EMPLOYMENT AGREEMENT
This Employment Agreement is dated as of October 17, 1997 and is
entered into between Renaissance Reinsurance Ltd., a Bermuda company (the
"Company"), and John M. Lummis ("Executive").
WHEREAS, Executive is currently employed as a Senior Vice President and
Chief Financial Officer of the Company; and
WHEREAS, Executive and the Company desire to embody in this Agreement
the terms and conditions under which Executive shall continue to be employed by
the Company.
NOW, THEREFORE, the parties hereby agree:
ARTICLE I.
Employment, Duties and Responsibilities
1.1. Employment. During the Term (as defined below), Executive shall
serve as a Senior Vice President and Chief Financial Officer of the Company and
its parent, RenaissanceRe Holdings Ltd. ("Holdings"). Executive agrees to devote
his full time and efforts to promote the interests of the Company.
1.2. Duties and Responsibilities. Executive shall have such duties and
responsibilities as specified by the Company's Board of Directors (the
"Company's Board") from time to time and as are consistent with his position.
1.3. Base of Operation. Executive's principal base of operation for the
performance of his duties and responsibilities under this Agreement shall be the
offices of the Company in Hamilton, Bermuda; provided, however, that Executive
shall perform such duties and responsibilities outside of Bermuda as shall from
time to time be reasonably necessary to fulfill his obligations hereunder.
Executive's performance of any duties and responsibilities outside of Bermuda
shall be conducted in a manner consistent with any guidelines provided to
Executive by Holdings' Board of Directors (the "Holdings Board").
Article II.
Term
2.1. Term. Subject to Article V, the employment of the Executive under
this Agreement shall be for a term (the
"Term") commencing as of the date first written above and continuing until July
1, 1998; provided, however, that the Term shall be extended for successive
one-year periods as of July 1st of each year commencing with July 1, 1998 (each,
a "Renewal Date") unless, with respect to any such Renewal Date, either party
hereto gives the other party at least 30 days prior written notice of its
election not to so extend the Term.
Article III.
Compensation and Expenses
3.1. Salary, Incentive Awards and Benefits. As compensation and
consideration for the performance by Executive of his obligations under this
Agreement, Executive shall be entitled, during the Term, to the following
(subject, in each case, to the provisions of ARTICLE V hereof):
(a) Salary; Bonus. The Company shall pay Executive a base
salary at a rate to be determined by the Board, upon recommendation of the Chief
Executive Officer, payable in accordance with the normal payment procedures of
the Company and subject to such withholding and other normal employee deductions
as may be required by law. Bonuses shall be payable at the discretion of the
Company.
(b) Awards. Executive may participate in the Second Amended
and Restated 1993 Stock Incentive Plan of RenaissanceRe Holdings Ltd. (the
"Plan"). Executive may receive grants from time to time as determined by the
Compensation Committee of the Holdings Board. Executive shall enter into
separate award agreements with respect to such awards granted to him ("Awards")
under the Plan, and his rights with respect to such Awards shall be governed by
the Plan and such award agreements.
(c) Benefits. Executive shall be eligible to participate in
such life insurance, health, disability and major medical insurance benefits,
and in such other employee benefit plans and programs for the benefit of the
employees and officers of the Company, as may be maintained from time to time
during the Term, in each case to the extent and in the manner available to other
officers of the Company and subject to the terms and provisions of such plan or
program.
(d) Vacation. Executive shall be entitled to reasonable paid
vacation periods, not to exceed five weeks for each full year during the Term,
to be taken at his discretion, in a manner consistent with his obligations to
the Company under this Agreement, and subject, with respect to timing, to the
reasonable approval of the Chief Executive Officer of the Company.
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(e) Indemnification/Liability Insurance. The Company shall
indemnify Executive as required by the Bye-laws, and may maintain customary
insurance policies providing for indemnification of Executive.
3.2. Expenses; Perquisites. During the Term, the Company shall provide
Executive with the following expense reimbursements and perquisites:
(a) Business Expenses. The Company will reimburse Executive
for reasonable business-related expenses incurred by him in connection with the
performance of his duties hereunder, subject, however, to the Company's policies
relating to business-related expenses as in effect from time to time.
(b) Automobile. The Company shall provide Executive with an
automobile with a value comparable to automobiles customarily provided to
executive officers of comparable Bermuda-based companies.
