Exhibit 10.14
EMPLOYMENT
AGREEMENT
AGREEMENT, dated as of December 12,
2005 by and between Greenlight Reinsurance, Ltd. (the
“Company”) and Barton Hedges
(“Executive”).
IN CONSIDERATION of the premises and
the mutual covenants set forth below, the parties hereby agree as
follows:
1. Employment . The Company
hereby agrees to employ Executive as the President and Chief
Underwriting Officer of the Company (the “President and
CUO”), and Executive hereby accepts such employment, on the
terms and conditions hereinafter set forth.
2. Employment Period . The
period of employment of Executive by the Company under this
Agreement (the “Employment Period”) shall commence on
the later of (a) the date on which the Company obtains all
necessary work permits in order for Executive to work in the Cayman
Islands including, without limitation, any and all necessary
approvals of the Cayman Islands Monetary Authority and (b) January
2, 2006 (the “Effective Date”) and shall continue until
terminated by either party in accordance with Section 6 of this
Agreement. Executive’s employment shall at all times be
“at will” and not for a definite duration, and nothing
contained herein shall confer upon Executive any contractual right
to continued employment. This Agreement is conditioned upon the
Company maintaining a work permit for Executive and Executive
complying with the Cayman Islands Immigration laws and regulations
from time to time in force.
3. Position and Duties .
During the Employment Period, Executive shall serve as President
and CUO and shall report directly to the Company’s Chief
Executive Officer (the “CEO”) or the Board of Directors
of the Company (the “Board”). Executive shall have
those powers and duties normally associated with the position of
President and CUO and such other powers and duties as may be
prescribed by the Company; provided that , such other
powers and duties are consistent with Executive’s position as
President and CUO and do not violate any applicable laws or
regulations. Executive shall perform his duties to the best of his
abilities and shall devote all of his working time, attention and
energies to the performance of his duties for the Company. If
requested by the Board of Directors of the Company, Executive shall
also serve as an officer and/or director of the Company for no
additional compensation.
4. Place of Performance . The
Company’s principal place of business is the Cayman Islands.
Executive shall be required to travel to the Cayman Islands as
necessary to perform his duties hereunder. During the Employment
Period, Executive shall comply with all Company policies, as may be
amended from time to time, including, without limitation,
conducting the business affairs of the Company such that it is not
deemed to be engaging in a trade or business within the United
States.
5. Compensation and Related
Matters .
(a) Base Salary and Bonus. During
the Employment Period, the Company shall pay Executive a base
salary at the rate of not less than US $450,000 per year
(“Base Salary”). Executive’s Base Salary shall be
paid in accordance with the Company’s customary payroll
practices. The Board shall periodically review Executive’s
Base Salary for
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increase (but not decrease),
consistent with the compensation practices and guidelines of the
Company. If Executive’s Base Salary is increased by the
Company, such increased Base Salary shall then constitute the Base
Salary for all purposes of this Agreement. In addition to Base
Salary, during the Employment Period, Executive shall be eligible
for an annual bonus based on pre-established performance metrics
established by the Board (the “Bonus”). With respect to
the 2006 calendar year, Executive shall be guaranteed a Bonus equal
to 100% of Base Salary. With respect to years thereafter, Executive
shall be eligible to receive a discretionary Bonus with a target of
100% of Base Salary. Any Bonus earned during a calendar year shall
be paid at such time as the Company customarily pays annual
bonuses; provided , that , Executive is still
employed as of such date. Executive shall receive a signing bonus
in the amount of $50,000 which shall be payable at the end of the
first month in which the Effective Date occurs; provided, that,
Executive remains employed as of such date.
(b) Expenses . During the
Employment Period, the Company shall promptly reimburse Executive
for all reasonable business expenses upon the presentation of
reasonably itemized statements of such expenses in accordance with
the Company’s policies and procedures now in force or as such
policies and procedures may be modified with respect to all senior
executive officers of the Company.
(c) Vacation . During the
Employment Period, Executive shall be entitled to five (5) weeks of
paid vacation per year to be used and accrued in accordance with
the Company’s policy as it may be established from time to
time. In addition to vacation, Executive shall be entitled to the
number of sick days, personal days and national holidays per year
to which other employees of the Company with similar tenure are
entitled under the Company’s policies, but in no event less
than the minimum days mandated by Cayman Islands statutory
requirements.
(d) Welfare, Pension and
Incentive Benefit Plans . During the Employment Period,
Executive shall be entitled to participate in such employee benefit
plans and insurance programs offered by the Company, or which it
may adopt from time to time, for its employees, in accordance with
Cayman Islands Laws and regulations from time to time in force and
in accordance with the eligibility requirements for participation
therein. Prior to the time that the Company establishes welfare and
health plans, the Company shall reimburse Executive for the cost of
health insurance for himself and his family that is comparable to
the health insurance Executive has in effect as of the Effective
Date. In addition, during the Employment Period, the Company shall
reimburse Executive for his reasonable expenses incurred in having
an accountant assist and prepare his annual tax return. The Company
will provide a workers’ compensation plan that meets or
exceeds the statutory requirements of the Cayman
Islands.
