KEY EMPLOYEE EMPLOYMENT PROTECTION AGREEMENT
THIS AGREEMENT between MBIA Inc., a Connecticut corporation (the
"Company"), and Xxxxxx X. Xxxxx (the "Executive"), dated as of this 20th day of
January, 1999.
WITNESSETH:
WHEREAS, the Company has employed the Executive in an officer position and
has determined that the Executive holds an important position with the Company;
WHEREAS, the Company believes that, in the event it is confronted with a
situation that could result in a change in ownership or control of the Company,
continuity of management will be essential to its ability to evaluate and
respond to such a situation in the best interests of shareholders;
WHEREAS, the Company understands that any such situation will present
significant concerns for the Executive with respect to his financial and job
security;
WHEREAS, the Company desires to assure itself of the Executives services
during the period in which it is confronting such a situation, and to provide
the Executive certain financial assurances to enable the Executive to perform
the responsibilities of his position without undue distraction and to exercise
his judgment without bias due to his personal circumstances;
WHEREAS, to achieve these objectives, the Company and the Executive desire
to enter into an agreement providing the Company and the Executive with certain
rights and obligations upon the occurrence of a Change of Control or Potential
Change of Control (as defined in Section 2);
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Company and the
Executive as follows:
1. Operation of Agreement. (a) Effective Date. The effective date of
this Agreement shall be the date on which a Change of Control occurs (the
"Effective
Date"), provided that, except as provided in Section I (b), if the
Executive is not employed by the Company on the Effective Date, this
Agreement shall be void and without effect.
(b) Termination of Employment Following a Potential Change of Control.
Notwithstanding Section l(a), if (i) the Executive's employment is
terminated by the Company Without Cause (as defined in Section 6(c)) after
the occurrence of a Potential Change of Control and prior to the occurrence
of a Change of Control and prior to the time at which the Board of
Directors of the Company (the Board) has adopted a Nullification Resolution
(as defined in Section 2(b) hereof) with respect to such Potential Change
of Control or (ii) a Change of Control (as defined in Section 2(a) hereof).
and (ii) a Change of Control occurs within two years of such termination,
the Executive shall be deemed, solely for purposes of determining his
rights under this Agreement, to have remained employed until the date such
Change of Control occurs and to have been terminated by the Company Without
Cause immediately after this Agreement becomes effective, with any amounts
payable hereunder reduced by the amount of any other severance benefits
provided to him in connection with such termination.
2. Definitions. (a) Change of Control. For the purposes of this
Agreement, a "Change of Control" shall be deemed to have occurred if:
(i) any person, as such term is currently used is Section 13(d)
or 14(d) of the 1934 Act, other than the Company, its majority owned
subsidiaries, or any employee benefit plan of the Company or any of
its majority-owned subsidiaries, becomes a "beneficial owner" (as such
term is currently used in Rule 13d-3, as promulgated under 0000 Xxx)
of 25% or more of the Voting Power of the Company;
(ii) on any date, a majority of the Board consists of individuals
other than Incumbent Directors, which term means the members of the
Board who were serving on the Board at beginning of any 24-month
period ending with such date (or another date specified by the
Committee), provided that any individual who becomes a director
subsequent to that date whose election or nomination for election was
supported by two-thirds of the directors who then comprised the
Incumbent Directors shall be considered to be an Incumbent Director
for purposes of this subsection 2(a)(ii);
(iii) the stockholders of the Company approve a merger,
consolidation, share exchange, division, sale or other disposition of
substantially all of the assets of the Company (a "Corporate Event"),
as a result of which the shareholders of the Company immediately prior
to such Corporate Event (the Company Shareholders) shall not hold,
directly or indirectly, immediately following such Corporate Event a
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majority of the Voting Power of (x) in the case of a merger or
consolidation, the surviving or resulting corporation, (y) in the case
of a share exchange, the acquiring corporation or (z) in the case of a
division or a sale or other disposition of substantially all of the
Company's assets, each surviving, resulting or acquiring corporation;
provided that such a division or sale shall not be a Change of Control
for purposes of this Agreement to the extent that, following such
Corporate Event, the Executive continues to be employed by a
surviving, resulting or acquiring entity with respect to which the
Company Shareholders hold, directly or indirectly, a majority of the
Voting Power immediately following such Corporate Event.
