exv10w1



 





Exhibit 10.1



ANNUITY & LIFE RE (HOLDINGS), Ltd.




EMPLOYMENT AGREEMENT




     THIS AGREEMENT, dated as of February 18, 2004 by and between Annuity &
Life Re Holdings LTD. (the “Parent Company”) and Annuity and Life Reassurance
Ltd., both companies organized under the laws of Bermuda, (collectively and
individually, the Bermuda Companies”), Annuity & Life Re America, Inc., a
Company organized under the laws of Delaware and its subsidiary Annuity & Life
Reassurance America, Inc. a Company organized under the laws of Connecticut
(collectively and individually, the “US Companies”) (the Bermuda Companies and
the US Companies collectively, the “Group) and John W. Lockwood (hereinafter
called the “Employee”).



WITNESSETH




     WHEREAS, the Group desires that the Employee serve as Director, Controller
and Treasurer of the US Companies and the Employee is willing to serve in such
capacities; and



     WHEREAS, the Group desires that the Employee serve as Chief Financial
Officer, Controller and Treasurer of the Bermuda Companies and the Employee is
willing to serve in such capacities; and



     NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the parties hereto agree as follows:



Section 1. Employment



     Effective as of February 16, 2004, the Group will employ the Employee and
the Employee will perform services for the Group on the terms and conditions
set forth in this Agreement and for the period (“Term of Employment”) specified
in Section 3. This agreement may be terminated at any time during its initial
term or during any renewal term solely in accordance with the terms and
conditions of Section 10.



Section 2. Duties



     The Employee, during the Term of Employment, shall serve the Group in the
capacities defined below. The Employee shall split his time (approximately
54/46) between the US Companies and the Bermuda Companies.



     With respect to the US Companies the Employee will, during the Term of
Employment, serve as Director, Controller and Treasurer of the US Companies.
The Employee shall spend approximately 54% of his time at the US Companies




 









 







headquarters
in Hartford, CT. The Employee shall have the duties and responsibilities
assigned to him by the Chief Executive Officer of the US Companies commensurate
with his position as Director, Controller and Treasurer of the US Companies.




     With respect to the Bermuda Companies the Employee will, during the Term
of Employment, serve as a Senior Vice President. The Employee shall spend
approximately 46% of his time at the Bermuda Companies headquarters in Bermuda.
The Employee shall have the duties and responsibilities assigned to him by the
Chief Executive Officer of the Bermuda Companies commensurate with his position
as Senior Vice President and Chief Financial Officer.



     The Employee shall perform the duties associated with his responsibilities
in the US Companies and Bermuda faithfully and to the best of his abilities and
in furtherance of the business of the Group, and shall devote his dull business
time, energy, attention and skill to the business of the Group and to the
promotion of its interests except as otherwise agreed by the Group.



     The Employee warrants and represents that he is free to enter into this
Agreement and is not restricted by any prior or existing agreement and the
Group may rely on such representation in entering into this Agreement.



Section 3. Term of Employment



     The Term of Employment of this agreement shall commence on January 19,
2004 and end December 31, 2004. At the end of the initial Term of Employment,
and on each anniversary thereof, the Term of Employment shall automatically be
extended for one additional year, unless the Group or the Employee shall have
the given written notice to the other that it does not wish to extend this
agreement at least three months in advance.



Section 4. Salary



     The Employee shall receive, as compensation for his duties and obligations
to the Group, a salary at the annual rate of $200,000, payable in substantially
equal installments in accordance with the Group’s payroll practice. It is
agreed between the parties that the Group shall review the base annual salary
annually and in light of such review may, in the discretion of the Board of
Directors of the Parent Company (but shall not be obligated to), increase such
annual base salary taking into account any changes in the Employee’s then
responsibilities, increases in the cost of living, performance by the Employee,
and other pertinent factors.



Section 5. Bonus



     During the Term of Employment, the Employee shall participate in the
Group’s Incentive Compensation Plan, and will be eligible for an annual cash
bonus




 









 







of up to one times his annual salary based on the performance targets as
determined in accordance with the terms of the Plan.




