SERVICE AGREEMENT
THIS AGREEMENT is made as of September 8, 2004
BETWEEN:
MONTPELIER REINSURANCE LTD., whose registered office is situate at Xxxxx Xxxxx,
0 Xxx-xx-Xxxxx Xxxx, Xxxxxxxx Xxxxxxx (xxx "Company"); and
XXXXXX X. XXXXXXXX (THE "EXECUTIVE"), whose address is Heron's Watch, 000 Xxxxx
Xxxx, Xxxxx, Xxxxxxx.
WHEREAS the parties desire to record the terms and conditions upon which the
Executive is employed by the Company.
NOW THEREFORE in consideration of the mutual covenants and promises herein
contained
IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement unless the context otherwise requires the following words
and expressions shall have the following meanings:
THIS "AGREEMENT" means this service agreement and includes all schedules
hereto;
THE "BOARD" means the board of directors of the Company;
THE "COMPANIES ACT" means the Companies Xxx 0000;
"GROUP COMPANY" means and includes any company which is from time to time a
holding company (as defined by Section 86 of the Companies Act, but
irrespective of whether it is a Bermuda company or an overseas company) of
the Company, a subsidiary company (as so defined) of the Company, a
subsidiary company (as so defined) of a holding company (as so defined) of
the Company or in which the Company owns at least 50% of the issued share
capital;
THE "PARTIES" means the parties to this Agreement;
1.2 In this Agreement unless the context otherwise requires:
1.2.1 references to statutory provisions shall be construed as
references to those provisions as amended or re-enacted or as
their application is modified by other provisions from time to
time and shall include references to any provisions of which
they are re-enactments (whether with or without modification);
and
1.2.2 references to clauses and schedules are references to clauses
hereof and schedules hereto; references to sub-clauses or
paragraphs are, unless otherwise stated, references to
sub-clauses of the clause or paragraphs of the schedule in
which the reference appears;
1.2.3 references to the singular shall include the plural and vice
versa and references to the masculine shall include the
feminine and/or neuter and vice versa; and
1.2.4 references to persons shall include companies, partnerships,
associations and bodies of persons, whether incorporated or
unincorporated.
2. APPOINTMENT
Subject to, and conditional upon, initial and continued permission
being granted to work and reside in Bermuda by the Bermuda Department
of Immigration of the Ministry of Home Affairs, the Company hereby
appoints the Executive and the Executive hereby agrees to serve the
Company as Chief Financial Officer and Executive Vice President subject
to the terms and conditions hereinafter contained.
3. TERM
The appointment of the Executive hereunder shall begin on October 1,
2004 or as soon thereafter as the Executive has received approval from
the Bermuda Department of Immigration and shall continue unless and
until terminated in accordance with the provisions hereinafter
contained.
4. DUTIES AND RESPONSIBILITIES
During the continuance of his employment hereunder:
4.1 The Executive shall perform such duties and exercise such powers in
relation to the business of the Company or of any Group Company as may
from time to time reasonably be assigned to or vested in him by the
Board and shall give to the Board such information regarding the
affairs of the Company and any Group Company as it shall require and at
all times and in all respects conform to and comply with the reasonable
directions and regulations made by the Board. The Executive shall
perform such services for any Group Company (without further
remuneration except as otherwise agreed) and shall accept such offices
in any such Group Companies as the Board may reasonably require.
4.2 The Executive shall well and faithfully serve the Company and the Group
Companies and use his best endeavours to promote develop and extend
their businesses and interests giving at all times the full benefit of
his knowledge, expertise, technical skill and ingenuity.
