EXHIBIT 10.27
AGREEMENT
THIS AGREEMENT is made as of the 3rd day of November, 1999 (the "Agreement"), by
and between Trenwick Group Inc., a Delaware corporation with a principal place
of business in Stamford, Connecticut (the "Company"), and James F. Billett, Jr.,
of 14 John Applegate Road, Redding, Connecticut 06896 ("Executive").
WHEREAS, the Executive is the Chairman, President and Chief Executive Officer
("Position") of the Company, a publicly traded holding company with operating
subsidiaries in the insurance and reinsurance business, reporting to, and
subject only to the direction and control of, the Board of Directors of the
Company (the "Board") and is a key employee of the Company and its subsidiaries;
WHEREAS, the Company believes that the maintenance of sound management is
essential to protecting and enhancing the business and operations of the Company
and is in the best interests of the Company and its shareholders and recognizes
that the possibility of a change of control raises uncertainty and questions
among its key employees that could result in, or lead to, the loss of such key
employees or their distraction from their duties, all to the detriment of the
Company and its shareholders;
WHEREAS, the Company wishes to assure that it will have the continued dedication
of the Executive as a key employee of the Company or one of its subsidiaries and
the continued availability of the Executive's advice, counsel and services,
notwithstanding the possibility, threat or actual occurrence of a change of
control of the Company, and to induce the Executive to remain as a key employee
of the Company or one of its subsidiaries; and
WHEREAS, the Executive is willing to continue to be employed by the Company and
its subsidiaries in his Position, taking into consideration the terms and
conditions of this Agreement and, to induce the Company to make the agreements
and undertakings set forth in this Agreement, hereby agrees to the provisions in
Section 5 of this Agreement concerning, among other things, confidentiality,
trade secrets, non-solicitation and non-competition.
NOW, THEREFORE, in consideration of the mutual terms and covenants contained
herein, the receipt and sufficiency of which the parties acknowledge and accept,
the Company and the Executive hereby agree as follows:
1. DEFINITIONS.
For purposes of this Agreement,
(a) A "Change in Control" shall be deemed to have occurred upon the earliest to
happen of the following:
(A) The acquisition, in one or more transactions, of beneficial
ownership (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934 (the "Exchange Act") by any person or entity or
any group of persons or entities who constitute a group (within the
meaning of Rule 13d-3 of the Exchange Act), other than a trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or a subsidiary, of any securities of the Company if, as a
result of such acquisition, such person, entity or group either (i)
beneficially owns (within the meaning of Rule 13d-3 under the Exchange
Act), directly or indirectly, more than 20% of the Company's
outstanding voting securities entitled to vote on a regular basis for
a majority of the members of the Board or (ii) otherwise has the
ability to elect, directly or indirectly, a majority of the members of
the Board;
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(B) A change in the composition of the Board such that a majority of the
members of the Board are not Continuing Directors. A "Continuing
Director" means, as of any date of determination, any member of the
Board who (i) was a member of the Board on the date of this Agreement,
or (ii) was nominated and elected to such Board with the affirmative
vote of a majority of the Continuing Directors who were members of
the Board at the time of such nomination or election; or
(C) The stockholders of the Company approve (i) a merger or consolidation
of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 80% of the total voting
power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or (ii) a plan of complete liquidation of the Company
or an agreement for the sale or disposition by the Company (in one or
more transactions) of all or substantially all of the Company's
assets.
Notwithstanding the foregoing, the events in Section 1(a)(A)(i) or
Section 1(a)(C)(i) shall not be deemed a Change in Control if, prior
to any transactions constituting such change,a majority of the
Continuing Directors shall have voted not to treat such transaction or
transactions as resulting in a Change in Control; provided, however,
if any such transaction would be a Change of Control if 50% were
substituted for the 20% in Section 1(a)(A)(i) or for the 80% in
Section 1(a)(C)(i), then the written consent of the Executive
shall also be required.
