Document:

Exhibit 10.5

 

Palomar Insurance Holdings, Inc.
 c/o Genstar Capital
 Four Embarcadero Center
 Suite 1900
 San Francisco, CA 94111-4191

 

April 15, 2014

 

Jon M. Christianson
 7575 Eads Avenue, Unit 207
 La Jolla, CA 92037

 

Dear Jon:

 

This letter (the “Agreement”) will confirm our offer to you of employment with Palomar Insurance Holdings, Inc.  (the “Company”), under the terms and conditions that follow.

 

1.                                      Position and Duties; Term.

 

(a)                                 The initial term of this Agreement shall be four (4) years from the date hereof (the “Initial Term”), unless otherwise terminated pursuant to Section 4 hereof.  This Agreement shall automatically renew for successive one (1) year terms (each such renewal term, a “Renewal Term”) unless otherwise terminated pursuant to Section 4 hereof or either party hereto gives written notice of its or his intent not to renew this Agreement at least sixty (60) days prior to the expiration of the then-current term.  The Executive’s continued employment during any Renewal Term shall be in accordance with and governed by this Agreement, unless modified by the parties hereto in writing.  The Initial Term and the Renewal Term are collectively referred to herein as the “Term.”

 

(b)                                 During the Term, you will be employed by the Company, on a full-time basis, as its Chief Operating Officer.  In addition, you may be asked from time to time to serve as a director or officer of one or more of the Company’s controlled Affiliates, without further compensation.

 

(c)                                  During the Term, you agree to perform the duties of your position that may be lawfully and reasonably assigned to you from time to time by the Chief Executive Officer.  You will report to the Chief Executive Officer.  You also agree that, while employed by the Company, you will devote your full business time and your reasonable best efforts and business judgment exclusively to the advancement of the business interests of the Company and its Affiliates and to the discharge of your duties and responsibilities for them.

 

 

(d)                                 Notwithstanding the restrictions set forth in Section 1(b), you shall be entitled to serve on non-for-profit boards and volunteer in various civic and charitable activities, so long as such activities do not interfere with the faithful performance of your duties and obligations under this Agreement, including, for the avoidance of doubt, the restrictions set forth in Section 3 hereof.

 

2.                                      Compensation and Benefits.  During the Term, as compensation for all services performed by you for the Company and its Affiliates, the Company will provide you the following pay and benefits:

 

(a)                                 Base Salary.  The Company will pay you a base salary (“Base Salary”) at the rate of $260,000 per year, payable in accordance with the regular payroll practices of the Company and subject to increase from time to time by the Board of Directors of the Company (the “Board”) in its discretion.

 

(b)                                 Bonus Compensation.  Upon the Company attaining $50,000,000 in gross written premiums and for each fiscal year completed during your employment under this Agreement thereafter, you will be eligible to earn an annual bonus based upon your performance and that of the Company against goals established by the Board after consultation with you (the “Annual Bonus”).  The amount of the Annual Bonus that you will be eligible to earn during each fiscal year during the Term and the criteria for the Annual Bonus will be established by the Board (or the Compensation Committee thereof).  The bonus plan structure of the Company will offer the potential for an Annual Bonus in excess of the target amount based on the Company’s achievement of financial performance above the annual budgeted target.  The bonus plan structure of the Company will be established each year by the Board (or the Compensation Committee thereof) in conjunction with the annual budgeting process.  You must be employed on December 31st of the fiscal year in which an Annual Bonus is earned in order to be eligible for payment of such Annual Bonus.  The Annual Bonus shall be paid by the Company to you between January 1 and December 31 following the conclusion of the fiscal year for which the Annual Bonus is earned, and in no event later than thirty (30) days after the completion and delivery to the Company of the audited financial statements for the fiscal year in which the Annual Bonus was earned.

 

(c)                                  Participation in Employee Benefit Plans.  During the Term, you will be eligible to participate in all employee benefit plans from time to time in effect for employees of the Company generally, except to the extent such plans are duplicative of benefits otherwise provided you under this Agreement (e.g., a severance pay plan).  Your participation will be subject to the terms of the applicable plan documents and generally applicable Company policies.  You will have no recourse against either the Company or any Affiliate under this Agreement in the event that the Company should alter, modify, add to or eliminate any employee benefit plans.

 

(d)                                 Paid Time Off.  During the Term, you will be entitled to four (4) weeks of vacation, in addition to holidays observed by the Company.  Vacation may be taken at such times and intervals as you shall determine, subject to the business needs of the Company.

 

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Unused vacation may be accrued and carried over from one year to the next; provided that no more than ten (10) days may be carried over in any year.  Vacation shall otherwise be subject to the policies of the Company, as in effect from time to time.

 

(e)                                  Business Expenses.  During the Term, the Company will pay or reimburse you promptly for all reasonable business expenses incurred or paid by you in the performance of your duties and responsibilities for the Company subject to any restrictions on such expenses set by the Company and to such reasonable substantiation and documentation as may be specified by the Company from time to time.  Your right to reimbursement for business expenses shall be subject to the following additional rules:  (i) the amount of expenses eligible for reimbursement during any calendar year shall not affect the expenses eligible for reimbursement in any other taxable year, (ii) reimbursement shall be made promptly, but in no event later than December 31 of the calendar year following the calendar year in which the expense was incurred, and (iii) the right to reimbursement is not subject to liquidation or exchange for any other benefit.

 

3.                                      Confidential Information and Restricted Activities.

 

(a)                                 Confidential Information.  During the Term, you will learn of Confidential Information, as defined below, and you may develop Confidential Information on behalf of the Company and its Affiliates.  You agree that you will not use or disclose to any Person (except as required by applicable law or for the good faith performance of your duties and responsibilities for the Company) any Confidential Information obtained by you incident to your employment with the Company or any of its Affiliates.  You agree that this restriction shall continue to apply after your employment terminates, regardless of the reason for such termination.

 

(b)                                 Protection of Documents.  All documents, records and files, in any media of whatever kind and description, relating to the business, present or otherwise, of the Company or any of its Affiliates, and any copies, in whole or in part, thereof (the “Documents”), whether or not prepared by you, shall be the sole and exclusive property of the Company.  You agree to use reasonable best efforts safeguard all Documents and to surrender to the Company, at the time your employment terminates or at such earlier time or times as the Board or its designee may specify, all Documents then in your possession or control.

 

(c)                                  Assignment of Rights to Intellectual Property.  You shall promptly and fully disclose all Intellectual Property to the Company.  You hereby assign and agree to assign to the Company (or as otherwise directed by the Company) your full right, title and interest in and to all Intellectual Property.  You agree to execute any and all applications for domestic and foreign patents, copyrights or other proprietary rights and to do such other acts (including without limitation the execution and delivery of instruments of further assurance or confirmation) requested by the Company to assign the Intellectual Property to the Company and to permit the Company to enforce any patents, copyrights or other proprietary rights to the Intellectual Property.  You will not charge the Company for time spent in complying with these obligations.  All copyrightable works that you create during

 

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the Term shall be considered “work made for hire” and shall, upon creation, be owned exclusively by the Company.

