1
Exhibit 10.07
EMPLOYMENT AGREEMENT
(amended and restated as of August 19, 1996)
AGREEMENT, made and entered into this 19th day of August, 1996 by
and between Mid Ocean Reinsurance Company Ltd., a Bermuda corporation (the
"COMPANY"), and Xxxxx X. X.
Xxxxxxx (the "EXECUTIVE").
WHEREAS, on November 1, 1995, the Company and the Executive
entered into an employment agreement (the "PRIOR AGREEMENT") pursuant to which
the Company agreed to employ the Executive, and the Executive agreed to serve,
as resident Senior Vice President and Chief Underwriting Officer, subject to the
terms and conditions of such Prior Agreement; and
WHEREAS, the Company desires to amend and restate the Prior
Agreement as set forth herein; and
WHEREAS, the Executive wishes to continue such employment under
the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable consideration, the
Company and the Executive (the "PARTIES") agree as follows:
1. EMPLOYMENT.
2
-2-
The Company hereby employs the Executive, and the Executive
hereby accepts employment with the Company, for the term of this Agreement as
set forth in Section 2, below, in the position with duties and responsibilities
set forth in Section 3, below, and upon such other terms and conditions as are
hereinafter stated.
2. TERM OF EMPLOYMENT.
The term of employment under this Agreement shall commence on
August 19, 1996 (the "DATE OF THE AGREEMENT") and shall continue through the
close of business on the third anniversary of the Date of the Agreement, subject
to earlier termination as provided in Section 9, below. Thereafter such term
shall automatically be renewed for successive one-year periods unless the
Company gives notice in writing to the Executive or the Executive gives notice
in writing to the Company at least 60 days prior to the then scheduled
expiration date that the term is not to so renew.
3. POSITIONS, DUTIES AND RESPONSIBILITIES.
(a) GENERAL. The Executive shall be employed as Resident Chief
Underwriting Officer and Executive Vice President for the Company, with such
duties and responsibilities, including but not limited to underwriting, as may
be assigned to him by the President and Chief Executive Officer or his
successor. In carrying out his duties and responsibilities, the Executive shall
report to the President and Chief Executive Officer. During the term of this
Agreement, the Executive shall devote his full business time to the business and
3
-3-
affairs of the Company, including any corporation, partnership or other venture
in which the Company owns, directly or indirectly, 50 percent or more of the
stock or, in the case of any entity or venture other than a corporation, 50
percent or more of the equity interest (an "AFFILIATE"), and shall use his best
efforts, skills and abilities to promote the Company's interests.
(b) PERFORMANCE OF SERVICES. The Executive shall be stationed in
Bermuda and his services under this Agreement shall be generally performed in
Bermuda unless the Executive and the Company's Board of Directors (the "BOARD")
mutually agree in writing to the performance of such duties in another location
outside the United States.
(c) PERMITTED ACTIVITIES. Anything herein to the contrary
notwithstanding, nothing shall preclude the Executive from (i) serving on the
boards of directors of a reasonable number of other corporations or the boards
of a reasonable number of trade associations and/or charitable organizations,
(ii) engaging in charitable activities and community affairs and (iii) managing
his personal investments and affairs, provided such activities do not materially
interfere with the proper performance of his duties and responsibilities as
resident chief Underwriting Officer for the Company.
4. BASE SALARY.
The Executive shall be paid a Base Salary by the Company at an
annual rate of US $325,000, payable in accordance with the Company's regular pay
practices. Such Base Salary shall be subject to annual review and may be
increased at the discretion of the Executive
4
-4-
Committee of the Board.
5. ANNUAL BONUS.
In addition to the Base Salary provided for in Section 4, above,
the Executive may be awarded such annual bonuses as may be determined by the
Executive Committee of the Board, based on whatever incentive programs have been
adopted by the Company for senior executives of the Company, and Parent (as
defined below) as well as the performance of the Executive and the performance
of the Company. Any bonus shall be paid in cash in a lump sum promptly following
determination thereof. In any event, each annual bonus shall be at least
$50,000.
