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EXHIBIT 10.3
EMPLOYMENT
AGREEMENT
EMPLOYMENT
AGREEMENT, dated as of July 27, 2007, by and between Max
Bermuda Ltd. (the “Company”), a wholly-owned subsidiary
or Max Capital Group Ltd. (the “Parent”), and Angelo M.
Guagliano (“Executive”).
WHEREAS,
the Company employs Executive as its President and Chief Executive
Officer and desires to continue to retain the services of Executive
and Executive desires to continue to work for and be employed by
the Company in such capacity; and
WHEREAS,
the parties now desire to enter into this Employment Agreement (the
“Agreement”) setting forth the terms and conditions of
the employment relationship of Executive with the Company; and
WHEREAS,
the Company and Executive desire that this Agreement replace and
supersede any and all existing employment arrangements and
agreements between Executive Parent and the Company and/or its
subsidiaries.
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 its President and Chief Executive Officer (“CEO”),
and Executive hereby accepts such employment, on the terms and
conditions hereinafter set forth, it being acknowledged and agreed
that prior to Executive’s promotion to CEO in June of 2007 he
served as the Executive Vice President and Chief Underwriting
Officer of the Company.
2.
Employment Period . The period of employment of Executive by
the Company under this Agreement shall commence on April 1,
2007 (the “Effective Date”) and shall continue until
the third anniversary of the Effective Date (the “Initial
Term”). This Agreement shall be automatically extended for
successive additional one year terms (each a “Renewal
Term”), unless either party delivers to the other party
written notice of non-renewal at least six (6) months prior to
the end of the Initial Term or any Renewal Term (the Initial Term
and any Renewal Terms are hereinafter referred to as the
“Employment Period”). The Employment Period may be
sooner terminated as provided in Section 6 hereof.
3.
Position and Duties . During the Employment Period, except
as otherwise provided in this Agreement, Executive shall serve as
CEO and shall report directly to the Chief Executive Officer of the
Parent and the Board of Directors of the Company (the
“Board”). Executive shall have all of those powers and
duties normally associated with the position of CEO of entities
comparable to the Company 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 CEO and do not violate any applicable laws or
regulations. Executive shall perform his duties to the best of his
abilities and shall devote substantially all of his working time,
attention and energies to the performance of his duties for the
Company. If requested by the Board, Executive shall serve as an
officer and/or director of any of the Company’s affiliates or
subsidiaries (collectively with the Company, the
“Group”) for no additional compensation.
Notwithstanding the foregoing, to the extent the following do not
materially interfere with the performance of Executive’s
duties hereunder, Executive shall be permitted to (i) manage
his personal affairs and (ii) be involved with charitable and
professional activities.
4.
Place of Performance . The principal place of employment of
Executive shall be at the Company’s office in Bermuda;
provided , that , Executive may be required to travel
on Company business from time to time during the Employment Period
as may be reasonably necessary to carry out his duties under this
Agreement.
5.
Compensation and Related Matters .
(a)
Base Salary and Bonus . During the Employment Period, the
Company shall pay to Executive a base salary at the rate of not
less than US$475,000 per year (“Base Salary”).
Executive’s Base Salary shall be paid in accordance with the
Company’s customary payroll practices. Each year during the
Employment Period, the Board or its designated committee shall
review Executive’s Base Salary for 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, Executive shall continue to be eligible
for an annual bonus (the “Bonus”) determined in
accordance with the bonus policy applicable to other senior
executive officers of the Group in the same geographic location. At
the commencement of each calendar year or shortly thereafter during
the Employment Period, the Board or its designated committee shall
provide to Executive a target bonus amount for such year (the
“Target Bonus”). 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; provided , further , that
if Executive’s employment terminates under Section 6(a),
6(b), 6(d), 6(e) or 6(h) hereof, he shall receive a pro-rata
portion of his Bonus for the year in which termination occurs, as
determined in the good faith opinion of the Board or its designated
committee (a “Pro-Rata Bonus”), which shall be paid on
or before March 15 of the calendar year following the year in
which it was earned. Except as otherwise provided by the Board or
herein, Executive shall not be paid any portion of the Bonus unless
he is employed on the date the Company customarily pays annual
bonuses; however, for the avoidance of doubt, the preceding
requirement that Executive be employed on the payment date shall
not be applicable to the Pro-Rata Bonus, and the Pro-Rata Bonus
shall be fully earned as of the first day of the fiscal year in
which such termination occurs and shall become payable when bonuses
are paid to other senior executives of the Company and Executive,
but in no event later than March 15 of the year following the
year of termination.
(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 the amount of paid vacation per year that other senior
executive officers of the Company with similar tenure are entitled
under the Company’s policies, but in no event less than four
(4) weeks 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
that other senior executive officers of the Group with similar
tenure and in the same geographic location are entitled under the
Company’s policies.