(e) Housing Allowance .
During the Employment Period, Executive shall be entitled to
receive a Cayman Islands housing allowance of US $6,000 per month.
Executive will be responsible for any taxes due on such
allowance.
(f) Stock Options
.
(i) On the Effective Date or as soon
as administratively feasible thereafter, Greenlight Capital Re,
Ltd. (the “Parent”) shall grant Executive a
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stock option (an
“Option”) to acquire 250,000 shares of the
Parent’s Class A ordinary shares, $0.10 par value per share
(“Shares”) under such terms and conditions as provided
for under the Parent’s then existing stock incentive plan
which are not inconsistent with clauses (ii) and (iii)
below.
(ii) The Option described in
paragraph (i) above shall be granted subject to the following terms
and conditions: (A) the Option shall be granted under and subject
to the Parent’s stock incentive plan (the
“Plan”); (B) the exercise price per Share subject to
the Option shall be equal to the fair market value per Share as of
the date of grant; (C) the Option shall be vested as to 33 1/3% of
the Shares subject thereto on each of the first three anniversaries
of the date of grant; provided, that, the Option shall cease to
vest upon Executive’s termination of employment with the
Company; (D) the Option shall be exercisable for the ten (10) year
period following the date of grant; provided , that ,
upon Executive’s termination of employment with the Company
for any reason, any unvested portion of the Option shall
automatically terminate and the vested portion of the Option shall
remain exercisable for 90 days after Executive’s termination
of employment with the Company; and (E) the Option shall be
evidenced by, and subject to, a stock option agreement whose terms
and conditions are consistent with the terms hereof.
(iii) The Shares acquired upon
exercise of the Options shall be subject to the terms and
conditions of the Parent’s Shareholders’ Agreement as
it may be amended from time to time and Executive shall become a
party to such agreement at such time.
6. Termination .
Executive’s employment hereunder may be terminated under the
following circumstances:
(a) Death . Executive’s
employment hereunder shall terminate upon his death.
(b) Disability . If, as a
result of Executive’s incapacity due to physical or mental
illness, Executive shall have been substantially unable to perform
his duties hereunder for an entire period of at least 90
consecutive days or 180 non-consecutive days within any 365-day
period, the Company shall have the right to terminate
Executive’s employment hereunder for
“Disability”, and such termination in and of itself
shall not be, nor shall it be deemed to be, a breach of this
Agreement.
(c) Cause . The Company shall
have the right to terminate Executive’s employment for Cause,
and such termination in and of itself shall not be, nor shall it be
deemed to be, a breach of this Agreement. For purposes of this
Agreement, “Cause” shall mean Executive’s (i)
drug or alcohol use which impairs the ability of Executive to
perform his duties hereunder; (ii) conviction by a court of
competent jurisdiction, or plea of “no contest” or
guilty to a criminal offense; (iii) engaging in fraud, embezzlement
or any other illegal conduct with respect to the Company or any of
its affiliates (collectively, the “Group”); (iv)
willfully violating the Restrictive Covenants set forth in Section
9 of this Agreement; (v) willful failure or refusal to perform his
duties hereunder (other than such failure caused by
Executive’s Disability or while
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on vacation) after a written demand
for performance is delivered to Executive by the Board which
specifically identifies the manner in which the Board believes that
Executive has failed or refused to perform his duties; or (vi)
breach of any material provision of this Agreement or any Group
policies related to conduct which is not cured, if curable, within
ten (10) days after written notice thereof. The Company shall have
the right to suspend Executive with pay in order to investigate any
event which it reasonably believes may provide a basis to terminate
Executive’s employment for Cause and such action shall not
give Executive Good Reason to terminate his employment.
(d) Good Reason . Executive
may terminate his employment with the Company for “Good
Reason” within thirty (30) days after Executive has knowledge
of the occurrence, without Executive’s written consent, of
one of the following events that has not been cured, if curable,
within thirty (30) days after written notice thereof has been given
by Executive to the Company and such termination in and of itself
shall not be, nor shall it be deemed to be, a breach of this
Agreement. “Good Reason” shall be limited to the
following: (i) any material and adverse change to Executive’s
duties which are inconsistent with his duties set forth herein,
(ii) a reduction of Executive’s Base Salary, or (iii) a
failure by the Company to comply with any other material provisions
of this Agreement.
