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EXHIBIT
10.13
CHANGE IN CONTROL
SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL
SEVERANCE AGREEMENT (this “ Agreement ”) is made
by and between Assurant, Inc. (the “ Company ”)
and Michael Peninger (the “ Executive ”), an
officer of the Assurant Employee Benefits Division (as defined in
Section 1(d) below), and is effective as of the 1st day of
January, 2005.
The Executive’s
Multiplier (as defined in Section 1(f) below) is 3.
The Board of Directors of the
Company (the “ Board ”), has determined that it
is in the best interests of the Company and its shareholders to
assure that the Company will have the continued dedication of
Executive, notwithstanding the possibility, threat or occurrence of
a Change in Control (as defined below) of the Company. The Board
believes it is imperative to diminish the inevitable distraction of
Executive by virtue of the personal uncertainties and risks created
by a pending or threatened Change in Control and to encourage
Executive’s full attention and dedication to the Company
currently and in the event of any threatened or pending Change in
Control, and to provide Executive with compensation and benefits
arrangements upon a Change in Control which ensure that the
compensation and benefits expectations of Executive will be
satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives,
the Board has caused the Company to enter into this
Agreement.
IN CONSIDERATION OF THE
MUTUAL PROMISES SET FORTH HEREIN, THE PARTIES AGREE AS
FOLLOWS:
| 1. |
Certain Definitions . Each of the following terms, when
used in this Agreement, has the meaning set forth
below: |
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(a) |
“ Agreement Term ” means the period of time
beginning on the date of this Agreement and ending on
December 31, 2005, unless this Agreement has been previously
terminated as provided in Section 10(f). The Company may in
its complete and sole discretion, at any time and from time to
time, extend the Agreement Term by giving a written notice to the
Executive; provided, however, that if an agreement has been
executed by the Company or any of its affiliates that contemplates
a transaction that will be a Change in Control when consummated,
the Agreement Term will be automatically extended until the earlier
of the date of such consummation or the termination of such
agreement prior to any such consummation. |
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(b) |
“ Change in Control ” means any one of the
following events: |
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(i) |
individuals
who, on the date of this Agreement, constitute the Board of
Directors of the Company (the “ Incumbent Directors
”)
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cease for any reason to
constitute at least a majority of such Board, provided that any
individual becoming a director after the date of this Agreement and
whose election or nomination for election was approved by a vote of
at least a majority of the Incumbent Directors then on the Board
shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the
Company as a result of an actual or threatened election contest
with respect to the election or removal of directors (“
Election Contest ”) or other actual or threatened
solicitation of proxies or consents by or on behalf of any Person
other than the Board (“ Proxy Contest ”),
including by reason of any agreement intended to avoid or settle
any Election Contest or Proxy Contest, shall be deemed an Incumbent
Director; or
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(ii) |
any Person becomes, after the date of this Agreement, a
“beneficial owner” (as defined in Rule 13d-3 under the
1934 Act) of either (A) 30% or more of the then outstanding
shares of common stock of the Company (“ Company Common
Stock ”) or (B) securities of the Company
representing 30% or more of the combined voting power of the
Company’s then outstanding securities entitled to vote for
the election of directors (the “ Company Voting
Securities ”); provided, however, that for purposes of
this subsection 1(b)(ii), the following acquisitions of Company
Common Stock or Company Voting Securities shall not constitute a
Change in Control: (1) an acquisition directly from the
Company; (2) an acquisition by the Company or a Subsidiary of
the Company; (3) an acquisition by a Person who is on the date
of this Agreement the beneficial owner, directly or indirectly, of
50% or more of the Company Common Stock or the Company Voting
Securities; (4) an acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any
Subsidiary of the Company; or (5) an acquisition pursuant to a
Non-Qualifying Transaction (as defined in subsection 1(b)(iii)
below); or |
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(iii) |
the
consummation of a reorganization, merger, consolidation, statutory
share exchange or similar form of corporate transaction involving
the Company or a Subsidiary (a “ Reorganization
”), or the sale or other disposition, directly or indirectly,
of all or substantially all of the Company’s assets (a
“ Sale ”) or the acquisition of assets or stock
of another corporation (an “ Acquisition ”),
unless immediately following such Reorganization, Sale or
Acquisition: (1) all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
outstanding Company Common Stock and outstanding Company Voting
Securities immediately prior to such Reorganization, Sale or
Acquisition beneficially own, directly or indirectly, more
than
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60% of, respectively, the
then outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such Reorganization, Sale or Acquisition
(including, without limitation, a corporation that as a result of
such transaction owns the Company or all or substantially all of
the Company’s assets or stock either directly or through one
or more subsidiaries, the “ Surviving Corporation
”) in substantially the same proportions as their ownership
immediately prior to such Reorganization, Sale or Acquisition of
the outstanding Company Common Stock and the outstanding Company
Voting Securities, as the case may be; and (2) no Person
(other than (A) the Company or any Subsidiary of the Company,
(B) the Surviving Corporation or its ultimate parent
corporation, or (C) any employee benefit plan (or related
trust) sponsored or maintained by any of the foregoing) is the
beneficial owner, directly or indirectly, of 30% or more of the
total common stock or 30% or more of the total voting power of the
outstanding voting securities eligible to elect directors of the
Surviving Corporation, and (3) at least a majority of the
members of the board of directors of the Surviving Corporation were
Incumbent Directors at the time of the Board’s approval of
the execution of the initial agreement providing for such
Reorganization, Sale or Acquisition (any Reorganization, Sale or
Acquisition that satisfies all of the criteria specified in (1),
(2) and (3) above shall be deemed to be a “
Non-Qualifying Transaction ”); or
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(iv) |
approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company; or |
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(v) |
Fortis acquires any additional Company Common Stock or Company
Voting Securities without approval of the Assurant, Inc. board of
directors; or |
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(vi) |
Any event that results in the Division no longer being
controlled, directly or indirectly, by Assurant, Inc.; provided,
however, that (1) a sale of the Division’s investment
assets in the ordinary course of business, including, without
limitation, any sale of assets in connection with financial
reinsurance shall not be a Change in Control; (2) the
liquidation, termination of operations or other winding down of the
Division shall not be a Change in Control; and (3) the final
and binding determination of whether a Change in Control of the
Division has occurred for purposes of this Agreement shall be made
by the Board of Directors of the Company acting in good
faith. |
