EMPLOYMENT AGREEMENT
(dated as of March 1, 2001)
AGREEMENT, made and entered into as of the date first above
written, by and between, XL Capital Ltd, a Cayman Islands corporation (the
"Company"), and Xxxxx de St. Paer (the "Executive").
WHEREAS, the Company desires to secure the services of the
Executive and to enter into an agreement embodying the terms of his employment;
and
WHEREAS, the Executive desires to accept such employment and
enter into such agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable consideration, the
Company, the Guarantors (as hereinafter defined) and the Executive (the
"Parties") agree as follows:
1. EMPLOYMENT.
Subject to Section 3(d) below, 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 and
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.
Subject to Section 3(d) below the stated term of employment
under this Agreement shall commence on the date first above written (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 8, below, and extension as provided in the next succeeding
sentence. On the third anniversary of the Date of this Agreement and upon each
anniversary thereafter, the stated term of employment shall be automatically
extended for an additional one year unless the Company gives notice in writing
to the Executive or the Executive gives notice in writing to the Company at
least three months prior to such anniversary that the term is not to be so
extended.
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3. POSITIONS, DUTIES AND RESPONSIBILITIES.
(a) GENERAL. The Executive shall be employed as the Executive
Vice President and Chief Financial Officer of the Company. In such position, the
Executive shall have the duties, responsibilities and authority normally
associated with the office, position and titles of such an officer of an
insurance, reinsurance and financial services company whose shares are publicly
traded in the United States. In carrying out his duties and responsibilities,
the Executive shall report to the Chief Executive Officer of the Company. During
the term of this Agreement, the Executive shall devote his full business time to
the business and affairs of the Company, and shall use his best efforts, skills
and abilities to promote the Company's interests.
(b) PERFORMANCE OF SERVICES. The Executive shall be based in the
Company's Bermuda headquarters. The Executive's services under this Agreement
shall be performed outside the United States and generally in Bermuda unless the
Executive and the Company mutually agree in writing to the performance of such
services in another location. The Executive may travel to any location in
connection with the performance of the Executive's duties hereunder provided
that such travel is in accordance with the guidelines established by the Company
from time to time.
(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
hereunder and are not otherwise considered to be inappropriate by the Board of
Directors of the Company (the "Company Board").
(d) WORK PERMITS. The employment of the Executive by the Company
shall be contingent upon the issuance to the Executive of a suitable (for the
purposes of the Executive's contemplated employment by the Company) work permit
by the Bermuda government authorities and any other permits required by any
Bermuda government authority. Both the Company and the Executive shall use their
respective best efforts to obtain, maintain and renew said permit(s) so as to
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allow the Executive to be employed under the terms hereof. The Company shall be
responsible for permit fees. If at any time said permit(s), having been
obtained, expire and are not renewed or cease to be valid and such renewal or
validation is necessary in order for the Executive to be employed by the Company
as contemplated by this Agreement and the non-renewal or invalidation is beyond
the control of both the Company and the Executive, employment under this
Agreement shall terminate immediately upon the expiration of said permit(s) or
upon said permit(s) ceasing to be valid unless the Executive can discharge his
duties and responsibilities effectively from another location not requiring said
permit(s) that is acceptable to the Executive and non-prejudicial to the
interests of the Company. In the event of such termination, the provisions of
Section 8(d) shall apply to such termination of the Executive's employment (or,
if within (i) the one-year period prior to the date of a Change in Control, as
hereinafter defined, provided the conditions set forth in the last paragraph of
Section 8(d)(iii) are satisfied, or (ii) the Post-Change Period, as hereinafter
defined, such termination shall be considered a termination by the employee for
"Good Reason") provided that non-renewal of said permit(s) or invalidation
thereof are not a direct result of any material action or omission of the
Executive that would reasonably cause such permit(s) not to be renewed or
validated.
4. BASE SALARY.
The Executive shall be paid a Base Salary by the Company equal
US$400,000, payable in accordance with the Company's regular pay practices. Such
Base Salary shall be subject to annual review in accordance with the Company's
practices for executives as in effect from time to time and may be increased at
the discretion of the Compensation Committee of the Company Board (the
"Compensation Committee").
5. ADDITIONAL COMPENSATION.
(a) BONUS. In addition to the Base Salary provided for in
Section 4, above, the Executive shall be eligible for an annual cash bonus under
the Company's Annual Incentive Compensation Plan as in effect from time to time.
The Executive may be awarded such annual bonuses thereunder as may be approved
by the Compensation Committee based on corporate, individual and business unit
performance measures, as appropriate, established or approved from time to time,
by the Compensation Committee. Initially, the Execu-
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tive shall have an annual target bonus equal to 90% of Base Salary (within a
range of 45% of Base Salary for threshold performance to 270% of Base Salary for
superior performance), of which 70% shall be based on corporate performance and
30% based on business unit performance. Any annual bonus shall be paid in cash
in a lump sum promptly following approval thereof or, at Executive's option,
deferred in accordance with any bonus deferral plans of the Company in effect
from time to time. Nothing in this Section 5(a) shall confer upon the Executive
any right to a minimum annual bonus.
(b) STOCK OPTION GRANT. Pursuant to the XL Capital Ltd 1991
Performance Incentive Program, as soon as practicable following the Date of the
Agreement XL will grant to the Executive an option (the "Option") to purchase
30,000 ordinary shares of XL at an exercise price equal to the fair market value
of such shares on the date of grant. The Option shall become exercisable in
three equal annual installments commencing on the first anniversary of the date
of grant (provided the Executive's employment continues through such dates), and
the Option shall be subject to such other terms and conditions set forth in the
form of stock option agreement utilized generally by XL for its executives.
