Exhibit 10.4
2008 FORM OF EMPLOYMENT
AGREEMENT
(dated as of ____________________)
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 ______________ (the
“Executive”).
WHEREAS,
the Company and the Executive each desire that the Executive become
employed by the Company and that the terms and condition of such
employment be memorialized by a written 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(c) 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(c) 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 first 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 first anniversary of the Date of the Agreement and on 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 six months prior to
such anniversary that the term is not to be so extended.
3.
POSITIONS, DUTIES AND RESPONSIBILITIES.
(a)
GENERAL. The Executive shall be employed as the ____________ 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, or holding company, whose shares
are publicly traded in the United States. In carrying out his
duties and responsibilities, the Executive shall report to the
________________ of the Company. During the term of this Agreement,
the Executive shall
* Where applicable.
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’s services under this
Agreement, which are global in nature, shall be performed at the
location or locations reasonably requested by the Company; [
provided , however , that such services will be
performed outside the United States and in accordance with the
guidelines established by the Company from time to time for the
location of the performance of services on behalf of the Company
and its subsidiaries.]* The Executive acknowledges that the Company
may require the Executive to travel to the extent such travel is
reasonably necessary to perform the services hereunder and that
such travel may be extensive. To the extent reasonably requested by
the Company, the Executive shall allocate greater business time to
a location other than his principal business location, and if
reasonably requested by the Company, the Executive shall relocate
to such other locations. Any such relocation will not be considered
to be a breach of this Agreement.
(c)
[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 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 per-mit(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 reasonably 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,
in the case of clauses (i) or (ii), 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.]*
* Where applicable.
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4.
BASE SALARY.
The
Executive shall be paid a Base Salary by the Company equal to US$
_______ 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 Board of Directors of the Company
(the “Compensation Committee”).
5.
BONUSES.
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, with a bonus opportunity which is substantially
similar to that of similarly situated executives. 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. Any annual bonus
shall be paid in cash in a lump sum after the end of the calendar
year for which the annual bonus is paid and no later than March 15
following such calendar year, unless deferred at the
Executive’s option in accordance with the provisions of any
applicable deferred compensation plan of the Company or it
subsidiaries in effect from time to time. Nothing in this Section 5
shall confer upon the Executive any right to a minimum annual
bonus.
6.
EMPLOYEE BENEFIT PROGRAMS.
During
the term of the Executive’s employment under this Agreement,
the tive shall be entitled to participate in all employee benefit
programs of the Company as are effect from time to time and in
which similarly situated senior executives of the Company are
eligible to participate.
7.
BUSINESS EXPENSE REIMBURSEMENT, FRINGE BENEFITS AND RELOCATION
EXPENSES.
(a)
EXPENSE REIMBURSEMENT AND FRINGE BENEFITS. During the term of the
Executive’s employment under this Agreement, the Executive
shall be entitled to participate in the Company’s travel and
entertainment expense reimbursement programs and its executive
fringe benefit plans and arrangements, all in accordance with the
terms and conditions of such programs, plans and arrangements as in
effect from time to time as applied to the Company’s
similarly situated executives.
(b)
[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 United States designated by the Executive (or the
Executive’s estate or other legal representative in the event
of his death) following the Executive’s “separation
from service” (within the meaning Treas. Reg. Section 1.409A
-1(h)) with the Company for any reason other than Cause (as
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hereinafter defined). Any such expenses must be incurred by the
Executive not later than the last day of the calendar year
following the calendar year in which the Executive’s
separation from service with the Company occurs. Any such
reimbursement for moving expenses shall be made promptly by the
Company and, in all events, no later than the last day of the
second calendar year following the calendar year in which the
Executive’s separation from service with the Company occurs.
Any such payment or reimbursement for taxes shall be made on or
before the due date of the Executive’s tax return for the
applicable year, but in no event later than the end of the
Executive’s taxable year next following the Executive’s
taxable year in which he remits the related taxes.]*
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, (or, if 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 Executive’s death, to be paid in accordance
with the Company’s regular payroll practices (as in effect at
the time of death) 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 awarded in
accordance with the Company’s bonus program but not yet paid
under Section 5, above, to be paid at the time such bonus would
otherwise be due under Section 5 above, and reimbursement of
business expenses incurred prior to death in accordance with
Section 7[(a)]* above,
(ii) within 45 days after the date
of death (with the actual date of payment within such 45 day period
to be determined by the Company), 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
average annual bonus for the immediately preceding three years (or
the period of the Executive’s employment with the Company, if
less),
(iii) 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,
(iv) for a period of six months
following the Executive’s death, continued medical benefit
plan coverage (including dental and vision benefits if provided
under the applicable plans) for the Executive’s dependents,
if any, under the Company’s medical benefit plans upon
substantially the same terms and conditions (including cost of
coverage to the dependents) as is then in existence for other
executives during the coverage period; provided, that, if the
Executive’s dependents cannot continue to participate in
the
* Where applicable.