6. STOCK OPTION.
The Executive will be awarded Stock Options ("OPTIONS") under the
1993 Long-Term Incentive and Share Award Plan (the "PLAN") of the Company's
parent, Mid Ocean Limited, a Cayman Islands corporation (the "PARENT")
periodically as appropriate on the terins set forth in the Plan.
7. EMPLOYEE BENEFIT PROGRAMS.
During the term of the Executive's employment under this
Agreement, the Executive shall be entitled to participate in all employee
benefit programs of the Company and Parent as are in effect from time to time
and in which senior executives of the Company and Parent are eligible to
participate.
5
-5-
8. BUSINESS EXPENSE REIMBURSEMENT AND FRINGE BENEFITS.
(a) EXPENSE REIMBURSEMENT. During the term of the Executive's
employment under this Agreement, the Executive shall be entitled to receive
reimbursement by the Company or Parent for all reasonable out-of-pocket travel
expenses, entertainment expenses and other expenses incurred by him in
performing services under this Agreement, provided that the Executive submits
reasonable documentation with respect to such expenses. This shall include,
without limitation, reimbursement of any such costs for air fare (which the
Executive shall be entitled to on a first-class basis), hotel accommodations and
meals.
(b) FRINGE BENEFITS. During the term of the Executive's
employment under this Agreement, the Executive shall be entitled to participate
in any of the Company's and Parent's executive fringe benefits in accordance
with the terms and conditions of such arrangements as are in effect from time to
time for the Company's and Parent's senior executives. In all events, the
Executive shall be entitled during the period he is employed to the following:
(i) a living allowance of up to US $8,000 per month (to be
prorated for partial months) while the services are generally performed
in Bermuda,
(ii) use of an automobile in Bermuda,
(iii) reimbursement of the cost (including initiation fees and
annual dues) of
6
-6-
membership in two clubs in Bermuda,
(iv) reimbursement by the Company for the reasonable cost of
financial and tax planning, such reimbursement not to exceed US $10,000
per year; and
(v) air fare for up to three round-trip first-class non-business
trips per year between London and Bermuda by the Executive and such
members of his family as may accompany him (the benefit under this
Section 8(b)(iv) being in addition to any reimbursement of air fare
described in Section 8(a)).
9. TERMINATION OF EMPLOYMENT.
(a) TERMINATION DUE TO DEATH.
In the event the Executive dies during the term of employment,
the Executive's spouse or, if she does not survive him, the estate or other
legal representative of the Executive shall be entitled to receive the
Executive's Base Salary as provided in Section 4, above, at the rate in effect
immediately prior to termination, through the end of the month in which the
Executive dies. In addition to the above, the estate or other legal
representative of the Executive shall be entitled to:
(i) any annual bonus awarded but not yet paid under Section 5,
above,
(ii) a pro rata bonus for the year of death, if the Executive
Committee of the
7
-7-
Board so determines,
(iii) the rights under any options as provided in Section 6,
above, in accordance with the terms thereof, and
(iv) any other rights and benefits available under employee
compensation or benefit programs of the Company, or their equivalent, as
provided in Section 7, above, and under business expense reimbursement
and fringe benefit programs as described in Section 8, above, determined
in accordance with the applicable terms and provisions of such programs.
(b) TERMINATION DUE TO DISABILITY.
In the event the Executive's employment with the Company is
terminated due to his disability, as determined under the Company's long-term
disability plan, the Executive shall be entitled to:
(i) the Base Salary as provided in Section 4, above, through the
end of the month in which the Executive's employment terminates due to
disability,
(ii) any annual bonus awarded but not yet paid under Section 5,
above,
(iii) the rights under the Options as provided in Section 6,
above, in accordance with the terms thereof,
8
-8-
(iv) any other rights and benefits available under employee
benefit programs of the Company, or their equivalent, as provided in
Section 7, above, including, without limitation, the terms of any
long-term disability plan, and under the business expense reimbursement
and fringe benefit programs as described in Section 8, above, determined
in accordance with the applicable terms and provisions of such programs.
(c) TERMINATION FOR CAUSE.