(b) Potential Change of Control. For the purposes of this Agreement, a
Potential Change of Control shall be deemed to have occurred if:
(i) a Person commences a tender offer (with adequate financing)
for securities representing at least 15% of the Voting Power of the
Company's securities;
(ii) the Company enters into an agreement the consummation of
which would constitute a Change of Control;
(iii) proxies for the election of directors of the Company are
solicited by anyone other than the Company; or
(iv) any other event occurs which is deemed to be a Potential
Change of Control by the Board.
Notwithstanding the foregoing, if, after a Potential Change of Control and
before a Change of Control, the Board makes a good faith determination that
such Potential Change of Control will not result in a Change of Control,
the Board may nullify the effect of the Potential Change of Control (a
"Nullification") by resolution (a "Nullification Resolution"), in which
case the Executive shall have no further rights and obligations under this
Agreement by reason of such Potential Change of Control; provided, however,
that if the Executive shall have delivered a Notice of Termination (within
the meaning of Section 6(f) hereof) prior to the date of the Nullification
Resolution, such Resolution shall not effect the Executive's rights
hereunder. If a Nullification Resolution has been adopted and the Executive
has not delivered a Notice of Termination prior thereto, the Effective Date
for purposes of this Agreement shall be the date, if any, during the term
hereof on which another Potential Change of Control or any actual Change of
Control occurs.
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(c) Voting Power Defined. A specified percentage of "Voting Power" of
a company shall mean such number of the Voting Securities as shall enable
the holders thereof to cast such percentage of all the votes which could be
cast in an annual election of directors and "Voting Securities" shall mean
all securities of a company entitling the, holders thereof to vote in an
annual election of directors.
3. Employment Period. Subject to Section 6 of this Agreement, the
Company agrees to continue the Executive in its employ, and the Executive
agrees to remain in the employ of the Company, for the period (the
"Employment Period") commencing on the Effective Date and ending on the
third anniversary of the Effective Date. Notwithstanding the foregoing, if,
prior to the Effective Date, the Executive is demoted to a lower position
than the position held on the date first set forth above, the Board may
declare that this Agreement shall be without force and effect by written
notice delivered to the Executive (i) within 30 days following such
demotion and (ii) prior to the occurrence of a Potential Change of Control
or a Change of Control.
4. Position and Duties. (a) No Reduction in Position. During the
Employment Period, the Executive's position (including titles), authority
and responsibilities shall be at least commensurate with those held,
exercised and assigned immediately prior to the Effective Date. It is
understood that, for purposes of this Agreement, such position, authority
and responsibilities shall not be regarded as not commensurate merely by
virtue of the fact that a successor shall have acquired all or
substantially all of the business and/or assets of the Company as
contemplated by Section 12(b) of this Agreement. The Executive's services
shall be performed at the location where the Executive was employed
immediately preceding the Effective Date.
(b) Business Time. From and after the Effective Date, the Executive
agrees to devote His full attention during normal business hours to the
business and affairs of the Company and to use his best efforts to perform
faithfully and efficiently the responsibilities assigned to him hereunder,
to the extent necessary to discharge such responsibilities, except for (i)
time spent in managing his personal, financial and legal affairs and
serving on corporate, civic or charitable boards or committees, in each
case only if and to the extent not substantially interfering with the
performance of such responsibilities, and (ii) periods of vacation and sick
leave to which he is entitled. It is expressly understood and agreed that
the Executive's continuing to serve on any boards and committees on which
he is serving or with which he is other-wise associated immediately
preceding the Effective Date shall not be deemed to interfere with the
performance of the Executive's services to the Company.
5. Compensation. (a) Base Salary. During the Employment Period, the
Executive shall receive a base salary at a monthly rate at least equal to
the monthly
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salary paid to the Executive by the Company and any of its affiliated
companies immediately prior to the Effective Date. The base salary shall be
reviewed at least once each year after the Effective Date, and may be
increased (but not decreased) at any time and from time to time by action
of the Board or any committee thereof or any individual having authority to
take such action in accordance with the Company's regular practices. The
Executive's base salary, as it may be increased from time to time, shall
hereafter be referred to as "Base Salary". Neither the Base Salary nor any
increase in Base Salary after the Effective Date shall serve to limit or
reduce any other obligation of the Company hereunder.