Section 6. Options



     The Employee has previously been granted stock options under the Parent
Company’s Initial Stock Option Plan (the “Initial Options”). With respect
thereto and other stock based compensation:



     (a) No Initial Option may be exercised after the
earlier of (A) the date that is (i) ninety (90) days following the termination
of the Employee’s employment for any reason other than death, disability or
Serious, Cause (as defined in Section 10), or (ii) six (6) months after the
termination of the Employee’s employment by reason of death or disability or
(iii) the date upon which the Employee’s employment is terminated for Serious
Cause; or (B) the tenth anniversary of the grant of such Option.



     The consideration of the Ordinary Shares purchased upon exercise of the
Initial Options may be paid in cash or by any other method permitted by the
terms of the Parent Company’s Initial Stock Option Plan (the “Plan”). The
issuance of any Ordinary Shares pursuant to the Initial Options shall in all
events be subject to all applicable securities laws and the Employee shall
enter into any agreement reasonably requested by the Parent Company in order to
ensure that all such issuances are in full compliance therewith. The Employee
shall not have any of the rights and privileges of a shareholder of the Company
with respect to the Ordinary Shares issuable upon any exercise of Initial
options unless and until his name is entered into the register of stockholders
of the Parent Company in respect of such Ordinary Shares. If there is any
change in the number or nature of outstanding shares of the Parent Company’s
capital stock by reason of share dividend, recapitalization, merger,
consolidation, scheme of arrangement, share split, combination or exchange,
share repurchase or otherwise, which in any such case has a dilutive or
anti-dilutive effect on the Ordinary Shares, the number of Ordinary Shares
subject to each outstanding Initial Option, the exercise price thereof and/or
other terms thereof shall be appropriately adjusted by the Board of Directors
of the Parent Company (or any committee thereof), whose determination shall be
conclusive, so as to restore the option holder to his rights thereunder.



     (b) During the Term of Employment, the Employee
shall be eligible to be granted options to purchase Ordinary Shares at such
price and subject to such terms as provided by the Plan, in the sole discretion
of the Board of Directors of the Parent Company.



     (c) During the Term of Employment, the Employee
shall be eligible to receive restricted stock subject to such terms as provided
by the Parent Company’s Restricted Stock Plan, in the sole discretion of the
Board of Directors of the Parent Company.



Section 7. Employee Benefits




 









 








     During the Term of Employment the Employee shall be entitled to
participate in all employee benefits programs of the Group, as such programs
may be in effect from time to time, including without limitation, pension and
other retirement plans, profit
sharing plans, group life insurance, accidental death and dismemberment
insurance, hospitalization, surgical and major medical coverage, sick leave
(including salary continuation arrangements), long-term disability, holidays
and vacations. The US Companies shall contribute monthly ten percent of the
base monthly salary of the employee to a retirement plan for the benefit of the
Employee.



Section 8. Business Expenses



     All reasonable travel and other expenses incidental to the rendering of
services by the Employee hereunder shall be paid by the Group; subject in each
case to compliance with the Group’s reasonable reimbursement policies and
procedures.



Section 9. Vacations



     The Employee shall be entitled to reasonable vacation and reasonable sick
leave each year, in accordance with policies of the Group, as determined by the
Board of Directors, provided, however, that the Employee shall be entitled to a
minimum of four (4) weeks vacation per year. For the purposes of this
agreement “vacation pay” shall mean: accrued but unused vacation time paid at
the Employee’s current daily base salary rate.



Section 10. Termination



     (a) In the event of Serious Cause, as defined
below, the Group may terminate the employee’s Employment and the Term of
Employment upon written notice of such termination stating the Serious Cause
upon which the Group relies for its termination. The Employee’s employment
shall be terminated effective as of the date specified in such notice which
shall in no event be earlier than the effective date of such notice as provided
in Section 19.



     “Serious Cause” shall mean (i) the willful and continued failure by the
Employee to perform substantially his duties hereunder, other than by reasons
of health, after written demand for substantial performance is delivered by the
Group that identifies the manner in which the Group believes the Employee has
not substantially performed his duties, (ii) the employee shall have been
indicted by any federal, state or local authority in any jurisdiction for, or
shall have pleaded guilty or nolo contender to, an act constituting a felony,
(ii) the Employee shall have habitually abused any substance (such as narcotics
or alcohol), or (iv) the Employee shall have (A) engaged in acts of fraud,
material dishonesty or gross misconduct in connection with the business of the
Group or (B) committed a material breach of this agreement.



