EXHIBIT 10.2
SEVERANCE AGREEMENT
AGREEMENT by and between NYMAGIC, INC., a New York corporation (the
"Company"), and Xxxxxx X. Xxxxxxxxx (the "Executive"), dated as of the 31st day
of December 2001.
WHEREAS, the Executive is the Chief Financial Officer of the Company; and
WHEREAS, the Company desires to provide the Executive with severance
compensation upon the occurrence of certain sale events, subject to certain
conditions;
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS.
(a) "Cause" shall mean (i) the willful and material neglect of duties by
the Executive, (ii) the Executive's conviction of, or plea of no contest to a
felony, or (iii) any other wrongful act committed by the Executive that has a
material adverse effect on the business or reputation of the Company or its
affiliated companies; provided that no act or failure to act on the Executive's
part shall be deemed "willful" unless done, or omitted to be done, by the
Executive without reasonable belief that the Executive's action or omission was
in the best interest of the Company.
(b) "Date of Termination" shall mean during the Sale Event Period the date
of receipt of a Termination Notice or any later date specified therein, as the
case may be; provided, however, that if the Company terminates the Executive's
employment other than for Cause during the Sale Event Period, the Date of
Termination shall be the date on which the Company notifies the Executive of
such termination.
(c) "Effective Date" shall mean the date on which a Sale Event occurs;
provided that the Executive is employed on that date (except as provided in
Section 1(f)(v)).
(d) "Good Reason" shall mean: (i) any failure by the Company to continue
paying any compensation or providing any benefits which the Executive was
otherwise entitled to receive during the Sale Event Period or during the 90-day
period immediately preceding the Effective Date, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of written notice thereof given
by the Executive; or (ii) the Company requiring during the Sale Event Period,
the Executive to be based at any office or location other than the location
where the Executive was based immediately preceding the Effective Date or any
office or location more than 35 miles from such location or, requiring the
Executive to travel away from Executive's office in the course of discharging
responsibilities or duties in a manner which is inappropriate for the
performance of the Executive's duties and which is significantly more frequent
(in terms of either consecutive days or aggregate days in any calendar year)
than was required prior to the Sale Event.
(e) Permitted Transferee: (a) In the case of a natural person, such
person's spouse, children, brother and/or sister, mother father or other lineal
descendants, or any trust formed for the benefit of such persons (hereinafter
"family members"), (b) in the case of a trust, including any voting trust, the
trustees and beneficiaries of such trust, whether or not for the benefit of
family members, including without limitation, any transfer to or from any of the
Xxxxxx Xxxxxxxxx trust, or trusts, as part of the regular estate planning, and
(c) any estate of any of the family members.
(f) "Sale Event" shall mean:
(i) the sale, transfer or other disposition for financial
consideration (hereinafter "sale") or series of integrated sales, other
than by the Company, to an individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) of 45% or more of the then outstanding shares
of common stock of the Company (the "Outstanding Company Common Stock")
provided, however, that (x) any acquisition by the Company or any of its
affiliates, or (y) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any of its subsidiaries,
or (z) any transfer to or among any Permitted Transferee shall not
constitute a Sale Event, and shall not be included in such percentage for
determining whether a Sale Event has occurred hereunder; or
(ii) approval by the stockholders of the Company of a plan of complete
liquidation or dissolution of the Company;
(iii) consummation of an agreement for the sale or other disposition
of all or substantially all of the assets of the Company, other than to a
an entity in which 50% or more of either (1.) the outstanding shares of
common stock of such entity or (2.) the combined voting power of the then
outstanding voting securities of such entity entitled to vote generally in
the election of directors are owned by stockholders of the Company
immediately prior to the sale or other disposition;
(iv) consummation of a merger or consolidation of the Company with any
other corporation other than (i) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to represent (either by
remaining outstanding or being converted into voting securities of the
surviving entity or any parent thereof), in combination with the ownership
of any trustee or fiduciary holding securities under an employee benefit
plan of the Company or any subsidiary of the Company, at least 50% of the
combined voting power of the securities of the Company or such surviving
entity or any parent thereof outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) with respect to
