Document:

Exhibit 10.3 Q2 2014

Exhibit 10.3

AMENDED AND RESTATED COMMERCIAL LINES
MASTER AGREEMENT
BY AND BETWEEN
ACP RE, LTD
AND
AMTRUST FINANCIAL SERVICES, INC.
DATED AS OF JULY 23, 2014

TABLE OF CONTENTS

	
			
	ARTICLE I DEFINITIONS
	2
	

	ARTICLE II TRANSACTION CLOSING
	6
	

	ARTICLE III REPRESENTATIONS AND WARRANTIES OF ACP
	7
	

	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF AMTRUST
	8
	

	ARTICLE V COVENANTS
	10
	

	ARTICLE VI RESERVED
	15
	

	ARTICLE VII CONDITIONS PRECEDENT
	15
	

	ARTICLE VIII INDEMNIFICATION
	16
	

	ARTICLE IX TERMINATION PRIOR TO CLOSING
	17
	

	ARTICLE X GENERAL PROVISIONS
	18
	

EXHIBITS
Exhibit A            LPT Agreement
Exhibit B            Administrative Services Agreement
Exhibit C            Commercial Lines MGA Agreement
Exhibit D            Commercial Lines Reinsurance Agreement
Exhibit E            Stop-Loss Agreement
Exhibit F            Investment Agreement
Exhibit G            Commercial Lines Bill of Sale
Exhibit H            Tower Companies

DISCLOSURE SCHEDULE
		
	Section
	Description

		
	Section 3.3
	Noncontravention; Consents

		
	Section 4.3
	Noncontravention; Consents

		
	Section 7.1(d)
	Consents

AMENDED AND RESTATED COMMERCIAL LINES MASTER AGREEMENT
This AMENDED AND RESTATED COMMERCIAL LINES MASTER AGREEMENT is made as of July 23, 2014 (this "Agreement"), by and between ACP Re Ltd ("ACP"), a Bermuda exempted company, and AmTrust Financial Services, Inc. ("AmTrust"), a Delaware corporation.
WHEREAS, ACP, AmTrust and National General Holdings Corporation, a Delaware corporation ("National General") are entering into a series of agreements by which ACP has agreed to acquire Tower Group International, Ltd. ("Tower"), a Bermuda insurance holding company, which transacts commercial and personal lines insurance business in the United States through the Companies which are parties to this Agreement, and, in connection therewith, AmTrust and National General have agreed to administer the run-off of Tower’s legacy business, provide stop-loss coverage to ACP with respect thereto, and, prospectively, manage and reinsure all business to be written by the Companies after the Effective Time;
WHEREAS, ACP, pursuant to that certain Merger Agreement among ACP, Merger Sub and Tower dated as of January 3, 2014 (the "Merger Agreement") is acquiring Tower and its Subsidiaries through the merger of Merger Sub with and into Tower with Tower surviving such merger (the "Merger");
WHEREAS, AmTrust and National General have agreed to provide financing to ACP in connection with the Merger and to manage and reinsure, respectively, the Tower Companies' Commercial Lines Business and Personal Lines Business as set forth in the agreements provided for in this Agreement;
WHEREAS, AmTrust will provide financing to ACP in an aggregate principal amount of up to $125,000,000, which will pay a market interest rate and have a term of no less than seven years, pursuant to a credit agreement, the principal terms of which have been agreed to by ACP and AmTrust (the "Credit Agreement");
WHEREAS, in connection with the transactions described above, CP Re and the Tower Companies will enter into that certain Loss Portfolio Transfer Agreement in substantially the form attached hereto as Exhibit A (the "LPT Agreement"), pursuant to which CP Re will assume all insurance liabilities and unearned premium liability (to the extent not previously assumed by Affiliates of AmTrust or National General) of the Tower Companies;
WHEREAS, the parties will enter into the Commercial Lines Administrative Services Agreement, in substantially the form attached as Exhibit B (the "Administrative Services Agreement"), pursuant to which AmTrust or one or more of its Affiliates will manage and administer the runoff of claims and policies arising out of the Commercial Lines Business written by the Tower Companies prior to the Effective Time; 
WHEREAS, the parties will enter into the Commercial Lines Managing General Agent Agreement, in substantially the form attached as Exhibit C (the "Commercial Lines MGA Agreement"), pursuant to which AmTrust or one or more of its Affiliates will manage and administer the Commercial Lines Business written by the Tower Companies following the Effective Time; 
WHEREAS, the parties will enter into the 100% Quota Share Reinsurance Agreement, in substantially the form attached as Exhibit D (the "Commercial Lines Reinsurance Agreement"), pursuant to which AmTrust or one or more of its Affiliates will reinsure business written by the Tower Companies pursuant to the Commercial Lines MGA Agreement; 

WHEREAS, AmTrust and National General, as reinsurers, and CP Re, as reinsured, will enter into the $250 million Aggregate Stop Loss Reinsurance Agreement in substantially the form attached as Exhibit E (the "Stop-Loss Agreement");
WHEREAS, AmTrust, National General and ACP Re will enter into a Stop-Loss Retrocession Agreement to be negotiated in good faith by AmTrust, National General and ACP Re (the "Retrocession Agreement"), pursuant to which ACP Re will reinsure 100% of the business reinsured pursuant to the Stop-Loss Agreement; 
WHEREAS, AmTrust, through its Affiliate, AII Insurance Management, Ltd., and ACP will enter into the Investment Management Agreement in substantially the form attached as Exhibit F (the "Investment Agreement"), by which AII Insurance Management, Ltd., will provide investment management services to the Tower Companies; 
WHEREAS, in connection with the transactions contemplated hereby and pursuant to the Commercial Lines Bill of Sale in substantially the form attached hereto as Exhibit G, AmTrust will purchase from ACP or its applicable Subsidiary, directly or indirectly, the Purchased Assets (as defined therein), on the terms and subject to the conditions set forth therein; 
WHEREAS, the transactions described in the foregoing recitals are collectively referred to herein as the "Transactions;" and
WHEREAS, the parties hereto entered into that certain Commercial Lines Master Agreement, dated as of April 8, 2014 (the "Original Master Agreement"), and now wish to amend and restate the Original Master Agreement in its entirety as set forth herein.
NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements contained in this Agreement, and of the mutual benefits to be derived from this Agreement, the parties agree as follows:   
ARTICLE I
DEFINITIONS
Section 1.1    Definitions.  For purposes of this Agreement, the following terms shall have the respective meanings set forth below:
"ACP" has the meaning set forth in the introductory paragraph of this Agreement.
"Administrative Services Agreement" has the meaning set forth in the Recitals. 
"Affiliate" of any Person means another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person.  For purposes of this definition, "control" (including its correlative meanings "controlled by" and "under common control with") shall mean possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership or securities or partnership or other ownership interests, by contract or otherwise).
"Agreement" has the meaning set forth in the introductory paragraph of this Agreement.

-2-

"AmTrust" has the meaning set forth in the introductory paragraph of this Agreement.
"Applicable Law" means any domestic or foreign federal, state or local statute, law, ordinance or code, or any written rules, regulations or administrative interpretations issued by any Governmental Entity pursuant to any of the foregoing, and any order, writ, injunction, directive, judgment or decree of a court of competent jurisdiction applicable to the parties hereto. 
"Applicable Rate" means the prime rate of interest reported from time to time in The Wall Street Journal.
"Business Day" means any day other than a Saturday, Sunday or other day on which banking institutions in New York are required or authorized by law or executive order to be closed.
"Commercial Lines Business" means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions (other than Personal Lines Business) issued by a Tower Company.
"Commercial Lines Bill of Sale" means the Commercial Lines Bill of Sale and General Assignment and Assumption Agreement dated as of the Transaction Closing Date among ACP, Affiliates of Tower acquired by ACP and AmTrust in the form annexed as Exhibit C.
"Commercial Lines Reinsurance Agreement" has the meaning set forth in the Recitals.
"Commercial Lines MGA Agreement" has the meaning set forth in the Recitals.
"CP Re" means CastlePoint Reinsurance Company, Ltd.
"Credit Agreement" has the meaning set forth in the Recitals. 
"Cut-Through Quota Share Agreement" means that certain Commercial Lines Cut-Through Quota Share Reinsurance Agreement, dated as of January 3, 2014, by and among Technology Insurance Company, Inc., an insurance company organized under the laws of New Hampshire, and the Companies.

"Disclosure Schedule" means the Disclosure Schedule delivered in connection with, and constituting a part of, this Agreement.
"Earn-Out Payments" has the meaning set forth in Section 2.4.

"Effective Time" has the meaning set forth in Section 2.1.
"Governmental Entity" has the meaning set forth in Section 3.3.
"Gross Written Premium" means (a) any and all amounts received, less cancellations and returns, in connection with the Commercial Lines Business that are required to be reported as direct or assumed premium on the statutory financial statement of AmTrust or its insurance company Affiliates, as the case may be, in accordance with Applicable Law, and (b) as of the Effective Time, unearned premium assumed or written in connection with the Cut-Through Quota Share Agreement or the Pre-Closing MGA Agreement.

-3-

"Indemnified Party" has the meaning set forth in Section 8.2(a).
"Indemnifying Party" has the meaning set forth in Section 8.2(a).Instrument" has the meaning set forth in the Recitals. 
"Insurance Regulators" means all Governmental Entities regulating the business of insurance under Applicable Laws.
"Investment Agreement" has the meaning set forth in the Recitals. 
"Liens" means pledges, restrictions, claims, liens, charges, encumbrances and security interests of any kind.
"Losses" means any and all liabilities, claims, obligations, losses, costs, disbursements, penalties, fines, expenses (including reasonable attorneys', accountants' and other out-of-pocket professional fees and expenses incurred in the investigation, collection, prosecution or defense or any claims, whether or not involving any third party) and damages, but excluding lost profits or any punitive, exemplary, consequential or similar damages (other than lost profits or any punitive, exemplary, consequential or similar damages actually paid to a third party in a Third Party Claim).
"LPT Agreement" has the meaning set forth in the Recitals. 
"Measurement Date" means the last Business Day of June and December of each calendar year.

"Merger Agreement" has the meaning set forth in the Recitals.
"Merger Sub" means London Acquisition Company Limited, a Bermuda exempted company.
"National General" has the meaning set forth in the Recitals.
"Permitted Liens" means (a) Liens for Taxes or assessments and similar charges, which either are (i) not delinquent or (ii) being contested in good faith and by any appropriate action or proceeding, and adequate reserves (as determined in accordance with SAP) have been established on the relevant Company's books with respect thereto, (b) Liens to secure, landlords, sublandlords, licensors, sublicensors or licensees under real estate leases, licenses or other rental or lease agreements, (c) deposits or pledges made in connection with, or to secure payment of, utilities or similar services, workers' compensation, unemployment insurance, pension or other social security, governmental insurance and governmental benefits mandated under Applicable Laws, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return of money bonds and similar obligations, (d) mechanics', materialmen's or contractors' Liens or any similar statutory Lien for amounts not yet due and payable and incurred in the ordinary course of business, (e) zoning, entitlement, building and other similar restrictions which are not violated by the current conduct of the Commercial Lines Business, (f) purchase money Liens in any property acquired by the Tower Companies in the ordinary course of business and (g) easements, covenants, rights of way or other encumbrances or restrictions, if any, that do not impair the use of the assets to which they relate.

-4-

"Person" means an individual, corporation, partnership (limited or general), joint venture, limited liability company, association, trust, unincorporated organization or other entity.
"Personal Lines Business" means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions for personal automobile liability and physical damage, homeowners, personal excess and umbrella coverage issued by the Companies.

"Personal Lines Master Agreement" means that certain Personal Lines Master Agreement, dated as of the date hereof, by and between ACP Re and National General.
"Pre-Closing MGA Agreement" means the Managing General Agent Agreement, dated as of April 1, 2014, by and between AmTrust North America, Inc. and Tower Risk Management Corp.