(c) Tax Gross-Up. To the extent that benefits provided to
Executive under subsections 3.02(b) of this Agreement result in imputed income
and a resulting increased income tax liability to Executive, the Company shall
pay Executive a tax reimbursement benefit in an amount such that, after
deduction of all income taxes payable with respect to such tax reimbursement
benefit, the amount retained by Executive will be equal to the amount of such
increased income tax liability.
Article IV.
Exclusivity, Etc.
4.1. Exclusivity; Non-Competition. Executive agrees to perform his
duties, responsibilities and obligations hereunder efficiently and to the best
of his ability. Executive agrees that he will devote his entire working time,
care and attention and best efforts to such duties, responsibilities and
obligations throughout the Term. Executive also agrees that during the Term he
will not engage in any business activities that are competitive with the
business activities of the Company or any of its divisions, subsidiaries or
affiliates.
4.2. Other Business Ventures. Executive agrees that during the Term he
will not own, directly or indirectly, any controlling or substantial stock or
other beneficial interest in any business enterprise which is engaged in
business activities
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that are competitive with the business activities of the Company or any of its
divisions, subsidiaries or affiliates. The preceding sentence notwithstanding,
Executive may own, directly or indirectly, up to 1% of the outstanding capital
stock of any business having a class of capital stock which is traded on any
major stock exchange or in a national over-the-counter market.
4.3. Confidential Information. Executive agrees that he will not, at
any time during or after the Term, make use of or divulge to any other person,
firm or corporation any trade or business secret, process, method or means, or
any other confidential information concerning the business or policies of the
Company or any of its divisions, subsidiaries or affiliates, which he may have
learned in connection with his employment hereunder. For purposes of this
Agreement, a "trade or business secret, process, method or means, or any other
confidential information" shall mean any information designated as confidential
by the Board and as to which Executive receives notice, provided that Executive
shall be obligated to confer periodically with and assist the Board in
determining which information should, in the best interests of the Company, be
so designated. Executive's obligation under this Section 4.03 shall not apply to
any information which (i) is known publicly; (ii) is in the public domain or
hereafter enters the public domain without the fault of Executive; (iii) is
known to Executive prior to his receipt of such information from the Company, as
evidenced by written records of Executive or (iv) is hereafter disclosed to
Executive by a third party not under an obligation of confidence to the Company.
Executive agrees not to remove from the premises of the Company, except as an
employee of the Company in pursuit of the business of the Company or except as
specifically permitted in writing by the Board, any document or other object
containing or reflecting any such confidential information. Executive recognizes
that all such documents and objects, whether developed by him or by someone
else, will be the sole exclusive property of the Company. Upon termination of
his employment hereunder, Executive shall forthwith deliver to the Company all
such confidential information, including without limitation all lists of
customers, correspondence, accounts, records and any other documents or property
made or held by him or under his control in relation to the business or affairs
of the Company or its subsidiaries or affiliates, and no copy of any such
confidential information shall be retained by him.
4.4. Non-Competition Obligations. During the Term and, other than in
the case of the death or disability of the Executive, upon any termination of
the employment of the Executive (including a termination by reason of either
party's election not to extend the Term as provided in Section 2.01), the
Executive shall not, for a period of one year from the date of
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such termination (the "Non-Competition Period"), directly or indirectly, whether
as an employee consultant, independent contractor, partner, joint venturer or
otherwise, (A) engage in any business activities reasonably determined by the
Company's Board to be competitive, to a material extent, with any substantial
type or kind of business activities conducted by the Company or any of its
divisions, subsidiaries or affiliates at the time of such termination; (B) on
behalf of any person or entity engaged in business activities competitive with
the business activities of the Company or any of its divisions, subsidiaries or
affiliates, solicit or induce, or in any manner attempt to solicit or induce,
any person employed by, or as agent of, the Company or any of its divisions,
subsidiaries or affiliates to terminate such person's contract of employment or
agency, as the case may be, with the Company or with any such division,
subsidiary or affiliate or (C) divert, or attempt to divert, any person,
concern, or entity from doing business with the Company or any of its divisions,
subsidiaries or affiliates, nor will he attempt to induce any such person,
concern or entity to cease being a customer or supplier of the Company or any of
its divisions, subsidiaries or affiliates. The preceding sentence
notwithstanding, in the case of (i) a voluntary termination of employment by the
Executive which is not for "Good Reason" following a "Change in Control" (each
as hereinafter defined), (ii) a termination by the Company for Cause (as
hereinafter defined), or (iii) an election by the Executive not to extend the
term as provided in Section 2.01, the Company may elect, within 14 days after
the date of such termination, to waive the Executive's non-competition
obligations, in which case it shall not be required to make payments to the
Executive during the Non-Competition Period, as provided in Section 5.05(a).
