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Exhibit 10.20
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (hereinafter the "Agreement") dated as of
January
16, 2006 by and among RAM Holdings Ltd., a Bermuda exempted
company
("Holdings"), RAM Holdings II Ltd., a Bermuda company ("Holdings
II" and,
together with Holdings, "Holding"), RAM Reinsurance Company Ltd., a
Bermuda
company (the "Company"), and Victoria Guest (the "Executive").
WHEREAS,
Holding and the Company wish to secure the services of the
Executive as their General Counsel; and
WHEREAS, the Executive wishes to serve as General Counsel of
Holding
and the Company, and to enter into this Agreement on the terms and
conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual
covenants
contained herein and for other good and valuable consideration, the
receipt and
adequacy of which are mutually acknowledged, Holding, the Company
and the
Executive agree as follows:
1.
Definitions. For purposes of this Agreement, the following terms
shall
have the following meanings:
(a) "Base Salary" means the salary provided for in Section 4 or
any
increased salary granted to the Executive pursuant to Section
4.
(b) "Boards" means the Boards of Directors of Holding and the
Company.
(c) "Cause" means: (i) the Executive's commission of any felony;
(ii)
the Executive's gross negligence, willful malfeasance or gross
misconduct in
connection with her employment hereunder; (iii) a substantial and
continual
refusal by the Executive in breach of this Agreement to perform the
duties,
responsibilities or obligations assigned to the Executive pursuant
to the terms
hereof; (iv) the Executive's failure to fully cooperate with a
regulatory
investigation involving Holding, the Company or any of its
Subsidiaries or
affiliates; or (v) any one or more acts by the Executive of
dishonesty, theft,
larceny, embezzlement or fraud from or with respect to Holding, the
Company or
any Subsidiary. By way of example, termination from employment
necessitated by
the Executive's inability to maintain a valid work permit from the
applicable
Bermuda governmental authorities after the Executive has used her
best efforts
to maintain such permit or in connection with a Change in Control
does not
constitute termination for Cause. Notwithstanding the foregoing, a
termination
shall not be treated as a termination for Cause unless Holding or
the Company
shall have delivered a written notice to the Executive within
thirty (30) days
of the actual knowledge of the Chief Executive Officer of either
Holding or the
Company of the occurrence of one or more of such events that may
give rise to a
termination of employment for Cause and, for an event described in
item (iii)
above, if capable of being cured, shall not have been cured by the
Executive
within thirty (30) days of the receipt of such notice and, for an
event
described in item (iv) above, shall not have been cured by the
Executive
immediately after receipt of such notice. If Holding or the Company
has provided
the notice described in the preceding sentence to the Executive on
at least two
separate occasions
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which involved substantially similar behavior, Holding or the
Company may
immediately terminate the Executive's employment for Cause upon the
occurrence
of a third similar event without regard to the notice and cure
period described
in the preceding sentence.
(d) "Change in Control" means: (i) the acquisition by any
person,
entity or "group" (as defined in Section 13(d) of the Securities
Exchange Act of
1934, as amended), other than by The PMI Group, Inc., of fifty
percent (50%) or
more of the combined voting power of the then outstanding voting
securities of
Holding or the Company; (ii) the merger, amalgamation,
reorganization, or
consolidation of, or share exchange involving Holding or the
Company, as a
result of which the shareholders of Holding or the Company
immediately before
such transaction do not, immediately thereafter, own, directly or
indirectly,
more than fifty percent (50%) of the combined voting power entitled
to vote
generally in the election of directors of the merged or
consolidated company;
(iii) a sale of all or substantially all of Holding's or the
Company's assets;
and (iv) approval by Holding or the Company of the liquidation or
dissolution of
Holding or the Company, other than a liquidation of the Company
into Holding.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Common Shares" means the non-voting Class A common shares,
par
value $1.00 per share, of Holdings II.
(g) "Cost of Living Allowance" means the amount paid to the
Executive
under Section 7(e).
(h) "Disability" means the Executive's inability to
substantially
fulfill the positions, duties, responsibilities and obligations set
forth in
this Agreement because of physical, mental or emotional incapacity
that entitles
the Executive to long-term disability benefits under the Company's
disability
plan or policy.
(i) "Effective Date" means [January 16, 2006] or, if later, the
date
on which the Executive obtains an appropriate, valid work permit
from the
applicable Bermuda governmental authorities.
