Re: Amendment to Your Retention Agreement
EXHIBIT 99.3
February
24, 2006
0000
Xxxxxxxxxx Xxxxxx
Xxxxxxxx
Xxxxx, XX 00000
Re:
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Amendment
to Your Retention Agreement
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Dear
:
Pursuant
to action taken by the Board of Directors of 21st Century Insurance Group and
its subsidiary, 21st Century Insurance Company (hereinafter collectively
referred to as the “Company”) on December 14, 2005, this letter agreement
constitutes an amendment to your Retention Agreement with the Company.
Your
Retention Agreement is amended as follows:
1.
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Lump
Sum Payment in Lieu of Future
Compensation
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Payment
of the lump sum cash amount provided in Section 5(b) of the Retention Agreement
will be delayed and paid within 15 days following the seven-month anniversary
of
your “Termination Date, ”i.e.,
the
date of your termination of employment on account of a termination of your
employment by the Company without Cause or your resignation for Good Reason,
unless Company’s counsel determines that this payment delay is not required to
comply with Internal Revenue Code Section 409A (Section 409A).
2.
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Options
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Outstanding
Options.
As
provided in Section 5(c) of the Retention Agreement, on your Termination Date,
any unvested stock option grants outstanding as of such date will become
immediately vested. However, in exchange for the cancellation of the extended
exercise period provided in Section 5(c), the Company will pay you an additional
payment for all outstanding options as of December 31, 2005 equal to
$0.50
per
option share multiplied by x, where x is the number of years or partial year
remaining in the maximum term of the option as of your Termination Date,
assuming you had not terminated, minus 5. Thus,
you
will receive a cash payment only for options that have more than five years
of
remaining term as of your Termination Date. Payment of this amount will be
delayed and paid within 15 days following the seven-month anniversary of your
Termination Date, unless Company’s counsel determines that this payment delay is
not required to comply with Section 409A. In no event will this payment be
made
earlier than January 1, 2007.
Future
Options. All
future option grants by the Company will not be subject to the terms of your
Retention Agreement (and the cancellation provision in Section 17(i)). The
option agreements reflecting future option grants will provide as follows:
On
your Termination Date, all unvested shares subject to the options will
immediately vest, and you will be allowed to exercise the options until the
earlier of (a) five years from your Termination Date, or (b) the expiration
of
the remaining term of the options (assuming you had not been terminated). If
your termination of employment occurs because of a Good Reason resignation,
you
will be provided this extended exercise period only if it would not make the
option subject to Section 409A, as determined by the Company’s counsel. If the
Company’s counsel concludes that the extended exercise period would subject the
options to Section 409A, you will have the normal 90 days to exercise the
options, and the Company will pay you an additional payment equal to $0.50
per
option share multiplied by x, where x is the number of years or partial year
remaining in the maximum term of the option as of your Termination Date,
assuming you had not terminated, minus 5. Payment of this amount will be delayed
and paid within 15 days following the seven-month anniversary of your
Termination Date, unless Company’s counsel determines that this payment delay is
not required to comply with Section 409A. In no event will this payment be
made
earlier than January 1, 2007.
3.
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Group
Insurance Benefit
Continuation
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Section
5(d) of the Retention Agreement is replaced with the following: Following your
Termination Date, the Company will arrange for life, disability, accident and
health insurance benefits if available and reasonably priced for you and your
family (which is comparable to the Company benefits provided to you and your
family immediately prior to your Termination Date or, if better, immediately
before a benefit reduction that constitutes Good Reason, if you terminate for
that Good Reason) until the earlier of (a) 30 months, (b) the remaining months
in the year you terminate plus 24 months, or (c) you become covered under
another group health plan (Coverage Period). Alternatively, if this is not
available or otherwise, the Company will pay for and provide you and your family
with the same life, disability, accident and health coverage under the Company’s
benefit plans to which you would have been entitled had you remained
continuously employed by the Company during the Coverage Period.
All
other
terms of the Retention Agreement will remain in effect.
I
would
appreciate it if you would sign, date and return a copy of this letter agreement
to me. As such, it will constitute a written amendment to your Retention
Agreement.
Sincerely
yours,
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21st
Century Insurance Group and 21st Century Insurance Company
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By
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Agreed
to and accepted by:
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Dated:
February __, 2006
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