EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of this 10th day of March, 1999, by and between
NYMAGIC, INC., a New York corporation (the "Company") whose principal executive
offices are located at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and XXXXXXX
X. XXXX, an individual residing at 00 Xxxxxxx Xxxxx, Xxxx Xxxxxx Xxxxxx, Xxx
Xxxx 00000 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company seeks to employ the Executive and the Executive seeks
to be employed by the Company; and
WHEREAS, both parties desire that the terms and conditions of the
Executive's employment with the Company be governed by the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. Employment and Duties.
(a) General. The Company hereby employs the Executive, effective as of
March 19, 1999 ( the "Effective Date"), and the Executive agrees, upon the terms
and conditions herein set forth, to serve, effective as of the Effective Date,
as President and Chief Executive Officer of the Company. In such capacities, the
Executive shall report directly and only to the Board of Directors of the
Company (the "Board"). The Executive's principal place of business shall be in
the Company's New York offices and he shall perform all of the duties
commensurate to the positions of President and Chief Executive Officer.
(b) Services and Duties. For so long as the Executive is employed
hereunder, he shall devote his full business time to the performance of his
duties hereunder; shall faithfully serve the Company; shall in all respects
conform to and comply with the lawful and good faith directions and instructions
given to him by the Board as the same are consistent with his status and the
terms hereof; and shall use his best efforts to promote and serve the interests
of the Company.
(c) Board Membership. The Company agrees to nominate the Executive for
membership on the Board at the next meeting of shareholders and shall use all
reasonable efforts to cause the Executive to be elected to the Board at such
meeting.
(d) No Other Employment. For so long as the Executive is employed by the
Company, he shall not, directly or indirectly, render services to any other
person or organization for which he receives compensation without the prior
approval of the Board. No such approval
will be required if the Executive seeks to perform inconsequential services
without direct compensation therefor in connection with the management of
personal investments or in connection with the performance of charitable and
civic activities, provided that such activities do not contravene the provisions
of Section 6 hereof.
2. Term of Employment. The term of the Executive's employment under this
Agreement (the "Term") shall commence on the Effective Date and continue until
the third anniversary date of the Effective Date. On the third anniversary date
of the Effective Date (and on each subsequent anniversary date thereafter), the
Term shall automatically renew for an additional one-year period unless, within
six months prior to the applicable anniversary date, either party shall have
given the other party hereto written notice of its intention not to extend the
Term.
3. Compensation and Other Benefits. Subject to the provisions of this
Agreement, the Company shall pay and provide the following compensation and
other benefits to the Executive during the Term as compensation for all services
rendered hereunder:
(a) Salary. The Company shall pay to the Executive an annual salary
(the "Salary") at the initial rate of $425,000, payable to the Executive
in accordance with the normal payroll practices of the Company for its
executive officers as are in effect from time to time. The amount of the
Executive's Salary shall be reviewed annually by the Board and may be
increased, but not decreased below such amount, on the basis of such
review.
(b) Signing Bonus. The Company shall pay the Executive a one time
sign-on bonus of $225,000, less applicable withholding taxes. The sign-on
bonus will be paid within one week of the Effective Date.
(c) Annual Bonus. During the Term, the Executive shall be eligible,
for each calendar year that begins within the Term, to participate in an
annual incentive bonus program established by the Company in accordance
with the terms and conditions as may be approved annually by the
Compensation Committee of the Board (the "Compensation Committee"). Under
the terms of the annual incentive bonus program, the Executive will be
afforded the opportunity to earn a bonus (the "Bonus") of up to 100% of
his Salary in effect for the applicable calendar year based on the
Company's achievement of the performance targets established by the
Compensation Committee for that year. For each year during the Term, the
Executive's target Bonus will be set at 50% of his Salary and will be
earned based upon the ratio that the return on capital (the "ROC") for the
relevant year bears to the average ROC achieved by the Company for the
five preceding years (the "Five-Year ROC"). The target Bonus will be
adjusted in proportion to the Company's level of achievement of the
Five-Year ROC. For the purpose of this Agreement, the ROC and the
Five-Year ROC will be calculated by dividing net operating income by the
average shareholders' equity for the relevant period as determined by the
Company's auditors in accordance with Generally Accepted Accounting
Principals. Attached hereto as Exhibit A is a chart depicting the Bonus
amount payable to the Executive based on the
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Company's achievement of various ROC rates. For calendar year 1999, the
Executive will be entitled to a minimum bonus of $212,500.