(c) RESTRICTED SHARE GRANT. Pursuant to XL Capital Ltd 1991
Performance Incentive Program, as soon as practicable following the Date of the
Agreement XL shall grant to the Executive 13,000 restricted ordinary shares of
XL. The restricted shares will vest in four equal annual installments,
commencing on the first anniversary of the date of grant, provided the
Executive's employment continues through such dates, and the restricted shares
shall be subject to such other terms and conditions as set forth in the form of
restricted stock agreement utilized generally by XL for its executives.
(d) SIGNING BONUS. On the execution of this Agreement the
Executive shall be entitled to a special signing bonus in the amount of
US$400,000, which shall be paid to him as soon as practicable thereafter.
6. 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 as are in effect from time to time and in which
senior executives of the
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Company are eligible to participate, including medical, hospitalization, life,
travel and accident insurance, disability protection, retirement benefits and
stock option and other stock-based compensation or incentive plans. During the
term of the Executive's employment hereunder, an amount equal to 10% of the
Executive's Base Salary and annual bonus shall be either (i) credited annually
to the Executive's account under a retirement plan which is not U.S.
tax-qualified (but which is intended to result in deferral of taxation under
U.S. tax principles until receipt of benefits by the Executive), (ii)
contributed annually to the Executive's account under a U.S. tax-qualified
retirement plan or (iii) a combination of (i) or (ii) above at the option of the
Executive, subject to limitations imposed by applicable law, in any case, which
amount so credited or contributed shall be in addition to the Executive's Base
Salary and annual bonus hereunder.
7. 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 for all reasonable out-of-pocket travel expenses,
entertainment expenses and other expenses incurred by him in performing his
duties under this Agreement, provided that the Executive submits reasonable
documentation with respect to such expenses. This shall include, without
limitation, reimbursements of any such costs for air fare, hotel accommodations
and meals, in each case at the same level and class as other comparable
executives.
(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 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 senior executives. In all events, without limiting the foregoing, the
Executive shall be entitled during the period he is employed to the following:
(i) a housing allowance of US$12,000 per month (to be prorated
for partial months and adjusted in accordance with the Company's
policies) while his services are performed in Bermuda,
(ii) use of an automobile having a purchase price not in excess
of US$38,500, plus maintenance, licensing and
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insurance costs, and a new automobile shall be made available to the
Executive after five years,
(iii) direct payment or reimbursement of the cost (including
initiation fees and annual dues) of membership in one club in Bermuda,
(iv) direct payment or reimbursement by the Company for the
reasonable cost of financial and tax planning, such payment or
reimbursement not to exceed US$10,000 per year,
(v) up to four round-trip non-business trips per year (flying in
business class) by the Executive and each member of his family
residing with him in Bermuda between Bermuda and New York, NY (the
benefit under this Section 7(b)(v) being in addition to any
reimbursement of air fare described in Section 7(a), above) in
accordance with the Company's policies and procedures for home leaves
as in effect from time to time,
(vi) reimbursement for the reasonable travel expenses incurred by
the Executive in attending meetings of the Board of Directors of the
following charitable organizations: Xxxxx Xxxxxxx School of Advanced
International Studies, North Central Trustee and RMD House, to the
extent such expenses are not otherwise reimbursed, and
(vii) such other benefits for which a Grade 11 executive shall be
eligible from time to time.
(c) RELOCATION EXPENSES. The Company shall pay directly or
reimburse the Executive, in either case on an after-tax basis to the Executive,
for reasonable moving expenses in relocating the Executive and his immediate
family from Bermuda to a location in the New York City metropolitan area
designated by the Executive (or the Executive's estate or other legal
representative in the event of his death) following termination of the
Executive's employment with the Company for any reason other than Cause (as
hereinafter defined).
8. TERMINATION OF EMPLOYMENT.
(a) TERMINATION DUE TO DEATH. In the event the Executive dies
during the term of employment hereunder, the Executive's spouse, if the spouse
survives the Executive, shall be entitled to receive the Base Salary as provided
in
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Section 4, above, at the rate in effect at the time of Executive's death, to
be paid in accordance with the Company's regular payroll practices or in a lump
sum, at the Company's option, through the end of the sixth month after the month
in which the Executive dies. In the event that the Executive's spouse does not
survive him, the estate or other legal representative of the Executive shall be
entitled to receive the Base Salary as provided in Section 4, above, at the rate
in effect at the time of the Executive's death, to be paid in accordance with
the Company's regular payroll practices or in a lump sum, at the Company's
option, through the end of the sixth month after 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 earned in accordance with the Company's
bonus program or awarded but not yet paid under Section 5, above,
(ii) a pro rata bonus for the year of death in an amount
determined by the Compensation Committee, but in no event less than a
pro rata portion of the Executive's target bonus for the year,
(iii) full and immediate vesting as of the date of death of all
rights under any options to purchase equity securities of the Company
or other rights with respect to equity securities of the Company,
including any restricted stock or other securities, held by the
Executive,
(iv) full and immediate vesting under the Company's pension plans
as of the date of death, to the extent permitted by applicable law,
and
(v) any other rights and benefits, if any, available under
employee benefit programs of the Company, or their equivalent, as
provided in Section 6, above, and under business expense reimbursement
and fringe benefits programs as described in Section 7, above,
determined in accordance with the applicable terms and provisions of
such programs, PROVIDED that such rights and benefits (excluding any
right to be considered for additional grants under the Company's stock
option and other stock-based compensation or incentive plans), or the
economic equivalent thereof on an after-tax basis to the Executive's
estate or other legal representative, shall continue for at least six
months following the end of the month in which the Executive dies.
