EXHIBIT 10.3
EMPLOYMENT AGREEMENT
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AGREEMENT made effective as of the 1st day of December, 1997, between
ESG Re Limited, a Bermuda company (the "Company"), and Xxxxxx X. Xxxxxxxxx (the
"Executive").
WHEREAS, the Company wishes to retain the services of the Executive
and recognize that the Executive's contribution to the growth and success of the
Company and its affiliates will be substantial; and
WHEREAS, the Executive is willing to commit himself to serve the
Company, and its affiliates, on the terms and conditions herein provided;
NOW, THEREFORE, in order to effect the foregoing, the Company and the
Executive wish to enter into an employment agreement on the terms and conditions
set forth below. Accordingly, in consideration of the premises and the
respective covenants and agreements of the parties herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Executive,
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and the Executive hereby agrees to be employed by the Company, on the terms and
conditions set forth herein.
2. Term. The term of the Executive's employment hereunder shall
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commence as of the date hereof and shall continue until the close of business on
the third anniversary of the date hereof, subject to earlier termination in
accordance with the terms of this Agreement (the "Term"). The Term shall be
automatically extended for successive one year periods thereafter unless any of
the parties notifies the other in writing of its intention not to so extend the
Term at least one year prior to the commencement of the next scheduled one year
extension.
3. Position and Duties.
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(a) Title and Duties. The Executive shall serve as the Chief
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Operating Officer of European Specialty Reinsurance (Bermuda) Limited ("ES
Bermuda"), European Specialty Ruckversicherungs AG ("ES Germany") and European
Specialty Reinsurance (Ireland) Limited ("ES Ireland"), each a wholly owned
subsidiary of the Company (the "Subs"), and shall have such duties, authority
and responsibilities as are normally associated with and appropriate for such
positions. The Executive shall report directly to the Board of Directors of the
Company (the "Board"). The Executive shall devote substantially all of his
working time and efforts to the business and affairs of the Subs at such
locations, including Germany, Bermuda and Ireland, as are mutually agreed upon
by the Executive and the Board. Executive shall not serve on the Board of
Directors of any unaffiliated companies, including but
not limited to, any charitable organization or chamber of commerce without the
written consent of the Board.
(b) Office and Facilities. The Executive shall be provided with
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appropriate office and secretarial facilities at any location that the Company
reasonably deems necessary to have an office and support services in order for
the Executive to perform his duties to the Company. The Executive shall serve
as a director of the Company and shall agree to serve on other committees of the
Company or any other affiliated company, without additional compensation, if
requested by the Board.
4. Compensation.
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(a) Base Salary. During the Term, the Company shall pay to the
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Executive an annual base salary of US$275,000. The Executive's base salary
shall be paid in substantially equal installments on a basis consistent with the
Company's payroll practices. The Executive's base salary, as in effect at any
time, is hereinafter referred to as the "Base Salary." The Compensation
Committee of the Board (the "Compensation Committee") shall review Executive's
performance on an annual basis and may increase the Executive's Base Salary, in
its sole discretion, as it deems appropriate.
(b) Annual Bonus. The Compensation Committee may award the Executive
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an annual bonus, at such time and in such amount as the Compensation Committee,
in its sole discretion, deems appropriate.
5. Employee Benefits.
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(a) Benefit Plans. The Executive shall be entitled to participate in
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all employee benefit plans, perquisite and fringe benefit arrangements of the
Company generally made available by the Company to its executives, subject to,
and on a basis consistent with the terms, conditions and administration of such
plans and arrangements.
(b) Expenses. The Executive shall be entitled to receive prompt
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reimbursement for all reasonable and customary expenses incurred by the
Executive in performing services hereunder, including all expenses of travel and
living expenses while away from home on business at the request of and in the
service of the Company or any of its affiliates and promoting the business of
the Company, provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the Company.
(c) Vacation. The Executive shall be entitled to vacations and
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holidays on a basis consistent with that offered to other senior executive
officers of the Company.
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6. Termination of Employment. The Company and the Executive may
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each terminate the Executive's employment hereunder and the Term for any reason.
(a) Termination by the Company without Cause or by the Executive for
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Good Reason. If the Company shall terminate the Executive's employment without
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"Cause" (as defined in Section 6(f)), or if the Executive resigns for Good
Reason (as defined in Section 6(f)) then, the Executive shall be entitled to his
Base Salary for the greater of (1) the remainder of the Term, or (2) one year,
subject to and conditioned upon the Executive's compliance with Sections 7 and 8
hereof. Options shall be treated as provided for in the applicable Award
Agreements.
Except as expressly provided above, the Company will have no further
obligations to the Executive hereunder following the Executive's termination of
employment under the circumstances described in this Section 6(a).
(b) Termination due to Non-Renewal of the Term or Death or Disability.
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If the Executive's employment is terminated due to the non-renewal of the Term
or due to the Executive's death or Disability (as defined in Section 6(f)), the
Executive shall be entitled to a lump sum cash payment equal to the Executive's
Base Salary through the date of termination. Options shall be treated as
provided for in the applicable Award Agreements.