(d) Stock Options. Effective as of the Effective Date, the Company
shall grant the Executive an option (the "Option") to purchase 80,000
shares of the common stock of the Company pursuant to the terms of the
Company's 1991 Stock Option Plan (the "Option Plan"). The per share
exercise price of the Option shall equal 95% of the fair market value of a
share of the Company's common stock on the first trading day immediately
preceding the Effective Date, as determined in accordance with the terms
of the Option Plan. The Option shall vest and become exercisable with
respect to 25% of the shares of common stock subject thereto on each of
the first through fourth anniversaries of the Effective Date provided that
the Executive has remained in the continuous full-time employment of the
Company through the applicable anniversary date. The Option shall be
subject to the terms of the Option Plan and to such other terms and
conditions as may be specified by the Compensation Committee in the form
of a standard option agreement between the Company and the Executive,
which is attached hereto as Exhibit B.
(e) Welfare, Benefit and Retirement Programs. The Executive will be
included in the Company's Profit Sharing Plan and Money Purchase Plan, and
will vest in 100% of the contributions to such plans on the second
anniversary of each such contribution. In addition, the Executive shall be
eligible to participate in the Company's benefit plans for executives as
in effect from time to time, which currently provide life insurance for
the Executive and medical and dental coverage for the Executive and his
eligible dependents.
(f) Expenses. The Company shall pay or reimburse the Executive for
all reasonable out-of-pocket expenses incurred by the Executive in
connection with his employment hereunder. Such expenses shall be paid upon
the periodic submission of invoices and shall be paid reasonably promptly
after the date of such invoice. The reimbursement of expenses under this
Section 3(f) shall be subject to the Executive's providing the Company
with such documentation of the expenses as the Company may from time to
time reasonably request.
(g) Vacation. In addition to the usual public and bank holidays, the
Executive shall be entitled to twenty days' paid vacation annually, which
shall be taken at such times as are approved by the Board. The Executive
shall also be entitled to personal and sick days in accordance with the
Company's policies for executives as in effect from time to time.
(h) Parking Space. The Company shall pay or reimburse the Executive
for the cost of a parking space in a garage located in or near the
Executive's primary place of employment.
4. Termination of Employment. Subject to the notice and other provisions
of this Section 4, the Company shall have the right to terminate the Executive's
employment hereunder, and he shall have the right to resign, at any time for any
reason or for no stated reason.
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(a) Termination for Cause; Resignation Without Good Reason. (i) If,
prior to the expiration of the Term, the Executive's employment is
terminated by the Company for Cause or if the Executive resigns from his
employment hereunder other than for Good Reason, he shall be entitled to
payment of the pro rata portion of his Salary and Bonus, through and
including the date of termination or resignation as well as any
unreimbursed expenses. Except to the extent required by the terms of any
applicable compensation or benefit plan or program or as otherwise
required by applicable law, the Executive shall have no rights under this
Agreement or otherwise to receive any other compensation or to participate
in any other plan, program or arrangement after such termination or
resignation of employment with respect to the year of such termination or
resignation and later years.
(ii) Termination for "Cause" shall mean termination of the
Executive's employment with the Company because of (A) the willful
or persistently repeated material non-performance of duties to the
Company (other than by reason of the incapacity of the Executive due
to physical or mental illness) and, after 30 days written notice by
the Board of such failure, the Executive's non-performance and
continued, willful or persistently repeated material non-performance
of such duties, (B) the conviction of the Executive for a felony
offense, (C) the commission by the Executive of a material fraud
against the Company or any willful misconduct that brings the
reputation of the Company into serious disrepute or causes the
Executive to cease to be able to perform his duties, or (D) any
other material breach by the Executive of any material term of this
Agreement.