(b) Annual Bonus. During the Employment Period, in addition to the
Base Salary, for each fiscal year of the Company ending during the
Employment Period, the Executive shall be afforded the opportunity to
receive an annual bonus on terms and conditions no less favorable to the
Executive (taking into account reasonable changes in the Company's goals
and objectives and taking into account actual performance) than the annual
bonus opportunity that had been made available to the Executive for the
fiscal year ended immediately prior to the Effective Date (the "Annual
Bonus Opportunity"). Any amount payable in respect of the Annual Bonus
Opportunity shall be paid as soon as practicable following the year for
which the amount (or prorated portion) is earned or awarded, unless
electively deferred by the Executive pursuant to any deferral programs or
arrangements that the Company may make available to the Executive.
(c) Long-term Incentive Compensation Programs. During the Employment
Period, the Executive shall participate in all long-term incentive
compensation programs for key executives at a level that is commensurate
with the Executive's participation in such plans immediately prior to the
Effective Date, or, if more favorable to the Executive, at the level made
available to the Executive or other similarly situated officers at any time
thereafter.
(d) Benefit Plans. During the Employment Period, the Executive (and,
to the extent applicable, his dependents) shall be entitled to participate
in or be covered under all pension, retirement, deferred compensation,
savings, medical, dental, health, disability, group life and accidental
death insurance plans and programs of the Company and its affiliated
companies at a level that is commensurate with the Executive's
participation in such plans immediately prior to the Effective Date, or, if
more favorable to the Executive, at the level made available to the
Executive or other similarly situated officers at any time thereafter.
(e) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the policies and procedures of
the Company as in effect
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immediately prior to the Effective Date. Notwithstanding the foregoing, the
Company may apply the policies and procedures in effect after the Effective
Date to the Executive, if such policies and procedures are not less
favorable to the Executive than those in effect immediately prior to the
Effective Date.
(f) Vacation and Fringe Benefits. During the Employment Period, the
Executive shall be entitled to paid vacation and fringe benefits at a level
that is commensurate with the paid vacation and fringe benefits available
to the Executive immediately prior to the Effective Date, or, if more
favorable to the Executive, at the level made available from time to time
to the Executive or other similarly situated officers at any time
thereafter.
(g) Indemnification. During and after the Employment Period, the
Company shall indemnify the Executive and hold the Executive harmless from
and against any claim, loss or cause of action arising from or out of the
Executive's performance as an officer, director or employee of the Company
or any of its Subsidiaries or in any other capacity, including any
fiduciary capacity, in which the Executive serves at the request of the
Company to the maximum extent permitted by applicable law and the Company's
Certificate of Incorporation and By-Laws (the "Governing Documents"),
provided that in no event shall the protection afforded to the Executive
hereunder be less than that afforded under the Governing Documents as in
effect immediately prior to the Effective Date.
(h) Office and Support Staff. The Executive shall be entitled to an
office with furnishings and other appointments, and to secretarial and
other assistance, at a level that is at least commensurate with the
foregoing provided to other similarly situated officers.
6. Termination. (a) Death, Disability or Retirement. Subject to the
provisions of Section 1 hereof, this Agreement shall terminate
automatically upon the Executive's death, termination due to "Disability"
(as defined below) or voluntary retirement under any of the Company's
retirement plans as in effect from time to time. For purposes of this
Agreement, Disability shall mean the Executive has met the conditions to
qualify for long-term disability benefits under the Company's policies, as
in effect immediately prior to the Effective Date.
(b) Voluntary Termination. Notwithstanding anything in this Agreement
to the contrary, following a Change of Control the Executive may, upon not
less than 60 days' written notice to the Company, voluntarily terminate
employment for any reason (including early retirement under the terms of
any of the Company's retirement plans as in effect from time to time),
provided that any termination by the Executive
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pursuant to Section 6(d) on account of Good Reason (as defined therein)
shall not be treated as a voluntary termination under this Section 6(b).
(c) Cause. The Company may terminate the Executive's employment for
Cause. For purposes of this Agreement, "Cause" means (i) the Executive's
conviction or plea of nolo contendere to a felony; (ii) an act or acts of
dishonesty or gross misconduct on the Executive's part which result or are
intended to result in material damage to the Company's business or
reputation; or (iii) repeated material violations by the Executive of his
obligations under Section 4 of this Agreement, which violations are
demonstrably willful and deliberate on the Executive's part and which
result in material damage to the Company's business or reputation.
