a
termination of employment, as determined by Company.

     5. Adjustments. If the number of outstanding shares of Company common stock is changed as a
result of a stock split or the like without additional consideration to the Company, the number of
Restricted Stock shares subject to this Agreement shall be adjusted to correspond to the change in
the outstanding shares of common stock.

     6. Voting and Dividends. Subject to the restrictions contained in Section 3 hereof, Grantee
shall have all rights of a stockholder of Company with respect to the Restricted Stock, including
the right to vote the shares of Restricted Stock and the right to receive any cash or stock
dividends payable with respect to Common Stock. Stock dividends issued with respect to the
Restricted Stock shall be treated as additional shares of Restricted Stock that are subject to the
same restrictions and other terms and conditions that apply to the shares with respect to which
such dividends are issued. If a dividend is paid in shares of stock of another company or in other
property, the Grantee will be credited with the number of shares of stock of that company or the
amount of property which the Grantee otherwise would have received as the owner of a number of
shares of Restricted Stock. The shares and property so credited will be subject to the same
Restrictions and other terms and conditions applicable to the Restricted Stock and will be paid out
in kind at the time the Restrictions lapse.

     7. Endorsement on Certificates. All certificates representing the Restricted Stock shall be
endorsed on the face thereof with the following legend:

“The shares of stock represented by this certificate and the transferability thereof are
restricted by and subject to a Restricted Stock Agreement dated
October 4, 2006, a copy of
which is on file with the Secretary of the Company.”

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Upon lapse of the Restrictions, the Grantee or his representative shall be entitled to have the
legend removed from certificates representing the Restricted Stock.

     8. Delivery of Certificates or Equivalent. Upon the lapse of Restrictions applicable to the
Restricted Stock, the Company shall, at its election, either (i) deliver to the Grantee a
certificate representing a number of shares of Common Stock equal to the number of shares of
Restricted Stock upon which such Restrictions have lapsed, or (ii) establish a brokerage account
for the Grantee and credit to that account the number of shares of Common Stock equal to the number
of shares of Restricted Stock upon which such Restrictions have lapsed.

     9. Withholding Taxes. The Company is entitled to withhold an amount equal to Company’s
required minimum statutory withholdings taxes for the respective tax jurisdiction attributable to
any share of Common Stock or property deliverable in connection with the Restricted Stock. Grantee
may satisfy any withholding obligation in whole or in part by electing to have Company retain
shares of the Restricted Stock having a fair market value on the date the Restrictions lapse equal
to the minimum amount required to be withheld.

     10. Public Offer Waiver. By voluntarily accepting this grant of Restricted Stock, you
acknowledge and understand that your rights under this Agreement are offered to you strictly as an
employee of the First Mercury Companies and that this grant of Restricted Stock is not an offer of
securities made to the general public.

     11. No Rights to Continued Employment. By voluntarily acknowledging and accepting this grant
of Restricted Stock, you acknowledge and understand that this grant shall not form part of any
contract of employment between you and any of the First Mercury Companies. Nothing in this
Agreement, confers on the Grantee any right to continue in the employ of the First Mercury
Companies or in any way affects the First Mercury Companies’ right to terminate the Grantee’s
employment without prior notice at any time or for any reason. You further acknowledge that this
grant of Restricted Stock is for future services to the First Mercury Companies and is not under
any circumstances to be considered compensation for past services.

     12. Miscellaneous.

     a. Governing Law. All matters regarding or affecting the relationship of the Company
and its stockholders shall be governed by the General Corporation Law of the State of
Delaware. All other matters arising under this Agreement including matters of validity,
construction and interpretation, shall be governed by the internal laws of the State of
Michigan, without regard to any state’s conflict of law principles. You and the Company
agree that all claims in respect of any action or proceeding arising out of or relating to
this Agreement shall be heard or determined in any state or federal court sitting in
Michigan, and you agree to submit to the jurisdiction of such courts, to bring all such
actions or proceedings in such courts and to waive any defense of inconvenient forum to such
actions or proceedings. A final judgment in any action or proceeding so brought shall be
conclusive and may be enforced in any manner provided by law.

     b. Successors and Assigns. Except as otherwise provided herein, this Agreement will
bind and inure to the benefit of the respective successors and permitted assigns of the
parties hereto whether so expressed or not.

     c. Waiver. The failure of the Company to enforce at any time any provision of this
grant shall in no way be construed to be a waiver of such provision or any other provision
hereof.

     d. Severability. Whenever feasible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of this Agreement.

