Document:

EX-10.1

 

Exhibit 10.1

EXECUTIVE EMPLOYMENT AGREEMENT

     This Executive Employment Agreement (this “Agreement”) is effective as
of August 17, 2007 (the
“Effective Date”) and is between Argo Group International Holdings, Ltd. a Bermuda company (the
“Company”) and Mark E. Watson, III (the “Employee”).

RECITALS:

     WHEREAS, the Employee is currently serving as the President and Chief Executive Officer of
Argonaut Group, Inc. (“Argonaut”);

     WHEREAS, the Company and Argonaut have entered into an Agreement and Plan of Merger, dated as
of March 14, 2007, and amended and restated as of June 8, 2007, pursuant to which the Company and
Argonaut are effectuating a merger on the date hereof (the “Merger”);

     WHEREAS, the Company desires that the Employee become the President and Chief Executive
Officer of the Company.

     WHEREAS, the Employee desires to become the President and Chief Executive Officer of the
Company.

     NOW, THEREFORE, in consideration of the promises and mutual agreements herein set forth, the
parties hereby agree as follows:

	1.	 	Term of Employment. The period of employment of Employee by the Company under this Agreement
(the Employment Period) shall be deemed to have commenced on the Effective Date and shall
terminate on February 7, 2011. The Employment Period may be sooner terminated in accordance
with Section 7 of this Agreement.

	2.	 	Duties. During his employment by the Company, the Employee shall perform such duties as
shall from time to time be delegated or assigned to him by the Company. Employee agrees to
serve the Company in the position of President and Chief Executive Officer and to perform
diligently and to the best of his abilities the duties and services pertaining to such office.
Employee’s employment shall also be subject to the policies maintained and established by the
Company, if any, as the same may be amended from time to time. Unless otherwise agreed by the
Company and Employee, Employee’s principal place of business with the Company shall be in
Bermuda. Employee acknowledges and agrees that Employee owes a fiduciary duty of loyalty,
fidelity and allegiance to act at all times in the best interests of the Company and to do no
act that would injure the business, interests, or reputation of the Company or any of its
Affiliates. In keeping with these duties, Employee shall make full disclosure to the Board of
Directors of all business opportunities pertaining to the business of the Company or its
Affiliates and should not appropriate for Employee’s own benefit business opportunities that
fall within the scope of the businesses conducted by the Company and its Affiliates.

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	3.	 	Compensation.

	 	(a)	 	Base Salary. The Company shall pay to Employee an initial base salary of
$1,000,000 per annum (the “Base Salary”), less all applicable legal deductions and/or
withholding. The Base Salary shall be payable in accordance with the Company’s
policies in effect from time to time, but in any event no less frequently than monthly.
The Base Salary shall be reviewed annually by the Compensation Committee of the Board
of Directors (“the Committee”) for possible increase (but not decrease); the Board of
Directors may, in its sole discretion, choose to increase the Base Salary during the
Term of this Agreement. If the Base Salary is increased by the Company, such Base
Salary then constitutes the Base Salary for all purposes of this Agreement. Such Base
Salary shall be deemed effective as of June 1, 2007 and the Employee shall be paid in a
lump sum the difference between the Base Salary paid to the Employee by Argonaut
between June 1, 2007 and the date hereof and the Base Salary that would have been payable
hereunder.
	 
	 	(b)	 	Incentive Bonus. In addition to the Base Salary, during the Term of this
Agreement, Employee may, in the sole discretion of the Board of Directors, be awarded
an incentive bonus based upon the achievement of specific Company objectives as
determined by the Company and the Employee and set forth in a separate written bonus
plan (the “Bonus Plan”).
	 
	 	(c)	 	Equity Compensation. The Employee shall be entitled to participate in the
equity compensation plans established from time to time by the Company on a basis no
less favorable than any other senior officers of the Company.
	 
	 	(d)	 	Housing Allowance. During the Employment Period and while he is a Bermuda
resident, the Employee shall be paid a housing allowance of US $30,000 per month.
	 
	 	(e)	 	Home Leave Allowance. During the Employment Period and while he is a Bermuda
resident, the Employee shall be paid a home leave allowance of US$3,333 per month.
	 
	 	(f)	 	Relocation Allowance. Upon execution of this Agreement, the Employee shall be
paid, in a lump sum, a relocation allowance of US$1,500,000; provided, that, Employee
shall promptly refund such relocation allowance to the Company if the Employee
terminates his employment with the Company without Good Reason prior to the first
anniversary of the date hereof.
	 