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(b) TERMINATION DUE TO DISABILITY. In the event the Executive's
employment hereunder 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 sixth month after the month in which the Executive's
employment terminates due to disability,
(ii) any annual bonus earned in accordance with the Company's
bonus program or awarded but not yet paid under Section 5,
(iii) a pro rata bonus for the year of disability in an amount
determined by the Compensation Committee, but in no event less than a
pro rata portion of the Executive's target bonus for the year,
(iv) full and immediate vesting as of the date of disability of
all rights under any options to purchase equity securities of the
Company or other rights with respect to equity securities of the
Company, including any restricted stock or other securities, held by
the Executive,
(v) full and immediate vesting under the Company's pension plans
as of the date of disability, to the extent permitted by applicable
law, and
(vi) any other rights and benefits, if any, available under
employee benefit programs of the Company, or their equivalent, as
provided in Section 6, above, including, without limitation, the terms
of any long-term disability plan, and under the business expense
reimbursement and fringe benefits programs as described in Section 7,
above, determined in accordance with the applicable terms and
provisions of such programs, PROVIDED that such rights and benefits
(excluding any rights to be considered for additional grants under the
Company's stock option and other stock-based compensation or incentive
plans), or the economic equivalent thereof on an after-tax basis to
the Executive, shall continue for at least six months following the
end of the month in which the Executive's employment is terminated due
to disability.
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(c) TERMINATION FOR CAUSE.
(i) The employment of the Executive under this Agreement may be
terminated by the Company for Cause, such termination to be effective
upon the Company giving the Executive written notice of termination in
accordance with the provisions of this Agreement. For this purpose,
"Cause" shall mean:
(A) conviction of the Executive of a felony involving moral
turpitude, dishonesty or laws to which the Company or its
Affiliates are subject in connection with the conduct of its or
their business, or
(B) the Executive, in carrying out his duties for the
Company under this Agreement, has been guilty of (1) willful
misconduct or (2) substantial and continual refusal by the
Executive to perform the duties assigned to the Executive
pursuant to the terms hereof; PROVIDED, HOWEVER, that any act or
failure to act by the Executive shall not constitute Cause for
purposes of this Section 8(c)(i)(B) if such act or failure to act
was committed, or omitted, by the Executive in good faith and in
a manner he reasonably believed to be in the overall best
interests of the Company, as the case may be. The determination
of whether the Executive acted in good faith and that he
reasonably believed his action to be in the Company's overall
best interest, as the case may be, will be in the reasonable
judgment of the General Counsel of the Company or, if the General
Counsel shall have an actual or potential conflict of interest,
the Compensation Committee.
(C) the Executive's continued willful refusal to obey any
lawful policy or requirement duly adopted by the Company Board
and the continuance of such refusal after receipt of written
notice.
(ii) In the event of a termination for Cause under Section
8(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,
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(B) the rights under any options to purchase equity
securities of the Company or other rights with respect to equity
securities of the Company, including any restricted stock or
other securities, held by the Executive, 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 6, above, and under the business expense
reimbursement and fringe benefits programs as described in
Section 7, above, determined in accordance with the applicable
terms and provisions of such programs; PROVIDED that the
Executive shall not be entitled to any such rights or benefits
unless the terms and provisions of such programs expressly state
that the Executive shall be entitled thereto in the event his
employment is terminated for Cause (as defined in this Agreement
or otherwise); PROVIDED FURTHER that any such continued coverage
shall be offset by comparable coverage provided to the Executive
in connection with subsequent full-time employment.
(d) TERMINATION WITHOUT CAUSE.
(i) Anything in this Agreement to the contrary notwithstanding,
the Executive's employment may be terminated by the Company without
Cause as provided in this Section 8(d). A termination due to death or
disability, as described in Section 8(a) or (b), above, or a
termination for Cause, as described in Section 8(c), above, shall not
be deemed a termination without Cause under this Section 8(d).
(ii) In the event the Executive's employment is terminated by the
Company without Cause (x) prior to a Change in Control (other than as
provided in the last paragraph of Section 8(d)(iii), in which case the
provisions of Section 8(d)(iii) shall apply in lieu of this Section
8(d)(ii)) or (y) following the Post-Change Period (as hereinafter
defined), the Executive shall be entitled to:
(A) Base Salary as provided in Section 4, above, at the rate
in effect at the time of his termination of employment without
Cause, through the date on which termination without Cause
occurs,
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(B) (I) if the Executive's employment terminates after the
second anniversary of the Date of the Agreement, a cash lump sum
payment equal to (x) two times the Executive's annual Base
Salary, at the annual rate in effect in accordance with Section
4, above, immediately prior to such termination and (y) one times
the higher of the targeted annual bonus for the year of such
termination or the bonus actually awarded to the Executive by the
Company for the year immediately preceding the year of
termination, and
(II) if the Executive's employment terminates on or prior to
the second anniversary of the Date of the Agreement, a cash lump
sum payment equal to (x) two times the Executive's annual Base
Salary, at the annual rate in effect in accordance with Section
4, above, immediately prior to such termination and (y) two times
the targeted annual bonus for the year of such termination,
(C) any annual bonus earned in accordance with the Company's
bonus program or awarded but not yet paid under Xxxxxxx 0, xxxxx,
(X) if the Executive's employment terminates on or prior to
the second anniversary of the Date of the Agreement, the rights
under the stock options granted pursuant to Section 5(b) hereof
and the restricted shares granted pursuant to Section 5(c) hereof
held by the Executive shall immediately become vested and, in the
case of the stock options, exercisable in full,
(E) except as otherwise set forth in Section 8(d)(ii)(D)
above, the rights under any options to purchase equity securities
of the Company or other rights with respect to equity securities
of the Company, including any restricted stock or other
securities, held by the Executive, determined in accordance with
the terms thereof, and
(F) any other rights and benefits, if any, available under
the employee benefit programs of the Company, or their
equivalent, as provided in Section 6 above, and under the
business expense reimbursement and fringe benefits programs as
described in Section 7, above, determined in accordance with the
applicable terms and provisions of such programs, for
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the remainder of the stated term of the agreement from termination or
until the second anniversary of the date of termination, whichever is
shorter; 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 is
unable to continue such coverage, the Company shall provide the
Executive with economically equivalent benefits determined on an
after-tax basis to the Executive; PROVIDED FURTHER, HOWEVER, that in
no event shall the Executive have a right to be considered for
additional grants under the Company's stock option and other
stock-based compensation or incentive plans or be eligible for
employer contributions under the Company's retirement benefit plans at
any time in whole or in part following the Executive's termination of
employment pursuant to this Section 8(d)(ii).
