AMENDED AND RESTATED AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT is made as of the 26th day of September,
2000 (the "Agreement"), by and between Trenwick Group Inc., a Delaware
corporation with a principal place of business in Stamford, Connecticut (the
"Company"), and Xxxxx X. Xxxxxxx, Xx., of 00 Xxxx Xxxxxxxxx Xxxx, Xxxxxxx,
Xxxxxxxxxxx 00000 ("Executive") and amends and restates the Agreement, dated as
of November 3, 1999, by and between the Company and the Executive (the "Original
Agreement").
WHEREAS, the Executive is the Chairman, President and Chief Executive Officer
("Position") of the Company, a publicly traded holding company with operating
subsidiaries in the insurance and reinsurance business, reporting to, and
subject only to the direction and control of, the Board of Directors of the
Company (the "Board") and is a key employee of the Company and its subsidiaries;
WHEREAS, the Company believes that the maintenance of sound management is
essential to protecting and enhancing the business and operations of the Company
and is in the best interests of the Company and its shareholders and recognizes
that the possibility of a change of control raises uncertainty and questions
among its key employees that could result in, or lead to, the loss of such key
employees or their distraction from their duties, all to the detriment of the
Company and its shareholders;
WHEREAS, the Company wishes to assure that it will have the continued dedication
of the Executive as a key employee of the Company or one of its subsidiaries and
the continued availability of the Executive's advice, counsel and services,
notwithstanding the possibility, threat or actual occurrence of a change of
control of the Company, and to induce the Executive to remain as a key employee
of the Company or one of its subsidiaries; and
WHEREAS, the Executive is willing to continue to be employed by the Company and
its subsidiaries in his Position, taking into consideration the terms and
conditions of this Agreement and, to induce the Company to make the agreements
and undertakings set forth in this Agreement, hereby agrees to the provisions in
Section 5 of this Agreement concerning, among other things, confidentiality,
trade secrets, non-solicitation and non-competition.
NOW, THEREFORE, in consideration of the mutual terms and covenants contained
herein, the receipt and sufficiency of which the parties acknowledge and accept,
the Company and the Executive hereby agree as follows:
1. DEFINITIONS.
-----------
For purposes of this Agreement,
(a) A "Change in Control" shall be deemed to have occurred upon the
earliest to happen of the following:
1
(A) The acquisition, in one or more transactions, of beneficial
ownership (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934 (the "Exchange Act") by any person or entity
or any group of persons or entities who constitute a group
(within the meaning of Rule 13d-3 of the Exchange Act), other
than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a subsidiary, of any
securities of the Company if, as a result of such acquisition,
such person, entity or group either (i) beneficially owns (within
the meaning of Rule 13d-3 under the Exchange Act), directly or
indirectly, more than 20% of the Company's outstanding voting
securities entitled to vote on a regular basis for a majority of
the members of the Board or (ii) otherwise has the ability to
elect, directly or indirectly, a majority of the members of the
Board;
(B) A change in the composition of the Board such that a majority of
the members of the Board are not Continuing Directors. A
"Continuing Director" means, as of any date of determination, any
member of the Board who (i) was a member of the Board on the date
of this Agreement, or (ii) was nominated and elected to such Board
with the affirmative vote of a majority of the Continuing
Directors who were members of the Board at the time of such
nomination or election; or
(C) The stockholders of the Company approve (i) a merger or
consolidation of the Company with any other corporation, other
than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at
least 80% of the total voting power represented by the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (ii) a plan of
complete liquidation of the Company or an agreement for the sale
or disposition by the Company (in one or more transactions) of all
or substantially all of the Company's assets.
Notwithstanding the foregoing, the events in Section 1(a)(A)(i) or
Section 1(a)(C)(i) shall not be deemed a Change in Control if, prior to
any transactions constituting such change, a majority of the Continuing
Directors shall have voted not to treat such transaction or
transactions as resulting in a Change in Control; provided, however, if
any such transaction would be a Change of Control if 50% were
substituted for the 20% in Section 1(a)(A)(i) or for the 80% in Section
1(a)(C)(i), then the written consent of the Executive shall also be
required.
