AGREEMENT, is made effective January 1,
2009 (the “Effective Date’) and entered into as of the
30th day of January 2009 by and between NYMAGIC, INC., a New
York corporation (together with its successors and assigns, the
“Company”), and A. George Kallop (the
“Executive”).
WHEREAS, the Company and the Executive entered
into an employment agreement, effective October 1, 2005, which by
its terms expired on December 31, 2008; and,
WHEREAS, the Company desires to continue to
employ the Executive pursuant to a new agreement embodying the
terms of such employment (this “Agreement”) and the
Executive desires to enter into this Agreement and to accept such
employment, subject to the terms and provisions of this
Agreement.
NOW, THEREFORE, in consideration of the premises
and mutual covenants contained herein and for other good and
valuable consideration, the receipt of which is mutually
acknowledged, the Company and the Executive (individually a
“Party” and together the “Parties”) agree
as follows:
(a) The term of the Executive’s
employment under this Agreement shall commence on the Effective
Date and end on December 31, 2010 (the “The Original
Term of Employment”), unless terminated earlier in accordance
herewith. The Original Term of Employment shall be automatically
renewed for successive one-year terms (the “Renewal
Terms”) unless at least 90 days prior to the expiration
of the Original Term of Employment or any Renewal Term, either
Party notifies the other Party in writing that he or it is electing
to terminate this Agreement at the expiration of the then current
Term of Employment. “Term of Employment” shall mean the
Original Term of Employment and all Renewal Terms.
(d) Notwithstanding anything in this
Agreement to the contrary, at least one year prior to the
expiration of the Original Term of Employment, upon the written
request of the Company or the Executive, the Parties shall meet to
discuss this Agreement and may agree in writing to modify any of
the terms of this Agreement.
2. Position,
Duties and Responsibilities .
(a) Generally . The Executive shall
serve as President and Chief Executive Officer and as a member of
the Board of Directors (the “Board”) of the Company.
For so long as he is serving on the Board, the Executive agrees to
serve as a member of any committee of the Board to which he is
elected. In any and all such capacities, the Executive shall report
only
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to the Board.
The Executive shall have and perform such duties, responsibilities,
and authorities as are customary for the president and chief
executive officer of corporations of similar size and businesses as
the Company as they may exist from time to time and as are
consistent with such positions and status. The Executive shall
devote substantially all of his business time and attention (except
for periods of vacation or absence due to illness), and his best
efforts, abilities, experience, and talent to the positions of
President and Chief Executive Officer and for the Company’s
businesses. In the event of termination of the Executive’s
employment under this Agreement, the Executive’s membership
on the Board and any committees thereof shall also be terminated
effective on the date of termination of Executive’s
employment.
(b) Other Activities . Anything herein to
the contrary notwithstanding, nothing in this Agreement shall
preclude the Executive from (i) serving on the boards of
directors of a reasonable number of other corporations or the
boards of a reasonable number of trade associations and/or
charitable organizations, (ii) engaging in charitable
activities and community affairs, (iii) managing his personal
investments and affairs, provided that such activities do not
materially interfere with the proper performance of his duties and
responsibilities under this Agreement and (iv) performing
consulting services for Mariner Partners, Inc. , or any of its
successors, affiliates, stockholders or members (collectively,
“Mariner”).
(c) Place of Employment . The
Executive’s principal place of employment shall be the
Company’s principal corporate office.
(d) Rank of the Executive Within
Company . As President and Chief Executive Officer of the
Company, the Executive shall be the Company’s highest-ranking
executive.
The Executive shall be paid an annualized
salary, payable in accordance with the regular payroll practices of
the Company, of not less than $525,000, subject to review for
increase at the discretion of the Compensation Committee (the
“Committee”) of the Board (“Base
Salary”).
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4. Annual
Incentive Awards .
