UNITED STATES SECURITIES
AND EXCHANGE COMMISSION
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------- --------------
Commission file number: 34-0-26512
RenaissanceRe Holdings Ltd.
---------------------------
(Exact name of registrant as specified in its charter)
Bermuda 98-013-8020
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Renaissance House
8--12 East Broadway
Pembroke, Bermuda HM 19
(Address of principal executive offices) (Zip Code)
(441) 295-4513
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
----- -----
The number of outstanding shares of RenaissanceRe Holding Ltd.'s common stock,
par value US $1.00 per share as of September 30, 1997 was 22,447,110
Total number of pages in this report: 15
RenaissanceRe Holdings Ltd.
INDEX TO FORM 10-Q
Part I -- Financial Information
Item 1 -- Financial Statements
Consolidated Balance Sheets as of September 30, 1997 3
(unaudited) and December 31, 1996
Unaudited Consolidated Statements of Operations for 4
the Nine Months Ended September 30, 1997 and 1996.
Unaudited Consolidated Statements of Cash Flows 5
for the Nine Months Ended September 30, 1997 and 1996
Notes to Unaudited Consolidated Financial Statements 6
Item II -- Management's Discussion and Analysis of 9
Financial Condition and Results of Operations
Part II -- Other Information 14
Item 1 -- Legal Proceedings
Item 2 -- Changes in Securities
Item 3 -- Defaults Upon Senior Securities
Item 4 -- Submission of Matters to a Vote of Security Holders
Item 5 -- Other Information
Item 6 -- Exhibits and Reports on Form 8-K
Signature - RenaissanceRe Holdings Ltd. 15
2
Part I - Financial Information
Item 1 - Financial Statements
RenaissanceRe Holdings Ltd. and Subsidiaries
Consolidated Balance Sheets
(United States Dollars)
(in thousands, except per share amounts)
As at
-------------------------------------------------
September 30, 1997 December 31, 1996
------------------------ ---------------------
Assets (Unaudited)
Fixed maturities available for sale, at fair value
(Amortized cost $674,496 and $601,907, at September 30, 1997
and December 31, 1996, respectively) $ 678,408 $ 603,484
Equity securities at market (Cost $49,169) 55,544 --
------------------------ ---------------------
Total investments 733,952 603,484
Cash and cash equivalents 123,828 198,982
Reinsurance premiums receivable 88,603 56,685
Ceded reinsurance balances 22,512 19,783
Accrued investment income 16,686 13,913
Deferred acquisition costs 10,656 6,819
Other assets 10,571 5,098
------------------------ ---------------------
Total assets $ 1,006,808 $ 904,764
======================== =====================
Liabilities, Capital Securities, Minority Interest and Shareholders' Equity
Liabilities
Reserve for claims and claim adjustment expenses $ 113,748 $ 105,421
Reserve for unearned premiums 103,407 65,617
Bank loan 50,000 150,000
Reinsurance balances payable 27,762 18,072
Other 5,547 4,215
------------------------ ---------------------
Total liabilities 300,464 343,325
------------------------ ---------------------
Company obligated mandatorily redeemable capital securities
of a subsidiary trust holding solely junior subordinated
debentures of the Company (Note 7) 100,000 --
Minority interest in consolidated subsidiary 10,672 15,236
Shareholders' Equity
Common shares 22,447 23,531
Additional paid-in capital 53,423 102,902
Loans to officers (3,364) (3,868)
Net unrealized appreciation on investments 10,287 1,577
Retained earnings 512,879 422,061
------------------------ ---------------------
Total shareholders' equity 595,672 546,203
------------------------ ---------------------
Total liabilities, capital securities, minority interest,
and shareholders' equity $ 1,006,808 $ 904,764
======================== =====================
Book value per Common Share $ 26.54 $ 23.21
======================== =====================
Common Shares outstanding 22,447 23,531
======================== =====================
The accompanying notes are an integral part of these financial statements.
3
RenaissanceRe Holdings Ltd. and Subsidiaries
Consolidated Statements of Operations
(United States Dollars)
(in thousands, except per share amounts)
(Unaudited)
Quarters Ended September 30, Year-to-Date September 30,
---------------------------------- ---------------------------------
1997 1996 1997 1996
---------------- ---------------- --------------- ----------------
Gross Premiums Written $ 60,411 $ 73,591 $ 215,574 $ 253,157
================ ================ =============== ================
Revenues
Net premiums written $ 46,740 $ 65,238 $ 184,964 $ 236,635
Decrease (increase) in unearned premiums 6,255 (1,785) (24,605) (49,468)
---------------- ---------------- --------------- ----------------
Net premiums earned 52,995 63,453 160,359 187,167
Net investment income 12,653 12,620 36,994 32,945
Net foreign exchange gains (losses) (356) 266 (1,520) (386)
Net realized gains (losses) on investments 1,053 (660) 917 (2,791)
---------------- ---------------- --------------- ----------------
Total revenues 66,345 75,679 196,750 216,935
---------------- ---------------- --------------- ----------------
Expenses
Claims and claim expenses incurred 14,673 26,298 40,017 65,615
Acquisition costs 6,663 6,606 18,978 19,018
Operating expenses 6,116 4,456 18,133 11,594
Corporate expenses 295 307 2,857 1,440
Interest expense 786 1,453 3,488 4,246
---------------- ---------------- --------------- ----------------
Total expenses 28,533 39,120 83,473 101,913
---------------- ---------------- --------------- ----------------
Income before minority interest and taxes 37,812 36,559 113,277 115,022
Minority interest - Company obligated mandatorily
redeemable capital securities of a subsidiary
trust holding solely junior subordinated
debentures of the Company (Note 7) (2,088) -- (4,816) --
Minority interest - Glencoe (316) (96) (611) (107)
---------------- ---------------- --------------- ----------------
Income before taxes 35,408 36,463 107,850 114,915
Income tax expense -- -- -- --
---------------- ---------------- --------------- ----------------
Net income $ 35,408 $ 36,463 $ 107,850 $ 114,915
================ ================ =============== ================
Net income per Common Share $ 1.55 $ 1.40 $ 4.66 $ 4.41
================ ================ =============== ================
Weighted average Common Shares and
common equivalent shares outstanding 22,856 26,084 23,137 26,082
================ ================ =============== ================
Claims and claim expense ratio 27.7% 41.5% 25.0% 35.1%
Expense ratio 24.1% 17.4% 23.1% 16.3%
---------------- ---------------- --------------- ----------------
Combined ratio 51.8% 58.9% 48.1% 51.4%
================ ================ =============== ================
The accompanying notes are an integral part of these financial statements.
4
RenaissanceRe Holdings Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
(United States Dollars in thousands)
(Unaudited)
Year-to-Date September 30,
----------------------------------
1997 1996
--------------- ----------------
Cash Flows from Operating Activities
Net income $ 107,850 $ 114,915
Adjustments to reconcile net income to
cash provided by operating activities
Amortization and depreciation 797 398
Realized investment (gains) losses (917) 2,791
Minority share of income 611 107
Change in:
Reinsurance balances, net (22,228) (22,568)
Ceded reinsurance balances receivable (2,729) (21,347)
Deferred acquisition costs (3,837) (5,390)
Reserve for claims and claim adjustment expenses 8,327 5,729
Reserve for unearned premiums 37,790 49,467
Other (337) 8,864
--------------- ----------------
Cash provided by operating activities 125,327 132,966
--------------- ----------------
Cash flows from investing activities
Proceeds from sale of investments 359,530 237,135
Purchase of investments available for sale (483,438) (312,448)
Proceeds from sale of (purchase of) minority interest in Glencoe (5,185) 15,126
--------------- ----------------
Cash applied to investing activities (129,093) (60,187)
--------------- ----------------
Cash flows from financing activities
Proceeds from issuance of Company obligated mandatorily
redeemable capital securities of a subsidiary trust holding
solely junior subordinated debentures of the Company (Note 7) 98,500 --
Proceeds from (repayment of) bank loan (100,000) 50,000
Dividends paid (17,031) (15,366)
Proceeds from repayment of officer loan 601 --
Purchase of Common Shares (53,458) (613)
--------------- ----------------
Cash provided by (used in) financing activities (71,388) 34,021
--------------- ----------------
Net increase (decrease) in cash and cash equivalents (75,154) 106,800
Cash and cash equivalents, balance at beginning of period 198,982 139,163
--------------- ----------------
Cash and cash equivalents, balance at end of period $ 123,828 $ 245,963
=============== ================
The accompanying notes are an integral part of these financial statements.
5
RenaissanceRe Holdings Ltd. and Subsidiaries
Notes to Consolidated Financial Statements
(Expressed in United States Dollars)
(unaudited)
1. The consolidated financial statements have been prepared on the basis of
United States generally accepted accounting principles ("GAAP") and include the
accounts of RenaissanceRe Holdings Ltd. (the "Company") and its subsidiaries,
including Renaissance Reinsurance Ltd. ("Renaissance Reinsurance") and Glencoe
Insurance Ltd. ("Glencoe"). In the opinion of management, these financial
statements reflect all the normal recurring adjustments necessary for a fair
presentation of the Company's financial position at September 30, 1997, its
results of operations for the three month and nine month periods ended September
30, 1997 and 1996 and cash flows for the nine month periods ended September 30,
1997 and 1996. These consolidated financial statements should be read in
conjunction with the 1996 audited consolidated financial statements and related
notes thereto. Certain comparative information has been reclassified to conform
to current presentation. Because of the seasonality of the Company's business
the results of operations for any interim period will not necessarily be
indicative of results of operations for the full fiscal year.
2. Earnings Per Share is calculated by dividing net income by the weighted
average number of common shares and common share equivalents outstanding.
For the three month period ended September 30, 1997, the Company had
22,856,000 weighted average common shares outstanding consisting of 22,409,000
weighted average common shares and 447,000 weighted average common share
equivalents issuable pursuant to the Company's stock option plans. For the
three month period ended September 30, 1996, the Company had 26,084,000 weighted
average common shares outstanding consisting of 25,614,000 weighted average
common shares and 470,000 weighted average common share equivalents issuable
pursuant to the Company's stock option plans.
For the nine months ended September 30, 1997, the Company had 23,137,000
weighted average common shares outstanding, consisting of 22,704,000 weighted
average common shares and 433,000 weighted average common share equivalents
issuable pursuant to the Company's stock option plans. For the nine months
ended September 30, 1996, the Company had 26,082,000 weighted average common
shares outstanding, consisting of 25,609,000 weighted average common shares and
473,000 weighted average common share equivalents issuable pursuant to the
Company's stock option plans. Total Common Shares outstanding as at September
30, 1997 and 1996 were 22,447,110 and 25,615,977, respectively.
3. The Board of Directors of the Company declared, and the Company paid,
dividends of $.25 per share to shareholders of record on each of August 20, May
22, and February 19, 1997. On October 22, 1997, the Board of Directors of the
Company declared a dividend of $.25 per share payable on December 5, 1997 to
shareholders of record on November 20, 1997.