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4.3 The Executive shall abide by all Company policies and procedures
contained in the Company's Employee Handbook, the terms of which are
incorporated by reference in this Agreement and a copy of which has
been given to the Executive. The Company reserves the right to vary the
Employee Handbook from time to time
4.4 The Executive shall not without the consent of the Board directly or
indirectly engage in any other business or be concerned or interested
in any other business of a similar nature to or which would or might
compete with the business for the time being carried on by the Company
or any Group Company save that
4.4.1 he may (but without prejudice to clause 4.2) be interested as a
holder or beneficial owner of not more than 5% of any class of stock,
shares or debentures in any company (other than the Company, in which
case, such limit shall not apply) whose stock, shares or debentures are
listed or dealt in on an appointed stock exchange (as defined in the
Companies Act); and
4.4.2 he may provide limited services for White Mountains Capital,
Inc, or its affiliates PROVIDED, HOWEVER, that (i) any such
work shall not interfere with his performance of his duties to
the Company under this Agreement, (ii) any services shall be
fully disclosed to the Company, and (iii) the Company may
require him to cease work on any project at any time, PROVIDED
FURTHER, HOWEVER, that the Company may terminate this clause
4.4.2 at any time.
4.5 The Company reserves the right to require the Executive not to attend
work/and or not to undertake all or any of his duties hereunder during
a period of up to 12 months immediately preceding the termination of
his employment, provided always that the Company shall continue to pay
the Executive's salary and contractual benefits for such period. This
Clause 4.5 shall not affect the general right of the Company to suspend
the Executive for good cause.
5. REMUNERATION AND REIMBURSEMENT
5.1 The Company shall pay to the Executive by way of remuneration for his
services hereunder a salary at the rate (subject as hereinafter
provided) of US$300,000 per annum. Such salary shall be inclusive of
any director's fees payable to the Executive by the Company or any
Group Company and accordingly either the Executive shall pay over or
procure to be paid over to the Company all such fees received or
receivable by him or his remuneration hereunder shall be reduced pro
tanto. The said salary shall be payable by equal monthly instalments in
arrears on the day appointed by the Board for the payment of employees'
salaries or pro rata where the Executive is only employed hereunder
during part of the month. The Compensation Committee of the Company's
Board, subject to ratification by the Board, may increase or reduce the
Executive's salary on each anniversary of the date of this Agreement,
with the first such review to take place on December 31, 2005, but not
below the amount of the Executive's starting salary.
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5.2 The Company shall also pay to the Executive all reasonable travelling
hotel and other out-of-pocket expenses which are properly incurred by
him in or about the performance of his duties hereunder and for which
vouchers (if so required) are provided to the reasonable satisfaction
of the Board.
5.3 The Company will pay for ten business-class round-trip flights to the
East Coast of the United States per annum for the Executive and his
household (or any travel for the Executive and his household to the
United States up to the annual equivalent cost to the company), outside
of any normal business travel that may be required, plus a tax gross-up
payment to reimburse the Executive for any income taxes paid by the
Executive on the cost of flights covered by this clause 5.3.
5.4 The Executive shall be entitled to participate in:
(i) the Company's Major Medical, Dental and Visions Plans and
other insurance plans from time to time subject to the
provisions of the Company's insurance plans in effect at the
time;
(ii) a suitable pension arrangement in accordance with Bermuda and
United States law ("Pension Plan") from time to time subject to
the provisions of such pension plan in effect at the time,
PROVIDED, HOWEVER, that in the event the Executive should leave
the Company of his own accord within 12 months of the date of
this Agreement first written above he will forfeit all
contributions to the Pension Plan made by the Company on his
behalf;
(iii) the Company's Annual Bonus Plan and Long-Term Incentive Plan and
any other incentive plan for which the Executive is eligible,
from time to time subject to the provision of such plans in
effect at the time;
(iv) Reasonable tax advisory services at the Company's cost; and
(iii) Any other employment benefit plans or arrangements generally
available to Executives in the Company of the Executive's
stature, to the extent not duplicative of benefits otherwise
provided by the Company.
The details of these benefits, plans and schemes are set out in
separate documents, copies of which will be provided on request. The
benefits, plans and schemes may be changed at the Company's discretion.
