EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of February 27, 2003
(the "Effective Date"), by and between Xxxxxxx X. XxXxxxxxx (the "Executive")
and Endurance Specialty Holdings Ltd., a Bermuda company (the "Company").
WHEREAS, during the course of Executive's employment with the Company, the
Executive has performed outstanding services for the Company;
WHEREAS, it is deemed by the Company to be in the best interests of the
Company to assure continuation of Executive's employment;
WHEREAS, the Company and the Executive have determined to enter into this
Agreement pursuant to which the Company will continue to employ the Executive on
the terms and conditions set forth herein; and
WHEREAS, this Agreement replaces that certain Employment Agreement, dated
as of December 14, 2001, between the Company and the Executive (the "Original
Agreement").
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
1. Defined Terms. The definitions of capitalized terms used in this
Agreement (if not provided where a capitalized term initially appears) are
provided in the last Section hereof.
2. Employment. The Company hereby agrees to continue to employ the
Executive, and the Executive hereby accepts such continued employment, on the
terms and conditions hereinafter set forth.
3. Term.
(a) Duration of Term. Unless earlier terminated as provided in Section
3(b) hereof, the Executive's employment with the Company under this Agreement
shall commence at the Effective Date and shall end on December 14, 2006 (the
"Term").
(b) Termination of Employment during the Term. Nothing in this Section 3
shall limit the right of the Company or the Executive to terminate the
Executive's employment under this Agreement during the Term hereof on the terms
and conditions set forth in Section 7 hereof.
4. Position and Duties. Except as otherwise provided in this Section 4, on
and after the Effective Date, the Executive shall serve as Chairman, President
and Chief Executive Officer of the Company and shall have such additional duties
and responsibilities as may be assigned to the Executive by the Board and
commensurate with
his position of Chairman (if applicable), President and Chief Executive Officer.
The Executive shall report exclusively to the Board. The Executive agrees to
devote substantially all the Executive's full working time, attention and
energies during normal business hours to the performance of the Executive's
duties for the Company; provided that the Executive may engage in charitable,
civic or community activities, serve on corporate boards or committees, manage
personal investments, and deliver lectures and fulfill speaking engagements, but
only if, and to the extent that, such activities do not interfere with the
Executive's duties hereunder or violate the terms of any of the covenants
contained in Section 12 hereof. Notwithstanding anything to the contrary
contained herein, the Company may in its sole discretion determine that it is
not permissible (under applicable law or under the rules or regulations
promulgated by any securities exchange on which the Company's Ordinary Shares
are then listed) to have a Chairman of the Board who is also an executive
officer of the Company, in which case it may, without giving rise to an event
constituting Good Reason pursuant to Section 7(e)(i) hereof, elect to have the
Executive serve as President and Chief Executive Officer of the Company and
remove the Executive from the position of Chairman of the Board.
5. Place of Performance. The principal place of employment and office of
the Executive shall be in Bermuda, or such other location as may be agreed to in
writing by the Executive.
6. Compensation and Related Matters.
(a) Base Salary. During the Employment Period the Company shall pay the
Executive an annual base salary no less than US $900,000 per annum ("Base
Salary"). Base Salary shall be payable in accordance with the Company's
executive payroll policy.
(b) Annual Bonus. The Executive shall be provided, in the sole discretion
of the Board, an opportunity for an annual bonus with respect to each fiscal
year which ends within the Employment Period (the "Annual Bonus"). The Executive
will be eligible to receive a pro rata annual bonus for any fiscal year ending
after December 14, 2006 if he performs services under this Agreement through
such date and during such fiscal year. The amount of the Annual Bonus which is
earned and becomes payable shall be determined by the Committee and shall not
exceed 150% of Base Salary.
(c) Housing Allowance. The Company shall pay the Executive's reasonable
expenses relating to the maintenance of the Executive's primary residence in
Bermuda during the Employment Period. Prior to such payment the Executive shall
provide to the Company any substantiation for such expenses requested by the
Company. Notwithstanding the foregoing, the maximum annual amount the Company
shall pay pursuant to this Section 6(c) shall be US $200,000, which maximum
amount shall be prorated for any partial year worked by the Executive during the
Employment Period.