4. During the third quarter of 1997, the Company executed the First Amendment
to the Third Amended and Restated Credit Agreement dated as of December 12, 1996
(the "Credit Facility"). The amendments became effective on September 8, 1997,
except for the amendments relating to invested assets which were effective on
June 30, 1997. The Credit Facility was amended to a) extend the termination
date from December 1, 1999 to December 1, 2001, b) specifically define the
Capital Securities as a component of Net
6
Worth, c) amend the definition of invested assets and the covenants related to
invested assets, d) amend certain restrictions regarding acquisitions and e)
amend certain fee schedules.
5. During the third quarter of 1997 the Company increased its ownership of
Glencoe through the purchase of an additional 9.9 percent interest in Glencoe.
The Company paid $5.2 million for the additional shares in Glencoe and increased
its ownership from 70.1 percent to 80 percent.
6. On June 23, 1997 the Company completed a secondary offering of 3.4 million
common shares at $38.00 per share. All shares sold were owned by the Company's
founding institutional shareholders or their successors, and the Company did not
receive any of the proceeds of the offering. Concurrent with the secondary
offering on June 23, 1997, the Company also purchased, for cancellation, an
aggregate of 700,000 common shares at $36.29 per share or an aggregate purchase
price of $25.4 million from the Company's founding institutional shareholders or
their successors (the "Company Purchase"). Expenses of $700,000 related to the
offerings were charged to additional paid in capital during the second quarter
of 1997.
7. On March 7, 1997 the Company completed the sale of $100 million of "Company
Obligated, Mandatorily Redeemable Capital Securities of a Subsidiary Trust
holding solely $103,092,783.51 of the Company's 8.54% Junior Subordinated
Debentures due March 1, 2027" ("Capital Securities") issued by RenaissanceRe
Capital Trust (the "Trust"), a newly created subsidiary business trust of the
Company. The Capital Securities pay cumulative cash distributions at an annual
rate of 8.54 percent, payable semi-annually commencing September 1, 1997.
Proceeds from the offering were used to repay a portion of the Company's
outstanding indebtedness. Effective September 11, 1997 the Trust exchanged the
Capital Securities for substantially the same securities registered under the
Securities Act of 1933, as amended.
The Trust is a wholly owned subsidiary of the Company. The financial
statements of the Trust are consolidated into the Company's consolidated
financial statements, and the Capital Securities and the related accrued
dividends are reflected in the financial statements as a minority interest.
8. In January 1997, the Company completed a fixed price tender offer and
repurchased and cancelled 813,190 Common Shares from its public shareholders at
$34.50 per share, or an aggregate purchase price of $28.1 million (the "Tender
Offer").
9. Interest paid was $3.1 million for the nine months ended September 30, 1997
and $4.2 million for the same period in the previous year. On September 1, 1997
the Company paid $4.1 million of dividends on the Capital Securities.
10. During 1997 the Company renegotiated and extended employment agreements
with certain key employees.
11. In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard ("SFAS") No. 128, Earnings per Share. SFAS No.
128 simplifies the standards for computing earnings per share ("EPS") previously
found in APB Opinion No. 15, Earnings per Share. It replaces the presentation
of primary EPS with a presentation of basic EPS. It also requires dual
presentation of basic and diluted EPS on the face of the income statement for
all entities with complex capital structures. Management does not believe this
new pronouncement will materially affect the Company's current disclosures as
the Company's capital structure is not considered complex nor is there
significant dilution from other securities or other contracts to issue
7
common stock.
SFAS No. 128 is effective for financial statements issued for periods ending
after December 15, 1997, including interim periods and requires restatement of
all prior-period EPS data presented. Earlier application is not permitted.
If SFAS No. 128 had been effective for the current reporting period, the pro
forma affects would be as follows:
Three Months Ended September 30,
- --------------------------------
1997 1996
---- ----
Basic EPS $1.58 $1.42
Diluted EPS $1.55 $1.40
Nine Months Ended September 30,
- --------------------------------
1997 1996
---- ----
Basic EPS $4.75 $4.49
Diluted EPS $4.66 $4.41
Year Ended December 31,
- -----------------------
1996 1995
---- ----
Basic EPS $6.12 $6.84
Diluted EPS $6.01 $6.75
In June 1997 the Financial Accounting Standards Board issued SFAS 130 and SFAS
131.
SFAS 130 establishes standards for reporting and displaying comprehensive income
and its components (revenues, expenses, gains, and losses) in a full set of
general-purpose financial statements. This statement requires that an
enterprise (a) classify items of other comprehensive income by their nature in a
financial statement and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of a statement of financial position.
SFAS 130 is effective for fiscal years beginning after December 15, 1997. The
Company is presently considering its disclosure alternatives.
SFAS 131 establishes standards for the way public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports issued to shareholders. Operating segments are
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance.
SFAS 131 is effective for financial periods beginning after December 15, 1997.
The Company is presently considering its disclosure alternatives.
8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
For the quarter ended September 30, 1997 compared to the quarter ended September
30, 1996
For the quarter ended September 30, 1997, net income was $35.4 million or $1.55
per share, compared to $36.5 million or $1.40 per share for the same quarter in
1996. The decrease in reported net income was primarily related to lower net
premiums earned, resulting from lower in force gross premiums as well as
increased ceded reinsurance premiums resulting from the expansion of the
Company's ceded retrocessional programs, offset by lower claims and claim
expenses attributable to a light Atlantic hurricane season. Per share amounts
for 1997 benefited from a lower number of common shares outstanding as a result
of the Company's purchase of 3.6 million common shares since December 13, 1996.
Gross premiums written for the third quarter of 1997 declined 17.9 percent to
$60.4 million, and included $2.6 million of premiums written by Glencoe. Gross
premiums written for the same period in 1996 were $73.6 million. The decline in
gross premiums written was primarily related to the Company's decision not to
renew certain contracts due to the competitive market for property catastrophe
reinsurance as well as lower overall pricing on reinsurance contracts. The 17.9
percent premium decrease was the result of a 13.3 percent decrease in premiums
due to the Company not renewing coverage and a 11.1 percent decrease related to
changes in pricing, participation levels and coverage on renewed business,
partially offset by a 6.5 percent increase in premiums related to new business.
Net premiums written for the third quarter of 1997 were $46.7 million compared
to $65.2 million for the third quarter of 1996. Net premiums earned for the
third quarter of 1997 were $53.0 million, compared to $63.5 million for the same
quarter of 1996, a decrease of 16.5 percent. Total revenues for the third
quarter of 1997 decreased to $66.3 million from $75.7 million reported for the
same quarter of 1996.
During 1997, consistent with its risk diversification and risk management
practices and the availability of coverage responsive to the Company's risk
profile, the Company increased the level of property catastrophe reinsurance
coverage purchased for its own account. During the third quarter of 1997, ceded
premiums written were $13.7 million compared to $8.4 million for the same
quarter in 1996.
The table below sets forth the Company's combined ratio and components thereof
for the quarters ended September 30, 1997 and 1996:
Quarters Ended September 30,
----------------------------
1997 1996
---- ----
Loss ratio 27.7% 41.5%
Expense ratio 24.1% 17.4%
- --------------------------------------------------------------------------------
Combined ratio 51.8% 58.9%
================================================================================
Claims and claim expenses incurred for the quarter ended September 30, 1997 were
$14.7 million or 27.7 percent of net premiums earned. In comparison, claims and
claim expenses incurred for the quarter ended September 30, 1996 were $26.3
million
9
or 41.5 percent of net premiums earned, and included a provision of $15 million
for Hurricane Fran.
Underwriting expenses are comprised of acquisition expenses and operational
expenses. Acquisition expenses were $6.7 million for the quarter ended
September 30, 1997 compared to $6.6 million for the same quarter in 1996. The
increase in acquisition costs as a percentage of net premiums earned is
primarily related to the increase in reinsurance purchased, which provides no
reduction in the associated acquisition expenses, and an increase in premiums
written by Glencoe, which have a higher ratio of acquisition costs. Operating
expenses for the third quarter of 1997 increased to $6.1 million compared with
$4.5 million for the same quarter of 1996 as a result of increased staffing at
Renaissance Reinsurance, the development of Glencoe and the Company's continuing
investment in modeling technology.
Net investment income (excluding net realized and unrealized investment gains
and losses) was $12.7 million for the quarter ended September 30, 1997 compared
to $12.6 million for the same period in 1996.
During the quarter ended September 30, 1997, the Company accrued $2.1 million
for dividends related to the Capital Securities that were issued in March 1997.
Interest expense for the quarter ended September 30, 1997 decreased to $.8
million from $1.5 million for the same period in 1996 as a result of a decreased
amount outstanding under the Company's Revolving Credit Facility.
For the nine months ended September 30, 1997 compared to the nine months ended
September 30, 1996
For the nine months ended September 30, 1997, net income available to common
shareholders was $107.9 million or $4.66 per share, compared to $114.9 million
or $4.41 per share for the same period in 1996. The decrease in reported net
income was primarily related to lower net premiums earned, resulting from lower
in force gross premiums as well as higher ceded reinsurance premiums, partially
offset by lower claims and claim expenses incurred. Per share amounts for 1997
benefited from a lower number of common shares outstanding as a result of the
Company's purchase of 3.6 million common shares since December 13, 1996.
Gross premiums written for the first nine months of 1997 declined 14.8 percent
to $215.6 million, and included $5.2 million of premiums written by Glencoe.
Gross premiums written for the same period in 1996 were $253.2 million. The
decline in gross premiums written was primarily related to the Company's
decision not to renew certain contracts due to the competitive market for
property catastrophe reinsurance as well as lower overall pricing on reinsurance
contracts. The premium decrease of 14.8 percent was the result of a 17.6
percent decrease in premiums due to the Company not renewing coverage and a 8.4
percent decrease related to changes in pricing, participation level and coverage
on renewed business, partially offset by a 11.2 percent increase in premiums
related to new business.
During 1997, consistent with its risk diversification and risk management
practices and the availability of coverage responsive to the Company's risk
profile, the Company increased the level of property catastrophe reinsurance
coverage purchased for its own account. During the first nine months of 1997,
ceded premiums written were $30.6 million compared to $16.5 million for the same
period in 1996.
Net premiums written for the first nine months of 1997 were $185.0 million
compared with $236.6 million for the same period in 1996. Net premiums earned
for first nine
10
months of 1997 were $160.4 million, compared to $187.2 million for the same
period in 1996, a decrease of 14.2 percent. Total revenues for the first nine
months of 1997 decreased to $196.8 million from $216.9 million reported for the
same period in 1996.
The table below sets forth the Company's combined ratio and components thereof
for the nine months ended September 30, 1997 and 1996:
Nine Months Ended September 30,
1997 1996
---- ----
Loss ratio 25.0% 35.1%
Expense ratio 23.1% 16.3%
- --------------------------------------------------------------------------------
Combined ratio 48.1% 51.4%
================================================================================
Claims and claim expenses incurred for the nine months ended September 30, 1997
were $40.0 million or 25.0 percent of net premiums earned. In comparison, claims
and claim expenses incurred for the nine months ended September 30, 1996 were
$65.6 million or 35.1 percent of net premiums earned.