4.5. Remedies. Executive acknowledges that the Company's remedy at law
for a breach by him of the provisions of this Article IV will be inadequate.
Accordingly, in the event of a breach or threatened breach by Executive of any
provision of this Article IV, the Company shall be entitled to injunctive relief
in addition to any other remedy it may have. If any of the provisions of, or
covenants contained in, this Article IV are hereafter construed to be invalid or
unenforceable in any jurisdiction, the same shall not affect the remainder of
the provisions or the enforceability thereof in any other jurisdiction, which
shall be given full effect, without regard to the invalidity or unenforceability
in such other jurisdiction. If any of the provisions of, or covenants contained
in, this Article IV are held to be unenforceable in any jurisdiction because of
the duration or geographical scope thereof, the parties agree that the court
making such determination shall have the power to reduce the duration or
geographical scope of such provision or
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covenant and, in its reduced form, such provision or covenant shall be
enforceable; provided, however, that the determination of such court shall not
affect the enforceability of this Article IV in any other jurisdiction.
Article V.
Termination
5.1. Termination for Cause. The Company shall have the right to
terminate Executive's employment at any time for "Cause". For purposes of this
Agreement, "Cause" shall mean (a) Executive's failure to substantially perform
his duties under this Agreement, (b) the engaging by Executive in misconduct
which is injurious to the Company or any of its divisions, subsidiaries or
affiliates, monetarily or otherwise, (c) the commission by Executive of an act
of fraud or embezzlement against the Company or any of its divisions,
subsidiaries or affiliates, (d) the conviction of Executive of a felony, or (e)
Executive's material breach of the provisions of any of Sections 4.01, 4.02 or
4.03 of this Agreement, provided Executive has received prior written notice of
such breach.
5.2. Death. In the event Executive dies during the Term, the
Executive's employment shall automatically terminate, such termination to be
effective on the date of Executive's death.
5.3. Disability. In the event that Executive suffers a disability which
prevents him from substantially performing his duties under this Agreement for a
period of at least 90 consecutive days, or 180 non-consecutive days within any
365-day period, and Executive becomes eligible for the Company's long-term
disability plan, the Company shall have the right to terminate the Executive's
employment, such termination to be effective upon the giving of notice to
Executive in accordance with Section 6.03 of this Agreement.
5.4. Termination Without Cause. The Company may at any time terminate
Executive's employment for reasons other than Cause.
5.5. Effect of Termination.
(a) Obligations of Company. In the event of any termination of
the Executive's employment hereunder, the Company shall pay Executive any earned
but unpaid base salary. In addition, except as provided in Section 5.06, upon a
termination of Executive's employment for any reason other than the Executive's
death or disability (including a termination by reason of either party's
election not to extend the Term as
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provided in Section 2.01), the Company shall continue to pay Executive during
the Non-Competition Period, his then current base salary, and an amount equal to
the highest regular annual bonus paid or payable to the Executive over the
preceding three fiscal years (excluding any extraordinary or non-recurring
bonus), such amounts to be payable in equal monthly installments commencing on
the date which is one month after the date of such termination. The preceding
sentence notwithstanding, in the event of a termination of employment described
in the last sentence of Section 4.04 of this Agreement, if the Company elects to
waive the Executive's non-competition obligations within 14 days after the date
of such termination, the Company shall not be required to make such additional
payments.
(b) Awards. Executive's rights with respect to Awards, upon
any termination of his employment with the Company, shall be governed
exclusively by the terms and conditions of the Plan and any award agreements
executed by Executive in connection with the Plan.
(c) Obligations of Executive. Executive may terminate his
employment at any time by 10 days' written notice to the Company. Executive
shall have no obligations to the Company under this Agreement after the
termination of his employment, except and to the extent Sections 4.03, 4.04 or
4.05 shall apply.