	 	(g)	 	Additional Payment. Upon execution of this Agreement, the Employee shall be
paid, in a lump sum, an additional payment of US$1,400,000; provided, that, if the
Employee terminates his employment with the Company without Good
Reason and in the absence of the occurrence of a Change of Control prior to the
fourth anniversary of the date hereof, the Employee shall promptly refund to the
Company an amount equal to US$1,400,000 multiplied by a fraction, the numerator of
which shall be the days of the Employment Period

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	 	 	 	that elapsed before such termination and the denominator of which shall be the days
of the Employment Period that would have elapsed had the Employment Period continued
through the fourth anniversary of the date hereof.

	 	(h)	 	As additional compensation for the Employee, the Company shall provide or
maintain the medical and health insurance benefits on the same terms and conditions as
are made available to all employees of the Company generally.

	4.	 	Vacation. Employee shall be entitled to a reasonable vacation(s) during each year of his
employment under this Agreement.

	5.	 	Reimbursement For Expenses; Working Space. The Company shall reimburse the Employee
within 30 days of the submission of appropriate documentation, and in no event later than the last day
of the calendar year following the year in which an expense was incurred, for all
reasonable and necessary travel expenses and other disbursements incurred by him for or on
behalf of the Company in the course and scope of his employment under this Agreement. The
Company shall furnish Employee with offices, supplies, equipment and such other facilities and
services as are suitable for performance of Employee’s duties hereunder at the Company’s
offices in Bermuda or provide an allowance sufficient to allow Employee to obtain same.

	6.	 	Remedies for Breach. In addition to the rights and remedies provided in Section 7, and
without waiving the same if Employee breaches, or threatens to breach, any of the provisions
of Sections 9 or 10, the Company shall have the following rights and remedies, in addition to
any others, each of which shall be independent of the other and severally enforceable:

	 	(a)	 	The right and remedy to have such provisions specifically enforced by any court
having equity jurisdiction. Employee specifically acknowledges and agrees that any
breach or threatened breach of the provisions of Sections 9 or 10 hereof will cause
irreparable injury to the Company and that money damages will not provide an adequate
remedy to the Company. Such injunction shall be available without the posting of any
bond or other security. If the Employee is determined to have breached any provision
of Sections 9 or 10 the court or arbitrators shall extend the effect of the
non-competition provisions for an amount of time equal to the time the Employee was in
breach thereof.
	 
	 	(b)	 	The right to require Employee to account for and pay over to the Company all
compensation, profits, monies, accruals, increments or other benefits (hereinafter
collectively the “Benefits”) derived or received by the Employee as a result of any
transactions constituting a breach of any of the provisions of Sections 9 or 10.
	 
	 	(c)	 	Upon discovery by the Company of a breach or threatened breach of Sections 9 or
10, the right to immediately suspend payments to Employee under Section 3 or 8(b)
pending a resolution of the dispute.
	 
	 	(d)	 	The right to terminate Employee’s employment pursuant to Section 7.

	7.	 	Termination of Agreement.

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	 	(a)	 	Death. This Agreement shall automatically terminate upon the death of
Employee.
	 
	 	(b)	 	Disability. If, as a result of Employee’s incapacity due to physical or mental
illness, Employee shall have been substantially unable, either with or without
reasonable accommodation, to perform his duties hereunder for an entire period of six
(6) consecutive months, and within thirty (30) days after written Notice of Termination
is given after such six (6) month period, Employee shall not have returned to the
substantial performance of his duties on a full-time basis, the Company shall have the
right to terminate Employee’s employment hereunder for Disability, and such termination
in and of itself shall not be, nor shall it be deemed to be, a breach of this
Agreement. Any dispute between the Employee and the Company regarding whether Employee
has a Disability shall be determined in writing by a qualified independent physician
mutually acceptable to the Employee and the Company. If the Employee and the Company
cannot agree as to a qualified independent physician, each shall appoint a physician
and those two physicians shall select a third who shall make such determination in
writing. The determination of Disability made in writing to the Company and Employee
shall be final and conclusive for all purposes of the Agreement. Employee acknowledges
and agrees that a request by the Company for such a determination shall not be
considered as evidence that the Company regarded the Employee as having a Disability.
	 
	 	(c)	 	Termination By Company For Cause. The Company may terminate this Agreement
upon written notice to Employee at any time for “Cause” in accordance with the
procedures provided below; provided, however, that the Company may instead give the
Employee a written notice that it has elected to place the Employee on “garden leave”
for a period of up to one year and that this Agreement will terminate on the date
immediately following the end of such garden leave period. If the Company elects to
place the Employee on garden leave, the Company may during the period immediately
preceding such termination date in its absolute discretion direct the Employee (i) to
perform only such of his duties as the Company may direct; and/or, (ii) to refrain from contacting any customers, clients,
advertisers, suppliers, agents, professional advisors, brokers or employees of the
Company or any of its Affiliates (as defined in Section 12(b)(iii)); and/or, (iii) not
to enter all or any premises of the Company or any of its Affiliates and/or; (iv) to
immediately resign without claim for compensation from office as director of the
Company and any of its Affiliates and from any other office held by him in the Company
or any of its Affiliates.