(i) The employment of the Executive under this Agreement may be
terminated by the Company for Cause. For this purpose, "CAUSE" shall
mean:
(A) conviction of the Executive of a felony involving
moral turpitude, or
(B) the Executive, in carrying out his duties for the
Company under this Agreement, has been guilty of (I) gross
neglect or (11) gross misconduct.
(ii) In the event of a termination for Cause under Section
9(c)(i), above, the Executive shall be entitled only to:
(A) Base Salary as provided in Section 4, above, at the
rate in effect at the time of his termination of employment for
Cause, through the date on which termination for Cause occurs,
9
-9-
(B) the rights, if any, under the Options as provided in
Section 6, above, determined in accordance with the terms
thereof, and (C) any other rights and benefits, if any, available
under employee benefit programs of the Company, or their
equivalent, as provided in Section 7, above, and under the
business expense reimbursement and fringe benefit programs as
described in Section 8, above, determined in accordance with the
applicable terms and provisions of such programs.
(d) TERMINATION WITHOUT CAUSE.
(i) Anything in this Agreement to the contrary notwithstanding,
the Executive's employment may be terminated without Cause as provided
in this Section 9(d). A termination due to disability, as described in
Section 9(b), above, or a termination for Cause, as described in Section
9(c), above, shall not be deemed a termination without Cause under this
Section 9(d).
(ii) In the event the Executive's employment is terminated
without Cause (x) prior to a "CHANGE IN CONTROL" of Parent (as defined
in Exhibit A hereto) or (y) following the first anniversary of a Change
of Control, the Executive shall be entitled to:
(A) Base Salary as provided in Section 4, above, at the
rate in effect in accordance with Section 4, above, immediately
prior to such termination, payable in equal monthly installments
for a period of 12 months following the date of such
10
-10-
termination,
(B) any annual bonus awarded but not yet paid under
Section 5, above,
(C) the rights under any Options as provided in Section 6,
above, in accordance with the terms thereof,
(D) continued coverage under the employee benefit programs
of the Company and Parent, or their equivalent, as provided in
Section 7, above, in which the Executive was participating at the
time of his termination of employment for the period of salary
continuation or, if longer, for the period provided in such
programs; provided, however, that any such continued coverage
shall be offset by comparable coverage provided to the Executive
in connection with subsequent full-time employment and, to the
extent the Company or Parent is unable to continue such coverage,
the Company or Parent shall provide the Executive with
economically equivalent benefits determined on an after-tax
basis, and
(E) any other rights and benefits available under employee
benefit programs of the Company or Parent, or their equivalent,
as provided in Section 7, above, and under the business expense
reimbursement and fringe benefit programs as described in Section
8, above, determined in accordance with the applicable terms and
provisions of such programs.
11
-11-
(iii) In the event the Executive's employment is terminated by
the Company without Cause within the 12 month period following a Change
in Control (the "POST-CHANGE PERIOD"), or the Executive terminates his
employment with the Company for "GOOD REASON" (as defined in Exhibit B
hereto) during the Post-Change Period, the Executive shall be entitled
to:
(A) Base Salary as provided in Section 4, above, at the
rate in effect in accordance with Section 4, above, immediately
prior to such termination, payable in equal monthly installments
for a period of 24 months following the date of such termination,
(B) an amount equal to two times the largest annual bonus
awarded to the Executive in the three year period prior to the
year in which a Change of Control occurs, paid in equal monthly
installments for the period of Base Salary continuation,
(C) an amount equal to the annual bonus that would have
been awarded to Executive in respect of the year in which the
Change in Control occurs, multiplied by a fraction, the numerator
of which is the number of months or fraction thereof in which the
Executive was employed by the Company in such year, and the
denominator of which is 12.