(iii) Termination of the Executive's employment for Cause
shall be communicated by delivery to the Executive of a written
notice from the Company stating that the Executive has been
terminated for Cause, specifying the particulars thereof and the
effective date of such termination. The date of a resignation by the
Executive without Good Reason shall be the date specified in a
written notice of resignation from the Executive to the Company. The
Executive shall provide at least 90 days' advance written notice of
resignation without Good Reason.
(b) Involuntary Termination. (i) If, prior to the expiration of the
Term, the Company terminates the Executive's employment for any reason
other than Disability or Cause or the Executive resigns from his
employment hereunder for Good Reason (collectively hereinafter referred to
as an "Involuntary Termination"), the Company shall pay to the Executive
his Salary and Bonus accrued up to and including the date of such
Involuntary Termination, as well as any unreimbursed expenses in
accordance with Section 3(f). In addition, the Company shall pay the
Executive as severance, periodic payments at a rate equal to 150% of his
Salary (at the rate in effect on the date of such termination) for the
longer of (i) the remainder of the Term and (ii) one year following such
termination (the later being the "Severance Period"), at such intervals as
the same would have been paid had the Executive remained employed by the
Company during the Severance Period.
(ii) Resignation for "Good Reason". For the purpose of this
Agreement,
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resignation for Good Reason shall mean resignation by the Executive
because of (A) a demonstrably adverse and material change in the
Executive's duties, titles or reporting responsibilities, (B) a
material breach by the Company of any material term of this
Agreement, (C) a reduction in the Executive's Salary or Bonus
opportunity or the failure of the Company to pay the Executive any
material amount of compensation when due, (D) a relocation of the
Executive's principal place of business to a location outside of New
York City without his prior written consent, or (E) a Change in
Control of the Company (as defined below). The Executive shall
provide the Company with written notice of his intention to resign
for Good Reason within 90 days after the Executive knows of the
occurrence of an event that constitutes Good Reason. The Company
shall have 30 business days from the date of receipt of such notice
to effect a cure of the material breach described therein and, upon
cure thereof by the Company to the reasonable satisfaction of the
Executive, such material breach shall no longer constitute Good
Reason for purposes of this Agreement.
(iii) The date of termination of employment without Cause
shall be the date specified in a written notice of termination to
the Executive. The date of resignation for Good Reason shall be the
date specified in a written notice of resignation from the Executive
to the Company; provided, however, that no such written notice shall
be effective unless the cure period specified in Section 4(b)(ii)
above has expired without the Company having corrected, to the
reasonable satisfaction of the Executive, the event or events
subject to cure.
(c) Termination Due to Disability. In the event of the Executive's
Disability (as hereinafter defined), the Company shall be entitled to
terminate his employment upon providing the Executive with six months'
prior written notice. If the Company terminates the Executive's employment
due to Disability, the Executive shall be entitled to receive, for the
remainder of the Term, his Salary at the rate in effect immediately prior
to the Disability, plus his maximum Bonus as described in Section 3(c),
less any amounts paid to the Executive under any disability plan of the
Company. As used in this Section 4(c), the term "Disability" shall mean a
physical or mental incapacity that substantially prevents the Executive
from performing his duties hereunder and that has continued for at least
six of the last twelve months and that can reasonably be expected to
continue indefinitely. Any dispute as to whether or not the Executive is
disabled within the meaning of the preceding sentence shall be resolved by
a physician reasonably satisfactory to the Executive and the Company, and
the determination of such physician shall be final and binding upon both
the Executive and the Company.
(d) Termination Due to Death. In the event of the Executive's death,
the Executive's Beneficiary shall be entitled to receive within 30 days a
lump sum payment in an amount equal to the Executive's Salary, at the rate
in effect immediately prior to his death, plus his maximum Bonus as
described in Section 3(c), in each case for the remainder of the Term,
less any death benefits which are provided to the Executive's Beneficiary
under the terms of any plan, program or arrangement for the benefit of the
Executive at the time of death.
