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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
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(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 .
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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:
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(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 Cause or by Executive (other than
for Good Reason):
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