     (b) The Employee may terminate his employment and
the Term of his Employment in the event of Good Reason, as defined below, upon
30 days’ prior written notice of such termination stating the Good Reason upon
which the Employee relies for his termination. The Employee’s employment and
the Term of




 









 







Employment shall be terminated effective as of the date specified
in such notice, which in no event shall be earlier than the effective date of
such notice as provided in Section 19.




     “Good Reason” shall mean (i) a substantial reduction on the Employee’s
salary or benefits, (ii) the demotion of the Employee, (ii) a material
reduction of the Employee’s duties or responsibilities hereunder, (iv) a
material breach of this Agreement by the Company, or (v) the occurrence of any
action taken by the Company that would constitute a constructive termination of
the Employee’s employment.



     (c) In the event of termination of the Employee’s
employment and the Term of Employment by the Company for Serious Cause or by
the employee without Good Reason, the Employee shall forfeit all bonus amounts
for the then fiscal year, and the Group shall be liable to the Employee only
for (i) any accrued but unpaid salary, (ii) any accrued but unpaid bonus from a
prior fiscal year, (iii) any accrued but unpaid vacation pay and (iv)
reimbursement of business expenses incurred prior to the date of termination.



     In the event of death, retirement or disability of the employee, the
Employee’s employment and Term of Employment shall be terminated as of the date
of death, retirement or disability and the Group shall pay the Employee, or the
Employee’s estate or legal representative, as appropriate, (i) any accrued but
unpaid salary, (ii) any earned but unpaid bonus from a prior fiscal year, and
(iii) reimbursement of business expenses incurred prior to the date of
termination. The date of the Employee’s disability shall be deemed to be the
last day of the sixth month during which the Employee has been unable to carry
out his position as provided below.



     “Disability” shall mean the Employee’s inability, for reasons of health,
to carry out the functions of his position for a total of six (6) months during
any 12-month period of the Agreement. “Retirement” shall mean retirement from
employment upon attaining age 65 or such earlier age agreed to by the Group.



     In addition, in such event, if the Parent Company’s Ordinary Shares are
not then publicly traded, the Parent Company shall have the right to call any
or all of the Ordinary Shares of the Parent Company owned by the Employee
within six (6) months after death, retirement or disability, and the Employee,
the Employee’s estate or legal representative, whichever is appropriate, shall
have the right to put any or all of the Employee’s Ordinary shares to the
Parent Company within twelve (12) months after death or within six (6) months
after retirement or disability. The price at which such put or call is
exercisable shall be equal to the appraised value as determined by an
Accredited Senior Appraisor (ASA) as accredited by the American Society of
Appraisors or a Certified business Appraisor (CBA), in each case measured as of
the date of termination, the date of Ordinary Shares are called by the Parent
Company, or the date the Employee, the Employee’s estate or legal
representative puts the Employee’s Ordinary Shares, whichever is greater.



     If the Group should (i) terminate the Term of Employment and the
Employee’s employment herein without Serious Cause, or (ii) the Employee shall




 









 







terminate the Term of Employment and his employment hereunder for Good Reason,
the Group shall continue to pay the Employee his case salary for a period of
one year from such termination. In addition, the Employee shall be entitled to
(a) any accrued but unpaid salary, (b) any earned but unpaid bonus from a prior
fiscal year, (c) any accrued but
unpaid vacation pay and (d) reimbursement of business expenses incurred prior
to the date of termination.




     In the event of the liquidation of the Group or in the event that the
Board of Directors elects to discontinue permanently operating the Group, the
Term of Employment and the Employee’s employment herein shall be terminated as
of the date of such liquidation or discontinuance and the Group shall pay the
Employee (i) any accrued but unpaid salary, (ii) any earned but unpaid bonus
from a prior fiscal year, (iii) any accrued but unpaid vacation pay and (iv)
unreimbursed business expenses incurred prior to the date of termination. In
addition, the Employee shall be entitled to receive one year’s base salary from
the date on which the Employee’s employment is terminated.