(iii) In the event the Executive's employment is terminated by
(x) the Company without Cause within the twenty-four month period
following a Change in Control (as defined in Exhibit A hereto) and, if
the Change in Control is stockholder approval of an Event (as defined
in Exhibit A), prior to a termination of the agreement to effect the
Event (the "Post-Change Period") or (y) the Executive terminates his
employment 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 at the time of his termination of employment, through
the date on which termination occurs,
(B) a cash lump sum payment equal to two times the
Executive's annual Base Salary, at the rate in effect in
accordance with Section 4, above, immediately prior to such
termination or Change of Control, whichever is greater,
(C) a cash lump sum payment equal to two times the largest
annual bonus awarded to the Executive by the Company in the
three-year period prior to the year in which the Change in
Control occurs, provided such bonuses shall be at least equal to
the targeted annual bonus for the year of such termination,
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(D) an amount equal to (i) the higher of (x) the bonus
actually awarded to the Executive by the Company for the year
immediately preceding the year in which the Change in Control
occurs or (y) the targeted amount of bonus that would have been
awarded to the Executive in respect of the year in which the
termination of employment occurs, multiplied by (ii) a fraction,
the numerator of which is the number of months or fraction
thereof in which the Executive was employed by the Company in the
year of termination of employment, and the denominator of which
is 12,
(E) options to purchase equity securities of the Company or
other rights with respect to equity securities of the Company
held by the Executive shall continue to be exercisable for three
years from the date of termination of employment, notwithstanding
the Executive's termination of employment, or the original full
term of the option or other right, if shorter,
(F) any other rights and benefits available under the
employee and fringe benefit programs of the Company, or their
equivalent, as provided in Section 7, above, in which the
Executive was participating at the time of his termination of
employment for a two-year period from termination; 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
unable to continue such coverage, the Company shall provide the
Executive with economically equivalent benefits determined on an
after-tax basis to the Executive; PROVIDED FURTHER, HOWEVER, that
in no event shall the Executive have a right to be considered for
additional grants under the Company's stock option and other
stock-based compensation or incentive plans at any time in whole
or in part following the Executive's termination of employment
pursuant to this Section 8(d)(iii),
(G) full and immediate vesting under the Company's pension
plans as of the date of termination, to the extent permitted by
applicable law, and
(H) continued coverage under and contributions by the
Company to the Executive's accounts under the Company's pension
plans for two years following the
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Executive's termination of employment, such contributions to be
based on the Executive's compensation and the Company's
practices as in effect at the time of such termination or
Change in Control, whichever is greater; PROVIDED, HOWEVER, that
if such continued coverage and contributions cannot be provided
under the pension plans under applicable law, then economically
equivalent benefits determined on an after-tax basis to the
Executive shall be provided through arrangements outside the
applicable pension plans.
Anything in this Agreement to the contrary notwithstanding, the
Executive shall be entitled to the benefits described in (A)-(H) above, if the
Executive's employment or status as an elected officer with the Company is
terminated (other than for Cause) within one year prior to the date on which a
Change in Control occurs, and it is reasonably demonstrated that such
termination (i) was at the request of a third party who has taken steps
reasonably calculated or intended to effect a Change in Control or (ii)
otherwise arose in connection with or anticipation of a Change in Control.
(iv) If, in situations where Section 8(d)(iii) does not apply, at
any time during the term of the Executive's employment hereunder, the
Executive fails to be appointed (or re-appointed, as appropriate) as
Executive Vice President and Chief Financial Officer of the Company
(or, if agreed in writing by the Executive, an equivalent or superior
position), or duties are assigned to the Executive that are
inconsistent with his position, or the Company does not cure any other
material breach by it of any provision of this Agreement or any
agreements entered into pursuant thereto within 30 calendar days
following written notice of same by the Executive, the Executive shall
have the right to terminate his employment within 30 calendar days of
such failure to appoint or re-appoint or of such assignment or of such
failure to cure a breach, as the case may be, and such termination
shall be deemed a termination by the Company without Cause under
Section 8(d)(ii), above, PROVIDED, in the case of a failure to appoint
or re-appoint or assignment of inconsistent duties, the Executive
shall have given the Company written notice of his decision and shall
not, within 30 calendar days thereafter, have been reinstated to the
relevant positions and/or had the assignment of inconsistent duties
rescinded.
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(e) VOLUNTARY TERMINATION BY THE EXECUTIVE. The Executive may
voluntarily terminate his employment prior to the expiration of the term of this
Agreement upon at least twelve months' prior written notice to the Company. Such
termination shall constitute a voluntary termination and, except as provided in
Section 8(d)(iii) or Section 8(d)(iv), above, in such event the Executive shall
be limited to the same rights and benefits as applicable to a termination by the
Company for Cause as provided in Section 8(c), above. A voluntary termination in
accordance with this Section 8(e) shall not be deemed a breach of this
Agreement. A termination of the Executive's employment due to disability or
death as described in Section 8(b) or 8(a), above, a termination by the
Executive which the Executive is entitled to treat as a termination by the
Company pursuant to Section 8(d), above, or a termination by the Executive under
Section 8(d)(iv), above, shall not be deemed a voluntary termination within the
meaning of this Section 8(e).