(b) Cause: "Cause" shall mean: (A) the commission by the Executive of
any felonious act or any other criminal act involving moral turpitude,
dishonesty, theft or unethical business conduct, (B) the willful and
continued failure of the Executive to substantially perform his duties
(other than as a result of incapacity due to physical or mental injury
or illness) which duties the Executive has been directed in writing
to perform by the Board; (C) willful misconduct or gross negligence
by the Executive in the performance of the Executive's duties, or (D)
the failure of the Executive to comply with the policies or procedures
of the Company. No action or failure to act by the Executive shall be
considered "willful" if it is determined by the Board to have been done
by the Executive in good faith and with the reasonable belief that
the Executive's action or omission is in the best interest of the
Company.
2
(c) Good Reason: "Good Reason" shall mean any of the following events,
provided that it occurs within the ninety (90) day period prior to the
date the Executive gives notice pursuant to Section 2(c) of this
Agreement:
(A) The position or responsibilities of the Executive are
significantly reduced (including, without limitation, the
elimination of his Position, a change in the reporting
responsibilities of his Position, a substantial reduction in the
size of the Company or other substantial change in the character
or scope of the Company's operations), or the Executive is
assigned without his written consent to any duties inconsistent
with his Position with the Company immediately prior to such
assignment or the status and stature of those with whom the
Executive is asked to work or the position, authority,
responsibility or type of work or the working conditions under
which the Executive is assigned is inconsistent with, not
comparable to, or reduced in status or altered in nature from the
Executive's Position;
(B) The annual incentive compensation opportunity provided to the
Executive is eliminated or significantly reduced, the Executive's
participation level is reduced or the manner of assessing actual
performance is changed in a manner that results in the Executive
earning significantly less annual incentive compensation for a
given period than he or she would have for the same period absent
such change;
(C) The Executive's aggregate level of benefits under the Company's
benefit plans is significantly reduced;
(D) The Company fails to provide the Executive with benefits and
perquisites which are substantially similar in the aggregate to
those to which the Executive is entitled under the Company's
benefit plans in which the Executive was participating immediately
prior to the Change in Control, or fails to provide the Executive
with directors' or officers' insurance, as applicable, at least at
the level maintained immediately prior to the Change in Control;
(E) The Executive is required to change his regular work location to a
location that requires the Executive to commute a distance more
than 50 miles further from the Executive's principal place of
employment existing at the time of the Change in Control; or
(F) The Company fails to pay the Executive any amount otherwise vested
and due hereunder or under any plan or policy of the Company, or
fails to comply with any other provision of or perform any of its
other obligations under this Agreement.
3
(d) Date of Termination: "Date of Termination" shall mean (A) if the
Executive's employment is terminated by the Executive's death, the date
of the Executive's death, or by reason of the Executive's Disability,
the date all of the conditions to constitute a Disability have
occurred, (B) if the Executive's active employment is terminated by the
Company pursuant to Section 2(b), whether or not for Cause, the date
specified in the Notice of Termination, and (C) if the Executive's
active employment is terminated by the Executive pursuant to Section
2(c) whether or not for Good Reason, the date which is ten (10)
business days after the date of receipt of the Executive's notice of
intention to terminate or such other date as may be agreed by Executive
and the Board.
(e) Protected Period: "Protected Period" shall mean the two year period
after the occurrence, during the term of this Agreement, of a Change
in Control.
(f) Disability: "Disability" shall have the same meaning as set forth in
the Company's long-term disability insurance policy providing
disability insurance for the Executive, as the same shall exist from
time to time.
(g) Notice of Termination: "Notice of Termination" shall mean written
notice of the termination of the Executive's active employment with the
Company either delivered to the Executive by the Company pursuant to
Section 2(b) or delivered to the Company by the Executive pursuant to
Section 2(c).
2. TERMINATION.
-----------
(a) Change in Control. The Executive shall be entitled to the benefits
provided in Section 3 hereof upon any termination of his active
employment with the Company and its subsidiaries within a Protected
Period, except a termination of active employment (i) because of his
death, (ii) because of a Disability, (iii) by the Company or its
subsidiaries for Cause, or (iv) by the Executive other than for Good
Reason. No amounts shall be payable under this Agreement if the
Executive's employment terminates outside of a Protected Period.