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For purposes of determining
whether a Change in Control has occurred pursuant to
Section 1(b)(iii), the assets of the Company shall not include
any assets that the Company is required to maintain on its
consolidated GAAP balance sheet that are the subject of reinsurance
ceded to third parties and result in an approximate offsetting
liability on such balance sheet.
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(c) |
“ Disability ” has the same meaning as
provided in the long-term disability plan or policy maintained by
the Company or if applicable, most recently maintained, by the
Company or if applicable, an affiliate of the Company, for the
Executive, whether or not the Executive actually receives
disability benefits under such plan or policy. If no long-term
disability plan or policy was ever maintained on behalf of the
Executive, Disability means Permanent and Total Disability as
defined in Section 22(e)(3) of the Code. In the event of a
dispute, the determination whether the Executive is Disabled will
be made by the Board and may be supported by the advice of a
physician competent in the area to which such Disability
relates. |
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(d) |
“ Fortis ” means Fortis SA/NV, a public
company established as a societe anonyme/naamloze vennootschap
under the laws of Belgium, and Fortis N.V., a public company
established as a naamloze vennootschap under the laws of The
Netherlands, and their affiliates other than the Company and its
Subsidiaries. |
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(e) |
“ GAAP ” means U.S. generally accepted
accounting principles consistently applied. |
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(f) |
“ Multiplier ” means the number set forth in
the second paragraph of this Agreement; provided however, that if
the Executive has, prior to the CIC Date, publicly announced his or
her Retirement or voluntary termination of employment, the
Multiplier will be a fraction with the numerator equal to the
remaining whole or partial months between the Date of Termination
of employment and the effective date of such announced Retirement
or voluntary termination of employment, and with the denominator
equal to 12, but in no event shall such fraction be equal to a
number greater than the number set forth in the second paragraph of
this Agreement. |
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(g) |
“ Person ” means any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act). |
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(h) |
“ Retirement ” means retirement as defined
in the Company’s then-current tax qualified defined benefit
pension plan, or if there is no such retirement plan, Retirement
means voluntary termination of employment after age 55 with ten or
more years of service, or after age 65 with five or more years of
service. |
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(i) |
“ Subsidiary ” means any corporation,
limited liability company, partnership or other entity of which a
majority of the outstanding voting stock or voting power is
beneficially owned directly or indirectly by the
Company. |
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(j) |
“ 1934 Act ” means the Securities Exchange
Act of 1934, as amended from time to time. |
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(k) |
Each of the following terms is defined in the Section
indicated: |
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Term
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Section |
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Accounting Firm
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8(b) |
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Accrued Obligations
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4(a)(i)(A)(3) |
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Base Salary
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4(a)(i)(A)(1) |
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Board
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3rd Paragraph |
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Cause
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3(b) |
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CIC Date
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2 |
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Code
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3(d) |
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Company Common Stock
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1(b)(ii) |
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Company Voting Securities
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1(b)(ii) |
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Date of Termination
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3(e) |
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Deferred Compensation
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4(g) |
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Disability Effective Date
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3(a) |
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Election Contest
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1(b)(i) |
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Employer Affiliate
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10(i) |
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Excise Tax
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8(a) |
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Good Reason
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3(c) |
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Gross-Up Payment
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8(a) |
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Incumbent Directors
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1(b)(i) |
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Non-Qualifying Transaction
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1(b)(iii) |
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Notice of Termination
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3(d) |
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Other Benefits
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4(a)(iii) |
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Payment
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8(a) |
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Post-CIC Period
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2 |
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Proxy Contest
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1(b)(i) |
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Rabbi Trust
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4(h) |
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Release
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10(h) |
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Severance
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4(a)(i)(B) |
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Surviving Corporation
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1(b)(iii) |
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Target Bonus
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4(a)(i)(A)(2) |
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Underpayment
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8(b) |
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Welfare Benefits
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4(a)(ii) |
| 2. |
Post-CIC
Period . If the Executive is employed by the Company
immediately prior to the first date during the Agreement Term on
which a Change in Control
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occurs (the “ CIC
Date ”), then the Executive’s employment during the
two-year period beginning on the CIC Date and ending on the second
anniversary of such date (the “ Post-CIC Period
”) shall be subject to all the terms and conditions of this
Agreement, including, without limitation, the termination events
described in Section 3 below.