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that (i) any payment or distribution made,
or benefit provided (including, without limitation, the acceleration of any
payment, distribution or benefit or accelerated vesting or exercisability of any
award) by the Company to or for the benefit of the Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise, but determined without regard to any additional payments required
under this Section 9) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the United States Internal Revenue Code of 1986, as amended
(the "Code") (or any successor provision or similar excise tax), or any interest
or penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), (ii) the aggregate amount of the
Executive's Parachute Payments (as defined in Section 280G(b)(2)(A) of the Code)
is less than 3.25 times the Executive's Base Amount (as defined in Section
280G(b)(3)(A) of the Code), and (iii) no such Payment would be subject to the
Excise Tax if the payments set forth in Section 8(d)(iii)(B) and (C) hereof were
each reduced by up to 20 percent, then the payments set forth in Section
8(d)(iii)(B) and (C) will each be reduced to the smallest extent possible (and
in no event by more than 20
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percent in the aggregate) such that no Payment is subject to the Excise Tax.
(b) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that (i) the aggregate amount of the
Executive's Parachute Payments equals or exceeds 3.25 times the Executive's Base
Amount, (ii) the aggregate amount of the Executive's Parachute Payments is less
than 3.25 times the Base Amount but one or more Payments would be subject to the
Excise Tax even if the payments set forth in Section 8(d)(iii)(B) and (C) hereof
were each reduced by 20 percent, or (iii) notwithstanding a reduction in
payments pursuant to Section 9(a) above, an Excise Tax is payable by the
Executive on one or more Payments, then, in any such case, Payments shall not be
reduced and the Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the Executive of all
taxes (including any income or Excise Tax) imposed upon the Gross-Up Payment and
any interest or penalties imposed with respect to such taxes, the Executive
retains from the Gross-Up Payment an amount equal to the Excise Tax imposed upon
the Payments.
(c) Subject to the provisions of Section 9(d), all
determinations required to be made under this Section 9, including determination
of whether a Gross-Up Payment is required and of the amount of any such Gross-Up
Payment, shall be made by a nationally recognized public accounting firm
selected by the Executive (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the Executive within 15 business
days of the date of termination of the Executive's employment, if applicable, or
such earlier time as is requested. The initial Gross-Up Payment, if any, as
determined pursuant to this Section 9(c), shall be paid to the Executive within
five business days of the receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it
shall furnish the Executive with a written opinion that he has substantial
authority not to report any Excise Tax on his Federal income tax return. Any
determination by the Accounting Firm meeting the requirements of this Section
9(c) shall be binding upon the Company and the Executive, subject only to
payments pursuant to the following sentence based on a determination that
additional Gross-Up Payments should have been made, consistent with the
calculations required to be made hereunder (the amount of such additional
payments are referred to herein as the "Gross-Up Underpayment"). In the
- 17 -
event that the Company exhausts its remedies pursuant to Section 9(d) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Gross-Up Underpayment that has
occurred and any such Gross-Up Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive. The fees and disbursements of
the Accounting Firm shall be paid by the Company.
(d) The Executive shall notify the Company in writing of any
claim by the United States Internal Revenue Service that, if successful, would
require the payment by the Executive of any Excise Tax and, therefore, the
payment by the Company of a Gross-Up Payment. Such notification shall be given
as soon as practicable but not later than 30 business days after the Executive
receives written notice of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid.
The Executive shall not pay such claim prior to the expiration of the 30-day
period following the date on which he gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires, in good faith, to contest such claim
(which notice shall set forth the bases for such contest) and that it will bear
the costs and provide the indemnification as required by this sentence, the
Executive shall, in good faith:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall, in good faith, reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney selected by
the Company and reasonably acceptable to the Executive,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate, in good faith, in any
proceedings relating to such claim;
PROVIDED, HOWEVER, that the Company shall bear and pay directly all costs and
expenses (including additional interest and pen-
- 18 -
alties) incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis to the Executive, for any Excise
Tax or income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of all costs and
expenses.
Without limitation on the foregoing provisions of this Section
9(d), the Company shall, exercising good faith, control all proceedings taken in
connection with such contest and, at its sole option (but in good faith), may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option (but in good faith), either direct the Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; PROVIDED, HOWEVER, that if the
Company directs the Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis to the Executive, from any Excise Tax or income tax, including
interest or penalties with respect thereto, imposed with respect to such advance
or with respect to any imputed income with respect to such advance; AND FURTHER
PROVIDED that any extension of the statute of limitations relating to the
payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority. If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(d), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 9(d)) promptly pay to the Company, as
the case may be, the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 9(d), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to
- 19 -
contest such denial of refund prior to the expiration of 30 days after such
determination, then any obligation of the Executive to repay such advance shall
be forgiven and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
Notwithstanding any provision herein to the contrary, the
Executive's failure to strictly comply with the notice provisions set forth in
this Section 9, so long as such failure does not prevent the Company from
contesting an excise tax claim, shall not adversely affect the Executive's
rights under this Section 9.
10. NO MITIGATION; NO OFFSET.
In the event of any termination of employment under Section 8,
above, the Executive shall be under no obligation to mitigate damages or seek
other employment, and, except as expressly set forth herein, 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. NONCOMPETITION AND NONSOLICITATION.
The Executive represents and warrants that, to the best of his
knowledge, he is not using the confidential or proprietary information of any
other person in violation of any agreement or rights of others known to him. The
Executive agrees that the products of the Company and its Affiliates shall
constitute the exclusive property of the Company and its Affiliates.