(e) Beneficiary. For purposes of this Agreement, "Beneficiary" shall
mean
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the person or persons designated in writing by the Executive to receive
benefits under a plan, program or arrangement or to receive the balance of
the Severance Payments, if any, in the event of the Executive's death, or,
if no such person or persons are designated by the Executive, the
Executive's estate. No Beneficiary designation shall be effective unless
it is in writing and received by the Company prior to the date of the
Executive's death.
(f) Change in Control. For purposes of this Agreement, "Change in
Control" shall mean the occurrence of any of the following events:
(i) any "person" (within the meaning of Section 13(d) of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act")
is or becomes the beneficial owner within the meaning of Rule 13d-3
under the Exchange Act (a "Beneficial Owner"), directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such person any securities acquired
from the Company or its affiliates) representing 25% or more of the
combined voting power of the Company's then outstanding securities,
excluding any person who becomes such a Beneficial Owner in
connection with a transaction described in clause (A) of paragraph
(iii) below; provided, however, that with respect to the beneficial
ownership of securities by Xxxx X. Xxxxxxxx, Xx., Xxxx X. Xxxxxxxx
and Xxxxxx X. Xxxxxxxxx and their respective heirs, executors, and
assigns and any trust formed by any of the Blackman Shareholders for
the purpose of estate and/or tax planning (including the Xxxxxx X.
Xxxxxxxxx Florida Intangible Tax Trust) (collectively, the "Xxxxxxxx
Shareholders"), the reference to 25% in this Section 4(f)(i) shall
be changed to 45%;
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any
new director (other than a director whose initial assumption of
office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by
the Company's stockholders was approved or recommended by a vote of
at least a two thirds (2/3) of the directors then still in office
who either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved or
recommended; or
(iii) there is consummated a merger or consolidation of the
Company or any direct or indirect wholly-owned subsidiary of the
Company with any other corporation, other than (A) 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 by being converted into voting securities of the
surviving entity or any parent thereof), in combination with the
ownership of any trustee or other 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
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of the securities of the Company or such surviving entity or any
parent thereof outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction)
in which no person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 25% or more of
the combined voting power of the Company's then outstanding
securities; provided, however, that with respect to the beneficial
ownership of securities by the Xxxxxxxx Shareholders, the reference
to 25% in this Section 4(f)(iii)(B) shall be changed to 45%; or
(iv) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the Company
of all or substantially all of the Company's assets, other than a
sale or disposition by the Company of all or substantially all of
the Company's assets to an entity, at least 50% of the combined
voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as
their ownership of the Company immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" 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 common stock of the Company immediately prior to such
transaction or series of transactions continue to have substantially the
same proportionate ownership in an entity which owns all or substantially
all of the assets of the Company immediately following such transaction or
series of transactions.
5. Additional Payment.
(a) Gross-Up Payment. Notwithstanding anything herein to the contrary, if
it is determined that any Payment (as defined herein) would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended, or any interest or penalties with respect to such excise tax (such
excise tax, together with any interest or penalties thereon, is herein referred
to as an "Excise Tax"), then the Executive shall be entitled to an additional
cash payment (a "Gross-Up Payment") in an amount that will place the Executive
in the same after-tax economic position that the Executive would have enjoyed if
the Excise Tax had not applied to the Payment. The amount of the Gross-Up
Payment shall be determined by the Accounting Firm (as defined herein) in
accordance with such formula as the Accounting Firm deems appropriate. No
Gross-Up Payments shall be payable hereunder if the Accounting Firm determines
that the Payments are not subject to an Excise Tax. The Accounting Firm shall be
paid by the Company for services performed hereunder.
(b) Determination of Gross-Up Payment. Subject to the provisions of
Section 5(c), all determinations required under this Section 5, including
whether a Gross-Up Payment is required, the amount of the Payments constituting
excess parachute payments, and the amount of the Gross-Up Payment, shall be made
by the Accounting Firm, which shall
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provide detailed supporting calculations both to the Executive and the Company
within fifteen days of any date reasonably requested by the Executive or the
Company on which a determination under this Section 5 is necessary or advisable.