	 	(i)	 	During any period when the provisions of this Section 7(c) are
invoked, the Employee’s salary and other contractual benefits and compensation
(including the vesting and exercisability of any equity awards) will continue
to be paid or provided by the Company and the Employee will continue to comply
without exception with all the Employee’s obligations under this Agreement.
Notwithstanding anything herein to the contrary, the Company’s invocation of
the provisions of this Section 7(c) shall not

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	 	 	 	constitute Good Reason and the Company shall not be obligated to make any
new awards under the Company’s Bonus Plan or equity compensation plans
(other than awards, if any, due prior to the date that the Employee ceases
to perform substantial duties for the Company pursuant to this Section 7(c))
during any period when the Employee is performing no substantial duties for
the Company pursuant to this Section 7(c).

	 	(d)	 	For purposes of this Agreement, “Cause” shall mean:

	 	(i)	 	the material breach of any provision of this Agreement by
Employee which has not been cured within five business (5) days after the
Company provides notice of the breach to Employee; provided, however, if the
act or omission that is the subject of such notice is substantially similar to
an act or omission with respect to which Employee has previously received
notice and an opportunity to cure, then no additional notice is required and
this Agreement may be terminated immediately upon the Company’s election and
written notice to Employee);
	 
	 	(ii)	 	the entry of a plea of guilty or judgment entered after trial
finding Employee guilty of a crime punishable by imprisonment in excess of one
year involving moral turpitude (meaning a crime that includes the commission of
an act of gross dishonesty or bad morals);
	 
	 	(iii)	 	willfully engaging by Employee in conduct that the Employee
knows or reasonably should know is detrimental to the reputation, character or
standing or otherwise injurious to the Company or any of its shareholders,
direct or indirect subsidiaries and Affiliates, monetarily or otherwise;
	 
	 	(iv)	 	without limiting the generality of Section 7(c)(i), the breach
or threatened breach of any of the provisions of Sections 9, 10 or 11; or
	 
	 	(v)	 	a ruling in any state or federal court or by an arbitration
panel that the Employee has breached the provisions of a non-compete or
non-disclosure agreement, or any similar agreement or understanding which would
in any way limit, as determined by the Board of Directors of the Company, the
Employee’s ability to perform under this Agreement now or in the future.

	 	(e)	 	Termination By Company Without Cause. The Company may terminate this Agreement
at any time, and for any reason, by providing at least thirty (30) days written notice
to Employee.
	 
	 	(f)	 	Termination By Employee With Good Reason. Employee may terminate his
employment with good reason anytime after Employee has actual knowledge of the
occurrence, without the written consent of Employee, of one of the following events
(each event being referred to herein as “Good Reason”):

	 	(i)	 	(A) any change in the duties or responsibilities (including
reporting responsibilities) of Employee that is inconsistent in any adverse
respect

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	 	 	 	with Employee’s position(s), duties, responsibilities or status with the
Company immediately prior to such change (including any diminution of such
duties or responsibilities) or (B) an adverse change in Employee’s titles or
offices (including, membership on the Board of Directors) with the Company;

	 	(ii)	 	a reduction in Employee’s Base Salary or Bonus opportunity;
	 
	 	(iii)	 	the relocation of the Company’s principal executive offices
from Bermuda;
	 
	 	(iv)	 	the failure of the Company to continue in effect any material
employee benefit plan, compensation plan, welfare benefit plan or fringe
benefit plan in which Employee is participating immediately prior to the date
of this Agreement or the taking of any action by the Company which would
adversely affect Employee’s participation in or reduce Employee’s benefits
under any such plan, unless Employee is permitted to participate in other plans
providing Employee with substantially equivalent benefits;
	 
	 	(v)	 	any refusal by the Company to continue to permit Employee to
engage in activities not directly related to the business of the Company which
Employee was permitted to engage in prior to the date of this Agreement;
	 
	 	(vi)	 	the Company’s failure to provide in all material respects the
indemnification set forth in the Company’s Articles of Incorporation, By-Laws,
or any other written agreement between Employee and Company;
	 
	 	(vii)	 	a Change in Control of the Company;
	 
	 	(viii)	 	the failure of the Company to obtain the assumption agreement from any
successor giving rise to a Change of Control as contemplated in Section 12 (a);
	 
	 	(ix)	 	any other breach of a material provision of this Agreement by
the Company.
	 
	 	 	 	For purposes of clauses (iii) through (vi) and (ix) above, an isolated,
insubstantial and inadvertent action taken in good faith and which is
remedied by the Company within ten (10) days after receipt of notice thereof
given by Employee shall not constitute Good Reason. Employee’s right to
terminate employment with Good Reason shall not be affected by Employee’s
incapacity due to mental or physical illness and Employee’s continued
employment shall not constitute consent to, or a waiver of rights with
respect to, any event or condition constituting cause.