 

(d)                                 Non-Solicitation.  You acknowledge that, during the Term, you will have access to Confidential Information and trade secrets which, if disclosed, would assist in interference with the Company and its Affiliates, and that you will also generate good will for the Company and its Affiliates.  Therefore, you agree that the following restrictions on your activities during and after the termination of your employment are necessary to protect the good will, Confidential Information and trade secrets of the Company and its Affiliates.

 

(i)                                     You agree that during the Restricted Period you will not, directly or through any other Person, hire or solicit for hiring any employee of the Company or any of its Affiliates or seek to persuade any employee of the Company or any of its Affiliates to discontinue his/her employment.

 

(ii)                                  You agree that, during the Restricted Period, you will not disparage or criticize the Company, its Affiliates, their business, their management or their products or services.  Nothing in this paragraph shall preclude you from (a) giving truthful testimony under oath in response to a subpoena or other lawful process or in connection with enforcing any rights or defending any claims hereunder or (b) giving truthful answers in response to an order or directive of a governmental agency or regulatory organization.

 

(iii)                               You agree that during the Restricted Period you will not, directly or through any other Person, solicit or encourage any customer or prospective customer of the Company or any of its Affiliates or any independent contractor providing services to the Company or any of its Affiliates to terminate or diminish its relationship with them.

 

(iv)                              For purpose of your obligations hereunder after your employment terminates, an employee, independent contractor, customer, and/or prospective customer includes only those who are such on the date your employment terminates or at any time during the preceding six (6) months.

 

(v)                                 The term “Restricted Period” means the period during which you are employed by the Company and the twenty-four (24) month period immediately following termination of your employment, regardless of the reason therefor.

 

(e)                                  In signing this Agreement, you give the Company assurance that you have carefully read and considered all the terms and conditions of this Agreement, including the restraints imposed on you under this Section 3.  You agree without reservation that these restraints are necessary for the reasonable and proper protection of the Company and its Affiliates, and that each and every one of the restraints is reasonable in respect to subject matter, length of time and geographic area.  You further agree that, were you to breach any of the covenants contained in this Section 3, the damage to the Company and its Affiliates would be irreparable.  You therefore agree that the Company, in addition to any other

 

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remedies available to it, shall be entitled to preliminary and permanent injunctive relief against any breach or threatened breach by you of any of those covenants without having to post bond and will additionally be entitled to an award of its attorney’s fees.  So that the Company may enjoy the full benefit of the covenants contained in this Section 3, you further agree that the Restricted Period shall be told, and shall not run, during the period of any breach by you of any of the covenants contained in this Section 3.  You and the Company further agree that, in the event that any provision of this Section 3 is determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a time, too large a geographic area or too great a range of activities, the court shall be authorized to delete overbroad language from, or otherwise modify the language of, such provision to permit its enforcement to the maximum extent permitted by law.  It is also agreed that each of the Company’s Affiliates shall have the right to enforce all of your obligations to that Affiliate under this Agreement, including without limitation pursuant to this Section 3.  Finally, except as otherwise expressly set forth herein, no claimed breach of this Agreement or other violation of law attributed to the Company or change in the nature or scope of your employment shall operate to excuse you from the performance of your obligations under this Section 3.

 

4.                                      Termination of Employment.  Your employment hereunder shall terminate prior to the expiration of the Term under the following circumstances:

 

(a)                                 The Company may terminate your employment for cause upon written notice to you setting forth in reasonable detail the nature of the cause.  The following, as determined in good faith by the Board, shall constitute cause for termination:  (i) your refusal or failure to perform (other than by reason of disability), or your material negligence in the performance of your duties and responsibilities to the Company or any of its Affiliates, or your refusal or failure to follow or carry out any reasonable direction of the Board, which refusal, failure or negligence, if susceptible of cure, remains uncured or continues or recurs ten (10) days after written notice from the Company specifying in reasonable detail the nature of such breach, (ii) your material breach of any policy of the Company or its Affiliates or any provision of any agreement to which you and the Company or any of its Affiliates are party, which breach, if susceptible of cure, remains uncured or continues or recurs ten (10) days after written notice from the Company specifying in reasonable detail the nature of such breach (provided that any material breach of any of the terms of Section 3 of this Agreement shall be deemed not susceptible of cure), (iii) commission by you of fraud, embezzlement or theft; (iv) commission by you of any felony or any other crime involving dishonesty or moral turpitude; and (v) any other conduct that involves a breach of fiduciary obligation or otherwise could reasonably be expected to have a material adverse effect upon the business, interests or reputation of the Company or any of its Affiliates, which breach, if susceptible of cure, remains uncured or continues or recurs ten (10) days after written notice from the Company specifying in reasonable detail the nature of such breach.

 

(b)                                 The Company may terminate your employment at any time other than for cause upon written notice to you.

 

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(c)                                  You may terminate your employment at any time upon thirty (30) days’ written notice to the Company.  The Board may elect to waive such notice period or any portion thereof; but in that event, the Company shall pay you your Base Salary (at the rate then in effect) for that portion of the notice period so waived.

 

(d)                                 You may terminate your employment with the Company for Good Reason (as defined below) by (i) providing written notice thereof to the Company no later than (30) days following the occurrence of the condition giving rise to Good Reason, which notice shall set forth in reasonable detail the nature of the facts and circumstances which constitute Good Reason, (ii) providing the Company a period of thirty (30) days after receipt of such resignation notice to remedy the condition which constitutes Good Reason and (iii) terminating your employment for Good Reason within thirty (30) days following the expiration of the period to remedy if the Company fails to remedy the condition.  For purposes of this Agreement, “Good Reason” shall mean, in each case without your consent, (i) a material diminution in your authority, duties or responsibilities, (iii) a material diminution in your Base Salary or target Annual Bonus opportunity, (iv) a requirement that you relocate your principal place of employment to a location more than twenty-five (25) miles from its location as of the date hereof or (v) a material breach of this Agreement by the Company.

 

(e)                                  This Agreement shall automatically terminate in the event of your death during the Term.  In the event you become disabled during the Term and, as a result, are unable to continue to perform substantially all of your duties and responsibilities under this Agreement, with reasonable accommodation, the Company will continue to pay you your Base Salary (at the rate then in effect) and to provide you benefits in accordance with Section 2(c) above, to the extent permitted by plan terms, for one-hundred and eighty (180) days of disability during any period of three hundred and sixty-five (365) consecutive calendar days.  If you are unable to return to work after one-hundred and eighty (180) days of disability (whether consecutive or nonconsecutive), the Company may terminate your employment, upon written notice to you.  If any question shall arise as to whether you are disabled to the extent that you are unable to perform substantially all of your duties and responsibilities for the Company and its Affiliates, you shall, at the Company’s written request, submit to a medical examination by a physician selected by the Company to whom you or your guardian, if any, has no reasonable objection to determine whether you are so disabled, and such determination shall for purposes of this Agreement be conclusive of the issue.  If such a question arises and you fail to submit to the requested medical examination, the Company’s determination of the issue shall be binding on you.

