EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement"),
dated as of June 18, 1998, is made and entered by and between Scottish Life
Holdings, Ltd., a Cayman Islands corporation (the "Company"), and Xxxxxxx X.
Xxxxxx (the "Executive").
WITNESSETH:
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WHEREAS, the Executive has agreed to serve as Chairman of the Board
and Chief Executive Officer of the Company and has made and is expected to
continue to make major contributions to the short- and long-term profitability,
growth and financial strength of the Company;
WHEREAS, the Company is currently contemplating the offer and sale of
ordinary shares of the Company to the public (the "Offering");
WHEREAS, the Company wishes to assure itself of both present and
future continuation of management in light of the Offering and subsequent to the
Offering; and
WHEREAS, the Company wishes to employ the Executive and the Executive
is willing to be employed by the Company, both on the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, the Company and the Executive agree as follows:
1. Certain Defined Terms. In addition to terms defined elsewhere herein,
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the following terms have the following meanings when used in this Agreement with
initial capital letters:
(a) "Base Pay" means the Executive's annual base salary rate as in
effect from time to time, as set forth in Section 5(a).
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means that the Executive shall have committed any of the
following:
(i) an intentional act of fraud, embezzlement or theft in
connection with his duties or in the course of his employment with the Company
or any Subsidiary;
(ii) intentional wrongful damage to any material property of the
Company or any Subsidiary;
(iii) intentional wrongful disclosure of secret processes or
confidential information of the Company or any Subsidiary; or
(iv) conviction of a felony or other crime involving moral
turpitude;
and any such act shall have been materially harmful to the Company. For
purposes of this Agreement, no act or failure to act on the part of the
Executive shall be deemed "intentional" if it was due primarily to an error
in judgment or negligence, but shall be deemed "intentional" only if done
or omitted to be done by the Executive not in good faith and without
reasonable belief that his action or omission was in the best interest of
the Company. Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for "Cause" hereunder unless and until there
shall have been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than two-thirds of the Board
then in office at a meeting of the Board called and held for such purpose,
after reasonable notice to the Executive and an opportunity for the
Executive, together with his counsel (if the Executive chooses to have
counsel present at such meeting), to be heard before the Board, finding
that, in the good faith opinion of the Board, the Executive had committed
an act constituting "Cause" as herein defined and specifying the
particulars thereof in detail. Nothing herein will limit the right of the
Executive or his beneficiaries to contest the validity or propriety of any
such determination.
(d) "Change in Control" means the occurrence of any of the following
events:
(i) the Company is merged or consolidated or reorganized into or
with another corporation or other legal person, and as a result of such
merger, consolidation or reorganization less than a majority of the
combined voting power of the then-outstanding securities of such
corporation or person immediately after such transaction are held in the
aggregate by the holders of Ordinary Shares immediately prior to such
transaction;
(ii) the Company sells or otherwise transfers all or
substantially all of its assets to any other corporation or other legal
person, and less than a majority of the combined voting power of the then-
outstanding securities of such corporation or person immediately after such
sale or transfer is held in the aggregate by the holders of Ordinary Shares
immediately prior to such sale or transfer;
(iii) the Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Act disclosing in
response to Form 8-K or Schedule 14A (or any successor schedule, form or
report or item therein) that a change in control of the Company has or may
have occurred or will or may occur in the future pursuant to any then-
existing contract or transaction; or
(iv) if during any period of two consecutive years, individuals
who at the beginning of any such period constitute the Directors cease for
any reason to constitute at least a majority thereof, unless the election,
or the nomination for election by the Company's shareholders, of each
Director first elected during such period was
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approved by a vote of at least two-thirds of the Directors then still in
office who were Directors at the beginning of any such period.
Notwithstanding the foregoing provisions of Paragraph (iii) above, a
"Change in Control" shall not be deemed to have occurred for purposes of
this Agreement (i) by reason of any action taken by the Company, including
changes in beneficial ownership of equity securities of the Company, in
connection with the Offering; (ii) solely because (A) the Company; (B) a
Subsidiary; or (C) any Company-sponsored employee stock ownership plan or
other employee benefit plan of the Company either files or becomes
obligated to file a report or proxy statement under or in response to
Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor
schedule, form or report or item therein) under the Act, disclosing
beneficial ownership by it of shares, or because the Company reports that a
change of control of the Company has or may have occurred or will or may
occur in the future by reason of such beneficial ownership; or (iii) solely
because of a change in control of any Subsidiary other than Scottish Life
Assurance (Cayman) Ltd.