"Regulatory Approvals" means all approvals, consents and authorizations of the transactions contemplated by this Agreement required under applicable state insurance or insurance holding company laws, including without limitation all approvals, consents and authorizations required by the New York Department of Financial Services, the Illinois Department of Insurance, the Massachusetts Division of Insurance, the Florida Office of Insurance Regulation, the New Jersey Department of Banking and Insurance, the Maine Bureau of Insurance and any other state insurance regulator whose approval is required to consummate any of the transactions contemplated by this Agreement.
"Retrocession Agreement" has the meaning set forth in the Recitals. 
"SAP" means, with respect to any Tower Company, the applicable statutory accounting principles (or local equivalents in the applicable jurisdiction) prescribed by the applicable Insurance Regulator under Applicable Law.
"Stop-Loss Agreement" has the meaning set forth in the Recitals. 
"Subject Premium" means Gross Written Premium in respect of the Commercial Lines Business written or assumed by AmTrust or its Affiliates in connection with the Transactions (including, without limitation, business written or assumed by AmTrust or its Affiliates pursuant to the Cut-Through Quota Share Agreement and the Pre-Closing MGA Agreement) on or following the Effective Time, including, without limitation, Gross Written Premium in respect of renewals or replacements of policies in respect of the Commercial Lines Business issued on or prior to the Effective Time, and policies in respect of the Commercial Lines Business written by AmTrust or its Affiliates following the Effective Time.

"Subsidiary" of any Person means another Person 50% or more of the total combined voting power of all classes of capital stock or other voting interests of which, or 50% or more of the equity securities of which, is owned directly or indirectly by such first Person.
"Taxes" means all federal, state, local and foreign taxes of any kind, including those on or measured by or referred to as income, gross receipts, sales, use, ad valorem, franchise, profits, value added, property or windfall profits taxes, or similar fees, assessments or charges of any kind whatsoever (whether payable directly or by withholding and whether or not requiring the filing of 

-5-

a tax return), together with any interest and any penalties, additions to tax or additional amounts imposed thereon by any Taxing Authority, domestic or foreign.
"Taxing Authority" means any Governmental Entity or other Person responsible for and having jurisdiction over, the administration of Taxes.
"Third-Party Claim" has the meaning set forth in Section 8.2(a).
"Tower" has the meaning set forth in the Recitals.
"Tower Companies" means the companies set forth on Exhibit H hereto. 
"Transaction Closing" has the meaning set forth in Section 2.1.
"Transaction Closing Date" has the meaning set forth in Section 2.1.
"Transaction Documents" means this Agreement, the Administrative Services Agreement, the Commercial Lines Bill of Sale, the Commercial Lines MGA Agreement, the Commercial Lines Reinsurance Agreement, the Credit Agreement, the LPT Agreement, the Retrocession Agreement, the Investment Agreement, the Stop-Loss Agreement and the Investment Agreement.
"Transactions" has the meaning set forth in the Recitals.
  
ARTICLE II 
TRANSACTION CLOSING
Section 2.1    Closing.  Unless this Agreement shall have been terminated pursuant to Section 9.1, and subject to the satisfaction or waiver of each of the conditions set forth in Article VII, the closing of the transactions contemplated hereby (the "Transaction Closing") shall take place at 10:00 a.m. on the "Closing Date" (as defined in the Merger Agreement), at the same location as the "Closing" (as defined in the Merger Agreement).  The effective date and time of the Transaction Closing are herein referred to as the "Transaction Closing Date."  All of the contemplated transactions under this Agreement shall be deemed to be consummated as of 11:59:59 p.m. Eastern Time on the Transaction Closing Date (the "Effective Time") and all actions taken at Transaction Closing shall be deemed to have occurred simultaneously and shall be deemed effective as of the dates and times specified in this Agreement.
Section 2.2    ACP's Transaction Closing Date Deliveries.  Subject to fulfillment or waiver (where permissible) of the conditions set forth in Article VII, at the Transaction Closing, ACP shall deliver to AmTrust all of the following:
(a)    FIRPTA Certificate.  Unless ACP is a foreign person, a certification from ACP and signed by a responsible officer of ACP, as contemplated under Section 1.1445-2(b)(2) of the Treasury Regulations, certifying that ACP is not a foreign person.
(b)    Transaction Documents.  A copy of (i) each Transaction Document (other than this Agreement) duly executed by ACP or its applicable Affiliate and (ii) such other documents and instruments as AmTrust reasonably requests to consummate the transactions contemplated by this Agreement.

-6-

Section 2.3    AmTrust's Transaction Closing Date Deliveries.  Subject to fulfillment or waiver (where permissible) of the conditions set forth in Article VII, at the Transaction Closing, AmTrust shall deliver to ACP a copy of (a) each Transaction Document (other than this Agreement) duly executed by AmTrust or its applicable Affiliate and (b) such other documents and instruments as ACP reasonably requests to consummate the transactions contemplated by this Agreement.
Section 2.4    Earn-Out Payments. 
 
(a)AmTrust will pay to ACP and ACP will accept from AmTrust, an amount in cash equal to three percent (3%) of Subject Premium for the three-year period following the Effective Time (the "Earn-Out Period"), which shall be payable semi-annually on the terms herein (each such payment, an "Earn-Out Payment").  The aggregate amount of all Earn-Out Payments shall not exceed $30 million.  The parties agree that AmTrust shall be entitled to set off any amounts due or payable to ACP hereunder against any amounts otherwise due and payable by ACP to AmTrust or its Affiliates in connection with the Transactions.
  
(b)On the last Business Day of the month following each Measurement Date during the Earn-Out Period, AmTrust shall notify ACP in writing of the Subject Premium for the six-month period ending on such Measurement Date (except with respect to the initial Measurement Date, which shall provide the Subject Premium beginning at the Effective Time and ending on the initial Measurement Date) and AmTrust shall pay to ACP the Earn-Out Payment in respect of such period by wire transfer in immediately available funds to the Reserve Account (as such term is defined in the Credit Agreement).  During the five-day period immediately following ACP's receipt of an Earn-Out Payment, ACP shall be permitted to review AmTrust's books and records and AmTrust's working papers to the extent solely related to the determination of the Subject Premium and the applicable Earn-Out Payment.
 
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACP
Subject to the exceptions and qualifications set forth in the Disclosure Schedule, ACP represents and warrants to AmTrust as follows:
Section 3.1    Organization, Standing and Corporate Power.  ACP is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has the requisite corporate power and authority to carry on its business as now being conducted.
Section 3.2    Authority.  ACP has the requisite corporate power and authority to enter into this Agreement and the other Transaction Documents and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and the other Transaction Documents by ACP and the consummation by ACP of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of ACP and no other corporate action or proceeding on the part of ACP or any Affiliate of ACP is necessary (including any shareholder vote).  This Agreement and each of the other Transaction Documents has been duly executed and delivered by ACP and, assuming this Agreement and the other Transaction Documents constitute the valid, legal and binding agreement of AmTrust, constitutes a valid, legal and binding obligation of ACP, enforceable against ACP in accordance with its terms, except that (a) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors' rights generally and (b) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

-7-

Section 3.3    Noncontravention; Consents.  Neither the execution and delivery of this Agreement or  the other Transaction Documents by ACP, nor the consummation by ACP of the transactions contemplated hereby or thereby, nor performance or compliance by ACP with any of the terms or provisions hereof or thereof, will (i) conflict with or violate any provision of the certificate or articles of incorporation, code of regulations, by-laws or other comparable charter or organizational documents of ACP or (ii) assuming (A) that the actions described in Section 4.02(a) of the Merger Agreement have been completed, (B) that the authorizations, consents and approvals referred to in this Section 3.3 are obtained and (C) that the filings referred to in this Section 3.3 are made and any waiting periods thereunder have terminated or expired, in the case of each of clauses (A) through (C), prior to the Effective Time, (x) conflict with, contravene or violate any Law, judgment, writ or injunction of any Governmental Entity applicable to ACP or the Tower Companies or (y) conflict with, contravene or violate or constitute a default or breach under any of the terms, conditions or provisions of any Contract to which ACP or any of the Tower Companies is a party or accelerate ACP's or any of the Tower Companies', if applicable, obligations under any such Contract.  Except for (a) compliance with the applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, (b) compliance with the rules and regulations of the NASDAQ Stock Market, (c) the filing of appropriate documents with the relevant authorities of other jurisdictions in which any of the Tower Companies is qualified to do business, (d) compliance with any applicable state securities or blue sky laws and (e) the Regulatory Approvals as set forth in Section 3.3 of the Disclosure Schedule, no consent or approval of, action by or in respect of, or filing, license, permit or authorization, declaration or registration with, any court or governmental or regulatory authority or agency, domestic or foreign (a "Governmental Entity"), the performance by ACP of its obligations pursuant to this Agreement and the other Transaction Documents and the consummation by ACP of the transactions contemplated hereunder and thereunder.
Section 3.4    Brokers.  No broker, investment banker, financial advisor or other Person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement or the other Transaction Documents based upon arrangements made by or on behalf of ACP or the Tower Companies.
Section 3.5    No Other Representations and Warranties.  Except for the representations and warranties contained in this Article III (including the related portions of the Disclosure Schedules), none of ACP or any other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of ACP, including any representation or warranty as to the accuracy or completeness of any information regarding the Tower Companies furnished or made available to AmTrust and its representatives.

ARTICLE IV 
REPRESENTATIONS AND WARRANTIES OF AMTRUST
Subject to the exceptions and qualifications set forth in the Disclosure Schedule, AmTrust represents and warrants to ACP as follows:
Section 4.1    Organization, Standing and Corporate Power.  AmTrust is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to carry on its business as now being conducted.

-8-

Section 4.2    Authority.  AmTrust has the requisite corporate power and authority to enter into this Agreement and the other Transaction Documents and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and the other Transaction Documents by AmTrust and the consummation by AmTrust of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of AmTrust.  No action by the stockholders of AmTrust is necessary to authorize the execution and delivery by AmTrust of this Agreement and the other Transaction Documents and the consummation by AmTrust of the transactions contemplated hereby and thereby.  This Agreement and each of the other Transaction Documents has been duly executed and delivered by AmTrust and, assuming this Agreement constitutes the valid, legal and binding agreement of ACP, constitutes a valid, legal and binding obligation of AmTrust, enforceable against AmTrust in accordance with its terms except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors' rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
Section 4.3    Noncontravention; Consents.  The execution and delivery of this Agreement and the other Transaction Documents do not, and except as disclosed in Section 4.3 of the Disclosure Schedule, the consummation of the transactions contemplated hereby or thereby will not, (i) conflict with, be prohibited by, or require any approval that has not already been obtained under, any of the provisions of the certificate of incorporation or the by-laws of AmTrust or the comparable organizational documents of any of its Subsidiaries, (ii) subject to the matters referred to in the next sentence, conflict with, result in a breach of or default (with or without notice or lapse of time, or both) under, be prohibited by, require approval or consent under, give rise to a right of termination under, or result in the creation of any Lien (other than a Permitted Lien) on any property or asset of AmTrust or any of its Affiliates under, any agreement, permit, franchise, license or instrument to which AmTrust or any of its Subsidiaries is a party or (iii) subject to the matters referred to in the next sentence, contravene, be prohibited by, or require approval or consent under, any Applicable Law, judgment, injunction or award applicable to AmTrust or any of its Subsidiaries, which, in the case of clauses (ii) and (iii) above, would materially impair the ability of AmTrust to consummate any of the transactions contemplated hereby or thereby.  No consent, approval or authorization of, or declaration or filing with, or notice to, any Governmental Entity is required by or with respect to AmTrust or any of its Subsidiaries in connection with the execution and delivery of this Agreement or the other Transaction Documents by AmTrust or the consummation by AmTrust of any of the transactions contemplated hereby or thereby, except for (i) the approvals, filings and notices required under the insurance laws of the jurisdictions set forth in Section 4.3 of the Disclosure Schedule, (ii) such other consents, approvals, authorizations, declarations, filings or notices as are set forth in Section 4.3 of the Disclosure Schedule and (iii) such other consents, approvals, authorizations, declarations, filings or notices that are not required to be set forth pursuant to clauses (ii) and (iii) the failure to obtain or make which, in the aggregate, would not materially impair the ability of AmTrust to consummate any of the transactions contemplated hereby.
Section 4.4    Litigation.  There is no suit, action, proceeding or arbitration pending or threatened in writing against or affecting AmTrust or any Affiliate of AmTrust that (i) seeks to restrain or enjoin the consummation of any of the transactions contemplated by this Agreement or the other Transaction Documents or (ii) would reasonably be expected to impair the ability of AmTrust to consummate any of the transactions contemplated by this Agreement or the other Transaction Documents.
Section 4.5    Brokers.  No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement or the other Transaction Documents based upon arrangements made by or on behalf of AmTrust or any Affiliate.