 

5.                                      Severance Payments and Other Matters Related to Termination.

 

(a)                                 In the event of termination of your employment with the Company, howsoever occurring, in addition to any amounts previously earned by you under any of the Company’s retirement plans or expressly required to be paid by the Company under applicable law, the Company shall pay you (i) your Base Salary (at the rate then in effect) for the final payroll period of your employment, through the date your employment terminates at the time prescribed by applicable law for such payment; and (ii)

 

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reimbursement for business expenses incurred by you but not yet paid to you as of the date your employment terminates; provided you submit all expenses and supporting documentation required within sixty (60) days of the date your employment terminates, and provided further that such expenses are reimbursable under Company policies as then in effect (all of the foregoing, “Final Compensation”).

 

(b)                                 In the event of your Separation from Service in connection with any termination of your employment pursuant to Section 4(b) or Section 4(d) hereof, the Company, in addition to Final Compensation, will pay you a sum (the “Severance Pay”) equal to (x) six (6) months of your Base Salary (at the rate then in effect prior to taking in to account any reduction that triggers a termination of your employment pursuant to Section 4(d) hereof), payable in accordance with the Company’s prevailing payroll practices for a period of six (6) months from the date of termination (the “Severance Period”).  Any obligation of the Company to you hereunder, other than for Final Compensation, is conditioned, however, on your signing and returning to the Company a timely and effective release of claims in the form provided to you by the Company not later than five (5) business days following the date your employment is terminated (the “Employee Release”).  You must sign and return (and not revoke) the Employee Release, if at all, by the deadline specified therein, which deadline shall in no event be later than the sixtieth (60th) calendar day following the date your employment is terminated.  The first payment in respect of your Severance Pay will be made on the Company’s next regular payroll date following the later of the effective date of the Employee Release or the date it is received by the Company; but that first payment shall be retroactive to the date of termination; provided, that if your Separation from Service occurs in one taxable year and the revocation period expires in the second taxable year, the payments in respect of your Severance Pay shall commence in the second taxable year.  Notwithstanding anything to the contrary contained in this Agreement, however, in the event that at the time of your Separation from Service you are a “Specified Employee,” any and all amounts payable under this Section 5 in connection with such separation from service that constitute deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), as determined by the Company in its sole discretion, and that would (but for this sentence) be payable within six (6) months following such separation from service, shall instead be paid on the date that follows the date of such separation from service by six (6) months.  For purposes of this Section 5(b), “Separation from Service” shall be determined in a manner consistent with subsection (a)(2)(A)(i) of Section 409A, and the term “Specified Employee” shall mean an individual determined by the Company to be a specified employee as defined in subsection (a)(2)(B)(i) of Section 409A.

 

(c)                                  Except for any right you may have under the federal law known as “COBRA” to continue participation in the Company’s group health and dental plans at your cost, your participation in all employee benefits shall terminate in accordance with the terms of the applicable benefit plans based on the date of termination of your employment, without regard to any continuation of base salary or other payment to you following termination.

 

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(d)                                 This Agreement is intended to comply with Section 409A or, if applicable, an exemption thereto, and shall be construed and interpreted in a manner consistent with Section 409A or, if applicable, an exemption thereto; provided, however, that in no event shall the Company have any liability relating to the failure of any payment or benefit under this Agreement to be exempt from the requirements of Section 409A.

 

(e)                                  Provisions of this Agreement shall survive any termination of employment if so provided in this Agreement or if necessary or desirable to accomplish the purposes of other surviving provisions, including without limitation your obligations under Section 3 of this Agreement.  The obligation of the Company to make payments to you under Section 5(b) are expressly conditioned upon your continued full performance of your obligations under Section 3 hereof.  Upon termination of your employment by either you or the Company, all rights, duties and obligations of you and the Company to each other shall cease, except as otherwise expressly provided in this Agreement.

 

6.                                      Definitions.  For purposes of this Agreement, the following definitions apply:

 

(a)                                 “Affiliates” means all persons and entities directly or indirectly controlling, controlled by or under common control with the Company, where control may be by management authority, equity interest or otherwise.  For the avoidance of doubt, “Affiliates” do not include any portfolio company of any investment fund associated with Genstar Capital other than the Company and its direct and indirect parents and subsidiaries.

 

(b)                                 “Code” means the Internal Revenue Code of 1986, as amended.

 

(c)                                  “Confidential Information” means any and all information of the Company and its Affiliates that is not generally available to the public.  Confidential Information also includes any information received by the Company or any of its Affiliates from any Person with any understanding, express or implied, that it will not be disclosed.  Confidential Information does not include information that enters the public domain, other than through your breach of your obligations under this Agreement or any other agreement with the Company or any of its Affiliates.

 

(d)                                 “Person” means an individual, a corporation, a limited liability company, an association, a partnership, an estate, a trust or any other entity or organization, other than the Company or any of its Affiliates.

 

(e)                                  “Intellectual Property” means inventions, discoveries, developments, methods, processes, compositions, works, concepts and ideas (whether or not patentable or copyrightable or constituting trade secrets) conceived, made, created, developed or reduced to practice by you (whether alone or with others, whether or not during normal business hours or on or off Company premises) during your employment that relate either to the business of the Company or to any prospective activity of the Company or any of its Affiliates or that result from any work performed by you for the Company or any of its Affiliates or that make use of Confidential Information or any of the equipment or facilities of the Company or any of its Affiliates.  For the avoidance of doubt, Intellectual Property

 

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shall not include any invention that you develop entirely on your own time without using the equipment, supplies, facilities, or trade secrets of the Company or any of its Affiliates, except for those inventions that (a) relate at the time of conception or reduction to practice to the business of the Company or any of its Affiliates or to actual or demonstrable anticipated research or development of the Company or any of its Affiliates, or (b) result from any work performed by you for the Company or any of its Affiliates.

 

7.                                      Conflicting Agreements.  You hereby represent and warrant that your signing of this Agreement and the performance of your obligations under it will not breach or be in conflict with any other agreement to which you are a party or are bound, and that you are not now subject to any covenants against competition or similar covenants or any court order that could affect the performance of your obligations under this Agreement.  You agree that you will not disclose to or use on behalf of the Company any confidential or proprietary information of a third party without that party’s consent.

 

8.                                      Withholding.  All payments made by the Company under this Agreement shall be reduced by any tax or other amounts required to be withheld by the Company under applicable law.

 

9.                                      Assignment.  Neither you nor the Company may make any assignment of this Agreement or any interest in it, by operation of law or otherwise, without the prior written consent of the other; provided, however, the Company may assign its rights and obligations under this Agreement without your consent to one of its Affiliates.  This Agreement shall inure to the benefit of and be binding upon you and the Company, and each of our respective successors, executors, administrators, heirs and permitted assigns.

