EXHIBIT 10.1
EXECUTION COPY
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AGREEMENT by and between Annuity and Life Re (Holdings), Ltd. ("Holdings")
and Annuity and Life Reassurance, Ltd. ("Annuity Reassurance" and, together with
Holdings, the "Company") and Xxxx X. Xxxxx (the "Executive") dated as of the
28th day of July, 2003.
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its shareholders
to employ the Executive as the Company's President and Chief Executive Officer
and to have the Executive be a member of the Board;
WHEREAS, Holdings and the Executive entered into an Employment Agreement,
dated as of April 3, 2003 (the "Existing Employment Agreement"), setting forth
the terms and conditions of the Executive's employment with Holdings; and
WHEREAS, Holdings and the Executive wish to amend the terms and conditions
of the Executive's employment with Holdings and to establish the terms and
conditions of the Executive's employment with Annuity Reassurance. Accordingly,
the Company and the Executive wish to amend and restate the Existing Employment
Agreement in its entirety in the manner set forth herein;
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. Effective Date. The "Effective Date" shall mean February 28, 2003.
2. Employment Period. The Company hereby agrees to employ the Executive,
and the Executive hereby agrees to be employed by the Company subject to the
terms and conditions of this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary thereof (the "Initial Term"),
provided that, commencing on February 28, 2006, the employment period shall be
extended one year on each successive anniversary until, at any time on or after
such date, the Company or the Executive delivers a written notice (a "Notice of
Non-Renewal"), no later than ninety-days prior to the end of the then-current
term to the other Party that the employment period shall expire at the end of
the then-current term (the Initial Term as so extended, the "Employment
Period").
3. Terms of Employment.
(a) Position and Duties. (i) During the Employment Period, (A) the
Executive
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shall serve as the President and Chief Executive Officer of the Company and
shall be responsible for the general management of the Company, with such
authority, duties and responsibilities as are commensurate with such positions
and as may be consistent with such positions (taking into account the duties and
responsibilities of the non-executive Chairman of the Board, if any), reporting
directly to the Board, and (B) the Executive's principal location of employment
shall be at the principal headquarters of the Company; provided, that the
Executive may be required under reasonable business circumstances to travel
outside of such location in connection with performing his duties under this
Agreement. In addition, the Company has caused the Executive to be appointed as
a member of the Board as of the Effective Date, and following such date, the
Executive shall remain on the Board, subject to Section 4(f), and shall perform
his duties as a director of the Company conscientiously and faithfully.
(ii) The Executive agrees that during the Employment Period,
he shall devote substantially all of his business time, energies and talents to
serving as the Company's President and Chief Executive Officer, perform his
duties conscientiously and faithfully subject to the reasonable and lawful
directions of the Board, and in accordance with each of the Company's corporate
governance and ethics guidelines, conflict of interests policies and code of
conduct (collectively, the "Company Policies") applicable to all Company
employees or senior executives generally and copies of which have been or will
be provided to the Executive within a reasonable period of time following the
adoption of the particular Company Policy. During the Employment Period, it
shall not be a violation of this Agreement for the Executive, subject to the
requirements of Section 9, to (A) serve on corporate, civic or charitable boards
or committees, (B) deliver lectures or fulfill speaking engagements and (C)
manage personal investments, so long as such activities do not materially
inhibit or interfere with the performance of the Executive's responsibilities as
the President and Chief Executive Officer or as a director of the Company in
accordance with this Agreement.
(b) Compensation.
(i) Base Salary; Cost of Living Allowance. During the
Employment Period, the Executive shall receive an annualized base salary
("Annual Base Salary") of not less than $500,000, payable pursuant to the
Company's normal payroll practices. During the Employment Period, the current
Annual Base Salary shall be reviewed for increase only (and once increased shall
never be decreased) at such time as the salaries of senior officers of the
Company are reviewed generally, provided that, the Executive's first such review
shall occur no earlier than calendar year 2004. The Company will also pay the
Executive a cost of living allowance for residing in Bermuda of $10,000 per
month.
(ii) Annual Bonus. For each fiscal year completed during the
Employment Period, the Executive shall be eligible to receive an annual cash
bonus ("Annual Bonus") based upon performance targets that are established as
soon as practicable by mutual agreement between the Executive and the
compensation committee of the Board, provided that, the Executive's target
Annual Bonus shall be at least 50% of his Annual Base Salary (the "Target
Bonus") and his maximum Annual Bonus shall be at least 150% of his Annual Base
Salary.
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(iii) Retirement Benefits.
