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Exhibit 10.15
Employment Agreement with Xxxxxxx X. Xxxxx
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of February 27, 1998, by and between
Annuity and Life Re (Holdings), Ltd., a Bermudian corporation (the "Company"),
Annuity and Life Reassurance, Ltd., a subsidiary of the Company organized under
the laws of Bermuda to engage in worldwide life and annuity reinsurance (the
"Operating Company"), and Xxxxxxx X. Xxxxx (hereinafter called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company is contemplating an initial public
offering or a private placement of its Common Shares in excess of $100 million
(the "IPO"); and
WHEREAS, the Company and the Operating Company desire that the
Employee serve as Chief Financial Officer and Treasurer of the Company and the
Operating Company and the Employee is willing to serve in such capacities; and
WHEREAS, if the IPO has not been completed prior to May 1,
1998, both Company and the Employee desire the option to terminate this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other good and valuable consideration, the parties hereto
agree as follows:
Section: 1. Employment.
Effective as of March 15, 1998, the Company and the Operating
Company will employ the Employee and the Employee will perform services for the
Company and the Operating Company on the terms and conditions set forth in this
Agreement and for the period ("Term of Employment") specified in Section 3
hereof.
Section: 2. Duties.
The Employee, during the Term of Employment, shall serve the
Company as its Chief Financial Officer and Treasurer. The Employee shall also
serve as Chief Financial Officer and Treasurer of the Operating Company. The
Employee shall be based at the Operating Company's headquarters in Bermuda,
other than for periodic travel in the ordinary course of business. The Employee
shall have such duties and responsibilities as are assigned to him by the Boards
of Directors of the Company and the Operating Company commensurate with his
positions as Chief Financial Officer and Treasurer of the Company and the
Operating Company.
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The Employee shall perform his duties hereunder faithfully and
to the best of his abilities and in furtherance of the business of the Company,
and shall devote his full business time, energy, attention and skill to the
business of the Company and to the promotion of its interests except as
otherwise agreed by the Company.
The Employee warrants and represents that he is free to enter
into this Agreement and is not restricted by any prior or existing agreement and
the Company and the Operating Company may rely on such representation in
entering into this Agreement.
Section: 3. Term of Employment.
The initial Term of Employment of this Agreement shall be the
period commencing on March 15, 1998 and ending on the third anniversary of the
IPO. At the end of the initial Term of Employment, and on each anniversary
thereof, the Term of Employment shall automatically be extended for one
additional year, unless the Company or the Employee shall have given written
notice to the other that it does not wish to extend this Agreement at least
three months in advance.
Section: 4. Salary.
The Employee shall receive, as compensation for his duties and
obligations to the Company and the Operating Company, a salary at the annual
rate of $180,000, payable in substantially equal installments in accordance with
the Operating Company's payroll practice. It is agreed between the parties that
the Company shall review the base annual salary annually and in light of such
review may, in the discretion of the Board of Directors of the Company (but
shall not be obligated to), increase such base annual salary taking into account
any change in the Employee's then responsibilities, increases in the cost of
living, performance by the Employee, and other pertinent factors.
Section: 5. Bonus.
During the Term of Employment, the Employee shall, subject to
and effective upon the consummation of the IPO, participate in the Company's
Incentive Compensation Plan, a summary of which is attached hereto as Exhibit A,
and will be eligible for an annual cash bonus of up to two times his annual
salary based on performance targets as determined in accordance with the terms
of the Plan.
Section: 6. Options.
(a) Initial Options. The Company shall grant to the
Employee, subject to and effective as of the consummation of the IPO, options
(the "Initial Options") to purchase at a price per
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share equal to the price per share in the IPO, one-half of one percent of the
Company's outstanding ordinary shares immediately following the consummation of
the Company's initial public offering and any concurrent private placements (the
"Ordinary Shares"), but not to exceed an aggregate value of $2.0 million (valued
at the IPO per share price). Thirty three and one-third percent (33 1/3%) of the
Initial Options shall become exercisable after the first anniversary of the IPO,
33 1/3% of the Initial Options shall become exercisable after the second
anniversary of the IPO, and an additional 33 1/3% of the Initial Options shall
become exercisable after the third anniversary thereof. In addition, no Initial
Option may be exercised after the earlier of (A) the date that is (i) ninety
(90) days following the termination of the Employee's employment for any reason
other than death, disability or Serious Cause (as defined in Section 11), or
(ii) six (6) months after the termination of the Employee's employment by reason
of death or disability or (iii) the date upon which the Employee's employment is
terminated for Serious Cause; or (B) the tenth anniversary of the IPO date.