 

10.                               Severability.  If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

 

11.                               Miscellaneous.  This Agreement sets forth the entire agreement between you and the Company, and replaces all prior and contemporaneous communications, agreements and understandings, written or oral, with respect to the terms and conditions of your employment.  This Agreement may not be modified or amended, and no breach shall be deemed to be waived, unless agreed to in writing by you and an expressly authorized representative of the Board.  The headings and captions in this Agreement are for convenience only and in no way define or describe the scope or content of any provision of this Agreement.  This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument.  This is a Washington contract and shall be governed and construed in accordance with the laws of the State of Washington, without regard to the conflict of laws principles thereof.  Except as provided in Section 3(e) hereof, in any dispute arising under or in connection with this Agreement, the prevailing party shall be entitled to recovery from the other party its reasonable attorney’s fees.

 

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12.                               Notices.  Any notices provided for in this Agreement shall be in writing and shall be effective when delivered in person or deposited in the United States mail, postage prepaid, and addressed to you at your last known address on the books of the Company or, in the case of the Company, to it at its principal place of business, attention of the Chair of the Board, or to such other address as either party may specify by notice to the other actually received.

 

If the foregoing is acceptable to you, please sign this letter in the space provided and return it to the Company no later than April 17, 2014.  The enclosed copy is for your records.

 

{Remainder of Page Left Intentionally Blank; Signature Page Follows}

 

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Sincerely yours,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
PALOMAR INSURANCE   HOLDINGS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Mac Armstrong
    
	
 
    	
 
    	
Name:
    	
Mac Armstrong
    
	
 
    	
 
    	
Title:
    	
CEO
    
	
Accepted   and Agreed:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Jon   M. Christianson
    	
 
    	
 
    
	
Name: Jon M. Christianson
    	
 
    	
 
    

 

{Christianson - Employment Agreement}

 

 

FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

 

This First Amendment to the Employment Agreement (“Amendment”) is by and between Palomar Insurance Holdings, Inc. (“Company”) and Jon M. Christianson, an individual (“Executive”), to be effective as of March 1, 2018 (“Effective Date”) and is intended to amend portions of the Employment Agreement between those parties entered on or around April 15, 2014, (“Employment Agreement”).  Capitalized terms used in this Amendment and not defined have the meanings given them in the Agreement.

 

WHEREAS, Executive remains employed by Company pursuant to the Employment Agreement;

 

WHEREAS, Executive and Company desire to amend certain provisions of the Employment Agreement;

 

NOW THEREFORE, in consideration of the terms and agreements of Company and Executive as set forth in this Amendment, Company and Executive, intending to be legally bound, agree to modify the terms of the Employment Agreement as follows:

 

A.            Position and Duties; Term. Paragraph 1(a) of the Employment Agreement is amended and restated to read as follows as of the Effective Date of this Agreement:

 

“This Agreement shall automatically renew for successive one (1) year terms (each such renewal term, “Renewal Term”) unless otherwise terminated pursuant to Section 4 hereof or either party hereto gives written notice of its or his intent not to renew this Agreement at least sixty (60) days prior to the expiration of the then-current term.  The Executive’s continued employment during any Renewal Term shall be in accordance with and governed by this Agreement, unless modified by the parties hereto in writing.  Each successive Renewal Term shall collectively be referred to herein as the ‘Term.’”

 

B.            Base Salary. Paragraph 2(a) of the Employment Agreement is amended and restated to read as follows as of the Effective Date of this Amendment:

 

“Your annual Base Salary shall be three hundred and fifty five thousand dollars ($355,000), less all applicable withholdings and deductions and payable in accordance with Company’s standard payroll procedures.  The Base Salary shall be effective for each Renewal Term up to December 31, 2021. Thereafter, Base Salary may be revisited with the Board and determined in the Board’s sole and absolute discretion.”

 

C.            Bonus Compensation.  Paragraph 2(b) of the Employment Agreement is amended and restated to read as follows effective as of the Effective Date of this Amendment:

 

“You will be eligible to earn an annual incentive bonus (the “Annual Bonus”) in a target amount (the “Target Bonus”) up to forty percent (40%) of your then-current Base Salary, less applicable withholdings and deductions.  The Annual Bonus structure shall be effective for each Renewal Term up to December 31, 2021.

 

 

Thereafter, the Annual Bonus structure will be revisited by the Board (or the Compensation Committee thereof).  The actual amount of the Annual Bonus you receive shall be determined by the Board, in its sole and absolute discretion, based upon your performance and that of the Company against goals established by the Board.  The amount of the Annual Bonus that you will be eligible to earn during each fiscal year during the Term and the criteria for the Annual Bonus will be established by the Board (or the Compensation Committee thereof).  You must be employed on December 31st of the fiscal year in which an Annual Bonus is earned in order to be eligible for payment of such Annual Bonus.  The Annual Bonus shall be paid by the Company to you between January 1 and December 31 following the conclusion of the fiscal year for which the Annual Bonus is earned, and in no event later than thirty (30) days after the completion and delivery to the Company of the audited financial statements for the fiscal year in which the Annual Bonus was earned.”

 

D.            Tax Treatment.  Executive understands and agrees that Company is neither providing tax nor legal advice, nor is Company making representations regarding tax obligations or consequences, if any.  Executive further agrees that Executive will assume any such tax obligations or consequences that may arise from this Amendment, and that Executive shall not seek any indemnification from Company in this regard.

 

E.             Other Provisions Remain In Full Force and Effect.  All other provisions of the Employment Agreement regarding Executive’s employment shall remain in effect.

 

F.              Entire Agreement.  This Amendment and the Employment Agreement (other than the above Paragraphs superseded by this Amendment) constitute the entire agreement between the parties on the subject of Executive’s employment.

 

G.            Severability.  If any provision of this Amendment, or its application to any person, place, or circumstance, is held by an arbitrator or a court of competent jurisdiction to be invalid, unenforceable, or void, such provision shall be enforced (by blue-penciling or otherwise) to the greatest extent permitted by law, and the remainder of this Amendment and such provision as applied to other persons, places, and circumstances shall remain in full force and effect.

 

H.           Approval of Amendment.  By their signatures below, the Company and Employee hereby adopt this Amendment.

 

I.                Necessary Acts.  Each party to this Amendment hereby agrees to perform any further acts and to execute and deliver any further documents that may be necessary or required to carry out the intent and provisions of this Amendment and the transactions contemplated hereby.

 

J.                Governing Law.  This Amendment shall be governed in all respects by the internal laws of the State of Washington without reference to the conflict of laws principles thereof.

 

K.            Continued Validity.  Except as otherwise expressly provided herein, the Employment

 

 

Agreement shall remain in full force and effect.

 

L.             Counterparts; Electronic Delivery. This Amendment may be executed in any number of counterparts by the parties hereto all of which together shall constitute one instrument, and such counterparts may be delivered electronically by the parties.

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment effective as of the Effective Date.

 

	
 
    	
EXECUTIVE
    
	
 
    	
 
    
	
 
    	
/s/ Jon Christianson
    
	
 
    	
Jon Christianson
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PALOMAR INSURANCE   HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
BY:
    	
/S/ MAC ARMSTRONG
    
	
 
    	
NAME:
    	
MAC ARMSTRONG
    
	
 
    	
TITLE:
    	
CEOExhibit 10.6

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement, dated                     , is made between Palomar Holdings, Inc., a Delaware corporation (the “Company”), and                               (the “Indemnitee”).