(A) General. The Executive shall become a participant in
any qualified or nonqualified retirement plans maintained by the Company.
(B) Certain Terminations During Initial Term. In the
event that, prior to the end of the Initial Term, the Executive (i) resigns
without Good Reason (as defined in Section 4(c)) or (ii) is terminated for Cause
(as defined in Section 4(b)), the Executive shall not be entitled to receive any
retirement benefits, and the Company shall not be obligated to pay such benefits
to the Executive.
(iv) Signing Bonus; Restricted Share Award. Executive shall be
paid a signing bonus of $100,000 upon his execution of this Agreement. Such
signing bonus shall be in lieu of any signing bonus payable to Executive under
Section 3(b)(iv) of the Existing Employment Agreement. The Executive was granted
200,000 shares of restricted stock in the Company on April 3, 2003. The
restriction for this grant covered a three-year period from the date of the
grant and the restriction will lapse with one-third of the restricted shares
becoming unrestricted after each of the three years. Except as specifically set
forth herein, the grant shall have the same terms and conditions as similar
grants that have been made by the Company to senior executives generally, as
such terms are set forth in the grant agreement attached as Exhibit A.
(v) Stock Option Awards. On April 3, 2003, the Executive was
granted options to purchase 250,000 shares of Common Stock under the Company's
Initial Stock Option Plan (the "Plan") at $1.00 per share (the "Option"). Except
as specifically set forth herein, the Options shall have the same terms and
conditions as similar grants that have been made by the Company to senior
executives generally, as such terms are set forth in the award agreement
attached as Exhibit B.
(vi) Other Benefits. During the Employment Period, the
Executive shall be entitled to participate in all welfare, perquisites, fringe
benefit, and other benefit plans, practices, policies and programs, as may be in
effect from time to time, for senior executives of the Company generally.
(vii) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for business expenses
reasonably incurred by the Executive in accordance with the Company's policies,
as may be in effect from time to time, for its senior executives generally.
(viii) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the Company's policies, as
may be in effect from time to time, for its senior executives generally.
(c) Other Entities. The Executive agrees to serve, without
additional compensation, as an officer and director for each of the Company's
subsidiaries, partnerships, joint ventures, limited liability companies and
other affiliates, including entities in which the
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Company has a significant investment (collectively, the Company and such
entities, the "Affiliated Group"), as determined by the Company, provided, that
such service does not materially interfere with the Executive's performance of
his duties and responsibilities as the President and Chief Executive Officer of
the Company. As used in this Agreement, the term "affiliates" shall include any
entity controlled by, controlling, or under common control with the Company.
4. Termination of Employment.
(a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may provide the Executive with written notice in accordance
with Section 12(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such notice
by the Executive (the "Disability Effective Date"), provided that, within the
30-day period after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the inability of the Executive to perform his duties
with the Company on a full-time basis for six consecutive months as a result of
incapacity due to mental or physical illness which is determined to be total and
permanent by a licensed physician mutually selected by (i) the Company or its
insurers and (ii) the Executive or the Executive's legal representative. If the
Parties cannot agree on a licensed physician, each Party shall select a licensed
physician and the two physicians shall select a third who shall be the approved
licensed physician for this purpose.
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period with or without Cause. For purposes of this
Agreement, "Cause" shall mean:
(i) the Executive's willful and continued failure to
substantially perform his duties under this Agreement, other than any such
failure resulting from incapacity due to physical or mental illness, which
failure has continued after a written demand for substantial performance, signed
by a duly authorized member of the Board, is delivered to the Executive,
specifying the manner in which the Executive has failed to substantially
perform; or
(ii) the Executive's willful engagement in any malfeasance,
fraud, dishonesty or gross misconduct, each of which must (x) be in connection
with his position as the President and Chief Executive Officer of the Company
(or as a director of the Company or an officer or director of any member of the
Affiliated Group) and (y) materially damage the Company economically or
otherwise; or
(iii) the Executive's conviction of, or plea of guilty or nolo
contendere to, a felony; or
(iv) the Executive's breach of Section 13(c) of this Agreement
that
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materially damages or could reasonably be expected to materially damage the
Company economically or otherwise; or
(v) the Executive's material breach of Section 9 or Section
13(b) of this Agreement.