	8.	 	Effect of Termination. Upon the termination of this Agreement, no rights of Employee which
shall have accrued prior to the date of such termination, including the right to

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	 	 	receive any bonus Fully-Earned through the date of such termination, shall be affected in
any way.

	 	(a)	 	Upon Death of Employee.
	 
	 	 	 	During the Term, if Employee’s employment is terminated due to his death, Employee’s
estate shall be entitled to receive the Base Salary set forth in Section 3 accrued
through the date of death and any bonus Fully-Earned (as herein defined) through the
date of such termination; provided, however, Employee’s estate shall not be entitled
to any other benefits (except as provided by law or separate agreement).
“Fully-Earned” shall mean that for purposes of determining whether the Employee
shall be entitled to a bonus, that such Employee shall be treated as if he had been
employed through the last date of the regular period for determining whether or not
a bonus is payable in the standard manner that all such employees are evaluated even
though Employee is no longer employed by the Company, and his eligibility for an
incentive bonus, if any, shall be determined accordingly. Further, a surviving
spouse of Employee shall be eligible for continuation of family benefits pursuant to
Section 3(c) subject to compliance with Plan provisions at the full premium rate
(Company plus employee portion) for a one year period after the date of termination.
	 
	 	(b)	 	For Disability; By Company Without Cause; By Employee with Good Reason.
	 
	 	 	 	If this Agreement is terminated under Section 7 (b), (e) or (f):

	 	(i)	 	Employee shall be entitled to receive his Base Salary set forth
in Section 3 accrued through the date of such termination and any bonus
Fully-Earned through the date of such termination, and
	 
	 	(ii)	 	All unvested stock options and restricted stock grants
previously awarded to Employee by the Company or Argonaut shall remain in full
force and effect as if no termination had occurred, and
	 
	 	(iii)	 	If a Change of Control (x) has not then occurred, Company
shall pay Employee on the six month anniversary of the date of such
termination an amount equal to three times his Base Salary, and (y) has
then occurred (or is reasonably expected to occur), Company shall pay Employee
on the six month anniversary of the date of such termination an amount equal to five times his Base Salary. Further, Employee shall be
eligible for continuation of benefits pursuant to Section 3(h) subject to
compliance with Plan provisions at the full premium rate (Company
plus employee portion) until Employee
obtains reasonably equivalent employment or for three (3) years from the date
of termination, whichever is earlier. It shall be a condition precedent of
payment to Employee of such payment and continued benefits pursuant to this
Section 8(b) that Employee execute a full and complete release of the Company,
each of its subsidiaries, Affiliates and their respective past, present and
future partners, officers, directors, employees, consultants, attorneys, agents
and shareholders, in form and substance reasonably acceptable to the Company,
of any claims

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	 	 	 	Employee may have against any of them, to the extent such claims arise from
Employee’s employment hereunder, and any revocation period with
respect to such release have expired, prior to the six month
anniversary of the date of such termination, and

	 	(iv)	 	Employee shall no longer be bound by the prohibitions contained
in Section 10.3 and 10.4.2 hereof prohibiting Employee from engaging or having
any interests in, directly or indirectly, in a competitive business or
soliciting employees; provided, however, Employee shall remain bound by the
further prohibition contained in Section 10.4.1, and
	 
	 	(v)	 	Except as provided for in this Section 8(b), Employee shall not
have any rights which have not previously accrued upon termination of this
Agreement.

	 	(c)	 	By Company With Cause
	 
	 	 	 	In the event of termination of Employee’s employment Section 7(c) Employee shall be
entitled to receive the Base Salary and benefits set forth in Section 3 accrued
through the date of termination, and he shall not be entitled to any other benefits
(except as required by law).
	 
	 	(d)	 	Gross-Up Payment.

	 	(i)	 	Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment, award, benefit or
distribution (or any acceleration of any payment, award, benefit or
distribution) by the Company, or any successor, to or for the benefit of Employee (the
“Payments”) would be subject to the excise tax imposed by
Section 4999 or Section 409(A) of the
US Internal Revenue Code of 1986, as amended from time to time (the “Code”)
(the “Excise Tax”), then the Company shall pay to Employee
within 30 days of such determination an additional
payment (a “Gross-Up Payment”) in an amount such that after payment by Employee
of all taxes (including any Excise Tax) imposed upon the Gross-Up Payment,
Employee retains an amount of the Gross-Up Payment equal to the sum of (x) the
Excise Tax imposed upon the Payments and (y) the products of any deductions
disallowed because of the inclusion of the Gross-Up Payment in Employee’s
adjusted gross income and the highest applicable marginal rate of federal
income taxation for the calendar year in which the Gross-Up Payment is to be
made. For purposes of determining the amount of the Gross-Up Payment, Employee
shall be deemed to (A) pay federal income taxes at the highest marginal rates
of federal income taxes at the highest marginal rate of taxation for the
calendar year in which the Gross-Up Payment is to be made, and (B) have
otherwise allowable deductions for federal income tax purposes at least equal
to those which could be disallowed because of the inclusion of the Gross-Up
Payment in Employee’s adjusted gross income.