(j) "Good Reason" means a termination of the Executive's employment
by
the Executive for one or more of the following reasons: (i) a
reduction in the
Executive's Base Salary, Cost of Living Allowance or the target
bonus
opportunity described in Section 5, (ii) Holding's or the Company's
removal of
the Executive from her position as General Counsel of Holding
and/or the
Company, (iii) a material breach of this Agreement by Holding or
the Company,
(iv) a material diminution in the Executive's duties or the
assignment to the
Executive of duties that are not materially consistent with those
customarily
assigned to the General Counsel of a company of the size and nature
of Holding
or the Company or which do, or would be reasonably expected to,
materially
impair her ability to function as the General Counsel of Holding
and/or the
Company, (v) a relocation of the corporate headquarters away from
Bermuda, (vi)
the refusal of a purchaser of all or substantially all of the
assets of Holding
or the Company to continue the Executive's employment with
substantially the
same position, title and responsibilities and at least the same
compensation as
described herein, or (vii) the Executive's inability to maintain a
valid work
permit from the applicable Bermuda governmental authorities after
the Executive
has used her best efforts to
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maintain such permit. Notwithstanding the foregoing, a termination
shall not be
treated as a termination for Good Reason (i) if the Executive shall
have
consented in writing to the occurrence of the event giving rise to
the claim of
termination for Good Reason, or (ii) unless the Executive shall
have delivered a
written notice to the Holdings Board within ninety (90) days of her
having
actual knowledge of the occurrence of one or more of such events
stating that
she intends to terminate her employment for Good Reason and
specifying the
factual basis for such termination, and such event, if capable of
being cured,
shall not have been cured by Holding or the Company within thirty
(30) days of
the receipt of such notice.
(k) "Holdings Board" means the Board of Directors of Holdings.
(l) "Party" or "Parties" means Holding, the Company and/or the
Executive.
(m) "Person" means any individual, corporation, partnership,
limited
liability company, joint venture, trust, estate, board, committee,
agency, body,
employee benefit plan or other person or entity.
(n) "Proceeding" means any threatened or actual action, suit or
proceeding, whether civil, criminal, administrative, investigative,
appellate or
other.
(o) "Restriction Period" means the Term of Employment plus, if
applicable, any further period during which the Executive is being
paid Base
Salary by the Company following termination under Section 9(d).
(p) "Standard Benefit" means any amounts earned, accrued or owing
to
the Executive but not yet paid, and receipt of other benefits, if
any, in
accordance with applicable plans and programs of Holding, the
Company or a
Subsidiary, provided, however, that in no event shall the Standard
Benefit be
deemed to include any bonus payments.
(q) "Share Option Plan" means the RAM Reinsurance Company Ltd.
Stock
Option Plan for Management Employees as Amended and Restated
Effective August
10, 2005, as may be amended from time to time, or any successor
plan, including
but not limited to the RAM Holdings Ltd. 2006 Equity Plan.
(r) "Subsidiary" means, with respect to Holdings and Holdings II,
any
corporation, partnership, limited liability company or other entity
of which (a)
if a corporation, fifty percent (50%) or more of the total voting
power of
shares of stock entitled (without regard to the occurrence of any
contingency)
to vote in the election of directors thereof is at the time owned
or controlled,
directly or indirectly, by Holdings and/or Holdings II, or one or
more of the
other Subsidiaries of Holdings and/or Holdings II, or a combination
thereof, or
(b) if a partnership, limited liability company or other entity,
fifty percent
(50%) or more of the partnership, membership or other similar
equity ownership
interest thereof is at the time owned or controlled, directly or
indirectly, by
Holdings and/or Holdings II, or one or more of the other
Subsidiaries of
Holdings and/or Holdings II, or a combination thereof. For purposes
hereof,
Holdings, Holdings II and their Subsidiaries will be deemed to have
fifty
percent (50%) or more ownership interest in a partnership, limited
liability
company or business entity if Holdings, Holdings II and/or a
Subsidiary is/are
allocated fifty percent (50%) or more of partnership, limited
liability company
or other entity gains or losses or control(s) the general
partner,
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managing member or similar managing body of such partnership,
limited liability
company or other entity.
(s) "Term of Employment" means the period specified in Section
2.