(b) Cause: "Cause" shall mean: (A) the commission by the Executive
of any felonious act or any other criminal act involving moral
turpitude, dishonesty, theft or unethical business conduct, (B) the
willful and continued failure of the Executive to substantially
perform his duties (other than as a result of incapacity due to
physical or mental injury or illness) which duties the Executive has
been directed in writing to perform by the Board; (C) willful
misconduct or gross negligence by the Executive in the performance of
the Executive's duties, or (D) the failure of the Executive to comply
with the policies or procedures of the Company. No action or failure
to act by the Executive shall be considered "willful" if it is
determined by the Board to have been done by the Executive in good
faith and with the reasonable belief that the Executive's action or
omission is in the best interest of the Company.
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(c) Good Reason: "Good Reason" shall mean any of the following events,
provided that it occurs within the ninety (90) day period prior to
the date the Executive gives notice pursuant to Section 2(c) of
this Agreement:
(A) The position or responsibilities of the Executive are significantly
reduced (including, without limitation, the elimination of his
Position, a change in the reporting responsibilities of his Position,
a substantial reduction in the size of the Company or other
substantial change in the character or scope of the Company's
operations), or the Executive is assigned without his written consent
to any duties inconsistent with his Position with the Company
immediately prior to such assignment or the status and stature of
those with whom the Executive is asked to work or the position,
authority, responsibility or type of work or the working conditions
under which the Executive is assigned is inconsistent with, not
comparable to, or reduced in status or altered in nature from the
Executive's Position;
(B) The annual incentive compensation opportunity provided to the
Executive is eliminated or significantly reduced, the Executive's
participation level is reduced or the manner of assessing actual
performance is changed in a manner that results in the Executive
earning significantly less annual incentive compensation for a given
period than he or she would have for the same period absent such
change;
(C) The Executive's aggregate level of benefits under the Company's
benefit plans is significantly reduced;
(D) The Company fails to provide the Executive with benefits and
perquisites which are substantially similar in the aggregate to those
to which the Executive is entitled under the Company's benefit plans
in which the Executive was participating immediately prior to the
Change in Control, or fails to provide the Executive with directors'
or officers' insurance, as applicable, at least at the level
maintained immediately prior to the Change in Control;
(E) The Executive is required to change his regular work location to a
location that requires the Executive to commute a distance more
than 50 miles further from the Executive's principal place of
employment existing at the time of the Change in Control; or
(F) The Company fails to pay the Executive any amount otherwise vested
and due hereunder or under any plan or policy of the Company, or
fails to comply with any other provision of or perform any of its
other obligations under this Agreement.
(d) Date of Termination: "Date of Termination" shall mean (A) if the
Executive's employment is terminated by the Executive's death, the
date of the Executive's death, or by reason of the Executive's
Disability, the date all of the conditions to constitute a Disability
have occurred, (B) if the Executive's active employment is terminated
by the Company pursuant to Section 2(b), whether or not for Cause, the
date specified in the Notice of Termination, and (C) if the
Executive's active employment is terminated by the Executive pursuant
to Section 2(c) whether or not for Good Reason, the date which is ten
(10) business days after the date of receipt of the Executive's notice
of intention to terminate or such other date as may be agreed by
Executive and the Board. If Executive's active employment shall be
terminated pursuant to Section 2, Executive shall, following the Date
of Termination enter into a period of "Post Employment" to the extent
that he or she is entitled to benefits under this Agreement.
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(e) Protected Period: "Protected Period" shall mean the two year period
after the occurrence, during the term of this Agreement, of a Change
in Control.
(f) Disability: "Disability" shall have the same meaning as set forth in
the Company's long-term disability insurance policy providing
disability insurance for the Executive, as the same shall exist from
time to time.
(g) Notice of Termination: "Notice of Termination" shall mean written
notice of the termination of the Executive's active employment with
the Company either delivered to the Executive by the Company pursuant
to Section 2(b) or delivered to the Company by the Executive pursuant
to Section 2(c).