-9-

ARTICLE V
COVENANTS
Section 5.1    Employees of the Tower Companies.
(a)    From time to time on or after the date hereof, upon ten (10) days written notice to ACP and National General (an "Employee Offer Notice"), subject to subsection (b) below, AmTrust may, or may cause an Affiliate to, offer employment to employees of any Tower Company or its Affiliates that AmTrust reasonably determines are necessary for the Commercial Lines Business under terms and conditions satisfying the obligations of ACP under the Merger Agreement (as defined in the Master Agreement) with respect to such employees. 
 
(b)    If within ten (10) days of receipt of an Employee Offer Notice, neither National General nor ACP has objected in writing to the making of offers of employment to the employees indicated in such Employee Offer Notice, AmTrust may make an offer of employment to such employees.  If National General or ACP provides such written objection, ACP, National General and AmTrust shall negotiate in good faith to coordinate the employment or retention of such employees among themselves.  If an agreement as to the employment or retention of such employees is reached, AmTrust may make offers to such employees pursuant to such agreement.  If within thirty (30) days of the delivery of any such objection, ACP, National General and AmTrust shall have failed to reach an agreement with respect to the employment or retention of such employees, ACP, AmTrust and National General shall enter mediation.  In the event pursuant to such mediation ACP, National General and AmTrust shall reach an agreement as the employment or retention of such employees, AmTrust may make offers of employment to the employees designated in such agreement.

(c)    Nothing contained in this Agreement shall confer upon any employee of any Tower Company or any of its Affiliates any right with respect to continued employment by AmTrust or any of its Affiliates.  No provision of this Agreement shall create any third-party rights in any such employee, or any beneficiary or dependent thereof, with respect to the compensation, terms and conditions of employment and benefits that may be provided to such employee by AmTrust or any of its Affiliates or under any benefit plan that AmTrust or any of its Affiliates may maintain.

Section 5.2    Confidential Information.
(a)    The Parties hereby agree to treat as confidential any and all reports, information, and data relating to, obtained by, prepared or assembled by, or given to the other or developed as a result of information supplied by or on behalf of any Party under this Agreement, or by reason of, or relating to, the transactions contemplated by or incidental to this Agreement, including but not limited to any materials, presentations, records, and all matters affecting or relating to the proposed business and operations under the Program (such information being collectively referred to herein as "Confidential Information").  For purposes of this Section 5.2, the party disclosing Confidential Information will be referred to as the "Disclosing Party" and the party receiving Confidential Information will be referred to as the "Receiving Party." 

(b)    The Parties shall each take appropriate steps to ensure that all Confidential Information is kept confidential by the respective Parties and each of their directors, officers, principals, shareholders, affiliates, employees, agents and advisors, and that such Confidential Information will not be divulged, disclosed or communicated to any person, firm, association, corporation or other entity, during or subsequent to the Term of this Agreement, provided, however, that (a) disclosure of any Confidential 

-10-

Information to which the Disclosing Party has consented in writing may be made; (b) any Confidential Information may be disclosed to regulatory authorities or other appropriate parties pursuant to Laws or legal process after notice is given to the Disclosing Party to allow the Disclosing Party to contest or limit the scope of Confidential Information to be disclosed;  (c) Confidential Information may also be disclosed to auditors of any Receiving Party, Tower Company reinsurers or retrocessionaires, to the extent reasonably appropriate; and (d) Confidential Information may also be disclosed by a Receiving Party to its Affiliates, provided the Receiving Party directs such Affiliates to treat such Confidential Information confidentially and in accordance with the terms of this Agreement.

(c)    In the event of a breach of this Section 5.2 relating to Confidential Information, the affected Party shall be entitled to seek specific performance and injunctive or other equitable relief as a remedy for any such breach, which shall not be deemed to be the exclusive remedy for such breach, but shall be in addition to all the remedies available at law or equity.

(d)    The term "Confidential Information" as used in this Agreement does not include information which (i) was or becomes generally available to the public other than as a result of the disclosure by or on behalf of the Receiving Party; (ii) was or becomes available on a non-confidential basis from a source other than the Receiving Party or its representatives, provided that such source is not bound by a confidentiality agreement with, or similar obligation to the Disclosing Party; or (iii) is independently developed by the Receiving Party without the use of such information.

(e)    AmTrust may from time to time provide each Tower Company with access to certain proprietary systems developed by AmTrust, including without limitation, any source code, object code, executable code, data, databases, and related documentation in respect thereof (collectively, the "AmTrust IP"). Each Tower Company acknowledges and agrees that the AmTrust IP, including without limitation program code, specifications, logic, design, ideas, techniques, know-how and procedures contained therein and all related documentation are confidential intellectual property exclusively owned by AmTrust.  This Agreement does not grant and shall not be construed to grant any license or right to use the AmTrust IP except as expressly authorized in writing by AmTrust.  Each Tower Company and its employees shall not disclose AmTrust IP or any part thereof to any third party, including affiliates, except as expressly authorized by AmTrust.  Each Tower Company shall not (a) use or access the AmTrust IP for any purpose other than performing its duties under this Agreement; or (b) modify, enhance, reverse engineer, delink, disassemble or decompile any of the AmTrust IP or part thereof. 

Section 5.3    Covenant Not to Compete, Solicit or Hire.

(a)    ACP and each of its subsidiaries (including, without limitation, the Tower Companies) (collectively, the "ACP Parties") acknowledges and agrees that AmTrust and its Affiliates would be irreparably damaged if any ACP Party were to provide services or to otherwise participate in the business of any Person competing with the Commercial Lines Business in a similar business and that any such competition by an ACP Party would result in a significant loss of goodwill by AmTrust in respect of the Commercial Lines Business.  Each ACP Party further acknowledges and agrees that the covenants and agreements set forth in this Section 5.3 were a material inducement to AmTrust to enter into this Agreement and the other Transaction Documents (as defined in the Master Agreement) and to perform its obligations hereunder and thereunder, and that AmTrust and its Affiliates would not obtain the benefit of the bargain set forth in this Agreement or the other Transaction Documents as specifically negotiated by the parties hereto and thereto if any ACP Party breached the provisions of this Section 5.3.  Therefore, in further consideration of AmTrust's performance of its obligations hereunder and under the other Transaction Documents, each of the ACP Parties agrees that during the period in which any parties have any obligations under any of the 

-11-

Transaction Documents (including, without limitation, the Credit Agreement) and the five-year period thereafter, it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, either for itself, himself or herself or through any other Person, engage in, participate in, or permit such Person’s name to be used by any enterprise engaging in or participating in, the Commercial Lines Business; provided, that the foregoing shall not restrict or prohibit the ACP Parties from engaging in reinsurance transactions in respect of the Commercial Lines Business.  For purposes of this Agreement, the term "participate" includes any direct or indirect interest in any enterprise, whether as a stockholder, member, partner, joint venturer, franchisor, franchisee, executive, consultant or otherwise (other than by ownership of less than two percent (2%) of the stock of a publicly held corporation) or rendering any direct or indirect service or assistance to any Person.  Each ACP Party agrees that this covenant is reasonably designed to protect AmTrust’s substantial investment and is reasonable with respect to its duration, geographical area and scope.

(b)    For so long as any ACP Party has continuing obligations under Section 3.3(a) above, such ACP Party shall not (and shall cause its, his or her Subsidiaries not to) directly, or indirectly through another Person, (a) induce or attempt to induce (other than by a general solicitation advertisement, posting or similar job solicitation process) any employee, agent or producer of AmTrust or its Affiliates engaged in the Commercial Lines Business to leave the employ of AmTrust or any of its Subsidiaries or Affiliates, or in any way interfere with the relationship between AmTrust or any of its Subsidiaries or Affiliates and any such employee, except in accordance with Section 5.1, (b) hire (other than by a general solicitation advertisement, posting or similar job solicitation process) any employee, agent or producer of AmTrust or any of its Subsidiaries or Affiliates at any time during the six-month period immediately prior to the date on which such hiring would take place (it being conclusively presumed by the Parties so as to avoid disputes under this Section 5.3(b) that any such hiring (other than by a general solicitation advertisement, posting or similar job solicitation process) within such six-month period is in violation of clause (i) above) , except in accordance with Section 5.1, or (c) call on, solicit or service any customer, agent, producer, supplier, licensee, licensor or other business relation of the Commercial Lines Business in order to induce or attempt to induce such Person to cease doing or decrease their business with AmTrust or any of its Subsidiaries or Affiliates, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation and AmTrust or any of its Subsidiaries or Affiliates (including making any negative statements or communications about AmTrust or any of its Subsidiaries or Affiliates).

(c)    If, at the time of enforcement of any of the provisions of this Section 5.3, a court determines that the restrictions stated herein are unreasonable under the circumstances then existing, then the Parties agree that the maximum period, scope or geographical area reasonable under the circumstances shall be substituted for the stated period, scope or area.  The Parties further agree that such court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope or geographical area permitted by law.

(d)    If  an  ACP Party (the "Restricted Persons") breaches, or threatens to commit a breach of, any of the provisions of this Section 5.3 (the "Restrictive Covenants"), AmTrust will have the following rights and remedies, each of which rights and remedies shall be independent of the others and severally enforceable, and each of which is in addition to, and not in lieu of, any other rights and remedies available to AmTrust at law or in equity:

		
	(i)
	the right and remedy to have the Restrictive Covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of the Restrictive Covenants would cause irreparable injury to AmTrust and that money damages would not provide an adequate remedy to AmTrust; and

-12-

		
	(ii)
	the right and remedy to require the Restricted Persons to account for and pay over to AmTrust any profits, monies, accruals, increments or other benefits derived or received by the Restricted Persons as the result of any transactions constituting a breach of the Restrictive Covenants.

Section 5.4    Commercially Reasonable Efforts.  Upon the terms and subject to the conditions and other agreements set forth in this Agreement, each of the parties agrees to use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement.  The parties acknowledge and agree that any reference made to commercially reasonable efforts in this Agreement shall not include any obligation to commence or continue any contested arbitration or litigation other than the filing of a proof of claim or similar filing requirement necessary to preserve a claim against any insolvent or otherwise financially impaired debtor.

Section 5.5    Consents, Approvals and Filings.  ACP and AmTrust shall each use their commercially reasonable efforts, and shall cooperate fully with each other (i) to comply as promptly as practicable with all governmental requirements applicable to the transactions contemplated by this Agreement and (ii) to obtain as promptly as practicable all necessary permits, orders or other consents, approvals or authorizations of Governmental Entities and consents or waivers of all third parties necessary in connection with the consummation of the transactions contemplated by this Agreement.  In connection therewith, ACP and AmTrust shall make and cause their respective Affiliates to make all legally required filings as promptly as practicable in order to facilitate prompt consummation of the transactions contemplated by this Agreement, and shall provide and shall cause their respective Affiliates to provide such information and communications to Governmental Entities as such Governmental Entities may request.  The parties hereto shall not willfully take any action that will have the effect of delaying, impairing or impeding the receipt of all necessary permits, orders or other consents, approvals or authorizations of Governmental Entities and consents or waivers of all third parties necessary in connection with the consummation of the transactions contemplated by this Agreement.
Section 5.6    Public Announcements.  Until the Transaction Closing Date, the parties hereto shall consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or other public statements with respect to the transactions contemplated hereunder, and shall not issue any such press release or make any such public statement prior to such consultation and joint approval of AmTrust and ACP, except as may be required by Applicable Law, court process or the rules and regulations of any national securities exchange or national securities quotation system provided that, to the extent possible under the circumstances, the party making such disclosure consults with the other party, and considers in good faith the views of the other party, before doing so.
Section 5.7    Further Assurances.  ACP and AmTrust agree, and ACP, prior to the Transaction Closing, and AmTrust, after the Transaction Closing, agree to cause the Tower Companies and each of their Subsidiaries, to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be reasonably necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by this Agreement.
Section 5.8    Notice of Events.
(a)    AmTrust shall promptly notify ACP, and ACP shall promptly notify AmTrust, in writing, upon (1) becoming aware of any order or decree or any complaint praying for an order or decree 