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	 	(ii)	 	As a result of the uncertainty in the application of Section
4999 or Section 409(A) of the Code at the time of the Determination, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
(Underpayment) or Gross-Up Payments are made by the Company which should not
have been made (Overpayment), consistent with the calculations required to be
made hereunder. In the event that Employee thereafter is required to make
payment of any Excise Tax or additional Excise Tax, any such Underpayment
(together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code) shall be paid by the Company to or for the benefit of Employee
within 30-days of any such required payment by Employee.
In the event the amount of the Gross-Up Payment exceeds the amount necessary to
reimburse Employee for his Excise Tax, any such Overpayment (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be
promptly paid by Employee (to the extent he has received a refund if the
applicable Excise Tax has been paid to the Internal Revenue Service) to or for
the benefit of the Company. Employee shall cooperate, to the extent his
expenses are reimbursed by the Company, with any reasonable requests by the
Company in connection with any contest or disputes with the Internal Revenue
Service in connection with the Excise Tax.

	9.	 	Confidential Information.

	 	(a)	 	The Company shall disclose to Employee, or place Employee in a position to have
access to or develop, trade secrets or confidential information of Company or its
Affiliates; and/or shall entrust Employee with business opportunities of Company or its
Affiliates; and/or shall place Employee in a position to develop business good will on
behalf of Company or its Affiliates.
	 
	 	(b)	 	The Employee acknowledges that in his employment hereunder he occupies a
position of trust and confidence and agrees that he will treat as confidential and will
not, without prior written authorization from the Company, directly or indirectly,
disclose or make known to any person or use for his own benefit or gain, the methods,
process or manner of accomplishing the business undertaken by the Company or its
Affiliates, or any non-public information, plans, formulas, products, trade secrets,
marketing or merchandising strategies, or confidential material or information and
instructions, technical or otherwise, issued or published for the sole use of the
company, or information which is disclosed to the Employee or in any acquired by him
during the term of this Agreement, or any information concerning the present or future
business, processes, or methods of operation of the Company or its Affiliates, or
concerning improvement, inventions or know how relating to the same or any part
thereof, it being the intent of the Company, with which intent the Employee hereby
agrees, to restrict him from disseminating or using for his own benefit any information
belonging directly or indirectly to the Company which is unpublished and not readily
available to the general public.

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	 	(c)	 	The confidentiality obligations set forth in (a) and (b) of this Section 9
shall apply during Employee’s employment and for a period of one year after termination
of employment.
	 
	 	(d)	 	All information, ideas, concepts, improvements, discoveries, and inventions,
whether patentable or not, that are conceived, made, developed or acquired by Employee,
individually or in conjunction with others, during Employee’s employment with Company
(whether during business hours or otherwise and whether on the premises of the Company
or one of its Affiliate or otherwise) that relate to the business, products or services
of the Company or any of its Affiliates shall be disclosed to the Board of Directors
and are and shall be the sole and exclusive property of the Company or such Affiliate.
Moreover, all documents, drawings, memoranda, notes, records, files, correspondence,
manuals, models, specifications, computer programs, e-mail, voice mail, electronic data
bases, maps and all other writings and materials of any type embodying any such
information, ideas, concepts, improvements, discoveries and inventions are and shall be
the sole and exclusive property of the Company. Upon termination of Employee’s
employment by the Company, for any reason, Employee promptly shall deliver the same,
and all copies thereof, to the Company.
	 
	 	(e)	 	If, during Employee’s employment by the Company, Employee creates any work of
authorship fixed in any tangible medium of expression that is the subject matter of
copyright (such as video tapes, written presentations, or acquisitions, computer
programs, e-mail, voice mail, electronic data bases, drawings, maps, architectural
renditions, models, manuals, brochures or the like) relating to the Company’s business,
products or services, whether such work is created solely by Employee or jointly with
others (whether during business hours or otherwise and whether on the Company’s
premises or otherwise), the Company shall be deemed the author of such work if the work
is prepared by Employee in the scope of Employee’s employment.

	10.	 	Restrictive Covenants
	 
	10.1	 	For the purposes of this Section, the following words have the following meanings:

	 	10.1.1	 	“Company Services” means any services (including but not limited to technical and
product support, technical advice, underwriting and customer services) supplied by the
Company or its Affiliates in the specialty property and/or casualty insurance business;
	 
	 	10.1.2	 	“Confidential Information” has the meaning ascribed thereto in Section 9;
	 
	 	10.1.3	 	“Customer” means any person or firm or company or other organization whatsoever to
whom or which the Company supplied Company Services during the Restricted Period and
with whom or which, during the Restricted Period:

(a)  the Employee had material personal dealings pursuant to his employment; or

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	 	 	 	(b)  any employee who was under the direct or indirect supervision of the Employee
had material personal dealings pursuant to their employment.
	 