The consideration for the Ordinary Shares purchased upon
exercise of the Initial Options may be paid in cash or by any other method
permitted by the terms of the Company's Initial Option Plan. The issuance of any
Ordinary Shares pursuant to the Initial Options shall in all events be subject
to all applicable securities laws and the Employee shall enter into any
agreement reasonably requested by the Company in order to ensure that all such
issuances are in full compliance therewith. The Employee shall not have any of
the rights and privileges of a shareholder of the Company with respect to the
Ordinary Shares issuable upon any exercise of Initial Options unless and until
his name is entered into the register of members of the Company in respect of
such Ordinary Shares. If there is any change in the number or nature of
outstanding shares of the Company's capital stock by reason of a share dividend,
recapitalization, merger, consolidation, scheme of arrangement, share split,
combination or exchange, share repurchase or otherwise, which in any such case
has a dilutive or anti-dilutive effect on the Ordinary Shares, the number of
Ordinary Shares subject to each outstanding Initial Option, the exercise price
thereof and/or other terms thereof shall be appropriately adjusted by the Board
of Directors of the Company (or any committee thereof), whose determination
shall be conclusive, so as to restore the option holder to his rights
thereunder.
(b) Other Options. During the Term of Employment, the Employee
shall, subject to the consummation of the IPO, be eligible to be granted options
(in addition to the Initial Options) to purchase Ordinary Shares at such price
and subject to such terms as provided by the Company's Initial Stock Option
Plan, in the sole discretion of the Board of Directors of the Company.
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Section: 7. Employee Benefits.
During the Term of Employment the Employee shall, subject to
the consummation of the IPO, be entitled to participate in all employee benefit
programs of the Company, as such programs may be in effect from time to time,
including without limitation, pension and other retirement plans, profit sharing
plans, group life insurance, accidental death and dismemberment insurance,
hospitalization, surgical and major medical coverage, sick leave (including
salary continuation arrangements), long term disability, holidays and vacations.
Following the termination of the Employee's employment with the Company, the
Company will, for a period of six months, pay for health benefits for the
Employee equivalent to the health benefits that the Employee received while
employed by the Company.
Section: 8. Business Expenses.
All reasonable travel and other expenses incidental to the
rendering of services by the Employee hereunder shall be paid by the Company and
if expenses are paid in the first instance by the Employee, the Company will
reimburse him therefor upon presentation of proper invoices; subject in each
case to compliance with the Company's reimbursement policies and procedures.
Section: 9. Housing and Travel Expenses.
Effective upon consummation of the IPO, the Company shall
provide to the Employee the sum of $8,333.00 monthly as an allowance to cover
the expenses of housing in Bermuda and for his personal travel including spouse
and immediate family to and from Bermuda.
Section: 10. Vacations and Sick Leave.
The Employee shall be entitled to reasonable vacation and
reasonable sick leave each year (beginning with 1998), in accordance with
policies of the Company, as determined by the Board of Directors, provided,
however, that the Employee shall be entitled to a minimum of 4 weeks vacation
per year. If the Employee chooses not to take all of the vacation time allotted
to him in a particular year, the Company shall pay the Employee at the end of
that year for each week of vacation that the Employee did not take during the
year at a rate equivalent to the Employee's weekly base salary.
Section: 11. Termination.
(a) In the event of Serious Cause, as defined below,
the Company may terminate the Employee's employment and the Term
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of Employment upon written notice of such termination stating the Serious Cause
upon which the Company relies for its termination. The Employee's employment and
the Term of Employment shall be terminated effective as of the date specified in
such notice, which shall in no event be earlier than the effective date of such
notice as provided in Section 20.