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IN WITNESS WHEREOF, the Company has executed this Agreement in duplicate as of day and year first
above written.

	 	 	 	 	 
	 	FIRST MERCURY HOLDINGS, INC.

 	 
	 	By:  	Richard H. Smith  	
	 	 	Name     Richard H. Smith 

	 
	 	Its: 
	President
& CEO 	 
	 

The undersigned Grantee hereby accepts, and agrees to, all terms and provisions of the foregoing
Agreement. If you do not sign and return this Agreement you will not be entitled to the Restricted
Stock.

	 	 	 	 	 
	 	 	 
	/s/
John A. Marazza 	 	 	 	 
	Signature of Grantee 	 	 
	 	 	 
	 
	John A. Marazza
 	 	 	 	 
	Name of Grantee 	 	 
	 	 	 
	 	 	 
	 	 	 
	 

5exv10w32

 

Exhibit 10.32

AMENDED AND RESTATED MANAGEMENT AGREEMENT

by and between

FIRST MERCURY FINANCIAL CORPORATION

(“Mercury”)

and

FIRST HOME INSURANCE AGENCY, LLC

(the “Company”)

 

October 3, 2006

 

 

 

     THIS AGREEMENT is made as of the 3rd day of October 2006 (the “Agreement”) by and
between FIRST MERCURY FINANCIAL CORPORATION, a Delaware corporation (“Mercury”), and FIRST HOME
INSURANCE AGENCY, LLC, a Florida limited liability company (the “Company”). This Agreement amends
and restates the original Management Agreement between the parties in its entirety (the “Original
Agreement”).

     WHEREAS, the Company is the Managing General Agent for FIRST HOME INSURANCE COMPANY (“Home”);

     WHEREAS, Mercury has expertise and experience in performing certain executive management
services including but not limited to marketing, claims analysis, supervisory accounting,
information services, product and underwriting development and management, regulatory compliance,
human resource benefits and technology services, and is willing to render those services to the
Company in connection with the Company’s role as the Managing General Agent for Home;

     WHEREAS, the Company is contemporaneously contracting with Home to perform certain policy
administration, underwriting, and processing management services on behalf of the Company in
connection with the Company’s role as the Managing General Agent for Home (the “Managing Agency
Agreement”);

     WHEREAS, the Company is contemporaneously contracting with insurance NCA Group to perform
claims administration services on behalf of the Company in connection with the Company’s role as
the Managing General Agent for Home (the “Claims Administration Agreement”);

     NOW THEREFORE, in consideration of the mutual representations, warranties, covenants and
agreements, and upon the terms and subject to the conditions hereinafter set forth, the parties do
hereby agree as follows:

	I.	 	THE TERM OF AGREEMENT. The initial term of this Agreement (the “Initial Term”) shall be the
period commencing on the date of the Original Agreement and ending May 31, 2008, unless
earlier terminated pursuant to the provisions of Paragraph VIII of this Agreement.
	 
	II.	 	TERRITORY AND EXCLUSIVITY. This Agreement shall cover all services encompassed by this
Agreement in any and all states in which the Company and Home are authorized to write
business.
	 
	III.	 	SERVICES AND AUTHORITIES. Subject to the limitations contained in this Agreement, the
Company hereby appoints Mercury as its management and administrative provider to provide the
Company with the following services (the “Services”):

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	 	A.	 	Perform regulatory and governmental compliance services related to the business of
the Company, with the exception of those functions delegated to Company pursuant to the
Managing Agency Contract or to NCA Group pursuant to the Claims Administration Agreement;
	 
	 	B.	 	Develop, foster, enhance, administer, and otherwise manage all vendor and other third
party relationships, including but not limited to marketing relationships, claims
processing relationships, accounting and auditing relationships, information services
relationships, underwriting development and management relationships, and catastrophe
risk management relationships;
	 
	 	C.	 	Market and develop the business of the Company and Home, including, without
limitation, marketing and developing customer, agent, policyholder, and other third party
relationships and prospective relationships;
	 
	 	D.	 	Research, develop and implement business plans and strategies for the maintenance,
expansion and growth of the business of the Company and Home in the State of Florida and
elsewhere;
	 
	 	E.	 	Perform all other management services related in any way to the business of the
Company and Home, with the exception of those services delegated to Company pursuant to
the Managing Agency Agreement, to NCA Group pursuant to the Claims Administration
Agreement , and to First Home Financial Corporation pursuant to the Service Agreement with
the Company;
	 