	 	10.1.5	 	“Prospective Customer” means any person or firm or company or other organization
whatsoever with whom or which the Company or its Affiliates shall have had negotiations
or material discussions regarding the possible distribution, sale or supply of Company
Services during the Restricted Period and with whom or which during such period:

(a)  the Employee shall have had material personal dealings pursuant to his
employment; or

(b)  any employee who was under the direct or indirect supervision of the Employee
shall have had material personal dealings pursuant to their employment; or

(c)  the Employee was directly responsible in a client management capacity on behalf
of the Company.
	 
	 	10.1.6	 	“Restricted Area” means:
	 
	 	 	 	(a)  Bermuda; or
	 
	 	 	 	(b)  any geographic area in which the Company or Affiliates provided Restricted
Services and for which the Employee was responsible in the 12 months preceding the
date of Employee’s termination of employment by the Company.
	 
	 	10.1.7	 	“Restricted Employee” means any person who on the date of Employee’s termination of
employment by the Company was at the level of director, manager, underwriter or
salesperson with whom the Employee had material contact or dealings in the course of
his Employment during the Restricted Period;
	 
	 	10.1.8	 	“Restricted Period” means the period of 12 months ending on the last day of the
Employee’s employment with the Company or, in the event that no duties were assigned to
the Employee or the Employee was placed upon garden leave, the 12 months immediately
preceding the last day on which the Employee carried out any duties for the Company;
	 
	 	10.1.10	 	“Restricted Services” means Company Services or any services of the same or of a
similar kind.

	10.2	 	The Employee recognises that, whilst performing his duties for the Company, he will have
access to and come into contact with trade secrets and confidential information belonging to
the Company and its Affiliates and will obtain personal knowledge of and influence over its or
their customers and/or employees. The Employee therefore agrees that the restrictions set out
in this Section are reasonable and necessary to protect the legitimate business interests of
the Company and its Affiliates both during and after the termination of his employment.

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	10.3	 	The Employee hereby undertakes with the Company that he will not during his employment with
the Company and for the period of twelve months after he ceases to be employed by the Company
whether by himself through his employees or agents or otherwise howsoever and whether on his
own behalf or on behalf of any other person, firm, company or other organisation, directly or
indirectly:

	 	10.3.1	 	in competition with the Company or its Affiliates within the Restricted Area, be
employed or engaged or otherwise interested in the business of researching into,
developing, underwriting, distributing, selling, supplying or otherwise dealing with
Restricted Services; or
	 
	 	10.3.2	 	in competition with the Company or its Affiliates, accept orders or facilitate the
acceptance of any orders or have any business dealings for Restricted Services from any
Customer or Prospective Customer; or
	 
	 	10.3.3	 	employ or otherwise engage in the business of or be personally involved to a material
extent in employing or otherwise engaging in the business of researching into,
developing, distributing, selling, supplying or otherwise dealing with Restricted
Services, any person who was during the Restricted Period employed or otherwise engaged
by the Company and who by reason of such employment or engagement is reasonably likely
to be in possession of any trade secrets or Confidential Information relating to the
business of the Company.

	10.4	 	The Employee hereby undertakes with the Company that he shall not during his employment with
the Company and for the period of 12 months after he ceases to be employed by the Company
without the prior written consent of the Company whether by himself through his employees or
agents or otherwise howsoever and whether on his own behalf or on behalf of any other person,
firm, company or other organisation directly or indirectly:

	 	10.4.1	 	in competition with the Company, solicit business from or endeavour to entice away or
canvass any Customer or Prospective Customer if such solicitation or canvassing is in
respect of Restricted Services;
	 
	 	10.4.2	 	solicit or induce or endeavour to solicit or induce any Restricted Employee to cease
working for or providing services to the Company, whether or not any such person would
thereby commit a breach of contract.

	10.5	 	The benefit of Sections 10.3 and 10.4 shall be held on trust by the Company for each of its
Affiliates and the Company reserves the right to assign the benefit of such provisions to any
of its Affiliates, in addition such provisions also apply as though there were substituted for
references to “the Company” references to each of its Affiliates in relation to which the
Employee has in the course of his duties for the Company or by reason of rendering services to
or holding office in such Affiliate:

	 	10.5.1	 	acquired knowledge of its trade secrets or Confidential Information; or
	 
	 	10.5.2	 	had material personal dealings with its Customers or Prospective Customers; or

12

 

	 	10.5.3	 	supervised directly or indirectly employees having material personal dealings with
its Customers or Prospective Customers but so that references in Section 10 to “the
Company” shall for this purpose be deemed to be replaced by references to the relevant
Affiliate. The obligations undertaken by the Employee pursuant to this Section 10.5
shall, with respect to each Affiliate of the Company, constitute a separate and
distinct covenant and the invalidity or unenforceability of any such covenant shall not
affect the validity or enforceability of the covenants in favour of any other Affiliate
or the Company.