(e) "Competitive Activity" means the Executive's participation,
without the written consent of an officer of the Company, in the management of
any business enterprise if such enterprise engages in substantial and direct
competition with the Company. "Competitive Activity" will not include (i) the
mere ownership of securities in any such enterprise and the exercise of rights
appurtenant thereto or (ii) participation in the management of any such
enterprise other than in connection with the competitive operations of such
enterprise.
(f) "Employee Benefits" means the perquisites, benefits and service
credit for benefits as provided under any and all employee retirement income and
welfare benefit policies, plans, programs or arrangements in which senior
officers of the Company are entitled to participate, including without
limitation any stock option, performance share, performance unit, stock
purchase, stock appreciation, savings, pension, supplemental executive
retirement, or other retirement income or welfare benefit, deferred
compensation, incentive compensation, group or other life, health,
medical/hospital or other insurance (whether funded by actual insurance or self-
insured by the Company or a Subsidiary), disability, salary continuation,
expense reimbursement and other employee benefit policies, plans, programs or
arrangements that may now exist or may be adopted hereafter by the Company or a
Subsidiary.
(g) "Incentive Pay" means an annual bonus, incentive or other payment
of compensation, in addition to Base Pay, made or to be made in regard to
services rendered in any year or other period pursuant to any bonus, incentive,
profit-sharing, performance, discretionary pay or similar agreement, policy,
plan, program or arrangement (whether or not funded) of the Company or a
Subsidiary, or any successor thereto.
(h) "Retirement Plans" means the retirement income, supplemental
executive retirement, excess benefits and retiree medical, life and similar
benefit plans providing retirement perquisites, benefits and service credit for
benefits for senior officers of the Company now existing or hereafter adopted.
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(i) "Subsidiary" means an entity in which the Company directly or
indirectly beneficially owns 50% or more of the outstanding Voting Stock.
(j) "Term" means the period commencing as of the date of this
Agreement and expiring on the third anniversary of this Agreement; provided,
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however, that commencing on the first anniversary of the date of this Agreement
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and each anniversary thereafter, the term of this Agreement will automatically
be extended for an additional one year unless, not later than 90 days before any
such anniversary date, the Company or the Executive shall have given written
notice that it or the Executive, as the case may be, does not wish to have the
Term extended.
(k) "Termination Date" means the date on which the Executive's
employment is terminated (the effective date of which shall be the date of
termination, or such other date that may be specified by the Executive if the
termination is pursuant to Section 5(b)).
(l) "Voting Stock" means securities entitled to vote generally in the
election of directors.
2. Employment. The Company hereby agrees to employ the Executive, and
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the Executive hereby agrees to be employed with the Company for the Term, upon
the terms and conditions herein set forth.
3. Positions and Duties.
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(a) During the Term, the Executive will serve in the positions of
Chairman of the Board and Chief Executive Officer of the Company, or such other
position as may be agreed upon by the Company and the Executive, and will have
such duties, functions, responsibilities and authority as are (i) consistent
with the Executive's position as the Company's Chairman of the Board and Chief
Executive Officer; or (ii) assigned to his office in the Company's bylaws; or
(iii) reasonably assigned to him by the Board. The Executive will report
directly to The Board of Directors.
(b) During the Term, the Executive will be the Company's employee and
will devote such portion of his business time and attention to the performance
of his duties to the Company as are reasonably required.
4. Compensation and Related Matters.
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(a) Annual Base Salary. During the Term, the Company will pay to the
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Executive an annual base salary of not less than $450,000, which annual base
salary may be increased (but not decreased) from time to time by the Board (or a
duly authorized committee thereof) in its sole discretion, payable at the times
and in the manner consistent with the Company's general policies regarding
compensation of executive employees. The Board may from time to time authorize
such additional compensation to the Executive, in cash or in property, as the
Board may determine in its sole discretion to be appropriate.