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| 3. |
Termination of Employment During Post-CIC Period
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(a) |
Death, Retirement or Disability . During the Post-CIC
Period, the Executive’s employment shall terminate
automatically upon the Executive’s death or Retirement. If
the Company determines in good faith that the Disability of the
Executive has occurred during the Post-CIC Period, the Company may,
in its discretion, give the Executive a written notice in
accordance with Section 10(b) of this Agreement of the
Company’s intention to terminate the Executive’s
employment. In such event, the Executive’s employment with
the Company shall terminate effective on the 30th day after receipt
of such notice by the Executive (the “ Disability
Effective Date ”). |
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(b) |
Cause . The Company may terminate the Executive’s
employment during the Post-CIC Period with or without Cause. For
purposes of this Agreement, “ Cause ” means
either of the following circumstances: |
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(i) |
Failure to Perform . The willful and continued failure
of the Executive to perform substantially the Executive’s
reasonably assigned duties with the Company (other than any such
failure resulting from incapacity due to physical or mental illness
or from the assignment to the Executive of duties that would
constitute Good Reason under Section 3(c)), which failure
continues for a period of at least 30 days after a written demand
for substantial performance is delivered to the Executive by the
Board or the Chief Executive Officer of the Company. Such written
demand must specifically identify the manner in which the Board or
Chief Executive Officer believes that the Executive has not
substantially performed the Executive’s duties; provided,
however, that no failure to perform by the Executive after a Notice
of Termination is given to the Company by the Executive shall
constitute Cause for purposes of this Agreement. |
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(ii) |
Engaging in Illegal Conduct or Gross Misconduct . The
willful engaging by the Executive in illegal conduct or gross
misconduct that is materially and demonstrably injurious to the
Company. |
For purposes of this
Section 3(b), no act or failure to act, on the part of the
Executive, shall be considered “willful” unless it is
done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the
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Executive’s action or
omission was in the best interests of the Company. Any act, or
failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of a senior
officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be
done, by the Executive in good faith and in the best interests of
the Company. The cessation of employment of the Executive shall not
be deemed to be for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by
the affirmative vote of not less than a majority of the entire
membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board), finding that, in the good
faith opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail.
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(i) |
The Executive’s employment may be terminated by the
Executive during the Post-CIC Period for Good Reason or for no
reason. For purposes of this Agreement, “ Good Reason
” means any of the following circumstances: |
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(1) |
Diminution of Position . The assignment to the Executive
of any duties materially inconsistent with the Executive’s
position immediately prior to the CIC Date (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities, or any other action by the Company which results
in a material diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive. |
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(2) |
Reduction of Compensation. Any material reduction in the
aggregate value of the Executive’s annual base salary,
short-term cash bonus target amount, long-term incentive plan
target amount, and Company-provided welfare benefits, all as in
effect immediately prior to the CIC Date, , or any failure by the
Company to pay any such amount to the Executive as earned by the
Executive. An inadvertent failure by the Company to make any
payment of compensation to the Executive that does not occur in bad
faith and that is remedied by the Company promptly after the
Company receives notice thereof from the Executive, is excluded
from the definition of “Good Reason.” |
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(3) |
Employment Location. The Company or an affiliate thereof
requiring the Executive to be based at any location that is more
than fifty (50) miles from the location at which the Executive
is based immediately prior to the CIC Date. |
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(4) |
Other Termination. Any purported termination by the
Company of the Executive’s employment other than as expressly
permitted by this Agreement. |
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(5) |
Breach by the Company . Any material breach by the
Company of any provision of this Agreement, including, without
limitation, Section 9(c). |
Good Reason shall not include
Executive’s death or Disability. Executive’s continued
employment shall not constitute consent to, or a waiver of rights
with respect to, any circumstance constituting Good Reason
hereunder. For purposes of this Section 3(c), any good faith
determination of "Good Reason" made by Executive shall be
conclusive.