(b) Termination by Company. Any termination by the Board of the Executive's
active employment must, in order to be effective, be preceded by a
written Notice of Termination to the Executive indicating the Date of
Termination and the reasons therefor and, if the termination is for
Cause, the specific provision of Section 1(b) relied upon and setting
forth in reasonable detail the facts and circumstances supporting
termination for Cause. Nothing herein shall bar the Executive from
contesting the basis for his termination under this Section 2(b).
(c) Termination by Executive. Any termination by the Executive of his
active employment for Good Reason must, in order to be effective, be
preceded by a written Notice of Termination to the Company indicating
the specific provision of Section 1(c) relied upon and setting forth in
reasonable detail the facts and circumstances supporting the
termination under the provision so indicated. After receipt of such
Notice of Termination, the Company shall have ten (10) business days
from the date of receipt of such Notice of Termination to cure the
event described therein, and upon cure thereof by the Company to the
Executive's reasonable satisfaction, such event shall no longer
constitute "Good Reason" for purposes of this Agreement.
4
3. COMPENSATION AND BENEFITS: POST EMPLOYMENT.
------------------------------------------
(a) Change in Control. If, within a Protected Period, the Executive's
employment by the Company and its subsidiaries shall be terminated (i)
by the Company and its subsidiaries other than for Cause and other than
because of a Disability or death, or (ii) by the Executive for Good
Reason, the Executive shall be entitled to the benefits provided for
below:
(A) Base Salary - The Executive shall continue to receive his base
salary for three (3) years after the Date of Termination, payable
in installments on the Company's normal payroll dates. For this
purpose, base salary shall be the current base salary of the
Executive at the Date of Termination or at the base salary at any
time in the last twelve months, if higher.
(B) Bonus - The Executive shall continue to receive a Bonus for three
(3) years after the Date of Termination and for the period of the
year elapsed prior to the Date of Termination, pro rated for the
portion of the year elapsed. Such amount shall be determined based
on the greater of the last annual performance bonus paid or the
average of the last two annual performance bonuses paid
immediately preceding the Executive's Date of Termination.
(C) Car Allowance - The Executive shall continue to receive a car
allowance for the 3- year period after the Executive's Date of
Termination. The amount of such allowance shall equal the amount,
if any, being received by the Executive as of the date of the
Change in Control.
(D) Medical & Dental, 401(k), Pension Plans and Supplemental Pension
Plans - The Executive shall continue to be treated as a
participant in all such plans in which the Executive shall have
been a participant on the date of the Notice of Termination, based
on then applicable and corresponding elections and contribution
rates, for the 3-year period commencing on the Executive's Date of
Termination. If such plans do not permit the Executives continued
participation, the tax-adjusted value the Executive would have
received shall be determined and paid by the Company (outside of
the plans). The Executive shall be allowed to change the
Executive's payment election under the terms of such Supplemental
Benefit Plan at the Executive's Date of Termination.
(E) Life & Disability Insurance - The Company shall continue to pay
the premium related to the Executive's life insurance and
long-term disability insurance for the 3-year period commencing on
the Executive's Date of Termination.
5
(F) Benefits - The Executive shall be paid or be provided such other
benefits for which the Executive is otherwise eligible, if any,
under the terms of any employee benefit, incentive, option, stock
award or other plans or programs of the Company in which he may
be, or may have been, a participant and any unused vacation time.
All awards made to the Executive under such employee benefit,
incentive, option, stock award or other plans or programs shall
immediately vest and be payable and all restrictions shall lapse.
If such plans do not permit the Executive's continued
participation or immediate vesting, the tax-adjusted value the
Executive would have received shall be determined and paid by the
Company (outside of the plans).
(b) Other. This Agreement shall not be considered a "change of control or
an employment agreement" for the purposes of the Trenwick Group Inc.