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(b) Annual Incentive Compensation. If the Board (or the Compensation
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Committee thereof) authorizes any cash incentive compensation or approves any
other management incentive program or arrangement, the Executive will be
eligible to participate in such plan, program or arrangement under the general
terms and conditions applicable to executive and management employees. Nothing
in this Section 4(b) will guarantee to the Executive any specific amount of
incentive compensation, or prevent the Board (or a duly authorized committee
thereof) from establishing performance goals and compensation targets applicable
only to the Executive.
(c) Executive Benefits. In addition to the compensation described in
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Section (a) and (b), the Company will make available to the Executive and his
eligible dependents, subject to the terms and conditions of the applicable
plans, including without limitation the eligibility rules, participation in all
Company-sponsored employee benefit plans including all employee retirement
income and welfare benefit policies, plans, programs or arrangements in which
senior executives of the Company participate, including any stock option, stock
purchase, stock appreciation, savings, pension, supplemental executive
retirement or other retirement income or welfare benefit, disability, salary
continuation, and any other deferred compensation, incentive compensation, group
and/or executive life, health, medical/hospital or other insurance (whether
funded by actual insurance or self-insured by the Company), expense
reimbursement or other employee benefit policies, plans, programs or
arrangements, including, without limitation, financial counseling services or
any equivalent successor policies, plans, programs or arrangements that may now
exist or be adopted hereafter by the Company.
(d) Other Expenses. The Company will promptly reimburse the Executive
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for all business expenses the Executive incurs in order to perform his duties to
the Company under this Agreement in a manner commensurate with the Executive's
position and level of responsibility with the Company, and in accordance with
the Company's policy regarding substantiation of expenses.
(e) Options. The Company shall grant Executive, upon the execution of
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this Agreement, an option ("Option") to purchase up to 400,000 Ordinary Shares
of the Company, such Option to be exercisable at the per share price equal to
the Offering price per share and to be governed by the option agreement attached
hereto as Exhibit A; provided, however, that the Option shall be increased, as
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provided in Exhibit A hereto, by a number of Ordinary Shares in an amount equal
to 400,000 multiplied by a fraction where the numerator is the number of
Ordinary Shares issued to the underwriters in the Offering to cover the
underwriter's overallotment and the denominator is the number of Ordinary Shares
issued in the Offering excluding the overallotment.
5. Termination Following the Date of this Agreement.
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(a) The Executive's employment may be terminated by the Company during
the Term, and the Executive shall be entitled to the severance compensation
provided by Section 6 unless such termination is the result of the occurrence of
one or more of the following events:
(i) The Executive's death;
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(ii) If the Executive becomes permanently disabled within the
meaning of, and begins actually to receive disability benefits pursuant to,
the long-term disability plan in effect for, or applicable to, the
Executive; or
(iii) Cause.
If, during the Term, the Executive's employment is terminated by the Company or
any Subsidiary other than pursuant to Section 5(a)(i), 5(a)(ii) or 5(a)(iii),
the Executive will be entitled to the benefits provided by Section 6 hereof.
(b) The Executive may terminate employment with the Company during the
Term with the right to severance compensation as provided in Section 6 upon the
occurrence of one or more of the following events (regardless of whether any
other reason, other than Cause as hereinabove provided, for such termination
exists or has occurred):
(i) Failure to elect or reelect or otherwise to maintain the
Executive in the office or the position, or a substantially equivalent
office or position, of or with the Company (or any successor thereto by
operation of law of or otherwise), which the Executive held pursuant to,
and upon the date of, this Agreement.
