Exhibit 10.1
EMPLOYMENT AGREEMENT
(dated as of January 25, 2008)
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 David B. Duclos (the
“Executive”).
WHEREAS,
the Executive has been in the employ of the Company and certain of
its subsidiaries;
WHEREAS,
the Company and the Executive desire to continue such employment
and to amend the terms and conditions of such employment as set
forth herein;
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.
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.
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 Chief Executive,
Insurance Operations 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 Chief Operating Officer of the
Company. During the term of this Agreement, the Executive shall
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. The
Executive acknowledges that the Company may require the Executive
to travel to the extent such travel is reasonably necessary to
perform the services here under 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.
4.
BASE SALARY.
The
Executive shall be paid a Base Salary by the Company equal to
US$550,000, 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 Executive shall be entitled to participate in all employee
benefit programs of the Company as are in effect from time to time
and in which similarly situated senior executives of the Company
are eligible to participate.
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7.
BUSINESS 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.
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:
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(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 above,
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(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),
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(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,
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(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 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
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(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.
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(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:
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(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,
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(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 above,
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(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),
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(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,
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(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 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
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(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.
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(c)
TERMINATION FOR CAUSE.
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(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:
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(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;
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(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 General Counsel of the Company
or, if the General Counsel shall have an actual or potential
conflict of interest, the Compensation Committee; or
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(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.
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(ii)
In the event of a termination for Cause under Section 8(c)(i),
above, the Executive shall be entitled only to:
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(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,
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(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
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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).
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(d)
TERMINATION WITHOUT CAUSE.
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(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.
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(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:
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(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,
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(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),
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(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 of business
expenses incurred prior to termination of employment in accordance
with Section 7 above,
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(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
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stock or other securities, held
by the Executive, determined in accordance with the terms
thereof,
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(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
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(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.
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(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:
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(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,
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(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,
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(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,
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(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,
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(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-l(a)(2)) under applicable law, then
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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.
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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 below, 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 any provision of Sections 4
through 7 of this Agreement within 30 calendar days following
written notice of same by the Executive (which written notice must
be given within 30 calendar days after such breach), the Executive
shall have the right to terminate his employment within 30 calendar
days of the Company’s failure to rescind such assignment in
accordance with the proviso below or of such failure to cure a
breach, as the case may be, and such termination shall be deemed a
termination by the Company without Cause under Section 8(d)(ii),
above, provided , in the case of assignment of duties that
are materially inconsistent with those set forth in Section 3
above, the Executive shall have given the Company written notice of
such assignment within 30 calendar days of such assignment and
shall not, within 30 calendar days thereafter, have had the
assignment of inconsistent duties rescinded.
(e)
VOLUNTARY TERMINATION BY THE EXECUTIVE. The Executive may
voluntarily terminate his employment prior to the expiration of the
term of this Agreement upon at least three months’ prior
written notice to the Company. Such termination shall constitute a
voluntary termination and, except as provided in Section 8(d)(iii)
or Section 8(d)(iv), above, in such event the Executive shall be
limited to the same rights and benefits as applicable to a
termination by the Company for Cause as provided in Section 8(c),
above. A voluntary termination in accordance with this Section 8(e)
shall not be deemed a breach of this Agreement. A termination of
the Executive’s employment due to disability or death as
described in Section 8(b) or 8(a), above, a termination by the
Executive which the Executive is entitled to treat as a termination
by the Company pursuant to Section 8(d), above, or a termination by
the Executive under Section 8(d)(iv), above, shall not be deemed a
voluntary termination within the meaning of this Section
8(e).
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9.
EXCISE TAX PAYMENTS.
(a)
Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that (i) any payment or distribution
made, or benefit provided (including, without limitation, the
acceleration of any payment, distribution or benefit o
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