5.6. Termination Following a Change in Control. In the event that a
Change in Control occurs (as hereinafter defined) and, on or within one year
following the date of such Change in Control, the Executive's employment is
terminated by the Company without Cause, or the Company elects not to extend the
Term as provided in Section 2.01, or the Executive terminates his employment
voluntarily for "Good Reason" (as hereinafter defined), then in lieu of the
payments described in the second sentence of Section 5.05(a), the Company shall
pay the Executive, within fifteen days following the date of such termination, a
lump sum cash amount equal to two times the sum of:
(i) Executive's annual base salary at the highest rate in
effect during the Term; and
(ii) the highest regular annual bonus paid or payable to the
Executive over the preceding three fiscal years (excluding any
extraordinary or non-recurring bonus).
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For purposes of this Agreement, "Good Reason" means
(i) any action taken or failed to be taken by the Company or
any of its officers which, without Executive's prior written consent,
changes Executive's position (including titles), authority, duties or
responsibilities from those in effect prior to the Change in Control,
or reduces Executive's ability to carry out such duties and
responsibilities;
(ii) any failure by the Company to comply with any of the
provisions of Section 3 of this Agreement, other than an insubstantial
or inadvertent failure which is remedied by the Company promptly after
receipt of notice thereof from Executive;
(iii) the Company's requiring Executive to be employed at any
location more than 35 miles further from his current principal
residence than the location at which Executive was employed immediately
preceding the Change in Control; or
(iv) any failure by the Company to obtain the assumption of
and agreement to perform this Agreement by a successor as contemplated
by Section 6.02(b) of this Agreement.
For purposes of this Agreement, "Change of Control" means the
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act") (a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of securities representing more than
50% of the value and voting power of all of Holdings' outstanding equity
securities (the "Outstanding Equity Securities"); provided, however, that the
following acquisitions shall not constitute a Change of Control: (i) any
acquisition by the Holdings (ii) any acquisition by one or more of the
"Investors" (as such term is defined in the Plan) or any entity directly or
indirectly controlling, controlled by, or under common control with, one or more
or the Investors (an "Investor Affiliate"), or (iii) any acquisition by a
corporation pursuant to a merger, consolidation or other similar transaction (a
"Corporate Event") if, as a result of such Corporate Event, (a) substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Equity Securities immediately prior to such
Corporate Event beneficially own, directly or indirectly, securities
representing more than 50% of the value and voting power of the then outstanding
equity securities of the corporation resulting from such Corporate Event
(including a corporation which, as result of such transaction, owns Holdings or
all or substantially all of Holding's assets either directly or through one or
more subsidiaries) in
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substantially the same proportions as their ownership immediately prior to
such Corporate Even, of the Outstanding Equity Securities, and (b) no Person
other than (1) one of more of the Investors or any Investor Affiliate, or (2)
any corporation resulting from such Corporate Event, beneficially owns, directly
or indirectly, securities representing more than 50% of the value and voting
power of the then outstanding equity securities of the corporation resulting
from such Corporate Event.
Except as specifically provided in this Section 5.06, the effect of a
termination of Executive's employment following a Change in Control shall be
governed by the provisions of Section of 5.05.
Article VI.
Miscellaneous
6.1. Life Insurance. Executive agrees that the Company or any of its
divisions, subsidiaries or affiliates may apply for and secure and own insurance
on Executive's life (in amounts determined by the Company). Executive agrees to
cooperate fully in the application for and securing of such insurance, including
the submission by Executive to such physical and other examinations, and the
answering of such questions and furnishing of such information by Executive, as
may be required by the carrier(s) of such insurance. Notwithstanding anything to
the contrary contained herein, neither the Company nor any of its divisions,
subsidiaries or affiliates shall be required to obtain any insurance for or on
behalf of Executive.
6.2. Benefit of Agreement; Assignment; Beneficiary. (a) This Agreement
shall inure to the benefit of and be binding upon the Company and its successors
and assigns, including, without limitation, any corporation or person which may
acquire all or substantially all of the Company's assets or business, or with or
into which the Company may be consolidated or merged. This Agreement shall also
inure to the benefit of, and be enforceable by, Executive and his personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
(b) The Company shall require any successor (whether direct
or indirect, by operation of law, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place.