(ii) (A) A significant adverse change in the nature or scope of
the authorities, powers, functions, responsibilities or duties attached to
the position with the Company which the Executive held pursuant to, and
upon the date of, this Agreement, (B) a reduction in the aggregate of the
Executive's Base Pay received from the Company and any Subsidiary, or (C)
the termination or denial of the Executive's rights to Employee Benefits or
a reduction in the scope or value thereof, unless such reduction is
applicable to all employees of the Company on a pro rata basis, any of
which is not remedied by the Company within 30 calendar days after receipt
by the Company of written notice from the Executive of such change,
reduction or termination, as the case may be;
(iii) A determination by the Executive (which determination will
be conclusive and binding upon the parties hereto provided it has been made
in good faith and in all events will be presumed to have been made in good
faith unless otherwise shown by the Company by clear and convincing
evidence) that a change in circumstances has occurred following this
Agreement, including, without limitation, a change in the scope of the
business or other activities for which the Executive was responsible
immediately prior to the date of this Agreement, which has rendered the
Executive substantially unable to carry out, has substantially hindered the
Executive's performance of, or has caused the Executive to suffer a
substantial reduction in, any of the authorities, powers, functions,
responsibilities or duties attached to the position held by the Executive
pursuant to, and upon the date of, this Agreement, which situation is not
remedied within 30 calendar days after written notice to the Company from
the Executive of such determination;
(iv) The liquidation, dissolution, merger, consolidation or
reorganization of the Company or transfer of all or substantially all of
its business and/or assets, unless the successor or successors (by
liquidation, merger, consolidation,
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reorganization, transfer or otherwise) to which all or substantially all of
its business and/or assets have been transferred (by operation of law or
otherwise) assumed all duties and obligations of the Company under this
Agreement pursuant to Section 13(a);
(v) The Company relocates its principal executive offices (if
such offices are the principal location of Executive's work), or requires
the Executive to have his principal location of work changed, to any
location that, in either case, is in excess of 25 miles from the location
thereof pursuant to, and upon the date of, this Agreement without his prior
written consent; or
(vi) A Change in Control has occurred and Executive, within one
year thereafter, gives notice of termination of his employment with the
Company; or
(vii) Without limiting the generality or effect of the foregoing,
any material breach of this Agreement by the Company or any successor
thereto which is not remedied by the Company within 30 calendar days after
receipt by the Company of written notice from the Executive of such breach.
(c) A termination by the Company pursuant to Section 5(a) or by the
Executive pursuant to Section 5(b) will not affect any rights that the Executive
may have pursuant to any agreement, policy, plan, program or arrangement of the
Company or any Subsidiary providing Employee Benefits, which rights shall be
governed by the terms thereof.
6. Severance Compensation.
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(a) If the Company shall terminate the Executive's employment during
the Term other than pursuant to Section 5(a)(i), 5(a)(ii) or 5(a)(iii), or if
the Executive shall terminate his employment pursuant to Section 5(b), in lieu
of any further payments to the Executive for periods subsequent to the
Termination Date, the Company shall pay to the Executive a lump sum payment (the
"Severance Payment"), in an amount equal to 300% of the sum of (i) the aggregate
Base Pay (at the highest rate in effect for any year prior to the Termination
Date), and (ii) the aggregate Incentive Pay (at the highest rate in effect for
any year prior to the Termination Date), plus the aggregate sum of the
reasonable transportation expenses for relocating Executive and his immediate
family to the United States. The Severance Payment shall be made upon the later
of (i) five business days after the Termination Date and (ii) the effective date
of a release executed by the Executive and the Company in the form attached
hereto as Exhibit B.
(b) There shall be no right of set-off or counterclaim in respect of
any claim, debt or obligation against any payment to or benefit for the
Executive provided for in this Agreement.
(c) Without limiting the rights of the Executive at law or in equity,
if the Company fails to make any payment required to be made hereunder on a
timely basis, the Company shall pay interest on the amount thereof at an
annualized rate of interest equal to the then-applicable interest rate
prescribed by the Pension Benefit Guarantee Corporation for benefit
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valuations in connection with non-multiemployer pension plan terminations
assuming the immediate commencement of benefit payments.