Merger Severance Policy adopted in connection with the merger of the
Company and Chartwell Re Corporation; provided, however, if there is a
Change of Control under this Agreement and the Executive is entitled to
benefits under Section 3(a) of this Agreement, then the Executive shall
not be covered by, or entitled to any benefits under, such Merger
Severance Policy.
4. EXCISE TAX.
----------
It is the intention of this provision that the Executive receive a net amount,
after payment of all Excise Taxes (including Excise Taxes on any Excise Tax
Adjustment) equal to the aggregate compensation, benefits and other amounts
which gave rise to the Excise Tax.
(a) In the event that Executive receives or derives from the Company or
otherwise any compensation, benefit or any amount under any option
plan, performance plan, or incentive plan, which is determined to be
subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended, (the "Excise Tax"), then the
Executive shall be entitled to receive from the Company an Excise Tax
Adjustment Payment equal to the amount of all applicable U.S.federal,
state and local taxes (computed at the maximum marginal rates and
including interest penalties and any cost of contest or defense)
including Excise Tax imposed upon the Excise Tax Adjustment Payment.
The amount of the any Excise Tax Adjustment Payment to be made shall
be determined, at the Company's expense, by a nationally recognized
accounting firm acceptable to the Executive and the Company.
(b) The Executive shall notify the Company in writing promptly of any
written claim by the IRS that would require the payment of the Excise
Tax Adjustment Payment. The Company may elect, by notifying the
Executive in writing within thirty (30) days of its receipt of
Executive's notice, to contest such claim and/or to retain legal
counsel selected by the Company to represent the Executive. Such
contest will be at the Company's sole cost and expense and the Company
shall advance any amounts required to be paid in respect of such Excise
tax or the contest thereof. The Executive shall cooperate fully with
the Company in good faith including permitting the Company to
participate in any proceedings relating to such claim or contest and
giving the Company any information reasonably requested by the Company
relating to such claim or contest.
6
(c) The Company shall be entitled to control all proceedings, conferences,
and appeals it may elect to take, but only with respect to the Excise
Tax, and may xxx for a refund or contest the claim in any permissible
manner provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with
respect to which such contested amount is claimed to be due is limited
solely to such contested amount. The Executive shall promptly pay to
the Company the amount of any refund with respect to such claim
(together with any interest paid or credited thereon but after payment
by Executive of any taxes applicable thereto).
5. CONFIDENTIAL INFORMATION: COMPETITION.
-------------------------------------
Except as necessary or appropriate to the proper performance of the Executive's
duties, or with the prior written consent of the Company, or as ordered by a
court of competent jurisdiction, the Executive shall not at any time either
during the continuance of the Executive's employment or after its termination
for a period of three years disclose or communicate to any person or use for the
Executive's own benefit or the benefit of any person other than the Company or
any subsidiary or affiliate any information relating to the Company or any
subsidiary or affiliate that is not generally known to the public ("Confidential
Information") which may come to the Executive's knowledge in the course of the
Executive's employment, and the Executive shall during the continuance of the
Executive's employment use the Executive's best endeavors to prevent the
unauthorized publication or misuse of any Confidential Information, provided
that such restrictions shall not apply to any Confidential Information which (i)
is or becomes publicly available other than as a result of a disclosure by the
Executive in violation of this Agreement, (ii) becomes available to the
Executive on a non-confidential basis from a source other than the Company or
its employees, agents or advisors, provided that such source is not known by the
Executive to be bound by a confidentiality agreement with or other obligation of
secrecy to the Company with respect to such information, (iii) is independently
developed by the Executive or on the Executive's behalf without violating the
terms of this Agreement or (iv) is required to be disclosed by applicable law,
regulation or legal process. While the Executive is employed by the Company and
thereafter for so long as the Executive is being compensated pursuant to Section
3(a)(A) of this Agreement, the Executive agrees not to carry on or set up or be
employed or engaged by or otherwise assist in or be interested in any capacity
(including without limitation as a shareholder) in any State of the United
States of America or in any foreign country in which the Company or any
subsidiary or affiliate thereof is conducting business, any business materially
competitive to that being carried on by the Company or any subsidiary or
affiliate thereof; provided, however, that the ownership by the Executive for
investment purposes (directly or through nominees) of not more than 5% of the
outstanding stock of any corporation which is publicly held and traded shall not
be deemed to be violation of this Agreement. While the Executive is employed by
the Company and thereafter for so long as the Executive is being compensated
pursuant to Section 3(a)(A) of this Agreement, the Executive will not solicit,
7
entice away, or otherwise encourage any executive or other employee of the
Company or its subsidiaries or affiliates to leave his employment in order to
join the Executive in any business endeavor, nor shall the Executive aid,
promote, encourage or be a party to any acts, the effect of which would divert,
diminish or prejudice the goodwill or business of the Company or any of its
subsidiaries or affiliates. The agreements by the Executive in this Section 5
are intended to be separate and severable and enforceable as such.