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(d) Private Air Travel. During the Employment Period, the Company in
accordance with the Company's policies shall provide the Executive in connection
with business travel with at least 400 hours of usage of a Learjet 60 or
comparable private aircraft. If a private aircraft is not available for any one
or more of the Executive's business travels, in lieu thereof the Company shall
reimburse the Executive for his cost of first class travel on a commercial
airline. In connection therewith, the Executive shall be entitled to
participate, at the Company's expense, in an air travel club selected by the
Executive.
(e) Tax Gross-Up. To the extent that the Executive incurs any United
States federal or state ordinary income tax liability on account of the housing
allowance specified in Section 6(c) hereof or the private air travel specified
in Section 6(d) hereof, the Company shall reimburse the Executive for all such
tax liability incurred and all United States federal and state ordinary income
tax, employment and payroll tax liability incurred as a result of the tax
gross-up payments specified pursuant to this Section 6(e), so that the Executive
is in the same after-tax basis as if all such payments had not been subject to
such taxes.
(f) Country Club Membership. The Company shall reimburse the Executive for
the dues and reasonable business-related expenses (not including initiation
fees) in connection with the Executive's membership during the Employment Period
in a country club mutually agreed to by the Executive and the Company.
(g) Other Benefits. During the Employment Period, the Executive shall be
entitled to participate in (i) the Company's medical and dental plans, (ii) a
pension arrangement in accordance with Bermuda law at a level of participation
that is no less than the level at which the Company's other senior executive
officers are entitled to participate and (iii) any other employee benefit and
compensation plans (including insurance benefits) made generally available to
executives of the Company (such benefits set forth in items (i), (ii) and (iii)
hereof being hereinafter referred to as the "Employee Benefits"). The Executive
shall be entitled to five weeks of paid vacation. The Executive also shall be
entitled to take time off for illness in accordance with the Company's policy
for executives and to receive all other fringe benefits and perquisites as are
from time to time made generally available to executives of the Company.
(h) Expense Reimbursement. During the Employment Period, the Company shall
reimburse the Executive, in accordance with the Company's policies and
procedures, for all proper and reasonable expenses incurred by the Executive in
the performance of the Executive's duties hereunder.
(i) Ordinary Share Purchase. On a date mutually agreeable to the Company
and the Executive prior to December 14, 2003, provided that the Executive is
employed by the Company on such date, the Company shall offer to the Executive
the right to purchase from the Company 50,000 Ordinary Shares (the "Purchased
Shares"), at a price per share of US $20 for an aggregate purchase price of US
$1,000,000. The Executive shall purchase such shares within thirty days of the
date of such offer. The Executive in his discretion may use all or a portion of
any Annual Bonus payable to the
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Executive pursuant to Section 6(b) of this Agreement to pay the aggregate
purchase price for the Ordinary Shares purchased pursuant to this Section 6(i).
The Purchased Shares shall be subject to adjustment or substitution as to the
number, price or kind of Ordinary Shares or as otherwise agreed upon by the
parties (i) in the event of changes in the outstanding Ordinary Shares or in the
capital structure of the Company, by reason of share dividends, share splits,
recapitalizations, reorganizations, amalgamations, mergers, consolidations,
combinations, exchanges, liquidations, spinoffs or other relevant changes in
capitalization, or any distributions to holders of Ordinary Shares other than a
regular cash dividend or (ii) in the event of any change in applicable laws or
any change in circumstances which results in or would result in any substantial
dilution or enlargement of the rights of the Executive with respect to the
Purchased Shares or which otherwise warrants equitable adjustment because it
interferes with the intended operation of this Section 6(i). The Ordinary Shares
purchased pursuant to this Section 6(i) shall not be subject to forfeiture to
the Company.
(j) Share Forfeiture. The Executive shall forfeit to the Company the
20,000 Ordinary Shares subject to forfeiture restrictions purchased by the
Executive pursuant to Section 4(a) of the Original Agreement in the event that,
prior to December 14, 2006, either (i) the Company terminates the Executive's
employment with the Company for Cause pursuant to Section 7(c) of this Agreement
or (ii) the Executive voluntarily terminates his employment with the Company
during the Employment Period pursuant to Section 7(e)(ii) of this Agreement.
Such forfeiture shall be effective as of the Date of Termination in connection
with any such event, and the Executive shall not be entitled to receive any
consideration from the Company in connection with the Executive's forfeiture of
the Ordinary Shares pursuant to this Section 6(j).