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6.3. Notices. Any notice required or permitted hereunder shall be in
writing and shall be sufficiently given if personally delivered or if sent by
telegram or telex or by registered or certified mail, postage prepaid, with
return receipt requested, addressed: (a) in the case of the Company to
Renaissance Reinsurance Ltd., Renaissance House, East Broadway, Hamilton,
Bermuda, Attention: Secretary, or to such other address and/or to the attention
of such other person as the Company shall designate by written notice to
Executive; and (b) in the case of Executive, to Executive at his then current
home address as shown on the Company's books, or to such other address as
Executive shall designate by written notice to the Company. Any notice given
hereunder shall be deemed to have been given at the time of receipt thereof by
the person to whom such notice is given.
6.4. Entire Agreement; Amendment. This Agreement contains the entire
agreement of the parties hereto with respect to the terms and conditions of
Executive's employment and supersedes any and all prior agreements and
understandings, whether written or oral, between the parties hereto with respect
to compensation due for services rendered hereunder. This Agreement may not be
changed or modified except by an instrument in writing signed by both of the
parties hereto.
6.5. Waiver. The waiver by either party of a breach of any provision of
this Agreement shall not operate or be construed as a continuing waiver or as a
consent to or waiver of any subsequent breach hereof.
6.6. Headings. The Article and Section headings herein are for
convenience of reference only, do not constitute a part of this Agreement and
shall not be deemed to limit or affect any of the provisions hereof.
6.7. Enforcement. If any action at law or in equity is brought by
either party hereto to enforce or interpret any of the terms of this Agreement,
the prevailing party shall be entitled to reimbursement by the other party of
the reasonable costs and expenses incurred in connection with such action
(including reasonable attorneys' fees), in addition to any other relief to which
such party may be entitled. Executive shall have no right to enforce any of his
rights hereunder by seeking or obtaining injunctive or other equitable relief
and acknowledges that damages are an adequate remedy for any breach by the
Company of this Agreement.
6.8. Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the internal laws of Bermuda without
reference to the principles
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of conflict of laws. The parties submit to the non-exclusive jurisdiction of the
courts of Bermuda.
6.9. Agreement to Take Actions. Each party to this Agreement shall
execute and deliver such documents, certificates, agreements and other
instruments, and shall take such other actions, as may be reasonably necessary
or desirable in order to perform his or its obligations under this Agreement or
to effectuate the purposes hereof.
6.10. No Mitigation; No Offset. Executive shall not be required to
mitigate damages or the amount of any payment provided for under this Agreement
by seeking (and, without limiting the generality of this sentence, no payment
otherwise required under this Agreement shall be reduced on account of) other
employment or otherwise, and payments under this Agreement shall not be subject
to offset in respect of any claims which the Company may have against Executive.
6.11. Attorneys' Fees. Each party to this Agreement will bear its own
expenses in connection with any dispute or legal proceeding between the parties
arising out of the subject matter of this Agreement, including any proceeding to
enforce any right or provision under this Agreement.
6.12. Termination; Survivorship. This Agreement shall terminate upon
termination of the Executive's employment, except that the respective rights and
obligations of the parties under this Agreement as set forth herein shall
survive any termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations.
6.13. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision or provisions of this Agreement, which shall remain in full
force and effect.
6.14. Other Agreements. Executive represents and warrants to the
Company that to the best of his knowledge, neither the execution and delivery of
this Agreement nor the performance of his duties hereunder violates or will
violate the provisions of any other agreement to which he is a party or by which
he is bound.
6.15. Subsidiaries, etc. (a) The obligations of the Company under this
Agreement may be satisfied by any subsidiary or affiliate of the Company for
which Executive serves as an employee under this Agreement, to the extent such
obligations relate to Executive's employment by such subsidiary or affiliate.
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(b) The rights of the Company under this Agreement may be
enforced by any Subsidiary or affiliate of the Company for which Executive
serves as an employee under this Agreement, to the extent such rights relate to
Executive's employment by such subsidiary or affiliate.
6.16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and Executive have duly executed this
Agreement as of the date first above written.
RenaissanceRe Holdings LTD.
By: /s/ James N. Stanard
--------------------------------
James N. Stanard
Chairman, President & CEO
/s/ John M. Lummis
-----------------------------------
Name: John M. Lummis
Title: Senior Vice President &
Chief Financial Officer