(d) Good Reason. Following the occurrence of a Change of Control, the
Executive may terminate his employment for Good Reason. For purposes of
this Agreement, "Good Reason" means the occurrence of any of the following,
without the express written consent of the Executive, after the occurrence
of a Change of Control:
(i) the assignment to the Executive of any duties inconsistent in
any material adverse respect with the Executive's position, authority
or responsibilities as contemplated by Section 4 of this Agreement, or
any other material adverse change in such position, including titles,
authority or responsibilities;
(ii) any failure by the Company to comply with any of the
provisions of Section 5 of this Agreement, other than an insubstantial
or inadvertent failure remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any
office or location more than 50 miles (or such other distance as shall
be set forth in the Company's relocation policy as in effect at the
Effective Time) from that location at which he performed his services
specified under the provisions of Section 4 immediately prior to the
Change of Control, except for travel reasonably required in the
performance of the Executive's responsibilities; or
(iv) any failure by the Company to obtain the assumption and
agreement to perform this Agreement by a successor as contemplated by
Section 12(b).
In no event shall the mere occurrence of a Change of Control, absent any
further impact on the Executive, be deemed to constitute Good Reason.
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(e) Special Window Period. The Executive shall also have the right to
terminate his employment at any time and for any reason during the 30-day
period commencing on the first anniversary of the date on which a Change of
Control occurs (the "Special Window Period").
(f) Notice of Termination. Any termination by the Company for Cause or
by the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section
13(e). For purposes of this Agreement, a "Notice of Termination" means a
written notice given, in the case of a termination for Cause, within 10
business days of the Company's having actual knowledge of the events giving
rise to such termination, and in the case of a termination for Good Reason,
within 90 days of the Executive's having actual knowledge of the events
giving rise to such termination, and which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated, and (iii) if the termination date is other than the date of
receipt of such notice, specifies the termination date of this Agreement
(which date shall be not more than 15 days after the giving of such
notice). The failure by the Executive to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason shall not waive any right of the Executive hereunder or preclude the
Executive from asserting such fact or circumstance in enforcing his rights
hereunder.
(g) Date of Termination. For the purpose of this Agreement, the term
"Date of Termination" means (i) in the case of a termination for which a
Notice of Termination is required, the date of receipt of such Notice of
Termination or, if later, the date specified therein, as the case may be,
and (ii) in all other cases, the actual date on which the Executive's
employment terminates during the Employment Period.
7. Obligations of the Company upon Termination. (a) Death or
Disability. If the Executive's employment is terminated during the
Employment Period by reason of the Executive's death or Disability, this
Agreement shall terminate without further obligations to the Executive or
the Executive's legal representatives under this Agreement other than those
obligations accrued hereunder at the Date of Termination, and the Company
shall pay to the Executive (or his beneficiary or estate) (i) the
Executive's full Base Salary through the Date of Termination (the "Earned
Salary"), (ii) any vested amounts or benefits owing to the Executive under
the Company's otherwise applicable employee benefit plans and programs,
including any compensation previously deferred by the Executive (together
with any accrued earnings thereon) and not yet paid by the Company and any
accrued vacation pay not yet paid by the Company (the "Accrued
Obligations"), and (iii) any other benefits payable due to the Executive's
death or Disability under the Company's plans, policies or programs (the
"Additional Benefits").
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Any Earned Salary shall be paid in cash in a single lump sum as soon
as practicable, but in no event more than 10 days (or at such earlier date
required by law), following the Date of Termination. Accrued Obligations
and Additional Benefits shall be paid in accordance with the terms of the
applicable plan, program or arrangement.
(b) Cause and Voluntary Termination. If, during the Employment Period,
the Executive's employment shall be terminated for Cause or voluntarily
terminated by the Executive (other than on account of Good Reason following
a Change of Control), the Company shall pay the Executive (i) the Earned
Salary in cash in a single lump sum as soon as practicable, but in no event
more than 10 days, following the Date of Termination, and (ii) the Accrued
Obligations in accordance with the terms of the applicable plan, program or
arrangement.