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Company plans providing such benefits, the Company shall
otherwise provide such benefits on substantially the same after-tax
basis as if continued participation had been permitted (and any
payment made by the Company in respect of any taxes imposed with
respect to such benefits shall be paid to the Executive’s
dependents, or to the applicable taxing authority on their behalf,
no later than the due date of such taxes), and
(v) the vested accrued benefits,
if any, under the employee benefit programs of the Company, as
provided in Section 6, above, determined in accordance with the
applicable terms and provisions of such programs.
(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) a cash lump sum payment made,
subject to Section 25 below, 60 days after the date of termination
in an amount equal to the Base Salary as provided in Section 4,
above, that would have been paid to the Executive had he remained
employed through the end of the sixth month after the month in
which the Executive’s employment terminates due to
disability,
(ii) any annual bonus awarded in
accordance with the Company’s bonus program but not yet paid
under Section 5, to be paid, subject to Section 25 below, at the
time such bonus would otherwise be due under Section 5 above, and
reimbursement of business expenses incurred prior to termination of
employment in accordance with Section 7(a) above,
(iii) subject to Section 25 below,
60 days after the date of termination, a pro rata bonus for the
year of termination in an amount determined by the Compensation
Committee, but in no event less than a pro rata portion of the
Executive’s average annual bonus for the immediately
preceding three years (or the period of the Executive’s
employment with the Company, if less),
(iv) 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,
(v) for a period of six months
following the termination of the Executive’s employment,
continued medical benefit plan coverage (including dental and
vision benefits if provided under the applicable plans) for the
Executive (and the Executive’s dependents, if any) under the
Company’s medical benefit plans upon substantially the same
terms and conditions (including cost of coverage to the Executive)
as is then in existence for other executives during the coverage
period; provided , that, if the Executive cannot continue to
participate in the Company plans providing such benefits, the
Company shall otherwise provide such benefits on substantially the
same after-tax basis as if continued participation had been
permitted (and any payment made by the Company in respect of any
taxes imposed with respect to such benefits shall be paid to the
Executive, or to the
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applicable taxing authority on his behalf, no later than the due
date of such taxes); provided further, however , that, in
the event the Executive becomes reemployed with another employer
and becomes eligible to receive medical benefits from such
employer, the medical benefits described herein shall immediately
cease, and
(vi) the vested accrued benefits,
if any, under the employee benefit programs of the Company, as
provided in Section 6 above, determined in accordance with the
applicable terms and provisions of such programs.
(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;
(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 Compensation Committee; or
(C)
the Executive’s continued willful refusal to obey any lawful
policy or requirement duly adopted by the Board of Directors of the
Company 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, to be paid in
accordance with the Company’s regular payroll practices,
(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
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(C)
the vested accrued benefits, if any, under employee benefit
programs of the Company, as provided in Section 6, above, and
reimbursement of properly incurred unreimbursed business expenses
under the business expense reimbursement program as described in
Section 7, above, determined in accordance with the applicable
terms and provisions of such employee benefit and expense
reimbursement programs; provided that the Executive shall not be
entitled to any such 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).
(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). For the avoidance of doubt, if a notice of non-renewal of
this Agreement pursuant to Section 2 is issued by the Company, the
termination of the Executive’s employment at the end of the
term shall be considered a termination by the Company without Cause
hereunder.
