Exhibit 10.25
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), dated September 1st , 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 Tim Moura (the "Executive").
RECITALS
1. The Company is publicly traded and engaged in the insurance and financial services industry and has over $1 billion of in-force gross premiums across 16 states.
The Executive is currently the President of Narragansett Bay Insurance Company and NBIC Service Company (collectively "NBIC") and has been employed by the Company since 2014 pursuant to that certain Employment Agreement dated as of February 3, 2014 between the Company and Executive and amended pursuant to certain First Amendment to Employment Agreement dated as of January 30, 2018 (the "Prior Employment Agreement") which the Company and Executive agree is hereby terminated.
Given the Executive's unique experience and qualifications, the Company's Board of Directors has appointed Executive as NBIC's President effective January 1, 2018.
4. The Company and Executive desire to enter into this Agreement which sets forth the terms and conditions under which Executive shall serve as President of NBIC.
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
$200,000, with pro rata amounts earned between threshold and maximum. Achievement of the annual cash incentive will be based on the performance criteria included in Heritage's executive incentive compensation program, attached as Schedule A.
award agreement shall be subject to the terms and conditions of The Heritage Insurance Holdings, Inc. Omnibus Incentive Plan or any other equity incentive plan approved and adopted by the Board.
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Section Ill. Termination.
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, becomes the owner or beneficial owner of Company securities, after the Effective Date, having greater than 50% of the combined voting power of the then outstanding shares of the Company that may be cast for the election of directors of the Company (other than as a result of an issuance of securities initiated by the Company, or open market purchases approved by the Board, as long as the majority of the Board approving the purchases is the majority at the time the purchases are made), or (ii) the persons who were directors of the Company before such transactions shall cease to constitute a majority of the Board, or any successor to the Company, as the direct or indirect result of or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions and the (ii) the "Change of Control Date" shall be the date on which a Change of Control occurs.
During the remaining Employment Term hereof after a Change of Control Date, the Company (or the acquiring or surviving entity, will continue to be bound by this Agreement. Following a Change of Control, if the Executive is terminated without Cause or voluntarily terminates his
employment for Good Reason, Section III(2) of this Agreement will apply, but the lump sum cash severance payment will instead equal 1.5 times the Executive's base salary in effect immediately preceding termination, reflecting a minimum payment of$1,425,000, to be paid within ninety (90) days following his termination. 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.
Section IV. Restrictive Covenants
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.
1. To use the Confidential Information for the singular purpose of benefiting the Company and its Subsidiaries, and specifically not use the Company's and its Subsidiaries' customer or prospective customer data to conduct marketing, or otherwise undertake personal contacts, to solicit, divert or appropriate customers or prospective customers of the Company or its Subsidiaries, whether for the benefit of the Executive or any Person;
11. Not to disclose Confidential Information, except to the extent the Executive
is required to disclose or use such Confidential Information in the performance of the Executive's assigned duties for the Company or its Subsidiaries, to any Person without the prior express written consent of the Board;
To tender all Confidential Information to the Company, and
destroy any of the Executive's additional notes or records made from such Confidential Information, immediately upon request by the Company or upon termination of this Agreement
111. To promptly disclose and assign any right, title and interest to the Company
all IP authored, made, conceived or actually reduced to practice, alone or jointly with others, (a) while performing duties for the Company or its Subsidiaries, or
(b) during the Employment Term of this Agreement, or ( c) which results or is suggested by any work done for or at the request of the Company or its
Subsidiaries, or (d) which was aided by the use of trade secret information, whether or not during working hours and regardless of location;
1v. To use best efforts to safeguard the Confidential Information and protect it against disclosure, misuse, espionage, loss, misappropriation and theft;
Section V. Taxes
Generally. Anything in this Agreement to the contrary notwithstanding, all payments required to be made by the Company hereunder to the Executive or the Executive's estate or beneficiaries shall be subject to the withholding of such amounts relating to taxes as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation. In lieu of withholding such amounts, in whole or in part, the Company may, in its sole discretion, accept
other provisions for payment of taxes and withholding as required by law, provided it is satisfied that all requirements of law affecting its responsibilities to withhold have been satisfied.
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 l.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 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
to bind the Executive and the Executive's respective heirs, executors, successors, administrators, representatives and agents.
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.
disputes seeking equitable remedies, shall be submitted to arbitration in Pinellas County, Florida pursuant to the rules of the American Arbitration Association.
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 fom1 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/ EENIE GARATEIX
Ernie Garateix, CEO
Executive
By: /s/ TIM MOURA
Tim Moura, President NBIC
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Schedule A
ANNUAL INCENTIVE COMPENSATION PLAN
Eligible executives can receive annual performance-based cash and stock bonuses and annual time based stock grants in accordance with Heritage's annual incentive compensation plan. Annual cash bonuses are associated with Heritage's short-term annual incentive plan, while annual time-based and performance-based stock bonuses are associated with Heritage's long-term annual incentive plan.
Payout amounts for annual cash and performance stock bonuses are based on target dollar amounts established in eligible executives' employment agreements. The dollar amount of time-based restricted stock grants that executives are eligible to receive annually are similarly outlined in executives' employment agreements.
Cash and performance stock bonus payouts
Cash bonus Threshold Target |
Max | Performance Stock Threshold Target Max | |||
[ ] | [ ] | [ ] | [ ] | [ ] | [ ] |
Note: pro rata amounts are calculated between threshold and target and target and max.
Annual short-term incentive plan:
Heritage's short-term incentive plan is performance-based and consists of annual cash bonuses that are payable no later than March 5th of the subsequent calendar year. Performance criteria are measured over a single calendar year. The Board and CEO may review the metrics on an annual basis and may adjust any metrics as needed.
Cash bonus criteria 2021
Weighting Threshold Target Max
[ ] | HIH Net operating Ratio* | [ ] | [ ] | [ ] |
[ ] | NBIC Holding Net Operating Ratio* | [ ] | [ ] | [ ] |
[ ] | Ex-FL organic GPW growth** | [ ] | [ ] | [ ] |
[ ] Qualitative Qualitative
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.
12.
Annual long-term incentive plan:
Heritage's long-term incentive plan consists of two components:
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.