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Exhibit 10.3
EMPLOYMENT AGREEMENT
AGREEMENT, is made effective
January 1, 2007 (the "Effective Date’) and entered into
as of the 9th 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").
W I T N E S
S E T H:
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:
1. Term of
Employment.
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.
3. Base Salary .
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 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.
7. Disability .
(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.
(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
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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
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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
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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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9
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 combined voting power of the Company’s or such
subsidiary’s then outstanding securities;
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(ii)
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during any peri
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