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5.5 During the Executive's appointment under this Agreement, he shall receive a
housing allowance of USD$12,000 per month, plus a tax gross-up payment to
reimburse the Executive for any income taxes paid by the Executive on such
allowance as well as any income taxes paid by the Executive on expenses set
forth in clauses 5.5.1 and 5.5.2. In addition to the Executive's housing
allowance:
5.5.1 the Company will provide relocation and furnishing expenses in
an amount up to $50,000, provided that the expenses shall have
been approved in advance by the Company's Chief Executive
Officer; and
5.5.2 upon termination of this Agreement the Company will provide
for the relocation of the Executive and his family to the
United States as set forth in clause 10.2(a).
5.6 The Executive agrees that the Company may deduct from his pay any sums
which the Executive may owe the Company including, without limitation, any
overpayments or loans made to him by the Company or losses suffered by the
Company as a result of the Executive's breach of this Agreement.
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6. NORMAL HOURS AND HOLIDAYS
The Executive shall conform to such hours of work as may from time to
time reasonably be required of him and shall not be entitled to receive
any additional remuneration for work outside his normal hours. In
addition to the usual public holidays the Executive shall be entitled
without loss of remuneration to 25 days holiday in each year to be
taken at such time or times as may be approved by the Chief Executive
Officer of the Company. Any entitlement to holiday remaining at the end
of any year may be carried forward to the next succeeding year but no
further. The entitlement to holiday (and on termination of employment
holiday pay in lieu of holiday) accrues pro rata throughout each year,
provided that fractions of days shall be disregarded in calculating
entitlement to holiday or payment in lieu of holiday.
7. CONFIDENTIALITY
7.1 The Executive shall not either during the continuance of his employment
hereunder (otherwise than in the proper performance of his duties
hereunder) or at any time after the determination thereof divulge to
any person whomsoever and shall use his reasonable endeavours to
prevent the publication or disclosure of any trade secret or other
confidential information concerning the business, finances, accounts,
dealings, transactions or affairs of the Company or any Group Company
or of any of their respective clients entrusted to him or arising or
coming to his knowledge during the course of his employment hereunder
or otherwise.
7.2 The Executive shall upon the termination of his employment hereunder
immediately deliver up to the Company all fee schedules, lists of
clients, correspondence and other documents, papers and property
belonging to the Company or any Group Company or related to any of the
matters referred to in clause 7.1 which may have been prepared by him
or have come into his possession in the course of his employment
hereunder and shall not retain any copies thereof.
8. CHANGE OF STATUS
8.1 If, before the expiration or determination of this Agreement, the
employment of the Executive hereunder shall be terminated by reason of
the liquidation of the Company or for the purpose of reconstruction or
amalgamation, and he shall be offered employment with any concern or
undertaking resulting from such reconstruction or amalgamation on terms
and conditions not less favourable (financially and in personal status)
than the terms of this Agreement, then he shall have no claim against
the Company in respect of the termination of his employment hereunder
save in respect of accrued benefits.
8.2 Unless this agreement has been terminated under clause 9, if for any
reason the Executive shall either:
8.2.1 at the Company's request resign as a director of the Company
or any Group Company; or
8.2.2 be removed from office as a director of the Company or any
Group Company;
then, notwithstanding his so ceasing to be a director, this Agreement
shall not automatically terminate and thereupon (and without any claim
against the Company in respect of such loss of office) the Executive's
employment hereunder shall continue for the remaining period of this
Agreement and all the terms and conditions of this Agreement shall with
the necessary variations apply to the Executive's employment but in any
event, the Executive's basic annual salary will not at any time be less
than the Executive's starting salary under this agreement.
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9. TERMINATION
9.1 Without prejudice to clauses 9.2 or 9.4 either the Executive or the
Company may terminate this Agreement by giving to the other party not
less than 6 months' written notice from the Executive to the Company
and not less than 12 months' written notice from the Company to the
Executive or if the Executive is terminated by the Company by payment
in lieu of notice of 12 months salary payable in 12 equal monthly
instalments. The Company may require that the Executive work for a
portion of the notice period provided that the Company shall pay the
Executive in lieu of notice the balance of any such notice period.