(c) Termination by the Company other than for Cause and Termination by
the Executive for Good Reason or in the Special Window Period. If (x) the
Company terminates the Executive's employment other than for Cause during
the Employment Period, (y) the Executive terminates his employment at any
time during the Employment Period for Good Reason or (z) the Executive
terminates his employment with or without Good Reason during the Special
Window Period, the Company shall provide the Executive with the following
benefits:
(i) Severance and Other Termination Payments. The Company shall
pay the Executive the following:
(A) the Executive's Earned Salary; and
(B) an amount (the Pro-Rated Annual Incentive) equal to the
average of the annual bonuses payable to the Executive for
the two fiscal years of the Company ended prior to the
Effective Date for which bonuses have been determined (the
"Average Annual Bonus") multiplied by a fraction, the
numerator of which is the number of months in such fiscal
year which have elapsed on or before (and including) the
last day of the month in which the Date of Termination
occurs and the denominator of which is 12; and
(C) an aggregate amount (the Book Value Award Amount) equal to
the sum of the amounts payable to the Executive in respect
of each outstanding incentive award related to the Company's
adjusted book value, determined as of the end of the month
in which the Date of Termination occurs; and
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(D) the Accrued Obligations; and
(E) a cash amount (the "Severance Amount") equal to three times
the sum of
(1) the Executive's annual Base Salary;
(2) an amount equal to the Average Annual Bonus;
The Earned Salary, Pro-Rated Annual Incentive and Severance Amount
shall be paid in cash in a single lump sum as soon as practicable, but
in no event more than 10 days (or at such earlier date required by
law), following the Date of Termination. The Book Value Award Amounts
shall be paid in cash as soon as practicable after the amount of each
such payment can be determined. Accrued Obligations shall be paid in
accordance with the terms of the applicable plan, program or
arrangement.
(ii) Continuation of Benefits. If, during the Employment Period,
the Company terminates the Executive's employment other than for Cause
or the Executive terminates his employment for Good Reason, the
Executive (and, to the extent applicable, his dependents) shall be
entitled, after the Date of Termination until the earlier of (1) the
third anniversary of the Date of Termination (the "End Date") and (2)
the date the Executive becomes eligible for comparable benefits under
a similar plan, policy or program of a subsequent employer, to
continue participation in all of the Company's group health and group
life employee benefits plans (the "Group Benefit Plans"). To the
extent any such benefits cannot be provided under the terms of the
applicable plan, policy or program, the Company shall provide a
comparable benefit under another plan or from the Company's general
assets. The Executive's participation in the Group Benefit Plans will
be on the same terms and conditions (including, without limitation,
any condition that the Executive make contributions toward the cost of
such coverage on the same terms and conditions generally applicable to
similarly situated employees) that would have applied had the
Executive continued to be employed by the Company through the End
Date.
(iii) Restricted Stock. Any and all awards of restricted stock
held by the Executive at the Date of Termination shall immediately
become fully vested.
(iv) Post-Termination Exercise Period. Notwithstanding anything
else contained in Section 14 of the Company's 1987 Stock Option Plan
to the contrary,
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in the event that Executive is entitled to receive the severance
benefits described above pursuant to the terms of this Agreement, all
of his outstanding Options and SARs awarded under such 1997 Stock
Option Plan shall automatically be and become fully exercisable on the
Date of Termination without further action on anyone's part and the
Executive shall have the right to exercise any such Option or SAR
until the earlier to occur of the expiration of the term of such
Option or SAR and the fifth anniversary of the Date of Termination.
(v) Retirement Contribution Credits. The Executive shall receive
credits to the Company's nonqualified excess benefits plan with
respect to the amounts that would otherwise have been contributed on
his behalf under the Company's Money Purchase Pension Plan and Profit
Sharing Plan had the Executive continued in the company's employ for
three years following the Date of Termination.
(vi) Outplacement Services. The Executive shall be provided at
the Company's expense with outplacement services customary for
executives at his level (including, without limitation, office space
and telephone support services) provided by a qualified and
experienced third party provider selected by the Company.