For purposes of this provision, no act or failure to act on the part of the
Executive shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith and without reasonable belief that the
Executive's act or omission was in the best interests of the Company. A
termination of employment of the Executive shall not be deemed to be for Cause
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 entire membership of the Board (not including the Executive) at a meeting of
the Board called and held for such purpose (after at least ten days' written
notice is provided to the Executive and the Executive is given an opportunity,
together with counsel, to be heard before the Board), finding that, in the good
faith opinion of the Board, the Executive is guilty of the conduct described in
subparagraph (i), (ii), (iii), (iv) or (v) above, and specifying the particulars
thereof in detail.
(c) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. If (x) an event or circumstance set forth in clauses
(i) through (viii) below shall have occurred and the Executive provides the
Company with written notice thereof within a reasonable period of time after the
Executive has knowledge of the occurrence or existence of such event or
circumstance, which notice shall specifically identify the event or circumstance
that the Executive believes constitutes Good Reason, (y) the Company fails to
correct the circumstance or event so identified within 15 days after the receipt
of such notice, and (z) the Executive resigns within 90 days after the date of
delivery of the notice referred to in clause (x) above, the Executive shall be
considered to have resigned for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean, in the absence of the Executive's express written
consent (and except in consequence of a prior termination of the Executive's
employment), the occurrence of any of the following:
(i) a reduction by the Company in the Executive's highest
Annual Base Salary or a reduction in the Executive's Target Bonus as a
percentage of the Executive's Annual Base Salary; or
(ii) the failure of the Executive to be appointed to any of
the positions described in Section 3(a)(i) or his removal from any such position
(other than pursuant to Section 4(f) or pursuant to a termination of the
Executive's employment for death, Disability or Cause); or
(iii) a material diminution in the Executive's duties or
responsibilities (other than as a result of the Executive's physical or mental
incapacity) or the assignment to the Executive of duties or responsibilities
materially inconsistent with the Executive's position and status as the
President and Chief Executive Officer of the Company; provided, however, that
the Executive acknowledges that he will continue to serve as the Company's Chief
Financial Officer until such time as the Board elects to retain another
individual for such position and such
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individual has in fact been retained; or
(iv) a material change in the Executive's reporting
relationship so that the Executive no longer reports solely to the Board in his
positions as President and Chief Executive Officer; or
(v) a breach by the Company of any of its material obligations
to the Executive under this Agreement; or
(vi) the Company requiring the Executive's principal location
of employment to be at any office or location other than Bermuda or the United
States (except to the extent agreed to or requested by the Executive); or
(vii) a breach by the Company of Section 11 or Section 13(a)
of this Agreement; or
(viii) any failure by the Company to comply with and satisfy
Section 10(b) of this Agreement.
(d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other Party hereto given in accordance with Section 12(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein within 30 days of such notice, as the case may
be, (ii) if the Executive's employment is terminated by the Company other than
for Cause or Disability, or if the Executive voluntarily resigns without Good
Reason, the date on which the terminating Party notifies the other Party of such
termination, (iii) if the Executive's employment is terminated by reason of
death, the date of death of the Executive, (iv) if the Executive's employment is
terminated by the Company due to Disability, the Disability Effective Date, or
(v) if the Executive's employment is terminated by the Executive or the Company
as a result of a Notice of Non-Renewal, the second anniversary of such notice.
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(f) Resignation from All Positions. Notwithstanding any other
provision of this Agreement, upon the termination of the Executive's employment
for any reason, unless otherwise requested by the Board, the Executive shall
immediately resign from all positions that he holds or has ever held with the
Company and any other member of the Affiliated Group (and with any other
entities with respect to which the Company has requested the Executive to
perform services), including, without limitation, the Board and all boards of
directors of any member of the Affiliated Group. The Executive hereby agrees to
execute any and all documentation to effectuate such resignations upon request
by the Company, but he shall be treated for all purposes as having so resigned
upon termination of his employment, regardless of when or whether he executes
any such documentation.
(g) Except in matters where Executive is individually a defendant or
the subject of an investigation, following termination of his employment for any
reason, in the event that Executive is requested by the Company to cooperate in
any litigation or investigation regarding the Company, or is compelled to do so
by any legal process, the Company shall pay Executive the sum of $2,500 for each
day or portion of a day Executive performs any such services, to the extent
permitted by applicable law.
5. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause. If, during the Employment
Period, (1) the Company shall terminate the Executive's employment other than
for Cause, death or Disability, (2) the Executive shall terminate employment for
Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within 30 days (except as specifically provided in Sections 5(a)(i)(A)(3))
after the Date of Termination the aggregate of the following amounts:
A. the sum of (1) the Executive's accrued but unpaid Annual
Base Salary and any accrued vacation pay through the Date of Termination, (2)
the Executive's business expenses that are reimbursable pursuant to Section
3(b)(vii) but have not been reimbursed by the Company as of the Date of
Termination, (3) the Executive's Annual Bonus for the fiscal year immediately
preceding the fiscal year in which the Date of Termination occurs if such bonus
has been determined but not paid as of the Date of Termination (at the time such
Annual Bonus would otherwise have been paid), and (4) $60,000 (such amount
representing the cost of living allowance under Section 3(b)(i) for six months);
B. one year's Annual Base Salary and full relocation back to
any city in the United States; and
C. an amount equal to (1) the Executive's Annual Bonus, if
any, for the fiscal year immediately preceding the fiscal year in which the Date
of Termination occurs multiplied by (2) a fraction, the denominator of which is
365 and the numerator of which is the number of days between the end of the
immediately preceding fiscal year and the Date of Termination.
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(ii) any stock options, restricted stock, performance shares
and any other stock-based long-term incentive compensation award held by the
Executive (whether granted under this Agreement or otherwise) shall vest
immediately (with option exercisability continuing until the first to occur of
the fifth anniversary of the Date of Termination or the end of the scheduled
option term)
The Parties agree that any amounts due under this Section 5(a) are in the nature
of severance payments considered to be reasonable by the Company and are not in
the nature of a penalty. If the Company shall terminate the Executive's
employment other than for Cause, death or Disability, or the Executive shall
terminate employment for Good Reason, except as contemplated by Section 9, 11
and 12 hereof, this Agreement shall terminate without further obligations to the
Executive other than the obligations set forth in this Section 5(a).
(b) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause or the Executive terminates his employment without
Good Reason during the Employment Period (including by providing to the Company
a Notice of Non-Renewal), except as contemplated by Section 9, 11 and 12 hereof,
this Agreement shall terminate without further obligations to the Executive
other than the obligation to pay to the Executive an amount equal to the amount
set forth in clauses (1) and (2) of Section 5(a)(i)(A) above and the timely
payment or provision of the Other Benefits, including any applicable life
insurance benefits.
(c) Death. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, except as contemplated by
Section 9, 11 and 12 hereof, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement, other
than the obligation to pay to the Executive's beneficiaries an amount equal to
the amount set forth in clauses (1), (2) and (3) of Section 5(a)(i)(A) above and
the timely payment or provision of the Other Benefits, including any applicable
life insurance benefits.
(d) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, except as
contemplated by Section 9, 11 and 12 hereof, this Agreement shall terminate
without further obligations to the Executive, other than the obligation to pay
or provide to the Executive the Executive's Retiree Health Benefits, an amount
equal to the amount set forth in clauses (1), (2) and (3) of Section 5(a)(i)(A)
above, and the timely payment or provision of Other Benefits, including any
applicable disability benefits.
6. Change of Control
(a) Notwithstanding any other provision contained herein, all
options issued to the Executive under the Company's share option plans that are
not then exercisable shall become exercisable (and be deemed to be vested) on
the date on which a Change of Control of the Company occurs. In addition, any
restricted shares granted under any of the Company's equity incentive plans
shall immediately vest upon a Change of Control of the Company.
(b) Notwithstanding any other provision contained herein, if (i) the
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employment of the Executive is terminated by the Company (or successor thereto)
without Cause within the period commencing on the date that a Change of Control
is formally proposed to the Board and ending on the first anniversary of the
date on which such Change of Control occurs or (ii) the Executive terminates
employment with the Company (or successor thereto) (A) because of the failure of
a successor to the Company to expressly assume and agree to perform this
Agreement or (B) for any reason during the period commencing ninety (90) days
following the date that a Change of Control occurs and ending on the first
anniversary of the date on which such Change of Control occurs, then the
Executive shall be entitled to receive (in lieu of the benefits described in
Section 5): (1) any accrued but unpaid Annual Base Salary through the Date of
Termination, (2) the Executive's Annual Bonus for the fiscal year immediately
preceding the fiscal year in which the Date of Termination occurs if such bonus
has been determined but not paid as of the Date of Termination (at the time such
Annual Bonus would otherwise have been paid), (3) a lump sum payment equal to
equal to the sum of (x) two times the the Executive's Annual Base Salary as of
the Date of Termination plus (y) an amount equal to (A) the Executive's Annual
Bonus, if any, for the fiscal year immediately preceding the fiscal year in
which the Date of Termination occurs multiplied by (B) a fraction, the
denominator of which is 365 and the numerator of which is the number of days
between the end of the immediately preceding fiscal year and the Date of
Termination, (4) the Executive's business expenses that are reimbursable
pursuant to Section 3(b)(vii) but have not been reimbursed by the Company as of
the Date of Termination, (5) the cost of living allowance under Section 3(b)(i)
for twelve months after the Date of Termination, (6) reasonable relocation
expenses from Bermuda to the United States, together with (7) a gross-up of any
income taxes payable by the Executive by reason of such payments occurring in
connection with a change of control.