For the avoidance of doubt, all trademarks, policy language or
forms, products or services (including products and services under development),
trade names, trade secrets, service marks, designs, computer programs and
software, utility models, copyrights, know-how and confidential information,
applications for registration of any of the foregoing and the right to apply for
them in any part of the world (whether any of the foregoing shall be registered
or unregistered) created or discovered or participated in by the Executive
during the course of his employment (whether or not pursuant to the terms of
this Agreement) or under the instructions of the Company or its Affiliate are
and shall be the absolute property of the Company and its Affiliates, as
appropirate. Without limiting the foregoing, the Executive hereby assigns to the
Company any and all of the Executive's right, title and interest, if any,
- 20 -
pertaining to the insurance and reinsurance (including, without limitation,
finite insurance and reinsurance), risk assumption, risk management, brokerage,
financial and other products or services developed or improved upon by the
Executive (including, without limitation, any related "know-how") while employed
by the Company or its Affiliates, including any patent, trademark, trade name,
copyright, ownership or other right that may pertain thereto.
Since Executive has obtained and is likely to obtain in the
course of Executive's employment with the Company and its Affiliates knowledge
of trade names, trade secrets, know-how, products and services (including
products and services under development), techniques, methods, lists, computer
programs and software and other confidential information relating to the Company
and its Affiliates, and their employees, clients, business or business
opportunities, Executive hereby undertakes that:
(i) Executive will not (either alone or jointly with or on behalf
of others and whether directly or indirectly) encourage, entice,
solicit or endeavor to encourage, entice or solicit, or hire or cause
to be hired any officer or employee of the Company or its Affiliates
away from employment with any such entity or to violate the terms of
any employment agreement or arrangement between any such officer or
employee and the Company or any of its Affiliates;
(ii) Executive will not (either alone or jointly with or on
behalf of others and whether directly or indirectly) interfere with or
disrupt or seek to interfere with or disrupt (A) the relationships
between the Company and its Affiliates, on the one hand, and any
customer or client of the Company and its Affiliates, on the other
hand, (including any insured or reinsured party) who during the period
of twenty-four months immediately preceding such termination shall
have been such a customer or client, or (B) the supply to the Company
and its Affiliates of any services by any supplier or agent or broker
who during the period of twenty-four months immediately preceding such
termination shall have supplied services to any such person, nor will
Executive interfere or seek to interfere with the terms on which such
supply or agency or brokering services during such period as aforesaid
have been made or provided; and
- 21 -
(iii) Executive will not (either alone or jointly with or on
behalf of others and whether directly or indirectly) whether as an
employee, consultant, partner, principal, agent, distributor,
representative or stockholder (except solely as a less than one
percent stockholder of a publicly traded company), engage in any
activities in Bermuda if such activities are competitive with the
businesses that (i) are then being conducted by the Company or its
Affiliates and (ii) during the period of the Executive's employment
were either being conducted by the Company or its Affiliates or
actively being developed by the Company or its Affiliates.
The provisions of the immediately preceding sentence shall
continue as long as the Executive is employed by the Company or its Affiliates
and shall continue in effect after such employment is terminated for any reason
until the first anniversary of such termination, provided that if such
employment is terminated by the Company prior to the end of the stated term
other than for Cause, or is terminated by the Executive under Section 8(d)(iii)
or Section 8(d)(iv), the provisions of clauses (ii) and (iii) shall
automatically terminate upon the termination of such employment, unless the
Company elects, in writing, upon such termination to continue the provisions of
clauses (ii) and (iii) in effect through the six-month anniversary of such
termination of employment in which case the Company shall be obligated to
continue (through such six-month anniversary of termination) to pay the
Executive, in addition to any of the Executive's rights under Section 8(d)(ii),
8(d)(iii) or Section 8(d)(iv), his Base Salary and the pro rata portion of the
Executive's target annual bonus for the year of termination, and such bonus
shall be payable at the times annual bonuses for such year are payable to other
executives.
For purposes of this Agreement, an "Affiliate" of the Company
includes any person, directly or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with the Company, and such
term shall specifically include, without limitation, the Company's
majority-owned subsidiaries.
The limitations on the Executive set forth in this Section shall
also apply to any agent or other representative acting on behalf of Executive.
While the restrictions aforesaid are considered by both parties
to be reasonable in all the circumstances it is recognized that restrictions of
the nature in question may fail
- 22 -
for reasons unforeseen and accordingly it is hereby declared and agreed that if
any of such restrictions or the geographic or other scope thereof shall be
adjudged to be void as going beyond what is reasonable in the circumstances for
the protection of the interests of the Company and its Affiliates but would be
valid if part of the wording thereof were deleted and/or the periods (if any)
thereof reduced and/or geographic or other area dealt with thereby reduced in
scope then said restrictions shall apply with such modifications as may be
necessary to make them valid and effective.
Nothing contained in this Section 11 shall limit in any manner
any additional obligations to which Executive may be bound pursuant to any other
agreement or any applicable law, rule or regulation and Section 11 shall apply,
subject to its terms, after employment has terminated for any reason.