(d) Discharge of the Company's Obligations. Except as expressly
provided in the last sentence of this Section 7(d), the amounts payable to
the Executive pursuant to this Section 7 following termination of his
employment shall be in fun and complete satisfaction of the Executive's
rights under this Agreement and any other claims he may have in respect of
his employment by the Company or any of its Subsidiaries. Such amounts
shall constitute liquidated damages with respect to any and all such
rights and claims and, upon the Executive's receipt of such amounts, the
Company shall be released and discharged from any and all liability to the
Executive in connection with this Agreement or otherwise in connection with
the Executive's employment with the Company and its Subsidiaries. Nothing
in this Section 7(d) shall be construed to release the Company from its
commitment to indemnify the Executive and hold the Executive harmless from
and against any claim, loss or cause of action arising from or out of the
Executive's performance as an officer, director or employee of the Company
or any of its Subsidiaries or in any other capacity, including any
fiduciary capacity, in which the Executive served at the request of the
Company to the maximum extent permitted by applicable law and the Governing
Documents.
(e) Certain Further Payments by the Company.
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(i) In the event that any amount or benefit paid or distributed
to the Executive pursuant to this Agreement, taken together with any
amounts or benefits otherwise paid or distributed to the Executive by
the Company or any affiliated company (collectively, the "Covered
Payments"), are or become subject to the tax (the "Excise Tax")
imposed under Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any similar tax that may hereafter be
imposed, the Company shall pay to the Executive at the time specified
in Section 7(e)(v) below an additional amount (the "Tax Reimbursement
Payment") such that the net amount retained by the Executive with
respect to such Covered Payments, after deduction of any Excise Tax on
the Covered Payments and any Federal, state and local income or
employment tax and Excise Tax on the Tax Reimbursement Payment
provided for by this Section 7(e), but before deduction for any
Federal, state or local income or employment tax withholding on such
Covered Payments, shall be equal to the amount of the Covered
Payments.
(ii) For purposes of determining whether any of the Covered
Payments will be subject to the Excise Tax and the amount of such
Excise Tax,
(A) such Covered Payments will be treated as "parachute
payments" within the meaning of Section 280G of the Code,
and all "parachute payments" in excess of the "base amount"
(as defined under Section 280G(b)(3) of the Code) shall be
treated as subject to the Excise Tax, unless, and except to
the extent that, in the good faith judgment of the Company's
independent certified public accountants appointed prior to
the Change of Control Date or tax counsel selected by such
Accountants (the "Accountants"), the Company has a
reasonable basis to conclude that such Covered Payments (in
whole or in part) either do not constitute "parachute
payments" or represent reasonable compensation for personal
services actually rendered (within the meaning of Section
280G(b)(4)(B) of the Code) in excess of the "base amount,"
or such "parachute payments" are otherwise not subject to
such Excise Tax, and
(B) the value of any non-cash benefits or any deferred payment
or benefit shall be determined by the Accountants in
accordance with the principles of Section 280G of the Code.
(iii) For purposes of determining the amount of the Tax
Reimbursement Payment, the Executive shall be deemed to pay:
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(A) Federal income taxes at the highest applicable marginal rate
of Federal income taxation for the calendar year in which
the Tax Reimbursement Payment is to be made, and
(B) any applicable state and local income taxes at the highest
applicable marginal rate of taxation for the calendar year
in which the Tax Reimbursement Payment is to be made, net of
the maximum reduction in Federal income taxes which could be
obtained from the deduction of such state or local taxes if
paid in such year.
(iv) In the event that the Excise Tax is subsequently determined
by the Accountants or pursuant to any proceeding or negotiations with
the Internal Revenue Service to be less than the amount taken into
account hereunder in calculating the Tax Reimbursement Payment made,
the Executive shall repay to the Company, at the time that the amount
of such reduction in the Excise Tax is finally determined, the portion
of such prior Tax Reimbursement Payment that would not have been paid
if such Excise Tax had been applied in initially calculating such Tax
Reimbursement Payment, plus interest on the amount of such repayment
at the rate provided in Section 1274(b)(2)(B) of the Code.
Notwithstanding the foregoing, in the event any portion of the Tax
Reimbursement Payment to be refunded to the Company has been paid to
any Federal, state or local tax authority, repayment thereof shall not
be required until actual refund or credit of such portion has been
made to the Executive, and interest payable to the Company shall not
exceed interest received or credited to the Executive by such tax
authority for the period it held such portion. The Executive and the
Company .shall mutually agree upon the course of action to be pursued
(and the method of allocating the expenses thereof) if the Executive's
good faith claim for refund or credit is denied.