 

RECITALS

 

A.            The Company desires to attract and retain the services of talented and experienced individuals, such as Indemnitee, to serve as directors and officers of the Company and its subsidiaries and wishes to indemnify its directors and officers to the maximum extent permitted by law;

 

B.            The Company and Indemnitee recognize that corporate litigation in general has subjected directors and officers to expensive litigation risks;

 

C.            Section 145 of the General Corporation Law of Delaware, under which the Company is organized (“Section 145”), empowers the Company to indemnify its directors and officers by agreement and to indemnify persons who serve, at the request of the Company, as the directors and officers of other corporations or enterprises, and expressly provides that the indemnification provided by Section 145 is not exclusive;

 

D.            Section 145(g) allows for the purchase of management liability (“D&O”) insurance by the Company, which in theory can cover asserted liabilities without regard to whether they are indemnifiable by the Company or not;

 

E.             Individuals considering service or presently serving expect to be extended market terms of indemnification commensurate with their position, and that entities such as Company will endeavor to maintain appropriate D&O insurance; and

 

F.              In order to induce Indemnitee to serve or continue to serve as a director or officer of the Company and/or one or more subsidiaries of the Company, or otherwise serve the Company in an indemnifiable capacity as set forth below, the Company and Indemnitee enter into this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, Indemnitee and the Company hereby agree as follows:

 

1.              Definitions.  As used in this Agreement:

 

(a)                                 “Agent” means any person who is or was a director, officer, employee or other agent of the Company or a subsidiary of the Company; or is or was serving at the request of, for the convenience of, or to represent the interests of the Company or a subsidiary of the Company as a director, officer, employee or agent of another foreign or domestic corporation, limited liability company, employee benefit plan, nonprofit entity, partnership, joint venture, trust or other enterprise; or was a director, officer, employee or agent of a foreign or domestic

 

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corporation which was a predecessor corporation of the Company or a subsidiary of the Company, or was a director, officer, employee or agent of another enterprise at the request of, for the convenience of, or to represent the interests of such predecessor corporation.

 

(b)                                 “Board” means the Board of Directors of the Company.

 

(c)                                  A “Change in Control” shall be deemed to have occurred if (i) any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing a majority of the total voting power represented by the Company’s then outstanding voting securities, (ii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board, together with any new directors whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination was previously so approved, cease for any reason to constitute a majority of the Board, (iii) the stockholders of the Company approve a merger or consolidation or a sale of all or substantially all of the Company’s assets with or to another entity, other than a merger, consolidation or asset sale that would result in the holders of the Company’s outstanding voting securities immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least a majority of the total voting power represented by the voting securities of the Company or such surviving or successor entity outstanding immediately thereafter, or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company.

 

(d)                                 “Expenses” shall include all out-of-pocket costs of any type or nature whatsoever (including, without limitation, all attorneys’ fees and related disbursements), actually and reasonably incurred by Indemnitee in connection with either the investigation, defense, or appeal of a Proceeding, or establishing or enforcing a right to indemnification under this Agreement, or Section 145 or otherwise; provided, however, that “Expenses” shall not include any judgments, fines, ERISA excise taxes or penalties, or amounts paid in settlement of a Proceeding.

 

(e)                                  “Independent Counsel” means a law firm, or a partner (or, if applicable, member) of such a law firm, that is experienced in relevant matters of corporation law and neither currently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party or (ii) any other party to or witness in the proceeding giving rise to a claim for indemnification hereunder.  But “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.  Where required by this Agreement, Independent Counsel shall be retained at the Company’s sole expense.

 

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(f)                                   “Proceeding” means any threatened, pending, or completed action, claim, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing, or any other proceeding whether formal or informal, civil, criminal, administrative, or investigative, including any such investigation or proceeding instituted by or on behalf of the Company or its Board of Directors, in which Indemnitee is or reasonably may be involved as a party or target, that is associated with Indemnitee’s being an Agent of the Company.

 

(g)                                  “Subsidiary” means any corporation of which more than 50% of the outstanding voting securities is owned directly or indirectly by the Company, by the Company and/or one or more other subsidiaries.

 

2.              Agreement to Serve.  Indemnitee agrees to serve and/or continue to serve as an Agent of the Company, at its will (or under separate agreement, if such agreement exists), in the capacity Indemnitee currently serves as an Agent of the Company, so long as Indemnitee is duly appointed or elected and qualified in accordance with the applicable provisions of the Bylaws of the Company or any subsidiary of the Company or until such time as Indemnitee tenders his or her resignation in writing; provided, however, that nothing contained in this Agreement is intended to create any right to continued employment or other service by Indemnitee.

 

3.              Liability Insurance.

 

(a)                                 Maintenance of D&O Insurance.  The Company hereby covenants and agrees that, so long as Indemnitee shall continue to serve as an Agent of the Company and thereafter so long as Indemnitee shall be subject to any possible Proceeding by reason of the fact that Indemnitee was an Agent of the Company, the Company, subject to Section 3(c), shall promptly obtain and maintain in full force and effect directors’ and officers’ liability insurance (“D&O Insurance”) in reasonable amounts from established and reputable insurers of a minimum A.M. Best rating of A- VII, and as more fully described below.  In the event of a Change in Control, the Company shall, as set forth in Section (c) below, either: i) maintain such D&O Insurance for six years; or ii) purchase a six year tail for such D&O Insurance.

 

(b)                                 Rights and Benefits.  In all policies of D&O Insurance, Indemnitee shall qualify as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s Agents of the same standing as Indemnitee.

 

(c)                                  Limitation on Required Maintenance of D&O Insurance.  Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain D&O Insurance at all, or of any type, terms, or amount, if the Company determines in good faith and after using commercially reasonable efforts that: such insurance is not reasonably available; the premium costs for such insurance are disproportionate to the amount of coverage provided; the coverage provided by such insurance is limited so as to provide an insufficient or unreasonable benefit; Indemnitee is covered by similar insurance maintained by a subsidiary of the Company; or the Company is to be acquired and a tail policy of reasonable terms and duration can be purchased for pre-closing acts or omissions by Indemnitee.

 

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4.              Mandatory Indemnification.  Subject to the terms of this Agreement:

 

(a)                                 Third Party Actions.  If Indemnitee is a person who was or is a party or is threatened to be made a party to any Proceeding (other than an action by or in the right of the Company) by reason of the fact that Indemnitee is or was an Agent of the Company, or by reason of anything done or not done by Indemnitee in any such capacity, the Company shall indemnify Indemnitee against all Expenses and liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes and penalties, and amounts paid in settlement) actually and reasonably incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of such Proceeding, provided Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or Proceeding, had no reasonable cause to believe his or her conduct was unlawful.