(d)
Employee Benefit Plans . During the Employment Period,
Executive shall continue to be entitled to participate in such
employee benefit plans and insurance programs offered to other
senior executive officers of the Group in the same geographic
location, in accordance with the eligibility requirements for
participation therein.
(e)
Other Perquisites . During the Employment Period, Executive
shall be entitled to receive such other perquisites commensurate to
the perquisites provided to Executive Vice Presidents of the Group
in the same geographic location, including without limitation
(i) housing allowance, (ii) club dues allowance,
(iii) auto allowance, (iv) travel allowance, (v) tax
and financial planning services and (vi) tax gross-up
allowance; provided , that in no event will the
housing allowance be less than US$10,000 per month during the
Employment Period.
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 a period
of at least 120 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 or any law.
(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 (i) habitual drug or alcohol use which impairs the
ability of Executive to perform his duties hereunder;
(ii) Executive’s conviction during the Employment Period
by a court of competent jurisdiction, or a pleading of “no
contest” or guilty to a felony or the equivalent if outside
the United States; (iii) Executive’s engaging in fraud,
embezzlement or any other illegal conduct with respect to any
member of the Group which acts are materially harmful to, either
financially, or to the business reputation of, the Company or any
other member of the Group; (iv) Executive willfully violating
the Restrictive Covenants set forth in Section 9 of this
Agreement; (v) Executive’s willful failure or refusal to
perform his duties hereunder (other than such failure caused by
Executive’s Disability or while on vacation), after a written
demand for performance is delivered to Executive by the Board (or
the Board of Directors of the Parent (the “Parent
Board”)) that specifically identifies the manner in which the
Board (or Parent Board) believes that Executive has failed or
refused to perform his duties; (vi) Executive otherwise
breaches any material provision of this Agreement or any Group
policies related to conduct which is not cured, if curable, within
10 days after written notice thereof; or
(vii) Executive’s willful misconduct which is directly
related to the employment relationship and which has a material and
detrimental effect on the Company or the Group. No act or failure
to act by Executive shall be deemed “willful” unless
done, or omitted to be done, (i) by Executive not in good
faith and (ii) without a reasonable belief that his action or
omission was in the best interest of the Company. However, acts or
failures to act will not be deemed to be “willful” if
Executive is specifically directed to take (or not take) such
action by the Board, unless Executive in good faith believes such
directives are illegal and Executive promptly notifies the Board
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. For purposes of this Agreement, “Good
Reason” shall mean: (i) any material and adverse change
to Executive’s duties, responsibilities, reporting or
authority which is inconsistent with his title and position of CEO;
(iii) the relocation of Executive’s office outside of
Bermuda; (iv) a reduction of Executive’s Base Salary;
(v) a reduction of Executive’s Target Bonus opportunity
below 50% of Base Salary or (vi) a material breach by the
Company of any other obligations of the Company under this
Agreement which is not cured, if curable, within ten (10) days
following written notice thereof.
(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 at
least sixty (60) 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; provided , that ,
the Company may elect to immediately terminate Executive without
Cause under this clause (e) and in lieu of advance notice,
continue to pay to Executive the same compensation and benefits
during the advance notice requirement set forth herein (e.g., sixty
(60) days less the period, if any, of advance notice) as if
Executive had continued to remain employed during such advance
notice period in addition to compensation to be paid to Executive
under Section 8(a).
(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 where such termination
shall not be effective until the end of the month immediately
following the last day of the quarter of the fiscal year in which
such Notice of Termination is given, and such termination shall not
in and of itself be, nor shall it be deemed to be, a breach of this
Agreement. The Company may elect to waive any such advance notice
requirement in which case Executive’s termination under this
Section 6(f) shall be effective as of the date the Company provides
in such waiver.
(g)
Expiration of the Employment Period . Executive’s
employment hereunder shall terminate upon either the Company or
Executive providing notice not to renew the Employment Period in
the manner contemplated pursuant to Section 2 of this
Agreement.
(h)
Retirement . Executive may terminate employment on account
of Retirement, provided , that , the Company and
Executive mutually agree on such termination. For purposes hereof,
Executive will be eligible for Retirement if the sum of
Executive’s age and years of service as an employee of the
Company equal or exceed fifty-five (55) and Executive is at
least fifty (50) years of age.