(k) Stock Options. The Option shall remain subject to the terms and
conditions contained in the Original Agreement and in the Non-Qualified Stock
Option Agreement, dated December 17, 2002, between the Executive and the
Company, except (i) that the Option shall be deemed to have become vested with
respect to 20% of the Ordinary Shares on January 1, 2003 (the "Initial Vesting
Date") and shall become vested with respect to an additional 20% of the Ordinary
Shares on each of December 14, 2003, December 14, 2004, December 14, 2005 and
December 14, 2006 (each, a "Vesting Date") and (ii) as otherwise provided in
this Agreement. In addition, in the event of a Change in Control, the Option
shall become fully vested and exercisable and, subject to Section 17(b) of the
Company's Amended and Restated 2002 Stock Option Plan (the "Option Plan"), shall
remain exercisable through December 14, 2006, at which time the Option shall
terminate.
7. Termination. The Executive's employment hereunder may be terminated,
and the Employment Period hereunder shall be ended, as follows:
(a) Death. The Executive's employment shall terminate upon the Executive's
death. Upon such a termination, this Agreement shall automatically terminate and
all rights of the Executive and his heirs, executors and administrators to
compensation and other benefits under this Agreement shall cease immediately,
except that the Executive's heirs, executors or administrators, as the case may
be, shall become
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entitled to the payments and benefits provided in Section 8(a) hereof in
accordance with the terms of such Section.
(b) Disability. The Company may terminate the Executive's employment
hereunder for Disability. Upon such a termination, the Executive shall become
entitled to the payments and benefits provided in Section 8(a) hereof in
accordance with the terms of such Section.
(c) Cause. The Company may terminate the Executive's employment hereunder
for Cause. Upon such a termination, the Executive shall become entitled to the
payments and benefits provided in Section 8(b) hereof in accordance with the
terms of such Section.
(d) Without Cause. The Company may terminate the Executive's employment
hereunder without Cause. Upon such a termination, the Executive shall become
entitled to the payments and benefits provided in Section 8(c) hereof in
accordance with the terms of such Section.
(e) Termination by the Executive.
(i) The Executive may terminate the Executive's employment hereunder
for Good Reason. Upon a Good Reason termination, the Executive shall
become entitled to the payments and benefits provided in Section 8(c)
hereof in accordance with the terms of such Section.
(ii) The Executive may terminate the Executive's employment
hereunder without Good Reason, upon giving notice of thirty (30) days to
the Company. In the event of such a termination, the Executive shall
comply with any reasonable request of the Company to assist in providing
for an orderly transition of authority, but such assistance shall not
delay the Executive's termination of employment longer than sixty (60)
days beyond the submission by the Executive of a Notice of Termination.
Upon such a termination, the Executive shall become entitled to the
payments and benefits provided in Section 8(b) hereof in accordance with
the terms of such Section.
(f) Notice of Termination. Any purported termination of the Executive's
employment (other than termination pursuant to Section 7(a) hereof) shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 16 hereof. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set 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. Further, a Notice of
Termination for Cause based on clause (ii) or (iii) of the definition of Cause
herein is required to include a copy of a resolution duly adopted by the
affirmative vote of not less than two-thirds (2/3) of the entire membership of
the Board at a meeting of the Board which was called and held for the purpose of
considering such termination (after reasonable notice to the Executive and an
opportunity for the
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Executive, together with the Executive's counsel, to be heard before the Board)
finding that, in the good faith opinion of the Board, the Executive was guilty
of conduct set forth in clause (ii) or (iii) of the definition of Cause herein,
and specifying the particulars thereof in detail.
(g) Date of Termination. For purposes of this Agreement, "Date of
Termination" shall mean the following: (i) if the Executive's employment is
terminated by the Executive's death, the date of the Executive's death; (ii) if
the Executive's employment is terminated for Disability pursuant to Section 7(b)
hereof, thirty (30) days after the Notice of Termination is given (provided that
the Executive shall not have returned to the full-time performance of the
Executive's duties during such thirty (30) day period); (iii) if the Executive's
employment is terminated for Cause pursuant to Section 7(c) hereof, the date
specified in the Notice of Termination; (iv) if the Executive's employment is
terminated by the Executive without Good Reason pursuant to Section 7(e)(ii)
hereof, the date determined in accordance with said Section; and (v) if the
Executive's employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a termination by the Company,
shall not be less than thirty (30) days and, in the case of a termination by the
Executive, shall not be less than fifteen (15) days nor more than sixty (60)
days, respectively, from the date such Notice of Termination is given).
