Security Capital Assurance Ltd - 8K - 01/23/07
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
————————————
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of
1934
Date
of Report (Date of earliest event reported): January 23,
2007
————————————
SECURITY
CAPITAL ASSURANCE LTD
(Exact
name of registrant as specified in its charter)
————————————
|
Bermuda
|
001-32950
|
Not
applicable
|
|
(State
or other jurisdiction
of
incorporation)
|
(Commission
File Number)
|
(I.R.S.
Employer Identification No.)
|
One
Bermudiana Road, Hamilton, Bermuda HM 11
(Address
of principal executive offices)
Registrant’s
telephone number, including area code: (441) 292 8515
Not
Applicable
(Former
name or former address, if changed since last report)
————————————
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[
]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Item
5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On
January
23, 2007, the Registrant entered into an employment agreement with David P.
Shea
to serve as the Executive Vice President and Chief Financial Officer of the
Registrant.
The
employment agreement provides for (i) a specified base salary of not less than
$385,000 and is subject to annual review and may be increased by the
Registrant's Compensation Committee (the "Compensation Committee"), (ii) an
annual bonus pursuant to the Registrant's incentive compensation plan
as determined by the Compensation Committee with an annual target bonus equal
to
150% of his base salary, (iii) reimbursement for or payment of certain travel
expenses, and (iv) the right to participate in such other employee or fringe
benefit programs for senior executives as are in effect from time to time.
The
original term of employment is scheduled to expire on the third anniversary
of
the closing date of the initial public offering of the Registrant’s common stock
and will continue to be automatically extended for successive one year periods
unless the Registrant or Mr. Shea provides written notice that the term is
not
to be extended, as provided in the agreement. Mr. Shea has agreed to certain
confidentiality, noncompetition and nonsolicitation provisions. The Registrant’s
obligations under the employment agreement are guaranteed by SCA Holdings US
Ltd
and XL Financial Assurance Ltd.
The
employment agreement for Mr. Shea further provides that, in the event of the
termination of the his employment prior to the expiration date of the employment
agreement (after giving effect to any extensions thereof) by reason of death
or
disability, Mr. Shea (or in the case of death, Mr. Shea’s spouse or estate)
shall be entitled to receive his then current base salary through the end of
the
six month period commencing after the month in which the executive’s employment
is terminated and Mr. Shea (or his estate) shall be entitled to any annual
bonus
awarded but not yet paid and a pro rata bonus for the year of termination in
an
amount determined by the Compensation Committee (but not less than a pro rata
portion of the executive’s average annual bonus for the immediately preceding
three years, or the period of the executive’s employment, if less). Mr. Shea (or
Mr. Shea’s estate) shall also be entitled to the executive’s vested accrued
benefits under any employee benefit programs, continued rights with regard
to
any stock options or other rights with respect to equity securities of the
Registrant held by the executive in accordance with the terms of the plans
under
which such options or other rights were issued, and continued medical benefit
plan coverage substantially the same for Mr. Shea (in the case of disability)
and his immediately family for a period of six months.
In
the
event of termination of Mr. Shea’s employment by the Registrant without Cause
(as defined in the employment agreement), including termination of employment
following the Registrant’s issuance of a notice of nonrenewal of the employment
agreement, or by Mr. Shea if he is assigned duties inconsistent with his
position (but such assignment does not constitute “Good Reason” as defined in
the employment agreement), Mr. Shea shall be entitled to (i) his then current
base salary through the date on which termination occurs, (ii) provided Mr.
Shea
executes a general release of claims, a cash lump sum payment equal to the
sum
of (x) two times his then current base salary and (y) one times the higher
of
the targeted annual bonus for the year of such termination or the average of
his
annual bonus for the three years (or shorter period of employment) immediately
preceding the year of termination, and (iii) any annual bonus awarded but not
yet paid. Mr. Shea shall also be entitled to his vested accrued benefits under
any employee benefit programs, continued rights with regard to any stock options
or other rights with respect to equity securities of the Registrant held by
the
executive in accordance with the terms of the plans under which such options
or
other rights were issued and continued medical benefit plan coverage
substantially the same for Mr. Shea and his immediate family members for a
period of 24 months.
Notwithstanding
the foregoing, in the event of termination of Mr. Shea’s employment (x) by the
Registrant without Cause within the 24-month period following a Change in
Control (as defined in the employment agreement) (the “Post-Change Period”), (y)
by Mr. Shea for Good Reason during the Post-Change Period or (z) by the
Registrant (other than for Cause) within one year prior to a Change in Control
and it is reasonably demonstrated that such termination arose in connection
with
or anticipation of the Change in Control, then Mr. Shea shall be entitled to
(i)
his then current base salary through the date on which termination occurs;
(ii)
a cash lump sum payment equal to the sum of (x) two times the executive’s base
salary and (y) two times the average of the executive’s annual bonus for the
three years (or shorter period of employment) immediately preceding the year
in
which the Change in Control occurs, provided such bonus shall be at least equal
to the targeted annual bonus for the year of such termination; and (iii) an
amount equal to the higher of (x) the executive’s annual bonus actually awarded
in the year immediately preceding the year in which the Change in Control occurs
or (y) the targeted annual bonus that would have been awarded to the executive
for the year of such termination, pro rated by a fraction based on the number
of
months or fraction thereof in which the executive was employed by the Registrant
in the year of termination. The agreement also provides for continued medical
benefit plan coverage for Mr. Shea and his immediate family for a period of
24
months (which ceases if Mr. Shea becomes eligible to receive medical benefits
from another employer) and to accelerated vesting of the executive’s rights (i)
under any retirement plans and (ii) with regard to any stock options or other
rights with respect to equity securities of the Registrant held by the
executive, which options or other rights shall be exercisable for the shorter
of
three years or the original term of the security. In
addition,
in the event excise taxes on the executive’s payments or benefits are imposed
under Section 4999 of the United States Internal Revenue Code, Mr. Shea shall
be
entitled to gross-up payments.
In
the
event of termination of Mr. Shea’s employment by the Registrant for Cause or
other voluntary termination by the executive, Mr. Shea shall be entitled to
his
then current base salary through the date on which termination occurs and
continued rights with regard to any stock options or other rights with respect
to equity securities of the Registrant held by the executive in accordance
with
the terms of the plans under which such options or equity securities were
issued. Mr. Shea shall also be entitled to his vested accrued benefits under
any
employee benefit programs in the case of voluntary termination and, if such
programs expressly provide for such benefits, in the case of termination by
the
Registrant for Cause.
The
employment agreement also provides for indemnification of the executive by
the
Registrant to the maximum extent permitted by applicable law and the
Registrant’s charter documents and requires the Registrant to maintain
directors’ and officers’ liability coverage in an amount equal to at least
$25,000,000.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: January
26, 2007
SECURITY
CAPITAL ASSURANCE LTD
(Registrant)
By:
/s/
Kirstin Romann Gould
Name:
Kirstin Romann Gould
Title:
Secretary