Long-Term Incentive Agreement
Exhibit 10.14
Agreement No. [ ]
THIS LONG-TERM INCENTIVE AGREEMENT (this “Agreement”) is made by and between [Employee Name]
(“Grantee”) and Endurance Specialty Holdings Ltd., an exempted company organized under the laws of
Bermuda (the “Company”), as of [Grant Date].
WHEREAS, Grantee is currently an employee of the Company or a subsidiary of the Company, and
the Company desires to increase the incentive of the Grantee to exert his or her utmost efforts to
improve the business and increase the assets of the Company.
NOW, THEREFORE, in consideration of the Grantee’s services to the Company and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Grant of Long-Term Incentive Award. The Company hereby grants and promises to pay
to Grantee a long-term restricted cash incentive award of [Dollar Amount of Award] (the “LTI
Award”) pursuant to the terms and provisions of this Agreement.
2. Accrued Interest. The unpaid portion of the LTI Award shall bear interest from the
date of grant of the LTI Award to and including the date of payment of each installment of the LTI
Award (the “Accrued Interest”). Upon the payment of each installment of the LTI Award, only that
portion of the Accrued Interest upon that installment of the LTI Award shall be due and payable.
The Accrued Interest shall be determined based upon an annual simple interest rate while the LTI
Award is outstanding. The annual simple interest rate for the Accrued Interest will be fixed
commencing on [Grant Date and continuing until [Day Before One Year Anniversary] and then shall be
redetermined and fixed by the Company for each succeeding annual period commencing on each March
1st and ending on the last day of each February. For each annual period commencing on
March 1st and ending on the last day of the following February, the annual simple
interest rate for the Accrued Interest shall be equal to the average of the five year United States
treasury note rate for the 20 trading days preceding such March 1st, as published by the
U.S. Department of the Treasury on its website at xxx.xxxxxxx.xxx or, if such data is no longer
published by the U.S. Department of the Treasury, such substitute published interest rate index as
shall be determined by the Company in its sole discretion. The Accrued Interest on the LTI Award
shall be computed on the basis of the actual number of days elapsed in the period during which it
accrues, based upon a 365 or 366 day year, as the case may be. The Accrued Interest shall be
determined without the compounding of interest.
3. Restrictions and Restricted Period.
a. Restrictions. Neither the LTI Award nor any Accrued Interest granted or accrued
hereunder may be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of by the
Grantee except, in the event of the Grantee’s death, by will or the laws of descent and
distribution. The LTI Award and any Accrued Interest granted or accrued hereunder shall be subject
to a risk of forfeiture as described in Section 4 below until paid in full.
b. Restricted Period. Unless the Restricted Period (as defined below) is previously
terminated pursuant to Section 4 of this Agreement, the restrictions set forth above shall lapse
and the LTI Award shall be paid on the first regularly scheduled Company payroll dates following
the dates (the “Restricted Period”) and in the amounts set forth below:
| Date of Payment | Portion of LTI Award Paid | |
[One Year Anniversary]
|
[25% of Initial Grant] plus Accrued Interest on the portion of the LTI Award paid | |
[Two Year Anniversary]
|
[25% of Initial Grant] plus Accrued Interest on the portion of the LTI Award paid | |
[Three Year Anniversary]
|
[25% of Initial Grant] plus Accrued Interest on the portion of the LTI Award paid | |
[Four Year Anniversary]
|
[25% of Initial Grant] plus Accrued Interest on the portion of the LTI Award paid |
c. Withholding of Portion of LTI Award for Taxes. The payment of any portion of the
LTI Award or Accrued Interest hereunder shall be conditioned upon Grantee making adequate provision
for federal, state or other tax withholding obligations, if any, which arise upon the payment of
such portion of the LTI Award or Accrued Interest, as set forth in Section 5 hereof.
4. Termination of Employment.
a. General. In the event the Grantee’s employment with the Company or any subsidiary
of the Company is terminated for any reason other than the Grantee’s death, Disability or
Retirement or by the Company during the 24 month period following a Change in Control (each as
defined in Section 11), the unpaid portion of the LTI Award and any and all Accrued Interest at
that time shall be forfeited and neither the Grantee nor any of the Grantee’s successors, heirs,
assigns, or personal representatives shall thereafter have any further rights or interests in such
LTI Award or Accrued Interest.