(h) Dispute Concerning Termination. If within fifteen (15) days after any
Notice of Termination is given, or, if later, prior to the Date of Termination
(as determined without regard to this Section 7(h)), the party receiving such
Notice of Termination notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be extended until the earlier to
occur of (i) the date on which the Term ends or (ii) the date on which the
dispute is finally resolved, either by mutual written agreement of the parties
or by the final judgment, order or decree of an arbitrator or a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Date of Termination shall be extended by a notice of
dispute given by the Executive only if such notice is given in good faith and
the Executive pursues the resolution of such dispute with reasonable diligence.
8. Compensation Upon Termination of Employment.
(a) Termination for Death or Disability. Upon termination of the
Executive's employment due to the Executive's death or Disability, the Company
shall have no additional obligations to the Executive under this Agreement
except to the extent provided in Section 14 hereof (and, to the extent
applicable, Sections 9 and 10 hereof) and except for the following, which shall
be provided to the Executive, or his beneficiaries, as applicable:
(i) accrued Base Salary through and including the Date of
Termination ("Accrued Base Salary");
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(ii) payment, in accordance with the Company's executive payroll
policy, for each year during the period commencing on the Date of
Termination and ending on December 14, 2006, of an amount equal to the
Base Salary, which amount shall be prorated for any partial year during
such period of payment;
(iii) the vesting of the Option, to the extent not vested as of the
Date of Termination, with respect to an additional number of Ordinary
Shares equal to the product of (x) and (y), where (x) is equal to
218,818 and (y) is equal to (I) if the Date of Termination is prior to
December 14, 2003, a fraction, the numerator of which is the number of
days elapsed from the Initial Vesting Date through the Date of
Termination and the denominator of which is 348 or (II) if the Date of
Termination on or following December 14, 2003, a fraction, the
numerator of which is the number of days elapsed from the most recent
Vesting Date through the Date of Termination and the denominator of
which is 365, and, in each case, the ability to exercise the Option, to
the extent vested as of the Date of Termination (including any portion
that becomes vested as a result of the operation of this Section
8(a)(iii)), for a period of eighteen months following such date, and,
to the extent not exercised by the Executive during such period, the
termination of the Option in its entirety;
(iv) the continuation until December 14, 2006 of the Employee
Benefits to which the Executive was entitled on the Date of
Termination, subject to such changes thereto as are generally
applicable to the executives of the Company from time to time; and
(v) (x) reimbursement for any expenses which are incurred by the
Executive prior to the Date of Termination, but for which the Executive
has not yet been reimbursed by the Company ("Unreimbursed Expenses"),
(y) a cash payment equal to the amount of any earned but unpaid bonus
and (z) any vacation that has been accrued in accordance with the terms
of Section 6(g) hereof ("Accrued Vacation").
(b) Termination by the Company with Cause or by the Executive without Good
Reason. If the Executive's employment hereunder is terminated by the Company
with Cause or by the Executive without Good Reason, then the Option, whether or
not then exercisable, shall terminate, and all obligations of the Company
hereunder shall cease, except that the Executive shall be entitled to (i)
Accrued Base Salary, (ii) Unreimbursed Expenses, (iii) Accrued Vacation and (iv)
the Employee Benefits to which the Executive was entitled as of the Date of
Termination in accordance with the terms of the plans and programs of the
Company under which such Employee Benefits are provided. The Company shall have
no additional obligations to the Executive under this Agreement except to the
extent provided in this Section 8(b) and Section 14 hereof (and, to the extent
applicable, Sections 9 and 10 hereof).