	 	F.	 	Perform supervisory services related to management, marketing, claims processing,
accounting and auditing, information services, policy, product and underwriting
development and management;
	 
	 	G.	 	Perform oversight on behalf of the Company’s manager and to assist the Company in
implementing the manager’s resolutions, wishes intentions and goals; and
	 
	 	H.	 	Perform such other services as may hereafter become necessary to as agreed to by the
parties.

	IV.	 	MERCURY’S DUTIES AND RESPONSIBILITIES. Mercury hereby accepts its appointment as the
Company’s management and administrative provider and agrees to perform the Services to the
best of its professional knowledge, skill and judgment, and in accordance with the level of
care required of a professional manager in such business. In addition:

	 	A.	 	Mercury shall dedicate sufficient human, equipment and computer resources reasonably
necessary to provide the Company with the Services.
	 
	 	B.	 	Mercury shall designate an individual to act as a liaison with the Company to
facilitate the provisions of the Services. The Company acknowledges that this person shall
not have the authority to amend this Agreement in any way.

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	 	C.	 	Company acknowledges that Mercury shall not be responsible for Home’s obligations and
duties as an insurance company. Mercury shall use commercially reasonable efforts to
comply with all applicable rules and regulations promulgated by the Department of Insurance
in the States to which this Agreement applies and as instructed by Home.
	 
	 	D.	 	Mercury agrees to pay all tariffs and taxes properly levied against it as a result of
its performance hereunder. This includes, but is not limited to, sales, use,
excise, gross receipt, personal property and income taxes.
	 
	 	E.	 	Mercury agrees to keep private and confidential and not to disclose to any person
whomsoever or use in a competitive manner “Confidential Information and Trade Secrets” (as
defined hereinafter) during the term of this Agreement and thereafter except:

	 	1.	 	as expressly permitted by this Agreement or as otherwise permitted in writing;
	 
	 	2.	 	in connection with enforcement of the terms of this Agreement as may be
required by law by an arbitration panel, or by a court of competent jurisdiction,
	 
	 	3.	 	as required by any governmental or regulatory body having jurisdiction; and
	 
	 	4.	 	for the purposes of professional advice from Mercury’s accountants and
attorneys under a like duty of confidentiality.

	 	F.	 	“Confidential Information and Trade Secrets” means:

	 	1.	 	all insureds’ non-public personal information, including but not limited to,
any data provided by a consumer for the purpose of obtaining insurance coverage or
information obtained by Home in connection with the provision of insurance products
or services;
	 
	 	2.	 	all information contained in the records generated in connection with the
business of the Company and statistical information derived therefrom;
	 
	 	3.	 	all information coming into the possession of Mercury in the course of
providing the Services hereunder; and
	 
	 	4.	 	the terms of this Agreement.
	 
	 	5.	 	“Confidential Information and Trade Secrets” does not include information
which is in the public domain, or which comes into the public domain through no fault
of Mercury or which is disclosed to the Company by Mercury.

	 	G.	 	Mercury’s expenses including, but not limited to, it’s office rent; transportation;
salaries; utilities; furniture; fixtures; equipment; telephone; attorney or other legal
fees; postage; promotional advertising and public relations expenses; printing costs of
proposals, notices, records, reports and any other documents required to fulfill the
obligations of Mercury under this Agreement; shall be reimbursed by the Company in
accordance with Schedule A attached to this Agreement.

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	 	H.	 	Mercury shall maintain, as a part of its record keeping responsibilities, all records,
data, information and documents related to the Services, including, but not limited to,
true and complete contracts and records of all transactions and correspondence with
vendors, agencies, departments, reinsurers and Company.
	 
	 	I.	 	Ownership of Information. The Company shall be the owner, and the only entity with
rights to exploit, Confidential Information and Trade Secrets. Nothing in this Agreement
shall be construed as an assignment or license to utilize Confidential Information and
Trade Secrets.

	V.	 	COMPANY’S DUTIES AND RESPONSIBILITIES:

	 	A.	 	Company acknowledges and agrees that Mercury assumes no insurance or credit risk for
any of Home’s or Company’s policyholders/insureds/agents or any of the parties named in
this Agreement.
	 
	 	B.	 	Company shall, with respect to any Services requiring Company’s approval or action,
issue such approval or disapproval within commercially reasonable time periods.
	 