Section 11. Change in Control



     (a) Notwithstanding any other provision contained
herein, the Employee’s Initial Options and other options issued under the
Parent Company’s share option plans that are not then exercisable shall become
exercisable (and be deemed to be vested) on the date on which a Change in
Control of the Parent Company occurs. In addition, restricted Ordinary Shares
granted under any of the Parent Company’s share option plans or Restricted
Stock plans shall immediately vest upon Change in Control of the Parent
Company.



     (b) If (i) the employment of the Employee is
terminated by the Group (or successor thereto) without serious cause or (ii)
Employee terminated employment with the Group (or successor thereto) for Good
Reason or because the failure of a successor to the Parent Company to expressly
assume and agree to perform this agreement, within the period commencing on the
date that a Change in Control is formally proposed to the Parent Company’s
Board of Directors and the ending of the sixth month after he date on which
such Change in Control occurs, then the Employee shall be entitled to receive
(in lieu of the benefits described in Section 10); (1) any accrued but unpaid
salary, (2) a lump sum payment equal to two times such Employee’s annual base
salary as of the date of termination, (3) any accrued but unpaid bonus from a
prior fiscal year, (4) any accrued but unpaid vacation pay and (4)
reimbursement of business expenses incurred prior to the date of termination.



     The employee shall not be entitled to any benefits or other entitlements
under this section unless a Change of Control actually occurs.



     (c) A “Change of Control” of the Parent Company
shall be deemed to have occurred if (i) any “person” (as such term is defined
in Section 3(a)(9) and as used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934 (the “Exchange Act”)), excluding the Parent Company, a
trustee or any fiduciary holding securities under an employee benefit plan of
the Parent Company, an underwriter temporarily holding securities pursuant to
an offering of such securities




 









 







or a corporation owned, directly or indirectly,
by shareholders of the Parent Company in substantially the same proportion as
their ownership of the Parent Company, is or becomes the “beneficial owner” (as
defined in rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Parent Company representing 50% or more of the combined
voting power of the Parent
Company’s then outstanding securities (“Voting Securities”); (ii) during any
period of not more than two years, individuals who constitute the Board of
Directors of the Parent Company (the “Board”) as of the beginning of the period
and any new director (other than a director designated by a person who has
entered into an agreement with the Parent Company to effect a transaction
described in clause (i) or (iii) of this sentence) whose election by the Board
or nomination for election by the Parent Company’s shareholders was approved by
a vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at such time or whose election or nomination for election
was previously so approved, cease for any reason to constitute a majority
thereof; (iii) the shareholders of the Parent Company approve a merger,
consolidation or reorganization or a court of competent jurisdiction approves a
scheme of arrangement of the Group, other than a merger, consolidation,
reorganization or scheme of arrangement which would result in the Voting
Securities of the Parent Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least 50% of the combined
voting power of the Voting Securities of the Parent Company or such surviving
entity outstanding immediately after such merger, consolidation, reorganization
or scheme of arrangement; or (iv) the shareholders of the Parent Company
approve a plan of complete liquidation of the Parent Company or any agreement
for the sale of substantially all of the Parent Company’s assets.




Section 12. Agreement Not To Compete



     The Employee hereby covenants and agrees that at no time during the Term
of Employment nor for a period of (i) one year immediately following the
termination of the Employee’s employment by the Group without Serious cause or
by the Employee for Good Reason or in the event of the liquidation of the Group
or in the event the Board of Directors of the Parent Company elect to
discontinue permanently operating the Group or (ii) one year following the
termination of the Employee’s employment for any other reason, will he for
himself or on behalf of any other person, partnership, company or corporation,
directly or indirectly, acquire financial or beneficial interest in (except as
provided in the next sentence) any entity engaged in any business directly
competitive to the business engaged in by the Group at the time of such
termination of employment. Notwithstanding the preceding sentence, the
Employee shall not be prohibited from owning less than one (1%) percent of any
publicly traded corporation, whether or not enter into competition with the
Group for a period of one year following termination. For the purposes of this
Employment Agreement, “competition” will mean soliciting reinsurance business
from any clients of the Group. Clients of the Group are those companies for
whom the Group has reinsured business in force as of the date of this
agreement.




