FIFTH AMENDMENT TO EMPLOYMENT AGREEMENT
This Fifth Amendment to the Employment Agreement between Chartwell Re
Corporation and Xxxxxxx X. Xxxxxxx is entered into as of August 4, 1998.
RECITALS
A. Chartwell Re Corporation (the "Company") entered into an Employment
Agreement (the "Agreement") with Xxxxxxx X. Xxxxxxx (the "Executive") dated
December 8, 1993; and
B. The Agreement set forth the terms and conditions of the Executive's
employment with the Company.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and Executive hereby consent to
amend the Agreement as follows:
1. Clause (i) in Section 5(e) shall be deleted and the following shall be
inserted in its place:
"As soon as practicable following the end of each calendar year ending
on or prior to the end of the Term, the Company shall contribute to a
separate account (the "Trust Account") established for the Executive in
a rabbi trust (the "Rabbi Trust") administered by a bank or trust
company reasonably satisfactory to the Executive (the "Trustee"), an
amount equal to 13-1/2% of the Base Salary paid to the Executive during
such calendar year."
2. The last sentence of clause (ii) in Section 5(e) shall be deleted and
the following shall be inserted in its place:
"The Trustee shall provide the Company with written notice of any
proposed investment and a reasonable period of time to respond to the
Trustee with a written statement that such proposed investment could
reasonably be expected to have the adverse effect described in the
immediately preceding sentence. Notwithstanding the foregoing, the
Trustee shall have ultimate investment authority with respect to all
investments made of the amounts contributed to the Trust Account."
3. The first sentence of clause (iii) in Section 5(e) shall be deleted
and the following shall be inserted in its place:
"For each taxable year of the Company, the Company shall be entitled to
instruct the Trustee to deduct from the Trust Account and distribute to
the Company as of the end of the first calendar quarter following such
taxable year an amount equal to the greater of zero and the following:
Individual Trust Account Taxes
(Aggregate Taxes - $50,000) x ------------------------------
Aggregate Taxes
where "Aggregate Taxes" means all federal, state and local income or
franchise taxes deemed payable by the Company with respect to the
aggregate income or gains (offset by losses and loss carryforwards)
recognized by the Trust Account and each other trust account held in
the Rabbi Trust and "Individual Trust Account Taxes" means all federal,
state and local income or franchise taxes deemed payable by the Company
with respect to the income or gains attributable to the Trust Account
(offset by losses and loss carryforwards of the Trust Account on a
separate basis)."
4. Clause (iv) in Section 5(e) shall be deleted and the following shall be
inserted in its place:
"Within 10 calendar days following the Executive's attainment of age 65
or, if earlier, within the time periods following the Executive's Date
of Termination specified in Section 8, the Trustee shall make payments
to the Executive in cash (or, if consented to by the Company and the
Executive, in kind) of the balance of the Trust Account less any amount
which the Trustee may deduct pursuant to clause (iii) above with
respect to the period from the end of the immediately preceding taxable
year of the Company to the date of the payment to the Executive,
including any taxes payable as a result of the distribution."
5. Clause (v) in Section 5(e) shall be deleted and the following shall be
inserted in its place:
"For purposes of determining Aggregate Taxes and Individual Trust
Account Taxes pursuant to this Section 5(e), it shall be assumed that
the Company pays all taxes at the maximum marginal rate of federal
income taxes and state and local income and franchise taxes applicable
to business corporations in the jurisdictions in which the Company is
subject to state and local income and franchise taxes, with such
federal and state taxes reduced in order to reflect the deductibility
of any state and local income and franchise taxes in determining
federal taxes."
6. The following shall be added to the end of clause (vi) in Section 5(e):
"In the event that all or any portion of the principal and interest in
the Trust Account is not available to be distributed to the Executive
for any reason, the Company shall be liable to the Executive for an
amount equal to the amount contributed to the Trust Account, increased
(or decreased) by the income (or loss) attributable to the Trust
Account, reduced by any amounts previously distributed from the Trust
Account to the Executive or his beneficiaries and reduced by any
amounts paid or payable to the Company pursuant to clause (iii) above."
7. The following shall be added to the end of Section 5(h):
"If the number of vacation, paid holiday or personal days is reduced as
a result of a change in policy by the Company, the Executive shall be
entitled to the highest number of vacation, paid holiday and personal
days to which the Executive was entitled under Company policy during
any calendar year during the Term. Upon termination in accordance with
Section 8, the Executive shall be entitled to receive the pro-rata
portion of the Executive's then current Base Salary for any of the
Executive's accrued and unutilized vacation and personal days during
the Term."
8. Section 6(b)shall be deleted and the following shall be inserted in its
place:
"Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from
his duties hereunder on a full-time basis for the entire period of 12
consecutive months, and within 30 days after written Notice of
Termination is given (which may occur only after the end of such 12
month period), the Executive shall not have returned to the performance
of his duties hereunder on a full-time basis, the Company may terminate
the Executive's employment hereunder for "Disability"."