	 	C.	 	Company shall designate an individual to act as a liaison with Mercury to facilitate
the provision of the Services. Mercury acknowledges that this person shall not have the
authority to amend this Agreement in any way without express written authorization from the
Company.
	 
	 	D.	 	Company shall, at periodic intervals, review its business plans or other such items
that may require a change in the Services and notify Mercury of same.
	 
	 	E.	 	Each party shall be responsible for any taxes, tariffs, levies and assessments properly
levied against such party.

	VI.	 	MANAGEMENT FEE AND EXPENSE SCHEDULE:
	 
	 	 	Mercury shall be compensated by the Company for the Services rendered by Mercury in
accordance with Schedule A attached hereto. Any amounts due Mercury shall be paid by the
Company on a monthly basis and such amounts will be due and payable 30 days after receipt of
an invoice from Mercury. The fee for additional services, lines of business, and/or states
shall be reasonably negotiated between the parties.
	 
	VII.	 	OFFSET:
	 
	 	 	All amounts due Mercury or the Company under this or any other agreement between the
parties shall be subject to a right of bona fide documented offset.

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	VIII.	 	TERMINATION OF AGREEMENT.

	 	A.	 	Termination. After the Initial Term, this Agreement shall automatically renew for
successive one year terms unless either party gives written notice of termination to the
other at least 90 days before the end of the then current term.
	 
	 	B.	 	Termination for Cause. At anytime, either party may terminate this Agreement upon the
occurrence of a material breach by the other party; provided, however, if
the material breach: (a) relates to a monetary provision or obligation, the breaching party
shall have ten (10) business days after the receipt of written notice thereof from the
other party within which to cure such monetary breach; or (b) relates to a non-monetary
provision or obligation, the breaching party shall have forty-five (45) days after the
receipt of written notice thereof from the other party within which to cure such
non-monetary breach. Such termination shall be effective as of the end of the calendar
month following the applicable cure period.
	 
	 	C.	 	Termination by Company. Notwithstanding the foregoing, the Company may immediately
terminate, upon delivery of written notice to terminate to Mercury, this Agreement for the
following reasons:

	 	1.	 	Mercury becomes insolvent, institutes or acquiesces in the
institution of any bankruptcy, financial reorganization, or liquidation proceeding
or any such proceeding is instituted against Mercury and remains undismissed for
thirty (30) days (Mercury shall immediately notify Company of same); or
	 
	 	2.	 	the consummation of any transaction or series of related transactions
which results in (a) more than 50% of the voting power of Mercury (or of the
direct or indirect owner of a controlling interest in Mercury) being sold,
transferred, assigned, pledged or otherwise disposed of to any unaffiliated third
party, (b) the consolidation, merger or other business combination of Mercury (or
of the direct or indirect owner of a controlling interest in Mercury) with or into
any other entity whereby the shareholders of Mercury (or the equity owners of the
direct or indirect owner of a controlling interest in Mercury, as the case may be)
prior to the transaction do not have 50% or more of the voting power of the
survivor, or (c) the sale, transfer, assignment, pledge or other disposition of
substantially all of the assets of Mercury (or of the direct or indirect owner of
a controlling interest in Mercury) to any unaffiliated third party; or
	 
	 	3.	 	Mercury fails to maintain funds in the amount and manner required in
this Agreement; or
	 
	 	4.	 	Mercury engages in acts or omissions constituting abandonment, fraud,
insolvency, misappropriation of funds, material misrepresentation, or gross and
willful misconduct: or
	 
	 	5.	 	Mercury fails to permit Company to inspect or audit any records or
files relating to

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	 	 	 	the Services within ten (10) business days of its receipt of written notice from
Company requesting such inspection or audit.

	 	D.	 	Termination by Mercury. Notwithstanding the foregoing, Mercury may immediately, unless
otherwise indicated, upon written notice terminate this Agreement in whole or in part, for
cause, which shall include, the following:

	 	1.	 	Company, becomes insolvent, institutes or acquiesces in the
institution of any bankruptcy, financial reorganization, or liquidation proceeding
or any such proceeding is instituted against Company or its parent corporation and
remains undismissed for thirty (30) days (Company shall immediately notify Mercury
of same); or
	 