(c) Termination by the Company without Cause or by the Executive with Good
Reason. If the Executive's employment hereunder is terminated by
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the Company without Cause (other than by reason of death or Disability) or by
the Executive with Good Reason, then:
(i) the Company shall pay the Executive's Base Salary to the
Executive through the Date of Termination at the rate in effect
immediately prior to the Date of Termination, together with all
compensation and benefits to which the Executive was entitled through
the Date of Termination under the terms of the Company's compensation
and benefit plans, programs or arrangements as in effect immediately
prior to the Date of Termination;
(ii) the Company shall pay to the Executive a lump sum amount, in
cash, equal to the amount of any Annual Bonus which has been allocated
or awarded (but not yet paid) to the Executive for a completed fiscal
year preceding the Date of Termination under any Annual Bonus plan;
(iii) in lieu of any severance benefit otherwise payable to the
Executive, the Company shall continue to pay the Executive his Base
Salary as in effect immediately prior to the Date of Termination, in
accordance with the Company's executive payroll policy, through the
earlier to occur of (x) the second anniversary of the Date of
Termination or (y) December 14, 2006 (the earlier to occur of (x) or
(y), the "Severance Period"); provided, however, that (I) in the event
the Date of Termination follows a Change in Control, the payments
requirement to be made to the Executive under this Section 8(c)(iii)
shall be made in one lump sum as soon as practicable following the Date
of Termination and (II) in the event of a Change in Control during the
Severance Period, any amounts to which the Executive is entitled under
this Section 8(c)(iii) which remain unpaid as of the date of such
Change in Control shall be paid to the Executive in one lump sum as
soon as practicable following the date of such Change in Control;
(iv) during the Severance Period, the Company shall arrange to
provide the Executive and his eligible dependents Employee Benefits
similar to those provided to the Executive and his eligible dependents
immediately prior to the Date of Termination; provided, however, that,
benefits otherwise receivable pursuant to this Section 8(c)(iv) shall
be reduced to the extent benefits of the same type are received by or
made available to Executive during the Severance Period (and any such
benefits received by or made available to the Executive shall be
reported to the Company by the Executive);
(v) the Option shall continue to vest during the Severance Period,
and the vested portion shall thereafter remain exercisable for a period
of one month, at which time any portion of the Option which has not
been exercised by the Executive shall terminate; and
(vi) (x) Unreimbursed Expenses and (y) Accrued Vacation.
(vii) the Company shall have no additional obligations to the
Executive under this Agreement except to the extent provided in Section
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hereof (and, to the extent applicable, Sections 9 and 10 hereof)
(the payments and benefits provided to the Executive pursuant to this
Section 8(c) being referred to herein as the "Severance Payments").
(d) General. 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.
9. 280G Treatment.
(a) Notwithstanding any other provisions of this Agreement, in the
event that any payment or benefit received or to be received by the Executive
(including any payment or benefit received in connection with a Change in
Control or the termination of the Executive's employment, whether pursuant to
the terms of this Agreement or any other plan, arrangement or agreement) (all
such payments and benefits, including the Severance Payments, being hereinafter
referred to as the "Total Payments") would be subject (in whole or part), to any
excise tax imposed under Section 4999 of the Code (the "Excise Tax"), then,
after taking into account any reduction in the Total Payments provided by reason
of section 280G of the Code in such other plan, arrangement or agreement, the
cash Severance Payments shall first be reduced, and the noncash Severance
Payments shall thereafter be reduced, to the extent necessary so that no portion
of the Total Payments is subject to the Excise Tax but only if (i) the net
amount of such Total Payments, as so reduced (and after subtracting the net
amount of federal, state and local income taxes on such reduced Total Payments
and after taking into account the phase out of itemized deductions and personal
exemptions attributable to such reduced Total Payments) is greater than or equal
to (ii) the net amount of such Total Payments without such reduction (but after
subtracting the net amount of federal, state and local income taxes on such
Total Payments and the amount of Excise Tax to which the Executive would be
subject in respect of such unreduced Total Payments and after taking into
account the phase out of itemized deductions and personal exemptions
attributable to such unreduced Total Payments); provided, however, that the
Executive may elect to have the noncash Severance Payments reduced (or
eliminated) prior to any reduction of the cash Severance Payments.