9. The last sentence of Section 6(c) shall be deleted and the following
shall be inserted in its place:
"Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause without (1) delivery to the Executive of
a Notice of Termination (as defined in Section 7(a)) from the Board
finding that in the good faith opinion of a majority of the Board the
Executive was guilty of conduct set forth above in clause (i) or (ii)
hereof, and specifying the particulars thereof in detail, (2) providing
a period of 30 calendar days from the date of delivery of the Notice of
Termination for the Executive to cure the conduct set forth in the
Notice of Termination and (3) an opportunity for the Executive,
together with his counsel, to be heard before the Board."
10. Clause (i) of Section 6(d) shall be deleted and the following shall be
inserted in its place:
"a material and adverse change in the Executive's status, authority,
duties or function or in the Executive's individual ability to
participate in or receive benefits under any incentive compensation,
bonus, stock option, stock ownership, employee benefit or other
employee welfare plan on the same basis as employees of the Company
generally,"
11. Clause (iii)of Section 7(b) shall be deleted and the following shall be
inserted in its place:
"if the Executive's employment is terminated pursuant to Section 6(c),
30 days after the Notice of Termination (provided that the Executive
shall not have cured the conduct set forth in the Notice of Termination
during such 30 day period and the other requirements of Section 6(c)
shall have been met), and"
12. Section 8(a)shall be deleted and the following shall be inserted in its
place:
"Death. If the Executive's employment is terminated by his death, the
Company shall within 30 calendar days of the Executive's death pay to
the Executive's estate or as may be directed by the legal
representatives of such estate any amounts accrued and due to the
Executive under Sections 5(a), 5(b)(ii), 5(d), 5(e), 5(f), 5(g), 5(h)
and 5(j) through the date of his death and the balance of any amounts
due under Section 5(b)(i), and the Company shall have no further
obligations hereunder."
13. The number "180" in the first sentence of Section 8(b) shall be deleted
and the number "365" shall be inserted in its place.
14. The last sentence of Section 8(b) shall be deleted and the following
shall be inserted in its place:
"Upon the Executive's termination of employment for Disability pursuant
to Section 6(b), the Company shall within 30 calendar days of the Date
of Termination pay the Executive any amounts accrued and due to the
Executive under Sections 5(a), 5(b)(ii), 5(d), 5(e), 5(f), 5(g), 5(h)
and 5(j) through his Date of Termination and the balance of any amounts
due under Section 5(b)(i), and the Company shall have no further
obligations hereunder."
15. Section 8(c) shall be deleted and the following shall be inserted in
its place:
"Cause or By Executive Without Good Reason. If the Executive's
employment with the Company is terminated for Cause or by the Executive
without Good Reason, the Company shall within 30 calendar days of the
Date of Termination pay the Executive all amounts accrued and due to
the Executive under Sections 5(a), 5(d), 5(e), 5(f), 5(g), 5(h) and
5(j) through his Date of Termination and the Company shall have no
further obligations hereunder."
16. Clause (i) of Section 8(d) shall be deleted and the following shall
be inserted in its place:
"within 30 calendar days of the Date of Termination pay the Executive
all amounts accrued and due to the Executive under Sections 5(a), 5(b),
5(d), 5(e), 5(f), 5(g), 5(h) and 5(j) through his Date of Termination,"
17. Clause (ii) of Section 8(d) shall be deleted and the following shall
be inserted in its place:
"pay the Executive his Base Salary (at the highest rate in effect at
any time during the Term) for three years from the Date of Termination
(or through such earlier time that the Executive violates the
provisions of Section 10) at the times such payments would otherwise
have been made under Section 5(a),"
18. Clause (iv) of Section 8(d) shall be deleted and the following shall be
inserted in its place:
"provide the Executive with outplacement services having a value of at
least $10,000 and continuing for a period of one year from the Date of
Termination (it being understood and agreed that the Company shall not
have any obligation to purchase outplacement services in excess of
$10,000 pursuant to this clause (iv))."
19. The first paragraph of Section 8(e) shall be deleted and the following
shall be inserted in its place:
"Notwithstanding any other provisions in this Agreement, if during the
two year period following a "Change of Control" of the Company, the
Executive's employment with the Company shall terminate as a result of:
(i) the termination of the Executive's employment by
the Company (including a failure by the Company to extend the
Term) other than for Disability or Cause, or
(ii) the Executive's termination for Good Reason,
the Company shall pay to the Executive, within five (5) days following
the Date of Termination, the compensation set forth in Section 8(d)(i),
plus (in lieu of the compensation set forth in Sections 8(d)(ii) and
(iii)) a lump sum payment equal to the sum of (A) three (3) times the
Executive's Base Salary (at the highest rate in effect at any time
during the Term) and (B) an amount equal to the greater of (1) the
highest annual bonus paid to the Executive during the two fiscal years
prior to the Change of Control or (2) the highest annual bonus paid to
the Executive after the Change of Control, but only to the extent
payment of such amount does not subject the Executive to any Excise Tax
(as defined below) in connection therewith. In addition to the
foregoing, for a period of two years following the Date of Termination,
the Company shall provide the Executive with continued participation
(or equivalent benefits if such participation is not permitted) in the
employee benefit plans provided to the Executive pursuant to Section
5(c) as of the Date of Termination. If requested by the Executive
within 30 calendar days of the Date of Termination, in lieu of the
obligation of the Company set forth in the immediately preceding
sentence, the Company shall pay to the Executive within 30 calendar
days of receipt of such request the amount needed by the Executive to
purchase benefits equivalent to those provided to the Executive
pursuant to Section 5(c) as of the Date of Termination for a period of
two years from the Date of Termination."