Underwriting expenses are comprised of acquisition expenses and operational
expenses. Acquisition expenses were $19.0 million for the nine months ended
September 30, 1997 and 1996. The increase in acquisition costs as a percentage
of net premiums earned is primarily related to the increase in reinsurance
purchased, which provides no reduction in the associated acquisition expenses,
and an increase in premiums written by Glencoe, which have a higher ratio of
acquisition costs. Operating expenses for the first nine months of 1997
increased to $18.1 million compared with $11.6 million for the same period in
1996 as a result of increased staffing at Renaissance Reinsurance, the continued
development of Glencoe and the Company's continuing investment in modeling
technology.
Corporate expenses for the first nine months of 1997 were $2.9 million and
included one-time fees of $1.5 million related to the issuance of the $100
million of Capital Securities in March of 1997.
Net investment income (excluding net realized and unrealized investment gains
and losses) was $37.0 million for the nine months ended September 30, 1997
compared to $32.9 million for the same period in 1996. The increase in net
investment income for the first nine months of 1997 was the result of higher
average invested assets, primarily related to cash provided by operations, which
was partially offset by amounts used to purchase common stock.
During the nine months ended September 30, 1997, the Company accrued $4.8
million for dividends related to the Capital Securities that were issued in
March 1997. Interest expense for the nine months ended September 30, 1997
decreased to $3.5 million from $4.2 million for the same period in 1996 as a
result of a decreased amount outstanding under the Company's Revolving Credit
Facility.
RECENT DEVELOPMENTS
On October 20, 1997, the Company announced that it intends to file a
registration statement with the Securities and Exchange Commission for the sale
of up to 4,600,000 common shares (including up to 600,000 shares solely to cover
overallotment options) in an underwritten secondary offering, subject to market
and other customary conditions, at the request of the Company's initial
institutional investors. All of the shares to be sold in
11
the offering will be sold by the Company's initial institutional investors or
their successors, and the Company will not receive any of the proceeds of the
offering. The Company expects to incur approximately $600,000 in expenses
related to the offering, which will be charged to additional paid in capital.
LIQUIDITY AND CAPITAL RESOURCES
As a holding company, the Company relies on cash dividends and other permitted
payments from its subsidiaries to make principal payments, interest payments and
cash distributions on outstanding obligations and pay dividends, if any, to the
Company's shareholders. The payment of dividends by the Company's subsidiaries
to the Company is, under certain circumstances, limited under Bermuda insurance
law. The Bermuda Insurance Act of 1978, amendments thereto and related
regulations of Bermuda, require the Company's subsidiaries to maintain a minimum
solvency margin and a minimum liquidity ratio. Presently, restrictions on the
payment of dividends by the Company's subsidiaries to the Company are not
material relative to the capital of the subsidiaries.
The Company anticipates that the primary insurance operations of Glencoe,
combined with other primary insurance opportunities, may become an increasingly
important element of the Company over time. The growth of the Company's primary
insurance business may require additional capital, either to support organic
growth of the business or possible acquisitions. The Company currently believes
that internally generated capital will be sufficient to support this business,
but external financing may be needed to facilitate a substantial strategic
acquisition or significant growth of this business.
The Company periodically reviews strategic acquisition opportunities and from
time to time engages in discussions regarding possible acquisitions. Any future
acquisitions by the Company could result in, among other things, the incurrence
of additional debt and/or amortization of expenses related to goodwill and
intangible assets that could adversely affect the Company's liquidity and/or
profitability. However, the Company has not presently entered into any
definitive agreements with respect to future acquisitions and there can be no
assurance that it will do so in the future.
Cash flows from operating activities resulted principally from premium and
investment income, net of paid losses, acquisition costs and other related
expenses. Because of the high severity and low frequency of the coverages
written by the Company and the seasonality of the Company's business, it is not
possible to accurately predict the future cash flows from operating activities.
As a consequence, cash flows from operating activities may fluctuate between
individual quarters and years.
Neither the Company nor its subsidiaries have material commitments for capital
expenditures. Based on its current operating plans, the Company believes that
its liquidity will be adequate in both the short and long term.
On June 23, 1997 the Company completed a secondary offering of 3.4 million
common
12
shares at $38.00 per share. All shares sold were owned by the Company's founding
institutional shareholders or their successors, and the Company did not receive
any of the proceeds of the offering. Concurrent with the secondary offering on
June 23, 1997, the Company also purchased, for cancellation, an aggregate of
700,000 common shares at $36.29 per share or an aggregate purchase price of
$25.4 million from the Company's founding institutional shareholders or their
successors. Expenses of $700,000 related to the offerings were charged to
additional paid in capital during the second quarter of 1997.
On March 7, 1997 the Company completed the sale of $100 million of Capital
Securities issued by RenaissanceRe Capital Trust (the Trust), a newly created
subsidiary business trust of the Company. The Capital Securities pay cumulative
cash distributions at an annual rate of 8.54 percent, payable semi-annually
commencing September 1, 1997. Proceeds from the offering were used to repay a
portion of the Company's outstanding indebtedness.
In January 1997, the Company repurchased and cancelled 813,190 Common Shares for
a total value of $28.1 million through the completion of the Company's Tender
Offer.
During 1997 the Company allocated $50.0 million of its fixed maturity
investments towards the purchase of non-U.S. equity securities. At September 30,
1997, the Company's investments in equity securities had a fair value of $55.5
million and an unrealized gain position of $6.4 million.
The Company's investment portfolio had a fair value of $857.7 million at
September 30, 1997 and consisted of fixed maturity investments of $678.4
million, equity security investments of $55.5 million, and cash and cash
equivalents of $123.8 million. At September 30, 1997, the fixed maturity
investment portfolio had an average rating of AA as measured by Standard &
Poor's Ratings Group, an average duration of 2.3 years and an average yield to
maturity of 6.6 percent before investment expenses.
The Company's equity securities and its investment in cash and cash equivalents
include $55.1 million and $16.9 million of investments denominated in currencies
other than the U.S. Dollar, respectively, representing approximately 8.4 percent
of total invested assets. The remaining 91.6 percent of the Company's invested
assets are invested in U.S. Dollar denominated investments. The portfolio does
not contain any direct investments in real estate or mortgage loans.
The Company believes that its readily marketable portfolio of investments and
available credit line will provide it with adequate liquidity to fund its
operating cash needs.
13
Part II -- OTHER INFORMATION
Item 1 -- Legal Proceedings
None.
Item 2 -- Changes in Securities
None
Item 3 -- Defaults Upon Senior Securities
None
Item 4 -- Submission of Matters to a Vote of Security Holders
None
Item 5 -- Other Information
None
Item 6 -- Exhibits and Reports on Form 8-K
a. Exhibits:
Exhibit 10 -- Material Contracts
10.1 Guaranty, dated as of June 23, 1997, between
RenaissanceRe Holdings Ltd. and Bank of America
National Illinois
10.2 First Amendment Agreement, dated as of September 8,
1997 to the Third Amended and Restated Credit
Agreement, dated as of December 12, 1996.
10.3 Employment Agreement, dated as of June 23, 1997
between Renaissance Reinsurance Ltd. And James N.
Stanard
10.4 Form of Employment Agreement, dated as of May 27,
1997 between Renaissance Reinsurance Ltd. And Keith
S. Hynes*
* - A substantially similar Form of Employment Agreement has
been entered into by Renaissance Reinsurance and each of
Messrs. Riker & Eklund.
Exhibit 27.1 -- Financial Data Schedule
b. Current Reports on Form 8-K:
The Registrant filed a Current Report on Form 8-K on July 11,
1997.
14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed by the undersigned
thereunto duly authorized.
RENAISSANCERE HOLDINGS LTD.
Date: October 22, 1997
By: /s/ John M. Lummis
-------------------------------
John M. Lummis
Senior Vice President and
Chief Financial Officer
15
EXHIBIT 10.1
================================================================================
GUARANTY
Dated as of June 23, 1997
among
RENAISSANCERE HOLDINGS LTD.,
as Guarantor,
and
BANK OF AMERICA NATIONAL ILLINOIS
================================================================================
GUARANTY
THIS GUARANTY (this "Guaranty") is entered into as of June 23, 1997 between
RENAISSANCERE HOLDINGS LTD., a Bermuda company ("Guarantor"), in favor of BANK
OF AMERICA ILLINOIS (the "Bank"). Unless otherwise defined herein, capitalized
terms used herein shall have the meanings assigned to such terms pursuant to
Article I.
- ---------
W I T N E S S E T H:
-------------------
WHEREAS, pursuant to a Credit Agreement, dated as of June 23, 1997 (as from
time to time, in whole or in part, the same may be amended, modified,
supplemented, restated, refinanced, refunded or renewed, the "Credit
Agreement"), among the individuals listed as borrowers on the signature pages
thereto (herein, collectively called, the "Borrowers" and each individually, a
"Borrower") and the Bank, the Bank has extended a Commitment to make Loans to
each of the Borrowers on the terms and subject to the conditions contained in
the Credit Agreement;
WHEREAS, as a condition precedent to the making of the initial Loans and
any subsequent Loans under the Credit Agreement, the Bank has requested that
Guarantor execute and deliver this Guaranty;
WHEREAS, Guarantor has been duly authorized to execute, deliver and perform
this Guaranty; and
WHEREAS, it is in the best interest of Guarantor to execute this Guaranty
inasmuch as Guarantor will derive substantial direct and indirect benefits from
the Loans made from time to time to the Borrowers or any of them by the Bank
pursuant to the Credit Agreement;
NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, and in order to induce the Bank to
make Loans (as defined in the Credit Agreement) (including the initial Loans) to
the Borrowers or any of them pursuant to the Credit Agreement, Guarantor agrees,
for the benefit of the Bank and any holder of any Loan (individually a
"Guarantied Party" and collectively the "Guarantied Parties"), as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. Certain Terms. Capitalized terms used herein, unless
-------------
otherwise defined herein, shall have the meanings assigned thereto in the Credit
Agreement; provided that such definitions shall survive any termination of the
--------
Credit Agreement. In addition, when used herein the following terms
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Bank" - see Preamble.
"Borrowers" or "Borrower" - see Recitals.
--------
"Cash Collateral Account" shall mean the custody account, account number
72-81129 maintained in the name of, and subject to the sole dominion and control
of the Bank for the purpose of holding prepayments of the Obligations of the
Borrowers by the Guarantor pursuant to Section 6.1.
-----------
"Credit Agreement" - see Recitals.
--------
"Guarantied Party" - see Preamble.
--------
"Guaranty" - see Preamble.
--------
"Indemnified Parties" - see Section 6.2.
-----------
"Obligations" - see Section 2.1.
-----------
"Subrogation Rights" - see Section 5.6.
-----------
"UCC" shall mean the Uniform Commercial Code or comparable statute or any
successor statutes thereto, as in effect from time to time in the relevant
jurisdiction.
ARTICLE II.