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b. Death or Disability. In the event the Grantee’s employment with the Company or any
subsidiary of the Company is terminated as a result of the
Grantee’s death or Disability, or if the Grantee shall die or become subject to a Disability
within 30 days of the Grantee’s termination of employment other than for Cause (as defined in
Section 11), the restrictions on the unpaid portion of the LTI Award and any Accrued Interest that
would have become due and payable (as provided in the Restricted Period schedule set forth in
Section 3) during the period ending on the second anniversary of the Grantee’s date of termination
of employment shall immediately lapse and such portion of the LTI Award and any Accrued Interest as
so determined shall be paid to the Grantee within 30 days following the date of (i) the Grantee’s
termination of employment due to death or Disability, or (ii) the Grantee’s death or Disability
which occurs within 30 days of the Grantee’s termination of employment other than for Cause, as the
case may be. The portion of the LTI Award and any and all Accrued Interest that would have become
due and payable (as provided in the Restricted Period schedule set forth in Section 3) after the
second anniversary of the Grantee’s date of termination of employment, shall be forfeited and
neither the Grantee nor any of the Grantee’s successors, heirs, assigns, or personal
representatives shall thereafter have any further rights or interests in such LTI Award or Accrued
Interest.
c. Retirement. In the event the Grantee is eligible for Retirement, the restrictions
on the LTI Award and any Accrued Interest as of the date of such eligibility shall immediately
lapse and the Grantee shall be paid in full the LTI Award and any Accrued Interest (through and
including the date of payment) within 30 days of such eligibility.
d. Change in Control. In the event of a Change in Control and the termination by the
Company (or a successor company as a result of the Change in Control) of the Grantee’s employment
with the Company, a subsidiary of the Company (or a successor company as a result of the Change in
Control) within 24 months following such Change in Control, the restrictions set forth above shall
lapse and the unpaid portion of the LTI Award, plus any Accrued Interest to and including the date
of payment, shall be paid in full as of the date of such termination of employment.
5. Tax Withholding. It shall be a condition to the obligation of the Company to pay
the LTI Award and any Accrued Interest to the Grantee upon the lapse of restrictions on the LTI
Award and any Accrued Interest that the Grantee pay to the Company, upon demand (but no later than
10 following such demand), such amount as may be requested by the Company for the purpose of
satisfying any liability to withhold income or other taxes. In the event any such amount so
requested is not paid within 10 days of demand, the LTI Award and any Accrued Interest shall be
forfeited and neither the Grantee nor any of the Grantee’s successors, heirs, assigns, or personal
representatives shall thereafter have any further rights or interests in such LTI Award or Accrued
Interest. Unless the Company shall in its discretion determine otherwise, payment for taxes
required to be withheld may be made by withholding a portion of the LTI Award and/or Accrued
Interest, in either case, equal to the appropriate tax withholding liability as determined by the
Company in its sole discretion.
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6. Tax Consequences. By signing this Agreement, the Grantee represents that the
Grantee has reviewed with the Grantee’s own tax advisors the federal,
state, local and foreign tax consequences of the transactions contemplated by this Agreement
and that the Grantee is relying solely on such advisors and not on any statements or
representations of the Company or any of its agents. The Grantee understands and agrees that the
Grantee (and not the Company) shall be responsible for any tax liability that may arise as a result
of the transactions contemplated by this Agreement.
7. Termination of this Agreement. This Agreement shall terminate upon the earliest to
occur of (a) the termination of the Restricted Period with respect to all of the LTI Award and
Accrued Interest in accordance with Section 3 of this Agreement, (b) the forfeiture of the LTI
Award and Accrued Interest in accordance with Section 4 of this Agreement or (c) the termination of
this Agreement by an instrument in writing signed by the parties hereto. Upon termination of this
Agreement, all rights and obligations of the Grantee and the Company hereunder shall cease.
8. Agreement to Perform Necessary Acts. Each party to this Agreement agrees to
perform any further acts and execute and deliver any documents that may be reasonably necessary to
carry out the provisions of this Agreement.
9. No Limitation on Rights of the Company. This Agreement shall not in any way affect
the right or power of the Company to make adjustments, reclassifications or changes in its capital
or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any
part of its business or assets.
10. Creditor Status. The Grantor shall be a general creditor of the Company under
this Agreement and any obligation of the Company to the Grantee under this Agreement shall be
subordinated to any obligation of the Company to the various lending institutions under the Amended
and Restated Credit Agreement, dated as of May 8, 2007 and as amended or restated from time to
time, among the Company, various designated subsidiary borrowers, various lending institutions and
JPMorgan Chase Bank, N.A., as Administrative Agent.
11. Definitions.
The following definitions shall be applicable within this Agreement.
a. “Cause” means (i) any intentional act of fraud, embezzlement or theft by the Grantee in
connection with or in the course of his or her employment with the Company or a Grantee’s admission
or conviction of, or plea of nolo contendere to, (x) a felony or (y) any crime involving moral
turpitude, fraud, embezzlement, theft or misrepresentation; (ii) any gross negligence or willful
misconduct of a Grantee resulting in a loss to the Company, or damage to the reputation of the
Company or (iii) any violation of any statutory or common law duty of loyalty to the Company.