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 that
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 ( 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), (iii) if Executive’s employment
is terminated pursuant to Section 6(c), 6(d), or 6(e), at
least sixty (60) days after the giving of such notice unless
the Company elects to terminate Executive’s employment
immediately and continue to provide compensation as set forth in
Section 6(e), in which case the Date of Termination shall be
the date set forth in the Notice of Termination, (iv) if
Executive’s employment is terminated pursuant to
Section 6(f), the end of the month following the last day of
the quarter of the fiscal year in which the Notice of Termination
is given (unless waived by the Company), (v) if
Executive’s employment is terminated pursuant to
Section 6(g), the expiration of the Employment Period, and
(vi) if Executive’s employment is terminated pursuant to
Section 6(h), the date mutually agreed upon by Executive and
the Company; 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 with respect to the 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 any other members of the Group related to
Executive’s employment (and termination of employment) with
the Company substantially in the form attached hereto as
Exhibit A (the “General Release”), subject to such
changes as may be required to preserve the intent thereof for
changes in applicable law; provided , that , if
Executive should fail to execute such General Release within
45 days following the later of (i) the Date of
Termination or (ii) the date Executive actually receives an
execution copy of such General Release which shall be delivered to
Executive within five (5) business days following his Date of
Termination, the Company shall not have any obligations to provide
the payments contemplated under this Section 8. 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 other members
of the Group or is or was serving at the request of the Company or
any other member of the Group, as a director, officer, member,
employee or agent of another corporation or a partnership, joint
venture, trust or other enterprise.
(a)
Termination by the Company without Cause or by Executive for
Good Reason . If Executive’s employment is terminated by
the Company without Cause under Section 6(e) or by Executive for
Good Reason under Section 6(d):
(i) as
soon as practicable following such termination but no later than
ninety (90) days after the Date of Termination, the Company shall
pay to Executive: his accrued, but yet unpaid Base Salary earned
through the Date of Termination, his accrued, but unpaid Bonus, if
any, 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”); and
(ii) provided Executive does not breach Section 9 or any
other term of this Agreement following his termination, in which
case all payments under this clause (ii) shall cease, the
Company shall pay to Executive, in 12 substantially equal monthly
installments, an amount equal to the product of (A) and (B),
where (A) is equal to 1/12 and (B) is equal to the sum of
(i) the greater of (x) Executive’s Base Salary in
effect on the Date of Termination or (y) Executive’s
Base Salary in effect immediately before a reduction of such Base
Salary that would constitute Good Reason, plus
(ii) Executive’s Bonus (if any) paid or payable to
Executive with respect to the fiscal year that ended immediately
prior to the fiscal year in which such Date of Termination
occurred, with such payments beginning on the first day following
the applicable revocation period set forth in the General Release
contemplated in this Section 8 (the “ Severance
Payment Date ”). Notwithstanding the foregoing, if the
Board (or its delegate) determines in its discretion that severance
payments due under this Section 8(a)(ii) are determined to be
“nonqualified deferred compensation” subject to
Section 409A of the Internal Revenue Code of 1986, as amended
(the “ Code ”), and that Executive is a
“specified employee” as defined in
Section 409A(a)(2)(B)(i) of the Code and the regulations and
other guidance issued thereunder, then such severance payments
shall commence no earlier than the first day of the seventh month
following the month in which Executive’s termination occurs
(the “ Specified Employee Severance Payment Date
”) (with the first such payment being a lump sum equal to the
aggregate severance payments Executive would have received during
such six-month period if no such delay had been imposed); for
purposes of this Agreement, whether Executive is a “specified
employee” will be determined in accordance with the written
procedures adopted by the Board subsequent to the execution of this
Agreement which are incorporated by reference herein;
(iii) the
Company shall reimburse Executive within ninety (90) days of
the Date of Termination pursuant to Section 5(b) 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.
Notwithstanding clause (ii) of this Section 8(a), if
Executive’s employment is terminated pursuant to Section 6(d)
or Section 6(e) in connection with, or upon the occurrence of, or
within twelve (12) months following, a Change in Control, as
defined below, in lieu of the payments described in clause
(ii) of this Section 8(a), Executive shall receive a lump
sum payment, within ten (10) days of the Severance Payment
Date or the Specified Employee Severance Payment Date, whichever is
applicable, equal to two times the sum of (x) his then current
Base Salary plus (y) his then current Target Bonus. For
purposes of this Agreement, a Change in Control shall mean
(i) any sale, lease, exchange or other transfer (in one or a
series of related transactions) of all or substantially all of the
assets of the Company or Parent; (ii) any “person”
as such term is used in Section 13(d) and Section 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”) is or becomes, directly or indirectly, the
“beneficial owner” as defined in Rule 13d-3 under
the Exchange Act of securities of the Company that represent 51% or
more of the combined voting power of the Company’s then
outstanding voting securities; (iii) during any period of two
consecutive years, individuals who at the beginning of such period
constituted the Parent Board (together with any new directors whose
election by the Parent Board whose nomination by the shareholders
of the Parent was approved by a vote of the Parent Board then still
in office who are either directors at the beginning of such period
or whose election or nomination for election was so previously
approved) cease for any reason to constitute a majority of the
Parent Board then in office; or (iv) the Parent Board or the
shareholders of the Parent approve a merger or consolidation of the
parent with any other corporation, other than a merger or
consolidation which would re
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