 

(b)                                 Derivative Actions.  If Indemnitee is a person who was or is a party or is threatened to be made a party to any Proceeding by or in the right of the Company by reason of the fact that Indemnitee is or was an Agent of the Company, or by reason of anything done or not done by Indemnitee in any such capacity, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of such Proceeding, provided Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; except that no indemnification under this Section 4(b) shall be made in respect to any claim, issue or matter as to which Indemnitee shall have been finally adjudged to be liable to the Company by a court of competent jurisdiction unless and only to the extent that the Delaware Court of Chancery or the court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such amounts which the Delaware Court of Chancery or such other court shall deem proper.

 

(c)                                  Actions where Indemnitee is Deceased.  If Indemnitee is a person who was or is a party or is threatened to be made a party to any Proceeding by reason of the fact that Indemnitee is or was an Agent of the Company, or by reason of anything done or not done by Indemnitee in any such capacity, and if, prior to, during the pendency of or after completion of such Proceeding Indemnitee is deceased, the Company shall indemnify Indemnitee’s heirs, executors and administrators against all Expenses and liabilities of any type whatsoever to the extent Indemnitee would have been entitled to indemnification pursuant to this Agreement were Indemnitee still alive.

 

(d)                                 Certain Terminations.  The termination of any Proceeding or of any claim, issue, or matter therein by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal action or Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.

 

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(e)                                  Limitations.  Notwithstanding the foregoing provisions of Sections 4(a), 4(b), 4(c) and 4(d) hereof, but subject to the exception set forth in Section 13 which shall control, the Company shall not be obligated to indemnify the Indemnitee for Expenses or liabilities of any type whatsoever for which payment (and the Company’s indemnification obligations under this Agreement shall be reduced by such payment) is actually made to or on behalf of Indemnitee, by the Company or otherwise, under a corporate insurance policy, or under a valid and enforceable indemnity clause, right, by-law, or agreement; and, in the event the Company has previously made a payment to Indemnitee for an Expense or liability of any type whatsoever for which payment is actually made to or on behalf of the Indemnitee from any such source, Indemnitee shall return to the Company the amounts subsequently received by the Indemnitee that source.

 

(f)                                   Witness.  In the event that Indemnitee is not a party or threatened to be made a party to a Proceeding, but is subpoenaed (or given a written request to be interviewed by or provide documents or information to a government authority) in such a Proceeding by reason of the fact that the Indemnitee is or was an Agent of the Company, or by reason of anything witnessed or allegedly witnessed by the Indemnitee in that capacity, the Company shall indemnify the Indemnitee against all actually and reasonably incurred out of pocket costs (including without limitation legal fees) incurred by the Indemnitee in responding to such subpoena or written request for an interview.  As a condition to this right, Indemnitee must provide notice of such subpoena or request to the Company within 14 days, otherwise the Company’s obligation to pay such costs shall only attach for costs incurred from the date of notice.

 

5.              Indemnification for Expenses in a Proceeding in Which Indemnitee is Wholly or Partly Successful.

 

(a)                                 Successful Defense.  Notwithstanding any other provisions of this Agreement, to the extent Indemnitee has been successful, on the merits or otherwise, in defense of any Proceeding (including, without limitation, an action by or in the right of the Company) in which Indemnitee was a party by reason of the fact that Indemnitee is or was an Agent of the Company at any time, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by or on behalf of Indemnitee in connection with the investigation, defense or appeal of such Proceeding.

 

(b)                                 Partially Successful Defense.  Notwithstanding any other provisions of this Agreement, to the extent that Indemnitee is a party to any Proceeding (including, without limitation, an action by or in the right of the Company) in which Indemnitee was a party by reason of the fact that Indemnitee is or was an Agent of the Company at any time and is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by or on behalf of Indemnitee in connection with each successfully resolved claim, issue or matter.

 

(c)                                  Dismissal.  For purposes of this section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

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(d)                                 Contribution.  If the indemnification provided in this Agreement is unavailable and may not be paid to Indemnitee, then to the extent allowed by law, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in such proportion as is appropriate to reflect (i) the relative benefits received by the Company on the one hand and Indemnitee on the other hand from the transaction from which such action, suit or proceeding arose, and (ii) the relative fault of Company on the one hand and of Indemnitee on the other in connection with the events which resulted in such expenses, judgments, fines or settlement amounts, as well as any other relevant equitable considerations.  The relative fault of the Company on the one hand and of Indemnitee on the other shall be determined by reference to, among other things, the parties’ relative intent, knowledge, access to information, active or passive conduct, and opportunity to correct or prevent the circumstances resulting in such expenses, judgments, fines or settlement amounts.  The Company agrees that it would not be just and equitable if contribution pursuant to this section were determined by pro rata allocation or any other method of allocation which does not take account of the foregoing equitable considerations.

 

(e)                                  Settlements by Company.  The Company may not settle any claim held by Indemnitee without express written consent of Indemnitee, which may be given or withheld in Indemnitee’s sole discretion.

 

6.              Mandatory Advancement of Expenses.

 

(a)  Subject to the terms of this Agreement and following notice pursuant to Section 7(a) below, the Company shall advance, interest free, all Expenses reasonably incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of any Proceeding to which Indemnitee is a party or is threatened to be made a party by reason of the fact that Indemnitee is or was an Agent of the Company (unless there has been a final determination such that Indemnitee is not entitled to indemnification for such Expenses) upon receipt satisfactory documentation supporting such Expenses.   Such advances are intended to be an obligation of the Company to Indemnitee hereunder and shall in no event be deemed to be a personal loan.  Such advancement of Expenses shall otherwise be unsecured and without regard to Indemnitee’s ability to repay.  The advances to be made hereunder shall be paid by the Company to Indemnitee within 30 days following delivery of a written request therefore by Indemnitee to the Company, along with such documentation and information as is reasonably available to the Indemnitee and is reasonably necessary to determine whether and to what extent the claimant is entitled to advancement (which shall include without limitation reasonably detailed invoices for legal services, but with disclosure of confidential work product not required if that would work a waiver of privilege as to an adverse party).  The Company shall discharge its advancement duty by, at its option, (a) paying such Expenses on behalf of Indemnitee, (b) advancing to Indemnitee funds in an amount sufficient to pay such Expenses, or (c) reimbursing Indemnitee for Expenses already paid by Indemnitee.  In the event that the Company fails to pay Expenses as incurred by Indemnitee as required by this paragraph, Indemnitee may seek mandatory injunctive relief (including without limitation specific performance) from any court having jurisdiction to require the Company to pay Expenses as set forth in this paragraph.  If Indemnitee seeks mandatory

 

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injunctive relief pursuant to this paragraph, it shall not be a defense to enforcement of the Company’s obligations set forth in this paragraph that Indemnitee has an adequate remedy at law for damages.

 

(b)  Undertakings.  Indemnitee shall qualify for advances upon the execution and delivery to the Company of this Agreement, which constitutes an undertaking whereby Indemnitee promises to repay any amounts advanced if and to the extent that it shall ultimately be determined that Indemnitee is not entitled to indemnification by the Company.