Except as expressly provided above, the Company will have no further
obligations to the Executive hereunder following the Executive's termination of
employment under the circumstances described in this Section 6(b).
(c) Termination by the Company for Cause or by Executive Other than
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for Good Reason. If the Executive's employment is terminated by the Company for
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Cause or by the Executive other than for Good Reason, the Executive shall be
entitled to a lump sum cash payment equal to his Base Salary through the date of
termination. Options shall be treated as provided for in the applicable Award
Agreements.
Except as expressly provided above, the Company will have no further
obligations to the Executive hereunder following the Executive's termination of
employment under the circumstances described in this Section 6(c).
(d) Termination Within One Year of a Change in Control. If the
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Company terminates the Executive's employment without Cause or the Executive
terminates his employment for Good Reason within one year following a Change in
Control, the Executive shall be entitled, in addition to the compensation
otherwise payable upon his termination of employment pursuant to Section 6(a)
above, to a lump sum payment which, when added to the present value of all other
benefits or payments to which the Executive is entitled which would constitute
"Parachute
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Payments" (as defined in Section 280G of the U.S. Internal Revenue Code of 1986,
as amended (the "Code")); equals 2.99 times the Executive's "Base Amount" (as
defined in Section 280G of the Code).
(e) Notice of Termination. Any termination of the Executive's
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employment by the Company or by the Executive (other than termination pursuant
to the Executive's death) shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 11 hereof. If the Company
terminates the Executive's employment for Cause or if the Executive resigns for
Good Reason, the "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. For purposes of this Agreement, the date of the
Executive's termination of employment shall be deemed to be the date of receipt
of the Notice of Termination.
(f) Definitions. For purpose of this Agreement:
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(i) "Cause" shall mean
(1) Executive's breach of any material term of this Agreement,
including, but not limited to, the covenants set forth in Sections 7 and 8
hereof;
(2) Executive's failure or refusal to perform his duties
hereunder or to perform specific directives of the Board, provided that
such directives do not violate any applicable law or industry standards;
(3) Dishonesty of Executive affecting the Company, the Subs or
any affiliates of the Company or the Subs (the "Affiliates");
(4) Alcoholism or use of drugs or any controlled substances which
interferes with the performance of Executive's duties and responsibilities
under this Agreement;
(5) Any gross or willful conduct of Executive resulting in
substantial loss to or theft from the Company or any of the Subs; or
substantial damage to the Company or any of the Subs' reputation or theft
from the Company or any of the Subs; or
(6) Executive is charged with a felony or other serious crime,
whether or not related to the business of the Company or the Subs,
including but not limited to, any crime related to tax evasion, bribery,
theft, political payoffs, etc.
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(ii) "Change in Control" shall mean the occurrence of any of the
following: (i) the sale, lease, transfer or other disposition, in one or a
series of related transactions, of all or substantially all of the assets of the
Company other than to the Company or any of its affiliates, or (ii) a merger or
sale of the Company pursuant to which the shareholders of the Company
immediately prior to such merger or sale do not own a majority of the stock of
the Company or the surviving corporation immediately after such merger or sale.
(iii) "Disability" shall mean the Executive's adjudication as mentally
incompetent, or mental or physical disability preventing Executive from
performing his duties under this Employment Agreement for a period of 180
consecutive days.
(iv) "Good Reason" shall mean (1) a material diminution in the
Executive's duties or the assignment to the Executive of a title or duties
inconsistent with his position as Chief Operating Officer of the Subs, (2) a
material reduction in the Executive's salary, or (3) a failure of the Company to
comply with any material provision of this Agreement.
7. Non-Competition
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(a) Executive acknowledges and recognizes the highly competitive
nature of the businesses of the Company and its affiliates and accordingly
agrees as follows:
(i) During the Employment Term and for a period of 12 months following
the Executive's termination of employment (unless such termination of employment
occurs within one year following a Change in Control, in which case this
paragraph shall not be applicable) (the "Restricted Period"), the Executive will
not, unless the Executive is given written permission by the Board, directly or
indirectly, (i) engage in any business for the Executive's own account that
competes with the business of the Company or any of its affiliates that are
engaged in the insurance or reinsurance business (the "Company Affiliates"),
(ii) enter the employ of, or render any services to, any person engaged in any
business that competes with the business of the Company or the Company
Affiliates, (iii) acquire a financial interest in, or otherwise become actively
involved with, any person engaged in any business that competes with the
business of the Company or the Company Affiliates, directly or indirectly, as an
individual, partner, shareholder, officer, director, principal, agent, trustee
or consultant, or (iv) interfere with business relationships (whether formed
before or after the date of this Agreement) of the Company or the Company
Affiliates.