GUARANTY PROVISIONS
SECTION 2.1. Guaranty. Guarantor hereby absolutely, unconditionally and
--------
irrevocably:
(a) guaranties to the Guarantied Parties the full and punctual payment
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise, and at all times thereafter, of all
obligations of each Borrower to the Guarantied Parties, howsoever created,
arising or evidenced, whether direct or indirect, absolute or contingent, or now
or hereafter existing, or due or to become due under the Credit Agreement
whether for principal, interest, fees, expenses or otherwise (including all such
amounts which would become due but for the operation of the automatic stay
provisions under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C.
(S)362(a), and the operation of Sections 502(b) and 506(b) of the United States
Bankruptcy Code, 11 U.S.C. (S)502(b) and (S)506(b)) (all such obligations
hereinafter collectively called the "Obligations"); and
(b) indemnifies and holds harmless each Guarantied Party for any and all
costs and expenses (including, without
-2-
limitation, reasonable attorneys' fees and expenses) incurred by such Guarantied
Party in enforcing any rights under this Guaranty;
This Guaranty constitutes a guaranty of payment when due and not of collection,
and Guarantor specifically agrees that except as provided in Article V it shall
not be necessary or required that any Guarantied Party exercise any right,
assert any claim or demand or enforce any remedy whatsoever against any
Borrower or any other obligor (or any other Person) before the performance of,
or as a condition to, the obligations of Guarantor hereunder.
SECTION 2.2. Acceleration of Guaranty. Guarantor agrees that, upon the
------------------------
occurrence of an Event of Default under Section 10.1.2 of the Credit Agreement
with respect to any Borrower or Guarantor, if such event shall occur at a time
when any of the Obligations of such Borrower may not then be due and payable,
Guarantor will pay to the Banks forthwith (a) if such event relates to such
Borrower, the full amount which would be payable hereunder by Guarantor if all
Obligations of such Borrower were then due and payable and (b) if such event
relates to Guarantor or any other obligor with respect to the obligations of
Guarantor, the full amount which would be payable hereunder by Guarantor if all
the Obligations of all Borrowers were then due and payable.
SECTION 2.3. Guaranty Absolute, etc. This Guaranty shall in all respects
----------------------
be a continuing, absolute, unconditional and irrevocable guaranty of payment,
and shall remain in full force and effect until all Obligations of the Borrowers
have been paid in full, all obligations of Guarantor hereunder shall have been
paid in full and all Commitments shall have terminated. Guarantor guarantees
that the Obligations of the Borrowers will be paid strictly in accordance with
the terms of the Credit Agreement and each other Loan Document under which they
arise, regardless of any law, regulation or order now or hereafter in effect in
any jurisdiction affecting any of such terms or the rights of any Guarantied
Party with respect thereto. The liability of Guarantor under this Guaranty
shall be absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of the Credit
Agreement, any Note or any other Loan Document;
(b) the failure of any Guarantied Party:
(i) to assert any claim or demand or to enforce any right or remedy
against any Borrower, any other obligor or any other Person under the
provisions of the Credit Agreement, any Note, any other Loan Document or
otherwise; or
-3-
(ii) to exercise any right or remedy against any other guarantor of,
or collateral securing, any Obligations of any Borrower or any other
obligor;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of any Borrower or any other
obligor, or any other extension, compromise or renewal of any Obligations of any
Borrower or any other obligor;
(d) any reduction, limitation, impairment or termination of the
Obligations of any Borrower or any other obligor for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to (and Guarantor hereby waives any right to or claim of) any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, the Obligations
of any Borrower, any other obligor or otherwise;
(e) any amendment to, rescission, waiver, or other modification of, or
any consent to any departure from, any of the terms of the Credit Agreement, any
Note or any other Loan Document;
(f) any addition, exchange, release, surrender or non-perfection of
any collateral, or any amendment to or waiver or release or addition of, or
consent to any departure from, any other guaranty, held by any Guarantied Party
securing any of the Obligations of any Borrower or any other obligor; or
(g) any other circumstance which might otherwise constitute a defense
available to, or a legal or equitable discharge of, any Borrower, any other
obligor, any surety or any guarantor other than payment in full of the
Obligations.
SECTION 2.4. Reinstatement, etc. Guarantor agrees that this Guaranty
------------------
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment (in whole or in part) of any of the Obligations is rescinded or
must otherwise be restored by any Guarantied Party, upon the insolvency,
bankruptcy or reorganization of any Borrower, any other obligor or otherwise,
all as though such payment had not been made.
SECTION 2.5. Waiver, etc. Guarantor hereby waives promptness, diligence,
-----------
notice of acceptance and any other notice with respect to any of the Obligations
of any Borrower or any other obligor, and this Guaranty and any requirement that
the Bank or any other Guarantied Party protect, secure, perfect or insure any
security interest or Lien, or any property subject thereto, or exhaust any right
or take any action against any Borrower, any other obligor or any other Person
(including any other guarantor) or entity or any collateral securing the
-4-
Obligations of any Borrower or any other obligor, as the case may be.
SECTION 2.6 Waiver of Subrogation; Subordination. Guarantor hereby
------------------------------------
irrevocably waives with respect to any Borrower, until termination of the
Commitment of the Bank with respect to such Borrower and thereafter until the
prior indefeasible payment in full in cash of all Obligations of such Borrower
under the Loan Documents, any claim or other rights which it may now or
hereafter acquire against such Borrower or any other obligor that arises from
the existence, payment, performance or enforcement of Guarantor's obligations
under this Guaranty or any other Loan Document or otherwise, including any right
of subrogation, reimbursement, exoneration, or indemnification, any right to
participate in any claim or remedy of the Guarantied Parties against such
Borrower or any other obligor or any collateral which the Bank now has or
hereafter acquires, whether or not such claim, remedy or right (all such claims,
remedies and rights being collectively called "Subrogation Rights") arises in
equity, or under contract, statute or common law, including the right to take or
receive from such Borrower or any other obligor, directly or indirectly, in cash
or other property or by set-off or in any manner, payment or security on account
of such claim or other rights. If any amount shall be paid to Guarantor in
violation of the preceding sentence and the Obligations shall not have been paid
in cash, in full, and the Commitments of the Banks with respect to such Borrower
have not been terminated, such amount shall be deemed to have been paid to
Guarantor for the benefit of, and held in trust for, the Guarantied Parties, and
shall forthwith be paid to the Guarantied Parties to be credited and applied
upon the obligations of such Borrower, whether matured or unmatured. Guarantor
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by the Credit Agreement and that the waiver
set forth in this Section is knowingly made in contemplation of such benefits.
SECTION 2.7. Successors, Transferees and Assigns; Transfers of Notes, etc.
------------------------------------------------------------
This Guaranty shall:
(a) be binding upon Guarantor, and its successors, transferees
and assigns; and
(b) inure to the benefit of and be enforceable by the Bank and
each other Guarantied Party.
Without limiting the generality of clause (b), the Bank may assign or otherwise
----------
transfer (in whole or in part) any Note or Loan held by it to any other Person,
and such other Person shall thereupon become vested with all rights and benefits
in respect thereof granted to such Bank under any Loan Document (including this
Guaranty) or otherwise. Notwithstanding anything contained in this Section 2.7
-----------
to the contrary, this Section 2.7 shall not be deemed to enlarge or create
-----------
additional rights with respect to
-5-
the Bank's ability to assign its Loans or rights under any Note or any other
Loan Document pursuant to Section 11 of the Credit Agreement, and this Section
-------
2.7 is expressly made subject thereto.
- ---
SECTION 2.8. Payments Free and Clear of Taxes, etc. Guarantor hereby
--------------------------------------
agrees that:
(a) any and all payments made by such Guarantor hereunder shall be
made in accordance with Section 4.7 of the Credit Agreement free and clear of,
and without deduction for, any and all Taxes, to the same extent as if Guarantor
were a Borrower.
(b) Guarantor hereby indemnifies and holds harmless each Guarantied
Party for the full amount of any Taxes paid by such Guarantied Party in
connection with any payments under this Guaranty and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally asserted.
(c) Without prejudice to the survival of any other agreement of
Guarantor hereunder, the agreements and obligations of Guarantor contained in
this Section 2.8 shall survive the payment in full of the principal of and
-----------
interest on the Loans.
SECTION 2.9. Right of Offset. In addition to and not in limitation of all
---------------
rights of offset that any Guarantied Party may have under applicable law or any
other Loan Document, subject to the terms of the Credit Agreement, each
Guarantied Party shall upon the occurrence of any Event of Default with respect
to the Guarantor and whether or not such Guarantied Party has made any demand or
Guarantor's obligations are matured, have the right to appropriate and apply to
the payment of Guarantor's obligations hereunder all deposits (general or
special, time or demand, provisional or final) then or thereafter held by, and
other indebtedness or property then or thereafter owing to, such Guarantied
Party whether or not related to this Guaranty or any transaction hereunder.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES; INCORPORATION BY REFERENCE
To induce the Bank to enter into the Credit Agreement and to make the Loans
thereunder, Guarantor represents and warrants to the Bank that:
SECTION 3.1. Organization, etc. Guarantor and each of its Subsidiaries is
-----------------
a company duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or formation and each of Guarantor and
its Subsidiaries is duly qualified to transact business and in good standing as
a foreign corporation, authorized to do business in each jurisdiction where the
nature of its business makes such
-6-
qualification necessary except where the failure to so qualify could reasonably
be expected to have a Material Adverse Effect.
SECTION 3.2. Authorization. The Guarantor (a) has the power to execute,
-------------
deliver and perform this Guaranty, and (b) has taken all necessary action to
authorize the execution, delivery and performance by it of this Guaranty and the
other Loan Documents to which it is a party.
SECTION 3.3. No Conflict. The execution, delivery and performance by
-----------
Guarantor of this Guaranty does not and will not (a) contravene or conflict with
any provision of any law, statute, rule or regulation, (b) contravene or
conflict with, result in any breach of, or constitute a default under, any
material agreement or instrument binding on Guarantor or any of its Subsidiaries
(including, without limitation, any writ, judgment, injunction or other similar
court order), (c) result in the creation or imposition of or the obligation to
create or impose any Lien upon any of the property or assets of the Guarantor or
any of its Subsidiaries or (d) contravene or conflict with any provision of the
memorandum of incorporation or bye-laws of Guarantor.
SECTION 3.4. Margin Regulations.
------------------
(a) None of the transactions contemplated hereunder or in connection
herewith will in any way contravene or conflict with any of the provisions of
Regulation G or Regulation U;
(b) None of the obligations of any Borrower to the Guarantor is or
will be directly or indirectly secured by "margin stock" (as defined in
Regulation G and Regulation U);
(c) The Guarantor does not and will not have any right to prohibit any
Borrower from selling, pledging, encumbering or otherwise disposing of any
margin stock owned by such Borrower so long as this Guaranty is in effect or any
of the Obligations of the Borrowers or the obligations of the Guarantor under
the Loan Documents remain outstanding;
(d) None of the Borrowers have granted or will grant the Guarantor or
any third party acting on behalf of the Guarantor the right to accelerate
repayment of any of the Obligations of such Borrower if any of the margin stock
owned by such Borrower is sold by such Borrower or otherwise; and
SECTION 3.5. Incorporation by Reference. Guarantor agrees that the
--------------------------
representations and warranties of Guarantor set forth in Section 4 of the
Revolving Credit Agreement (other than Sections 4.2, 4.3 and 4.8,) shall be
incorporated by reference in this Guaranty in their entirety as if fully set
forth herein with the same effect as if applied to this Guaranty. All
capitalized terms set forth in such Sections shall have the meanings provided in
the Revolving Credit Agreement; provided that for purposes of
--------
-7-
this Guaranty, to the extent set forth in the Revolving Credit Agreement (a) the
term "Borrower" shall be deemed to refer to Guarantor and (b) the terms "Agent",
"Lenders", and "Required Lenders" shall be deemed to refer to the Bank. Such
representations and warranties shall not be affected in any manner by the
termination of the Revolving Credit Agreement.