20. The fourth sentence of Section 8(f) shall be deleted and the following
shall be inserted in its place:
"If a determination (as defined in Section 1313 of the Code) is made
that the Executive owes less Excise Tax than the amount taken into
account hereunder at the time of termination of the Executive's
employment, the Executive shall pay to the Company the amount of any
refunded Excise Tax (and any statutory interest paid to the Executive
by the Internal Revenue Service) promptly upon receipt. The Executive
shall also pay to the Company the value of any tax savings which the
Executive realizes as a result of the repayment of the Excise Tax to
the Company."
21. The following shall be added to the end of Section 9:
"Except as set forth in this Section 9, the Executive shall have no
duty to mitigate the effects of this Agreement, and the Company shall
have no right to reduce the Executive's severance benefits under this
Agreement."
22. The last sentence of Section 10(d) shall be deleted and the following
shall be inserted in its place:
"Notwithstanding the foregoing provisions of this Section 10, the
Executive (x) may discuss this Agreement with the members of his
immediate family and with his personal legal and tax advisors, provided
that, prior to disclosing any term or condition of this Agreement to
any such person, the Executive shall obtain from such person for the
benefit of the Company his or her agreement to observe the foregoing
provisions and (y) may disclose any information regarding this
Agreement or other information regarding the Company or its
majority-owned subsidiaries which, in the opinion of the Executive's
counsel, the Executive is legally compelled to disclose."
23. The first paragraph of Section 11 shall be deleted and the following
shall be inserted in its place:
"For the purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered to the
recipient, addressed as follows:"
24. The following new paragraphs shall be added to the end of Section 13:
"The Executive and the Company shall each promptly select an
arbitrator and a third arbitrator shall be selected jointly by the
arbitrators selected by the parties within 15 days of their selection
by the Executive and the Company. If the arbitrators are unable to
agree on a third arbitrator within that period, then the Company or the
Executive may request that the American Arbitration Association select
the third arbitrator. The arbitrators shall possess substantive legal
experience in the principal issues in dispute and shall be independent
of the parties hereto.
The arbitration shall take place at a location selected by the
arbitrators within the New York City metropolitan area. The arbitrators
shall have the authority to award any remedy or relief that a court of
competent jurisdiction could order or grant, including, without
limitation, the issuance of an injunction. Either party may apply to a
court for enforcement of the remedy or relief the arbitrators order or
grant.
Any discovery permitted shall be limited to information directly
relevant to the controversy or claim in arbitration. In the event of
discovery disputes, the arbitrators are directed to issue such orders
as are appropriate to limit discovery in accordance with the foregoing
and as are reasonable in light of the issues in dispute, the amount in
controversy and other relevant considerations.
The Company shall reimburse the Executive, upon demand, for all costs
and expenses (including, without limitation attorneys' fees) reasonably
incurred by the Executive in good faith in connection with this
arbitration provision, including, without limitation, in connection
with any such application undertaken by the Executive in good faith as
well as for all such costs and expenses reasonably incurred by the
Executive in connection with entering or enforcing the award rendered
by the arbitrators.
Except as necessary in court proceedings to enforce this arbitration
provision or an award rendered hereunder, neither a party nor an
arbitrator may disclose the existence, content or results of any
arbitration hereunder without the prior written consent of the
Company."
25. Except as expressly amended hereby, the Agreement shall continue in
full force and effect in accordance with the provisions thereof on the
date hereof.
26. This Fifth Amendment shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.
27. This Fifth Amendment may be executed in two or more counterparts, each
of which shall constitute an original, but all of which when taken
together shall constitute but one instrument.
28. This Fifth Amendment shall be governed by and construed in accordance
with the laws of the State of Delaware without regard to its conflict
of law principles.
IN WITNESS WHEREOF, the Executive has executed this Fifth Amendment and the
Company has caused this Fifth Amendment to be executed by its duly authorized
representative.
CHARTWELL RE CORPORATION
/s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxx X. Del Col
------------------------ ---------------------------------
Xxxxxxx X. Xxxxxxx Xxxx X. Del Col
Vice President, General Counsel
& Secretary
