Exhibit 10.2.1
CHANGE IN CONTROL AGREEMENT -- PRESIDENT
CHANGE IN CONTROL AGREEMENT
Agreement, made as of the 1st day of March, 1998, by and between Risk
Capital Holdings, Inc., a Delaware corporation (the "Company"), and Xxxx X.
Xxxxx (the "Executive").
WHEREAS, the Executive is a key employee of the Company or one of its
subsidiaries; and
WHEREAS, the Board of Directors of the Company (the "Board") considers the
maintenance of a sound management to be essential to protecting and enhancing
the best interests of the Company and its stockholders and recognizes that the
possibility of a change in control raises uncertainty and questions among key
employees and may result in the departure or distraction of such key employees
to the detriment of the Company and its stockholders; and
WHEREAS, the Board wishes to assure that it will have the continued
dedication of the Executive and the availability of his or her advice and
counsel notwithstanding the possibility, threat or occurrence of a bid to take
over control of the Company, and to induce the Executive to remain in the employ
of the Company; and
WHEREAS, the Executive is willing to continue to serve the Company or one
of its subsidiaries taking into account the provisions of this Agreement;
NOW, THEREFORE, in consideration of the foregoing, and the respective
covenants and agreements of the parties herein contained, the parties agree as
follows:
1. Change in Control. Benefits shall be provided hereunder only in the
event there shall have occurred a "Change in Control," as such term is defined
below, and, in the case of benefits described in Section 4 below, the
Executive's employment by the Company and its subsidiaries shall thereafter have
terminated in accordance with Section 3 below within the Protection Period. No
benefits shall be paid under Section 4 of this Agreement if the Executive's
employment terminates outside of a Protection Period.
(i) For purposes of this Agreement, a "Change in Control" shall
mean:
(A) any person (within the meaning of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), other than a
Permitted Person or an Initial Investor, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of Voting Securities representing 35%
or more of the total voting power of all the then outstanding Voting
Securities; or
(B) any Initial Investor is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of Voting Securities representing 50% or more of the
total voting power of all the then outstanding Voting Securities; or
(C) the individuals who, as of the date hereof, constitute the
Board together with those who become directors subsequent to such
date and whose recommendation, election or nomination for election
to the Board was approved by a vote of at least a majority of the
directors then still in office who either were directors as of such
date or whose recommendation, election or nomination for election
was previously so approved, cease for any reason to constitute a
majority of the members of the Board; or
(D) the required stockholders of the Company approve a merger,
consolidation, recapitalization, liquidation, sale or disposition by
the Company of all or substantially all of the Company's assets, or
reorganization of the Company (provided that all material regulatory
approvals have been obtained), or consummation of any such
transaction, other than any such transaction which would (x) result
in at least 60% of the total voting power represented by the voting
securities of the surviving entity outstanding immediately after
such transaction being beneficially owned by the former stockholders
of the Company and (y) not otherwise be deemed a Change in Control
under subparagraphs (A), (B), (C) or (E) of this paragraph (i); or
(E) the Board adopts a resolution to the effect that, for
purposes hereof, a Change in Control has occurred.
(ii) The "Change in Control Date" shall be any date during the term
of this Agreement on which a Change in Control occurs.
(iii) "Initial Investors" means (A) X.L. Insurance Company, Ltd.;
(B) The Trident Partnership, L.P.; (C) Xxxxx & McLennan Risk Capital
Holdings, Ltd.; or (D) any majority-owned subsidiary or parent (or
equivalent in the case of a non-corporate entity) of the foregoing.
(iv) "Permitted Persons" means (A) the Company; (B) any Related
Party; or (C) any group (as defined in Rule 13d-3 under the Exchange Act)
comprised of any or all of the foregoing.
(v) "Protection Period" means the period beginning on the Change in
Control Date and ending on the second anniversary of the Change in Control
Date.
(vi) "Related Party" means (A) a majority-owned subsidiary of the
Company; (B) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any majority-owned subsidiary of
the Company; or (C) a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportion as their
ownership of Voting Securities.
(vii) "Voting Security" means any security of the Company which
carries the right to vote generally in the election of directors.
2. Acceleration of Vesting Upon Change in Control. All stock options and
restricted stock issued under the Company's 1995 Long Term Incentive and Share
Award Plan (or any successor plan) shall become immediately vested in full and,
in the case of stock options, immediately exercisable in full, upon a Change in
Control in accordance with the applicable restricted stock agreements and stock
option agreements.
3. Termination Following Change in Control. The Executive shall be
entitled to the benefits provided in Section 4 hereof upon any termination of
his or her employment with the Company and its subsidiaries within a Protection
Period, except a termination of employment (a) because of his or her death, (b)
because of a "Disability," (c) by the Company or any of its subsidiaries for
"Cause," or (d) by the Executive other than due to "Constructive Termination."