ARTICLE IV.
COVENANTS
SECTION 4.1. Guarantor agrees that, on and after the Closing Date until
the termination or expiration of the Commitments and for so long thereafter as
any of the Obligations or the obligations of Guarantor hereunder remain unpaid
or outstanding (except Obligations which by the terms hereof survive the payment
in full of the Loans and termination of this Guaranty), the Guarantor will
comply with the covenants set forth in Sections 5 and 6 of the Revolving Credit
Agreement and the terms and provisions set forth therein shall be incorporated
by reference in this Guaranty in their entirety as if fully set forth herein
with the same effect as if applied to this Guaranty. All capitalized terms set
forth in Sections 5 and 6 of the Revolving Credit Agreement shall have the
meanings provided in the Revolving Credit Agreement; provided that for purposes
--------
of this Guaranty, to the extent set forth in the Revolving Credit Agreement (a)
the term "Borrower" shall be deemed to refer to Guarantor and (b) the terms
"Agent", "Lenders", and "Required Lenders", shall be deemed to refer to the
Bank. Such covenants shall not be affected in any manner by any amendment or
modification of or the termination of the Revolving Credit Agreement.
SECTION 4.2. Certain Indebtedness. Guarantor shall not, and shall not
--------------------
permit any of its Insurance Subsidiaries to amend or modify any provision of the
Revolving Credit Agreement if such amendment or modification could have an
adverse effect on the Bank or any material provision of the Loan Documents.
SECTION 4.3. Margin Regulations. Guarantor shall take such actions from
------------------
time to time as the Bank shall reasonably request to maintain continuous
compliance with Regulation G and U.
ARTICLE V.
SALE AND RELEASE OF PLEDGED SHARES; CASH COLLATERAL
SECTION 5.1. Sale of Pledged Shares. Notwithstanding any provision set
----------------------
forth herein or in any of the Loan Documents to the contrary, the Bank agrees
that (a) after the occurrence and during the continuance of a Default under
Section 10.1.2 of the Credit Agreement (it being understood that upon the
occurrence of an Event of Default under Section 10.1.2 of the Credit Agreement
--------------
-8-
with respect to any Borrower, the provisions of Section 2.2(a) shall be
--------------
applicable) or Section 10.1.7 of the Credit Agreement or (b) after the
occurrence and during the continuation of any Event of Default (other than an
Event of Default under Section 10.1.2 of the Credit Agreement) with respect to
any Borrower the effect of which is to cause the Obligations of such Borrower to
be due and payable under the Credit Agreement (a "Borrower Default"), subject to
the provisions of Section 5.2 and 5.4 below, it will not demand that the
----------- ---
Guarantor pay the Obligations of such Borrower (constituting outstanding
principal and interest of such Borrower), until after the Bank has used its
reasonable efforts, in good faith, to sell the Pledged Shares of such Borrower,
such sale to be consummated in one or a series of open market transactions
through one or more reputable broker-dealers at the then fair market value of
such Pledged Shares.
SECTION 5.2. Conditions. The obligation of the Bank not to demand payment
----------
hereunder pursuant to Section 5.1 is subject to the following conditions:
-----------
(a) the Guarantor, within five (5) Business Days after receipt of
written notice of a Borrower Default from the Bank, shall deposit with the Bank
in the Cash Collateral Account an amount equal to the then outstanding
Obligations of the Borrower related to such Borrower Default and, thereafter,
upon written notice from the Bank, the Guarantor continues to deposit funds in
the Cash Collateral Account in sufficient amounts to pay in full any additional
interest accrued on the Loans of such Borrower after the date of the initial
deposit to the Cash Collateral Account; and
(b) none of the following has occurred at the time of such Borrower
Default or shall occur thereafter:
(i) a suspension or material limitation in trading in securities
generally or trading in the common shares of the Guarantor on the New York
Stock Exchange or such other U.S. exchange or quotation system on which
such shares may be primarily listed;
(ii) a general moratorium on commercial banking activities in New
York is declared by any Federal or New York State authorities;
(iii) the Bank is prohibited or materially limited from selling
the Pledged Shares as a result of any Federal or state securities laws
(including, without limitation, the rules promulgated thereunder relating
to the disclosure of material information);
(iv) the sale of the Pledged Shares shall require the approval of
the Bermuda Monetary Authority or any other Governmental Authority;
-9-
(v) any other event (including, without limitation, commencement
of any suit, action or litigation, filing of any claim or any other similar
proceeding or any change in any applicable law) has occurred which, in the
reasonable opinion of the Bank, would prohibit, have a material adverse
effect on, or materially limit the Bank's ability to sell the Pledged
Shares as contemplated by the terms of Section 6.1; or
-----------
(vi) an Event of Default under the Credit Agreement affecting the
Guarantor or any Insurance Subsidiary has occurred and is continuing.
The Guarantor agrees that in any sale of any of the Pledged Shares, the
Bank is authorized to comply with any limitation or restriction in connection
with such sale as counsel may advise the Bank is necessary, in the reasonable
opinion of such counsel, in order to avoid any violation of applicable law
(including, without limitation, compliance with such procedures as may restrict
the number of prospective bidders and purchasers, require that such prospective
bidders and purchasers have certain qualifications, and restrict such
prospective bidders and purchasers to persons who will represent and agree that
they are purchasing for their own account for investment and not with a view to
the distribution or resale of such Collateral), or in order to obtain any
required approval of the sale or of the purchaser by any governmental regulatory
authority or official, and the Guarantor further agrees that such compliance
shall not result in such sale being considered or deemed not to have been made
in a commercially reasonable manner, nor shall the Bank be liable or accountable
to the Guarantor for any discount allowed by reason of the fact that such
Pledged Shares are sold in compliance with any such limitation or restriction.
The Guarantor further agrees to indemnify and hold harmless the Bank, its
officers, directors, employees, agents, successors and assigns, and any Person
in control of any thereof, from and against any loss, liability, claim, damage
and expense, including, without limitation, reasonable attorneys' fees actually
incurred (in this paragraph collectively called the "Indemnified Liabilities"),
under federal and state securities laws or otherwise resulting from the action
or failure to act by the Guarantor or any Borrower.
SECTION 5.3. Release of Pledged Shares. The Bank agrees that, except as
-------------------------
provided in Section 5.4 of the Credit Agreement, so long as the Guarantor is in
compliance with Section 5.2(a) and none of the events set forth in Section
-------------- -------
5.2(b) has occurred, it shall not release any of the Pledged Shares of any
- ------
Borrower from the Lien granted under the Pledge Agreement until after the
termination of this Guaranty and the obligations of the Guarantor hereunder with
respect to such Borrower. Notwithstanding the foregoing, the Bank shall be
entitled to release the Pledged
-10-
Shares of such Borrower if such Pledged Shares are replaced by additional common
shares of the Guarantor.
SECTION 5.4. Borrower Event of Default. The Guarantor hereby acknowledges
-------------------------
and agrees that Sections 5.1 and 5.3 shall not apply to any Default or Event of
------------ ---
Default relating to the Guarantor or any of its Insurance Subsidiaries and, upon
the occurrence of an Event of Default relating to the Guarantor or any of its
Insurance Subsidiaries, the Bank expressly reserves its rights and remedies
under this Guaranty to demand payment hereunder to satisfy the Obligations of
all Borrowers and the obligations of Guarantor hereunder whether or not the Bank
has sold or attempted to sell the Pledged Shares of any Borrower or otherwise
exercised its rights and remedies under the Pledge Agreement.
SECTION 5.5. Application of Cash Collateral. If after compliance by the
------------------------------
Bank with the provisions set forth in Section 5.1 any Obligations remain unpaid
-----------
with respect to any applicable Borrower, any funds held in the Cash Collateral
Account may be applied by the Bank against the payment of the Obligations of
such Borrower. The Bank, prior to applying such funds against the Obligations of
such Borrower, will certify to the Guarantor (a) if the Pledged Shares of such
Borrower are sold pursuant to Section 5.1, the net proceeds (including a
-----------
calculation thereof in reasonable detail) received by the Bank from the sale of
such Pledged Shares and (b) if the Pledged Shares of such Borrower are not sold
pursuant to Section 5.1, the reason or reasons why such sale could not be
-----------
accomplished. Any funds remaining in the Cash Collateral Account after
application thereof to the Obligations as set forth above shall be returned to
the Guarantor. The Bank agrees that it shall deliver to the Guarantor, after
the application of such funds to the Obligations of such Borrower, a calculation
in reasonable detail of the Obligations of such Borrower (including principal
and interest of the Loans of such Borrower) and the application of such funds
thereto.
ARTICLE VI.
MISCELLANEOUS
SECTION 6.1. The Guarantor agrees to pay on demand all reasonable expenses
of the Bank (including the non-duplicative fees and reasonable expenses of
counsel (including allocated costs and expenses of in-house counsel) and of
local counsel, if any, who may be retained by such counsel) in connection with:
(a) the negotiation, preparation, execution and delivery of the Credit
Agreement, this Guaranty and the other Loan Documents, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to the Credit Agreement, this Guaranty or the other Loan Documents
as may from time to time hereafter be required, whether or not the transactions
contemplated hereby or thereby are consummated; and
-11-
(b) the preparation and/or review of the form of any document or
instrument relevant to the Credit Agreement, this Guaranty or any other Loan
Document.
The Guarantor further agrees to pay, and to save the Bank harmless from all
liability for, any stamp or other Taxes (other than income taxes of the Bank)
which may be payable in connection with the execution or delivery of the Credit
Agreement, any Borrowing thereunder, the issuance of the Notes, this Guaranty or
any other Loan Document. The Guarantor also agrees to reimburse the Bank upon
demand for all reasonable expenses (including attorneys' fees and legal
expenses) incurred by the Bank in connection with the enforcement of any
Obligations or obligations hereunder and the consideration of legal issues
relevant hereto and thereto. All obligations of the Guarantor provided for in
this Section 6.1 shall survive termination of this Agreement. Notwithstanding
-----------
the foregoing, the Bank shall not have the right to reimbursement under this
Section 6.1 for amounts determined by a court of competent jurisdiction to have
- -----------
arisen from the gross negligence or willful misconduct of the Bank.