	 	2.	 	the consummation of any transaction or series of related transactions
which results in (a) more than 50% of the voting power of Company (or of the
direct or indirect owner of a controlling interest in Company) being sold,
transferred, assigned, pledged or otherwise disposed of to any unaffiliated third
party, (b) the consolidation, merger or other business combination of Mercury (or
of the direct or indirect owner of a controlling interest in Mercury) with or into
any other entity whereby the members of Company (or the equity owners of the
direct or indirect owner of a controlling interest in Company, as the case may be)
prior to the transaction do not have 50% or more of the voting power of the
survivor, or (c) the sale, transfer, assignment, pledge or other disposition of
substantially all of the assets of Company (or of the direct or indirect owner of
a controlling interest in Company) to any unaffiliated third party; or
	 
	 	3.	 	Company engages in acts or omissions constituting abandonment, fraud,
insolvency, misappropriation of funds, material misrepresentation, or gross and
willful misconduct; or
	 
	 	4.	 	Company’s necessary license(s) is canceled, suspended, or is declined
renewal by any regulatory body within the Territory where Company renders the
services hereunder if, after (90) days, Company fails to remedy such loss of
license (Company shall immediately notify Mercury of same); or
	 
	 	5.	 	Company fails to permit Mercury to inspect or audit any records or
files relating to the services rendered hereunder within ten (10) business days of
its receipt of written notice from Mercury requesting such inspection or audit.

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	IX.	 	CONTINUING DUTIES OF MERCURY AFTER TERMINATION

	 	A.	 	If the Company terminates this Agreement, Mercury will perform all of the duties
necessary for the proper servicing of all policies bound or written under this Agreement
until all those policies shall have expired or been terminated.
	 
	 	B.	 	So long as Mercury continues to perform duties in accordance with this article, Mercury
shall continue to receive compensation based upon the policies which continue to be
serviced hereunder as set forth in Schedule A.
	 
	 	C.	 	If the Company terminates this Agreement, the Company may elect to assume or
assign the responsibilities of Mercury under this Agreement at the Company’s expense. If
so elected, Mercury will cooperate fully with Company and, at the reasonable expense of the
Company, promptly return all files and other necessary information and perform other
services reasonably requested by the Company.

	X.	 	COMPLIANCE WITH REGULATORY REQUIREMENTS.
	 
	 	 	Each party shall have the responsibility to observe and comply with all laws or
regulations of any federal, state or local government of every jurisdiction in which such
party is doing business. It is understood and agreed that Mercury or the Company shall be
responsible for their respective appropriate filings as required by state regulators.
	 
	XI.	 	INDEMNIFICATION.

	 	A.	 	Mercury. Mercury shall indemnify and hold the Company, its affiliates, and
their respective officers, directors, managers, members, shareholders, employees, agents
and representatives (collectively, the “Company Indemnitees”) harmless from and against all
claims, losses, damages, liabilities, judgments or settlements, including reasonable costs,
expenses and attorney’s fees, arising out of the relationship of the parties under the
terms of this Agreement caused by any Mercury act, error or omission, except to the extent
the Company Indemnitees caused, contributed to or compounded such act, error or omission.
	 
	 	B.	 	The Company. The Company shall indemnify and hold Mercury, its affiliates, and
their respective officers, directors, managers, members, shareholders, employees, agents
and representatives (collectively, the “Mercury Indemnitees”) harmless from and against all
claims, losses, damages, liabilities, judgments or settlements, including reasonable costs,
expenses and attorney’s fees, arising out of the relationship of the parties under the
terms of this Agreement caused by any Company act, error or omission, except to the extent
Mercury Indemnitees caused, contributed to or compounded such act, error or omission.

-7-

 

	 	C.	 	Contributory Negligence. In the case of contributory negligence on the part of
either party, the damages shall be shared proportionately based upon the parties’ acts in
the error or judgment.

	XII.	 	GENERAL.

	 	A.	 	Entire Agreement. This Agreement constitutes the sole understanding of the parties
with respect to the subject matter hereof. No amendment, modification or alteration of the
terms or provisions of this Agreement shall be binding unless the same shall be in writing
and duly executed by the parties hereto.
	 
	 	B.	 	Parties Bound by Agreement; Successors and Assigns. The terms, conditions and
obligations of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns. Without the prior written consent of
the Company, Mercury may not assign or delegate its rights, duties or obligations hereunder
or any part thereof to any other person or entity, which consent shall not be unreasonably
withheld.
	 
	 	C.	 	Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall for all purposes be deemed to be an original and all of which shall constitute
the same instrument.
	 
	 	D.	 	Business Data. Company and Mercury expressly agree that the business data generated
and/or maintained under this Agreement shall be and remain the sole property of the
Company.
	 