-13-

restraining or enjoining the execution of this Agreement or the consummation of the transactions contemplated by this Agreement, or (2) receiving any notice from any Governmental Entity of its intention to (i) institute a suit or proceeding to restrain or enjoin the execution of this Agreement or the consummation of the transactions contemplated by this Agreement or (ii) nullify or render ineffective this Agreement or such transactions if consummated.
(b)    During the period from the date hereof to the Transaction Closing Date or the earlier termination of this Agreement, AmTrust shall promptly notify ACP in writing if AmTrust becomes aware of: (i) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a breach of any of its representations or warranties had any such representation or warranty been made as of the time of AmTrust's discovery of such event, fact or condition; (ii) any material failure on its part or ACP's or the Tower Companies' part to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; or (iii) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a breach of any of ACP's representations or warranties hereunder.
(c)    During the period from the date hereof to the Transaction Closing Date or the earlier termination of this Agreement, ACP shall promptly notify AmTrust in writing if ACP becomes aware of: (i) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a breach of any of its representations or warranties had any such representation or warranty been made as of the time of ACP's discovery of such event, fact or condition; (ii) any material failure on its part or AmTrust's part to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; or (iii) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a breach of any of AmTrust's representations or warranties hereunder.
Section 5.9    Merger Agreement.  During the period from the date hereof to the Transaction Closing Date or the earlier termination of this Agreement, ACP shall promptly notify AmTrust in writing if ACP becomes aware of: (a) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a material breach of any of Tower's representations or warranties set forth in the Merger Agreement had any such representation or warranty been made as of the time of ACP's discovery of such event, fact or condition; (b) any material failure on Tower's part to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it under the Merger Agreement; or (c) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a material breach of any of Tower's representations or warranties under the Merger Agreement.  ACP hereby agrees that without AmTrust's written consent that it shall not waive: (x) any material breach by Tower of any of its representation or warranty set forth in the Merger Agreement; or (y) any material failure by Tower to comply with any covenants or conditions to closing contained in the Merger Agreement. 
Section 5.10    Transition Services.  From time to time following the Transaction Closing Date, AmTrust may request from ACP any transition services that AmTrust reasonably determines are necessary for the Commercial Lines Business.  AmTrust shall reimburse ACP for any costs actually incurred by ACP in providing any such services to AmTrust.   
Section 5.11    Use of Office Space.  From time to time following the Transaction Closing Date, AmTrust may elect to use of all or a portion of the office space used by any of the Companies prior to such date, including, without limitation, employee work stations, telephone and computer equipment and other facilities as AmTrust determines are reasonably necessary for the Commercial Lines Business.  AmTrust shall reimburse ACP for costs actually incurred by ACP in connection therewith.  

-14-

ARTICLE VI
RESERVED
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1    Conditions to Each Party's Obligations.  The respective obligations of each party to consummate the transactions contemplated hereby are subject to the satisfaction or waiver on or prior to the Transaction Closing Date of the following conditions:
(a)    Governmental Consents.  All filings required to be made prior to the Transaction Closing Date with, and all consents, approvals, permits and authorizations required to be obtained prior thereto from, Governmental Entities in connection with the consummation of the transactions contemplated hereby by ACP and AmTrust set forth in Section 3.3 and Section 4.3 of the Disclosure Schedule shall have been made or obtained.
(b)    No Injunctions or Restraints.  No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction and no Applicable Law of any Governmental Entity preventing the consummation of the Transactions or any of the other transactions contemplated hereby shall be in effect; provided, that the party invoking this condition shall have used all reasonable efforts to have any such order or injunction vacated, and no Governmental Entity shall have instituted any proceeding that is pending seeking any such order, preliminary or permanent injunction or other order to prohibit the consummation of the transactions contemplated hereby or any of the other transactions contemplated hereby.
(c)    Consents.  All consents, waivers, clearances, approvals and authorizations from third parties under the contracts and agreements set forth on Section 7.1(c) of the Disclosure Schedule as being required to be obtained prior to Transaction Closing shall have been retained.
(d)    Merger Agreement.    The Closing (as defined in the Merger Agreement) of the Merger (as defined in the Merger Agreement) shall occur contemporaneous with the transactions contemplated herein.
(e)    Personal Lines Master Agreement.  The transactions contemplated by the Personal Lines Master Agreement to be effected as of the "Transaction Closing" (as defined in the Personal Lines Master Agreement) shall occur contemporaneous with the transactions contemplated herein.
Section 7.2    Conditions to Obligations of AmTrust.  The obligations of AmTrust to consummate the transactions contemplated hereby and the other actions to be taken at the Transaction Closing are further subject to the satisfaction or waiver by AmTrust on or prior to the Transaction Closing Date of the following conditions:
(a)    Representations and Warranties.  The representations and warranties of ACP in this Agreement shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Transaction Closing Date as though made on and as of the Transaction Closing Date (except as to any representation or warranty which specifically relates to another date).

-15-

(b)    Performance of Obligations of ACP.  ACP shall have performed in all material respects all obligations required to be performed by it under this Agreement on or prior to the Transaction Closing Date.
(c)    Closing Deliveries.  ACP shall have delivered to AmTrust each of the items described in Section 2.2.
Section 7.3    Conditions to Obligations of ACP.  The obligations of ACP to consummate the transactions contemplated hereby and the other actions to be taken at the Transaction Closing are further subject to the satisfaction or waiver by ACP on or prior to the Transaction Closing Date of the following conditions:
(a)    Representations and Warranties.  The representations and warranties of AmTrust set forth in this Agreement shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Transaction Closing Date as though made on and as of the Transaction Closing Date (except as to any representation or warranty which specifically relates to another date).
(b)    Performance of Obligations of AmTrust.  AmTrust shall have performed in all material respects all obligations required to be performed by it under this Agreement on or prior to the Transaction Closing Date.
(c)    Closing Deliveries.  AmTrust shall have delivered to ACP each of the items described in Section 2.3.
Section 7.4    Frustration of Closing Conditions.  No party to this Agreement may rely on the failure of any condition set forth in this Article VII to be satisfied if such failure was caused by such party's failure to use reasonable best efforts to cause the Transaction Closing to occur, as required by Section 5.1 hereof.
ARTICLE VIII
INDEMNIFICATION
Section 8.1    Obligation to Indemnify.
(a)    ACP agrees to indemnify, defend and hold harmless AmTrust and its Affiliates and their respective representatives from and against all Losses relating to a Third-Party Claim to the extent such Losses are determined to have arisen from or relate to any material breach of any of the covenants and agreements of ACP contained in this Agreement.
(b)    AmTrust agrees to indemnify, defend and hold harmless ACP and its Affiliates and their respective representatives from and against all Losses relating to a Third-Party Claim to the extent such Losses are determined to have arisen from or relate to any breach of any of the covenants and agreements of AmTrust contained in this Agreement. 
(c)    The parties' obligations pursuant to this Section 8.1 shall terminate as of the Transaction Closing Date, except for claims based on actual fraud, criminal activity or willful misconduct.  Following the Transaction Closing Date, the parties' indemnification rights and obligations shall be as set forth in the applicable Transaction Document.  
Section 8.2    Indemnification Procedures.

-16-

(a)    If any third party shall notify either party (the "Indemnified Party") with respect to any matter (a "Third-Party Claim") which may give rise to a claim for indemnification against any other Party (the "Indemnifying Party") under this Article VIII, then the Indemnified Party shall promptly (and in any event within five Business Days after receiving notice of the Third-Party Claim) notify the Indemnifying Party thereof in writing.
(b)    An Indemnifying Party will have the right at any time to assume and thereafter conduct the defense of the Third-Party Claim with counsel of its choice; provided, that the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third-Party Claim without the prior written consent of the Indemnified Party (not to be unreasonably withheld) unless the judgment or proposed settlement involves only the payment of money damages and does not impose an injunction or other equitable relief upon the Indemnified Party.
(c)    Unless and until an Indemnifying Party assumes the defense of the Third-Party Claim as provided in Section 8.2(b) above, the Indemnified Party may defend against the Third-Party Claim in any manner it may reasonably deem appropriate.
(d)    In no event will the Indemnified Party consent to the entry of any judgment on or enter into any settlement with respect to the Third-Party Claim without the prior written consent of each of the Indemnifying Parties.
ARTICLE IX
TERMINATION PRIOR TO CLOSING
Section 9.1    Termination of Agreement.  This Agreement may be terminated at any time prior to the Transaction Closing:
(a)    by the written agreement of AmTrust and ACP;
(b)    by either ACP or AmTrust in writing, if there shall be any order, injunction or decree of any Governmental Entity which prohibits or restrains any party from consummating the transactions contemplated hereby, and such order, injunction or decree shall have become final and nonappealable; 
(c)    by either ACP or AmTrust in writing, if a Governmental Entity shall have disapproved a Regulatory Approval;
(d)     unless ACP or AmTrust otherwise agree in writing, upon the withdrawal of filings submitted in connection with any Regulatory Approvals; or
(e)    automatically, following the termination of the Merger Agreement.
Section 9.2    Effect of Termination.  In the event of termination pursuant to Section 9.1, this Agreement shall become null and void and have no effect (other than Section 5.6 (Public Announcements), Article VIII (Indemnification), this Section 9.2 and Article X (General Provisions), all of which shall survive termination of this Agreement), and there shall be no liability on the part of ACP, the Tower Companies or AmTrust or their respective directors, officers and Affiliates, except (a) as liability may exist pursuant to the sections specified in the immediately preceding parenthetical that survive such termination and (b) that no such termination shall relieve any party from liability for any willful and material breach by such party of any representation, warranty, covenant or agreement set forth in this Agreement or fraud.  For purposes hereof, "willful and material breach" means a material breach by a party of the applicable provision of this 

-17-

Agreement as a result of an action or failure to act by such Person that it knew would result in a breach of this Agreement.
ARTICLE X
GENERAL PROVISIONS
Section 10.1    No Survival of Representations, Warranties, Covenants and Agreements.  This Article X, Article VIII and the agreements of ACP and AmTrust contained in Article II, Article V and Article VI shall survive the Effective Time.  No other representations, warranties, covenants or agreements in this Agreement shall survive the Effective Time.
Section 10.2    Fees and Expenses.  Whether or not the transactions contemplated hereby are consummated, each party hereto shall pay its own fees and expenses incident to preparing for, entering into and carrying out this Agreement and the consummation of the transactions contemplated hereby.  For the avoidance of doubt, ACP shall be solely responsible for the payment of all of the transaction expenses incurred by or on behalf of ACP or the Tower Companies incident to the transaction which is the subject of this Agreement, including investment banking fees, accounting fees and legal fees.
Section 10.3    Notices.  All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, by facsimile (which is confirmed as provided below) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):
if to AmTrust, to
59 Maiden Lane, 43rd Floor 
New York, New York 10038 
(646) 458-7913 
Fax:  (212) 220-7130 
Attention: Stephen Ungar, Esq.
if to ACP, to 
 
Washington Mall
7 Reid Street, Suite 404 
Hamilton HM11 Bermuda
Attn: General Counsel
Notice given by personal delivery or overnight courier shall be effective upon actual receipt.  Notice given by facsimile shall be confirmed by appropriate answer back and shall be effective upon actual receipt if received during the recipient's normal business hours, or at the beginning of the recipient's next Business Day if not received during the recipient's normal business hours.  All notices by facsimile shall be confirmed promptly after transmission in writing by personal delivery or overnight courier.
Section 10.4    Interpretation.  When a reference is made in this Agreement to a section, exhibit or schedule, such reference shall be to a section of, or an exhibit or schedule to, this Agreement unless otherwise indicated.  The inclusion of any information in the Disclosure Schedule will not be deemed an admission or acknowledgment, in and of itself and solely by virtue of the inclusion of such information in the Disclosure Schedule, that such information is required to be listed in the Disclosure Schedule or that such items are material to the Tower Companies.  The specification of any dollar amount in the Disclosure Schedule is not 

-18-

intended to imply that such amount, or higher or lower amounts is or is not material for purposes of this Agreement and no party shall use the fact of the setting forth of such amount in any dispute or controversy between the parties as to whether any obligation, item or matter not described therein is or is not material for purposes of this Agreement. Unless the Agreement specifically provides otherwise, neither the specification of any item or matter in any representation or warranty contained in this Agreement nor the inclusion of any specific item in the Disclosure Schedule is intended to imply that such item or matter, or other items or matters, are or are not in the ordinary course of business (except as expressly provided herein), and no party shall use the fact of the setting forth or the inclusion of any such item or matter in any dispute or controversy among the parties as to whether any obligation, item or matter not described in this Agreement or included in any Disclosure Schedule is or is not in the ordinary course of business for purposes of this Agreement (except as expressly provided herein).  The disclosure of an item in one section of the Disclosure Schedule as an exception to a particular covenant, representation or warranty will be deemed adequately disclosed as an exception with respect to all other covenants, representations or warranties to the extent that the relevance of such item to such other covenants, representations or warranties is reasonably apparent on the face of such item, notwithstanding the presence or absence of an appropriate section of the Disclosure Schedule with respect to such other covenants, representations or warranties or an appropriate cross-reference thereto.  The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation."  Whenever the singular is used herein, the same shall include the plural, and whenever the plural is used herein, the same shall include the singular, where appropriate.
Section 10.5    Entire Agreement; Third-Party Beneficiaries.  This Agreement (including all exhibits and schedules hereto) constitutes the entire agreement, and supersedes all prior agreements, understandings, representations and warranties, both written and oral, among the parties with respect to the subject matter of this Agreement.  AmTrust has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of the transactions contemplated hereby and is capable of bearing the economic risks thereof.  Except as expressly provided herein, this Agreement is not intended to confer upon any Person other than the parties hereto any rights or remedies.
Section 10.6    Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts executed in and to be performed entirely within that State, regardless of the laws that might otherwise govern under any applicable conflict of laws principles, except to the extent the provisions of the laws of Bermuda are mandatorily applicable to the Merger.
Section 10.7    Assignment.  Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, and any such assignment that is not consented to shall be null and void.  Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.
Section 10.8    Dispute Resolution; Enforcement.
(a)    In the event of any dispute arising under this Agreement, prior to the commencement of litigation, a senior officer of AmTrust and a senior officer of ACP shall attempt in good faith to resolve the dispute consistent with the terms of this Agreement.  If they are unable to resolve the dispute in this manner within a reasonable period of time, the parties may pursue judicial remedies with respect to such dispute.  This section shall not apply to any application to obtain emergency judicial intervention.