SECTION 6.2. The Guarantor agrees to indemnify the Bank and the Bank's
directors, officers, employees, persons controlling or controlled by any of them
or their respective agents, consultants, attorneys and advisors (the
"Indemnified Parties") and hold each Indemnified Party harmless from and against
any and all liabilities, losses, claims, damages, costs and expenses of any kind
to which any of the Indemnified Parties may become subject, whether directly or
indirectly (including, without limitation, the reasonable fees and disbursements
of counsel for any Indemnified Party), relating to or arising out of the Credit
Agreement, this Guaranty, the other Loan Documents, or any actual or proposed
use of the proceeds of the Loans hereunder; provided, that no Indemnified Party
--------
shall have the right to be indemnified hereunder for its own gross negligence or
willful misconduct as determined by a court of competent jurisdiction. All
obligations of the Borrowers and the Guarantor provided for in this Section 6.2
-----------
shall survive termination of the Credit Agreement and this Guaranty.
SECTION 6.3. All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile) and shall be given to such
party at its address or facsimile number set forth on the signature page hereof
in the case of the Guarantor and on its signature page to the Credit Agreement
in the case of the Bank or such other address or facsimile or telex number as
such party may hereafter specify for the purpose by written notice to the Bank
or the Guarantor, as the case may be. Each such notice, request or other
communication shall be effective (a) if given by facsimile when such facsimile
is transmitted in legible form to the facsimile number specified in this
Section, receipt confirmed and (b) if given by overnight delivery, when
delivered for overnight (next day) delivery, addressed as specified in this
Section.
-12-
SECTION 6.4. This Guaranty, and the terms, covenants and conditions
hereof, shall be binding upon and inure to the benefit of the parties hereto,
and their respective successors and assigns, except Guarantor shall not be
permitted to assign this Guaranty nor any interest herein nor in the Collateral,
nor any part thereof, nor otherwise pledge, encumber or grant any option with
respect to the Collateral, nor any part thereof, except in accordance with the
terms of the Credit Agreement.
SECTION 6.5. EACH OF GUARANTOR AND THE BANK (I) HEREBY IRREVOCABLY SUBMITS
TO THE NONEXCLUSIVE JURISDICTION OF ANY ILLINOIS STATE OR FEDERAL COURT SITTING
IN THE NORTHERN DISTRICT OF ILLINOIS OVER ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS GUARANTY OR THE OTHER LOAN DOCUMENTS, AND EACH OF
GUARANTOR AND THE BANK HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH ILLINOIS STATE OR
FEDERAL COURT, AND (II) AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING
AGAINST THE OTHER PARTY HERETO OR THE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR
PROPERTY OF ANY THEREOF, ARISING OUT OF OR RELATING TO THIS GUARANTY, IN ANY
COURT OTHER THAN AS HEREINABOVE SPECIFIED IN THIS SECTION 6.5. EACH OF GUARANTOR
-----------
AND THE BANK HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY ACTION
OR PROCEEDING (WHETHER BROUGHT BY GUARANTOR, ANY OF ITS SUBSIDIARIES, THE BANK
OR OTHERWISE) IN ANY COURT HEREINABOVE SPECIFIED IN THIS SECTION 6.5 AS WELL AS
-----------
ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING,
ONCE COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR
----- --- ----------
OTHERWISE.
SECTION 6.6. The provisions of this Guaranty may from time to time be
amended, modified or waived, if such amendment, modification or waiver is in
writing and consented to by Guarantor and by the Bank, and then any such
amendment, modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 6.7. The section headings in this Guaranty are inserted for
convenience of reference and shall not be considered a part of this Guaranty or
used in its interpretation.
SECTION 6.8. No action of the Bank permitted hereunder shall in any way
affect or impair the rights of the Bank and the obligations of Guarantor under
this Guaranty. Guarantor hereby acknowledges that there are no conditions to the
effectiveness of this Guaranty.
SECTION 6.9. All obligations of Guarantor and rights of the Bank or
obligation expressed in this Guaranty shall be in addition to and not in
limitation of those provided in applicable law or in any other written
instrument or agreement relating to any of the Obligations.
-13-
SECTION 6.10. GOVERNING LAW. THIS GUARANTY SHALL BE A CONTRACT MADE UNDER
-------------
AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES. ALL OBLIGATIONS OF THE BORROWERS AND THE GUARANTOR AND
RIGHTS OF THE BANK IN RESPECT OF THE OBLIGATIONS AND THE OBLIGATIONS OF THE
GUARANTOR EXPRESSED HEREIN OR IN THE OTHER LOAN DOCUMENTS SHALL BE IN ADDITION
TO AND NOT IN LIMITATION OF THOSE PROVIDED BY APPLICABLE LAW.
SECTION 6.11. This Guaranty may be executed in any number of counterparts,
each of which shall for all purposes be deemed an original, but all such
counterparts shall constitute but one and the same agreement. Guarantor hereby
acknowledges receipt of a true, correct and complete counterpart of this
Guaranty.
SECTION 6.12. The Bank acts herein as agent for itself and any and all
future holders of the Obligations.
SECTION 6.13. WAIVER OF JURY TRIAL. EACH OF GUARANTOR AND THE BANK HEREBY
--------------------
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS
GUARANTY, ANY OTHER LOAN DOCUMENT OR ANY OTHER DOCUMENT OR AGREEMENT DELIVERED
OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR
ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS GUARANTY
AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY; THIS PROVISION IS A MATERIAL INDUCEMENT
FOR THE PARTIES ENTERING INTO THIS GUARANTY.
SECTION 6.14. Nonrecourse Obligations. Guarantor acknowledges that it has
-----------------------
reviewed Section 12.10 of the Credit Agreement, understands that the Borrowers
have no personal liability to the Bank for the Obligations and that the Bank's
sole recourse is to the Pledged Shares of such Borrower and under this Guaranty.
-14-
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed
and delivered by its officer thereunto duly authorized as of the date first
above written.
RENAISSANCERE HOLDINGS LTD.
By: /s/ John D. Nichols, Jr.
---------------------------------
Name: John D. Nichols, Jr.
-------------------------------
Title: Vice President, Treasurer and
------------------------------
Secretary
----------
Notice Address:
Renaissance House
8-12 E. Broadway
Hamilton HM19, Bermuda
Attention: Keith S. Hynes,
Chief Financial Officer
Telephone: 441-295-4513
Facsimile: 441-292-9453
-15-
EXHIBIT 10.2
FIRST AMENDMENT AGREEMENT
-------------------------
THIS FIRST AMENDMENT AGREEMENT (this "Amendment"), dated as of September 8,
1997, is among RENAISSANCERE HOLDINGS LTD. (the "Borrower"), the Lenders listed
on the signature pages hereto, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION as Administrative Agent for the Lenders;
W I T N E S E T H:
- - - - - - - - -
WHEREAS, the parties hereto are parties to that certain Third Amended and
Restated Credit Agreement dated as of December 12, 1996 (the "Credit
Agreement");
WHEREAS, the parties hereto wish to amend the Credit Agreement as
hereinafter set forth;
NOW, THEREFORE, the parties hereto, in consideration of the premises and
the mutual agreements herein contained, hereby agree as follows:
Section 1. Credit Agreement Definitions Capitalized terms used herein that
----------------------------
are defined in the Credit Agreement shall have the same meaning when used herein
unless otherwise defined herein.
Section 2. Amendments To Credit Agreement. Effective on (and subject to
------------------------------
the occurrence of) the First Amendment Effective Date (as defined below), the
Credit Agreement shall be amended as follows:
2.1. Amendment to Section 1.1. Section 1.1 of the Credit Agreement is
--------------------------
amended as follows:
(a) The definition of "Commitment Termination Date" is amended by
deleting "December 1, 1999" and inserting "December 1, 2001" therefor.
(b) The definition of "Invested Assets" is amended by inserting the
following at the end thereof: "provided that Catastrophe Bonds shall not be
deemed to be Invested Assets."
(c) The definition of "Net Worth" is amended in its entirety to read
as follows:
"Net Worth means the sum of (a) the shareholders equity, calculated in
---------
accordance with GAAP, plus (b) the outstanding 8.54% Mandatorily Redeemable
----
Capital Securities issued by the Borrower in March, 1997, plus (c) any
----
other preferred shares of the Borrower and its consolidated Subsidiaries
which shall not be redeemable before the Commitment Termination Date.
(d) The definition of "Reinsurance Agreements" is amended by inserting
the following at the end thereof: ", including (for purposes of this Agreement)
Catastrophe Bonds."
(e) The following new definition is inserted in Section 1.1 in its
proper alphabetical order:
"Catastrophe Bonds means (a) any note, bond or other Debt instrument
-----------------
which has a catastrophe risk feature linked to interest payments, principal
payments or both and is issued with the purpose of transferring traditional
reinsurance risk to the capital markets and (b) any equity interest in a
Person controlled by the Borrower formed for the sole purpose of investing
in Debt of the type described in clause (a), in each case which are
purchased by the Borrower in accordance with its customary reinsurance
underwriting procedures.
2.2. Amendment to Section 5.9. Section 5.9 of the Credit Agreement is
-----------------------------------------------------------------
amended as follows:
- -------------------
(a) Clause (ii) of Section 5.9 is amended by deleting "95%" and
inserting "80%" therefor.
(b) The last sentence of Section 5.9 beginning "Notwithstanding the
foregoing" is deleted in its entirety.
2.3. Amendment to Section 6.3. Section 6.3(ii) of the Credit Agreement is
---------------------------------------------------------------------
amended in its entirety to read as follows:
- -------------------------------------------
(ii) purchases or acquisitions which comply with Section 5.10 provided
(x) no Default or Event of Default has occurred and is continuing or would
result therefrom and (y) the purchase price for any single purchase or
acquisition does not exceed 50% of Net Worth minus all amounts which in
accordance with GAAP would be characterized as intangible assets (including
goodwill) as of the date of such purchase or acquisition (calculated on a
proforma basis giving effect to such acquisition or purchase) and (z) the
aggregate purchase price of all purchases and acquisitions after the First
Amendment Effective Date do not exceed 100% of Net Worth minus all amounts
which in accordance with GAAP would be characterized as intangible assets
(including goodwill).
2.4. Schedule 1.2. Schedule 1.2 of the Credit Agreement is deleted in its
---------------------------------------------------------------------
entirety and Schedule 1.2 to this Amendment is substituted therefor.
- --------------------------------------------------------------------
Section 3. Representation And Warranties. In order to induce the Lenders
-----------------------------
and the Administrative Agent to execute and deliver this Amendment, the Borrower
hereby represents and warrants to the Lenders and to the Administrative Agent
that:
-2-
(a) No Event of Default or Default has occurred and is continuing or
will result from the execution and delivery or effectiveness of this
Amendment; and
(b) the warranties of the Borrower contained in Article IV of the
Credit Agreement are true and correct as of the date hereof, with the same
effect as though made on such date; provided that (i) with respect to
clause (a) of Section 4.2, the reference to "1995 Fiscal Year" therein
shall instead be a reference to "1996 Fiscal Year" and (ii) with respect to
clause (a) of Section 4.3, the reference to "December 31, 1995" shall
instead be a reference to "December 31, 1996" and the reference to the nine
months ended September 30, 1996 shall instead be a reference to "the six
months ended June 30, 1997".