"Serious Cause" shall mean (i) the willful and continued
failure by the Employee to perform substantially his duties hereunder, other
than by reasons of health, after demand for substantial performance is delivered
by the Company that identifies the manner in which the Company believes the
Employee has not substantially performed his duties, (ii) the Employee shall
have been indicted by any federal, state or local authority in any jurisdiction
for, or shall have pleaded guilty or nolo contendere to, an act constituting a
felony, (iii) the Employee shall have habitually abused any substance (such as
narcotics or alcohol), or (iv) the Employee shall have (A) engaged in acts of
fraud, material dishonesty or gross misconduct in connection with the business
of the Company or (B) committed a material breach of this Agreement.
(b) The Employee may terminate his employment and the Term of
his Employment in the event of Good Reason, as defined below, upon 30 days'
prior written notice of such termination stating the Good Reason upon which the
Employee relies for his termination. The Employee's employment and the Term of
Employment shall be terminated effective as of the date specified in such
notice, which in no event shall be earlier than the effective date of such
notice as provided in Section 20.
"Good Reason" shall mean (i) a substantial reduction in the
Employee's salary, (ii) the demotion of the Employee, (iii) a material reduction
of the Employee's duties hereunder, or (iv) a material breach of this Agreement
by the Company.
(c) In the event of termination of the Employee's employment
and the Term of Employment by the Company for Serious Cause or by the Employee
without Good Reason, the Employee shall forfeit all bonus amounts for the then
current fiscal year, and the Company shall be liable to the Employee only for
(i) any accrued but unpaid salary, (ii) any accrued but unpaid bonus from a
prior fiscal year, and (iii) reimbursement of business expenses incurred prior
to the date of termination.
(d) In the event of the death, retirement or disability of the
Employee, the Employee's employment and Term of Employment shall be terminated
as of the date of such death, retirement or disability and the Company shall pay
the Employee, or the Employee's estate or legal representative, as appropriate,
(i) any accrued but unpaid salary, (ii) any earned but unpaid bonus from a prior
fiscal year, (iii) reimbursement of business
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expenses incurred prior to the date of termination, (iv) travel and housing
allowances under Section 9 for six months after the date of termination, and (v)
reasonable relocation expenses from Bermuda to the United States. The date of
the Employee's disability shall be deemed to be the last day of the sixth month
during which the Employee has been unable to carry out his position as provided
below.
"Disability" shall mean the Employee's inability, for reasons
of health, to carry out the functions of his position for a total of 6 months
during any 12 month period of this Agreement. "Retirement" shall mean retirement
from employment upon attaining age 65 or such earlier age agreed to by the
Company.
In addition, in such event, if the Company's Ordinary Shares
are not then publicly traded, the Company shall have the right to call any or
all of the Ordinary Shares of the Company owned by the Employee within six (6)
months of death, retirement or disability, and the Employee, the Employee's
estate or legal representative, whichever is appropriate, shall have the right
to put any or all of the Employee's Ordinary Shares to the Company within twelve
(12) months after death or within six (6) months after retirement or disability.
The price at which such put or call is exercisable shall be equal to the
appraised value, in each case measured as of the date of termination.
(e) If the Company should (i) terminate the Term of Employment
and the Employee's employment herein without Serious Cause; or (ii) if the
Employee should terminate the Term of Employment and his employment hereunder
for Good Reason, the Company shall continue to pay the Employee not less than
$15,000 per month for a period of one year from such termination. In addition,
the Employee shall be entitled to (A) any accrued but unpaid salary, (B) any
earned but unpaid bonus from a prior fiscal year, (C) reimbursement of business
expenses incurred prior to the date of termination, and (D) travel and housing
allowances under Section 9 for six months after the date of termination, and (E)
reasonable relocation expenses from Bermuda to the United States.