2. TERMINATION.
(a) Change in Control. The Executive shall be entitled to the benefits
provided in Section 3 hereof upon any termination of his active
employment with the Company and its subsidiaries within a Protected
Period, except a termination of active employment (i) because of his
death, (ii) because of a Disability, (iii) by the Company or its
subsidiaries for Cause, or (iv) by the Executive other than for Good
Reason. No amounts shall be payable under this Agreement if the
Executive's employment terminates outside of a Protected Period.
(b) Termination by Company.Any termination by the Board of the Executive's
active employment must, in order to be effective, be preceded by a
written Notice of Termination to the Executive indicating the Date of
Termination and the reasons therefor and, if the termination is for
Cause, the specific provision of Section 1(b) relied upon and setting
forth in reasonable detail the facts and circumstances supporting
termination for Cause. Nothing herein shall bar the Executive from
contesting the basis for his termination under this Section 2(b).
(c) Termination by Executive. Any termination by the Executive of his
active employment for Good Reason must, in order to be effective,
be preceded by a written Notice of Termination to the Company
indicating the specific provision of Section 1(c) relied upon and
setting forth in reasonable detail the facts and circumstances
supporting the termination under the provision so indicated. After
receipt of such Notice of Termination, the Company shall have ten (10)
business days from the date of receipt of such Notice of Termination
to cure the event described therein, and upon cure thereof by the
Company to the Executive's reasonable satisfaction, such event shall
no longer constitute "Good Reason" for purposes of this Agreement.
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3. COMPENSATION AND BENEFITS: POST EMPLOYMENT.
(a) Change in Control. If, within a Protected Period, the Executive's
employment by the Company and its subsidiaries shall be terminated (i)
by the Company and its subsidiaries other than for Cause and other
than because of a Disability or death, or (ii) by the Executive for
Good Reason, the Executive shall be entitled to the benefits provided
for below:
(A) Base Salary - The Executive shall continue, during Post
Employment, to receive base salary for three (3) years after the
Date of Termination, payable in installments on the Company's
normal payroll dates. For this purpose, base salary shall be the
current base salary of the Executive at the Date of Termination or
at the base salary at any time in the last twelve months, if
higher.
(B) Bonus - The Executive shall continue to receive a Bonus for three
(3) years after the Date of Termination and for the period of the
year elapsed prior to the Date of Termination, pro rated for the
portion of the year elapsed. Such amount shall be determined based
on the greater of the last annual performance bonus paid or the
average of the last two annual performance bonuses paid
immediately preceding the Executive's Date of Termination.
(C) Car Allowance - The Executive shall continue to receive a car
allowance for the 3- year period after the Executive's Date of
Termination. The amount of such allowance shall equal the amount,
if any, being received by the Executive as of the date of the
Change in Control.
(D) Medical & Dental, 401(k), Pension Plans and Supplemental Pension
Plans - The Executive shall continue to be treated as a
participant in all such plans in which the Executive shall have
been a participant on the date of the Notice of Termination, based
on then applicable and corresponding elections and contribution
rates, for the 3-year period commencing on the Executive's Date
of Termination. If such plans do not permit the Executives
continued participation, the tax-adjusted value the Executive
would have received shall be determined and paid by the Company
(outside of the plans). The Executive shall be allowed to change
the Executive's payment election under the terms of such
Supplemental Benefit Plan at the Executive's Date of Termination.
(E) Life & Disability Insurance - The Company shall continue to pay
the premium related to the Executive's life insurance and
long-term disability insurance for the 3-year period commencing on
the Executive's Date of Termination.
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(F) Benefits - The Executive shall be paid or be provided such other
benefits for which the Executive is otherwise eligible, if any,
under the terms of any employee benefit, incentive, option, stock
award or other plans or programs of the Company in which he may
be, or may have been, a participant and any unused vacation
time. All awards made to the Executive under such employee
benefit, incentive, option, stock award or other plans or programs
shall immediately vest and be payable and all restrictions shall
lapse. If such plans do not permit the Executive's continued
participation or immediate vesting, the tax-adjusted value the
Executive would have received shall be determined and paid by the
Company (outside of the plans).