The Company shall pay the Executive in cash the initial Gross-Up Payment within
five days of the receipt by the Executive and the Company of the Accounting
Firm's determination. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, the Company shall cause the Accounting Firm to provide
the Executive with an opinion that the Accounting Firm has substantial authority
under the Code and the Regulations not to report an Excise Tax on the
Executive's federal income tax return. Any determination by the Accounting Firm
shall be binding upon the Executive and the Company. If the initial Gross-Up
Payment is insufficient to completely place the Executive in the same after-tax
economic position that the Executive would have enjoyed if the Excise Tax had
not applied to the Payments (hereinafter an "Underpayment"), the Company, after
exhausting its remedies under Section 5(c) below, shall promptly pay the
Executive in cash an additional Gross-Up Payment in respect of the Underpayment.
(c) Procedures. The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service (the "IRS") that, if successful, would
require the payment by the Company of a Gross-Up Payment. Such notice shall be
given as soon as practicable after the Executive knows of such claim and shall
apprise the Company of the nature of the claim and the date on which the claim
is requested to be paid. The Executive agrees not to pay the claim until the
expiration of the thirty-day period following the date on which the Executive
notifies the Company, or such shorter period ending on the date the Taxes with
respect to such claim are due (the "Notice Period"). If the Company notifies the
Executive in writing prior to the expiration of the Notice Period that it
desires to contest the claim, the Executive shall: (i) give the Company any
information reasonably requested by the Company relating to the claim; (ii) take
such action in connection with the claim as the Company may reasonably request,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company and reasonably
acceptable to the Executive; (iii) cooperate with the Company in good faith in
contesting the claim; and (iv) permit the Company to participate in any
proceedings relating to the claim. The Executive shall permit the Company to
control all proceedings related to the claim and, at its option, permit the
Company to pursue or forgo any and all administrative appeals, proceedings,
hearings, and conferences with the taxing authority in respect of such claim. If
requested by the Company, the Executive agrees either to pay the tax claimed and
xxx for a refund or contest the claim in any permissible manner and to prosecute
such contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts as the Company shall
determine; provided, however, that, if the Company directs the Executive to pay
such claim and pursue a refund (or if the IRS or other taxing authority requires
the Executive to make any payments), the Company shall advance the amount of
such payment to the Executive on an after-tax and interest-free basis (the
"Advance"). The Company's control of the contest related to the claim shall be
limited to the issues related to the Gross-Up Payment and the Executive shall be
entitled to settle or contest, as the case may be, any other issues raised by
the IRS or other taxing authority. If the Company does not notify the Executive
in writing prior to the end of the Notice Period of its desire to contest the
claim, the Company shall pay the Executive in cash an additional Gross-Up
Payment
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in respect of the excess parachute payments that are the subject of the claim,
and the Executive agrees to pay the amount of the Excise Tax that is the subject
of the claim to the applicable taxing authority in accordance with applicable
law.
(d) Repayments. If, after receipt by the Executive of an Advance, the
Executive becomes entitled to a refund with respect to the claim to which such
Advance relates, the Executive shall pay the Company the amount of the refund
(together with any interest paid or credited thereon after Taxes applicable
thereto). If, after receipt by the Executive of an Advance, a determination is
made that the Executive shall not be entitled to any refund with respect to the
claim and the Company does not promptly notify the Executive of its intent to
contest the denial of refund, then the amount of the Advance shall not be
required to be repaid by the Executive and the amount thereof shall offset the
amount of the additional Gross-Up Payment then owing to the Executive.
(e) Further Assurances. The Company shall indemnify the Executive and hold
the Executive harmless, on an after-tax basis, from any costs, expenses,
penalties, fines, interest or other liabilities ("Losses") incurred by the
Executive with respect to the exercise by the Company of any of its rights under
this Section 3, including, without limitation, any Losses related to the
Company's decision to contest a claim or any imputed income to the Executive
resulting from any Advance or action taken on the Executive's behalf by the
Company hereunder. The Company shall pay all legal fees and expenses incurred
under this Section 5, and shall promptly reimburse the Executive for the
reasonable expenses incurred by the Executive in connection with any actions
taken by the Company or required to be taken by the Executive hereunder. The
Company shall also pay all of the fees and expenses of the Accounting Firm,
including, without limitation, the fees and expenses related to the opinion
referred to in Section 5(b).
