EXHIBIT 10.6
FORM OF SEVERANCE AGREEMENT
AMONG GENERAL RE CORPORATION AND
CERTAIN EXECUTIVE OFFICERS
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EXHIBIT 10.6
SEVERANCE AGREEMENT
Agreement made this 15th day of May, 1996, between General Re Corporation
(the "Company"), and (the "Executive").
WHEREAS, the Company desires to provide the Executive with severance pay
under the circumstances and pursuant to the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the Company and the Executive hereby agree as follows:
1. This Agreement shall be effective for the period beginning May 1, 1996
and expiring on January 16, 2007.
2. Definitions: For purposes of this Agreement, the terms set forth
below shall have the meanings set forth below:
(a) "Annual Compensation" means the Base Salary of the Employee plus
the greater of:
(i) fifty (50%) percent of the Employee's Base Salary or
(ii) the Target Annual Incentive Bonus Award in effect for the
calendar year, but excluding other special compensation or
bonuses.
(b) "Base Salary" means the regular annual basic salary paid by the
Company for services performed by the Executive before any payroll deductions
for taxes or any other purposes, plus any amounts reduced from such salary or
wages and contributed on the Executive's behalf under the Employee Savings and
Stock Ownership Plan ("ESOP") or any amounts contributed on behalf of such
Executive under the Company's Cafeteria Plan for such period. Base salary shall
not include overtime,
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bonuses, commissions, fees, pension, severance pay or any other extraordinary
compensation, nor Matching Contributions or ESOP Contributions under the ESOP or
Company contributions to the Employee Retirement Plan of General Re Corporation
and its Affiliates ("Retirement Plan") or any other deferred compensation or
employee benefit plan or program of the Company.
(c) "Change in Control" of the Company shall occur if: (i) any
person, including a "group" as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, shall become the beneficial owner of shares of the Company
with respect to which twenty (20%) percent or more of the total number of votes
for the election of the Board of Directors of the Company may be cast; (ii) as a
result of, or in connection with, any cash tender offer, exchange offer, merger
or other business combination, sale of assets or contested election or
combination of the foregoing, the persons who were prior to the institution
thereof directors of the Company shall cease to constitute a majority of the
Board of Directors of the Company; or (iii) stockholders of the Company shall
approve an agreement pursuant to which the Company will cease to be an
independent publicly-owned corporation or for a sale or other disposition of all
or substantially all of the assets of the Company.
(d) "Person" shall have the meaning given in Section 3(a)(9) of the
Securities and Exchange Act of 1934 (as amended), as modified and used in
Sections 13(d) and 14(d) thereof; however, a Person shall not include (a) the
Company or any of its subsidiaries, (b) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries, (c) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (d) a corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportion as their
ownership of stock of the Company.
(e) "Target Annual Incentive Bonus Award" means the target formula
amount of the Annual Incentive Bonus Award applicable for the calendar year an
Employee pursuant to Section 6(c)(2)(A) of the General Re Corporation Long Term
Incentive Plan.
(f) "Termination for Cause" means any separation from service by the
Executive from the Company which is effected by reason of fraud, deceit, or
other gross misconduct by the Executive performed within the scope of the
Executive's employment.
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(g) "Termination for Good Reason" means any separation from service
by the Executive because of (a) the involuntary assignment of the Executive to
duties materially different from the Executive's position prior to such Change
in Control; (b) a reduction of the Executive's salary which is greater than 10
percent of the Executive's salary at the annual rate in effect at the time of
the Change in Control; or (c) the relocation of the Executive's regular assigned
workplace by more than 50 additional miles from residence.
