EXHIBIT 10.5
EMPLOYMENT AGREEMENT
AGREEMENT made effective as of the 23rd day of March, 1998, among ESG Re
Limited, a Bermuda company (the "Company"), and its various subsidiaries and
Xxxx X. Xxxxxxx ("Executive").
WHEREAS, the Company wishes to retain the services of the Executive and
recognizes that the Executive's contribution to the growth and success of the
Company will be substantial; and
WHEREAS, the Executive is willing to commit herself to serve the Company, 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, 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 Executives employment hereunder shall 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
(a) Title and Duties
The Executive shall serve a Chief Financial Officer of the Company 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 Chief Executive Officer of the Company.
The Executive shall devote substantially all of her working time and
efforts to the business and affairs of the Company, at such locations,
including Germany, Bermuda, Ireland and Toronto and/or as mutually
agreed upon by the Executive and the Company. The Executive shall not
serve as Director or Officer of any unaffiliated companies, including
but not limited to, any charitable organization or chamber of commerce
without the written consent of the Company.
(b) Office and Facilities
The Executive shall be provided with appropriate office and
secretarial facilities at the Company's offices in Hamburg, Germany
and any other location that the Company reasonably deems necessary to
have an office and support services in order for the Executive to
perform her duties to the Company. The Executive shall serve as a
Director or Officer of the Company and
shall agree to serve on other committees of the Company or any other
affiliated company, without additional compensation, if so requested
by the Company.
4. Compensation
(a) BASE SALARY
During the Term, the Company shall pay to the Executive an annual base
salary of US$ 250,000. 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 anytime, is hereinafter referred to as the "Base Salary". The
Compensation Committee of the Board (the "Compensation Committee")
shall review the Executive's performance on an annual basis and may
increase the Executive's Base Salary, in its sole discretion, as it
deems appropriate.
At the request of the Executive, the Company will pay up to 70% of the
Base Salary in Deutsche Xxxx.
(b) ANNUAL BONUS
The Compensation Committee may award the Executive an annual bonus, at
such time and in such amount as the Compensation Committee, in its
sole discretion, deems appropriate.
5. Employee Benefits
(a) BENEFIT PLANS
The Executive shall be entitled to participate in all employee benefit
plans, which include worldwide medical, dental and vision coverage,
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 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 holidays on a basis
consistent with that offered to other senior executive officers of the
Company.
(4) TAX EQUALIZATION
In the event that the Executive will be subject to taxes in excess of
those that would otherwise have been due under US taxcode as a US
citizen working in the US, ESG Re will compensate the Executive for
the difference.
6. Termination of Employment
The Company and the Executive may 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 GOOD
REASON
If the Company shall terminate the Executive's employment without
"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 her Base Salary for the greater of (l) 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 held by
the Executive will be treated as provided for in the applicable Award
Agreement. In addition, the Company will reimburse reasonable
relocation costs for a move back to the United States.
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
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 dare of
termination. Options held by the Executive `will be treated as
provided for in the applicable Award Agreement In addition, the
Company will reimburse reasonable relocation costs for a move back to
the United States for the spouse or named beneficiary.
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 the Executive other than
for Good Reason
If the Executive's employment is terminated by the Company for Cause or
by the Executive other than for Good Reason, the Executive shall be
entitled to a lump sum cash payment equal to her Base Salary through the
date of termination. Options held by the Executive shall be treated as
provided for in the applicable Award Agreement.
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 Company terminates the Executive's employment without Cause or the
Executive terminates her 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 her
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 Payments" (as defined in Section 2800 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).. In
addition, the Company will reimburse reasonable relocation costs for a
move back to the United States.
(e) NOTICE OF TERMINATION
Any termination of the Executive's 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 due
of the Executive's termination of employment shall be deemed to be the
date of receipt of the Notice of Termination.
(1) DEFINITIONS - For purpose of this Agreement:
(i) "Cause" shall mean
(1) The Executive's breach of any material term of this Agreement,
including, but not limited to, the covenants set forth in
Sections 7 and 8 hereto
(2) The Executive's failure or refusal to perform her duties
hereunder or to perform specific directives of the Company,
provided that such directives do not violate any applicable
law or industry standards;
(3) Dishonesty of the Executive affecting the Company or any
affiliates:
(4) Any gross or willful conduct of the Executive resulting
in substantial loss to or theft from any of the Company or any affiliate; or
substantial damage to the Company's reputation or theft from the Company; or
(5) Alcoholism or use of drugs or any controlled substances
which interfered with the performance of the Executive's
duties and responsibilities under this Agreement;
(6) The Executive is charged with a felony or other serious
crime, whether or not related to the business of the
Company, including but not limited to, any crime related
to tax evasion, bribery, theft, political payoff etc.