	10.6	 	The parties agree that the periods referred to in Sections 10.3 and 10.4 above will be
reduced by one day for every day, during which, at the Company’s direction the Employee has
been excluded from the Company’s premises and has not carried out any duties.

	10.7	 	While the restrictions in this Section 10 (on which the Employee has had the opportunity to
take independent advice, as the Employee hereby acknowledges) are considered by the parties to
be reasonable in all the circumstances, it is agreed that if any such restrictions, by
themselves, or taken together, shall be adjudged to go beyond what is reasonable in all the
circumstances for the protection of the legitimate interests of the Company or its Affiliates
but would be adjudged reasonable if part or parts of the wording thereof were deleted, the
relevant restriction or restrictions shall apply with such deletion(s) as may be necessary to
make it or them valid and effective.

	11.	 	[Intentionally blank]
	 
	12	 	Change Of Control.

	 	(f)	 	For purposes of this Agreement, a “Change of Control” shall be deemed to occur
if:

	 	(i)	 	Any Person, other than (1) the Company or any of its
subsidiaries, (2) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affiliates, (3) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (4) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as their
ownership of stock of the Company, is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such person any securities acquired directly
from the Company or its Affiliates) representing 50% or more of the combined
voting power of the Company’s then outstanding securities, or 50% or more of
the then outstanding common stock of the Company, excluding any Person who
becomes such a Beneficial Owner in

13

 

	 	 	 	connection with a merger or consolidation of the Company described in (ii)
below.
	 
	 	(ii)	 	There is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any other
corporation, except if: (A) the merger or consolidation would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or any parent
thereof) at least fifty percent (50%) of the combined voting power of the
voting securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation; or (B)
the merger or consolidation is effected to implement a recapitalization of
the Company (or similar transaction) in which no Person is or becomes the
beneficial owner, directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any securities
acquired directly from the Company or its Affiliates other than in connection
with the acquisition by the Company or its Affiliates of a business)
representing 50% or more of the combined voting power of the Company’s then
outstanding securities;
	 
	 	(iii)	 	The shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company’s assets,
other than a sale or disposition by the Company of all or substantially all
of the Company’s assets to an entity, at least 50% of the combined voting
power of the voting securities of which are owned by the stockholders of the
Company in substantially the same proportions as their ownership of the
Company immediately prior to such sale.
	 
	 	(iv)	 	During any one year period, individuals who at the
beginning of the period constitute the Board of Directors of the Company
cease for any reason to constitute a majority of the Board of Directors.

	 	(g)	 	For purposes of this Section 12:

	 	(i)	 	The term “Person” shall have the meaning given in Section
3(a)(9) of the 1934 Act as modified and used in Sections 13(d) and 14(d) of
the 1934 Act.
	 
	 	(ii)	 	The term “Beneficial Owner” shall have the meaning provided
in Rule 13d-3 under the 1934 Act.
	 
	 	(iii)	 	The term “Affiliate” means, with respect to any individual
or a corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock

14

 

	 	 	 	company, government (or an agency or political subdivision thereof) or
other entity of any kind (each a “person”), any other person that directly
or indirectly controls or is controlled by or under common control with
such person. For the purposes of this definition, “control” when used
with respect to any person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies
of such person, whether through the ownership of voting securities, by
contract or otherwise; and the terms of “affiliated”, “controlling” and
“controlled” have meanings correlated to the foregoing.

	13.	 	Successors and Assigns. This Agreement is personal in its nature and neither of the parties
hereto shall, without the consent of the other, assign or transfer this Agreement or any
rights or obligations hereunder, provided, however, that the provisions hereof shall enure to
the benefit of, and be binding upon, each successor of the Company, whether by merger,
consolidation, acquisition or otherwise, unless otherwise agreed to by the Employee and the
Company.

	14.	 	Notices. Any notice required or permitted to be given to the Employee pursuant to this
Agreement shall be sufficiently given if sent to the Employee by registered or certified mail
addressed to the Employee at 110 Pitts Bay Road, Pembroke HM 08 Bermuda, or at such other
address as he shall designate by notice to the Company, and any notice required or permitted
to be given to the Company pursuant to this Agreement shall be sufficiently given if sent to
the Company by registered or certified mail addressed to it at 110 Pitts Bay Road, Pembroke HM
08 Bermuda, or at such other address as it shall designate by notice to the Employee.