(f) In the event of the liquidation of the Company or in the
event that the Board of Directors elects to discontinue permanently operating
the Company, the Term of Employment and the Employee's employment herein shall
be terminated as of the date of such liquidation or discontinuance and the
Company shall pay the Employee (i) any accrued but unpaid salary, (ii) any
earned but unpaid bonus from a prior fiscal year, (iii) unreimbursed business
expenses incurred prior to the date of termination, (iv) travel and housing
allowances under Section 9 for two months after the date of termination, and (v)
reasonable relocation expenses from Bermuda to the United States. In addition,
the
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Employee shall be entitled to receive one year's base salary from the date on
which the Employee's employment is terminated.
(g) Notwithstanding any other provision of this Agreement, if
the IPO has not been consummated by May 1, 1998, either the Employee or Company
may terminate the Employee's employment and the Term of Employment upon 30 days'
written notice, in which event the Company shall continue to pay the Employee's
monthly salary for the lesser of (i) the amount of time it takes for the
Employee to enter into employment with another entity or (ii) six months.
Section: 12. Change of Control.
(a) Notwithstanding any other provision contained herein, the
Employee's Initial Options and other options issued 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, restricted Ordinary Shares granted under any of the
Company's share option plans shall immediately vest upon a Change of Control of
the Company.
(b) If (i) the employment of the Employee is terminated by the
Company (or successor thereto) without Serious Cause or (ii) the Employee
terminates employment with the Company (or successor thereto) for Good Reason,
within the period commencing on the date that a Change of Control is formally
proposed to the Company's Board of Directors and ending on the first anniversary
of the date on which such Change of Control occurs, then the Employee shall be
entitled to receive (in lieu of the benefits described in Section 11): (1) any
accrued but unpaid salary, (2) a lump sum payment equal to two times such
Employee's annual base salary as of the date of termination, (3) any accrued but
unpaid bonus from a prior fiscal year, (4) reimbursement of business expenses
incurred prior to the date of termination, (5) travel and housing allowances
under Section 9 for one year following 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 Employee by reason of such payments
occurring in connection with a change of control.
The Employee 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, following consummation of the IPO (i) any "person" (as such
term is defined in Section 3(a)(9) and as 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
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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 of the Company representing 50% or
more of the combined voting power of the Company's then outstanding securities
("Voting Securities"); (ii) during any period of not more than two years,
individuals who constitute the Board of Directors of the Company (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 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 of substantially all of
the Company's assets.
(d) The provisions of this Section 12 shall only apply
following the consummation of an IPO.
Section: 13. Agreement Not to Compete.
(a) The Employee hereby covenants and agrees that at no time
during the Term of Employment nor for a period of (i) one year immediately
following the termination of the Employee's employment by the Company without
Serious Cause or by the Employee for Good Reason or (ii) two years following the
termination of the Employee's employment for any other reason, will he for
himself or on behalf of any other person, partnership, company or corporation,
directly or indirectly, acquire any financial or beneficial interest in (except
as provided in the next sentence), provide consulting or other
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services to, be employed by, or own, manage, operate or control any entity
engaged in any business similar to the business engaged in by the Company or the
Operating Company at the time of such termination of employment. Notwithstanding
the preceding sentence, the Employee shall not be prohibited from (i) obtaining
employment with an employer in the life insurance industry that does not have
reinsurance operations or (ii) owning less than one (1%) percent of any publicly
traded corporation, whether or not such corporation is in competition with the
Company or the Operating Company.
(b) The Employee hereby covenants and agrees that, at all
times during the Term of Employment and for a period of two years immediately
following the termination thereof, the Employee shall not directly or indirectly
employ or seek to employ any person or entity employed at that time by the
Company or any of its subsidiaries, or otherwise encourage or entice such person
or entity to leave such employment.
(c) This Section 13 shall be null and void if the IPO
has not been consummated by August 31, 1998.
Section: 14. Confidential Information.
(a) The Employee agrees to keep secret and retain in the
strictest confidence all confidential matters which relate to the Company or any
affiliate of the Company, including, without limitation, customer lists, client
lists, trade secrets, pricing policies and other business affairs of the Company
and any affiliate of the Company learned by him from the Company or any such
affiliate or otherwise before or after the date of this Agreement, and not to
disclose any such confidential matter to anyone outside the Company or any of
its affiliates, whether during or after his period of service with the Company,
except as may be required in the course of a legal or governmental proceeding.