The Executive shall participate in the
Company’s annual incentive compensation plan with a target
Annual Incentive Award opportunity of 75% of Base Salary and a
maximum Annual Incentive Award opportunity of 150% of Base Salary
(the “Annual Incentive Award”). Payment of the
Executive’s Annual Incentive Award shall be made within
2 months of the Company’s fiscal year-end, and all
amounts in excess of $200,000 shall be paid as an award of an
equivalent amount of Unrestricted Shares under the Company’s
2004 Amended and Restated Long-Term Incentive Plan (the
“LTIP”), valued at the closing price of the
Company’s stock on the New York Stock Exchange on the date of
such award.
5. Long-Term
Incentive Programs .
(a) Grant of Restricted Shares . On
the Effective Date, the Executive shall be granted 8,000 Restricted
Shares under the LTIP, which shall vest on December 31, 2009,
contingent upon the Executive’s continued employment with the
Company on that date. The Executive shall also be granted an
additional annual award of 8,000 Restricted Shares on
January 1, 2010, which shall vest on December 31, 2010,
contingent upon the Executive’s continued employment with the
Company on those dates (the “Restricted Share
Grants”).
(b) Grant of Performance Compensation
Units. On the Effective Date, the Executive shall be awarded
(i) a Standard Performance Compensation Award in the amount of
12,000 Performance Units for each of 2009 and 2010; and (ii) a
Supplemental Performance Compensation Award in the amount of 25,000
Performance Units, which Performance Compensation Awards shall be
subject to the achievement of certain performance criteria in
accordance with the terms of the LTIP and the Performance
Compensation Award Agreement to be entered into contemporaneously
herewith by the Company and the Executive (the “Performance
Compensation Awards”).
6. Employee
Benefit Programs .
(a) General Benefits . During the
Term of Employment as President and Chief Executive Officer, the
Executive shall be entitled to participate in such employee benefit
plans and programs of the Company as are made available to the
Company’s senior level executives or to its employees
generally, as such plans or programs may be in effect from time to
time, including, without limitation, health, medical, dental,
long-term disability, travel accident and life insurance
plans.
(b) Deferral of Compensation . The
Executive shall be permitted to elect to defer receipt, pursuant to
written deferral election terms and forms (the “Deferral
Election Forms”) consistent with Section 409A of the
Code, as hereinafter defined, of all or a specified portion of his
annual incentive compensation under Section 4 and his long
term incentive compensation under Section 5; provided,
however, that such deferrals shall not reduce the Executive’s
total cash compensation in any calendar year below the sum of
(i) the FICA maximum taxable wage base plus (ii) the amount
needed, on an after-tax basis, to enable the Executive to pay the
1.45% Medicare tax imposed on his wages in excess of such FICA
maximum taxable wage base.
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The Company and the Executive agree that
compensation deferred pursuant to this Section 6(b) shall be fully
vested and nonforfeitable; however, the Executive acknowledges that
his rights to the deferred compensation provided for in this
Section 6(b) shall be no greater than those of a general unsecured
creditor of the Company, and that such rights may not be pledged,
collateralized, encumbered, hypothecated, or liable for or subject
to any lien, obligation, or liability of the Executive, or be
assignable or transferable by the Executive, otherwise than by will
or the laws of descent and distribution, provided that the
Executive may designate one or more beneficiaries to receive any
payment of such amounts in the event of his death.