The Executive shall not be entitled to any benefits or other entitlements
under this section or under Section 5 of this Agreement if he terminates his
employment with the Company for any reason, including Good Reason, during the
period commencing on the date that a Change of Control is formally proposed to
the Board and ending ninety (90) days following the date that a Change of
Control occurs. The Executive shall not be entitled to any benefits or other
entitlements under this section unless a Change of Control actually occurs.
(c) A "Change of Control" of the Company shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934 (the "Exchange Act")), excluding the
Company or any of its subsidiaries, a trustee or any fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries, an underwriter temporarily holding securities pursuant to an
offering of such securities or a corporation owned, directly or indirectly, by
shareholders of the Company in substantially the same proportion as their
ownership of the Company, is or becomes the "beneficial owner" (as defined in
rule 13d-3 under the Exchange Act), directly or indirectly, of securities
("Voting Securities") of the Company representing 50% or more of the combined
voting power of the Company's then outstanding securities; (ii) during any
period of not more than two years, individuals who constitute the Board as of
the beginning of the period and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in clause (i) or (iii) of this sentence) whose
election by the Board or nomination for election by the Company's shareholders
was approved by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors
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at such time or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; (iii) the
shareholders of the Company approve a merger, consolidation or reorganization or
a court of competent jurisdiction approves a scheme of arrangement of the
Company, other than a merger, consolidation, reorganization or scheme of
arrangement 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 50% of the combined voting power of the Voting
Securities of the Company or such surviving entity outstanding immediately after
such merger, consolidation, reorganization or scheme of arrangement; or (iv) the
shareholders of the Company approve a plan of complete liquidation of the
Company or any agreement for the sale or liquidation of substantially all of the
Company's assets.
7. Non-Exclusivity of Rights. Except as specifically provided otherwise,
nothing in this Agreement shall prevent or limit the Executive's continuing or
future participation in any plan, program, policy or practice provided by the
Company, or any of its subsidiaries for which the Executive is otherwise
eligible, nor, subject to Section 12(f), shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with the Company or its subsidiaries. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with the Company or
its subsidiaries at or subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program or contract or agreement
except as explicitly modified by this Agreement.
8. Full Settlement. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense, or other
claim, right or action that the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and such amounts shall
not be reduced as a result of a mitigation duty whether or not the Executive
obtains other employment. In the event of any dispute between the Company and
the Executive under this Agreement during or after termination of the
Executive's employment, the Company agrees to pay, to the full extent permitted
by law, all professional fees, costs and expenses which the Executive may
reasonably incur as a result of any such contest.
9. Covenants.
(a) Confidential Information. The Executive shall hold in a
fiduciary capacity for benefit of the Affiliated Group, all secret or
confidential information, knowledge or data relating to the Affiliated Group and
its businesses (including, without limitation, any proprietary and not publicly
available information concerning any processes, methods, trade secrets, research
or secret data, costs, names of users or purchasers of their respective products
or services, business methods, operating procedures or programs or methods of
promotion and sale) that the Executive has obtained or obtains during the
Executive's employment by the Affiliated Group that is not public knowledge
(other than as a result of the Executive's violation of this Section 9(a))
("Confidential Information"). For the purposes of this Section 9(a), information
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shall not be deemed to be publicly available merely because it is embraced by
general disclosures or because individual features or combinations thereof are
publicly available. The Executive shall not communicate, divulge or disseminate
Confidential Information at any time during or after the Executive's employment
with the Affiliated Group, except with prior written consent of the Company, or
as otherwise required by law or legal process or as such disclosure or use may
be required in the course of the Executive performing his duties and
responsibilities as the President and Chief Executive Officer of the Company.