In the event that the Excise Tax is later determined by the
Accountants or pursuant to any proceeding or negotiations with the
Internal Revenue Service to exceed the amount taken into account
hereunder at the time the Tax Reimbursement Payment is made
(including, but not limited to, by reason of any payment the existence
or amount of which cannot be determined at the time of the Tax
Reimbursement Payment), the Company shall make an additional Tax
Reimbursement Payment in respect of such excess (plus any interest or
penalty payable with respect to such excess) at the time that the
amount of such excess is finally determined.
(v) The Tax Reimbursement Payment (or portion thereof) provided
for in Section 7(e)(i) above shall be paid to the Executive not later
than 10 business
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days following the payment of the Covered Payments; provided, however,
that if the amount of such Tax Reimbursement Payment (or portion
thereof) cannot be finally determined on or before the date on which
payment is due, the Company shall pay to the Executive by such date an
amount estimated in good faith by the Accountants to be the minimum
amount of such Tax Reimbursement Payment and shall pay the remainder
of such Tax Reimbursement Payment (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined, but in no event later than 45 calendar days
after payment of the related Covered Payment. In the event that the
amount of the estimated Tax Reimbursement Payment exceeds the amount
subsequently determined to have been due, such excess shall constitute
a loan by the Company to the Executive, payable on the fifth business
day after written demand by the Company for payment (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code).
8. Non-exclusivity of Rights. Except as expressly provided herein,
nothing in this Agreement shall prevent or limit the Executive's continuing
or future participation in any benefit, bonus, incentive or other plan or
program provided by the Company or any of its affiliated companies and for
which the Executive may qualify, nor shall anything herein limit or
otherwise prejudice such lights as the Executive may have under any other
agreements with the Company or any of its affiliated companies, including
employment agreements or stock option agreements. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any
plan or program of the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with
such plan or program.
9. No Offset. 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 circumstances, including, without limitation,
any set-off, counterclaim, recoupment, defense or other right which the
Company may have against the Executive or others whether by reason of the
subsequent employment of the Executive or otherwise.
10. Legal Fees and Expenses. If the Executive asserts any claim in any
contest (whether initiated by the Executive or by the Company) as to the
validity, enforceability or interpretation of any provision of this
Agreement, the Company shall pay the Executive's legal expenses (or cause
such expenses to be paid) including, without limitation, his reasonable
attorney's fees, on a quarterly basis, upon presentation of proof of such
expenses in a form acceptable to the Company, provided that the Executive
shall reimburse the Company for such amounts, plus simple interest thereon
at the 90-day United States Treasury Xxxx rate as in effect from time to
time, compounded annually, if
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the arbitrator referred to in Section 13(b) or a court of competent
jurisdiction shall find that the Executive did not have a good faith and
reasonable basis to believe that he would prevail as to at least one
material issue presented to such arbitrator or court.
11. Confidential Information, Company Property; By and in
consideration of the salary and benefits to be provided by the Company
hereunder, including the severance arrangements set forth herein, the
Executive agrees that:
(a) Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or
any of its affiliated companies, and their respective businesses, (i)
obtained by the Executive during his employment by the Company or any
of its affiliated companies and (ii) not otherwise public knowledge
(other than by reason of an unauthorized act by the Executive). After
termination of the Executive's employment with the Company, the
Executive shall not, without the prior written consent of the Company,
unless compelled pursuant to an order of a court or other body having
jurisdiction over such matter, communicate or divulge any such
information, knowledge or data to anyone other than the Company and
those designated by it.
(b) Nonsolicitation of Employees. The Executive agrees that for
two years after the Date of Termination, he will not attempt, directly
or indirectly, to induce any employee of the Company, or any
subsidiary or any affiliate thereof to be employed or perform services
elsewhere or otherwise to cease providing services to the Company, or
any subsidiary or affiliate thereof.
(c) Company Property. Except as expressly provided herein,
promptly following the Executive's termination of employment, the
Executive shall return to the Company all property of the Company and
all copies thereof in the Executive's possession or under his control.