Section 4. Conditions to Effectiveness. The Amendment set forth in Section
---------------------------
2 hereof shall become effective on the date (the "First Amendment Effective
Date") when the Administrative Agent shall have received all of the following,
each in form and substance satisfactory to the Administrative Agent:
(a) eight counterparts of this Amendment executed by all of the
parties hereto;
(b) a certificate of an authorized officer of the Borrower as to the
satisfaction of the conditions set forth in Section 3 of this Amendment;
---------
and
(c) such other documents as the Administrative Agent or any Lender may
reasonably request;
provided, however, that the amendment set forth in Section 2.2 hereof
-------- -------
[AMENDMENT TO SECTION 5.9] shall be effective as of June 30, 1997.
Section 5. Reaffirmation of Loan Documents. From and after the date hereof,
-------------------------------
each reference that appears in any other Loan Document to the Credit Agreement
shall be deemed to be a reference to the Credit Agreement as amended hereby. As
amended hereby, the Credit Agreement, is hereby reaffirmed, approved and
confirmed in every respect and shall remain in full force and effect.
Section 6. Counterparts; Effectiveness. This Amendment may be executed by
---------------------------
the parties hereto in any number of counterparts and by the different parties on
separate counterparts and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same agreement.
-3-
Section 7. Governing Law; Entire Agreement. This Amendment shall be deemed
-------------------------------
a contract made under and governed by the laws of the State of Illinois, without
giving effect to conflicts of laws principles. This agreement constitutes the
entire understanding among the parties hereto with respect to the subject matter
hereof and supersedes any prior agreements with respect thereto.
Section 8. Loan Document. This Amendment is a Loan Document.
-------------
-4-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
RENAISSANCERE HOLDINGS LTD.
By:
---------------------------------
Title:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Administrative Agent and
Lender
By:
---------------------------------
Title:
FLEET NATIONAL BANK
By:
---------------------------------
Title:
MELLON BANK, N.A.
By:
---------------------------------
Title:
THE BANK OF N.T. BUTTERFIELD & SON LIMITED
By:
---------------------------------
Title:
BANK OF MONTREAL
By:
---------------------------------
Title:
-5-
DEUTSCHE BANK AG, New York and/or Cayman
Islands Branch
By:
---------------------------------
Title:
By:
---------------------------------
Title:
BANK OF BERMUDA
By:
---------------------------------
Title:
-6-
SCHEDULE 1.2
Pricing Grid
PRICING PRICING PRICING PRICING PRICING
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
S & P BBB+ or A- A A+ AA- or
Claims below above
Rating
Offshore 0.500% 0.400% 0.350% 0.300% 0.250%
Rate
Non-Use 0.150% 0.125% 0.100% 0.090% 0.080%
Fee Rate
EXHIBIT 10.3
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
--------------------
This Second Amended and Restated Employment Agreement (the
"Agreement") is dated as of July 1, 1997, and is entered into between
Renaissance Reinsurance Ltd., a Bermuda Company (the "Company"), and James N.
Stanard ("Executive").
WHEREAS, Executive and the Company are parties to an Amended and
Restated Employment Agreement, dated March 26, 1995 (the "Prior Agreement"); and
WHEREAS, Executive and the Company have agreed to amend the Prior
Agreement as set forth herein.
NOW, THEREFORE, the parties hereby agree to amend and restate the
Prior Agreement as follows:
ARTICLE I
Employment, Duties and Responsibilities
---------------------------------------
1.01. Employment. The Executive shall continue to serve as Chief
----------
Executive Officer and Chairman of the Board 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.
1.02. Duties and Responsibilities. Executive shall have such duties and
---------------------------
responsibilities as are consistent with his position.
1.03. 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 the Holdings' Board of Directors (the "Holdings Board").
ARTICLE II
Term
----
2.01. Term. The term of this Agreement (the "Term") shall commence on
----
June 23, 1997 and, unless terminated earlier as provided in Article V, shall
continue until the earlier of (i) July 1, 2001, or (ii) the date which is one
year following a "Change in Control" (as defined in Section 5.06 below).
ARTICLE III
Compensation and Expenses
-------------------------
3.01. 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 the
-------------
rate of $412,000 per year ("Base Salary"), 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. The Company shall review
the base salary annually. In addition, not later than January 1, 1998, the
Company shall pay executive a one-time bonus of $162,500. Annual bonuses shall
be payable at the discretion of the Company and shall be determined in a manner
consistent with the treatment of other executive officers of the Company.
(b) Additional Bonus.
----------------
(i) Except as provided in clause (ii) below, each year during the
Term, the Company shall pay Executive, in addition to any discretionary bonus,
an additional annual bonus of $815,000 (the "Additional Bonus") payable on each
of June 30, 1998, June 30, 1999, June 30, 2000 and June 30, 2001. In addition,
on each such date, Executive shall receive an additional payment (the "Gross-Up
Payment") in an amount which, after reduction of all applicable income taxes
incurred by Executive in connection with such Gross-Up Payment, is equal to the
amount of income tax payable by the Executive in respect of the Additional Bonus
payable on such date. For this purpose, the income taxes payable by Executive
shall be computed based on the effective combined Federal and State income tax
rate then applicable to the Executive.
-2-
(ii) The foregoing notwithstanding, in the event of (x) a termination
of Executive's employment by reason of Executive's death or disability (as
defined in Section 5.03) or (y) a termination of Executive's employment by the
Company without "Cause" (as defined in Section 5.04 below) or by Executive for
"Good Reason" (as defined in Section 5.01 below) prior to a Change in Control,
the Additional Bonus and the Gross-Up Payment shall be accelerated and shall be
paid on the date of such termination pursuant to clause (i) above. In the event
of a termination of Executive's employment by the Company without Cause or by
Executive for Good Reason on or after a Change in Control, or in the event of an
expiration of this Agreement one year following a Change in Control, any portion
of the Additional Bonus and the Gross-Up Payment not previously paid shall be
accelerated and paid on the last day of the "Non-Competition Period" (as defined
in Section 4.04 below) pursuant to clause (i) above. No payments of Additional
Bonus or Gross-Up Payment shall be made following a termination of Executive's
employment for Cause, or by Executive without Good Reason, regardless of whether
a Change in Control has occurred.
(c) Awards.
------
(i) Executive shall participate in the Second Amended and Restated
1993 Stock Incentive Plan of RenaissanceRe Holdings Ltd., as amended from time
to time and any successor plan thereto (the "Plan"). Executive shall enter into
separate award agreements with respect to awards granted to him under the Plan
("Awards").
(ii) Effective as of the date of this Agreement, the Company, by
action of the Section 162(m) Subcommittee of the Stock Option Committee of the
Board of Directors, has granted to Executive 111,111 shares of restricted common
stock of Holdings ("Restricted Stock") and options ("Options") to purchase
66,667 shares of unrestricted common stock of Holdings ("Common Stock"). The
Restricted Stock and the Options shall vest at the rate of 25% a year commencing
as of the date hereof, with the first vesting date being June 23, 1998, and
shall be governed by the terms and conditions of the Plan. The vesting of such
Awards and any future Awards shall be accelerated in the event of a termination
of Executive's employment by the Company without
-3-
Cause, or by Executive for Good Reason, or by reason of Executive's death or
disability unless, with respect only to future Awards, Executive is otherwise
notified by the Company at the time of grant. The Options shall be exercisable
at a price of $38 per share. The Company and the Executive will enter into
customary Award agreements with respect to such Awards.
(iii) (A) To the extent that the Executive borrows funds under the
Credit Agreement between Bank of America Illinois and Executive dated June 23,
1997 (the "Credit Agreement") to pay for taxes incurred in respect of the
Restricted Stock (whether incurred by reason of an election under Section 83(b)
of the Internal Revenue Code, or under Section 83(a) of the Internal Revenue
Code upon the vesting of such Restricted Stock), the Executive will be eligible
to earn an additional bonus (the "Tax Loan Bonus"). The potential Tax Loan
Bonus will be determined each fiscal year based on the amount borrowed by the
Executive during that year under the Credit Agreement to pay taxes in respect of
the Restricted Stock (the "Borrowed Amount"), and shall be payable in a maximum
amount of 25% of the Borrowed Amount (including interest paid or accrued
thereon) over each of the four years following the year in which such amounts
were borrowed.
(B) In general, a Tax Loan Bonus will be paid only if the
Company meets cumulative Return on Equity ("ROE") targets for each fiscal year
established under the Company's business plan adopted by the Holdings Board. A
Tax Loan Bonus which is not payable for a given fiscal year as a result of the
Company's failure to meet the cumulative ROE target for that year shall be
payable in a subsequent year if the Company meets the cumulative ROE target for
that subsequent year. The base year for determining cumulative ROE targets
shall be 1997.
(C) In the event of a termination of Executive's employment
without Cause, or by Executive for Good Reason, which occurs prior to a Change
in Control, Executive shall be paid a Tax Loan Bonus equal to the aggregate
Borrowed Amount (including interest paid or accrued thereon), reduced by the
aggregate amount of all previous Tax Loan Bonuses paid to Executive (the
"Remaining Tax Loan Balance"), such amount to be paid on the date of such
termination. In the event of a termination of Executive's employment by the
Company without Cause, or by Executive for Good Reason, which occurs on or after
a Change in Control or upon expiration of this Agreement one year following a
Change in Control, Executive shall be paid a Tax Loan Bonus equal to the
Remaining Tax Loan Balance, such amount to be paid on the last day of the Non-
Competition Period. In the event of a termination of Executive's employment by
reason of Executive's death or disability, regardless of whether a Change in
Control has occurred, Executive shall be paid a Tax Loan Bonus equal to the
Remaining Tax Loan Balance, such amount to be paid on the date of such
termination. The amounts described in this
-4-
subsection (c)(iii)(C) shall be paid irrespective of whether applicable ROE
targets have been met.
(D) No Tax Loan Bonus shall be paid following a termination
of Executive's employment for Cause, or by Executive without Good Reason,
regardless of whether a Change in Control has occurred.
(iv) The Company acknowledges that the Executive will incur
obligations under the Credit Agreement in respect of taxes payable on the
Restricted Stock and in respect of the purchase price paid for certain shares of
Common Stock purchased by Executive, and may incur additional obligations under
the Credit Agreement in the future. In the event that Executive's obligations
under the Credit Agreement become due and Executive is precluded from selling
shares of Common Stock owned by the Executive by reason of Company-imposed
transfer restrictions (other than Restricted Stock which has not vested), the
Company shall waive such transfer restrictions to the extent necessary to allow
Executive to sell his shares and apply the proceeds thereof toward the repayment
of his obligations under the Credit Agreement.
(d) 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 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, except that
Executive shall not be entitled to participate in any plan or program maintained
for the purpose of providing retirement income to participants other than the
RenaissanceRe Holdings Ltd. Retirement Plan.
(e) Vacation. Executive shall be entitled to reasonable paid vacation
--------
periods, to be taken at his discretion, in a manner consistent with his
obligations to the Company under this Agreement.
(f) Indemnification/Liability Insurance. The Company shall indemnify
-----------------------------------
Executive as required by the By-laws, and may maintain customary insurance
policies providing for indemnification of Executive.