(b) For purposes of determining whether and the extent to which
the Total Payments will be subject to the Excise Tax, (i) no portion of the
Total Payments the receipt or enjoyment of which the Executive shall have waived
at such time and in such manner as not to constitute a "payment" within the
meaning of section 280G(b) of the Code shall be taken into account, (ii) no
portion of the Total Payments shall be taken into account which, in the opinion
of tax counsel ("Tax Counsel") reasonably acceptable to the Executive and
selected by the accounting firm (the "Auditor") which was, immediately prior to
the Change in Control, the Company's independent auditor, does not constitute a
"parachute payment" within the meaning of section 280G(b)(2) of the Code
(including by reason of section 280G(b)(4)(A) of the
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Code) and, in calculating the Excise Tax, no portion of such Total Payments
shall be taken into account which, in the opinion of Tax Counsel, constitutes
reasonable compensation for services actually rendered, within the meaning of
section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to
such reasonable compensation, and (iii) the value of any non-cash benefit or any
deferred payment or benefit included in the Total Payments shall be determined
by the Auditor in accordance with the principles of sections 280G(d)(3) and (4)
of the Code
(c) At the time that payments are made under this Agreement,
the Company shall provide the Executive with a written statement setting forth
the manner in which such payments were calculated and the basis for such
calculations including, without limitation, any opinions or other advice the
Company has received from Tax Counsel, the Auditor or other advisors or
consultants (and any such opinions or advice which are in writing shall be
attached to the statement). If the Executive objects to the Company's
calculations, the Company shall pay to the Executive such portion of the
Severance Payments (up to 100% thereof) as the Executive determines is necessary
to result in the proper application of subsection (a) of this Section 9.
10. Legal and Arbitration Fees and Expenses. The Company also shall pay to
the Executive all reasonable legal fees and expenses incurred by the Executive
in (a) disputing in good faith any issue hereunder relating to the termination
of the Executive's employment, in seeking in good faith to obtain or enforce any
benefit or right provided by this Agreement or in connection with any tax audit
or proceeding to the extent attributable to the application of section 4999 of
the Code to any payment or benefit provided hereunder and (b) in connection with
the preparation of this Agreement. Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require. Notwithstanding the foregoing, no such fees and expenses
shall be paid pursuant to subsection 10(a) hereof, unless the Executive prevails
on at least one of the issues he raises or are raised by the Company.
11. No Mitigation; Limited Offset. The Company agrees that, if the
Executive's employment with the Company terminates during the Term, then, except
as may be required by applicable law, the Executive is not required to seek
other employment or to attempt in any way to reduce any amounts payable to the
Executive by the Company pursuant to Section 8 hereof. However, such amounts
shall be reduced by the amount of salary, bonus or other compensation which the
Executive earns from a subsequent employer that relates to the period for which
the amount is payable to the Executive hereunder. The Executive shall promptly
notify the Company of his acceptance of employment with another employer
following his termination of employment.
12. Protection of Ideas, Noncompetition and Nonsolicitation.
(a) Protection of Ideas. Both during the Employment Period and
thereafter, Executive shall assist the Company or its nominees, at any time, in
the
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protection of the Company's worldwide right, title, and interest in and to
information, ideas, concepts, improvements, discoveries, and inventions, and its
copyrighted works with respect to such items that were within his direct or
indirect control, by assisting in any reasonable requests to cooperate in
litigation and by the execution of all formal assignment documents requested by
Company or its nominees and the execution of all lawful oaths and applications
for applications for patents and registration of copyright in Bermuda, the
United States and other countries.
(b) Noncompetition. The Company shall disclose to the Executive,
or place the Executive in a position to have access to or to develop, trade
secrets or confidential information of the Company or its affiliates; and/or
shall entrust the Executive with business opportunities of the Company or its
affiliates; and/or shall place the Executive in a position to develop business
good will on behalf of the Company or its affiliates. As part of the
consideration for the compensation and benefits to be paid to the Executive
hereunder, to protect the trade secrets and confidential information of the
Company or its subsidiaries or affiliates that have been and will in the future
be disclosed or entrusted to the Executive, the business good will of the
Company or its subsidiaries or affiliates that has been and will in the future
be developed in the Executive, or the business opportunities that have been and
will in the future be disclosed or entrusted to the Executive by the Company or
its subsidiaries or affiliates; and as an additional incentive for the Company
to enter into this Agreement, the Executive agrees to the non-competition
obligations hereunder. While the Executive continues to be an employee of the
Company and (i) in the event of a Severance Termination, during the Severance
Period, or (ii) in the event of any other termination of the Executive's
employment, for the one year period beginning on the Date of Termination, the
Executive shall not in any manner, directly or indirectly, through any person,
firm or corporation, alone or as a member of a partnership or as an officer,
director, stockholder, investor or employee of or consultant to any other
corporation or enterprise or otherwise, engage or be engaged, or assist any
other person, firm, corporation or enterprise in engaging or being engaged, in
the Business in any geographic area in which the Company or any of its
subsidiaries is then conducting such business (other than the ownership of less
than 5% of a publicly-traded entity or 1% of a private entity).