(f) Definitions. For the purpose of this Section 5, the following terms
shall have the following meanings:
(i) "Accounting Firm" shall mean Deloitte and Touche or, if such
firm is unable or unwilling to perform such calculations, such other
national accounting firm as shall be designated by agreement between the
Executive and the Company.
(ii) "Payment" means (i) any amount due or paid to the Executive
under this Agreement, (ii) any amount that is due or paid to the Executive
under any plan, program or arrangement of the Company and its
subsidiaries, and (iii) any amount or benefit that is due or payable to
the Executive under this Agreement or under any plan, program or
arrangement of the Company and its subsidiaries not otherwise covered
under clause (i) or (ii) hereof which must reasonably be taken into
account under Section 280G of the Code and the Regulations in determining
the amount of the "parachute payments" received by the Executive,
including, without limitation, any amounts which must be taken into
account under the Code and Regulations as a result of (x) the acceleration
of the vesting of options, restricted stock or other equity awards, (y)
the acceleration of the
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time at which any payment or benefit is receivable by the Executive or (z)
any contingent severance or other amounts that are payable to the
Executive.
(iii) "Regulations" means the proposed, temporary and final
regulations under Section 280G of the Code or any successor provision
thereto.
(iv) "Taxes" means the federal, state and local income taxes to
which the Executive is subject at the time of determination, calculated on
the basis of the highest marginal rates then in effect, plus any
additional payroll or withholding taxes to which the Executive is then
subject.
6. Protection of the Company's Interests.
(a) No Competing Employment. For so long as the Executive is employed by
the Company and, in circumstances where the Executive's employment is terminated
pursuant to Sections 4(a) or 4(c), continuing until the later of (i) the
remainder of the Term or (ii) one year following termination (such period being
referred to hereinafter as the "Restricted Period"), the Executive shall not,
without the prior written consent of the Board, directly or indirectly, own an
interest in, manage, operate, join, control, lend money or render financial or
other assistance to or participate in or be connected with, as an officer,
employee, partner, stockholder, consultant or otherwise, any individual,
partnership, firm, corporation or other business organization or entity that
competes with the Company by providing any goods or services provided or under
development by the Company at the effective date of the Executive's termination
of employment under this Agreement; provided, however, that this Section 6(a)
shall not proscribe the Executive's ownership, either directly or indirectly, of
either less than five percent of any class of securities which are listed on a
national securities exchange or quoted on the automated quotation system of the
National Association of Securities Dealers, Inc. or any limited partnership
investment over which the Executive has no control.
(b) No Interference. If, during the Restricted Period, the Executive's
employment is terminated pursuant to Sections 4(a), 4(b) or 4(c), the Executive
shall not, whether for his own account or for the account of any other
individual, partnership, firm, corporation or other business organization (other
than the Company), intentionally endeavor to entice away from the Company, or
otherwise interfere with the relationship of the Company with, any senior person
who is employed by or otherwise engaged to perform services for the Company or
any senior person or entity who is, or was within the then most recent
twelve-month period, a customer, client or supplier of the Company.
(c) Secrecy. The Executive recognizes that the services to be performed by
him hereunder are special, unique and extraordinary in that, by reason of his
employment hereunder, he may acquire confidential information and trade secrets
concerning the operation of the Company or its affiliates or subsidiaries, the
use or disclosure of which could cause the
10
Company or its affiliates or subsidiaries substantial losses and damages which
could not be readily calculated and for which no remedy at law would be
adequate. Accordingly, the Executive covenants and agrees with the Company that
he will not at any time, except in performance of the Executive's obligations to
the Company hereunder or with the prior written consent of the Board, directly
or indirectly disclose to any person any secret or confidential information that
he may learn or has learned by reason of his association with the Company or its
affiliates or subsidiaries. The term "confidential information" means any
material information not previously disclosed to the public or to the trade by
the Company with respect to the Company's or any of affiliates' or
subsidiaries', products, facilities and methods, trade secrets and other
intellectual property, systems, procedures, manuals, confidential reports,
product price lists, customer lists, financial information (including the
revenues, costs or profits associated with any of the Company's products),
business plans, prospects or opportunities.