(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, to be paid in
accordance with the Company’s regular payroll practices,
(B)
provided the Executive executes, on or before the date that is
fifty (50) days following the date of his termination of
employment, a general release of claims against the Company and its
Affiliates (as defined below) in form and substance satisfactory to
the Company and does not revoke such release prior to the end of
the seven day statutory revocation period, a cash lump sum payment
made, subject to Section 25 below, sixty (60) days after
termination of employment 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, if any, or the average of
the Executive’s annual bonus payable by the Company for the
three years immediately preceding the year of termination (or such
shorter period during which the Executive has been employed by the
Company),
(C)
any annual bonus awarded in accordance with the Company’s
bonus program but not yet paid under Section 5, above, to be paid,
subject to Section 25 below, at the time such bonus would otherwise
be due under Section 5 above, and reimbursement
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of business expenses incurred prior to termination of employment
in accordance with Section 7(a) above,
(D)
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,
(E)
for a period of twenty-four months following the termination of the
Executive’s employment, continued medical benefit plan
coverage (including dental and vision benefits if provided under
the applicable plans) for the Executive (and the Executive’s
dependents, if any) under the Company’s medical benefit plans
upon substantially the same terms and conditions (including cost of
coverage to the Executive) as is then in existence for other
executives during the coverage period; provided , that, if
the Executive cannot continue to participate in the Company plans
providing such benefits, the Company shall otherwise provide such
benefits on substantially the same after-tax basis as if continued
participation had been permitted (and any payment made by the
Company in respect of any taxes imposed with respect to such
benefits shall be paid to the Executive, or to the applicable
taxing authority on his behalf, no later than the due date of such
taxes); provided, however , with respect to the
participation by the Executive in the medical insurance plan
hereunder, the following conditions shall be met: (i) the amount
eligible for reimbursement or payment under any such plan in one
calendar year may not affect the amount eligible for reimbursement
or payment under such plan in any other calendar year (except that
the plan may impose a limit on the amount that may be reimbursed or
paid if such limit is imposed on all participants), and (ii) any
reimbursement must be made on or before the last day of the
calendar year following the calendar year in which the expense was
incurred; provided, further, however , that, in the event
the Executive becomes reemployed with another employer and becomes
eligible to receive medical benefits from such employer, the
medical benefits described herein shall immediately cease, and
(F)
the vested accrued benefits, if any, under the employee benefit
programs of the Company, as provided in Section 6 above, determined
in accordance with the applicable terms and provisions of such
programs.
(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) (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 the following, paid in the case of amounts set forth in
(B), (C) and (D) below, subject to Section 25 below, 60 days after
termination of employment:
(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, to be paid in accordance with the
Company’s regular payroll practices,
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(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, or immediately prior to such termination or
Change in Control, whichever is greater,
(C)
a cash lump sum payment equal to two times the average annual bonus
awarded to the Executive by the Company in the three years prior to
the year in which the Change in Control occurs (or shorter period
during which the Executive had been employed by the Company);
provided such bonuses shall be at least equal to the targeted
annual bonus, if any, for the year of such termination,
(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, if any, 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 immediately vest in full and 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)
for a period of twenty-four months following the termination of the
Executive’s employment, continued medical benefit plan
coverage (including dental and vision benefits if provided under
the applicable plans) for the Executive (and the Executive’s
dependents, if any) under the Company’s medical benefit plans
upon substantially the same terms and conditions (including cost of
coverage to the Executive) as is then in existence for other
executives during the coverage period; provided , that, if
the Executive cannot continue to participate in the Company plans
providing such benefits, the Company shall otherwise provide such
benefits on substantially the same after-tax basis as if continued
participation had been permitted (and any payment made by the
Company in respect of any taxes imposed with respect to such
benefits shall be paid to the Executive, or to the applicable
taxing authority on his behalf, no later than the due date of such
taxes); provided, however , with respect to the
participation by the Executive in the medical insurance plan
hereunder, the following conditions shall be met: (i) the amount
eligible for reimbursement or payment under any such plan in one
calendar year may not affect the amount eligible for reimbursement
or payment under such plan in any other calendar year (except that
the plan may impose a limit on the amount that may be reimbursed or
paid if such limit is imposed on all participants), and (ii) any
reimbursement must be made on or before the last day of the
calendar year following the calendar year in which the expense was
incurred; provided further, however , that, in the event the
Executive becomes reemployed with another employer and becomes
eligible to receive medical benefits from such employer, the
medical benefits described herein shall immediately cease, and
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(G)
full and immediate vesting under the Company’s retirement
plans as of the date of termination, to the extent permitted by
applicable law; provided, however , that if such full and
immediate vesting cannot be provided under a “qualified
employer plan” (within the meaning of Treas. Reg. Section
1.409A -1(a)(2)) under applicable law, then the present value of
economically equivalent benefits, determined using reasonable
assumptions and on an after-tax basis to the Executive, shall be
paid in a cash lump sum to the Executive, subject to Section 25
below, 60 days after termination of employment.
Anything
in this Agreement to the contrary notwithstanding, the Executive
shall be entitled to the benefits described in (A)-(G) above, if
the Executive’s employment with the Company is terminated by
the Company (other than for Cause) within one year prior to the
date on which a “409A Change in Control” (as defined
below) 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 the 409A Change
in Control or (ii) otherwise arose in connection with or
anticipation of the 409A Change in Control; provided ,
however , that in such event, amounts in excess of those
otherwise payable to the Executive under Section 8(d)(ii) above
will be payable hereunder only following the 409A Change in Control
(and, subject to Section 25 be-low,10 days thereafter). For
purposes hereof, a “409A Change in Control” means a
“change in control event” (as defined in Treas. Reg.
Section 1.409A -3(i)(5)) with respect to the Company that also
constitutes 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
and without the Executive’s written consent, duties are
assigned to the Executive that are materially inconsistent with his
position as described in Section 3 above, or the Company does not
cure any material breach by it of