(a) During the Term of Employment, the
Executive shall be entitled to disability coverage as described in
this Section 7(a). In the event the Executive becomes
disabled, as that term is defined under the Company’s
Long-Term Disability Plan, the Executive shall be entitled to
receive pursuant to the Company’s Long-Term Disability Plan
or otherwise, and in place of his Base Salary, an amount equal to
60% (or at the rate then applicable) of his Base Salary, at the
annual rate in effect on the commencement date of his eligibility
for the Company’s long-term disability benefits
(“Commencement Date”) for a period beginning on the
Commencement Date and ending with the Executive’s attainment
of age 65. If (i) the Executive ceases to be disabled during
the Term of Employment (as determined in accordance with the terms
of the Long-Term Disability Plan), (ii) the positions set
forth in Section 2(a) are then vacant and (iii) the Company
requests in writing that he resume such positions, he may elect to
resume such positions by written notice to the Company within
15 days after the Company delivers its request. If he resumes
such positions, he shall thereafter be entitled to his Base Salary
at the annual rate in effect on the Commencement Date and, for the
year he resumes his positions, a pro rata Annual Incentive Award at
75% of Base Salary for such year. If he ceases to be disabled
during the Term of Employment and does not resume his positions in
accordance with the preceding sentence, he shall be treated as if
he voluntarily terminated his employment pursuant to Section 9(e)
as of the date the Executive ceases to be disabled. If the
Executive is not offered such positions after he ceases to be
disabled during the Term of Employment, he shall be treated as if
his employment was terminated Without Cause pursuant to Section
9(c) as of the date the Executive ceases to be disabled.
(b) The Executive shall be entitled to a
pro rata Annual Incentive Award at 75% of Base Salary for the year
in which the Commencement Date occurs, payable in accordance with
the terms of the annual incentive compensation plan and at the time
set forth in Section 4 hereof. The Executive shall not be
entitled to any Annual Incentive Award with respect to the period
following the Commencement Date. If the Executive recommences his
positions in accordance with Section 7(a), he shall be
entitled to a pro rata Annual Incentive Award at 75% of Base Salary
for the year he resumes such positions and shall thereafter be
entitled to Annual Incentive Awards in accordance with
Section 4 hereof.
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(c) During the period the Executive is
receiving disability benefits pursuant to Section 7(a) above, he
shall continue to be treated as an employee for purposes of all
employee benefits and entitlements in which he was participating on
the Commencement Date, including without limitation, the benefits
and entitlements referred to in Section 5 and 6 above, except
that the Executive shall not be entitled to receive any annual
salary increases or any new long-term incentive plan grants or
elect to defer compensation following the Commencement
Date.
8.
Reimbursement of Business and Other Expenses: Perquisites
.
(a) The Executive is authorized to incur
reasonable expenses in carrying out his duties and responsibilities
under this Agreement, and the Company shall promptly reimburse him
on a monthly basis for all such business expenses incurred in
connection therewith in the prior month, subject to documentation
in accordance with the Company’s policy.
9.
Termination of Employment .
(a) Termination Due to Death or
Disability . The Term of Employment shall be terminated
immediately upon the death or disability (as such term is defined
under the Company’s Long-Term Disability Plan) of the
Executive. In the event the Executive’s employment with the
Company is terminated due to his death or disability, the
Executive, his estate or his beneficiaries, as the case may be,
shall be entitled to and their sole remedies under this Agreement
shall be:
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(i)
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Base Salary through the date of
death or the Commencement Date, as the case may be, which shall be
paid in a single lump sum 15 days following the
Executive’s death or the Commencement Date, as the case may
be;
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(ii)
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pro
rata Annual Incentive Award at 75% of Base Salary for the year in
which the Executive’s death, or the Commencement Date, as the
case may be, occurs, which shall be payable in a lump sum
30 days after his death or on the first day following the
six-month anniversary of the Executive’s termination of
employment by reason of disability;
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(iii)
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elimination of all restrictions on
any Restricted Share Grants or deferred stock awards outstanding at
the time of his death, or the Commencement Date, as the case may
be;
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(iv)
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immediate vesting of all outstanding
stock options and the right to exercise such stock options as is
provided in any stock option award agreement to which the Executive
is a party;
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(v)
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immediate vesting of all outstanding
Performance Compensation Awards for which target performance has
been achieved through the date of death or the Commencement Date,
as the case may be, payable in a lump sum in cash or stock
30 days after his death or on the first day following the
six-month anniversary of the Executive’s termination of
employment by reason of disability, as the case may be;
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(vi)
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the
balance of any Annual Incentive Awards earned as of
December 31 of the prior year (but not yet paid), which shall
be paid in a single lump sum and in accordance with the terms of
such awards;
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(vii)
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settlement of all deferred
compensation arrangements in accordance with the Executive’s
duly executed Deferral Election Forms; and
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(viii)
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other or additional benefits then
due or earned, payable in accordance with applicable plans and
programs of the Company.