(ii) Notwithstanding anything to the contrary in this Agreement, the
Executive may, directly or indirectly own, solely as an investment, securities
of any person engaged in the business of the Company or the Company
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Affiliates if the Executive (i) is not a controlling person of, or a member of a
group which controls, such person and (ii) does not, directly or indirectly, own
more than one share less than 5% of any class of securities of such person.
(iii) During the Restricted Period, the Executive will not, directly
or indirectly, (i) solicit or encourage any employee of the Company or the
Company Affiliates to leave the employment of the Company or the Company
Affiliates, or (ii) hire any such employee who has left the employment of the
Company or the Company Affiliates (other than as a result of the termination of
such employment by the Company or the Company Affiliates) within one year after
the termination of such employee's employment with the Company or the Company
Affiliates.
(iv) During the Restricted Period, the Executive will not, directly or
indirectly, solicit or encourage to cease to work with the Company or the
Company Affiliates any consultant then under contract with the Company or the
Company Affiliates.
(b) It is expressly understood and agreed that although Executive and
the Company consider the restrictions contained in this Section 7 to be
reasonable, if a final judicial determination is made by a court of competent
jurisdiction that the time or territory or any other restriction contained in
this Agreement is an unenforceable restriction against Executive, the provisions
of this Agreement shall not be rendered void but shall be deemed amended to
apply as to such maximum time and territory and to such maximum extent as such
court may judicially determine or indicate to be enforceable. Alternatively, if
any court of competent jurisdiction finds that any restriction contained in this
Agreement is unenforceable, and such restriction cannot be amended so as to make
it enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.
8. Confidentiality. Executive will not at any time (whether during or
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after his employment with the Company) disclose or use for his own benefit or
purposes or the benefit or purposes of any other person, firm, partnership,
joint venture, association, corporation or other business organization, entity
or enterprise other than the Company and any of its subsidiaries or affiliates,
any trade secrets, information, data, or other confidential information relating
to customers, development programs, costs, marketing, trading, investment, sales
activities, promotion, credit and financial data, financing methods, plans, or
the business and affairs of the Company or of any subsidiary or affiliate of the
Company, provided that the foregoing shall not apply to information which is not
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unique to the Company or any of its subsidiaries or affiliates or which is
generally known to the industry or the public other than as a result of
Executive's breach of this covenant. Executive agrees that upon termination of
his employment with the Company or the Subs for any reason, he will return to
the Company and the Subs immediately all memoranda,
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books, papers, plans, information, letters and other data, and all copies
thereof or therefrom, in any way relating to the business of the Company and its
affiliates, except that he may retain personal notes, notebooks and diaries.
Executive further agrees that he will not retain or use for his account at any
time any trade names, trademarks or other proprietary business designations used
or owned in connection with the business of the Company or its affiliates.
9. Equitable Relief. Executive acknowledges and agrees that the
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Company's remedies at law for a breach or threatened breach of any of the
provisions of Section 7 or Section 8 would be inadequate and, in recognition of
this fact, Executive agrees that, in the event of such a breach or threatened
breach, in addition to any remedies at law, the Company, without posting any
bond or security, shall be entitled to obtain equitable relief in the form of
specific performance, temporary restraining order, temporary or permanent
injunction or any other equitable remedy which may then be available.
10. Successors; Binding Agreement.
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(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
herein defined and any successor to its business and/or assets as aforesaid
which executes and delivers the agreement provided for in this Section 10 or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts are
payable to him hereunder all such amounts unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee, or other designee or, if there be no such designee, to the
Executive's estate.
11. Notice. For the purposes of this Agreement, notices, demands and
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all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered with receipt
acknowledged or after having been received by certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:
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If to the Executive:
Xx. Xxxxxx X. Xxxxxxxxx
000 Xxxxx Xxxxxx Xx.
Xxxxx, Xxxxxxx
00000 XXX
If to the Company:
ESG Re Limited
Skandia International House
00 Xxxxxx Xxxxxx
Xxxxxxxx, XX00
Xxxxxxx
Xxxxxxxxx: Chairman
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
12. Miscellaneous. No provisions of this Agreement may be modified,
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waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer of the Company as may be
specifically designated by the Supervisory Board or the Board as the case may
be. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of Germany without regard to its
conflicts of law principles.
13. Validity. The invalidity or unenforceability of any provision or
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provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
14. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
15. Withholding. The Company may withhold from any amounts payable
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under this Agreement such federal, state and local and foreign taxes as may be
required to be withheld pursuant to applicable law or regulation.
16. Entire Agreement. This Agreement sets forth the entire agreement of
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the parties hereto in respect of the subject matter contained herein and
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supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto, including any prior
employment agreements.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and the Executive has hereunto set his hand, effective as of the 1st
day of December, 1997.
ESG RE LIMITED
By:/s/ Xxxxxxxx X. Xxxx
__________________________________
Name: Xxxxxxxx X. Xxxx
Title: Chief Executive Officer
/s/ Xxxxxx X. Xxxxxxxxx
_____________________________________
Executive: Xxxxxx X. Xxxxxxxxx
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