Notwithstanding the foregoing provisions, if the Executive is required to
disclose any such confidential or proprietary information pursuant to applicable
law or a subpoena or court order, the Executive shall promptly notify the
Company in writing of any such requirement so that the Company or the
appropriate member of the Affiliated Group may seek an appropriate protective
order or other appropriate remedy or waive compliance with the provisions
hereof. The Executive shall reasonably cooperate with the Affiliated Group to
obtain such a protective order or other remedy. If such order or other remedy is
not obtained prior to the time the Executive is required to make the disclosure,
or the Company waives compliance with the provisions hereof, the Executive shall
disclose only that portion of the confidential or proprietary information which
he is advised by counsel that he is legally required to so disclose. All
records, files, memoranda, reports, customer lists, drawings, plans, documents
and the like that the Executive uses, prepares or comes into contact with during
the course of the Executive's employment shall remain the sole property of the
Company and/or the Affiliated Group, as applicable, and shall be turned over to
the Company upon termination of the Executive's employment.
(b) Non-Recruitment of Affiliated Group Employees. The Executive
shall not, at any time during the Restricted Period (as defined in this Section
9(b)), without the prior written consent of the Company, directly or indirectly,
contact, solicit, recruit, or employ (whether as an employee, officer, director,
agent, consultant or independent contractor) any person who is or was at any
time during the previous twelve months an employee, representative, officer or
director of any member of the Affiliated Group. Further, during the Restricted
Period, the Executive shall not take any action that could reasonably be
expected to have the effect of encouraging or inducing any employee,
representative, officer or director of any member of the Affiliated Group to
cease their relationship with any member of the Affiliated Group for any reason,
except for terminations of employment in the ordinary course of business. This
Section 9(b) shall not apply to recruitment of employees for the Affiliated
Group and shall not apply to the Executive's personal administrative staff who
perform secretarial-type functions. The "Restricted Period" shall mean the
period of Executive's employment with the Company and its subsidiaries and the
additional period ending on the second anniversary of the Date of Termination.
(c) Remedies. The Executive acknowledges and agrees that the terms
of Section 9: (i) are reasonable in light of all of the circumstances, (ii) are
sufficiently limited to protect the legitimate interests of the Company and its
subsidiaries, (iii) impose no undue hardship on the Executive and (iv) are not
injurious to the public. The Executive further acknowledges and agrees that (x)
the Executive's breach of the provisions of Section 9 will cause the Company
irreparable harm, which cannot be adequately compensated by money damages, and
(y) if the Company elects to prevent the Executive from breaching such
provisions by obtaining an injunction against the Executive, there is a
reasonable probability of the
-11-
Company's eventual success on the merits. The Executive consents and agrees that
if the Executive commits any such breach or threatens to commit any breach, the
Company shall be entitled to temporary and permanent injunctive relief from a
court of competent jurisdiction, without posting any bond or other security and
without the necessity of proof of actual damage, in addition to, and not in lieu
of, such other remedies as may be available to the Company for such breach,
including the recovery of money damages. If any of the provisions of Section 9
are determined to be wholly or partially unenforceable, the Executive hereby
agrees that this Agreement or any provision hereof may be reformed so that it is
enforceable to the maximum extent permitted by law. If any of the provisions of
this Section 9 are determined to be wholly or partially unenforceable in any
jurisdiction, such determination shall not be a bar to or in any way diminish
the Company's right to enforce any such covenant in any other jurisdiction.
10. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive other than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(b) No rights or obligations of the Company under this Agreement may
be assigned or transferred by the Company except that such rights or obligations
may be assigned or transferred pursuant to a merger or consolidation in which
the Company is not the continuing entity, or the sale or liquidation of all or
substantially all or a substantial portion of the assets of the Company;
provided, however, that the assignee or transferee is the successor to all or
substantially all or a substantial portion of the assets of the Company and such
assignee or transferee assumes the liabilities, obligations and duties of the
Company, as contained in this Agreement, either contractually or as a matter of
law. The Company shall cause any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all or a
substantial portion of its business and/or assets to assume expressly and agree
to perform this Agreement within 15 days after such succession in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. A breach of this Section 10(b) shall be
deemed to be Good Reason under Section 4(c)(viii). As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
11. Indemnification. The Company shall indemnify the Executive as an
officer, director and employee of the Company and any member of the Affiliated
Group and in the same amounts to the maximum extent permitted under the
Company's by-laws and applicable law. The Company shall maintain directors' and
officers' liability insurance coverage during the Executive's employment and
thereafter for the duration of any period of limitations during which any
action, if any, may be brought against the Executive for his service as an
officer, director or employee of the Company and any member of the Affiliated
Group and in the same amounts, and on the same terms and conditions as
applicable to other former senior executives and directors of the Company.
12. Miscellaneous. (a) This Agreement shall be governed by and construed
in
-12-
accordance with the laws of the State of New York, without reference to
principles of conflict of laws. The Parties hereto irrevocably agree to submit
to the jurisdiction and venue of the courts of the State of New York, in any
action or proceeding brought with respect to or in connection with this
Agreement. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the Parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other Party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Xxxx X. Xxxxx
At the most recent address on file for the Executive at the Company.
