AGREEMENT, is made
effective January 1, 2007 (the “Effective Date’)
and entered into as of the 9 th day of January, 2007 by and between NYMAGIC,
INC., a New York corporation (together with its successors and
assigns, the “Company”), and George R. Trumbull, III
(the “Executive”).
WHEREAS, the
Company desires to continue to employ the Executive pursuant to an
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:
The
term of the Executive’s employment under this Agreement shall
commence on the Effective Date and end on December 31, 2007
(the “Term of Employment”), unless terminated earlier
in accordance herewith.
2.
Position, Duties and Responsibilities .
(a)
Generally . The Executive shall serve as Chairman 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 to
the Board. The Executive shall have and perform such duties,
responsibilities, and authorities as are customary for the Chairman
of corporations of similar size and businesses as the Company as
they may exist from time to time and as are consistent with such
position and status. The Executive shall devote approximately
twenty (20) hours per week and his best efforts, abilities,
experience, and talent to the position of Chairman of the Company.
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.
The
Executive shall be paid an annualized salary, payable in accordance
with the regular payroll practices of the Company, of $250,000
(“Base Salary”).
4. Annual
Incentive Awards .
The
Executive shall participate in the Company’s annual incentive
compensation plan with a target Annual Incentive Award opportunity
of 50% of Base Salary and a maximum Annual Incentive Award
opportunity of 100% 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.
5.
Long-Term Incentive Program .
(a)
Grant of Restricted Shares . On the date of the execution of
this Agreement the Executive shall be granted 5,000 Restricted
Shares under the LTIP, which shall vest on December 31, 2007,
contingent upon the Executive’s continued employment with the
Company on that date (the “Restricted Share
Grant”).
6.
Employee Benefit Programs .
(a)
General Benefits . During the Term of Employment as
Chairman, 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
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Executive to
pay the 1.45% Medicare tax imposed on his wages in excess of such
FICA maximum taxable wage base.
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
position set forth in Section 2(a) are then vacant and
(iii) the Company requests in writing that he resume such
position, he may elect to resume such position by written notice to
the Company within 15 days after the Company delivers its
request. If he resumes such position, 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 position, 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 position 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 position 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 position 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 position 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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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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(vi)
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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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(vii)
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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)
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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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;
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(viii)
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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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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.
“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
removal of the Executive from or any failure to elect or re-elect
or, as the case may be, nominate the Executive 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 Chairman of the Company;
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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, or Hartford
Connecticut.
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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 Control . The Term of
Employment shall be terminated immediately upon a Change of Control
(as defined below). In the event the Executive’s employment
with the Company is terminated due to a Change of Control, 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 the
Change of Control, which shall be paid in a single lump sum
15 days following the date of the Executive’s
termination of employment;
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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 Change of Control occurs, which shall be payable in a
lump sum on the first day following the six month anniversary of
the Executive’s termination of employment;
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(iii)
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elimination of all restrictions on
any Restricted Share Grants or deferred stock awards outstanding on
the date of the Change of Control;
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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
provided in any stock option award agreement to which the Executive
is a party;
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(v)
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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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(vi)
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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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(vii)
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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 “Change
in Control” shall be deemed to have occurred if:
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(i)
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any
Person (other than the Company, any trustee or other fiduciary
holding securities under any employee benefit plan of the Company,
or any company owned, directly or indirectly, by the stockholders
of the Company immediately prior to the occurrence with respect to
which the evaluation is being made in substantially the same
proportions as their ownership of the common stock of the Company)
becomes the Beneficial Owner (except that a Person shall be deemed
to be the Beneficial Owner of all shares that any such Person has
the right to acquire pursuant to any agreement or arrangement or
upon exercise of conversion rights, warrants or options or
otherwise, without regard to the sixty day period referred to in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company or any Significant Subsidiary (as defined
below), representing 50% or more of the combin
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