-19-

(b)    All actions and proceedings arising out of or relating to the interpretation and enforcement of the provisions of this Agreement and in respect of the transactions contemplated by this Agreement (except to the extent any such proceeding mandatorily must be brought in Bermuda) shall be heard and determined in the United States District Court for the Southern District of New York and any Federal appellate court therefrom (or, if United States federal jurisdiction is unavailable over a particular matter, the Supreme Court of the State of New York, New York County) and the parties hereto hereby irrevocably submit to the exclusive jurisdiction and venue of such courts in any such action or proceeding and irrevocably waive the defense of an inconvenient forum or lack of jurisdiction to the maintenance of any such action or proceeding.  The consents to jurisdiction and venue set forth in this Section 10.8(b) shall not constitute general consents to service of process in the State of New York and shall have no effect for any purpose except as provided in this paragraph and shall not be deemed to confer rights on any Person other than the parties hereto.  Each party hereto agrees that service of process upon such party in any action or proceeding arising out of or relating to this Agreement shall be effective if notice is given by overnight courier at the address set forth in Section 10.3 of this Agreement.  The parties hereto agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law; provided, that nothing in the foregoing shall restrict any party's rights to seek any post-judgment relief regarding, or any appeal from, a final trial court judgment.
Section 10.9    WAIVER OF JURY TRIAL.  TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON, ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
Section 10.10    Severability; Amendment and Waiver.
(a)    Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any Applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein.
(b)    This Agreement may be amended, and the terms hereof may be waived, only by a written instrument signed by each of the parties or, in the case of a waiver, by the party waiving compliance.
(c)    No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege, nor any single or partial exercise of any such right, power or privilege, preclude any further exercise thereof or the exercise of any other such right, power or privilege.

-20-

Section 10.11    Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

[Signature Page Follows]

-21-

 IN WITNESS WHEREOF, ACP and AmTrust have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above.

ACP RE, LTD

By  /s/ Michael Karfunkel    
Name:  Michael Karfunkel    
Title:  Chairman    

AMTRUST FINANCIAL SERVICES, INC.

By  /s/ Stephen Ungar    
Name: Stephen Ungar    
Title:  Secretary     

[Signature Page to Amended and Restated Commercial Lines Master Agreement]

Exhibits A - H
Exhibits A-H were previously included as exhibits to the Commercial Lines Master Agreement dated as of April 8, 2014 by and between ACP Re Ltd. and the Company, filed with the Securities and Exchange Commission on August 11, 2014 as Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended June 30, 2014, and are incorporated by reference herein.ex_10-60.htm

EXHIBIT 10.60

 

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is entered into by and between PhotoMedex, Inc., a Nevada corporation (the “Company”) and Dolev Rafaeli (the “Executive”) on August 5, 2014 (the “Effective Date”), to become effective immediately.

 

WHEREAS, the Company and the Executive are party to an amended and restated employment agreement entered into on July 4, 2011 and effective as of December 13, 2011 (the “Prior Agreement”);

 

WHEREAS, in connection with the pending expiration of the Prior Agreement and the consummation of the LCA-Vision, Inc. merger (the “Closing”), the Company and the Executive wish to amend and restate the Prior Agreement to provide for the Executive’s continued employment as the Company’s Chief Executive Officer and President and Chief Executive Officer of Radiancy Inc. and, following the Closing, as the Chairman of the Board of Directors of LCA-Vision; and

 

WHEREAS, this Agreement amends and supersedes the Prior Agreement and any other agreement between the Executive and the Company with respect to the matters contained herein.

 

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the Company and the Executive hereby agree as follows:

 

1. Employment.

 

(a) Term. The term of this Agreement shall begin on the Effective Date and shall continue until December 31, 2018 (the “Scheduled Term”), unless sooner terminated by either party as hereinafter provided.    The period commencing on the Effective Date and ending on the date on which the term of the Executive’s employment under the Agreement terminates is referred to herein as the “Employment Term.”  Except as the Company and the Executive otherwise agree in writing, in the event that the parties fail to reach a mutual written agreement to renew or extend this Agreement on or prior to the end of the Scheduled Term, the Executive’s employment with the Company shall terminate upon expiration of the Scheduled Term (“Non-Renewal”), and such Non-Renewal shall be treated as a termination of the Executive’s employment by the Company without Cause under Section 7(a).

 

(b) Duties.

 

(1) The Executive shall serve as the Chief Executive Officer of the Company, as President and Chief Executive Officer of Radiancy Inc. and, following the Closing, as Chairman of the Board of Directors of LCA-Vision with duties, responsibilities and authority commensurate therewith and shall report to the Board of Directors of the Company (the “Board”). The Executive shall perform all duties and accept all responsibilities incident to such position as may be reasonably assigned to him by the Board, consistent with his positions.  In addition, during the Employment Term, without compensation other than that herein provided, the Executive shall also serve and continue to serve, if and when elected and re-elected, as a member of the Board.

 

  

  

  

 

 

(2) The Executive represents to the Company that he is not subject to or a party to any employment agreement, non-competition covenant, understanding or restriction which would be breached by or prohibit the Executive from executing this Agreement and performing fully his duties and responsibilities hereunder.

 

(c) Best Efforts. During the Employment Term, the Executive shall devote his best efforts and full time and attention to promote the business and affairs of the Company and its affiliated entities, and shall be engaged in other business activities only to the extent that such activities do not materially interfere or conflict with his obligations to the Company hereunder. In no event shall the Executive’s other business activities violate his obligations under Section 13 below. The foregoing also shall not be construed as preventing the Executive from (1) serving on civic, educational, philanthropic or charitable boards or committees, or, with the prior written consent of the Board, in its sole discretion, on corporate boards, and (2) managing personal investments, so long as such activities are permitted under the Company’s Code of Conduct and employment policies. The Executive acknowledges and agrees that Schedule A represents a complete list of all corporate boards on which the Executive serves as of the Effective Date. Notwithstanding any provision of this Section 1 of the Agreement to the contrary, in no event shall the Executive invest in any business competitive with the Company or that would otherwise violate the provisions of Section 13 below.

 

2. Base Salary and Cash Bonuses.

 

(a) During the Employment Term, for all of the services rendered by the Executive hereunder, the Company shall pay the Executive a base salary (“Base Salary”), at the annual rate of $495,000 payable in semi-monthly installments at such times as the Company customarily pays its other employees. The Executive’s Base Salary shall be reviewed periodically by the Board (or a committee of the Board) pursuant to the Board’s normal performance review policies for senior level executives.

 

(b) During the Employment Term, as a bonus for success in sales, the Executive shall be entitled to a quarterly cash bonus (the “1st Tier Cash Bonus”) equal to 1% of the quarterly sales of the Company (calculated as 1% of recognized US GAAP sales reported in the Company’s consolidated quarterly financial reports presented to the Board) for each quarter during the Employment Term.  Payments of the 1st Tier Cash Bonus will be made to the order of the Executive no later than 45 days after the presentation of the financial reports to the Board for the applicable quarter; provided, that all 1st Tier Cash Bonuses to which the Executive shall be entitled during a taxable year of the Company, when combined with all other “applicable employee remuneration” (within the meaning of Code section 162(m)(4)) payable to the Executive for such taxable year, shall not exceed $1,000,000.

 

(c) In addition to the 1st  Tier Cash Bonus, the Executive shall also be entitled to a quarterly cash bonus (the “2nd Tier Cash Bonus”) equal to 1% of the sales of the Company (calculated as 1% of recognized US GAAP sales reported in the Company’s consolidated quarterly financial reports presented to the Board) for each quarter during the Employment Term in excess of such target threshold amount as the compensation committee of the Board (which committee shall be comprised solely of two or more outside directors (the “Compensation Committee”)) shall determine.  Payments of the 2nd Tier Cash Bonus will be made to the order of

 

  

- 2 -

  

 

 

the Executive no later than 45 days after the presentation of the financial reports to the Board for the applicable quarter.  It is the express intent of the parties that the 2nd Tier Cash Bonus shall constitute “other performance-based compensation” (within the meaning of Code section 162(m)(4)(C)).  Notwithstanding anything herein to the contrary, in the sole discretion of (and subject to the approval of) the Compensation Committee, all or any portion of Executive’s 2nd Tier Cash Bonus may be paid in the form of shares of common stock of the Company under the Company’s Amended and Restated 2005 Equity Compensation Plan, as amended and/or restated from time to time, or any successor shareholder-approved Company equity compensation plan, with the number of shares equal to quotient of (x) the portion of such 2nd Tier Cash Bonus that is not paid in cash divided by (y) the closing price per share of common stock on the principal national securities exchange in the United States on which such shares are then traded on the fourth trading day the following the release of the Company’s quarterly financial reports for the applicable quarter, as reported in The Wall Street Journal or such other source as the Compensation Committee deems reliable; provided, however, that, (1) if the shares are regularly quoted by a recognized securities dealer but are not traded on a national securities exchange in the United States, then the foregoing clause (y) shall instead be the mean between the high bid and low asked prices for the shares on the fourth trading day the following the release of the Company’s quarterly financial reports for the applicable quarter, as reported in The Wall Street Journal or such other source as the Compensation Committee deems reliable; and (2) if the shares are neither traded on a national securities exchange in the United States nor quoted by a recognized securities dealer, then the foregoing clause (y) shall instead be the value of a share as determined by the Compensation Committee based upon the reasonable application of a reasonable valuation method as outlined under Code Section 409A.

 

For removal of doubt and without limitation on (but subject to) Section 7(c), should the Company furnish the Executive with a notice of termination of Executive’s employment for any reason other than for Cause (as defined in section 11(a)), the Executive shall be entitled to the Cash Bonuses as described in this Section 2(b) and (c) through the end of the Scheduled Term, as applicable, in accordance with this Section 2 as if the Company had not furnished Executive with such notice of termination.

The 1st Tier Cash Bonus and the 2nd Tier Cash Bonus are referred to collectively herein as the “Cash Bonuses.” Executive’s Cash Bonuses shall be adjusted according to any restatement of US GAAP sales, provided that a downward revision of US GAAP sales shall not require Executive to return any portion of the 1st Tier Cash Bonus, and such adjustment shall instead be set off against the next applicable 1st Tier Cash Bonus. Notwithstanding the forgoing, if a downward adjustment is made to US GAAP sales following Executive’s final 1st Tier Cash Bonus or Executive’s termination of employment with the Company for any reason, Executive shall reimburse the Company accordingly.

 

The Cash Bonuses shall be paid to the Executive no later than 45 days after the presentation of the financial reports to the Board for the applicable quarter, but in no event later than March 15 of the year immediately following the fiscal year to which they relate.  Any bonus other than the Cash Bonuses shall be paid to the Executive no later than March 15 of the year following the end of the fiscal year to which it relates, under the same conditions as other executives of the Company.