 

7.              Notice and Other Indemnification Procedures.

 

(a)                                 Notice by Indemnitee.  Promptly after receipt by Indemnitee of notice of the commencement of or the threat of commencement of any Proceeding, Indemnitee shall, if Indemnitee believes that indemnification with respect thereto may be sought from the Company under this Agreement, notify the Company in writing of the commencement or threat of commencement thereof provided, however, that a delay in giving such notice will not deprive Indemnitee of any right to be indemnified under this Agreement unless, and then only to the extent that, the Company did not otherwise learn of the Proceeding and such delay is materially prejudicial to the Company; and, provided, further, that notice will be deemed to have been given without any action on the part of Indemnitee in the event the Company is a party to the same Proceeding and already has notice of all the matters for which Indemnitee is demanding indemnification and advancement.

 

(b)                                 Insurance.  If the Company receives notice pursuant to Section 7(a) hereof of the commencement of a Proceeding that may be covered under D&O Insurance then in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies.

 

(c)                                  Defense.  In the event the Company shall be obligated to pay the Expenses of any Proceeding against Indemnitee, the Company shall be entitled to assume the defense of such Proceeding, with counsel selected by the Company and approved by Indemnitee (which approval shall not be unreasonably withheld), upon the delivery to Indemnitee of written notice of the Company’s election so to do.  After delivery of such notice, and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same Proceeding, provided that (i) Indemnitee shall have the right to employ his or her own counsel in any such Proceeding at Indemnitee’s expense; and (ii) Indemnitee shall have the right to employ his or her own counsel in any such Proceeding at the Company’s expense if (A) the Company has authorized the employment of counsel by Indemnitee at the expense of the Company; (B) Indemnitee shall have reasonably concluded based on the written advice of Indemnitee’s legal counsel that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense; or (C) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding.  In addition to all the requirements above, if the Company has D&O Insurance, or other insurance, with a panel counsel requirement that may cover the matter for which indemnity is claimed by Indemnitee, then Indemnitee shall use such panel counsel or other counsel approved by the insurers, unless there is an actual conflict of interest posed by representation by all such counsel, or unless and to the extent Company waives

 

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such requirement in writing.  Indemnitee and his counsel shall provide reasonable cooperation with such insurer on request of the Company.

 

8.              Right to Indemnification.

 

(a)                                 Right to Indemnification.  In the event that Section 5(a) is inapplicable, the Company shall indemnify Indemnitee pursuant to this Agreement unless, and except to the extent that, it shall have been determined by one of the methods listed in Section 8(b) that Indemnitee has not met the applicable standard of conduct required to entitle Indemnitee to such indemnification.

 

(b)                                 Determination of Right to Indemnification.  A determination of Indemnitee’s right to indemnification under this Section 8 shall be made at the election of the Board by (i) a majority vote of directors who are not parties to the Proceeding for which indemnification is being sought, even though less than a quorum, or by a committee consisting of directors who are not parties to the Proceeding for which indemnification is being sought, who, even though less than a quorum, have been designated by a majority vote of the disinterested directors, (ii) if there are no such disinterested directors or if the disinterested directors so direct, by Independent Counsel chosen by the Company in a written opinion to the Board, a copy of which shall be delivered to Indemnitee, or (iii) by vote of the stockholders.  However, in the event there has been a Change in Control, then the determination shall, at Indemnitee’s sole option, be made by Independent Counsel as in (b)(ii), above, with Company choosing the Independent Counsel subject to Indemnitee’s consent, such consent not to be unreasonably withheld.

 

(c)                                  Submission for Decision.  As soon as practicable, and in no event later than 30 days after Indemnitee’s written request for indemnification, the Board shall select the method for determining Indemnitee’s right to indemnification.  Indemnitee shall cooperate with the person or persons or entity making such determination with respect to Indemnitee’s right to indemnification, including providing to such person, persons or entity, upon reasonable advance request, any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination.  Any Independent Counsel or member of the Board shall act reasonably and in good faith in making a determination regarding Indemnitee’s entitlement to indemnification under this Agreement.

 

(d)                                 Application to Court.  If (i) a claim for indemnification or advancement of Expenses is denied, in whole or in part, (ii) no disposition of such claim is made by the Company within 60 days after the request therefore, (iii) the advancement of Expenses is not timely made pursuant to Section 6 of this Agreement or (iv) payment of indemnification is not made pursuant to Section 5 of this Agreement, Indemnitee shall have the right at his option to apply to the Delaware Court of Chancery, a California state or federal court, the court in which the Proceeding is or was pending, or any other court of competent jurisdiction, for the purpose of enforcing Indemnitee’s right to indemnification (including the advancement of Expenses) pursuant to this Agreement. Upon written request by Indemnitee, the Company shall consent to service of process.

 

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(e)                                  Expenses Related to the Enforcement or Interpretation of this Agreement.  The Company shall indemnify Indemnitee against all reasonable Expenses incurred by Indemnitee in connection with any hearing or proceeding under this Section 8 involving Indemnitee, and against all reasonable Expenses incurred by Indemnitee in connection with any other proceeding between the Company and Indemnitee to the extent involving the interpretation or enforcement of the rights of Indemnitee under this Agreement, if and to the extent Indemnitee is successful.

 

(f)                                   In no event shall Indemnitee’s right to indemnification (apart from advancement of Expenses) be determined prior to a final adjudication in a Proceeding at issue if the Proceeding is both ongoing, and of the nature to have a final adjudication.

 

(g)                                  In any proceeding to determine Indemnitee’s right to indemnification or advancement, Indemnitee shall be presumed to be entitled to indemnification or advancement, with the burden of proof on the Company to prove, by a preponderance of the evidence (or higher standard if required by relevant law) that Indemnitee is not so entitled.

 

(h)                                 Indemnitee shall be fully indemnified for those matters where, in the performance of his duties for the Company, he relied in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any of the Company’s officers or employees, or committees of the board of directors, or by any other person as to matters Indemnitee reasonably believed were within such other person’s professional or expert competence and who was selected with reasonable care by or on behalf of the Company.

 

9.              Exceptions.  Any other provision herein to the contrary notwithstanding, the Company shall not be obligated:

 

(a)                                 Claims Initiated by Indemnitee.  To indemnify or advance Expenses to Indemnitee with respect to Proceedings or claims initiated or brought voluntarily by Indemnitee (including cross actions), with a reasonable allocation where appropriate, unless (i) such indemnification is expressly required to be made by law, (ii) the Proceeding was authorized by the Board, (iii) such indemnification is provided by the Company, in its sole discretion, pursuant to the powers vested in the Company under the General Corporation Law of Delaware or (iv) the Proceeding is brought pursuant to Section 8 specifically to establish or enforce a right to indemnification under this Agreement or any other statute or law or otherwise as required under Section 145 in advance of a final determination, in which case 8(e)’s fees-on-fees provision shall control.   For clarity, the raising of defenses by the Company by way of argument or affirmative defense in such an Indemnitee-initiated Proceeding or claim against the Company, shall not themselves be deemed to be a Proceeding.

 

(b)                                 Fees on Fees.  To indemnify Indemnitee for any Expenses incurred by Indemnitee with respect to any Proceeding instituted by Indemnitee to enforce or interpret this Agreement, to the extent Indemnitee is not successful in such a Proceeding.