2.
Term of Employment.
(a) Holding and the Company agree to employ the Executive under
this
Agreement, and the Executive accepts such employment, for a period
commencing on
the Effective Date and ending on the third anniversary thereof, or
such later
date as provided in Section 2(b). Notwithstanding the foregoing,
the Term of
Employment shall be earlier terminated upon the termination of the
Executive's
employment, but only in strict accordance with the provisions of
Section 9.
(b) The Term of Employment shall be extended automatically for
one
additional year beginning on the last day before the third
anniversary of the
Effective Date (the "Extension Date") unless and until, not later
than six (6)
months prior to the Extension Date, either Holding or the Company,
on the one
hand, or the Executive, on the other hand, gives written notice to
the other
Party that the Term of Employment shall not be so extended. A
termination of the
Executive's employment that results from the expiration of the Term
of
Employment shall not be treated as a termination of employment for
any purposes
under this Agreement except as specifically noted herein.
3.
Positions; Duties; Responsibilities; and Place of Employment.
(a) During the Term of Employment, the Executive shall be employed
as
General Counsel of Holding and the Company and shall be employed in
such other
position or positions with Holding and the Company as the Holdings
Board shall
from time to time specify. The Executive, in carrying out her
executive duties
under this Agreement, shall report to the President and Chief
Executive Officer
of Holding and the Company. While employed by Holding and the
Company hereunder,
the Executive shall perform her duties at the Company's offices in
Bermuda;
provided, however, that the Executive shall be required to travel
as reasonably
necessary in carrying out her duties and obligations hereunder. The
Executive is
required to work the hours and days necessary to fulfill her
executive duties
under this Agreement.
(b) Notwithstanding anything herein to the contrary, nothing
shall
preclude the Executive from (i) serving on the boards of directors
of a
reasonable number of other corporations, subject to prior approval
by the
Holdings Board (which shall not be unreasonably withheld), or the
boards of a
reasonable number of trade associations and/or charitable
organizations, (ii)
engaging in charitable activities and community affairs, including
political
activities, and (iii) managing her personal investments and
affairs, provided
that such activities do not materially interfere with the proper
performance of
her duties and responsibilities as the General Counsel or violate
Section 13 of
this Agreement.
4.
Base Salary. Commencing as of the Effective Date, the Company shall
pay
the Executive an annualized Base Salary of $240,000 during the Term
of
Employment. Such Base Salary shall be payable at intervals in
accordance with
the regular payroll practices of the
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Company applicable to executives, but no less frequently than
monthly. The
Holdings Board shall review the Base Salary no less frequently than
annually
during the Term of Employment; provided, however, that the Base
Salary shall not
be decreased during the Term of Employment below the amount set
forth above
without the Executive's consent (including, without limitation, for
the purpose
of determining benefits due under Section 9). The Executive is a
professional or
managerial employee whose Base Salary has been calculated to
reflect the fact
that her regular duties are likely to require her to work on
occasion more than
forty (40) hours a week. Accordingly, no overtime shall be
payable.
5.
Annual Incentive Awards. The Executive shall be eligible for a
combined
annual incentive bonus award from Holding and the Company in
respect of each
calendar year during the Term of Employment. The Executive's target
annual
incentive bonus amount for each such year shall be an amount equal
to thirty
percent (30%) of her annualized Base Salary for such year,
provided, however,
the Executive's annual incentive award for the first year of her
employment
hereunder shall be prorated. The Executive's actual annual
incentive bonus
amount for each such year may be less than or greater than the
target amount
depending upon the degree of attainment of criteria, which shall be
established
by the Boards (or committees of the Boards) in advance of each such
year. The
Boards (or committees of the Boards) shall determine following the
end of each
such year whether the criteria for such year have been attained.
The Company
shall pay the Executive her annual incentive award payment in
respect of any
year at the same time as bonuses are paid to other executive
officers of the
Company, but in no event later than fifteen (15) days after receipt
by the
Boards of the audited consolidated financial statements of Holding
and the
Company and, if applicable, their Subsidiaries, for the fiscal year
for which
the bonus is payable and in no event later than the last day of the
calendar
year following the calendar year for which the bonus is
payable.
6.
