Exhibit 10.24
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), dated September 1, 2021 is made and entered into by and between HERITAGE INSURANCE HOLDINGS, INC., Delaware corporation, and all of its affiliate and subsidiary companies (collectively, the "Company"), and Sharon Binnun (the "Executive").
RECITALS
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, the parties hereby agree as follows:
Section I. Term
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Section II. Compensation and Benefits
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Section III. Termination.
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2. Severance. If Executive is terminated without Cause or voluntarily terminates her employment for Good Reason, the Executive shall be entitled to a lump-sum cash severance payment equivalent to 9 months of her annual base salary in effect immediately preceding termination, but not less than $393,750, to be paid within ninety (90) days of her termination and upon receipt of any Company required release to comply with Code Section 409A. In addition, the Executive will be entitled to receive a prorated annual cash incentive for the year of termination, subject to satisfying performance criteria, payable consistent with the Company’s normal annual cash incentive schedule included in the Company’s executive incentive compensation program, attached as Schedule A. All previously granted and unvested time-based and performance-based stock compensation will immediately vest. As used in this Agreement, “Good Reason” shall mean, without the Executive’s consent (i) reduction in Executive’s base salary, (ii) reduction in Executive’s cash bonus opportunity, (iii) reduction in Executive’s stock compensation opportunity, (iv) reduction in title, duties or responsibilities, (v) any requirement that the Executive report to anyone other than the CEO or CFO, (vi) meaningful, involuntary relocation of Executive’s principal place of business, or (vii) a material breach of this Agreement by the Company.
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Section IV. Restrictive Covenants
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It is further acknowledged by the Executive that if the general public or competitors (now existing or to be created in the future) learn of these ongoing discussions and negotiations with potential investors as a result of the Executive's failure to comply hereunder, irreparable harm and substantial financial loss may occur to the Company's, the Insurance Entity or other Subsidiary's viability and future revenues. The Executive acknowledges and agrees that the knowledge and experience the Executive shall acquire by virtue of employment by the Company during the Employment Term is of a special, unique and extraordinary character and hat such position allows the Executive access to Confidential Information and Intellectual Property.
(b) the Company or its Subsidiaries would sustain great and irreparable loss and damage if the Executive were to breach any of such covenants set forth herein; (c) the covenants herein set forth are made as an inducement to and have been relied upon by the Company in entering into this Agreement. The Executive acknowledges and agrees this Agreement is binding on the Executive's heirs, executors, successors, administrators, representatives and agents.
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Section V. Taxes
extent that the requirements of Section 409A are applicable thereto, and the provisions of this Agreement shall be construed in a manner consistent with that intention. If the Executive or the Company believes, at any time, that any such benefit or right that is subject to Section 409A does not so comply, he, she or it shall promptly advise the other and shall negotiate reasonably and in good faith to amend the terms of such benefits and rights such that they comply with Section 409A (with the most limited possible economic effect on the Executive and on the Company). If and to the extent required to comply with Section 409A, no payment or benefit required to be paid under this Agreement on account of termination of the Executive’s employment shall be made unless and until the Executive incurs a “separation from service” within the meaning of Section 409A. Notwithstanding anything in this Agreement to the contrary, to the extent necessary to comply with Section 409A of the Code, no transaction or series of transactions shall constitute a Change of Control unless such transaction or series of transactions is a permissible payment event for purposes of Treasury Regulation Section 1.409A-3(a)(5) of the Code. If the Executive is a “specified employee” (as reasonably determined by the Company in accordance with Section 409A), then no payment or benefit that is payable on account of the Executive’s “separation from service”, as that term is defined for purposes of Section 409A, shall be made before the date that is six months after the Executive’s “separation from service” (or, if earlier, the date of the Executive’s death) if and to the extent that such payment or benefit constitutes deferred compensation (or may be nonqualified deferred compensation) under Section 409A and such deferral is required to comply with the requirements of Section 409A. Any payment or benefit delayed by reason of the prior sentence shall be paid out or provided in a single lump sum at the end of such required delay period in order to catch up to the original payment schedule. For purposes of applying the provisions of Section 409A to this Agreement, each separately identified amount to which the Executive is entitled under this Agreement shall be treated as a separate payment. In addition, to the extent permissible under Section 409A, any series of installment payments under this Agreement shall be treated as a right to a series of separate payments. Any reimbursements by the Company to the Executive of any eligible expenses under this Agreement that are not excludable from the Executive’s income for Federal income tax purposes (the “Taxable Reimbursements”) shall be made by no later than the last day of the taxable year of the Executive following the year in which the expense was incurred. The amount of any Taxable Reimbursements, and the value of any in-kind benefits to be provided to the
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Executive, during any taxable year of the Executive shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year of the Executive. The right to Taxable Reimbursement, or in-kind benefits, shall not be subject to liquidation or exchange for another benefit. Notwithstanding anything to the contrary, the Company does not make any representation to the Executive that the payments or benefits provided under this Agreement are exempt from, or satisfy, the requirements of Section 409A, and neither the Company nor any Related Entity shall have any liability or other obligation to indemnify or hold harmless the Executive or any beneficiary of the Executive for any tax, additional tax, interest or penalties that the Executive or any beneficiary of the Executive may incur in the event that any provision of this Agreement or any other action taken with respect thereto is deemed to violate any of the requirements of Section 409A.