3. In the event that there is a Change in Control of the Company
during the term of this Agreement, the Executive shall be entitled to a
severance payment if the Executive's employment with the Company terminates
(other than by reason of death, disability, retirement on or after Normal
Retirement Date under the Retirement Plan of General Re Corporation and its
Affiliates, Termination for Cause, or voluntary termination by the Executive
except for Termination for Good Reason) during the term of this Agreement and
within two years after the Change in Control. The amount of severance payment
shall be an amount equal to the Executive's Annual Compensation multiplied by
three (3). Notwithstanding anything contained herein to the contrary, the
Executive's entitlement to severance pay pursuant to this Agreement shall be in
lieu of, and not in addition to, any entitlement under the Company's Severance
Pay Plan, and the Executives entitlement to severance pay pursuant to this
Agreement shall be contingent upon the Executive delivering to the Company in a
form acceptable to the Company a signed release of any and all claims that the
Executive may have against the Company and any affiliated entities and their
respective officers, directors, employees, agents and employee welfare benefit
plans, relating in any way to the Executive's employment with the Company and
any affiliated entities and to the termination of such employment.
4. In the event that any payments or benefits received or to be
received by the Executive in connection with a Change in Control or termination
of employment, whether pursuant to the terms of this Plan or any other plan,
arrangement or agreement with the Company, any affiliated entity, or with any
Person whose actions result in a Change in Control or with any Person affiliated
with the Company or such Person, (all such payments and benefits, including the
Severance Payments payable hereunder, being hereinafter called "Total
Payments"), are subject (in whole or part) to the excise tax (the "Excise Tax")
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on the Total Payments and deduction of any
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federal, state and local income tax and Excise Tax on the Gross-Up Payment,
shall be equal to the Total Payments. For purposes of determining whether any of
the Total Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) any such total payments shall be treated as "parachute payments"
within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code shall be treated
as subject to the Excise Tax, unless in the opinion of tax counsel selected by
the Company's independent auditors such payments or benefits (in whole or in
part) do not constitute parachute payments, including by reason of Section
280G(b)(4)(A) of the Code, or such excess parachute payments (in whole or in
part) represent reasonable compensation for services actually rendered, within
the meaning of Section 280G(b)(4)(B) of the Code, in excess of the "base amount"
(as defined in Section 280G(b)(3) of the Code) allocable to such reasonable
compensation, or are otherwise not subject to the Excise Tax, and (ii) the value
of any non-cash benefits or any deferred payment or benefit shall be determined
by the Company's independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount
of the Gross-Up Payment, the Executive shall be deemed to pay federal income
taxes at the highest marginal rate of federal income taxation in the calendar
year in which the Gross-Up Payment is to be made and state and local income
taxes at the highest marginal rate of taxation in the state and locality of the
Executive's residence on the date of termination of the Executive's employment,
net of the maximum reduction in federal income taxes which could be obtained
from deduction of such state and local taxes. In the event that the Excise Tax
is subsequently determined to be less than the amount taken into account
hereunder at the time of a Change in Control or termination of the Executive's
employment, the Executive shall repay to the Company, at the time that the
amount of such reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus that portion of the Gross-
Up Payment attributable to the Excise Tax and federal, state and local income
tax imposed on the Gross-Up Payment being repaid by the Executive to the extent
that such repayment results in a reduction in Excise Tax and/or a federal, state
or local income tax deduction) plus interest on the amount of such repayment at
the rate provided in Section 1174(b)(2)(b) of the Code. In the event that the
Excise Tax is determined to exceed the amount taken into account hereunder at
the time of the Change of Control or termination of the Executive's employment
(including by reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall make an
additional Gross-Up Payment in respect of such excess (plus any interest,
penalties or additions payable to the Executive with respect to such excess) at
the time that the amount of such excess is finally determined. The Executive and
the Company shall
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each reasonably cooperate with the other in connection with any administrative
or judicial proceedings concerning the existence or amount of liability for the
Excise Tax with respect to the Total Payments.
5. Severance payments shall be made in a lump sum within two weeks
(14 days) after the date of the Executive's termination. Notwithstanding the
foregoing, at the Executive's written request, Severance Payments may be made at
a later date or in an alternative method of payment period.