 

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(c)                                  Unauthorized Settlements.  To indemnify Indemnitee under this Agreement for any amounts paid in settlement of a Proceeding unless the Company consents to such settlement, which consent shall not be unreasonably withheld.

 

(d)                                 Claims Under Section 16(b).  To indemnify Indemnitee for Expenses associated with any Proceeding related to, or the payment of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of state statutory law or common law (provided, however, that the Company must advance Expenses for such matters as otherwise permissible under this Agreement).

 

(e)                                  Payments Contrary to Law.  To indemnify or advance Expenses to Indemnitee for which payment is prohibited by applicable law.

 

(f)                                   Required Reimbursement. To indemnify Indemnitee for any reimbursement of the Company by Indemnitee of any compensation, including bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company, as required in each case under the ‘33 or ‘34 Acts (including without limitation reimbursements that (i) arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002, or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act of 2002, or (ii) arise pursuant to regulations or policies adopted in compliance with Section 954 of the Investor Protection and Securities Reform Act of 2010).

 

10.       Non-Exclusivity.  The provisions for indemnification and advancement of Expenses set forth in this Agreement shall not be deemed exclusive of any other rights which Indemnitee may have under any provision of law, the Company’s Certificate of Incorporation or Bylaws, the vote of the Company’s stockholders or disinterested directors, other agreements, or otherwise, both as to action in Indemnitee’s official capacity and as to action in another capacity while occupying Indemnitee’s position as an Agent of the Company. Indemnitee’s rights hereunder shall continue after Indemnitee has ceased acting as an Agent of the Company and shall inure to the benefit of the heirs, executors and administrators of Indemnitee.

 

11.       Permitted Defenses.  It shall be a defense to any action for which a claim for indemnification is made under this Agreement (other than an action brought to enforce a claim for Expenses pursuant to Section 6 hereof, provided that the required documents have been tendered to the Company) that Indemnitee is not entitled to indemnification because of the limitations set forth in Sections 4 and 9 hereof.  Neither the failure of the Company or an Independent Counsel to have made a determination prior to the commencement of such enforcement action that indemnification of Indemnitee is proper in the circumstances, nor an actual determination by the Company or an Independent Counsel that such indemnification is improper, shall be a defense to the action or create a presumption that Indemnitee is not entitled to indemnification under this Agreement or otherwise. In making any determination concerning Indemnitee’s right to indemnification, there shall be a presumption that Indemnitee has satisfied the applicable standard of conduct. Any determination by the Company concerning Indemnitee’s right to indemnification that is adverse to Indemnitee may be challenged by the Indemnitee in the Court of Chancery of the State of Delaware.

 

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12.       Subrogation.  Subject to the limitations of Section 13, in the event the Company is obligated to make a payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents reasonably required and take all action that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights (provided that the Company pays Indemnitee’s costs and expenses of doing so), including without limitation by assigning all such rights to the Company or its designee to the extent of such indemnification or advancement of Expenses.   The Company’s obligation to indemnify or advance expenses under this Agreement shall be reduced by any amount Indemnitee has collected from such other source, and in the event that Company has fully paid such indemnity or expenses, Indemnitee shall return to the Company any amounts subsequently received from such other source of indemnification.

 

13.       Primacy of Indemnification.  The Company hereby acknowledges that Indemnitee may have certain rights to indemnification, advancement of expenses, or liability insurance, neither procured or provided by the Company (including any affiliate, subsidiary, investment vehicle, or joint venture of the Company) nor any entity Indemnitee served or is serving at the direction of the Company, from a third party (collectively, the “Third Party Indemnitors”).  The Company hereby agrees that (i) it is the indemnitor of first resort, i.e., its obligations to Indemnitee under this Agreement and any indemnity provisions set forth in its Certificate of Incorporation, Bylaws or elsewhere (collectively, “Indemnity Arrangements”) are primary, and any obligation of the Third Party Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee is secondary and excess, (ii) it shall advance the full amount of expenses incurred by Indemnitee and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement by or on behalf of Indemnitee, to the extent legally permitted and as required by any Indemnity Arrangement, without regard to any rights Indemnitee may have against the Third Party Indemnitors, and (iii) it irrevocably waives, relinquishes and releases the Third Party Indemnitors from any claims against the Third Party Indemnitors for contribution, subrogation or any other recovery of any kind arising out of or relating to any Indemnity Arrangement.  The Company further agrees that no advancement or indemnification payment by any Third Party Indemnitor on behalf of Indemnitee shall affect the foregoing, and the Third Party Indemnitors shall be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company.  The Company and Indemnitee agree that the Third Party Indemnitors are express third party beneficiaries of the terms of this Section 13.  The Company, on its own behalf and on behalf of its insurers to the extent allowed by its insurance policies, waives subrogation rights against Indemnitee and Third Party Indemnitors.

 

14.       No Imputation.  The knowledge or actions, or failure to act, of any director, officer, employee, or agent of the Company, or the Company itself shall not be imputed to Indemnitee for the purpose of determining Indemnitee’s rights hereunder.

 

15.       Survival of Rights.

 

(a)                                 All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an Agent of the Company and shall continue thereafter

 

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so long as Indemnitee shall be subject to any possible claim or threatened, pending or completed Proceeding by reason of the fact that Indemnitee was serving in the capacity referred to herein.

 

(b)                                 The Company shall require any successor to the Company (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

16.       Severability.  If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever, (i) the validity, legality and enforceability of the remaining provisions of the Agreement (including, without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal, or unenforceable) shall not in any way be affected or impaired thereby, and (ii) to the fullest extent possible, such remaining provisions shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal, or unenforceable.

 

17.       Modification and Waiver.  No supplement, modification, or amendment of this Agreement shall be binding unless it is in a writing signed by both of the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions (even if similar) nor shall such waiver constitute a continuing waiver.

 

18.       Notice.  All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (a) upon delivery if delivered by hand to the party to whom such notice or other communication shall have been directed, (b) if mailed by certified or registered mail with postage prepaid, return receipt requested, on the third business day after the date on which it is so mailed, (c) one business day after the business day of deposit with a nationally recognized overnight delivery service, specifying next day delivery, with written verification of receipt, or (d) on the same day as delivered by confirmed facsimile transmission if delivered during business hours or on the next successive business day if delivered by confirmed facsimile transmission after business hours.  Addresses for notice to either party shall be as shown on the signature page of this Agreement, or to such other address as may have been furnished by either party in the manner set forth above.

 

19.       Governing Law.  This Agreement shall be governed exclusively by and construed according to the laws of the State of Delaware as applied to contracts between Delaware residents entered into and to be performed entirely within Delaware.  This Agreement is intended to be an agreement of the type contemplated by Section 145(f) of the General Corporation Law of Delaware.

 

20.       Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement, and electronically transmitted signatures shall be valid.

 

The parties hereto have entered into this Indemnification Agreement, including the undertaking contained herein, effective as of the date first above written.

 

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Indemnitee:
    	
The Company:
    
	
 
    	
 
    
	
 
    	
PALOMAR   HOLDINGS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
Address:
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
					

 

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