 

  

- 3 -

  

 

3. Equity Incentive Programs. The Executive shall be eligible to participate in the Company’s annual and long-term equity incentive plans and programs in accordance with the terms of such plans and programs as in effect for other similarly situated employees of the Company generally, at levels determined by the Board (or a committee of the Board) in its sole discretion, commensurate with the Executive’s position.

 

4. Retirement and Welfare Benefits. The Executive shall be eligible to continue to participate in the Company’s (or Radiancy Inc.’s where relevant) health, life insurance, long and short-term disability, dental, retirement, savings and medical programs, if any, pursuant to their respective terms and conditions. In addition, the Executive shall continue to be eligible to participate in any long-term equity incentive programs established by the Company for its senior level executives generally, at levels determined by the Board in its sole discretion, commensurate with the Executive’s position as Chief Executive Officer. Nothing in this Agreement shall preclude the Company or any affiliate of the Company from terminating or amending any employee benefit plan or program from time to time after the Effective Date.

 

5. Vacation.

 

The Executive shall be entitled to annual vacation of 24 days plus ten established holiday days per full calendar year of his employment with the Company hereunder. Any unused vacation in one accrued calendar year may not be carried over to any subsequent calendar year. The Company shall, however, pay the Employee (based on the Employee’s annual salary) for any such unused vacation days within 30 days of the end of any such calendar year.

 

The Executive shall be entitled to an annual medical executives’ checkup at the expense of the Company.

 

The Executive shall be entitled to a fully paid sick leave until the end of the waiting period for coverage against disability or incapacity as defined in the Executive medical insurance policy.

 

6. Expenses; Car Allowance; Phone and Cellular Phone; Relocation costs; Family annual leave.  The Company shall reimburse the Executive for all necessary and reasonable travel and other business expenses incurred by the Executive in the performance of his duties hereunder in accordance with the Company’s policies in effect from time to time with respect to business expenses, subject to such reasonable accounting procedures as the Company may adopt generally from time to time for executives. In addition, the Executive shall be entitled to an automobile allowance of $1,000 per month, in accordance with the Company’s policies in effect from time to time.

 

Company shall provide Executive with a Cellular Phone and shall order a land line at the Executive’s residence, for Executive’s use in the course of performing his obligations under his position. The Company shall bear and pay all the expenses related to the Cellular Phone and the land line and their use thereof.

 

Upon termination of this Agreement for any reason, Company shall pay for the household relocation costs including the packing, shipping, insurance and unpacking of the goods of the

 

  

- 4 -

  

 

Executive between the US and Israel. Company will reimburse the Executive for all reasonable out of pocket relocation expenses. Additionally, Company shall pay for the equivalent of economy class airfare tickets of all family members between the US and Israel. Company shall pay for the equivalent of economy round trip airfare tickets for all family members for an annual home leave between the US and Israel.

 

All expense reimbursements under this Agreement shall be made no later than 90 days from when expenses are incurred and submitted for reimbursement, in accordance with the Company’s policies in effect from time to time with respect to business expenses.

 

7. Termination Without Cause; Resignation for Good Reason. If the Executive’s employment is terminated by the Company without Cause (as defined in Section 11) or if the Executive resigns for Good Reason (as defined in Section 11), the provisions of this Section 7 shall apply.

 

(a) The Company may terminate the Executive’s employment with the Company at any time without Cause upon not less than 30 days’ prior written notice to the Executive; provided that, in the event that such notice is given, the Executive shall be under no obligation to render any additional services to the Company and shall be allowed to seek other employment. In addition, the Executive may initiate a termination of employment by resigning under this Section 7 for Good Reason. The Executive shall give the Company not less than 30 days’ prior written notice of such resignation. On the date of termination or resignation, as applicable, specified in such notice, the Executive agrees to resign all positions, including as an officer and, if applicable, as a director or member of the Board, related to the Company and its parents, subsidiaries and affiliates.

 

(b) Unless the Executive complies with the provisions of Section 7(c) below, upon termination or resignation under Section 7(a) above, the Executive shall be entitled to receive only the amount due to the Executive under the Company’s then current severance pay plan or arrangement for employees, if any, but only to the extent not conditioned on the execution of a release by the Executive. No other payments or benefits shall be due under this Agreement to the Executive, but the Executive shall be entitled to receive any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of the Company, in each case, subject to and in accordance with the terms thereof.

 

(c) Notwithstanding the provisions of Section 7(b), upon termination or resignation, as applicable, under Section 7(a) above (including a termination due to Non-Renewal), if, within sixty (60) days following the termination of the Executive’s employment, the Executive timely executes and delivers to the Company (without revocation) a fully effective written release of any and all claims against the Company and all related parties with respect to all matters arising out of the Executive’s employment by the Company or the termination thereof (other than claims for any entitlements under the terms of this Agreement), in substantially the form set forth in Exhibit A hereto (the “Release”), the Executive shall be entitled to receive, in lieu of the payment described in Section 7(b) and any other payments due under any severance plan or program for employees or executives, the following payments and benefits:

 

  

- 5 -

  

 

 

(1) From the date of termination through the balance of the Scheduled Term (if any) (collectively, the “Severance Period”), the Executive shall continue to receive his Base Salary (at the rate in effect immediately before the Executive’s termination or resignation, as applicable), and Cash Bonuses.  The Base Salary continuation shall be paid in installments during the Severance Period in accordance with the Company’s normal payroll practices.  The 1st Tier Cash Bonus contemplated in this sub-section (1) shall be equal to 1% of the sales of the Company (calculated as 1% of recognized US GAAP sales reported in the Company’s consolidated quarterly financial reports presented to the Board) during the Severance Period; provided, however, that if the Executive is not a “covered employee” (within the meaning of Code section 162(m)(3) in the year for which any such 1st Tier Cash Bonus is payable, the amount of such 1st Tier Cash Bonus during the Severance Period shall be determined and paid without respect to any limitations intended to make it tax-deductible under Code section 162(m) and the next sentence herein shall not apply; provided, further, that if the proviso clause in the preceding sentence does not apply, the 2nd Tier Cash Bonus during the Severance Period shall be equal to 1% of the sales of the Company (calculated as 1% of recognized US GAAP sales reported in the Company’s consolidated quarterly financial reports presented to the Board) in excess of such target threshold amount as the Compensation Committee shall determine.  Payment of Cash Bonuses during the Severance Period will be made to the order of the Executive no later than 45 days after the presentation of the quarterly financial reports to the Board for the fiscal quarter to which such Cash Bonuses relate (but not later than March 15 of the year following the end of the fiscal year to which such Cash Bonuses relate).

 

(2) To the extent the Executive timely elects to receive continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), the Company shall pay or reimburse the Executive, on a monthly basis, an amount equal to the full monthly premium for such coverage, from the date of termination until the date eighteen (18) months following the date of termination.  The COBRA health care continuation coverage period under Section 4980B of the Internal Revenue Code of 1986, as amended (the "Code") shall run concurrently with the foregoing period.

 

(3) Beginning on the 60th day following the effective date of the Executive’s termination or resignation, and on the first payroll date of each month thereafter during the remainder of the Scheduled Term (if any), a monthly payment equal to the premium cost for the long and short-term disability coverage that was in effect for the Executive under plans of the Company immediately before his termination or resignation.  To the extent requested by the Executive within 30 days following the date of termination, the Company shall take all action necessary, if any, to facilitate the Executive’s exercise of all conversion and/or portability privileges, if any, under such long and short-term disability coverage.

 

(4) Beginning on the 60th day following the effective date of the Executive’s termination or resignation, and on the first payroll date of each month thereafter during the remainder of the Scheduled Term (if any), a monthly payment equal to the full cost of any Company life insurance coverages in effect for the Executive immediately before his termination or resignation to maintain life insurance coverage.  To the extent requested by the Executive within 30 days following the date of termination, the Company shall take all action necessary, if

 

  

- 6 -

  

any, to facilitate the Executive’s exercise of all conversion privileges, if any, under such life insurance program or policy.

 

(5) Notwithstanding any provision to the contrary in any applicable plan, program or agreement, all outstanding equity awards held by the Executive as of the date of his termination or resignation, as applicable, shall become fully vested and exercisable as of such date.  In addition, any outstanding stock options held by the Executive, including any stock options that previously became exercisable and have not expired or been exercised, shall remain exercisable, notwithstanding any provision to the contrary in any other agreement governing such options, for the shorter of (i) the 60-month period following the date of the Executive’s termination or resignation, as applicable, and (ii) the then remaining term of such stock option.

 

(6) Any other amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of the Company, payable in accordance with the terms and conditions thereof.

 

(7) Any Cash Bonus payable for the fiscal year of termination or resignation, based on actual performance for the full fiscal year, but pro-rated based on the number of days the Executive was employed during such fiscal year of termination, payable at the same time as otherwise payable in accordance with Section 2, but not later than March 15 of the year following the end of the fiscal year of termination or resignation (the “Pro Rata Bonus”).

 

(d) To the extent that the payment of any amount or provision of any benefit under Section 7 is conditioned upon the Release and is otherwise scheduled to occur prior to the sixtieth (60th) day following the date of Executive’s termination of employment hereunder, but for the condition on executing the Release as set forth herein, shall not be made until the first regularly scheduled payroll date following such sixtieth (60th) day, after which any remaining payments shall thereafter be provided to Executive according to the applicable schedule set forth herein.

 

8. Termination for Cause; Resignation without Good Reason.  The Company may terminate the Executive immediately for Cause.  In addition, the Executive may voluntarily terminate his employment for any reason upon 30 days’ prior written notice. In either such event, after the effective date of such termination no payments shall be due under this Agreement, except that the Executive shall be entitled to any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of the Company, payable in accordance with the terms and conditions thereof.

 

9. Disability. If the Executive incurs a Disability (as defined below), the Company may terminate the Executive’s employment on account of Disability subject to the requirements of applicable law. If the Company terminates the Executive’s employment on account of his Disability, the Executive shall be entitled to receive any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of the Company, payable in accordance with the terms and conditions thereof. In addition, if the Company terminates the Executive’s employment on account of his Disability, the Executive shall be entitled to receive the Pro Rata Bonus.  For

 

  

- 7 -

  

 

 

purposes of this Agreement, the term “Disability” shall have the same meaning as under the Company’s long-term disability plan.

 

10. Death. If the Executive dies while employed by the Company, the Executive’s employment shall terminate on the date of death and the Company shall pay to the Executive’s executor, legal representative, administrator or designated beneficiary, as applicable, any amounts earned, accrued and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of the Company, payable in accordance with the terms and conditions thereof. In addition, if the Executive dies while employed by the Company, the Executive shall be entitled to receive the Pro Rata Bonus.  Otherwise, the Company shall have no further liability or obligation under this Agreement to the Executive’s executors, legal representatives, administrators, heirs or assigns or any other person claiming under or through the Executive.

 

11. Definitions.

 

(a) Cause. For purposes of this Agreement, “Cause” shall mean any of the following grounds for termination of the Executive’s employment:

 

(1) The Executive’s breach of any of the restrictive covenants set forth in Section 13.

 

(2) The Executive’s conviction of a felony or a crime involving moral turpitude.

 

(3) The Executive’s material violation of any written Company policy or the material terms of this Agreement.

 

(4) The Executive’s failure to follow a lawful direction of the Board.

 

(5) Drug or alcohol abuse by the Executive, but only if the Executive fails to seek appropriate counseling or fails to complete a prescribed counseling program.

 

With respect to Items (3) and (4), a termination for Cause shall only be effective if the violation or failure is not cured by the Executive within the 20-day period following written notice from the Board of the specific grounds that could result in a termination for “Cause;” provided that the Executive shall only have an opportunity to cure a failure to the extent the failure is curable, as determined by the Board in its sole discretion.

 

(b) Change of Control. As used herein, a “Change of Control” shall be deemed to have occurred if:

 

(1) Any “person,” as such term is used in sections 13(d) and 14(d) of Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than a person who is a stockholder of the Company on the effective date of the Plan) becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the voting power of the then outstanding securities of the Company; provided that a Change of Control shall not be deemed to occur as a result of a

 

  

- 8 -

  

 

 

transaction in which the Company becomes a subsidiary of another corporation and in which the stockholders of the Company, immediately prior to the transaction, will beneficially own, immediately after the transaction, shares entitling such stockholders to more than 50% of all votes to which all stockholders of the parent corporation would be entitled in the election of directors; or

 

(2) The consummation of (i) a merger or consolidation of the Company with another corporation where the stockholders of the Company, immediately prior to the merger or consolidation, will not beneficially own, immediately after the merger or consolidation, shares entitling such stockholders to more than 50% of all votes to which all stockholders of the surviving corporation would be entitled in the election of directors, (ii) a sale or other disposition of all or substantially all of the assets of the Company, or (iii) a liquidation or dissolution of the Company.