which all or substantially all of the individuals and entities who were the
respective beneficial owners of the Outstanding Company Common Stock or its
combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors (the "Outstanding Voting
Securities") immediately prior to such reorganization, merger or
consolidation beneficially own, directly or
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indirectly, following such reorganization, merger or consolidation 50% or
more of the then outstanding shares of common stock and/or the Outstanding
Voting Securities, as the case may be, of the corporation resulting from
such reorganization, merger or consolidation; or
(v) if the Executive's employment is terminated by the Company without
Cause (x) at the request of a third party who has indicated an intention or
taken steps reasonably calculated to effect a Sale Event described in this
Section 1(f) above and who effectuates such Sale Event within one (1) year
thereafter, or (y) otherwise in connection with, or as part of, a Sale
Event which actually occurs within one (1) year after the Date of
Termination, then the date of a Sale Event shall mean the date immediately
prior to the date of such termination of the Executive's employment;
provided, however, that notwithstanding anything to the contrary in Sections
1(f) (i) through (v), a Sale Event shall not be deemed to have occurred by
virtue of the consummation of any transaction or series of integrated
transactions immediately following which the record holders of the Outstanding
Company Common Stock and/or Outstanding Company Voting Securities immediately
prior to such transaction or transactions beneficially own, directly or
indirectly, at least 50% of either (x) the outstanding shares of common stock of
the entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions or (y) the
combined voting power of the then outstanding voting securities of such entity
entitled to vote generally in the election of directors, in either case, in
substantially the same proportions as their ownership of the Company immediately
prior to the transaction or series of transactions.
(g) "Sale Event Period" shall mean the period commencing on the Effective
Date and ending on the second anniversary of such date.
(h) "Termination Notice" shall mean a written notice during the Sale Event
Period which sets forth in reasonable detail the facts and circumstances upon
which the termination of the Executive's employment is based and, if the Date of
Termination is other than the date of receipt of such notice, specifies the
termination date; provided however, that the failure by the Executive or the
Company to set forth in the Termination Notice any fact or circumstance which
contributes to a showing of Good Reason or Cause, as the case may be, shall not
waive any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in enforcing
the Executive's or the Company's rights hereunder.
2. OBLIGATIONS UPON TERMINATION DURING SALE EVENT PERIOD. If the
Executive's employment is terminated during the Sale Event Period by (i) the
Company without Cause, or (ii) by the Executive for Good Reason, then the
Company shall pay to the Executive, in consideration of the execution and
delivery of the Release (as set forth in Section 3 of this Agreement) one year's
current base salary (not including any bonus or supplemental compensation) in a
one lump sum in cash payment, seven (7) days after the date of the execution and
delivery of the Release, defined below, and the expiration of any revocation
period required by law. In addition, upon execution and delivery of the Release,
all outstanding stock options held by the Executive pursuant to any Company
stock option plan shall immediately become
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vested effective as of the Date of Termination and exercisable as to all or any
part of the shares covered thereby, with the Executive being able to exercise
Executive's stock options within a period of three months following the Date of
Termination or such longer period as may be permitted under Executive's stock
option agreements, if any. The amounts required to be paid under this Section 2
are not in lieu of any other severance obligations and shall not be reduced by
any other amount of severance (i.e., relating solely to salary or bonus
continuation or actual or deemed pension or insurance continuation) to be
received by the Executive upon such termination of employment under any
severance plan, policy or arrangement of the Company applicable to the Executive
or a group of employees of the Company, including the Executive, and applicable
without regard to the occurrence of a Sale Event prior to such termination of
employment. The amounts payable to the Executive pursuant to this Agreement will
not be subject to any requirement of mitigation, nor, except as specifically set
forth herein, will they be offset or otherwise reduced by reason of the
Executive's receipt of compensation from any source other than the Company. Any
termination of Executive's employment by the Company for Cause or by the
Executive for Good Reason shall be communicated by a Termination Notice to the
other party hereto given in accordance with Section 11.