(c) Nonsolicitation. While the Executive continues to be an
employee of the Company and (i) in the event of a Severance Termination, during
the Severance Period, or (ii) in the event of any other termination of the
Executive's employment, for the one year period beginning on the Date of
Termination, the Executive shall not, except as permitted by the Company upon
its prior written consent, (x) in any manner, directly or indirectly, induce or
attempt to induce any employee of the Company or any of its subsidiaries to
terminate or abandon his or her employment for any purpose whatsoever or (y) in
connection with any Business call on, service, solicit or otherwise do business
with any customer of the Company or any of its subsidiaries. This shall not
apply to the Executive's recruitment of his personal administrative assistant or
to general solicitations to the public.
(d) Enforcement. The Company shall have the right and remedy to
have the provisions of this Section 12 specifically enforced, including by
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temporary and/or permanent injunction, it being acknowledged and agreed that any
such violation may cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company. Any termination of
the Executive's employment or of this Agreement shall have no effect on the
continuing operation of this Section 12.
(e) In the event that any provision of this Section 12 is not
performed by the Executive in accordance with its terms or is otherwise breached
by the Executive, the Company immediately shall cease providing the Executive
with the payments and benefits set forth in Section 8(c) of this Agreement and
the Executive's right to any such payments and benefits immediately shall be
forfeited.
13. Independence and Severability of Section 12 Provisions. Each of the
rights and remedies enumerated in Section 12 hereof shall be independent of the
others and shall be severally enforceable and all of such rights and remedies
shall be in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity. If any of the covenants
contained in Section 12 hereof or if any of the rights or remedies enumerated in
Section 12 hereof, or any part of any of them, is hereafter construed to be
invalid or unenforceable, the same shall not affect the remainder of the
covenant or covenants or rights or remedies which shall be given full effect
without regard to the invalid portions. If any of the covenants contained in
Section 12 is held to be unenforceable because of the duration of such provision
or the area covered thereby, the parties agree that the court making such
determination shall have the authority to reduce the duration and/or area of
such provision, and in its reduced form said provision shall then be
enforceable.
14. Indemnification. The Company shall indemnify the Executive to the full
extent authorized by law and the Charter and Bye-Laws of the Company, as
applicable, for all expenses, costs, liabilities and legal fees which the
Executive may incur in the discharge of the Executive's duties hereunder. The
Executive shall be insured under the Company's directors' and officers'
liability insurance policy as in effect from time to time. Any termination of
the Executive's employment or of this Agreement shall have no effect on the
continuing operation of this Section 14.
15. Successors; Binding Agreement.
(a) In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform this Agreement 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
and may not otherwise assign this Agreement. Failure of the Company to obtain
such assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive to
compensation from the Company in the same amount and on the same terms as the
Executive would be entitled to hereunder if the Executive were to terminate the
Executive's employment for Good Reason, except that, for purposes of
implementing
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the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive shall
die while any amount would still be payable to the Executive hereunder (other
than amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, each such amount, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the executors, personal representatives or administrators of the Executive's
estate.
16. Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed, if to the
Executive, to the address inserted below the Executive's signature on the final
page hereof and, if to the Company, to the address set forth below, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon actual receipt:
To the Company:
Endurance Specialty Holdings Ltd.
00 Xxx-Xx-Xxxxx Xxxx
Xxxxx 000
Xxxxxxxx XX 00, Xxxxxxx
Xxxxxxxxx: General Counsel
Facsimile: (000) 000-0000
17. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or of any lack of compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. This Agreement supersedes any other
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof which have been made by either party,
including, without limitation, any employment memorandum, memorandum of
understanding, or severance agreement. Captions and Section headings in this
Agreement are provided merely for convenience and shall not affect the
interpretation of any of the provisions herein. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
Bermuda. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law and any additional
13
withholding to which the Executive has agreed. The obligations of the Company
and the Executive under this Agreement which by their nature may require either
partial or total performance after the expiration of the Term (including,
without limitation, those under Sections 8 and 9 hereof) shall survive such
expiration.
18. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
19. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
20. Settlement of Disputes; Arbitration.
(a) Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Bermuda in accordance
with the Bermuda Law then in effect. Judgment may be entered on the arbitrator's
award in any court having jurisdiction. Notwithstanding any provision of this
Agreement to the contrary, the Executive shall be entitled to seek specific
performance of the Executive's right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in connection
with this Agreement.
(b) Notwithstanding any provision of this Agreement to the contrary, in
the event of a breach or threatened breach by the Executive of any of the
covenants set forth in Section 12 hereof, the Company shall be entitled to seek
equitable relief, including an injunction, in any court of proper jurisdiction
to maintain the status quo pending the resolution of the dispute by binding
arbitration as provided above. With respect to any such action, the Executive
and the Company hereby irrevocably submit to the non-exclusive jurisdiction of
the Supreme Court of Bermuda, and agree that process in any such action shall be
valid and effective for all purposes if served upon the respective party in
accordance with the notice provisions of Section 16 hereof.
21. Definitions. For purposes of this Agreement, the following terms shall
have the meanings indicated below:
(a) "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.
(b) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Business" shall mean any property or casualty coverages
underwritten by the Company or any of its subsidiaries as an insurer or
reinsurer during the Employment Period or the one-year period immediately
preceding the commencement of the Employment Period.
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(e) "Cause" for termination by the Company of the Executive's
employment shall mean (i) conviction of the Executive (including a plea of nolo
contendere) for the commission of a felony, (ii) the willful failure of the
Executive to substantially perform the Executive's duties with the Company
(other than any such failure resulting from the Executive's incapacity due to
physical or mental illness or any such actual or anticipated failure after the
issuance of a Notice of Termination for Good Reason by the Executive pursuant to
Section 7(f) hereof) after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically identifies
the manner in which the Board believes that the Executive has not substantially
performed the Executive's duties, or (iii) the engaging by the Executive in
willful gross misconduct in the course of performing his duties, which results
in demonstrable and material economic harm to the Company and its subsidiaries.
For purposes of clauses (ii) and (iii) of this definition, no act, or failure to
act, on the Executive's part shall be deemed "willful" unless done, or omitted
to be done, by the Executive not in good faith and without reasonable belief
that the Executive's act, or failure to act, was in the best interest of the
Company.
(f) A "Change in Control" shall have the meaning ascribed to such term
in the Option Plan, as it may be amended from time to time; provided, that any
amendment adverse to the Executive shall not be binding upon him under this
Agreement without his written consent. Notwithstanding the foregoing, a "Change
in Control" shall not be deemed to have occurred by virtue of an initial public
offering of the Ordinary Shares.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(h) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment, if, (i) as a result of the Executive's
incapacity due to physical or mental illness, fails to perform the essential
functions of the Executive's position required of the Executive hereunder for a
continuous period of 120 days or any 360 days during the Employment Period Term,
and (ii) the Company shall have given the Executive a Notice of Termination for
Disability.
(i) "Employment Period" shall mean the period (which in no event shall
extend beyond the expiration of the Term and may end earlier pursuant to Section
3(b) hereof) during which Executive has an obligation to render services
hereunder, as described in Section 4 hereof.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(k) "Excise Tax" shall mean any excise tax imposed under section 4999
of the Code.
(l) "Good Reason" for termination by the Executive of the Executive's
employment shall mean a breach by the Company of any material provision
15
of this Agreement which breach remains uncured for a period of 30 days following
the Company's receipt of notice of such breach by the Executive. The Executive's
right to terminate the Executive's employment for Good Reason shall not be
affected by the Executive's incapacity due to physical or mental illness.
(m) "Option" shall mean the stock option granted to the Executive
pursuant to Section 3(d) of the Original Agreement.
(n) "Ordinary Share" shall mean an ordinary share of the Company, par
value $1.00 per share.
(o) "Severance Termination" shall mean a termination of the Executive's
employment described in Section 8(c) hereof.
16
Endurance Specialty Holdings Ltd.
By: /s/ Xxxxxxx X. XxXxxx
------------------------------
Name: Xxxxxxx X. XxXxxx
Title: Director
/s/ Xxxxxxx X. XxXxxxxxx
------------------------------
Xxxxxxx X. XxXxxxxxx
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