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b. “Change in Control” means any of the following:
(1) the acquisition by any individual, entity or group (a “Person”), including any
“person” within the meaning of Section 13(d)(3) or 14(d)(2) of the
U.S. Securities Exchange Act of 1934, as amended from time to time (the “Exchange
Act”), of beneficial ownership within the meaning of Rule 13d-3 promulgated under the
Exchange Act, of 50% or more of either (i) the then outstanding ordinary shares, par value
U.S.$1.00 per share, of the Company (the “Outstanding Ordinary Shares”) or (ii) the
combined voting power of the then outstanding securities of the Company entitled to vote
generally in the election of directors pursuant to the Bye-Laws of the Company (the
“Outstanding Voting Securities”); excluding, however, the following: (A)
any acquisition directly from the Company (excluding any acquisition resulting from the
exercise of an exercise, conversion or exchange privilege unless the security being so
exercised, converted or exchanged was acquired directly from the Company), (B) any
acquisition by the Company, (C) any acquisition by an employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by the Company
or (D) any acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (3) of this definition of Change in Control;
provided, further, that for purposes of clause (B), if any Person (other
than the Company or any employee benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company) shall become the beneficial owner
of 50% or more of the Outstanding Ordinary Shares or 50% or more of the Outstanding Voting
Securities by reason of an acquisition by the Company, and such Person shall, after such
acquisition by the Company, become the beneficial owner of any additional Outstanding
Ordinary Shares or any additional Outstanding Voting Securities and such beneficial
ownership is publicly announced, such additional beneficial ownership shall constitute a
Change in Control;
(2) individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of such Board within a 24
month period; provided, that any individual who becomes a director of the Company
subsequent to the date hereof whose election, or nomination for election by the Company’s
shareholders, was approved by the vote of at least a majority of the directors then
comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and
provided, further, that any individual who was initially elected as a
director of the Company as a result of an actual or threatened solicitation by a Person
other than the Board for the purpose of opposing a solicitation by any other Person with
respect to the election or removal of directors, or any other actual or threatened
solicitation of proxies or consents by or on behalf of any Person other than the Board
shall not be deemed a member of the Incumbent Board;
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(3) the consummation of a reorganization, amalgamation, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the Company (a
“Corporate Transaction”); excluding, however, a Corporate Transaction
pursuant to which (i) all or substantially all of the individuals or entities who are the
beneficial owners, respectively, of the Outstanding Ordinary Shares and the Outstanding
Voting Securities immediately prior to such Corporate Transaction will beneficially own,
directly or indirectly, more than 55% of, respectively, the outstanding shares of common stock, and the combined voting power of
the outstanding securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Corporate Transaction (including,
without limitation, a corporation which as a result of such transaction owns the Company or
all or substantially all of the Company’s assets either directly or indirectly) in
substantially the same proportions relative to each other as their ownership, immediately
prior to such Corporate Transaction, of the Outstanding Ordinary Shares and the Outstanding
Voting Securities, as the case may be, (ii) no Person (other than: the Company; any
employee benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; the corporation resulting from such Corporate
Transaction; and any Person which beneficially owned, immediately prior to such Corporate
Transaction, directly or indirectly, 50% or more of the Outstanding Ordinary Shares or the
Outstanding Voting Securities, as the case may be) will beneficially own, directly or
indirectly, 50% or more of, respectively, the outstanding shares of common stock of the
corporation resulting from such Corporate Transaction or the combined voting power of the
outstanding securities of such corporation entitled to vote generally in the election of
directors and (iii) individuals who were members of the Incumbent Board will constitute at
least a majority of the members of the board of directors of the corporation resulting from
such Corporate Transaction; or
(4) the consummation of a plan of complete liquidation or dissolution of the Company.
c. “Disability” means the inability of a Grantee to perform the duties of the occupation at
which a Grantee was employed when such disability commenced for a period of at least 120
consecutive days, or 180 non-consecutive days within any 365-day period, as determined by the
Company in its discretion based upon medical evidence acceptable to it.
d. “Retirement” means the voluntary termination of a Grantee’s employment with the Company
after the Grantee has (a) attained the age of 65 and (b) been employed with the Company for a
period greater than five years.
e. “Section 409A” means Section 409A of the U.S. Internal Revenue Code of 1986, as amended,
and any related regulations or other guidance promulgated thereunder.
f. “Section 457A” means Section 457A of the U.S. Internal Revenue Code of 1986, as amended,
and any related regulations or other guidance promulgated thereunder.
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12. Miscellaneous.
a. Notices. Any notice or other communication required or permitted hereunder shall
be in writing and shall be delivered personally or sent by
certified, registered, or express mail, postage prepaid. Any such notice shall be deemed
given when delivered to each party at the following addresses (or to such other address as may be
designated in a notice given in accordance with this Section):
(i) if to the Company:
Endurance Specialty Holdings Ltd.