Agreement or otherwise (“Covered Payments”) constitute parachute payments (“Parachute Payments”) within the meaning of Section 280G of the Code and would, but for this Section be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the “Excise Tax”), then the Covered Payments shall be payable either
(i) in full or (ii) reduced to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax, whichever of the foregoing (i) or (ii) results in the Executive’s receipt on an after-tax basis of the greatest amount of benefits after taking into account the applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax). If a reduction in payments or benefits is necessary, reduction shall occur in the following order: (i) cash payments; (ii) equity-based payments and acceleration; and
(iii) other non-cash forms of benefits. Within any such category of payments and benefits (that is, (i), (ii) or (iii)), a reduction shall occur first with respect to amounts that are not “deferred compensation” within the meaning of Section 409A of the Code and then with respect to amounts that are. To the extent any such payment is to be made over time (e.g., in installments, etc.), then the payments shall be reduced in reverse chronological order. Any determination required hereunder, including whether any payments or benefits are Parachute Payments, shall be made by the Company in its sole discretion.
Section VI. Miscellaneous
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term "the Company" as used herein, shall mean such other corporation and this Agreement shall continue in full force and effect, subject to the provisions of Section III, Paragraph 4 hereof.
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agree that, in addition to any available remedy at law, including but not limited to monetary damages, an aggrieved party, without posting any bond, shall be entitled to obtain, and the offending party agrees to oppose the aggrieved party's request for, equitable relief in the form of specific enforcement, temporary restraining order, temporary or permanent injunction, or any other equitable remedy that may then be available to the aggrieved party.
Agreed to by:
Heritage Insurance Holdings, Inc.
By: /s/ ERNIE GARATEIX
Ernie Garateix, CEO
Executive
/s/ SHARON BINNUN
Sharon Binnun, Chief Accounting Officer
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Schedule A
ANNUAL INCENTIVE COMPENSATION PLAN
Eligible executives can receive annual performance-based cash and equity incentives and annual time-based equity grants in accordance with Heritage’s annual incentive compensation plan. Annual cash incentives are associated with Heritage’s short-term annual incentive plan, while annual time-based and performance-based equity grants are associated with Heritage’s long-term annual incentive plan.
Payout amounts for annual cash and performance equity grants are based on target dollar amounts established in eligible executives’ employment agreements. Pro rata amounts are calculated between threshold and target and target and max. The dollar amount of time-based restricted stock grants that executives are eligible to receive annually are similarly outlined in executives’ employment agreements.
Annual short-term incentive plan:
Heritage’s annual short-term incentive plan is performance-based and consists of annual cash incentives that are payable no later than March 5th of the immediately subsequent calendar year. Performance criteria are measured over a single calendar year.
Cash bonus criteria 2021
Weighting Threshold Target Max
[ ] | Net operating ratio* | [ ] | [ ] | [ ] |
[ ] | Ex‐FL organic GPW growth* | [ ] | [ ] | [ ] |
[ ] | Qualitative | [ ] | [ ] | [ ] |
*The numerator of the net operating ratio is calculated as the sum of net losses and loss adjustment expenses, policy acquisition costs and general and administrative expenses, less net investment income and policy fee income, while the denominator represents net premiums earned.
**Organic gross premiums written (GPW) growth is calculated as year‐over‐year GPW growth excluding premiums associated with acquisitions of whole entities for twelve months from the acquisition date.
Annual long-term incentive plan:
Heritage’s annual long-term incentive plan consists of two components:
‐ Annual grants of time-based restricted stock that vest in one-third annual increments, beginning with December 31st of the grant year.
‐ Annual grants of performance-based restricted stock that vest following the conclusion of the three-year performance period, but no later than March 5th of the calendar year immediately following the three-year performance period. The performance period is over three calendar years, beginning with the year of grant.
Performance stock criteria Threshold Target Max
3‐year adjusted book value per share growth [ ] [ ] [ ]
Note: adjusted book value per share growth excludes cumulative dividends declared and accumulated other comprehensive income.
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