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(b)
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Termination by the Company for
Cause .
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(i)
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The
Term of Employment may be terminated by the Company for Cause.
“Cause” shall mean:
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(A)
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The
Executive’s willful and material breach of Sections 10,
11 or 12 of this Agreement;
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(B)
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The
Executive is convicted of a felony or pleads guilty or nolo
contendre to an offense that is a felony in the jurisdiction where
committed;
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(C)
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The
Executive engages in conduct that constitutes willful gross neglect
or willful gross misconduct in carrying out his duties under this
Agreement, resulting, in either case, in material harm to the
financial condition or reputation of the Company;
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(D)
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The
Executive’s failure to cooperate, if requested by the Board,
with any investigation or inquiry into his or the Company’s
business practices, whether internal or external, including, but
not limited to the Executive’s refusal to be deposed or to
provide testimony at any trial or inquiry;
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(E)
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The
Executive’s substantial and continued refusal to perform his
duties;
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(F)
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The
Executive’s violation of a material Company Policy;
and,
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(G)
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The
Executive engages in any act or series of acts that constitute
misconduct requiring a restatement of the Company’s financial
statements pursuant to the Sarbanes-Oxley Act of 2002.
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For purposes of
this Agreement, an act or failure to act on the Executive’s
part shall be considered “willful” if it was done or
omitted to be done by him not in good faith, and shall not include
any act or failure to act resulting from any incapacity of the
Executive.
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(ii)
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A
termination for Cause shall not take effect unless the provisions
of this paragraph (ii) are complied with. The Executive shall
be given written notice by the Company of its intention to
terminate him for Cause, such notice (A) to state in detail
the particular act or acts or failure or failures to act that
constitute the grounds on which the proposed termination for Cause
is based and (B) to be given within 90 days of the
Company’s learning of such act or acts or failure or failures
to act. The Executive shall have 20 days after the date that
such written notice has been given to him in which to cure such
conduct, to the extent such cure is possible. If he fails to cure
such conduct, the Executive shall then be entitled to a hearing
before the Board at which the Executive is entitled to appear. Such
hearing shall be held within 25 days of such notice to the
Executive, provided he requests such hearing within 10 days of
the written notice from the Company of the intention to terminate
him for Cause. If, within five days following such hearing, the
Executive is furnished written notice by the Board confirming that,
in its judgment, grounds for Cause on the basis of the original
notice exist, he shall thereupon be terminated for
Cause.
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(iii)
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In
the event the Company terminates the Executive’s employment
for Cause, he shall be entitled to and his sole remedies under this
Agreement shall be:
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(A)
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Base Salary through the date of the
termination of his employment for Cause, which shall be paid in a
single lump sum 15 days following the Executive’s
termination of employment;
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(B)
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any
Annual Incentive Awards earned as of December 31 of the prior
year (but not yet paid), which shall be paid in a single lump and
in accordance with the terms of such awards;
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(C)
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settlement of all deferred
compensation arrangements in accordance with the Executive’s
duly executed Deferral Election Forms; and
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(D)
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other or additional benefits then
due or earned, payable in accordance with applicable plans or
programs of the Company.