12. CONFIDENTIAL INFORMATION.
The Executive covenants that he shall not, without the prior
written consent of the Company, disclose to any person, other than an employee
of the Company or other person to whom disclosure is necessary to the
performance by the Executive of his duties in the employ of the Company, any
confidential, proprietary, secret, or privileged information about the Company
or its Affiliates or their business or operations, including, but not limited
to, information concerning trade secrets, know-how, software, data processing
systems, policy language and forms, inventions, designs, processes, formulae,
notations, improvements, financial information, business plans, prospects,
referral sources, lists of suppliers and customers, legal advice and other
information with respect to the affairs, business, clients, customers, agents or
other business relationships of the Company or its Affiliates. Executive shall
hold in a fiduciary capacity for the benefit of the Company all secret,
confidential proprietary or privileged information or data relating to the
Company or any of its Affiliates or predecessor companies, and their respective
businesses, which shall have been obtained by Executive during his employment,
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
and this Section 12 shall apply in accordance with its terms after employment
has terminated for any reason. The Executive acknowledges and agrees that he
shall
- 23 -
have no authority to waive any attorney-client or other privilege without the
express prior written consent of the Compensation Committee as evidenced by the
signature of the Company's General Counsel.
13. WITHHOLDING.
Anything in this Agreement to the contrary notwithstanding, all
payments required to be made by the Company hereunder to the Executive shall be
subject to withholding of such amounts relating to taxes as the Company may
reasonably determine should be withheld pursuant to any applicable law or
regulation. In lieu of withholding such amounts, in whole or in part, the
Company may, in its sole discretion, accept 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. GUARANTY AND AFFILIATE SERVICES.
(a) LIABILITY. Each of XL Insurance Ltd and XL Re Ltd (together,
the "Guarantors") hereby agrees to be jointly and severally liable together with
the Company, for the performance of all obligations and duties, and the payment
of all amounts, due to the Executive under this Agreement.
(b) RESPONSIBILITY. All of the other terms and provisions of
this Agreement relating to the Executive's employment by the Company shall
likewise apply MUTATIS MUTANDIS to the Executive's employment by any of its
Affiliates, it being understood that if the Executive's employment with the
Company is terminated, his employment with its Affiliates shall also be
terminated and the Executive shall be required to resign immediately from all
directorships and other positions held by the Executive in the Company and its
Affiliates or in any other entities in respect of which the Executive was acting
as a representative or designee of the Company or its Affiliates in connection
with his employment.
15. 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.
- 24 -
16. ASSIGNABILITY; BINDING NATURE.
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 right 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
or amalgamation or scheme of arrangement 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 by operation of law or in writing duly executed by the
assignee or transferee all of the liabilities, obligations and duties of the
Company, as contained in this Agreement, either contractually or as a matter of
law.
17. INDEMNIFICATION.
The Executive shall be provided indemnification by the Company
to the maximum extent permitted by applicable law and its charter documents. In
addition, he shall be covered by a directors' and officers' liability policy
with coverage for all directors and officers of the Company in an amount equal
to at least US$75,000,000. Such directors' and officers' liability insurance
shall be maintained in effect for a period of six years following termination of
the Executive's employment for any reason other than pursuant to Section 8(c) or
Section 8(e) hereof.
18. SETTLEMENT OF DISPUTES.
(a) Any dispute between the Parties arising from or relating to
the terms of this Agreement or the Executive's employment with the Company or
its Affiliates shall, except as provided in Section 18(b) or Section 18(c), be
resolved by arbitration held in New York City in accordance with the rules of
the American Arbitration Association.
(b) Executive acknowledges that the Company and its Affiliates
will suffer irreparable injury, not readily susceptible of valuation in monetary
damages, if Executive breaches his obligations under Section 11 or 12.
Accord-
- 25 -
ingly, Executive agrees that the Company and its Affiliates will be entitled, in
addition to any other available remedies, to obtain injunctive relief against
any breach or prospective breach by Executive of his obligations under Section
11 or 12 in any Federal or state court sitting in the City and State of New York
or court sitting in Bermuda or the United Kingdom, or, at the Company's or any
Affiliate's election, in any other jurisdiction in which Executive maintains his
residence or his principal place of business. Executive hereby submits to the
non-exclusive jurisdiction of all those courts for the purposes of any actions
or proceedings instituted by the Company or its Affiliates to obtain such
injunctive relief, and Executive agrees that process in any or all of those
actions or proceedings may be served by registered mail or delivery, addressed
to the last address of Executive known to the Company or its Affiliates, or in
any other manner authorized by law. Executive further agrees that, in addition
to any other remedies available to the Company or its Affiliates by operation of
law or otherwise, because of any breach by Executive of his obligations under
Section 11 or 12 he will forfeit any and all bonus and rights to any payments to
which he might otherwise then be entitled by virtue hereof and such payments may
be suspended so long as any good faith dispute with respect thereto is
continuing; PROVIDED, HOWEVER, that payments, benefits and other rights and
privileges of the Executive under Section 8(d)(iii) shall not be forfeited,
suspended, offset, diminished or otherwise altered in any way on account of any
breach or prospective breach of Section 11, Section 12 or any other provision of
this Agreement alleged by the Company.
(c) Notwithstanding any other provision of this Agreement, the
Executive may elect to resolve any dispute involving a breach or alleged breach
of Section 8(d)(iii) in any Federal or State court sitting in the City and State
of New York or court sitting in Bermuda or the United Kingdom. The Company and
the Guarantors hereby submit to the non-exclusive jurisdiction of all those
courts for the purposes of any actions or proceedings instituted by the
Executive to enforce Section 8(d)(iii), and the Company and the Guarantors agree
that process in any or all of such actions or proceedings may be served by
registered mail or delivery, addressed to the Company as set forth in Section
20, or in any other manner authorized by law. The Company and the Guarantors
shall pay all costs associated with any court proceeding under this Section
18(c), including all legal fees and expenses of the Executive, who shall be
reimbursed
- 26 -
for all such costs promptly upon written demand therefor by the Executive.