	15.	 	Invalid Provisions. The invalidity or unenforceability of a particular provision of this
Agreement shall not affect the enforceability of any other provisions hereof and this
Agreement shall be construed in all respects as if such invalid or unenforceable provision
were omitted.

	16.	 	Amendments To The Agreement. This Agreement may only be amended in writing by an agreement
executed by both parties hereto.

	17.	 	Entire Agreement. This Agreement contains the entire agreement of the parties hereto and
supersedes any and all prior agreements, oral or written, and negotiations between said
parties regarding the subject matter contained herein. The parties further agree that this
Agreement shall supersede and replace in its entirety the Amended and Restated Executive
Employment Agreement, dated February 7, 2005 and amended November 1, 2006, between the
Employee and Argonaut.

	18.	 	Applicable Law and Venue. This Agreement is entered into under, and shall be governed for
all purposes, by the laws of Bermuda; with venue of any lawsuit between the parties in
Hamilton, Bermuda.

15

 

	19.	 	No Waiver. No failure by either party hereto at any time to give notice of any breach by the
other party of, or to require compliance with, any condition or provision of this Agreement
shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time.

	20.	 	Severability. If a Court of competent jurisdiction determines that any provision of this
Agreement is invalid or unenforceable, then the invalidity or unenforceability of that
provision shall not affect the validity or unenforceability of any other provision of this
Agreement, and all other provisions shall remain in full force and effect.

	21.	 	Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, but all of which together will constitute one in the same
agreement.

	22.	 	Withholding of Taxes and Other Employee Deductions. The Company may withhold from any
benefits and payments made pursuant to this Agreement all federal, state, city and other taxes
as may be required pursuant to any law or governmental regulation or ruling and any and all
other normal employee deductions made with respect to the Company’s employees generally.

	23.	 	Section 409A of the Code. The provisions of this Agreement and any payments made herein
are intended to comply with, and should be interpreted consistent with, the requirements of
Section 409A of the Code, and any related regulations or other effective guidance promulgated
thereunder (collectively, “Section 409A”). The time or schedule of a payment to which the
Executive is entitled under this Agreement may be accelerated at any time that this Agreement
fails to meet the requirements of Section 409A and any such payment will be limited to the
amount required to be included in the Executive’s income as a result of the failure to comply
with Section 409A. Reference herein to termination of employment
shall be deemed to mean a separation from service.
	 
		 	In witness whereof, the parties hereto have executed this Agreement as of the day and year
above written.

	 	 	 	 	 	 	 
	Argo Group International
Holdings, Ltd.	 	 	 	Employee:
	 
	 	 	 	 	 	 
	By:
	 	/s/ John Power	 	 	 	/s/ Mark E. Watson III
	 	 	 	 	 	 	 
	 

	 	John Power, Chairman,

Compensation Committee,

Board of Directors of

Argo Group International Holdings, Ltd.
	 	 	 	Mark E. Watson III

16<PAGE>

                                  Exhibit 10.1

                            TECUMSEH PRODUCTS COMPANY
                      LONG-TERM INCENTIVE EQUITY AWARD PLAN

                                 AWARD AGREEMENT
                                    (OPTION)

     Agreement made effective ____________, 20__ (the "Grant Date") between
Tecumseh Products Company, a Michigan corporation (the "Company"), and
________________________ (the "Employee").

     This Agreement confirms the grant of an Option pursuant to and subject to
all the terms and conditions of the Tecumseh Products Company Long-Term
Incentive Equity Award Plan, as amended and restated on August 7, 2007 and as it
may be further amended or restated in the future in accordance with its terms
(the "Plan"). In this Agreement capitalized terms that are used without separate
definition have the meanings given to them in the Plan.

     The Option granted and its terms are as follows:

          Shares subject to Option: _________ shares of Class A Common Stock

          Exercise price per share: $_______

          Option becomes exercisable as to:

               _____ shares [one-third of total] on __________, 20__ [first
               anniversary of Grant Date];

               an additional _____ shares [one-third of total] on __________,
               20__ [second anniversary of Grant Date]; and

               the final _____ shares [one-third of total] on __________, 20__
               [third anniversary of Grant Date]

          Option expires: __________, 20__ [seventh anniversary of Grant Date]

     No portion of the Option that is unexercisable at Termination of Employment
will become exercisable, except as may be otherwise provided by the express
terms of an Employment Contract.

     The Employee's signature below indicates the Employee's acknowledgement
that the Employee has received and read a copy of the Plan. The terms and
provisions of the Plan. In the event of a conflict between any term or provision
contained in this Agreement and a term or provision of the Plan, the applicable
terms and provisions of the Plan will govern and prevail.

TECUMSEH PRODUCTS COMPANY               EMPLOYEE:

By:
    ---------------------------------   ----------------------------------------
[Name]                                  [Name]
[Title]

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