(e) Without Cause . The
Company shall have the right to terminate Executive’s
employment hereunder without Cause at any time by providing
Executive with a Notice of Termination and such termination shall
not in and of itself be, nor shall it be deemed to be, a breach of
this Agreement.
(f) Without Good Reason .
Executive shall have the right to terminate his employment
hereunder without Good Reason by providing the Company with a
Notice of Termination at least ninety (90) days prior to such
termination, and such termination shall not in and of itself be,
nor shall it be deemed to be, a breach of this
Agreement.
(g) Dissolution of the
Company . The Company shall have the right to terminate
Executive’s employment hereunder in connection with the
Board’s resolution to dissolve the Company by providing
Executive with a Notice of Termination, and such termination shall
not in and of itself be, nor shall it be deemed to be, a breach of
this Agreement.
7. Termination Procedure
.
(a) Notice of Termination .
Any termination of Executive’s employment by the Company or
by Executive (other than termination pursuant to Section 6(a))
shall be communicated by written Notice of Termination to the other
party hereto in accordance with Section 13 of this Agreement. For
purposes of this Agreement, a “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 Executive’s employment under the
provision so indicated.
(b) Date of Termination .
“Date of Termination” shall mean (i) if
Executive’s employment is terminated by his death, the date
of his death, (ii) if Executive’s employment is terminated
pursuant to Section 6(b), thirty (30) days after Notice of
Termination
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(provided that Executive shall not
have returned to the substantial performance of his duties on a
full-time basis during such thirty (30) day period), and (iii) if
Executive’s employment is terminated for any other reason,
the date on which a Notice of Termination is given or any later
date (within ninety (90) days after the giving of such notice) set
forth in such Notice of Termination; provided , that
, if applicable, the Notice of Termination shall not be effective
until the cure period has expired and such event or events leading
to such termination have not yet been cured.
8. Compensation Upon
Termination . In the event Executive’s employment is
terminated, the Company shall provide Executive with the payments
set forth below and shall not be required to provide any other
payments or benefits to Executive upon such termination. Executive
acknowledges and agrees that the payments set forth in this Section
8 constitute liquidated damages for termination of his employment
and that prior to receiving any such payments under Section 8 and
as a material condition thereof, Executive shall, if requested by
the Company, sign and agree to be bound by a general release of
claims against the Company and its affiliates related to
Executive’s employment (and termination of employment) with
the Company in such form as the Board deems appropriate. Upon
Executive’s termination of employment for any reason, upon
the request of the Board, he shall resign any membership or
positions that he then holds with the Company or any of its
affiliates.
(a) Termination By the Company
without Cause or By Executive for Good Reason . If
Executive’s employment is terminated by the Company without
Cause or by Executive for Good Reason:
(i) as soon as practicable following
such termination, the Company shall pay to Executive: (A) his
accrued, but unpaid Base Salary earned through the Date of
Termination, his accrued, but unpaid Bonus earned for the year
immediately prior to the year in which the Date of Termination
occurs and any accrued, but unused vacation pay through the Date of
Termination (the “Accrued Obligations”); (B) the target
Bonus Executive would have earned for the year of termination
assuming targets had been achieved, pro-rated based on the number
of days Executive was employed by the Company during the year over
the number of days in such year (the “Pro-Rated
Bonus”); and
(ii) commencing on the Severance
Payment Date (as defined below) and provided Executive does not
breach Section 9 of this Agreement following his termination in
which case all payments under this clause (ii) shall cease, the
Company shall continue to pay Executive the sum of his annual rate
of Base Salary and target Bonus (assuming targets had been
achieved) in twelve (12) equal monthly installments. For purposes
of this Agreement, the “Severance Payment Date” shall
mean (i) if the Board (or its delegate) determines in its
discretion that Executive is a “specified employee” (as
defined in Section 409A(a)(2)(B)(i) of the United States Internal
Revenue Code of 1986, as amended (the “Code”)) as of
the date of termination and that Section 409A of the Code applies
with respect to a payment to Executive pursuant to this Section
8(a), the six-month anniversary of the date of termination or (ii)
if the Board (or its delegate) determines in its discretion that
Executive is not a specified employee as of the date of termination
(or that Section 409A of the Code does not apply with respect to
a
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payment to Executive pursuant to
this Section 8(a)), the first day following the applicable
revocation period set forth in the release contemplated in this
Section 8; and
(iii) the Company shall reimburse
Executive pursuant to Section 5 for reasonable expenses incurred,
but not paid prior to such termination of employment;
and
(iv) Executive shall be entitled to
any other rights, compensation and/or benefits as may be due to
Executive in accordance with the terms and provisions of any
agreements, plans or programs of the Company.
(b) Termination By the Company
for Cause or By Executive Without Good Reason . If
Executive’s employment is terminated by the Company for
Ca