(b) Other This Agreement shall not be considered a "change of control or
an employment agreement" for the purposes of the Trenwick Group Inc.
Merger Severance Policy adopted in connection with the merger of the
Company and Chartwell Re Corporation; provided, however, if there is a
Change of Control under this Agreement and the Executive is entitled
to benefits under Section 3(a) of this Agreement, then the Executive
shall not be covered by, or entitled to any benefits under, such
Merger Severance Policy.
4. EXCISE TAX.
It is the intention of this provision that the Executive receive a net amount,
after payment of all Excise Taxes (including Excise Taxes on any Excise Tax
Adjustment) equal to the aggregate compensation, benefits and other amounts
which gave rise to the Excise Tax.
(a) In the event that Executive receives or derives from the Company or
otherwise any compensation, benefit or any amount under any option
plan, performance plan, or incentive plan, which is determined to be
subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended, (the "Excise Tax"), then the
Executive shall be entitled to receive from the Company an Excise Tax
Adjustment Payment equal to the amount of all applicable U.S.federal,
state and local taxes (computed at the maximum marginal rates and
including interest penalties and any cost of contest or defense)
including Excise Tax imposed upon the Excise Tax Adjustment Payment.
The amount of the any Excise Tax Adjustment Payment to be made shall
be determined, at the Company's expense, by a nationally recognized
accounting firm acceptable to the Executive and the Company.
(b) The Executive shall notify the Company in writing promptly of any
written claim by the IRS that would require the payment of the Excise
Tax Adjustment Payment. The Company may elect, by notifying the
Executive in writing within thirty (30) days of its receipt of
Executive's notice, to contest such claim and/or to retain legal
counsel selected by the Company to represent the Executive. Such
contest will be at the Company's sole cost and expense and the Company
shall advance any amounts required to be paid in respect of such
Excise tax or the contest thereof. The Executive shall cooperate fully
with the Company in good faith including permitting the Company to
participate in any proceedings relating to such claim or contest and
giving the Company any information reasonably requested by the Company
relating to such claim or contest.
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(c) The Company shall be entitled to control all proceedings, conferences,
and appeals it may elect to take, but only with respect to the Excise
Tax, and may sue for a refund or contest the claim in any permissible
manner provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. The Executive shall promptly
pay to the Company the amount of any refund with respect to such
claim (together with any interest paid or credited thereon but after
payment by Executive of any taxes applicable thereto).
5. CONFIDENTIAL INFORMATION: COMPETITION.
Except as necessary or appropriate to the proper performance of the Executive's
duties, or with the prior written consent of the Company, or as ordered by a
court of competent jurisdiction, the Executive shall not at any time either
during the continuance of the Executive's employment or after its termination
disclose or communicate to any person or use for the Executive's own benefit or
the benefit of any person other than the Company or any subsidiary or affiliate
any information relating to the Company or any subsidiary or affiliate that is
not generally known to the public ("Confidential Information") which may come to
the Executive's knowledge in the course of the Executive's employment, and the
Executive shall during the continuance of the Executive's employment use the
Executive's best endeavors to prevent the unauthorized publication or misuse of
any Confidential Information, provided that such restrictions shall cease to
apply to any Confidential Information which may enter the public domain other
than through the fault of the Executive. During the term of this Agreement and
for a period of three (3) years after the Date of Termination, the Executive
agrees not to carry on or set up or be employed or engaged by or otherwise
assist in or be interested in any capacity (including without limitation as a
shareholder) in any State of the United States of America or in any foreign
country in which the Company or any subsidiary or affiliate thereof is
conducting business, any business materially competitive to that being carried
on by the Company or any subsidiary or affiliate thereof; provided, however,
that the ownership by the Executive for investment purposes (directly or through
nominees) of not more than 5% of the outstanding stock of any corporation which
is publicly held and traded shall not be deemed to be violation of this
Agreement. The Executive will not solicit, entice away, or otherwise encourage
any executive or other employee of the Company or its subsidiaries or affiliates
to leave his employment in order to join the Executive in any business endeavor,
nor shall the Executive aid, promote, encourage or be a party to any acts, the
effect of which would divert, diminish or prejudice the goodwill or business of
the Company or any of its subsidiaries or affiliates. The agreements by the
Executive in this Section 5 are intended to be separate and severable and
enforceable as such.