7. Certain Additional Payments by the Company.
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(a) Anything in this Agreement to the contrary notwithstanding, in the
event that this Agreement shall become operative and it shall be determined (as
hereafter provided) that any payment (other than the Gross-Up payments provided
for in this Section 7) or distribution by the Company or any of its affiliates
to or for the benefit of the Executive, whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise pursuant
to or by reason of any other agreement, policy, plan, program or arrangement,
including without limitation any stock option, performance share, performance
unit, stock appreciation right or similar right, or the lapse or termination of
any restriction on or the vesting or exercisability of any of the foregoing (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") (or any successor
provision thereto) by reason of being considered "contingent on a change in
ownership or control" of the Company, within the meaning of Section 280G of the
Code (or any successor provision thereto) or to any similar tax imposed by state
or local law, or any interest or penalties with respect to such tax (such tax or
taxes, together with any such interest and penalties, being hereafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment or payments (collectively, a "Gross-Up
Payment"); provided, however, that no Gross-up Payment shall be made with
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respect to the Excise Tax, if any, attributable to (i) any incentive stock
option, as defined by Section 422 of the Code ("ISO") granted prior to the
execution of this Agreement, or (ii) any stock appreciation or similar right,
whether or not limited, granted in tandem with any ISO described in clause (i).
The Gross-Up Payment shall be in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payment.
(b) Subject to the provisions of Section 7(f), all determinations
required to be made under this Section 7, including whether an Excise Tax is
payable by the Executive and the amount of such Excise Tax and whether a Gross-
Up Payment is required to be paid by the Company to the Executive and the amount
of such Gross-Up Payment, if any, shall be made by a nationally recognized
accounting firm (the "Accounting Firm") selected by the Executive in his sole
discretion. The Executive shall direct the Accounting Firm to submit its
determination and detailed supporting calculations to both the Company and the
Executive within 30 calendar days after the Termination Date, if applicable, and
any such other time or times as may be requested by the Company or the
Executive. If the Accounting Firm determines that any Excise Tax is payable by
the Executive, the Company shall pay the required Gross-Up Payment to the
Executive within five business days after receipt of such determination and
calculations with respect to any Payment to the Executive. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it shall, at the
same time as it makes such determination, furnish the Company and the Executive
an opinion that the Executive has substantial authority not to report any Excise
Tax on his federal, state or local income or other tax return. As a result of
the uncertainty in the application of Section 4999 of the Code (or any successor
provision thereto) and the possibility of
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similar uncertainty regarding applicable state or local tax law at the time of
any determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (an
"Underpayment"), consistent with the calculations required to be made hereunder.
In the event that the Company exhausts or fails to pursue its remedies pursuant
to Section 7(f) and the Executive thereafter is required to make a payment of
any Excise Tax, the Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment shall be promptly paid by the
Company to, or for the benefit of, the Executive within five business days after
receipt of such determination and calculations.
(c) The Company and the Executive shall each provide the Accounting
Firm access to and copies of any books, records and documents in the possession
of the Company or the Executive, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determinations and calculations
contemplated by Section 7(b). Any determination by the Accounting Firm as to
the amount of the Gross-Up Payment shall be binding upon the Company and the
Executive.
(d) The federal, state and local income or other tax returns filed by
the Executive shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive shall make proper payment of the amount of any
Excise Payment, and at the request of the Company, provide to the Company true
and correct copies (with any amendments) of his federal income tax return as
filed with the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority, and such
other documents reasonably requested by the Company, evidencing such payment.
If prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive shall within five business days pay to the Company the amount of such
reduction.
(e) The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by Section 7(b)
shall be borne by the Company. If such fees and expenses are initially paid by
the Executive, the Company shall reimburse the Executive the full amount of such
fees and expenses within five business days after receipt from the Executive of
a statement therefor and reasonable evidence of his payment thereof.
(f) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service or any other taxing authority that, if successful,
would require the payment by the Company of a Gross-Up Payment. Such
notification shall be given as promptly as practicable but no later than 30
business days after the Executive actually receives notice of such claim and the
Executive shall further apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid (in each case, to the extent
known by the Executive). The Executive shall not pay such claim prior to the
earlier of (i) the expiration of the 30-calendar-day period following the date
on which he gives such notice to the Company and
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(ii) the date that any payment of amount with respect to such claim is due. If
the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) provide the Company with any written records or documents in
his possession relating to such claim reasonably requested by the Company;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including without limitation accepting legal representation with respect to
such claim by an attorney competent in respect of the subject matter and
reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
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expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of
this Section 7(f), the Company shall control all proceedings taken in connection
with the contest of any claim contemplated by this Section 7(f) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Executive may participate therein at his own cost
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and expense) and may, at its option, either direct the Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
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Company directs the Executive to pay the tax claimed and xxx for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including interest
or penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
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relating to payment of taxes for the taxable year of the Executive with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of any such contested
claim shall be limited to issues with respect to which a Gross-Up Payment would
be payable hereunder and the Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.
