EXHIBIT 10.19
[LETTERHEAD OF TERRA NOVA (BERMUDA) HOLDINGS LTD. APPEARS HERE]
November 26, 1998
Mr J Riddick
22 Stanhopes
Limpsfield
Surrey
RH8 0TY
Dear John,
In response to our discussions regarding your departure from Terra Nova
(Bermuda) Holdings Ltd. and its subsidiary companies (individually or
collectively, the "Company"), including Terra Nova Insurance Company Limited
("Terra Nova"), I am writing to set out the terms that have been agreed in
respect of that termination of your employment. The following summary sets out
the terms of your retirement on which we have agreed:
1. The Company will cause the terms and conditions of your service agreement
with Terra Nova, dated October 18, 1993 (the "Service Agreement"), to be
fulfilled through March 31, 2000 as provided under the terms of the
contract and on to June 1, 2000 as we have mutually agreed. As we also have
agreed, your paid leave from Terra Nova will begin on January 1, 1999 and
your employment termination date will be May 31, 2000 at which time you
will retire from Terra Nova. During the period of your paid leave, you
agree to be available to assist the management of the Company, as may
reasonably be requested from time to time. The Company will reimburse you
for reasonable travel or other expenses in connection with such assistance.
2. Under the terms of your employment contract, the following salary and
benefits will continue until May 31, 2000.
A. Your monthly salary will continue at the present rate from which
the Company will deduct income tax at the applicable basic rate
and any employee's National Insurance contributions and will
account to the Inland Revenue for these amounts;
B. An annual bonus equal to 10% of your current salary will be paid
for the performance year 1998 and 7800 (pounds) for the
performance year 1999. The customary payment dates would be on
February 1, 1999 and February 1, 2000. At your election, the
Company will pay the bonus amounts in a single lump sum on
February 1, 1999.
John Riddick 2
November 26, 1998
C. The following benefits provided by the Company will continue at the
current levels:
. Life insurance;
. Private medical insurance for yourself and your family;
. Contribution to the Terra Nova pension scheme;
. Membership in the Royal Automobile Club; and
. "Vesting" of share options under the Company's Executive Share
Option Schemes ("Option Schemes") according to the schedule
specifically applicable to each option granted.
In lieu of the customary automobile benefit, the Company will transfer
ownership of the Company-owned Jaguar Sovereign, registration number
MGT 1Y, that is currently in your possession, to you on approximately
January 1, 1999 free from all encumbrances, except that you will be
liable for any income tax that may be charged or levied in respect of
the transfer. The Company makes no warranty as to the fitness and
condition of the car. Estimated motor expenses for the period to May
31, 2000 of 5,000 (pounds) will be paid to you at the time of the
transfer.
3. The Company has requested the Trustees of the Terra Nova Insurance Company
Limited Pension and Life Assurance Scheme and the Trustees have agreed that
your Normal Retirement Age be lowered from the age of 62 to 60 years at
which time you will be entitled, subject to the rules of the Pension
Scheme, to take your pension without discount. We have agreed to extend
your pensionable service so that at the date of your leaving on May 31,
2000, your pension will be calculated on the basis of 24 years of
pensionable service. If you elect to take your pension at an earlier date
than age 60, your new normal retirement age, your discounted pension will
be calculated using a discount rate of 4%. The Trustees will write to you
separately setting out in full your options under the Pension Scheme rules.
4. At the time of your retirement on June 1, 2000, the exercise period
applicable to exercisable Terra Nova Share options held by you on that
date, subject to the applicable rules of the Options Schemes, should extend
to the earlier of the expiration date of each option or May 31, 2005.
5. The Company will provide up to 10,000 (pounds) of outplacement services for
you which will be paid by the Company when invoices are provided which
document actual utilization. The Company will also reimburse you for the
reasonable costs, including V.A.T., of the review of this letter by your
counsel within seven days of your presentation of the applicable invoices.
6. You will resign as a director of the Company, from any other direct or
indirect subsidiary of the Company and as a trustee of the Pension Scheme
with effect from January 1, 1999 in the form or forms of resignation that
will be provided by the Company.
7. The Company will reimburse you, on receipt of appropriate documentation,
for all legitimate unclaimed expenses incurred by you up to and including
December 31, 1998.
John Riddick 3
November 26, 1998
8. The Company will meet the cost of one full medical with BUPA (the Company's
medical insurer) at their scale fee during 1999.
9. On the basis of our long association, I anticipate that your efforts will
be directed towards assisting Terra Nova's management in assuring a smooth
transition related to your departure. The terms of this letter and the
Company's arrangements with you are confidential. You may discuss the terms
with your family and with your personal legal and financial advisors. No
other disclosure is to be made by you or by the Company to any third party
without the prior written consent of you or the Company, as the case may
be.
10. All announcements concerning your leaving the Company will be drafted with
your assistance and agreed with you before they are issued and no comment
is to be made by you, by the Company or by any employee or officer of the
Company to any third party other than in a manner which is consistent with
the agreed announcement made by the Company. Neither party will make any
untrue and/or derogatory statements about the other. The Company will
respond to all requests for a written reference in the agreed form
(attached). All references given orally will be consistent with the terms
and spirit of the agreed reference.
11. You have requested information on the restrictions which will apply in
respect of your holding of Terra Nova (Bermuda) Holdings Ltd. Ordinary
Shares. Generally, you will be free to buy or sell shares at any time after
January 1, 1999. Jean Waggett, the Company's General Counsel, will be
available to consult with you from time to time if you have questions about
transactions in the Company's shares or options.
12. As provided in your Service Agreement, you will not, without the consent in
writing of the Company, divulge to any person or use for your own benefit
or for the benefit of any person, any information of a private, secret or
confidential nature concerning the business, accounts or finances of the
Company or any other of the secrets, dealings, transactions or affairs of
the Company or any of its or their clients which have come to your
knowledge during your employment with the Company. This shall not apply to
any secrets or information which come into the public domain (otherwise
than through an authorised disclosure by you).
13. During your paid leave and for a period of six months thereafter you
undertake with the Company to comply with the restrictions in Clause 11 of
your Service Agreement relating to non-solicitation.
14. These terms are to be construed in accordance with and subject to English
Law.
These terms are in full and final settlement of all claims in all jurisdictions
(whether arising under statue, common law or otherwise), that you have on
December 31, 1998 against the Company or any of its officers or employees in
connection with your position as an officer or director of the Company or your
contract of employment with Terra Nova, its termination or in any other respect.
You have agreed that you will hold the Company harmless against any and all
claims that
John Riddick 4
November 26, 1998
may be filed against the Company, now or in the future for any purpose, by you
or any member of your family.
The Company agrees that these terms are in full and final settlement of all
claims it has or may have against you provided that such agreement will not
extend to claims arising from breach of fiduciary duties as a director or
involving fraud or criminal activities on your part or to claims by third
parties. For the avoidance of doubt, no such claims are known to the Company as
of December 9, 1998.
Please review this agreement with your counsel, and confirm your agreement to
these terms by signing and returning to me the duplicate of this letter by
December 9, 1998.
Very truly yours,
/s/ John J Dwyer
John J Dwyer, Chairman Signed: /s/ John Riddick
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Terra Nova (Bermuda) Holdings Ltd. John Riddick
Date: 9 December, 1998
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