 

(c) Good Reason. The occurrence of one or more of the following actions; provided, however, that the Executive shall give the Company not less than 30 days’ prior written notice of such resignation setting forth in reasonable specificity the event that constitutes Good Reason, which written notice, to be effective, must be provided to the Company within thirty (30) business days following initial notification of its occurrence or proposed occurrence, and during such thirty (30) day notice period, the Company shall have a cure right (if curable), and if not cured within such period and which action is not then rescinded within 30 days after delivery of such notice, the Executive's termination will be effective upon the expiration of such cure period:

 

(1) A change of the principal office or work place assigned to the Executive to a location more than 35 miles distant from its location immediately prior to such change.

 

(2) A material reduction by the Company of the Executive’s title, duties, responsibilities, authority, status, reporting relationship or the Executive’s position.

 

(3) A material reduction of the Executive’s base salary or bonus opportunity, unless pursuant to a reduction in such items applicable proportionally to all senior management and board members.

 

(4) Any reason or no reason following a Change of Control, provided that the Executive’s notice of resignation under this subsection 11(c)(4) is provided to the surviving entity following the Change of Control, within the 30-day period following the six-month anniversary of such Change of Control.

 

12. Section 409A. It is intended that this Agreement will comply with, or be exempt from, Section 409A of the Code and any regulations and guidelines promulgated thereunder, to the extent the Agreement is subject thereto, and the Agreement shall be interpreted on a basis consistent with such intent.  Notwithstanding any provision in this Agreement to the contrary—

 

(a) the payment (or commencement of a series of payments) hereunder of any nonqualified deferred compensation (within the meaning of Section 409A of the Code) upon a termination of employment shall be delayed until such time as the Executive has also undergone a “separation from service” as defined in Treas. Reg. 1.409A-1(h), at which time such

 

  

- 9 -

  

 

 

nonqualified deferred compensation (calculated as of the date of Executive’s termination of employment hereunder) shall be paid (or commence to be paid) to the Executive on the schedule set forth in this Agreement as if the Executive had undergone such termination of employment (under the same circumstances) on the date of his ultimate “separation from service.”

 

(b) if the Executive is a “specified employee” of the Company under Section 409A of the Code at the time of his separation from service and if payment of any amount under this Agreement is required to be delayed for a period of six months after separation from service to meet the requirements of Section 409A(a)(2)(B)(i) of the Code, payment of such amount shall be delayed as required by Section 409A, and the accumulated postponed amount shall be paid in a lump sum payment within 10 days after the end of the six-month period.  If the Executive dies during the postponement period prior to the payment of postponed amount, the amounts withheld on account of section 409A shall be paid to the personal representative of the Executive’s estate within 60 days after the date of the Executive’s death.  The determination of whether Executive is a specified employee, including the number and identity of persons considered key employees and the identification date, shall be made by the Board in accordance with the provisions of Sections 416(i) and 409A of the Code and the regulations issued thereunder.

 

(c) For purposes of Section 409A of the Code, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments, and each payment made under the Agreement shall be treated as a separate payment for purposes of 409A of the Code.  Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company.  In no event may the Executive, directly or indirectly, designate the calendar year of payment.

 

(d) All reimbursements and in kind benefits, if any, provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the Executive’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement, or in kind benefits provided, during a fiscal year may not affect the expenses eligible for reimbursement, or in kind benefits to be provided, in any other fiscal year; provided, that the foregoing clause shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect, (iii) the reimbursement of an eligible expense will be made on or before the last day of the fiscal year following the year in which the expense is incurred, and (iv) the right to reimbursement or in kind benefits is not subject to liquidation or exchange for another benefit.  Any tax gross-up payment provided for under this Agreement shall in no event be paid to the Executive later than December 31 of the calendar year following the calendar year in which such taxes are remitted by the Executive.

 

13. Property Rights and Obligations of the Executive.

 

(a) Trade Secrets. For purposes of this Agreement, “trade secrets” shall include without limitation any and all financial, cost and pricing information and any and all information

 

  

- 10 -

  

 

 

contained in any drawings, designs, plans, proposals, customer lists, records of any kind, data, formulas, specifications, concepts or ideas, where such information is reasonably related to the business of the Company, has been divulged to or learned by the Executive during the term of his employment by the Company, and has not previously been publicly released by duly authorized representatives of the Company or otherwise lawfully entered the public domain.

 

(b) Preservation of Trade Secrets. The Executive will preserve as confidential all trade secrets pertaining to the Company’s business that have been obtained or learned by him by reason of his employment. The Executive will not, without the prior written consent of the Company, either use for his own benefit or purposes or disclose or permit disclosure to any third parties, either during the term of his employment hereunder or thereafter (except as required in fulfilling the duties of his employment), any trade secret connected with the business of the Company.

 

(c) Trade Secrets of Others. The Executive agrees that he will not disclose to the Company or induce the Company to use any trade secrets belonging to any third party.

 

(d) Property of Employer. The Executive agrees that all documents, reports, files, analyses, drawings, designs, tools, equipment, plans (including, without limitation, marketing and sales plans), proposals, customer lists, computer software or hardware, and similar materials that are made by him or come into his possession by reason of and during the term of his employment with the Company are the property of the Company and shall not be used by him in any way adverse to the Company’s interests. The Executive will not allow any such documents or things, or any copies, reproductions or summaries thereof to be delivered to or used by any third party without the specific consent of the Company. The Executive agrees to deliver to the Board or its designee, upon demand, and in any event upon the termination of the Executive’s employment, all of such documents and things which are in the Executive’s possession or under his control.

 

(e) Non-Competition and Non-Solicitation by the Executive.

 

(1) General. The Executive agrees during the Term, for the remainder of the Scheduled Term following termination of the Executive’s employment and for the one (1) year period thereafter or, in the event of a termination for Cause or a resignation by the Executive pursuant to Section 8, for the two (2) year period following such termination (as the case may be, the “Restricted Period”), not to recruit, engage in passive efforts, solicit or induce any person or entity who, during such one year period, or within one year prior to the termination of the Executive’s employment with the Company, was an employee, agent, representative or sales person of the Company or any of its affiliates (the “Company Group”) to leave or cease his employment or other relationship with the Company Group for any reason whatsoever or hire or engage the services of such person for the Executive in any business substantially similar to or competitive with that in which the Company Group was engaged during the Executive’s employment.

 

(2) Non-Solicitation of Customers. The Executive acknowledges that in the course of his employment, he has learned and will continue to learn about the Company Group’s business, services, materials, programs and products and the manner in which they are

 

  

- 11 -

  

 

 

developed, marketed, served and provided. The Executive knows and acknowledges that the Company Group has invested considerable time and money in developing its programs, agreements, offices, representatives, services, products and marketing techniques and that they are unique and original. The Executive further acknowledges that the Company Group must keep secret all pertinent information divulged to the Executive about the Company Group’s business concepts, ideas, programs, plans and processes, so as not to aid the Company Group’s competitors. Accordingly, the Company Group is entitled to the following protection, which the Executive agrees is reasonable:

 

(i) The Executive agrees that during the Term and thereafter during the Restricted Period, he will not, on his own behalf or on behalf of any person, firm, partnership, association, corporation, or other business organization, entity or enterprise, knowingly solicit, call upon, or initiate communication or contact with any person or entity or any representative of any person or entity, with whom the Executive had contact during his employment, with a view to the sale or the providing of any product, equipment or service sold or provided or under development by the Company Group during the period of two years immediately preceding the date of the Executive’s termination. The restrictions set forth in this Section shall apply only to persons or entities with whom the Executive had actual contact during the two years prior to termination of his employment with a view toward the sale or providing of any product, equipment or service sold or provided or under development by the Company Group.

 

(3) Non-Competition. The Executive acknowledges that he will be a “high impact” person in the Company Group’s business who is in possession of selective and specialized skills, learning abilities, customer contacts, and customer information as a result of his relationship with the Company Group and prior experience, and agrees that the Company Group has a substantial business interest in the covenant described below. The Executive, therefore, agrees that during the Term and thereafter during the Restricted Period, not to, either directly, whether as an employee, sole proprietor, partner stockholder, joint venture or the like, in the same or similar capacity in which he worked for the Company Group, compete with the Company Group in any field in which the Company Group has entered into, enters into during the Executive’s employment with the Company Group or is considering entering into at the time of the Executive’s termination of employment, provided the Executive has actual knowledge of such field. The territory in which this non-competition covenant shall apply will be limited to the area commensurate with the territory in which the Executive marketed, sold or provided products or services for the Company Group during the two years preceding termination of employment.

 

(4) Survival Provisions. Unless otherwise agreed to in writing between the parties hereto, the provisions of this Section 13 shall survive the termination of this Agreement. The covenants in this Section 13 shall be construed as separate covenants and to the extent any covenant shall be judicially unenforceable, it shall not affect the enforcement of any other covenant.

 

14. Legal and Equitable Remedies. Because the Executive’s services are personal and unique and the Executive has had and will continue to have access to and has become and will continue to become acquainted with the proprietary information of the Company, and because any breach by the Executive of any of the restrictive covenants contained in Section 13 would

 

  

- 12 -

  

 

 

result in irreparable injury and damage for which money damages would not provide an adequate remedy, the Company shall have the right to enforce Section 13 and any of its provisions by injunction, specific performance or other equitable relief, without bond and without prejudice to any other rights and remedies that the Company may have for a breach, or threatened breach, of the restrictive covenants set forth in Section 13. The Executive agrees that in any action in which the Company seeks injunction, specific performance or other equitable relief, the Executive will not assert or contend that any of the provisions of Section 13 are unreasonable or otherwise unenforceable. The Executive irrevocably and unconditionally (a) agrees that any legal proceeding arising out of this paragraph may be brought in the United States District Court for the Eastern District of Pennsylvania, or if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in Philadelphia, Pennsylvania, (b) consents to the non-exclusive jurisdiction of such court in any such proceeding, and (c) waives any objection to the laying of venue of any such proceeding in any such court. The Executive also irrevocably and unconditionally consents to the service of any process, pleadings, notices or other papers.

 

15. Arbitration; Expenses. In the event of any dispute under the provisions of this Agreement, other than a dispute in which the primary relief sought is an equitable remedy such as an injunction, the parties shall be required to have the dispute, controversy or claim settled by arbitration in Philadelphia, Pennsylvania in accordance with the Employment Arbitration Rules and Mediation Procedures then in effect of the American Arbitration Association, before an arbitrator agreed to by both parties. If the parties cannot agree upon the choice of arbitrator, the Company and the Executive will each choose an arbitrator. The two arbitrators will then select a third arbitrator who will serve as the actual arbitrator for the dispute, controversy or claim. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The arbitrators shall have no authority to modify any provision of this Agreement or to award a remedy for a dispute involving this Agreement other than a benefit specifically provided under or by virtue of the Agreement. Each party shall be responsible for its own expenses relating to the conduct of the arbitration (including reasonable attorneys’ fees and expenses) and shall share the fees of the American Arbitration Association.

 

16. Attorneys’ Fees. Except as provided in Section 14 above, in any action at law or in equity to enforce or construe any provisions or rights under this Agreement, the unsuccessful party or parties to such litigation, as determined by the courts pursuant to a final judgment or decree, shall pay the successful party or parties all costs, expenses, and reasonable attorneys’ fees incurred by such successful party or parties (including, without limitation, such costs, expenses, and fees on any appeals), and if such successful party or parties shall recover judgment in any such action or proceedings, such costs, expenses, and attorneys’ fees shall be included as part of such judgment.

 

17. Indemnification and Liability Insurance.  The Company will indemnify and hold harmless, to the fullest extent permitted by applicable law and the Company’s bylaws, the Executive if the Executive is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that the Executive is a director or officer of the Company, against all liability or loss

 

  

- 13 -

  

 

 

suffered (including attorneys’ fees) reasonably incurred by the Executive. The Company shall cover the Executive under directors’ and officers’ liability insurance both during and, while potential liability exists, after the term of this Agreement on terms no less favorable and to the same extent as the Company covers its active officers and directors.