(g) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 7(f), the Executive receives any refund with
respect to such claim, the Executive shall (subject to the Company's complying
with the requirements of Section 7(f))
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promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after any taxes applicable thereto). If, after
the receipt by the Executive of an amount advanced by the Company pursuant to
Section 7(f), a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial or refund prior to the
expiration of 30 calendar days after such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of any such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid by the Company to the Executive pursuant to this Section 7.
8. No Mitigation Obligation. The Company hereby acknowledges that it
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will be difficult and may be impossible for the Executive to find reasonably
comparable employment following the Termination Date and that the non-
competition covenant in Section 9 will further limit the employment
opportunities for the Executive. In addition, the Company acknowledges that its
severance pay plans applicable in general to its salaried employees do not
provide for mitigation, offset or reduction of any severance payment received
thereunder. Accordingly, the payment of the severance compensation by the
Company to the Executive in accordance with the terms of this Agreement is
hereby acknowledged by the Company to be reasonable, and the Executive will not
be required to mitigate the amount of any payment provided for in this Agreement
by seeking other employment or otherwise, nor will any profits, income, earnings
or other benefits from any source whatsoever create any mitigation, offset,
reduction or any other obligation on the part of the Executive hereunder or
otherwise.
9. Competitive Activity; Confidentiality; Nonsolicitation.
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(a) The Executive acknowledges that during the course of his
employment with the Company the Executive will learn business information
valuable to the Company and form substantial business relationships with the
Company's clients. To protect the Company's legitimate business interests in
preserving its valuable confidential business information and client
relationships, the Executive shall not without the prior written consent of the
Company, which consent shall not be unreasonably withheld, (i) engage in any
Competitive Activity during the Term and (ii) if the Executive shall have
received or shall be receiving benefits under Section 6, engage in any
Competitive Activity for a period ending on the first anniversary of the
Termination Date.
(b) During the Term, the Company agrees that it will disclose to
Executive its confidential or proprietary information (as defined in this
Section 9(b)) to the extent necessary for Executive to carry out his obligations
to the Company. The Executive hereby acknowledges the Company has a legitimate
business interest in protecting its confidential and proprietary information and
hereby covenants and agrees that he will not, without the prior written consent
of the Company, during the Term or thereafter (i) disclose to any person not
employed by the Company, or use in connection with engaging in competition with
the Company, any confidential or proprietary information of the Company or (ii)
remove, copy or retain in his possession any Company files or records. For
purposes of this Agreement, the term "confidential or proprietary information"
will include all information of any nature and in any form that is owned by the
Company and that is not publicly available (other than by Executive's breach of
this Section 9(b))
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or generally known to persons engaged in businesses similar or related to those
of the Company. Confidential or proprietary information will include, without
limitation, the Company's financial matters, customers, employees, industry
contracts, strategic business plans, product development (or other proprietary
product data), marketing plans, and all other secrets and all other information
of a confidential or proprietary nature. For purposes of the preceding two
sentences, the term "Company" will also include any Subsidiary (collectively,
the "Restricted Group"). The foregoing obligations imposed by this Section 9(b)
will not apply (i) during the Term, in the course of the business of and for the
benefit of the Company, (ii) if such confidential or proprietary information
will have become, through no fault of the Executive, generally known to the
public or (iii) if the Executive is required by law to make disclosure (after
giving the Company notice and an opportunity to contest such requirement).
(c) The Executive hereby covenants and agrees that during the Term and
for one year thereafter Executive will not, without the prior written consent of
the Company, which consent shall not unreasonably be withheld, on behalf of
Executive or on behalf of any person, firm or company, directly or indirectly,
attempt to influence, persuade or induce, or assist any other person in so
persuading or inducing, any employee of the Restricted Group to give up
employment or a business relationship with the Restricted Group.
(d) The Executive agrees that on or before the Termination Date the
Executive shall return all Company property, including without limitation all
credit, identification and similar cards, keys and documents, books, records and
office equipment.