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(c) Termination Without Cause or
Constructive Termination Without Cause. Prior to a Change in
Control . In the event the Executive’s employment with
the Company is terminated without Cause (which termination shall be
effective as of the date specified by the Company in a written
notice to the Executive), other than due to death, or disability,
or in the event there is a Constructive Termination Without Cause
(as defined below), in either case prior to a Change in Control (as
defined below) the Executive shall be entitled to and his sole
remedies under this Agreement shall be:
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(i)
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Base Salary through the date of
termination of the Executive’s employment, which shall be
paid in a single lump sum 15 days following the Executive’s
termination of employment;
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(ii)
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Base Salary, at the annualized rate
in effect on the date of termination of the Executive’s
employment (or in the event a reduction in Base Salary is a basis
for a Constructive Termination Without Cause, then the Base Salary
in effect immediately prior to such reduction), continued for a
period of 12 months following such termination payable in 12
equal monthly installments beginning on the first day following the
six month anniversary after the date of the Executive’s
termination of employment (the 12 month period following
termination of employment is referred to as the “Severance
Period”);
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(iii)
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pro
rata Annual Incentive Award at 75% of Base Salary for the year in
which termination occurs, payable in a lump sum payable on the
first day following the six-month anniversary after the date of the
Executive’s termination of employment;
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(iv)
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elimination of all restrictions on
any Restricted Share Grants or deferred stock awards outstanding at
the time of termination of employment;
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(v)
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any
outstanding stock options, which are unvested, shall vest and the
Executive shall have the right to exercise any vested stock options
as provided in any stock option award agreement to which the
Executive is a party;
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(vi)
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immediate vesting of all outstanding
Performance Compensation Awards for which target performance has
been achieved through the date of termination, payable on the first
day following the six-month anniversary of the date of the
Executive’s termination of employment;
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(vii)
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the
balance of any Annual Incentive Awards earned as of
December 31 of the prior year (but not yet paid), which shall
be paid in a single lump sum and in accordance with the terms of
such awards;
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(viii)
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settlement of all deferred
compensation arrangements in accordance with the Executive’s
duly executed Deferral Election Forms;
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(ix)
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continued participation in all
medical, health and life insurance plans at the same benefit level
at which he was participating on the date of the termination of his
employment until the earlier of:
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(A)
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the
expiration of the Severance Period; or
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(B)
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the
date, or dates, he receives equivalent coverage and benefits under
the plans and programs of a subsequent employer;
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provided,
however, to the extent that any such benefits cannot be provided on
a non-taxable basis to the Executive and the provision thereof
would cause any part of the benefits to be subject to additional
taxes and interest under Section 409A of the Code, then the
provision of such benefits shall be deferred to the earliest date
upon which such benefits can be provided without being subject to
such additional taxes and interest; and,
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(x)
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other or additional benefits then
due or earned, payable in accordance with applicable plans and
programs of the Company.
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A termination without “Cause” shall
mean the Executive’s employment is terminated by the Company
for any reason other than Cause (as defined in Section 9(b))
or due to death or disability.
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“Constructive Termination Without
Cause” shall mean a termination of the Executive’s
employment at his initiative as provided in this Section 9(c)
following the occurrence, without the Executive’s written
consent, of one or more of the following events (except as a result
of a prior termination):
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(A)
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a
material diminution or change, adverse to the Executive, in the
Executive’s positions, titles, or offices as set forth in
Section 2(a), status, rank, nature of responsibilities, or
authority within the Company, or a removal of the Executive from or
any failure to elect or re-elect or, as the case may be, nominate
the Executive to any such positions or offices, including as a
member of the Board;
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(B)
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an
assignment of any duties to the Executive which are inconsistent
with his status as President and Chief Executive Officer of the
Company and other positions held under
Section 3(a);
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(C)
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a
decrease in annual Base Salary or target Annual Incentive Award
opportunity;
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(D)
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any
other failure by the Company to perform any material obligation
under, or breach by the Company of any material provision of, this
Agreement that is not cured within 30 days after receipt by
the Company of written notice thereof from the Executive;
or
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(E)
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a
relocation of the corporate offices of the Company outside a
35-mile radius of New York, New York.
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Notwithstanding anything to contrary contained
in this Agreement, a Constructive Termination Without Cause shall
not have occurred if the occurrence of an event which would
otherwise constitute Constructive Termination Without Cause under
this Agreement arises out of or in connection with any transaction
between the Company and Mariner.
(d) Termination Upon a Change
of
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