(d) Exclusive Property. The Executive confirms that all confidential
information is and shall remain the exclusive property of the Company. All
business records, papers and documents kept or made by the Executive relating to
the business of the Company shall be and remain the property of the Company.
Upon the termination of his employment with the Company or upon the request of
the Company at any time, the Executive shall promptly deliver to the Company,
and shall not without the consent of the Board retain copies of, any written
materials not previously made available to the public, or records and documents
made by the Executive or coming into his possession concerning the business or
affairs of the Company or any of its affiliates and subsidiaries; provided,
however, that subsequent to any such termination, the Company shall provide the
Executive with copies (the cost of which shall be borne by the Executive) of any
documents which are requested by the Executive and which the Executive has
determined in good faith are (i) required to establish a defense to a claim that
the Executive has not complied with his duties hereunder or (ii) necessary to
the Executive in order to comply with applicable law.
(e) Injunctive Relief. Without intending to limit the remedies available
to the Company, the Executive acknowledges that a breach of any of the covenants
contained in this Section 6 may result in material irreparable injury to the
Company or its subsidiaries or affiliates for which there is no adequate remedy
at law, that it will not be possible to measure damages for such injuries
precisely and that, in the event of such a breach or threat thereof, the Company
shall be entitled to obtain a temporary restraining order and/or a preliminary
or permanent injunction restraining the Executive from engaging in activities
prohibited by this Section 6 or such other relief as may be required to
specifically enforce any of the covenants in this Section 6. Without intending
to limit the remedies available to the Executive, the Executive shall be
entitled to seek specific performance of the Company's obligations under this
Agreement.
(g) The Executive shall comply, during the continuance of his employment
(and shall procure that his spouse or partner and his minor children shall
comply), with all applicable rules of law, stock exchange regulations and codes
of conduct applicable to employees, officers and directors of the Company in
relation to dealings in the shares, debentures and other securities of the
Company or any member of the Company or any unpublished
11
share price sensitive information affecting the securities of any other company
with which the Company has dealings (provided that the Executive shall be
entitled to exercise any options granted to him under any share option scheme
established by the Company or any member of the Company, subject to the rules of
such scheme).
7. General Provisions.
(a) Source of Payments. All payments provided under this Agreement, other
than payments made pursuant to a plan which provides otherwise, shall be paid in
cash from the general funds of the Company, and no special or separate fund
shall be established, and no other segregation of assets made, to assure
payment. The Executive shall have no right, title or interest whatever in or to
any investments which the Company may make to aid the Company in meeting its
obligations hereunder. To the extent that any person acquires a right to receive
payments from the Company hereunder, such right shall be no greater than the
right of an unsecured creditor of the Company; provided, however, that this
provision shall not be deemed to waive or abrogate any preferential or other
rights to payment accruing to the Executive under applicable bankruptcy laws by
virtue of the Executive's status as an employee of the Company.
(b) No Other Severance Benefits. Except as specifically set forth in this
Agreement, the Executive covenants and agrees that he shall not be entitled to
any other form of severance benefits from the Company, including, without
limitation, benefits otherwise payable under any of the Company's regular
severance policies, in the event his employment hereunder ends for any reason
and, except with respect to obligations of the Company expressly provided for
herein, the Executive unconditionally releases the Company and its subsidiaries
and affiliates, and their respective directors, officers, employees and
stockholders, or any of them, from any and all claims, liabilities or
obligations under this Agreement or under any severance or termination
arrangements of the Company or any of its subsidiaries or affiliates for
compensation or benefits in connection with his employment or the termination
thereof.
(c) Tax Withholding. Payments to the Executive of all compensation
contemplated under this Agreement shall be subject to all applicable tax
withholding.
(d) Notices. Any notice hereunder by either party to the other shall be
given in writing by personal delivery, or certified mail, return receipt
requested, or (if to the Company) by telex or facsimile, in any case delivered
to the applicable address set forth below:
(i) To the Company: NYMAGIC, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: General Counsel
With a copy to: Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
12
Attn.: Xxxx X. Xxxxxx, III, Esq.