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(ii) |
Notwithstanding the foregoing, “Good Reason” shall
not exist until after (1) the Executive has given the Company
written notice of the applicable event not later than 30 days after
the occurrence of such event, specifying in reasonable detail the
circumstances of the event and stating the Executive’s intent
to terminate his or her employment if not remedied, and
(2) the Company has not remedied such event within 30 days
after receipt of such notice; provided, however, that if the
specified event reasonably cannot be remedied within such 30-day
period, the Company commences reasonable steps within such 30-day
period to remedy such event and diligently continues such steps
thereafter until a remedy is effected, and the remedy is effected
within 60 days after the Company’s receipt of the
Executive’s notice, then such event shall not constitute
“Good Reason.” |
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(iii) |
Notwithstanding the foregoing, “Good Reason” shall
not exist if the Executive is offered employment with the Company
or an affiliate thereof, or if the Executive is offered employment
with the Surviving Corporation, and in either case such offer of
employment includes a position, compensation and employment
location that are consistent with the requirements of subsections
3(c)(i)(1), (2) and (3). |
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(d) |
Notice of Termination . Any termination by the Company
or by the Executive must be communicated by Notice of Termination
to the other party, and must be given in accordance with
Section 10(b) of this Agreement. For purposes of this
Agreement, a “ Notice of Termination ” means a
written notice that: |
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(i) |
indicates the specific termination provision in this Agreement
relied upon, and |
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(ii) |
to the extent applicable, 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 |
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(iii) |
if the Date of Termination is other than the date of receipt of
such notice, specifies the termination date (which date shall be
not more than 30 days after the giving of such notice, except as
provided in Section 3(c)(ii) above). |
If a dispute exists
concerning the provisions of this Agreement that apply to the
Executive’s termination of employment, the parties shall
pursue the resolution of such dispute with reasonable diligence.
Within five days of such a resolution, any party owing any payments
pursuant to the provisions of this Agreement shall make all such
payments together with interest accrued thereon at the rate
provided in Section 1274(b)(2)(B) of the Internal Revenue Code
of 1986, as amended (the “ !Code ”). If the
Executive or the Company fails to set forth in a Notice of
Termination any additional fact or circumstance that contributes to
a showing of Good Reason or Cause, but otherwise delivers a Notice
of Termination in accordance with this Agreement, such party will
not be precluded from asserting the additional fact or circumstance
in enforcing such party’s rights hereunder.
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(e) |
Date of Termination . “ Date of Termination
” means whichever of the following is applicable: |
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(i) |
If the Company terminates the Executive’s employment for
Cause, the Date of Termination shall be the date of receipt of the
Notice of Termination or any later date specified in such
Notice. |
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(ii) |
If the Company terminates the Executive’s employment
other than for Cause or Disability, the Date of Termination shall
be the date on which the Company notifies the Executive of such
termination or any later date specified in such notice. |
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(iii) |
If the Executive’s employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of
death of the Executive or the Disability Effective
Date. |
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(iv) |
If the Executive terminates his or her employment for Good
Reason, the Date of Termination shall be in accordance with
Section 3(c)(ii) of this Agreement. |
| 4. |
Obligations of the Company upon Termination
. |
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(a) |
Good Reason; Other Than for Cause or Disability . If,
during the Post-CIC Period, the Company terminates the
Executive’s employment other than for Cause or Disability, or
the Executive terminates his or her employment for Good Reason,
then in consideration of Executive’s services rendered prior
to such termination all of the following shall take
place: |
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A. |
Current Compensation . The Company shall pay to the
Executive in a lump sum in cash within 30 days after the Date of
Termination the sum of: |
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(1) |
the Executive’s annual base salary as in effect
immediately prior to the CIC Date (“ Base Salary
”) through the Date of Termination to the extent not
theretofore paid, |
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(2) |
the product of (x) the Executive’s target annual
bonus under the Company’s short-term incentive bonus plan for
the year in which the Date of Termination occurs (the “
Target Bonus ”) and (y) a fraction, the numerator
of which is the number of days in the current fiscal year of the
Division through the Date of Termination, and the denominator of
which is 365, and |
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(3) |
any accrued vacation pay to the extent not theretofore paid
(the sum of the amounts described |
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