12
-12-
(D) the rights under any Options as provided in Section 6,
above, in accordance with the terms thereof,
(E) continued coverage under the employee benefit programs
of the Company or Parent, or their equivalent, as provided in
Section 7, above, in which the Executive was participating at the
time of his termination of employment for the period of Base
Salary continuation or, if longer, for the period provided in
such programs; provided, however, that any such continued
coverage shall be offset by comparable coverage provided to the
Executive in connection with subsequent full-time employment and,
to the extent the Company or Parent is unable to continue such
coverage, the Company or Parent shall provide the Executive with
economically equivalent benefits determined on an after-tax
basis, and
(F) any other rights and benefits available under employee
benefit programs of the Company or Parent, or their equivalent,
as provided in Section 7, above, and under the business expense
reimbursement and fringe benefit programs as described in Section
8, above, determined in accordance with the applicable terms and
provisions of such programs.
(iv) If, at any time during the term of the Executive's
employment hereunder, the Executive fails to be appointed (or
re-appointed, as appropriate) as resident Chief
13
-13-
Underwriting Officer for the Company, the Executive shall have the right
to terminate his employment and such termination, if prior to a Change
in Control, shall be deemed a termination by the Company without Cause
under Section 9(d)(ii), above, or, if following a Change in Control,
shall be deemed a termination by the Company without Cause under Section
9(d)(ii), above, provided the Executive shall have given the Company
written notice of his decision and shall not within 10 business days
thereafter have been reinstated to the relevant position.
(e) VOLUNTARY TERMINATION BY THE EXECUTIVE.
The Executive may voluntarily terminate his employment prior to
the expiration of the term of this Agreement. Such termination shall constitute
a voluntary termination and, except as provided in Section 9(d)(iii), above, in
such event the Executive shall be limited to the same rights and benefits as
applicable to a termination by the Company or Parent for Cause as provided in
Section 9(c), above. A voluntary termination under this Section 9(e) shall not
be deemed a breach of this Agreement. A termination of the Executive's
employment due to disability as described in Section 9(b), above, termination by
the Executive which the Executive is entitled to treat as a termination by the
Company or Parent pursuant to Section 9(d), above, or a termination by Executive
under Section 9(d)(iii), above, shall not be deemed a voluntary termination
within the meaning of this Section 9(c).
10. NO MITIGATION; NO OFFSET.
14
-14-
In the event of any termination of employment under Section 9
above, the Executive shall be under no obligation to seek other employment, and
there shall be no offset against amounts due the Executive under this Agreement
on account of any remuneration attributable to any subsequent employment that he
may obtain.
11. NON-COMPETITION AND NON-SOLICITATION.
(a) NON-COMPETITION. During the term of his employment and for a
period of 12 months thereafter, the Executive shall not engage in any activities
in Bermuda if such activities involve business that is competitive with that
being conducted by the Company or Parent. For purposes of this Section 11, the
Company or Parent shall be deemed to include any entity that was an Affiliate of
the Company or Parent during the period of the Executive's employment as well as
the time in question.
15
-15-
(b) NON-SOLICITATION. During the term of the Executive's
employment under this Agreement, and for a period of 12 months following
termination of employment, the Executive shall not encourage any other employee
of the Company or Parent to leave the employ of the Company or Parent.
12. CONFIDENTIAL INFORMATION.
The Executive covenants that he shall not, without the prior
written consent of the Board or a person authorized by the Board, disclose to
any person, other than an employee of the Company or Parent or other person to
whom disclosure is necessary to the performance by the Executive of his duties
in the employ of the Company or Parent, any confidential proprietary information
about the Company Parent or an Affiliate or their respective businesses, unless
and until such information has become known to the public generally (other than
as a result of unauthorized disclosure by the Executive) or unless he is
required to disclose such information by a court or by a governmental body with
apparent authority to require such disclosure. The foregoing covenant by the
Executive shall be without limitation as to time and geographic application.
13. WITHHOLDING.
Anything in this Agreement to the contrary notwithstanding, all
payments required to be made by the Company or Parent hereunder to the Executive
shall be subject to withholding of such amounts relating to taxes as the Company
or Parent may reasonably determine it should
16
-16-
withhold pursuant to any applicable law or regulation. In lieu of withholding
such amounts, in whole or in part, the Company or Parent may, in its sole
discretion, accept any other provision for payment of taxes as required by law,
provided it is satisfied that all requirements of law affecting its
responsibilities to withhold such taxes have been satisfied.