(ii) To the Executive: Xxxxxxx X. Xxxx
00 Xxxxxxx Xxxxx
Xxxx Xxxxxx Xxxxxx, XX 00000
With a copy to: Xxxxxx & Xxxxxx
000 Xxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx
or to such other persons or other addresses as either party may specify to the
other in writing.
(e) Representation by the Executive. The Executive represents and warrants
that his entering into this Agreement does not, and that his performance under
this Agreement and consummation of the transactions contemplated hereby will
not, violate the provisions of any noncompetition agreement or other agreement,
policy, or instrument to which the Executive is a party, or any decree, judgment
or order to which the Executive is subject, and that this Agreement constitutes
a valid and binding obligation of the Executive in accordance with its terms.
Breach of this representation will render all of the Company's obligations under
this Agreement void ab initio.
(f) Limited Waiver. The waiver by the Company or the Executive of a
violation of any of the provisions of this Agreement, whether express or
implied, shall not operate or be construed as a waiver of any subsequent
violation of any such provision.
(g) Assignment; Assumption of Agreement. No right, benefit or interest
hereunder shall be subject to assignment, encumbrance, charge, pledge,
hypothecation or setoff by the Executive in respect of any claim, debt,
obligation or similar process; provided, however, that upon the Executive's
death, the Beneficiary or the Executive's estate is entitled to enforce the
provisions of this Agreement. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to assume expressly
and to 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.
(h) Amendment; Actions by the Company. This Agreement may not be amended,
modified, canceled or discharged except by written agreement of the Executive
and the Company. Any and all determinations, judgments, reviews, verifications,
adjustments, approvals, consents, waivers or other actions of the Company
required or permitted under this Agreement shall be effective only if undertaken
by the Company pursuant to authority granted by a resolution duly adopted by the
Board; provided, however, that by resolution duly adopted in
13
accordance with this Section 7(h), the Board may delegate its responsibilities
hereunder to one or more of its members other than the Executive.
(i) Severability. If any term or provision hereof is determined to be
invalid or unenforceable in a final court or arbitration proceeding, (i) the
remaining terms and provisions hereof shall be unimpaired and (ii) the invalid
or unenforceable term or provision shall be deemed replaced by a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision.
(j) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of New York (determined without regard to
the choice of law provisions thereof).
(k) Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties hereto with respect to the matters covered hereby
and supersedes all prior agreements and understandings of the parties, with
respect to the subject matter hereof.
(l) Headings. The headings and captions of the sections of this Agreement
are included solely for convenience of reference and shall not control the
meaning or interpretation of any provisions of this Agreement.
(m) Counterparts. This Agreement may be executed by the parties hereto in
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same document.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the day and year first written above.
NYMAGIC, INC.
By: /s/ Xxxxxx Xxxxx
----------------------------
Xxxxxx Xxxxx
Chief Executive Officer
EXECUTIVE
/s/ Xxxxxxx X. Xxxx
-------------------------------
Xxxxxxx X. Xxxx
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EXHIBIT A
Sample Annual Bonus Amounts
--------------------------------------------------------------------------------
Annual Return on Capital(1) Bonus Amount
(as a percentage of 5 year ROC) (as a percentage of Salary)
--------------------------------------------------------------------------------
0% 0%
--------------------------------------------------------------------------------
25% 12.5%
--------------------------------------------------------------------------------
50% 25%
--------------------------------------------------------------------------------
75% 37.5%
--------------------------------------------------------------------------------
100% 50%
--------------------------------------------------------------------------------
125% 62.5%
--------------------------------------------------------------------------------
150% 75%
--------------------------------------------------------------------------------
175% 87.5%
--------------------------------------------------------------------------------
200% or more 100%
--------------------------------------------------------------------------------
(1) This column refers to the return on capital for the most current year, the
year for which the Bonus is to be paid.
A-1
EXHIBIT B
Form of Option Agreement
------------------------
B-1