If to the Company:
Annuity and Life Re (Holdings), Ltd.
Xxxxxxxxxx Xxxxx
0 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 11
Bermuda
Attn: Chair of Compensation Committee
or to such other address as either Party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) Notwithstanding any other provision of this Agreement, the
Company may withhold from any amounts payable or benefits provided under this
Agreement any Federal, state, and local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, shall not be deemed to be
a waiver of such provision or right or any other provision or right of this
Agreement.
(f) From and after the Effective Date, this Agreement shall
supersede any
-13-
other employment, severance, retention or change-in-control agreement between
the Parties with respect to the subject matter hereof excepting only any stock
option or restricted stock agreements or awards whereunder the Executive is the
optionee or shareholder.
13. Representations. (a) The Company hereby represents and warrants to the
Executive that it is fully authorized and empowered to enter into this Agreement
and to perform its obligations hereunder and that the performance of its
obligations under this Agreement will not violate any agreement between it and
any other person, firm or organization.
(b) The Executive hereby represents and warrants to the Company that
the Executive is not party to any contract, understanding, agreement or policy,
whether or not written that would be breached by the Executive's entering into,
or performing services under, this Agreement by the Executive.
(c) The Executive further represents that he has disclosed to the
Company in writing all material (i) threatened claims that (x) are unresolved
and still outstanding as of the Effective Date and (y) have been received by the
Executive in writing during the 24 months prior to the Effective Date, (ii)
existing claims, and (iii) pending claims, in each case, against him of which he
is aware, if any, as a result of his employment with any previous employer or
his membership on any boards of directors which could be reasonably expected to
be materially damaging to the Executive monetarily, reputationally or otherwise.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name and on its behalf, all as of
the day and year first above written.
/s/ Xxxx X. Xxxxx
-----------------
Xxxx X. Xxxxx
By: /s/ Xxx X. Xxxxxxx
-------------------
Name: Xxx X. Xxxxxxx
Title: Chairman of the Compensation Committee
of the Board of Directors
-14-
EXHIBIT A
RESTRICTED STOCK AGREEMENT
This RESTRICTED STOCK AGREEMENT, dated as of the 3rd day of April,
2003 (the "Award Date"), is between Annuity and Life Re (Holdings), Ltd., a
Bermuda corporation (the "Company"), and Xxxx X. Xxxxx (the "Grantee"), an
employee of the Company.
The Company desires to award the Grantee shares of restricted stock
as provided in this Agreement, in accordance with the provisions of the Annuity
and Life Re (Holdings), Ltd. Restricted Stock Plan (the "Plan"), a copy of which
has been provided to the Grantee;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the legal sufficiency
of which is hereby acknowledged, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Grant of Award. The Company hereby awards to the Grantee a
restricted stock award (the "Award") under the Plan for an aggregate of Two
Hundred Thousand (200,000) common shares of the Company ("Common Shares"),
subject to adjustment as provided by Section 8 of the Plan. The Award is in all
respects limited and conditioned as provided in this Agreement and by the Plan.
The Plan and Grantee's rights under the Plan may be amended from time to time.
The terms of the Plan shall control in the event of any conflict with any other
terms of this Restricted Stock Agreement.
2. Vesting. Unless earlier terminated or vested in accordance with
the provisions of the Plan, the Common Shares covered by the Award shall vest in
Grantee in three equal annual installments commencing on the first anniversary
of the Award Date.
3. Stock Certificates. Certificates for Common Shares subject to the
Award shall be registered in the Grantee's name (or, if the Grantee so requests,
in the name of the Grantee and the Grantee's spouse, jointly with a right of
survivorship) and shall be delivered to the Grantee as soon as practicable. With
respect to shares in which the Grantee is not vested on the Award Date, the
Grantee shall, immediately upon receipt thereof, deposit all certificates for
such unvested Common Shares, together with a stock power executed in favor of
the Company, with the Company. Certificates for such unvested Common Shares
shall be held by the Company until the Grantee becomes vested in such Common
Shares. The certificate may include a legend setting forth restrictions on
transfer.