14. ENTIRE AGREEMENT.
This Agreement, together with the Exhibits, contains the entire
agreement between the Parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the Company and the Executive
with respect thereto.
15. ASSIGNABILITY; BINDING NATURE.
17
-17-
This Agreement shall be binding upon and inure to the benefit of
the Parties and their respective successors, heirs and assigns. No rights or
obligations of the Executive under this Agreement may be assigned or transferred
by the Executive other than his rights to compensation and benefits hereunder,
which may be transferred by will or operation of law subject to the limitations
of this Agreement. 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 of the assets of the Company, provided that the
assignee or transferee is the successor to all or substantially all 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.
16. INDEMNIFICATION.
The Executive shall be provided indemnification by the Company to
the maximum extent permitted under the laws of Bermuda and the Memorandum of
Association and By-Laws of the Company. In addition, he shall be covered by a
directors' and officers' liability policy with coverage for him to the extent of
US $50,000,000.
17. SETTLEMENT OF DISPUTES.
18
-18-
Any dispute between the Parties arising from or relating to the
terms of this Agreement or the Executive's employment with the Company shall be
resolved by arbitration held in New York City in accordance with the rules of
the American Arbitration Association. All costs associated with any arbitration,
including all legal expenses, for both Parties shall be borne by the Company.
18. AMENDMENT OR WAIVER.
No provision in this Agreement may be amended unless such
amendment is agreed to in writing, signed by the Executive and by a duly
authorized officer of the Company. No waiver by either Party of any breach by
the other Party of any condition or provision of this Agreement to be performed
by such other Party shall be deemed a waiver of a similar or dissimilar
condition or provision at the same or any prior or subsequent time. Any waiver
must be in writing and signed by the Executive or a duly authorized officer of
the Company, as the case may be.
19. NOTICES.
Any notices required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or sent by courier, or by certified or registered mail,
postage prepaid, return receipt requested, duly addressed to the Party concerned
at the address indicated below or to such changed address as such Party may
subsequently by similar process give notice of:
19
-19-
If to the Company: Mid Ocean Reinsurance Company, Ltd.
Xxxxxxxx Xxxxx,
00 Xxx-xx-Xxxxx Xxxx
Xxxxxxxx, XX XX
Bermuda
If to the Parent: Mid Ocean Limited
Xxxxxxxx Xxxxx,
00 Xxx-xx-Xxxxx Xxxx
Xxxxxxxx, XX XX
Bermuda
If to the Executive: Xxxxx X.X. Xxxxxxx
Xxxxxx House
3 Nantucket Lane
Smiths Parish FL 05
Bermuda
20. SEVERABILITY.
In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, in whole or
in part, the remaining provisions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
law.
21. SURVIVORSHIP.
20
-20-
The respective rights and obligations of the Parties shall
survive any termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations.
22. REFERENCES.
In the event of the Executive's death or a judicial determination
of his incompetence, reference in this Agreement to the Executive shall be
deemed, where appropriate, to refer to his estate or other legal representative.
23. GOVERNING LAW.
This Agreement shall be governed by and construed and interpreted
in accordance with the laws of the State of New York without reference to the
principles of conflict of laws.
24. HEADINGS.
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control of affect the meaning or
construction of any provision of this Agreement.
25. COUNTERPARTS.
This Agreement may be executed in one or more counterparts.
21
-21-
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first written above.
MID OCEAN REINSURANCE COMPANY LTD.