(d) All costs associated with any proceeding under Sections
18(a) or 18(b) hereof, including all legal fees and expenses, for all Parties
shall be borne by the Company; PROVIDED, HOWEVER, that each Party shall bear its
own expenses if (i) the dispute relates to Sections 11 or 12 hereof, (ii) the
dispute results in the grant of injunctive relief against the Executive, and
(iii) the Executive's employment was terminated by the Company for Cause or by
the Executive not for Good Reason and not pursuant to Section 8(d)(iv) hereof.
The Executive shall be reimbursed by the Company for all such costs promptly
upon written demand therefor by the Executive.
19. 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 and the Guarantors. No waiver by any 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 and the Guarantors, as the case may be.
20. NOTICES.
Any notice 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:
If to the Company:
XL Capital Ltd
XX Xxxxx
Xxx Xxxxxxxxxx Xxxx
Xxxxxxxx XX00 Xxxxxxx
Att'n: General Counsel
- 27 -
If to the Executive:
Xxxxx de St. Paer
c/o XL Capital Ltd
XX Xxxxx
Xxx Xxxxxxxxxx Xxxx
Xxxxxxxx XX00 Xxxxxxx
00. 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.
22. SURVIVORSHIP.
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.
23. REFERENCE.
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.
24. 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.
25. HEADINGS.
The heading of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
- 28 -
26. COUNTERPARTS.
This Agreement may be executed in one or more counterparts.
- 29 -
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first written above.
XL CAPITAL LTD
By:
----------------------------
XXXXX DE ST. PAER
By:
----------------------------
GUARANTORS:
XL INSURANCE LTD
By:___________________________
XL RE LTD
By: __________________________
EXHIBIT A
CHANGE IN CONTROL
A "Change in Control" shall be deemed to have occurred:
(i) if 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)(a "Person") or any group,
as defined in Sections 13(d) or 14(d) of the United States Securities
Exchange Act of 1934 (other than a group of which the Executive is a
member or which has been organized by the Executive), becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing, or acquires the right to control or direct, or to
acquire through the conversion of securities or the exercise of
warrants or other rights to acquire securities, 30% or more of either
(I) the outstanding Ordinary Shares of the Company; (II) the
outstanding securities of the Company having a right to vote in the
election of directors or (III) the combined voting power of the
outstanding securities of the Company having a right to vote in the
election of directors; or
(ii) if there shall be elected or appointed to the Board of
Directors of the Company (the "Board") any director or directors whose
appointment or election by the Board or nomination for election by the
Company's shareholders was not approved by a vote of at least a
majority of the directors then still in office who were either
directors on the date of execution of this Agreement or whose election
or appointment or nomination for election was previously so approved;
or
(iii) if there occurs a reorganization, scheme of arrangement,
merger, consolidation, combination, amalgamation, corporate
restructuring, liquidation, winding up, exchange of securities, or
similar transaction, or stockholder approval of any of the foregoing,
(each, an "Event"), in each case, in respect of which the beneficial
owners of the outstanding Company Ordinary Shares immediately prior to
such Event do not or will not, following such Event, beneficially own,
directly or indirectly, more
- 2 -
than 60% of each of the outstanding equity share capital and the
combined voting power of the then outstanding voting securities
entitled to vote in the election of the directors, of the Company and
any resulting entity, in substantially the same proportions as their
ownership, immediately prior to such Event, of the Ordinary Shares and
voting power of the Company; or
(iv) if there occurs an Event involving the Company as a result
of which 25% of more of the members of the Board of the Company are
not persons who were members of the Board immediately prior to the
earlier of (x) the Event, (y) execution of an agreement, the
consummation of which would result in the Event, or (z) announcement
by the Company of an intention to effect the Event; or
(v) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Change in Control has occurred.
EXHIBIT B
GOOD REASON
For purposes of this Agreement, "Good Reason" shall mean any of
the following, unless done with the prior express written consent of
the Executive:
(i) (A) The assignment to Executive of duties
inconsistent with Executive's position (including duties,
responsibilities, status, titles or offices as set forth in
Section 3 hereof); or (B) any elimination, diminution 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; and for purposes for this
clause (i), the determination of whether there has been a
reduction of duties or responsibilities or an assignment of
duties inconsistent with the Executive's position shall take into
account the Executive's duties, responsibilities and position
with the ultimate parent of the parent/subsidiary group as a
whole which includes the Company;
(ii) The (A) reduction in Executive's Base Salary from the
level in effect immediately prior to the Change in Control, or
(B) payment of an annual bonus in an amount less than the lesser
of (x) the most recent annual bonus paid prior to the Change in
Control or (y) the greater of (I) the most recent target bonus
established prior to the Change in Control or (II) the annual
average bonus paid for the preceding three complete years prior
to the Change in Control (or such lesser number of complete years
as the Executive shall have been employed by the Company);
(iii) The failure by the Company or the Guarantors to obtain
the specific written assumption of this Agreement by any
successor or assign of the Company or the Guarantors or any
person acquiring substantially all of the Company's or the
Guarantors' assets;
(iv) Any breach by the Company or the Guarantors of any
provision of this Agreement or any agreements entered into
pursuant thereto that remains uncured for 20 calendar days
following written notice of same by the Executive;
- 2 -
(v) Requiring Executive to be based at any office or
location other than those described in Section 3(b) hereof,
except for travel reasonably required in the performance of the
Executive's responsibilities;
(vi) During the Post Change Period, (A) the failure to
continue in effect any compensation or incentive plan in which
Executive participates immediately prior to the time of the
Change in Control unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan providing Executive with
at least the same aggregate economic opportunity on an after-tax
basis available to the Executive immediately prior to the Change
in Control) 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 and coverage at least as
favorable in the aggregate as those enjoyed by him under the
Company'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 in Control; or
(vii) The failure by the Company to pay within 7 calendar
days of the due date any amounts due under any benefit or
compensation plan, including any deferred compensation plan.