4. Dividends; Rights as Shareholder in Unvested Common Shares. The
Grantee shall be entitled to receive dividends on unvested Common Shares subject
to the Award (if any), shall have the right to vote such unvested Common Shares,
and shall have all other shareholder's rights in such unvested Common Shares,
with the exception that (i) the Grantee shall not be entitled to delivery of the
stock certificates until he or she becomes vested in the Common Shares and (ii)
the Company shall retain custody of the certificates representing the unvested
Common Shares until the Grantee becomes vested in such Common Shares, at which
time such certificates shall be delivered to the Grantee. The Grantee's rights
to such unvested Common Shares in the event the Grantee's employment with the
Company (or any related company) is terminated shall be governed by the Plan,
except as otherwise set forth in that certain Employment Agreement dated as of
the date hereof by and between the Grantee and the Company.
5. Transferability. The Grantee may not assign or transfer, in whole
or in part, Common Shares subject to this Award in which the Grantee is not
vested, other than by will or by the laws of descent and distribution.
6. Withholding of Taxes. The obligation of the Company to deliver
Common Shares upon vesting shall be subject to applicable tax withholding
requirements. If the vesting of the Award is subject to the withholding
requirements of applicable tax laws, the Grantee, subject to the provisions of
the Plan and such additional withholding rules ("Withholding Rules") as shall be
adopted by the Committee, may satisfy the withholding tax, in whole or in part,
by electing to have the Company withhold Common Shares to the extent such
shares are vested. Such Common Shares shall be valued, for this purpose, at
their Fair Market Value (as defined in the Plan) on the date the Award is
includible in income by the Grantee under applicable tax laws (the
"Determination Date"). Such election must be made in compliance with and subject
to the Withholding Rules, and the Company may limit the number of Common Shares
withheld to the extent necessary to avoid adverse accounting consequences.
7. Governing Law. This Restricted Stock Agreement shall be construed
in accordance with, and its interpretation shall be governed by, applicable
United States laws, and otherwise by Bermuda law (without reference to
principles of conflict of laws).
IN WITNESS WHEREOF, the Company has caused this Restricted Stock
Agreement to be duly executed by its duly authorized officer, and the Grantee
has hereunto set his hand, all on the day and year first above written.
ANNUITY AND LIFE RE (HOLDINGS), LTD.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Director
GRANTEE:
/s/ Xxxx X. Xxxxx
-------------------------------------
Xxxx X. Xxxxx
EXHIBIT B
April 3, 2003
Xx. Xxxx X. Xxxxx
c/o Annuity and Life Re (Holdings), Ltd.
Xxxxxxxxxx Xxxxx, 0 Xxxxxxxx Xxxxxx
Xxxxxxxx XX 11
Bermuda
Dear Xxx:
I am pleased to inform you that on April 3, 2003, pursuant to the terms of the
Annuity and Life Re (Holdings), Ltd. Initial Stock Option Plan (the "Plan"), you
were granted options to purchase Two Hundred Fifty Thousand (250,000) common
shares of Annuity and Life Re (Holdings), Ltd. (the "Company") at an exercise
price of $1.00 per share. The exercise price for the options shall be payable in
cash or its equivalent.
The options herein granted will become exercisable as follows:
Date First Exercisable Number of Shares
---------------------- ----------------
April 3, 2004 83,333
April 3, 2005 83,333
April 3, 2006 83,334
Once the options become exercisable, they will remain exercisable
until they are exercised or until they terminate. Unless earlier terminated
pursuant to the terms of the Plan, all options herein granted shall terminate on
April 3, 2013. Under certain conditions more specifically set forth in the Plan
or in that certain Employment Agreement dated as of the date hereof by and
between you and the Company, the time at which the options become exercisable
may be accelerated.
To the extent exercisable under the provisions of this letter
agreement and the Plan, the options may be exercised from time to time by
written notice to the Company of your election to exercise the options. Any such
notice of exercise shall specify the number of common shares to be purchased by
the exercise of the options and shall be accompanied by the purchase price for
such common shares.
Further terms governing the options granted to you herein are set
forth in the Plan, which is incorporated by reference herein. In the event of
any conflict between this letter agreement and the Plan, the Plan shall control.
The options granted to you herein are intended to be non-qualified
stock options. You are advised to consult with your tax advisor for the tax
consequences of the grant of the options, exercise of the options and the sale
of common shares purchased by exercise of the options.
If you wish to accept the grant of the options as provided above and
in the Plan, please so indicate by signing this letter in the space provided
below. Upon signing the letter, you and the Company shall be legally bound
hereby under Bermuda law.
Very truly yours,
ANNUITY AND LIFE RE (HOLDINGS), LTD.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Director
Accepted and Agreed:
/s/ Xxxx X. Xxxxx
------------------------------
Xxxx X. Xxxxx