10. Legal Fees and Expenses. It is the intent of the Company that the
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Executive not be required to incur legal fees and the related expenses
associated with the interpretation, enforcement or defense of Executive's rights
under this Agreement by litigation or otherwise because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
the Executive hereunder. Accordingly, if it should appear to the Executive that
the Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person takes or
threatens to take any action to declare this Agreement void or unenforceable, or
institutes any litigation or other action or proceeding designed to deny, or to
recover from, the Executive the benefits provided or intended to be provided to
the Executive hereunder, the Company irrevocably authorizes the Executive from
time to time to retain counsel of Executive's choice, at the expense of the
Company as hereafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense, including
without limitation the initiation or defense of any litigation or other legal
action, whether by or against the Company or any Director, officer, stockholder
or other person affiliated with the Company, in any jurisdiction.
Notwithstanding any existing or prior attorney-client relationship between the
Company and such counsel, the Company irrevocably consents to the Executive's
entering into an attorney-client relationship with such counsel, and in that
connection the Company and the Executive agree that a confidential relationship
shall exist between the Executive and such counsel. Without respect to whether
the Executive prevails, in whole or in part, in connection with any of the
foregoing, the Company will pay and be solely financially responsible for any
and all attorneys' and related fees and expenses incurred by the Executive in
connection with any of the foregoing.
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11. Withholding of Taxes. The Company may withhold from any amounts
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payable under this Agreement all United States federal, state, city or other
taxes as the Company is required to withhold pursuant to any applicable law,
regulation or ruling.
12. Successors and Binding Agreement.
--------------------------------
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or otherwise) to
all or substantially all of the business or assets of the Company, by agreement
in form and substance reasonably satisfactory to the Executive, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent the Company would be required to perform if no such succession had taken
place. This Agreement will be binding upon and inure to the benefit of the
Company and any successor to the Company, including without limitation any
persons acquiring directly or indirectly all or substantially all of the
business or assets of the Company whether by purchase, merger, consolidation,
reorganization or otherwise (and such successor shall thereafter be deemed the
"Company" for the purposes of this Agreement), but will not otherwise be
assignable, transferable or delegable by the Company.
(b) This Agreement will inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, transfer or delegate
this Agreement or any rights or obligations hereunder except as expressly
provided in Sections 12(a) and 12(b). Without limiting the generality or effect
of the foregoing, the Executive's right to receive payments hereunder will not
be assignable, transferable or delegable, whether by pledge, creation of a
security interest, or otherwise, other than by a transfer by Executive's will or
by the laws of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Section 12(c), the Company shall have no
liability to pay any amount so attempted to be assigned, transferred or
delegated.
13. Notices. For all purposes of this Agreement, all communications,
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including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder will be in writing and will be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof orally confirmed), or five business days
after having been mailed by, or three business days after having been sent by,
an internationally recognized overnight courier service such as FedEx or UPS,
addressed to the Company (to the attention of the Chief Executive Officer of the
Company) at its principal executive office and to the Executive at his principal
residence, or to such other address as any party may have furnished to the other
in writing and in accordance herewith, except that notices of changes of address
shall be effective only upon receipt.
14. Governing Law. The validity, interpretation, construction and
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performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the Cayman Islands, without giving effect to the
principles of conflict of laws of such State.
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15. Validity. If any provision of this Agreement or the application of
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any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstances will not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid or legal.
16. Miscellaneous. No provision of this Agreement may be modified, waived
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or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or representations, oral
or otherwise, expressed or implied with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. References to Sections are to references to Sections of this
Agreement.
17. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
18. Entire Agreement. This Agreement sets forth the entire understanding
----------------
between the Company and the Executive, and all oral or written agreements or
representations, express or implied, with respect to the subject matter of this
Agreement are set forth in this Agreement. All prior employment agreements,
understandings and obligations (whether written, oral, express or implied)
between the Company and the Executive, without further action, terminated as of
the date of this Agreement and are superseded by this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
/s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx
SCOTTISH LIFE HOLDINGS, LTD.
By: /s/ Xxxxxxxx X. Xxxxxxx
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Name: Xxxxxxxx X. Xxxxxxx
Title: Senior Vice President and
Chief Financial Officer
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