Wellesley House
90 Xxxxx Bay Road
Pembroke HM 08
Bermuda
Attn: General Counsel
Wellesley House
90 Xxxxx Bay Road
Pembroke HM 08
Bermuda
Attn: General Counsel
(ii) if to the Grantee, to the most recent primary residence address
listed for the Grantee in the employment records of the Company.
b. Failure to Enforce Not a Waiver. The failure of the Company or the Grantee to
enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of
such provision or of any other provision hereof.
c. Governing Law. This Agreement shall be governed by and construed according to the
laws of Bermuda without giving effect to the choice of law principles thereof. The Grantee submits
to the non-exclusive jurisdiction of the courts of Bermuda in respect to matters arising hereunder.
d. Arbitration. All disputes, controversies or claims arising out of, relating to or
in connection with this Agreement, the LTI Award or the Accrued Interest, or the breach,
termination or validity thereof, shall be finally settled by arbitration. The arbitration shall be
conducted in accordance with the rules of the International Chamber of Commerce except as same may
be modified herein or by mutual agreement of the parties. The seat of the arbitration shall be
Bermuda and it shall be conducted in the English language. The arbitration shall be conducted by
one arbitrator who shall be selected by BIBA (Bermuda International Business Association), in the
event that the parties fail to agree. The arbitral award shall be in writing, shall state reasons
for the award, and shall be final and binding on the parties. The award may include an award of
costs, including reasonable attorneys fees and disbursements. Judgment on the award may be entered
by any court having jurisdiction thereof or having jurisdiction over the parties or their assets.
e. Amendments. This Agreement may be amended or modified at any time by an instrument
in writing signed by the parties hereto.
f. Agreement Not a Contract of Employment. This Agreement is not a contract of
employment, and the terms of employment of the Grantee or the relationship of the Grantee with the
Company or any subsidiary of the Company shall not be affected in any way by this Agreement except
as specifically provided herein. The execution of this Agreement shall not be construed as
conferring any legal rights upon the
Grantee for a continuation of employment or relationship with the Company or any subsidiary of
the Company, nor shall it interfere with the right of the Company or any subsidiary of the Company
to discharge the Grantee and to treat the Grantee without regard to the effect which that treatment
might have upon the Grantee as a holder of the LTI Award and Accrued Interest.
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g. Entire Agreement. This Agreement contains the entire understanding and agreement
of the parties hereto concerning the subject matter hereof, and supersedes all earlier negotiations
and understandings, written or oral, between the parties hereto with respect thereto.
h. Captions. The captions and headings of the sections and subsections of this
Agreement are included for convenience only and are not to be considered in construing or
interpreting this Agreement.
i. Counterparts. This Agreement may be executed in counterparts and by facsimile or
electronic reproduction, each of which when signed by the Company or the Grantee will be deemed an
original and all of which together will be deemed the same agreement.
j. Assignment. The Company may assign its rights and delegate its duties under this
Agreement. If any such assignment or delegation requires consent of any state securities
authorities, the parties hereto agree to cooperate in requesting such consent. This Agreement
shall inure to the benefit of the successors and assigns of the Company and, subject to the
restrictions on transfer herein set forth, be binding upon the Grantee, the Grantee’s heirs,
executors, administrators, successors and assigns.
k. Severability. This Agreement will be severable, and the invalidity or
unenforceability of any term or provision hereof will not affect the validity or enforceability of
this Agreement or of any other term or provision hereof. Furthermore, in lieu of any invalid or
unenforceable term or provision, the parties hereto intend that there be added as a part of this
Agreement a valid and enforceable provision as similar in terms to such invalid or unenforceable
provision as may be possible.
l. Section 409A and Section 457A Compliance. To the extent applicable, it is intended
that the compensation arrangements under this Agreement be in full compliance with Section 409A and
Section 457A. This Agreement will be construed in a manner to give effect to such intention. Any
references to a “termination of employment” (or similar term) under this Agreement shall mean a
“separation from service” within the meaning of Section 409A. Each installment of the LTI Award
payments and corresponding Accrued Interest shall be deemed to be a separate payment for purposes
of Section 409A. If it is determined that all or a portion of the LTI Award or Accrued Interest
constitutes deferred compensation for purposes of Section 409A, and if the Grantee is a “specified
employee” (within the meaning of Section 409A) at the time of the Grantee’s separation from
service, then the portion of such payments that would otherwise be payable during the six-month
period immediately following the Grantee’s separation from service shall instead be paid on the
earlier of (i) the first business day of
the seventh month following the Grantee’s separation from service or (ii) the Grantee’s death.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.
| ENDURANCE SPECIALTY HOLDINGS LTD. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
The undersigned hereby accepts and agrees to all the terms and provisions of the foregoing
Agreement.
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