(d) Injunctive Relief and Other Remedies with Respect to
Covenants. The Executive acknowledges and agrees that the covenants
and obligations of the Executive with respect to confidentiality and
Company property relate to special, unique and extraordinary matters
and that a violation of any of the terms of such covenants and
obligations will cause the Company irreparable injury for which
adequate remedies are not available at law, Therefore, the Executive
agrees that the Company shall be entitled to an injunction,
restraining order or such other equitable relief (without the
requirement to post bond) restraining Executive from committing any
violation of the covenants and obligations contained in this Section
11 These remedies are cumulative and are in addition to any other
rights and remedies the Company may have at law or in equity. In no
event shall
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an asserted violation of the provisions of this Section 11 constitute
a basis for deferring or withholding any amounts otherwise payable to
the Executive under this Agreement.
12. 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.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors. The Company shall require any successor to
all or substantially all of the business and/or assets of the Company,
whether direct or indirect, by purchase, merger, consolidation, acquisition
of stock, or otherwise, by an agreement in form and substance satisfactory
to the Executive, expressly to assume and agree 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.
13. Miscellaneous. (a) Applicable Law. This Agreement shall be
governed by and construed in accordance with the laws of the States of New
York, applied without reference to principles of conflict of laws.
(b) Arbitration. Except to the extent provided in Section 11(c), any
dispute or controversy arising under or in connection with this Agreement
shall be resolved by binding arbitration. The arbitration shall be held in
the city of White Plains, New York and, except to the extent inconsistent
with this Agreement, shall be conducted in accordance with the Expedited
Employment Arbitration Rules of the American Arbitration Association then
in effect at the time of the arbitration (or such other rules as the
parties may agree to in writing), and otherwise in accordance with
principles which would be applied by a court of law or equity. The
arbitrator shall be acceptable to both the Company and the Executive. If
the parties cannot agree on an acceptable arbitrator, the dispute shall be
heard by a panel of three arbitrators, one appointed by each of the parties
and the third appointed by the other two arbitrators.
(c) Amendments. 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.
(d) Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the matters referred to herein.
No other agreement relating to the terms of the Executive's employment by
the Company, oral or otherwise, shall be binding between the parties unless
it is in writing and signed by the party against whom enforcement is
sought. There are no promises, representations,
16
inducements or statements between the parties other than those that are
expressly contained herein. The Executive acknowledges that he is entering
into t1ris Agreement of his own free will and accord, and with no duress,
that he has read this Agreement and that he understands it and its legal
consequences.
(e) Notices. 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: at the home address of the Executive noted
on the records of the Company
If to the Company: MBIA Inc.
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attn.: Secretary
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.
(f) Tax Withholding. The Company shall 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.
(g) Severability; Reformation. In the event that one more of the
provisions of this Agreement shall become invalid, illegal or unenforceable
in any respect, the validity, legality, and enforceability of the remaining
provisions contained herein shall not be affected thereby. In the event
that any of the provisions of any of Section 11 (a) are not enforceable in
accordance with its terms, the Executive and the Company agree that such
Section shall be reformed to make such Section enforceable in a manner
which provides the Company the maximum rights permitted at law.
(h) Waiver. Waiver by any party hereto of any breach or default by the
other party of any of the terms of this Agreement shall not operate as a
waiver of any other breach or default, whether similar to or different from
the breach or default waived. No waiver of any provision of this Agreement
shall be implied from any course of dealing between the parties hereto or
from any failure by either party hereto to assert its or his rights
hereunder on any occasion or series of occasions.
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(i) Survival. The provisions of Section 7(c)(iii) (and so much of
Section 7(d) as provides a benefit identical to that payable under such
Section 7(c)(iii)) shall survive the termination of the Employment Period
hereunder and shall be binding upon and enforceable against the Company in
accordance with its terms. In the event, that any dispute arises with
respect to the Executive's entitlement to such enhanced retirement
benefits, the dispute resolutions provisions contained in Section 13(b) and
the legal fees provision contained in Section 10 shall also survive the end
of the Employment Period and shall be applied as though the dispute arose
within the Employment Period.
(j) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
(k) Captions. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Company has caused this Agreement to be executed in its name on its behalf,
and its corporate seal to be hereunto affixed and attested by its
Secretary, all as of the day and year first above written.
MBIA Inc.
/s/ Xxxxx X. Xxxxxxx
--------------------------
By:
Title: Chairman
EXECUTIVE:
/s/ [ILLEGIBLE]
--------------------------
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