3. RELEASE. The Company's obligation to make the payment provided for in
this Agreement and the acceleration of the vesting and exercise of the stock
options, and otherwise to perform its obligations hereunder, including any other
severance amounts otherwise due and payable to such Executive as referred to in
Section 2, are conditioned upon the execution and delivery by the Executive of
full and unconditional General Release, in form and substance reasonably
satisfactory to the Company, which, among other things, releases and discharges
all claims and causes of action which the Executive or Executive's heirs,
personal representatives, successors, or assigns ever had, now have, or
hereafter may have against the Company and any of its affiliated companies on
account of any claims and causes of action arising out of or relating to
Executive's relationship with the Company and its affiliated companies,
including without limitation, claims under various Federal and State laws
protecting employees from discrimination, and this Agreement, any other document
relating hereto or delivered in connection with the transactions contemplated
hereby ("Release").
4. TERMINATION OF THIS AGREEMENT. If the Executive's employment shall be
terminated prior to the Sale Event for any reason by the Company, with or
without Cause, or if the Executive shall resign, retire or otherwise leave the
employ of the Company prior to the Sale Event for any reason, this Agreement
shall terminate and the Company shall have no further obligation to the
Executive under this Agreement. Notwithstanding the preceding sentence of this
Section 4, if the Executive's employment is terminated by the Company without
Cause (x) at the request of a third party who has indicated an intention or
taken steps reasonably calculated to effect a Sale Event described in Section
1(f) above and who effectuates such Sale Event within one (1) year thereafter,
or (y) otherwise in connection with, or as part of, a Sale Event which actually
occurs within one (1) year after the Date of Termination, then the date of a
Sale Event shall mean the date immediately prior to the date of such termination
of the Executive's employment and the Company shall remain obligated to
Executive under this Agreement. After the Sale Event, the Company shall remain
obligated to Executive during the Sale Event Period in accordance with Section 2
of this Agreement.
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5. NON-EXCLUSIVITY. Nothing in this Agreement shall be deemed to constitute
an employment agreement, or to provide any assurance or guarantee of ongoing
employment of the Executive by the Company, and the Executive acknowledges that
his employment is at will and is subject to the determination of the Board of
Directors of the Company. Nothing in this Agreement shall affect, prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices provided by the
Company or any of its affiliated companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect any right of the
Executive to receive accrued and unpaid compensation otherwise due upon any
termination of his employment. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of the Company or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy,
practice or program.
6. FULL SETTLEMENT. The Company's obligation to make the payment provided
for in this Agreement and otherwise to perform its obligations hereunder, except
as provided in the last sentence of Section 2, shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Executive or others. 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.
7. PUBLIC ANNOUNCEMENTS. The Executive shall consult with the Company
before issuing any press release or otherwise making any public statement with
respect to the Company or any of its affiliated companies, this Agreement or the
transactions contemplated hereby, and the Executive shall not issue any such
press release or make any such public statement without the prior written
approval of the Company, except as may be required by applicable law, rule or
regulation or any self regulatory agency requirements, in which event the
Company shall have the right to review and comment upon any such press release
or public statement prior to its issuance.
8. ARBITRATION. Any dispute, controversy or claim arising out of or
relating to this Agreement, or any breach thereof, shall be determined and
settled by arbitration to be held in New York City pursuant to the labor rules
of the American Arbitration Association or any successor organization. Any award
rendered thereunder shall be final, conclusive and binding on the parties. Each
party shall pay one-half of all costs and expenses of any arbitration proceeding
brought pursuant to this Section, and each party shall pay its own attorneys'
fees and expenses.
9. SUCCESSORS.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
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(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as herein defined and any successor
to its business and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
10. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without reference to principles of conflict
of laws. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement sets forth the entire
agreement between Executive and the Company and supersedes any and all prior
oral or written agreements or understandings concerning the subject matter of
this Agreement. This Agreement may not be amended or modified otherwise than by
a written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Xxxxxx X. Xxxxxxxxx
[ address to come ]
If to the Company:
NYMAGIC, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Human Resources Administrator
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The Company may withhold from any amounts payable under this Agreement
such Federal, state or local taxes as shall be required to be withheld pursuant
to any applicable law or regulation.
(d) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof in any particular instance shall not be
deemed to be a waiver of such provision or any other provision thereof.
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(e) Executive represents that he fully understands his right to review all
aspects of this Agreement and the Release with an attorney of his choice, that
he has had had the opportunity to consult with an attorney of his choice, that
he has carefully read and fully understands all the provisions of this
Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set Executive's hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first stated above.
/s/ Xxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx
NYMAGIC, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
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