3.02. Expenses; Perquisites. During the Term, the Company shall provide
---------------------
Executive with the following expense reimbursements and perquisites:
(a) Housing. The Company shall reimburse Executive for all reasonable
-------
expenses incurred in connection with Executive's maintenance of a place of
residence in Bermuda, as approved from time to time by the Board.
-5-
(b) 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.
(c) Automobile. The Company shall provide Executive with an
----------
automobile with a value comparable to automobiles customarily provided to Chief
Executive Officers of comparable Bermuda-based companies.
(d) Personal Travel. The Company shall provide Executive with first-
---------------
class air travel between Bermuda and the United States for the personal purposes
of Executive and members of his immediate family, up to a maximum of 40 visits
by Executive and 12 visits for his family during each year of employment.
(e) Financial Services. The Company shall provide Executive with the
------------------
services of a professional tax and financial planning company.
(f) Tax Gross-Up. To the extent that benefits provided to Executive
------------
under subsections 3.02(a), (c) and (d) 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.
-----------------
4.01. 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, it being understood that Executive anticipates
spending three-day weekends with his family during non-peak periods. 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.
4.02. 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 that are competitive with the business activities of the
Company or any of its divisions, subsidiaries or affiliates. The
-6-
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 the over-the-
counter market.
4.03. 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 of Directors of the Company (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(a) 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.
4.04. Non-Competition Obligations. During Executive's employment and,
---------------------------
upon any termination of Executive's employment (including upon the expiration of
the Term on the earlier of July 1, 2001 or the date one year following a Change
in Control), other than (a) a termination of Executive's employment by reason of
his death or disability, or (b) a termination of Executive's employment by the
Company without Cause, or by Executive for Good Reason, which occurs prior to a
Change in Control, the Executive shall not, for a period of one year from the
date of such termination (the "Non-Competition Period"), directly or indirectly,
whether as an employee consultant, independent
-7-
contractor, partner, joint venturer or otherwise, (i) engage in any business
activities reasonably determined by the 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; (ii) 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 (iii) 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, (I) in the event of a termination of
Executive's employment by the Company for Cause, or by Executive without Good
Reason, which occurs within one year following a Change in Control, the Non-
Competition Period shall be one year from the date of such termination, plus a
number of days equal to (x) 365, minus (y) the number of days which have elapsed
from the date of such Change in Control until the date of such termination,
provided that it shall expire no later than June 30, 2002; and (II) irrespective
of whether a Change in Control has occurred, in the case of (A) a voluntary
termination of employment by the Executive which is not for Good Reason, (B) a
termination by the Company for Cause, or (C) a termination which occurs by
reason of the expiration of the Term on the earlier of July 1, 2001 or the date
one year following a Change in Control, 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) of
this Agreement.
4.05. 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 the 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
-8-
parties agree that the court making such determination shall have the power to
reduce the duration or geographical scope of such provision or 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
-----------
5.01. 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 willful and continued failure to
substantially perform his duties under this Agreement, (b) the engaging by
Executive in willful misconduct which is demonstrably and materially 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, 4.03 or 4.04 of this Agreement,
provided Executive has received prior written notice of such breach.
5.02. Death. In the event Executive dies during the Term, this Agreement
-----
shall automatically terminate, such termination to be effective on the date of
Executive's death.
5.03. 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, the Company shall have the right to terminate this Agreement,
such termination to be effective upon the giving of notice to Executive in
accordance with Section 6.03 of this Agreement.
5.04. Termination for Good Reason. For purposes of this Agreement, the
---------------------------
following circumstances shall constitute "Good Reason":
(a) the assignment to Executive of any duties materially inconsistent
with his authority, duties or responsibilities, or any other action by the
Company which results in a material diminution or material adverse change in
such authority, duties or responsibilities, excluding for this purpose an
isolated action not taken in bad faith and which is remedied promptly after
receipt of notice thereof given by Executive;
(b) any material breach of this Agreement by the Company, other than
an isolated failure not occurring in bad
-9-
faith and which is remedied promptly after receipt of written notice thereof
given by Executive;
(c) any failure by the Company to require any successor to be bound by
the terms of this Agreement as required by Section 6.02(b) of this Agreement; or
(d) any decision by the Board to effect a winding down and eventual
dissolution of the Company.
5.05. 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 of this
Agreement, upon a termination of Executive's employment for any reason other
than the Executive's death or disability (including the expiration of this
Agreement on July 1, 2001 or one year following a Change in Control), the
Company shall continue to pay Executive for a period of twelve (12) months his
then current Base Salary, and an amount equal to the highest regular
discretionary bonus paid or payable to Executive over the preceding three fiscal
years (excluding the Additional Bonus, the Tax Loan Bonus and 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 the additional payments set forth in the preceding
sentence.
(b) Awards. The Executive's rights with respect to Awards, upon any
------
termination of his employment with the Company, shall be governed exclusively by
this Agreement, the terms and conditions of the Plan and any agreement executed
by Executive in connection with such Awards. With respect to the Award of
Options to purchase 66,667 shares of Common Stock described in Section 3.01(c)
hereof, and any Awards granted prior or subsequent to the date hereof, the Award
agreements shall provide (or shall be amended to provide) that in the event of
termination of Executive's employment by reason of the expiration of this
Agreement on July 1, 2001 or one year following a Change in Control, Executive
shall continue to be treated as employed by the Company for purposes of vesting
in such Awards, for so long as (i) Executive has not engaged in conduct which
would be inconsistent with the non-competition obligations described in Section
4.04 of this Agreement, and (ii) Executive has not voluntarily resigned from the
---
Holdings Board, and (iii) with respect only to Awards granted prior to the date
hereof, Executive is either serving on the Holdings Board or providing
-10-
substantial services to the Company and/or Holdings in a consulting capacity.
With respect to Executive's Options to purchase 66,667 shares of Common Stock
described in Section 3.01(c), and any options granted prior or subsequent to the
date hereof, the Award agreements shall provide (or shall be amended to provide)
that during the applicable period described in the preceding sentence, such
Options shall remain outstanding and exercisable. The Award agreements shall
further provide (or shall be amended to provide) that, in the event Executive
(A) resigns from the Holdings Board, (B) has engaged in conduct which is
inconsistent with the non-competition obligations described in Section 4.04 of
this Agreement, or (C) with respect only to options granted prior to the date
hereof, is not serving on the Holdings Board and is not providing (or has ceased
providing) substantial services to the Company and/or Holdings in a consulting
capacity, such options shall remain exercisable for a period of no more than
thirty days following the date Executive receives notice from the Company of
such occurrence, to the extent exercisable on that date, and shall thereafter
terminate.
(c) Obligations of Executive. Subject to this Section 5.05 of this
------------------------
Agreement, Executive may terminate this Agreement at any time. Except as
otherwise provided in Sections 4.03 and 4.04 of this Agreement, Executive shall
not have obligations to the Company hereunder by reason of the termination of
his employment.
5.06. Termination Following a Change in Control.
-----------------------------------------
(a) In the event that a Change in Control occurs and, on or within one
year following the date of such Change in Control: (i) the Executive's
employment is terminated by the Company without Cause, or (ii) the Executive
terminates his employment voluntarily for Good Reason, then in lieu of the
payments described in the second sentence of Section 5.05(a) of this Agreement,
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:
(A) Executive's annual Base Salary at the highest rate in effect
during the Term; and
(B) the highest regular discretionary bonus paid or payable to the
Executive over the preceding three fiscal years (excluding the
Additional Bonus, the Tax Loan Bonus and any extraordinary or
non-recurring bonus).
(b) For purposes of this Agreement, "Change in 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 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
-11-
representing more than 50% of the value and voting power of all of the
outstanding equity securities of Holdings (the "Outstanding Equity Securities");
provided, however, that the following acquisitions shall not constitute a Change
- -------- -------
of Control: (i) any acquisition by 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 of 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 a result of such transaction, owns Holdings
or all or substantially all of Holdings' assets either directly or through one
or more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Corporate Event, of the Outstanding Equity Securities,
and (B) no Person other than (1) one or 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.
(c) Except as specifically provided in this Section 5.06, the
provisions of this Agreement, including, but not limited to, Sections 4.04,
shall not be effected by a termination of Executive's employment following a
Change in Control.
ARTICLE VI
Miscellaneous
-------------
6.01. 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, except as provided in Section 3.01(c) of this Agreement.
-12-
6.02. 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.
6.03. 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., Sofia House, 48 Church Street, Hamilton, Bermuda,
Attention: Board of Directors, 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 James N. Stanard, at the address
shown on the Company's records, 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.
6.04. Entire Agreement; Amendment. This Agreement contains the entire
---------------------------
agreement of the parties hereto with respect to the terms and conditions of
Executive's employment during the Term 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
including, without limitation, the Prior Agreement. This Agreement may not be
changed or modified except by an instrument in writing signed by both of the
parties hereto.
6.05. 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.
6.06. 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.
-13-
6.07. 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.
6.08. 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 of conflict of laws.
6.09. 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. Survivorship. The respective rights and obligations of the parties
------------
under this Agreement 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
-14-
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.
(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.
RENAISSANCE REINSURANCE LTD.
By: /s/ Keith S. Hynes
------------------------------
Name: Keith S. Hynes
Title: Senior Vice President and
Chief Financial Officer
/s/ James N. Stanard
---------------------------------
James N. Stanard
-15-
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement is dated as of May 27, 1997 and is entered
into between Renaissance Reinsurance Ltd., a Bermuda company (the "Company"),
and ____________("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
---------------------------------------
1.01. 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.
1.02. 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.
1.03. 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
----
2.01. 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
-------------------------
3.01. 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
2
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.
(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.
3.02. 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.
-----------------
4.01. 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
3
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.
4.02. 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 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.
4.03. 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
4
the Company or its subsidiaries or affiliates, and no copy of any such
confidential information shall be retained by him.
4.04. 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 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).
4.05. 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
5
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 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
-----------
5.01. 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.
5.02. 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.
5.03. 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.
5.04. Termination Without Cause. The Company may at any time
-------------------------
terminate Executive's employment for reasons other than Cause.
6
5.05. 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 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.
5.06. 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:
7
(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).
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
8
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 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
-------------
6.01. 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.
6.02. 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.
9
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.
6.03. 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.
6.04. 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.
6.05. 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.
6.06. 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.
6.07. Enforcement. If any action at law or in equity is brought by
-----------
either party hereto to enforce or interpret any of
10
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.
6.08. 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 of conflict of laws. The parties submit to
the non-exclusive jurisdiction of the courts of Bermuda.
6.09. 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.
11
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.
(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.
RENAISSANCE REINSURANCE LTD.
By: _______________________________________
Name:
Title:
___________________________________________
12
7
1,000
9-MOS
DEC-31-1997
SEP-30-1997
678,408
0
0
55,544
0
0
733,952
123,828
0
10,656
1,0006,808
113,748
103,407
0
0
50,000
100,000
0
22,447
573,225
1,006,808
215,574
36,994
917
(1,520)
40,017
18,978
18,133
107,850
0
107,850
0
0
0
107,850
4.66
0
0
0
0
0
0
0
0