	 	E.	 	Headings. The headings of Articles, Sections and paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this Agreement
or to affect the construction hereof.
	 
	 	F.	 	Modification and Waiver. Any of the terms or conditions of this Agreement may be waived
in writing at any time by the party which is entitled to the benefits
thereof. No
waiver of any of the provisions of this Agreement shall be deemed to or shall constitute a
waiver of any other provision hereof (whether or not similar).
	 
	 	G.	 	Notices. Any notice, request, instruction or other document to be given hereunder by any
party hereto to any other party hereto shall be in writing and delivered personally or by
telecopy transmission or sent by registered or certified mail or by any express mail
service, postage or fees prepaid. This does not include the monthly reporting and monthly
accounting activity documentation. In addition, it does not apply to items in the normal
course of business.

-8-

 

	 	H.	 	GOVERNING LAW; CONSTRUCTION. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF FLORIDA WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICTS OF LAW THEREOF. NO PROVISION OF THIS AGREEMENT OR ANY RELATED DOCUMENT SHALL BE
CONSTRUED AGAINST OR INTERPRETED TO THE DISADVANTAGE OF ANY PARTY HERETO BY ANY COURT OR
OTHER GOVERNMENTAL OR JUDICIAL AUTHORITY BY REASON OF SUCH PARTY’S HAVING OR BEING DEEMED TO
HAVE STRUCTURED OR DRAFTED SUCH PROVISION.

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

-9-

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Management Agreement to be executed
on its behalf on the date indicated.

MERCURY:

FIRST MERCURY FINANCIAL CORPORATION

	 	 	 	 	 
	By:

	 	/s/ Richard H. Smith 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Name:
	 	Richard H. Smith 	 	 
	 

	 	 	 	 
	Title:
	 	President & CEO 	 	 
	 

	 	 	 	 

THE COMPANY:

FIRST HOME INSURANCE AGENCY, LLC

	 	 	 	 	 
	By:

	 	/s/ G. Douglas Patterson 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Name:
	 	G. Douglas Patterson 	 	 
	 

	 	 	 	 
	Title:
	 	An Authorized Person 	 	 
	 

	 	 	 	 

 

Schedule A

to the

MANAGEMENT AGREEMENT

by and between

FIRST MERCURY FINANCIAL CORPORATION

(“Mercury”)

And

FIRST HOME INSURANCE AGENCY, LLC.

(the “Company”)

	I.	 	Executive Management Fee:
	 
	 	 	In full payment for the faithful performance of all services rendered by Mercury under the
terms of this Agreement, the Company agrees to allow Mercury a fee of up to 1.5% of the
Direct Written Premium (as defined below) associated with the policies to be serviced in
accordance with this Agreement for systems and all expenses associated with these systems,
provided that the actual fee, if any, must be agreed by the parties from time to time in
writing. “Direct Written Premium” is defined as direct written premium from policies
issued plus additional premium for endorsements, less return premium for endorsements and
cancellations. Any amounts due Mercury shall be paid by the Company on a monthly basis
within 30 days after the end of the month in which the premium was written. These payments
shall be adjusted when the Company’s annual Direct Written Premium is determined and
identified on the Company’s annual report filed with the Florida Department of Financial
Services. Any balance due from these adjustments shall be paid to the other party no later
than March 15th of the year in which such annual report is due and filed.
	 
	II.	 	Management Fee Adjustments:
	 
	 	 	In the event any legislative or regulatory body amends the law or issues an order which
significantly alters the responsibilities described in this Schedule A, Mercury and the
Company will be permitted to adjust compensation hereunder to account for the additional or
reduced expenses and or services associated with the change. Likewise, if the Company
alters Mercury’s responsibilities under this Agreement, Mercury and Company will be
permitted to adjust their compensation to account for the additional or reduced expenses and
or services associated with the change.

 

 

	III.	 	Expenses:
	 
	 	 	In consideration of the facilities and other general overhead resources made available by Mercury
and utilized by the Company, other than the facilities and overhead resources associated with all
computer and processing systems and all expenses associated with systems, the Company shall pay to
Mercury an amount equal to the actual cost of such facilities and overhead resources. The actual
cost of all such facilities and overhead resources shall be determined in accordance with generally
accepted accounting principles. Any amounts due Mercury shall be paid by the Company on a monthly
basis within 30 days after the end of the month in which the expenses are billed by Mercury to the
Company.

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