By: /s/ Xxxxxxx X. Butt
---------------------------------
MID OCEAN LIMITED
By: /s/ Xxxxx X. X. Xxxxxxx
---------------------------------
---------------------------------
Xxxxx X. X. Xxxxxxx
22
EXHIBIT A
CHANGE IN CONTROL
A "Change in Control" shall be deemed to have occurred if:
(i) on or after the date hereof, any person (which, for all purposes hereof,
shall include, without limitation, an individual, sole proprietorship,
partnership, unincorporated association, unincorporated syndicate,
unincorporated organization, trust, body corporate and a trustee,
executor, administrator or other legal representative), or any group
(within the meaning of Section 13(d)(3) of the United States Securities
Exchange Act of 1934, as amended), becomes the beneficial owner,
directly or indirectly, of securities of the Parent representing, or
acquires the right to control or direct, or to acquire through the
conversion or exchange of securities or the exercise of warrants or
other rights to acquire securities ("Beneficial Owner"), 20% or more of
the combined voting power of the Parent's then outstanding securities
("Significant Owner") (excluding any person who or group which, together
with all affiliates and associates of such person or group, would on the
date of this Agreement but for this clause be a Significant Owner as
long as such person or group does not subsequently become the Beneficial
Owner of any additional securities of the Parent in any manner other
than a change in the aggregate number of the outstanding securities of
the Parent, and other than pursuant to any purchase or acquisition
permitted by the first Full paragraph of the second page of that
Standstill Agreement dated June 2, 1995 between Parent and EXEL Limited)
and, for the purposes hereof "voting power" means the right to vote for
the
A-1
23
election of directors; or
(ii) at any time subsequent to the execution of this contract there shall be
elected or appointed to the Parent's Board of Directors (the "Parent
Board") any director or directors whose appointment or election by the
Parent's shareholders was not approved by a vote of at least a majority
of the directors then still in office who were either directors at the
date hereof or whose election or appointment or nomination for election
was previously so approved.
The determination to be made pursuant to clause (i) above shall be made on the
basis that (x) all securities beneficially owned by the person or group or over
which control or direction is exercised by the person or group which are
convertible or exchangeable into securities carrying voting rights have been
converted or exchanged and all options, warrants, exchange rights or other
rights which may be exercised to acquire securities beneficially owned by the
person or group or over which control or direction is exercised by the person or
group have been exercised, and (y) no such convertible or exchangeable
securities have been converted or exchanged by any other person and no such
options, warrants, exchange rights or other rights have been exercised by any
other person.
A-2
24
EXHIBIT B
GOOD REASON
For purposes of this Agreement, "Good Reason" shall mean any of
the following (without Executive's express prior written consent):
(i) (A) The assignment to Executive of duties materially inconsistent
with Executive's position (including duties, responsibilities,
status, titles or offices as set forth in Section 2 hereof); or
(B) any elimination or reduction of Executive's duties or
responsibilities except in connection with the termination of
Executive's employment for Cause, disability or as a result of
Executive's death or by Executive other than for Good Reason;
(ii) The (A) reduction in Executive's Base Salary from the level in
effect immediately prior to, or (B) payment of an annual bonus in
an amount less than the most recent annual bonus paid prior to
the Change in Control;
(iii) The failure by the Company or Parent to obtain the specific
assumption of this Agreement by any successor or assign of Parent
or the Company or any person acquiring substantially all of the
Company's or Parent's assets;
(iv) Any material breach by the Company or Parent of any provision of
this Agreement or any agreements entered into pursuant thereto;
(v) Requiring Executive to be based at any office or location other
than those described in Section 2(a) hereof, except for travel
reasonably required in the performance of the Executive's
responsibilities; or
(vi) During the twelve month period following a Change in Control, (A)
the failure to continue in effect any compensation plan in which
Executive participates at the time of the Change in Control
unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan providing Executive with
substantially similar benefits) has been made with respect to
such plan in connection with the Change in Control, or the
failure to continue Executive's participation therein on
substantially the same basis, both in terms of the amount of
benefits provided and the level of his participation relative to
other participants, as existed at the time of the Change in
Control; or (B) the failure to continue to provide Executive with
benefits at least as favorable in the aggregate as those enjoyed
by
A-3
25
him under any of the Company's or Parent's pension, life
insurance, medical, health and accident, disability, deferred
compensation or savings plans in which he was participating at
the time of the Change of Control, the taking of any action which
would directly or indirectly materially reduce any of such
benefits or deprive Executive of any fringe benefit enjoyed by
him at the time of the Change of Control, or the failure to
provide him with the number of paid vacation days to which he was
entitled on the basis of the Company's practice with respect to
him as in effect at the time of the Change of Control.
A-4