 

18. Code Section 280G/4999. Notwithstanding anything in this Agreement to the contrary, if any of the payment or payments or other benefit to the Executive (prior to any reduction below) provided for in this Agreement, together with any other payment or payments or other benefit which the Executive has the right to receive from the Company or any corporation which is a member of an “affiliated group” as defined in Section 1504(a) of the Code, without regard to Section 1504(b) of the Code, of which the Company is a member (the “Payments”) would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), and if the Safe Harbor Amount (defined below) is greater than the Taxed Amount (defined below), then the total amount of such Payments shall be reduced to the Safe Harbor Amount. The “Safe Harbor Amount” is the largest portion of the Payments that would result in no portion of the Payments being subject to the excise tax set forth at Section 4999 of the Code (“Excise Tax”). The “Taxed Amount” is the total amount of the Payments (prior to any reduction, above) notwithstanding that all or some portion of the Payments may be subject to the Excise Tax. Solely for the purpose of comparing which of the Safe Harbor Amount and the Taxed Amount is greater, the determination of each such amount, shall be made on an after-tax basis, taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all of which shall be computed at the highest applicable marginal rate). If a reduction of the Payments to the Safe Harbor Amount is necessary, then the reduction shall occur in the following order unless the Executive elects in writing a different order (provided, however, that such election shall be subject to approval of the Company if made on or after the date on which the event that triggers the Payments occurs): (i) reduction of cash payments; then (ii) cancellation of accelerated vesting of stock or stock option awards; and then (iii) reduction of the Executive’s benefits. In the event that acceleration of vesting of stock or stock option award compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of the Executive’s stock awards.

 

19. Survival. The respective rights and obligations of the parties hereunder shall survive the termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations.

 

20. No Mitigation or Set Off. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced, regardless of whether the Executive obtains other employment. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive or others.

 

21. Notices. All notices and other communications required or permitted under this Agreement or necessary or convenient in connection herewith shall be in writing and shall be

 

  

- 14 -

  

 

 

deemed to have been given when hand delivered or mailed by registered or certified mail, as follows (provided that notice of change of address shall be deemed given only when received):

 

	  	
If to the Company, to:

	  	
PhotoMedex, Inc

	  
	  	  	  	
100 Lakeside Dr

	  
	  	  	  	
Suite 100

	  
	  	  	  	
Horsham, Pennsylvania 19044

	  
	  	  	  	
Fax: (215) 619-3209

	  

 

 

	  	
With a copy to:

	  	
Proskauer Rose LLP

	  
	  	  	  	
11 Times Square

	  
	  	  	  	
New York, NY 10036

	  
	  	  	  	
Attention: Paul I. Rachlin, Esq.

	  
	  	  	  	
Fax: (212) 969-2900

	  

 

	  	
If to Executive:

	  	
At the address shown on the records of the

	  
	  	  	  	
Company

	  

22. Withholding. All payments under this Agreement shall be made subject to applicable tax withholding, and the Company shall withhold from any payments under this Agreement all federal, state and local taxes as the Company is required to withhold pursuant to any law or governmental rule or regulation. The Executive shall bear all expense of, and be solely responsible for, all federal, state and local taxes due with respect to any payment received under this Agreement.

 

23. Remedies Cumulative; No Waiver. No remedy conferred upon a party by this Agreement is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to any other remedy given under this Agreement or now or hereafter existing at law or in equity. No delay or omission by a party in exercising any right, remedy or power under this Agreement or existing at law or in equity shall be construed as a waiver thereof, and any such right, remedy or power may be exercised by such party from time to time and as often as may be deemed expedient or necessary by such party in its sole discretion.

 

24. Assignment. All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, executors, administrators, legal representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of the Executive under this Agreement are of a personal nature and shall not be assignable or delegable in whole or in part by the Executive.  The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, 

 

 

 

  

- 15 -

  

 

 

reorganization or otherwise) to all or substantially all of the business or assets of the Company, within 15 days of such succession, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such succession had taken place and the Executive acknowledges that in such event the obligations of the Executive hereunder, including but not limited to those under Section 13, will continue to apply in favor of the successor. The obligations to Executive required to be performed by a successor entity (or by the Company, if the Company so elects in the case of a sale of assets)

 

  

- 16 -

  

 

 

shall include but not be limited to the obligation to pay the Cash Bonuses to the extent payable hereunder.

 

25. Entire Agreement. This Agreement sets forth the entire agreement of the parties hereto and supersedes any and all prior agreements and understandings concerning the Executive’s employment by the Company, including, without limitation, the Prior Agreement. This Agreement may be changed only by a written document signed by the Executive and the Company.

 

26. Severability. If any provision of this Agreement or application thereof to anyone or under any circumstances is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and shall not invalidate or render unenforceable such provision or application in any other jurisdiction. If any provision is held void, invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances.

 

27. Choice of Law and Forum. Except as expressly provided otherwise in this Agreement, this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, and both parties consent to the jurisdiction of the courts of the State of Delaware with respect thereto.

 

28. Counterparts. This Agreement may be executed in any number of counterparts (including facsimile counterparts), each of which shall be an original, but all of which together shall constitute one instrument.

 

[SIGNATURE PAGE FOLLOWS]

 

  

- 17 -

  

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of August 5, 2014, to become effective immediately.

 

 

 

	 	PHOTOMEDEX, INC. 	 
	 	 	 	 
	
 

	
By: 

	/s/ Lewis C. Pell                                     	 
	 	Name: 	Lewis C. Pell 	 
	 	Title: 	

Chairman of the Board of Directors

	 
	 	 	 	 

 

 

	 	EXECUTIVE	 
	 	 	 	 
	
 

	
By:

	/s/ Dolev Rafaeli                                     	 
	 	Name:	Dolev Rafaeli	 

 

  

- 18 -

  

SCHEDULE A

 

CORPORATE BOARDS

 

 

Executive is a member of the following corporate boards as of the Effective Date:

 

	
·  

	
Radiancy Inc.

 

  

- 19 -

  

EXHIBIT A

 

GENERAL RELEASE OF CLAIMS

 

For and in consideration of the promises set forth in the Amended and Restated Employment Agreement, agreement dated August 4, 2014 (the “Agreement”), between Dolev Rafaeli (“Executive”) and PhotoMedex, Inc. (the “Company”), including the benefits and other valuable consideration as set forth therein, and in consideration for the promises set forth in this General Release of Claims (this “Release”), the parties agree as follows:

1. Executive, for himself, his heirs, administrators, representatives, executors, successors, assigns, and all other individuals and entities claiming through him, if any (collectively, the “Releasors”), hereby releases, waives, and forever discharges the Company and each of its affiliates, related organizations, and their successors and assigns, and each of its and their employees, officers, directors, members, agents, trustees, attorneys, successors, and assigns in their capacities as such (collectively, “Releasees”) from, and does fully waive any obligations of Releasees to Releasors for, any and all liability, actions, charges, causes of action, demands, damages, or claims for relief, remuneration, sums of money, accounts or expenses of any kind whatsoever, whether known or unknown or contingent or absolute, which heretofore has been or which hereafter may be suffered or sustained, directly or indirectly, by Releasors, including, without limitation, any obligations of Releasees in consequence of, arising out of, or in any way relating to: (i) Executive’ service with the Company (whether as an employee or a consultant); (ii) the separation or termination of Executive’ service to the Company (whether as an employee or a consultant); or (iii) any events, acts, or omissions occurring on or prior to the date of this Release (collectively, “Claims”).  The foregoing release, discharge and waiver includes, but is not limited to, all waivable Claims and any obligations, liabilities or causes of action arising from such Claims under common law, including, but not limited to, wrongful or retaliatory discharge, breach of contract, libel, slander, defamation or intentional infliction of emotional distress; and further includes, but is not limited to, any claims under any federal, state or local statute, ordinance, or regulation, including, but not limited to, the Age Discrimination in Employment Act (“ADEA”), the Older Workers Benefit Protection Act (“OWBPA”), the Civil Rights Act of 1991, the Equal Pay Act, the Immigration and Reform Control Act, the Uniform Services Employment and Re-Employment Act, the Rehabilitation Act of 1973, Executive Order 11246, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, Title VII of the Civil Rights Act of 1964, other civil rights statutes including, without limitation 42 U.S.C. § 1981, 42 U.S.C. § 1982, and 42 U.S.C. § 1985, the National Labor Relations Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, the Americans with Disabilities Act of 1990, the Rehabilitation Act of 1973, the Family and Medical Leave Act, the Sarbanes-Oxley Act, the Occupational Safety and Health Act, the Immigration Reform and Control Act, the Pennsylvania Human Relations Act, the Pennsylvania Equal Pay Law, the Pennsylvania Whistleblower Law or any other applicable state or local labor or human rights laws, as such laws have been amended, or the discrimination or employment laws of any state or municipality, and/or any claims under any express or implied contract which Releasors may claim existed with Releasees.  This also includes a release of any claims for wrongful discharge and all claims for alleged physical or personal injury, emotional distress, damages, attorneys or experts fees, interest and penalties relating to or arising out of Executive’ service to the Company or any of its affiliates or related organizations (whether as an employee or an independent contractor) or the separation or termination of such service, and any claims under the Worker Adjustment and Retraining Notification Act or any similar law, which requires, among other things, that advance notice be given of certain work force reductions.

2.           Notwithstanding anything contained in Section 1 above to the contrary, nothing contained herein will constitute a release by Releasors of any of his rights or remedies available to him, at law or in equity,

  

- 20 -

  

related to, on account of, in connection with or in any way pertaining to the enforcement of: (i) any rights to the receipt of employee benefits or other payments which were earned and vested on or prior to the date of this Release; (ii) any claims that cannot be waived by applicable law, including but not limited to the right to participate in an investigation conducted by certain government agencies (provided, however, that Executive does waive his right to, and will not accept, any monetary payment should any government agency (such as the Equal Employment Opportunity Commission or Department of Labor) pursue any claims on his behalf); or (iii) the Agreement or any of its terms or conditions.

3.           Executive understands that he will have at least [twenty one (21)][forty five (45)]1 days from the date of receipt of this Release to consider the terms and conditions of this Release.  Executive may accept this Release by signing it and returning it to the Company.  After executing this Release, Executive will have seven (7) days (the “Revocation Period”) to revoke this Release by indicating his desire to do so in writing delivered to the Company by no later than the seventh (7th) day after the date he signs this Release.  The effective date of this Release will be the eighth (8th) day after Executive signs this Release.  If the last day of the Revocation Period falls on a Saturday, Sunday or holiday, the last day of the Revocation Period will be deemed to be the next business day.  In the event Executive does not accept this Release as set forth above, or in the event he revokes this Release during the Revocation Period, this Release, including but not limited to the obligation of the Company to provide the payments and benefits provided in the Agreement, will be deemed automatically null and void.

4.           Executive acknowledges that he: (a) has carefully read this Release in its entirety; (b) has had an opportunity to consider for at least [twenty one (21)][forty five (45)] days the terms of this Release; (c) is hereby advised by the Company, in this writing, to consult with an attorney of his choice before signing this Release; (d) fully understands the significance of all of the terms and conditions of this Release and has discussed them with an attorney of his choice, or has had a reasonable opportunity to do so; and (e) is signing this Release voluntarily and of his own free will and agrees to abide by all the terms and conditions contained herein.

5.           This Release will not affect Executive’ rights under the Older Workers Benefit Protection Act to have a judicial determination of the validity of this Release and does not purport to limit any right that Executive may have to file a charge under the Age Discrimination in Employment Act or other civil rights statute or to participate in an investigation or proceeding conducted by the Equal Employment Opportunity Commission or other investigative agency.  This Release does, however, waive and release any right to recover damages under the Age Discrimination in Employment Act or other civil rights statute.

[SIGNATURE PAGE FOLLOWS]

 

  

1 Note – 21- or 45-day period dependent on circumstances required for ADEA/OWBPA purposes - consideration period of 45 days generally required if the waiver relates to a group or class termination.

  

- 21 -

  

IN WITNESS WHEREOF, the parties hereto have executed this Release as of the dates set forth below.

 

	 	PHOTOMEDEX, INC.	 
	 	 	 	 
	
 

	
By: 

	/s/ Lewis C. Pell                                       	 
	 	Name 	 Lewis C. Pell 	 
	 	Title 	 Chairman of the Board of Directors	 
	 	 	 	 

 

	 	EXECUTIVE	 
	 	 	 	 
	
 

	
By: 

	/s/ Dolev Rafaeli                                     	 
	 	Name 	 Dolev Rafaeli	 
	 	 	 	 

 

 

 

 

- 22 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00234-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00234-of-00352.parquet"}]]