9.2 This Agreement shall be subject to termination by the Company summarily
9.2.1 if the Executive's application for permission to work and
reside in Bermuda is refused or the Executive's work permit
and/or permission to reside is revoked, and or a renewal
application is refused
9.2.2 if the Executive shall become of unsound mind or be or become
a patient for the purpose of any statute relating to mental
health;
9.2.3 if the Executive shall at any time be prevented by illness or
accident from performing his duties for a period of 6
consecutive months or if he shall be absent from his duties by
reason of illness or accident for more than 180 working days
in any consecutive twelve months (provided that any such
periods may be extended at the sole discretion of the Board);
9.2.4 other than by written notice, if the Executive terminates his
employment for any reason prior to the expiration of this
Agreement other than in accordance with clause 9.1 or if the
Executive shall have failed or neglected efficiently and
diligently to discharge his duties hereunder having received a
written warning for the misconduct within the previous 6
months or shall have committed any serious breach of his
obligations hereunder or shall have been guilty of conduct
tending to bring himself or the Company or any Group Company
into disrepute or calculated or likely to affect prejudicially
the interests of the Company or any Group Company or shall
have committed an act of bankruptcy or compounded with his
creditors generally.
9.3 The termination by the Company of this Agreement shall be without
prejudice to any claim which the Company may have for damages arising
from any breach thereof by the Executive giving rise to such
termination.
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9.4 The normal retirement age for employees of the Company is 60 years of
age. The Executive's Employment will terminate automatically without
notice on his 60th birthday.
9.5 This Agreement shall not, save as hereinbefore set out in this Clause
9, be subject to termination by notice or otherwise by the Company or
by the Executive.
9.6 If the Executive shall be unable to perform his duties by reason of
illness or other incapacity he shall remain entitled to receive his
salary payable hereunder in full until this Agreement is terminated
pursuant to this Clause 9.
9.7 After notice of termination has been given by either party or if the
Executive seeks to resign without notice or by giving shorter notice
than that required under this Agreement then provided the Company
continues to pay the Executive the contractual benefits in accordance
with this Agreement, the Company has at its discretion, the right for
the notice period or balance of the notice period (the "Garden Leave
Period") then outstanding until the termination date of this Agreement
to:
9.7.1 exclude the Executive from the Company's premises and require
the Executive not to attend at the Company's premises; and/or
9.7.2 require the Executive to carry out no duties; and/or
9.7.3 require the Executive not to communicate or deal with
employees, agents, consultants, clients or other
representatives of the Company;
Provided always that the maximum permitted Garden Leave Period shall be
six months.
10. CONSEQUENCE OF TERMINATION
10.1 Upon the termination of this Agreement howsoever arising, the Executive
shall at any time or from time to time thereafter upon the request of
the Company resign, without claim for compensation for loss of office,
as a director of the Company and such offices held by him in any of the
Group Companies as may be so requested and should he fail to do so, the
Company is hereby irrevocably authorised to appoint some person in his
name and on his behalf to sign and do any documents or things necessary
or requisite to give effect thereto.
10.2 Notwithstanding anything else to the contrary herein, should this
Agreement terminate:
(a) pursuant to clause 9.1, 9.2.1, 9.2.2 or 9.2.3 then the Executive
shall be entitled to receive three months salary by way of repatriation
expenses together with three months accommodation allowance at the rate
set out in clause 5.5 and reimbursement of a one way business class air
fare for himself and his family to the United States, PROVIDED,
HOWEVER, that such repatriation expenses shall not be payable pursuant
to clause 9.2.1 if the Executive's work permit or permission to reside
is revoked or renewal application is refused by the Bermuda Department
of Immigration as a result of any conviction under Bermuda law or
conduct by the Executive amounting to a breach of this Agreement under
clause 9.2.4;
(b) pursuant to clause 9.2.2 or clause 9.2.3, then the Executive shall
continue to receive his salary for a period of 12 months following the
termination of this Agreement and the Company shall have no further
obligations to the Executive arising hereunder except as provided in
clause 10.2(a);
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(c) pursuant to clause 9.2.4, then all payments under this Agreement
shall immediately cease and the Company shall have no further
obligations to the Executive arising hereunder.