Upon request by the Company, the Employee agrees to deliver promptly to the
Company upon termination of his services for the Company, or at any time
thereafter as the Company may request, all Company or affiliate memoranda,
notes, records, reports, manuals, drawings, designs, computer files in any media
and other documents (and all copies thereof) relating to the Company's or any
affiliate's business and all property of the Company or any affiliate associated
therewith, which he may then possess or have under his control.
Section: 15. Remedy.
(a) Should the Employee engage in or perform, either directly
or indirectly, any of the acts prohibited by Sections 13 or 14 hereof, it is
agreed that the Company shall be entitled to full injunctive relief, to be
issued by any competent court of equity, enjoining and restraining the Employee
and each and every
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other person, firm, organization, association, or corporation concerned therein,
from the continuance of such violative acts. The foregoing remedy available to
the Company shall not be deemed to limit or prevent the exercise by the Company
of any or all further rights and remedies which may be available to the Company
hereunder or at law or in equity.
(b) The Employee acknowledges and agrees that the covenants
contained in this Agreement are fair and reasonable in light of the
consideration paid hereunder, and the invalidity or unenforceability of any
particular provision, or part of any provision, of this Agreement shall not
affect the other provisions or parts hereof. If any provision hereof is
determined to be invalid or unenforceable by a court of competent jurisdiction,
the Employee shall negotiate in good faith to provide Company with protection as
nearly equivalent to that found to be invalid or unenforceable and if any such
provision shall be so determined to be invalid or unenforceable by reason of the
duration or geographical scope of the covenants contained therein, such duration
or geographical scope, or both, shall be considered to be reduced to a duration
or geographical scope to the extent necessary to cure such invalidity.
Section: 16. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit
of the Employee, his heirs, executors, administrators and beneficiaries, and the
Company, the Operating Company and their successors and assigns.
Section: 17. Governing Law.
This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of New York, without reference to rules
relating to conflicts of law.
Section: 18. Entire Agreement.
This Agreement constitutes the full and complete understanding
and agreement of the parties and supersedes all prior understandings and
agreements as to employment of the Employee. This Agreement cannot be amended,
changed, modified or terminated without the written consent of the parties
hereto.
Section: 19. Waiver of Breach.
The waiver by either party of a breach of any term of this
Agreement shall not operate nor be construed as a waiver of any subsequent
breach thereof.
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Section: 20. Notices.
Any notice, report, request or other communication given under
this Agreement shall be written and shall be effective upon delivery when
delivered personally, by Federal Express or by fax.
Unless otherwise notified by any of the parties, notices shall
be sent to the parties as follows:
To Employee: Xxxxxxx X. Xxxxx
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With a
Copy to:
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To the
Company: Annuity and Life Reassurance, Ltd.
Xxxxxxxx Xxxx, Victoria Street
P.O. Box HM1262
Xxxxxxxx, XX FX, Bermuda
Section: 21. Severability.
If any one or more of the provisions contained in this
Agreement shall be invalid, illegal or unenforceable in any respect under any
applicable law, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.
Section: 22. Counterparts.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as on the day and year first above written.
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
Annuity and Life Re (Holdings), Ltd.
By: /s/ Xxxxxxxx X. Xxxxx
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Xxxxxxxx X. Xxxxx, President
Annuity and Life Reassurance, Ltd.
By: /s/ Xxxxxxxx X. Xxxxx
--------------------------------
Xxxxxxxx X. Xxxxx, President
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Exhibit A
Initial Cash Bonus Plan
20% of the Company's consolidated pretax earnings from normal
operations in excess of a benchmark return on equity (such benchmark is expected
to be set at approximately 8%), as determined by the Board of Directors in
accordance with Generally Accepted Accounting Principles, consistently applied,
shall be available for all senior executives. All determinations by the Board of
Directors shall be final and conclusive for all purposes of the Plan.