6. MERGER OR REORGANIZATION.
------------------------
This Agreement shall not be terminated by the voluntary or involuntary
dissolution of the Company or by any merger or consolidation where the Company
is not the surviving or resulting corporation, or upon any transfer of all or
substantially all of the assets of the Company. In the event of any such merger
or consolidation or transfer of assets, the provisions of this Agreement shall
be binding and shall inure to the benefit of the Executive and the surviving or
resulting entity or the entity to which such assets shall be transferred. The
Company's successor, as the Executive's employer (whether such succession is
direct or indirect, by purchase, merger, consolidation or otherwise, to all or a
substantial portion of the business and/or assets of the Company), assumes and
agrees to perform this Agreement in the same manner and to the same extent as
the Company would be required to perform if no such succession had taken place.
As used in this Agreement, the term "Company" shall mean the Company and any
successor to all or a substantial portion of the Company's business or assets.
7. ARBITRATION; JURY WAIVER.
------------------------
Any controversy or claim arising out of or relating to this Agreement, the
breach thereof or the coverage of this arbitration provision shall be settled by
arbitration administered by the American Arbitration Association in accordance
with its Commercial Arbitration Rules in effect on the date of delivery of
demand for arbitration. The arbitration of such issues, including the
determination of the amount of any damages suffered by either party hereto by
reason of the acts or omissions of the other, shall be to the exclusion of any
court. The decision of the arbitrators shall be final and binding on the parties
and their respective heirs, executors, administrators, successors and assigns.
Judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction. There shall be three arbitrators, one to be chosen directly
by each party and the third arbitrator to be selected by the two arbitrators so
chosen. The arbitration shall be conducted in Stamford, Connecticut or at such
other location as agreed by the parties. All decisions and awards shall be made
by a majority of the arbitrators. Each party shall pay the fees and expenses of
that party's arbitrator and any representatives, witnesses and all other
expenses related to the presentation of that party's case. The cost of the third
arbitrator, the record or any transcripts, any administrative fees, and all
other fees and costs shall be borne equally by the parties.
By agreeing to arbitration under this Section, the Company and the Executive
understand that they are each waiving any right to a trial by jury and each
party makes that waiver knowingly and voluntarily with full consideration of the
ramifications of such waiver.
Nothing contained herein shall be construed or interpreted to preclude the
Company prior to, or pending the resolution of, any matter subject to
arbitration from seeking injunctive relief in any court for any breach or
threatened breach of any of the Executive's obligations in Section 5 hereof.
8
8. NON-ASSIGNABILITY.
-----------------
The obligations of the Executive hereunder are personal and may not be
delegated, assigned or transferred by the Executive in any manner whatsoever,
nor are such obligations subject to involuntary alienation, assignment or
transfer.
9. AMENDMENT; TERMINATION.
-----------------------
This Agreement contains the entire agreement of the parties. It may not be
changed orally but only by a written agreement executed by the Executive and the
Board that expressly references this Agreement. This Agreement may be terminated
by the Board at any time upon one year's written notice to the Executive,
setting forth the date of termination of this Agreement. Notwithstanding such a
termination of this Agreement, this Agreement shall continue with respect to any
Change of Control that occurs during the term of this Agreement, until the end
of its Protected Period, but shall not apply to any Change of Control that
occurs after the date of termination of this Agreement.