11. NON-COMPETITION
11.1 Since the Executive has obtained in the course of his employment prior
to the date hereof and is likely to obtain in the course of his
employment hereunder knowledge of the trade secrets and also other
confidential information in regard to the business of the Company and
of any Group Company with which he becomes associated, the Executive
hereby agrees with the Company that in addition to the restrictions
contained in clause 4.4 he will not in Bermuda, the United States of
America, the United Kingdom or the European Union:
11.1.1 during the period of 12 months following the termination of
his employment hereunder (howsoever caused) either on his own
account or for any other person, firm or company directly or
indirectly be engaged in or concerned with any business or
undertaking which is engaged in or carries on in Bermuda, the
United States of America, the United Kingdom or the European
Union any insurance business which competes or seeks to
compete with the business carried on by the Company or any
other Group Company at the date of termination, PROVIDED,
HOWEVER, that the Executive shall be permitted to provide the
limited services set forth in clause 4.4.2.
11.1.2 During the period of 12 months following the termination
aforesaid either on his own account or for any other person,
firm or company directly or indirectly solicit, interfere with
or endeavour to entice away from the Company or any Group
Company the custom of any person, firm or company who at the
date of termination aforesaid or who in the period of 12
months immediately prior to such date was a customer or client
of or in the habit of dealing with the Company or any Group
Company or who at such date was to his knowledge negotiating
with the Company or any Group Company in relation to all or
part of its business.
11.1.3 During the period of 12 months following the termination
aforesaid either on his own account or for any other person,
firm or company solicit the services of or endeavour to entice
away from the Company or any Group Company any director,
employee or consultant of the Company or any Group Company
(whether or not such person would commit any breach of his
contract of employment or engagement by reason of leaving the
service of such company) nor shall the Executive knowingly
employ or aid or assist in or procure the employment by any
other person, firm or company of any such person.
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11.2 While the restrictions aforesaid are considered by the Parties to be
reasonable in all the circumstances it is agreed that if any of such
restrictions shall, taken together, be adjudged to go beyond what is
reasonable in all the circumstances for the protection of the
legitimate interests of the Company or any Group Company but would be
adjudged reasonable if part of the wording thereof were deleted or
modified the said restrictions shall apply with such words deleted or
modified.
11.3 The Executive hereby agrees that he will at the request and cost of the
Company enter into a direct agreement or undertaking with any Group
Company whereby he will accept restrictions and provisions
corresponding to the restrictions and provisions herein contained (or
such of them as may be appropriate in the circumstances) in relation to
such services and such area and for such period as such company or
companies may reasonably require for the protection of its or their
legitimate interests provided that the terms of such restrictions and
provisions will not be more onerous than the restrictions and
provisions of this agreement.
12. UNTRUE STATEMENTS
The Executive shall not knowingly at any time make any untrue statement
in relation to the Company or any Group Company and in particular shall
not after the determination of his employment hereunder wrongfully
represent himself as being employed by or connected with the Company or
any Group Company.
13. SCHEDULES
The provisions set out in any schedule hereto shall apply as if
incorporated in this Agreement.
14. INTELLECTUAL PROPERTY
14.1 The Executive may make discover or create Intellectual Property in the
course of his duties under this Agreement and agrees that in this
respect he has a special obligation to further the interests of the
Company.
14.2 Subject to the provisions of the Patents and Designs Xxx 0000 or any
applicable Patents and design legislation and any applicable Copyright
legislation, if at any time during his employment under this Agreement
the Executive makes or discovers or participates in the making or
discover of any Intellectual Property relating to or capable of being
used in the business for the time being carried on by the Company or
any Group Companies full details of the Intellectual Property shall
immediately be communicated by him to the Company and shall be the
absolute property of the Company. At the request and expense of the
Company the Executive shall give and supply all such information data
drawings and assistance as may be requisite to enable the Company to
exploit the Intellectual Property to the best advantage and shall
execute all documents and do all things which may be necessary or
desirable for obtaining patent or other protection for the Intellectual
Property in such parts of the world as may be specified by the Company
and for vesting the same in the Company or as it may direct.