6. MERGER OR REORGANIZATION.
This Agreement shall not be terminated by the voluntary or involuntary
dissolution of the Company or by any merger or consolidation where the Company
is not the surviving or resulting corporation, or upon any transfer of all or
substantially all of the assets of the Company. In the event of any such merger
or consolidation or transfer of assets, the provisions of this Agreement shall
be binding and shall inure to the benefit of the Executive and the surviving or
resulting entity or the entity to which such assets shall be transferred. The
Company's successor, as the Executive's employer (whether such succession is
direct or indirect, by purchase, merger, consolidation or otherwise, to all or a
substantial portion of the business and/or assets of the Company), assumes and
agrees to perform this Agreement in the same manner and to the same extent as
the Company would be required to perform if no such succession had taken place.
As used in this Agreement, the term "Company" shall mean the Company and any
successor to all or a substantial portion of the Company's business or assets.
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7. ARBITRATION; JURY WAIVER.
Any controversy or claim arising out of or relating to this Agreement, the
breach thereof or the coverage of this arbitration provision shall be settled by
arbitration administered by the American Arbitration Association in accordance
with its Commercial Arbitration Rules in effect on the date of delivery of
demand for arbitration. The arbitration of such issues, including the
determination of the amount of any damages suffered by either party hereto by
reason of the acts or omissions of the other, shall be to the exclusion of any
court. The decision of the arbitrators shall be final and binding on the parties
and their respective heirs, executors, administrators, successors and assigns.
Judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction. There shall be three arbitrators, one to be chosen directly
by each party and the third arbitrator to be selected by the two arbitrators so
chosen. The arbitration shall be conducted in Stamford, Connecticut or at such
other location as agreed by the parties. All decisions and awards shall be made
by a majority of the arbitrators. Each party shall pay the fees and expenses of
that party's arbitrator and any representatives, witnesses and all other
expenses related to the presentation of that party's case. The cost of the third
arbitrator, the record or any transcripts, any administrative fees, and all
other fees and costs shall be borne equally by the parties.
By agreeing to arbitration under this Section, the Company and the Executive
understand that they are each waiving any right to a trial by jury and each
party makes that waiver knowingly and voluntarily with full consideration of the
ramifications of such waiver.
Nothing contained herein shall be construed or interpreted to preclude the
Company prior to, or pending the resolution of, any matter subject to
arbitration from seeking injunctive relief in any court for any breach or
threatened breach of any of the Executive's obligations in Section 5 hereof.
8. NON-ASSIGNABILITY.
The obligations of the Executive hereunder are personal and may not be
delegated, assigned or transferred by the Executive in any manner whatsoever,
nor are such obligations subject to involuntary alienation, assignment or
transfer.
9. AMENDMENT; TERMINATION.
This Agreement contains the entire agreement of the parties. It may not be
changed orally but only by a written agreement executed by the Executive and the
Board that expressly references this Agreement. This Agreement may be terminated
by the Board at any time upon one year's written notice to the Executive,
setting forth the date of termination of this Agreement. Notwithstanding such a
termination of this Agreement, this Agreement shall continue with respect to any
Change of Control that occurs during the term of this Agreement, until the end
of its Protected Period, but shall not apply to any Change of Control that
occurs after the date of termination of this Agreement.
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10. NOTICES.