10. NOTICES.
-------
All notices which a party is required or may desire to give to the other party
under or in connection with this Agreement shall be sufficient if given by hand
delivery or by addressing same to the other party as follows:
(a) if to the Executive, to:
Xxxxx X. Xxxxxxx Xx.
00 Xxxx Xxxxxxxxx Xxxx
Xxxxxxx XX 00000
(b) if to the Company, to:
Trenwick Group Inc.
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Secretary
or at such other place as may be designed in writing by like notice. Any notice
shall be deemed to have been delivered when addressed as required herein and
deposited postage prepaid, in the United States Mail.
9
11. WAIVER; MODIFICATION.
--------------------
No provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing that expressly
references this Agreement and is signed by the Executive and the Company. The
waiver by either party of any breach by the other party, or of compliance with,
any condition or provision of this Agreement to be performed by such other party
shall not be deemed a waiver of the same provisions or conditions at any other
time, nor shall it be deemed a waiver of any other provisions or conditions at
any time.
12. SEVERABILITY.
------------
The various Sections of this Agreement are severable, and if any Section or an
identifiable part thereof is held to be invalid or unenforceable by any court of
competent jurisdiction, then such invalidity or unenforceability shall not
affect the validity or enforceability of the remaining Sections or identifiable
parts thereof in this Agreement, and the parties hereto agree that the portion
so held invalid, unenforceable or void shall, if possible, be deemed amended or
reduced in scope, or otherwise be stricken from this Agreement, to the extent
required for the purposes of the validity and enforcement hereof.
13. CHOICE OF LAW.
-------------
The parties agree that Connecticut, as the place of contracting and where the
Company has its principal place of business, has a substantial relationship to
this Agreement and so the parties agree that this Agreement shall be governed by
the laws of the State of Connecticut, without reference to any conflict of law
rules.
14. SURVIVAL AND CONTINUATION OF AGREEMENT PROVISIONS.
-------------------------------------------------
The termination of the Executive's employment for any reason whatsoever shall
not operate to terminate this Agreement or otherwise adversely affect the
respective continuing rights and obligations of the parties, including those
under Sections 3, 4, 5, 7, 8, 9, 10, 11, 13 and 18 of this Agreement, all of
which shall survive the effective date of such termination of employment in
accordance with their respective terms.
15. ENTIRE AGREEMENT.
----------------
This Agreement sets forth the entire agreement between the parties with respect
to the subject matter hereof and supersedes any and all prior agreements between
the Company and the Executive, whether written or oral, relating to any or all
matters covered by, and contained or otherwise dealt with, in this Agreement,
including but not limited to the Original Agreement. No agreements or
representations, oral or otherwise, express or implied, have been made by either
party with respect to the subject matter of this Agreement, unless set forth
expressly in this Agreement.
10
16. BENEFICIARIES; REFERENCES.
-------------------------
The Executive may select (and change, to the extent permitted under any
applicable law) a beneficiary or beneficiaries to receive any compensation or
benefit payable under this Agreement following the Executive's death, and may
change such election by giving the Company written notice thereof. In the event
of the Executive's death, Disability or a judicial determination of the
Executive's incompetence, all references in this Agreement to the Executive
shall be deemed, where appropriate, to refer to the Executive's named
beneficiary, estate or other legal representative.
17. ACTION OF THE BOARD.
-------------------
Except for the reference in Section 1(a), any reference in this Agreement to the
Board shall include the Compensation Committee thereof and any officers of the
Company to which the Board or the Compensation Committee thereof has by
resolution delegated any explicit authority or responsibilities with respect to
this Agreement.
18. TAX WITHHOLDINGS.
----------------
All payments to the Executive hereunder shall be subject to such withholding of
federal, state and local income and excise taxes and to such employment taxes as
may be reasonably determined by the Company to be required.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date set forth above.
TRENWICK GROUP INC.
By:
------------------------------
Name:
Title:
EXECUTIVE
---------------------------------
Xxxxx X. Xxxxxxx, Xx.