 









 








     The Employee hereby covenants and agrees that, at all times during the
Term of Employment and for a period of one year immediately following the
termination thereof, the Employee shall not directly or indirectly employ or
seek to employ any person or entity employed at that time by the Group, or
otherwise encourage or entice such person or entity to leave such employment.



Section 13. Confidential Information



     The Employee agrees to keep secret and retain in the strictest confidence
all confidential matters which relate to the Group, including, without
limitation, customer lists, client lists, trade secrets, pricing policies and
other business affairs of the Group learned by him from the Group or otherwise
before or after the date of this Agreement, and not to disclose any such
confidential matter to anyone outside the Group, whether during or after his
period of service with the Group, except as may be required in the course of a
legal or governmental proceeding. Upon request by the Group the Employee
agrees to deliver promptly to the Group upon termination of his services for
the Group, or at any time thereafter as the Group may request, all Group
memoranda, notes, records, reports, manuals, drawings, designs, computer files
in any media and other documents (and copies thereof) relating to the Group’s
business and all property of the Group, which he may then possess or have under
his control.



Section 14. Remedy



     Should the Employee engage in or perform, either directly or indirectly,
any of the acts prohibited by Sections 12 or 13 hereof, it is agreed that the
Group shall be entitled to full injunctive relief, to be issued by any
competent court of equity, enjoining and restraining the Employee and each and
every other person, firm, organization, association, or corporation concerned
therein from continuance of such violative acts. The foregoing remedy
available to the Group shall not be deemed to limit or prevent the exercise by
the Group of any or all further rights and remedies which may be available to
the Group hereunder or a law in equity.



     The Employee acknowledges and agrees that the covenants contained in this
agreement are fair and reasonable in light of the consideration paid hereunder,
and the invalidity or unenforceability of any particular provision, or part of
any provision, of this agreement shall not affect the other provisions or parts
hereof. If any provision hereof is determined to be invalid or unenforceable
and if any such provision shall be so determined to be invalid or unenforceable
by reason of the duration or geographical scope of the covenants contained
therein, such duration or geographical scope, or both shall be considered
reduce to a duration or geographical scope to the extent necessary to cure such
invalidity.



Section 15. Successor and Assigns



     This agreement shall be binding upon and inure to the benefits of the
Employee, his heirs, executors, administrators and beneficiaries, and the
Group, and their successors and assigns.




 









 








Section 16. Governing Law




     This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Connecticut, with reference to rules
relating to conflicts of law.



Section 17. Entire Agreements



     This Agreement constitutes the full and complete understanding and
agreement of the parties and supersedes all prior understandings and agreements
as to employment of the Employee. This Agreement cannot be amended, changed,
modified or terminated without the written consent of the parties hereto.



Section 18. Waiver of Breach



     The waiver by either party of a breach of any terms of this agreement
shall not operate nor be construed as a waiver of any subsequent breach
thereof.



Section 19. Notices



     Any notice, report, request or other communication given under this
agreement shall be written and shall be effective upon delivery when delivered
personally, Federal Express or by Fax.



     Unless otherwise notified by any of the parties, notices shall be sent to
the parties as follows:



	 	 	 	 	 	 	 
	 

	 	To Employee:
	 	John W. Lockwood	 	 
	

	 	 	 	121 Huntingdon Drive	 	 
	

	 	 	 	Vernon, CT 06066	 	 
	 
	 	 	 	 	 	 
	

	 	To the Group:
	 	Annuity & Life RE (Holdings) Ltd.
	 	 
	

	 	 	 	One Victoria Street	 	 
	

	 	 	 	Hamilton, Bermuda	 	 







Section 21. Severability



     If any one or more of the provisions contained in this agreement shall be
invalid and illegal or unenforceable in any respect under any applicable law,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.



Section 22. Counterparts



     This agreement may be executed in one or more counterparts, each of which
shall be deemed to be and original by all of which together will constitute one
and the same instrument.




 









 








     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first written above.



	 	 	 
	 

	 	/s/ John W. Lockwood
	

	 	
 
	

	 	John W. Lockwood, Employee
	 
 
	 	 
	

	 	/s/ John F. Burke
	

	 	
 
	

	 	John F. Burke, CEO
	

	 	Annuity & Life RE (Holdings), Ltd.