All notices which a party is required or may desire to give to the other party
under or in connection with this Agreement shall be sufficient if given by hand
delivery or by addressing same to the other party as follows:
(a) if to the Executive, to:
James F. Billett Jr.
14 John Applegate Road
Redding CT 06896
(b) if to the Company, to:
Trenwick Group Inc.
One Canterbury Green
Stamford, CT 06901
Attn: Secretary
or at such other place as may be designed in writing by like notice. Any notice
shall be deemed to have been delivered when addressed as required herein and
deposited postage prepaid, in the United States Mail.
11. WAIVER; MODIFICATION.
No provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing that expressly
references this Agreement and is signed by the Executive and the Company. The
waiver by either party of any breach by the other party, or of compliance with,
any condition or provision of this Agreement to be performed by such other party
shall not be deemed a waiver of the same provisions or conditions at any other
time, nor shall it be deemed a waiver of any other provisions or conditions at
any time.
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12. SEVERABILITY.
The various Sections of this Agreement are severable, and if any Section or an
identifiable part thereof is held to be invalid or unenforceable by any court of
competent jurisdiction, then such invalidity or unenforceability shall not
affect the validity or enforceability of the remaining Sections or identifiable
parts thereof in this Agreement, and the parties hereto agree that the portion
so held invalid, unenforceable or void shall, if possible, be deemed amended or
reduced in scope, or otherwise be stricken from this Agreement, to the extent
required for the purposes of the validity and enforcement hereof.
13. CHOICE OF LAW.
The parties agree that Connecticut, as the place of contracting and where the
Company has its principal place of business, has a substantial relationship to
this Agreement and so the parties agree that this Agreement shall be governed by
the laws of the State of Connecticut, without reference to any conflict of law
rules.
14. SURVIVAL AND CONTINUATION OF AGREEMENT PROVISIONS.
The termination of the Executive's employment for any reason whatsoever shall
not operate to terminate this Agreement or otherwise adversely affect the
respective continuing rights and obligations of the parties, including those
under Sections 3, 4, 5, 7, 8, 9, 10, 11, 13 and 18 of this Agreement, all of
which shall survive the effective date of such termination of employment in
accordance with their respective terms.
15. ENTIRE AGREEMENT.
This Agreement sets forth the entire agreement between the parties with respect
to the subject matter hereof and supersedes any and all prior agreements between
the Company and the Executive, whether written or oral, relating to any or all
matters covered by, and contained or otherwise dealt with, in this Agreement. No
agreements or representations, oral or otherwise, express or implied, have been
made by either party with respect to the subject matter of this Agreement,
unless set forth expressly in this Agreement.
16. BENEFICIARIES; REFERENCES.
The Executive may select (and change, to the extent permitted under any
applicable law) a beneficiary or beneficiaries to receive any compensation or
benefit payable under this Agreement following the Executive's death, and may
change such election by giving the Company written notice thereof. In the event
of the Executive's death, Disability or a judicial determination of the
Executive's incompetence, all references in this Agreement to the Executive
shall be deemed, where appropriate, to refer to the Executive's named
beneficiary, estate or other legal representative.
17. ACTION OF THE BOARD.
Except for the reference in Section 1(a), any reference in this Agreement to the
Board shall include the Compensation Committee thereof and any officers of the
Company to which the Board or the Compensation Committee thereof has by
resolution delegated any explicit authority or responsibilities with respect to
this Agreement.
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18. TAX WITHHOLDINGS.
All payments to the Executive hereunder shall be subject to such withholding of
federal, state and local income and excise taxes and to such employment taxes as
may be reasonably determined by the Company to be required.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date set forth above.
TRENWICK GROUP INC.
By: /s/ John V. Del Col
---------------------------------
Name: John V. Del Col
Title: Senior Vice President,
General Counsel & Secretary
EXECUTIVE
/s/ James F. Billett,Jr.
------------------------------------
James F. Billett, Jr.
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