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14.3 The Executive irrevocably appoints the Company to be his agent in his
name and on his behalf to sign, execute or do any such instrument or
thing and generally to use his name for the purpose of giving to the
Company (or its nominee) or any third party the full benefit of the
provisions of this clause. A certificate in writing signed by any
director or the secretary of the Company that any instrument or act
falls within the authority conferred by this clause shall be conclusive
evidence that such is the case.
14.4 If the Intellectual Property is not the property of the Company the
Company shall subject to the provisions of the any applicable Patents
legislation have the right to acquire for itself or its nominee his
rights in the Intellectual Property within 3 months after disclosure to
the Company under clause 14.2 on fair and reasonable terms to be agreed
or in the absence of agreement to be determined by a single arbitrator
who shall be agreed by the parties and in the absence of agreement
shall be appointed by the Appointment Committee of the Chartered
Institute of Arbitrators Bermuda Branch.
14.5 The Executive waives all such moral rights as may exist under
applicable law in respect of any acts of the Company or any acts of
third parties done with the Company's authority in relation to any
Intellectual Property which is the property of the Company by virtue of
this clause.
14.6 Rights and obligations under this clause shall continue in force after
termination of this Agreement in respect of Intellectual Property made
during the Executive's Employment under this Agreement and shall be
binding upon his representatives.
15. DISCIPLINE AND GRIEVANCE PROCEDURES
If the Executive has a grievance regarding the Employment he should, in
the first instance, speak to the Chairman of the Company's Compensation
and Nominating Committee. If the grievance is not resolved to his
satisfaction, he should then refer to the grievance procedure outlined
in the Company's Employee Handbook, which is incorporated by reference
in this Agreement pursuant to clause 4.3. All disciplinary procedures
applicable to the Executive are also outlined in the Company's Employee
Handbook.
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16. DELEGATION
The Company may at any time and from time to time delegate its power
and authority under this Agreement to any Group Company and such
delegation (or the revocation thereof) shall be effective upon the
Company's giving written notice of the same to the Executive.
17. NOTICES
Notices may be given by either Party by pre-paid first class post or by
hand delivery addressed to the other Party at (in the case of the
Company) its registered office for the time being and (in the case of
the Executive) his last known address. Any such notice given by post
shall be deemed to have been served on the second week day after
despatch (public holidays excepted) and any notice so given by hand
shall be deemed to have been served when delivered if delivered during
normal business hours or, If delivered outside such hours, at the next
time after delivery when normal business hours commence
18. MISCELLANEOUS
18.1 The expiration or termination of this Agreement howsoever arising shall
not operate to affect such of the provisions hereof as are expressed or
intended to remain in full force and effect notwithstanding such
termination.
18.2 If any of the clauses, conditions, covenants or restrictions of this
Agreement or any deed or document emanating from it shall be found to
be void but would be valid if some part thereof were deleted or
modified, then such clause, condition, covenant or restriction shall
apply with such deletion or modification as may be necessary to make it
valid and effective.
18.3 This Agreement shall be binding and enure for the benefit of the
successors of the Parties but shall not be assignable.
18.4 This Agreement (together with any documents referred to herein)
constitutes the whole agreement between the Parties relating to its
subject matter.
18.5 The headings in this Agreement are inserted for convenience only and
shall not affect the construction of this Agreement.
18.6 This Agreement may be executed in counterparts each of which when
executed and delivered shall constitute an original but all such
counterparts together shall constitute one and the same instrument.
18.7 No provision in this Agreement may be amended unless such amendment is
agreed to in writing, signed by the Executive and by a duly authorised
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 authorised officer of the Company, as the case may
be.
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18.8 This Agreement shall be governed by and construed in accordance with
the laws of Bermuda and the Parties hereby irrevocably submit to the
non-exclusive jurisdiction of the courts of Bermuda.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first written above.
SIGNED by )
on behalf of Montpelier Reinsurance Ltd. )
in the presence of: )
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Witness
SIGNED by _____________________ )
in the presence of: )
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Witness
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