(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 die assets of the Company other
than to any of the 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 sick merger or sale.
(iii) "Disability" shall mean the Executive's adjudication as
mentally incompetent or mental or physical disability
preventing the Executive from performing her duties under
this Employment Agreement for a period of 180 consecutive
days.
(iv) "Good Reason" shall mean (1) a material diminution of the
Executive's duties (per Exhibit A as attached) or the
assignment to the Executive of a title or duties inconsistent
with her position as Chief Financial Officer of the Company,
(2) a material reduction amounting to at least 10% of the
Executive's base salary, or (3) a failure of the Company to
comply with any material provision of this Agreement
7. Non-Competition
(a) The 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 18 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 smitten
permission by the Company, 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 employment 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 a investment, securities of
any person engaged in the business of the Company or the Company 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 lass 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
(if) 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 the 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 the 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
The Executive will not at any time (whether during or after her
employment with the Company) disclose or use for her own benefit or
purposes or the benefit or purposes of any other person, firm,
partnership, joint venture, association, corporation & other business
organization, entity or enterprise other than the Company and any of
their 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 foregoing shall not apply to information which
is not 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 the Executives breach of this covenant. The Executive agrees
that upon termination of her employment with the Company for any reason,
she will return to the Company immediately all memoranda, 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 she may retain personal notes, notebooks and
diaries. The Executive further agrees that she will not retain or use for
her 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 their affiliates
9. Equitable Relief
The Executive acknowledges and agrees that the Company's remedies at law
for a breach or threatened breach of any of the provisions of Section 7
or Section 3 would be inadequate and, in recognition of this fact, the
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
(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 as 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 her 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 purpose of this Agreement, notices, demands and 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 alter having been received by certified or
registered mall, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Xxxx X. Xxxxxxx
Xxxxxxxxxxx 00
D - 20144 Hamburg
ESG Re Limited
Skandia Xxxxxxxxxxxxx Xxxxx
00 Xxxxxx Xxxxxx
Xxxxxxxx, XX 11
Bermuda
Attention: Chairman
or to such other address as any party may have finished 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 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 Company as the case may be. No waiver by
any 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 Bermuda
without regard to its conflicts of law principles.
13. Validity
The invalidity or unenforceability of any provision or 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 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 under this Agreement
such Federal, state and local and foreign taxes as may be required to be
withheld pursuant to applicable law or regulation.
This Agreement sets forth the entire agreement of the parties hereto in
respect of the matters contained herein and 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 other than those contained in the employment offer
dated 5th of March, 1998.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be duly executed and the Executive has hereunto set his
hand, effective as of 23rd day of March, 1998.
ESG
BY: /s/ XXXXXXXX X. WAND
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Name: X. X. Xxxx
Title: CEO
Xxxx X. Xxxxxxx
/s/ XXXX X. XXXXXXX
-------------------------------------
Chief Financial Officer
ESG Re Limited
Duties and Responsibilities
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1. Manage the Company's accounting, SEC and other regulatory reporting
functions.
2. Ensure the conformance of an international operation with SEC and
international accounting and reporting standards.
3. Establish and maintain a financial/tax analysis, reporting, budgeting and
planning capability that provides appropriate management information and
accountability report
4. Represent the Company in its dealings with shareholders, regulators,
rating agencies and equity analysts; manage overall investors relations
activities aid communications.
5. Play a key role in the development and implementation of the Company's
strategy; serve on the Company's Executive Committee.
6. Evaluate and maintain optimal capital structure; lead capital raising
efforts in public or private markets, as necessary.
7. Evaluate and recommend investment polity mid strategy consistent with
Company parameters of credit rating, liquidity and liability
characteristics; ensure conformance with stated policy and strategy.
Evaluation, recommendation, policy and strategy will include both the
invested asset portfolio and strategic investments, mergers or
acquisitions.
8. Supervise the Company's systems (IT) operation and development
9. Manage Treasury operations, including risk management, cash management,
banking relationships and credit facilities pension and benefit plans.
10. Evaluate adequacy of loss reserves
11. Provide personnel functions and support to the Company, including:
development of incentive compensation plans, human resource planning and
development, establishing appropriate hiring policies and practices,
implementing and administering all policies and procedures.
12. Direct and provide management to the General Counsel of the Company or
legal staff as required.
13. Ensure that an overall integrated framework of internal control is
maintained and that compliance is achieved.
14. Provide regular communication and information to the Board of Directors
regarding the financial results of the Company, significant business and
financial issues, and other items or requests that may arise.