(i) Disability. The Executive's employment shall be deemed to have
terminated because of a "Disability" if the Executive applies for and is
determined to be eligible to receive disability benefits under the
Company's Long-Term Disability Plan.
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(ii) Cause. Termination of the Executive's employment by the Company
or any of its subsidiaries for "Cause" shall mean termination by reason of
the Executive's willful engagement in conduct which involves dishonesty or
moral turpitude in connection with his or her employment and which is
demonstrably and materially injurious to the financial condition or
reputation of the Company. An act or omission shall be deemed "willful"
only if done, or omitted to be done, in bad faith and without reasonable
belief that it was in the best interest of the Company. Notwithstanding
the foregoing, the Executive shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to the
Executive a written notice of termination from the Compensation Committee
of the Board (the "Committee") after reasonable notice to the Executive
and an opportunity for him or her, together with his or her counsel, to be
heard before the Committee.
(iii) Without Cause. The Company or any of its subsidiaries may
terminate the employment of the Executive without Cause during a
Protection Period only by giving the Executive written notice of
termination to that effect. In that event, the Executive's employment
shall terminate on the last day of the month in which such notice is given
(or such later date as may be specified in such notice), and the benefits
set forth in Section 4 hereof shall be provided to the Executive.
(iv) Constructive Termination. Termination of employment by the
Executive during a Protection Period due to "Constructive Termination"
shall mean termination by the Executive subsequent to any of the
following:
(A) the assignment of duties inconsistent with the Executive's
position or a significant diminution in his/her responsibilities;
(B) a reduction in the Executive's base salary or bonus
opportunity;
(C) the requirement that the Executive work at a location
outside of Fairfield County, Connecticut, or Westchester County, New
York;
(D) the failure to provide the Executive with benefits and
incentive compensation opportunities at least as favorable, in the
aggregate, as the benefits and incentive compensation opportunities
available to the Executive immediately prior to a Change in Control;
or
(E) if the Company has failed to obtain the assumption of the
obligations contained in this Agreement by any successor as
contemplated in Section 9(c) hereof.
The Executive shall exercise his or her right to terminate employment due to
Constructive Termination by giving the Company a written notice of termination
specifying in reasonable detail the circumstances constituting such Constructive
Termination. In that event, the Executive's employment shall terminate on the
last day of the month in which such notice is given unless an earlier date is
specified in writing by the Executive. A termination of employment by the
Executive within a Protection Period shall be due to Constructive Termination if
one of the occurrences specified in this subsection (iv) shall have occurred,
notwithstanding that the Executive may have other reasons for terminating
employment, including employment by another employer which the Executive desires
to accept.
4. Benefits Upon Termination Within Protection Period. If, within a
Protection Period, the Executive's employment by the Company and its
subsidiaries shall be terminated (a) by the Company or any of its subsidiaries
other than for Cause and other than because of a Disability or death, or (b) by
the Executive due to Constructive Termination, the Executive shall be entitled
to the benefits provided for below:
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(i) The Company shall pay to the Executive, through the date of the
Executive's termination of employment, salary at the rate then in effect,
together with salary in lieu of vacation accrued to the date on which his
or her employment terminates, in accordance with the standard payroll
practices of the Company;
(ii) The Company shall pay to the Executive an amount equal to the
product of (A) the amount of the Executive's annual bonus for the year
immediately preceding the year including the Change in Control Date (or
the year immediately preceding the year including the termination date, if
higher), multiplied by (B) a fraction, the numerator of which is the
number of days elapsed in the calendar year through the date of
termination of the Executive's employment, and the denominator of which is
365; and such payment shall be made in a lump sum within 10 business days
after the date of such termination of employment;
(iii) The Company shall pay to the Executive an amount equal to 2.99
times the sum of (A) the Executive's annual base salary in effect on the
Change in Control Date (or the date of termination, if higher), and (B)
the Executive's annual bonus for the year immediately preceding the year
including the Change in Control Date (or the year immediately preceding
the year including the termination date, if higher); and such payment
shall be made in a lump sum within 10 business days after the date of such
termination of employment; and
(iv) The Company shall continue to cover the Executive and his or
her dependents under, or provide the Executive and his or her dependents
with insurance coverage no less favorable than, the Company's life,
disability, health and dental benefit plans or programs (as in effect on
the day immediately preceding the Protection Period or, at the option of
the Executive, on the date of termination of employment) for a period
equal to the lesser of (x) 36 months following the date of termination or
(y) until the Executive is provided by another employer with benefits
substantially comparable (with no preexisting condition limitations) to
the benefits provided by such plans or programs. To the extent any such
benefits cannot be provided under the benefit plans or programs of the
Company or any of its subsidiaries, the Executive will be entitled to
receive, on a monthly basis following termination, cash payments in an
amount equal to the monthly cost of such benefits. The statutory health
care continuation coverage period under Section 4980B of the Internal
Revenue Code of 1986, as amended (the "Code"), will commence at the end of
such 36-month period.
5. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
policies or programs provided by the Company or any of its subsidiaries and for
which the Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any stock option or other
agreements with the Company or any of its subsidiaries; provided, however, that
amounts payable hereunder are in lieu of any severance benefit payable under any
other severance plan or agreement of the Company or its subsidiaries in effect
on the date hereof. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, practice, policy or program of the
Company or any of its subsidiaries at or subsequent to the date of termination
of the Executive's employment shall be payable in accordance with such plan,
practice, policy or program.
6. Full Settlement; Legal Expenses. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company or any of its
subsidiaries 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, and amounts payable hereunder will not be reduced
by compensation the Executive receives from other employment. The Company agrees
to pay, upon written demand therefor by the Executive, all legal fees and
expenses which the Executive may reasonably incur as a
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result of any dispute or contest by or with the Company or others regarding the
validity or enforceability of, or liability under, any provision of this
Agreement (including as a result of any contest by the Executive about the
amount of any payment hereunder), plus in each case interest at the applicable
federal rate provided for in Section 7872(f)(2) of the Code, unless the Company
prevails on all causes of action in the dispute or contest. In any such action
brought by the Executive for damages or to enforce any provisions of this
Agreement, the Executive shall be entitled to seek both legal and equitable
relief and remedies, including, without limitation, specific performance of the
Company's obligations hereunder, in the Executive's sole discretion.
7. Limitation on Payments by the Company. Anything in this Agreement to
the contrary notwithstanding, in the event that any payment or distribution
made, or benefit provided (including, without limitation, the acceleration of
any payment, distribution or benefit and the acceleration of exercisability of
any stock option) by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise) would be subject to the excise tax imposed by Section
4999 of the Code as an "excess parachute payment" (within the meaning of Section
280G of the Code), the payment set forth in Section 4(iii) hereof shall be
reduced to the smallest extent possible such that no amount payable hereunder
constitutes an "excess parachute payment" (within the meaning of Section 280G of
the Code).
8. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company and its subsidiaries all secret or
confidential information, knowledge or data relating to the Company or any of
its subsidiaries, and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by the Company or
any of its subsidiaries (except for information, knowledge or data which shall
be or subsequently become known or generally available to the public other than
by acts of the Executive or his or her representatives in violation of this
Agreement). After the date of termination of the Executive's employment with the
Company or any of its subsidiaries, the Executive shall not, without the prior
written consent of the Company, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those designated by the
Company. The Executive shall return to the Company at the time of the
termination of the Executive's employment with the Company or any of its
subsidiaries all tangible property of the Company or any its subsidiaries in the
Executive's possession, including, but not limited to, confidential information
relating to the Company or any of its subsidiaries. In the event of a breach or
threatened breach by the Executive of any provision of this Section 8, the
Executive acknowledges that the Company and its subsidiaries shall be entitled
to an injunction restraining the Executive from such act or threatened act, in
addition to monetary damages and any other available remedies. The Executive
hereby expressly consents and agrees that, for any breach or threatened breach
of any provision of this Section 8, a restraining order and/or an injunction may
be issued against the Executive in addition to any other rights the Company or
any of its subsidiaries may have with respect to such violation or breach. In no
event shall an asserted violation of the provisions of this Section 8 constitute
a basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement. The provisions of this Section 8 shall apply to
the Executive whether or not there has been a Change in Control.
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 or successors in interest.
(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 hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees (or is
required hereunder to assume and agree) to perform this Agreement by
operation of law or otherwise. A subsequent Change in Control of a
successor shall be considered a Change in Control under Section 1 hereof
upon termination of Executive's employment with the successor within a
Protection Period.
10. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut, 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 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:
Xxxx X. Xxxxx
[Address of Executive]
If to the Company:
Risk Capital Holdings, Inc.
00 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
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 invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company or any of its subsidiaries 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.
(e) The Executive's failure to insist upon strict compliance with
any provision hereof shall not be deemed to be a waiver of such provision
or any other provision thereof.
(f) This Agreement contains the entire understanding of the Company
and the Executive with respect to the subject matter hereof but, except as
otherwise expressly stated herein, does not supersede or override the
provisions of any stock option, employee benefit or other plan, program,
policy or practice in which the Executive is a participant or under which
the Executive is a beneficiary.
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IN WITNESS WHEREOF, the Executive has hereunto set his/her hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused this Agreement to be executed as of the date first above written.
RISK CAPITAL HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Managing Director, General Counsel
and Secretary
/s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
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