6. Notwithstanding anything in this Agreement to the contrary, the
severance payment received under this Agreement shall be reduced by any payments
earned after the Executive's termination of employment pursuant to employment,
consulting and/or service agreements or arrangements between the Executive and
the Company or any affiliated entity.
7. In the event that the Executive becomes entitled to receive a
severance payment pursuant to the terms of this Agreement, the Executive will
also be entitled, for a period of 36 months from the date of the Executive's
termination, to participate in each medical, dental, vision, life and personal
accident plan or benefit in which the Executive participated immediately prior
to the Executive's termination of employment, upon the same terms available to
active employees. If the terms of any benefit plan do not permit continued
participation by the Executive, then the Company will make a lump sum payment to
the Executive in an amount equal to the Company's cost to provide the benefit
that the Executive would have been entitled to receive under this Agreement if
the coverage under that plan immediately prior to the Executive's termination of
employment had remained in effect. The benefit to be provided or payments to be
made under this paragraph shall be reduced to the extent that the Executive
receives benefits or payments for the same occurrence under another employer
sponsored plan to which the Executive is entitled because of employment
subsequent to the termination of employment with the Company. The benefit to be
provided or payment to be made under this paragraph shall terminate in the event
the Executive fails to make any required employee contributions, provided that
such required contributions do not exceed the contribution amount required or an
active employee participating in the benefit plan.
8. In the event of any dispute between the parties hereto arising
out of or relating to this Agreement or the employment between the Company and
the Executive, such dispute shall be settled by arbitration in Stamford,
Connecticut in accordance with the commercial arbitration rules then obtaining
of the American Arbitration Association, except that there shall be one
arbitrator selected with respect to any
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such arbitration proceeding. Judgment upon the award rendered may be entered in
any court having jurisdiction thereof.
9. Any notice of other communication required or permitted under
this Agreement shall be effective only if it is in writing and delivered
personally or sent by registered or certified mail, postage prepaid, addressed
as follows:
If to the Company:
Xxxxxxx X. Xxxx
Vice President and General Counsel
General Reinsurance Corporation
000 Xxxx Xxxx Xxxxxx
X.X. Xxx 00000
Xxxxxxxx, XX 00000-0000
If to the Executive:
or to such other address as either party may designate by notice to the other,
and shall be deemed to have been given upon receipt.
10. Nothing contained herein shall be deemed to give the Executive
the right to be retained in the employment of the Company or to limit the rights
of the Company to discharge any Executive at any time.
11. This Agreement constitutes the entire agreement between the
parties hereto with respect to the Executive's entitlement to severance pay from
the Company, and supersedes and is in full substitution for any and all prior
understandings or agreements with respect to the Executive's severance pay
entitlement. The invalidity or unenforceability of any term or provision, or any
clause, or portion thereof, of this Agreement, shall in no way impair or affect
the validity or enforceability or any other provision of this Agreement which
shall remain in full force and effect.
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12. This Agreement may be amended only by an instrument in writing
signed by the parties hereto, and any provision hereof may be waived only by an
instrument in writing signed by the party or parties against whom or which
enforcement of such waiver is sought. The failure of either party hereto at any
time to require the performance by the other party hereto of any provision
hereof shall in no way affect the full right to require such performance at any
time thereafter, nor shall the waiver be either party hereto of a breach of any
provision hereof be taken or held to be a waiver of any succeeding breach of
such provision or a waiver of the provision itself or a waiver of any other
provision of this Agreement.
13. This Agreement is binding on and is for the benefit of the
parties hereto and their respective successors, heirs, executors, administrators
and other legal representatives. Neither this Agreement nor any right or
obligation hereunder may be assigned by the Company (except to an affiliated
entity) or by the Executive.
14. This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut.
15. This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date first written above.
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GENERAL RE CORPORATION
Dated: By:
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