Long Term Incentive Plan; Share Option Award. During the Term
of
Employment, the Executive shall participate in the Share Option
Plan. Pursuant
to the terms and subject to the conditions of the Share Option Plan
and the
applicable share option agreement, within ten (10) days after the
Effective
Date, the Executive shall be granted an option to purchase 3,500
shares of
Common Shares at a per share exercise price equal to the fair
market value of
the shares on the date of grant. The Executive's right to exercise
the option
shall vest five percent (5%) on the last day of each calendar
quarter
(commencing on the last day of the calendar quarter in which the
option is
granted) that the Executive remains employed by Holding and the
Company
following the date the option is granted. Subject to the terms of
the Share
Option Plan and any applicable share option agreement, the number
of shares
subject to the option and the exercise price per share may be
adjusted in the
event of a stock split, reverse stock split, reorganization,
recapitalization,
or other similar event described in the Share Option Plan and/or
any applicable
share option agreement. The Executive shall be eligible for other
or additional
long-term incentives in the discretion of the Holdings Board (or a
committee of
the Holdings Board). Such other or additional incentive award(s)
shall be on a
level, and on terms and conditions, that are commensurate with her
positions and
responsibilities at Holding and the Company and are appropriate in
light of
corresponding incentive awards to other executives of Holding and
the Company.
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7.
Other Benefits.
(a) Employee Benefits. During the Term of Employment, the
Executive
shall be eligible to participate in all employee benefit plans,
programs and
arrangements made available generally to Holding's and the
Company's executives
in accordance with the terms and subject to the conditions of such
plans,
programs and arrangements, including, without limitation, share
option,
profit-sharing, savings (qualified and non-qualified) and other
defined
contribution retirement plans or programs, medical, dental,
hospitalization,
vision, short-term and long-term disability and life insurance
plans or
programs, accidental death and dismemberment protection, travel
accident
insurance and any other employee welfare benefit plans or programs
that may,
from time to time, be sponsored by Holding, the Company or by a
Subsidiary for
the benefit of the Holding's or the Company's employees, including
any plans or
programs that supplement the above-listed types of plans or
programs, whether
funded or unfunded; provided, however, that nothing in this
Agreement shall be
construed to require Holding, the Company or a Subsidiary to
establish or
maintain any such plans, programs or arrangements, or to prevent
Holding, the
Company or a Subsidiary from terminating any such plan, program or
arrangement
in accordance with its terms, except as required by Bermuda
law.
(b) Perquisites. During the Term of Employment, the Executive
shall
participate in all fringe benefits and perquisites available to
executives of
Holding and the Company at levels and on terms and conditions that
are
commensurate with her position and responsibilities at Holding and
the Company.
The Executive shall also receive such additional fringe benefits
and perquisites
as Holding and the Company may, in their discretion, from time to
time elect to
provide.
(c) Vacation, Holidays, and Leave. During the Term of Employment,
the
Executive shall be entitled to vacation, holidays, and leave in
accordance with
the reasonable practices of Holding and the Company and as required
by Bermuda
law.
(d) Annual Travel. Each year during the Term of Employment, the
Executive, her spouse and any dependent children, as applicable,
shall each be
provided one round-trip ticket between Bermuda and the east coast
of the U.S.,
such tickets to be paid for by the Company and used by the
Executive, her spouse
and dependent children.
(e) Cost of Living Allowance. During the Term of Employment,
the
Company shall pay the Executive a monthly cost of living allowance
of $10,000.
(f) Tax Treatment. In the event that, during the Term of
Employment,
there is an amendment to the Code governing the taxation of income
earned by,
and/or cost of living/housing allowances paid to, a United States
citizen
resident in Bermuda that results in both the inclusion in the
Executive's income
subject to U.S. taxation of amounts paid by the Company and not
previously
subject to such taxation and a decrease in the combined net
after-tax Base
Salary and Cost of Living Allowance of the Executive, the Company
shall increase
the amount payable hereunder to the Executive as Base Salary and/or
Cost of
Living Allowance, as applicable, by an amount such that, with such
increase, the
combined net after-tax Base Salary and Cost of Living Allowance
payable
hereunder equals the Executive's combined net after-tax
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Base Salary and Cost of Living Allowance payable hereunder
immediately prior to
the effective date of any such amendment to the Code.
8.
Reimbursement of Business and Other Expenses.
(a) The Executive is authorized to incur reasonable expenses in
carrying out her du
